<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
THE AEGIS CONSUMER FUNDING GROUP, INC.
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:
.................................................................
2) Aggregate number of securities to which transaction
applies:
.................................................................
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it was
determined):
.................................................................
4) Proposed maximum aggregate value of transaction:
.................................................................
5) Total fee paid:
.................................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
.................................................................
2) Form, Schedule or Registration Statement No.:
.................................................................
3) Filing Party:
.................................................................
4) Date Filed:
.................................................................
<PAGE>
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
JERSEY CITY, NEW JERSEY
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 3, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The Aegis
Consumer Funding Group, Inc. (the 'Company') will be held at the offices of the
Company, 525 Washington Blvd., 29th Floor, Jersey City, New Jersey 07310, on
June 3, 1996 at 10:00 A.M., local time, for the purpose of considering and
acting upon the following:
1. The election of Felice Cutler and Paul Fitzpatrick to the Board of
Directors.
2. The approval of the amendment of the Company's 1994 Stock Option
Plan (the '1994 Plan') by adopting the 1994 Plan, as amended.
3. The approval of the adoption of the Company's 1996 Stock Option
Plan.
4. Any and all other matters that may properly come before the meeting
and any adjournment thereof.
The Board of Directors has fixed the close of business on May 6, 1996, as
the record date for determining the stockholders entitled to notice of and to
vote at the meeting and any adjournment thereof, and only holders of Common
Stock of the Company of record at such date will be entitled to notice of or to
vote at the meeting. Such stockholders may vote in person or by proxy.
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. HOWEVER, WHETHER OR NOT
YOU PLAN TO BE PERSONALLY PRESENT AT THE MEETING, PLEASE MARK, DATE AND SIGN THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors,
ANGELO R. APPIERTO
ANGELO R. APPIERTO,
Chief Executive Officer
Jersey City, New Jersey
May 13, 1996
<PAGE>
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
525 WASHINGTON BOULEVARD
JERSEY CITY, NEW JERSEY 07310
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1996
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of proxies to be used at the Annual Meeting of
Stockholders of The Aegis Consumer Funding Group, Inc. (the Company ), to be
held at the offices of the Company, 525 Washington Blvd., 29th Floor, Jersey
City, New Jersey 07310, on June 3, 1996 at 10:00 A.M., local time. This Proxy
Statement and accompanying proxy card are first being sent to the stockholders
of the Company on or about May 13, 1996.
Any proxy delivered in the accompanying form may be revoked by the person
executing the proxy at any time, before the authority thereby granted is
exercised, by written request addressed to the Secretary, The Aegis Consumer
Funding Group, Inc., 525 Washington Blvd., Jersey City, New Jersey, 07310, or by
attending the meeting and electing to vote in person. Proxies received in such
form will be voted as therein set forth at the meeting or any adjournment
thereof, but if no instructions are given, such shares will be voted (1) for the
election as director of the nominees of the Board of Directors named below, (2)
for the approval of the amendment of the Company's 1994 Stock Option Plan (the
'1994 Plan') by adoption of the 1994 Plan, as amended, (3) for the approval of
the adoption of the Company's 1996 Stock Option Plan (the '1996 Plan') and (4)
in the discretion of the proxies named in the proxy card on any other proposals
to properly come before the meeting or any adjournment thereof.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has selected the close of business on May 6, 1996 as
the record date for determining the stockholders entitled to notice of, and to
vote at, the meeting or any adjournment thereof. The number of shares of Common
Stock of the Company outstanding on May 6, 1996 was 14,944,258. Stockholders
present or represented and entitled to vote on any matter at the meeting or any
adjournment thereof will be entitled to one vote on such matter for each share
of the Common Stock of the Company held by them as of the record date.
Directors are elected by a plurality of the votes cast by the holders of
the shares entitled to vote in the election of Directors at a meeting at which a
quorum is present. Provided a quorum is present, abstentions and shares not
voted are not taken into account in determining a plurality. The favorable vote
of a majority of the shares represented in person or by proxy and entitled to
vote at the meeting is necessary to approve the amendment of the 1994 Plan and
to approve the adoption of the 1996 Plan. A quorum consists of a majority of
votes entitled to be cast.
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a number of Directors, as determined
from time to time by resolution of the stockholders or the Board of Directors.
The Board of Directors has set the number of Directors of the Company at five
and the Company's Board of Directors is divided into three classes. Directors of
each class are elected at the annual meeting of stockholders held in the year in
which the term for such class expires and will serve thereafter for three years.
The term of Class 1 Directors expires at the 1996 Annual Meeting of
Stockholders. The terms of Class 2 and Class 3 Directors expires, respectively,
at the 1997 and 1998 Annual Meeting of Stockholders. Presently, Felice Cutler
serves as the sole Class 1 Director, subject to election at this Annual Meeting
of Stockholders.
At the meeting, two Directors will be elected to serve, subject to the
provisions of the Bylaws, until the 1999 Annual Meeting of Stockholders and
until his or her successor is duly elected and qualified. It is the intention of
the persons named in the accompanying proxy to vote all proxies solicited by the
Board of Directors for the nominees listed below unless authority to vote for
any nominee is withheld
<PAGE>
<PAGE>
by a stockholder in such stockholder's proxy. If for any reason a nominee shall
not become a candidate for election as a Director at the meeting, an event not
now anticipated, the proxies will be voted for a nominee including such
substitutes as shall be designated by the Board of Directors. Proxies may not be
voted for a greater number of persons than are named.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF FELICE CUTLER
AND PAUL FITZPATRICK TO THE BOARD. Felice Cutler has served as a non-employee
director of the Company since February 1996 and as a member of the Compensation
Committee and the Audit Committee since March 21, 1996. If elected, Felice
Cutler and Paul Fitzpatrick will serve three-year terms ending at the 1999
Annual Meeting of Stockholders.
Felice Cutler and Paul Fitzpatrick will be present at the Annual Meeting of
Stockholders where they will be available to respond to appropriate questions,
and, if desired, make statements.
If the stockholders do not elect Felice Cutler or Paul Fitzpatrick to the
Board of Directors, the Board will attempt to locate suitable replacements.
Non-employee directors traditionally receive a $25,000 per annum retainer,
$3,000 for each board meeting attended ($1,500 for telephonic meetings of less
than an hour, with discretion to reduce such fee for telephonic meetings of less
than one-half hour) and $1,500 for each committee meeting attended and are also
entitled to be reimbursed for out-of-pocket expenses in connection with
attendance at such meetings.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors and nominee for director and executive officers of the
Company and their respective ages and positions with the Company are set forth
in the following table.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- -----------------------------------------------------
<S> <C> <C>
Angelo R. Appierto...................... 43 Chairman of the Board and Chief Executive Officer,
Class 3
Gary D. Peiffer......................... 45 Vice Chairman of the Board and General Counsel,
Class 2
Joseph F. Battiato...................... 41 President
Matthew B. Burns........................ 53 Executive Vice President
Dina L. Penepent........................ 34 Executive Vice President, Chief Financial Officer and
Secretary
Jorge G. Rios........................... 36 Executive Vice President -- National Sales Manager
Felice Cutler........................... 59 Director, Class 1
Carl Frischling......................... 59 Director, Class 3
Paul Fitzpatrick........................ 43 Nominee as Class 1 Director
</TABLE>
Mr. Appierto joined the Company in 1992. Mr. Appierto has served as
Chairman of the Board, Chief Executive Officer and a director of the Company
since March 1994, and served as President of the Company from July 1993 until
May 1995. He previously served as Chief Financial Officer of the Company from
May 1992 through February 1994. Prior to joining the Company, Mr. Appierto was a
trader and Senior Vice President at CS First Boston, an investment bank, from
December 1991 through May of 1992, and a Partner and Chief Financial Officer at
FB Tech Joint Venture, an affiliate of CS First Boston and of Tech Partners, a
proprietary securities trading firm, from April 1990 through November 1991.
Mr. Peiffer has served as Vice Chairman of the Board, General Counsel and a
director of the Company since January 1994. Prior to joining the Company, Mr.
Peiffer was a senior Partner at the law firm of Jeffer, Hopkinson, Vogel,
Coomber & Peiffer from January 1983 through December 1993. Mr. Peiffer also
serves as a director of Ragar Corp. a publicly-traded carpet and floor covering
retailer.
Mr. Battiato has served as President of the Company since May 1995 and has
been an Executive Vice President and head of the Consumer Finance Division of
the Company from January 1991 until May 1995. Prior to joining the Company, Mr.
Battiato served in several positions relating to mortgage trading; he was a
Principal at Morgan Stanley & Co., an investment bank, from January 1990 through
December 1990 and from June 1988 through December 1989, he was a Vice President
at Donaldson,
2
<PAGE>
<PAGE>
Lufkin & Jenrette, an investment bank. From 1986 to 1988, Mr. Battiato was a
senior vice president and manager of mortgage backed securities at Dean Witter
Reynolds. From 1973 to 1986, Mr. Battiato was associated with Goldman, Sachs &
Co., an investment bank, as a senior financial analyst and senior trader of
mortgage backed securities.
Mr. Burns has served as Executive Vice President of the Company in charge
of systems development since May 1995 and the Executive Vice President from
November 1992 until May 1995. From 1991 through 1992 Mr. Burns was the Senior
Financial Economist of the Franklin Savings Holding Company. From 1988 to 1990,
Mr. Burns was Chairman of the Board and Chief Executive Officer of Franklin
Pacific, a trading subsidiary of Franklin Savings, Ottawa, Kansas, a savings and
loan association. From 1985 to 1988, Mr. Burns was the Chief Operating Officer
and Co-Founder of Merrill Lynch Capital Markets Mortgage Inc., a wholesale
mortgage bank later sold to Franklin Savings. From 1984 to 1985 Mr. Burns was
Vice President of all Hedging and Mortgage Trading for Shearson Mortgage in
Newport Beach, California. From 1982 to 1984, Mr. Burns served as a head of an
interest rate management and asset liability management team for Shearson Lehman
American Express in Denver, Colorado. See 'Executive Compensation -- Employment
Agreements.'
Ms. Penepent has served as Chief Financial Officer and Executive Vice
President of the Company since March 1994, and as Secretary of the Company since
October 1993. From July 1992 through February 1994 she was Controller and Vice
President of the Company. Before joining the Company Ms. Penepent, a certified
public accountant, was a Manager in the audit and accounting practice at BDO
Seidman, Certified Public Accountants from January 1989 through July 1992.
Mr. Rios has served as Executive Vice President-National Sales Manager of
the Company since July 1994. From January 1994 until July 1994, Mr. Rios was
President of the National Financing and Leasing Corporation, a finance company.
From 1982 until September 1993, Mr. Rios worked in six separate automobile
dealerships in positions ranging from salesman, sales manager, to finance and
insurance manager. From September 1993 until December 1993, Mr. Rios was a sales
representative of the Company. From January 1991 until August 1991, Mr. Rios
served as President of Interstate Associates, a distributor of automobile
anti-theft devices.
Ms. Cutler has served as a director of the Company since February 1996. Ms.
Cutler has served as the Managing Partner of the law firm of Cutler and Cutler
since 1966. From 1960 through 1966 Ms. Cutler was a Deputy Attorney General of
the State of California. Ms. Cutler serves as a Trustee of Astra Institutional
Trust and Astra Institutional Securities Trust.
Mr. Frischling has served as a director of the Company since February 1996.
Mr. Frischling has served as a Senior Partner of the law firm of Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel from September 1994. From September 1992 to
August 1994, Mr. Frischling was a Senior Partner of the law firm of Reid &
Priest. From 1979 to August 1992 Mr. Frischling was as a Senior Partner of the
law firm of Spengler Carlson Gubar Brodsky & Frischling. He also serves as a
director of AIM Funds, ERD Waste Corp. and Lazard Funds.
Mr. Fitzpatrick is a nominee for director of the Company. Mr. Fitzpatrick
has served in various capacities at Deutsche Bank AG New York Branch since 1979,
including as Vice President/Credit Risk Manager from October 1995 to present; as
Senior Credit Officer Private Banking from July 1994 to September 1995; and as
Vice President/Credit Administration from January 1979 to June 1994.
3
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the Company,
as well as certain other compensation paid or accrued, for the fiscal years
ended June 30, 1995 and 1994 to Angelo R. Appierto, the Company's Chairman of
the Board and Chief Executive Officer, and the other four most highly
compensated executive officers of the Company for each fiscal year (the 'Named
Executive Officers '):
1995 SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION
- ------------------------------------------------------------------ -------- -------- ------------
<S> <C> <C> <C> <C>
Angelo R. Appierto ............................................... 1995 $240,500 $ -- $ --
Chief Executive Officer and 1994 216,667 -- --
Chairman of the Board
Joseph F. Battiato ............................................... 1995 171,750 -- --
President 1994 182,763 61,980 50,000(1)
Gary D. Peiffer .................................................. 1995 240,500 -- --
General Counsel, Vice Chairman, Director 1994 125,333 -- --
Matthew B. Burns ................................................. 1995 167,330 -- --
Executive Vice President 1994 155,500 20,830 --
Robert G. Nelson(2) .............................................. 1995 125,000 73,623 --
Executive Vice President -- Marketing 1994 107,570 25,000 --
and Product Development
Jorge G. Rios(3) ................................................. 1995 95,833 266,860 --
Executive Vice President -- National Sales Manager 1994 13,765 -- --
</TABLE>
- ------------
(1) Reflects consulting fees paid to Interstate Associates Ltd., a company
wholly owned by Mr. Battiato.
(2) Mr. Nelson ceased to be an executive officer of the Company effective as of
February 22, 1995. See 'Employment Agreements.'
(3) Mr. Rios was employed by the Company for four months in the fiscal year
ended June 30, 1994.
OPTION GRANTS IN LAST FISCAL YEAR
The following options were granted to the Named Executive Officers during
fiscal year 1995 under the 1994 Plan.
<TABLE>
<CAPTION>
POTENTIAL REALIZED
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL RATES OF
NUMBER OF STOCK PRICE
SECURITIES % OF TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED EXERCISE OPTION TERM
OPTIONS TO EMPLOYEES IN PRICE EXPIRATION --------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------------------ ----------- --------------- -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Angelo R. Appierto.................. 75,000 14.3 7.75 6/30/04 320,460 789,307
Joseph F. Battiato.................. 150,000 28.6 7.75 6/30/04 640,919 1,578,614
Gary D. Peiffer..................... 75,000 14.3 7.75 6/30/04 320,460 789,307
Matthew B. Burns.................... -- -- -- -- -- --
Robert G. Nelson.................... 75,000 14.3 6.50 4/06/04 268,773 662,000
Jorge G. Rios....................... 50,000 9.5 6.50 4/06/04 179,182 441,333
Jorge G. Rios....................... 50,000 9.5 7.75 6/30/04 213,640 526,205
</TABLE>
4
<PAGE>
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The table below sets forth information relating to the exercise of options
during fiscal year 1995 by each Named Executive Officer and the fiscal year-end
value of unexercised options.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES ACQUIRED AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------------ --------------- ----------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
Angelo R. Appierto.................. -- -- 75,000/0 0/0
Joseph F. Battiato.................. -- -- 150,000/0 0/0
Gary D. Peiffer..................... -- -- 75,000/0 0/0
Matthew B. Burns.................... -- -- 0/0 0/0
Robert G. Nelson.................... -- -- 75,000/0 $93,750/0
Jorge G. Rios....................... -- -- 100,000/0 $62,500/0
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Angelo Appierto,
Gary Peiffer, Joseph Battiato, Matthew Burns, Jorge Rios and Dina Penepent. Each
such agreement is for a term of five years commencing March 1, 1994, except for
Mr. Rios' agreement which is for a term of three years commencing July 1, 1994
and Ms. Penepent's agreement which is for a term of three years commencing
October 1, 1995. Mr. Appierto's and Mr. Peiffer's agreements provide for a base
salary of $250,000 in the first year, $275,000 in the second year, $300,000 in
the third year and $350,000 in the fourth and fifth years. Mr. Battiato's
agreement provides for a base salary of $175,000 during the first year and
$200,000 per year thereafter. Mr. Burns' agreement provides for $150,000 salary
for each year of the term. Mr. Burns is entitled to a bonus based on production
volumes of $10 per loan or lease originated less loans or leases which have
defaulted. Mr. Rios' agreement provides for $100,000 salary for each year of the
term. Mr. Rios is entitled to a bonus based on production volumes of $25 per
loan or lease originated less loans or leases which have defaulted. In addition,
the Company paid Mr. Rios $248,490 in July 1994 in connection with the purchase
of certain sales territories from an entity controlled by Mr. Rios which held
exclusive rights to act as the Company's independent marketing broker for such
territories. Ms. Penepent's agreement provides for a minimum $120,000 salary for
each year of the term. Each of the agreements (other than Mr. Burns', Mr. Rios'
and Ms. Penepent's agreements) provides for an annual bonus based on the net
pre-tax income (as defined therein) of the Company. Mr. Appierto is entitled to
a bonus ranging from 1% of net pre-tax income if such net pre-tax income is less
than $1 million to 5% of net pre-tax income if such net pre-tax income is in
excess of $10 million. Mr. Peiffer's bonus is 2% of net pre-tax income if such
net pre-tax income is in excess of $5 million and 3% of net pre-tax income if
such net pre-tax income is in excess of $10 million. Mr. Battiato is entitled to
a bonus ranging from 4% of the first $1 million of net pre-tax income down to 1%
of net pre-tax income in excess of $10 million. Notwithstanding the foregoing,
for the fiscal year ended June 30, 1995, Mr. Appierto, Mr. Peiffer, Mr. Battiato
and Mr. Burns each waived all bonuses (in the aggregate amount of $0.1 million)
due them pursuant to their respective employment agreements. For these purposes,
net pre-tax income of the Company is generally such amount indicated in its
financial statements and calculated in accordance with generally accepted
accounting principles after adding management consulting fees and without giving
effect to the bonus for the relevant executive officer. Mr. Appierto's, Mr.
Battiato's and Mr. Peiffer's agreements further provide that in the event of a
change in control (defined generally to be a change in control that would be
reported as such in reports filed with the Securities and Exchange Commission,
the acquisition of beneficial ownership of 25% of the Company's voting
securities by an individual or group other than the stockholders of the Company
prior to the Company's initial public offering or a majority change in the
composition of the Company's Board of Directors not approved by the current
directors or their chosen successors) of the Company, each such officer is
entitled to a payment up to 2.99 times his base amount as defined in Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended (the 'Code' ). Each
employment agreement provides that each executive
5
<PAGE>
<PAGE>
shall be entitled to the full unpaid balance, in a single lump sum in the case
of Mr. Appierto and Mr. Peiffer, of his respective base salary for the remainder
of the term in the event his employment is terminated by the Company other than
for cause (defined generally to mean conviction of a felony or wilful failure to
follow written directions of the Board of Directors), death or disability, or by
such executive except for good reason (defined generally to mean a reduction in
the executive officer's responsibilities, title, offices or compensation). Mr.
Appierto's, Mr. Battiato's and Mr. Peiffer's employment agreements further
provide that, in the event that for any reason (other than by the Company for
cause or by the executive other than for good reason) their employment
agreements are not renewed or extended on or before March 1, 1999 for a period
of at least five years commencing March 1, 1999 upon the same terms and
conditions and containing the same compensation and bonus provisions to be
effective under their respective employment agreements for the twelve month
period ending March 1, 1999, the Company shall pay to the Executive a
Termination Fee in an amount equal to two times the sum of the executive's base
annual compensation in effect for the twelve months immediately preceding the
expiration of the then current term of their employment agreement plus the
amount of all bonuses paid or payable to the officer pursuant to the terms of
the employment agreement with respect to the same twelve month period. In
addition, the Board of Directors has approved an amendment to Mr. Appierto's,
Mr. Battiato's and Mr. Peiffer's employment agreements which would compensate
them at the rate of $350,000 per year times the number of years remaining under
their contracts for future lost bonuses in the event their employment is
terminated prior to March 1, 1999 by the Company other than for cause (as
defined herein), including the death or disability of the Executive. All
employment agreements contain provisions protecting the confidentiality of
information concerning the Company's business, and, except for Ms. Penepent's
employment agreement, do not limit the ability of such officers to compete with
the Company after the conclusion of their respective terms. In addition, each of
such employment agreements provides for certain insurance and other benefits to
the executives party thereto.
In April 1996, Mr. Appierto, Mr. Peiffer and Mr. Battiato each entered into
an agreement with the Company with respect to the Whitehall Change in Control
(as hereinafter defined). Each such executive agreed that the Whitehall Change
in Control shall not constitute a change in control for purposes of their
employment agreements and no payment shall be deemed owed to the executive by
the Company as a result thereof unless and until such executive shall
voluntarily terminate his employment prior to June 30, 1996 or the Company shall
terminate such executive's employment without cause on or before June 30, 1997.
Mr. Burns was given the title of Chief Operating Officer in May 1994 but
has not served in this capacity since April 1995. Mr. Burns entered into an
agreement with the Company in October 1995 pursuant to which he would cease to
be Chief Operating Officer and would act as Executive Vice President -- Systems
and Systems Development. Pursuant to the agreement, Mr. Burns gave up the right
to any bonuses based on loan or lease origination after July 1, 1995 in exchange
for payment by the Company of $110,000. Such agreement provides that it would
cease to be of any force or effect if Mr Burns were not made President of a new
subsidiary of the Company pursuant to a contract satisfactory to Mr. Burns and
the Company on or before February 1, 1996. Although Mr. Burns has not entered
into such an agreement with a subsidiary of the Company, he is continuing to
negotiate with the Company with respect thereto.
The Company also entered into an employment agreement with Robert Nelson
for a three-year term commencing August 25, 1993. Mr. Nelson's agreement
provided for a base salary of $125,000. Mr. Nelson was entitled to receive an
annual bonus equal to 18% of the pre-tax net income of the Company's lease
origination business and an additional bonus of $10,000 for any quarter in which
750 to 1,200 loans were funded, $15,000 for any quarter in which 1,201 to 2,250
loans were funded, $25,000 for any quarter in which 2,251 to 3,000 loans were
funded and $50,000 for any quarter in which 3,001 or more loans were funded. Mr.
Nelson was entitled to receive options for Common Stock in lieu of a cash bonus
at an exercise price equal to 80% of fair market value on the date of grant. In
addition, Mr. Nelson's employment agreement provided for certain insurance and
other benefits. The Company has entered into an agreement with Mr. Nelson dated
February 22, 1995 terminating his rights under his employment agreement and
pursuant to which his employment terminated on August 31, 1995. In addition, the
Company loaned Mr. Nelson $200,000, to be repaid by August 31, 1996.
6
<PAGE>
<PAGE>
PRINCIPAL STOCKHOLDERS AND HOLDINGS OF MANAGEMENT
The following table sets forth certain information as of April 19, 1996.
This data is based on information obtained from the persons named below or from
Schedule 13Ds filed with the Securities and Exchange Commission, with respect to
the beneficial ownership of shares of Common Stock by (i) each person known by
the Company to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock, (ii) each director, nominee and Named Executive Officer of the
Company and (iii) all officers and directors as a group.
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF SHARES OF
AND NATURE OF COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2) OUTSTANDING(2)
- ---------------------------------------------------------------------- -------------------------- ------------
<S> <C> <C>
Gary Winnick(3) ...................................................... 3,022,841 20.2
c/o PCG Management, Inc.
150 El Camino Drive, Suite 204
Beverly Hills, CA 90212
Robert I. Weingarten(4) .............................................. 1,836,224 12.3
1999 Avenue of the Stars, Suite 2350
Los Angeles, CA 90067
Palomba Weingarten(4)(5) ............................................. 1,744,083 11.7
c/o Atlas Holdings Group, Inc.
9595 Wilshire Boulevard
Beverly Hills, CA 90212
Angelo R. Appierto(6)(7).............................................. 656,437 4.3
Gary D. Peiffer(6)(8)................................................. 429,314 2.8
Felice Cutler(6)...................................................... -- --
Carl Frischling(6).................................................... 10,000 *
Paul Fitzpatrick(6)................................................... -- --
Joseph F. Battiato(6)(9).............................................. 635,000 4.2
Matthew B. Burns(6)................................................... 100,000 *
Jorge G. Rios(6)(10).................................................. 130,000 *
All executive officers and directors as a group (8 persons)(11)....... 2,020,751 12.9
</TABLE>
- ------------
* Less than 1%
(1) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and 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 of this Proxy upon the conversion of convertible
securities or the exercise of warrants or options. Each beneficial owner's
percentage ownership is determined by assuming that convertible securities,
options or warrants that are held by such person (but not those held by any
other person) and which are exercisable within 60 days of the date of this
Proxy have been exercised.
(2) Includes 1,078,308 shares placed in escrow in connection with the Company's
initial public offering (The 'Escrowed Shares').
(3) Such shares are owned by PCG Management, Inc. an entity of which Gary
Winnick is the Chairman of the Board, Chief Executive Officer and sole
stockholder.
(4) Robert I. Weingarten and Palomba Weingarten are married to each other.
Shareholdings for Mr. Weingarten and Mrs. Weingarten each reflect individual
ownership and each disclaims beneficial ownership of stock held by the
other. Mr. Weingarten's shareholdings do not include 91,624 shares of Common
Stock held nominally by Whitehall Financial Group, Inc. ('Whitehall'), of
which Mr. Weingarten is President, a director and a principal stockholder,
which shares are held for the benefit of Rita Villa and Philip A.
Fitzpatrick. See 'Change in Control.'
(footnotes continued on next page)
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(footnotes continued from previous page)
(5) Such shares are owned by Atlas Holdings Group, Inc. an entity of which
Palomba Weingarten is the Chief Executive Officer, sole director and
principal stockholder.
(6) Addresses are c/o The Aegis Consumer Funding Group, Inc., 525 Washington
Blvd., Jersey City, New Jersey 07310.
(7) Includes (i) 50,000 shares held by the Appierto Irrevocable Family Trust (as
to which shares Mr. Appierto disclaims beneficial ownership) and (ii)
150,000 shares subject to immediately exercisable stock options.
(8) Includes 150,000 shares subject to immediately exercisable stock options.
139,657 shares directly owned are held by Suzanne C. Peiffer, Mr Peiffer's
wife. Mr. Peiffer disclaims beneficial ownership of such shares.
(9) Includes 300,000 shares subject to immediately exercisable stock options.
(10) Includes 130,000 shares subject to immediately exercisable stock options.
(11) Includes 780,000 shares subject to immediately exercisable stock options.
MEETINGS OF THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 1995, the Board of Directors held
five (5) meetings. During such period, each of the then-current directors of the
Company attended 75% or more of the aggregate of (1) the total number of
meetings of the Board of Directors and (2) the total number of meetings held by
all committees of the Board of Directors on which such director served.
The Board of Directors has established a Compensation Committee, consisting
of Felice Cutler and Carl Frischling. The Compensation Committee is responsible
for reviewing all compensation agreements and arrangements for officers of the
Company, including annual incentive awards, and is responsible for administering
the Company's 1994 Plan and 1996 Plan. The Board of Directors has established an
Audit Committee, consisting of Felice Cutler and Carl Frischling. The Audit
Committee is responsible for recommending to the Board of Directors the
engagement of the independent auditors of the Company and reviewing with the
independent auditors the scope and results of the audits, the internal
accounting controls of the Company, audit practices and the professional
services furnished by the independent auditors.
CHANGE IN CONTROL
On February 20, 1996, the Company received a copy of a Schedule 13D (the
'Schedule 13D') filed with the Securities and Exchange Commission by Whitehall,
Robert I. Weingarten, Gerry R. Ginsberg, Ilene S. Weingarten, Philip A.
Fitzpatrick, Rita C. Villa, Atlas Holdings Group, Inc. ('Atlas'), Palomba
Weingarten, PCG Management, Inc. ('PCG'), and Gary Winnick relating to the
beneficial ownership of 7,497,701 shares of Common Stock by virtue of an option
to acquire such Common Stock obtained by such persons and entities from The
Bennett Funding Group, Inc. ('Bennett Funding') and Bennett Management and
Development Corp. ('Bennett Management' and together with Bennett Funding,
'Bennett'). The Schedule 13D indicated that the option price was $9.5 million,
which amount was payable in cash or by offsetting amounts due from Bennett
pursuant to certain promissory notes (the 'Loans'). As indicated in various
amendments filed to the Schedule 13D, on February 22, 1996, Whitehall, Atlas and
PCG notified Bennett that the option would become exercisable April 23, 1996. On
February 23, 1996, pursuant to the terms of the Loans, Whitehall, Atlas and PCG
demanded payment of all principal and accrued interest of the Loans. No portion
of the amounts owed was paid. On March 15, 1996, Whitehall, Atlas and PCG
acquired at a trustee's sale the 7,497,701 shares of Common Stock pledged to
secure the Loans (the 'Whitehall Change in Control'). Following such trustee's
sale, Whitehall, Atlas and PCG directed that the shares be transferred to the
following persons and in the following denominations (including Escrowed Shares
subject to release upon the attainment by the Company of certain earnings or
market price targets): Atlas -- 1,744,083 shares (11.8%); PCG -- 3,437,341
shares (23.3%); Robert I. Weingarten -- 1,744,084 shares (11.8%); Gerry R.
Ginsberg --
8
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276,231 shares (1.9%); Ilene S. Weingarten -- 59,193 shares (0.4%); Philip A.
Fitzpatrick -- 157,846 shares (including 54,416 shares to be nominally held by
Whitehall) (1.1%), and Rita C. Villa -- 78,923 shares (including 37,208 shares
to be nominally held by Whitehall) (0.5%).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company believes that each of the following transactions was on terms
fair to the Company and its stockholders and at least as favorable to the
Company as those available from unaffiliated third parties. The Company priced
each of the sale transactions using models or methodologies it would use in
pricing transactions entered with unrelated third parties. Any transaction with
directors, executive officers or their affiliates since the Company's initial
public offering in April 1995 has been and in the future will continue to be
made only if the transaction has been approved by a majority of the then
disinterested members of the Board of Directors and is on terms no less
favorable to the Company than could have been obtained from unaffiliated
parties.
The Company entered into an agreement with Whitehall, which subsequently
became a significant stockholder of the Company, on December 26, 1995 (the
'Letter Agreement'). Pursuant to the Letter Agreement, which has been terminated
without any fees being paid, Whitehall was engaged as the Company's exclusive
agent to effect the sale of certain interests of the Company in securitized sub-
prime automobile loan pools. The Letter Agreement provided for a fee of 3% of
the proceeds from any such sale plus costs and expenses. Subsequently, Whitehall
recommended that Carl Frischling, Felice Cutler and Paul Fitzpatrick be named to
the Company's Board of Directors. In addition, the Company entered into an
agreement with Whitehall on March 31, 1996 (the 'Consulting Agreement') whereby
Whitehall was engaged to provide consulting services to the Company relating to
operations, management, financing and marketing. The Consulting Agreement
expires February 5, 1997, is renewable for a one-year term and provides for an
annual fee to Whitehall of $300,000 (subject to adjustment in certain
circumstances) plus reasonable and necessary expenses.
The Company loaned Joseph F. Battiato, the President of the Company,
$100,000, at 10% interest on March 24, 1995. The principal became due upon
demand on or after April 24, 1995. Mr. Battiato repaid the principal amount of
the note in August 1995 and interest due was forgiven by the Company. In April
1996, in connection with the modification of his employment agreement in
connection with the Whitehall Change in Control, the Company advanced Joseph
Battiato $125,000. Such advance is repayable solely as an offset against any
bonus due Mr. Battiato for the fiscal year ended June 30, 1997 or any change in
control payments under his employment agreement; provided, however, in the event
Mr. Battiato's employment is terminated prior to the date such bonus is payable
by the Company for cause or by Mr. Battiato without good reason, such advance
shall thereafter become a full recourse loan bearing interest at 7% per annum
and due on or before the first to occur of (i) the date a change of control
payment becomes due, if any or (ii) September 1, 1997.
On November 7, 1995, Beckett Reserve Fund, L.L.C., a company controlled by
Kenneth Kasarjian, who was then a director of the Company, loaned $1 million to
the Company. Such loan bore interest at 12% per annum. The Loan was repaid in
full in March 1996. In connection with this loan, the Company granted to Beckett
Reserve Fund, L.L.C., a five year warrant to purchase 15,000 shares of Common
Stock at $7.9375 per share.
The Company loaned Matthew B. Burns, an Executive Vice President of the
Company, $100,000, at 10% interest on November 15, 1994. The principal and all
interest will become due upon demand on or after November 15, 1996. As of the
record date, the principal had not been repaid. At present, interest on the loan
is accruing at the rate of ten percent (10%) per annum.
During the fiscal year ended June 30, 1995, the Company provided
consulting, financial advisory and structuring services to Bennett Management, a
then significant stockholder of the Company and an entity of which Patrick
Bennett was Chief Financial Officer and a principal shareholder and Michael
Bennett was Chief Operating Officer and a principal shareholder. Such services
related to portfolio analysis and arranging financing and insurance facilities
for Bennett Management's equipment leasing operations. In connection with these
engagements, the Company received consulting fees of $275,000. On March 28,
1996, (i) the Securities and Exchange Commission filed a civil complaint (the
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'Complaint') in the United States District Court for the Southern District of
New York (the 'Court') against Bennett Management, Bennett Funding, a former
significant stockholder of the Company which is owned by Patrick and Michael
Bennett's parents and of which Patrick Bennett was the Chief Financial Officer
and Michael Bennett was the Deputy Chief Executive Officer, Bennett Receivables
Corporation, Bennett Receivables Corporation -- II and Patrick R. Bennett, No.
96 Civ. 2237 (JES), alleging numerous violations of the antifraud provisions of
the federal securities laws based in part on allegations of sales of fictitious
leveraged leases, fraudulent misrepresentations to investors in private
placements of debt securities and misappropriation of corporate assets and (ii)
the United States Attorney for the Southern District of New York filed a
criminal complaint in the Court against Patrick Bennett alleging criminal
violations of the antifraud provisions of the federal securities laws and
perjury. Neither Patrick nor Michael Bennett was ever an officer or director of
the Company and, except for the transactions described herein and in the
Company's other filings with the Securities and Exchange Commission, the
Company's business has been operated entirely independently of Bennett
Management and Bennett Funding. On May 2, 1996, a purported class action lawsuit
on behalf of Josephine Thornton and other individuals was filed in the New York
Supreme Court for New York County against Bennett Finance Inc. and various other
persons and entities alleged to have been affiliated with or employed by Bennett
Funding and Bennett Management. Other entities, including the Company, were
named as defendants because they were allegedly alter egos and agents for
Patrick Bennett, Michael Bennett, their parents and certain other named
individual defendants. It is further alleged that, as such alter egos and
agents, the corporate defendants, including the Company, engaged in common law
fraud, negligent misrepresentation, deceptive acts or practices, sale of
unregistered securities and breaches of fiduciary duty in connection with the
financing activities of Bennett Funding and Bennett Management. Plaintiffs in
this action seek an accounting, unspecified compensatory and punitive damages,
injunctive relief, costs, attorneys' fees and such other relief as the court
deems appropriate. As noted above, Patrick Bennett, Bennett Funding and Bennett
Management were passive investors in the Company. Accordingly, the Company
believes that the allegations as to it set forth in the complaint are totally
without merit and intends to defend the matter vigorously.
In April 1995, the Company used approximately $2.5 million of the net
proceeds received by it from its initial public offering to redeem $2.45 million
liquidation value of preferred stock held by Bennett Management. The Company
utilized approximately $5.1 million of the net proceeds received by it from its
initial public offering to repay indebtedness under a revolving credit facility
granted by Bennett Funding in July 1993.
On February 15, 1995, the Bennetts, Bennett Management and Bennett Funding
granted an irrevocable proxy to vote all shares of Common Stock beneficially
owned by them (i.e., (i) shares owned by them as of the date of such proxy or
which they are entitled to vote, (ii) any securities issued or issuable in
respect of such shares and (iii) any shares subsequently acquired by them during
the term of such proxy) on all matters to the members of the Company's board of
directors not affiliated with Bennett Funding or Bennett Management. By its
terms, the proxy shall continue until the earliest to occur of (i) the sale,
transfer or conveyance of all of the Common Stock beneficially owned by the
Bennetts, Bennett Management and Bennett Funding to any person not affiliated
with Bennett Funding or Bennett Management; (ii) the change of control of both
Bennett Funding and Bennett Management, other than a change of control in which
another affiliated person of either Bennett Funding or Bennett Management
obtains control of Bennett Funding or Bennett Management; or (iii) the
occurrence of a 'going private' transaction involving the Company, such that the
Common Stock is no longer listed or traded on a national securities exchange or
national interdealer quotation system. Until the termination of the irrevocable
proxy, it will continue to apply to any shares of Common Stock beneficially
owned by the Bennetts, Bennett Management or Bennett Funding that are
transferred to Bennett Management or Bennett Funding or any affiliate of either
of them. Such proxy continues to apply to 500,000 shares of Common Stock.
In August 1993, the Company sold to Bennett Management (i) an investment in
a retained interest in securitized HUD Title I Loans and (ii) retained interests
in the Company's previous two securitizations of automobile loans. The Company
received $2,375,363 in cash and a note receivable of $600,000 bearing interest
at 8.5% per annum and maturing in August 2000 in connection with the sales. In
light of the Complaint and the Chapter 11 bankruptcy filing by Bennett
Management on March 29,
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1996, the Company has reserved $600,000 against the note receivable,
representing the entire unpaid balance.
The Company currently subleases one floor of office space in New York, New
York to Americorp Financial Services, Inc. ('Americorp') at the Company's cost
for a monthly rent of $32,283, $32,283, $38,467, $38,750, and $38,750,
respectively in the years ending June 30, 1995, 1996, 1997, 1998 and 1999. The
sublease for office space expires on January 31, 1999. A subsidiary of Americorp
was an underwriter of the Company's initial public offering and its President,
Drew Schaefer, is a former significant stockholder of the Company.
Effective as of January 1, 1994, the Company entered into a revised
consulting agreement with Drew Schaefer and Nustar Financial Corporation
('Nustar'), of which Mr. Schaefer is the sole shareholder. Mr. Schaefer's and
Nustar's consulting services consisted primarily of advice regarding receivables
purchase programs of the Company and securitization and other transactions
involving the Company's disposition of consumer receivables held by it. Pursuant
to the original agreement, dated September 15, 1993, and the revised agreement,
the Company paid $350,000 to Mr. Schaefer in the year ended June 30, 1995. Such
consulting agreement was terminated in April 1995.
As of June 30, 1994 the Company had a receivable of $210,000 from Aegis
Investment Partners ('AIP'), a New York general partnership formed in June 1993
by most of the Company's stockholders at that time to hold a substantial portion
of the outstanding shares of Common Stock, resulting from the Company's paying,
on behalf of AIP, certain monies owed to Barry Sloane, a former stockholder of
the Company and an officer of one of the Company's subsidiaries, in connection
with AIP's purchase of all of Mr. Sloane's Common Stock. The obligation to repay
such receivable was assumed by Gary Peiffer and was repaid in full upon the
consummation of the Company's initial public offering in April 1995 from
proceeds received by Mr. Peiffer as a result of shares sold in such offering.
APPROVAL OF THE 1994 STOCK OPTION PLAN, AS AMENDED
In September 1994, the Board of Directors approved the 1994 Plan, which was
subsequently approved by the Company's stockholders. The Board of Directors
amended such plan again on May 6, 1996 to, among other things, amend the
individual per year and aggregate limitations on options granted to key
employees and consultants to increase them from 100,000 and 850,000,
respectively, to, in each case, 1,000,000, the full amount of options available
under the 1994 Plan. The 1994 Plan is designed to provide an incentive to the
officers and certain other key employees of and consultants to the Company by
making available to them an opportunity to acquire a proprietary interest or to
increase their proprietary interest in the Company. The 1994 Plan provides for
options (each an 'Award') representing or corresponding to up to 1,000,000
shares of Common Stock. Options on 841,250 shares of Common Stock have been
granted under the 1994 Plan. Any Award issued under the 1994 Plan which is
forfeited, expires or terminates prior to vesting or exercise will again be
available for Award under the 1994 Plan.
DESCRIPTION
The following description of the 1994 Plan is qualified in its entirety by
reference to the full text of the 1994 Plan which is set forth as Attachment A
to this Proxy Statement.
The Compensation Committee of the Board of Directors (the 'Committee')
administers the 1994 Plan. The Committee has the full power and authority,
subject to the provisions of the 1994 Plan, to designate participants, grant
Awards and determine the terms of all Awards. The Committee has the right to
make adjustments with respect to Awards granted under the 1994 Plan in order to
prevent dilution of the rights of any holder. Members of the Committee are not
eligible to receive discretionary Awards under the 1994 Plan but automatically
receive each year non-qualified ('NQSO's') stock options to purchase 10,000
shares of Common Stock at an exercise price equal to the fair market value on
the date of grant. Members of the Committee are disinterested within the meaning
of Section 16 of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act') and outside directors within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the 'Code').
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Options Issued Under 1994 Plan. The terms of specific options are
determined by the Committee. Options granted may be NQSO's or incentive stock
options within the meaning of Code Section 422 ('ISO's'). The exercise price per
share for a non-qualified option is subject to the determination of the
Committee. Incentive stock options may not be granted at less than 100% of the
fair market value at the date of grant. Each option will be exercisable after
the period or periods specified in the option agreement, which will generally
not exceed 10 years from the date of grant.
Upon the exercise of an option, the option holder shall pay to the Company
the exercise price plus the amount of the required Federal and state withholding
taxes, if any. Options may be exercised and the withholding obligation may be
paid for with cash and, with the consent of the Committee, shares of Common
Stock, other securities (including options) or other property. The periods after
termination of employment during which an option may be exercised is as
determined by the Committee. In the absence of any specific determination by the
Committee, the following rules will apply. The unexercised portion of any option
granted under the 1994 Plan will generally be terminated (a) 30 days after the
date on which the optionee's employment is terminated for any reason other than
(i) cause, (ii) retirement or mental or physical disability or (iii) death; (b)
immediately upon the termination of the optionee's employment for cause; (c)
three months after the date on which the optionee's employment is terminated by
reason of retirement or mental or physical disability; or (d)(i) 12 months after
the date on which the optionee's employment is terminated by reason of
retirement or the death of the employee, or (ii) three months after the date on
which the optionee shall die if such death shall occur during the three-month
period following the termination of the optionee's employment by reason of
retirement or mental or physical disability.
AWARDS GRANTED
NEW PLAN BENEFITS
1994 STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND POSITION DOLLAR VALUE(1) SUBJECT TO OPTIONS(2)
- --------------------------------------------------------------------------- --------------- ---------------------
<S> <C> <C>
Angelo R. Appierto ........................................................ $ 0 150,000
Chairman of the Board and Chief Executive Officer
Gary D. Peiffer ........................................................... 0 150,000
Vice Chairman of the Board and General Counsel
Joseph F. Battiato ........................................................ 0 300,000
President
Matthew B. Burns .......................................................... 0 0
Chief Operating Officer and Executive Vice President
Dina L. Penepent .......................................................... 0 50,000
Executive Vice President, Chief Financial Officer and Secretary
Jorge G. Rios ............................................................. 0 130,000
Executive Vice President -- National Sales Manger
Executive Group (6 individuals)............................................ 0 780,000
Non Executive Director Group (3 individuals)............................... 0 0
Non Executive Officer Employee Group (18 individuals)...................... 0 61,250
</TABLE>
- ------------
(1) Based on difference between the exercise price of the options and the May 1,
1996 closing sale price of the Common Stock ($5 1/8).
(2) Options outstanding at May 1, 1996. Persons and groups listed in the table
may also receive grants under the 1994 Plan in the future at the discretion
of the Compensation Committee.
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FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a description of the federal income tax consequences
under the Code, of the grant and exercise of the benefits awarded under the 1994
Plan. This description does not purport to be a complete description of the
federal income tax aspects of the 1994 Plan. The summary does not include any
discussion of state, local or foreign income tax consequences or the effect of
gift, estate or inheritance taxes, any of which may be significant to a
particular employee eligible to receive options.
There will be no federal income tax consequences to employees or the
Company on the grant of a NQSO. On the exercise of a NQSO, the employee
generally will have taxable ordinary income, subject to withholding, equal to
the excess of the fair market value of the shares of Common Stock received on
the exercise date over the option price of the shares. The Company will be
entitled to a tax deduction in an amount equal to the amount of income
recognized by the employee provided the Company complies with applicable
withholding and/or reporting rules. Any ordinary income realized by an employee
upon exercise of a NQSO will increase his tax basis in the Common Stock thereby
acquired.
Any gain or any loss recognized upon the subsequent disposition of the
acquired Common Stock will be a capital gain or loss, and will be a long-term
gain or loss if such shares of Common Stock are held for more than one year.
An employee who surrenders shares of Common Stock in payment of the
exercise price of a NQSO will not recognize gain or loss on his surrender of
such shares, but will recognize ordinary income on the exercise of the NQSO as
described above. Of the shares received in such an exchange, that number of
shares equal to the number of shares surrendered will have the same tax basis
and capital gains holding period as the shares surrendered. The balance of the
shares received will have a tax basis equal to their fair market value on the
date of exercise, and the capital gains holding period will begin on the date of
exercise.
With respect to ISOs, no compensation income is recognized by a
participant, and no deduction is available to the Company upon either the grant
or exercise of an ISO. However, the difference between the exercise price of an
ISO and the market price of the Common Stock acquired on the exercise date will
be included in alternative minimum taxable income of a participant for the
purposes of the 'alternative minimum tax.' Generally, if an optionee holds the
shares acquired upon exercise of ISOs until the later of (i) two years from the
grant of the ISOs or (ii) one year from the date of acquisition of the shares
upon exercise of ISOs, any gain recognized by the participant on a sale of such
shares will be treated as capital gain. The gain recognized upon the sale is the
difference between the option price and the sale price of the Common Stock. The
net federal income tax effects on the holder of ISOs generally is to defer,
until the shares are sold, taxation of any increase in the value of the Common
Stock from the time of grant to the time of exercise, and to treat such gain as
capital gain. If the optionee sells the shares prior to the expiration of the
holding period set forth above, the optionee will realize ordinary compensation
income in the amount equal to the difference between the exercise price and the
fair market value on the exercise date. The compensation income will be added to
the optionee's basis for purposes of determining the gain on the sale of the
shares. Such gain will be capital gain if the shares are held as capital assets.
If the application of the above-described rule would result in a loss to the
optionee, the compensation income required to be recognized thereby would be
limited to the excess, if any, of the amount realized on the sale over the basis
of the shares sold. If an optionee disposes of shares obtained upon exercise of
an ISO prior to the expiration of the holding period described above, the
Company generally will be entitled to a deduction in the amount of the
compensation income that the optionee recognizes as a result of the disposition.
However, the use by an optionee of shares previously acquired pursuant to the
exercise of an ISO to exercise an incentive stock option will be treated as a
taxable disposition if the transferred shares have not been held by the optionee
for the requisite holding period described above.
If the Company delivers cash, in lieu of fractional shares, the employee
will recognize ordinary income equal to the cash paid and the fair market value
of any shares issued as of the date of exercise. An amount equal to any such
ordinary income will be deductible by the Company, provided it complies with
applicable withholding requirements.
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Section 162(m) of the Code, which generally disallows the annual tax
deduction for compensation over $1,000,000 paid to the Chief Executive Officer
and certain other highly compensated executive officers, provides that
'performance-based' compensation will not be subject to the $1,000,000 deduction
limitation. Since an employer is not entitled to a deduction upon the grant or
exercise of an ISO in any event, this provision does not affect the Company's
tax treatment with regard to ISOs. Options (other than ISOs) granted under a
plan approved by stockholders with an exercise price equal to the fair market
value of the underlying stock as of the date of grant are considered
performance-based compensation, if certain requirements are met. The 1994 Plan
meets such requirements and, accordingly, any income realized by employees with
respect to options granted under the 1994 Plan is not subject to the deduction
limitation of Section 162(m).
The 1994 Plan is not subject to any provisions of the Employee Retirement
Income Security Act of 1974 and is qualified under Section 401(a) of the Code.
The Committee may take such additional steps as are necessary to ensure that
other Awards under the 1994 Plan qualify for exemption from the deduction
limitations of Code Section 162(m).
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. Proxies
solicited by the Board of Directors will be so voted unless stockholders specify
otherwise in their proxy.
APPROVAL OF THE 1996 STOCK OPTION PLAN
Options on 841,250 shares of Common Stock have been granted under the 1994
Plan. Accordingly, in May 1996, the Board of Directors approved the 1996 Plan in
order to continue to provide an incentive to the officers and certain other key
employees of and consultants to the Company by making available to them an
opportunity to acquire a proprietary interest or to increase their proprietary
interest in the Company. The 1996 Plan is substantially identical to the 1994
Plan as amended and provides for options (each an 'Award') representing or
corresponding to up to 750,000 shares of Common Stock. Any Award issued under
the 1996 Plan which is forfeited, expires or terminates prior to vesting or
exercise will again be available for Award under the 1996 Plan.
DESCRIPTION
The following description of the 1996 Plan is qualified in its entirety by
reference to the full text of the 1996 Plan which is set forth as Attachment B
to this Proxy Statement.
The Committee administers the 1996 Plan. The Committee has the full power
and authority, subject to the provisions of the 1996 Plan, to designate
participants, grant Awards and determine the terms of all Awards. The Committee
has the right to make adjustments with respect to Awards granted under the 1996
Plan in order to prevent dilution of the rights of any holder. Members of the
Committee are not eligible to receive discretionary Awards under the 1996 Plan
but automatically receive each year NQSO's to purchase 10,000 shares of Common
Stock at an exercise price equal to the fair market value on the date of grant.
Members of the Committee are disinterested within the meaning of Section 16 of
the Exchange Act and outside directors within the meaning of Section 162(m) of
the Code.
Options Issued Under 1996 Plan. The terms of specific options are
determined by the Committee. Options granted may be NQSO's or ISO's within the
meaning of Code Section 422. The exercise price per share for a non-qualified
option is subject to the determination of the Committee. Incentive stock options
may not be granted at less than 100% of the fair market value at the date of
grant. Each option will be exercisable after the period or periods specified in
the option agreement, which will generally not exceed 10 years from the date of
grant.
Upon the exercise of an option, the option holder shall pay to the Company
the exercise price plus the amount of the required Federal and state withholding
taxes, if any. Options may be exercised and the withholding obligation may be
paid for with cash and, with the consent of the Committee, shares of Common
Stock, other securities (including options) or other property. The periods after
termination of employment during which an option may be exercised is as
determined by the Committee. In the
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absence of any specific determination by the Committee, the following rules will
apply. The unexercised portion of any option granted under the 1996 Plan will
generally be terminated (a) 30 days after the date on which the optionee's
employment is terminated for any reason other than (i) cause, (ii) retirement or
mental or physical disability, (iii) death; (b) immediately upon the termination
of the optionee's employment for cause; (c) three months after the date on which
the optionee's employment is terminated by reason of retirement or mental or
physical disability; or (d)(i) 12 months after the date on which the optionee's
employment is terminated by reason of retirement or the death of the employee,
or (ii) three months after the date on which the optionee shall die if such
death shall occur during the three-month period following the termination of the
optionee's employment by reason of retirement or mental or physical disability.
AWARDS GRANTED
No options have been granted to date under the 1996 Plan. Eligible persons
may receive grants under the 1996 Plan in the future at the discretion of the
Compensation Committee.
FEDERAL INCOME TAX CONSEQUENCES
Set forth below is a description of the federal income tax consequences
under the Code, of the grant and exercise of the benefits awarded under the 1996
Plan. This description does not purport to be a complete description of the
federal income tax aspects of the 1996 Plan. The summary does not include any
discussion of state, local or foreign income tax consequences or the effect of
gift, estate or inheritance taxes, any of which may be significant to a
particular employee eligible to receive options.
There will be no federal income tax consequences to employees or the
Company on the grant of a NQSO. On the exercise of a NQSO, the employee
generally will have taxable ordinary income, subject to withholding, equal to
the excess of the fair market value of the shares of Common Stock received on
the exercise date over the option price of the shares. The Company will be
entitled to a tax deduction in an amount equal to the amount of income
recognized by the employee provided the Company complies with applicable
withholding and/or reporting rules. Any ordinary income realized by an employee
upon exercise of a NQSO will increase his tax basis in the Common Stock thereby
acquired.
Any gain or any loss recognized upon the subsequent disposition of the
acquired Common Stock will be a capital gain or loss, and will be a long-term
gain or loss if such shares of Common Stock are held for more than one year.
An employee who surrenders shares of Common Stock in payment of the
exercise price of a NQSO will not recognize gain or loss on his surrender of
such shares, but will recognize ordinary income on the exercise of the NQSO as
described above. Of the shares received in such an exchange, that number of
shares equal to the number of shares surrendered will have the same tax basis
and capital gains holding period as the shares surrendered. The balance of the
shares received will have a tax basis equal to their fair market value on the
date of exercise, and the capital gains holding period will begin on the date of
exercise.
With respect to ISOs, no compensation income is recognized by a
participant, and no deduction is available to the Company upon either the grant
or exercise of an ISO. However, the difference between the exercise price of an
ISO and the market price of the Common Stock acquired on the exercise date will
be included in alternative minimum taxable income of a participant for the
purposes of the 'alternative minimum tax.' Generally, if an optionee holds the
shares acquired upon exercise of ISOs until the later of (i) two years from the
grant of the ISOs or (ii) one year from the date of acquisition of the shares
upon exercise of ISOs, any gain recognized by the participant on a sale of such
shares will be treated as capital gain. The gain recognized upon the sale is the
difference between the option price and the sale price of the Common Stock. The
net federal income tax effects on the holder of ISOs generally is to defer,
until the shares are sold, taxation of any increase in the value of the Common
Stock from the time of grant to the time of exercise, and to treat such gain as
capital gain. If the optionee sells the shares prior to the expiration of the
holding period set forth above, the optionee will realize ordinary compensation
income in the amount equal to the difference between the exercise price and the
fair market value on the exercise date. The compensation income will be added to
the optionee's basis for
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purposes of determining the gain on the sale of the shares. Such gain will be
capital gain if the shares are held as capital assets. If the application of the
above-described rule would result in a loss to the optionee, the compensation
income required to be recognized thereby would be limited to the excess, if any,
of the amount realized on the sale over the basis of the shares sold. If an
optionee disposes of shares obtained upon exercise of an ISO prior to the
expiration of the holding period described above, the Company generally will be
entitled to a deduction in the amount of the compensation income that the
optionee recognizes as a result of the disposition. However, the use by an
optionee of shares previously acquired pursuant to the exercise of an ISO to
exercise an incentive stock option will be treated as a taxable disposition if
the transferred shares have not been held by the optionee for the requisite
holding period described above.
If the Company delivers cash, in lieu of fractional shares, the employee
will recognize ordinary income equal to the cash paid and the fair market value
of any shares issued as of the date of exercise. An amount equal to any such
ordinary income will be deductible by the Company, provided it complies with
applicable withholding requirements.
Section 162(m) of the Code, which generally disallows the annual tax
deduction for compensation over $1,000,000 paid to the Chief Executive Officer
and certain other highly compensated executive officers, provides that
'performance-based' compensation will not be subject to the $1,000,000 deduction
limitation. Since an employer is not entitled to a deduction upon the grant or
exercise of an ISO in any event, this provision does not affect the Company's
tax treatment with regard to ISOs. Options (other than ISOs) granted under a
plan approved by stockholders with an exercise price equal to the fair market
value of the underlying stock as of the date of grant are considered
performance-based compensation, if certain requirements are met. The 1996 Plan
meets such requirements and, accordingly, any income realized by employees with
respect to options granted under the 1996 Plan is not subject to the deduction
limitation of Section 162(m).
The 1996 Plan is not subject to any provisions of the Employee Retirement
Income Security Act of 1974 and is qualified under Section 401(a) of the Code.
The Committee may take such additional steps as are necessary to ensure that
other Awards under the 1996 Plan qualify for exemption from the deduction
limitations of Code Section 162(m).
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL. Proxies
solicited by the Board of Directors will be so voted unless stockholders specify
otherwise in their proxy.
COMPLIANCE WITH SECTION 16(a) OF SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's Directors and
executive officers and persons who own more than 10% of the Company's Common
Stock to file with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of the Common Stock and other
equity securities. Executive officers, Directors and greater than 10%
stockholders are required to furnish the Company copies of all such reports they
file. To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company during the fiscal year ended June 30, 1995, all
Section 16(a) filing requirements applicable to its executive officers,
Directors and greater than 10% stockholders were complied with.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's financial statements for the years ended June 30, 1995 and
1994 have been examined by the firm of Ernst & Young LLP. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting of
Stockholders with an opportunity to make a statement if they desire to do so,
and they are expected to be available to respond to appropriate questions.
The Company's Board of Directors has appointed Ernst & Young LLP as
independent certified public accountants for the fiscal year ending June 30,
1996.
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STOCKHOLDERS PROPOSALS
Any proposal that a stockholder intends to present for action at the 1997
Annual Meeting of Stockholders, currently scheduled for November 16, 1996, must
be received by the Company no later than June 19, 1996 in order for the proposal
to be included in the proxy statement and form of proxy for the 1997 Annual
Meeting of Stockholders. The proposal should be sent to the Secretary, The Aegis
Consumer Funding Group, Inc., 525 Washington Blvd., 29th floor, Jersey City, New
Jersey 07310.
OTHER BUSINESS
The Board of Directors of the Company knows no other matters to be
presented at the Annual Meeting of Stockholders. However, if any other maters
properly come before the meeting, or any adjournment thereof, it is intended
that proxies in the accompanying form will be voted in accordance with the
judgment of the persons named therein.
COST OF SOLICITATION
Solicitation other than by mail may be made personally and by telephone by
regularly employed officers and employees of the Company who will not be
additionally compensated therefor. The Company will request brokers, dealers,
banks or voting trustees, or their nominees, who hold stock in their names for
others or hold stock for others who have the right to give voting instructions,
to forward proxy materials to their principals and request authority for the
execution of the proxy card and will reimburse such institutions for their
reasonable expenses in so doing. The total cost of soliciting proxies will be
borne by the Company.
It is important that your shares be represented at the meeting. If you are
unable to be present in person, you are respectfully requested to sign the
enclosed proxy and return it in the enclosed stamped and addressed envelope as
promptly as possible.
By Order of the Board of Directors,
ANGELO R. APPIERTO
ANGELO R. APPIERTO,
Chief Executive Officer
Jersey City, New Jersey
May 13, 1996
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ATTACHMENT A
THE AEGIS CONSUMER FUNDING GROUP, INC.
1994 STOCK OPTION PLAN, AS AMENDED
SECTION 1. PURPOSE
The purposes of this 1994 Stock Option Plan of The Aegis Consumer Funding
Group, Inc. (the 'Plan') are to encourage selected employees, consultants and
directors of The Aegis Consumer Funding Group, Inc. (together with any successor
thereto, the 'Company') and its Affiliates (as defined below) to acquire a
proprietary interest in the growth and performance of the Company, to generate
an increased incentive to contribute to the Company's future success and
prosperity, thus enhancing the value of the Company for the benefit of its
stockholders, and to enhance the ability of the Company and its Affiliates to
attract and retain qualified individuals upon whom, in large measure, the
sustained progress, growth, and profitability of the Company depend.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) 'Affiliate' shall mean (i) any entity that, directly or through
one or more intermediaries, is controlled by, controls or is under common
control with the Company and (ii) any entity in which the Company has a
significant equity interest, as determined by the Committee.
(b) 'Board' shall mean the Board of Directors of the Company.
(c) 'Code' shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d) 'Committee' shall mean a committee of the Board designated by the
Board to administer the Plan and composed of not less than two directors,
each of whom is both a 'disinterested person' within the meaning of Rule
16b-3 and an 'outside director' as that term is defined for purposes of
Section 162(m) of the Code.
(e) 'Consultant' shall mean any Person who contracts to provide
services to the Company as an independent contractor.
(f) 'Fair Market Value' shall mean, with respect to Shares or other
securities (i) the closing price per Share of the Shares on the principal
exchange on which the Shares are then trading, if any, on such date, or, if
the Shares were not traded on such date, then on the next preceding trading
day during which a sale occurred; or (ii) if the Shares are not traded on
an exchange but are quoted on NASDAQ or a successor quotation system, (1)
the last sales price (if the Shares are then listed as a National Market
Issue under the NASDAQ National Market System) or (2) the mean between the
closing representative bid and asked prices (in all other cases) for the
Shares on such date as reported by NASDAQ or such successor quotation
system; or (iii) if the Shares are not publicly traded on an exchange and
not quoted on NASDAQ or a successor quotation system, the mean between the
closing bid and asked prices for the Shares on such date as determined in
good faith by the Committee; or (iv) if the Shares are not publicly traded,
the fair market value established by the Committee acting in good faith.
(g) 'Incentive Stock Option' shall mean an option granted under
Section 6 of the Plan that meets the requirements of Section 422 of the
Code or any successor provision thereto.
(h) 'Independent Director' shall mean each member of the Board who is
not an employee of the Company or any Affiliate.
(i) 'Key Employee' shall mean any officer, director or other employee
who is a regular full-time employee of the Company or its present and
future Affiliates.
(j) 'Non-Qualified Stock Option' shall mean an Option granted under
Section 7 of the Plan or an option granted under Section 6 of the Plan that
is not an Incentive Stock Option.
(k) 'Option' shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
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(l) 'Option Agreement' shall mean a written agreement, contract, or
other instrument or document evidencing an Option granted under the Plan.
(m) 'Participant' shall mean a Key Employee, Consultant or Independent
Director who has been granted an Option under the Plan.
(n) 'Person' shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(o) 'Rule 16b-3' shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended, or any successor rule or regulation thereto.
(p) 'Shares' shall mean the common stock of the Company, $.01 par
value, and such other securities or property as may become the subject of
Options pursuant to an adjustment made under Section 4(b) of the Plan.
(q) 'Ten Percent Stockholder' shall mean a Person, who together with
his or her spouse, children and trusts and custodial accounts for their
benefit, immediately at the time of the grant of an Option and assuming its
immediate exercise, would beneficially own, within the meaning of Section
424(d) of the Code, Shares possessing more than ten percent (10%) of the
total combined voting power of all of the outstanding capital stock of the
Company.
SECTION 3. ADMINISTRATION
(a) Generally. The Plan shall be administered by the Committee. Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Option shall be within the sole discretion of the Committee, may be made at any
time, and shall be final, conclusive, and binding upon all Persons, including
the Company, any Affiliate, any Participant, any holder or beneficiary of any
Option, any stockholder of the Company or any Affiliate, and any employee of the
Company or of any Affiliate.
(b) Powers. Subject to the terms of the Plan and applicable law and except
as provided in Section 7 hereof, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Options to be granted to each Participant under the Plan; (iii) determine the
number of Shares to be covered by Options; (iv) determine the terms and
conditions of any Option; (v) determine whether, to what extent, and under what
circumstances Options may be settled or exercised in cash, Shares, other
Options, or other property, or canceled, forfeited, or suspended, and the method
or methods by which Options may be settled, exercised, canceled, forfeited, or
suspended; (vi) interpret and administer the Plan and any instruments or
agreements relating to, or Options granted under, the Plan; (vii) establish,
amend, suspend, or waive such rules and regulations and appoint such agents as
it shall deem appropriate for the proper administration of the Plan; and (viii)
make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.
(c) Reliance, Indemnification. The Committee may employ attorneys,
consultants, accountants or other persons and the Committee, the Company and its
officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. No member of the Committee shall be personally
liable for any action, determination or interpretation taken or made in good
faith with respect to the Plan, or Options granted thereunder, and all members
of the Committee shall be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.
SECTION 4. SHARES AVAILABLE FOR OPTIONS
(a) Shares Available. Subject to adjustment as provided in Section 4(b):
(i) Limitation on Number of Shares. Options issuable under the Plan
are limited such that the maximum aggregate number of Shares which may
issued pursuant to, or by reason of, Options is 1,000,000. To the extent
that an Option granted to a (A) Key Employee or Consultant or (B) an
Independent Director ceases to remain outstanding by reason of termination
of rights granted
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thereunder, forfeiture or otherwise, the Shares subject to such Option
shall again become available for award under the Plan to (x) Key Employees
and Consultants and (y) Independent Directors, respectively; provided,
however, that in the case of the cancellation or termination of a Non-
Qualified Stock Option in the same fiscal year that such Non-Qualified
Stock Option was granted, both the cancelled Non-Qualified Stock Option and
the newly granted Non-Qualified Stock Option shall be counted in
determining whether the recipient has received the maximum number of such
Options under the Plan for such fiscal year.
(ii) Accounting for Awards. For purposes of this Section 4, the number
of Shares covered by an Option to a (A) Key Employee or Consultant or (B)
Independent Director shall be counted on the date of grant of such Option
against the aggregate number of Shares available for granting Options under
the Plan to (x) Key Employees and Consultants or (y) Independent Directors,
respectively.
(iii) Sources of Shares Deliverable Under Options. Any Shares
delivered pursuant to an Option may consist, in whole or in part, of
authorized and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall determine that any
(i) subdivision or consolidation of Shares, (ii) dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property),
(iii) recapitalization or other capital adjustment of the Company or (iv)
merger, consolidation or other reorganization of the Company or other rights to
purchase Shares or other securities of the Company, or other similar corporate
transaction or event, affects the Shares such that an adjustment is determined
by the Committee to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the
Plan, then the Committee shall, in such manner as it may deem necessary to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made under the Plan, adjust any or all of (x) the number and type of
Shares which thereafter may be made the subject of Options, (y) the number and
type of Shares subject to outstanding Options, and (z) the grant, purchase, or
exercise price with respect to any Option or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Option; provided,
however, in each case, that (i) with respect to Incentive Stock Options no such
adjustment shall be authorized to the extent that such adjustment would cause
the Plan to violate Section 422 of the Code or any successor provision thereto;
(ii) each such adjustment shall be made in such manner as not to constitute a
cancellation and reissuance of a Non-Qualified Stock Option for purposes of
Section 162(m) of the Code, or the regulations promulgated thereunder, to the
extent that such reissuance would result in the grant of such Options in excess
of the maximum permitted to be granted to any Participant in any fiscal year;
and (iii) the number of Shares subject to any Option denominated in Shares shall
always be a whole number.
SECTION 5. ELIGIBILITY
Except as provided in Section 7, Options may be granted only to Key
Employees and Consultants. In determining the Persons to whom Options shall be
granted and the number of Shares to be covered by each Option, the Committee
shall take into account the nature of the Person's duties, such Person's present
and potential contributions to the success of the Company and such other factors
as it shall deem relevant in connection with accomplishing the purposes of the
Plan. An Independent Director will not be eligible to receive an Option except
as specifically provided in Section 7. A Key Employee or Consultant who has been
granted an Option or Options under the Plan may be granted an additional Option
or Options, subject to such limitations as may be imposed by the Code on the
grant of Incentive Stock Options, or by the terms of this Plan.
SECTION 6. OPTIONS
The Committee is hereby authorized to grant Options to Participants upon
the following terms and the conditions (except to the extent otherwise provided
in Section 7) and with such additional terms and conditions, in either case not
inconsistent with the provisions of the Plan, as the Committee shall determine:
(a) Exercise Price. The purchase price per Share purchasable under
Incentive Stock Options and Non-Qualified Stock Options shall not be less
than 100% or 85%, respectively, of the Fair
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Market Value of a Share on the date of grant; provided that the purchase
price per Share purchasable under Incentive Stock Options granted to Ten
Percent Stockholders shall be not less than 110% of the Fair Market Value
of a Share on the date of grant.
(b) Option Term. The term of each Non-Qualified Stock Option shall be
fixed by the Committee but generally shall not exceed 10 years from the
date of grant. The term of each Incentive Stock Option shall in no event be
more than 10 years from the date of grant, or in the case of an Incentive
Stock Option granted to a Ten Percent Stockholder, 5 years from the date of
grant.
(c) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part, and
the method or methods by which, and the form or forms in which, payment of
the option price with respect thereto may be made or deemed to have been
made (including, without limitation, (i) cash, Shares, outstanding Options
or other consideration, or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant option price and (ii) a
broker-assisted cashless exercise program established by the Committee),
provided in each case that such methods avoid 'short-swing' profits to the
Participant under Section 16(b) of the Securities Exchange Act of 1934, as
amended. The payment of the exercise price of an Option may be made in a
single payment or transfer, in installments, or on a deferred basis, in
each case in accordance with rules and procedures established by the
Committee.
(d) Early Termination. Unless otherwise provided by the Committee in
an Option Agreement with a Participant, the unexercised portion of any
Option granted to a Key Employee under the Plan will generally be
terminated (i) thirty (30) days after the date on which the Key Employee's
employment is terminated for any reason other than (A) Cause (as defined
below), (B) retirement or mental or physical disability, or (C) death; (ii)
immediately upon the termination of the Key Employee's employment for
Cause; (iii) three months after the date on which the Key Employee's
employment is terminated by reason of retirement or mental or physical
disability; or (iv)(A) 12 months after the date on which the Key Employee's
employment is terminated by reason of the death of the Key Employee, or (B)
three months after the date on which the Key Employee shall die if such
death shall occur during the three-month period following the termination
of the Key Employee's employment by reason of retirement or mental or
physical disability. The term 'Cause,' as used herein, shall mean (w) the
Key Employee's willful misconduct or fraud in the performance of his duties
under such Key Employee's employment arrangement with the Company, (x) the
continued failure or refusal of the Key Employee (following written notice
thereof) to carry out any reasonable request of the Board for the provision
of services under such Key Employee's employment arrangement with the
Company, (y) the material breach by the Key Employee of his employment
arrangement with the Company or (z) the entering of a plea of guilty or
nolo contendere to or the conviction of the Key Employee for a felony or
any other criminal act involving moral turpitude, dishonesty, theft or
unethical business conduct. For purposes of this paragraph (d), no act
shall be considered willful unless done or omitted to be done not in good
faith and without reasonable belief that such action or omission was in the
best interest of the Company.
(e) Incentive Stock Options. All terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the provisions of
Section 422 of the Code, or any successor provision thereto, and any
regulations promulgated thereunder.
(f) No Cash Consideration for Awards. Awards shall be granted for no
cash consideration or such minimal cash consideration as may be required by
applicable law.
(g) Limits on Transfer of Options. Subject to Code Section 422, no
Option and no right under any such Option, shall be assignable, alienable,
saleable, or transferable by a Participant otherwise than by will or by the
laws of descent and distribution or pursuant to a qualified domestic
relations order as defined in the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder; provided, however,
that, if so determined by the Committee, a Participant may, in the manner
established by the Committee, designate a beneficiary or beneficiaries to
exercise the rights of the Participant, and to receive any property
distributable, with respect to any Option upon the death of the
Participant. Each Option, and each right under any such Option, shall be
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exercisable during the Participant's lifetime, only by the Participant or,
if permissible under applicable law with respect to any Option that is not
an Incentive Stock Option, by the Participant's guardian or legal
representative. No Option and no right under any such Option, may be
pledged, alienated, attached, or otherwise encumbered, and any purported
pledge, alienation, attachment, or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate.
(h) Term of Options. Except as set forth in Section 6(b) and Section
7, the term of each Option shall be for such period as may be determined by
the Committee.
(i) Share Certificates. All certificates for Shares or other
securities of the Company delivered under the Plan pursuant to any Option
or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the Plan or
the rules, regulations, and other restrictions of the Securities and
Exchange Commission, any stock exchange upon which such Shares or other
securities are then listed, and any applicable Federal or state securities
laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
SECTION 7 OPTIONS AWARDED TO INDEPENDENT DIRECTORS
Each Independent Director who is a member of the Board on June 30 of a
calendar year during the term of the Plan shall automatically be granted a
Non-Qualified Stock Option to purchase 10,000 Shares on July 1 of such calendar
year. All Options granted pursuant to this Section 7 shall (a) be at an exercise
price per Share equal to 100% of the Fair Market Value of a Share on the date of
the grant; (b) have a term of 10 years; (c) terminate (i) upon termination of an
Independent Director's service as a director of the Company for any reason other
than mental or physical disability or death, (ii) three months after the date
the Independent Director ceases to serve as a director of the Company due to
physical or mental disability or (iii)(A) 12 months after the date the
Independent Director ceases to serve as a director due to the death of the
Independent Director or (B) three months after the death of the Independent
Director if such death shall occur during the three month period following the
date the Independent Director ceased to serve as a director of the Company due
to physical or mental disability; and (d) be otherwise on the same terms and
conditions as all other Options granted pursuant to the Plan.
SECTION 8. AMENDMENT AND TERMINATION
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Option Agreement or in the Plan:
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan, without the consent of any stockholder,
Participant, other holder or beneficiary of an Option, or other Person;
provided, however, that no amendment of the Plan shall cause the Plan to be
in violation of Rule 16b-3 (including Section (c)(2)(ii)(B) thereof); and
provided, further, that notwithstanding any other provision of the Plan or
any Option Agreement, without the approval of the stockholders of the
Company no amendment, alteration, suspension, discontinuation, or
termination shall be made that would: (i) increase the total number of
Shares available under the Plan, except as provided in Section 4 of the
Plan; (ii) increase the benefits accruing to Participants under the Plan;
or (iii) modify the requirements as to eligibility for participation in the
Plan; or where such stockholder approval would be required under Section
422 of the Code in order for Incentive Stock Options to qualify as such, or
under Section 162(m) of the Code, in order for compensation to continue to
qualify as 'performance based compensation.'
(b) Adjustments of Options Upon Certain Acquisitions. In the event the
Company or any Affiliate shall assume outstanding employee awards in
connection with the acquisition of another business or another corporation
or business entity, the Committee may make such adjustments, not
inconsistent with the terms of the Plan, in the terms of Options as it
shall deem appropriate in order to achieve reasonable comparability or
other equitable relationship between the assumed awards and the Options
granted under the Plan as so adjusted.
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(c) Adjustments of Options Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments
in the terms and conditions of, and the criteria included in, Options in
recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 4(b) hereof) affecting the
Company, any Affiliate, or the financial statements of the Company or any
Affiliate or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits to be made available under the Plan.
(d) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option in the manner and to the extent it
shall deem desirable to carry the Plan into effect.
SECTION 9. ELECTION TO HAVE SHARES WITHHELD
(a) In combination with or in substitution for cash withholding or any
other legal method of satisfying federal and state withholding tax liability, a
Participant may elect to have Shares withheld by the Company in order to satisfy
federal and state withholding tax liability (a 'share withholding election'),
provided, (i) the Committee shall not have revoked its advance approval of the
holder's share withholding election; and (ii) the share withholding election is
made on or prior to the date on which the amount of withholding tax liability is
determined (the 'Tax Date'). If a Participant elects within thirty (30) days of
the date of exercise to be subject to withholding tax on the exercise date
pursuant to the provisions of Section 83(b) of the Code, then the share
withholding election may be made during such thirty (30) day period.
Notwithstanding the foregoing, a holder whose transactions in Common Stock are
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, may
make a share withholding election only if the following additional conditions
are met: (i) the share withholding election is made no sooner than six (6)
months after the date of grant of the Option, except, however, such six (6)
month condition shall not apply if the Participant's death or disability (as
shall be determined by the Committee) occurs within such six (6) month period;
and (ii) the share withholding election is made (x) at least six (6) months
prior to the Tax Date, or (y) during the period beginning on the third business
day following the date of release of the Company's quarterly or annual financial
results and ending on the twelfth business day following such date.
(b) A share withholding election shall be deemed made when written notice
of such election, signed by the Participant, has been hand delivered or
transmitted by registered or certified mail to the Secretary of the Company at
its then principal office. Delivery of said notice shall constitute an
irrevocable election to have Shares withheld.
(c) If a Participant has made a share withholding election pursuant to this
Section 9; and (i) within thirty (30) days of the date of exercise of the
Option, the Participant elects pursuant to the provisions of Section 83(b) of
the Code to be subject to withholding tax on the date of exercise of the Option,
then such Participant will be unconditionally obligated to immediately tender
back to the Company the number of Shares having an aggregate fair market value
(as determined in good faith by the Committee), equal to the amount of tax
required to be withheld plus cash for any fractional amount, together with
written notice to the Company informing the Company of the Participant's
election pursuant to Section 83(b) of the Code; or (ii) if the Participant has
not made an election pursuant to the provisions of Section 83(b) of the Code,
then on the Tax Date, such Participant will be unconditionally obligated to
tender back to the Company the number of Shares having an aggregate fair market
value (as determined in good faith by the Committee), equal to the amount of tax
required to be withheld plus cash for any fractional amount.
SECTION 10. VESTING LIMITATION ON INCENTIVE STOCK OPTIONS
The Fair Market Value of Shares subject to Incentive Stock Options
(determined as of the date such Incentive Stock Options are granted) exercisable
for the first time by any individual during any calendar year shall in no event
exceed $100,000.
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SECTION 11. GENERAL PROVISIONS
(a) No Rights to Awards. No Key Employee or Consultant shall have any claim
to be granted any Option under the Plan, and there is no obligation for
uniformity of treatment of Key Employees or Consultants or holders or
beneficiaries of Options under the Plan. The terms and conditions of Options
need not be the same with respect to each recipient.
(b) No Limit on Other Plans. Nothing contained in the Plan shall prevent
the Company or any Affiliate from adopting or continuing in effect other or
additional compensation arrangements and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) No Right to Employment. The grant of an Option shall not be construed
as giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability, or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Option
Agreement.
(d) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware and applicable Federal law.
(e) Severability. If any provision of the Plan or any Option is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or
would disqualify the Plan or any Option under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan, such
provision shall be deemed void, stricken and the remainder of the Plan and any
such Option shall remain in full force and effect.
(f) No Trust or Fund Created. Neither the Plan nor any Option shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Option, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(g) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Option, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(h) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision hereof.
SECTION 12. EFFECTIVE DATE OF THE PLAN
The Plan is effective as of September 22, 1994, subject to stockholder
approval of the amendment thereof.
SECTION 13. TERM OF THE PLAN
The Plan shall continue until the earlier of (i) the date on which all
Options issuable hereunder have been issued, (ii) the termination of the Plan by
the Board or (iii) September 22, 2004. However, unless otherwise expressly
provided in the Plan or in an applicable Option Agreement, any Option
theretofore granted may extend beyond such date and the authority of the
Committee to amend, alter, adjust, suspend, discontinue, or terminate any such
Option or to waive any conditions or rights under any such Option, and the
authority of the Board to amend the Plan, shall extend beyond such date.
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ATTACHMENT B
THE AEGIS CONSUMER FUNDING GROUP, INC.
1996 STOCK OPTION PLAN
SECTION 1. PURPOSE
The purposes of this 1996 Stock Option Plan of The Aegis Consumer Funding
Group, Inc. (the 'Plan') are to encourage selected employees, consultants and
directors of The Aegis Consumer Funding Group, Inc. (together with any successor
thereto, the 'Company') and its Affiliates (as defined below) to acquire a
proprietary interest in the growth and performance of the Company, to generate
an increased incentive to contribute to the Company's future success and
prosperity, thus enhancing the value of the Company for the benefit of its
stockholders, and to enhance the ability of the Company and its Affiliates to
attract and retain qualified individuals upon whom, in large measure, the
sustained progress, growth, and profitability of the Company depend.
SECTION 2. DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth
below:
(a) 'Affiliate' shall mean (i) any entity that, directly or through
one or more intermediaries, is controlled by, controls or is under common
control with the Company and (ii) any entity in which the Company has a
significant equity interest, as determined by the Committee.
(b) 'Board' shall mean the Board of Directors of the Company.
(c) 'Code' shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(d) 'Committee' shall mean a committee of the Board designated by the
Board to administer the Plan and composed of not less than two directors,
each of whom is both a 'disinterested person' within the meaning of Rule
16b-3 and an 'outside director' as that term is defined for purposes of
Section 162(m) of the Code.
(e) 'Consultant' shall mean any Person who contracts to provide
services to the Company as an independent contractor.
(f) 'Fair Market Value' shall mean, with respect to Shares or other
securities (i) the closing price per Share of the Shares on the principal
exchange on which the Shares are then trading, if any, on such date, or, if
the Shares were not traded on such date, then on the next preceding trading
day during which a sale occurred; or (ii) if the Shares are not traded on
an exchange but are quoted on NASDAQ or a successor quotation system, (1)
the last sales price (if the Shares are then listed as a National Market
Issue under the NASDAQ National Market System) or (2) the mean between the
closing representative bid and asked prices (in all other cases) for the
Shares on such date as reported by NASDAQ or such successor quotation
system; or (iii) if the Shares are not publicly traded on an exchange and
not quoted on NASDAQ or a successor quotation system, the mean between the
closing bid and asked prices for the Shares on such date as determined in
good faith by the Committee; or (iv) if the Shares are not publicly traded,
the fair market value established by the Committee acting in good faith.
(g) 'Incentive Stock Option' shall mean an option granted under
Section 6 of the Plan that meets the requirements of Section 422 of the
Code or any successor provision thereto.
(h) 'Independent Director' shall mean each member of the Board who is
not an employee of the Company or any Affiliate.
(i) 'Key Employee' shall mean any officer, director or other employee
who is a regular full-time employee of the Company or its present and
future Affiliates.
(j) 'Non-Qualified Stock Option' shall mean an Option granted under
Section 7 of the Plan or an option granted under Section 6 of the Plan that
is not an Incentive Stock Option.
(k) 'Option' shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.
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(l) 'Option Agreement' shall mean a written agreement, contract, or
other instrument or document evidencing an Option granted under the Plan.
(m) 'Participant' shall mean a Key Employee, Consultant or Independent
Director who has been granted an Option under the Plan.
(n) 'Person' shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, or
government or political subdivision thereof.
(o) 'Rule 16b-3' shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as
amended, or any successor rule or regulation thereto.
(p) 'Shares' shall mean the common stock of the Company, $.01 par
value, and such other securities or property as may become the subject of
Options pursuant to an adjustment made under Section 4(b) of the Plan.
(q) 'Ten Percent Stockholder' shall mean a Person, who together with
his or her spouse, children and trusts and custodial accounts for their
benefit, immediately at the time of the grant of an Option and assuming its
immediate exercise, would beneficially own, within the meaning of Section
424(d) of the Code, Shares possessing more than ten percent (10%) of the
total combined voting power of all of the outstanding capital stock of the
Company.
SECTION 3. ADMINISTRATION
(a) Generally. The Plan shall be administered by the Committee. Unless
otherwise expressly provided in the Plan, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Option shall be within the sole discretion of the Committee, may be made at any
time, and shall be final, conclusive, and binding upon all Persons, including
the Company, any Affiliate, any Participant, any holder or beneficiary of any
Option, any stockholder of the Company or any Affiliate, and any employee of the
Company or of any Affiliate.
(b) Powers. Subject to the terms of the Plan and applicable law and except
as provided in Section 7 hereof, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Options to be granted to each Participant under the Plan; (iii) determine the
number of Shares to be covered by Options; (iv) determine the terms and
conditions of any Option; (v) determine whether, to what extent, and under what
circumstances Options may be settled or exercised in cash, Shares, other
Options, or other property, or canceled, forfeited, or suspended, and the method
or methods by which Options may be settled, exercised, canceled, forfeited, or
suspended; (vi) interpret and administer the Plan and any instruments or
agreements relating to, or Options granted under, the Plan; (vii) establish,
amend, suspend, or waive such rules and regulations and appoint such agents as
it shall deem appropriate for the proper administration of the Plan; and (viii)
make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.
(c) Reliance, Indemnification. The Committee may employ attorneys,
consultants, accountants or other persons and the Committee, the Company and its
officers and directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. No member of the Committee shall be personally
liable for any action, determination or interpretation taken or made in good
faith with respect to the Plan, or Options granted thereunder, and all members
of the Committee shall be fully indemnified and protected by the Company in
respect of any such action, determination or interpretation.
SECTION 4. SHARES AVAILABLE FOR OPTIONS
(a) Shares Available. Subject to adjustment as provided in Section 4(b):
(i) Limitation on Number of Shares. Options issuable under the Plan
are limited such that the maximum aggregate number of Shares which may
issued pursuant to, or by reason of, Options is 750,000. To the extent that
an Option granted to a (A) Key Employee or Consultant or (B) an Independent
Director ceases to remain outstanding by reason of termination of rights
granted
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thereunder, forfeiture or otherwise, the Shares subject to such Option
shall again become available for award under the Plan to (x) Key Employees
and Consultants and (y) Independent Directors, respectively; provided,
however, that in the case of the cancellation or termination of a Non-
Qualified Stock Option in the same fiscal year that such Non-Qualified
Stock Option was granted, both the cancelled Non-Qualified Stock Option and
the newly granted Non-Qualified Stock Option shall be counted in
determining whether the recipient has received the maximum number of such
Options under the Plan for such fiscal year.
(ii) Accounting for Awards. For purposes of this Section 4, the number
of Shares covered by an Option to a (A) Key Employee or Consultant or (B)
Independent Director shall be counted on the date of grant of such Option
against the aggregate number of Shares available for granting Options under
the Plan to (x) Key Employees and Consultants or (y) Independent Directors,
respectively.
(iii) Sources of Shares Deliverable Under Options. Any Shares
delivered pursuant to an Option may consist, in whole or in part, of
authorized and unissued Shares or of treasury Shares.
(b) Adjustments. In the event that the Committee shall determine that any
(i) subdivision or consolidation of Shares, (ii) dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property),
(iii) recapitalization or other capital adjustment of the Company or (iv)
merger, consolidation or other reorganization of the Company or other rights to
purchase Shares or other securities of the Company, or other similar corporate
transaction or event, affects the Shares such that an adjustment is determined
by the Committee to be appropriate in order to prevent dilution or enlargement
of the benefits or potential benefits intended to be made available under the
Plan, then the Committee shall, in such manner as it may deem necessary to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made under the Plan, adjust any or all of (x) the number and type of
Shares which thereafter may be made the subject of Options, (y) the number and
type of Shares subject to outstanding Options, and (z) the grant, purchase, or
exercise price with respect to any Option or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Option; provided,
however, in each case, that (i) with respect to Incentive Stock Options no such
adjustment shall be authorized to the extent that such adjustment would cause
the Plan to violate Section 422 of the Code or any successor provision thereto;
(ii) each such adjustment shall be made in such manner as not to constitute a
cancellation and reissuance of a Non-Qualified Stock Option for purposes of
Section 162(m) of the Code, or the regulations promulgated thereunder, to the
extent that such reissuance would result in the grant of such Options in excess
of the maximum permitted to be granted to any Participant in any fiscal year;
and (iii) the number of Shares subject to any Option denominated in Shares shall
always be a whole number.
SECTION 5. ELIGIBILITY
Except as provided in Section 7, Options may be granted only to Key
Employees and Consultants. In determining the Persons to whom Options shall be
granted and the number of Shares to be covered by each Option, the Committee
shall take into account the nature of the Person's duties, such Person's present
and potential contributions to the success of the Company and such other factors
as it shall deem relevant in connection with accomplishing the purposes of the
Plan. An Independent Director will not be eligible to receive an Option except
as specifically provided in Section 7. A Key Employee or Consultant who has been
granted an Option or Options under the Plan may be granted an additional Option
or Options, subject to such limitations as may be imposed by the Code on the
grant of Incentive Stock Options, or by the terms of this Plan.
SECTION 6. OPTIONS
The Committee is hereby authorized to grant Options to Participants upon
the following terms and the conditions (except to the extent otherwise provided
in Section 7) and with such additional terms and conditions, in either case not
inconsistent with the provisions of the Plan, as the Committee shall determine:
(a) Exercise Price. The purchase price per Share purchasable under
Incentive Stock Options and Non-Qualified Stock Options shall not be less
than 100% or 85%, respectively, of the Fair
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Market Value of a Share on the date of grant; provided that the purchase
price per Share purchasable under Incentive Stock Options granted to Ten
Percent Stockholders shall be not less than 110% of the Fair Market Value
of a Share on the date of grant.
(b) Option Term. The term of each Non-Qualified Stock Option shall be
fixed by the Committee but generally shall not exceed 10 years from the
date of grant. The term of each Incentive Stock Option shall in no event be
more than 10 years from the date of grant, or in the case of an Incentive
Stock Option granted to a Ten Percent Stockholder, 5 years from the date of
grant.
(c) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part, and
the method or methods by which, and the form or forms in which, payment of
the option price with respect thereto may be made or deemed to have been
made (including, without limitation, (i) cash, Shares, outstanding Options
or other consideration, or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant option price and (ii) a
broker-assisted cashless exercise program established by the Committee),
provided in each case that such methods avoid 'short-swing' profits to the
Participant under Section 16(b) of the Securities Exchange Act of 1934, as
amended. The payment of the exercise price of an Option may be made in a
single payment or transfer, in installments, or on a deferred basis, in
each case in accordance with rules and procedures established by the
Committee.
(d) Early Termination. Unless otherwise provided by the Committee in
an Option Agreement with a Participant, the unexercised portion of any
Option granted to a Key Employee under the Plan will generally be
terminated (i) thirty (30) days after the date on which the Key Employee's
employment is terminated for any reason other than (A) Cause (as defined
below), (B) retirement or mental or physical disability, or (C) death; (ii)
immediately upon the termination of the Key Employee's employment for
Cause; (iii) three months after the date on which the Key Employee's
employment is terminated by reason of retirement or mental or physical
disability; or (iv)(A) 12 months after the date on which the Key Employee's
employment is terminated by reason of the death of the Key Employee, or (B)
three months after the date on which the Key Employee shall die if such
death shall occur during the three-month period following the termination
of the Key Employee's employment by reason of retirement or mental or
physical disability. The term 'Cause,' as used herein, shall mean (w) the
Key Employee's willful misconduct or fraud in the performance of his duties
under such Key Employee's employment arrangement with the Company, (x) the
continued failure or refusal of the Key Employee (following written notice
thereof) to carry out any reasonable request of the Board for the provision
of services under such Key Employee's employment arrangement with the
Company, (y) the material breach by the Key Employee of his employment
arrangement with the Company or (z) the entering of a plea of guilty or
nolo contendere to or the conviction of the Key Employee for a felony or
any other criminal act involving moral turpitude, dishonesty, theft or
unethical business conduct. For purposes of this paragraph (d), no act
shall be considered willful unless done or omitted to be done not in good
faith and without reasonable belief that such action or omission was in the
best interest of the Company.
(e) Incentive Stock Options. All terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the provisions of
Section 422 of the Code, or any successor provision thereto, and any
regulations promulgated thereunder.
(f) No Cash Consideration for Awards. Awards shall be granted for no
cash consideration or such minimal cash consideration as may be required by
applicable law.
(g) Limits on Transfer of Options. Subject to Code Section 422, no
Option and no right under any such Option, shall be assignable, alienable,
saleable, or transferable by a Participant otherwise than by will or by the
laws of descent and distribution or pursuant to a qualified domestic
relations order as defined in the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder; provided, however,
that, if so determined by the Committee, a Participant may, in the manner
established by the Committee, designate a beneficiary or beneficiaries to
exercise the rights of the Participant, and to receive any property
distributable, with respect to any Option upon the death of the
Participant. Each Option, and each right under any such Option, shall be
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exercisable during the Participant's lifetime, only by the Participant or,
if permissible under applicable law with respect to any Option that is not
an Incentive Stock Option, by the Participant's guardian or legal
representative. No Option and no right under any such Option, may be
pledged, alienated, attached, or otherwise encumbered, and any purported
pledge, alienation, attachment, or encumbrance thereof shall be void and
unenforceable against the Company or any Affiliate.
(h) Term of Options. Except as set forth in Section 6(b) and Section
7, the term of each Option shall be for such period as may be determined by
the Committee.
(i) Share Certificates. All certificates for Shares or other
securities of the Company delivered under the Plan pursuant to any Option
or the exercise thereof shall be subject to such stop transfer orders and
other restrictions as the Committee may deem advisable under the Plan or
the rules, regulations, and other restrictions of the Securities and
Exchange Commission, any stock exchange upon which such Shares or other
securities are then listed, and any applicable Federal or state securities
laws, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.
SECTION 7. OPTIONS AWARDED TO INDEPENDENT DIRECTORS
Each Independent Director who is a member of the Board on June 30 of a
calendar year during the term of the Plan shall automatically be granted a
Non-Qualified Stock Option to purchase 10,000 Shares on July 1 of such calendar
year; provided, however, that such grant shall be reduced by the number of
shares relating to an Option granted to such director on such July 1 under
Section 7 of the Company's 1994 Stock Option Plan. All Options granted pursuant
to this Section 7 shall (a) be at an exercise price per Share equal to 100% of
the Fair Market Value of a Share on the date of the grant; (b) have a term of 10
years; (c) terminate (i) upon termination of an Independent Director's service
as a director of the Company for any reason other than mental or physical
disability or death, (ii) three months after the date the Independent Director
ceases to serve as a director of the Company due to physical or mental
disability or (iii)(A) 12 months after the date the Independent Director ceases
to serve as a director due to the death of the Independent Director or (B) three
months after the death of the Independent Director if such death shall occur
during the three month period following the date the Independent Director ceased
to serve as a director of the Company due to physical or mental disability; and
(d) be otherwise on the same terms and conditions as all other Options granted
pursuant to the Plan.
SECTION 8. AMENDMENT AND TERMINATION
Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Option Agreement or in the Plan:
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan, without the consent of any stockholder,
Participant, other holder or beneficiary of an Option, or other Person;
provided, however, that no amendment of the Plan shall cause the Plan to be
in violation of Rule 16b-3 (including Section (c)(2)(ii)(B) thereof); and
provided, further, that notwithstanding any other provision of the Plan or
any Option Agreement, without the approval of the stockholders of the
Company no amendment, alteration, suspension, discontinuation, or
termination shall be made that would: (i) increase the total number of
Shares available under the Plan, except as provided in Section 4 of the
Plan; (ii) increase the benefits accruing to Participants under the Plan;
or (iii) modify the requirements as to eligibility for participation in the
Plan; or where such stockholder approval would be required under Section
422 of the Code in order for Incentive Stock Options to qualify as such, or
under Section 162(m) of the Code, in order for compensation to continue to
qualify as 'performance based compensation.'
(b) Adjustments of Options Upon Certain Acquisitions. In the event the
Company or any Affiliate shall assume outstanding employee awards in
connection with the acquisition of another business or another corporation
or business entity, the Committee may make such adjustments, not
inconsistent with the terms of the Plan, in the terms of Options as it
shall deem appropriate in order to achieve reasonable comparability or
other equitable relationship between the assumed awards and the Options
granted under the Plan as so adjusted.
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(c) Adjustments of Options Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee shall be authorized to make adjustments
in the terms and conditions of, and the criteria included in, Options in
recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 4(b) hereof) affecting the
Company, any Affiliate, or the financial statements of the Company or any
Affiliate or of changes in applicable laws, regulations, or accounting
principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits to be made available under the Plan.
(d) Correction of Defects, Omissions, and Inconsistencies. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option in the manner and to the extent it
shall deem desirable to carry the Plan into effect.
SECTION 9. ELECTION TO HAVE SHARES WITHHELD
(a) In combination with or in substitution for cash withholding or any
other legal method of satisfying federal and state withholding tax liability, a
Participant may elect to have Shares withheld by the Company in order to satisfy
federal and state withholding tax liability (a 'share withholding election'),
provided, (i) the Committee shall not have revoked its advance approval of the
holder's share withholding election; and (ii) the share withholding election is
made on or prior to the date on which the amount of withholding tax liability is
determined (the 'Tax Date'). If a Participant elects within thirty (30) days of
the date of exercise to be subject to withholding tax on the exercise date
pursuant to the provisions of Section 83(b) of the Code, then the share
withholding election may be made during such thirty (30) day period.
Notwithstanding the foregoing, a holder whose transactions in Common Stock are
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended, may
make a share withholding election only if the following additional conditions
are met: (i) the share withholding election is made no sooner than six (6)
months after the date of grant of the Option, except, however, such six (6)
month condition shall not apply if the Participant's death or disability (as
shall be determined by the Committee) occurs within such six (6) month period;
and (ii) the share withholding election is made (x) at least six (6) months
prior to the Tax Date, or (y) during the period beginning on the third business
day following the date of release of the Company's quarterly or annual financial
results and ending on the twelfth business day following such date.
(b) A share withholding election shall be deemed made when written notice
of such election, signed by the Participant, has been hand delivered or
transmitted by registered or certified mail to the Secretary of the Company at
its then principal office. Delivery of said notice shall constitute an
irrevocable election to have Shares withheld.
(c) If a Participant has made a share withholding election pursuant to this
Section 9; and (i) within thirty (30) days of the date of exercise of the
Option, the Participant elects pursuant to the provisions of Section 83(b) of
the Code to be subject to withholding tax on the date of exercise of the Option,
then such Participant will be unconditionally obligated to immediately tender
back to the Company the number of Shares having an aggregate fair market value
(as determined in good faith by the Committee), equal to the amount of tax
required to be withheld plus cash for any fractional amount, together with
written notice to the Company informing the Company of the Participant's
election pursuant to Section 83(b) of the Code; or (ii) if the Participant has
not made an election pursuant to the provisions of Section 83(b) of the Code,
then on the Tax Date, such Participant will be unconditionally obligated to
tender back to the Company the number of Shares having an aggregate fair market
value (as determined in good faith by the Committee), equal to the amount of tax
required to be withheld plus cash for any fractional amount.
SECTION 10. VESTING LIMITATION ON INCENTIVE STOCK OPTIONS
The Fair Market Value of Shares subject to Incentive Stock Options
(determined as of the date such Incentive Stock Options are granted) exercisable
for the first time by any individual during any calendar year shall in no event
exceed $100,000.
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SECTION 11. GENERAL PROVISIONS
(a) No Rights to Awards. No Key Employee or Consultant shall have any claim
to be granted any Option under the Plan, and there is no obligation for
uniformity of treatment of Key Employees or Consultants or holders or
beneficiaries of Options under the Plan. The terms and conditions of Options
need not be the same with respect to each recipient.
(b) No Limit on Other Plans. Nothing contained in the Plan shall prevent
the Company or any Affiliate from adopting or continuing in effect other or
additional compensation arrangements and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) No Right to Employment. The grant of an Option shall not be construed
as giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability, or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Option
Agreement.
(d) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Delaware and applicable Federal law.
(e) Severability. If any provision of the Plan or any Option is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction, or
would disqualify the Plan or any Option under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan, such
provision shall be deemed void, stricken and the remainder of the Plan and any
such Option shall remain in full force and effect.
(f) No Trust or Fund Created. Neither the Plan nor any Option shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Option, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Affiliate.
(g) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Option, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(h) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision hereof.
SECTION 12. EFFECTIVE DATE OF THE PLAN
The Plan is effective as of May 6, 1996, subject to stockholder approval
thereof.
SECTION 13. TERM OF THE PLAN
The Plan shall continue until the earlier of (i) the date on which all
Options issuable hereunder have been issued, (ii) the termination of the Plan by
the Board or (iii) May 6, 2006. However, unless otherwise expressly provided in
the Plan or in an applicable Option Agreement, any Option theretofore granted
may extend beyond such date and the authority of the Committee to amend, alter,
adjust, suspend, discontinue, or terminate any such Option or to waive any
conditions or rights under any such Option, and the authority of the Board to
amend the Plan, shall extend beyond such date.
B-7
<PAGE>
<PAGE>
APPENDIX 1
PROXY CARD
<TABLE>
<S> <C>
P THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
R THE AEGIS CONSUMER FUNDING GROUP, INC.
O The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each
X dated May 13, 1996, and does hereby appoint Angelo R. Appierto and Gary D. Peiffer, and each of them, with full power
Y of substitution, as proxy or proxies of the undersigned to represent the undersigned and to vote all shares of Common
Stock of The Aegis Consumer Funding Group, Inc. (the 'Company'), which the undersigned would be entitled to vote if
personally present at the Annual Meeting of Stockholders of the Company to be held at 10:00 a.m., local time, on June
3, 1996 at the offices of the Company, 525 Washington Blvd., 29th Floor, Jersey City, NJ, and at any adjournment(s) or
postponements thereof, hereby revoking all proxies heretofore given with respect to such Common Stock.
This Proxy, when properly executed, will be voted in accordance with the directions given by the undersigned
stockholder. If no direction is made, it will be voted FOR the election of the nominees for director named herein, FOR
the approval of the amendment of the 1994 Stock Option Plan by adopting such Plan, as amended, and FOR the approval of
the 1996 Stock Option Plan.
PLEASE VOTE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
Please sign this Proxy exactly as your name appears on the books of the Company. Joint owners should each sign
personally. Trustees and other fiduciaries should indicate the capacity in which they sign, and where more than one
name appears, a majority must sign. If a corporation, this signature should be that of an authorized officer who
should state his or her title.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------- ------------------------------------
- ------------------------------- ------------------------------------
- ------------------------------- ------------------------------------
</TABLE>
<PAGE>
<PAGE>
9404
[X] Please mark votes
as in this example.
FOR ALL
FOR WITHHOLD EXCEPT
[ ] [ ] [ ]
1. Election of Directors
FELICE CUTLER AND PAUL FITZPATRICK
INSTRUCTION: To withhold authority for any individual nominee, mark the 'For
All Except' box and strike a line through the nominee's name in the list above.
RECORD DATE SHARES:
FOR AGAINST ABSTAIN
2. Approval of the amendment of the 1994 Stock Option [ ] [ ] [ ]
Plan by adopting such Plan, as amended.
3. Approval of the 1996 Stock Option Plan [ ] [ ] [ ]
4. In their discretion the proxies are authorized to vote on such other business
as may properly come before the Annual Meeting of Stockholders or any
adjournment(s) thereof.
Check if you intend to attend the Annual Meeting of Stockholders [ ]
Mark box at right if comments or address change have been noted on [ ]
the reverse side of this card.
SIGNATURE(S)__________________________________________ DATE ___________
Note: Please sign as name appears hereon. Joint owners
should each sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such.