<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Exchange Act Rule 14a-11(c) or 14a-12
SPECIALTY TELECONSTRUCTORS, INC.
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(Name of Registrant as Specified In Its Charter)
SPECIALTY TELECONSTRUCTORS, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which the transaction applies:
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3) Per unit or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
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4) Proposed maximum aggregate value of transaction:
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/ / Check box if any part of the fee is offset by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration Statement No.
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3) Filing Party:
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4) Date Filed:
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Set forth the amount on which the filing fee is calculated and state how it was
determined.
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SPECIALTY TELECONSTRUCTORS, INC.
12001 Hwy. 14 North
Cedar Crest, New Mexico 87008
October 7, 1996
DEAR STOCKHOLDER:
You are cordially invited to attend the annual meeting of the
stockholders (the "Meeting") of Specialty Teleconstructors, Inc. (the "Company")
to be held on November 1, 1996, at 10:00 a.m., local time, at the La Posada de
Albuquerque Hotel, 125 Second Street, N.W., Albuquerque, New Mexico 87102.
The proposals for the Meeting relate to: (i) the election of four (4)
directors; (ii) an amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of Common Stock; (iii) a proposal to
approve and ratify the amendment and restatement of the Company's 1994 Incentive
Stock Option Plan (the "1994 Option Plan" and as amended and restated, the
"Amended and Restated 1994 Option Plan") pursuant to which the number of shares
of Common Stock available for awards under the 1994 Option Plan was increased
from 100,000 to 400,000; (iv) ratification of the Board of Directors'
appointment of KPMG Peat Marwick LLP, independent certified public accountants,
as auditors for the Company for the fiscal year ending June 30, 1997. A copy of
the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1996 accompanies this Proxy Statement.
We look forward to seeing you at the Meeting. Whether or not you are
planning to attend, we urge you to return the enclosed proxy at your earliest
convenience.
Sincerely,
Michael R. Budagher
Chairman of the Board,
President, Chief Executive
Officer and Treasurer
<PAGE>
SPECIALTY TELECONSTRUCTORS, INC.
12001 Hwy. 14 North
Cedar Crest, New Mexico 87008
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On November 1, 1996
-------------------------
TO THE STOCKHOLDERS OF SPECIALTY TELECONSTRUCTORS, INC.:
The annual meeting of stockholders (the "Meeting") of Specialty
Teleconstructors, Inc. (the "Company") will be held on November 1, 1996, at
10:00 a.m., local time, at the La Posada de Albuquerque Hotel, 125 Second
Street, N.W., Albuquerque, New Mexico 87102, for the following purposes:
I. To elect four (4) directors to hold office until the
Company's next annual meeting of stockholders;
II. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation increasing the number of
authorized shares of Common Stock from 7,500,000 to
10,000,000;
III. To consider and vote upon a proposal to a proposal to approve
and ratify the the amdendment and restatement of the
Company's 1994 Incentive Stock Option Plan (the "1994 Option
Plan" and as amended and restated, the "Amended and Retstated
1994 Option Plan") pursuant to which the number of shares of
Common Stock available for awards under the 1994 Option Plan
was increased from 100,000 to 400,000;
IV. To ratify the Board of Directors' appointment of KPMG Peat
Marwick LLP, independent certified public accountants, as
auditors for the Company for the fiscal year ending June 30,
1997; and
V. To transact such other business as may properly come before
the Meeting.
The close of business on October 7, 1996 has been fixed as the record
date for the Meeting. Only stockholders of record of the Company at that time
are entitled to notice of and to vote at the Meeting or any adjournment(s) or
postponement(s) thereof.
All stockholders of the Company are cordially invited to attend the
Meeting. Proxies for the Meeting are being solicited by the Board of Directors
of the Company. Reference is made to the attached proxy for further information
with respect to the business to be transacted at the Meeting. YOUR VOTE IS
IMPORTANT. STOCKHOLDERS ARE URGED TO DESIGNATE THEIR CHOICES ON EACH OF THE
MATTERS TO BE ACTED UPON AND TO DATE, SIGN, AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
YOUR PROMPT RETURN OF THE PROXY WILL HELP ASSURE A QUORUM AT THE MEETING AND
AVOID THE ADDITIONAL FUND EXPENSE OF FURTHER SOLICITATION.
By order of the Board of Directors
Dennis K. Hartnett
Secretary
October 7, 1996
Cedar Crest, New Mexico
<PAGE>
SPECIALTY TELECONSTRUCTORS, INC.
12001 Hwy. 14 North
Cedar Crest, New Mexico 87008
------------------------------
PROXY STATEMENT
------------------------------
The enclosed proxy is solicited by the Board of Directors of Specialty
Teleconstructors, Inc. (the "Company"), a Nevada corporation, for use at the
annual meeting of stockholders of the Company (the "Meeting") to be held on
November 1, 1996, at 10:00 a.m., local time, at the La Posada de Albuquerque
Hotel, 125 Second Street, N.W., Albuquerque, New Mexico, 87102, or any
adjournment(s) or postponement(s) thereof. This Proxy Statement and accompanying
proxy are first being mailed to stockholders on or about October 7, 1996.
VOTING AT THE ANNUAL MEETING; REVOCATION OF PROXIES
The record date for determining the stockholders entitled to notice of and to
vote at the Meeting has been fixed at the close of business on October 7, 1996
(the "Record Date"). As of such date, the Company had 4,092,308 shares of common
stock, par value $.01 per share ("Common Stock")outstanding, each of which is
entitled to one (1) vote as to all matters to be acted upon at the Meeting.
Only stockholders of record at the close of business on the Record Date will be
entitled to vote at the Meeting or any adjournment(s) or postponement(s)
thereof. The presence, in person or by proxy, of holders entitled to cast at
least a majority of the votes that all stockholders are entitled to cast on each
matter to be acted upon at the Meeting will constitute a quorum at the Meeting.
The Board of Directors does not intend to bring any matter before the Meeting
other than the matters specifically referred to in the notice of the Meeting,
nor does the Board of Directors know of any matter which anyone else proposes to
present for action at the Meeting. However, if any other matter properly comes
before the Meeting, the persons named in the accompanying proxy or their duly
constituted substitutes acting at the Meeting will be deemed authorized to vote
or otherwise act thereon in accordance with their judgment on such matter.
Proxies indicating a vote against the proposals contained herein may not be
voted by the persons marked in the accompanying proxy or their duly constituted
substitutes for adjournment of the Meeting.
WHITE proxy card(s) for use by stockholders are enclosed herewith. Properly
executed proxies will be voted in accordance with the instructions therein. In
the absence of instruction, the shares of Common Stock represented at the
Meeting by the enclosed proxy will be voted (i) FOR the election of each of the
nominees of the Board of Directors in the election of directors, (ii) FOR the
proposal to amend the Company's Certificate of Incorporation increasing the
number of authorized shares of Common Stock from 7,500,000 to 10,000,000; (iii)
FOR the proposal to approve and ratify the amendment and restatement of the
Company's 1994 Incentive Stock Option Plan (the "1994 Option Plan" and as
amended and restated, the "Amended and Restated 1994 Option Plan") pursuant to
which the number of shares of Common Stock available for awards under the 1994
Option Plan was increased from 100,000 to 400,000; and (iv) FOR the ratification
of the appointment of KPMG Peat Marwick LLP, independent certified public
accountants, as auditors for the Company for the fiscal year ending June 30,
1997. Any stockholder giving a proxy may revoke it at any time prior to its use
at the Meeting by (i) giving written notice of revocation to the Secretary of
the Company or (ii) executing and delivering to the Company a later dated proxy.
Mere attendance at the Meeting, without submitting such written notice of
revocation, will not revoke the proxy.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1996 accompanies this Proxy Statement. In addition, the Company will
furnish without charge to any stockholder, upon written or oral request, a copy
of the Company's Annual Report on Form 10-KSB for the fiscal year ended June 30,
1996 and other documents filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934. Requests for such documents should be
addressed to Dennis K. Hartnett, Corporate Secretary of Specialty
Teleconstructors, Inc., 12001 Hwy. 14 North, Cedar Crest, New Mexico 87008,
telephone number (505) 281-2197, ext. 102.
Questions concerning the voting of your shares should be directed to Dennis K.
Hartnett,
<PAGE>
Corporate Secretary of Specialty Teleconstructors, Inc., 12001 Hwy. 14 North,
Cedar Crest, New Mexico 87008, telephone number (505) 281-2197, ext. 102.
SOLICITATION OF PROXIES
The expense of the solicitation of proxies will be borne by the
Company. Solicitations may also be made by certain members of senior management
of the Company without additional compensation. Proxies will be solicited by use
of the mails and may also be solicited personally or by telephone, telegraph,
telegram, cablegram, facsimile or other electronic transmission. Bankers,
brokers and others holding stock in their names or in the names of nominees will
be reimbursed for out-of-pocket expenses incurred in forwarding proxies and
proxy materials to the beneficial owners of such shares.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth as of September 18, 1996, the beneficial
ownership of each current director, each nominee for director, each executive
officer ("Named Executive Officer") of the Company who received total annual
salary and bonus exceeding $100,000 for the last fiscal year, all executive
officers and directors as a group, and each stockholder known to management of
the Company to own beneficially more than 5% of the outstanding common stock.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS(2)
- - - ------------------------ ----------------------- -----------
<S> <C> <C>
Michael R. Budagher 2,370,000(3) 57.91%
12001 Hwy 14 North
Cedar Crest, New Mexico 87001
Bruce P. Budagher 307,750(4) 7.52%
12001 Hwy 14 North
Cedar Crest, New Mexico 87001
John D. Emery 11,500(5) *
Corporate Development Center, Inc.
1613 University Blvd.
Terry D. Farmer 10,000(5) *
Moses, Dunn, Farmer & Tuthill, P.C.
612 First Street N.W.
Albuquerque, New Mexico 87102
Jon D. Word 10,000(5) *
10526 City Lights Drive, N.E.
Albuquerque, New Mexico 87111
All directors and executive officers as a group, 2,401,500(6) 58.26%
including those names above (4 persons)
</TABLE>
- - - ----------------
*Less than 1.0%
(1) Unless otherwise noted and subject to community property laws, where
applicable, the persons named in the table above have sole voting and investment
power with respect to all shares of common stock shown as beneficially owned by
them.
(2) Shares not outstanding but deemed beneficially owned by virtue of the
right of a person or member of a group to acquire them within 60 days are
treated as outstanding only when determining the amount and percent owned by
such person or group.
(3) Consists entirely of shares owned by the Budagher Family Limited
Partnership #1 (the "Budagher Family Partnership") of which Michael R. Budagher
is the sole general partner. As the sole general partner of the Budagher Family
Partnership, Michael R. Budagher has sole voting and investment power with
respect to these shares.
(4) Includes 7,500 shares subject to options exercisable within 60 days.
(5) Includes 10,000 shares subject to options exercisable within 60 days
(6) Includes 30,000 shares subject to options exercisable within 60 days.
<PAGE>
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS
The following tables sets forth certain information regarding compensation,
aggregate stock option grants and exercises during the fiscal year ended
June 30, 1996 values for the Chief Executive Officer and each Named Executive
Officer.
SUMMARY COMPENSATION TABLE
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<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------ ---------------------------------
Awards Payouts
----------------------- -------
Other Restricted Securities All other
Name and Annual Stock Underlying LTIP Compen-
Principal Salary Bonus Comp. Award(s) Options/ Payouts sation(1)
Position Year ($) ($) ($) ($) SARs (#) ($) ($)
- - - -------- --- ------ ----- ------ ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael R. 1996 $ 85,000 -- -- -- -- -- --
Budagher 1995 $100,000 -- -- -- -- -- $16,374
(C.E.O.) 1994 $117,645 -- -- -- -- -- --
</TABLE>
==============================================================================
(1) Reflects employer contributions under the Specialty Constructors, Inc.
Profit Sharing Plan.
Neither the Chief Executive Officer nor any Named Executive Officer received
personal benefits, securities or property in excess of the lesser of $50,000 or
10% of such individual's reported salary and bonus. Neither the Chief Executive
Officer nor any Named Executive Officer has any employment agreement with the
Company or any of its subsidiaries.
Stock Options
No options to purchase Common Stock of the Company were granted to the Chief
Executive Officer or any Named Executive Officer in the fiscal year ended June
30, 1996. At June 30, 1996, neither the Chief Executive Officer nor any Named
Executive Officer held any unexercised options to purchase shares of the
Company's common stock and no such options were exercised during the fiscal year
ended June 30, 1996.
Compensation of Directors
Directors receive $500 for each Board of Directors meeting attended and
reimbursement for expenses incurred in attending such meetings. In addition,
Directors who serve on committees receive $100 per hour for time spent attending
meetings of such committees.
Benefit Plans
The Amended and Restated 1994 Option Plan
The Company's 1994 Option Plan was approved by the Board of Directors and
Stockholders of the Company on May 16, 1994 to provide for the grant of
incentive stock options within the meaning of Section 422 of the Internal
Revenue Code of 1986 as amended. A total of 100,000 shares of Common Stock was
originally authorized and reserved for issuance under the 1994 Option Plan
subject to adjustment to reflect changes in the Company's capitalization in the
case of a stock split, stock dividend or similar event. In addition, during
fiscal 1996, the Board of Directors approved the amendment and restatement of
the 1994 Option Plan (as amended and restated, the "Amended and Restated 1994
Option Plan") to increase the number of share authorized for issuance under the
1994 Option Plan from 100,000 to 400,000. The effectiveness of the Amended and
Restated 1994 Option Plan and the grant of certain options under the Amended and
Restated 1994 Option Plan to employees and advisors during fiscal 1996 were made
subject to ratification of the Amended and Restated 1994 Option Plan by the
Company's stockholders and is the subject of Proposal III discussed below. A
copy of the Amended and Restated 1994 Option Plan is attached as Exhibit B to
this Proxy Statement. The Amended and Restated 1994 Option Plan is administered
by the Compensation Committee, which consists of the Company's three Outside
Directors. Outside Directors means only those directors of the Company or a
subsidiary of the Company who are not regular salaried employees of either the
Company or a subsidiary as of the date the option is granted. The Compensation
Committee has the sole authority to interpret the Amended and Restated 1994
Incentive Stock Option Plan; provided that, (i) the exercise price of each
option granted
<PAGE>
under the 1994 Incentive Stock Option Plan may not be less than the fair market
value of the Common Stock on the day of the grant of the option, (ii) the
exercise price must be paid in cash and or stock upon exercise of the option,
(iii) no option may be exercisable for more than 10 years after the date of
grant, and (iv) no option is transferable other than by will or the laws of
descent and distribution. No option is exercisable after an optionee who is an
employee of the Company ceases to be employed by the Company or a subsidiary of
the Company, subject to the right of the Compensation Committee to extend the
exercise period for not more than 90 days following the date of termination of
an optionee's employment. An optionee who was a director or advisor may exercise
his option at any time within 90 days after such optionee's status as a director
or advisor terminates to the extent he was entitled to exercise such option at
the date of termination of his status. If an optionee's employment is terminated
by reason of disability, the Compensation Committee has the authority to extend
the exercise period for not more than one year following the date of termination
of the optionee's employment or service as an advisor or director. If an
optionee dies and shall hold options not fully exercised, such options may be
exercised in whole or in part within one year of the optionee's death by the
executors or administrators of the optionee's estate or by the optionee's heirs.
The vesting period, if any, specified for each option will be accelerated upon
the occurrence of a change of control or threatened change of control of the
Company.
As of September 18, 1996, 29,695 options had been issued and remained
outstanding under the Amended and Restated 1994 Option Plan which issuance was
not subject to approval by the Company's stockholders of Proposal III described
below. In addition, as of September 18, 1996, 270,000 options had been issued
under the Amended and Restated 1994 Option Plan subject to approval by the
Company's stockholders of Proposal III described below. If Proposal III is
approved by the Company's stockholders, then 100,305 options will remain
available for issuance under the Amended and Restated 1994 Option Plan.
A total of 277,500 options were granted under the Amended and Restated 1994
Option Plan during the fiscal year ended June 30, 1996, of which 270,000 options
were granted subject to approval by the Company's stockholders of Proposal III
described below. As of September 18, 1996, none of the shares of Common Stock
reserved for issuance under the Amended and Restated 1994 Option Plan had been
issued.
The Outside Directors Stock Option Plan
The Outside Directors Stock Option Plan (the "Outside Directors Option Plan")
was approved by the Board of Directors and Stockholders of the Company on May
16, 1994. A total of 50,000 shares of Common Stock has been authorized and
reserved for issuance under the Outside Directors Option Plan, subject to
adjustment to reflect changes in the Company's capitalization in the case of a
stock split, stock dividend or similar event. The Outside Directors Option Plan
is currently administered by the entire Board of Directors. Until June 14, 1996,
the Outside Directors Option Plan was administered by the Stock Option Committee
of the Board of Directors which consisted of Michael R. Budagher and Kari A.
Young. Following Ms. Young's resignation on June 14, 1996 as Chief Financial
Officer, Treasurer, Secretary and a Director of the Company, in accordance with
the terms of the Outside Directors Option Plan, the Outside Directors Option
Plan began being administered by the entire Board of Directors. Currently, the
Board of Directors has the sole authority to interpret the Outside Directors
Option Plan to determine the persons to whom options will be granted, to
determine the basis upon which the options will be granted and to determine the
exercise price, duration and other terms of options to be granted under the
Outside Directors Option Plan; provided that, (i) the exercise price of each
option granted under the Plan may not be less than the fair market value of the
Common Stock on the day of the grant of the option, (ii) the exercise price must
be paid in cash and or stock upon exercise of the option, (iii) no option may be
exercisable for more than 10 years after the date of grant, and (iv) no option
is transferable other than by will or the laws of descent and distribution. If
an optionee's status as an Outside Director is terminated for any reason other
than death, the optionee may exercise his option at any time within 90 days
after such termination to the extent it was then exercisable. If an optionee
dies while an Outside Director and shall not have fully exercised options
granted under the Outside Directors Option Plan, such options may be exercised
in whole or in part within six months of the optionee's death by the executors
or administrators of the optionee's estate or by the optionee's heirs. The
vesting period, if any, specified for each option will be accelerated upon the
occurrence of a change of control or threatened change of control of the
Company.
Options under the Outside Directors Option Plan are granted only to Outside
Directors. Outside Directors shall mean only those directors of the Company or a
subsidiary of the Company who are not regular salaried employees of either the
Company or a subsidiary as of
<PAGE>
the date the option is granted. As of September 18, 1996, 30,000 options had
been issued under the Outside Directors Stock Option Plan and 20,000 options
remain available for issuance under the Outside Directors Stock Option Plan. No
stock options were granted under the Outside Directors Stock Plan during the
fiscal year ended June 30, 1996. As of September 18, 1996, none of the shares of
Common Stock reserved for issuance under the Outside Directors Option Plan had
been issued.
MATTERS TO BE ACTED UPON BY THE STOCKHOLDERS AT THE MEETING.
PROPOSAL I
ELECTION OF DIRECTORS
Election
The By-Laws of the Company provide that the Board of Directors shall be composed
of one (1) to seven (7) Directors, with such number to be fixed by the Board of
Directors. Following the resignation of the Ms. Kari A. Young on June 14, 1996
as Chief Financial Officer, Treasurer, Secretary and a Director of the Company,
the Board of Directors reduced the number of Directors comprising the Board of
Directors from five (5) to four (4). Currently, the number of Directors of the
Company, as fixed by the Board of Directors, is four (4) Directors. The Company
is nominating four (4) Directors, all of whom are bing nominated for re-election
at the Meeting. Each of the four (4) Directors to be elected at the Meeting will
be elected by the holders of the Common Stock.
Set forth below is certain information with respect to the persons nominated by
the Board of Directors. With respect to each such person, such information
includes his age, the period during which he has served as a Director of the
Company and his principal occupation and employment during the past five years.
All nominees are currently Directors of the Company. Unless otherwise specified
on the enclosed proxy card, each proxy received from the holders of shares of
Common Stock will be voted for the election as Directors of the four (4)
nominees named below as nominees to serve until the next annual meeting of
stockholders and until a successor in office shall be duly elected and
qualified. Each of the nominees has consented to be named as a nominee in this
Proxy Statement and to serve as a Director if elected. Should any nominee become
unable or unwilling to accept his nomination or election, the persons named in
the enclosed proxy will vote for the election of a nominee designated by the
Board of Directors.
Vote Required for Approval
The four (4) Directors are required to be elected by a plurality of the votes
cast as to the subject Board seat. Votes may be cast in favor of or withheld for
any or all of the appropriate nominees. Unless otherwise instructed by a record
holder submitting a proxy, the persons named in a proxy will vote the shares
represented thereby for the election of all such appropriate nominees.
Abstentions and broker non-votes will not be counted toward a nominee's
achievement of a plurality and thus will have no effect on the outcome of the
election of Directors.
The Board of Directors unanimously recommends a vote FOR each of the nominees
listed below.
The following persons have been nominated for election as Directors:
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS BY HOLDERS
OF THE COMPANY'S COMMON STOCK
<TABLE>
<CAPTION>
Name Age Description
- - - ---- --- -----------
<S> <C> <C>
Michael R. Budagher(1) 38 Mr. Budagher founded the Company in 1981 and
has been Chairman of the Board, President,
Chief Executive Officer and a Director of the
Company since its inception. Mr. Budagher was
appointed Treasurer of the Company in May,
1996. Mr. Budagher is also a founder,
stockholder and President of Specialty
Antenna Site Resources, Inc. ("SASR") and a
founder, stockholder and President of
Specialty Constructors Coatings, Inc.
("SCC"). See "ITEM 12. CERTAIN RELATIONSHIPS
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
AND RELATED TRANSACTIONS."
John D. Emery(2)(3) 49 Mr. Emery has been a Director of the Company
since 1994. For more than five years, Mr.
Emery has been president of Corporate
Development Center, Inc., a consulting firm
specializing in assisting fast growth
companies, arranging mergers and
acquisitions, rendering expert valuations,
and providing crisis management
services to businesses. In addition, Mr.
Emery has taught Entrepreneurship, Business
Ethics and Organizational Environment, and
Business Policy and Strategy at the
University of New Mexico. Mr. Emery holds a
Master of Business Administration from the
Harvard Business School.
Terry D. Farmer(2)(3) 47 Mr. Farmer has been a Director of the Company
since 1994. Mr. Farmer has been a
stockholder, officer and director of the
Albuquerque law firm of Moses, Dunn, Farmer &
Tuthill, P.C. for more than five years. Mr.
Farmer is a past President of the Albuquerque
Lawyers Club and the Young Lawyers Division
of the State Bar of New Mexico. In 1994, Mr.
Farmer was elected a fellow in the New Mexico
Bar Foundation. See "ITEM 12. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS."
Jon D. Word(2)(3) 35 Mr. Word has been a Director of the Company
since 1994. Mr. Word has been President and
Chief Executive Officer of Contact New
Mexico, L.P., a paging and Messaging service
provider in New Mexico and Southern Colorado
since August, 1992. Mr. Word also is an
owner and director of Rural Telco, Inc., a
cellular telephone provider in North Carolina
and is President and Director of Word SMR,
Inc. which holds specialized mobile radio
licenses in several locations throughout the
United States. In 1991 and 1992, Mr. Word
was a consultant in the wireless
telecommunications industry and from 1988
through 1991 he was Vice President of
Operations for Cellular Information Systems,
Inc., a wireless communications company. Mr.
Word received a Bachelor of Science Degree
from Texas A&M University in 1984.
</TABLE>
- - - - -------------------
(1) Member of the Stock Option Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
Meetings of the Board of Directors and its Committees
During the fiscal year ended June 30, 1996, there were four (4) meetings of the
full Board of Directors. All nominees attended at least 75% of the meetings held
during their terms as Directors. The Company's Board of Directors has an Audit
Committee, a Compensation Committee and a Stock Option Committee. Each committee
met at least once during the fiscal year ended June 30, 1996. All committee
members attended at least 75% of all committee meetings held during their terms
as members of such committees.
Audit Committee. The Audit Committee is currently composed of three (3)
non-employee Directors. The current members of the Audit Committee are Messrs.
Emery, Farmer and Word. This committee meets with the Company's independent
public accountants to review the scope and results of auditing procedures and
the Company's accounting procedures and controls. The Audit Committee also
provides general oversight with respect to the accounting principles employed in
the Company's financial reporting. The Audit Committee met one (1) time during
<PAGE>
the fiscal year ended June 30, 1996.
Compensation Committee. The Compensation Committee is composed of three
(3) non-employee Directors. The current members of the Compensation Committee
are Messrs. Emery, Farmer and Word. The Compensation Committee is responsible
for determining and reviewing the compensation of the officers of the Company,
including the Company's Chief Executive Officer. The Compensation Committee
determines and reviews executive bonus plan targets and allocations and
administers the terms and provisions of the Company's 1994 Option Plan. The
Compensation Committee met one (1) time during the fiscal year ended June 30,
1996.
Stock Option Committee. The Stock Option Committee is composed of two (2)
Directors who are not eligible to receive stock options under the Company's
Outside Directors' Stock Option Plan (the "Outside Directors' Stock Option
Plan"). Currently, Mr. Budagher is a member of the Stock Option Committee and a
vacancy exists on the Stock Option Committee which was caused by the resignation
on June 14, 1996 of Ms. Kari A. Young as the Company's Chief Financial Officer,
Assistant Secretary, Treasurer and a Director and a member of the Stock Option
Committee. Normally, the Stock Option Committee administers the terms and
provisions of the Outside Directors' Plan. However, due to the vacancy created
by the resignation of Ms. Young, in accordance with the terms of the Outside
Directors' Plan, the Outside Directors' Plan currently is being administered by
the entire Board of Directors. The Stock Option Committee met one (1) time
during the fiscal year ended June 30, 1996.
PROPOSAL II
APPROVAL OF AN AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION TO INCREASE THE NUMBER OF
AUTHORIZED SHARES OF COMMON STOCK FROM
7,500,000 to 10,000,000
On September 16, 1996, the Board of Directors unanimously adopted a resolution
approving a proposal to amend the first paragraph of Article Fourth of the
Company's Articles of Incorporation increasing the number of shares of Common
Stock which the Company is authorized to issue from 7,500,000 to 10,000,000. The
Board of Directors determined that such an amendment is advisable and directed
that the proposed amendment be considered by the Company's stockholders at the
Meeting.
The full text of the first paragraph of Article Three of the Company's Articles
of Incorporation, if amended as proposed, will be as follows:
"Section 3.01. Number and Class. The amount of the total authorized
capital stock of this corporation is TEN MILLION (10,000,000) shares,
par value one cent ($.01) per share, designated as common stock. The
Common Stock may be issued from time to time without action by the
stockholders. The Common Stock may be issued for such consideration as
may be fixed from time to time by the Board of Directors."
The relative rights and limitations of the Common Stock would remain unchanged
under the proposed amendment. A copy of the proposed amendment is attached as
Exhibit A to this Proxy Statement.
Purposes and Effects of Increasing the Number of Authorized Shares of Common
Stock
The proposed amendment would increase the number of shares of Common Stock which
the Company is authorized to issue from 7,500,000 to 10,000,000. The additional
2,500,000 shares, if and when used, would have the same rights and privileges as
the shares of Common Stock presently issued and outstanding. The holders of
Common Stock of the Company are not entitled to preemptive rights or cumulative
voting.
On the Record Date, the Company had 4,092,308 shares of Common Stock issued and
outstanding. In addition, as of such date, an aggregate of approximately 800,000
shares of Common Stock were reserved or allocated for issuance by the Company
(i) pursuant to the Company's 1994 Option Plan; (ii) upon exercise of the
Company's Redeemable Common Stock Purchase warrants issued in connection with
its 1994 initial public offering; (iii) upon exercise of the Underwriter's
Warrants issued in connection with its 1994 initial public offering and the
Redeemable Common Stock Purchase Warrants underlying said Underwriter's
Warrants; and (iv) pursuant to its Outside Directors Option Plan. Subject to
approval by the Company's stockholders of Proposal III described below, an
additional 300,000 shares of Common Stock were reserved for issuance by the
Company pursuant to the Company's Amended and Restated 1994 Option Plan.
After taking into account the number of currently issued and outstanding shares
of Common Stock together with the shares of Common Stock reserved or allocated
for issuance by the Company, the Company has 2,607,692 shares of Common Stock
which remain unreserved for issuance if Proposal III described below is not
approved by the Company's stockholders and 2,307,692 shares of Common Stock
which remain unreserved for issuance if Proposal III
<PAGE>
described below is so approved. The Board of Directors recommends the proposed
increase in the authorized number of shares of Common Stock to ensure that an
adequate number of authorized and unissued shares is available principally for
(i) the raising of additional capital for the operations of the Company and (ii)
the financing of the acquisitions of other businesses. Except as described
above, there are currently no plans or arrangements relating to the issuance of
any of the additional shares of Common Stock proposed to be authorized and such
shares would be available for issuance without further action by stockholders,
unless required by the Company's Articles of Incorporation, its By-Laws or by
applicable law.
The increase in the number of authorized shares of Common Stock has not been
proposed for any anti-takeover-related purpose, and the Board of Directors and
management of the Company have no knowledge of any current effort to obtain
control of the Company or accumulate large amounts of its Common Stock. However,
the availability of additional shares of Common Stock could make any attempt to
gain control of the Company or of the Board of Directors more difficult. Shares
of authorized but unissued Common Stock could be issued in an effort to dilute
the stock ownership and voting power of any person or entity desiring to acquire
control of the Company, which might have the effect of discouraging or making
less likely such a change of control. Such shares could also be issued to other
persons or entities who support the Board of Directors in opposing a takeover
attempt that the Board of Directors has deemed not to be in the best interests
of the Company and its stockholders.
Effective Date of Proposed Amendment
If the proposed amendment to Article Three of the Company's Articles of
Incorporation is adopted by the required vote of the Company's stockholders,
such amendment will become effective upon the filing by the Company of Articles
of Amendment to the Company's Articles of Incorporation with the Secretary of
the State of Nevada, which is expected to be accomplished as soon as practicable
after stockholder approval is obtained.
Vote Required for Approval
The proposal to approve the amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock to
10,000,000 shares of Common Stock described above requires the affirmative vote
of a majority of shares present in person or represented by proxy at the Meeting
for its approval. Abstentions may be specified on the proxy and will be
considered present at the Meeting, but will not be counted as affirmative votes.
Abstentions, therefore, will have the practical effect of voting against the
proposal because the affirmative vote of a majority of the shares present at the
Meeting is required to approve the proposal. Broker non-votes are considered not
present at the Meeting and, therefore, will not be voted or have any effect on
the proposal.
The Board of Directors unanimously recommends a vote FOR this proposal.
PROPOSAL III
APPROVAL OF AMENDMENTS TO THE COMPANY'S 1994 STOCK OPTION PLAN
The Proposal
At the Meeting, there will be presented to the stockholders a proposal to ratify
and approve the amendment and restatement of the Company's 1994 Incentive Stock
Option Plan (the "1994 Option Plan" and as amended and restated, the "Amended
and Restated 1994 Option Plan") pursuant to which the number of shares of Common
Stock available for awards under the 1994 Option Plan was increased from 100,000
to 400,000.
During the fiscal year ended June 30, 1996, options to purchase a total of
270,000 shares of Common Stock were under the Amended and Restated 1994 Option
Plan subject to approval of by the Company's stockholders of this Proposal III.
Of these options, 30,000 options were granted to the Company's chief accounting
officer, Dennis K. Hartnett in connection with the execution of his employment
agreement with the Company in June 1996. In addition, a total of 240,000 of such
options were previously granted to three non-executive officer employees and one
advisor of the Company in connection with the execution of their employment or
engagement agreements with the Company in May 1996 (collectively, the options
granted to these persons and to Mr. Hartnett are referred to as the "1996 Option
Grants"). All the 1996 Option Grants were made subject to stockholder approval
of this Proposal III. The options granted pursuant to the 1996 Option Grants
vest in installments beginning on July 1, 1996 and ending on July 1, 1998. In
its continuing effort to tailor the Company's compensation package to the
realities of the market and the interests of the Company's stockholders, the
Board of Directors believes the 1996 Option Grants and the availability of
additional options for grant in the future under the Amended and Restated 1994
Option Plan will serve to strengthen
<PAGE>
the mutuality of interests between the Company's line managers and the Company's
stockholders. Except for options granted to Dennis K. Hartnett, the Company's
chief accounting officer, none of the options described in the foregoing
paragraphs which are subject to this Proposal III were granted to any executive
officer or director of the Company.
The Board of Directors believes that the Amended and Restated 1994 Option Plan
is the proper mechanism through which to provide incentives to all members of
the Company's management team to increase stockholder value.
The changes to the 1994 Option Plan will not be effective unless and until
stockholder approval of the Amended and Restated 1994 Option Plan is obtained.
The Board of Directors believes that the ratification and approval of the
Amended and Restated 1994 Option Plan by stockholders is an important factor in
the Company's ability to attract and retain high-quality employees and advisors
and non-employee Directors. If this proposal is not approved by the
stockholders, none of the options granted or proposed to be granted as described
above will be issuable either pursuant to the 1994 Option Plan or pursuant to
the employment agreements described above. The effectiveness of the ratification
and approval of the Amended and Restated 1994 Option Plan is not contingent upon
approval of Proposal II.
If the proposed ratification and approval of the Amended and Restated 1994
Option Plan amendment is not approved at the Meeting, the only options issuable
pursuant to the 1994 Option Plan will be options pertaining to shares as to
which options remain available for issuance under the 1994 Option Plan.
Vote Required for Approval
The proposal to approve the ratification and approval of the Amended and
Restated 1994 Option Plan described above requires the affirmative vote of a
majority of shares present in person or represented by proxy at the Meeting for
its approval. Abstentions may be specified on the proxy and will be considered
present at the Meeting, but will not be counted as affirmative votes.
Abstentions, therefore, will have the practical effect of voting against the
proposal because the affirmative vote of a majority of the shares present at the
Meeting is required to approve the proposal. Broker non-votes are considered not
present at the Meeting and, therefore, will not be voted or have any effect on
the proposal.
Summary Description of the Amended and Restated 1994 Option Plan, as it applies
to Proposal III.
In May 1994 the Board of Directors adopted and the stockholders of the Company
approved the Company's 1994 Option Plan. The 1994 Option Plan also was ratified
by a majority of the Company's stockholders at the Company's annual meeting of
stockholders on November 10, 1995. As in effect, the 1994 Option Plan provides
for the granting of options intended to qualify as incentive stock options
("ISOs") as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). On May 23, 1996 the Board resolved to amend the 1994
Option Plan, subject to receipt of stockholder approval at the Meeting.
Accordingly, the Board of Directors has adopted the Amended and Restated 1994
Option Plan set forth as Exhibit B to this Proxy Statement, subject to approval
by the Company's stockholders of this Proposal III. The description of the First
Amendment to 1994 Option Plan contained herein is qualified in its entirety by
reference to such Exhibit.
General. Persons eligible for participation in the Amended and Restated 1994
Option Plan include officers, directors, employees and advisors who perform
services for the Company or a subsidiary company, and non-employee directors
("Eligible Participants"). Only Eligible Participants who are officers or other
employees of the Company or a subsidiary company are eligible to receive ISOs.
All Eligible Participants are eligible to receive options under the Amended and
Restated 1994 Option Plan that do not qualify for treatment as ISOs ("Non-
qualified Stock Options" or "NQSOs") and together with ISOs, "Stock Options").
Under the terms of the current 1994 Option Plan, options to purchase 100,000
shares of Common Stock are available for issuance. Approval and ratification of
the proposed Amended and Restated 1994 Option Plan would increase the maximum
number of shares of Common Stock that would be issuable under the 1994 Option
Plan by an additional 300,000 shares.
Administration. The Amended and Restated 1994 Option Plan is administered by a
committee of the Board consisting of not less than two persons who are
"disinterested persons" under Rule 16b-3 of the Securities Exchange Act of 1934
(the "Exchange Act") and "outside directors" under Section 162(m) of the Code
(the "Committee"). The Committee has full power to administer and interpret the
Amended and Restated 1994 Option Plan. The Company's Compensation Committee
serves as the "Committee" for the 1994 Option Plan.
The Shares. Each of the Stock Options will be granted for a term of ten years
from the date of grant, subject to earlier termination on the optionee's death,
disability or termination of employment or other relationship with the Company.
The Stock Options are subject to vesting, which commences on the date of grant
and ends on the date or dates determined by the Committee. In the event of a
change of control, as defined in the Amended and Restated 1994 Option Plan, all
options granted become immediately vested and exercisable. The Stock Options are
not assignable
<PAGE>
or otherwise transferrable except by will or the laws of descent and
distribution and, if permitted under Rule 16b-3 of the Exchange Act and the
Committee, pursuant to a qualified domestic relations order as defined under the
Code or Title I of ERISA. The exercise price of the Stock Option is payable in
cash, or, with the consent of the Committee, by delivering shares of Common
Stock already owned by the optionee, by a combination of cash and shares, or by
delivering a note approved by the Committee at the time of grant. Shares subject
to Stock Options granted under the Amended and Restated 1994 Option Plan which
lapse or terminate may again be granted under the Amended and Restated 1994
Option Plan. The Committee may offer to exchange new options for existing
options, with the shares subject to the existing options being again available
for grant under the Amended and Restated 1994 Option Plan.
Amendments. The Committee has the full authority to amend the Amended and
Restated 1994 Option Plan, except that stockholder approval is required to (i)
increase the number of shares available for the Amended and Restated 1994 Option
Plan, (ii) materially increase the benefits accruing to optionees, (iii)
materially modify the eligibility requirements for options granted under the
Amended and Restated 1994 Option Plan, (iv) increase the number of shares for
which any optionee may be granted Stock Options, or (v) modify the provisions
for determining fair market value under the Amended and Restated 1994 Option
Plan. If approved and ratified by the Company's stockholders, the Amended and
Restated 1994 Option Plan shall be effective as of May 23, 1996, and will
terminate on May 23, 2006, the tenth anniversary of its effective date.
Federal Income Tax Consequences. The federal income tax consequences of an
optionee's participation in the 1994 Option Plan are complex and subject to
change. The following discussion is only a summary of the general rules
applicable to Stock Options.
The tax consequences of a Stock Option depend on whether the Stock Option is an
ISO or a NQSO. An optionee will not recognize income at the time of a grant or
exercise of an ISO and the Company may not deduct the related expense at those
times. However, for purposes of the alternative minimum tax, the difference
between the exercise price and the fair market value of the stock will be
included in alternative minimum tax income. The optionee has a taxable event
only upon a later sale or disposition of the stock acquired pursuant to the
exercise of the ISO. The tax treatment of the disposition of the stock will
depend on when the optionee disposes of the stock. An optionee who sells stock
acquired pursuant to the exercise of an ISO within one year from the date of
exercise or within two years of the date of grant will recognize capital gain on
the sale of the stock and ordinary income equal to the difference between the
ISO's exercise price and the fair market value of the stock. An optionee who
disposes of stock after a date that is both two years after the grant and one
year after its exercise will recognize capital gain equal to the difference
between the amount received on disposition and the adjusted basis in the stock.
A different set of rules govern NQSOs. There are no federal income tax
consequences to the optionee or the Company upon the grant of NQSOs. Upon
exercise of a NQSO, the optionee will recognize ordinary income in the amount by
which the fair market value of the Stock Option exceeds the exercise price of
the Stock Option. The Company is allowed a deduction for federal income tax
purposes equal to the amount of ordinary income recognized by the optionee at
the time of exercise of NQSOs. The optionee's holding period for purposes of
determining whether any subsequently realized gain or loss will be long-term or
short-term will begin at the time the optionee recognizes ordinary income. If,
at the time of issuance of the option shares, the optionee is subject to the
restrictions of Section 16(b) of the Exchange Act, then the optionee generally
will recognize ordinary income as of the later of (i) the date of exercise, or
(ii) the expiration of six months from the date of option grant, based upon the
difference between the fair market value of the option shares at such time and
the exercise price.
Section 162(m). Under Section 162(m) of the Code, the Company may be precluded
from claiming a federal income tax deduction for total remuneration in excess of
$1,000,000 paid to the chief executive officer or to any of the other four most
highly compensated officers in any one year. Total remuneration would include
amounts received upon the exercise of Stock Options granted after February 17,
1993. An exception does exist, however, for "performance-based" remuneration,
including amounts received upon the exercise of Stock Options pursuant to a plan
approved by stockholders that meets certain requirements. The Option Plan is
intended to make option grants thereunder meet the requirements of
"performance-based" remuneration.
PROPOSAL IV
RATIFICATION OF APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors has, subject to the ratification by the stockholders,
appointed KPMG Peat Marwick LLP, independent certified public accountants, to
audit the financial statements of the Company for the fiscal year ending June
30, 1997. KPMG Peat Marwick, LLP has audited the financial
<PAGE>
statements of the Company for each of the three fiscal years ended June 30,
1996.
Vote Required for Approval
The proposal to ratify the appointment of KPMG Peat Marwick LLP requires the
affirmative vote of the majority of shares present in person or represented by
proxy at the Meeting for its approval. Abstentions may be specified on the
proposal and will be considered present at the Meeting, but will not be counted
as affirmative votes. Abstentions, therefore, will have the practical effect of
voting against the proposal because the affirmative vote of a majority of the
shares present at the Meeting is required to approve the proposal. Broker non-
votes are considered not present at the Meeting and, therefore, will not be
voted or have any effect on the proposal.
The Board of Directors unanimously recommends a vote FOR this proposal.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Set forth below is a description concerning transactions which may not otherwise
be described herein by and between the Company and/or its affiliates and other
persons or entities affiliated with the Company or its affiliates. The Company
is of the view that each of such transactions was on terms no less favorable to
the Company than would otherwise have been available to the Company in
transactions with unaffiliated third parties, if available at all.
Michael R. Budagher owns 52% of SASR. In 1990, SASR acquired approximately 200
microwave towers and related land from Western Union for future sale. SASR has
sold approximately 95% of these towers. The Company did not transact any
business with SASR during fiscal 1996. However, in fiscal 1994 and 1995, the
Company received $13,974 and $1,200, respectively, for services provided to SASR
and, for these respective fiscal years, provided management services to SASR in
exchange for the use of the certain equipment in the amount of $25,700 and $0.
The relationship with SASR is expected to be negligible in the future.
At September 1, 1996, Michael R. Budagher owned 50% of SCC. SCC provides lead
abatement services and finishes or refinishes metal structures, principally
water towers. During the years ended June 30, 1994, 1995 and 1996, the Company
had paid $17,449, $170,260 and $401,587, respectively, for services provided by
SCC to the Company. This relationship is expected to continue in the indefinite
future.
At September 1, 1996, Bruce P. Budagher, vice president of Specialty
Constructors and the brother of Michael R. Budagher, and Sheril E. Budagher, the
spouse of Michael R. Budagher, owned all of the outstanding stock of SMI. Prior
to August, 1996, Kari A. Young, who resigned in June, 1996 as Chief Financial
Officer, Secretary, Assistant Treasurer and a Director of the Company, owned 1/3
of the outstanding stock of SMI. Ms. Young's SMI stock was repurchased by SM as
of August, 1996. SMI manufactures devices that ground electric transmission
lines. The Company buys these devices from SMI for use in connection with
certain of the Company's wireless infrastructure building operations. During the
1994, 1995 and 1996 fiscal years, the Company purchased $6,403, $12,065 and
$13,285, respectively, of SMI products. This relationship is expected to
continue in the indefinite future.
The Company has utilized contract labor from Budagher's Nursery, Inc., a company
wholly owned by William J. Budagher, a brother of Michael R. Budagher and Bruce
P. Budagher. The Company paid $192,493, $126,884 and $92,391 for contract labor
services provided by Budagher's Nursery, Inc. for the years ended June 30, 1994,
1995 and 1996, respectively.
The Company leases its office building from Michael R. Budagher and the spouse
of Michael R. Budagher. The building has 6,400 square feet for which the Company
leases 5,400 square feet and pays $16,800 annually for the space. Management of
the Company believes that the rent for the space is at least as favorable as
could have been negotiated in an arms length transaction. The Company also
leases a vehicle from Bruce P. Budagher.
There are numerous conflicts of interest between the Company and its affiliates,
particularly between the Company and entities that are affiliated with
individuals having executive responsibility for the Company. Typically, these
include the possibility of channeling business to entities other than the
Company that is more appropriately business of the Company, the Company paying
excessive prices to affiliated entities, or the Company subsidizing the
affiliated entity by charging less than market rates.
Management of the Company believes that entities presently owned by affiliates
of the Company operate in businesses that are clearly distinct from those of the
Company. SCC operations are primarily involved in specialized coatings and lead
abatement of elevated water structures.
<PAGE>
Its activities require skills that are different from those required by the
Company and includes a high level of environmental risk. To date, the Board of
Directors did not want the Company to be involved with environmental concerns
surrounding lead abatement.
The Company has extensive experience in costing the services it provides, and
management believes that its costing to affiliated entities is consistent with
its general costing. Similarly, products or services received by the Company
from affiliated entities have been at substantially the same rates charged other
enterprises. The Company has compared these rates prior to engagement with
independent quotes or with rates charged by other entities. None of the
agreements or arrangements with affiliates are subject to adjustment.
While there has been no independent determination as to the fairness of the
Company's transactions with affiliated entities, the Company's Board of
Directors has reviewed these transactions and has found the terms of these
transactions to be fair and reasonable to the Company. Management believes that
the transactions with affiliated entities that occurred in the past have been
fair and reasonable to the Company and that practical measures have been taken
to assure that any such transactions in the future will be fair and reasonable
to the Company. Nonetheless, almost all transactions between the Company and
affiliated entities have been with entities that are controlled by Michael R.
Budagher. Michael R. Budagher controls the Company. As a result of this control,
Michael R. Budagher has the legal power to elect directors and thus elect those
that set the Company's policies, including policies involving related party
transactions, that is, should Michael R. Budagher determine to have a different
policy regarding transactions with affiliates, he has the power to elect
directors that would implement that new policy. Michael R. Budagher has no
intent to have any transaction with an affiliated entity that is not fair and
reasonable to the Company, now or in the future.
Each of Michael R. Budagher and Bruce P. Budagher have represented to the
Company that, notwithstanding his equity or other interest in the businesses
other than the Company described herein, he intends to devote substantially all
of his efforts during regular business hours to the business of the Company.
During the 1996 fiscal year, the Company engaged in transactions with the law
firm with which Mr. Farmer is associated. During the fiscal year ended June 30,
1996, the Company paid $32,665 to the law firm of Moses, Dunn, Farmer and
Tuthill, P.C. Mr. Farmer is a stockholder, officer and director of that firm.
OTHER MATTERS
Stockholder Proposals and Nominations for Directors for the Company's Next
Annual Meeting
Any stockholder who intends to present a proposal for consideration at the
Company's next annual meeting of stockholders intended to occur on or about
November 1, 1997 must, on or before June 7, 1997, submit his proposal to the
Company in order to have the Company consider the inclusion of such proposal in
the Company's Proxy Statement and form of proxy relating to such annual meeting.
Reference is made to Rule 14a-8 under the Securities Exchange Act of 1934, as
amended, for information concerning the content and form of such proposal and
the manner in which such proposal must be made.
Nominations for election to the Board of Directors at the Company's next annual
meeting may be made only in writing by a stockholder entitled to vote at such
annual meeting and must be addressed to the Secretary, Specialty
Teleconstructors, Inc., 12001 Hwy. 14 North, Cedar Crest, New Mexico 87008.
Nominations must be received by the Secretary on or before June 7, 1997, and
must be accompanied by the written consent of the nominee. Nominations should
also be accompanied by a description of the nominee's business or professional
background and otherwise contain the information required by Schedule 14A of the
Securities Exchange Act of 1934, as amended.
Other Business
The Board of Directors is not aware of any other matters that may be brought
before the Meeting. If other matters not now known come before the Meeting, the
persons named in the accompanying form of proxy or their substitutes will vote
such proxy in accordance with their judgment.
Section 16(a) Disclosure
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than ten percent of the
Company's Common Stock to file reports of ownership and changes in ownership
<PAGE>
with the Securities and Exchange Commission. Officers, directors and greater
than ten-percent owners are required by the Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on the Company's review of the copies of such forms received by it,
the Company believes that, during the fiscal year ended June 30, 1996, all
filing requriements applicable to its officers, directors and greater than ten-
percent owners were complied with except that Michael R. Budagher failed to
timely file one (1) Form 4.
Independent Public Accountants
Representatives of KPMG Peat Marwick, LLP are expected to be present at the
Meeting, will have the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
Annual Report on Form 10-KSB
A copy of the Company's Annual Report on Form 10-KSB which contains copies of
the Company's audited financial statements is being sent to stockholders with
this Proxy Statement.
IN ADDITION, THE COMPANY WILL FURNISH WITHOUT CHARGE TO ANY STOCKHOLDER, UPON
THE WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-KSB. REQUESTS FOR THIS REPORT SHOULD BE ADDRESSED TO DENNIS K.
HARTNETT, CORPORATE SECRETARY OF SPECIALTY TELECONSTRUCTORS INC., 12001 Hwy. 14
North, Cedar Crest, New Mexico 87008, TELEPHONE NUMBER (505) 281-2197.
<PAGE>
SPECIALTY TELECONSTRUCTORS, INC.
PROXY
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
I hereby constitute and appoint Michael R. Budagher and Dennis K.
Hartnett and each of them acting individually, my true and lawful agents and
proxies, with full power of substitution in each, to vote all shares held of
record by me at the Annual Meeting of Stockholders of Specialty
Teleconstructors, Inc. to be held on November 1, 1996 and any adjournments or
postponements thereof. I direct said proxies to vote as specified on the reverse
side.
UNLESS OTHERWISE SPECIFIED, ALL SHARES WILL BE VOTED FOR THE ELECTION OF ALL
NOMINEES LISTED AND FOR EACH OF THE PROPOSALS TO BE ACTED UPON AT THE MEETING.
THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY TO VOTE WITH RESPECT TO ANY
OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OF
POSTPONEMENT THEREOF.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY.
[Reverse Side]
1. Election of Directors
FOR all nominees listed below: / / WITHHOLD AUTHORITY / /
(except as indicated to the to vote for all nominees
contrary below) listed below:
To withhold authority to vote for any individual nominee, mark the box next to
such nominee's name.
Michael R. Budagher / / Terry D. Farmer / /
John D. Emery / / Jon D. Word / /
2. Proposal II to approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock
from 7,500,000 to 10,000,000.
FOR AGAINST ABSTAIN
/ / / / / /
3. Proposal III to approve and ratify the Amended and Restated 1994 Option Plan
increasing the number of shares of Common Stock available for awards under
the 1994 Option Plan from 100,000 to 400,000.
FOR AGAINST ABSTAIN
/ / / / / /
<PAGE>
4. Proposal IV to ratify the Board of Directors' appointment of KPMG Peat
Marwick LLP, independent certified public accountants, as auditors for the
Company for the fiscal year ended June 30, 1997.
FOR AGAINST ABSTAIN
/ / / / / /
THE UNDERSIGNED HEREBY REVOKES ALL
PREVIOUS PROXIES FOR THE MEETING
AND ACKNOWLEDGES RECEIPT OF THE
NOTICE OF ANNUAL MEETING AND PROXY
STATEMENT OF SPECIALTY TELECONSTRUCTORS,
INC.
Date:________________________, 1996
-----------------------------------
-----------------------------------
By:________________________________
NOTE: Please sign this proxy exactly
as name(s) appear in address. When
signing as attorney-in-fact,
executor, administrator, trustee or
guardian, please add your title
as such.
<PAGE>
EXHIBIT A
AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
SPECIALTY TELECONSTRUCTORS, INC.
TO THE SECRETARY OF STATE OF THE STATE OF NEVADA:
Pursuant to the provisions of the Nevada Business Corporation Act,
Specialty Teleconstructors, Inc., a Nevada corporation (the "Company"), adopts
the following Amendment to its Articles of Incorporation by repealing Section
3.01 of Article III thereof in its entirety, and substituting therefor a new
Section 3.01, as follows:
"Section 3.01. Number and Class. The amount of the total authorized
----------------
capital stock of this corporation is TEN MILLION (10,000,000) shares,
par value one cent ($.01) per share, designated as common stock. The
Common Stock may be issued from time to time without action by the
stockholders. The Common Stock may be issued for such consideration as
may be fixed from time to time by the Board of Directors."
This Amendment to the Articles of Incorporation was approved by the
stockholders of the Company on November 1, 1996, and the number of shares of
common stock of the Corporation voting for the Amendment were sufficient for
approval.
SPECIALTY TELECONSTRUCTORS, INC.
[SEAL] By:
-------------------------------
Michael R. Budagher, Chief
Executive Officer, President and
Treasurer
ATTEST:
- - - ------------------------------------
Dennis K. Hartnett, Secretary
STATE OF NEW MEXICO )
) SS:
COUNTY OF )
-------------
Before me, , a Notary Public in and for said County and State,
---
personally appeared Michael R. Budagher, who acknowledged before me that he is
the Chief Executive Officer, President and Treasurer of Specialty
Teleconstructors, Inc., a Nevada corporation, and that he signed the foregoing
Amendment to the Articles of Incorporation of Specialty Teleconstructors, Inc.
as his free and voluntary act and deed, for the uses and purposes therein set
forth, and that the facts contained therein are true.
In witness whereof I have hereunto set my hand and seal this ____ day
of November, 1996.
-----------------------------------------
Notary Public
- - - -----------
My Commission Expires:
- - - -----------------------------------
<PAGE>
EXHIBIT B
AMENDED AND RESTATED 1994 STOCK OPTION PLAN
OF
SPECIALTY TELECONSTRUCTORS, INC.
1. Purpose of Plan. This Amended and Restated 1994 Stock Option Plan
---------------
("Plan") is intended to encourage ownership of the common stock of SPECIALTY
TELECONSTRUCTORS, INC. ("Company") by certain officers, directors, employees and
advisors of the Company or any Subsidiary or Subsidiaries of the Company (as
hereinafter defined) in order to provide additional incentive for such persons
to promote the success and the business of the Company or its Subsidiaries and
to encourage them to remain in the employ of the Company or its Subsidiaries by
providing such persons an opportunity to benefit from any appreciation of the
common stock of the Company through the issuance of stock options and related
stock appreciation rights to such persons in accordance with the terms of the
Plan. It is further intended that options granted pursuant to this Plan shall
constitute either incentive stock options ("Incentive Options") within the
meaning of Section 422 (formerly Section 422A) of the Internal Revenue Code of
1986, as amended ("Code"), or options which do not constitute Incentive Options
("Nonqualified Options") as determined by the Committee (as hereinafter defined)
at the time of issuance of such options. Incentive Options, Nonqualified
Options and Reload Options (as defined in Section 11 hereof) are herein
sometimes referred to collectively as "Options". As used herein, the term
Subsidiary or Subsidiaries shall mean any corporation (other than the employer
corporation) in an unbroken chain of corporations beginning with the employer
corporation if, at the time of granting of the Option, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
2. Stock Subject to the Plan. Subject to adjustment as provided in
-------------------------
Section 14 hereof, there will be reserved for the use upon the exercise of
Options to be granted from time to time under the Plan, an aggregate of four
hundred thousand (400,000) shares of the common stock, no par value, of the
Company ("Common Stock"), which shares in whole or in part shall be authorized,
but unissued, shares of the Common Stock or issued shares of Common Stock which
shall have been reacquired by the Company as determined from time to time by the
Board of Directors of the Company ("Board of Directors"). To determine the
number of shares of Common Stock available at any time for the granting of
Options under the Plan, there shall be deducted from the total number of
reserved shares of Common Stock, the number of shares of Common Stock in respect
of which Options have been granted pursuant to the Plan which remain outstanding
or which have been exercised. If and to the extent that any Option to purchase
reserved shares shall not be exercised by the optionee for any reason or if such
Option to purchase shall terminate as provided herein, such shares which have
not been so purchased hereunder shall again become available for the purposes of
the Plan unless the Plan shall have been terminated, but such unpurchased shares
shall not be deemed to increase the aggregate number of shares specified above
to be reserved for purposes of the Plan (subject to adjustment as provided in
Section 14 hereof).
3. Administration of the Plan.
--------------------------
(a) General. The Plan shall be administered by a Compensation
-------
Committee ("Committee") appointed by the Board of Directors, which
Committee shall consist of not less than two (2) members of the Board of
Directors who are not eligible to participate in the Plan, and have not,
for a period of at least one (1) year prior thereto been eligible to
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 1
<PAGE>
participate in the Plan, except that if at any time there shall be less
than two (2) directors who are qualified to serve on the Committee, then
the Plan shall be administered by the full Board of Directors. All
references in this Plan to the Committee shall be deemed to refer instead
to the full Board of Directors at any time there is not a committee of two
(2) members qualified to act hereunder. The Board of Directors may from
time to time appoint members of the Committee in substitution for or in
addition to members previously appointed and may fill vacancies, however
caused, in the Committee. If the Board of Directors does not designate a
Chairman of the Committee, the Committee shall select one of its members as
its Chairman. The Committee shall hold its meetings at such times and
places as it shall deem advisable. A majority of its members shall
constitute a quorum. Any action of the Committee shall be taken by a
majority vote of its members at a meeting at which a quorum is present.
Notwithstanding the preceding, any action of the Committee may be taken
without a meeting by a written consent signed by all of the members, and
any action so taken shall be deemed fully as effective as if it had been
taken by a vote of the members present in person at the meeting duly called
and held. The Committee may appoint a Secretary, shall keep minutes of its
meetings, and shall make such rules and regulations for the conduct of its
business as it shall deem advisable.
The Committee shall have the sole authority and power, subject to the
express provisions and limitations of the Plan, to construe the Plan and
option agreements granted hereunder, and to adopt, prescribe, amend, and
rescind rules and regulations relating to the Plan, and to make all
determinations necessary or advisable for administering the Plan,
including, but not limited to, (i) who shall be granted Options under the
Plan, (ii) the term of each Option, (iii) the number of shares covered by
such Option, (iv) whether the Option shall constitute an Incentive Option
or a Nonqualified Option or a Reload Option, (v) the exercise price for the
purchase of the shares of the Common Stock covered by the Option, (vi) the
period during which the Option may be exercised, (vii) whether the right to
purchase the number of shares covered by the Option shall be fully vested
on issuance of the Option so that such shares may be purchased in full at
one time or whether the right to purchase such shares shall become vested
over a period of time so that such shares may only be purchased in
installments, and (viii) the time or times at which Options shall be
granted. The Committee's determinations under the Plan, including the
above enumerated determinations, need not be uniform and may be made by it
selectively among the persons who receive, or are eligible to receive,
Options under the Plan, whether or not such persons are similarly situated.
The interpretation by the Committee of any provision of the Plan or of
any option agreement entered into hereunder with respect to any Incentive
Option shall be in accordance with Section 422 of the Code and the
regulations issued thereunder, as such section or regulations may be
amended from time to time, in order that the rights granted hereunder and
under said option agreements shall constitute "Incentive Stock Options"
within the meaning of such section. The interpretation and construction by
the Committee of any provision of the Plan or of any Option granted
hereunder shall be final and conclusive, unless otherwise determined by the
Board of Directors. No member of the Board of Directors or the Committee
shall be liable for any action or determination made in good faith with
respect to the Plan or any Option granted under it. Upon issuing an Option
under the Plan, the Committee shall report to the Board of Directors the
name of the person granted the Option, whether the Option is an Incentive
Option or a Nonqualified Option, the number of shares of Common Stock
covered by the Option, and the terms and conditions of such Option.
(b) Changes in Law Applicable. If the laws relating to Incentive
-------------------------
Options or Nonqualified Options are changed, altered or amended during
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 2
<PAGE>
the term of the Plan, the Board of Directors shall have full authority and
power to alter or amend the Plan with respect to Incentive Options or
Nonqualified Options, respectively, to conform to such changes in the law
without the necessity of obtaining further stockholder approval, unless the
changes require such approval.
4. Types of Awards Under the Plan. Awards under the Plan may be in the
------------------------------
form of either Options, alternate stock appreciation rights (as described in
Section 10 hereof), or a combination thereof.
5. Persons to Whom Options Shall be Granted.
----------------------------------------
(a) Nonqualified Options. Nonqualified Options shall be granted only
--------------------
to officers, directors (other than "Outside Directors" of the Company or a
Subsidiary [as hereinafter defined]), employees and advisors of the Company
or a Subsidiary who, in the judgment of the Committee, are responsible for
or contribute to the management or success of the Company or a Subsidiary
and who, at the time of the granting of the Nonqualified Options, are
either officers, directors (other than Outside Directors), employees or
advisors of the Company or a Subsidiary. As used herein, the term "Outside
Director" shall mean any director of the Company or a Subsidiary who is not
an employee of the Company or a Subsidiary.
(b) Incentive Options. Incentive Options shall be granted only to
-----------------
employees of the Company or a Subsidiary who, in the judgment of the
Committee, are responsible for or contribute to the management or success
of the Company or a Subsidiary and who, at the time of the granting of the
Incentive Option are either an employee of the Company or a Subsidiary.
Subject to the provisions of Section 8(g) hereof, no individual shall be
granted an Incentive Option who, immediately before such Incentive Option
was granted, would own more than ten percent (10%) of the total combined
voting power or value of all classes of stock of the Company ("10%
Stockholder").
6. Factors to Be Considered in Granting Options. In making any
--------------------------------------------
determination as to persons to whom Options shall be granted and as to the
number of shares to be covered by such Options, the Committee shall take into
account the duties and responsibilities of the respective officers, directors,
employees, or advisors, their current and potential contributions to the success
of the Company or a Subsidiary, and such other factors as the Committee shall
deem relevant in connection with accomplishing the purpose of the Plan.
7. Time of Granting Options. Neither anything contained in the Plan or in
------------------------
any resolution adopted or to be adopted by the Board of Directors or the
Stockholders of the Company or a Subsidiary nor any action taken by the
Committee shall constitute the granting of any Option. The granting of an Option
shall be effected only when a written Option Agreement acceptable in form and
substance to the Committee, subject to the terms and conditions hereof including
those set forth in Section 8 hereof, shall have been duly executed and delivered
by or on behalf of the Company and the person to whom such Option shall be
granted. No person shall have any rights under the Plan until such time, if any,
as a written Option Agreement shall have been duly executed and delivered as set
forth in this Section 7.
8. Terms and Conditions of Options. All Options granted pursuant to this
-------------------------------
Plan must be granted within ten (10) years from the date the Plan is adopted by
the Board of Directors of the Company. Each Option Agreement governing an
Option granted hereunder shall be subject to at least the following terms and
conditions, and shall contain such other terms and conditions, not inconsistent
therewith, that the Committee shall deem appropriate:
(a) Number of Shares. Each Option shall state the number of shares
----------------
of Common Stock which it represents.
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 3
<PAGE>
(b) Type of Option. Each Option shall state whether it is intended
--------------
to be an Incentive Option or a Nonqualified Option.
(c) Option Period.
-------------
(1) General. Each Option shall state the date upon which it is
-------
granted. Each Option shall be exercisable in whole or in part during
such period as is provided under the terms of the Option subject to
any vesting period set forth in the Option, but in no event shall an
Option be exercisable either in whole or in part after the expiration
of ten (10) years from the date of grant; provided, however, if an
Incentive Option is granted to a 10% Stockholder, such Incentive
Option shall not be exercisable more than five (5) years from the date
of grant thereof.
(2) Termination of Employment. Except as otherwise provided in
-------------------------
case of Disability (as hereinafter defined), death or Change of
Control (as hereinafter defined), no Option shall be exercisable after
an optionee who is an employee of the Company or a Subsidiary ceases
to be employed by the Company or a Subsidiary as an employee;
provided, however, that the Committee shall have the right in its sole
discretion, but not the obligation, to extend the exercise period for
not more than three (3) months following the date of termination of
such optionee's employment; provided further, however, that no Option
shall be exercisable after the expiration of ten (10) years from the
date it is granted and provided further, no Incentive Option granted
to a 10% Stockholder shall be exercisable after the expiration of five
(5) years from the date it is granted.
(3) Cessation of Service as Director or Advisor. In the event
-------------------------------------------
an optionee who was a director or advisor of the Company or a
Subsidiary ceases to be a director or advisor of the Company or a
Subsidiary for any reason, other than Disability or death, prior to
the full exercise of the Option, such optionee may exercise his Option
at any time within ninety (90) days after such optionee's status as a
director or advisor of the Company or a Subsidiary is so terminated to
the extent he was entitled to exercise such Option at the date such
optionee's status as a director or advisor of the Company or a
Subsidiary terminated; provided, however, that no Option shall be
exercisable after the expiration of ten (10) years from the date it is
granted.
(4) Disability. If an optionee's employment is terminated by
----------
reason of the permanent and total Disability of such optionee or if an
optionee who is a director or advisor of the Company or a Subsidiary
ceases to serve as a director or advisor by reason of the permanent
and total Disability of such optionee, the Committee shall have the
right in its sole discretion, but not the obligation, to extend the
exercise period for not more than one (1) year following the date of
termination of the optionee's employment or the date such optionee
ceases to be a director or advisor of the Company or a Subsidiary, as
the case may be, subject to the condition that no Option shall be
exercisable after the expiration of ten (10) years from the date it is
granted and subject to the further condition that no Incentive Option
granted to a 10% Stockholder shall be exercisable after the expiration
of five (5) years from the date it is granted. For purposes of this
Plan, the term "Disability" shall mean the inability of the optionee
to fulfill such optionee's obligations to the Company or a Subsidiary
by reason of any physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for
a continuous period of not less than twelve (12) months
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 4
<PAGE>
as determined by a physician acceptable to the Committee in its sole
discretion.
(5) Death. If an optionee dies while in the employ of the
-----
Company or a Subsidiary, or while serving as a director or advisor of
the Company or a Subsidiary, and shall not have fully exercised
Options granted pursuant to the Plan, such Options may be exercised in
whole or in part at any time within one (1) year after the optionee's
death, by the executors or administrators of the optionee's estate or
by any person or persons who shall have acquired the Options directly
from the optionee by bequest or inheritance, but only to the extent
that the optionee was entitled to exercise such Option at the date of
such optionee's death, subject to the condition that no Option shall
be exercisable after the expiration of ten (10) years from the date it
is granted and subject to the further condition that no Incentive
Option granted to a 10% Stockholder shall be exercisable after the
expiration of five (5) years from the date it is granted.
(6) Acceleration and Exercise Upon Change of Control.
------------------------------------------------
Notwithstanding the preceding provisions of this Section 8(c), if any
Option granted under the Plan provides for either (a) an incremental
vesting period whereby such Option may only be exercised in
installments as such incremental vesting period is satisfied or (b) a
delayed vesting period whereby such Option may only be exercised after
the lapse of a specified period of time, such as after the expiration
of one (1) year, such vesting period shall be accelerated upon the
occurrence of a Change of Control (as hereinafter defined) of the
Company, or a threatened Change of Control of the Company as
determined by the Committee, so that such Option shall thereupon
become exercisable immediately in part or its entirety by the holder
thereof, as such holder shall elect. For the purposes of this Plan, a
"Change of Control" shall be deemed to have occurred if:
(i) Any "person", including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange Act
of 1934 ("Exchange Act") and the Rules and Regulations
promulgated thereunder, is or becomes, through one or a series of
related transactions or through one or more intermediaries, the
beneficial owner, directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of
the Company's then outstanding securities, other than a person
who is such a beneficial owner on the effective date of the Plan
and any affiliate of such person;
(ii) As a result of, or in connection with, any tender
offer or exchange offer, merger or other business combination,
sale of assets or contested election, or any combination of the
foregoing transactions ("Transaction"), the persons who were
Directors of the Company before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or
any successor to the Company;
(iii) Following the effective date of the Plan, the
Company is merged or consolidated with another corporation and as
a result of such merger or consolidation less than 40% of the
outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former
stockholders of the Company, other than (x) any party to such
merger or consolidation, or (y) any affiliates of any such party;
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 5
<PAGE>
(iv) A tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing 25% or more of the combined voting power of the
Company's then outstanding voting securities; or
(v) The Company transfers more than 50% of its assets,
or the last of a series of transfers result in the transfer of
more than 50% of the assets of the Company, to another
corporation that is not a wholly-owned corporation of the
Company. For purposes of this subsection 8(c)(6)(v), the
determination of what constitutes more than 50% of the assets of
the Company shall be determined based on the sum of the values
attributed to (i) the Company's real property as determined by an
independent appraisal thereof, and (ii) the net book value of all
other assets of the Company, each taken as of the date of the
Transaction involved.
In addition, upon a Change of Control, any Options previously
granted under the Plan to the extent not already exercised may be
exercised in whole or in part either immediately or at any time during
the term of the Option as such holder shall elect.
(d) Option Prices.
-------------
(1) Nonqualified Options. The purchase price or prices of
--------------------
the shares of the Common Stock which shall be offered to any
person under the Plan and covered by a Nonqualified Option
shall be the price determined by the Committee at the time of
granting of the Nonqualified Option, which price may be less
than, equal to or higher than one hundred percent (100%) of the
fair market value of the Common Stock at the time of granting
the Nonqualified Option.
(2) Incentive Options. The purchase price or prices of
-----------------
the shares of the Common Stock which shall be offered to any
person under the Plan and covered by an Incentive Option shall be
one hundred percent (100%) of the fair market value of the Common
Stock at the time of granting the Incentive Option or such higher
purchase price as may be determined by the Committee at the time
of granting the Incentive Option; provided, however, if an
Incentive Option is granted to a 10% Stockholder, the purchase
price of the shares of the Common Stock of the Company covered by
such Incentive Option may not be less than one hundred ten
percent (110%) of the fair market value of such shares on the day
the Incentive Option is granted.
(3) Determination of Fair Market Value. During such time
----------------------------------
as the Common Stock of the Company is not listed upon an
established stock exchange, the fair market value per share shall
be deemed to be the closing sales price of the Common Stock on
the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") on the day the Option is granted, as
reported by NASDAQ, if the Common Stock is so quoted, and if not
so quoted, the mean between dealer "bid" and "ask," prices of the
Common Stock in the New York over-the-counter market on the day
the Option is granted, as reported by the National Association of
Securities Dealers, Inc. If the Common Stock is listed upon an
established stock exchange or exchanges, such fair market value
shall be deemed to be the highest closing price of the Common
Stock on such stock exchange or exchanges on the day the Option
is granted or, if no sale of the Common Stock of the Company
shall have been made on established stock exchange on such day,
on the next preceding day on which there was a sale of such
stock.
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 6
<PAGE>
If there is no market price for the Common Stock, then the Board
of Directors and the Committee may, after taking all relevant
facts into consideration, determine the fair market value of the
Common Stock.
(e) Exercise of Options. To the extent that a holder of an Option
-------------------
has a current right to exercise, the Option may be exercised from time to
time by written notice to the Company at its principal place of business.
Such notice shall state the election to exercise the Option, the number of
whole shares in respect of which it is being exercised, shall be signed by
the person or persons so exercising the Option, and shall contain any
investment representation required by Section 8(i) hereof. Such notice
shall be accompanied by payment of the full purchase price of such shares
and by the Option Agreement evidencing the Option. In addition, if the
Option shall be exercised, pursuant to Section 8(c)(4) or Section 8(c)(5)
hereof, by any person or persons other than the optionee, such notice shall
also be accompanied by appropriate proof of the right of such person or
persons to exercise the Option. The Company shall deliver a certificate or
certificates representing such shares as soon as practicable after the
aforesaid notice and payment of such shares shall be received. The
certificate or certificates for the shares as to which the Option shall
have been so exercised shall be registered in the name of the person or
persons so exercising the Option. In the event the Option shall not be
exercised in full, the Secretary of the Company shall endorse or cause to
be endorsed on the Option the number of shares which has been exercised
thereunder and the number of shares that remain exercisable under the
Option and return such Option Agreement to the holder thereof.
(f) Nontransferability of Options. An Option granted pursuant to the
-----------------------------
Plan shall be exercisable only by the optionee or the optionee's court
appointed guardian as set forth in Section 8(c)(4) hereof during the
optionee's lifetime and shall not be assignable or transferable by the
optionee ot herwise than by Will or the laws of descent and distribution.
An Option granted pursuant to the Plan shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise other
than by Will or the laws of descent and distribution) and shall not be
subject to execution, attachment, or similar process. Any attempted
transfer, assignment, pledge, hypothecation, or other disposition of any
Option or of any rights granted thereunder contrary to the foregoing
provisions of this Section 8(f), or the levy of any attachment or similar
process upon an Option or such rights, shall be null and void.
(g) Limitations on 10% Stockholders. No Incentive Option may be
-------------------------------
granted under the Plan to any 10% Stockholder unless (i) such Incentive
Option is granted at an option price not less than one hundred ten percent
(110%) of the fair market value of the shares on the day the Incentive
Option is granted and (ii) such Incentive Option expires on a date not
later than five (5) years from the date the Incentive Option is granted.
(h) Limits on Vesting of Incentive Options. An individual may be
--------------------------------------
granted one or more Incentive Options, provided that the aggregate fair
market value (as determined at the time such Incentive Option is granted)
of the stock with respect to which Incentive Options are exercisable for
the first time by such individual during any calendar year shall not exceed
$100,000. To the extent the $100,000 limitation in the preceding sentence
is exceeded, such option shall be treated as an option which is not an
Incentive Option.
(i) Compliance with Securities Laws. The Plan and the grant and
-------------------------------
exercise of the rights to purchase shares hereunder, and the Company's
obligations to sell and deliver shares upon the exercise of rights to
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 7
<PAGE>
purchase shares, shall be subject to all applicable federal and state laws,
rules and regulations, and to such approvals by any regulatory or
governmental agency as may, in the opinion of counsel for the Company, be
required, and shall also be subject to all applicable rules and regulations
of any stock exchange upon which the Common Stock of the Company may then
be listed. At the time of exercise of any Option, the Company may require
the optionee to execute any documents or take any action which may be then
necessary to comply with the Securities Act of 1933, as amended
("Securities Act"), and the rules and regulations promulgated thereunder,
or any other applicable federal or state laws regulating the sale and
issuance of securities, and the Company may, if it deems necessary, include
provisions in the stock option agreements to assure such compliance. The
Company may, from time to time, change its requirements with respect to
enforcing compliance with federal and state securities laws, including the
request for and enforcement of letters of investment intent, such
requirements to be determined by the Company in its judgment as necessary
to assure compliance with said laws. Such changes may be made with respect
to any particular Option or stock issued upon exercise thereof. Without
limiting the generality of the foregoing, if the Common Stock issuable upon
exercise of an Option granted under the Plan is not registered under the
Securities Act, the Company at the time of exercise will require that the
registered owner execute and deliver an investment representation agreement
to the Company in form acceptable to the Company and its counsel, and the
Company will place a legend on the certificate evidencing such Common Stock
restricting the transfer thereof, which legend shall be substantially as
follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN ACQUIRED FOR
THE PRIVATE INVESTMENT OF THE HOLDER HEREOF AND MAY NOT BE OFFERED,
SOLD OR TRANSFERRED UNTIL EITHER (i) A REGISTRATION STATEMENT UNDER
SUCH SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) THE COMPANY
SHALL HAVE RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY
AND ITS COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED OFFER, SALE OR TRANSFER.
(j) Additional Provisions. The Option Agreements authorized under
---------------------
the Plan shall contain such other provisions as the Committee shall deem
advisable, including, without limitation, restrictions upon the exercise of
the Option. Any such Option Agreement with respect to an Incentive Option
shall contain such limitations and restrictions upon the exercise of the
Incentive Option as shall be necessary in order that the option will be an
"Incentive Stock Option" as defined in Section 422 of the Code.
9. Medium and Time of Payment. The purchase price of the shares of the
--------------------------
Common Stock as to which the Option shall be exercised shall be paid in full
either (i) in cash at the time of exercise of the Option, (ii) by tendering to
the Company shares of the Company's Common Stock having a fair market value (as
of the date of receipt of such shares by the Company) equal to the purchase
price for the number of shares of Common Stock purchased, or (iii) partly in
cash and partly in shares of the Company's Common Stock valued at fair market
value as of the date of receipt of such shares by the Company. Cash payment for
the shares of the Common Stock purchased upon exercise of the Option shall be in
the form of either a cashier's check, certified check or money order. Personal
checks may be submitted, but will not be considered as payment for the shares of
the Common Stock purchased and no certificate for such shares will be issued
until the personal check clears in normal banking
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 8
<PAGE>
channels. If a personal check is not paid upon presentment by the Company, then
the attempted exercise of the Option will be null and void. In the event the
optionee tenders shares of the Company's Common Stock in full or partial payment
for the shares being purchased pursuant to the Option, the shares of Common
Stock so tendered shall be accompanied by fully executed stock powers endorsed
in favor of the Company with the signature on such stock power being guaranteed.
If an optionee tenders shares, such optionee assumes sole and full
responsibility for the tax consequences, if any, to such optionee arising
therefrom, including the possible application of Code Section 424(c), or its
successor Code section, which negates any nonrecognition of income rule with
respect to such transferred shares, if such transferred shares have not been
held for the minimum statutory holding period to receive preferential tax
treatment.
(10) Alternate Stock Appreciation Rights.
-----------------------------------
(a) Award of Alternate Stock Rights. Concurrently with or subsequent
-------------------------------
to the award of any Option to purchase one or more shares of Common Stock,
the Committee may in its sole discretion, subject to the provisions of the
Plan and such other terms and conditions as the Committee may prescribe,
award to the optionee with respect to each share of Common Stock covered by
an Option ("Related Option"), a related alternate stock appreciation right
("SAR"), permitting the optionee to be paid the appreciation on the Related
Option in lieu of exercising the Related Option. A SAR granted with respect
to an Incentive Option must be granted together with the Related Option. A
SAR granted with respect to a Nonqualified Option may be granted together
with or subsequent to the grant of such Related Option.
(b) Alternate Stock Rights Agreement. Each SAR shall be on such
--------------------------------
terms and conditions not inconsistent with this Plan as the Committee may
determine and shall be evidenced by a written agreement executed by the
Company and the optionee receiving the Related Option.
(c) Exercise. An SAR may be exercised only if and to the extent that
--------
its Related Option is eligible to be exercised on the date of exercise of
the SAR. To the extent that a holder of a SAR has a current right to
exercise, the SAR may be exercised from time to time by written notice to
the Company at its principal place of business. Such notice shall state the
election to exercise the SAR, the number of shares in respect of which it
is being exercised, shall be signed by the person so exercising the SAR and
shall be accompanied by the agreement evidencing the SAR and the Related
Option. In the event the SAR shall not be exercised in full, the Secretary
of the Company shall endorse or cause to be endorsed on the SAR and the
Related Option the number of shares which have been exercised thereunder
and the number of shares that remain exercisable under the SAR and the
Related Option and return such SAR and Related Option to the holder
thereof.
(d) Amount of Payment. The amount of payment to which an optionee
-----------------
shall be entitled upon the exercise of each SAR shall be equal to 100% of
the amount, if any, by which the fair market value of a share of Common
Stock on the exercise date exceeds the fair market value of a share of
Common Stock on the date the Option related to said SAR was granted or
became effective, as the case may be; provided, however, the Company may,
in its sole discretion, withhold from such cash payment any amount
necessary to satisfy the Company's obligation for withholding taxes with
respect to such payment. For this purpose, the fair market value of a share
of Common Stock shall be determined as set forth in Section 8(d) hereof.
(e) Form of Payment. The amount payable by the Company to an
---------------
optionee upon exercise of a SAR may be paid in shares of Common Stock, cash
or a combination thereof. The number of shares of Common Stock to be paid
to an optionee upon such optionee's exercise of SAR shall be
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 9
<PAGE>
determined by dividing the amount of payment determined pursuant to Section
10(d) hereof by the fair market value of a share of Common Stock on the
exercise date of such SAR. For purposes of this Plan, the exercise date of
a SAR shall be the date the Company receives written notification from the
optionee of the exercise of the SAR in accordance with the provisions of
Section 10(c) hereof. As soon as practicable after exercise, the Company
shall either deliver to the optionee the amount of cash due such optionee
or a certificate or certificates for such shares of Common Stock. All such
shares shall be issued with the rights and restrictions specified herein.
(f) Termination of SAR. Except as otherwise provided in case of
------------------
Disability (as defined in Section 8(c)(4) hereof) or death, no SAR shall be
exercisable after an optionee ceases to be an employee, director or advisor
of the Company or Subsidiary; provided, however, that the Committee shall
have the right in its sole discretion, but not the obligation, to extend
the exercise period for not more than three (3) months following the date
such optionee ceases to be an employee, director or advisor of the Company
or a Subsidiary; provided further, that the Committee may not extend the
period during which an optionee may exercise a SAR for a period greater
than the period during which an optionee may exercise the Related Option.
If an optionee's position as an employee, director or advisor of the
Company is terminated due to the Disability or death of such optionee, the
Committee shall have the right, in its sole discretion, but not the
obligation, to extend the exercise period applicable to the SAR for a
period not to exceed the period in which the optionee may exercise the
Option related to said SAR as set forth in Sections 8(c)(4) and 8(c)(5)
hereof, respectively.
(g) Effect of Exercise of SAR. The exercise of any SAR shall cancel
-------------------------
and terminate the right to purchase an equal number of shares covered by
the Related Option.
(h) Effect of Exercise of Related Option. Upon the exercise or
------------------------------------
termination of any Related Option, the SAR with respect to such Related
Option shall terminate to the extent of the number of shares of Common
Stock as to which the Related Option was exercised or terminated.
(i) Nontransferability of SAR. A SAR granted pursuant to this Plan
-------------------------
shall be exercisable only by the optionee or the optionee's court appointed
guardian as set forth in Section 8(c)(4) hereof during the optionee's
lifetime and, subject to the provisions of Section 10(f) hereof, shall not
be assignable or transferable by the optionee. A SAR granted pursuant to
the Plan shall not be assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise) and shall not be subject to execution,
attachment, or similar process. Any attempted transfer, assignment,
pledge, hypothecation, or other disposition of any SAR or of any rights
granted thereunder contrary to the foregoing provisions of this Section
10(i), or the levy of any attachment or similar process upon a SAR or such
rights, shall be null and void.
11. Reload Options.
--------------
(a) Authorization of Reload Options. Concurrently with the award of
-------------------------------
Nonqualified Options and/or the award of Incentive Options to any
participant in the Plan, the Committee may authorize reload options
("Reload Options") to purchase for cash or shares that number of shares of
Common Stock equal to the sum of:
(1) The number of shares of Common Stock used to exercise the
underlying Nonqualifying Option or Incentive Option; and
(2) To the extent authorized by the Committee, the number of
shares of Common Stock used to satisfy any tax withholding
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 10
<PAGE>
requirement incident to the exercise of the underlying Nonqualifying
Option or Incentive Options.
The grant of a Reload Option will become effective upon the exercise
of the underlying Nonqualifying Option, Incentive Option or Reload Option
through the use of shares of Common Stock held by the optionee for at least
12 months. Notwithstanding the fact that the underlying option may be an
Incentive Option, a Reload Option is not intended to qualify as an
"incentive stock option" under Section 422 of the Code.
(b) Reload Option Amendment. Each Option Agreement shall state
-----------------------
whether the Committee has authorized Reload Options with respect to the
underlying Nonqualifying Option and/or Incentive Option. Upon the exercise
of an underlying Option or Incentive Option, the Reload Option will be
evidenced by an amendment to the underlying Option Agreement.
(c) Reload Option Price. The option price per share of Common Stock
-------------------
deliverable upon the exercise of a Reload Option shall be the fair market
value of a share of Common Stock on the date the grant of the Reload Option
becomes effective.
(d) Term and Exercise. Each Reload Option is fully exercisable six
-----------------
months from the effective date of grant. The term of each Reload Option
shall be equal to the remaining option term of the underlying Nonqualifying
Option and/or Incentive Option.
(e) Termination of Employment. No additional Reload Options shall be
-------------------------
granted to optionees when Nonqualifying Options, Incentive Option and/or
Reload Options are exercised pursuant to the terms of this Plan following
termination of the optionee's employment.
(f) Applicability of Other Sections. To the extent not inconsistent
-------------------------------
with the foregoing provisions of this Section, the other Sections of this
Plan pertaining to Options, including Sections 5, 8, and 9, are
incorporated herein by this reference thereto as through fully set forth
herein.
12. Rights as a Stockholder. The holder of an Option or a SAR shall have
-----------------------
no rights as a stockholder with respect to the shares covered by the Option or
SAR until the due exercise of the Option, Related Option, or SAR and the date of
issuance of one or more stock certificates to such holder for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 14 hereof.
13. Optionee's Agreement to Serve. Each employee receiving an Option
-----------------------------
shall, as one of the terms of the Option Agreement agree that such employee will
remain in the employ of the Company or Subsidiary for a period of at least one
(1) year from the date on which the Option shall be granted to such employee;
and that such employee will, during such employment, devote such employee's
entire time, energy, and skill to the service of the Company or a Subsidiary as
may be required by the management thereof, subject to vacations, sick leaves,
and military absences. Such employment, subject to the provisions of any written
contract between the Company or a Subsidiary and such employee, shall be at the
pleasure of the Board of Directors of the Company or a Subsidiary, and at such
compensation as the Company or a Subsidiary shall reasonably determine. Any
termination of such employee's employment during the period which the employee
has agreed pursuant to the foregoing provisions of this Section 13 to remain in
employment that is either for cause or voluntary on the part of the employee
shall be deemed a violation by the employee of such employee's agreement. In the
event of such violation, any Option or Options held by such employee, to the
extent not theretofore exercised, shall forthwith terminate, unless otherwise
determined by the Committee. Notwithstanding the preceding, neither the action
of the Company in establishing the Plan nor any
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 11
<PAGE>
action taken by the Company, a Subsidiary or the Committee under the provisions
hereof shall be construed as granting the optionee the right to be retained in
the employ of the Company or a Subsidiary, or to limit or restrict the right of
the Company or a Subsidiary, as applicable, to terminate the employment of any
employee of the Company or a Subsidiary, with or without cause.
14. Adjustments on Changes in Capitalization.
----------------------------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
Stockholders of the Company, the number of shares of Common Stock covered
by the Plan, the number of shares of Common Stock covered by each
outstanding Option, and the exercise price per share thereof specified in
each such Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company
resulting from a subdivision or consolidation of shares or the payment of a
stock dividend (but only on the Common Stock) or any other increase or
decrease in the number of such shares effected without receipt of
consideration by the Company after the date the Option is granted, so that
upon exercise of the Option, the optionee shall receive the same number of
shares the optionee would have received had the optionee been the holder of
all shares subject to such optionee's outstanding Option immediately before
the effective date of such change in the number of issued shares of the
Common Stock of the Company.
(b) Reorganization, Dissolution or Liquidation. Subject to any
------------------------------------------
required action by the Stockholders of the Company, if the Company shall be
the surviving corporation in any merger or consolidation, each outstanding
Option shall pertain to and apply to the securities to which a holder of
the number of shares of Common Stock subject to the Option would have been
entitled. A dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, shall
cause each outstanding Option to terminate as of a date to be fixed by the
Committee (which date shall be as of or prior to the effective date of any
such dissolution or liquidation or merger or consolidation); provided, that
not less than thirty (30) days written notice of the date so fixed as such
termination date shall be given to each optionee, and each optionee shall,
in such event, have the right, during the said period of thirty (30) days
preceding such termination date, to exercise such optionee's Option in
whole or in part in the manner herein set forth.
(c) Change in Par Value. In the event of a change in the Common
-------------------
Stock of the Company as presently constituted, which change is limited to a
change of all of its authorized shares with par value into the same number
of shares with a different par value or without par value, the shares
resulting from any change shall be deemed to be the Common Stock within the
meaning of the Plan.
(d) Notice of Adjustments. To the extent that the adjustments set
---------------------
forth in the foregoing paragraphs of this Section 14 relate to stock or
securities of the Company, such adjustments, if any, shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive, provided that each Incentive Option granted pursuant to this
Plan shall not be adjusted in a manner that causes the Incentive Option to
fail to continue to qualify as an "Incentive Stock Option" within the
meaning of Section 422 of the Code. The Company shall give timely notice of
any adjustments made to each holder of an Option under this Plan and such
adjustments shall be effective and binding on the optionee.
(e) Effect Upon Holder of Option. Except as hereinbefore expressly
----------------------------
provided in this Section 14, the holder of an Option shall have no rights
by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class by
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 12
<PAGE>
reason of any dissolution, liquidation, merger, reorganization, or
consolidation, or spin-off of assets or stock of another corporation, and
any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares of Common Stock subject to the Option. Without limiting the
generality of the foregoing, no adjustment shall be made with respect to
the number or price of shares subject to any Option granted hereunder upon
the occurrence of any of the following events:
(1) The grant or exercise of any other options which may be
granted or exercised under any qualified or nonqualified stock option
plan or under any other employee benefit plan of the Company whether
or not such options were outstanding on the date of grant of the
Option or thereafter granted;
(2) The sale of any shares of Common Stock in the Company's
initial or any subsequent public offering, including, without
limitation, shares sold upon the exercise of any overallotment option
granted to the underwriter in connection with such offering;
(3) The issuance, sale or exercise of any warrants to purchase
shares of Common Stock whether or not such warrants were outstanding
on the date of grant of the Option or thereafter issued;
(4) The issuance or sale of rights, promissory notes or other
securities convertible into shares of Common Stock in accordance with
the terms of such securities ("Convertible Securities") whether or not
such Convertible Securities were outstanding on the date of grant of
the Option or were thereafter issued or sold;
(5) The issuance or sale of Common Stock upon conversion or
exchange of any Convertible Securities, whether or not any adjustment
in the purchase price was made or required to be made upon the
issuance or sale of such Convertible Securities and whether or not
such Convertible Securities were outstanding on the date of grant of
the Option or were thereafter issued or sold; or
(6) Upon any amendment to or change in the terms of any rights
or warrants to subscribe for or purchase, or options for the purchase
of, Common Stock or Convertible Securities or in the terms of any
Convertible Securities, including, but not limited to, any extension
of any expiration date of any such right, warrant or option, any
change in any exercise or purchase price provided for in any such
right, warrant or option, any extension of any date through which any
Convertible Securities are convertible into or exchangeable for Common
Stock or any change in the rate at which any Convertible Securities
are convertible into or exchangeable for Common Stock.
(f) Right of Company to Make Adjustments. The grant of an Option
------------------------------------
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassification, reorganizations, or changes
of its capital or business structure or to merge or to consolidate or to
dissolve, liquidate or sell, or transfer all or any part of its business or
assets.
15. Investment Purpose. Each Option under the Plan shall be granted on
------------------
the condition that the purchase of the shares of stock thereunder shall be for
investment purposes, and not with a view to resale or distribution; provided,
however, that in the event the shares of stock subject to such Option are
registered under the Securities Act or in the event a resale of such shares of
stock without such registration would otherwise be permissible, such condition
shall be inoperative if in the opinion of counsel for the Company such
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 14
<PAGE>
condition is not required under the Securities Act or any other applicable law,
regulation, or rule of any governmental agency.
16. No Obligation to Exercise Option or SAR. The granting of an Option or
---------------------------------------
SAR shall impose no obligation upon the optionee to exercise such Option or SAR.
17. Modification, Extension, and Renewal of Options. Subject to the terms
-----------------------------------------------
and conditions and within the limitations of the Plan, the Committee and the
Board of Directors may modify, extend or renew outstanding Options granted under
the Plan, or accept the surrender of outstanding Options (to the extent not
theretofore exercised). Neither the Committee nor the Board of Directors shall,
however, modify any outstanding Options so as to specify a lower price or accept
the surrender of outstanding Options and authorize the granting of new Options
in substitution therefor specifying a lower price. Notwithstanding the
foregoing, however, no modification of an Option shall, without the consent of
the optionee, alter or impair any rights or obligations under any Option
theretofore granted under the Plan.
18. Effective Date of the Plan. The Plan shall become effective as of May
--------------------------
23, 1996, ("Effective Date"); provided, however, if the Stockholders of the
Company shall not have approved the Plan by the requisite vote of the
Stockholders, within twelve (12) months after the Effective Date, then the Plan
shall terminate and all Options theretofore granted under the Plan shall
terminate and be null and void.
19. Termination of the Plan. This Plan shall terminate as of the
-----------------------
expiration of ten (10) years from the Effective Date. Options may be granted
under this Plan at any time and from time to time prior to its termination. Any
Option outstanding under the Plan at the time of its termination shall remain in
effect until the Option shall have been exercised or shall have expired.
20. Amendment of the Plan. The Plan may be terminated at any time by the
---------------------
Board of Directors of the Company. The Board of Directors may at any time and
from time to time without obtaining the approval of the Stockholders of the
Company or a Subsidiary, modify or amend the Plan (including such form of Option
Agreement as hereinabove mentioned) in such respects as it shall deem advisable
in order that the Incentive Options granted under the Plan shall be "Incentive
Stock Options" as defined in Section 422 of the Code or to conform to any change
in the law, or in any other respect which shall not change: (a) the maximum
number of shares for which Options may be granted under the Plan, except as
provided in Section 14 hereof; or (b) the option prices other than to change the
manner of determining the fair market value of the Common Stock for the purpose
of Section 8(d) hereof to conform with any then applicable provisions of the
Code or regulations thereunder; or (c) the periods during which Options may be
granted or exercised; or (d) the provisions relating to the determination of
persons to whom Options shall be granted and the number of shares to be covered
by such Options; or (e) the provisions relating to adjustments to be made upon
changes in capitalization. The termination or any modification or amendment of
the Plan shall not, without the consent of the person to whom any Option shall
theretofore have been granted, affect that person's rights under an Option
theretofore granted to such person. With the consent of the person to whom such
Option was granted, an outstanding Option may be modified or amended by the
Committee in such manner as it may deem appropriate and consistent with the
requirements of this Plan applicable to the grant of a new Option on the date of
modification or amendment.
21. Withholding. Whenever an optionee shall recognize compensation income
as a result of the exercise of any Option or SAR granted under the Plan, the
optionee shall remit in cash to the Company or Subsidiary the minimum amount of
federal income and employment tax withholding which the Company or Subsidiary is
required to remit to the Internal Revenue Service in accordance with the then
current provisions of the Code. The full amount of such
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 14
<PAGE>
withholding shall be paid by the optionee simultaneously with the award or
exercise of an Option or SAR, as applicable.
22. Indemnification of Committee. In addition to such other rights of
----------------------------
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceedings, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the Company
the opportunity, at its own expense, to pursue and defend the same.
23. Application of Funds. The proceeds received by the Company from the
--------------------
sale of Common Stock pursuant to Options granted hereunder will be used for
general corporate purposes.
24. Governing Law. This Plan shall be governed and construed in
-------------
accordance with the laws of the state of incorporation of the Company.
EXECUTED this 16th day of September, 1996, to be effective as of May 23,
1996.
SPECIALTY TELECONSTRUCTORS, INC.
By: /s/ Michael R. Budagher
-- ---------------------------------------
Michael R. Budagher,
President
ATTEST:
/s/ Dennis K. Hartnett
---------------------------------------
Dennis K. Hartnett, Secretary
AMENDED AND RESTATED 1994 STOCK OPTION PLAN - Page 15
