<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by Registrant [X]
Filed by a Party other than
the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Belmont Homes, Inc.
(Name of Registrant as Specified in Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing the Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee previously paid with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration No.:
(3) Filing party:
(4) Date filed:
<PAGE> 2
BELMONT HOMES, INC.
Highway 25 South
Industrial Park Drive
Belmont, Mississippi 38827
MAY 6, 1997
TO OUR SHAREHOLDERS:
On behalf of the Board of Directors and management, I invite you to attend
the Annual Meeting of Shareholders of Belmont Homes, Inc. to be held on Tuesday,
June 3, 1997 at 1:00 p.m., Central Daylight Savings Time, at the Executive Inn,
1011 North Gloster, Tupelo, Mississippi 38801.
The notice of meeting and proxy statement accompanying this letter describe
the specific business to be acted upon.
In addition to the specific matters to be acted upon, there will be a
report on the progress of the Company and an opportunity for questions of
general interest to the shareholders.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR
NOT YOU PLAN TO ATTEND IN PERSON, YOU ARE REQUESTED TO MARK, SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
Sincerely yours,
/s/ John W. Allison
John W. Allison
Acting President and Chief Executive Officer
<PAGE> 3
BELMONT HOMES, INC.
HIGHWAY 25 SOUTH
INDUSTRIAL PARK DRIVE
BELMONT, MISSISSIPPI 38827
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 3, 1997
Notice is hereby given that the Annual Meeting of Shareholders of Belmont
Homes, Inc. (the "Company") will be held on Tuesday, June 3, 1997 at 1:00 p.m.,
Central Daylight Savings Time, at the Executive Inn, 1011 North Gloster, Tupelo,
Mississippi 38801, for the following purposes:
1. To elect eight nominees as directors of the Company.
2. To approve the proposed amendment to the Company's 1994 Incentive
Stock Plan to (i) increase from 600,000 to 1,000,000 the number of shares
of Common Stock authorized thereunder, (ii) require that no more than
250,000 shares of Common Stock be awarded to any person in a three-year
period and (iii) eliminate the requirement of shareholder approval of
certain administrative amendments;
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on April 18, 1997 are
entitled to notice of and to vote at the Annual Meeting of Shareholders.
Belmont, Mississippi
May 6, 1997 By order of the Board of Directors,
/s/ Thomas D. Keenum, Sr.
Thomas D. Keenum, Sr.
Secretary
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN
THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
<PAGE> 4
BELMONT HOMES, INC.
HIGHWAY 25 SOUTH
INDUSTRIAL PARK DRIVE
BELMONT, MISSISSIPPI 38827
PROXY STATEMENT
INFORMATION CONCERNING THE SOLICITATION
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Belmont Homes, Inc. ("Belmont Homes" or the "Company")
of proxies to be voted at the Annual Meeting of Shareholders to be held on
Tuesday, June 3, 1997 at 1:00 p.m., Central Daylight Savings Time, at the
Executive Inn, 1011 North Gloster, Tupelo, Mississippi 38801, and at any
adjournment or adjournments thereof.
Only the holders of the Company's common stock, $.10 par value per share
(the "Common Stock"), of record at the close of business on April 18, 1997 will
be entitled to vote at the Annual Meeting of Shareholders. On such date,
approximately 9,467,000 shares of Common Stock were outstanding. Each such
shareholder is entitled to one vote per share held of record on the record date.
This Proxy Statement and the accompanying proxy are first being mailed on or
about May 6, 1997.
A majority of the shares of Common Stock, represented in person or by
proxy, is required to constitute a quorum. If a quorum is not present at the
time of the Annual Meeting of Shareholders, or if for any reason the Company
believes that additional time should be allowed for the solicitation of proxies,
the Company may adjourn or postpone the Annual Meeting of Shareholders with or
without a vote of the shareholders. If adjournment is proposed by the Company,
the person named on the enclosed proxy card will vote such shares for which they
have voting authority in favor of adjournment.
All shares of Common Stock represented at the Annual Meeting of
Shareholders by properly executed proxies received prior to or at the Annual
Meeting of Shareholders and not properly revoked will be voted at the Annual
Meeting of Shareholders in accordance with the instructions indicated thereon.
If no specification is made, such proxies will be voted in favor of the matters
listed on the proxy card. Directors must be elected by a plurality of votes cast
(in person or by proxy) by the holders of Common Stock entitled to vote at the
Annual Meeting of Shareholders if a quorum is present. All other matters shall
be determined based upon the vote of the majority of votes cast (in person or by
proxy) by the holders of Common Stock entitled to vote at the Annual Meeting of
Shareholders if a quorum is present. Abstentions and broker non-votes will not
have the effect of voting in opposition to a director or of a vote against the
other proposals.
All expenses of the Annual Meeting of Shareholders, including the cost of
soliciting proxies, will be paid by the Company. The Company may reimburse
persons holding shares in their names for others, or holding shares for others
who have the right to give voting instructions, such as brokers, banks,
fiduciaries and nominees, for such persons' reasonable expenses in forwarding
the proxy materials to their principals.
Any shareholder giving a proxy may revoke it by delivering a written notice
of such revocation to the Secretary of the Company at Highway 25 South,
Industrial Park Boulevard, Belmont, Mississippi 38827 prior to the Annual
Meeting of Shareholders, by submitting to the Company a more recently dated
proxy or by attending the Annual Meeting of Shareholders and voting at any time
before the proxy is exercised.
In voting by proxy in regard to the election of eight nominees as directors
to serve until the next Annual Meeting of Shareholders, or until their
successors are duly elected and qualified, shareholders may vote in favor of all
eight nominees, withhold their votes as to all eight nominees or withhold their
votes as to specific nominees. If no instructions are indicated, such proxies
will be voted FOR the election of all eight nominees as directors.
<PAGE> 5
I. ELECTION OF DIRECTORS
INTRODUCTION
The Company's Restated Articles of Incorporation provide that the Board of
Directors shall consist of such number of directors (not less than three nor
more than nine) as may be fixed by action of the Board of Directors. The current
Board of Directors has determined that the Board of Directors shall consist of
eight members. The Board of Directors has nominated the eight individuals named
below for election as directors to serve until the next Annual Meeting of
Shareholders, or until their successors are duly elected and qualified. All of
the nominees are currently members of the Board of Directors. If any nominee or
nominees should be unable to accept nomination or election as a director, which
is not expected, the proxies may be voted with discretionary authority for a
substitute or substitutes designated by the Board of Directors. Directors are
elected by a plurality of the votes cast (in person or by proxy) by the holders
of Common Stock entitled to vote at the Annual Meeting of Shareholders if a
quorum is present. The Restated Articles of Incorporation of the Company
prohibit shareholders from cumulating their votes in the election of directors.
As a result, each shareholder may cast one vote per share of Common Stock owned
for each nominee.
NOMINEES
The following table shows the names, ages and principal occupations of the
nominees to become directors and the year in which each nominee was first
elected to the Board of Directors.
<TABLE>
<CAPTION>
Principal Director
Name Age Occupation Since
- - ---- --- ---------- --------
<S> <C> <C> <C>
A. Douglas Jumper, Sr. 65 Chairman of the Board 1993
Jerold Kennedy 64 Director; Former President 1988
and Chief Executive Officer
of the Company
John W. Allison 50 Acting President and Chief 1995
Executive Officer of the Company
Thomas D. Keenum, Sr. 58 Secretary/Treasurer and 1993
General Counsel; Attorney
Roger D. Moore 48 Director of Sales and Marketing 1987
J.M. Page 70 Owner of Page Chevrolet and 1990
Page Motors
Don D. Murphy 53 General Manager of WBIP 1993
radio station
Hollis D. Sparks 61 Chairman and President 1996
of Sparko Inc.
</TABLE>
A. Douglas Jumper, Sr. has served as a director of the Company since June
1993 and as Chairman of the Board since July 1993. Mr. Jumper has been the
President and co-owner of S&J Steel Builders, Inc. of Booneville, Mississippi
since 1963. Mr. Jumper is a director of BancorpSouth, Inc., a bank holding
company
2
<PAGE> 6
headquartered in Tupelo, Mississippi, and River Oaks Furniture, Inc., a
furniture manufacturer headquartered in Belden, Mississippi.
Jerold Kennedy has been a director of the Company since 1988. On March 31,
1997, Mr. Kennedy took a medical leave of absence from his executive offices
with the Company. Until such time, Jerold Kennedy served as President of the
Company since January 1988 and as Chief Executive Officer since July 1993. Prior
to joining the Company, Mr. Kennedy served as General Manager and
Secretary/Treasurer of Sunshine Homes, Inc., a manufactured housing company
headquartered in Red Bay, Alabama, for 17 years. Mr. Kennedy has been involved
with the manufactured housing industry since 1971. He has served as a member of
the Board of Directors of the Alabama Manufactured Housing Institute and serves
on the national Board of Directors of the Agency for Regulatory Reform, an
agency representing the interests of manufacturers in the manufactured housing
industry.
John W. Allison has served as President of Spirit Homes, Inc. ("Spirit")
since January 1986 and a director of the Company since October 1995. Mr. Allison
was named the Company's Acting President and Chief Executive Officer on March
31, 1997. Mr. Allison served as Chief Executive Officer of Spirit from January
1986 until the Company's acquisition of Spirit in October 1995. Mr. Allison is a
director of First Commercial Bank of Arkansas, a bank headquartered in Little
Rock, Arkansas, and a director of First National Bank of Conway, a bank
headquartered in Conway, Arkansas.
Thomas D. Keenum, Sr. has served as Secretary/Treasurer, General Counsel
and a director of the Company since July 1993. Mr. Keenum is a partner in Keenum
& Tutor, P.A., in Booneville, Mississippi, where he has practiced law since
1968. Mr. Keenum is a director of River Oaks Furniture, Inc., a furniture
manufacturer headquartered in Belden, Mississippi.
Roger D. Moore has served as Director of Sales and Marketing since April
1995 and a director of the Company since December 1987. From December 1987 until
April 1995, Mr. Moore served as Sales Manager of the Company.
J. M. Page has served as a director of the Company since 1990. Mr. Page is
the owner of Page Chevrolet, an automobile dealership in Red Bay, Alabama, and
of Page Motors, an automobile dealership in Iuka, Mississippi. Mr. Page is also
a director of Colonial Bank, Red Bay, Alabama.
Don D. Murphy has served as a director of the Company since June 1993. Mr.
Murphy is general manager of WBIP, a radio station in Booneville, Mississippi
owned by Community Broadcast Services of Mississippi, Inc. From 1988 until 1995,
Mr. Murphy was Vice President and co-owner of WBIP Broadcasting Company. Mr.
Murphy is a director of River Oaks Furniture, Inc., a furniture manufacturer
headquartered in Belden, Mississippi.
Hollis D. Sparks has served as a director of the Company since September
1996, when he was elected to fill the vacancy created by the resignation from
the Board of Directors of Aubrey Burns Patterson. Mr. Sparks has served as
Chairman of the Board and President of Sparko Inc. ("Sparko") since 1964. Sparko
is a holding company currently engaged in real estate and other investment
activities.
Mr. Jumper and Mr. Keenum are first cousins. There are no other family
relationships between any directors or executive officers of the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION OF ALL OF THE PROPOSED NOMINEES TO THE BOARD OF DIRECTORS.
3
<PAGE> 7
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During the last fiscal year, the Board of Directors held four meetings.
Each director attended at least 75% of the aggregate of the number of the
meetings held during 1996. Additionally, the Board of Directors took two actions
by unanimous written consent during 1996.
The Board of Directors has three standing committees: an Executive
Committee, a Compensation Committee and an Audit Committee. Members of the
Executive Committee are Messrs. Jumper, Kennedy and Keenum. Mr. Allison was
elected to the Executive Committee on March 31, 1997. The Executive Committee is
authorized by the Board of Directors to take all action which may be delegated
by the Board of Directors under the Mississippi Business Corporation Act. During
1996, the Executive Committee held six meetings, all of which each member
attended.
Members of the Compensation Committee during 1996 were Messrs. Jumper,
Keenum and Murphy. The Compensation Committee was appointed by the Board of
Directors to administer the Company's stock incentive plans and recommend to the
Board of Directors the compensation of the Company's executive officers. During
1996, the Compensation Committee held five meetings, all of which each member
attended.
Members of the Audit Committee during 1996 were Messrs. Page, Patterson and
Sparks. Mr. Patterson resigned from the Board of Directors and the Audit
Committee in September 1996 and was replaced by Mr. Sparks. The Audit Committee
was appointed by the Board of Directors to recommend the annual appointment of
the Company's independent auditors, with whom the Audit Committee reviews the
scope of audit and non-audit assignments and related fees, accounting principles
used by the Company in financial reporting, internal auditing procedures and the
adequacy of the Company's internal control principles. During 1996, the Audit
Committee held four meetings, all of which each member attended.
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company, who are elected annually by the Board of Directors.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Jerold Kennedy(1) 64 President, Chief Executive Officer
John W. Allison(2) 50 Acting President, Chief Executive Officer
William A. Sheffield(3) 71 Chief Financial Officer
William M. Kunkel(4) 48 Vice President and Chief Financial Officer
Thomas D. Keenum, Sr. 58 Secretary,Treasurer and General Counsel
Mike Kennedy(2) 37 Acting Senior Vice President of Administration
Keith Kennedy(2) 39 Acting Senior Vice President of Manufacturing
</TABLE>
- - ----------
(1) Mr. Kennedy took a medical leave of absence from his offices with the
Company on March 31, 1997.
(2) Each of Messrs. Allison, Kennedy and Kennedy were named to their respective
offices on March 31, 1997.
(3) Mr. Sheffield retired from the Company in March 1997.
(4) Mr. Kunkel was elevated to Vice President and Chief Financial Officer on
March 31, 1997.
William A. Sheffield served as Chief Financial Officer of the Company from
October 1993 until his retirement in March 1997. From January 1973 until joining
the Company, Mr. Sheffield was a senior partner in the accounting firm of
Sheffield & Otts, Certified Public Accountants, in Tupelo, Mississippi.
William M. Kunkel has served as Vice President and Chief Financial Officer
since March 31, 1997. Prior to such time, Mr. Kunkel served as Vice President of
Finance since January 30, 1995. From October 1994 until joining the Company, he
served as Interim Chief Financial Officer of Concept Technologies Group, Inc., a
4
<PAGE> 8
manufacturer of audio speakers in Knoxville, Tennessee. From April 1994 until
October 1994, he served as Chief Financial Officer of Lansinoh Laboratories,
Inc., a manufacturer of skin-care products in Oak Ridge, Tennessee. From March
1993 until April 1994, he served as a consultant to Concept Technologies Group.
From April 1989 until August 1993, he served as Executive Vice President and
Chief Financial Officer of Knox International Corporation, a direct marketer of
horticulture products in Knoxville, Tennessee.
Mike Kennedy has served as Acting Senior Vice President of Administration
of the Company since March 31, 1997. Prior to such time and since October 1993,
Mr. Kennedy served the Company in various capacities. From March 1990 until
October 1993, Mr. Kennedy was a sales representative for Fabwell, Inc., a metal
fabricating company.
Keith Kennedy has served as Acting Senior Vice President of Manufacturing
of the Company since March 31, 1997. Prior to such time and since March 1994,
Mr. Kennedy served the Company in various capacities. From September 1981 until
March 1994, Mr. Kennedy was the Director of Purchasing and Quality Control of
Sunshine Mills, Inc., a manufacturer of pet food.
The business experience of Messrs. Kennedy, Allison and Keenum is set forth
above. See "Election of Directors-Nominees."
5
<PAGE> 9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 18, 1997, the shares of Common
Stock beneficially owned by (i) holders of more than five percent of the Common
Stock known to the Company, (ii) each of the directors of the Company (which
directors also constitute the nominees for election as directors at the Annual
Meeting of the Shareholders), (iii) the Company's named executive officers,
individually, and (iv) all directors and executive officers as a group, together
with the percentage of the outstanding shares which such ownership represents.
<TABLE>
<CAPTION>
Shares
Beneficially
Name of Beneficial Owner Owned (1) Percent of Class (2)
- - ------------------------ --------- --------------------
<S> <C> <C>
A. Douglas Jumper, Sr. (3)....................................... 655,437 6.9%
Jerold Kennedy (3) .............................................. 883,012 9.3
John W. Allison.................................................. 97,500 1.0
Thomas D. Keenum, Sr. (4)........................................ 315,000 3.3
William M. Kunkel................................................ 0 *
Roger D. Moore................................................... 9,225 *
Don D. Murphy.................................................... 147,604 1.6
J.M. Page........................................................ 301,171 3.2
Aubrey Burns Patterson........................................... 1,000 *
William A. Sheffield............................................. 500 *
Hollis D. Sparks................................................. 6,000 *
FMR Corp. (5).................................................... 769,050 8.1
Franklin Resources, Inc. (6)..................................... 799,750 8.4
Kennedy Capital Management, Inc. (7)............................. 758,275 8.0
OppenheimerFunds, Inc. (8)....................................... 630,000 6.6
Thomson Horstmann & Bryant, Inc. (9)............................. 651,150 6.9
All directors and executive officers as a group (13 persons)..... 2,453,199 25.6
</TABLE>
- - ----------
* Represents beneficial ownership of less than 1% of the outstanding shares
of the Company's common stock.
(1) Based upon information furnished to the Company or filed with the
Securities and Exchange Commission by the listed persons.
(2) Computation based upon approximately 9,467,000 shares outstanding on April
18, 1997.
(3) The business address of Messrs. Jumper and Kennedy is Highway 25 South,
Industrial Park Drive, Belmont, Mississippi 38827.
(4) Includes 39,624 shares owned by Thomas D. Keenum, Jr., of which Mr. Keenum,
Sr. has voting control.
(5) Fidelity Management & Research Company, a wholly-owned subsidiary of FMR
Corp. and a registered investment advisor, is the beneficial owner of
762,750 of these shares. Fidelity Management & Trust Company, a
wholly-owned subsidiary of FMR Corp. and a bank under the Securities
Exchange Act of 1934, is the beneficial owner of 6,300 of these shares. The
address of these entities is 82 Devonshire Street, Boston Massachusetts
02109.
(6) Franklin Advisers, Inc., a subsidiary of Franklin Resources, Inc. and an
investment advisor, has the sole voting power of these shares. The address
of these entities is 777 Mariners Island Boulevard, San Mateo, California
94404.
(7) Kennedy Capital Management, Inc. has sole voting power of 565,975 of these
shares, and sole dispositive power of all 758,275 of these shares. The
address of this entity is 10829 Olive Boulevard, St. Louis, Missouri 63141.
(8) The shares are owned by registered investment companies managed by
OpenheimerFunds, Inc., a registered investment advisor. The address of this
entity is Two World Trade Center, Suite 3400, New York, New York
10048-0203.
(9) Thomson Horstmann & Bryant, Inc., a registered investment advisor, has sole
voting power of 416,150 of these shares, shared voting power of 13,500 of
these shares, and sole dispositive power of all 651,150 of these shares.
The address of this entity is Park 80 West, Plaza Two, Saddle Brook, New
Jersey 07663.
6
<PAGE> 10
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to or accrued by or on
behalf of the Company's named executive officers for services rendered in all
capacities to the Company for the years ended December 31, 1994, 1995 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG TERM COMPENSATION
---------------------------------------------------------- ----------------------------------
OTHER SECURITIES
NAME AND ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS (#) COMPENSATION($)
- - ------------------- ---- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Jerold Kennedy 1996 $185,993 $ 0 -- -- $ 4,914(2)
President and 1995 185,993 200,000 -- -- 3,650(3)
Chief Executive 1994 167,580 200,000 -- -- 3,369(4)
Officer
William A. Sheffield 1996 $ 84,091 $ 42,500 -- 15,000 --
Chief Financial 1995 84,000 42,500 -- -- --
Officer 1994 84,091 35,000 -- -- --
William M. Kunkel 1996 $ 95,000 $ 0 -- -- $ 5,843(5)
Vice President 1995 87,083 40,000 -- 75,000 5,282(5)
of Finance (6) 1994 -- -- -- -- --
</TABLE>
- - ----------
(1) These executive officers did not receive any annual compensation not
properly categorized as salary or bonus, except for certain perquisites or
other benefits the aggregate incremental cost of which to the Company for
each officer did not exceed the lesser of $50,000 or 10% of the total of
annual salary and bonus reported for each such officer.
(2) Includes $1,788 contributed by the Company to the Employee Savings and
Profit Sharing Plan, car allowance of $1,926 and life insurance benefit of
$1,200.
(3) Includes $1,848 contributed by the Company to the Employee Savings and
Profit Sharing Plan and car allowance of $1,802.
(4) Includes $1,913 contributed by the Company to the Employee Savings and
Profit Sharing Plan and car allowance of $1,456.
(5) Represents reimbursement of living, travel and related expenses.
(6) Mr. Kunkel became the Company's Vice President and Chief Financial Officer
on March 31, 1997.
Employment Agreements
The Company has entered a non-competition agreement with Jerold Kennedy
which provides that, for a period of two years after Mr. Kennedy's employment
with the Company terminates, he shall not compete with the Company. Mr. Kennedy
is not entitled to receive additional compensation under this non-competition
agreement.
7
<PAGE> 11
Option Grants in Last Fiscal Year
The following table sets forth certain information regarding grants of
stock options made to the named executive officers during 1996.
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------------------------------
Number of Percentage of Potential Realizable Value
Securities Total Options at Assumed Annual Rates
Underlying Granted to Exercise or Market Price of Stock Price Apprecia-
Options Employees in Base Price on Date of Expiraton for Option Term
Name Granted Fiscal Year ($/Sh) Grant($/Sh) Date 5%($) 10%($)
---- ---------- ------------- ----------- ------------ --------- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Jerold Kennedy -- -- -- -- -- -- --
William A. Sheffield 15,000 4% 10.64 10.64 2001 (1) (1)
William M. Kunkel -- -- -- -- -- -- --
</TABLE>
- - ----------
(1) The outstanding options granted to Mr. Sheffield expired upon his
retirement from the Company.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
The following table provides certain information, with respect to the named
executive officers, concerning the exercise of options during 1996 and with
respect to unexercised options at December 31, 1996.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options at Fiscal In-the-Money Options at
Acquired Value Year End (#) Fiscal Year End ($)
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- - ---- --------------- ------------ ---------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jerold Kennedy -- -- -- -- -- --
William A. Sheffield 3,000 $ 12,500 (1) (1) (1) (1)
William M. Kunkel 30,000 265,000 -- 45,000 -- $163,000
</TABLE>
- - ----------
(1) The outstanding options granted to Mr. Sheffield expired upon his
retirement from the Company.
8
<PAGE> 12
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the Compensation Committee with respect to
compensation policies applicable to the Company's executive officers and with
respect to the basis for Mr. Kennedy's compensation as President and Chief
Executive Officer for 1996.
The Compensation Committee believes that, while familiar indicators of
success such as stock price and earnings per share are important, there are
numerous criteria to evaluate in assessing the skill with which the executive
officers are performing their duties. The Company's executive compensation
policies are designed to motivate and retain senior management by providing
levels of compensation which relate to past and anticipated individual and
Company performance and to base a portion of each executive officer's
compensation package on the financial performance of the Company in the form of
bonuses tied to financial performance and the granting of stock options.
The compensation of the Company's executive officers is reviewed and
approved annually by the Compensation Committee of the Board of Directors. Each
member of the current Compensation Committee is a non-management director,
except for Mr. Keenum, who, while not employed by the Company, serves as the
Secretary/Treasurer and General Counsel of the Company.
President and Chief Executive Officer's Compensation
The Compensation Committee considers increases in the chief executive
officer's compensation on an annual basis. In establishing the compensation
for Mr. Kennedy for 1996, the basic approach was that of the compensation
policies applicable to all executive officers, including consideration of the
contribution by Mr. Kennedy to the success of the Company and the degree of
responsibility vested in him. The Compensation Committee made a subjective
determination regarding the level of Mr. Kennedy's compensation and considered,
among other factors, the increase in the Company's revenues and net income from
1995 to 1996, the corresponding increase in Mr. Kennedy's management duties,
Mr. Kennedy's existing compensation and ownership interest in the Company, and
Mr. Kennedy's recommendations regarding his compensation. Based upon these
considerations, the Compensation Committee decided not to alter Mr. Kennedy's
base compensation and to not pay Mr. Kennedy a bonus for 1996. No specific
relative weighing of these factors was used.
Salary
The Compensation Committee considers increases in compensation on an annual
basis. The Compensation Committee's policy in determining the appropriate annual
salary for executives is to consider the executive's contribution to the success
of the Company and the degree of responsibility vested in the executive's
position. The Compensation Committee also considers each executive's existing
compensation, the anticipated growth of the Company, and each executive's
performance, considered on a subjective basis by the Compensation Committee. No
specific relative weighing of these factors was used.
The Compensation Committee intends to structure future compensation so that
executive compensation paid by the Company is fully deductible in accordance
with Section 162(m) of the Internal Revenue Code of 1986, as amended. Section
162(m), which was enacted in 1993, generally disallows a tax deduction to public
companies for compensation over $1 million paid to certain executive officers
unless certain conditions are met.
Performance Bonus
The Compensation Committee's policy is that a portion of executive
compensation should be "at risk." The Compensation Committee believes that the
performance bonus motivates the executives to increase the Company's revenues
and income, which should result in increased shareholder value. The granting and
amount of the performance bonus is subjective, but the Compensation Committee
considers the performance of the Company during the year, especially with
respect to the Company's revenues, net income and number of floors produced. In
addition, the Compensation Committee considers each executive's existing
compensation, the anticipated or expected growth of the Company, and each
executive's performance, judged on a subjective basis. No specific relative
weighing of these factors was used.
9
<PAGE> 13
The amount earned under the performance bonus by each named executive
officer in 1995 and 1996 is as follows:
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Jerold Kennedy $200,000 $ 0
William A. Sheffield 42,500 42,500
William M. Kunkel 40,000 0
</TABLE>
Stock Options
The Compensation Committee believes that stock options reward the long-term
performance of executives. The Compensation Committee believes that stock
options provide financial incentives for management because the option exercise
price for the employee is the price of stock on the date of grant. Accordingly,
executives recognize a gain only if the value of the Company's stock increases.
As a result, executives with stock options are rewarded for their efforts to
improve long-term stock market performance. In this manner, the financial
interests of management are aligned with those of the Company's shareholders.
The Company granted options to purchase 15,000 shares of Common Stock at an
exercise price of $10.64 per share to William A. Sheffield on January 24, 1996.
Due to prior awards or to current ownership interests in the Company, the
Compensation Committee did not grant any other options to the named executive
officers under its Incentive Stock Plan in 1996.
Compensation Committee Interlocks and Insider Participation
Mr. Keenum, a member of the Compensation Committee, serves as the
Secretary/Treasurer and General Counsel of the Company but is not compensated in
such capacity. There are no other relationships among the Company's executive
officers and any entity affiliated with any of the members of the Compensation
Committee that require disclosure under applicable rules promulgated by the
Securities and Exchange Commission (the "Commission").
Compensation Committee:
A. Douglas Jumper, Sr.
Thomas D. Keenum, Sr.
Don D. Murphy
COMPENSATION OF DIRECTORS
During 1996, each Director who was not either an employee or officer of the
Company (a "Non-Employee Director") received an annual fee of $10,000, a fee of
$750 plus expenses for each quarterly meeting of the Board of Directors attended
and a fee of $250 plus expenses for each quarterly committee meeting attended.
In addition, Non-Employee Directors are entitled to receive options pursuant to
the 1994 Non-Qualified Stock Option Plan for Non-Employee Directors (the
"Non-Employee Directors Plan"). The Non-Employee Directors Plan authorizes the
issuance of up to 75,000 shares of Common Stock pursuant to options having an
exercise price equal to the fair market value of the Common Stock on the date
the options are granted. The Non-Employee Directors Plan contains provisions
providing for adjustment of the number of shares available for option and
subject to unexercised options in the event of stock splits, dividends payable
in Common Stock, business combinations or certain other events. The Non-Employee
Directors Plan provides for the grant on January 1 of each year (the "Grant
Date") of options to purchase 1,500 shares to each Non-Employee Director serving
the Company on the Grant Date.
10
<PAGE> 14
On January 1, 1996, the Company granted options to purchase an aggregate of
6,000 shares of Common Stock under the Non-Employee Directors Plan at an
exercise price per share of $12.09, the fair market value of the Common Stock on
December 29, 1995, the last trading date prior to the Grant Date. Messrs.
Jumper, Murphy, Page and Patterson, the Non-Employee Directors on such date,
were each granted options to purchase 1,500 shares. On January 1, 1997, Messrs.
Jumper, Murphy, Page and Sparks, the Non-Employee Directors on such date, were
granted option to purchase 1,500 shares at $9.88 per share, the fair market
value of the Common Stock on the last trading day prior to the Grant Date.
11
<PAGE> 15
COMPARATIVE PERFORMANCE GRAPH
The following graph compares the yearly percentage change in cumulative
total shareholder return on the Common Stock since the Company's initial public
offering with the cumulative total return on the CRSP Index for Nasdaq Stock
Market Companies and the CRSP Index for an industry peer group selected by the
Company. The companies in the peer group are Cavalier Homes, Inc., Champion
Enterprises, Inc., Fleetwood Enterprises, Inc., Redman Industries, Inc., Skyline
Corporation and Southern Energy Homes, Inc. The graph assumes the investment on
June 1, 1995 of $100 in the Common Stock and that any dividends were reinvested
at the time they were paid.
<TABLE>
<CAPTION>
*6/1/95 12/95 12/96
------- ----- -----
<S> <C> <C> <C>
Belmont Homes, Inc. $100 $181 $144
NASDAQ (U.S. Companies) $100 $122 $150
Custom Peer Group $100 $142 $167
</TABLE>
_______________
* Initial Public Offering on 6/1/95
12
<PAGE> 16
CERTAIN TRANSACTIONS
Aubrey Burns Patterson, a director of the Company until September 1996, is
the Chairman of the Board, President and Chief Executive Officer of
BancorpSouth, Inc. ("Bancorp") and BOM, a wholly owned subsidiary of Bancorp.
Mr. Jumper, Sr. is also a director of Bancorp and BOM. On November 10, 1995, the
Company obtained a line of credit in the principal amount of $10,000,000 from
BOM. This line of credit bears interest, at the Company's option, at BOM's prime
rate or LIBOR plus 2.65%, expires on May 10, 1998 and is secured by
substantially all of the assets of Belmont Homes, Inc. At April 18, 1997, the
Company had $5,000,000 outstanding under this line of credit.
Mr. Page is a director of Colonial Bank of Red Bay, Alabama ("Colonial
Bank"), which extended a $500,000 line of credit to the Company, with interest
at a rate of 1% over the Colonial Bank Base Rate and a maturity date of
September 6, 1996. On January 11, 1995, the Company obtained an additional
$2,000,000 line of credit from Colonial Bank, with interest at 1% over the prime
rate and a maturity date of April 30, 1996. On April 10, 1996, the Company
refinanced the $500,000 line of credit and the $2,000,000 line of credit with a
$2,500,000 line of credit, with interest at the prime rate and a maturity date
of April 10, 1997. These lines were consolidated and increased on April 10,
1997. The Company now has a $5,000,000 line of credit with Colonial Bank, with
interest payable at the Colonial Bank Base Rate. At April 18, 1996, borrowings
under the line of credit consisted of letters of credit issued in the amount of
$280,000.
Mr. Allison is a director of the First National Bank of Conway ("FNB"). On
April 10, 1995, Spirit Homes, Inc., a subsidiary of the Company, entered into a
variable rate commercial revolving note in the principal amount of $1.3 million
with FNB, which note bore interest at a variable rate not to exceed 10.25% and
expired on April 10, 1996 (the "FNB Revolver"). The FNB Revolver has been
amended by increasing funds available to $2 million, and extending the maturity
date to July 10, 1997. The FNB Revolver is secured by a lien on Spirit's
accounts, finished manufactured homes and inventory of raw materials.
Mr. Allison owns a 42% interest in Conway Home Sales, d/b/a Cottonwood Home
Sales, a manufactured home retailer in Harrison, Arkansas. During the year ended
December 31, 1996, Spirit sold manufactured homes to this dealership in the
aggregate amount of approximately $1,154,315.
Mr. Allison owns a 33% interest in Sunrise Decor, Inc., a manufacturer of
draperies in Conway, Arkansas. During the year ended December 31, 1996, Spirit
purchased $715,739 in supplies from Sunrise Decor.
In 1993, Spirit purchased 20 acres and a 66,000 square foot manufacturing
facility from Mr. Allison for a purchase price of $500,000. Spirit financed the
acquisition of this facility by entering into a loan agreement with Boatmen's
National Bank of Conway (formerly Worthen National Bank of Conway) on June 22,
1993 in the aggregate principal amount of $500,000 (the "Boatmen's Note"). The
Boatmen's Note was refinanced and moved to FNB on January 7, 1997. At April 18,
1997, the outstanding balance of the Boatmen's Note was $489,475.56. The
Boatmen's Note is secured by a mortgage on the facility and the personal
guaranty of Mr. Allison.
Mr. Keenum is a partner with the law firm of Keenum & Tutor, P.A., which
has performed certain legal services for the Company. Fees paid to the firm by
the Company were less than 5% of the Company's net sales in 1996.
13
<PAGE> 17
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP has served as the Company's independent accountants
since July 14, 1993. Consistent with its past practice, the Audit Committee of
the Board of Directors has not yet selected the Company's independent auditors
for 1997. Representatives of KPMG Peat Marwick LLP will be available to answer
questions at the Annual Meeting of Shareholders and are free to make statements
during the course of the meeting.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who own more than 10% of a registered
class of the Company's securities to file reports of ownership and changes in
ownership with the Commission. Officers, directors and greater than ten-percent
shareholders are required by the Commission to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on a review of copies of such
forms received by it, or written representations from certain of the Company's
directors and executive officers that no other reports were required, the
Company notes that William A. Sheffield, the Company's Chief Financial Officer
from October 1993 until his retirement in March 1997, failed to report timely
his acquisition of 500 shares of the Common Stock on November 8, 1996. Mr.
Sheffield subsequently reported this acquisition on Form 5.
II. APPROVAL OF AMENDMENTS TO THE COMPANY'S 1994 INCENTIVE STOCK PLAN
The Board of Directors adopted, subject to the approval of the
shareholders, amendments to the Company's 1994 Incentive Stock Plan (the
"Incentive Plan") (i) increasing the number of authorized shares of Common Stock
under the Incentive Plan from 600,000 to 1,000,000, (ii) requiring that no more
than 250,000 shares of Common Stock be awarded to any person in a three-year
period and (iii) eliminating the requirement of shareholder approval of certain
administrative amendments.
The following is a brief description of the material terms of the Incentive
Plan and the proposed amendments thereto. Such description is qualified in its
entirety by reference to the full text of the Incentive Plan and the proposed
amendments to the Incentive Plan attached hereto as Appendix A(1) and Appendix
A(2), respectively.
DESCRIPTION OF PROPOSED AMENDMENTS
Currently, 600,000 shares of Common Stock have been reserved for issuance
pursuant to options granted under the Incentive Plan, of which 460,500 have been
granted. If the amendments are approved, an additional 400,000 shares would be
available for grant under the Incentive Plan. The Incentive Plan currently does
not restrict the number of shares that may be granted to any person. The
amendments, if approved, would require that no more than 250,000 shares of
Common Stock be awarded under an option to any person during a three-year
period. In addition, the Incentive Plan currently requires shareholder approval
of any amendment that could materially increase benefits accruing to option
holders, as that term is used in Rule 16b-3 promulgated by the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934 ("Rule
16b-3"). If approved, the amendments would limit the requirement of shareholder
approval to those matters that are referenced in Sections 422 and 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code").
REASONS FOR CHANGES
The Incentive Plan is an essential part of the Company's compensation and
reward program for its employees because awards under the Incentive Plan permit
employees to benefit from the Company's growth and financial performance. The
Board of Directors believe that it is in the best interest of the Company to
authorize additional shares under the Incentive Plan to continue to provide
employees compensation and reward for their efforts on behalf of the Company.
The limit on the number of shares that can be awarded to an individual under an
option
14
<PAGE> 18
is recommended, since there currently is no such limit under the Incentive Plan,
and this restriction will increase the Company's ability to treat compensation
recognized by option holders as "performance-based" pay under Section 162(m) of
the Code. Compensation that is not performance-based pay cannot be deducted for
tax purposes to the extent it exceeds $1 million in a year. This amendment is
intended to preserve the Company's right to deduct compensation recognized by
option holders, as described under "Federal Income Tax Consequences," below, as
a result of possible appreciation in the market value of the Company's Common
Stock. Finally, the Board of Directors believes that it is appropriate to
eliminate the Rule 16b-3 requirements for shareholder approval of future
amendments because Rule 16b-3 has been itself amended to delete these
shareholder approval requirements. Instead, consistent with the requirements of
the Code, the amended Incentive Plan will require shareholder approval of
amendments that increase the aggregate number of shares that can be issued
pursuant to the Incentive Plan, change the class of employees eligible to
receive "incentive stock options" (described in Section 422 of the Code),
change the maximum number of shares that can be awarded to any employee under
an option, or increase the period during which options may be granted or
exercised.
DESCRIPTION OF INCENTIVE PLAN
The purpose of the Incentive Plan is to provide a performance incentive to
employees and others who perform services that enhance the value of
shareholders' equity. Plan participants, from time to time, are awarded
incentive stock options ("ISOs") as defined in Section 422 of the Code, or
options that are not so qualified as incentive stock options ("NQSOs"). These
awards are intended to serve as an encouragement to participants in the
Incentive Plan to remain with the Company and to more closely align their
interests with the interests of the Company and its shareholders. The Incentive
Plan will terminate in 2004 if not terminated earlier. The Compensation
Committee is authorized to administer the Incentive Plan and to award options to
Company employees and to certain others who provide significant services to the
Company. ISOs may be granted only to Company employees.
The Compensation Committee determines which individuals are to receive
awards under the Incentive Plan, whether to award ISOs or NQSOs and the exercise
prices and vesting dates of award. The exercise price of NQSOs may not be less
than 85% of the fair market value of the Common Stock on the date of grant. The
exercise price of ISOs may not be less than 100% of the fair market value of the
Common Stock on the date of grant (110% in the case of an individual who, at the
time of the grant, owns more than 10% of the total outstanding Common Stock, as
determined in good faith by the Compensation Committee). The aggregate fair
market value of Common Stock with regard to which ISOs are exercisable by an
individual for the first time during any calendar year may not exceed $100,000.
No option shall be exercisable after the expiration of ten years from the date
the option is granted (five years in the case of ISOs granted to employees who
at the time of grant own more than 10% of the total outstanding Common Stock).
The terms of specific stock option agreements may shorten these expiration
periods.
The Company has granted options to purchase 460,500 shares of Common Stock
under the Incentive Plan. The exercise price under which options have been
granted has been the fair market value of the Company's Common Stock on the date
of grant, which has ranged from $6.00 to $10.64 per share. All awards of options
have been made so that one-fifth of the award becomes exercisable on the
six-month anniversary date of the award, and each successive year thereafter.
Once an option has become exercisable, the participant may purchase shares
of Common Stock from the Company by paying the exercise price in cash or in
certain other consideration acceptable to the Compensation Committee. The
Company is authorized to loan, or guarantee loans of, the purchase price of
shares issuable upon exercise of options granted under the Incentive Plan.
The amount and specific terms of any award under the Incentive Plan is
subject to the discretion, within the terms of the Incentive Plan, of the
Compensation Committee and, therefore, cannot be determined in advance.
Similarly, the dollar value of such awards cannot be determined prior to their
grant.
15
<PAGE> 19
FEDERAL INCOME TAX CONSEQUENCES
Tax consequences to the Company and to participants of awards of options
will vary with the type of option awarded. A participant will not recognize
income, and the Company is not entitled to take a deduction, upon the grant of
an ISO or NQSO under the Incentive Plan. If the participant does not sell the
Common Stock acquired through the option for at least two years after the date
of grant of an ISO and one year after exercising the ISO, he will not recognize
ordinary income on the purchase of Common Stock. Any gain or loss on the sale of
the Common Stock after these holding periods will be subject to capital gains
treatment.
A participant who disposes of the Common Stock before these holding periods
are satisfied will have engaged in a "disqualifying disposition" and will
recognize taxable compensation on the difference between the exercise price of
the ISO and the fair market value of the Common Stock at the time the ISO was
exercised. The participant's basis in the Common Stock after a disqualifying
disposition is its fair market value at the time of exercise. The participant
will also be subject to tax on capital gain, if any, upon the sale of the Common
Stock on the amount realized in excess of the increased basis. Generally, the
Company is not entitled to a tax deduction upon the grant of an option or the
exercise of an ISO under the Incentive Plan. However, if the participant engages
in a disqualifying disposition, the Company may take a tax deduction for the
amount of ordinary income recognized by the participant.
Upon exercise of a NQSO, the participant recognizes taxable compensation on
the difference between the fair market value of the Common Stock and the
exercise price paid under the NQSO. The Company is entitled to deduct this
amount for tax purposes, provided that the Company pays an appropriate amount of
withholding tax to the Internal Revenue Service for the income recognized by the
participant. The participant is also subject to capital gains treatment on the
subsequent sale of the Common Stock acquired through the exercise of an option.
Corporate deductions for reasonable compensation paid to certain executive
officers are limited to $1 million per year under Section 162(m) of the Code.
REQUIRED VOTE
Approval of the proposed amendments to the Incentive Plan requires the
affirmative vote of the majority of the votes cast (in person or by proxy) by
the holders of Common Stock entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
AMENDMENTS TO THE COMPANY'S 1994 INCENTIVE STOCK PLAN
III. OTHER MATTERS
SHAREHOLDERS' PROPOSALS FOR NEXT ANNUAL MEETING OF SHAREHOLDERS
Shareholders' proposals intended to be presented at the next Annual Meeting
of Shareholders must be received by the Company no later than December 31, 1997
for inclusion in the Company's proxy statement and form of proxy relating to
that meeting.
MISCELLANEOUS
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors of the Company. The entire cost of soliciting these proxies
will be borne by the Company. In addition to being solicited through the mails,
proxies may be solicited personally or by courier service, telephone, telegraph
or facsimile by officers, directors and employees of the Company, who will
receive no additional compensation for such activities. Arrangements will also
be made with brokerage houses and other custodians, nominees and fiduciaries to
forward
16
<PAGE> 20
solicitation materials to the beneficial owners of shares held of record by such
persons, who will be reimbursed for their reasonable expenses incurred in such
connection.
The Board of Directors, at the time of the preparation of this Proxy
Statement, knows of no business to come before the meeting other than that
referred to herein. If any other business should come before the meeting, the
persons named in the enclosed Proxy will have discretionary authority to vote
all proxies in accordance with the recommendation of the Board of Directors.
UPON THE WRITTEN REQUEST OF ANY RECORD HOLDER OR BENEFICIAL OWNER OF COMMON
STOCK ENTITLED TO VOTE AT THE ANNUAL MEETING OF SHAREHOLDERS, THE COMPANY,
WITHOUT CHARGE, WILL PROVIDE A COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1996, TOGETHER WITH THE FINANCIAL STATEMENTS AND
SCHEDULES, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD
BE DIRECTED TO WILLIAM M. KUNKEL, VICE PRESIDENT AND CHIEF FINANCIAL OFFICER,
BELMONT HOMES, INC., HIGHWAY 25 SOUTH, INDUSTRIAL PARK DRIVE, BELMONT,
MISSISSIPPI 38827.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Thomas D. Keenum, Sr.
Belmont, Mississippi Thomas D. Keenum, Sr.
May 6, 1997 Secretary
17
<PAGE> 21
Appendix A
PROXY
BELMONT HOMES, INC.
ANNUAL MEETING OF SHAREHOLDERS
-------------------
The undersigned hereby appoints John W. Allison and Thomas D. Keenum, Sr.,
or either of them, with power of substitution, as Proxies to vote all Common
Stock of Belmont Homes, Inc. owned by the undersigned at the Annual Meeting of
Shareholders to be held at the Executive Inn, 1011 North Gloster, Tupelo,
Mississippi, at 1:00 p.m. on Tuesday, June 3, 1997, and any adjournment thereof,
on the following items of business and such other business as may properly come
before the meeting.
1. ________FOR THE ELECTION AS DIRECTORS OF ALL NOMINEES LISTED BELOW (EXCEPT
AS MARKED TO THE CONTRARY BELOW)
________WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW
(degree) A. Douglas Jumper, Sr. (degree) Roger D. Moore
(degree) Jerold Kennedy (degree) J.M. Page
(degree) John W. Allison (degree) Don D. Murphy
(degree) Thomas D. Keenum, Sr. (degree) Hollis D. Sparks
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEES, WRITE
THEIR NAMES IN THE SPACE PROVIDED BELOW.
-------------------------------------------------------------------
2. ________FOR THE APPROVAL OF THE AMENDMENTS TO THE 1994 INCENTIVE STOCK PLAN.
________WITHHOLD AUTHORITY FOR THE APPROVAL OF THE AMENDMENTS TO THE
1994 INCENTIVE STOCK PLAN.
3. IN THEIR DISCRETION, UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
18
<PAGE> 22
BELMONT HOMES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted for all nominees and for all Proposals.
Please sign exactly as name appears below. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: _____________, 1997 _________________________________
Signature of Shareholder
__________________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
19
<PAGE> 23
APPENDIX A(1)
BELMONT HOMES, INC.
1994 INCENTIVE STOCK PLAN
1. The Purpose of the Plan. This Belmont Homes, Inc. 1994 Incentive Stock
Plan (the "Plan") is intended to provide an opportunity for individuals
performing services to Belmont Homes, Inc., a Mississippi corporation (the
"Corporation"), including officers, directors and key employees of the
Corporation and its subsidiaries, as subsidiaries are defined in section 425 of
the Code* (its "subsidiaries"), to acquire shares of the Corporation's stock and
to provide for additional compensation based on appreciation of the
Corporation's stock. The Plan provides for the grant of incentive stock options,
as defined in Section 422 of the Code ("Incentive Stock Options"), and stock
options not qualifying as Incentive Stock Options ("Non-Qualified Stock
Options"), providing an equity interest in the Corporation's business as an
incentive to service or continued service with the Corporation and to aid the
Corporation in retaining and obtaining key personnel of outstanding ability. As
used herein, "Incentive Stock" refers to Incentive Stock Options and
Non-Qualified Stock Options.
2. Stock Subject to the Plan. The maximum number of shares of the Common
Stock, $.10 par value, of the Corporation (the "Stock") which may be issued
under Incentive Stock Options and Non-Qualified Stock Options granted under the
Plan (the "Options") shall be a total of 400,000 shares of Stock, which may be
either authorized and unissued Stock or Stock held in the treasury of the
Corporation, as shall be determined by the Board of Directors of the
Corporation. If an Option expires or terminates for any reason without being
exercised in full, the unpurchased shares subject to such Option shall again be
available for purposes of the Plan.
3. Administration of the Plan. This Plan shall be administered by the Board
of Directors or a committee of the Board of Directors consisting of not less
than three directors who are "disinterested persons" (within the meaning of that
term as used in Rule 16b-3 promulgated by the Securities and Exchange Commission
("Rule 16b-3"). As used herein, the term "Committee" refers to such committee
or, in the absence of appointment of such committee, to the Board of Directors.
The Committee shall have full authority in its discretion to determine the
eligible persons to whom Incentive Stock shall be granted and the terms and
provisions of Incentive Stock, subject to the Plan. In making such
determinations, the Committee may take into account the nature of the services
rendered and to be rendered by such person, their present and potential
contributions to the Corporation and any other factors which the Committee deems
relevant. The Board of Directors shall administer the Plan only if each member
is a disinterested person. Subject to the provisions of the Plan, the Committee
shall have full and conclusive authority to interpret the Plan; to prescribe,
amend and rescind rules and regulations relating to the Plan; to determine the
terms and provisions of the respective Stock Incentive agreements (which need
not be identical); to determine the restrictions on transferability of Stock
acquired upon exercise of Options (which restrictions need not be identical);
and to make all other determinations necessary or advisable for the proper
administration of the Plan.
4. Eligibility and Limits. Stock Incentives may be granted to employees and
officers as are selected by the Committee. Incentive Stock Options may, however,
only be granted to employees of the Corporation and its present or future
subsidiaries. The aggregate fair market value (determined as of the time an
Incentive Stock Option is granted) of the Stock with respect to which Incentive
Stock Options are exercisable by an individual for the first time during any
calendar year, taking into account Incentive Stock Options granted under this
Plan and under all other plans of the Corporation and its parent or subsidiary
corporations (as defined in Section 424 of the Code), shall not exceed $100,000.
5. Incentive Stock Options and Non-Qualified Stock Options. At the time any
Option is granted under this Plan, the Committee shall determine whether said
Option is to be an Incentive Stock Option or a Non-Qualified Stock Option, and
the Option shall be clearly identified as to its status as an Incentive Stock
Option or a Non-Qualified Stock Option. The number of shares as to which
Incentive Stock Options and Non-Qualified Stock Options
- - ----------
* The "Code" herein refers to the Internal Revenue Code of 1986, as amended.
<PAGE> 24
shall be granted shall be determined by the Committee in its sole discretion,
subject to the provisions of Section 4 above with respect to the aggregate fair
market value of the Stock for which Incentive Stock Options held by any
individual may become exercisable in any calendar year and subject to the
provisions of paragraph 2 above as to the total number of shares for which Stock
Incentives may be granted under the Plan. At the time any Incentive Stock Option
granted under this Plan is exercised, the certificates representing the shares
of Stock purchased pursuant to said Option shall be clearly identified by legend
as representing shares purchased upon exercise of an Incentive Stock Option.
6. Terms and Conditions of Options. Subject to the following provisions,
all Options shall be in such form and upon such terms and conditions as the
Committee, in its discretion, may from time to time determine.
(a) Option Price.
(i) Incentive Stock Options. The Option price per share shall in no
event be less than 100% of the fair market value per share of the Stock (as
determined in good faith by the Committee) on the date the Option is
granted. If the employee owns (as defined in Code Section 424) more than
10% of the total combined voting power of all classes of the Corporation's
stock or of the stock of its parent or subsidiary, the Option price per
share shall not be less than 110% of the fair market value per share of the
Stock (as determined in good faith by the Committee) on the date the Option
is granted.
(ii) Non-Qualified Options. The option price per share shall not be
less than 50% of the fair market value per share of the Stock (as
determined in good faith by the Committee) on the date the Option is
granted.
(b) Date of Grant. For purposes of this subparagraph (b) the date the
Option is granted shall be the date on which the Committee has approved the
terms and conditions of a stock option agreement evidencing the Option, has
determined the recipient of the Option and the number of shares covered by the
Option and has taken all such other action as is necessary to complete the grant
of the Option.
(c) Option Term. No Option shall be exercisable after the expiration of ten
years from the date the Option is granted. No Incentive Stock Option granted to
an employee who at the time of grant owns (as defined in Code Section 424) more
than 10% of the total combined voting power of all classes of the Corporation's
stock or of the stock of its parent or subsidiary shall be exercisable after the
expiration of five years from the date it is granted.
(d) Payment. Payment for all shares purchased pursuant to exercise of an
Option shall be made in cash or, if approved by the Committee either at the time
of grant or at the time of exercise, by delivery of (i) outstanding shares of
Stock or (ii) currently exercisable Options, each at its fair market value, as
determined by the Committee, on the date of delivery or by any combination of
cash, Stock or Options, in an amount equal to the exercise price of the Options
being exercised. For purposes of this section, the fair market value of an
Option shall be equal to the product of (i) the amount by which the fair market
value of the Stock, as determined by the Committee, on the date of exercise
exceeds the exercise price contained in the Option and (ii) the number of shares
of Stock subject to the Option relinquished. Such payment shall be made at the
time that the Option or any part thereof is exercised, and no shares shall be
issued until full payment therefor has been made. The holder of an Option shall,
as such, have none of the rights of a stockholder.
(e) Nontransferability of Options. Options shall not be transferable or
assignable except by will or by the laws of descent and distribution and shall
be exercisable, during the holder's lifetime, only by him.
(f) Termination of Employment or Death. Except as provided below, an Option
may not be exercised by a holder unless he has been an employee or officer of
the Corporation or one of its subsidiaries continually from the date of the
grant until the date ending three months before the date of exercise. If a
holder ceases to be an employee or officer by reason of disability, within the
meaning of Section 422(c)(6) of the Code, the holder may not exercise an Option
(to the extent that the holder shall have been entitled to do so at the date of
his disability) later than twelve months after the date he ceases to be an
employee or removed as an officer or until the expiration of the stated
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<PAGE> 25
term of such Option, whichever is shorter. If the holder of an Option dies, such
Option may be exercised (to the extent that the holder shall have been entitled
to do so at the date of his death) by a legatee or legatees of the holder under
his last will, or by his personal representative or distributees, at any time
during the twelve-month period following his death or until the expiration of
the stated term of such Option, whichever is shorter. If a holder is discharged
as an employee or removed as a director for cause, as determined by the
Committee, Options held by him shall not be exercisable after such discharge or
removal. Notwithstanding this subparagraph (f), no Option may be exercised more
than ten years after the date on which it was granted. For purposes of this
subparagraph (f), a holder shall be deemed to be an employee or officer so long
as the holder is an employee or officer of a parent or subsidiary of the
Corporation or by another corporation (or a parent or subsidiary corporation of
such other corporation) which has assumed the Option of the holder in a
transaction to which Section 424(a) of the Code is applicable.
(g) Limited Right of Exercise. An Option may be exercised during the Option
term as to the full number of shares covered by the Option upon the occurrence
of any of the following events (each a "Change in Control") if: (1) a tender
offer or exchange offer has been made for shares of Stock, provided that the
corporation, person or other entity making such offer purchases or otherwise
acquires shares of Stock representing 50% or more of the outstanding shares of
Stock pursuant to such offer; (2) the stockholders of the Corporation have
approved a definitive agreement (the "Agreement") to merge or consolidate with
or into another corporation pursuant to which the Corporation will not survive
or will survive only as a subsidiary of another corporation, or to sell or
otherwise dispose of all or substantially all of its assets; or (3) any person
or group (as such terms are defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended (the "Act")), becomes the holder of 50% or more
of the outstanding shares of Stock. If a Change in Control has occurred, the
Option shall be fully exercisable: (x) in the event of (1) above, during the
term of the tender or exchange offer; (y) in the event of (2) above, within a
30-day period commencing on the date of approval by the shareholders of the
Agreement; or (z) in the event of (3) above, within a 30-day period commencing
on the date upon which the Corporation is provided a copy of Schedule 13D (filed
pursuant to Section 13(d) of the Act and the rules and regulations promulgated
thereunder) indicating that any person or group has become the holder of 50% or
more of the outstanding shares of Stock or, if the Corporation is not subject to
Section 13(d) of the Act, within a 30-day period commencing on the date upon
which the Corporation receives written notice that any person or group has
become the holder of 50% or more of the outstanding shares of Stock.
Notwithstanding the foregoing, no person subject to Section 16(a) of the
Act with respect to the Stock may sell or otherwise dispose of Stock acquired
pursuant to an Option granted within six months of the date of sale or other
disposition.
7. Guarantees and Loans. The Corporation is hereby authorized to guarantee
or make loans to the holder of an Option to enable him to exercise such Option.
Any loan made or guaranteed herein shall be in such amount as determined by the
Committee but shall not exceed the exercise price of the Options being exercised
by the holder. Any loans made or guaranteed shall be with full recourse against
the borrower, shall be secured by the Stock received from exercise of the
related Option, shall provide for a market rate of interest and shall contain
such other terms and conditions as are acceptable to the Committee. The
determination of whether loans are to be made or guaranteed shall be made by the
Committee.
Upon a merger or consolidation in which the Corporation is not the
surviving corporation, the surviving corporation shall substitute another Option
with equivalent value for an outstanding Option in a transaction to which
Section 424 of the Code is applicable. In the event of a change of the
Corporation's shares of Stock with par value into the same number of shares with
a different par value or without par value, the shares resulting from any such
change shall be deemed to be the Stock within the meaning of the Plan. Except as
expressly provided in this section 7, the holder of a Incentive Stock shall have
no rights by reason of any subdivision or combination 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 or by reason of any dissolution,
liquidation, merger or consolidation or distribution to the Corporation's
stockholders of assets or stock of another corporation, and any issue by the
Corporation of shares of Stock of any class, or securities convertible into
shares of Stock of any class, shall not affect, and no adjustment by reasons
thereof shall be made with respect to, the number or price of shares of Stock
subject to the Incentive Stock. The existence of the Plan and the Incentive
Stock granted pursuant to the Plan shall not affect in any way the right or
power of the Corporation to make or authorize any adjustment, reclassification,
reorganization or other change in its capital or business structure,
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<PAGE> 26
any merger or consolidation of the Corporation, any issue of debt or equity
securities having preferences or priorities as to the Stock or the rights
thereof, the dissolution or liquidation of the Corporation, any sale or transfer
of all or any part of its business or assets, or any other corporate act or
proceeding.
8. Termination and Amendment of the Plan. The Plan shall terminate on the
date ten years after adoption of the Plan by the Board of Directors, and no
Incentive Stock shall be granted under the Plan after that date, but Incentive
Stock granted before termination of the Plan shall remain exercisable thereafter
until they expire or lapse according to their terms. The Plan may be terminated,
modified or amended by the stockholders or the Board of Directors of the
Corporation; provided, however, that:
(a) no such termination, modification or amendment without the consent
of the holder of a Incentive Stock shall adversely affect his rights under
such Incentive Stock; and
(b) any modification or amendment which would (1) increase the
aggregate number of shares of Stock which may be issued under the Plan
(other than an increase merely reflecting a change in capitalization such
as a stock dividend or stock split), (2) modify the designation of the
persons eligible to receive Incentive Stock under the Plan, or (3)
materially increase the benefits accruing to holders of Incentive Stock
granted or to be granted under the Plan, within the meaning of Rule 16b-3
issued by the Securities and Exchange Commission under the Act, as amended,
shall be effective only if it is approved by the stockholders of the
Corporation at the next annual meeting of stockholders after the date of
adoption by the Board of Directors of such modification or amendment.
9. Changes in Capitalization; Merger; Liquidation. (a) The number of shares
of Stock as to which Stock Incentives may be granted, the number of shares
covered by each outstanding Stock Incentive, and the exercise price per share in
each outstanding Option shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Stock resulting from a subdivision or
combination of shares or the payment of a stock dividend in shares of Stock to
holders of outstanding shares of Stock or any other increase or decrease in the
number of such shares effected without receipt of consideration by the
Corporation.
(b) If the Corporation shall be the surviving corporation in any merger or
consolidation, recapitalization, reclassification of shares or similar
reorganization, the holder of each outstanding Option shall be entitled to
purchase, at the same times and upon the same terms and conditions as are then
provided in the Option, the number and class of shares of Stock or other
securities to which a holder of the number of shares of Stock subject to the
Option at the time of such transaction would have been entitled to receive as a
result of such transaction.
(c) In the event of any changes in capitalization of the Corporation, the
Committee may make such additional adjustments in the number and class of shares
of Stock or other securities with respect to which outstanding Options are
exercisable and with respect to which future Options may be granted as the
Committee in its sole discretion shall deem equitable or appropriate, subject to
the provisions of this paragraph 9.
(d) A dissolution or liquidation of the Corporation shall cause each
outstanding Option to terminate.
(e) In the event of any Change in Control in which shares of Stock are
purchased for cash in a tender offer or are to be converted into cash in a
merger, then, unless the Committee otherwise determines, each Option (other than
an Option granted within the last six months held by a person subject to Section
16(b) of the Act) shall be converted into a fully exercisable right to receive
an amount in cash per share subject to such Option equal to (A) in the case of a
tender offer or merger, the excess, in any, of the price paid in such tender
offer or merger over the exercise price of such Option and (B) in the case of
conversion, the excess, if any, of the highest market price of the Stock on the
date of conversion over the exercise price of such Option. Upon a merger or
consolidation, other than a cash merger or consolidation, in which the
Corporation is not the surviving corporation, the surviving corporation shall
substitute another Option with equivalent value for an outstanding Option in a
transaction to which Section 424(a) of the Code is applicable.
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(f) In the event of a change of the Corporation's shares of Stock with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any such change shall be deemed to be the Stock
within the meaning of the Plan. Except as expressly provided in this paragraph
9, the holder of a Stock Incentive shall have no rights by reason of any
subdivision or combination 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 or by reason of any dissolution, liquidation, merger or
consolidation or distribution to the Corporation's stockholders of assets or
stock of another corporation, and any issue by the Corporation of shares of
Stock of any class, or securities convertible into shares of Stock of any class,
shall not affect, and no adjustment by reasons thereof shall be made with
respect to, the number or price of shares of Stock subject to the Stock
Incentive. The existence of the Plan and the Stock Incentives granted pursuant
to the Plan shall not affect in any way the right or power of the Corporation to
make or authorize any adjustment, reclassification, reorganization or other
change in its capital or business structure, any merger or consolidation of the
Corporation, any issue of debt or equity securities having preferences or
priorities as to the Stock or the rights thereof, the dissolution or liquidation
of the Corporation, any sale or transfer of all or any part of its business or
assets, or any other corporate act or proceeding.
10. Approval. This Plan is subject to the approval of the holders of a
majority of the outstanding shares of common stock of the Corporation and unless
so approved within twelve months of its adoption by the Board of Directors, this
Plan and any Stock Incentives granted hereunder shall become void thereafter.
11. Incentive Stock Option. All Incentive Stock Options to be granted
hereunder are intended to comply with Sections 422 and 424 of the Code, and all
provisions of this Plan and all Incentive Stock Options granted hereunder shall
be construed in such manner as to effectuate that intent.
12. General Provisions.
(a) Legends; Restrictions on Transfer. The Committee may require each
person purchasing shares pursuant to a Stock Incentive to represent to and agree
with the Corporation in writing that the shares are acquired without a view to
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
(b) Other Compensation. Nothing contained in this Plan shall prevent the
Board of Directors from adopting other or additional compensation arrangements,
subject to shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only in specific
cases.
(c) No Rights to Continued Employment. Neither the adoption of the Plan, or
the granting of any Stock Incentive hereunder, shall not confer upon any
employee of the Corporation or any subsidiary any right to continued employment
with the Corporation or a subsidiary, as the case may be, nor shall it interfere
in any way with the right of the Corporation or a subsidiary to terminate the
employment of any of its employees at any time.
(d) Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Mississippi.
(e) Compliance with Section 16(b). This Plan is intended to comply with and
to the extent necessary or appropriate shall be interpreted to comply with, Rule
16b-3.
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APPENDIX A(2)
AMENDMENT TO BELMONT HOMES, INC.
1994 INCENTIVE STOCK PLAN
WHEREAS, Belmont Homes, Inc. (the "Corporation") previously adopted the
1994 Incentive Stock Plan (the "Plan"); and
WHEREAS, the Board of Directors desires to (1) increase the number of
authorized shares available for issuance under the Plan, (2) modify the terms of
the Plan so that compensation amounts payable thereunder will be treated as
"performance based compensation" that is described in Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), (3) consistent with
modifications to Rule 16b-3 promulgated under the Securities Exchange Act of
1934, provide for approval of amendments to the Plan only in circumstances
described in Sections 162(m) and 422 of the Code and (4) modify the terms of the
Plan to remove restrictions on the transfer of non-qualified stock options
received under the Plan;
NOW, THEREFORE, the Plan is hereby amended as follows, effective April 16,
1997:
1. Section 2 of the Plan is hereby amended by deleting the reference to
"400,000 shares of Stock" and replacing such reference with "1,000,000
shares of Stock".
2. The following language is added to the end of Section 4 of the Plan:
"No person may receive an Option to purchase more than 250,000 shares of
Stock (subject to increases and adjustments for changes in the
capitalization of the Corporation) during any three year period."
3. Section 6(e) of the Plan is deleted in its entirety and restated as
follows:
(e) Transferability of Options. Incentive Stock Options shall not be
transferrable or assignable except by will or by the laws of descents
and distribution and shall be exercisable, during the holder's
lifetime, only by him. Non-Qualified Stock Options shall be
transferable by will or by the laws of descent and distribution only,
except as otherwise expressly provided for in a written agreement
(including any amendment or supplement thereto) between the
Corporation and the holer specifying the terms and conditions of an
Option granted to such holder.
4. Section 8 of the Plan is deleted in its entirety and restated as follows:
8. Termination and Amendment of the Plan. The Plan shall terminate on the
date ten years after the adoption of the Plan by the Board of Directors and no
Option shall be granted under the Plan after that date, but Options granted
before termination of the Plan shall remain exercisable thereafter until they
expire or lapse according to their terms. The Board of Directors may otherwise
sooner amend or terminate this Plan at any time; provided, however, an amendment
that would have a material adverse effect on the rights of a holder of an
existing Option is not valid with respect to such Option without the holder's
consent. Provided further that the shareholders of the Corporation must approve
any amendment:
(a) 12 months before or after the date an amendment is adopted that
increases the aggregate number of shares of Stock that may be issued under
Incentive Stock Options or changes the employees (or class of employees)
eligible to receive Incentive Stock Options.
<PAGE> 29
(b) Before the effective date of an amendment that changes the number of
shares in the aggregate which may be issued pursuant to Options granted under
the Plan or the maximum number of shares with respect to which any individual
may receive Options during any period specified herein.
(c) Before the effective date of an amendment that increases the period
during which Options may be granted or exercised.
IN WITNESS WHEREOF, the undersigned officer has executed this Amendment
pursuant to authority granted by the Board of Directors of the Corporation on
this ___ day of ______________, 1997.
BELMONT HOMES, INC.
By:____________________________
Title:_________________________
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