SCHEDULE 14A INFORMATION
------------------------
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to SS240.14a-11(c) or SS240.14a-12
THE FIRST CONNECTICUT CAPITAL CORPORATION
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(Name of Registrant as specified in its charter)
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(Name of Person(s) Filing Proxy Statement), if other than Registrant
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(l) or
14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
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(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11: (A)
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any 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>
THE FIRST CONNECTICUT
CAPITAL CORPORATION
1000 Bridgeport Avenue
Shelton, Connecticut 06484
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
October 19, 1999
--------------------------
To the Stockholders:
NOTICE is hereby given that the Annual Meeting of Stockholders of THE
FIRST CONNECTICUT CAPITAL CORPORATION (the "Company") will be held at the First
Union Bank, Shelton Square Office, Greater Valley Chamber of Commerce,
Conference Room, 2nd Floor, 900 Bridgeport Avenue, Shelton, Connecticut on
October 19, 1999 at 9:00 a.m. for the following purposes:
( 1 ) To elect six Directors for the ensuing year;
( 2 ) To consider and approve The First Connecticut Capital Corporation
1999 Stock Option Plan.
( 3 ) To approve the appointment of the firm of Deloitte & Touche as
auditors of the Company for the fiscal year ending March 31, 2000;
( 4 ) To transact any other business that may properly come before the
meeting or any adjournment thereof.
Stockholders of record on the books of the Company at close of business
on September 7, 1999 will be entitled to vote at the meeting.
So far as management is at present aware, no business will come before
the annual meeting other than the matters set forth above.
You are cordially invited to attend this meeting. Whether or not you plan
to be present, kindly fill in, date and sign the enclosed proxy exactly as your
name appears on the proxy and mail it promptly so your vote can be recorded.
Your vote is important regardless of the number of shares you own. A return
envelope is enclosed for your convenience which requires no postage if mailed
within the United States. The giving of this proxy will not affect your right to
vote in person in the event you find it convenient to attend the meeting.
By order of the Board of Directors,
Priscilla E. Ottowell
Secretary
Dated: September 21, 1999
Shelton, CT.
<PAGE>
THE FIRST CONNECTICUT
CAPITAL CORPORATION
1000 Bridgeport Avenue
Shelton, Connecticut 06484
--------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
--------------------------
SOLICITATION AND USE OF PROXY
The enclosed proxy is solicited by The First Connecticut Capital
Corporation (the "Company") for use at the Annual Meeting of Stockholders to be
held at 9:00 a.m. on Tuesday, October 19, 1999 at the First Union Bank, Shelton
Square Office, Greater Valley Chamber of Commerce, Conference Room, 2nd Floor,
900 Bridgeport Avenue, Shelton, Connecticut or any adjournment thereof for the
purposes set forth in the attached Notice of Meeting. The approximate date on
which this Proxy Statement and the enclosed proxy is first sent or given to
stockholders is September 21, 1999.
The shares represented by a duly executed proxy received by the Secretary
in the accompanying form prior to the meeting and not revoked will be voted and
if a choice is specified in the spaces provided therefor in the proxy the shares
will be voted in accordance therewith. In the absence of such instructions, the
proxy will vote IN FAVOR OF the proposals set forth in the Notice of Meeting. If
any other matters are properly brought before the meeting, the enclosed proxy
gives discretionary authority to the persons named in such proxy to vote the
shares in accordance with their best judgment. Any stockholder giving a proxy
may revoke it by giving written notice to the Secretary of the Company at any
time prior to its use at the meeting. The mailing address of the principal
executive office of the Company is 1000 Bridgeport Avenue, Shelton, Connecticut
06484.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
Only stockholders of record at the close of business on September 7, 1999
will be entitled to vote at the meeting. The securities of the Company entitled
to vote at the Meeting are 1,173,382 outstanding shares of Common Stock. Each
share shall be accorded one vote. As of March 31, 1999, Mr. Robert E. Humphreys
of 64 Alcott Street, Acton, Massachusetts 01720, members of his immediate family
and affiliated trusts were the beneficial owners of 114,900 shares of Common
Stock constituting 9.79% of the total outstanding shares of the Company's Common
Stock. Mr. Humphreys is not an executive officer or director of the Company.
Other than such beneficial owners, to the knowledge of the Company, no
stockholder owns more than 5% of the Company's outstanding Common Stock.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, it is proposed to elect six directors, each to hold
office for a term of one year, and until his successor shall have been chosen
and qualified. All such nominees are presently serving as directors and were
elected at the 1998 Annual Meeting of Stockholders. Unless otherwise specified,
the persons named in the accompanying form of proxy shall vote such proxy for
the election of the directors named below who will constitute the new Board of
Directors, and as to whom the following information is submitted.
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<PAGE>
<TABLE>
<CAPTION>
- - - - - - - - - - - - - - --------------------- ------ ---------------------------------- ----------- ----------------- ------------
SHARES OF
COMMON STOCK PERCENTAGE
BUSINESS EXPERIENCE FIRST BENEFICIALLY OF
NAME AGE DURING PAST 5 YEARS ELECTED OWNED AS OF OUTSTANDING
AND OTHER DIRECTORSHIPS A DIRECTOR AUGUST SHARES
24,1998(1)
- - - - - - - - - - - - - - --------------------- ------ ---------------------------------- ----------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
David Engelson 78 Chairman of the Board of the 1960 43,605 3.716%
Company
Lawrence R. Yurdin 59 CEO and President of the 1986 21,707 1.850%
Company;
Jan E. Cohen 42 CEO, President and Director of 1998 2,113 0.180
CF Industries, Inc.; CEO,
LLC Manager and Director
of Northeast Builders Supply
and Home Centers;
CEO and LLC Manager of
The Brilco Business Center;
Member of the American
Institute of Certified Public
Accountants and the Conn.
Society of CPA's
Thomas D'Addario 47 Vice President of Mario 1998 15,700 1.340%
D'Addario Buick, Inc.;
Ronald Farrell 55 Principal owner, Vice 1998 -0- N/A
President and Operating
Officer of the Kaufman Fuel
Company
Michael L. Goldman 38 Principal in the law firm of 1998 16,921 1.440%
Goldman, Gruder & Woods,
LLC; Director and President
of The State Street Mortgage
Company
- - - - - - - - - - - - - - --------------------- ------ ---------------------------------- ----------- ----------------- ------------
<FN>
All directors and executive officers as a group (six) persons.. 100,046 8.526%
(1) Based on information furnished to the company by the person named or his
agent. Includes shares owned bythe director as custodian or trustee for
minor children. All directors disclaim beneficial ownership of these share.
(2) Mr. Yurdin is the son-in-law of Mr. Engelson, Chairman of the Board and a
Director of the Company.
</FN>
</TABLE>
MEETING OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held 3 meetings since the last annual meeting of
the Company which was held on October 20, 1998.
The Board of Directors has a standing Audit Committee, Stock Option
Committee and Compensation Committee, but no Nominating Committee. Members of
the Audit Committee are Messrs. Yurdin and Cohen. This Committee met once during
the last fiscal year to review audit procedures and internal controls with the
independent auditors and to review results of compliance audits conducted by
various government agencies. The Stock Option Committee is composed of the
entire Board of Directors and meet twice during the last fiscal year.
All directors attended over seventy-five percent of the Board meetings and
the Committees of the Board of which they are members. Directors, except Messers
Engelson and Yurdin, receive a fee of $300.00 per meeting for serving on the
Board or such committies.
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COMPENSATION OF EXECUTIVE OFFICERS
The following summary compensation table sets forth certain information
regarding the annual and long-term compensation of David Engelson and Lawrence
R. Yurdin. No officer of the Company receives salary and bonus exceeding
$100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
- - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION
- - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------
OTHER AWARDS PAYOUTS
ANNUAL RESTRICTED OPTIONS/ ALL OTHER
NAME AND COMPEN- STOCK SARS LTIP COMPEN-
PRINCIPAL YEAR SALARY BONUS SATION AWARDS (#) PAYOUTS SATION
POSITION ENDED (S) ($) ($) ($) ($) ($)
- - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David Engelson 03/31/99 $13,000 0 0 None 0 None 0
Chairman of the 03/31/98 $12,000 0 0 None 0 None 0
Board 03/31/97 $38,493 0 0 None 0 None 0
Lawrence R. Yurdin 03/31/99 $67,500 0 0 None 0 None 0
President & CEO 03/31/98 $67,500 0 0 None 0 None 0
03/31/97 $55,000 0 0 None 0 None 0
- - - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------
</TABLE>
TRANSACTIONS WITH MANAGEMENT
One (1) director of the Company is also an officer of The State Street
Mortgage Company, which made first and second mortgage loans to commercial and
residential borrowers. The State Street Mortgage Company is in the process of
liquidation and does not compete with the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL 2
APPROVAL OF THE COMPANY'S 1999 STOCK OPTION PLAN
The Board is recommending to the stockholders that they approve the 1999
Stock Option Plan, a copy of which is attached hereto as Exhibit A. Because
adoption of the 1999 Stock Option Plan may benefit the directors of the Company,
they may be deemed to have an interest in this proposal.
THE 1999 STOCK OPTION PLAN
The purpose of the 1999 Stock Option Plan is to provide incentives that
will attract and retain highly competent persons to serve as employees and
directors by providing them with opportunities to acquire a propriety interest
in the Company.
The following is a brief description of the principal provisions of the
1999 Stock Option Plan and is qualified in its entirety by the 1999 Stock Option
Plan included herewith as Exhibit A.
Under the 1999 Stock Option Plan, the aggregate number of shares of Common
Stock of the Company which may be issued is 150,000 shares, subject to
adjustment in certain circumstances, including merger, consolidation,
reorganization, recapitalization, stock dividends, stock splits, combination of
shares, exchange of shares, change of corporate structure or other similar
transactions. The Options issued under the Plan will be exercisable at not less
than the fair market value of the Company's Common Stock, based upon the average
quoted trading prices of the Common Stock preceding the issuance of the Options.
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The terms and conditions under which stock shall be granted under the 1999
Stock Option Plan are set forth in the 1999 Stock Option Plan and described
below. The Board of Directors or any executive officer of the Company designated
by the Board of Directors shall have authority to interpret the provisions of
the 1999 Stock Option Plan, to establish such rules and procedures as may be
necessary or advisable to administer the 1999 Stock Option Plan and to male all
determinations necessary or advisable for the administration of the 1999 Stock
Option Plan, provided that no such interpretation or determination shall change
or affect the selection of participants eligible to receive grants under that
Plan, the number of shares of Common Stock covered under that Plan or the terms
and conditions thereof.
ELIGIBILTY. Employees, consultants and non-employee directors of the
Company are eligible to receive stock under the 1999 Stock Option Plan. The
Company currently has 4 employees and 4 non-employee directors who would be
eligible to participate in this Plan.
TERM OF PLAN. The 1999 Stock Option Plan shall be effective as of October
19, 1999, upon approval of the stockholders at the Annual Meeting.
Participants will not be able to sell or transfer Common Stock issued to
them under the Plan for at least twelve months from the date of issuance and
thereafter will be subject to the trading restrictions under Rule 144 of the
Securities Act of 1933, as amended.
The Stock Option Plan may be terminated and may be modified or amended by
the Company's Board of Directors at any time; provided, however, that no
modification or amendment may increase the aggregate number of shares which may
be issued, materially increase benefits accruing to participants under the 1999
Directors Plan, or materially modify the requirements as to eligibility to
receive stock without stockholder approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL 3
ELECTION OF AUDITORS
Upon the approval of a majority of the stockholders, a resolution will be
adopted appointing the firm of Deloitte & Touche, who have no direct or indirect
affiliation with, or financial interest in, the Company, as auditors to examine
and report upon the financial statements of the Company for the fiscal year
ending March 31, 2000. For the fiscal year ended March 31, 1999, Deloitte &
Touche examined the Company's financial statements included in the Company's
report to shareholders. A representative of the firm of Deloitte & Touche is
expected to be available to respond to appropriate questions.
The Company and its accountants did not have any "disagreements" as
defined in Item 304 of Regulation S-K of the SEC during the two most recent
fiscal years of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
EXPENSES OF SOLICITATION
The solicitation of proxies in the form enclosed is made on behalf of the
management of the Company and by authority of its Board of Directors. The
expenses in connection with the solicitation of Proxies, including the cost of
preparing, handling, printing and mailing the Notice of Annual Meeting of
Stockholders, proxy and Proxy Statement will be borne by the Company.
Solicitations will be made only by use of the mails except, that if necessary,
management may solicit proxies by advertising, telephone, telegraph, cable and
personal interviews. In connection with this solicitation of proxies, management
may use the services of directors, officers and regular employees, who will be
reimbursed for their actual out of pocket expenses incurred. The Company may
request bank, broker, nominees, custodians and fiduciaries to forward copies of
the proxy soliciting material to the beneficial owners of the stock held of
record by such persons and to request authority for the execution of proxies.
The Company will reimburse such persons for their expenses in so doing, which is
expected to be nominal in cost.
5
<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 Annual Meeting
must be received by the Company no later than March 20, 2000 for inclusion in
the Company's Proxy Statement and form of Proxy for that meeting.
ADDITIONAL INFORMATION
The Annual Report of the Company on Form 10-KSB covering the fiscal year
ended March 31, 1999 was mailed to all stockholders on June 24, 1999
Stockholders not receiving a copy of the Annual report on Form 10-KSB may
obtain one by writing The First Connecticut Capital Corporation, 1000 Bridgeport
Avenue, Shelton, Connecticut 06484, attention Priscilla E. Ottowell, Secretary
or by calling 203-944-5400.
OTHER MATTERS
The persons named in the enclosed form of proxy have no present intention
of bringing before the meeting for action any matters other than those
specifically referred to above, nor has management any such intention and
neither such person nor the management are aware of any matters which may be
presented by others. If any other business should properly come before the
meeting, the persons named in the proxy intended to vote thereon in accordance
with their best judgment.
ALL STOCKHOLDERS ARE URGED TO FILL IN, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY.
By Order of the Board Directors,
Priscilla E. Ottowell,
Secretary
Dated: September 21, 1999
Shelton, CT.
6
<PAGE>
EXHIBIT A
THE FIRST CONNECTICUT CAPITAL CORPORATION
1999 STOCK OPTION PLAN
1. PURPOSE; EFFECTIVENESS OF THE PLAN
(a) The purpose of this Plan is to advance the interests of the
Company and its stockholders by helping the Company obtain and retain the
services of employees, officers, consultants, and directors, upon whose
judgment, initiative and efforts the Company is substantially dependent, and to
provide those persons with further incentives to advance the interests of the
Company.
(b) This Plan will become effective on the date of its adoption by
the Board, provided this Plan is approved by the stockholders of the Company
(excluding holders of shares of Stock issued by the Company pursuant to the
exercise of options granted under this Plan) within twelve (12) months before or
after that date. If this Plan is not so approved by the stockholders of the
Company, any options granted under this Plan will be rescinded and will be void.
This Plan will remain in effect until it is terminated by the Board or the
Committee (as defined hereafter) under section 9 hereof, except that no ISO (as
defined herein) will be granted after the tenth anniversary of the date of this
Plan's adoption by the Board. This Plan will be governed by, and construed in
accordance with, the laws of the State of Connecticut.
2. CERTAIN DEFINITIONS. Unless the context otherwise requires, the
following defined terms (together with other capitalized terms defined elsewhere
in this Plan) will govern the construction of this Plan, and of any stock option
agreements entered into pursuant to this Plan:
(a)"10% Stockholder" means a person who owns, either directly or
indirectly by virtue of the ownership attribution provisions set forth
in Section 424(d) of the Code at the time he or she is granted an
Option, stock possessing more than ten percent (10%) of the total
combined voting power or value of all classes of stock of the Company
and/or of its subsidiaries;
(b)"1933 Act" means the federal Securities Act of 1933, as amended;
(c)"Board" means the Board of Directors of the Company;
(d)"Called for under an Option," or words to similar effect, means
issuable pursuant to the exercise of an Option;
<PAGE>
(e)"Code" means the Internal Revenue Code of 1986, as amended
(references herein to Sections of the Code are intended to refer to
Sections of the Code as enacted at the time of this Plan's adoption by
the Board and as subsequently amended, or to any substantially similar
successor provisions of the Code resulting from recodification,
renumbering or otherwise);
(f)"Committee" means a committee of two or more directors, appointed by
the Board, to administer and interpret this Plan; provided that the
term "Committee" will refer to the Board during such times as no
Committee is appointed by the Board.
(g)"Company" means The First Connecticut Capital Corporation, a
Connecticut corporation;
(h)"Disability" has the same meaning as "permanent and total
disability," as defined in Section 22(e)(3) of the Code;
(i)"Eligible Participants" means persons who, at a particular time, are
employees, officers, consultants, or directors of the Company or its
subsidiaries;
(j)"Fair Market Value" means, with respect to the Stock and as of the
date an ISO is granted hereunder, the market price per share of such
Stock determined by the Committee, consistent with the requirements of
Section 422 of the Code and to the extent consistent therewith, as
follows:
(i) If the Stock was traded on a stock exchange on the date in
question, when the Fair Market Value will be equal to the
closing price reported by the applicable
composite-transactions report for such date;
(ii) If the Stock was traded over-the-counter on the date in
question and was classified as a national market issue, then
the Fair Market Value will be equal to the last-transaction
price quoted by the NASDAQ system for such date;
(iii) If the Stock was traded over-the-counter on the date in
question but was not classified as a national market issue,
then the Fair Market Value will be equal to the average of the
last reported representative bid and asked prices quoted by
the NASDAQ system for such date; and
(iv) If none of the foregoing provisions is applicable, then
the Fair Market Value will be determined by the Committee in
good faith on such basis as it deems appropriate.
(k) "ISO" has the same meaning as "incentive stock option," as defined
in Section 422 of the Code;
(l) "Involuntary Transfer" means a Transfer that occurs pursuant to any
of the following: an assignment of Option Stock for the benefit of
creditors of the Optionee; a Transfer by operation of law, including,
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<PAGE>
without limitation, a Transfer by will or under the laws of descent and
distribution; an execution of judgment against the Option Stock or the
acquisition of record or beneficial ownership of Option Stock by a
lender or creditor; a Transfer pursuant to any decree of divorce,
dissolution or separate maintenance, any property settlement, any
separation agreement or any other agreement with a spouse (except for
estate planning purposes) under which a part or all of any Option Stock
are Transferred or awarded to the spouse of the Optionee or are
required to be sold; or a Transfer resulting from the filing by the
Optionee of a petition for relief, or the filing of an involuntary
petition against the Optionee, under the bankruptcy laws of the United
States or of any other nation;
(m)"Just Cause Termination" means a termination by the Company of an
Optionee's employment by and/or service to the Company (or if the
Optionee is a director, removal of the Optionee from the Board by
action of the stockholders or, if permitted by applicable law and the
by-laws of the Company, the other directors), in connection with the
good faith determination of the Company's board of directors (or of the
Company's stockholders if the Optionee is a director and the removal of
the Optionee from the Board is by action of the stockholders, but in
either case excluding the vote of the Optionee if he or she is a
director or a stockholder) that the Optionee has engaged in any acts
involving dishonesty or moral turpitude or in any acts that materially
and adversely affect the business, affairs or reputation of the Company
or its subsidiaries;
(n) "NSO" means any option granted under this Plan whether designated
by the Committee as a "non-qualified stock option," a "non-statutory
stock option" or otherwise, other than an option designated by the
Committee as an ISO, or any option so designated but which, for any
reason, fails to qualify as an ISO pursuant to Section 422 of the Code
and the rules and regulations thereunder;
(o) "Option" means an option granted pursuant to this Plan entitling
the option holder to acquire shares of Stock issued by the Company
pursuant to the valid exercise of the option;
(p) "Option Agreement" means an agreement between the Company and an
Optionee, in form and substance satisfactory to the Committee in its
sole discretion, consistent with this Plan;
(q)"Option Price" with respect to any particular Option means the
exercise price at which the Optionee may acquire each share of the
Option Stock called for under such Option;
(r)"Option Stock" means Stock issued or issuable by the Company
pursuant to the valid exercise of an Option;
(s) "Optionee" means an Eligible Participant to whom Options are
granted hereunder, and any transferee thereof pursuant to a Transfer
authorized under this Plan;
(t) "Plan" means this 1999 Stock Option Plan of the Company;
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<PAGE>
(u) "QDRO" has the same meaning as "qualified domestic relations order"
as defined in Section 414(p) of the Code;
(v) "Stock" means shares of the Company's Common voting stock;
(w) "Subsidiary" has the same meaning as "Subsidiary Corporation" as
defined in Section 424(f) of the Code;
(x) "Transfer," with respect to Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment, transfer,
conveyance, pledge, hypothecation, encumbrance, disposal, loan, gift,
attachment or levy of such Option Stock; and
(y) "Voluntary Transfer" means any Transfer other than an Involuntary
Transfer.
3. ELIGIBILITY. The Company may grant Options under this Plan only
to persons who are Eligible Participants as of the time of such grant. Subject
to the provisions of sections 4(d), 5 and 6 hereof, there is no limitation on
the number of Options that may be granted to an Eligible Participant.
4. ADMINISTRATION.
(a) COMMITTEE. The Committee, if appointed by the Board, will
administer this Plan. If the Board, in its discretion, does not appoint such a
Committee, the Board itself will administer this Plan and take such other
actions as the Committee is authorized to take hereunder; provided that the
Board may take such actions hereunder in the same manner as the Board may take
other actions under the Company's certificate of incorporation and by-laws
generally.
(b) AUTHORITY AND DISCRETION OF COMMITTEE. The Committee will
have full and final authority in its discretion, at any time and from time to
time, subject only to the express terms, conditions and other provisions of the
Company's certificate of incorporation, by-laws and this Plan, and the specific
limitations on such discretion set forth herein:
(i) to select and approve the persons who will be granted Options
under this Plan from among the Eligible Participants, and to
grant to any person so selected one or more Options to
purchase such number of shares of Option Stock as the
Committee may determine;
(ii) to determine the period or periods of time during which
Options may be exercised, the Option Price and the duration of
such Options, and other matters to be determined by the
Committee in connection with specific Option grants and Option
Agreements as specified under this Plan;
(iii) to interpret this Plan, to prescribe, amend and rescind rules
and regulations relating to this Plan, and to make all other
determinations necessary or advisable for the operation and
administration of this Plan; and
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<PAGE>
(iv) to delegate all or a portion of its authority under
subsections (i) and (ii) of this section 4(b) to one or more
directors of the Company who are executive officers of the
Company, but only in connection with Options granted to
Eligible Participants who are not officers or directors of the
Company, and subject to such restrictions and limitations
(such as the aggregate number of shares of Option Stock called
for by such Options that may be granted) as the Committee may
decide to impose on such delegate directors.
(c) LIMITATION ON AUTHORITY. Notwithstanding the foregoing, or any
other provision of this Plan, the Committee will have no authority to grant
Options to any of its members, unless approved by the Board.
(d) DESIGNATION OF OPTIONS. Except as otherwise provided herein,
the Committee will designate any Option granted hereunder either as an ISO or as
an NSO. To the extent that the Fair Market Value (determined at the time the
Option is granted) of Stock with respect to which all ISOs are exercisable for
the first time by any individual during any calendar year (pursuant to this Plan
and all other plans of the Company and/or its subsidiaries) exceeds $100,000,
such option will be treated as an NSO. Notwithstanding the general eligibility
provisions of section 3 hereof, the Committee may grant ISOs only to persons who
are employees of the Company and/or its subsidiaries.
(e) OPTION AGREEMENTS. Options will be deemed granted
hereunder only upon the execution and delivery of an Option Agreement by the
Optionee and a duly authorized officer of the Company. Options will not be
deemed granted hereunder merely upon the authorization of such grant by the
Committee.
5. SHARES RESERVED FOR OPTIONS.
(a) OPTION POOL. The aggregate number of shares of Option Stock that
may be issued pursuant to the exercise of Options granted under this Plan will
not exceed One Hundred Fifty Thousand (150,000) (the "Option Pool"), provided
that such number will be increased by the number of shares of Option Stock that
the Company subsequently may reacquire through repurchase or otherwise. Shares
of Option Stock that would have been issuable pursuant to Options, but that are
no longer issuable because all or part of those Options have terminated or
expired, will be deemed not to have been issued for purposes of computing the
number of shares of Option Stock remaining in the Option Pool and available for
issuance.
(b) ADJUSTMENTS UPON CHANGES IN STOCK. In the event of any
change in the outstanding Stock of the Company as a result of a stock split,
reverse stock split, stock dividend, recapitalization, combination or
reclassification, appropriate proportionate adjustments will be made in: (i) the
aggregate number of shares of Option Stock in the Option Pool that may be issued
pursuant to the exercise of Options granted hereunder; (ii) the Option Price and
the number of shares of Option Stock called for in each outstanding Option
5
<PAGE>
granted hereunder; and (iii) other rights and matters determined on a per share
basis under this Plan of any Option Agreement hereunder. Any such adjustments
will be made only by the Board, and when so made will be effective, conclusive
and binding for all purposes with respect to this Plan and all Options then
outstanding. No such adjustments will be required by reason of the issuance or
sale by the Company for cash or other consideration of additional shares of its
Stock or securities convertible into or exchangeable for shares of its Stock.
6. TERMS OF STOCK OPTION AGREEMENTS. Each Option granted pursuant to
this Plan will be evidenced by an agreement (an "Option Agreement") between the
Company and the person to whom such Option is granted, in form and substance
satisfactory to the Committee in its sole discretion, consistent with this Plan.
Without limiting the foregoing, each Option Agreement (unless otherwise stated
therein) will be deemed to include the following terms and conditions:
(a) COVENANTS OF OPTIONEE. At the discretion of the Committee, the
person to whom an Option is granted hereunder, as a condition to the granting of
the Option, must execute and deliver to the Company a confidential information
agreement approved by the Committee. Nothing contained in this Plan, any Option
Agreement or in any other agreement executed in connection with the granting of
an Option under this Plan will confer upon any Optionee any right with respect
to the continuation of his or her status as an employee of, consultant or
independent contractor to, or director of, the Company or its subsidiaries.
(b) VESTING PERIODS. Except as otherwise provided herein, each
Option Agreement may specify the period or periods of time within which each
Option or portion thereof will first become exercisable (the "Vesting Period")
with respect to the total number of shares of Option Stock called for thereunder
(the "Total Award Option Stock"). Such Vesting Periods will be fixed by the
Committee in its discretion, and may be accelerated or shortened by the
Committee in its discretion. Unless the Option Agreement executed by an Optionee
expressly otherwise provides and except as set forth herein, the right to
exercise an Option granted hereunder will vest immediately upon the grant
thereof by the Committee, or on such later Grant Date as may be specified in
such Option Agreement.
(c) EXERCISE OF THE OPTION.
(i) MECHANICS AND NOTICE. An Option may be exercised to the extent
exercisable (1) by giving written notice of exercise to the
Company, specifying the number of full shares of Option Stock to
be purchased and accompanied by full payment of the Option Price
thereof and the amount of withholding taxes pursuant to
subsection 6(c)(ii) below; and (2) by giving assurances
satisfactory to the Company that the shares of Option Stock to
be purchased upon such exercise are being purchased for
investment and not with a view to resale in connection with any
distribution of such shares in violation of the 1933 Act;
provided, however, that in the event the Option Stock called for
under the Option is registered under the 1933 Act, or in the
event resale of such Option Stock without such registration
would otherwise be permissible, this second condition will be
inoperative if, in the opinion of counsel for the Company, such
condition is not required under the 1933 Act, or any other
applicable law, regulation or rule of any governmental agency.
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(ii) WITHHOLDING TAXES. As a condition to the issuance of the shares
of Option Stock upon full or partial exercise of an NSO granted
under this Plan, the Optionee will pay to the Company in cash,
or in such other form as the Committee may determine in its
discretion, the amount of the Company's tax withholding
liability required in connection with such exercise for purposes
of this subsection 6(c)(ii), "tax withholding liability" will
mean all federal and state income taxes, social security tax,
and any other taxes applicable to the compensation income
arising from the transaction required by applicable law to be
withheld by the Company.
(d) PAYMENT OF OPTION PRICE. Each Option Agreement will
specify the Option Price with respect to the exercise of Option Stock
thereunder, to be fixed by the Committee in its discretion, but in no event will
the Option Price for an ISO granted hereunder be less than the Fair Market Value
(or, in case the Optionee is a 10% Stockholder, one hundred ten percent (110%)
of such Fair Market Value) of the Option Stock at the time such ISO is granted.
The Option Price will be payable to the Company in United States dollars in cash
or by check or, such other legal consideration as may be approved by the
Committee, in its discretion.
(i) For example, the Committee, in its discretion, may permit a
particular Optionee to pay all or a portion of the Option Price,
and/or the tax withholding liability set forth in subsection
6(c)(ii) above, with respect to the exercise of an Option either
by surrendering shares of Stock already owned by such Optionee
or by withholding shares of Option Stock, provided that the
Committee determines that the fair market value of such
surrendered Stock or withheld Option Stock is equal to the
corresponding portion of such Option Price and/or tax
withholding liability, as the case may be, to be paid for
therewith.
(ii) If the Committee permits an Optionee to pay any portion of the
Option Price and/or tax withholding liability with shares of
Stock with respect to the exercise of an Option (the "Underlying
Option") as provided in subsection 6(d)(i) above, then the
Committee, in its discretion, may grant to such Optionee (but
only if the Optionee remains an Eligible Participant at that
time) additional NSOs, the number of shares of Option Stock
called for thereunder to be equal to all or a portion of the
Stock so surrendered or withheld (a "Replacement Option"). Each
Replacement Option will be evidenced by an Option Agreement.
Unless otherwise set forth therein, each Replacement Option will
be immediately exercisable upon such grant (without any Vesting
Period) and will be coterminous with the Underlying Option. The
Committee, in its sole discretion, may establish such other
terms and conditions for Replacement Options as it deems
appropriate.
(e) TERMINATION OF THE OPTION. Except as otherwise provided herein,
each Option Agreement will specify the period of time, to be fixed by the
Committee in its discretion, during which the Option granted therein will be
exercisable, not to exceed ten (10) years from the date of grant in the case of
an ISO (the "Option Period"); provided that the Option Period will not exceed
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five (5) years from the date of grant in the case of an ISO granted to a 10%
Stockholder. To the extent not previously exercised, each Option will terminate
upon the expiration of the Option Period specified in the Option Agreement;
provided, however, that each such Option will terminate, if earlier: (i) ninety
(90) days after the date that the Optionee ceases to be an Eligible Participant
for any reason, other than by reason of death or disability or a Just Cause
Termination; (ii) twelve (12) months after the date that the Optionee ceases to
be an Eligible Participant by reason of such person's death or disability; or
(iii) immediately as of the date that the Optionee ceases to be an Eligible
Participant by reason of a Just Cause Termination. In the event of a merger or
consolidation or other reorganization (a "Corporate Transaction") in which the
Company is not the surviving corporation, or in which the Company becomes a
subsidiary of another corporation, then notwithstanding anything else herein,
the right to exercise all then outstanding Options will vest immediately prior
to such Corporate Transaction and will terminate immediately after such
Corporate Transaction; provided, however, that if the Board, in its sole
discretion, determines that such immediate vesting of the right to exercise
outstanding Options is not in the best interests of the Company, then the
successor corporation must agree to assume the outstanding Options or substitute
therefor comparable options of such successor corporation or a parent or
subsidiary of such successor corporation.
(f) OPTIONS NONTRANSFERABLE. No Option will be transferable by the
Optionee otherwise than by will or the laws of descent and distribution, or in
the case of an NSO, pursuant to a QDRO. During the lifetime of the Optionee, the
Option will be exercisable only by him or her, or the transferee of an NSO if it
was transferred pursuant to a QDRO.
(g) QUALIFICATION OF STOCK. The right to exercise an Option will be
further subject to the requirement that if at any time the Board determines, in
its discretion, that the listing, registration or qualification of the shares of
Option Stock called for thereunder upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental regulatory
authority, is necessary or desirable as a condition of or in connection with the
granting of such Option or the purchase of shares of Option Stock thereunder,
the Option may not be exercised, in whole or in part, unless and until such
listing, registration, qualification, consent or approval is effected or
obtained free of any conditions not acceptable to the Board, in its discretion.
(h) RESTRICTIONS ON TRANSFER OF OPTION STOCK.
(i) GENERAL RULES ON PERMISSIBLE TRANSFER OF OPTION STOCK. Option
Stock may be Transferred only after compliance with the specific
limitations on the Transfer of Option Stock set forth below with
respect to restrictions upon Transfer imposed by applicable
state or federal securities laws, and certain undertakings of
the transferee as set forth in subsection 6(h)(iii). All
Transfers of Option Stock not meeting the conditions set forth
in this subsection 6(h) are expressly prohibited.
(ii) EFFECT OF PROHIBITED TRANSFER. Any prohibited Transfer, whether
Voluntary or Involuntary, is void and of no effect. Should such
a Transfer purport to occur, the Company may refuse to carry out
the Transfer on its books, attempt to set aside
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the Transfer, enforce any undertaking or right under this
subsection 6(h), or exercise any other legal or equitable
remedy.
(iii) REQUIRED UNDERTAKING. Any Transfer that would otherwise be
permitted under the terms of this Plan is prohibited unless the
transferee executes such documents as the Company may reasonably
require to ensure that the Company's rights under an Option
Agreement and this Plan are adequately protected with respect to
the Option Stock so Transferred. Such agreements may include,
without limitation, the transferee's agreement to be bound by
all of the terms of this Plan, and of the applicable Option
Agreement, as if he or she were the original Optionee.
(i) SPECIFIC RESTRICTIONS ON TRANSFER. By accepting Options and/or
Option Stock under this Plan, the Optionee will be deemed to represent, warrant
and agree as follows:
(i) SECURITIES ACT OF 1933. The Optionee understands that the shares
of Option Stock have not been registered under the 1933 Act, and
that such shares are not freely tradable and must be held
indefinitely unless such shares are either registered under the
1933 Act or an exemption from such registration is available.
The Optionee understands that the Company is under no obligation
to register the shares of Option Stock.
(ii) OTHER APPLICABLE LAWS. The Optionee further understands that
Transfer of the Option Stock requires full compliance with the
provisions of all applicable laws.
(iii) INVESTMENT INTENT. (1) Upon exercise of any Option, the
Optionee will purchase the Option Stock for his or her own
account and not with a view to distribution within the meaning
of the 1933 Act, other than as may be effected in compliance
with the 1933 Act and the rules and regulations promulgated
thereunder; (2) no one else will have any beneficial interest in
the Option Stock; and (3) he or she has no present intention of
disposing of the Option Stock at any particular time.
(j) COMPLIANCE WITH LAW. Notwithstanding any other provision
of this Plan, Options may be granted pursuant to this Plan, the Option Stock
may be issued pursuant to the exercise thereof by an Optionee, only after
there has been compliance with all applicable federal and state securities
laws, and all of the same will be subject to this overriding condition. The
Company will not be required to register or qualify Option Stock with the
Securities and Exchange Commission or any State agency, except that the
Company will register with, or as required by local law, file for and secure
an exemption from such registration requirements from, the applicable
securities administrator and other officials of each jurisdiction in which an
Eligible Participant would be granted an Option hereunder prior to such grant.
(k) STOCK CERTIFICATES. Certificates representing the Option Stock
issued pursuant to the exercise of Options will bear all legends required by
law and necessary to effectuate this Plan's provisions. The Company may place
a "stop transfer" order against shares of the Option Stock until all
restrictions and conditions set forth in this Plan and in the legends referred
to in this section 6(k) have been complied with.
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(l) MARKET STANDOFF. To the extent requested by the Company and any
underwriter of securities of the Company in connection with a firm commitment
underwriting, no holder of any shares of Option Stock will sell or otherwise
Transfer any such shares not included in such underwriting, or not previously
registered pursuant to a registration statement filed under the 1933 Act,
during the one hundred and twenty (120) day period following the effective
date of the registration statement filed with the Securities and Exchange
Commission in connection with such offering.
(m) NOTICES. Any notice to be given to the Company under the terms
of an Option Agreement will be addressed to the Company at its principal
executive office, Attention: Corporate Secretary, or at such other address as
the Company may designate in writing. Any notice to be given to an Optionee
will be addressed to the Optionee at the address provided to the Company by
the Optionee. Any such notice will be deemed to have been duly given if and
when enclosed in a properly sealed envelope, addressed as aforesaid,
registered and deposited, postage and registry fee prepaid, in a post office
or branch post office regularly maintained by the United States Government,
by telecopier or nationally recognized overnight delivery service.
(n) OTHER PROVISIONS. The Option Agreement may contain such other
terms, provisions and conditions, including restrictions on the Transfer of
Option Stock issued upon exercise of any Options granted hereunder, not
inconsistent with this Plan, as may be determined by the Committee in its
sole discretion.
7. PROCEEDS FROM SALE OF STOCK. Cash proceeds from the sale of
shares of Option Stock issued from time to time upon the exercise of Options
granted pursuant to this Plan will be added to the general funds of the
Company and as such will be used from time to time for general corporate
purposes.
8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to
the terms and conditions and within the limitations of this Plan, the Committee
may modify Options granted under this Plan, or accept the surrender of
outstanding Options (to the extent not theretofore exercised) and authorize the
granting of new Options in substitution therefor. Notwithstanding the foregoing,
however, no modification of any Option will, without the consent of the holder
of the Option, alter or impair any rights or obligations under any Option
theretofore granted under this Plan.
9. AMENDMENT AND DISCONTINUANCE. The Board may amend, suspend or
discontinue this Plan at any time or from time to time; provided that no action
of the Board will cause ISOs granted under this Plan not to comply with Section
422 of the Code unless the Board specifically declares such action to be made
for that purpose and provided further that no such action may, without the
approval of the stockholders of the Company, increase (other than by reason of
an adjustment pursuant to section 5(b) hereof) the maximum aggregate number of
shares of Option Stock in the Option Pool that may be issued under Options
granted pursuant to this Plan. Moreover, no such action may alter or impair any
Option previously granted under this Plan without the consent of the holder of
such Option.
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10. Copies of Plan. A copy of this Plan will be delivered to
each Optionee at or before the time he or she executes an Option Agreement.
Date Plan Adopted by Board of Directors: _________ _____, 1999
Date Plan Approved by Stockholders: _________ _____, 1999
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