SCHEDULE 14A INFORMATION
------------------------
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ][X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ][X] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to SS240.14a-11(c) or SS240.14a-12
THE FIRST CONNECTICUT CAPITAL CORPORATION
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(Name of Registrant as specified in its charter)
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement), if other than Registrant
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(l) or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ][X] 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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
(A)
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(4) Proposed maximum aggregate value of transaction: ------$1,400,000.
(5) Total fee paid: ---------------------------------------
[ ]$ 280.00
[X] Fee paid previously with preliminary materials.
[ ][X] Check box if any 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: -------------------------------$280
(2) Form, Schedule or Registration Statement No.: ---------SCHEDULE 14A
(3) Filing Party: -----------------------------------------THE FIRST CONNECTICUT CAPITAL CORPORATION
(4) Date Filed: -------------------------------------------SEPTEMBER 17, 2002
THE FIRST CONNECTICUT
CAPITAL CORPORATION
1000 Bridgeport Avenue
Shelton, Connecticut 06484
------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
October 19, 1999
------------------------------------------
To the Stockholders:
NOTICE is hereby given that the Annual Meeting of Stockholders of THE
FIRST CONNECTICUT CAPITAL CORPORATION (the "Company") will be held at the First
Union Bank, Shelton Square Office, Greater Valley Chamber of Commerce,
Conference Room, 2nd Floor, 900 Bridgeport Avenue, Shelton, Connecticut on
October 19, 1999Friday, February 28, 2003 at 9:0030 a.m. for the following purposes:
( 1 1. To consider, vote upon and approve the agreement for the sale of
the Company's business and assets (the "Asset Purchase Agreement");
2. To consider, vote upon and approve an agreement for the sale of
250,000 shares of the Company's Common Stock and Warrants to purchase
200,000 shares of the Company's Common Stock (the "Stock Purchase
Agreement");
3. To elect six Directors for the ensuing year;
( 2 )five Directors;
4. To consider, vote upon and adopt the 2002 Equity Incentive Plan;
5. To consider, vote upon and approve an amendment to the Company's
Certificate of Incorporation, as amended, to change the Company name
from The First Connecticut Capital Corporation 1999 Stock Option Plan.
( 3 )to FCCC, Inc.;
6. To consider, vote upon and approve the appointment of the firm of
DeloitteSaslow Lufkin & ToucheBuggy, LLP as auditors of the Company for the fiscal
year ending March 31, 2000;
( 4 )2003;
7. To approve the postponement or adjournment of the meeting, if
necessary, to solicit additional proxies; and
8. To transact any other business that may properly come before the
meeting or any adjournment thereof.
Stockholdersof the meeting.
Only stockholders of record on the books of the Company at close of
business on September 7, 1999February 1, 2003 will be entitled to notice of and the right to vote
at the meeting.
So far as management is at present aware, no business will come before
the annual meeting other than the matters set forth above.
You are cordially invited to attend this meeting. For your review we
have enclosed copies of the Company's Annual Reports on Form 10-KSB, as amended,
for the fiscal years ended March 31, 2002 and March 31, 2001, and Form 10-QSB,
as amended, for the quarter ended September 30, 2002, including the financial
statements and schedules thereto, as filed with the Securities and Exchange
Commission. Whether or not you plan to be present, kindly fill in, date and sign
the enclosed proxy exactly as your name appears on the proxy and mail it
promptly so your vote can be recorded. Your vote is important regardless of the
ii
number of shares you own. A return envelope is enclosed for your convenience
which requires no postage if mailed within the United States. The giving of thisThis proxy will
not affect your right to vote in person in the event you find it convenient to attend the meeting.
Prior to the actual voting at the meeting, a proxy may be revoked in one of
three ways: 1) by the person executing such proxy by filing with the Secretary
of the Company an instrument of revocation, 2) by a duly executed proxy bearing
a later date, or 3) by voting in person at the Annual Meeting.
Dated: January , 2003
By order of the Board of Directors,
Priscilla E. Ottowell
Secretary
Dated:Lawrence R. Yurdin
PRESIDENT
iii
TABLE OF CONTENTS
PAGE
Forward Looking Statements................................................... v
Summary...................................................................... 1
Pro Forma Balance Sheet...................................................... 6
Notes to Pro Forma Balance Sheet............................................. 7
Risk Factors................................................................. 9
General Information.......................................................... 11
Introduction to Proposals Nos. 1 and 2....................................... 26
Proposal No. 1 - Approval of Asset Purchase Agreement........................ 28
Proposal No. 2 - Approval of Stock Purchase Agreement........................ 34
Proposal No. 3 - Election of Directors....................................... 37
Proposal No. 4 - Approval of 2002 Equity Incentive Plan...................... 38
Proposal No. 5 - Approval to Change the Company Name......................... 39
Proposal No. 6 - Approval of Appointment of Auditors......................... 39
ANNEXES
Annex A - Asset Purchase Agreement
Annex B - Stock Purchase Agreement
Annex C - 2002 Equity Incentive Plan
Annex D - Fairness Opinion of Westwood Partners, Ltd. Annex E -
Report of Independent Appraiser Annex F - Sections 33-855 to 33-872
of the Connecticut General Statutes
iv
FORWARD-LOOKING STATEMENTS
When used in this Proxy Statement, the words "estimate," "project,"
"intend," "expect" and similar expressions are intended to identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date of this Proxy
Statement or as of the date of such other documents. Actual results may differ
materially from those contemplated in forward-looking statements and
projections. Risks and uncertainties that may cause such differences include,
but are not limited to, the ability of the Company to close the transactions
described in the Asset Purchase and Stock Purchase Agreements, the effects on
the Company if the closings are not completed, the uncertainty as to what
dividends, if any, stockholders will receive if the sale is completed, the
effect that a delay in the closing of the transactions might have on the
proceeds from the sale or assets remaining after the sale and other risk factors
detailed in the Company's Securities and Exchange Commission filings, including
the Company's Form 10-KSB, as amended, for the fiscal year ended March 31, 2002
and the Company's Form 10-QSB, as amended, for the quarter ended September 21, 1999
Shelton, CT.30,
2002. Other factors and assumptions not identified above were also involved in
the derivation of these forward-looking statements, and the failure of such
other assumptions to be realized, as well as other factors, may also cause
actual results to differ materially from those projected. The Company assumes no
obligation to update such forward-looking statements or any projections to
reflect actual results, changes in assumptions or changes in other factors
affecting such forward-looking statements, except to the extent necessary to
make such statements and projections not misleading.
v
THE FIRST CONNECTICUT
CAPITAL CORPORATION
1000 Bridgeport Avenue
Shelton, Connecticut 06484
--------------------------SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY
STATEMENT ANNUAL MEETINGAND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU.
TO BETTER UNDERSTAND THE PROPOSED ASSET PURCHASE AGREEMENT AND STOCK PURCHASE
AGREEMENT AND FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS OF THE
AGREEMENTS, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AS WELL AS THE
AGREEMENTS THEMSELVES. FOR YOUR CONVENIENCE, WE HAVE INCLUDED PAGE REFERENCES TO
DIRECT YOU TO MORE COMPLETE DESCRIPTIONS OF THE TOPICS PRESENTED IN THIS
DOCUMENT.
PROPOSALS FOR STOCKHOLDER VOTE
At the Annual Meeting, stockholders will be asked to:
1. Consider, vote upon and approve the Asset Purchase Agreement for
the sale of the Company's business and assets (see page 28);
2. Consider, vote upon and approve the Stock Purchase Agreement for
the sale of 250,000 shares of the Company's Common Stock and
Warrants to purchase 200,000 shares of the Company's Common Stock
(see page 34);
3. Elect five Directors (see page 37);
4. Consider, vote upon and adopt the 2002 Equity Incentive Plan (see
page 38);
5. Consider, vote upon and approve an amendment to the Company's
Certificate of Incorporation, as amended, to change the Company
name from The First Connecticut Capital Corporation to FCCC, Inc.
(see page 39);
6. Consider, vote upon and approve the appointment of the firm of
Saslow Lufkin & Buggy, LLP as auditors of the Company for the
fiscal year ending March 31, 2003 (see page 39);
7. Consider any motion to adjourn to a later date to permit further
solicitation of proxies if necessary (see page 12); and
8. Transact such other business as may properly come before the
annual meeting.
SUMMARY OF TERMS OF THE ASSET PURCHASE AGREEMENT
The material terms of the Asset Purchase Agreement are as follows:
o The Company will sell to FCCC Holding Company, LLC all of its
operating assets and liabilities. The Company will not sell its
cash or certain deferred tax assets, including carried forward
net operating losses (if any).
o The buyer of the assets is FCCC Holding Company, LLC, a company
wholly owned by the Company's current Board of Directors and
management.
-1-
o The effect of the Asset Purchase would be that immediately after
its closing, the Company would have no operating business and no
liabilities and its only assets would consist of the cash on hand
at the time of the closing, the cash proceeds of the Stock
Purchase transaction and certain deferred tax assets.
o Within three months after the closing of the Asset Purchase
transaction, the Company would declare and pay a dividend for
each outstanding share equal to all cash on hand in excess of
$1,500,000, less actual and accrued liabilities of the Company
(if any) and all fees and expenses related to the Asset Purchase
and Stock Purchase transactions divided by the total number of
Common shares outstanding at that time. The Company will not be
obligated to declare and pay a dividend, if cash, less such
liabilities and expenses, is not in excess of $1,500,000 or if
the per share dividend amount is less than $0.15. Based on
preliminary calculations, management estimates the dividend would
have been between $.40 and $.45 per share, had the closing
occurred on September 30, 2002.
o The Company's pro forma balance sheet (see page 6) estimates that
at September 30, 2002 the proceeds from the Asset Purchase and
Stock Purchase transactions would be approximately $1,644,000 and
that the cash available for the dividend would be approximately
$630,000.
SUMMARY OF TERMS OF THE STOCK PURCHASE AGREEMENT
The material terms of the Stock Purchase Agreement are as follows:
o The Company will sell to Bernard Zimmerman & Co. Inc. and the
Cohen Profit Sharing Plan an aggregate of 250,000 shares of the
Company's Common Stock at a price of $1.00 per share, and 5-year
Warrants, at a purchase price of $.01 per Warrant, to purchase an
additional 200,000 shares, exercisable at a price of $1.00 per
share.
o Upon closing of the Stock Purchase transaction, Bernard Zimmerman
& Co. Inc. and the Cohen Profit Sharing Plan would each own
13.23% of the total outstanding shares of the Company and,
assuming the issuance of Common Shares upon exercise of all of
their outstanding Warrants, would each own 17.76% of the total
outstanding shares of the Company.
IMPLICATIONS OF APPROVAL OF THE ASSET PURCHASE AND STOCK PURCHASE AGREEMENTS
The following are potential implications of approval of the Asset
Purchase and Stock Purchase Agreements, subject to the uncertainties and Risk
Factors more fully described in this proxy statement.
o The Company will cease to be an operating company. Its sole
assets will be the amount of cash equal to cash on hand
immediately prior to the closing, the cash received from the
Asset Purchase and Stock Purchase transactions and certain
deferred tax assets.
o If the amount of cash on hand after the closings is in excess of
$1,500,000, after provision for all transaction expenses,
liabilities of the Company to be paid as of the closing and
accrued expenses, then within three months of the closing date,
the Company would declare and pay a dividend to its stockholders
equal to each stockholder's pro rata portion of such cash in
excess of $1,500,000. The Company would not declare and pay a
dividend if the dividend amount would be less than $0.15 per
share. Because of the uncertainties and necessary provisions for
liabilities, the Company cannot predict at this time whether a
dividend would be declared and paid and, if declared and paid,
what the amount of the dividend could be. Nonetheless, based on
preliminary calculations, management estimates the dividend would
have been between $.40 and $.45 per share, had the closing
occurred on September 30, 2002.
-2-
o The Company would maintain its publicly held status and continue
to be subject to the filing and disclosure requirements of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder, with its attendant costs.
POTENTIAL NEGATIVE IMPLICATIONS TO STOCKHOLDERS --------------------------
SOLICITATIONIF THE PROPOSALS ARE APPROVED
While the Board of Directors and Management believe the proposed
transactions represent the best opportunity for stockholders to achieve a
greater value for their stock, they also stress that the proposed transactions
may present potentially negative implications to stockholders, including:
o A dividend would not be declared and paid if the cash on hand
after the closings is less than $1,500,000 or if the dividend
amount would be less than $0.15 per share.
o The new investors and their designee would hold three of the
Company's five Board seats. This would result in their having
substantial control over the policy and operations of the
Company, including potential material transactions in which the
Company may engage.
o The price that the investors pay for the Company's Common Stock
may be less than its book value.
o The shares sold pursuant to the Stock Purchase Agreement could
negatively affect each stockholder's potential dividend (if any)
as well as dilute each stockholder's effective voting power.
o The Stock Purchase transaction could negatively affect the market
price of the Company's Common Stock, notwithstanding the fact
that the price of the shares sold pursuant to the Stock Purchase
Agreement was at a 54% premium to market value as of the date
that the parties executed the Stock Purchase Agreement and the
shares that the investors purchase would be restricted as to
transfer and sale.
ROLE OF PRESENT MANAGEMENT IF THE ASSET PURCHASE AND USESTOCK PURCHASE AGREEMENTS
AND THE RECOMMENDED SLATE OF PROXYDIRECTORS ARE APPROVED
Two members of the present Board of Directors, Lawrence Yurdin (the
Company's current President) and Michael Goldman, would continue to serve on the
Board of Directors without compensation. The other current management and
employees of the Company would have no other involvement with the Company.
REASONS THE BOARD OF DIRECTORS AND MANAGEMENT HAVE APPROVED AND RECOMMENDED THE
ASSET PURCHASE AND STOCK PURCHASE AGREEMENTS
The Board of Directors and Management have determined that these
transactions represent the best available opportunity for stockholders to
achieve a greater value for their stock for the following reasons:
-3-
o The transactions would take advantage of the current willingness
of members of the Board of Directors to purchase the assets of
the Company's mortgage business for a price at least equal to
book value, without any material representations, warranties or
indemnities from the Company. It should be noted that results of
the mortgage business for the first two quarters of the Company's
fiscal year beginning April 1, 2002 were substantially ahead of
the same period last year.
o The transactions may enhance the ability of the Company to
acquire or merge with a business more appropriate in type or size
for public ownership.
o The proposed transactions would provide for a possible cash
dividend within three months of the closing date. Each
stockholder's cash dividend would be calculated by dividing the
cash available for dividends by the total number of shares
outstanding, multiplied by the number of shares each stockholder
owns. No dividend would be declared or paid if such dividend
would amount to less than $.15 per share. Based on preliminary
calculations, management estimates the dividend would have been
between $.40 and $.45 had the closing occurred on September 30,
2002. Each stockholder's share ownership would be based upon the
number of Common Shares owned as of a date to be fixed after
closing of the proposed transactions.
o In addition to the above described dividend, the Asset Purchase
and Stock Purchase Agreements provide for the stockholders to
vote as to whether there should be a complete liquidation of the
Company three (3) years from closing of the transactions if a
material transaction (as defined in the Asset Purchase Agreement
as having an aggregate value in excess of $750,000) had not been
concluded during that period.
OPINION OF OUR FINANCIAL ADVISOR WITH RESPECT TO THE ASSET PURCHASE AND STOCK
PURCHASE TRANSACTIONS
In connection with the transactions, our Board of Directors received
a written opinion from Westwood Partners, Ltd. ("Westwood") as to the fairness,
from a financial point of view and as of the date of the opinion, of the
transactions. The full text of the written opinion delivered by Westwood is set
forth in Annex D to this proxy statement. The principals of Westwood, Duane L.
Berlin and Donald M. Kleban, are, respectively, the Managing Attorney and
Counsel to Lev & Berlin, P.C., the law firm that is acting as special securities
counsel for the Company in connection with the proposed sale of assets and the
business. You are encouraged to read this opinion carefully in its entirety for
a description of the assumptions made, matters considered and limitations on the
review undertaken.
-4-
INTRODUCTION TO PRO FORMA BALANCE SHEET
The pro forma balance sheet and notes of the First Connecticut
Capital Corporation (the "Company"), as required by Article 11 of Regulation
S-X, set forth below, provide investors with information about the continuing
impact of a transaction by showing how it might have affected historical
financial information if the transaction had been consummated at an earlier
time. Such pro forma information is designed to assist the investors in
analyzing the future prospects of a company because they illustrate the possible
scope of the change in a company's financial position and results of operations
caused by the transaction or transactions.
The pro forma balance sheet and notes reflect the sale of the
Company's mortgage business to FCCC Holding Company, LLC, a company organized by
members of the Board of Directors and management, including Lawrence Yurdin (the
current President of the Company) and the sale of Common Shares and Warrants to
Bernard Zimmerman, of Weston, Connecticut, and Martin Cohen, of New York City,
New York or their affiliates (see Note 2). The pro forma balance sheet and notes
illustrates the results of the proposed transactions as if they had occurred on
September 30, 2002.
-5-
THE FIRST CONNECTICUT CAPITAL CORPORATION
PRO FORMA BALANCE SHEET
AS OF SEPTEMBER 30, 2002
(IN THOUSANDS)
SEPTEMBER 30, PRO FORMA PRO FORMA
2002 ADJUSTMENTS BALANCES
------------ ------------ ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
ASSETS
Cash and cash equivalents $ 702 $ 1,392 A $ 2,346
250 B
2 B
Loans- net of allowance for loan
losses of $634 2,672 (2,672) A --
Loans due from related parties -- -- A --
Loans held for sale 1,185 (1,185) A --
Due from partnerships 87 (87) A --
Accrued interest receivable 63 (63) A --
Servicing rights 81 (81) A --
Fixed Assets 15 (15) A --
Deferred income taxes 130 130
Investment in partnerships 60 (60) A --
Other Assets 47 (47) A --
------- ------- -------
TOTAL ASSETS $ 5,042 $(2,566) $ 2,476
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Line of credit $ 2,735 $(2,735) A $ --
Accounts payable and other accrued expenses 83 (83) A --
------- ------- -------
TOTAL LIABILITIES 2,818 (2,818) --
STOCKHOLDERS' EQUITY
Common Stock, no par value, stated value $.50 per share authorized
3,000,000 shares, issued and outstanding 1,173,382
shares at September 30, 2002 and 1,423,382 after transaction 587 125 B 712
Additional paid-in capital 9,253 127 B 9,380
Accumulated deficit (7,616) -- (7,616)
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY 2,224 252 2,476
------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,042 $(2,566) $ 2,476
======= ======= =======
See Notes 1 through 5, attached
-6-
NOTES TO PRO FORMA BALANCE SHEET
NOTE 1 - ORGANIZATION
The Company is engaged in the construction mortgage banking business, which
involves the origination, purchase, sale and servicing of mortgage loans secured
by residential or commercial real estate. The Company's revenues consist of loan
servicing fees, loan origination fees, interest on mortgage loans held prior to
sale and gains from the sale of loans and mortgage servicing rights. Mortgage
loans that are originated or purchased by the Company may be resold. The Company
also engages in mortgage servicing of its own Portfolio Loan Program, which
includes the processing and administration of mortgage loan payments and
remitting principal and interest to purchasers.
NOTE 2 - OVERVIEW OF THE TRANSACTIONS
The Company announced the execution of definitive agreements for the sale of its
mortgage business (the "Asset Sale") to FCCC Holding Company, LLC, a company
organized by members of the Board of Directors and management, including
Lawrence Yurdin (the current President of the Company). The Asset Sale would
include all of the assets (excluding cash and deferred income taxes) of the
mortgage business, subject to the assumption of all liabilities and other
obligations, including contingent liabilities. Upon closing of the Asset Sale
and the transactions described in the Stock Purchase Agreement (the "Securities
Sale"), the Company would have no operating business.
The sale price, currently estimated to be the approximate net book value of the
assets to be sold, will be an amount determined, in part, in accordance with an
independent appraisal of the loan portfolio by a nationally recognized portfolio
valuation company. The Asset Sale will be reviewed and determined to be fair
pursuant to an opinion to be delivered by an NASD registered broker-dealer.
The Purchaser (of which Lawrence Yurdin, the President of the Company, is a
Member and Manager) expects to pay the approximate net book value for the assets
of the Company (excluding cash and deferred income taxes) at the time of the
closing if approved by the stockholders of the Company.
Simultaneously with the proposed Asset Sale, the Company would issue and sell to
Bernard Zimmerman, of Weston, Connecticut, and Martin Cohen, of New York City,
New York or their affiliates, for a purchase price of $252,000 in cash, a total
of 250,000 Common Shares of the Company, together with five year Warrants to
purchase an additional 200,000 shares at a purchase price of $.01 per Warrant,
exercisable at a price of $1 per share. Messrs. Zimmerman and Cohen or their
affiliates may also purchase additional Common Shares from other sources. Upon
completion of the Securities Sale, Messrs. Zimmerman and Cohen will each own
188,300 shares and Warrants to purchase 100,000 shares at $1.00 per share.
Assuming consummation of the Asset Sale and the Securities Sale and after
payment of expenses, the Company would have 1,423,382 shares outstanding,
excluding shares reserved for outstanding options and Warrants. If the Company
has total cash on hand of not less than $1,500,000, after payment of all fees,
expenses related to the Asset Purchase and Stock Purchase transactions,
liabilities of the Company to be paid at or prior to closing and accrued
expenses, then pursuant to the terms of the proposed transactions, the Company
will declare and pay a cash dividend to stockholders within 3 months of the
closing, pro rata, based upon the then outstanding number of shares of the
Company's Common Stock, of all cash (if any) on hand in excess of $1,500,000
after the closing of the Asset Sale and the Securities Sale and after payment of
all fees, expenses and liabilities to be paid at or prior to Closing, provided
such dividend equals or exceeds $.15 per share.
Pursuant to the terms of the Asset Purchase and Stock Purchase Agreements,
Messrs. Zimmerman and Cohen will designate three of the five nominees for
election to the Company's Board of Directors and will supervise the day-to-day
operations of the Company subsequent to the closing. In the event that the
Company is unable to consummate a material merger or business combination
transaction or series of transactions (defined as having an aggregate value in
excess of $750,000) within 36 months of the closing of the asset sale (subject
to a three month extension under certain circumstances), then upon the request
of the holders of 20% or more outstanding stock of the Company held by
non-affiliates of management, the Company would schedule a meeting of
stockholders and issue a proxy solicitation pursuant to which the stockholders
would vote on whether to liquidate the Company. The Agreements provide that all
shares held by management shall be voted in the same proportion as the
non-management shares with respect to such vote.
-7-
NOTE 3 - PRO FORMA ADJUSTMENTS
The following adjustments correspond to the pro forma adjustments
included on the unaudited pro forma balance sheet as at September 30,
2002.
A. The Company sells to FCCC Holding Company, LLC, all of the assets (excluding
cash and deferred income taxes) of the mortgage business at their approximate
book value (the "Asset Sale"), subject to the assumption of all liabilities and
other obligations, including contingent liabilities.
B. Simultaneously, with the Asset Sale, the Company will issue and sell for a
purchase price of $250,000, a total of 250,000 Common Shares of the Company, and
for a purchase price of $2,000, five year Warrants to purchase an additional
200,000 shares, exercisable at a price of $1 per share (collectively the
"Securities Sale").
The following summarizes the assets purchased and liabilities assumed which
comprises the overall purchase price on a pro forma basis as of September 30,
2002:
Amount
Description (in thousands)
---------------------------------------- ----------------------
Loans, net of allowances of $634 $2,672
Loans held for sale 1,185
Due from partnerships 87
Accrued interest receivable 63
Servicing rights 81
Fixed Assets 15
Investment in partnerships 60
Other Assets 47
Line of credit (2,735)
Accounts payable and accrued expenses (83)
-----
Purchase Price $1,392
======
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
See the Company's March 31, 2002 Form 10KSB, as amended, for a complete summary
of the Company's accounting policies.
NOTE 5- REPRESENTATIONS
The Company makes no representations as to the net worth of the Company or the
book value of its assets or business at the actual closing date currently
anticipated to occur on or about February 28, 2003, subject to extension, which
will be adjusted to reflect the results of operations for the period between
September 30, 2002 and such closing date. The Pro Forma Balance Sheet does not
take into account any post-closing dividend or the results of operations between
September 30, 2002 and the actual closing date. The Company makes no
representation as to the value, if any, of the deferred tax assets that the
Company will retain after the closing.
-8-
RISK FACTORS
In addition to other information provided or incorporated by
reference in this document, you should consider the following information
carefully in deciding whether to vote in favor of Proposals No. 1 and 2.
AFTER CLOSING OF THE ASSET PURCHASE, THE COMPANY MAY BE CLASSIFIED AS
AN INVESTMENT COMPANY. After the closing of the Asset Purchase, the Company may
be categorized as an investment company, if it does not effectuate a combination
with an operating business within one year or otherwise become an operating
company. Such compliance could cause the Company to incur material compliance
expenses.
Generally, an issuer is deemed to be an investment company subject to
registration if its holdings of "investment securities," which usually are
securities other than securities issued by majority owned subsidiaries and
government securities, exceed 40% of the value of its total assets exclusive of
government securities and cash items on an unconsolidated basis. However, a
company that otherwise would be deemed to be an investment company may be
excluded from such status for a one-year period provided that such company has a
bona fide intent to be engaged as soon as reasonably possible, and in any event
within that one-year period, primarily in a business other than that of
investing, reinvesting, owning, holding or trading in securities. If the Company
would otherwise be deemed to be an investment company under the Investment
Company Act, it intends to rely on this exemption while it attempts to
effectuate a combination with an operating business.
Accordingly, if the Company has not effectuated a combination with or
otherwise become an operating business within the one-year period referred to
above, the Company may be required to (1) apply to the Securities and Exchange
Commission for exemptive relief from the requirements of the Investment Company
Act, or (2) invest certain of its assets in government securities and cash
equivalents that are not considered "investment securities" under the Investment
Company Act. There can be no assurance that the Company will be able to obtain
exemptive relief from the Commission. Please note, however, that investment in
government securities and cash equivalents could yield a significantly lower
rate of return than other investments that the Company could make if it chose to
register as an investment company.
AFTER CLOSING OF THE ASSET PURCHASE AND STOCK PURCHASE TRANSACTIONS,
THE COMPANY MAY NOT BE SUCCESSFUL IN EFFECTUATING A BUSINESS COMBINATION. There
can be no assurance that the Company will ever effectuate a business combination
after closing of the transactions described in the Asset Purchase and Stock
Purchase Agreements. Pending the closing of such a business combination, the
Company intends to invest in cash and cash equivalents such as Certificates of
Deposit, United States Treasury Securities and/or money market funds. These
instruments typically yield among the lowest rates of interest available from
investment securities and therefore there is a risk that the Company's cash and
the return thereon will not be sufficient to fund operating expenses. These
instruments may also be subject to interest rate fluctuations and/or other
market conditions. Additionally, as discussed above, the Company could be deemed
to be an investment company under the Investment Company Act and incur material
compliance expenses and other operational and regulatory obligations. Please
note that, if the Company fails to consummate a material transaction (defined in
the Asset Purchase Agreement as having an aggregate value in excess of $750,000)
within three years of the closing of the Asset Purchase and Stock Purchase
Agreements, then, upon the request of the holders of 20% or more outstanding
stock of the Company held by non-affiliates of management, the Company would
schedule a meeting of stockholders at which the stockholders will vote, pursuant
to a proxy solicitation, whether to liquidate the Company. All shares held by
management shall be voted at any such meeting in the same proportion as the
non-management shares.
-9-
TERMS AND/OR EFFECTS OF A POTENTIAL BUSINESS COMBINATION MAY NOT BE
FAVORABLE TO THE COMPANY. Even if the Company successfully effectuates a
business combination, there can be no assurance as to how favorable the terms of
such a transaction would be, whether and to what extent the stockholders of the
Company will suffer dilution of their ownership of the Company or whether the
business combination would be successful, profitable or result in any material
appreciation in the value of the Company's stock.
AFTER CLOSING OF THE ASSET PURCHASE AGREEMENT, BUYER MAY NOT BE ABLE
TO SATISFY ITS REPRESENTATIONS AND INDEMNIFICATIONS. There can be no assurance
that the buyer of the Company's assets will have the financial ability to
satisfy the representations and indemnifications that it makes to the Company in
the Asset Purchase Agreement. In such an event, the Company would have little or
no ability to recover any losses or damages that it sustains as a result of the
buyer's breach of such representations and indemnifications.
AFTER CLOSING OF THE ASSET PURCHASE AND STOCK PURCHASE AGREEMENTS THE
DEFERRED TAX ASSETS MAY HAVE NEGLIGIBLE OR NO VALUE. There can be no assurance
that the deferred tax assets that the Company will retain after the closing of
the transactions will have any value, or if they have value, what that value
will be and whether and to what extent their use would be limited or restricted.
THE ASSET PURCHASE TRANSACTION MAY NOT CLOSE. Even if the Asset
Purchase Agreement were approved by the Company's stockholders, there is a risk
that the transaction would not close. The Asset Purchase Agreement contains
numerous conditions to closing. If one or more of these conditions were not
satisfied or waived, then the transactions contemplated by and described in the
Asset Purchase Agreement may not close, and the Company's stockholders would
face the risks described below under "Risks if the Asset Purchase Agreement were
not approved."
AFTER CLOSING OF THE ASSET PURCHASE AND STOCK PURCHASE TRANSACTIONS,
THERE MAY BE NO DIVIDEND OR THE AMOUNT OF DIVIDEND COULD BE LESS THAN CURRENTLY
ANTICIPATED. Whether or not the Asset Purchase Agreement closes, there may be no
cash dividend to the Company's stockholders. Even if there is a dividend, there
can be no assurance when such dividend will be declared or paid or what the
amount of such dividend would be. A number of events or factors could affect the
dividend per share amount. Even seemingly small variations from the current
expectations could have a material impact on the dividend. The Company could
have higher than anticipated liabilities and expenses, and it may be more
expensive than anticipated for the Company to consummate the transactions.
Consequently, the Company is asking stockholders to vote on the Asset Purchase
and Stock Purchase Agreements without being able to assure them that it will be
able to pay any dividend.
RISKS IF THE ASSET PURCHASE AGREEMENT WERE NOT APPROVED. If the Asset
Purchase Agreement were not approved, stockholders would not receive a dividend
as provided therein. While stockholders may subsequently receive a dividend
pursuant to another transaction or plan, the Company has not planned or provided
for any other transaction or plan. Furthermore, if the Asset Purchase Agreement
were not approved, then the Company would continue to operate its business,
unless and until it is able to negotiate another transaction that the Board of
Directors believes is beneficial to the stockholders.
-10-
GENERAL INFORMATION
The enclosed proxy is solicited by the Board of Directors of The
First Connecticut Capital Corporation (the "Company") for use at the Annual
Meeting of Stockholders to be held at 9:0030 a.m. on Tuesday, October 19, 1999Friday, February 28, 2003 at
the First Union Bank, Shelton Square Office, Greater Valley Chamber of Commerce,
Conference Room, 2nd Floor, 900 Bridgeport Avenue, Shelton, Connecticut or any
adjournment thereofof the meeting for the purposes set forth in the attached Notice of
Meeting. The approximate date on which this Proxy Statement and the enclosed
proxy is first sent or given to stockholders is September 21, 1999.February ___, 2003.
The shares represented by a duly executed proxy card received by the
Secretary of the Company in the accompanying form prior to the meeting and not
revoked, will be voted and
if ain accordance with the choice is specified in the spaces
provided therefor in the proxy the shares
will be voted in accordance therewith.card. In the absence of such instructions,choice, the holders of the
proxy will votehave deemed to have voted FOR the election of directors and IN FAVOR
OF the proposals set forth in the Notice of Meeting. If any other matters are
properly brought before the meeting, the enclosed proxy gives discretionary
authority to the persons named in such proxy to vote the shares in accordance
with their best judgment. Any stockholder giving a proxy may revoke it by giving
written notice to the Secretary of the Company at any time prior to its use at
the meeting. The mailing address of the principal executive office of the
Company is 1000 Bridgeport Avenue, Shelton, Connecticut 06484.
In addition to the enclosed copies of the Company's Annual Reports on
Form 10-KSB, as amended, for the fiscal years ended March 31, 2002 and March 31,
2001 and the Company's Quarterly Report on Form 10-QSB, as amended, for the
fiscal quarter ended September 30, 2002, the Company will provide, without
charge, to each person to whom this Proxy Statement is delivered, upon written
or oral request of such person and by first class mail or other equally prompt
means, an additional copy of the Annual and Quarterly Reports. Requests should
be directed by mail to: The First Connecticut Capital Corporation, ATTN: Ms.
Priscilla E. Ottowell, Secretary, 1000 Bridgeport Avenue, Shelton, Connecticut
06484.
RECORD DATE AND VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
Only stockholders of record atRIGHTS
The Board has fixed the close of business on September 7, 1999
will beFebruary 1, 2003 (the
"Record Date") as the date for the determination of Company's stockholders
entitled to notice of, and to vote at, the meeting. The securitiesAnnual Meeting. As of the CompanyRecord
Date, there were 1,173,382 shares of Common Stock outstanding. Only stockholders
on the Record Date are entitled to notice of and to vote at the Annual Meeting
are 1,173,382 outstanding shares of Common Stock.Stockholders or any continuation or adjournment of the meeting. Each share shall be accorded one vote. As of March 31, 1999, Mr. Robert E. Humphreys
of 64 Alcott Street, Acton, Massachusetts 01720, members of his immediate family
and affiliated trusts were the beneficial owners of 114,900 shares of
Common Stock constituting 9.79%is entitled to one vote per share. Any share of Common Stock held
of record on the Record Date shall be assumed, by the Board of Directors, to be
owned beneficially by the record holder of that share. The present directors and
officers of the totalCompany, currently holding approximately 104,435 shares (8.9%)
of the outstanding sharesCommon Stock of the Company on the Record Date, intend to
vote "FOR" the slate of directors, "FOR" the adoption of the 2002 Equity
Incentive Plan, "FOR" the approval of the Asset Purchase Agreement, "FOR" the
approval of the Stock Purchase Agreement, "FOR" the approval of the amendment to
the Company's Certificate of Incorporation, as amended, to change the corporate
name, "FOR" the appointment of auditors for the Company for the fiscal year
ending March 31, 2003 and "FOR" the postponement or adjournment of the meeting,
if necessary, to continue the solicitation of proxies.
-11-
VOTES REQUIRED FOR APPROVAL
o The approval of the Asset Purchase Agreement requires the
affirmative vote of two-thirds of the Common Stock issued and
outstanding as of the Record Date.
o The Election of Directors, the approval of the Stock Purchase
Agreement, the appointment of the auditors and the approval of an
adjournment, if necessary, each requires the affirmative vote of
a majority of the votes cast at the Annual Meeting.
o The adoption of the 2002 Equity Incentive Plan and the approval
of the amendment to the Company's Certificate of Incorporation,
as amended, to change the name of the Company require the
affirmative vote of a majority of the Common Stock issued and
outstanding as of the Record Date.
Accordingly, abstentions, broker non-votes or the failure to either
return a proxy or to attend the Annual Meeting will be deemed not to have voted
and, therefore, have the effect of a negative vote on the Asset Purchase
Agreement, the Stock Purchase Agreement, the appointment of auditors, the
adoption of the 2002 Equity Incentive Plan and the amendment to the Certificate
of Incorporation, as amended.
ADJOURNMENT OF THE ANNUAL MEETING
In the event that there were not sufficient votes to approve any
proposal included in this Proxy Statement at the time of the annual meeting, the
proposal could not be approved unless the annual meeting was adjourned in order
to permit further solicitation of proxies from holders of the Company's Common
Stock. Mr. HumphreysProxies that are being solicited by the Company's Board of Directors
grant discretionary authority to vote for any adjournment, if necessary. If it
were necessary to adjourn the annual meeting, and the adjournment is not an executive officer or directorfor a
period of less than 45 days, no notice of the Company.
Other than such beneficial owners,time and place of the adjourned
meeting is required to be given to the knowledgestockholders other than an announcement
of the time and place at the annual meeting. A majority of the shares
represented and voting at the annual meeting is required to approve the
adjournment, regardless of whether there is a quorum present at the annual
meeting.
-12-
DIRECTORS AND EXECUTIVE OFFICERS
The current Directors and Executive Officers of the Company no
stockholder owns more than 5%are as
follows:
NAMES AGE PRESENT POSITION
----- --- ----------------
David Engelson 81 Chairman of the Company's outstanding Common Stock.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, it is proposed to elect six directors, each to hold
office for a term of one year, and until his successor shall have been chosen
and qualified. All such nominees are presently serving as directors and were
elected at the 1998 Annual Meeting of Stockholders. Unless otherwise specified,
the persons named in the accompanying form of proxy shall vote such proxy for
the election of the directors named below who will constitute the new Board of Directors
Lawrence R. Yurdin 62 President, CEO and Director
Jan E. Cohen 45 Director
Thomas D'Addario 50 Director
Michael L. Goldman 41 Assistant Secretary and Director
Priscilla E. Ottowell 55 Secretary and Controller
David Engelson, Director of the Corporation since 1960. Chairman of
the Board of the Corporation.
Lawrence R. Yurdin, Director of the Corporation since 1986. President
and Chief Executive Officer of the Corporation; employed by the Corporation in
various capacities since 1970.
Jan E. Cohen, Director of the Corporation since 1998. CEO, President
and Director of CF Industries, Inc.; CEO, LLC Manager and Director of Northeast
Builders Supply and Home Centers, LLC; CEO and LLC Manager of The Brilco
Business Center and a Member of the American Institute of Certified Public
Accountants and the Connecticut Society of CPA's.
Thomas D'Addario, Director of the Corporation since 1998. President
of Mario D'Addario Buick, Inc., and President of Mario D'Addario Limousine
Services.
Michael L. Goldman, Assistant Secretary and Director of the
Corporation since 1998. Managing Principal in the law firm of Goldman, Gruder &
Woods, LLC.
Priscilla E. Ottowell elected Secretary of the Corporation on April
12, 1995. Employed by the Corporation as to whom the following information is submitted.
2
- - - - - - - - - - - - - - --------------------- ------ ---------------------------------- ----------- ----------------- ------------
SHARES OF
COMMON STOCK PERCENTAGE
BUSINESS EXPERIENCE FIRST BENEFICIALLY OF
NAME AGE DURING PAST 5 YEARS ELECTED OWNED AS OF OUTSTANDING
AND OTHER DIRECTORSHIPS A DIRECTOR AUGUST SHARES
24,1998(1)
- - - - - - - - - - - - - - --------------------- ------ ---------------------------------- ----------- ----------------- ------------
David Engelson 78 Chairman of the Board of the 1960 43,605 3.716%
Company
Lawrence R. Yurdin 59 CEO and President of the 1986 21,707 1.850%
Company;
Jan E. Cohen 42 CEO, President and Director of 1998 2,113 0.180
CF Industries, Inc.; CEO,
LLC Manager and Director
of Northeast Builders Supply
and Home Centers;
CEO and LLC Manager of
The Brilco Business Center;
Member of the American
Institute of Certified Public
Accountants and the Conn.
Society of CPA's
Thomas D'Addario 47 Vice President of Mario 1998 15,700 1.340%
D'Addario Buick, Inc.;
Ronald Farrell 55 Principal owner, Vice 1998 -0- N/A
President and Operating
Officer of the Kaufman Fuel
Company
Michael L. Goldman 38 Principal in the law firm of 1998 16,921 1.440%
Goldman, Gruder & Woods,
LLC; Director and President
of The State Street Mortgage
Company
- - - - - - - - - - - - - - --------------------- ------ ---------------------------------- ----------- ----------------- ------------
All directors and executive officers as a group (six) persons.. 100,046 8.526%
(1) Based on information furnished to the company by the person named or his
agent. Includes shares owned bythe director as custodian or trustee for
minor children. All directors disclaim beneficial ownership of these share.
(2) Mr. Yurdin is the son-in-law of Mr. Engelson, Chairman of the Board and a
Director of the Company.
MEETINGController since 1985.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held 3three meetings since the last annual meeting of
the Company which was held on October 20, 1998.in Fiscal Year 2001 and
two meetings in Fiscal Year 2002. The Board of Directors has a standing Audit
Committee, Stock Option Committee and Compensation Committee, but no Nominating
Committee.
The Audit Committee has reviewed and discussed the audited financial
statements with management. The Audit Committee has discussed with the
independent auditors the matters required to be discussed by SAS 61. The audit
committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1
and has discussed with the independent accountant the independent accountant's
independence. Based on the review of the audited financial statements, the
written disclosures and the letter from the independent accountants and on
discussions with the independent auditors, the Audit Committee recommended to
the Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-KSB, as amended, for the last fiscal year for
filing with the Securities and Exchange Commission. Members of the Audit
-13-
Committee are Messrs. Lawrence R. Yurdin and Jan E. Cohen. This Committee met
once during
the last fiscal yearone time in Fiscal Year 2001 and one time in Fiscal Year 2002 to review audit
procedures and internal controls with the independent auditors and to review
results of compliance audits conducted by various government agencies. The
members of the Audit Committee are not independent.
The Stock Option Committee is composed of the entire Board of
Directors and meet twice duringmet two times in Fiscal Year 2001 and two times in Fiscal Year
2002.
The members of the last fiscal year.Compensation Committee are Messrs. Yurdin and
Cohen. The Compensation Committee met one time in Fiscal Year 2001 and one time
in Fiscal Year 2002.
All directors attended over seventy-five percent of the Board
meetings and the Committees of the Board of which they are members. Directors,
except MessersMessrs. Engelson and Yurdin, receive a fee of $300.00 per meeting for
serving on the Board or such committies.
3committees. Messrs. Engelson and Yurdin are not
compensated independently for their Board service.
NOMINEES FOR ELECTION TO BOARD OF DIRECTORS
BUSINESS EXPERIENCE FIRST ELECTED
NAME AGE AND OTHER DIRECTORSHIPS A DIRECTOR
---- --- ----------------------- ----------
Martin Cohen 68 Private investor, former manager of Marcon Workouts --
LLC; founder and former CEO of Marcon Capital
Corporation, a federally licensed Small Business
Investment Company; former consultant to
CS First Boston and Greenwich Capital Corp.,
investment banking firms.
Michael L. Goldman 41 Principal in the law firm of Goldman, Gruder & 1998
Woods, LLC.
Lawrence R. Yurdin* 62 CEO and President of the Company. 1986
Bernard Zimmerman 69 President of Bernard Zimmerman and Co., Inc.; --
Director of Sbarro, Inc.; Director of Institute for
Cancer Research and Molecular Medicine; Director
of the M. and A. Sbarro Family Foundation;
Certified Public Accountant for more than 30 years.
Jay J. Miller 69 Attorney in private practice; Director of Covista --
Communications, Inc., a long distance telephone
service provider; Director of AmTrust Financial
Group, Inc., an insurance holding company;
Chairman of the Board of AmTrust Pacific Ltd.,
a New Zealand real estate company.
- ----------
*Mr. Yurdin is the son-in-law of Mr. David Engelson, a
current Director of the Company and the current Chairman of the
Board, who is not standing for reelection to the Board of
Directors.
-14-
COMPENSATION OF EXECUTIVE OFFICERS
The following summary compensation table sets forth certain
information regarding the annual and long-term compensation of David Engelson
and Lawrence R. Yurdin. No officer of the Company receivesother than Mr. Yurdin received
salary and bonus exceeding $100,000.
NAME AND FISCAL ALL OTHER
PRINCIPAL YEAR ENDED SALARY BONUS OPTIONS COMPENSATION
POSITION MARCH 31 ($) ($) GRANTED ($)_____
- --------------------------------------------------------------------------------
David Engelson 2002 $12,000 None None None
CHAIRMAN OF THE BOARD 2001 $12,000 None None None
2000 $11,000 None None None
Lawrence R. Yurdin 2002 $109,000 None 28,500 None
PRESIDENT AND CEO 2001 $88,000 None None None
2000 $83,500 None None None
The Company, with the approval of the Board of Directors, entered
into an Employment Agreement with Mr. Yurdin as of February 1, 2002. The
Employment Agreement provides for an initial term of three (3) years, pursuant
to which the Company agreed to pay Mr. Yurdin an annual base salary of $125,000,
plus certain other benefits. The Employment Agreement also provides for the
Company to pay to Mr. Yurdin severance benefits in the event of the termination
of his employment under certain circumstances. Pursuant to the terms of the
Asset Purchase and Stock Purchase Agreements, described in Proposals 1 and 2
below, Mr. Yurdin has agreed to terminate any Company severance or other
liability with respect to his Employment Agreement that could be triggered by
either or both of the Asset Purchase and Stock Purchase Agreements.
-15-
SECURITIES OWNERSHIP OF MANAGEMENT AND CURRENT DIRECTORS AS AT
SEPTEMBER 30, 2002
SUMMARY COMPENSATION TABLEBENEFICIAL OWNER SHARES OF PERCENTAGE OF OPTIONS * PERCENTAGE OF TOTAL PERCENTAGE OF
COMMON STOCK OUTSTANDING OUTSTANDING SHARES AND OUTSTANDING SHARES
SHARES OPTIONS OPTIONS (ASSUMING EXERCISE
OF ALL OUTSTANDING
OPTIONS)
David Engelson 43,605 3.72% 0 0% 43,605 3.42%
Lawrence R. Yurdin 21,707 1.85 28,500 35.0 50,207 3.94
Jan E. Cohen 2,113 .18 16,000 19.6 18,113 1.42
Thomas D'Addario 15,700 1.34 16,000 19.6 31,700 2.48
Michael L. Goldman 16,921 1.44 16,000 19.6 32,921 2.58
Priscilla E 4,389 .37 5,000 6.2 9389 .73
Ottowell
All directors and
executive officers 104,435 8.88% 81,500 81.5% 185,935 14.60%
as a group (six
persons)
*All options set forth above are currently exercisable
OPTION GRANTS TO EXECUTIVE OFFICER IN LAST FISCAL YEAR
The following table summarizes option grants during the fiscal year
ended March 31, 2002 to the named executive officer:
- --------------------- ----------------------- --------------------- ------------- ----------------
NAME NUMBER OF SECURITIES % TOTAL OPTIONS EXERCISE OR EXPIRATION DATE
UNDERLYING OPTIONS GRANTED TO EMPLOYEES BASE PRICE
GRANTED IN FISCAL YEAR ($/SHARE)
- --------------------- ----------------------- --------------------- ------------- ----------------
Lawrence R. 28,500 100% $.64 05/03/11
Yurdin
- --------------------- ----------------------- --------------------- ------------- ----------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
- ------------ ---------------- ------------- ------------------------------------- ------------------
NAME SHARES ACQUIRED VALUE NUMBER OF SHARES VALUE OF UNEXERCISED
ON EXERCISE (#) REALIZED ($) UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL AT FISCAL YEAR END($)(1)
YEAR END (#)
--------------------------- -------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------ ---------------- --------------- ------------------------------------- ------------------
Lawrence R.
Yurdin -0- -0- 28,500 -0- -0- -0-
- ------------ ---------------- --------------- ------------------------------------- ------------------
(1) Exercise Price is based on the closing bid price of the Company's
Common Stock on the date that the options were granted.
-16-
STOCK OPTION PLAN:
The Company has one stock option plan, adopted in 1999 (the "1999
Plan") which enables the granting of options to officers and directors to
purchase shares of the Company's Common Stock at prices equal to fair market
value at the date of the grant. Options issued pursuant to the 1999 Plan expire
within 10 years of the grant and vest immediately. The Company previously had a
stock option plan that was adopted in 1988. That plan and all options issued
thereunder have expired.
Options issued pursuant to the 1999 Plan: On May 3, 2001, 100,000
options were granted under the 1999 Plan at an exercise price of $.64 per share.
The options expire ten years from grant date. As of September 30, 2002, 100,000
options were outstanding under the 1999 Plan. No options were exercised or
canceled during the year ended March 31, 2002 or the period ended September 30,
2002 and no compensation cost has been recognized for stock options awarded
under the 1999 Plan.
Pursuant to the terms of the transactions described in Proposals 1
and 2 below, the options that the Company has granted pursuant to the 1999 Plan
will be amended to provide that all of the holders will be prohibited from
publicly offering or selling any shares issuable upon the exercise of such
options for a period of eighteen (18) months following the closing of said
transactions.
OTHER OPTIONS:
On October 1, 2002, the Company issued a total of 79,500
non-qualified options ("Other Options"), at an exercise price of $.82 per share,
to current and former employees, officers and directors of the Company (not
including Mr. Yurdin), whose options have or would terminate as a result of the
closing of the transactions contemplated by and described in Proposals 1 and 2
below. The Company issued the Other Options in consideration of the efforts of
the grantees in connection with the transactions described in Proposals 1 and 2
and their continued cooperation with and assistance to the Company after the
closing of those transactions. The granting of the Other Options is subject to
and conditioned upon the approval by the stockholders of Proposals 1 and 2 below
and the consummation of the transactions contemplated by and described therein.
The terms and conditions of the Other Options are identical to the terms and
provisions of the options issued under the 1999 Plan, except that they will not
terminate upon the holders ceasing to be "Eligible Persons," as defined in the
1999 Plan. Using the Black-Scholes method of valuation, the aggregate value of
the Other Options at the time of their grant was $24,645.
TRANSACTIONS WITH MANAGEMENT AND DIRECTORS
The Company believes that each transaction described in the following
section is on terms not less favorable to the Company than terms that could have
been obtained in an arms' length transaction with an unaffiliated party.
Legal services, including representation of the Company on the
closing of all new loans, foreclosure proceedings on delinquent loans and
general corporate matters are provided by a firm in which Michael L. Goldman, a
director of the Company, is a principal. The Company does not pay for these
legal services since the fees are paid by the borrowers. Legal fees paid by the
Company to Mr. Goldman's firm (exclusive of fees paid directly by borrowers) for
legal services were $1,000 for each of the fiscal years ended March 31, 2002 and
2001.
-17-
As of September 30, 2002, the Company had two loans with aggregate
original principal balances totaling $500,000 ($225,000 which has been retained
by the Company) to Sonny Field, LLC. The President of Sonny Field, LLC is Jan E.
Cohen, a director of the Company. The loan is collateralized by a first mortgage
on property owned by Sonny Field, LLC, and is personally guaranteed by Mr.
Cohen. The Loan Committee and the Board of Directors approved the loan, which
was made upon terms not less favorable than other arm's length transactions
entered into by the Company. The loan is secured and is current.
As of March 31, 2001, the Company had a $120,000 ($50,000 which had
been retained by the Company) loan outstanding to CF Industries, Inc. The
President of CF Industries, Inc. is Jan E. Cohen, a director of the Company. The
loan was collateralized by a first mortgage on property owned by CF Industries,
Inc. and is personally guaranteed by Mr. Cohen. The Loan Committee and the Board
of Directors approved the loan which was made upon terms not less favorable than
other arm's length transactions entered into by the Company. The loan was fully
repaid during Company's 2002 fiscal year.
The Company utilizes the appraisal services of Larson Associates, LLC
for the majority of the Company's appraisal needs. Larson Associates, LLC is
owned by Lawrence Yurdin, the Company's President, who is also a director. The
Company does not pay for these appraisal services since the fees are paid by the
borrowers. Larson Associates, LLC performs appraisals for a number of other
clients in addition to the Company. Management of the Company believes that all
appraisals performed by Larson Associates, LLC were performed in an unbiased
manner and represent proper market valuations.
The Company sub-leases office space to Larson Associates, LLC on a
monthly basis. The amount received from Larson Associates, LLC for each of the
years ended March 31, 2002 and 2001 was $5,000.
During the fiscal years ended March 31, 2002 and March 31, 2001, the
Company sold loans to the First Connecticut Capital Mortgage Fund A, Limited
Partnership ("Limited Partnership A") and the First Connecticut Capital Limited
Partnership Mortgage Fund B, Limited Partnership ("Limited Partnership B"). In
addition, the Company services all loans to these partnerships. As of September
30, 2002 the Company was servicing $4,778,000 of loans for Limited Partnership
A, compared to $4,366,000 as of September 30, 2001, and was servicing $1,653,000
of loans for Limited Partnership B, compared to $480,000 as of September 30,
2001.
Certain members of the Company's Management, Board of Directors,
employees and their immediate families are limited partners of Limited
Partnership A and Limited Partnership B. As of March 31, 2002 and 2001, these
individuals accounted for 19% and 24%, respectively, of the ownership in Limited
Partnership A. As of March 31, 2002 these individuals accounted for 7% of the
ownership in Limited Partnership B.
During the fiscal years ended March 31, 2002 and March 31, 2001, the
Company sold loans to certain members of management, and to each of the members
of the Board of Directors, employees and their immediate families and to one of
the individuals proposed as a new Board member and consultant and/or to their
limited liability company or trust (collectively, "Affiliated Purchasers"). The
Company services all of these loans. As of March 31, 2002 and March 31, 2001 the
Company was servicing $2,924,470 and $2,926,682, respectively, of loans that it
had sold to Affiliated Purchasers, as follows:
-18-
- -----------------------------------------------------------------------------------------------------------
LOANS SOLD TO AFFILIATED PURCHASERS
- -----------------------------------------------------------------------------------------------------------
4/1/00 - 3/31/01 4/01/01 - 3/31/02
---------------- -----------------
- -----------------------------------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
NEW INT & BAL NEW INT. & BAL
PRINCIPAL FEES AT 3/31/01 PRINCIPAL FEES AT 3/31/02
- -----------------------------------------------------------------------------------------------------------
PURCHASER AFFILIATION
- -----------------------------------------------------------------------------------------------------------
Busker, Harriet Officer and 0 7,760 70,000 0 7,807 70,000
Director
(sister in law)
- ------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG TERM COMPENSATION-----------------------------------------------------------------------------------------------------------
D'Addario Estate Director 0 0 0 450,000 13,276 450,000
(Fiduciary)
- -----------------------------------------------------------------------------------------------------------
D'Addario Janet Director 66,667 4,333 66,667 0 8,044 66,667
(spouse)
- -----------------------------------------------------------------------------------------------------------
D'Addario Thomas Director 66,667 12,719 141,667 0 15,698 141,667
- -----------------------------------------------------------------------------------------------------------
D. Engelson Director 50,000 29,260 80,000 60,000 3,716 30,000
- -----------------------------------------------------------------------------------------------------------
Dubin Barbara Director 66,667 5,954 124,667 0 14,452 66,667
(sister)
- -----------------------------------------------------------------------------------------------------------
Sylvia Engelson Director 0 9,010 75,000 15,000 8,250 15,000
(spouse)
- -----------------------------------------------------------------------------------------------------------
M Goldman Trst Director 155,000 23,559 280,000 5,000 17,558 0
(Trust)
- -----------------------------------------------------------------------------------------------------------
Ellen Goldman Director 0 7,457 80,000 90,000 9,921 90,000
(spouse)
- -----------------------------------------------------------------------------------------------------------
F & D Kaplan TR Officer (son 0 0 0 1,000 27 1,017
in law)
- -----------------------------------------------------------------------------------------------------------
F & D Kaplan Officer (son 0 1,190 4,681 0 2,437 6,752
in law)
- -----------------------------------------------------------------------------------------------------------
L Yurdin Officer and 100,000 25,968 230,000 175,000 27,669 175,000
Director
- -----------------------------------------------------------------------------------------------------------
Ed Metzendorf Officer and 10,000 4,178 40,000 5,000 4,508 45,000
Director (son
in law)
- -----------------------------------------------------------------------------------------------------------
Ottowell P Officer 0 2,062 5,000 5,000 429 0
- -----------------------------------------------------------------------------------------------------------
Prof Mtg Director 1,230,750 196,750 1,367,000 1,536,825 180,385 1,389,700
- ------------------------------------------------------------------------------------------------------
OTHER AWARDS PAYOUTS
ANNUAL RESTRICTED OPTIONS/ ALL OTHER-----------------------------------------------------------------------------------------------------------
-19-
- -----------------------------------------------------------------------------------------------------------
LOANS SOLD TO AFFILIATED PURCHASERS
- -----------------------------------------------------------------------------------------------------------
4/1/00 - 3/31/01 4/01/01 - 3/31/02
---------------- -----------------
- -----------------------------------------------------------------------------------------------------------
PRINCIPAL PRINCIPAL
NEW INT & BAL NEW INT. & BAL
PRINCIPAL FEES AT 3/31/01 PRINCIPAL FEES AT 3/31/02
- -----------------------------------------------------------------------------------------------------------
PURCHASER AFFILIATION
- -----------------------------------------------------------------------------------------------------------
Helen Shatanof Officer and 0 7,177 65,000 0 7,547 65,000
Director (aunt)
- -----------------------------------------------------------------------------------------------------------
Beth Y. Metzendorf Officer and 0 1,995 17,000 10,000 2,813 27,000
Director
(daughter)
- -----------------------------------------------------------------------------------------------------------
Barbara Yurdin Officer and 0 9,622 40,000 0 4,259 40,000
Director
(spouse)
- -----------------------------------------------------------------------------------------------------------
CohenProfit Director 0 14,628 200,000 0 29,569 200,000
Sharing Nominee
- -----------------------------------------------------------------------------------------------------------
Scott Yurdin Officer and 0 4,559 40,000 5,000 4,876 45,000
Director
(Child)
========================================================================================================
TOTALS 1,745,751 368,181 2,926,682 2,357,825 363,241 2,924,470
========================================================================================================
If for any reason an event of default were to occur with respect to a majority
of the above loans and there occurred any foreclosure or other disposition of
the collateral, then upon liquidation of the collateral, the Affiliated
Purchaser would be entitled to recovery of its investment and accrued interest
before the Company could recover its investment in any of the above loans. The
Company does not guarantee any investment or interest return in the above
transactions. The Company grants a priority position and a lower interest rate
on one or more loans sold to an Affiliated Purchaser, when the loan bears a
higher nature of risk or has a higher loan to value ratio than loans sold to
Limited Partnership A, Limited Partnership B or others. Loans are sold to the
Affiliated Purchaser only if such loans cannot be sold on commercially
reasonable terms to Limited Partnership A or B, assigned to the Company's
secured lender or sold on commercially reasonable terms to an unaffiliated third
party who does not require a loan priority and lower interest rate. It is the
opinion of management that the Company benefits by selling such loans under this
arrangement to such Affiliated Purchasers rather than declining to make the
loans. To date, there have been no events of defaults with respect to any such
loans.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Under United States securities laws, the Company's directors and
officers and persons who own more than ten percent (10%) of the Company's Common
Stock are required to file initial reports of ownership and reports of changes
in ownership with the Securities and Exchange Commission. Based solely on its
review of copies of such reports received or written representations from
certain reporting persons, the Company believes that during the fiscal years
ended March 31, 2002 and March 31, 2001, its directors and officers and holders
of more than ten percent (10%) of the Company's Common Stock complied with all
applicable filing requirements under Section 16(a) of the Securities Exchange
Act of 1934.
-20-
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
On February 1, 2003, there were 1,173,382 shares of Common Stock
outstanding. The following table sets forth as of February 1, 2003 the number of
shares of the Company's Common Stock and the percentage of that class owned
beneficially, as "beneficial owner" is defined in Item 403 of Regulation S-B
promulgated under the Securities Exchange Act of 1934, as amended, and the
percentage of the Company's voting power owned by (i) all the directors of the
Company who are stockholders; (ii) all stockholders known by the Company to own
more than five percent of the Company's Common Stock; and (iii) all directors
and officers as a group.
SECURITIES OWNERSHIP OF CURRENT EXECUTIVE OFFICERS AND DIRECTORS
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND COMPEN-ADDRESS OWNERSHIP* OF CLASS
- ---------------- --------- ---------
David Engelson .............................................. 43,605 3.72%
3200 Park Avenue
Bridgeport, CT
Lawrence R. Yurdin .......................................... 50,207 4.28%
431B North Trail
Stratford, CT
Michael L. Goldman .......................................... 32,921 2.81%
11 Skytop Drive
Trumbull, CT
Thomas D'Addario ............................................ 31,700 2.70%
329 Bridgeport Avenue
Shelton, CT
Priscilla E. Ottowell ....................................... 9,389 .80%
90 Goodhill Road
Oxford, CT
Jan E. Cohen ................................................ 18,113 1.54%
38 Meadowcrest Drive
Fairfield, CT
All directors and executive officers as a group (six persons) 185,935 15.85%
-21-
STOCK SARS LTIP COMPEN-
PRINCIPAL YEAR SALARY BONUS SATION AWARDS (#) PAYOUTS SATION
POSITION ENDED (S) ($) ($) ($) ($) ($)OWNERSHIP OF SIGNIFICANT STOCKHOLDERS
Carucci Family Partners ..................................... 121,3001 10.34%
C/O Carr Securities Corp
14 Vanderventer Avenue
Port Washington, NY
Robert E. Humphreys ......................................... 114, 9002 9.79%
64 Alcott Street
Acton, MA
STOCK OWNERSHIP OF PROPOSED DIRECTORS
Bernard Zimmerman ........................................... 15,6003 1.33%
18 High Meadow Road
Weston, CT
Martin Cohen ................................................ 51,0004 4.35%
27 East 65th Street Apt. 11A
New York, NY
Jay J. Miller ............................................... 0 0%
430 East 57th Street
New York, NY
- ----- * Beneficial ownership, as defined in Item 403 of Regulation S-B, includes
all options that are exercisable within 60 days.
1 Total includes 5,000 shares beneficially owned by Walter Carucci, but does
not give effect to the proposed sale of an aggregate of 53,000 shares, as
follows: 8,800 shares to be sold to the Cohen Profit Sharing Plan and
44,200 shares to be sold to Bernard Zimmerman & Company, Inc., both such
sales being subject to the consummation of the transactions contemplated by
and described in the Asset Purchase and Stock Purchase Agreements, as set
forth in Proposals 1 and 2 below.
2 Total includes shares beneficially owned by members of his immediate family
and affiliated trusts.
3 All such shares are held by Bernard Zimmerman & Company, Inc., an affiliate
of Mr. Zimmerman. Does not include (a) an aggregate of 47,700 shares to be
acquired by Bernard Zimmerman & Company, Inc. from Carucci Family Partners
and an unaffiliated person or (b) 125,000 shares and Warrants to purchase
100,000 shares pursuant to the Stock Purchase Agreement, all of which are
subject to consummation of the transactions contemplated by and described
in the Asset Purchase and Stock Purchase Agreements, as set forth in
Proposals 1 and 2 below. For purposes of Regulation 13D, Messrs. Cohen and
Zimmerman may be deemed to be acting as a "group" as defined therein; they
have, however, disclaimed acting as a group pursuant to a Schedule 13D
filed September 6, 2002.
4 All such shares are held by Cohen Profit Sharing Plan, an affiliate of Mr.
Cohen. Does not include (a) an aggregate of 12,300 shares to be acquired by
Cohen Profit Sharing Plan from Carucci Family Partners and an unaffiliated
person or (b) 125,000 shares and Warrants to purchase 100,000 shares
pursuant to the Stock Purchase Agreement, all of which are subject to
consummation of the transactions contemplated by and described in the Asset
Purchase and Stock Purchase Agreements, as set forth in Proposals 1 and 2
below. For purposes of Regulation 13D, Messrs. Cohen and Zimmerman may be
deemed to be acting as a "group" as defined therein; they have, however,
disclaimed acting as a group pursuant to a Schedule 13D filed September 6,
2002.
-22-
SECURITIES OWNERSHIP OF DIRECTOR NOMINEES ASSUMING CLOSING OF THE TRANSACTIONS
CURRENT CURRENT PURCHASE NUMBER OF OWNERSHIP ADDITIONAL NEW OWNERSHIP
OWNERSHIP OWNERSHIP AND SHARES PERCENTAGE PURCHASE OF OWNERSHIP PERCENTAGE
PERCENTAGE ISSUANCE UNAFFILIATED
OF 250,000 PARTIES' SHARES
SHARES
- - - - - - - - - - - - - -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
David Engelson 03/31/99 $13,000 0 0 None 0 None 0
Chairman of the 03/31/98 $12,000 0 0 None 0 None 0
Board 03/31/97 $38,493 0 0 None 0 None 0
Lawrence R. Yurdin 03/31/99 $67,500 0 0 None 0 None 0
President & CEO 03/31/98 $67,500 0 0 None 0 None 0
03/31/97 $55,000 0 0 None 0 None 021,707 1.85% -- 21,707 1.53% -- 21,707 1.53%
Goldman 16,921 1.44% -- 16,921 1.19% -- 16,921 1.19%
Zimmerman 15,600 1.33% 125,000 140,600 9.88% 47,700 188,300 13.23%
Cohen 51,000 4.35% 125,000 176,000 12.36% 12,300 188,300 13.23%
Miller -- 0.00% -- 0.00% -- 0.00%
- -----------------------------------------------------------------------------------------------------------------------
105,228 8.97% 250,000 355,228 24.96% 60,000 415,228 29.17%
TOTAL 1,173,382 250,000 1,423,382 60,000 1,423,382
=======================================================================================================================
WARRANTS OWNERSHIP TOTAL OWNERSHIP
(IF EXERCISED) (ASSUMING PERCENTAGE
EXERCISE OF
WARRANTS)
Yurdin 21,707 1.34%
Goldman 16,921 1.04%
Zimmerman 100,000 288,300 17.76%
Cohen 100,000 288,300 17.76%
Miller -- 0.00%
- - - - - - - - - - - - - ------------------------------------------------------------------------------------------------------------------------------------------------------------
200,000 615,228 37.90%
TOTAL 200,000 1,623,382
======================================================
TRANSACTIONS WITH MANAGEMENT
One (1) director-23-
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's Common Stock is traded in the over the counter market,
and the low bid and high ask prices of the Company's stock are quoted on the OTC
Bulletin Board under the symbol FCCC.
Following are the low bid and high ask prices for the Company's
Common Stock on January 14, 2003, and for each month during the current fiscal
year; and for each quarter during the fiscal years ended March 31, 2002 and
2001, as quoted on the OTC Bulletin Board.
- ------------------------------------ ----------------------- -------------------
DATE OR FISCAL PERIOD LOW BID HIGH ASK
- ------------------------------------ ----------------------- -------------------
FISCAL YEAR ENDING MARCH 31, 2003
- --------------------------------------------------------------------------------
January 14, 2003 $0.75 $0.90
- ------------------------------------ ----------------------- -------------------
December, 2002 0.75 1.01
- ------------------------------------ ----------------------- -------------------
November, 2002 0.75 1.01
- ------------------------------------ ----------------------- -------------------
October, 2002 0.82 1.00
- ------------------------------------ ----------------------- -------------------
September, 2002 0.82 1.01
- ------------------------------------ ----------------------- -------------------
August, 2002 0.72 0.90
- ------------------------------------ ----------------------- -------------------
July, 2002 0.82 1.01
- ------------------------------------ ----------------------- -------------------
June, 2002 0.65 0.90
- ------------------------------------ ----------------------- -------------------
May, 2002 0.65 0.90
- ------------------------------------ ----------------------- -------------------
April, 2002 0.65 0.90
- ------------------------------------ ----------------------- -------------------
FISCAL YEAR ENDING MARCH 31, 2002
- --------------------------------------------------------------------------------
Fourth Quarter $0.64 $0.66
- ------------------------------------ ----------------------- -------------------
Third Quarter 0.65 0.75
- ------------------------------------ ----------------------- -------------------
Second Quarter 0.65 1.10
- ------------------------------------ ----------------------- -------------------
First Quarter 0.65 0.86
- ------------------------------------ ----------------------- -------------------
FISCAL YEAR ENDING MARCH 31, 2001
- --------------------------------------------------------------------------------
Fourth Quarter $0.40 $0.55
- ------------------------------------ ----------------------- -------------------
Third Quarter 0.40 0.59
- ------------------------------------ ----------------------- -------------------
Second Quarter 0.57 0.67
- ------------------------------------ ----------------------- -------------------
First Quarter 0.60 0.64
- ------------------------------------ ----------------------- -------------------
The approximate number of stockholders of the Company on December 31,
2002 was 1,130 and the Company estimates that it has a total of approximately
1,350 beneficial stockholders. The Company has not paid any dividends on its
Common Stock since April 27, 1990. The Company currently intends to retain
earnings for use in its business and does not anticipate paying cash dividends
in the foreseeable future, except as set forth in this Proxy Statement in the
event that the transactions contemplated by and described in Proposals 1 and 2
are approved and closed.
-24-
COMPARATIVE PERFORMANCE BY THE COMPANY
The SEC requires the Company to present a graph comparing the
cumulative total shareholder return on its Common Stock with the cumulative
total shareholder return of: (i) a broad equity market index; and (ii) a
published industry index or peer group. The following graph compares the Common
Stock with: (i) the Russell 2000 Index; and (ii) a Peer Group (as defined below)
and assumes an investment of $100 on March 31, 1997 in each of the Common Stock,
the stocks comprising the Russell 2000 Index and the stocks comprising the Peer
Group, assuming the reinvestment of dividends.
[GRAPHIC OMITTED][GRAPHIC OMITTED]
COMPARISON OF 69 MONTH CUMULATIVE TOTAL RETURN*
AMONG FIRST CONNECTICUT CAPITAL CORP., THE RUSSELL 2000 INDEX
AND A PEER GROUP
NEED PLOT POINTS
Total return calculations for the Russell 2000 Index and the Peer
Group were prepared by Research Data Group, Inc. The Peer Group is composed of
stocks within the NASDAQ Small Cap Financial Stock Index. Specific information
regarding the companies comprising the Peer Group will be provided to any
stockholder upon request to Priscilla E. Ottowell, the Secretary of the Company.
The preceding graph shall not: (i) be deemed incorporated by
reference by any general statement incorporating this Proxy Statement by
reference into any filing under the Securities Act or the Exchange Act, except
to the extent that the Company specifically incorporates this information by
reference; or (ii) otherwise be deemed filed under either the Securities Act or
the Exchange Act or subject to Regulations 14A or 14C promulgated under the
Exchange Act or the liabilities of Section 18 of the Exchange Act.
-25-
INTRODUCTION TO PROPOSALS NOS. 1 AND 2
HISTORICAL BACKGROUND OF THE ASSET PURCHASE AND STOCK PURCHASE AGREEMENTS
The Company has been publicly held for nearly four decades. At this
time, the Company's only operations consist of a small construction mortgage
lending business. Total revenues of the business for the fiscal year ended March
31, 2002, were $1,220,000 and for the second fiscal quarter ended September 30,
2002, revenues were $881,000 as compared to total revenues for the fiscal year
ended March 31, 2001 of $995,000 and for the second fiscal quarter ended
September 30, 2001 of $583,000.
The Company's business in size and focus has changed over the years
to a point where management no longer believes the mortgage business should be
operated as a public company. The business of the Company is to a great degree
centralized around and conducted by one person, its President, and has a total
of five employees, including the President.
There has been little appreciation in the price or liquidity of the
Company's stock in several years. As a result, stockholders have been unable to
realize any significant value from their investment in the shares of the
Company.
Accordingly, approximately two years ago, the Company began to
explore ways to maximize stockholder value. The Company retained a financial
advisor to help it to identify and investigate various types of transactions,
including mergers, acquisitions and liquidation. However, management was not
successful in pursuing an appropriate business combination. Furthermore,
management recognized that outright liquidation would (i) require stockholders
to forfeit any value inherent in its publicly held status and (ii) could result
in the Company selling its assets at a discount.
In early 2001, Messrs. Bernard Zimmerman of Weston, Connecticut and
Martin Cohen of New York City, two experienced and successful entrepreneurs,
approached the Company and offered to make a substantial investment in and act
as consultants to the Company. The Company entered into an initial non-binding
letter of intent with Messrs. Zimmerman and Cohen which contemplated the
execution of definitive agreement substantially similar to the Stock Purchase
Agreement.
Nonetheless, the Company continued to investigate other opportunities
to maximize stockholder value. In April 2001 the Company submitted a proposal to
a financial publishing and information company, pursuant to which the Company
would have consummated a transaction substantially identical to the transaction
described in the Asset Purchase Agreement and then consummated a merger, whereby
the sole operating business of the Company would have been that of the financial
publishing and information company. That proposed transaction did not proceed
beyond the proposal because the other company elected not to pursue it.
In November 2001, Messrs. Cohen and Zimmerman affirmed their
continued interest in pursuing a transaction with the Company. Specifically,
they proposed that the Company sell its current business and operating assets,
leaving a minimum of $1,500,000 in cash on hand after the payment of all fees
and expenses associated with the transaction and all other liabilities to be
paid as contemplated by and described in Proposals 1 and 2 below. Their
objective was to identify and assist the Company in buying, merging or otherwise
combining with an operating business that would be more appropriate to operate
as a publicly held entity.
Meanwhile, the members of the Company's Board of Directors and
Management confirmed their interest in purchasing the mortgage business and
operating assets for an amount equal to the assets' approximate net book value,
without requiring the Company to make any substantive representations or
warranties.
-26-
Management determined these two potential transactions represented
the best available opportunity for stockholders to maximize the value of their
stock. Management believes that the experience and knowledge that both Mr.
Zimmerman and Mr. Cohen have in advising private and public companies in
numerous merger and acquisition negotiations and transactions would allow
stockholders to realize value not just in the Company's assets but also from the
its status as a public entity. It is intended that after the closing of the
Asset Purchase transaction, the Company, with the aid of Messrs. Zimmerman and
Cohen, would be able to close a suitable business combination that would bring
stockholders better value for their shares. In order to empower Mr. Zimmerman
and Mr. Cohen to assist the Company in seeking a suitable business combination,
Management agreed to permit them to purchase stock, warrants and other
contractual rights in the Company and its management, as set forth in the Stock
Purchase Agreement and described in this proxy statement.
In December 2001 the Company executed a letter of intent with the
Management group to purchase the Company's assets and continued to negotiate the
terms of the investment by Messrs. Zimmerman and Cohen. In June 2002 the parties
entered into definitive purchase agreements with respect to those proposed
transactions. Under such terms, Messrs. Zimmerman and Cohen would purchase
250,000 shares of Common Stock at $1.00 a share. This represented a 54% premium
over the bid price of the Company's stock the day prior to the Company's
announcement of the Asset Purchase and Stock Purchase Agreements, and a 33%
premium over the $.75 bid price as of January 14, 2003. Messrs. Zimmerman and
Cohen would also buy, for a nominal amount, Warrants to purchase an officeradditional
200,000 shares of Common Stock, exercisable at $1.00 a share. Upon closing of
the proposed Stock Purchase Agreement, together with shares purchased from other
unaffiliated stockholders, Messrs. Zimmerman and Cohen would each own 13.23% of
the Company's total outstanding shares and assuming exercise of all of their
outstanding Warrants into Common Shares, would each own 17.76% of the Company's
total outstanding shares. The State Street
Mortgageproposed Stock Purchase Agreement by Messrs.
Zimmerman and Cohen is described in Proposal 2, below.
The Company then engaged the Clayton Group, a nationally known loan
portfolio appraisal company, to provide an independent valuation of the
Company's principal assets, its portfolio of real estate mortgage loans. Members
of the current Board of Directors have offered to pay the approximate net book
value of the loan portfolio as determined by the Clayton Group as well as the
approximate net book value of the other assets of the Company (excluding the
cash and deferred tax assets). The Company has also obtained a fairness opinion
from Westwood Partners, Ltd., an NASD Broker-Dealer, as to the Asset Purchase
Transaction.
-27-
PROPOSAL 1
ASSET PURCHASE AGREEMENT
PLEASE REFER TO THE SECTIONS ENTITLED "SUMMARY," "RISK FACTORS" AND
THE PRO FORMA BALANCE SHEET SET FORTH ON PAGES 1, 9 AND 6, RESPECTIVELY.
SET FORTH BELOW IS SELECTED INFORMATION ABOUT THE PROPOSED SALE OF
THE COMPANY'S BUSINESS AND OPERATING ASSETS, WHICH MAY NOT CONTAIN ALL OF THE
INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND THE TRANSACTION FULLY, WE
STRONGLY ENCOURAGE YOU TO READ CAREFULLY THIS ENTIRE PROXY STATEMENT AS WELL AS
THE ASSET PURCHASE AGREEMENT. WE HAVE INCLUDED A COPY OF THE ASSET PURCHASE
AGREEMENT IN THIS PROXY STATEMENT IN ANNEX A.
SUMMARY OF THE ASSET PURCHASE AGREEMENT
On June 28, 2002 the Company, with the approval of the Board of
Directors, and subject to stockholder approval, entered into an Asset Purchase
Agreement between the Company and FCCC Holding Company, LLC ("Holding"). The
Asset Purchase Agreement provides for the sale of substantially all of the
Company's assets to, and the assumption of substantially all of the Company's
liabilities by, Holding. The closing of the transactions contemplated by the
Asset Purchase Agreement is subject to the approval of the stockholders of the
Company.
THE AGREEMENT: The Asset Purchase Agreement provides for the sale by the Company
to Holding of all of the operating assets and the business of the Company,
including but not limited to its tangible personal property, loans receivable,
accounts receivable, contracts, intangibles, investments, loan servicing rights
and certain prepaid accounts. The Company is not selling its cash or certain
deferred tax assets, including carried forward net operating losses (if any).
The Asset Purchase Agreement does not require the Company to make any material
representations or warranties about the assets or the Company's business.
THE BUYER: Holding is a recently organized Connecticut limited liability
company, created solely for the purpose of acquiring the operating assets and
the business of the Company, with the exception of its cash and certain deferred
tax assets. Holding was formed by the current directors and management of the
Company and will be operated and owned by the Company's current directors and
management upon the closing of the Asset Purchase Agreement. There have been no
negotiations, transactions or material contracts during the past two years
between Holding and the Company except in connection with the proposed Asset
Purchase transaction.
PURCHASED ASSETS: Holding is purchasing substantially all of the assets and the
business of the Company with the exception of cash and certain deferred tax
assets, including carried forward net operating losses (if any). A schedule of
the purchased assets is contained in Schedule 1(a) of the Asset Purchase
Agreement, Annex A, hereto.
PURCHASE PRICE: The purchase price of the purchased assets will be determined by
the independent appraiser (see "Independent Appraiser" below) on the day of the
closing. The purchase price will be approximately equal to the book value of the
assets on the closing date, less cash and deferred tax assets. Based upon the
report of the independent appraiser, in the event that the transactions had
closed as of September 30, 2002, then, on a pro forma basis, the aggregate
purchase price to be received by the Company on the closing of the Asset
Purchase Agreement would have been $1,392,000 (see Pro Forma Balance Sheet on
page 6). While the Company has no reason to believe that the actual purchase
price would be more or less than the amount set forth above, there can be no
assurance as to the amount that the Company will ultimately receive, which made firstshall
approximate the book value of the assets on the closing date, as adjusted to
account for the results of the Company's operations for the period between
September 30, 2002 and second mortgage loansthe actual date of closing, currently anticipated to
commercialoccur on or about February 28, 2003, subject to extension.
-28-
The independent appraiser assigned no value to the Company's
servicing rights due to their short term nature and residential borrowers.limited marketability.
Nonetheless, Holding is paying the approximate book value ($35,000) for those
rights in order to insure that the Company receives an adequate consideration
for its business assets.
The State Street Mortgageindependent appraiser also assigned no going concern value to the
Company's business for the following reasons:
o The Company is not making any representations or warranties with
respect to the assets purchased.
o The Company is not creating any escrows or reserves with respect
to any of its representations and warranties.
o The Company is in a fragile business in a declining market
environment.
o The business experience and business relationships of Mr.
Lawrence Yurdin, a Director and the processCompany's current President,
comprises materially all of the Company's going concern value.
o The business is overwhelmingly dependent upon Mr. Yurdin's
continued full time involvement, who shall cease to work for the
Company after consummation of the proposed transactions.
POTENTIAL NEGATIVE IMPLICATIONS TO STOCKHOLDERS FROM THE ASSET PURCHASE
AGREEMENT: While the Board of Directors and management believe the proposed
transactions represent the best available opportunity for stockholders to
achieve an increase in the value of their stock, they also stress that the
proposed Asset Purchase Agreement may present potentially negative implications
to stockholders for the following reasons:
o After the closing of the transaction, the Company will have no
operating business and there can be no assurance that it will
successfully effect a business combination with an appropriate
operating business. In such event, the Company may be categorized
as an investment company, which could cause the Company to incur
material compliance expenses.
o The Company will no longer benefit from the current and potential
future profitability and growth of its mortgage lending business.
o Current management will no longer control the Board of Directors
or day to day management of the Company.
o The Company may not achieve sufficient income to offset its
operating expenses, thereby creating operating losses that may
require it to use and thereby reduce its cash on hand.
REASONS FOR THE SALE: The Board of Directors and management of the Company have
determined that the costs associated with maintaining the Company as a public
entity are inappropriate for the Company's current operating business and that
the Company is currently not positioned to exploit the capital markets generally
available to public corporations nor any other advantage or opportunity of being
a publicly held company. This has been reflected in the narrow trading range of
the price of the Company's stock, the fact that the stock has typically traded
at prices below its book value, the failure of that price to appreciate and the
relative illiquidity of the stock.
-29-
Accordingly, the Board of Directors has determined that the best way to increase
stockholder value is to sell the operating assets for cash in an amount equal to
the approximate net book value and permit a new, experienced management team to
attempt to find an operating business that would be more suitable for the
resulting publicly held entity. In the event that the new management team is
unable to effect a "material transaction" (defined in the Asset Purchase
Agreement as a transaction or transactions having a value of not less that
$750,000) with such an operating company within 36 months (subject to a three
month extension in certain circumstances) of the closing of the asset sale, then
upon the request of the holders of 20% or more outstanding stock of the Company
held by non-affiliates of management, the Company shall schedule a meeting of
stockholders, pursuant to a proxy solicitation, at which the stockholders will
vote on whether to liquidate the Company. All shares held by management shall be
voted at any such meeting in the same proportion as the non-management shares.
ALTERNATIVES TO PROPOSED SALE: The Board of Directors carefully considered
several alternatives to the proposed transaction.
One alternative would be the immediate liquidation of the operating
assets and doesdistribution of the proceeds to the stockholders. While such
liquidation would relieve the Company of the burdens of its public reporting
obligations, a liquidation was deemed less favorable than the proposed asset
sale since it would result in only a pro rata distribution of the Company's cash
on hand and the cash attributable to the liquidation value of the Company's
loans and tangible assets, which could be significantly below their approximate
book value. Any value in the Company's public status would be lost. The Board
felt that the proposed transaction could preserve any stockholder interest in
the Company's value as a public corporation, while ultimately providing for the
opportunity to obtain a liquidating distribution in the event that the Company
was unable to consummate a business combination that utilizes its publicly held
status.
Another alternative would be a merger or other business combination
with another operating company. The Company unsuccessfully attempted to identify
possible transactions of this nature for more than two years. In April of 2001,
the Company submitted a proposal to a financial publishing and information
company, pursuant to which the Company would have consummated a transaction
substantially identical to the transaction described in the Asset Purchase
Agreement and then consummated a merger, whereby the sole operating business of
the Company would have been that of the financial publishing and information
company. That proposed transaction did not competeproceed beyond the proposal because
the other company elected not to pursue it.
Furthermore, the proposed buyers of the assets and the business of
the Company (who are current members of the Company's Board of Directors) have
an immediate interest and financial capability to purchase the assets, which
could be lost if the Company fails to conclude such a sale. No other party or
parties have made a definitive offer to purchase the assets and the business
from the Company at any price or on any terms and, in any event, the Company has
not received any offers or proposals for such a purpose at terms as favorable as
those being offered by the proposed buyer. Management has no reason to believe
that such an offer may be forthcoming at any time in the future.
EFFECT OF THE SALE: As a result of the proposed transaction, the Company would
have no liabilities and its sole assets would be cash, including the net
proceeds of the sale, and certain deferred tax assets, the value of which, if
any, has not been determined. Accordingly, if the Asset Purchase transaction is
consummated, then the Company would have no operating business (See the
Company's Pro Forma Balance Sheet, on page 6).
SUBSEQUENT PLANS: Following the closing of the transactions contemplated by and
described in the Asset Purchase Agreement, a new, experienced management team
will seek an appropriate merger or business combination for the Company in order
to increase stockholder value and better realize the value inherent in the
Company's status as a publicly held company. In the event that the Company were
unable to consummate a suitable merger or business combination transaction or
transactions having an aggregate value of not less than $750,000 within 36
months of the closing of the asset sale (subject to a three month extension),
-30-
then upon the request of the holders of 20% or more outstanding stock of the
Company held by non-affiliates of management, the Company shall schedule a
meeting of stockholders at which the stockholders will vote, pursuant to a proxy
solicitation, whether to liquidate the Company. All shares held by management
shall be voted at such meeting in the same proportion as the non-management
shares. In the event that the Asset Purchase Agreement is consummated, then the
Company's current management will have no role in the management of the Company
other than the fact that two of the current directors will hold two of the five
seats on the Board of Directors.
ASSUMPTION OF LIABILITIES: As of the closing of the Asset Purchase Agreement,
Holding will assume and indemnify and hold the Company harmless from and against
all of its liabilities.
INDEPENDENT APPRAISER: The Clayton Group, a nationally recognized appraisal firm
that specializes in valuing loan assets for financial institutions, has
appraised the loan portfolio and loan servicing rights of the Company for the
purposes of the proposed transaction. Neither the Company, the Board of
Directors nor any member of Holding has had any prior dealings or relationships
with the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL 2
APPROVALClayton Group. In accordance with industry practice, the Clayton Group
determined the approximate value of the Company's loan portfolio and loan
servicing rights as of December 30, 2002 to be $18,469 and a book value on that
same date of $4,234,000 (see the report of the independent appraiser attached in
Annex E). The other tangible assets of the Company to be sold are office
equipment and supplies which were not appraised and are of negligible value.
EFFECTIVE TIME OF THE COMPANY'S 1999 STOCK OPTION PLANSALE: In accordance with the terms of the Asset Purchase
Agreement, the closing of the transactions contemplated by the Asset Purchase
Agreement shall occur on or about the tenth (10th) business day following
approval by the Company's stockholders.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY: The Board is recommendingAsset Purchase Agreement
contains various minimal representations and warranties made by the Company.
Such representations and warranties include, without limitation, authorization,
organization, binding obligation and corporate power.
REPRESENTATIONS AND WARRANTIES OF HOLDING: The Asset Purchase Agreement contains
customary representations and warranties made by Holding. Such representations
and warranties include, without limitation, authorization, organization, binding
obligation and corporate power.
CONDITIONS TO CLOSING: The completion of the transactions contemplated by the
Asset Purchase Agreement depends upon the satisfaction of a number of
conditions, including, among others:
o Approval of the Asset Purchase Agreement by stockholders of the
Company holding not less than the two-thirds of the issued and
outstanding shares of Common Stock.
o Accuracy in all material respects of the representations and
warranties contained in the Asset Purchase Agreement.
o Compliance in all material respects with all agreements and
obligations of each of the Company and Holding that are required to
be complied with before consummation of the sale.
o Receipt of any and all consents and waivers of third parties that are
required to be obtained before the consummation of the sale.
o Assumption by Holding of all liabilities of the Company.
o Absence of any law or injunction preventing the sale.
o Approval by the stockholders that they approve the 1999
Stock Option Plan, a copy of which is attached hereto as Exhibit A. Because
adoption of the 1999 Stock Option Plan may benefitCompany of the election of the
five nominees for directors of the Company (see Proposal 3, below),
the 2002 Equity Incentive Plan (see Proposal 4, below), the Stock
Purchase Agreement (see Proposal 2, below) and the change of the
Company's corporate name (see Proposal 5, below).
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COVENANTS OF THE COMPANY: The Asset Purchase Agreement contains customary
covenants made by the Company. Such covenants include, without limitation,
agreements to cooperate with Holding to assume the Company's real property
obligations, to perfect Holding's interests in the Company's intellectual
property, and to declare and pay a dividend within ninety (90) days subsequent
to the Closing, if certain conditions were met, as set forth in Section 4.2 of
the Asset Purchase Agreement.
COVENANTS OF HOLDING: The Asset Purchase Agreement contains various customary
covenants made by Holding. Such covenants include, without limitation,
agreements to take all steps necessary to assume the Company's liabilities and
to maintain a tangible net worth of not less that one million dollars
($1,000,000) for a period of three (3) years subsequent to the closing.
APPRAISAL RIGHTS: The Company is organized under the corporate laws of the State
of Connecticut. Connecticut corporate law provides certain rights to dissenting
stockholders in connection with certain corporate actions. These rights and the
procedures to assert these rights are detailed in Sections 33-855 to 33-872 of
the Connecticut General Statutes. A copy of the relevant sections is set forth
in Annex F.
FEDERAL TAX CONSEQUENCES: The Asset Purchase transaction will not have material
income tax consequences to the Company or to the stockholders.
TERMINATION OF THE AGREEMENT: The Asset Purchase Agreement provides that the
Company or Holding may mutually agree to terminate the Asset Purchase Agreement
at any time before the time of the closing of the Asset Purchase Agreement. The
Company may terminate the Asset Purchase Agreement if the Board of Directors
determines that it is legally required to terminate the Asset Purchase Agreement
in order to comply with its fiduciary duties and obligations to the
stockholders. In addition, Holding or the Company may terminate the Asset
Purchase Agreement, if specified events occur. These include:
o If the conditions set forth in the Asset Purchase Agreement have not
been satisfied or waived by the party to whom they may beapply.
o If either party has failed to comply with any of its obligations or
covenants and such failure has not been waived by the other party.
o If the Asset Purchase Agreement were deemed to havebe unenforceable in any
bankruptcy or similar proceeding in which the Company is the debtor.
o If two-thirds of the Company's stockholders do not vote in favor of
the sale.
o If the closing has not occurred on or prior to February 28, 2003 and
Holding has not waived any conditions precedent, the obligation of
Holding to close the transactions contemplated by the Asset Purchase
Agreement shall be null and void unless waived in writing by Holding.
REGULATORY REQUIREMENTS: No federal or state regulatory requirements must be
complied with or approval must be obtained (other than stockholder approval) in
connection with the sale.
OPINION OF FINANCIAL ADVISOR: In connection with the sale of the assets and the
business, the Company's Board of Directors received an interestopinion from Westwood
Partners, Ltd. ("Westwood"), a NASD registered Broker Dealer, which is acting as
its financial advisor in connection with the proposed sale of the assets and the
business.
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The principals of Westwood, Duane L. Berlin and Donald M. Kleban, are,
respectively, the Managing Attorney and Counsel to Lev & Berlin, P.C., the law
firm that is acting as special securities counsel for the Company in connection
with the proposed sale of assets and the business. Mr. Kleban is a former
corporate and securities attorney, who has been involved in the securities and
corporate finance industries for approximately 15 years, including senior
positions in leading Wall Street securities firms. Mr. Kleban is also a
principal of the Artemis Group, a leading legal recruitment firm in New York
City. Mr. Berlin is the Principal of Lev & Berlin and is a practicing corporate
and securities attorney. Both are NASD Series 7 Registered Representatives and
Mr. Kleban is a Series 24 General Securities Principal.
The opinion states, subject to specific qualifications, limitations and
exclusions, that the form of the transaction is fair and reasonable. The opinion
is limited to the form of the transaction since the amount of the purchase price
has been determined in accordance with the valuation of the Company's assets by
a qualified independent appraiser (see "Independent Appraiser" above). In
rendering its opinion, Westwood reviewed the corporate and financial records of
the Company, interviewed management and the Board of Directors and reviewed the
historical price and volume data of the Common Stock of the Company. Westwood
then reviewed the transactional options available to management to increase
stockholder value. Westwood concluded that (i) the current mortgage lending
business is not appropriate for operation within a publicly held company and
that (ii) a disposition of the business assets for cash in an amount equal to
their net book value would constitute a transaction that is financially fair to
the stockholders. The opinion of Westwood is directed to the Board of Directors
of the Company. A copy of the Fairness Opinion is set forth as Annex D.
FINANCIAL DATA: The Company's financial statements for the quarter ended
September 30, 2002 and for the years ended March 31, 2002 and 2001 are in the
Company's Quarterly Report on Form 10-QSB, as amended, and its Annual Report on
Form 10-KSB, as amended, copies of which are furnished herewith together with
this proxy statement.
VOTE REQUIRED: The affirmative vote of the holders of two-thirds of the
Company's issued and outstanding Common Stock as of the Record Date is required
to approve the transaction contemplated by and described in the Asset Purchase
Agreement.
RECOMMENDATION OF THE BOARD OF DIRECTORS: The Board of Directors unanimously
recommends that the stockholders vote "FOR" the approval of the Asset Purchase
Agreement (Item No. 1 on the proxy card). All material factors the Board of
Directors considered in deciding whether to approve and recommend the Asset
Purchase Agreement are disclosed in this proposal.
THE 1999 STOCK OPTION PLAN
The purposeProxy Statement. Messrs. Yurdin and
Goldman, who abstained from the vote of the 1999Board of Directors on this matter,
both have interests in the Buyer.
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PROPOSAL 2
STOCK PURCHASE AGREEMENT
PLEASE REFER TO THE SECTIONS ENTITLED "SUMMARY," "RISK FACTORS" AND
THE PRO FORMA BALANCE SHEET SET FORTH ON PAGES 1, 9 AND 6, RESPECTIVELY.
SET FORTH BELOW IS SELECTED INFORMATION ABOUT THE PROPOSED STOCK
PURCHASE AGREEMENT. THIS SECTION MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. TO UNDERSTAND THE TRANSACTION FULLY, WE STRONGLY ENCOURAGE YOU
TO READ CAREFULLY THIS ENTIRE PROXY STATEMENT AS WELL AS THE STOCK PURCHASE
AGREEMENT. WE HAVE INCLUDED A COPY OF THE STOCK PURCHASE AGREEMENT IN THIS PROXY
STATEMENT IN ANNEX B.
SUMMARY OF THE STOCK PURCHASE AGREEMENT
On June 28, 2002 the Company, with the approval of the Board of
Directors, and subject to stockholder approval, entered into a Stock OptionPurchase
Agreement with Bernard Zimmerman & Co. Inc. and the Cohen Profit Sharing Plan
(collectively, the "Purchasers"). The Stock Purchase Agreement provides for the
sale of an aggregate of 250,000 shares of the Company's Common Stock at a price
of $1.00 per share, and 5-year Warrants, at a purchase price of $.01 per
Warrant, to purchase an additional 200,000 shares, exercisable at a price of
$1.00 per share. Upon closing of the proposed Stock Purchase Agreement, Messrs.
Zimmerman and Cohen would each own 13.23% of the Company's total outstanding
shares and assuming exercise of all of their outstanding Warrants into Common
Shares, would each own 17.76% of the Company's total outstanding shares. The
closing of the transactions contemplated by the Stock Purchase Agreement is
subject to provide incentives that
will attract and retain highly competent persons to serve as employees and
directors by providing them with opportunities to acquire a propriety interest
inthe approval of the stockholders of the Company. The following is a brief descriptionproxy holders
will vote the proxies received by them for the authorization of the principal provisionsStock
Purchase Agreement.
THE AGREEMENT: The Stock Purchase Agreement provides for the sale of the
1999 Stock Option Plan and is qualified in its entirety by the 1999 Stock Option
Plan included herewith as Exhibit A.
Under the 1999 Stock Option Plan, thean
aggregate number of 250,000 shares of Common Stock at a per share price of $1.00, and
5-year Warrants at a purchase price of $.01 each, to purchase 200,000 shares of
Common Stock exercisable at a price of $1.00 per share. While the pro forma
balance sheet on page 6 of this Proxy Statement indicates that the post closing
net asset value of the Company's Common Stock per share may be higher than the
purchase price per share as set forth in the Stock Purchase Agreement, the
parties determined that the purchase price represents fair consideration for the
Common Stock based upon arms-length negotiations between the parties, taking
into account (i) the historical market price of the stock, which has
consistently been at a substantial discount to the Company's net book value,
(ii) the fact that the Purchasers are paying all cash for the securities, (iii)
the fact that the securities are restricted and (iv) the fact that the purchase
price represents a substantial premium to the current and historical market
price of the stock.
THE PURCHASERS: Bernard Zimmerman & Co. Inc. and the Cohen Profit Sharing Plan
are entities affiliated with Messrs. Bernard Zimmerman and Martin Cohen,
respectively, each of whom currently is a nominee to serve as a Director of the
Company. Pursuant to the Stock Purchase Agreement, subsequent to the sale,
Messrs. Zimmerman and Cohen, if elected, would serve as Directors, officers and
consultants to the Company and may become "control persons" of the Company as
that term is defined in the Securities Exchange Act of 1934. Under the terms of
their three-year consultant agreements Messrs. Zimmerman and Cohen initially
would each receive $24,000 in annual fees.
EFFECT ON BOARD OF DIRECTORS: The terms of the Stock Purchase Agreement allow
Bernard Zimmerman & Co. Inc. and the Cohen Profit Sharing Plan to designate
three of the Company's five directors.
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EXEMPTION FROM SECURITIES ACT OF 1933: The offering of securities contemplated
by the Stock Purchase Agreement is exempt from the registration requirements of
Section 5 of the Securities Act of 1933 (the "Securities Act") pursuant to
Section 4(2) of the Securities Act as a transaction not involving any public
offering of securities.
USE OF PROCEEDS: The proceeds of the proposed sale of the securities would be
used for general corporate purposes.
POTENTIAL NEGATIVE IMPLICATIONS TO STOCKHOLDERS FROM THE STOCK PURCHASE
AGREEMENT: While the Board of Directors and Management believe the proposed
transactions represent the best available opportunity for stockholders to
maximize the value of their stock, they also stress that the proposed Stock
Purchase Agreement may present potentially negative implications to stockholders
for the following reasons:
o The 250,000 Common Shares and Warrants to purchase 200,000 Common
Shares would represent 27.72% of the Company's total shares
outstanding after the closing. The issuance of such a large block of
shares may negatively affect each stockholder's potential dividend as
well as dilute each stockholder's effective voting power.
o The sale could also negatively affect the bid price of the Common
Stock. It should be noted, however, that the per share purchase price
of the Common Shares as set forth in the Stock Purchase Agreement was
at a 54% premium to the stock price on the date of the Agreement and,
because they would not be registered for resale, would be legally
restricted with respect to subsequent transfer and sale.
o The new investors would designate the holders of three of the
Company's five Board seats. This would result in their having
substantial control over the policy and operations of the Company,
including potential material transactions in which the Company may
engage.
CLOSING: In accordance with the terms of the Stock Purchase Agreement, the
closing will occur on the tenth (10th) business day following approval by the
Company's stockholders. If the closing has not occurred on or prior to February
28, 2003, and the Purchasers have not waived any conditions precedent, the
obligation of the Purchasers to close the transactions contemplated by the Stock
Purchase Agreement shall be null and void unless waived in writing by the
Purchasers.
IMPLICATIONS OF LARGE BLOCK SALE: The 250,000 Common Shares and Warrants to
purchase 200,000 Common Shares would represent 27.72% of the Company's total
shares outstanding. Such a large block of newly issued is 150,000common shares would
negatively affect each stockholder's potential dividend as well as dilute each
stockholder's effective voting power. The sale could also negatively affect the
market price of the Common Stock.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY: The Stock Purchase Agreement
contains various customary representations and warranties made by the Company.
Such representations and warranties include, without limitation, the solvency of
the Company following the transaction, authorization, organization and corporate
power, capitalization, registration rights, government consent, exemption of the
offering, compliance with other instruments, litigation, taxes, financial
statements, the absence of undisclosed liabilities, absence of certain changes
or events and insurance in effect.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS: The Stock Purchase Agreement
contains various customary representations and warranties made by the
Purchasers. Such representations and warranties include, without limitation,
business and financial experience, investment intent and legal authorization to
consummate the transaction.
-35-
CONDITIONS TO CLOSING: The completion of the transactions contemplated by the
Stock Purchase Agreement depends upon the satisfaction of a number of
conditions, including, among other things:
o Approval of the Stock Purchase Agreement by the stockholders of the
Company holding not less than the majority of the shares of Common
Stock voting at the meeting.
o Accuracy in all material respects of the representations and
warranties contained in the Stock Purchase Agreement.
o Compliance in all material respects with all agreements and
obligations of each of the Company and the Purchasers that are
required to be complied with before consummation of the sale.
o The election of the five nominees for directors of the Company (see
Proposal 3, below), approval of the 2002 Equity Incentive Plan (see
proposal 4, below) by the stockholders of the Company, the closing of
the Asset Purchase Agreement (see Proposal 1, above) and the approval
of the Company's corporate name change (see Proposal 5, below) by the
stockholders of the Company.
o Receipt of any and all consents and waivers of third parties that are
required to be obtained before the consummation of the sale.
o Receipt of legal opinions from counsel to the Company and the
Purchasers as to certain corporate matters.
o The absence of any law or injunction preventing the sale.
Both the Company and the Purchasers can elect to waive certain conditions to
their own performance.
COVENANTS OF THE COMPANY: The Stock Purchase Agreement contains various
customary covenants made by the Company. Such covenants include, without
limitation, the preparation and filing of applicable forms required by federal,
state or other cognizant regulatory body, and the preparation and filing of a
registration statement for the Shares and Warrants or Warrant Shares in the
event of the consummation of a business transaction between the Company and an
unaffiliated person or firm and upon request of the holders of not less than
fifty (50%) percent of the Shares and Warrants or Warrant Shares, if the
Warrants have been exercised.
COVENANTS OF THE PURCHASERS: The Stock Purchase Agreement contains various
customary covenants made by the Purchasers. Such covenants include, without
limitation, investment representations, best efforts to cause the Company to
distribute a pro rata dividend to the stockholders if certain conditions are met
within ninety days of the Closing, and best efforts upon the request of the
holders of 20% or more outstanding stock of the Company held by non-affiliates
of management, to cause the Company to effect a vote as to the liquidation and
pro rata distribution of the Company's assets to the stockholders in the event
of failure of the Company to conclude a material transaction (defined as having
an aggregate value in excess of $750,000) within three years of the Closing,
subject to adjustmenta three month extension by the Company
TERMINATION OF THE AGREEMENT: The Company and the Purchasers may mutually agree
to terminate the Stock Purchase Agreement at any time before the time of the
closing of the Stock Purchase Agreement. The Company may terminate the Stock
Purchase Agreement if the Board of Directors determines that it is legally
required to do so in certain circumstances,order to comply with its fiduciary duties. In addition, the
Purchasers or the Company may terminate the Stock Purchase Agreement if
specified events occur. These include:
o If the conditions set forth in the Stock Purchase Agreement have not
been satisfied or waived by the party to whom they apply.
o If either party has failed to comply with any of its obligations or
covenants or such compliance has not been waived by the other party.
-36-
o If the Stock Purchase Agreement were deemed to be unenforceable in
any bankruptcy or similar proceeding in which the Company is the
debtor.
o If the Closing has not occurred on or prior to February 28, 2003,
subject to any applicable extensions.
By reason of the failure of the Company to submit the Stock Purchase Agreement
to a vote of the stockholders by October 31, 2002, the Company is now obligated
to reimburse the Purchasers for their reasonable expenses, including merger, consolidation,
reorganization, recapitalization,legal fees,
in an amount up to $35,000. In the event that the Company terminates the Stock
Purchase Agreement for any reason other than those set forth above, then the
Company would be required to reimburse the Purchasers for all of their
reasonable expenses incurred subsequent to October 31, 2002, including, without
limitation, legal fees in an amount not to exceed an additional $25,000.
However, the Company would be obligated to reimburse the Purchasers for the
additional $25,000 in expenses if the Stock Purchase Agreement is not submitted
to a vote of the stockholders by February 28, 2003.
REGULATORY REQUIREMENTS: No federal or state regulatory requirements must be
complied with or approval must be obtained (other than stockholder approval) in
connection with the proposed sale.
VOTE REQUIRED: The affirmative vote of a majority of the Common Stock voting at
the meeting is required to approve the Stock Purchase Agreement.
RECOMMENDATION OF THE BOARD OF DIRECTORS: The Board of Directors unanimously
recommends that the stockholders vote "FOR" the approval of the Stock Purchase
Agreement (Item No. 2 on the proxy card). All material factors the Board of
Directors considered in deciding whether to approve and recommend the Stock
Purchase Agreement are disclosed in this Proxy Statement.
PROPOSAL NO. 3
ELECTION OF DIRECTORS
The persons named below have been nominated by the Board of Directors
for election to the Board of Directors at the Annual Meeting. The By-Laws of the
Company provide for a Board of Directors of a minimum of three members. The
Board of Directors currently consists of five members. At the meeting, five
directors will be elected to serve until the 2003 Annual Meeting of Stockholders
and until their successors have been elected and qualified. The Board of
Directors may fill any vacancy that occurs during the year, and in order to be
re-elected, any directors so appointed must stand for reelection at the next
annual meeting of stockholders. Two such nominees are presently serving as
directors and were elected at the last Annual Meeting of Stockholders.
The nominees for Board of Directors are: MARTIN COHEN, BERNARD ZIMMERMAN,
LAWRENCE R. YURDIN, MICHAEL L. GOLDMAN AND JAY J. MILLER (see "Nominees for
Election to Board of Directors" on page 14).
All nominees have consented to be named and have indicated their
intent to serve, if elected. The Company has no reason to believe that any of
these nominees will be unavailable for election. However, if any nominee becomes
unavailable, then the persons named as proxies may vote for the election of such
person or persons as the Board of Directors of the Company may recommend in the
place of such nominee or nominees. It is intended that proxies, unless marked to
the contrary, will be voted in favor of the election of Messrs. Martin Cohen,
Bernard Zimmerman, Lawrence R. Yurdin, Michael L. Goldman and Jay J. Miller.
VOTE REQUIRED: Five directors shall be elected by a majority of the votes cast
at the meeting, assuming the presence of a quorum.
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RECOMMENDATION OF THE BOARD OF DIRECTORS: The Board of Directors unanimously
recommends that the stockholders vote "FOR" the election of the above-referenced
five nominees (Item No. 3 on the proxy card).
PROPOSAL 4
2002 EQUITY INCENTIVE PLAN
The Company, with the approval of the Board of Directors, has
proposed to adopt, as of September 9, 2002, subject to stockholder approval, the
2002 Equity Incentive Plan (the "Incentive Plan"). The essential provisions of
the Plan are as follows:
o The Company may grant up to that number of options which are
exercisable into 250,000 shares of the Company's Common Stock;
o The Company may issue options to employees, officers, directors and
consultants of the Company (other than Messrs. Zimmerman and Cohen);
o The Company will issue options under the Plan at times and in amounts
determined in the discretion of a two person Stock Option Committee
comprised of Messrs. Zimmerman and Cohen or, in the absence of such a
Committee, by the Board of Directors in its entirety;
o The Company may issue either qualified incentive stock dividends,options or
non-qualified stock splits, combinationoptions;
o The exercise price of shares, exchange of shares, change of corporate structure or other similar
transactions. The Optionsstock options issued under the Plan will be exercisable at not less
than the
fair market value of the Company's Common Stock basedat the time the
options are granted;
o The Company, in its discretion, may issue options that vest
immediately or over a specified period of time; o The option holders
may exercise their options by paying cash in the amount of the full
exercise price;
o The options will expire upon the average
quoted trading pricesearlier of ten (10) years after the
date of issuance (except for individuals who hold more than 10% of
the outstanding Common Stock preceding the issuance of the Options.
4
The terms and conditions underCompany, in which stockcase the
expiration date shall be granted underfive (5) years) and ninety (90) days after
the 1999
Stock Option Plan are set forthholder ceases to be an employee, officer, director or consultant
to the Company, unless extended or waived in the 1999 Stock Option Plan and described
below. Thediscretion of the
Board of Directors or any executive officerthe Stock Option Committee.
To date, no options have been issued under the Incentive Plan. A copy
of the Company designated
by the Board of Directors shall have authority to interpret the provisions of
the 1999 Stock Optionproposed Plan to establish such rules and procedures as may be
necessary or advisable to administer the 1999 Stock Option Plan and to male all
determinations necessary or advisable for the administration of the 1999 Stock
Option Plan, provided that no such interpretation or determination shall change
or affect the selection of participants eligible to receive grants under that
Plan, the number of shares of Common Stock covered under that Plan or the terms
and conditions thereof.
ELIGIBILTY. Employees, consultants and non-employee directors of the
Company are eligible to receive stock under the 1999 Stock Option Plan.is set forth in Annex C.
VOTE REQUIRED: The Company currently has 4 employees and 4 non-employee directors who would be
eligible to participate in this Plan.
TERM OF PLAN. The 1999 Stock Option Plan shall be effective as of October
19, 1999, upon approval of the stockholders at the Annual Meeting.
Participants will not be able to sell or transfer Common Stock issued to
them under the Plan for at least twelve months from the date of issuance and
thereafter will be subject to the trading restrictions under Rule 144 of the
Securities Act of 1933, as amended.
The Stock Option Plan may be terminated and may be modified or amended by
the Company's Board of Directors at any time; provided, however, that no
modification or amendment may increase the aggregate number of shares which may
be issued, materially increase benefits accruing to participants under the 1999
Directors Plan, or materially modify the requirements as to eligibility to
receive stock without stockholder approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL 3
ELECTION OF AUDITORS
Upon the approvalaffirmative vote of a majority of the shares issued and
outstanding as of the Record Date is required to approve the 2002 Equity
Incentive Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS: The Board of Directors unanimously
recommends that the stockholders vote "FOR" the approval of the 2002 Equity
Incentive Plan (Item No. 4 on the proxy card).
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PROPOSAL 5
CORPORATE NAME CHANGE
The Board of Directors has approved and recommends that the
stockholders approve a resolutionproposal to change the name of the Company to "FCCC,
Inc." Pursuant to the terms of the Asset Purchase Agreement, the Company agreed
to change its corporate name so that it no longer contains the words "First
Connecticut Capital." Our name change would be accomplished by amending the
Company's Certificate of Incorporation, as amended.
If the Proposal were adopted, Article 1 of the Company's Certificate
of Incorporation, as amended, would be amended to read as follows:
"FCCC, Inc."
In addition, all other references to the Company's corporate name in
its Certificate of Incorporation, as amended, would be changed to "FCCC, Inc."
The approval of the name change will not affect in any way the validity of
currently outstanding stock certificates and will not require the Company's
stockholders to surrender or exchange any stock certificates that they currently
hold.
The Board of Directors has sole discretion as to whether to file the
proposed amendment of the Certificate of Incorporation, as amended. If the name
change were not effected by the first anniversary of this Annual Meeting, the
Board's authority to effect the name change would terminate and stockholder
approval would again be adoptedrequired prior to implementing any name change. The
Board does not intend to effectuate the corporate name change unless the Company
concludes the transactions contemplated by and described in Proposals 1 and 2
above.
VOTE REQUIRED: The affirmative vote of a majority of the Common Stock issued and
outstanding as of the Record Date is required to approve the amendment to the
Certificate of Incorporation, as amended.
RECOMMENDATION OF THE BOARD OF DIRECTORS: The Board of Directors unanimously
recommends that the stockholders vote "FOR" the approval of the amendment to the
Certificate of Incorporation, as amended, to change the name of the Company from
The First Connecticut Capital Corporation to FCCC, Inc. (Item No. 5 on the proxy
card).
PROPOSAL 6
APPOINTMENT OF AUDITORS
The Audit Committee of the Board of Directors has approved and
recommends appointing the firm of DeloitteSaslow Lufkin & Touche,Buggy, LLP, who have no direct
or indirect affiliation with, or financial interest in, the Company, as auditors
to examine and report upon the financial statements of the Company for the
fiscal year ending March 31, 2000.2003. For the fiscal year ended March 31, 1999, Deloitte2002,
Saslow Lufkin & ToucheBuggy, LLP examined the Company's financial statements included
in the Company's report to shareholders. A representativestockholders.
Audit Fees: Saslow Lufkin & Buggy, LLP billed the Company an
aggregate of $23,000 for the audit of the firmfinancial statements for the year
ended March 31, 2002 and $3,000 for each of Deloittethe reviews of the Company's
financial statements included in each Form 10QSB of the Company's filed covering
the fiscal quarters ended June 30, 2002 and September 30, 2002.
-39-
All Other Fees: Saslow Lufkin & Touche is
expectedBuggy, LLP billed the Company
approximately $4,000 to be available to respond to appropriate questions.date in 2002 for services rendered in connection with
the preparation of this proxy statement.
The Company and its accountants did not have any "disagreements" as
defined in Item 304 of Regulation S-K of the SEC during the two most recent
fiscal years of the Company. THERepresentatives of Saslow Lufkin & Buggy, LLP will
not be present at the Annual Meeting.
VOTE REQUIRED: The affirmative vote of a majority of the Common Stock voting at
the meeting is required to approve the appointment of the firm of Saslow Lufkin
& Buggy, LLP to act as the Company's independent auditors, assuming the presence
of a quorum.
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.RECOMMENDATION: The Board of Directors unanimously recommends that the
stockholders vote "FOR" the approval of the appointment of the firm of Saslow
Lufkin & Buggy, LLP as auditors of the Company for the fiscal year ending March
31, 2003 (Item No. 6 on the proxy card).
EXPENSES OF SOLICITATION
The solicitation of proxies in the form enclosed is made on behalf of
the management of the Company and by authority of its Board of Directors. The
expenses in connection with the solicitation of Proxies,proxies, including the cost of
preparing, handling, printing and mailing the Notice of Annual Meeting of
Stockholders, proxy and Proxy Statement will be borne by the Company.
Solicitations will be made only by use of the mails except that, if necessary,
management may solicit proxies by advertising, telephone, telegraph, cable and
personal interviews. In connection with this solicitation of proxies, management
may use the services of directors,Directors, officers and regular employees, who will be
reimbursed for their actual out of pocket expenses incurred. The Company may
request bank, broker,banks, brokers, nominees, custodians and fiduciaries to forward copies
of the proxy soliciting material to the beneficial owners of the stock held of
record by such persons and to request authority for the execution of proxies.
The Company will reimburse such persons for their expenses in so doing, which is
expected to be nominal in cost. 5
If necessary the Company may retain the services
of a proxy solicitation firm, the expenses of which are not expected to be
material.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 20002003 Annual
Meeting must be received by the Company no later than March 20, 2000April 30, 2003 for
inclusion in the Company's Proxy Statement and form of Proxy for that meeting.
ADDITIONAL INFORMATION
The Annual ReportEnclosed are copies of the CompanyCompany's Annual Reports for the fiscal
years ended March 31, 2002 and 2001 on Form 10-KSB, coveringas amended, and quarterly
report for the fiscal yearquarter ended March 31, 1999 was mailed to all stockholdersSeptember 30, 2002 on June 24, 1999Form 10-QSB, as
amended. Stockholders not receiving amay obtain an additional copy of the Annualeach report on Form 10-KSB may
obtain one by writing
to: The First Connecticut Capital Corporation, 1000 Bridgeport Avenue, Shelton,
Connecticut 06484, attentionAttention: Ms. Priscilla E. Ottowell, Secretary, or by
calling 203-944-5400.(203) 944-5400.
-40-
OTHER MATTERS
The persons named in the enclosed form of proxy have no present
intention of bringing before the meeting for action any matters other than those
specifically referred to above, nor has management any such intention and
neither such person nor the management are aware of any matters which may be
presented by others. If any other business should properly come before the
meeting, the persons named in the proxy intended to vote thereon in accordance
with their best judgment.
INCORPORATION BY REFERENCE
THE COMPANY'S ANNUAL REPORTS ON FORM 10-KSB, as amended, FOR THE
FISCAL YEARS ENDED MARCH 31, 2001 AND 2002, AND QUARTerLY REPORT ON FORM 10-QSB,
as amended, FOR THE PERIOD ENDED September 30, 2002 ARE INCORPORATED BY
REFERENCE INTO THIS PROXY STATEMENT. COPIES OF THE COMPANY'S ABOVE REFERENCED
REPORTS ON FORM 10-KSB AND 10-QSB, AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, ARE ENCLOSED HEREWITH and are available through the SEC's Electronic
Data Gathering and Retrieval System at the SEC's Internet site at
http://www.sec.gov. ADDITIONAL COPIES CAN BE OBTAINED WITHOUT CHARGE UPON
WRITTEN OR ORAL REQUEST TO THE FIRST CONNECTICUT CAPITAL CORPORATION, ATTN: MS.
PRISCILLA E. OTTOWELL, SECRETARY, 1000 BRIDGEPORT AVENUE, SHELTON, CONNECTICUT
06484, TELEPHONE: (203) 944-5400.
ALL STOCKHOLDERS ARE URGED TO FILL IN, SIGN AND PROMPTLY RETURN THE ENCLOSED
PROXY.
By Order of the Board Directors,
Priscilla E. Ottowell,
SecretaryLawrence R. Yurdin,
PRESIDENT
Dated: September 21, 1999January , 2003
Shelton, CT.
6CT
-41-
EXHIBIT A
THE FIRST CONNECTICUT CAPITAL CORPORATION
1999THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints Lawrence R. Yurdin and Pricilla E.
Ottowell, and either of them, as proxyholders and attorneys-in-fact of the
undersigned, with full power of substitution, to vote all shares of stock that
the undersigned is entitled to vote at the Annual Meeting of Stockholders of The
First Connecticut Capital Corporation (the "Company") to be held at the First
Union Bank, Shelton Square Office, Greater Valley Chamber of Commerce,
Conference Room, 2nd Floor, 900 Bridgeport Avenue, Shelton, Connecticut on
Friday, February 28, 2003 at 9:30 a.m., local time, and at any continuation or
adjournment thereof, with all the powers that the undersigned would have if
personally present at the meeting.
The undersigned hereby acknowledges receipt of the Notice of Annual
Meeting and Proxy Statement, dated ______________, 2003, and a copy of the
Company's Annual Reports for the fiscal years ended March 31, 2002 and 2001 on
Form 10-KSB, as amended, and quarterly report for the fiscal quarter ended
September 30, 2002 on Form 10-QSB, as amended. The undersigned hereby expressly
revokes any and all proxies heretofore given or executed by the undersigned with
respect to the shares of stock represented by this Proxy and, by filing this
Proxy with the Secretary of the Company, gives notice of such revocation.
WHERE NO CONTRARY CHOICE IS INDICATED BY THE STOCKHOLDER, THIS PROXY,
WHEN RETURNED, WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS FOR ALL
PROPOSALS AND WITH DISCRETIONARY AUTHORITY UPON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING. THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO
THE TIME IT IS VOTED.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
-1-
THE FIRST CONNECTICUT CAPITAL CORPORATION VOTE BY PHONE - [NUMBER]
C/O GEORGESON SHAREHOLDER Use any touch-tone telephone to
17 STATE STREET, 28TH FLOOR transmit your voting instructions
NEW YORK, NEW YORK 10004 up until 11:59 P.M. Eastern Time
the day before the cut-off date or
meeting date. Have your proxy
card in hand when you call. You
will be prompted to enter your
Control Number which is located
below and then follow the simple
instructions the message provides
you.
VOTE BY MAIL
Mark, sign, and date your proxy
card and return it in the
postage-paid envelope we have
provided or return it to the First
Connecticut Capital Corporation,
Attn: Ms. Priscilla E. Ottowell,
Secretary, 1000 Bridgeport Avenue,
Shelton, Connecticut 06484.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
1. To approve the Asset Purchase Agreement for the sale of the Company's
business and assets.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. To approve the Stock Purchase Agreement for the sale of 250,000
shares of the Company's Common Stock and Warrants to purchase 200,000
shares of the Company's Common Stock.
FOR [ ] AGAINST ABSTAIN [ ]
3. Election of Directors. Nominees:
FOR WITHHOLD
Martin Cohen [ ] [ ]
Bernard Zimmerman [ ] [ ]
Lawrence R. Yurdin [ ] [ ]
Michael L. Goldman [ ] [ ]
Jay J. Miller [ ] [ ]
4. To adopt the Company's 2002 Equity Incentive Plan.
FOR [ ] AGAINST ABSTAIN [ ]
-2-
5. To approve an amendment to the Company's Certificate of
Incorporation, as amended, to change the Company name from The First
Connecticut Capital Corporation to FCCC, Inc.
FOR [ ] AGAINST ABSTAIN [ ]
6. To approve the appointment of the firm of Saslow Lufkin & Buggy, LLP
as auditors of the Company for the fiscal year ending March 31, 2003.
FOR [ ] AGAINST ABSTAIN [ ]
7. To approve the postponement or adjournment of the meeting, if
necessary, to solicit additional proxies.
FOR [ ] AGAINST ABSTAIN [ ]
8. To transact any other business that may properly come before the
meeting or any adjournment of the meeting.
FOR [ ] AGAINST ABSTAIN [ ]
Please date and sign exactly as your name or names appear herein. Corporate or
partnership proxies should be signed in full corporate or partnership name by an
authorized person. Persons signing in a fiduciary capacity should indicate their
full title in such capacity.
- ---------------------------------------- ------------
Signature Date
- ---------------------------------------- ------------
Signature Date
-3-
ANNEX A
Asset Purchase Agreement
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made this 28th day of
June, 2002 by and between FCCC Holding Company, LLC, a limited liability company
duly organized under the laws of the State of Connecticut ("Buyer"), The First
Connecticut Capital Corporation, a corporation duly organized under the laws of
the State of Connecticut ("Seller" or "Company").
WHEREAS Seller is the owner of certain assets used in connection with
the operation of its business; and WHEREAS, the members and managers of Buyer
are or have been current officers and directors of the Seller and are familiar
with the management and operations of the Seller; and
WHEREAS Buyer desires to purchase the hereinafter described assets of
Seller pursuant to the terms and conditions set forth herein; and
WHEREAS Seller desires to sell and transfer such assets to Buyer
pursuant to the terms and conditions set forth herein:
NOW, THEREFORE, for and in consideration of the premises and mutual
promises and covenants hereinafter contained, it is agreed between Buyer and
Seller as follows:
1. PURCHASE AND SALE OF ASSETS
Subject to the terms and conditions of this Agreement, at the Closing
(as hereinafter defined) Seller shall sell, convey, assign, transfer and deliver
to Buyer, and Buyer shall purchase and acquire from Seller, all of Seller's
right, title and interest in, to and under those assets set forth in Schedule
1(a) (the "Assets"), attached hereto and deemed a part hereof.
2. EFFECTIVE TIME. The transaction contemplated by this Agreement
shall become effective as of 10 a.m. on the Closing Date, as defined
hereinbelow, at which time the risk of loss with respect to the Assets shall
pass to Buyer.
3. PURCHASE PRICE.
As consideration for the Assets being purchased hereby, Buyer shall
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(a) Pay to Seller on the Closing Date, by bank or certified check or
by wire transfer of funds in an e aggregate sum equal to the Fair Market Value
of the Assets, as determined by an independent appraiser (the "Purchase Price");
(b) Assume all of the liabilities of the Seller, including, but not
limited to those as set forth and described on Schedule 3(b) (the "Liabilities")
attached hereto and made a part hereof and indemnify and hold Seller harmless
with respect thereto;
(c) Assume and agree to satisfy, when due, all of the Seller's duties
and obligations under and with respect to those certain contracts and
agreements, set forth on Schedule 3(c) (the "Contracts"), attached hereto and
made a part hereof and indemnify and hold Seller harmless with respect thereto;
and
(d) Assume and agree to discharge, when due, all debts, duties,
liabilities and obligations of the Seller to the Seller's employees, including,
but not limited to those listed on Schedule 3(d) attached hereto and made a part
hereof as a result of their employment and any employment, benefit or
compensation arrangement between such employees and the Seller (collectively,
the "Employment Obligations") and indemnify and hold Seller harmless with
respect thereto and execute any and all documents and instruments as may be
reasonably necessary to effectuate the assumption of liabilities and
indemnification of Seller set forth in Section 5.2.1 hereinbelow.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER.
4.1 REPRESENTATIONS AND WARRANTIES. Seller represents and warrants as
follows:
4.1.1 EXISTENCE/AUTHORIZATION. Seller is a corporation duly organized
and validly existing under the laws of the State of Connecticut
4.1.2 CORPORATE POWER. The Seller has full power and authority to
execute and deliver this Agreement and such other agreements and instruments to
be executed and delivered by it pursuant hereto, and, subject to shareholder
approval, to consummate the transactions contemplated hereby and thereby. All
corporate acts and other proceedings required to be taken by or on the part of
Seller to authorize it to execute, deliver and perform this Agreement and such
other agreements, instruments and transactions contemplated hereby have been
duly and properly taken, subject only to shareholder approval.
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4.1.3 BINDING OBLIGATION; GOVERNMENTAL CONSENTS. This Agreement has
been duly executed and delivered by Seller, and such other agreements and
instruments contemplated hereby when duly executed and delivered by Seller will
constitute, legal, valid and binding obligations of Seller enforceable in
accordance with their respective terms, subject to shareholder approval as to
enforcement of remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally from time to time in effect, and subject to any equitable principles
limiting the right to obtain specific performance of certain obligations of
Seller hereunder and thereunder. All consents of governmental and other
regulatory authorities and of other parties required to be received by or on the
part of Seller to enable it to enter into and carry out this Agreement and the
transactions contemplated hereby have been obtained or shall be obtained prior
to Closing. Without limiting the foregoing, Seller has made or shall make prior
to Closing, all such filings and submissions which may be required under
applicable law for Seller to consummate the transactions contemplated hereby.
Neither the execution and delivery of this Agreement nor the consummation by
Seller of the transactions contemplated hereby will (i) violate or conflict with
any of the provisions of the Articles of Incorporation or By-laws of Seller; or
(ii) to Seller's knowledge, violate or constitute a default under any note,
bond, mortgage, indenture, contract, agreement, license or other instrument or
any order, judgment or ruling of any governmental authority to which Seller is a
party or by which any of their respective properties are bound. Other than the
approval of Seller's shareholders, to Seller's knowledge, no other consent,
approval, license, permit, or authorization of, or registration, declaration or
filing with, any state or federal court, administrative agency or commission or
other governmental authority or instrumentality, or of any other third party, is
required to be obtained or made by Seller in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby other than those that may be required solely by reason of Buyer's (as
opposed to any third party's) participation in the transactions contemplated
hereby.
4.1.4 STATEMENTS AS TO KNOWLEDGE. All representations and warranties
of Seller set forth herein which are qualified as to knowledge are deemed to be
made after diligent inquiry by each party making such representations and
warranties.
4.2 COVENANTS. Seller covenants as follows:
4.2.1 REAL PROPERTY. Seller shall cooperate with Buyer subsequent to
the Closing so as to permit and assist Buyer to assume the existing obligations
of Seller with respect to the lease covering the Seller's facilities located at
1000 Bridgeport Avenue, Shelton, CT (the "Lease"), subject to Buyer arranging
for Landlord's consent to the assignment by Seller to Buyer of said Lease and
Landlord releasing Seller from any obligations thereunder.
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4.2.2 INTELLECTUAL PROPERTY. Seller shall cooperate with Buyer
subsequent to Closing to perfect Buyer's right and interest to any such patents,
trademarks, trade names, service marks, service names, copyrights and
applications therefor, programs (including source codes and other documentation)
and other intellectual property owned by or registered in the name of, or used
in the business of, Seller (collectively, the "Intellectual Property") including
the registration thereof.
4.2.3 TAXES. At Buyer's request and provided Buyer provides Seller
with the necessary funds, Seller shall make, on Buyer's behalf, all appropriate
remittances in connection with all federal, state, local and foreign or other
taxes (including franchise taxes or fees) and assessments, measured by income or
otherwise, any Social Security taxes, any direct tax, withholding tax, payroll
tax, any stamp taxes, sales or use taxes and capital taxes, and customs charges,
including all interest, penalties and additions imposed upon Seller for any
period prior to the Closing Date (collectively, the "Taxes") which were due,
owing, accrued or payable by Seller, but unpaid prior to the date of the
Closing.
4.2.4 NON-COMPETITION/NON-SOLICITATION. Seller shall not, directly or
indirectly, for a period of one (1) year after the Closing Date, without prior
express written consent of the Buyer:
(i) Be engaged in any work or other activity anywhere in
the State of Connecticut (the "Territory"), or if the business is
located in another jurisdiction, conduct in the Territory, whether as
owner, stockholder, partner, consultant, employer, employee or
otherwise, a real estate construction mortgage lending business (the
"Business").
(ii) Either on behalf of itself or any other person, firm
or company anywhere in the Territory, or if the business is located
in another jurisdiction in the Territory, canvass or solicit business
from or in any way interfere with any person, firm or company who
shall at any time have been directly or indirectly a customer or
customers of the Buyer or any of its affiliated companies with
respect to the Business, nor
(iii) Employ, solicit or endeavor to entice away from the
Buyer or any affiliated companies any person who is or was an
employee of such company during the two (2) years immediately
preceding the Closing Date.
4.2.5 DECLARATION OF DIVIDEND. Not later than ninety (90) days
subsequent to the Closing, the Company shall distribute to its stockholders in
the form of a dividend all of its cash that exceeds the sum of One Million Two
Hundred Fifty Thousand Dollars ($1,250,000), after the payment of all costs,
fees and expenses, billed or accrued, associated with the transactions
contemplated and described by this Agreement and after provision for any unpaid
obligations of the Seller arising prior to the Closing and excluding all cash
derived from the sale of shares of the Company's Common Stock to Messrs Martin
Cohen and Bernard Zimmerman and/or their affiliates (collectively, the
"Investors"), as set forth and in described in that certain Stock Purchase
Agreement between the Company and the Investors, of even date herewith, (the
"Stock Purchase Agreement") provided that such dividend shall be payable only if
it equals or exceeds fifteen cents ($.15) per outstanding share of Common Stock
of the Company.
A-4
4.2.6 CORPORATE NAME CHANGE. Immediately subsequent to the Closing,
provided Seller's shareholders shall have approved, Seller will change its
corporate name so that it no longer contains the words "First Connecticut
Capital".
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER.
5.1 REPRESENTATIONS AND WARRANTIES. Buyer hereby represents and
warrants to Seller as of the date hereof and at the Closing as follows:
5.1.1 EXISTENCE. Buyer is a limited liability company duly organized
and validly existing under the laws of the State of Connecticut. Buyer has the
corporate power to own and operate its properties and to carry on its business
as it is now being conducted.
5.1.2 POWER AND AUTHORITY. Buyer has full legal power and authority
to execute and deliver this Agreement and such other agreements and instruments
to be executed and delivered by it pursuant hereto, and to consummate the
transactions contemplated hereby and thereby. All acts and other proceedings
required to be taken by or on the part of the Buyer to authorize it to execute,
deliver and perform this Agreement and such other agreements, instruments and
transactions contemplated hereby have been duly and properly taken.
5.1.3 BINDING OBLIGATION; GOVERNMENTAL CONSENTS. This Agreement has
been duly executed and delivered by Buyer and constitutes, and such other
agreements and instruments when duly executed and delivered by Buyer will
constitute, legal, valid and binding obligations of Buyer enforceable in
accordance with their respective terms, subject, as to enforcement of remedies,
to applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally from time
to time in effect, and subject to any equitable principles limiting the right to
obtain specific performance of certain obligations of Buyer hereunder and
thereunder. All consents of governmental and other regulatory authorities and of
other parties required to be received by or on the part of either Buyer or
Seller to enable it to enter into and carry out this Agreement and the
transactions contemplated hereby have been obtained. Without limiting the
foregoing, Buyer and Seller each has made all such filings and submissions which
may be required under applicable law for Buyer or Seller to consummate the
transactions contemplated hereby. Neither the execution and delivery of this
Agreement nor the consummation by Buyer of the transactions contemplated hereby
A-5
will (i) violate or conflict with any of the provisions of the Articles of
Incorporation or By-laws of Buyer; or (ii) violate or constitute a default under
any note, bond, mortgage, indenture, contract, agreement, license or other
instrument or any order, judgment or ruling of any governmental authority to
which Buyer is a party or by which any of its properties are bound. No other
consent, approval, license, permit, or authorization of, or registration,
declaration or filing with, any state or federal court, administrative agency or
commission or other governmental authority or instrumentality, or of any other
third party, is required to be obtained or made by Buyer in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby other than those that may be required solely by reason of
Seller's (as opposed to any third party's) participation in the transactions
contemplated hereby, i.e. shareholder approval.
5.1.4 BROKERS/FINDERS. Neither Buyer nor any of Buyer's directors,
employees or agents has employed any broker, finder, investment banker or other
person and none of the foregoing has incurred any liability for any brokerage
fees, commissions or finders' fees to any other parties in connection with the
transactions contemplated hereby. Without limiting any other indemnification set
forth herein, Buyer hereby indemnifies Seller and holds Seller harmless from and
against any and all claims, liabilities and/or causes of action for any
brokerage fees, commissions, finder's fees or the like arising out of the
transactions contemplated hereby.
5.2 COVENANTS. Buyer hereby covenants to Seller the following:
5.2.1 ASSUMPTION OF AND INDEMNIFICATION WITH RESPECT TO LIABILITIES.
Without limiting any other indemnification set forth herein, as of the Closing
Date, Buyer shall take all steps necessary to terminate or assume and cause
Seller to be released from, and shall indemnify, defend and hold Seller harmless
from and against any and all debts, claims, liabilities, obligations, actions
and/or damages, related to any event or circumstance which occurred at any time
prior or subsequent to the Closing relating to:
(a) The Contracts;
(b) Any liabilities or obligations of any nature related to
any event or circumstance which occurred at any time
prior to the Closing, including but not limited to (i) as set forth or reflected
on the Seller's fiscal year 2001 and 2002 audited balance sheets or described in
notes therein, including but not limited to Seller's line of credit with Hudson
United bank and any other loan, or credit facility of which Seller is a
borrower, guarantor or obligor , (ii) as disclosed in this Agreement or the
Schedules or Exhibits hereto, (iii) as related to any purchase contracts or
orders for inventory in the ordinary course of business consistent with past
practice, and (iv) as incurred in the ordinary course of business consistent
with past practice or otherwise between March 31, 2002 and the Closing Date and
not in violation of this Agreement (collectively, the "Disclosed Liabilities');
A-6
(c) The Taxes;
(d) Any partnership, joint venture or similar entity of
which Seller is a member of or participant (collectively,
the "Affiliated Entities") , for which Buyer or an affiliate of Buyer shall as
of the Closing, be substituted for Seller with respect to such membership or
participation, as the case may be, and obtain a release of Seller from each such
entity;
(e) The Employment Obligations;
(f) The Lease; and
(g) Any loan participations in which Seller is a party.
5.2.2 MINIMAL TANGIBLE NET WORTH. For the period commencing on the
Closing Date and terminating on the third anniversary of the Closing Date, Buyer
shall maintain a tangible net worth of not less than $1,000,000 and, not later
than sixty (60) days after the expiration of each six (6) month period following
the Closing, provide an Officer's Certificate of Buyer attesting to compliance
with such net worth requirement.
6. INDEMNIFICATION.
6.1 INDEMNIFICATION BY SELLER. Without limiting any other
indemnification set forth herein, Seller hereby agrees to indemnify and defend
Buyer against and hold it harmless from any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses) suffered or incurred by
Buyer to the extent arising from any breach of any representation, warranty or
covenant of the Seller contained in this Agreement. In addition, Seller hereby
agrees to indemnify Buyer against all liability for reasonable legal, accounting
and other fees and expenses directly attributable to any such indemnification.
6.2 INDEMNIFICATION BY BUYER. Buyer shall indemnify and defend Seller
against, and hold it harmless from, any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses) suffered or incurred by
Seller to the extent arising from any breach of any representation, warranty or
covenant of Buyer set forth herein or arising from the conduct of the business
relating to the Assets after the Closing. In addition, Buyer agrees to indemnify
Seller against all liability for reasonable legal, accounting and other fees and
expenses directly attributable to any such indemnification.
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7. DURATION OF REPRESENTATIONS. The representations, warranties,
covenants and indemnities in this Agreement and in any other document delivered
in connection herewith (other than those with respect to the Taxes, which shall
continue until the expiration of each statutory period of limitations), shall
continue until the close of business on the date which is two (2) years
following the Closing Date, unless the specific provision herein for which
indemnification is sought has a longer duration.
8. CONFIDENTIAL INFORMATION.
Each party agrees to maintain as confidential all information which
is delivered to it by the other and agrees further not to disclose the same to
any third party whatsoever or use any such information for any purpose except in
connection with the implementation of the undertakings of the parties described
herein, PROVIDED, HOWEVER, that the Seller may be required to release
information concerning the transactions contemplated hereby in furtherance of
its responsibilities as a publicly traded company.
9. CLOSING. The Closing of the transactions contemplated hereby shall
take place at the offices of Seller, 1000 Bridgeport Avenue, Shelton,
Connecticut and shall occur on or about the tenth (10th) business day following
the approval by the Seller's shareholders of the transactions contemplated and
described by this agreement. If the Closing has not occurred on or prior to
October 31, 2002, and the Buyer has not waived any conditions precedent, the
obligation of Buyer to close the transactions contemplated hereby shall be null
and void unless waived in writing by Buyer.
10. CONDITIONS PRECEDENT TO CLOSING.
(a) The obligation of Buyer to consummate the transactions
contemplated herein and to perform its obligations hereunder on or
prior to the Closing Date is, at the option of Buyer, subject to the
following conditions, any or all of which may be waived by Buyer in
whole or in part at or prior to the Closing:
(i) no action or proceeding shall have been instituted
or threatened or claim or demand made against Buyer or Seller
before any court or other governmental body, seeking to restrain
or prohibit, or to obtain damages with respect to, the
consummation of the transactions contemplated hereby, or which,
if adversely determined to Buyer or Seller, might have a
material adverse effect on the Assets or the business,
operations or prospects of Buyer or Seller;
(ii) since March 31, 2002 there shall not have been
any change, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Assets or the
business of Seller or any suit, action or proceeding pending or
threatened which, if adversely determined, would result in the
loss of a material part of the Assets or would adversely affect
Seller's business;
A-8
(iii) Seller shall deliver to Buyer a certificate of
an officer of Seller stating that the transactions contemplated
hereby have been approved by Seller's stockholders;
(iv) Seller shall deliver to Buyer a certificate
executed by an authorized representative of Seller certifying
that each of the representations, warranties and covenants of
Seller herein shall be true and correct in all respects on the
date hereof and on the Closing Date;
(v) The execution by the counterparties to the
Contracts, the Lease and the constituent documents of the
Affiliated Entities of consents to the transfer of each such
contract, agreement or instrument to the Buyer, to the extent
required;
(vi) Seller shall deliver to Buyer a certificate of
an officer of Seller stating that the Seller's Board of
Directors and shareholders have approved the transactions
contemplated and described herein;
(b) The obligation of Seller to consummate the
transactions contemplated herein and to perform its obligations hereunder on and
after the Closing Date is, at the option of the Seller, subject to the following
conditions, any or all of which may be waived by Seller in whole or in part at
or prior to the Closing:
(i) no action or proceeding shall have been instituted
or threatened or claim or demand made against Buyer or Seller
before any court or other governmental body, seeking to restrain
or prohibit, or seeking to obtain damages with respect to, the
consummation of the transactions contemplated hereby;
(ii) The Seller shall have received an appraisal from
a qualified loan asset valuation company and a fairness opinion
from an NASD registered Broker-Dealer confirming and certifying
that the consideration to be paid by the Buyer for the Assets
and the other terms and conditions of the transactions
contemplated and described herein are fair and reasonable.
(iii) Upon consummation of the transactions
contemplated and described herein, the Seller shall have, net of
all costs, fees and expenses associated with such transactions
and after provision for any obligations of the Seller arising
prior to the Closing, excluding all cash derived from the sale
of shares of the Company's Common Stock to the Investors, as set
forth and described in the Stock Purchase Agreement, not less
than One Million Two Hundred Fifty Thousand Dollars
($1,250,000).
(iv) The Contracts, Disclosed Liabilities, Taxes,
Affiliated Entities, Lease and Employment Obligations shall have
been terminated or assumed by Buyer or Buyer shall have
indemnified and held Seller harmless with respect to same to
Seller's reasonable satisfaction.
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11. MISCELLANEOUS PROVISIONS.
11.1 FURTHER ASSURANCES. Each party hereto agrees to execute and
deliver such other documents, agreements or instruments and take such further
action as may be reasonably requested by any other party hereto for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
11.2 NOTICES. Any notices required or permitted hereunder shall be
sufficiently given if in writing and personally delivered, by telecopy and
confirmed by telephone, by nationally recognized overnight courier, or by
certified or registered mail, postage prepaid, addressed as follows or to such
other address as the parties shall have given notice of pursuant hereto:
(a) If to the Seller:
The First Connecticut Capital Corporation
1000 Bridgeport Avenue
Shelton CT 06484
With a copy to:
Duane L. Berlin, Esq.
Lev & Berlin, P.C.
535 Connecticut Avenue
Norwalk, CT 06851
(b) If to Buyer: FCCC Holding
Company, LLC 1000 Bridgeport Avenue
Shelton, CT 06484 Attention: Lawrence
R. Yurdin, President
With a copy to:
Michael L. Goldman, Esquire
Goldman & Gruder, L.L.C.
200 Connecticut Avenue
Suite 2F
Norwalk, CT 06854
All such notices shall be effective upon the earlier of receipt or, in the case
of certified or registered mail, seven (7) days after depositing in the mail,
postage prepaid, return receipt requested and addressed as shown above.
11.3 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) represents the entire understanding and agreement between the
parties with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the parties
hereto. This Agreement supersedes all prior agreements and arrangements between
the parties hereto and their affiliates.
A-10
11.4 SUCCESSORS AND ASSIGNS; BENEFITS. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and, except as
otherwise provided below, their respective successors and assigns. Nothing
contained in this Agreement or in any of the Schedules or Exhibits hereto is
intended to create any rights in any person or entity that is not a party to
this Agreement and no person or entity shall be deemed to be a third party
beneficiary hereof or thereof.
11.5 SECTION HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
11.6 APPLICABLE LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Connecticut,
without regard to the principles thereof relating to conflicts of law. The
parties hereto consent to the jurisdiction of the courts of the State of
Connecticut and the United States District Court for the District of
Connecticut.
11.7 EXPENSES. Except as otherwise provided herein, the parties
hereto shall pay their own respective fees and expenses, including without
limitation, attorneys' fees.
11.8 SEVERABILITY. If any provision of this Agreement shall be held
by any court of competent jurisdiction to be illegal, void or unenforceable,
such provision shall be of no force and effect, but the illegality or
unenforceability of such provision shall have no effect upon and shall not
impair the enforceability of any other provision of this Agreement.
11.9 PUBLICITY. Except as required by law or as part of Seller's
responsibilities as a publicly traded corporation, none of the parties hereto
shall issue any press release or make any other public statement or announcement
relating to, connected with or arising out of this Agreement or the matters
contained herein, without obtaining the prior written approval of the other
parties hereto to the contents and the manner of presentation and publication
thereof. Notwithstanding the foregoing, after the Closing Buyer and/or Seller
may issue any such release, statement or announcement as it reasonably deems
appropriate.
11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument. This Agreement may be
executed by telecopied signatures with the same effect as original signatures.
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11.11 SCHEDULES AND EXHIBITS. All Schedules and Exhibits referenced
herein are incorporated herein by reference and shall be initialed by both
parties in order to be deemed an integral part of this Agreement. The contents
of such Schedules and Exhibits are deemed to be disclosures to Buyer by Seller.
In the event that any Schedule or Exhibit provided for herein is incomplete or
has not been prepared by Seller and attached hereto as of the execution and
delivery of this Agreement, it shall be a condition precedent to Closing that
such Schedule or Exhibit shall be in form and substance reasonably satisfactory
to Buyer.
EXECUTED as of the date first indicated above:
- -------------------------------------- -----------------------------------------
FCCC HOLDING COMPANY, LLC THE FIRST CONNECTICUT CAPITAL CORPORATION
- -------------------------------------- -----------------------------------------
By:_____________________________ By:_______________________________
Its: Its:
- -------------------------------------- -----------------------------------------
A-12
AMENDMENT TO
ASSET PURCHASE AGREEMENT
This amendment (the "Amendment") is made as of this 30 day of
October, 2002 by and between The First Connecticut Capital Corporation, a
Connecticut corporation ("Seller" or "Company") and FCCC Holding Company, LLC, a
limited liability company duly organized under the laws of the State of
Connecticut ("Buyer").
W I T N E S S E T H:
WHEREAS, on June 28, 2002, the Company and Buyer entered into that
certain Asset Purchase Agreement (the "Agreement") whereby the Company agreed to
sell, convey, assign, transfer and deliver to Buyer, and Buyer agreed to
purchase and acquire from Company, all of Company's right, title and interest
in, to and under those assets set forth in the Agreement.
NOW THEREFORE, the Company and Buyer, in consideration of mutual
value, the receipt and sufficiency of which is hereby acknowledged, do hereby
agree to amend and modify the Agreement, as amended, as follows:
1. Paragraph 9. CLOSING, shall be deleted in its entirety and replaced
with the following:
"9. CLOSING. The Closing of the transactions contemplated hereby
shall take place at the offices of Seller, 1000 Bridgeport Avenue,
Shelton, Connecticut and shall occur on or about the tenth (10th)
business day following the approval by the Seller's shareholders of
the transactions contemplated and described by this agreement. If the
Closing has not occurred on or prior to December 30, 2002, and the
Buyer has not waived any conditions precedent, the obligation of
Buyer to close the transactions contemplated hereby shall be null and
void unless waived in writing by Buyer."
2. Except as specifically set forth herein, the Agreement, as amended,
shall remain unchanged and in full force and effect.
3. The execution, delivery and performance by the parties of this
Amendment have been duly authorized by all necessary corporate
action.
4. This Amendment, together with the Agreement, hereby constitutes the
legal, valid and binding obligations of the Company and the Buyer as
applicable and is enforceable against each party in accordance with
its terms.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
FCCC HOLDING COMPANY, LLC THE FIRST CONNECTICUT
CAPITAL CORPORATION
By:____________________________ By:____________________________
Its: Its:
SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
This amendment (the "Second Amendment") is made as of this 15th day
of December, 2002 by and between The First Connecticut Capital Corporation, a
Connecticut corporation ("Seller" or "Company") and FCCC Holding Company, LLC, a
limited liability company duly organized under the laws of the State of
Connecticut ("Buyer").
W I T N E S S E T H:
WHEREAS, on June 28, 2002, the Company and Buyer entered into that
certain Asset Purchase Agreement (the "Agreement") whereby the Company agreed to
sell, convey, assign, transfer and deliver to Buyer, and Buyer agreed to
purchase and acquire from Company, all of Company's right, title and interest
in, to and under those assets set forth in the Agreement.
WHEREAS, as of October 30, 2002, the Company and Purchasers entered
into that certain Amendment to Stock Purchase Agreement (the "First Amendment")
whereby the parties agreed to amend and modify the Agreement.
NOW THEREFORE, the Company and Buyer, in consideration of mutual
value, the receipt and sufficiency of which is hereby acknowledged, do hereby
agree to amend and modify the Agreement, as amended, as follows:
Paragraph 9. CLOSING, shall be deleted in its entirety and replaced with the
following:
1. "9. CLOSING. The Closing of the transactions contemplated hereby
shall take place at the offices of Seller, 1000 Bridgeport Avenue,
Shelton, Connecticut and shall occur on or about the tenth (10th)
business day following the approval by the Seller's shareholders of
the transactions contemplated and described by this agreement. If the
Closing has not occurred on or prior to February 28, 2002, and the
Buyer has not waived any conditions precedent, the obligation of
Buyer to close the transactions contemplated hereby shall be null and
void unless waived in writing by Buyer."
2. Except as specifically set forth herein, the Agreement, as amended,
shall remain unchanged and in full force and effect.
3. The execution, delivery and performance by the parties of this Second
Amendment have been duly authorized by all necessary corporate
action.
4. This Second Amendment, together with the First Amendment and the
Agreement, hereby constitutes the legal, valid and binding
obligations of the Company and the Buyer as applicable and is
enforceable against each party in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment
as of the day and year first above written.
FCCC HOLDING COMPANY, LLC THE FIRST CONNECTICUT
CAPITAL CORPORATION
By:____________________________ By:_________________________
Its: Its:
ANNEX B
Stock Purchase Agreement
STOCK OPTIONPURCHASE AGREEMENT (the "Agreement") dated as of June 28, 2002,
by and between The First Connecticut Capital Corporation, a Connecticut
corporation (the "Company"), and the individuals and firms listed on the
signature page of this Agreement (the "Purchasers"). The names and addresses and
the Federal Employer Identification or Social Security Numbers of the Purchasers
are also set forth on the signature page.
In consideration of the mutual promises and covenants contained
herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. SALE OF COMMON STOCK AND WARRANTS
1.1 AUTHORIZATION. The Company, subject to shareholder approval, has
authorized the sale and issuance to the Purchasers in the amounts set forth
opposite their respective names on Exhibit A hereto of an aggregate of 250,000
shares of Common Stock (the "Shares") and 5-year Warrants (the "Warrants") to
purchase an aggregate of 200,000 shares of Common Stock (the "Warrant Shares")
initially exercisable at a price of $1.00 per share, the form of which shall be
acceptable to the Company and the Purchasers.
1.2 SALE AND ISSUANCE OF THE SHARES AND WARRANTS. Subject to the
terms and conditions set forth in this Agreement, the Company will issue and
sell to the Purchasers and the Purchasers will buy from the Company the Shares
at a per share purchase price of $1.00 and the Warrants at a per Warrant
purchase price of $.01.
SECTION 2. CLOSING DATE; DELIVERY.
2.1 CLOSING DATE. The Closing, of the purchase and sale of the Shares
and Warrants (together the "Securities") shall take place at the offices of Lev
& Berlin, P.C. 535 Connecticut Avenue, Norwalk, Conn. 06854 at 10:00a.m., on the
fifth business day following shareholder approval of this Agreement or at such
other location, date, and time as may be agreed upon between the Purchasers and
the Company (such closing being called the "Closing" and such date and time
being called the "Closing Date") but in any event not later than October 31,
2002.
2.2 DELIVERY AND PAYMENT. At Closing, the Company will deliver to the
Purchasers a certificate or certificates, registered in each Purchaser's name,
representing the number of Shares and Warrants to be purchased by each Purchaser
at the Closing, against payment of the purchase price therefor, by (i) a
certified or official bank check payable to the Company, (ii) by wire transfer
per the Company's instructions, or (iii) by any combination of (i) and (ii)
above. The Company shall not be obligated to issue and sell any Shares and
Warrants unless all are purchased.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to the Purchasers as follows:
3.1 ORGANIZATION AND STANDING; CERTIFICATE OF INCORPORATION AND
BYLAWS. The Company is a corporation duly organized and validly existing and is
in good standing under the laws of the State of Connecticut. The Company has
requisite corporate power and authority to own and operate its properties and
assets and to carry on its business as now conducted and is duly qualified as a
foreign corporation in each jurisdiction in which such qualification is
necessary. Copies of the Certificate of Incorporation and Bylaws of the Company
have been provided to Purchasers. Said copies are true, correct and complete and
reflect all amendments now in effect.
B-1
3.2 CORPORATE POWER. The Company has all requisite legal and
corporate power and authority to execute and deliver this Agreement, and to
carry out and perform its obligations under the terms of this Agreement.
3.3 SUBSIDIARIES. The Company has no subsidiaries or affiliated
companies and does not otherwise own or control, directly or indirectly, any
equity interest in any corporation, association or business entity except as set
forth on Schedule 3.3 hereto.
3.4 CAPITALIZATION. The authorized capital stock in the Company
consists of 3,000,000 shares of Common Stock, no par value, stated value $.50
per share ("Common Stock") of which 1,173,382 shares are issued and outstanding
and an aggregate of 160,000 shares of Common Stock are reserved for issuance
under the Company's Stock Option Plans. Except as set forth in this Agreement,
there are no options, warrants or other rights to purchase or acquire any of the
Company's authorized and unissued capital stock. All issued and outstanding
shares of Common Stock of the Company have been duly authorized and validly
issued, are fully paid and nonassessable, and have been offered, issued, sold
and delivered by the Company in compliance with applicable Federal and state
securities laws.
3.5 AUTHORIZATION. All corporate action on the part of the Company
and its directors (subject only to soliciting and obtaining stockholder
approval) necessary for the authorization, execution, delivery and performance
of this Agreement by the Company, the authorization, sale, issuance and delivery
of the Shares, the Warrants and the Warrant Shares and the performance of the
Company's obligations under this Agreement has been taken or will be taken prior
to the Closing. This Agreement, constitutes the valid and binding obligation of
the Company, enforceable in accordance with its terms. The Shares, when issued
in compliance with the provisions of this Agreement, will be validly issued,
fully paid and nonassessable; the Warrants have been duly authorized and, when
delivered and paid for, shall be exercisable in accordance with their terms; the
Warrant Shares have been duly and validly reserved and, when issued upon
exercise of the Warrants will be validly issued, fully paid and nonassessable
and the Shares, the Warrants and the Warrant Shares will be free of any liens or
encumbrances other than restrictions under pertinent Federal and State
securities laws, rules and regulations.
3.6 REGISTRATION RIGHTS. Except as provided to the Purchasers and as
set forth in this Agreement, the Company is not under any contractual obligation
to register under the Securities Act of 1933, as amended (the "ACT") any of its
outstanding securities or any of its securities which may hereafter be issued,
including but not limited to, the Shares, the Warrants and Warrant Shares except
as provided in this Agreement hereafter.
3.7 GOVERNMENTAL CONSENT, ETC. No consent, approval order or
authorization of or registration, qualification, designation, declaration or
filing with any governmental authority on the part of the Company (except the
filing of a definitive proxy statement with the Securities and Exchange
Commission ("SEC") under the Securities Exchange Act of 1934 (the "Exchange
Act") and the rules and regulations of the SEC promulgated thereunder) is
required in connection with the valid execution and delivery of this Agreement
or the offer, sale or issuance of the Shares, the Warrants and the Warrant
Shares or other transactions contemplated hereby or by the Sale Agreement
hereinafter described, except the qualification (or taking of such action as may
be necessary to secure an exemption from qualification, if available) of the
offer and sale of the Shares, the Warrants and the Warrant Shares under
applicable Blue Sky laws, which filings and qualifications, if required, will be
accomplished by the Company, at its expense, in a timely manner.
B-2
3.8 OFFERING. Subject to the accuracy of the Purchasers'
representations in Section 4 hereof, the offer, sale and issuance of the Shares,
the Warrants and the Warrant Shares constitute transactions exempt from the
registration requirements of Section 5 of the Act.
3.9 PERMITS. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it. The Company is not in default under any of such franchises,
permits, licenses or other similar authority.
3.10 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation of any term of its Certificate of Incorporation or Bylaws, or in any
respect of any term or provision of any mortgage, indenture, contract,
agreement, instrument, judgment or decree, or any order, statute, rule or
regulation applicable to the Company. The execution, delivery and performance of
and compliance with this Agreement, and the consummation of the transactions
contemplated hereby, and the issuance of the Shares, the Warrants and the
Warrant Shares have not resulted and will not result in any violation of, or
conflict with, or constitute a default under any such term or provision, or
result in the creation of, any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company; and there is no such
violation or default or event which, with the passage of time or giving of
notice or both, would constitute a violation or default which would adversely
affect the business of the Company or any of its properties or assets.
3.11 SALE TRANSACTION. The Company is a party to an agreement of even
date herewith, pursuant to which it is proposed that it will sell the assets
comprising the Company's mortgage banking business (herein the "Business") in
the manner described in and contemplated thereby (the "Sale Agreement"). The
Sale Agreement has been executed and delivered by the Company and the
performance thereof has been duly authorized by all required corporate action,
subject to approval of the Company's shareholders at the Annual or a Special
Meeting of Shareholders to be convened as promptly as practicable after the date
hereof. The Sale Agreement is a valid and binding agreement of the parties
thereto, enforceable in accordance with its terms, subject only to the aforesaid
shareholders' approval. The representations and warranties made by the Company
and the other parties thereto contained in the Sale Agreement are deemed
incorporated herein as if made by the Company and such other parties and the
Purchaser shall be a third party beneficiary thereof with the rights attendant
thereto if there were any breach of, or misrepresentation contained in, any such
representations or warranties.
3.12 LITIGATION. There is neither pending nor threatened any action,
suit, proceeding or claim, whether or not purportedly on behalf of the Company,
to which the Company or any employee of the Company is or may be named as a
party or to which the Company's, or any such person's property is or may be
subject, except collection proceedings or foreclosures in the ordinary course of
the Company's business in which the Company is plaintiff. To the best of the
Company's knowledge, there is no basis for any such action, suit, proceeding or
claim, in which an unfavorable outcome, ruling or finding in any such matter or
for all such matters, taken as a whole, might have a material adverse effect on
the condition, financial or otherwise, operations or prospects of the Company.
The Company has no knowledge of any unasserted claim, the assertion of which is
likely and which, if asserted, will seek damages, an injunction or other legal,
equitable, monetary or nonmonetary relief which if granted would have a material
adverse effect on the condition, financial or otherwise, operations or prospects
of the Company.
B-3
3.13 ISSUANCE TAXES. All taxes imposed by any taxing authority in
connection with the issuance, sale and delivery of the Shares, the Warrants and
the Warrant Shares shall have been fully paid, and all laws imposing such taxes
shall have been fully complied with, prior to the Closing Date; however,
Purchasers acknowledge their responsibility for any income, capital gain or
similar tax arising out of the purchase or sale of the Securities or the
exercise of the Warrants and that the Company has made no representation as to
the tax consequences of said transactions.
3.14 ILLEGAL OR UNAUTHORIZED PAYMENTS; POLITICAL CONTRIBUTIONS.
Neither the Company nor any of its officers, directors, employees, agents or
other representatives, or any other business entity or enterprise with which the
Company is or has been affiliated or associated, has, directly or indirectly,
made or authorized any payment, contribution or gift of money, property, or
services, whether or not in contravention of applicable law, (a) as a kickback
or bribe to any person or (b) to any political organization, or the holder of or
any aspirant to any elective or appointive public office except for personal
political contributions not involving the direct or indirect use of funds of the
Company.
3.15 FINANCIAL STATEMENTS. The Balance Sheets of the Company as of
March 31, 2001 and 2002, and the related statements of income, changes in
stockholders' equity and cash flow for the fiscal years then ended, as restated
in 2001, audited by Saslow Lufkin & Buggy, LLP, including related notes and
schedules (the "Financial Statements") are true and complete in all material
respects and fairly present in all material respects the financial position and
results of operations of the Company as at said dates and for the periods then
ended, except as to the unaudited Financial Statements, which are subject to
customary year and audit adjustments, not material in amount. The Financial
Statements have been prepared in accordance with generally accepted accounting
principles, (GAAP), consistently applied, except the unaudited financial
statements may not have complete notes.
3.16 ABSENCE OF UNDISCLOSED LIABILITIES. The Financial Statements, as
restated, make full and adequate provision for all material obligations,
liabilities and commitments (fixed and contingent) of the Company as of the
dates thereof, and the Company had no material obligations, liabilities or
commitments (fixed or contingent) which were required to be set forth or
reserved in the Financial Statements or notes thereto in accordance with GAAP
and were not so set forth or reserved.
3.17 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the most recent
Balance Sheet date, the Company has:
(a) conducted its business only in the ordinary course;
(b) not suffered any material adverse change in its financial
condition or results of operations;
(c) not incurred any material obligation, liability or commitment
(fixed or contingent), except trade obligations in the ordinary
course of business; and
(d) not sold, transferred or leased any of its properties or assets
or entered into any transaction other than in the ordinary course
of business, except this Agreement and the Sale Agreement.
B-4
3.18 TAX MATTERS. The Company has prepared and filed, or duly
obtained extensions therefor, with the appropriate Federal, State or local
government agencies, all tax returns required to be filed; the Company has paid
all taxes shown on such returns to be payable or which have come due pursuant to
any assessment, etc.; the provisions, if any, in the Financial Statements are
sufficient for all accrued and unpaid taxes; and the Deferred Income Taxes item
on the March 31, 2002 Balance Sheet is true and correct in all material
respects.
3.19 SEC REPORTS. The Company has filed and is current with all
reports, including but not limited to, Form 10-K Annual Report and Form-10Q
Quarterly Report, required to be filed with the SEC, and each such report is
correct and complete in all material respects and provides the information
required to be included therein pursuant to SEC rules and regulations under the
Exchange Act.
3.20 BROKERS OR FINDERS. The Purchasers have not and will not incur,
directly or indirectly, as a result of any action taken by the Company, any
liability for brokerage or finders' fees in connection with the transactions
contemplated hereby.
3.21 INSURANCE.The Company has delivered to Purchasers a schedule
setting forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, key person,
workers' compensation coverage and bond and surety arrangements) which the
Company is a party, a named insured, or otherwise the beneficiary of coverage:
(a) The name, address, and telephone number of the agent.
(b) The name of the insurer, the name of the policyholder, and the
name of each covered insured.
(c) The policy number and the period of coverage.
(d) The scope (including an indication of whether the coverage is on
a claims made, occurrence or other basis) and amount (including a
description of how deductibles and ceilings are calculated and
operate) of coverage.
(e) A description of any retroactive premium adjustments or other
material loss-sharing arrangements.
With respect to each such insurance policy; (i) the policy is valid, binding,
enforceable and in full force and effect; (ii) neither the Company nor, to the
best knowledge of the Company, any other party to the policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and, to the best knowledge of the Company, no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification or acceleration, under the policy;
and (iii) no party to the policy has repudiated any material provision thereof.
3.22 DISCLOSURE. Neither this Agreement, nor any other written
statement furnished to the Purchaser or its counsel in connection with the offer
and sale of the Shares, the Warrants and the Warrant Shares or in connection
with the Sale Agreement, including the proxy statement related thereto to be
filed by the Company as contemplated herein, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein or herein not
misleading in the light of the circumstances under which they were made. There
is no fact which the Company has not disclosed to the Purchasers in writing
that, to the best knowledge of the Company, materially adversely affects, the
ability of the Company to perform this Agreement and the Sale Agreement or the
other actions contemplated herein.
B-5
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
The Purchasers hereby severally represent and warrant to the Company
as follows:
4.1 BUSINESS AND FINANCIAL EXPERIENCE. Each Purchaser is an
accredited investor within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act and has such knowledge and experience in financial and
business matters that each Purchaser is capable of evaluating the merits and
risks of the Purchaser's purchase of the Shares, the Warrants and the Warrant
Shares as contemplated by this Agreement. Each Purchaser's financial situation
is such that he or it can afford to bear the economic risk of holding the
Shares, the Warrants and the Warrant Shares for an indefinite period of time and
suffer complete loss of such Purchaser's investment.
4.2 INVESTMENT INTENT; BLUE SKY. Each Purchaser is acquiring the
Shares, the Warrants and the Warrant Shares for investment for such Purchaser's
own account, not as a nominee or agent, and not with a view to or for resale in
connection with any distribution thereof. Each Purchaser understands that the
issuance of the Shares, the Warrants and the Warrant Shares has not been, and
will not be, registered under the Act by reason of a specific exemption from the
registration provisions of the Act, the availability of which depends upon,
among other things, the bona fide nature of the Purchaser's true and correct
state of domicile, upon which the Company may rely for the purpose of complying
with applicable Blue Sky laws.
4.3 RULE 144. Each Purchaser acknowledges that the Shares, the
Warrants and the Warrant Shares must be held indefinitely unless subsequently
registered under the Act or unless an exemption from such registration is
available. The Purchaser is aware of the provisions of Rule 144 promulgated
under the Act which permit limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the shares, the availability
of certain current public information about the Company, the resale occurring
not less than one year after a party has purchased and paid for the security to
be sold, the sale being effected through a "broker's transaction" or in a
transaction directly with a "market maker", and the number of shares being sold
during any three-month period not exceeding specified limitations. The Company
makes no representation as to the future availability of any exemption from such
registration requirements.
4.4 RESTRICTIONS ON TRANSFER; RESTRICTIVE LEGENDS. Each Purchaser
understands that the transfer of the Shares, the Warrants and the Warrant
Shares, if applicable, is restricted by applicable state and federal securities
laws, and that the certificates representing the Shares, the Warrants and the
Warrant Shares will be imprinted with legends restricting transfer except in
compliance therewith.
4.5 ACCESS TO COMPANY INFORMATION. Each Purchaser has had an
opportunity to discuss the Company's business, management and financial affairs
with the Company's management. The Purchaser has also had an opportunity to ask
questions of officers of the Company. The Purchaser understands that such
discussions, as well as any written information issued by the Company, were
intended to describe the material aspects of the Company's business, including
the transactions contemplated by the Sale Agreement, but were not a thorough or
exhaustive description.
4.6 AUTHORIZATION. All action on the part of each Purchaser, the
Purchaser's Board of Directors and stockholders or Trustees, as applicable,
necessary for the authorization, execution, delivery and performance of this
Agreement by the Purchaser, the purchase of and payment for the Shares, the
Warrants and the Warrant Shares, if applicable, and the performance of all of
such Purchaser's obligations under this Agreement has been taken or will be
taken prior to the Closing. This Agreement, when executed and delivered by each
Purchaser, shall constitute the valid and binding obligation of each Purchaser,
enforceable in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies.
The execution of this Agreement and consummation by Purchasers of the
transactions on their part contemplated herein will not breach or violate any
order or judgment of any court or governmental agency or any contract or
agreement to which any of the Purchasers is a party or may be bound.
B-6
4.7 BROKERS OR FINDERS. The Company has not and will not incur,
directly or indirectly, as a result of any action taken by any Purchaser, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or the transactions contemplated
hereby.
4.8 NO VIOLATIONS, ETC. Neither Martin Cohen nor Bernard Zimmerman or
any of the Purchasers has had a criminal conviction; been the subject of any
regulatory enforcement action or any civil order or judgment involving financial
fraud or wrongdoing; or been denied or had revoked any license or permit
involving securities or any financial business.
SECTION 5. CONDITIONS TO CLOSING OF THE PURCHASERS.
The Purchasers obligation to purchase the Shares and Warrants is,
unless waived in writing by the Purchasers, subject to the fulfillment as of the
Closing Date of the following conditions:
5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Company in Section 3 hereof shall be true and correct in
all material respects as of the date of the Closing.
5.2 COVENANTS.All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by the Company have been
performed or complied with in all material respects.
5.3 BLUE SKY. The Company shall have obtained all necessary Blue Sky
law permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Shares, the
Warrants and the Warrant Shares.
5.4 SHAREHOLDER APPROVAL. The Company's shareholders shall have
approved this Agreement, the Sale Agreement and the other matters requiring
their approval as provided herein and in the Sale Agreement.
5.5 SALE AGREEMENT. The Company shall have consummated the Sale
Agreement in accordance with the terms and provisions thereof and upon
consummation thereof, the Company shall have on hand not less than $1,250,000 in
cash after payment of all of the Company's expenses, current or accrued, related
to the transactions described herein and in the Sale Agreement, excluding cash
to be derived from the sale of the Shares and Warrants as provided herein.
5.6 COMPLIANCE CERTIFICATE. The Company shall have delivered to the
Purchaser a certificate of the Company executed by the President and Chief
Executive Officer of the Company, dated as of the date of the Closing certifying
to the fulfillment of the conditions specified in Sections 5.1 and 5.2 of this
Agreement.
B-7
5.7 BOARD OF DIRECTORS. Upon the Closing date, the number of
directors constituting the Board of Directors of the Company shall initially be
five (5) and shall consist of Lawrence Yurdin, Michael Goldman, Martin Cohen,
Bernard Zimmerman and one additional individual to be designated by Messrs.
Cohen and Zimmerman.
5.8 2002 EQUITY INCENTIVE PLAN. The Board of Directors and
shareholders of the Company shall have authorized and adopted a 2002 Equity
Incentive Plan, in form and content satisfactory to the Purchasers, for
officers, directors, key employees and consultants of the Company other than
Messrs. Cohen and Zimmerman, covering an aggregate of 150,000 shares of the
Company's authorized and unissued Common Stock.
5.9 EMPLOYMENT AGREEMENTS. All of the Company's employment agreements
or relationships, written or oral, shall have been cancelled as of the Closing
Date and the Company shall have no liability or obligation for severance,
accrued vacation, bonus or other payment of any kind to any current or past
employee of the Company.
5.10 OUTSTANDING STOCK OPTIONS. Each holder of an option to purchase
Common Stock of the Company who holds an option which is exercisable after the
Closing Date shall have agreed in writing with the Company that notwithstanding
any term or provision of any such option that any shares acquired upon exercise
of an option may not be publicly offered or sold for a period of eighteen (18)
months after the Closing Date.
5.11 SUCESSOR GENERAL PARTNER. The purchaser designated in the Sale
Agreement shall provide for a successor general partner in any limited
partnership in which the Company serves in such capacity and shall indemnify and
hold harmless the Company from any claim or liability which it may incur by
reason of having served in such capacity.
5.12 RELEASES. Each of the officers and directors of the Company
shall execute and deliver a general release in customary form in favor of the
Company.
5.13 LEGAL OPINION. The Purchaser shall have received an opinion of
Lev & Berlin, P.C., counsel to the Company covering such matters as Purchasers
reasonably may request.
5.14 SHARE AND WARRANT CERTIFICATES. The Company shall have issued to
the Purchasers certificates representing the Shares and Warrants in accordance
with this Agreement.
5.15 INVESTIGATION SATISFACTORY. The Purchasers shall be satisfied in
all respects with the results of their investigation of the Company and the
proposed sale of the Business as described in the proxy statement contemplated
herein and the independent evaluation of the Business.
5.16 EXPENSES. The Company shall have paid the expenses set forth in
Section 9.5.
5.17 PROCEEDINGS. On or before the Closing Date, all actions,
proceedings, instruments and documents required by, or on behalf of, the Company
to execute, deliver and carry out this Agreement, and all agreements incidental
hereto, and all other related legal matters, shall be reasonably satisfactory to
the Purchasers and their counsel.
5.18 NO MATERIAL EVENT. The Purchasers shall not have discovered any
material error in, misstatement of or omission to disclose any material fact
relating to the Company or the Sale Agreement.
5.19 REPORTS AND RETURNS. The Company shall have filed its From 10-K
Annual Report for the fiscal year ended March 31, 2002 and such other periodic
reports as may be required and shall have filed Federal and State tax returns
for such fiscal year.
B-8
SECTION 6. CONDITIONS TO CLOSING OF THE COMPANY.
The Company's obligation to issue and sell and issue the Shares and
Warrants is, unless waived in writing by the Company, subject to the fulfillment
as of the Closing Date of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchasers in Section 4 hereof shall be true and correct
in all material respects as of the Closing Date.
6.2 COVENANTS. All covenants, agreements, and conditions contained in
this Agreement to be performed or complied with by the Purchasers on or prior to
the Closing Date shall have been performed or complied with in all material
respects.
6.3 COHEN AND ZIMMERMAN CONSULTING ARRANGEMENTS. The Company and
Messrs. Cohen and Zimmerman shall have executed and delivered Consulting
Agreements in form and content reasonably satisfactory to the Company and
Messrs. Cohen and Zimmerman.
6.4 SALE AGREEMENT. The Company shall have consummated the Sale
Agreement in accordance with the terms and provisions thereof.
6.5 INVESTMENT. The Purchasers shall have tendered, in the aggregate,
at the Closing, consideration of not less than $252,000 for the Shares and
Warrants.
6.6 LEGAL OPINION. The Company shall have received an opinion from
Jay J. Miller, Esq., counsel to the Purchasers, covering such matters as the
Company reasonably may request.
6.7 SHAREHOLDER APPROVAL. The Company's shareholders shall have
approved this Agreement, the Sale Agreement and the other matters requiring
their approval as provided herein and in the Sale Agreement.
6.8 PROCEEDINGS. On or before the Closing Date, all actions,
proceedings, instruments and documents, by or on behalf of the Purchasers to
execute, deliver and carry out this Agreement and all agreements incidental
hereto, and all other related legal matters, shall be reasonably satisfactory to
the Company and its counsel.
6.9 EXPENSES. The Company shall have paid the expenses set forth in
Section 9.5.
6.10 COMPLIANCE CERTIFICATE. The Purchasers shall have delivered to
the Company a certificate executed by each of the Purchasers dated as of the
Closing Date certifying to the fulfillment of the conditions specified in
Sections 6.1 and 6.2.
SECTION 7. COVENANTS OF THE COMPANY.
The Company hereby covenants and agrees for the benefit of the
Purchasers as follows:
7.1 PROXY STATEMENT. As promptly as practicable after the date of
this Agreement, the Company shall prepare and file a proxy statement under the
Exchange Act and pertinent rules and regulations, relating to an Annual or
Special Meeting of Shareholders of the Company to be held to consider and act
upon, among other matters, the authorization and approval of this Agreement and
the Sale Agreement; the election of five (5) directors; the adoption of a 2002
Equity Incentive Plan; the change of the Company's corporate name; and such
other matters as may properly come before the meeting; and use its best efforts
to have such material distributed at the earliest practicable date.
B-9
7.2 INDEPENDENT EVALUATION. The Company shall engage a recognized
appraiser to prepare a "fairness opinion" relating to the sale of the Business
to be included in the Company's proxy material.
7.3 OTHER OFFERS. Pending consummation of the transactions
contemplated herein and in the Sale Agreement, the Company shall not seek or
solicit other purchasers of the Business or any equity interest in the Company
or otherwise entertain any proposal therefor, subject, however, to the fiduciary
responsibility of the Company's Board of Directors. In the event the Company's
Board of Directors determines not to proceed with the transactions provided
herein or the Sale Agreement, the Company shall reimburse the Purchasers
promptly upon request for all of their costs and expenses, including counsel
fees, incurred by Purchasers in connection with this Agreement and the
transactions contemplated herein.
7.4 REGULATORY REPORTS. The Company shall prepare and file timely
with the SEC, State securities departments and other cognizant regulatory
authorities, including the NASD, such reports or other filings as may be
required in connection with the transactions contemplated herein and in the Sale
Agreement.
7.5 REGISTRATION. If, after the Closing, a business transaction is
consummated between the Company and an unaffiliated person or firm, the Company,
upon request of the holders of not less than fifty (50%) percent of the Shares
and Warrants or Warrant Shares, if the Warrants have been exercised, shall
prepare and file at its expense a Registration Statement under the Act on
appropriate form to permit the holders of such Securities to publicly offer and
sell such Securities in the prevailing market or in negotiated transactions and
shall use its best efforts to cause such Registration Statement to become
effective at the earliest practicable date. In such event, such persons shall
provide the Company with such information as it reasonably may request and the
Company and the selling security holders shall indemnify each other as the
Company's counsel reasonably may request. The Company shall also file such
documents as may be required by State securities agencies; however, the Company
shall not be required to qualify in any jurisdiction or generally consent to
service of process and also make such filings as the NASD may require, in each
instance at the Company's expense. The selling security holders shall be
responsible for any underwriting discounts or commissions in connection with
their sales of Securities.
7.6 SALE AGREEMENT PROVISIONS. The Company may not amend any term,
provision or condition of the Sale Agreement nor waive any condition or
requirement thereof except upon the prior written consent of the Purchasers.
Without limiting the generality of the foregoing, the Company may not cancel or
amend any insurance coverage which it has as of the date of this Agreement
SECTION 8. COVENANTS OF THE PURCHASERS.
The Purchasers hereby covenant and agree for the benefit of the
Company as follows:
8.1 INVESTMENT REPRESENTATION. Each of the Purchasers represents and
agrees that he or it is acquiring the Shares, the Warrants and Warrant Shares
for investment for his or its sole account and not with a view towards the
public distribution or resale thereof and shall not offer, sell, transfer or
assign any of the Securities except in compliance with pertinent Federal and
State securities laws, rules and regulations. Each Purchaser consents that an
appropriate restrictive legend be imprinted on the certificates for the Shares,
Warrants, and Warrant Shares and the Company's stock transfer agent shall be
instructed to make appropriate notation on the Company's stock transfer ledger.
B-10
8.2 SHAREHOLDER DISTRIBUTION. Not later than ninety (90) days after
the Closing Date, Purchasers shall cause the Company to distribute to its
shareholders a pro-rata cash dividend to the extent that the Company's cash on
hand following closing of the Sale Agreement and after payment of all expenses,
current or accrued, related to the transactions provided herein and in the Sale
Agreement exceeds $1,250,000, but excluding cash to be derived from the sale of
the Shares and Warrants to the Purchasers herein; provided such dividend is at
least $.15 per share to all of the Company's shareholders.
8.3 LIQUIDATION. In the event the Company fails to complete a
material transaction or series of transactions within three (3) years of the
Closing of the transactions provided herein and in the Sale Agreement,
Purchasers shall take all steps reasonably required to cause the Company to
dissolve and distribute its cash then on hand, pro-rata, to its shareholders.
For purposes hereof, a material transaction shall be defined as having an
aggregate value of not less than $750,000. If the Company, at the expiration of
said three (3) year period is then involved in good faith negotiations to
consummate a material transaction, then the obligation to distribute the
Company's cash as aforesaid shall be extended for a period not to exceed ninety
(90) days to permit the completion of such negotiations.
8.4 COOPERATION. The Purchasers shall cooperate reasonably with the
Company and provide such information as the Company or its counsel reasonably
may request to prepare proxy material and regulatory reports or other filings.
SECTION 9. MISCELLANEOUS.
9.1 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Connecticut
without regard to conflict of laws provisions.
9.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and any other
documents delivered pursuant hereto, including exhibits or schedules hereto
constitute the full and entire understanding and agreement among the parties
with regard to the subject hereof and no party shall be liable or bound to any
other party in any manner by any warranties, representations or covenants except
as specifically set forth herein or therein. Except as expressly provided
herein, neither this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed by the party
against whom enforcement of any such amendment, waiver, discharge or termination
is sought.
9.3 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by facsimile
transmission, by hand or by messenger or overnight express, addressed:
(a) if to the Purchasers to the address or fax number listed after
such Purchaser's name on the signature page or at such other
address as such Purchaser shall have furnished to the Company
with a copy to:
B-11
Jay J. Miller, Esq.
430 East 57th Street Fax: 212-758-0624
Suite 5D
New York, NY 10022
(b) if to the Company, to:
The First Connecticut Capital Corporation
1000 Bridgeport Avenue
Shelton, CT 06484 Fax: 203-944-5405
or at such other address as the Company shall have furnished to
the Purchasers with a copy to:
Duane Berlin, Esq.
Lev & Berlin, P.C.
535 Connecticut Avenue
Norwalk, CT 06854 Fax: 203-854-1652
Each such notice or other communication shall for all purposes of
this Agreement be treated as effective or having been given when
received if delivered personally, if sent by facsimile, the first
business day after the date of confirmation that the facsimile has
been successfully transmitted to the facsimile number for the party
notified, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained
receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
9.4 DELAYS OR OMISSIONS. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party,
upon any breach or default of another party under this Agreement, shall impair
any such right, power or remedy of such party nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall nay waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.
9.5 EXPENSES. Each of the parties to this Agreement shall bear its
own costs, expenses and professional fees in connection with the negotiation and
consummation of the terms hereof; however, if the transactions contemplated
herein were not consummated for any reason other than Purchasers inability or
unwillingness (except for a breach by the Company of its representations,
warranties or obligations herein or a default by Buyer under the Sale Agreement,
including the failure of Buyer to obtain all necessary consents of third
parties) to perform their obligations herein or the failure by the Company's
shareholders to authorize and approve the transactions contemplated herein and
in the Sale Agreement, the Company shall reimburse the Purchasers, promptly upon
request, for all of their expenses, including counsel or other professional
fees, reasonably incurred in connection with the negotiation and preparation of
this Agreement and the transactions contemplated herein, but in an amount not to
exceed $35,000.
B-12
9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which together
shall constitute one instrument.
9.7 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision, which shall be replaced with an enforceable provision
closest in intent and economic effect as the severed provision; provided that no
such severability shall be effective if it materially changes the economic
benefit of this Agreement to any party.
9.8 TITLE AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.9 SURVIVAL OF WARRANTIES. The representations and warranties of the
Company and the Purchasers contained in or made pursuant to this Agreement shall
survive execution and delivery of this Agreement and the Closing for a period of
two years and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Purchasers or the Company.
B-13
9.10 SUCCESSORS AND ASSIGNS. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto, as the case may be.
9.11 FURTHER ASSURANCES. Each party hereto agrees
to do all acts and things, and to make, execute and delivery such written
instruments, as shall from time to time be reasonably required to carry out the
terms and provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the day and year first above written.
PURCHASERS:
-----------------------------------
Name:
Address:
Fax No.
-----------------------------------
Name:
Address:
Fax No.
The First Connecticut Capital Corporation
By:_______________________________
Lawrence Yurdin
President and
Chief Executive Officer
B-14
To induce Purchasers to execute and deliver this Agreement and to
perform their obligations hereunder, the undersigned hereby agree to vote all of
their shares of Common Stock of the Company in favor of the transactions
provided herein at the Annual or a Special Meeting of Shareholders of the
Company contemplated herein.
------------------------------
------------------------------
------------------------------
B-15
EXHIBIT A
PURCHASER SHARES WARRANTS
Bernard Zimmerman & Co. Inc. 25,000 100,000
18 High Meadow Road
Weston, Conn. 06883
EIN # 13-2736451
Martin Cohen, Trustee 125,000 100,000
Cohen Profit Sharing Plan
27 E. 65th Street
Apartment 11A
New York, NY 10021
EIN # 22-3415892
AMENDMENT TO
STOCK PURCHASE AGREEMENT
This amendment (the "Amendment") is made as of this 30th day of
October, 2002 by and between The First Connecticut Capital Corporation, a
Connecticut corporation (the "Company") and the individuals and firms listed on
the signature page of this Amendment (the "Purchasers").
W I T N E S S E T H:
WHEREAS, on June 28, 2002, the Company and Purchasers entered into
that certain Stock Purchase Agreement (the "Agreement") for the sale and
issuance by the Company to Purchasers of an aggregate of 250,000 shares of the
Company's Common Stock and 5-year Warrants to purchase an aggregate of 200,000
shares of Company's Common Stock initially exercisable at a price of $1.00 per
share.
NOW THEREFORE, the Company and Purchasers, in consideration of mutual
value, the receipt and sufficiency of which is hereby acknowledged, do hereby
agree to amend and modify the Agreement as follows:
1. Section 8.3 - LIQUIDATION, shall be deleted in its entirety.
2. The following Section 7.7 shall be added to Section 7 - Covenants
of the Company.
"Section 7.7 LIQUIDATION VOTE
If the Company fails to consummate a material transaction within
three years of the closing of the transactions provided herein
and in the Sale Agreement, then, upon the written request by the
holders of 20% or more of the then issued and outstanding Common
Stock of the Company held by non-affiliates of management, the
Company shall hold a meeting of shareholders as promptly as
practicable and solicit proxies therefor pursuant to which the
shareholders will consider and vote on the dissolution and
liquidation of the Company. At such meeting, all shares held by
management shall be voted in the same proportion as shares voted
by non-affiliates of non-management."
3. Section 2.1 is hereby amended and restated as follows:
"Section 2.1 CLOSING DATE. The Closing, of the purchase and
sale of the Shares and Warrants (together the "Securities") shall
take place at the offices of Lev & Berlin, P.C. 535 Connecticut
Avenue, Norwalk, Conn. 06854 at 10:00a.m., on the fifth business
day following shareholder approval of this Agreement or at such
other location, date, and time as may be agreed upon between the
Purchasers and the Company (such closing being called the
"Closing" and such date and time being called the "Closing Date")
but in any event not later than November 30, 2002." Such
extension of the Closing Date shall not affect the Company's
obligation to reimburse Purchasers for expenses in an amount not
to exceed $35,000, by reason of the failure to hold the
shareholders meeting by October 31, 2002, which obligation has
now matured.
4. Except as specifically set forth herein, the Agreement, as
amended, shall remain unchanged and in full force and effect.
5. The execution, delivery and performance by the parties of this
Amendment have been duly authorized by all necessary corporate
action.
6. This Amendment, together with the Agreement, hereby constitutes
the legal, valid and binding obligations of the Company and the
Purchasers as applicable and is enforceable against each party in
accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written.
PURCHASERS:
-----------------------------------
Name:
------------------------------------
Name:
THE FIRST CONNECTICUT CAPITAL CORPORATION:
By:_________________________________
Lawrence Yurdin
President and Chief Executive Officer
SECOND AMENDMENT TO
STOCK PURCHASE AGREEMENT
This amendment (the "Second Amendment") is made as of this ___ day of
December, 2002 by and between The First Connecticut Capital Corporation, a
Connecticut corporation (the "Company") and the individuals and firms listed on
the signature page of this Second Amendment (the "Purchasers").
W I T N E S S E T H:
WHEREAS, on June 28, 2002, the Company and Purchasers entered into
that certain Stock Purchase Agreement (the "Agreement") for the sale and
issuance by the Company to Purchasers of an aggregate of 250,000 shares of the
Company's Common Stock and 5-year Warrants to purchase an aggregate of 200,000
shares of Company's Common Stock initially exercisable at a price of $1.00 per
share.
WHEREAS, as of October 30, 2002, the Company and Purchasers entered
into that certain amendment to Stock Purchase Agreement (the "First Amendment")
whereby the parties agreed to amend and modify the Agreement.
NOW THEREFORE, the Company and Purchasers, in consideration of mutual
value, the receipt and sufficiency of which is hereby acknowledged, do hereby
agree to amend and modify the Agreement, as amended, as follows:
1. Section 2.1 is hereby amended and restated as follows:
"2.1 CLOSING DATE. The Closing, of the purchase and sale of
the Shares and Warrants (together the "Securities") shall take
place at the offices of Lev & Berlin, P.C. 200 Connecticut
Avenue, Norwalk, Conn. 06854 at 10:00a.m., on the fifth business
day following shareholder approval of this Agreement or at such
other location, date, and time as may be agreed upon between the
Purchasers and the Company (such closing being called the
"Closing" and such date and time being called the "Closing Date")
but in any event not later than February 15, 2003."
2. Section 9.5 is hereby amended and restated as follows:
"9.5 EXPENSES. Each of the parties to this Agreement shall bear
its own costs, expenses and professional fees in connection with
the negotiation and consummation of the terms hereof; however, if
the transactions contemplated herein were not consummated for any
reason other than Purchasers inability or unwillingness (except
for a breach by the Company of its representations, warranties or
obligations herein or a default by Buyer under the Sale
Agreement, including the failure of Buyer to obtain all necessary
consents of third parties) to perform their obligations herein or
the failure by the Company's shareholders to authorize and
approve the transactions contemplated herein and in the Sale
Agreement, the Company shall reimburse the Purchasers, promptly
upon request, for all of their expenses, including counsel or
other professional fees, reasonably incurred in connection with
the negotiation and preparation of this Agreement and the
transactions contemplated herein, but in an amount not to exceed
$60,000."
3. The parties further agree, confirm and acknowledge that the
consulting fees payable by the Company to Messrs Zimmerman and
Cohen following the Closing shall be in the amounts of $24,000
per year for Mr. Cohen and $24,000 per year for Mr. Zimmerman.
4. Except as specifically set forth herein, the Agreement, as
amended, shall remain unchanged and in full force and effect.
5. The execution, delivery and performance by the parties of this
Second Amendment have been duly authorized by all necessary
corporate action.
6. This Second Amendment, together with the First Amendment and the
Agreement, hereby constitutes the legal, valid and binding
obligations of the Company and the Purchasers as applicable and
is enforceable against each party in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the day and year first above written.
PURCHASERS:
-----------------------------------
Name:
------------------------------------
Name:
THE FIRST CONNECTICUT CAPITAL CORPORATION:
By:_________________________________
Lawrence Yurdin
President and Chief Executive Officer
ANNEX C
2002 Equity Incentive Plan
FCCC, INC.
2002 EQUITY INCENTIVE PLAN
1. PURPOSE; EFFECTIVENESS OF THE PLAN
(a) The purpose of this Plan is to advance the interests
of the Company and its stockholders by helping the Company
obtain and retain the services of employees, officers, consultants, and
directors, upon whose judgment, initiative and efforts the Company is
substantially dependent, and to provide those persons with further incentives to
advance the interests of the Company.
(b) This Plan will become effective on the date of its
adoption by the Board, provided this Plan is approved by the
stockholders of the Company (excluding holders of shares of Stock issued by the
Company pursuant to the exercise of options granted under this Plan) within
twelve (12) months before or after that date. If this Plan is not so approved by
the stockholders of the Company, any options granted under this Plan will be
rescinded and will be void. This Plan will remain in effect until it is
terminated by the Board or the Committee (as defined hereafter) under section 9
hereof, except that no ISO (as defined herein) will be granted after the tenth
anniversary of the date of this Plan's adoption by the Board. This Plan will be
governed by, and construed in accordance with, the laws of the State of
Connecticut.
2. CERTAIN DEFINITIONS. Unless the context otherwise requires, the
following defined terms (together with other capitalized terms defined elsewhere
in this Plan) will govern the construction of this Plan, and of any stock option
agreements entered into pursuant to this Plan:
(a)"10% Stockholder" means a person who owns, either
directly or indirectly by virtue of the ownership attribution provisions set
forth in Section 424(d) of the Code at the time he or she is granted an Option,
stock possessing more than ten percent (10%) of the total combined voting power
or value of all classes of stock of the Company and/or of its subsidiaries;
(b)"1933 Act" means the federal Securities Act of 1933, as
amended;
(c)"Board" means the Board of Directors of the Company;
(d)"Called for under an Option," or words to similar
effect, means issuable pursuant to the exercise of an Option;
(e)"Code" means the Internal Revenue Code of 1986, as
amended (references herein to Sections of the Code are intended to refer to
Sections of the Code as enacted at the time of this Plan's adoption by the Board
and as subsequently amended, or to any substantially similar successor
provisions of the Code resulting from recodification,re-codification, renumbering or
otherwise);
C-1
(f)"Committee" means a committee of two or more directors,
appointed by the Board, to administer and interpret this Plan; provided that the
term "Committee" will refer to the Board during such times as no Committee is
appointed by the Board.
(g)"Company" means The First Connecticut Capital
Corporation, a Connecticut corporation;
(h)"Disability" has the same meaning as "permanent and
total disability," as defined in Section 22(e)(3) of the Code;
(i)"Eligible Participants" means persons who, at a
particular time, are employees, officers, consultants, or directors of the
Company or its subsidiaries;
(j)"Fair Market Value" means, with respect to the Stock
and as of the date an ISO is granted hereunder, the market price per share of
such Stock determined by the Committee, consistent with the requirements of
Section 422 of the Code and to the extent consistent therewith, as follows:
(i) If the Stock was traded on a stock exchange on the date
in question, when the Fair Market Value will be equal to
the closing price reported by the applicable
composite-transactions report for such date;
(ii) If the Stock was traded over-the-counter on the date
in question and was classified as a national market issue,
then the Fair Market Value will be equal to the
last-transaction price quoted by the NASDAQ system for such
date;
(iii) If the Stock was traded over-the-counter on the date
in question but was not classified as a national market
issue, then the Fair Market Value will be equal to the
average of the last reported representative bid and asked
prices quoted by the NASDAQ system for such date; and
(iv) If none of the foregoing provisions is applicable,
then the Fair Market Value will be determined by the
Committee in good faith on such basis as it deems
appropriate.
(k) "ISO" has the same meaning as "incentive stock
option," as defined in Section 422 of the Code;
(l) "Involuntary Transfer" means a Transfer that occurs
pursuant to any of the following: an assignment of Option Stock for the benefit
of creditors of the Optionee; a Transfer by operation of law, including, 2
without
limitation, a Transfer by will or under the laws of descent and distribution; an
execution of judgment against the Option Stock or the acquisition of record or
beneficial ownership of Option Stock by a lender or creditor; a Transfer
pursuant to any decree of divorce, dissolution or separate maintenance, any
property settlement, any separation agreement or any other agreement with a
spouse (except for estate planning purposes) under which a part or all of any
Option Stock are Transferred or awarded to the spouse of the Optionee or are
required to be sold; or a Transfer resulting from the filing by the Optionee of
a petition for relief, or the filing of an involuntary petition against the
Optionee, under the bankruptcy laws of the United States or of any other nation;
C-2
(m)"Just Cause Termination" means a termination by the
Company of an Optionee's employment by and/or service to the Company (or if the
Optionee is a director, removal of the Optionee from the Board by action of the
stockholders or, if permitted by applicable law and the by-laws of the Company,
the other directors), in connection with the good faith determination of the
Company's board of directors (or of the Company's stockholders if the Optionee
is a director and the removal of the Optionee from the Board is by action of the
stockholders, but in either case excluding the vote of the Optionee if he or she
is a director or a stockholder) that the Optionee has engaged in any acts
involving dishonesty or moral turpitude or in any acts that materially and
adversely affect the business, affairs or reputation of the Company or its
subsidiaries;
(n) "NSO" means any option granted under this Plan whether
designated by the Committee as a "non-qualified stock option," a "non-statutory
stock option" or otherwise, other than an option designated by the Committee as
an ISO, or any option so designated but which, for any reason, fails to qualify
as an ISO pursuant to Section 422 of the Code and the rules and regulations
thereunder;
(o) "Option" means an option granted pursuant to this Plan
entitling the option holder to acquire shares of Stock issued by the Company
pursuant to the valid exercise of the option;
(p) "Option Agreement" means an agreement between the
Company and an Optionee, in form and substance satisfactory to the Committee in
its sole discretion, consistent with this Plan;
(q)"Option Price" with respect to any particular Option
means the exercise price at which the Optionee may acquire each share of the
Option Stock called for under such Option;
(r)"Option Stock" means Stock issued or issuable by the
Company pursuant to the valid exercise of an Option;
(s) "Optionee" means an Eligible Participant to whom
Options are granted hereunder, and any transferee thereof pursuant to a Transfer
authorized under this Plan;
(t) "Plan" means this 1999 Stock Option Plan of the
Company;
3
(u) "QDRO" has the same meaning as "qualified domestic
relations order" as defined in Section 414(p) of the Code;
(v) "Stock" means shares of the Company's Common voting
stock;
C-3
(w) "Subsidiary" has the same meaning as "Subsidiary
Corporation" as defined in Section 424(f) of the Code;
(x) "Transfer," with respect to Option Stock, includes,
without limitation, a voluntary or involuntary sale, assignment, transfer,
conveyance, pledge, hypothecation, encumbrance, disposal, loan, gift, attachment
or levy of such Option Stock; and
(y) "Voluntary Transfer" means any Transfer other than an
Involuntary Transfer.
3. ELIGIBILITY. The Company may grant Options under this Plan only to
persons who are Eligible Participants as of the time of such grant. Subject to
the provisions of sections 4(d), 5 and 6 hereof, there is no limitation on the
number of Options that may be granted to an Eligible Participant.
4. ADMINISTRATION.
(a) COMMITTEE. The Committee, if appointed by the Board,
will administer this Plan. If the Board, in its
discretion, does not appoint such a Committee, the Board itself will administer
this Plan and take such other actions as the Committee is authorized to take
hereunder; provided that the Board may take such actions hereunder in the same
manner as the Board may take other actions under the Company's certificate of
incorporation and by-laws generally.
(b) AUTHORITY AND DISCRETION OF COMMITTEE. The Committee
will have full and final authority in its discretion, at
any time and from time to time, subject only to the express terms, conditions
and other provisions of the Company's certificate of incorporation, by-laws and
this Plan, and the specific limitations on such discretion set forth herein:
(i) to select and approve the persons who will be
granted Options under this Plan from among the Eligible
Participants, and to grant to any person so selected one or
more Options to purchase such number of shares of Option
Stock as the Committee may determine;
(ii) to determine the period or periods of time during
which Options may be exercised, the Option Price and the
duration of such Options, and other matters to be
determined by the Committee in connection with specific
Option grants and Option Agreements as specified under this
Plan;
(iii) to interpret this Plan, to prescribe, amend and
rescind rules and regulations relating to this Plan, and to
make all other determinations necessary or advisable for
the operation and administration of this Plan; and
4
(iv) to delegate all or a portion of its authority under
subsections (i) and (ii) of this section 4(b) to one or
more directors of the Company who are executive officers of
the Company, but only in connection with Options granted to
Eligible Participants who are not officers or directors of
the Company, and subject to such restrictions and
limitations (such as the aggregate number of shares of
Option Stock called for by such Options that may be
granted) as the Committee may decide to impose on such
delegate directors.
C-4
(c) LIMITATION ON AUTHORITY. Notwithstanding the foregoing,
or any other provision of this Plan, the Committee will have no authority to
grant Options to any of its members, unless approved by the Board.
(d) DESIGNATION OF OPTIONS. Except as otherwise provided
herein, the Committee will designate any Option granted
hereunder either as an ISO or as an NSO. To the extent that the Fair Market
Value (determined at the time the Option is granted) of Stock with respect to
which all ISOs are exercisable for the first time by any individual during any
calendar year (pursuant to this Plan and all other plans of the Company and/or
its subsidiaries) exceeds $100,000, such option will be treated as an NSO.
Notwithstanding the general eligibility provisions of section 3 hereof, the
Committee may grant ISOs only to persons who are employees of the Company and/or
its subsidiaries.
(e) OPTION AGREEMENTS. Options will be deemed granted
hereunder only upon the execution and delivery of an Option Agreement by the
Optionee and a duly authorized officer of the Company. Options will not be
deemed granted hereunder merely upon the authorization of such grant by the
Committee.
5. SHARES RESERVED FOR OPTIONS.
(a) OPTION POOL. The aggregate number of shares of Option
Stock that may be issued pursuant to the exercise of Options granted under this
Plan will not exceed One Hundred Fifty Thousand (150,000) (the "Option Pool"),
provided that such number will be increased by the number of shares of Option
Stock that the Company subsequently may reacquire through repurchase or
otherwise. Shares of Option Stock that would have been issuable pursuant to
Options, but that are no longer issuable because all or part of those Options
have terminated or expired, will be deemed not to have been issued for purposes
of computing the number of shares of Option Stock remaining in the Option Pool
and available for issuance.
(b) ADJUSTMENTS UPON CHANGES IN STOCK. In the event of any
change in the outstanding Stock of the Company as a result of a stock split,
reverse stock split, stock dividend, recapitalization, combination or
reclassification, appropriate proportionate adjustments will be made in: (i) the
aggregate number of shares of Option Stock in the Option Pool that may be issued
pursuant to the exercise of Options granted hereunder; (ii) the Option Price and
the number of shares of Option Stock called for in each outstanding Option
5
granted hereunder; and (iii) other rights and matters determined on a per share
basis under this Plan of any Option Agreement hereunder. Any such adjustments
will be made only by the Board, and when so made will be effective, conclusive
and binding for all purposes with respect to this Plan and all Options then
outstanding. No such adjustments will be required by reason of the issuance or
sale by the Company for cash or other consideration of additional shares of its
Stock or securities convertible into or exchangeable for shares of its Stock.
6. TERMS OF STOCK OPTION AGREEMENTS. Each Option granted pursuant to
this Plan will be evidenced by an agreement (an "Option Agreement") between the
Company and the person to whom such Option is granted, in form and substance
satisfactory to the Committee in its sole discretion, consistent with this Plan.
Without limiting the foregoing, each Option Agreement (unless otherwise stated
therein) will be deemed to include the following terms and conditions:
C-5
(a) COVENANTS OF OPTIONEE. At the discretion of the
Committee, the person to whom an Option is granted hereunder,
as a condition to the granting of the Option, must execute and deliver to the
Company a confidential information agreement approved by the Committee. Nothing
contained in this Plan, any Option Agreement or in any other agreement executed
in connection with the granting of an Option under this Plan will confer upon
any Optionee any right with respect to the continuation of his or her status as
an employee of, consultant or independent contractor to, or director of, the
Company or its subsidiaries.
(b) VESTING PERIODS. Except as otherwise provided herein,
each Option Agreement may specify the period or periods
of time within which each Option or portion thereof will first become
exercisable (the "Vesting Period") with respect to the total number of shares of
Option Stock called for thereunder (the "Total Award Option Stock"). Such
Vesting Periods will be fixed by the Committee in its discretion, and may be
accelerated or shortened by the Committee in its discretion. Unless the Option
Agreement executed by an Optionee expressly otherwise provides and except as set
forth herein, the right to exercise an Option granted hereunder will vest
immediately upon the grant thereof by the Committee, or on such later Grant Date
as may be specified in such Option Agreement.
(c) EXERCISE OF THE OPTION.
(i) MECHANICS AND NOTICE. An Option may be exercised to the extent
exercisable (1) by giving written notice of exercise to the
Company, specifying the number of full shares of Option Stock to
be purchased and accompanied by full payment of the Option Price
thereof and the amount of withholding taxes pursuant to
subsection 6(c)(ii) below; and (2) by giving assurances
satisfactory to the Company that the shares of Option Stock to be
purchased upon such exercise are being purchased for investment
and not with a view to resale in connection with any distribution
of such shares in violation of the 1933 Act; provided, however,
that in the event the Option Stock called for under the Option is
registered under the 1933 Act, or in the event resale of such
Option Stock without such registration would otherwise be
permissible, this second condition will be inoperative if, in the
opinion of counsel for the Company, such condition is not
required under the 1933 Act, or any other applicable law,
regulation or rule of any governmental agency.
6
(ii) WITHHOLDING TAXES. As a condition to the issuance of the shares
of Option Stock upon full or partial exercise of an NSO granted
under this Plan, the Optionee will pay to the Company in cash, or
in such other form as the Committee may determine in its
discretion, the amount of the Company's tax withholding liability
required in connection with such exercise forexercise. For purposes of this
subsection 6(c)(ii), "tax withholding liability" will mean all
federal and state income taxes, social security tax, and any
other taxes applicable to the compensation income arising from
the transaction required by applicable law to be withheld by the
Company.
C-6
(d) PAYMENT OF OPTION PRICE. Each Option Agreement will
specify the Option Price with respect to the exercise of
Option Stock thereunder, to be fixed by the Committee in its discretion, but in
no event will the Option Price for an ISO granted hereunder be less than the
Fair Market Value (or, in case the Optionee is a 10% Stockholder, one hundred
ten percent (110%) of such Fair Market Value) of the Option Stock at the time
such ISO is granted. The Option Price will be payable to the Company in United
States dollars in cash or by check or, such other legal consideration as may be
approved by the Committee, in its discretion.
(i) For example, the Committee, in its discretion, may permit a
particular Optionee to pay all or a portion of the Option Price,
and/or the tax withholding liability set forth in subsection
6(c)(ii) above, with respect to the exercise of an Option either
by surrendering shares of Stock already owned by such Optionee
or by withholding shares of Option Stock, provided that the
Committee determines that the fair market value of such
surrendered Stock or withheld Option Stock is equal to the
corresponding portion of such Option Price and/or tax
withholding liability, as the case may be, to be paid for
therewith.
(ii) If the Committee permits an Optionee to pay any portion of the
Option Price and/or tax withholding liability with shares of
Stock with respect to the exercise of an Option (the "Underlying
Option") as provided in subsection 6(d)(i) above, then the
Committee, in its discretion, may grant to such Optionee (but
only if the Optionee remains an Eligible Participant at that
time) additional NSOs, the number of shares of Option Stock
called for thereunder to be equal to all or a portion of the
Stock so surrendered or withheld (a "Replacement Option"). Each
Replacement Option will be evidenced by an Option Agreement.
Unless otherwise set forth therein, each Replacement Option will
be immediately exercisable upon such grant (without any Vesting
Period) and will be coterminous with the Underlying Option. The
Committee, in its sole discretion, may establish such other
terms and conditions for Replacement Options as it deems
appropriate.
(e) TERMINATION OF THE OPTION. Except as otherwise
provided herein, each Option Agreement will specify the period
of time, to be fixed by the Committee in its discretion, during which the Option
granted therein will be exercisable, not to exceed ten (10) years from the date
of grant in the case of an ISO (the "Option Period"); provided that the Option
Period will not exceed
7
five (5) years from the date of grant in the case of an
ISO granted to a 10% Stockholder. To the extent not previously exercised, each
Option will terminate upon the expiration of the Option Period specified in the
Option Agreement; provided, however, that each such Option will terminate, if
earlier: (i) ninety (90) days after the date that the Optionee ceases to be an
Eligible Participant for any reason, other than by reason of death or disability
or a Just Cause Termination; (ii) twelve (12) months after the date that the
Optionee ceases to be an Eligible Participant by reason of such person's death
or disability; or (iii) immediately as of the date that the Optionee ceases to
be an Eligible Participant by reason of a Just Cause Termination.Termination; provided,
however, that the Board or the Stock Option Committee may, in its discretion,
extend or waive any expiration based (i), (ii) or (iii) above. . In the event of
a merger or consolidation or other reorganization (a "Corporate Transaction") in
which the Company is not the surviving corporation, or in which the Company
becomes a subsidiary of another corporation, then notwithstanding anything else
herein, the right to exercise all then outstanding Options will vest immediately
prior to such Corporate Transaction and will terminate immediately after such
Corporate Transaction; provided, however, that if the Board, in its sole
discretion, determines that such immediate vesting of the right to exercise
outstanding Options is not in the best interests of the Company, then the
successor corporation must agree to assume the outstanding Options or substitute
therefor comparable options of such successor corporation or a parent or
subsidiary of such successor corporation.
(f) OPTIONS NONTRANSFERABLE. No Option will be transferable
by the Optionee otherwise than by will or the laws of descent and distribution,
or in the case of an NSO, pursuant to a QDRO. During the lifetime of the
Optionee, the Option will be exercisable only by him or her, or the transferee
of an NSO if it was transferred pursuant to a QDRO.
(g) QUALIFICATION OF STOCK. The right to exercise an Option
will be further subject to the requirement that if at
any time the Board determines, in its discretion, that the listing, registration
or qualification of the shares of Option Stock called for thereunder upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory authority, is necessary or desirable as
a condition of or in connection with the granting of such Option or the purchase
of shares of Option Stock thereunder, the Option may not be exercised, in whole
or in part, unless and until such listing, registration, qualification, consent
or approval is effected or obtained free of any conditions not acceptable to the
Board, in its discretion.
C-7
(h) RESTRICTIONS ON TRANSFER OF OPTION STOCK.
(i) GENERAL RULES ON PERMISSIBLE TRANSFER OF OPTION
STOCK. Option Stock may be Transferred only after
compliance with the specific limitations on the Transfer of
Option Stock set forth below with respect to restrictions
upon Transfer imposed by applicable state or federal
securities laws, and certain undertakings of the transferee
as set forth in subsection 6(h)(iii). All Transfers of
Option Stock not meeting the conditions set forth in this
subsection 6(h) are expressly prohibited.
(ii) EFFECT OF PROHIBITED TRANSFER. Any prohibited
Transfer, whether Voluntary or Involuntary, is void and of
no effect. Should such a Transfer purport to occur, the
Company may refuse to carry out the Transfer on its books,
attempt to set aside
8
the Transfer, enforce any undertaking
or right under this subsection 6(h), or exercise any other
legal or equitable remedy.
(iii) REQUIRED UNDERTAKING. Any Transfer that would
otherwise be permitted under the terms of this
Plan is prohibited unless the transferee executes such
documents as the Company may reasonably require to ensure
that the Company's rights under an Option Agreement and
this Plan are adequately protected with respect to the
Option Stock so Transferred. Such agreements may include,
without limitation, the transferee's agreement to be bound
by all of the terms of this Plan, and of the applicable
Option Agreement, as if he or she were the original
Optionee.
(i) SPECIFIC RESTRICTIONS ON TRANSFER. By accepting
Options and/or Option Stock under this Plan, the Optionee will
be deemed to represent, warrant and agree as follows:
(i) SECURITIES ACT OF 1933. The Optionee understands that the shares
of Option Stock have not been registered under the 1933 Act, and that
such shares are not freely tradabletradeable and must be held indefinitely
unless such shares are either registered under the 1933 Act or an
exemption from such registration is available. The Optionee
understands that the Company is under no obligation to register the
shares of Option Stock.
(ii) OTHER APPLICABLE LAWS. The Optionee further understands that
Transfer of the Option Stock requires full compliance with the
provisions of all applicable laws.
(iii) INVESTMENT INTENT. (1) Upon exercise of any Option, the
Optionee will purchase the Option Stock for his or her own account
and not with a view to distribution within the meaning of the 1933
Act, other than as may be effected in compliance with the 1933 Act
and the rules and regulations promulgated thereunder; (2) no one else
will have any beneficial interest in the Option Stock; and (3) he or
she has no present intention of disposing of the Option Stock at any
particular time.
(j) COMPLIANCE WITH LAW. Notwithstanding any other
provision of this Plan, Options may be granted pursuant to this Plan, the
Option Stock may be issued pursuant to the exercise thereof by an Optionee,
only after there has been compliance with all applicable federal and state
securities laws, and all of the same will be subject to this overriding
condition. The Company will not be required to register or qualify Option
Stock with the Securities and Exchange Commission or any State agency, except
that the Company will register with, or as required by local law, file for and
secure an exemption from such registration requirements from, the applicable
securities administrator and other officials of each jurisdiction in which an
Eligible Participant would be granted an Option hereunder prior to such grant.
C-8
(k) STOCK CERTIFICATES. Certificates representing the
Option Stock issued pursuant to the exercise of Options will bear all legends
required by law and necessary to effectuate this Plan's provisions. The Company
may place a "stop transfer" order against shares of the Option Stock until all
restrictions and conditions set forth in this Plan and in the legends referred
to in this section 6(k) have been complied with.
9
(l) MARKET STANDOFF. To the extent requested by the Company
and any underwriter of securities of the Company in connection with a firm
commitment underwriting, no holder of any shares of Option Stock will sell or
otherwise Transfer any such shares not included in such underwriting, or not
previously registered pursuant to a registration statement filed under the 1933
Act, during the one hundred and twenty (120) day period following the effective
date of the registration statement filed with the Securities and Exchange
Commission in connection with such offering.
(m) NOTICES. Any notice to be given to the Company under
the terms of an Option Agreement will be addressed to the Company at its
principal executive office, Attention: Corporate Secretary, or at such other
address as the Company may designate in writing. Any notice to be given to an
Optionee will be addressed to the Optionee at the address provided to the
Company by the Optionee. Any such notice will be deemed to have been duly given
if and when enclosed in a properly sealed envelope, addressed as aforesaid,
registered and deposited, postage and registry fee prepaid, in a post office or
branch post office regularly maintained by the United States Government, by
telecopier or nationally recognized overnight delivery service.
(n) OTHER PROVISIONS. The Option Agreement may contain such
other terms, provisions and conditions, including restrictions on the Transfer
of Option Stock issued upon exercise of any Options granted hereunder, not
inconsistent with this Plan, as may be determined by the Committee in its sole
discretion.
7. PROCEEDS FROM SALE OF STOCK. Cash proceeds from the sale of shares
of Option Stock issued from time to time upon the exercise of Options granted
pursuant to this Plan will be added to the general funds of the Company and as
such will be used from time to time for general corporate purposes.
8. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the
terms and conditions and within the limitations of this Plan, the Committee may
modify Options granted under this Plan, or accept the surrender of outstanding
Options (to the extent not theretofore exercised) and authorize the granting of
new Options in substitution therefor. Notwithstanding the foregoing, however, no
modification of any Option will, without the consent of the holder of the
Option, alter or impair any rights or obligations under any Option theretofore
granted under this Plan.
C-9
9. AMENDMENT AND DISCONTINUANCE. The Board may amend, suspend or
discontinue this Plan at any time or from time to time; provided that no action
of the Board will cause ISOs granted under this Plan not to comply with Section
422 of the Code unless the Board specifically declares such action to be made
for that purpose and provided further that no such action may, without the
approval of the stockholders of the Company, increase (other than by reason of
an adjustment pursuant to section 5(b) hereof) the maximum aggregate number of
shares of Option Stock in the Option Pool that may be issued under Options
granted pursuant to this Plan. Moreover, no such action may alter or impair any
Option previously granted under this Plan without the consent of the holder of
such Option.
10
10. Copies of Plan.COPIES OF PLAN. A copy of this Plan will be delivered to each
Optionee at or before the time he or she executes an Option Agreement.
Date Plan Adopted by Board of Directors: _________ _____, 1999
Date Plan Approved by Stockholders: _________ _____, 19992002
C-10
ANNEX D
Fairness Opinion
WESTWOOD PARTNERS, LTD
420 LEXINGTON AVENUE
NEW YORK, N.Y. 10170
September 9, 2002
Board of Directors
The First Connecticut Capital Corporation
1000 Bridgeport Avenue
Shelton, CT. 06484
RE: FAIRNESS OPINION
Dear Members of the Board:
The First Connecticut Capital Corporation ("First Connecticut" or the
"Company") and FCCC Holding Company, LLC, a Connecticut limited liability
company, whose members comprise the board of directors of First Connecticut have
entered into an Asset Purchase Agreement dated as of June 28, 2002 (the "Asset
Purchase Agreement") relating to a certain transaction described herein. You
have requested our opinion as to the fairness, from a financial point of view,
of the transaction contemplated in connection with the Asset Purchase Agreement
to the existing holders of the Company's outstanding shares of Common Stock (the
"Common Stock"). The asset purchase transaction contemplated by and described in
the Asset Purchase Agreement is herein sometimes referred to as the
"Transaction".
Pursuant to the Asset Purchase Agreement, and subject to the
conditions thereof, it is contemplated, among other things, that the Company
will sell, transfer and assign to Holding all of the operating assets and the
business of the Company (the "Assets"), excluding cash and certain deferred tax
assets, the value of which (if any) cannot be determined at this time, in
consideration of (1) the assumption by Holding of all liabilities, debts and
obligations of the Company as at the date of closing and (2) the cash payment by
Holding to the Company of an amount equal to the approximate net book value of
the Assets as at the date of closing, as determined by the report of the Clayton
Group, an independent appraiser of financial services assets ("Clayton"). Based
upon Clayton's report, in the event that the Transaction had closed as of June
30, 2002, then, on a Pro Forma basis, the aggregate purchase price to be
received by the Company would be $1,046,000, the approximate book value of the
Assets, less cash and deferred tax assets.
While the parties to the Asset Purchase Agreement make certain
customary representations and warranties with respect to their existence and
ability to consummate the Transaction, the Company does not make any substantive
representations or warranties with respect to the Assets. The obligations of the
parties to close the transaction are subject to certain conditions, which
include, among others:
1. Approval of the Asset Purchase Agreement by the
stockholders of the Company holding not less than the
two-thirds of the issued and outstanding shares of Common
Stock;
2. Accuracy in all material respects of the representations
and warranties contained in the Asset Purchase Agreement;
D-1
3. Compliance in all material respects with all agreements
and obligations of each of the Company and Holding that are
required to be complied with before consummation of the
Transaction;
4. Receipt of any and all consents and waivers of third
parties that are required to be obtained before the
consummation of the Transaction;
5. Assumption by Holding of all liabilities of the Company
6. Absence of any law or injunction preventing the
Transaction;
7. Approval by the stockholders of the Company of:
(i) The election of the five nominees for
directors of the Company;
(ii) That certain 2002 Equity Incentive Plan;
(iii) That certain Stock Purchase Agreement
(the Stock Purchase Agreement among the
Company, Bernard Zimmerman & Co,
Inc.("Zimmerman") and the Cohen Profit sharing
Plan ("Cohen"); and
(iv) The change of the Company's corporate
name.
Westwood Partners, Ltd. has from time to time acted as financial advisor to the
Company and has acted as its financial advisor in connection with the
Transaction and will receive a fee for rendering this opinion pursuant to our
engagement agreement with the Company dated February 11, 2000, as amended from
time to time (the "Engagement Agreement"). In addition, as you know, Westwood's
President is an of-counsel attorney to and our Vice President and Managing
director is the Managing Partner of the law firm of Lev & Berlin, P.C., which
has acted as special counsel to the Company in connection with the Transaction.
In arriving at our opinion expressed in this letter, we have, among other
things:
1. Reviewed the terms and conditions of the Asset Purchase
Agreement and the agreements and instruments to be entered into
pursuant thereto;
2. Reviewed the Preliminary Proxy Statement dated September
13, 2002 (the "Proxy Statement") relating to the Annual Meeting of
Shareholders to be held on or about October 31, 2002 and regarding,
among other things, the approval of the Transaction;
3. Analyzed certain historical business and financial
information relating to the Company, including the Annual Reports on
Form 10-KSB of the Company for each of its fiscal years ended March,
1996 through March, 2001, the Company's Quarterly Report on Form
10-QSB for its fiscal quarter ended June 30, 2002 and certain
internal business and financial information prepared by management of
the Company;
4. Conducted discussions with members of the senior
management of the Company with respect to the business and prospects
of the Company as well as management's assessment of the prospects
for the construction mortgage lending industry in general;
5. Considered the views of the Company's management
concerning the costs associated with continuing to operate the
current business of the Company through a publicly traded
corporation;
D-2
6. Considered the current financial condition of the
Company, including its current need for capital, alternatives for
raising capital and the relative costs of such alternatives, the
terms of its present credit facilities and the substantial resources
required to continue the growth of the Company's business within a
publicly traded corporation under present economic and market
conditions; and
7. Conducted such other financial studies, analyses and
investigations as we deemed appropriate.
In addition to the specific information summarized above, our opinion expressed
herein reflects our general familiarity with the Company as well as information
regarding the current prospects for the Company and business combination
alternatives available to it, which information we acquired during the course of
our association with the Company, and, in particular, our engagement under the
Engagement Agreement. Our opinion does not, however, constitute a recommendation
of the Transaction over any other alternative transactions which may be
available to the Company.
We have assumed and relied upon the accuracy and completeness of the financial
and other information provided by the Company to us and, representations
contained in the Asset Purchase Agreement, and the report of the Clayton Group
and we have not undertaken any independent verification of such information or
any independent valuation or appraisal of any of the Assets. With respect to the
financial forecasts referred to above, we have assumed that they have been
reasonably prepared on a basis reflecting the best currently available judgments
of the management of the Company as to the future financial performance of the
Company. Furthermore, our opinions are based on economic, monetary and market
conditions existing on this date. We express no opinion herein as to any matter
other than the Transaction, including, without limitation, the Stock Purchase
Agreement or any transaction contemplated or described therein.
Our engagement and the opinions expressed herein are solely for the benefit of
the Company's Board of Directors and are not on behalf of, and are not intended
to confer rights or remedies upon, Holding, Zimmerman, Cohen, any stockholders
of the Company or any other person other than the Company's Board of Directors.
Furthermore, the opinion rendered herein does not constitute a recommendation by
our firm that any stockholder of the Company vote to approve the Transaction or
any other matter discussed or described in the Proxy Statement.
Based on and subject to the foregoing and such other factors as we deemed
relevant, including our assessment of economic, monetary and market conditions
existing on the date of this letter, we are of the opinion that, as of this
date, the Transaction is fair, from a financial point of view, to the current
holders of the Company's Common Stock.
Very truly yours,
WESTWOOD PARTNERS, LTD.
----------------------------
By: Duane L. Berlin
Its: Vice President and Managing Director
D-3
WESTWOOD PARTNERS, LTD
420 LEXINGTON AVENUE
NEW YORK, N.Y. 10170
September 9, 2002
Board of Directors
The First Connecticut Capital Corporation
1000 Bridgeport Avenue
Shelton, CT. 06484
RE: CONSENT TO ANNEX FAIRNESS OPINION TO PROXY STATEMENT
Gentlemen:
This will serve as our consent for you to annex our fairness opinion
relating to the proposed sale of the assets of The First Connecticut Capital
Corp. to that certain Proxy Statement dated September, 2002, provided that you
agree to reimburse us with respect to any cost or expense arising out of or
related to such annexation.
Very truly yours,
WESTWOOD PARTNERS, LTD.
----------------------------
By: Duane L. Berlin
Its: Vice President and Managing Director
ANNEX E
- --------------------------------------------------------------------------------
CLAYTON LOGO 2 Corporate Drive Shelton, CT 06484
Ph 203.926.5600
www.claytongroup.com
January 9, 2003
Mr. Lawrence Yurdin
First Connecticut Capital Corporation
1000 Bridgeport Avenue, First Floor
Shelton, CT 06484
RE: ESTIMATE OF VALUE-FIRST CONNECTICUT CAPITAL ASSET REPORT (3RD UPDATE)
Dear Larry:
It was good to speak to you again. I have reviewed the updated
spreadsheet titled "First Connecticut Capital Asset Report 30-Dec-02" for the
purpose of putting an updated value on the portfolio. The portfolio has a
retained balance of $1,828,618.84 as of December 30, 2002.
Once again, although loan status changes (either positive or
negative), have been negligible, lower interest rates have had a positive effect
on the overall value of the portfolio. Using, the sixth month London Interbank
Offered Rate (6 Month LIBOR) as a benchmark, we have increased our estimate 21
basis points, which is roughly half of the difference between 6 Month LIBOR in
August 2002 (1.815%) and in the first week of January 2003 (1.400%). This
equates to a lower range percentage price of 89.42% and a higher range price
percentage of 92.42%. Thus, our opinion of the value is between $1,635,151 to
$1,690,009. However, when subtracting the Hudson United Bank balance of
$1,796,500.00, the portfolio has a NEGATIVE Net Asset Value of between
($161,349) and ($106,491).
The old SBIC loans (King Foods, JHB Realty Trust, Fire Island
Haulage) still have severe property and borrower issues that negatively affect
their value. We project their value to be between $41,883.79 and $88,021.69.
This computes to a range of 7.18% to 14.89% of the $602,603 book balance. The
breakdown appears below:
- --------------------------------- ------------------------------ ------------------------------- -------------------------------
LOW PRICE HIGH PRICE
LOAN UPB
- --------------------------------- ------------------------------ ------------------------------- -------------------------------
- --------------------------------- ------------------------------ ------------------------------- -------------------------------
King Foods $14,442.00 $833.61 $1,461.70
- --------------------------------- ------------------------------ ------------------------------- -------------------------------
- --------------------------------- ------------------------------ ------------------------------- -------------------------------
Fire Island Haulage $466,589.00 $18,889.79 $42,291.60
- --------------------------------- ------------------------------ ------------------------------- -------------------------------
- --------------------------------- ------------------------------ ------------------------------- -------------------------------
JHB Realty Trust $121,572.00 $22,160.39 $44,268.39
- --------------------------------- ------------------------------ ------------------------------- -------------------------------
With only a small number of loans remaining, all with very short
remaining terms, there is currently no market for the servicing rights and
therefore no value given.
Should you have any further questions concerning anything discussed
above, please do not hesitate to contact me at (203) 926-5611. Thank you for
using the services of The Clayton Group. Let us know if we can be of further
assistance.
Sincerely,
Neil Spagna
Senior Vice President
LAWRENCE R. YURDIN
PRESIDENT & CEO
THE FIRST CONNECTICUT CAPITAL CORPORATION
1000 BRIDGEPORT AVENUE
SHELTON, CT 06484
Toll Free (800) 401-FCCC Phone (203) 944-5400
FAX (203) 944-5405
August 23, 2002
Mr. Neil Spagna
The Clayton Group, Inc.
2 Corporate Dive
Shelton, CT. 06484
RE: First Connecticut Asset Report
Dear Neil,
Confirming our conversation today, it is understood that FCCC has the permission
of the Clayton Group, Inc. to incorporate the First Connecticut Asset Report
that the Clayton Group, Inc. prepared in our soon to be released proxy
statement.
It is also understood that FCCC will reimburse the Clayton Group for any
additional reasonable expense incurred for future time spent regarding this
asset report.
We appreciate your assistance in this matter.
Very truly yours,
Lawrence R. Yurdin
President & CEO
LRY:kr
ANNEX F
Connecticut General Statutes
(Sections 33-855 through 33-872)
PART XIII
DISSENTERS' RIGHTS
(A) RIGHT TO DISSENT AND OBTAIN PAYMENT FOR SHARES
SEC. 33-855. DEFINITIONS. As used in sections 33-855 to 33-872, inclusive:
(1) "Corporation" means the issuer of the shares held by a dissenter before the
corporate action or the surviving or acquiring corporation by merger or share
exchange of that issuer.
(2) "Dissenter" means a shareholder who is entitled to dissent from corporate
action under section 33-856 and who exercises that right when and in the manner
required by sections 33-860 to 33-868, inclusive.
(3) "Fair value", with respect to a dissenter's shares, means the value of the
shares immediately before the effectuation of the corporate action to which the
dissenter objects, excluding any appreciation or depreciation in anticipation of
the corporate action.
(4) "Interest" means interest from the effective date of the corporate action
until the date of payment, at the average rate currently paid by the corporation
on its principal bank loans or, if none, at a rate that is fair and equitable
under all the circumstances.
(5) "Record shareholder" means the person in whose name shares are registered in
the records of a corporation or the beneficial owner of shares to the extent of
the rights granted by a nominee certificate on file with a corporation.
(6) "Beneficial shareholder" means the person who is a beneficial owner of
shares held in a voting trust or by a nominee as the record shareholder.
(7) "Shareholder" means the record shareholder or the beneficial shareholder.
(P.A. 94-186, S. 147, 215.)
SEC. 33-856. RIGHT TO DISSENT. (a) A shareholder is entitled to dissent from,
and obtain payment of the fair value of his shares in the event of, any of the
following corporate actions:
(1) Consummation of a plan of merger to which the corporation is a party (A) if
shareholder approval is required for the merger by section 33-817 or the
certificate of incorporation and the shareholder is entitled to vote on the
merger or (B) if the corporation is a subsidiary that is merged with its parent
under section 33-818;
(2) Consummation of a plan of share exchange to which the corporation is a party
as the corporation whose shares will be acquired, if the shareholder is entitled
to vote on the plan;
(3) Consummation of a sale or exchange of all, or substantially all, of the
property of the corporation other than in the usual and regular course of
business, if the shareholder is entitled to vote on the sale or exchange,
including a sale in dissolution, but not including a sale pursuant to court
order or a sale for cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the shareholders within one
year after the date of sale;
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(4) An amendment of the certificate of incorporation that materially and
adversely affects rights in respect of a dissenter's shares because it: (A)
Alters or abolishes a preferential right of the shares; (B) creates, alters or
abolishes a right in respect of redemption, including a provision respecting a
sinking fund for the redemption or repurchase, of the shares; (C) alters or
abolishes a preemptive right of the holder of the shares to acquire shares or
other securities; (D) excludes or limits the right of the shares to vote on any
matter, or to cumulate votes, other than a limitation by dilution through
issuance of shares or other securities with similar voting rights; or (E)
reduces the number of shares owned by the shareholder to a fraction of a share
if the fractional share so created is to be acquired for cash under section
33-668; or
(5) Any corporate action taken pursuant to a shareholder vote to the extent the
certificate of incorporation, bylaws or a resolution of the board of directors
provides that voting or nonvoting shareholders are entitled to dissent and
obtain payment for their shares. (b) Where the right to be paid the value of
shares is made available to a shareholder by this section, such remedy shall be
his exclusive remedy as holder of such shares against the corporate transactions
described in this section, whether or not he proceeds as provided in sections
33-855 to 33-872, inclusive. (P.A. 94-186, S. 148, 215; P.A. 96-271, S. 111,
254.)
SEC. 33-857. DISSENT BY NOMINEES AND BENEFICIAL OWNERS. (a) A record shareholder
may assert dissenters' rights as to fewer than all the shares registered in his
name only if he dissents with respect to all shares beneficially owned by any
one person and notifies the corporation in writing of the name and address of
each person on whose behalf he asserts dissenters' rights. The rights of a
partial dissenter under this subsection are determined as if the shares as to
which he dissents and his other shares were registered in the names of different
shareholders.
(b) A beneficial shareholder may assert dissenters' rights as to shares held on
his behalf only if: (1) He submits to the corporation the record shareholder's
written consent to the dissent not later than the time the beneficial
shareholder asserts dissenters' rights; and
(2) he does so with respect to all shares of which he is the beneficial
shareholder or over which he has power to direct the vote. (P.A. 94-186, S. 149,
215.)
(Return to TOC) (Return to Chapters) (Return to Titles)
SECS. 33-858 AND 33-859. Reserved for future use.
(B) PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS
SEC. 33-860. NOTICE OF DISSENTERS' RIGHTS. (a) If proposed corporate action
creating dissenters' rights under section 33-856 is submitted to a vote at a
shareholders' meeting, the meeting notice shall state that shareholders are or
may be entitled to assert dissenters' rights under sections 33-855 to 33-872,
inclusive, and be accompanied by a copy of said sections. (b) If corporate
action creating dissenters' rights under section 33-856 is taken without a vote
of shareholders, the corporation shall notify in writing all shareholders
entitled to assert dissenters' rights that the action was taken and send them
the dissenters' notice described in section 33-862. (P.A. 94-186, S. 150, 215.)
SEC. 33-861. NOTICE OF INTENT TO DEMAND PAYMENT. (a) If proposed corporate
action creating dissenters' rights under section 33-856 is submitted to a vote
at a shareholders' meeting, a shareholder who wishes to assert dissenters'
rights (1) shall deliver to the corporation before the vote is taken written
notice of his intent to demand payment for his shares if the proposed action is
effectuated and (2) shall not vote his shares in favor of the proposed action.
(b) A shareholder who does not satisfy the requirements of subsection (a) of
this section is not entitled to payment for his shares under sections 33-855 to
33-872, inclusive. (P.A. 94-186, S. 151, 215.)
F-2
SEC. 33-862. DISSENTERS' NOTICE. (a) If proposed corporate action creating
dissenters' rights under section 33-856 is authorized at a shareholders'
meeting, the corporation shall deliver a written dissenters' notice to all
shareholders who satisfied the requirements of section 33-861.
(b) The dissenters' notice shall be sent no later than ten days after the
corporate action was taken and shall:
(1) State where the payment demand must be sent and where and when certificates
for certificated shares must be deposited;
(2) Inform holders of un-certificated shares to what extent transfer of the
shares will be restricted after the payment demand is received; (
3) Supply a form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and requires that the person asserting dissenters' rights
certify whether or not he acquired beneficial ownership of the shares before
that date;
(4) Set a date by which the corporation must receive the payment demand, which
date may not be fewer than thirty nor more than sixty days after the date the
subsection (a) of this section notice is delivered; and
(5) Be accompanied by a copy of sections 33-855 to 33-872, inclusive. (P.A.
94-186, S. 152, 215.)
SEC. 33-863. DUTY TO DEMAND PAYMENT. (a) A shareholder sent a dissenters' notice
described in section 33-862 must demand payment, certify whether he acquired
beneficial ownership of the shares before the date required to be set forth in
the dissenters' notice pursuant to subdivision (3) of subsection (b) of said
section and deposit his certificates in accordance with the terms of the notice.
(b) The shareholder who demands payment and deposits his share certificates
under subsection (a) of this section retains all other rights of a shareholder
until these rights are cancelled or modified by the taking of the proposed
corporate action. (c) A shareholder who does not demand payment or deposit his
share certificates where required, each by the date set in the dissenters'
notice, is not entitled to payment for his shares under sections 33-855 to
33-872, inclusive.
(P.A. 94-186, S. 153, 215.)
SEC. 33-864. SHARE RESTRICTIONS. (a) The corporation may restrict the transfer
of un-certificated shares from the date the demand for their payment is received
until the proposed corporate action is taken or the restrictions released under
section 33-866. (b) The person for whom dissenters' rights are asserted as to
uncertificated shares retains all other rights of a shareholder until these
rights are cancelled or modified by the taking of the proposed corporate action.
(P.A. 94-186, S. 154, 215.)
F-3
SEC. 33-865. PAYMENT. (a) Except as provided in section 33-867, as soon as the
proposed corporate action is taken, or upon receipt of a payment demand, the
corporation shall pay each dissenter who complied with section 33-863 the amount
the corporation estimates to be the fair value of his shares, plus accrued
interest. (b) The payment shall be accompanied by: (1) The corporation's balance
sheet as of the end of a fiscal year ending not more than sixteen months before
the date of payment, an income statement for that year, a statement of changes
in shareholders' equity for that year and the latest available interim financial
statements, if any; (2) a statement of the corporation's estimate of the fair
value of the shares; (3) an explanation of how the interest was calculated; (4)
a statement of the dissenter's right to demand payment under section 33-868; and
(5) a copy of sections 33-855 to 33-872, inclusive.
(P.A. 94-186, S. 155, 215; P.A. 98-137, S. 9, 62; 98-219, S. 33, 34.)
SEC. 33-866. FAILURE TO TAKE ACTION. (a) If the corporation does not take the
proposed action within sixty days after the date set for demanding payment and
depositing share certificates, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on un-certificated
shares. (b) If after returning deposited certificates and releasing transfer
restrictions, the corporation takes the proposed action, it must send a new
dissenters' notice under section 33-862 and repeat the payment demand procedure.
(P.A. 94-186, S. 156, 215.)
SEC. 33-867. AFTER-ACQUIRED SHARES. (a) A corporation may elect to withhold
payment required by section 33-865 from a dissenter unless he was the beneficial
owner of the shares before the date set forth in the dissenters' notice as the
date of the first announcement to news media or to shareholders of the terms of
the proposed corporate action. (b) To the extent the corporation elects to
withhold payment under subsection (a) of this section, after taking the proposed
corporate action, it shall estimate the fair value of the shares, plus accrued
interest, and shall pay this amount to each dissenter who agrees to accept it in
full satisfaction of his demand. The corporation shall send with its offer a
statement of its estimate of the fair value of the shares, an explanation of how
the interest was calculated and a statement of the dissenter's right to demand
payment under section 33-868.
(P.A. 94-186, S. 157, 215.)
SEC. 33-868. PROCEDURE IF SHAREHOLDER DISSATISFIED WITH PAYMENT OR OFFER. (a) A
dissenter may notify the corporation in writing of his own estimate of the fair
value of his shares and amount of interest due, and demand payment of his
estimate, less any payment under section 33-865, or reject the corporation's
offer under section 33-867 and demand payment of the fair value of his shares
and interest due, if:
(1) The dissenter believes that the amount paid under section 33-865 or offered
under section 33-867 is less than the fair value of his shares or that the
interest due is incorrectly calculated;
(2) The corporation fails to make payment under section 33-865 within sixty days
after the date set for demanding payment; or (
3) The corporation, having failed to take the proposed action, does not return
the deposited certificates or release the transfer restrictions imposed on
un-certificated shares within sixty days after the date set for demanding
payment. (b) A dissenter waives his right to demand payment under this section
unless he notifies the corporation of his demand in writing under subsection (a)
of this section within thirty days after the corporation made or offered payment
for his shares.
(P.A. 94-186, S. 158, 215.)
SECS. 33-869 AND 33-870. Reserved for future use.
F-4
(C) JUDICIAL APPRAISAL OF SHARES
SEC. 33-871. COURT ACTION. (a) If a demand for payment under section 33-868
remains unsettled, the corporation shall commence a proceeding within sixty days
after receiving the payment demand and petition the court to determine the fair
value of the shares and accrued interest. If the corporation does not commence
the proceeding within the sixty-day period, it shall pay each dissenter whose
demand remains unsettled the amount demanded.
(b) The corporation shall commence the proceeding in the superior court for the
judicial district where a corporation's principal office or, if none in this
state, its registered office is located. If the corporation is a foreign
corporation without a registered office in this state, it shall commence the
proceeding in the superior court for the judicial district where the registered
office of the domestic corporation merged with or whose shares were acquired by
the foreign corporation was located.
(c) The corporation shall make all dissenters, whether or not residents of this
state, whose demands remain unsettled parties to the proceeding as in an action
against their shares and all parties must be served with a copy of the petition.
Nonresidents may be served by registered or certified mail or by publication as
provided by law.
(d) The jurisdiction of the court in which the proceeding is commenced under
subsection (b) of this section is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend decision on
the question of fair value. The appraisers have the powers described in the
order appointing them, or in any amendment to it. The dissenters are entitled to
the same discovery rights as parties in other civil proceedings.
(e) Each dissenter made a party to the proceeding is entitled to judgment (1)
for the amount, if any, by which the court finds the fair value of his shares,
plus interest, exceeds the amount paid by the corporation, or (2) for the fair
value, plus accrued interest, of his after-acquired shares for which the
corporation elected to withhold payment under section 33-867.
(P.A. 94-186, S. 159, 215.)
SEC. 33-872. COURT COSTS AND COUNSEL FEES. (a) The court in an appraisal
proceeding commenced under section 33-871 shall determine all costs of the
proceeding, including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against the
corporation, except that the court may assess costs against all or some of the
dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously or not in good faith in demanding
payment under section 33-868.
(b) The court may also assess the fees and expenses of counsel and experts for
the respective parties, in amounts the court finds equitable: (1) Against the
corporation and in favor of any or all dissenters if the court finds the
corporation did not substantially comply with the requirements of sections
33-860 to 33-868, inclusive; or (2) against either the corporation or a
dissenter, in favor of any other party, if the court finds that the party
against whom the fees and expenses are assessed acted arbitrarily, vexatiously
or not in good faith with respect to the rights provided by sections 33-855 to
33-872, inclusive.
(c) If the court finds that the services of counsel for any dissenter were of
substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the corporation, the court may
award to these counsel reasonable fees to be paid out of the amounts awarded the
dissenters who were benefited.
(P.A. 94-186, S. 160, 215.)
F-5