UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 240.14a-12
PUBLICARD, INC.
(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)(4) and 0-
11.
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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):
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the offsetting fee was paid previously. Identify the previous
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November 11, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of
Shareholders of PubliCARD, Inc. to be held on Monday, December 13, 1999 at
the Peninsula Hotel in New York, New York. The meeting will begin with a
report on company operations, followed by discussion and voting on the
matters set forth in the attached notice of the 1999 Annual Meeting of
Shareholders.
As you know, PubliCARD has embarked on an exciting new strategy
designed to capitalize on the worldwide explosion in the use of chip card
technology and this meeting will include an exhibition of the Company's
many chip card based technology products. This exhibition will be open one
hour before and after the formal proceedings associated with the Annual
Meeting.
You will be able to get hands on experience with many of the
innovative products and services your company is developing. Our staff
will be on hand to explain our technology and its many applications. For
example, you will be able to surf the web protected by SmartGuardian , our
award-winning web filtering product designed for the public library and
school markets. You will see first hand how PubliCARD is working with
industry leading companies in revolutionizing the cable set top box
market, and see how we are helping retailers generate customer loyalty and
sales through the use of chip technology.
These are only a few examples of our products and I would urge you to
attend the Annual Meeting to get an understanding of the breadth and depth
of the technology that we are developing and deploying today.
Whether or not you plan to attend the Annual Meeting, please complete,
sign, date and return the accompanying proxy card in the enclosed
envelope. We look forward to seeing you at the Annual Meeting.
Sincerely,
/s/ Harry I. Freund
Harry I. Freund
Chairman
Notice of 1999 Annual Meeting of Shareholders
November 11, 1999
To the Shareholders of PubliCARD, Inc.
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Shareholders of
PubliCARD, Inc. (the "Company") will be held at the Peninsula Hotel, 700
Fifth Avenue, New York, New York on Monday, December 13, 1999 at 10:00 a.m.
for the following purposes:
1. To elect seven directors to hold office until the annual meeting of
shareholders to be held in 2000 and until their respective successors
shall be duly elected and qualified;
2. To consider and act upon a proposal to approve the Company's 1999
Long-Term Incentive Plan.
3. To consider and act upon a proposal to approve the Company's 1999 Stock
Option Plan for Non-employee Directors.
4. To ratify the selection of Arthur Andersen LLP as auditors for the fiscal
year ending December 31, 1999; and
5. To transact such other business as may properly be brought before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 28,
1999, as the record date for the determination of shareholders entitled to
notice of and to vote at the meeting and any adjournments.
By Order of the Board of Directors
/s/ Antonio L. Delise
Antonio L. DeLise, Secretary
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS
OF THE NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN AND MAIL THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE EVEN IF YOU INTEND TO BE PRESENT
AT THE MEETING. RETURNING THE PROXY WILL NOT LIMIT YOUR RIGHT TO VOTE IN
PERSON OR TO ATTEND THE ANNUAL MEETING, BUT WILL ENSURE YOUR REPRESENTATION
IF YOU CANNOT ATTEND. THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER,
BANK OR OTHER NOMINEE AND YOU WISH TO ATTEND AND VOTE AT THE MEETING, YOU
MUST OBTAIN FROM SUCH BROKER, BANK OR OTHER NOMINEE, A PROXY ISSUED IN YOUR
NAME.
PUBLICARD, INC.
620 Fifth Avenue
Rockefeller Center
New York, NY 10020
(212) 489-8021
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
December 13, 1999
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of PubliCARD, Inc., a Pennsylvania
corporation (the "Company" or "PubliCARD"), to be voted at the 1999 Annual
Meeting of Shareholders of the Company referred to in the foregoing Notice
(the "Annual Meeting"). This proxy statement and accompanying material are
being mailed on or about November 16, 1999.
RECORD DATE AND VOTING SECURITIES
Only holders of the Company's common stock (the "Common Stock") of record
at the close of business on October 28, 1999 (the "Record Date") are entitled
to notice of and to vote at the meeting. On that date, the Company had
outstanding and entitled to vote 21,747,309 shares of Common Stock, par value
$.10 per share. Each outstanding share of Common Stock entitles the record
holder to one vote on each matter.
VOTING PROCEDURES
In order for any business to be conducted at the Annual Meeting, holders
of more than 50% of the shares entitled to vote must be represented at the
Annual Meeting, either in person or by proxy. Abstentions and broker
non-votes are each included in the determination of the number of shares
present and voting. Each is tabulated separately. Abstentions and broker
non-votes are counted in tabulations of the votes cast on proposals presented
to shareholders, and have the same affect as a vote against a particular
proposal.
All proxies received pursuant to this solicitation will be voted, and,
where a choice is specified as to the proposals described in the foregoing
Notice, they will be voted in accordance with that specification. If no
choice is specified with respect to any proposal, the proxy will be voted in
favor of such proposal. Shareholders who execute proxies may revoke them at
any time before they are voted either by delivering to the Secretary of the
Company written notice of revocation or a duly executed proxy bearing a later
date, or by attending the Annual Meeting and voting in person.
COST OF SOLICITING MANAGEMENT PROXIES
The entire cost of soliciting management proxies will be borne by the
Company. Proxies will be solicited by mail and may be solicited personally
by directors, officers or regular employees of the Company, who will not be
compensated for their services. In order to support the Board of Directors'
nominees and the other proposals herein and to help ensure the presence of
a quorum, the Company has retained the services of D.F. King & Co., Inc. as
proxy solicitor to assist in the solicitation of proxies for the Annual
Meeting. The fees payable to D.F. King & Co., Inc. in connection with this
solicitation are estimated to be $10,000. The Company will reimburse banks,
brokerage firms and other custodians, nominees and fiduciaries for reasonable
expenses incurred in sending proxy material to their principals and obtaining
their proxies. Accompanying this proxy statement is a copy of the Company's
1998 Annual Report and the Company's quarterly report for the fiscal quarter
ended September 30, 1999.
SHAREHOLDER PROPOSALS
Any proposals by shareholders of the Company intended to be included in
the Company's Proxy Statement relating to the Company's 2000 Annual Meeting
of Shareholders must be in writing and received by the Company at its
principal executive office no later than February 10, 2000.
PROPOSAL 1.
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors are to be elected to hold office
until the next annual meeting of shareholders and until their respective
successors have been elected and qualified. In order to be elected, each
nominee must receive a plurality of the votes cast at the Annual Meeting.
Unless otherwise directed, proxies given to the persons named in the
enclosed proxy pursuant to this solicitation will be voted for the election
as directors of Messrs. Freund, Goldsmith, Cohn, Herman, Rottinghuis,
Schafran and Tyabji. If any such nominee should become unavailable for any
reason, which the Board of Directors has no reason to anticipate, the proxy
holders reserve the right to substitute another person of their choice in his
place.
The Company currently has six directors, five of whom were elected at the
Annual Meeting of Shareholders held on June 14, 1998. Mr. Tyabji became a
director by action of the Board of Directors on March 16, 1999. All
directors serve until the next election of directors or until their
successors have been elected and have qualified. All of the persons named
in the enclosed proxy are currently directors of the Company except Mr.
Rottinghuis who is a nominee to the Board of Directors. See "Employment and
Change in Control Agreements."
Set forth below as to each director nominated for reelection as a
director of the Company is information regarding age (as of October 31,
1999), position with the Company, principal occupation, business experience,
period of service as a director of the Company and directorships currently
held.
HARRY I. FREUND: Age 59; Director of PubliCARD since April 12, 1985,
Chairman of the Board of Directors since December 1985 and Chairman of
PubliCARD since October 1998. Since 1975, Mr. Freund has been Chairman of
Balfour Investors Inc., a merchant banking firm that had previously been
engaged in a general brokerage business.
JAY S. GOLDSMITH: Age 56; Director of PubliCARD since April 12, 1985,
Vice Chairman of the Board of Directors since December 1985 and Vice Chairman
of PubliCARD since October 1998. Since 1975, Mr. Goldsmith has been
President of Balfour Investors Inc.
CLIFFORD B. COHN: Age 48; Director of PubliCARD since July 31, 1980, and
was Vice President of Government Affairs of PubliCARD from April 1, 1982 to
November 20, 1984. Since 1977, Mr. Cohn has been engaged in the private
practice of law in Philadelphia, Pennsylvania. Mr. Cohn is a director of
Leslie Fay Company Ltd.
DAVID L. HERMAN: Age 86; Director of PubliCARD since April 12, 1985.
Mr. Herman was President and Chief Executive Officer of PubliCARD from
March 31, 1986 until March 8, 1995. Prior to 1986, Mr. Herman was an
independent consultant advising clients on the reorganization of businesses
and potential acquisitions.
JAN-ERIK ROTTINGHUIS: Age 52; President and Chief Executive Officer of
PubliCARD effective in early 2000. Prior to joining PubliCARD, since 1993,
Mr. Rottinghuis had been employed by VeriFone, Inc., a subsidiary and part
of the Internet Business Unit of Hewlett Packard Company, most recently as
Vice President, Worldwide Sales. Prior to joining VeriFone, he was
responsible for sales, marketing and business development with Polaroid
Europe, acting as General Manager of Polaroid France and as Director of
European Sales and Marketing. Prior to that, Mr. Rottinghuis held various
positions in international marketing and business development for Wang
Laboratories in Boston and France, and provided strategic management
consultancy to the diverse clientele of Bain & Company, also in Boston.
L.G. SCHAFRAN: Age 61; Director of PubliCARD since December 3, 1986.
Mr. Schafran is the Managing General Partner of L.G. Schafran & Associates,
a real estate investment and development firm established in 1984. He was
Chairman of the Executive Committee of Dart Group Corporation from 1994 to
October 1997 and a director of Dart (and its publicly-traded subsidiaries)
from 1993 to October 1997. Mr. Schafran is a director of COMSAT Corporation,
Discovery Zone, Inc. , Kasper A.S.L., LTD. and Tarragon Realty Advisors,
Inc., and is Chairman of the Board of Delta-Omega Technologies, Inc.
<PAGE>
HATIM A. TYABJI: Age 54; Director of PubliCARD since March 16, 1999.
Since September 1998, Mr. Tyabji has been the Chairman and Chief Executive
Officer of Saraide.com, which provides mobile data services for the Internet
and the wireless communications industry. Mr. Tyabji was the Chairman, Chief
Executive Officer and President of VeriFone, Inc. from September 1986 until
March 1998. Mr. Tyabji is a director of each of Deluxe Corporation, Best
Buy, SmartDisk Corporation, Novatel Wireless and Ariba Technologies.
The Board of Directors recommends a vote FOR each of Messrs. Freund,
Goldsmith, Cohn, Herman, Rottinghuis, Schafran and Tyabji for election as
directors of the Company.
INFORMATION CONCERNING THE BOARD OF DIRECTORS
Directors who are not officers of the Company are paid $2,500 per month
for services as directors and, in addition, $750 per day for each meeting of
the Board or of shareholders that they attended without regard to the number
of meetings attended each day.
James J. Weis, former President and Chief Executive Officer of the
Company, resigned as a member of the Board of Directors on November 5, 1999.
Messrs. Freund, Goldsmith and Herman are each party to an agreement with
the Company providing for payments to them under certain circumstances
following a change in control of the Company. See "Employment and Change in
Control Agreements."
On March 8, 1995, following Mr. Herman's retirement as President of the
Company, the Company and Mr. Herman entered into an informal Consulting
Agreement pursuant to which Mr. Herman renders consulting services to the
Board of Directors of the Company. The Consulting Agreement provides for a
monthly consulting fee at a rate of $20,000 per year, payable in monthly
installments. The services to be rendered to the Company by Mr. Herman
include consultation on acquisitions and divestitures, litigation and other
matters. The Consulting Agreement is terminable at any time by the Company
or Mr. Herman.
The Company and Balfour Investors Inc. ("Balfour"), are parties to a
License Agreement, dated as of October 26, 1994, with respect to a portion
of the office space leased by the Company in New York City. Messrs. Freund
and Goldsmith are Chairman and President, respectively, and the only
shareholders of Balfour. The term of the License Agreement commenced on
January 1, 1995 and will expire on June 30, 2004, unless sooner terminated
pursuant to law or the terms of the License Agreement. The License Agreement
provides for Balfour to pay the Company an amount equal to 40% of the rent
paid by the Company under its lease, including base rent, electricity, water,
real estate tax escalations and operation and maintenance escalations. In
addition, Balfour has agreed to reimburse the Company for 40% of the cost of
insurance which the Company is obligated to maintain under the terms of its
lease with respect to the premises. In November 1998, Balfour's share of
rent and other costs was reduced to 20% due to an increase in the space
utilized by the Company. The base rent payable by Balfour under the License
Agreement is $4,030 per month.
Directors of the Company are elected at each annual meeting of
shareholders to hold office until the next annual meeting of shareholders and
until their respective successors are duly elected and qualified. Executive
officers are elected to hold office until the first meeting of directors
following the next annual meeting of shareholders or until their successors
are sooner elected by the Board and qualified.
During 1998, there were 21 meetings of the Board of Directors of the
Company. The Board of Directors has various committees, including an Audit
Committee, a Compensation Committee, a Directors Compensation Committee, a
Nominating Committee and a Technology Committee. During 1998, each of the
Directors attended at least 75% of the total number of meetings held by the
Board of Directors and the committees of which he was a member.
The Audit Committee of the Board of Directors reviews with the Company's
independent public accountants the plan and scope of the audit for each year,
as well as the results of each audit when completed and the accountants' fee
for services performed. The Audit Committee also reviews with management and
with the independent accountants the Company's internal control procedures.
The Audit Committee is composed of members of the Board of Directors who are
not otherwise officers or employees of the Company. The present members of
the Audit Committee are L. G. Schafran (Chairman), Clifford B. Cohn and David
L. Herman. The Audit Committee met once during 1998.
The Compensation Committee of the Board of Directors, which consists
entirely of outside directors, reviews the compensation of key employees of
the Company. The present members of the Compensation Committee are David L.
Herman (Chairman), Clifford B. Cohn and L. G. Schafran. The Compensation
Committee met once during 1998.
The Directors Compensation Committee of the Board of Directors reviews
the compensation of directors of the Company. The present members of the
Directors Compensation Committee are David L. Herman (Chairman), Clifford B.
Cohn and L. G. Schafran. The Directors Compensation Committee did not meet
during 1998.
The Nominating Committee of the Board of Directors advises and makes
recommendations to the Board of Directors on the selection of candidates as
nominees for election as directors. The members of the Nominating Committee
are David L. Herman (Chairman), Jay S. Goldsmith and Clifford B. Cohn. The
Nominating Committee met once during 1998. The Nominating Committee will
consider nominees recommended by shareholders pursuant to procedures
described in "Shareholder Nominations."
In 1998, the Company established a Technology Committee comprised of
board members together with invited leading industry experts drawn from both
commerce and academia. The primary functions of the Technology Committee are
to provide the Company with advice and counsel on the future technological
and commercial trends in the smart card industry, plan PubliCARD's
technological strategy, review and plan the Company's overall corporate
strategy, direct the Company's continuing acquisition strategy and develop
synergies among the Company's subsidiaries. The current members of the
Technology Committee are Hatim A. Tyabji (Chairman), Clifford B. Cohn and L.
G. Schafran. In addition to board member representation, Professor Zehev
Tadmor, a Distinguished Institute Professor at Technion - Israel Institute
of Technology also serves on the Technology Committee. The Technology
Committee met once during 1998.
SHAREHOLDER NOMINATIONS
Nominations for election of directors may be made by any shareholder
entitled to vote for the election of directors, provided that written
notice (the "Notice") of such shareholder's intent to nominate a director
at the meeting is given by the shareholder and received by the Secretary
of the Company in the manner and within the time specified herein. The
Notice shall be delivered to the Secretary of the Company not less than 14
days nor more than 50 days prior to any meeting of the shareholders called
for the election of directors; provided, however, that if less than 21
days notice of the meeting is given to shareholders, the Notice shall be
delivered to the Secretary of the Company not later than the earlier of
the seventh day following the day on which notice of the meeting was first
mailed to shareholders or the fourth day prior to the meeting. In lieu of
delivery to the Secretary of the Company, the Notice may be mailed to the
Secretary of the Company by certified mail, return receipt requested, but
shall be deemed to have been given only upon actual receipt by the
Secretary of the Company.
The Notice shall be in writing and shall contain or be accompanied by:
(a) the name and residence of the shareholder submitting the nomination;
(b) a representation that such shareholder is a holder of record of the
Company's voting stock and intends to appear in person or by proxy at the
meeting to nominate the persons specified in the Notice;
(c) such information regarding each nominee as would have been required
to be included in a proxy statement filed pursuant to Regulation 14A of
the rules and regulations established by the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (or pursuant to any
successor act or regulation) had proxies been solicited with respect to
such nominee by the management or Board of Directors of the Company;
(d) a description of all arrangements or understandings among such
shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which such nomination or nominations are to
be made by the shareholder; and
(e) the consent of each nominee to serve as director of the Company if
so elected.
Unless a judge or judges of election shall have been appointed
pursuant to the By-Laws, the Chairman of the meeting may, if the facts
warrant, determine and declare to the meeting that any nomination made at
the meeting was not made in accordance with the foregoing procedures and,
in such event, the nomination shall be disregarded. Any decision by the
Chairman of the meeting shall be conclusive and binding upon all
shareholders of the Company for any purpose.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of October 15, 1999 the beneficial
ownership of the Company's Common Stock by each person who owns of record
or is known by the Company to own beneficially more than 5% of the Common
Stock of the Company, all directors, nominees and executive officers
individually and all directors, nominees and executive officers as a
group. All information with respect to beneficial ownership has been
furnished to the Company by the respective shareholders of the Company.
Name Position Beneficial Ownership Percent
of Shares of Common of Class(1)
Stock as of
October 15, 1999 (1)
Taube Hodson Stonex N/A 2,720,000 (2) 12.5%
Partners Limited
27 St. James Place
London SW1A INR
United Kingdom
Harry I. Freund Director and 2,323,955 (3) 10.1%
c/o Balfour Chairman of
Investors, Inc. the Board
620 Fifth Avenue
Rockefeller Center
New York, NY 10020
Jay S. Goldsmith Director and 2,349,174 (4) 10.2%
c/o Balfour Vice Chairman of
Investors, Inc. the Board
620 Fifth Avenue
Rockefeller Center
New York, NY 10020
Jan-Erik - -
Rottinghuis (5)
James J. Weis President, Chief 549,500 (6) 2.5%
Executive Officer
and Director (14)
Clifford B. Cohn Director 268,271 (7) 1.2%
David L. Herman Director 315,108 (8) 1.4%
L.G. Schafran Director 366,159 (9) 1.7%
Hatim A. Tyabji Director 30,000 (10) Less
than 1%
M. Richard Executive Vice 50,000 (11) Less
Phillimore President/Smart than 1%
Card Business
Antonio L. Vice President, 152,000 (12) Less
DeLise Chief Financial than 1%
Officer and Secretary
All directors, nominees
and officers as a group
(9 persons) 6,404,167 (13) 25.2%
(1) Calculated in accordance with Rule 13d-3 adopted by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as
amended.
(2) Based on a statement on Schedule 13G filed with the Securities and
Exchange Commission on October 11, 1999. Taube Hodson Stonex Partners
Limited is a discretionary investment advisor to J. Rothschild
Assurance Life Fund, St. James Place International Unit Trust, J.
Rothschild Assurance Pension Fund, J. Rothschild International
Assurance Managed Fund, J. Rothschild International Assurance U$
Managed Fund, TDG Funds Limited, GAM Worldwide Fund and The Partners
Fund. Taube Hodson Stonex Partners has power to vote and direct the
vote and power to dispose and direct the disposition of shares held by
such funds.
(3) Includes shares of Common Stock which may be acquired by Mr. Freund
within 60 days as follows: 541,912 shares through the exercise of
stock options and 688,861 shares through the exercise of stock
purchase warrants. Also includes 273,625 shares that may be deemed to
be owned beneficially by Mr. Freund which are held by Balfour for its
clients in discretionary accounts, as to which Mr. Freund disclaims
beneficial ownership. Messrs. Freund and Goldsmith are Chairman and
President, respectively, and the only shareholders of Balfour. The
discretionary clients of Balfour have the sole power to vote and
direct the vote of the shares held in their account. Balfour and its
discretionary clients have shared power to dispose of or direct the
disposition of the shares held in such clients' accounts. At present,
Balfour has the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of the Company's Common
Stock for all of its discretionary clients. Also includes 13,000
shares that may be deemed to be owned beneficially by Mr. Freund which
are held by the Balfour Defined Benefit Pension Plan ("the Plan"), for
which Mr. Freund is a Trustee and Plan Administrator and in which he
participates. Mr. Freund disclaims ownership of 5,850 shares of such
13,000 shares.
(4) Includes shares of Common Stock which may be acquired by Mr. Goldsmith
within 60 days as follows: 541,912 shares through the exercise of
stock options and 744,930 shares through the exercise of stock
purchase warrants. Also includes 1,250 shares of Common Stock held by
Mr. Goldsmith's spouse over which Mr. Goldsmith has shared voting and
investment power but as to which he disclaims any beneficial interest,
and includes 273,625 shares that may be deemed to be owned
beneficially by Mr. Goldsmith which are held by Balfour for its
clients in discretionary accounts as to which Mr. Goldsmith disclaims
beneficial ownership (see Note 2 above). Also includes 13,000 shares
that may be deemed to be owned beneficially by Mr. Goldsmith which
are held by the Balfour Defined Benefit Pension Plan, of which Mr.
Goldsmith is a Trustee and Plan Administrator and in which he
participates. Mr. Goldsmith disclaims ownership of 7,280 shares of
Common Stock held by the Plan.
(5) Mr. Rottinghuis will become the Company's President and Chief
Executive Officer effective in early 2000. Pursuant to the employment
between Mr. Rottinghuis and the Company, The Company issued 200,000
shares of Common Stock to Mr. Rottinghuis on November 2, 1999. See
"Employment and Change in Control Agreements."
(6) Includes 340,000 shares which may be acquired by Mr. Weis within 60
days through the exercise of stock options.
(7) Includes 212,059 shares which may be acquired by Mr. Cohn within 60
days through the exercise of stock options.
(8) Includes shares of Common Stock which may be acquired by Mr. Herman
within 60 days as follows: 112,058 shares through the exercise of
stock options and 38,888 shares through the exercise of stock purchase
warrants.
(9) Includes 212,059 shares which may be acquired by Mr. Schafran within
60 days through the exercise of stock options. Also includes 114,050
shares of Common Stock and 38,888 shares that may be acquired through
the exercise of stock purchase warrants held by Mr. Schafran's spouse
as to which Mr. Schafran disclaims any beneficial interest.
(10)Includes 30,000 shares which may be acquired by Mr. Tyabji within 60
days through the exercise of stock options.
(11)Represents 50,000 shares of common stock that Mr. Phillimore will
be entitled to receive in January 2000, on the one-year anniversary
of his employment with the Company.
(12)Includes 150,000 shares which may be acquired by Mr. DeLise within
60 days through the exercise of stock options.
(13)Includes shares of Common Stock which may be acquired by such
persons within 60 days as follows: 2,140,000 shares through the
exercise of stock options and 1,513,891 shares through the exercise
of stock purchase warrants.
(14)Mr. Weis was President and Chief Executive Officer of the Company
through November 3,1999 and a Director through November 5, 1999.
EXECUTIVE COMPENSATION
The following tables set forth information concerning the cash
compensation, stock options and retirement benefits provided to
PubliCARD's executive officers. The notes to these tables provide more
specific information concerning compensation. The Company's compensation
policies are discussed in the Compensation Committee Report on Executive
Compensation.
Summary Compensation Table
Annual Compensation Long-Term Compensation
Name and Year Salary Bonus(1) Options/ All Other
Principal Position SARs (#)(2) Compensation
Harry I. Freund(3) 1998 $325,000 - - $15,000 (4)
Chairman 1997 $325,000 - 91,912 $15,000 (4)
1996 $325,000 - 125,000 $15,000 (4)
Jay S. Goldsmith(3) 1998 $325,000 - - $22,966 (4)
Vice Chairman 1997 $325,000 - 91,912 $17,000 (4)
1996 $325,000 - 125,000 $17,000 (4)
James J. Weis (7) 1998 $325,000 250,000 140,000 $ 7,604 (5)
President, Chief 1997 $325,000 162,500 - $ 7,958 (5)
Executive Officer 1996 $325,000 200,000 100,000 $ 8,146 (5)
and Director
Antonio L. DeLise 1998 $183,611 100,000 75,000 $ 5,861 (6)
Vice President, 1997 $163,700 67,000 - $ 6,036 (6)
Chief Financial 1996 $149,561 85,000 50,000 $ 6,727 (6)
Officer and
Secretary
(1) Reflects bonus earned during the fiscal year. In some instances, all
or a portion of the bonus was paid during the next fiscal year.
(2) Options to acquire shares of common stock.
(3) On November 1, 1998, Messrs. Freund and Goldsmith were appointed
executive officers of PubliCARD with the titles of Chairman and Vice
Chairman, respectively. Prior to such time, Messrs. Freund and Goldsmith
were directors of PubliCARD with the titles of Chairman of the Board and
Vice Chairman of the Board, respectively; titles and positions which they
still hold in addition to their positions as executive officers of
PubliCARD. For the period prior to November 1, 1998, Messrs. Freund and
Goldsmith received compensation from PubliCARD in their capacities as
directors of PubliCARD and for as serving Chairman of the Board and Vice
Chairman of the Board, respectively, at the rate of $325,000 per year.
Commencing November 1, 1998, Messrs. Freund and Goldsmith have received
compensation from PubliCARD at the same rate in their capacities as
executive officers.
(4) Represents life insurance premiums paid on behalf of Mr. Freund and
Mr. Goldsmith for 1996, 1997 and 1998.
(5) Consists of $4,750, $4,750 and $4,800 in contributions to PubliCARD's
401(k) plan for 1996, 1997 and 1998, respectively, and $3,396, $3,208 and
$2,804 for term life and disability insurance premiums paid on behalf of
Mr. Weis for 1996, 1997 and 1998, respectively.
(6) Consists of $4,750, $4,750 and $4,800 in contributions to PubliCARD's
401(k) plan for 1996, 1997 and 1998, respectively, and $1,977, $1,286 and
$1,061 for term life and disability insurance payments paid on behalf of
Mr. DeLise for 1996, 1997 and 1998, respectively.
(7) Mr. Weis was President and Chief Executive Officer of the Company
through November 3,1999 and a Director through November 5, 1999.
Option Grants in Last Fiscal Year
The following table sets forth certain information concerning grants to
purchase shares of common stock to the following persons during the fiscal
year ended December 31, 1998:
Potential Realizable
Percent Value at Assumed Annual
of Total Rates of Stock Price
Options Exercise Expira- Appreciation for
Options Granted to Price tion Five Year
Name Granted(3) Employees Per Share Date Option Term (1)
5% 10%
Harry I.
Freund - - - - - -
Jay S.
Goldsmith - - - - - -
James J.
Weis 140,000 24.8% $1.75 9/14/2003 $67,689 $149,575
Antonio L.
DeLise 75,000 13.3% $1.75 9/14/2003 36,262 80,129
All share-
holders(2) N/A N/A N/A N/A 8,162,301 18,036,551
Named offi-
cers' gain
as % of all
shareholders'
gain N/A N/A N/A N/A 1.27% 1.27%
________________________________
(1) The potential gain is calculated from the closing price of common stock of
$1.75 on September 14, 1998, the date of grant to executive officers.
These amounts represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises and common stock holdings
are dependent on the future performance of the common stock and overall
market conditions. There can be no assurance that the amounts reflected
in this table will be achieved.
(2) Based on the number of shares outstanding at December 31, 1998.
(3) Options granted under PubliCARD's 1993 Long-Term Incentive Plan expire
five years from the date of grant.
Aggregate Stock Option Exercises in Fiscal Year 1998 and Fiscal Year-End
Option Values
The following table sets forth certain information as of December 31, 1998
concerning exercisable and unexercisable stock options held by the following
persons:
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Shares Options at Fiscal Options at Fiscal
Acquired Value Year End Year End(1)
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
Harry I.
Freund 125,000 $7,812 541,912(2) / - $6,481,759 / -
Jay S.
Goldsmith 125,000 7,812 541,912(2) / - 6,481,759 / -
James J.
Weis 60,000 1,875 400,000 / - 4,913,750 / -
Antonio L.
DeLise - - 150,000 / - 1,846,875 / -
________________________________
(1) These values are based on the December 31, 1998 closing price for
PubliCARD's common stock on the Nasdaq National Market of $14.00 per
share.
(2) Excludes shares of common stock which may be acquired by Messrs.
Freund and Goldsmith through the exercise of stock purchase warrants
in the amounts of 668,865 and 723,308, respectively.
Retirement Income Plan
Effective December 31, 1993, benefits under the Publicker Industries Inc.
Retirement Plan (the "Plan") were frozen. Accordingly, Plan participants
will accumulate no additional credited service, and earnings subsequent to
December 31, 1993 will no longer have an impact on accumulated benefits. The
annual benefits payable upon retirement for Mr. Weis is $23,831. The
foregoing amount is based on a straight life annuity. Retirement benefits
are payable at age 65 to married employees in the form of a 50% joint and
survivor annuity with their spouses, at a reduced amount, unless they elect
to receive a straight life annuity. Single employees receive a straight life
annuity. The foregoing benefit amount is not subject to any deduction for
Federal Insurance Contributions Act or other offset amounts.
Stock Option Plans
Under the 1993 Long-Term Incentive Plan and the Non-employee Director
Stock Option Plan adopted by shareholders of the Company in 1994, the Company
may grant stock options, restricted stock options, stock appreciation rights,
performance awards and other stock-based awards equivalent to up to 3,550,000
shares of Common Stock. A total of 73,500 shares of Common Stock in the
aggregate are currently available for grant under the 1993 Long-Term
Incentive Plan and the Non-employee Director Stock Option Plan.
The plans are administered by the Compensation Committee of the Board of
Directors of the Company, except the Non-employee Director Stock Option Plan,
which is administered by the Board of Directors. Subject to the express
provisions of the plans, the Board of Directors has full and final authority
to determine the terms of all awards granted under the plans including (a)
the purchase price of the shares covered by each award, (b) whether any
payment will be required upon grant of the award, (c) the individuals to
whom, and the time at which, awards shall be granted, (d) the number of
shares to be subject to each award, (e) when an award can be exercised and
whether in whole or in installments, (f) whether the exercisability of the
awards is subject to risk of forfeiture or other condition and (g) whether
the stock issued upon exercise of an award is subject to repurchase by the
Company, and the terms of such repurchase. Under the 1993 Long-Term
Incentive Plan, the term of options granted shall be prescribed by the
Compensation Committee of the Board of Directors, but no stock option may be
exercised after five years from the date it is granted.
During the year ended December 31, 1998, 215,000 stock options were
granted to executive officers of the Company under the 1993 Long-Term
Incentive Plan.
On August 4, 1999, the Board of Directors, subject to approval by the
Company's shareholders, adopted the 1999 Long-Term Incentive Plan and the
1999 Stock Option Plan for Non-employee Directors. Under these plans, the
Company may grant stock options, restricted stock, stock appreciation rights,
performance awards and other stock-based awards equivalent to an aggregate of
3,750,000 shares of Common Stock.
Stock Option Agreements
In April 1985, the Company issued 1.6 million shares of Common Stock at
$2.50 per share in a private placement. Under the terms of the related
agreement, Balfour, the agent for the purchasers, received options to buy
400,000 shares of PubliCARD's Common Stock at a price of $2.50 per share for
five years, which period was subsequently extended by ten years. Balfour
subsequently transferred the options to Messrs. Freund and Goldsmith, who
currently hold them. In January 1996, PubliCARD issued options to Messrs.
Cohn and Schafran to buy a total of 200,000 shares of PubliCARD's Common
Stock at a price of $2.50 per share for five years. None of these options
had been exercised as of December 31, 1998.
On January 18, 1999, the Company granted stock options to purchase an
aggregate of 200,000 shares of Common Stock to Mr. Phillimore. 100,000 of
those options are exercisable for five years beginning January 19, 2000 at
$5.50 per share. The remaining 100,000 of those options are exercisable for
five years beginning January 19, 2001 at $5.50 per share.
On March 16, 1999, the Company granted stock options to purchase an
aggregate of 250,000 shares of Common Stock to Mr. Tyabji. 125,000 of those
options are exercisable for four years beginning March 16, 2000 at $9.75 per
share. The remaining 125,000 of those options are exercisable for three
years beginning March 16, 2001 at $9.75 per share.
On November 2, 1999, the Company entered into an option agreement with Mr.
Rottinghuis in connection with his appointment as the Company's President and
Chief Executive Officer, effective in early 2000. Pursuant to the option
agreement, the Company granted options to purchase 400,000 shares of Common
Stock at an exercise price equal to $6.75 per share. These options become
exercisable 133,333 on November 2, 2000, 133,333 on November 2, 2001 and
133,334 on November 2, 2002. If Mr. Rottinghuis' employment is terminated by
Mr. Rottinghuis for good reason or by the Company other than for cause (as
each such term is defined in Mr. Rottinghuis' employment agreement), these
options will become exercisable in full. See "Executive
Compensation Employment and Change in Control Agreements." Unless sooner
terminated, these options will expire on November 2, 2004.
Also on November 2, 1999, the Company entered into another option
agreement with Mr. Rottinghuis in connection with his appointment as the
Company's President and Chief Executive Officer. Pursuant to this option
agreement, Mr. Rottinghuis was granted an option to purchase from the Company
up to 400,000 shares of Common Stock at an exercise price equal to $6.75 per
share. This option will become exercisable in accordance with, in such
installments as may be provided in and upon satisfaction of performance
criteria that will be established by mutual agreement of the Company and Mr.
Rottinghuis. This option will be exercisable for the periods specified in
such performance criteria. If Mr. Rottinghuis' employment agreement is
terminated by the Company other than for cause or by Mr. Rottinghuis for good
reason, this option will be exercisable for a number of shares of Common
Stock equal to the sum of (i) the number of shares for which it was
exercisable immediately prior to such termination and (ii) the number of
shares for which it could become exercisable after such termination if all
performance criteria applicable to the period after termination were met.
Unless sooner terminated, this option will expire on November 2, 2004.
Employment and Change in Control Agreements
On November 2, 1999, the Company entered into an employment agreement with
Mr. Rottinghuis, pursuant to which he will begin to serve as President and
Chief Executive Officer of the Company, effective in early 2000, and pursuant
to which the Company agreed to nominate Mr. Rottinghuis to serve on the
Company's board of directors. The employment agreement provides that Mr.
Rottinghuis' compensation will consist of $350,000 per year plus an annual
bonus in an amount to be determined by the Company's board of directors, but
not less than $100,000.
Pursuant to the employment agreement, on November 2,1999, the Company
issued to Mr. Rottinghuis (i) 200,000 shares of its Common Stock to
compensate him for economic losses he suffered as a result of terminating his
prior employment and (ii) options to acquire 400,000 shares of Common Stock.
The employment agreement also provides that Mr. Rottinghuis will be eligible
to receive an option to acquire 400,000 additional shares of Common Stock,
which will become exercisable upon the achievement of certain performance-
based goals. See "Executive Compensation Stock Option Agreements."
The term of Mr. Rottinghuis' employment with the Company is three years,
unless sooner terminated in accordance with the terms of the employment
agreement. The employment agreement may be terminated (a) upon the death of
Mr. Rottinghuis, (b) upon the disability of Mr. Rottinghuis, (c) for cause or
(d) for good reason (as each such term is defined in the employment
agreement).
In August 1987, the Company entered into change of control agreements with
each of Messrs. Freund, Goldsmith and Herman, which provide for payments to
them under certain circumstances following a change of control of the
Company. These agreements were not adopted in response to any specific
acquisition of shares of PubliCARD or any other event threatening to bring
about a change of control of the Company. For purposes of the agreements, a
change of control is defined as any of the following: (a) the Company
ceasing to be a publicly owned corporation having at least 2,000
shareholders, (b) any person or group acquiring in excess of 30% of the
voting power of the Company's securities, (c) Messrs. Freund, Goldsmith,
Herman, Cohn and Schafran and any other director designated as a "continuing
director" prior to his election as a director by a majority of the foregoing
persons (the "Continuing Directors") ceasing for any reason to constitute at
least a majority of the board of directors, (d) the Company merging or
consolidating with any entity, unless approved by a majority of the
Continuing Directors or (e) the sale or transfer of a substantial portion of
PubliCARD's assets to another entity, unless approved by a majority of the
Continuing Directors.
In the event one of the above-named individuals (a) is terminated as an
employee of the Company for any reason other than conviction of a felony or
any act of fraud or embezzlement, (b) is disabled for six consecutive months
or dies, (c) is not elected and maintained in the office which he now
occupies, (d) is not included by the board of directors in the slate of
directors recommended to stockholders, (e) receives a reduction in his salary
or fringe benefits, (f) experiences a change in his place of employment or is
required to travel excessively or (g) experiences other substantial, material
and adverse changes in conditions under which the individual's services are
to be rendered, within three years following a change of control, the
individual will be entitled to receive in a lump sum within 10 days of the
date of discontinuance, a payment equal to 2.99 times the individual's
average annual compensation for the shorter of (a) the five years preceding
the change of control, or (b) the period the individual received
compensation from PubliCARD for personal services. Assuming a change of
control of the Company and the discontinuance of an individual's services
were to occur at the present time, payments in the following amounts,
assuming there are no "excess parachute payments" as defined in the Internal
Revenue Code of 1986 (the "Code"), would be made pursuant to the change of
control agreements: Mr. Freund $942,709; Mr. Goldsmith $942,709; and Mr.
Herman $394,376. In the event any such payment, either alone or together
with others made in connection with the individual's discontinuance, is
considered to be an "excess parachute payment," the individual is entitled to
receive an additional payment in an amount which, when added to the initial
payment, results in a net benefit to the individual, after giving effect to
excise taxes imposed by Section 4999 of the Code and income taxes on such
additional payment, equal to the initial payment before such additional
payment. Since the change of control agreements would require large cash
payments to be made by any person or group effecting a change of control of
PubliCARD, absent the assent of a majority of the Continuing Directors, these
agreements may discourage hostile takeover attempts of PubliCARD.
The change of control agreements would have expired on December 1, 1998
but have been and will continue to be automatically extended for a period of
one year on each December 1, unless terminated by either party prior to any
December 1. In the event a change of control occurs while the change of
control agreements are in effect, the term of such agreements will
automatically be extended to three years from the date of the change of
control and the foregoing renewal option will become inapplicable.
Pursuant to an employment agreement between the Company and James J. Weis,
the former President and Chief Executive Officer of the Company, the Company
is required to pay to Mr. Weis, in lieu of severance, his base salary (after
a dollar-for-dollar reduction for any salary received by him from any other
employer) and continue his existing employee benefits until the earlier of
November 3, 2000 or the date upon which he begins full-time employment with a
new employer.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors, consisting entirely
of outside directors, approves all of the policies under which compensation
is paid or awarded to the Company's executive officers. The present members
of the Compensation Committee are David L. Herman, Clifford B. Cohn and L.
G. Schafran. The objectives of the Company's executive compensation program
are to attract and retain highly talented and productive executives and to
align the interests of the executive officers with the interests of the
Company's shareholders by basing a significant portion of their compensation
upon the Company's performance and achievement of strategic goals.
The Company's compensation program for executive officers currently
consists of base salary, annual bonus and long-term incentive compensation
consisting of periodic grants of qualified and nonqualified stock options.
Each element of this program serves a specific purpose in meeting the
Company's objectives.
Base salary. The Committee annually reviews the salaries of the executive
officers. In establishing the base salary, the Compensation Committee
considers level of responsibility, individual performance, Company
performance, competitive market conditions for executive compensation, prior
experience and contributions made to the Company's success. The Compensation
Committee has not found it practicable, nor has it attempted, to assign
relative weights to the specific factors used in determining base salary
levels.
Annual bonus. The Company's cash bonus program represents an at-risk
component of pay designed to motivate executives to work effectively to
achieve the Company's performance objectives and to reward them when
objectives are met. In determining the annual bonus payments for 1998, the
Compensation Committee was guided less on quantitative measures of operating
results than on other goal-directed endeavors such as executing the Company's
smart card acquisition and growth strategy and bringing about improvements in
the operations of the Company's subsidiaries.
Long-term incentives. The Compensation Committee believes that option
grants (a) align executive interests with shareholder interests by creating a
direct link between compensation and shareholder return, (b) give executives
a significant long-term interest in the Company's success and (c) help retain
key executives in a competitive market for executive talent. Option grants
are made from time to time to executives whose contributions have or will
have a significant impact on the Company's long-term performance. The
determination of whether option grants are appropriate each year is based
upon performance of each individual. All options granted to executive
officers in 1998 were granted at the fair market value of our Common Stock on
the date of grant, are exercisable for five years and are generally
forfeited should the executive officer leave the Company before retirement,
unless already exercised. All stock option grants are made under the
Company's stock option plans which have been approved by the Company's
shareholders. Because the option grants have been made at option prices
equal to the fair market value on the dates of grant, the stock options have
value only if the stock price appreciates from the value on the grant date.
This design is intended to focus executives on the enhancement of shareholder
value over the long-term.
Bases for Chief Executive Officer Compensation
In 1998, Mr. Weis received an annual salary of $325,000, a cash bonus of
$250,000 and a stock option grant of 140,000 shares. His annual salary
remained unchanged from 1997 and was not adjusted from the time he was named
President and Chief Executive Officer of the Company in March 1995 to
November 3, 1999 when he no longer served in this capacity. Mr. Weis' cash
bonus for 1998 increased 54% compared to the previous year. The option grant
was made at option prices equal to the fair market value on the date of
grant. He did not receive an option grant in 1997. The Compensation
Committee considered the 1998 compensation appropriate in light of his
performance with respect to implementing strategic initiatives for the
Company, principally repositioning the Company as a participant in the smart
card industry. The Compensation Committee noted Mr. Weis' considerable
efforts to revitalize the Company, his direct involvement in the significant
transactions of the Company during 1998 and his knowledge and historical
perspective of the Company's problems and issues.
Section 162 (m)
Section 162(m) of the Code limits the tax deduction for compensation paid
to certain executives of public companies to $1.0 million. Having considered
the requirements of Section 162(m), the Compensation Committee believes that
grants made pursuant to the Company's stock option plans meet the
requirements that such grants be"performance based" and are, therefore,
exempt from the limitations on deductibility. Historically, the combined
salary and bonus of each executive officer has been below the $1.0 million
limit. The Compensation Committee's present intention is to comply with
Section 162(m) unless the Compensation Committee feels that required changes
would not be in the best interest of the Company or its stockholders.
This report is submitted by the members of the Compensation Committee
of the Board of Directors.
Compensation Committee
David L. Herman
Clifford B. Cohn
L. G. Schafran
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors, which consists
entirely of outside directors, reviews the compensation of key employees of
the Company. The present members of the Compensation Committee are David L.
Herman (Chairman), Clifford B. Cohn and L.G. Schafran. See "Information
Concerning the Board of Directors", "Employment and Change of Control
Agreements" and Notes 2 and 3 to the table under "Principal Shareholders."
FIVE YEAR PERFORMANCE GRAPH: 1993 - 1998
The following performance graph compares the cumulative total return on
the common stock of PubliCARD for the five year period from December 31,
1993 to December 31, 1998 to (i) the Hambrect & Quist Technology Index and
(ii) the Standard & Poor's 500 Stock Index. Prior to 1998, the Company's
common stock performance was compared to (i) a peer group index based on all
companies in the Multi-industry Group of Media General Financial Services with
a market capitalization of under $100 million and (ii) the Media General
Composite Index. In 1998, the Company entered the smart card industry by
acquiring several technology buisnesses that currently offer and are
continuing to develop solutions for conditional access and security, payment
system and data storage needs of a number of growth industries. Due to this
shift in strategic focus and an increase in the Company's market capitalization,
the Company made changes to the peer group index and broad market index in
1998 to provide better comparable data points. As required by SEC rules, the
following performance graph also provides a comparison to the broad market
index used in 1997. A comparison to the peer group index used in 1997 has not
been provided as this index is no longer maintained by Media General Financial
Services.
The annual changes for the five year period from 1993 through 1998 are
based on the assumption that $100 had been invested in PubliCARD common
stock and each index on December 31, 1993 (as required by SEC rules), and
that all quarterly dividends were reinvested at the average of the closing
stock prices at the beginning and end of the quarters. The total cumulative
dollar returns shown in the graphs represent the value that such investments
would have had on December 31, 1998.
1993 1994 1995 1996 1997 1998
PubliCARD 100 173 173 105 100 1,018
H & Q Tech Index 100 120 180 223 262 407
S & P 500 100 101 139 171 229 294
MGFS Composite 100 99 129 155 202 246
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings,
including the Proxy Statment in whole or in part, the foregoing report and the
Performance Graph shall not be incorporated by reference into any such filing.
Section 16 (a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors and officers and persons who
own more than 10 percent of a registered class of the Company's equity
securities to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"). Officers, directors and
greater than 10% shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. To the Company's
knowledge, based solely upon the Company's review of the copies of such forms
received by it during the fiscal year ended December 31, 1998 and
representations that no other reports were required, the Company believes
that each person who, at any time during such fiscal year, was a director,
officer or beneficial owner of more than 10% of the Company's Common Stock
complied with all Section 16(a) filing requirements during such fiscal year
except that David L. Herman filed a late report on Form 5 covering one late
Form 4 transaction.
PROPOSAL 2.
PROPOSAL TO ADOPT THE 1999 LONG TERM INCENTIVE PLAN
Introduction
The Board of Directors of the Company has determined that it is
desirable to adopt the 1999 Long Term Incentive Plan to attract and retain
key employees, motivate participants to achieve long-term goals, encourage
employees of the Company and its subsidiaries to acquire a proprietary
interest in the Company through the ownership of Common Stock, and reward
advisors of the Company who are not employees, also referred to in this
discussions as consultants.
The Board of Directors of the Company has approved the 1999 Long Term
Incentive Plan, subject to shareholder approval. A copy of the full text of
the 1999 Long Term Incentive Plan is set forth in Appendix I to this Proxy
Statement, and the following description is qualified in its entirety by
reference to Appendix I. The 1999 Long Term Incentive Plan will be
administered by the Compensation Committee of the Board of Directors. The
Compensation Committee is comprised of David L. Herman, Clifford B. Cohn and
L.G. Schafran. Each member of the Compensation Committee is an outside
director within the meaning of Section 162(m) of the Internal Revenue Code of
1986.
All employees and consultants of the Company and its subsidiaries,
approximately 185 persons as of September 23, 1999, including the Company's
officers, will be eligible to receive awards under the 1999 Long Term
Incentive Plan, subject to the discretion of the Compensation Committee to
determine the particular individuals who, from time to time, will be selected
to receive awards. Except as set forth below, neither the individuals who
are to receive awards, the number of awards that will be granted to any
individual or group of individuals nor the amounts payable with respect to
such awards have been determined at this time. The 1999 Long Term Incentive
Plan will remain in existence as to all outstanding awards until they are
either exercised, converted or terminated. However, no award can be made
after August 3, 2009.
Awards
Awards to employees and consultants under the 1999 Long Term Incentive
Plan may be in the form of incentive stock options, nonqualified stock
options, restricted stock, stock appreciation rights or other equity-based
awards as the Compensation Committee may determine.
Awards may be granted singly or in combination with other awards. Each award
will be evidenced by an agreement setting forth the specific terms and
conditions applicable to that award. Any agreement may specify that awards
under the 1999 Long Term Incentive Plan that are not vested or exercised
generally will be nontransferable by a holder. However, an award may by
transferred by will or by the laws of descent and distribution or under a
qualified domestic relations order, as defined in the Internal Revenue Code .
During the holder's lifetime, awards may be exercised only by the holder or
his personal representative or guardian, except that an option transferred
under a qualified domestic relations order may be exercised by the
transferee.
Options. Stock options authorized under the 1999 Long Term Incentive
Plan are rights to purchase a specified number of shares of Common Stock at a
set exercise price during a specified period. The Compensation Committee
will determine, at the time any option is granted, the number of options to
be granted, whether the options are to be incentive stock options or
nonqualified stock options, the exercise price of the options, and the period
during which an option shall vest and become exercisable.
However, the exercise price of any option that is intended to be an incentive
stock option must be at least equal to the fair market value of the Common
Stock on the date of grant, and not less than 110% of fair market value in
the case of a grant to an employee who owns more than 10% of the combined
voting power of all classes of the Company's or a subsidiary's stock. Fair
market value for purposes of the 1999 Long Term Incentive Plan means the
closing price of the Common Stock on the grant date. In addition, no option
will be exercisable after the tenth anniversary of the date on which it was
granted, or the fifth anniversary thereof, in the case of incentive stock
options. The fair market value of the Common Stock for which incentive stock
options are exercisable for the first time by an optionee during any calendar
year may not exceed $100,000, measured as of the date those options become
exercisable, under current tax law. The 1999 Long Term Incentive Plan also
provides that the maximum number of shares of Common Stock that may be
subject to all stock-based awards, including options, stock appreciation
rights and restricted stock, that are granted to any participant during any
calendar year will not exceed 500,000 , either individually or in the
aggregate.
Stock Appreciation Rights. Stock appreciation rights provide a holder
with the right to receive any appreciation in the value of a specified number
of shares of Common Stock over a specified period. Stock appreciation rights
may be granted in connection and simultaneously with the grant of an option,
with respect to a previously granted option, or independent of an option.
A stock appreciation right that is granted in connection with a
particular option may be granted for no more than the number of shares of
Common Stock subject to that option; will be exercisable only when and to the
extent the related option is exercisable; and will entitle the grantee to
surrender the unexercised portion of any exercisable option to which the
stock appreciation right relates and to receive an amount in cash, determined
as above, equal to the difference of the fair market value of a share of
Common Stock on the date of exercise minus the price per share at which the
stock appreciation right was granted multiplied by the number of shares of
Common Stock with respect to which the stock appreciation right is exercised.
A stock appreciation right which is not coupled with an option will be
exercisable in the manner in which the Compensation Committee determines and
only while the grantee is an employee or a consultant, unless the
Compensation Committee determines otherwise.
Restricted Stock Awards. A restricted stock award is an award
entitling the recipient to acquire, at no cost or for a purchase price
determined by the Compensation Committee, Common Stock subject to any
restrictions and conditions as the compensation committee may determine at
the time of grant. Conditions may be based, among other things, on
continuing employment and/or achievement of pre-established performance goals
and objectives. A participant who receives a restricted stock award will
have all the rights of a shareholder with respect to such restricted stock,
including voting and dividend rights, subject to non-transferability
restrictions and other conditions contained in the written instrument
evidencing the restricted stock award or the resolution of the compensation
committee authorizing that award. Common Stock underlying a restricted stock
award will become vested, and the recipient will be the owner, with respect
to a participant following the date or dates specified by the compensation
committee or the attainment of the pre-established performance goals,
objectives or other conditions associated with that restricted stock award,
such as continued employment.
In general, the Company will have the right to repurchase from a
participant any Common Stock still subject to restrictions under the award
agreement immediately upon a termination of the participant's employment, at
a cash price per share equal to the price paid by the participant for that
restricted stock. However, the compensation committee may provide that no
right of repurchase exists if the participant's termination of employment or
consultancy is other than for cause, as defined in the 1999 Long Term
Incentive Plan, or occurs after a change in control, or because of the
participant's retirement, death or disability, or otherwise.
Performance-Based Awards. Under Section 162(m) of the Internal
Revenue Code, the Company may not deduct compensation in excess of $1.0
million paid to the chief executive officer or any one of the four other most
highly compensated executive officers of the Company unless, among other
things, this compensation qualifies as performance-based compensation under
Section 162(m), and the material terms of the plan for that compensation are
approved by shareholders. The awards granted under the 1999 Long Term
Incentive Plan may qualify as performance-based compensation under Section
162(m) of the Internal Revenue Code. Appropriate adjustments to the
performance goals and targets in respect of stock-based awards may be made by
the Compensation Committee based upon objective criteria in the case of
significant acquisitions or dispositions by the Company, a change in
capitalization, a corporate transaction or a complete or partial liquidation,
extraordinary gains or losses, material changes in accounting principles or
practices or certain other events that were not anticipated, or the effects
of which were not anticipated, at the time goals were established, in order
to neutralize the effect of such events on the stock-based awards.
The Compensation Committee must certify the achievement of the
applicable performance goals and the satisfaction of other material terms of
the award prior to payment. Stock-based awards generally will be paid
following the completion of each cycle. The compensation committee may
retain discretion to reduce, but not increase, the amount payable under a
stock-based award to any participant, notwithstanding the achievement of
targeted performance goals. Stock-based awards may be accelerated in the
event of a change in control.
Awards may be granted in connection with the surrender or cancellation
of previously granted awards, or may be amended, under such terms and
conditions, including numbers of shares of Common Stock and exercise price,
exercisability or termination, that are the same as or different from the
existing awards, all as the Compensation Committee may approve.
Administration; Change in Control
The 1999 Long Term Incentive Plan will be administered by the
Compensation Committee. The Compensation Committee will have authority
within the terms and limitations of the 1999 Long Term Incentive Plan to
select the persons to whom awards are granted, determine the type and number
of awards to be granted, determine the duration of each award, impose any
restrictions on awards, and apply any other terms and conditions it deems
appropriate to awards.
The Compensation Committee will have the authority to interpret and construe
the 1999 Long Term Incentive Plan and the agreements under which awards are
made. In addition, the compensation committee will have the authority to
determine the extent to which awards will be structured in order to comply
with Section 162(m) of the Internal Revenue Code.
The Compensation Committee is authorized to include specific
provisions in award agreements relating to the treatment of awards in the
event of a change in control of the Company, and is authorized to take
certain other actions in that event. A change in control is defined
generally to include the following:
any person within the meaning of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, other than the Company or any
subsidiary or any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any subsidiary, becoming
the beneficial owner, within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, directly or indirectly, of securities
of the Company representing more than thirty percent (30%) or more of
the combined voting power of the Company's then outstanding
securities;
a majority of the directors elected at any special or annual meeting
of shareholders are not individuals nominated by the Company's
incumbent board of directors, or individuals who are members of the
Company's board of directors at any one time shall immediately
thereafter cease to constitute a majority of the board of directors;
the approval of the Company's shareholders of the merger or
consolidation of the Company with another corporation, the sale of
substantially all of the Company's assets or the liquidation or
dissolution of the Company, unless, in the case of a merger or
consolidation, at least two-thirds (2/3) of the directors in office
immediately prior to such merger or consolidation constitute at least
two-thirds (2/3) of the members of the board of directors of the
surviving corporation of such merger and consolidation.
The Compensation Committee may delegate to the officers or employees
of the Company and its subsidiaries the authority to execute and deliver such
instruments and documents and to take such actions as are necessary,
advisable or convenient for the effective administration of the 1999 Long
Term Incentive Plan.
Amendment and Termination
The Compensation Committee has the authority to amend, suspend or
terminate the 1999 Long Term Incentive Plan at any time, provided that no
such action may affect the rights of a recipient of any award previously
granted. In addition, unless first approved by the Company's shareholders,
no amendment to the 1999 Long Term Incentive Plan may be made to increase the
total number of shares which may be issued or transferred under the 1999 Long
Term Incentive Plan, change the purchase price for the shares subject to
options, extend the period during which awards may be granted or exercised or
change the designation of persons entitled to receive awards.
Amendments made without shareholder approval could increase the costs
to the Company under the 1999 Long Term Incentive Plan, although the amount
is not determinable. Because the Compensation Committee will retain the
discretion to set and change the specific targets for each performance period
under a performance-based award intended to be exempt from Section 162(m),
shareholder ratification of the performance goals will be required, in any
event, at five-year intervals in the future to exempt awards granted under
the 1999 Long Term Incentive Plan from the limitation on deductibility.
Authorized Shares; Other Provisions; Non-Exclusivity
The number of shares of Common Stock that may be issued in respect of
awards under the 1999 Long Term Incentive Plan will not exceed 3,000,000.
The 3,000,000 figure for the number of shares of Common Stock to be available
under the 1999 Long Term Incentive Plan is based on an estimate of the number
of shares of Common Stock that will be subject to awards granted during the
first three years of the terms of the 1999 Long Term Incentive Plan. If
dividends payable in Common Stock during any fiscal year exceed in the
aggregate 5% of the Common Stock issued and outstanding at the beginning of
that fiscal year, or if there is during any fiscal year one or more splits,
subdivisions or combinations of shares of Common Stock resulting in an
increase or decrease of more than 5% of the shares outstanding at the
beginning of the year, the number of shares available under the 1999 Long
Term Incentive Plan will be increased or decreased proportionately, as the
case may be. The number of shares subject to stock appreciation rights and
the related fair market value of such rights as of the date of grant will be
increased or decreased proportionately, as the case may be, and the number of
shares deliverable upon the exercise thereafter of any options previously
granted will be increased or decreased proportionately, as the case may be,
without change in the aggregate purchase price. Common Stock dividends,
splits, subdivisions or combinations during any fiscal year which do not
exceed in the aggregate 5% of the Common Stock issued and outstanding at the
beginning of that year will be ignored for purposes of the 1999 Long Term
Incentive Plan.
If the Company is merged or consolidated with or into another
corporation, or if the Common Stock or substantially all of the Company's
assets are exchanged for the stock of another corporation, or in case of a
reorganization or liquidation of the Company, the board of directors of the
Company, or the board of directors of any corporation assuming the
obligations of the Company hereunder, shall either (a) make appropriate
provisions for the protection of any awards by the substitution on an
equitable basis of appropriate stock or other property of the Company, or
appropriate stock or other property of the merged, consolidated or otherwise
reorganized corporation, provided only that such substitution of options or
other property shall comply with the requirements of Section 424 of the
Internal Revenue Code, or (b) terminate all restrictions relating to
restricted stock awards and give written notice to optionees that their
options and any stock appreciation rights or other award, will become
immediately exercisable, notwithstanding any waiting period or other
restriction otherwise prescribed by the compensation committee, and must be
exercised within 30 days of the date of such notice or they will be
terminated.
Any unexercised or undistributed portion of any expired, canceled,
terminated or forfeited award, or any alternative form of consideration under
an award that is not paid in connection with the settlement of any portion of
any award, will again be available for award under the 1999 Long Term
Incentive Plan, whether or not the participant has received benefits of
ownership during the period in which the participant's ownership was
restricted or otherwise not vested. Although Common Stock subject to
canceled options or stock appreciation rights will be counted against the
individual stock-based award limits to the extent required by Section 162(m),
only Common Stock actually issued will be charged against the aggregate
Common Stock limit under the 1999 Long Term Incentive Plan. Upon approval of
the 1999 Long Term Incentive Plan by the shareholders, the Company intends to
register under the Securities Act the number of shares of Common Stock
reserved for issuance under the 1999 Long Term Incentive Plan.
Full payment for Common Stock purchased on exercise of any option must
be made at the time of such exercise in cash or, if permitted by the
Compensation Committee, by transferring previously owned shares of Common
Stock having a fair market value equivalent to the exercise price or any
combination thereof. Withholding taxes, if any, are payable at the time of
exercise and must be made in cash. Any payment required in respect of other
awards may be in the amount and in any lawful form of consideration as may be
authorized by the Compensation Committee.
The 1999 Long Term Incentive Plan generally does not impose any
minimum vesting periods on options or other awards. The maximum term of an
option or any other award is ten years.
The 1999 Long Term Incentive Plan is not exclusive and does not limit
the authority of the Board of Directors or its committees to grant awards or
authorize any other compensation, with or without reference to the Common
Stock, under any other plan or authority. Approval of the 1999 Long Term
Incentive Plan by the shareholders of the Company will not be deemed to
constitute approval of any other compensation plan or authority.
Federal Income Tax Consequences
The following is a general description of federal income tax
consequences to participants and the Company relating to nonqualified stock
options and certain other awards that may be granted under the 1999 Long Term
Incentive Plan. This discussion does not purport to cover all tax
consequences relating to stock options and other awards.
An optionee will not recognize income upon the grant of a nonqualified
stock option to purchase Common Stock. Upon exercise of the option, the
optionee will recognize ordinary compensation income equal to the excess of
the fair market value of the Common Stock on the exercise date over the
exercise price for such stock. The Company will be entitled to a tax
deduction equal in amount and timing to the income recognized by the
optionee. The tax basis of the option stock in the hands of the optionee
will equal the exercise price for the stock plus the amount of ordinary
compensation income the optionee recognizes upon exercise of the option, and
the holding period for the stock will commence on the day the option is
exercised. An optionee who sells option stock will recognize capital gain or
loss measured by the difference between the tax basis of the stock and the
amount realized on the sale. This gain or loss will be long-term if the
stock is held for more than one year after exercise.
An optionee will not recognize income upon either the grant or
exercise of an incentive stock option to purchase Common Stock , so long as
the optionee was an employee of the Company at all times from the date of
grant until three months prior to exercise, or one year prior to exercise in
the event of death or disability. Generally, the amount by which the fair
market value of the Common Stock on the date of exercise exceeds the option
price will be includable in alternative minimum taxable income for purposes
of determining alternative minimum tax and those amounts will be added to the
tax basis of that stock for purposes of determining alternative minimum
taxable income in the year in which the stock is sold. Where an optionee who
has exercised an incentive stock option sells the Common Stock acquired upon
exercise more than two years after the date of grant and more than one year
after exercise, long-term capital gain or loss will be recognized equal to
the difference between the sales price and the option price. An optionee who
sells the Common Stock within two years after the date of grant or one year
after exercise will recognize ordinary compensation income in an amount equal
to the lesser of the difference between (a) the exercise price and the fair
market value of the Common Stock on the date of exercise or (b) the exercise
price and the sales proceeds. Any remaining gain or loss will be treated as
capital gain or loss. The Company will be entitled to a tax deduction equal
to the amount of ordinary compensation income recognized by the optionee in
this case. The deduction will be allowable at the same time the optionee
recognizes the income.
Stock appreciation rights are taxed and deductible in substantially
the same manner as nonqualified options.
If, as a result of a change in control, a participant's options or
stock appreciation rights or other rights become immediately exercisable, or
Common Stock or other benefits covered by another type of award are
immediately vested or not subject to restrictions, the additional value, if
any, attributable to the acceleration may be deemed a parachute payment
under Section 280G of the Internal Revenue Code. In such case, a portion of
such amount will be subject to a non-deductible excise tax , in addition to
any income tax payable. The Company generally will not be entitled to a
deduction for that portion of any parachute payment that is subject to the
excise tax.
The Board recommends a vote FOR approval of the 1999 Long Term
Incentive Plan. All current directors and executive officers will receive or
are eligible to receive benefits under the 1999 Long Term Incentive Plan and
will have an interest in the 1999 Long Term Incentive Plan.
Vote Required
In order to permit certain of the awards to qualify as
performance-based compensation for purposes of Section 162(m) of the Internal
Revenue Code, the 1999 Long Term Incentive Plan must be approved by the
affirmative vote of the majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting. If the shareholders do not approve
the 1999 Long Term Incentive Plan, no awards will be made under the 1999 Long
Term Incentive Plan, and the 1999 Long Term Incentive Plan will be null and
void.
PROPOSAL 3.
PROPOSAL TO ADOPT THE 1999 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
Introduction
The Board of Directors of the Company has determined that it is
desirable to adopt the 1999 Stock Option Plan for Non-employee Directors to
promote the interests of the Company and its shareholders by increasing the
proprietary and personal interest of Non-employee members of the Company's
Board of Directors in the growth and continued success of the Company by
granting them options to purchase shares of the Company's Common Stock.
The Board of Directors of the Company has approved the 1999 Stock
Option Plan for Non-employee Directors, subject to shareholder approval. A
copy of the full text of the 1999 Stock Option Plan for Non-employee
Directors is set forth in Appendix II to this Proxy Statement, and the
following description is qualified in its entirety by reference to Appendix
II. The 1999 Stock Option Plan for Non-employee Directors will be
administered by the Board of Directors.
Options Granted to Non-employee Directors
On August 4, 1999, each non-employee director, consisting of Clifford
B. Cohn, David L. Herman, L.G. Schafran and Hatim Tyabji received a grant of
options to purchase 30,000 shares of Common Stock, subject to shareholder
approval of the 1999 Stock Option Plan for non-employee Directors. In
addition, each Non-employee director will receive an additional grant of
options to purchase 30,000 shares of Common Stock each calendar year so long
as he remains a Non-employee director . Any individual who is not an
employee of the Company who is elected to the board of directors in the
future will receive an option to purchase (a) 30,000 shares of Common Stock
as soon as practicable after his election, and (b) an additional option to
purchase 30,000 shares of Common Stock in each calendar year thereafter .
Notwithstanding the foregoing, the Board of Directors has the discretion to
grant additional options to any participant at such times, in such amounts
and subject to such other terms and conditions as it deems appropriate.
The exercise price for options will be 100% of the fair market value
of a share of Common Stock as of the date the option is granted. Subject to
the discretion of the Board of Directors, the term of each option will be
five years from the date of grant; provided that all outstanding options will
terminate immediately if the holder ceases to be a member of the Board of
Directors. Options will become exercisable at the discretion of the Board of
Directors as set forth in the applicable option agreement. However, any
options that are not exercisable prior to a change in control will become
exercisable on the date of 3any change in control and will remain exercisable
for the remainder of their term. If a participant ceases to be a member of
the Board of Directors due to death, retirement on or after age 65 or
disability, all outstanding options held by that participant that are then
exercisable will remain exercisable for their term, and will then terminate.
No option granted under the 1999 Stock Option Plan for Non-employee
Directors will be transferable by the participant to whom options are granted
other than by will or the laws of descent and distribution. An option may be
exercised during the lifetime of a participant only by the participant or his
guardian or legal representative. The terms of options will be binding upon
the beneficiaries, executors, administrators, heirs and successors of the
participant.
The table below sets forth the determinable benefits that would
be granted under the 1999 Stock Option Plan for Non-employee Directors if the
shareholders approve that plan:
New Plan Benefits
1999 Stock Option Plan for Non-Employee Directors
Options to Acquire Common Stock
Name and Position Fair Market Value ($) Number of Shares
Clifford B. Cohn, Director $6.875/share 30,000(1)
David L. Herman, Director $6.875/share 30,000(1)
L.G. Schafran, Director $6.875/share 30,000(1)
Hatim Tyabji, Director $6.875/share 30,000(1)
Non-employee Directors, as a group $6.875/share 120,000(1)
_____________________________
(1) Options to purchase the number of shares of Common Stock indicated
were granted to each Non-employee director pursuant to the 1999 Stock
Option Plan for Non-employee Directors, subject to shareholder
approval .
Administration; Change in Control
The 1999 Stock Option Plan for Non-employee Directors will be
administered by the Board of Directors. The Board of Directors will have
authority within the terms and limitations of the 1999 Stock Option Plan for
Non-employee Directors to interpret and construe the 1999 Stock Option Plan
for Non-employee Directors and the related option agreements, establish,
amend and rescind any rules and regulations relating to the 1999 Stock Option
Plan for Non-employee Directors and make all other determinations necessary
or advisable for the administration of the 1999 Stock Option Plan for Non-
employee Directors and to carry out its purpose.
The Board of Directors is authorized to include specific provisions in
option agreements relating to the treatment of options in the event of a
change in control of the Company, and is authorized to take certain other
actions in that event. A change in control is defined generally to include
the following:
any person within the meaning of Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, other than the Company or any
subsidiary or any trustee or other fiduciary holding securities under
an employee benefit plan of the Company or any subsidiary, becoming
the beneficial owner, within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, directly or indirectly, of securities
of the Company representing more than thirty percent (30%) or more of
the combined voting power of the Company's then outstanding
securities;
a majority of the directors elected at any special or annual meeting
of shareholders are not individuals nominated by the Company's
incumbent board of directors, or individuals who are members of the
Company's board of directors at any one time shall immediately
thereafter cease to constitute a majority of the board of directors;
the approval of the Company's shareholders of the merger or
consolidation of the Company with another corporation, the sale of
substantially all of the Company's assets or the liquidation or
dissolution of the Company, unless, in the case of a merger or
consolidation, at least two-thirds (2/3) of the directors in office
immediately prior to such merger or consolidation constitute at least
two-thirds (2/3) of the members of the board of directors of the
surviving corporation of such merger and consolidation.
The Board of Directors may delegate to the officers or employees of
the Company the authority to execute and deliver such instruments and
documents and to take such actions as are necessary, advisable or convenient
for the effective administration of the 1999 Stock Option Plan for Non-
employee Directors.
Amendment and Termination
The Board of Directors will have the authority to amend or otherwise
modify, suspend or terminate the 1999 Stock Option Plan for Non-employee
Directors at any time, provided that no such action will affect the rights of
a recipient of any award previously granted. In addition, unless first
approved by the Company's shareholders, no amendment to the 1999 Stock Option
Plan for Non-employee Directors may be made to increase the total number of
shares which may be issued or transferred under the 1999 Stock Option Plan
for Non-employee Directors or change the exercise price for the shares
subject to options. No options may be granted during any period of
suspension, and in no event may any awards be granted after August 3, 2009,
on which date the 1999 Stock Option Plan for Non-employee Directors will
terminate, unless earlier terminated by action of the Board of Directors.
Amendments made without shareholder approval could increase the costs
to the Company under the 1999 Stock Option Plan for Non-employee Directors,
although the amount is not determinable.
Authorized Shares; Other Provisions; Non-Exclusivity
The number of shares of Common Stock that may be issued in respect of
options under the 1999 Stock Option Plan for Non-employee Directors will not
exceed 750,000. The 750,000 figure for the number of shares of Common Stock
to be available under the 1999 Stock Option Plan for Non-employee Directors
is based on an estimate of the number of shares of Common Stock that will be
subject to awards granted during the first six years of the term of the 1999
Stock Option Plan for Non-employee Directors. In the event the Board of
Directors determines that any stock dividend, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination, exchange of shares, warrants or rights offering to purchase
shares of Common Stock, or other similar corporate event, affects the value
of the Common Stock such that an adjustment is required in order to preserve
the benefits or potential benefits available under the 1999 Stock Option Plan
for Non-employee Directors, the Board of Directors will have the right to:
(x) adjust the number and kind of shares available for issuance under the
1999 Stock Option Plan for Non-employee Directors and subject to outstanding
options, and (y) adjust the grant or exercise price with respect to any
option or (z) make provision for a cash payment to an optionee or a person
who has an outstanding option in an amount equal to the then difference
between the exercise price and the fair market value of a share of Common
Stock.
Any unexercised or undistributed portion of any expired, canceled,
terminated or forfeited award, or any alternative form of consideration under
an award that is not paid in connection with the settlement of any portion of
any award, will again be available for award under the 1999 Stock Option Plan
for Non-employee Directors, whether or not the participant has received
benefits of ownership during the period in which the participant's ownership
was restricted or otherwise not vested. Although Common Stock subject to
canceled options will be counted against the individual stock-based award
limits to the extent required by Section 162(m), only Common Stock actually
issued will be charged against the aggregate Common Stock limit under the
1999 Stock Option Plan for Non-employee Directors. Upon approval of the 1999
Stock Option Plan for Non-employee Directors by the shareholders, the Company
intends to register under the Securities Act the number of shares of Common
Stock reserved for issuance under the 1999 Stock Option Plan for Non-employee
Directors.
The exercise price for any shares of Common stock purchased pursuant
to the exercise of an option must be paid in full upon exercise in cash, by
check or, at the discretion of the Board of Directors and upon the terms and
conditions as the Board of Directors may approve, by transferring previously
owned shares of Common Stock to the Company, or any combination of the
foregoing. Not less than 100 shares of Common Stock may be purchased at any
time upon the exercise of an option unless the number of shares of Common
Stock so purchased constitutes the total number of shares then purchasable
under the option or the board of directors determines otherwise.
The 1999 Stock Option Plan for Non-employee Directors generally does
not impose any minimum vesting periods on options or other awards. The
maximum term of an option or any other award is five years.
The 1999 Stock Option Plan for Non-employee Directors is not exclusive
and does not limit the authority of the Board of Directors or its committees
to grant awards or authorize any other compensation, with or without
reference to the Common Stock, under any other plan or authority. Approval
of the 1999 Stock Option Plan for Non-employee Directors by the shareholders
of the Company will not be deemed to constitute approval of any other
compensation plan or authority.
Federal Income Tax Consequences
The following is a general description of federal income tax
consequences to participants and the Company relating to nonqualified stock
options that may be granted under the 1999 Stock Option Plan for Non-employee
Directors. This discussion does not purport to cover all tax consequences
relating to stock options.
An optionee will not recognize income upon the grant of a nonqualified
stock option to purchase Common Stock. Upon exercise of the option, the
optionee will recognize ordinary compensation income equal to the excess of
the fair market value of the Common Stock on the exercise date over the
exercise price for such stock. The Company will be entitled to a tax
deduction in amount and timing equal to the income recognized by the
optionee. The tax basis of the option stock in the hands of the optionee
will equal the exercise price for the stock plus the amount of ordinary
compensation income the optionee recognizes upon exercise of the option, and
the holding period for the stock will commence on the day the option is
exercised. An optionee who sells option stock will recognize capital gain or
loss measured by the difference between the tax basis of the stock and the
amount realized on the sale. This gain or loss will be long-term if the
stock is held for more than one year after exercise.
If, as a result of a change in control, a participant's options become
immediately exercisable, or Common Stock or other benefits are immediately
vested or not subject to restrictions, the additional value, if any,
attributable to the acceleration may be deemed a parachute payment under
Section 280G of the Internal Revenue Code. In such case, a portion of such
amount will be subject to a non-deductible excise tax , in addition to any
income tax payable. The Company generally will not be entitled to a
deduction for that portion of any parachute payment that is subject to the
excise tax.
The Board recommends a vote FOR approval of the 1999 Stock Option Plan
for Non-employee Directors. All current Non-employee directors will receive
and are eligible to receive benefits under the 1999 Stock Option Plan for
non-employee Directors and will have an interest in the 1999 Stock Option
Plan for Non-employee Directors.
Vote Required
The 1999 Stock Option Plan for Non-employee Directors must be approved
in a separate vote by the affirmative vote of the majority of the Company's
outstanding common stock entitled to vote at the Annual Meeting. If the
shareholders do not approve the 1999 Stock Option Plan for Non-employee
Directors, no awards will be made under the 1999 Stock Option Plan for Non-
employee Directors, and the 1999 Stock Option Plan for Non-employee Directors
will be null and void.
PROPOSAL 4.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors of the Company has appointed Arthur Andersen LLP as
independent accountants to audit the books and accounts of the Company for
the year ending December 31, 1999, and recommends that the appointment of
such auditors be ratified by the shareholders.
Representatives of Arthur Andersen LLP, the Company's principal
accountants for the most recently completed and the current fiscal years, are
expected to be present at the meeting, will have the opportunity to make a
statement, and will be available to respond to questions.
GENERAL
Management of the Company does not know of any matters other than the
foregoing that will be presented for consideration at the Annual Meeting.
However, if other matters properly come before the Annual Meeting it is the
intention of the persons named in the enclosed proxy to vote thereon in
accordance with their judgment.
By Order of the Board of Directors
/s/ANTONIO L.DELISE
ANTONIO L. DELISE, Secretary
Appendix I
PubliCARD, Inc.
1999 LONG TERM INCENTIVE PLAN
PubliCARD, Inc., a Pennsylvania corporation, (the "Company") has
adopted the 1999 Long-Term Incentive Plan (the "Plan"), effective as of August
4, 1999, to (1) attract and retain key employees, (2) motivate participants to
achieve long-term goals, (3) encourage employees to acquire a proprietary
interest in the Company through the ownership of Company stock, and (4) reward
consultants to the Company who are not employees of the Company
("Consultants").
ARTICLE I
DEFINITIONS
When used herein, the following terms shall have the meaning set
forth below, unless the context clearly indicates otherwise:
1.1 "Board" shall mean the Board of Directors of the Company.
1.2 "Cause" shall mean (a) the conviction of the holder of a Plan
Award of a felony or a crime involving moral turpitude or (b) the
commission by the holder of a Plan Award of a public or notorious
act which subjects the Company to public disrespect, scandal or
ridicule and which adversely affects the value of the services to
the Company of the holder of the Plan Award.
1.3 "Change in Control" shall mean:
(i) any person within the meaning of Sections 13(d) and
14(d) of the Securities Exchange Act of 1934 (other
than the Company or any Subsidiary or any trustee or
other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary),
becoming the beneficial owner (within the meaning of
Rule 13d-3 under the Securities Exchange Act of
1934) directly or indirectly, of securities of the
Company representing thirty percent (30%) or more of
the combined voting power of the Company's then
outstanding securities;
(ii) a majority of the directors elected at any special
or annual meeting of stockholders are not
individuals nominated by the Company's incumbent
Board, or individuals who are members of the
Company's Board at any one time shall immediately
thereafter cease to constitute a majority of the
Board;
(iii) the approval of the Company's stockholders of the
merger or consolidation of the Company with another
corporation, the sale of substantially all of the
Company's assets or the liquidation or dissolution
of the Company, unless, in the case of a merger or
consolidation, at least two-thirds (2/3) of the
directors in office immediately prior to such merger
or consolidation constitute at least two-thirds
(2/3) of the members of the board of directors of
the surviving corporation of such merger and
consolidation. Notwithstanding anything herein to
the contrary, unless specifically provided in
advance by the Board, a Change in Control shall not
be deemed to have occurred as a result of any event
that occurs on or after the date the Company files
a voluntary petition to reorganize under Chapter 11
of the United States Bankruptcy Code or to liquidate
under chapter 7 of such Code, or following the
filing of an involuntary bankruptcy petition against
the Company.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.5 "Committee" shall mean the Compensation Committee of the Board, as
appointed pursuant to Section 2.1 hereof.
1.6 "Common Stock" shall mean the common stock of the Company, par
value $.10 per share.
1.7 "Company" shall mean PubliCARD, Inc.
1.8 "Disability" shall mean (a) the definition of "disability" used in
any employment agreement between a Participant and the Company or
(b) for any Optionee who has not entered into an employment
agreement with the Company, the inability, by reason of bodily
injury or physical or mental disease, or any combination thereof,
of the Optionee to perform his customary duties with the Company
for a period of ninety (90) days (whether or not consecutive) in
any period of one hundred and eighty (180) consecutive days.
1.9 "Employee" shall mean an officer or other employee of the Company
or any Subsidiary.
1.10 "Fair Market Value" per share of Common Stock as of a particular
date shall mean, unless otherwise determined by the Board:
(i) the closing sales price per share of Common Stock on
a national securities exchange for the business day
preceding the exercise date on which there was a
sale of shares of Common Stock on such exchange;
(ii) if clause (i) does not apply and the shares of
Common Stock are then quoted on the National
Association of Securities Dealers Automated
Quotation system (known as "NASDAQ"), the closing
price per share of Common Stock as reported on such
system for the business day preceding the exercise
date on which a sale was reported;
(iii) if clause (i) or (ii) does not apply and the shares
of Common Stock are then traded on an over-the-
counter market, the closing price per share of
Common Stock in such over-the-counter market for the
business day preceding the exercise date; or
(iv) if the shares are not then listed on a national
securities exchange or traded in an over-the-counter
market, such value as the Board in its discretion
may determine.
1.11 ""Good Reason" shall mean a significant change in the nature or
scope of the authorities, powers, functions, or duties normally
attached to an Employee's position with the Company.
1.12 "Grantee" shall mean an Employee or Consultant who is granted an
SAR.
1.13 "ISO" shall mean an Option which meets the requirement of Section
422 of the Code.
1.14 "NQSO" shall mean an Option that does not qualify as an ISO.
1.15 "Option" shall mean either an ISO or a NQSO, as the context
requires and as reflected in the applicable Option Agreement.
1.16 "Option Agreement" shall mean an agreement between the Company and
an Optionee setting forth the terms of any Option.
1.17 "Optionee" shall mean the recipient of an Option.
1.18 "Participant" shall mean any Employee or Consultant to whom a Plan
Award of any kind has been made.
1.19 "Plan Award" shall mean an award of Options, restricted stock,
SARs or other equity-based award as the Committee determines.
1.20 "SAR" shall mean a Stock Appreciation Right granted pursuant to
Article VI of the Plan.
1.21 "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain
owns stock possessing 50 percent or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
1.22 "Termination of Employment" shall mean the date on which the
employment relationship between the Company or any Subsidiary and
a Participant terminates for any reason, including, without
limitation, resignation, death, disability or retirement,
excluding, at the discretion of the Committee, a termination of
employment followed immediately by the commencement of a
consulting relationship between the Company or a Subsidiary and a
former employee.
ARTICLE II
PLAN ADMINISTRATION
2.1 Committee. The Plan shall be administered by the Committee which
shall consist of at least two members of the Board who shall be
appointed by and serve at the pleasure of the Board, provided that
each committee member must qualify as an "outside director" as
such term is defined in Section 162(m) of the Code, unless the
Board determines otherwise, in its sole discretion. Any vacancies
in the Committee shall be filled by the Board. Committee members
may resign at any time by delivering thirty (30) days' advance
written notice to the Board, and may be removed by the Board at
any time for any reason.
2.2 Duties and Powers of the Committee. The Committee shall adopt
rules and regulations for carrying out the administration of the
Plan as it deems appropriate. The Committee shall have the power
and the authority to interpret and construe the Plan and the
agreements pursuant to which Plan Awards are made, and any
interpretation and decision by the Committee with regard to any
question or matter arising under the Plan shall be final and
binding on all persons. Subject to the provisions hereof, the
Committee from time to time shall determine the terms and
conditions of all Plan Awards, including, but not limited to: (a)
selecting the persons to whom Plan Awards are granted,
(b) determining whether the Plan Award to any individual should be
Options, SARs, Restricted Stock or any combination thereof, and
the number of Options, SARs and shares of Restricted Stock to be
granted to any Employee or consultant, (c) determining the time or
times at which Plan Awards shall be granted, (d) determining the
duration of each Plan Award, (e) imposing any restrictions
applicable to Plan Awards, and (f) imposing any other terms and
conditions it deems appropriate for Plan Awards. The Committee
also shall have the authority and discretion to determine the
extent to which Plan Awards will be structured in order to comply
with Section 162(m) of the Code.
2.3 Majority Rule. The Committee shall act by a majority of its
members in attendance at a meeting at which a quorum is present or
by a memorandum or other written instrument signed by all
Committee members.
2.4 Compensation. Members of the Committee shall receive such
compensation for their services as may be determined by the Board,
in its sole discretion. All expenses and liabilities which any
member of the Committee incurs in connection with administering
the Plan shall be borne by the Company. The Committee may employ
attorneys, consultants, accountants, appraisers, brokers or other
persons to assist them, and shall be entitled to rely on the
advice of such persons.
ARTICLE III
SHARES SUBJECT TO THE PLAN
3.1 Shares of Stock Subject to the Plan. (a) Except as provided in
Section 10, the aggregate number of shares of Common Stock that
may be issued or transferred pursuant to Plan Awards shall not
exceed 3,000,000 which may be authorized and unissued shares or
previously issued shares acquired by the Company and held in
treasury, or any combination thereof. Any shares subject to a
Plan Award which for any reason terminates, expires, or is
forfeited may be subject to a new Plan Award, to the extent
consistent with applicable law. If an Option or related SAR is
exercised for stock, the shares covered by such Option or SAR
shall not thereafter be available for grant pursuant to the Plan.
(b) The maximum number of shares of common stock that may be
issued with respect to Options intended to be ISOs shall be
3,000,000. The maximum number of Options that may be
granted to any individual in any year shall be 500,000.
ARTICLE IV
TERM
4.1 Term. All Plan Awards must be made within ten years from August
4, 1999.
ARTICLE V
STOCK OPTIONS
5.1 Terms of Options. At the time an Option is granted, the Committee
shall determine (a) the number of Options to be granted,
(b) whether the Options are to be ISOs or NQSOs, (c) the exercise
price of each Option, provided that the exercise price of any
Option that is intended to be an ISO shall be at least equal to
the Fair Market Value of the Common Stock on the date of grant;
not less than 110% of Fair Market Value in the case of a grant to
an Employee who owns more than 10 percent of the total combined
voting power of all classes of stock of the Company or any
Subsidiary (a "10% Stockholder"), and (d) subject to Section 5.3
hereof, the period during which an Option shall vest, and become
exercisable; provided, however, that no Option shall be
exercisable after the tenth (10th) anniversary of the date on
which it was granted (the fifth (5th) anniversary in the case of
an ISO granted to a 10% Stockholder). Notwithstanding the
foregoing or anything else herein to the contrary, the Committee
may, in its sole discretion and subject to whatever terms and
conditions it deems appropriate, accelerate the exercisability of
an Option at any time.
5.2 Manner of Exercise. All or a portion of an exercisable Option
shall be deemed exercised upon the Optionee's delivery to the
Secretary of the Company of: (a) a written notice of exercise,
delivered in person or by first class mail to the Secretary of the
Company at the Company's principal executive office, in the form
prescribed by the Committee and executed by the Optionee or such
person as is then authorized to exercise the Option, (b) payment
in full of the exercise price in cash, by check, or, if the
Committee so permits, by transferring previously owned shares of
Common Stock (valued at Fair Market Value on the exercise date),
or any combination thereof, (c) such representations and documents
as the Committee, in its sole discretion, deems necessary or
advisable to effect compliance with all applicable provisions of
the Securities Act of 1933, as amended, and any other federal or
state securities laws or regulations. The Committee may, in its
sole discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without
limitation, placing legends on share certificates and issuing
stop-transfer notices to agents and registrars, and (d) in the
event that the Option shall be exercised pursuant to Section 5.3
by any person or persons other than the Optionee, appropriate
proof of the right of such person or persons to exercise the
Option. Not less than one hundred (100) shares may be purchased
at any time upon the exercise of an Option unless the number of
shares of Common Stock so purchased constitutes the total number
of shares then purchased under the Option or the Committee
determines otherwise in its sole discretion.
5.3 Exercisability Following Termination of Employment. Subject to
the Committee's discretion, following an Optionee's Termination of
Employment, his or her Options shall be exercisable as follows:
(a) Any Option which is not exercisable on the date of such
Termination of Employment shall not be exercisable
thereafter.
(b) If an Optionee voluntarily resigns without Good Reason or
is terminated for Cause, all Options shall terminate as of
the day before the date of the Optionee's Termination of
Employment, whether then exercisable or not.
(c) If an Optionee's Termination of Employment is due to death,
Disability, or retirement on or after reaching age 60, any
exercisable Option held by the Employee shall remain
exercisable for their original term, provided that (i) any
ISOs must be exercised within ninety (90) days following
Termination of Employment by reason of death or retirement
and one (1) year following Termination by reason of
Disability; and (ii) any Option intended to be an ISO that
is not exercised within such period shall be treated as an
NQSO and shall remain exercisable for its original term.
(d) Upon an Optionee's Termination of Employment for any other
reason, any exercisable Options shall remain exercisable
for a period of thirty (30) days from the date of his
Termination of Employment, but not later than the original
expiration date of the Option, and shall thereafter
terminate.
(e) Upon a Change in Control of the Company, all Options held
by an Optionee that are not then exercisable shall become
exercisable immediately, and shall remain exercisable for
their original term.
5.4 Exercisability Following Termination of Consulting Arrangement.
Upon the termination of a consulting arrangement for any reason,
any Options then held by a consultant that are not exercisable
shall expire on such date and any Options that are then
exercisable shall remain exercisable for thirty (30) days
following such termination and may not thereafter be exercised,
provided that such termination was not due to the misfeasance or
nonfeasance of the consultant, in which case all Options shall be
void and no longer exercisable as of the date of termination of
the arrangement.
5.5 Option Agreements. Each Option shall be evidenced by a written
stock option agreement in such form, not inconsistent with the
Plan, as the Committee shall approve from time to time, in its
sole discretion, which agreements need not be identical, and
shall be subject to such terms and conditions as the Committee may
prescribe, consistent with this Plan.
5.6 Reload Options. The Committee shall have the authority (but not
the obligation) to include within any Option Agreement a provision
entitling the Optionee to a further Option (a "Reload Option") if
the Optionee exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of
Common Stock held by the Optionee in accordance with the terms and
conditions of the Option Agreement. Any such Reload Option shall
not be an ISO; shall be for a number of shares equal to the number
of surrendered shares; shall have an exercise price equal to the
Fair Market Value of the Common Stock on the date of exercise of
the original Option; shall become exercisable if the purchased
shares are held for a period of time established by the Committee;
and shall be subject to such other terms and conditions as the
Committee, in its sole discretion, may determine.
5.7 Conditions to Issuance of Stock Certificate. The Company shall
not be required to issue or deliver any certificate or
certificates for shares of Common Stock purchased upon the
exercise of any Option or 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 such class of stock is then listed;
(b) The completion of any registration or other qualification
of such shares under any state or federal law, or under the
rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body which
the Committee shall, in its sole and absolute discretion,
deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee
shall, in its sole and absolute discretion, determine to be
necessary or advisable;
(d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from
time to time for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.
5.8 Rights as Stockholders. The holders of Options shall not be, nor
have any of the rights or privileges of, stockholders of the
Company in respect of any shares purchasable upon the exercise of
any part of an Option unless and until certificates representing
such shares have been issued by the Company to such holders.
ARTICLE VI
STOCK APPRECIATION RIGHTS
6.1 Grant of Stock Appreciation Rights. The Committee may grant a
Stock Appreciation Right (a) in connection and simultaneously with
the grant of an Option, (b) with respect to a previously granted
Option, or (c) independent of an Option. An SAR shall be subject
to such terms and conditions not inconsistent with this Plan as
the Committee shall impose, and shall be evidenced by a written
Stock Appreciation Right Agreement, which shall be executed by the
Grantee and an authorized officer of the Company. The Committee,
in its discretion, may determine whether an SAR is to qualify as
performance-based compensation as described in Section 162(m) of
the Code, and Stock Appreciation Right Agreements evidencing SARs
intended to so qualify shall contain such terms and conditions as
may be necessary to meet the applicable provisions of Section
162(m) of the Code. Without limiting the generality of the
preceding sentence, the Committee may, in its discretion and on
such terms as it deems appropriate, require as a condition to the
grant of an SAR that the Employee or consultant surrender for
cancellation some or all of the unexercised Options, awards of
Restricted Stock, SARs, or other rights which have been previously
granted to him under this Plan or otherwise. An SAR, the grant of
which is conditioned upon such surrender, may have an exercise
price lower (or higher) than the exercise price of the surrendered
Option or other award, may cover the same (or a lesser or greater)
number of shares as such surrendered Option or other award, may
contain such other terms as the Committee deems appropriate, and
shall be exercisable in accordance with its terms, without regard
to the number of shares, price, exercise period or any other term
or condition of such surrendered Option or other award.
6.2 Characteristics of Stock Appreciation Rights.
(a) A SAR that is granted in connection with a particular
Option (i) may be granted for no more than the number of
shares of Common Stock subject to such Option, (ii) shall
be exercisable only when and to the extent the related
Option is exercisable, and (iii) shall entitle the Grantee
(or other person entitled to exercise the Option) to
surrender to the Company the unexercised portion of any
then exercisable Option to which such SAR relates and to
receive from the Company in exchange therefor an amount
determined by multiplying the difference obtained by
subtracting the exercise price of the Option from the Fair
Market Value of a share of Common Stock on the date of
exercise of the SAR by the number of shares of Common Stock
with respect to which the SAR shall have been exercised,
subject to any limitations the Committee may impose.
(b) A SAR (i) which is independent of and not related to an
Option shall be exercisable in such installments as the
Committee may determine; shall cover such number of shares
of Common Stock as the Committee may determine; subject to
Section 6.3, shall be exercisable only while the grantee is
an Employee or a Consultant, and (ii) such SAR shall
entitle the Grantee (or other person entitled to exercise
the SAR) to exercise all or a specified portion of the SAR
and to receive from the Company an amount determined by
multiplying the difference obtained by subtracting the
price per share at which the SAR was granted from the Fair
Market Value of a share of Common Stock on the date of
exercise of the SAR by the number of shares of Common Stock
with respect to which the SAR shall have been exercised,
subject to any limitations the Committee may impose.
6.3 Exercise Following Termination of Employment and Consultancy.
Subject to the Committee's discretion, (i) an Employee whose
employment terminates while he or she is holding exercisable SARs
shall be entitled to exercise such SARs for the same period as
exercisable Options may be exercised pursuant to Section 5.3(a)-
(f) hereof (whether or not any such SARs were awarded in
connection with any Option), and (ii) any SARs held by a
consultant, whether or not exercisable, shall terminate on the
date the consultancy arrangement terminates, unless the Committee
determines otherwise.
ARTICLE VII
RESTRICTED STOCK
7.1 Award of Restricted Stock
(a) The Committee shall from time to time, in its sole and
absolute discretion, (i) determine the purchase price, if
any, and form of payment for Restricted Stock; provided,
however, that the purchase price shall be no less than the
par value of the Common Stock at the time an award is made,
and (ii) determine any other terms and conditions
applicable to such Restricted Stock, consistent with this
Plan.
(b) Upon the selection of an Employee or consultant to be
awarded Restricted Stock, the Committee shall instruct the
Secretary of the Company to issue such Restricted Stock and
may impose such conditions on the issuance of such
Restricted Stock as it deems appropriate.
(c) Notwithstanding the foregoing or anything to the contrary
herein, each Restricted Stock Agreement shall provide that,
upon a Change in Control, any restrictions on Restricted
Stock held by a Participant shall lapse and be of no
further force or effect, and the holder thereof shall be
treated as the owner of such Stock thereafter.
7.2 Restrictions. All shares of Restricted Stock issued under this
Plan (including any shares received by holders thereof with
respect to shares of Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization)
shall, in the terms of each individual Restricted Stock Agreement,
be subject to such restrictions as the Committee shall provide,
which restrictions may include, without limitation, restrictions
concerning voting rights and transferability and restrictions
based on duration of employment with the Company, Company
performance and individual performance; provided, however, that
the Committee may, on such terms and conditions as it may
determine to be appropriate, remove any or all of the restrictions
imposed by the terms of the Restricted Stock Agreement.
Restricted Stock may not be sold or encumbered until all
restrictions terminate or expire.
7.3 Termination of Employment. Except as otherwise expressly provided
for herein, any shares of Restricted Stock which are subject to
restriction upon an Employee's Termination of Employment with the
Company for any reason or when a consulting arrangement
terminates, as applicable, shall be forfeited and the Participant
shall have no further rights to or with respect to such shares.
7.4 Repurchase of Restricted Stock. The Committee shall provide in
the terms of each individual Restricted Stock Agreement that upon
a Termination of Employment or, if applicable, upon a termination
of any consulting relationship between the restricted stockholder
and the Company, the Company shall have the right but not the
obligation, to purchase any Restricted Stock held by such employee
or consultant at a cash price per share equal to the price paid by
the Employee or consultant for such Restricted Stock; provided,
however, that provision may be made that no such right of
repurchase shall exist in the event of a Termination of Employment
or termination of consultancy without Cause, or because of
retirement, death, disability, or otherwise.
7.5 Restricted Stock Agreement. Restricted Stock shall be issued only
pursuant to a written Restricted Stock Agreement, which shall be
executed by the selected Employee or consultant and an authorized
officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this
Plan.
7.6 Escrow. The Secretary of the Company or such other escrow holder
as the Committee may appoint shall retain physical custody of each
certificate representing Restricted Stock until all of the
restrictions imposed under the Restricted Stock Agreement with
respect to the shares evidenced by such certificate expire or
shall have been removed. While such shares are held by the escrow
holder, the Participant shall have, unless otherwise provided by
the Committee, all the rights of a stockholder with respect to
said shares, subject to any restrictions among other shareholders
of Common Stock, including the right to receive all dividends and
other distributions paid or made with respect to the shares;
provided, however, that in the discretion of the Committee, any
extraordinary distributions with respect to the Common Stock shall
be subject to the restrictions set forth in Section 7.2.
7.7 Legend. In order to enforce the restrictions imposed upon shares
of Restricted Stock hereunder, the Committee shall cause a legend
or legends to be placed on certificates representing all shares of
Restricted Stock that are still subject to restrictions under
Restricted Stock Agreements, which legend or legends shall make
appropriate reference to the conditions imposed thereby.
ARTICLE VIII
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
8.1 Capital Adjustments. (a) If dividends payable in Common Stock
during any fiscal year of the Company exceed in the aggregate 5%
of the Common Stock issued and outstanding at the beginning of
such fiscal year, or if there is during any fiscal year of the
Company one or more splits, subdivisions, or combinations of
shares of Common Stock resulting in an increase or decrease of
more than 5% of the shares outstanding at the beginning of the
year, the number of shares available under the Plan shall be
increased or decreased proportionately, as the case may be, the
number of shares subject to SARs and the related Fair Market Value
thereof as of the date of grant shall be increased or decreased
proportionately, as the case may be, and the number of shares
deliverable upon the exercise thereafter of any Options
theretofore granted shall be increased or decreased
proportionately, as the case may be, without change in the
aggregate purchase price. Common Stock dividends, splits,
subdivisions, or combinations during any fiscal year which do not
exceed in the aggregate 5% of the Common Stock issued and
outstanding at the beginning of such year shall be ignored for
purposes of the Plan. All adjustments shall be made as of the day
such action necessitating such adjustment becomes effective.
(b) Merger or Consolidation. If the Company is merged or
consolidated with or into another corporation, or if the
Common Stock or substantially all of the Company's assets
are exchanged for the stock of another corporation, or in
case of a reorganization or liquidation of the Company, the
Board, or the board of directors of any corporation
assuming the obligations of the Company hereunder, shall
either (i) make appropriate provisions for the protection
of any Plan Awards by the substitution on an equitable
basis of appropriate stock or other property of the
Company, or appropriate stock or other property of the
merged, consolidated, or otherwise reorganized corporation,
provided only that such substitution of options or other
property shall comply with the requirements of Section 424
of the Code for ISOs, or (ii) terminate all restrictions
relating to Restricted Stock awards and give written notice
to Optionees that their Options and any SARs or other Plan
Award, will become immediately exercisable, notwithstanding
any waiting period or other restriction otherwise
prescribed by the Committee, and must be exercised within
a stated period of the date of such notice or they will be
terminated.
ARTICLE IX
TERMINATION AND AMENDMENT OF THE PLAN
9.1 (a) The Committee shall have the right to amend or suspend the
Plan, in whole or in part, or to terminate the Plan at any time;
provided, however, that no such action shall effect or in any way
impair the rights of a recipient under any Plan Award theretofore
granted; and, provided further, that, except as provided in
Article VIII, unless first duly approved by the stockholders of
the Company entitled to vote thereon at a meeting (which may be
the annual meeting) duly called and held for such purpose, or by
a consent of stockholders, no amendment or change shall be made in
the Plan that: (a) increases the total number of shares which may
be issued or transferred under the Plan; (b) changes the purchase
price hereinbefore specified for the shares subject to options;
(c) extends the period during which Plan Awards may be granted or
exercised; or (d) changes the designation of persons eligible to
receive Plan Awards.
(b) Termination Date The Plan shall, in all events, terminate
on August 3, 2009, or on such earlier date as the Board of
Directors may determine. Any Option or SAR outstanding at
the termination date shall remain outstanding until it has
either expired or has been exercised. Any Restricted Stock
outstanding at the termination date shall remain subject to
the terms of the Plan until the restrictions thereon shall
have lapsed.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Effective Date. The Plan shall become effective August 4, 1999,
the date of its adoption by the Board of Directors, subject,
however, to approval by the stockholders of the Company within
twelve (12) months next following such Effective Date; and if such
approval is not obtained, the Plan and any and all Plan Awards
granted during such interim period shall terminate and be of no
further force or effect.
10.2 Rights as an Employee. Nothing in the Plan, the grant or holding
of a Plan Award, or in any agreement entered into pursuant to the
Plan shall confer to any holder of Plan Award any right to
continue in the employ of the Company or Subsidiary or to continue
a consulting arrangement with the Company or any Subsidiary, or
interfere in any way with the right of the Company or any parent
or Subsidiary of the Company to terminate a Participant's
employment or a consulting arrangement at any time.
10.3 Withholding. It shall be a condition to the performance of the
Company's obligation with respect to any Plan Award that a
Participant pay, or make provision satisfactory to the Company for
the payment of, any taxes which the Company is obligated to
collect with respect to the issuance, vesting or exercise of any
Plan Award, including any Federal, state, or local withholding
taxes.
10.4 Ownership and Transfer Restrictions. The Committee, in its sole
and absolute discretion, may impose such restrictions on the
ownership and transferability of the shares purchasable upon the
exercise of an Option as it deems appropriate, any such
restriction shall be set forth in the Stock Option Agreement and
may be referred to on the certificates evidencing such shares.
The Committee may require the Employee to give the Company prompt
notice of any disposition of shares of Common Stock acquired by
exercise of an ISO within (a) two years from the date of granting
such ISO to such Employee, or (b) one year after the transfer of
such shares to such Employee. The Committee may direct that the
certificates evidencing shares acquired by exercise of an Option
refer to such requirement to give prompt notice of disposition.
Notwithstanding the foregoing, with the consent of the Committee
and subject to such requirements as it shall determine, a
Participant may transfer an Option for no consideration to or for
the benefit of his spouse, parents, children (including step- and
adoptive children) and grandchildren, or to a trust for the
benefit of such individuals, or to a partnership or limited
liability company for one or more such individuals.
10.5 Rights as a Stockholder. Subject to Section 7.5, a recipient of
a Plan Award (other than a restricted stock award) shall have no
rights as a stockholder with respect to any shares issuable or
transferable upon exercise thereof until the date a stock
certificate is issued to him for such shares, and, except as
otherwise expressly provided in the Plan, no adjustment shall be
made for dividends or other rights for which the record date is
prior to the date such stock certificate is issued.
10.6 Non-Assignability of Plan Awards. Except as set forth in Section
10.4, no Plan Award shall be sold, pledged, assigned or
transferred by the recipient, except by will or by the laws of
descent and distribution or pursuant to a "qualified domestic
relations order," as such term is defined in the Code or Title I
of the Employee Retirement Income Security Act of 1974, as
amended. During the lifetime of a recipient, Plan Awards shall be
exercisable only by him or his personal representative or
guardian, except that an Option transferred pursuant to a
"qualified domestic relations order" may be exercised by the
transferee. No Plan Award or interest therein may be sold,
pledged, attached, or otherwise encumbered other than in favor of
the Company, and no Plan Award shall be liable for the debts,
contracts or engagements of the holder of a Plan Award or his or
her successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, encumbrance, assignment or any
other means whether such disposition may be voluntary or
involuntary or by operation of law or judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including
bankruptcy) and any attempt to do so shall be null and void and of
no force or effect.
10.7 Leave of Absence. In the case of a holder of a Plan Award on an
approved leave of absence, the Committee may, if it determines
that to do so would be in the best interests of the Company,
provide for continuation of Plan Awards during such leave of
absence, such continuation to be on such terms and conditions as
the Committee determines to be appropriate.
10.8 Other Restrictions. Each Plan Award shall be subject to the
requirement that, if at any time the Board of Directors or the
Committee shall determine, in its discretion, that the listing,
registration, or qualification of the shares issuable or
transferable upon exercise thereof upon any securities exchange or
under any state or Federal law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the granting of such Plan
Award or the issue, transfer, or purchase of shares thereunder,
such Plan Award may not be exercised in whole or in part unless
such listing, registration, qualification, consent, or approval
shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors. The Company shall not be
obligated to sell or issue any shares of Common Stock in any
manner in contravention of the Securities Act of 1933, as amended,
or any state securities law.
10.9 Governing Law. This Plan and any agreements hereunder shall be
interpreted and enforced under the internal laws of the State of
New York without regard to conflicts of law thereof.
10.10 No Waiver. No modification or waiver of any of the provisions of
this Plan shall be effective unless in writing and signed by the
party against whom it is sought to be enforced.
<PAGE>
Appendix II
PubliCARD, INC.
1999 STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
1. Purpose.
The purpose of the Plan is to promote the interests of the Company
and its shareholders by increasing the proprietary and personal interest of
non- employee members of the Board in the growth and continued success of
PubliCARD, Inc. (the "Company") by granting them Options to purchase
shares of the Company's stock.
2. Definitions.
Whenever the following terms are used in this Plan, they shall have
the meaning specified below unless the context clearly indicates to the
contrary.
"Board" shall mean the Board of Directors of the Company.
"Change in Control" shall mean the occurrence of any of the
following:
i. any person within the meaning of Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (other than the Company or
any Subsidiary or any trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any Subsidiary), becoming the
beneficial owner, within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined voting power of the
Company's then outstanding securities;
ii. a majority of the directors elected at any
special or annual meeting of stockholders are not individuals nominated by
the Company's incumbent Board, or individuals who are members of the
Company's Board at any one time shall immediately thereafter cease to
constitute a majority of the Board;
iii. the approval of the Company's stockholders of
the merger or consolidation of the Company with another corporation, the sale
of substantially all of the Company's assets or the liquidation or
dissolution of the Company, unless, in the case of a merger or consolidation,
at least two-thirds (2/3) of the directors in office immediately prior to
such merger or consolidation constitute at least two-thirds (2/3) of the
members of the board of directors of the surviving corporation of such merger
and consolidation. Notwithstanding anything herein to the contrary, unless
specifically provided in advance by the Board, a Change in Control shall not
be deemed to have occurred as a result of any event that occurs on or after
the date the Company files a voluntary petition to reorganize under Chapter
11 of the United States Bankruptcy Code or to liquidate under chapter 7 of
such Code, or following the filing of an involuntary bankruptcy petition
against the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
"Company" shall mean PubliCARD, Inc., a Delaware corporation, and
any successor corporation.
"Disability" shall mean (a) the definition of "disability" used in
any employment agreement between an Optionee and the Company, or (b) for any
Optionee who has not entered into an employment agreement with the Company, the
inability, by reason of bodily injury or physical or mental disease, or any
combination thereof, of the Optionee to perform his customary duties with the
Company for a period of ninety (90) days (whether or not consecutive) in any
period of one hundred and eighty (180) consecutive days.
"Fair Market Value" per Share as of a particular date shall mean,
unless otherwise determined by the Board:
iv. the closing sales price per Share on a national
securities exchange for the business day preceding the exercise date on which
there was a sale of Shares on such exchange;
v. if clause (i) does not apply and the Shares are
then quoted on the National Association of Securities Dealers Automated
Quotation system (known as "NASDAQ"), the closing price per Share as reported
on such system for the business day preceding the exercise date on which a
sale was reported;
vi. if clause (i) or (ii) does not apply and the
Shares are then traded on an over-the-counter market, the closing price for
the Shares in such over-the-counter market for the business day preceding the
exercise date; or
vii. if the Shares are not then listed on a national
securities exchange or traded in an over-the-counter market, such value as
the Board in its discretion may determine.
"Non-employee Director" shall mean a member of the Board who is not
an employee of the Company.
"Option" shall mean an option to purchase Shares granted pursuant
to the Plan. Options granted under the Plan are not intended to be "incentive
stock options" within the meaning of Section 422 of the Code.
"Option Agreement" shall mean an Option Agreement to be entered
into between the Company and an Optionee, which shall set forth the terms and
conditions of the Options granted to such Optionee.
"Participant" shall mean a Non-employee Director who is granted an
Option under the Plan.
"Plan" shall mean this PubliCARD, Inc. 1999 Stock Option Plan for
Non-employee Directors, as hereinafter amended from time to time.
"Share" shall mean a share of the Company's common stock, .10 par
value.
3. Shares Subject to the Plan.
a. Shares Subject to the Plan. Subject to adjustment
as set forth in Section 3(b), the maximum number of Shares that may be issued
or transferred pursuant to Options under this Plan shall be 750,000 which may
be authorized but unissued Shares or Shares held in the Company's treasury, or
a combination thereof. Any Shares subject to an Option that cease to be
subject thereto may again be the subject of Options hereunder.
b. Changes in Company's Shares. In the event the Board
determines that any stock dividend, extraordinary cash dividend, recapitali-
zation, reorganization, merger, consolidation, split-up, spin-off, combination,
exchange of shares, warrants or rights offering to purchase Shares, or other
similar corporate event, affects the value of the Shares such that an
adjustment is required in order to preserve the benefits or potential
benefits available under this Plan, the Board shall have the right, in its
sole discretion, and in such manner as it may deem equitable, to: (x) adjust
the number and kind of Shares available for issuance pursuant to the Plan
and subject to outstanding Options, and (y) adjust the grant or exercise
price with respect to any Option or (z) make provision for a cash payment
to an Optionee or a person who has an outstanding Option (in an amount
equal to the then difference between the exercise price and the Fair Market
Value of a Share).
4. Participation.
Each Non-employee Director shall be a participant in the Plan.
5. Terms of Options and Shares.
a. Terms. The Options granted hereunder shall have the
following terms and conditions:
i. Exercise Price. The exercise price of any
Option shall be one hundred percent (100%) of the Fair Market Value of a
Share as of the date the Option is granted.
ii. Term. Subject to the discretion of the Board,
the term of an Option shall be five years from the date it is granted.
iii. Vesting. An Option shall become exercisable
at the discretion of the Board, as embodied in the Option Agreement covering
such Option, provided, however, that any Options that are not exercisable
prior to a Change in Control shall become exercisable on the date of such
Change in Control and shall remain exercisable for the remainder of the Term
thereof.
iv. Number. Each current Non-employee Director
shall receive an Option grant of 30,000 Shares as of the Effective Date and
an additional grant of 30,000 Shares each calendar year thereafter so long
as he remains a Non-employee Director. Any individual who is not an employee
of the Company who is elected to the Board after the Effective Date shall
receive an Option to purchase (a) 30,000 shares as soon as practicable after
such election and (b) an additional 30,000 shares in each calendar year
thereafter so long as he remains a Non-employee Director. Notwithstanding
the foregoing, the Board shall have the discretion to grant additional
Options to any Participant at such times, in such amounts, and subject to
such other terms and conditions, as it deems appropriate.
b. Termination of Service. All outstanding Options held
by an Optionee shall terminate immediately if such individual ceases to be a
member of the Board for any reason other than death, retirement on or after age
65, or Disability. If an Optionee ceases to be a member of the Board due to
death, retirement on or after age 65, or Disability, all outstanding Options
held by such Optionee that are exercisable on such date shall remain
exercisable for their Term, and shall thereafter terminate.
c. Option Agreement. Options shall be granted only
pursuant to a written Option Agreement, which shall be executed by the Optionee
and an authorized officer of the Company and which shall contain such terms and
conditions as the Board shall determine, consistent with the Plan.
d. Non-Transferability. No Option granted under the
Plan shall be transferable by the Optionee to whom granted otherwise than by
will or the laws of descent and distribution, and an Option may be exercised
during the lifetime of such Optionee only by the Optionee or his guardian or
legal representative. The terms of such Option shall be binding upon the
beneficiaries, executors, administrators, heirs and successors of the Optionee.
e. Method of Exercise. The exercise of an Option
shall be made only by a written notice delivered in person or by first class
mail to the Secretary of the Company at the Company's principal executive
office, specifying the number of Shares to be purchased and accompanied by full
payment therefor and otherwise in accordance with the Option Agreement pursuant
to which the Option was granted. The exercise price for any Shares purchased
pursuant to the exercise of an Option shall be paid in full upon such exercise
in cash, by check or, at the discretion of the Board and upon such terms and
conditions as the Board shall approve, by transferring previously owned Shares
to the Company, or any combination thereof. Any Shares transferred to the
Company as payment of the exercise price shall be valued at their Fair Market
Value on the day preceding the date of exercise of such Option. If requested
by the Board, the Optionee shall deliver the Option Agreement evidencing the
Option to the Secretary of the Company who shall endorse thereon a notation of
such exercise and return such Option Agreement to the Optionee. Not less than
one hundred (100) Shares may be purchased at any time upon the exercise of an
Option unless the number of Shares so purchased constitutes the total number of
Shares then purchasable under the Option or the Board determines otherwise in
its sole discretion.
f. Rights as Stockholder. No Optionee shall be deemed
for any purpose to be or to have the rights and privileges of the owner of any
Shares subject to any Option unless and until (a) the Option shall have been
exercised pursuant to the terms thereof, and (b) the Company shall have issued
the Shares to the Optionee.
6. Administration.
The Plan shall be administered by the Board. Subject to the
provisions of the Plan, the Board shall be authorized to interpret and construe
the Plan and the Option Agreements, to establish, amend, and rescind any rules
and regulations relating to the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan and to carry out its
purpose. The determinations of the Board in the administration of the Plan, as
described herein, shall be final and conclusive. The Secretary shall be
authorized to implement the Plan in accordance with its terms and to take such
actions of a ministerial nature as shall be necessary to effectuate the intent
and purposes thereof.
7. Other Provisions.
a. Effective Date. The Plan shall become effective as
of August 4, 1999, (the "Effective Date"), subject, however, to approval by the
shareholders of the Company within twelve (12) months next following the
Effective Date, and, if such approval is not obtained, any Option grants made
hereunder shall terminate and be of no further force or effect.
b. Amendment, Suspension or Termination of the Plan.
The Plan may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Board; provided, however,
that, except as provided in Section 3(b), no amendment, suspension nor
termination shall, without the consent of the Optionee, alter or impair any
rights or obligations under any Option theretofore granted, and provided,
further, that unless first duly approved by the stockholders of the Company
entitled to vote thereon at a meeting (which may be the annual meeting) duly
called and held for such purpose or by a consent of stockholders, no amendment
or change shall be made in the Plan that: (a) increases the total number of
shares which may be issued or transferred under the Plan or; (b) changes the
exercise price for an Option. No Options may be granted during any period of
suspension nor after termination of the Plan, and in no event may any awards be
granted under the Plan after August 3, 2009, on which date the Plan shall
terminate unless earlier terminated by action of the Board.
c. Governing Law. The Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with
the laws of the State of New York without giving effect to the choice of law
principles thereof.
d. Regulations and Other Approvals. i. The obligation
of the Company to sell or deliver Shares with respect to Options granted under
the Plan shall be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and the obtaining
of all such approvals by governmental agencies as may be deemed necessary or
appropriate by the Board.
ii. The Board may make such changes as may be
necessary or appropriate to comply with the rules and regulations of any
government authority.
iii. Each Option is subject to the requirement that,
if at any time the Board determines, in its sole discretion, that the
listing, registration or qualification of Shares issuable pursuant to the
Plan is required by any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with, the grant
of an Option or the issuance of Shares, no Options shall be granted or
payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or
obtained free of any conditions as acceptable to the Board.
iv. In the event that the disposition of Shares
acquired pursuant to the Plan is not covered by a then current registration
statement under the Securities Act, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act or regulations thereunder, and the Board may
require any individual receiving Shares pursuant to the Plan, as a condition
precedent to receipt of such Shares, to represent to the Company in writing
that the Shares acquired by such individual are acquired for investment only
and not with a view to distribution. the certificate for such shall include
any legend that the Board deems appropriate to reflect any restrictions on
transfer.
e. Withholding of Taxes. No later than the date as of
which an amount first becomes includable in the gross income of an Optionee for
federal income tax purposes with respect to Options granted under this
Agreement, the Optionee shall pay to the Company, or the Optionee (or his
designated beneficiary) shall make arrangements satisfactory to the Company
regarding the payment of, any federal, estate, or local taxes of any kind
required by law to be withheld with respect to such amount. The obligations of
the Company under this Agreement shall be conditioned on such payment or
arrangements, and the Company shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due
to the employee.
f. Titles; Construction. Titles are provided herein for
convenience only and are not to serve as a basis for interpretation or
construction of the Plan. The masculine pronoun shall include the feminine and
neuter and the singular shall include the plural, when the context so
indicates.
<PAGE>
PUBLICARD, INC.
PROXY
PROXY SOLICITED BY BOARD OF DIRECTORS
for the Annual Meeting of Shareholders
The undersigned hereby appoints HARRY I. FREUND and JAY S. GOLDSMITH or
either of them, with full power of substitution, proxies to vote, unless
such authority is withheld, all shares registered in the name of the
undersigned of Common Stock of PubliCARD, Inc. (the "Company") that the
undersigned would be entitled to vote at the Annual Meeting of Shareholders
of the Company to be held at the Peninsula Hotel, 700 Fifth Avenue,
New York, New York at 10:00 a.m. on December 13, 1999, and any adjournments
thereof, with all powers the undersigned would possess if personally present,
for the election of directors and on all other matters described in the
Proxy Statement or which otherwise come before the Meeting in the discretion
of the Board of Directors.
This Proxy when properly executed will be voted in the manner directed
herein. If no instruction to the contrary is indicated, this Proxy will be
voted FOR the election of the Directors named in proposal 1 and FOR
proposals 2, 3 and 4.
1. ELECTION OF DIRECTORS: Harry I. Freund, Jay S. Goldsmith, Clifford B.
Cohn, David L. Herman, Jan-Erik Rottinghuis, L.G. Schafran and Hatim A.
Tyabji
__ FOR all nominees listed above (except as marked to the contrary hereon).
__ WITHHOLD AUTHORITY to vote for all nominees listed hereon.
(Instruction: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below.)
2. To consider and act upon a proposal to approve the Company's 1999 Long
Term Incentive Plan
__ FOR __ AGAINST __ ABSTAIN
3. To consider and act upon a proposal to approve the Company's 1999 Stock
Option plan for Non-employee Directors.
__ FOR __ AGAINST __ ABSTAIN
4. To ratify the selection of Arthur Andersen LLP as auditors for the
fiscal year ending December 31, 1999.
__ FOR __ AGAINST __ ABSTAIN
5. In their discretion, to act upon such other business as may properly
be brought before the Meeting or any adjournment thereof.
(Continued and to be signed and dated on the reverse side.)
NOTE: Your signature should
conform with your name as it
appears hereon. If signing as
attorney, executor, administrator,
trustee or guardian, please give
your full title as such. If stock
is owned by a partnership or
corporation, please indicate your
capacity in signing the Proxy. If
stock is held in joint ownership,
all co-owners must sign.
__________________________________
Signature
__________________________________
Signature if held jointly
Dated:___________________________,
1999.
PLEASE MARK, DATE, SIGN AND
RETURN THE PROXY CARD
PROMPTLY USING THE
ENCLOSED ENVELOPE.
P
R
O
X
Y
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
