UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
Security Capital Corporation
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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<PAGE>
[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE>
SECURITY CAPITAL CORPORATION
ONE PICKWICK PLAZA, SUITE 310
GREENWICH, CT 06830
(203) 625-0770
April 28, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of
Stockholders of Security Capital Corporation (the "Company"), which will
be held in Conference Room 45A, 45th Floor, 101 Park Avenue, New York,
New York, on Thursday, July 13, 2000, commencing at 10:00 a.m. (local
time). We look forward to greeting as many of our stockholders as are
able to be with us.
At the meeting, you will be asked to consider and vote upon (i) the
election of four directors; (ii) the approval of the adoption of the
2000 Long-Term Incentive Plan of the Company; and (iii) such other
business as may properly come before the meeting and any adjournment
thereof.
We hope you will find it convenient to attend the meeting in person.
WHETHER OR NOT YOU EXPECT TO ATTEND, TO ASSURE YOUR REPRESENTATION AT
THE MEETING AND THE PRESENCE OF A QUORUM, PLEASE COMPLETE, DATE, SIGN
AND MAIL PROMPTLY THE ENCLOSED PROXY, for which a return envelope is
provided. No postage need be affixed to the Proxy if it is mailed in the
United States.
The Company's Annual Report for the fiscal year ended December 31, 1999
is being mailed to you together with the enclosed proxy materials.
Sincerely,
/s/ BRIAN D. FITZGERALD
Brian D. Fitzgerald
Chairman of the Board of Directors
/s/ A. GEORGE GEBAUER
A. George Gebauer
President
<PAGE>
SECURITY CAPITAL CORPORATION
ONE PICKWICK PLAZA, SUITE 310
GREENWICH, CT 06830
(203) 625-0770
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Annual Meeting") of Security Capital Corporation (the "Company")
will be held in Conference Room 45A, 45th Floor, 101 Park Avenue,
New York, New York, on Thursday, July 13, 2000, commencing at 10:00
a.m. (local time), for the following purposes:
(1) To elect four directors to hold office until the next annual
meeting and until their successors are duly elected and
qualified;
(2) To approve the adoption of the 2000 Long-Term Incentive Plan
of the Company; and
(3) To transact such other business as may properly come before
the Annual Meeting and any adjournment thereof.
Only holders of record of the Common Stock or the Class A Common
Stock of the Company at the close of business on May 17, 2000 are
entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof.
By Order of the Board of Directors,
/s/ A. GEORGE GEBAUER
A. George Gebauer
Secretary
April 28, 2000
YOUR VOTE IS IMPORTANT.
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
SECURITY CAPITAL CORPORATION
ONE PICKWICK PLAZA, SUITE 310
GREENWICH, CT 06830
(203) 625-0770
PROXY STATEMENT
This Proxy Statement is being furnished in connection with the solicitation of
Proxies by and on behalf of the Board of Directors of Security Capital
Corporation (the "Company") to be used at the Annual Meeting of Stockholders to
be held on Thursday, July 13, 2000, and at any adjournment thereof (the "Annual
Meeting"), for the purposes set forth in the accompanying Notice of Annual
Meeting. The Company's Annual Report for the fiscal year ended December 31, 1999
accompanies this Proxy Statement. This Proxy Statement and accompanying
materials are expected to be first sent or given to stockholders of the Company
on or about May 24, 2000.
The close of business on May 17, 2000 has been fixed as the record date for the
determination of the stockholders entitled to notice of and to vote at the
Annual Meeting. Only holders of record as of that date of shares of the
Company's Common Stock, $.01 par value per share (the "Common Stock"), and of
the Company's Class A Common Stock, $.01 par value per share (the "Class A
Common Stock"), are entitled to notice of and to vote at the Annual Meeting. The
Common Stock and the Class A Common Stock are sometimes collectively referred to
herein as the "Common Equity."
Each share of the Common Stock or the Class A Common Stock entitles the holder
thereof to one vote per share on each matter presented to the stockholders for
approval at the Annual Meeting. On April 28, 2000, there were 380 shares of the
Common Stock and 6,442,309 shares of the Class A Common Stock, for a total of
6,442,689 shares of the Common Equity, outstanding and entitled to vote.
Execution of a Proxy by a stockholder will not affect such stockholder's right
to attend the Annual Meeting and to vote in person. Any stockholder who executes
a Proxy has a right to revoke it at any time before it is voted by advising A.
George Gebauer, Secretary of the Company, in writing of such revocation, by
executing a later-dated Proxy which is presented to the Company at or prior to
the Annual Meeting, or by appearing at the Annual Meeting and voting in person.
Attendance at the Annual Meeting will not in and of itself constitute revocation
of a Proxy. The Board of Directors has retained D.F. King & Co., Inc. to assist
in the solicitation of Proxies.
The presence, in person or by Proxy, of the holders of a majority of the shares
of the Common Equity entitled to vote at the Annual Meeting will constitute a
quorum. Assuming a quorum, the nominees receiving a plurality of the votes of
the shares of the Common Equity present in person or by Proxy at the Annual
Meeting and entitled to vote on the election of directors will be elected as
directors. The proposal to approve the adoption of the 2000 Long-Term Incentive
Plan requires the affirmative vote of the holders of a majority of the shares of
the Common Equity present in person or by Proxy at the Annual Meeting and
entitled to vote on such proposal.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be counted for purposes of determining
the presence or absence of a quorum but will have no other effect. With regard
to the proposal to approve the 2000 Long-Term Incentive Plan, stockholders may
vote in favor of or against such proposal, or they may abstain. Abstentions will
be counted for purposes of determining the presence or absence of a quorum and
will have the same effect as a vote against the proposal to approve the adoption
of the 2000 Long-Term Incentive Plan. Broker non-votes, if any, will be counted
for purposes of determining the presence or absence of a quorum, but will have
no effect on the election of directors or the proposal to approve the adoption
of the 2000 Long-Term Incentive Plan.
UNLESS SPECIFIED OTHERWISE, THE PROXIES WILL BE VOTED FOR THE ELECTION OF ALL
THE NOMINEES TO SERVE AS DIRECTORS OF THE COMPANY UNTIL THE NEXT ANNUAL MEETING
AND UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND QUALIFIED AND FOR THE APPROVAL
OF THE ADOPTION OF THE 2000 LONG-TERM INCENTIVE PLAN. IN THE DISCRETION OF THE
PROXY HOLDERS, THE PROXIES WILL ALSO BE VOTED FOR OR AGAINST SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING. MANAGEMENT IS NOT AWARE OF ANY
OTHER MATTERS TO BE PRESENTED FOR ACTION AT THE ANNUAL MEETING.
The principal executive offices of the Company are located at One Pickwick
Plaza, Suite 310, Greenwich, Connecticut 06830, and the Company's telephone
number there is (203) 625-0770.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table and the notes thereto set forth information, as of April 28,
2000, with respect to the beneficial ownership of shares of each class of equity
securities of the Company by the only persons known to the Company to have
beneficial ownership of more than 5% of such class, by each director of the
Company, by each executive officer of the Company and by the directors and
executive officers of the Company as a group. Except as otherwise indicated,
each person is believed to exercise sole voting and dispositive power over the
shares reported.
<TABLE>
<CAPTION>
PERCENTAGE
CLASS A OF
NAME AND ADDRESS COMMON PERCENTAGE COMMON PERCENTAGE COMMON
OF BENEFICIAL OWNER STOCK OF CLASS STOCK OF CLASS EQUITY
- ------------------- ----- -------- ----- -------- ------
<S> <C> <C> <C> <C> <C>
Brian D. Fitzgerald............ 128 33.7% 5,167,806 80.2% 80.2%
One Pickwick Plaza
Suite 310, Greenwich,
CT 06830(1)(2)
FGS, Inc....................... 128 33.7% 4,983,361 77.4% 77.4%
1105 North Market St.
Suite 1300, Wilmington,
DE 19894(1)(2)
Capital Partners, Inc.......... -- -- 4,455,672 69.2% 69.2%
One Pickwick Plaza
Suite 310, Greenwich,
CT 06830(1)(2)
CP Acquisition, L.P. No. 1..... -- -- 4,455,672 69.2% 69.2%
1105 North Market St.
Suite 1300, Wilmington,
DE 19894(1)(2)
FGS Partners, L.P.............. -- -- 4,455,672 69.2% 69.2%
One Pickwick Plaza
Suite 310, Greenwich,
CT 06830(1)(2)
William T. Bozarth............. -- -- -- -- --
A. George Gebauer(1)(2)........ -- -- 89,198 1.7% 1.7%
Thomas J. Gochberg............. 1 * 8,709 * *
William R. Schlueter(1)........ -- -- -- -- --
All Directors and Executive
Officers as a Group
(5 persons).................. 129 33.9% 5,265,713 81.8% 81.86%
- ----------
</TABLE>
* Less than one percent
(1) The following related entities are generally referred to as "Capital
Partners": (a) Capital Partners, Inc., a Connecticut corporation ("CP
Inc."), of which Brian D. Fitzgerald is the sole stockholder and
director, and A. George Gebauer is an officer; (b) Fitzgerald and
Partners, a Delaware general partnership ("F&P"), of which Messrs.
Fitzgerald and Gebauer are partners; (c) Capital Partners I, L.P., a New
York limited partnership, of which CP Inc. and F&P are the general
partners; and (d) 11 related Delaware limited partnerships as follows:
(i) CP Acquisition, L.P. No. 1 ("CP Acquisition"); (ii) CP Acquisition,
L.P. No. 4A; (iii) CP Acquisition, L.P. No. 4B; (iv) CP Acquisition,
L.P. No. 5A; (v) CP Acquisition, L.P. No. 5B; (vi) CP Acquisition, L.P.
No. 6A; (vii) CP Acquisition, L.P. No. 6B; (viii) CP Acquisition, L.P.
No. 7A; (ix) CP Acquisition, L.P. No. 7B; (x) CP Acquisition, L.P. No.
8A; and (xi) CP Acquisition, L.P. No. 8B. CP Inc., FGS, Inc., a Delaware
corporation ("FGS"), of which Mr. Fitzgerald is the controlling
stockholder, president, treasurer and a director, and FGS Partners,
L.P., a Connecticut limited partnership, of which CP Inc. is the general
partner, are the general partners of the 11 related partnerships.
Brian D. Fitzgerald owns of record 184,445 shares of the Class A Common
Stock. CP Acquisition owns of record 4,455,672 shares of the Class A
Common Stock and FGS owns of record 527,689 shares of the Class A Common
Stock and 128 shares of the Common Stock.
(2) Mr. Fitzgerald may be deemed to own beneficially the 184,445 shares of
the Class A Common Stock owned of record by him, the 4,455,672 shares of
the Class A Common Stock owned of record by CP Acquisition and the
527,689 shares of the Class A Common Stock and the 128 shares of the
Common Stock owned of record by FGS. Mr. Fitzgerald has shared authority
to vote and dispose of the FGS-owned shares of the Class A Common Stock
and the Common Stock and disclaims beneficial ownership of such
FGS-owned shares for all other purposes. Mr. Gebauer is also a
stockholder, officer and director of FGS and an officer of CP Inc., but
he disclaims beneficial ownership of shares of the Class A Common Stock
and the Common Stock owned of record by such corporations for any
purpose. The ownership noted above excludes the 82,453 shares of Class A
Common Stock owned by the Fitzgerald Trust (of which Mr. Fitzgerald's
brother and father are the trustees and Mr. Fitzgerald's minor children
are sole beneficiaries), as to which beneficial ownership is disclaimed
for all purposes.
2
<PAGE>
PROPOSAL 1 -- ELECTION OF DIRECTORS
Our Board of Directors is comprised of four members. The names of the four
nominees for election as directors are set forth below. All of the nominees
are to be elected at the Annual Meeting and until their successors are duly
elected and qualified. All of the nominees listed below are expected to
serve as directors if they are elected. If any nominee should decline or be
unable to accept such nomination or to serve as a director (an event which
the Board of Directors does not now expect), the Board of Directors reserves
the right to nominate another person or to vote to reduce the size of the
Board of Directors. In the event another person is nominated, the Proxy
holders intend to vote the shares to which the Proxy relates for the
election of the person nominated by the Board of Directors. There is no
cumulative voting for directors.
PRINCIPAL OCCUPATIONS DURING
DIRECTOR THE LAST FIVE YEARS;
NAME AGE SINCE OTHER DIRECTORSHIPS
---- --- ----- --------------------------------
Brian D. Fitzgerald........... 55 1990 Chairman of the Board of the
Company since January 1990;
President, Treasurer and a
director of FGS since March
1989; and a partner, general
partner, stockholder, officer
and/or director of various
Capital Partners entities for
more than five years. Mr.
Fitzgerald was a director of
Bryant Universal Roofing, Inc.
("Bryant"), a privately-held
Dela- ware corporation that on
May 17, 1996 filed a petition
for bankruptcy under Chapter 11
of the U.S. Bankruptcy Code in
the United States Bankruptcy
Court for the District of
Arizona.
A. George Gebauer............. 67 1990 President of the Company since
January 1990 and Secretary of
the Company since February 1994;
Vice President, Secretary and a
director of FGS since March
1989; and a partner, general
partner, stockholder, officer
and/or director of various
Capital Partners entities for
more than five years. Mr.
Gebauer also was a director of
Bryant, a privately-held
Delaware corporation that on May
17, 1996 filed a petition for
bankruptcy under Chapter 11 of
the U.S. Bankruptcy Code in
United States Bankruptcy Court
for the District of Arizona.
Craig R. Stapleton............ 55 2000 President of Marsh & McLennan
Real Estate Advisors, Inc.,
which is a general partner of
various real estate investment
entities, since 1982; presently
serving as a director of
Alleghany Properties, Inc.;
Sonoma West, Inc.; Cornerstone
Properties Inc., and T.B. Wood.
Paul M. Kelly................. 56 2000 Founder and President of PK
Enterprises, which is an equity
investment and operational
consulting practice, since 1990.
3
<PAGE>
VOTE REQUIRED FOR APPROVAL
The four nominees receiving a plurality of the votes of the shares of the Common
Equity present in person or by Proxy at the Annual Meeting and entitled to vote
on the election of directors will be elected as directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE FOUR NOMINEES
AS DIRECTORS.
PROPOSAL 2 - APPROVAL OF THE ADOPTION OF THE 2000 LONG-TERM
INCENTIVE PLAN
BACKGROUND
The Company's previous stock option plan terminated in 1992. The Company has not
granted any options since the termination of that plan, and all previously
outstanding options under that plan have long since expired.
The Company's business has changed significantly since the termination of the
previous stock option plan. The Board of Directors has adopted the 2000
Long-Term Incentive Plan (the "Plan") because it believes that the Company needs
at this time to be able to offer a long-term incentive program to its executive
officers and other key personnel in order to attract, retain and motivate its
key personnel. The Board of Directors also believes that most public companies,
including the Company's principal competitors, offer their key personnel
long-term incentive programs. Accordingly the Board of Directors believes that
the existence of the Plan will bring the Company more in line with typical
public companies and improve the Company's ability to attract, retain and
motivate its key personnel through the use of stock options and other
stock-based awards. The Board"s adoption of the Plan and all awards granted
under the Plan are conditioned upon stockholder approval.
DESCRIPTION OF THE PLAN
The Plan is set forth as Appendix A to this Proxy Statement, and the following
description of the Plan is qualified in its entirety by reference to Appendix A.
The purpose of the Plan is to provide a means to attract, retain, motivate and
reward selected directors, officers, employees of, and consultants and service
providers to, the Company and its affiliates by increasing their ownership
interests in the Company. Awards under the Plan may be granted by the Plan
committee of the Board of Directors or by the Board of Directors in the absence
of a Plan Committee (the "Committee") and may include: (i) options to purchase
shares of the Class A Common Stock, including incentive stock options ("ISOs"),
non-qualified stock options or both; (ii) stock appreciation rights ("SARs"),
whether in conjunction with the grant of any other award under the Plan or
independent of such grant, or SARs that are only exercisable in the event of a
change in control of the Company; (iii) restricted stock, consisting of shares
that are subject to forfeiture based on the failure to satisfy
employment-related restrictions determined by the Committee; (iv) deferred
stock, representing the right to receive shares of stock in the future; (v)
bonus stock and awards in lieu of cash compensation; (vi) dividend equivalents,
consisting of a right to receive cash, shares of stock, other awards, or other
property equal in value to dividends paid with respect to a specified number of
shares of stock; or (vii) other awards not otherwise provided for, the value of
which is based in whole or in part upon the value of the stock. Awards granted
under the Plan are generally not assignable or transferable except by the laws
of descent and distribution.
The terms of the Plan permit the Committee to impose performance conditions with
respect to any award, thereby requiring forfeiture of all or part of any award
if performance objectives are not met, or linking the time of exercisability or
settlement of an award to the achievement of performance conditions. For awards
intended to qualify as "performance-based compensation" within the meaning of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
(see below), such performance objectives will be based solely on (i) annual
return on capital; (ii) annual earnings or earnings per share; (iii) annual cash
flow provided by operations; (iv) changes in annual revenues; (v) increase in
stock price and/or (vi) strategic business criteria, consisting of one or more
objectives based on meeting specified revenues, market penetration, geographic
business expansion goals, cost targets, market capitalization and goals relating
to acquisitions or divestitures.
The Committee, which will administer the Plan, will have the authority, among
other things: (i) to select each person to whom awards may be granted; (ii) to
determine the type of award or awards to be granted to each such person; (iii)
to determine the number of shares of stock or units or rights covered by an
award; and (iv) to determine the terms and conditions of any awards granted
under the Plan, including any exercise, grant or purchase price, any
restrictions or conditions on transfer, exercisability or settlement, any
vesting schedules or the acceleration thereof, performance conditions relating
to an award and any forfeiture provision or waiver thereof.
4
<PAGE>
The number of shares of Class A Common Stock that may be subject to outstanding
awards granted under the Plan (determined at the effective time of the grant of
an award) may not exceed 15% of the aggregate number of shares of Class A Common
Stock then outstanding. In addition, no individual may receive awards in any one
calendar year relating to more than 500,000 shares of Class A Common Stock.
The Plan may be amended, altered, suspended, discontinued or terminated by the
Board of Directors without stockholder approval unless such approval is required
by law or regulation or under the rules of any stock exchange or automated
quotation system on which the Class A Common Stock is then listed or quoted, in
which case such Board action shall be subject to stockholder approval at or
before the next annual meeting of stockholders.
No awards have been granted pursuant to the Plan. Awards that may in the future
be received by or allocated to the chief executive officer, other executive
officers or other eligible participants cannot be determined at this time. The
Company intends to register under the Securities Act of 1933, as amended, the
shares of Class A Common Stock issuable upon exercise of options granted under
the Plan.
FEDERAL TAX CONSEQUENCES
The following is a brief description of the federal income tax consequences
generally arising with respect to awards that may be granted under the Plan.
This discussion is intended for the information of stockholders considering how
to vote at the Annual Meeting and not as tax guidance to individuals who
participate in the Plan.
The grant of an option or SAR (including a stock-based award in the nature of a
purchase right) will create no tax consequences for the participant or the
Company. A participant will not recognize taxable income upon exercising an ISO
(except that the alternative minimum tax may apply) and the Company will receive
no deduction at that time. Upon exercising an option other than an ISO
(including a stock-based award in the nature of a purchase right), the
participant must generally recognize ordinary income equal to the difference
between the exercise price and fair market value of the freely transferable and
nonforfeitable stock received. In each case, the Company will generally be
entitled to a deduction equal to the amount recognized as ordinary income by the
participant.
A participant's disposition of shares acquired upon the exercise of an option,
SAR or other stock-based award in the nature of a purchase right generally will
result in capital gain or loss measured by the difference between the sale price
and the participant's tax basis in such shares (or the exercise price of the
option in the case of shares acquired by exercise of an ISO and held for the
applicable ISO holding periods). Generally, there will be no tax consequences to
the Company in connection with a disposition of shares acquired upon exercise of
an option or other award, except that the Company will generally be entitled to
a deduction (and the participant will recognize ordinary taxable income) if
shares acquired upon exercise of an ISO are disposed of before the applicable
ISO holding periods have been satisfied.
With respect to awards granted under the Plan that may be settled either in cash
or in stock or other property that is either not restricted as to
transferability or not subject to a substantial risk of forfeiture, the
participant must generally recognize ordinary income equal to the cash or the
fair market value of stock or other property received. The Company will
generally be entitled to a deduction for the same amount. With respect to awards
involving stock or other property that is restricted as to transferability and
subject to a substantial risk of forfeiture, the participant must generally
recognize ordinary income equal to the fair market value of the shares or other
property received at the first time the shares or other property become
transferable or not subject to a substantial risk of forfeiture, whichever
occurs earlier. The Company will generally be entitled to a deduction in an
amount equal to the ordinary income recognized by the participant. A participant
may elect to be taxed at the time of receipt of shares or other property rather
than upon lapse of restrictions on transferability or substantial risk of
forfeiture, but if the participant subsequently forfeits such shares or
property, he would not be entitled to any tax deduction, including a capital
loss, for the value of the shares or property on which he previously paid tax.
Such election must be made and filed with the Internal Revenue Service within 30
days of the receipt of the shares or other property.
Section 162(m) of the Code generally disallows a public company's tax deduction
for compensation paid to the chief executive officer and the four other most
highly compensated executive officers in excess of $1.0 million. Compensation
that qualifies as "performance-based compensation" is excluded from the $1.0
million deductibility cap, and therefore remains fully deductible by the company
that pays it. Assuming the Plan is approved by the Company's stockholders, the
Company believes that options granted with an exercise price at least equal to
100% of the fair market value of the underlying stock at the date of grant, and
other awards the settlement of which is conditioned upon achievement of
performance goals (based on one or more of the performance criteria described
above), will qualify as "performance-based compensation," although other awards
under the Plan may not so qualify.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the shares of the Common
Equity present in person or represented by Proxy and entitled to vote at the
Annual Meeting is required to approve the adoption of the Plan.
5
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE
ADOPTION OF THE PLAN.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors held one meeting and acted by written consent three times
during the year ended December 31, 1999. Each of the directors attended at least
75% of the aggregate number of meetings of the Board and all committees on which
such director served that were held during the year ended December 31, 1999.
The Board of Directors has an Audit Committee. The Audit Committee, which is
presently composed of Messrs. Gebauer, Thomas J. Gochberg and William T.
Bozarth, selects the independent auditors, consults with such auditors and with
management with regard to the adequacy of the Company's internal accounting
controls, considers any non-audit functions to be performed by the independent
auditors and carries out such activities related to the financial statements of
the Company as the Board of Directors shall from time to time request. The Audit
Committee acted by written consent once with respect to the year ended December
31, 1999. If Messrs. Stapleton and Kelly are elected as Directors at the Annual
Meeting, the Board of Directors intends to elect them as members of the Audit
Committee.
In connection with the financing by the Company of its purchase of Primrose
School Franchising Company and its affiliates (the "Primrose Companies"), the
Board of Directors established a Special Committee composed of Messrs. Bozarth
and Gochberg to review, analyze and negotiate the proposed sale of the Class A
Common Stock to CP Acquisition. The Special Committee held one meeting and acted
by written consent twice during the year ended December 31, 1999.
6
<PAGE>
EXECUTIVE COMPENSATION
1. SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth certain information
about the cash and non-cash compensation earned by or awarded to the chief
executive officer of the Company and the other two executive officers of
the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION
--------------------------- ----------- ------ ----- ------------
<S> <C> <C> <C> <C>
A. George Gebauer............. 1999 (1) (1) (1)
President and Secretary 1998 (1) (1) (1)
1997 (1) (1) (1)
Brian D. Fitzgerald........... 1999 (1) (1) (1)
Chairman of the Board 1998 (1) (1) (1)
1997 (1) (1) (1)
William R. Schlueter.......... 1999 (1) (1) (1)
Vice President and Chief
Financial Officer
</TABLE>
- -----------
(1) Messrs. Fitzgerald, Gebauer and Schlueter receive no compensation for
their services as officers of the Company. CP Inc., a corporation
controlled by Mr. Fitzgerald and for which Mr. Gebauer and Mr. Schlueter
serve as officers, is paid a management fee pursuant to an Advisory
Services Agreement, dated as of April 27, 1990 and effective as of
January 26, 1990 (the "Advisory Agreement"), between the Company and CP
Inc. Pursuant to the Advisory Agreement, CP Inc. provides certain
advisory services to the Company in the areas of investments, general
administration, corporate development, strategic planning, stockholder
relations, financial matters and general business policy for a fee of
$150,000 per year. Upon the acquisition of Possible Dreams, the Advisory
Agreement was amended to increase the annual fee for such services by an
amount equal to the greater of $175,000 and 5% of the annual EBITDA of
Possible Dreams (calculated as provided in the Asset Purchase Agreement,
dated as of May 17, 1996, effecting such purchase). Upon the acquisition
of Pumpkin, the Advisory Agreement was further amended to increase the
annual fee for such services by an amount equal to the greater of
$100,000 and 5% of the annual EBITDA of Pumpkin (calculated as provided
in the Asset Purchase Agreement, dated as of June 27, 1997, effecting
such purchase). The Advisory Agreement was amended for the third time in
connection with the acquisition of the Primrose Companies on April 6,
1999 to increase the fee by $200,000. During 1999, CP Inc. was paid
advisory fees of $692,000 and investment banking fees of $400,000. CP
Inc. was also reimbursed for expenses incurred by it of approximately
$60,280.
2. OPTION/SAR GRANTS IN LAST FISCAL YEAR
No Options or SARs were granted to any executive officer of the Company
during the period from January 1, 1999 through December 31, 1999.
3. AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
No Options or SARs were exercised by any executive officer of the Company
during the period from January 1, 1999 through December 31, 1999.
4. LONG-TERM INCENTIVE PLAN ("LTIP") AWARDS IN LAST FISCAL YEAR
No LTIP Awards were made to any executive officer of the Company during the
period from January 1, 1999 through December 31, 1999.
7
<PAGE>
5. COMPENSATION OF DIRECTORS
Directors who are not employees or officers of the Company have received an
annual fee of $5,000 plus reasonable expenses in connection with attendance
at meetings of the Board of Directors or any committee thereof, but did not
receive any separate fee for attendance at meetings. However, in 2000,
directors will receive an annual fee of $8,000 plus a fee of $2,000 and
reimbursement of reasonable expenses in connection with attendance at Board
meetings. In addition to fees, the directors will also receive options in
amounts not yet determined. Messrs. Fitzgerald and Gebauer do not and will
not receive any annual fee, or any fees for attendance at meetings.
6. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The Company does not have a Compensation Committee. Messrs. Gebauer and
Fitzgerald, directors and executive officers of the Company who receive no
salary or bonus, participate in deliberations of the Board of Directors
concerning executive officer compensation.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
Set forth below is the report of the members of the Board of Directors who were
involved in compensation decisions during 1999 regarding compensation policies.
The Company did not pay any cash compensation to any executive officer for
service as an officer of the Company in 1999. However, the Board of Directors
has adopted the Plan so that it can award stock options and other long-term
incentives to the Company's executive officers and other key personnel to align
their interests with those of the Company's long-term investors and to help
attract, retain and motivate these persons. See "Proposal 2 - Approval of the
Adoption of the 2000 Long-Term Incentive Plan."
The options to be granted under the Plan will provide value to the recipients
only if and when the market price of the Class A Common Stock increases above
the option exercise price. To that end, there will be ongoing review by the
Board of Directors of the market price of the Class A Common Stock and the
exercise price of options. It is the Board of Directors' goal to preserve this
incentive as an effective tool in attracting, retaining and motivating key
personnel.
Section 162(m) of the Code generally disallows a public company's deduction for
compensation to any one employee in excess of $1.0 million per year unless the
compensation is pursuant to a plan approved by the public company's
stockholders. The Board of Directors believes that the Plan will not be
adversely impacted by Section 162(m) of the Code.
BY THE BOARD OF DIRECTORS:
Brian D. Fitzgerald
A. George Gebauer
Thomas J. Gochberg
William T. Bozarth
8
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PERFORMANCE GRAPH
The performance graph below shows a comparison of the cumulative total return,
on a dividend reinvestment basis, measured at each fiscal year end and calendar
year end for the last five years assuming $100 invested on January 1, 1995 in
the Class A Common Stock, the Company's selected peer group, the Nasdaq Market
Index and the Amex Market Index. The Company's peer group consists of seasonal
products companies and educational services companies. The seasonal products
companies are Department 56 Inc., Enesco Group Inc. and Russ Berrie & Co. Inc.
These companies are considered by the Company's management to be competitors of
the Company's seasonal products segment. The Company has added educational
services companies to its peer group because of its acquisition of the Primrose
Companies in April 1999. The educational services companies are Nobel Learning
Communities, Inc. and Childtime Learning Centers, Inc. These companies are
considered by management to be competitors of the Company's educational services
segment. The Company has decided to add the Amex Market Index to the performance
graph because it believes the Amex Market Index provides a more meaningful
comparison of the cumulative total return than the Nasdaq Market Index due to
the relative sizes of the companies included in the indexes. The returns of each
peer group company have been weighted according to its stock market
capitalization for purposes of arriving at a peer group average.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG SECURITY CAPITAL CORPORATION,
NASDAQ MARKET INDEX, AMEX MARKET INDEX AND PEER GROUP
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------------------------------
COMPANY/INDEX/MARKET 1/1/1995 9/30/1995 12/31/1995 9/30/1996 12/31/1996 12/31/1997
<S> <C> <C> <C> <C> <C> <C>
SECURITY CAPITAL CORP 100.00 133.33 100.00 225.00 283.33 200.00
Peer Group 100.00 115.92 100.82 89.07 87.36 102.93
Nasdaq Market Index 100.00 125.49 124.48 143.78 150.50 184.10
Amex Market Index 100.00 125.33 125.80 130.95 132.99 160.03
<CAPTION>
FISCAL YEAR ENDED
------------------------
COMPANY/INDEX/MARKET 12/31/1998 12/31/1999
<S> <C> <C>
SECURITY CAPITAL CORP 275.00 392.00
Peer Group 109.34 82.99
Nasdaq Market Index 259.65 457.95
Amex Market Index 157.85 196.80
</TABLE>
SOURCE: MEDIA GENERAL FINANCIAL SERVICES
P.O. BOX 85333
RICHMOND, VA 23293
PHONE: 1-(800) 446-7922
FAX: 1-(804) 649-6826
9
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ADVISORY SERVICES AGREEMENT; ACQUISITION CRITERIA AND PROCEDURES
On April 27, 1990, effective as of January 26, 1990, the Company entered into
the Advisory Agreement with CP Inc., an entity controlled by Mr. Fitzgerald and
for which Mr. Gebauer and Mr. Schlueter serve as officers. Pursuant to the
Advisory Agreement, CP Inc. provides certain advisory services in the areas of
investments, general administration, corporate development, strategic planning,
stockholder relations, financial matters and general business policy for a fee
of $150,000 per year. Upon the acquisition of Possible Dreams, the Advisory
Agreement was amended to increase the annual fee for such services by an amount
equal to the greater of $175,000 and 5% of the annual EBITDA of Possible Dreams
(calculated as provided in the Asset Purchase Agreement, dated as of May 17,
1996, effecting such purchase). Then upon the acquisition of Pumpkin, the
Advisory Agreement was amended again to increase the annual fee for such
services by an amount equal to the greater of $100,000 and 5% of the annual
EBITDA of Pumpkin (calculated as provided in the Asset Purchase Agreement, dated
as of June 27, 1997, effecting such purchase). The Advisory Agreement was
further amended in connection with the acquisition of the Primrose Companies on
April 6, 1999 to increase the fee by $200,000. Such fee is subject to
appropriate adjustment should the scope of operations of the Company change
again, whether from an acquisition or otherwise. In this regard, CP Inc. would
likely be paid an annual fee for ongoing advisory services following an
acquisition of no more than 4% to 5% of the acquired company's annual operating
profit. Pursuant to the Advisory Agreement and otherwise, no compensation is
paid to the current Chairman of the Board (Mr. Fitzgerald), President and
Secretary (Mr. Gebauer) or Vice President and Chief Financial Officer (Mr.
Schlueter) in their respective capacities as such. During 1999, CP Inc. was paid
$692,000 in fees and reimbursed for expenses incurred by it of approximately
$60,280.
The initial term of the Advisory Agreement was for one year commencing on
January 26, 1990. Thereafter, the agreement has been automatically extended for
additional one-year periods and will be automatically extended for additional
one-year periods unless either party gives 30 days' written notice to the other
of its intention to terminate. The Advisory Agreement was automatically renewed
for a one-year period commencing January 26, 2000.
The Advisory Agreement confirms that, from time to time, CP Inc. may present
acquisition opportunities to the Company that it believes may be appropriate for
the Company, but that CP Inc. is under no obligation to present any or all
acquisition candidates of which it is aware to the Company except for insurance
agency businesses. If the Company or any of its subsidiaries completes any
acquisition which was presented by CP Inc., the Company is obligated to pay CP
Inc. an investment banking fee at the usual and customary rate for transactions
of such size and complexity. This fee is likely to be in the range of 1% to
1 1/2% of the aggregate purchase price for the acquisition. The Company paid CP
Inc. an investment banking fee of $400,000 for the Primrose Companies
acquisition during 1999.
While enterprises proposed for acquisition may be in any line of business, to
date the acquisitions in which CP Inc. and its affiliates have participated have
been primarily in the manufacturing, distribution and service fields. Consistent
with the investment strategies and principles utilized by CP Inc., the Company
currently intends in general to focus upon, as potential targets, established
companies of medium size with histories of earnings and cash flow stability,
favorable earnings growth prospects, good management and strong competitive
positions. It is currently the Company's plan that acquisitions will be
undertaken directly or by one or more subsidiaries of the Company, with
financing achieved through equity contributed by the Company and debt and
subordinated debt raised at the subsidiary or parent level. It may be necessary
to issue preferred stock, common equity or warrants or options to purchase
common equity of the Company or of the acquired entity to one or more lenders in
order to obtain the financing. In some instances, it may be possible to obtain
financing from the sellers of the acquired entity in the form of subordinated
notes or earn-outs. Such sellers may also receive shares of common equity or
warrants or options to purchase the same of the Company or the acquired entity.
Typically, certain members of management of the acquired entity will be granted
incentives (usually equity-based) to remain with the acquired entity following
the acquisition. The companies targeted usually will have annual operating
profits of $3,000,000 to $10,000,000. Consequently, purchase prices should range
from approximately $10,000,000 to $75,000,000. Under such acquisition strategy,
significant uncertainties involving product life cycles, volatile market demand,
organization changes and other major turnaround aspects will generally
disqualify a prospect. The acquisition criteria set forth above are only
guidelines and may change from time to time in response to market conditions,
the Company's financial condition and results of operations and other factors.
In connection with its acquisition activities on behalf of the Company, other
portfolio companies and for its own account, CP Inc. maintains ongoing
relationships with hundreds of merger and acquisition intermediary firms,
ranging from large investment banks and accounting firms to small business
brokerages. In a typical year, CP Inc. receives over 500 leads on companies
which are or might be for sale. Of these, perhaps 50 are sufficiently close to
the Company's acquisition criteria set forth above to merit further
consideration.
CP Inc. may decide at some future date to present one of its portfolio companies
to the Company for possible acquisition. Any such acquisition would be submitted
to the Company's independent directors for their approval.
10
<PAGE>
PRIVATE PLACEMENT OF CLASS A COMMON STOCK
In January 1999, CP Acquisition offered to purchase in a private placement
shares of the Class A Common Stock at a price per share equal to $4.00 in
connection with the financing by the Company of its purchase of the Primrose
Companies. In light of the affiliations of Mr. Fitzgerald and Mr. Gebauer to CP
Acquisition, the Company's Board of Directors established a Special Committee
composed of Messrs. Bozarth and Gochberg to review, analyze and negotiate the
proposed sale of shares of the Class A Common Stock. After reviewing and
considering information on the acquisition of the Primrose Companies and the
financing options available to the Company in connection with such acquisition,
the Special Committee agreed that acquiring the Primrose Companies was in the
best interest of the Company. After further discussions and negotiations with CP
Acquisition, the Committee determined to approve a sale of 1,136,364 shares of
the Class A Common Stock at a price of $4.40 per share to CP Acquisition in
connection with the Company's financing of the acquisition of the Primrose
Companies. The sale was effected on April 6, 1999.
INDEPENDENT AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors selected
Deloitte & Touche as independent auditors of the Company for the fiscal year
ending December 31, 2000. One or more representatives of Deloitte & Touche,
which has served as the Company's independent auditors since October 22, 1990,
are expected to be available by telephone at the Annual Meeting to respond to
appropriate questions. They will have an opportunity to make a statement if they
so desire.
In addition to performing customary audit services, Deloitte & Touche will
assist the Company with the preparation of its Federal and state income tax
returns, for which it will charge the Company its customary billing rates.
Material non-audit services will be approved by the Audit Committee prior to the
rendering of such services after due consideration of the effect of the
performance thereof on the independence of the auditors.
EXPENSES OF SOLICITATION
The total cost of the Proxy solicitation will be borne by the Company. In
addition to the mails, Proxies may be solicited by directors and officers of the
Company by personal interviews, telephone and telegraph. The Company has
retained D.F. King & Co., Inc., New York, New York, to assist in the
solicitation of Proxies for a fee estimated to be $1,500 plus reimbursement of
out-of-pocket expenses. It is anticipated that banks, brokerage houses and other
custodians, nominees and fiduciaries will forward soliciting material to the
beneficial owners of shares of Common Equity entitled to vote at the Annual
Meeting and that such persons will be reimbursed for their out-of-pocket
expenses incurred in this connection.
STOCKHOLDER PROPOSALS
Stockholders are hereby notified that, if they intend to submit proposals for
inclusion in the Company's Proxy Statement and Proxy for its 2001 Annual Meeting
of Stockholders, such proposals must be received by the Company no later than
December 31, 2000 and must otherwise be in compliance with applicable Securities
and Exchange Commission regulations.
MISCELLANEOUS
The Board of Directors knows of no other business to be presented at the Annual
Meeting. If, however, other matters properly do come before the Annual Meeting,
it is intended that the Proxies in the accompanying form will be voted thereon
in accordance with the judgment of the person or persons holding such Proxies.
11
<PAGE>
STOCKHOLDERS ARE URGED TO COMPLETE, DATE, SIGN AND MAIL PROMPTLY THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED. PROMPT RESPONSE WILL GREATLY FACILITATE
ARRANGEMENTS FOR THE ANNUAL MEETING, AND YOUR COOPERATION WILL BE APPRECIATED.
By Order of the Board of Directors,
/s/ A. GEORGE GEBAUER
A. George Gebauer
Secretary
Greenwich, CT
April 28, 2000
12
<PAGE>
APPENDIX A
SECURITY CAPITAL CORPORATION
2000 LONG-TERM INCENTIVE PLAN
1. PURPOSE. The purpose of this 2000 Long-Term Incentive Plan (the "Plan")
of SECURITY CAPITAL CORPORATION, a Delaware corporation (the "Company"), is to
advance the interests of the Company and its stockholders by providing a means
to attract, retain, motivate and reward directors, officers, employees and
consultants of and service providers to the Company and its affiliates and to
enable such persons to acquire or increase a proprietary interest in the
Company, thereby promoting a closer identity of interests between such persons
and the Company's stockholders.
2. DEFINITIONS. The definitions of awards under the Plan, including
Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock,
Stock granted as a bonus or in lieu of other awards, Dividend Equivalents and
Other Stock-Based Awards as are set forth in Section 6 of the Plan. Such awards,
together with any other right or interest granted to a Participant under the
Plan, are termed "Awards." For purposes of the Plan, the following additional
terms shall be defined as set forth below:
(a) "Award Agreement" means any written agreement, contract, notice or
other instrument or document evidencing an Award.
(b) "Beneficiary" shall mean the person, persons, trust or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or, if there is no
designated Beneficiary or surviving designated Beneficiary, then the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time
to time. References to any provision of the Code shall be deemed to include
regulations thereunder and successor provisions and regulations thereto.
(e) "Committee" means the committee appointed by the Board to administer
the Plan, or if no committee is appointed, the Board.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include rules thereunder and successor provisions and rules thereto.
(g) "Fair Market Value" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time to
time by the Committee, provided, however, that if the Stock is listed on a
national securities exchange or quoted in an interdealer quotation system, the
Fair Market Value of such Stock on a given date
<PAGE>
shall be based upon the last sales price at the end of regular trading or, if
unavailable, the average of the closing bid and asked prices per share of the
Stock at the end of regular trading on such date (or, if there was no trading or
quotation in the Stock on such date, on the next preceding date on which there
was trading or quotation) as provided by one of such organizations.
(h) "ISO" means any Option that is designated as an incentive stock option
within the meaning of Section 422 of the Code, and qualifies as such.
(i) "Parent" means any "person" (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) that controls the Company, either directly or
indirectly through one or more intermediaries.
(j) "Participant" means a person who, at a time when eligible under
Section 5 hereof, has been granted an Award under the Plan.
(k) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(l) "Stock" means the Company's Class A Common Stock, and such other
securities as may be substituted for Stock pursuant to Section 4.
(m) "Subsidiary" means each entity that is controlled by the Company or a
Parent, either directly or indirectly through one or more intermediaries
3. ADMINISTRATION.
(a) AUTHORITY OF THE COMMITTEE. Except as otherwise provided below, the
Plan shall be administered by the Committee. The Committee shall have full and
final authority to take the following actions, in each case subject to and
consistent with the provisions of the Plan:
(i) to select persons to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to each
such person;
(iii) to determine the number of Awards to be granted, the number of
shares of Stock to which an Award will relate, the terms and conditions of any
Award granted under the Plan (including, but not limited to, any exercise price,
grant price or purchase price, any restriction or condition, any schedule for
lapse of restrictions or conditions relating to transferability or forfeiture,
exercisability or settlement of an Award, and waivers or accelerations thereof,
performance conditions relating to an Award (including performance conditions
relating to Awards not intended to be governed by Section 7(f) and waivers and
modifications thereof), based in each case on
2
<PAGE>
such considerations as the Committee shall determine), and all other matters to
be determined in connection with an Award;
(iv) to determine whether, to what extent and under what circumstances
an Award may be settled, or the exercise price of an Award may be paid, in cash,
Stock, other Awards, or other property, or an Award may be canceled, forfeited,
or surrendered;
(v) to determine whether, to what extent and under what circumstances
cash, Stock, other Awards or other property payable with respect to an Award
will be deferred either automatically at the election of the Committee or at
the election of the Participant;
(vi) to determine the restrictions, if any, to which Stock received
upon exercise or settlement of an Award shall be subject (including lock-ups and
other transfer restrictions), and to condition the delivery of such Stock upon
the execution by the Participant of any agreement providing for such
restrictions;
(vii) to prescribe the form of each Award Agreement, which need not be
identical for each Participant;
(viii) to adopt, amend, suspend, waive and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary or
advisable to administer the Plan;
(ix) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan and to construe and interpret the Plan and any Award,
rules and regulations, Award Agreement or other instrument hereunder; and
(x) to make all other decisions and determinations as may be required
under the terms of the Plan or as the Committee may deem necessary or advisable
for the administration of the Plan.
Other provisions of the Plan notwithstanding, the Board shall perform the
functions of the Committee for purposes of granting awards to directors who
serve on the Committee, and the Board may perform any function of the Committee
under the Plan for any other purpose, including without limitation for the
purpose of ensuring that transactions under the Plan by Participants who are
then subject to Section 16 of the Exchange Act in respect of the Company are
exempt under Rule 16b-3. In any case in which the Board is performing a function
of the Committee under the Plan, each reference to the Committee herein shall be
deemed to refer to the Board, except where the context otherwise requires.
(b) MANNER OF EXERCISE OF COMMITTEE AUTHORITY. Any action of the Committee
with respect to the Plan shall be final, conclusive and binding on all persons,
including the Company, its Parent and Subsidiaries, Participants, any person
claiming any rights under the Plan from or through any Participant and
stockholders, except to the extent the Committee may subsequently modify, or
take further action not consistent
3
<PAGE>
with, its prior action. If not specified in the Plan, the time at which the
Committee must or may make any determination shall be determined by the
Committee, and any such determination may thereafter be modified by the
Committee (subject to Section 8(e)). The express grant of any specific power to
the Committee, and the taking of any action by the Committee, shall not be
construed as limiting any power or authority of the Committee. Except as
provided under Section 7(f), the Committee may delegate to officers or managers
of the Company, its Parent or Subsidiaries the authority, subject to such terms
as the Committee shall determine, to perform such functions as the Committee may
determine, to the extent permitted under applicable law.
(c) LIMITATION OF LIABILITY; INDEMNIFICATION. Each member of the Committee
shall be entitled to, in good faith, rely or act upon any report or other
information furnished to him by any officer or other employee of the Company,
its Parent or Subsidiaries, the Company's independent certified public
accountants or any executive compensation consultant, legal counsel or other
professional retained by the Company to assist in the administration of the
Plan. No member of the Committee, or any officer or employee of the Company
acting on behalf of the Committee, shall be personally liable for any action,
determination or interpretation taken or made in good faith with respect to the
Plan, and all members of the Committee and any officer or employee of the
Company acting on its behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination or interpretation.
4. STOCK SUBJECT TO PLAN.
(a) AMOUNT OF STOCK RESERVED. The total number of shares of Stock that may
be subject to outstanding Awards, determined immediately after the grant of any
Award, shall not exceed 15% of the total number of shares of the Company's
Class A Common Stock outstanding at the effective time of such grant. In no
event shall the number of shares of Stock delivered upon the exercise of ISOs
exceed 15% of the total number of shares of the Company's Class A Common Stock
outstanding determined at the time the Plan is approved by the Company's
stockholders; PROVIDED, HOWEVER, that shares subject to ISOs shall not be deemed
delivered if such ISOs are forfeited, expire or otherwise terminate without
delivery of shares to the Participant. If an Award valued by reference to Stock
may only be settled in cash, the number of shares to which such Award relates
shall be deemed to be Stock subject to such Award for purposes of this Section
4(a). Any shares of Stock delivered pursuant to an Award may consist, in whole
or in part, of authorized and unissued shares, treasury shares or shares
acquired in the market on a Participants behalf.
(b) ANNUAL PER-PARTICIPANT LIMITATIONS. During any calendar year, no
Participant may be granted Awards that may be settled by delivery of more than
500,000 shares of Stock, subject to adjustment as provided in Section 4(c). In
addition, with respect to Awards that may be settled in cash (in whole or in
part), no Participant may be paid during any calendar year cash amounts relating
to such Awards that exceed the greater of the Fair Market Value of the number of
shares of Stock set forth in the
4
<PAGE>
preceding sentence at the date of grant or the date of settlement of the Award.
This provision sets forth two separate limitations, so that Awards that may be
settled solely by delivery of Stock will not operate to reduce the amount of
cash-only Awards, and vice versa; nevertheless, Awards that may be settled in
Stock or cash must not exceed either limitation.
(c) ADJUSTMENTS. In the event that the Committee shall determine that any
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase or exchange of Stock or other
securities, Stock dividend or other special, large and non-recurring dividend or
distribution (whether in the form of cash, securities or other property),
liquidation, dissolution, or other similar corporate transaction or event,
affects the Stock such that an adjustment is appropriate in order to prevent
dilution or enlargement of the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and kind of shares of Stock reserved and available for Awards
under Sections 4(a) and 4(b), including shares reserved for ISOs, (ii) the
number and kind of shares of outstanding Restricted Stock or other outstanding
Awards in connection with which shares have been issued, (iii) the number and
kind of shares that may be issued in respect of other outstanding Awards and
(iv) the exercise price, grant price or purchase price relating to any Award.
(or, if deemed appropriate, the Committee may make provision for a cash payment
with respect to any outstanding Award). In addition, the Committee is authorized
to make adjustments in the terms and conditions of, and the criteria included
in, Awards (including, without limitation, cancellation of unexercised or
outstanding Awards, or substitution of Awards using stock of a successor or
other entity) in recognition of unusual or nonrecurring events (including,
without limitation, events described in the preceding sentence) affecting the
Company, its Parent or any Subsidiary or the financial statements of the
Company, its Parent or any Subsidiary, or in response to changes in applicable
laws, regulations, or accounting principles.
5. ELIGIBILITY. Directors, officers and employees of the Company or its
Parent or any Subsidiary, and persons who provide consulting or other services
to the Company, its Parent or any Subsidiary deemed by the Committee to be of
substantial value to the Company or its Parent and Subsidiaries, are eligible to
be granted Awards under the Plan. In addition, persons who have been offered
employment by, or agreed to become a director of, the Company, its Parent or any
Subsidiary, and persons employed by an entity that the Committee reasonably
expects to become a Subsidiary of the Company, are eligible to be granted an
Award under the Plan.
6. SPECIFIC TERMS OF AWARDS.
(a) GENERAL. Awards may be granted on the terms and conditions set forth
in this Section 6. In addition, the Committee may impose on any Award or the
exercise thereof such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment or
service of the Participant. Except as expressly provided by the Committee
(including for purposes of complying with the requirements
5
<PAGE>
of the Delaware General Corporation Law relating to lawful consideration for the
issuance of shares), no consideration other than services will be required as
consideration for the grant (but not the exercise) of any Award.
(b) OPTIONS. The Committee is authorized to grant options to purchase
Stock on the following terms and conditions ("Options"):
(i) EXERCISE PRICE. The exercise price per share of Stock purchasable
under an Option shall be determined by the Committee.
(ii) TIME AND METHOD OF EXERCISE. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part, the
methods by which such exercise price may be paid or deemed to be paid, the form
of such payment, including, without limitation, cash, Stock, other Awards or
awards granted under other Company plans or other property (including notes or
other contractual obligations of Participants to make payment on a deferred
basis, such as through "cashless exercise" arrangements, to the extent permitted
by applicable law), and the methods by which Stock will be delivered or deemed
to be delivered to Participants.
(iii) TERMINATION OF EMPLOYMENT. The Committee shall determine the
period, if any, during which Options shall be exercisable following a
Participant's termination of his employment relationship with the Company, its
Parent or any Subsidiary. For this purpose, unless otherwise determined by the
Committee, any sale of a Subsidiary of the Company pursuant to which it ceases
to be a Subsidiary of the Company shall be deemed to be a termination of
employment by any Participant employed by such Subsidiary. Unless otherwise
determined by the Committee, (x) during any period that an Option is exercisable
following termination of employment, it shall be exercisable only to the extent
it was exercisable upon such termination of employment, and (y) if such
termination of employment is for cause, as determined in the discretion of the
Committee, all Options held by the Participant shall immediately terminate.
(iv) SALE OF THE COMPANY. Upon the consummation of any transaction
whereby the Company (or any successor to the Company or substantially all of its
business) becomes a wholly-owned Subsidiary of any corporation, all Options
outstanding under the Plan shall terminate, unless such other corporation shall
continue or assume the Plan as it relates to Options then outstanding (in which
case such other corporation shall be treated as the Company for all purposes
hereunder, and, pursuant to Section 4(c), the Committee of such other
corporation shall make appropriate adjustment in the number and kind of shares
of Stock subject thereto and the exercise price per share thereof to reflect
consummation of such transaction). If the Plan is not to be so assumed, the
Company shall notify the Participant of consummation of such transaction at
least ten days in advance thereof.
(v) OPTIONS PROVIDING FAVORABLE TAX TREATMENT. The Committee may grant
Options that may afford a Participant with favorable treatment under the tax
laws
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applicable to such Participant, including, but not limited to ISOs. If
Stock acquired by exercise of an ISO is sold or otherwise disposed of within two
years after the date of grant of the ISO or within one year after the transfer
of such Stock to the Participant, the holder of the Stock immediately prior to
the disposition shall promptly notify the Company in writing of the date and
terms of the disposition and shall provide such other information regarding the
disposition as the Company may reasonably require in order to secure any
deduction then available against the Company's or any other corporations taxable
income. The Company may impose such procedures as it determines may be necessary
to ensure that such notification is made. Each Option granted as an ISO shall be
designated as such in the Award Agreement relating to such Option.
(c) STOCK APPRECIATION RIGHTS. The Committee is authorized to grant stock
appreciation rights on the following terms and conditions ("SARs"):
(i) RIGHT TO PAYMENT. An SAR shall confer on the Participant to whom it
is granted a right to receive, upon exercise thereof, the excess of (A) the Fair
Market Value of one share of Stock on the date of exercise (or, if the Committee
shall so determine in the case of any such right other than one related to an
ISO, the Fair Market Value of one share at any time during a specified period
before or after the date of exercise), over (B) the grant price of the SAR as
determined by the Committee as of the date of grant of the SAR, which, except as
provided in Section 7(a), shall be not less than the Fair Market Value of one
share of Stock on the date of grant.
(ii) OTHER TERMS. The Committee shall determine the time or times at
which an SAR may be exercised in whole or in part, the method of exercise,
method of settlement, form of consideration payable in settlement, method by
which Stock will be delivered or deemed to be delivered to Participants, whether
or not an SAR shall be in tandem with any other Award, and any other terms and
conditions of any SAR. Limited SARs that may only be exercised upon the
occurrence of a change in control of the Company may be granted on such terms,
not inconsistent with this Section 6(c), as the Committee may determine. Limited
SARs may be either freestanding or in tandem with other Awards.
(d) RESTRICTED STOCK. The Committee is authorized to grant Stock that is
subject to restrictions based on continued employment on the following terms and
conditions ("Restricted Stock"):
(i) GRANT AND RESTRICTIONS. Restricted Stock shall be subject to such
restrictions on transferability and other restrictions, if any, as the Committee
may impose, which restrictions may lapse separately or in combination at such
times, under such circumstances, in such installments, or otherwise, as the
Committee may determine. Except to the extent restricted under the terms of the
Plan and any Award Agreement relating to the Restricted Stock, a Participant
granted Restricted Stock shall have all of the rights of a stockholder
including, without limitation, the right to vote Restricted Stock or the right
to receive dividends thereon.
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(ii) FORFEITURE. Except as otherwise determined by the Committee, upon
termination of employment or service (as determined under criteria established
by the Committee) during the applicable restriction period, Restricted Stock
that is at that time subject to restrictions shall be forfeited and reacquired
by the Company; PROVIDED, HOWEVER, that the Committee may provide, by rule or
regulation or in any Award Agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of termination resulting from specified
causes.
(iii) CERTIFICATES FOR STOCK. Restricted Stock granted under the Plan
may be evidenced in such manner as the Committee shall determine. If
certificates representing Restricted Stock are registered in the name of the
Participant, such certificates may bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Restricted Stock, the
Company may retain physical possession of the certificate, in which case the
Participant shall be required to have delivered a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.
(iv) DIVIDENDS. Dividends paid on Restricted Stock shall be either paid
at the dividend payment date in cash or in shares of unrestricted Stock having a
Fair Market Value equal to the amount of such dividends, or the payment of such
dividends shall be deferred and/or the amount or value thereof automatically
reinvested in additional Restricted Stock, other Awards, or other investment
vehicles, as the Committee shall determine or permit the Participant to elect.
Stock distributed in connection with a Stock split or Stock dividend, and other
property distributed as a dividend, shall be subject to restrictions and a risk
of forfeiture to the same extent as the Restricted Stock with respect to which
such Stock or other property has been distributed, unless otherwise determined
by the Committee.
(e) DEFERRED STOCK. The Committee is authorized to grant units
representing the right to receive Stock at a future date subject to the
following terms and conditions ("Deferred Stock"):
(i) AWARD AND RESTRICTIONS. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred Stock by
the Committee (or, if permitted by the Committee, as elected by the
Participant). In addition, Deferred Stock shall be subject to such restrictions
as the Committee may impose, if any, which restrictions may lapse at the
expiration of the deferral period or at earlier specified times, separately or
in combination, in installments or otherwise, as the Committee may determine.
(ii) FORFEITURE. Except as otherwise determined by the Committee, upon
termination of employment or service (as determined under criteria established
by the Committee) during the applicable deferral period or portion thereof to
which forfeiture conditions apply (as provided in the Award Agreement evidencing
the Deferred
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Stock), all Deferred Stock that is at that time subject to such forfeiture
conditions shall be forfeited; PROVIDED, HOWEVER, that the Committee may
provide, by rule or regulation or in any Award Agreement, or may determine in
any individual case, that restrictions or forfeiture conditions relating to
Deferred Stock will be waived in whole or in part in the event of termination
resulting from specified causes.
(f) BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS. The Committee
is authorized to grant Stock as a bonus, or to grant Stock or other Awards in
lieu of Company obligations to pay cash under other plans or compensatory
arrangements.
(g) DIVIDEND EQUIVALENTS. The Committee is authorized to grant awards
entitling the Participant to receive cash, Stock, other Awards or other property
equal in value to dividends paid with respect to a specified number of shares of
Stock ("Dividend Equivalents"). Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee may
provide that Dividend Equivalents shall be paid or distributed when accrued or
shall be deemed to have been reinvested in additional Stock, Awards or other
investment vehicles, and subject to such restrictions on transferability and
risks of forfeiture, as the Committee may specify.
(h) OTHER STOCK-BASED AWARDS. The Committee is authorized, subject to
limitations under applicable law, to grant such other Awards that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Stock and factors that may influence the
value of Stock, as deemed by the Committee to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee and Awards valued by
reference to the book value of Stock or the value of securities of or the
performance of specified Subsidiaries ("Other Stock Based Awards"). The
Committee shall determine the terms and conditions of such Awards. Stock issued
pursuant to an Award in the nature of a purchase right granted under this
Section 6(h) shall be purchased for such consideration, paid for at such times,
by such methods, and in such forms, including, without limitation, cash, Stock,
other Awards, or other property, as the Committee shall determine. Cash awards,
as an element of or supplement to any other Award under the Plan, may be granted
pursuant to this Section 6(h).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) STAND-ALONE, ADDITIONAL, TANDEM, AND SUBSTITUTE AWARDS. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with or in substitution for any other
Award granted under the Plan or any award granted under any other plan of the
Company, its Parent or Subsidiaries or any business entity to be acquired by the
Company or a Subsidiary, or any other right of a Participant to receive payment
from the Company its Parent or Subsidiaries. Awards granted in addition to or in
tandem with other Awards or awards
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<PAGE>
may be granted either as of the same time as or a different time from the grant
of such other Awards or awards.
(b) TERM OF AWARDS. The term of each Award shall be for such period as may
be determined by the Committee; PROVIDED, HOWEVER, that (i) in no event shall
the term of any ISO or an SAR granted in tandem therewith exceed a period of ten
years from the date of its grant (or such shorter period as may be applicable
under Section 422 of the Code), and (ii) the term of any Option granted to a
resident of the United Kingdom shall not exceed a period of ten years from the
date of its grant.
(c) FORM OF PAYMENT UNDER AWARDS. Subject to the terms of the Plan and any
applicable Award Agreement, payments to be made by the Company, its Parent or
Subsidiaries upon the grant, exercise or settlement of an Award may be made in
such forms as the Committee shall determine, including, without limitation,
cash, Stock, other Awards or other property, and may be made in a single payment
or transfer, in installments or on a deferred basis. Such payments may include,
without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
Dividend Equivalents in respect of installment or deferred payments denominated
in Stock.
(d) RULE 16B-3 COMPLIANCE.
(i) SIX-MONTH HOLDING PERIOD. Unless a Participant could otherwise
dispose of equity securities, including derivative securities, acquired under
the Plan without incurring liability under Section 16(b) of the Exchange Act,
equity securities acquired under the Plan must be held for a period of six
months following the date of such acquisition, provided that this condition
shall be satisfied with respect to a derivative security if at least six months
elapse from the date of acquisition of the derivative security to the date of
disposition of the derivative security (other than upon exercise or conversion)
or its underlying equity security.
(ii) OTHER COMPLIANCE PROVISIONS. With respect to a Participant who is
then subject to Section 16 of the Exchange Act in respect of the Company, the
Committee shall implement transactions under the Plan and administer the Plan in
a manner that will ensure that each transaction by such a Participant is exempt
from liability under Rule 16b-3, except that such a Participant may be permitted
to engage in a non-exempt transaction under the Plan if written notice has been
given to the Participant regarding the non-exempt nature of such transaction.
The Committee may authorize the Company to repurchase any Award or shares of
Stock resulting from any Award in order to prevent a Participant who is subject
to Section 16 of the Exchange Act from incurring liability under Section 16(b).
Unless otherwise specified by the Participant, equity securities, including
derivative securities, acquired under the Plan which are disposed of by a
Participant shall be deemed to be disposed of in the order acquired by the
Participant.
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(e) LOAN PROVISIONS. With the consent of the Committee, and subject at all
times to, and only to the extent, if any, permitted under and in accordance
with, laws and regulations and other binding obligations or provisions
applicable to the Company, the Company may make, guarantee or arrange for a loan
or loans to a Participant with respect to the exercise of any Option or other
payment in connection with any Award, including the payment by a Participant of
any or all federal, state or local income or other taxes due in connection with
any Award. Subject to such limitations, the Committee shall have full authority
to decide whether to make a loan or loans hereunder and to determine the amount,
terms and provisions of any such loan or loans, including the interest rate to
be charged in respect of any such loan or loans, whether the loan or loans are
to be with or without recourse against the borrower, the terms on which the loan
is to be repaid and conditions, if any, under which the loan or loans may be
forgiven.
(f) PERFORMANCE-BASED AWARDS. The Committee may, in its discretion,
designate any Award the exercisability or settlement of which is subject to the
achievement of performance conditions as a performance-based Award subject to
this Section 7(f), in order to qualify such Award as "qualified
performance-based compensation" within the meaning of Code Section 162(m) and
regulations thereunder. The performance objectives for an Award subject to this
Section 7(f) shall consist of one or more business criteria and a targeted level
or levels of performance with respect to such criteria, as specified by the
Committee but subject to this Section 7(f). Performance objectives shall be
objective and shall otherwise meet the requirements of Section 162(m)(4)(C) of
the Code. Business criteria used by the Committee in establishing performance
objectives for Awards subject to this Section 7(f) shall be selected from among
the following:
(1) Annual return on capital;
(2) Annual earnings or earnings per share;
(3) Annual cash earnings per share after taking into account
goodwill, amortization and other non-cash charges against
income;
(4) Annual cash flow provided by operations;
(5) Increase in stock price;
(6) Changes in annual revenues; and/or
(7) Strategic business criteria, consisting of one or more
objectives based on meeting specified revenue, market
penetration, geographic business expansion goals, cost
targets, market capitalization of the Company, trading
volume of the Company's shares and goals relating to
acquisitions or divestitures.
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The levels of performance required with respect to such business criteria may be
expressed in absolute or relative levels. Performance objectives may differ for
such Awards to different Participants. The Committee shall specify the weighting
to be given to each performance objective for purposes of determining the final
amount payable with respect to any such Award. The Committee may, in its
discretion, reduce the amount of a payout otherwise to be made in connection
with an Award subject to this Section 7(f), but may not exercise discretion to
increase such amount, and the Committee may consider other performance criteria
in exercising such discretion. All determinations by the Committee as to the
achievement of performance objectives shall be in writing. The Committee may not
delegate any responsibility with respect to an Award subject to this Section
7(f).
8. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LAWS AND OBLIGATIONS. The Company shall not be
obligated to issue or deliver Stock in connection with any Award or take any
other action under the Plan in a transaction subject to the requirements of any
applicable securities law, any requirement under any listing agreement between
the Company and any national securities exchange or automated quotation system
or any other law, regulation or contractual obligation of the Company until the
Company is satisfied that such laws, regulations, and other obligations of the
Company have been complied with in full. Certificates representing shares of
Stock issued under the Plan will be subject to such stop-transfer orders and
other restrictions as may be applicable under such laws, regulations and other
obligations of the Company, including any requirement that a legend or legends
be placed thereon. In addition, the Company may adopt policies that impose
restrictions on the timing of exercise of Options, SARs or other Awards (e.g.,
to enforce compliance with Company-imposed black-out periods).
(b) LIMITATIONS ON TRANSFERABILITY. Awards and other rights under the Plan
will not be transferable by a Participant except by will or the laws of descent
and distribution or to a Beneficiary in the event of the Participant"s death,
shall not be pledged, mortgaged, hypothecated or otherwise encumbered, or
otherwise subject to the claims of creditors, and, in the case of ISOs and
SARs in tandem therewith, shall be exercisable during the lifetime of a
Participant only by such Participant or his guardian or legal representative;
PROVIDED, HOWEVER, that such Awards and other rights (other than ISOs and SARs
in tandem therewith) may be transferred to one or more transferees during the
lifetime of the Participant to the extent and on such terms as then may be
permitted by the Committee.
(c) NO RIGHT TO CONTINUED EMPLOYMENT OR SERVICE. Neither the Plan nor any
action taken hereunder shall be construed as giving any employee, director or
other person the right to be retained in the employ or service of the Company,
its Parent or any Subsidiary, nor shall it interfere in any way with the right
of the Company, its Parent or any Subsidiary to terminate any employees
employment or other persons service at any time or with the right of the Board
or stockholders to remove any director.
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(d) TAXES. The Company, its Parent and Subsidiaries are authorized to
withhold from any Award granted or to be settled, any delivery of Stock in
connection with an Award, any other payment relating to an Award or any payroll
or other payment to a Participant amounts of withholding and other taxes due or
potentially payable in connection with any transaction involving an Award, and
to take such other action as the Committee may deem advisable to enable the
Company, its Parent and Subsidiaries and Participants to satisfy obligations for
the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Stock or
other property and to make cash payments in respect thereof in satisfaction of a
Participants tax obligations.
(e) CHANGES TO THE PLAN AND AWARDS. The Board may amend, alter, suspend,
discontinue or terminate the Plan or the Committee's authority to grant Awards
under the Plan without the consent of stockholders or Participants, except that
any such action shall be subject to the approval of the Company's stockholders
at or before the next annual meeting of stockholders for which the record date
is after such Board action if such stockholder approval is required by any
federal or state law or regulation or the rules of any stock exchange or
automated quotation system on which the Stock may then be listed or quoted, and
the Board may otherwise, in its discretion, determine to submit other such
changes to the Plan to stockholders for approval; PROVIDED, HOWEVER, that,
without the consent of an affected Participant, no such action may materially
impair the rights of such Participant under any Award theretofore granted to him
(as such rights are set forth in the Plan and the Award Agreement). The
Committee may waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Award theretofore granted and any Award Agreement
relating thereto; PROVIDED, HOWEVER, that, (subject to Section 4(c)) without the
consent of an affected Participant, no such action may materially impair the
rights of such Participant under such Award (as such rights are set forth in the
Plan and the Award Agreement). Notwithstanding the foregoing, the Board or the
Committee may take any action (including actions affecting or terminating
outstanding Awards) to the extent necessary for a business combination in which
the Company is a party to be accounted for under the pooling-of-interests method
of accounting under Accounting Principles Board Opinion No. 16 (or any successor
thereto). The Board or the Committee shall also have the authority to establish
separate sub-plans under the Plan with respect to Participants resident in a
particular jurisdiction (the terms of which shall not be inconsistent with those
of the Plan) if necessary or desirable to comply with the applicable laws of
such jurisdiction.
(f) NO RIGHTS TO AWARDS; NO STOCKHOLDER RIGHTS. No person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants and employees. No Award shall confer on
any Participant any of the rights of a stockholder of the Company unless and
until Stock is duly issued or transferred and delivered to the Participant in
accordance with the terms of the Award or, in the case of an Option, the Option
is duly exercised.
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(g) UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company;
PROVIDED, HOWEVER, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations under the Plan to
deliver cash, Stock, other Awards, or other property pursuant to any Award,
which trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan unless the Committee otherwise determines with the consent of
each affected Participant.
(h) NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the
Board nor any submission of the Plan or amendments thereto to the stockholders
of the Company for approval shall be construed as creating any limitations on
the power of the Board to adopt such other compensatory arrangements as it may
deem desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
(i) NO FRACTIONAL SHARES. No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash, other Awards, or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.
(j) GOVERNING LAW. The validity, construction and effect of the Plan, any
rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws, and applicable federal law.
(k) EFFECTIVE DATE; PLAN TERMINATION. The Plan shall become effective as
of the date of its adoption by the Board, and shall continue in effect until
terminated by the Board; PROVIDED, HOWEVER, that if approval of such adoption by
the Company's shareholders is not obtained within 12 months of the date of such
adoption, the Plan shall terminate AB INITIO, and any Awards then outstanding
shall be canceled.
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SECURITY CAPITAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS - JULY 13, 2000
The undersigned hereby appoints Brian D. Fitzgerald and A. George Gebauer, and
each of them, proxies, with full power of substitution, to appear on behalf of
the undersigned and to vote all shares of Common Stock (par value $.01) and
Class A Common Stock (par value $.01) of Security Capital Corporation (the
"Company") that the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company to be held in Conference Room 45A, 45th Floor, 101
Park Avenue, New York, New York on Thursday, July 13, 2000, commencing at 10:00
a.m. (local time), and at any adjournment thereof.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
LISTED NOMINEES AS DIRECTORS AND FOR THE APPROVAL OF THE ADOPTION OF THE 2000
LONG-TERM INCENTIVE PLAN OF THE COMPANY.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Please mark box [ ] or [X] in blue or black ink.
<TABLE>
<CAPTION>
<S> <C>
1. Election of FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote [ ] EXCEPTIONS [ ]
Directors: for all nominees listed below
Nominees: BRIAN D. FITZGERALD, A. GEORGE GEBAUER, CRAIG R. STAPLETON, PAUL M. KELLY
(Instructions: To withhold authority to vote for any nominee, mark the
"Exceptions" box and write that nominee's name in the space provided below.)
___________________________________
2. Approval of the adoption FOR [ ] AGAINST [ ] ABSTAIN [ ]
of the 2000 Long-Term
Incentive Plan:
</TABLE>
(Continued and to be signed on reverse side)
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the Annual Meeting and any adjournment thereof.
Please sign exactly as your name appears on
the left. When signing as an attorney,
executor, administrator, trustee or guardian,
please give your full title. If shares are
held jointly, each holder should sign.
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE
ANNUAL MEETING [ ]
Dated: __________________________, 2000
__________________________
Signature
__________________________
Signature
Please sign, date and return the proxy card using the enclosed envelope.
