JACO ELECTRONICS, INC.
145 Oser Avenue
Hauppauge, New York 11788
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on December 12, 2000
--------------------------
To the Shareholders of JACO ELECTRONICS, INC.
Please be advised that the annual meeting of shareholders (the "Annual
Meeting") of Jaco Electronics, Inc., a New York corporation (the "Company"),
will be held on December 12, 2000, at 9:30 a.m., local time, at the Melville
Marriot, 1350 Old Walt Whitman Road, Melville, New York 11747.
The Annual Meeting will be held for the following purposes:
1. To elect six Directors of the Company to hold office until the next annual
meeting of shareholders or until their successors are duly elected and
qualified;
2. To amend the Company's certificate of incorporation (the "Certificate of
Incorporation") to increase the number of shares of common stock, $0.10 par
value per share (the "Common Stock"), of the Company authorized for
issuance from 10 million to 20 million;
3. To approve the Company's 2000 Stock Option Plan under which the Company's
Board of Directors may grant incentive stock options and nonqualified stock
options to purchase up to 600,000 shares of Common Stock to employees,
officers, directors, consultants and advisers; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on November 13, 2000
as the record date for the determination of the shareholders entitled to notice
of and to vote at the Annual Meeting or any adjournment or adjournments thereof.
Only shareholders of record at the close of business on the record date are
entitled to notice of and to vote at the Annual Meeting.
YOUR VOTE IS IMPORTANT! PLEASE PROMPTLY MARK, DATE, SIGN, AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE. IF YOU ARE ABLE TO ATTEND THE MEETING AND WISH
TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE YOUR PROXY IS
VOTED.
By Order of the Board of Directors,
Joel H. Girsky,
Date: November 17, 2000 Chairman
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<PAGE>
JACO ELECTRONICS, INC.
145 Oser Avenue
Hauppauge, New York 11788
---------------
PROXY STATEMENT
---------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Jaco Electronics, Inc. (the "Company"), a New York
corporation, of proxies to be voted at the annual meeting of shareholders (the
"Annual Meeting") to be held on December 12, 2000, at 9:30 a.m., local time, at
the Melville Marriot, 1350 Old Walt Whitman Road, Melville, New York, 11747, and
any and all adjournments thereof.
The solicitation will be by mail, and the cost of such solicitation,
including the reimbursement of brokerage firms and others for their expenses in
forwarding proxies and proxy statements to the beneficial owners of the
Company's common stock, $0.10 par value per share (the "Common Stock"), will be
borne by the Company.
The shares of Common Stock represented by each duly executed proxy received
by the Board of Directors before the Annual Meeting will be voted at the Annual
Meeting as specified in the proxy. A shareholder may withhold authority to vote
for all of the nominees by marking the appropriate box on the accompanying proxy
card or may withhold authority to vote for an individual nominee by striking a
line through such nominee's name in the appropriate space on the accompanying
proxy card. UNLESS INSTRUCTIONS TO THE CONTRARY ARE GIVEN, EACH PROPERLY
EXECUTED PROXY WILL BE VOTED (i) FOR THE ELECTION OF DIRECTORS NAMED IN THIS
PROXY, (ii) FOR THE AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION
INCREASING THE NUMBER OF SHARES OF COMMON STOCK AUTHORIZED FOR ISSUANCE FROM 10
MILLION TO 20 MILLION, AND (iii) FOR APPROVAL OF THE COMPANY'S 2000 STOCK OPTION
PLAN. Shareholders who execute proxies nevertheless retain the right to revoke
them at any time before they are voted by submitting new proxies bearing a later
date, by submitting written revocations to the named proxies, or by attending
the Annual Meeting and voting thereat.
The principal executive offices of the Company are located at 145 Oser
Avenue, Hauppauge, New York 11788. The telephone number of the Company is (631)
273-5500. This Proxy Statement, the accompanying form of proxy, and the 2000
Annual Report to Shareholders, are first being sent to shareholders on or about
November 20, 2000 (the "Mailing Date").
VOTING SECURITIES AND RECORD DATE
The Board of Directors has designated November 13, 2000, as the record date
(the "Record Date") for determining the shareholders entitled to notice of the
Annual Meeting and to vote thereat. On the Record Date, the total number of
shares of Common Stock of the Company, outstanding and entitled to vote was
5,669,959 (excluding 618,300 shares of treasury stock). The holders of all
outstanding shares of Common Stock are entitled to one vote for each share of
Common Stock registered
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in their names on the books of the Company at the close of business on the
Record Date. The presence in person or by proxy of a majority of the outstanding
shares of the Common Stock entitled to vote at the Annual Meeting will be
necessary to constitute a quorum. If a quorum is present, a plurality vote of
the shares of Common Stock present, in person or by proxy, at the Annual Meeting
and entitled to vote is required for the election of any director in Proposal 1.
A majority vote of the issued and outstanding shares of Common Stock of the
Company entitled to vote at the Annual Meeting is required for approval of the
amendment to the Certificate of Incorporation in Proposal 2. A majority vote of
the votes cast by shares of Common Stock of the Company entitled to vote at the
Annual Meeting is required for approval of the Company's 2000 Stock Option Plan
in Proposal 3.
In case a quorum shall not be present at the Annual Meeting, a majority in
interest of the shareholders entitled to vote at the Annual Meeting present in
person or by proxy, shall have the power to adjourn such Annual Meeting from
time to time, without notice other than announcement at the Annual Meeting until
the requisite amount of shares of Common Stock entitled to vote shall be
present. Abstentions are considered shares of Common Stock present and entitled
to vote, and therefore have the same legal effect as a vote AGAINST a matter
presented at the Annual Meeting. Any shares of Common Stock held in street name
for which the broker or nominee receives no instructions from the beneficial
owner, and as to which such broker or nominee does not have discretionary
authority, will be considered as shares of Common Stock not entitled to vote and
will therefore not be considered in the tabulation of votes. Proxy ballots are
received and tabulated by the Company's transfer agent, American Stock Transfer
and Trust Company, and certified by the inspector of election.
PRINCIPAL SHAREHOLDERS; SHARES HELD BY MANAGEMENT
The following table sets forth the number and percentage of shares of
Common Stock owned as of November 13, 2000 by (i) each director of the Company
and each nominee for director, (ii) all persons who, to the knowledge of the
Company, are the beneficial owners of more than 5% of the outstanding shares of
Common Stock, (iii) each of the executive officers, and (iv) all of the
Company's directors and executive officers, as a group. Each person named in
this table has sole investment power and sole voting power with respect to the
shares of Common Stock set forth opposite such person's name, except as
otherwise indicated.
<PAGE>
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<TABLE>
Aggregate Number of
Name and Address of Shares Beneficially Percentage of Shares
Beneficial Owner(1) Owned Beneficially Owned(2)
<S> <C> <C> <C>
*Joel H. Girsky 1,078,640 (3) 17.8%
*Joseph F. Oliveri - -
*Charles B. Girsky 503,315 (4) 8.7
*Stephen A. Cohen 29,683 (5) **
*Edward M. Frankel 31,298 (6) **
*Joseph F. Hickey, Jr. 32,149 (7) **
Jeffrey D. Gash 47,298 (8) **
Gary Giordano 22,500 (9) **
Dimensional Fund Advisors 456,172 (10) 8.1
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
All directors and executive officers as 1,744,883 (11) 27.8
a group (8 persons)
</TABLE>
---------------------------------
* Nominee for election to the Board of Directors.
** Less than one percent.
(1) Unless otherwise indicated, the address of each person listed is 145 Oser
Avenue, Hauppauge, New York, 11788.
(2) Assumes a base of 5,669,959 shares of Common Stock outstanding, before any
consideration is given to outstanding options.
(3) Includes 383,098 shares of Common Stock acquirable pursuant to options
exercisable within 60 days granted under the Company's 1993 Non-Qualified
Stock Option Plan and 37,500 shares of Common Stock awarded under the
Company's Restricted Stock Plan.
(4) Includes (i) 352,815 shares of Common Stock owned by the Girsky Family
Trust, (ii) 90,000 shares of Common Stock acquirable pursuant to options
exercisable within 60 days granted under the Company's 1993 Non-Qualified
Stock Option Plan and (iii) 37,500 shares of Common Stock awarded under the
Company's Restricted Stock Plan.
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(5) Includes 11,250 shares of Common Stock acquirable pursuant to non-qualified
stock options exercisable within 60 days granted to Mr. Cohen by the
Company and 11,250 shares of Common Stock acquirable pursuant to the
exercise of options granted under the Company's 1993 Non- Qualified Stock
Option Plan.
(6) Includes (i) 8,798 shares of Common Stock acquirable pursuant to options
exercisable within 60 days granted under the Company's Outside Directors'
Plan, (ii) 11,250 shares of Common Stock acquirable pursuant to
non-qualified stock options exercisable within 60 days granted to Mr.
Frankel by the Company and (iii) 11,250 shares of Common Stock acquirable
pursuant to options exercisable within 60 days granted under the Company's
1993 Non-Qualified Stock Option Plan.
(7) Includes (i) 4,399 shares of Common Stock acquirable pursuant to options
exercisable within 60 days granted under the Company's Outside Directors'
Plan, (ii) 15,000 shares of Common Stock acquirable pursuant to
non-qualified stock options exercisable within 60 days granted to Mr.
Hickey by the Company and (iii) 11,250 shares of Common Stock acquirable
pursuant to options exercisable within 60 days granted under the Company's
1993 Non- Qualified Stock Option Plan.
(8) Includes 30,000 shares of Common Stock acquirable pursuant to options
exercisable within 60 days granted under the Company's 1993 Non-Qualified
Stock Option Plan and 15,000 shares of Common Stock awarded under the
Company's Restricted Stock Plan.
(9) Includes 15,000 shares of Common Stock acquirable pursuant to options
exercisable within 60 days granted under the Company's 1993 Non-Qualified
Stock Option Plan and 7,500 shares of Common Stock awarded under the
Company's Restricted Stock Plan.
(10) These securities are held in investment advisory accounts of Dimensional
Fund Advisors, Inc. This information is based upon a Schedule 13G dated
February 4, 2000, and information made available to the Company.
(11) Includes 602,545 shares of Common Stock acquirable pursuant to options
exercisable within 60 days and 97,500 shares of Common Stock awarded under
the Company's Restricted Stock Plan.
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PROPOSAL 1
ELECTION OF DIRECTORS
Six directors are to be elected to serve until the next annual meeting of
shareholders or until their successors are elected and qualified. Directors
shall be elected by shareholders holding a plurality of the shares of Common
Stock present at the Annual Meeting. It is the intention of the persons named in
the form of proxy, unless authority is withheld, to vote the proxies given them
for the election of all nominees hereinafter named, all of whom are presently
directors of the Company. In the event, however, that any one of them is unable
or declines to serve as a director, the appointees named in the form of proxy
reserve the right to substitute another person of their choice as nominee, in
his place and stead, or to vote for such lesser number of directors as may be
presented by the Board of Directors in accordance with the Company's By-Laws.
The nominees for the Board of Directors of the Company are as
follows:
Stephen A. Cohen
Edward M. Frankel
Charles B. Girsky
Joel H. Girsky
Joseph F. Hickey, Jr.
Joseph F. Oliveri
Information about the foregoing nominees is set forth under
"Management" below.
Unless marked to the contrary, the shares of Common Stock
represented by the enclosed Proxy will be voted FOR the election of the nominees
named above as directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE TO THE BOARD OF DIRECTORS.
The Board of Directors held seven meetings during the fiscal
year ended June 30, 2000 ("Fiscal 2000") and one action by unanimous consent.
Each director (during the period in which each such director served) attended at
least seventy-five (75%) percent of the aggregate of (i) the total number of
meetings of the Board of Directors and (ii) the total number of meetings held by
all committees of the Board of Directors on which the director served.
Board Committees
The Board of Directors has a standing Audit Committee and a standing
Compensation Committee. The entire Board of Directors administered the Company's
1993 Non-Qualified Stock Option Plan and Restricted Stock Plan during Fiscal
2000. The Audit Committee reviews the work and reports of the Company's
independent accountants. During Fiscal 2000, the Audit Committee was
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comprised of Stephen A. Cohen, Edward M. Frankel and Joseph F. Hickey. The Audit
Committee met once during Fiscal 2000. The Compensation Committee makes
recommendations to the Board of Directors concerning compensation arrangements
for directors, executive officers, and senior management of the Company. The
Compensation Committee did not meet during Fiscal 2000. The Compensation
Committee is comprised of Mr. Frankel and Mr. Hickey.
MANAGEMENT
Executive Officers and Directors
The current directors and executive officers of the Company,
their ages, their positions and terms of office with the Company are set forth
below.
<TABLE>
Name Age Position
<S> <C>
*Joel H. Girsky ......................... 61 Chairman of the Board, President and
Treasurer
*Joseph F. Oliveri....................... 51 Vice Chairman of the Board and Executive
Vice President
*Charles B. Girsky....................... 66 Executive Vice President and Director
Jeffrey D. Gash........................ 48 Executive Vice President, Vice President,
Finance and Secretary
Gary Giordano.......................... 43 Executive Vice President
*Stephen A. Cohen........................ 63 Director
*Edward M. Frankel....................... 62 Director
*Joseph F. Hickey, Jr.................... 42 Director
---------------
</TABLE>
* Nominee for election to the Board of Directors.
Joel H. Girsky has been a Director and executive officer of the Company
since it was founded in 1961. He also is a director of Nastech Pharmaceutical
Company, Inc. of Hauppauge, New York, and Frequency Electronics, Inc. of
Uniondale, New York. Messrs. Joel H. Girsky and Charles B. Girsky are brothers.
Joseph F. Oliveri became Vice Chairman of the Board of Directors and an
Executive Vice President in June 2000. From March 1983 to June 2000 he was
President and Chief Executive Officer of Interface Electronics Corp.
("Interface"). The Company acquired Interface in June 2000. Mr. Oliveri
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is also a director of EMC Corporation, a designer and manufacturer of hardware
and software products and a provider of services for the storage, management,
protection and sharing of electronic information.
Charles B. Girsky was a founder, Director, and President of the Company
from 1961 through January 1983. He became an executive officer again in August
1985 and has been an Executive Vice President since January 1988. He has been a
Director since 1986. Messrs. Charles B. Girsky and Joel H. Girsky are brothers.
Jeffrey D. Gash became an Executive Vice President in October 2000. He
became Vice President of Finance in January 1989, and was Controller of the
Company for more than five years prior thereto. In September 1999, he became
Secretary of the Company. He has also served in similar capacities with the
Company's subsidiaries.
Gary Giordano became Executive Vice President in June 2000. From February
1992 to June 2000 he was a Vice President of Sales and Marketing.
Stephen A. Cohen has been a Director since 1970. Since August 1989, he has
practiced law as a member of Morrison Cohen Singer & Weinstein, LLP, the
Company's general counsel.
Edward M. Frankel became a Director in May 1984. Since December 1999, he
has been Chairman of the Board of Vitaquest International, Inc., a distributor
of vitamins and health and beauty products. For more than five years prior
thereto, he served as President of Vitaquest and its predecessor entities.
Joseph F. Hickey, Jr. became a Director in May 1997. Since February 1991,
he has been employed by Tucker Anthony Capital Markets, a national investment
banking firm. He is a managing director in Tucker Anthony's investment banking
department.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table sets forth the information for Fiscal
2000, the fiscal year ended June 30, 1999 ("Fiscal 1999") and the fiscal year
ended June 30, 1998 ("Fiscal 1998") as to the compensation paid by the Company
to its Chief Executive Officer for services rendered and its four other most
highly compensated executive officers, whose total salary and bonus exceeded
$100,000 during such years.
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<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
---------------------- -----------------------
Awards Payouts
------ --------
Other Restricted
Name and Annual Stock Options/ LTIP All Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) Awards($)(2)(3) SARs(#)(3) Payouts($) Compensation($)(4)
---------------------- ------ -------- ------- ------------------ -------------- --------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Joel H. Girsky 2000 325,000 648,100 - - 60,000 - 66,709
Chairman of the Board 1999 325,000 - - - 300,000 - 58,556
President, and Treasurer 1998 325,000 81,100 - - - - 57,949
Joseph F. Oliveri (5) 2000 20,770 15,700 - - 30,000 - -
Vice Chairman and
Executive Vice President
Charles B. Girsky 2000 225,000 324,000 - - 15,000 - 6,831
Executive Vice President 1999 225,000 - - - 37,500 - 3,144
1998 225,000 41,000 - - - - 3,145
Jeffrey D. Gash 2000 136,000 60,800 - - 15,000 - 4,953
Executive Vice President, 1999 125,000 25,800 - - 15,000 - 2,217
Vice President, Finance 1998 125,000 28,100 - - - - 1,895
and Secretary
Gary Giordano(6) 2000 158,000 40,000 - - 15,000 - 1,971
Executive Vice President
</TABLE>
(1) The costs of certain benefits are not included because they did not exceed,
in the case of each named executive officer, the lesser of $50,000 or ten
percent of the total annual salary and bonus reported in the above table.
(2) On June 9, 1997, the Board of Directors awarded an aggregate of 97,500
shares of Common Stock under the Company's Restricted Stock Plan to its
executive officers as follows: 37,500 shares of Common Stock to Mr. Joel
Girsky, 37,500 shares of Common Stock to Mr. Charles Girsky, 15,000 shares
of Common Stock to Mr. Jeffrey Gash and 7,500 shares of Common Stock to Mr.
Gary Giordano. These grants were subject to the approval of the Company's
shareholders, which approval was received on December 9, 1997. The awards
vest in one-quarter increments annually. Accordingly, as of June 30, 2000,
the following portions of the aforementioned awards were vested: 28,125
shares of Common Stock awarded to each of Mr. Joel Girsky and Mr. Charles
Girsky, 11,250 shares of Common Stock awarded to Mr. Jeffrey Gash and 5,625
shares of Common Stock awarded to Mr. Gary Giordano. The value of the
aggregate restricted stock holdings of these individuals at June 30, 2000
was as follows: $525,000 for Mr. Joel Girsky, $525,000 for Mr. Charles
Girsky, $210,000 for Mr. Jeffrey Gash and $105,000 for Mr. Gary Giordano.
These figures are based upon the fair market value per share of the
Company's Common Stock at June 30, 2000, minus the purchase price of such
awards. The closing sale price for the Company's Common Stock as of June
30, 2000 on the Nasdaq National Market was $14.67.
(3) Adjusted to give effect to a 3-for-2 stock split which was effective on
July 24, 2000.
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(4) Includes 401(k) matching contributions, premiums paid on group term life
insurance and, in the case of Mr. Joel Girsky, the taxable portion of split
dollar life insurance policies and deferred compensation accrued in
connection with his employment agreement with the Company. 401(k) matching
contributions for Fiscal 2000 for the Named Executives were as follows: Mr.
Joel Girsky -- $1,125, Mr. Oliveri -- $0, Mr. Charles Girsky -- $3,786, Mr.
Gash -- $4,431 and Mr. Giordano -- $1,665. Premiums paid on group term life
insurance for Fiscal 2000 for the Named Executives were as follows: Mr.
Joel Girsky -- $8,584, Mr. Oliveri -- $0, Mr. Charles Girsky -- $3,045, Mr.
Gash -- $522 and Mr. Giordano -- $306. The taxable portion of split dollar
life insurance policies for Mr. Joel Girsky was $7,000 for Fiscal 2000.
$50,000 deferred compensation was accrued in Fiscal 2000 in connection with
Mr. Joel Girsky's employment agreement with the Company.
(5) Mr. Oliveri became an Executive Vice President of the Company on June 6,
2000.
(6) Mr. Giordano became an Executive Vice President of the Company on June 22,
2000.
Employment Agreements
The Company entered into a four-year employment agreement with Joel
Girsky, effective as of July 1, 1997, to serve as the Company's Chairman and
President. The employment agreement, as amended, will automatically renew for
additional one-year periods on each anniversary date, unless notice is given 90
days prior to an anniversary date. In the event that a notice of non-renewal is
delivered by either party, Mr. Girsky's employment agreement shall continue for
a period of three years following the anniversary date which follows immediately
after the date that such notice is delivered. Mr. Joel Girsky received a base
salary of $325,000 for Fiscal 2000 and shall receive a base salary of $325,000
for each fiscal year ending June 30, thereafter. In addition, he is entitled to
receive a cash bonus equal to four percent of the Company's earnings before
income taxes for each fiscal year in which such earnings are between $1.0
million and $2.5 million, or six percent of the Company's earnings before income
taxes for such fiscal year if such earnings are in excess of $2.5 million up to
a maximum annual cash bonus of $720,000. If the Company's earnings before income
taxes are in excess of $12.0 million for any such fiscal year, Mr. Girsky may
also receive stock options. Mr. Girsky or his estate, as the case may be, is
entitled to receive a payment of $1.5 million if he dies or becomes permanently
disabled during the term of the employment agreement. The death benefit is
currently being funded by a life insurance policy maintained by the Company. Mr.
Girsky shall also receive deferred compensation which accrues at the rate of
$50,000 per year, and becomes payable in a lump sum at the later of (i) Mr.
Girsky's attainment of age 60 (which event occurred in Fiscal 1999), or (ii) his
cessation of employment, with or without cause, at any time. In the event of a
change in control, Mr. Girsky will receive 299% of the average of his base
salary plus cash bonus for the previous five years, to the extent that such
payment does not equal or exceed three times Mr. Girsky's base amount, as
computed in accordance with Section 280G(d)(4) of the Internal Revenue Code of
1986.
The Company entered into a three-year employment agreement with Joseph
F. Oliveri, effective as of June 6, 2000. The employment agreement will
automatically renew for additional one-year periods unless notice is given 90
days prior to an anniversary date. Mr. Oliveri receives a base salary at an
annual
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rate of $300,000. In addition, he is entitled to receive a cash bonus equal to
two percent of Interface's gross profit from certain customers for each twelve
month period beginning June 1, 2000, June 2, 2001 and June 1, 2002. In the event
of a change in control, Mr. Oliveri will receive 300% of his base salary plus
cash bonus earned during the twelve months prior to the change of control, if
the change of control occurs before May 30, 2001. If the change of control
occurs on or after June 1, 2001 and on or prior to May 30, 2002, Mr. Oliveri
will receive 200% of his base salary plus cash bonus earned during the twelve
months prior to the change of control. Finally, if the change of control occurs
on or after June 1, 2002 and on or prior to May 30, 2003, Mr. Oliveri will
receive 100% of his base salary plus cash bonus earned during the twelve months
prior to the change of control.
The Company entered into a four-year employment agreement with Charles
Girsky, effective as of July 1, 1998, to serve as the Company's Executive Vice
President. The employment agreement will automatically renew for additional
one-year periods on each anniversary date, unless notice is given 90 days prior
to an anniversary date. In the event that a notice of non-renewal is delivered
by either party, Mr. Girsky's employment agreement shall continue for a period
of three years following the anniversary date which follows immediately after
the date that such notice is delivered. Mr. Girsky received a base salary of
$225,000 for Fiscal 2000, and shall receive a base salary of $225,000 for each
fiscal year ending June 30, thereafter. In addition, he is entitled to receive a
cash bonus equal to two percent of the Company's earnings before income taxes
for each fiscal year in which such earnings are between $1.0 million and $2.5
million or three percent of the Company's earnings before income taxes for such
fiscal year if such earnings are in excess of $2.5 million up to a maximum
annual cash bonus of $360,000. If the Company's earnings before income taxes are
in excess of $12.0 million for any such fiscal year, Mr. Girsky may receive
stock options. Mr. Girsky or his estate, as the case may be, is entitled to
receive a payment of $1.0 million if he dies during the term of the employment
agreement. The death benefit is currently being funded by a life insurance
policy maintained by the Company. In the event of a change in control, Mr.
Girsky will receive 250% of the average of his base salary plus cash bonus for
the previous five years, to the extent that such payment does not equal or
exceed three times Mr. Girsky's base amount, as computed in accordance with
Section 280G(d)(4) of the Internal Revenue Code of 1986. Additionally, upon a
change of control, Mr. Girsky's employment agreement may be assigned by the
Company or any such successor or surviving corporation upon sixty days prior
written notice to Mr. Girsky.
The Company entered into a four-year employment agreement with Jeffrey
Gash, effective as of July 1, 1998, to serve as the Company's Vice President of
Finance. The employment agreement will automatically renew for additional
one-year periods on each anniversary date, unless notice is given 90 days prior
to an anniversary date. In the event that a notice of non-renewal is delivered
by either party, Mr. Gash's employment agreement shall continue for a period of
three years following the anniversary date which follows immediately after the
date that such notice is delivered. Pursuant to the agreement, Mr. Gash received
a base salary of $125,000 for Fiscal 2000, and shall receive a base salary of
$125,000 for each fiscal year ending June 30, thereafter. In addition, he is
entitled to receive a cash bonus as determined by the Board of Directors and the
President. Mr. Gash or his estate, as the case may be, is entitled to receive a
payment of $750,000 if he dies during the term of the employment agreement. The
death benefit is currently being funded by a life insurance policy maintained by
the Company. In the event of Mr. Gash's cessation of employment with the
Company, upon his request, the Company is obligated to transfer such policy to
Mr. Gash. Thereafter, the Company would have no further liability for the
payment of such benefit or the premiums on such policy. In the event of a change
in control, Mr.
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Gash will receive 200% of the average of his base salary plus cash bonus for the
previous five years, to the extent that such payment does not equal or exceed
three times Mr Gash's base amount, as computed in accordance with Section
280G(d)(4) of the Internal Revenue Code of 1986. Additionally, upon a change of
control, Mr. Gash's employment agreement may be assigned by the Company or any
such successor or surviving corporation upon sixty days prior written notice to
Mr. Gash.
The Company entered into an agreement with Gary Giordano dated as of
July 20, 1998, which provides a lump sum payment to him in the event of a change
in control. If Mr. Giordano's employment with the Company or a successor or
surviving corporation is terminated other than for cause (commission by Mr.
Giordano of an act constituting common law fraud or a felony), for a period of
up to two years after the change in control event, he will receive up to 200% of
the average of his base salary plus cash bonus for the previous three years
based upon a formula. The payment will be made to Mr. Giordano to the extent
such payment does not exceed Mr. Giordano's base amount as computed in
accordance with Section 280G(d)(4) of the Internal Revenue Code of 1986. The
agreement also requires Mr. Giordano to refrain from disclosing proprietary or
confidential information obtained by him. The agreement does not obligate the
Company to retain the services of Mr. Giordano.
Option Grants
Option Exercises and Fiscal Year-End Option Values
The following tables set forth information concerning the grant of
stock options during Fiscal 2000 to each of the persons described in the Summary
Compensation Table and the number and value of unexercised options held by them
at the fiscal year-end.
<TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants
Potential Realizable Value
Number of Percent of At Assumed Annual Rates
Securities Total Options/ of Stock Price Appreciation
Underlying SARs Granted Exercise or for Option Term (2)
Options/SARs to Employees Base Price ---------------------------
Name Granted (#) (1) in Fiscal Year ($/Sh)(1) Expiration Date 5%($) 10%($)
----------------- ---------------- --------------- ------------- ----------------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Joel H. Girsky 60,000(3) 30% $ 3.25 December 7, 2004 $ 53,900 $119,000
Joseph F. Oliveri 30,000(4) 15 13.70 June 5, 2005 113,600 250,900
Charles B. Girsky 15,000(5) 7 2.50 September 14, 2004 10,400 22,900
Jeffrey D. Gash 15,000(5) 7 2.50 September 14, 2004 10,400 22,900
Gary Giordano 15,000(5) 7 2.50 September 14, 2004 10,400 22,900
(1) Adjusted to give effect to a 3-for-2 stock split which was effective on July 24, 2000.
</TABLE>
11
<PAGE>
(2) The potential realizable value assumes that the stock price increases
from the date of grant until the end of the option term (5 years) at
the annual rate of five percent and ten percent. The assumed annual
rates of appreciation are computed in accordance with the rules and
regulations of the Securities and Exchange Commission. No assurance can
be given that the annual rates of appreciation assumed for the purposes
of the table will be achieved, and actual results may be lower or
higher.
(3) The options in the table were granted on December 8, 1999 under the
Company's 1993 Non- Qualified Stock Option Plan and have exercise
prices equal to the fair market value of the Company's Common Stock on
the date of grant. The options become exercisable one year from the
date of grant.
(4) The options in the table were granted on June 6, 2000 under the
Company's 1993 Non-Qualified Stock Option Plan and have exercise prices
equal to the fair market value of the Company's Common Stock on the
date of grant. The options become exercisable one year from the date of
grant.
(5) The options in the table were granted on September 15, 1999 under the
Company's 1993 Non- Qualified Stock Option Plan and have exercise
prices equal to the fair market value of the Company's Common Stock on
the date of grant. The options become exercisable one year from the
date of grant.
<TABLE>
AGGREGATE OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Value of Unexercised
Number of Unexercised In-the-Money Option/SARs at
Shares Acquired Value Option/SARs at FY-End (#)(1) FY-End ($)(2)
Name on Exercise (#)(1) Realized($) Exercisable Unexercisable Exercisable Unexercisable
-------- ------------------ ------------ --------------------------- --------------------------
<S> <C> <C> <C> <C>
Joel H. Girsky - - 323,098 60,000 $3,951,000 $685,000
Joseph F. Oliveri - - - 30,000 - 29,500
Charles B. Girsky - - 97,500 15,000 996,600 182,500
Jeffrey D. Gash 22,500 $228,600 15,000 15,000 193,100 182,500
Gary Giordano 30,000 226,500 - 15,000 - 182,500
</TABLE>
(1) Adjusted to give effect to a 3-for-2 stock split which was effective on
July 24, 2000.
(2) Based on the fair market value per share of the Common Stock at year end,
minus the exercise or base price on "in-the-money" options. The closing
sale price for the Company's Common Stock as of June 30, 2000 on the Nasdaq
National Market was $14.67.
Director Compensation
Pursuant to the Company's 1993 Stock Option Plan for Outside Directors,
the then outside directors (directors who are not employees) were each granted
options on December 31, 1993 to purchase
12
<PAGE>
22,000 shares of Common Stock. In addition, the Outside Directors' Plan provided
that each outside director shall also be granted on each December 31 subsequent
to December 31, 1993 stock options to purchase 4,399 shares of Common Stock. All
options granted under the Outside Directors' Plan are immediately exercisable,
and the exercise price per share of each option is equal to the fair market
value of the shares of Common Stock on the date of grant. No option may be
granted after January 1, 1998 under the Outside Directors' Plan.
On September 16, 1998, each of Messrs. Cohen and Frankel was granted
options to purchase 11,250 shares of Common Stock. The options became
exercisable one year from the date of grant and expire on September 15, 2003.
The per share exercise price of each option is equal to the closing price of the
Common Stock on the date of grant, or $2.75 per share.
On September 15, 1999, the Company granted each of Mr. Stephen A. Cohen,
Mr. Edward M. Frankel and Mr. Joseph F. Hickey, Jr., five year options to
purchase 11,250 shares of Common Stock at an exercise price of $2.50 per share.
The per share exercise price of each option is equal to the closing price of the
Common Stock on the date of grant. The options vest on the one-year anniversary
date of the date of grant and were issued pursuant to the Company's 1993
Non-Qualified Stock Option Plan.
Employment Contracts and Termination of Employment
and Change-In-Control Arrangements
The Company's employment agreements with Messrs. Joel Girsky, Charles
Girsky, Jeffrey Gash and Joseph Oliveri, and the change-in-control agreement
with Gary Giordano are described on pages 10 through 12 of this Proxy Statement.
Compensation Committee Interlocks and Insider Participation
Joseph F. Hickey, Jr., a Director and member of the Compensation Committee,
is a managing director of Tucker Anthony Capital Markets, which firm renders
services to the Company from time to time.
Compliance with Section 16(a) of Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than ten percent of the Company's Common Stock to file with the Securities
and Exchange Commission initial reports of beneficial ownership on Form 3 and
reports of changes in beneficial ownership on Form 4 or Form 5. Executive
officers, directors, and ten percent shareholders are required to furnish the
Company with copies of such forms. Based solely on a review of such forms
furnished to the Company and written representations from certain reporting
persons, the Company believes that during Fiscal 2000, the Company's executive
officers, directors, and ten percent shareholders complied with all applicable
Section 16(a) filing requirements.
13
<PAGE>
Board Compensation Committee Report on Executive Compensation
Introduction
The Compensation Committee of the Board of Directors of the Company
(the "Committee") is composed of non-employee Directors. The Committee is
responsible for determining and administering the Company's compensation
policies for the remuneration of the Company's senior executive officers
(collectively, "Executives"). In determining the cash and non-cash compensation
of Executives, the Committee annually evaluates both individual and corporate
performance from both a short-term and long-term perspective.
A number of the Company's Executives have entered into employment
agreements with the Company. For Fiscal 2000, Messrs. Joel Girsky, Charles
Girsky and Joseph Oliveri received bonuses that were determined based upon a
formula contained in each of their employment agreements. See "Executive
Compensation and Other Information."
Philosophy
The Company's compensation program for Executives (the "Program") seeks
to encourage the achievement of business objectives of the Company and superior
corporate performance by the Company's Executives. The Program enables the
Company to reward and retain highly qualified executives and to foster a
performance-oriented environment wherein management's long-term focus is on
maximizing shareholder value through the use of equity-based incentives. The
Program calls for consideration of the nature of each Executive's work and
responsibilities, his or her leadership and technical skills, unusual
accomplishments or achievements on the Company's behalf, years of service, the
Executive's total compensation package (cash and non-cash compensation) and the
Company's financial condition generally.
Components of Executive Compensation
Historically, the Company's executive employees have received
cash-based and equity-based compensation. The Company attempts to pay its
executive officers competitively in order that it may retain the most capable
people in the industry.
Cash-Based Compensation: Base salary represents the primary cash
component of an Executive's compensation, and is determined by evaluating the
responsibilities associated with an Executive's position at the Company and his
or her overall level of experience. In addition, the Committee, in its
discretion, may award bonuses. The Committee believes that the Executives are
best motivated through a combination of stock option awards and cash incentives.
Equity-Based Compensation: Equity-based compensation principally has
been in the form of stock options, granted pursuant to the Company's 1993
Non-Qualified Plan and awards of shares of Common Stock under the Company's
Restricted Stock Plan. The Committee believes that stock options represent an
important component of a well-balanced compensation program. Because stock
option
14
<PAGE>
awards provide value only in the event of share price appreciation, stock
options enhance management's focus on maximizing long term shareholder value,
and thus provide a direct relationship between an executive's compensation and
the shareholders' interests. No specific formula is used to determine option
awards for an Executive. Rather, individual award levels are based upon the
subjective evaluation of each Executive's overall past and expected future
contributions to the success of the Company. Additionally, the Committee
believes that awards under the Restricted Stock Plan will enhance the alignment
of an Executive's interest with that of the shareholders, because the Executive
may be able to realize greater value with increased stock performance.
Compensation of the Chief Executive Officer
The philosophy, factors, and criteria of the Committee generally
applicable to the Company's senior management is applicable to the Chief
Executive Officer.
This report is submitted by the Compensation Committee.
Edward M. Frankel
Joseph F. Hickey, Jr.
Directors' and Officers' Liability Insurance
The Company has purchased a directors' and officers' liability
insurance policy, as permitted by Article 7 of the New York Business Corporation
Law. National Union Insurance Company issued the policy, which provides coverage
of $5,000,000 for an annual premium of $55,000. The policy has an expiration
date of February 5, 2001 and is expected to be renewed on that date.
15
<PAGE>
Comparative Stock Performance Graph
The following is a graph comparing the annual percentage change in the
cumulative total shareholder return of the Company's Common Stock with the
cumulative total returns of the published Dow Jones Equity Market Index and Dow
Jones Industrial Services - All for the Company's last five (5) fiscal years:
<TABLE>
(Chart & Graph)
1995 1996 1997 1998 1999 2000
------ ------ ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Jaco Electronics, Inc. 100 158.82 112.74 97.55 64.71 345.10
Dow Jones Equity Market Index 100 127.13 169.95 220.56 270.46 299.75
Dow Jones Industrial Services - All 100 125.48 131.47 155.30 167.72 141.68
</TABLE>
16
<PAGE>
INDEPENDENT AUDITORS
The Board of Directors selected Grant Thornton LLP as independent
auditors for its fiscal year ended June 30, 2000. Grant Thornton LLP were also
auditors for the fiscal year ended June 30, 1999. The Board of Directors expects
that representatives of Grant Thornton LLP will be present at the Annual
Meeting, will be afforded an opportunity to make a statement, and will be
available to respond to appropriate inquiries from shareholders. The Board of
Directors anticipates selecting Grant Thornton LLP as the Company's independent
auditor for its fiscal year ending June 30, 2001.
CERTAIN TRANSACTIONS
During Fiscal 2000, the Company incurred approximately $598,000 of
rental expenses in connection with the Company's main headquarters and
centralized inventory distribution facility, located in Hauppauge, New York,
which was paid to Bemar Realty Company, the owner of such premises. Bemar is a
partnership consisting of Messrs. Joel Girsky and Charles Girsky, both of whom
are officers, directors and principal shareholders of the Company. The lease on
the property, which is net of all expenses, including taxes, utilities,
insurance, maintenance and repairs was renewed on January 1, 1996 and expires on
December 31, 2003. The Company believes the current rental rate is at its fair
market value.
Joseph F. Oliveri, the Company's Vice Chairman of the Board and an
Executive Vice President, has been a director of EMC Corporation, a public
company, since March 1993. Mr. Oliveri was also the President and Chief
Executive Officer of Interface from March 1983 until June 2000, when it was
acquired by the Company. Interface sells components to contract manufacturers
which incorporate such components into products sold to EMC. Mr. Oliveri was a
40% stockholder of Interface, and therefore, upon the acquisition of Interface,
Mr. Oliveri received his proportionate share of the $15.4 million purchase price
paid by the Company at the closing and is entitled to receive his proportionate
share of up to approximately $6.6 million of deferred payments.
Joseph E. Hickey, Jr., a Director, is also a managing director of Tucker
Anthony Capital Markets, which firm renders services to the Company from time to
time.
PROPOSAL 2
TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK
The Company's Certificate of Incorporation currently authorizes the
issuance of up to 10.1 million shares of capital stock of which 10 million
shares are designated Common Stock and 100,000 shares are designated preferred
stock. On October 26, 2000, the Board of Directors approved an amendment to the
Certificate of Incorporation, pursuant to which, subject to approval by the
shareholders at the Annual Meeting, the number of shares of Common Stock
authorized for issuance by the Company thereunder
17
<PAGE>
will be increased from 10 million to 20 million. A majority of the issued and
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
required for approval of the amendment to the Certificate of Incorporation.
As of November 13, 2000, the Company had issued and outstanding
5,669,959 shares of Common Stock.
The Board of Directors would like to increase the number of authorized
shares of Common Stock to provide the Company with flexibility to issue its
shares in connection with possible future actions, such as stock splits, stock
dividends, financing, corporate mergers, acquisitions, use in employee benefit
plans or other corporate purposes. As of the date of this proxy statement, the
Company has no agreements or commitments with respect to the sale or issuance of
such additional shares of Common Stock. The availability of additional
authorized shares would allow the Company to accomplish the Company's business
and financial objectives in the future without shareholder approval, except as
may be required in particular cases by the Company's charter documents,
applicable law or the rules of any stock exchange or other system on which the
Company's securities may then be listed. In addition to the more traditional
uses described above, the Company could issue shares of its Common Stock as a
defense against efforts to obtain control of the Company. The Board of Directors
does not intend or view the increase in authorized shares of Common Stock as an
anti-takeover measure, nor is the Company aware of any proposed or contemplated
transaction of this type.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 2 TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK
AUTHORIZED FOR ISSUANCE BY THE COMPANY FROM 10 MILLION TO 20 MILLION.
PROPOSAL 3
TO APPROVE THE COMPANY'S 2000 STOCK OPTION PLAN
The Company maintains a 1993 Non-Qualified Stock Option Plan and a
Restricted Stock Plan. The Board of Directors believes that the availability of
stock incentives is an important factor in the Company's ability to not only
attract and maintain key employees, directors, officers, consultants, and
advisers but also to give them an added incentive to exert their best efforts on
behalf of the Company. As of the Record Date, no options to purchase shares of
the Company's Common Stock remained available for grant under the Company's 1993
Non-Qualified Stock Option Plan and 315,000 shares of Common Stock remained
available for awards under the Company's Restricted Stock Plan. The Board of
Directors believes that additional shares are needed to provide option grants to
key persons during the next two to three years. Accordingly, the Board of
Directors adopted the Company's 2000 Stock Option Plan, subject to shareholder
approval, and reserved 600,000 shares of the Company's Common Stock for issuance
pursuant to the exercise of options granted under such 2000 Stock Option Plan. A
majority vote of the votes cast by shares of Common Stock entitled to vote at
the Annual Meeting is required for approval of the Company's 2000 Stock Option
Plan.
18
<PAGE>
DESCRIPTION OF THE 2000 STOCK OPTION PLAN
At the Annual Meeting, the shareholders entitled to vote will be asked
to approve the 2000 Stock Option Plan, as adopted by the Board of Directors. The
2000 Stock Option Plan will provide for the grant of incentive stock options
("ISOs") and non-qualified stock options ("NQSOs") in compliance with the
Internal Revenue Code of 1986, as amended (the "Code") to employees
(approximately one hundred as of the Record Date), officers ( approximately
fifteen as of the Record Date) and directors (6 as of the Record Date) of, and
consultants and advisers (there were no consultants and advisers as of the
Record Date) to, the Company who are expected to contribute to the Company's
future growth and success (collectively, "Optionees"). As of the date of this
Proxy Statement, of the 600,000 shares of Common Stock to be reserved for
issuance upon the exercise of options under the 2000 Stock Option Plan, no
options to purchase shares of the Company's Common Stock have been granted under
such plan. No single individual may be granted in any one calendar year options
to purchase more than 150,000 shares of Common Stock (as such number of shares
may be adjusted in accordance with the provisions of Section 9 of the 2000 Stock
Option Plan). The following is a summary of the material provisions of the 2000
Stock Option Plan. This summary is in all respects qualified in its entirety by
reference to the complete text of the 2000 Stock Option Plan attached hereto as
Exhibit A.
The 2000 Stock Option Plan shall provide that options granted under
such plan at the discretion of a committee of the Board of Directors (the
"Committee") may become exercisable in such number of cumulative installments as
the Committee may establish, provided, however, no option may be exercisable
until at least six months and one day from the date of grant. However, in the
case of ISOs, the exercise price shall be no less than the fair market value of
the Company's Common Stock on the date of grant (110% in the case of
shareholders owning more than 10% of the Company's voting securities), and shall
expire no later than the tenth (10th) anniversary of the date of grant (the
fifth (5th) anniversary in the case of shareholders owning more than 10% of the
Company's voting securities). Options, to the extent they are vested, may be
exercised up to the date that the Optionee ceases to be employed by the Company
or within a period of one (1) year if the Optionee (i) dies while in the employ
of the Company, or (ii) becomes disabled within the meaning of Section 22(e)(3)
of the Code (or on such other dates as may be prescribed by the Committee and
set forth in any option agreement). Pursuant to the 2000 Stock Option Plan and
in compliance with the Code, to the extent that the aggregate fair market value,
determined by the date or dates of grant, for which ISOs are first exercisable
by an Optionee during any calendar year exceeds $100,000, such options shall be
treated as NQSOs.
CERTAIN FEDERAL TAX INFORMATION
The following is a summary of the U.S. federal income tax consequences
that generally will arise with respect to options granted pursuant to the 2000
Stock Option Plan and with respect to the shares of Common Stock of the Company
issuable upon the exercise thereof.
ISOS.
In general, an Optionee will not recognize regular income upon the
grant or exercise of an ISO. Instead, an Optionee will recognize taxable income
upon the sale of Common Stock issuable upon the
19
<PAGE>
exercise of an ISO. Notwithstanding, the exercise of an ISO may subject the
Optionee to the alternative minimum tax. The basis of shares transferred to an
Optionee pursuant to the exercise of an ISO is the price paid for such shares
(i.e., the exercise price).
In general, the tax consequences of selling Common Stock issuable upon
the exercise of an ISO will vary with the length of time that the Optionee holds
such Common Stock prior to such sale. An Optionee will recognize long-term
capital gain or loss equal to the difference between the sale price of the
Common Stock and the exercise price if the Optionee sells the Common Stock after
having had owned it for at least (i) two (2) years from the date the option was
granted (the "Grant Date") and (ii) one (1) year from the date the option was
exercised (the "Exercise Date").
However, an Optionee will recognize ordinary compensation income and
capital gain (if the sale price is greater than exercise price) or loss (if the
sale price is less than the exercise price), if the Optionee sells the Common
Stock issuable upon the exercise of an ISO prior to having had owned it for less
than (i) two (2) years from the Grant Date and (ii) one (1) year from the
Exercise Date (a "Disqualifying Disposition"). The capital gain or loss will be
treated as long-term capital gain or loss if the Optionee has held the Common
Stock for more than one (1) year prior to the date of sale.
NQSOS.
As in the case of ISOs, an Optionee will recognize no income tax upon
the grant of an NQSO. Unlike an ISO, however, an Optionee exercising an NQSO
will recognize ordinary income tax equal to the excess of the fair market value
of the Company's Common Stock on the Exercise Date over the exercise price.
With respect to the Common Stock issuable upon the exercise of an NQSO,
an Optionee generally will have a tax basis equal to the fair market value of
the stock on the Exercise Date. Upon the subsequent sale of Common Stock
issuable upon the exercise of an NQSO, an Optionee will recognize a capital gain
or loss, assuming the stock was a capital asset in the Optionee's hands, equal
to the difference between the tax basis of the Common Stock and the amount
realized upon disposition; provided, however, that the Optionee has owned the
Common Stock for a period of one (1) year.
TAX CONSEQUENCES TO THE COMPANY.
The grant of ISOs and NQSOs under the 2000 Stock Option Plan will have
no tax consequences to the Company. Furthermore, in the case of ISOs, the
Company will not experience any tax consequences relating to the exercise of
ISOs granted under the 2000 Stock Option Plan. Notwithstanding, the Company
generally will be entitled to a business-expense deduction with respect to any
ordinary compensation income, including a Disqualifying Disposition; provided,
however, that such deduction may be subject to the limitation of Section 162(m)
promulgated under the Code.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3 ADOPTING THE
COMPANY'S 2000 STOCK OPTION PLAN TO GRANT UP TO AN AGGREGATE OF 600,000
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK
20
<PAGE>
OPTIONS TO PURCHASE SHARES OF THE COMPANY'S COMMON STOCK TO EMPLOYEES, OFFICERS,
DIRECTORS, CONSULTANTS AND ADVISERS.
SHAREHOLDER PROPOSALS TO BE PRESENTED AT THE NEXT ANNUAL MEETING
Shareholder Proposals. Proposals of shareholders intended to be
presented at the Company's 2001 Annual Shareholder Meeting (i) must be received
by the Company at its offices no later than August 22, 2001, 90 days preceding
the one year anniversary of the Mailing Date, (ii) may not exceed 500 words and
(iii) must otherwise satisfy the conditions established by the Commission for
shareholder proposals to be included in the Company's Proxy Statement for that
meeting.
Discretionary Proposals. Shareholders intending to commence their own
proxy solicitations and present proposals from the floor of the 2001 Annual
Shareholder Meeting in compliance with Rule 14a-4 promulgated under the
Securities Exchange Act of 1934, as amended, must notify the Company before
October 9, 2001, 42 days preceding the one year anniversary of the Mailing Date,
of such intentions. After such date, the Company's proxy in connection with the
2001 Annual Shareholder's Meeting may confer discretionary authority on the
Board to vote.
GENERAL
The Board of Directors knows of no other matters which are likely to be
brought before the Annual Meeting. If, however, any other matters are properly
brought before the Annual Meeting, the persons named in the enclosed proxy or
their substitutes shall vote thereon in accordance with their judgment pursuant
to the discretionary authority conferred by the form of proxy.
By Order of the Board of Directors,
Joel H. Girsky,
Chairman
Hauppauge, New York
November 17, 2000
21
<PAGE>
EXHIBIT A
JACO ELECTRONICS, INC.
2000 STOCK OPTION PLAN
1. Purpose; Types of Awards: Construction
The purpose of the Jaco Electronics, Inc. 2000 Stock Option
Plan (the "Plan") is to provide incentives to directors, officers, employees,
advisers and consultants of Jaco Electronics, Inc. (the "Company") or any
subsidiary of the Company which now exists or hereafter is organized or acquired
by the Company, to acquire a proprietary interest in the Company, to increase
their efforts on behalf of the Company and to promote the success of the
Company's business. The Plan is intended to permit the Committee (as defined in
Section 3 hereof) to issue options totaling 600,000 shares of the Company's
common stock to directors, officers, employees, advisers and consultants. The
Committee may grant options which shall constitute either "nonqualified stock
options" ("Nonqualified Stock Options") or "incentive stock options" ("Incentive
Stock Options" or "ISO") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Definitions
As used in this Plan, the following words and phrases shall
have the meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Common Stock" shall mean shares of common stock, par value
$.10 per share, of the Company.
(c) "Disability" shall mean the Optionee's incapacity due to
physical or mental illness, as a result of which the Optionee shall have been
absent from his duties of employment with the Company on a full-time basis for
the entire period of three (3) consecutive months, and within thirty (30) days
after written notice of termination is given by the Company (which notice may be
given within thirty (30) days before or at any time after the end of such three
month period) shall not have returned to the performance of such duties on a
fulltime basis.
(d) "Fair Market Value" per share as of a particular date
shall mean the value determined by the Committee in its discretion; provided,
however, that in the event that there is a public market for the Common Stock,
the fair market value is, if available, (i) the closing price of the Common
Stock as of the date of grant as reported (in descending order of priority) on
(A) a national securities exchange listing the Common Stock, (B) the Nasdaq
Stock Market, (C) a national
1
<PAGE>
automated quotation system with daily trading volume in the Common Stock in
excess of 10,000 shares, or (D) a regional securities exchange listing the
Common Stock, or (ii) the average of the closing bid and asked prices of the
Common Stock for the previous five trading days.
(e) "Option" or "Options" shall mean a grant to an Optionee of
an option or options to purchase shares of Common Stock. Options granted by the
Committee pursuant to the Plan shall constitute either Nonqualified Stock
Options or Incentive Stock Options, as determined by the Committee.
(f) "Parent Corporation" shall mean any corporation (other
than the Company) in an unbroken chain of corporations ending with the employer
corporation if, at the time of granting an Option, each of the corporations
other than the employer corporation owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
(g) "Subsidiary Corporation" shall mean any corporation (other
than the Company) in an unbroken chain of corporations beginning with the
employer corporation if, at the time of granting an Option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
(h) "Ten Percent Shareholder" shall mean an Optionee who, at
the time an Incentive Stock Option is granted, 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.
3. Administration
(a) The Plan shall be administered by a committee (the
"Committee") established by the Board, the composition of which shall at all
times consist of two (2) or more individuals who are each members of the Board.
If no Committee is appointed by the Board, the functions of the Committee shall
be carried out by the Board, provided, however, that if at any time the
Corporation has outstanding a class of equity securities required to be
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "1934 Act"), the Corporation may grant, designate or amend any Options
hereunder through a committee consisting solely of two or more persons, each of
whom shall qualify as (i) a "Non-Employee Director", as that term is defined in
subparagraph (b)(3)(i) of Rule 16b-3 ("Rule 16b-3") promulgated under the 1934
Act, and (ii) an "outside director", within the meaning of Section 162(m) of the
Code.
(b) The Committee shall choose one of its members as Chairman
and shall hold meetings at such times and places as it shall deem advisable. A
majority of the members of the Committee shall constitute a quorum and any
action may be taken by a majority of those present and voting at any meeting.
Any action may also be taken without the necessity of a meeting by a written
instrument signed by all members of the Committee. The decision of the Committee
as
2
<PAGE>
to all questions of interpretation and application of the Plan shall be final,
binding and conclusive on all persons. The Committee shall have the authority to
adopt, amend and rescind such rules and regulations as, in its opinion, may be
advisable in the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any Option Agreement (as defined in Section 8) in the manner and to the extent
it shall deem expedient to carry the Plan into effect and shall be the sole and
final judge of such expediency. No Committee member shall be liable for any
action or determination made in good faith.
(c) The Committee shall have the authority in its discretion,
subject to and not inconsistent with the express provisions of the Plan, to
administer the Plan and to exercise all the powers and authorities either
specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority to
grant Options; to determine the purchase price of the shares of Common Stock
covered by each Option (the "Option Price"); to determine the persons to whom,
and the time or times at which awards shall be granted, (such persons are
referred to herein as "Optionees"); to determine the number of shares to be
covered by each award; to interpret the Plan; to prescribe, amend and rescind
rules and regulations relating to the Plan; to determine the terms and
provisions of the agreements (which need not be identical) entered into in
connection with awards granted under the Plan; to cancel or suspend awards, as
necessary; and to make all other determinations deemed necessary or advisable
for the administration of the Plan. The Committee may delegate to one or more of
its members or to one or more agents such administrative duties as it may deem
advisable. The Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan. All
decisions, determinations and interpretations of the Committee shall be final
and binding on all Optionees.
(d) The Board shall fill all vacancies of the Committee, however
caused.
(e) No member of the Board or Committee shall be liable for any
action taken or determination made in good faith with
respect to the Plan or any award granted hereunder.
4. Eligibility
(a) Awards may be granted to directors, officers, employees,
advisers and consultants of the Company. In determining the persons to whom
awards shall be granted and the number of shares to be covered by each award,
the Committee shall take into account the duties of the respective persons,
their present and potential contributions to the success of the Company and such
other factors as the Committee shall deem relevant in connection with
accomplishing the purposes of the Plan.
(b) Options designated as ISOs may be granted only to officers
and other employees of the Company or any "subsidiary corporation" as defined in
Section 424 of the Code. Non-Qualified Stock Options may be granted to any
officer, employee, director, adviser, or consultant of the Company or of any
Subsidiary Corporation. Non-Qualified Stock Options may be
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granted to an individual in connection with the hiring or engagement of the
individual prior to the date that the individual first performs services for the
Company or any Subsidiary Corporation.
5. Common Stock Subject to the Plan
(a) The maximum number of shares of Common Stock reserved for
the grant of Options shall be 600,000. Such shares may, in whole or in part, be
authorized but unissued shares or shares that shall have been or may be
reacquired by the Company. No single individual may be granted in any one
calendar year options to purchase more than 150,000 shares of Common Stock (as
such number of shares may be adjusted in accordance with the provisions of
Section 9 hereof).
(b) If any outstanding award under the Plan should, for any
reason expire, be canceled or be terminated, without having been exercised in
full, the shares of Common Stock allocable to the unexercised, canceled or
terminated portion of such award shall (unless the Plan shall have been
terminated) become available for subsequent grants of awards under the Plan.
(c) Stock issuable upon exercise of an option granted under
the Plan may be subject to such restrictions on transfer, repurchase rights or
other restrictions as shall be determined by the Committee.
6. Incentive Stock Options
Options granted pursuant to this Section 6 are intended to
constitute Incentive Stock Options and shall be subject to the following special
terms and conditions, in addition to the general terms and conditions specified
in Section 8 hereof.
(a) Value of Shares. The aggregate Fair Market Value
(determined as of the date that Incentive Stock Options are granted) of the
shares of Common Stock with respect to which Options granted under this Plan and
all other option plans of the Company and any Parent or Subsidiary Corporation
that become exercisable for the first time by an Optionee during any calendar
year shall not exceed $100,000.
(b) Ten Percent Shareholders. In the case of an Incentive
Stock Option granted to a Ten Percent Shareholder, (i) the Option Price shall
not be less than one hundred ten percent (110%) of the Fair Market Value of the
shares of Common Stock on the date of grant of such Incentive Stock Option, and
(ii) the exercise period shall not exceed five (5) years from the date of grant
of such Incentive Stock Option.
7. Nonqualified Stock Options
Options granted pursuant to this Section 7 are intended to
constitute Non-Qualified Stock Options and shall be subject only to the general
terms and conditions specified in Section 8 hereof.
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8. Terms and Conditions of Options
Each Option granted pursuant to the Plan shall be evidenced by
a written agreement between the Company and the Optionee in such form as the
Committee shall from time to time approve (the "Option Agreement"), which Option
Agreement shall be subject to and set forth the following terms and conditions:
(a) Number of Shares. Each Option Agreement shall state the
number of shares of Common Stock to which the option relates.
(b) Type of Option. Each Option Agreement shall specifically
state whether the Option constitutes a Non-Qualified Stock Option or
an Incentive Stock Option.
(c) Option Price. The option price or prices of shares of the
Company's Common Stock for options designated as Non-Qualified Stock
Options shall be as determined by the Committee, but in no event shall
the option price be less than the minimum legal consideration required
therefor under the laws of the State of New York or the laws of any
jurisdiction in which the Company or its successors in interest may be
organized. The option price or prices of shares of the Company's
Common Stock for ISOs shall be the Fair Market Value of such Common
Stock at the time the option is granted as determined by the
Committee.
(d) Method and Time of Payment. Each Option Agreement shall
require that the Option Price be paid in full, at the time of exercise of an
Option, in cash, by certified or cashier's check.
(e) Term and Exercisability of Options. Except as otherwise
provided in this Section 8 or Section 9 hereof or unless otherwise determined by
the Committee and set forth in the Option Agreement, at the discretion of the
Committee, options may become exercisable in such number of cumulative
installments as the Committee may establish, provided, however, no option may be
exercisable until at least six months and one day from the date of grant,
provided, however, that, the Committee shall have the authority to accelerate
the exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. Except as
specifically provided in Sections 8(f) and 8(g) hereof, all Options shall expire
ten (10) years from the date of grant of such Option (five (5) years in the case
of an Incentive Stock Option granted to a Ten Percent Shareholder) or on such
earlier date as may be prescribed by the Committee and set forth in the Option
Agreement. An Option may be exercised, as to any or all full shares of Common
Stock as to which the Option has become exercisable, by giving written notice of
such exercise to the Committee or its designated agent; provided, however, that
an Option may not be exercised at any one time as to fewer than 100 shares (or
such number of shares as to which the Option is then exercisable if such number
of shares is less than 100).
(f) Termination of Employment. Except as provided in this
Section 8(f) and in Sections 8(e) and (g) hereof, each Option granted hereunder
shall expire, to the extent not theretofore exercised immediately upon the date
that the Optionee ceases to be employed by the Company or
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any of its Parent or Subsidiary Corporations (or on such other date as may be
prescribed by the Committee and set forth in any Option Agreement).
(g) Death or Disability of Optionee. If an Optionee shall die
while employed by the Company or a Parent or Subsidiary Corporation (or within
such longer period as the Committee may have provided pursuant to Section 8(f)
hereof), or if the Optionee's employment shall terminate by reason of
Disability, all Options theretofore granted to such Optionee (to the extent
otherwise exercisable) may, unless earlier terminated in accordance with their
terms, be exercised by the Optionee or by the Optionee's estate or by a person
who acquired the right to exercise such Options by bequest or inheritance or
otherwise by reason of the death or Disability of the Optionee, at any time
within one (1) year after the date of death or Disability of the Optionee;
provided, however, that the Committee may, in any Option Agreement, extend such
period of exercisability. In the event that an Option granted hereunder shall be
exercised by the legal representatives of a deceased or former Optionee, written
notice of such exercise shall be accompanied by a certified copy of letters
testamentary or equivalent proof of the right of such legal representative to
exercise such option.
(h) Other Provisions. The Option Agreements evidencing Options under
the Plan shall contain such other terms and conditions, not inconsistent
with the Plan, as the Committee may determine.
9. Effect of Certain Changes
(a) If there is any change in the shares of Common Stock
through the declaration of extraordinary dividends, stock dividends,
re-capitalization, stock splits, or combinations or exchanges of such shares, or
in the event of a sale of all or substantially all of the assets of the Company
(an "Asset Sale"), or the merger or consolidation of the Company with or into
another corporation (a "Merger"), or in the event of other similar transactions,
the Committee shall promptly make an appropriate adjustment to the number and
class of shares of Common Stock available for awards, to the number of shares
covered by outstanding awards after the effective date of such transaction, and,
if applicable, to the price thereof; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated.
(b) In the event of the dissolution or liquidation of the
Company, in the event of any corporate separation or division, including, but
not limited to, split-up, split-off or spin-off or in the event of other similar
transactions, the Committee may provide that:
(i) the Optionee of any Option shall have the right to
exercise such Option; and/or
(ii) each Option granted under the Plan shall terminate
as of a date to be fixed by the Committee, and that not be
less than thirty (30) days notice of the date so fixed shall
be given to each Optionee, who shall have the right, during
the period of thirty (30) days preceding such termination,
to exercise (to the extent exercisable) with respect to such
Option all or any part of the shares of Common Stock covered
thereby.
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(c) In the event of an Asset Sale or a Merger, any award then
outstanding may be assumed or an equivalent award may be substituted by such
successor corporation or a parent or subsidiary of such successor corporation.
If such successor corporation does not agree to assume the award or to
substitute an equivalent award, the Board may, in lieu of such assumption or
substitution, provide for the realization of such outstanding award in the
manner set forth in subsections 9(b)(i) or 9(b)(ii) above.
(d) In the event of a change in the Common Stock of the
Company as presently constituted that is limited to a change of all of its
authorized shares of Common Stock into the same number of shares with a
different par value or without par value, the shares resulting from any such
change shall be deemed to be the Common Stock within the meaning of the Plan.
(e) Except as hereinbefore expressly provided in this Section
9, the Optionee of an award hereunder shall have no rights by reason of any
subdivision or consolidation of shares of stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class or by reason of any dissolution, liquidation, Merger or spin-
off of assets or stock of another company; and any issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
award. The grant of an award pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structures or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or part of its
business or assets or engage in any similar transactions.
10. Period During Which Options May Be Granted
Awards may be granted pursuant to the Plan from time to time
within a period of ten (10) years from the date the Plan is adopted by the
Board, or the date the Plan is approved by the Shareholders of the Company,
whichever is earlier.
11. Nontransferability of Awards
The right of any Optionee to exercise any option granted to
him or her shall not be assignable or transferable by such Optionee otherwise
than by will or the laws of descent and distribution, or pursuant to a domestic
relations order, and any such option shall be exercisable during the lifetime of
such Optionee only by him; provided, however, that the Committee may permit the
further transferability on a general or specific basis and may impose conditions
and limitations on any permitted transferee. Any option granted under the Plan
shall be null and void and without effect upon the bankruptcy of the Optionee to
whom the option is granted, or upon any attempted assignment or transfer, except
as herein provided, including without limitation any purported assignment,
whether voluntary or by operation of law, pledge, hypothecation or other
disposition, attachment, divorce, except as provided above with respect to
Non-Qualified Stock Options, trustee process or similar process, whether legal
or equitable, upon such option.
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12. Beneficiary
An Optionee may file with the Committee a written designation
of a beneficiary on such form as may be prescribed by the Committee and may,
from time to time, amend or revoke such designation. If no designated
beneficiary survives the Optionee, the executor or administrator of the
Optionee's estate shall be deemed to be the Optionee's beneficiary.
13. Agreement by Optionee Regarding Withholding Taxes
If the Committee shall so require, as a condition of exercise
of an Option granted hereunder, each Optionee shall agree that no later than the
date of exercise, the Optionee will pay to the Company or make arrangements
satisfactory to the Committee, regarding payment of any federal, state or local
taxes of any kind required by law to be withheld upon the exercise of an Option,
not to exceed the minimum statutory federal, state and local tax withholding
requirements. To the extent provided in the applicable Option Agreement, such
payment may be made by the Optionee with shares of Common Stock (whether
previously owned by, or issuable upon the exercise of an Option awarded to, such
Optionee) having a Fair Market Value equal to the amount of such taxes.
Alternatively, the Committee may provide that an Optionee may elect, to the
extent permitted or required by law, to have the Company deduct federal, state
and local taxes of any kind required by law to be withheld upon the exercise of
an Option from any payment of any kind due to the Optionee.
14. Rights as a Shareholder
An Optionee or a transferee of an award shall have no rights
as a Shareholder with respect to any shares of Common Stock covered by the
Option until the date of the issuance of a stock certificate to him for such
shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distributions of other rights
for which the record date is prior to the date such stock certificate is issued,
except as provided in Section 9 hereof.
15. No Rights to Employment
Nothing contained in the Plan or in any option granted under
the Plan shall confer upon any option holder any right with respect to the
continuation of his employment by the Company (or any subsidiary) or interfere
in any way with the right of the Company (or any subsidiary), subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
option holder from the rate in existence at the time of the grant of an option.
Whether an authorized leave of absence, or absence in military or government
service, shall constitute termination of employment shall be determined by the
Committee at the time.
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16. Approval of Shareholders
The Plan, and any grants of Options thereunder, shall be
subject to approval by the holder(s) of a majority of the issued and outstanding
shares of the Company's capital stock which are entitled to vote on the subject
matter thereof and are present in person or represented by proxy at a
duly-called meeting of the Shareholders of the Company which approval must occur
within one year after the date that the Plan is adopted by the Board. In the
event that the shareholders of the Company do not approve the Plan at a meeting
of the shareholders at which such issue is considered and voted upon, then, upon
such event, this Plan and all rights hereunder or under any Option Agreement
entered into in connection herewith shall immediately terminate and no Optionee
(or any permitted transferee thereof) shall have any remaining rights under the
Plan.
17. Amendment and Termination of the Plan
The Board at any time and from time to time may suspend,
terminate, modify or amend the Plan; provided, however, that any amendment that
would materially increase the aggregate number of shares of Common Stock as to
which awards may be granted under the Plan or materially increase the benefits
accruing to Optionees under the Plan or materially modify the requirements as to
eligibility for participation in the Plan shall be subject to the approval of
the holders of a majority of the Common Stock issued and outstanding, except
that any such increase or modification that may result from adjustments
authorized by Section 9 hereof shall not require such approval. Except as
provided in Section 9 hereof, no suspension, termination, modification or
amendment of the Plan may adversely affect any award previously granted, without
the express written consent of the Optionee.
18. Compliance with Section 16(b)
In the case of Optionees who are or may be subject to Section
16 of the 1934 Act, it is the intent of the Company that the Plan and any award
granted hereunder satisfy and be interpreted in a manner that satisfies the
applicable requirements of Rule 16b-3 so that such persons will be entitled to
the benefits of Rule 16b-3 or other exemptive rules under Section 16 of the 1934
Act and will not be subjected to liability thereunder. If any provision of the
Plan or any award would otherwise conflict with the intent expressed herein,
that provision, to the extent possible, shall be interpreted and deemed amended
so as to avoid such conflict. To the extent of any remaining irreconcilable
conflict with such intent, such provision shall be deemed void as applicable to
Optionees who are or may be subject to Section 16 of the 1934 Act.
19. Restrictions on Issue of Shares.
(a) Notwithstanding the provisions of Section 8, the Company
may delay the issuance of shares of Common Stock covered by the exercise of an
option and the delivery of a certificate for such shares of Common Stock until
the delivery or distribution of any shares of Common Stock issued under this
Plan complies with all applicable laws (including without
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limitation, the Securities Act of 1933, as amended), and with the applicable
rules of any stock exchange upon which the shares of Common Stock of the Company
are listed or traded.
(b) It is intended that all exercises of options shall be
effective, and the Company shall use its best efforts to bring about compliance
with all applicable legal and regulatory requirements within a reasonable time,
except that the Company shall be under no obligation to qualify shares of Common
Stock or to cause a registration statement or a post- effective amendment to any
registration statement to be prepared for the purpose of covering the issuance
of shares of Common Stock in respect of which any option may be exercised,
except as otherwise agreed to by the Company in writing.
20. Modification of Outstanding Options.
The Committee may authorize the amendment of any outstanding option
with the consent of the Optionee when and subject to such conditions as are
deemed to be in the best interests of the Company and in accordance with the
purposes of this Plan.
21. Reservation of Stock.
The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of Common Stock as will be sufficient to
satisfy the requirements of the Plan and shall pay all fees and expenses
necessarily incurred by the Company in connection therewith.
22. Limitation of Rights in the Option Shares.
Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an Optionee, to the address as appearing on the
records of the Company.
23. Governing Law
The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of New York without
giving effect to the conflict of laws principles thereof.
24. Effective Date and Duration of the Plan
This Plan shall, subject to Section 16 hereof, be effective as
of October 26, 2000, the date of its adoption by the Board of Directors, and
shall terminate on the later of (a) the tenth anniversary of the date so
determined or (b) the last expiration of awards granted hereunder.
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PROXY
JACO ELECTRONICS, INC.
145 OSER AVENUE, HAUPPAUGE, NEW YORK 11788
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned constitutes and appoints Joel H. Girsky and Charles B.
Girsky, and each of them, proxies of the undersigned (the "Proxies") with the
power to appoint a substitute, and to represent and vote all shares of common
stock of Jaco Electronics, Inc. (the "Company"), $.10 par value per share (the
"Common Stock"), which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Shareholders to be held on Tuesday, December
12, 2000, and all adjournments thereof, as follows:
1. To vote on the election of each of the following nominees to
the Board of Directors, as indicated:
FOR all nominees listed below (except as marked to the
contrary): [ ]
WITHHOLD AUTHORITY to vote for all nominees listed below: [ ]
Stephen A. Cohen, Edward M. Frankel, Charles B. Girsky, Joel
H. Girsky, Joseph F. Hickey, Jr., and Joseph F. Oliveri
(Instructions: To withhold authority to vote for any
individual nominee, strike a line through the nominee's name
above.)
2. TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF
COMMON STOCK FOR ISSUANCE BY THE COMPANY FROM 10 MILLION TO
20 MILLION.
|_| FOR |_| AGAINST |_| ABSTAIN
3. TO APPROVE THE COMPANY'S 2000 STOCK OPTION PLAN.
|_| FOR |_| AGAINST |_| ABSTAIN
4. To vote, in the discretion of the Proxies, on such other
matters as may properly come before the meeting.
The shares of Common Stock represented by this Proxy shall be voted as directed
above by the shareholder. In the absence of such direction, the shares of Common
Stock shall be voted FOR the matters set forth in Items 1 through 3.
Receipt of the Notice of Annual Meeting, the Proxy Statement, and the Annual
Report to Shareholders is hereby acknowledged.
Dated: , 2000
Signature:
Signature if held jointly:
Please sign as name appears hereon. If signing as attorney,
executor, administrator, trustee, guardian or other fiduciary,
please give full title as it appears. If shares of Common
Stock are hold jointly, each named shareholder should sign. If
a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY.
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