<PAGE>
SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
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
COMMAND SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
5) Total fee paid:
-----------------------------------------------------------------------
[_] Fee paid previously with preliminary materials:
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
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<PAGE>
COMMAND SYSTEMS, INC.
Dear Stockholder:
You are cordially invited to attend our Annual Meeting of Stockholders to
be held on Friday, May 26, 2000 at 10:00 AM, Eastern Standard Time, at The
Hartford Club, 46 Prospect Street, Hartford, Connecticut 06103.
The formal Notice of Meeting and the accompanying Proxy Statement set forth
proposals for your consideration this year. You are being asked to elect two
directors, approve an amendment to our 1997 Employee, Director and Consultant
Stock Plan to increase the number of shares which may be issued thereunder, to
approve the adoption of our 2000 Non-Employee Director Stock Purchase Plan and
to ratify the appointment of Ernst & Young LLP as our independent accountants
for the fiscal year ending December 31, 2000.
At the meeting, the Board of Directors will be pleased to report on the
affairs of Command Systems, Inc., and a discussion period will be provided for
questions and comments of general interest to stockholders.
We look forward to greeting personally those of you who are able to be
present at the meeting. However, whether or not you are able to be with us at
the meeting, it is important that your shares be represented. Accordingly, you
are requested to sign, date and mail, at your earliest convenience, the enclosed
proxy in the envelope provided for your use.
Thank you for your cooperation.
Very truly yours,
/s/ Edward G. Caputo
Edward G. Caputo
President, Chief Executive Officer and
Chairman of the Board
April 24, 2000
<PAGE>
COMMAND SYSTEMS, INC.
76 Batterson Park Road
Farmington, CT 06032
__________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 24, 2000
__________________________
Notice Is Hereby Given that the Annual Meeting of Stockholders of
Command Systems, Inc. (the "Company") will be held on Friday, May 26, 2000 at
10:00 AM, Eastern Standard Time, at The Hartford Club, 46 Prospect Street,
Hartford, Connecticut 06103, for the following purposes:
(1) To elect two Class I directors to serve for terms of three years;
(2) To consider and act upon a proposal to approve an amendment of
the Company's 1997 Employee, Director and Consultant Stock Plan
increasing the number of shares which may be issued thereunder;
(3) To consider and act upon a proposal to approve the adoption of
the Company's 2000 Non-Employee Director Stock Purchase Plan;
(4) To consider and act upon a proposal to ratify the appointment of
Ernst & Young LLP as the Company's independent accountants for
the fiscal year ending December 31, 2000; and
(5) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 17, 2000 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. However, whether or not you plan to attend the Annual Meeting in person,
each stockholder is urged to complete, date and sign the enclosed form of proxy
and return it promptly in the envelope provided. No postage is required if the
proxy is mailed in the United States. Stockholders who attend the Annual Meeting
may revoke their proxy and vote their shares in person.
By Order of the Board of Directors
/s/ Stephen L. Willcox
Stephen L. Willcox
Secretary
Farmington, Connecticut
April 24, 2000
<PAGE>
COMMAND SYSTEMS, INC.
76 Batterson Park Road
Farmington, CT 06032
_____________________________
PROXY STATEMENT
_____________________________
GENERAL INFORMATION
General
This Proxy Statement (first mailed to stockholders on or about April 24,
2000) is furnished to the holders of record on April 17, 2000 of the common
stock, par value $.01 per share (the "Common Stock"), of Command Systems, Inc.
(the "Company") in connection with the solicitation by the Board of Directors of
the Company of proxies for use at the Annual Meeting of Stockholders (the
"Annual Meeting"), or at any adjournment thereof, pursuant to the accompanying
Notice of Annual Meeting of Stockholders. The Annual Meeting will be held on
Friday, May 26, 2000 at 10:00 AM, Eastern Standard Time, at The Hartford Club,
46 Prospect Street, Hartford, Connecticut.
It is proposed that at the Annual Meeting: (i) two Class I directors will
be nominated for election to serve for terms of three years, (ii) an amendment
to the Company's 1997 Employee, Director and Consultant Stock Plan increasing
the number of shares which may be issued thereunder will be adopted, (iii) the
Company's 2000 Non-Employee Director Stock Purchase Plan be adopted and (iv) the
appointment of Ernst & Young LLP as the Company's independent accountants for
the fiscal year ending December 31, 2000 be ratified.
Management currently is not aware of any other matters which will come
before the Annual Meeting. If any other matters properly come before the Annual
Meeting, the persons designated as proxies intend to vote in accordance with
their best judgment on such matters.
Proxies for use at the Annual Meeting are being solicited by the Board of
Directors of the Company. Proxies will be solicited chiefly by mail; however,
certain officers, directors, employees and agents of the Company, none of whom
will receive additional compensation therefor, may solicit proxies by telephone,
telegram or other personal contact. The Company will bear the cost of the
solicitation of the proxies, including postage, printing and handling and will
reimburse the reasonable expenses of brokerage firms and others for forwarding
material to beneficial owners of shares of Common Stock.
Revocability and Voting of Proxy
A form of proxy for use at the Annual Meeting and a return envelope for the
proxy are enclosed. Unless otherwise indicated on the form of proxy, shares of
Common Stock represented by any proxy in the enclosed form, assuming the proxy
is properly executed and received by the Company prior to the Annual Meeting,
will be voted with respect to the following items on the agenda: (i) the
election of each of the
<PAGE>
nominees for director as shown on the form of proxy; (ii) the approval of an
amendment to the Company's 1997 Employee, Director and Consultant Stock Plan
increasing the number of shares which may be issued thereunder, (iii) the
approval of adoption of the Company's 2000 Non-Employee Director Stock Purchase
Plan and (iv) the ratification of the appointment of Ernst & Young LLP as the
Company's independent accountants for the fiscal year ending December 31, 2000.
Stockholders may revoke the authority granted by their execution of a proxy
at any time prior to the effective exercise of the powers conferred by that
proxy, by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the meeting. Shares of Common Stock represented by executed and unrevoked
proxies will be voted in accordance with the instructions specified in such
proxies. If no specifications are given, the proxies intend to vote the shares
represented thereby "for" the election of each of the nominees for director as
shown on the form of proxy, "for" the adoption of an amendment to the 1997
Director, Employee and Consultant Stock Plan, "for" the adoption of the 2000
Non-Employee Director Stock Purchase Plan, and "for" the ratification of the
appointment of Ernst & Young LLP as the Company's independent accountants, and
in accordance with their best judgment on any other matters which may properly
come before the meeting.
Record Date and Voting Rights
On April 17, 2000, there were 7,656,750 shares of Common Stock outstanding,
each of which shares is entitled to one vote upon each of the matters to be
presented at the Annual Meeting. Only stockholders of record at the close of
business on April 17, 2000 will be entitled to notice of and to vote at the
Annual Meeting or any adjournment thereof. The holders of a majority of the
outstanding shares of Common Stock, present in person or by proxy and entitled
to vote, will constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum but will not be counted with respect to the specific matter being voted
upon. "Broker non-votes" are shares held by brokers or nominees which are
present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner.
The affirmative vote of the holders of a plurality of the shares of Common
Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting is required for the election of directors. The affirmative vote
of the holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting is required for
the approval of the amendment to the 1997 Employee, Director and Consultant
Stock Plan, the adoption of the 2000 Non-Employee Director Stock Purchase Plan
and the ratification of the appointment of Ernst & Young LLP.
-2-
<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK BY
CERTAIN STOCKHOLDERS AND MANAGEMENT
The following table sets forth information as of April 17, 2000 regarding
the beneficial ownership of the Company's Common Stock of: (a) each person known
by the Company to own beneficially more than five percent of the outstanding
Common Stock, (b) each director and nominee for director of the Company, (c)
each executive officer named in the Summary Compensation Table (see "Executive
Compensation" below), and (d) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Percentage of
Name and Address of Beneficial Owner(1) Ownership of Common Stock(2) Common Stock
- ------------------------------------ ------------------------- ------------
<S> <C> <C>
Edward G. Caputo ................................ 3,972,500 51.9%
Phoenix Home Life Mutual
Insurance Company .............................. 579,250(3) 7.56%
One American Row
P.O. Box 5956
Hartford, CT 06102
Stephen L. Willcox .............................. 40,000(4) *
Glenn M. King ................................... 13,200(4) *
William P. Scharfenstein ........................ 5,000(4) *
Holly Neumann ................................... 1,970(4) *
John T. Crawford ................................ 0 0
John J.C. Herndon ............................... 583,000(5) *
Theodore Ketterer ............................... 0 0
James M. Oates .................................. 4,750(6) *
Joseph D. Sargent ............................... 8,750(6) *
All directors and executive officers as a group
(11 persons) ................................... 4,636,270(7) 60.6%
</TABLE>
_______________________________
/*/ Less than one percent.
(1) The address of each named individual is c/o Command Systems, Inc., 76
Batterson Park Road, Farmington, CT 06032.
(2) Except as otherwise indicated, each named beneficial owner has the sole
voting and investment power over the shares listed opposite such beneficial
owner's name.
(3) The shares are owned through PHL Global Holding Company, an indirect wholly
owned subsidiary of Phoenix Home Life Mutual Insurance Company ("Phoenix").
(4) Represents shares of Common Stock which may be acquired within 60 days upon
the exercise of options.
(5) Includes 579,250 shares owned by Phoenix. Mr. Herndon is the Vice President
of Strategic Development for Phoenix, a New York domiciled mutual life
insurance company. Mr. Herndon expressly disclaims beneficial ownership of
such shares. Also includes 3,750 shares of Common Stock which may be
acquired by Mr. Herndon within 60 days upon the exercise of options.
(6) Includes an aggregate of 3,750 shares of Common Stock which may be acquired
upon the exercise of options.
(7) Includes an aggregate of 83,270 shares of Common Stock which may be
acquired by directors and executive officers within 60 days upon the
exercise of options.
-3-
<PAGE>
PROPOSAL NO. 1--ELECTION OF DIRECTORS
Two directors are to be elected at the Annual Meeting. Unless otherwise
specified, the enclosed proxy will be voted in favor of the persons named below
(all of whom are currently directors of the Company). The Board of Directors has
been classified pursuant to the Company's Amended and Restated Certificate of
Incorporation, as amended (the "Certificate of Incorporation"). The Board of
Directors is divided into three classes. These classes are required to be as
nearly equal in number as reasonably possible. At each annual meeting of
stockholders or special meeting in lieu thereof following the Annual Meeting,
directors elected to succeed those directors whose terms expire are elected for
a term of office to expire at the third succeeding annual meeting of
stockholders or special meeting in lieu thereof after their election and until
their successors are duly elected and qualified.
The terms of Messrs. Willcox and Crawford will expire with the 2000 Annual
Meeting and they have been nominated for reelection. If elected, Mr. Willcox and
Mr. Crawford will each serve as a Class I director for a term expiring at the
annual meeting of stockholders held in 2003 or at a special meeting held in lieu
thereof; Messrs. Herndon and Sargent are serving as Class II directors for a
term expiring at the annual meeting of stockholders held in 2001 or at a special
meeting held in lieu thereof; and Messrs. Caputo, Ketterer and Oates are serving
as Class III directors for a term expiring at the annual meeting of stockholders
held in 2002 or at a special meeting held in lieu thereof.
If either Mr. Willcox or Mr. Crawford becomes unavailable for any reason,
or if a vacancy should occur before the election, the shares represented by the
proxy will be voted for the person, if any, who is designated by the Board of
Directors to replace the nominee or to fill the vacancy on the Board. All
nominees have consented to be named and have indicated their intent to serve if
elected. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.
The following information is furnished with respect to each of the nominees
for election as director and each member for the Board of Directors whose term
of office will continue after the meeting.
-4-
<PAGE>
<TABLE>
<CAPTION>
Year First Principal Occupation
Name Age Became Director During the Past Five Years
- ---- --- --------------- --------------------------
<S> <C> <C> <C>
NOMINEES FOR TERMS
EXPIRING IN 2003
- ------------------
Stephen L. Willcox ............ 48 1997 Executive Vice President, Chief Financial
Officer and Secretary of the Company
since December 1997. Strategic and
Financial Consultant to the Company from
July 1997 to December 1997. Various
executive capacities, including President
and Chief Operating Officer, of United
HealthCare Administrators, Inc.
(including its predecessor), a subsidiary of
United HealthCare, from January 1995 to
December 1996. Various executive
capacities including Vice President of
Corporate Finance and Vice President of
Employee Benefits for The Travelers
Corporation from January 1982 to
December 1994.
John T. Crawford ............. 58 1999 Group Senior Vice President of
Information Technology for The Hartford
Financial Services Group since September
1997 and Senior Vice President of
Information Technology from March 1994
to September 1997 for The Hartford
Financial Services Group.
</TABLE>
-5-
<PAGE>
<TABLE>
DIRECTORS WHOSE
TERMS EXPIRE IN 2001
- --------------------
<S> <C> <C> <C>
John J.C. Herndon ............. 68 1997 Vice President of Strategic Development
for Phoenix since April 1996. Consultant
to the Advest Group in 1995. President of
the Connecticut Development Authority
and Deputy Chief of Staff for Connecticut
Governor Lowell Weicker from 1992 to
1994.
Joseph D. Sargent ............. 69 1998 Chairman and Principal of Bradley, Foster
& Sargent since 1993. Vice Chairman and
Director of Connecticut Surety
Corporation and its affiliates since 1998.
Chairman and Director of S-K-I Ltd. from
1995 to 1996. Chairman and Vice
Chairman of Conning & Company from
1991 to 1995. Director of Trenwick
Group Inc., E.W. Blanch Holdings, Policy
Management Systems Corporation, Mutual
Risk Management Ltd., MMI Companies,
Inc. and Executive Risk, Inc.
</TABLE>
-6-
<PAGE>
<TABLE>
DIRECTORS WHOSE
TERMS EXPIRE IN 2002
- --------------------
<S> <C> <C> <C>
Edward G. Caputo .............. 49 1985 President and Chief Executive Officer and
Chairman of the Board of Directors of the
Company since its inception in 1985.
Theodore Ketterer ............. 57 2000 Managing Director and co-founder of
Avian Securities, Inc. since June 1999.
Senior Vice President of Hambrecht &
Quist LLC (now Chase H&Q) from
January 1993 to June 1999. Vice
President at Alex. Brown & Sons from
December 1989 to January 1993.
James M. Oates ................ 52 1997 Chairman of IBEX Capital Markets, LLC
since November 1996. Managing Director
of the Wydown Group since 1994.
President and Chief Executive Officer of
Neworld Bancorp from 1984 to 1994.
</TABLE>
The Board of Directors of the Company has an Audit Committee and a
Compensation Committee. During the year ended December 31, 1999, the Board of
Directors held 13 meetings.
The Audit Committee, composed of John J.C. Herndon, James M. Oates and
Joseph D. Sargent,
-7-
<PAGE>
is charged with reviewing results and scope of audits and other services
provided by the Company's independent accountants. The Audit Committee met 4
times during the year ended December 31, 1999.
The Compensation Committee is composed of John J.C. Herndon, James M. Oates
and Joseph D. Sargent. The Compensation Committee reviews the compensation
levels of the Company's executive officers, makes recommendations to the Board
of Directors concerning salaries and incentive compensation for the Company's
employees and consultants and establishes and approves salaries and incentive
compensation for the Company's executive officers. The Compensation Committee
also administers the Company's 1997 Employee, Director and Consultant Stock
Plan. The Compensation Committee did not meet during the fiscal year ended
December 31, 1999.
During the fiscal year ended December 31, 1999, each of the directors
attended 100% of the meetings of the Board of Directors and committees on which
he served.
Vote Required
The two nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote for them
shall be elected as directors. Only votes cast for a nominee will be counted,
except that the accompanying proxy will be voted for all nominees in the absence
of instructions to the contrary. Abstentions, broker non-votes and instructions
on the accompanying proxy card to withhold authority to vote for one or more
nominees will not be counted as a vote for any such nominee.
THE BOARD OF DIRECTORS DEEMS THE ELECTION AS CLASS I DIRECTORS OF THE TWO
NOMINEES LISTED ABOVE TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THESE NOMINEES.
-8-
<PAGE>
MANAGEMENT AND DIRECTORS
Executive Officers and Directors
Our executive officers and directors are as follows:
<TABLE>
<S> <C> <C>
Edward G. Caputo 49 President, Chief Executive Officer and Chairman of
the Board of Directors
Stephen L. Willcox 48 Executive Vice President, Chief Financial Officer,
Secretary and Director
Glenn M. King 47 Regional Vice President
Mohan Kumar 35 Chief Operating Officer, Command International
Software Pvt.
William P. Scharfenstein 52 Vice President of Professional Services
William Tamburro 44 Vice President of Staff Augmentation Services
Holly Neumann 41 Regional Vice President
John T. Crawford 58 Director
John J.C. Herndon(1)(2) 68 Director
Theodore Ketterer 57 Director
James M. Oates(1)(2) 52 Director
Joseph D. Sargent(1)(2) 69 Director
</TABLE>
___________
(1) Member of Audit Committee
(2) Member of Compensation Committee
Edward G. Caputo founded Command Systems, Inc. in April 1985 and has served
as its President, Chief Executive Officer and Chairman of the Board of Directors
since its inception. Prior to founding Command Systems, Inc., for eight years
Mr. Caputo served as President of Computech, Inc., a privately held consulting
services company which he founded in 1977 and sold to Price Warehouse in 1985.
From 1972 until he founded Computech, Mr. Caputo was a programmer for Electronic
Data Systems, a systems integration company.
Stephen L. Willcox has served as Executive Vice President, Chief Financial
Officer and Secretary since December 1997 and as a Director of Command Systems,
Inc. since October 1997. From July 1997 until December 1997, Mr. Willcox served
as a strategic and financial consultant for Command Systems, Inc. From January
1995 to December 1996, Mr. Willcox served in various executive capacities,
including President and Chief Operating Officer, of United HealthCare
Administrators, Inc. (including its predecessor), a subsidiary of United
HealthCare, a publicly held managed care company. From January 1993 to December
1994, Mr. Willcox served as the Vice President of Employee Benefits for The
Travelers Corporation. From January 1982 to December 1992, Mr. Willcox held
various positions in the Travelers Insurance Companies, where he most recently
served as its Vice President of Corporate Finance. From 1973 to 1981, Mr.
Willcox was employed by Coopers & Lybrand, including as General Practice
Manager. Mr. Willcox is also a Certified Public Accountant and a Certified
Management Accountant.
Glenn M. King has been employed by Command Systems, Inc. in various
capacities since September 1986, most recently as Regional Vice President since
January 1999, as Vice President of Marketing from October 1998 to January 1999,
as Vice President of Recruiting from June 1998 to
-9-
<PAGE>
October 1998 and as Vice President of Marketing from November 1997 through June
1998. He has also been an Assistant Secretary of the Company since October 1998.
From May 1983 to September 1986, Mr. King served as a Systems Analyst for the
Travelers Insurance Company, the Hartford Insurance Group and Vantage Computer
Systems. From May 1979 to May 1983, Mr. King served as a Licensed Insurance
Adjuster for Metropolitan Property and Casualty Insurance Co.
Mohan Kumar has served as General Manager and Chief Operating Officer since
July 1996 and as a Director of Command International Software Pvt. Since 1997.
From 1989 through July 1996, Mr. Kumar held various positions in Wipro Systems,
a large software company based in Asia.
William P. Scharfenstein has served as Vice President of Professional
Services since October 1998 and Vice President of Operations from February 1998
to October 1998. From 1973 to February 1998, Mr. Scharfenstein served in various
capacities for Pratt & Whitney including Senior Systems Programmer, Business
Support from 1973 to 1982, Senior Systems Analyst, Operations Research from 1982
to 1986, Superior Systems Programming & Operations from 1986 to 1992, MIS
Manager, Powerplant Production from 1992 to June 1997, and MIS Manager, Eagle
Service from July 1997 to February 1998. Previously, Mr. Scharfenstein served as
Systems Analyst for Dunham-Bush, Beneficial Computing Services and Travelers
Insurance Company.
William Tamburro has served as Vice President of Staff Augmentation
Services since February 2000 and as Vice President of Recruiting from October
1998 to February 2000. From June 1990 until October 1998 Mr. Tamburro served as
Vice President of Information Systems recruiting for J. Morrissey & Co. From May
1985 until June 1990 Mr. Tamburro was employed in the recruiting and sales area
of Command Systems, Inc. Previously, Mr. Tamburro performed programming
functions with Computech, Inc., a privately-held consulting services company
founded by Mr. Caputo.
Holly R. Neumann has served as Regional Vice President since January 1999
and as New York Business Manager from April 1995 to December 1998. From 1983 to
April 1995, Ms. Newmann served in various capacities for Digital Equipment
Corporation, including as the Americas Financial Services New Business Marketing
Manager and Manager of Product and Industry Marketing for the Eastern Region.
John T. Crawford has served as a Director of Command Systems, Inc., since
November 1999. Mr. Crawford has served as Group Senior Vice President of
Information Technology for The Hartford Financial Services Group since September
1997 and Senior Vice President of Information Technology from March 1994 to
September 1997 for The Hartford Financial Services Group.
John J.C. Herndon has served as a Director of Command Systems, Inc. since
December 1997. Mr. Herndon has served as the Vice President of Strategic
Development for Phoenix since April 1996. In 1995, Mr. Herndon was a consultant
to the Advest Group and successfully raised a private equity fund for investment
in companies in the Connecticut River Valley. From 1993 to 1994, he was
President of the Connecticut Development Authority, a quasi-public merchant bank
for economic development, and in 1992, he served as Deputy Chief of Staff for
Connecticut Governor Lowell Weicker. From 1977 to 1985, Mr. Herndon was Senior
Vice President of City Investing Company in New York, a diversified
international corporation engaged in insurance, manufacturing, construction and
consumer services.
Theodore Ketterer has served as a Director of Command Systems, Inc. since
April 2000. Mr. Ketterer has served as a Managing Director and co-founder of
Avian Securities, Inc. since June 1999. From January 1993 to June 1999, Mr.
Ketterer was a Senior Vice President of Hambrecht & Quist LLC (now Chase H&Q, a
division of Chase Securities Inc.). Mr. Ketterer also served as Vice President
at
-10-
<PAGE>
Alex. Brown & Sons from December 1989 to January 1993.
James M. Oates has served as a Director of Command Systems, Inc. since
December 1997. Since November 1996 to the present, he has been the Chairman of
IBEX Capital Markets, LLC. Mr. Oates currently is, and since 1994 has been,
Managing Director of the Wydown Group, a consulting firm specializing in start-
ups and growth strategies. From 1984 to 1994, Mr. Oates served as President and
Chief Executive Officer of Neworld Bancorp. From 1983 to 1984, Mr. Oates served
as President and Chief Operating Officer of Burgess and Leith, a full service
brokerage firm. From 1977 to 1983, Mr. Oates served as President and Chief
Operating Officer to Metro Bancholding Corporation. From 1973 to 1977, Mr. Oates
served as Vice President of Centerre Bank, N.A. Mr. Oates is a Director or
Trustee of the Phoenix Mutual Funds. Mr. Oates serves on the Board of Directors
of Connecticut River Bancorp, Investors Financial Services, Inc., Phoenix
Investment Partners Ltd., Plymouth Rubber Company and Stifel Financial, all of
which are publicly traded companies, and Investors Bank & Trust Co., AIB Govett
Funds and Emerson Investment.. He also serves as Vice Chairman of the
Massachusetts Housing Partnership.
Joseph D. Sargent has served as a Director of Command Systems, Inc. since
January 1998. Mr. Sargent has served as Chairman and Principal of Bradley,
Foster & Sargent since 1993. Also, since 1998, Mr. Sargent has served as Vice
Chairman and Director of Connecticut Surety Corporation and its affiliates. From
1995 to 1996, Mr. Sargent served as Chairman and Director of S-K-I Ltd. Mr.
Sargent served as Chairman, and later as Vice Chairman, of Conning & Company, an
investment banking firm, from 1991 to 1995 and as its Chairman and Chief
Executive Officer from 1988 to 1991. Mr. Sargent is a Director of Trenwick Group
Inc., E.W. Blanch Holdings, Policy Management Systems Corporation, Mutual Risk
Management Ltd., MMI Companies, Inc. and Executive Risk, Inc., all of which are
publicly held companies.
There are no family relationships among any of our executive officers and
directors.
-11-
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation earned by (a) our President and Chief Executive Officer and (b) our
four other most highly compensated executive officers whose total salary for
fiscal 1999 exceeded $100,000, for services rendered to Command and its
subsidiaries in all capacities during each of the fiscal years indicated. No
executive who would otherwise have been includable in such table on the basis of
salary and bonus earned for fiscal 1999 has resigned or otherwise terminated
employment during fiscal 1999.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long-Term
Compensation(1) Compensation
--------------------- -----------------
Common Stock Underlying
Name and Principal Position Year Salary ($) Bonus ($) Options (#)
- --------------------------- ---- ---------- --------- -----------
<S> <C> <C> <C> <C>
Edward G. Caputo -- President 1999 150,000 0 0
and Chief Executive Officer ...... 1998 150,000 0 0
1997 150,000 0 0
Stephen L. Willcox -- Executive 1999 175,000 0 100,000
Vice President and Chief 1998 175,000 0 50,000
Financial Officer ................ 1997(2) 0 0 0
Glenn M. King -- Regional Vice 1999 130,000 0 39,250
President ........................ 1998 130,000 0 14,250
1997 100,000 0 14,250
William P. Scharfenstein -- Vice 1999 150,000 10,000 32,500
President of Professional Services 1998 137,500 0 12,500
1997(2) 0 0 0
Holly Neumann -- Regional Vice 1999 272,000 0 23,100
President......................... 1998 246,000 0 3,100
1997 142,000 0 3,000
</TABLE>
- ------------------------------------
(1) Amounts reflected do not include perquisites and other personal benefits
received by any named executive, which, in all instances, were less than
the lesser of $50,000 or 10% of the total of annual salary and bonus
reported for the named executive.
(2) Messrs. Willcox and Scharfenstein were not employed by the Company in 1997.
-12-
<PAGE>
The following table provides information related to options granted to the
named executive officers during the fiscal year ended December 31, 1999.
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------
% of Total
Options Potential Realizable
Granted to Exercise Value at Assumed
Options Employees in or Base Annual Rates of Stock
Granted Fiscal Price Expiration Price Appreciation
Name (#)/(1)/ Year ($/share) Date For Option Term/(2)/
- ---- -------- -------- --------- -------- ---------------------
5% ($) 10% ($)
<S> <C> <C> <C> <C> <C>
Edward G. Caputo --- --- --- --- --- ---
Stephen L. Willcox 50,000 19.61% $1.75 9/30/09 142,528 226,952
Glenn M. King 25,000 9.8% $1.75 9/30/09 71,264 113,476
William P. 20,000 7.8% $1.75 9/30/09 57,011 90,781
Scharfenstein
Holly Neumann 20,000 7.8% $1.75 9/30/09 57,011 90,781
</TABLE>
_____________________
(1) Options are granted pursuant to and in accordance with our 1997 Employee,
Director and Consultant Stock Plan.
(2) Potential realizable value is based on the assumption that the price per
share of common stock appreciates at the assumed annual rate of stock
appreciation for the option term. The assumed 5% and 10% annual rates of
appreciation compounded annually over the term of the option are set forth
in accordance with the rules and regulations adopted by the Securities and
Exchange Commission and do not represent our estimate of stock price
appreciation.
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<PAGE>
The following table sets forth information with respect to unexercised
stock options held by persons named in the Summary Compensation Table at
December 31, 1999. There were no stock options exercised during the fiscal year
ended December 31, 1999 by such individuals.
Aggregated Option Exercises In Last Fiscal Year
And Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised in-
Options Held at Fiscal the-Money Options at Fiscal
Year End (#) Year End ($) (1)
---------------------- ----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Edward G. Caputo............ -- -- -- --
Stephen L. Willcox.......... 30,000 70,000 0 12,500
Glenn M. King............... 13,200 26,050 0 6,250
William P. Scharfenstein.... 2,500 30,000 0 5,000
Holly Neumann............... 1,720 21,380 0 5,000
</TABLE>
_________________________
(1) Computed based upon the difference between the last sale price per share of
the Company's Common Stock of $2.00 on December 31, 1999 and the exercise
price of (i) $ 9.00 and $1.75 per share in the case of Mr. Willcox, (ii)
$9.00, $4.00 and $1.75 per share in the case of Mr. King, (iii) $12.00 and
$1.75 per share in the case of Mr. Scharfenstein and (iv) $1.75 per share
in the case of Ms. Neumann.
Employment Agreements
The Company and Mr. Caputo have entered into an employment agreement with
an initial term expiring January 1, 2001, which will be automatically extended
annually for an additional period of one year unless either Mr. Caputo or the
Company gives 60 days' prior written notice to the other that such automatic
extension will not occur. The employment agreement sets forth:
. the terms of Mr. Caputo's employment as President and Chief Executive
Officer,
. Mr. Caputo's agreement not to compete with the Company by rendering
information technology consulting or staffing services to customers in
the insurance, banking, brokerage or other financial services
industries during the term of his employment and for a period of two
years following the expiration or termination of such employment and
. Mr. Caputo's agreement to protect and preserve information and
property which is confidential and proprietary to the Company.
The employment agreement does not provide for any specified compensation to
Mr. Caputo and contains no provisions regarding compensation in the event of his
severance or upon a change of control of Command Systems, Inc.
The Company and Mr. Willcox have entered into an employment agreement as of
January 1, 1998 pursuant to which, among other things, in the event that Mr.
Willcox's employment is terminated voluntarily or by the Company for any reason
other than for "cause" as defined in the agreement, Mr. Willcox will be entitled
to a severance payment equal to one-half of his annual base salary in effect on
the date of termination, but in no event less than $87,500. The Company may pay
this severance either
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<PAGE>
as a lump sum or over a six-month period following termination. The parties have
not agreed to any specific term for Mr. Willcox's employment. In addition, Mr.
Willcox has agreed to a non-competition provision during his term of employment
and for a period of one year following termination of his employment. Under the
agreement, he has also agreed to protect and preserve information and property
which is confidential and proprietary to the Company.
The Company and Mr. King entered into an employment agreement dated as of
December 1, 1997 pursuant to which, among other things, in the event that Mr.
King's employment is terminated by the Company for any reason other than for
"cause" as defined in the agreement, Mr. King will be entitled to severance
payments for six months equal to one-half of his annual base salary in effect on
the date of termination. At the time of entering into the agreement, Mr. King's
annual salary was set at $120,000 with a $10,000 draw non-recoverable against
bonus. The parties have not agreed to any specific term for Mr. King's
employment. In addition, Mr. King has agreed to a non-competition provision
during his term of employment and for a period of six months following
termination of his employment. Under the agreement, he has also agreed to
protect and preserve information and property which is confidential and
proprietary to the Company.
The Company and Mr. Scharfenstein have entered into an agreement dated as
of April 1, 2000 pursuant to which, among other things, in the event that Mr.
Scharfenstein's employment is terminated by the Company for any reason other
than for "cause" as defined in the agreement, Mr. Scharfenstein will be entitled
to severance payments for six months equal to one-half of his annual base salary
in effect on the date of termination. At the time of entering into the
agreement, Mr. Scharfenstein's annual salary was set at $175,000. The parties
have not agreed to any specific term for Mr. Scharfenstein's employment. In
addition, Mr. Scharfenstein has agreed to a non-competition provision during his
term of employment and for a period of six months following termination of his
employment. Under the agreement, he has also agreed to protect and preserve
information and property which is confidential and proprietary to the Company.
The Company and Mr. Tamburro have entered into an agreement dated as of
October 5, 2000 pursuant to which, among other things, in the event that Mr.
Tamburro's employment is terminated by the Company for any reason other than for
"cause" as defined in the agreement, Mr. Tamburro will be entitled to severance
payments for a period and for such amounts equal to one weeks' salary for each
year of employment he has been employed by the Company. At the time of entering
into the agreement, Mr. Tamburro's annual salary was set at $120,000. The
parties have not agreed to any specific term for Mr. Tamburro's employment. In
addition, Mr. Tamburro has agreed to a non-competition provision during his term
of employment and for a period of six months following termination of his
employment. Under the agreement, he has also agreed to protect and preserve
information and property which is confidential and proprietary to the Company.
Compensation of Directors
Non-employee directors each receive a monthly fee of $1,000 and are
reimbursed for reasonable out-of-pocket expenses incurred in attending meetings.
Non-employee directors are also eligible for participation in our 1997 Employee,
Director and Consultant Stock Plan. We have granted non-qualified stock options
to non-employee directors as an incentive to join or remain on the Board of
Directors. We may do the same in the future. Upon joining the Board of
Directors, each of Messrs. Herndon and Oates was granted an option to purchase
5,000 shares of Common Stock at an exercise price of $9.00 per share, 25% of
which vested immediately and the remainder of which will vest ratably on each of
the first, second and third anniversaries of the date of the initial grant. Mr.
Sargent was granted an option, effective as of March 12, 1998, to purchase 5,000
shares of Common Stock at an exercise price of $12.00
-15-
<PAGE>
per share. Of this option, 25% vested immediately and an additional 25% vested
on each of March 12, 1999 and March 12, 2000, the remainder will vest on March
12, 2001. On September 30, 1999, each of Messrs. Herndon, Oates and Sargent was
granted an option to purchase 5,000 shares of Common Stock at an exercise price
of $1.75 which vests ratably over three years. On November 30, 1999, Mr.
Crawford was granted an option to purchase 5,000 shares of common stock at an
exercise price of $1.75 per share which vests ratably over three years. On April
7, 2000, Messrs. Crawford, Herndon, Ketterer, Oates, Sargent and Willcox
received an option to purchase 20,000 shares of Common Stock at an exercise
price of $3.16 per share, subject to stockholder approval of an amendment to
increase the number of options available under the 1997 Employee, Director and
Consultant Stock Plan. The option fully vests on April 7, 2008. However, upon
the Company's satisfaction of certain performance criteria, the option may fully
vest on either April 7, 2003 or April 7, 2005.
If the 2000 Non-Employee Director Stock Purchase Plan is approved by the
stockholders, each non-employee director will be provided the opportunity to
elect to purchase shares of Common Stock at a rate equal to not less than
eighty-five percent (85%) of the fair market value of the Common Stock on the
last day of a designated offering period, in lieu of receiving cash payment of
his or her directors fees during such offering period. In general, there will be
four quarterly offering periods under the 2000 Non-Employee Director Stock
Purchase Plan during each calendar year.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors advises the Chief
Executive Officer and the Board of Directors on compensation matters generally,
determines the compensation of the Chief Executive Officer, reviews and takes
action on the recommendation of the Chief Executive Officer as to the
appropriate compensation of other officers and key personnel, and approves the
grants of bonuses to officers and key personnel. The Compensation Committee is
also responsible for the administration of the Company's 1997 Employee, Director
and Consultant Stock Plan.
General Compensation Policy For Executive Officers. The fundamental policy of
the Compensation Committee is to provide the Company's executive officers with
competitive compensation opportunities based upon their contribution to the
development and financial success of the Company and their personal performance.
It is the Compensation Committee's objective to have a portion of each executive
officer's compensation contingent upon the Company's performance as well as upon
each executive officer's own level of performance. Accordingly, the compensation
package for each executive officer is comprised of three elements: (i) base
salary which reflects individual performance and is designed primarily to be
competitive with salary levels in the industry, (ii) cash bonuses which reflect
the achievement of performance objectives and goals, and (iii) long-term stock-
based incentive awards which strengthen the mutuality of interests between the
executive officers and the Company's stockholders.
Factors. The principal factors which the Compensation Committee considered with
respect to each executive officer's compensation for fiscal 1999 are summarized
below. The Compensation Committee may, however, in its discretion apply entirely
different factors with respect to executive compensation for future years.
. Base Salary. The base salary for each executive officer is determined
on the basis of the following factors: experience, personal
performance, the salary levels in effect for comparable positions
within and without the industry, and internal base salary
comparability considerations. The weight given to each of these
factors differs from individual to individual, as the Compensation
Committee deems appropriate. Base
-16-
<PAGE>
salaries are generally reviewed on an annual basis, with adjustments
made in accordance with the factors indicated above. In addition, in
reviewing annual adjustments, the Compensation Committee takes into
account the Company's performance in the fiscal year then ended.
. Bonus. The incentive compensation of executive officers is closely
related to Company performance. A portion of the cash compensation of
executive officers consists of contingent compensation. Bonus awards
are based on, among other things, performance objectives and goals
that are tailored to the responsibilities and functions of key
executives. Other than a bonus of $10,000 granted to Mr.
Scharfenstein, the Board of Directors did not approve any bonuses for
its executive officers during the fiscal year ended December 31, 1999.
. Long-Term Incentive Compensation. Long-term incentives are provided
through grants of stock options. The grants are designed to align the
interests of each executive officer with those of the stockholders and
provide each individual with a significant incentive to manage the
Company from the perspective of an owner with an equity stake in the
Company. Each option grant allows the individual to acquire shares of
the Company's Common Stock at a fixed price per share (generally, the
market price on the grant date) over a specified period of time (up to
ten years). Each option generally becomes exercisable in installments
over a five-year period, contingent upon the executive officer's
continued employment with the Company. Accordingly, the option grant
will provide a return to the executive officer only if the executive
officer remains employed by the Company during the vesting period, and
then only if the market price of the underlying shares appreciates.
The Company granted certain options prior to its initial public
offering. The Board of Directors did grant stock options to purchase
an aggregate of 137,500 shares of the Company's Common Stock to its
executive officers during the fiscal year ended December 31, 1999.
CEO Compensation. In determining the base salary payable to the Company's Chief
Executive Officer in 1999, the Compensation Committee considered the CEO's
performance in fiscal 1999, and the Company's performance in fiscal 1999. As a
result of the Company's performance for the fiscal year ended December 31, 1999,
the Board of Directors determined not to grant Mr. Caputo a year-end bonus or
stock option grant.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code of 1986, as amended, generally denies a federal income tax
deduction for certain compensation exceeding $1,000,000 paid to the Chief
Executive Officer or any of the four other highest paid executive officers,
excluding (among other things) certain performance-based compensation. Through
December 31, 1999, this provision has not affected the Company's tax deductions,
but the Committee will continue to monitor the potential impact of Section
162(m) on the Company's ability to deduct executive compensation.
Compensation Committee
John J.C. Herndon, Chairman of the Compensation Committee
James M. Oates
Joseph D. Sargent
-17-
<PAGE>
Compensation Committee Interlocks and Insider Participation
The Company's Board of Directors did not have a Compensation Committee
during 1997. Consequently, all Directors participated in deliberations
concerning executive compensation, including decisions relative to their own
compensation. In January 1998, the Board of Directors created a Compensation
Committee. No executive officer of the Company serves as a member of the board
of directors or compensation committee of any entity that has one or more
executive officers serving as a member of the Company's Board of Directors or
Compensation Committee. Mr. Herndon is the Vice President of Strategic
Development for Phoenix Home Life Mutual Insurance Company. Mr. Oates is a
director of Phoenix Duff & Phelps and Phoenix Funds which are affiliates of
Phoenix. See "Certain Relationships and Related Transactions."
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who beneficially own more than ten percent of the Company's Common
Stock, to file initial reports of ownership and reports of changes in ownership
with the Securities and Exchange Commission (the "SEC"). Executive officers,
directors and greater than ten percent beneficial owners are required by the SEC
to furnish the Company with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal 1999 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with on a timely basis, except that
Mr. James T. Crawford inadvertently failed to timely file a Form 3 to report the
grant of options to purchase 5,000 shares of Common Stock at a purchase price of
$1.75, subject to a three-year vesting schedule, upon joining as a director in
November 1999.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Phoenix
In June 1996, the Company entered into an agreement with Phoenix to
establish an offshore technology resource center in Bangalore, India. In
connection therewith, the Company formed Command International Holdings, LLC, a
corporation organized under the laws of Mauritius ("Command Holdings"), and
Command International Software Pvt., an Indian unlimited liability company
("Command Software"). Pursuant to the terms of the agreement the Company owned
100% of the outstanding equity of Command Holdings which in turn owned 51% of
the outstanding equity of Command Software. The remaining 49% ownership in
Command Software was owned by PHL Global Holding Company ("PHL"), a wholly-owned
subsidiary of PM Holdings, Inc., which in turn is wholly-owned by Phoenix.
During 1996 and 1997, Phoenix made certain advances to the Company and Command
Holdings. Notes evidencing these advances (the "Notes") bore interest at 15% per
annum and were due and payable in full five years from the date of each such
Note. At the time the offshore technology resource center was established, the
only relationship between the Company and Phoenix was that the Company provided
information technology services to Phoenix.
On August 26, 1997, the Company and Phoenix effected a transaction pursuant
to which the Notes, including the right to receive prior interest accrued
thereon, evidencing indebtedness to Phoenix of approximately $2.2 million, were
exchanged for an aggregate of 100 shares of Series A Redeemable Convertible
Preferred Stock. These shares of Series A Redeemable Convertible Preferred Stock
were convertible on a 5,225 for one basis into 522,500 shares of the Company's
Common Stock. In addition, the Series A Redeemable Convertible Preferred Stock
was entitled to a mandatory 10% cash dividend. Phoenix was granted certain
registration rights in connection with this transaction. The Company pledged all
of its shares held in Command Holdings (the "CH Shares"), its wholly-owned
subsidiary, to Phoenix to secure the Company's dividend and redemption
obligations arising under the Series A Redeemable Convertible Preferred Stock.
In connection with the foregoing transactions, Edward G. Caputo transferred all
the shares owned by him in Command Holdings to the Company, which shares
constituted a portion of the CH Shares. In addition, Mr. Caputo guaranteed the
Company's dividend and redemption obligations arising under the Series A
Redeemable Convertible Preferred Stock.
As of December 31, 1997, the Company and Phoenix completed a transaction
whereby the 49% interest in Command Software owned by PHL, was exchanged for 100
shares of Series B Redeemable Convertible Preferred Stock. These shares of
Series B Redeemable Convertible Preferred Stock were convertible on a 6,592.5
for one basis into 659,250 shares of the Company's Common Stock and were
entitled to a mandatory 10% cash dividend. Phoenix was granted certain
registration rights in connection with this transaction.
All shares of Series A and Series B Redeemable Convertible Preferred Stock
outstanding as of the consummation of the Company's initial public offering in
March 1998 were converted into an aggregate of 1,181,750 shares of the Company's
Common Stock. Phoenix sold 602,500 shares of Common Stock in the Company's
initial public offering at a purchase price of $12.00 per share, less
underwriting discounts and commissions.
In connection with the issuance of the Series A and Series B Redeemable
Convertible Preferred Stock, the Company entered into a Co-Sale Agreement with
Mr. Caputo and each of Phoenix and PHL (collectively, the "Co-Sale Agreements").
Pursuant to the Co-Sale Agreements, Mr. Caputo granted to Phoenix and PHL the
right to participate in any sale of Common Stock or preferred stock, if any, of
the Company (collectively, "Co-Sale Stock") by Mr. Caputo, upon the same terms
and conditions as the
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<PAGE>
proposed sale, with the exception of certain specified transfers. The Co-Sale
Agreements will terminate upon the earliest to occur of (i) ten years after the
date of such agreement, (ii) the date that Mr. Caputo ceases to own shares of
Co-Sale Stock constituting at least 25% of the Company's issued and outstanding
Common Stock on a fully-diluted basis and (iii) the date that Phoenix and PHL,
together with their respective affiliates, cease to own shares of Common Stock
constituting at least 5% of the Company's issued and outstanding Common Stock on
a fully-diluted basis.
For the year ended December 31, 1999 the Company provided IT services to
Phoenix, which generated revenue of approximately $1,690,000. These services
were provided on terms no less favorable to the Company than were obtained
during this same period from unaffiliated third parties. There can be no
assurance that the Company will continue to provide this level of services to
Phoenix, if at all.
Transactions with Officers
All transactions, including any loan from the Company to its officers,
directors, principal stockholders or affiliates, will be approved by a majority
of the Board of Directors, including a majority of the independent and
disinterested members of the Board of Directors or, if required by law, a
majority of disinterested stockholders, and will be on terms no less favorable
to the Company than could be obtained from unaffiliated third parties.
-20-
<PAGE>
COMPARATIVE PERFORMANCE BY THE COMPANY
The Securities and Exchange Commission requires the Company to present a
chart comparing the cumulative total stockholder return on its Common Stock with
the cumulative total stockholder return of (i) a broad equity market index and
(ii) a published industry index or peer group. Although the chart would normally
be for a five-year period, the Common Stock of the Company began trading
publicly on March 13, 1998 and, as a result, the following chart commences as of
such date. This chart compares the Company's Common Stock with (i) the Nasdaq
Stock Market-United States Index and (ii) an index of peer companies constructed
by the Company. Included in the peer group are Complete Business Solutions,
Inc., Computer Horizons Corp., Condor Technology Solutions, Inc., IMR Global
Corporation and Prt Group Inc.
Command Systems, Inc.
Comparison of Cumulative Total Return
(March 13, 1998 - December 31, 1999)
COMPARISON OF 21 MONTH CUMULATIVE TOTAL RETURN
AMONG COMMAND SYSTEMS, INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX AND A PEER GROUP
[GRAPH APPEARS HERE]
* $100 INVESTED ON 3/13/98 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF IVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
<TABLE>
<CAPTION>
3/13/1998 3/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COMMAND SYSTEMS, INC. 100.00 118.75 42.19 26.04 28.13 15.89 14.58 14.58 16.67
PEER GROUP 100.00 107.33 92.63 65.80 74.28 41.83 42.01 27.42 43.24
NASDAQ STOCK MARKET (U.S.) 100.00 103.74 106.58 96.18 124.98 140.08 153.27 156.99 231.29
</TABLE>
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<PAGE>
PROPOSAL NO. 2-APPROVAL OF AN AMENDMENT TO THE
COMPANY'S 1997 EMPLOYEE, DIRECTOR AND CONSULTANT STOCK PLAN
TO INCREASE THE NUMBER OF SHARES WHICH MAY BE ISSUED THEREUNDER
In January 2000, the Board of Directors unanimously adopted, subject to
stockholder approval, an amendment to the Company's 1997 Employee, Director and
Consultant Stock Plan (the "1997 Plan") which would increase the aggregate
number of shares of Common Stock that may be issued thereunder from 427,500
shares to 927,500 shares. As of April 17, 2000, 35,015 shares remained available
for issuance under the 1997 Plan. In assessing the recommendation of the Board,
stockholders should consider that Messrs. Crawford, Herndon, Ketterer, Oates,
Sargent and Willcox, directors of the Company, were each granted 20,000 options
to purchase the Company's Common Stock at an exercise price of $3.16 per share
on April 17, 2000, subject to stockholder approval, and thus may be viewed to
have a conflict of interest.
The 1997 Plan was adopted by the Board of Directors for the purpose of
securing for the Company and its stockholders the benefits of common stock
ownership of the Company by key employees, directors and consultants of the
Company and its subsidiaries. The Board of Directors believes that the granting
of options under the 1997 Plan will foster the Company's ability to attract,
retain and motivate those individuals who will be largely responsible for the
profitability and long-term future growth of the Company. As of April 17, 2000,
approximately 150 persons were eligible to participate in the 1997 Plan.
The Board of Directors, as the ultimate administrator of the 1997 Plan, has
appointed the Compensation Committee to administer the 1997 Plan. Subject to the
provisions and some limitations described in the 1997 Plan, the administrator,
acting in its sole and absolute discretion, has full power and authority to:
. grant options and shares under the 1997 Plan;
. select the persons to whom awards will be granted, except that only
key employees may receive incentive stock options;
. fix the number of shares covered by each such option so long as in no
event shall grants with a total fair market value of $250,000 be
granted to anyone in any fiscal year,
. establish the terms and conditions relating to awards;
. interpret the provisions of the 1997 Plan and option grants made under
the 1997 Plan; and
. take such other action as may be necessary or desirable in order to
carry out the provisions of the 1997 Plan.
Awards, including options and stock rights, may be granted under the 1997
Plan to present or future key employees, directors and consultants of the
Company or a subsidiary of the Company (a "Subsidiary") within the meaning of
Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
and to directors of and consultants to the Company or a Subsidiary who are not
employees.
In the case of an option which is not intended to be an incentive stock
option, the exercise price per share may not be less than the par value of a
share of Common Stock on the date the option is granted; and, in the case of an
incentive stock option, the exercise price per share will be 100% of the fair
market value of a share of Common Stock on the date the option is granted (110%
in the case of an optionee who, at the time the option is granted, owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or a Subsidiary (a "ten percent shareholder")).
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<PAGE>
The period during which an option may be exercised will be fixed by the
administrator and will not exceed ten years from the date the option is granted
(five years in the case of an incentive stock option granted to a ten percent
shareholder).
Unless extended by the administrator, if an optionee ceases to be employed
by or to perform services for the Company or any Subsidiary for any reason other
than death or disability, then each outstanding option granted to him or her
under the 1997 Plan will terminate on a date designated in the applicable option
agreement. In no case shall the date be later than three months after the date
of his or her termination of employment or service. If the optionee's employment
or service is terminated by the Company for cause, then the option will
terminate upon the date of such termination of employment or service. In
general, if an optionee's employment or service is terminated by reason of the
optionee's death or disability, then each outstanding option granted to the
optionee under the 1997 Plan will terminate on the date one year after the date
of such termination of employment or service or, if earlier, the date specified
in the option agreement. However, in no event, shall the date extend beyond the
date of expiration of the term of the option.
Offers of stock grants not accepted prior to termination automatically
terminate. If a grantee is terminated for cause, then all shares are subject to
repurchase at the purchase price. In general, upon death or disability of a
grantee who has received stock grants, stock grants are subject to repurchase
rights which lapse periodically. These rights will lapse to the extent of a pro
rata portion of shares subject to the stock grant would have lapsed had the
grantee not died or become disabled prior to the end of the vesting period which
immediately followed the date of death or disability.
If the Company is to be consolidated with or acquired by another entity in
a merger, sale of all or substantially all of the Company's assets, the Board of
Directors or its successor shall make provision for (a) outstanding options to
continue by substituting on an equitable basis for the underlying common stock
issuable upon exercise of the option with consideration payable in connection
with the acquisition or securities of any successor or acquiring entity, (b)
upon written notice to participants, provide that all options must be exercised
prior to end of a period which would terminate all options, or (c) terminate all
options in exchange for a cash payment equal to the excess of the fair market
value of the underlying shares subject to the options over the exercise price.
With respect to stock grants, the Board or its successor shall make provision
for (a) outstanding options to continue by substituting on an equitable basis
for the common stock subject to the stock grants with consideration payable in
connection with the acquisition or securities of any successor or acquiring
entity or (b) upon written notice to participants, provide that all stock grants
must be accepted prior to end of a period which would terminate all options, or
(c) terminate all stock grants in exchange for a cash payment equal to the
excess of the fair market value of the shares subject to the stock grants over
the purchase price.
Upon dissolution or liquidation of the Company, all options and stock
grants which have not been exercised or accepted will terminate and become null
and void. However, if the rights of a participant or a participant's survivor
have not otherwise terminated or expired, each may exercise any rights
immediately prior to the dissolution or liquidation.
The 1997 Plan terminates in August, 2007, ten years after its adoption.
However, the 1997 Plan may also be terminated by a vote of the stockholders of
the Company, although such termination would not affect any option agreements
executed prior to termination. In addition, the stockholders may amend the 1997
Plan, although such amendment would not adversely affect rights previously
granted to a participant. The 1997 Plan may also be amended by the Board or its
delegated committee to the extent necessary to qualify shares issuable upon
exercise or exercise of stock options or grants for listing on a national
securities exchange or any national automated quotation system of securities
dealers. However, any amendment approved by the Board or its committee which the
Board or its committee determines is of a scope that requires stockholder
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<PAGE>
approval shall be subject to obtaining stockholder approval. No amendment may
affect adversely any outstanding option without the written consent of the
optionee.
Plan Benefits
The table below indicates stock options which were granted, subject to
stockholder approval of Proposal No. 2 of this Proxy Statement, to (a) each
person named in the Summary Compensation Table appearing earlier in this Proxy
Statement, (b) all current executive officers of the Company as a group, (c) all
current directors who are not executive officers as a group and (d) all
employees of the Company, including all current officers of the Company who are
not executive officers of the Company, as a group:
1997 Employee, Consultant and Director Stock Plan Benefits
<TABLE>
<CAPTION>
Name and Position Dollar Value (1) Number of Shares
- ----------------- ---------------- ----------------
<S> <C> <C>
Stephen L. Willcox $ 63,200 20,000(2)
Glenn M. King $ 63,200 20,000(2)
William P. Scharfenstein $ 63,200 20,000(2)
William Tamburro $ 63,200 20,000(2)
Holly Neumann $ 63,200 20,000(2)
John T. Crawford $ 63,200 20,000(2)
John J.C. Herndon $ 63,200 20,000(2)
Theodore Ketterer $ 63,200 20,000(2)
James M. Oates $ 63,200 20,000(2)
Joseph D. Sargent $ 63,200 20,000(2)
All other employees $291,738 92,322(2)
</TABLE>
_____________________
(1) Amounts are determined by multiplying the number of options granted by the
exercise price of the option which was $3.16, the market price of a share
of Common Stock on April 7, 2000, the grant date.
(2) The option fully vests on April 7, 2008. However, upon the Company's
satisfaction of certain performance criteria, the option may fully vest on
either April 7, 2003 or April 7, 2005.
Federal Income Tax Consequences
The following is intended only as a general summary of the federal income
tax consequences in connection with participation in the 1997 Plan.
An optionee will not realize taxable income upon the grant of an option. In
general, the holder of a non-qualified stock option will realize ordinary income
when the option is exercised equal to the excess of the value of the stock over
the exercise price (i.e., the option spread), and the Company receives a
corresponding deduction if applicable withholding requirements are met. If an
option is exercised within six months after the date of grant and if the
optionee is subject to the six month restrictions on sale of Common Stock under
Section 16(b) of the Exchange Act, the optionee generally will recognize
ordinary income on the date the restrictions lapse, unless an early income
recognition election is made. Upon a later sale of the stock, an optionee will
realize capital gain or loss equal to the difference between the selling price
and the value of the stock at the time the option was exercised.
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<PAGE>
The holder of an incentive stock option will not realize taxable income
upon the exercise of the option, although the option spread is an item of tax
preference income potentially subject to the alternative minimum tax. If the
stock acquired upon exercise of the incentive stock option is sold or otherwise
disposed of within two years from the option grant date or within one year from
the exercise date, then, in general, gain realized on the sale is treated as
ordinary income to the extent of the option spread at the exercise date, and the
Company receives a corresponding deduction. Any remaining gain is treated as
capital gain. If the stock is held for at least two years from the grant date
and one year from the exercise date, then gain or loss realized upon the sale
will be capital gain or loss and the Company will not be entitled to a
deduction. A special basis adjustment applies to reduce the gain for alternative
minimum tax purposes.
The Amendment to the 1997 Plan
The Board believes that approval of the amendment to increase the aggregate
number of shares which may be issued under the 1997 Plan will serve the best
interests of the Company and its stockholders by permitting the Committee to
exercise needed flexibility in the administration of the 1997 Plan and the
granting of options and shares thereunder. In addition, the Board believes that
the ability to grant additional options and shares will help attract, motivate
and retain key employees and directors who are in a position to contribute to
the successful conduct of the business and affairs of the Company and its
subsidiaries as well as stimulate in such individuals an increased desire to
render greater service to the Company and its subsidiaries.
Accordingly, the Board recommends that the stockholders approve the
following resolution:
RESOLVED, that the aggregate number of shares of the Corporation's
Common Stock which may be issued under the Company's 1997 Employee,
Consultant and Director Stock Plan shall be increased to 927,500
shares, and that the first sentence of Section 3 of the Plan be
amended to read in its entirety as follows:
"The number of Shares which may be issued from
time to time pursuant to this Plan shall be 927,500, or
the equivalent of such number of Shares after the
Administrator, in its sole discretion, has interpreted
the effect of any stock split, stock dividend,
combination, recapitalization or similar transaction in
accordance with Paragraph 23 of the Plan."
Vote Required
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company issued, outstanding and entitled to vote, present or
represented at the meeting, a quorum being present, is required for the adoption
of the amendment as set forth in Proposal No. 2. Broker non-votes with respect
to this matter will be treated as neither a vote "for" nor a vote "against" the
matter, although they will be counted in determining the number of votes
required to attain a majority of the shares present or represented at the
meeting and entitled to vote. Accordingly, an abstention from voting by a
stockholder present in person or by proxy at the meeting has the same legal
effect as a vote "against" the matter because it represents a share present or
represented at the meeting and entitled to vote, thereby increasing the number
of affirmative votes required to approve this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
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<PAGE>
PROPOSAL NO. 3-APPROVAL OF THE ADOPTION OF THE COMPANY'S
2000 NON-EMPLOYEE DIRECTOR STOCK PURCHASE PLAN.
On February 14, 2000, the Board of Directors adopted the 2000 Non-Employee
Director Stock Purchase Plan (the "2000 Plan"), subject to stockholder approval.
The Company believes that the 2000 Plan is an important part of providing
incentives to attract and retain qualified non-employee directors. In assessing
the recommendation of the Board, stockholders should consider that Messrs.
Crawford, Herndon, Ketterer, Oates and Sargent, non-employee directors of the
Company, would benefit from the participation of the 2000 Plan and thus may be
viewed to have a conflict of interest. The primary features of the 2000 Plan are
summarized below. The full text of the 2000 Plan is set forth in Appendix A to
----------
this Proxy Statement and the following discussion is qualified by reference
thereto.
General Description of the 2000 Plan
All non-employee directors of the Company shall be eligible to participate
under the 2000 Plan. As of April 17, 2000, there are five non-employee directors
of the Company eligible to participate in the 2000 Plan. Prior to the
commencement of an offering period, in lieu of receiving cash payment of
directors' fees for such offering period, each non-employee director may elect
to purchase shares of the Company's Common Stock under the 2000 Plan at a price
per share equal to not less than eighty-five percent (85%) of the fair market
value of the Company's Common Stock on the last business day of an offering
period. The number of shares which can be purchased is determined by dividing
the amount of director fees otherwise payable in cash with respect to an
offering period by the purchase price per share. In general, unless otherwise
determined by the Board of Directors, there will be four quarterly offering
periods under the 2000 Plan during each calendar year.
The total number of shares reserved for issuance under the 2000 Plan will
be 150,000 shares, which would have a current market value of approximately
$412,500, based upon a price per share of $2.75, the closing price of the
Company's Common Stock on the Nasdaq National Market on April 20, 2000.
The Board of Directors will administer, interpret and apply all provisions
of the 2000 Plan. No member of the Board shall be liable for any action or
determination made in good-faith with respect to the 2000 Plan, unless and to
the extent attributable to such member's fraud or wilful misconduct.
The Board of Directors may amend, modify or terminate the 2000 Plan at any
time provided that unless otherwise required by law, that no such amendment,
modification or termination may adversely affect any existing rights of any
participant.
Federal Tax Consequences of the 2000 Plan
The following is intended only as a general summary of the federal income
tax consequences in connection with participation in the 2000 Plan.
In general, upon the purchase of shares of the Company's Common Stock, a
non-employee director will recognize ordinary income equal to the fair market
value of the shares at the time of purchase. Generally, the Company will be
entitled to a deduction in an amount equal to the ordinary income recognized by
the director.
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<PAGE>
Capital gain will be realized upon the sale of the shares to the extent the
sale proceeds exceed the fair market value of the shares on the date of
purchase. A capital loss will be realized to the extent the sales price of the
shares disposed of is less than the fair market value of such shares on the date
of purchase.
Plan Benefits
As of April 17, 2000, no shares have been purchased by any non-employee
directors of the Company under the 2000 Plan, which is subject to stockholder
approval.
Vote Required
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present or represented at the 2000 Annual Meeting of
Stockholders is required for the approval of the 2000 Non-Employee Director
Stock Purchase Plan. Broker non-votes with respect to this matter will be
treated as neither a vote "for" nor a vote "against" the matter, although they
will be counted in determining if a quorum is present. However, abstentions will
be considered in determining the number of votes required to attain a majority
of the shares present or represented at the meeting and entitled to vote.
Accordingly, an abstention from voting by a stockholder present in person or by
proxy at the meeting has the same legal effect as a vote "against" the matter
because it represents a share present or represented at the meeting and entitled
to vote, thereby increasing the number of affirmative votes required to approve
this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 3 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
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<PAGE>
PROPOSAL NO. 4--RATIFICATION OF APPOINTMENT
OF INDEPENDENT ACCOUNTANTS
The stockholders will be asked to ratify the appointment of Ernst & Young
LLP as the Company's independent accountants for the fiscal year ending December
31, 2000. Ernst & Young LLP audited the consolidated financial statements of the
Company for the year ended December 31, 1999. A representative of Ernst & Young
LLP is expected to be present at the Annual Meeting and will have an opportunity
to make a statement if he or she desires to do so and is expected to be
available to respond to appropriate questions from stockholders.
Vote Required
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present or represented and entitled to vote is required for
the ratification of the appointment of Ernst & Young LLP as the Company's
independent accountants. Abstentions and broker non-votes have the same legal
effect as votes cast against this proposal.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 4 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR" APPROVAL THEREOF.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the Annual
Meeting of Stockholders of the Company to be held in 2001 must be received by
the Company no later than December 26, 2000 for inclusion in the Board of
Directors' proxy statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope.
By Order of the Board of Directors
/s/ Stephen L. Willcox
Stephen L. Willcox
Secretary
Dated: April 24, 2000
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT
WITHOUT CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: COMMAND
SYSTEMS, INC., ATTENTION: CORPORATE SECRETARY, 76 BATTERSON PARK ROAD,
FARMINGTON, CT 06032.
-28-
<PAGE>
Appendix A
----------
COMMAND SYSTEMS, INC.
2000 NON-EMPLOYEE DIRECTOR STOCK PURCHASE PLAN
1. Purpose.
The purpose of this Non-Employee Director Stock Purchase Plan (the "Plan")
is to enhance the ability of Command Systems, Inc., a Delaware corporation (the
"Company") to attract, retain and motivate Non-Employee Directors and to further
the mutuality of interests between the Company's Non-Employee Directors and
stockholders by allowing Non-Employee Directors to purchase shares of the
Company's common stock, par value $.01 per share (the "Common Stock") at a
specified discount, in lieu of receiving cash payment of their director fees.
2. Administration of the Plan.
The Plan shall be administered by the Board of Directors of the Company
(the "Board"). The interpretation and construction by the Board of any
provisions of the Plan or of any other matters related to the Plan shall be
final, binding and conclusive on all parties. The Board may from time to time
adopt such rules and regulations for carrying out the Plan as it may deem
advisable. No member of the Board shall be liable for any action or
determination made in good-faith with respect to the Plan, unless and to the
extent attributable to such member's fraud or wilful misconduct.
3. Available Shares.
The maximum number of shares of Common Stock that may be issued under the
Plan shall not exceed 150,000, provided that, if any change is made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Company's receipt of
consideration, the maximum number and/or class of securities that may be issued
under the Plan shall be automatically adjusted to reflect such event. Shares of
Common Stock available for issuance under the Plan may be either authorized and
unissued or held by the Company in its treasury. No fractional shares of Common
Stock may be issued under the Plan.
4. Eligibility and Purchase.
a. Eligibility. Directors of the Company who are not officers, employees
or consultants of the Company or any of its subsidiaries ("Non-Employee
Directors") shall be eligible to purchase shares of Common Stock pursuant to the
Plan.
b. Purchase.
(i) Election to Purchase Shares. In lieu of receiving cash payment
of director fees with respect to any fiscal quarter or such other period
determined by the Board from time to time
A-1
<PAGE>
(the "Offering Period"), each Non-Employee Director may elect, in
accordance with Section 4(ii) below, to purchase the number of shares of
Common Stock determined by dividing the amount of director fees otherwise
payable in cash with respect to an Offering Period by the purchase price
per share. The purchase price per share shall be equal to eighty-five
percent (85%) (or such greater percentage determined by the Board from time
to time) of the Fair Market Value of the Common Stock on the last business
day of an Offering Period. Each Non-Employee Director who purchases shares
of Common Stock pursuant to the Plan is hereinafter referred to as a
"Recipient". Notwithstanding anything herein to the contrary, no Offering
Period under the Plan shall commence prior to the approval of the Plan by
the Company's stockholders.
(ii) Form and Timing of Election. Any election to purchase shares of
Common Stock or any change or revocation of any such election shall be made
on such form as prescribed by the Board from time to time and shall become
effective on the first day of the next Offering Period and shall remain
effective for all subsequent Offering Periods until revoked by the Non-
Employee Director in accordance herewith. If no election is made, the Non-
Employee Director shall continue to receive cash payment of his director
fees.
(iii) Fair Market Value. For purposes of the Plan, Fair Market Value
shall mean, on any date specified herein, (A) if the Common Stock is listed
or admitted to trading on the New York Stock Exchange (the "NYSE") or the
American Stock Exchange (the "ASE"), the average of the high and low sale
price of the Common Stock on such date or if no such sale takes place on
any such date, the average of the highest closing bid and lowest closing
asked prices thereof, in each case as officially reported on the NYSE or
the ASE or (B) if no shares of Common Stock are then listed or admitted to
trading on the NYSE or the ASE, the closing price of the Common Stock on
such date in the over-the-counter market as shown by the NASDAQ National
Market System or, if no such shares are then quoted in such system, as
published by the National Quotation Bureau, Incorporated or any similar
successor organization, and in either case as reported by any member firm
of the NYSE selected by the Company, or (C) if no shares of Common Stock
are then listed or admitted to trading on the NYSE or the ASE or quoted in
the over-the-counter market, the average of the high and low sale price of
the Common Stock listed or admitted to trading on a national securities
exchange other than the NYSE or the ASE or if no such sale takes place on
such date, the average of the highest closing bid and lowest closing asked
prices thereof (in each case as officially reported on such national
securities exchange). If no shares of Common Stock are then listed or
admitted to trading on any national securities exchange and if no closing
bid and asked prices thereof are then so quoted or published in the over-
the-counter market, the "Fair Market Value" shall be determined in good
faith by the Board.
(iv) Rights Upon Purchase. Each Recipient shall have full rights as a
stockholder on the date of purchase with respect to any shares of Common
Stock purchased by him under the Plan, including the rights to vote and to
receive dividends and special distributions on the total number of shares
of Common Stock purchased by such Recipient.
(v) Delivery of Common Stock. Stock certificates representing the
shares of Common Stock purchased hereunder shall be promptly delivered to
the Recipient or the Recipient's beneficiary or estate, as the case may be.
The Company shall not be required to deliver any
A-2
<PAGE>
fractional Share but will pay, in lieu thereof, cash equal to the Fair
Market Value of such fractional share on the date of purchase.
(vi) Beneficiary. A Recipient may file with the Board a written
designation of a Beneficiary, on such form as may be prescribed by the
Board, to receive any shares of Common Stock or cash payments that become
deliverable to the Recipient pursuant to the Plan as a result of the
Recipient's death. A Recipient may, from time to time, amend or revoke a
designation of Beneficiary. If no designated Beneficiary survives the
Recipient, the executor or administrator of the Recipient's estate shall be
deemed to be the Recipient's Beneficiary.
5. Regulatory Compliance and Listing.
The issuance or delivery of any shares of Common Stock may be postponed by
the Company for such period as may be required to comply with federal and state
securities laws, any applicable listing requirements of any applicable
securities exchange and any other law or regulation applicable to the issuance
or delivery of such Common Stock, and the Company shall not be obligated to
issue or deliver any shares of Common Stock if the issuance or delivery of such
Common Stock would constitute a violation of any law or any regulation of any
governmental authority or applicable securities exchange.
6. Termination or Amendment of the Plan.
The Board may at any time terminate the Plan and may from time to time
alter or amend the Plan or any part thereof (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Section 5), provided that, unless otherwise required by law, the
rights of a Recipient with respect to the shares of Common Stock purchased prior
to such termination, alteration or amendment may not be impaired without the
consent of such Recipient.
7. Miscellaneous.
a. Nothing in the Plan shall be deemed to create any obligation on the
part of the Board to nominate any director for reelection by the Company's
stockholders.
b. The Common Stock purchased under the Plan may be either newly issued
shares of Common Stock or treasury shares which theretofore have been issued and
reacquired by the Company.
c. The Company shall have the right to require, prior to the issuance or
delivery of any shares of Common Stock under the Plan, payment by the Recipient
of any taxes required by law with respect to the issuance or delivery of such
shares.
d. No Recipient shall be, or shall be deemed to be, a holder of any
shares of Common Stock until the date of the issuance of a stock certificate for
such shares to him. No adjustment shall be made for dividends or other rights
for which the record date is prior to the date such stock certificate is issued.
A-3
<PAGE>
8. Effective Date of the Plan.
The Plan shall become effective on February 10, 2000, subject to the
approval of the Plan by the stockholders of the Company at the Company's 2000
Annual Meeting of Stockholders.
A-4
