Fill and Sign the Usi Holdings Corp Proxy Statement Definitive Def 14a Form

PROPOSAL 3 APPROVAL OF 1994 STOCK AWARD PLAN On January 10, 1994, the Board of Directors adopted, subject to the approval of the stockholders of the Company, the Optelecom, Inc. 1994 Stock Award Plan (the "Plan"). The Plan provides for the granting of stock awards not to exceed an aggregate of 100,000 shares of Common Stock of the Company. The purpose of the Plan is to attract, retain, motivate and reward, and to provide competitive incentive compensation for employees, officers, and consultants of the Company who will be largely responsible for the future success of the Company, and to encourage stock ownership and a proprietary interest in the Company by such employees, officers, and consultants. The Board of Directors believes that the Plan will encourage this sense of proprietorship on the part of key employees and consultants and is necessary to assist the Company in its efforts to attract, retain and motivate key employees and consultants. The Board of Directors of the Company has the power to adopt the Plan without the approval of the stockholders. However, the Board is seeking stockholder approval in order to comply with the requirements of Rule 16b-3 adopted under the Securities Exchange Act of 1934 (the "1934 Act") which provides an exemption from Section 16(b) of the 1934 Act with respect to the award of shares under the Plan to officers and directors of the Company. In order to secure the benefits of Rule 16b-3, the Plan must be approved by the affirmative vote of the holders of a majority of the Common Stock present or represented at the annual meeting. A copy of the Plan is annexed to this Proxy Statement as Exhibit A and the following summary of its principal provisions is subject in all respects to the full text of the Plan. The effective date of the Plan is July 1, 1994, subject to approval by stockholders of the Company at the Annual Meeting. Awards may be made by the Company under the Plan until June 30, 2004. Awards under the Plan shall not exceed an aggregate of 100,000 shares of Common Stock of the Company. Shares awarded may be from authorized but unissued shares or from Company treasury shares. The recipient of an award under the Plan will be issued a stock certificate for shares (the "Shares") of Common Stock of the Company equivalent in number to the award granted, and the certificate shall bear an appropriate restrictive legend on its face, which legend shall be subject t o removal pursuant to an effective registration statement or an opinion of counsel satisfactory to the Company that such registration is not required. Participation under the Plan shall be limited to officers and key employees of the Company, including directors of the Company who are also key employees of the Company, and consultants to the Company. The Plan is to be administered by a committee comprised of the non-employee members of the Company's Board of Directors (the "Committee"). The Committee has full and exclusive authority in its discretion to grant shares of Common Stock to eligible employees, officers, and consultants in such amounts as are deemed appropriate, to determine the time or times at which awards will be granted, to interpret the provisions and supervise the administration of the Plan, and to prescribe, amend and rescind rules and regulations with respect to the Plan. The Company has been advised that the Federal income tax consequences to the Company and the recipient of an award under the Plan and the existing applicable provisions of the Internal Revenue Code and regulations are substantially as follows: For Federal Income Tax purposes, the recipient must include in his or her gross income the fair market value of Common Stock at the time of the award of the Common Stock. The Company is entitled to a deduction for compensation equal to the amount of gross income recognized by the recipient at the time so recognized. Required Stockholder Vote Approval of the Plan requires the affirmative vote of the holders of a majority of the shares of Common Stock voting either in person or by proxy at the Annual Meeting. The Board of Directors believes that it is in the best interests of the Company to approve the Plan, and the Board of Directors unanimously recommends that stockholders vote FOR the proposal to ratify the Plan. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.