NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Dover Investments
Corporation will be held at 235 Montgomery Street, Conference
Room #740, Seventh Floor, San Francisco, California, on
Wednesday, June 7, 1995, at 9:00 A.M., for the following
purposes:
(1) To elect six directors (two of whom will be
elected by holders of the Class A Common Stock and four of
whom will be elected by holders of the Class B Common
Stock), each to hold office until the next annual meeting
and until his successor has been elected and qualified;
(2) To ratify and approve an amendment to the Stock
Option Plan for Nonemployee Directors;
(3) To ratify and approve the 1995 Stock Option Plan;
(4) To ratify the appointment of Grant Thornton
as the Company's independent public accountant for the year
ended December 31, 1994; and
(5) To transact such other business as may
properly come before the meeting or any adjournment
thereof.
The Board of Directors has fixed the close of business
on April 11, 1995 as the record date for the determination of
stockholders entitled to notice of and to vote at this meeting or
any adjournment thereof.
BY ORDER OF THE BOARD OF DIRECTORS
LAWRENCE WEISSBERG
Chairman of the Board of Directors,
President and Chief Executive Officer
San Francisco, California
April 21, 1995
IMPORTANT: To ensure your representation at the
meeting please date, sign and mail the enclosed Proxy card(s)
promptly in the return envelope which has been provided.
DOVER INVESTMENTS CORPORATION
Proxy Statement
for the
Annual Meeting of Stockholders of
DOVER INVESTMENTS CORPORATION
350 California Street, Suite 1650
San Francisco, California 94104
to be Held on June 7, 1995
The accompanying proxy is solicited on behalf of the
Board of Directors of Dover Investments Corporation (the
"Company") for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held at 9:00 a.m. on Wednesday, June 7,
1995, at 235 Montgomery Street, Conference Room #740, Seventh
Floor, San Francisco, California, or any adjournment thereof.
Any stockholder giving a proxy has the power to revoke it at any
time prior to the exercise thereof by filing with any Assistant
Secretary of the Company a written revocation, by attending the
Annual Meeting and voting in person, or by submitting a duly
executed proxy bearing a later date. The expense of soliciting
proxies will be paid by the Company. The Company will request
brokers, custodians, nominees and other holders of record to
forward copies of soliciting material to persons for whom they
hold shares of Company stock and to request authority for the
execution of proxies. In such cases, the Company will reimburse
holders for their reasonable charges or expenses. The Company's
principal executive office is located at 350 California Street,
Suite 1650, San Francisco, California 94104. This proxy
statement and the accompanying form(s) of proxy were mailed on
or about April 21, 1995.
VOTING RIGHTS
The Board of Directors has fixed the close of business
on April 11, 1995 as the record date for determination of
stockholders entitled to notice of and to vote at the Annual
Meeting. The voting securities of the Company outstanding at
the close of business on that date were 795,020 shares of
Class A Common Stock and 327,338 shares of Class B Common Stock,
each with a $.01 par value. The Company's Restated Certificate
of Incorporation provides that, so long as the total number of
shares of Class B Common Stock outstanding on any record date
for a meeting of stockholders at which directors are to be
elected equals or exceeds 12 1/2% of the total number of
outstanding shares of Common Stock of both classes on such date,
the holders of Class A Common Stock will vote as a separate
class to elect 25% of the Board of Directors (the "Class A
Directors") and the holders of the Class B Common Stock will
vote as a separate class to elect the remaining 75% of the Board
of Directors (the "Class B Directors"). If 25% of the
authorized number of directors is not a whole number, then the
holders of Class A Common Stock are entitled to elect the next
higher whole number of directors that is at least 25% of the
authorized number of directors. The total number of outstanding
shares of Class B Common Stock on April 11, 1995 constituted
29.2% of the total number of outstanding shares of Common Stock
of both classes. Accordingly, holders of record of Class A
Common Stock will vote as a separate class at the Annual Meeting
with respect to the election of directors and be entitled to
elect two Class A Directors. Holders of record of Class B
Common Stock, voting as a separate class, will be entitled to
elect the four Class B Directors. Holders of the Class A Common
Stock and of the Class B Common Stock generally will vote
together as a single class on other matters submitted to a
stockholders' vote, with the Class A Common Stock entitled to
one vote per share and the Class B Common Stock entitled to ten
votes per share.
The representation in person or by proxy of not less
than a majority of the shares entitled to vote at the meeting
will constitute a quorum. Class A Directors and Class B
Directors will be elected by a plurality of the respective votes
cast by holders of Class A Common Stock and Class B Common
Stock. The affirmative vote of a majority of the shares
represented at the meeting is required for the approval and
adoption of proposals 2,3 and 4. Because abstentions and "non-
votes" are counted as present in determining whether the quorum
requirement is satisfied, abstentions and "non-votes" will have
the effect of a vote against a proposal. A "non-vote" occurs
when a nominee holding shares for a beneficial owner votes on
one proposal but does not vote on another proposal because the
nominee does not have discretionary voting power and has not
received instructions from the beneficial owner.
A holder of Class A Common Stock or Class B Common
Stock may be entitled to cumulate votes and give one nominee a
number of votes equal to the number of directors to be elected
by the Class A Common Stock or the Class B Common Stock, as
applicable, multiplied by the number of votes to which such
stockholder's shares are entitled, or distribute such
stockholder's votes on the same principle among as many nominees
as the stockholder thinks fit. A stockholder may cumulate votes
for a nominee or nominees for Class A or Class B Directors if
such nominee or nominees' names have been placed in nomination
prior to the voting at the Annual Meeting and the stockholder
has given notice prior to the voting at the Annual Meeting of
the stockholder's intention to cumulate votes. If any one
stockholder has given such notice, all stockholders may cumulate
their votes for nominees.
<TABLE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table shows as of April 11, 1995, (i) persons who are known by the Company to be beneficial
owners of more than 5% of the Company's Class A or Class B Common Stock, and (ii) for each director and all directors and officers
as a group, the amount and nature of their beneficial ownership and percentage of all outstanding Class A Common Stock and Class B
Common Stock owned by them:
<CAPTION>
Aggregate
Voting Power
Class A Common Percentage of Class B Common Percentage of Represented
Position Shares Outstanding Shares Outstanding by Shares
with Beneficially Class A Common Beneficially Class B Common Beneficially
Name and Address Company Owned Stock (1) Owned Stock Owned
<S> <C> <C> <C> <C> <C> <C>
Lawrence Weissberg Chairman, 75,778(3) 9.53% 245,114 74.88% 62.11%
350 California Street President
Suite 1650 and Chief
San Francisco, CA Executive
94104 Officer
Arnold Addison Director 200(4) * 0 0 0
727 Industrial Parkway
Hayward, CA
94544
Larry Freels Director 4,400(4) * 0 0 0
655 Beach Street
Suite 400
San Francisco, CA
94109
John Gilbert Director 100(5) * 0 0 0
400 Montgomery Street
Suite 820
San Francisco, CA
94104
Michael Raddie Director 900(6) * 0 0 0
400 Montgomery Street
Suite 820
San Francisco, CA
94104
Will C. Wood Director 9,100(7) * 0 0 0
1550 El Camino Real
Suite 275
Menlo Park, CA
94025
Robert Naify N/A 54,407 6.84% 23,330 7.13% 7.07%
172 Golden Gate
Avenue
San Francisco, CA
94102
The Baupost Group, Inc. N/A 61,000 7.67% 0 0 0
44 Brattle Street
Second Floor
Cambridge, MA
02238-9125
All current officers 90,478(8) 11.38% 245,114 74.88% 62.47%
and directors as a
group (6) person
<FN>
* Less than one percent (1%) of the outstanding class of stock
or aggregate voting power of the Class A Common Stock and
Class B Common Stock combined.
(1) Based on a total of 1,122,358 currently outstanding shares and
the respective number of shares issuable upon exercise of
options owned by each individual exercisable within 60 days of
April 11, 1995.
(2) For matters other than the election of directors only.
(3) Includes 7,257 shares of Class A Common Stock, of which 1,810
shares are owned by Mr. Weissberg's wife, 4,660 shares are
owned by the Weissberg Foundation and 787 shares are held by a
trust for the benefit of the grandchildren of Mr. Weissberg of
which Mr. Weissberg is trustee. Mr. Weissberg disclaims
beneficial ownership of the 1,810 shares owned by his wife.
(4) Includes 200 shares issuable upon exercise of options
exercisable within 60 days of April 11, 1995.
(5) Includes 100 shares issuable upon exercise of options
exercisable within 60 days of April 11, 1995.
(6) 500 of such shares are owned by Raddie & Nouaux, a California
general partnership, of which Mr. Raddie is a general partner.
The remaining 400 shares represent shares issuable upon
exercise of options exercisable within 60 days of
April 11, 1995.
(7) Includes 400 shares issuable upon exercise of options
exercisable within 60 days of April 11, 1995.
(8) Includes 1500 shares issuable upon exercise of options
exercisable within 60 days of April 11, 1995.
</TABLE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
Company as Thrift Holding Company
The Company was the parent company of Homestead
Savings, A Federal Savings and Loan Association (hereafter
referred to as the "Association"), until August 1991, at which
time the Company's voting interest in the Association was
reduced to 20.7% of the total shares eligible to vote (the
"Exchange"). The Association was placed in receivership by the
Office of Thrift Supervision on October 30, 1992, and the
Resolution Trust Corporation (the "RTC") was appointed receiver.
Certain assets and liabilities of the Association were
transferred to a newly chartered federal savings association.
The Company has no interest in the new institution.
Following the shift in ownership in August 1991, all
of the executive officers and directors of the Company and the
Association, except Mr. Weissberg, resigned as executive
officers and directors of the Company. Mr. Weissberg presently
is the only executive officer and the only director of the
Company who was formerly a director of the Association.
The Company has an agreement to indemnify its
directors who formerly served as directors and/or officers of
the Association and its subsidiaries. The RTC, in a letter
dated March 10, 1993, advised the present and former directors
and officers of the Association and its subsidiaries of
potential claims that the RTC may assert against them for the
recovery of losses suffered by the Association and its
subsidiaries in connection with certain specified actions and
loan transactions. The Company maintained a directors and
officers liability insurance policy to cover such potential
liabilities. The Company cannot estimate at this time its
liability under the indemnity agreement nor can it estimate the
extent of its insurance coverage with respect to such claims.
Nominees for Directors
Action is to be taken at the Annual Meeting with
respect to the election of a total of six directors, consisting
of two Class A Directors and four Class B Directors, to serve
until the next annual meeting of stockholders and until their
successors are elected and qualified. Holders of the Class A
Common Stock will vote as a separate class for the election of
the Class A Directors and holders of the Class B Common Stock
will vote as a separate class for the election of the Class B
Directors. Each proxy with respect to the Class A Directors
(the proxy card printed with black ink) may not be voted for
more than two nominees and each proxy with respect to the
Class B Directors (the proxy card printed with red ink) may not
be voted for more than four nominees. It is intended that the
proxies solicited by and on behalf of management will be voted
for the election of the nominees listed in the following table.
In the event any of the nominees, for any reason, should cease
to be a candidate for a position as a director, the proxies will
be voted in accordance with the best judgment of the person or
persons acting under them and may be voted for another person
nominated by management. The Company knows of no current
circumstances which would render any nominee unable to accept
nomination or election. Under the terms of the Company's
By-Laws, a vacancy may be filled by the Board of Directors.
The following table indicates as to each nominee the
year when he was first elected or appointed a director, his age
and class of directorship:
Director Class of
Name Since Age Directorship
Arnold Addison 1992 65 Class A
Michael Raddie 1991 64 Class A
Larry Freels 1993 57 Class B
John Gilbert 1993 55 Class B
Lawrence Weissberg 1968 74 Class B
Will C. Wood 1992 55 Class B
Mr. Weissberg may be deemed to be a control person of
the Company under the Securities Exchange Act of 1934.
Arnold Addison. Mr. Addison has been President of
Addison Financial Corporation, an auto leasing company, since
October 1987. He has also been the owner of Warm Springs Land
Co., a real estate investment firm, since January 1985.
Michael Raddie. Mr. Raddie has been Executive Vice
President of The Commonwealth Group, Inc., an investment banking
firm, since March 1989. He was designated Chief Financial
Officer of the Company on a part-time, consulting basis in
December 1991. From July 1956 to January 1989, he was a
certified public accountant with KPMG Peat Marwick, having
become a partner of such firm in 1968. Mr. Raddie was a
director of Continental Savings, a savings and loan association,
from April 1989 to July 1990.
Larry Freels. Mr. Freels has been a self-employed
real estate owner and investor since 1973.
John Gilbert. Mr. Gilbert has been a self-employed
financial consultant since 1989 and has seventeen years of
experience as a general contractor and home builder.
Lawrence Weissberg. Mr. Weissberg is presently the
Chairman of the Board of Directors, President and Chief
Executive Officer of the Company. He was the President and
Chief Executive Officer of the Company and the Association from
1960 to 1973 and from 1975 to 1989. In May 1989, Mr. Weissberg
stepped down as President of the Company and the Association,
although he continued to serve as Chairman of the Board of
Directors and Chief Executive Officer of the Company. In August
1991, Mr. Weissberg was re-appointed President of the Company.
Mr. Weissberg stepped down as Chief Executive Officer of the
Association in August 1989 and as Chairman of the Board of
Directors and as a director of the Association in January 1992.
Will C. Wood. Mr. Wood has been a principal of
Kentwood Associates, a financial advisory firm, since November
1993. He was an international banking executive with Wells
Fargo Bank, Crocker Bank and Citibank from 1972 through 1989 and
was managing Director of IDI Associates from 1989 to 1993.
Certain Legal Matters
Mr. Freels is a general partner of Station West
Investors, a California limited partnership, which filed a
petition under Chapter 11 of the United States Bankruptcy Code
in October 1992. He was also a general partner of The Kingsdale
Co., an Ohio general partnership, which filed a petition under
Chapter 11 of the United States Bankruptcy Code in October 1991
and has since dissolved.
Committees and Meetings of the Board of Directors
In 1994, the Board of Directors of the Company held
five regular meetings. Each of the directors attended at least
75% of the meetings of the Board of Directors held during the
period for which he has been a director.
The Board of Directors of the Company established a
Compensation Committee in January 1995. The Compensation
Committee of the Board of Directors consists of Arnold Addison,
Michael Raddie and Will C. Wood. The Compensation Committee
reviews and sets company policies in addition to recommending to
the Board the level of compensation of the President. The
Compensation Committee will administer the 1995 Stock Option
Plan and the Stock Option Plan for Nonemployee Directors.
Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's
equity securities, to file reports of ownership and changes in
ownership of equity securities of the Company with the
Securities and Exchange Commission (the "SEC").
Based solely on the Company's review of the reporting
forms received by it, and written representations from certain
persons that no Form 5 reports were required to be filed by
those persons, the Company believes that during the period from
January 1, 1994 to December 31, 1994, inclusive, all filing
requirements applicable to officers, directors and greater than
ten percent stockholders were satisfied, except as follows.
SEC rules require directors and certain officers of an
issuer to file reports regarding issuer stock options granted to
them no later than the 45th day after the end of the issuer's
fiscal year. Mr. Raddie filed such a report after its due date.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
EACH OF THE NOMINEES.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Compensation of Executive Officers
The cash compensation of the only executive officer of
the Company whose total cash compensation exceeded $100,000 in
1994 for services in all capacities to the Company and its
subsidiaries during 1992, 1993 and 1994 was as follows:
SUMMARY COMPENSATION TABLE
Name and Annual
Principal Compensation All Other
Position Year Salary($) Compensation ($)
Lawrence Weissberg 1994 150,000 5,438(2)
Chairman of the 1993 150,000 8,437(2)
Board of Directors, 1992 175,000(1) 37,138(3)
President and Chief
Executive Officer
___________________________
(1) On July 1, 1992, Mr. Weissberg elected to reduce his annual salary
from $200,000 to $150,000.
(2) Consists of an automobile allowance.
(3) Consists of compensation for unused vacation time accrued from 1979
to 1989. The Association paid one-half of such amount to Mr.
Weissberg in October 1991 in connection with the Exchange and the
Company paid the remaining half to Mr. Weissberg in 1992.
Compensation of Directors
The Company pays each nonemployee director $500 for
each meeting of the Board of Directors of the Company attended.
None of the Company's directors, other than Mr. Weissberg, are
employees of the Company. In addition, the Company paid Mr.
Raddie $18,000 in consulting fees in 1994.
Each nonemployee director receives stock options
pursuant to the Company's Stock Option Plan for Nonemployee
Directors, which is described below under "Proposal 2 --
Ratification and Approval of an Amendment to the Stock Option
Plan for Nonemployee Directors."
CERTAIN TRANSACTIONS
Gramercy Mortgage Corporation ("Gramercy"), a
wholly-owned subsidiary of the Company, and Gramercy's
wholly-owned subsidiary, Homestead Insurance Services Inc.
("HISI"), engaged in transactions with the Association during
1993. Gramercy provided trustee services for the mortgage
lending activities of the Association, while HISI is a licensed
insurance agency that, through agreements with unaffiliated
insurance marketing companies, marketed insurance products to
customers of the Association.
In November 1991, the Company entered into an agreement
with a corporation (the "Developer Corporation") owned in part by
Britt Evans, the former Chief Executive Officer of the
Association, concerning the future development of a parcel of
land located in San Leandro, California. This agreement calls
for the Developer Corporation to act as developer and general
contractor for the San Leandro property and to receive various
types of consideration for such future services, including a
management fee. The bulk of such consideration is payable out of
future development sales proceeds from the property. The
agreement requires the Company to pay the Developer Corporation a
management fee of $50,000 per month from November 1991 until
April 1993. At December 31, 1994, the Company had paid the
Developer Corporation management fees aggregating $1,637,350, of
which $900,000 will be deducted from amounts owed to the
Developer Corporation in the future out of sales proceeds of
completed homes at the San Leandro property.
The Company has entered into an agreement to sublease
its office space for $2,800 per month from a corporation that is
wholly-owned by Mr. Weissberg. The term of the sublease is
April 1, 1993 through February 15, 1999.
In December 1993, the Company loaned $1,100,000 to the
Developer Corporation to acquire a parcel of land in Tracy,
California. The loan bears interest at 12 percent per annum,
payable monthly, with a maturity date of December 1, 1996, and is
secured by the real property. Subsequent to December 31, 1993,
the Company and the Developer Corporation entered into a joint
venture for the development and sale of the property. In
September of 1994, the Developer Corporation arranged for
financing which paid off the Company's loan in the amount of
$1,100,000.
PROPOSAL 2 -- RATIFICATION AND APPROVAL OF AN AMENDMENT TO
THE STOCK OPTION PLAN FOR NONEMPLOYEE
DIRECTORS
Purpose of the Proposal
Stockholders of the Company first approved the
Company's Stock Option Plan for Nonemployee Directors (the
"Director Plan") at the annual meeting of stockholders held in
1990. The Director Plan provides for the grant of nonqualified
stock options to purchase Class A Common Stock pursuant to a
formula and is intended to attract and retain the services of
experienced and knowledgeable independent directors for the
benefit of the Company and its stockholders. An aggregate of
12,500 shares of Class A Common Stock is currently available for
grant under the Director Plan.
On November 16, 1994, the Board of Directors approved,
subject to stockholder approval, an amendment to the Director
Plan (the "Plan Amendment") that would (a) increase the number
of options granted to a nonemployee director upon appointment as
a director from 500 to 1,000, (b) increase the number of options
granted to each nonemployee director from 200 every two years to
500 every year, and (c) provide that the options vest over a two
year period rather than a five year period. The Board of
Directors recommends that the Plan Amendment be approved because
the directors believe that the current Director Plan does not
provide an adequate incentive to attract and retain the services
of experienced nonemployee directors. The following discussion
consists of a brief description of the principal terms and
provisions of the Director Plan and the Plan Amendment.
Administration
The Director Plan is administered by the Compensation
Committee. However, because the principal terms of all option
awards are set forth in the Director Plan, the Compensation
Committee has no discretion to determine which nonemployee
directors will receive option awards or to set the number of
shares subject to such option awards.
Eligibility
The Director Plan currently provides that on the
earlier of the date that any person is for the first time either
appointed to the Board of Directors or elected by the
stockholders of the Company to the Board of Directors, options
to purchase 500 shares of Class A Common Stock (subject to
adjustment for recapitalizations, stock splits and similar
events) will automatically be granted to such newly appointed or
elected director; provided, however, that such automatic option
grant will be made only if the director is not otherwise an
employee of the Company or any of its subsidiaries on the date
of such appointment or election and has not been an employee of
the Company or any of its subsidiaries for all or any part of
the preceding fiscal year. Thereafter, on the date occurring
every two years after the date of such appointment or election,
as the case may be, options to purchase 200 shares of Class A
Common Stock (subject to adjustment for recapitalizations, stock
splits and similar events) will automatically be granted to such
director; provided, however, that such automatic option grants
will be made only if the director (a) has served on the Board of
Directors for the entire two preceding fiscal years, (b) is not
otherwise an employee of the Company or any of its subsidiaries
on the date of grant, and (c) has not been an employee of the
Company or any of its subsidiaries for all or any part of the
preceding fiscal year.
The Plan Amendment provides that the number of shares
issuable upon exercise of the options granted when a director is
newly appointed shall be increased from 500 to 1,000.
Furthermore, the number of shares issuable upon exercise of the
options granted thereafter shall be increased from 200 every two
years to 500 every year, provided the director has served on the
Board of Directors for the entire preceding fiscal year.
In the event that the number of shares of Class A
Common Stock subject to future grant under the Director Plan is
insufficient to make all automatic grants required to be made on
a particular date, then all nonemployee directors entitled to a
grant of options on such date will share ratably in the number
of options on shares of Class A Common Stock then available for
grant under the Director Plan.
Terms of Options
The exercise price for shares subject to options
granted under the Director Plan is the fair market value of the
shares at the date of the option grant.
Payments of the exercise price may be in cash or, at
the discretion of the Compensation Committee, in shares of Class
A Common Stock or in a combination of cash and such shares.
Exercise of Options
All options granted under the Director Plan will be
exercisable only after a period of 12 months from the date of
grant. The Director Plan currently provides that such options
will become exercisable in installments to the extent of one-
fifth of the shares covered by the option on the date one year
after the date of grant, an additional one-fifth of the shares
covered by the option on the date two years after the date of
grant, an additional one-fifth of the shares covered by the
option on the date three years after the date of grant, an
additional one-fifth of the shares covered by the option on the
date four years after the date of grant, and the remaining
shares covered by the option on the date five years after the
date of grant.
The Plan Amendment would accelerate the exercisability
of the options, providing that the options will become
exercisable in installments to the extent of one-half of the
shares covered by the option on the date one year after the date
of grant, and the remaining one-half of the shares covered by
the option on the date two years after the date of grant.
In the event that an optionee ceases to be a director
of the Company for any reason other than his death, his option
will be exercisable, to the extent it was exercisable at the
date he ceased to be a director, for a period of 30 days after
such date, and will then terminate. If an optionee dies while a
director of the Company, or within the 30-day period after
termination of such status during which he is permitted to
exercise an option in accordance with the preceding sentence,
then such option may be exercised at any time within six months
after the optionee's death, but only to the extent the option
was exercisable at the time of death. Notwithstanding the
foregoing, no option granted under the Director Plan will be
exercisable after the expiration of 10 years from the date of
its grant.
Options will not be transferable other than by will or
the laws of descent and distribution, and will be exercisable
during the lifetime of an optionee only by that optionee.
Amendment and Termination
The Director Plan may be amended by the Board of
Directors of the Company, except that stockholder approval will
be required for any amendment which would increase the number of
shares subject to the Director Plan, increase the number of
shares for which an option may be granted to any optionee,
change the designation of the class of persons eligible to
receive options under the Director Plan, provide for the grant
of options having an option price per share less than fair
market value on the date of grant, extend the term during which
options may be exercised, extend the final date upon which
options under the Director Plan may be granted, or otherwise
amend the Director Plan in a way that would require stockholder
approval under Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
Awards of options under the Director plan may be made
until September 28, 1999, the date of termination of the
Director Plan.
Certain Federal Income Tax Consequences
A recipient of a stock option will not have taxable
income upon the grant of the option. Instead, the optionee will
recognize ordinary income upon exercise in an amount equal to
the excess of the fair market value of the shares over the
exercise price on the date of exercise. Any gain or loss
recognized upon any later disposition of the shares generally
will be capital gain or loss. The Company will be entitled to a
tax deduction in connection with an option under the Director
Plan in an amount equal to the ordinary income realized by the
optionee at the time that he or she recognizes such income.
Option Awards Under the Plan Amendment
Five of the Company's six directors receive options
under the Director Plan. Mr. Weissberg does not receive options
under the Director Plan since he is an employee of the Company.
The following table shows the additional number of
shares covered by options that will be granted to nonemployee
directors in 1995 if the Plan Amendment is approved by the
stockholders:
Number of 1995
Number of 1995 Option Shares
Option Shares Granted with Plan
Name Prior to Amendment Amendment
Arnold Addison 0 500
Larry Freels 200 500
John Gilbert 200 500
Michael Raddie 200 500
Will C. Wood 0 500
All directors who
are not
executive
officers as
a group 600 2,500
The dollar value of these additional options is not
determinable since the exercise price of the options is the fair
market value of the underlying shares on the date of grant.
The following table shows the hypothetical additional
number of shares covered by options that would have been granted
to nonemployee directors in 1994 and the market value of the
underlying shares if the Plan Amendment had been effective
during fiscal 1994:
Market
Value of
Class A
Number of 1994 Number of 1994 Common
Option Shares Option Shares Stock on
Prior to Granted with Grant
Name Amendment Plan Amendment Date (1)
Arnold Addison 200 500 $3.250
Larry Freels 0 500 2.375
John Gilbert 0 500 2.375
Michael Raddie 0 500 2.375
Will C. Wood 200 500 1.562
All directors who
are not
executive
officers as
a group 400 2,500
(1) Market value is based on the average of the high and low
bid information as quoted on the National Quotation
Bureau Pink Sheets. On April 11, 1995, such market value
was $2.25.
Under the Plan Amendment, the Directors will receive
an additional 1,900 shares in 1995, subject to approval of the
Plan Amendment by the stockholders.
Required Vote
A vote FOR Proposal 2 by the holders of a majority of
the outstanding shares of the Company's Class A Common Stock and
Class B Common Stock, present at the Annual Meeting in person or
by proxy and voting together as a single class with holders of
the Class A Common Stock casting one vote per share and holders
of the Class B Common Stock casting ten votes per share, is
required to approve and adopt the Plan Amendment. Votes with
respect to the Plan Amendment will be cast as specified in the
proxy. If no specification is made, votes represented by proxy
will be cast FOR approval of the Plan Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCK HOLDERS VOTE
"FOR" PROPOSAL 2.
PROPOSAL 3 -- RATIFICATION AND APPROVAL OF THE COMPANY'S
1995 STOCK OPTION PLAN
Purpose of the Proposal
On January 17, 1995, the Company's Board of Directors
adopted, subject to stockholder approval, the Company's 1995
Stock Option Plan (the "Plan") which provides for the issuance
of incentive stock options and nonqualified stock options.
Options for a maximum of 200,000 shares of Class A Common Stock,
Class B Common Stock or any combination thereof may be granted
at not less than the fair market value under the Plan. The Plan
is intended to contribute to maintaining the Company's
performance by providing certain officers and key employees with
long-term incentives in the form of options.
Administration
The Plan will be administered by the Compensation
Committee (the "Committee") which consists of not less than two
directors of the Company who are "disinterested persons" within
the meaning of Rule 16b-3 promulgated under the Exchange Act.
The Committee has sole discretion to select the officers and
other key employees to whom options may be granted, to determine
the number and class of Common Stock to be subject to stock
options, to determine whether payment of the exercise price of
any option shall be in cash, or shares or Common Stock of any
class, or partly in cash and partly in shares, to determine
whether such options shall be exercisable in full upon vesting
or exercisable in installments, and to interpret, construe and
implement the Plan. The Committee may also, within the general
limitations of the Plan, modify, extend, renew or cancel
outstanding options and, upon cancellation of previously granted
higher priced options and rights, re-grant options and rights at
lower prices, provided that no rights or obligations under
existing options may be altered or impaired without the consent
of the optionee.
Eligibility
Officers and key employees selected by the Committee
are eligible to receive options under the Plan. "Officers and
key employees" means officer and assistant officers, both
elective and appointive, presidents and general managers of
divisions and subsidiaries and such other key employees as may
be determined by the Committee in its sole discretion. Two of
the Company's current employees are eligible to receive options
under the Plan. Except as described below, the Plan does not
provide for any maximum or minimum amount of options which may
be received by any one employee.
Terms of Options
Options granted under the Plan will provide for the
purchase of shares of the Company's Class A Common Stock, Class
B Common Stock, or any combination thereof, at not less than the
fair market value of the stock on the date the option is
granted. In the case of an incentive stock option held by an
optionee who, on the date of grant of such option, owns more
than 10% of the total combined voting power of all classes of
stock of the Company, the exercise price will be not less than
110% of the fair market value of the stock. The Plan also
provides that the aggregate fair market value of the stock
(determined at the time the incentive stock option is granted)
with respect to which incentive stock options are exercisable
for the first time by any employee during any calendar year may
not exceed $100,000.
On April 11, 1995, the market value of the Class A
Common Stock was $2.25 per share and the market value of the
Class B Common Stock was $2.25 per share, based on the average
of the high and low bid information as reported on the National
Quotation Bureau Pink Sheets.
The Plan provides for appropriate adjustments in the
provisions of outstanding options and rights and the number of
shares available for future awards in the event of any changes
in the Company's outstanding Common Stock of any class by reason
of certain stock dividends, stock splits or similar events.
Exercise of Options
Options granted under the Plan will be exercisable
during a period fixed by the Committee, provided that no
nonqualified stock option will be exercisable before the
expiration of six months from the date of grant and no incentive
stock option, except as described below, will be exercisable
before the expiration of one year from the date of grant and,
with limited exceptions, no option will be exercisable after the
expiration of ten years from the date of grant. The Plan
provides that no option is exercisable after the expiration of
five years from the date of grant of such option in the case of
an incentive stock option held by an optionee who, on the date
of grant of such options, owns more than 10% of the total
combined voting power of all classes of stock of the Company.
The Plan provides that an option is exercisable
generally only while the optionee is an employee of the Company
or one of its subsidiaries, or within 30 days following
cessation of employment for reasons other than death or
disability. Under certain circumstances, an option may be
exercised within three months of a cessation of employment.
Furthermore, if a cessation of employment occurs after a Change
in Control (as defined below) and certain other conditions are
satisfied, such option will terminate upon the earlier of 180
days after the date of a cessation of employment or the
expiration date of such option. If an optionee ceases to be
employed as a result of disability, retirement or death, the
exercise period also will be extended.
The option exercise price is payable upon exercise of
the option in cash or, in the discretion of the Committee, in
shares of the Class A Common Stock, the Class B Common Stock, in
a combination of cash and such shares or in the form of other
consideration (including, without limitation, promissory notes)
approved by the Committee.
During an optionee's lifetime an option is exercisable
only by the optionee. Options are transferable only by will or
the laws of descent and distribution.
Change in Control, Reorganization, Consolidation or Merger
If the Company is the continuing or surviving
corporation in any reorganization, consolidation or merger, each
outstanding option will pertain to and apply to the securities,
if any, to which a holder of the same number of shares of Class
A Common Stock and/or Class B Common Stock that are subject to
that option would have been entitled.
A "Change in Control" of the Company (as defined
below) will cause each outstanding option to terminate, unless
any agreement relating to a Change in Control otherwise provides
or unless such Change in Control is an event described in
clauses (a)(2) or (a)(3) of the following paragraph; provided,
however, that each optionee holding an outstanding option in
the event of a Change in Control will have the right immediately
prior to such a Change in Control, regardless of whether such
option will terminate, to exercise his or her option in whole or
in part without regard to any limitations on exercisability and
thereafter such option will be considered fully vested.
A "Change in Control" will be deemed to have occurred
under the Plan when (a) there shall be consummated (1) any
reorganization, consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation, or
(2) any reorganization, consolidation or merger of the company
in which the Company is the continuing or surviving corporation
and pursuant to which shares of the Company's Class A Common
Stock and Class B Common Stock would be converted into cash,
securities or other property, or (3) any sale, lease exchange or
other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the
Company; (b) the stockholders of the Company approve a plan or
proposal for the liquidation or dissolution of the Company; or
(c) the Board of Directors of the Company or the Committee shall
have determined that such a "Change in Control" otherwise has
occurred.
These "Change in Control" provisions may have certain
anti-takeover effects. If a Change in Control occurs and
options issued under the Plan become immediately exercisable and
fully vested, such accelerated vesting could have the effect of
increasing the consideration a potential acquiror would have to
pay to acquire the Company since more shares and vested options
would be outstanding.
Amendment and Termination
The Board of Directors of the Company may suspend or
discontinue the Plan or revise or amend it in any respect
whatsoever, except that no such amendment may alter or impair
any rights or obligations under any option previously granted
under the Plan without the consent of the optionee.
Furthermore, without further stockholder approval, no such
amendment may increase the number of shares subject to the Plan
(except in the case of stock splits or similar changes in
capitalization), change the designation of the class of
employees eligible to receive options under the Plan, provide
for the grant of stock options having a purchase price less than
the fair market value on the date of grant, extend the term
during which stock options granted under the Plan may be
exercised, extend the date pursuant to which options under the
Plan may be granted, or otherwise amend the Plan in a way that
would require stockholder approval pursuant to Rule 16b-3 under
the Exchange Act.
Option awards may be made under the Plan until January
16, 2005, the date of termination of the Plan.
Certain Federal Income Tax Considerations
A recipient of a stock option will not have taxable
income upon the grant of the option. For options other than
incentive stock options, the optionee will recognize ordinary
income upon exercise in an amount equal to the excess of the
fair market value of the shares over the exercise price on the
date of exercise. Any gain or loss recognized upon any later
disposition of the shares generally will be capital gain or
loss.
Purchase of shares upon exercise of an incentive stock
option will not result in any taxable income to the optionee,
except for purposes of the alternative minimum tax. Gain or
loss recognized by the optionee on a later sale or other
disposition will either be long-term capital gain or loss or
ordinary income depending upon whether the optionee holds the
shares transferred upon the exercise for a specified period.
Any ordinary income recognized will be in the amount, if any, by
which the lesser of the fair market value of such shares on the
date of exercise or the amount realized from the sale exceeds
the option price.
The Company will be entitled to a tax deduction in
connection with an option under the Plan only in an amount equal
to the ordinary income realized by the participant at the time
the participant recognizes such income, provided that applicable
withholding requirements are met. In addition, section 162(m)
of the Internal Revenue Code limits the federal income tax
deductibility of compensation paid to the Company's Chief
Executive Officer and to each of the other four most highly
compensated executive officers. The Company generally may
deduct compensation paid to such an officer (including
compensation from options) only if the compensation does not
exceed $1 million during any fiscal year or meets certain other
requirements. At present, the Company believes that it will not
be affected by section 162(m) because no Company executive
currently receives compensation in excess of $1 million.
Required Vote
A vote FOR Proposal 3 by the holders of a majority of
the outstanding shares of the Company's Class A Common Stock and
Class B Common Stock, present at the Annual Meeting in person or
by proxy and voting together as a single class with holders of
the Class A Common Stock casting one vote per share and holders
of the Class B Common Stock casting ten votes per share, is
required to approve and adopt the Plan. Votes with respect to
the Plan will be cast as specified in the proxy. If no
specification is made, votes represented by proxy will be cast
FOR approval of the Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
PROPOSAL 3.
PROPOSAL 4 -- RATIFICATION OF ACCOUNTANTS
On January 23, 1994, the Company engaged Grant
Thornton as the Company's independent public accountant to audit
its financial statements for the years ended December 31, 1993
and 1994.
Representatives of Grant Thornton are expected to be
present at the Annual Meeting, will have an opportunity to make
a statement if they desire to do so, and will be available to
respond to appropriate stockholder questions.
Required Vote
A vote FOR Proposal 4 by the holders of a majority of
the outstanding shares of the Company's Class A Common Stock and
Class B Common Stock, present at the Annual Meeting in person or
by proxy and voting together as a single class with holders of
the Class A Common Stock casting one vote per share and holders
of the Class B Common Stock casting ten votes per share, is
required to approve and adopt the proposal. Votes with respect
to this proposal will be cast as specified in the proxy. If no
specification is made, votes represented by proxy will be cast
FOR the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
PROPOSAL 4.
STOCKHOLDER PROPOSALS
Any proposals of stockholders intended to be presented
at the 1996 annual meeting must be received by the Company by
December 21, 1995 in order to be included in the Company's proxy
materials relating to that meeting.
OTHER MATTERS
Management knows of no business other than that
mentioned above to be transacted at the Annual Meeting, but if
other matters are properly raised before the Annual Meeting it
is the intention of the persons named in the enclosed proxy, in
the absence of instructions to the contrary, to vote in regard
thereto in accordance with their judgment; discretionary
authority to do so is included in the proxy.
DOVER INVESTMENTS CORPORATION
1995 STOCK OPTION PLAN
(Effective January 17, 1995)
ARTICLE I
GENERAL
1. PURPOSE.
This 1995 Stock Option Plan (the "Plan") is intended to
contribute to maintaining the Company's performance by providing
certain officers and key employees of the Company with long-term
incentives in the form of options to purchase shares of the
Company's Class A Common Stock, $.01 par value per share (the
"Class A Common Stock"), Class B Common Stock, $.01 par value per
share (the "Class B Common Stock"), or any combination thereof.
2. ADMINISTRATION.
The plan shall be administered by the Compensation
Committee of the Board of Directors of the Company, a standing
committee (the "Committee"). The Committee shall from time to
time at its discretion make determinations with respect to the
officers and key employees of the Company to whom options shall be
granted and the amount of such options. The Committee shall
consist of not less than two (2) members of the Board of
Directors. Each member of the Committee shall be a "disinterested
person" within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended.
The interpretation and construction by the Committee of
any provisions of the Plan or of any option granted under it shall
be final. No member of the Committee shall be liable for any
action or determination made in good faith with respect to the
Plan or any option granted under it.
3. ELIGIBILITY.
Subject to Section 2 of this Article I, the persons who
shall be eligible to receive options under the Plan shall be such
officers and key employees (including directors who are also
salaried employees of the Company) of the Company as the Committee
shall select. The terms "officers and key employees" as used
herein shall mean officers and assistant officers, both elective
and appointive, presidents and general managers of divisions and
subsidiaries and such other key employees as may be determined by
the Committee in its sole discretion.
Except where the context otherwise requires, the term
"Company," as used herein, shall include (i) Dover Investments
Corporation and (ii) any of its "subsidiary corporations" which
meet the definition of subsidiary corporation contained in
Section 425(f) of the Internal Revenue Code of 1986, as amended,
as now in effect or as hereafter amended (the "Code"), and the
terms "officers and key employees of the Company," and words of
similar import, shall include officers and key employees of each
such subsidiary corporation, as well as officers and key employees
of Dover Investments Corporation.
4. SHARES OF STOCK SUBJECT TO THE PLAN.
The shares that may be issued under the Plan shall be
authorized and unissued or reacquired shares of the Company's
Class A Common Stock and Class B Common Stock. The aggregate
number of shares which may be issued under the Plan shall not
exceed 200,000 shares of Class A Common Stock, 200,000 shares of
Class B Common Stock or an aggregate of 200,000 shares of any
combination of shares of Class A Common Stock and Class B Common
Stock, unless an adjustment is required in accordance with
Section 3(I) of Article II hereof.
5. AMENDMENT OF THE PLAN.
The Board of Directors of the Company may, insofar as
permitted by law, from time to time, suspend or discontinue the
Plan or revise or amend it in any respect whatsoever, except that
no such amendment shall alter or impair any rights or obligations
under any option theretofore granted under the Plan without the
consent of the Person to whom such option was granted.
Furthermore, without further stockholder approval, no such
amendment shall increase the number of shares subject to the Plan
(except as authorized by Section 3(I) of Article II hereof),
change the designation in Section 3 of Article I of the class of
employees eligible to receive options under the Plan, provide for
the grant of stock options having a purchase price less than the
fair market value on the date of grant, extend the term during
which stock options granted under the Plan may be exercised,
extend the date pursuant to which options under the Plan may be
granted, or otherwise amend the Plan in a way that would require
stockholder approval promulgated under Rule 16b-3 under the
Securities Exchange Act of 1934, as amended.
6. TERM OF PLAN.
Awards may be made under the Plan until January 16,
2005, the date of termination of the Plan. Notwithstanding the
foregoing, all options granted under the Plan shall remain in
effect until such options have been satisfied by the issuance of
shares or terminated in accordance with their terms and the terms
of the Plan.
7. RESTRICTIONS.
All options granted under the Plan shall be subject to
the requirement that, if at any time the Committee shall
determine, in its discretion, that the listing, registration or
qualification of the shares subject to stock options granted under
the Plan upon any securities exchange or under any state or
federal law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or
in connection with, the granting of such option or the issue or
purchase of shares thereunder, such option may not be exercised in
whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.
8. NONASSIGNABILITY.
No stock option shall be assignable or transferable by
the grantee except by will or by the laws of descent and
distribution. During the life of the grantee, any stock options
which have been granted to the grantee shall be exercisable only
by the grantee.
9. WITHHOLDING TAXES.
Whenever under the Plan shares of Class A Common Stock,
Class B Common Stock or any combination thereof are to be issued,
the Company shall have the right to require the grantee to remit
to the Company an amount sufficient to satisfy federal, state and
local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares.
10. CERTAIN INFORMATION.
The Company shall provide to each optionee, during the
period that such optionee has one or more outstanding options,
copies of all annual reports and other information which are
provided to all stockholders of the Company. The Company shall
not be required to provide such information to key employees whose
duties in connection with the Company assure their access to
equivalent information.
ARTICLE II
STOCK OPTIONS
1. AWARD OF STOCK OPTIONS.
Awards of stock options may be made under the Plan. It
is intended that certain options granted pursuant to the Plan
shall constitute incentive stock options within the meaning of
Section 422 of the Code ("incentive stock options"), and that
certain options granted pursuant to the Plan shall not constitute
incentive stock options ("nonqualified stock options"). The
aggregate fair market value (determined at the time the option is
granted) of the stock with respect to which incentive stock
options are exercisable for the first time by such individual
during any calendar year (under all incentive stock option plans
of the individual's employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000. The date on
which an option is granted shall be the date of the Committee's
authorization of such grant or such later date as may be
determined by the Committee at the time such grant is authorized.
2. EFFECT OF TERMINATION OF OPTIONS.
In the event that any outstanding option under the Plan
terminates before it would otherwise have expired under its terms
or expires by its terms without being fully exercised, the shares
of Class A Common Stock, Class B Common Stock or any combination
thereof subject to such option not issued pursuant to the exercise
of such option shall again become available in the pool of shares
provided under the Plan.
3. TERMS AND CONDITIONS OF OPTIONS.
Stock options granted pursuant to the Plan shall be
evidenced by agreements in such form as the Committee shall from
time to time determine, which agreements shall comply with the
following terms and conditions:
(A) Optionee's Agreement
Each optionee shall agree to remain in the
employ of and to render to the Company his or her services for a
period of one (1) year from the date of the option, but such
agreement shall not impose upon the Company any obligation to
retain the optionee in its employ for any period.
(B) Number of Shares
Each option agreement shall state the class and
number of shares to which the option pertains.
(C) Option Price
Each option agreement shall state the option
price per share, which shall be not less than 100% of the fair
market value of the Class A Common Stock or Class B Common
Stock, as the case may be, on the date that the option is
granted. Notwithstanding the foregoing, the option price per
share of an incentive stock option granted to a person who,
on the date of such grant and in accordance with
Section 425(d) of the Code, owns stock possessing more than
10% of the total combined voting power of all classes of
stock of the Company shall be not less than 110% of the fair
market value of a shares of the Class A Common Stock or
Class B Common Stock, as the case may be, on the date that
the option is granted. Fair market value as used herein
shall be the mean of the closing sales prices of the Class A
Common Stock or Class B Common Stock, as the case may be, on
the Composite Tape for New York Stock Exchange--Listed Stocks
on the date that such option is granted or, if the option
date is not a trading date, the trading date next following
the option date. If the Class A Common Stock or the Class B
Common Stock is not listed on the New York Stock Exchange,
fair market value shall be the highest closing sales price on
the principal United States securities exchange registered
under the Securities Exchange Act of 1934, as amended, on
which such stock is listed, or, if such stock is not listed
on any such securities exchange, the highest closing sales
price or bid quotation with respect to a share of such stock
on the date such option is granted on the National
Association of Securities Dealers, Inc. Automated Quotations
System or any successor system or, if no such quotations are
available, the fair market value on the date in question of
a share of such stock as determined in good faith by the
Board of Directors.
(D) Medium and Time of Payment
The option price shall be payable upon the
exercise of an option in the legal tender of the United States or,
in the discretion of the Committee, in shares of the Class A
Common Stock, Class B Common Stock, in a combination of such
legal tender and such shares or in the form of such other
consideration (including, without limitation, promissory
notes). Upon receipt of payment, the Company shall deliver
to the optionee (or person entitled to exercise the option)
a certificate or certificates for the shares of Class A
Common Stock or Class B Common Stock, as the case may be, to
which the option pertains.
(E) Terms and Exercise of Option
Each option shall state the time or times when
it becomes exercisable, which shall be determined by the
Committee; provided, however, that, except as otherwise
provided herein, no option shall become exercisable until six
months has elapsed from the date of grant and no incentive
stock option shall become exercisable until one (1) year has
elapsed from the date of grant. The Committee may specify
such option exercise schedule, if any, for each option as it,
in its discretion, deems appropriate. To the extent that an
option has become exercisable, it may be exercised in whole
or in such lesser amount as authorized by the option
agreement. If exercised in part, the unexercised portion of
an option shall continue to be held by the optionee and may
thereafter be exercised as herein provided. Notwithstanding
any other provision of the Plan, no option granted under the
Plan shall be exercisable after the expiration of ten (10)
years from the date of its grant, subject, in the Committee's
discretion, to Section 3(H) of this Article II. In addition,
no incentive stock option granted under the Plan to a person
who, at the time such option is granted and in accordance
with Section 425(d) of the Code, owns stock possessing more
than 10% of the total combined voting power of all classes of
stock of the Company shall be exercisable after the
expiration of five (5) years from the date of its grant.
During the lifetime of the optionee, the option shall be
exercisable only by the optionee and shall not be assignable
or transferable by the optionee, and no other person shall
acquire any rights therein.
(F) Termination of Employment Except
Disability or Death
In the event that an optionee shall cease to be
employed by the Company for any reason other than the
optionee's death or disability, the optionee's option shall
terminate 30 days after the date of cessation of employment;
provided, however, that if such cessation of employment is
with the consent of the Board of Directors of the Company,
expressed in the form of a resolution, or is pursuant to the
optionee's retirement under the provisions of any pension,
profit sharing or other retirement plan of the Company then
in effect, such option may be exercised within three (3)
months after the date that he ceases to be an employee of the
Company, but only to the extent such option was exercisable
or would have been exercisable but for the existence of
earlier-granted incentive stock options on the date of such
cessation of employment; and, provided, further, that if such
cessation of employment occurs after a Change in Control (as
defined in Section 3(l)(i) of Article II hereof) and the
provisions of Section 3(l)(i) are applicable to such option,
such option shall terminate upon the earlier of 180 days
after the date of such cessation of employment or the
expiration date of such option.
(G) Disability of Optionee
If an optionee shall cease to be employed by the
Company by reason of the optionee becoming permanently and
totally disabled within the meaning of Section 22(e)(3) of
the Code and shall not have fully exercised the optionee's
option, such option may be exercised to the extent it was
exercisable immediately prior to the optionee's disability at
any time within one (1) year after cessation of employment
due to such disability.
(H) Death of Optionee and Transfer of
Option
If an optionee should die while in the employ of
the Company, or within a period of three (3) months after a
termination of the optionee's employment with the Company
during which the optionee is still permitted to exercise an
option in accordance with Subsection 3(F) of this Article II
and shall not have fully exercised the optionee's option,
such option may be exercised to the extent it was exercisable
immediately prior to the optionee's death at any time within
one (1) year after the optionee's death. Such option may be
exercised to the extent it was exercisable immediately prior
to the optionee's death by the executors or administrators of
the optionee's estate or by any person or persons who shall
have acquired the option directly from the optionee by the
optionee's will or the applicable law of descent and
distribution.
(I) Recapitalizations and Reorganizations
The number of shares of Class A Common Stock and
Class B Common Stock covered by the Plan, and each
outstanding option hereunder and the price per share thereof,
shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding shares of
Class A Common Stock and Class B Common Stock resulting from
a subdivision or consolidation of shares or the payment of a
stock dividend in excess of 2% or any other increase or
decrease in the number of issued and outstanding shares of
Class A Common Stock and Class B Common Stock effected
without receipt of consideration by the Company.
If the Company shall be the continuing or
surviving corporation in any reorganization, consolidation or merger,
each outstanding option shall pertain to and apply to the
securities, if any, to which a holder of the same number of
shares of Class A Common Stock and/or Class B Common Stock
that are subject to that option would have been entitled.
A "Change in Control" of the Company (as defined
below) shall cause each outstanding option to terminate,
unless any agreement relating to a Change in Control shall
otherwise provide or unless such Change in Control is an
event described in clauses (a)(2) or (a)(3) of the following
paragraph; provided, however, that each optionee holding an
outstanding option in the event of a Change in Control shall
have the right immediately prior to such a Change in Control,
regardless of whether such option will terminate, to exercise
his or her option in whole or in part without regard to any
limitations on exercisability and thereafter such option
shall be considered fully vested.
For the purposes hereof, a "Change in Control"
shall be deemed to have occurred when (a) there shall be
consummated (1) any reorganization, consolidation or merger
of the Company in which the Company is not the continuing or
surviving corporation, or (2) any reorganization,
consolidation or merger of the Company in which the Company
is the continuing or surviving corporation and pursuant to
which shares of the Company's Class A Common Stock and
Class B Common Stock would be converted into cash, securities
or other property, or (3) any sale, lease, exchange or other
transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of
the Company, or (b) the stockholders of the Company approve
a plan or proposal for the liquidation or dissolution of the
Company, or (c) the Board of Directors of the Company or the
Committee shall have been determined that such a "Change in
Control" otherwise has occurred.
To the extent that the foregoing adjustments in this
Section 3(I) relate to stock or securities of the Company,
such adjustments shall be made by the Committee, whose
determination in that respect shall be final, binding and
conclusive.
The grant of an option pursuant to the Plan
shall not affect in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations of
changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer
all or any part of its business or assets.
(J) Rights as a Stockholder
An optionee or a transferee of an option shall
have no rights as a stockholder with respect to any shares covered
by his or her option until the date of the receipt of payment
by the Company and the issuance of a stock certificate to him
or her for such shares pursuant to Section 3(D) of this
Article II. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which
the record date is prior to such date, except as provided in
Section 3(I) of this Article II.
(K) Modification, Extension and Renewal
of Options
Subject to the terms and conditions and within
the limitations of the Plan, the Committee may modify, extend,
renew or cancel outstanding options granted under the Plan.
Notwithstanding the foregoing, however, no modification of an
option shall, without the consent of the optionee, alter or
impair any right or obligations under any option theretofore
granted under the Plan.
(L) Other Provisions
The option agreements authorized under the Plan
shall contain such other provisions, including, without
limitation, restrictions upon the exercise of the option or
restrictions required by any applicable securities laws, as
the Committee, in its discretion, shall deem advisable.
4. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of
Class A Common Stock, Class B Common Stock or any combination
thereof pursuant to options will be used for general corporate
purposes.
5. NO OBLIGATION TO EXERCISE OPTION.
The granting of an option shall impose no obligation
upon the optionee to exercise such option.
