SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934 (Amendment No. )
Check the appropriate box:
/X/ Preliminary information statement
/ / Definitive information statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
UNITED VANGUARD HOMES, INC.
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(Name of Registrant as Specified in Charter)
Payment of filing fee (check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), or 14c-5(g).
/ / Fee computed on the table below per Exchange Act Rules
14c-5(g) 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 0-11:1
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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.
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1 Set forth the amount on which the filing fee is calculated and state how it
was determined.
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/ / 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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[PRELIMINARY INFORMATION STATEMENT - FOR SEC USE ONLY]
UNITED VANGUARD HOMES, INC.
4 Cedar Swamp Road
Glen Cove, New York 11542
INFORMATION STATEMENT
INTRODUCTION
This Information Statement is being furnished pursuant to
Section 14(c) of the Securities Exchange Act of 1934, as amended, to the holders
(the "Stockholders") of the common stock, par value $.01 per share ("Common
Stock"), of United Vanguard Homes, Inc., a Delaware corporation (the "Company")
in connection with (i) the approval of an amendment to the Company's Certificate
of Incorporation to increase the authorized capital stock of the Company from
8,000,000 shares of Common Stock to 15,000,000 shares, of which 14,000,000
shares will be Common Stock and 1,000,000 shares will be preferred stock, par
value $.001 per share ("Preferred Stock"), (ii) the approval of a 1-for-1.66667
reverse split of the presently issued and outstanding shares of Common Stock,
(iii) the approval of an amendment to the Company's Bylaws to provide for a
Board of Directors divided into three classes, (iv) the approval of an amendment
to the Company's Bylaws to provide that only the Stockholders may amend, alter
or repeal the provision of the Company's Bylaws providing for a Board of
Directors divided into three classes, (v) the approval of an amendment to the
Company's 1991 Incentive Stock Option Plan to increase the number of shares of
Common Stock available for issuance thereunder from 270,000 shares to 500,000
shares and (vi) the approval of the Company's 1996 Outside Directors' Stock
Option Plan (collectively, the "Amendments").
On June 21, 1996, of the 3,723,129 shares of Common Stock
outstanding, 2,726,769 shares (or 73.2%) delivered written consents to the
Company adopting the Amendments. Since the Amendments have been approved by the
holders of the required majority of the Common Stock, no proxies are being
solicited with this Information Statement.
The Company has asked brokers and other custodians, nominees
and fiduciaries to forward this Information Statement to the beneficial owners
of the Common Stock held of record by such persons and will reimburse such
persons for out-of-pocket expenses incurred in forwarding such material.
The Board of Directors has fixed the close of business on July
19, 1996 as the record date for the determination of Stockholders who are
entitled to receive this Information Statement. This Information Statement also
serves as notice to Stockholders of an action taken by less than unanimous
written consent as required by Section 228(d) of the Delaware General
Corporation Law, as amended.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO
SEND US A PROXY.
The date of this Information Statement is July , 1996
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INCREASE IN AUTHORIZED CAPITAL STOCK
On June 21, 1996, the Board of Directors declared it advisable
and in the best interests of the Company and directed that there be submitted to
the Stockholders a proposed amendment to Article FOURTH of the Company's
Certificate of Incorporation to increase the authorized capital stock of the
Company from 8,000,000 shares of Common Stock to 15,000,000 shares, of which
14,000,000 shares will be Common Stock and 1,000,000 shares will be Preferred
Stock. On June 21, 1996, of the 3,723,129 shares of Common Stock outstanding,
2,726,769 shares (or 73.2%) delivered written consents to the Company adopting
this Amendment. As of July 19, 1996, 3,728,129 shares of Common Stock were
issued and outstanding, and approximately additional [601,396] shares of Common
Stock were reserved for issuance upon exercise of outstanding stock options,
warrants, convertible securities and for options that may be granted in the
future under the Company's 1991 Incentive Stock Option Plan. No shares of
Preferred Stock are issued and outstanding.
COMMON STOCK. The Board of Directors of the Company believes
that it is advisable and in the best interests of the Company to have available
additional authorized but unissued shares of Common Stock in an amount adequate
to provide for the future needs of the Company. The additional shares will be
available for issuance from time to time by the Company in the discretion of the
Board of Directors, normally without further stockholder action (except as may
be required for a particular transaction by applicable law, requirements of
regulatory agencies or by stock exchange rules), for any proper corporate
purpose including, among other things, future acquisitions of property or
securities of other corporations, stock dividends, stock splits, convertible
debt financing and equity financings. No stockholder of the Company would have
any preemptive rights regarding future issuance of any shares of Common Stock.
On July __, 1996, the Company filed (i) an amendment to a
Registration Statement on Form SB-2 for the registration of 1,875,000 shares of
Common Stock (inclusive of 225,000 shares subject to an over-allotment option
and 150,000 shares subject to a warrants to be granted to the underwriters) and
(ii) a Registration Statement on Form SB-2 for the registration of $12,500,000
aggregate principal amount of its __% Convertible Senior Secured Notes due 2006
(the "Notes") (inclusive of $1,500,000 aggregate principal amount of Notes
subject to an over-allotment option and $1,000,000 aggregate principal amount of
Notes subject to a warrant to be granted to the underwriters) and [1,086,958]
shares of Common Stock (inclusive of [130,435] shares underlying the
underwriters' over-allotment option to purchase $1,500,000 aggregate principal
amount of Notes and [86,957] shares underlying the underwriters' warrants to
purchase $1,000,000 aggregate principal amount of Notes) (collectively, the
"Public Offering"). Other than the Public Offering, the Company has no present
plans, understandings or agreements for the issuance or use of the proposed
additional shares of Common Stock. However, the Board of Directors believes that
if an increase in the authorized number of shares of Common Stock were to be
postponed until a specific need arose, the delay and expense incident to
obtaining the approval of the Company's stockholders at that time could
significantly impair the Company's ability to meet financing requirements or
other objectives.
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Issuing additional shares of Common Stock may have the effect
of diluting the stock ownership of persons seeking to obtain control of the
Company. Although the Board of Directors has no present intention of doing so,
the Company's authorized but unissued Common Stock could be issued in one or
more transactions that would make more difficult or costly, and less likely, a
takeover of the Company. The amendment to the Company's Certificate of
Incorporation is not being recommended in response to any specific effort of
which the Company is aware to obtain control of the Company, nor is the Board of
Directors currently proposing to stockholders any anti-takeover measures.
PREFERRED STOCK. The Board of Directors believes that the
authorization of Preferred Stock is in the best interests of the Company and its
Stockholders and believes that it is advisable to authorize such shares and have
them available in connection with possible future transactions, such as
financings, strategic alliances, corporate mergers, acquisitions, possible
funding of new businesses and other uses not presently determinable and as may
be deemed to be feasible and in the best interests of the Company. In addition,
the Board of Directors believes that it is desirable that the Company have the
flexibility to issue shares of Preferred Stock without further stockholder
action, except as otherwise provided by law.
It is not possible to determine the actual effect of Preferred
Stock on the rights of the stockholders of the Company until the Board of
Directors determines the rights of the holders of a series of Preferred Stock.
However, such effects might include (i) restrictions on the payment of dividends
to holders of the Common Stock; (ii) dilution of voting power to the extent that
the holders of shares of Preferred Stock are given voting rights; (iii) dilution
of the equity interests and voting power if Preferred Stock is convertible into
Common Stock; and (iv) restrictions upon any distribution of assets to the
holders of the Common Stock upon liquidation or dissolution and until the
satisfaction of any liquidation preference granted to the holders of Preferred
Stock.
The Board of Directors is required by Delaware law to take any
determination to issue shares of Preferred Stock based upon its judgment as to
the best interests of the stockholders and the Company. Although the Board of
Directors has no present intention of doing so, it could issue shares of
Preferred Stock (within the limits imposed by applicable law) that could,
depending on the terms of such series, make more difficult or discourage an
attempt to obtain control of the Company by means of a merger, tender offer,
proxy contest or other means. When in the judgment of the Board of Directors
such action would be in the best interests of the stockholders and the Company,
the issuance of shares of Preferred Stock could be used to create voting or
other impediments or to discourage persons seeking to gain control of the
Company, for example, by the sale of Preferred Stock to purchasers favorable to
the Board of Directors. In addition, the Board of Directors could authorize
holders of a series of Preferred Stock to vote either separately as a class or
with the holders of Common Stock, on any merger, sale or exchange of assets by
the Company or any other extraordinary corporate transaction. The existence of
the additional authorized shares could have the effect of discouraging
unsolicited takeover attempts. The issuance of new shares could also be used to
dilute the stock ownership of a person or entity seeking to obtain control of
the Company should the Board of Directors consider the action of such entity or
person not to be in the best interests of the stockholders and
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the Company. Such issuance of Preferred Stock could also have the effect of
diluting the earnings per share and book value per share of the Common Stock
held by the holders of Common Stock.
While the Company may consider effecting an equity offering of
Preferred Stock in the future for the purposes of raising additional working
capital or otherwise, the Company, as of the date hereof, has no agreements or
understandings with any third party to effect any such offering and no
assurances are given that any offering will in fact be effected.
DISSENTERS' RIGHTS. Pursuant to the Delaware Business
Corporation Law, the Company's stockholders are not entitled to dissenters'
rights of appraisal with respect to the proposed amendment.
A copy of the Amendment to the Company's Certificate of
Incorporation is attached hereto as Appendix A to this Information Statement,
and the preceding discussion of the Amendment to the Company's Certificate of
Incorporation is qualified in its entirety by reference to the text of the
Amendment. Twenty days after the commencement of the distribution of this
Information Statement, the Company will file the Amendment with the Secretary of
State of Delaware.
REVERSE SPLIT OF ISSUED AND OUTSTANDING SHARES OF COMMON STOCK
On June 21, 1996, the Board of Directors declared it advisable
and in the best interests of the Company and directed that there be submitted to
the Stockholders a proposed 1- for-1.66667 reverse spilt of the presently issued
and outstanding shares of Common Stock (the "Reverse Split"). On June 21, 1996,
of the 3,723,129 shares of Common Stock outstanding, 2,726,769 shares (or 73.2%)
delivered written consents to the Company adopting the Reverse Split. The effect
of the Reverse Split upon holders of Common Stock will be that the total number
of shares of the Company's Common Stock held by each Stockholder will be
automatically converted into the number of whole shares of Common Stock equal to
the number of shares of Common Stock owned immediately prior to the Reverse
Split divided by 1.66667, adjusted, as described below, for any fractional
shares. Each Stockholder's percentage ownership interest in the Company and
proportional voting power will remain unchanged, except for minor differences
resulting from adjustments for fractional shares. The rights and privileges of
the holders of shares of Common Stock will be substantially unaffected by the
Reverse Split. No certificates or scrip representing fractional shares of the
Company's Common Stock will be issued to Stockholders because of the Reverse
Split. All fractional shares of one-half share or more will be increased to the
next higher whole number of shares, and all fractional shares of less than
one-half share will be decreased to the next lower whole number of shares,
respectively.
The Board of Directors believes the Reverse Split is the most
expeditious and cost-effective method by which the capitalization of the Company
can be restructured to conform to the terms of the Public Offering. The
effective date of the Reverse Split will be August , 1996.
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Stockholders have no right under Delaware law or under the
Company's Certificate of Incorporation or Bylaws to dissent from the Reverse
Split or to dissent from the rounding to the nearest whole share of any
fractional share resulting from the Reverse Split in lieu of issuing fractional
shares.
The Company had an authorized capital of 8,000,000 shares of
Common Stock, par value $.001 per share, as of July ___, 1996. See "Increase in
Authorized Capital Stock" above. The number of issued and outstanding shares of
Common Stock of the Company on that date was 3,728,129. Based upon the Company's
best estimate, the aggregate number of shares of Common Stock that will be
issued and outstanding on July __, 1996, after giving effect to the Reverse
Split is 2,236,873.
The Reverse Split may result in some Stockholders owning
"odd-lots" of less than 100 shares of Common Stock. Brokerage commissions and
other costs of transactions in odd-lots are generally somewhat higher than the
costs of transactions in "round-lots" of even multiples of 100 shares.
The Company has previously issued, and has outstanding,
various options, warrants and rights to purchase [601,396] shares of Common
Stock. In general, both the exercise price and the number of shares subject to
each such option, warrant and right will be affected by the Reverse Split. In
many instances, the exercise price of an option, warrant or right will increase
by approximately 66.7%, and the number of shares subject to such option,
warrant, or right will be reduced by 40%.
Stockholders will be required to exchange their stock
certificates for new certificates representing the shares of new Common Stock.
Stockholders will be furnished with the necessary materials and instructions for
the surrender and exchange of stock certificates at the appropriate time by the
Company's transfer agent. Stockholders will not be required to pay a transfer or
other fee in connection with the exchange of certificates. Stockholders should
not submit any certificates until requested to do so.
The following description of Federal income tax consequences
is based upon the Internal Revenue Code of 1986, as amended, the applicable
Treasury Regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this
Information Statement. This discussion is for general information only and does
not discuss consequences which may apply to special classes of taxpayers (e.g.,
non-resident aliens, broker-dealers or insurance companies). Stockholders are
urged to consult their own tax advisors to determine the particular consequences
to them.
The exchange of shares of Common Stock for shares of new
Common Stock will not result in recognition of gain or loss. The holding period
of the shares of new Common Stock will include the Stockholder's holding period
for the shares of Common Stock exchanged therefor, provided that the shares of
Common Stock were held as a capital asset. The adjusted
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basis of the shares of new Common Stock will be the same as the adjusted basis
of the shares of Common Stock exchanged therefor.
AMENDMENT TO BYLAWS TO PROVIDE
FOR CLASSIFIED BOARD OF DIRECTORS
On June 21, 1996, the Board of Directors declared it advisable
and in the best interests of the Company and directed that there be submitted to
the Stockholders a proposed amendment to Article II, Section 3, of the Bylaws of
the Company to provide for a Board of Directors divided into three classes. On
June 21, 1996, of the 3,723,129 shares of Common Stock outstanding, 2,726,769
shares (or 73.2%) delivered written consents to the Company adopting this
Amendment. Prior to the Amendment, the Bylaws of the Company provided for one
class of Directors elected annually. The classification of the Board of
Directors into three classes, each of which serves for a staggered three-year
term, may have the effect of making more difficult or delaying attempts by
others to obtain control of the Company. At least two stockholder meetings,
instead of one, will be required to effect a change in the control of the Board
of Directors. The Board of Directors believes that the longer term required to
elect a majority of a classified board will help to assure the continuity and
stability of the Company's management and policies in the future, because a
majority of the directors at any given time will have prior experience as
directors of the Company. It should be noted that the classification provision
will apply to every election of directors, whether or not a change in the Board
of Directors will be beneficial to the Company and its stockholders and whether
or not a majority of the Company's stockholders believes that such a change
would be desirable. Article II, Section 3, of the Bylaws, as amended, is as
follows:
Section 3. Election and Term. Directors shall be elected at
each annual meeting of the stockholders, or, if no such election
shall be held, at a meeting called and held in accordance with
the statutes of the State of Delaware. Each director shall be
elected to hold office until the expiration of the term for which
he is elected, and thereafter until a successor shall be elected
and shall qualify. The directors shall be divided, with respect
to the terms for which they severally hold office, into three
classes, hereby designated as Class I, Class II and Class III.
Each class shall be as nearly equal in number as possible.
Concurrent with the adoption of this Section 3, Benjamin Frank
and Francis S. Gabreski shall be designated as the Class I
directors, James E. Eden, Robert S. Hoshino, Jr. and Stanford J.
Shuster shall be designated as the Class II directors and Carl G.
Paffendorf and Larry L. Laird shall be designated as the Class
III directors. The initial terms of office of the Class I, Class
II and Class III directors named herein shall expire at the next
succeeding annual meeting of stockholders, the second succeeding
annual meeting of stockholders and the third succeeding annual
meeting of stockholders, respectively. At each annual meeting of
stockholders, the successors of the class of directors whose term
expires at
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that meeting shall be elected to hold office for a term expiring
at the annual meeting of stockholders to be held in the third
year following the year of their election.
AMENDMENT TO BYLAWS TO PROVIDE FOR STOCKHOLDER APPROVAL
TO AMEND BYLAW PROVISION FOR CLASSIFIED BOARD OF DIRECTORS
On June 21, 1996, the Board of Directors declared it advisable
and in the best interests of the Company and directed that there be submitted to
the Stockholders a proposed amendment to Article VI of the Bylaws of the Company
to provide that Article II, Section 3, of the Bylaws (the provision of the
Bylaws providing for a classified Board of Directors), may be amended, altered,
or repealed only the Stockholders. On June 21, 1996, of the 3,723,129 shares of
Common Stock outstanding 2,726,769 shares (or 73.2%) delivered written consents
to the Company adopting this Amendment. Prior to the Amendment, the Bylaws
provided that the power to amend, alter, or repeal, any of the Bylaws could be
exercised by the Board of Directors or the Stockholders. The effect of this
Amendment, together with the classified board amendment described above, may
have the effect of making it more difficult, or delaying attempts by others to
obtain control of the Company. Article VI of the Bylaws, as amended, is as
follows:
ARTICLE VI
Subject to the provisions of the Certificate of Incorporation
and the provisions of the General Corporation Law, the power to amend,
alter or repeal these Bylaws and to adopt new Bylaws may be exercised
by the Board of Directors or by the stockholders, provided, however,
that only stockholders may amend, alter or repeal Section 3 of Article
II.
AMENDMENT TO 1991 INCENTIVE STOCK OPTION PLAN
On June 21, 1996, the Board of Directors of the Company
unanimously approved for submission to a vote of the Stockholders a proposal to
amend the Company's 1991 Incentive Stock Option Plan (the "1991 Plan"), as set
forth in Appendix B to this Information Statement, to increase the number of
shares reserved for issuance pursuant to the exercise of options granted
thereunder from 270,000 shares of Common Stock to 500,000 shares of Common Stock
and to make other changes in order to make transactions by officers and
directors exempt from Section 16 of the Securities Exchange Act of 1934, as
amended. Effective with the implementation of the Reverse Split, the number of
shares of Common Stock reserved for issuance under the 1991 Plan will be reduced
from 500,000 shares of Common Stock (reflecting the increase in the number of
shares under the 1991 Plan) to 300,000 shares of Common Stock. On June 21, 1996,
of the 3,723,129 shares of Common Stock outstanding 2,726,769 shares (or 73.2%)
delivered written consents to the Company adopting this Amendment. This
discussion is qualified in its entirety by reference to Appendix B. The purposes
of the 1991 Plan are to secure and retain the best available personnel for
positions of responsibility within the Company, to provide additional
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incentives to employees of the Company and to promote the success and growth of
the Company's business through the grant of options to purchase Common Stock. As
of the date hereof, options to purchase 164,300 shares of Common Stock at
exercise prices ranging from $0.80 to $3.66 have been granted under the 1991
Plan to eight employees and directors of the Company. No options to purchase
shares of Common Stock have been exercised through the date hereof.
Prior to the Reverse Split, the first sentence of the section
of the 1991 Plan captioned "Shares Subject to Options" will read as follows:
3.1 Number of Shares. Subject to the provisions of paragraph
13 (relating to adjustments upon changes in capitalization), the
number of shares of Common Stock subject at any one time to
options granted under the Plan, plus the number of shares of
Common Stock theretofore issued or delivered pursuant to the
exercise of options granted under the Plan, shall not exceed
500,000 shares; provided, that if and to the extent that options
granted under the Plan terminate, expire or are cancelled without
having been exercised, new options may be granted under the Plan
with respect to the shares of Common Stock covered by such
terminated, expired or cancelled options.
Administration of the 1991 Plan. The 1991 Plan is administered
by the Stock Option Committee, which determines to whom among those eligible,
and the time or times at which options will be granted, the number of shares to
be subject to options, the duration of options, any conditions to the exercise
of options, and the manner in and price at which options may be exercised. In
making such determinations, the Stock Option Committee may take into account the
nature and period of service of eligible employees, their level of competition,
their past, present and potential contributions to the Company and such other
factors as the Stock Option Committee in its discretion deems relevant.
The Board of Directors is authorized to amend, modify or
terminate the 1991 Plan, except that it is not authorized without stockholder
approval (except with regard to adjustments resulting from changes in
capitalization) to (i) increase the maximum number of shares that may be issued
pursuant to the exercise of options granted under the 1991 Plan; (ii) change the
class of employees eligible for the grant of options; or (iii) decrease an
option price (although an option may be cancelled and a new option granted at a
lower exercise price).
Unless the 1991 Plan is terminated earlier by the Stock Option
Committee, it will terminate on June 14, 2001.
Option Price. The exercise price of each option is determined
by the Stock Option Committee, but may not be less than 100% of the fair market
value of the shares of Common Stock covered by the option on the date the option
is granted. If an option is to be granted to an employee who owns over 10% of
the total combined voting power of all classes
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of the Company's stock, then the exercise price may not be less than 110% of the
fair market value of the Common Stock covered by the option on the date the
option is granted.
Terms of Options. The maximum term of each option shall be 10
years. Options granted to an employee who owns over 10% of the total combined
voting power of all classes of stock of the Company shall expire not more than
five years after the date of grant. The 1991 Plan provides for the earlier
expiration of a participant's options in the event of certain terminations of
employment.
Registration of Shares. The Company intends to file a
registration statement under the Securities Act of 1933, as amended, with
respect to the Common Stock issuable pursuant to the Amendment to the 1991 Plan.
1996 OUTSIDE DIRECTORS' STOCK OPTION PLAN
On June 21, 1996 the Board of Directors unanimously approved
for submission to the Stockholders a proposal to approve the 1996 Outside
Directors' Stock Option Plan of the Company (the "Outside Directors' Plan") as
set forth in Appendix C to this Information Statement. This discussion is
qualified in its entirety by reference to Appendix C. On June 21, 1996, of the
3,723,129 shares of Common Stock outstanding 2,726,769 shares (or 73.2%)
delivered written consents to the Company adopting this Amendment. The purpose
of the Outside Directors' Plan is to secure for the Company and its Stockholders
the benefits arising from stock ownership by its Outside Directors. The Outside
Directors' Plan will provide a means whereby such Outside Directors may purchase
shares of Common Stock pursuant to options granted in accordance with the
Outside Directors' Plan. Any Outside Director of the Company who is not, and has
not been, a full- or part-time employee thereof for the preceding 36 months
shall be eligible to participate in the Outside Directors' Plan (each an
"Outside Director").
Administration of the Outside Directors' Plan. The Outside
Directors' Plan is administered by the Board of Directors, which shall have full
and complete authority to adopt such rules and regulations and to make all such
other determinations not inconsistent with the Outside Directors' Plan as may be
necessary for the administration thereof.
The Board of Directors is authorized to amend, suspend or
terminate the Outside Directors' Plan, except that it is not authorized without
stockholder approval (except with regard to adjustments resulting from changes
in capitalization) to (i) increase the maximum number of shares that may be
issued pursuant to the exercise of options granted under the Outside Directors'
Plan; (ii) change the minimum price per share at which an option may be
exercised pursuant to the Outside Directors' Plan; (iii) increase the maximum
term of any option granted under the Outside Directors' Plan; or (iv) permit the
granting of options to anyone other than as provided in the Outside Directors'
Plan.
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Unless the Outside Directors' Plan is terminated earlier by
the Board of Directors, it will terminate on June 21, 2006.
Common Stock Subject to the Outside Directors' Plan. The
shares of Common Stock to be issued under the Outside Directors' Plan may be
either authorized but unissued shares or reacquired shares. The number of shares
of Common Stock available under the Outside Directors' Plan will be subject to
adjustment to prevent dilution in the event of a stock split, combination of
shares, stock dividend or certain other events. If an option granted under the
Outside Directors' Plan, or any portion thereof, shall expire or terminate for
any reason without having been exercised in full, the unpurchased shares of
Common Stock covered by such option shall be available for future grants of
options.
The Outside Directors' Plan authorizes the issuance of a
maximum of 150,000 shares of Common Stock, subject to adjustment, pursuant to
the exercise of options granted thereunder. Effective with the implementation of
the Reverse Split, the number of shares of Common Stock reserved for issuance
under the Outside Directors' Plan will be reduced from 150,000 shares of Common
Stock to 90,000 shares of Common Stock. As of the date of this Information
Statement options to purchase 9,000 shares of Common Stock are outstanding under
the Outside Directors' Plan.
Grant of Options. Each Outside Director who becomes a director
after April 1, 1996 (the "Initial Grant Date") shall receive the grant of an
option to purchase 5,000 shares.
To the extent that shares remain available for the grant of
options under the Outside Directors' Plan, each year on April 1, beginning April
1, 1997, each Outside Director shall be granted an option to purchase 3,000
shares.
Terms of Options. The term of each option shall be ten years
from the date of grant, subject to early termination by the Board of Directors.
The Outside Directors' Plan also provides for the earlier termination of options
in the event an Outside Director's membership on the Board of Directors
terminates.
Vesting of Options. Options granted pursuant the Outside
Directors' Plan shall be exercisable in three equal installments beginning on
the first anniversary of the Initial Grant Date or any other date on which
options are granted; provided, however, that in the case of the Outside
Director's death or Permanent Disability (as defined in Outside Directors'
Plan), the options held thereby will become immediately exercisable. No option
shall be exercisable until more than six months have elapsed from the date of
the grant; and provided, further, that no option will be exercisable until
shareholder approval of the Plan shall have been obtained.
Transferability; Termination of Directorship. All options
granted under the Outside Directors' Plan are non-transferable and
non-assignable except by will, by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
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Security Act and may be exercised during an Outside Director's lifetime only by
such Outside Director, his guardian or legal representative. If an Outside
Directors' membership on the Board terminates for any reason other than cause,
including the death of such Outside Director, an option held on the date of
termination may be exercised in whole or in part at any time within 90 days
after the date of such termination (but in no event after the term of the Option
expires) and shall thereafter terminate. If an Outside Director's membership on
the Board is terminated for cause, which determination shall be made by the
Board, options held by him shall terminate concurrently with termination of
membership.
Option Price. The exercise price of each option is the Fair
Market Value for each share of Common Stock subject to an option. Fair Market
Value means the closing sales price on the national securities exchange on which
the Common Stock is listed or on the Nasdaq National Market on the date of grant
of any option. If the Common Stock is not quoted on Nasdaq National Market, fair
market value shall be deemed to be the average of the closing bid and asked
prices of the Common Stock in the over-the-counter market on the date of grant,
or if such bid and asked prices shall not be available, as reported by any
nationally recognized quotation service selected by the Company on the Grant
Date, or as determined by the Board in a manner consistent with the provisions
of the Internal Revenue Code.
By Order of the Board of Directors
Theresa A. Govier, Secretary
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APPENDIX A
AMENDMENT TO CERTIFICATE OF INCORPORATION
<PAGE>
FOURTH: The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is 15,000,000, of which
1,000,000 shares shall be Preferred Stock of the par value of $.01 per share and
14,000,000 shall be Common Stock of the par value of $.001 per share.
A. Preferred Stock. The Board of Directors is expressly authorized to
provide for the issuance of all or any shares of the Preferred Stock, in one or
more series, and to fix for each such series such voting powers, full or
limited, or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof as shall be stated and expressed in the
resolution or resolutions adopted by the Board of Directors providing for the
issue of such series (a "Preferred Stock Designation") and as may be permitted
by the General Corporation Law of the State of Delaware. The number of
authorized shares of Preferred Stock may be increased (but not above the number
of authorized shares of the class) or decreased (but not below the number of
shares thereof then outstanding). Without limiting the generality of the
foregoing, the resolutions providing for issuance of any series of Preferred
Stock may provide that such series shall be superior or rank equally or junior
to the Preferred Stock of any other series to the extent permitted by law. No
vote of the holders of the Preferred Stock or Common Stock shall be required in
connection with the designation or the issuance of any shares of any series of
any Preferred Stock authorized by and complying with the conditions herein, the
right to have such vote being expressly waived by all present and future holders
of the capital stock of the Corporation.
B. Common Stock.
Section 1. Voting. Except as otherwise required by law or as otherwise
provided in any Preferred Stock Designation, the holders of the Common Stock
shall exclusively possess all voting power and each share of Common Stock shall
have one vote.
Section 2. Dividends. The holders of Common Stock shall be entitled to
receive dividends, when, as and if declared by the Board of Directors out of
funds legally available for such purpose and subject to any preferential
dividend rights of any then outstanding Preferred Stock.
Section 3. Liquidation, Dissolution, Winding Up. After distribution in
full of the preferential amount, if any (fixed in accordance with the provisions
of paragraph A of this Article FOURTH), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or winding-up of the Corporation,
the holders of the Common Stock shall be entitled to receive all the remaining
assets of the Corporation, tangible and intangible, of whatever kind available
for distribution to stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
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APPENDIX B
1991 INCENTIVE STOCK OPTION PLAN
as amended and restated on June 21, 1996
<PAGE>
UNITED VANGUARD HOMES, INC.
1991 INCENTIVE STOCK OPTION PLAN
as amended and restated on June 21, 1996
I.. Purpose. The purpose of the United Vanguard Homes, Inc.
1991 Incentive Stock Option Plan (the "Plan") is to secure for United Vanguard
Homes, Inc. (the "Company") and its stockholders the benefits that flow from
providing corporate officers and key employees with the incentive, inherent in
the ownership of the Company's common stock, par value $.01 per share (the
"Common Stock"), to contribute to the success and growth of the business of the
Company and its subsidiaries and to help the Company and its subsidiaries secure
and retain the services of such employees. All options to be granted under the
Plan are intended to qualify as "incentive stock options" under the provisions
of section 422A of the Internal Revenue Code of 1986, as from time to time
amended (the "Code"). For purposes of the Plan, the terms "parent" and
"subsidiary" shall mean "parent corporation" and "subsidiary corporation,"
respectively, as such terms are defined in sections 425(e) and (f) of the Code.
II.. Stock Option Committee.
A. Administration. The Plan shall be administered by
the Board of Directors or by a Stock Option Committee (the "Committee") of not
less than two members of the Board of Directors who are disinterested persons,
as defined in Rule 16b-3, promulgated under the Securities Exchange Act of 1934,
as amended. The appointment of a Committee, however, shall not preclude the
Board of Directors from granting options and otherwise
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exercising its powers with respect to the Plan. As used herein, the term
"Committee" shall be deemed to include the Board of Directors, whether or not a
Committee shall have been appointed.
B. Interpretation; Procedures. The Committee is
authorized to interpret the provisions of the Plan and shall adopt such rules
and regulations as it shall deem appropriate concerning the holding of its
meetings and the administration of the Plan. A majority of the whole Committee
shall constitute a quorum, and the act of a majority of the members of the
Committee present at a meeting at which a quorum is present shall be the act of
the Committee. Any member of the Committee may be removed at any time either
with or without cause by resolution adopted by the Board of Directors of the
Company; and any vacancy on the Committee may at any time be filled by
resolution adopted by the Board of Directors.
III.. Shares Subject to Options.
A. Number of Shares. Subject to the provisions of
paragraph 13 (relating to adjustments upon changes in capitalization), the
number of shares of Common Stock subject at any one time to options granted
under the Plan, plus the number of shares of Common Stock theretofore issued or
delivered pursuant to the exercise of options granted under the Plan, shall not
exceed 500,000 shares; provided, that if and to the extent that options granted
under the Plan terminate, expire or are cancelled without having been exercised,
new options may be granted under the Plan with respect to the shares of Common
Stock covered by such terminated, expired or cancelled options.
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B. Character of Shares. Shares of Common Stock
delivered upon the exercise of options granted under the Plan may be authorized
and unissued Common Stock, issued Common Stock held in the Company's treasury,
or both.
C. Reservation of Shares. There shall be reserved at
all times for sale under the Plan a number of shares of Common Stock (authorized
and unissued Common Stock, issued Common Stock held in the Company's treasury,
or both) equal to the maximum number of shares which may be purchased pursuant
to options granted or that may be granted under the Plan.
IV.. Grant of Options. The Committee shall determine, within
the limitations of the Plan, the employees of the Company and its subsidiaries,
if any, to whom options are to be granted, the number of shares that may be
purchased under each option and the option price; provided, that the aggregate
fair market value (determined as of the time the option is granted) of the
Common Stock for which any officer or employee may be granted options in any
calendar year (under all incentive stock option plans of the Company, its
parent, if any, and its subsidiaries), shall not exceed the sum of $100,000 plus
any "unused limit carryover" to such year within the meaning of section
422A(c)(4) of the Code. Each option granted under the Plan shall be evidenced by
a written agreement between the Company and the Optionee (as hereinafter
defined) in such form, not inconsistent with the provisions of the Plan or of
section 422A of the Code, as the Committee shall provide.
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V.. Employees Eligible. Options may be granted under the Plan
to any key employee or prospective key employee (conditioned upon, and effective
not earlier than, his becoming an employee) of the Company or any of its
subsidiaries. When considering a potential grant of options, the Committee may
take into account the nature and period of service of eligible employees, their
level of compensation, their past, present and potential contributions to the
Company and such other factors as the Committee shall in its discretion deem
relevant. Employees who are also officers or directors of the Company or any of
its subsidiaries shall not by reason of such offices be ineligible to receive
options under the Plan. No options may be granted under the Plan to any person
who owns, directly or indirectly, at the time the option is granted, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of its parent, if any, or any of its subsidiaries
(within the meaning of sections 422A(b)(6) and 425(d) of the Code), unless the
option price is at least 110% of the fair market value of the shares subject to
the option, determined on the date of the grant, and the option by its terms is
not exercisable after the expiration of five years from the date such option is
granted.
An individual receiving any option under the Plan is
hereinafter referred to as an "Optionee." Any reference herein to the employment
of an Optionee by the Company shall include his employment by the Company, its
parent, if any, or any of its subsidiaries.
VI.. Price. Subject to paragraph 13, the option price of each
share of Common Stock purchasable under any option granted under the Plan shall
be (a) not less than the fair market value thereof at the time the option is
granted (which time, in the case of the grant of an
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option to a prospective officer or key employee, shall be deemed to be the time
of effectiveness of such grant); or (b) in the case of an option issued in a
transaction described in section 425(a) of the Code, an amount which conforms to
the requirements of that section.
VII.. Expiration and Termination of the Plan.
A. General. Options may be granted under the Plan at
any time and from time to time on or prior to June 14, 20001, on which date the
Plan will expire except as to options then outstanding under the Plan. Such
options shall remain in effect until they have been exercised, terminated or
have expired. The Plan may be terminated, modified or amended by the Board of
Directors at any time on or prior to June 14, 2001, except with respect to any
options then outstanding under the Plan; any change in the class of employees
eligible for the grant of options, as specified in paragraph 5, shall be subject
to approval by the Company shareholders; and provided further that any increase
in the maximum number of shares subject to options, as specified in paragraph 3,
or any decrease in the option price specified in paragraph 5 or 6, shall be
subject to approval by the Company's shareholders, unless made pursuant to the
provisions of paragraph 13.
B. Modifications. No modification, extension, renewal
or other change in any option granted under the Plan shall be made after the
grant of such option, unless the same is consistent with the provisions of the
Plan and does not disqualify the option as an "incentive stock option" under the
provisions of section 422A of the Code.
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VIII.. Exercisability and Duration of Options.
A. Determination of Committee; Acceleration. Each
option granted under the Plan shall be exercisable at such time or times, or
upon the occurrence of such event or events, and in such amounts, as the
Committee may provide upon the granting thereof. Subsequent to the grant of an
option which is not immediately exercisable in full, the Committee, at any time
before complete termination of such option, may accelerate the time or times at
which such option may be exercised in whole or in part. Any option granted under
the Plan shall be exercisable upon the death of the Optionee or upon the
termination of the Optionee's employment by the Company by reason of his illness
or disability only to the extent such option was exercisable by the Optionee
immediately prior to such event, unless otherwise expressly provided in the
option at the time it is granted.
B. Automatic Termination. The unexercised portion of
any option granted under the Plan shall automatically and without notice
terminate and become null and void at the time of the earliest to occur of the
following:
1. The expiration of ten years from the date on which
such option was granted;
2. The expiration of three months from the date of
termination of the Optionee's employment by the Company (other than a
termination described in subparagraph (c), (d) or (e) below); provided, that if
the Optionee shall die during such three-month period, the time of termination
of the unexercised portion of any such option shall be determined under the
provisions of subparagraph (d) below;
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3. The expiration of one year from the date of
termination of the employment of an Optionee who is permanently and totally
disabled (other than a termination described in subparagraph (e) below);
4. The expiration of six months following the
issuance of letters testamentary or letters of administration to the executor or
administrator of a deceased Optionee, if the Optionee's death occurs either
during his employment by the Company or during the three-month period following
the date of termination of such employment (other than a termination described
in subparagraph (e) below), but in no event later than one year after the
Optionee's death;
5. The termination of the Optionee's employment by
the Company if such termination constitutes or is attributable to a breach by
the Optionee of an employment agreement with the Company, its parent, if any, or
any of its subsidiaries, or if the Optionee is discharged for cause. The
Committee shall have the right to determine whether the Optionee has been
discharged for cause and the date of such discharge, and such determination of
the Committee shall be final and conclusive; or
6. The expiration of such period of time or the
occurrence of such event as the Committee in its discretion may provide upon the
granting thereof.
IX.. Exercise of Options: Certain Legal and Other
Restrictions.
A. Exercise. Options granted under the Plan shall be
exercised by the Optionee (or by its executors or administrators, as provided in
paragraph 10) as to all or part of the shares covered thereby, by the giving of
written notice of exercise to the Company, specifying
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the number of shares to be purchased, accompanied by payment of the full
purchase price for the shares being purchased. No option shall be exercisable
until more than six months have elapsed from the Grant Date. Payment of such
purchase price shall be made (a) by check payable to the Company or (b) with the
consent of the Committee, by delivery of shares of Common Stock having a fair
market value (determined as of the date such option is exercised) equal to all
or part of the purchase price and, if applicable, of a check payable to the
Company for any remaining portion of the purchase price. Such notice of
exercise, accompanied by such payment, shall be delivered to the Company at its
principal business office or such other office as the Committee may from time to
time direct, and shall be in such form, containing such further provisions
consistent with the provisions of the Plan, as the Committee may from time to
time prescribe. The Company shall effect the transfer of the shares so purchased
to the Optionee (or such other person exercising the option pursuant to
paragraph 10 hereof) as soon as practicable, and within a reasonable time
thereafter, such transfer shall be evidenced on the books of the Company. No
Optionee or other person exercising an option shall have any of the rights of a
shareholder of the Company with respect to shares subject to an option granted
under the Plan until certificates for such shares shall have been issued
following the exercise of such option. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to the date of such
issuance. In no event may any option granted hereunder be exercised for a
fraction of a share.
B. Restrictions on Delivery of Shares. Each award
granted under the Plan is subject to the conditions that if at any time the
Committee, in its discretion, shall determine that the listing, registration or
qualification of the shares covered by such award upon any securities exchange
or under any state or federal law is necessary or desirable as a condition of or
in
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connection with the granting of such option or the purchase or delivery of
shares thereunder, the delivery of any or all shares pursuant to exercise of the
option may be withheld unless and until such listing, registration or
qualification shall have been effected. The Committee may require, as a
condition of exercise of any option, that the Optionee represent, in writing,
that the shares received upon exercise of the option are being acquired for
investment and not with a view to distribution, provided that the Committee may
thereafter waive such representation, subject to such restrictions as it may
determine, if, in the opinion of counsel to the Company, the offer of such
shares by the Company pursuant to such option and the resale of such shares by
the Optionee, or either of such acts, is pursuant to an applicable effective
registration statement under the Securities Act of 1933, as amended, or is
exempt from such registration. The Company may endorse on certificates
representing shares issued upon the exercise of an option such legends referring
to the foregoing representations or any applicable restrictions on resale as the
Company, in its discretion, shall deem appropriate.
X.. Non-Transferability of Options. No option granted under
the Plan or any right evidenced thereby shall be transferable by the Optionee
other than by will, by the laws of descent and distribution, pursuant to a
qualified domestic relations order as defined by the Code or by Title I of the
Employee Retirement Income Security Act or the rules thereunder.
In the event of an Optionee's death during his employment by
the Company, its parent, if any, or a subsidiary of the Company, or during the
three-month period following the
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date of termination of such employment, his option shall thereafter be
exercisable, during the period specified in paragraph 8(d), by his executors or
administrators.
XI.. Right to Terminate Employment. Nothing in the Plan or in
any option granted under the Plan shall confer upon any Optionee the right to
continue in the employment of the Company or affect the right of the Company,
its parent, if any, or any of its subsidiaries, to terminate the Optionee's
employment at any time, subject, however, to the provisions of any agreement of
employment between the Optionee and the Company, its parent, if any, or any of
its subsidiaries.
XII.. Order of Exercise of Options. No option granted under
the Plan (the "new option") shall be exercisable while there is outstanding
(within the meaning of section 422A(c)(7) of the Code) any incentive stock
option (within the meaning of section 422A(b) of the Code) which was granted to
the Optionee, before the granting of the new option, to purchase stock in the
Company or in a corporation which (at the time of the granting of the new
option) is a parent or subsidiary of the Company, or in a predecessor
corporation of any such corporation.
XIII.. Adjustment Upon Changes in Capitalization, etc. In the
event of any stock split, stock dividend, reclassification or recapitalization
which changes the character or amount of the Company's outstanding Common Stock
while any portion of any option theretofore granted under the Plan is
outstanding but unexercised, the Committee shall make such adjustments in the
character and number of shares subject to such options and in the option price,
as shall be
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equitable and appropriate in order to make the option, as nearly as may be
practicable, equivalent to such option immediately prior to such change;
provided, that no such adjustment shall give the Optionee any additional
benefits under his option; and provided further, that if any such adjustment is
made by reason of a transaction described in section 425(a) of the Code, it
shall be made so as to conform to the requirements of that section and the
regulations thereunder.
If any transaction (other than a change specified in
the preceding paragraph) described in section 425(a) of the Code affects the
Company's Common Stock subject to any unexercised option theretofore granted
under the Plan (hereinafter for purposes of this paragraph 13 referred to as the
"old option"), the Board of Directors of the Company or any surviving or
acquiring corporation shall take such action as is equitable and appropriate and
in conformity with the requirements on that section and the regulations
thereunder, to substitute a new option for the old option, or to assume the old
option, in order to make the new option, as nearly as may be practicable,
equivalent to the old option.
If any such change or transaction shall occur, the
number and kind of shares for which options may thereafter be granted under the
Plan shall be adjusted to give effect thereto.
XIV.. Effective Date of Plan. The Plan shall become effective
on June 14, 1991, the date of its adoption by the Board of Directors of the
Company, subject, however, to the approval of the Plan by the Company's
stockholders within 12 months of such adoption.
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<PAGE>
APPENDIX C
1996 OUTSIDE DIRECTORS' STOCK OPTION PLAN
<PAGE>
UNITED VANGUARD HOMES, INC.
1996 OUTSIDE DIRECTORS' STOCK OPTION PLAN
ARTICLE I
PURPOSE
The purpose of the United Vanguard Homes, Inc. 1996 Outside Directors'
Stock Option Plan (the "Plan") is to secure for United Vanguard, Inc. and its
stockholders the benefits arising from stock ownership by its Outside Directors.
The Plan will provide a means whereby such Outside Directors may purchase shares
of the common stock, $.01 par value, of United Vanguard Homes, Inc. pursuant to
options granted in accordance with the Plan.
ARTICLE II
DEFINITIONS
The following capitalized terms used in the Plan shall have the
respective meanings set forth in this Article:
2.1 "Board" shall mean the Board of Directors of United Vanguard Homes,
Inc.
2.2 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2.3 "Company" shall mean United Vanguard Homes, Inc. and any of its
Subsidiaries.
2.4 "Director" shall mean any person who is a member of the Board of
Directors of the Company.
2.5 "Outside Director" shall mean any Director elected after April 1,
1996 who is neither a present nor past employee of the Company or a Subsidiary
of the Company during the 36 months preceding his election to the Board.
2.6 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2.7 "Exercise Price" shall mean the price per Share at which an Option
may be exercised.
2.8 "Fair Market Value" of the Shares means the closing price of
publicly traded Shares on the national securities exchange on which the Shares
are listed on the Grant Date (if the Shares are so listed) or on the Nasdaq
National Market on the Grant Date (if the Shares are regularly quoted on the
Nasdaq National Market), or, if not so listed or regularly quoted, the mean
between the closing bid and asked prices of publicly traded Shares in the
over-the-counter
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market on the Grant Date, or, if such bid and asked prices shall not be
available, as reported by any nationally recognized quotation service selected
by the Company on the Grant Date, or as determined by the Board in a manner
consistent with the provisions of the Code.
2.9 "Grant Date" shall mean the Initial Grant Date and any Subsequent
Grant Date.
2.10 "Initial Grant Date" shall mean the date an Outside Director is
elected to the Board.
2.11 "Option" shall mean an Option to purchase Shares granted pursuant
to the Plan.
2.12 "Option Agreement" shall mean the written agreement described in
Article VI herein.
2.13 "Permanent Disability" shall mean the condition of an Outside
Director who is unable to participate as a member of the Board by reason of any
medically determined physical or mental impairment that can be expected to
result in death or which can be expected to last for a continuous period of not
less than 12 months.
2.14 "Purchase Price" shall be the Exercise Price multiplied by the
number of whole Shares with respect to an Option may be exercised.
2.15 "Securities Act" shall mean the Securities Act of 1933, as
amended.
2.16 "Shares" shall mean shares of common stock, $.01 par value, of the
Company.
2.17 "Subsequent Grant Date" shall mean any Grant Date other than the
Initial Grant Date.
2.18 "Subsidiaries" shall have the meaning provided in Section 425(f)
of the Code.
ARTICLE III
ADMINISTRATION
3.1 General. This Plan shall be administered by the Board in accordance
with the express provisions of this Plan.
3.2 Powers of the Board. The Board shall have full and complete
authority to adopt such rules and regulations and to make all such other
determinations not inconsistent with the Plan as may be necessary for the
administration of the Plan.
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ARTICLE IV
SHARES SUBJECT TO PLAN
Subject to adjustment in accordance with Article IX, an aggregate of
150,000 Shares is reserved for issuance under this Plan. Shares sold under this
Plan may be either authorized but unissued Shares or reacquired Shares. If an
Option, or any portion thereof, shall expire or terminate for any reason without
having been exercised in full, the unpurchased Shares covered by such Option
shall be available for future grants of Option.
ARTICLE V
GRANTS
5.1 Initial Grants. On the Initial Grant Date, each Outside Director
shall receive the grant of an option to purchase 5,000 Shares. If an Outside
Director was granted an option as of the date the Board approved the Plan, then
such grant is subject to shareholder approval of the Plan.
5.2 Subsequent Grants. To the extent that Shares remain available for
the grant of Options under the Plan, each year on April 1, beginning April 1,
1997, each Outside Director shall be granted an Option to purchase 3,000 Shares.
5.3 Adjustment of Grants. The number of Shares set forth in Section 5.1
and 5.2 as to which Options shall be granted shall be subject to adjustment as
provided in Section 9.1 hereof.
5.4 Compliance With Rule 16b-3. The terms for the grant of Options to
an Outside Director may only be changed if permitted under Rule 16b-3 under the
Exchange Act and, accordingly, the formula for the grant of Options may not be
changed or otherwise modified more than once in any six month period, other than
to comport with changes in the Code, the Employee Retirement Income Security
Act, or the rules and regulations thereunder.
ARTICLE VI
TERMS OF OPTION
Each Option shall be evidenced by a written Option Agreement executed
by the Company and the Outside Director which shall specify the Grant Date, the
number of Shares subject to the Option and the Exercise Price and shall also
include or incorporate by reference the substance of all of the following
provisions and such other provisions consistent with this Plan as the Board may
determine.
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6.1 Term. The term of each Option shall be 10 years from the Grant Date
thereof, subject to earlier termination in accordance with Articles VI and X.
6.2 Restriction on Exercise. Options shall be exercisable in three
equal installments beginning on the first anniversary of the Initial Grant Date
or any Subsequent Grant Date, provided, however, that in the case of the Outside
Director's death or Permanent Disability, the Options held by him will become
immediately exercisable. No Option shall be exercisable until more than six
months have elapsed from the Grant Date; and provided, further, that no Option
will be exercisable until shareholder approval of the Plan shall have been
obtained.
6.3 Exercise Price. The Exercise Price for each Share subject to an
Option shall be the Fair Market Value of the Share as determined in Section 2.8
herein.
6.4 Manner of Exercise. An Option shall be exercised in accordance with
its terms, by delivery of a written notice of exercise to the Company, and
payment of the full purchase price of the Shares being purchased. An Outside
Director may exercise an Option with respect to all or less than all of the
Shares for which the Option may then be exercised, but a Director must exercise
the Option in full Shares.
6.5 Payment. The Purchase Price of Shares purchased pursuant to an
Option or portion thereof, may be paid:
(a) in United States Dollars, in cash or by check, bank draft
or money order payable to the Company;
(b) at the discretion of the Board by delivery of Shares
already owned by an Outside Director with an aggregate Fair
Market Value on the date of exercise equal to the Purchase
Price, subject to the provisions of Section 16(b) of the
Exchange Act; and
(c) through the written election of the Outside Director to
have Shares withheld by the Company from the Shares otherwise
to be received with such withheld Shares having an aggregate
Fair Market Value on the date of exercise equal to the
Purchase Price.
6.6 Transferability. No Option shall be transferable otherwise than by
will or the laws of descent and distribution, and an Option shall be exercisable
during the Outside Director's lifetime only by the Outside Director, his
guardian or legal representative.
6.7 Termination of Membership on the Board. If an Outside Director's
membership on the Board terminates for any reason other than cause, including
the death of an Outside Director, an Option held on the date of termination may
be exercised in whole or in part at any time within ninety (90) days after the
date of such termination (but in no event after the term of the Option expires)
and shall thereafter terminate. If an Outside Director's membership on the
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Board is terminated for cause, which determination shall be made by the Board,
Options held by him shall terminate concurrently with termination of membership.
6.8 Capital Change of the Company. In the event of any merger,
reorganization or consolidation of the Company, all Options granted under the
Plan shall immediately, prior to such merger, reorganization or consolidation,
vest assuming that the option holder has held the Option for at least six
months. In the event of a stock dividend or recapitalization, or other change in
corporate structure affecting the Shares not covered in the first sentence of
this Section 6.8 (or in the event of a merger, reorganization or consolidation
where the option holder has not held the Option for at least six months), the
Board shall make an appropriate and equitable adjustment in the number and kind
of shares reserved for issuance under the Plan and in the number and option
price of shares subject to outstanding Options granted under the Plan, to the
end that after such event each option holder's proportionate interest shall be
maintained as immediately before the occurrence of such event.
ARTICLE VII
GOVERNMENT AND OTHER REGULATIONS
7.1 Delivery of Shares. The obligation of the Company to issue or
transfer and deliver Shares for exercised Options under the Plan shall be
subject to all applicable laws, regulations, rules, orders and approvals which
shall then be in effect.
7.2 Holding of Stock After Exercise of Option. The Option Agreement
shall provide that the Outside Director, by accepting such Option, represents
and agrees, for the Outside Director and his permitted transferees hereunder
that none of the Shares purchased upon exercise of the Option shall be acquired
with a view to any sale, transfer or distribution of the Shares in violation of
the Securities Act and the person exercising an Option shall furnish evidence
satisfactory to that Company to that effect, including an indemnification of the
Company in the event of any violation of the Act by such person. Notwithstanding
the foregoing, the Company in its sole discretion may register under the Act the
Shares issuable upon exercise of the Options under the Plan.
ARTICLE VIII
WITHHOLDING TAX
The Company may in its discretion, require an Outside Director to pay
to the Company, at the time of exercise of an Option an amount that the Company
deems necessary to satisfy its obligations to withhold federal, state or local
income or other taxes (which for purposes of this Article includes an Outside
Director's FICA obligation) incurred by reason of such exercise. When the
exercise of an Option does not give rise to the obligation to withhold federal
income taxes on the date of exercise, the Company may, in its discretion,
require an Outside Director to place Shares purchased under the Option in escrow
for the benefit of the Company until such time as federal income tax withholding
is required on amounts included in the Outside Director's
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gross income as a result of the exercise of an Option. At such time, the
Company, in its discretion, may require an Outside Director to pay to the
Company an amount that the Company deems necessary to satisfy its obligation to
withhold federal, state or local taxes incurred by reason of the exercise of the
Option, in which case the Shares will be released from escrow upon such payment
by an Outside Director.
ARTICLE IX
ADJUSTMENT
9.1 Proportionate Adjustments. If the outstanding Shares are increased,
decreased, changed into or exchanged into a different number of kind of Shares
or securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an appropriate and proportionate adjustment shall be made
to the maximum number and kind of Shares as to which Options may be granted
under this Plan. A corresponding adjustment changing the number or kind of
Shares allocated to unexercised Options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding Options shall be made without change in the
Purchase Price applicable to the unexercised portion of the Option with a
corresponding adjustment in the Exercise Price of the Shares covered by the
Option. Notwithstanding the foregoing, there shall be no adjustment for the
adjustment for the issuance of Shares on conversion of notes, preferred stock or
exercise of warrants or Shares issued by the Board for such consideration as the
Board deems appropriate.
9.2 Dissolution or Liquidation. Upon the dissolution or liquidation of
the Company, or upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is not the
surviving corporation, or upon a sale of substantially all of the property or
more than 80% of the then outstanding Shares of the Company to another
corporation, the Company shall give to each Outside Director at the time of
adoption of the plan for liquidation, dissolution, merger or sale either (1) a
reasonable time thereafter within which to exercise the Option prior to the
effective date of such liquidation or dissolution, merger or sale, or (2) the
right to exercise the Option as to an equivalent number of Shares of stock of
the corporation succeeding the Company or acquiring its business by reason of
such liquidation, dissolution, merger, consolidation or reorganization.
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 Amendments. The Board may at any time amend or revise the terms of
the Plan, provided no such amendment or revision shall, unless appropriate
shareholder approval of such amendment or revision is obtained:
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(a) increase the maximum number of Shares which may be sold
pursuant to Options granted under the Plan, except as
permitted under the provisions of Article IX;
(b) change the minimum Exercise Price set forth in Article VI;
(c) increase the maximum term of Options provided for in Article
VI; or
(d) permit the granting of Options to anyone other than as
provided in Article V.
10.2 Termination. The Board at any time may suspend or terminate this
Plan. This Plan, unless sooner terminated, shall terminate on the tenth (10th)
anniversary of its adoption by the Board. Termination of the Plan shall not
affect Options previously granted thereunder. No Option may be granted under
this Plan while this Plan is suspended or after it is terminated.
10.3 Consent of Holder. No amendment, suspension or termination of the
Plan shall, without the consent of the holder of Options, alter or impair any
rights or obligations under any Option theretofore granted under the Plan.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Privilege of Stock Ownership. No Outside Director entitled to
exercise any Option granted under the Plan shall have any of the rights or
privileges of a shareholder of the Company with respect to any Shares issuable
upon exercise of an Option until certificates representing the Shares shall have
been issued and delivered.
11.2 Plan Expenses. Any expenses incurred in the administration of the
Plan shall be borne by the Company.
11.3 Governing Law. The Plan has been adopted under the laws of the
State of Delaware. The Plan and all Options which may be granted hereunder and
all matters related thereto, shall be governed by and construed and enforceable
in accordance with the laws of the State of Delaware as it then exists.
ARTICLE XII
SHAREHOLDER APPROVAL
This Plan is subject to approval, at a duly held shareholders' meeting
within 12 months after the date the Board approves this Plan, by the affirmative
vote of holders of a majority of the voting Shares of the Company represented in
person or by proxy and entitled to vote at the
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meeting. Options may be granted, but not exercised, before such shareholder
approval is obtained. If the shareholders fail to approve the Plan within the
required time period, any Options granted under this Plan shall be void, and no
additional Options may thereafter be granted.
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