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:
[X] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
LUCOR, INC.
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(Name of Registrant as Specified In Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange 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:
[ ] 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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LUCOR, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on __________, 2000
TO THE SHAREHOLDERS
OF LUCOR, INC.
NOTICE IS HEREBY GIVEN that the Special Meeting of Shareholders
of Lucor, Inc., a Florida corporation (the "Company"), will be held at
2:00 PM, local time, on __________, at the Company's headquarters at
790 Pershing Road, Raleigh, North Carolina, 27608 to approve an
amendment to the Company's Amended and Restated Articles of
Incorporation (the "Articles") which will effect a 20 to 1 reverse
stock split of the Company's Class A Common Stock and Class B Common
Stock.
The Board of Directors has fixed the close of business on
________________ as the record date for determining those shareholders
entitled to notice of, and to vote at, the Special Meeting and any
adjournments or postponements thereof.
Whether or not you expect to be present, please sign, date and
return the proxy form sent to you as promptly as possible.
By Order of the Board of Directors,
s/s Stephen P. Conway
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Stephen P. Conway
Chairman and Chief Executive Officer
Raleigh, North Carolina
ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. THOSE
SHAREHOLDERS WHO ARE UNABLE TO ATTEND ARE URGED TO EXECUTE AND RETURN
THE PROXY FORM AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY FORM MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND
VOTE THEIR SHARES IN PERSON.
<PAGE>
2000 SPECIAL MEETING OF SHAREHOLDERS
OF LUCOR, INC.
____________________
PRELIMINARY PROXY STATEMENT
____________________
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Lucor, Inc., a Florida
corporation (the "Company"), of proxies from the holders of the
Company's Class A Common Stock (the "Class A Stock") for use at the
Special Meeting of Shareholders of the Company to be held at the
corporate headquarters of Lucor, Inc, 790 Pershing Road, Raleigh, NC
27608 at 2:00 PM, local time, on _______________ or at any
adjournments or postponements thereof (the "Special Meeting"). The
approximate date that this Proxy Statement and the enclosed form of
proxy are first being sent or given to holders of Class A Stock is
_____________, 2000. The Company's principal executive offices are
located at its corporate offices at 790 Pershing Road, Raleigh, North
Carolina 27608, and its telephone number is (919) 828-9511.
INFORMATION CONCERNING PROXY
The enclosed proxy is solicited on behalf of the Company's Board
of Directors (the "Board"). The giving of a proxy does not preclude
the right to vote in person should any shareholder giving the proxy so
desire. Shareholders have a right to revoke their proxy at any time
prior to the exercise thereof, either in person, at the Special
Meeting, or by filing with the Company's Secretary at the Company's
principal executive offices a written revocation or duly executed
proxy bearing a later date; however, no such revocation will be
effective until written notice of the revocation is received by the
Company at or prior to the Special Meeting.
The cost of preparing, assembling and mailing this Proxy
Statement, the Notice of Special Meeting of Shareholders and the
enclosed proxy will be borne by the Company. The Company may request
banks, brokers and other custodians, nominees and fiduciaries to
forward copies of the proxy material to their principals and to
request authority for the execution of proxies.
PURPOSE OF THE MEETING
At the Special Meeting, the Company's shareholders will consider
and vote to approve an amendment to the Company's Amended and Restated
Articles of Incorporation (the "Articles") which will effect a 20 to 1
reverse stock split of the Company's Class A Stock and Class B Common
Stock (the "Class B Stock").
Unless contrary instructions are indicated on the enclosed proxy,
all shares represented by valid proxies received pursuant to this
solicitation will be voted in favor of the amendment to the Articles
as described herein. In the event a shareholder specifies a different
choice by means of the enclosed proxy, his or her shares will be voted
in accordance with the specifications so made.
OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
The Board of Directors has set the close of business on
_______________ as the record date (the "Record Date") for determining
shareholders of the Company entitled to notice of and to vote at the
Special Meeting. As of the Record Date, there were 2,333,133 shares
of Class A Stock outstanding and 502,155 shares of Class B Stock
outstanding, all of which are entitled to one vote on the proposed
amendment to the Articles.
REQUIRED VOTE
Pursuant to the Articles and the Florida General Corporation law,
the affirmative vote of the holders of a majority of the common shares
which are present in person or by proxy at the special meeting is
required to approve the proposed amendment. The representation in
person or by proxy of a majority of the issued and outstanding shares
of Class A Stock and Class B Stock (collectively, the "Common Stock")
entitled to vote is necessary to provide a quorum at the Special
Meeting. Broker non-votes are treated as shares as to which voting
power has been withheld by the beneficial owners thereof and,
therefore, as shares not entitled to vote thereon. Thus, although
broker non-votes have no effect on the vote, they have the practical
effect of reducing the number of affirmative votes required to approve
the proposed amendment to the Articles by reducing the total number of
shares entitled to vote thereon.
Board Members Messrs. Stephen P. Conway and Jerry B. Conway
directly or indirectly own all of the 502,155 outstanding shares of
Class B Stock, and directly or indirectly own or by irrevocable proxy
control the voting rights of 917,407 shares of the Class A Stock
eligible to be cast on the approval of the proposed amendment to the
Articles. Board Members Messrs. Anthony J. Beisler, III and D.
Fredrico Fazio directly or indirectly own an aggregate of 387,301
shares of Class A Stock. These Board Members have advised the Company
that they intend to be present at the meeting, and to vote their
shares for the approval of the Reverse Stock Split proposal. Since
the number of shares of Common Stock held or controlled by these four
shareholders represents a majority of the votes that may be cast at
the Special Meeting, these shareholders will be able to approve the
proposed amendment to the Articles, regardless of how the other
holders of Class A Stock vote their shares.
<PAGE>
REVERSE STOCK SPLIT PROPOSAL
Summary of Reverse Stock Split Proposal
On February 9, 2000, the Board discussed the mechanics and
anticipated effects of a possible reverse stock split of the Company's
Class A Stock and the Class B Stock (the "Reverse Stock Split"). On
September 28, 2000, the Board adopted a resolution, subject to
shareholder approval, that the Articles be amended to effect an 20 to
1 reverse stock split of the Company's common stock, such that each
20 shares of existing Class A Stock and Class B Stock will be
respectively combined into one share of "new" Class A Stock and one
share of "new" Class B Stock. The form of amendment to the Articles
to effect this transaction is attached hereto as Appendix A (the
"Amendment").
In order to complete the Reverse Stock Split, a majority of the
stockholders entitled to vote at the Special Meeting must approve an
amendment to the Articles. By approving this proposal, the
stockholders authorize the Board to implement the Reverse Stock Split
by filing the Amendment with Florida Secretary of State's office
within ten (10) business days following the proposal's approval at the
Special Meeting (hereinafter referred to as the "Effective Date").
The stockholders may not rescind their vote even if the timing of the
Amendment may adversely affect any particular stockholder.
The following table presents a summary of the effect of the
Reverse Stock Split proposal on the Company's stockholders. Please
note that we refer herein to our shareholders whose shares are
registered in their own names as "Registered Stockholders."
Stockholders as of Net Effect After Reverse Stock Split
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Effective Date
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Registered Stockholders Shares of Class A Stock will
holding 20 shares of Class A be converted into one whole
Stock. There are no holders of share of new Class A Stock.
Class B Stock in this category.
Registered Stockholders Shares of Class A Stock and
holding more that 20 shares of Class B Stock will be respectively
Class A Stock or Class B converted into one or more shares of
Stock. new Class A Stock and Class B Stock
on a 20-for-1 basis, with a cash
payment for any shares that would
otherwise result in fractional new
shares.
Registered Stockholders Shares of Class A Stock will be
holding fewer than 20 shares exchanged for a cash payment.
of Class A Stock. There are
no holders of Class B Stock in
this category.
Stockholders holding Class A Nominees (such as a bank or
Stock in street name through a broker) may have required procedures,
nominee, such as a bank or and the Company stockholder holding
broker. There are no holders Class A Stock in street name should
of Class B Stock in this contact their nominees to determine how
category. the Reverse Stock Split will affect them.
In lieu of the issuance of any fractional shares, the Company
will pay the fair value for those shares of Class A Stock and Class B
stock that would otherwise be converted into fractional shares as a
result of the Reverse Stock Split. The Board has determined that the
fair value of such stock shall the greater of (i) the average of bid
and asked price of Class A Stock for the twenty (20) trading days
immediately preceding the initial preliminary filing of this Proxy
Statement, and (ii) the average of bid and asked price of Class A
Stock for the twenty (20) trading days immediately preceding the
Effective Date (the "Cash Payment"). Payment in lieu of issuance of a
fractional new share will be made promptly after receipt of a properly
completed letter of transmittal and stock certificates (see also the
information under the caption "Exchange of Stock Certificates and
Payment of Fractional Shares" contained in this Proxy Statement).
<PAGE>
There will be no service charge payable by stockholders in
connection with the exchange of certificates or in connection with the
payment of cash in lieu of the issuance of a fractional new share.
Background
The Company has approximately 459 Registered Stockholders holding
Class A Stock. On the same date, there were approximately 349 of such
stockholders that were holding fewer than 20 shares of Class A Stock
(the "Small Stockholders"). In the aggregate, the Small Stockholders
held less than .16% of the Class A Stock as of this date. All but 9
of these shareholders held 10 shares or less. The large majority of
these Small Stockholders are former employees of the Company that were
granted a small number of shares in 1994 as a bonus to their regular
compensation in connection with their employment with the Company. In
early December 1999, management recognized the importance of being
able to contact these Small Stockholders in a reasonable time period
in order to adopt certain corporate strategies, including the ability
of the Company to cease public registration of its Class A Stock.
At the Board's February 2000 meeting, management expressed the
above-stated views to the Board and presented a proposal for a 11 to
1 reverse stock split as a strategy for eliminating the Small
Shareholders. Management also noted that the reverse stock split
would have the probable effect of reducing the number of registered
shareholders below 300, which would provide the Company the option to
cease public registration of its Class A Stock. The Board discussed
the advantages and disadvantages of eliminating the Small
Shareholders. The Board also discussed the advantages and
disadvantages of ceasing public registration of its Class A Stock.
The Board agreed with the necessity to reduce or eliminate these Small
Shareholders and approved the implementation of the 11 to 1 reverse
stock split. The Board acknowledged that this action may grant the
Company the option to terminate public registration of such stock, but
directed management to complete the reverse stock split regardless of
the issue regarding public registration the Class A Stock. The Board
deferred the decision on ceasing public registration of the Class A
Stock until a review of the market situation for the Class A Stock
could be made following completion of the 11 to 1 reverse stock split.
At the Board's May 2000 meeting, management informed the Board
of a notice from Nasdaq stating that the Company was not in compliance
with the continuing listing requirements of Nasdaq's SmallCap Market.
Management also informed the Board that the Company had responded to
Nasdaq with a plan for compliance and proposed that the Board delay
implementation of the reverse stock split until it received Nasdaq's
response to the plan. The Board delayed implementation of the Reverse
Stock Split proposal, as well as the decision to cease public
registration until it received Nasdaq's response to the plan.
In August 2000, Nasdaq denied the Company's plan for compliance
and terminated registration of the Class A Stock from Nasdaq's
SmallCap Market. At the next Board meeting, on September 28, 2000,
the management proposed completing implementation of a reverse stock
split, but with an increased ratio of 20 to 1. Management stated
that the reason for the recommended increase in the split ratio was
to minimize the number of fractional shares that would be created by
the transaction, not to raise the number of eliminated shareholders
(only 9 more shareholders were projected to be eliminated by the
increase). Board approved completion of the Reverse Stock Split
proposal, and implementation of a termination of public registration
of the Class A Stock if the Reverse Stock Split reduced the number of
registered stockholders of this class to fewer than 300.
Purpose and Reasons for the Reverse Stock Split
The purpose of the Reverse Stock Split proposal is to reduce the
number of Small Stockholders and permit the Company to cease
registration of the Class A Stock under the 1934 Securities and
Exchange Act (the "1934 Act"). The Board recommends that the
Company stockholders approve the Reverse Stock Split proposal to
achieve this purpose for the reasons set forth below.
For the Small Stockholders, typical transaction costs for public
sale of Class A Stock significantly reduce the liquidity of the
shares, since in most cases these transaction costs represent a large
percentage of the value of their holdings (at current stock pricing
trends). The Reverse Stock Split proposal will allow such
stockholders to liquidate their holdings at a fair value without these
transaction costs.
<PAGE>
For stockholders of the Company other than the Small
Stockholders, reducing such a large number of small stockholders (over
75% of the existing stockholders) will result in savings to the
Company by reducing the administrative costs of providing annual
reports, proxy information and other shareholder services. In
addition, since it is important in certain corporate transactions to
be able to quickly communicate with its company stockholders, reducing
such a larger number of Company stockholders that cannot be readily
located reduces delays in implementing corporation strategies. For
example, the Company considered an issuer tender offer to reduce the
number of shareholders to below 300 and allow it to cease public
registration of its Class A Stock, but because of the difficulty in
locating the Small Shareholders, it determined that such a strategy
would not be practical.
Another intended effect of the Reverse Stock Split is to position
the Company for terminating registration as a public company. As a
registered company, the Company is subject to the periodic reporting
and proxy solicitation requirements of the Securities and Exchange
Commission (the "SEC"). There is a significant likelihood that
purchase of the fractional shares following the Reverse Stock Split
will reduce the number of Registered Stockholders of Class A Stock to
fewer than 300. We estimate that the number of Registered
Stockholders of Class A Stock would be reduced to 110 following the
completion of the Reverse Stock Split. If this occurs, the Company
will be in a position to elect to cease registration of the Class A
Stock under the 1934 Act.
As part of its 1934 Act registration, the Company incurs direct
and indirect costs associated with compliance with the filing and
reporting requirements imposed on public companies. Examples of
direct costs savings from terminating registration of the Class A
Stock include lower printing and mailing costs, less complicated
disclosure due to the Company's private status; reduction in direct
miscellaneous clerical and other expenses (e.g., the word processing,
EDGARizing, telephone and fax charges associated with SEC filings) and
elimination of the charges of brokers and transfer agents in
forwarding materials to beneficial holders. The Company's auditors
have also informed the Company, informally, that there will be a
reduction in auditing fees.
The Company also incurs substantial indirect costs due to 1934
Act registration as a result of the executive time expended to prepare
and review such filings. Ceasing registration of the Class A Stock
will reduce or eliminate these costs, as well as lower the risk of
liability that typically attends private (as distinguished from
public) company status.
Based on its experience in prior years, the Company's direct
costs, which include the fees and expenses of independent auditors,
SEC legal counsel, printing, mailing, and SEC filing fees are
estimated at approximately $50,000 annually. This amount, however, is
just an estimate, and the actual savings to be realized may be higher
or lower than such estimate. It is expected that the estimated
savings will be not be realized until the fiscal year ending December
31, 2001.
Another aspect of public registration is the disclosure of
proprietary information, such as material contracts, acquisitions,
growth strategies, and financial information regarding overall
operations. Ceasing registration of the Class A Stock will increase
the confidentiality of such proprietary information, which the Company
believes can be analyzed by its competitors to place the Company at a
competitive disadvantage.
There are many advantages to being a publicly-traded company,
including stock value, stock liquidity, as use of company stock to
more effectively place equity and debt to raise capital or make
acquisitions. In the opinion of the Board, however, the pricing
trends and trading volume of the Class A Stock in the stock market has
not allowed the Company to effectively take advantage of the benefits
of the market, at least to the extent of justifying the continuing
direct and indirect costs of public registration. Furthermore, the
Board does not believe that there will be a significant change in this
equation in the near term.
Another factor further which may also impair the Company's
ability to effectively take advantage of the benefits of public
registration is the August 2000 de-listing of the Company's Class A
Stock from trade on Nasdaq's SmallCap Market. This stock continues to
be traded in the over-the-counter market, but management believes that
the de-listing will have further detrimental effects on the trading
volume and pricing of the Class A Stock, which contributes to the
failure to realize some of the benefits of the Company's continued
registration of the Class A Stock under the 1934 Act.
<PAGE>
The Company believes that size, revenue performance (current and
projected), strategic partnering, and product mix are among the key
factors in establishing a stock price which properly reflect the value
of the Company. One of the Company's goals over the next several
years is to enhance one or more of these factors so that the Company
can more effectively take advantage of the status as a publicly traded
company. Should this occur, and the Board may determine that the
benefits of registration outweigh the costs at that time; it intends
re-register stock in connection with a new public offering. There is,
however, no assurance when or if such re-registration will occur.
Stockholders should note that the decision by the Board to
terminate 1934 Act registration does not require stockholder approval
and will not be voted on at the Special Meeting. Further, there is no
assurance that the number of such stockholders will be fewer than 300
following the Effective Date. While the Company intends to cease
public registration of its Class A Stock following the Reverse Stock
Split, the Board may choose not to implement this strategy if the
Board determines that it is not then in the best interests of the
Company and its stockholders given the then existing market
conditions.
Fairness of Reverse Stock Split Proposal
The Board believes that the Reverse Stock Split proposal, taken
as a whole, is fair to and in the best interests of the Company and
its stockholders, including unaffiliated stockholders, those
stockholders who will receive the Cash Payment and those stockholders
who will receive shares of new Class A Stock. The Board also believes
that the process by which the Reverse Stock Split is to be approved is
also fair. The Board unanimously approved the Reverse Stock Split
proposal and recommends that the stockholders vote for its approval
and adoption. Each member of the Board who owns shares of Class A
Stock and Class B Stock has indicated that he intends to vote in favor
of the Reverse Stock Split proposal, including the Board members who
are not employees of the Company.
The Board considered a number of factors in determining the
fairness of the Reverse Stock Split prior to approval of the proposed
transaction. It recognized the existing liquidity concerns of the
Small Shareholders. It recognized that by reducing the number of
small stockholders would decrease (but not necessarily eliminate) the
problems associated with not being able to readily communicate with a
large portion of its stockholders. It also recognized that the
Reverse Stock Split will also likely enable the Company to cease
public registration of the Class A Stock, so in making its
determination of the fairness the Reverse Stock Split proposal, the
Board also factored in the added administrative costs and resources
involved in providing annual reports, proxy information and other
shareholder services to such a large proportion of stockholders
holding twenty shares or less. However, even if termination of 1934
Act registration is not implemented, the Board still concluded that
the elimination of the Small Shareholders is in the best interests of
the Company and its stockholders, when taken as a whole.
The Board did not retain either an investment bank or other
financial adviser to render a report or opinion with respect to the
fairness of the Reverse Stock Split proposal to the Company or its
stockholders. The Board also did not establish an unaffiliated
representative to represent the unaffiliated stockholders of the
Company in determining the terms of the Reverse Stock Split proposal
or preparing a report covering the fairness of the Reverse Stock Split
proposal. In addition, no independent committee of the Board has
reviewed the fairness of the Reverse Stock Split proposal. Also, the
transaction is not structured so that approval of at least a majority
of the unaffiliated stockholders is required.
The Board believes that the transaction is substantively fair to
all unaffiliated stockholders notwithstanding the absence of such a
committee or representative because the Small Shareholders will be
allowed to liquidate their holdings in a cost effective manner and all
other stockholders will retain an ownership interest in the Company.
The Board believes that the Reverse Stock Split is procedurally fair
because it is being effected in accordance with Florida state law and
hence will require the affirmative vote of the holders of a majority
of the Company's outstanding common stock. In addition, between the
date hereof and the Effective Date, all holders of Class A Stock will
have an opportunity to adjust the number of shares of stock owned by
them so that holders whose total holdings would otherwise be converted
to fractional shares can continue to be holders of the new Class A
Stock. For example, stockholders who hold fewer than 20 can purchase
additional shares in open market transactions and thereby continue to
hold equity ownership in the Company after the reverse split.
The Board discussed two alternative transactions for reducing or
eliminating the Small Shareholders, a tender offer and open market
purchases. The Board, however, determined that either of these
alternatives would not result in shares being tendered by a sufficient
number of record stockholders so as to accomplish the Company's
objectives. It was thought unlikely that many holders of small
numbers of shares would be aware of the offer to tender since a large
percentage of these stockholders cannot be located to provide them
with the proxy information, and even if they were aware of the offer
it is unlikely that they would make the effort to tender their shares
in sufficient number to accomplish the objectives. The Board
ultimately determined that the Reverse Stock Split proposal was the
preferred method.
<PAGE>
The Cash Payment will be determined by the greater of (i) the
average of bid and asked price of Class A Stock for the twenty (20)
trading days immediately preceding the initial preliminary filing of
this Proxy Statement, and (ii) the average of bid and asked price of
Class A Stock for the twenty (20) trading days immediately preceding
the Effective Date. The Board determined that using the market price
of a publicly traded stock prior to the effective date of a reverse
stock split is an accepted method of valuation for payment of
fractional shares resulting from a reverse stock split. While the
Board determined that 5 trading days is the more typical measure used,
it chose 20 days because of the potential volatility of the Class A
Stock due to its low trading volume.
To eliminate any adverse effect caused by the disclosure of the
Company's intention to terminate public registration of the Class A
Stock, the Board chose to use the 20-day period immediately prior to
the initial preliminary filing of this Proxy Statement. The Board
also felt that the Cash Payment should not be less than the market
value immediately prior to the Effective Date, and so chose the
greater value of the two periods to ensure fairness. The Board
considered an independent analysis and evaluation of the fair market
value of the Class A Stock and Class B Stock that would be converted
into a fractional share of new stock, but determined that the method
of valuation chosen was a fair representation of value of the
stockholdings and concluded that the time and expense of an
independent analysis and evaluation was unjustified. The Board did
not adopt the Reverse Stock Split proposal with the intention of
forcing the elimination any more of the Company shareholders than is
necessary to liquidate the Small Shareholders for the reasons
described herein. The Board considers the Reverse Stock Split
transaction independent of the possible subsequent termination of
public registration of the Class A Stock, in that the Reverse Stock
Split, if approved, will be completed without regard to a decision to
cease public registration of the Class A Stock.
The Class B Stock are solely held by the Company's Chief
Executive Officer and the Company's President. Since their holdings
are more then 20 shares each, the Cash Payment to such stockholders
will be merely incidental to the purposes of the Reverse Stock Split.
Consequently, the Board has determined that the cash payment for the
Class B Stock shall be the same as the cash payment for of the Class A
Stock (as determined using the above method) for purposes of this
transaction, even though the Class B Stock has greater voting rights
and is not registered under the 1934 Act.
After consideration of all the facts, all of the directors,
including those who are not employees of the Company, have determined
that the Reverse Stock Split proposal is fair to the stockholders of
the Company, including the unaffiliated stockholders and the Small
Stockholders.
With respect to its intent to terminate 1934 Act registration,
the Board has considered and will continue to consider the effect that
terminating the registration of the new Class A Stock might have on
the market for the holders of the Class A Stock and the ability of
those stockholders to buy and sell their shares. The Board also has
considered and will continue to consider whether the value of the
Class A Stock is being fully recognized in the stock market, and as a
result, whether the Company's can effectively take advantage of
trading on the stock market for stock value and placement of equity
and debt. The Board also has considered and will continue to consider
the increase in the confidentiality of the Company's proprietary
information with a termination of public registration of the Class A
Stock, along with the potential direct cost savings and savings
related to the time and effort currently required of management to
comply with the reporting and other requirements associated with a
reporting company.
Potential Detriments of Reverse Stock Split Proposal to Stockholders;
Accretion in Ownership and Control of Certain Stockholders
The potential detriments to stockholders who remain as holders of
new Class A Stock after effecting the Reverse Stock Split and
termination of registration under the 1934 Act include decreased
liquidity and decreased access to information. Upon termination of
registration of the Class A Stock, the Company will no longer be
subject to the periodic reporting requirements and the proxy rules of
the 1934 Act. Since there will no longer be a public market for
purchase and sale of the stock, the liquidity and market value of the
shares of Class A Stock may be adversely affected as well.
<PAGE>
If the Reverse Stock Split proposal is effected, the Company
believes that 110 Registered Stockholders of new Class A Stock will
remain (based on the Company's current stockholder records). In
addition, individuals who are members of the Board and executive
officers of the Company now owning approximately 24% of the Class A
Stock will own approximately 25% of the new Class A Stock after the
Reverse Stock Split (the proportionate holdings of the Class B Stock
will not be affected).
Conduct of the Company's Business after Reverse Stock Split
The Company expects its business and operations to continue as
they are currently being conducted and, except as disclosed below, the
Reverse Stock Split is not anticipated to have any effect upon the
conduct of its business.
Other than as described in this Proxy Statement, neither the
Company nor its management has any current plans or proposals to
effect any extraordinary corporate transaction, such as a merger,
reorganization or liquidation; to sell or transfer any material amount
of its assets; to change its Board or management; to change materially
its indebtedness or capitalization; or otherwise to effect any
material change in its corporate structure or business. See also the
information contained herein in the section captioned "Purpose and
Reasons for the Reverse Stock Split."
As a result of the Reverse Stock Split, the Company plans to
become a privately held company by termination of registration of the
Class A Stock under the 1934 Act, if the number of Registered
Stockholders are less than 300. In addition, because the new Class A
Stock will no longer be publicly-held, the Company will be relieved of
the obligation to comply with the proxy rules of Regulation 14A under
Section 14 of the 1934 Act, and its officers and directors and
stockholders owning more than 10% of the Class A Stock will be
relieved of certain obligations under the 1934 Act.
Structure of Reverse Stock Split
The Reverse Stock Split is of the Class A Stock and the Class B
Stock. If the Reverse Stock Split proposal is approved and occurs,
the Reverse Stock Split will occur on the Effective Date. Assuming
stockholder approval of the Reverse Stock Split proposal is obtained,
the Company will file the Amendment within 10 business days of the
proposal's approval at the Special Meeting. The structure of the
Reverse Stock Split, for each stockholder is as follows:
1. Registered Stockholders with Fewer Than 20 Shares. If the
Reverse Stock Split proposal is implemented and you are a Registered
Holder of fewer than 20 shares of Class A Stock of the Effective Date,
you will receive a Cash Payment instead of a fractional share of new
Class A Stock. After the reverse split, you will have no further
interest in the new Class A Stock. You will not have to pay any
service charges or brokerage commissions in connection with the
Reverse Stock Split or the Cash Payments. There are no holders of
Class B Stock in this category.
2. Registered Holder With 20 or More Shares. If the Reverse Stock
Split proposal is implemented and you are a Registered Holder of 20 or
more shares of Class A Stock or Class B Stock as of the Effective
Date, we will convert your shares into 1/20 of the number of shares
you held immediately prior to the reverse split, with a Cash Payment
for any shares that would otherwise result in fractional new shares.
For example, if you are a Registered Holder of 2,010 shares of Class A
Stock immediately prior to the Effective Date, your shares will be
converted to 100 shares of new Class A Stock and you will receive a
Cash Payment for ten shares.
3. Beneficial Owners of the Company Stock. Nominees (such as a
bank or broker) may have required procedures, and stockholders holding
Class A Stock in street name should contact their nominees to
determine how they will be affected by the Reverse Stock Split. NOTE:
If you are a beneficial owner of fewer than 20 shares of Class A Stock
or the beneficial owner of more than 20 shares of Class A Stock, but
not in an even multiple of 20, and you want to have your shares
exchanged for Cash Payment, you should instruct your nominee to
transfer your shares into a record account in your name in a timely
manner so that you will be considered a holder of record immediately
prior to the Effective Date.
<PAGE>
In the event any certificate representing shares of Class A Stock
or Class B Stock is not presented for exchange or Cash Payment upon
request by the Company, the new Class A Stock, Class B Stock, or the
Cash Payment, as applicable, will be administered in accordance with
the relevant abandoned property laws. Until new Class A Stock, Class
B Stock or Cash Payments have been delivered to the public official
pursuant to the abandoned property laws, such Cash Payments or
certificates will be paid to the holder thereof or his designee,
without interest, at such time as the stock certificate has been
properly presented for exchange or Cash Payment.
The Reverse Stock Split is structured to be a "going private"
transaction as defined in Rule 13e-3 promulgated under the 1934 Act
because it is intended to, and, if completed, will likely terminate
the Company's reporting requirements under the 1934 Act. In
connection with the Reverse Stock Split proposal, the Company has
filed with the SEC a Schedule 13E-3 pursuant to Rule 13e-3 under the
1934 Act.
Exchange of Stock Certificates and Payment of Fractional Shares
Oxford Transfer and Registrar have been appointed the exchange
agent (the "Transfer Agent") to carry out the exchange of certificates
for new Class A Stock. Registered Stockholders will receive a letter
of transmittal after the Reverse Stock Split is completed. These
stockholders must complete and sign the letter of transmittal and
return it with their stock certificate(s) to the Transfer Agent before
they can receive new Class A Stock, Class B Stock and/or the Cash
Payment for those shares. You should not submit any certificates
until requested to do so.
If the Reverse Stock Split is effected, each Registered
Stockholder who holds fewer than 20 common shares immediately prior to
the effectiveness of the Reverse Stock Split will cease to have any
rights with respect to the new common shares and will only have the
right to receive the Cash Payment cash in lieu of the fractional share
to which such shareholder of record would otherwise be entitled. No
service charges will be payable by stockholders in connection with the
exchange of certificates or the issuance of new stock or Cash
Payments, all expenses of which will be borne by the Company. Promptly
following the Effective Date, you will be furnished the necessary
materials and instructions to effect such exchange (and Cash Payment,
if applicable). Certificates representing shares of Class A Stock and
Class B Stock subsequently presented for transfer to a third party
will not be transferred on the books and records of the Company until
the certificates representing the shares have been exchanged for the
Cash Payment or certificates representing shares of new Class A Stock
or new Class B Stock (as applicable).
Company Stock Options and Warrants
At the Effective Date, each option outstanding under the
Company's stock option plans and each warrant for the purchase of
Class A Stock shall be adjusted to reflected the right to receive one
or more shares number of shares new Class A Stock on a 20-for-1 basis.
Certain Effects of Reverse Stock Split Proposal on the Company's
Stockholders
1. Financial Effect. The Reverse Stock Split and the expenditures
for professional fees and other expenses related to the transaction
will not have a material effect on the Company's balance sheet,
statement of income, earnings per share, ratio of earnings to fix
charges or book value per share. The expenditures have been estimated
as follows: cash payment for fractional shares - $5,000; fees and
expenses of legal counsel - $8,000; fees and expenses of accountants -
$3,500; printing and postage - $2,000; and miscellaneous - $1,000. The
only consideration to be paid will be the Cash Payment, to be paid for
shares that would otherwise be converted into fractional shares. We
will use the Company's cash-on-hand as the sole source of funds for
the expenditures for professional fees and other expenses related to
the transaction.
2. Effect on Market for Shares. The Company estimates that the
number of shares of new Class A Stock and new Class B Stock
outstanding after the Reverse Stock Split, if effected, shall be as
follows:
Class Number of Shares Number of Shareholders
----- ---------------- ----------------------
Class A 116,385 110
Class B 25,107 2
<PAGE>
The new Class A Stock will continue to be traded on the OTC Bulletin
Board under the symbol "LUCR." However, there will no longer be a
public market for the new Class A Stock if the Board terminates public
registration of the new Class A Stock, which is its intention. See
also the information contained below in the subsection captioned
"Termination of 1934 Act Registration of Class A Stock."
The Company has no current plans to issue additional shares of
stock, but the Company reserves the right to do so at any time and
from time to time at such prices and on such terms as the Board
determines to be in the best interests of the Company and its then
stockholders. Persons who continue as stockholders following
implementation of the Reverse Stock Split proposal will not have any
preemptive or other preferential rights to purchase any of the
Company's stock that may be issued by the Company in the future,
unless such rights are currently specifically granted to such
stockholder.
3. Securities Laws Relating to the New Class A Stock.The Company
has not filed with the SEC a registration statement under the
Securities Act of 1933 (the "1933 Act") for the registration of the
new Class A Stock to be issued and exchanged pursuant to the Reverse
Stock Split proposal. Instead, the new Class A Stock will be issued
in reliance on exemptions contained in Section 3(a)(9) and Rule
145(a)(1) under the 1933 Act. Upon consummation of the Reverse Stock
Split, the new Class A Stock are expected to be freely transferable
under the 1933 Act by those stockholders of the Company not deemed to
be "affiliates" of the Company. Shares of new Class A Stock acquired
by persons who are "affiliates" of the Company will be subject to the
resale restrictions of Rule 144 under the 1933 Act.
4. Termination of 1934 Act Registration of Class A Stock. The
Reverse Stock Split proposal will affect the public registration of
the new Class A Stock with the SEC under the 1934 Act, as the Company
intends to apply for such termination as soon as practicable after
approval of the Reverse Stock Split proposal by the stockholders.
Registration under the 1934 Act may be terminated by the Company if
the Class A Stock is no longer held by 300 or more stockholders of
record. Termination of registration of the Class A Stock under the
1934 Act would substantially reduce the information required to be
furnished by the Company to its stockholder and to the SEC and would
make certain provisions of the 1934 Act, such as proxy statement
disclosure in connection with stockholder meetings and the related
requirement of an annual report to stockholders, no longer applicable
to the Company.
With respect to the executive officers and directors of the
Company, in the event the registration of the Class A Stock is
terminated under the 1934 Act: (a) executive officers, directors and
other affiliates would no longer be subject to many of the reporting
requirements and restrictions of the 1934 Act, including without
limitation the reporting and short-swing profit provisions of Section
16 of , and (b) executive officers, directors and other affiliates of
the Company may be deprived of the ability to dispose of shares of
Class A Stock pursuant to Rule 144 under the 1933 Act. Upon
termination of 1934 Act registration, the Company will continue to be
subject to the general anti-fraud provisions of federal and applicable
state securities laws. See also the information contained above in
the section captioned "Securities Laws Relating to the New Class A
Stock."
Material Federal Income Tax Consequences
We summarize below the material federal income tax consequences
to the Company and stockholders resulting from the Reverse Stock Split
proposal. This summary is based on existing U.S. federal income tax
law, which may change, even retroactively. This summary is not
binding on the Internal Revenue Service (the "IRS"). There can be no
assurance and none is given that the IRS or the courts will not adopt
a position that is contrary to the statements contained in this
summary. This summary does not discuss all aspects of federal income
taxation which may be important to you in light of your individual
circumstances, and many stockholders may be subject to special tax
rules. In addition, this summary does not discuss any state, local,
foreign, or other tax considerations. You should consult your tax
advisor as to the particular federal, state, local, foreign, and other
tax consequences, in light of your specific circumstances.
This summary also assumes that you are a one of the following:
(i) a citizen or resident of the United States; (ii) a corporation or
other entity taxable as a corporation created or organized under U.S.
law (federal or state); (iii) an estate the income of which is subject
to U.S. federal income taxation regardless of its sources; (iv) a
trust if a U.S. court is able to exercise primary supervision over
administration of the trust and one or more U.S. persons have
authority to control all substantial decisions of the trust; or (v)
any other person whose worldwide income and gain is otherwise subject
to U.S. federal income taxation. This summary also assumes that you
have held and will continue to hold your shares as capital assets for
investment purposes under the Internal Revenue Code of 1986, as
amended.
We believe that the Reverse Stock Split proposal should be
treated as a tax-free "recapitalization" for federal income tax
purposes. This should result in no material federal income tax
consequences to the Company. If you continue to hold new Class A
Stock after the Reverse Stock Split, you should not recognize any gain
or loss in the Reverse Stock Split, and you should have the same
adjusted tax basis and holding period in your new stock as you had in
your stock immediately prior to the Reverse Stock Split.
<PAGE>
The receipt by a stockholder of a Cash Payment in lieu of a
fractional new share pursuant to the Reverse Stock Split will be a
taxable transaction for federal income tax purposes. Accordingly, a
stockholder who receives cash in lieu of a fractional new share should
recognize gain or loss equal to the difference between the amount of
cash received and the portion of the aggregate tax basis in his or her
shares of common stock allocable to the fractional new share interest
for which he or she received cash. If the shares of your stock were
held as a capital asset on the Effective Date, then the stockholder's
gain or loss will be a capital gain or loss. Such capital gain or
loss will be a long-term capital gain or loss if the stockholder's
holding period for the shares of common stock is longer than one year.
Appraisal Rights; Escheat Laws
There are no appraisal rights for any stockholder who dissents
from approval of the Reverse Stock Split proposal under the Company's
governance documents. Also, the Company concluded that there are no
appraisal rights for any stockholder who dissents from approval of the
Reverse Stock Split proposal under Florida General Corporation law.
We refer you, however, to Sections 607.1302 and 607.0604 of the
Florida Statutes which respectively proscribe the rights of
shareholders to dissent and general treatment of fractional shares.
Section 607.0604 (5) of the Florida Statutes states that, "when a
corporation is to pay in money the value of fractions of a share, the
good faith judgment of the board of directors as to the fair value
shall be conclusive." There may exist other rights or actions under
state law for stockholders who are aggrieved by reverse stock splits
generally. Although the nature and extent of such rights or actions
are uncertain and may vary depending upon the facts or circumstances,
stockholder challenges to corporate action in general are related to
the fiduciary responsibilities of corporate officers and directors and
to the fairness of corporate transactions.
Stockholders whose shares are eliminated and whose addresses are
unknown to the Company, or who do not return their stock certificates
and request payment, generally have a certain number of years from the
date of the Reverse Stock Split to claim the Cash Payment payable to
them. If no claim is made within this period, state law generally
provides that these payments are deemed abandoned and forfeit to the
state. The state law of the state of the last known residence of the
stockholder, as shown on Company records, usually governs. In
Florida, this holding period is 5 years, but the exact number of years
may vary from state to state.
Market for Common Stock/Financial Statements.
The decision by the Board to terminate 1934 Act registration following
the Effective Date (assuming this action results in fewer than 300
Register Stockholders of the Class A Stock) does not require
stockholder approval and will not be voted on at the Special Meeting.
This decision is within the discretion of the Board in accordance with
applicable federal securities laws. No further communication will be
provided to the Company stockholders if the Board decides that it is
in the best interests of the Company
Intention to Terminate Public Registration
The decision by the Board to terminate 1934 Act registration
following the Effective Date (assuming this action results in fewer
than 300 Register Stockholders of the Class A Stock) does not require
stockholder approval and will not be voted on at the Special Meeting.
This decision is within the discretion of the Board in accordance with
applicable federal securities laws. No further communication will be
provided to the Company stockholders if the Board decides that it is
in the best interests of the Company and its stockholders to terminate
such registration after the Effective Date. Although the Board
presently believes that termination of registration is in the best
interests of the Company and its stockholders, the Board nonetheless
believes that it is prudent to recognize that factual circumstances
could possibly change such that it might not be appropriate or
desirable to effect termination under 1934 Act registration at that
time.
The Board recommends that you vote FOR the Reverse Stock Split
proposal. Proxies solicited by the Board will be voted FOR this
Reverse Stock Split proposal, unless you specify otherwise in your
proxy.
<PAGE>
MANAGEMENT
David M. Barnett has served as Vice President of Marketing since
October 1993. Prior to his appointment as a Vice President, he served
as the director of sales and marketing from February 1991. Before
joining the Company, Mr. Barnett was employed in the advertising
industry in several positions and left as an account service
executive. Mr. Barnett is a graduate of North Carolina State
University in 1988.
Anthony J. Beisler, III has been a director of the Company since
1991. He practices law, specializing in insurance defense, with
Beisler & Beisler, Fort Lauderdale, Florida and has practiced law in
excess of twenty years. He is not actively engaged in the day to day
operations of the Company.
Kendall A. Carr is the Vice President of Finance and Chief
Financial Officer for the Company. He started with the Company in
January 1996 at which time he was appointed to his current position.
Mr. Carr served as Controller for Limitorque Corporation from 1988
until 1993. From 1993 through 1994, Mr. Carr served as the Chief
Financial Officer for Walter Kidde Portable Equipment, Inc. and in
1995 he served as the Controller of Precision Concepts, Inc. He
graduated summa cum laude from SUNY at Buffalo in 1978, and received
his MBA from James Madison University in 1988. He is a licensed CPA.
Jerry B. Conway is co-founder of the Company and has been the
President, Chief Operating Officer, and Director of the Company since
the Company was organized in 1990. He is an executive officer and
director of each of the Company's subsidiaries, as well as President
and principal shareholder of CFA Management Inc. and Navigator. Mr.
Conway oversees and directs the management of the Company. He has
worked in the retail service industry for over twenty-six years, and
has been involved specifically with Jiffy Lube since 1986. Mr. Conway
is a high honor graduate, Beta Gamma Sigma, of Michigan State
University in 1977. He also chairs several committees as well as
serves on the Board of Directors of JLAF (Jiffy Lube Association of
Franchisees). Mr. Conway is also President of OH Distributors, Inc.
Stephen P. Conway is co-founder of the Company and has served as
Chairman of the Board and Chief Executive Officer since the Company
was organized in 1990. He is an executive officer and director of each
of the Company's subsidiaries as well as the Vice President and a
principal shareholder of CFA Management, Inc. and Navigator, which
provide management services to the Company's subsidiaries. Mr. Conway
is a shareholder and officer of Fiduciary Asset Management, Inc., Boca
Raton, Florida, a Registered Investment Adviser, and a principal of
Financial Assets Corporation, a securities broker-dealer in Boca
Raton. Mr. Conway is also Vice President of OH Distributors, Inc.
Michael D. Davis has served the Company as the Vice President of
Administration since July 1998. Prior to his appointment as Vice
President he served as Director of Administration for the Company from
January 1996. Prior to joining the Company Mr. Davis served as the
Assistant Controller for Hooters of America, Inc. from 1991 through
1994. Mr. Davis graduated magna cum laude from Berry College in 1990
and received his MBA from the University of Georgia in 1995.
D. Fredrico Fazio has been a director of the Company since 1991.
He is the managing partner of the civil trial law firm of Fazio,
Dawson, DiSalvo, Cannon, Abers & Podrecca, in Fort Lauderdale, Florida
and has practiced law in excess of twenty years. Mr. Fazio is also
involved in real estate development in Fort Lauderdale, Florida. He
is not actively engaged in the day to day operations of the Company.
Martin Kauffman has served the Company as the Controller since
1987. He has had extensive financial experience during his previous
twenty year employment with Exxon Corporation. Mr. Kauffman is a
licensed CPA, and is a graduate of Rutgers University.
James D. Ridout has served as the Vice President of Operations
since 1993. Prior to his appointment as Vice President, he served as
Director of Operations, Regional Sales and Operations Manager,
District Sales and Operations Manager and Store Manager for the
Company. Mr. Ridout has been with the Company since 1987, and has
worked in the quick lube industry since 1983.
Douglas W. Roan has served as the Vice President of Development
and Purchasing since October 1993. Prior to his appointment as Vice
President he served as Director of Development for the Company from
1987. Mr. Roan has worked in the construction, development and
purchasing industries for over twenty seven years in various regions
of the United States.
Richard L. Rubin was appointed director on April 6, 1999. He is
a sales and marketing specialist for a telecommunications company.
Prior to his experience in telecommunications, Mr. Rubin was involved
in sales and marketing of commercial real estate and real estate
private placements. He is not actively engaged in the day to day
operations of the Company.
R. Lewis Stanford was appointed director on April 6, 1999. He is
the Vice President and General Counsel for the Company since September
1995. From 1992 until joining the Company, Mr. Stanford was
associated with the law firm of Moore & Van Allen, PLLC, where he had
a general corporate practice. Mr. Stanford graduated with highest
honors and highest distinction from the University of North Carolina
at Chapel Hill and received his JD with honors from the University of
North Carolina School of Law in 1992. Mr. Stanford has worked in the
auto industry and legal profession for eighteen years.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect
to beneficial ownership of the Common Stock as of August 31, 2000 by:
(i) each person known to the Company to beneficially own more that 5%
of the Class A Stock and Class B Stock; (ii) each director of the
Company; and (iv) all directors and executive officers of the Company
as a group. Except as otherwise indicated, each shareholder named has
sole voting and investment power with respect to such shareholder's
shares.
Class A Common Stock
--------------------
<TABLE>
Number of Number of Total Percent
Shares Directly Shares Beneficially Shares of Class
Name Owned Owned
---- --------------- ------------------- ------ --------
<S> <C> <C> <C> <C>
Stephen P. Conway 500 784,277 (1) 784,777 33.6%
790 Pershing Road
Raleigh, NC 27608
Jerry B. Conway 133,130 782,277 (2) 915,407 39.2%
790 Pershing Road
Raleigh, NC 27608
D. Fredrico Fazio 302,159 0 302,159 13.0%
633 South Andrews Avenue
Suite 500
Fort Lauderdale, FL 33301
Anthony J. Beisler, III 46,082 39,060 (3) 85,142 3.6%
1001 Northeast 26th Street
Fort Lauderdale, FL 33305
Pennzoil Products Company 759,477 (4) 0 759,477 (4) 32.6%
Pennzoil Place
Post Office Box 2967
Houston, TX 77252-2967
Kathleen D. Conway 202,229 0 202,229 8.7%
P.O. Box 2091
Blowing Rock, NC 28605
Richard L Rubin 500 0 500 0.0%
503 East Fillmore
Fairfield, IA 52556
R. Lewis Stanford 4,600 0 4,600 0.2%
790 Pershing Road
Raleigh, NC 27608
All directors and executive 503,718 823,337 1,327,055 56.9%
officers as a group
(12 persons)
</TABLE>
Class B Common Stock
--------------------
Number of Shares Percent
Name Directly Owned of Class
---- ---------------- --------
Stephen P. Conway 292,409 58.2%
790 Pershing Road
Raleigh, NC 27608
Jerry B. Conway 209,746 41.8%
790 Pershing Road
Raleigh, NC 27608
All directors and executive 502,155 100.0%
officers as a group
(10 persons)
1. Includes (i) 2,000 shares held as custodian for his children;
(ii) 22,800 shares held by Navigator Management, Inc. ("Navigator")and
CFA Management, Inc. both of which are owned 50%; and (iii) the
jointly held irrevocable proxy to vote 759,477 shares of Class A
Stock, as described more fully below in footnote 4.
2. Includes (i) 22,800 shares held by Navigator and CFA Management,
Inc. both of which are owned 50% and (ii) the jointly held irrevocable
proxy to vote 759,477 shares of Class A Stock, as more fully described
below in footnote 4.
3. Includes (i) 45,582 shares held jointly with Mr. Beisler's wife,
(ii) 14,550 shares held by the Anthony J. Beisler, III P.A. Money
Purchase Pension Trust, and (iii) 24,510 shares held by Anthony J.
Beisler, III P.A. Profit Sharing Trust.
4. Pursuant to the grant of an irrevocable proxy dated May 30, 1996,
Messrs. Stephen P. Conway and Jerry B. Conway, or either of them, are
entitled to vote these 759,477 shares of Class A Stock on the proposed
amendment.
<PAGE>
CERTAIN MARKET INFORMATION
The Class A Common Stock trades on the over-the-counter The
following is the high and low sales prices for the Class A Common
Stock for each quarter during the past two years:
Quarter High Low
Second 1998 6.88 3.88
Third 1998 6.75 4.75
Fourth 1998 6.00 4.00
First 1999 5.00 3.50
Second 1999 4.94 3.94
Third 1999 5.25 3.06
Fourth 1999 4.25 1.75
First 2000 4.13 1.38
Second 2000 3.25 1.53
FINANCIAL INFORMATION
The financial statements contained under the caption "Selected
Financial Data" on page 7 of the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999, and the Company's
Quarterly Report on Form 10-Q for the second fiscal quarter ended June
30, 2000, as filed with the Securities and Exchange Commission are
incorporated herein by reference. You may read and copy any materials
we file with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-
SEC-0330. The SEC also maintains a website at www.sec.gov that
contains information that we file electronically with the SEC.
By Order of the Board of Directors,
s/s Stephen P. Conway
-----------------------------------
Stephen P. Conway,
Chairman and Chief Executive Officer
Raleigh, North Carolina
<PAGE>
Appendix A
ARTICLES OF AMENDMENT
TO THE
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
LUCOR, INC.
-------------------------------------------------
Pursuant to General Corporation Law of the State of Florida, the
undersigned, being the Chairman of the Board of Directors of Lucor,
Inc., a Florida corporation (the "Corporation"), does hereby execute
these Articles of Amendment to the Amended and Restated Articles of
Incorporation of Lucor, Inc., on behalf of the Corporation, and
certify as follows:
1. The name of the corporation is Lucor, Inc. (the "Corporation").
2. Article III of the Corporation's Amended and Restated Articles of
Incorporation is hereby deleted in its entirety, with the following
substituted in its place:
The aggregate number of shares which this Corporation
shall have the authority to issue is 5,375,000, of which
250,000 shares, at the par value of $.40 each share, will be
designated Class A Common Stock; 125,000 shares at the par
value of $.40 each per share shall be designated Class B
Common Stock; and 5,000,000 shares at the par value of $.02
each per share shall be designated Preferred Shares.
3. Upon the effectiveness of the foregoing amendment, (i) each
twenty outstanding shares of Class A Common Stock of the Corporation,
par value $.02, shall be combined into one share of Class A Common
Stock of the Corporation, par value $.40, and (ii) each twenty
outstanding shares of Class B Common Stock of the Corporation, par
value $.02, shall be combined into one share of Class B Common Stock
of the Corporation, par value $.40. Outstanding shares of Class A
Common Stock and Class B Common Stock, each with a par value of $.02,
which would otherwise be respectively converted into a fractional
share of Class A Common Stock or Class B Common Stock of the
Corporation, each with a par value of $.40, will be cancelled, with
the holders of such shares receiving cash payment equal to such
share's fair value as determined in the good faith judgment of the
Corporation's Board of Directors.
4. The date of adoption of the resolution approving the combination
of shares of this Corporation set forth in the foregoing amendment is
__________, 2000.
5. The foregoing amendment was required to be approved by the
shareholders of the Corporation and the number of votes cast for the
amendment by the shareholders was sufficient for approval in
accordance with Florida General Corporation Law.
IN WITNESS WHEREOF, the undersigned Chairman of the Board of
Directors of the Corporation has cause these Articles of Amendment to
the Amended and Restated Articles of Incorporation of Lucor, Inc., as
of this ____ day of__________, 2000.
LUCOR, INC.
By:s/s Stephen P. Conway
----------------------------
Stephen P. Conway,
Chairman and
Chief Executive Officer
ATTEST:
By:s/s R. Lewis Stanford
-------------------------
R. Lewis Stanford
Assistant Secretary
[CORPORATE SEAL]
<PAGE>
LUCOR, INC.
PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF LUCOR, INC.
The undersigned hereby appoints Stephen P. Conway and Jerry B.
Conway, and each of them, proxies, with power of substitution, to
represent the undersigned at the Special Meeting of Shareholders of
Lucor, Inc. (the "Company"), to be held at 2:00 p.m., local time, on
______________, 2000, at the Company's headquarters located at 790
Pershing Road, Raleigh, North Carolina, 27608, and at any adjournments
thereof, to vote the number of shares which the undersigned would be
entitled to vote if present in person in such manner as such proxies
may determine, and to vote on the following proposals as specified
below by the undersigned.
(1) Reverse Stock Split
_____Vote FOR ____Vote AGAINST ___ABSTAIN
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. IN THE ABSENCE OF
SPECIFIED DIRECTIONS, THIS PROXY WILL BE VOTED IN FAVOR OF THE
ELECTION OF ALL NOMINEES NAMED IN THIS PROXY. The proxies are also
authorized to vote in their discretion upon such other matters as may
properly come before the meeting or any adjournment thereof.
If signing as attorney, administrator, executor,
guardian, trustee or as a custodian for a minor,
please add your title as such. If a corporation,
please sign in full corporate name and indicate
the signer's office. If a partner, please sign in
the partnership's name.
X_________________________________________________
Printed
Name______________________________________________
X_________________________________________________
Printed
Name______________________________________________
Dated
__________________________________________________, 2000
<PAGE>
