SCHEDULE 14C
INFORMATION REQUIRED IN INFORMATION STATEMENT
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
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Corfacts, Inc.
..............................................................................
(Name of Registrant as Specified In Its Charter)
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CORFACTS, INC.
3499 Highway 9 North, Suite 3B
Freehold, New Jersey 07728
INFORMATION STATEMENT
To the Holders of Common Stock:
We are mailing this Information Statement to sharehold
ers of record as of the close of business on November 1, 1999.
The purpose of this Information Statement is to notify you that
the holders of shares representing a majority of the Common Stock
of Corfacts have given written consent to a resolution proposed
by Corfacts' Board of Directors to adopt the 1999 Stock and Stock
Option Plan. The consent of those shareholders to the resolution
will be effective on December 15, 1999, at which time the Plan
will be deemed to have been approved by the shareholders of
Corfacts.
The Business Corporation Act of New Jersey permits the
taking of shareholder action by written consent of the holders of
a majority of the voting power. Therefore, there will be no
meeting of Corfacts shareholders to consider or vote upon the
1999 Stock and Stock Option Plan.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
November 2, 1999 LARRY FINKELSTEIN
President
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Shareholders of record for purposes of this shareholder
action were determined as of the close of business on November 1,
1999. Each share of Common Stock of Corfacts, no par value, was
entitled to one vote. As of the record date, there were out
standing and entitled to vote 11,940,521 shares of Common Stock
of Corfacts.
The following table sets forth the equity securities of
Corfacts beneficially owned by any person who, to the knowledge
of Corfacts, owned beneficially more than 5% of the voting stock
as of November 1, 1999, by all directors of Corfacts, and by the
directors and officers of Corfacts as a group. The table also
indicates the percentage of the total voting power represented by
the shares. None of the persons identified below owns any
securities of Corfacts other than the Common Stock listed below.
Amount and
Nature of Percentage
Beneficial of Voting
Title of Class Beneficial Owner Ownership Power
Common Stock, Larry Finkelstein 3,864,088 32.4%
no par value shares of
record
Common Stock, Ariel Freud 4,194,088 35.1%
no par value shares of
record
Common Stock, All Directors and 8,058,176 67.5%
no par value Officers as a shares of
Group ( 2 persons) record
ADOPTION OF THE
1999 STOCK AND STOCK OPTION PLAN
Messrs. Finkelstein and Freud, who are the Directors of
Corfacts and who hold shares representing a majority of the total
voting power of Corfacts shareholders, have signed written
consents to a proposal to adopt the 1999 Stock and Stock Option
Plan. The Plan was approved by the Board of Directors on October
22, 1999. Its approval by the shareholders will become effective
on December 15, 1999, although the Board of Directors may grant
shares and/or options under the Plan prior to that date.
Reasons for the 1999 Stock and Stock Option Plan
Prior to the adoption of the 1999 Plan, the only
incentive plan available to Corfacts management was the 1997
Stock and Stock Option Plan. The 1997 Plan is relatively limited
in scope, as it permits the Board to issue non-qualified stock
options and to grant shares of Common Stock outright to employ
ees. It does not allow Corfacts to offer its employees any tax-
advantaged equity incentives. In addition, options for
1,180,000 of the 1,200,000 shares included in the 1997 Plan are
currently outstanding.
The primary reason that the Board of Directors adopted
the 1999 Stock and Stock Option Plan was to obtain a flexible
equity incentive plan which will allow Corfacts to offer tax-
advantaged equity incentives. The Plan will be utilized by the
Board of Directors to persuade qualified individuals to become
employees of Corfacts and to give Corfacts employees an incen
tive to contribute to the growth of the company.
Summary of the 1999 Stock and Stock Option Plan
Stock Options. Options granted under the Plan may be
either incentive stock options, within the meaning of Section 422
of the Internal Revenue Code of 1986 (the "Code"), or non-quali
fied options. The Plan provides that a committee of Directors
(the Plan Committee ) will determine the number of shares
subject to options and all other terms and conditions of the
options. In no event, however, may the exercise price of an
incentive stock option be less than 100 percent of the fair
market value of Corfacts's Common Stock on the date of the stock
option's grant, nor may any option have a term of more than 10
years. The Plan Committee will provide a vesting schedule for
each option, but no option will vest in less than one year.
Restricted Stock. The Plan authorizes the Plan Commit
tee to grant restricted stock. Each share of restricted stock
will be subject to such terms, conditions, restrictions, and/or
limitations, if any, as the Plan Committee deems appropriate,
including, but not by way of limitation, restrictions on trans
ferability and continued employment. In order to qualify a
restricted stock grant under Section 162(m) of the Internal
Revenue Code, the Plan Committee may condition vesting of the
award on the attainment of performance goals, using the same
performance criteria as that described below for performance
shares.
Performance Shares. The Plan allows the Plan Committee
to issue "performance shares." These are contingent incentive
awards which are converted into stock only if specific perfor
mance goals are achieved over performance periods of not less
than one year. If the performance goals are not achieved, the
awards are forfeited or reduced. Performance shares are each
equivalent in value to a share of Common Stock. Unless limited
by the Plan Committee, participants may receive dividend equiva
lents on performance shares.
The performance goals set by the Plan Committee may
include payout tables, formulas or other standards to be used in
determining the extent to which the performance goals are met,
and, if met, the number of performance shares which would be
converted into stock. The performance goals may include any of
the following criteria or any combination thereof:
(1) Financial performance of Corfacts. Such financial
performance may be based on net income and/or value
added (after-tax cash operating profit less deprecia
tion and less a capital charge).
(2) Service performance of Corfacts. Such service perfor
mance may be based upon measured customer perceptions
of service quality.
(3) Corfacts's stock price, return on shareholders' equity,
total shareowner return (stock
price appreciation plus dividends, assuming the rein
vestment of dividends), and/or earnings per share.
(4) With respect to Corfacts: sales, costs, market share
of a product or service, return on net assets, return
on assets, return on capital, profit margin, and/or
operating revenues, expenses or earnings.
Eligibility for Participation. All employees of
Corfacts, non-employee directors of Corfacts, and consultants
performing services for Corfacts (other than services in connec
tion with raising capital or promoting the stock of Corfacts) are
eligible to be selected to participate in the Plan. Actual
selection of any eligible person to participate in the Plan is
within the sole discretion of the Plan Committee.
Available Shares. The 1999 Stock and Stock Option Plan
authorizes the Plan Committee to issue, over a ten year period,
awards providing for the issuance of up to one million, two
hundred thousand (1,200,000) shares of Common Stock to partici
pants under the Plan. After August 31, 2009, no awards may be
issued.
Awards to Date. The Plan Committee has not made any
awards to date under the Plan. Neither has the Plan Committee
formed any specific intentions regarding whom awards will be
given to or the nature or size of awards.
Federal Income Tax Matters Relating to Stock Options.
Corfacts believes that, under present law, the following is a
summary of the principal United States Federal income tax conse
quences of the issuance and exercise of stock options granted
under the Plan. This summary is not intended to be exhaustive
and, among other things, does not describe state or local tax
consequences.
A participant will not be deemed to have received any
income subject to tax at the time a non-qualified stock option or
an incentive stock option is granted, nor will Corfacts be
entitled to a tax deduction at that time.
When a non-qualified stock option is exercised, the
participant will be deemed to have received an amount of ordinary
income equal to the excess of the fair market value of the shares
of Common Stock purchased over the exercise price. Corfacts will
be allowed a tax deduction in the year the shares are valued in
an amount equal to the ordinary income which the participant is
deemed to have received.
If an incentive stock option is exercised by a partici
pant who is employed by Corfacts at the time of exercise or has
been employed by Corfacts within three months prior to exercise,
the participant will not be deemed to have received any income
subject to tax at such time, although the excess of the fair
market value of the Common Stock so acquired on the date of
exercise over the exercise price will be an item of tax prefer
ence for purposes of the alternative minimum tax. Section 422 of
the Internal Revenue Code provides that if the Common Stock is
held at least one year after the exercise date and two years
after the date of grant, the participant will realize a long term
capital gain or loss upon the subsequent sale, measured as the
difference between the exercise price and the sales price.
If Common Stock acquired upon the exercise of an
incentive stock option is not held for one year, a "disqualifying
disposition" results, at which time the participant is deemed to
have received an amount of ordinary income equal to the lesser of
(a) the excess of the fair market value of the Common Stock on
the date of exercise over the exercise price, or (b) the excess
of the amount realized on the disposition of the shares over the
exercise price. If the amount realized on the "disqualifying
disposition" of the Common Stock exceeds the fair market value on
the date of exercise, the gain on the excess of the ordinary
income portion will be treated as capital gain. Any loss on the
disposition of Common Stock acquired through the exercise of
incentive stock options is a capital loss.
No income tax deduction will be allowed to Corfacts
with respect to shares of Common Stock purchased by a participant
through the exercise of an incentive stock option, provided there
is no "disqualifying disposition" as described above. In the
event of a "disqualifying disposition," Corfacts is entitled to a
tax deduction equal to the amount of ordinary income recognized
by the participant.
The closing price of Corfacts's Common Stock reported
on the OTC Bulletin Board for November 1, 1999 was $ 1.09 per
share.
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