SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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Check the appropriate box:
/ / Preliminary Proxy Statement
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14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
BABYSTAR, INC.
------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
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BABYSTAR, INC.
165 University Ave.
Westwood, Massachusetts 02090
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On November 14, 1995
To the Stockholders of
Babystar, Inc.
Notice is hereby given that the Annual Meeting of Stockholders
of Babystar, Inc. (the "Company") will be held at The Offices of
the Company, 165 University Avenue, Westwood, Massachusetts on
November 14, 1995 at 10:00 A.M. for the following purposes as set
forth in the accompanying Proxy Statement:
I. To elect five directors to the Board of Directors of the
Company to serve for a term of one year or until their
successors are duly elected and qualified;
II. To approve a change of the Company's name from Babystar,
Inc. to Datatrend Services, Inc.;
III. To consider and act upon a proposal to amend the
Certificate of Incorporation of the Company to provide
for authorizing an additional 10,000,000 shares of Common
Stock increasing the authorized Common Stock from
20,000,000 shares to 30,000,000 shares;
IV. To ratify the selection and appointment by the Company's
Board of Directors of Richard A. Eisner & Company,
independent certified public accountants, as auditors for
the Company for the fiscal year ending December 31, 1995;
V. To approve the creation of a new 1995 Stock Option Plan
authorizing the Company to issue options to acquire up to
500,000 shares of Common Stock to directors, officers,
key employees, consultants, and others who render
services to the Company; and
VI. To transact such other business as may properly come
before the meeting or any adjournments thereof.
Holders of record of the Company's Common Stock at the close
of business on September 21, 1995 will be entitled to vote at the
meeting. You are cordially invited to attend the meeting. Whether
or not you plan to attend, please complete, date and sign the
accompanying proxy and return it promptly in the enclosed envelope
to insure that your shares are represented at the meeting. If you
do attend, you may revoke any prior proxy delivered hereunder and
vote your shares in person if you wish to do so. Any prior proxy
delivered hereunder will automatically be revoked if you execute
the accompanying proxy or if you notify the Secretary of the
Company, in writing, prior to the Annual Meeting of Stockholders.
By Order of the Board of Directors
Yitz Grossman, Secretary
Dated: September 22, 1995
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE DATE AND
SIGN THE ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED.
ANY PERSON GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME
PRIOR TO ITS EXERCISE AND IF
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PRESENT AT THE MEETING MAY WITHDRAW IT AND VOTE IN PERSON. ATTENDANCE AT THE
MEETING IS LIMITED TO STOCKHOLDERS, THEIR PROXIES AND INVITED GUESTS OF THE
COMPANY.
BABYSTAR, INC.
c/o Datatrend, Inc.
165 University Ave.
Westwood, MA 02090
Proxy Statement
for
ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 14, 1995
PROXY STATEMENT
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of proxies to be voted at
the Annual Meeting of Stockholders of the Company to be held at
Datatrend, Inc., 165 University Ave., Westwood, Massachusetts at
10:00 A.M. on November 14, 1995 and at any adjournments thereof.
The shares represented by proxies that are received in the
enclosed form and properly filled out will be voted in accordance
with the specifications made thereon. In the absence of specific
instructions, proxies will be voted in accordance with the
recommendations made herein with respect to the proposals described
in this Proxy Statement. Proxies may be revoked by stockholders by
written notice received by the Secretary of the Company at the
address set forth above, at any time prior to the exercise thereof.
Stockholders of record at the close of business on September 21,
1995 are entitled to notice of and to vote at the Annual Meeting or
any adjournments thereof. The Company's only class of voting
securities is its Common Stock, par value $.01 per share, of which
4,712,795 shares were outstanding as of September 21, 1995.
PROPOSAL I
ELECTION OF DIRECTORS
It is the intention of the persons named in the enclosed form
of proxy, unless such proxy specifies otherwise, to nominate and to
vote the shares represented by such proxy for the election of the
nominees listed below to hold office until the next Annual Meeting
of Stockholders or until their respective successors shall have
been duly elected and qualified. Messrs. Grossman, Hanson, Bulman
and Haase are all presently directors of the Company. The Company
has no reason to believe that any of the nominees will be come
unavailable to serve as directors for any reason before the Annual
Meeting. However, in the event that any of them shall become
unavailable, the person designated as proxy reserves the right to
substitute another person of his choice when voting at the Annual
Meeting.
Certain information regarding each nominee is set forth in the
table and text below. The number of shares beneficially owned by
each nominee is listed below under "Security Ownership of Certain
Beneficial Owners and Management."
Kevin Donovan is Mr. Hanson's nominee as a fifth director
pursuant to the terms of an Agreement and Plan of Merger (the
"Agreement") between the Company and Datatrend, Inc. Kevin Donovan
is the brother-in-law of Mr.
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Hanson. There are no other family relationships among directors, nominees or
executive officers nor is there any arrangement or understanding between any
such director or nominee and any other person pursuant to which any director or
nominee was selected as such.
The following table sets forth the name, age and term of
office as director of each nominee for election as director and his
present position(s) with the Company:
Nominee for Election Since Position(s)
- - -------------------- ----- -----------
Mark A. Hanson (40) 1995 President, Chief
Executive Officer,
Treasurer and Chairman of
the Board
Yitz Grossman (40) 1987 Secretary and Director
John G. Bulman (37) 1995 Asst. Treasurer and Director
Werner Haase (57) 1995 Director
Kevin Donovan (39) NA None
The directors serve for a term of one year and until their
successors are duly elected and qualified. Directors have not
received any remuneration for their service on the Board. There
are no standing audit, nominating or compensation committees of the
Board of Directors. Officers serve at the pleasure of the Board of
Directors subject to any contracts of employment. The Board of
Directors held three meetings in the fiscal year ended December 31,
1994 at which all of the directors were in attendance. The Board
also acted by written consents and met informally during the year.
Executive Officers
The following table sets forth the name, age and position of
each executive officer of the Company:
Name Position(s)
---- -----------
Mark A. Hanson (40) President, Treasurer and
Chief Executive Officer
Yitz Grossman (40) Secretary
John G. Bulman (37) Asst. Secretary
Mark A. Hanson Mark A. Hanson was elected President, CEO and
Director of the Company in February 1995. In 1993 he helped found
Datatrend, Inc. and has been the President and a Director of
Datatrend, Inc., the Company's wholly owned subsidiary acquired in
February 1995, since its formation in April 1993. Prior to
founding Datatrend, he was President of Bostek, Inc. for
approximately four years, and has been a business consultant
specializing in advising manufacturers and distributors about
automation and software customization since 1978.
Yitz Grossman Under an agreement dated February 1, 1995, Mr.
Grossman is obligated to serve as a director and officer of the
Company at the Company's request, and he was elected to these
positions in February 1993. Mr. Grossman has acted as a business
consultant to the Company, with a special emphasis on marketing,
since March 1992. In July 1984, Mr. Grossman formed Target
Capital Corporation, a New York privately-held corporation engaged
in financial consulting and has been the Chairman and President of
that corporation since that time. Mr. Grossman is a director of
Water-Jel Technologies, Inc., a publicly held company involved in
producing a line of fire blankets and burn dressings, Pure Tech
International, Inc., a publicly held company engaged in plastics
recycling and the production of injected plastic molding, garden
hose, specialty plastic compounds, fabricated precision plastic
components and non-woven textiles and Mark Solutions, Inc., a
publicly held business which manufactures modular prison cells.
John G. Bulman was elected a director of the Company in
February 1995. Mr. Bulman has been a director of Datatrend, Inc.,
the Company's wholly-owned subsidiary, since its formation in April
1993. Mr. Bulman is an
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attorney admitted to practice in the Commonwealth of Massachusetts in 1987. Mr.
Bulman has acted as Mr. Hanson's counsel on various business matters since
approximately April of 1987. Mr. Bulman is also a certified public accountant
in the Commonwealth of Massachusetts.
Werner Haase was elected a director of the Company in February
1995. For more than the past five years, Mr. Haase has been a
director, President and Chief Executive Officer of Journeycraft,
Inc., a privately held New York corporation involved in travel and
sales promotion. Mr. Haase is also a director of Water-Jel
Technologies, Inc., Pure Tech International, Inc. and Multi-Media
Tutorial Services, Inc., a publicly held corporation which produces
and distributes educational materials on video tape and CD formats.
Kevin Donovan was elected as a director of Datatrend, Inc.,
the Company's wholly-owned subsidiary in January 1995. Pursuant to
the Agreement, Mark A. Hanson has the right to appoint one
additional Director of the Company. Kevin Donovan is Mr. Hanson's
nominee for that directorship. Mr. Donovan is a certified public
accountant in practice in the Commonwealth of Massachusetts. Mr.
Donovan has been in practice as a certified public accountant since
1988, and is the principal of Kevin Donovan, P.C., a privately held
professional corporation in the Commonwealth of Massachusetts
formed by Mr. Donovan in June 1994. Mr. Donovan is Mr. Hanson's
brother-in-law.
Executive Compensation
The following table sets forth information with respect to
compensation paid by the Company for services to the Company during
the three fiscal years ended December 31, 1994 of the Company's
Chief Executive Officer and its other officer receiving
compensation in excess of $100,000 per year. Information for
Messrs. Hanson and Moskowitz reflects compensation received from
Datatrend, Inc. ("DTI") prior to acquisition by the Company.
Therefore, the compensation shown for Messrs. Hanson and Moskowitz
is not reflected in the Company's financial statements for the year
ended December 31, 1994. Mr. Hanson became President and Chief
Executive officer of the Company in February 1995. Mr. Moskowitz
resigned his positions with DTI at that time and has not assumed
any positions with the Company.
Summary Compensation Table
All Other
Name and Principal Position Year Salary Bonus Compensation
- - ---------------------------
Mark A. Hanson 1994 $125,167 - $ 775
President, Chief 1993 $ 89,000 $ 40,000 -
Executive Officer 1992 NA NA NA
and Director
Michael W. Moskowitz 1994 $125,167 - $ 2,583
Former CEO and 1993 $ 89,000 - -
Director 1992 NA NA NA
Martin Chopp
Former President, CEO 1994 $208,000 - $30,765
and Director 1993 $176,800 - $27,140
1992 $161,700 - $23,442
Gerald Schwebel 1994 $125,000 - $ 1,718
Former Vice President 1993 $156,000 - $ 1,760
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1992 $161,700 - $ 1,877
DTI was incorporated in April 1993. Therefore, 1993 salaries
and compensation reflect only partial year salaries. No salaries
or compensation was paid by DTI during 1992. Mr. Schwebel left his
position as an officer of the Company in August 1994 but received
$20,000 in consulting fees thereafter which are included in the
salary figure above. Mr. Chopp resigned his positions with the
Company in February 1995. Other compensation for Messrs. Chopp
and Schwebel in all years consists of premiums for life insurance
policies on the lives of Mr. Chopp and Mr. Schwebel. Mr. Chopp and
Mr. Schwebel were entitled to name the beneficiary on the policy on
their respective lives.
Prior to the merger with the Company on February 1, 1995, DTI
elected treatment as a Subchapter S corporation for federal income
tax purposes. DTI paid Mr. Hanson (45% Stockholder) and Mr.
Moskowitz (45% Stockholder) as well as Mr. Bulman (5% Stockholder)
and Mr. Steven Kaplan (5% Stockholder) distributions for the tax
year ended 1993 in an amount equal to approximately 45.6% of the
Subchapter S earnings of DTI reportable on their personal income
tax returns based upon their respective stock ownership. Pursuant
to the Agreement, the Company has agreed to allow Mr. Hanson and
Mr. Bulman a distribution for the tax year ending December 31, 1994
in an amount not to exceed a total of $125,000 for payment of their
personal income tax liability for Subchapter S earning reportable
on their personal income tax returns.
The aggregate amount of personal benefits, including personal
use of four automobiles provided to officers and used primarily for
business purposes, cannot be specifically or precisely ascertained
and do not, in any event, exceed $50,000 or 10% of compensation as
to any person.
The Company offers health insurance to its employees. At the
present time, the Company does not have any retirement, pension,
profit sharing, or other similar programs or benefits.
The Company has not paid remuneration of any nature for or on
account of services rendered by a director in such capacity.
There were no stock appreciation rights or stock options
granted during the fiscal year ended December 31, 1994 to the
above-mentioned officers. The Company has no pension or long term
incentive plans. See "Certain Relationships and Related
Transactions" for information regarding stock grants to be made to
Messrs. Hanson and Bulman pursuant to the Agreement based upon
future earnings of the Company.
The following table sets forth information with respect to the
number and value of unexercised options held by the above mentioned
officers at the end of 1994. There were no stock options exercised
by the named officers during the fiscal year.
Aggregated Option Exercises in Last
Fiscal Year and Fiscal Year End Option Values
Value of Unexercised
Number of Unexercised In the Money Options
Options at 12/31/94 at 12/31/94
Name Exercisable (#) Exercisable($)
Martin Chopp - -
Former President
Gerald Schwebel 95,000 -
Former Vice President
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Both Messrs. Chopp and Schwebel are no longer employed by the
Company. Neither of Messrs. Hanson or Moskowitz held any stock
options or stock appreciation rights in either the Company or DTI.
Employment Agreements
The Company has entered into an employment contract with Mark
A. Hanson dated January 1995 for a term of five years. Mr. Hanson
is to serve as the President, Chief Executive Officer and a
director of the Company. Mr. Hanson is to receive a annual salary
of $180,000 plus escalations. Mr. Hanson is also entitled to the
use of an automobile, health insurance and other similar benefits.
Mr. Hanson's employment can be terminated by the Board of Directors
if the Company does not meet certain after tax earnings goals
specified in the employment agreement. Mr. Hanson may terminate
the employment agreement should the directors nominated by him no
longer constitute a majority of the Board of Directors.
The Company has entered into a consulting agreement with
Target Capital Corp. dated January 1995 for a term of three years.
The consulting agreement automatically renews for a term of an
additional three years if Target Capital Corp. is able to assist the
Company in rasing certain specified amounts of equity capital over
the initial three year term. Target Capital Corp. is wholly-owned
by Mr. Grossman, a director and officer of the Company. Under this
Agreement, Target Capital is entitled to annual consulting fees in
the amount of $100,000 per year. The Company has issued to Mr.
Grossman warrants to purchase an aggregate of 342,000 shares. In
October, 1994, the exercise prices of these warrants was adjusted to
$0.62 per share and the expiration date was extended from December
31, 1994 to December 31, 1997.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding
the beneficial ownership of the Company's Common Stock as of
September 21, 1995 based upon the most recent information available
to the Company for: (I) each person who is known by the Company to
own beneficially more than 5% of the Company's outstanding Common
Stock; (ii) each of the Company's officers and directors; and (iii)
all officers and directors of the Company as a group:
Amount and Nature
of Beneficial
Name and Address Ownership Percentage
Mark A. Hanson 1,080,000(1) 22.9%
165 University Ave
Westwood, MA 02090
Yitz Grossman 345,800(2) 7.3%
40 Fulton Street
New York, NY
John G. Bulman 120,000(3) 2.5%
72 Old Forge Road
Scituate, MA 02066
Werner Haase 8,000(4) *
488 Madison Avenue
New York, NY 10022
Kevin B. Donovan - -
23 Main Street
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Andover, MA 01810
Joseph Stevens & Company LP
33 Maiden Lane
New York, NY 10038 250,000(5) 5.0%
All officers and Directors
as a Group
(4 persons) (1)(2)(3)(4) 1,554,300 33.0%
* Less than 1%.
(1) Does not include the right to receive an additional
1,080,000 shares of common stock if certain earnings tests are met
over the next two years. See "Certain Relationships and Related
Transactions".
(2) Includes currently exercisable warrants to receive
342,000 shares of Common Stock.
(3) Does not include the right to receive and additional
120,000 shares of common stock if certain earnings test are met
over the next two years. See "Certain Relationships and Related
Transactions".
(4) Includes currently exercisable warrants to receive 4,000
shares of common stock.
(5) Consists of shares issuable upon exercise of warrants.
See "Certain Relationships and Related Transactions."
Certain Relationships and Related Transactions
Acquisition of DTI
On February 1, 1995 the Company acquired DTI. Pursuant to the
terms of the Agreement dated January 31, 1995, in exchange for the
merger, the holders of DTI stock received 1,200,000 shares of the
Company's Common Stock as well as the right to receive an aggregate
of 1,200,000 additional shares if certain earnings tests are met
over a period of approximately two years. The Company also
contributed $2,100,000 to DTI of which $1,209,160 was paid to two
DTI Stockholders immediately prior to the consummation of the
Agreement for their DTI stock and to discharge DTI's indebtedness
to them. The consideration paid by the Company was determined by
arm's length negotiations with DTI's Stockholders. The cash
portion of the consideration was funded out of working capital.
Prior to this transaction, there existed no affiliation between the
Company and DTI or any of their respective officers and directors.
The Company has received an opinion from A.S. Goldmen & Co.,
independent investment bankers, that the amount of stock issued as
consideration in the merger is fair to the Company and its
Stockholders from a financial point of view.
The Agreement provides that the Board of Directors of the
Company shall consist of five directors, three of which shall be
nominated by DTI. Mark A. Hanson, the President of Datatrend, Inc,
and John G. Bulman, a director of Datatrend, Inc, have been elected
as directors of the Company. A third DTI nominee, Kevin Donovan,
is proposed herein as a fifth director of the Company. Yitz
Grossman will continue to be a director and Werner Haase was
elected as the second director not affiliated with DTI.
The by-laws of the Company were amended to require, for a
period of four years, the affirmative vote of at least four
directors for any stock issuances, option grants, certain mergers,
acquisitions and dispositions, the
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incurrence of certain debt obligations, and transactions with
affiliates.
Sale of Wholly-Owned Subsidiary
The Company was previously engaged in the business of
marketing a juvenile car seat for children through its wholly-owned
subsidiary Travel Safety Children's Products, Inc. ("Travel"). Due
to engineering challenges with the Company's car seat product, the
Company ceased production and on November 17, 1994 the Company
completed the sale of Travel to Travel Safety Corp. ("Purchaser").
At the closing, Purchaser paid $136,000 to the Company and
Purchaser delivered to the Company a non-negotiable promissory note
in the amount of $640,000 payable over 14 months commencing
December 26, 1994. The note accrues interest at the annual rate of
8.5%. The Company and Travel also entered into a License Agreement
pursuant to which Travel will have the exclusive right to use car
seat patents owned by the Company. The License Agreement has a
term of seven and half years and provides for royalty payments of
$2.00 per product sold, with minimum royalty payments of $37,500
per calendar quarter commencing July 1, 1995. Effective August 1,
2002, the patents will be assigned to Travel, provided that all
royalty and other payments required to be made under the License
Agreement have been made. Travel was also granted the option to
make designated lump sum payments and thereby terminate the License
Agreement and acquire the patents prior to August 1, 2002. There
is no assurance that any sums will be received under the promissory
note or the License Agreement and due to this uncertainty there is
a substantial bad-debt reserve against the principal amount of the
promissory note. Purchaser's President served as a consultant to
the Company and is the inventor and designer of Travel's products.
Travel is currently in arrears with respect to payments due under
the Note and the Company has notified Travel of such default.
Yitz Grossman - Target Capital Corp.
See "Executive Compensation" for a description of a consulting
agreement between the Company and an affiliate of Mr. Yitz
Grossman, who is an officer and director, and of certain warrants
which have been issued to Mr. Grossman.
Martin Chopp - Sun Capital Company
Also under the Agreement, Martin Chopp has resigned as a
director and officer of the Company in consideration of a severance
payment of $200,000. The Company has also entered into a
consulting agreement with Sun Capital Company which expires on
January 31, 2002. Sun Capital Company is a partnership of which
Martin Chopp, the Company's former President and CEO is a general
partner. Under this Agreement, in consideration for services in
connection with the collection of sums due from the Purchaser, Sun
Capital Company is entitled to fees equal to fifteen percent (15%)
of net sums collected pursuant to the Note and the License
Agreement related to the Company's disposition of Travel. Mr.
Chopp was an owner of more than 5% of the Company's outstanding
Common Stock at the effective date of the Agreement.
Joseph Stevens & Company LP Warrants
Pursuant to the Agreement, the Company issued warrants to
purchase up to 250,00 shares of the Company's Common Stock at an
exercise price of $1.00 per share to Joseph Stevens & Company LP
for investment banking services provided to the Company.
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PROPOSAL II
-----------
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO CHANGE THE
COMPANY'S NAME TO DATATREND SERVICES, INC.
The Board of Directors has approved an amendment to the
Certificate of Incorporation which would change
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the name of the Company from Babystar, Inc. to Datatrend Services,
Inc. The Board believes that by using the Company's principal trade
name, Datatrend, in its corporate name, the Company will promote
recognition of the trade name, identify the Company with its
principal products and more accurately reflect in its name what the
Company's business is about. The Company currently plans to
implement the change of name when it would be most cost efficient
with regard using current supplies of packaging, stationery, etc.
The Company anticipates that the cost of publicizing the change of
name will not be significant.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE CHANGE
OF THE COMPANY'S NAME TO DATATREND SERVICES, INC.
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PROPOSAL III
------------
PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION
At the meeting, Stockholders will be asked to adopt an
amendment to the Company's Certificate of Incorporation to increase
the number of authorized shares of the Company's Common Stock to
30,000,000 shares, par value of $0.01 per share (the "Proposed
Stock Amendment"). The Company's Board of Directors has approved
the Proposed Stock Amendment, subject to Stockholder authorization.
At September 21, 1995, the authorized capital of the Company
consisted of 20,000,000 shares of Common Stock, par value $0.01 per
share and 5,000,000 shares of non-designated Preferred Stock, par
value $0.01 per share. As of that date, 4,712,795 shares of Common
Stock were outstanding and no shares of Preferred Stock were
outstanding. In addition, at that date, an aggregate of 5,576,500
shares of Common Stock were reserved for issuance upon: (I)
exercise of options which may be granted under the Company's 1986
Employees' Stock Option Plan (95,000 shares), (ii) exercise of
options which may be granted under the Company's 1989 Non-Qualified
Stock Option Plan (95,000 shares), (iii) exercise of options which
may be granted under the Company's 1993 Stock Option Plan (500,000
shares), (iv) exercise of the Company's outstanding public warrants
(2,106,800), (v) exercise of Warrants granted to the underwriter in
connection with a public offering of the Company's securities
(183,200), (vi) exercise of options issued by the Company to the
investment banker in connection with the Agreement with DTI
(250,000), (vii) issuance of additional shares to Messrs. Hanson
and Bulman pursuant to the Agreement (1,200,000), (viii) exercise of
various other outstanding warrants and options (1,146,500).
Therefore , the Company will have issued or reserved for issuance a
total of 10,289,300 of the 20,000,000 shares of Common Stock
currently authorized for issuance.
If the proposed Common Stock Amendment is adopted by the
Company's Stockholders, the additional shares of Common Stock would
be issuable at any time and from time to time, by action of the
Board of Directors without further authorization from the Company's
Stockholders, except as otherwise required by applicable law or
rules and regulations to which the Company may be subject, to such
persons and for such consideration (but not less than the par value
thereof) as the Board of Directors determines.
After taking into account the currently issued and reserved
shares of Common Stock discussed above, the Company would have less
than 10,000,000 shares of Common Stock authorized which are not
issued or reserved for issuance. The Company's Board of Directors
believes that the authorization of the additional shares of Common
Stock are in the best interests of the Company and its Stockholders
so that sufficient shares will be readily available for use, if
feasible, in acquisitions, in raising additional capital and for
grants as incentives to employees, officers, directors and
consultants of the Company.
From time to time the Company may consider acquisitions or
other transactions which may require the issuance of shares of
Common Stock or Preferred Stock. Except as provided in the
Agreement, the Company
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presently has no understandings or arrangements which would require
the issuance of any of the additional 10,000,000 shares of Common
Stock which are proposed to be authorized. However, management
believes that the increase in the number of authorized shares of
Common Stock is in the best interest of the Company and its
Stockholders since additional shares of Common Stock will provide
the Company with the flexibility of having a broader choice in the
type and number of equity securities available to it for the above
and other corporate purposes. Due to the Board of Directors'
discretion in connection with the issuance of additional shares of
Common Stock to be issued in a private placement, it may, under
certain circumstances, possess timing and other advantages in
responding to a tender offer or other attempt to gain control of the
Company, which may make such attempts more difficult and less
attractive. For example, issuance of additional shares would
increase the number of shares outstanding and could necessitate the
acquisition of a greater number of shares by a person making a
tender offer and could make such acquisition more difficult since
the recipient of such additional shares may favor the incumbent
management. Moreover, these advantages give the Board of Directors
the ability to provide any such holders with a veto power over
actions proposed to be taken by the holders of the Company's Common
Stock. This could have the effect of insulating existing management
from removal, even if it is in the best interest of the common
stockholders. Management of the Company is not aware of any
existing or threatened efforts to obtain control of the Company.
The foregoing is only a summary of the Proposed Stock
Amendment and is not intended to be complete. Stockholders are
urged to read carefully the provisions of the Proposed Stock
Amendment, the complete text of which is attached as Exhibit B to
this Proxy Statement. The foregoing summary is qualified in its
entirety by reference to such complete text.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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PROPOSAL IV
-----------
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Subject to approval by the Stockholders, the Board of
Directors has appointed Richard A. Eisner & Company as the
independent public accountants to audit the financial statements of
the Company for the fiscal year ending December 31, 1995. Richard
A. Eisner & Company also served as the Company's auditors for the
fiscal years ended December 31, 1993 and 1994. It is expected that
a representative of Richard A. Eisner & Company will be present at
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR RATIFICATION OF THE
APPOINTMENT OF RICHARD A. EISNER & COMPANY AS INDEPENDENT
ACCOUNTANTS
-------
PROPOSAL V
----------
ADOPTION OF 1995 STOCK OPTION PLAN
The Board has determined that the Company should adopt a new
Stock Option Plan in order to make options available to employees,
officers, directors, consultants and others who render services to
the Company. Accordingly, the Board has adopted the 1995 Stock
Option Plan (the "1995 Plan") and recommends to the Stockholders
that the 1995 Plan be approved. A summary of the Company's
existing 1986, 1989 and 1993 Stock Option Plans (the "Current
Plans") and options outstanding thereunder is set forth below.
There are 690,000 shares available for grant
9
<PAGE>
under the Current Plans.
The Current Plans
The 1986 Employees' Stock Option Plan
-------------------------------------
In 1986, the Company adopted the 1986 Employees' Stock Option
Plan (the "1986 Plan") which provided for the grant of options to
purchase an aggregate of 500,000 shares of the Company's Common
Stock. A reverse stock split by the Company in 1993 reduced the
shares available under the 1986 Plan to 95,000. All options
previously granted under the 1986 Plan have expired. No options
have been exercised under the 1986 Plan. Therefore, 95,000 options
(on a post-reverse split basis) are available for grant under this
Plan. The 1986 Plan and any options granted thereunder will expire
no later than 1996. The 1986 Plan is administered by the Company's
Board of Directors.
The 1989 Non-Qualified Stock Option Plan
----------------------------------------
In 1989, the Company adopted the 1989 Non-Qualified Stock
Option Plan (the "1989 Plan"), pursuant to which options to
purchase shares of the Company's Common Stock and/or stock
appreciation rights ("SARs") may be granted to key employees,
including officers and directors, of the Company and its present
and future subsidiaries. All options previously granted under the
1989 Plan have expired and are no longer exercisable. No options
have been exercised under the 1989 Plan. Therefore, 95,000 (on a
post-reverse split basis) options are available for grant under
this Plan. The 1989 Plan and any options granted thereunder will
expire no later than 1999. The 1989 Plan is administered by the
Company's Board of Directors.
The 1993 Stock Option Plan
--------------------------
In 1993, the Company adopted the 1993 Stock Option Plan (the
"1993 Plan"), pursuant to which options to purchase shares of the
Company's Common Stock and/or stock appreciation rights ("SARs")
may be granted to key employees, including officers and directors,
of the Company and its present and future subsidiaries. No options
have been granted or exercised under the 1993 Plan. Therefore,
500,000 options are available for grant under this Plan. The 1993
Plan is administered by the Company's Board of Directors.
Summary of the 1995 Plan
The Company may grant to its officers, key employees and
others who render services to the Company, options to purchase
("Options") up to 500,000 of the Company's Common Stock at a price
which may not be less than the fair market value per share in the
case of incentive stock options or 85% of fair market value in the
case of non-qualified options for such stock on the date of the
granting of the Option. As of September 18, 1995, the closing bid
price as reported by NASDAQ for a share of Common Stock was $3.31.
Payment of this price shall be made in cash, or, with the consent
of the Board, in whole or in part, in shares of Common Stock. If
an option granted under the 1995 Plan shall expire, terminate or be
canceled for any reason without being exercised in full, the
corresponding number of unpurchased shares shall again be available
for the purposes of the 1995 Plan. Options may be granted in the
form of incentive stock options or options which do not qualify for
treatment as incentive stock options.
The 1995 Plan will be administered by the Board of Directors
or a committee of the Board (the "Board"). The Board determines
the persons who are to be granted Options based upon the
contribution of such persons to the management and growth of the
Company. No Option may be exercised after the expiration of 10
years from the date of grant. No Option may be granted under the
1995 Plan after July 18, 2005.
Incentive stock options are also subject to the following
limitations: (I) the aggregate fair market value (determined at the
time an option is granted) of stock with respect to which incentive
stock options are exercisable
10
<PAGE>
for the first time by an optionee during any calendar year (under
all such plans of the Company, its parent or subsidiary) shall not
exceed $100,000, and (ii) if the individual to whom the incentive
stock options were granted is considered as owning stock possessing
more than 10% of the total combined voting power of all classes of
stock of the Company, then (A) the option price at the time of grant
may not be less than 110% of the fair market value per share for
such Common Stock, and (B) the option period must be no more than
five years from the date of grant.
Unless otherwise determined by the Board or by other
provisions of the Plan, upon the granting of any Option such Option
may be immediately exercisable with respect to 100% of the shares
subject to the Option. The Board may, in its discretion, (A)
provide for the holding of such shares of Common Stock in escrow
for a period not exceeding five years, or (B) impose other
restrictions on the vesting of any Option or the vesting of any
shares of Common Stock that an Optionee receives upon exercise of
any Option; provided that any and all such restrictions shall lapse
if there is a sale of (A) substantially all of the assets or (B) 50
percent or more of the voting securities of the Company (excluding
for this purpose Company stock sold in a primary or secondary
public offering). Any restrictions the Board imposes on an Option
pursuant to this paragraph shall be specified in the stock option
agreement governing such Option.
An individual whose employment terminates by reason other than
death may generally exercise an Option within a period after
termination to be designated by the Board, or if termination is by
reason of death, within the twelve month period after such
termination, and then only if and to the extent that such Option
was exercisable at the date of termination of employment.
The Board of Directors may, at any time, alter, suspend or
terminate the 1995 Plan, except that the Board of Directors may
not, without further approval of the Stockholders, (1) increase the
maximum number of shares for which Options may be granted under the
1995 Plan or which may be acquired by an individual employee, (2)
decrease the minimum purchase price for shares of Common Stock to
be issued upon exercise of Options or (3) change the class of
persons eligible to receive Options. Except in limited
circumstances, the Board may not make any change which would have
a material adverse affect upon any Option previously granted unless
the consent of the Options is obtained. No person may be divested
of ownership of shares already issued under the 1995 Plan.
The foregoing summary of the 1995 Plan is qualified in its
entirety by, and reference is hereby made to, the 1995 Plan, a copy
of which is attached hereto as Exhibit B.
Tax Matters
The following material is based on discussions with counsel.
No opinion of counsel has been obtained.
The grant or exercise of an incentive stock option will not
generally cause recognition of income by the Optionee; however, the
amount by which the fair market value of a share of Common Stock at
the time of exercise of an incentive stock option exceeds the
option price, is a "tax preference item" for purposes of the
alternative minimum tax. In the event of a sale of the shares
received upon exercise of an incentive stock option more than two
years from the date of grant and more than one year from the date
of exercise, any appreciation of the shares received above the
exercise price should qualify as long-term capital gain. However,
if shares of Common Stock acquired pursuant to the exercise of an
incentive stock option are sold by the Optionee before the
completion of such holding periods so much of the gain as does not
exceed the difference between the option price and the lesser of
the fair market value of the shares at the date of exercise or the
fair market value at the date of disposition will be taxable as
ordinary income for the taxable year in which the sale occurs. Any
additional gain realized on the sale should qualify as capital
gain.
The grant of an Option that is not an incentive stock option
(a "non-qualified option") should not result in
11
<PAGE>
recognition of income by the Optionee. Upon exercise of a
non-qualified option, the excess of the fair market value of the
shares on the exercise date over the option price should be
considered compensation taxable as ordinary income to the employee.
If the Optionee is subject to the restrictions of Section 16(b),
income will be recognized at the time the restrictions lapse and
should be measured by the excess of the fair market value of the
shares at such time over the option price unless the Optionee elects
to be taxed at the time of exercise. In the event of a sale of the
shares, any appreciation after the date of exercise or lapse of the
restriction of Section 16(b), as the case may be, should qualify the
capital gain.
In connection with incentive stock options and non-qualified
options, the Company will be entitled to a deduction for federal
income tax purposes at the same time and in the same amount as the
ordinary income recognized by the employee, provided that any
Federal income tax withholding requirements are satisfied. If
applicable holding period requirements in connection with an
incentive stock option are not satisfied, no deduction will be
available to the Company.
Board of Directors Recommendation
The proposed 1995 Plan is necessary because the Board of
Directors believes that by increasing the number of shares, which
may be issued under the Current Plans by authorizing another
500,000 shares under the 1995 Plan, it will advance the interests
of the Company by strengthening its ability to attract and obtain
key people in its employ and to furnish incentive to eligible
employees. The Board of Directors further believes that the
additional shares made available under the 1995 Plan will be
necessary to replace shares available under the 1986 and 1989 Plans
which will expire in 1996 and 1999 respectively, as well as to
replace the shares effectively rendered unavailable under the 1986
and 1989 Plans as a result of the reverse stock split which reduced
the shares reserved under each plan from 500,000 shares to 95,000
shares on a post reverse stock split basis.
The Board of Directors recommends a vote for this proposal. In
considering the Board's recommendation, Stockholders should be
aware that members of the Board may benefit from approval of the
proposal and, therefore, have an inherent conflict of interest.
The affirmative vote of a majority of the shares cast at the Annual
Meeting will be required to authorize the proposal to adopt the
1995 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
VOTE REQUIRED
Under Delaware law, the affirmative vote of the holders of a
majority of the shares of stock of the Company entitled to notice
of, and to vote at, the Annual Meeting is required to adopt the
proposed change in Company name, to increase the amount of
authorized Common Stock. The affirmative vote of a majority of the
votes cast at the Annual Meeting is required to approve the
selection of auditors and to adopt the 1995 Stock Option Plan. The
affirmative vote of a plurality of the votes cast at the Annual
Meeting is required to elect directors. Abstentions will not be
counted as affirmative votes. The current members of the Board of
Directors presently hold voting authority for Common Stock
representing approximately 26% of the total number of votes
eligible to be cast at the Annual Meeting. The members of the
Board of Directors have indicated their intention to vote
affirmatively on all of the proposals.
EXPENSE OF SOLICITATION
The cost of soliciting proxies, which also includes the
preparation, printing and mailing of this Proxy Statement, will be
borne by the Company. Solicitation will be made by the Company
primarily through the mail. The Company may also retain the
services of a proxy solicitation firm. The Company has not made
any arrangements to do so as of the date of this Proxy Statement,
and does not presently have estimates as to the cost of such
services.
12
<PAGE>
Directors, officers and regular employees of the Company
may solicit proxies personally, by telephone or telegram. The
Company will request brokers and nominees to obtain voting
instructions of beneficial owners of stock registered in their
names and will reimburse them for any expenses incurred in
connection therewith.
PROPOSALS OF STOCKHOLDERS
Stockholders of the Company who intend to present a proposal
for action at the 1996 Annual Meeting of Stockholders of the
Company must notify the Company's management of such intention by
notice received at the Company's principal executive offices not
later than May 24, 1996, for such proposal to be included in the
Company's proxy statement and form of proxy relating to such
Meeting.
FINANCIAL STATEMENTS
The Company's Form 10-KSB for the year ended December 31, 1994
and Form 10-QSB for the six months ended June 30, 1995 are being
delivered with this Proxy Statement to the Company's Stockholders.
The financial statements and management's discussion and analysis
thereof contained in those documents are incorporated herein by
reference.
OTHER MATTERS
The Board of Directors knows of no matters that are expected
to be presented for consideration at the Annual Meeting which are
not described herein. However, if other matters properly come
before the Meeting, it is intended that the persons named in the
accompanying proxy will vote thereon in accordance with the best
judgment.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS
REQUIRED IF MAILED IN THE UNITED STATES. A PROMPT RETURN OF YOUR
PROXY CARD WILL BE APPRECIATED AS IT WILL SAVE THE EXPENSE OF
FURTHER MAILINGS.
By Order of the Board of Directors
Yitz Grossman, Secretary
13
<PAGE>
BABYSTAR, INC.
1995 STOCK OPTION PLAN
There is hereby established a 1995 Stock Option Plan (the
"Plan"). The Plan provides for the grant to certain employees and
others who render services to Babystar, Inc. or its subsidiaries
(the "Company") of options ("Options") to purchase shares of common
stock of the Company ("Common Stock").
i. Purpose: The purpose of the Plan is to provide
--------
additional incentive to the officers, employees,
and others who render services to the Company, who
are responsible for the management and growth of
the Company, or otherwise contribute to the conduct
and direction of its business, operations and
affairs. It is intended that Options granted under
the Plan strengthen the desire of such persons to
join and remain in the employ of the Company and
stimulate their efforts on behalf of the Company.
ii. The Stock: The aggregate number of shares of
----------
Common Stock which may be subject to Options shall
not exceed 500,000. Such shares may be either
authorized and unissued shares, or treasury shares.
If any Option granted under the Plan shall expire,
terminate or be cancelled for any reason without
having been exercised in full, the corresponding
number of unpurchased shares shall again be
available for the purposes of the Plan.
iii. Types of Options. Options granted under the Plan
-----------------
shall be in the form of (i) incentive stock options
("ISO's"), as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the
"Code") or (ii) non-statutory options which do not
qualify under such Section ("NSO's"), or both, in
the discretion of the Board of Directors or any
committee appointed by the Board (each, the
"Committee"). The status of each Option shall be
identified in the Option Agreement.
iv. Eligibility:
------------
(1) ISO's may be granted to such employees
(including officers and directors who are
employees) of the Company as the Committee
shall select from time to time.
(2) NSO's may be granted to such employees
(including officers and directors) of the
Company, and to other persons who render
services to the Company, as the Committee
shall select from time to time.
v. General Terms of Options:
-------------------------
(1) Option Price. The price or prices per share
-------------
of Common Stock to be sold pursuant to an
Option (the "exercise price") shall be such as
shall be fixed by the Committee but shall in
any case not be less than:
(a) the fair market value per share for such
Common Stock on the date of grant in the
case of ISOs other than to a 10%
Shareholder,
(b) 110% of the fair market value per share
for such Common Stock on the date of
grant in the case of ISOs to a 10%
Shareholder, and
(c) 85% of the fair market value on the date
of grant in the case of NSO's.
A "10% Shareholder" means an individual who within the meaning of
Section 422(b)(6) of the Code owns stock possessing more than 10
percent of the total combined voting power of all classes of stock
of the Company or of its parent or any subsidiary corporation.
(2) Period of Option Vesting. The Committee
-------------------------
shall determine for each Option the period
during which such Option shall be exercisable
in whole or in part, provided that no ISO to a
10% Shareholder shall be exercisable more than
five years after the date of grant.
<PAGE>
(3) Special Rule for ISO's. The aggregate fair
-----------------------
market value (determined at the time the ISO
is granted) of the stock with respect to which
ISOs are exercisable for the first time by an
Optionee during any calendar year (under all
such plans of the Company, its parent or
subsidiary) shall not exceed $100,000, and any
excess shall be considered an NSO.
(4) Effect of Termination of Employment.
------------------------------------
(a) The Committee shall
determine for each Option the extent,
if any, to which such Option shall
be exercisable in the event of the
termination of the Optionee's
employment with or rendering of other
services to the Company.
(b) However, any such Option which is an
ISO shall in all events lapse unless
exercised by the Optionee:
(i) prior to the 89th day after the
date on which employment terminated,
if termination was other than by
reason of death; and
(ii) within the twelve-month period next
succeeding the death of the
Optionee, if termination is by
reason of death.
(c) The Committee shall have the right, at
any time, and from time to time, with the
consent of the Optionee, to modify the
lapse date of an Option and to convert an
ISO into an NSO to the extent that such
modification in lapse date increases the
life of the ISO beyond the dates set
forth above or beyond dates otherwise
permissible for an ISO.
(5) Payment for Shares of Common Stock. Upon
-----------------------------------
exercise of an Option, the Optionee shall make
full payment of the Option Price:
(a) in cash, or,
(b) with the consent of the Committee and to
the extent permitted by it:
(i) with Common Stock of the Company
valued at fair market value on date
of exercise, but only if held by the
Optionee for a period of time
sufficient to prevent a pyramid
exercise that would create a charge
to the Company's earnings,
(ii) with a full recourse interest
bearing promissory note of the
Optionee, secured by a pledge of the
shares of Common Stock received upon
exercise of such Option, and having
such other terms and conditions as
determined by the Committee,
(iii) by delivering a properly
executed exercise notice together
with irrevocable instructions to a
broker to sell shares acquired upon
exercise of the Option and promptly
to deliver to the Company a portion
of the proceeds thereof equal to the
exercise price, or
(iv) any combination of any of the
foregoing.
(6) Option Exercises. Options shall be exercised
-----------------
by submitting to the Company a signed copy of
notice of exercise in a form to be supplied by
the Company. The exercise of an Option shall
be effective on the date on which the Company
receives such notice at its principal
corporate offices. The Company may cancel such
exercise in the event that payment is not
effected in full, subject to the terms
<PAGE>
of Section 1(e) above.
(7) Post-termination Exercises. The exercise of
---------------------------
any option after termination of employment
shall be subject to satisfaction of the
conditions precedent that the Optionee neither
(i) takes other employment or renders services
to others without the written consent of the
Company, or (ii) conducts himself or herself
in a manner adversely affecting the Company.
(8) Non-Transferability of Option. No Option
------------------------------
shall be transferable by the Optionee or
otherwise than by will or by the laws of
descent and distribution. During the
Optionee's lifetime, such Option shall be
exercisable only by such Optionee. If an
Optionee should die while in the employ of the
Company, the Option theretofore granted to the
Optionee, to the extent then otherwise
exercisable, shall be exercisable only by the
estate of the Optionee or by a person who
acquired the right to exercise such Option by
bequest or inheritance or otherwise by reason
of the death of the Optionee.
vi. Other Plan Terms.
(1) Number of Options which may be Granted to,
------------------------------------------
and Number of Shares of Common Stock which may
----------------------------------------------
be Acquired by Employees.
-------------------------
(a) The Committee may grant more than one
Option to an individual, and, subject to
the requirements of Section 422 of the
Code, with respect to ISOs, such Option
may be in addition to, in tandem with, or
in substitution for, Options previously
granted under the Plan or of another
corporation and assumed by the Company.
(b) The Committee may permit the voluntary
surrender of all or a portion of any
Option granted under the Plan or
otherwise to be conditioned upon the
granting to the employee of a new Option
for the same or a different number of
shares of Common Stock as the Option
surrendered, or may require such
voluntary surrender as a condition
precedent to a grant of a new Option to
such employee. Such new Option shall be
exercisable at the price, during the
period, and in accordance with any other
terms or conditions specified by the
Committee at the time the new Option is
granted, all determined in accordance
with the provisions of the Plan without
regard to the price, period of exercise,
or any other terms or conditions of the
Option surrendered.
(2) Period of Grant of Options. Options under
---------------------------
the Plan may be granted at any time after the
Plan has been approved by the stockholders of
the Company. However, no Option shall be
granted under the Plan after September 30,
2005.
(3) Effect of Change in Common Stock. In the
---------------------------------
event of a reorganization, recapitalization,
liquidation, stock split, stock dividend,
combination of shares, merger or
consolidation, or the sale, conveyance, lease
or other transfer by the Company of all or
substantially all of its property, or any
change in the corporate structure or shares of
common stock of the Company, pursuant to any
of which events the then outstanding shares of
the common stock are split up or combined or
changed into, become exchangeable at the
holder's election for, or entitle the holder
thereof to other shares of common stock, or in
the case of any other transaction described in
Section 424(a) of the Code, the Committee may
change the number and kind of shares of Common
Stock available under the Plan and any
outstanding Option (including substitution of
shares of common stock of another corporation)
and the price of any Option and the fair
market value determined under this Plan in
such manner as it shall deem equitable in its
sole discretion.
<PAGE>
(4) Optionees not Shareholders. An Optionee or a
---------------------------
legal representative thereof shall have none
of the rights of a stockholder with respect to
shares of Common Stock subject to Options
until such shares shall be issued or
transferred upon exercise of the Option.
vii. Option Agreement. The Company shall effect the
-----------------
grant of Options under the Plan, in accordance with
determinations made by the Committee, by execution
of instruments in writing in a form approved by the
Committee. Each Option shall contain such terms
and conditions (which need not be the same for all
Options, whether granted at the time or at
different times) as the Committee shall deem to be
appropriate and not inconsistent with the
provisions of the Plan, and such terms and
conditions shall be agreed to in writing by the
Optionee.
viii. Certain Definitions.
--------------------
(1) Fair Market Value. As used in the Plan, the
------------------
term "fair market value" shall mean as of any
date:
(a) if the Common Stock is not traded on any
over-the-counter market or on a national
securities exchange, the value determined
by the Committee using the best available
facts and circumstances,
(b) if the Common Stock is traded in the
over-the-counter market, based on most
recent closing prices for the Common
Stock on the date the calculation thereof
shall be made, or
(c) if the Common Stock is listed on a
national securities exchange, based on
the most recent closing prices for the
Common Stock of the Company on such
exchange.
(2) Subsidiary and Parent. The term "subsidiary"
----------------------
and "parent" as used in the Plan shall have
the respective meanings set forth in Sections
424(f) and (e) of the Internal Revenue Code.
ix. Not an Employment Contract. Nothing in the Plan or
---------------------------
in any Option or stock option agreement shall
confer on any Optionee any right to continue in the
service of the Company or any parent or subsidiary
of the company or interfere with the right of the
Company to terminate such Optionee's employment or
other services at any time.
x. Withholding Taxes:
------------------
(a) Whenever the Company proposes or is required to
issue or transfer shares of Common Stock under the Plan, the
Company shall have the right to require the Optionee to remit to
the Company an amount sufficient to satisfy any Federal, state
and/or local withholding tax requirements prior to the delivery of
any certificate or certificates for such shares. Alternatively,
the Company may, in its sole discretion from time to time, issue or
transfer such shares of Common Stock net of the number of shares
sufficient to satisfy the withholding tax requirements. For
withholding tax purposes, the shares of Common Stock shall be
valued on the date the withholding obligation is incurred.
(b) In the case of shares of Common Stock that an
Optionee receives pursuant to his exercise of an Option which is an
ISO, if such Optionee disposes of such shares of Common Stock
within two years from the date of the granting of the ISO or within
one year after the transfer of such shares of Common Stock to him,
the Company shall have the right to withhold from any salary,
wages, or other compensation for services payable by the Company to
such Optionee, amounts sufficient to satisfy any withholding tax
obligation attributable to such disposition.
(c) In the case of a disposition described in
Section (b), the Optionee shall give written notice to the Company
of such disposition within 30 days following the disposition within
30 days following the disposition, which notice shall include such
information as the Company may reasonably request to effectuate the
provisions hereof.
<PAGE>
xi. Agreements and Representations of Optionees:
--------------------------------------------
As a condition to the exercise of an Option, unless
counsel to the Company opines that it is not necessary under the
Securities Act of 1933, as amended, and the pertinent rules
thereunder, as the same are then in effect, the Optionee shall
represent in writing that the shares of Common Stock being
purchased are being purchased only for investment and without any
present intent at the time of the acquisition of such shares of
Common Stock to sell or otherwise dispose of the same.
xii. Administration of the Plan:
---------------------------
(1) The Plan shall be administered by the
Committee. Subject to the express provisions
of the Plan, the Committee shall have
authority, in its discretion, to determine the
individuals to receive Options, the times when
they shall receive them and the number of
shares of Common Stock to be subject to each
Option, and other terms relating to the grant
of Options. Directors, including those that
may be members of the Committee, shall be
eligible to receive Options under the Plan.
(2) Subject to the express provisions of the
Plan, the Committee shall have authority to
construe the respective option agreements and
the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to
determine the terms and provisions of the
respective option agreements (which need not
be identical) and, as specified in this Plan,
the fair market value of the common stock, and
to make all other determinations necessary or
advisable for administering the Plan. The
Committee may correct any defect or supply any
omission or reconcile any inconsistency in the
Plan or in any option agreement in the manner
and to the extent it shall deem expedient to
carry it into effect, and it shall be the sole
and final judge of such expediency. The
determinations of the Committee on the matters
referred to in this Section 12 shall be
conclusive.
(3) The Committee may, in its sole discretion,
and subject to such terms and conditions as it
may adopt, accelerate the date or dates on
which some or all outstanding Options may be
exercised.
(4) The Committee may require that any Option
Shares issued be legended as necessary to
comply with applicable federal and state
securities laws.
xiii. Amendment and Discontinuance of the Plan:
-----------------------------------------
(1) The Board of Directors of the Company may at
any time alter, suspend or terminate the Plan,
but no change shall be made which will have a
material adverse effect upon any Option
previously granted, unless the consent of the
Optionee is obtained; provided, however, that
the Board of Directors may not without further
approval of the shareholders, (i) increase the
maximum number of shares of Common Stock for
which Options may be granted under the Plan or
which may be purchased by an individual
Optionee, (ii) decrease the minimum option
price provided in the Plan, or (iii) change
the class of persons eligible to receive
Options.
(2) The Company intends that Options designated
by the Committee as ISO's shall constitute
ISOs under Section 422 of the Code. Should
any provision in this Plan for ISO's not be
necessary in order to so comply or should any
additional provisions be required, the Board
of Directors of the Company may amend the Plan
accordingly without the necessity of obtaining
the approval of the shareholders of the
Company.
xiv. Other Conditions: If at any time counsel to the
-----------------
Company shall be of the opinion that any sale or
delivery of shares of Common Stock pursuant to an
Option granted under the Plan is or may in the
circumstances be unlawful under the statutes, rules
or regulations of any applicable jurisdiction, the
Company shall have no obligation to make such sale
or
<PAGE>
delivery, and the Company shall not be required
to make any application or to effect or to maintain
any qualification or registration under the
Securities Act of 1933 or otherwise with respect to
shares of Common Stock or Options under the Plan,
and the right to exercise any such Option may be
suspended until, in the opinion of said counsel,
such sale or delivery shall be lawful.
At the time of any grant or exercise of any Option, the
Company may, if it shall deem it necessary or desirable for any
reason connected with any law or regulation of any governmental
authority relative to the regulation of securities, condition the
grant and/or exercise of such Option upon the Optionee making
certain representations to the Company and the satisfaction of the
Company with the correctness of such representations.
13. Approval; Effective Date; Governing Law. The Plan
----------------------------------------
was adopted by the Board of Directors on ____, 1995 and was
approved by the stockholders of the Company on October 26, 1995.
This Plan shall be interpreted in accordance with the internal laws
of the State of New York.
<PAGE>
Exhibit A
---------
BABYSTAR, INC.
Annual Meeting of Stockholders - November 14, 1995
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Mark A. Hanson and Yitz
Grossman, and each of them, proxies with full power of
substitution, to vote all Common Shares of BABYSTAR, INC., owned by
the undersigned at the Annual Meeting of Stockholders of BABYSTAR,
INC., to be held on November 14, 1995 and at any adjournments
thereof, hereby revoking any proxy heretofore given. The
undersigned instructs such proxies to vote:
I. ELECTION OF DIRECTORS
FOR all nominees listed below (except as marked to the
contrary below)
-----
WITHHOLD AUTHORITY
to vote for all nominees listed below -----
(Instruction: To withhold authority for any individual
nominee, strike a line through the nominee's name in the list
below)
Mark A. Hanson Yitz Grossman
John G. Bulman Werner Haase
Kevin Donovan
II. PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO
CHANGE THE COMPANY'S NAME TO DATATREND SERVICES, INC.
FOR AGAINST ABSTAIN
----- ----- -----
III. PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF
INCORPORATION TO INCREASE COMMON STOCK AUTHORIZED TO
30,000,000 SHARES
FOR AGAINST ABSTAIN
----- ----- -----
IV. PROPOSAL FOR RATIFICATION OF APPOINTMENT OF INDEPENDENT
ACCOUNTANTS
FOR AGAINST ABSTAIN
----- ----- -----
V. PROPOSAL FOR ADOPTION OF 1995 STOCK OPTION PLAN
FOR AGAINST ABSTAIN
----- ----- -----
Management recommends voting FOR Items I, II ,III, IV and V.
<PAGE>
Either of the proxies or their respective substitutes, who
shall be present and acting shall have and may exercise all the
powers hereby granted.
THE COMMON SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR
ITEMS I, II, III, IV AND V UNLESS CONTRARY INSTRUCTIONS ARE GIVEN.
Said proxies will use their discretion with respect to any other
matters which properly come before the meeting.
Dated: , 1995
- - ---------------------------------- -----------------------
- - ---------------------------------- -----------------------
(Please date and sign exactly
as name appears on the mailing
envelope. For joint accounts,
each joint owner should sign.
Executors, administrators,
trustees, etc., should also so
indicate when signing.)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PLEASE SIGN AND RETURN THE PROXY IN THE ENCLOSED ENVELOPE.
