SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934 (Amendment No. )
[X] Filed by the Registrant
[ ] 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 Section 240.14a-11(c) or
Section 240.14a-12
GENERAL EMPLOYMENT ENTERPRISES, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:________________________________________________________
(2) Aggregate number of securities to which transaction
applies:________________________________________________________
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was deterimined):__________________________________
(4) Proposed maximum aggregate value of transaction:________________
(5) Total Fee paid:_________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a) (2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:_________________________________________
(2) Form, Schedule or Registration Statement:_______________________
(3) Filing Party:___________________________________________________
(4) Date Filed:_____________________________________________________
GENERAL EMPLOYMENT ENTERPRISES, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of
GENERAL EMPLOYMENT ENTERPRISES, INC.:
You are cordially invited to attend the Annual Meeting of
Shareholders of General Employment Enterprises, Inc. which will
be held at The DuPage Club, 1901 S. Meyers Road, in Oakbrook
Terrace, Illinois 60181, on Monday, February 22, 1999, at 10:00
a.m., local time, for the following purposes:
1. To elect six directors of the Company;
2. To consider and vote upon a proposal to approve the
Company's 1999 Stock Option Plan; and
3. To act upon such other matters as may properly be
brought before the meeting.
Shareholders of record at the close of business on December 28,
1998 will be entitled to vote at the meeting.
By Order of the Board of Directors
Nancy C. Frohnmaier
Secretary
Oakbrook Terrace, Illinois
January 22, 1999
YOUR VOTE IS IMPORTANT
Even if you plan to attend the Annual Meeting, you are urged to
sign, date and promptly return your proxy in the postage paid
envelope that is enclosed, so that your shares may be voted in
accordance with your wishes. If you attend the meeting, you may
vote your shares in person, even though you have previously
signed and returned your proxy.
GENERAL EMPLOYMENT ENTERPRISES, INC.
Oakbrook Terrace Tower
One Tower Lane, Suite 2100
Oakbrook Terrace, Illinois 60181
PROXY STATEMENT
For Annual Meeting of Shareholders
This statement and the accompanying proxy card, which are first
being sent to shareholders on approximately January 22, 1999, are
being furnished in connection with a solicitation of proxies by
the Board of Directors of General Employment Enterprises, Inc.
(the "Company"), an Illinois corporation, to be voted at the
Annual Meeting of Shareholders to be held on Monday, February 22,
1999, at 10:00 a.m., local time, at The DuPage Club, 1901 S.
Meyers Road, in Oakbrook Terrace, Illinois 60181.
The only voting securities of the Company entitled to be voted
at the Annual Meeting are the shares of Common Stock, of which
there were 4,423,566 outstanding on December 28, 1998, the record
date for the Annual Meeting. Shareholders are entitled to one
vote for each share held except that, in elections for directors,
each shareholder has cumulative voting rights. When voting
cumulatively, each shareholder has the number of votes equal to
the number of directors to be elected (six) multiplied by the
number of his or her shares. Such number of votes may be divided
equally among all nominees, may be cumulated for one nominee, or
may be distributed on any basis among as many nominees as is
desired.
Each proxy that is properly signed and received prior to the
Annual Meeting will, unless such proxy has been revoked, be voted
in accordance with the instructions on such proxy. If no
instruction is indicated, the shares will be voted for election
of the six nominees for director listed in this proxy statement
and for approval of the Company's 1999 Stock Option Plan.
Proxies given may be revoked at any time prior to the voting
thereof by delivering to the Company a written statement revoking
the proxy or a subsequently dated proxy, or by attending the
meeting and voting in person.
A quorum of shareholders is necessary to take action at the
Annual Meeting. A majority of the total outstanding shares of
Common Stock of the Company, represented in person or by proxy,
will constitute a quorum for purposes of the meeting.
Abstentions will be treated as shares of Common Stock that are
present and entitled to vote for purposes of determining the
presence of a quorum. If a proxy submitted by a broker for
shares beneficially owned by other persons indicates that all or
a portion of the shares represented by such proxy are not being
voted (because the broker does not have discretionary authority
to vote shares with respect to a particular matter in the absence
of instructions from the beneficial owner of such shares), those
shares will not be counted in determining whether a quorum is
present and will not be considered present and entitled to vote
with respect to that matter.
The six nominees for director receiving the highest number of
votes cast will be elected directors of the Company. The vote
required for the approval of the Company's 1999 Stock Option Plan
is the affirmative vote of a majority of the outstanding Common
Stock of the corporation, present in person or represented by
proxy at the annual meeting. For purposes of determining the
approval of the matters submitted to the shareholders for a vote,
abstentions will have no effect on the vote for the election of
directors and will be treated as voted against approval of the
Company's 1999 Stock Option Plan.
Proposal 1 - ELECTION OF DIRECTORS
The Company's Board of Directors is currently comprised of
seven directors. One of the current directors, Howard S. Wilcox,
has resigned as a director of the Company effective the day
before the convening of the Annual Meeting. At such time the
number of directors constituting the entire Board of Directors
shall be reduced to six. Therefore, six directors are to be
elected at the Annual Meeting, to serve until the 2000 Annual
Meeting of Shareholders, or until their successors are elected
and qualified. Proxies will be voted, unless otherwise
indicated, for the election of the nominees named below. If
necessary to elect the nominees named below, proxies will be
voted cumulatively.
Nominees
The following information is furnished with respect to each
nominee for election as a director:
HERBERT F. IMHOFF, age 72, has been Chairman of the Board since
1968 and was named Chief Executive Officer in February 1997. He
served as President from 1964 until 1997.
WALTER T. KERWIN, JR., age 81, is a former Vice Chief of Staff
of the U.S. Army. He has served as a consultant to the Army, the
Department of Defense and private industry since 1978. He joined
the Board in 1984.
HERBERT F. IMHOFF, JR., age 49, was named President and Chief
Operating Officer in February 1997 and had previously been
Executive Vice President since 1986. Mr. Imhoff, Jr. has served
as the Company's general counsel since 1982, and has been a
member of the Board since 1986.
LEONARD CHAVIN, age 67, has operated a real estate management
and development business for more than 10 years. He was elected
to the Board in 1991.
SHELDON BROTTMAN, age 64, has been an attorney and real estate
developer for more than 10 years. Until December 1997, he was
President and CEO of Jemm Wholesale Meat Co. Mr. Brottman was
elected to the Board in 1991.
DELAIN G. DANEHEY, age 64, was with the auditing firm of Ernst
& Young LLP for 31 years, and was a partner when he retired from
the firm in 1991. Mr. Danehey joined the Company's Board in 1995.
All of the foregoing nominees are currently serving as
directors of the Company and were elected by the shareholders at
the last Annual Meeting. Each of the above-named nominees has
agreed to serve if elected.
Resigning Director
HOWARD S. WILCOX, age 78, is a management consultant and
currently a director of the Indianapolis Chamber of Commerce and
the Indiana State Chamber of Commerce. Mr. Wilcox was formerly
owner of Howard S. Wilcox, Inc., a public relations firm, from
1966 to 1986 and was elected to the Board in 1974.
Information Concerning the Board of Directors and its Committees
The Board of Directors meets on a regularly scheduled basis
during its fiscal year to review significant developments
affecting the Company and to act on matters requiring Board
approval. It also holds special meetings when an important
matter requires Board action between scheduled meetings. The
Board held five regularly scheduled meetings during the last
fiscal year. No director of the Company attended fewer than 75%
of the total meetings of the Board and Committee meetings on
which such Board Members served during this period.
Executive Committee
The Board of Directors has an Executive Committee consisting of
the Board of Directors as a whole, and meetings of the committee
may be called or requested by the chairman of the board, the
president, or a majority of the directors. The Executive
Committee is authorized to act upon all matters requiring Board
approval except the declaration of dividends, corporate
reorganization, and merger and acquisition decisions. As provided
in the By-Laws of the Company, a majority of the directors
constitutes a quorum for the purposes of transacting committee
business. No Executive Committee meetings were held in fiscal
1998.
Audit Committee
The Audit Committee, which is comprised of all members of the
Board, meeting as a committee of the whole, is primarily
concerned with the effectiveness of the Company's accounting
policies and practices, its financial reporting and with the
review of internal policies and practices. Specifically, the
Audit Committee reviews and approves the scope of the annual
audit of the Company's books, reviews the findings and
recommendations of the independent auditors at the completion of
their audit, and approves annual audit fees and the selection of
an auditing firm. The Audit Committee met once during fiscal
1998.
Stock Option Committee
The Board has a Stock Option Committee which is comprised of
all non-employee Directors. The function of this committee is to
oversee the administration of the Company's stock option plans.
The Stock Option Committee has the power to determine from time
to time the individuals to whom options shall be granted, the
number of shares to be covered by each option, the time or times
at which options shall be granted, and the terms of such options.
The Stock Option Committee met once during fiscal 1998.
The Board of Directors does not have a standing Nominating
Committee or Compensation Committee.
Nominations
The By-Laws of the Company establish procedures for the
nomination of candidates for election to the Board of Directors.
The By-Laws provide that nominations may be made by the Board of
Directors or by a committee appointed by the Board of Directors.
Any shareholder entitled to vote in the election of directors
generally may make nominations for the election of directors to
be held at an annual meeting of shareholders, provided that such
shareholder has given actual written notice of his intent to make
such nomination or nominations to the secretary of the Company
not later than sixty days prior to the anniversary date of the
immediately preceding annual meeting of shareholders. Each such
notice must set forth (a) the name and address of the shareholder
who intends to make the nomination and of the person or persons
to be nominated; (b) a representation that the shareholder is a
holder of record of stock of the Company entitled to vote at such
meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the
notice; (c) a description of all arrangements or understandings
involving any two or more of the shareholders, each such nominee
and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by
the shareholder or relating to the Company or its securities or
to such nominee's service as a director if elected; (d) such
other information regarding such nominee proposed by such
shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had the nominee been nominated, or intended
to be nominated, by the Board of Directors; and (e) the consent
of each nominee to serve as a director of the Company, if so
elected.
Security Ownership of Certain Beneficial Owners and Management
Listed in the following table is information concerning persons
known to the Company to be beneficial owners of more than five
percent of the Company's outstanding Common Stock as of December
28, 1998:
Title of Name and Address Amount and Nature of Percent
Class of Beneficial Owner Beneficial Ownership* of Class
Common Herbert F. Imhoff 1,290,512(1) 28.70
One Tower Lane, Suite 2100
Oakbrook Terrace, IL 60181
*The named individual has sole voting and dispositive power over
the shares listed.
(1) Includes 74,250 option shares exercisable by Mr. Imhoff
within 60 days of record date.
The following information is furnished as of December 28, 1998,
to indicate beneficial ownership by each director and each named
executive officer, individually, and all executive officers and
directors as a group:
Title of Name of Amount and Nature of Percent
Class Beneficial Owner Beneficial Ownership* of Class
Common Herbert F. Imhoff 1,290,512(1) 28.70
Common Herbert F. Imhoff, Jr. 67,783(2) 1.51
Common Leonard Chavin 0 -
Common Sheldon Brottman 54,420(3) 1.22
Common Howard S. Wilcox 39,188(4) **
Common Walter T. Kerwin, Jr. 28,059(4) **
Common Delain G. Danehey 27,120(4) **
Common Kent M. Yauch 23,216(3) **
Common Gregory Chrisos 18,975(3) **
Common Marilyn L. White 18,107(3) **
All directors and executive 1,567,380(5) 33.04
officers as a group
(ten in number)
* Unless noted otherwise, the named individuals have sole voting
and dispositive power over the shares listed.
** Represents less than 1%.
(1) Includes 74,250 option shares exercisable by Mr. Imhoff
within 60 days of record date. Mr. Imhoff is the father of Mr.
Herbert F. Imhoff, Jr.
(2) Includes 271 shares held in a custodial account for the
benefit of Mr. Imhoff, Jr.'s son and 57,750 option shares
exercisable by Mr. Imhoff, Jr. within 60 days of record date.
Mr. Imhoff, Jr. is the son of Mr. Herbert F. Imhoff.
(3) Represents options to purchase shares exercisable within 60
days of record date.
(4) Includes options to purchase 24,750 shares exercisable within
60 days of record date.
(5) Includes 271 shares held in a custodial account for the
benefit of Mr. Imhoff, Jr.'s son and 320,968 option shares
exercisable by members of the group within 60 days of record
date.
Settlement Agreement
On September 27, 1991 the Company and Leonard Chavin entered
into a Settlement Agreement to resolve certain litigation and
other issues. Insofar as it is still in effect, Mr. Chavin (and,
subsequently, in certain respects, his former wife, Marlene
Chavin) (a) agreed not to sue the Company or its agents based on
facts existing or occurring prior to September 27, 1991, (b)
agreed not to acquire additional securities of the Company during
the term of the Agreement or to encourage others to do so, (c)
granted the Company a right of first refusal to purchase his
common shares of the Company and (d) agreed not to solicit
proxies in opposition to the recommendation of the Company's
Board of Directors and agreed to vote his shares in accordance
with the Board's recommendation for so long as Mr. Chavin and one
other person designated by him are included in the slate of
nominees for directors recommended by the Board to shareholders
for election as directors.
In the Settlement Agreement, the Company agreed (a) to notify
Mr. Chavin in advance of an annual meeting of shareholders if Mr.
Chavin and his designee are not to be included on the Board's
recommended slate of nominees, and (b) to include Mr. Chavin and
his designee on the slate of nominees for directors under certain
circumstances in the event the Company reincorporates in Delaware
and Mr. Chavin and his nominee are members of the Company's Board
on the date such reincorporation is approved. The covenants and
agreements of the Settlement Agreement will continue in full
force and effect for so long as Mr. Chavin remains a member of
the Company's Board of Directors.
In connection with the 1999 Annual Meeting, Mr. Chavin has
designated himself and Mr. Brottman for inclusion in the slate of
nominees pursuant to the Settlement Agreement.
Compensation of Executive Officers
Summary Compensation Table
The following table sets forth certain information regarding
compensation awarded, earned or paid during each of the Company's
last three fiscal years to the Company's Chief Executive Officer
and the other four most highly-compensated executive officers.
Summary Compensation Table
Long-Term
Compensation
Awards
Name and Annual Securities All Other
Principal Fiscal Compensation Underlying Compensa-
Position Year Salary($) Bonus($) Options(#)(1) tion($)(2)
Herbert F. Imhoff 1998 $368,000 $162,432 16,500 $ 0
Chairman and Chief 1997 302,500 207,148 57,750 2,000
Executive Officer 1996 275,000 360,638 0 1,875
Herbert F. Imhoff, Jr. 1998 $226,000 $ 87,463 16,500 $2,400
President and Chief 1997 176,000 120,522 41,250 2,025
Operating Officer 1996 160,000 209,826 0 2,182
Marilyn L. White 1998 $130,000 $ 27,083 8,250 $2,400
Vice President 1997 90,000 39,340 17,737 2,064
1996 60,000 75,129 8,620 875
Gregory Chrisos(3) 1998 $130,000 $ 26,496 8,250 $2,400
Vice President 1997 105,000 17,527 27,225 1,013
Triad Personnel
Services
Kent M. Yauch 1998 $115,000 $ 25,000 4,950 $2,156
Chief Financial 1997 100,000 25,000 18,266 1,563
Officer and 1996 88,000 25,000 0 1,288
Treasurer
(1) Adjusted in accordance with the anti-dilution provisions of
the Company's stock option plans, to reflect a 10% stock dividend
paid on October 30, 1998.
(2) Amounts represent the Company's contribution to the Company's
401(k) Incentive Savings Plan.
(3) Mr. Chrisos became an executive officer of the Company's
subsidiary in October of 1996.
Stock Option Grants
The following table shows all grants of stock options in fiscal
1998 under the 1997 Stock Option Plan, to each of the officers
named in the Summary Compensation Table above. The exercise
price of all options was the fair market value on the date of
grant.
Option Grants in Last Fiscal Year
Individual Grants
Number of Percent of
Securities Total Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name Granted(#)(1)(2) Fiscal Year ($/Sh)(1) Date
Herbert F. Imhoff 16,500 26.55 $5.91 9/27/2008
Herbert F. Imhoff, Jr. 16,500 26.55 5.91 9/27/2008
Marilyn L. White 8,250 13.27 5.91 9/27/2008
Gregory Chrisos 8,250 13.27 5.91 9/27/2008
Kent M. Yauch 4,950 7.96 5.91 9/27/2008
(1) Adjusted in accordance with the anti-dilution provisions of
the Company's stock option plans, to reflect a 10% stock dividend
paid on October 30, 1998.
(2) Options are immediately exercisable except those granted to
Ms. White and Mr. Chrisos which are exercisable two years after
date of grant.
Stock Option Exercises and Fiscal Year-End Stock Option Values
The following table shows stock options exercised during fiscal
1998 by each of the officers named in the Summary Compensation
Table and the value of unexercised options held as of the end of
that year.
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options
Acquired F/Y End (#)(1) at F/Y End($)(2)
on Exer- Value Exer- Unexer- Exer- Unexer-
Name cise(#)(1) Realized cisable cisable cisable cisable
Herbert F. Imhoff 0 $ 0 74,250 0 $ 7,425 $ 0
Herbert F. Imhoff, Jr. 0 $ 0 57,750 0 $ 7,425 $ 0
Marilyn L. White 13,200 $111,360 18,107 16,500 $23,705 $3,713
Gregory Chrisos 0 $ 0 18,975 16,500 $ 0 $3,713
Kent M. Yauch 0 $ 0 23,216 0 $ 2,228 $ 0
(1) Number of shares adjusted in accordance with the anti-
dilution provisions of the Company's stock option plans, to
reflect a 10% stock dividend paid on October 30, 1998.
(2) Represents the spread between $6.36, the closing price of the
Company's Common Stock on the American Stock Exchange on
September 30, 1998 (adjusted for a 10% stock dividend) and the
option price per share multiplied by the number of unexercised
options.
Compensation of Directors
During the last fiscal year directors who are not full-time
employees of the Company were compensated at the rate of $2,000
per month. Compensation for non-employee Executive Committee
Members is $1,000 per meeting; however, no Executive Committee
Meetings were held in fiscal 1998. Since Audit Committee and
Stock Option Committee meetings are held in conjunction with
regular Board Meetings, Committee Members receive no additional
fee for serving on the Audit Committee or the Stock Option
Committee.
Supplemental Executive Retirement Plan
The Company has agreed to provide Herbert F. Imhoff with a
retirement benefit of $400,000 subsequent to his retirement.
Under the terms of the agreement, the retirement benefit is to be
paid in a number of equal monthly installments equal to the
number of months between the first day of the month following his
termination date and the first day of the month in which Mr.
Imhoff attains age 75. The retirement benefit is also to be paid
in the event of a termination without cause or a constructive
termination within 12 months following a change in control. In
the event of Mr. Imhoff's death, the retirement benefit is to be
paid to his designated beneficiary. Mr. Herbert F. Imhoff also
has an employment contract with the Company dated October 1,
1962, providing for exclusive continuous employment during a
period of time mutually agreeable to the parties.
Senior Employment Contracts
Herbert F. Imhoff and Herbert F. Imhoff, Jr. each have
employment security agreements with the Company which, in
general, provide for payments in the amount of twice their
respective annual compensation, plus continued participation in
any employee benefit plan maintained by the Company in which the
executive participates at the date of termination, in the event
that the employment of the executive is terminated by the Company
for any reason other than good cause within twenty-four months
following change of control of the Company.
A change of control shall be deemed to take place on the
occurrence of any of the following events on or after May 14,
1990, without the prior written approval of a majority of the
entire Board of Directors of the Company as it exists immediately
prior to such event:
(1) The acquisition by an entity, person or group of beneficial
ownership of capital stock of the Company if after such
acquisition such entity, person or group is entitled to exercise
more than 30% of the outstanding voting power of all capital
stock of the Company entitled to vote in elections of directors
("Voting Power");
(2) The effective time of (I) a merger or consolidation of the
Company with one or more other corporations as a result of which
the holders of the outstanding Voting Power of the Company
immediately prior to such merger or consolidation hold less than
50% of the Voting Power of the surviving or resulting
corporation, or (II) a transfer of 30% of the Voting Power, or a
substantial portion of the property, of the Company other than to
an entity of which the Company owns at least 50% of the Voting
Power; or
(3) The election to the Board of Directors of the Company of
candidates who were not recommended for election by the Board of
Directors of the Company in office immediately prior to the
election, if such candidates constitute a majority of those
elected in that particular election.
Proposal 2 - GENERAL EMPLOYMENT ENTERPRISES, INC. 1999 STOCK
OPTION PLAN
The Board of Directors has established, effective upon receipt
of shareholder approval, the General Employment Enterprises, Inc.
1999 Stock Option Plan. The Stock Option Plan is intended to
promote stock ownership by selected officers and employees of the
Company and its subsidiaries to increase their proprietary
interest in the Company and to encourage them to remain in the
employ of the Company. In addition, the Plan is intended as an
additional incentive to members of the Board of Directors of the
Company who are not employees of the Company to serve on the
Board of Directors of the Company and to devote themselves to the
future success of the Company. Four non-employee directors and
approximately fifty employees are eligible to participate in the
Plan.
The Stock Option Plan is to be administered by the Stock
Option Committee (the "Committee") of the Board of Directors of
the Company. The Committee will be comprised of two or more
members of the Board who are "non-employee" directors within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934.
The Committee will have the authority, among other things, to
select the employees to whom options may be granted, to determine
the terms of each option, to interpret the provisions of the
Stock Option Plan and to make all other determinations that it
may deem necessary or advisable for the administration of the
Stock Option Plan. Each determination or other action made or
taken pursuant to the Stock Option Plan by the Committee,
including interpretation of the Stock Option Plan and the
specific terms and conditions of the options granted thereunder,
will be final and conclusive for all purposes and upon all
persons.
The Stock Option Plan provides for the grant of "incentive
stock options" within the meaning of Section 422 of the Internal
Revenue Code, and for options that do not constitute incentive
stock options (referred to herein as "nonstatutory options"), as
determined in each individual case by the Committee. The Plan
provides that the number of shares of Common Stock for which
options may be granted under the Plan shall be 250,000. Upon
receipt of shareholder approval to establish the Stock Option
Plan, the Board of Directors intends to reserve 250,000 shares of
Common Stock for issuance under the Stock Option Plan. In
general, any shares of Common Stock subject to issuance upon
exercise of options but which are not issued because of a
surrender, forfeiture, expiration, termination or cancellation of
any such option will once again be available for issuance
pursuant to subsequent options.
Grants of Options to Non-Employee Directors will be automatic
and non-discretionary. Initially each individual who is a Non-
Employee Director on the effective date of the Plan, will
automatically be granted a nonstatutory option to purchase 5,000
shares of Common Stock on the effective date of the Plan. Each
individual who becomes a Non-Employee Director after the
effective date of the Plan shall be granted automatically an
option to purchase 5,000 shares of Common Stock on the date he or
she becomes a Non-Employee Director. Options to be granted under
the Stock Option Plan during 1999 to employees of the Company are
not determinable at this time. Reference is made to the table
entitled "Option Grants in Last Fiscal Year" under the heading
"Compensation of Executive Officers" included in this proxy
statement, which sets forth the options granted to executive
officers of the Company under the 1997 Stock Option Plan during
1998. The Committee will, from time to time, select those
officers and other key employees of the Company or any of its
subsidiaries to participate in the Stock Option Plan on the basis
of the special importance of their services in the management,
development and operations of the Company or its subsidiaries.
Options granted under the Stock Option Plan will vest and become
exercisable over such time period as the Committee may determine
or upon a change of control as defined under the Stock Option
Plan. Options granted under the Stock Option Plan may be
exercisable for up to ten years.
The exercise price of nonstatutory options granted under the
Stock Option Plan will be determined by the Committee and
specified in each option grant, and may be less than the fair
market value of the Common Stock on the date the option is
granted. The exercise price of incentive stock options granted
under the Stock Option Plan must at least equal the fair market
value of the Common Stock on the date the option is granted. On
December 28, 1998, the closing price of the Common Stock on the
American Stock Exchange was $ 6.375 per share.
An incentive stock option granted under the Stock Option Plan
to an employee owning more than 10% of the Company (i) must have
an exercise price of at least 110% of the fair market value of
the shares issuable (determined as of the date the options
granted) and (ii) will expire no later than the fifth anniversary
of the date the incentive stock option was granted. An incentive
stock option is subject to the further restriction that the
aggregate fair market value (determined as of the date of grant)
of stock as to which any such incentive stock option first
becomes exercisable in any calendar year is limited to $100,000.
Options in excess of this limit would be nonstatutory options.
The full exercise price for all shares purchased on exercise of
options granted under the Stock Option Plan may be paid in cash,
in cash received from a broker-dealer to whom the optionee has
submitted an exercise notice, by delivering shares of Common
Stock having an aggregate fair market value on the date of
exercise equal to the option exercise price, by directing the
Company to withhold such number of shares of Common Stock
otherwise issuable upon exercise of such option having an
aggregate fair market value on the date of exercise equal to the
option exercise price, by such other medium of payment as the
Committee, in its discretion, shall authorize at the time of
grant, or by any combination of the above. Except in instances
of retirement, disability or death as provided in the Stock
Option Plan or in the Committee's sole discretion, any option
will terminate on the date of the optionee's termination of
employment with the Company and its subsidiaries.
Incentive stock options granted under the Stock Option Plan
have certain advantageous tax attributes under federal income tax
laws. No taxable income is recognized by the option holder for
federal income tax purposes at the time of the grant or exercise
of an incentive stock option. Any gain or loss recognized by an
option holder on the later disposition of shares acquired
pursuant to the exercise of an incentive stock option generally
will be treated as long-term capital gain or loss if such
disposition does not occur prior to one year after the date of
exercise of the option, or two years after the date the option
was granted. No federal income tax deduction is available to the
Company as a result of the grant or exercise of an incentive
stock option.
As in the case of incentive stock options, the grant of a
nonstatutory stock option will not result in taxable income to
the option holder for federal income tax purposes nor will the
Company be entitled to an income tax deduction. Upon exercise of
a nonstatutory stock option, however, the option holder will
generally recognize ordinary income for federal and state income
tax purposes equal to the difference between the exercise price
and the fair market value of the shares acquired on the date of
exercise, and the Company or the subsidiary of the Company which
is the employer of the option holder, will be entitled to federal
and state income tax deductions in the amount of the ordinary
income recognized by the option holder. In general, any further
gain or loss realized by the option holder on the subsequent
disposition of such shares will be long-term or short-term
capital gain or loss, depending on the length of time the shares
are held after the option is exercised.
The Board of Directors or the Committee has authority to
terminate, suspend or amend the Stock Option Plan, in whole or in
part, from time to time without the approval of the shareholders
of the Company to the extent allowed by law. The Stock Option
Plan provides for appropriate adjustment in the number and kind
of shares subject to the Stock Option Plan, and the number, kind
and per share exercise price of shares subject to unexercised
options, in the event of any change in the outstanding Common
Stock by reason of a stock split, stock dividend, combination or
reclassification of shares, recapitalization, merger or similar
event.
Upon a change in control (as defined in the Stock Option Plan)
of the Company, all outstanding options will become fully
exercisable and all restrictions thereon will terminate in order
that optionees may fully realize the benefits thereunder. Also,
the Committee, as constituted before such change in control, is
authorized, and has sole discretion, as to any option, either at
the time such option is granted or any time thereafter, to take
any one or more of the following actions: (i) provide for the
purchase of any such option, upon the option holder's request,
for an amount of cash equal to the difference between the
exercise price and the then fair market value of the Common Stock
covered thereby had such option been currently exercisable; (ii)
make such adjustment to any such option then outstanding as the
Committee deems appropriate to reflect such change in control;
and (iii) cause any such option then outstanding to be assumed,
by the acquiring or surviving corporation, after such change in
control. The right to exercise an option in the event of a
change in control may tend to discourage such a change in
control, even if the change in control would be beneficial to
shareholders.
The number of shares available for issuance under this Stock
Option Plan represents approximately 5.65% of the total currently
outstanding shares. The total number of shares available for
issuance under the Stock Option and all other stock related plans
of the Company represents approximately 17.43% of the total
currently outstanding shares. Because the shares utilized to
fund the option awards will come from authorized but unissued
shares, the exercise of options awarded under the Stock Option
Plan would have a dilutive effect on the percentage interest of
shareholders.
The Stock Option Plan is subject to approval by the holders of
a majority of the outstanding shares of Common Stock of the
Company within twelve months after the date of its adoption by
the Board of Directors. The Plan will be null and void if such
approval is not obtained.
Vote Required
The affirmative vote of the holders of a majority of the
outstanding Common Shares is required to approve this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
OPTION PLAN.
OTHER MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers, and persons who
beneficially own more than ten-percent of the Company's stock, to
file initial reports of ownership and reports of changes in
ownership with the Securities and Exchange Commission and the
American Stock Exchange. Executive officers, directors and
greater than ten-percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of these reports furnished
to the Company and written representations from the executive
officers and directors that no other reports were required during
the fiscal year ended September 1998, the Company believes that
all Section 16(a) filing requirements applicable to its executive
officers, directors and greater than ten-percent owners were
complied with, except that in fiscal 1998, Howard S. Wilcox, a
director of the Company, failed to report a transaction on Form 4
as required by Section 16(a). Such transaction was later
reported by Mr. Wilcox on a Form 5 for fiscal 1998.
Proposals of Shareholders
In order to be considered for inclusion in the Proxy Statement
for the 2000 Annual Meeting of Shareholders, shareholder
proposals must be received by the Company at its address
hereinabove, on or before September 24, 1999.
Independent Auditors
Ernst & Young LLP, independent auditors, have been auditors of
the Company since 1985 and have been selected by the Board of
Directors of the Company to serve as independent auditors for the
Company for the year ending September 30, 1999.
Representatives of Ernst & Young LLP are expected to be present
at the Annual Meeting of Shareholders to respond to appropriate
questions and to make a statement if they desire to do so.
Manner and Costs of Solicitation
The cost of preparing, assembling and mailing the proxy
materials and of reimbursing brokers, nominees and fiduciaries
for the out-of-pocket expenses of transmitting copies of the
proxy materials to the beneficial owners of shares held of record
by such persons will be borne by the Company. The Company does
not intend to solicit proxies otherwise than by the use of mail,
but certain officers and regular employees of the Company or its
subsidiary, without additional compensation, may use their
personal efforts by telephone or otherwise, to obtain proxies.
Availability of Form 10-KSB
The Company will furnish upon request and without charge to
each record or beneficial owner of its securities from whom it
solicits proxies, a copy of its current annual report on Form 10-
KSB including the financial statements and financial schedules
thereto, filed with the Securities and Exchange Commission.
Requests should be in writing and addressed to
Investor Relations Department
General Employment Enterprises, Inc.
Oakbrook Terrace Tower
One Tower Lane, Suite 2100
Oakbrook Terrace, Illinois 60181
Other Business
At the date of this Proxy Statement, the Board of Directors is
not informed of any matters, other than those stated above, that
may be brought before the meeting. However, if any other matters
shall properly come before the meeting, it is the intention of
the persons named in the enclosed form of proxy to vote such
proxy in accordance with their best judgment on such matters.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO
SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO ADDITIONAL POSTAGE, IF MAILED IN THE
UNITED STATES.
Directions to the location of this year's Annual Meeting can be
obtained by contacting the Company's Investor Relations
Department at the above address or by calling (630) 954-0495.
By Order of the Board of Directors
Nancy C. Frohnmaier
Secretary
Oakbrook Terrace, Illinois
APPENDIX
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
OF GENERAL EMPLOYMENT ENTERPRISES, INC.
One Tower Lane, Suite 2100, Oakbrook Terrace, IL 60181
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of GENERAL EMPLOYMENT ENTERPRISES,
INC. hereby appoints HERBERT F. IMHOFF and WALTER T. KERWIN, JR.,
and each of them, as the proxies (with full power of
substitution) to vote all shares which the undersigned would be
entitled to vote at the Annual Meeting of Shareholders to be held
on February 22, 1999 and any adjournment thereof. If a vote is
not specified, said proxies will vote FOR election of directors
and FOR proposal 2.
1. Election of Directors, Nominees:
S. Brottman, L. Chavin, D. G. Danehey, H. F. Imhoff, H. F. Imhoff, Jr.,
W. T. Kerwin, Jr.
For, except vote withheld
FOR ___ WITHHOLD ___ from the following nominee(s):________________
2. Approval of the Company's 1999 Stock Option Plan.
FOR ___ AGAINST ___ ABSTAIN ___
3. In their discretion, in the transaction of such other
business as may properly come before the meeting.
You are encouraged to specify your choices by marking the
appropriate boxes with an "X" but you need not mark any boxes if
you wish to vote in accordance with the Board of Directors'
recommendations.
Please sign and date on the reverse side, and mail this proxy in
the enclosed envelope as promptly as possible.
This proxy when properly executed will be voted as directed. If
no direction is made, this proxy will be voted FOR the election
of Directors and FOR proposal 2. This proxy confers on the proxy
holders the power of cumulative voting and the power to vote
cumulatively for less than all of the nominees as described in
the accompanying proxy statement.
The Board of Directors recommends a vote FOR Proposals 1 and 2.
The signer hereby revokes all proxies heretofore given by the
signer to vote at said meeting or any adjournments thereof.
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as
such.
__________________________________
__________________________________
SIGNATURE(S)
DATED: 1999
APPENDIX
GENERAL EMPLOYMENT ENTERPRISES, INC.
1999 STOCK OPTION PLAN
Section 1. Purpose.
The purpose of the General Employment Enterprises, Inc. 1999
Stock Option Plan (the "Plan") is to benefit General Employment
Enterprises, Inc. (the "Company") and its Subsidiaries (as
defined in Section 2) by recognizing the contributions made to
the Company by officers and other key employees (including
members of the Board of Directors of the Company ("the
Directors") who are also employees) of the Company and its
Subsidiaries, to provide such persons with additional incentive
to devote themselves to the future success of the Company, and to
improve the ability of the Company to attract, retain and
motivate individuals, by providing such persons with a favorable
opportunity to acquire or increase their proprietary interest in
the Company. In addition, the Plan is intended as an additional
incentive to members of the Board of Directors of the Company who
are not employees of the Company ("Non-Employee Directors") to
serve on the Board of Directors of the Company (the "Board") and
to devote themselves to the future success of the Company by
providing them with a favorable opportunity to acquire or
increase their proprietary interest in the Company through
receipt of options to acquire common stock of the Company.
The Company may grant stock options that constitute
"incentive stock options" ("ISOs") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or stock options which do not constitute ISO ("NSOs")
(ISOs and NSOs being hereinafter collectively referred to as
"Options").
Section 2. Eligibility.
Non-Employee Directors shall participate in the Plan only in
accordance with the provisions of Section 5.2 of the Plan. The
Committee (as defined in Section 3) shall initially, and from
time to time thereafter, select those officers and other key
employees (including Directors of the Company who are also
employees) (collectively referred to herein as "Key Employees")
of the Company or any other entity of which the Company is the
direct or indirect beneficial owner of not less than fifty
percent (50%) of all issued and outstanding equity interests
("Subsidiaries"), to participate in the Plan on the basis of the
special importance of their services in the management,
development and operations of the Company or its Subsidiaries
(each such Key Employee receiving Options granted under the Plan
is referred to herein as an "Optionee").
Section 3. Administration.
3.1. The Committee. The Plan shall be administered by the
Stock Option Committee (the "Committee") of the Board of
Directors of the Company (the "Board"). The Committee shall be
comprised of two (2) or more members of the Board who are "non-
employee directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934.
3.2. Authority of the Committee. No person, other than
members of the Committee, shall have any authority concerning
decisions regarding the Plan. Subject to the express provisions
of this Plan, the Committee shall have sole discretion concerning
all matters relating to the Plan and Options granted hereunder.
The Committee, in its sole discretion, shall determine the Key
Employees of the Company and its Subsidiaries to whom, and the
time or times at which Options will be granted, the number of
shares to be subject to each Option, the expiration date of each
Option, the time or times within which the Option may be
exercised, the cancellation of the Option (with the consent of
the holder thereof) and the other terms and conditions of the
grant of the Option. The terms and conditions of the Options
need not be the same with respect to each Optionee or with
respect to each Option.
The Committee may, subject to the provisions of the Plan,
establish such rules and regulations as it deems necessary or
advisable for the proper administration of the Plan, and may make
determinations and may take such other action in connection with
or in relation to the Plan as it deems necessary or advisable.
Each determination or other action made or taken pursuant to the
Plan, including interpretation of the Plan and the specific terms
and conditions of the Options granted hereunder by the Committee
shall be final and conclusive for all purposes and upon all
persons including, but without limitation, the Company, its
Subsidiaries, the Committee, the Board, officers and the affected
employees of the Company and/or its Subsidiaries and their
respective successors in interest.
No member of the Committee shall, in the absence of bad
faith, be liable for any act or omission with respect to service
on the Committee. Service on the Committee shall constitute
service as a Director of the Company so that members of the
Committee shall be entitled to indemnification pursuant to the
Company's Certificate of Incorporation and By-Laws.
Section 4. Shares of Common Stock Subject to Plan.
4.1. The total number of shares of common stock, no par
value, of the Company (the "Common Stock"), that may be issued
and sold under the Plan within the Applicable Period (as defined
below) shall be 250,000. For purposes of the preceding sentence,
Applicable Period shall be the ten-year period commencing on
February 22, 1999 and ending on February 22, 2009. The
aforementioned total number of shares of Common Stock shall be
adjusted in accordance with the provisions of Section 4.2 hereof.
Notwithstanding the foregoing, the total number of shares of
Common Stock that may be subject to ISOs under the Plan shall be
250,000 shares of Common Stock, adjusted in accordance with the
provisions of Section 4.2 hereof. Any shares of Common Stock
subject to issuance upon exercise of Options but which are not
issued because of a surrender (other than pursuant to Sections
7.2 or 7.3 of the Plan), forfeiture, expiration, termination or
cancellation of any such Option, to the extent consistent with
applicable law, rules and regulations, shall once again be
available for issuance pursuant to subsequent Options.
4.2. The number of shares of Common Stock subject to the
Plan and to Options granted under the plan shall be adjusted as
follows: (a) in the event that the number of outstanding shares
of Common Stock is changed by any stock dividend, stock split or
combination of shares, the number of shares subject to the Plan
and to Options previously granted thereunder shall be
proportionately adjusted; (b) in the event of any merger,
consolidation or reorganization of the Company with any other
corporation or corporations, there shall be substituted on an
equitable basis as determined by the Board, in its sole
discretion, for each share of Common Stock then subject to the
Plan and for each share of Common Stock then subject to an Option
granted under the Plan, the number and kind of shares of stock,
other securities, cash or other property to which the holders of
Common Stock of the Company are entitled pursuant to the
transaction; and (c) in the event of any other change in the
capitalization of the Company, the Committee, in its sole
discretion, shall provide for an equitable adjustment in the
number of shares of Common Stock then subject to the Plan and to
each share of Common Stock then subject to an Option granted
under the Plan. In the event of any such adjustment, the
exercise price per share shall be proportionately adjusted.
Section 5. Grants of Options.
5.1. Grants of Options to Key Employees. Subject to the
terms of the Plan, the Committee may from time to time grant
Options, which may be ISOs or NSOs, to Key Employees of the
Company or any of its Subsidiaries. Unless otherwise expressly
provided at the time of the grant, Options granted under the Plan
to Key Employees will be ISOs.
5.2. Grants of Options to Non-Employee Directors. All
grants of Options to Non-Employee Directors shall be automatic
and non-discretionary. Each individual who is a Non-Employee
Director on the effective date of the Plan shall be granted
automatically a NSO to purchase 5,000 shares of Common Stock on
the effective date of the Plan. Each individual who becomes a
Non-Employee Director (other than a Non-Employee Director who was
previously an employee Director) after the effective date of the
Plan shall be granted automatically a NSO to purchase 5,000
shares of Common stock on the date he or she becomes a Non-
Employee Director.
5.3. Option Agreement. Each Option shall be evidenced by a
written Option Agreement specifying the type of Option granted,
the Option exercise price, the terms for payment of the exercise
price, the expiration date of the Option, the number of shares of
Common Stock to be subject to each Option and such other terms
and conditions established by the Committee, in its sole
discretion, not inconsistent with the Plan.
5.4. Expiration. Except to the extent otherwise provided in
or pursuant to Section 6, each Option shall expire, and all
rights to purchase shares of Common Stock shall expire, on the
tenth anniversary of the date on which the Option was granted.
5.5. Exercise Period. Except to the extent otherwise
provided in or pursuant to Section 6, or in the proviso to this
sentence, Options shall become exercisable pursuant to the
following schedule: with respect to one-fifth of the total
number of shares of Common Stock subject to Option on the date
twelve months after the date of its grant and with respect to an
additional one-fifth of the total number of shares of Common
Stock subject to the Option at the end of each twelve-month
period thereafter during the succeeding four years; provided,
however, that the Committee, in its sole discretion, shall have
the authority to shorten or lengthen the exercise schedule with
respect to any or all Options, or any part thereof, granted under
the Plan.
5.6. Required Terms and Conditions of ISOs. Each ISO
granted to a Key Employee shall be in such form and subject to
such restrictions and other terms and conditions as the Committee
may determine, in its sole discretion, at the time of grant,
subject to the general provisions of the Plan, the applicable
Option Agreement, and the following specific rules:
(a) Except as provided in Section 5.6(d), the per
share exercise price of each ISO shall be the Fair Market
Value of the shares of Common Stock on the date such ISO is
granted.
(b) The aggregate Fair Market Value (determined with
respect to each ISO at the time such Option is granted) of
the shares of Common Stock with respect to which ISOs are
exercisable for the first time by an individual during any
calendar year (under all incentive stock option plans of the
Company and its parent and subsidiary corporations) shall
not exceed $100,000. If the aggregate Fair Market Value
(determined at the time of grant) of the Common Stock
subject to an Option that first becomes exercisable in any
calendar year exceeds the limitation of this Section 5.6(b),
so much of the Option that does not exceed the applicable
dollar limit shall be an ISO and the remainder shall be a
NSO; but in all other respects, the original Option
Agreement shall remain in full force and effect.
(c) As used in this Section 5, the words "parent" and
"subsidiary" shall have the meanings given to them in
Section 424(e) and 424(f) of the Code.
(d) Notwithstanding anything herein to the contrary,
if an ISO is granted to an individual who owns stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of
its parent or subsidiary corporations, within the meaning of
Section 422(b)(6) of the Code: (i) the purchase price of
each share of Common Stock subject to the ISO shall be not
less than one hundred ten percent (110%) of the Fair Market
Value of the Common Stock on the date the ISO is granted;
and (ii) the ISO shall expire and all rights to purchase
shares thereunder shall cease no later than the fifth
anniversary of the date the ISO was granted.
(e) No ISOs may be granted under the Plan after
February 22, 2009.
5.7. Required Terms and Conditions of NSOs. Each NSO
granted shall be in such form and subject to such restrictions
and other terms and conditions as the Committee may determine, in
its sole discretion, at the time of grant, subject to the general
provisions of the Plan, the applicable Option Agreement, and the
following specific rule: in no event may the exercise price be
less than the par value of the shares of Common Stock subject to
such NSO.
Section 6. Effect of Termination.
6.1. Key Employee Termination Generally. Except as provided
in Sections 6.2, 6.3 and 11, or by the Committee in its sole
discretion, any Option shall terminate on the date of the Key
Employee's termination of employment with the Company and its
Subsidiaries: (i) for Good Cause (as defined in the Option
Agreement); or (ii) voluntarily, for any other reason other than
retirement, death, or disability. A Key Employee's transfer of
employment from the Company to a Subsidiary, or from a Subsidiary
to the Company, or from a Subsidiary to another Subsidiary, shall
not constitute a termination of employment for purposes of the
Plan. Options granted under the Plan shall not be affected by
any change of duties in connection with the employment of the Key
Employee or by leave of absence authorized by the Company or a
Subsidiary.
6.2. Death and Disability. In the event of an Optionee's
death or Disability (as defined below) during employment or
service with the Company or any of its Subsidiaries, all Options
held by the Optionee shall become fully exercisable on such date
of death or Disability. Each of the Options held by such an
Optionee shall expire on the earlier of: (a) the first
anniversary of the date of the Optionee's death or Disability;
and (b) the date that such Option expires in accordance with its
terms. For purposes of this Section 6.2, "Disability" shall mean
the inability of an individual to engage in any substantial
gainful activity by reason of any medical determinable physical
or mental impairment which is expected to result in death or
which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months. The Committee, in
its sole discretion, shall determine the date of any Disability.
6.3. Retirement of Key Employees. In the event the
employment of a Key Employee with the Company and/or its
Subsidiaries shall be terminated by reason of Employee
Retirement, all Options held by the Key Employee shall become
fully exercisable. Each of the Options held by such a Key
Employee shall expire on the earlier of: (i) the first
anniversary of the date of the Employee Retirement; and (ii) the
date that such Option expires in accordance with its terms. For
purposes of this Section 6.3, "Employee Retirement" shall mean
retirement of a Key Employee after attaining age 55. In the
event the employment of a Key Employee with the Company and/or
its Subsidiaries shall be terminated by reason of a retirement
that is not an Employee Retirement as herein defined, the
Committee may, in its sole discretion, determine that the
exercisability and exercise periods set forth in this Section
6.3(a) shall be applicable to Options held by such Key Employee.
Notwithstanding the foregoing, in the event the employment of a
Key Employee who is also a Director of the Company is terminated
by reason of Employee Retirement, all Options held by the Key
Employee shall become fully exercisable, but each of the Options
held by such a Key Employee shall expire on the earlier of: (i)
the first anniversary of the date of the Key Employee's
termination of service on the Board for any reason; and (ii) the
date that such Option expires in accordance with its terms.
6.4. Retirement of Non-Employee Directors. In the event the
service of a Non-Employee Director on the Board shall be
terminated by reason of the retirement of such Non-Employee
Director of the Company in accordance with the Company's
retirement policy for Directors, any Option or Options granted to
such Non-Employee Director shall continue to vest and remain
exercisable pursuant to Section 5, in the same manner and to the
same extent as if such Director had continued his or her service
on the Board during such period.
Section 7. Exercise of Options.
7.1. Notice. A person entitled to exercise an Option may do
so by delivery of a written notice to that effect specifying the
number of shares of Common Stock with respect to which the Option
is being exercised and any other information the Committee may
prescribe. The notice shall be accompanied by payment as
described in Section 7.2. The notice of exercise shall be
accompanied by the Optionee's copy of the writing or writings
evidencing the grant of the Option. All notices or requests
provided for herein shall be delivered to the Secretary of the
Company.
7.2. Exercise Price. Except as otherwise provided in the
Plan or in any Option Agreement, the Optionee shall pay the
purchase price of the shares of Common Stock upon exercise of any
Option: (a) in cash; (b) in cash received from a broker-dealer to
whom the Optionee has submitted an exercise notice consisting of
a fully endorsed Option (however, in the case of an Optionee
subject to Section 16 of the 1934 Act, this payment option shall
only be available to the extent such insider complies with
Regulation T issued by the Federal Reserve Board); (c) by
delivering shares of Common Stock having an aggregate Fair Market
Value on the date of exercise equal to the Option exercise price;
(d) by directing the Company to withhold such number of shares of
Common Stock otherwise issuable upon exercise of such Option
having an aggregate Fair Market Value on the date of exercise
equal to the Option exercise price; (e) in the case of a Key
Employee, by such other medium of payment as the Committee, in
its discretion, shall authorize at the time of grant; or (f) by
any combination of (a), (b), (c), (d) and (e). In the case of an
election pursuant to (a) or (b) above, cash shall mean cash or a
check issued by a federally insured bank or savings and loan, and
made payable to the Company. In the case of payment pursuant to
(b), (c) or (d) above, the Optionee's election must be made on or
prior to the date of exercise and shall be irrevocable. In lieu
of a separate election governing each exercise of an Option, an
Optionee may file a blanket election with the Committee which
shall govern all future exercises of Options until revoked by the
Optionee. The Company shall issue, in the name of the Optionee,
stock certificates representing the total number of shares of
Common Stock issuable pursuant to the exercise of any Option as
soon as reasonably practicable after such exercise, provided that
any shares of Common Stock purchased by an Optionee through a
broker-dealer pursuant to clause (b) above shall be delivered to
such broker-dealer in accordance with 12 C.F.R. 220.3(e)(4) or
other applicable provision of law.
7.3. Taxes Generally. At the time of the exercise of any
Option, as a condition of the exercise of such Option, the
Company may require the Optionee to pay the Company an amount
equal to the amount of the tax the Company or any Subsidiary may
be required to withhold to obtain a deduction for federal and
state income tax purposes as a result of the exercise of such
Option by the Optionee or to comply with applicable law.
7.4. Payment of Taxes. At any time when an Optionee is
required to pay an amount required to be withheld under
applicable income tax or other laws in connection with the
exercise of an Option, the Optionee may satisfy this obligation
in whole or in part by: (a) directing the Company to withhold
such number of shares of Common Stock otherwise issuable upon
exercise of such Option having an aggregate Fair Market Value on
the date of exercise equal to the amount of tax required to be
withheld; or (b) delivering shares of Common Stock of the Company
having an aggregate Fair Market Value equal to the amount
required to be withheld. In the case of payment of taxes
pursuant to (a) or (b) above, the Optionee's election must be
made on or prior to the date of exercise and shall be
irrevocable. The Committee may disapprove any election or
delivery or may suspend or terminate the right to make elections
or deliveries. In lieu of a separate election governing each
exercise of an Option, an Optionee may file a blanket election
with the Committee which shall govern all future exercises of
Options until revoked by the Optionee.
Section 8. Transferability of Options.
No Option granted pursuant to the Plan shall be transferable
otherwise than by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined by
the Code. Notwithstanding the preceding sentence, an Optionee,
at any time prior to his death, may assign all or any portion of
an Option granted to him (other than an ISO) to (i) his spouse or
lineal descendant, (ii) the trustee of a trust for the primary
benefit of his spouse or lineal descendant, (iii) a partnership
of which his spouse and lineal descendants are the only partners,
or (iv) a tax exempt organization as described in Code Section
501 (c)(3). In such event, the spouse, lineal descendant,
trustee, partnership or tax exempt organization will be entitled
to all of the rights of the Optionee with respect to the assigned
portion of such Option, and such portion of the Option will
continue to be subject to all of the terms, conditions and
restrictions applicable to the Option, as set forth herein and in
the related Option Agreement immediately prior to the effective
date of the assignment. Any such assignment will be permitted
only if: (i) the Optionee does not receive any consideration
therefore; and (ii) the assignment is expressly permitted by the
applicable Agreement as approved by the Committee. Any such
assignment shall be evidenced by an appropriate written document
executed by the Optionee, and a copy thereof shall be delivered
to the Company on or prior to the effective date of the
assignment.
Section 9. Rights as Shareholder.
An Optionee or a transferee of an Optionee pursuant to
Section 8 shall have no rights as a shareholder with respect to
any Common Stock covered by an Option or receivable upon the
exercise of an Option until the Optionee or transferee shall have
become the holder of record of such Common Stock, and no
adjustments shall be made for dividends in cash or other property
or other distributions or rights in respect to such Common Stock
for which the record date is prior to the date on which the
Optionee shall have in fact become the holder of record of the
shares of Common Stock acquired pursuant to the Option.
Section 10. Change in Control.
10.1. Effect of Change in Control. Notwithstanding any
of the provisions of the Plan or any Option Agreement evidencing
Options granted hereunder, upon a Change in Control of the
Company (as defined in Section 10.2) all outstanding Options
shall become fully exercisable and all restrictions thereon shall
terminate in order that Optionees may fully realize the benefits
thereunder. Further, in addition to the Committee's authority
set forth in Section 3, the Committee, as constituted before such
Change in Control, is authorized, and has sole discretion, as to
any Option, either at the time such Option is granted hereunder
or any time thereafter, to take any one or more of the following
actions: (a) provide for the purchase of any such Option, upon
the Optionee's request, for an amount of cash equal to the
difference between the exercise price and the then Fair Market
Value of the Common Stock covered thereby had such Option been
currently exercisable; (b) make such adjustment to any such
Option then outstanding as the Committee deems appropriate to
reflect such Change in Control; and (c) cause any such Option
then outstanding to be assumed, by the acquiring or surviving
corporation, after such Change in Control.
10.2. Definition of Change in Control. A "Change in
Control of the Company" is deemed to occur upon:
(a) The receipt by the Company of a Schedule 13D
or other statement filed under Section 13(d) of the 1934
Act, indicating that any entity, person, or group has
acquired beneficial ownership, as that term is defined in
Rule 13d-3 under the 1934 Act, of more than 30% of the
outstanding capital stock of the Company entitled to vote
for the election of directors ("voting stock");
(b) The commencement by an entity, person, or group
(other than the Company or a Subsidiary) of a tender offer
or an exchange offer for more than 20% of the outstanding
voting stock of the Company;
(c) The effective time of: (i) a merger or
consolidation of the Company with one or more other
corporations as a result of which the holders of the
outstanding voting stock of the Company immediately prior to
such merger or consolidation hold less than 80% of the
voting stock of the surviving or resulting corporation; or
(ii) a transfer of substantially all of the property of the
Company other than to an entity of which the Company owns at
least 80% of the voting stock; or
(d) The election to the Board, without the
recommendation or approval of the incumbent Board, of the
lesser of: (i) three directors or (ii) directors
constituting a majority of the number of directors of the
Company then in office.
Section 11. Postponement of Exercise.
The Committee may postpone any exercise of an Option for
such time as the Committee in its sole discretion may deem
necessary in order to permit the Company: (a) to effect, amend or
maintain any necessary registration of the Plan or the shares of
Common Stock issuable upon the exercise of an Option under the
Securities Act of 1933, as amended, or the securities laws of any
applicable jurisdiction; (b) to permit any action to be taken in
order to (i) list such shares of Common Stock on a stock exchange
if shares of Common Stock are then listed on such exchange or
(ii) comply with restrictions or regulations incident to the
maintenance of a public market for its shares of Common Stock,
including any rules or regulations of any stock exchange on which
the shares of Common Stock are listed; or (c) to determine that
such shares of Common Stock and the Plan are exempt from such
registration or that no action of the kind referred to in (b)(ii)
above needs to be taken; and the Company shall not be obligated
by virtue of any terms and conditions of any Option or any
provision of the Plan to recognize the exercise of an Option or
to sell or issue shares of Common Stock in violation of the
Securities Act of 1933 or the law of any government having
jurisdiction thereof. Any such postponement shall not extend the
term of an Option and neither the Company nor its directors or
officers shall have any obligation or liability to an Optionee,
to the Optionee's successor or to any other person with respect
to any shares of Common Stock as to which the Option shall lapse
because of such postponement.
Section 12. Termination or Amendment of Plan.
The Board or the Committee may terminate, suspend, or amend
the Plan, in whole or in part, from time to time, without the
approval of the shareholders of the Company to the extent allowed
by law.
The Committee may correct any defect or supply an omission
or reconcile any inconsistency in the Plan or in any Option
granted hereunder in the manner and to the extent it shall deem
desirable, in its sole discretion, to effectuate the Plan.
No amendment or termination of the Plan shall in any manner
affect any Option theretofore granted without the consent of the
Optionee, except that the Committee may amend the Plan in a
manner that does affect Options theretofore granted upon a
finding by the Committee that such amendment is in the best
interest of holders of outstanding Options affected thereby.
Section 13. Effective Date.
The Plan has been adopted and authorized by the Board of
Directors for submission to the shareholders of the Company. If
the Plan is approved by the affirmative vote of a majority of the
shares of the voting stock entitled to be voted by the holders of
stock represented at a duly held shareholders' meeting, it shall
be deemed to have become effective as of such date, February 22,
1999.
