SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Commission Only (as permitted by
Rule 14a-6(e)2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14(a)-12
Light Savers U.S.A., Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
|X| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a- 6(i)(2) or Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
<PAGE>
|_| 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:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
LIGHT SAVERS U.S.A., INC.
509 Madison Avenue
Suite 1114
New York, New York 10022
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Light Savers U.S.A., Inc.
Please take notice that the Annual Meeting of Shareholders of Light
Savers U.S.A., Inc., a New York corporation (the "Company"), will be held at The
Regency Hotel, 540 Park Avenue, New York, New York, on September 26, 1996 at
10:00 A.M. for the following purposes:
1. To elect 5 members of the Board of Directors to serve
until the 1997 Annual Meeting of Shareholders.
2. To approve an amendment to the Company's Certificate
of Incorporation to change the name of the Company
from "Light Savers U.S.A., Inc." to "Hospitality
Worldwide Services, Inc."
3. To approve an amendment to the Company's Certificate
of Incorporation to increase the number of authorized
shares of the Company's Common Stock and Preferred
Stock.
4. To approve an amendment to the Company's Certificate
of Incorporation to limit the liability of the
Company's directors.
5. To approve an amendment to the Company's By-Laws to
permit indemnification of the Company's directors.
6. To approve the adoption of the Company's 1996 Stock
Option Plan (the "1996 Plan").
7. To approve the adoption of the Company's 1996 Outside
Directors' Stock Option Plan (the "Outside Directors'
Plan").
8. To ratify the appointment of BDO Seidman, LLP as
independent auditors for the year ending December 31,
1996.
9. To transact such other business as may properly come
before the meeting or any adjournment or adjournments
thereof.
The Board of Directors has fixed the close of business on August 16,
1996 as the record date for the purpose of determining the shareholders entitled
to notice of, and to vote at, the meeting.
YOU ARE REQUESTED, WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE
MEETING, TO MARK, DATE, SIGN AND RETURN PROMPTLY THE ACCOMPANYING PROXY IN THE
ENCLOSED ENVELOPE TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES.
You may revoke your Proxy for any reason at any time prior to the
voting thereof, and if you attend the meeting in person you may withdraw the
Proxy and vote your own shares.
By Order of the Board of Directors,
HOWARD G. ANDERS
Executive Vice President,
Chief Financial Officer and Secretary
New York, New York
August 23, 1996
<PAGE>
LIGHT SAVERS U.S.A., INC.
509 Madison Avenue
Suite 1114
New York, New York 10022
------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
September 26, 1996
-------------------------
The Proxy accompanying this proxy statement (the "Proxy Statement") is
solicited by the Board of Directors (the "Board of Directors") of Light Savers
U.S.A., Inc., a New York corporation (the "Company"), for use at the Annual
Meeting of Shareholders to be held at The Regency Hotel, 540 Park Avenue, New
York, New York, on Thursday, September 26, 1996 at 10:00 A.M. and at any
adjournment or adjournments thereof (the "Annual Meeting").
The approximate date of mailing of this Proxy Statement and the
accompanying proxy to shareholders is August 26, 1996.
RECORD DATE AND VOTING SECURITIES
Only holders of the Company's Common Stock, $.01 par value (the "Common
Stock"), of record at the close of business on August 16, 1996 will be entitled
to notice of and to vote at the Annual Meeting or at any adjournment or
adjournments thereof. On that date, 7,125,655 shares of Common Stock were issued
and outstanding. Each outstanding share entitles the holder thereof to one vote.
PROXIES AND VOTING RIGHTS
Shares of Common Stock represented by Proxies in the accompanying form
that are properly executed and duly returned will be voted in accordance with
the instructions specified therein. If no instructions are given, such Proxies
will be voted in accordance with the recommendations of the Board of Directors
as indicated in this Proxy Statement. A Proxy may be revoked at any time prior
to its exercise by written notice to the Company, by submission of another Proxy
bearing a later date or by voting in person at the Annual Meeting. Such
revocation will not affect a vote on any matters taken prior thereto. The mere
presence at the Annual Meeting of the person appointing a Proxy will not revoke
the appointment. A majority of the outstanding shares will constitute a quorum
at the Annual Meeting. Abstentions and broker non-votes are counted for purposes
of determining the presence or absence of a quorum for the transaction of
business. A broker non-vote occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee, who
does not have discretionary voting power with respect to that item, has not
received instructions from the beneficial owner. Broker non-votes are not
included in the tabulation of the voting results on the election of directors or
issues requiring approval of the majority of the votes present and, therefore,
do not have the effect of votes in opposition in such tabulations. Broker
non-votes are not counted for purposes of determining whether a proposal has
been approved, whereas, abstentions are counted in tabulations of the vote cast
on proposals presented to shareholders. Proxies marked as abstaining with
respect to any of the
-1-
<PAGE>
proposals to approve the amendments to the Certificate of Incorporation, the
By-Laws, the 1996 Plan and the Directors' Plan or to ratify the appointment of
independent auditors will have the effect of a vote against such proposals.
The solicitation of proxies in the accompanying form is made by the
Board of Directors and the cost thereof will be borne by the Company. In
addition to the solicitation of proxies by use of the mails, some of the
officers, directors and other employees of the Company may also solicit proxies
personally or by mail, telephone or telegraph, but they will not receive
additional compensation for such services. Brokerage firms, custodians, banks,
trustees, nominees or other fiduciaries holding shares of Common Stock in their
names will be requested by the Company to forward proxy materials to their
principals and will be reimbursed for their reasonable out-of-pocket expenses in
such connection.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning ownership of the
Common Stock as at July 31, 1996 by (i) each director and nominee for director,
(ii) each executive officer, (iii) all directors, director nominees and
executive officers as a group, and (iv) each person who, to the knowledge of
management, owned beneficially more than 5% of the Common Stock. Unless
otherwise indicated, the address of each person listed below is 509 Madison
Avenue, Suite 1114, New York, New York 10022.
<TABLE>
<CAPTION>
Percent of
Outstanding
Beneficial Owner(1) Shares Beneficially Owned Common Stock(2)
- --------------------------------------------------- ---------------------------------- ---------------------
<S> <C> <C>
Watertone Holdings L.P................................ 2,300,000 32.3%
730 Fifth Avenue, 9th Floor
New York, New York 10019
Watertone L.L.C....................................... 2,300,000(3) 32.3%
730 Fifth Avenue, 9th Floor
New York, New York 10019
Joel A. Asen.......................................... 2,300,000(3) 32.3%
445 Old Academy Road
Fairfield, Connecticut 06430
John A. Garraty, Jr................................... 2,300,000(3) 32.3%
c/o Kelley Drye & Warren
101 Park Avenue
New York, New York 10178
E.W. Plaut............................................ 2,300,000(3) 32.3%
c/o Relco Inc.
3 Stamford Landing
46 Southfield Avenue
Stamford, Connecticut 06802
Tova Schwartz......................................... 1,743,155 24.5%
11 Wedgewood Lane
Lawrence, New York 11559
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Percent of
Outstanding
Beneficial Owner(1) Shares Beneficially Owned Common Stock(2)
- --------------------------------------------------- ---------------------------------- ---------------------
<S> <C> <C>
Resource Holdings Associates.......................... 500,000(4) 6.6%
520 Madison Avenue
New York, New York 10022
Resource Holdings, Limited............................ 500,000(5) 6.6%
520 Madison Avenue
New York, New York 10022
Richard A. Bartlett................................... 616,666(6) 8.1%
50 Central Park West, #11C
New York, New York 10023
Jerry M. Seslowe...................................... 616,668(7) 8.1%
2 Chanticlare Drive
Manhasset, New York 11030
John C. Shaw.......................................... 616,666(8) 8.1%
16 Ledge Road
Old Greenwich, Connecticut 06870
Howard G. Anders...................................... 104,500(9) 1.4%
Alan G. Friedberg..................................... 10,000 *
Guillermo A. Montero.................................. 19,792(10) *
Scott A. Kaniewski.................................... 2,000 *
Louis K. Adler........................................ 75,000 1.1%
George C. Asch........................................ 75,000 1.1%
All Officers and Directors as a group (4 136,292(9) 1.9%
persons)..............................................
</TABLE>
- ------------------
* Less than 1%.
(1) Except as outlined herein, the persons named in the table, to the
Company's knowledge, have sole voting and dispositive power with
respect to all shares shown as beneficially owned by them, subject to
community property laws where applicable and the information contained
in the footnotes hereunder.
(2) Calculations assume that all options and warrants which are exercisable
within 60 days after July 31, 1996 have been exercised.
-3-
<PAGE>
(3) Consists of 2,300,000 shares of Common Stock held by Watertone Holdings
L.P. as to which each of Watertone L.L.C., Joel A. Asen, John A.
Garraty, Jr. and E.W. Plaut are attributed beneficial ownership
pursuant to Rule 13d-3 of the Securities Exchange Act of 1934, as
amended ("Rule 13d-3"). Watertone L.L.C., as general partner of
Watertone Holdings, L.P., has sole power to vote and dispose of the
2,300,000 shares of Common Stock. Messrs. Asen, Garraty and Plaut, as
Managers of Watertone L.L.C., have shared power to vote and dispose of
the 2,300,000 shares of Common Stock.
(4) Consists of 500,000 shares of Common Stock underlying an option granted
to Resource Holdings Associates by the Company as partial compensation
for services rendered as a consultant (the "Option") at an exercise
price of $2.00 per share.
(5) Consists of 500,000 shares of Common Stock underlying the Option.
(6) Consists of (i) 116,666 shares of Common Stock owned individually by
Mr. Bartlett; and (ii) 500,000 shares of Common Stock underlying the
Option as to which Mr. Bartlett is attributed beneficial ownership
pursuant to Rule 13d-3. Mr. Bartlett has sole power to vote and dispose
of the 116,666 shares of Common Stock he owns individually. Mr.
Bartlett, as a Managing Director of Resource Holdings, Ltd., has shared
power to vote and dispose of the 500,000 shares of Common Stock
underlying the Option.
(7) Consists of (i) 116,668 shares of Common Stock owned individually by
Mr. Seslowe; and (ii) 500,000 shares of Common Stock underlying the
Option as to which Mr. Seslowe is attributed beneficial ownership
pursuant to Rule 13d-3. Mr. Seslowe has sole power to vote and dispose
of the 116,668 shares of Common Stock he owns individually. Mr.
Seslowe, as a Managing Director of Resource Holdings, Ltd., has shared
power to vote and dispose of the 500,000 shares of Common Stock
underlying the Option.
(8) Consists of (i) 116,666 shares of Common Stock owned individually by
Mr. Shaw; and (ii) 500,000 shares of Common Stock underlying the Option
as to which Mr. Shaw is attributed beneficially ownership pursuant to
Rule 13d-3. Mr. Shaw has sole power to vote and dispose of the 116,666
shares of Common Stock he owns individually. Mr. Shaw, as a Managing
Director of Resource Holdings, Ltd., has shared power to vote and
dispose of the 500,000 shares of Common Stock underlying the Option.
(9) Includes options to purchase 100,000 shares of Common Stock at an
exercise price of $1.275 per share.
(10) Represents shares of Common Stock held by Mr. Montero's wife, Maria
Elizabeth Leon. Mr. Montero disclaims beneficial ownership of such
shares.
-------------------------
-4-
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Directors of the Company hold office until the next annual meeting of
shareholders or until their successors are elected and qualified. Directors
shall be elected by a plurality of the votes cast, in person or by proxy, at the
Annual Meeting. If no contrary instructions are indicated, proxies will be voted
for the election of Alan G. Friedberg, Scott A. Kaniewski, Louis K. Adler,
George C. Asch and Richard A. Bartlett, the five nominees of the Board of
Directors. Mr. Friedberg and Mr. Kaniewski are currently directors of the
Company. The Company does not expect that any of the nominees will be
unavailable for election, but if that should occur before the Annual Meeting,
the proxies will be voted in favor of the remaining nominees and may also be
voted for a substitute nominee or nominees selected by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF EACH OF THE NOMINEES
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table and paragraphs set forth information regarding the
director nominees who currently serve as directors of the Company.
Name Age Position
- ---- --- --------
Alan G. Friedberg 37 Chief Executive Officer, President
and Director
Scott A. Kaniewski 32 Director
Alan G. Friedberg has been the Chief Executive Officer, President and a
director of the Company since February 1996. He became the Chief Executive
Officer of Hospitality Restoration and Builders, Inc. ("HRB") in August 1995.
Prior thereto, Mr. Friedberg was the founder and Chief Executive Officer AGF
Interior Services, Inc. d/b/a Hospitality Restoration and Builders ("AGF"). In
1979, he formed AGF, a contract installation company and expanded it to a full
service "turn-key" operation in construction/installation, specializing in
hotels. He has applied his extensive experience and hands-on management approach
to successfully complete the renovation of over 100,000 guestrooms. Completed
projects include work performed for Marriott, Loews, Nikko, Holiday Inn
Worldwide, Ritz Carlton hotel chain and many more.
Scott A. Kaniewski has been a director of the Company since March 1996
and has been a director of Watermark Investments Limited ("Watermark") since
February 1995. From December 1988 to February 1995, Mr. Kaniewski held several
positions with VMS Realty Partners ("VMS"), including Vice President of Hotel
Investments where he was responsible for the development of fee-for-service
programs targeting institutions and private investors. He also directed the
asset management of VMS's hotel portfolio. He graduated from the Indiana
University School of Business with a Bachelor of Finance Degree in Finance
-5-
<PAGE>
in
December 1986 and is a Certified Public Accountant and a member of the Illinois
CPA Society.
The following table and paragraphs set forth information regarding the
director nominees who do not currently serve as directors of the Company.
Name Age Proposed Position
- ---- --- -----------------
Louis K. Adler 60 Director
George C. Asch 59 Director
Richard A. Bartlett 39 Director
Louis K. Adler is a director nominee and does not hold an executive
office with the Company. Mr. Adler has been a private investor for over five
years in Houston, Texas. He has been the Chairman of the Board and President of
Bancshares, Inc. (Houston, TX) since 1973, Vice Chairman of the Board since 1992
and a director since 1988 of Luther's Bar-B-Q Inc., a group of twenty
restaurants in Texas, Louisiana and Colorado, a director, Secretary and
Treasurer of Warwick Communications, Inc. (owner of KFXK, the Fox Television
affiliate, in Longview, TX) since 1993, and a director and officer of several
other private companies. Mr. Adler is also a trustee and the President of the
Adler Foundation and member of the Dean's Advisory Council of Goizueta Business
School of Emory University.
George C. Asch is a director nominee and does not hold an executive
office with the Company. Mr. Asch has been a Vice President of Gray, Seifert &
Co., Inc. since September 1994. Gray, Seifert & Co., Inc. is an investment
management company which became a wholly-owned, independent subsidiary of Legg
Mason, Inc. in April 1994. For 25 years prior to joining Gray Seifert & Co.,
Inc. in August 1990, Mr. Asch served as President of a manufacturing company. He
presently serves on the boards of various philanthropic organizations, including
the Montefiore Medical Center and the Price Foundation. He is a graduate of
Columbia College and served as an officer in the United States Navy.
Richard A. Bartlett is a director nominee and does not hold an
executive office with the Company. Mr. Bartlett is a Managing Director of
Resource Holdings Limited, a private merchant banking firm in New York City
("Resource Limited"). He specializes in legal aspects of mergers, acquisitions
and other corporate restructurings. In that capacity, he sits and has sat on the
board of various companies in which Resource Limited and its principals have
made investments. Prior to joining Resource Limited in 1984, he served as a law
clerk to the Honorable Harry A. Blackmun, Associate Justice of the United States
Supreme Court, during the Supreme Court's 1983-84 term. From 1982 to 1983, he
served as law clerk to the Honorable David L. Bazelon, United States Court of
Appeals for the District of Columbia Circuit. Mr. Bartlett received a law degree
from Yale Law School in 1982, where he was an editor of the Yale Law Journal. He
received his B.A. from Princeton University in 1979, where he studied economics
and politics at the Woodrow Wilson School of Public and International Affairs.
From 1987 to 1993, he was a member of the Council on Foreign Relations and he is
a member of the New York State Bar.
-6-
<PAGE>
The following table and paragraphs set forth information regarding the
executive officers who are not standing for election as directors of the
Company.
Name Age Position
- ---- --- --------
Guillermo A. Montero 36 Vice President-Operations, Chief
Operating Officer and Director
Howard G. Anders 52 Chief Financial Officer, Executive
Vice President and Secretary
Guillermo A. Montero has been the Vice President-Operations, Chief
Operating Officer and a director of the Company since February 1996. In August
1995, he became the Senior Vice President of HRB. Prior thereto, he was the
President of AGF. Mr. Montero attended Oglethorpe University and Georgia Tech,
receiving a B.A. degree in 1982. He became associated with AGF in 1979.
Completed projects include work performed for the FelCor Suite hotels, Ritz
Carlton hotel chain, The Omni Hotels chain, Holiday Inn hotels and Embassy
Suites.
Howard G. Anders has been the Executive Vice President, Chief Financial
Officer and Secretary of the Company since February 1996 and was the Executive
Vice President, Chief Operating Officer and a director of the Company from
October 1994 to February 1996. From December 1995 to February 1996, Mr. Anders
was an independent consultant. Prior to joining the Company, Mr. Anders served
as Vice President and Chief Financial Officer of Alpine Lace Brands, Inc. in
Maplewood, New Jersey from April 1992 to October 1994. From April 1983 to April
1992, Mr. Anders was President and Chief Operating Officer of North Hills
Electronics, Inc. in Glen Cove, New York. Mr. Anders is a 1965 graduate of
Rutgers University and attended the Harvard Business School PMD Program in 1979.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held three meetings during the fiscal year ended
December 31, 1995. From time to time during such fiscal year, the members of the
Board of Directors acted by unanimous written consent. The Company has no
standing audit, compensation or nominating committees. The typical functions of
such committees are performed by the entire Board of Directors. If the 1996 Plan
is approved by the shareholders, the Company will create a Stock Option
Committee (the "Committee") to administer such plan.
BOARD OF DIRECTORS COMPENSATION
The Company does not currently compensate directors who are also
executive officers of the Company for service on the Board of Directors.
Directors are reimbursed for their expenses incurred in attending meetings of
the Board of Directors. If the Outside Directors' Plan is approved by the
shareholders, directors who are not present or past employees of the Company
will receive stock options pursuant to a formula described therein.
-7-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by or paid to (i) Tova Schwartz, who served as
chief executive officer (the "CEO") of the Company from its inception through
February 1996; (ii) Alan G. Friedberg, the Company's CEO; and (iii) Howard G.
Anders, the Company's Chief Financial Officer, (collectively, the "Named
Executive Officers") whose salary and bonus exceeded $100,000 (three
individuals) for one or more of the fiscal years presented. There is no other
executive officer of the Company whose salary and bonus exceeded $100,000 for
the years presented.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------- -----------------
Other Annual Securities
Name and Compensation Underlying
Principal Position Year Salary($) Bonus($) ($)(1) Options(#)
------------------ ---- --------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
Tova Schwartz(2)..................... 1995 $103,992 -- -- --
1994 $100,000 $83,333(3) -- --
1993 $92,000 $75,000 -- --
Alan G. Friedberg(4)................. 1995 $110,520 -- -- --
1994 -- -- -- --
1993 -- -- -- --
Howard G. Anders(5).................. 1995 $128,333 -- -- 50,000
1994 $39,999 -- -- 50,000
1993 -- -- -- --
</TABLE>
- ---------------------
(1) Perquisites and other personal benefits, securities or property to the
Named Executive Officers did not exceed the lesser of $50,000 or 10% of
such executive's salary and bonus.
(2) Ms. Schwartz served as the CEO, President and a director of the Company
from its inception until she resigned in February 1996. Mr. Friedberg
became the Company's CEO, President and a director in February 1996.
(3) Reflects dollar amount earned in 1993 and paid in 1994.
(4) Mr. Friedberg joined the Company in August 1995 as the Chief Executive
Officer of HRB. In February 1996, he became the CEO and a director of
the Company.
(5) Mr. Anders joined the Company in October 1994 as Executive Vice
President, Chief Operating Officer and a director. In February 1996, he
resigned as a director of the Company and became the Chief Financial
Officer, Executive Vice President and Secretary of the Company.
-8-
<PAGE>
The following table sets forth certain information regarding stock
option grants made to the Named Executive Officers during the fiscal year ended
December 31, 1995.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted(#) Fiscal Year ($/sh) Date
---- ---------- ----------- ------ ----
<S> <C> <C> <C> <C>
Tova Schwartz.............. -- -- -- --
Alan G. Friedberg.......... -- -- -- --
Howard G. Anders........... 50,000 50% $1.275 3/15/00
</TABLE>
The following table sets forth certain information regarding
unexercised stock options held by the Named Executive Officers as of December
31, 1995.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Name Number of Securities Underlying Value of Unexercised in-the-Money Options
---- Unexercised Options at at December 31, 1995 ($)(1)
December 31, 1995(#) Exercisable/Unexercisable
Exercisable/Unexercisable -------------------------
-------------------------
<S> <C> <C>
Tova Schwartz................. -- --
Alan G. Friedberg............. -- --
Howard G. Anders.............. 100,000/0 $ 0/0
</TABLE>
- ----------------
(1) On December 29, 1995, the last reported sales price of the Common Stock
on the Nasdaq SmallCap Market ("Nasdaq) was $1.25 per share.
LONG-TERM INCENTIVE AND PENSION PLANS
The Company does not have any long-term incentive or defined benefit
pension plans.
OTHER
No director, executive officer or record or beneficial owner of more
than five percent of the Company's Common Stock is involved in any material
legal proceeding in which he is a party adverse to the Company or has a material
interest adverse to the Company.
EMPLOYMENT AGREEMENTS
Pursuant to that certain Divestiture, Settlement and Reorganization
Agreement, entered into by the Company, HRB, Watermark Investments Limited, a
Bahamian international business company
-9-
<PAGE>
("Watermark-Bahamas"), Watermark, a wholly-owned subsidiary of
Watermark-Bahamas, AGF, Tova Schwartz, Alan G. Friedberg and Guillermo A.
Montero on February 26, 1996 (the "Divestiture Agreement"), the Company and Tova
Schwartz agreed that Ms. Schwartz would provide consulting services to the
Company on a part-time basis (no more than four hours per month) for a term of
three years, to be compensated at a rate of $100,000 per year. As additional
consideration for the purchase of the lighting business, the Company agreed to
refer lighting business to Ms. Schwartz or an entity controlled by her, and Ms.
Schwartz agreed to pay commissions to the Company for a period of three years at
a rate of 10% (or as negotiated), of the net invoice price of all sales referred
to Ms. Schwartz by the Company.
Additionally, pursuant to the Divestiture Agreement, Mr. Friedberg and
the Company agreed on the terms of Mr. Friedberg's employment with the Company,
for an initial term of three years, subject to automatic renewal for successive
twelve-month periods unless either party provides the other with a notification
of non-renewal no later than 90 days prior to the end of the initial term or any
renewal term. The salary of Mr. Friedberg has been determined by the Company's
Board of Directors to be $225,000. Mr. Friedberg has agreed not to compete with
the Company during the two-year period after the termination of his employment
with the Company.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers, directors and greater than ten percent
shareholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file. During the year ended December
31, 1995, all of such forms were filed in a timely manner, except that Watermark
did not file a Form 3.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company hired Interstate Interior Services ("Interstate") as a
subcontractor on certain of its projects. Sheryl Smul, the President of
Interstate, is the sister of Alan G. Friedberg, the Company's Chief Executive
Officer. From August 1, 1995, the date of the Acquisition, to December 31, 1995,
the Company paid fees of $712,137 to Interstate. During the six months ended
June 30, 1996, the Company paid fees of $20,315 to Interstate. The Company
solicits bids from subcontractors and, based on its knowledge of the hospitality
restoration industry, knows that the fees paid to Interstate are as favorable to
those which might have been paid to non-affiliated parties.
On February 26, 1996, pursuant to the Divesture Agreement pursuant to
which (i) the Company sold its lighting business to Tova Schwartz, the Company's
former President and Chief Executive Officer; (ii) Ms. Schwartz resigned from
her positions as a director, the CEO and President of the Company and of HRB;
(iii) the Company repurchased 500,000 shares of Common Stock from Ms. Schwartz
for a purchase price of $250,000; (iv) Ms. Schwartz granted to the Company the
option to purchase an aggregate of 1,000,000 shares of Common Stock (two options
each for 500,000 shares of Common Stock; (v) the Company retained Ms. Schwartz
as a consultant for a period of three years at a salary of $100,000 per year;
(vi) prior to resigning, Ms. Schwartz, the then sole remaining director of the
Company (since Howard G. Anders, Moshe Greenfield and Moise Hendeles resigned
from their positions as directors of the Company effective February 25, 1996),
appointed Mr. Friedberg and Robert A. Berman to the
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Company's Board of Directors and the Board of Directors appointed Mr. Friedberg
as the Company's President; (vii) the Company entered into three-year employment
agreements with each of Messrs. Friedberg and Montero; and (viii) the Company
engaged Resource Holdings Associates ("Resource Holdings") as its financial
advisor. On March 25, 1996, Mr. Berman resigned from the Company's Board of
Directors and the Board elected Scott A. Kaniewski to the Board of Directors.
Additionally, the Company has agreed to refer lighting business to Ms. Schwartz
or an entity controlled by her, and Ms. Schwartz agreed to pay commissions to
the Company for a period of three years at a rate of 10% (or as negotiated), of
the net invoice price of all sales referred to Ms. Schwartz by the Company.
The Company engaged Ms. Schwartz as a consultant for a three-year term
at a rate of $100,000 a year. Under the terms of Ms. Schwartz' engagement, the
Company is to use its best efforts to direct lighting business to Ms. Schwartz,
provided, however, that Ms. Schwartz is not obligated to accept any such
referrals. Ms. Schwartz will pay 10% of the net invoice price of all sales
referred to Ms. Schwartz by the Company.
In connection with the engagement of Resource Holdings as its financial
advisor, the Company (i) pays to Resource Holdings $10,000 per month through
February 1997 and (ii) granted to Resource Holdings options to purchase 500,000
shares of Common Stock at an exercise price of $2.00 per share.
Richard A. Bartlett, a director nominee, is the beneficial owner of
more than 10% of the common stock of Resource Limited, the corporate general
partner of Resource Holdings.
Guillermo Montero, the Vice President, Chief Operating Officer and a
director of the Company, is the beneficial owner of over 10% of the outstanding
common stock of Watermark.
On April 12, 1996, based upon provisions of the Asset Purchase
Agreement dated as of August 1, 1995, by and among AGF, Watermark,
Watermark-Bahamas, H&B and the Company (the "Agreement") and a memorandum
agreement between the parties to the Agreement, the Company and Watermark agreed
to reduce the purchase price by $1,350,000 through a reduction in the Note
Payable. The Company and Watermark agreed to offset the $2,150,000 Note Payable
and the $2,500,000 Note Receivable, with a net balance of $350,000 payable to
the Company over five years at a rate of 7% per annum, with payments commencing
January 1997. The Company believes that the 7% interest rate accurately reflects
the cost of money at the time of such adjustment.
Watertone Holdings, L.P. ("Watertone") is a limited partnership
comprised of Watertone L.L.C., a Delaware limited liability company, as general
partner, and Watermark and Watermark-Bahamas, as limited partners. Watertone
holds 2,300,000 shares of the Common Stock of the Company contributed to it by
Watermark on May 3, 1996 for, among other consideration, its limited partnership
interest in Watertone.
Scott Kaniewski is a director of Watermark, which has a management role
in the affairs of Watermark-Bahamas.
-------------------------
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PROPOSAL NO. 2
CHANGING THE NAME OF THE COMPANY
The Board of Directors recommends an amendment to the Company's
Certificate of Incorporation to change the Company's name from Light Savers
U.S.A., Inc. to Hospitality Worldwide Services, Inc. If approved by the
shareholders, Article One of the Company's Certificate of Incorporation would be
amended to provide as follows:
"1: The name of the corporation is: HOSPITALITY WORLDWIDE
SERVICES, INC."
In the judgment of the Board of Directors, the change of corporate name
is desirable in view of the significant change in the character and strategic
focus of the business of the Company resulting from the recent acquisition of
certain of the assets of AGF and disposal of the Company's lighting business.
These transactions were part of a strategic corporate program to refocus the
Company's business operations into areas with higher growth potential than the
lighting business.
If this amendment is adopted, shareholders will not be required to
exchange outstanding stock certificates for new certificates.
The affirmative vote of the holders of a majority of outstanding shares
of Common Stock is required for approval of the proposal to amend the Company's
Certificate of Incorporation to change the Company's name.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
APPROVAL OF THE PROPOSAL TO AMEND
THE COMPANY'S CERTIFICATE OF INCORPORATION
TO CHANGE THE COMPANY'S NAME
-------------------------
PROPOSAL NO. 3
INCREASING THE AUTHORIZED COMMON AND PREFERRED STOCK
The Board of Directors recommends an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from ten million (10,000,000) shares to twenty million (20,000,000)
shares and the number of authorized shares of Preferred Stock, $0.01 par value
per share ("Preferred Stock") from two million five hundred thousand (2,500,000)
to three million (3,000,000). If approved by the shareholders, Article Five of
the Company's Certificate of Incorporation would be amended to provide as
follows:
"5: The aggregate number of shares of common stock that the Corporation
shall have authority to issue is (i) twenty million (20,000,000) shares
of Common Stock, $0.01 par value per share ("Common Stock"), and (ii)
three million (3,000,000) shares of Preferred Stock, $0.01 par value
per share ("Preferred Stock").
The Company is currently authorized to issue 10,000,000 shares of
Common Stock. As of August 16, 1996, the record date for the Annual Meeting,
7,125,655 shares of Common Stock were issued and outstanding, and approximately
an additional 2,610,000 shares of Common Stock were reserved for
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issuance upon exercise of outstanding stock options and warrants and for options
that may be granted in the future under the 1996 Plan and the Outside Directors'
Plan (assuming the approval of the 1996 Plan and the Outside Directors' Plan by
shareholders described in this Proxy Statement). The Company is currently
authorized to issue 2,500,000 shares of Preferred Stock. As of August 16, 1996,
the record date for the Annual Meeting, no shares of Preferred Stock were issued
and outstanding.
The Board of Directors of the Company believes that it is advisable and
in the best interest of the Company to have available authorized but unissued
shares of Common Stock and Preferred Stock in an amount adequate to provide for
the future needs of the Company. The additional shares will be available for
issuance from time to time by the Company in the discretion of the Board of
Directors, normally without further shareholder action (except as may be
required for a particular transaction by applicable law, requirements of
regulatory agencies or by stock exchange or Nasdaq rules), for any proper
corporate purpose including, among other things, future acquisitions of property
or securities of other corporations, stock dividends, stock splits, convertible
debt financing and equity financings. As there are no offerings of the Preferred
Stock contemplated by the Company in the proximate future, the terms of such
securities have not been determined. Dividend or interest rates, conversion
prices, voting rights, redemption prices, maturity dates and similar matters
will be determined by the Board of Directors, without further authorization of
the shareholders. No shareholder of the Company would have any preemptive rights
regarding future issuance of any shares of Common Stock and Preferred Stock.
The Company has no present plans, understandings or agreements for the
issuance or use of the proposed additional shares of Common Stock and Preferred
Stock. However, the Board of Directors believes that if an increase in the
authorized number of shares of Common Stock and Preferred Stock were to be
postponed until a specific need arose, the delay and expense incident to
obtaining the approval of the Company's shareholders at that time could
significantly impair the Company's ability to meet financing requirements or
other objectives.
The issuance of additional shares of Common Stock and Preferred Stock
may have the effect of diluting the stock ownership of persons seeking to obtain
control of the Company. Although the Board of Directors has no present intention
of doing so, the Company's authorized but unissued Common Stock and Preferred
Stock could be issued in one or more transactions that would make more difficult
or costly, and less likely, a takeover of the Company. The proposed amendment to
the Company's Certificate of Incorporation is not being recommended in response
to any specific effort of which the Company is aware to obtain control of the
Company, nor is the Board of Directors currently proposing to shareholders any
anti-takeover measures.
The affirmative vote of the holders of a majority of outstanding shares
of Common Stock is required for approval of the proposal to amend the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF
THE PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK AND
PREFERRED STOCK
-------------------------
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PROPOSAL NO. 4
LIMITING DIRECTORS' LIABILITY
The Board of Directors is presenting two proposals for action by the
shareholders, each consistent with provisions of the New York Business
Corporation Law ("New York BCL"), under which the Company is organized. The
first, proposal No. 4, is a proposal to amend Article 3 to the Company's
Certificate of Incorporation to eliminate the personal liability of directors of
the Company to the fullest extent permitted by paragraph (b) of Section 402 of
the New York BCL, as the same may be amended or supplemented. Article 3 of the
Company's existing Certificate of Incorporation eliminates the personal
liability of directors in a manner consistent with paragraph (b) of Section 402
of the New York BCL as it exists as of the date hereof. The second, proposal No.
5, is a proposal to adopt an amendment to the Company's By-Laws which, in
general, provides for indemnification of directors and officers of the Company.
The Company's By-Laws do not currently provide for indemnification of directors
and officers.
The Board of Directors believes that the two proposals, together, will
assist the Company in attracting and retaining qualified individuals to serve as
directors and officers of the Company. In the past, the Company has not had any
problems attracting and retaining qualified individuals. Each of the proposals
is consistent with the provisions of the New York BCL that enable New York
corporations to take measures to respond to the increasing threat of litigation
which directors and officers of public companies face in carrying out their
responsibilities and to the diminishing availability of directors' and officers'
liability insurance. Since directors and officers of the Company may benefit
from these proposals, the Board of Directors has an interest in the passage
thereof by the shareholders. The Board of Directors believes, however, that
adoption of the proposals is in the best interests of the Company and its
shareholders.
Each of the two proposals is discussed below. The Board of Directors
has recommended that the shareholders vote for approval of each proposal. Each
proposal will be presented separately for shareholder vote; approval of one is
not contingent upon approval of the other.
PROPOSAL TO ADOPT AN AMENDMENT TO THE
CERTIFICATE OF INCORPORATION
PROVIDING FOR ELIMINATION OF CERTAIN LIABILITIES OF
DIRECTORS IN ACCORDANCE WITH NEW YORK LAW
The Board of Directors recommends that the shareholders approve a
proposal to amend Article 3 of the Company's Certificate of Incorporation to
eliminate personal liability of the Company's directors to the Company or to its
shareholders for monetary damages arising from breach of fiduciary duty to the
fullest extent permitted by paragraph (b) of Section 402 of the New York BCL, as
the same may be amended or supplemented. Article 3 currently eliminate the
personal liability of directors in a manner consistent with paragraph (b) of
Section 402 of the New York BCL as it exists as of the date hereof. The proposed
amendment is authorized by Section 402(b) of the New York BCL.
BACKGROUND
Since 1986, many states, including Delaware, Massachusetts, New Jersey,
Ohio and Pennsylvania, have enacted statutes to reduce the exposure of corporate
directors to litigation seeking to impose upon them heavy monetary liability for
their acts or inaction in such capacity. The New York BCL was amended in 1986 in
response to this need. As noted in the legislative memorandum accompanying the
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Act amendment to Section 402(b) of the New York BCL with respect to directors'
liability, the purpose of the New York legislation was "to assure that qualified
and experienced persons continue to be willing to serve as . . . directors of
New York corporations by relieving them of the threat of monetary liability in
connection with their duties ...." Such liability is not eliminated or limited
if the acts or omissions of directors are in bad faith, involve intentional
misconduct or knowing violations of law, violate certain statutory prohibitions,
or result in a profit or other advantage to the director to which he is not
legally entitled. Section 402(b) of the New York BCL is an enabling provision
only. Shareholder approval of an amendment to the Certificate of Incorporation
is required to effect this continued and modified limitation on monetary
liability authorized by the statute.
TEXT OF PROPOSED AMENDMENT
If approved by the shareholders, Article Three of the Company's
Certificate of Incorporation would be amended to read as follows:
"3: The personal liability of the directors of the corporation
is hereby eliminated to the fullest extent permitted by the provisions
of paragraph (b) of Section 402 of the Business Corporation Law of the
State of New York, as the same may be amended and supplemented. Any
repeal or modification of this Article by the shareholders of the
Company shall not adversely affect any right or protection of a
director of the Company existing hereunder with respect to any act or
omission occurring prior to such repeal or modification."
REASONS FOR THE PROPOSED AMENDMENT
Article 3 of the Company's Certificate of Incorporation currently
mirrors that which is currently allowed in Section 402(b) of the New York BCL
("Section 402(b)") by providing that directors "shall not be held liable to the
corporation or its shareholders for damages for any breach of duty in such
capacity except for (i) liability if a judgment or other adjudication adverse to
a director establishes that his or her acts or omissions were in bad faith or
involved intentional misconduct or in knowing violation of law or that the
director personally gained in fact a financial profit or other advantage to
which he or she was not legally entitled or that the director's acts violated
Section 719 of the New York BCL, or (ii) liability for any acts or omissions
prior to the adoption of this provision." The proposed amendment would amend the
present Article by limiting directors' liability to the fullest extent of
Section 402(b) in its present form and as supplemented and amended. The effect
of this proposal would be that directors would be further protected to the
extent provided in any amendment to Section 402(b) without further approval of
the Company's shareholders.
Directors of New York corporations are required, under the New York
BCL, to perform their duties in such capacity in good faith and with that degree
of care which an ordinarily prudent person in a like position would use under
similar circumstances. A director may rely upon information, opinions, reports
or statements (including financial statements) prepared by certain officers or
employees, professional advisors, or committees of the Board on which such
director does not serve. Decisions made on that basis are protected by the
"business judgment rule" and should not be questioned by a court in the event of
a lawsuit challenging such decisions. The expense of defending such lawsuits,
the frequency of unwarranted litigation and the inevitable uncertainties of
applying the business judgment rule to particular facts and circumstances mean,
as a practical matter, that directors must rely on indemnification arrangements
and directors' and officers' liability insurance in the event of such expenses
or unforeseen liability. In a companion proposal, the Company is requesting
shareholder approval of an amendment to the Company's By-Laws to permit the
fullest possible indemnification permitted under the New York BCL. In a period
of increasing threats of corporate litigation, premiums have increased at the
same time
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as the coverage of such policies has been limited, so that only partial coverage
may be available and, then, only at prohibitive cost. Because of such factors,
the Company has chosen not to obtain such coverage.
As noted above, the purpose of the New York legislation was to assure
that qualified persons would continue to serve as directors of New York
corporations by relieving them of the threat of monetary liability. Significant
management changes have occurred in the Company since the 1995 annual meeting of
shareholders. The Board of Directors of the Company believes that the Company
should take every possible step to ensure that it will continue to be able to
attract and retain the best possible directors. In the past, there has been no
claim of the type which would be affected by the proposed amendment and none is
presently pending or, to the knowledge of management of the Company, threatened.
EFFECT OF THE PROPOSED AMENDMENT
The proposed amendment would continue to protect each of the Company's
directors against personal liability to the Company or its shareholders for any
breach of duty unless a judgment or other final adjudication adverse to the
director establishes that (i) his acts or omissions were in bad faith, or (ii)
involved intentional misconduct or a knowing violation of the law, or (iii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled, or (iv) his acts violated the prohibitions contained in
Section 719 of the New York BCL against certain declarations of dividends,
certain purchases or redemptions of its shares by the Company, certain
distributions of assets after dissolution of the Company without adequately
providing for its liabilities and the making of certain loans to directors.
Because the proposed amendment provides that the liability of the Company's
directors is limited to the fullest extent permitted by the New York BCL "as the
same may be amended or supplemented," the amendment will further protect
directors to the extent provided in any amendment to the statute, without
further approval of the shareholders.
A director is required, under Section 717 of the New York BCL, to
"perform his duties as a director . . . in good faith and with that degree of
care which an ordinarily prudent person in a like position would use under
similar circumstances." Additionally, a director owes to the company for which
he serves a duty of care and a duty of loyalty. Thus, a director, acting in such
capacity, must always act in the best interests of the company and its
shareholders and must not seek personal gain from a business opportunity that
the company for which he serves might also have an interest unless and until the
company has elected not to pursue that opportunity.
Examples of breaches of a director's duties that continue to be covered
by the proposed amendment are the neglect of or failure to perform, or other
violation of his duties in management and disposition of corporate assets
committed to his charge and the acquisition by himself, transfer to others, loss
or waste of corporate assets due to any neglect of, or failure to perform, or
other violation of his duties
The Company's directors who are proposed for re-election acknowledge
that they and future directors may personally benefit from adoption of the
proposed amendment at the potential expense of the Company's shareholders, and
that they may thus have a conflict of interest in recommending approval of the
amendment. The Board of Directors believes, however, that the diligence
exercised by directors stems primarily from their desire to act in the best
interests of the Company, and not from a fear of monetary damage awards.
Accordingly, the Board of Directors believes that the level of scrutiny and care
exercised by directors will not be lessened by adoption of the proposed
amendment. The Board of Directors believes that such adoption will enhance the
Company's ability to attract and retain qualified individuals to serve as
directors of the Company.
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Approval of the proposed amendment to the Certificate of Incorporation
requires the affirmative vote of the holders of at least a majority of the
issued and outstanding shares of Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE FOREGOING PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION TO LIMIT THE LIABILITY OF DIRECTORS
-------------------------
PROPOSAL NO. 5
ALLOWING FOR
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Board of Directors recommends that the shareholders approve a
proposal to amend the ByLaws of the Company to add an Article XII which relates
to indemnification of directors, officers and others. The Company's By-Laws do
not currently provide for indemnification of the Company's directors or officers
and is therefore currently governed by the New York BCL. The text of this
proposal is set forth in Appendix A to this Proxy Statement.
BACKGROUND
A number of states have changed the indemnification provisions of their
corporate laws in response to increasing general concern over the ability of
corporations to attract and retain qualified persons to serve as corporate
directors and officers in the face of heightened risks of litigation challenging
their decisions and the diminishing availability of meaningful directors' and
officers' liability insurance. The basic indemnification provisions of the New
York BCL were amended in 1986 to authorize New York corporations to provide for
indemnification and advancement of expenses to directors and officers against
liabilities incurred, as a result of their service to the corporation, in either
shareholder derivative suits by or in the name of the corporation or third-party
claims, and against the expenses of defending these claims. These provisions,
however, are permissive and require the Company to affirmatively implement them.
The 1986 revision in the New York law, however, PROHIBITS
indemnification when and if a judgment or other final adjudication adverse to
the director or officer establishes that (i) his acts were committed in bad
faith or were the result of active and deliberate dishonesty and were material
to the adverse adjudication, or (ii) he personally gained a financial profit or
other advantage to which he was not legally entitled.
The New York BCL now provides that the indemnification and advancement
of expenses provisions thereof are not exclusive of any other rights to which a
director or officer may be entitled. The New York BCL also permits a corporation
to provide directors and officers more extensive indemnification rights, if such
additional rights are contained in, or authorized by, its certificate of
incorporation or by-laws, except that no indemnification may be made if a
director or officer is found to be ineligible for indemnification under the
circumstances set forth in the preceding paragraph.
REASONS FOR THE PROPOSED AMENDMENT
The New York Governor's memorandum in support of the legislation
expanding the power of a New York corporation to indemnify its directors and
officers in the manner contemplated by the amendment stated that the principal
objective of the statutory changes was "to encourage capable and experienced
persons to serve in corporate management by providing reasonable indemnification
of the
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directors and officers of public corporations for their defense of both
third-party and derivative actions." The directors may benefit from shareholder
adoption of the proposed amendment to the potential detriment of shareholders,
since adoption may discourage shareholder derivative actions based on alleged
negligence because the Company will be required to reimburse directors or
officers for any amount the Company recovers in such suits from defendant
directors or officers and for their expenses in defending such suits. This
proposal is intended to help the Company attract and retain able and
well-qualified persons as directors and officers by assuring them that the
Company will hold them harmless when they do not act in bad faith or dishonestly
or for their own interests. In the past, the Company has not had any problems
attracting and retaining qualified individuals.
As noted above, the purpose of the New York legislation was to assure
that qualified persons would continue to serve as directors and officers of New
York corporations by relieving them of the threat of monetary liability. The
Board of Directors of the Company believes that the Company should take every
possible step to ensure that it will continue to be able to attract and retain
the best possible directors and officers.
NEW YORK STATUTORY PROVISIONS FOR INDEMNIFICATION
The New York BCL provides that a corporation MAY (but is not required
to) indemnify a director or officer against judgments, fines, amounts paid in
settlement and reasonable expenses of litigation (other than in an action
brought by the corporation against such person or by shareholders against such
person on behalf of the corporation), even if the director or officer is not
successful on the merits, if he acted in good faith and for a purpose he
reasonably believed to be in (or not opposed to) the best interests of the
corporation (and, in criminal actions or proceedings, had no reason to believe
his conduct was unlawful). In addition, a corporation MAY (but is not required
to) indemnify a director or officer against amounts paid in settlement and
reasonable expenses of an action brought against him by the corporation or by
shareholders on behalf of the corporation, even if he is not successful on the
merits, if he acted in good faith and for a purpose he reasonably believed to be
in (or not opposed to) the best interests of the corporation. However, no
indemnification is permitted in an action by the corporation, or shareholders on
behalf of the corporation, in connection with the settlement or other
disposition of a threatened or pending action or in connection with any claim,
issue or matter as to which a director or officer is adjudged to be liable to
the corporation, unless a court determines that, in view of all of the
circumstances, he is entitled to indemnity for such portion of the settlement
amount and expenses as the court deems proper. In addition, the New York BCL
provides that a director or officer SHALL (is required to) be indemnified if
such person is successful in the litigation on the merits or otherwise.
Mandatory indemnification as described above will continue to be applicable
after the adoption of proposed Article XII.
Permitted indemnification as described above may only be made if it is
authorized by the Board of Directors, in each specific case, based upon a
determination that the applicable standard of conduct has been met or that
indemnification is proper under New York BCL section 721. Such authorization is
made by the Board of Directors, either acting as a quorum of disinterested
directors or based upon an opinion by independent legal counsel or the
shareholders that indemnification is proper because the applicable standard of
conduct has been met. Upon application of the person seeking indemnification, a
court may also award indemnification upon a determination that the standards
outlined above have been met. A corporation's board of directors may also
authorize the advancement of litigation expenses to a director or officer upon
receipt of an undertaking by him to repay such expenses, if it is ultimately
determined that he is not entitled to be indemnified for them. The Company is
currently permitted to indemnify its officers and directors as described above;
however, after adoption of Article XII, such permitted indemnification will
become mandatory.
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MANDATORY INDEMNIFICATION
Presently, unless any director or officer involved in litigation has
been successful, on the merits or otherwise, the Company may choose not to
provide indemnification in any particular case (although a person denied such
indemnification may apply to a court therefor). Article XII provides that the
Company SHALL indemnify a director or officer to the fullest extent permitted by
law.
STANDARD OF CONDUCT
Under Article XII, a director or officer seeking indemnification will
be indemnified UNLESS there is a judgment or other adverse final adjudication
establishing (i) that the acts involved were taken in bad faith or were the
result of active and deliberate dishonesty and were material to the cause of
action so adjudicated, or (ii) that the director or officer personally gained a
financial profit or other advantage to which the person was not legally
entitled.
INDEMNIFICATION AS PROVIDED BY PROPOSED ARTICLE XII
The purpose of proposed Article XII is to implement those rights of
indemnification permitted by the New York BCL. Neither the Company's Certificate
of Incorporation nor its By-Laws presently contain any provisions concerning
indemnification.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Article XII, the Company will be obligated to indemnify directors
and officers against any liability incurred in connection with any proceeding in
which such person may be involved as a party or otherwise by reason of the fact
that the person is or was serving as a director or officer of the Company,
except as expressly prohibited by law. Such liabilities may include, without
limitation, judgments, fines, penalties, punitive damages, excise taxes assessed
with respect to an employee benefit plan, amounts paid in settlement, costs and
expenses of any nature (including attorneys' fees). Since indemnification
payments would be made from the Company's general funds, in the event that the
Company were to make substantial payments under Article XII, the shareholders'
investment in the Company may be at risk. The Company will be required to
reimburse or advance to a director or officer funds necessary for the payment of
expenses, subject to his undertaking to repay such funds to the Company upon an
adjudication that he was not entitled to indemnification. Without this Article
XII, the New York BCL would govern and provide that in the above described
circumstances the Company may indemnify such directors and officers.
In addition to the indemnities set forth in the New York BCL, Article
XII will enable the Company to indemnify directors and officers against
liabilities incurred under the federal securities laws. However, the Commission
and some courts have taken the position that a corporation may not provide
indemnification against such liabilities. Other state or federal statutes may
raise similar issues.
INDEMNIFICATION OF OTHER CORPORATE PERSONNEL AND OTHERS
Article XII will also provide that the Company may indemnify any other
person (including other corporate personnel) to whom the Company by applicable
law is permitted to provide indemnification or advancement of expenses, whether
pursuant to the New York BCL or by a resolution of shareholders or directors or
an agreement providing for such indemnification. Such other corporate personnel
may include, but need not be limited to, any person serving at the request of
the Company as a director, officer, fiduciary or trustee of another corporation,
partnership, joint venture, trust, employee benefit plan
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or other entity or enterprise. Without this Article XII, the New York BCL would
govern and also provide that in the above described circumstances the Company
may indemnify such personnel.
GENERAL
The Board of Directors without further shareholder approval will have
the authority to amend, modify, or repeal Article XII as necessary or
appropriate to reflect any future developments concerning indemnification of
directors and officers. Article XII will NOT be applied retroactively to events
occurring prior to the adoption of the proposal, although such retroactive
application is permissible, because the Board of Directors believes that
retroactive application is not appropriate. Subsections (a) - (c) of Article XII
will enable the Company to utilize the indemnification provisions of the New
York BCL.
As previously noted, this is a companion proposal to that relating to
the amendment of the Company's Certificate of Incorporation to modify the
current elimination of the personal liability of directors under certain
circumstances. This proposal will give additional protection to directors, and
(unless the Company should procure directors' and officers' liability insurance,
which is not presently contemplated due to its prohibitive cost and restricted
coverage) will be the sole protection for the Company's officers and others who
are acting for the Company in good faith. The threat of a possible lawsuit, even
though groundless, is one of the major reasons for the need of such insurance.
Lack of such insurance requires even an innocent director or officer to bear the
expenses of such litigation unless he is protected by an indemnification
provision. In the past, there has been no claim of the type which would be
affected by the proposed amendment and none is presently pending or, to the
knowledge of the management of the Company, threatened. Again, the Board of
Directors believes that providing this level of protection to its directors and
officers, comparable to that being provided by other public companies, will not
lessen the level of scrutiny and care exercised by them in the Company's
service.
Approval of the proposed amendment to the By-Laws requires the
affirmative vote of a majority of the votes cast by shareholders present in
person or by proxy and entitled to vote at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
APPROVAL OF THE FOREGOING PROPOSAL TO AMEND THE COMPANY'S BY-LAWS
TO ALLOW THE COMPANY TO INDEMNIFY DIRECTORS AND OFFICERS
-------------------------
PROPOSAL NO. 6
APPROVAL OF 1996 STOCK OPTION PLAN
The Board of Directors of the Company has unanimously approved for
submission to a vote of the shareholders a proposal to adopt the 1996 Stock
Option Plan (the "1996 Plan"). The purpose of the 1996 Plan is to provide
additional incentive to the officers and employees of the Company who are
primarily responsible for the management and growth of the Company. Each option
granted pursuant to the 1996 Plan shall be designated at the time of grant as
either an "incentive stock option" or as a "non-qualified stock option." A
summary of the significant provisions of the 1996 Plan is set forth below. The
full text of the 1996 Plan is set forth as Appendix B to this Proxy Statement.
THIS DISCUSSION OF THE 1996 PLAN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
APPENDIX B.
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ADMINISTRATION OF THE PLAN
The 1996 Plan will be administered by the Committee, consisting of two
or more Disinterested Persons (as defined in the 1996 Plan), which determines to
whom among those eligible, and the time or times at which options will be
granted, the number of shares to be subject to options, the duration of options,
any conditions to the exercise of options, and the manner in and price at which
options may be exercised. In making such determinations, the Committee may take
into account the nature and period of service of eligible employees, their level
of compensation, their past, present and potential contributions to the Company
and such other factors as the Committee in its discretion deems relevant.
The Committee is authorized to amend, suspend or terminate the 1996
Plan, except that it is not authorized without shareholder approval (except with
regard to adjustments resulting from changes in capitalization) to (i) increase
the maximum number of shares that may be issued pursuant to the exercise of
options granted under the 1996 Plan; (ii) permit the grant of an incentive stock
option under the 1996 Plan with an option price less than 100% of the fair
market value of the shares at the time such option is granted; (iii) change the
eligibility requirements for participation in the 1996 Plan; (iv) extend the
term of any option or the period during which any option may be granted under
the 1996 Plan; (v) decrease an option exercise price (although an option may be
cancelled and a new option granted at a lower exercise price); or (vi)
materially increase the benefits to participants of the 1996 Plan.
Unless the 1996 Plan is terminated earlier by the Committee, it will
terminate on June 5, 2006.
SHARES SUBJECT TO THE PLAN
The 1996 Plan provides that options may be granted with respect to a
total of 1,700,000 shares of Common Stock. Under certain circumstances involving
a change in the number of shares of Common Stock, such as a stock split, stock
consolidation or payment of a stock dividend, the class and aggregate number of
shares of Common Stock in respect of which options may be granted under the 1996
Plan, the class and number of shares subject to each outstanding option and the
option price per share will be proportionately adjusted. In addition, if the
Company is involved in a merger, consolidation, dissolution, liquidation or upon
a transfer of substantially all of the assets or more than 80% of the
outstanding Common Stock, the options granted under the 1996 Plan will be
adjusted or, under certain conditions, will terminate, subject to the right of
the option holder to exercise his option or a comparable option substituted at
the discretion of the Company prior to such event. If any option expires or
terminates for any reason, without having been exercised in full, the
unpurchased shares subject to such option will be available again for the
purposes of the 1996 Plan.
PARTICIPATION
Any employee of the Company shall be eligible to receive incentive
stock options or non-qualified stock options granted under the 1996 Plan.
OPTION PRICE
The exercise price of each option is determined by the Committee, but
may not be less than 100% of the Fair Market Value (as defined in the 1996 Plan)
of the shares of Common Stock covered by the option on the date the option is
granted in the case of an incentive stock option, nor less than 75% of the Fair
Market Value of the shares of Common Stock covered by the option on the date the
option is granted in the case of a non-qualified stock option. If an incentive
stock option is to be granted to an employee who owns over 10% of the total
combined voting power of all classes of the Company's capital stock,
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then the exercise price may not be less than 110% of the Fair Market Value of
the Common Stock covered by the option on the date the option is granted.
TERMS OF OPTIONS
The Committee shall, in its discretion, fix the term of each option,
provided that the maximum term of each option shall be 10 years. Options granted
to an employee who owns over 10% of the total combined voting power of all
classes of stock of the Company shall expire not more than five years after the
date of grant. The 1996 Plan provides for the earlier expiration of options of a
participant in the event of certain terminations of employment.
RESTRICTIONS ON GRANT AND EXERCISE
An option may not be transferred or assigned other than by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order (as described in the 1996 Plan) and, during the lifetime of the option
holder, may be exercised solely by him. The aggregate Fair Market Value
(determined at the time the incentive stock option is granted) of the shares as
to which an employee may first exercise incentive stock options in any one
calendar year under all incentive stock option plans of the Company and its
subsidiaries may not exceed $100,000. The Committee may impose any other
conditions to exercise as it deems appropriate.
REGISTRATION OF SHARES
The Company may file a registration statement under the Securities Act
of 1933, as amended, with respect to the Common Stock issuable pursuant to the
1996 Plan subsequent to the approval of the 1996 Plan by the Company's
shareholders.
RULE 16B-3 COMPLIANCE
In all cases, the terms, provisions, conditions and limitations of the
1996 Plan shall be construed and interpreted consistent with the provisions of
Rule 16b-3 of the Securities Exchange Act of 1934, as amended.
TAX TREATMENT OF INCENTIVE OPTIONS
No taxable income will be recognized by an option holder upon receipt
of an incentive stock option, and the Company will not be entitled to a tax
deduction in respect of such grant.
In general, no taxable income for Federal income tax purposes will be
recognized by an option holder upon receipt or exercise of an incentive stock
option and the Company will not then be entitled to any tax deduction. Assuming
that the option holder does not dispose of the option shares before the
expiration of the longer of (i) two years after the date of grant, or (ii) one
year after the transfer of the option shares, upon disposition, the option
holder will recognize capital gain equal to the difference between the sale
price on disposition and the exercise price.
If, however, the option holder disposes of his option shares prior to
the expiration of the required holding period, he will recognize ordinary income
for Federal income tax purposes in the year of disposition equal to the lesser
of (i) the difference between the fair market value of the shares at date of
exercise and the exercise price, or (ii) the difference between the sale price
upon disposition and the exercise price. Any additional gain on such
disqualifying disposition will be treated as capital gain. In
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addition, if such a disqualifying disposition is made by the option holder, the
Company will be entitled to a deduction equal to the amount of ordinary income
recognized by the option holder provided such amount constitutes an ordinary and
reasonable expense of the Company.
The amount by which the fair market value of the shares at the time of
exercise exceeds the exercise price of an incentive stock option will be a tax
preference item for purposes of the alternative maximum tax, which, in general,
imposes a 26% tax rate on the initial $175,000 (and a 28% rate in excess of
$175,000) of the excess of (i) an individual's adjusted gross income plus
certain tax preference items over (ii) $33,750 ($45,000 for joint returns)
reduced by $.25 for each $1.00 by which the alternative minimum taxable income
exceeds $112,500 ($150,000 for joint returns). An individual will be liable for
the alternative minimum tax only to the extent that the amount of such tax
exceeds the liability for regular Federal income tax.
TAX TREATMENT OF NON-QUALIFIED OPTIONS
No taxable income will be recognized by an option holder upon receipt
of a non-qualified stock option, and the Company will not be entitled to a tax
deduction for such grant.
Upon the exercise of a non-qualified stock option, the option holder
will include in taxable income for Federal income tax purposes the excess in
value on the date of exercise of the shares acquired upon exercise of the
non-qualified stock option over the exercise price. Upon a subsequent sale of
the shares, the option holder will derive short-term or long-term gain or loss,
depending upon the option holder's holding period for the shares, commencing
upon the exercise of the option, and upon the subsequent appreciation or
depreciation in the value of the shares.
The Company generally will be entitled to a corresponding deduction at
the time that the participant is required to include the value of the shares in
his income.
OPTION GRANTS
No options have heretofore been granted under the 1996 Plan.
REQUIRED VOTE
The affirmative vote of the holders of a majority of outstanding shares
of Common Stock is required for the approval of the 1996 Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPROVAL
OF THE ADOPTION OF THE 1996 PLAN
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PROPOSAL NO. 7
APPROVAL OF 1996 OUTSIDE DIRECTORS' STOCK OPTION PLAN
GENERAL
The Board of Directors has unanimously approved for submission to a
vote of the shareholders a proposal to approve the 1996 Outside Directors' Stock
Option Plan of the Company (the "Outside
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Directors' Plan") as set forth in Appendix C to this Proxy Statement. THIS
DISCUSSION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO APPENDIX C.
The purpose of the Outside Directors' Plan is to secure for the Company
and its shareholders the benefits arising from stock ownership by its Outside
Directors. The Outside Directors' Plan will provide a means whereby such Outside
Directors may purchase shares of Common Stock pursuant to options granted in
accordance with the Outside Directors' Plan. Any Outside Director of the
Company, defined as any director who is neither a present nor past employee of
the Company, shall be eligible to participate in the Outside Directors' Plan
(each an "Outside Director").
ADMINISTRATION OF THE OUTSIDE DIRECTORS' PLAN
The Outside Directors' Plan is administered by the Board of Directors,
which shall have full and complete authority to adopt such rules and regulations
and to make all such other determinations not inconsistent with the Outside
Directors' Plan as may be necessary for the administration thereof.
The Board of Directors is authorized to amend, suspend or terminate the
Outside Directors' Plan, except that it is not authorized without shareholder
approval (except with regard to adjustments resulting from changes in
capitalization) to (i) increase the maximum number of shares that may be issued
pursuant to the exercise of options granted under the Outside Directors' Plan;
(ii) change the minimum price per share at which an option may be exercised
pursuant to the Outside Directors' Plan; (iii) increase the maximum term of any
option granted under the Outside Directors' Plan; (iv) permit the granting of
options to anyone other than as provided in the Outside Directors' Plan; or (v)
materially increase the benefits accruing to participants in the Outside
Directors's Plan.
Unless the Outside Directors' Plan is terminated earlier by the Board
of Directors, it will terminate on the tenth anniversary of its adoption by the
Board of Directors.
COMMON STOCK SUBJECT TO THE OUTSIDE DIRECTORS' PLAN
The Outside Directors' Plan, as proposed, would authorize the issuance
of a maximum of 250,000 shares of Common Stock, subject to adjustment, pursuant
to the exercise of options granted thereunder. As of the date of this Proxy
Statement no options are outstanding under the Outside Directors' Plan.
The shares of Common Stock to be issued under the Outside Directors'
Plan may be either authorized but unissued shares or reacquired shares. The
number of shares of Common Stock available under the Outside Directors' Plan
will be subject to adjustment to prevent dilution in the event of a stock split,
recapitalization, stock dividend or certain other events. If an option granted
under the Outside Directors' Plan, or any portion thereof, shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares of Common Stock covered by such option shall be available for future
grants of options.
GRANT OF OPTIONS
Subject to shareholder approval, each Outside Director who becomes an
Outside Director after March 1, 1996 shall receive the grant of an option to
purchase 15,000 shares of Common Stock. To the extent that shares of Common
Stock remain available for the grant of options under the Outside Directors'
Plan on April 1 of each year, beginning on April 1, 1997, each Outside Director
shall be granted an option to purchase 10,000 shares of Common Stock.
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VESTING OF OPTIONS
Options granted under the Outside Director's Plan shall be exercisable
in three equal installments beginning on the first anniversary of the grant
dates and subject to such terms and conditions as shall be determined by the
Board of Directors at grant; provided, however, that in the case of an Outside
Director's death or Permanent Disability (as defined in the Outside Directors'
Plan), the options held thereby will become immediately exercisable; provided,
however, that no option shall be exercisable until more than six months have
elapsed from the grant date and shareholder approval of the Outside Directors'
Plan shall have been obtained.
OPTION PRICE
The exercise price of each option is the Fair Market Value (as
hereinafter defined) for each share of Common Stock subject to an option. Fair
Market Value means the closing sales price of the Common Stock as quoted on the
national securities exchange on which the Company's Common Stock is listed or on
the Nasdaq SmallCap Market on the date of grant of any option. If the Common
Stock is not quoted on any national securities exchange or on Nasdaq SmallCap
Market, Fair Market Value shall be deemed to be the average of the closing bid
and asked prices of the Common Stock in the over-the-counter market on the date
of grant.
TERMS OF OPTIONS
The term of each option shall be five years from the date of grant,
subject to early termination by the Board of Directors. The Outside Directors'
Plan also provides for the earlier termination of options in the event an
Outside Director's membership on the Board of Directors terminates.
TRANSFERABILITY; TERMINATION OF DIRECTORSHIP
All options granted under the Outside Directors' Plan are
non-transferable and non-assignable except by will or by the laws of descent and
distribution or by a qualified domestic relations order (as defined in the
Outside Directors' Plan) and may be exercised during an Outside Director's
lifetime only by such Outside Director, his guardian or legal representative. If
an Outside Director's membership on the Board of Directors terminates for any
reason other than cause, including death of such Outside Director, an option
held on the date of termination may be exercised in whole or in part at any time
within ninety days after the date of such termination (but in no event after the
term of such option expires) and shall thereafter terminate. If an Outside
Director's membership on the Board of Directors is terminated for cause, which
determination shall be made by the Board of Directors, options held by such
Outside Director shall terminate concurrently with termination of membership.
TAX TREATMENT OF OPTIONS
See "Tax Treatment of Non-Qualified Options" in Proposal 6 for a
discussion of the tax consequences associated with options granted under the
Outside Directors' Plan.
REQUIRED VOTE
The affirmative vote of the holders of a majority of outstanding shares
of Common Stock is required for approval of the Outside Directors' Plan.
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE FOR APPROVAL OF THE 1996 OUTSIDE DIRECTORS' PLAN
-------------------------
PROPOSAL NO. 8
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed BDO Seidman, LLP to be the
independent auditors of the Company for the fiscal year ending December 31,
1996. Although the selection of auditors does not require ratification, the
Board of Directors has directed that the appointment of BDO Seidman, LLP be
submitted to shareholders for ratification. If shareholders do not ratify the
appointment of BDO Seidman, LLP, the Board of Directors will consider the
appointment of other certified public accountants. A representative of BDO
Seidman, LLP is expected to be available at the Annual Meeting to make a
statement if such representative desires to do so and to respond to appropriate
questions.
The affirmative vote of the holders of a majority of the Common Stock
present, in person or by proxy, is required for ratification of the appointment
of BDO Seidman, LLP as independent auditors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
DISMISSAL OF INDEPENDENT PUBLIC ACCOUNTANTS
On March 14, 1996, the Company dismissed Arthur Andersen LLP
("Andersen") as its independent accountants. The Company Board of Directors
approved such dismissal. Andersen's accountant's report on the financial
statements of the Company for the past two years did not contain an adverse
opinion or a disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope, or accounting principles. There were no other
reportable events or disagreements with Andersen to report in response to Item
304(a) of Regulation S-K, ss. 229.304(a).
On March 15, 1996, BDO Seidman, LLP was engaged as new independent
accountants to the Company.
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SHAREHOLDER PROPOSALS
Shareholder proposals in respect of matters to be acted upon at the
Company's 1997 Annual Meeting of Shareholders should be received by the Company
on or before March 3, 1997 in order that they may be considered for inclusion in
the Company's proxy materials.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors is not
aware of any other matters to be presented for action at the forthcoming Annual
Meeting, but if any other matters properly come before the Annual Meeting, it is
intended that the persons voting the accompanying proxy will vote the shares
represented thereby in accordance with their best judgment.
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The Annual Report on Form 10-KSB for the fiscal year ended December 31,
1995, including financial statements, has been mailed to shareholders with this
Proxy Statement. If, for any reason, you did not receive your copy of the Annual
Report, please advise the Company and a copy will be sent to you.
It is important that Proxies be returned promptly. Therefore, whether
or not you plan to attend the meeting in person, you are urged to mark, date,
execute and return your Proxy in the enclosed envelope, to which no postage need
be affixed if mailed in the United States.
By Order of the Board of Directors,
HOWARD G. ANDERS,
Executive Vice President,
Chief Financial Officer and Secretary
Dated: New York, New York
August 23, 1996
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APPENDIX A
PROPOSED ARTICLE XII OF THE BY-LAWS
Indemnification of Directors, Officers and Others
XII(a) The Corporation shall, to the fullest extent now or hereafter
permitted by the New York Business Corporation Law, indemnify any director or
officer who is or was made, or threatened to be made, a party to an action or
proceeding, whether civil or criminal, whether involving any actual or alleged
breach of duty, neglect or error, any accountability, or any actual or alleged
misstatement, misleading statement or other act or omission and whether brought
or threatened in any court or administrative or legislative body or agency,
including an action by or in the right of the Corporation to procure a judgment
in its favor and an action by or in the right of any other corporation of any
type or kind, domestic or foreign, or any partnership, joint venture, trust,
employee benefit plan or other enterprise, which any director or officer of the
Corporation is serving or served in any capacity at the request of the
Corporation, or is serving or served such other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise in any capacity,
against judgments, fines, amounts paid in settlement, and costs, charges and
expenses, including attorneys' fees, or any appeal therein; provided, however,
that no indemnification shall be provided to any such director or officer if a
judgment or other final adjudication adverse to the director or officer
establishes that (i) his acts were committed in bad faith or were the result of
active and deliberate dishonesty and, in either case, were material to the cause
of action so adjudicated, or (ii) he personally gained in fact a financial
profit or other advantage to which he was not legally entitled.
(b) The Corporation may indemnify any other person (including, without
limitation, corporate personnel other than directors or officers) to whom the
Corporation is permitted to provide indemnification or the advancement of
expenses by applicable law, whether pursuant to rights granted pursuant to, or
provided by, the New York Business Corporation Law or other rights created by
(i) a resolution of shareholders, (ii) a resolution of directors, or (iii) an
agreement providing for such indemnification, it being expressly intended that
these By-Laws authorize the creation of other rights in any such manner.
(c) The Corporation shall, from time to time, reimburse or advance to
any person referred to in Section (a) the funds necessary for payment of
expenses, including attorneys' fees, incurred in connection with any action or
proceeding referred to in Section (a), upon receipt of a written undertaking by
or on behalf of such person to repay such amount(s) if a judgment or other final
adjudication adverse to the director or officer establishes that (i) his acts
were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
(d) The right to indemnification conferred by Section (a) shall not be
retroactive to events occurring prior to the adoption of this Article XII.
(e) This Article XII may be amended, modified or repealed either by
action of the Board of Directors of the Corporation or by the vote of the
shareholders. Any repeal or modification of the foregoing provisions of this
Article XII shall not adversely affect any right or protection of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
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APPENDIX B
HOSPITALITY WORLDWIDE SERVICES, INC.
1996 STOCK OPTION PLAN
1. PURPOSES
The purpose of the Plan is to provide additional incentive to
the officers and employees of the Company who are primarily responsible for the
management and growth of the Company, or otherwise materially contribute to the
conduct and direction of its business, operations and affairs, in order to
strengthen their desire to remain in the employ of the Company and to stimulate
their efforts on behalf of the Company, and to retain and attract to the employ
of the Company persons of competence. Each option granted pursuant to the Plan
shall be designated at the time of grant as either an "incentive stock option"
or as a "non-qualified stock option." The terms and conditions of the Plan shall
be set forth or incorporated by reference in the option agreements evidencing
the options.
2. DEFINITIONS
For the purposes of the Plan, unless the context otherwise
requires, the following definitions shall be applicable:
(a) "Board" or "Board of Directors" means the Company's
Board of Directors.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the Stock Option Committee composed of
two or more members of the Board of Directors, and who shall be responsible for
administering the Plan. Each of the members of the Committee shall be a
Disinterested Person.
(d) "Company" means Hospitality Worldwide Services, Inc.
(e) "Disinterested Person" means a disinterested person,
as defined in Rule 16b-3 under the Exchange Act.
(f) "Employee" means an employee of the Company or of a
Subsidiary (including a director or officer of the Company or a
Subsidiary who is also an employee).
(g) "ERISA" means the Employment Retirement Income
Security Act of 1974.
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(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended.
(i) "Fair Market Value" of the Shares means the closing price
of publicly traded Shares on the national securities exchange on which the
Shares are listed (if the Shares are so listed) or on the Nasdaq National Market
(if the Shares are regularly quoted on the Nasdaq National Market), or, if not
so listed or regularly quoted, the mean between the closing bid and asked prices
of publicly traded Shares in the over-the-counter market, or, if such bid and
asked prices shall not be available, as reported by any nationally recognized
quotation service selected by the Company, or as determined by the Committee in
a manner consistent with the provisions of the Code.
(j) "ISO" means an option intended to qualify as an
incentive stock option under Section 422 of the Code.
(k) "NQO" means an option that does not qualify as an
ISO.
(l) "Plan" means the 1996 Stock Option Plan of the
Company.
(m) "Securities Act" means the Securities Act of 1933,
as amended.
(n) "Shares" means shares of the Company's Common Stock, $.01
par value, including authorized but unissued shares and shares that have been
previously issued and reacquired by the Company.
(o) "Subsidiary" of the Company means and includes a
"Subsidiary Corporation," as that term is defined in Section 425(f)
of the Code.
3. ADMINISTRATION
Subject to the express provisions of the Plan, the Committee
shall have authority to interpret and construe the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the terms and
conditions of the respective option agreements (which need not be identical) and
to make all other determinations necessary or advisable for the administration
of the Plan. Subject to the express provisions of the Plan, the Committee, in
its sole discretion, shall from time to time determine the persons from among
those eligible under the Plan to whom, and the time or times at which, options
shall be granted, the number of Shares to be subject to each option, whether an
option shall be designated an ISO or an NQO and the manner in and price at which
such option may be exercised. In making such determination, the Committee may
take into account the nature and period of service of eligible employees, their
level of compensation, their
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past, present and potential contributions to the Company and such other factors
as the Committee shall in its discretion deem relevant. The determination of the
Committee with respect to any matter referred to in this Section 3 shall be
conclusive.
4. ELIGIBILITY FOR PARTICIPATION
Any Employee shall be eligible to receive ISOs or NQOs granted
under the Plan.
5. LIMITATION ON SHARES SUBJECT TO THE PLAN
Subject to adjustment as hereinafter provided, no more than
1,700,000 Shares may be issued pursuant to the exercise of options granted under
the Plan. If any option shall expire or terminate for any reason, without having
been exercised in full, the unpurchased Shares subject thereto shall again be
available for the purposes of the Plan.
6. TERMS AND CONDITIONS OF OPTIONS
Each option granted under the Plan shall be subject to the
following terms and conditions:
(a) Except as provided in Subsection 6(j), the option price
per Share shall be determined by the Committee, but (i) as to an ISO shall not
be less than 100% of the Fair Market Value of a Share on the date such ISO
option is granted; and (ii) as to an NQO, shall not be less than 75% of the Fair
Market Value of a Share on the date such NQO is granted.
(b) The Committee shall, in its discretion, fix the term of
each option, provided that the maximum length of the term of each option granted
hereunder shall be 10 years and provided further than the provisions of
Subsection 6(j) hereof shall be applicable to the grant of ISOs to Employees
therein identified.
(c) If a holder of an option dies while he is employed by the
Company or a Subsidiary, such option may, to the extent that the holder of the
option was entitled to exercise such option on the date of his death, be
exercised during a period after his death fixed by the Committee, in its
discretion, at the time such option is granted, but in no event to exceed one
year, by his personal representative or representatives or by the person or
persons to whom the holder's rights under the option shall pass by will or by
the applicable laws of descent and distribution or by a qualified domestic
relations order; provided, however, that no option granted under the Plan may be
exercised to any extent by anyone after its expiration.
(d) In the event that a holder of an option shall
voluntarily retire or quit his employment without the written
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consent of the Company or a Subsidiary or if the Company shall terminate the
employment of a holder of an option for cause, the options held by such holder
shall forthwith terminate. If a holder of an option shall voluntarily retire or
quit his employment with the written consent of the Company or a Subsidiary, or
if the employment of such holder shall have been terminated by the Company or a
Subsidiary for reasons other than cause, such holder may (unless his option
shall have previously expired pursuant to the provisions hereof) exercise his
option at any time prior to the first to occur of the expiration of the original
option period or the expiration of a period after termination of employment
fixed by the Committee, in its discretion, at the time the option is granted,
but in no event to exceed three months, to the extent of the number of Shares
subject to such option which were purchasable by him on the date of termination
of his employment. Options granted under the Plan shall not be affected by any
change of employment so long as the holder thereof continues to be an Employee.
(e) Anything to the contrary contained herein or in any option
agreement executed and delivered hereunder, no option shall be exercisable
unless and until the Plan has been approved by stockholders of the Company in
accordance with Section 13 hereof.
(f) Each option shall be nonassignable and nontransferable by
the option holder otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of ERISA, or the rules promulgated thereunder and shall be
exercisable during the lifetime of the option holder solely by him.
(g) An option holder desiring to exercise an option shall
exercise such option by delivering to the Company written notice of such
exercise, specifying the number of Shares to be purchased, together with payment
of the purchase price therefor; provided, however that no option may be
exercised in part with respect to fewer than 100 Shares, except to purchase the
remaining Shares purchasable under such option. Payment shall be made as
follows: (i) in United States dollars by cash or by check, certified check, bank
draft or money order payable to the order of the Company; (ii) at the discretion
of the Committee, by delivering to the Company Shares already owned by the
option holder and having a Fair Market Value on the date of exercise equal to
the exercise price, or a combination of such Shares and cash; or (iii) by any
other proper method specifically approved by the Committee.
(h) In order to assist an option holder with the acquisition
of Shares pursuant to the exercise of an option granted under the Plan, the
Committee may, in its discretion and subject to the requirements of applicable
statutes, rules and regulations, whenever, in its judgment, such assistance may
reasonably be expected to benefit the Company, authorize, either at the time of
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the grant of the option or thereafter (i) the extension of a loan to the option
holder by the Company, (ii) the payment by the option holder of the purchase
price of the Shares in installments, or (iii) the guaranty by the Company of a
loan obtained by the option holder from a third party. The Committee shall
determine the terms of any such loan, installment payment arrangement or
guaranty, including the interest rate and other terms of repayment thereof.
Loans, installment payment arrangements and guaranties may be authorized with or
without security and the maximum amount thereof shall be the option price for
the Shares being acquired plus related interest payments.
(i) The aggregate Fair Market Value (determined at the time an
ISO is granted) of the Shares as to which an Employee may first exercise ISOs in
any one calendar year under all incentive stock option plans of the Company and
its Subsidiaries may not exceed $100,000.
(j) An ISO may be granted to an Employee owning, or who is
considered as owning by applying the rules of ownership set forth in Section
425(d) of the Code, over 10% of the total combined voting power of all classes
of stock of the Company or any Subsidiary if the option price of such ISO equals
or exceeds 110% of the Fair Market Value of a Share on the date the option is
granted and such ISO shall expire not more than five years after the date of
grant.
7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
(a) Subject to any required regulatory approval, new option
rights may be substituted for the option rights granted under the Plan, or the
Company's duties as to options outstanding under the Plan may be assumed, by a
corporation other than the Company, or by a parent or subsidiary of the Company
or such corporation, in connection with any merger, consolidation, acquisition,
separation, reorganization, liquidation or like occurrence in which the Company
is involved. Notwithstanding the foregoing or the provisions of Subsection 7(b)
hereof, in the event such corporation, or parent or subsidiary of the Company or
such corporation, does not substitute new option rights for, and substantially
equivalent to, the option rights granted hereunder, or assume the option rights
granted hereunder, the option rights granted hereunder shall terminate and
thereupon become null and void (i) upon dissolution or liquidation of the
Company, or similar occurrence, (ii) upon any merger, consolidation,
acquisition, separation, reorganization, or similar occurrence, in which the
Company will not be a surviving entity or (iii) upon a transfer of substantially
all of the assets of the Company or more than 80% of the outstanding Shares;
provided, however, that each option holder shall have the right immediately
prior to or concurrently with such dissolution, liquidation, merger,
consolidation, acquisition, separation, reorganization or similar occurrence, to
exercise any
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unexpired option rights granted hereunder whether or not then exercisable. If
the exercise of the foregoing right by the holder of an ISO would be deemed to
result in a violation of the provisions of Subsection 6(i) of the Plan, then,
without further act on the part of the Committee or the option holder, such ISO
shall be deemed an NQO to the extent necessary to avoid any such violation.
(b) The existence of outstanding options shall not affect in
any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issuance of Common Stock or subscription
rights or any merger or consolidation of the Company, or any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Shares
or the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise;
provided, however, that if the outstanding Shares shall at any time be changed
or exchanged by declaration of a stock dividend, stock split, combination of
shares or recapitalization, the number and kind of Shares subject to the Plan or
subject to any options theretofore granted, and the option prices, shall be
appropriately and equitably adjusted so as to maintain the proportionate number
of Shares without changing the aggregate option price.
(c) Adjustments under this Section 7 shall be made by the
Committee whose determination as to what adjustments, if any, shall be made, and
the extent thereof, shall be final.
8. PRIVILEGES OF STOCK OWNERSHIP
No option holder shall be entitled to the privileges of stock
ownership as to any Shares not actually issued and delivered to him.
9. SECURITIES REGULATION
(a) Each option shall be subject to the requirement that
if at any time the Board of Directors or Committee shall in its
discretion determine that the listing, registration or qualification of the
Shares subject to such option upon any securities exchange or under any Federal
or state law, or the approval or consent of any governmental regulatory body, is
necessary or desirable in connection with the issuance or purchase of Shares
thereunder, such option may not be exercised in whole or in part unless such
listing, registration, qualification, approval or consent shall have been
effected or obtained free from any
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conditions not reasonably acceptable to the Board of Directors or Committee.
(b) Unless at the time of the exercise of an option and the
issuance of the Shares thereby purchased by any option holder hereunder there
shall be in effect as to such Shares a Registration Statement under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission, or there shall be available an exemption from the registration
requirements of the Securities Act, the option holder exercising such option
shall deliver to the Company at the time of exercise a certificate (i)
acknowledging that the Shares so acquired may be "restricted securities" within
the meaning of Rule 144 promulgated under the Securities Act, (ii) certifying
that he is acquiring the Shares issuable to him upon such exercise for the
purpose of investment and not with a view to their sale or distribution; and
(iii) containing such option holder's agreement that such Shares may not be sold
or otherwise disposed of except in accordance with applicable provisions of the
Securities Act. The Company shall not be required to issue or deliver
certificates for Shares until there shall have been compliance with all
applicable laws, rules and regulations, including the rules and regulations of
the Securities and Exchange Commission.
10. EMPLOYMENT OF EMPLOYEE
Nothing contained in the Plan or in any option agreement
executed and delivered thereunder shall confer upon any option holder any right
to continue in the employ of the Company or any Subsidiary or to interfere with
the right of the Company or any Subsidiary to terminate such employment at any
time.
11. WITHHOLDING; DISQUALIFYING DISPOSITION
(a) The Company shall deduct and withhold from any salary or
other compensation for employment services of an option holder, all amounts
required to satisfy withholding tax liabilities arising from the grant or
exercise of an option under the Plan or the acquisition or disposition of Shares
acquired upon exercise of any such option.
(b) In the discretion of the Committee and in lieu of the
deduction and withholding provided for in subsection (a) above, the Company
shall deduct and withhold Shares otherwise issuable to the option holder having
a fair market value on the date income is recognized pursuant to the exercise of
an option equal to the amount required to be withheld.
(c) In the case of disposition by an option holder of Shares
acquired upon exercise of an ISO within (i) two years after the date of grant of
such ISO, or (ii) one year after the transfer of such Shares to such option
holder, such option holder shall give
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written notice to the Company of such disposition not later than 30 days after
the occurrence thereof, which notice shall include all such information as may
be required by the Company to comply with applicable provisions of the Code and
shall be in such form as the Company shall from time to time determine.
12. AMENDMENT, SUSPENSION AND TERMINATION OF THE PLAN
Subject to any required regulatory approval, the Board of
Directors or Committee may at any time amend, suspend or terminate the Plan,
provided that, except as set forth in Section 7 above, no amendment may be
adopted without the approval of stockholders which would:
(a) increase the number of Shares which may be issued
pursuant to the exercise of options granted under the Plan;
(b) permit the grant of an option under the Plan with an
option price less than 100% of the Fair Market Value of the Shares at the time
such option is granted;
(c) change the provisions of Section 4;
(d) extend the term of an option or the period during
which an option may be granted under the Plan;
(e) decrease an option exercise price (provided that the
foregoing does not preclude the cancellation of an option and a new grant at a
lower exercise price without stockholder approval); or
(f) materially increase the benefits accruing to
participants of the Plan.
Unless the Plan shall theretofore have been terminated by the Board of Directors
or Committee, the Plan shall terminate on June 5, 2006. No option may be granted
during the term of any suspension of the Plan or after termination of the Plan.
The amendment or termination of the Plan shall not, without the written consent
of the option holder to be affected, alter or impair any rights or obligations
under any option theretofore granted to such option holder under the Plan.
13. EFFECTIVE DATE
The effective date of the Plan shall be June 5, 1996, subject
to its approval by shareholders of the Company not later than June 4, 1997.
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APPENDIX C
HOSPITALITY WORLDWIDE SERVICES, INC.
1996 OUTSIDE DIRECTORS' STOCK OPTION PLAN
ARTICLE I
PURPOSE
The purpose of the Hospitality Worldwide Services, Inc. 1996 Outside
Directors' Stock Option Plan (the "Plan") is to secure for Light Savers U.S.A.,
Inc. and its stockholders the benefits arising from stock ownership by its
Outside Directors. The Plan will provide a means whereby such Outside Directors
may purchase shares of the common stock, $.01 par value, of Light Savers U.S.A.,
Inc. pursuant to options granted in accordance with the Plan.
ARTICLE II
DEFINITIONS
The following capitalized terms used in the Plan shall have the
respective meanings set forth in this Article:
2.1 "Board" shall mean the Board of Directors of Light Savers
U.S.A., Inc.
2.2 "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.3 "Company" shall mean Hospitality Worldwide Services, Inc.
and any of its Subsidiaries.
2.4 "Director" shall mean any person who is a member of the
Board of Directors of the Company.
2.5 "Outside Director" shall mean any Director who is neither a present
nor past employee of the Company or a Subsidiary of the Company.
2.6 "ERISA" means the Employee Retirement Income Security Act
of 1974.
2.7 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
2.8 "Exercise Price" shall mean the price per Share at which
an Option may be exercised.
2.9 "Fair Market Value" of the Shares means the closing price of
publicly traded Shares on the national securities exchange on which the Shares
are listed on the Grant Date (if the Shares are so listed) or on the Nasdaq
National Market on the Grant Date (if the
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Shares are regularly quoted on the Nasdaq National Market), or, if not so listed
or regularly quoted, the mean between the closing bid and asked prices of
publicly traded Shares in the over-the-counter market on the Grant Date, or, if
such bid and asked prices shall not be available, as reported by any nationally
recognized quotation service selected by the Company on the Grant Date, or as
determined by the Board in a manner consistent with the provisions of the Code.
2.9 "Grant Date" shall mean the Initial Grant Date and any
Subsequent Grant Date.
2.10 "Initial Grant Date" shall mean the later to occur of (i) the date
an Outside Director becomes a Director, and (ii) the date on which the Board
approves the Plan.
2.11 "Option" shall mean an Option to purchase Shares granted
pursuant to the Plan.
2.12 "Option Agreement" shall mean the written agreement
described in Article VI herein.
2.13 "Permanent Disability" shall mean the condition of an Outside
Director who is unable to participate as a member of the Board by reason of any
medically determined physical or mental impairment that can be expected to
result in death or which can be expected to last for a continuous period of not
less than 12 months.
2.14 "Purchase Price" shall be the Exercise Price multiplied by the
number of whole Shares with respect to an Option may be exercised.
2.15 "Securities Act" shall mean the Securities Act of 1933,
as amended.
2.16 "Shares" shall mean shares of common stock, $.01 par
value, of the Company.
2.17 "Subsequent Grant Date" shall mean any Grant Date other
than the Initial Grant Date.
2.18 "Subsidiaries" shall have the meaning provided in Section
425(f) of the Code.
ARTICLE III
ADMINISTRATION
3.1 General. This Plan shall be administered by the Board in
accordance with the express provisions of this Plan.
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3.2 Powers of the Board. The Board shall have full and complete
authority to adopt such rules and regulations and to make all such other
determinations not inconsistent with the Plan as may be necessary for the
administration of the Plan.
ARTICLE IV
SHARES SUBJECT TO PLAN
Subject to adjustment in accordance with Article IX, an aggregate of
250,000 Shares is reserved for issuance under this Plan. Shares sold under this
Plan may be either authorized but unissued Shares or reacquired Shares. If an
Option, or any portion thereof, shall expire or terminate for any reason without
having been exercised in full, the unpurchased Shares covered by such Option
shall be available for future grants of Option.
ARTICLE V
GRANTS
5.1 Initial Grants. On the Initial Grant Date, each Outside Director
who becomes a Director after March 1, 1996 shall receive the grant of an option
to purchase 15,000 Shares. If an Outside Director was granted an option as of
the date the Board approved the Plan, then such grant is subject to shareholder
approval of the Plan.
5.2 Subsequent Grants. To the extent that Shares remain available for
the grant of Options under the Plan, each year on April 1, beginning April 1,
1997, each Outside Director shall be granted an Option to purchase 10,000
Shares.
5.3 Adjustment of Grants. The number of Shares set forth in Section 5.1
and 5.2 as to which Options shall be granted shall be subject to adjustment as
provided in Section 9.1 hereof.
5.4 Compliance With Rule 16b-3. The terms for the grant of Options to
an Outside Director may only be changed if permitted under Rule 16b-3 under the
Exchange Act and, accordingly, the formula for the grant of Options may not be
changed or otherwise modified more than once in any six month period, other than
to comport with changes in the Code ERISA or the rules and regulations
thereunder.
ARTICLE VI
TERMS OF OPTION
Each Option shall be evidenced by a written Option Agreement executed
by the Company and the Outside Director which shall specify the Grant Date, the
number of Shares subject to the Option and the Exercise Price and shall also
include or incorporate by reference the substance of all of the following
provisions and such other provisions consistent with this Plan as the Board may
determine.
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6.1 Term. The term of each Option shall be five years from the Grant
Date thereof, subject to earlier termination in accordance with Articles VI and
X.
6.2 Restriction on Exercise. Options shall be exercisable in three
equal installments beginning on the first anniversary of the Initial Grant Date
or any Subsequent Grant Date, provided, however, that in the case of the Outside
Director's death or Permanent Disability, the Options held by him will become
immediately exercisable. No Option shall be exercisable until more than six
months have elapsed from the Grant Date; and no Option will be exercisable until
shareholder approval of the Plan shall have been obtained.
6.3 Exercise Price. The Exercise Price for each Share
subject to an Option shall be the Fair Market Value of the Share as
determined in Section 2.8 herein.
6.4 Manner of Exercise. An Option shall be exercised in accordance with
its terms, by delivery of a written notice of exercise to the Company, and
payment of the full purchase price of the Shares being purchased. An Outside
Director may exercise an Option with respect to all or less than all of the
Shares for which the Option may then be exercised, but a Director must exercise
the Option in full Shares.
6.5 Payment. The Purchase Price of Shares purchased pursuant
to an Option or portion thereof, may be paid:
(a) in United States Dollars, in cash or by check, bank
draft or money order payable to the Company;
(b) at the discretion of the Board by delivery of Shares
already owned by an Outside Director with an aggregate Fair
Market Value on the date of exercise equal to the Purchase
Price, subject to the provisions of Section 16(b) of the
Exchange Act; and
(c) through the written election of the Outside Director to
have Shares withheld by the Company from the Shares otherwise
to be received with such withheld Shares having an aggregate
Fair Market Value on the date of exercise equal to the
Purchase Price.
6.6 Transferability. No Option shall be transferable otherwise than by
will or the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of ERISA, or the rules
promulgated thereunder, and an Option shall be exercisable during the Outside
Director's lifetime only by the Outside Director, his guardian or legal
representative.
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6.7 Termination of Membership on the Board. If an Outside Director's
membership on the Board terminates for any reason other than cause, including
the death of an Outside Director, an Option vested on the date of termination
may be exercised in whole or in part at any time within ninety (90) days after
the date of such termination (but in no event after the term of the Option
expires) and shall thereafter terminate. If an Outside Director's membership on
the Board is terminated for cause, which determination shall be made by the
Board, Options held by him shall terminate concurrently with termination of
membership.
6.8 Capital Change of the Company. In the event of any merger,
reorganization or consolidation of the Company, all Options granted under the
Plan shall immediately, prior to such merger, reorganization or consolidation,
vest assuming that the option holder has held the Option for at least six
months. In the event of a stock dividend or recapitalization, or other change in
corporate structure affecting the Shares not covered in the first sentence of
this Section 6.8 (or in the event of a merger, reorganization or consolidation
where the option holder has not held the Option for at least six months), the
Board shall make an appropriate and equitable adjustment in the number and kind
of shares reserved for issuance under the Plan and in the number and option
price of shares subject to outstanding Options granted under the Plan, to the
end that after such event each option holder's proportionate interest shall be
maintained as immediately before the occurrence of such event.
ARTICLE VII
GOVERNMENT AND OTHER REGULATIONS
7.1 Delivery of Shares. The obligation of the Company to issue or
transfer and deliver Shares for exercised Options under the Plan shall be
subject to all applicable laws, regulations, rules, orders and approvals which
shall then be in effect.
7.2 Holding of Stock After Exercise of Option. The Option Agreement
shall provide that the Outside Director, by accepting such Option, represents
and agrees, for the Outside Director and his permitted transferees hereunder
that none of the Shares purchased upon exercise of the Option shall be acquired
with a view to any sale, transfer or distribution of the Shares in violation of
the Securities Act and the person exercising an Option shall furnish evidence
satisfactory to that Company to that effect, including an indemnification of the
Company in the event of any violation of the Act by such person. Notwithstanding
the foregoing, the Company in its sole discretion may register under the Act the
Shares issuable upon exercise of the Options under the Plan.
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ARTICLE VIII
WITHHOLDING TAX
The Company may in its discretion, require an Outside Director to pay
to the Company, at the time of exercise of an Option an amount that the Company
deems necessary to satisfy its obligations to withhold federal, state or local
income or other taxes (which for purposes of this Article includes an Outside
Director's FICA obligation) incurred by reason of such exercise. When the
exercise of an Option does not give rise to the obligation to withhold federal
income taxes on the date of exercise, the Company may, in its discretion,
require an Outside Director to place Shares purchased under the Option in escrow
for the benefit of the Company until such time as federal income tax withholding
is required on amounts included in the Outside Director's gross income as a
result of the exercise of an Option. At such time, the Company, in its
discretion, may require an Outside Director to pay to the Company an amount that
the Company deems necessary to satisfy its obligation to withhold federal, state
or local taxes incurred by reason of the exercise of the Option, in which case
the Shares will be released from escrow upon such payment by an Outside
Director.
ARTICLE IX
ADJUSTMENT
9.1 Proportionate Adjustments. If the outstanding Shares are increased,
decreased, changed into or exchanged into a different number of kind of Shares
or securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an appropriate and proportionate adjustment shall be made
to the maximum number and kind of Shares as to which Options may be granted
under this Plan. A corresponding adjustment changing the number or kind of
Shares allocated to unexercised Options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding Options shall be made without change in the
Purchase Price applicable to the unexercised portion of the Option with a
corresponding adjustment in the Exercise Price of the Shares covered by the
Option. Notwithstanding the foregoing, there shall be no adjustment for the
adjustment for the issuance of Shares on conversion of notes, preferred stock or
exercise of warrants or Shares issued by the Board for such consideration as the
Board deems appropriate.
9.2 Dissolution or Liquidation. Upon the dissolution or liquidation of
the Company, or upon a reorganization, merger or consolidation of the Company
with one or more corporations as a result of which the Company is not the
surviving corporation, or upon a sale of substantially all of the property or
more than 80% of the then outstanding Shares of the Company to another
corporation, the Company shall give to each Outside Director at the
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time of adoption of the plan for liquidation, dissolution, merger or sale either
(1) a reasonable time thereafter within which to exercise the Option prior to
the effective date of such liquidation or dissolution, merger or sale, or (2)
the right to exercise the Option as to an equivalent number of Shares of stock
of the corporation succeeding the Company or acquiring its business by reason of
such liquidation, dissolution, merger, consolidation or reorganization.
ARTICLE X
AMENDMENT OR TERMINATION OF PLAN
10.1 Amendments. The Board may at any time amend or revise the terms of
the Plan, provided no such amendment or revision shall, unless appropriate
shareholder approval of such amendment or revision is obtained:
(a) increase the maximum number of Shares which may be sold
pursuant to Options granted under the Plan, except as
permitted under the provisions of Article IX;
(b) change the minimum Exercise Price set forth in
Article VI;
(c) increase the maximum term of Options provided for in
Article VI;
(d) permit the granting of Options to anyone other than
as provided in Article V; or
(e) materially increase the benefits accruing to
participants of the Plan.
10.2 Termination. The Board at any time may suspend or terminate this
Plan. This Plan, unless sooner terminated, shall terminate on the tenth (10th)
anniversary of its adoption by the Board. Termination of the Plan shall not
affect Options previously granted thereunder. No Option may be granted under
this Plan while this Plan is suspended or after it is terminated.
10.3 Consent of Holder. No amendment, suspension or termination of the
Plan shall, without the consent of the holder of Options, alter or impair any
rights or obligations under any Option theretofore granted under the Plan.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1 Privilege of Stock Ownership. No Outside Director
entitled to exercise any Option granted under the Plan shall have
any of the rights or privileges of a shareholder of the Company
with respect to any Shares issuable upon exercise of an Option
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until certificates representing the Shares shall have been issued
and delivered.
11.2 Plan Expenses. Any expenses incurred in the
administration of the Plan shall be borne by the Company.
11.3 Governing Law. The Plan has been adopted under the laws of the
State of New York. The Plan and all Options which may be granted hereunder and
all matters related thereto, shall be governed by and construed and enforceable
in accordance with the laws of the State of New York as it then exists.
ARTICLE XII
SHAREHOLDER APPROVAL
This Plan is subject to approval, at a duly held shareholders' meeting
within 12 months after the date the Board approves this Plan, by the affirmative
vote of holders of a majority of the voting Shares of the Company represented in
person or by proxy and entitled to vote at the meeting. Options may be granted,
but not exercised, before such shareholder approval is obtained. If the
shareholders fail to approve the Plan within the required time period, any
Options granted under this Plan shall be void, and no additional Options may
thereafter be granted.
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LIGHT SAVERS U.S.A., INC.
Proxy Solicited by the Board of Directors
for the
ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 26, 1996
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
shareholder of LIGHT SAVERS U.S.A., INC. (the "Company") does hereby constitute
and appoint ALAN G. FRIEDBERG AND HOWARD G. ANDERS or either of them (each with
full power of substitution of another for himself) as attorneys, agents and
proxies, for and in the name, place and stead of the undersigned, and with all
the powers the undersigned would possess if personally present, to vote as
instructed below all of the shares of Common Stock of the Company that the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held on Thursday, September 26, 1996 at 10:00 A.M. local time at
The Regency Hotel, 540 Park Avenue, New York, New York and at any adjournment or
adjournments thereof, all as set forth in the Notice of Meeting and Proxy
Statement.
(See Reverse Side)
<PAGE>
1. ELECTION OF A BOARD OF FIVE DIRECTORS:
To vote for the election of the following directors: Alan G.
Friedberg, Scott A. Kaniewski, Louis J. Adler, George C. Asch and
Richard A. Bartlett
(INSTRUCTIONS: To
withhold authority to
vote for any
FOR all nominees WITHHOLD AUTHORITY individual nominee,
listed below to vote for strike a line through
(except as marked nominees listed the nominee's name in
to the contrary) below the list below.)
/ / / / Alan G. Friedberg,
Scott A. Kaniewski,
Louis K. Adler
George C. Asch
Richard A. Bartlett
2. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION CHANGING
THE COMPANY'S NAME TO "HOSPITALITY WORLDWIDE SERVICES, INC.":
FOR ___ AGAINST ___ ABSTAIN _____
3. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION INCREASING
THE AUTHORIZED STOCK OF THE COMPANY:
FOR ___ AGAINST ___ ABSTAIN _____
4. AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION LIMITING
THE LIABILITY OF THE COMPANY'S DIRECTORS:
FOR ___ AGAINST ___ ABSTAIN _____
5. AMENDMENT TO THE COMPANY'S BY-LAWS ALLOWING FOR INDEMNIFICATION OF
THE COMPANY'S DIRECTORS AND OFFICERS:
FOR ___ AGAINST ___ ABSTAIN _____
6. 1996 STOCK OPTION PLAN:
FOR ___ AGAINST ___ ABSTAIN _____
<PAGE>
7. 1996 OUTSIDE DIRECTORS' STOCK OPTION PLAN:
FOR ___ AGAINST ___ ABSTAIN _____
8. RATIFICATION OF THE APPOINTMENT OF AUDITORS:
FOR ___ AGAINST ___ ABSTAIN _____
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE INSTRUCTIONS GIVEN. IF NO SUCH INSTRUCTIONS ARE GIVEN,
THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED IN FAVOR OF
ELECTION OF THE NOMINEES FOR DIRECTORS DESIGNATED BY THE BOARD OF
DIRECTORS AND FOR ITEMS 2 THROUGH 8.
The undersigned hereby revokes any proxy or proxies heretofore given
and ratifies and confirms that all the proxies appointed hereby, or any of them,
or their substitutes, may lawfully do or cause to be done by virtue hereof. The
undersigned hereby acknowledges receipt of a copy of the Notice of Annual
Meeting and Proxy Statement, both dated August 23, 1996.
Signature ____________________________ Date:___________________
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE
GIVE FULL TITLE AS SUCH. WHEN SIGNING ON BEHALF OF A CORPORATION, YOU SHOULD BE
AN AUTHORIZED OFFICER OF SUCH CORPORATION, AND PLEASE GIVE YOUR TITLE AS SUCH.
