SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)2)
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14(a)-12
United Capital Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
<PAGE>
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
UNITED CAPITAL CORP.
--------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 9, 1998
--------------
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of UNITED CAPITAL CORP., a Delaware corporation (the "Company"), will
be held at the offices of the Company, 9 Park Place, Great Neck, New York 11021,
on June 9, 1998, at 10:00 A.M., Local Time, for the following purposes:
1. To elect four (4) members of the Board of Directors to
serve until the next annual meeting of stockholders and until their
successors have been duly elected and qualified;
2. To provide performance criteria for the payment of bonuses
to the Chief Executive Officer;
3. To amend the Company's 1988 Joint Incentive and Non-
Qualified Stock Option Plan (the "Joint Plan") and the Company's 1988
Incentive Stock Option Plan (the "Incentive Plan") to approve an
increase in the number of authorized shares reserved for issuance
pursuant to each of the Joint Plan and the Incentive Plan, from 325,000
shares to 1,325,000 shares, respectively;
4. To ratify the appointment of Arthur Andersen LLP as the
Company's independent auditors for the year ending December 31, 1998;
and
5. To transact such other business as may properly be brought
before the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on May 5, 1998
as the record date for the Meeting. Only stockholders of record on the stock
transfer books of the Company at the close of business on that date are entitled
to notice of, and to vote at, the Meeting.
By Order of the Board of Directors
ANTHONY J. MICELI
Secretary
Dated: May 13, 1998
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<PAGE>
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED
TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE THAT IS
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
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<PAGE>
UNITED CAPITAL CORP.
9 PARK PLACE
GREAT NECK, NEW YORK 11021
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
JUNE 9, 1998
----------------
INTRODUCTION
This Proxy Statement is being furnished to stockholders by the Board of
Directors of United Capital Corp., a Delaware corporation (the "Company"), in
connection with the solicitation of the accompanying Proxy for use at the 1998
Annual Meeting of Stockholders of the Company (the "Meeting") to be held at the
offices of the Company, 9 Park Place, Great Neck, New York 11021, on June 9,
1998, at 10:00 A.M., Local Time, or at any adjournment thereof.
The principal executive offices of the Company are located at 9 Park
Place, Great Neck, New York 11021. The approximate date on which this Proxy
Statement and the accompanying Proxy will first be sent or given to stockholders
is May 13, 1988.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on May 5, 1998,
the record date (the "Record Date") for the Meeting, will be entitled to notice
of, and to vote at, the Meeting and any adjournment thereof. As of the close of
business on the Record Date, there were 5,202,447 outstanding shares of the
Company's common stock, $.10 par value (the "Common Stock"). Each of such shares
is entitled to one vote. There was no other class of voting securities of the
Company outstanding on that date. All shares of Common Stock have equal voting
rights. A majority of the outstanding shares of Common Stock present in person
or by proxy is required for a quorum.
VOTING OF PROXIES
Shares of Common Stock represented by Proxies, which are properly
executed, duly returned and not revoked will be voted in accordance with the
instructions contained therein. If no specification is indicated on the Proxy,
the shares of Common Stock represented thereby will be voted (i) for the
election as Directors of the persons who have been nominated by the Board of
Directors, (ii) to provide performance criteria for the payment of bonuses to
the Chief Executive Officer, (iii) for the amendment of the Company's 1988 Joint
Incentive and Non-Qualified Stock Option Plan (the "Joint Plan") and 1988
Incentive Stock Option Plan (the "Incentive Plan") to approve an increase in the
<PAGE>
number of authorized shares reserved for issuance pursuant to each of the Joint
Plan and the Incentive Plan, from 325,000 shares to 1,325,000 shares,
respectively, (iv) for the ratification of the appointment of Arthur Andersen
LLP as the Company's independent auditors for the year ending December 31, 1998
and (v) for any other matter that may properly be brought before the Meeting in
accordance with the judgment of the person or persons voting the Proxies.
The execution of a Proxy will in no way affect a stockholder's right to
attend the Meeting and vote in person. Any Proxy executed and returned by a
stockholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Meeting, or by execution of a subsequent proxy which is presented
to the Meeting, or if the stockholder attends the Meeting and votes by ballot,
except as to any matter or matters upon which a vote shall have been cast
pursuant to the authority conferred by such Proxy prior to such revocation. For
purposes of determining the presence of a quorum for transacting business at the
Meeting, abstentions and broker "non-votes" (i.e., proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the brokers or nominees do not have discretionary power)
will be treated as shares that are present but which have not been voted.
The cost of solicitation of the Proxies being solicited on behalf of
the Board of Directors will be borne by the Company. In addition to the use of
the mails, proxy solicitation may be made by telephone, telegraph and personal
interview by officers, directors and employees of the Company. The Company will,
upon request, reimburse brokerage houses and persons holding Common Stock in the
names of their nominees for their reasonable expenses in sending soliciting
material to their principals.
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the
Company's Common Stock, as of the Record Date, by each person known by the
Company to be the beneficial owner of more than five percent of the Common
Stock, each director, each executive officer, and nominee for election as a
director and by all directors and executive officers of the Company as a group:
Name and Address Shares Percentage
Of Beneficial Owner Beneficially Owned of Class(6)
- ---------------------------- ------------------ ---------------
A.F. Petrocelli 3,048,651(1)(2) 56.4%
9 Park Place
Great Neck, NY 11021
Beverly Petrocelli 500,000(2) 9.6%
c/o 9 Park Place
Great Neck, NY 11021
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<PAGE>
Name and Address Shares Percentage
Of Beneficial Owner Beneficially Owned of Class(6)
- ---------------------------- ------------------ ---------------
Anthony J. Miceli 36,300(3) *
9 Park Place
Great Neck, NY 11021
Arnold S. Penner 3,333(4) *
249 East 71st Street
New York, NY 10021
Howard M. Lorber 81,833(5) 1.6%
70 E. Sunrise Highway
Valley Stream, NY 11581
All executive officers and 3,170,117(1)(3) 58.2%
directors as a group (4 (4)(5)
persons)
* Less than 1%
(1) Mr. Petrocelli owns directly 2,849,524 shares of Common Stock and
presently exercisable options or options exercisable within 60 days of
the Record Date to purchase 199,127 shares of Common Stock. Does not
include shares held by the wife, adult children or the grandchildren of
Mr. Petrocelli. Mr. Petrocelli disclaims beneficial ownership of the
shares held by his wife, adult children and grandchildren.
(2) Beverly Petrocelli is the wife of Mr. Petrocelli, Mr. Petrocelli
disclaims beneficial ownership of all shares held by Mrs. Petrocelli.
Does not include shares held by the adult children or the grandchildren
of Mrs. Petrocelli. Mrs. Petrocelli disclaims beneficial ownership of
the shares held by her husband, adult children and grandchildren.
(3) Consists of presently exercisable options or options exercisable within
60 days of the Record Date to purchase 36,300 shares of Common Stock.
(4) Consists of 3,333 shares issuable upon the exercise of options which
are exercisable within 60 days of the Record Date.
(5) Includes 36,800 shares owned by the Howard M. Lorber Irrevocable Trust.
Mr. Lorber disclaims beneficial ownership of all shares owned by Mr.
Lorber's wife and the Howard M. Lorber Irrevocable Trust. Also includes
3,333 shares issuable upon the exercise of options which are
exercisable within 60 days of the Record Date.
(6) Includes the shares of Common Stock subject to options which are
presently exercisable or exercisable within 60 day after the Record
Date held by directors and executive officers as a group for purposes
of calculating the respective percentages of Common Stock owned by such
individuals or by the executive officers and directors as a group.
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<PAGE>
PROPOSAL I--ELECTION OF DIRECTORS
Nominees
Unless otherwise specified, all Proxies received will be voted in favor
of the election of the persons named below as directors of the Company, to serve
until the next Annual Meeting of Stockholders of the Company and until their
successors shall be duly elected and qualified. Directors shall be elected by a
plurality of the votes cast, in person or by proxy, at the Meeting. Abstentions
from voting and broker non-votes on the election of directors will have no
effect since they will not represent votes cast at the Meeting for the purpose
of electing directors. All nominees are currently directors of the Company. The
terms of the current directors expire at the Meeting and when their successors
are duly elected and qualified. Management has no reason to believe that any of
the nominees will be unable or unwilling to serve as a director, if elected.
Should any of the nominees not remain a candidate for election at the date of
the Meeting, the Proxies will be voted in favor of those nominees who remain
candidates and may be voted for substitute nominees selected by the Board of
Directors. The names of the nominees and certain information concerning them are
set forth below:
<TABLE>
<CAPTION>
First
Year
Became
Name Principal Occupation Age Director
- --------------------------- ------------------------------- --------- ---------
<S> <C> <C> <C>
A.F. Petrocelli Chairman of the Board, 54 1981
President and Chief
Executive Officer of the
Company
Anthony J. Miceli Vice President, Chief 35 1996
Financial Officer and
Secretary of the Company
Arnold S. Penner Self employed real estate 61 1989
investor and broker
Howard M. Lorber Chairman and Chief Executive 49 1991
Officer of Hallman &
Lorber Associates, Inc.
</TABLE>
A.F. PETROCELLI, has been Chairman of the Board and Chief Executive
Officer since December, 1987, President of the Company since June, 1991 and from
June, 1983 to March, 1989 and a Director of the Company since June 1981. Mr.
Petrocelli is a Director of Prime Hospitality Corp., a New York Stock Exchange
listed company, a Director of Boyer Value Fund (a public mutual fund), a
Director of Philips International Realty Corp. ("Philips") and a Director of
Nathan's Famous Inc. ("Nathan's").
ANTHONY J. MICELI, has been a Director and a Vice President and Chief
Financial Officer of the Company since June, 1996 and prior thereto was the
Corporate Controller of the Company for more than three years. Mr. Miceli is a
Certified Public Accountant and a member of the American Institute of Certified
-4-
<PAGE>
Public Accountants and New Jersey Society of Certified Public Accountants.
ARNOLD S. PENNER, has been a Director of the Company since 1989 and has
worked for more than the past five years as a private real estate investor and
as a self-employed real estate broker in New York. Mr. Penner is also a Director
of Philips.
HOWARD M. LORBER, has been a Director of the Company since May 1991.
Mr. Lorber has been the Chairman and Chief Executive Officer of Hallman & Lorber
Associates, Inc., a consulting and actuarial firm for pension and profit sharing
plans, since 1975. He has been a shareholder of Aegis Capital Corp. ("Aegis"), a
broker-dealer and a member firm of the National Association of Securities
Dealers, since 1984 and is currently a registered representative of Aegis. Mr.
Lorber is also President and Chief Operating Officer and a member of the Board
of Directors of New Valley Corporation (formerly Western Union Corp.) as well as
Chairman of the Board of Directors and Chief Executive Officer of Nathan's. Mr.
Lorber is also a member of the Board of Directors of Prime Hospitality Corp.,
and a Trustee of the Board of Long Island University. Since before 1993, Mr.
Lorber has also been a general partner or shareholder of a corporate general
partner of various limited partnerships organized to acquire and operate real
estate properties.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE
NOMINEES.
Meetings
The Board of Directors held two meetings, during the year ended
December 31, 1997. From time to time, the members of the Board of Directors act
by unanimous written consent pursuant to the laws of the State of Delaware.
The Company has a standing Audit Committee and a Compensation and Stock
Option Committee whose members are Howard M. Lorber and Arnold S. Penner, the
independent, non-employee, directors of the Company. The Audit Committee
annually recommends to the Board of Directors, independent public accountants as
auditors of the Company's books, records and accounts, reviews the scope of the
audits performed by such auditors and the audit reports prepared by them, and
reviews and monitors the Company's internal accounting procedures. The
Compensation and Stock Option Committee, which was formed in December 1993,
recommends to the Board of Directors compensation for the Company's key
employees and administers the Joint Plan and the Incentive Plan and awards stock
options thereunder.
Directors of the Company who are not officers of the Company are
entitled to receive compensation for serving as directors in the amount of
$6,000 per annum and $500 per Board meeting and Committee meeting attended.
-5-
<PAGE>
Executive Compensation
The following table sets forth, for the Company's 1997 fiscal year, all
compensation awarded to, earned by or paid to the chief executive officer
("CEO") and the most highly compensated executive officer of the Company other
than the CEO who was an executive officer of the Company during the fiscal year
ended December 31, 1997 and whose salary and bonus exceeded $100,000 (one
individual) with respect to the fiscal year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
--------------------------------------------- ------------------------------
Other Annual All Other
Name and Principal Compensation Number of Compensation
Position Year Salary($) Bonus($) ($)(1) Options ($)
- ------------------------------- ------- ------------------- ---------- -------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
A.F. Petrocelli, 1997 $650,000 $700,000 ---- 222,381 ----
Chairman of the 1996 650,000 700,000 ---- ---- ----
Board, President 1995 650,000 700,000 ---- ---- ----
and Chief Executive
Officer
Anthony J. Miceli, 1997 $113,731 $100,000 ---- 30,000 ----
Vice President and 1996 99,557 50,000 ---- 20,000 ----
Chief Financial 1995 90,088 30,000 ---- ---- ----
Officer (2)
</TABLE>
(1) Perquisites and other personal benefits, securities or property to each
executive officer did not exceed the lesser of $50,000 or 10% of such
executive officer's salary and bonus.
(2) Mr. Miceli became Vice President and Chief Financial Officer of the
Company in June 1996. Prior thereto, he was the Corporate Controller of
the Company.
Option Grants During 1997 Fiscal Year
The following table provides information related to options to purchase
Common Stock granted to the CEO and the named executive officer during 1997. The
Company currently does not have any plans providing for the grant of stock
appreciation rights.
-6-
<PAGE>
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed Rates
of Stock Price
Appreciation for Option
Individual Grants Term(2)
- -------------------------------------------------------------------------------- -----------------------
% of Total
Number of Options Exercise
Securities Granted to or Base
Underlying Employees in Price
Name Option(#) Fiscal Year ($/Sh)(2) Expiration Date 5% 10%
- ------------------- ------------- ------------- --------- ----------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
A.F. Petrocelli 204,734 68.4 $17.00 June 18, 2007 $2,188,854 $5,546,986
17,647 5.9 $18.75 June 18, 2002 $52,002 $152,270
Anthony J. Miceli 15,000 5.0 $17.00 June 18, 2007 $160,368 $406,404
15,000 5.0 $18.75 June 18, 2007 $134,118 $380,154
</TABLE>
- -----------
(1) The option exercise price may be paid in shares of Common Stock owned by
the executive, in cash, or a combination of any of the foregoing, as
determined by the Stock Option Committee administering the Company's
stock option plans. The exercise price is equal to the fair market value
of the Common Stock on the date of grant.
(2) The potential realizable value portion of the foregoing table
illustrates values that might be realized upon exercise of the options
immediately prior to the expiration of their term, assuming the
specified compounded rates of appreciation on the Company's Common Stock
over the term of the options. These numbers do not take into account
provisions of certain options providing for termination of the option
following termination of employment, non-transferability or differences
in vesting periods. Regardless of the theoretical value of an option,
its ultimate value will depend upon the market value of the Common Stock
at a future date, and that value will depend on a variety of factors,
including the overall condition of the stock market and the Company's
results of operations and financial condition. There can be no assurance
that the values reflected in this table will be achieved.
Fiscal Year End Option Values
No options were exercised in the Fiscal Year ended December 31, 1997 by
the executive officers. The following table provides information related to the
number and value of options held by the named executive officers at fiscal year
end.
<TABLE>
<CAPTION>
Number of Securities Underlying
Unexercised Options at FY-End Value of Unexercised In-the-
Name (#) Money Options at FY-End ($)(2)
- --------------------- ------------------------------ ------------------------------
Exercisable Unexercisable Exercisable Unexercisable
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
A.F. Petrocelli......... 125,000 222,381 $2,087,500 $2,081,738
Anthony J. Miceli ..... 26,300 30,000 $490,450 $258,750
</TABLE>
- -----------------
(1) Based on the closing price of a share of Common Stock on December 31,
1997 of $26.50, as reported on the American Stock Exchange ("AMEX").
-7-
<PAGE>
Employee Retirement Plan
The Company, through one of its subsidiaries, has a noncontributory
pension plan that covers the executive officers of the Company. The following
table discloses estimated annual benefits payable upon retirement in specified
compensation and years of service classifications, based on current limits set
by the Internal Revenue Code of 1986, as amended.
Projected Annual Benefit at Retirement
<TABLE>
<CAPTION>
Years of Service
----------------------------------------------------------------------------------
Salary 10 15 20 25 30 35
------ ---------------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$ 20,000............... $1,750 $2,625 $3,500 $4,375 $5,250 $6,125
30,000............... 3,250 4,875 6,500 8,125 9,750 11,375
40,000............... 4,750 7,125 9,500 11,875 14,250 16,625
50,000............... 6,250 9,375 12,500 15,625 18,750 21,875
60,000............... 7,750 11,625 15,500 19,375 23,250 27,125
70,000............... 9,250 13,875 18,500 23,125 27,750 32,375
80,000............... 10,750 16,125 21,500 26,875 32,250 37,625
90,000............... 12,250 18,375 24,500 30,625 36,750 42,875
100,000............... 13,750 20,625 27,500 34,375 41,250 48,125
150,000............... 21,250 31,875 42,500 53,125 63,750 74,375
160,000............... 22,750 34,125 45,500 56,875 68,250 79,625
</TABLE>
The Company did not make any contributions for the benefit of executive
officers for the year ended December 31, 1997.
The estimated credited years of service for each of the executive
officers named in the Summary Compensation Table is as follows: A.F. Petrocelli
ten years and Anthony J. Miceli ten years, respectively.
Subject to compensation limitations under the Employee Retirement Income
Security Act of 1974, which was $160,000 in 1997, benefits are computed as
follows: For each year of credited service after June 30, 1989, the sum of one
percent (1%) of annual compensation, as defined, up to $25,000 plus one and
one-half percent (1 1/2%) of annual compensation in excess of $25,000.
Employment Contracts
The Company has an employment contract with Mr. Petrocelli which
provides for a base salary of $650,000 per annum plus a bonus as determined by
the Board of Directors. In the event of a change of control of the Company as
defined in the employment agreement, the Company shall pay Mr. Petrocelli a lump
sum severance payment equal to three years salary and purchase outstanding
options owned by Mr. Petrocelli. The employment agreement provides for
successive one year terms unless either the Company or Mr. Petrocelli gives the
other written notice that the employment agreement is terminated.
-8-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
A.F. Petrocelli serves on the Compensation Committee of Nathan's of
which Mr. Howard Lorber is Chairman of the Board and Chief Executive Officer.
Mr. Lorber is a member of the Compensation and Stock Option Committees of the
Company. For information relating to transactions involving Messrs., Petrocelli
and Lorber and the Company, see "Certain Relationships and Related
Transactions."
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE
COMPENSATION
General
The Compensation and Stock Option Committee determine the cash and other
incentive compensation, if any, to be paid to the Company's executive officers
and key employees. Messrs. Lorber and Penner, non-employee directors of the
Company, serve as members of the Compensation and Stock Option Committee and are
independent and non-employee directors.
Compensation Philosophy
The Compensation and Stock Option Committee's executive compensation
philosophy is to base management's pay, in part, to the achievement of the
Company's annual and long-term performance goals by (a) setting levels of
compensation designed to attract and hold superior executives in a highly
competitive business environment, (b) providing incentive compensation that
varies directly with the Company's financial performance and the impact of
individual initiative and achievement on such financial performance, (c) linking
compensation to elements which effect the Company's annual and long-term
performance, (d) evaluating the competitiveness of executive compensation
programs based upon information drawn from a variety of sources, and (e)
establishing salary levels and bonuses intended to be consistent with
competitive practice and level of responsibility, with salary increases and
bonuses reflecting competitive trends, the overall financial performance of the
Company, the performance of the individual executive and the contractual
arrangements that may be in effect with the individual executive.
Section 162(m) of the Internal Revenue Code, prohibits a publicly held
corporation, such as the Company, from claiming a deduction on its federal
income tax return for compensation in excess of $1 million paid for a given
fiscal year to the chief executive officer (or person acting in that capacity)
at the close of the corporation's fiscal year and the four most highly
compensated officers of the corporation, other than the chief executive officer,
at the end of the corporation's fiscal year. The $1 million compensation
deduction limitation does not apply to "performance-based compensation." The
Company believes that any compensation received by executive officers in
connection
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<PAGE>
with the exercise of options granted under the Joint Plan and the Incentive Plan
qualifies as "performance-based compensation."
Salaries
Base salaries for the Company's executive officers are determined
initially by evaluating the responsibilities of the position held and the
experience of the individual, and by reference to the competitive marketplace
for management talent, including a comparison of base salaries for comparable
positions at comparable companies within the Company's industries. Annual salary
adjustments are determined consistent with the Company's compensation policy by
evaluating the competitive marketplace, the performance of the Company, the
performance of the executive particularly with respect to the ability to manage
growth of the Company, the length of the executive's service to the Company and
any increased responsibilities assumed by the executive. Mr. Miceli's base
salary is determined by the Compensation and Stock Option Committee in
consultation with the Chairman of the Board, President and Chief Executive
Officer of the Company.
Annual Bonuses
The Company from time to time considers the payment of bonuses to its
executive officers although no formal plan currently exists. Bonuses would be
determined based, first, upon the level of achievement by the Company of its
strategic and operating goals and, second, upon the level of personal
achievement by participants. The achievement of personal goals includes the
actual performance of the Company for which the executive officer has
responsibility as compared to the planned performance thereof, other individual
contributions, the ability to manage and motivate reporting employees and the
achievement of assigned projects. Bonuses are determined annually after the
close of each fiscal year.
Compensation of Chief Executive Officer
Mr. Petrocelli's base salary of $650,000 is based upon the terms of his
employment agreement and the factors described in the "Salaries" paragraph
above. Mr. Petrocelli will receive the same base salary in 1998. Mr. Petrocelli
received a bonus in 1998 of $700,000 for services rendered during the 1997
fiscal year. In addition, the Company granted Mr. Petrocelli options to purchase
222,381 shares. The Compensation and Stock Option Committee has recommended that
the stockholders approve a performance criteria which requires the Company to
achieve at least $50,000,000 in total revenues in order for the Chief Executive
Officer to be eligible to receive a bonus. This proposal is designed to qualify
bonuses paid to the Chief Executive Officer as "performance based" for purposes
of Section 162 of the Internal Revenue Code. See "Proposal II--Performance
Criteria for Chief Executive Officer Bonus Compensation." At the Company's 1996
annual meeting of stockholders, the stockholders had approved a performance
criteria which requires the Company to achieve at least $70,000,000 in total
revenues in order for the
-10-
<PAGE>
Chief Executive Officer to be eligible to receive a bonus. For the fiscal year
ended December 31, 1997, this criteria was achieved. Including the approximately
$20,000,000 in revenues from Dorne & Margolin Inc., which for financial
statement purposes, were reclassified to discontinued operations, revenues for
1997 were approximately $80,000,000.
Compensation and Stock Option Committee: Arnold S. Penner and Howard M.
Lorber.
COMMON STOCK PERFORMANCE: Set forth below is a graph comparing the total
shareholder returns (assuming reinvestment of dividends, if any) of the Company,
AMEX and a peer group ("The Peer Group") compiled by the Company consisting of
publicly traded companies in industry segments corresponding to those in which
the Company competes. The Peer Group, which includes the Company consists of the
following companies: Base Ten Systems, Comtech Telecommunications, EDO
Corporation, EQK Realty Investments, Keystone Consolidated Industries, Inc.,
Larizza Industries, Inc. and Pacific Gateway Properties, Inc., and
Watkins-Johnson Company.
The Peer Group consolidation was done on a weighted average basis
(market capitalization basis, adjusted at the end of each year). The graph
assumes $100 invested on December 31, 1992, in the Company and each of the other
indices.
TOTAL RETURN TO SHAREHOLDERS REINVESTED DIVIDENDS
INDEXED RETURNS
Years Ending
<TABLE>
<CAPTION>
======================================================================================================
Base
Company Period
Name/Index Dec 92 Dec 93 Dec 94 Dec 95 Dec 96 Dec 97
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
United Capital 100 288.00 272.00 220.00 280.00 848.00
Corp.
- ------------------------------------------------------------------------------------------------------
American Stock 100 119.52 108.63 137.32 146.10 171.48
Exchange
- ------------------------------------------------------------------------------------------------------
Peer Group 100 154.92 152.84 201.83 155.62 202.02
======================================================================================================
</TABLE>
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following sets forth the transactions involving the Company and its
subsidiaries and its executive officers and/or Directors from January 1, 1997.
Specific descriptions of these transactions are provided below.
In September 1996, the Company purchased a 50% interest in a limited
partnership that owns and operates a hotel in Miami Beach, Florida. Through
December 31, 1997, the Company has invested approximately $1,168,000 for its
equity interest. In September 1996, the Company participated in a $2.5 million
loan transaction to the limited partnership secured by a mortgage lien against
the property. The Company advanced approximately $682,500 in connection with
this note. The remaining amounts were advanced by the following: A.F.
Petrocelli, $250,000; Beverly Petrocelli, $1 million; an officer of the Company,
$100,000; and the balance by unrelated parties. All amounts invested in and
advanced to the partnership by the Company have been classified as investments
in and advances to affiliates and are included in other assets in the
consolidated financial statements. The note bears interest at 14% per annum
payable monthly and the participants also received a commitment fee of 4%. This
note matured in September 1997 and was extended in accordance with original
terms of the note, for one year, in consideration of a 4% commitment fee. A.F.
Petrocelli disclaims beneficial interest of the participation interest held by
Beverly Petrocelli.
In 1996 and 1997, in order to effectively manage the cost to the Company
of the remediation efforts at Metex Corporation ("Metex"), a wholly-owned
subsidiary of the Company, and its two New Jersey facilities, the Company sold,
in total, approximately a 4% interest for $40,000 in a subsidiary that manages
the Company's environmental remediation efforts to Anthony J. Miceli an officer
and Director of the Company and other employees, as well as an interest to the
Company's environmental consulting company. These shares contain certain
restrictions on transfer and, under certain circumstances, are redeemable at the
net book value of the subsidiary.
The Company's two hotel properties are managed by a publicly traded
company for which A.F. Petrocelli and Howard M. Lorber are directors. Fees paid
for the management of these properties is based upon a percentage of revenue and
was approximately $143,000 for 1997.
In March 1997, the Company completed a $73,250,000 sales/leaseback
transaction with Kmart Corporation for two of its distribution centers located
in Brighton, Colorado and Greensboro, North Carolina. Kmart will lease these
facilities for a minimum of 25 years. These sites encompass over 2.7 million
square feet and service approximately 300 Kmart stores. The Company has taken a
50% equity interest in this transaction. Also participating in this transaction
were Beverly Petrocelli, Arnold Penner and Howard M. Lorber who, along with an
unrelated
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party, have taken approximately an 8% interest in this transaction. A.F.
Petrocelli disclaims beneficial ownership of the participation interest held by
Beverly Petrocelli.
During 1997 the Company advanced, in the aggregate, $398,000 to A.F.
Petrocelli and $375,000 to Mr. Miceli. These advances bore interest at the
Company's borrowing rate under its revolving credit facility. All amounts
advanced have been repaid together with accrued interest thereon.
The Company has Indemnity Agreements with certain directors
(individually each an "Indemnitee"), indemnifying each Indemnitee against the
various legal risks and potential liabilities to which such individuals are
subject due to their position with the Company, in order to induce and encourage
highly experienced and capable persons such as the Indemnitees to continue to
serve as directors of the Company.
PROPOSAL II--CRITERIA FOR CHIEF EXECUTIVE OFFICER BONUS
COMPENSATION PERFORMANCE
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
disallows a tax deduction to public companies for compensation over $1 million
paid to the corporation's Chief Executive Officer and the four other most highly
compensated executive officers. Qualifying performance-based compensation will
not be subject to the deduction limit if certain requirements are met. The
Company's Compensation and Stock Option Committee has structured a formula,
subject to stockholder approval, by which it believes all future bonuses payable
to its Chief Executive Officer are in a manner that complies with the new
statute. Under this formula, all bonuses to be paid to the Chief Executive
Officer will be based on the total revenues of the Company. The Chief Executive
Officer currently receives a base salary of $650,000 pursuant to the terms of
his employment contract. In any year that the total revenues of the Company
exceeds $50,000,000 the Chief Executive Officer will be entitled to receive a
bonus. The revenue criteria will be adjusted in the next four years by increases
in the Consumer Price Index. The Compensation and Stock Option Committee will
certify that the performance goals have been satisfied before payment of the
bonus. At the Company's 1996 annual meeting of stockholders the stockholders
approved a proposal which provided that in any year that total revenues of the
Company exceeded $70,000,000, the Chief Executive Officer would be entitled to
receive a bonus of $700,000. The Company believes that the new criteria is
necessitated by the sale of Dorne & Margolin, Inc. which contributed
approximately $20,000,000 in revenues for the fiscal year ended December 31,
1997. For financial statement purposes, Dorne & Margolin's revenues were
reclassified to discontinued operations.
The Board of Directors and the Compensation and Stock Option Committee
recommend that stockholders vote in favor of this proposal. The Board of
Directors and the Compensation and Stock
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Option Committee believe that the Chief Executive Officer of the Company should
be awarded for the growth of the Company. The Board of Directors and the
Compensation and Stock Option Committee believe that if the Company were to meet
the established target it would demonstrate the value that the Chief Executive
Officer provides to the Company, particularly since several of the Company's
core businesses are in industries which have had little or no growth over the
last few years. The Board of Directors and the Compensation and Stock Option
Committee expect these trends to continue for the foreseeable future, and
consequently they believe that the bonus to the Chief Executive Officer should
be awarded if the Company meets the prescribed revenue targets. The Company and
the Compensation and Stock Option Committee will continue to review the
performance goal to assess the desirability of further revisions as the final
regulations to Section 162(m) are issued, the Internal Revenue Service begins to
issue interpretations, and competitive practices begin to emerge.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO PROVIDE CRITERIA
FOR THE COMPENSATION PAYABLE TO THE CHIEF EXECUTIVE OFFICER.
PROPOSAL III - APPROVAL OF AMENDMENTS TO 1988 JOINT
INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN AND THE
1988 INCENTIVE STOCK OPTION PLAN
The Board of Directors of the Company has unanimously approved for
submission to a vote of the stockholders a proposal to amend the Joint Plan and
the Incentive Plan to increase the number of shares reserved for issuance
pursuant to the exercise of options granted under each of such plans from
325,000 shares of Common Stock to 1,325,000 shares of Common Stock (the
"Amendments"). The purpose of the Joint Plan and the Incentive Plan is to
attract and retain the best available employee talent and encourage the highest
levels of employee performance in order to continue to serve the best interests
of the Company and its stockholders. The granting of options serves as partial
consideration for and gives employees an additional inducement to remain in the
service of the Company and provides them with an increased incentive to work
towards the Company's success. Each option granted pursuant to the Joint Plan
and the Incentive Plan shall be designated at the time of grant as either an
"incentive stock option" or as a "non-qualified stock option." Approximately 320
employees are eligible to participate under the Joint Plan and Incentive Plan.
The Board of Directors believes it is in the Company's and its
stockholders' best interests to approve the Amendments because they should allow
the Company to continue to grant options under the Joint Plan and the Incentive
Plan which facilitates the benefits of the additional incentive inherent in
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the ownership of Common Stock by key employees of the Company and its
subsidiaries and helps the Company retain the services of key employees.
The Joint Plan and the Incentive Plan, as proposed to be amended, would
each authorize the issuance of a maximum of 1,325,000 shares of Common Stock
pursuant to the exercise of options granted thereunder. As of the date hereof,
stock options to purchase 325,000 shares of Common Stock, at exercise prices
ranging from $5.00 to $18.75 per share have been granted under each of the Joint
Plan and the Incentive Plan, respectively. Since the enactment of the Joint Plan
and the Incentive Plan, Messrs. Petrocelli and Miceli have been awarded options
to purchase an aggregate of 372,381 shares and 56,300 shares, respectively. All
other employees as a group have been awarded options to purchase 201,319 shares
under the Joint Plan and the Incentive Plan, and all non-executive officer
Directors as a group have been awarded options to purchase an aggregate of
20,000 shares under the Joint Plan. As of the date hereof, stock options to
purchase 262,130 and 216,751 shares were outstanding under the Joint Plan and
the Incentive Plan, respectively. Options to purchase 3,350 and 3,350 shares of
Common Stock were exercised by non-executive officers in 1997 and in 1998
through the date hereof under the Joint Plan and the Incentive Plan,
respectively.
During the last completed fiscal year, options to purchase shares of
Common Stock have been granted pursuant to the Joint Plan or the Incentive Plan
to (i) Mr. Petrocelli and Mr. Miceli, (ii) all Non Executive Officer Directors
as a group and (iii) all employees, including all current officers who are not
executive officers, as a group, as follows:
Name and Position Number of
- ----------------- Options
(#)(1)(2)(3)
------------------------
A.F. Petrocelli............................... 222,381
Anthony J. Miceli............................. 30,000
Executive Group............................... 252,381
Non Executive Officer Directors as a Group ... 20,000
Non-Executive Officer Employee Group.......... 47,000
- -------------------
(1) On December 31, 1997, the last reported sales price of the Company's
Common Stock as reported on AMEX was $26.50 per share.
(2) Information contained in this table is duplicative of information
contained in "Executive Compensation" and does not signify additional
grants of options to purchase shares of Common Stock.
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(3) Options were granted on June 19, 1997 and have an exercise price of
either $17.00 or $18.75 per share.
Administration of the Plan
The Joint Plan and the Incentive Plan are administered by the Stock
Option Committee, which determines to whom among those eligible, and the time or
times at which options will be granted, the number of shares to be subject to
options, the duration of options, any conditions to the exercise of options, and
the manner in and price at which options may be exercised. In making such
determinations, the Stock Option Committee may take into account the nature and
period of service of eligible employees, their level of compensation, their
past, present and potential contributions to the Company and such other factors
as the Stock Option Committee in its discretion deems relevant.
The Stock Option Committee is authorized to amend, suspend or terminate
the Joint Plan or the Incentive Plan, except that it is not authorized without
stockholder approval (except with regard to adjustments resulting from changes
in capitalization) to (i) increase the maximum number of shares that may be
issued pursuant to the exercise of options granted under the Joint Plan or the
Incentive Plan; (ii) materially increase the benefits accruing to participants;
or (iii) materially change the eligibility requirements for participation.
Option Price
The exercise price of each option is determined by the Stock Option
Committee, but may not be less than 100% of the fair market value of the shares
of Common Stock covered by the option on the date the option is granted. If an
incentive stock option is to be granted to an employee who owns over 10% of the
total combined voting power of all classes of the Company's stock, then the
exercise price may not be less than 110% of the fair market value of the Common
Stock covered by the option on the date the option is granted.
Terms of Options
The Stock Option Committee shall, in its discretion, fix the term of
each option, provided that the maximum term of each option shall be 10 years.
Incentive stock options granted to an employee who owns over 10% of the total
combined voting power of all classes of stock of the Company shall expire not
more than five years after the date of grant. The Joint Plan and the Incentive
Plan provide for the earlier expiration of options of a participant in the event
of certain terminations of employment.
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Registration of Shares
The Company intends to file a registration statement under the
Securities Act of 1933, as amended, with respect to the Common Stock issuable
pursuant to the Amendments to the Joint Plan and the Incentive Plan subsequent
to the Amendments' approval by the Company's stockholders. The Company
previously filed a Registration Statement covering an aggregate of 650,000
shares issuable upon the exercise of options granted under the Incentive Plan
and the Joint Plan.
Required Vote
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present, in person or by proxy and entitled to vote, is
required for approval of the Amendments to the Joint Plan and the Incentive
Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE
AMENDMENTS TO THE JOINT PLAN AND THE INCENTIVE PLAN. BROKER NON-VOTES AND
PROXIES MARKED "ABSTAIN" WITH RESPECT TO THIS PROPOSAL WILL BE COUNTED TOWARDS A
QUORUM. ABSTENTIONS WILL BE COUNTED AS A VOTE AGAINST THIS PROPOSAL AND BROKER
NON-VOTES WILL NOT BE COUNTED FOR PURPOSES OF DETERMINING WHETHER THIS PROPOSAL
HAS BEEN APPROVED.
PROPOSAL IV--RATIFICATION OF APPOINTMENT OF
INDEPENDENT AUDITORS
The Board of Directors appointed Arthur Andersen LLP, certified public
accountants, as the Company's independent auditors for the year ending December
31, 1998. Although the selection of auditors does not require ratification, the
Board of Directors has directed that the appointment of Arthur Andersen LLP be
submitted to stockholders for ratification due to the significance of their
appointment to the Company. If stockholders do not ratify the appointment of
Arthur Andersen LLP, the Board of Directors will consider the appointment of
other certified public accountants. The approval of the proposal to ratify the
appointment of Arthur Andersen LLP requires the affirmative vote of a majority
of the votes cast by all shareholders represented and entitled to vote thereon.
An abstention, withholding of authority to vote or broker non-vote, therefore,
will not have the same legal effect as an "against" vote and will not be counted
in determining whether the proposal has received the required shareholder vote.
The Company's auditors for the year ended December 31, 1997 were Arthur
Andersen LLP.
Recommendation
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1998.
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ANNUAL REPORT
All stockholders of record as of the Record Date, have been sent, or are
concurrently herewith being sent, a copy of the Company's 1997 Annual Report for
the year ended December 31, 1997, which contains certified consolidated
financial statements of the Company and its subsidiaries for the year ended
December 31, 1997.
ANY STOCKHOLDER OF THE COMPANY MAY OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1997
(WITHOUT EXHIBITS), AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, BY
WRITING TO ANTHONY J. MICELI, VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND
SECRETARY AT UNITED CAPITAL CORP., 9 PARK PLACE, GREAT NECK, NEW YORK 11021.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the proxy materials to be
distributed in connection with the next Annual Meeting of Stockholders of the
Company, stockholder proposals for such meeting must be submitted to the Company
no later than January 9, 1999.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no matters
other than those set forth herein which will be presented for consideration at
the Meeting. If any other matter or matters are properly brought before the
Meeting or any adjournment thereof, the persons named in the accompanying Proxy
will have discretionary authority to vote, or otherwise act, with respect to
such matters in accordance with their judgment.
Anthony J. Miceli
Secretary
May 13, 1998
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
UNITED CAPITAL CORP.
Proxy -- Annual Meeting of Stockholders
June 9, 1998
The undersigned, a stockholder of United Capital Corp., a Delaware
corporation (the "Company"), does hereby appoint A.F. Petrocelli and Anthony J.
Miceli, and each of them, the true and lawful attorneys and proxies with full
power of substitution, for and in the name, place and stead of the undersigned,
to vote all of the shares of Common Stock of the Company which the undersigned
would be entitled to vote if personally present at the 1998 Annual Meeting of
Stockholders of the Company to be held at the offices of the Company, 9 Park
Place, Great Neck, New York 11021, on June 9, 1998, at 10:00 A.M., Local Time,
or at any adjournment or adjournments thereof.
The undersigned hereby instructs said proxies or their substitutes:
1. ELECTION OF DIRECTORS:
The election of the following directors: Howard M. Lorber, Anthony J.
Miceli, Arnold S. Penner, and A.F. Petrocelli to serve until the next
annual meeting of stockholders and until their successors have been duly
elected and qualified.
TO WITHHOLD AUTHORITY
WITHHOLD TO VOTE FOR ANY NOMINEE(S),
FOR ___ VOTE ___ PRINT NAME(S) BELOW
-------------------------
2. BONUS CRITERIA:
To approve the proposal to provide performance criteria for the payment
of bonuses to the Chief Executive Officer.
______ FOR _____ AGAINST _____ ABSTAIN
<PAGE>
3. TO AMEND THE 1988 JOINT INCENTIVE AND NON-QUALIFIED STOCK OPTION
PLAN AND THE 1988 INCENTIVE STOCK OPTION PLAN:
To amend the 1988 Joint Incentive and Non-Qualified Stock Option Plan
(the "Joint Plan") and the 1988 Incentive Stock Option Plan (the
"Incentive Plan") to increase the shares of Common Stock reserved for
issuance under each of the Joint Plan and the Incentive Plan from
325,000 shares of Common Stock to 1,325,000, respectively.
______ FOR _____ AGAINST _____ ABSTAIN
4. RATIFICATION OF APPOINTMENT OF AUDITORS:
To ratify the appointment of Arthur Andersen LLP as the independent
auditors of the Company for the year ending December 31, 1998.
______ FOR _____ AGAINST _____ ABSTAIN
5. DISCRETIONARY AUTHORITY:
To vote with discretionary authority with respect to all other matters
which may come before the Meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT DIRECTORS,
APPROVE THE PERFORMANCE CRITERIA, AMEND THE JOINT PLAN AND THE INCENTIVE PLAN
AND TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
The undersigned hereby revokes any proxy or proxies heretofore given,
and ratifies and confirms that all the proxies appointed hereby, or any of them,
or their substitutes, may lawfully do or cause to be done by virtue hereof. The
undersigned hereby acknowledges receipt of a copy of the Notice of Annual
Meeting and Proxy Statement, both dated May 6, 1998, and a copy of either the
Company's Annual Report or Annual Report on Form 10-K for the year ended
December 31, 1997.
Dated _______________________ 1998
_____________________________ (L.S.)
