SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant
[ ] Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2)
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to S 240.14a-11(c) or S 240.14a-12
CAPITA RESEARCH GROUP, 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) (4) 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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CAPITA RESEARCH GROUP, INC.
---------------
Notice of Annual Meeting of Stockholders
to be held July 27, 1999
---------------
Blue Bell, Pennsylvania
June 29, 1999
To the Holders of Common Stock
of CAPITA RESEARCH GROUP, INC.:
The Annual Meeting of the Stockholders of CAPITA RESEARCH
GROUP, INC. will be held at the Double Tree Guest Suites, 640 West Germantown
Pike, Plymouth Meeting, PA, 19462 on Tuesday, July 27, 1999 at 4:30 P.M., local
time, for the following purposes, as more fully described in the accompanying
Proxy Statement:
1. To elect directors of the Company for the ensuing year.
2. To consider and take action upon a proposal to ratify the
Board of Directors' adoption of the Capita Research Group 1999 Stock Option
Plan.
3. To consider and take action upon a proposal to ratify the
Board of Directors' selection of Rudolph, Palitz, LLC to serve as the Company's
independent auditors for the Company's fiscal year ending December 31, 1999.
4. To transact such other business as may properly come before
the Meeting or any adjournment or adjournments thereof.
The close of business on June 29, 1999 has been fixed by the
Board of Directors as the record date for the determination of stockholders
entitled to notice of, and to vote at, the Meeting.
By Order of the Board of Directors,
Millard E. Tydings, II Secretary
You are cordially invited to attend the Meeting in person. If
you do not expect to be present, please mark, sign and date the enclosed form of
Proxy and mail it in the enclosed return envelope.
<PAGE>
PROXY STATEMENT
This Proxy Statement, which will be mailed commencing on or
about June 29, 1999 to the persons entitled to receive the accompanying Notice
of Annual Meeting of Stockholders, is provided in connection with the
solicitation of Proxies on behalf of the Board of Directors of Capita Research
Group, Inc. (the "Company") for use at the Annual Meeting of Stockholders (the
"Meeting") to be held on July 27, 1999, and at any adjournment or adjournments
thereof, for the purposes set forth in such Notice. The Company's executive
office is located at 591 Skippack Pike, Suite 300, Blue Bell, Pennsylvania
19422.
Any Proxy may be revoked at any time before it is exercised.
The casting of a ballot at the Meeting by a stockholder who may theretofore have
given a Proxy or the subsequent delivery of a Proxy will have the effect of
revoking the initial Proxy.
At the close of business on June 29, 1999, the record date
stated in the accompanying Notice, the Company had outstanding 18,740,377 shares
of common stock, $.001 par value ("Common Stock"), each of which is entitled to
one vote with respect to each matter to be voted on at the Meeting. The Company
has no class or series of stock outstanding other than the Common Stock.
Directors are elected by plurality vote. Adoption of proposals
2 and 3 will require the affirmative vote of a majority of the shares of Common
Stock present and voting thereon at the Meeting. Abstentions and broker
non-votes (as hereinafter defined) will be counted as present for the purpose of
determining the presence of a quorum. For the purpose of determining the vote
required for approval of matters to be voted on at the Meeting, shares held by
stockholders who abstain from voting will be treated as being "present" and
"entitled to vote" on the matter and, thus, an abstention has the same legal
effect as a vote against the matter. However, in the case of a broker non-vote
or where a stockholder withholds authority from his proxy to vote the proxy as
to a particular matter, such shares will not be treated as "present" and
"entitled to vote" on the matter and, thus, a broker non-vote or the withholding
of a proxy's authority will have no effect on the outcome of the vote on the
matter. A "broker non-vote" refers to shares of Common Stock represented at the
Meeting in person or by proxy by a broker or nominee where such broker or
nominee (i) has not received voting instructions on a particular matter from the
beneficial owners or persons entitled to vote and (ii) the broker or nominee
does not have discretionary voting power on such matter.
I. ELECTION OF DIRECTORS
Four directors will be elected at the Annual Meeting of
Stockholders to be held on July 27, 1999, each to serve until the 2000 Annual
Meeting of Stockholders and until a successor shall have been chosen and
qualified. It is the intention of each of the persons named in the accompanying
form of Proxy to vote the shares of Common Stock represented thereby in favor of
the nominees listed in the following table, unless otherwise instructed in such
Proxy. All of such nominees are presently serving as directors. In case any of
the nominees is unable or declines to serve, such persons reserve the right to
<PAGE>
vote the shares of Common Stock represented by such Proxy for another person
duly nominated by the Board of Directors in such nominee's stead. The Board of
Directors has no reason to believe that the nominees named will be unable or
will decline to serve.
Certain information concerning the nominees for election as
directors is set forth below. Such information was furnished by them to the
Company.
<TABLE>
<CAPTION>
Shares of Common
Stock Owned
Beneficially as of Percent
Name and Certain Biographical Information June 15, 1999 of Class
- ----------------------------------------- ------------- --------
<S> <C> <C>
DAVID B. HUNTER, age 45, has been Chairman of the Board 1,494,727 9.86%
and Chief Executive Officer since January 1998. He
has been with the Company since 1995 as General
Manager and Director. Mr. Hunter has been
responsible for designing, deploying, financing
and marketing the Engagement (SM) Testing System
since its inception, and originated, negotiated
and closed the Company's licensing agreement with
the National Aeronautics and Space Administration
("NASA"). From 1989 to 1995 Mr. Hunter was an
independent money manager. From 1981 to 1989 he
was a Vice President with Tucker Anthony
Incorporated, W.H. Newbold's Son & Co. and Piper
Jaffray Inc. Prior to that, Mr. Hunter was an
actuarial consultant with a major pension
actuarial firm. Mr. Hunter graduated from Temple
University with a B.S. degree in Accounting in
1980.
R. DONALD PETERSON, age 60, is Vice President Finance 100,000 0.66%
and Director. Mr. Peterson is a Certified Public
Accountant, and has been with the Company since
May 1998. From 1994 to 1998 he owned and operated
an independent financial consulting firm providing
corporate financial management services. From 1976
to 1994 he was employed by UGI Corporation and its
subsidiaries in various financial management
capacities including, from 1989 to 1994, Vice
President of Finance for its Amerigas, Inc.
subsidiary. Mr. Peterson received a B.S. in
business administration from Lehigh University.
MILLARD E. TYDINGS II, age 40, has been a Director of 49,824 0.33%
the Company since September 1996. Currently an
independent financial consultant and mergers and
acquisitions specialist, Mr. Tydings was formerly
a marketing representative with the United States
Chamber of Commerce from 1992 to1994. He received
a B.A. from Johns Hopkins University in 1992.
RALPH ANGLIN, age 73, Director, has been a Director of 2,271,696 14.98%
the Company since November 1998. Currently Mr.
Anglin is an active consultant with PRA
Development and Management Corporation. From 1980
to 1985 he was the President of Robb Cape Inc. Mr.
Anglin is a graduate of the Massachusetts
Institute of Technology with a B.S. in civil
engineering in 1953.
</TABLE>
- -------------------------
(1) Included in Mr. Anglin's shareholdings are 152,020 shares owned by his
profit-sharing plan and 682,000 shares owned by his personal IRA.
During the fiscal year ended December 31, 1998 the Board of
Directors of the Company met three times. Each of the persons named in the table
above attended at least 75% of the meetings of the Board of Directors which were
held during the time that such person served.
2
<PAGE>
The Board will have a Compensation Committee. The members of
the Compensation Committee will be Ralph Anglin, who will serve as Chairman, and
Millard Tydings. The Compensation Committee will make recommendations to the
full Board as to compensation of senior management and will determine the
executives who are to receive options and the number of shares subject to each
option. The Compensation Committee will meet not less than once every calendar
year.
The Board has an Audit Committee. The members of the Audit
Committee are Ralph Anglin, Chairman, and Millard Tydings. The Audit Committee
meets at least once per year in advance of the Annual Meeting of Stockholders of
the Company with the Company's independent auditors. The Audit Committee acts as
a liaison between the Board and the independent auditors and annually recommends
to the Board the appointment of the independent auditors. The Audit Committee
reviews with the independent auditors the planning and scope of the audits of
the financial statements, the results of those audits and the adequacy of the
Company's internal accounting controls.
The directors and officers of the Company, other than Messrs.
Tydings and Anglin, are active in its business on a day-to-day basis. No family
relationships exist between any of the directors and officers of the Company.
The Company's Certificate of Incorporation contains a
provision, authorized by Nevada law, which eliminates the personal liability of
a director of the Company to the Company or to any of its stockholders for
monetary damages for a breach of his fiduciary duty as a director, except in the
case where the director breached his duty of loyalty, failed to act in good
faith, engaged in intentional misconduct or knowingly violated a law, authorized
the payment of a dividend or approved a stock repurchase in violation of Nevada
corporate law, or obtained an improper personal benefit.
Compensation of Executive Officers
- ----------------------------------
The following table sets forth information for the fiscal
years ended December 31, 1998, 1997 and 1996 concerning the compensation paid or
awarded to the Chairman and Chief Executive Officer of the Company. No executive
officer of the Company received fiscal 1998 salary and bonus compensation which
exceeded $100,000. The Company's outside Directors will receive $1,250 per
meeting for their services as such and reimbursement for any expenses they may
incur in connection with their services as directors.
3
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SUMMARY COMPENSATION TABLE
Long Term
Compensation
Name of Officer and Fiscal Other Annual Awards-Options
Principal Position Year Salary Compensation (#)
- ------------------- ------ ------- ------------ ----------
David B. Hunter, 1998 $55,385 $ 0 0
Chairman and Chief 1997 $24,000 $ 0 0
Executive Officer 1996 $31,500 $ 0 0
There is no stock option plan at this time. No compensation to
management has been waived or accrued to date.
Compliance with Section 16(a) of the
Securities Exchange Act of 1934
- ------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers, and persons who own more than
ten percent of the Company's Common Stock, to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of Common Stock. Officers, directors and greater than ten percent
stockholders are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and representations that no
other reports were required, during the fiscal year ended December 31, 1998 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were not initially filed in a timely
manner but are now, expecting Michael Kline filed and current as of June 29,
1999.
Certain Relationships and Related Transactions
- ----------------------------------------------
In October 1996, Media Solutions, Inc., a predecessor of the
Company, entered into a $100,000 bridge loan agreement with Margaret W. Long,
one of its shareholders. Under the terms of the agreement, the company utilized
borrowed funds to satisfy near term working capital obligations. Management
believed that repayment would come both from anticipated system sales and from
proceeds of an offering of equity securities to outside investors. The bridge
loan has a current outstanding principal balance of $100,000. The current rate
of interest on this loan is set at the prime rate plus two percentage points,
which, at present, is 10.5%. The bridge loan is renewable every three months,
with the current due date being August 2, 1999.
In January 1999, William Hummel, a director, was issued 80,000
shares of common stock at $.25 per share as prepaid rent on office space the
Company leases.
In January 1999, Ralph Anglin, a director, was issued 84,000
shares of common stock at $.25 per share in return for various office furniture
and fixtures at a fair market value of $21,000.
4
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Information Concerning Certain Stockholders
- -------------------------------------------
The shareholdings of the persons who, to the knowledge of the
Board of Directors of the Company, owned beneficially more than five percent of
any class of the outstanding voting securities of the Company as of June
15,1999, and all directors and executive officers of the Company as a group, and
their respective shareholdings as of such date (according to information
furnished by them to the Company), are set forth in the following table. Except
as indicated in the footnotes to the table, all of such shares are owned with
sole voting and investment power.
5
<PAGE>
Shares of Common
Stock Owned
Name and Address Beneficially Percent of Class
- ---------------- ------------ ----------------
Ralph Anglin 2,271,696(1) 14.98%
111 S. Independence
Mall E. #100
Philadelphia, PA 19106
David Hunter 1,494,727 9.86%
591 Skippack Pike
Blue Bell, PA 19422
Michael Kline 1,295,432 8.55%
P.O. Box 314
Sharon, CT 06069
Margaret Long 996,484 6.57%
591 Skippack Pike
Blue Bell, PA 19422
William Winter 888,701 5.86%
100 Pacific Avenue
San Francisco, CA 94111
R. Donald Peterson 100,000 0.66%
906 Old State Road
Berwyn, PA 19312
Anthony J. Baratta 99,903 0.66%
33 Country Club Road
Pine Hill, NJ 08021
Tomas Stenstrom 50,000 0.33%
275 Camp Hill Road
Fort Washington, PA 19034
Millard E. Tydings, II 49,824 0.33%
2705 Pocock Road
Monkton, MD 21111
All Executive Officers and 4,066,150(1) 26.82%
Directors as a Group (6
persons)
- ------------
(1) See footnote (1) on page 2.
6
<PAGE>
II. APPROVAL OF THE CAPITA RESEARCH GROUP 1999 STOCK OPTION PLAN
There will be presented to stockholders at the Meeting a
proposal to adopt the Capita Research Group 1999 Stock Option Plan. The
following discussion of the material features of the Stock Option Plan is
qualified by reference to the text of the Stock Option Plan as proposed to be
adopted and as filed as Exhibit A to this Proxy Statement. Under the amended
Stock Option Plan, options to purchase up to an aggregate of 2,500,000 shares of
Common Stock may be granted to key employees of the Company or its subsidiaries,
and to officers and directors of the Company.
The Compensation Committee of the Board of Directors will
administer the Stock Option Plan and determine the persons who are to receive
options and the number of shares of Common Stock to be subject to each option.
In selecting individuals for options and determining the terms thereof, the
Compensation Committee may consider any factors it deems relevant including
present and potential contributions to the success of the Company. Options
granted under the Stock Option Plan must be exercised within a period fixed by
the Compensation Committee, which may not exceed ten years from the date of the
option or, in the case of incentive stock options granted to any holder on the
date of grant of more than ten percent of the total combined voting power of all
classes of stock of the Company, five years from the date of grant of the
option. Options may be made exercisable in whole or in installments, as
determined by the Compensation Committee.
Options may not be transferred other than by will or the laws
of descent and distribution and during the lifetime of an optionee may be
exercised only by the optionee or, if approved by the Compensation Committee, to
immediate family members or charitable organizations. The per share exercise
price may not be less than the per share market value of the Common Stock on the
date of grant of the option. In the case of incentive stock options granted to
any holders on the date of grant of more than ten percent of the total combined
voting power of all classes of stock of the Company and its subsidiaries, the
exercise price may not be less than 110% of the market value per share of the
Common Stock on the date of grant. Unless designated as "incentive stock
options" intended to qualify under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), options which are granted under the Stock Option
Plan are intended to be "nonstatutory stock options." The exercise price may be
paid in cash, shares of Common Stock owned by the optionee, or in a combination
of cash and shares.
The Stock Option Plan provides that the maximum number of
shares of Common Stock which may be subject to options granted to any person
during any fiscal year of the Company is 1,000,000 shares.
The Stock Option Plan provides that, in the event of changes
in the corporate structure of the Company or certain events affecting the Common
Stock, the Compensation Committee may, in its discretion, make adjustments with
respect to the number of shares which may be issued under the Stock Option Plan
or which are covered by outstanding options, in the exercise price per share, or
both. The Compensation Committee may in its discretion provide that, in
connection with any merger or consolidation in which the Company is not the
surviving corporation or any sale or transfer by the Company of all or
7
<PAGE>
substantially all its assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or group of all or a majority
of the then outstanding voting securities of the Company, outstanding options
under the Stock Option Plan will become exercisable in full or in part,
notwithstanding any other provision of the Stock Option Plan or of any
outstanding options granted thereunder, on and after (i) 15 days prior to the
effective date of such merger, consolidation, sale, transfer or acquisition or
(ii) the date of commencement of such tender offer or exchange offer, as the
case may be.
For federal income tax purposes, an optionee will not
recognize any income upon the grant of a non-qualified or incentive stock
option. Upon the exercise of a non-qualified option, the optionee will realize
ordinary income equal to the excess (if any) of the fair market value of the
shares purchased upon such exercise over the exercise price. The Company will be
entitled to a deduction from income in the same amount and at the same time as
the optionee realizes such income. Upon the sale of shares purchased upon such
exercise, the optionee will realize capital gain or loss measured by the
difference between the amount realized on the sale and the fair market value of
the shares at the time of exercise of the option. In the case of options granted
to executive and other principal officers, directors and greater than 10%
stockholders of the Company, income will be recognized upon exercise of a
non-qualified option only if the option has been held for at least six months
prior to exercise. If such option is exercised within six months after the date
of grant, an officer, director or greater than 10% stockholder will recognize
income on the date six months after the date of grant, unless he or she files an
election under Section 83(b) of the Code to be taxed on the date of exercise.
In contrast, an optionee will not be taxed upon exercise of an
incentive stock option and the Company will not be entitled to a deduction from
income in respect thereof. If the optionee retains the shares transferred to him
upon exercise of an incentive stock option for more than one year after the date
of issuance of the stock and two years after the date of grant of the option,
any gain or loss realized on a subsequent sale of the shares by the optionee
will be treated as long-term capital gain or loss. If, on the other hand, the
optionee sells the shares within one year after the date of transfer or two
years after the date of grant of the option, the optionee will realize ordinary
income, and the Company will be entitled to a deduction from income, to the
extent of the excess of the value of the shares on the date of exercise or the
amount realized on the sale (whichever is less) over the exercise price. Any
excess of the sale price over the value of the shares on the date of exercise
will be treated as capital gain. The spread between the fair market value of the
shares on the date of exercise and the exercise price constitutes an item of tax
preference for purpose of the alternative minimum tax which, under certain
circumstances, could cause tax liability as a result of the exercise.
The Board believes that the future success of the Company
depends upon attracting and retaining the most qualified management and
employees, and the Stock Option Plan will assist the Company in attracting and
retaining persons of superior ability and inspiring their efforts on behalf of
the Company. The Board believes that the adoption of the Stock Option Plan is in
the best interests of the Company.
The Board believes that the proposed Stock Option Plan will be
advantageous to the Company and its stockholders. The Stock Option Plan has been
adopted by the Board, subject to stockholder approval. The Stock Option Plan
8
<PAGE>
will not become effective unless approved by the holders of a majority of the
shares of Common Stock present and voting thereon at the Meeting (at which a
quorum is present); provided that the total votes cast represent more than 50%
of the total outstanding shares of Common Stock as of June 29, 1999. The Board
recommends that the stockholders vote FOR the adoption of the Stock Option Plan.
It is the intention of the persons named in the accompanying form of proxy to
vote the shares represented thereby in favor of adoption of the Stock Option
Plan unless otherwise instructed therein.
III. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has selected Rudolph,
Palitz, LLC to serve as independent auditors for the Company for the fiscal year
ending December 31, 1999. The Board of Directors considers Rudolph, Palitz, LLC
to be eminently qualified.
Although it is not required to do so, the Board of Directors
is submitting its selection of the Company's auditors for ratification at the
Meeting, in order to ascertain the views of stockholders regarding such
selection. If the selection is not ratified, the Board of Directors will
reconsider its selection.
The Board of Directors recommends that stockholders vote FOR
ratification of the selection of Rudolph, Palitz, LLC to examine the financial
statements of the Company for the Company's fiscal year ending December 31,
1999. It is the intention of the persons named in the accompanying form of Proxy
to vote the shares of Common Stock represented thereby in favor of such
ratification unless otherwise instructed in such Proxy.
A representative of Rudolph, Palitz, LLC will be present at
the Meeting, with the opportunity to make a statement if such representative
desires to do so, and will be available to respond to appropriate questions.
IV. OTHER MATTERS
The Board of Directors of the Company does not know of any
other matters which may be brought before the Meeting. However, if any such
other matters are properly presented for action, it is the intention of the
persons named in the accompanying form of Proxy to vote the shares represented
thereby in accordance with their judgment on such matters.
V. MISCELLANEOUS
If the accompanying form of Proxy is executed and returned,
the shares of Common Stock represented thereby will be voted in accordance with
the terms of the Proxy, unless the Proxy is revoked. If no directions are
indicated in such Proxy, the shares represented thereby will be voted IN FAVOR
of the nominees proposed by the Board of Directors in the election of directors
and FOR the adoption of the Stock Option Plan and the ratification of the Board
of Directors' selection of independent auditors for the Company.
All costs relating to the solicitation of Proxies will be
borne by the Company. Proxies may be solicited by officers, directors and
regular employees of the Company personally, by mail or by telephone or
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<PAGE>
telegraph, and the Company may pay brokers and other persons holding shares of
stock in their names or those of their nominees for their reasonable expenses in
sending soliciting material to their principals.
It is important that Proxies be returned promptly.
Stockholders who do not expect to attend the Meeting in person are urged to
mark, sign and date the accompanying form of Proxy and mail it in the enclosed
return envelope.
Stockholder Proposals
- ---------------------
Stockholder proposals intended to be presented at the 2000
Annual Meeting of Stockholders of the Company must be received by the Company by
March 29, 2000 in order to be considered for inclusion in the Company's Proxy
Statement relating to such Meeting. In the event that a stockholder fails to
notify the Company by May 15, 2000 of an intent to be present at the Company's
2000 Annual Meeting of Stockholders in order to present a proposal for a vote,
the Company will have the right to exercise its discretionary authority to vote
against the proposal, if presented, without including any information about the
proposal in its proxy materials.
Annual Report on Form 10-KSB
- ----------------------------
A copy of the Company's Annual Report on Form 10-KSB,
including the financial statements and financial statement schedules for the
fiscal year ended December 31, 1998, which has been filed with the Securities
and Exchange Commission, is being included with the mailing of this Proxy
Statement.
Blue Bell, Pennsylvania
June 29, 1999
<PAGE>
EXHIBIT A
CAPITA RESEARCH GROUP, INC.
1999 STOCK OPTION PLAN
1. PURPOSES OF PLAN. The purposes of this Plan, which shall be known as the
Capita Research Group, Inc. 1999 Stock Option Plan and is hereinafter referred
to as the "Plan", are (i) to provide incentives for key employees, directors,
consultants and other individuals providing services to CAPITA RESEARCH GROUP,
INC., (the "Company") and its subsidiary or parent corporations (within the
respective meanings of Sections 424(f) and 424(e) of the Internal Revenue Code
of 1986, as amended (the "Code"), and referred to herein as "Subsidiary" and
"Parent", respectively, and such Parent and each Subsidiary are referred to
herein individually as an "Affiliate" and collectively as "Affiliates") by
encouraging their ownership of the common stock, $.001 par value, of the Company
(the "Stock") and (ii) to aid the Company in retaining such key employees,
directors, consultants and other individuals upon whose efforts the Company's
success and future growth depends and in attracting other such employees,
directors, consultants and individuals.
2. ADMINISTRATON. The Plan shall be administered by the Compensation
Committee of the Board of Directors or a subcommittee of the Compensation
Committee appointed by the Compensation Committee, as hereinafter provided (the
committee or subcommittee administering the Plan is hereinafter referred to as
the "Committee"). For purposes of administration, the Committee, subject to the
terms of the Plan, shall have plenary authority to establish such rules and
regulations, to make such determinations and interpretations, and to take such
other administrative actions as it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be final,
conclusive and binding on all persons, including Optionees (as hereinafter
defined) and their legal representatives and beneficiaries.
The Committee shall consist of not fewer than two members of the Board of
Directors. Unless otherwise determined by the Board of Directors, all members of
the Board of Directors who serve on the Committee shall be "Non-Employee
Directors" (as defined in Rule 16b-3 under the Securities Exchange Act of 1934,
as amended) and "outside directors" as defined in Treasury Regulation
ss.1.162-27(e)(3). The Compensation Committee shall designate one of the members
of the Committee as its Chairman. The Committee shall hold its meetings at such
times and places as it may determine. A majority of its members shall constitute
a quorum. All determinations of the Committee shall be made by a majority of its
members. Any decision or determination reduced to writing and signed by all
members shall be as effective as if it had been made by a majority vote at a
meeting duly called and held. The Committee may appoint a secretary (who need
not be a member of the Committee). No member of the Committee shall be liable
for any act or omission with respect to his service on the Committee if he acts
in good faith and in a manner he reasonably believes to be in or not opposed to
the best interests of the Company.
<PAGE>
3. STOCK AVAILABLE FOR OPTIONS. There shall be available for options under
the Plan a total of 2,500,000 shares of Stock, subject to any adjustments which
may be made pursuant to Section 5(f) hereof. Shares of Stock used for purposes
of the Plan may be either authorized and unissued shares, or previously issued
shares held in the treasury of the Company, or both. Shares of Stock covered by
options, which have terminated or expired prior to exercise, shall be available
for further options hereunder. The maximum number of options which may be
granted to any person under the Plan during any fiscal year of the Company shall
not exceed 1,000,000 shares.
4. ELIGIBILITY. Options under the Plan may be granted to key employees of
the Company or any Affiliate, including officers or directors of the Company or
any Affiliate, and to consultants and other individuals providing services to
the Company or any Affiliate (each such grantee, an "Optionee"). Options may be
granted to eligible individuals whether or not they hold or have held options
previously granted under the Plan or otherwise granted or assumed by the
Company. In selecting individuals for options, the Committee may take into
consideration any factors it may deem relevant, including its estimate of the
individual's present and potential contributions to the success of the Company
and its Affiliates. Service as an employee, director, officer or consultant of
or to the Company or any Affiliate shall be considered employment for purposes
of the Plan (and the period of such service shall be considered the period of
employment for purposes of Section 5(d) of this Plan); provided, however, that
incentive stock options may be granted under the Plan only to an individual who
is an "employee" (as such term is used in Section 422 of the Code) of the
Company or any Affiliate.
5. TERMS AND CONDITIONS OF OPTIONS. The Committee shall, in its discretion,
prescribe the terms and conditions of the options to be granted hereunder, which
terms and conditions need not be the same in each case, subject to the
following:
(a) Option Price. The price at which each share of Stock covered by an
option granted under the Plan may be purchased shall not be less than the Market
Value (as defined in Section 5(c) hereof) per share of Stock on the date of
grant of the option. The date of the grant of an option shall be the date
specified by the Committee in its grant of the option.
(b) Option Period. The period for exercise of an option shall in no event be
more than ten years from the date of grant, or in the case of any option
intended to be an incentive stock option granted to an individual owning, on the
date of grant, stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company of any Parent or Subsidiary, more than
five years from the date of grant. Options may, in the discretion of the
Committee, be made exercisable in installments during the option period. Any
shares not purchased on any applicable installment date may be purchased
thereafter at any time before the expiration of the option period.
(c) Exercise of Options. In order to exercise an option, the Optionee shall
deliver to the Company written notice specifying the number of shares of Stock
to be purchased, together with cash or a certified or bank cashier's check
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payable to the order of the Company in the full amount of the purchase price
therefor; provided that, for the purpose of assisting an Optionee to exercise an
option, the Company may make loans to the Optionee or guarantee loans made by
third parties to the Optionee, on such terms and conditions as the Board of
Directors may authorize; and provided further that such purchase price may be
paid in shares of Stock owned by the Optionee having an aggregate Market Value
on the date of exercise equal to the aggregate purchase price, or in a
combination of cash and Stock. For purposes of the Plan, the Market Value per
share of Stock shall be the last sale price regular way on the date of
reference, or, in case no sale takes place on such date, the average of the
closing high bid and low asked prices regular way, in either case on the
principal national securities exchange on which the Stock is listed or admitted
to trading, or if the Stock is not listed or admitted to trading on any national
securities exchange, the last sale price reported on the National Market System
of the National Association of Securities Dealers Automated Quotation System
("NASDAQ") on such date, or the last sale price reported on the NASDAQ SmallCap
Market on such date, or the average of the closing high bid and low asked prices
in the over-the-counter market on such date, whichever is applicable, or if
there are no such prices reported on NASDAQ or in the over-the-counter market on
such date, as furnished to the Committee by any New York Stock Exchange member
selected from time to time by the Committee for such purpose. If there is no bid
or asked price reported on any such date, the Market Value shall be determined
by the Committee in accordance with the regulations promulgated under Section
2031 of the Code, or by any other appropriate method selected by the Committee.
If the Optionee so requests, shares of Stock purchased upon exercise of an
option may be issued in the name of the Optionee or another person. An Optionee
shall have none of the rights of a stockholder until the shares of Stock are
issued to him.
(d) Effect of Termination of Employment. An option may not be exercised
after the Optionee has ceased to be in the employ of the Company or any
Affiliate, except in the following circumstances:
(i) If the Optionee's employment is terminated by action of the
Company or an Affiliate, or by reason of disability or retirement under any
retirement plan maintained by the Company of any Affiliate, the option may
be exercised by the Optionee within three months after such termination, but
only as to any shares exercisable on the date the Optionee's employment so
terminates;
(ii) In the event of the death of the Optionee during the three month
period after termination of employment covered by (i) above, the person or
persons to whom his rights are transferred by will or the laws of descent
and distribution shall have a period of one year from the date of his death
to exercise any options which were exercisable by the Optionee at the time
of his death; and
(iii) In the event of the death of the Optionee while employed, the
option shall thereupon become exercisable in full, and the person or persons
to whom the Optionee's rights are transferred by will or the laws of descent
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and distribution shall have a period of one year from the date of the
Optionee's death to exercise such option. The provisions of the foregoing
sentence shall apply to any outstanding options which are incentive stock
options to the extent permitted by Section 422(d) of the Code and such
outstanding options in excess thereof shall, immediately upon the occurrence
of the event described in the preceding sentence, be treated for all
purposes of the Plan as nonstatutory stock options and shall be immediately
exercisable as such as provided in the foregoing sentence.
In no event shall any option be exercisable more than ten years from the
date of grant thereof. Nothing in the Plan or in any option granted pursuant
to the Plan (in the absence of an express provision to the contrary) shall
confer on any individual any right to continue in the employ of the Company
or any Affiliate or interfere in any way with the right of the Company or
any Affiliate to terminate his employment at any time.
(e) Limitation on Transferability of Options. Except as provided in the
Section 5(e), during the lifetime of an Optionee, options held by such Optionee
shall be exercisable only by him and no option shall be transferable other than
by will or the laws of descent and distribution. The Committee may, in its
discretion, provide that during the lifetime of an Optionee, options held by
such Optionee may be transferred to or for the benefit of a member of his
immediate family or to a charitable organization exempt from income tax under
Section 501(c)(3) of the Code. For purposes hereof, the term " immediate family"
of an Optionee shall mean such Optionee's spouse and children (both natural and
adoptive), and the direct lineal descendants of his children.
(f) Adjustments for Change in Stock Subject to Plan. In the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure of shares of the Company, the Committee shall make such
adjustments, if any, as it deems appropriate in the number and kind of shares
subject to the Plan, in the number and kind of shares covered by outstanding
options, or in the option price per share, or both, and, in the case of a
merger, consolidation or other transaction pursuant to which the Company is not
the surviving corporation or pursuant to which the holders of outstanding Stock
shall receive in exchange therefor shares of capital stock of the surviving
corporation or another corporation, the Committee may require an Optionee to
exchange options granted under the Plan for options issued by the surviving
corporation or such other corporation.
(g) Acceleration of Exercisability of Options Upon Occurrence of Certain
Events. The Committee may, in its discretion provide in the case of any option
granted under the Plan that, in connection with any merger or consolidation
which results in the holders of the outstanding voting securities of the Company
(determined immediately prior to such merger or consolidation) owning less than
a majority of the outstanding voting securities of the surviving corporation
(determined immediately following such merger or consolidation), or any sale of
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<PAGE>
transfer by the Company of all or substantially all its assets or any tender
offer or exchange offer for or the acquisition, directly or indirectly, by any
person or group of all or a majority of the then outstanding voting securities
of the Company, such option shall become exercisable in full or part,
notwithstanding any other provision of the Plan or of any outstanding options
granted thereunder, on and after (i) the fifteenth day prior to the effective
date of such merger, consolidation, sale, transfer or acquisition or (ii) the
date of commencement of such tender offer or exchange offer, as the case may be.
The provisions of the foregoing sentence shall apply to any outstanding options
which are incentive stock options to the extent permitted by Section 422(d) of
the Code and such outstanding options in excess thereof shall, immediately upon
the occurrence of the event described in clause (i) or (ii) of the foregoing
sentence, be treated for all purposes of the plan as nonstatutory stock options
and shall be immediately exercisable as such as provided in the foregoing
sentence. Notwithstanding the foregoing, in no event shall any option be
exercisable after the date of termination of the exercise period of such option
specified in Sections 5(b) and 5(d).
(h) Registration, Listing and Qualification of Shares of Stock. Each option
shall be subject to the requirement that if at any time the Board of Directors
shall determine that the registration, listing or qualification of the shares of
Stock covered thereby upon any securities exchange or under any federal or state
law, or the consent or approval of any governmental regulatory body is necessary
or desirable as a condition of, or in connection with, the granting of such
option or the purchase of shares of Stock thereunder, no such option may be
exercised unless and until such registration, listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors. The Company may require that any person
exercising an option shall make such representations and agreements and furnish
such information as it deems appropriate to assure compliance with the foregoing
or any other applicable legal requirement.
(i) Other Terms and Conditions. The Committee may impose such other terms
and conditions, not inconsistent with the terms hereof, on the grant or exercise
of options, as it deems advisable.
6. Additional Provisions Applicable to Incentive Stock Options. The
Committee may, in its discretion, grant options under the Plan to eligible
employees which constitute "incentive stock options" within the meaning of
Section 422 of the Code; provided, however, that (a) the aggregate Market Value
of the Stock with respect to which incentive stock options are exercisable for
the first time by the Optionee during any calendar year shall not exceed the
limitation set forth in Section 422(d) of the Code;(b) if the Optionee owns on
the date of grant securities possessing more than 10% of the total combined
voting power of all classes of securities of the Company or of any Affiliate,
the price per share shall not be less than 110% of the Market Value per share on
the date of grant and (c) Section 5(d)(ii) hereof shall not apply to any
incentive stock option.
7. Amendment and Termination. Unless the Plan shall theretofore have been
terminated as hereinafter provided, the Plan shall terminate on, and no option
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<PAGE>
shall be granted hereunder after December 31, 2009; provided, however, that the
Board of Directors may at any time prior to that date terminate the Plan. The
Board of Directors may at any time amend the Plan or any outstanding options. No
termination or amendment of the Plan may, without the consent of an Optionee,
adversely affect the rights of such Optionee under any option held by such
Optionee.
8. Stockholder Approval of Plan. The establishment of the Plan shall be
subject to approval by a majority of the votes cast thereon by the stockholders
of the Company at a meeting of stockholders duly called and held for such
purpose or by a method and in a degree that would be treated as adequate under
the applicable law of the Company's state of incorporation, and no option
granted hereunder shall be exercisable prior to such approval.
9. Withholding. It shall be a condition to the obligation of the Company to
issue shares of Stock upon exercise of an option, that the Optionee (or any
beneficiary, transferee or person entitled to act under Sections 5(d) or 5(e)
hereof) pay to the Company, upon its demand, such amount as may be requested by
the Company for the purpose of satisfying any liability to withhold federal,
state or local income or other taxes. If the amount requested is not paid, the
Company may refuse to issue such shares of Stock.
10. Issuance of Certificates; Legends. The Company may endorse such legend or
legends upon the certificates for shares of Stock issued upon the exercise of an
option granted hereunder and may issue such "stop transfer" instructions to its
transfer agent in respect of such shares as, in its absolute discretion, it
determines to be necessary or appropriate.
11. Other Actions. Nothing contained in this Plan shall be construed to limit
the authority of the Company to exercise its corporate rights and powers,
including but not by way of limitation, the right of the Company to grant or
assume options for proper corporate purposes other than under the Plan with
respect to any employee or other person, firm, corporation or association.
Dated:____________________, 1999
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CAPITA RESEARCH GROUP, INC.
PROXY -- Annual Meeting of Stockholders -- July 27, 1999
The undersigned, a stockholder of CAPITA RESEARCH GROUP, INC., does
hereby appoint DAVID B. HUNTER and R. DONALD PETERSON, or either of them, his
proxies, with full power of substitution or resubstitution, to appear and vote
all shares of Common Stock of the Company which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held on Tuesday, July 27, 1999,
at 4:30 P.M., local time, or at any adjournment thereof, upon such matters as
may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby instructs said proxies or their substitutes to
vote as specified below on each of the following matters and in accordance with
their judgment on any other matters which may properly come before the Meeting.
1. Election of Directors, FOR all nominees listed below |_|
(except as marked to the contrary below)
WITHHOLD AUTHORITY |_|
to vote for all nominees listed below
David B. Hunter, R. Donald Peterson, Millard E. Tydings II,
Ralph Anglin
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name in the space provided below.)
2. Approval of adoption of the Company's 1999 Stock Option Plan
FOR |_| AGAINST |_| ABSTAIN |_|
3. Ratification of appointment of Rudolph Palitz, LLC as independent auditors
for the fiscal year ending December 31, 1999.
FOR |_| AGAINST |_| ABSTAIN |_|
(Continued and to be completed on the Reverse Side)
<PAGE>
(Continued From Other Side)
The Board of Directors favors a vote "FOR" each item.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS INDICATED THEY WILL BE VOTED IN FAVOR OF THE ITEM(S) FOR WHICH NO DIRECTION
IS INDICATED.
IMPORTANT: Before returning this Proxy, please sign your name or names on the
line(s) below exactly as shown thereon. Executors, administrators, trustees,
guardians or corporate officers should indicate their full titles when signing.
Where shares are registered in the name of joint tenants or trustees, each joint
tenant or trustee should sign.
Dated: , 1999
-----------------------------------------
(L.S.)
-----------------------------------------
(L.S.)
-----------------------------------------
Stockholder(s) Sign Here
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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