SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
Cox Technologies, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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COX TECHNOLOGIES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 3, 2000
TO THE SHAREHOLDERS:
Notice is hereby given that the next annual meeting of shareholders of
Cox Technologies, Inc. (the "Company") will be held at the Holiday Inn Airport,
2707 Little Rock Road, Charlotte, North Carolina on Friday, November 3, 2000, at
8:30 a.m. for the following purposes:
1. To elect seven directors, each to serve for a one-year term
expiring in 2001 or until their successors are elected and
qualified;
2. To approve the proposal for the Company's 2000 Stock Incentive
Plan;
3. To approve the proposal to authorize the reincorporation of the
Company in North Carolina;
4. To ratify the change in and the appointment of Cherry, Bekaert &
Holland, L.L.P. as certified independent public accountants for
the Company for the fiscal year ending April 30, 2001; and
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed October 12, 2000 as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
meeting. A list of such shareholders will be available for examination by a
shareholder for any purpose germane to the meeting during ordinary business
hours at the corporate office of the Company, 69 McAdenville Road, Belmont,
North Carolina, during the ten (10) business days prior to the meeting.
For the Board of Directors
/s/ James L. Cox
DR. JAMES L. COX
Chairman, President and
Chief Executive Officer
Dated: October 16, 2000
The form of proxy is enclosed to enable you to vote your shares at the
meeting. You are urged to mark, sign, date and return the proxy promptly in the
accompanying envelope. This is important whether you own few or many shares.
Delay in returning your proxy may subject the Company to additional expense. Any
person giving a proxy has the power to revoke it at any time prior to its
exercise, and if you attend the meeting in person, you may withdraw your proxy
and vote your shares in person if you so choose.
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COX TECHNOLOGIES, INC
69 McAdenville Road
Belmont, North Carolina 28012
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PROXY STATEMENT
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This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Cox Technologies, Inc. (the "Company")
for use at the annual meeting of shareholders of the Company to be held on
Friday, November 3, 2000, at 8:30 a.m., and at any adjournment thereof. Unless
the context requires otherwise, all references in this Proxy Statement to the
Company refer to Cox Technologies, Inc. and its subsidiaries. This Proxy
Statement and the accompanying proxy card are first being mailed to shareholders
on or about October 16, 2000.
Only shareholders of record at the close of business on October 12,
2000 are entitled to vote at the meeting. As of September 15, 2000, the Company
had outstanding 24,574,824 shares of Common Stock, which shares constitute the
only class of stock of the Company entitled to notice of, and to vote at, the
meeting. As of the same date, the Company had approximately 2,060 shareholders
of record.
HOW YOU CAN VOTE
All proxies that are properly executed and received prior to the
meeting will be voted at the meeting. If a shareholder specifies how the proxy
is to be voted on any of the business to come before the meeting, the proxy will
be voted in accordance with such specification. If no specification is made, the
proxy will be voted for the election of directors and the approval of proposals
two, three, four and five.
Under rules followed by the National Association of Securities Dealers,
Inc., brokers who hold shares in street name for customers have the authority to
vote on certain items when they have not yet received instructions from
beneficial owners. Brokers that do not receive instructions are entitled to vote
on the election of directors. With respect to the other proposals presented to
the shareholders, no broker may vote shares held for customers without specific
instruction from such customers. A majority of the total outstanding shares will
constitute a quorum at the meeting. Abstentions and broker non-votes are counted
for purposes of determining the presence or absence of a quorum for the
transaction of business.
REVOCATION OF PROXIES
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it at any time before its exercise. It may be revoked:
* by filing with the Secretary of the Company an instrument of
revocation;
* by presenting at the meeting a duly executed proxy bearing a
later date; or
* by attending the meeting and electing to vote in person.
REQUIRED VOTES
Directors are elected by a plurality of the votes cast by the holders
of the Common Stock of the Company at a meeting at which a quorum is present.
"Plurality" means that the individuals who receive the largest number of votes
cast are elected as directors up to the maximum number of directors to be chosen
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at the meeting. Pursuant to the provisions of Arizona General Corporation Law
and the Company's Bylaws, at each election for directors, every stockholder is
entitled to cumulative voting at such election and thus has the right to vote,
in person or by proxy, the number of shares owned by him for as many persons as
there are directors to be elected or to cumulate his or her votes by giving one
candidate as many votes as the number of such directors multiplied by the number
that his shares equal, or by distributing the voting of such shares on the same
principle among any number of such candidates. Consequently, any shares not
voted (whether by abstention, broker non-vote or otherwise) have no impact in
the election of directors except to the extent the failure to vote for an
individual results in another individual receiving a larger number of votes. The
affirmative vote of the holders of a majority of the shares present or
represented by proxy is required for any other proposals to be taken at the
meeting.
The present officers and directors of the Company, together are
entitled to vote shares of the Company's common stock representing approximately
20% of the outstanding shares of voting stock. The present officers and
directors have indicated their intent to vote in favor of the election of the
nominees for director and in favor of the other proposals described in this
proxy statement.
EXPENSE OF SOLICITATION
The cost of soliciting proxies will be borne by the Company, including
expenses incurred in connection with preparing and mailing this Proxy Statement.
The Company will request brokers and nominees to obtain voting instructions of
beneficial owners of stock registered in their name and will reimburse them for
related expenses, including charges for forwarding proxy material to the
beneficial owners of shares held in the name of a nominee. The Company may also
retain the services of a proxy solicitation firm. The Company has not made any
arrangements to do so as of the date of this Proxy Statement, and does not
presently have estimates as to the cost of such services. The Company expects to
solicit proxies primarily by mail, but certain officers and employees of the
Company may also solicit in person, by telephone, telegram or other means
without additional compensation for their services other than their regular
salaries.
SHAREHOLDER PROPOSALS AND NOMINATIONS
The 2001 Annual Meeting of Shareholders is tentatively scheduled to be
held on August 31, 2001. Any shareholder desiring to have a proposal included in
the Company's Proxy Statement for its 2001 Annual Meeting must deliver such
proposal no later than June 4, 2001.
The Board of Directors will consider nominees for the Board recommended
by shareholders. Recommendations by shareholders must be forwarded to the
Secretary of the Company and must identify the nominee by name and provide
pertinent information concerning his or her background and experience. A
shareholder recommendation must be received at least 90 days prior to the date
of the annual meeting of shareholders, which has regularly been held on the
second Saturday in November.
Shareholders should send their proposals and names of proposed nominees
to the attention of the Company's Secretary at the Company's corporate office,
69 McAdenville Road, Belmont, North Carolina 28012.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors currently serve a term of one year. At the
annual meeting, seven directors are to be elected to serve until the Company's
next annual meeting to be held in November 2001 or until their successors are
elected and qualified. They are Dr. James L. Cox, Brian D. Fletcher, Kurt C.
Reid, David K. Caskey, Uri M. Dahan, Dr. Michael E. Fonzo, and Dr. George M.
Pigott. Each of the seven nominees has consented to being named in the Proxy
Statement and to serve if elected. If, prior to the annual meeting, any one of
the nominees should become unable to serve, the proxies solicited hereby will be
voted for such additional person as shall be designated by the Board. The Board
of Directors recommends that the shareholders vote "FOR" the election of the
following nominees.
Set forth below is a table showing the names, ages, terms and positions
of the seven nominees for election.
DIRECTOR TERM
NAME AGE SINCE EXPIRES POSITION
---- --- ----- ------- --------
DAVID K. CASKEY 38 1997 2000 Director, Secretary and
Treasurer of the Company
DR. JAMES L. COX 56 1995 2000 Director, Chairman, President
and Chief Executive Officer
of the Company
URI M. DAHAN 40 1999 2000 Director, Senior Vice
President - Engineering of
the Company
BRIAN D. FLETCHER 38 2000 2000 Director, Chief Operating
Officer of the Company
DR. MICHAEL E. FONZO 61 1997 2000 Director
DR. GEORGE M. PIGGOT 72 1997 2000 Director
KURT C. REID 40 2000 2000 Director, Chief Operating
Officer of the Company
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BIOGRAPHY OF DIRECTOR NOMINEES
DAVID K. CASKEY has been the Secretary and Treasurer of the Company since 1996
and has been a director of the Company since November 1997. Mr. Caskey earned
his B.A. degree from Long Beach State University and has been with the Company
since 1987. Mr. Caskey is the brother-in-law of Dr. Cox.
DR. JAMES L. COX has served as President and Chief Executive Officer since
November 1997. Dr. Cox served as President and Chief Operating Officer from
August 1, 1995 to November 1997. In November 1998, Dr. Cox was elected Chairman
of the Board. Dr. Cox holds a Ph.D. from Stanford University and has held
various teaching and research positions with Duke University, Stanford Research
Institute and University of California, Santa Barbara.
URI M. DAHAN has been the Senior Vice President - Engineering of the Company
since October 1999 and has been a director of the Company since November 1999.
Since 1993, Mr. Dahan was a designer and engineer for manufacturing of
temperature monitoring systems. Mr. Dahan holds two engineering degrees, an M.S.
in Manufacturing from Boston University and a B.S. in Industrial Engineering
from Northwestern University.
BRIAN D. FLETCHER has been a Chief Operating Officer and a director of the
Company since March 2000. Since 1995, Mr. Fletcher has been a private investor.
Mr. Fletcher is a Managing Director of Technology Investors, LLC, a group that
has provided financing for the Company. He also serves as a director of Piedmont
Bank where he is Chairman of the Investment Committee and a member of the
Executive Committee and the Compensation Committee. Mr. Fletcher earned his B.S.
degree from Rockhurst College.
DR. MICHAEL E. FONZO has been a director of the Company since November 1997. Dr.
Fonzo is the director of International Sales of FAB-COM Machinery, a
manufacturer of textile finishing machinery. Dr. Fonzo attended Catholic
University, Chile, where he earned his M.S. degree.
DR. GEORGE M. PIGOTT has been a director of the Company since November 1997.
Since 1957 to the present, Dr. Pigott is President and a director of Sea
Resources Engineering, Inc. From 1985 to 1999, Dr. Pigott was Professor of Food
Engineering and was director of the Institute for Food Science and Technology,
School of Fisheries, College of Ocean and Fishery Sciences at the University of
Washington. Dr. Pigott is also a director of Classic Seafoods, Inc. and
Perfection Food, Inc.
KURT C. REID has been a Chief Operating Officer and a director of the Company
since March 2000. Since 1995, Mr. Reid has been a private investor. Mr. Reid is
a Managing Director of Technology Investors, LLC, a group that has provided
financing for the Company. Mr. Reid earned his B.S. degree from Southern
Illinois University at Carbondale.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Mr. Dahan and another senior executive of the Company, Mohamed Hassim,
Senior Vice President, Information Systems are involved in a pending lawsuit in
the U.S. District Court for the Western District of Washington State, Cause No.:
C99-1919C, entitled RYAN INSTRUMENTS, L.P. VS. FINCH SYSTEMS OF WINONA, INC., ET
al., filed on April 1, 1999. The plaintiff, Ryan Instruments, a competitor of
the Company, has claimed Sharpturn Technologies, Inc., one of the defendants in
the lawsuit, entered into a development agreement on May 22, 1998 with Ryan
Instruments to design, develop and test data loggers and an exclusive sales
agreement to sale the data loggers to Ryan Instruments. On March 29, 1999,
Sharpturn terminated the development agreement as a result of Ryan Instruments'
failure to make a requested payment. Also on March 29, 1999, Sharpturn ceased
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operations and terminated its employees, including Mr. Dahan and Mr. Hassim.
Ryan instruments claims exclusive intellectual property rights to the data
loggers developed by Sharpturn, and Sharpturn disputes Ryan Instruments claim to
the data logger technology. Mr. Dahan and Mr. Hassim have sought to dismiss the
suit for lack of personal jurisdiction. Sharpturn filed a Chapter 7 Petition in
the United States Bankruptcy Court in Massachusetts on July 29, 1999. The
Bankruptcy petition was dismissed on January 18, 2000. The Company has agreed to
pay all legal expenses associated with these proceedings. While management is
not certain of the outcome of these proceedings, the Company is of the opinion
that there will be no material adverse effect to the Company.
COMMON STOCK OWNERSHIP BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is the number of shares of Common Stock of the Company
owned by certain beneficial owners, the directors, the Chief Executive Officer,
the other executive officers named in the Summary Compensation Table, and the
directors and executive officers as a group, on September 15, 2000.
Percent
Name Shares (1) of Class
---- ---------- --------
David K. Caskey ....................................... 3,811 *
James L. Cox .......................................... 7,080,279(2) 20.8%
Uri M. Dahan .......................................... -- *
Robert W. Dupree ...................................... 704,000 2.1%
Brian D. Fletcher ..................................... 2,803,000(3) 8.4%
Michael E. Fonzo ...................................... 20,000 *
George M. Pigott ...................................... 20,000 *
Kurt C. Reid .......................................... 2,800,000(4) 8.4%
Technology Investors, LLC ............................. 2,000,000(5) 5.9%
Vitsab, AG ............................................ 3,203,196(6) 9.4%
Directors and executive officers
as a group (12 persons) ............................. 13,479,210(7) 40.6%
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* Indicates beneficial ownership of less than 1% of the shares of Common
Stock of the Company outstanding on September 15,2000.
(1) Includes shares, if any, held by each person's spouse.
(2) Dr. Cox owns 3,280,279 shares directly, and 800,000 shares are owned by a
trust over which Dr. Cox has investment and voting power. Includes a
warrant to purchase 2,500,000 shares. Includes options to purchase 500,000
shares.
(3) Mr. Fletcher owns 3,000 shares directly. Includes options to purchase
800,000 shares. Includes 2,000,000 shares beneficially owned through
Technology Investors, LLC.
(4) Mr. Reid has options to purchase 800,000 shares. Includes 2,000,000 shares
beneficially owned through Technology Investors, LLC.
(5) The address for Technology Investors, LLC is 191 Bridgeport Drive,
Mooresville, North Carolina.
(6) The address for Vitsab, AG is Stenxegatan 21, S-213 76 Malmo, Sweden.
(7) Includes warrants and options to purchase 8,632,500 shares.
THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of the
Board. The Board meets regularly during the year to review the Company's
operations, strategic and business plans, major capital appropriations and other
significant developments affecting the Company and to act on matters requiring
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Board approval. It also holds special meetings when important matters require
Board action. Members of senior management attend Board meetings on an as needed
basis to discuss the progress and plans relating to their areas of
responsibility. During the fiscal year ended April 30, 2000, there were 2
meetings of the Board. Each incumbent director attended at least 75 percent of
the aggregate of the number of board meetings.
There are no standing committees of the Board of Directors.
COMPENSATION OF DIRECTORS
During fiscal 2000, the Board of Directors was not compensated for
their services. All directors are reimbursed in cash for their reasonable
out-of-pocket expenses incurred in connection with their attendance at Board
meetings. Directors who are employees of the Company do not receive compensation
for service on the Board other than their compensation as employees.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than 10% of the Company's Common Stock, to file with the Securities and
Exchange Commission reports of ownership and changes in ownership of Common
Stock. Officers, directors and greater than 10% beneficial owners are required
by Securities and Exchange Commission regulation to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on review of the copies of such reports furnished to the
Company, the Company is not aware of any failure to file on a timely basis any
Form 3, 4 or 5 during fiscal 2000, except as set forth in this paragraph. Each
of Mr. Mason, Mr. Thornton, Mr. McCue and Mr. Hassim has filed one late report
on Form 3. Mr. Caskey has filed one late report on Form 4, and Dr. Fonzo has not
timely filed one or more reports on Form 4.
EXECUTIVE COMPENSATION
The Summary Compensation Table below includes compensation paid by the
Company for services rendered for the fiscal years ended April 30, 2000, 1999
and 1998 for the Chief Executive Officer and Chief Financial Officer as
determined by total salary and bonus payments. No other officer received
compensation in excess of $100,000, and the Company does not currently have a
stock option plan or any long-term incentive plans.
REPORT OF BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Company's Board of Directors approves all compensation decisions
with regard to executive officers, including the Chief Executive Officer. The
Board is responsible for the establishment of all compensation and benefit
programs, as well as the overall monitoring of those programs. The Company's
compensation philosophy and executive compensation programs are discussed in
this report.
Executive Compensation Philosophy. In general, executive officers who
are in a position to make a substantial contribution to the success and growth
of the Company should have interests similar to those of the shareholders.
Executive officers should be motivated by and benefit from increased shareholder
value. Therefore, the Company believes that executive officers should hold a
meaningful equity position in the Company through the purchase of common stock
or the award of options to purchase common stock. The Company's Board of
Directors believes that the executive compensation program must be competitive
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with those of other companies of comparable size and complexity in order to
attract, retain and motivate talented individuals.
Executive Compensation Program. The Company's compensation program has
consisted of base salary. The Board of Directors has approved, and are
submitting a proposal to create long-term incentives, generally in the form of
options to purchase common stock.
Base Salary. The Board of Directors generally reviews and determines
the relative levels of base salary for executive officers on an annual basis. In
determining the levels of base salary for an executive officer, except with
respect to the Chief Executive Officer, the Board of Directors considers
relative levels of responsibility and individual and Company performance. The
Board believes that base salaries of the Company's executive officers are below
average relative to its national and regional peer companies. As the Company
continues its growth, the Board will continue to review the base salary levels
of executive management to bring them more in line with national and regional
peer companies.
Chief Executive Officer Compensation. Dr. Cox served as Chief Executive
Officer in fiscal year 2000. The Board of Directors determined Dr. Cox's base
salary after evaluating a number of factors, including salaries of chief
executive officers of companies of comparable size in the industry, his
performance and the Company's performance generally. Dr. Cox's base salary in
fiscal 2000 was $134,575.
Dr. Cox's base salary and annual incentive award for future years will
be determined by a Compensation Committee based upon such factors as the
Compensation Committee deems to be appropriate.
COMPENSATION MEETING INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended April 30, 2000, Dr. Cox and Mr. Dupree
participated in deliberations of the Board of Directors concerning executive
officer compensation.
SUMMARY COMPENSATION TABLE
Annual Compensation
------------------------ All Other
Name and Principal Position Year Salary Bonus Compensation (1)
--------------------------- ---- ------ ----- ----------------
James L. Cox 2000 $134,575 $ -- $2,679
Chairman, President and 1999 133,000 -- --
Chief Executive Officer 1998 100,000 2,594 --
Robert W. Dupree 2000 100,000 -- --
Chief Financial Officer 1999 100,000 -- --
1998 100,000 -- --
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(1) For the years indicated, consists of contributions by the Company to the
executive's account under the Company's tax-qualified Section 401-K
retirement plan.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 2000 the Company entered into an agreement with Technology
Investors, LLC ("TI") whereby the Company issued to TI a 10% subordinated
convertible promissory note due March 2005 in the amount of $2,500,000 for cash.
The principal amount of the note and interest accrued thereon are convertible,
at the option of holder into 2,000,000 shares of the Company's Common Stock at a
conversion price of $1.25 per share. Two individuals, Mr. Brian D. Fletcher and
Kurt C. Reid are the sole managers of TI and share voting and dispositions power
with respect to the Common Stock issuable upon conversion of the note. In
connection with TI's purchase of the note, Mr. Fletcher and Mr. Reid each
received an option to purchase notes with terms substantially similar to those
of the note referred to above in the aggregate principal amount of up to
$500,000. In addition, Mr. Fletcher and Mr. Reid were named directors of the
Company. The Company has agreed to nominate Mr. Fletcher and Mr. Reid for three
consecutive terms on the Board of Directors.
Mr. Fletcher and Mr. Reid were also both retained as consultants to the
Company. In connection for their services they each will receive compensation of
$1 annually and immediately exercisable options to purchase 300,000 shares of
Common Stock at an exercisable price of $1.25 per share for a period of up to 10
years.
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PERFORMANCE GRAPH
The line graph set forth below charts performance (on an annual basis)
of an investment in the Company's Common Stock against each of the NASDAQ
Composite Index, an SIC Code Index and Berry Petroleum Company's Common Stock,
in each case assuming an investment of $100 on April 30, 1995 through April 30,
2000. The following graph is presented pursuant to rules of the Securities and
Exchange Commission. The Company will discontinue using the Berry Petroleum
Company Common Stock as a comparison as the Company is of the opinion that this
entity is not a valid comparison. The Company will now compare its performance
against the SIC Code Index, to which it belongs, as the Company is of the
opinion that this is a more meaningful measure. The stock price performance
comparisons below shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended, except to the extent that the Company specifically
incorporates this graph by reference, and shall not otherwise be deemed filed
under such acts. While total stockholder return is an important criterion of
corporate performance, it is subject to the vagaries of the equity market, which
affect common stock price performance. There can be no assurance that the
Company's Common Stock price performance will continue into the future with the
same or similar trends depicted in the graph below. As of April 28, 2000, the
closing price of the Company's Common Stock was $1.50. As of September 28, 2000,
the closing price of the Company's Common Stock was $1.03.
Cumulative Total Return
-------------------------------------------
4/95 4/96 4/97 4/98 4/99 4/00
---- ---- ---- ---- ---- ----
Cox Technologies, Inc. $100 $136 $152 $164 $244 $600
NASDAQ Composite Index $100 $142 $150 $223 $300 $457
SIC Code Index $100 $124 $147 $183 $185 $178
Berry Petroleum Company $100 $129 $159 $168 $145 $187
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PROPOSAL NO. 2
PROPOSAL TO APPROVE THE 2000 STOCK INCENTIVE PLAN
INTRODUCTION
There will be presented to the annual meeting a proposal that the
shareholders approve the 2000 Stock Incentive Plan. The purpose of the 2000
Stock Incentive Plan is to further the long term stability and financial success
of the Company by attracting and retaining employees and consultants through the
use of stock-based incentives, and to provide non-employee members of the
Company's Board of Directors with an additional incentive to promote the success
of the Company. The 2000 Stock Incentive Plan is set forth as Appendix A. The
following summary of the 2000 Stock Incentive Plan is qualified in its entirety
by reference to Appendix A.
ELIGIBILITY
All present and future employees and consultants of the Company that
the Compensation Committee determines to have contributed or who can be expected
to contribute significantly to the Company will be eligible to receive incentive
awards under the 2000 Stock Incentive Plan. Non-employee directors of the
Company are eligible to receive nonqualified stock options under the Plan.
The Compensation Committee has the power and complete discretion to
select eligible employees and consultants to receive awards, and to determine
the type, terms and conditions of the awards. The Compensation Committee may
delegate to the Executive Committee of the Company's officers (or the President
of the Company if the Executive Committee ceases to exist) the power to select
which employees will receive awards, the type of awards, the time when awards
are granted, the number of shares of Common Stock allocated to awards and the
terms of awards, except to the extent that such a delegation would prevent
compliance with applicable federal securities or tax laws, or other applicable
laws or regulations. Action taken by the Executive Committee of the Company's
officers (or the President) pursuant to such a delegation must be ratified by
the Compensation Committee. The Company has not determined how many employees or
consultants would currently be eligible to receive awards under the 2000 Stock
Incentive Plan. The Company currently has two non-employee directors who would
be eligible to receive nonqualified stock options, as described below.
AMOUNT OF STOCK AVAILABLE FOR AWARDS
The number of shares of the Company's Common Stock for which incentive
awards may be granted under the 2000 Stock Incentive Plan is limited to
8,000,000, which is approximately 33% of the number of shares outstanding at
September 15, 2000. This limit, the option exercise prices, the terms of
incentive awards and the number of shares subject to outstanding options, will
be appropriately adjusted by the Compensation Committee for stock dividends,
stock splits, recapitalization, mergers, combinations of shares and other
changes affecting the Company's Common Stock. Shares subject to options that
expire or terminate without being exercised may again be subjected to incentive
awards under the 2000 Stock Incentive Plan. Stock options, stock appreciation
rights and restricted stock may be granted under the 2000 Stock Incentive Plan.
No more than 800,000 shares of common stock may be allocated to the options or
stock appreciation rights that are granted to any individual employee during any
single taxable year of the Company.
The Company's Common Stock is listed on NASDAQ over-the-counter
bulletin board. On September 28, 2000 the closing price of the Company's Common
Stock was $1.03.
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STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Compensation Committee may grant stock options to eligible
employees and consultants, and establish the terms and conditions for exercising
a stock option. Stock options may be either incentive stock options (which are
subject to favorable tax treatment under Section 422 of the Internal Revenue
Code of 1986, as amended) or non-qualified stock options (which are not subject
to such treatment). Incentive stock options may be granted to employees. Stock
appreciation rights may be granted with respect to all or any part of a stock
option, and also are subject to terms and conditions set by the Compensation
Committee. Stock appreciation rights may be granted in connection with a stock
option or in a separate incentive award. Stock appreciation rights may only be
granted to employees.
The exercise price of a nonqualified stock option granted to an
employee must be at least 85% of (i) the closing price of the Company's Common
Stock on the date of determination if the stock is traded on a national
securities exchange or quoted on the Nasdaq National Market, (ii) the average of
the closing bid and asked prices per share for the Company's Common Stock on the
date of determination if the stock is not listed on a national exchange or
quoted on the Nasdaq National Market, or (iii) by the Committee in good faith if
none of the above are applicable (the "Fair Market Value"). The exercise price
of an incentive stock option must be at least 100% of the Fair Market Value (or
110% of Fair Market Value in the case of a grant to an employee who is a 10%
shareholder of the Company). The value of incentive stock options that can be
exercised by an employee in any calendar year is limited to $100,000.
The Compensation Committee may grant a stock appreciation right in
connection with all or any part of a stock option. A stock appreciation right
entitles the employee to receive an amount equal to the excess of (i) the Fair
Market Value of the Common Stock covered by the stock appreciation right over
(ii) the price of the Common Stock on the date of the stock appreciation right
was granted. The stock appreciation right can be paid in stock or cash, or both.
The 2000 Stock Incentive Plan also provides that, subject to
shareholder approval, each non-employee director of the Company will receive an
option to purchase 7,500 shares on November 3, 2000 and an option to purchase
7,500 shares at each annual Board of Directors meeting thereafter. Each person
who becomes a non-employee director after November 3, 2000 will receive a
nonqualified option as of the date they become a director for a number of shares
of Common Stock to be determined by the Board in its discretion. The exercise
price of the options per share will be 100% of the Fair Market Value of the
Common Stock.
If an optionee ceases to serve as a director of the Company after the
option becomes exercisable in whole or in part, the option will terminate ninety
(90) days after the date of termination of the director's service as a director,
or on expiration of the option, whichever is earlier. However, an option
transferred on account of a director's death may be exercised by the director's
personal representative during the one year period following his or her death to
the extent the option was exercisable as of the date of his or her death or on
expiration of the option, whichever is earlier.
RESTRICTED STOCK
The Compensation Committee may also grant shares of common stock that
are subject to certain terms and conditions (the "Restricted Stock"). Employees
who receive Restricted Stock may not sell or transfer the Restricted Stock until
the restrictions have been met, and if the restrictions are not met, the
Restricted Stock will be forfeited. Unless otherwise provided in the Restricted
Stock Agreement, a stockholder's agreement or any other agreement, a holder of
Restricted Stock will have all the rights of a Company shareholder holding the
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same class or series of common stock, including the right to vote the shares and
the right to receive cash dividends and distributions.
FEDERAL INCOME TAX CONSEQUENCES
A participant generally will not incur federal income tax when he or
she is granted a nonqualified stock option, an incentive stock option or a stock
appreciation right. Upon exercise of a nonqualified stock option or a stock
appreciation right, the participant will be treated in most circumstances, as
having received ordinary income equal to the difference between the fair market
value of the common stock on the date of the exercise and the exercise price.
This income is subject to income tax withholding by the Company. When a
participant exercises an incentive stock option, he or she generally will not
recognize taxable income, unless the participant is subject to the alternative
minimum tax, subject to satisfying applicable holding period requirements.
A participant will generally not incur federal income tax when he or
she is granted restricted stock. When the restrictions imposed on the restricted
stock lapse, the participant will be treated as having received ordinary income
equal to the fair market value of the restricted stock on the date the
restrictions lapsed. A participant may make a special election under the Code to
be taxed on the fair market value of the restricted stock at the time the
restricted stock is granted. If such an election is made, the participant
generally will not be taxed when the restrictions on the restricted stock later
lapse. Income recognized by a participant in connection with restricted stock is
subject to income tax withholding by the Company.
The Company usually will be entitled to a business expense deduction at
the time and in the amount that the recipient of an award recognizes ordinary
income. As stated above, this usually occurs upon exercise of nonqualified stock
options and stock appreciation rights, and upon the lapse of restrictions on
restricted stock. No deduction is allowed in connection with an incentive stock
option unless the employee disposes of the common stock received upon exercise
in violation of certain holding period requirements. There also may be
circumstances when a deduction is not allowed for certain transfers of common
stock or payments to participants upon the exercise of an award that has been
accelerated as a result of a change of control.
Section 162(m) of the Code imposes a $1,000,000 limit on the amount of
the annual compensation deduction allowable to publicly-held company with
respect to its CEO and each of its other four most highly compensated officers.
An exception to this limit is provided for performance-based compensation if
certain requirements are met. The 2000 Stock Incentive Plan permits the
Compensation Committee to grant nonqualified stock options and stock
appreciation rights that will qualify for this exception from the deduction
limit, as will incentive stock options to the extent ordinary income is
recognized under such options.
This summary of federal income tax consequences of stock options, stock
appreciation rights and restricted stock is not complete. State, local and
federal income taxes may also be applicable to these transactions.
ADMINISTRATION
The Compensation Committee will administer the 2000 Stock Incentive
Plan. The 2000 Stock Incentive Plan may be terminated, modified or amended by
the shareholders of the Company. The Board of Directors may also terminate the
2000 Stock Incentive Plan or modify or amend it in certain respects as set forth
in the 2000 Stock Incentive Plan. The plan will terminate automatically on
November 1, 2010.
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2000 STOCK INCENTIVE PLAN BENEFITS
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES EXERCISE PRICE PER
UNDERLYING INITIAL UNDERLYING ANNUAL SHARE OF OPTION
NAME AND POSITION AUTOMATIC OPTION GRANT AUTOMATIC OPTION GRANT GRANT ($)
----------------- ---------------------- ---------------------- ---------
<S> <C> <C> <C>
Dr. Michael E. Fonzo 7,500 7,500 (1)
Dr. George M. Piggot 7,500 7,500 (1)
Non-Employee Director Group 15,000 15,000 (1)
</TABLE>
----------
1. The exercise price will be the Fair Market Value of the Company's Common
Stock on the date of grant of the option.
The Board recommends a vote "FOR" Proposal No. 2.
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PROPOSAL NO. 3
PROPOSAL TO REINCORPORATE THE COMPANY
IN NORTH CAROLINA
INTRODUCTION
The Board of Directors has unanimously approved and recommends for
shareholder approval, the change of the Company's state of incorporation from
Arizona to North Carolina. The Board of Directors believes the change in
domicile to be in the best interests of the Company and its shareholders as the
Company's principal offices are in North Carolina. The transaction will not
result in any change in the business, management, assets, liabilities or net
worth of the Company. The proposed transaction and its effects are summarized
below.
THE REINCORPORATION MERGER
The proposed reincorporation would be accomplished by merging the
Company (the "Arizona Company") into a newly-formed North Carolina corporation
which, just before the merger, will be a wholly owned subsidiary of the Company
(the "North Carolina Company"), pursuant to an Agreement and Plan of Merger (the
"Merger Agreement"), a copy of which is attached as Appendix B hereto. On the
effective date of the merger, the North Carolina Company's name will be changed
from "Cox Merger Sub, Inc." to "Cox Technologies, Inc."
The reincorporation will not result in any change in the Company's
business, assets, liabilities or management, will not cause its principal
facilities to be moved and will not result in any relocation of management or
other employees.
The reincorporation will not result in a change in any shareholder's
pro rata ownership of the Company. Following the effectiveness of the proposed
reincorporation, each outstanding share of common stock of the Arizona Company
will automatically convert into one share of common stock of the North Carolina
Company, and shareholders of the Arizona Company will automatically become
shareholders of the North Carolina Company. On the effective date of the
reincorporation, the number of outstanding shares of common stock of the North
Carolina Company will be equal to the number of shares of common stock of the
Arizona Company outstanding immediately prior to the effective date of the
reincorporation.
In addition, each outstanding option or right to acquire shares of
common stock of the Arizona Company will be converted into an option or right to
acquire an equal number of shares of common stock of the North Carolina Company,
under the same terms and conditions as the original options or rights. All of
the Arizona Company's employee benefit plans, including the 2000 Stock Incentive
Plan if approved by the shareholders at the annual meeting, will be continued by
the North Carolina Company following the reincorporation. Shareholders should
note that approval of the proposed reincorporation will constitute approval of
the adoption and assumption of those plans by the North Carolina Company.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY TO EXCHANGE
THEIR EXISTING STOCK CERTIFICATES FOR CERTIFICATES OF THE NORTH CAROLINA
COMPANY; OUTSTANDING STOCK CERTIFICATES OF COX TECHNOLOGIES, INC. SHOULD NOT BE
DESTROYED OR SENT TO THE COMPANY.
The common stock of the Company will continue to be traded on the OTC
Bulletin Board, and the existing stock certificates will be considered as
constituting "good delivery" in transactions subsequent to the reincorporation.
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Under Arizona law, the affirmative vote of a majority of all votes
entitled to be cast by the holders of the outstanding shares of the Company's
capital stock is required for approval of the reincorporation. If approved by
the shareholders, it is anticipated that the reincorporation would be completed
as soon thereafter as practicable. The reincorporation may be abandoned or the
Merger Agreement may be amended (with certain exceptions), either before or
after shareholder approval has been obtained, if in the opinion of the Board of
Directors, circumstances arise that make such action advisable; provided that
any amendment that would effect a material change from the charter provisions
discussed in this proxy statement would require further approval by the holders
of a majority of the outstanding shares of the Company's capital stock.
SIGNIFICANT CHANGES CAUSED BY REINCORPORATION
In general, the Company's corporate affairs are governed at present by
the corporate law of Arizona, the Company's state of incorporation, and by the
Company's Articles of Incorporation and the Bylaws, which have been adopted
pursuant to Arizona law (the "Arizona Articles" and the "Arizona Bylaws"). The
Company's Arizona Articles and Arizona Bylaws are available for inspection
during business hours at the principal executive offices of the Company. In
addition, copies may be obtained, free of charge, by writing to the Company at
69 McAdenville Road, Belmont, North Carolina 28012, Attention: Corporate
Secretary, or by calling (704) 825-8146, ext. 277.
If the reincorporation proposal is adopted, the Arizona Company will
merge into, and its business will be continued by, the North Carolina Company.
Following the merger, issues of corporate governance and control would be
controlled by North Carolina, rather than Arizona law. The Arizona Articles and
Arizona Bylaws, will, in effect, be replaced by the Articles of Incorporation of
the North Carolina Company (the "North Carolina Articles") and the Bylaws of the
North Carolina Company (the "North Carolina Bylaws"), copies of which are
attached to this Proxy Statement as Appendices C and D hereto. Accordingly, the
differences among these documents and between North Carolina and Arizona law are
relevant to your decision whether to approve the reincorporation proposal.
A number of differences between Arizona and North Carolina law and
among the various governing corporate documents are summarized below.
Shareholders are requested to read the following summary in conjunction with the
Merger Agreement, the North Carolina Articles and the North Carolina Bylaws
attached to this proxy statement.
PREFERRED STOCK
Both the Arizona Articles and the North Carolina Articles provide that
the Company shall have the authority to issue 100,000,000 shares of common
stock. The North Carolina Articles also provide that the Company shall have the
authority to issue 20,000,000 shares of preferred stock. The Arizona Articles
contain no such provision. The North Carolina Articles further provide that the
Board of Directors may determine, in whole or in part, the preferences,
limitations and relative rights (within the limits set forth by the North
Carolina Business Corporation Act) of (a) any class of shares before the
issuance of any shares of that class, or (b) one or more series within a class
before the issuance of any shares of that series. Thus, the Board of Directors
shall have the sole discretion and authority without the approval of the
shareholders to establish different series of preferred stock and may attach any
preferences or limitations or rights for each series as the Board of Directors
may deem advisable. This will allow the Board of Directors to establish terms
for a specific series of preferred stock that ordinarily would require your
approval for the proposed amendment and in some circumstances, might (a) confer
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upon you dissenters' rights if the proposed amendment were submitted for your
approval or (b) make a proposed hostile acquisition of the Company more
difficult.
ELECTION OF DIRECTORS
Arizona law requires cumulative voting in the election of directors and
permits classification of the Board of Directors if provided in the Articles of
Incorporation. As a result of cumulative voting, shareholders holding a
significant minority percentage of the outstanding shares entitled to vote in
the election of directors may be able to ensure the election of one or more
directors. The Arizona Bylaws provide that the number of directors shall be not
less than two and not more than fifteen, with the exact number being fixed by
the Board of Directors. For example, in the current situation of the Company
whereby the election of seven directors is sought under Arizona law, those
shareholders holding in the aggregate at least 14.28% of the outstanding voting
stock (assuming all shares of voting stock are voted) could, through the
concentration of their votes, assure the election of one director. If only 70%
of the shares of outstanding voting stock are voted, those shareholders holding
in the aggregate at least 10% of the outstanding voting stock could, through the
concentration of their votes, assure the election of one director.
Under North Carolina law, cumulative voting is not required. The North
Carolina Articles do not provide for cumulative voting. As a result, the holder
or holders of a majority of the shares entitled to vote in an election of
directors will be able to elect all directors then being elected, and holders of
a substantial number of shares of voting stock, perhaps as many as 49.9% of the
outstanding shares entitled to vote in the election of directors, may not have
enough voting power to elect any directors.
LIMITATION ON LIABILITY
Both North Carolina and Arizona law provide that a director is not
liable for any action taken as a director, or any failure to take any action, if
the director's duties were performed in good faith, with the care an ordinarily
prudent person in a like position would exercise under similar circumstances,
and in a manner reasonably believed to be in the best interests of the
corporation. Also, both Arizona and North Carolina law provide that a
corporation's articles of incorporation may include a provision limiting or
eliminating the personal liability of a director for monetary damages for breach
of any duty as a director, except for certain enumerated actions including
unlawful distributions and transactions from which the director derived an
improper personal benefit. The Arizona Articles contain no such provision, but
the North Carolina Articles provide that a director of the Company shall not be
personally liable for monetary damages for breach of any duty as a director
except and only to the extent applicable law restricts the effectiveness of such
provision.
INDEMNIFICATION
Both Arizona law and North Carolina law provide that a corporation may
indemnify a director or officer of the corporation, or a person who was serving
at the corporation's request as a director, officer, partner, trustee, employee
or agent of another enterprise or employee benefit plan, provided that the
person (a) acted in good faith, (b) reasonably believed, in the case of conduct
in his official capacity with the corporation, that the conduct was in the best
interests of the corporation and, in all other cases, that his conduct was at
least not opposed to the corporation's best interests, and (c) in the case of
criminal proceedings, had no reasonable cause to believe the conduct was
unlawful. No indemnification of an officer or director may be made in connection
with a proceeding (i) by or in the right of the corporation in which the person
has been adjudged to be liable to the corporation, except for reasonable
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expenses incurred in connection with the proceeding or (ii) in connection with
any other proceeding in which the person was adjudged liable on the basis that a
financial benefit was improperly received by such person.
Under both Arizona and North Carolina law, to the extent that an
officer or director has been successful in the defense of the proceeding, he
must be indemnified by the corporation for expenses reasonably and actually
incurred. Under Arizona law (but not under North Carolina law), special rules
apply to "outside directors" who are neither officers, directors nor
five-percent shareholders. Unless a court has determined before payment that an
outside director failed to meet the statutory standard of conduct, an outside
director must be indemnified against liability and his expenses must be paid in
advance of a final disposition upon receipt from such outside director of a
written affirmation of his good faith belief that he has met the statutory
standard of conduct and an undertaking to repay the advance if it is ultimately
determined that he did not meet such standard.
Unless ordered by a court that the person is entitled to mandatory
indemnification, or that such person is entitled to indemnification whether or
not he has met the statutory standard of conduct or has been adjudged liable (in
which case court ordered indemnification is limited to reasonable expenses),
indemnification may be made under both Arizona and North Carolina law only upon
a determination that the person has met the statutory standard of conduct. This
determination is made by (i) a majority vote of the directors not at the time
parties to the proceeding, (ii) special legal counsel appointed by majority vote
of the disinterested directors, or, if there are no disinterested directors, by
majority vote of the board, or (iii) by the shareholders, provided that shares
owned by or voted under the control of directors who are at the time parties to
the proceeding shall not be voted on the determination.
North Carolina law provides that, unless the articles of incorporation
state otherwise, an officer of the corporation is entitled to mandatory
indemnification and is entitled to apply for court-ordered indemnification, in
each case to the same extent as a director. In addition, neither Arizona nor
North Carolina law limits a corporation's power to further indemnify and advance
expenses to employees, agents or officers who are not acting as directors,
subject to certain limitations.
Both the Arizona and the North Carolina Bylaws provide that directors
and officers of the Company shall have a right to be indemnified to the fullest
extent permitted by law.
SPECIAL MEETINGS OF SHAREHOLDERS
Arizona law provides that special meetings of the shareholders of a
corporation other than an "issuing public corporation" may be called by the
board of directors or such other persons as may be authorized in the articles of
incorporation or the bylaws. Arizona law provides that special meetings of the
shareholders of an "issuing public corporation" may be called by the president,
the secretary or two or more directors, by any person authorized in the articles
of incorporation or bylaws to call special meetings or by a shareholder or
shareholders holding 10% or more of the voting power of all shares, except that
a special meeting for the purpose of considering any action to directly or
indirectly facilitate or effect a "business combination" (as defined in the
Arizona law), including any action to change or otherwise affect the composition
of the board of directors for that purpose, must be called by 25% or more of the
voting power of all shares. An "issuing public corporation" is defined in the
Arizona law as a corporation that has a class of equity securities registered
pursuant to Section 12 of the Exchange Act of 1934 or is subject to Section
15(d) of the Exchange Act or has elected to be treated as an issuing public
corporation and which either (i) is incorporated under the laws of Arizona; or
(ii) has its principal place of business or its principal executive office
located in Arizona and owns or controls assets located within Arizona that have
a fair market value of at least $1 million and has more than 500 employees
residing in Arizona. The Company is an issuing public corporation.
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The Arizona Bylaws provide that special meetings of the shareholders
may be called by the Board of Directors, the Chairman of the Board, the
President of the Company or by the written demand of the holders of ten percent
(10%) of all issued and outstanding shares of stock, regardless of class.
Under North Carolina law a special meeting of the shareholders may be
called (a) by the board of directors or such person or persons as may be
authorized by the articles of incorporation or the bylaws, or (b) within 30 days
after written demand by the holders of at least ten percent (10%) of all the
votes entitled to be cast on any issue proposed to be considered at the proposed
special meeting, except however that, unless otherwise provided in the articles
of incorporation or bylaws, the call of a special meeting by shareholders is not
available to the shareholders of a public corporation.
The North Carolina Bylaws provide that special meetings of the
shareholders may be called only by the Board of Directors, the Chairman of the
Board or the President of the Company.
LIMITATION ON SHARE REPURCHASE
Under Arizona law, an issuing public corporation may not purchase or
agree to purchase any shares from a beneficial owner of more than 5% of the
voting power of the issuing public corporation for more than the "average market
price" (as defined) of the shares if the shares have been beneficially owned by
the beneficial owner for less than three years unless either (i) the purchase or
agreement to purchase is approved at a meeting of shareholders by the
affirmative vote of the holding of a majority of the voting power of all shares
excluding shares beneficially owned by the beneficial owner or its affiliates or
associates or by any officer or director of the issuing public corporation; or
(ii) the issuing public corporation makes an offer, of at least equal value per
share, to all holders of shares of such class or series and to all holders of
any class or series into which the shares may be converted. North Carolina law
does not contain a similar provision.
COMPENSATION AGREEMENTS
Arizona law provides that during any tender offer or request or
invitation for tenders of any class or series of shares of an issuing public
corporation, the issuing public corporation may not enter into or amend
agreements containing the provisions that increase the current or future
compensation of any officer or director of the issuing public corporation, other
than routine increases in compensation or other routine compensation agreements
undertaken in the ordinary course of the issuing public corporation's business.
North Carolina law does not contain a similar provision.
CONTROL SHARE ACQUISITIONS
Arizona law and North Carolina law each contain a provision (the
"Control Share Acquisitions Provision") that generally apply when any person or
group of persons (a "Purchasing Person") acquires shares of an issuing public
corporation that, when added to all other shares of the corporation beneficially
owned by the Purchasing Person, would result in the percentage of the
corporation's voting power that the Purchasing Person is entitled to exercise,
or direct the exercise, being increased above certain specified levels
(one-fifth, one-third or a majority) of the shares of the corporation. Under
Arizona law, the Purchasing Person will not have the right to vote the shares in
excess of that level (the "Excess Shares"), except for the election of
directors, unless such voting rights are approved by the holders of a majority
of the voting power of all shares, excluding all shares beneficially owned by
the Purchasing Person or its affiliates or associates or by any officer or
director of the issuing public corporation. Under North Carolina law, the
Purchasing Person will not have the right to vote the Excess Shares for any
reason, including the election of directors, unless such voting rights are
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approved by the holders of a majority of the voting power of all shares,
excluding all shares beneficially owned by the Purchasing Person or its
affiliates or associates or by any officer or director of the issuing public
corporation.
In addition, under Arizona law, unless otherwise provided in the
articles of incorporation or in bylaws approved by the shareholders, the issuing
public corporation may call for redemption of all but not less than all of the
Excess Shares at a redemption price equal to the market value of the shares at
the time the call for redemption is given if either (i) the Purchasing Person
fails to deliver certain written information to the issuing public corporation
by the tenth day after crossing the specified level; or (ii) the shareholders
vote not to accord voting rights to such shares.
Under North Carolina law, unless otherwise provided in the articles of
incorporation or in bylaws approved by the shareholders, if the Excess Shares
are accorded voting rights and the holders of the Excess Shares have a majority
of all voting power for the election of directors, all shareholders of the
company (other than holders of the Excess Shares) have the right to have their
shares redeemed by the corporation at the fair value of those shares.
The Arizona Company has not opted out of the Arizona Control Share
Acquisitions Provision, whereas the North Carolina Articles provide that the
North Carolina Control Share Acquisitions Provision shall not apply to the North
Carolina Company.
BUSINESS COMBINATIONS
Arizona law contains a provision (the "Arizona Business Combinations
Provision") which provides that, subject to certain exceptions specified
therein, an issuing public corporation may not engage in certain business
combinations with respect to, proposed by or on behalf of or pursuant to any
agreement, arrangement or understanding with any "interested shareholder" (as
defined below) of the corporation or any affiliate or associate of the
interested shareholder for a three-year period following the date that such
shareholder becomes an interested shareholder unless prior to such date (the
"Shares Acquisition Date") a committee comprised of the disinterested directors
approved either the business combination or the transaction which resulted in
the shareholder becoming an interested shareholder.
After such three-year period, the issuing public corporation may engage
in such transactions only if (i) prior to the Shares Acquisition Date, the board
of directors of the corporation approved either the business combination or the
transaction which resulted in the shareholder becoming an interested
shareholder; (ii) the business combination is approved by the affirmative vote
of the shareholders holding a majority of the voting power of all shares,
excluding shares beneficially owned by the interested shareholder or any
affiliate or associate of the interested shareholder; or (iii) the business
combination meets certain conditions relating to price and form of
consideration.
For purposes of the Arizona Business Combinations Provision, an
interested shareholder is defined to include (i) any person that is the owner of
10% or more of voting power of the outstanding shares of the issuing public
corporation or (ii) any affiliate or associate of the issuing public corporation
that at any time within the three-year period immediately before the date in
question was the beneficial owner of 10% or more of the voting power of the then
outstanding shares of the issuing public corporation. An issuing public
corporation may amend its articles of incorporation or bylaws, with the approval
of shareholders holding a majority of the outstanding voting power of all
shares, excluding shares beneficially owned by interested shareholders and their
affiliates and associates, to exclude an interested shareholder whose Share
Acquisition Date is prior to the effective date of such amendment from the
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restrictions imposed under the Arizona Business Combinations Provision. The
Arizona Business Combination Provision is applicable to the Arizona Company.
North Carolina law governing business combinations is substantially
different from that of Arizona. North Carolina's Shareholder Protection Act
requires the affirmative vote of 95% of the voting shares of a corporation to
approve certain business combinations with any "other entity" (as defined in the
statute) if that other entity is the beneficial owner, directly or indirectly,
of more than 20% of the voting shares of the corporation, or if the other entity
has ever been a 20% holder and is still an affiliate. The 95% vote requirement
to approve such a business combination does not apply if certain "fair price"
provisions and certain procedural provisions are satisfied. The fair price
provisions require that the price paid for any shares in the second phase of the
business combination must be at least equal to the highest of the following: (a)
the highest per share price ever paid by anyone who is a part of an acquiring
other entity; (b) a price that exceeds the market price when the second phase of
the acquisition is announced by the same percentage as the highest price paid by
any member of the other entity exceeds the market price immediately before the
commencement of acquisition of the corporation's shares by the other entity; or
(c) a price computed by multiplying the corporation's annual earnings per share
by the price/earnings multiple, if any, of the acquiring other entity.
The North Carolina Articles provide that the North Carolina Shareholder
Protection Act shall not apply to the North Carolina Company.
DUTIES OF DIRECTORS
Arizona law provides that, in discharging the duties of the position of
director with respect to the provisions described above regarding special
meetings of shareholders, the limitation on share repurchases, compensation
agreements, the Arizona Business Combinations Provision and the Arizona Control
Share Acquisitions Provision, a director of an issuing public corporation in
considering the best interest of the corporation, must consider the long-term as
well as the short-term interests of the corporation and its shareholders
including the possibility that these interests may be best served by the
continued independence of the corporation. North Carolina law does not contain
such a provision.
LOANS TO DIRECTORS
North Carolina law prohibits loans to directors unless authorized by
majority shareholder vote or the board of directors determines that the loan or
guarantee benefits the corporation and approves the loan or guarantee. Arizona
law contains no such prohibitions.
SHAREHOLDER DERIVATIVE SUITS
North Carolina law requires that a plaintiff in a derivative action
brought on behalf of a public corporation against one or more directors must:
(1) have been a shareholder or a holder of a beneficial interest in shares of
the corporation for at least a year, (2) bring the action within two years of
the date of the transaction of which the shareholder complains, and (3) if the
court orders, execute and deposit with the clerk of court, a written undertaking
with sufficient surety approved by the court to indemnify the company against
all expenses in connection with the proceeding. There is no such similar
provision in Arizona law.
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STAGGERED BOARD OF DIRECTORS
North Carolina law allows a staggered board of directors if there are
nine or more directors. Arizona law allows a staggered board of directors if
there are six or more directors. The Company has seven directors, and thus the
North Carolina Company will not be able to have a staggered board unless it
increases the number of directors, which it may do pursuant to the North
Carolina Bylaws.
LIMITATION ON INDEBTEDNESS
The Arizona Articles provide that the highest amount of indebtedness,
either direct or contingent, which the Company may incur is one billion dollars.
The North Carolina Articles contain no limitation on indebtedness of the
Company.
ANNUAL MEETING OF SHAREHOLDERS
The Arizona Bylaws provide that the annual meeting of the shareholders
will be held on the second Saturday in November. The North Carolina Bylaws
provide that the annual meeting shall be held on the last Friday in August or on
such other day designated in the notice of the meeting.
FEDERAL INCOME TAX CONSEQUENCES OF THE REINCORPORATION
The reincorporation provided for in the Merger Agreement is intended to
be a tax-free reorganization under the Internal Revenue Code of 1986, as
amended. Assuming the reincorporation qualifies as a tax-free reorganization, no
gain or loss will be recognized to the holders of capital stock of the Company
as a result of consummation of the reincorporation, and no gain or loss will be
recognized by the Arizona Company or the North Carolina Company. Each former
holder of capital stock of the Arizona Company will have the same basis in the
capital stock of the North Carolina Company received by such holder pursuant to
the reincorporation as such holder has in the capital stock of the Arizona
Company held by such holder at the time of consummation of the reincorporation.
Each shareholder's holding period with respect to the North Carolina Company's
capital stock will include the period during which such holder held the
corresponding Arizona Company capital stock, provided the latter was held by
such holder as a capital asset at the time of consummation of the
reincorporation. The Company has not obtained a ruling from the Internal Revenue
Service or an opinion of legal or tax counsel with respect to the consequences
of the reincorporation.
The foregoing is only a summary of certain federal income tax
consequences. Shareholders should consult their own tax advisers regarding the
specific tax consequences to them of the merger, including the applicability of
the laws of any state or other jurisdiction.
THERE ARE NO DISSENTERS' RIGHTS RELATING TO THE REINCORPORATION
Arizona law provides that, unless the articles of incorporation provide
otherwise (which the Arizona Articles do not), shareholders have no dissenters
rights if (a) the shares were registered on a national securities exchange, (b)
were listed on the national market systems of the national association of
securities dealers automated quotation system, or (c) were held of record by at
least two thousand shareholders on the date fixed to determine the shareholders
entitled to vote on the proposed corporate action. The Company's common stock
was held of record by at least two thousand shareholders on the record date, and
thus shareholders have no dissenters rights with respect to the proposed
reincorporation of the Company from Arizona to North Carolina.
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BOARD RECOMMENDATION
The foregoing discussion is an attempt to summarize the more important
differences between Arizona and North Carolina law and among the various
governing corporate documents, and does not purport to be an exhaustive
discussion of all of the differences. Such differences can be determined in full
by reference to the Arizona Business Corporation Act, the North Carolina
Business Corporation Act, the Arizona Articles, the North Carolina Articles, the
Arizona Bylaws and the North Carolina Bylaws.
A vote "FOR" the reincorporation will constitute approval of the Merger
Agreement, the North Carolina Articles, the North Carolina Bylaws, adoption and
assumption by the North Carolina Company of each of the Company's stock option
and employee benefit plans and all other aspects of the reincorporation
proposal.
The Board recommends a vote "FOR" Proposal No. 3.
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF AUDITORS
Subject to approval by the shareholders, the Board of Directors has
appointed Cherry, Bekaert & Holland, L.L.P. as the independent public
accountants to audit the financial statements of the Company for the year ending
April 30, 2001.
During the two most recent fiscal years and through July 31, 2000, the
Company has not consulted with Cherry, Bekaert & Holland, L.L.P. concerning the
Company's financial statements. It is expected that a representative of Cherry,
Bekaert & Holland, L.L.P. will be present at the Meeting, have an opportunity to
make a statement if they desire to do so and be available to respond to
appropriate questions.
Cherry, Bekaert & Holland, L.L.P. replaces the firm of Bedinger &
Company, whose engagement was terminated upon the expiration of their engagement
by the Board of Directors effective as of October 31, 2000. Bedinger & Company
had previously been notified of the termination. Bedinger & Company's reports on
the Company's financial statements for the past two fiscal years contained no
adverse opinion or disclaimer of opinion and were not qualified or modified as
to uncertainty, audit scope or accounting principle. In connection with its
audits for the two most recent fiscal years and through October 16, 2000, there
were no disagreements with Bedinger & Company on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of Bedinger &
Company would have caused them to make reference thereto in their report on the
financial statements for those years. Bedinger & Company has agreed to furnish
the Company with a copy of its letter addressed to the Securities and Exchange
Commission stating that it agrees with the foregoing statements. That letter
will be filed by the Company as Exhibit 16.1 to its Current Report on Form 8-K
reporting an event during the week of October 9, 2000, which the Company will
file within 5 days after their dismissal.
OTHER MATTERS
The Board of the Company knows of no matters that will be presented for
consideration at the annual meeting other than those set forth in this Proxy
Statement. However, if any other matters shall come before the meeting, it is
the intention of the persons named in the enclosed proxy to vote on such matters
in accordance with their best judgment.
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We ask that you promptly execute the enclosed proxy and return it in
the enclosed envelope that requires no postage if mailed in the United States.
For the Board of Directors
/s/ James L. Cox
DR. JAMES L. COX
Chairman, President and
Chief Executive Officer
October 16, 2000
A COPY OF THE COMPANY'S LATEST ANNUAL REPORT ON FORM 10-K TO THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES
THERETO, HAVE BEEN INCLUDED IN THIS MAILING. ADDITIONAL COPIES WILL BE PROVIDED
WITHOUT CHARGE UPON WRITTEN REQUEST TO ROBERT L. THORNTON, CONTROLLER, COX
TECHNOLOGIES, INC., 69 McADENVILLE ROAD, BELMONT, NORTH CAROLINA 28012.
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Appendix A
COX TECHNOLOGIES, INC.
2000 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the 2000 Stock Incentive Plan (the "Plan") is to
further the long term stability and financial success of Cox Technologies, Inc.
and its Subsidiaries (collectively the "Company") by attracting and retaining
employees and consultants through the use of stock-based incentives, and to
provide non-employee members of the Board of Directors of Cox Technologies, Inc.
with an additional incentive to promote the success of the Company. It is
believed that ownership of Company Common Stock will stimulate the efforts of
those employees, consultants and non-employee directors upon whose judgment and
interests the Company are and will be largely dependent for the successful
conduct of its business. It is also believed that Incentive Awards granted to
employees under this Plan will strengthen their desire to remain employed with
the Company and will further the identification of employees' interests with
those of the Company. The Plan is intended to operate in compliance with the
provisions of Securities and Exchange Commission Rule 16b-3.
2. DEFINITIONS. As used in the Plan, the following terms have the meanings
indicated:
(a) "ACT" means the Securities Exchange Act of 1934, as amended.
(b) "APPLICABLE WITHHOLDING TAXES" means the aggregate amount of federal,
state and local income and payroll taxes that the Company is required by
applicable law to withhold in connection with any lapse of restrictions on
Restricted Stock or any exercise of a Nonstatutory Stock Option or Stock
Appreciation Right.
(c) "BOARD" means the Board of Directors of the Cox Technologies, Inc.
(d) "CHANGE OF CONTROL" means the occurrence of any of the following
events:
(i) The acquisition by a Group of Beneficial Ownership of 50% or more
of the Common Stock or the Voting Power of the Company, but excluding for this
purpose: (A) any acquisition by the Company or an employee benefit plan of the
Company; or (B) any acquisition of then outstanding Common Stock by management
employees of the Company. For purposes of this Section, "Group" means any
individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2)
of the Act, "Beneficial Ownership" has the meaning in Rule 13d-3 promulgated
under the Act, and "Voting Power" means the combined voting power of the
outstanding voting securities entitled to vote generally in the election of
directors.
(ii) Individuals who constitute the Board on the date immediately after
the effective date set forth in Section 12 (the "Incumbent Board") cease to
constitute at least a majority of the Board, provided that any director whose
nomination was approved by a majority of the Incumbent Board shall be considered
a member of the Incumbent Board unless such individual's initial assumption of
office is in connection with an actual or threatened election contest (as such
terms are used in Rule 14a-11 of Regulation 14A promulgated under the Act).
(iii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, in each case, in which the owners of more than 50% of
<PAGE>
the Common Stock or Voting Power of the Company do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 50% of the Common Stock or Voting Power of the corporation
resulting from such reorganization, merger or consolidation.
(iv) A complete liquidation or dissolution of the Company or of its
sale or other disposition of all or substantially all of the Company's assets.
(e) "CODE" means the Internal Revenue Code of 1986, as amended.
(f) "COMMITTEE" means the Compensation Committee of the Board, provided
that, if any member of the Compensation Committee does not or would not qualify
as both an outside director for purposes of Code section 162(m) and a
non-employee director for purposes of Rule 16b-3, the Board shall designate the
remaining members of the Compensation Committee (but not less than two members)
as a subcommittee of the Compensation Committee to act as the Compensation
Committee for purposes of the Plan.
(g) "COMMON STOCK" means common stock of Cox Technologies, Inc. In the
event of a change in the capital structure of Cox Technologies, Inc. (as
provided in Section 14), the shares resulting from such a change shall be deemed
to be Common Stock within the meaning of the Plan.
(h) "COMPANY" means Cox Technologies, Inc, and, if the context so requires,
any of its Subsidiaries.
(i) "DATE OF GRANT" means the date on which the Committee grants an
Incentive Award.
(j) "DISABILITY" or "DISABLED" means, as to an Incentive Stock Option, a
disability within the meaning of Code section 22(e)(3). As to all other
Incentive Awards, the Committee shall determine whether a Disability exists and
such determination shall be conclusive.
(k) "ELIGIBLE DIRECTOR" means a member of the Board who is not an employee
of the Company.
(l) "FAIR MARKET VALUE" means, as of any date, the value of a share of
Common Stock, determined as follows:
(i) if such Common Stock is then quoted on the Nasdaq National Market,
its closing price on the Nasdaq National Market on the date of determination, as
reported in The Wall Street Journal;
(ii) if such Common Stock is then listed on a national securities
exchange, its closing price on the date of determination on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading, as reported in The Wall Street Journal;
(iii) if such Common Stock is not quoted on the Nasdaq National Market
nor listed or admitted to trading on a national securities exchange, the average
of the closing bid and asked prices on the date of determination, as reported in
The Wall Street Journal or by such other source as the Committee may determine
to be reliable;
(iv) if none of the foregoing is applicable, by the Committee in good
faith.
(m) "INCENTIVE AWARD" means, collectively, an award of Restricted Stock, an
Option, or a Stock Appreciation Right granted under the Plan.
(n) "INCENTIVE STOCK OPTION" means an Option intended to meet the
requirements of, and qualify for favorable federal income tax treatment under,
Code section 422.
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(o) "MATURE SHARES" means shares of Common Stock for which the holder
thereof has good title, free and clear of all liens and encumbrances and which
such holder either (i) has held for at least six months, or (ii) has purchased
on the open market.
(p) "NONSTATUTORY STOCK OPTION" means an Option that does not meet the
requirements of Code section 422, or, even if meeting the requirements of Code
section 422, is not intended to be an Incentive Stock Option and is so
designated.
(q) "OPTION" means a right to purchase Common Stock granted under the Plan,
at a price determined in accordance with the Plan.
(r) "PARTICIPANT" means any employee of the Company who receives an
Incentive Award under the Plan, or any Eligible Director or consultant who
receives a Nonstatutory Stock Option under the Plan.
(s) "RESTRICTED STOCK" means Common Stock awarded upon the terms and
subject to the restrictions set forth in Section 11.
(t) "RULE 16b-3" means Rule 16b-3 of the Securities and Exchange Commission
promulgated under the Act. A reference in the Plan to Rule 16b-3 shall include a
reference to any corresponding rule (or number redesignation) of any amendments
to Rule 16b-3 enacted after the effective date of the Plan's adoption.
(u) "STOCK APPRECIATION RIGHT" means a right to receive amounts from the
Employer granted under Section 8.
(v) "SUBSIDIARY" means any corporation of which the Company owns at least
50 percent of the combined voting power of all classes of stock or which is in a
chain of corporations with the Company in which stock possessing at least 50% of
the combined voting power of all classes of stock is owned by one or more
corporations in the chain.
(w) "TAXABLE YEAR" means the fiscal period used by the Company for
reporting taxes on income under the Code.
3. GENERAL. The following types of Incentive Awards may be granted under
the Plan: Options, Stock Appreciation Rights or Restricted Stock. Options
granted to employees may be Incentive Stock Options or Nonstatutory Stock
Options. Options granted to Eligible Directors may only be Nonstatutory Stock
Options.
4. STOCK. Subject to Section 14 of the Plan, there shall be reserved for
issuance under the Plan an aggregate of 8,000,000 shares of Common Stock, which
shall be authorized, but unissued shares. Shares allocable to Incentive Awards
or portions thereof granted under the Plan that expire, are forfeited, or
otherwise terminate unexercised may again be subjected to an Incentive Award
under the Plan. The Committee is expressly authorized to grant an Incentive
Award to a Participant conditioned upon the surrender for cancellation of
Incentive Awards previously granted to such Participant. No more than 800,000
shares of Common Stock may be allocated to the Options or Stock Appreciation
Rights that are granted to any individual Participant who is an employee during
any single Taxable Year. For purposes of determining the number of shares that
are available for Incentive Awards under the Plan, such number shall include the
number of shares under an Incentive Award surrendered by a Participant or
retained by the Company in payment of Applicable Withholding Taxes.
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5. ELIGIBILITY.
(a) All present and future employees and consultants of the Company whom
the Committee determines to have contributed or who can be expected to
contribute significantly to the Company shall be eligible to receive Incentive
Awards under the Plan. The Committee shall have the power and complete
discretion, as provided in Section 15, to select eligible employees and
consultants to receive Incentive Awards, and to determine for each employee or
consultant the terms and conditions, the nature of the award, and the number of
shares to be allocated to each employee or consultant as part of each Incentive
Award. In addition, Eligible Directors shall be eligible to receive automatic
awards of Nonstatutory Stock Options pursuant to Section 7.
(b) The grant of an Incentive Award shall not obligate the Company to pay
an employee or consultant any particular amount of remuneration, to continue the
employment of the employee or the contract of a consultant after the grant or to
make further grants to the employee or the consultant at any time thereafter.
6. OPTIONS.
(a) The Committee may make grants of Options to eligible employees, and may
make grants of Nonstatutory Stock Options to consultants. Whenever the Committee
deems it appropriate to grant Options, written notice shall be given to the
Participant stating the number of shares for which Options are granted, the
Option price per share, whether the Options are Incentive Stock Options or
Nonstatutory Stock Options, the extent to which Stock Appreciation Rights are
granted (as provided in Section 8), and the conditions to which the grant and
exercise of the Options are subject. This notice, when duly accepted in writing
by the Participant, shall become a stock option agreement. The Committee may
delegate to the Executive Committee of the Company's officers the authority to
select eligible employees to receive Options, to determine the time or times at
which Options will be awarded to eligible employees and to determine the terms
and conditions of such Options, except to the extent that such a delegation
would prevent compliance with Rule 16b-3, Code section 162(m) or any other
section of the Code, or other applicable law or regulation. Actions taken by the
Executive Committee of the Company's officers pursuant to such a delegation of
authority shall be subject to ratification by the Committee. In the event that
the Executive Committee ceases to exist, the delegation described above may be
made to the President of the Company.
(b) The exercise price of shares of Common Stock covered by an Option shall
be not less than 85% of the Fair Market Value of such shares on the Date of
Grant, provided, however, that the exercise price of any Incentive Stock Option
granted under the Plan shall not be less than 100% of the Fair Market Value of
such Common Stock on the Date of Grant (or 110% of Fair Market Value in the case
of a grant to a 10% shareholder (as that term is defined in Code section 422)).
(c) Options may be exercised in whole or in part at such times as may be
specified by the Committee in the Participant's stock option agreement; provided
that, the exercise provisions for Incentive Stock Options shall in all events
not be more liberal than the following provisions:
(i) No Incentive Stock Option may be exercised after the first to
occur of (x) ten years from the Date of Grant, (y) three months following the
date of the Participant's retirement or termination of employment with all
Employers for reasons other than Disability or death, or (z) one year following
the date of the Participant's termination of employment on account of Disability
or death.
(ii) An Incentive Stock Option by its terms, shall be exercisable in
any calendar year only to the extent that the aggregate Fair Market Value
(determined at the Date of Grant) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time during the calendar
year does not exceed $100,000 (the "Limitation Amount"). Incentive Stock Options
granted under the Plan and all other plans of the Company shall be aggregated
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for purposes of determining whether the Limitation Amount has been exceeded. The
Committee may impose such conditions as it deems appropriate on an Incentive
Stock Option to ensure that the foregoing requirement is met. If Incentive Stock
Options that first become exercisable in a calendar year exceed the Limitation
Amount, the excess Options will be treated as Nonstatutory Stock Options to the
extent permitted by law.
(d) The Committee may impose such vesting conditions and other requirements
as the Committee deems appropriate, and the Committee may include such
provisions regarding Change of Control as the Committee deems appropriate.
7. NONSTATUTORY STOCK OPTIONS FOR ELIGIBLE DIRECTORS.
(a) Nonstatutory Stock Options shall automatically be granted to all
Eligible Directors as follows:
(i) As of November 3, 2000 each Eligible Director as of that date
shall receive a Nonstatutory Stock Option to purchase 7,500 shares of Common
Stock.
(ii) As of each annual meeting of the Board thereafter, each Eligible
Director as of that date shall receive a Nonstatutory Stock Option to purchase
7,500 shares of Common Stock.
(iii) Each Eligible Director who first becomes an Eligible Director
after November 3, 2000 shall receive a Nonstatutory Stock Option to purchase a
number of shares of Common Stock to be determined by the Board in its discretion
as of the date on which the Eligible Director first becomes an Eligible Director
and shall be eligible thereafter to receive the grants described in subsection
(ii) above.
(iv) If at any time there are not sufficient shares available under
the Plan to permit the automatic Nonstatutory Stock Option grants described
above, the Nonstatutory Stock Option grants shall be reduced pro rata (to zero,
if necessary) so as not to exceed the number of shares available under the Plan.
(b) The exercise price of shares of Common Stock covered by a Nonstatutory
Stock Option shall be equal to 100% of the Fair Market Value of such shares on
the Date of Grant.
(c) Each Nonstatutory Stock Option shall be exercisable in accordance with
the provisions of Section 9 and may not be exercised before the shareholders of
the Company approve the Plan.
(d) A Nonstatutory Stock Option may only be exercised while the Eligible
Director is a member of the Board, except that:
(i) If an Eligible Director ceases to be a member of the Board after
he attains age 70 or on account of his Disability or death, the Eligible
Director (or his legatees or distributees or the personal representative of his
estate) may exercise any outstanding Nonstatutory Stock Options until the first
occur of (x) the date that is one year after the Eligible Director ceases to be
a member of the Board or (y) the date that is ten years after the Date of Grant.
(ii) If an Eligible Director ceases to be a member of the Board for
any reason other than one described in subsection (i) above, the Eligible
Director may exercise his outstanding Nonstatutory Stock Options until the first
to occur of (x) the date that is 90 days after the Eligible Director ceases to
be a member of the Board or (y) the date that is ten years after the Date of
Grant.
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(iii) If an Eligible Director dies after he ceases to be a member of
the Board, but within the time period during which his outstanding Nonstatutory
Stock Options may be exercised, the Eligible Director's outstanding Nonstatutory
Stock Options may be exercised by his legatees or distributees or the personal
representative of his estate within the applicable time period described above.
(e) Each Nonstatutory Stock Option shall be evidenced by a written
agreement in such form as the Board shall from time to time approve and as shall
be consistent with the terms of the Plan.
8. STOCK APPRECIATION RIGHTS.
(a) Whenever the Committee deems it appropriate, Stock Appreciation Rights
may be granted to an eligible employee. Stock Appreciation Rights may be granted
in connection with all or any part of an Option or in a separate Incentive
Award.
(b) The following provisions apply to all Stock Appreciation Rights that
are granted in connection with Options:
(i) Stock Appreciation Rights shall entitle the Participant, upon
exercise of all or any part of the Stock Appreciation Rights, to surrender to
the Company unexercised that portion of the underlying Option relating to the
same number of shares of Common Stock as is covered by the Stock Appreciation
Rights (or the portion of the Stock Appreciation Rights so exercised) and to
receive in exchange from the Company an amount equal to the excess of (x) the
Fair Market Value on the date of exercise of the Common Stock covered by the
surrendered portion of the underlying Option over (y) the exercise price of the
Common Stock covered by the surrendered portion of the underlying Option. The
Committee may limit the amount that the Participant will be entitled to receive
upon exercise of Stock Appreciation Rights.
(ii) Upon the exercise of a Stock Appreciation Right and surrender of
the related portion of the underlying Option, the Option, to the extent
surrendered, shall not thereafter be exercisable.
(iii) Subject to any further conditions upon exercise imposed by the
Committee, a Stock Appreciation Right shall be exercisable only to the extent
that the related Option is exercisable and a Stock Appreciation Right shall
expire no later than the date on which the related Option expires.
(iv) A Stock Appreciation Right may only be exercised at a time when
the Fair Market Value of the Common Stock covered by the Stock Appreciation
Right exceeds the exercise price of the Common Stock covered by the underlying
Option.
(c) The following provisions apply to all Stock Appreciation Rights that
are not granted in connection with Options:
(i) Stock Appreciation Rights shall entitle the Participant, upon
exercise of all or any part of the Stock Appreciation Rights, to receive in
exchange from the Company an amount equal to the excess of (x) the Fair Market
Value on the date of exercise of the Common Stock covered by the surrendered
Stock Appreciation Right over (y) the price of the Common Stock on the Date of
Grant of the Stock Appreciation Right. The Committee may limit the amount that
the Participant will be entitled to receive upon exercise of Stock Appreciation
Rights.
(ii) A Stock Appreciation Right may only be exercised at a time when
the Fair Market Value of the Common Stock covered by the Stock Appreciation
Right exceeds the Fair Market Value of the Common Stock on the Date of Grant of
the Stock Appreciation Right.
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(d) The manner in which the Company's obligation arising upon the exercise
of a Stock Appreciation Right shall be paid shall be determined by the Committee
and shall be set forth in the Incentive Award. The Incentive Award may provide
for payment in Common Stock or cash, or a fixed combination of Common Stock or
cash, or the Committee may reserve the right to determine the manner of payment
at the time the Stock Appreciation Right is exercised. Shares of Common Stock
issued upon the exercise of a Stock Appreciation Right shall be valued at their
Fair Market Value on the date of exercise.
(e) Stock Appreciation Rights shall be evidenced by a written agreement in
such form as the Committee shall from time to time approve and as shall be
consistent with the terms of the Plan.
9. METHOD OF EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS.
(a) Options and Stock Appreciation Rights may be exercised by the
Participant giving written notice of the exercise to the Company, stating the
number of shares the Participant has elected to purchase under the Option or the
number of Stock Appreciation Rights the Participant has elected to exercise. In
the case of the purchase of shares under an Option, such notice shall be
effective only if accompanied by the exercise price in full in cash; provided,
however, that if the terms of an Option so permit, the Participant may (i)
deliver Mature Shares (valued at their Fair Market Value) in satisfaction of all
or any part of the exercise price, or (ii) deliver a properly executed exercise
notice together with irrevocable instructions to a broker to deliver promptly to
the Company, from the sale or loan proceeds with respect to the sale of Common
Stock or a loan secured by Common Stock, the amount necessary to pay the
exercise price and, if required by the terms of the Option, Applicable
Withholding Taxes.
(b) The Company may place on any certificate representing Common Stock
issued upon the exercise of an Option or a Stock Appreciation Right any legend
deemed desirable by the Company's counsel to comply with federal or state
securities laws, and the Company may require a customary written indication of
the Participant's investment intent. Until the Participant has made any required
payment, including any Applicable Withholding Taxes, and has had issued a
certificate for the shares of Common Stock acquired, he or she shall possess no
shareholder rights with respect to the shares.
(c) Each Participant shall agree as a condition of the exercise of an
Option or a Stock Appreciation Right to pay to the Company, or make arrangements
satisfactory to the Company regarding the payment to the Company of, Applicable
Withholding Taxes. Until such amount has been paid or arrangements satisfactory
to the Company have been made, no stock certificate shall be issued upon the
exercise of an Option or cash paid upon the exercise of a Stock Appreciation
Right.
(d) As an alternative to making a cash payment to the Company to satisfy
Applicable Withholding Taxes, if the Participant's Option agreement so provides,
the Participant may elect to (i) deliver Mature Shares (valued at their Fair
Market Value) or (ii) to have the Company retain that number of shares of Common
Stock (valued at their Fair Market Value) that would satisfy all or a specified
portion of the Applicable Withholding Taxes.
10. TRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS. Nonstatutory
Stock Options and Stock Appreciation Rights may be transferable by a Participant
and exercisable by a person other than the Participant, but only to the extent
specifically provided in the Incentive Award agreement. Incentive Stock Options,
by their terms, shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable, during the Participant's
lifetime, only by the Participant.
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11. RESTRICTED STOCK AWARDS.
(a) The Committee may make grants of Restricted Stock to eligible
employees. Whenever the Committee deems it appropriate to grant Restricted
Stock, written notice shall be given to the Participant stating the number of
shares of Restricted Stock granted and the terms and conditions to which the
Restricted Stock is subject. This notice, when accepted in writing by the
Participant shall become a grant agreement between the Company and the
Participant. Restricted Stock may be awarded by the Committee in its discretion
without cash consideration.
(b) No shares of Restricted Stock may be sold, assigned, transferred,
pledged, hypothecated, or otherwise encumbered or disposed of until the
restrictions on such shares as set forth in the Participant's grant agreement
have lapsed or been removed pursuant to paragraph (d) or (e) below.
(c) Upon the acceptance by a Participant of an award of Restricted Stock,
such Participant shall, subject to the restrictions set forth in paragraph (b)
above, have all the rights of a shareholder with respect to such shares of
Restricted Stock, including, but not limited to, the right to vote such shares
of Restricted Stock and the right to receive all dividends and other
distributions paid thereon. Certificates representing Restricted Stock shall be
issued to the Participant but shall bear a legend referring to the restrictions
set forth in the Plan and the Participant's award agreement.
(d) The Committee shall establish as to each award of Restricted Stock the
terms and conditions upon which the restrictions set forth in paragraph (b)
above shall lapse. The terms and conditions may include, without limitation, the
lapsing of such restrictions as a result of the Disability, death or retirement
of the Participant or the occurrence of a Change of Control.
(e) Notwithstanding the provisions of paragraph (b) above, the Committee
may at any time, in its sole discretion, accelerate the time at which any or all
restrictions will lapse or remove any and all such restrictions.
(f) Each Participant shall agree at the time the Restricted Stock is
granted, and as a condition thereof, to pay to the Company, or make arrangements
satisfactory to the Company regarding the payment to the Company of, Applicable
Withholding Taxes. Until such amount has been paid or arrangements satisfactory
to the Employer have been made, no stock certificate free of a legend reflecting
the restrictions set forth in paragraph (b) above shall be issued to such
Participant. As an alternative to making a cash payment to the Company to
satisfy Applicable Withholding Taxes, if the grant so provides, the Participant
may elect to (i) to deliver Mature Shares (valued at their Fair Market Value) or
(ii) to have the Company retain that number of shares of Common Stock (valued at
their Fair Market Value) that would satisfy all or a specified portion of the
Applicable Withholding Taxes.
12. EFFECTIVE DATE OF THE PLAN. The effective date of the Plan is November
1, 2000. The Plan shall be submitted to the shareholders of the Company for
approval. Until (i) the Plan has been approved by Company's shareholders, and
(ii) the requirements of any applicable Federal or State securities laws have
been met, no Option or Stock Appreciation Right granted under the Plan shall be
exercisable.
13. TERMINATION, MODIFICATION, CHANGE
(a) If not sooner terminated by the Board, this Plan shall terminate at
the close of business on November 1, 2010. No Options shall be granted under the
Plan after its termination. The Board may amend or terminate the Plan in such
respects as it shall deem advisable; provided that, if and to the extent
required by the Code, no change shall be made that increases the total number of
shares of Common Stock reserved for issuance pursuant to Incentive Awards
granted under the Plan (except pursuant to Section 14), materially modifies the
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requirements as to eligibility for participation in the Plan, or materially
increases the benefits accruing to Participants under the Plan, unless such
change is authorized by the shareholders of the Company. Notwithstanding the
foregoing, the Board may amend the Plan and unilaterally amend Incentive Awards
as it deems appropriate to ensure compliance with applicable federal or state
securities laws or regulations thereunder, or any applicable Nasdaq or
securities exchange listing requirement, and to cause Incentive Stock Options to
meet the requirements of the Code and regulations thereunder. Except as provided
in the preceding sentence, a termination or amendment of the Plan shall not,
without the consent of the Participant, detrimentally affect a Participant's
rights under an Incentive Award previously granted to the Participant.
(b) Notwithstanding the provisions of subsection (a) above, this subsection
(b) will apply if the Company is involved in any merger or similar transaction
that the Company intends to treat as a "pooling of interest" for financial
reporting purposes. In such a case, the Committee may amend the terms of any
Incentive Award or of the Plan to the extent that the Company's independent
accountants determine that such terms would preclude the use of "pooling of
interest" accounting. The authority of the Committee to amend the terms of any
Incentive Award or of the Plan includes, without limitation, the right (i) to
rescind or suspend any terms that are contingent on a Change in Control, such as
the acceleration of vesting or provisions for special payments to an optionee or
participant; (ii) to modify Incentive Awards to comply with prior practices of
the Company as to terms of Incentive Awards; (iii) to provide for payment to the
Participant of Common Stock or stock of the other party to the transaction equal
to the fair value of the Incentive Award; and (iv) to suspend any provisions for
payment of an Incentive Award in cash. The authority of the Committee under this
section may be exercised in the Committee's sole and complete discretion.
14. CHANGE IN CAPITAL STRUCTURE.
(a) In the event of a stock dividend, stock split or combination of shares,
recapitalization or merger in which the Company is the surviving corporation or
other change in the Company's capital stock (including, but not limited to, the
creation or issuance to shareholders generally of rights, options or warrants
for the purchase of common stock or preferred stock of the Company), the number
and kind of shares of stock or securities of the Company to be subject to the
Plan and to Incentive Awards then outstanding or to be granted thereunder, the
maximum number of shares or securities which may be delivered under the Plan,
the maximum number of shares or securities that can be granted to an individual
Participant under Section 4, the exercise price, the terms of Incentive Awards
and other relevant provisions shall be appropriately adjusted by the Committee,
whose determination shall be binding on all persons. If the adjustment would
produce fractional shares with respect to any unexercised Option, the Committee
may adjust appropriately the number of shares covered by the Option so as to
eliminate the fractional shares.
(b) If the Company is a party to a consolidation or a merger in which the
Company is not the surviving corporation, a transaction that results in the
acquisition of substantially all of the Company's outstanding stock by a single
person or entity, or a sale or transfer of substantially all of the Company's
assets, the Committee may take such actions with respect to outstanding
Incentive Awards as the Committee deems appropriate.
(c) Notwithstanding anything in the Plan to the contrary, the Committee may
take the foregoing actions without the consent of any Participant, and the
Committee's determination shall be conclusive and binding on all persons for all
purposes.
15. ADMINISTRATION OF THE PLAN.
(a) Subject to the provisions of Section 16(b) of the Act and Rule 16b-3,
the Plan shall be administered by the Committee. The Committee shall have
general authority to impose any limitation or condition upon an Incentive Award
that the Committee deems appropriate to achieve the objectives of the Incentive
Award and the Plan and, without limitation and in addition to powers set forth
9
<PAGE>
elsewhere in the Plan, shall have the power and complete discretion to
determine: (i) which eligible employees and consultants shall receive Incentive
Awards and the nature of each Incentive Award, (ii) whether all or any part of
an Incentive Award shall be accelerated upon a Change of Control, (iii) the
number of shares of Common Stock to be covered by each Incentive Award, (iv)
whether Options shall be Incentive Stock Options or Nonstatutory Stock Options,
(v) when, whether and to what extent Stock Appreciation Rights shall be granted,
(vi) the time or times when an Incentive Award shall be granted, (vii) whether
an Incentive Award shall become vested over a period of time and when it shall
be fully vested, (viii) when Options and Stock Appreciation Rights may be
exercised, (ix) whether a Disability exists and whether a Participant that
cannot be located shall be treated as having died, (x) the manner in which
payment will be made upon the exercise of Options or Stock Appreciation Rights,
(xi) conditions relating to the length of time before disposition of Common
Stock received upon the exercise of Options or Stock Appreciation Rights is
permitted, (xii) whether to authorize a Participant (A) to deliver Mature Shares
to satisfy Applicable Withholding Taxes or (B) to have the Company withhold from
the shares to be issued upon the exercise of a Nonstatutory Stock Option or
Stock Appreciation Right the number of shares necessary to satisfy Applicable
Withholding Taxes, (xiii) the terms and conditions applicable to Restricted
Stock awards, (xiv) the terms and conditions on which restrictions upon
Restricted Stock shall lapse, (xv) whether to accelerate the time at which any
or all restrictions with respect to Restricted Stock will lapse or be removed,
(xvi) notice provisions relating to the sale of Common Stock acquired under the
Plan, (xvii) the extent to which information shall be provided to Participants
about available tax elections, (xviii) when Incentive Awards may be forfeited or
expire, and (xix) any additional requirements relating to Incentive Awards that
the Committee deems appropriate. Notwithstanding the foregoing, no "tandem stock
options" (where two stock options are issued together and the exercise of one
option affects the right to exercise the other option) may be issued in
connection with Incentive Stock Options. The Committee shall have the power to
amend the terms of previously granted Incentive Awards that were granted by that
Committee so long as the terms as amended are consistent with the terms of the
Plan and provided that the consent of the Participant is obtained with respect
to any amendment that would be detrimental to him or her, except that such
consent will not be required if such amendment is for the purpose of complying
with Rule 16b-3 or any requirement of the Code applicable to the Incentive
Award.
(b) The Committee may adopt rules and regulations for carrying out the Plan
with respect to Participants. The interpretation and construction of any
provision of the Plan by the Committee shall be final and conclusive as to any
Participant. The Committee may consult with counsel, who may be counsel to the
Company, and shall not incur any liability for any action taken in good faith in
reliance upon the advice of counsel.
(c) A majority of the members of the Committee shall constitute a quorum,
and all actions of the Committee shall be taken by a majority of the members
present. Any action may be taken by a written instrument signed by all of the
members, and any action so taken shall be fully effective as if it had been
taken at a meeting.
(d) The Board from time to time may appoint members previously appointed
and may fill vacancies, however caused, in the Committee. The Committee shall
have, in connection with the administration of the Plan, the powers possessed by
the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise, subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board.
16. NOTICE. All notices and other communications required or permitted to
be given under this Plan shall be in writing and shall be deemed to have been
duly given if delivered personally or mailed first class, postage prepaid, as
follows (a) if to the Company - at the principal business address of the Company
to the attention of the Chief Financial Officer of the Company; and (b) if to
any Participant - at the last address of the Participant known to the sender at
the time the notice or other communication is sent.
10
<PAGE>
17. SHAREHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to an Incentive Award unless and until such Participation
has satisfied all requirements under the terms of the Incentive Award.
18. NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Incentive Award granted under the Plan shall confer upon
any Participant any right to continue to serve the Company in the capacity in
effect at the time the Incentive Award was granted or shall affect the right of
the Company to terminate (i) the employment of an employee with or without
notice and with or without cause, (ii) the service of a consultant pursuant to
the terms of an agreement with the Company, or (iii) the service of an Eligible
Director pursuant to the bylaws of the Company and any applicable provisions of
the corporate law of the state in which the Company is incorporated, as the case
may be.
19. INTERPRETATION. The terms of this Plan shall be governed by the laws
of the State of North Carolina, without regard to the conflict of law provisions
of any jurisdiction. The terms of this Plan are subject to all present and
future regulations and rulings of the Secretary of the Treasury or his delegate
relating to the qualification of Incentive Stock Options under the Code. If any
provision of the Plan conflicts with any such regulation or ruling, then that
provision of the Plan shall be void and of no effect.
11
<PAGE>
Appendix B
AGREEMENT AND PLAN OF MERGER
between
Cox Technologies, Inc.
(an Arizona corporation)
and
Cox Merger Sub, Inc.
(a North Carolina corporation)
This Agreement and Plan of Merger ("Agreement") is made and entered into as
of September 29, 2000 by and between Cox Technologies, Inc., an Arizona
corporation (the "Arizona Company"), and Cox Merger Sub, Inc., a North Carolina
corporation (the "North Carolina Company").
RECITALS
A. The Board of Directors of the Arizona Company has determined that it is
in the best interests of the Arizona Company and its stockholders for the
Arizona Company to change its state of incorporation from the State of Arizona
to the State of North Carolina;
B. The Arizona Company has caused the North Carolina Company to be
organized under North Carolina law to facilitate the reincorporation of the
Arizona Company in North Carolina; and
C. The reincorporation will be effected by a merger under Arizona and North
Carolina law of the Arizona Company with and into the North Carolina Company in
which each share of common stock of the Arizona Company is converted into one
share of common stock of the North Carolina Company; and
D. The respective Boards of Directors of the Arizona Company and the North
Carolina Company have approved this Agreement, and the Board of Directors of the
Arizona Company has directed that this Agreement be submitted to a vote of its
shareholders and executed by the undersigned officers.
NOW, THEREFORE, the Arizona Company and the North Carolina Company do
hereby agree as follows:
1. The Merger. Subject to the terms and conditions hereof, the Arizona
Company shall be merged with and into the North Carolina Company (the "Merger")
in accordance with the Arizona Business Corporation Act and the North Carolina
Business Corporation Act. The North Carolina Company shall be the surviving
corporation. The North Carolina Company shall succeed to and acquire all of the
assets and assume all of the liabilities (each, without limitation or
modification, whatsoever) of the Arizona Company. The Merger shall become
effective when certificates of merger issued by the Secretary of the State of
Arizona and by the Secretary of the State of North Carolina shall have become
effective (the "Effective Time"). At the Effective Time the separate corporate
existence of the Arizona Company shall cease, and the Merger shall have the
effects stated in Section 55-11-06 of the North Carolina Business Corporation
Act and Section 10-1106 of the Arizona Business Corporation Act. At the
Effective Time or as soon thereafter as possible, the North Carolina Company's
corporate name shall become "Cox Technologies, Inc."
<PAGE>
2. Articles of Incorporation; Bylaws; Directors and Officers. The Articles
of Incorporation of the North Carolina Company in effect immediately prior to
the consummation of the Merger shall be the Articles of Incorporation of the
surviving corporation, except that such Articles of Incorporation shall be
thereby amended to provide that the name of the surviving corporation shall be
changed from "Cox Merger Sub, Inc." to "Cox Technologies, Inc." Such Articles of
Incorporation, as so amended, shall remain in effect following the Effective
Time until amended or repealed. The Bylaws of the North Carolina Company in
effect immediately prior to the consummation of the Merger shall be the Bylaws
of the surviving corporation and shall remain in effect following the Effective
Time until amended or repealed. The directors and officers of the Arizona
Company immediately prior to the Effective Time shall be the directors and
officers of the surviving corporation until their successors shall have been
duly elected and qualified or as otherwise provided by law, or by the articles
of incorporation or bylaws of the surviving corporation.
3. Conversion of Shares; Cancellation of Certain Rights and Shares. At the
Effective Time, each share of common stock, no par value per share, of the
Arizona Company ("Arizona Company Common Stock") issued and outstanding
immediately prior to the Effective Time, by operation of law, shall be
automatically converted into one share of common stock, no par value per share,
of the North Carolina Company ("North Carolina Company Common Stock"). No other
property, shares, other securities or considerations of any type will be
distributed or issued in connection with or as a result of the Merger. At the
Effective Time, each share of North Carolina Company Common Stock outstanding
immediately prior to the Effective Time shall be cancelled, without payment of
any consideration therefor. Each stock certificate that represents shares of
Arizona Company Common Stock, after the Effective Time, shall represent the same
number of shares of North Carolina Company Common Stock. Stockholders will not
be required to surrender stock certificates.
4. Employee and Director Stock Plans. At the Effective Time, all stock
option and stock-based compensation plans of the Arizona Company (the "Arizona
Company Plans") shall automatically be continued as and become plans of the
North Carolina Company ( the "North Carolina Company Plans"). At the Effective
Time, new options ("New Options") under the North Carolina Company Plans shall
be substituted for the options granted under the Arizona Company Plans ("Old
Options"), without any action on the part of optionees, and each New Option
shall be for the same number of shares of North Carolina Company Common Stock,
exercisable at the same price and subject to the same terms and conditions as
each Old Option was with respect to Arizona Company Common Stock. The
substitution of New Options for Old Options shall be done in accordance with the
provisions of Section 424(a) of the Internal Revenue Code of 1986. Under the
North Carolina Company Plans, the North Carolina Company shall assume all of the
rights and obligations of the Arizona Company under the Arizona Company Plans.
At the Effective Time, the North Carolina Company shall be deemed to have
reserved and authorized the issuance of the number of shares of North Carolina
Company Common Stock under the North Carolina Company Plans that is equal to the
number of shares of Arizona Company Common Stock approved for issuance under the
Arizona Company Plans that the Arizona Company has not issued under the Arizona
Company Plans prior to the Effective Time.
At the Effective Time, all rights to purchase, sell or receive Arizona
Company Common Stock and all rights to elect to make payment in Arizona Company
Common Stock under any agreement between the Arizona Company and any director,
officer or employee thereof or under any plan or program of the Arizona Company
shall automatically, by operation of law, be converted into and shall become an
identical right to purchase, sell or receive North Carolina Company Common Stock
and an identical right to make payment in North Carolina Company Common Stock
under any such agreement between the Arizona Company and any director, officer
or employee thereof or under such plan or program of the Arizona Company.
2
<PAGE>
5. Conditions to the Merger. The Merger shall not be consummated unless the
following conditions have been satisfied:
(a) Holders of the issued and outstanding shares of Arizona Company
Common Stock shall have approved this Agreement in accordance with Arizona
law and the Articles of Incorporation of the Arizona Company, and such
approval shall not have been revoked at or prior to the Effective Time.
(b) If, in the opinion of counsel to the North Carolina Company, such
registration is required, North Carolina Company Common Stock to be issued
to the holders of Arizona Company Common Stock pursuant to the Merger shall
have been duly registered pursuant to Section 5 of the Securities Act of
1933 and such registration shall not be suspended at the Effective Time.
Further, to the extent required in the opinion of legal counsel for the
North Carolina Company, the North Carolina Company shall have complied with
all applicable securities law of states and other jurisdictions relating to
such issuance of North Carolina Company Common Stock.
(c) Any and all approvals or consents shall have been obtained from
any governmental agency having jurisdiction, and from other third parties
that are, in the opinion of legal counsel for the Arizona Company or the
North Carolina Company, required for the lawful consummation of the Merger
and the issuance and delivery of North Carolina Company Common Stock as
contemplated by this Agreement, and such approvals or consents shall not
have been revoked.
(d) The Arizona Company and the North Carolina Company shall have
received, with respect to federal income taxes, either (i) a ruling from
the Internal Revenue Service, or (ii) an opinion from McGuireWoods LLP, in
either case acceptable in form, qualification and substance to the Arizona
Company and the North Carolina Company and their legal counsel, to the
effect that:
(1) The Merger should qualify as a reorganization under Section
368(a) of the Internal Revenue Code of 1986, as amended;
(2) No gain or loss should be recognized by the stockholders of
the Arizona Company upon the conversion of their Arizona Company
Common Stock solely into North Carolina Company Common Stock pursuant
to the Merger;
(3) No gain or loss should be recognized for federal income tax
purposes by the Arizona Company as a result of the Merger;
(4) The aggregate tax basis of North Carolina Company Common
Stock received by each stockholder of the Arizona Company in the
Merger should be equal to the aggregate tax basis of Arizona Company
Common Stock converted in exchange therefor; and
(5) The holding period of North Carolina Company Common Stock
received by each stockholder of the Arizona Company in the Merger
should include the period during which the stockholder held his
Arizona Company Common Stock, converted therefor, provided that such
Arizona Company Common Stock is held by the stockholder as a capital
asset on the date of the Merger.
6. Abandonment of Agreement. This agreement may be abandoned unilaterally
by the Arizona Company or by the North Carolina Company at any time before the
Effective Time if (a) any action, suit, proceeding or claim has been instituted,
made or threatened relating to the Agreement which shall make consummation of
3
<PAGE>
the transactions contemplated hereby inadvisable in the opinion of the Arizona
Company or the North Carolina Company, respectively, or (b) for any other reason
consummation of the transactions contemplated hereby is inadvisable in the
opinion of the Arizona Company or the North Carolina Company, in its respective
sole judgment. Such abandonment shall be effected by written notice by the
Arizona Company or the North Carolina Company to the other party hereto,
authorized or approved by the Board of Directors of the party giving such
notice. Upon the giving of such notice, this Agreement shall be terminated and
there shall be no liability hereunder or on account of such termination on the
part of the Arizona Company or the North Carolina Company or the directors,
officers, employees, agents or stockholders of any of them. If this Agreement is
so abandoned, the Arizona Company shall pay the fees and expenses incurred by
itself and the North Carolina Company in connection with this Agreement and the
Merger.
7. Amendments. To the extent permitted by law, this Agreement may be
amended by a subsequent writing signed by the parties hereto with the
authorization or approval of the Board of Directors of each of the parties
hereto; provided, that after the stockholders of the Arizona Company have
considered and approved this Agreement, the provisions of Section 3 hereof
relating to the consideration to be exchanged for shares of Arizona Company
Common Stock shall not be amended so as to decrease the amount or change the
form of such consideration without the further approval of the Arizona Company
stockholders.
8. Further Assurances. From time to time, as and when required by the North
Carolina Company or by its successors or assigns, and to the extent permitted by
law, there shall be executed and delivered on behalf of the Arizona Company such
deeds and other instruments, and there shall be taken or caused to be taken by
it such further and other actions as shall be appropriate or necessary in order
to vest or perfect in or conform of record or otherwise by the North Carolina
Company the title to and possession of all the property, interests, assets,
rights, privileges, immunities, powers, franchises and authority of the Arizona
Company and otherwise carry out the purposes of this Agreement, and each of the
directors and officers of the North Carolina Company is fully authorized in the
name and on behalf of the Arizona Company or otherwise to take any and all such
action and to execute and deliver any and all such deeds and other instruments.
9. Counterparts. This Agreement may be executed in one or more
counterparts.
10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of North Carolina, without regard to the conflicts of
law principles thereof.
4
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
COX TECHNOLOGIES, INC.
(an Arizona corporation)
By:
-------------------------------------
Name: James L. Cox
Title: Chairman, President and Chief
Executive Officer
Attest:
------------------------------------
Name: David K. Caskey
Title: Secretary
COX MERGER SUB, INC.
(a North Carolina corporation)
By:
-------------------------------------
Name: James L. Cox
Title: Chairman, President and Chief
Executive Officer
Attest:
------------------------------------
Name: David K. Caskey
Title: Secretary
5
<PAGE>
Appendix C
ARTICLES OF INCORPORATION
OF
COX MERGER SUB, INC.
The undersigned hereby submits these Articles of Incorporation for the
purpose of forming a business corporation under the laws of the State of North
Carolina:
1. The name of the corporation is Cox Merger Sub, Inc.
2. The corporation shall have authority to issue One Hundred Million
(100,000,000) shares of Common Stock and Twenty Million (20,000,000)
shares of Preferred Stock.
3. The street address and county of the initial registered office of the
corporation in North Carolina is 69 McAdenville Road, Belmont, Gaston
County, North Carolina 28012; and the name of its initial registered
agent at such address is James L. Cox.
4. The name and address of the incorporator are:
Name Address
---- -------
69 McAdenville Road
James L. Cox Belmont, North Carolina 28012
5. The number of directors shall be fixed by and in the manner provided
in the bylaws of the corporation.
6. A director of the corporation shall not be personally liable for
monetary damages for breach of any duty as director except and only to
the extent applicable law restricts the effectiveness of this
provision. Any repeal or modification of this article shall be
prospective only and shall not diminish the rights or expand the
personal liability of a director of the corporation with respect to
any act or omission occurring prior to the time of such repeal or
modification.
7. The Board of Directors may determine, in whole or in part, the
preferences, limitations and relative rights (within the limits set
forth in N.C. Gen. Stat. 55-6-01) of (a) any class of shares before
the issuance of any shares of that class or (b) one or more series
within a class before the issuance of any shares of that series.
8. The provisions of the North Carolina Business Corporation Act entitled
"The North Carolina Shareholder Protection Act" and "The North
Carolina Control Share Acquisition Act" shall not be applicable to the
corporation.
IN WITNESS WHEREOF, the undersigned has executed these Articles of
Incorporation this ____ day of _____________, 2000.
------------------------------------
James L. Cox
Incorporator
<PAGE>
Appendix D
--------------------------------------------------------------------------------
BYLAWS
OF
COX MERGER SUB, INC.
--------------------------------------------------------------------------------
EFFECTIVE AS OF _____________, 2000
<PAGE>
INDEX OF BYLAWS
OF
COX MERGER SUB, INC.
ARTICLE I - OFFICES
SECTION 1. PRINCIPAL OFFICE.......................................... 5
SECTION 2. REGISTERED OFFICE......................................... 5
SECTION 3. OTHER OFFICES............................................. 5
ARTICLE II - MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING............................................ 5
SECTION 2. SUBSTITUTE ANNUAL MEETING................................. 5
SECTION 3. SPECIAL MEETINGS.......................................... 6
SECTION 4. PLACE OF MEETING.......................................... 6
SECTION 5. NOTICE OF MEETING......................................... 6
SECTION 6. WAIVER OF NOTICE.......................................... 6
SECTION 7. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE........ 6
SECTION 8. VOTING LISTS.............................................. 7
SECTION 9. VOTING GROUPS............................................. 7
SECTION 10. QUORUM.................................................... 7
SECTION 11. PROXIES................................................... 8
SECTION 12. VOTING OF SHARES.......................................... 8
SECTION 13. VOTES REQUIRED............................................ 8
SECTION 14. VOTING INSPECTORS......................................... 8
SECTION 15. ACTION OF SHAREHOLDERS WITHOUT MEETING.................... 8
ARTICLE III - BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS............................................ 8
SECTION 2. NUMBER, TENURE AND QUALIFICATIONS......................... 9
SECTION 3. VACANCIES................................................. 9
SECTION 4. REMOVAL; RESIGNATION...................................... 9
SECTION 5. COMPENSATION.............................................. 9
SECTION 6. CHAIRMAN OF THE BOARD..................................... 9
ARTICLE IV - MEETINGS OF DIRECTORS
SECTION 1. REGULAR MEETINGS.......................................... 10
SECTION 2. SPECIAL MEETINGS.......................................... 10
SECTION 3. NOTICE.................................................... 10
SECTION 4. WAIVER OF NOTICE.......................................... 10
SECTION 5. QUORUM.................................................... 10
SECTION 6. MANNER OF ACTING.......................................... 10
SECTION 7. PRESUMPTION OF ASSENT..................................... 10
SECTION 8. ACTION BY DIRECTORS WITHOUT MEETING....................... 11
SECTION 9. MEETINGS BY CONFERENCE TELEPHONE.......................... 11
ARTICLE V - COMMITTEES OF THE BOARD
SECTION 1. EXECUTIVE COMMITTEE....................................... 11
SECTION 2. OTHER COMMITTEES.......................................... 11
SECTION 3. VACANCY................................................... 11
2
<PAGE>
SECTION 4. REMOVAL; RESIGNATION...................................... 11
SECTION 5. MINUTES................................................... 12
SECTION 6. RESPONSIBILITY OF DIRECTORS............................... 12
ARTICLE VI - OFFICERS
SECTION 1. OFFICERS OF THE CORPORATION............................... 12
SECTION 2. APPOINTMENT AND TERM...................................... 12
SECTION 3. COMPENSATION OF OFFICERS.................................. 12
SECTION 4. REMOVAL OF OFFICERS....................................... 12
SECTION 5. BONDS..................................................... 12
SECTION 6. PRESIDENT................................................. 12
SECTION 7. VICE PRESIDENTS........................................... 13
SECTION 8. SECRETARY................................................. 13
SECTION 9. TREASURER................................................. 13
ARTICLE VII - CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS................................................. 13
SECTION 2. LOANS..................................................... 13
SECTION 3. CHECKS AND DRAFTS......................................... 14
SECTION 4. DEPOSITS.................................................. 14
ARTICLE VIII - CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES................................... 14
SECTION 2. TRANSFER OF SHARES........................................ 14
SECTION 3. LOST CERTIFICATES......................................... 14
SECTION 4. HOLDER OF RECORD.......................................... 14
ARTICLE IX - GENERAL PROVISIONS
SECTION 1. DISTRIBUTIONS............................................. 15
SECTION 2. SEAL...................................................... 15
SECTION 3. FISCAL YEAR............................................... 15
SECTION 4. PRONOUNS.................................................. 15
SECTION 5. AMENDMENTS................................................ 15
ARTICLE X - INDEMNIFICATION
SECTION 1. COVERAGE.................................................. 15
SECTION 2. EXPENSES PAYABLE IN ADVANCE............................... 15
SECTION 3. EVALUATION................................................ 15
SECTION 4. CONSIDERATION............................................. 16
SECTION 5. DEFINITIONS............................................... 16
3
<PAGE>
BYLAWS
OF
COX MERGER SUB, INC.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of the corporation shall
be located in Belmont, North Carolina, or at such other place as the Board of
Directors shall determine.
SECTION 2. REGISTERED OFFICE. The registered office of the corporation
required by law to be maintained in the State of North Carolina may be, but need
not be, identical to the principal office. The address of the registered office
may be changed from time to time by the Board of Directors.
SECTION 3. OTHER OFFICES. The corporation may, from time to time, have
offices at such places, either inside or outside the State of North Carolina, as
the Board of Directors may designate or as the business of the corporation may
require.
ARTICLE II
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the shareholders shall be
held on the last Friday in August, or at such time on such day designated in the
notice of meeting, for the purpose of electing directors and for the transaction
of such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday in the State of North Carolina, such
meeting shall be held on the next succeeding business day.
For nominations or other proper business to be brought before an annual
meeting by a shareholder, the shareholder must give written notice thereof to
the Secretary, with such notice to be received at the principal office of the
corporation no less than 90 days prior to the first anniversary of the preceding
year's annual meeting. Such shareholder notice shall set forth (a) as to each
person whom the shareholder proposes to nominate for election or reelection as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended, including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (b) as to any other business the shareholder proposes to
bring before the meeting, the reasons for conducting such business at the
meeting and any material interest in such business of such shareholder; and (c)
the name and address, as they appear on the corporation's books, of each
shareholder proposing such business, and the classes and number of shares of the
corporation that are owned of record and beneficially by such shareholder.
SECTION 2. SUBSTITUTE ANNUAL MEETING. If the annual meeting shall not be
held on the day designated by these Bylaws for the annual meeting of
shareholders, or at any adjournment thereof, then a substitute annual meeting
may be called in accordance with Section 3 of this Article and the meeting so
called may be designated and treated for all purposes as the annual meeting.
4
<PAGE>
SECTION 3. SPECIAL MEETINGS. Special meetings of the shareholders may be
called by the Chairman of the Board of Directors, the President or the Board of
Directors.
SECTION 4. PLACE OF MEETING. The Board of Directors may designate any
place, either inside or outside the State of North Carolina, as the place of
meeting for any annual meeting or for any special meeting called by the Board of
Directors. A waiver of notice signed by all shareholders entitled to vote at a
meeting may designate any place, either inside or outside the State of North
Carolina, as the place for the holding of such meeting. If no designation is
made, or if a special meeting be otherwise called, the place of meeting shall be
the principal office of the corporation.
SECTION 5. NOTICE OF MEETING. Written or printed notice stating the time
and place of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) nor more than sixty (60) days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary,
or the officer or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the shareholder
at his address as it appears on the record of shareholders of the corporation,
with postage thereon prepaid. In addition to the foregoing, such notice of a
substitute annual meeting shall state that the annual meeting was not held on
the day designated by these Bylaws and that such substitute annual meeting is
being held in lieu of and is designated as such annual meeting.
If a meeting of shareholders is adjourned to a different date, time or
place, notice need not be given of the new date, time or place if the new date,
time or place is announced at the meeting before adjournment and if a new record
date is not fixed for the adjourned meeting. If a new record date for the
adjourned meeting is fixed (which must be done if the new date is more than 120
days after the date of the original meeting), notice of the adjourned meeting
must be given to persons who are shareholders as of the new record date.
SECTION 6. WAIVER OF NOTICE.
(a) A shareholder may waive any notice required by law, the Articles
of Incorporation, or these Bylaws before or after the date and time stated
in the notice. The waiver must be in writing, be signed by the shareholder
entitled to the notice, and be delivered to the corporation for inclusion
in the minutes or filing with the corporate records.
(b) A shareholder's attendance at a meeting in person or by proxy:
(1) waives objection to lack of notice or defective notice of the
meeting, unless the shareholder or his proxy at the beginning of the
meeting objects to holding the meeting or transacting business at the
meeting; and
(2) waives objection to consideration of a particular matter at
the meeting that is not within the purpose or purposes described in
the meeting notice, unless the shareholder or his proxy objects to
considering the matter before it is voted upon.
SECTION 7. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, seventy (70) days. If the stock transfer books shall be
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closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
(10) days immediately preceding such meeting.
In lieu of closing the stock transfer books, the Board of Directors may fix
in advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than seventy (70) days and, in the case of
a meeting of shareholders, not less then ten (10) full days prior to the date on
which the particular action, requiring such determination of shareholders, is to
be taken.
If the stock transfer books are not closed and no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or shareholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this Section, such determination shall
apply to any adjournment thereof except where the determination has been made
through the closing of the stock transfer books and the stated period of closing
has expired, and except where the Board of Directors fixes a new record date,
which it must do if the meeting is adjourned to a date more than 120 days after
the date fixed for the original meeting.
SECTION 8. VOTING LISTS. After fixing a record date for a meeting, the
Secretary of the corporation shall prepare, or shall cause the transfer agent to
prepare, an alphabetical list of the names of all its shareholders who are
entitled to notice of a shareholders' meeting. The list shall be arranged by
voting group (and within each voting group by class or series of shares) and
show the address of and number of shares held by each shareholder. The
shareholders' list shall be available for inspection by any shareholder,
beginning two (2) business days after notice of the meeting is given for which
the list was prepared and continuing through the meeting, at the corporation's
principal office or at a place identified in the meeting notice in the city
where the meeting will be held. A shareholder, or his agent or attorney, is
entitled on written demand to inspect and, subject to the requirements of
ss.55-16-02(c) of the North Carolina Business Corporation Act, as may be
hereafter amended, to copy the list, during regular business hours and at his
expense, during the period it is available for inspection. The Secretary of the
corporation shall make the shareholders' list available at the meeting, and any
shareholder or his agent or attorney is entitled to inspect the list at any time
during the meeting or any adjournment.
SECTION 9. VOTING GROUPS. All shares of one or more classes or series that
under the Articles of Incorporation or the North Carolina Business Corporation
Act are entitled to vote and be counted together collectively on a matter at a
meeting of shareholders constitute a voting group. All shares entitled by the
Articles of Incorporation or the North Carolina Business Corporation Act to vote
generally on a matter are for that purpose a single voting group. Classes or
series of shares shall not be entitled to vote separately by voting group unless
expressly authorized by the Articles of Incorporation or specifically required
by law.
SECTION 10. QUORUM. Shares entitled to vote as a separate voting group may
take action on a matter at the meeting only if a quorum of those shares exists.
A majority of the votes entitled to be cast on the matter by the voting group
constitutes a quorum of that voting group for action on that matter.
The shareholders at a meeting at which a quorum is present may continue to
do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
In the absence of a quorum at the opening of any meeting of shareholders,
such meeting may be adjourned from time to time by a vote of the majority of the
shares voting on the motion to adjourn; and at any adjourned meeting at which a
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quorum is present, any business may be transacted which might have been
transacted at the original meeting.
SECTION 11. PROXIES. Shares may be voted either in person or by one or more
agents authorized by a written proxy executed by the shareholder or by his duly
authorized attorney in fact.
An appointment of a proxy is effective when received by the Secretary or
other officer or agent authorized to tabulate votes. An appointment is valid for
eleven (11) months unless a different period is expressly provided in the
appointment form.
SECTION 12. VOTING OF SHARES. Each outstanding share entitled to vote shall
be entitled to one vote on each matter submitted to a vote at a meeting of
shareholders.
Except as otherwise provided by law, the Articles of Incorporation or these
Bylaws, if a quorum exists, action on a matter by a voting group is approved if
the votes cast within the voting group favoring the action exceed the votes cast
opposing the action.
Shares of its own stock owned by the corporation directly, or indirectly
through a corporation in which it owns, directly or indirectly, a majority of
the shares entitled to vote for directors, shall not be voted at any meeting and
shall not be counted in determining the total number of outstanding shares at a
given time entitled to vote; provided that this provision does not limit the
power of the corporation to vote its own shares held by it in a fiduciary
capacity.
SECTION 13. VOTES REQUIRED. The vote of a majority of the shares voted at a
meeting of shareholders, duly held at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which may properly come
before the meeting except as otherwise provided by law, by the Articles of
Incorporation or by these Bylaws. Any provision in these Bylaws prescribing the
vote required for any purpose as permitted by law may not itself be amended by a
vote less than the vote prescribed therein.
SECTION 14. VOTING INSPECTORS. Either the Board of Directors or the
Chairman of the meeting may appoint one or more voting inspectors, each of whom
shall take an oath to execute his duties impartially and to the best of his
ability. The voting inspectors shall, by majority vote, resolve all questions
regarding voting of shares, including the number of shares outstanding, the
voting power of each, the shares represented at the meeting, the qualification
of voters, the validity of proxies, the existence of a quorum as to any voting
group, and the acceptance, rejection and tabulation of votes.
SECTION 15. ACTION OF SHAREHOLDERS WITHOUT MEETING. Any action which may be
taken at a meeting of the shareholders may be taken without a meeting if the
action is taken by all the shareholders entitled to vote on the action. The
action must be evidenced by one or more written consents signed by all the
shareholders before or after such action, describing the action taken and
delivered to the corporation for inclusion in the minutes or filing with the
corporate records. A consent signed under this Section has the effect of a
meeting vote and may be described as such in any document.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation managed
under the direction of, the Board of Directors.
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SECTION 2. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of
the corporation shall be not less than three (3) nor more than nine (9) as shall
be determined from time to time by the directors.
The directors shall be elected at the annual meeting of the shareholders
(except as herein otherwise provided for the filling of vacancies) and each
director shall hold office until his death, resignation, retirement, removal,
disqualification, or his successor is elected and qualified. Directors shall be
elected by a plurality of the votes cast by the shares entitled to vote in the
election of directors at a meeting at which a quorum is present.
Directors need not be residents of the State of North Carolina. Each
director must be a shareholder of record of the corporation.
SECTION 3. VACANCIES. Except as otherwise provided by law or the Articles
of Incorporation, any vacancy occurring in the Board of Directors, including a
vacancy created by an increase in the number of directors within the minimum and
maximum specified in Section 2 of this Article, may be filled by the affirmative
vote of a majority of the remaining directors even though less than a quorum or
by the sole remaining director.
The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected.
At a special meeting of shareholders the shareholders may elect a director
to fill any vacancy not filled by the directors.
SECTION 4. REMOVAL; RESIGNATION. Any director may be removed at any time
with or without cause by a vote of the shareholders holding a majority of the
outstanding shares entitled to vote at an election of directors. If cumulative
voting is authorized, a director may not be removed if the number of votes
sufficient to elect him under cumulative voting is voted against his removal.
A director may not be removed by the shareholders at a meeting unless the
notice of the meeting states that the purpose, or one of the purposes, of the
meeting is removal of the director.
Any director may at any time resign by giving written notice to the Board
of Directors, the Chairman or the corporation. Any such resignation shall take
effect at the time specified therein or, if no time shall be specified therein,
at the time of the receipt thereof, and unless specified therein, the acceptance
of such resignation shall not be necessary to make it effective.
SECTION 5. COMPENSATION. The Board of Directors may compensate directors
for their services as such and may provide for the payment of all expenses
incurred by directors in attending meetings of the Board.
SECTION 6. CHAIRMAN OF THE BOARD. There may be a Chairman of the Board of
Directors appointed by the directors. The Chairman shall preside at all meetings
of the Board of Directors and perform such other duties as may be directed by
the Board.
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ARTICLE IV
MEETINGS OF DIRECTORS
SECTION 1. REGULAR MEETINGS. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately after the annual
meeting of shareholders. The Board of Directors may provide, by resolution, the
time and place, either within or without the State of North Carolina for the
holding of additional regular meetings without other notice than such
resolution.
SECTION 2. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by the President or any two directors. The person or persons
authorized to call special meetings of the Board of Directors may fix any place,
either inside or outside the State of North Carolina, as the place for holding
any special meeting of the Board of Directors called by them.
SECTION 3. NOTICE. The person calling the meeting shall give or cause to be
given oral or written notice of special meetings of the Board of Directors to
each director not less than three (3) days before the date of the meeting.
Neither the business transacted at, nor the purposes of, any regular or
special meeting of the Board of Directors need be specified in the notice or
waiver of notice of such meeting.
SECTION 4. WAIVER OF NOTICE.
(a) A director may waive any notice required by law, the Articles of
Incorporation, or these Bylaws before or after the date and time stated in
the notice. Except as provided by subsection (b), the waiver must be in
writing, signed by the director entitled to the notice, and delivered to
the corporation for filing with the minutes or corporate records.
(b) A director's attendance at or participation in a meeting waives
any required notice to him of the meeting unless the director at the
beginning of the meeting (or promptly upon his arrival) objects to holding
the meeting or transacting business at the meeting and does not thereafter
vote for or assent to action taken at the meeting.
SECTION 5. QUORUM. Except as otherwise provided by law, the Articles of
Incorporation or these Bylaws, a quorum of the Board of Directors consists of
(a) a majority of the fixed number of directors if the corporation has a fixed
board size, or (b) a majority of the number of directors prescribed, or if no
number is prescribed, the number in office immediately before the meeting
begins, if the corporation has a variable-range size board.
SECTION 6. MANNER OF ACTING. If a quorum is present when a vote is taken,
the affirmative act of the majority of the directors present is the act of the
Board of Directors, except as otherwise provided by these Bylaws.
SECTION 7. PRESUMPTION OF ASSENT. A director who is present at a meeting of
the Board of Directors or a committee of the Board of Directors when corporate
action is taken is deemed to have assented to the action taken unless:
(a) He objects at the beginning of the meeting (or promptly upon his
arrival) to holding it or transacting business at the meeting;
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(b) His dissent or abstention from the action taken is entered in the
minutes of the meeting; or
(c) He files written notice of his dissent or abstention with the
presiding officer of the meeting before its adjournment or with the
corporation immediately after adjournment of the meeting. The right of
dissent or abstention is not available to a director who votes in favor of
the action taken.
SECTION 8. ACTION BY DIRECTORS WITHOUT MEETING. Action required or
permitted by law to be taken at a Board of Directors' meeting may be taken
without a meeting if the action is taken by all members of the Board. The action
must be evidenced by one or more written consents signed by each director before
or after such action, describing the action taken, and included in the minutes
or filed with the corporate records. Action taken under this Section is
effective when the last director signs the consent unless the consent specifies
a different effective date. A consent signed under this Section has the effect
of a meeting vote and may be described as such in any document.
SECTION 9. MEETINGS BY CONFERENCE TELEPHONE. Any one or more directors may
participate in a meeting of the Board or a committee by means of a conference
telephone or similar communications device by which all directors participating
may simultaneously hear each other during the meeting, and such participation in
a meeting shall be deemed presence in person at such meeting.
ARTICLE V
COMMITTEES OF THE BOARD
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors, by resolution
adopted by a majority of the number of directors fixed by these Bylaws, may
designate two or more directors to constitute an Executive Committee, which
committee, to the extent provided in such resolution, shall have and may
exercise all of the authority of the Board of Directors to the extent permitted
by applicable law.
SECTION 2. OTHER COMMITTEES. The Board of Directors may create an Audit
Committee, a Compensation Committee and one or more other committees and appoint
members of the Board of Directors to serve on them. Each committee must have two
or more members, who serve at the pleasure of the Board of Directors. The
creation of a committee and appointment of members to it must be approved by the
greater of:
(a) A majority of all the directors in office when the action is
taken; or
(b) The number of directors constituting a quorum under the Articles
of Incorporation or these Bylaws.
SECTION 3. VACANCY. Any vacancy occurring in any committee shall be filled
by a majority of the number of directors fixed by these Bylaws at a regular or
special meeting of the Board of Directors.
SECTION 4. REMOVAL; RESIGNATION. Any member of a committee may be removed
at any time with or without cause by a majority of the number of directors fixed
by these Bylaws. Any member of a committee may at any time resign from such
committee by giving written notice to the Board of Directors, the Chairman or
the corporation. Any such resignation shall take effect at the time specified
therein or, if no time shall be specified therein, at the time of the receipt
thereof, and unless specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
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SECTION 5. MINUTES. Each committee shall keep regular minutes of its
proceedings, report the same to the Board when required and deliver the same to
the Secretary of the corporation for inclusion in the corporate records.
SECTION 6. RESPONSIBILITY OF DIRECTORS. The designation of a committee and
the delegation thereto of authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility or liability imposed
upon it or him by law.
Any resolutions adopted or other action taken by a committee within the
scope of the authority delegated to it by the Board of Directors shall be deemed
for all purposes to be adopted or taken by the Board of Directors.
If action taken by a committee is not thereafter formally considered by the
Board, a director may dissent from such action by filing his written objection
with the Secretary with reasonable promptness after learning of such action.
ARTICLE VI
OFFICERS
SECTION 1. OFFICERS OF THE CORPORATION. The officers of the corporation
shall consist of a President, a Secretary, a Treasurer and such Vice Presidents,
Assistant Secretaries, Assistant Treasurers and other officers as the Board of
Directors may from time to time appoint. The same individual may simultaneously
hold more than one office in the corporation, but no individual may act in more
than one capacity where action of two or more officers is required.
SECTION 2. APPOINTMENT AND TERM. The officers of the corporation shall be
appointed annually by the Board of Directors and each officer shall hold office
until his death, resignation, retirement, removal, disqualification or his
successor shall have been appointed.
SECTION 3. COMPENSATION OF OFFICERS. The compensation of all officers of
the corporation shall be fixed by the Compensation Committee and ratified by the
Board of Directors (or, if there is no Compensation Committee, by the Board of
Directors) and no officer shall serve the corporation in any other capacity and
receive compensation therefor unless such additional compensation shall be so
authorized. The appointment of an officer does not itself create contract
rights.
SECTION 4. REMOVAL OF OFFICERS. The Board of Directors may remove any
officer at any time with or without cause, but such removal shall not itself
affect the officer's contract rights, if any, with the corporation.
SECTION 5. BONDS. The Board of Directors may by resolution require any
officer, agent, or employee of the corporation to give bond to the corporation,
with sufficient sureties, conditioned upon the faithful performance of the
duties of his respective office or position, and to comply with such other
conditions as may from time to time be required by the Board of Directors.
SECTION 6. PRESIDENT. The President shall, subject to the control of the
Board of Directors, supervise and control the day-to-day operation of the
corporation in accordance with these Bylaws. He shall, when present, preside at
all meetings of the shareholders.
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He shall sign any deeds, mortgages, bonds, contracts, or other instruments
which may be lawfully executed on behalf of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be delegated by the Board of
Directors to some other officer or agent; and, in general, he shall perform all
duties incident to the office of President and such other duties as may be
prescribed by the Board of Directors from time to time.
SECTION 7. VICE PRESIDENTS. In the absence of the President or in the event
of his death, inability or refusal to act, the Vice Presidents, in the order of
the seniority of their titles, or if they shall all be the same level of Vice
President, in the order of their length of uninterrupted service at such level
of Vice President, unless otherwise determined by the Board of Directors, shall
perform the duties of the President, and when so acting shall have all the
powers of and be subject to all the restrictions upon the President. Each Vice
President shall perform such other duties as from time to time be assigned to
him by the President or Board of Directors.
SECTION 8. SECRETARY. The Secretary shall: (a) attend all meetings of the
shareholders and of the Board of Directors, keep the minutes of such meetings in
one or more books provided for that purposes, and perform like duties for the
standing committees when required; (b) see that all notices are duly given in
accordance with the provisions of these Bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation and see
that the seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly authorized; (d) keep a
register of the post office address of each shareholder which shall be furnished
to the Secretary by such shareholder; (e) have general charge of the stock
transfer books of the corporation, which shall be maintained by a corporation
qualified to act as transfer agent; and (f) in general perform all duties
incident to the office of secretary and such other duties as from time to time
may be assigned to him by the Board of Directors or by the President, under
whose supervision he shall be.
The Secretary shall keep or cause to be kept at the corporation's principal
office a record of the corporation's shareholders, giving the names and
addresses of all shareholders and the number and class of shares held by each,
and such other records as are required to be kept at the corporation's principal
office by ss.55-16-01 of the North Carolina Business Corporation Act and any
successor to such statute.
SECTION 9. TREASURER. The Treasurer shall: (a) have charge and custody of
and be responsible for all funds and securities of the corporation; receive and
give receipts for money due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
depositories as shall be selected in accordance with the provisions of Article
VII, Section 4 of these Bylaws; and (b) in general perform all of the duties
incident to the office of Treasurer, including preparing, or causing to be
prepared, all financial statements required by law, and such other duties as
from time to time may be assigned to him by the President or by the Board of
Directors.
ARTICLE VII
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver any
instrument in the name of and on behalf of the corporation, and such authority
may be general or confined to specific instances.
SECTION 2. LOANS. No loans shall be contracted on behalf of the corporation
and no evidences of indebtedness shall be issued in its name unless authorized
by a resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
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SECTION 3. CHECKS AND DRAFTS. All checks, drafts or other orders for the
payment of money, issued in the name of the corporation, shall be signed by such
officer or officers, agent or agents of the corporation and in such manner as
shall from time to time be determined by resolution of the Board of Directors.
SECTION 4. DEPOSITS. All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the corporation in such
depositories as the Board of Directors may select.
ARTICLE VIII
CERTIFICATES FOR SHARES AND THEIR TRANSFER
SECTION 1. CERTIFICATES FOR SHARES. Every shareholder of the corporation
shall be entitled to a certificate or certificates for the fully paid shares
owned by such shareholder, which certificates shall be consecutively numbered or
otherwise identified, and shall be in such form as shall be determined by the
Board of Directors. Certificates shall bear the signatures of the President or a
Vice President and of the Secretary or an Assistant Secretary, and the
impression of the corporation's corporate seal. The signatures of such officers
of the corporation, and the impression of its corporate seal, may be in
facsimile form on any certificates which are manually countersigned by or on
behalf of an independent transfer agent and/or registrar duly appointed by the
corporation for the shares of stock evidenced thereby. In case any officer who
has signed or whose facsimile or other signature has been placed upon such
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the corporation with the same effect as if he were
such officer at the date of its issue. The name and address of the person to
whom the shares represented thereby are issued, with the number and class of
shares and the date of issue, shall be entered on the stock transfer books of
the corporation.
SECTION 2. TRANSFER OF SHARES. Transfer of shares of the corporation shall
be made only on the stock transfer books of the corporation by the holder of
record thereof or by his legal representative, who shall furnish proper evidence
of authority to transfer, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary, and upon surrender for
cancellation of the certificate for such shares.
SECTION 3. LOST CERTIFICATES. The Secretary may direct a new certificate to
be issued in place of any certificate theretofore issued by the corporation
claimed to have been lost or destroyed, upon receipt of an affidavit of such
fact from the shareholder. When authorizing such issuance of a new certificate,
the Secretary may require that the shareholder give the corporation a bond in
such sum as the Secretary may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate claimed to have
been lost or destroyed or may require the shareholder to agree to indemnify the
corporation against any claims that may be made against the corporation with
respect to the certificate claimed to have been lost or destroyed.
SECTION 4. HOLDER OF RECORD. The corporation may treat as an absolute owner
of shares the person in whose name the shares stand of record on its books just
as if that person had full competency, capacity and authority to exercise all
rights of ownership irrespective of any knowledge or notice to the contrary or
any description indicating a representative, pledge or other fiduciary relation
or any reference to any other instrument or to the rights of any other person
appearing upon its records or upon the share certificate except that any person
furnishing to the corporation proof of his appointment as a fiduciary shall be
treated as if he were a holder of record of its shares.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 1. DISTRIBUTIONS. The Board of Directors may from time to time
authorize, and the corporation may grant, distributions and share dividends
pursuant to law and subject to the provisions of its Articles of Incorporation.
SECTION 2. SEAL. The corporate seal of the corporation shall consist of two
concentric circles between which is the name of the corporation and in the
center of which is inscribed SEAL; and such seal, as impressed on the margin
hereof, is hereby adopted as the corporate seal of the corporation.
SECTION 3. FISCAL YEAR. The fiscal year of the corporation shall begin on
the first day of May and end on the last day of April.
SECTION 4. PRONOUNS. Each reference to pronouns herein shall be construed
in the masculine, feminine, neuter, singular or plural, as the context may
require.
SECTION 5. AMENDMENTS. The Board of Directors may amend or repeal the
Bylaws, except to the extent otherwise provided by law, the Articles of
Incorporation or a Bylaw adopted by the shareholders, and except that a Bylaw
adopted, amended or repealed by the shareholders may not be readopted, amended
or repealed by the Board of Directors unless the Articles of Incorporation or a
Bylaw adopted by the shareholders authorizes the Board of Directors to adopt,
amend or repeal that particular Bylaw or the Bylaws generally.
ARTICLE X
INDEMNIFICATION
SECTION 1. COVERAGE. Any person who at any time serves or has served as a
director or officer of the corporation, or in such capacity at the request of
the corporation for any other corporation, partnership, joint venture, trust or
other enterprise, or as a trustee or administrator under an employee benefit
plan, shall have a right to be indemnified by the corporation to the fullest
extent permitted by law against (a) reasonable expenses, including reasonable
attorneys' fees, actually incurred by him in connection with any threatened,
pending or completed action, suit or proceeding (and any appeal thereof),
whether civil, criminal, administrative, investigative or arbitrative, and
whether or not brought by or on behalf of the corporation, seeking to hold him
liable by reason of the fact that he is or was acting in such capacity, and (b)
reasonable payments made by him in satisfaction of any judgment, money decree,
fine (including, without limitation, an excise tax assessed with respect to an
employee benefit plan), penalty or settlement for which he may have become
liable in any such action, suit or proceeding.
SECTION 2. EXPENSES PAYABLE IN ADVANCE. Expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding by the Corporation upon receipt of an acknowledgement and agreement
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
Corporation as authorized in this Section.
SECTION 3. EVALUATION. The Board of Directors of the corporation shall take
all such action as may be necessary and appropriate to authorize the corporation
to pay the indemnification required by this Article X, including without
limitation, to the extent needed, making a determination that indemnification is
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permissible under the circumstances and a good faith evaluation of the manner in
which the claimant for indemnity acted and of the amount of indemnity due him,
and giving notice to and obtaining approval by the shareholders of the
corporation.
SECTION 4. CONSIDERATION. Any person who at any time after the adoption of
this Article X serves or has served in any of the aforesaid capacities for or on
behalf of the corporation shall be deemed to be doing or to have done so in
reliance upon, and as consideration for, the right of indemnification provided
herein. Such right shall inure to the benefit of the legal representatives of
any such person and shall not be exclusive of any other rights to which such
person may be entitled apart from the provisions of this Article X. Any repeal
or modification of these indemnification provisions shall not affect any rights
or obligations existing at the time of such repeal or modification.
SECTION 5. DEFINITIONS. For purposes of this Article X, terms defined by
the North Carolina Business Corporation Act and used but not defined herein
shall have the meanings assigned to them by the Act.
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COX TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS - NOVEMBER 3, 2000
The undersigned hereby appoints DR. JAMES L. COX, with full power of
substitution, attorneys and proxies to appear and vote, as indicated below, all
of the shares of Common Stock of Cox Technologies, Inc. that the undersigned
would be entitled to vote at the annual meeting of shareholders to be held on
November 3, 2000 and at any and all adjournments thereof. The Board of Directors
recommends a vote FOR the following items:
1. Election of Directors.
[ ] FOR the nominees [ ] FOR the nominees [ ] WITHHOLD AUTHORITY to
listed below listed below except as vote for the nominees
marked to the contrary listed below
(Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, strike a
line through the nominee's name in the list below.)
David K. Caskey James L. Cox Uri M. Dahan Brian D. Fletcher
Michael E. Fonzo George M. Pigott Kurt C. Reid
2. Proposal to approve the Company's 2000 Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to authorize the reincorporation of the Company in North
Carolina
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to ratify the selection of Cherry, Bekaert & Holland, L.L.P.
as independent public accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting or any
adjournments thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and when properly
executed will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this proxy will be voted FOR all nominees
for Director and FOR Proposals 2, 3, 4,and 5.
________________________________ Signed:__________________________________
Print Name
________________________________ Signed:__________________________________
Print Name
Please sign exactly as your name
appears hereon. If the holder is a
corporation or partnership, please
sign its name and add your own name
and title. When signing as
attorney, executor, administrator,
trustee or guardian, please also
give your full title. If shares are
held jointly EACH holder must sign.
Dated:_____________________________
IMPORTANT: Please mark, sign and date this proxy and return it promptly in the
enclosed envelope.
