SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. 1)
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.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Lucor, Inc., Stephen P. Conway and Jerry B. Conway
------------------------------------------------
(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:
<PAGE>
LUCOR, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be held on _______________
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/ Stephen P. Conway
-----------------------------------
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>
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 __________________. 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 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 that 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 be cast 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 be cast 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. Proxies sent to
the Company that are marked "abstain" with respect to the
approval of the proposed amendment will be counted for the
purpose of determining the number of common shares represented at
the Special Meeting, but will have no effect in determining
whether the requisite vote has been obtained for approval of the
proposed amendment other than 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.
<PAGE>
Messrs. Stephen P. Conway and Jerry B. Conway, each of whom
are directors and executive officers of the Company, 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 940,707 shares of the Class A Stock
eligible to be cast on the approval of the proposed amendment to
the Articles. These individuals 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 two 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.
REVOCATION OF PROXY
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.
<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. There
are no material differences between the respective rights,
preferences or limitations of the existing Class A Stock and
Class B Stock and the "new" Class A Stock and the "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
Effective Date Split
------------------------------ ------------------------------
Registered Stockholders Shares of Class A Stock will
holding 20 shares of Class A be converted into one whole
Stock. There are no holders share of new Class A Stock.
of 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
Class A Stock or Class B respectively converted into
Stock. one or more shares of 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
holding fewer than 20 shares be exchanged for a cash
of Class A Stock. There are payment.
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
nominee, such as a bank or procedures, and the Company
broker. There are no holders stockholder holding Class A
of Class B Stock in this Stock in street name should
category. contact their nominees to
determine how 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 closing 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
closing 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. Approximately 349 of such stockholders
hold fewer than 20 shares of Class A Stock (the "Small
Stockholders"). In the aggregate, the Small Stockholders hold
less than 0.16% of the Class A Stock. All but nine of these
shareholders hold 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, 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). The 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.
Following the initial preliminary filing of this Proxy
Statement and a Schedule 13E-3 contemporaneously filed pursuant
to Rule 13e-3 under the 1934 Act, the Board met on December 12,
2000 to reconsider the factors concerning the fairness of the
Reverse Stock Split, primarily focusing on the various factors
for establishing a fair value of the Class A Stock for
determining the Cash Payment in lieu of issuance of a fractional
share of new stock. The results of this discussion are noted
later in this discussion.
<PAGE>
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.
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 large 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 of its class A
stock under the 1934 Act. 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 the 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
its 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 public (as
distinguished from private) 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 majority of 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, and use of
company stock to raise capital or make acquisitions. In the
opinion of the Board, however, the pricing trends and trading
volume of the Class A Stock has not allowed the Company to
effectively take advantage of these benefits, 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.
<PAGE>
Another factor which has impaired 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
trading on Nasdaq's SmallCap Market. Although the Class A Stock
continues to be traded in the Electronic Bulletin Board Market,
management believes that the de-listing has had 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.
The Company believes that size, revenue performance (current
and projected), strategic partnering, earnings, cash flow and
product mix are among the key factors considered by the
investment community in valuing the stock of a public 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
consider whether to register its common stock for a public
offering to effectively take advantage of a public market for
its stock. The Board intends to evaluate these factors, and
should the Board determine that the benefits of a public offering
will likely outweigh the costs at that time, it intends to
register the Company's stock in connection with a new public
offering. There is, however, no assurance when or if such an
offering 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. Stephen
P. Conway and Jerry B. Conway, individually, believe that the
Reverse Stock Split is fair to the shareholders of the Company
and considered the same factors as the Board considered in
reaching that conclusion. All references to considerations and
conclusions by the Board as to fairness and to factors considered
by the Board apply as well to Stephen P. Conway and Jerry B.
Conway. 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. Management estimated that the cost of such
report or opinion would exceed $80,000. The Board determined
that this expense was unwarranted since it concluded that the
Board itself could adequately establish the fairness of the
Reverse Stock Split proposal , without such report or opinion, by
addressing the factors and considerations described in this
section.
<PAGE>
The Board did not establish an unaffiliated representative
to represent the unaffiliated stockholders of the Company in
determining the terms of the Reverse Stock Split proposal because
the Board concluded that there was sufficient representation in
the decision-making at the Board level to protect the interests
of unaffiliated stockholders. This decision was based on the
fact that four of the six Board members are not controlled by, or
under common control with the Company, and three of these Board
members are not employees of the Company. In addition, no
independent committee of the Board has reviewed the fairness of
the Reverse Stock Split proposal because the Board concluded that
such unaffiliated Board members could adequately convey their
opinions and concerns to the entire Board without the need for
the establishment of such a committee.
The Board determined that the Reverse Stock Split proposal
was substantively fair to all unaffiliated stockholders. In
reaching this determination, the Board considered of the
following supporting factors:
The Small Shareholders will be allowed to liquidate their
holdings in a cost effective manner, a task that they could not
otherwise accomplish since over 97% of the Small Shareholders own
ten shares of Class A Stock with a total estimated market value
for each ten shares of less than $17.50 (calculated at $1.75
price per share - the highest closing price for Class A Stock
during the third calendar quarter of 2000). On December 1, 2000,
Management conducted a summary review of the current pricing of
transaction fees, and found that the lowest transaction fee for a
stock trade was approximately $20.00 per trade. (The sole
purpose of identifying estimated transaction fees ten share was
to provide a context for establishing the approximate low-end
cost of selling small stock holdings of Class A Stock in the
public market relative to the estimated value of such holdings;
its purpose was not to identify the absolute lowest cost or the
best value with regard to brokerage services.)
The Reverse Stock Split will not change the rights,
preferences or limitations of unaffiliated stockholders, with the
exception of the Small Shareholders.
No stockholder, whether affiliated or unaffiliated (other
than the Small Shareholders), will have a material decrease in
their percentage of ownership interest of the Company following
the Reverse Stock Split and any decrease that will occur will
equally apply to affiliated and unaffiliated stockholders. Any
stockholder whose holdings are not in even multiples of 20 shares
will experience a slight relative decrease in their percentage of
interest after the split, but the maximum number of shares that
could be affected would be nineteen. As an example, the
percentage ownership interest of a stockholder with 2,019 shares
would experience a relative decrease of 0.0005722% of his or her
interest following the Reverse Stock Split due to the
cancellation of the nineteen odd lot shares in return for a Cash
Payment. We have qualified the foregoing statements as
"relative decreases" because the percentage of ownership of the
remaining shareholders following the split, affiliated and
unaffiliated, will be slightly increased to the extent of the
cancellation of the Small Shareholders' holdings and any other
odd-lot holdings that are not in an even multiple of 20 shares.
Small Shareholders can retain their ownership in the Company
by increasing their number of shares to 20. All Small
Shareholders own at least 10 shares of Class A Stock, so any
Small Shareholder wishing to remain a stockholder of the Company
may do so by purchasing no more than 10 shares of stock. The
highest closing price for Class A Stock in November 2000 on the
OTC Electronic Bulletin Board was $1.031 per share and the lowest
closing price during such period was $0.563 per share.
Consequently, using the forgoing pricing, a Small Shareholder
could remain a stockholder of the Company for a maximum price
estimated at or between $10.31 and $5.63, plus transaction fees.
Any stockholder other than the Small Shareholders, whether
affiliated or unaffiliated, can avoid a relative decrease in
their percentage of ownership in the Company in the same manner
described in the foregoing paragraph. Since stockholders other
than the Small Shareholders may acquire 19 shares to avoid any
cancellation of their stock for a Cash Payment in lieu of
issuance of a fractional share, such stockholders could remain a
stockholder of the Company for a total maximum price estimated at
or between $19.60 and $10.70, plus transaction fees (using the
prices per share in the foregoing paragraph).
<PAGE>
Only the Small Shareholders will cease to be stockholders of
the Company following the split and they are the only
stockholders who will lose a significant percentage of their
existing ownership interest in the Company. As generally
described in the information contained herein in the sections
captioned "Background" and "Purpose and Reasons for the Reverse
Stock Split," locating and communicating with the Small
Shareholders has not been feasible despite efforts to do so.
Conditioning the approval of the Reverse Stock Split transaction
on the affirmative by majority vote of the unaffiliated
stockholders would not reflect the collective judgment of the
Small Shareholders because the Board determined that it would be
unlikely that large number of such stockholders would vote (in
person or by proxy) due to the historical difficulties in
communicating with the Small Shareholders. The Board therefore
concluded that the interests of the unaffiliated stockholders who
were directly impacted by the split would not be represented
because they would not likely be aware of the importance of the
vote and, even if they were aware, their interests would
represent a minority of the unaffiliated stockholders. Since,
unlike the Board, the unaffiliated shareholders have no fiduciary
duty to fellow stockholders, the Board decided that it should not
grant the veto on the Reverse Stock Split to the unaffiliated
stockholders. Even if the Small Shareholders could be
effectively communicated with, so as to allow such stockholders
to convey the interests of the majority of this group, the
holdings of the Small Shareholders represent only 0.1% of the
ownership interests of the Company. Since the Board has a
fiduciary duty to the Company and its stockholders in toto, it
determined that an abrogation of the responsibility for the
decision to move forward on the Reverse Stock Split transaction
to group holding such a small interest in the Company would also
be incorrect.
The Board ascertained to its satisfaction that this
transaction was not the typical Rule 13e-3 "going private"
transaction, which involves the involuntary or threat of
involuntary purchase of all of the ownership interests of the
unaffiliated stockholders. In the Reverse Stock Split
transaction the unaffiliated stockholders, other than the Small
Shareholders, will retain their percentage ownership in the
Company in all material respects . The ownership interests of
the Small Shareholders will be terminated as a result of the
Reverse Stock Split (unless they purchase additional shares as
described above), but the Board concluded that the completion of
the split will be an overall benefit to the Small Shareholders
because of the illiquidity issues discussed above.
As part of its considerations, the Board took note of
potential liquidity concerns of certain minority stockholders
should the Company, as expected, cease public registration of the
Class A Stock. Excluding the holdings of the Board,
approximately 40% of the outstanding shares of Class A Stock are
publicly registered . While this issue relates to the ceasing of
public registration, rather than the Reverse Stock Split, the
Board acknowledged that the split facilitates this action and
therefore the Board identified it as a contradicting factor. The
Board weighed this contradicting factor against what it had
determined were the overall benefits to the stockholders and the
Company for this Reverse Stock Split and concluded that this
concern was insufficient to outweigh such benefits in light of
the considerations and conclusions stated in this section.
The Board believes that the Reverse Stock Split is also
substantively fair because the Board determined in good faith
that the Cash Payment to be paid for stock in lieu of issuance of
fractional shares constitutes a fair value. 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."
The Board adopted the current market price methodology as
the most appropriate measure of Payment in lieu of issuance of
fractional shares, and therefore this methodology was given the
maximum weight. The Company has been implementing an aggressive
growth plan since the initial public registration of the Class A
Stock at the end of 1994. Since 1995, the Company has made major
acquisitions of services center in each year and increased its
operating service centers by a factor of five. In order to
accurately value a company, the Board reasoned that the valuation
must reflect its current operating characteristics.
Consequently, the Board concluded that the current market price
was the best reflection of the value of such stock because any
historical measure would not reflect the company that is being
valued in connection with the Reverse Stock Split. After
reviewing reverse stock splits by other publicly-traded
companies, management informed the Board that using current
market pricing 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. The Board also considered other valuation methods and
factors, but rejected each as discussed below:
Historical market prices - The Board gave no weight to this
factor because it did not feel that historical market pricing
accurately reflected the current value of the Class A Stock due
to the aggressive growth nature of the Company (as described in
the foregoing paragraph). Based on the foregoing, the Board
decided against further analysis of this factor in determining
the fair value for the Cash Payment.
<PAGE>
Net book value - Management recommended that the Board give
no weight to this factor because it maintained that book value is
not any appropriate measure for establishing the fair value for
the Cash Payment as it is an accounting methodology that is based
on the historical cost of the Company's assets, and therefore
does not reflect current value. The Board concurred with
management's recommendation and did not give any weight to this
factor.
Going concern value - Management described to the Board that
a going concern valuation is an attempt to establish the present
value of future earnings of a company in the context of what
returns an investor could expect to receive on his or her
investment over a future period. Two key factors in using this
methodology valuation are establishing a reasonably accurate
forecast of earnings and identifying an appropriate discount rate
to establish the present value of such future earnings. To
establish a reasonably accurate forecast of earnings, management
suggested that the Board would need to review (i) historical
earnings, (ii) the Company's current financial condition, and
(iii) any future earnings projections. However, management
recommended, and the Board agreed, that a going concern value
could not be established with reasonable accuracy because of the
changing nature of the Company due to recent acquisition growth
which would make it too difficult to arrive at a reasonable
forecast of earnings for this purpose. The Board reasoned that
the Company was still assimilating the significant store
acquisitions in 1999 (which nearly doubled the number of stores
operated by the Company) and therefore, management could not
predict the Company's future performance with the accuracy
necessary for this purpose. A majority of these acquired stores
were formerly competitors of the Company or the "Jiffy Lube"
franchise, and the Board noted the uncertainty of accurately
predicting final patronage decisions by customers formerly loyal
to such competitors. The Board also noted that the effects on
the Company's financial and human resources in assimilating such
a large number of stores was still in process and this would add
to the uncertainty in forecasting earnings. The Board concluded
that each of these uncertain factors was sufficient to reject
going concern value in determining the fair value for the Cash
Payment. For more information on the acquisitions described in
this paragraph, please refer to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, which is
incorporated herein by reference.
Liquidation value - The Board agreed with management and did
not to give weight to this valuation method as a factor in
establishing the fair value of the Cash Payment because the Board
determined that there is no ready market for the sale of the
Company's assets, which represent the largest number of
franchised quick oil change and lubrication centers in the United
States. The Board decided further analysis of this factor was
unnecessary for determining the fair value of the Cash Payment
because of the foregoing conclusion and the considerations and
conclusions described in the foregoing discussion on book value.
Comparative Company Analysis - The Company is the only
publicly-traded owner and operator of franchised quick oil change
and lubrication centers. The Board did not believe that a
company could be identified with sufficient similar
characteristics to the Company for use in establishing the fair
value of the Cash Payment using this methodology. Consequently,
the Board decided further analysis of this valuation method was
unwarranted.
The Company has not purchased any of its stock so the Board
did not consider this factor in establishing the fair value of
the stock for the Cash Payment.
The Company and its affiliates are not aware of any firm
offers to purchase the Company that have been made during the
past two years by any unaffiliated person. Consequently, the
Board did not consider this factor in establishing the fair value
of the stock for the Cash Payment.
The Company has not engaged in a merger or consolidation
with another company or in the sale or other transfer of a
substantial part of its assets in the last two years, so the
Board did not consider this factor in establishing the fair value
of the stock for the Cash Payment.
<PAGE>
There have not been any purchases of the Company's stock
that would enable the holder to exercise control of the Company.
Therefore, the Board did not consider this factor in establishing
the fair value of the stock for the Cash Payment.
After establishing current market pricing of the Class A
Stock as the method of calculating in the Cash Payment, the Board
focused on identifying the appropriate date or time period in
which to apply to this method. After reviewing reverse stock
splits by other publicly-traded companies, management informed
the Board that five to ten trading days is the typical period
used to minimize temporary fluctuations in pricing which do not
reflect the true market valuation of the stock. The Board noted
that the historic volatility of the Class A Stock, due to its low
trading volume, dictated that a longer period should be adopted
to minimize these effects and chose 20 days as a fairer measure.
The Board further considered the possible adverse effect on
stock pricing caused by the disclosure of the Company's intention
to terminate public registration of the Class A Stock.
Consequently, the Board adopted the 20-day period immediately
prior to the initial preliminary filing of this Proxy Statement
because this would reflect market valuation prior to the
disclosure. The Board also concluded that the Cash Payment
should not be less than the market value immediately prior to the
Effective Date since this date constitutes the date of purchase
of the stock and hence the purchase price should at least reflect
the market valuation as close to this time as practical given the
stock volatility issues described in the foregoing paragraph.
Because of the uncertainty inherent in any valuation, the Board
also concluded that the Cash Payment should constitute the
greater value of the two established periods to ensure maximum
fairness to the Small Shareholders, since their ownership
interest in the Company would be terminated (absent any action on
their behalf to remain stockholders by purchasing additional
shares). Therefore, the Board determined that the Cash Payment
should be determined by the greater of (i) the average closing
prices 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 prices of
Class A Stock for the twenty (20) trading days immediately
preceding the Effective Date.
The Company's Chief Executive Officer and it's President are
the only holders the shares of Class B Stock. The total number
of shares of Class B stock to be purchased by the Company in lieu
of issuance of fractional shares will be 15 shares, with a total
estimated Cash Payment equal to less than $17.00. The holders of
the Class B Stock have greater voting rights than the holders of
the Class A Stock since under the Articles the holders of Class B
Stock have the right to elect a majority of the directors of the
Company. The Board determined that the amount of the potential
Cash Payment for Class B Stock for purchase in lieu of issuance
of fractional shares will be too small to warrant further
discussion or expenditures of resources for determining the
fairness of such consideration. 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 for
purposes of this transaction (as determined using the above
established method).
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, but, as noted
earlier, determined that the time and expense of an independent
analysis and evaluation was unjustified in the circumstances
because the Board concluded that the method of valuation chosen
by the board was a fair representation of value of the
stockholdings for the reasons stated above.
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 tender
materials, and even if they were aware of the offer it is
unlikely that they would make the effort to tender their shares
in sufficient numbers to accomplish the Company's objective. The
Board ultimately determined that the Reverse Stock Split proposal
was the preferred method.
After consideration of all the forgoing factors, all of the
directors, including those who are not employees of the Company,
have determined that the Reverse Stock Split proposal is
procedurally and substantially fair to the stockholders of the
Company, including the unaffiliated stockholders and the Small
Stockholders.
<PAGE>
With respect to its intent to terminate the Company's 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 public market, and as a result,
whether the Company can effectively take advantage of a public
market for its stock The Board also has considered and will
continue to consider the need to protect the confidentiality of
the Company's proprietary information, 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. After
taking into account all of the considerations and conclusions
described herein with respect to the benefits and disadvantages
of registration of the Class A Stock under the 1934 Act at the
present time, the Board has determined that it will terminate
registration of Class A Stock under the 1934 Act as soon as
practical following the Reverse Stock Split absent any
significant changes in the foregoing considerations that would
result in the Board determining that the benefits of continued
registration would outweigh the disadvantages. The Board does
not foresee any such change in circumstance in the reasonably
near future. See also the section contained herein captioned
"Purpose and Reason for the Reverse Stock Split Proposal."
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 about the
Company. 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 the purchase and sale of
the stock, the liquidity and market value of the shares of Class
A Stock will be adversely affected.
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). Control of the
Company by Messrs. Stephen P. Conway and Jerry B. Conway as
generally described in the information contained herein in the
section captioned "Security Ownership and Certain Beneficial
Owners and Management," will not be materially affected by the
Reverse Stock Split.
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 is fewer than 300. In addition, because the new
Class A Stock will be held by fewer than 300 registered holders,
the Company will be relieved of the obligation to comply with the
proxy rules of Regulation 14A under Section 14 of the 1934 Act,
its officers and directors and stockholders owning more than 10%
of the Class A Stock will be relieved of certain reporting
obligations under the 1934 Act, and the Company will cease filing
periodic reports under the 1934 Act.
<PAGE>
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 10 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.
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.
<PAGE>
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 such 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 the 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 to receive the 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 of Class A
Stock shall be adjusted to reflect the right to receive one or
more shares of new Class A Stock on a 20-for-1 basis.
Certain Effects of Reverse Stock Split Proposal on the Company's
Stockholders
1. Rights, Preferences and Limitations. There are no material
differences between the respective rights, preferences or
limitations of the existing Class A Stock and Class B Stock and
the "new" Class A Stock and the "new" Class B Stock.
2. 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.
3. 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, will be
as follows:
Class Number of Shares Number of
Shareholders
----------- ------------------ --------------
Class A 116,385 110
Class B 25,107 2
The new Class A Stock will continue to be traded on the OTC
Electronic 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 registration of the new Class A Stock
under the 1934 Act, 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.
4. 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.
<PAGE>
5. 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 terminate this registration 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 of the intended termination of registration
of the Class A Stock 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.
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.
<PAGE>
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.
Intention to Terminate Public Registration
The Company intends to terminate public registration of the
new Class A Stock with the SEC under the 1934 Act as soon as
practicable after approval of the Reverse Stock Split proposal by
the stockholders. 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. See also
the discussion of this issue in the section contained herein
captioned "Fairness of Reverse Stock Split Proposal."
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, ArtSelect, Inc. 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
November 30, 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 Shares Number of Shares Total Percent
Name Directly Owned Beneficially Owned Shares of Class
--------------------------- ------------------ -------------------- -------- ----------
<S> <C> <C> <C> <C>
Stephen P. Conway (5) 7,300 800,277 (1) 807,577 34.6%
790 Pershing Road
Raleigh, North Carolina 27608
Jerry B. Conway (5) 142,430 798,277 (2) 940,707 40.3%
790 Pershing Road
Raleigh, North Carolina 27608
D. Fredrico Fazio 302,159 0 302,159 13.0%
633 South Andrews Avenue
Suite 500
Fort Lauderdale, Florida 33301
Anthony J. Beisler, III 46,082 39,060 (3) 85,142 3.6%
1001 Northeast 26th Street
Fort Lauderdale, Florida 33305
Pennzoil Products Company 759,477 (4) 0 759,477 (4) 32.6%
Pennzoil Place
Post Office Box 2967
Houston, Texas 77252-2967
Kathleen D. Conway (5) 202,229 0 202,229 8.7%
P.O. Box 2091
Blowing Rock, North Carolina 28605
Richard L Rubin 500 0 500 0.0%
503 East Fillmore
Fairfield, Iowa 52556
R. Lewis Stanford 4,600 0 4,600 0.2%
790 Pershing Road
Raleigh, North Carolina 27608
All directors and executive 519,818 839,337 1,359,155 58.3%
officers as a group (12 persons)
</TABLE>
<PAGE>
Class B Common Stock
--------------------
Number of Shares Percent
Name Directly Owned of Class
------------------------------- ---------------- --------
Stephen P. Conway (5) 292,409 58.2%
790 Pershing Road
Raleigh, North Carolina 27608
Jerry B. Conway (5) 209,746 41.8%
790 Pershing Road
Raleigh, North Carolina 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) 38,800 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) 38,800 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.
5. Stephen P. Conway and Jerry B. Conway are brothers.
Kathleen Conway is the former wife of Stephen P. Conway.
<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
Third 2000 1.75 .88
FINANCIAL AND OTHER INFORMATION
The information contained in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, including
the financial statements contained under the caption "Selected
Financial Data" on page 7 therein, along with the Company's
Quarterly Report on Form 10-Q for the third fiscal quarter ended
September 30, 2000, both of which have been 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/ 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 __________________.
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_______________.
LUCOR, INC.
By:___________________________
Stephen P. Conway,
Chairman and
Chief Executive Officer
ATTEST:
By: _______________________________
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 ___________________, 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 APPROVAL OF THE AMENDMENT DESCRIBED 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
_____________________________________________
<PAGE>
