<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. _______________)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, For Use of the
Commission Only (as permitted
/X/ Definitive Proxy Statement by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ARISTA INVESTORS CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
ARISTA INVESTORS CORP.
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Friday, August 6, 1999
------------------
Notice is hereby given that the Annual Meeting of Stockholders (the
"Meeting") of Arista Investors Corp., a Delaware corporation (the "Company"),
will be held on Friday, August 6, 1999, at 10:00 a.m., local time, at Cold
Spring Harbor Country Club, East Gate Drive, Cold Spring Harbor, New York 11724,
for the following purposes:
1. To elect five directors to the Board of Directors until the
next annual meeting or until their successors are elected and
qualified;
2. To approve and adopt the Company's 1999 Non-Qualified Stock
Option Plan to enable key employees and directors of the
Company to receive stock options to purchase the Company's
Class A Common Stock;
3. To approve and adopt the Company's 1999 Restricted Stock Plan
to enable key employees and directors of the Company to
receive stock awards under such plan; and
4. To transact such other business as may properly come before
the Meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on July 1, 1999,
as the record date (the "Record Date") for the determination of stockholders
entitled to receive notice of and to vote at the Meeting, and any adjournment or
adjournments thereof.
Whether or not you expect to be present at the Meeting, please
complete, date, and sign the enclosed proxy card and return it in the envelope
provided. Your vote is important.
By Order of the Board of Directors,
SUSAN J. HALL,
Secretary
Date: July 12, 1999
<PAGE>
ARISTA INVESTORS CORP.
116 John Street
New York, New York 10038
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Friday, August 6, 1999
INTRODUCTION
This Proxy Statement is being furnished to stockholders of Arista
Investors Corp., a Delaware corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company of proxies for use at the
Annual Meeting of Stockholders (the "Meeting") of the Company to be held at Cold
Spring Harbor Country Club, East Gate Drive, Cold Spring Harbor, New York 11724
at 10:00 a.m., local time, on Friday, August 6, 1999, and at any adjournment or
adjournments thereof. This Proxy Statement and the accompanying Notice of
Meeting of Stockholders, Form of Proxy, and 1998 Annual Report To Stockholders
are first being mailed to stockholders of the Company on or about July 14, 1999.
The Board of Directors has fixed the close of business on July 1, 1999
as the record date (the "Record Date") for the determination of those
stockholders of the Company entitled to notice of and to vote at the Meeting.
Only those holders of record on the books of the Company on the Record Date will
be entitled to notice and to vote at the Meeting. Each stockholder of the
Company's Class A common stock, par value $0.01 per share (the "Class A Common
Shares" or "Class A Common Stock"), will be entitled to cast, in person or by
properly executed proxy, one vote for each Class A Common Share so held for each
of the five director-nominees, the approval and adoption of the 1999
Non-Qualified Stock Option Plan (the "1999 Non-Qualified Plan") and 1999
Restricted Stock Plan (the "1999 Restricted Stock Plan"). In the past, the
Company had 47,400 shares of Class B common stock, par value $0.01 per share
(the "Class B Common Stock"), issued and outstanding. On May 4, 1999, the Class
A Directors of the Board of Directors of the Company exercised an option (the
"Class B Stock Transaction") granted to the Company pursuant to a letter
agreement, dated June 14, 1996 (the "Letter Agreement"), by Mr. Bernard Kooper,
the Chairman of the Board of Directors of the Company and beneficial owner of
47,400 shares of the Company's Class B Common Stock, representing all of the
Company's issued and outstanding shares of Class B Common Stock. The Class B
Stock Transaction was consummated on May 18, 1999, and as a result of such
transaction, there are no longer any shares of the Company's Class B Common
Stock outstanding. (See "Compensation Committee Interlocks and Insider
Participation" discussion on page 12.)
On the Record Date, there were 2,570,100 Class A Common Shares issued
and outstanding (excluding 10,000 shares of treasury stock). The presence,
either in person or by properly executed proxies, of the holders of a majority
of the outstanding Class A Common Shares entitled to vote is necessary to
constitute a quorum at the Meeting. In all matters other than the election of
directors, an amendment to the certificate of incorporation, or any merger, sale
of assets or other similar corporate matter, the affirmative vote of a majority
of the Class A Common Shares present in person or represented by proxy at the
Meeting and entitled to vote on the subject matter shall be the act of the
stockholders. Abstentions will be treated as votes against a proposal. Broker
non-votes will be counted towards a quorum, but will not be counted for purposes
of determining whether a matter has been approved by the stockholders. Directors
shall be elected by the plurality of the votes present in person or represented
by proxy at the Meeting and entitled to vote on the election of directors.
<PAGE>
All Class A Common Shares represented at the Meeting by properly
executed proxies received by the Company, and not revoked prior to the taking of
the vote at the Meeting, will be voted at the Meeting in accordance with the
instructions on such proxies. If no instructions are indicated, such proxies
will be voted FOR the election to the Board of Directors of the
director-nominees named in this Proxy Statement, the adoption of the 1999
Non-Qualified Plan and 1999 Restricted Stock Plan. The Company does not know of
any matters, other than the election of directors and the adoption of the 1999
Non-Qualified Plan and 1999 Restricted Stock Plan, to be presented at the
Meeting. However, if any other matters are properly presented at the Meeting for
action, the proxy holders will have the authority to vote on such matters in
their discretion.
Any proxy given pursuant to this solicitation may be revoked by the
stockholder who granted such proxy by giving notice thereof to the Secretary of
the Company at any time before the proxy is voted. Such revocation will not be
effective until written notice thereof is received by the Secretary of the
Company. All notices of revocation of proxies should be delivered to the
Secretary either at the Company's principal offices at 116 John Street, New
York, New York 10038, prior to the Meeting, or at the Meeting. Attendance by a
stockholder at the Meeting will not, in itself, constitute revocation of such
stockholder's proxy.
The Company will bear the costs of the solicitation of proxies from its
stockholders. In addition to the use of the mails, proxies may be solicited by
the directors, officers, and employees of the Company by personal interview,
telephone, or telegram. Such directors, officers, and employees will not be
additionally compensated, but may be reimbursed for out-of-pocket expenses
incurred in connection with such solicitation. Arrangements will also be made
with brokerage houses and other custodians, nominees, and fiduciaries for the
forwarding of solicitation material to the beneficial owners of stock held of
record by such persons, and the Company will reimburse such custodians,
nominees, and fiduciaries for reasonable out-of-pocket expenses incurred in
connection therewith.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON BEING SOLICITED
BY THIS PROXY STATEMENT, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998,
AS FILED WITH THE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO. ALL SUCH REQUESTS SHOULD BE DIRECTED TO MS. SUSAN J. HALL,
SECRETARY, ARISTA INVESTORS CORP., 116 JOHN STREET, NEW YORK, NEW YORK 10038.
PRINCIPAL STOCKHOLDERS; SHARES HELD BY MANAGEMENT
As of the Record Date, the Company had 2,570,100 Class A Common Shares
issued and outstanding. The following table sets forth the number of shares of
the Company's common stock owned as of the Record Date by (i) owners of more
than 5% of the Company's outstanding common stock, (ii) each director of the
Company, (iii) each of the Named Executives, and (iv) all officers and directors
of the Company as a group. Except as otherwise indicated, each person or entity
named in the table has sole investment power and sole voting power with respect
to the shares of the Company's common stock set forth opposite his or her name.
-2-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares
of Class A Percentage Ownership
Name and Address of Common Stock of Class A Common Stock
Beneficial Owner Beneficially Owned Outstanding(1)
- ---------------- ------------------ --------------
<S> <C> <C>
Bernard Kooper, Chairman of the 525,200 20.4%
Boards of Directors of the Company
and Arista(2)(3)
116 John Street
New York, New York 10038
Stanley S. Mandel, President and 105,400 4.1%
Director of the Company
and Arista(4)(5)
116 John Street
New York, New York 10038
Susan J. Hall -
Senior Vice President, 1,100 *
Treasurer and Secretary of
the Company and Arista,
and Controller and Director
of Arista
116 John Street
New York, New York 10038
Peter J. Norton, Vice President
of the Company and Arista and
Director of Arista -- --
116 John Street
New York, New York 10038
Louis H. Saltzman, Director of the
Company and Arista(3) 70,000 2.7%
1205 Northern Boulevard
Manhasset, New York 11030
Richard P. Farkas, Director of the
Company and Arista -- --
500 Route 36
Navesink, New Jersey 07752
J. Martin Feinman, Director of the
Company and Arista(6) 51,200 2.0%
270-07 E. Grand Central Parkway
Floral Park, New York 11005
Daniel Glassman, Director of the
Company and Arista 38,600 1.5%
4 Magnolia Lane
Woodbury, New York 11797
Michael B. Krasner, Director of the
Company and Arista 29,800 1.2%
371 Merrick Road
Rockville Centre, New York 11570
Keith E. Mandel, M.D.(5) 178,400 6.9%
99 Pond Avenue
Brookline, Massachusetts 02445
Old Lyme Holding Corporation(7) 205,000 8.0%
122 East 42nd Street
New York, New York 10168
Helmut N. Friedlaender (8) 142,500 5.5%
All officers and directors 821,300 32.0%
as a group (9 persons)
(2)(3)(5)(6)
</TABLE>
- ----------
* Less than 1%.
-3-
<PAGE>
(1) Based upon 2,570,100 shares of Class A Common Stock outstanding on the
Record Date.
(2) Includes 30,400 shares of Class A Common Stock owned by Arlyne Kooper,
wife of Bernard Kooper.
(3) Bernard Kooper is the father-in-law of Louis Saltzman. Each disclaims
beneficial ownership of the securities of the Company owned by the
other.
(4) Includes shares of Class A Common Stock held individually by Stanley S.
Mandel and in the various retirement accounts of Stanley S. Mandel and
Joy Mandel, wife of Stanley S. Mandel.
(5) Dr. Keith E. Mandel is the son of Stanley S. Mandel. Each disclaims
beneficial ownership of the securities of the Company owned by the
other.
(6) Includes 2,400 shares of Class A Common Stock owned by Carl Feinman,
the son of J. Martin Feinman, 2,400 shares of Class A Common Stock
owned by Lisa Feinman Baum, the daughter of J. Martin Feinman, and
2,400 shares of Class A Common Stock owned by Jane Feinman Kendes, the
daughter of J. Martin Feinman. Mr. Feinman disclaims beneficial
ownership of the shares of Class A Common Stock owned by his children.
(7) According to the Schedule 13D, Amendment No. 1, dated April 4, 1995,
filed by Old Lyme Holding Corporation on behalf of itself and certain
reporting persons.
(8) According to the Schedule 13G, Amendment No. 1, dated June 9, 1999,
filed with the Securities and Exchange Commission on behalf of: (A)
Helmut N. Friedlaender, (B) Helmut N. Friedlaender Individual
Retirement Account, (C) Ronald J. Stein, Helmut N. Friedlaender and
Edith F. Bondi, as trustees U/W/O Hedwig Friedlaender F/B/O Helmut N.
Friedlaender, (D) Ronald J. Stein, Helmut N. Friedlaender and Edith F.
Bondi, as trustees U/W/O Hedwig Friedlaender F/B/O Edith F. Bondi, (E)
the Eugen Friedlaender Foundation, Inc., a New York not-for-profit
corporation, (F) the Gumpel-Lury Foundation, a New York not-for-profit
corporation, (G) Judith G. Friedlaender, individually and as custodian
for Catherine Ann Friedlaender, (H) Ronald J. Stein as trustee F/B/O
Judith Gumpel Friedlaender, (I) Ronald J. Stein as trustee F/B/O Jane
Lury Friedlaender, (J) Ronald J. Stein and Thomas M. Franck as trustees
F/B/O Ardith Y. Bondi, (K) Ardith Y. Bondi, (L) Rebecca Osborn and (M)
Wolfgang J. Neumann Individual Retirement Account. Except for Ronald J.
Stein, the business address of each of the foregoing reporting persons
is: c/o Helmut N. Friedlaender, Suite 3820, 60 East 42nd Street, New
York, New York 10165. The business address of Ronald J. Stein is 180
Maiden Lane, New York, New York 10038.
-4-
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
At a meeting of the Board of Directors held on June 3, 1999, the Board
of Directors duly adopted a resolution to reduce the size of the Board to five
directors. Five directors will be elected by the holders of Class A Common Stock
and are to serve until the next Annual Meeting of Stockholders or until their
respective successors are elected and have qualified.
The nominees for election as directors are as follows:
Daniel Glassman
Bernard Kooper
Michael Krasner
Stanley S. Mandel
Louis H. Saltzman
Each of the nominees currently serves on the Company's Board of
Directors. Each of the nominees has so served continuously since he first became
a director. Information about all nominees is set forth under "Management
Directors and Executive Officers."
It is the intention of the persons named as proxy, unless authority is
withheld, to vote the proxies given them for the election of each of the five
nominees named herein.
THE BOARD OF DIRECTORS RECOMMENDS THAT
STOCKHOLDERS VOTE FOR EACH OF THE FIVE NOMINEES FOR DIRECTOR.
-5-
<PAGE>
MANAGEMENT
Directors and Executive Officers
The names of the directors, executive officers, and nominees for
directors, their ages, positions with the Company and Arista Insurance Company
("Arista"), and their tenure as directors of the Company, are set forth below:
<TABLE>
<CAPTION>
Director of
the Company
Name Age Position Since
- ---- --- -------- -----
<S> <C> <C> <C>
Bernard Kooper(1) 74 Chairman of the Boards of Directors 1978
of the Company and Arista
Stanley S. Mandel(1) 64 President and Director of the Company 1983
and Arista
Susan J. Hall 55 Senior Vice President, Treasurer and Secretary --
of the Company and Arista, and Controller
and Director of Arista
Peter J. Norton 54 Vice President of the Company and Arista, --
and Director of Arista
Louis H. Saltzman(1) 48 Director of the Company 1981
and Arista
Richard P. Farkas(2) 74 Director of the Company and Arista 1991
J. Martin Feinman(2) 74 Director of the Company and Arista 1978
Daniel Glassman(1) 70 Director of the Company and Arista 1994
Michael B. Krasner(1) 58 Director of the Company and Arista 1999
</TABLE>
- ----------
(1) Director-nominee.
(2) Not a director-nominee. At a meeting of the Board of Directors held on
June 3, 1999, the Board of Directors duly adopted a resolution to
reduce the size of the Board to five directors.
BERNARD KOOPER, a director-nominee, has served as Chairman of the
Board of Directors of the Company since its inception and Chairman of
the Board of Directors of Arista since June 1986. Mr. Kooper served as
President of the Company from its inception to November 12, 1998, the
closing date of the transactions (collectively, the "Transaction")
contemplated by the Assumption Reinsurance Agreement, dated September
23, 1998 (the "Treaty"), between the Company and The Guardian Life
Insurance Company of America ("The Guardian") and the Administrative
Services Agreement, dated September 23, 1998 (the "TPA Agreement"),
between the Company and The Guardian. Since 1971, Mr. Kooper has served
as President and has been the sole stockholder of Bernard Kooper Life
Agency, Inc. and Bernard Kooper Associates, Inc., life, accident and
health general agencies in New York, New York. Since 1968, Mr. Kooper
has also served as Vice President and has been a principal stockholder
of Fischman-Kooper, Inc., a multi-line insurance agency located in
Roslyn Heights, New York. Mr. Kooper is the father-in-law of Louis H.
Saltzman.
STANLEY S. MANDEL, a director-nominee, has served as President of
the Company since the closing date of the Transaction, and also as a
director of the Company and President and a director of Arista since
August 1983. From August 1993 until the closing date of the
Transaction, Mr. Mandel served as Executive Vice President of the
Company. Mr. Mandel is also a director of Micro-Medical Industries,
Inc. and President and Chairman of the Board of Directors of Kingsbrook
Jewish Medical Center.
-6-
<PAGE>
SUSAN J. HALL has served as Senior Vice President and Treasurer of
the Company and Arista since March 1988, as Secretary of the Company
and Arista since the closing date of the Transaction and as a director
of Arista since June 1987. Since October 1986, Ms. Hall has served as
Controller of Arista.
PETER J. NORTON has served as Vice President of the Company since
February 1, 1999 and Vice President of Arista since July 1, 1994. Mr.
Norton has served as a director of Arista since May 4, 1999.
LOUIS H. SALTZMAN, a director-nominee, has served as a director of
the Company and Arista since May 1981. From May 1981 until the closing
date of the Transaction, Mr. Saltzman served as Secretary of the
Company and Arista. Since March 31, 1997, Mr. Saltzman has served as
Secretary, a director and a principal stockholder of the
Saltzman-American Business Agency, Inc., a life and health general
agency in Manhasset, New York. Since January 1989, Mr. Saltzman served
as President and sole stockholder of The Saltzman/Kooper Agency, Inc.,
a life, accident and health general agency in New York, New York. Mr.
Saltzman is the son-in-law of Bernard Kooper.
RICHARD P. FARKAS has served as a director of the Company since
September 1991 and as a director of Arista since June 1988. From June
1988 to June 1990, Mr. Farkas served as a director of the Company. Mr.
Farkas is also Chairman and Chief Executive Officer of IMC
International Management Consultants, Inc., a provider of business and
management consulting services. Mr. Farkas is also a director of
Waterchef, Inc. and Ta Lenman, Inc.
J. MARTIN FEINMAN has served as a director of the Company since
its inception, and has served as a director of Arista since May 1981.
From 1950 until November 1992, Mr. Feinman served as President of Olde
England Paint and Varnish Corporation, a distributor of paint products,
located in Brooklyn, New York.
DANIEL GLASSMAN, director-nominee, has served as a director of the
Company since October 1994 and has served as a director of Arista since
June 1982. From 1971 to 1991, he served as Vice President-Finance and
director of Lea Ronal, Inc, a chemical specialties manufacturer. Mr.
Glassman is the President and sole stockholder of CSA, Inc., a clothing
manufacturer, and a principal stockholder of JLT Corp., a clothing
manufacturer.
MICHAEL B. KRASNER, a director-nominee, has served as a director
of the Company since April 13, 1999. Mr. Krasner has also served as a
director of Arista since its inception. Since 1988, he has also served
as President of Louis D. Krasner, Inc., a multi-line insurance agency
located in Rockville Centre, New York.
The terms of office of all officers and directors expire at the time of
the Annual Meeting of Stockholders. Noah Fischman resigned as a director of the
Company and Arista on April 13, 1999. Mr. Fischman had served as a director of
the Company since its inception and of Arista since May 1981.
-7-
<PAGE>
COMMITTEES OF THE BOARD
The Board of Directors has the following standing committees:
AUDIT COMMITTEE: The Audit Committee reviews the Company's financial
accounting procedures, internal controls and the reports of the Company's
independent certified public accountants. The Audit Committee met one time in
fiscal 1998. In fiscal 1998, Messrs. Feinman, Farkas and Fischman served as
members of the Audit Committee. Mr. Fischman resigned as a director on April 13,
1999. Messrs. Feinman and Farkas continue to serve as members of the Audit
Committee.
COMPENSATION COMMITTEE: The Compensation Committee makes
recommendations to the Board concerning compensation arrangements for directors,
executive officers and certain other senior management of the Company. The
Compensation Committee met three times in fiscal 1998. In fiscal 1998, Mr.
Feinman and Mr. Fischman served as members of the Compensation Committee. Mr.
Fischman resigned as a director on April 13, 1999. Mr. Feinman continues to
serve on the Compensation Committee.
EXECUTIVE COMMITTEE: The Executive Committee has, to the extent
permitted by law, the full power and authority of the full Board of Directors to
act when the Board is not in session. The Executive Committee met twice in
fiscal 1998. In fiscal 1998, Messrs. Kooper, Mandel, Feinman, Saltzman and
Fischman served as members of the Executive Committee. Mr. Fischman resigned as
a director on April 13, 1999. Messrs. Kooper, Mandel, Feinman and Saltzman
continue to serve as members of the Executive Committee.
INVESTMENT COMMITTEE: The Investment Committee makes recommendations to
the Board concerning the cash management and investment policies of the Company.
The Investment Committee did not hold any meetings in fiscal 1998. In fiscal
1998, Messrs. Kooper, Farkas and Fischman served as members of the Investment
Committee. Mr. Fischman resigned as a director on April 13, 1999. Messrs. Kooper
and Farkas continue to serve as members of the Investment Committee.
ACQUISITION COMMITTEE: A special committee of the Board was established
in 1994 to assist the Board in selecting potential candidates for mergers or
acquisitions with the Company. The Acquisition Committee did not hold any
meetings in fiscal 1998. In fiscal 1998, Messrs. Feinman, Farkas and Fischman
served as members of the Acquisition Committee. Mr. Fischman resigned as a
director on April 13, 1999. Messrs. Feinman and Farkas continue to serve as
members of the Acquisition Committee.
The Board of Directors held nine meetings during fiscal 1998. In 1998,
each incumbent director attended at least 75 percent of the aggregate of (i) the
total number of meetings of the Board held during the period for which he was a
director plus (ii) the total number of meetings held by all committees of the
Board on which the incumbent served.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows, for the three most recently ended fiscal
years ended December 31, the cash compensation paid or accrued for those years
to the President of the Company and to each of the four most highly compensated
executive officers of the Company other than the President whose aggregate
annual salary and bonus paid in compensation for services rendered in all the
capacities in which they served exceeded $100,000 for the Company's last fiscal
year (each, a "Named Executive Officer"):
-8-
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Name and Other Restricted
Principal Annual Stock Options/ LTIP All Other
Position Year Salary($) Bonus($) Compensation($) Awards($) SARs (#) Payouts($) Compensation($)(4)(6)
- -------- ---- --------- -------- --------------- --------- -------- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard Kooper -
Chairman of the Boards of
Directors of the Company 1996 150,000 10,000 492,750(7) -0- -0- -0- 35,950
and Arista(1)(4)(5) 1997 150,000 35,000 -0- -0- -0- -0- 35,950
1998 150,000 -0- -0- -0- -0- -0- 35,950(6)
Stanley S. Mandel -
President and a Director 1996 208,750 26,000 264,600(7) -0- -0- -0- 27,196
of the Company and 1997 208,750 61,000 63,428(8) -0- -0- -0- 28,363
Arista (2)(3)(4)(5) 1998 231,519 -0- 25,692(8) -0- -0- -0- 28,363(6)
Susan J. Hall -
Senior Vice President, 1996 80,136 12,000 -0- -0- -0- -0- -0-
Treasurer and Secretary 1997 84,217 -0- -0- -0- -0- -0- -0-
of the Company and Arista, 1998 90,316 -0- 31,201(8) -0- -0- -0- -0-
of and Controller and
Director of Arista
Peter J. Norton- 1996 125,000 9,999 9,600(8) -0- -0- -0- 9,600
Vice President of 1997 125,000 -0- 19,215(8) -0- -0- -0- 9,600
the Company 1998 125,000 -0- 19,215(8) -0- -0- -0- 9,600(6)
and Arista and Director
of Arista(9)
</TABLE>
- ----------
(1) Effective February 1993, the Company entered into an employment agreement
with Mr. Kooper which provided Mr. Kooper with a base salary of $150,000 per
annum (the "Kooper Employment Agreement"). The Kooper Employment Agreement
obliged Mr. Kooper to devote such time as he deemed necessary to perform his
duties on behalf of the Company (but in no event less than 120 days per year).
Mr. Kooper devoted and continues to devote a substantial amount of his time to
the activities of Bernard Kooper Life Agency Inc., Bernard Kooper Associates,
Inc., Fischman-Kooper, Inc. and other business activities during the year. In
July 1994, the Kooper Employment Agreement was amended to, among other things,
extend Mr. Kooper's term of employment for an additional three year period,
expiring in February 2001.
Effective December 10, 1998, the Kooper Employment Agreement was terminated. See
Footnote (5) below.
(2) Effective February 1993, Arista entered into an employment agreement with
Mr. Mandel which provided Mr. Mandel with a base salary of $208,750 per annum
(the "Mandel Employment Agreement"). In July 1994, the Mandel Employment
Agreement was amended to, among other things, extend Mr. Mandel's term of
employment for an additional three year period, expiring in February 2001. Under
the Mandel Employment Agreement, Mr. Mandel was also entitled to annual
reimbursements for automobile expenses of up to $9,000 per annum and a
non-accountable expense allowance of up to $5,000 per annum and required Arista
to obtain a long-term disability benefits policy with benefits of $5,000 per
month for Mr. Mandel. Effective December 10, 1998, the Mandel Employment
Agreement was terminated.
See Footnote (5) below.
(3) Effective on the closing date of the Transaction, the Company entered into a
new employment agreement with Mr. Mandel (the "Mandel Investors Employment
Agreement") pursuant to which Mr. Mandel is employed as President of the Company
for a period ending on the later to occur of (i) the second anniversary of the
Effective Date (as that term is defined in the Mandel Investors Employment
Agreement) or (ii) the termination date of the TPA Agreement (the "Employment
Period"), renewable for an additional period of not more than three years.
Pursuant to the Mandel Investors Employment Agreement, Mr. Mandel is to receive
a salary of $185,000 per annum, an annual bonus equal to 8% of the Company's
annual earnings before income taxes and extraordinary or non-recurring items
from third party administration operations for such bonus period and a
nonaccountable expense allowance equal to $5,000 per annum. The Mandel Investors
Employment Agreement may be terminated upon Mr. Mandel's death or disability,
with or without "Cause," the occurrence of a "Change of Control" (as those terms
are defined in the Mandel Investors Employment Agreement) and the termination of
the TPA Agreement. Pursuant to the Mandel Investors Employment Agreement, in the
event of a "Change of Control," the Company or the successor or surviving
corporation, as the case may be, may terminate, assign or assume the Mandel
Investors Employment Agreement, provided, however, that any such entity pays Mr.
Mandel a sum equal to $370,000. Pursuant to the Mandel Investors Employment
Agreement, Mr. Mandel has agreed not to engage in any "Competitive Activity" (as
defined in the Mandel Investors Employment Agreement) during the Employment
Period and up to a period of one year thereafter, provided, Mr. Mandel is paid a
sum equal to $185,000 in twelve equal monthly installments, commencing the month
subsequent to such termination.
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<PAGE>
(4) Each of the Kooper Employment Agreement and Mandel Employment Agreement was
amended in July 1994 to provide for a split-dollar insurance policy in the
amount of $1,000,000 and $205,000, respectively. Under these agreements, the
Company and Arista paid the premiums on these policies on behalf of Mr. Kooper
and Mr. Mandel for a period of time specified in each agreement. The premium
payments are treated as loans to both Mr. Kooper and Mr. Mandel and are
collateralized by the underlying policy cash values. For the year ended December
31, 1998, loans of $33,338 and $10,419 were made to Mr. Kooper and Mr. Mandel,
respectively, and the cash surrender values of the insurance policies owned by
Mr. Kooper and Mr. Mandel were approximately $214,037 and $65,884, respectively.
The policies also provide that in the event that Mr. Kooper or Mr. Mandel shall
be living on February 16, 2001, each of them will be entitled to a lump sum
retirement benefit equal to the amount of premiums paid by the Company or
Arista, attributable to the cumulative increase in the cash surrender value of
the policies during the period ending February 2001. Pursuant to the Kooper
Employment Agreement and the Mandel Employment Agreement, the Company and Arista
are obligated to make lump sum payments on behalf of Mr. Kooper and Mr. Mandel
sufficient to render their respective policies "paid up" upon (i) their death
(if they predecease their spouse), (ii) one year from a physical or mental
disability or (iii) a merger, consolidation, or sale of all or substantially all
of the assets of the Company or Arista, unless their employment has been
terminated for "Cause" (as defined in the employment agreements). Effective upon
the termination of the Kooper Employment Agreement and Mandel Employment
Agreement on December 10, 1998, each of Mr. Kooper and Mr. Mandel agreed to
defer having the Company pay such premiums to render the foregoing policies
"paid up" and, also, to receive the lump sum payouts as discussed in Footnote
(5) below; provided, however, that such lump sum payouts bear interest monthly
at the applicable federal short term rate as provided in Section 1274(d) of the
Internal Revenue Code of 1986, as amended, and the Company agrees to make such
payments within ten days after the payment by Arista of a special dividend or
special dividends to the Company, approved by the Department, in an aggregate
amount equal to or greater than $8.4 million (the "Investors Dividend"). See
Footnote (5).
(5) The Kooper Employment Agreement and the Mandel Employment Agreement provided
that in the event of a consolidation, merger, or sale of all or substantially
all of the assets of the Company or Arista, such employment agreements may be
terminated, and upon such termination, Mr. Kooper and/or Mr. Mandel,
respectively, would be entitled to receive a lump sum payout. The payout was to
be the maximum amount that would not trigger the excise tax payable in the event
of an "excess parachute payment" as such term is defined in the Internal Revenue
Code of 1986, as amended. Effective December 10, 1998, the Kooper Employment
Agreement and the Mandel Employment Agreement were terminated, and Mr. Kooper
and Mr. Mandel have become entitled to receive payments of $861,658 and
$994,619, respectively. The Company was required to pay such amounts to Messrs.
Kooper and Mandel within ten days after the payment of the Investors Dividend.
On May 13, 1999, the Company made the lump sum payout to Mr. Kooper in the
amount of $861,658.
(6) Other compensation includes in fiscal 1998: (i) insurance premiums paid in
fiscal 1998 by, or on behalf of, the Company with respect to certain split
dollar life insurance policies as follows: (x) Bernard Kooper, $35,950 (Mr.
Kooper had taxable income in 1998 of $2,610 with regard to these premiums), and
(y) Stanley S. Mandel, $11,313 (Mr. Mandel had taxable income in 1998 of $894
with regard to these premiums); (ii) Stanley S. Mandel also received automobile
expenses of $9,000 and a non-accountable expenses of $5,000 and long-term
disability premium payments of $3,050 and (iii) a car allowance of $6,000 and a
nonaccountable expense allowance of $3,600 to Mr. Norton.
(7) Amount realized upon the exercise of warrants, nonqualified stock options or
upon the early disposition of the shares underlying incentive stock options.
(8) Amount realized upon sale of unused vacation time.
(9) Effective February 1, 1999, Mr. Norton's employment agreement, dated July 1,
1994, with Arista was assigned to the Company pursuant to which Mr. Norton
serves as Vice President of the Company (the "Norton Employment Agreement').
Pursuant to the Norton Employment Agreement, Mr. Norton (a) receives an annual
base salary equal to $125,000 per year, (b) is entitled to (i) receive an annual
bonus, as may be determined by the Board of Directors, (ii) be reimbursed for
automobile expenses in the sum of $6,000 per year and (e) receive a
nonaccountable expense allowance equal to $3,600 for each twelve month period
falling within the employment period. The Norton Employment Agreement may be
terminated in the case of the death or disability of Mr. Norton or with or
without "Cause" (as defined in the Norton Employment Agreement). Pursuant to the
Norton Employment Agreement, Mr. Norton has agreed not to engage in any
"Competitive Activity" (as defined in the Norton Employment Agreement) during
the Employment Period and up to a period of one year thereafter, provided, Mr.
Norton is paid a sum equal to $75,000 in twelve equal monthly installments,
commencing the month subsequent to such termination. The Company and Mr. Norton
have agreed in principal to extend the Norton Employment Agreement for an
additional one year period ending June 30, 2000.
STOCK OPTIONS
There were no options granted in fiscal 1998 and there were no warrants
and options exercised by Named Executive Officers in fiscal 1998.
COMPENSATION OF DIRECTORS
Directors of the Company are usually elected annually. Directors of the
Company and Arista who are not full-time employees of the Company or Arista,
were paid $1,125 per quarter for each Board on which the member served.
Directors of the Company and Arista who are not full-time employees of the
Company or Arista received $250 for each directors' meeting actually attended
and $250 for each committee meeting actually attended. No attendance fee for a
committee meeting is paid if a directors' meeting is held on the same day.
In 1996 and 1998, the Company engaged a company owned by Richard
Farkas, a director of Arista and the Company, to perform consulting services
with respect to proposed transactions and related activities of the Company,
including, but not limited to, evaluating
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<PAGE>
various business strategies. Such consulting services were performed throughout
a five month period ended on July 31, 1996 and a 3 1/2 month period ended July
15, 1998. In consideration for such consulting services, the Company paid Mr.
Farkas' company $30,000 in 1996 and $6,000 in 1998.
In July 1993, Arista entered into an agreement with Richard Greenwald
for specified services to be performed for a fee of $500 per week. Mr. Greenwald
became a director of Arista in October 1994. Arista paid $26,000 under this
Agreement in 1996 and 1997 and $25,000 in 1998. As a result of the Transaction,
such agreement between Arista and Mr. Greenwald was terminated, effective as of
January 31, 1999.
EMPLOYMENT CONTRACTS AND TERMINATIONS OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company's employment agreements with Mr. Bernard Kooper, Mr.
Stanley S. Mandel and Mr. Peter J. Norton are described in the footnotes to the
Summary Compensation Table included in this Proxy Statement.
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the twelve month period ended December 31, 1998, the
Compensation Committee consisted of Noah Fischman and J. Martin Feinman. Mr.
Fischman resigned as director of the Company on April 13, 1999.
Mr. Fischman, a former Vice President and director of the Company, is a
principal stockholder of Fischman-Kooper, Inc., an insurance broker. Mr. Kooper,
a former President of the Company and the current Chairman of the Boards of
Directors of the Company, and Arista, owns Bernard Kooper Life Agency, Inc., a
general agent of Arista. Mr. Kooper is also a principal stockholder of Fischman-
Kooper, Inc. During the calendar years 1996, 1997 and 1998, Arista and/or the
Company paid approximately $223,000, $227,000 and $207,000, respectively, in
gross commissions to Bernard Kooper Life Agency, Inc. Such commissions relate to
premiums which were approximately 5.4%, 6.1% and 5.3% of gross premiums earned
during the years ended December 31, 1996, 1997 and 1998, respectively. Of these
amounts, Bernard Kooper Life Agency, Inc. paid approximately $159,000 in 1996,
$131,000 in 1997 and $151,000 in 1998 to brokers, including approximately
$26,000 in 1996, $26,000 in 1997 and $20,000 in 1998 to members of the Board of
Directors of Arista who are licensed insurance brokers. Furthermore, the
commissions paid to director/brokers include payments to Fischman-Kooper, Inc.
of approximately $22,000 in 1996, $21,000 in 1997 and $16,000 in 1998 and
payments to Louis D. Krasner, Inc. of approximately $4,000 in 1996, $5,000 in
1997 and $4,000 in 1998. Michael B. Krasner, a director of the Company and
Arista, is the President of Louis D. Krasner, Inc. Bernard Kooper Life Agency,
Inc., Fischman-Kooper, Inc. and Louis D. Krasner, Inc. were compensated on the
same basis as Arista's other general agents and brokers.
In addition to the commissions described in the preceding paragraph,
members of the Board of Directors of the Company and Arista received commissions
paid by third parties of approximately $25,000 in 1996, $24,000 in 1997 and
$24,000 in 1998 for the placement of the Company's or Arista's life and health
insurance coverage, directors' and officers' liability insurance and fidelity
bond and casualty insurance coverage with other insurers. Furthermore, such
commissions paid to director/brokers include approximately $14,000 in 1996,
$14,000 in 1997 and $14,000 in 1998 paid to Noah Fischman for the placement of
the Company's or Arista's life, health and long-term disability insurance
coverages with other insurers; approximately $10,000 in 1996, $9,000 in 1997 and
$9,000 in 1998 paid to Louis D. Krasner, Inc. for directors' and officers'
liability insurance, fidelity bond and casualty insurance coverages; and
approximately $1,000 in 1996, $1,000 in 1997 and $1,000 in 1998 paid to Louis H.
Saltzman for life insurance coverages.
In June 1996, the Company issued 365,000 shares of Class A Common Stock
("Kooper Warrant Shares") to Bernard Kooper upon his exercise of a warrant
granted to him by the Company in June 1986 to purchase shares of Class A Common
Stock at an exercise price of $1.40 per share. As consideration for the Kooper
Warrant Shares, Mr. Kooper delivered $11,000 in cash and a $500,000 principal
amount interest-bearing promissory note (the "Kooper Note") to the Company and
granted the Company an option (the "Class B Repurchase Option") to acquire the
47,400 shares of Class B Common Stock then owned by Mr. Kooper. The Kooper Note
required interest at the LIBOR rate plus 1 1/4% per annum and would have matured
on June 14, 2001. Interest payments were payable quarterly on the last day of
September, December, March and June. As of December 31, 1998, $7,955 in interest
was due for the fourth quarter of 1998, which amount was paid on January 13,
1999. Additionally, to secure the performance of his obligations under the
Kooper Note, Mr. Kooper pledged his 365,000 shares of the Company's Class A
Common Stock to the Company. The Class B Repurchase Option, which was to expire
on June 14, 2001, had an exercise price equal to the cancellation of the
$500,000 outstanding under the Kooper Note plus delivery by the Company, at its
option, of either 47,400 shares of Class A Common Stock or the Fair Market Value
(as defined in the Class B Repurchase Option) of such shares to Mr. Kooper. On
May 4, 1999, the Class A Directors of the Board of Directors of the Company
exercised the Class B Repurchase Option. The Class B Stock Transaction closed on
May 18, 1999. As a result of the Class B Stock Transaction there are no longer
any shares of the Class B Common Stock outstanding.
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<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
determining and administering the Company's compensation policies for the
remuneration of the Company's senior management. The Committee annually
evaluates individual and corporate performance from both a short-term and
long-term perspective. The Compensation Committee's recommendations regarding
all members of senior management are subject to the approval of the full Board
of Directors. The Company's executive compensation program is designed to reward
and retain highly qualified executives and encourage the achievement of business
objectives, superior corporate performance and both short-term and long-term
strategic planning of the Company's business affairs.
Historically, compensation of the Company's senior management has
principally been in the form of a base salary, and cash bonuses, rather than
long-term cash and stock-based incentives. Recently, the Compensation Committee
has focused on senior management's role in shaping the strategic business plans
of the Company, rather than on recent corporate performance, when considering
senior management's total compensation.
After the closing date of the Transaction, the Company and Stanley S.
Mandel entered into an employment agreement pursuant to which Mr. Mandel is
employed as President of the Company. The employment agreement provides for a
base salary of $185,000 plus a nonaccountable expense allowance of $5,000 per
annum, a decrease in base salary of approximately $24,000 from Mr. Mandel's
prior employment agreement with Arista, pursuant to which Mr. Mandel served as
President of Arista. Such decrease in compensation is attributable to a shift in
the Company's focus from primarily underwriting insurance to third party
administration operations. Commencing with the fiscal year beginning January 1,
1999 and ending on December 31 of each fiscal year or portion of such fiscal
year for which Mr. Mandel is the President of the Company, Mr. Mandel will
receive a bonus equal to eight percent (8%) of the Company's annual income from
current operations before taxes and extraordinary or non-recurring items from
third party administration operations for such bonus period. The employment
agreement also provides that in the event of a "Change of Control" (as defined
in the employment agreement), the employment agreement may be either terminated,
assigned by the Company or continued by the Company or any successor or
surviving corporation; provided, however, that notice of such action is
accompanied by a lump sum payment of $370,000. Mr. Mandel's managerial skills,
extensive knowledge and years of experience of the insurance industry and the
Company are vital to the Company's success in the third party administration
business pursuant to the TPA Agreement. See Footnotes to Summary Compensation
Table.
Other than with respect to the Company's executive officers with
employment agreements, base salaries of officers are reviewed annually, and are
approved by the Compensation Committee and the Board of Directors. Initial
salaries, subsequent increases in such salaries, and bonuses are based on
individual qualifications, experience, performance and each such officer's job
responsibilities.
In making bonus awards, the Compensation Committee takes into
consideration total compensation arrangements, overall corporate financial
performance, and each person's respective role in attaining such results and in
shaping the short-term and long-term business strategies of the Company.
Dated: July 1, 1999
THE BOARD OF DIRECTORS:
Richard P. Farkas
J. Martin Feinman
Daniel Glassman
Bernard Kooper
Michael Krasner
Stanley S. Mandel
Louis H. Saltzman
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COMPARATIVE STOCK PERFORMANCE GRAPH
The graph below compares the five-year cumulative stockholder total
return based upon an initial $100 investment (assuming the reinvestment of
dividends) for the Company's shares of Class A Common Stock on December 31, 1993
with the comparable return for the Nasdaq Market Index and a peer issuer index
selected on an industry basis. The peer group index includes 31 companies
involved in the insurance industry whose common stock has been registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") for at least the time frame set forth in the graph.
The total stockholder returns depicted in the graph are not necessarily
indicative of future performance. The Performance Graph and related disclosure
shall not be deemed to be incorporated by reference in any filing by the Company
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act, except to the extent that the Company specifically incorporates
the graph and such disclosure by reference.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN OF
COMPANY, NASDAQ MARKET INDEX AND PEER GROUP
<TABLE>
<CAPTION>
COMPANY/MARKET/INDEX FISCAL YEAR ENDED
----------------------------------------------------------------------------------------------------
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Arista Investors Corp. 100.00 133.33 94.44 116.67 95.84 133.33
Nasdaq Market Index 100.00 104.99 136.18 169.23 207.00 291.96
Peer Group (31 companies) 100.00 100.93 118.21 140.88 195.41 212.03
</TABLE>
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CERTAIN TRANSACTIONS
In 1996 and 1998, the Company engaged a company owned by Richard
Farkas, a director of Arista and the Company, to perform consulting services
with respect to proposed transactions and related activities of the Company,
including, but not limited to, evaluating various business strategies. Such
consulting services were performed throughout a five month period ended on July
31, 1996 and a 3 1/2 month period ended July 15, 1998. In consideration for such
consulting services, the Company paid Mr. Farkas' company $30,000 in 1996 and
$6,000 in 1998.
In July 1993, the Company entered into an agreement with Richard
Greenwald for specified services to be performed for a fee of $500 per week.
Pursuant to such agreement, Mr. Greenwald provided consulting services with
respect to proposed transactions and related activities of Arista, including,
but not limited to, identifying available books of business and negotiating the
terms of such acquisitions. Mr. Greenwald became a director of Arista in October
1994. Arista paid $26,000 under this agreement in 1996 and 1997 and $25,000 in
1998. Subsequent to the Transaction, such agreement between the Company and Mr.
Greenwald was terminated, effective as of January 31, 1999.
See "Compensation Committee Interlocks and Insider Participation" for
related transactions involving Bernard Kooper, Noah Fischman, Louis Saltzman and
Michael Krasner.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS:
The firm of independent accountants of the Company recommended
by the Audit Committee and selected by the Board of Directors is currently Rosen
Seymour Shapss Martin & Company, LLP. The Board of Directors expects that
representatives of Rosen Seymour Shapss Martin & Company, LLP will be present at
the Meeting, have the opportunity to make a statement if they desire to do so,
and be expected to be available to respond to appropriate questions.
PROPOSAL 2
APPROVAL AND ADOPTION OF THE COMPANY'S 1999 NON-QUALIFIED STOCK OPTION PLAN
The Board of Directors of the Company is submitting to the
stockholders, for their approval and adoption, the Company's 1999
Non-Qualified Plan to allow the Company's key employees and directors to
receive options to purchase an aggregate of 350,000 shares of the Company's
Class A Common Stock. On July 12, 1999, the Executive Committee of the Board
of Directors duly approved the 1999 Non-Qualified Plan, subject to approval
by the Company's stockholders in the form attached hereto as Exhibit A. The
vote of a majority of the shares of Class A Common Stock present in person or
represented by proxy at the Meeting is required to adopt the 1999
Non-Qualified Plan. There are currently a total of 41 employees and directors
eligible for awards under the 1999 Non-Qualified Plan.
PURPOSE
The purpose of the 1999 Non-Qualified Plan is to enable the Company,
and its affiliated companies, ("Affiliates"), to attract and retain the best
available personnel for positions of substantial responsibility, and to provide
additional incentives for officers, directors and key employees of the Company,
its Affiliates and any future parent or subsidiary of the Company to promote the
success of the Company. At the discretion of the Board of Directors of the
Company, or appointed committee, the options available for grant under the 1999
Non-Qualified Plan are not intended to be characterized as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"). The Board believes that the ability to grant options to directors of
the Company, thereby providing them with the opportunity to acquire an equity
investment in the Company, will enhance their efforts on the Company's behalf
and may attract other qualified persons to serve as directors of the Company.
The Company intends to use the proceeds of cash or property received by the
Company from the exercise of options granted under the 1999 Non-Qualified Plan
for general corporate purposes.
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<PAGE>
SUMMARY OF THE 1999 NON-QUALIFIED PLAN
The following is a summary of the material provisions of the 1999
Non-Qualified Plan. This summary is in all respects qualified in its entirety by
reference to the complete text of the 1999 Non-Qualified Plan attached hereto as
EXHIBIT A.
EFFECTIVE DATE. The 1999 Non-Qualified Plan shall become effective (i)
after its approval by the holders of a majority of the shares of Class A Common
Stock of the Company present in person or represented by proxy at the Meeting
and (ii) upon the earlier to occur of (x) the date that the Plan of Liquidation
of the Company's wholly-owned subsidiary, Arista Insurance Company, is completed
or (y) January 1, 2000.
ADMINISTRATION. The 1999 Non-Qualified Plan is to be administered by a
committee (the "Committee") composed of either (i) the full Board of Directors;
or (ii) a committee of directors appointed by the Board of Directors. The
Committee shall be composed of not less than two (2) directors. If the Committee
is composed of other than the entire Board, all of the members of the Committee
shall be "Non-Employee Directors," as such term is defined under Rule 16b-3
promulgated under the Exchange Act. In addition, the Committee may be composed
of members also characterized as "outside directors" within the meaning of
Treasury Department Regulations interpreting Section 162(m) of the Code. The
Committee has complete authority to interpret all provisions of the 1999
Non-Qualified Plan consistent with applicable laws, to prescribe the form of
instruments evidencing the stock options granted under the 1999 Non-Qualified
Plan, to prescribe, amend, and rescind rules and regulations for its
administration, and to make all other determinations necessary or advisable for
the administration of the 1999 Non-Qualified Plan.
ELIGIBILITY. Options may be granted under the 1999 Non-Qualified Plan
to any employee or director of the Company or any of its Affiliates who, in the
judgment of the Committee, has or is expected to make key contributions to the
success of the Company and its Affiliates. The Committee must designate the
optionees to whom options are to be granted, and must specify the number of
shares of Class A Common Stock subject to each option, the duration and exercise
price of each option, the time or times within which all or portions of each
option may be exercised, and whether cash, Class A Common Stock, or other
property may be accepted in full or partial payment upon the exercise of an
option. As of the Record Date, the Committee has not determined or allocated any
options to be granted under the 1999 Non-Qualified Plan nor are any such amounts
determinable. No single individual shall be eligible to receive options to
purchase more than 200,000 shares of Class A Common Stock (as such shares may be
adjusted in accordance with the provisions of Section 6 of the 1999
Non-Qualified Plan) in any one calendar year. Such shares may be either
authorized but unissued shares or reacquired shares or other treasury shares.
Any shares of Class A Common Stock otherwise issuable upon the exercise of
cancelled or terminated options shall again become available for new options
available for grant under the 1999 Non-Qualified Plan. There are currently a
total of 41 employees and directors eligible for the grant of options under the
1999 Non-Qualified Plan.
SHARES. Options may be granted for up to an aggregate of 350,000 shares
of Class A Common Stock, subject to adjustment in the event of certain changes
in the Company's capitalization. If any option is terminated, in whole or in
part, for any reason other than the exercise thereof, the shares of Class A
Common Stock allocated to the option or portion thereof so terminated may be
reallocated to another option or options to be granted.
EXERCISE PRICE. The option price for options granted under the 1999
Non-Qualified Plan shall be either 100% of the Fair Market Value of the Class A
Common Stock at the time such option is granted or a value to be determined in
accordance with the procedures established by the Committee. As used in the 1999
Non-Qualified Plan, "Fair Market Value" shall mean, in the event that the Class
A Common Stock is not listed on a national securities exchange, such value as
may be determined by the Board or Committee, or in the event that the Class A
Common Stock is listed on Nasdaq (or any other exchange on which it may be
listed), the average of the highest price and lowest price per share at which
the Class A Common Stock is sold in the regular way on Nasdaq (or any other
exchange on which it may be listed) on the day such option is granted
thereunder, or in the absence of any reported sales on such day, the first
preceding day on which there were such sales, provided such price shall not be
less than the par value of the Class A Common Stock.
MAXIMUM TERM. No option shall be exercisable more than ten (10) years
from the date it was granted.
TERMINATION OF OPTIONS. In the event an optionee shall cease to be
employed by and/or serve as a director of the Company or any of its Affiliates
for any reason other than death, then the optionee shall thereafter have no
right to exercise any options granted
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<PAGE>
thereunder and all of his/her outstanding options shall terminate.
Notwithstanding the provisions of the preceding sentence, if cessation of
employment and/or termination of service as a director occurs by reason of a
disability (within the meaning of Section 22(e)(3) of the Code), the optionee
shall have the right at any time within six months after such cessation of
employment and/or termination of service as a director, subject to the maximum
term and adjustment provisions of the 1999 Non-Qualified Stock Option Plan, to
exercise any options granted thereunder, but only as to such number of shares as
to which his option was exercisable at the date of such cessation of employment
and/or termination of service as a director. If a participant dies while in the
employ and/or while serving as a director of the Company and any of its
Affiliates or its subsidiaries or within six months after cessation of such
employment and/or service as a director by reason of disability, his estate,
personal representative or the person that acquires his option by bequest or
inheritance or by reason of his death shall have the right, subject to maximum
term and adjustment provisions, to exercise his option at any time within three
months from the date of his death, but only as to the number of shares as to
which his option was exercisable on the date of his death. In any such event,
unless so exercised within the period as aforesaid, the option shall terminate
at the expiration of said period. The time of cessation of employment and
whether an authorized leave of absence or absence on military or government
service shall constitute cessation of employment, for the purpose of the 1999
Non-Qualified Stock Option Plan, shall be determined by the Committee.
METHOD OF EXERCISE. An option shall be exercised by so notifying the
Treasurer of the Company in writing, stating the number of shares of Class A
Common Stock with respect to which the option is being exercised, and tendering
payment therefor. The exercise price of any Options granted under the 1999
Non-Qualified Plan may be payable in (i) in cash or by check acceptable to the
Company, (ii) at the discretion of the Board, by the transfer to the Company by
the optionee of shares of Class A Common Stock having a value at the time of
exercise equal to the total exercise price or (iii) by a combination of such
methods of payment; provided, however, that consideration may not consist of
shares of Class A Common Stock purchased through the exercise of stock options
previously granted under the 1999 Non-Qualified Plan held less than six months
from the date of exercise of such options.
ADJUSTMENTS. Subject to certain changes in the Company's capital
structure, appropriate adjustments shall be made to the aggregate number of
shares of Class A Common Stock with respect to which options may be granted and
to the number of shares of Class A Common Stock subject to each outstanding
option.
AMENDMENT AND TERMINATION OF THE 1999 NON-QUALIFIED PLAN. No option may
be granted after the tenth year anniversary of the adoption of the 1999
Non-Qualified Plan. The Board of Directors, acting by a majority of its members,
without further action on the part of the stockholders, has the authority to
alter, amend, or suspend the 1999 Non-Qualified Plan; provided, however, the
Board of Directors may not (a) change the total number of shares of Class A
Common Stock available for options under the 1999 Non-Qualified Plan (except for
appropriate adjustments as described in the 1999 Non-Qualified Plan), (b)
materially modify the eligibility requirements of the 1999 Non-Qualified Plan,
(c) decrease the minimum option price or otherwise materially increase the
benefits accruing to participants under the 1999 Non-Qualified Plan, (d) extend
the duration of the 1999 Non-Qualified Plan, or (e) increase the maximum term of
the options; provided, further, no such action shall materially and adversely
affect any outstanding options without the consent of the respective optionees.
FEDERAL TAX CONSEQUENCES.
Options granted under the 1999 Non-Qualified Plan are not intended to
qualify as incentive stock options within the meaning of Section 422 of the
Code, but rather are considered to be so-called non-qualified stock options for
federal income tax purposes. No income will be recognized by a recipient at the
time of the grant of a non-qualified stock option. On exercise of a
non-qualified stock option, the amount by which the fair market value of the
Class A Common Stock on the date of exercise exceeds the option exercise price
will be taxable to the recipient as ordinary income. The subsequent disposition
of shares acquired upon exercise of a non-qualified stock option will ordinarily
result in capital gain or loss.
A recipient who is an officer or a director of the Company or a
beneficial owner of more than 10% of any class of registered equity securities
of the Company should consult with his or her tax advisor as to whether, as a
result of Section 16(b) of the Exchange Act and the rules and regulations
thereunder, the timing of income recognition is deferred for any period
following the exercise of a non-qualified stock option (the "Deferral Period").
If there is a Deferral Period, recognition of income by the recipient could, in
certain instances, be deferred until the expiration of the Deferral Period
absent a written election (pursuant to Section 83(b) of the Code) filed with the
Internal Revenue Service within 30 days after the date of transfer of the shares
of Class A Common Stock pursuant to the exercise of
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the non-qualified stock option to include in income, as of the transfer date,
the excess (on such date) of the fair market value of such shares over their
exercise price. The ordinary income recognized with respect to the transfer of
shares to a Company employee upon exercise of a non-qualified stock option will
be subject to both wage withholding and employment taxes.
A recipient's tax basis and the shares of Class A Common Stock received
on exercise of a non-qualified stock option will be equal to the amount of any
cash paid on exercise plus the amount of ordinary income recognized by such
individual as a result of the receipt of such shares. The recipient's holding
period, for income tax purposes, for the shares so acquired would begin just
after the transfer of the shares or, in the case of an officer or beneficial
owner of more than 10% of any class of registered equity securities of the
Company who does not make a Section 83(b) election, just after the expiration of
any Deferral Period.
Generally, the Company will be entitled to a tax deduction in
connection with the recipient's exercise of a non-qualified stock option in an
amount equal to the income recognized by the recipient, subject to the possible
application of Sections 162(m) and 280G of the Code.
Section 162(m) of the Code denies a deduction to any publicly held
corporation for compensation paid to certain "covered employees" in a taxable
year to the extent that such compensation exceeds $1,000,000. "Covered
employees" are a corporation's chief executive officer on the last day of the
taxable year and any other individual whose compensation is required to be
reported to stockholders under the Exchange Act by reason of being among the
four most highly compensated officers (other than the chief executive officer)
for the taxable year and who are employed on the last day of the taxable year.
Compensation paid under certain qualified performance-based compensation
arrangements, which (among other things) provide for compensation based on
pre-established performance goals established by a compensation committee that
is composed solely of two or more "outside directors," is not considered in
determining whether a "covered employee's" compensation exceeds $1,000,000.
Whether an award of options under the 1999 NonQualified Plan will satisfy the
requirements of Section 162(m) of the Code for performance-based compensation
will depend upon the specific facts and circumstances existing at the time of
the issuance of the option. Accordingly, the income recognized in connection
with the awards under the 1999 Non-Qualified Plan may be included in a "covered
employee's" compensation for the purpose of determining whether such person's
compensation exceeds $1,000,000.
In the event that exercisability of an option granted under the 1999
Non-Qualified Plan is accelerated because of a change in ownership (as defined
in Code Section 280G(b)(2)) of the Company, a portion of the ordinary income to
the recipient resulting from the exercise of such option may, either alone or
together with any other payments made to the recipient, constitute an excess
parachute payment under Section 280G of the Code. In such event, subject to
certain exceptions, a portion of such amount would be nondeductible to the
Company and the recipient would be subject to a 20% excise tax on such portion
of such amount.
UNLESS MARKED TO THE CONTRARY, THE SHARES OF CLASS A COMMON STOCK REPRESENTED BY
THE ENCLOSED PROXY WILL BE VOTED FOR THE APPROVAL AND ADOPTION OF THE 1999
NON-QUALIFIED PLAN.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THE ADOPTION OF THE 1999 NON-QUALIFIED PLAN.
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PROPOSAL 3
APPROVAL AND ADOPTION OF THE COMPANY'S 1999 RESTRICTED STOCK PLAN.
The Board of Directors of the Company is submitting to the
stockholders, for their approval and adoption, the Company's 1999 Restricted
Stock Plan to provide that key employees and directors of the Company an
opportunity to acquire or increase their proprietary interest in the Company by
purchasing the Company's Class A Common Stock. On July, 12, 1999, the Executive
Committee of the Board of Directors of the Company duly approved the 1999
Restricted Stock Plan, subject to approval by the Company's stockholders in the
form attached hereto as EXHIBIT B. The vote of a majority of the shares of Class
A Common Stock present at the Meeting is required to adopt the 1999 Restricted
Stock Plan. There are currently a total 41 employees and directors eligible for
awards under the 1999 Restricted Stock Plan.
PURPOSE
The purpose of the 1999 Restricted Stock Plan is to advance the
interests of the Company and its stockholders by affording to key employees and
directors an opportunity to acquire or increase their proprietary interest in
the Company by purchasing Restricted Stock under the terms set forth therein.
The 1999 Restricted Stock Plan is intended to serve as an employment incentive
through which the Company seeks to motivate, retain and attract those highly
competent individuals upon whose judgment, initiative, leadership and continued
efforts the success of the Company in large measure depends. The Board believes
that the ability to grant stock to directors of the Company, thereby providing
them with the opportunity to acquire an equity investment in the Company, will
enhance their efforts on the Company's behalf and may attract other qualified
persons to serve as directors of the Company.
SUMMARY OF THE COMPANY'S 1999 RESTRICTED STOCK PLAN
The following is a summary of the material features of the 1999
Restricted Stock Plan. This summary is in all respects qualified in its entirety
by reference to the complete text of the 1999 Restricted Stock Plan attached
hereto as EXHIBIT B.
EFFECTIVE DATE. The 1999 Restricted Stock Plan shall become effective
(i) after its approval by the holders of a majority of the shares of Class A
Common Stock of the Company present in person or represented by proxy at the
Meeting and (ii) upon the earlier to occur of (x) the date that the Plan of
Liquidation of the Company's wholly-owned subsidiary, Arista Insurance Company,
is completed or (y) January 1, 2000.
ADMINISTRATION. The 1999 Restricted Stock Plan is to be administered by
the Board of Directors of the Company or a Committee appointed by the Board.
Subject to the express provisions of the 1999 Restricted Stock Plan, the Board
of Directors or Committee has the sole discretion and authority to determine (a)
from among eligible employees and directors of the Company, those who may
purchase Restricted Stock, (b) the time or times at which Restricted Stock may
be purchased, (c) the number of shares of Restricted Stock which may be
purchased, (d) the duration of the restrictions on the Restricted Stock, (e) the
manner and type of restrictions to be imposed on the Restricted Stock, and (f)
the valuation of the consideration to be paid for the Restricted Stock, provided
that the consideration may not be less than the par value thereof and that such
consideration need not be the same for each grant thereunder. Subject to the
express provisions of the 1999 Restricted Stock Plan, the Board of Directors or
Committee also has the sole discretion and complete authority to interpret the
1999 Restricted Stock Plan, to prescribe, amend, and rescind rules and
regulations relating to it, to determine the details and provisions of each
escrow agreement and stock purchase agreement executed by a Participant (as
defined below) pursuant to the 1999 Restricted Stock Plan, and to take all such
other and further steps as may or shall be necessary or advisable to administer
the 1999 Restricted Stock Plan .
ELIGIBILITY. Any key employee and director of the Company is eligible
to participate in the 1999 Restricted Stock Plan. The Board or Committee may
select any eligible key employee or director ("Participant") who may purchase
shares of Class A Common Stock in accordance with such determinations as the
Board from time to time in its sole discretion may make ("Restricted Stock"). As
of the Record Date, neither the Board nor Committee has determined any benefits
or amounts to be awarded under the 1999 Restricted Plan. The 1999 Restricted
Stock Plan does not entitle a Participant to purchase Restricted Stock unless
such Participant is selected by the Board of
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Directors or Committee. A Participant who has been eligible and/or selected by
the Board of Directors to purchase Restricted Stock in one year may not
necessarily be eligible and/or selected to purchase Restricted Stock in
subsequent years. The Board of Directors may, before it approves the purchase of
Restricted Stock or as a condition of such approval, require the Participant by
whom the purchase is to be made to enter into an escrow agreement and/or stock
purchase agreement with the Company containing such terms and conditions as the
Board of Directors or Committee may prescribe.
SHARES. 50,000 shares of Class A Common Stock, subject to adjustment,
have been reserved for issuance by the Company under the 1999 Restricted Stock
Plan. Such shares may consist, either in whole or in part, of the Company's
authorized and unissued shares or the Company's authorized and issued shares
thereafter re-acquired by the Company and held in its treasury, as may from time
to time be determined by the Board of Directors. Any of such shares which remain
unsold at the termination of the 1999 Restricted Stock Plan shall cease to be
reserved for the purposes of the 1999 Restricted Stock Plan. The certificates
representing Restricted Stock shall each bear restrictive legends under the
conditions set forth in Section 6.7(d) of the 1999 Restricted Stock Plan. The
holder of Restricted Stock shall be a stockholder and have all the rights of a
stockholder with respect to such shares, including the right to vote and receive
all dividends or other distributions made or paid with respect to such shares;
provided, that such shares of Restricted Stock, and any new, additional or
different securities the holder may become entitled to receive with respect to
such shares by virtue of a stock split or stock dividend or any other change in
the corporate or capital structure of the Company, shall be subject to the
restrictions imposed on the Restricted Stock under the 1999 Restricted Stock
Plan.
RESTRICTED STOCK PURCHASE. All Restricted Stock purchased pursuant to
the 1999 Restricted Stock Plan shall be authorized by minutes of a meeting or
the written consent of the Board of Directors, which shall specify the terms and
provisions to be contained in the stock purchase agreement and/or the escrow
agreement to be executed by the Participant, in accordance with the 1999
Restricted Stock Plan. The Participant shall be required, at the time he or she
purchases Restricted Stock, to represent to the Company in writing that he or
she will hold the Restricted Stock for his or her own account for investment
only and not with a view to distribution or resale and that he or she will not
make any sale, transfer or other disposition of any shares of Restricted Stock
purchased except pursuant to registration under the Securities Act or pursuant
to an opinion of counsel satisfactory in form and substance to the Board of
Directors, that the sale, transfer or other disposition may be made without such
registration. The escrow agreement and the stock purchase agreement shall be
executed by an authorized officer of the Company. Notwithstanding anything
contained in the 1999 Restricted Stock Plan, the Restricted Stock purchased
pursuant thereto must be held for not less than six months following the date of
acquisition.
RESTRICTED STOCK PURCHASE PRICE. The per share Restricted Stock price
shall be determined by the Board of Directors, but the per share price shall not
be less than the par value of the Class A Common Stock of the Company on the
date the Restricted Stock is purchased. The purchase price for the Restricted
Stock shall be paid in cash.
ADJUSTMENTS. In the event that the Common Stock of the Company is
changed into or exchanged for a different number or kind of shares or other
securities of the Company or another corporation by reason of a merger,
consolidation or other reorganization, recapitalization, reclassification,
combination of shares, stock split-up or stock dividend, there will be
appropriate adjustments made to the aggregate number of shares of Restricted
Stock purchased under the 1999 Restricted Stock Plan, both as to the number or
subject shares and the price. In addition, any new or additional or different
shares or securities which are distributed to any Participant, in his/her
capacity as the owner of Restricted Stock purchased under the 1999 Restricted
Stock Plan, will bear a restrictive legend as set forth in the 1999 Restricted
Stock Plan.
RESTRICTIONS. The Board of Directors may impose some or all of the
restrictions set forth in Section 6.7 of the 1999 Restricted Stock Plan and/or
such other restrictions on any shares sold pursuant to the 1999 Restricted Stock
Plan as they may deem advisable in their sole discretion, including without
limitation, restrictions under the Securities Act, any stock exchange upon which
such shares or shares of the same class are then listed, and under any state or
local blue sky or securities laws applicable to such shares. Three of the
restrictions imposed on Restricted Stock in Section 6.7 of the 1999 Restricted
Stock Plan are: (1) if a Participant's employment with the Company is terminated
by the Company based upon Discharge For Cause (as defined in the 1999 Restricted
Stock Plan) or if a director is removed for cause, within ten (10) years from
the date Restricted Stock was purchased under the 1999 Restricted Stock Plan,
the Company shall have the option for a period of sixty (60) days after such
termination of employment or service as a director, to buy any or all of the
shares purchased by such terminated employee or former director which are, at
such time, subject to restriction as provided in the applicable Stock Purchase
Agreement, for an amount equal to the Product of (x) the consideration paid by
the terminated Participant to the Company to
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acquire such shares, multiplied by (y) the number of shares which the Company
repurchases ("Repurchase Price"); (2) if a Participant shall, within ten (10)
years from the date Restricted Stock shall have been purchased, directly or
indirectly, own, manage, operate, control, be employed by, or participate in, as
a partner, joint venturer, employee, agent, salesman, officer, director, five
percent (5%) stockholder, or be connected in any manner with the ownership,
management, operation, control, employment or participation as a partner, joint
venturer, employee, agent, salesman, officer, director, or five percent (5%)
stockholder, of any business similar to the type of business conducted by the
Company at that time, as determined in the sole discretion of the Board of
Directors, the Company shall have the option for a period of sixty (60) days
after such determination by the Board of Directors, to buy any or all of the
shares purchased by such Participant which are, at such time, subject to
restriction as provided in the applicable Stock Purchase Agreement, for an
amount equal to the Repurchase Price; (3) if, within twelve (12) months of the
date on which Restricted Stock is purchased thereunder, the Company shall not
have filed a registration statement under the Securities Act for the offer and
sale of shares of its Common Stock and any such registration statement shall not
have been declared effective by the Securities and Exchange Commission, then the
Company shall have the option for a period of sixty (60) days after the end of
such twelve (12) month period to buy any or all of the shares purchased
thereunder for an amount equal to the Repurchase Price.
REMOVAL OF RESTRICTIONS. Certain of the restrictions under the 1999
Restricted Stock Plan shall automatically terminate and the restrictions shall
be removed in accordance with Section 6.9 thereof, immediately following a
"Change of Control of the Company" and/or if the Participant is terminated by
the Company under circumstances which do not constitute a Discharge for Cause. A
"Change of Control of the Company" for the purposes of the 1999 Restricted Stock
Plan means a dissolution or liquidation of the Company or a merger,
consolidation, sale of all or substantially all of its assets, or other
corporate reorganization in which the Company is not the surviving corporation.
TRANSFERABILITY. No Restricted Stock shall be transferred by a
Participant otherwise than by Last Will and Testament or the laws of Descent and
Distribution.
AMENDMENT AND TERMINATION OF THE 1999 RESTRICTED STOCK PLAN. The 1999
Restricted Stock Plan shall terminate and no further shares shall be sold or
issued thereunder on or after the tenth anniversary of such plan's effective
date, or such earlier date as may be determined by the Board or Committee. No
further shares of Restricted Stock shall be sold or issued after the termination
date. The termination of the 1999 Restricted Stock Plan, however, shall not
affect any restrictions previously imposed on shares issued pursuant to the 1999
Restricted Stock Plan. The Board of Directors of the Company may, at any time
and from time to time, amend or modify the 1999 Restricted Stock Plan; PROVIDED,
HOWEVER, that no amendment to the 1999 Restricted Stock Plan may provide for a
purchase price for the Restricted Stock of less than the par value thereof or
change the manner for removal of the restrictions set forth in Section 6.9
thereof.
FEDERAL TAX CONSEQUENCES. A Participant receiving Restricted Stock may
elect under Section 83(b) of the Code to include in ordinary income, as
compensation, at the time Restricted Stock is first transferred to him, the
excess of the fair market value of such shares at the time of the transfer over
the amount paid, if any, by the recipient for such shares. Unless an election
under Section 83(b) of the Code is timely made by the recipient (not later than
the expiration of thirty days following the time of the transfer of the stock to
him) taxable income will not be recognized by the recipient until such shares
are no longer subject to a substantial risk of forfeiture (the "Restrictions").
However, when the Restrictions lapse, the recipient will recognize ordinary
income in an amount equal to the excess of the fair market value of the Common
Stock on the date of lapse over the amount paid, if any, by the recipient for
such shares. Such ordinary income recognized by a recipient who is a Company
employee will be subject to both wage withholding and employment taxes.
If a Section 83(b) election is made, any dividends received on shares
which are subject to Restrictions will be treated as dividend income. If a
recipient does not make an election under Section 83(b), dividends received on
the Common Stock prior to the time the Restrictions on such shares lapse will be
treated as additional compensation income, and not dividend income, for federal
income tax purposes, and generally will be subject to wage withholding and
employment taxes.
A recipient's tax basis in Restricted Stock received pursuant to the
1999 Restricted Stock Plan will be equal to the sum of the price paid for such
shares, if any, and the amount of ordinary income recognized by such recipient
with respect to the receipt of such shares or the lapse of Restrictions thereon.
The recipient's holding period for such shares for purposes of determining gain
or loss on subsequent sale will begin immediately after the transfer of such
shares to the recipient if a Section 83(b) election is made with respect to such
shares, or immediately after the Restrictions on such shares lapse if no Section
83(b) election is made.
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In general, a deduction will be allowed to the Company for federal
income tax purposes, subject to the application of Sections 162(m) and 280G of
the Code, in an amount equal to the ordinary income recognized by the recipient
with respect to restricted stock awarded pursuant to the 1999 Restricted Stock
Plan. If, subsequent to the lapse of Restrictions on his or her Common Stock,
the recipient sells such shares, the difference, if any, between the amount
realized from such sale and the tax basis of such shares will ordinarily result
in capital gain or loss.
If a Section 83(b) election is made and, before the Restrictions on the
shares lapse, the shares which are subject to such election are in effect
forfeited: (i) no deduction will be allowed to such recipient for the amount
included in the income of such recipient by reason of the Section 83(b)
election, and (ii) the recipient will realize a loss in an amount equal to the
excess, if any, of the amount paid by the recipient for such shares over the
amount received by the recipient upon forfeiture (which loss would ordinarily be
a capital loss). In such an event, the Company will be required to include in
its income the amount of any deduction previously allowable to it in connection
with the transfer of such shares. A recipient will realize gain in an amount
equal to the excess, if any, of the amount received by the recipient upon such
resale or forfeiture over the recipient's tax basis in such shares (which gain
would ordinarily be capital gain).
Section 162(m) of the Code denies a deduction to any publicly held
corporation for compensation paid to certain "covered employees" in a taxable
year to the extent that such compensation exceeds $1,000,000. "Covered
employees" are a corporation's chief executive officer and any other individual
whose compensation is required to be reported to stockholders under the Exchange
Act by reason of being among the four most highly compensated officers (other
than the chief executive officer) for the taxable year. Compensation paid under
certain qualified performance-based compensation arrangements which (among other
things) provide for compensation based on pre-established performance goals
established by a compensation committee that is composed solely of two or more
"outside directors," is not considered in determining whether a "covered
employee's" compensation exceeds $1,000,000. Awards under the 1999 Restricted
Stock Plan will not satisfy the requirements of Section 162(m) of the Code for
performance based compensation, so that the income recognized in connection with
the awards thereunder will be included in a "covered employee's" compensation
for purposes of determining whether such covered employee's compensation exceeds
$1,000,000.
In the event that the lapse of Restrictions on any shares awarded under
the 1999 Restricted Stock Plan is accelerated because of a change of ownership
of the Company (as defined in Code Section 280G(b)(2)), a portion of the income
to the recipient resulting from the lapse of such Restrictions, either alone or
together with any other payments made to the recipient, may constitute an excess
parachute under Section 280G of the Code. In such event, subject to certain
exceptions, a portion of such amount would be nondeductible to the Company and
the recipient would be subject to a 20% excise tax on such portion of such
amount.
UNLESS MARKED TO THE CONTRARY, THE SHARES OF CLASS A COMMON STOCK
REPRESENTED BY THE ENCLOSED PROXY WILL BE VOTED FOR THE APPROVAL AND ADOPTION OF
THE 1999 RESTRICTED STOCK PLAN.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR THE APPROVAL AND ADOPTION OF 1999 RESTRICTED STOCK PLAN.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who beneficially own more than ten percent of
the Company's common stock (the "Ten Percent Stockholders") to file with the
Securities and Exchange Commission initial reports of beneficial ownership on
Form 3 and reports of changes in beneficial ownership of Form 4 or Form 5.
Executive officers, directors, and Ten Percent Stockholders are required to
furnish the Company with copies of such Forms. Based solely on a review of such
Forms furnished to the Company, the Company believes that during the year ended
December 31, 1998, the Company's executive officers, directors, and Ten Percent
Stockholders complied with all applicable Section 16(a) filing requirements.
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STOCKHOLDERS PROPOSALS FOR 2000 ANNUAL MEETING
The Company currently anticipates holding its next annual meeting of
stockholders on or about June 15, 2000 (the "2000 Annual Stockholder Meeting").
STOCKHOLDER PROPOSALS. Proposals of stockholders intended to be
presented at the Company's 2000 Annual Stockholder Meeting (i) must be received
by the Company at its offices no later than March 15, 2000, (ii) may not exceed
500 words and (iii) must otherwise satisfy the conditions established by the
Commission for stockholder proposals to be included in the Company's Proxy
Statement for that meeting.
DISCRETIONARY PROPOSALS. Stockholders intending to commence their own
proxy solicitations and present proposals from the floor of the 2000 Annual
Stockholder Meeting in compliance with Rule 14a-4 promulgated under the Exchange
Act must notify the Company before April 27, 2000 of such intentions. After such
date, the Company's proxy in connection with the 2000 Annual Stockholder's
Meeting may confer discretionary voting authority on the Board.
GENERAL
The Board of Directors knows of no other matters which are likely to be
brought before the Annual Meeting. However, if any other matters are properly
brought before the Annual Meeting, the persons named in the enclosed proxy or
their substitutes will vote thereon in accordance with their judgment pursuant
to the discretionary authority conferred by the form of proxy.
BY ORDER OF THE BOARD OF DIRECTORS,
SUSAN J. HALL,
Secretary
New York, New York
July 12, 1999
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EXHIBIT A
ARISTA INVESTORS CORP.
1999 Non-Qualified Stock Option Plan
1. PURPOSE: The purpose of the Arista Investors Corp. 1999
Non-Qualified Stock Option Plan (the "Plan") as hereinafter set forth, is to
enable Arista Investors Corp., ("Arista") a Delaware corporation, and its
affiliated companies (hereinafter referred to, individually and/or collectively,
as the "Corporation") to attract and retain the best available personnel for
positions of substantial responsibility and to provide additional incentives to
officers, members of the Board of Directors of the Corporation ("Directors"),
and/or other key employees of the Corporation and any future parent or
subsidiary of the Corporation to promote the success of the Corporation. Options
granted under the Plan are not intended to be incentive stock options under
Internal Revenue Code Section 422. Proceeds of cash or property received by the
Corporation from the sale of common stock of the Corporation pursuant to options
granted under the Plan will be used for general corporate purposes.
2. ADMINISTRATION.
(a) The Plan shall be administered by a committee (the
"Committee") composed of either the entire Board of Directors (the "Board") of
the Corporation, or a committee thereof appointed by the Board. The Committee
shall be composed of not less than two (2) directors. If the Committee is
composed of other than the entire Board, all of the members of the Committee
shall be "Non-Employee Directors," as such term is defined in subparagraph 2(b)
hereof. In addition, the Committee may (but need not) be composed of members
characterized as "outside directors" within the meaning of the Treasury
Department Regulations interpreting Section 162(m) of the Internal Revenue Code.
The Committee may have responsibilities in addition to the administration of the
Plan. Subject to the express provisions of the Plan, the Committee may interpret
the Plan, prescribe, amend and rescind rules and regulations relating to it,
determine the terms and provisions of participants' agreements (which need not
be identical) and make such other determinations as it deems necessary or
advisable for the administration of the Plan. The decisions of the Committee on
matters within their jurisdiction under the Plan shall be conclusive and
binding. No member of the Committee shall be liable for any action taken or
determination made in good faith.
(b) The term "Non-Employee Director" as used in this Plan, shall
mean a director of the Company who satisfies the definition thereof under Rule
16b-3 promulgated under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"). Any such person shall comply with the requirements of Rule
16b-3 promulgated under the Exchange Act, as from time to time in effect.
<PAGE>
3. ELIGIBILITY. Options may be granted under this Plan to any
employee and/or Director of the Corporation or its affiliates, who, in the
opinion of the Committee, has or is expected to make key contributions to the
success of the Corporation. The Committee shall determine, within the limits of
the express provisions of the Plan, those employees and/or Directors to whom,
and the time or times at which, options shall be granted. The Committee shall
also determine the number of shares to be subject to each option, the duration
of each option, the exercise price (option price) under each option, the time or
times within which (during the term of the option) all or portions of each
option may be exercised, and whether cash, common stock of the Corporation, or
other property may be accepted in full or partial payment upon exercise of an
option. In making such determinations, the Committee may take into account the
nature of the services rendered by the employee and/or Director, his/her present
and potential contributions to the Corporation's success and such other factors
as the Committee in its discretion shall deem relevant.
4. COMMON STOCK. Options may be granted for a number of shares not to
exceed, in the aggregate, Three Hundred Fifty Thousand (350,000) shares of Class
A common stock of the Corporation, $0.01 par value per share ("Common Stock"),
except as such number of shares shall be adjusted in accordance with the
provisions of Section 6 hereof. No single individual may be granted in any one
calendar year options to purchase more than Two Hundred Thousand (200,000)
shares of Common Stock (as such number of shares may be adjusted in accordance
with the provisions of Section 6 hereof). Such shares may be either authorized
but unissued shares or reacquired shares or other treasury shares. In the event
that any option granted under the Plan expires unexercised, or is surrendered by
a participant for cancellation, or is terminated or ceases to be exercisable for
any other reason without having been fully exercised prior to the end of the
period during which options may be granted under the Plan, the shares which had
been subject to such option, or to the unexercised portion thereof, shall again
become available for new options to be granted under the Plan to any eligible
employee and/or Director (including the holder of such former option) at an
option price determined in accordance with Section 5(a) hereof, which price may
then be greater or less than the option price of such former option.
5. REQUIRED TERMS AND CONDITIONS OF OPTIONS. The options granted
under the Plan shall be in such form and upon such terms and conditions as the
Committee shall from time to time determine subject to the provisions of the
Plan, including the following:
(a) OPTION PRICE. The option price of each option to purchase
Common Stock shall be at either 100% of the Fair Market Value (as defined below)
of the Common Stock subject to such option at the time such option is granted,
or at such value to be determined in accordance with procedures established by
the Committee; provided that the option price shall in no event be less than the
par value of the Common Stock subject to such option. As used herein, "Fair
Market Value" shall mean, in the event that the Common Stock is not listed on a
national securities exchange, such value as may be determined by the Board, or,
in the event that the Stock is listed on Nasdaq (or any other exchange on which
it may be listed), the average of the highest price and the lowest price per
share at which the Common Stock is sold in the regular way on Nasdaq (or any
other exchange on which it may be listed) on the day such option is granted
hereunder, or in the
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absence of any reported sales on such day, the first preceding day on which
there were such sales, provided such price shall not be less than the par value
of the Common Stock.
(b) MAXIMUM TERM. No option shall be exercisable after the
expiration of ten (10) years from the date it is granted.
(c) INSTALLMENT EXERCISE LIMITATIONS. At the discretion of the
Committee, options may become exercisable in such number of cumulative annual
installments as the Committee may establish.
(d) TERMINATION OF OPTION. In the event an optionee shall cease to
be employed by and/or serve as a Director of the Corporation for any reason
other than death, then the optionee shall thereafter have no right to exercise
any options granted hereunder and all of his outstanding options shall
terminate. Notwithstanding the provisions of the preceding sentence, if
cessation of employment and/or termination of service as a Director occurs by
reason of a disability (within the meaning of Section 22(e)(3) of the Internal
Revenue Code), the optionee shall have the right at any time within six months
after such cessation of employment and/or termination of service as a Director,
subject to the provisions of Section 5(b) and 6 hereof, to exercise any options
granted hereunder, but only as to such number of shares as to which his option
was exercisable at the date of such cessation of employment and/or termination
of service as a Director. If a participant dies while in the employ and/or while
serving as a Director of the Corporation or its subsidiaries or within six
months after cessation of such employment and/or service as a Director by reason
of disability, his estate, personal representative or the person that acquires
his option by bequest or inheritance or by reason of his death shall have the
right, subject to the provisions of Section 5(b) and 6 hereof, to exercise his
option at any time within three months from the date of his death, but only as
to the number of shares as to which his option was exercisable on the date of
his death. In any such event, unless so exercised within the period as
aforesaid, the option shall terminate at the expiration of said period. The time
of cessation of employment and whether an authorized leave of absence or absence
on military or government service shall constitute cessation of employment, for
the purpose of the Plan, shall be determined by the Committee.
(e) METHOD OF EXERCISE. Options may be exercised by giving written
notice to the Treasurer of the Corporation, stating the number of shares of
Common Stock with respect to which the option is being exercised and tendering
payment therefor. Payment for Common Stock, whether in cash or other shares of
Common Stock shall be made in full at the time that an option, or any part
thereof, is exercised. Notwithstanding the foregoing, payment for Common Stock
may not be made with other shares of Common Stock acquired through previous
exercise of a stock option under this Plan if such Common Stock has not been
held by the participant at least six months from date of exercise.
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6. ADJUSTMENTS.
(a) The aggregate number of shares of Common Stock with respect to
which options may be granted hereunder and the number of shares of Common Stock
subject to each outstanding option, may all be appropriately adjusted, as the
Committee may determine, for any increase or decrease in the number of shares of
issued Common Stock resulting from a subdivision or consolidation of shares
whether through reorganization, payment of a share dividend or other increase or
decrease in the number of such shares outstanding effected without receipt of
consideration by the Corporation so as to prevent the dilution or enlargement of
the rights of the optionees.
(b) Subject to any required action by the stockholders, if the
Corporation shall be a party to a transaction involving a sale of substantially
all its assets, a merger or a consolidation, any option granted hereunder shall
pertain to and apply to the securities to which a holder of the number of shares
of Common Stock subject to the option would have been entitled if he actually
owned the stock subject to the option immediately prior to the time any such
transaction became effective; provided, however, that all unexercised options
under the Plan may be canceled by the Corporation as of the effective date of
any such transaction, by giving notice to the holders thereof of its intention
to do so and by permitting the exercise, during the 30-day period preceding the
effective date of such transaction of all partly or wholly unexercised options
in full (without regard to installment exercise limitations).
(c) In the case of dissolution of the Corporation, every option
outstanding hereunder shall terminate; provided, however that each option holder
shall have 30 days' prior written notice of such event, during which time he
shall have a right to exercise his partly or wholly unexercised option (without
regard to installment exercise limitations).
(d) On the basis of information known to the Corporation, the
Committee shall make all determinations under this Section 6, including whether
a transaction involves a sale of substantially all of the Corporation's assets;
and all such determinations shall be conclusive and binding.
7. OPTION AGREEMENTS. Each optionee shall agree to such terms and
conditions in connection with the exercise of an option, including restrictions
on the disposition of the Common Stock acquired upon the exercise thereof, as
the Committee may deem appropriate. Option agreements need not be identical. The
certificates evidencing the shares of Common Stock acquired upon exercise of an
option may bear a legend referring to the terms and conditions contained in the
respective option agreement and the Plan, and the Corporation may place a stop
transfer order with its transfer agent against the transfer of such shares.
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8. CERTAIN LEGAL AND OTHER REQUIREMENTS.
(a) The obligation of the Corporation to sell and deliver Common
Stock under options granted under the Plan shall be subject to all applicable
laws, regulations, rules and approvals, including, but not by way of limitation,
the effectiveness of a registration statement under the Securities Act of 1933,
as amended, or any state securities laws, if deemed necessary or appropriate by
the Board, of the Common Stock reserved for issuance upon exercise of options.
Nothing herein shall be construed to obligate the Corporation to effect any such
registration or qualification. The certificates evidencing the Common Stock
issued upon exercise of options may be legended to indicate a lack of such
registration or qualification. The Corporation may require any optionee, as a
condition of exercising his option, or at any time thereafter, to fulfil such
conditions as may be imposed by the Committee or to represent in writing that he
is acquiring (or has acquired) the Common Stock for his own account and not with
a view to distribution; notwithstanding the foregoing, the Corporation's failure
or refusal to request and/or obtain such representation shall not be construed
as a waiver of any provision hereof.
(b) A participant shall have no rights as a stockholder with
respect to any shares covered by an option granted to, or exercised by, him
until the date of delivery of a stock certificate to him for such shares. No
adjustment other than pursuant to Section 6 hereof shall be made for dividends
or other rights for which the record date is prior to the date such stock
certificate is delivered.
9. NON-TRANSFERABILITY. During the lifetime of an optionee,
any option granted to him shall be exercisable only by him or by his guardian or
legal representative. No option shall be assignable or transferable, except by
will or by the laws of descent and distribution. The granting of an option shall
impose no obligation upon the employee and/or Director to exercise such option
or right.
10. NO CONTRACT OF EMPLOYMENT. Neither the adoption of this Plan nor
the grant of any option shall be deemed to obligate the Corporation to continue
the employment or service of any optionee for any particular period, nor shall
the granting of an option constitute a request or consent to postpone the
retirement date of any employee and/or the resignation date of any Director.
11. INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as Directors or as members of the Committee,
the members of the Committee shall be indemnified by the Corporation against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred in connection with the defense of any action, suit or proceeding (or in
connection with any appeal therein) to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any option granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Corporation) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to matters
as to which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable
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for gross negligence or misconduct in the performance of his duties; provided
that within 60 days after institution of any such action, suit or proceeding, a
Committee member shall, in writing, offer the Corporation the opportunity, at
its own expense, to handle and defend the same.
12. TERMINATION AND AMENDMENT OF PLAN. No options shall be granted
under the Plan more than ten (10) years after the date the Plan was adopted. The
Board, acting by a majority of its members, without further action on the part
of the stockholders, may from time to time alter, amend or suspend the Plan or
any option granted hereunder or may at any time terminate the Plan; provided,
however, that the Board may not (i) change the total number of shares of Common
Stock available for options under the Plan, except as provided in Section 6
hereof, (ii) extend the duration of the Plan, (iii) increase the maximum term of
options, (iv) decrease the minimum option price or otherwise materially increase
the benefits accruing to participants under the Plan, or (v) materially modify
the eligibility requirements of the Plan; and provided further, that no such
action shall materially and adversely affect any outstanding options without the
consent of the respective optionees.
13. EFFECTIVE DATE. The Plan shall become effective (i) after its
approval by the holders of a majority of the shares of Common Stock of the
Corporation represented at the next annual or special meeting of the
stockholders of the Corporation, and (ii) upon the earlier to occur of (x) the
date that the Plan of Liquidation of the Corporation's wholly owned subsidiary,
Arista Insurance Company, is completed, or (y) January 1, 2000.
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EXHIBIT B
ARISTA INVESTORS CORP.
1999 RESTRICTED STOCK PLAN
(LIMITED TO 50,000 SHARES)
SECTION 1.
DEFINITIONS
1. As used herein, the following terms have the meanings hereinafter
set forth unless the context clearly indicates to the contrary:
(i) "BOARD" shall mean the Board of Directors of the Company.
(ii) "CHANGE OF CONTROL OF THE COMPANY" shall have the meaning
given in Section 6.7 hereof.
(iii) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(iv) "COMMITTEE" shall mean either the entire Board, or a
committee thereof appointed by the Board. The Committee shall be composed of not
less than two (2) directors. If the Committee is composed of other than the
entire Board, all of the members of the Committee shall satisfy the definition
of a "Non-Employee Director" as under Rule 16b-3 promulgated under the Exchange
Act. In addition, the Committee may (but need not) be composed of members
characterized as "outside directors" within the meaning of the Treasury
Department Regulations interpreting Section 162(m) of the Internal Revenue Code.
The Committee may have responsibilities in addition to the administration of the
Plan. Subject to the express provisions of the Plan, the Committee may interpret
the Plan, prescribe, amend and rescind rules and regulations relating to it,
determine the terms and provisions of participants' agreements (which need not
be identical) and make such other determinations as it deems necessary or
advisable for the administration of the Plan. The decisions of the Committee on
matters within their jurisdiction under the Plan shall be conclusive and
binding. No member of the Committee shall be liable for any action taken or
determination made in good faith.
(v) "COMMON STOCK" shall mean the Class A Common Stock of the
Company, par value $.01 per share.
(vi) "COMPANY" shall mean Arista Investors Corp., a Delaware
corporation.
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(vii) "DISCHARGE FOR CAUSE" shall mean termination of employment
or of service as a Director due to (i) such acts or conduct on the part of the
Participant which is contrary to the interests of the Company, as determined by
the Committee ; (ii) the occurrence of an event described in Section 6.7(b)
hereof; (iii) the commission of any crime or act of material dishonesty by the
Participant; or (iv) the commission of any willful, malicious, grossly negligent
or reckless act by the Participant which is deemed, in the reasonable judgment
of the Committee, detrimental to the business, prospects or reputation of the
Company. Notwithstanding anything to the contrary contained herein, however, the
term "Discharge for Cause" or "Cause" shall not include a determination by a
Board or Committee constituted at any time following a Change of Control of the
Company (as defined below).
(viii) "EFFECTIVE DATE OF THE PLAN" shall be as defined in Section
2.3 hereof.
(ix) "ESCROW AGENT" shall mean any escrow agent or its successor
designated by the Committee to act under the provisions of the Escrow Agreement.
(x) "ESCROW AGREEMENT" shall mean the form of escrow agreement as
determined from time to time by the Committee.
(xi) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
(xii) "FAIR MARKET VALUE" shall mean, in the event that the Stock
is not listed on a national securities exchange, such value as may be determined
by the Committee, or, in the event that the Stock is listed on Nasdaq (or any
other exchange on which it may be listed), the average of the highest price and
the lowest price per share at which the Stock is sold in the regular way on
Nasdaq (or any other exchange on which it may be listed) on the day Restricted
Stock is purchased hereunder, or in the absence of any reported sales on such
day, the first preceding day on which there were such sales, provided such price
shall not be less than the par value of the Stock.
(xiii) "KEY EMPLOYEES" shall mean officers of the Company and
those key or outstanding employees of the Company, from time to time, designated
by the Committee.
(xiv) "PARTICIPANT" shall mean a person who has purchased
Restricted Stock pursuant to the provisions hereof and which has not been
forfeited under the Plan.
(xv) "PLAN" shall mean the Arista Investors Corp. 1999 Restricted
Stock Plan, the terms of which are set forth herein.
(xvi) "RESTRICTED STOCK" shall mean Common Stock delivered to or
held by a Participant which is subject to the restrictions described in Section
6.7 hereof and any new, additional or different stock or securities of the
Company or some other corporation, which a Participant may become entitled to
receive with respect to such shares by virtue of a stock split or
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stock dividend or any other change in the corporate or capital structure of the
Company. Shares of Restricted Stock delivered pursuant to the Plan, at the
election of the Committee, may consist either in whole or in part of the
Company's authorized and unissued shares or the Company's authorized and issued
shares thereafter re-acquired by the Company and held in its treasury, as may
from time to time, be determined by the Committee.
(xvii) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
(xviii) "STOCK" shall mean the Common Stock of the Company or, in
the event that the outstanding shares of Stock are hereafter changed into or
exchanged for shares of a different stock or securities of the Company or some
other corporation, any new, additional or different stock or securities of the
Company or some other corporation. Shares of Stock delivered pursuant to the
Plan, at the election of the Committee, may consist either in whole or in part
of the Company's authorized and unissued shares or the Company's authorized and
issued shares thereafter re-acquired by the Company, and held in its treasury,
as may from time to time be determined by the Committee.
(xix) "STOCK PURCHASE AGREEMENT" shall mean the form of stock
purchase agreement as determined from time to time by the Committee.
(xx) "SUBSIDIARY" shall mean any corporation, the majority of the
outstanding capital stock of which is owned, directly or indirectly, by the
Company, and as defined in Section 425 of the Code.
SECTION 2.
THE PLAN
1. NAME. This Plan shall be known as the "Arista Investors Corp. 1999
Restricted Stock Plan."
2. PURPOSE. The purpose of the Plan is to advance the interests of
the Company and its stockholders by affording Key Employees and members of the
Board of Directors of Arista Investors Corp. an opportunity to acquire or
increase their proprietary interest in the Company by purchasing Restricted
Stock under the terms set forth herein. This Plan is intended to serve as an
employment and service incentive through which the Company seeks to motivate,
retain and attract those highly competent individuals upon whose judgment,
initiative, leadership and continued efforts the success of the Company in large
measure depends.
3. EFFECTIVE DATE. The Plan shall become effective (i) after its
approval by the holders of a majority of the shares of Common Stock of the
Company represented at the next annual or special meeting of the stockholders of
the Company, and (ii) upon the earlier to occur of, (x) the date that the Plan
of Liquidation of the Company's wholly-owned subsidiary, Arista Insurance
Company, is completed, or (y) January 1, 2000.
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SECTION 3.
PARTICIPANTS
Any Key Employee or Director of the Company shall be eligible to
participate in the Plan. The Committee may select any eligible Key Employee or
Director who may purchase Restricted Stock in accordance with such
determinations as the Committee from time to time in its sole discretion shall
make. The Plan does not entitle an eligible Key Employee or Director to purchase
Restricted Stock unless such employee or Director is selected by the Committee.
A Key Employee or Director who has been eligible and/or selected by the
Committee to purchase Restricted Stock in one year may not necessarily be
eligible and/or selected to purchase Restricted Stock in subsequent years. The
Committee may, before it approves the purchase of Restricted Stock or as a
condition of such approval, require the Participant by whom the purchase is to
be made to enter into an Escrow Agreement and/or Stock Purchase Agreement with
the Company containing such terms and conditions as the Committee may prescribe.
Nothing contained in the Plan shall give any employee the right to be retained
in the employ of the Company or any Director the right of continued service as a
director of the Company or affect the right of the Company to dismiss any
employee or any Director. The adoption of the Plan shall not constitute a
contract between the Company and any employee or any Director.
SECTION 4.
ADMINISTRATION
1. DUTIES AND POWERS OF THE COMMITTEE. The Plan shall be administered
by the Committee. Subject to the express provisions of the Plan, the Committee
shall have the sole discretion and authority to determine (a) from among
eligible Key Employees and Directors those who may purchase Restricted Stock,
(b) the time or times at which Restricted Stock may be purchased, (c) the number
of shares of Restricted Stock which may be purchased, (d) the duration of the
restrictions on the Restricted Stock, (e) the manner and type of restrictions to
be imposed on the Restricted Stock, and (f) the valuation of the consideration
to be paid for the Restricted Stock, provided that the consideration may not be
less than the par value thereof and that such consideration need not be the same
for each grant hereunder. Subject to the express provisions of the Plan, the
Committee shall also have the sole discretion and complete authority to
interpret the Plan, to prescribe, amend, and rescind rules and regulations
relating to it, to determine the details and provisions of each Escrow Agreement
and Stock Purchase Agreement, and to take all such other and further steps as
may or shall be necessary or advisable to administer the Plan.
The Committee may employ such legal counsel, consultants and agents as
they may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant. None of the members of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Restricted Stock purchased under
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it and the Company shall indemnify and hold harmless each member of the
Committee against any liability, cost or expense (including reasonable counsel
fees) arising out of any act or omission to act in connection with the Plan,
unless arising out of such person's own fraud, bad faith or willful misconduct.
2. MAJORITY RULE. Any resolution adopted by the Committee in
accordance with the by-laws of the Company, and provided a quorum is present in
accordance with such by-laws, shall be deemed sufficient for purposes of taking
any action required to be taken by the Committee hereunder.
3. COMPANY ASSISTANCE. The Company shall supply full and timely
information to the Committee on all matters relating to Participants, their
employment, death, retirement, disability or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of their duties.
SECTION 5.
SHARES OF RESTRICTED STOCK SUBJECT TO PLAN
1. LIMITATIONS. Subject to adjustment pursuant to the provisions of
Section 5.3 hereof, the number of shares of Restricted Stock which may be issued
and sold hereunder shall not exceed Fifty Thousand (50,000) shares. Such shares
may consist, either in whole or in part, of the Company's authorized and
unissued shares or the Company's authorized and issued shares thereafter
re-acquired by the Company and held in its treasury, as may from time to time be
determined by the Committee. Any of such shares which remain unsold at the
termination of the Plan shall cease to be reserved for the purposes of the Plan.
2. STOCKHOLDER APPROVAL. The Company shall not issue or deliver any
certificate for restricted stock which may be purchased under the Plan, prior to
approval of the Plan by a resolution adopted by the holders of a majority of the
outstanding shares of Stock of the Company present at an annual or special
meeting of stockholders.
3. ANTIDILUTION. In the event that the Stock hereafter is changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of merger, consolidation, or
other reorganization, recapitalization, reclassification, combination of shares,
stock split-up, or stock dividend, then:
(a) The aggregate number and kind of shares in the Plan shall be
adjusted appropriately;
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(b) The number of shares of Restricted Stock purchased by a
Participant pursuant hereto shall be adjusted appropriately, both as to
the number of subject shares and the price; and
(c) Such new or additional or different shares or securities which
are distributed to a Participant, in his capacity as the owner of
Restricted Stock purchased hereunder, shall be legended in accordance
with Section 6.7(d) hereof and shall be subject to all of the
conditions and restrictions applicable to Restricted Stock issued as
provided herein.
Any adjustments required hereunder and the manner of application of the
foregoing provisions shall be determined solely by the Committee, and any such
adjustment may provide for the elimination of fractional share interests.
SECTION 6.
RESTRICTED STOCK PURCHASE
1. RESTRICTED STOCK PURCHASE. All Restricted Stock purchased pursuant
hereto shall be authorized by minutes of a meeting or the written consent of the
Committee, which shall specify the terms and provisions to be contained in the
Stock Purchase Agreement and/or the Escrow Agreement, in accordance with the
Plan. The Escrow Agreement and the Stock Purchase Agreement shall be executed by
an authorized officer of the Company. Notwithstanding anything contained herein,
the Restricted Stock purchased pursuant hereto must be held for not less than
six months following the date of acquisition.
2. RESTRICTED STOCK PRICE. The per share Restricted Stock price shall
be determined by the Committee, but the per share price shall not be less than
the par value of the Restricted Stock on the date the Restricted Stock is
purchased. The purchase price for the Restricted Stock shall be paid in cash.
3. SECTION 83(B) ELECTION. A Participant who files an election with
the Internal Revenue Service to include the fair market value of any Restricted
Stock in gross income while it is still subject to restrictions shall promptly
furnish the Company with a copy of such election together with information as to
the amount of any federal, state, local or other taxes required to be withheld
to enable the Company to claim an income tax deduction with respect to such
election.
4. WITHHOLDING. All Restricted Stock purchased pursuant hereto and
dividends on such Restricted Stock shall be subject to withholding as required
by applicable federal, state and local laws, and the Committee may make such
arrangements for the payment of any withholding taxes on Restricted Stock
purchased pursuant hereto as they deem satisfactory, including but not limited
to (i) reducing the number of shares of Restricted Stock otherwise deliverable,
based upon their Fair Market Value, to permit deduction of the amount of any
such withholding taxes from the
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amount which may otherwise be purchased under the Plan, (ii) deducting the
amount required to be withheld from salary or any other amount then or
thereafter payable to a Participant, and (iii) requiring a Participant to pay to
the Company the amount required to be withheld as a condition of releasing the
Restricted Stock and any other distributions related thereto.
5. NONTRANSFERABILITY OF RESTRICTED STOCK. Unless otherwise permitted
hereunder, no Restricted Stock shall be transferred by a Participant otherwise
than by Last Will and Testament or the laws of Descent and Distribution.
At such time that a Participant purchases Restricted Stock pursuant
hereto, the Participant shall represent to the Company in writing that he or she
will hold the Restricted Stock for his or her own account for investment only
and not with a view to distribution or resale and that the Participant will not
make any sale, transfer or other disposition of any shares of Restricted Stock
purchased except pursuant to registration under the Securities Act or pursuant
to an opinion of counsel satisfactory in form and substance to the Committee,
that the sale, transfer or other disposition may be made without such
registration.
6. NO ALIENATION OF BENEFITS. Except insofar as may otherwise be
required by law, no Restricted Stock held at any time pursuant to an Escrow
Agreement shall be subject in any manner to alienation by anticipation, sale,
transfer, assignment, bankruptcy, pledge, attachment, charge, or encumbrance of
any kind nor in any manner be subject to the debts or liabilities of any person
and any attempt to so alienate or subject any such amount, whether presently or
thereafter payable, shall be void. If any person shall attempt to, or shall
alienate, sell, transfer, assign, pledge, attach, charge, or otherwise encumber
any Restricted Stock purchased under the Plan, or any part thereof, or if by
reason of his of her bankruptcy or other event happening at any such time such
amount would be made subject to his debts or liabilities or would otherwise not
be enjoyed by him or her, then the Committee, if it so elects, may direct that
such Restricted Stock be withheld and that the same or any part thereof be paid
or applied to or for the benefit of such person, his or her spouse, children or
other dependents, or any of them, in such manner and proportion as the Committee
may deem proper, in their sole discretion.
7. RESTRICTIONS IMPOSED. The Committee may impose any or all of the
restrictions enumerated in subsections (a), (b) and (c) of this Section 6.7 or
such other restrictions as provided in subsection (e) below, with respect to any
Restricted Stock purchased hereunder:
(a) If a Participant's employment with the Company shall be
terminated by the Company based upon Discharge For Cause, or by the act
of the Participant or a Director shall be removed for cause, within ten
(10) years from the date Restricted Stock shall have been purchased
hereunder, the Company shall have the option for a period of sixty (60)
days after such termination of employment or termination of service as
a Director, to buy any or all of the shares purchased by such
terminated employee or Director which are, at such time, subject to
restriction as provided in the applicable Stock Purchase Agreement, for
an amount equal to the Product of (x) the consideration paid by the
terminated employee or Director to
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the Company to acquire such shares, multiplied by (y) the number of
shares which the Company repurchases ("Repurchase Price"). The
provisions of this paragraph shall automatically terminate and the
restrictions shall be removed in accordance with Section 6.9 hereof,
immediately following a "Change of Control of the Company." A "Change
of Control of the Company" shall mean a dissolution or liquidation of
the Company or a merger, consolidation, sale of all or substantially
all of its assets, or other corporate reorganization in which the
Company is not the surviving corporation.
(b) If a Participant shall, within ten (10) years from the date
Restricted Stock shall have been purchased, directly or indirectly,
own, manage, operate, control, be employed by, or participate in, as a
partner, joint venturer, employee, agent, salesman, officer, director,
five percent (5%) stockholder, or be connected in any manner with the
ownership, management, operation, control, employment or participation
as a partner, joint venturer, employee, agent, salesman, officer,
director, or five percent (5%) stockholder, of any business similar to
the type of business conducted by the Company at that time, as
determined in the sole discretion of the Committee, the Company shall
have the option for a period of sixty (60) days after such
determination by the Committee, to buy any or all of the shares
purchased by such Participant which are, at such time, subject to
restriction as provided in the applicable Stock Purchase Agreement, for
an amount equal to the Repurchase Price. The provisions of this
paragraph shall automatically terminate and the restrictions shall be
removed in accordance with Section 6.9 hereof, immediately following a
Change of Control of the Company or if the Participant is terminated by
the Company under circumstances which do not constitute a Discharge for
Cause.
(c) If, within twelve months of the date on which Restricted Stock
is purchased hereunder, the Company shall not have filed a registration
statement under the Securities Act for the offer and sale of shares of
its Common Stock and any such registration statement shall not have
been declared effective by the Securities and Exchange Commission, then
the Company shall have the option for a period of sixty (60) days after
the end of such twelve month period to buy any or all of the shares
purchased hereunder for an amount equal to the Repurchase Price.
(d) Stock certificates evidencing Restricted Stock purchased by a
Participant shall be issued and delivered in the sole name of the
Participant and each such certificate shall bear the following legends:
(i) "The shares of Arista Investors Corp., $.01 par value per
share, of Class A Common Stock evidenced by this certificate are
subject to repurchase by Arista Investors Corp., and such shares
may not be sold or otherwise transferred, pledged or hypothecated
except pursuant to the provisions of the Escrow Agreement and/or
Stock Purchase Agreement by and between the Escrow Agent, Arista
Investors Corp. and the registered owner of such shares."; and
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(ii) "This stock certificate may not be sold, transferred,
pledged or hypothecated unless it has first been registered under
the Securities Act of 1933, as amended, or unless counsel for
Arista Investors Corp. has given an opinion that registration
under said Act is not required, except that after a Change of
Control of the Company, an opinion of counsel that registration
under said Act is not required, may be provided by counsel
independent of Arista Investors Corp. These shares are subject to
the terms of an Escrow Agreement and/or Stock Purchase Agreement
with the Escrow Agent, Arista Investors Corp. and the registered
owner of such shares."
No such share may be sold, transferred, or otherwise alienated or
hypothecated so long as the certificate evidencing such share bears the
legends provided above.
The foregoing provisions in subsection (d) hereof shall not be
effective if and to the extent that the shares of Stock delivered under
the Plan are covered by an effective and current registration statement
under the Securities Act, or if and so long as the Committee determines
that application of such provisions is no longer required. In making
such determination, the Committee shall rely upon an opinion of counsel
for the Company, except that after a Change of Control of the Company,
an opinion of counsel that registration under the Securities Act is not
required may be provided by counsel independent of the Company.
(e) The Committee may impose some or all of the restrictions set
forth in this Section and/or such other restrictions on any shares sold
pursuant to the Plan as they may deem advisable in their sole
discretion, including without limitation, restrictions under the
Securities Act, under the requirements of any stock exchange upon which
such shares or shares of the same class are then listed, and under any
state or local blue sky or securities laws applicable to such shares.
(f) In the event the Company exercises its sixty (60) day option
with respect to any shares, the Company may set off the Repurchase
Price from any obligation or liability to a Participant, whether as
compensation or otherwise.
8. RIGHTS AS STOCKHOLDER. Subject to the provisions of Section 6.9
hereof, a certificate or certificates for all shares of Restricted Stock
registered in the name of a Participant shall be delivered to him or her as soon
as reasonably practicable and he or she shall thereupon be a stockholder and
have all the rights of a stockholder with respect to such shares, including the
right to vote and receive all dividends or other distributions made or paid with
respect to such shares; provided, that such shares of Restricted Stock, and any
new, additional or different securities the Participant may become entitled to
receive with respect to such shares by virtue of a stock split or stock dividend
or any other change in the corporate or capital structure of the Company, shall
be subject to the restrictions theretofore imposed on the Restricted Stock.
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9. REMOVAL OF RESTRICTIONS.
(a) If (i) a Participant shall die, retire or become permanently
and totally disabled as determined in accordance with applicable
Company personnel policies, or (ii) there is a Change of Control of the
Company, at any time within ten (10) years from the date Restricted
Stock shall have been purchased hereunder, the events of forfeiture
specified in Section 6.7(a) and (b) hereof (but not Section 6.7(c)) or
as otherwise determined by the Committee shall terminate, and upon
surrender and presentation to the Company of the legended certificates
evidencing such shares, replacement certificates shall be issued and
delivered to the Participant, free from the legend provided for in
Section 6.7(d)(i) hereof or any other restrictions on the sale or other
transfer of such shares, pursuant to the Plan, but legended in
accordance with Section 6.7(d)(ii) hereof, and such shares shall,
nonetheless, remain subject to the Securities Act and the Exchange Act,
unless an opinion of counsel is provided in accordance with Section
6.7(d) hereof.
(b) If the Company chooses not to exercise its sixty (60) day
option with respect to any shares or such sixty (60) day option period
has expired pursuant to Section 6.7(a) hereof, the events of forfeiture
specified in Section 6.7(a) hereof shall terminate, and upon surrender
and presentation to the Company of the legended certificates evidencing
such shares, replacement certificates shall be issued and delivered to
the Participant, free from the legend provided for in Section 6.7(d)(i)
hereof or any other restrictions on the sale or transfer of such
shares, pursuant to the Plan, but legended in accordance with Section
6.7(d)(ii) hereof, and such shares shall, nonetheless, remain subject
to the Securities Act and the Exchange Act, unless an opinion of
counsel is provided in accordance with Section 6.7(d) hereof.
(c) If the Company chooses not to exercise its sixty (60) day
option with respect to any shares or such sixty (60) day option period
has expired pursuant to Section 6.7(b) hereof, the events of forfeiture
specified in Section 6.7(b) hereof shall terminate, and upon surrender
and presentation to the Company of the legended certificates evidencing
such shares, replacement certificates shall be issued and delivered to
the Participant, free from the legend provided for in Section 6.7(d)(i)
hereof or any other restrictions on the sale or transfer of such
shares, pursuant to the Plan, but legended in accordance with Section
6.7(d)(ii) hereof, and such shares shall, nonetheless, remain subject
to the Securities Act and the Exchange Act, unless an opinion of
counsel is provided in accordance with Section 6.7(d) hereof.
(d) If a Participant's Stock Purchase Agreement provides for the
release from restriction of portions of the Restricted Stock upon the
passage of time, then upon the passage of such time periods, the events
of forfeiture specified in Section 6.7(a) and 6.7(b) hereof shall
terminate as to such portions of the Restricted Stock and upon
surrender and presentation to the Company of the legended certificates
evidencing such shares, replacement certificates shall be issued and
delivered to the Participant, free from the legend provided for
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in Section 6.7(d)(i) hereof or any other restrictions on the sale or
transfer of such shares, pursuant to the Plan, but legended in
accordance with Section 6.7(d)(ii) hereof, and such shares shall,
nonetheless, remain subject to the Securities Act and the Exchange Act,
unless an opinion of counsel is provided in accordance with Section
6.7(d) hereof.
10. ESCROW. In order to enforce the restrictions imposed upon shares
issued under the Plan, the Committee may require any Participant to deposit with
the Escrow Agent all certificates for Restricted Stock together with stock
powers, appropriately endorsed in blank and to enter into an Escrow Agreement
providing that the certificates representing shares issued pursuant to the Plan
shall remain in the physical custody of the Escrow Agent until any or all of the
restrictions imposed pursuant to the Plan have terminated.
SECTION 7.
STOCK CERTIFICATES
The Company may, but shall not be required to, issue or deliver any
certificate for shares of Restricted Stock purchased hereunder or any portion
thereof, prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges
on which the Stock is then listed;
(b) The completion of any registration or other qualification of
such shares under any federal or state law or under the rules or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Committee shall in their sole
discretion deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any
federal or state governmental agency which the Committee shall in their
sole discretion determine to be necessary or advisable;
(d) Compliance with all terms and provisions of the Plan, the
Stock Purchase Agreement and the Escrow Agreement;
(e) The lapse of such reasonable period of time following the
purchase of the Restricted Stock as the Committee from time to time in
their sole discretion may establish for reasons of administrative
convenience; and
(f) The approval of the Plan by the holders of a majority of the
shares of Stock of the Company present at an annual or special meeting
of the stockholders of the Company; and
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Nothing herein contained shall be construed as imposing any obligation on the
Committee or the Company to undertake or complete any act with respect to
subparagraphs (a), (b) and (c) of this Section 7.
SECTION 8.
TERMINATION, AMENDMENT, AND MODIFICATION OF PLAN
1. TERMINATION. The Plan shall terminate and no further shares shall
be sold or issued hereunder on or after the tenth (10th) anniversary of the
Effective Date, or such earlier date as may be determined by the Committee. The
termination of the Plan, however, shall not affect any restrictions previously
imposed on shares issued pursuant to the Plan.
2. AMENDMENT AND MODIFICATION. The Board may at any time terminate,
and may at any time and from time to time and in any respect amend or modify,
the Plan; provided, however, that no amendment to the Plan may provide for a
purchase price for the Restricted Stock of less than the par value thereof or
change the manner for removal of the restrictions set forth in Section 6.9
hereof.
No termination, amendment, or modification of the Plan shall in any
manner affect any Stock Purchase Agreement or Escrow Agreement theretofore
executed pursuant to the Plan without the consent of the Participant.
SECTION 9.
MISCELLANEOUS
1. EMPLOYMENT. Nothing in the Plan or in any Stock Purchase Agreement
relating hereto shall confer upon any employee the right to continue in the
employ of the Company.
2. OTHER COMPENSATION PLANS. The adoption of the Plan shall not
affect any other stock option or incentive or other compensation plans in effect
for the Company, nor shall the Plan preclude the Company from establishing any
other forms of incentive or other compensation plans for employees or Directors
of the Company.
3. PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the
successors and assigns of the Company.
4. SINGULAR, PLURAL, GENDER. Whenever used herein, nouns in the
singular shall include the plural, and the masculine pronoun shall include the
feminine gender.
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5. HEADINGS, ETC., NO PART OF PLAN. Headings or Sections hereof are
inserted for convenience and reference and they constitute no part of the Plan.
6. UNFUNDED PLAN. The Plan is intended to constitute an unfunded
deferred compensation arrangement for a select group of management, key or
outstanding personnel.
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PROXY
ARISTA INVESTORS CORP.
116 JOHN STREET, NEW YORK, NEW YORK 10038
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Stanley S. Mandel and Susan J. Hall as
proxies ("Proxies"), each with the power to appoint his or her substitute, and
hereby authorizes them to represent and to vote, as designated below, all the
Class A Common Stock of Arista Investors Corp., a Delaware corporation (the
"Company"), held of record by the undersigned on July 1, 1999, at the Annual
Meeting of Stockholders to be held at Cold Spring Harbor Country Club, East Gate
Drive, Cold Spring Harbor, New York 11724 on August 6, 1999, 10:00 a.m., local
time or any adjournment thereof.
PROPOSAL 1. Election of Directors.
Nominees: Daniel Glassman, Bernard Kooper, Michael Krasner,
Stanley S. Mandel and Louis H. Saltzman
/ / FOR all nominees / / WITHHOLDING AUTHORITY
(except as marked to the contrary below) as to all nominees
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)
Withheld for:
---------------------------------------------
PROPOSAL 2. To approve and adopt the Company's 1999 Non-Qualified Stock Option
Plan.
/ / FOR / / AGAINST / / ABSTAIN
PROPOSAL 3. To approve and adopt the Company's 1999 Restricted Stock Plan.
/ / FOR / / AGAINST / / ABSTAIN
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the Meeting. This proxy, when
properly executed, will be voted in the manner directed herein by the
undersigned stockholder.
<PAGE>
If no direction is made, the Proxies will have discretionary authority
to vote on the above-listed matters to be presented at the Meeting. In such
event, the Proxies intend to vote FOR the election of each director-nominee
listed in Proposal 1 and FOR Proposals 2 and 3.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW.
WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD
SIGN.
Date: , 1999
--------------------
Signature:
---------------------------------------
Print Name:
--------------------------------------
Signature if held jointly:
----------------------
(When signing as attorney, as executor, as administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.)
