SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant X
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Filed by a Party other than the Registrant |_|
Check the appropriate box
Preliminary Proxy Statement
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X Definitive Proxy Statement
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Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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WINFIELD CAPITAL CORP.
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required
- ---
Fee computed on table below per Exchange Act Rules 14a(6)(i)(4) and 0-11.
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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:
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total Fee Paid:
________________________________________________________________________________
Fee paid previously with preliminary materials
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- --- 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>
WINFIELD CAPITAL CORP.
237 MAMARONECK AVENUE
WHITE PLAINS, NEW YORK 10605
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 24, 1997
To the shareholders of Winfield Capital Corp.:
The special meeting (the "Special Meeting") of shareholders of Winfield
Capital Corp., a New York corporation (the "Company"), will be held at 9:00 a.m.
(Eastern Time) on September 24, 1997, at The Yale Club of New York City
(Trumbull Room, 18th Floor), 50 Vanderbilt Avenue, New York, New York 10017, for
the following purposes:
1. To elect seven members to the Board of Directors to hold office until
the next annual meeting of shareholders and until their respective successors
are duly elected and have qualified;
2. To consider amendments to the 1995 Stock Plan as described in the
accompanying Proxy Statement; and
3. To consider and vote upon such other matters as may properly come before
the meeting and any adjournment(s) or postponement(s) thereof.
Only shareholders of record at the close of business on August 29, 1997 are
entitled to receive notice of and to vote at the Special Meeting.
The Board of Directors of the Company extends a cordial invitation to all
shareholders to attend the Special Meeting in person. Whether or not you plan to
attend the meeting, please fill in, date, sign and mail the enclosed proxy in
the return envelope as promptly as possible. Your proxy may be revoked by you at
any time prior to the meeting. The prompt return of your completed proxy will
assist the Company in obtaining a quorum of shareholders for the Special
Meeting, but will not affect your ability to change your vote by subsequent
proxy or by attending the meeting and voting in person. If you are unable to
attend, your signed proxy will assure that your vote is counted.
By Order of the Board of Directors
July 29, 1997 BRUCE A. KAUFMAN, SECRETARY
<PAGE>
WINFIELD CAPITAL CORP.
237 MAMARONECK AVENUE
WHITE PLAINS, NEW YORK 10605
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 24, 1997
This Proxy Statement is furnished to the shareholders of Winfield Capital
Corp., a New York corporation (the "Company"), in connection with the
solicitation by and on behalf of the Company's Board of Directors (the "Board")
of proxies to be voted at the Special Meeting of Shareholders of the Company
(the "Special Meeting"). The meeting will be held on September 24, 1997 at 9:00
a.m. (Eastern Time) at The Yale Club of New York City (Trumbull Room, 18th
Floor), 50 Vanderbilt Avenue, New York, New York 10017, for the purposes set
forth in the accompanying Notice of Special Meeting of Shareholders. Officers
and other employees of the Company, without additional compensation, may solicit
proxies personally or by telephone if deemed necessary. Solicitation expenses,
which are not expected to exceed $5,000, will be paid by the Company.
All proxies that are properly executed and received prior to the Special
Meeting will be voted at the meeting. If a shareholder specifies how the proxy
is to be voted on any business to come before the meeting, it will be voted in
accordance with such specification. If a shareholder does not specify how to
vote the proxy, it will be voted FOR the election of the seven nominees to the
Board named in this Proxy Statement and FOR the proposed amendments to the 1995
Stock Plan; and on such other business as may properly come before the meeting.
Any proxy may be revoked by a shareholder at any time before it is actually
voted at the meeting by delivering written notification to the Secretary of the
Company, by delivering another valid proxy bearing a later date, or by attending
the meeting and voting in person.
This Proxy Statement and the accompanying proxy are first being sent to
shareholders on or about September 2, 1997. The Company will bear the cost of
preparing, assembling, and mailing the notice, Proxy Statement, and form of
proxy for the meeting.
VOTING SECURITIES
All voting rights are vested exclusively in the holders of the Company's
common stock, $.01 par value per share (the "Common Stock"), with each share
entitled to one vote. Only shareholders of record at the close of business on
August 29, 1997 are entitled to receive notice of and to vote at the Special
Meeting or any adjournment. At the close of business on July 25, 1997, there
were 5,023,361 shares of Common Stock issued and outstanding. The Company
estimates that such shares are held by approximately 2,380 beneficial owners. A
majority of the shares of Common Stock issued and outstanding must be
represented at the Special Meeting, in person or by proxy, in order to
constitute a quorum. Cumulative voting is not allowed for any purpose.
The election of directors requires the affirmative vote of the holders of a
plurality of the shares present and represented at the meeting.
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A shareholder who abstains from voting or withholds his or her vote will be
counted as present for determining whether the quorum requirement is satisfied.
If a shareholder returns a signed proxy but fails to indicate a vote for or
against any proposal, for purposes of determining the outcome of the vote on any
such proposal, such shareholder will be deemed to have voted FOR the proposal. A
broker "non-vote" occurs when a nominee holding shares for a beneficial holder
does not have discretionary voting power and does not receive voting
instructions from the beneficial owner. Broker "non-votes" with respect to any
item to be voted upon at the Special Meeting will, however, be treated as shares
present and entitled to vote.
HOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
As of July 25, 1997, there were 5,023,361 shares of the Common Stock of
the Company outstanding. The Company has no other class of voting securities
outstanding.
The following table sets forth information, as of July 25, 1997, as to
the ownership of Common Stock by (a) each person known by the Company to own,
beneficially or of record, 5% or more of the outstanding Common Stock, and (b)
the directors and officers of the Company as a group:
================================================================================
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF COMMON
OF OWNER OWNED STOCK (1)
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Paul A. Perlin 681,519 shs.(2) 13.01%
c/o Winfield Capital Corp.
237 Mamaroneck Avenue
White Plains, NY 10605
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David Greenberg 617,233 shs.(3) 11.93%
c/o Winfield Capital Corp.
237 Mamaroneck Avenue
White Plains, NY 10605
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All Directors and Officers as
a Group 1,862,323 shs.(4) 33.95%
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(1) Based on 5,023,361 outstanding shares of Common Stock plus the number of
shares underlying any stock options granted to the person whose percentage
interest is indicated.
(2) Includes 214,286 shares issuable upon the exercise of stock options granted
to Mr. Perlin. See "ELECTION OF DIRECTORS - Stock Options".
(3) Includes 150,000 shares issuable upon the exercise of stock options granted
to Mr. Greenberg. See "ELECTION OF DIRECTORS - Stock Options".
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<PAGE>
(4) Includes all shares owned by officers and directors of the Company,
including shares issuable upon the exercise of outstanding stock options
and stock options that are subject to approval by the Securities and
Exchange Commission (the "Commission.") See "ELECTION OF DIRECTORS - Stock
Options".
ELECTION OF DIRECTORS
The Company's Board of Directors consists of seven members. There is no
provision for cumulative voting in the election of directors. Directors will be
elected by a plurality vote of the shares represented at the Special Meeting.
The following table lists the names, ages, and the positions held with the
Company of, and the number of shares of the Company beneficially owned by, the
persons nominated to be directors of the Company. All of the nominees are
incumbent directors, and all have been approved as directors of the Company by
the Small Business Administration ("SBA"), as required. Additional information
regarding the business experience, length of time served in each capacity, and
other matters relevant to each individual are set forth in or below the table.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS (1) AGE POSITION OWNED (2)
- -------------------- --- -------- ---------
<S> <C> <C> <C>
Paul A. Perlin (3) 45 Chairman, Chief Executive Officer and 681,519
Director
David Greenberg (3) 38 Chief Operating Officer and Director 617,233
R. Scot Perlin (3) 49 Chief Financial Officer and Director 105,714
Joel I. Barad 46 Director 70,857
Barry J. Gordon 52 Director 48,857
Allen L. Weingarten 43 Director 73,857
Scott A. Ziegler 37 Director 156,000
</TABLE>
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(1) The business address for the directors of the Company is c/o Winfield
Capital Corp., 237 Mamaroneck Avenue, White Plains, New York 10605.
(2) Includes shares issuable upon the exercise of outstanding stock options
and, in the case of the non-employee directors, stock options that are
subject to the approval of the Commission under the Investment Company Act
of 1940, as amended (the "1940 Act"). See "Stock Options" below.
(3) The 1940 Act requires that a majority of the directors of a Business
Development Company, which the Company has elected to be, may not be
"interested persons," as defined in the 1940 Act. Each of the directors
named in the table above to which this note (3) pertains is an "interested
person."
The directors elected at the Special Meeting will serve until the next
annual meeting of shareholders and thereafter until their respective successors
are elected and qualified.
The following sets forth biographical information as to the business
experience of each nominee for director of the Company for at least the past
five years.
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<PAGE>
Paul A. Perlin became the Chief Executive Officer, Chairman and a director
of the Company on May 2, 1995. He was Secretary of Pet Products Inc., a
manufacturer and distributor of dog chews ("Pet Products"), from November 1991
to February 1995, and a member of its Board of Directors from March 1992 to
February 1995, when it was acquired by The Hartz Mountain Corporation ("Hartz").
From 1986 to 1990, Mr. Perlin was a Vice President of Chase Manhattan Capital
Corporation (an SBIC), Chase Manhattan Investment Holdings, Inc. and The Chase
Manhattan Bank, N.A., and a Director of Chase Manhattan Capital Markets
Corporation. Prior to joining Chase, Mr. Perlin was Director of Corporate
Finance at Neuberger & Berman, a New York Stock Exchange member firm. Paul A.
Perlin and R. Scot Perlin are brothers.
David Greenberg became a director of the Company on May 2, 1995 and its
Chief Operating Officer on November 1, 1995. He was a co-founder, President,
Chief Financial Officer and a director of Pet Products from its inception in
1981 to February 1995, when it was acquired by Hartz.
R. Scot Perlin became a director of the Company on May 2, 1995 and its
Chief Financial Officer on October 3, 1996. From April 1994 to May 1995, he was
Executive Vice President and Chief Financial Officer of Meridien Corporation, a
multinational financial institution. He is currently an Adjunct Professor at
Fordham University's Graduate School of Business Administration and at New York
University's Stern School of Business. From 1987 to 1989, Mr. Perlin was a
Senior Vice President for Yamaichi International (America), Inc., a securities
firm. From 1978 to 1987 he was with American International Group ("AIG"), an
insurance company, where he held several senior management positions, including
Senior Vice President and Chief Investment Officer for American International
Underwriters and Treasurer of AIG Capital Corp., both subsidiaries of AIG, and
Assistant Treasurer of AIG. Paul A. Perlin and R. Scot Perlin are brothers.
Joel I. Barad became a director of the Company on October 24, 1995. Mr.
Barad is currently a management consultant. He was the Executive Vice President
of Pet Products from 1993 to July 1995. He was Vice President, Marketing,
Seagram Asia Pacific and Global Duty Free, a distributor of alcoholic beverages,
from 1988 to 1993. From 1976 to 1988, he was an account executive and later a
Vice President of Ogilvy & Mather, an advertising agency.
Barry J. Gordon became a director of the Company on October 24, 1995. He
has been the President since 1980, and the Chairman of the Board of Directors
since 1987, of American Fund Advisors, Inc., a money management firm. Since
1990, he has been the President, and from 1990 to 1993, he was a director, of
John Hancock Technology Series, Inc., an investment company. From 1985 to 1992,
he was the Chairman, the President and a director of National Value Fund, Inc.,
an investment company. From 1981 to 1990, he was a director, and from 1983 to
1990, he was the President, of National Aviation & Technology Corp. and National
Telecommunications and Technology Fund, both investment companies and
predecessors of John Hancock Technology Series, Inc. Mr. Gordon is also a
director of various other companies.
Allen L. Weingarten became a director of the Company on October 24, 1995.
He has been special counsel to the New York law firm of Skadden, Arps, Slate,
Meagher & Flom since 1987, and previously was an associate in that firm for
eight years.
Scott A. Ziegler became a director of the Company on October 24, 1995. He
has been a partner in the New York law firm of Ziegler, Ziegler & Altman and its
predecessor firms since 1991.
At its meeting on May 21, 1996, the Company's Board of Directors authorized
the formation of an audit committee, consisting of Messrs. R. Scot Perlin, Barry
J. Gordon and Allen L. Weingarten, a compensation committee consisting of
Messrs. Joel I. Barad, Barry J. Gordon, Allen L. Weingarten
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and Scott A. Ziegler, and an executive committee consisting of
Messrs. Paul A. Perlin and David Greenberg and two directors who are not
"interested" persons, initially, Mr. Barad and Mr. Ziegler.
During the fiscal year ended March 31, 1997, there were three meetings of
the Company's Board of Directors. No incumbent director, who was a director when
such meetings were held, attended fewer than three of such meetings.
EXECUTIVE COMPENSATION
The aggregate compensation payable to management of the Company is limited
by the SBA Regulations. The following table summarizes the compensation of the
named executive officers for each of the Company's past three fiscal years:
<TABLE>
<CAPTION>
============================================================================================================
NAME AND PRINCIPAL FISCAL YEAR(S) ENDED SALARY SHARES UNDERLYING
POSITION MARCH 31, STOCK OPTIONS
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Paul A. Perlin, 1997 $173,557 214,286 shares
Chairman of the Board
Chief Executive Officer
---------------------------------------------------
1996 $106,617
---------------------------------------------------
1995 NONE
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David Greenberg, 1997 $147,788 150,000 shares
Chief Operating Officer
---------------------------------------------------
1996 $55,762
---------------------------------------------------
1995 NONE
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Stanley M. Pechman, 1997 $65,000 64,286 shares
President
---------------------------------------------------
1996 $65,536
---------------------------------------------------
1995 $70,000
============================================================================================================
</TABLE>
None of the named persons received bonuses or compensation other than as
shown in the above table.
Effective May 2, 1995, the Company entered into an employment agreement
with Paul A. Perlin for a term ending October 31, 1998, under which he is to
serve as the Chief Executive Officer of the Company. Mr. Perlin received a
salary at the rate of $95,000 per annum through October 31, 1995 and is
currently receiving a salary at the rate of $173,250 per annum. Mr. Perlin's
salary is subject to annual cost-of-living adjustments. The employment agreement
contains provisions, in general, prohibiting Mr. Perlin from owning more than a
five percent equity interest in any companies or engaging in any other business
activities, that are competitive with the business of the Company. In addition,
Mr. Perlin has been granted, pursuant to the Company's stock option plan, an
option to purchase up to 214,286 shares of the Company's Common Stock at an
exercise price of $1.16 per share until May 2, 2002. The agreement provides for
the use of an automobile for Mr. Perlin, for the reimbursement of certain
business expenses and payment of annual premiums on a term life insurance policy
in the amount of $1,000,000, payable to beneficiaries named by Mr. Perlin.
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<PAGE>
Effective November 1, 1995 the Company entered into an employment agreement
with David Greenberg, for a term of three years ending on October 31, 1998, to
act as Chief Operating Officer of the Company. The agreement provides Mr.
Greenberg with a salary of $145,000 per annum, subject to annual cost of living
adjustments and which is currently $152,250 per annum. The employment agreement
contains provisions, in general, prohibiting Mr. Greenberg from owning more than
a five percent equity interest in any companies, or engaging in any other
business activities, that are competitive with the business of the Company. The
agreement provides for the use of an automobile for Mr. Greenberg, for the
reimbursement of certain business expenses and a term life insurance policy in
the amount of $1,000,000, payable to beneficiaries named by Mr. Greenberg. In
addition, Mr. Greenberg has been granted, pursuant to the Company's stock option
plan, an option to purchase up to 150,000 shares of the Company's Common Stock
at an exercise price of $1.16 per share until June 13, 2002.
On May 2, 1995, the Company entered into an employment agreement with
Stanley M. Pechman for a term of three years, under which he serves as President
of the Company and receives a salary of $65,000 per annum. The employment
agreement contains provisions prohibiting Mr. Pechman from owning more than a
one percent equity interest in any companies, or engaging in any other business
activities, that are competitive with the business of the Company. In addition,
Mr. Pechman has been granted, pursuant to the Company's stock option plan, an
option to purchase up to 64,286 shares of the Company's Common Stock at an
exercise price of $1.16 per share until May 12, 1998. The agreement also
provides for the use of an automobile for Mr. Pechman and reimbursement of
certain business expenses.
In addition to the compensation provided in the agreements described above,
the Board of Directors, in its discretion, may grant bonuses to the Company's
officers subject to the overall management compensation guidelines in the SBA
Regulations and SBA approval.
The directors of the Company do not currently receive compensation other
than the stock options listed in the table below and reimbursement of certain
expenses relating to their directorships.
STOCK OPTIONS
At the date of this Proxy Statement, the following options had been granted
by the Company's Board of Directors under the Company's stock option plan:
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<TABLE>
<CAPTION>
====================================================================================================================
NAME OR DESCRIPTION RELATIONSHIP TO NUMBER OF EXERCISE EXPIRATION OF POTENTIAL
OF OPTIONEE COMPANY SHARES PRICE (1) OPTION VALUE (2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Paul A. Perlin Chairman of the 214,286 $1.16 May 2, 2002 $ 101,194
Board, Chief
Executive Officer
and Director
- --------------------------------------------------------------------------------------------------------------------
David Greenberg Chief Operating 150,000 $1.16 May 2, 2002 $ 70,835
Officer and
Director
- --------------------------------------------------------------------------------------------------------------------
Stanley M. Pechman President 64,286 $1.16 May 2, 1998 $ 11,754
- --------------------------------------------------------------------------------------------------------------------
R. Scot Perlin Chief Financial
Officer and 2,000 $1.16 May 2, 2000 $ 641
Director
------------ ---------------- ---------------------- -------------
4,000 $1.53125 February 5, 2002 $ 1,692
- --------------------------------------------------------------------------------------------------------------------
Joel I. Barad Director 2,000 $5.00 October 24, 2000 $ 2,763
------------ ---------------- ---------------------- -------------
4,000 $1.53125 February 5, 2002 $ 1,692
- ----------------------------- ------------------- ------------ ---------------- ---------------------- -------------
Barry J. Gordon Director 2,000 $5.00 October 24, 2000 $ 2,763
------------ ---------------- ---------------------- -------------
4,000 $1.53125 February 5, 2002 $ 1,692
- ----------------------------- ------------------- ------------ ---------------- ---------------------- -------------
Allen L. Weingarten Director 2,000 $5.00 October 24, 2000 $ 2,763
------------ ---------------- ---------------------- -------------
4,000 $1.53125 February 5, 2002 $ 1,692
- ----------------------------- ------------------- ------------ ---------------- ---------------------- -------------
Scott A. Ziegler Director 2,000 $5.00 October 24, 2000 $ 2,763
------------ ---------------- ---------------------- -------------
4,000 $1.53125 February 5, 2002 $ 1,692
- ----------------------------- ------------------- ------------ ---------------- ---------------------- -------------
Bruce A. Kaufman Secretary 4,000 $1.50 April 24, 2002 $ 1,657
============================= =================== ============ ================ ====================================
</TABLE>
(1) The exercise prices were based upon the fair market value of the shares
underlying the options on the date of the grants.
(2) The potential value is equal to the appreciated market value of the
underlying shares, assuming for this purpose that the market value of the
Common Stock will appreciate in value from the grant date to the expiration
of the option at an annualized (compounded) rate of 5%, less the aggregate
exercise price of the underlying shares.
The number of stock options that may be granted by the Company under its
stock option plan is restricted under the 1940 Act to 25% of the outstanding
number of shares of the Common Stock less the number of outstanding warrants and
any other warrants, options or right to purchase shares of Common Stock. Under
the 1940 Act, the options granted to non-officer directors require the approval
of the Commission, which at the date of this Proxy Statement has not been
applied for.
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<PAGE>
PENSION PLAN
The Company terminated its defined benefit pension plan on April 8, 1994.
The distribution of benefits was paid in full as of June 24, 1994. The Company
will incur no termination or withdrawal liability as a result of the action
taken by the Company to terminate its plan. The Company currently has no pension
or other retirement plan, or profit sharing plan or other contingent forms of
remuneration.
INDEMNIFICATION
Pursuant to Article EIGHTH of the Company's certificate of incorporation
and Article VI of the Company's by-laws, the Company is obligated to indemnify
any person, made, or threatened to be made, a party to an action or proceeding
(other than an action or proceeding by or in the right of the Company to procure
a judgment in its favor), whether civil or criminal, including an action by or
in the right of any other corporation, domestic or foreign, or any partnership,
joint venture, trust, employee benefit plan or other enterprise, which any
director or officer of the Company served in any capacity at the request of the
Company, by reason of the fact that he, was a director or officer of the
Company, or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement and reasonable expenses, including attorneys'
fees, actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein. It is a requirement for such indemnity that
such director or officer have acted in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the Company, as
determined by a disinterested person and, in criminal actions or proceedings, in
addition, had no reasonable cause to believe that his conduct was unlawful.
AMENDMENTS TO 1995 STOCK PLAN
In June 1995 the Board of Directors authorized, and in October 1995 the
shareholders of the Company approved, the 1995 Stock Option Stock Plan (the
"Stock Plan"). Under the Stock Plan, the Company may grant options intended to
qualify as "incentive stock options" ("Qualified Options"), under section 422 of
Internal Revenue Code of 1986 ("the Code") options not intended to so qualify
("Non-Qualified Options"), stock appreciation rights ("SAR's") and shares of
restricted Common Stock ("Restricted Stock"). The purpose of the Stock Plan is
to provide employees who have substantial responsibility for the management of
the Company and directors of the Company with additional incentives to exert
their best efforts on behalf of the Company, to increase their proprietary
interest in the success of the Company, and to reward outstanding performance
and to attract and retain executive personnel of outstanding ability.
The Stock Plan currently provides for the issuance of up to 800,000 shares
of Common Stock pursuant to Qualified Options, Non-Qualified Options, SAR's, and
Restricted Stock of which 100,000 shares are available for non-employee
directors under automatic options and 700,000 shares are available for key
employees. The maximum number of shares of Common Stock that may be granted to
any employee during the term of the Stock Plan cannot exceed 300,000.
On July 24, 1997, the Board of Directors adopted, subject to approval of
the shareholders at the Special Meeting, proposed amendments to the Stock Plan
to (1) increase the number of shares reserved for issuance under the Stock Plan
from 800,000 to 1,250,000 (2) eliminate the current allocation of shares
issuable under the Plan between those available for non-employee directors and
those available for key employees while continuing to reserve 100,000 shares for
non-employee
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directors (3) eliminate the 300,000 share maximum aggregate award that the
Company may grant to any employee over the term of the Stock Plan (4) provide
for the grant of awards under the Plan to outside consultants and advisors to
the Company and (5) modify, among other provisions, certain shareholder approval
provisions initially included in the Stock Plan to conform with the former Rule
16b-3 under the Securities Exchange Act of 1934 ("1934 Act"), such provisions
being no longer required to conform with the recent amendments to such rule. The
text of the proposed amendments is set forth in Appendix A.
The proposed increase in the number of shares reserved for issuance under
the Stock Plan would allow the Company to grant additional shares to those
eligible under the Stock Plan in amounts which, taking into account the current
market value of the Common Stock, would adequately provide for the types of
financial incentives and rewards contemplated when the Stock Plan was initially
adopted in 1995. The elimination of the allocation of Common Stock between
non-employee directors and key employees and of the 300,000 share maximum
aggregate award is intended to provide the Company with greater flexibility in
making awards among the Company's employees, directors and outside consultants
and advisors and allows the Company to take into account the market value of the
Common Stock of the Company at the time of grant. In seeking the ability to
grant awards to selected outside consultants and advisors to the Company, the
Company believes that certain consultants and advisors may make substantial
contributions to the success of the Company and the attainment of its goals and
recognizes that at times the required skills to attain such levels are available
from persons who are not employees of the Company.
Lastly, the Company proposes to make certain amendments to provisions of
the Stock Plan allowing shareholders the right to vote for certain amendments to
the Plan. The Stock Plan currently provides that, while the Board of Directors
may amend the Stock Plan from time to time without shareholder approval, the
Board will not amend the Stock Plan to (a) increase the total amount of Common
Stock that may be issued under the Stock Plan (b) materially increase the cost
of the Stock Plan or materially increase the benefits to participants (c) extend
the period during which options or Restricted Stock may be granted (d) extend
the maximum period after the date of grant during which options may be exercised
or (e) change the class of individuals eligible to receive options or Restricted
Stock. The Stock Plan's provision for shareholder approval of such amendments is
based on the terms of the Securities and Exchange Commission's former Rule 16b-3
under the 1934 Act which provides exemptions from the 1934 Act's "short-swing
profit" provisions for certain qualifying transactions. In 1996, the Securities
and Exchange Commission adopted amendments to Rule 16b-3 that, among other
things, enable such plan amendments to be approved by the Board. This change in
the law will allow the Company to have the flexibility to amend the Plan from
time to time with Board approval, except in certain circumstances described
below. This greater flexibility should help maintain the Company's
competitiveness by facilitating its ability to respond quickly to changes in the
marketplace for executive talent. Pursuant to this amendment, the Board will
have the authority, subject to limitations described below, to adopt amendments
to the Stock Plan without putting the matter to a vote by shareholders. While
this amendment facilitates the ability of the Board to adopt plan amendments in
its discretion, shareholder approval of plan amendments will be retained in
certain instances. Under the terms of the amendments, shareholders will continue
to vote on any amendment that increases the number of shares that may be issued
under the Stock Plan. Shareholders also will continue to vote in other
instances. For example, under Section 162(m) of the Code and the regulations
thereunder, compensation paid to covered employees in excess of $1,000,000 is
not eligible for a tax deduction by the Company unless certain conditions are
satisfied. If the Company sought to increase the number of stock options that
could be granted to an executive officer or director under the Stock Plan and
intended to deduct the compensation attributable to the additional stock
options, such conditions would require, among other things, that the Company's
shareholders approve an amendment to the Stock Plan setting forth the maximum
number of shares subject to stock options that an
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individual could receive under the Stock Plan. Likewise, the Internal Revenue
Code requires that incentive stock options be granted under a
shareholder-approved plan that sets forth the maximum of shares that may be
issued as incentive stock options and the individuals who are eligible to
receive incentive stock options. Any addition to the Stock Plan's existing
limitations on incentive stock options would also remain an amendment subject to
shareholder approval.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE PROPOSED AMENDMENTS
TO THE STOCK PLAN.
CERTAIN TRANSACTIONS
Reference is made to "ELECTION OF DIRECTORS" - Executive Compensation" for
information about employment agreements between the Company and Messrs. Paul A.
Perlin, David Greenberg and Stanley M. Pechman and for information about stock
options granted to management personnel and directors.
THE PRIVATE PLACEMENT AND CHANGE OF CONTROL
On May 2, 1995, the Company sold 2,581,753 shares of Common Stock in a
private placement to 34 investors (including certain officers and directors of
the Company) at a price of $1.16 per share (the "Private Placement").
Paul A. Perlin, the Chairman and Chief Executive Officer of the Company,
purchased 171,429 shares of Common Stock in the Private Placement, and David
Greenberg, the Chief Operating Officer-designate and a director of the Company
purchased 171,429 shares of Common Stock in the Private Placement. R. Scot
Perlin, a director, purchased 85,714 shares of Common Stock in the Private
Placement. In addition, a trust for the benefit of family members of the parents
of Paul A. Perlin and R. Scot Perlin purchased an aggregate of 85,714 shares of
Common Stock in the Private Placement and various family members of David
Greenberg and trusts for the benefit of such family members purchased an
aggregate of 565,477 shares of Common Stock in the Private Placement. Joel I.
Barad, Barry J. Gordon and Allen L. Weingarten, directors of the Company, each
purchased 42,857 shares, and Scott A. Ziegler, also a director, purchased
128,571 shares, respectively, in the Private Placement. Ziegler, Ziegler &
Altman, of which Mr. Ziegler is a partner, purchased 42,857 shares in the
Private Placement.
Also on May 2, 1995, immediately prior to the Private Placement, Paul A.
Perlin and David Greenberg purchased all of the then outstanding shares of
Common Stock from the then existing shareholders of the Company (including
Stanley M. Pechman). Such purchase was made pursuant to a Stock Purchase
Agreement, dated as of August 25, 1994, as amended on November 30, 1994 (the
"Stock Purchase Agreement"), among the then existing shareholders of the
Company, Messrs. Perlin and Greenberg, and the Company. Pursuant to the Stock
Purchase Agreement, Mr. Perlin acquired 295,804 shares of Common Stock and Mr.
Greenberg acquired 295,804 shares of Common Stock, or an aggregate of 591,608
shares, for an aggregate purchase price of $686,858, which was the net asset
value of the Company at December 31, 1993 (approximately $1.16 per share). When
the parties began their negotiations in early 1994, they selected December 31,
1993 as the date for determining the Company's net asset value which formed the
basis of the purchase price for the outstanding shares of the Company. The
purchase price was evidenced by a promissory note (the "Note") signed by Paul A.
Perlin and David Greenberg, who are jointly and severally obligated to pay the
Note. The Note is payable to Mr. Pechman and the other former shareholders of
the Company and bears interest at a rate per annum equal to the "prime rate"
designated from time to time by Citibank, N. A., plus 1%, but not more than 12%
per annum. The principal amount of the Note and all accrued interest thereon are
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<PAGE>
due and payable on May 2, 1998. If the Company determines that the book value of
the loans and investments that were in its portfolio on December 31, 1993, as
reported to the SBA, has decreased between December 31, 1993 and April 21, 1998,
the principal amount of the Note ($686,858) will be reduced by the amount by
which the book value of such investments has decreased.
In the Stock Purchase Agreement, Mr. Pechman agreed to indemnify Messrs.
Perlin and Greenberg, from the date of the consummation of the transactions
contemplated by the Stock Purchase Agreement and thereafter, for any breach of
the representations and warranties contained therein in an amount no greater
than the face amount of the Note and any interest accrued thereon (except for
tax related matters, as to which there is no dollar limit on Mr. Pechman's
indemnity obligation). All other former shareholders of the Company agreed to
forego his or her right of payment under the Note if Mr. Pechman were to become
liable to Messrs. Perlin and Greenberg under the foregoing indemnity.
On May 2, 1995, immediately after the closing of the Stock Purchase
Agreement, Paul A. Perlin, R. Scot Perlin and David Greenberg were elected
directors of the Company.
SHAREHOLDER PROPOSALS
Proposals by shareholders of the Company to be presented at the 1998 Annual
Meeting of Shareholders must be received by the Company no later than May 1,
1998 to be included in the Company's Proxy Statement and proxy for that meeting.
The proponent must be a record or beneficial owner of Common Stock of the
Company entitled to vote on his or her proposal at the 1998 Annual Meeting and
must continue to own such stock entitling him or her to vote through that date
on which the meeting is held.
ANNUAL REPORT
The Annual Report to Shareholders concerning the Company's operations
during the fiscal year ended March 31, 1997, including certified financial
statements as of and for the year then ended, is being furnished to
shareholders, together with this Proxy Statement. The Annual Report is
incorporated in this Proxy Statement and should be considered part of the
soliciting material.
OTHER MATTERS
The Company has requested representatives of Coopers & Lybrand L.L.P., the
Company's independent public accountants, to be present at the Special Meeting.
The Company will give such representatives an opportunity to make a statement if
they so desire, and it expects them to be available to respond to appropriate
questions from shareholders. The Board of Directors knows of no other business
to be presented at the Special Meeting. If other matters properly come before
the Special Meeting, the persons named in the accompanying form of proxy intend
to vote on such other matters in accordance with their best judgment.
By Order of the Board of Directors
Bruce A. Kaufman, Secretary
July 29, 1997
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APPENDIX A
Set forth below are the sections of the 1995 Stock Plan of Winfield Capital
Corp. as proposed to be amended:
1.1 Establishment. Winfield Capital Corp., a New York corporation (the
"Company"), hereby establishes the "1995 STOCK PLAN" (the "Plan") for its key
employees and directors and certain outside consultants and advisors of the
Company. The Plan permits the grant of Stock Options, Stock Appreciation Rights
and Restricted Stock.
1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company and its Subsidiaries and promote continuity of management by encouraging
and providing key employees and directors and certain outside consultants and
advisors of the Company with the opportunity to acquire an equity interest in
the Company and to participate in the increase in shareholder value as reflected
in the growth in the price of the shares of the Company's Stock and by enabling
the Company to attract and retain the services of the key employees and
directors and certain outside consultants and advisors of the Company upon whose
judgment, interest, skills, and special effort the successful conduct of its
operations is largely dependent.
1.3 Effective Date. The Plan became effective in October, 1995. Sections
1.3, 2.1(g), 7.1, 8.1(g) and 12.1(b) of the Plan, as amended and restated as of
July 24, 1997, shall become effective on such date and Sections 1.1., 1.2,
2.1(g), (j) and (k) and 3.1, 4.1, 6.1, 6.3 and 12.3 of the Plan, as so amended
and restated, shall become effective upon the approval by the affirmative votes
of the holders of a majority of the shares of the Stock.
2.1 Definitions.
[subsections (a) - (i) are not changed and are, therefore, omitted]
(j) "Eligible Employee" means any key employee of the Company or a
Subsidiary designated by the Committee as eligible to participate in the Plan
pursuant to Subsection 3.1. "Eligible Director" means a director of the Company
who is not also an employee of the Company or a Subsidiary. "Eligible
Consultant" means any non-employee consultant or advisor to the Company or
Subsidiary designated by the Committee as eligible to participate in the Plan
pursuant to Subsection 3.1.
(k) "Employee Option" shall mean an Option granted to an Eligible
Employee. "Consultant Option" shall mean an Option granted to an Eligible
Consultant. An Employee Option or a Consultant Option may be either (i) an
"incentive stock option" within the meaning of Section 422 of the Code or (ii) a
"nonstatutory stock option."
[subsections (l) - (q) are not changed and are, therefore, omitted]
(r) "Participant" means an Eligible Employee or, an Eligible Director
or an Eligible Consultant who has been granted and, at the time of reference,
holds an Option, Restricted Stock or Stock Appreciation Right.
<PAGE>
[subsections (s) - (w) are not changed and are, therefore, omitted]
3.1 Eligibility and Participation. Eligible Employees, Eligible Directors
and Eligible Consultants shall be selected by the Committee from among those
officers and other key employees and Directors of the Company and its
Subsidiaries who, in the opinion of the Committee, are in a position to
contribute materially to the Company's continued growth and development and to
its long-term financial success.
4.1 Number. The total number of shares of Stock subject to issuance under
the Plan shall not exceed 1,250,000, of which 100,000 shares shall be earmarked
for directors other than Directors who are Eligible Employees. The shares to be
delivered under the Plan may consist, in whole or in part, of authorized but
unissued Stock or treasury Stock, not reserved for any other purpose. The
numbers of shares of Stock referred to herein shall be subject to adjustment
upon occurrence of any of the events indicated in Subsection 4.5.
6.1 Grant of Options. Subject to Sections 4 and 5, Options may be granted
to Eligible Employees, Eligible Directors or Eligible Consultants at any time
and from time to time as determined by the Committee. The Committee shall have
complete discretion consistent with the terms of the Plan in determining whether
to grant Options, the number of Options to be granted to each Eligible Employee,
Eligible Director, or Eligible Consultant and whether an Employee Option is to
be an incentive stock option within the meaning of Section 422 of the Code or a
nonstatutory stock option. Nothing in this Section 6 of the Plan shall be deemed
to prevent the grant of nonstatutory stock options in excess of the maximum
established by Section 422 of the Code.
6.3 Option Price. The Option Price for each Employee Option or Consultant
Option shall be determined by, or in the manner specified by, the Committee;
provided that in the case of an incentive stock option, no Employee Option or
Consultant Option shall have an Option Price that is less than the Fair Market
Value of the Stock on the date the Employee Option or Consultant Option, as the
case may be, is granted (110% of Fair Market Value in the case of an incentive
stock option granted to any person who owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or any
Subsidiary (a "Ten Percent Shareholder")).
12.3 Amendment, Modification and Termination of Plan. The Board may at any
time terminate, and from time to time may amend or modify, the Plan, provided,
however, that no such action of the Board, without approval of the shareholders,
may increase the total amount of Stock which may be issued under the Plan, as
provided in Subsection 4.5 of the Plan.
2
<PAGE>
The Board may seek approval of the shareholders for any amendments or
modifications to the Plan in order to comply with Section 422 of the Code. No
amendment, modification or termination of the Plan shall in any manner adversely
affect any Options or Restricted Stock theretofore granted to any Participant
under the Plan, without the consent of that Participant.
3
<PAGE>
WINFIELD CAPITAL CORP.
SPECIAL MEETING OF SHAREHOLDERS
SEPTEMBER 24, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all prior proxies, hereby acknowledges receipt of the
Proxy Statement dated July 29, 1997 (the "Proxy Statement") and appoints Paul
A. Perlin and David Greenberg and each of them, with full power of substitution,
as the undersigned's proxies (the "Proxies") to vote at the Special Meeting of
Shareholders to be held at 9:00 a.m., Eastern Time, on September 24, 1997, at
The Yale Club of New York City (Trumbull Room, 18th Floor), 50 Vanderbilt
Avenue, New York, New York 10017, and at any adjournments thereof (the
"Meeting").
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. UNLESS OTHERWISE INDICATED, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES AS DIRECTORS REFERRED TO HEREIN AND FOR
THE PROPOSED AMENDMENTS TO THE 1995 STOCK PLAN.
(1) ELECTION OF DIRECTORS:
JOEL I. BARAD
BARRY J. GORDON
DAVID GREENBERG
PAUL A. PERLIN
R. SCOT PERLIN
ALLEN L. WEINGARTEN
SCOTT A. ZIEGLER
(TO WITHHOLD VOTE FOR ANY NOMINEE, STRIKE OUT HIS NAME)
(2) PROPOSED AMENDMENTS TO THE 1995 STOCK PLAN:
(TO WITHHOLD VOTE FOR THIS ITEM, STRIKE OUT THIS ITEM)
(3) IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY BE BROUGHT BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF.
IN WITNESS WHEREOF, THE UNDERSIGNED HAS SET HIS OR HER HAND THIS _______ DAY OF
___________________, 1997.
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