SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definititive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant toss.240.14a-11(c) orss.240.14a-12
Danzer Corporation
(Name of Registrant as Specified In Its Charter)
(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 Acts Rules 14a-(6)(i)(1) and
0-11.
1. Title of each class of securities to which transaction applies.
1. Aggregate number of securities to which transaction applied:
1. 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):
1. Proposed maximum aggregate value of transaction:
<PAGE>
1. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-12(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, of the Form or Schedule and the date of its filing.
1) Amount Previously Paid.
---------------------
1) Form, Schedule or Registration Statement No.:
---------------------
1) Filing Party:
---------------------
1) Date Filed:
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<PAGE>
DANZER CORPORATION
17500 York Road
Hagerstown, Maryland 21740
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 23, 2000
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of DANZER CORPORATION (the "Company") to be held on May 23, 2000, at 10:00
a.m. at the Company's headquarters 17500 York Road, Hagerstown, Maryland
21740, for the following purposes:
1. To elect three directors to serve until the next
annual meeting of shareholders;
2. To increase the number of authorized shares of Common
Stock to 40,000,000;
3. To ratify the Company's 1999 Stock Incentive Plan;
4. To approve auditors for the current fiscal year; and
5. To transact such other business as may properly come
before the Annual Meeting or any adjournment thereof.
Only shareholders of record at the close of business on April 24, 2000
will be entitled to notice of and to vote at the Annual Meeting.
If you do not expect to attend the Annual Meeting in person but wish
to have your shares voted, please promptly sign, date and mail the enclosed
proxy in the envelope provided in order that your shares may be represented
at the Annual Meeting.
By Order of the Board of Directors,
Goodhue Smith III
Chairman of the Board
Date:
<PAGE>
DANZER CORPORATION
17500 York Road
Hagerstown, Maryland 21740
PROXY STATEMENT
This proxy statement is furnished to shareholders of DANZER
CORPORATION (the "Company") in connection with the solicitation of proxies
on behalf of the Board of Directors of the Company for use at the Annual
Meeting of Shareholders to be held on May 23, 2000, at 10:00 a.m. at the
offices of Company's headquarters 17500 York Road, Hagerstown, Maryland
21740 and any adjournments thereof.
The approximate date of mailing of this proxy statement and
accompanying proxy is April 24, 2000. If the enclosed form of proxy is duly
executed and returned, the shares represented will be voted in accordance
with the instructions marked on the proxy.
Unmarked proxies will be voted "FOR" the election of the directors
named below, "FOR" the increase in the number of authorized shares of
Common Stock, "FOR" the ratification of the Company's 1999 Stock
Compensation Plan, and "FOR" approval of the auditors named below and in
the discretion of the person or persons voting such proxies upon such other
business as may properly be considered at the Annual Meeting or at any
adjournment thereof.
REVOCATION
Execution and delivery of the enclosed proxy will not affect the right
of any person to attend the Annual Meeting and vote in person. Any
shareholder who gives a proxy has the power to revoke it at any time before
it is voted by delivery of a written instrument of revocation or a duly
executed proxy bearing a later date to the Secretary of the Company or by a
request in person to the Secretary of the Company to return the executed
proxy. The presence of a shareholder at the Annual Meeting will not operate
to revoke a proxy, but the casting of a ballot by a shareholder who is
present at the Annual Meeting will revoke a proxy as to the matter on which
the ballot is cast.
COST OF SOLICITATION
The cost of soliciting proxies is being borne by the Company. In
addition to solicitation by mail, arrangements will be made with brokerage
houses and other custodians, nominees and fiduciaries to send proxies and
proxy statements their principals, and the Company will reimburse them for
their expense in so doing. Officers, directors and employees of the Company
may solicit proxies in person or by telephone, but will not receive any
additional compensation therefor.
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
The Board of Directors proposes the election of Goodhue Smith, Russell
G. Cleveland and M. E. Williams to serve on the Company's Board of
Directors until the next Annual Meeting of Shareholders and until their
respective successors are duly elected and qualify.
The following table provides certain information concerning the
directors of the Company.
<TABLE>
<CAPTION>
Present
Term Director
Name Age Position Expires Since
<S> <C> <C> <C> <C>
Goodhue W. Smith, III 51 Director 2001 1997
Russell Cleveland 62 Director 2001 1991
M.E. Williams 60 Director 2001 1999
</TABLE>
Russell Cleveland, a chartered financial analyst, became director of
the Company on April 26, 1991. Mr. Cleveland has for the past eight years
been a director, officer and shareholder of Renaissance Capital Group,
Inc., which is the managing general partner of Renaissance, a business
development company pursuant to the Investment Company Act of 1940. Mr.
Cleveland currently serves on the Board of Directors of Feminique
Corporation, Bentley Pharmaceuticals, Inc., Technology Research Corp. and
Tutogen Medical, Inc. Mr. Cleveland is the Renaissance designee to the
Board of Directors. See "Certain Relationships and Related Transactions"
herein.
M.E. Williams is the President and Chief Executive Officer of Danzer.
Mr. Williams has over 30 years of experience in manufacturing and 7 years
of truck body manufacturing experience. He was hired as President and Chief
Executive Officer in March 1998 and replaced Mr. William L. Pryor, III as a
member of the Company's Board of Directors in 1999.
Goodhue W. Smith III founded Duncan-Smith Co., an investment banking
firm in San Antonio, Texas, in 1978 and has since such time served as its
Secretary and Treasurer. Mr. Smith is also Director of Citizens National
Bank of Milam County, and Ray Ellison Mortgage Acceptance Co.
If a nominated director becomes unavailable to accept election as a
director, the persons named in the enclosed proxy will vote "FOR" the
election of a substitute recommended by the Board of Directors. The
Company, however, has no reason to believe that any nominee will be
unavailable.
The Company's Board of Directors met three times during the fiscal
year ended October 31, 1999.
The Company's audit committee met once in fiscal 1999. The Company
does not have a nominating or compensation committee of the Board of
Directors.
Directors who are not employees of the Company are entitled to a board
meeting attendance fee of $750 plus reimbursement of expenses. The
directors waived all of these fees for the year ending October 31, 1999.
Goodhue W. Smith, III who was elected as Chairman of the Board at the
Company's December 15, 1997 Board meeting as a requirement under financing
provided by Duncan-Smith Co., of which Mr. Smith is an officer and
director, is to be paid $1,500 per month as compensation. Mr. Smith did not
receive any fees in the year ended October 31, 1999. Mr. Smith has received
warrants for 100,000 shares of Common Stock with an exercise price of $0.10
per share.
<PAGE>
Directors are elected by a plurality of the votes cast. Abstentions
and broker non-votes will not be treated as votes cast.
Compliance with Section 16 (a) of the Securities Exchange Act of 1934
Section 16 (a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and persons who own more than ten
percent of the Company's Common Stock ("10% Shareholders") to file reports
of Ownership and reports of changes in ownership of the Company's Common
Stock with the Securities Exchange Commission ("SEC"). Officers, Directors
and Shareholders are required by SEC regulation to furnish the Company with
copies of all forms they file under Section 16 (a). Based solely on its
review of the copies of such forms received by it with respect to its
fiscal year ended October 31, 1999 and written representations from certain
reporting persons that no other reports were required to those persons, the
Company believes that all Section 16 (a) filing requirements applicable to
its officers, directors and 10% Shareholders were complied with.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE ELECTION OF ITS NOMINEES
PROPOSAL 2. APPROVAL OF INCREASE IN NUMBER OF AUTHORIZED SHARES.
Presently there are 17,588,348 shares of Common Stock issued and
outstanding and there are 20,000,000 shares of Common Stock authorized.
Another 1,569,500 shares are reserved for issuance pursuant to stock
options and warrants. The Company's Articles of Incorporation must be
amended to increase the number of authorized shares, and the proposal
submitted herewith is to increase the number of authorized shares of Common
Stock to 40,000,000. The Company needs to be in the position to issue
additional shares of stock in the event it desires to seek additional
funding or enter into a possible restructuring. In addition, the Company
needs to be able to reserve for issuance additional shares of stock
pursuant to the Company's proposed 1999 Stock Compensation Plan which is
one of the proposed matters set forth for approval at this annual meeting
of stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" INCREASING THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
PROPOSAL 3. APPROVAL OF 1999 STOCK COMPENSATION PLAN
The 1999 Stock Compensation Plan (the "Stock Option Plan") provides
for the grant to employees, directors and advisors, of the Company or any
parent, subsidiary or affiliate of the Company of up to 2,000,000 shares of
the Company's Common Stock, subject to adjustment in the event of any
subdivision, combination, or reclassification of shares. The Stock Option
Plan will terminate in August 2009. The Stock Option Plan provides for the
grant of incentive stock options ("ISO's") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, and non-qualified
options at the discretion of the Board of Directors or a committee of the
Board of Directors (the "Committee"). The exercise price of any option will
not be less than the fair market value of the shares at the time the option
is granted. The options granted are exercisable within the times or upon
the events determined by the Committee set forth in the grant, but no
option is exercisable beyond ten years from the date of the grant. The
Committee administering the Stock Option Plan will determine whether each
option is to be an ISO or non-qualified stock option, the number of shares,
the exercise price, the period during which the option may be exercised,
and any other terms and conditions of the option. The holder of an option
may pay the option price in (1) cash, (2) check or (3) other mature shares
of the Company. The options are nontransferable except by will or by the
laws of descent and distribution. Upon dissolution, liquidation, merger,
sale of stock or sale of substantially all assets, outstanding options,
notwithstanding the terms of the grant, will become exercisable in full at
least 10 days prior to the transaction. The Stock Option Plan is subject to
amendment or termination at any time and from time to time, subject to
certain limitations.
<PAGE>
The plan also grants certain "Reload Options" which are not Incentive
Stock Options. The number of Reload Options a grantee has the right to
acquire is equal to the number of shares underlying an Incentive Option
plus the number of shares required to satisfy any tax withholding. The
exercise price of the Reload Options is equal to the fair market value of a
share of stock on the date of grant of the Reload Option. The grant of a
Reload Option becomes effective upon the exercise of the underlying
incentive Option or Reload Option through the use of shares of Common Stock
held by the optionee for at least twelve months.
The plan is administered by the Compensation Committee appointed by
the Board of Directors.
The Company maintains a Stock Option Plan (the "Plan"), which will be
superceded by the 1999 Stock incentive plan under which options of purchase
800,000 shares of the Company's Common Stock, par value $.0001 per share,
have been reserved. Pursuant to the Plan, the Company is permitted to issue
incentive stock options ("Incentive Stock Options") and non-qualified stock
options ("Non-Qualified Stock Options") to employees or directors of the
Company; provided, however, that no incentive Stock Options shall be
granted to a non-employee director. Incentive Stock Options under the Plan
are intended to qualify for the tax treatment accord under Section 422A of
the Internal Code of 1986, as amended (the "Code). Non-Qualified Options
under the plan are intended to be options which do not qualify for the tax
treatment accorded under Section 422A of the Code.
The Company had 1,569,500 options or warrants outstanding at October
31, 1999. 230,000 options expire June 2000 and are exercisable at $1.27 per
share, 210,000 options expire March 2001 and are exercisable at $0.48 per
share, 529,500 options are exercisable at $0.10 per share and expire in
October and November 2001 and 600,000 options are exercisable at $0.10 per
share and expire April 2004. Certain eligible employees and others may be
granted new options under the 1999 Stock Compensation Plan subject to
rescission under existing programs.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE APPROVAL OF ITS 1999 STOCK COMPENSATION PLAN
PROPOSAL 4. APPROVAL OF AUDITORS
The Board of Directors has selected the firm of Linton, Shafer & Co.,
P.A., independent public accountants, to audit the Company's accounts for
the fiscal year ending October 31, 2000. Linton, Shafer & Co., P.A. has
audited the Company's financial statements for the prior year.
It is expected that one or more representatives of Linton, Shafer &
Co., P.A.will be present at the Annual Meeting to answer appropriate
questions and to make a statement if they so desire. A majority of the
votes cast is required for approval of the auditors. Abstentions and broker
non-votes will not be treated as votes cast.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR" THE APPROVAL OF LINTON, SHAFER & CO., P.A.
AS THE COMPANY'S AUDITORS FOR FISCAL 2000
<PAGE>
VOTING SECURITIES
The holders of the common stock of the Company are entitled to one
vote per share on all matters. Only shareholders of record at the close of
business on April 24, 2000 (the "record date") will be entitled to notice
of and to vote at the Annual Meeting. The outstanding voting securities of
the Company as of the record date consisted of 17,588,348 shares of common
stock, par value $.0001 per share. The presence in person or by proxy of
the holders of a majority of the Company's voting securities will
constitute a quorum at the Annual Meeting.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of March 31, 2000, information
concerning the Company's common stock beneficially owned by (a) each person
or group known to the Company to be the beneficial owner of more than 5% of
the Company's voting securities, (b) each director and executive officer of
the Company, and (c) all directors and executive officers of the Company as
a group. The outstanding voting securities of the Company as of the record
date consisted of 15,588,342 shares of common stock. Except as otherwise
indicated, each person named or included in a group has sole voting and
investment power with respect to his or its voting securities.
<TABLE>
<CAPTION>
Name and Address of Beneficial Amount and Nature of Percent
Owner or Identity of Group Beneficial Ownership of Class (1)
-------------------------- -------------------- ------------
<S> <C> <C>
Renaissance Capital Partners, Ltd. 11,719,110 62.6%
8080 N. Central Expressway,
Suite 210, LB 59
Dallas, TX 75206-1857
Richard W. Snyder 1,946,667 10.9%
c/o Snyder Capital Corporation
3219 McKinney Ave.
Dallas, TX 75204
Russell G. Cleveland 11,807,110 (2) 63.1%
c/o Renaissance Capital Group, Inc.
8080 N. Central Expressway,
Suite 210, LB 59
Dallas, TX 75206-1857
Goodhue W. Smith, III 650,000 (3) 3.5%
c/o Duncan-Smith Co.
311 Third
San Antonio, Texas 78205
</TABLE>
(1) Common Stock which is not outstanding but which a person has a
right to acquire with 60 days of the record date are
considered as Common stock outstanding for purposes of
computing the percentage of Common Stock owned by such person,
but such Common stock is not deemed outstanding for purposes
of computing the percentage of Common Stock owned by any other
person. The number of shares used to compute percentage
ownership were the shares outstanding at December 31, 1999,
which shares equaled 18,717,848.
<PAGE>
(2) Mr. Cleveland owns 88,000 shares individually. Mr. Cleveland
is a director, officer and principal shareholder of
Renaissance Capital Group Inc., the managing general partner
of Renaissance Capital Partners, Ltd., and may be deemed to
share voting and investment control over such shares.
(3) Duncan-Smith Co. owns warrants to purchase 650,000 shares of
the Company's common stock at $0.25 per share on or before
August 2002. Mr. Smith is a principal of Duncan-Smith Co. and
may be deemed to share voting and investment control over such
shares.
Compliance with Section 16 (a) of the Securities Exchange Act of 1934
Section 16 (a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and persons who own more than ten percent of the
Company's Common Stock ("10% Shareholders") to file reports of Ownership and
reports of changes in ownership of the Company's Common Stock with the
Securities Exchange Commission ("SEC"). Officers, Directors and Shareholders are
required by SEC regulation to furnish the Company with copies of all forms they
file under Section 16 (a). Based solely on its review of the copies of such
forms received by it with respect to its fiscal year ended October 31, 1999 and
written representations from certain reporting persons that no other reports
were required to those persons, the Company believes that all Section 16 (a)
filing requirements applicable to its officers, directors and 10% Shareholders
were complied with.
EXECUTIVE COMPENSATION
The Company's executive officers are appointed by the Board of
Directors and, except as described herein, hold office at the pleasure of
the Board until their successors are appointed and have qualified. The
following table sets forth certain information concerning the compensation
paid or accrued by the Company for services rendered during the past three
fiscal years ended October 31 by the Company's sole executive officer.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual ($) Compensation
------------------------------------------- Common
Name and Principal Fiscal Salary Other Annual All Other Stock Options
Position Year ($) Compensation(1) Compensation (Shares)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
M.E. (Mel) Williams (2) 1998 $105,000 0 0 757,500
CEO 1999 $105,000 $8,386 0 0
Terry Moore (3) 1998 $ 64,000 0 0 192,000
CFO 1999 $ 69,000 $7,667 0 0
Kirby McLaughlin (4) 1998 $ 60,000 0 0 180,000
Vice President of 1999 $ 65,000 $7,188 0 0
Engineering
</TABLE>
(1) Represents cash bonuses paid for fiscal 1999.
(2) 157,500 of Mr. William's options are exercisable at $0.10 per share at
any time on or before November 2001. 600,000 of Mr. William's options
are exercisable at $0.10 per share on or before April 2004, but are not
exercisable until April 2000. In the event Mr. Williams is not CEO in
April 2000, the options will not vest.
(3) Mr. Moore's options are exercisable at $0.10 per share. 96,000 options
expire October 2001 and 96,000 options expire November 2001.
(4) Mr. McLaughlin's options are exercisable at $0.10 per share. 90,000
options expire October 2001 and 90,000 options expire November 2001
<PAGE>
The Company had 1,569,500 options outstanding at October 31, 1999.
230,000 options expire June 2000 and are exercisable at $1.27 per share,
210,000 options expire March 2001 and are exercisable at $0.48 per share,
529,500 options are exercisable at $0.10 per share and expire in October
and November 2001 and 600,000 options are exercisable at $0.10 per share
and expire April 2004.
The Company maintains a Stock Option Plan (the "Plan") under which
options of purchase 800,000 shares of the Company's Common Stock, par value
$.0001 per share, have been reserved. Pursuant to the Plan, the Company is
permitted to issue incentive stock options ("Incentive Stock Options") and
non-qualified stock options ("Non-Qualified Stock Options") to employees or
directors of the Company; provided, however, that no incentive Stock
Options shall be granted to a non-employee director. Incentive Stock
Options under the Plan are intended to qualify for the tax treatment accord
under Section 422A of the Internal Code of 1986, as amended (the "Code).
Non-Qualified Options under the plan are intended to be options which do
not qualify for the tax treatment accorded under Section 422A of the Code.
All directors and key employees of the Company and its subsidiaries
are eligible to participate in the Plan. The Plan is administered by the
Board of Directors of the Company which, to the extent it determines, may
delegate its power with respect to the administration of the Plan to a
compensation advisory committee consisting of not less than three members,
at least of whom two shall be directors for the Company.
Under the Plan, Incentive Stock Options to purchase shares of the
Company's Common Stock may not be granted for less than 100 percent of fair
market value of the Common Stock on the date the Incentive Stock Option is
granted; provided, however, that in the case of an Incentive Stock Option
granted to any person then owning 10 percent of the voting power of all
classes of the Company's stock, the Purchase Price per share of all classes
of the Company's stock, the Purchase Price per share subject to the
Incentive Stock Option may not be less than 110 percent of the fair market
value of the stock on the date of the grant of the option. The option price
per share with respect to each Non-Qualified Stock Option granted under the
Plan is to be determined by the Board of Directors, but may not be less
than 85% of the fair market value of the Common Stock on the date the
Non-Qualified Stock Option is granted.
Options under the Plan may not have a term of more than 10 years;
provided, however, that an Incentive Stock Option granted to a person then
owing more than 10 percent of the voting power of all classes of the
Company's stock may not be exercised more than 5 years after the date such
option is granted. In addition, the aggregate fair market value, determined
at the time the options granted, of the stock with respect to which
Incentive Stock Options are exercised for the first time by an employee in
any calendar year under the Plan may not exceed $100,000.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 31, 1994, Renaissance exchanged its Convertible Debenture
for 16,000 shares of the Company's Series B Preferred Stock. The Company
also issued Renaissance a 10% Term Note due December 31, 1996 in the
principal amount of approximately $211,635 for unpaid accrued interest on
the Debentures and paid Renaissance $50,000 (representing interest on the
Debentures from October 1, 1994 through December 31, 1994).
On October 31, 1996, Renaissance converted all of its Preferred Stock,
accumulated dividends, accumulated interest and note payable to common
stock at a conversion rate of $0.25 per share.
On August 1, 1997, the Company entered into a loan agreement with
Duncan-Smith Co., Trustee, for purposes of executing the DSC Note. Terms of
the $650,000 loan included an interest rate of 11% with payments due
quarterly and a final notoriety on June 15, 2002. Duncan-Smith Co. received
a cash fee of $32,500 and a warrant to purchase 650,000 shares of common
stock at $0.25 per share with an expiration date of August 2002.
Subsequently, Goodhue W. Smith, III, a director and officer of Duncan-Smith
Co., was elected Chairman of the Board. In February 1999, Duncan-Smith Co.
agreed to temporarily defer principal repayments on the DSC Note for
February and May 1999. In consideration, the Company agreed to increase the
interest rate to 13% until the Company could catch up on the original
payment schedule. Effective January 21, 2000, the Company entered into the
BOACFC Loan and paid down the DSC Note in full.
<PAGE>
In December 1997, Renaissance agreed to loan the Company $150,000
pursuant to a 10% promissory note secured by substantially all of the
assets of the Company. In February 1999, Renaissance converted the entire
$150,000 principal balance on the note, plus $17,532 in accrued interest,
into 1,675,318 shares of the Company's common stock, a rate of $0.10 per
share.
In February 1999, and in conjunction with the agreement by the DSC
Note Holders to defer principal repayments to the Company, Renaissance lent
Danzer $25,000 pursuant to a 13% promissory note maturing December 31,
1999. All principal and accrued interest was outstanding subsequent to
December 31, 1999. Effective January 12, 2000, Renaissance agreed to waive
its default rights through February 29, 2000 on a limited basis, and in
expectation of full payment out of proceeds from the BOACFC Loan.
SHAREHOLDER PROPOSALS
Shareholders wishing to submit proposals for inclusion in the Board of
Director's proxy statement for the next Annual Meeting of Shareholders must
submit their proposals to be received by the Company no later than December
20, 2000.
Management is not aware of any other business to be presented for
consideration at the Annual Meeting, but if any other business should arise
before the Annual Meeting, the persons named in the enclosed proxy will
vote on such business as management recommends.
<PAGE>
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
THE COMPANY HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ITS
ANNUAL REPORT ON FORM 10-K. SHAREHOLDERS WISHING TO RECEIVE A COPY OF THE
COMPANY'S 1999 FORM 10-K MAY RECEIVE IT WITHOUT CHARGE BY WRITING TO M.E.
WILLIAMS, CHIEF EXECUTIVE OFFICER, DANZER CORPORATION, 17500 YORK ROAD,
HAGERSTOWN, MD 21740.
The Company's Annual Report to Shareholders for the fiscal year ended
October 31, 1999, accompanies this Proxy Statement. The Annual Report to
Shareholders is neither proxy soliciting material nor a communication with
respect to a solicitation.
By Order of the Board of Directors,
Goodhue Smith III
Chairman of the Board
1999 STOCK COMPENSATION PLAN
of
Danzer Industries, Inc.
(a New York corporation)
* * * * *
<PAGE>
TABLE OF CONTENTS
* * *
1999 STOCK COMPENSATION PLAN
of
DANZER INDUSTRIES, INC.
SECTION SUBJECT PAGE
1. Purpose of Plan 1
2. Stock Subject to the Plan 1
3. Administration of the Plan 1
(a) General 1
(b) Changes in Law Applicable 2
4. Persons to Whom Options Shall Be Granted 2
5. Factors to Be Considered in Granting Options 2
6. Time of Granting Option 3
7. Terms and Conditions of Options 3
(a) Number of Shares 3
(b) Option Period 3
(1) General 3
(2) Termination of Employment 3
(3) Disability 3
(4) Death 4
(5) Acceleration and Exercise Upon Change
of Control 4
(c) Option Prices 5
(1) Incentive Options 5
<PAGE>
(2) Determination of Fair Market Value 5
(d) Exercise of Options 5
(e) Nontransferability of Options 6
(f) Limitations on 10% Shareholders 6
(g) Limits on Vesting of Incentive Options 6
(h) Compliance with Securities Laws 6
(i) Additional Provisions 6
8. Medium and Time of Payment 6
9. Reload Options
(a) Authorization of Reload Options 7
(b) Reload Option Amendment 8
(c) Reload Option Price 8
(d) Term and Exercise 8
(e) Termination of Employment 8
(f) Applicability of Other Sections 8
10. Rights as a Shareholder 8
11. Optionee's Agreement to Serve 8
12. Adjustments on Changes in Capitalization 9
(a) Changes in Capitalization 9
(b) Reorganization, Dissolution or Liquidation 9
(c) Change in Par Value 9
(d) Notice of Adjustments 9
(e) Effect Upon Holder of Option 9
(f) Right of Company to Make Adjustments 10
13. Investment Purpose 10
14. No Obligation to Exercise Option 10
15. Modification, Extension, and Renewal of Options 10
16. Effective Date of the Plan 11
17. Termination of the Plan 11
18. Amendment of the Plan 11
19. Withholding 11
20. Indemnification of Committee 11
21. Application of Funds 12
22. Governing Law 12
<PAGE>
12
1999 STOCK COMPENSATION PLAN
OF
DANZER INDUSTRIES, INC.
1. Purpose of Plan. This 1999 Stock Compensation Plan ("Plan") is
intended to encourage ownership of the common stock of DANZER INDUSTRIES, INC.
("Company") by certain officers, directors, employees and advisors of the
Company or any Subsidiary or Subsidiaries of the Company (as hereinafter
defined) in order to provide additional incentive for such persons to promote
the success and the business of the Company or its Subsidiaries and to encourage
them to remain in the employ of the Company or its Subsidiaries by providing
such persons an opportunity to benefit from any appreciation of the common stock
of the Company through the issuance of stock options in accordance with the
terms of the Plan. It is further intended that options granted pursuant to this
Plan shall constitute either incentive stock options ("Incentive Options")
within the meaning of Section 422 (formerly Section 422A) of the Internal
Revenue Code of 1986. Incentive Options and Reload Options (as defined in
Section 9 hereof) are herein sometimes referred to collectively as "Options". As
used herein, the term Subsidiary or Subsidiaries shall mean any corporation
(other than the employer corporation) in an unbroken chain of corporations
beginning with the employer corporation if, at the time of granting of the
Option, each of the corporations other than the last corporation in the unbroken
chain owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
2. Stock Subject to the Plan. Subject to adjustment as provided in
Section 12 hereof, there will be reserved for the use upon the exercise of
Options to be granted from time to time under the Plan, an aggregate of
______________________ (____________) shares of the common stock, par value
$0.0001 per share, of the Company ("Common Stock"), which shares in whole or in
part shall be authorized, but unissued, shares of the Common Stock or issued
shares of Common Stock which shall have been reacquired by the Company as
determined from time to time by the Board of Directors of the Company ("Board of
Directors"). To determine the number of shares of Common Stock available at any
time for the granting of Options under the Plan, there shall be deducted from
the total number of reserved shares of Common Stock, the number of shares of
Common Stock in respect of which Options have been granted pursuant to the Plan
which remain outstanding or which have been exercised. If and to the extent that
any Option to purchase reserved shares shall not be exercised by the optionee
for any reason or if such Option to purchase shall terminate as provided herein,
such shares which have not been so purchased hereunder shall again become
available for the purposes of the Plan unless the Plan shall have been
terminated, but such unpurchased shares shall not be deemed to increase the
aggregate number of shares specified above to be reserved for purposes of the
Plan (subject to adjustment as provided in Section 12 hereof).
3. Administration of the Plan.
(a) General. The Plan shall be administered by a Compensation
Committee ("Committee") appointed by the Board of Directors, which
Committee shall consist of not less than two (2) members of the Board
of Directors who are not eligible to participate in the Plan, and have
not, for a period of at least one (1) year prior thereto been eligible
to participate in the Plan, except that if at any time there shall be
less than two (2) who are qualified to serve on the Committee, then the
Plan shall be administered by the full Board of Directors. All
references in this Plan to the Committee shall be deemed to refer
instead to the full Board of Directors at any time there is not a
committee of two (2) members qualified to act hereunder. The Board of
Directors may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed and may
fill vacancies, however caused, in the Committee. If the Board of
Directors does not designate a Chairman of the Committee, the Committee
shall select one of its members as its Chairman. The Committee shall
hold its meetings at such times and places as it shall deem advisable.
A majority of its members shall constitute a quorum. Any action of the
Committee shall be taken by a majority vote of its members at a meeting
at which a quorum is present. Notwithstanding the preceding, any action
of the Committee may be taken without a meeting by a written consent
signed by all of the members, and any action so taken shall be deemed
fully as effective as if it had been taken by a vote of the members
present in person at the meeting duly called and held. The Committee
may appoint a Secretary, shall keep minutes of its meetings, and shall
make such rules and regulations for the conduct of its business as it
shall deem advisable.
<PAGE>
The Committee shall have the sole authority and power, subject
to the express provisions and limitations of the Plan, to construe the
Plan and option agreements granted hereunder, and to adopt, prescribe,
amend, and rescind rules and regulations relating to the Plan, and to
make all determinations necessary or advisable for administering the
Plan, including, but not limited to, (i) who shall be granted Options
under the Plan, (ii) the term of each Option, (iii) the number of
shares covered by such Option, (iv) the exercise price for the purchase
of the shares of the Common Stock covered by the Option, (v) the period
during which the Option may be exercised, (vi) whether the right to
purchase the number of shares covered by the Option shall be fully
vested on issuance of the Option so that such shares may be purchased
in full at one time or whether the right to purchase such shares shall
become vested over a period of time so that such shares may only be
purchased in installments, and (vii) the time or times at which Options
shall be granted. The Committee's determinations under the Plan,
including the above enumerated determinations, need not be uniform and
may be made by it selectively among the persons who receive, or are
eligible to receive, Options under the Plan, whether or not such
persons are similarly situated.
The interpretation by the Committee of any provision of the
Plan or of any option agreement entered into hereunder with respect to
any Incentive Option shall be in accordance with Section 422 of the
Code and the regulations issued thereunder, as such section or
regulations may be amended from time to time, in order that the rights
granted hereunder and under said option agreements shall constitute
"Incentive Stock Options" within the meaning of such section. The
interpretation and construction by the Committee of any provision of
the Plan or of any Option granted hereunder shall be final and
conclusive, unless otherwise determined by the Board of Directors. No
member of the Board of Directors or the Committee shall be liable for
any action or determination made in good faith with respect to the Plan
or any Option granted under it. Upon issuing an Option under the Plan,
the Committee shall report to the Board of Directors the name of the
person granted the Option, the number of shares of Common Stock covered
by the Option, and the terms and conditions of such Option.
(b) Changes in Law Applicable. If the laws relating to
Incentive Options are changed, altered or amended during the term of
the Plan, the Board of Directors shall have full authority and power to
alter or amend the Plan with respect to Incentive Options to conform to
such changes in the law without the necessity of obtaining further
shareholder approval, unless the changes require such approval.
4. Persons to Whom Options Shall be Granted.
(a) Incentive Options. Incentive Options shall be granted only
to employees of the Company or a Subsidiary who, in the judgment of the
Committee, are responsible for or contribute to the management or
success of the Company or a Subsidiary and who, at the time of the
granting of the Incentive Option are either an employee of the Company
or a Subsidiary. Subject to the provisions of Section 7(e) hereof, no
individual shall be granted an Incentive Option who, immediately before
such Incentive Option was granted, would own more than ten percent
(10%) of the total combined voting power or value of all classes of
stock of the Company ("10% Shareholder").
(b) Non-qualified options may be granted to non-employee
directors of the Company and to consultants and other independent
advisors who provide services to the Company or a Subsidiary; provided,
however; (i) that none of the services rendered by such consultants or
advisors shall be service related to any "capital raising" transaction;
and (ii) that the issuance of such shares be subject to satisfaction of
the Company and its counsel that both the consultant and the services
rendered fall within the guidelines of the Securities & Exchange
Commission as set forth in S.E.C. Release No. 33-7646 and in any future
S.E.C. guidelines on this subject.
<PAGE>
5. Factors to Be Considered in Granting Options. In making any
determination as to persons to whom Options shall be granted and as to the
number of shares to be covered by such Options, the Committee shall take into
account the duties and responsibilities of the respective officers, directors,
employees, or advisors, their current and potential contributions to the success
of the Company or a Subsidiary, and such other factors as the Committee shall
deem relevant in connection with accomplishing the purpose of the Plan.
6. Time of Granting Options. Neither anything contained in the Plan or
in any resolution adopted or to be adopted by the Board of Directors or the
Shareholders of the Company or a Subsidiary nor any action taken by the
Committee shall constitute the granting of any Option. The granting of an Option
shall be effected only when a written Option Agreement acceptable in form and
substance to the Committee, subject to the terms and conditions hereof including
those set forth in Section 7 hereof, shall have been duly executed and delivered
by or on behalf of the Company and the person to whom such Option shall be
granted. No person shall have any rights under the Plan until such time, if any,
as a written Option Agreement shall have been duly executed and delivered as set
forth in this Section 6.
7. Terms and Conditions of Options. All Options granted pursuant to
this Plan must be granted within ten (10) years from the date the Plan is
adopted by the Board of Directors of the Company. Each Option Agreement
governing an Option granted hereunder shall be subject to at least the following
terms and conditions, and shall contain such other terms and conditions, not
inconsistent therewith, that the Committee shall deem appropriate:
(a) Number of Shares. Each Option shall state the number of
shares of Common Stock which it represents.
(b) Option Period.
(1) General. Each Option shall state the date upon
which it is granted. Each Option shall be exercisable in whole
or in part during such period as is provided under the terms
of the Option subject to any vesting period set forth in the
Option, but in no event shall an Option be exercisable either
in whole or in part after the expiration of ten (10) years
from the date of grant; provided, however, if an Incentive
Option is granted to a 10% Shareholder, such Incentive Option
shall not be exercisable more than five (5) years from the
date of grant thereof.
(2) Termination of Employment. Except as otherwise
provided in case of Disability (as hereinafter defined), death
or Change of Control (as hereinafter defined), no Option shall
be exercisable after an optionee who is an employee of the
Company or a Subsidiary ceases to be employed by the Company
or a Subsidiary as an employee; provided, however, that the
Committee shall have the right in its sole discretion, but not
the obligation, to extend the exercise period for not more
than three (3) months following the date of termination of
such optionee's employment; provided further, however, that no
Option shall be exercisable after the expiration of ten (10)
years from the date it is granted and provided further, no
Incentive Option granted to a 10% Shareholder shall be
exercisable after the expiration of five (5) years from the
date it is granted.
(3) Disability. If an optionee's employment is
terminated by reason of the permanent and total Disability of
such optionee, the Committee shall have the right in its sole
discretion, but not the obligation, to extend the exercise
period for not more than one (1) year following the date of
termination of the optionee's employment or the date such
optionee ceases to be a director or advisor of the Company or
a Subsidiary, as the case may be, subject to the condition
that no Option shall be exercisable after the expiration of
ten (10) years from the date it is granted and subject to the
further condition that no Incentive Option granted to a 10%
Shareholder shall be exercisable after the expiration of five
(5) years from the date it is granted. For purposes of this
Plan, the term "Disability" shall mean the inability of the
optionee to fulfill such optionee's obligations to the Company
or a Subsidiary by reason of any physical or mental impairment
which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less
than twelve (12) months as determined by a physician
acceptable to the Committee in its sole discretion.
<PAGE>
(4) Death. If an optionee dies while in the employ of
the Company or a Subsidiary, and shall not have fully
exercised Options granted pursuant to the Plan, such Options
may be exercised in whole or in part at any time within one
(1) year after the optionee's death, by the executors or
administrators of the optionee's estate or by any person or
persons who shall have acquired the Options directly from the
optionee by bequest or inheritance, but only to the extent
that the optionee was entitled to exercise such Option at the
date of such optionee's death, subject to the condition that
no Option shall be exercisable after the expiration of ten
(10) years from the date it is granted and subject to the
further condition that no Incentive Option granted to a 10%
Shareholder shall be exercisable after the expiration of five
(5) years from the date it is granted.
(5) Acceleration and Exercise Upon Change of Control.
Notwithstanding the preceding provisions of this Section 7(b),
if any Option granted under the Plan provides for either (a)
an incremental vesting period whereby such Option may only be
exercised in installments as such incremental vesting period
is satisfied or (b) a delayed vesting period whereby such
Option may only be exercised after the lapse of a specified
period of time, such as after the expiration of one (1) year,
such vesting period shall be accelerated upon the occurrence
of a Change of Control (as hereinafter defined) of the
Company, or a threatened Change of Control of the Company as
determined by the Committee, so that such Option shall
thereupon become exercisable immediately in part or its
entirety by the holder thereof, as such holder shall elect.
For the purposes of this Plan, a "Change of Control" shall be
deemed to have occurred if:
(i) Any "person", including a "group" as
determined in accordance with Section 11(d)(3) of the
Securities Exchange Act of 1934 ("Exchange Act") and
the Rules and Regulations promulgated thereunder, is
or becomes, through one or a series of related
transactions or through one or more intermediaries,
the beneficial owner, directly or indirectly, of
securities of the Company representing 25% or more of
the combined voting power of the Company's then
outstanding securities, other than a person who is
such a beneficial owner on the effective date of the
Plan and any affiliate of such person;
(ii) As a result of, or in connection with,
any tender offer or exchange offer, merger or other
business combination, sale of assets or contested
election, or any combination of the foregoing
transactions ("Transaction"), the persons who were
Directors of the Company before the Transaction shall
cease to constitute a majority of the Board of
Directors of the Company or any successor to the
Company;
(iii) Following the effective date of the
Plan, the Company is merged or consolidated with
another corporation and as a result of such merger or
consolidation less than 40% of the outstanding voting
securities of the surviving or resulting corporation
shall then be owned in the aggregate by the former
stockholders of the Company, other than (x) any party
to such merger or consolidation, or (y) any
affiliates of any such party;
<PAGE>
(iv) A tender offer or exchange offer is
made and consummated for the ownership of securities
of the Company representing 25% or more of the
combined voting power of the Company's then
outstanding voting securities; or
(v) The Company transfers more than 50% of
its assets, or the last of a series of transfers
result in the transfer of more than 50% of the assets
of the Company, to another corporation that is not a
wholly-owned corporation of the Company. For purposes
of this subsection 7(b)(5)(v), the determination of
what constitutes more than 50% of the assets of the
Company shall be determined based on the sum of the
values attributed to (i) the Company's real property
as determined by an independent appraisal thereof,
and (ii) the net book value of all other assets of
the Company, each taken as of the date of the
Transaction involved.
In addition, upon a Change of Control, any Options
previously granted under the Plan to the extent not already
exercised may be exercised in whole or in part either
immediately or at any time during the term of the Option as
such holder shall elect.
(c) Option Prices.
(1) Incentive Options. The purchase price or prices
of the shares of the Common Stock which shall be offered to
any person under the Plan and covered by an Incentive Option
shall be one hundred percent (100%) of the fair market value
of the Common Stock at the time of granting the Incentive
Option or such higher purchase price as may be determined by
the Committee at the time of granting the Incentive Option;
provided, however, if an Incentive Option is granted to a 10%
Shareholder, the purchase price of the shares of the Common
Stock of the Company covered by such Incentive Option may not
be less than one hundred ten percent (110%) of the fair market
value of such shares on the day the Incentive Option is
granted.
(2) Determination of Fair Market Value. During such
time as the Common Stock of the Company is not listed upon an
established stock exchange, the fair market value per share
shall be deemed to be the closing sales price of the Common
Stock on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") on the day the Option is
granted, as reported by NASDAQ, if the Common Stock is so
quoted, and if not so quoted, the mean between dealer "bid"
and "ask," prices of the Common Stock in the New York
over-the-counter market on the day the Option is granted, as
reported by the National Association of Securities Dealers,
Inc. If the Common Stock is listed upon an established stock
exchange or exchanges, such fair market value shall be deemed
to be the highest closing price of the Common Stock on such
stock exchange or exchanges on the day the Option is granted
or, if no sale of the Common Stock of the Company shall have
been made on established stock exchange on such day, on the
next preceding day on which there was a sale of such stock. If
there is no market price for the Common Stock, then the Board
of Directors and the Committee may, after taking all relevant
facts into consideration, determine the fair market value of
the Common Stock.
(d) Exercise of Options. To the extent that a holder of an
Option has a current right to exercise, the Option may be exercised
from time to time by written notice to the Company at its principal
place of business. Such notice shall state the election to exercise the
Option, the number of whole shares in respect of which it is being
exercised, shall be signed by the person or persons so exercising the
Option, and shall contain any investment representation required by
Section 7(h) hereof. Such notice shall be accompanied by payment of the
full purchase price of such shares and by the Option Agreement
evidencing the Option. In addition, if the Option shall be exercised,
pursuant to Section 7(b)(3) or Section 7(b)(4) hereof, by any person or
persons other than the optionee, such notice shall also be accompanied
by appropriate proof of the right of such person or persons to exercise
the Option. The Company shall deliver a certificate or certificates
representing such shares as soon as practicable after the aforesaid
notice and payment of such shares shall be received. The certificate or
certificates for the shares as to which the Option shall have been so
exercised shall be registered in the name of the person or persons so
exercising the Option. In the event the Option shall not be exercised
in full, the Secretary of the Company shall endorse or cause to be
endorsed on the Option the number of shares which has been exercised
thereunder and the number of shares that remain exercisable under the
Option and return such Option Agreement to the holder thereof.
<PAGE>
(e) Nontransferability of Options. An Option granted pursuant
to the Plan shall be exercisable only by the optionee or the optionee's
court appointed guardian as set forth in Section 7(b)(3) hereof during
the optionee's lifetime and not be assignable or transferable by the
optionee otherwise than by Will or the laws of descent and
distribution. An Option granted pursuant to the Plan shall not be
assigned, pledged or hypothecated in any way (whether by operation of
law or otherwise other than by Will or the laws of descent and
distribution) and shall not be subject to execution, attachment, or
similar process. Any attempted transfer, assignment, pledge,
hypothecation, or other disposition of any Option or of any rights
granted thereunder contrary to the foregoing provisions of this Section
7(e), or the levy of any attachment or similar process upon an Option
or such rights, shall be null and void.
(f) Limitations on 10% Shareholders. No Incentive Option may
be granted under the Plan to any 10% Shareholder unless (i) such
Incentive Option is granted at an option price not less than one
hundred ten percent (110%) of the fair market value of the shares on
the day the Incentive Option is granted and (ii) such Incentive Option
expires on a date not later than five (5) years from the date the
Incentive Option is granted.
(g) Limits on Vesting of Incentive Options. An individual may
be granted one or more Incentive Options, provided that the aggregate
fair market value (as determined at the time such Incentive Option is
granted) of the stock with respect to which Incentive Options are
exercisable for the first time by such individual during any calendar
year shall not exceed $100,000. To the extent the $100,000 limitation
in the preceding sentence is exceeded, such option shall be treated as
an option which is not an Incentive Option.
(h) Compliance with Securities Laws. The Plan and the grant
and exercise of the rights to purchase shares hereunder, and the
Company's obligations to sell and deliver shares upon the exercise of
rights to purchase shares, shall be subject to all applicable federal
and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency as may, in the opinion of counsel for
the Company, be required, and shall also be subject to all applicable
rules and regulations of any stock exchange upon which the Common Stock
of the Company may then be listed. At the time of exercise of any
Option, the Company may require the optionee to execute any documents
or take any action which may be then necessary to comply with the
Securities Act of 1933, as amended ("Securities Act"), and the rules
and regulations promulgated thereunder, or any other applicable federal
or state laws regulating the sale and issuance of securities, and the
Company may, if it deems necessary, include provisions in the stock
option agreements to assure such compliance. The Company may, from time
to time, change its requirements with respect to enforcing compliance
with federal and state securities laws, including the request for and
enforcement of letters of investment intent, such requirements to be
determined by the Company in its judgment as necessary to assure
compliance with said laws. Such changes may be made with respect to any
particular Option or stock issued upon exercise thereof. Without
limiting the generality of the foregoing, if the Common Stock issuable
upon exercise of an Option granted under the Plan is not registered
under the Securities Act, the Company at the time of exercise will
require that the registered owner execute and deliver an investment
representation agreement to the Company in form acceptable to the
Company and its counsel, and the Company will place a legend on the
certificate evidencing such Common Stock restricting the transfer
thereof, which legend shall be substantially as follows:
<PAGE>
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN
ACQUIRED FOR THE PRIVATE INVESTMENT OF THE HOLDER HEREOF AND
MAY NOT BE OFFERED, SOLD OR TRANSFERRED UNTIL EITHER (i) A
REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE
WITH REGARD THERETO, OR (ii) THE COMPANY SHALL HAVE RECEIVED
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY AND ITS
COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION
WITH SUCH PROPOSED OFFER, SALE OR TRANSFER.
(i) Additional Provisions. The Option Agreements authorized
under the Plan shall contain such other provisions as the Committee
shall deem advisable, including, without limitation, restrictions upon
the exercise of the Option. Any such Option Agreement with respect to
an Incentive Option shall contain such limitations and restrictions
upon the exercise of the Incentive Option as shall be necessary in
order that the option will be an "Incentive Stock Option" as defined in
Section 422 of the Code.
8. Medium and Time of Payment. The purchase price of the shares of the
Common Stock as to which the Option shall be exercised shall be paid in full
either (i) in cash at the time of exercise of the Option, (ii) by tendering to
the Company shares of the Company's Common Stock having a fair market value (as
of the date of receipt of such shares by the Company) equal to the purchase
price for the number of shares of Common Stock purchased, or (iii) partly in
cash and partly in shares of the Company's Common Stock valued at fair market
value as of the date of receipt of such shares by the Company. Cash payment for
the shares of the Common Stock purchased upon exercise of the Option shall be in
the form of either a cashier's check, certified check or money order. Personal
checks may be submitted, but will not be considered as payment for the shares of
the Common Stock purchased and no certificate for such shares will be issued
until the personal check clears in normal banking channels. If a personal check
is not paid upon presentment by the Company, then the attempted exercise of the
Option will be null and void. In the event the optionee tenders shares of the
Company's Common Stock in full or partial payment for the shares being purchased
pursuant to the Option, the shares of Common Stock so tendered shall be
accompanied by fully executed stock powers endorsed in favor of the Company with
the signature on such stock power being guaranteed. If an optionee tenders
shares, such optionee assumes sole and full responsibility for the tax
consequences, if any, to such optionee arising therefrom, including the possible
application of Code Section 424(c), or its successor Code section, which negates
any nonrecognition of income rule with respect to such transferred shares, if
such transferred shares have not been held for the minimum statutory holding
period to receive preferential tax treatment.
9. Reload Options.
(a) Authorization of Reload Options. Concurrently with the
award of Incentive Options to any participant in the Plan, the
Committee may authorize reload options ("Reload Options") to purchase
for cash or shares that number of shares of Common Stock equal to the
sum of:
(1) The number of shares of Common Stock used to
exercise the underlying Incentive Option; and
<PAGE>
(2) To the extent authorized by the Committee, the
number of shares of Common Stock used to satisfy any tax
withholding requirement incident to the exercise of the
underlying Incentive Options.
The grant of a Reload Option will become effective upon the exercise of
the underlying Incentive Option or Reload Option through the use of
shares of Common Stock held by the optionee for at least 12 months.
Notwithstanding the fact that the underlying option may be an Incentive
Option, a Reload Option is not intended to qualify as an "incentive
stock option" under Section 422 of the Code.
(b) Reload Option Amendment. Each Option Agreement shall state
whether the Committee has authorized Reload Options with respect to the
underlying Incentive Option. Upon the exercise of an underlying Option
or Incentive Option, the Reload Option will be evidenced by an
amendment to the underlying Option Agreement.
(c) Reload Option Price. The option price per share of Common
Stock deliverable upon the exercise of a Reload Option shall be the
fair market value of a share of Common Stock on the date the grant of
the Reload Option becomes effective.
(d) Term and Exercise. Each Reload Option is fully exercisable
six months from the effective date of grant. The term of each Reload
Option shall be equal to the remaining option term of the underlying
Incentive Option.
(e) Termination of Employment. No additional Reload Options
shall be granted to optionees when Incentive Option and/or Reload
Options are exercised pursuant to the terms of this Plan following
termination of the optionee's employment.
(f) Applicability of Other Sections. To the extent not
inconsistent with the foregoing provisions of this Section, the other
Sections of this Plan pertaining to Options, including Sections 4, 7,
and 8, are incorporated herein by this reference thereto as through
fully set forth herein.
10. Rights as a Shareholder. The holder of an Option shall have no
rights as a shareholder with respect to the shares covered by the Option until
the due exercise of the Option or Reload Option and the date of issuance of one
or more stock certificates to such holder for such shares. No adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such stock certificate is issued, except as provided in
Section 12 hereof.
11. Optionee's Agreement to Serve. Each employee receiving an Option
shall, as one of the terms of the Option Agreement agree that such employee will
remain in the employ of the Company or Subsidiary for a period of at least one
(1) year from the date on which the Option shall be granted to such employee;
and that such employee will, during such employment, devote such employee's
entire time, energy, and skill to the service of the Company or a Subsidiary as
may be required by the management thereof, subject to vacations, sick leaves,
and military absences. Such employment, subject to the provisions of any written
contract between the Company or a Subsidiary and such employee, shall be at the
pleasure of the Board of Directors of the Company or a Subsidiary, and at such
compensation as the Company or a Subsidiary shall reasonably determine. Any
termination of such employee's employment during the period which the employee
has agreed pursuant to the foregoing provisions of this Section 11 to remain in
employment that is either for cause or voluntary on the part of the employee
shall be deemed a violation by the employee of such employee's agreement. In the
event of such violation, any Option or Options held by such employee, to the
extent not theretofore exercised, shall forthwith terminate, unless otherwise
determined by the Committee. Notwithstanding the preceding, neither the action
of the Company in establishing the Plan nor any action taken by the Company, a
Subsidiary or the Committee under the provisions hereof shall be construed as
granting the optionee the right to be retained in the employ of the Company or a
Subsidiary, or to limit or restrict the right of the Company or a Subsidiary, as
applicable, to terminate the employment of any employee of the Company or a
Subsidiary, with or without cause.
<PAGE>
12. Adjustments on Changes in Capitalization.
(a) Changes in Capitalization. Subject to any required action
by the Shareholders of the Company, the number of shares of Common
Stock covered by the Plan, the number of shares of Common Stock covered
by each outstanding Option, and the exercise price per share thereof
specified in each such Option, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
of the Company resulting from a subdivision or consolidation of shares
or the payment of a stock dividend (but only on the Common Stock) or
any other increase or decrease in the number of such shares effected
without receipt of consideration by the Company after the date the
Option is granted, so that upon exercise of the Option, the optionee
shall receive the same number of shares the optionee would have
received had the optionee been the holder of all shares subject to such
optionee's outstanding Option immediately before the effective date of
such change in the number of issued shares of the Common Stock of the
Company.
(b) Reorganization, Dissolution or Liquidation. Subject to any
required action by the Shareholders of the Company, if the Company
shall be the surviving corporation in any merger or consolidation, each
outstanding Option shall pertain to and apply to the securities to
which a holder of the number of shares of Common Stock subject to the
Option would have been entitled. A dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not the
surviving corporation, shall cause each outstanding Option to terminate
as of a date to be fixed by the Committee (which date shall be as of or
prior to the effective date of any such dissolution or liquidation or
merger or consolidation); provided, that not less than thirty (30) days
written notice of the date so fixed as such termination date shall be
given to each optionee, and each optionee shall, in such event, have
the right, during the said period of thirty (30) days preceding such
termination date, to exercise such optionee's Option in whole or in
part in the manner herein set forth.
(c) Change in Par Value. In the event of a change in the
Common Stock of the Company as presently constituted, which change is
limited to a change of all of its authorized shares with par value into
the same number of shares with a different par value or without par
value, the shares resulting from any change shall be deemed to be the
Common Stock within the meaning of the Plan.
(d) Notice of Adjustments. To the extent that the adjustments
set forth in the foregoing paragraphs of this Section 12 relate to
stock or securities of the Company, such adjustments, if any, shall be
made by the Committee, whose determination in that respect shall be
final, binding and conclusive, provided that each Incentive Option
granted pursuant to this Plan shall not be adjusted in a manner that
causes the Incentive Option to fail to continue to qualify as an
"Incentive Stock Option" within the meaning of Section 422 of the Code.
The Company shall give timely notice of any adjustments made to each
holder of an Option under this Plan and such adjustments shall be
effective and binding on the optionee.
(e) Effect Upon Holder of Option. Except as hereinbefore
expressly provided in this Section 12, the holder of an Option shall
have no rights by reason of any subdivision or consolidation of shares
of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class by
reason of any dissolution, liquidation, merger, reorganization, or
consolidation, or spin-off of assets or stock of another corporation,
and any issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to the
Option. Without limiting the generality of the foregoing, no adjustment
shall be made with respect to the number or price of shares subject to
any Option granted hereunder upon the occurrence of any of the
following events:
<PAGE>
(1) The grant or exercise of any other options which
may be granted or exercised under any qualified or
nonqualified stock option plan or under any other employee
benefit plan of the Company whether or not such options were
outstanding on the date of grant of the Option or thereafter
granted;
(2) The sale of any shares of Common Stock in the
Company's initial or any subsequent public offering,
including, without limitation, shares sold upon the exercise
of any overallotment option granted to the underwriter in
connection with such offering;
(3) The issuance, sale or exercise of any warrants to
purchase shares of Common Stock whether or not such warrants
were outstanding on the date of grant of the Option or
thereafter issued;
(4) The issuance or sale of rights, promissory notes
or other securities convertible into shares of Common Stock in
accordance with the terms of such securities ("Convertible
Securities") whether or not such Convertible Securities were
outstanding on the date of grant of the Option or were
thereafter issued or sold;
(5) The issuance or sale of Common Stock upon
conversion or exchange of any Convertible Securities, whether
or not any adjustment in the purchase price was made or
required to be made upon the issuance or sale of such
Convertible Securities and whether or not such Convertible
Securities were outstanding on the date of grant of the Option
or were thereafter issued or sold; or
(6) Upon any amendment to or change in the terms of
any rights or warrants to subscribe for or purchase, or
options for the purchase of, Common Stock or Convertible
Securities or in the terms of any Convertible Securities,
including, but not limited to, any extension of any expiration
date of any such right, warrant or option, any change in any
exercise or purchase price provided for in any such right,
warrant or option, any extension of any date through which any
Convertible Securities are convertible into or exchangeable
for Common Stock or any change in the rate at which any
Convertible Securities are convertible into or exchangeable
for Common Stock.
(f) Right of Company to Make Adjustments. The grant of an
Option pursuant to the Plan shall not affect in any way the right or
power of the Company to make adjustments, reclassification,
reorganizations, or changes of its capital or business structure or to
merge or to consolidate or to dissolve, liquidate or sell, or transfer
all or any part of its business or assets.
13. Investment Purpose. Each Option under the Plan shall be granted on
the condition that the purchase of the shares of stock thereunder shall be for
investment purposes, and not with a view to resale or distribution; provided,
however, that in the event the shares of stock subject to such Option are
registered under the Securities Act or in the event a resale of such shares of
stock without such registration would otherwise be permissible, such condition
shall be inoperative if in the opinion of counsel for the Company such condition
is not required under the Securities Act or any other applicable law,
regulation, or rule of any governmental agency.
14. No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the optionee to exercise such Option.
15. Modification, Extension, and Renewal of Options. Subject to the
terms and conditions and within the limitations of the Plan, the Committee and
the Board of Directors may modify, extend or renew outstanding Options granted
under the Plan, or accept the surrender of outstanding Options (to the extent
not theretofore exercised). Neither the Committee nor the Board of Directors
shall, however, modify any outstanding Options so as to specify a lower price or
accept the surrender of outstanding Options and authorize the granting of new
Options in substitution therefor specifying a lower price. Notwithstanding the
foregoing, however, no modification of an Option shall, without the consent of
the optionee, alter or impair any rights or obligations under any Option
theretofore granted under the Plan.
<PAGE>
16. Effective Date of the Plan. The Plan shall become effective on the
date of execution hereof, which date is the date the Board of Directors approved
and adopted the Plan ("Effective Date"); provided, however, if the Shareholders
of the Company shall not have approved the Plan by the requisite vote of the
Shareholders, within twelve (12) months after the Effective Date, then the Plan
shall terminate and all Options theretofore granted under the Plan shall
terminate and be null and void.
17. Termination of the Plan. This Plan shall terminate as of the
expiration of ten (10) years from the Effective Date. Options may be granted
under this Plan at any time and from time to time prior to its termination. Any
Option outstanding under the Plan at the time of its termination shall remain in
effect until the Option shall have been exercised or shall have expired.
18. Amendment of the Plan. The Plan may be terminated at any time by
the Board of Directors of the Company. The Board of Directors may at any time
and from time to time without obtaining the approval of the Shareholders of the
Company or a Subsidiary, modify or amend the Plan (including such form of Option
Agreement as hereinabove mentioned) in such respects as it shall deem advisable
in order that the Incentive Options granted under the Plan shall be "Incentive
Stock Options" as defined in Section 422 of the Code or to conform to any change
in the law, or in any other respect which shall not change: (a) the maximum
number of shares for which Options may be granted under the Plan, except as
provided in Section 12 hereof; or (b) the option prices other than to change the
manner of determining the fair market value of the Common Stock for the purpose
of Section 7(c) hereof to conform with any then applicable provisions of the
Code or regulations thereunder; or (c) the periods during which Options may be
granted or exercised; or (d) the provisions relating to the determination of
persons to whom Options shall be granted and the number of shares to be covered
by such Options; or (e) the provisions relating to adjustments to be made upon
changes in capitalization. The termination or any modification or amendment of
the Plan shall not, without the consent of the person to whom any Option shall
theretofore have been granted, affect that person's rights under an Option
theretofore granted to such person. With the consent of the person to whom such
Option was granted, an outstanding Option may be modified or amended by the
Committee in such manner as it may deem appropriate and consistent with the
requirements of this Plan applicable to the grant of a new Option on the date of
modification or amendment.
19. Withholding. Whenever an optionee shall recognize compensation
income as a result of the exercise of any Option granted under the Plan, the
optionee shall remit in cash to the Company or Subsidiary the minimum amount of
federal income and employment tax withholding which the Company or Subsidiary is
required to remit to the Internal Revenue Service in accordance with the then
current provisions of the Code. The full amount of such withholding shall be
paid by the optionee simultaneously with the award or exercise of an Option, as
applicable.
20. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceedings, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the Company
the opportunity, at its own expense, to pursue and defend the same.
<PAGE>
21. Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to Options granted hereunder will be used for
general corporate purposes.
22. Governing Law. This Plan shall be governed and construed in
accordance with the laws of the state of incorporation of the Company.
EXECUTED this ____ day of ____, 1999.
DANZER INDUSTRIES,INC.
By: ______________________________
President
ATTEST:
Secretary
