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:
/ / Preliminary information statement
/X/ 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):
/X/ $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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UNITED VANGUARD HOMES, INC.
4 Cedar Swamp Road
Glen Cove, New York 11542
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INFORMATION STATEMENT
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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-1.6667
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 31, 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 828,913 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 22, 1996, the Company filed an amendment to a Registration
Statement on Form SB-2 for the registration of (i) 3,375,000 shares of Common
Stock (inclusive of 1,125,000 shares underlying 2,250,000 Common Stock Purchase
Warrants and (ii) 2,250,000 Common Stock Purchase Warrants and on July 26, 1996,
the Company filed a Registration Statement on Form SB-2 for the registration of
(i) $14,375,000 aggregate principal amount of its __% Convertible Senior Secured
Notes due 2006 (the "Notes"), (ii) 1,652,299 shares of Common Stock underlying
the Notes and (iii) 143,678 shares of Common Stock subject to a warrant to be
granted to the Placement Agent (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.
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
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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 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.
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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-1.6667 reverse split 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 1.6667, 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 30, 1996.
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.
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The Company had an authorized capital of 8,000,000 shares of
Common Stock, par value $.01 per share, as of July 31, 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 3,723,796. Based upon the Company's
best estimate, the aggregate number of shares of Common Stock that will be
issued and outstanding on July 31, 1996, after giving effect to the Reverse
Split is 2,234,233.
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 556,208 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 basis of the shares of
new Common Stock will be the same as the adjusted basis of the shares of Common
Stock exchanged therefor.
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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 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.
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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 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 212,304 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
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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 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.
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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.
Unless the Outside Directors' Plan is terminated earlier by
the Board of Directors, it will terminate on June 21, 2006.
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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
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
Director's membership on the Board terminates for any reason other than cause,
including the death of such Outside Director, an
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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
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
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 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.
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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. 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.
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.
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
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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 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, 2001, 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.
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
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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;
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 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
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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 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 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.
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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 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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APPENDIX C
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
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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 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
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time as federal income tax withholding is required on amounts included in the
Outside Director's 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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