<PAGE> Page 1 of 20
LEASING EDGE CORPORATION
6540 South Pecos Road
Suite 103
Las Vegas, Nevada 89120
-------------------
NOTICE OF ANNUAL MEETING
To Be Held July , 1996
To all Stockholders of
LEASING EDGE CORPORATION
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of LEASING EDGE CORPORATION, a Delaware corporation
(the "Company"), will be held at on
Monday, July , 1996 at the hour of 9:00 a.m., Pacific Time, for
the following purposes:
1. To elect five directors to serve for a term of one
year and until their respective successors shall be elected and
shall qualify;
2. To consider and vote upon a proposal to approve the
Company's 1996 Stock Option Plan;
3. To approve an Amendment to the Certificate of
Incorporation increasing the number of authorized shares of Common
Stock;
4. To ratify the appointment of auditors for the fiscal
year to end December 31, 1996; and
5. To transact such other business as may properly come
before the meeting or any adjournment(s) thereof.
Only stockholders of record at the close of business on
June , 1996] are entitled to notice of and to vote at such meeting
or any adjournment thereof. If you attend the meeting you may vote
in person if you wish, even though you have previously returned
your proxy. A copy of the Company's Proxy Statement and its Annual
Report to shareholders for the year ended December 31, 1995 are
enclosed herewith.
By order of the Board of Directors.
--------------------------------
Michael F. Daniels,
President
Las Vegas, Nevada
June , 1996
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE
SIGN THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE COMPANY'S BOARD
OF DIRECTORS AND RETURN IT IN THE PRE-ADDRESSED ENVELOPE WHICH HAS
BEEN PROVIDED. ANY STOCKHOLDER MAY REVOKE HIS PROXY AT ANY TIME
BEFORE THE MEETING BY WRITTEN NOTICE TO SUCH EFFECT, BY SUBMITTING
A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETING AND VOTING
IN PERSON.<PAGE>
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LEASING EDGE CORPORATION
6540 South Pecos Road
Suite 103
Las Vegas, Nevada 89120
---------------------------
PROXY STATEMENT FOR ANNUAL
MEETING OF STOCKHOLDERS
---------------------------
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of LEASING EDGE
CORPORATION (the "Company"), a Delaware corporation, for use at the
Annual Meeting of Stockholders to be held at
on Monday, July , 1996, at 9:00 a.m., Pacific Time, and at any
adjournment thereof (the "1996 Meeting").
Stockholders who execute proxies retain the right to
revoke them at any time by notice in writing to the Secretary of
the Company, by revocation in person at the meeting or by
presenting a later dated proxy. Unless so revoked, the shares
represented by proxies will be voted at the meeting in accordance
with the directions given therein.
The principal executive offices of the Company are
located at 6540 South Pecos Road, Suite 103, Las Vegas, Nevada
89120. The approximate date upon which this Proxy Statement and
the enclosed form of proxy will first be sent to stockholders is on
or about June , 1996.
Stockholders of record of the Company's Common Stock at
the close of business on June , 1996, (the "Record Date") shall
be entitled to one vote for each share then held. There were
outstanding on said date shares of Common Stock owned by
approximately stockholders of record.
Management and Directors of the Company, which
collectively owned on the Record Date approximately % of the
outstanding shares of the Common Stock, have indicated that they
will vote all of their shares for each such proposal.
A list of stockholders entitled to vote at the 1996
Meeting will be available at the Company's offices, 6540 South
Pecos Road, Suite 103, Las Vegas, Nevada 89120 for a period of ten
days prior to the 1996 Meeting for examination by any stockholder,
and at the 1996 Meeting itself.
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ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS
Nominees to the Board of Directors
Five directors will be elected at the 1996 Meeting to
serve for a term of one year and until their respective successors
shall have been elected and shall qualify. Unless otherwise
indicated, the accompanying form of proxy will be voted for the
persons listed below. In the event that any nominee for Director
should become unavailable to serve, it is intended that votes will
be cast, pursuant to the enclosed form of proxy, for such
substitute nominee as may be nominated by the Company. At this
time, the Board of Directors knows of no reason why any nominee
might be unable to serve. There is no arrangement or understanding
between any director or nominee and any other person pursuant to
which such person was selected as a director or nominee.
Michael F. Daniels
L. Derrick Ashcroft
William G. McMurtrey
Larry M. Segall
David C. Ward
Messrs. Daniels, Ashcroft, McMurtrey and Segall and Dr.
Ward are current members of the Board of Directors. Certain
information regarding these nominees is set forth below in the
MANAGEMENT Section under the heading "Directors and Executive
Officers".
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders
vote "FOR" each of the five nominees named above.
Vote Required
The nominees for election as director at the 1996 Meeting
who receive the five largest pluralities of votes properly cast for
the election of directors shall be elected directors of the
Company. Abstentions with respect to the election of a nominee for
Director will have the same effect as a withheld vote and broker
non-votes will have no effect on the election of Directors.
Cumulative voting is not permitted.
<PAGE> Page 4 of 20
APPROVAL OF THE COMPANY'S 1996 STOCK OPTION PLAN
PROPOSAL 2: PROPOSAL TO APPROVE THE ADOPTION OF THE COMPANY'S 1996
STOCK OPTION PLAN
General
On February 9, 1996, the Company's Board of Directors
adopted the Company's 1996 Stock Option Plan, subject to
stockholder approval (the "Stock Option Plan"). The following
summary of the provisions of the Stock Option Plan is qualified in
its entirety by express reference to the text of the Stock Option
Plan attached as Exhibit I hereto. Terms not otherwise defined in
this summary shall have the meaning given to them in the text of
the Stock Option Plan.
Shares Granted and Reserved
Under the Stock Option Plan, a total of 1,000,000 shares
of Common Stock are reserved to be issued upon exercise of options
granted under the plan, subject to adjustment in the event of,
among other things, an increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, stock
dividend, combination or reclassification of the Common Stock of
the Company or the payment of a stock dividend with respect to the
Common Stock. As of May 10, 1996, options for the purchase of a
total of 500,000 shares had been granted and were outstanding under
the Stock Option Plan at an exercise price of $1.66 per share.
Such exercise price was equal to the fair market value of the
Common Stock on the date of grant. Included within such total are
options granted to the Company's President, Michael F. Daniels, the
Company's Chief Financial Officer and Secretary, William J. Vargas
and the President of the Company's wholly-owned subsidiary, William
G. McMurtrey, to purchase 250,000, 70,000 and 60,000 shares of
Common Stock, respectively. The options granted to employees vest
in three equal annual installments and expire five years from the
date of grant.
On May , 1996 the closing sales price of the
Company's Common Stock on The Nasdaq Stock Market's SmallCap Market
(the "Nasdaq Market") was $ . per share.
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Plan Description
Purpose. The Purpose of the Stock Option Plan is to
strengthen the Company by providing an incentive to its employees,
consultants and directors and encouraging them to devote their
abilities to the success of the Company. It is intended that this
purpose be achieved by extending to employees, consultants and
directors of the Company or any subsidiary an added long-term
incentive for high levels of performance and exceptional efforts
through the grant of options to purchase shares of the Common Stock
of the Company.
Administration. The Stock Option Plan provides that it
shall be administered by a disinterested committee consisting of at
least two persons chosen by the Board of Directors (the
"Committee"). The Committee must consist of at least two directors
who are "disinterested" persons as defined in Rule 16b-3 under the
Securities Exchange Act of 1934 (the "Exchange Act"). Presently,
Messrs. Segall and Ashcroft comprise the Stock Option Committee
(hereafter the "Committee"), responsible for administering the
Stock Option Plan with respect to awards to key employees and
directors, respectively. Subject to the terms of the Stock Option
Plan, the Committee has full power to select, from among the
employees and directors eligible for option grants, the individuals
to whom options will be granted, and to determine the specific
terms and conditions of each option grant in a manner consistent
with the Stock Option Plan; to waive compliance by participants
with terms and conditions of option grants; to modify or amend
option grants in a manner consistent with the Stock Option Plan; to
interpret the Stock Option Plan and decide any questions and settle
all controversies and disputes that may arise in connection
therewith; and to adopt, amend, and rescind rules and regulations
for the administration of the Stock Option Plan. Determinations of
the Committee on all matters relating to the Stock Option Plan are
conclusive.
Eligibility. Options may be granted to any employee,
consultant or director of the Company, provided that incentive
stock options (as defined below) may only be granted to employees
and to directors who are also employees. Under Exchange Act Rule
16b-3, a member of the Committee may not participate in the Stock
Option Plan.
Options: Grants and Exercise. The Stock Option Plan
permits the granting of non-transferable stock options that qualify
as incentive stock options ("ISOs") under Section 422(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), and non-
transferable stock options that do not so qualify ("non-statutory
options"). The option exercise price of each option is to be
determined by the Committee, but it may not be less than 100% of
the fair market value of the shares on the date of grant (110% in
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the case of a person who owns stock possessing more than 10% of the
voting power of the Company (a "10% stockholder")). For purposes
of the Stock Option Plan, "fair market value" on any given date
means the last sales price at which Common Stock is traded on such
date as reflected on the Nasdaq Market.
The term of each option shall be determined by the
Committee; provided, however, in the case of an ISO, the term may
not exceed ten years from the date of grant (five years, in the
case of a 10% stockholder); non-statutory options have a term
limited to ten years (five years, in the case of a 10% stockholder)
from the date of grant.
The Committee determines at what time or times and under
what conditions (including performance criteria) each option may be
exercised. Options may be made exercisable in installments, and
the exercisability of options may be accelerated by the Committee.
The Committee also determines, at the time of grant of each option,
the terms and conditions under which the options granted to a
participant may be exercised in the event of such participant's
termination of service as an employee or director as a result of
death, disability or termination of employment.
To the extent not otherwise provided by the Committee,
options granted to employees become exercisable in three
installments, each equal to one-third of the entire option granted
and exercisable on the first, second and third anniversaries of the
grant date, respectively. In the event of termination of a
participant's service to the Company, vested options may be
exercised within six months following the date of death or
following a determination of disability and within three months
following termination for any other reason; except that, if such
termination is for cause, the options will not be exercisable
following such termination. In no event may an option be exercised
later than the date of expiration of the term of the option as set
forth in the agreement evidencing such option.
In order to exercise an option, the participant must
provide written notice and full payment to the Secretary of the
Company. The option exercise price of options granted under the
Stock Option Plan must be paid for in cash or other shares of
Common Stock upon such terms and conditions as determined by the
Committee. The Committee may require that upon exercise of an
option, certificates representing shares thereby acquired bear an
appropriate restrictive legend if the sale of the shares has not
been registered under the Securities Act of 1933, as amended.
No option may be transferred other than by will or by the
laws of descent and distribution, and during a participant's
lifetime an option may only be exercised by him or her.
<PAGE> Page 7 of 20
Mergers and Consolidations. In the event of a
dissolution or liquidation or merger or consolidation of the
Company, the options shall continue in effect in accordance with
their respective terms, and each participant shall be entitled to
receive the same number and kind of stock, securities, cash,
property or other consideration that each holder of Common Stock
was entitled to receive in the transaction in respect of the Common
Stock.
Amendment. The Committee may amend the Stock Option Plan
or any outstanding option for any purpose which may at the time be
permitted by law, except that no amendment or termination of the
Stock Option Plan may adversely affect the rights of any
participant (without his or her consent) under an option previously
granted.
Term of Plan. Unless sooner terminated by the Board, the
Stock Option Plan will terminate at the tenth anniversary of the
date of adoption by the Board.
Certain Federal Income Tax Consequences
The following summary generally describes the principal
federal (and not state and local) income tax consequences of
options granted under the Stock Option Plan. It is general in
nature and is not intended to cover all tax consequences that may
apply to a Stock Option Plan participant or to the Company. The
provisions of the Code and the regulations thereunder relating to
these matters ("Treasury Regulations") are complex, and their
impact in any one case may depend upon the particular
circumstances. Each holder of an option under the Stock Option
Plan should consult the holder's own accountant, legal counsel or
other financial advisor regarding the tax consequences of
participation in the Stock Option Plan. This discussion is based
on the Code as currently in effect.
If an option (whether an ISO or non-statutory) is granted
to a participant in accordance with the terms of the Stock Option
Plan, no income will be recognized by such participant at the time
the option is granted.
Generally, on exercise of a non-statutory option, the
amount by which the fair market value of the shares of the Common
Stock on the date of exercise exceeds the purchase price of such
shares will be taxable to the participant as ordinary income, and,
in the case of any employee, the Company will be required to
withhold tax on the amount of income recognized by the employee
upon exercise of a non-statutory option. Such amount will be
deductible for tax purposes by the Company in the year in which the
participant recognizes the ordinary income. The disposition of
<PAGE> Page 8 of 20
shares acquired upon exercise of a non-statutory option will result
in capital gain or loss (long-term or short-term depending on the
applicable holding period) in an amount equal to the difference
between the amount realized on such disposition and the sum of the
purchase price and the amount of ordinary income recognized in
connection with the exercise of the non-statutory option.
Generally, on exercise of an ISO, an employee will not
recognize any income and the Company will not be entitled to a
deduction for tax purposes. However, the difference between the
purchase price and the fair market value of the shares of Common
Stock received ("ISO shares") on the date of exercise will be
treated as a positive adjustment in determining alternative minimum
taxable income, which may subject the employee to the alternative
minimum tax ("AMT"). Upon the disposition of the ISO shares, the
employee will recognize long-term or short-term capital gain or
loss (depending on the applicable holding period) in an amount
equal to the difference between the amount realized on such
disposition and the purchase price of such shares. Generally,
however, if the employee disposes the ISO shares within two years
after the date of option grant or within one year after the date of
option exercise (a "disqualifying disposition"), the employee will
recognize ordinary income, and the Company will be entitled to a
deduction for tax purposes for the taxable year in which the
disqualifying disposition occurs, in the amount of the excess of
the fair market value of the shares on the date of exercise over
the purchase price (or, if less, the amount of the gain on sale).
Any excess of the amount realized by the holder on the
disqualifying disposition over the fair market value of the shares
on the date of exercise of the ISO will ordinarily constitute
capital gain.
If an option is exercised through the use of Common Stock
previously owned by the employee, such exercise generally will not
be considered a taxable disposition of the previously owned shares
and, thus, no gain or loss will be recognized with respect to such
shares upon such exercise. However, proposed Treasury Regulations
would provide that, if the previously owned shares are ISO shares
and the holding period requirement for those shares was not
satisfied at the time they were used to exercise an option, such
use would constitute a disqualifying disposition of such previously
owned ISO shares, resulting in the recognition of ordinary income
(but not any additional capital gain) in the amount described
above. If an otherwise qualifying ISO first becomes exercisable in
any one year for shares having a fair market value, determined as
of the date of the grant, in excess of $100,000, the portion of the
option in respect of such excess shares will be treated as a non-
statutory option.
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Section 16(b) of the Exchange Act generally requires
officers, directors and 10% stockholders of the Company to disgorge
profits realized by buying and selling the Company's Common Stock
within a six month period. Consequently, by application of Code
Section 83 to those participants who are subject to Section 16,
generally the relevant date for recognizing and measuring the
amount of ordinary income in connection with an exercise of a non-
statutory option (or AMT in the case of an ISO), as well as the
relevant date for recognizing and measuring the amount of an
employee's ordinary income and the Company's tax deduction in
connection with a disqualifying disposition of ISO shares as
discussed above, will be the later of: (i) six months following the
date of grant, and (ii) the date of exercise of the option unless
such participants elect otherwise under Code Section 83(b).
Board Recommendation
The Board of Directors recommends that stockholders vote
FOR the approval of the Stock Option Plan.
Vote Required
The affirmative vote of the record holders of a majority
of the Common Stock present in person or by proxy at the Annual
Meeting and entitled to vote is required to approve the Stock
Option Plan. Approval of the Stock Option Plan by stockholders is
required for ISO options granted under the Stock Option Plan to
meet the requirements of Code Section 422 and for options granted
under the Stock Option Plan to persons potentially liable under
Section 16 of the Exchange Act to be exempt from liability to the
extent provided under Exchange Act Rule 16b-3. Abstentions will
have the same effect as a vote against the approval of the Stock
Option Plan and broker non-votes will have no effect on such vote.
<PAGE>
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INCREASE IN AUTHORIZED SHARES
PROPOSAL 3: APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO INCREASE THE AUTHORIZED COMMON STOCK
The Board of Directors has recommended the adoption of an
amendment to the Company's Certificate of Incorporation which will
increase the authorized Common Stock from 10,000,000 shares to
12,500,000 shares.
During the past few months, the Board of Directors of the
Company has authorized the issuance of warrants, as part of
securities offerings, and options, including options under the 1996
Stock Option Plan. The Company is required to increase the
authorized number of shares of Common Stock in order to reserve the
shares for issuance under those warrants and options and to enhance
the Company's flexibility in connection with possible future
actions such as stock dividends or splits, acquisitions, adoption
of stock option or similar employee benefit plans, the funding of
capital and operating expenditures or other corporate purposes.
The future issuance of any newly authorized stock, if any, would be
authorized by resolution of the Board of Directors without further
approval of the stockholders. At this time, other than to be
reserved for issuance pursuant to certain presently outstanding
options and warrants, no specific use for the increased shares is
contemplated.
The additional Common Stock would be authorized subject
to the same voting rights which now apply. As provided for in the
Board of Directors resolution, the FOURTH paragraph of the
Company's Certificate of Incorporation will be amended to read as
follows:
FOURTH: A. The Corporation shall be authorized to issue
(i) twelve million, five hundred thousand (12,500,000) shares of
common stock, one cent ($.01) par value...
Board Recommendation
The Board of Directors recommends that stockholders vote
FOR the adoption of an amendment to the Company's Certificate of
Incorporation which will increase the authorized Common Stock.
Vote Required
The affirmative vote of the record holders of a majority
of the Common Stock present in person or by proxy at the Annual
Meeting and voting is required to approve the amendment to the
Company's Certificate of Incorporation. Abstentions and broker
non-votes will have the same effect as a vote against the approval
of the amendment to the Company's Certificate of Incorporation.
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INDEPENDENT PUBLIC ACCOUNTANTS
PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT
ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwick LLP
to audit the accounts of the Company for the fiscal year ended
December 31, 1996. The Company has an Audit Committee with
responsibility for recommending the engagement of certain auditors.
Approval of the recommendation of the Audit Committee is made by
the Board of Directors as a whole.
Although stockholder ratification of the Board of
Directors' action in this respect is not required, the Board of
Directors considers it desirable for stockholders to pass upon the
selection of auditors and, if the stockholders disapprove of the
selection, intends to consider the selection of other auditors for
the fiscal year ending December 31, 1996.
Representatives of KPMG Peat Marwick LLP are expected to
be present at the 1996 Meeting. Such persons will have an
opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders
vote "FOR" ratification of the appointment of KPMG Peat Marwick LLP
as independent accountants for the Company.
Vote Required
The affirmative vote of at least a majority of votes cast
of all shares of Common Stock present, or represented, at the 1996
Meeting and entitled to vote is required to ratify the appointment
of KPMG Peat Marwick LLP as independent accountants for the
Company. Abstentions and broker non-votes will have no effect on
such vote.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of April 10, 1996,
certain information concerning those persons known to the Company,
based on information obtained from such persons, with respect to
the beneficial ownership (as such term is defined in Rule 13d-3
under the Securities Act of 1934) of shares of Common Stock, $0.01
par value, of the Company by (i) each person known by the Company
to be the owner of more than 5% of the outstanding shares of Common
Stock, (ii) each Director of the Company, (iii) each executive
officer named in the Summary Compensation Table and (iv) all
executive officers and Directors as a group:
<TABLE>
<CAPTION>
=================================================================
Amount and Nature
Name and Address of of Beneficial Percentage of
Beneficial Owner (1) Ownership (2) Class (3)
- ------------------------------------------------------------------
<S> <C> <C>
Michael F. Daniels 468,125 (4) 14.4%
- ------------------------------------------------------------------
William G. McMurtrey 145,138 (5) 4.6%
- ------------------------------------------------------------------
L. Derrick Ashcroft 72,500 (6) 2.3%
- ------------------------------------------------------------------
Larry M. Segall 66,875 (7) 2.1%
- ------------------------------------------------------------------
David C. Ward 15,000 (8) (9)
- ------------------------------------------------------------------
Select Media, Inc. 275,000 (10) 8.8%
- ------------------------------------------------------------------
All Directors and
Executive Officers as
a Group (6 persons) 795,138 23.5%
=================================================================
</TABLE>
(1) The address for all individuals identified herein is 6540
S. Pecos Road, Suite 103, Las Vegas, Nevada 89120.
(2) Unless otherwise noted, the Company believes that all
persons named in the table have sole investment power
with respect to all shares of Common Stock beneficially
owned by them. A person is deemed to be the beneficial
owner of securities that can be acquired by such person
within 60 days from the date hereof upon the exercise of
warrants or options or upon the conversion of convertible
securities. Each beneficial owner's percentage ownership
is determined by assuming that options or warrants or
shares of convertible securities that are held by such
<PAGE> Page 13 of 20
person (but not those held by any other person) and which
are exercisable or convertible within 60 days from the
date hereof have been exercised or converted.
(3) Based on 3,129,319 shares of Common Stock outstanding as
of April 10, 1996.
(4) Includes options to purchase 101,250 shares of Common
Stock granted to Mr. Daniels which are currently
exercisable and options to purchase 12,500 shares of
Common Stock which are exercisable within 60 days hereof.
(5) Includes options to purchase 6,250 shares of Common Stock
granted to Mr. McMurtrey which are exercisable within 60
days of the date hereof.
(6) Includes options to purchase 72,500 shares of Common
Stock granted to Mr. Ashcroft which are currently
exercisable.
(7) Includes options to purchase 54,000 shares of Common
Stock granted to Mr. Segall which are currently
exercisable.
(8) Includes options to purchase 5,000 shares of Common Stock
granted to Dr. Ward which are currently exercisable.
(9) Represents less than one percent ownership.
(10) Includes options to purchase 275,000 shares of Common
Stock which are currently exercisable.
<PAGE>
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MANAGEMENT
Directors and Executive Officers
The names and ages of the directors and executive
officers of the Company and their positions with the Company, are
as follows:
<TABLE>
<CAPTION>
==================================================================
Name Age Position
- ----------------------------------------------------------------
<S> <C> <C>
Michael F. Daniels 48 Chairman of the Board
President and Chief
Executive Officer,
Director
- ----------------------------------------------------------------
Larry M. Segall 41 Director
- ----------------------------------------------------------------
Derrick Ashcroft 67 Director
- ----------------------------------------------------------------
David C. Ward 55 Director
- ----------------------------------------------------------------
William McMurtrey 57 Director
- ----------------------------------------------------------------
William J. Vargas 37 Vice President-
Finance, Chief
Financial Officer,
Treasurer and
Secretary
=================================================================
</TABLE>
Michael F. Daniels. Mr. Daniels has served as Chairman
of the Board of Directors, President and Chief Executive Officer
since April 1994 and as a Director of the Company since 1983. He
served as Chief Operating Officer from March 1993 to April 1994
and as Senior Vice-President-Marketing for more than five years
prior thereto. From 1970 to 1983 he was a Senior Systems
Engineer with Metropolitan Life Insurance Company.
Larry M. Segall. Mr. Segall has served as a Director
of the Company since November 1989. Mr. Segall has been employed
by Tiffany & Co. since 1985 and is currently its Vice President -
Treasurer and Controller. From 1983 to 1985 he was Controller of
Murjani International Ltd. From 1977 to 1983 he was employed as
an auditor with Touche Ross & Co.
<PAGE> Page 15 of 20
L. Derrick Ashcroft. Mr. Ashcroft has served as a
Director since August 1994. From 1988 to 1995 he was Chairman of
the Board of Cardiopet, Inc., an animal diagnostic firm and from
1986 through 1988 he served as Chairman and President of Ashcroft
Rubin, Inc., an equipment leasing company specializing in tax-
driven equipment leases. He also currently serves as a Director
on the Board's of Tatatech, Inc., a high tech venture capital
firm and Telco Technologies, Inc., a telecommunications services
company. Mr. Ashcroft is a graduate of Oxford University,
England.
David C. Ward. Dr. Ward has served as a Director of the
Company since May 1995. Dr. Ward has been a faculty member,
Department of Genetics and Molecular Biographics and
Biochemistry, Yale University School of Medicine since 1971 and a
Professor since 1982. He is a business advisor to Integrated
Genetics, Genzyme Corporation, Seq, Inc., Anco Rx and the
Canadian Medical Research Council.
William G. McMurtrey. Mr. McMurtrey has served as a
Director of the Company since June 1994 and as President of
Pacific Mountain Computer Products, Inc. since 1978. From 1974
to 1978, Mr. McMurtrey was a Regional Vice President for Telex
Corporation and from 1967 to 1974 he was a Branch Manager for the
Honeywell Corporation from 1967 to 1974.
William J. Vargas. Mr. Vargas has served as Vice
President-Finance, Chief Financial Officer and Treasurer since
May 1995 and as Secretary since February 1996. From July 1993
through January 1995, Mr. Vargas was the Senior Director of
Finance for Fitzgeralds Casino/Hotel in Las Vegas, Nevada and
from February 1995 through April 1995 he was an independent
financial consultant. From July 1990 to December 1991 and from
January 1992 to July 1993 he was the Chief Financial Officer of
Electronic Data Technologies and Sport of Kings, Inc.,
respectively, two publicly traded gaming companies. From July
1984 to July 1990 he was employed as an auditor with Arthur
Andersen & Co.
Meetings and Committees of the Board of Directors
The Board of Directors held a total of five meetings
during the fiscal year ended December 31, 1995. All incumbent
directors attended at least seventy-five percent of those
meetings and of its committees of the Board on which they served.
The Board of Directors has the following committees,
the current composition of which is as follows: the Compensation
Committee, comprised of Messrs. Daniels, Segall and Ashcroft; the
Audit Committee, comprised of Messrs. Segall and Ashcroft; and
the Stock Option Plan Committee, comprised of Messrs. Segall and
Ashcroft.
<PAGE> Page 16 of 20
The Compensation Committee is charged with periodically
reviewing the compensation of the Company's officers and
employees and recommending appropriate adjustments. The
Compensation Committee met five times during fiscal year 1995.
The Audit Committee of the Board of Directors
recommends engagement of the Company's independent accountants
and is primarily responsible for reviewing their performance and
their fees and for reviewing and evaluating with the independent
auditors and management the Company's accounting policies and its
system of material accounting controls. The Audit Committee met
five times during fiscal year 1995.
Compensation of Directors
Each director of the Company who is not an employee of
the Company is paid $1,000 per month. In addition, each director
of the Company is entitled to participate in the Company's 1991
and 1993 Director Stock Option Plans and the 1994 Stock Option
Plan, and, other than directors who act as members of the Stock
Option Committee, will be eligible to participate in the 1996
Stock Option Plan. Issuances of options under the 1991 and 1993
Director Stock Option Plans and the 1994 Stock Option Plan are
determined by the Director Stock Option Plan Committee and the
Key Employee Stock Option Plan Committee, respectively, in their
sole discretion. Issuances of options under the 1996 Stock
Option Plan will also be determined in the same manner. In
addition, in May 1996, Messrs. Ward, Ashcroft and Segall,
Directors of the Company, were granted options to purchase
25,000, 75,000 and 200,000 shares respectively of the Company's
Common Stock at an exercise price of $1.66.
Compliance with Stock Ownership Reporting Requirements
Under Section 16(a) of the Exchange Act, the Company's
directors, its officers, and any persons holding more than ten
percent of the Company's Common Stock are required to report
their ownership of the Company's Common Stock and any changes in
that ownership to the Securities and Exchange Commission (the
"Commission"). Specific due dates for these reports have been
established, and the Company is required to report in this Proxy
Statement any failure to file by these dates during or with
respect to 1995. All of these filing requirements were satisfied
by its directors, officers and ten percent holders. In making
these statements, the Company has relied on the written
representations of its directors, officers and its ten percent
holders and copies of the reports that they have filed with the
Commission.
<PAGE> Page 17 of 20
Executive Compensation
The following table sets forth certain information with
respect to the compensation paid and accrued to the Chief
Executive Officer of the Company for services rendered during the
three fiscal years ended December 31, 1995. No other executive
officer received annual compensation in excess of $100,000 in any
of the three fiscal years ended December 31, 1995. This
information includes the dollar value of base salaries, bonuses,
awards, the number of stock options granted and certain other
compensation, if any, whether paid or deferred.
<TABLE>
<CAPTION>
===========================================================================
SUMMARY COMPENSATION TABLE
- ---------------------------------------------------------------------------
ANNUAL COMPENSATION
- -------------------------------------------------------------------------
Name and Other Annual
Principal Position Year Salary($) Bonus($) Compensation($)
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael F. Daniels 1995 254,808 25,000(1) 198,987(2)
President,
Chief Executive
Officer, Director
- ---------------------------------------------------------------------------
1994 188,314 732,000(4) 192,148(2)
- ---------------------------------------------------------------------------
1993 146,652 ----- 199,149(2)
- ---------------------------------------------------------------------------
READ AS A CONTINUATION FROM ABOVE
- ---------------------------------------------------------------------------
LONG TERM COMPENSATION
AWARDS
- ---------------------------------------------------------------------------
Restricted Securities
Name and Stock Underlying All Other
Principal Position Year Awards Option SARs(#) Compensation($)
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael F. Daniels 1995 ----- 79,000 4,500(3)
President,
Chief Executive
Officer, Director
- ---------------------------------------------------------------------------
1994 ----- ----- 4,500(3)
- ---------------------------------------------------------------------------
1993 ----- 15,625 -----
===========================================================================
</TABLE>
<PAGE> Page 18 of 20
(1) Consists of accrued bonus pursuant to employment contract.
(2) Consists of commission income based upon realization of excess
residual values related to leases entered into prior to
May 15, 1993.
(3) Represents company matching contribution to 401(k) Profit Sharing
Plan.
(4) Consists of 300,000 shares of restricted common stock at a quoted
market price of $2.44 granted in lieu of discretionary commissions.
The following table discloses for the Chief Executive Officer
each stock option grant in the last fiscal year as a percentage of total
options granted to Employees in such Fiscal Year.
<TABLE>
<CAPTION>
=========================================================================
Percent of
Number of Total
Securities Options/SAR's
Underlying Granted Exercise
Options/SAR's to Employees or Base Expiration
Name Granted (#) In Fiscal Year Price($/Sh) Date
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Michael F. Daniels 50,000 27.4% $1.06 5-03-00
- -------------------------------------------------------------------------
Michael F. Daniels 29,000 15.9% $1.06 8-14-00
===========================================================================
</TABLE>
The following table discloses for the Chief Executive Officer
each stock option exercised in the last fiscal year and the value of all
options at the end of the last fiscal year.
<PAGE>
<PAGE> Page 19 of 20
<TABLE>
<CAPTION>
===============================================================================
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
- -------------------------------------------------------------------------------
Value of
Unexercised
Number of In-the Money
Securities Options/
Underlying Options/ SARs at
SARs at FY-END(#) FY-End($)*
Shares
Acquired On
Exercise Exercis- Unexer- Exercis- Unexer-
Name (#) Realized($) able cisable able cisable
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael F. Daniels 0 0 101,250 79,000 $93,436 $49,573
===============================================================================
</TABLE>
* The last sales price for the Common Stock on the Nasdaq Stock Market on
December 31, 1995 was $1.6875.
Employment Contract with Michael F. Daniels
Michael F. Daniels serves as the Company's President and Chief
Executive Officer under an employment agreement dated July 1, 1995 and expiring
June 30, 2000. Mr. Daniels is compensated at a rate of $250,000 per annum and
is eligible for a bonus based on the Company's performance. In addition, Mr.
Daniels is entitled to receive commissions equal to 25% of the net proceeds
realized by the Company from any subsequent sale or lease of certain equipment
subject to leases which commenced prior to May 15, 1993 in excess of the
residual value of such equipment.
Certain Relationships and Related Transactions
Customer Relationship. Mr. Segall, a director of the Company, is
also an officer of Tiffany & Co., which is one of the Company's customers. Mr.
Segall receives no cash or other remuneration from the Company other than a fee
for his services as a director and participation in certain of the Company's
stock option plans. The Company believes the terms of its arrangement with
Tiffany & Co. are fair and have been reached on an arms-length basis.
<PAGE>
<PAGE> Page 20 of 20
Incorporation by Reference
This Proxy Statement incorporates by reference by the Company's
Annual Report on Form 10-KSB/A for the year ended December 31, 1995 (included
in the Company's 1995 Annual Report to Shareholders) and the Company's
Quarterly Report on Form 10-QSB for the quarter ended March 31, 1996, copies of
which have been delivered to stockholders of this Company, together with this
Proxy Statement.
MISCELLANEOUS
Any proposal of a stockholder intended to be presented at the 1997
Annual Meeting of Stockholders must be received by the Company by December 31,
1996 to be eligible for inclusion in the Company's proxy statement and for the
proxy relating to such meeting.
The Board of Directors does not intend to present and knows of no
others who intend to present at the meeting any matter or business other than
that set forth in the accompanying Notice of Annual Meeting of Stockholders.
If other matters are properly brought before the meeting, it is the intention
of the persons named in the accompanying form of proxy to vote any proxies on
such matters in accordance with their judgment.
The Company will bear the cost of preparing, assembling and mailing
the enclosed form of proxy, this Proxy Statement and other material which may
be sent to stockholders in connection with this solicitation. Officers and
regular employees may solicit proxies by mail, telephone, telegraph and
personal interview, for which no additional compensation will be paid. The
Company may reimburse persons holding shares in their names or in the names of
nominees for their reasonable expenses in sending proxies and proxy material to
their principals.
By order of the Board of Directors,
---------------------------------
Michael F. Daniels, President
Las Vegas, Nevada
June , 1996
75876
<PAGE>
<PAGE>
<Ex-9.1>
Exhibit A to Proxy Statement
<PAGE>
<PAGE>
Leasing Edge Corporation
1996 STOCK OPTION PLAN
<PAGE>
<PAGE>
Leasing Edge Corporation
1996 STOCK OPTION PLAN
1. Purpose. The purpose of this Plan is to strengthen Leasing Edge
Corporation by providing an incentive to its employees, consultants and
directors, encouraging them to devote their abilities to the success of the
Company. It is intended that this purpose be achieved by extending to
employees, consultants and directors of the Company or any subsidiary an added
long-term incentive for high levels of performance and exceptional efforts
through the grant of options to purchase shares of the Company's common stock
under this Leasing Edge Corporation 1996 Stock Option Plan.
2. Definitions. For purposes of the Plan:
2.1. "Agreement" means the written agreement between the Company and
an Optionee evidencing the grant of an Option and setting forth the terms and
conditions thereof.
2.2. "Board" means the Board of Directors of the Company.
2.3. "Cause" means with respect to an Eligible Employee, including
an Eligible Employee who is a director of the Company, (i) the voluntary
termination of employment by such Eligible Employee, (ii) intentional failure
to perform, or habitual neglect of, reasonably assigned duties, (iii)
dishonesty or willful misconduct in the performance of an Optionee's duties,
(iv) an Optionee's engaging in a transaction in connection with the performance
of such Optionee's duties to the Company or any of its Subsidiaries thereof
which transaction is adverse to the interests of the Company or any of its
Subsidiaries and which is engaged in for personal profit to the Optionee, (v)
willful violation of any law, rule or regulation in connection with the
performance of an Optionee's duties, (vi) willful violation of any policy
adopted by the Company relating to the performance or behavior of employees or
(vii) acts of carelessness or misconduct which have in the reasonable judgment
of the Company's Board of Directors, an adverse effect on the Company.
2.4. "Change in Capitalization" means any increase or reduction in
the number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, public offering, private placement, change in
corporate structure or otherwise.
2.5. "Code" means the Internal Revenue Code of 1986, as amended.
<PAGE>
2.6. "Committee" means a committee consisting of at least two (2)
Disinterested Directors appointed by the Board to administer the Plan and to
perform the functions set forth herein.
2.7. "Company" means Leasing Edge Corporation
2.8. "Consultant Option" means an Option granted to a consultant
pursuant to Section 7.
2.9. "Director Option" means an Option granted to a Nonemployee
Director pursuant to Section 5.
2.10. "Disability" means a physical or mental infirmity which
impairs the Optionee's ability to perform substantially his or her duties for a
period of sixty (60) consecutive days.
2.11. "Disinterested Director" means a director of the Company who
is "disinterested" within the meaning of Rule 16b-3 under the Exchange Act.
2.12. "Eligible Employee" means an officer or other employee of the
Company or a Subsidiary who is designated by the Committee as eligible to
receive Options subject to the conditions set forth herein.
2.13. "Employee Options" means an Option granted to an Eligible
Employee pursuant to Section 6.
2.14. "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.15. "Fair Market Value" on any date means the last sales price of
the Shares on such date on the principal national securities exchange on which
such Shares are listed or admitted to trading, or if such Shares are not so
listed or admitted to trading, the last sales price per Share on such date as
quoted on the National Association of Securities Dealers Automated Quotation
System or such other market in which such prices are regularly quoted, or, if
there have been no published sales prices with respect to the Shares on such
date, the Fair Market Value shall be the value established by the Board in good
faith and in accordance with Section 422 of the Code.
2.16. "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as an
Incentive Stock Option.
2.17. "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.18. "Nonemployee Director" means a director of the Company who is
not an employee of the Company or any Subsidiary.
2.19. "Option" means an Employee Option, a Director Option, a
Consultant Option or any or all of them.
<PAGE>
2.20. "Optionee" means a person to whom an Option has been granted
under the Plan.
2.21. "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.
2.22. "Plan" means the Leasing Edge Corporation 1996 Stock Option
Plan.
2.23. "Shares" means the common stock, par value $.01 per share, of
the Company.
2.24. "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect to
the Company.
2.25. "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a) of
the Code applies.
2.26. "Ten-Percent Stockholder" means an Eligible Employee or other
eligible Plan participant, who, at the time an Incentive Stock Option is to be
granted to him or her, owns (within the meaning of Section 422(b)(6) of the
Code) stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, or of a Parent or a Subsidiary.
3. Administration.
3.1. The Plan shall be administered by the Committee which shall
hold meetings at such times as may be necessary for the proper administration
of the Plan. The Committee shall keep minutes of its meetings. A quorum shall
consist of not less than two members of the Committee and a majority of a
quorum may authorize any action. Any decision or determination reduced to
writing and signed by a majority of all of the members of the Committee shall
be as fully effective as if made by a majority vote at a meeting duly called
and held. Each member of the Committee shall be a Disinterested Director. No
member of the Committee shall be liable for any action, failure to act,
determination or interpretation made in good faith with respect to this Plan or
any transaction hereunder, except for liability arising from his or her own
willful misfeasance, fraud or bad faith. The Company hereby agrees to
indemnify each member of the Committee for all costs and expenses and, to the
extent permitted by applicable law, any liability incurred in connection with
defending against, responding to, negotiation for the settlement of or
otherwise dealing with any claim, cause of action or dispute of any kind
arising in connection with any action or failure to act in administering this
Plan or in authorizing or denying authorization to any transaction hereunder.
<PAGE>
<PAGE>
3.2. Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time to determine those
Eligible Employees to whom Employee Options shall be granted under the Plan and
the number of Incentive Stock Options and/or Nonqualified Stock Options to be
granted to each Eligible Employee and to prescribe the terms and conditions
(which need not be identical) of each Employee Option, including the purchase
price per Share subject to each Employee Option, and make any amendment or
modification to any Agreement consistent with the terms of the Plan.
3.3. Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options granted
thereunder and to establish, amend and revoke rules and regulations for the
administration of the Plan, including, but not limited to, correcting any
defect or supplying any omission, or reconciling any inconsistency in the Plan
or in any Agreement, in the manner and to the extent it shall deem necessary or
advisable to make the Plan fully effective, and all decisions and
determinations by the Committee in the exercise of this power shall be final,
binding and conclusive upon the Company, its Subsidiaries, the Optionees and
all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee on an individual basis without constituting
a termination of employment or service for purposes of the Plan;
(c) to exercise its discretion with respect to the powers and rights
granted to it as set forth in the Plan;
(d) generally, to exercise such powers and to perform such acts as
are deemed necessary or advisable to promote the best interests of the Company
with respect to the Plan.
4. Stock Subject to Plan.
4.1. The maximum number of Shares that may be made the subject of
Options granted under the Plan is 1,300,000 Shares (or the number and kind of
shares of stock or other securities to which such Shares are adjusted upon a
Change in Capitalization pursuant to Section 9) and the Company shall reserve
for the purposes of the Plan, out of its authorized but unissued Shares or out
of Shares held in the Company's treasury, or partly out of each, such number of
Shares as shall be determined by the Board.
4.2. Whenever any outstanding Option or portion thereof expires, is
canceled or is otherwise terminated for any reason, the Shares allocable to the
canceled or otherwise terminated Option or portion thereof may again be the
subject of Options granted hereunder.
5. Option Grants for Nonemployee Directors.
<PAGE>
5.1. Authority of Committee. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select those Nonemployee
Directors who will receive Director Options, the terms and conditions of which
shall be set forth in an Agreement.
5.2. Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Director Option shall
be determined by the Committee and set forth in the Agreement evidencing the
Option, provided that the purchase price per Share under each Director Option
shall be not less than the Fair Market Value of a Share on the date the
Director Option is granted.
5.3. Duration. Director Options shall be for a term to be
designated by the Committee and set forth in the Agreement evidencing the
Option.
5.4. Vesting. Each Director Option shall, commencing not earlier
than the date of its grant, become exercisable in such installments (which need
not be equal or may be one installment) and at such times as may be designated
by the Committee and set forth in the Agreement evidencing the Option. To the
extent not exercised, installments shall accumulate and be exercisable, in
whole or part, at any time after becoming exercisable, to not later than the
date the Director Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6. Option Grants for Eligible Employees.
6.1. Authority of Committee. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select those Eligible
Employees who will receive Employee Options, the terms and conditions of which
shall be set forth in an Agreement; provided, however, that no Eligible
Employee shall receive an Incentive Stock Option unless he is an employee of
the Company, a Parent or a Subsidiary at the time the Incentive Stock Option is
granted.
6.2. Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement evidencing the
Option, provided that the purchase price per Share under each Employee Option
shall be (i) except as provided in clause (ii) of this Section 6.2, not less
than the Fair Market Value of a Share on the date the Employee Option is
granted; and (ii) with respect to any Incentive Stock Option granted to a Ten
Percent Stockholder, not less than 110% of the Fair Market Value of a Share on
the date the Option is granted.
6.3. Duration. Employee Options granted hereunder shall be for such
term as the Committee shall determine, provided that no Employee Option shall
be exercisable after the expiration of ten (10) years from the date it is
granted (five (5) years in the case of an Incentive Stock Option granted to a
Ten-Percent Stockholder). The Committee may, subsequent to the granting of any
Employee Option, extend the term thereof but in no event shall the term as so
extended exceed the maximum term provided for in the preceding sentence.
<PAGE>
6.4. Vesting. Each Employee Option shall, commencing not earlier
then the date of its grant, become exercisable in such installments (which need
not be equal or may be in one installment) and at such times as may be
designated by the Committee and set forth in the Agreement evidencing the
Option. To the extent not otherwise provided by the Committee, Employee
Options shall be exercisable in three (3) equal installments each equal to one-
third of the entire Option granted, the first of which shall become exercisable
on the first anniversary of the date of the grant of the Employee Option, the
second installment of which shall become exercisable on the second anniversary
of the date of grant of the Employee Option, and the final installment of which
shall become exercisable on the third anniversary of the date of grant. To the
extent not exercised, installments shall accumulate and be exercisable, in
whole or part, at any time after becoming exercisable, to not later than the
date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6.5. Modification or Substitution. The Committee may, in its
discretion, modify outstanding Employee Options or accept the surrender of
outstanding Employee Options (to the extent not exercised) and grant new
Options in substitution for them. Notwithstanding the foregoing, no
modification of an Employee Option shall adversely alter or impair any rights
or obligations under the Employee Option without the Optionee's consent.
7. Option Grants for Consultants.
7.1. Authority of Committee. Subject to the provisions of the Plan,
the Committee shall have full and final authority to select those consultants
to the Company or a Subsidiary who will receive Consultant Options, the terms
and conditions of which shall be set forth in an Agreement.
7.2. Purchase Price. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Consultant Option
shall be determined by the Committee and set forth in the Agreement evidencing
the Option, provided that the purchase price per Share under each Consultant
Option shall be not less than the Fair Market Value of a Share on the date the
Consultant Option is granted.
7.3. Duration. Consultant Options granted hereunder shall be for
such term as the Committee shall determine, provided that no Consultant Option
shall be exercisable after the expiration of ten (10) years from the date it is
granted. The Committee may, subsequent to the granting of any Consultant
Option, extend the term thereof but in no event shall the term as so extended
exceed the maximum term provided for in the preceding sentence.
<PAGE>
<PAGE>
7.4. Vesting. Each Consultant Option shall, commencing not earlier
then the date of its grant, become exercisable in such installments (which need
not be equal or may be in one installment) and at such times as may be
designated by the Committee and set forth in the Agreement evidencing the
Option. To the extent not otherwise provided by the Committee, Consultant
Options shall be exercisable in three (3) equal installments each equal to one-
third of the entire Option granted, the first of which shall become exercisable
on the first anniversary of the date of grant of the Consultant Options, the
second installment of which shall become exercisable on the second anniversary
of the date of grant, and the final installment of which shall become
exercisable on the third anniversary of the date of grant. To the extent not
exercised, installments shall accumulate and be exercisable, in whole or part,
at any time after becoming exercisable, to not later than the date the
Consultant Option expires. The Committee may accelerate the exercisability of
any Option or portion thereof at any time.
8. Terms and Conditions Applicable to All Options
8.1. Non-transferability. No Option granted hereunder 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 or her guardian or legal
representative. The terms of each Option shall be final, binding and
conclusive upon the beneficiaries, executors, administrators, heirs and
successors of the Optionee.
<PAGE>
<PAGE>
8.2. Method of Exercise. The exercise of an Option shall be made
only by a written notice delivered in person or by 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 payment therefor and otherwise in
accordance with the Agreement pursuant to which the Option was granted. The
purchase price for any Shares purchased pursuant to the exercise of an Option
shall be paid in full upon such exercise, as determined by the Committee in its
discretion, by any one or a combination of the following: (i) cash, or (ii)
transferring Shares to the Company upon such terms and conditions as determined
by the Committee. At the Optionee's request and subject to the consent of the
Committee, Shares to be acquired upon the exercise of a portion of an Employee
Option will be applied automatically to pay the purchase price in connection
with the exercise of additional portions of the Employee Option then being
exercised. The written notice pursuant to this Section 8.2 may also provide
instructions from the Optionee to the Company that upon receipt of the purchase
price in cash from the Optionee's broker or dealer, designated as such on the
written notice, in payment for any Shares purchased pursuant to the exercise of
an Option, the Company shall issue such Shares directly to the designated
broker or dealer. Any Shares transferred to the Company as payment of the
purchase price under an Option shall be valued at their Fair Market Value on
the day preceding the date of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the Option to
the Secretary of the Company who shall endorse thereon a notation of such
exercise and return such Agreement to the Optionee. No fractional shares (or
cash in lieu thereof) shall be issued upon exercise of an Option and the number
of Shares that may be purchased upon exercise shall be rounded to the nearest
number of whole Shares.
8.3. Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until
(i) the Option shall have been exercised pursuant to the terms thereof, (ii)
the Company shall have issued and delivered the Shares to the Optionee and
(iii) the Optionee's name shall have been entered as a stockholder of record on
the books of the Company. Thereupon, the Optionee shall have full voting,
dividend and other ownership rights with respect to such Shares.
8.4. Termination of Employment. Unless otherwise provided in the
Agreement evidencing the Option, an Option (other than an Option granted to a
consultant or a Nonemployee Director) shall terminate upon an Optionee's
termination of employment with the Company and its Subsidiaries as follows:
(a) in the event the Optionee's employment terminates as a result of
Disability, the Optionee may at any time within three (3) months after such
event exercise the Option or portion thereof that was exercisable on the date
of such termination;
(b) if an Optionee's employment terminates for Cause, the Option
shall terminate immediately and no rights thereunder may be exercised;
<PAGE>
<PAGE>
(c) if an Optionee's employment terminates without Cause, the
Optionee may at any time within one (1) month after such event exercise the
Option or portion thereof that was exercisable on the date of such termination;
and
(d) if an Optionee dies while an employee of the Company or any
Subsidiary or within six (6) months after termination as a result of Disability
as described in clause (a) of this Section 8.4, the Option may be exercised at
any time within six (6) months after the Optionee's death by the person or
persons to whom such rights under the Option shall pass by will or by the laws
of descent and distribution; provided, however, that an Option may be exercised
to the extent, and only to the extent, that the Option or portion thereof was
exercisable on the date of death or earlier termination.
Notwithstanding the foregoing, in no event may any Option be
exercised by anyone after the expiration of the term of the Option.
8.5. Termination of Nonemployee Director Options and Consultant
Options. Nonemployee Director Options and Consultant Options granted to
Nonemployee Directors and consultants to the Company or a Subsidiary shall
terminate under such circumstances as are provided in the Agreement evidencing
the Option, and if not expressly specified, as of the close of business on the
last day of the term of the Option, but in no event may such an Option be
exercised by anyone after the expiration of the term of the Option.
9. Adjustment Upon Changes in Capitalization.
9.1. Subject to Section 10, in the event of a Change in
Capitalization, the Committee shall conclusively determine the appropriate
adjustments, if any, to the maximum number or class of Shares or other stock or
securities with respect to which Options may be granted under the Plan, the
number and class of Shares or other stock or securities which are subject to
outstanding Options granted under the Plan, and the purchase price therefor, if
applicable.
9.2. Any such adjustment in the Shares or other stock or securities
subject to outstanding Incentive Stock Options (including any adjustments in
the purchase price) shall be made in such manner as not to constitute a
modification as defined by Section 424(h)(3) of the Code and only to the extent
otherwise permitted by Sections 422 and 424 of the Code.
9.3. If, by reason of a Change in Capitalization, an Optionee shall
be entitled to exercise an Option with respect to new, additional or different
shares of stock or securities, such new, additional or different shares shall
thereupon be subject to all of the conditions which were applicable to the
Shares subject to the Option, as the case may be, prior to such Change in
Capitalization.
<PAGE>
<PAGE>
10. Effect of Certain Transactions.
In the event of (i) the liquidation or dissolution of the
Company or (ii) a merger or consolidation of the Company (a "Transaction"), the
Plan and the Options issued hereunder shall continue in effect in accordance
with their respective terms and each Optionee shall be entitled to receive in
respect of each Share subject to any outstanding Options, as the case may be,
upon exercise of any Option, the same number and kind of stock, securities,
cash, property, or other consideration that each holder of a Share was entitled
to receive in the Transaction in respect of a Share. In the event that, after
a Transaction, there occurs any change of a type described in Section 2.4
hereof with respect to the shares of the surviving or resulting corporation,
then adjustments similar to, and subject to the same conditions as, those in
Section 9 hereof shall be made by the Committee.
11. Termination and Amendment of the Program.
11.1. The Plan shall terminate on the day preceding the tenth
anniversary of the date of its adoption by the Board and no Option may be
granted thereafter. The Board may sooner terminate or amend the Plan at any
time and from time to time; provided, however, that to the extent necessary
under Section 16(b) of the Exchange Act and the rules and regulations
promulgated thereunder or other applicable law, no amendment shall be effective
unless approved by the stockholders of the Company in accordance with
applicable law and regulations at an annual or special meeting held within
twelve (12) months after the date of adoption of such amendment.
11.2. Except as provided in Sections 9 and 10 hereof, rights and
obligations under any Option granted before any amendment or termination of the
Plan shall not be adversely altered or impaired by such amendment or
termination, except with the consent of the Optionee, nor shall any amendment
or termination deprive any Optionee of any Shares which he may have acquired
through or as a result of the Plan.
12. Non-Exclusivity of the Plan. The adoption of the Plan by the
Board shall not be construed as amending, modifying or rescinding any
previously approved incentive arrangement or as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.
13. Limitation of Liability. As illustrative of the limitations of
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(i) give any person any right to be granted an Option other than at
the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
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(iii) limit in any way the right of the Company to terminate the
employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
14. Regulations and Other Approvals; Governing Law.
14.1. This 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.
14.2. 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 Committee.
14.3. The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act and the Committee shall interpret and administer the
provisions of the Plan or any Agreement in a manner consistent therewith. Any
provisions inconsistent with such Rule shall be inoperative and shall not
affect the validity of the Plan.
14.4. The Board may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Employees granted Incentive Stock Options
the tax benefits under the applicable provisions of the Code and regulations
promulgated thereunder.
14.5. Each Option is subject to the requirement that, if at any time
the Committee determines, in its 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, or as otherwise
determined to be acceptable to the Committee.
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14.6. Notwithstanding anything contained in the Plan to the
contrary, 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 of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to the Plan, as a condition precedent to receipt of such Shares
upon exercise of an Option, to represent and warrant to the Company in writing
that the Shares acquired by such individual are acquired without a view to any
distribution thereof and will not be sold or transferred other than pursuant to
an effective registration thereof under said act or pursuant to a exemption
applicable under the Securities Act of 1933, as amended, or the rules and
regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
15. Miscellaneous.
15.1. Multiple Agreements. The terms of each Option may differ from
other Options granted under the Plan at the same time, or at some other time.
The Committee may also grant more than one Option to a given Eligible Employee
during the term of the Plan, either in addition to, or in substitution for, one
or more Options previously granted to that Eligible Employee.
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15.2. Withholding of Taxes. (a) The Company shall have the right to
deduct from any distribution of cash to any Optionee, an amount equal to the
federal, state and local income taxes and other amounts as may be required by
law to be withheld (the "Withholding Taxes") with respect to any Option. If an
Optionee is entitled to receive Shares upon exercise of an Option, the Optionee
shall pay the Withholding Taxes to the Company prior to the issuance of such
Shares. In satisfaction of the Withholding Taxes, the Optionee may make a
written election (the "Tax Election"), which may be accepted or rejected in the
discretion of the Committee, to have withheld a portion of the Shares issuable
to him or her upon exercise of the Option having an aggregate Fair Market
Value, on the date preceding the date of exercise, equal to the Withholding
Taxes, provided that in respect of an Optionee who may be subject to liability
under Section 16(b) of the Exchange Act either (i) (A) the Optionee makes the
Tax Election at least six (6) months after the date the Option was granted, (B)
the Option is exercised during the ten day period beginning on the third
business day and ending on the twelfth business day following the release for
publication of the Company's quarterly or annual statements of earnings (a
"Window Period") and (C) the Tax Election is made during the Window Period in
which the Option is exercised or prior to such Window Period and subsequent to
the immediately preceding Window Period or (ii) (A) the Tax Election is made at
least six months prior to the date the Option is exercised and (B) the Tax
election is irrevocable with respect to the exercise of all Options which are
exercised prior to the expiration of six months following an election to revoke
the Tax Election. Notwithstanding the foregoing, the Committee may, by the
adoption of rules or otherwise, (i) modify the provisions in the preceding
sentence or impose such other restrictions or limitations on Tax Elections as
may be necessary to ensure that the Tax Elections will be exempt transactions
under Section 16(b) of the Exchange Act, and (ii) permit Tax Elections to be
made at such other times and subject to such other conditions as the Committee
determines will constitute exempt transactions under Section 16(b) of the
Exchange Act.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive
Stock Option within the two-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal
executive office, and immediately deliver to the Company the amount of
Withholding Taxes.
15.3. Designation of Beneficiary. Each Optionee may designate a
person or persons to receive in the event of his or her death, any Option or
any amount payable pursuant thereto, to which he or she would then be entitled.
Such designation will be made upon forms supplied by and delivered to the
Company and may be revoked in writing. If an Optionee fails effectively to
designate a beneficiary, then his or her estate will be deemed to be the
beneficiary.
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16. Effective Date. The effective date of the Plan shall be the
date of its adoption by the Board, subject only to the approval by the
affirmative votes of the holders of a majority of the securities of the Company
present, or represented, and entitled to vote at a meeting of stockholders duly
held in accordance with the applicable laws of the State of Delaware within
twelve (12) months of such adoption.
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