MEGA HOLDING CORP.
278A New Drop Lane
Staten Island, New York 10306
718-667-9117
December 15, 1997
Dear Fellow Shareholder:
The Fiscal 1998 Annual Shareholders' Meeting of Mega Holding Corp. will be
held at 10:00 a.m. on Thursday, January 29, 1998 at its corporate headquarters,
278A New Drop Lane, Staten Island, New York, New York 10306. Enclosed you will
find formal Notice of Annual Meeting, Proxy and Proxy Statement, detailing the
matters which will be acted upon. Directors and Officers of the Company will be
present to help host the meeting and to respond to any questions from our
shareholders. I hope you will be able to attend.
Please sign, date and return the enclosed Proxy without delay in the
enclosed envelope. If you attend the Meeting, you may vote in person, even if
you have previously mailed a Proxy, by withdrawing your Proxy vote at the
meeting. Any shareholder giving a proxy may revoke the same at any time prior to
the voting of such proxy by giving written notice of revocation to the
Secretary, by submitting a later dated proxy. All shares represented by proxies
will be voted at the Meeting in accordance with the specifications marked
thereon, or if no specifications are made, proxies will be voted "FOR" all
matters set forth in the attached Notice of Meeting and in the discretion of the
proxy holder as to any other business which comes before the Meeting.
The Company's Board of Directors believes that a favorable vote for each
matter described in the attached Notice of Annual Meeting and Proxy Statement is
in the best interest of the Company and its shareholders and unanimously
recommends a vote "FOR" each such matter. Accordingly, we urge you to review the
accompanying material carefully and to return the enclosed Proxy promptly.
Thank you for your investment and continued interest in Mega Holding Corp.
Sincerely,
/s/Thomas M Abate
Thomas M. Abate
President and
Chairman of the Board of Directors
<PAGE>
NOTICE OF FISCAL 1998 ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF MEGA HOLDING CORP.
NOTICE is hereby given that the Fiscal 1998 Annual Meeting of Shareholders
(the "Meeting") of Mega Holding Corp. will be held at 10:00 a.m. on Thursday,
January 29, 1998 at its corporate headquarters, 278A New Drop Lane, Staten
Island, New York 10306:
1. Election of Directors for the ensuing year.
2. Approval of the appointment of independent auditors for fiscal year 1998.
3. Approval of the adoption by the Board of Directors of the Fiscal 1998
Nonstatutory Option Plan.
4. Transaction of such other business as may properly come before the Meeting,
or any adjournments thereof.
Only shareholders of record at the close of business on December 12, 1997
are entitled to notice of and to vote at the Meeting or any adjournments
thereof.
Your attention is directed to the Proxy Statement accompanying this notice
for a more complete statement regarding matters proposed to be acted upon at the
meeting.
TO ASSURE THAT YOUR SHARES ARE REPRESENTED AT THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED PROXY, FOR WHICH A RETURN ENVELOPE IS
PROVIDED. YOUR PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS EXERCISE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/James D. Paulsen
James D. Paulsen
Secretary to the Board of Directors
December 15, 1997
<PAGE>
PROXY STATEMENT
FOR FISCAL 1998 ANNUAL MEETING OF SHAREHOLDERS
MEGA HOLDING CORP.
278A New Drop Lane
Staten Island, New York 10306
Solicitation of the enclosed proxy is made by and on behalf of the Board of
Directors (the "Board of Directors") of Mega Holding Corp.. ("Mega" or the
"Company") to be used at the Fiscal 1998 Annual Meeting of Shareholders to be
held at the Company's headquarters, 278A New Drop Lane, New York 10306 on
Thursday, January 29, 1998 at 10:00 a.m., and at any adjournments thereof. The
mailing date of the Proxy Statement and the accompanying Proxy is December 15,
1997.
The cost of the solicitation of proxies will be borne by the Company.
Solicitations will be made only by use of the mails, except that, if necessary,
officers, directors and regular employees of Mega may solicit proxies by
telephone, telegram, facsimile or by personal contact. It is contemplated that
brokerage houses and nominees may be requested to forward proxy solicitation
material to the beneficial owners of the stock held of record by such persons;
and Mega may reimburse them for their charges and expenses in this connection.
All properly executed proxies delivered pursuant to this solicitation will
be voted at the Annual Meeting in accordance with any instructions thereupon.
Any person signing and mailing the enclosed proxy may, nevertheless, revoke the
proxy at any time prior to the actual voting thereof by attending the Annual
Meeting and voting in person, by providing written notice of revocation of the
proxy or by submitting a signed proxy bearing a later date. Any written notice
of revocation should be sent to the attention of the Secretary of the Board at
the address above.
Mega has one class of shares outstanding, 20,000,000 shares of common
stock, $.01 par value per share ("Shares"). The Company has fixed the close of
business on December 12, 1997 as the record date for determination of
shareholders entitled to notice of and to vote at the meeting or any
adjournments thereof. As of December 12, 1997, there were 3,615,000 outstanding
Shares each share entitled to one vote on each matter to be voted on at the
Annual Meeting. The holders of a majority of shares entitled to vote and
represented in person or by proxy at the Annual Meeting will constitute a quorum
for the transaction of business at the Annual Meeting. A shareholder who is
present in person or by proxy at the Annual Meeting and who abstains from voting
on any or all proposals will be included in the number of stockholders present
at the Annual Meeting for the purpose of determining the presence of a quorum.
An abstention with respect to any matter, however, will not be counted either in
favor of or against such matter.
<PAGE>
Brokers who hold shares for the account of their clients may vote such
shares either as directed by their clients or in their own discretion if
permitted by the exchange or other organization of which they are members.
Proxies which are voted by brokers on some but not all of the proposals are
referred to as "broker non-votes." Broker non-votes will be included in
determining the presence of a quorum. A broker non-vote, however, is not treated
as being in favor of or against the particular proposal under consideration.
SOLICITATION OF PROXIES
The cost of the proxy solicitations will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by the directors,
officers and employees of the Company, without additional compensation, by
personal interview, telephone, telegram or otherwise. Arrangements may also be
made with brokerage firms or other custodians, nominees or fiduciaries for the
forwarding of solicitation material to the beneficial owners of Shares of the
Company held of record by such persons, and the Company will reimburse such
respective brokers, custodians, nominees and fiduciaries for the reasonable
out-of-pocket expenses incurred by them in connection therewith.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of October 31, 1997, with
respect to (1) any person known by the Company to own beneficially more than 5%
of the Company's Common Stock; (2) the Company's Common Stock beneficially owned
by each officer and director of the Company, and; (3) the total of the Company's
Common Stock beneficially owned by the Company's officers and directors as a
group.
Name & Address of Shares
Beneficial Owner Beneficially Owned Percent
- ----------------- ------------------ -------
Thomas M. Abate 1,715,489(1) 47.5%
231 Clarke Avenue
Staten Island, NY 10306
James D. Paulsen 907,084(2) 25.1%
511 East 80th Street
New York, NY 10021
T.G.J. & Associates 542,084(3) 15.0%
618 74th Street
Brooklyn, New York 11209
Emco Enterprises 230,000(4) 6.4%
1388 Paterson Plane Road
Secaucus, NJ 07094
Silvio Codispoti 127,000(5) 3.5%
115 Sylvia Street
Staten Island, NY 10312
<PAGE>
John Catricola 140,000(6) 3.9%
79 Belfast Avenue
Staten Island, NY 10306
Nancy Montanaro 42,000(7) 1.2%
88 Rivington Avenue
Staten Island, NY 10314
John M. Seroor 102,500 2.8%
11 Emerson Road
Somerset, NJ 08873
All Officers and Directors
As a Group
(6 Persons) 2,490,989(1) 68.9%
1. Includes 100,000 shares as joint tenant with Renee Abate and 50,000 shares
in the name of Renee Abate; 15,000 shares as custodian for Amanda
Alexander; 15,000 shares as custodian for Megan Abate; 15,000 shares as
custodian for Samantha Alexander; and 15,000 shares as custodian for James
Abate. Mr. Abate has sole investment power and sole voting power over these
shares.
2. Includes 25,000 shares as joint tenant with Judith Paulsen and 2,000 in the
name of Judith Paulsen. Mr. Paulsen has sole investment power and sole
voting power over these shares.
3. Of the Common Shares owned by TGJ Associates ("TGJ"), 248,332 shares are
beneficially owned by Thomas M. Abate and 248,332 shares are beneficially
owned by James D. Paulsen. Messrs. Abate and Paulsen have shared investment
power and shared voting power of these shares. All of the shares of TGJ
beneficially owned by Messrs. Abate and Paulsen are included in the shares
owned by all officers and directors as a group.
4. Emco Enterprises is owned by Greg Martenelli.
5. Includes 500 shares as joint tenants with Dina Codispoti; 4,000 shares in
the name of Dina Codispoti; 500 shares as joint tenant with Denis
Codispoti; 4,000 shares in the name of Denis Codispoti; and 4,000 shares as
joint tenant with Florence Codispoti. Mr. Codispoti has sole investment
power and sole voting power over these shares.
6. Includes 10,000 shares in the name of Mary Catricola and 65,000 shares as
joint tenant with Mary Catricola. Mr. Catricola has sole investment power
and sole voting power over these shares.
7. Includes 500 shares as joint tenant with Paul Montanaro and 5,000 shares in
the name of Paul Montanaro. Mrs. Montanaro has sole investment power and
sole voting power over these shares.
<PAGE>
SUMMARY COMPENSATION TABLE
The following table provides information as to annual, long-term and other
compensation paid by the Company to its Chief Executive Officer and to each of
the other named executive officers of the Company who earned in excess of
$100,000 per year for services rendered in all capacities to the Company.
- --------------------------------------------------------------------------------
Long Term Compensation
Annual Compensation Awards Payouts
- --------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted All
Name and Annual Stock Options LTIP Other
Principal Fiscal Salary Bonus Compen- Awards SARs Payouts Compen-
Position Year ($) ($) sation ($) (#) ($) sation
- --------------------------------------------------------------------------------
Thomas M. 1997 (1) N/A N/A 0 0 0 0
Abate 1996 (2) N/A N/A 0 0 0 0
1995 (3) N/A N/A 0 0 0 0
- --------------------------------------------------------------------------------
(1) Consists of 50,000 common shares of ARXA at fair market value of $2.25 per
share.
(2) Consists of 75,000 shares of QCS Corp. at fair market value $.50 per share;
46,000 shares of ARXA International Energy, Inc. at fair market value $.50
per share; 50,000 shares of Hiawatha Industries, Inc. (restricted) no
market value.
(3) Consists of 20,000 shares of Capital Communications Corp. at fair market
value of $.50 per share; 40,000 shares of First Nordic Equity Partners
Corp. at fair market value $.10 per share; 30,000 shares of Republic
International Corp. at fair market value $.50 per share.
The amount of securities distributed to Mr. Abate has been, and will
continue to be, determined by the Company's Board of Directors.
Option/SAR Grants in Last Fiscal Year Table
The following table provides information as to options granted to the named
executive officers during fiscal 1997. No separate stock appreciation rights
("SARs") were granted in fiscal 1997.
- --------------------------------------------------------------------------------
Potential
Realizable Value at Assumed
Annual Rates of Stock Price
Appreciation For Option Term
Individual Grants
Number of Percent of
Securities Total
underlying Options
Options Granted to Exercise or
Granted Employees in Base Price Expiration
Name Fiscal Year ($/share) Date 5% 10%
- --------------------------------------------------------------------------------
Thomas M. 0 0.0% 0.00 n/a 0 0
Abate
- --------------------------------------------------------------------------------
<PAGE>
Aggregated Options Granted and Exercised in Last Fiscal Year and
Fiscal Year End Option/SAR Values
The following tables sets forth certain information concerning the number
of stock options held by the named Officers as of November 30, 1997.
- --------------------------------------------------------------------------------
Number of Shares Dollar value of
underlying unexercised
unexercised (in-the-money) options/
options/warrants on warrants on
04/30/97 04/30/97
Shares
Acquired
on Value
Exercise Realized Non- Non-
Name (*) ($) Exercisable Exercisable Exercisable Exercisable
- --------------------------------------------------------------------------------
Thomas M. -0- $-0- -0- -0- $-0- $-0-
Abate
- --------------------------------------------------------------------------------
Compensation of Directors
All Directors are currently employees or officers of the Company and are
compensated as such, and receive no additional compensation for serving as a
Director. At this time, the Company has no policy for compensating Directors who
are neither employees or officers of the Company ("Outside Directors").
Board of Directors' Report on Executive Compensation
The compensation of the Company's executive officers and key managers,
("executives") is reviewed and approved periodically by the Board of Directors.
In addition to reviewing and approving executive officers' salary and bonus
arrangements, the Board of Directors establishes policies and guidelines for
other benefits and administers the awards of stock options pursuant to the
Company's stock option plans.
Compensation Policies and Procedures Applicable to Executives for Fiscal 1997
General. The Company has little or no cash to compensate executive. As a
result, it distributes securities of its subsidiaries or of companies in which
it has an interest to certain executives from time to time in lieu of cash
compensation. When and if the Company generates income from its mortgage
brokerage or other activities, it will consider whether or not to provide cash
compensation to its executives and the level of such compensation.
Long-Term Incentive Compensation. It is the Board's philosophy that
significant stock ownership by management creates a powerful incentive for
executives to build long-term shareholder value. The Company's proposed Fiscal
1998 Nonstatutory Stock Option Plan (the "Fiscal 1998 Plan") authorizes the
Board or an option committee to grant nonstatutory stock options to employees of
the Company. In determining the total number of shares of Common Shares to be
covered by option grants to executive officers in a given year, the Board will
take into account the number of outstanding Common Shares, the number of shares
reserved for issuance under the Company's Fiscal 1998 Plan, recommendations of
management concerning option grants to
<PAGE>
employees below executive level, and the Company's prgojected hiring needs for
the coming year. In making individual stock option grants to executives, the
Committee will consider the same factors considered in the determination of base
salary levels, as well as the stock and option holdings of each executive and
the remaining vesting schedule of such executive's options.
CEO Thomas M. Abate's Compensation. In reviewing and approving Mr. Abate's
fiscal 1997 compensation, the Board of Directors considered the same criteria
detailed herein with respect to executives in general.
The Board of Directors does not have a standing nominating committee.
Nominations for election to the Board of Directors may be made by the Board of
Directors, or by any shareholder entitled to vote for the election of directors.
Nominations made by shareholders must be made by written notice received by the
Secretary of the Company by October 31 of the year preceding the annual meeting
or within ten days of the date on which notice of a special meeting for the
election of directors is first given to shareholders.
Special meetings are held from time to time to consider matters for which
approval of the Board of Directors is desirable or is required by law. One
meeting of the Board of Directors was held during fiscal 1997.
PROPOSALS
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The Directors elected at the Annual Meeting will serve until the next
Annual Meeting of Shareholders and until their successors are elected and
qualified. The Board of Directors of the Company has nominated Thomas M. Abate,
James D. Paulsen and John M. Seroor.
Thomas M. Abate, (60 years old), has been President and Director of the
Company from its inception (March 1970) and has served as Chairman of the Board
of Directors of Megatron Holding Corp. (OTC) from 1983 to 1987. He was the
Manhattan Area Manager of the U.S. Treasury Department, SB Division from 1974 to
1984. Mr. Abate received a B.S. in Finance from Wagner College.
James D. Paulsen, (58 years old), has been Executive Vice President and
Director of the Company since 1991, and has been associated with the Company
from its inception. He was an officer of AIG Risk Management, Inc. and American
Home Assurance Co. from 1977 to 1991. He is a graduate of The City University of
New York and The College of Insurance.
John M. Seroor, (67 years old), has been Treasurer & Director of the
Company since its inception. From 1963 to 1968 he was a chemist for the Food and
Drug Administration in Cincinnati, Ohio and Brooklyn, New York, and from 1968 to
1994 he was a quality control supervisor for Carter-Wallace, Inc. Mr. Seroor
graduated from the University of Connecticut where he earned a B.A. in
Chemistry. It is the intention of the persons named as proxies in the
accompanying proxy, unless instructed otherwise, to vote for the persons
nominated by the Board. If any nominee should become unavailable to serve, the
proxy may be voted for the election of such substitute nominee as may be
designated by the Board. The Board has no reason to believe that any of the
nominees will be unable to serve if elected.
<PAGE>
Any proposals to nominate a director or directors, other than those persons
nominated by the Board, must be made in person at the meeting. The Board is not
aware of any other proposals or nominations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ABOVE-NAMED NOMINEES.
PROPOSAL NO. 2 - APPROVING THE APPOINTMENT OF MCMANUS & CO., P.C. AS
INDEPENDENT AUDITORS FOR FISCAL 1998
The Board of Directors appointed McManus & Co., P.C. as independent public
accountant to audit the financial statements for Fiscal 1998 and has determined
that it would be desirable to request that the shareholders approve such
appointment. A representative of McManus & Co., P.C. is expected to attend the
meeting with the opportunity to make a statement and/or to respond to
appropriate questions from shareholders. Shareholder approval is not required
for the appointment of McManus & Co., P.C. since the Board of Directors has the
responsibility for selecting auditors. However, the appointment is being
submitted for the approval at the Annual Meeting. No determination has been made
as to what action the Board would take if shareholders do not approve the
appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF MCMANUS & CO.,
P.C. AS INDEPENDENT AUDITORS.
PROPOSAL NO. 3 - APPROVING THE ADOPTION OF THE COMPANY'S 1998 NONSTATUTORY
STOCK OPTION PLAN
The Board of Directors has adopted the Company's 1998 Nonstatutory Stock
Option Plan. 1,000,000 Common Shares have been reserved under the Plan. The Plan
is administered by the Board of Directors.
Stock options under the Plan ("Plan Options") may be granted to employees,
officers, directors, consultants of the Company and any other parties who have
made a significant contribution to the business and success of the Company. The
exercise price of Plan Options under the Plan may be more, equal to or less than
the then current market price of the Shares as deemed to be appropriate. Options
granted under the Plan will not qualify as "incentive stock options" under
Section 422 of the Internal Revenue Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE ADOPTION OF
THE 1998 NONSTATUTORY STOCK OPTION PLAN.
REVOCABILITY OF PROXY
Shares represented by valid proxies will be voted in accordance with
instructions contained therein, or, in the absence of such instructions, in
accordance with the Board of Directors' recommendations. Any shareholder of the
Company has the unconditional right to revoke his or her proxy at any time prior
to the voting thereof by any action inconsistent with the proxy, including
notifying the Secretary of the Company in writing, executing a subsequent proxy,
or personally appearing at the Annual Meeting and casting a contrary vote.
However, no such revocation will be effective unless and until such notice of
revocation has been received by the Company at or prior to the Annual Meeting.
<PAGE>
PROPOSALS OF SHAREHOLDERS
A proper proposal submitted by a shareholder in accordance with applicable
rules and regulations for presentation at the Company's Annual Meeting of
Shareholders for 1999 and received at the Company's executive offices no later
than October 31, 1998, will be included in the Company's Proxy Statement and
form of proxy relating to such Annual Meeting.
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the meeting other than the matters set forth herein. Should any other
matter requiring a vote of shareholders arise, the proxies in the enclosed form
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote the same in accordance with their
best judgment in the interest of the Company.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will be
voted in accordance with the instructions set forth on the proxy card. A broker
non-vote occurs when a broker holding shares registered in street name is
permitted to vote, in the broker's discretion, on routine matters without
receiving instructions from the client, but is not permitted to vote without
instructions on non-routine matters, and the broker returns a proxy card with no
vote (the "non-vote") on the non-routine matter. Under the rules and regulation
of the primary trading markets applicable to most brokers, both the election of
directors or the ratification of the appointment of accountants are routine
matters on which a broker has the discretion to vote if instructions are not
received from the client in a timely manner. Under New York law, broker
non-votes will have no impact on the election of directors or the ratification
or the appointment of the Company's independent auditors. Abstentions will be
counted as present for purposes of determining a quorum but will not be counted
for or against the election of directors or the ratification of independent
auditors. As to Item 1, the Proxy confers authority to vote for all of the five
persons listed as candidates for a position on the Board of Directors even
though the block in Item 1 is not marked unless the names of one or more
candidates are lined out. The Proxy will be voted "For" Items 2 and 3 unless
"Against" or "Abstain" is indicated. If any other business is presented at the
meeting, the Proxy shall be voted in accordance with the recommendations of
Management.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-KSB
The Company has filed with the Securities Exchange Commission its Annual
Report on Form 10-KSB. A copy of the Form 10-KSB for fiscal 1997 is being sent
to all shareholders with this proxy statement. The Annual Report is not a part
of the proxy soliciting material.
BY ORDER OF THE BOARD OF DIRECTORS
/s/James D. Paulsen
Secretary to the Board
December 15, 1997
<PAGE>
Exhibit
MEGA HOLDING CORP.
NONSTATUTORY STOCK OPTION PLAN
December 1, 1997
1. Purpose
The purpose of this Nonstatutory Stock Option Plan (hereinafter referred to
as the "Plan"), is to provide a special incentive to selected individuals who
have made significant contributions to the business and success of MEGA HOLDING
CORP., (hereinafter referred to as the "Company"). The Plan is designed to
accomplish this purpose by offering such individuals options ("Options") to
purchase shares of the common stock of the Company ("Shares") so that they will
share in the Company's success.
2. Administration
The Plan shall be administered by the board of directors of the Company or
by an option committee to be established by the board of directors of the
Company. If an option committee administers the Plan, it shall consist of three
or more members, at least one of whom shall be neither an officer nor an
employee of the Company. (The board of directors or an option committee shall be
referred to as the "Board" herein.)
The Board shall have authority, consistent with the Plan,
(a) to determine which individuals shall be granted Options;
(b) to determine the time or times when Options shall be granted and the
number of Shares to be subject to each Option;
(c) to determine the exercise price of the Shares subject to each Option
and the method of payment of such price;
(d) to determine the time or times when each Option becomes exercisable
and the duration of the exercise period, subject to the limitations
contained in Paragraph 6(b);
(e) to prescribe the form or forms of the instruments evidencing any
Options granted under the Plan and of any other instruments required
under the Plan and to change such forms from time to time;
(f) to adopt, amend and rescind rules and regulations for the
administration of the Plan and the Options and for its own acts and
proceedings; and
(g) to decide all questions and settle all controversies and disputes
which may arise in connection with the Plan. All decisions,
determinations and interpretations of the Board shall be binding on
all parties concerned.
<PAGE>
3. Participants
The Participants in the Plan shall be employees, officers, directors,
consultants of the Company or any other parties who have made a significant
contribution to the business and success of the Company, as may be selected from
time to time by the Board in its discretion. In any grant of Options after the
initial grant, Participants who were previously granted Options or sold Shares
under the Plan may be included or excluded.
4. Limitations
No Option shall be granted under the Plan after November 31, 2002 , but
Options theretofore granted may extend beyond that date. Subject to adjustment
as provided in Section 8 of the Plan, the number of Shares which may be issued
under the Plan shall not exceed one (1,000,000) million in the aggregate. To the
extent that any Option granted under the Plan shall expire or terminate
unexercised or for any reason become unexercisable as to any Shares subject
thereto, such Shares shall thereafter be available for further grants under the
Plan, within the limit specified above.
5. Shares to be Issued
Shares to be issued under the Plan may constitute an original issue of
authorized Shares or may consist of previously issued Shares acquired by the
Company, as shall be determined by the Board. The Board and the proper officers
of the Company shall take any appropriate action required for such issuance. The
maximum number of Shares which may be issued under the Plan is one million
(1,000,000) Shares.
6. Terms and Conditions of Options
All Options granted under the Plan shall be subject to the following terms
and conditions (except as provided in Section 7) and to such other terms and
conditions as the Board shall determine to be appropriate to accomplish the
purposes of the Plan:
(a) Exercise price. The exercise price under each Option shall be
determined by the Board and may be more, equal to or less than the
then current market price of the Shares as the Board may deem to be
appropriate: provided, however, that in the event an option committee
shall determine to grant an Option at less than 85% of the then
current market price of the Shares, such Option shall not be granted
by the option committee without the prior approval of the board of
directors.
(b) Period of Options. The period of an Option shall not exceed five years
from the date of grant.
(c) Exercise of Options.
(i) Each Option shall be made exercisable at such time or times,
whether or not in installments, as the Board shall prescribe at
the time the Option is granted.
(ii) A person electing to exercise an Option shall give written notice
to the Company, as specified by the Board, of his/her election
and of the number of Shares he/she has elected to purchase, such
notice to be accompanied by such instruments or documents as may
be required by the Board, and shall at the time of such exercise
tender the purchase price of the Shares he/she has elected to
purchase.
<PAGE>
(d) Payment for Issuance of Shares. Upon exercise of any Option granted
hereunder, payment in full shall be made at the time of such exercise
for all such Shares then being purchased.
The Company shall not be obligated to issue any Shares unless and until, in
the opinion of the Company's counsel, all applicable laws and regulations have
been complied with, nor, in the event the Shares at the time are not listed upon
any stock exchange, unless and until the Shares to be issued have been listed or
authorized to be added to the list upon official notice of issuance upon such
exchange, nor unless or until all other legal matters in connection with the
issuance and delivery of Shares have been approved by the Company's counsel.
Without limiting the generality of the foregoing, the Company may require from
the Participant such investment representation or such agreement, if any, as
counsel for the Company may consider necessary in order to comply with the
Securities Act of 1933 as then in effect, and may require that the Participant
agree that any sale of the Shares will be made only in such manner as is
permitted by the Board and that a Participant will notify the Company when
he/she intends to make any disposition of the Shares whether by sale, gift or
otherwise. The Participant shall take any action reasonably requested by the
Company in such connection. A Participant shall have the rights of a stockholder
only as to Shares actually acquired by him/her under the Plan.
(e) Transferability of Options. No Option may be transferred by the
Participant otherwise than by will or by the laws of descent and
distribution, and during the Participant's lifetime the Option may be
exercised only by the Participant.
(f) Termination of Employment. If the Participant is an employee and
his/her employment terminates for any reason other than his/her death,
the Participant may, unless discharged for cause, thereafter exercise
his/her Option as provided below, but only to the extent the
Participant was entitled to exercise the Option on the date when
his/her employment terminated. If such termination of employment is
voluntary on the part of the Participant, he/she may exercise his/her
Option only within ten days after the date of termination of
employment (unless a longer period not in excess of three months is
allowed by the Board). If such termination of employment is
involuntary on the part of the Participant, he/she may exercise
his/her Option only within three months after the date of termination
of employment. In no event, however, may such Participant exercise
his/her Option at a time when the Option would not be exercisable had
the Participant remained an employee or when the termination was for
cause. For purposes of this subsection (f), a Participant's employment
shall not be considered terminated in the case of sick leave or other
bona fide leave of absence approved by the Company or a subsidiary, or
in the case of a transfer to the employment of a subsidiary or to the
employment of the Company. Anything herein to the contrary
notwithstanding, an Option may be exercised only to the extent
exercisable on the date of termination of employment by death or
otherwise.
(g) Retirement or Resignation. If prior to the expiration date of a
Participant's Option an optionee shall retire or resign with the
Company's consent such Option may be exercised in the same manner as
if the Optionee had continued in the Company's employ; provided,
however, the Board may terminate, at any time prior to exercise, all
unexercised Options if it shall determine that the retired or
resigning optionee has engaged in any activity detrimental to the
Company's interest.
<PAGE>
(h) Death. If a Participant dies at a time when he/she is entitled to
exercise an Option, then at any time or times within one (1) year
after his/her death (or such further period as the Board may allow)
such Option may be exercised, as to all or any of the Shares which the
Participant was entitled to purchase immediately prior to his/her
death, by his/her executor or administrator or the person or persons
to whom the Option is transferred by will or the applicable laws of
descent and distribution, and except as so exercised such Option shall
expire at the end of such period. In no event, however, may an Option
be exercised after the expiration of the Option period.
7. Replacement Options
The Company may grant Options under the Plan on terms differing from those
provided for in Section 6 where such Options are granted in substitution for
Options held by employees of other corporations who concurrently become
employees of the Company or a subsidiary as the result of a merger,
consolidation or other reorganization of the employing corporation with the
Company or subsidiary, or the acquisition by the Company or a subsidiary of the
business, property or stock of the employing corporation. The Board may direct
that the substitute Options be granted on such terms and conditions as the Board
considers appropriate in the circumstances.
8. Changes in Stock
In the event of a stock dividend, stock split or recapitalization or merger
in which the Company is the surviving corporation, or other similar capital
change, the number and kind of shares of stock or securities of the Company to
be subject to the Plan and to Options then outstanding or to be granted
thereunder, the maximum number of Shares or securities which may be issued or
sold under the Plan, the exercise price and other relevant provisions shall be
appropriately adjusted by the Board of the Company, the determination of which
shall be binding on all persons.
9. Employment Rights
The adoption of the Plan or the granting of an Option does not confer upon
any individual any right to employment or continued employment with the Company
or a subsidiary, as the case may be, nor does it interfere in any way with the
right of the Company or a subsidiary to terminate the employment of any of its
employees at any time.
10. Amendment
The Board may at any time discontinue granting Options under the Plan. The
Board of the Company may at any time or times amend the Plan or amend any
outstanding Option or Options for the purpose of satisfying the requirements of
any changes in applicable laws or regulations or for any other purpose which may
at the time be permitted by law provided, however, that, except to the extent
required or permitted under Section 8, no such amendment shall void or diminish
Options previously granted without the consent of the Participant, nor shall any
amendment increase or accelerate the conditions and actions required for the
exercise of an Option unless the Participant shall have been discharged from the
company's employment for cause.
Adopted by the Board of Directors
December 1 , 1997
<PAGE>
PROXY
ANNUAL MEETING OF SHAREHOLDERS
MEGA HOLDING CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE CORPORATION
The undersigned Shareholder of Mega Holding Corp., having received the
Notice dated December 15, 1997, of the Fiscal 1998 Annual Meeting of
Shareholders, hereby nominates, constitutes, appoints and authorizes Thomas M.
Abate and James D. Paulsen, and each of them with full power to act alone, as
proxies with full power of substitution, for me and in my name, place and stead,
to vote all the Shares of Common Stock of said corporation standing in my name
on its books on December 12, 1997, at the Annual Meeting of Shareholders to be
held at the headquarters of the Company, 278A New Drop Lane, Staten Island, New
York 10306 at 10:00 A.M., Thursday, January 29, 1998 or at any adjournments
thereof, with all the power the undersigned would possess if personally present,
as follows:
1. The election of the three (3) directors listed in the Proxy Statement dated
December 15, 1997, accompanying the Notice of said meeting for terms of one
year each and until their successors are elected and qualify. CUMULATIVE
VOTING IS NOT PERMITTED.
IF YOU WISH YOUR VOTES TO BE CAST FOR ALL OF THE THREE (3) PERSONS LISTED
BELOW, PLACE AN "X" IN THIS BOX / /.
IF YOU DO NOT WISH TO VOTE FOR ALL OF THE CANDIDATES, LINE OUT THE NAMES OF
PERSONS FOR WHOM YOU DO NOT CHOOSE TO VOTE:
DIRECTORS:
----------
Thomas M. Abate
James D. Paulsen
John M. Seroor
2. Approval of the appointment of McManus & Co., P.C. as independent auditors
for Fiscal year 1998.
FOR / / AGAINST / / ABSTAIN / /
3. Adoption of the Fiscal 1998 Nonstatutory Option Plan.
FOR / / AGAINST / / ABSTAIN / /
4. Upon such other business as may be brought before the meeting or any
adjournments thereof. The Board of Directors at present knows of no other
business to be presented.
<PAGE>
THIS PROXY CONFERS AUTHORITY TO VOTE FOR ALL OF THE FIVE PERSONS LISTED
EVEN THOUGH THE BLOCK IN ITEM 1 IS NOT MARKED UNLESS THE NAMES OF ONE OR MORE
CANDIDATES ARE LINED OUT. THIS PROXY WILL BE VOTED "FOR" ITEMS 2 AND 3 ABOVE
UNLESS "AGAINST" OR "ABSTAIN" IS INDICATED. IF ANY OTHER BUSINESS IS PRESENTED
AT SAID MEETING, THIS PROXY SHALL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF MANAGEMENT.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND THE COST OF
SAME IS BORNE BY THE CORPORATION. THIS PROXY MAY BE REVOKED BY WRITING THE
SECRETARY TO THE BOARD, MEGA HOLDING CORP., 278A NEW DORP LANE, STATEN ISLAND,
NEW YORK 10306 OR IN PERSON AT THE FISCAL 1998 ANNUAL MEETING OF SHAREHOLDERS AT
ANY TIME PRIOR TO ITS EXERCISE.
Date:
Name:
Beneficial Shareholder (Please Print)
Address:
Signature(s)
(All Shareholders must sign)
NUMBER OF SHARES VOTING
IF SHARES ARE NOT REGISTERED IN YOUR NAME, PLEASE GIVE THE NAME AND ADDRESS
OF THE PERSON OR ENTITY IN WHOSE NAME THEY ARE REGISTERED.
(This must be completed if applicable)
Please date, fill in your complete name and address and sign above exactly
as your name or names appear hereon, and return this proxy promptly in the
enclosed envelope. When signing as attorney, executor, administrator, trustee or
guardian, please give full title. If there is more than one fiduciary, all
should sign. All joint owners must sign.
