SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ____________)
Filed by the Registrant [X]
Filed by a Party other than the Registration [ ]
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 ss. 240.14a-11(c) or ss. 240.14a-12
WATERSIDE CAPITAL CORPORATION
- --------------------------------------------------------------------------------
(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
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
[ ] Fee computed on table below per Exchange Act Rules 14a6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
Common Stock
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2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule O-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:------------------------------------------------
2) Form Schedule or Registration Statement No.:---------------------------
3) Filing Party:----------------------------------------------------------
4) Date Filed:------------------------------------------------------------
<PAGE>
[WATERSIDE CAPITAL CORPORATION LETTERHEAD]
300 East Main Street, Suite 1380
Norfolk, Virginia 23510
September 7, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of
Shareholders of Waterside Capital Corporation that will be held at Nauticus, One
Waterside Drive, Norfolk, Virginia 23510 at 11:00 a.m. Eastern Time on Monday,
October 25, 1999.
Enclosed are a Notice of the Annual Meeting, a Proxy Card, and a Proxy
Statement containing information about the matters to be acted upon at the
meeting. Directors and officers of the Company as well as a representative of
KPMG LLP will be present at the Annual Meeting to respond to any questions our
shareholders may have.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
Accordingly, we urge you to sign and date the enclosed Proxy Card and promptly
return it to us in the enclosed, self-addressed, postage-paid envelope, even if
you are planning to attend the meeting. If you attend the meeting, you may vote
in person, even if you have previously returned a Proxy Card.
We look forward to the 1999 Annual Meeting of Shareholders, and we
hope you will attend the meeting or be represented by proxy.
Sincerely,
/s/ J. Alan Lindauer
---------------------------------
J. ALAN LINDAUER, President and Chief
Executive Officer
<PAGE>
WATERSIDE CAPITAL CORPORATION
300 EAST MAIN STREET, SUITE 1380
NORFOLK, VIRGINIA 23510
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
OCTOBER 25, 1999
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of
Waterside Capital Corporation will be held at Nauticus, One Waterside Drive,
Norfolk, Virginia 23510 at 11:00 a.m. Eastern Time on Monday, October 25, 1999
for the following purposes:
1. To elect 21 directors to hold office for a term of one
year and until their respective successors are elected and
qualified;
2. To approve an amendment to the Company's 1998 Employee Stock
Option Plan, a copy of which is attached as Exhibit A;
---------
3. To ratify the appointment of KPMG LLP as the Company's
independent auditors for 2000; and
4. To act upon such other matters as may properly come before the
meeting or any adjournment thereof.
Information concerning the matters to be acted upon at the meeting is
set forth in the accompanying Proxy Statement. The Board of Directors has
established the close of business on August 31, 1999 as the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof.
By Order of the Board of Directors
/s/ Gerald T. McDonald
-------------------------------------
Gerald T. McDonald, Secretary
Norfolk, Virginia
September 7, 1999
PLEASE COMPLETE, SIGN, AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY
IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY VOTE EITHER IN
PERSON OR THROUGH YOUR PROXY.
<PAGE>
PROXY STATEMENT
This Proxy Statement and the enclosed proxy card ("Proxy") are
furnished in connection with the solicitation of proxies on behalf of the Board
of Directors of Waterside Capital Corporation (the "Company") to be voted at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at held at
Nauticus, One Waterside Drive, Norfolk, Virginia 23510 at 11:00 a.m. Eastern
Time on Monday, October 25, 1999 and at any adjournment thereof, for the
purposes set forth in the accompanying Notice of Meeting.
Only shareholders of record at the close of business on August 31, 1999
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
This Proxy is being mailed on or about September 7, 1999.
REVOCABILITY OF PROXY
Execution of the enclosed Proxy will not affect a shareholder's right
to attend the Annual Meeting and vote in person. If your Proxy is properly
signed, received by the Company and not revoked by you, the shares to which it
relates will be voted at the Annual Meeting in accordance with your
instructions. If a shareholder does not return a signed Proxy, his or her shares
cannot be voted by proxy.
PERSON MAKING THE SOLICITATION
The cost of soliciting Proxies will be borne by the Company. The
Company has retained Reliance Trust Company to assist in the solicitation of
proxies from brokers and nominees and in the counting of proxies. The Company
will pay Reliance Trust Company approximately $500 plus out-of-pocket expenses
for this assistance. In addition to solicitation by mail, the Company will
request banks, brokers, and other custodians, nominees, and fiduciaries to send
proxy material to the beneficial owners and to secure their voting instructions
if necessary. The Company, upon request, will reimburse them for their expenses
in so doing. Officers of the Company may solicit Proxies personally, by
telephone or by telegram from some shareholders if Proxies are not received
promptly, for which no additional compensation will be paid.
VOTING SHARES AND VOTE REQUIRED
On the Record Date, the Company had 1,491,937 shares of Common Stock
outstanding. Each share of Common Stock is entitled to one vote on each matter
presented at the Annual Meeting.
Under the laws of Virginia, the Company's state of incorporation,
"shares present in person or represented by proxy and entitled to vote" are
determinative of the outcome of the matter that is subject to the vote.
Abstentions are considered "shares present in person or represented by proxy,"
but broker non-votes are not, based on the Company's understanding of Virginia
law and the Company's Articles of Incorporation and Bylaws. All shareholder
meeting proxies, ballots, and tabulations that identify individual shareholders
are kept confidential, and will not be available for examination, nor will the
identity or the vote of any shareholder be disclosed except as may be necessary
to meet legal requirements. Votes will be counted and certified by Reliance
Trust Company, which will act as the inspector of elections.
4
<PAGE>
Unless specified otherwise, the Proxy will be voted as follows:
(1) FOR the election of the 21 nominees to serve as directors of
the Company for a one-year term and until their respective
successors are duly elected and qualified;
(2) FOR the amendment of the Company's 1998 Employee Stock
Option Plan, a copy of which is attached hereto as Exhibit A;
and
(3) FOR the ratification of the appointment of KPMG LLP as
independent auditors for 2000;
Management is not aware of any other matters to be presented for action at the
Annual Meeting, but if such matters are properly presented, this proxy will be
voted in the discretion of the Proxy holders "for" or "against" such other
matters as may properly come before the Annual Meeting
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of August 31, 1999
relating to the beneficial ownership of the Company's Common Stock by (i) each
of the Company's directors and the executive officer identified in the
Compensation Table who own Common Stock, (ii) each person (or group of
affiliated persons) who is known by the Company to own beneficially more than 5%
of the Common Stock, and (iii) all of the Company's directors and executive
officers as a group.
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<PAGE>
BENEFICIAL OWNERSHIP OF COMMON STOCK
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner(1) Amount of Beneficial Percent of Class
- --------------------------------------- -------------------- ----------------
Ownership
---------
<S> <C>
James E. Andrews 14,700 1.0
J.W. Whiting Chisman, Jr. 33,127 2.2
Jeffrey R. Ellis 9,975 *
Eric L. Fox 5,500 *
Marvin S. Friedberg 30,750(2) 2.1
Roger L. Frost 10,500(3) *
Ernest F. Hardee 60,000(4) 4.0
Henry U. Harris, III 6,300(5) *
J. Alan Lindauer 71,344(6) 4.7
Robert I. Low 4,045 *
Harold J. Marioneaux, Jr. 5,250 *
Peter M. Meredith, Jr. 61,265(7) 4.1
Charles H. Merriman, III 1,000 *
Augustus C. Miller 11,700 *
Juan M. Montero, II 29,085(8) 1.9
R. Scott Morgan, Sr. 2,100 *
Richard G. Ornstein 10,500 *
Jordan E. Slone 14,700(9) 1.0
All officers and directors as a Group (25 persons) 399,819 26.5
- -----------------------------------
</TABLE>
(1) All directors and the executive officer identified above receive mail
at the Company's corporate executive offices at 300 East Main Street,
Suite 1380, Norfolk, Virginia 23510.
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<PAGE>
(2) Includes 30,750 shares owned by Mr. Friedberg's wife.
(3) Includes 10,500 shares held by Goodman & Company 401(k) Profit Sharing
Plan for the benefit of Mr. Frost.
(4) Includes 9,870 shares owned by Mr. Hardee's wife.
(5) Includes 5,250 shares held by DanSan, a general partnership, of which
Mr. Harris is one of two general partners.
(6) Includes 42,000 shares held by Hometown Bank & Co. for the J. Alan
Lindauer Profit Sharing Plan, 18,900 shares which Mr. Lindauer has the
right to acquire within 60 days through the exercise of options granted
under the 1998 Employee Plan, and 1,649 under the Company's 401(k)
plan.
(7) Includes (i) 10,500 shares held by Meredith Realty Company, L.L.C., of
which Mr. Meredith is a member, (ii) 33,455 shares held by Pomar
Holding Company, L.L.C., of which Mr. Meredith is a member, (iii) 3,885
shares owned by Mr. Meredith's wife, and (iv) 2,100 shares held in
trust for the benefit of Mr. Meredith's son.
(8) All of which are held by Juan M. Montero II M.D. P.C. Profit Sharing
and Money Purchase Pension Plan for benefit of Dr. Montero.
(9) All of which are held by Garden Capital Acquisitions, LLC of which Mr.
Slone is a member.
*Represents less than one percent (1%) interest.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the fiscal year ended June 30, 1999, the Company paid a fee of
$88,000 to a partnership owned 50% by J. Alan Lindauer, the Company's President
and Chief Executive Officer and a director of the Company, and 50% by Augustus
C. Miller, a director of the Company, for the use of an airplane. The Company
believes the fees paid this partnership are at a fair market rate. This
arrangement has been approved by the disinterested members of the Board of
Directors.
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Board of Directors is currently comprised of 21 members.
Directors serve for a term of one year and hold office until their successors
are duly elected and qualify. The Board of Directors recommends that the 21
nominees be elected to the Board of Directors. Proxies received will be voted
for the election of these 21 nominees unless marked to the contrary. A
shareholder who desires to withhold voting of the Proxy for the nominees may so
indicate on the Proxy. Each of the nominees has consented to be named as a
nominee and has indicated his intent to serve if elected. If any nominee becomes
unable to serve, the Proxy will be voted for a substitute nominee to be
designated by the Board of Directors, or the number of directors will be
reduced.
The following information relates to the nominees. There are no family
relationships among any of the nominees, nor among any of the nominees and any
officer. Charles H. Merriman, III has been selected as a nominee pursuant to a
contract between the Company and Scott & Stringfellow. Other than Mr. Merriman,
there is no understanding between any nominee and any other person pursuant to
which the nominee was selected. Each officer serves at the discretion of the
Board of Directors, subject to any employment contract rights.
7
<PAGE>
NOMINEES
JAMES E. ANDREWS, 61, has served as a director of the Company since May 1997.
Since 1974, Mr. Andrews has been the principal owner of Anzell Automotive, Inc.,
an automotive repair firm and franchisor of automotive repair shops.
DONNA C. BENNETT, 38, has served as a director of the Company since September
1996. She is a Vice-President of First Union Bank and has been employed since
1985 with First Union Bank, or its predecessors, in various capacities.
J. W. WHITING CHISMAN, JR., 58, has served as a director of the Company since
February 1994. Since 1988, he has been President of Dare Investment Company, a
land developer and investor in equities.
JEFFREY R. ELLIS, 55, has served as a director of the Company since August 1997.
Between 1973 and 1986, Mr. Ellis was the President and Chief Executive Officer
of Ridgewell Caterers, Inc. Since 1986, he has been a private investor.
ERIC L. FOX, 52, has served as a director of the Company since July 1993. In
1975, Mr. Fox joined the investment firm of Kidder, Peabody & Co. which was
acquired by Paine Webber in 1995. He is currently a Portfolio Manager of Paine
Webber.
MARVIN FRIEDBERG, 56, has served as a director since May 1999. Since 1989, he
has served as a chief executive officer of Virginia Commonwealth Trading
Company, a firm engaged in international trading.
ROGER L. FROST, 67, has served as a director of the Company since May 1997.
Between 1956 and 1997, he was an accountant with Goodman & Company, a firm of
Certified Public Accountants, from which he retired as a senior partner in 1997.
ERNEST F. HARDEE, 59, has served as a director of the Company since September
1997. Since 1963, he has been President and Chief Executive Officer of Hardee
Realty Corporation, a real estate brokerage firm. He also served as a director
of Branch Bank & Trust Corp. from 1995 through early 1999.
HENRY U. HARRIS, III, 46, has served as a director of the Company since
September 1997. Since 1980, he has been Portfolio Manager of Virginia Investment
Counselors, Inc., a financial consulting firm, of which he is now President.
Since 1991, he has been the vice-chairman of the Board of Directors of Heritage
Bank & Trust.
8
<PAGE>
J. ALAN LINDAUER, 60, has served as a director since July 1993 and as Chairman
of the Executive Committee of the Company since December 1993 and since March
1994 as its President and Chief Executive Officer. Mr. Lindauer is a Certified
Management Consultant.
ROBERT I. LOW, 62, has served as a director of the Company since July
1993. Mr. Low is a senior partner of Goodman & Company, a firm of Certified
Public Accountants. He has been with that firm since 1969.
HAROLD J. MARIONEAUX, JR., 43, has served as a director of the Company since
November 1994. Since 1990, he has practiced as a dental surgeon and since 1993
has acted as a certified financial planner.
PETER M. MEREDITH, JR., 47, has served as a director of the Company and as
Chairman of the Board of Directors since May 1994. Since 1978, he has served in
various executive capacities with Meredith Construction Company, Inc. Since
1995, he has been the Chairman of the Board of Directors of Heritage Bank.
CHARLES H. MERRIMAN, III, 65, has served as a director of the Company since
March 1998. He is currently a Managing Director with Scott & Stringfellow, an
investment banking firm, where he has served in various capacities since 1972.
AUGUSTUS C. MILLER, 65, has served as a director of the Company since August
1994. Since 1977, he has been President and Chief Executive Officer of Miller
Oil Co., Inc., a distributor of fuels.
PAUL F. MILLER, 67, has served as a director of the Company since May 1994.
Since 1987, he has served as Director of Planning and Development for the City
of Newport News, Virginia.
JUAN M. MONTERO, II, 57, has served as a director of the Company since July
1995. Since 1972, he has engaged in the private practice of general and thoracic
surgery.
R. SCOTT MORGAN, SR., 54, has served as a director of the Company since
September 1997. From 1995 through 1997, Mr. Morgan had been Executive Vice
President and Corporate Banking Manager with the Corporate Banking Group of
Branch Bank & Trust Corp. Between 1992 and 1995, he was employed in various
capacities with Commerce Bank.
JAMES W. NOEL, JR., 43, has served as a director of the Company since August
1994. Since 1993, Mr. Noel has been the Executive Director of the York County
Industrial Development Authority. Between 1991 and 1993, he served in various
capacities with the City of Portsmouth, Virginia.
RICHARD G. ORNSTEIN, 57, has served as a director of the Company and a member of
the Executive Committee since September 1997. Since 1964, Mr. Ornstein has been
privately engaged in real estate management and development.
JORDAN E. SLONE, 37, has served as a director of the Company since July 1995.
Since 1987, Mr. Slone has been Chairman and Chief Executive Officer of the
Harbor Group Companies, a diversified real estate and financial services firm.
9
<PAGE>
DIRECTORS ARE ELECTED BY A "PLURALITY" OF SHARES OF COMMON STOCK
PRESENT IN PERSON OR REPRESENTED BY PROXY AND ENTITLED TO VOTE AT THE ANNUAL
MEETING. FOR THE PURPOSES OF THE ANNUAL MEETING, THIS MEANS THAT THE 21 DIRECTOR
NOMINEES WITH THE MOST AFFIRMATIVE VOTES WILL BE ELECTED.
THE BOARD OF DIRECTORS RECOMMENDS THAT ALL STOCKHOLDERS VOTE "FOR" THE
DIRECTOR-NOMINEES SET FORTH ABOVE.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
MEETINGS
The business of the Company is managed under the direction of the Board
of Directors. The Board of Directors meets on a regularly scheduled basis during
the year to review significant developments affecting the Company and to act on
matters requiring approval by the Board of Directors. It also holds special
meetings when an important matter requires action by the Board of Directors
between scheduled meetings. The Board of Directors held three meetings during
fiscal year 1999. All of the members of the Board of Directors except Mr.
Lindauer are independent directors. During fiscal year 1999, each member of the
Board of Directors, other than Mr. Ellis, Mr. Low, Mr. Marioneaux, Mr. Meredith,
Mr. Morgan and Mr. Ornstein, who are nominees, and Mr. Schreiber, who is not a
nominee, who each attended two meetings, Mr. Chisman and Mr. Paul Miller, who
each attended one meeting, and Mr. Augustus Miller and Mr. Noel, who attended no
meetings, participated in at least 75% of all meetings of the Board of Directors
and at least 75% of all meetings of the applicable committees (other than the
Executive Committee as discussed below) during the period for which he or she
was a director. During 1999, directors did not receive any compensation for
attending Board of Directors meetings. Directors who are also employees of the
Company receive no compensation from the Company in their capacity as directors.
The Company reimburses all of its directors for travel and out of pocket
expenses in connection with their attendance at meetings of the Board of
Directors.
COMMITTEES
The Board of Directors has established an Executive Committee
("Executive Committee"), an Audit Committee ("Audit Committee") and a
Compensation/Stock Option Committee ("Compensation Committee"). The Company's
Articles of Incorporation provide for the appointment by the Board of Directors
of an Executive Committee comprised of not less than five nor more than nine
members, all of whom must be a member of the Board of Directors. The Executive
Committee was constituted by the Board of Directors in December 1993 and, under
Virginia law, may exercise all the authority of the Board of Directors except
that it may not (i) approve or recommend to shareholders action that Virginia
law requires to be approved by shareholders, (ii) fill vacancies on the Board of
Directors or any committee, (iii) amend the Articles of Incorporation, (iv)
adopt, amend, or repeal the Bylaws, (v) approve a plan of merger, (vi) authorize
or approve a distribution, except according to a general formula or method
prescribed by the Board of Directors, or (vii) authorize or approve the issuance
or sale or contract for sale of shares, or determine the designation of the
relative rights, preferences and limitations of a class or series of shares
within limits specifically prescribed by the Board of Directors. The Executive
Committee is delegated the power, with certain exceptions, of the Board of
Directors to act in place of the full Board during all periods between regular
meetings of the Board. The Executive Committee met 17 times during 1999. Members
of the Executive Committee did not receive a fee for attending Executive
Committee meetings. All members of the Executive Committee attended at least 75%
of all Executive Committee meetings, except for Mr. Chisman, Mr. Meredith, Mr.
Merriman and Mr. Ornstein in 1999. The members of the Executive Committee are
Messrs. Chisman, Hardee, Lindauer, Low, Meredith, Merriman, Morgan, and
Ornstein.
10
<PAGE>
The Audit Committee is empowered by the Board of Directors to, among
other things, recommend the firm to be employed by the Company as its
independent auditor and to consult with such auditor regarding audits and the
adequacy of internal accounting controls. The Audit Committee held three
meetings in 1999. The members of the Audit Committee are Mr. Low, Ms. Bennett,
and Mr. Frost.
The Compensation Committee makes recommendations to the Board of
Directors as to, among other things, the compensation of the Chief Executive
Officer, each officer who is also a director of the Company and designated other
members of senior management, as well as new compensation and stock plans. The
Compensation Committee met two times in 1999. The members of the Compensation
Committee are Messrs. Chisman, Hardee, and Meredith.
IDENTIFICATION OF DIRECTOR-NOMINEES
The Company will consider director-nominees recommended by
shareholders, although it has not actively solicited recommendations from
shareholders for nominees nor has the Company established any procedure for this
purpose for the Annual Meeting.
EXECUTIVE AND DIRECTOR COMPENSATION
The table below sets forth certain information regarding cash and other
compensation earned during fiscal year 1999 by each director and four other
executive officers receiving compensation in excess of $100,000 in 1999.
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<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
------------------------------------------------------
Name and Principal Other Annual
Position Year Salary Bonus Compensation
-------------------- -------- ------------ ----------- ------------
<S> <C>
J. Alan Lindauer 1999 $130,000 $20,000 --
CEO & President 1998 130,000 -- --
Gerald T. McDonald 1999 95,000 20,000 --
CFO & Secretary 1998 39,583(3) 15,000 --
Robert P. Louthan 1999 80,000 95,000 --
Vice President & Business
Development
Officer 1998 40,000*(4) -- --
Lex W. Troutman 1999 70,000 71,250 --
Business Development
Officer 1998 11,667(5) -- --
</TABLE>
<TABLE>
<CAPTION>
(1)
Long-term
Compensation
Awards
----------------
Securities (2)
Underlying
Name and Principal Options / All Other
Position Year SARs(#) Compensation 401K Life
-------------------- -------- --------------- -------------- ------------ ----------
<S> <C>
J. Alan Lindauer 1999 -- $4,500 3,900 63
CEO & President 1998 26,250 -- -- --
Gerald T. McDonald 1999 -- 3,400 3,300 124
CFO & Secretary 1998 21,000 -- -- --
Robert P. Louthan 1999 -- 3,800
Vice President & Business
Development
Officer 1998 10,500 -- 3,750 32
Lex W. Troutman 1999 10,500 4,300 4,232 54
Business Development
Officer 1998 -- -- -- --
</TABLE>
(1) Amount represents stock options granted in the year indicated. Amount
includes the increase in the number of options granted as a result of
the 5% stock dividend issued in March 1999.
(2) Includes 401(k) match and term life insurance premiums paid on behalf
of the named executive officers.
(3) Mr. McDonald began employment with the Company in February 1998.
(4) Mr. Louthan began employment with the Company in January 1998.
(5) Mr. Troutman began employment with the Company in May 1998.
12
<PAGE>
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Individual Grants
- -----------------------------------------------------------------------------------------
<S> <C>
Number of Percent of total
Securities options/SARs
Underlying granted to Excise of Grant date
Options/SARs employees in base price Expiration Present
Name Granted (#) fiscal year ($/Sh) date Value ($)
- -------------------------------------- ---------------------- ---------------------- ------------------ --------------- ------------
Lex W. Troutman
Business Development Officer 10,500 50% $8.625 5/1/08 23,900
- -------------------------------------- ---------------------- ---------------------- ------------------ --------------- ------------
</TABLE>
The Black-Scholes pricing model was used to determine the Grant Date Present
Value. The following assumptions were used in the calculation. Expected
volatility of 17.3%; risk-free rate of return 6.01%; no dividend yield ; and a
time of exercise of 5 years.
Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------- -------------------------- -----------------------
Number of
securities Value of
underlying Unexercised
unexercised in-the-money
options/SARs options/SARs
at FY-end (#) at FY-end($)
- ------------------------------------- --------------------- ---------------------- -------------------------- ----------------------
<S> <C>
Shares acquired Value Exercisable/ Exercisable/
Name on excise (#) Realized ($) Unexercisable Unexercisable
J. Alan Lindauer
CEO & President -- -- 18,900/7,350
Gerald T. McDonald
CFO & Secretary -- -- 18,900/2,100
Robert P. Louthan
Vice President & Business
Development Officer -- -- 10,500/--
Lex W. Troutman
Business Development Officer -- -- 3,500/7,000
- ------------------------------------- --------------------- ---------------------- -------------------------- ----------------------
</TABLE>
13
<PAGE>
EMPLOYMENT AGREEMENT
Mr. Lindauer is employed as the Company's President and Chief Executive
Officer under an employment agreement dated January 1, 1998 ("Lindauer
Employment Agreement"). The Lindauer Employment Agreement expires on December
31, 2002, unless terminated earlier in accordance with its terms. Mr. Lindauer
is paid an annual salary of $130,000. The Lindauer Employment Agreement includes
a two-year covenant not to compete with the Company within the Commonwealth of
Virginia and a one-year employee nonsolicitation clause and imposes certain
non-disclosure obligations on Mr. Lindauer with respect to the Company's
confidential and proprietary information.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires directors, officers and persons who beneficially own more than 10% of a
registered class of stock of the Company to file initial reports of ownership
(Forms 3) and reports of changes in beneficial ownership (Forms 4 and 5) with
the SEC and NASDAQ. Such persons are also required under the rules and
regulations promulgated by the SEC to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company, the Company believes that all reporting requirements under Section
16(a) for 1999 were met in a timely manner by its directors, officers and
greater than 10% beneficial owners.
PROPOSAL 2. APPROVAL OF AMENDMENT TO THE COMPANY'S 1998 EMPLOYEE
STOCK OPTION PLAN
INTRODUCTION
The Company shareholders are being asked to approve an amendment
("Amendment") to the Company's 1998 Employee Stock Option Plan (the "Plan"). The
Amendment increases the number of shares of the Company's Common Stock that may
be issued under the Plan from 105,000 shares to 200,000 shares. The number of
shares available under the Plan increased from 100,000 to 105,000 by its terms
when the Company declared a 5% stock dividend in 1999. The Plan was created as a
means of attracting and retaining outstanding management personnel and employees
and to more closely align these individuals' interests with those of the
Company's shareholders. The Company believes that an adequate reserve of shares
available for issuance under the Plan is necessary to enable the Company to
compete effectively with other companies to secure and retain valuable
employees.
14
<PAGE>
OPTIONS GRANTED IN 1999. The following table sets forth certain
information regarding stock option awards that were granted under the Plan in
fiscal year 1999 to certain executive officers and employees. Directors who are
not executive officers or employees of the Company are not eligible for
participation under the Plan.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION OPTIONS GRANTED GRANT PRICE
----------------- --------------- -----------
<S> <C>
Lex W. Troutman
Business Development Officer 10,500 $8.21
Martin N. Speroni 10,500 8.21
Director of Research
All other Executive Officers as a group -0- -0-
All other employees including current officers who
are not Executive Officers -0- -0-
</TABLE>
The Board of Directors believes that stock options are a competitive
necessity in its industry to attract and retain employees with the skill,
intelligence, education and experience on whose success the Company is largely
dependent. Stock options are used by the Company as a major element of the
compensation package for many different levels of employees because they foster
proprietary identification with the Company and encourage them to exert maximum
efforts for its success. The Company originally granted Mr. Troutman and Mr.
Speroni options to purchase 10,000 shares, which were adjusted to the right to
purchase 10,500 shares as a consequence of the 5% stock dividend declared by the
Company in February, 1999.
APPROVAL OF THE AMENDMENT BY THE SHAREHOLDERS REQUIRES THE AFFIRMATIVE
VOTE OF THE MAJORITY OF THE VOTES CAST AT THE ANNUAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS THAT ALL STOCKHOLDERS VOTE "FOR"
APPROVAL OF THE AMENDMENT TO THE EMPLOYEE PLAN.
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of its Audit Committee,
intends to appoint KPMG LLP as the firm of independent certified public
accountants to audit the financial statements of the Company for the fiscal year
ending June 30, 2000, and the Board of Directors desires that such appointment
be ratified by the shareholders. KPMG LLP has audited the financial statements
of the Company since June 30, 1997.
15
<PAGE>
A representative of KPMG LLP will be present at the Annual Meeting and
available to respond to appropriate questions.
RATIFICATION BY THE SHAREHOLDERS OF KPMG LLP REQUIRES THE AFFIRMATIVE
VOTE OF THE MAJORITY OF THE VOTES CAST AT THE ANNUAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY'S AUDITORS.
OTHER MATTERS
The Board of Directors does not know of any matters that will be
presented for action at the Annual Meeting other than those described above or
matters incident to the conduct of the Annual Meeting. If, however, any other
matters not presently known to management should come before the Annual Meeting,
it is intended that the shares represented by the Proxy will be voted on such
matters in accordance with the discretion of the holders of such proxy.
SUBMISSION OF PROPOSALS FOR 1999
The next Annual Meeting of Shareholders will be held on or about
October 26, 2000. Any shareholder who wishes to submit a proposal for
consideration at that meeting, and who wishes to have such proposal included in
the Company's proxy statement for that meeting, must submit the proposal in
writing to J. Alan Lindauer, President and Chief Executive Officer, at 300 East
Main Street, Suite 1380, Norfolk, VA 23510 by July 14, 2000.
GENERAL
The Company's 1999 Annual Report to Shareholders accompanies this Proxy
Statement. The 1999 Annual Report to Shareholders does not form any part of the
material for the solicitation of proxies. Upon written request, the Company will
provide shareholders with a copy of its Report on Form 10-K and Form N-SAR for
the year ended June 30, 1999 (the "Form N-SAR"), as filed with the Securities
and Exchange Commission, without charge. Please direct written requests for a
copy of the Form 10-K and Form N-SAR to: Gerald T. McDonald, Chief Financial
Officer, Waterside Capital Corporation, 300 East Main Street, Suite 1380,
Norfolk, VA 23510.
16
<PAGE>
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY
By Order of the Board of Directors
September 7, 1999
17
<PAGE>
EXHIBIT A TO PROXY STATEMENT
WATERSIDE CAPITAL CORPORATION
FORM OF FIRST AMENDMENT TO
1998 EMPLOYEE STOCK OPTION PLAN
Section 4 of Waterside Capital Corporation's 1998 Employee Stock Option Plan is
deleted in its entirety and is replaced with the following:
4. CAPITAL STOCK AVAILABLE FOR AWARDS.
The number of shares of common stock of the
Company for which Awards may be granted under the Plan shall
not exceed 200,000. As soon as possible after adoption of the
Plan by the Company's shareholders, the Company shall take
whatever actions are necessary to file required documents with
the U.S. Securities and Exchange Commission and any other
appropriate governmental authorities and stock exchanges to
make shares of stock available for issuance pursuant to
Awards. Stock related to Awards that are forfeited,
terminated, expire unexercised, or are settled in such manner
that all or some of the shares covered by an Award under this
Plan are not issued to a Participant shall immediately become
available for Awards under this Plan.
18
<PAGE>
WATERSIDE CAPITAL CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 25, 1999
The undersigned, having received the Annual Report to Shareholders and the
accompanying Notice of Annual Meeting of Shareholders and Proxy Statement dated
September 7, 1999, hereby appoints Ernest F. Hardee and Peter M. Meredith, Jr.
(each with the power to act alone) as proxies, with full power of substitution,
and hereby authorizes them to represent and vote, as directed below, all the
shares of the Common Stock of Waterside Capital Corporation held of record by
the undersigned on August 31, 1998, at the Annual Meeting of Shareholders to be
held on October 25, 1999, and any adjournment thereof.
1. To elect 21 directors to hold office for a term of one year and until their
respective successors are elected and qualified;
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to
(except as deleted below) vote for all of the
nominees listed below
NOMINEES: James E. Andrews, Donna C. Bennett, J.W. Whiting Chisman, Jr.,
Jeffrey R. Ellis, Eric L. Fox, Roger L. Frost, Ernest F. Hardee, Henry U.
Harris, III, J. Alan Lindauer, Robert I. Low, Harold J. Marioneaux, Jr., Peter
M. Meredith, Jr., Charles H. Merriman, Augustus C. Miller, Paul F. Miller, Juan
M. Montero, II, R. Scott Morgan, Sr., James W. Noel, Jr., Richard G. Ornstein,
Marvin S. Friedberg and Jordan E. Slone
2. To approve an amendment to the Company's 1998 Employee Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3.To ratify the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
4. To act upon such other matters as may properly come before the meeting or
any adjournment thereof.
THIS PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS EXERCISE. THIS PROXY WHEN
PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. WHEN NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED FOR 1, 2, AND 3.
--------------------------------
Signature
--------------------------------
Signature
NOTE: Please sign your name(s)
exactly as they appear hereon.
If signer is a corporation,
please sign the full corporate
name by duly authorized
officer. If any attorney,
guardian, administrator,
executor, or trustee, please
give full title as such. If a
partnership, sign in
partnership name by authorized
person.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS
PROXY PROMPTLY IN THE ACCOMPANYING ENVELOPE.
