PRELIMINARY COPY OF PROXY STATEMENT DATED FEBRUARY 22, 1996
JUDICATE, INC.
THE BELLEVUE
200 SOUTH BROAD STREET
PHILADELPHIA, PA 19102
Dear Stockholder:
You are cordially invited to attend a Special Meeting of
Stockholders of Judicate, Inc., which will be held on Thursday,
March 21, 1996 at 10:00 a.m., at the City Midday Club, 140
Broadway, 50th Floor, New York, New York.
By attending the meeting, you will have an opportunity to hear
a report on the operations of your Company and to meet your
Company's directors and executives.
This booklet includes the notice of the meeting and the proxy
statement which contains information about the functions of your
Board of Directors and its committees and personal information
about each of the nominees for the Board. It also includes three
(3) proposals of the Board of Directors, with the Board's position
on each.
It is important that your shares be represented at the meeting
regardless of the size of your holdings. I urge you to complete,
sign, date, and return your proxy card promptly.
If you plan to attend the meeting and are a stockholder of
record, please mark your proxy card in the space provided for that
purpose. An admission ticket is included with the proxy card for
each stockholder of record. However, if your shares are not
registered in your own name, please advise the stockholder of
record (your bank, broker, etc.) that you wish to attend. That
firm must provide you with evidence of your ownership which will
enable you to gain admittance to the meeting.
Sincerely yours,
Dominic A. Polimeni
Chairman, President and
Chief Executive Officer of the Company
March 4, 1996
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN
YOUR PROXY CARD IN THE ENCLOSED ENVELOPE
NOTICE OF
SPECIAL MEETING
OF
STOCKHOLDERS
A Special Meeting of Stockholders of Judicate, Inc. (the
"Company") will be held at the City Midday Club, 140 Broadway, 50th
Floor, New York, New York on Thursday, March 21, 1996, beginning at
10:00 a.m., New York time, for the following purposes:
1. To elect directors;
2. To consider and act upon:
- a proposal to amend the Certificate of Incorporation of
the Company to change the Company's name, which is
recommended by the Board of Directors;
- a proposal to amend the Certificate of Incorporation of
the Company to increase the authorized capital stock of
the Company, which is recommended by the Board of
Directors; and
- a proposal to approve the 1994 Director Non-Qualified
Stock Option Plan, which is recommended by the Board of
Directors.
3. To transact any other business which properly may be
brought before the meeting.
Stockholders of record at the close of business on February
21, 1996 will be entitled to vote at the meeting.
By Order of the Board of Directors,
Milton M. Adler
Secretary
Judicate, Inc.
The Bellevue
200 South Broad Street
Philadelphia, PA 19102
March 4, 1996
GENERAL INFORMATION
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Judicate,
Inc., a Delaware corporation (the "Company"), for use at a Special
Meeting of Stockholders of the Company (the "Meeting") which will
be held at 10:00 a.m. on Thursday, March 21, 1996 at the City
Midday Club, 140 Broadway, 50th Floor, New York, New York, and at
any and all adjournments of the Meeting for the purposes set forth
in the accompanying Notice of Meeting of Stockholders. This Proxy
Statement and the enclosed proxy card will be mailed to
stockholders on or about March 4, 1996. The Company's principal
executive offices are located at The Bellevue, 200 South Broad
Street, Philadelphia, PA 19102.
The accompanying proxy card is designed to permit each
stockholder of record at the close of business on February 21, 1996
to vote in the election of directors and on the proposals described
in this Proxy Statement. The proxy card provides space for a
stockholder to withhold voting for any or all nominees for the
Board of Directors or to abstain from voting for any proposal if
the stockholder chooses to do so. Shares represented by properly
executed proxy cards received by the Company at or prior to the
Meeting will be voted at the Meeting according to the instructions
indicated thereon or otherwise as provided therein. The election
of directors requires the affirmative vote of a plurality of the
votes cast. The amendments to the Company's Certificate of
Incorporation require the affirmative vote of a majority of the
outstanding stock entitled to vote. Approval of the stock option
plan requires the affirmative vote of a majority of the votes cast
at the Meeting. For purposes of determining the number of votes
cast with respect to any voting matter, only those cast "FOR" or
"AGAINST" are included. Abstentions and broker non-votes are
counted only for purposes of determining whether a quorum is
present at the Meeting.
Unless instructions to the contrary are indicated, the persons
named on the proxy card will be deemed to have intended to vote the
shares so represented "FOR" changing the corporate name, "FOR" the
increase in the shares of authorized capital stock, and "FOR"
approval of the 1994 Director Non-Qualified Stock Option Plan. As
to any other business which may properly come before the Meeting,
the persons named on the proxy card will vote according to their
best judgment.
A proxy may be revoked at any time before it is voted at the
Meeting by filing with the Secretary of the Company an instrument
revoking it, by a duly executed proxy bearing a later date, or by
voting by ballot at the Meeting.
This proxy is solicited by the Board of Directors of the
Company. The cost of preparing, assembling and mailing this notice
of meeting, proxy statement, and proxy will be borne by the
Company. In addition to solicitation of the proxies by use of the
mails, some of the officers, directors and regular employees of the
Company, without extra remuneration, may solicit proxies personally
or by telephone, telegraph, or cable. The Company may also request
brokerage houses, nominees, custodians and fiduciaries to forward
soliciting material to the beneficial owners of stock held of
record. The Company will reimburse such persons for their
reasonable expenses in forwarding soliciting material.
VOTING SECURITIES AND SECURITIES OWNERSHIP
Voting Securities
The Board of Directors has fixed the close of business on
February 21, 1996 as the record date (the "Record Date") for the
determination of stockholders entitled to notice of, and to vote
at, the Meeting and any adjournments thereof. Only stockholders on
the Record Date will be able to vote at the Meeting, and each
holder of record will be entitled to one vote for each share held,
with no shares having cumulative voting rights. The list of
stockholders entitled to vote at the Meeting will be available for
the examination of any stockholder at the offices of Gould &
Wilkie, One Chase Manhattan Plaza, 58th Floor, New York, New York,
for ten days prior to the date of the Meeting.
As of the Record Date, there were 15,354,392 shares of the
Company's common stock, par value $.0001 per share, (the "Common
Stock") issued and outstanding, all of which are entitled to one
(1) vote per share at the Meeting. Holders of the Common Stock are
entitled to vote on all matters.
Security Ownership of Certain Beneficial Owners and Management and
Principal Stockholders
The following table sets forth certain information, as of
February 5, 1996, known to the Company regarding beneficial
ownership of the Company's Common Stock by (i) any holder of more
than five percent of the outstanding shares; (ii) the Company's
directors; (iii) the executive officers of the Company; and (iv)
all directors and executive officers of the Company as a group:
Position With Number Percentages
Name & Address the Company of Shares of Shares
Dominic A. Polimeni(1) Chairman, 2,581,296(2) 16.8%
President and
Chief Executive
Officer
Milton M. Adler(1) Director, 6,666(3) *
Secretary,
Treasurer and
Controller
Robert V. Gubitosi(1) Director -0-(4) --
Mitchell Hymowitz(1) Director 30,000(5) *
William J. McSherry, Jr.(1)Director 20,000 *
Jordan R. Belfort 1,202,905(6) 7.8%
5 Pin Oak Court
Old Brookville, NY 11545
Joan R. Gubitosi 2,581,296(2) 16.8%
c/o Gulfstream Financial
Group, Inc.
6400 Congress Avenue
Suite 200
Boca Raton, FL 33487
Phillip D. Schwiebert 1,370,648(7) 8.9%
1180 Murphy Avenue
San Jose, CA
The Miami Project to
Cure Paralysis
The University of Miami
School of Medicine
1600 N.W. Tenth Avenue
Miami, FL 33136 1,000,000 6.5%
All officers and directors 2,637,962 17.2%
as a group
* Less Than 1% (footnotes on following page)
(1) c/o Judicate, Inc., The Bellevue, 200 South Broad Street,
Suite 800, Philadelphia, PA 19102
(2) These shares are owned by Gulfstream Financial Group, Inc.
("Gulfstream"). Joan R. Gubitosi and Dominic Polimeni are
executive officers and the stockholders of Gulfstream and
share voting and investment power with respect to shares owned
by Gulfstream. Pursuant to a Management Advisory and
Consulting Agreement, dated as of November 29, 1994, between
the Company and Gulfstream, Gulfstream may be entitled to be
awarded as incentive compensation warrants to purchase up to
10.0% of the Company's Common Stock outstanding at March 31,
1995 (for purposes of such calculation, the common stock
outstanding at March 31, 1995 assumes the conversion of all
outstanding warrants, options and preferred stock), at a price
of $.10 per share, upon the attainment of certain earnings
targets. See also "Related Party Transactions."
(3) Consists of Options to purchase 6,666 shares of Common Stock
at $12.75 per share granted pursuant to the 1992 Stock Option
Plan.
(4) Mr. Gubitosi's wife, Joan R. Gubitosi, has shared beneficial
ownership of 2,581,296 shares of Common Stock (see Footnote
2). Mr. Gubitosi disclaims beneficial ownership of such
shares.
(5) Consists of Options to purchase 15,000 shares of Common Stock
at $1.125 per share and Options to purchase 15,000 shares of
Common Stock at $2.406 per share granted, subject to
stockholder approval, pursuant to the 1994 Director Non-
Qualified Stock Option Plan.
(6) These securities are owned by J2 Holdings, Inc., a private
company owned by Jordan R. Belfort.
(7) Pursuant to an Employment Agreement, dated as of November 29,
1994, between Quest and Phillip Schwiebert, Phillip Schwiebert
may be entitled to be awarded as incentive compensation
warrants to purchase up to 5.0% of the Company's Common Stock
outstanding at March 31, 1995 (for purposes of such
calculation, the common stock outstanding at March 31, 1995
assumes the conversion of all outstanding warrants, options
and preferred stock), at a price of $.10 per share, upon the
attainment of certain earnings targets.
As of the close of business on March 31, 1995, the Company
acquired from Gulfstream Financial Group, Inc. ("Gulfstream"), a
Florida corporation owned by Dominic A. Polimeni and Joan R.
Gubitosi, all of the outstanding capital stock of Quest Electronic
Hardware, Inc. ("Quest"). Quest, in turn, simultaneously acquired
the fasteners distribution business of Arrow Electronics, Inc.
These events resulted in changes in ownership of the capital stock
of the Company which may have affected the control of the Company.
These changes included the following:
(a) Gulfstream became the direct beneficial owner of 22.1% of
the shares of common stock, par value $.0001 per share ("Common
Stock"), of the Company outstanding at March 31, 1995;
(b) Gulfstream, in consideration of its services to the
Company under a Management Advisory and Consulting Agreement, dated
as of November 29, 1994, may be entitled to be awarded as incentive
compensation, subject to certain conditions and restrictions,
warrants to purchase up to 10.0% of the Company's Common Stock
outstanding at March 31, 1995 (for purposes of such calculation,
the Common Stock outstanding at March 31, 1995 assumes the
conversion of all outstanding warrants, options and preferred
stock), at a price of $.10 per share, upon the attainment of
certain earnings targets;
(c) Dominic A. Polimeni ("Polimeni"), a Director, Executive
Officer and principal stockholder of Gulfstream, and the Chairman,
Chief Executive Officer and Chief Financial Officer of Quest, which
became a subsidiary of the Company, was named President and Chief
Operating Officer of the Company (Mr. Polimeni was subsequently
named Chairman, President and Chief Executive Officer of the
Company); and
(d) Phillip D. Schwiebert ("Schwiebert"), the President and
Chief Operating Officer of Quest, became the beneficial owner of
11.6% of the shares of Common Stock of the Company outstanding at
March 31, 1995, and, pursuant to an Employment Agreement, dated as
of November 29, 1994, by and between Quest and Schwiebert, may be
entitled to be awarded as incentive compensation, subject to
certain conditions and restrictions, warrants to purchase up to
5.0% of the Company's Common Stock outstanding at March 31, 1995
(for purposes of such calculation, the Common Stock outstanding at
March 31, 1995 assumes the conversion of all outstanding warrants,
options and preferred stock), at a price of $.10 per share, upon
the attainment of certain earnings targets.
ELECTION OF DIRECTORS
At the Meeting, the stockholders of record will elect
five (5) directors to hold office until the 1996 annual meeting of
stockholders which is intended to be held later this year or until
their respective successors have been duly elected and qualified.
Unless contrary instructions are given, the shares represented by
a properly executed proxy will be voted "FOR" the election of the
following nominees: Milton M. Adler, Robert V. Gubitosi, Mitchell
Hymowitz, William J. McSherry, Jr. and Dominic A. Polimeni. All of
the nominees presently comprise the entire Board of Directors of
the Company. If at any time during the Meeting any of the nominees
become unavailable to serve as director, the persons named in the
enclosed proxy will vote the shares represented by the proxy for
the election of such person as the Board of Directors may
recommend.
Set forth below is certain information concerning the nominees
for election as directors:
Name Age Position
Milton M. Adler 68 Secretary, Treasurer
and Director
Robert V. Gubitosi 48 Director
Mitchell Hymowitz 34 Director(1)
William J. McSherry, Jr. 48 Director(1)
Dominic A. Polimeni 49 Chairman, President
and Chief Executive
Officer
(1) Members of the Committee for the Administration of the 1992
Amended and Restated Management Incentive Option Plan.
Milton M. Adler has been a Director of the Company since
February 1996, Controller of the Company since January 1992 and has
been Treasurer of the Company since February 1992 and Secretary
since October 1993. Prior thereto, Mr. Adler was employed by
Travelco, a travel consulting firm, for more than 18 years in
various capacities, the most recent of which was Vice President of
Administration. Mr. Adler is a Certified Public Accountant.
Robert V. Gubitosi has been a Director of the Company since
February 1996 and Director of Operations of Quest Electronic
Hardware, Inc., a subsidiary of the Company, since March 1995. Mr.
Gubitosi has been a Managing Director of Gulfstream Financial
Group, Inc., a privately held financial consulting and investment
banking firm since August 1990. Prior to that he held the position
of General Partner and Chief Financial Officer of the Securities
Groups, a New York investment banking firm and primary dealer of
U.S. government securities, with responsibility for the investment
banking activities of the firm. In addition, he has held
managerial positions at Goldman Sachs & Company and Oppenheimer &
Company, and specialized in brokerage accounting and auditing at
Haskins & Sells and Touche Ross & Co. He holds a bachelor of
business administration degree from Hofstra University. Mr.
Gubitosi is the brother-in-law of Mr. Polimeni.
Mitchell Hymowitz has been a Director of the Company since
December 1993. Mr. Hymowitz has also been Principal/Chief
Financial Officer of H&W Hardware Co., Inc. and Vice President of
Two Twenty First Avenue Realty Corp. since September 1990. Prior
to that he was Senior Accountant with Paritz and Company, P.A., in
New Jersey. Mr. Hymowitz earned a Bachelor of Science in Business
Administration with a degree in Accounting from State University of
New York at Buffalo in 1984.
William J. McSherry, Jr. has been a Director of the Company
since February 1996. Mr. McSherry has been a partner of Battle
Fowler LLP, a law firm with offices in New York City and Los
Angeles, since July 1991. Prior to July 1991, Mr. McSherry was a
partner in the law firm of Bryan Cave. Mr. McSherry is also the
President and a director of Playtex Marketing Corporation, a
privately-owned corporation, and serves as a trustee and as Deputy
Mayor of the Village of Larchmont, State of New York.
Dominic A. Polimeni has been President, Chief Operating
Officer and a Director of the Company since March 1995, and
Chairman and Chief Executive Officer since February 1996. He has
also been Chairman, Chief Executive Officer and Chief Financial
Officer of Quest Electronic Hardware, Inc. since October 1994. Mr.
Polimeni has been Managing Director of Gulfstream Financial Group,
Inc., a privately held financial consulting and investment banking
firm since August 1990. Prior to that he held the position of
Chief Financial Officer of Arrow Electronics, Inc. ("Arrow") for
four (4) years. He also held several other positions, including
general management positions, with Arrow over an eight-year period.
Prior to that he practiced as a Certified Public Accountant for
more than 12 years and was a Partner in the New York office of
Arthur Young & Company. He has also held the position of Chief
Operating Officer of Fugazy Express, Inc., a New York based
transportation company in its start-up phase. He holds a bachelor
of business administration degree from Hofstra University. Mr.
Polimeni is the brother-in-law of Mr. Gubitosi.
The Board of Directors and its Committees
The Board of Directors held two meetings during the fiscal
year ended December 31, 1995. All directors participated in both
such meetings of the Board of Directors except for Marc Powell, a
former director who did not attend one of the meetings. The Board
of Directors acted by unanimous written consent four (4) times
during such fiscal year.
The Company does not have standing audit, nominating or
compensation committees. The Company has one Board of Directors'
committee: the Committee for the Administration of the 1992
Amended and Restated Management Incentive Option Plan. The
Committee did not take action during the fiscal year ended December
31, 1995.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation of the named executives for
the periods indicated. No executive officer had total annual salary and bonus
equal to or greater than $100,000.
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
----------------------------------------- -------------------------- -----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted Securities
Name and Other Annual Stock Underlying LTIP All other
Principal Position Year Salary Bonus Compensation Awards($) Options/SARs(#) Payouts Compensation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dominic A. Polimeni 1995 $75,000 -- -- -- -- -- --
Chairman, President and 1994 -- -- -- -- -- -- --
Chief Executive Officer 1993 -- -- -- -- -- -- --
Stephen J. Drescher 1995 $52,000 -- -- -- -0- -- --
Former Chairman and Chief 1994 $52,000 -- -- -- 250,000(1) -- --
Executive Officer 1993 $19,000 -- -- -- -0- -- --
</TABLE>
_______________
(1) Options to acquire 250,000 shares at $0.625 per share were granted to Mr.
Drescher in 1994 pursuant to the 1992 Amended and Restated Management Incentive
Option Plan.
Employment Agreement
Dominic A. Polimeni, Chairman, Chief Executive Officer and
President of the Company, is party to an employment agreement with
Quest Electronic Hardware, Inc., a subsidiary of the Company. This
agreement expires on March 31, 2000 and provides for a base salary
of $100,000 per annum. See also "Related Party Transactions"
relating to a Management Advisory and Consulting Agreement between
the Company and Gulfstream, a company owned by Mr. Polimeni and
Joan R. Gubitosi.
Option/SAR Grants
There were no grants during 1995 of stock options or stock
appreciation rights to any person named in the Summary Compensation
Table. For information relating to warrants granted to Gulfstream,
a company owned by Dominic A. Polimeni and Joan R. Gubitosi, see
"Voting Securities and Securities Ownership."
Option/SAR Exercises
Set forth below is information concerning exercises of options during 1995
and the fiscal year-end value of unexercised options for the persons named in
the Summary Compensation Table:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options/ Options/SARs at
Shares Acquired Value SARs at FY-End (#) FY-End ($)
Name on Exercise (#) Realized Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C>
Dominic A. Polimeni -0- -0- -0- -0-
Chairman, President and
Chief Executive Officer
Stephen J. Drescher 250,000 $656,250(1) -0- -0-
Former Chairman, Chief
Executive Officer
</TABLE>
(1) Based on the difference between the exercise price of $0.625 per share and
the average of the high and low bid prices for the Common Stock on April 28,
1995, the date of exercise.
Compensation of Directors
Other than the 1994 Director Non-Qualified Stock Option Plan
described below, the Company does not have a standard policy
regarding compensation of members of the Board of Directors. Other
than as reported below, the members of the Board of Directors did
not receive compensation for their services as such during the year
ended December 31, 1995.
1994 Director Non-Qualified Stock Option Plan
In January 1994, the Board of Directors (the "Board") adopted,
subject to stockholder approval, the above captioned plan and in
February 1996 amended the plan so as to change the annual date of
the grant to the first Wednesday of February. The plan, as
amended, is hereinafter referred to as the "1994 Plan". Pursuant
to the terms of the 1994 Plan, options for an aggregate of 300,000
shares of the Company's Common Stock may be granted.
All non-employee directors shall receive an option to purchase
15,000 shares of the Common Stock of the Company on the first
Wednesday of February in each calendar year at an exercise price
equal to the fair market value per share of the Common Stock on
that date. Such options shall be exercisable immediately for a
period of 10 years from date of grant unless terminated earlier
pursuant to the terms of the plan. Subject to shareholder
approval, 135,000 options have been granted to date at exercise
prices of $1.125 per share, $2.406 per share, and $1.906 per share.
1985 Incentive Stock Option Plan
All full time employees of the Company are eligible to
participate in the 1985 Incentive Stock Option Plan (the "1985
plan"). There are outstanding 533 options under the 1985 Plan at
an exercise price of $9.90 with an expiration date of October 3,
1995. On June 3, 1985, the Board approved the plan with
shareholder approval granted on December 12, 1985.
1992 Stock Option Plan
In June 1992, the Board approved the adoption of the "1992
Plan" which was approved by the shareholders of the Company on
January 8, 1993. Under the 1992 Plan, both incentive stock options
("ISOs") and non-qualified stock options ("Non-Qualified Options")
may be granted (together, the "Options"). Each Option is to be
specifically designated at the time of its grant as an ISO (within
the meaning of Section 422 of the Internal Revenue Code of 1986)
(the "Code"), or a Non-Qualified Option. All non-management
employees are eligible to receive ISOs under the 1992 Plan. All
non-management employees and non-employee consultants and Company
Judges are eligible to receive Non-Qualified Options under the 1992
Plan.
The aggregate maximum number of options issuable under the
1992 Plan to purchase shares of the Company's Common Stock is
1,900,000 options.
1992 Amended and Restated Management Incentive Option Plan
In December 1991, the Board approved the Company's 1992
Management Incentive Option Plan (the "Incentive Plan"). In
September and October 1992, effective as of the date of the
original plan, the Board approved certain amendments to the
original plan which were ratified by the stockholders of the
Company on January 8, 1993. Pursuant to the terms of the Incentive
Plan, non-qualified options to purchase up to 533,333 shares of the
Company's Common Stock may be granted to officers, directors, key
employees and consultants of the Company.
RELATED PARTY TRANSACTIONS
As of the close of business on March 31, 1995, the Company
acquired from Gulfstream, a Florida corporation owned by Dominic A.
Polimeni and Joan R. Gubitosi, all of the outstanding capital stock
of Quest Electronic Hardware, Inc. This transaction is described
under "Voting Securities and Securities Ownership." Pursuant to
the Management Advisory and Consulting Agreement therein described,
the Company has also agreed to compensate Gulfstream for advisory
and consulting services at the rate of $150,000 per year. This
agreement expires on March 31, 2000 and can be terminated by either
party on 90 days notice.
In April 1995, the Company loaned Stephen J. Drescher, then
Chairman and Chief Executive Officer of the Company, $156,250 in
connection with the exercise by Mr. Drescher of options to purchase
Common Stock of the Company. The obligation to repay this loan was
satisfied by Gulfstream and Phillip D. Schwiebert by the
contribution of shares of Common Stock to the Company in connection
with Mr. Drescher's resignation in January 1996 as an officer and
director of the Company.
In April 1995, the Company loaned Paul L. Burton, then
Executive Vice President and a Director of the Company, $125,000 in
connection with the exercise by Mr. Burton of options to purchase
Common Stock of the Company. The obligation to repay this loan and
to repay $69,228 of expenses paid by the Company on Mr. Burton's
behalf was satisfied by Gulfstream and Mr. Schwiebert by the
contribution of shares of Common Stock to the Company in connection
with Mr. Burton's resignation in January 1996 as an officer and
director of the Company.
CERTAIN OTHER TRANSACTIONS
In November 1994, the Company sold to J2 Holdings, Inc., a
private company owned by Jordan R. Belfort, 1,202,905 units for
$0.35 per unit. Each unit consisted of one common share and one
warrant to purchase a share of common stock for $0.35 per share.
These warrants were exercised in December 1995.
Biltmore Securities, Inc. ("Biltmore") acted as the Placement
Agent for the Company for the November 1994 Private Placement
consisting of the sale of 2,000,000 shares of the Company's Common
Stock. As compensation, Biltmore received 200,000 shares of the
Company's Common Stock and Warrants to purchase 200,000 shares of
Common Stock of the Company at $.35 per share. These Warrants were
exercised in December 1995.
Biltmore received 250,000 shares of Common Stock of the
Company as compensation under a Consulting Agreement dated January
26, 1994, and 250,000 options to purchase Common Stock of the
Company at an exercise price of $.625, which later through anti-
dilution provisions resulted in 626,956 options to purchase Common
Stock of the Company at $.249 per share. These options were
exercised in December 1995. Biltmore received 61,824 shares of
Common Stock of the Company as compensation for acting as placement
agent for the Exchange Offer and Series II Warrants in July 1994.
On March 31, 1995 Biltmore, in consideration of its serving as
Placement Agent, was granted 116,000 options to purchase a like
number of shares of the Common Stock of the Company at $3.50 per
share. Such options expire March 31, 2000. The Company also
agreed to pay to Biltmore a cash payment of $217,500 which
represents a 10% placement agent fee and a 2.5% non-accountable
expense allowance based on total proceeds of $1,740,000.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers and directors, and persons who own more than
10% of a registered class of the Company's equity securities, to
file reports of ownership of equity securities of the Company with
the Securities and Exchange Commission and the National Association
of Securities Dealers. Officers, directors and greater-than-ten-
percent shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on a review of the copies of Forms 3, 4 and 5 and
amendments thereto furnished to the Company, or written
representations from certain reporting persons that such persons
have filed on a timely basis all reports required by Section 16(a),
and without researching or making any inquiry regarding delinquent
Section 16(a) filings, the Company believes that, during the fiscal
year ended December 31, 1995, a Form 5 was filed on a non-timely
basis by Daniel Porush and Forms 4 were filed on a non-timely basis
with respect to two transactions by Paul L. Burton and with respect
to six transactions by Stephen J. Drescher. Messrs. Burton and
Drescher were officers and directors of the Company during 1995.
BOARD OF DIRECTORS PROPOSALS
PROPOSAL NO.1:
APPROVAL OF AN AMENDMENT TO ARTICLE FIRST OF THE
COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE COMPANY'S
NAME TO QUESTRON TECHNOLOGY, INC.
Stockholders are being asked to approve an amendment to the
Company's Certificate of Incorporation for the purpose of changing
the name of the Company to "QUESTRON TECHNOLOGY, INC." This
amendment has been approved by the Board of Directors, subject to
the approval of the Company's stockholders. The affirmative vote
of a majority of the shares present in person or represented by
proxy and entitled to vote at the meeting.
The Board of Directors is of the opinion that changing the
name of the Company is in the best interests of the corporation in
order to reflect that the Company is now engaged in the business of
supplying low technology products to high technology industries in
addition to the alternate dispute resolution business historically
conducted by the Company.
The text of the proposed amendment is set forth in Exhibit A
attached hereto.
The amendment to the Certificate of Incorporation requires the
affirmative vote of a majority of the outstanding stock entitled to
vote.
The Board of Directors recommends that stockholders vote "FOR"
the foregoing amendment to the Company's Certificate of
Incorporation to change the Company's name to "QUESTRON TECHNOLOGY,
INC."
PROPOSAL NO. 2:
APPROVAL OF AN AMENDMENT TO ARTICLE FOURTH OF THE COMPANY'S
CERTIFICATE OF INCORPORATION
PROVIDING FOR AN INCREASE IN AUTHORIZED SHARES
Article FOURTH of the Company's Certificate of Incorporation
currently authorizes the Company to issue 20,000,000 shares of
Common Stock and 1,000,000 shares of Preferred Stock. At the
Record Date, 15,354,392 shares of Common Stock and 25,000 shares of
Preferred Stock were issued and outstanding. The proposed
amendment would increase the authorized capital to 50,000,000
shares of Common Stock and to 10,000,000 shares of Preferred Stock.
The Board of Directors has determined that such increase is
advisable in order to provide the Company with additional
flexibility should it choose at a later date to engage in
financings or acquisitions.
Although management is not currently aware of any effort by
any person to gain control of the Company, in the event of such an
effort, the authorized but unissued shares of Common Stock or
Preferred Stock could be used to make a change in control of the
Company more difficult. Under certain circumstances such shares
could be used to create voting impediments to deter persons seeking
to effect a takeover or otherwise gain control of the Company.
Such shares could be sold in public or private transactions to
purchasers who might side with the Board of Directors in opposing
a takeover bid which the Board of Directors determines not to be in
the best interests of the Company and its stockholders. The
amendment might have the effect of discouraging an attempt by
another person, through the acquisition of a substantial number of
shares of the Company's Common Stock, to acquire control of the
Company with a view to imposing a merger, sale of all or any part
of the Company's assets or a similar transaction, since the
issuance of new shares could be used to dilute the stock ownership
of such person or entity.
In addition, shares of the Company may be authorized for
issuance by the Board of Directors as consideration in whole or in
part for future acquisitions which may be made by the Company. The
Company's stockholders may not have the opportunity to review the
financial statements of any of the companies which may be acquired
or have the opportunity to vote on any proposed acquisitions. Any
such issuance of additional shares may cause current stockholders
of the Company to suffer significant dilution which may adversely
affect the market for the Company's securities.
The voting, dividend and other rights of any shares of
Preferred Stock would be determined by the Board of Directors at
the time of issuance.
The text of the proposed amendment is set forth in Exhibit A
attached hereto.
The amendment to the Certificate of Incorporation requires the
affirmative vote of a majority of the outstanding stock entitled to
vote.
The Board of Directors recommends that stockholders vote "FOR"
the foregoing amendment to the Company's Certificate of
Incorporation to increase the authorized capital stock.
PROPOSAL NO.3:
APPROVAL OF THE COMPANY'S 1994 DIRECTOR NON-QUALIFIED
STOCK OPTION PLAN.
Stockholders are being asked to approve the 1994 Director Non-
Qualified Stock Option Plan, as amended (the "1994 Plan"). The
purpose of the 1994 Plan is to induce directors of the Company or
any of its subsidiaries who are not also officers or employees of
the Company or any of its subsidiaries ("Non-Employee Directors"),
who are in a position to contribute materially to the Company's
prosperity to remain with the Company, to offer said persons
incentives and rewards in recognition of their contributions to the
Company's progress, and to encourage said persons to continue to
promote the best interests of the Company. The 1994 Plan provides
for options that do not qualify as incentive options under Section
422 of the Internal Revenue Code of 1986, as amended, to be issued
to such persons.
Approval of the 1994 Plan requires the affirmative vote of a
majority of the shares present in person or represented by proxy
and entitled to vote at the meeting.
The following summary of the 1994 Plan is not intended to be
complete and is qualified in its entirety by reference to the 1994
Plan which is attached hereto as Exhibit B.
1. Number of Shares. The aggregate maximum number of shares
of the Company's Common Stock as to which options may be granted
under the Plan will be 300,000 shares. Options to purchase 135,000
shares of the Company's Common Stock have already been granted as
of the record date. The shares may be made available from either
authorized but unissued shares, treasury shares or both. The
maximum number of shares may, in the discretion of the Board of
Directors or of the Committee (defined below), be adjusted to
reflect any future changes in the Company's capitalization, for
example, in the event of stock dividends, stock splits and other
similar events. No shares shall be delivered pursuant to the 1994
Plan unless and until the Company has sufficient authorized capital
to deliver such shares. The Company receives no consideration in
connection with the grant of an option.
2. Administration. The 1994 Plan will be administered by
the Committee for the Administration of the 1994 Director Non-
Qualified Stock Option Plan (the "Committee"), or in the absence of
such a committee, by the Board of Directors.
3. Eligibility. Eligible participants under the 1994 Plan
are all directors of the Company or any of its subsidiaries who are
not also officers or employees of the Company or any of its
subsidiaries.
4. Term. The 1994 Plan became effective on January 26,
1994, subject to stockholder approval. No options may be granted
under the 1994 Plan after January 26, 2004. In the event that the
1994 Plan is not approved by the stockholders, the 1994 Plan and
all options granted under the 1994 Plan shall terminate.
5. Term of Options. All options granted under the 1994 Plan
terminate on the earliest of (a) the expiration of the term
specified in the option, which shall not exceed ten (10) years; the
expiration of three (3) months from the date a director's service
on the Company's Board of Directors terminates for any reason other
than death, disability or cause; (c) the expiration of one or three
years from the date the director's service terminates by reason of
death or disability, respectively; (d) the date a director's
service terminates for cause (as defined in Section 6.1 of the 1994
Plan); or (e) the date set by the Committee to be an accelerated
expiration date in the event of a dissolution or liquidation of the
Company or upon the occurrence of certain other corporate
transactions.
6. Option Price. The purchase price of shares of the
Company's Common Stock issuable upon exercise of options granted
pursuant to the 1994 Plan shall be the fair market value (as
defined in Section 5.1(b) of the 1994 Plan) per share of such
Common Stock on the date of the granting of such options.
7. Maximum Grant. Subject to the terms of the 1994 Plan,
the number of options to be granted to each eligible director is
within the discretion of the Board or the Committee. The number of
shares of Common Stock issuable upon the exercise of each such
option is 15,000.
8. Payment. The purchase price of shares of the Company's
Common Stock issuable upon the exercise of options granted under
the 1994 Plan shall be in United States dollars, payable in cash or
by certified bank check.
9. Option Document. All options granted under the 1994 Plan
are required to be evidenced by written documents containing
provisions consistent with the 1994 Plan and such other provisions
as the Committee deems appropriate. Options granted under the 1994
Plan are not transferable other than by will, or by the laws of
descent and distribution.
10. Amendment. The Board of Directors may terminate the 1994
Plan or amend the 1994 Plan from time to time in such manner as it
may deem advisable and in the best interests of the Company,
without action on the part of the stockholders of the Company;
provided, however, that no such termination or amendment shall,
without the consent of the individual to whom any option shall
theretofore been granted, affect or impair the rights of such
individual under such option, and provided further, that, unless
the holders of a majority of all classes of the Company's
outstanding voting stock entitled to vote thereon shall have first
approved thereof, no amendment of the 1994 Plan shall be made if
the amendment would (a) materially increase the benefits accruing
to participants under the 1994 Plan; (b) materially increase the
number of securities which may be issued under the 1994 Plan; or
(c) materially modify the requirements as to the eligibility for
participation in the 1994 Plan. The 1994 Plan was amended in
February 1996 to change the date of the annual grant to the first
Wednesday in February.
Set forth below is information relating to benefits to be
allocated under the 1994 Plan during 1996 to directors who are not
officers or employees of the Company. None of the persons named in
the Summary Compensation Table are eligible to participate in the
1994 Plan. The closing price of the Common Stock was $__ on March
__, 1996 as reported by the Nasdaq SmallCap Market.
1994 Plan
Name and Number of
Position Dollar Value($) Units
Non-Executive (a) 30,000 (b)
Director Group
(2 persons)
- ----------------
(a) Options under the 1994 Plan are granted with an exercise
price equal to the fair market value of the Common Stock as of the
date of grant. The respective dollar value of each stock option to
be granted under the 1994 Plan, which depends upon the fair market
value of the Common Stock at the time of the exercise of such stock
option, is not determinable at this time.
(b) These options were granted, subject to stockholder
approval, on February 7, 1996 with an exercise price of $1.906 per
share and an expiration date of February 7, 2006.
Summary of Certain Federal Income Tax Consequences. This
summary of certain federal tax consequences is provided as general
information, but does not purport to be a complete and detailed
description of all possible tax consequences. It describes the
federal tax consequences in effect as of the date set forth in the
notice.
Certain Federal Income Tax Consequences. When an optionee
exercises an option other than an incentive stock option (a "non-
qualified option"), the difference between the option price and any
higher fair market value of the Common Stock, generally on the date
of exercise, will be ordinary income to the optionee (subject to
withholding) and will be generally allowed as a deduction at that
time for federal income tax purposes to the Company.
Any gain or loss realized by an optionee on disposition of the
Common Stock acquired upon exercise of a non-qualified option will
generally be capital gain or loss to such optionee, long-term or
short-term depending on the holding period, and will not result in
any additional federal income tax consequences to the Company. The
optionee's basis in the Common Stock for determining gain or loss
on the disposition will be the fair market value of such Common
Stock determined generally at the time of exercise.
The foregoing discussion summarizes the federal income tax
consequences of the 1994 Plan based on current provisions of the
Code, which are subject to change. This summary does not cover any
foreign, state or local tax consequences of participation in such
plan.
The approval of the 1994 Plan requires the affirmative vote of
a majority of the votes cast at the Annual Meeting.
The Board of Directors recommends that stockholders vote "FOR"
the foregoing proposal to approve the 1994 Plan.
PROPOSALS FOR STOCKHOLDER APPROVAL
The 1996 Annual Meeting of Stockholders is expected to be held
prior to June 30, 1996, although an exact date has not yet been
set. Proposals of stockholders intended to be presented at the
1996 Annual Meeting of Stockholders of the Company which are
received in writing by the Chief Executive Officer of the Company
at its offices by April 1, 1996 will be considered for inclusion in
the Company's proxy statement relating to the 1996 Annual Meeting.
ADDITIONAL INFORMATION
The Company has retained Mortenson and Associates, P.C. as the
Company's independent public accountants for the fiscal year ended
December 31, 1995. One or more representatives of such firm are
expected to be present at the Meeting. Such representative(s) will
have the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate
questions.
The Board of Directors does not know of any matter to be
proposed for action at the Meeting other than those described in
this proxy statement. If other matters properly come before the
Meeting, the persons named in the accompanying proxy will act in
accordance with their best judgment.
By Order of the Board of Directors
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE
FILL IN, SIGN, AND DATE THE PROXY SUBMITTED HEREWITH AND RETURN IT
IN THE ENCLOSED STAMPED ENVELOPE. THE GIVING OF SUCH PROXY WILL
NOT AFFECT YOUR RIGHT TO REVOKE SUCH PROXY IN PERSON SHOULD YOU
LATER DECIDE TO ATTEND THE SPECIAL MEETING. THE ENCLOSED PROXY IS
BEING SOLICITED BY THE BOARD OF DIRECTORS.
EXHIBIT A
I. The Certificate of Incorporation is proposed to be
amended by deleting Article FIRST thereof in its
entirety and substituting the following in lieu
thereof:
"FIRST: The name of the corporation is:
QUESTRON TECHNOLOGY, INC."
II. The Certificate of Incorporation is proposed to be
further amended by deleting Article FOURTH thereof
in its entirety and substituting the following in
lieu thereof:
"FOURTH: The total number of shares of all
classes of capital stock which the Corporation
shall have authority to issue is sixty million
(60,000,000) shares, of which fifty million
(50,000,000) shares shall be Common Stock, par
value $.0001 per share and ten million
(10,000,000) shares shall be preferred stock, par
value $.01 per share ("Preferred Stock"). The
Preferred Stock may be issued with full, multiple
or fractional voting rights and with such
designations, preferences, qualifications,
privileges, limitations, options, conversion
rights and other special, relative rights that
shall be fixed from time to time by resolution of
the Board of Directors."
EXHIBIT B
As amended and restated on
February 7, 1996
JUDICATE, INC.
1994 DIRECTOR NON-QUALIFIED STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
Section 1.1 Effective as of January 26, 1994, the Board of Directors (the
"Board") of Judicate, Inc. (the "Company"), a Delaware corporation, adopted,
subject to shareholder approval, a stock option plan to be named the 1994
Director Non-Qualified Stock Option Plan (the "Plan"). The Plan was amended by
the Board effective February 7, 1996.
Section 1.2 The purpose of the Plan is to induce directors of the Company
or any of its subsidiaries who are not also officers or employees of the Company
or any of its subsidiaries ("Non-Employee Directors"), who are in a position to
contribute materially to the Company's prosperity to remain with the Company, to
offer said persons incentives and rewards in recognition of their contributions
to the Company's progress, and to encourage said persons to continue to promote
the best interests of the Company. The Plan provides for options which do not
qualify as incentive options under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") to be issued to such persons.
Section 1.3 All options specifically designated as being granted pursuant
to this Plan and granted to Non-Employee Directors on or after the date that
this Plan has been approved or adopted by the Company's Board shall be governed
by the terms and conditions of this Plan.
ARTICLE II
ADMINISTRATION
Section 2.1 The Plan shall be administered by the Board or by a committee
(the "Committee") of not less than two members of the Board who are
"disinterested persons" within the meaning of such term under Rule 16b-3 under
the Securities Exchange Act of 1934, as such rule may be amended from time to
time. If the Plan is administered by the Committee, except as permitted in
Section 2.4 hereof, no member of the Committee shall be eligible for selection
as a person to whom stock may be allocated or stock options or stock
appreciation rights may be granted pursuant to any other plan of the Company or
any of its affiliates entitling the participants therein to acquire stock, stock
appreciation rights, or stock options of the Company or any of its affiliates.
Furthermore, no member of the Board shall be eligible to be appointed to the
Committee unless such member was not eligible to receive options under any prior
Company stock option plan at any time within one year prior to the date of his
proposed appointment to the Committee. In the event the Plan is administered by
the Committee, the Committee may select one of its members as its Chairman, and
shall hold its meetings at such times and places as it may determine. A majority
of the Committee shall constitute a quorum, and the acts of a majority of the
members present at any meeting at which a quorum is present, or acts approved in
writing by a majority of the Committee, shall be deemed the acts of the
Committee. Notwithstanding any other provision hereof, all action taken pursuant
to this Plan must be in accordance with the provisions Rule 16b-3, as amended
from time to time, under the Securities Exchange Act of 1934.
Section 2.2 The Company shall grant options under the Plan only in
accordance with the formula set forth in Section 2.4 hereof. The Board or the
Committee may from time to time adopt (and thereafter amend or rescind) such
rules and regulations for carrying out the Plan and take such action in the
administration of the Plan, not inconsistent with the provisions hereof, as it
shall deem proper. The interpretation and construction of any provisions of the
Plan by the Board or the Committee (unless otherwise determined by the Board)
shall be final, conclusive and binding upon all persons.
Section 2.3 No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
option granted under it. A member of the Board or the Committee shall be
indemnified by the Company, pursuant to the Company's By-Laws, for any expenses,
judgments or other costs incurred as a result of a lawsuit filed against him
claiming any rights or remedies due to his participation in the administration
of the Plan.
Section 2.4 Non-Employee Directors shall participate in the Plan to the
extent that they shall be granted options on a non-discretionary basis in
accordance with the following formula. On the first Wednesday in February of
each calendar year, each member of the Company's Board of Directors then in such
office shall receive an option to purchase 15,000 shares of the Company's Common
Stock at an exercise price equal to the fair market value per share of such
Common Stock on that date. Each such option shall be exercisable immediately and
for ten years from the date of grant unless sooner terminated under the terms of
this Plan. Each such option shall be subject to the restrictions upon transfer,
limitations on exercise, and restrictions upon transfer of the Common Stock to
be issued upon exercise of the option, as are set forth elsewhere herein or as
are imposed by applicable law, including without limitation applicable federal
and state securities laws. This Section 2.4 shall not be amended more than one
(1) time in any consecutive six (6) month period, other than to comport with
changes in the Code, the Employee Retirement Income Security Act, or the
regulations thereunder.
ARTICLE III
TOTAL NUMBER OF SHARES TO BE OPTIONED
Section 3.1 Options for an aggregate of 300,000 shares of common stock
($.0001 par value) of the Company (subject to adjustment as provided in Article
VIII hereof) may be granted under the Plan. The shares sold under the Plan may
be either issued shares reacquired by the Company at any time or authorized but
unissued shares, as the Board from time to time may determine.
Section 3.2 In the event that any outstanding options under the Plan for
any reason expire or are terminated without having been exercised in full, the
unpurchased shares subject to such option may again be available for transfer
under the Plan.
Section 3.3 No options shall be granted pursuant to this Plan to any
optionee after the tenth anniversary of the earlier of the date that this Plan
is adopted by the Board or the date that this Plan is approved by the
shareholders.
ARTICLE IV
ELIGIBILITY
Section 4.1 Options will be issued to Non-Employee Directors only. Persons
granted options pursuant to this Plan are referred to herein as "optionees."
No option will be granted which has terms or conditions inconsistent with this
Plan.
Section 4.2 No options may be granted under any Company stock option plan
to any member of the Committee other than those options issued pursuant to the
non-discretionary formula set forth in Section 2.4, or a similar formula plan
complying with Rule 16b-3(c)(2) under the Securities Exchange Act of 1934, as
amended. If this Plan is administered by the Board rather than the Committee, no
options under any Company stock option plan (other than those options issued
pursuant to the non-discretionary formula set forth in Section 2.4, or a similar
formula plan complying with Rule 16b-3(c)(2) under the Securities Exchange Act
of 1934, as amended) may be granted to any director unless a majority of the
Board and a majority of the Board members voting on the grant of such options
are not eligible to receive options under any Company stock option plan (other
than pursuant to the non-discretionary formula in Section 2.4 or a similar
formula plan complying with Rule 16b-3(c)(2) under the Securities Exchange Act
of 1934, as amended) as of the date of the Board action, and have not been so
eligible to receive options thereunder (other than pursuant to the
non-discretionary formula in Section 2.4 or a similar formula plan complying
with Rule 16b-3(c)(2) under the Securities Exchange Act of 1934, as amended) at
any time within one year prior to the date of such action, for selection as a
person to whom stock may be allocated or stock options or stock appreciation
rights may be granted pursuant to any other plan of the Company or any of its
affiliates entitling the participants therein to acquire stock, stock
appreciation rights, or stock options of the Company or any of its affiliates.
ARTICLE V
TERMS AND CONDITIONS OF OPTIONS
Section 5.1 Each option granted under the Plan shall be evidenced by a
Stock Option Certificate and Agreement in a form not inconsistent with the
Plan, provided that the following terms and conditions shall apply:
(a) The price at which each share of common stock covered by an option may
be purchased shall be set forth in the Stock Option Certificate and Agreement
and shall be determined in accordance with the formula set forth in Section
2.4.
(b) For purposes of Section 2.4, the "fair market value" shall be
determined in accordance with the following: (i) if the common stock is not
listed and traded upon a recognized securities exchange and there is no report
of stock prices with respect to the common stock published by a recognized stock
quotation service, on the basis of the recent purchases and sales of the common
stock in arms-length transactions; or (ii) if the common stock is not then
listed and traded upon a recognized securities exchange or quoted on the NASDAQ
National Market System, and there are reports of stock prices by a recognized
quotation service, upon the basis of the mean between the bid and asked
quotations for such stock on the date of grant as reported by a recognized stock
quotation service, or, if there are no bid or asked quotations on that day, then
upon the basis of the mean between the bid and asked quotations for such stock
on the date nearest preceding that day; or (iii) if the common stock shall then
be listed and traded upon a recognized securities exchange or quoted on the
NASDAQ National Market System, upon the basis of the mean between the highest
and lowest selling prices at which shares of the common stock were traded on
such recognized securities exchange on that date or, if the common stock was not
traded on such date, upon the basis of the mean of such prices on the date
nearest preceding that date. The Board or the Committee shall also consider such
other factors relating to the fair market value of the common stock as it shall
deem appropriate.
(c) An optionee may, pursuant to the formula in Section 2.4, be granted
more than one option during the duration of this Plan.
(d) Any option and any right related thereto shall not be transferable by
the optionee other than by will, or by the laws of descent and distribution. An
option may be exercised during the optionee's lifetime only by the optionee.
(e) No shares shall be delivered pursuant to the exercise of any option
granted pursuant to the Plan unless and until the Company has sufficient
authorized capital to issue such shares.
ARTICLE VI
SERVICE OF OPTIONEE
Section 6.1 The option rights of an optionee under any then outstanding
option shall terminate immediately if the optionee is removed from the Board of
Directors for any one of the following reasons: (i) disloyalty, gross
negligence, dishonesty or breach of fiduciary duty to the Company; or (ii) the
commission of an act of embezzlement, fraud or deliberate disregard of the rules
or policies of the Company which results in loss, damage or injury to the
Company, whether directly or indirectly; or (iii) the unauthorized disclosure of
any trade secret or confidential information of the Company; or (iv) the
commission of an act which constitutes unfair competition with the Company or
which induces any customer of the Company to break a contract with the Company;
or (v) the conduct of any activity on behalf of any organization or entity which
is a competitor of the Company (unless such conduct is approved by a majority of
the disinterested members of the Board of Directors).
Section 6.2 If the optionee voluntarily resigns or ceases to be a member
of the Board of Directors for any reason other than for death or for
disability, as defined in Section 22(e)(3) of the Code, the option rights of
such optionee under any then outstanding option shall be exercisable by such
optionee at any time prior to the expiration of the option or within three
months after the date of such termination, whichever period of time is shorter.
Section 6.3 In the case of an optionee who becomes disabled, as defined by
Section 22(e)(3) of the Code, the option rights of such optionee under any then
outstanding option shall be exercisable by such optionee at any time prior to
the expiration of the option or within one year after the date of termination of
service due to disability, whichever period of time is shorter, but only to the
extent of the accrued right to exercise the option at the date of such
termination.
Section 6.4 In the event of the death of an optionee, the option rights of
such optionee under any then outstanding option shall be exercisable by the
person or persons to whom these rights pass by will, or by the laws of descent
and distribution, at any time prior to the expiration of the option or within
three years after the date of death, whichever period of time is shorter, but
only to the extent of the accrued right to exercise the option at the date of
death. If a person or estate acquires the right to exercise a option by bequest
or inheritance, the Board or Committee may require reasonable evidence as to the
ownership of such option, and may require such consents and releases of taxing
authorities as the Board or Committee may deem advisable.
Section 6.5 Nothing contained in the Plan, or in any option granted
pursuant to the Plan, shall confer upon any optionee any right with respect to
continuance of service by the Company nor interfere in any way with the right of
the Company to terminate the optionee's service.
ARTICLE VII
PURCHASE OF SHARES
Section 7.1 An option shall be exercised by tender to the Company of the
full purchase price of the shares with respect to which the option is exercised
and written notice of the exercise. The right to purchase shares shall be
cumulative so that, once the right to purchase any shares has accrued, such
shares or any part thereof may be purchased at any time thereafter until the
expiration or termination of the option. A partial exercise of an option shall
not affect the right of the optionee to exercise the option from time to time,
in accordance with the Plan, as to the remaining number of shares subject to the
option. The purchase price of the shares shall be in United States dollars,
payable in cash or by certified bank check.
Section 7.2 Except as provided in Article VI, an option may not be
exercised unless the holder thereof is a director of the Company at the time of
exercise.
Section 7.3 No optionee, or optionee's executor, administrator, legatee, or
distributee shall be deemed to be a holder of any shares subject to an option
for any purpose whatsoever unless and until a stock certificate or certificates
for such are issued to such person(s) under the terms of the Plan. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued, except as
provided in Article VIII hereof.
Section 7.4 If (i) the listing, registration or qualification of the
options issued hereunder, or of any securities that may be purchased upon
exercise of such options (the "Subject Securities") upon any securities
exchange or quotation system, or under federal or state law is necessary as a
condition of or in connection with the issuance or exercise of the options; or
(ii) the consent or approval of any governmental regulatory body is necessary
as a condition of or in connection with the issuance or exercise of the
options, the Company shall not be obligated to deliver the certificates
representing the Subject Securities or to accept or to recognize an option
exercise unless and until such listing, registration, qualification, consent or
approval shall have been effected or obtained. The Company will take reasonable
action to so list, register, or qualify the options and the Subject Securities,
or effect or obtain such consent or approval, so as to allow for their
issuance.
Section 7.5 An optionee may be required to represent to the Company as a
condition of his exercise of options issued under this Plan: (i) that the
Subject Securities acquired upon option exercise are being acquired by him for
investment and not with a view to distribution or resale, unless counsel for the
Company is then of the view that such a representation is not necessary and is
not required under the Securities Act of 1933, as amended, or any other
applicable statute, law, regulation or rule; and (ii) that the optionee shall
make no exercise or disposition of an option or of the Subject Securities in
contravention of the Securities Exchange Act of 1934, as amended. Optionees may
also be required to provide (as a condition precedent to exercise of an option)
such documentation as may be reasonably requested by the Company to assure
compliance with applicable law and the terms and conditions of the Plan and the
subject option.
ARTICLE VIII
CHANGE IN NUMBER OF OUTSTANDING SHARES OF
STOCK, ADJUSTMENTS, REORGANIZATIONS, ETC.
Section 8.1 In the event that the outstanding shares of common stock of the
Company are hereafter increased or decreased or changed into or exchanged for a
different number of shares or kind of shares or other securities of the Company
or of another corporation by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split, combination of shares, or a
dividend payable in capital stock, appropriate adjustment will be made in the
number and kind of shares for the purchase of which options may be granted under
the Plan, including the maximum number that may be granted to any one person. In
addition, appropriate adjustments in the number and kind of shares as to which
outstanding options, or portions thereof then unexercised, shall be exercisable,
to the end that the optionee's proportionate interest shall be maintained as
before the occurrence to the unexercised portion of the option and with a
corresponding adjustment in the option price per share.
Section 8.2 The grant of an option pursuant to the Plan shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
Section 8.3 Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which the
outstanding securities of the class then subject to options hereunder are
changed into or exchanged for cash or property or securities not of the
Company's issue, or upon a sale of substantially all the property of the Company
to an association, person, party, corporation, partnership, or control group as
that term is construed for purposes of the Securities Exchange Act of 1934, as
amended, the Plan shall terminate, and all options theretofore granted hereunder
shall terminate, unless provision be made in writing in connection with such
transaction for the continuance of the Plan and/or for the assumption of options
theretofore granted, or the substitution for such options of options covering
the stock of a successor employer corporation, or a parent or a subsidiary
thereof, with appropriate adjustments as to the number and kind of shares and
prices, in which event the Plan and options theretofore granted shall continue
in the manner and under the terms so provided. If the Plan and unexercised
options shall terminate pursuant to the foregoing sentence, all persons owning
any unexercised portions of options then outstanding shall have the right, at
such time prior to the consummation of the transaction causing such termination
as the Company shall designate, to exercise the unexercised portions of their
options, including the portions thereof which would, but for this Section 8.3,
not yet be exercisable.
ARTICLE IX
DURATION, AMENDMENT AND TERMINATION
Section 9.1 The Board may at any time terminate the Plan or make such
amendments thereto as it shall deem advisable and in the best interests of the
Company, without action on the part of the stockholders of the Company;
provided, however, that no such termination or amendment shall, without the
consent of the individual to whom any option shall theretofore have been
granted, affect or impair the rights of such individual under such option, and
provided further, that, unless the holders of a majority of all classes of the
Company's outstanding voting stock entitled to vote thereon shall have first
approved thereof, no amendment of this Plan shall be made if the amendment would
(a) materially increase the benefits accruing to participants under the Plan;
(b) materially increase the number of securities which may be issued under the
Plan; or (c) materially modify the requirements as to eligibility for
participation in the Plan.
ARTICLE X
RESTRICTIONS
Section 10.1 Any shares issued pursuant to the Plan shall be subject to
such restrictions on transfer and limitations as shall, in the opinion of the
Board or the Committee, be necessary or advisable to assure compliance with the
laws, rules and regulations of the United States government or any state or
jurisdiction thereof. By accepting an award pursuant to the Plan each optionee
shall thereby agree to any such restrictions.
Section 10.2 Any certificate issued to evidence shares issued pursuant to
an option shall bear such legends and statements as the Board or counsel to the
Company shall deem advisable to assure compliance with the laws, rules and
regulations of the United States government or any state or jurisdiction
thereof. No shares will be delivered under the Plan until the Company has
obtained such consents or approvals from such regulatory bodies of the United
States government or any state or jurisdiction thereof as the Board or counsel
to the Company deems necessary or advisable.
ARTICLE XI
APPLICATION OF FUNDS
Section 11.1 The proceeds received by the Company from the sale of stock
pursuant to the Plan are to be added to the general funds of the Company and
used for its corporate purposes as determined by the Board.
ARTICLE XII
EFFECTIVENESS OF PLAN
Section 12.1 This Plan shall become effective upon adoption by the Board,
and options may be issued hereunder from and after that date subject to the
provisions of Section 3.3. The effectiveness of this Plan and of the grant of
all options hereunder is in all respects subject to the approval of the
Company's stockholders. This Plan must be approved by the Company's stockholders
in accordance with the applicable provisions (relating to the issuance of stock
or options) of the Company's governing documents and state law or, if no such
approval is prescribed therein, by the affirmative vote of the holders of a
majority of the votes cast at a duly held stockholders meeting at which a quorum
representing a majority of all the Company's outstanding voting stock is present
and voting (in person or by proxy).
Draft 2/21/96
JUDICATE, INC.
Proxy for Special Meeting of Stockholders
The undersigned hereby appoints ___________________________ as Proxies,
each with the full power of substitution, and hereby authorizes each of them,
to represent and vote, as designated on the reverse hereof, all shares of
Common Stock of Judicate, Inc. (the "Company") held of record by the
undersigned on February 21, 1996, at the Special Meeting of Stockholders to be
held on March 21, 1996, or any adjournment thereof, upon all such matters as
may properly come before the Meeting.
(The Proxy continues and must be signed on the reverse side.)
/X/ Please mark your If you plan to attend / /
votes as in this the Annual Meeting,
example. place an X in this box.
WITHHOLD AUTHORITY
to vote for all
FOR nominees listed below
/ / / /
Nominees:
1. ELECTION OF Milton M. Adler
DIRECTORS Robert V. Gubitosi
Mitchell Hymowitz
FOR all nominees listed William J. McSherry, Jr.
(except as marked to the contrary below) Dominic A. Polimeni
- ---------------------------
- ---------------------------
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2. Proposal No. 1: Approval of an amendment to Article FIRST of the
Company's Certificate of Incorporation to change the Company's name to
Questron Technology, Inc. (The Board of Directors recommends a vote "FOR"
approval.)
FOR AGAINST ABSTAIN
/ / / / / /
3. Proposal No. 2: Approval of an amendment to Article FOURTH of the
Company's Certificate of Incorporation providing for an increase in authorized
shares. (The Board of Directors recommends a vote "FOR" approval.)
FOR AGAINST ABSTAIN
/ / / / / /
4. Proposal No. 3: Approval of the Company's 1994 Director Non-Qualified
Stock Option Plan. (The Board of Directors recommends a vote "FOR"
approval.)
FOR AGAINST ABSTAIN
/ / / / / /
5. In their discretion upon such other business as may properly come before the
Special Meeting or any postponement or adjournment thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE
ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED "FOR" ITEM
1, "FOR" ITEM 2, "FOR" ITEM 3, AND "FOR" ITEM 4.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN
THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
SIGNATURE: ____________________________ DATE: _______________
SIGNATURE: ____________________________ DATE: _______________
NOTE: Please sign exactly as name or
names appear on stock certificate
as indicated hereon. Joint owners
should each sign. When signing as
attorney, executor, administrator
or guardian, please give full
title as such.
