SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to SS240.14a-11(c) or SS240.14a-12
THE FIRST CONNECTICUT CAPITAL CORPORATION
-----------------------------------------
(Name of Registrant as specified in its charter)
Payment of Filing Fee (Check the appropriate box):
[ ] 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:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction: $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
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
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 Monday, March
31, 2003 at 9:30 a.m. for the following purposes:
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 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 to FCCC, Inc.;
6. To 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;
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 of the meeting.
Only stockholders of record on the books of the Company at close of
business on March 5, 2003 will be entitled to notice of and the right to vote at
the meeting.
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 December 31, 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
number of shares you own. A return envelope is enclosed for your convenience
ii
which requires no postage if mailed within the United States. This proxy will
not affect your right to vote in person in the event you 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: March , 2003
By order of the Board of Directors,
Lawrence R. Yurdin
PRESIDENT
TABLE OF CONTENTS
PAGE
Forward Looking Statements............................................. v
Summary................................................................ 1
Pro Forma Balance Sheet................................................ 6
Notes to Pro Forma Balance Sheet....................................... 8
Risk Factors........................................................... 10
General Information.................................................... 12
Introduction to Proposals Nos. 1 and 2................................. 28
Proposal No. 1 - Approval of Asset Purchase Agreement.................. 30
Proposal No. 2 - Approval of Stock Purchase Agreement.................. 36
Proposal No. 3 - Election of Directors................................. 39
Proposal No. 4 - Approval of 2002 Equity Incentive Plan................ 40
Proposal No. 5 - Approval to Change the Company Name................... 41
Proposal No. 6 - Approval of Appointment of Auditors................... 41
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 December 31,
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
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY STATEMENT AND
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 30);
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 36);
3. Elect five Directors (see page 39);
4. Consider, vote upon and adopt the 2002 Equity Incentive Plan (see page
40);
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
41);
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 41);
7. Consider any motion to adjourn to a later date to permit further
solicitation of proxies if necessary (see page 13); 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 purchase price of the assets will be determined by an independent
appraiser at the time of the closing. The purchase price will be
approximately equal to the net book value of the assets on the closing
date, less cash and deferred tax assets. Based upon a report of the
independent appraiser, in the event that the transactions had closed as
of December 31, 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 $1,842,000 (see Pro Forma Balance Sheet on
page 7).
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 December 31, 2002.
o The Company's pro forma balance sheet (see page 7) estimates that at
December 31, 2002 the proceeds from the Asset Purchase and Stock
Purchase transactions would be approximately $2,094,000 and that the
cash available for the dividend would be approximately $633,000.
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.
o The purchasers, who will become shareholders, will be entitled to
receive any dividend that the Company declares and pays discussed in
"Summary of Terms of Asset Purchase Agreement" above based on the number
of shares owned on the date a dividend is declared, if any.
o The terms of the Stock Purchase Agreement grant Bernard Zimmerman & Co.
Inc. and the Cohen Profit Sharing Plan the right to designate three of
the Company's five directors.
2
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 December 31, 2002.
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 IF 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. Based on the pro forma balance sheet on page
7, the pro forma net book value of the Company without approval of the
proposals would be $1.89 per share, whereas upon the closing of the
Stock Purchase Transaction, the net book value would be $1.73 per share,
assuming that the closing occurred on December 31, 2002. Further
assuming conversion of the Warrants into 200,000 shares of Common Stock,
the post-closing net book value would be $1.52 per share.
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.
3
o The Stock Purchase transaction could negatively affect the market price
of the Company's Common Stock as a result of the dilution to other
stockholders caused by the issuance of additional Common Stock and
Warrants to purchase Common Stock to the Purchasers.
ROLE OF PRESENT MANAGEMENT IF THE ASSET PURCHASE AND STOCK PURCHASE AGREEMENTS
AND THE RECOMMENDED SLATE OF DIRECTORS 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:
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 December 31,
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.
4
OPINION OF OUR FINANCIAL ADVISOR WITH RESPECT TO THE ASSET PURCHASE TRANSACTION
In connection with the Asset Purchase Transaction, 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 transaction. The opinion is limited to the form of the Asset Purchase
Transaction. 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. For further information regarding our financial advisor and
its opinion, please refer to "Proposal 1, Summary of Asset Purchase Agreement,
Opinion of Financial Advisor" on Page 35.
5
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 250,000 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
thereto do not take into account any post-closing dividends (see Note 5). The
pro forma balance sheet and notes illustrate the results of the proposed
transactions as if they had occurred on December 31, 2002.
6
THE FIRST CONNECTICUT CAPITAL CORPORATION
PRO FORMA BALANCE SHEET
AS OF DECEMBER 31, 2002
-----------------------
(IN THOUSANDS)
PRO FORMA PRO FORMA
DECEMBER 31, 2002 ADJUSTMENTS BALANCES
----------------- ------------------ --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
ASSETS
Cash and cash equivalents $ 254 $ 1,842 A $ 2,348
250 B
2 B
Loans- net of allowance for loan
losses of $634 2,280 (2,280) A --
Loans held for sale 1,293 (1,293) A --
Due from partnerships 93 (93) A --
Accrued interest receivable 49 (49) A --
Servicing rights 66 (66) A --
Fixed Assets 14 (14) A --
Deferred income taxes 117 -- A 117
Investment in partnerships 77 (77) A --
Other Assets 55 (55) A --
------- ------- -------
TOTAL ASSETS $ 4,298 $(1,833) $ 2,465
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Line of credit $ 1,797 $(1,797) A $ --
Accounts payable and other accrued expenses 288 (288) A --
------- ------- -------
TOTAL LIABILITIES 2,085 (2,085) --
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 December 31, 2002
and 1,423,382 after transaction 587 125 B 712
Additional paid-in capital 9,253 127 B 9,380
Accumulated deficit (7,627) -- (7,627)
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY 2,213 252 2,465
------- ------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,298 $(1,833) $ 2,465
======= ======= =======
See Notes 1 through 5, attached
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
7
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 any 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.
NOTE 3 - PRO FORMA ADJUSTMENTS
The following adjustments correspond to the pro forma adjustments included on
the unaudited pro forma balance sheet as at December 31, 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.
8
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 December 31,
2002:
Amount
Description (in thousands)
----------------------------------------------- ---------------------
Loans, net of allowances of $634 $2,280
Loans held for sale 1,293
Due from partnerships 93
Accrued interest receivable 49
Servicing rights 66
Fixed Assets 14
Investment in partnerships 77
Other Assets 55
Line of credit (1,797)
Accounts payable and accrued expenses (288)
-----
Purchase Price $1,842
======
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 March 31, 2003, subject to extension, which
will be adjusted to reflect the results of operations for the period between
December 31, 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
December 31, 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.
9
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.
10
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.
11
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 9:30 a.m. on Monday, March 31, 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 of 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 March 18, 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 in accordance with the choice specified in the spaces
provided in the proxy card. In the absence of such choice, the holders of the
proxy will have 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 Reports on Form 10-QSB, as amended, for the fiscal
quarter ended December 31, 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 RIGHTS
The Board has fixed the close of business on March 5, 2003 (the "Record
Date") as the date for the determination of Company's stockholders entitled to
notice of, and to vote at, the Annual Meeting. As of the Record 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 of Stockholders
or any continuation or adjournment of the meeting. Each share of Common Stock 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 Company, currently holding approximately 104,435 shares (8.9%)
of the outstanding Common 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.
12
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.
Proxies 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 for a period of
less than 45 days, no notice of the time and place of the adjourned meeting is
required to be given to the stockholders 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.
13
DIRECTORS AND EXECUTIVE OFFICERS
The current Directors and Executive Officers of the Company are as follows:
NAMES AGE PRESENT POSITION
David Engelson 81 Chairman of the 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 Controller since 1985.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held three meetings 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
14
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 Committee are Messrs.
Lawrence R. Yurdin and Jan E. Cohen. This Committee met one 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
met two times in Fiscal Year 2001 and two times in Fiscal Year 2002.
The members of the 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 Messrs.
Engelson and Yurdin, receive a fee of $300.00 per meeting for serving on the
Board or such committees. 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.
15
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 other 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 $125,000, plus certain
other benefits. The Employment Agreement also provides for the Company to pay to
Mr. Yurdin severance benefits in the event of the termination of his employment
under certain circumstances. Pursuant to the terms of the Asset Purchase and
Stock Purchase Agreements, described in Proposals 1 and 2 below, Mr. Yurdin has
agreed to terminate any Company severance or other liability with respect to his
Employment Agreement that could be triggered by either or both of the Asset
Purchase and Stock Purchase Agreements.
16
SECURITIES OWNERSHIP OF MANAGEMENT AND CURRENT DIRECTORS AS AT
DECEMBER 31, 2002
BENEFICIAL OWNER SHARES OF PERCENTAGE OF OPTIONS * PERCENTAGE OF TOTAL PERCENTAGE OF
COMMON OUTSTANDING OUTSTANDING SHARES OUTSTANDING
STOCK SHARES OPTIONS AND SHARES (ASSUMING
OPTIONS EXERCISE OF ALL
OUTSTANDING
OPTIONS)
David Engelson 43,605 3.72% 0 0% 43,605 3.42%
Lawrence R. 21,707 1.85 28,500 35.0 50,207 3.94
Yurdin
Jan E. Cohen 2,113 .18 16,000 19.6 18,113 1.42
Thomas D'Addario 15,700 1.34 16,000 19.6 31,700 2.48
Michael L. 16,921 1.44 16,000 19.6 32,921 2.58
Goldman
Priscilla E. 4,389 .37 5,000 6.2 9389 .73
Ottowell
All directors
and 104,435 8.88% 81,500 81.5% 185,935 14.60%
executive
Officers as a
group (six
persons)
*All options set forth above are currently exercisable
OPTION GRANTS TO EXECUTIVE OFFICER IN LAST FISCAL YEAR
The following table summarizes option grants during the fiscal
year ended March 31, 2002 to the named executive officer:
------------------- --------------------------- -------------------------------- -------------------- --------------------
NAME NUMBER OF SECURITIES % TOTAL OPTIONS GRANTED TO EXERCISE OR BASE EXPIRATION DATE
UNDERLYING OPTIONS GRANTED EMPLOYEES IN FISCAL YEAR PRICE ($/SHARE)
------------------- --------------------------- -------------------------------- -------------------- --------------------
Lawrence R.
Yurdin 28,500 100% $.64 05/03/11
------------------- --------------------------- -------------------------------- -------------------- --------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
------------------- ---------------- --------------- ----------------------------------- ---------------------------------
NAME SHARES ACQUIRED VALUE REALIZED NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
ON EXERCISE (#) ($) UNEXERCISED OPTIONS AT FISCAL YEAR OPTIONS
END (#) AT FISCAL YEAR END($)(1)
-------------------------- -------------------------
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.
17
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 December 31, 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 December 31,
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.
18
As of December 31, 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 December
31, 2002 the Company was servicing $4,506,000 of loans for Limited Partnership
A, compared to $4,423,000 as of December 31, 2001, and was servicing $2,473,000
of loans for Limited Partnership B, compared to $460,000 as of December 31,
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:
19
------------------------------------------------------------------------------------------------------------------
LOANS SOLD TO AFFILIATED PURCHASERS
------------------------------------------------------------------------------------------------------------------
4/1/00 - 3/31/01 4/01/01 - 3/31/02
---------------- -----------------
--------------------------------------------------------------------- ------------------------------------------
PRINCIPAL PRINCIPAL
NEW BAL NEW BAL
PURCHASER AFFILIATION PRINCIPAL INT &FEES AT 3/31/01 PRINCIPAL INT. & FEES AT 3/31/02
--------------------------------------------------------------------- ------------------------------------------
Busker, Harriet Officer and 0 7,760 70,000 0 7,807 70,000
Director
(sister in
law)
--------------------------------------------------------------------- ------------------------------------------
--------------------------------------------------------------------- ------------------------------------------
D'Addario Director 0 0 0 450,000 13,276 450,000
Estate (Fiduciary)
--------------------------------------------------------------------- ------------------------------------------
--------------------------------------------------------------------- ------------------------------------------
D'Addario Janet Director 66,667 4,333 66,667 0 8,044 66,667
(spouse)
--------------------------------------------------------------------- ------------------------------------------
--------------------------------------------------------------------- ------------------------------------------
D'Addario Director 66,667 12,719 141,667 0 15,698 141,667
Thomas
--------------------------------------------------------------------- ------------------------------------------
--------------------------------------------------------------------- ------------------------------------------
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
--------------------------------------------------------------------- ------------------------------------------
20
------------------------------------------------------------------------------------------------------------------
LOANS SOLD TO AFFILIATED PURCHASERS
------------------------------------------------------------------------------------------------------------------
4/1/00 - 3/31/01 4/01/01 - 3/31/02
---------------- -----------------
--------------------------------------------------------------------- ------------------------------------------
PRINCIPAL PRINCIPAL
NEW BAL NEW BAL
PURCHASER AFFILIATION PRINCIPAL INT &FEES AT 3/31/01 PRINCIPAL INT. & FEES AT 3/31/02
--------------------------------------------------------------------- ------------------------------------------
--------------------------------------------------------------------- ------------------------------------------
Helen Shatanof Officer and 0 7,177 65,000 0 7,547 65,000
Director
(aunt)
--------------------------------------------------------------------- ------------------------------------------
--------------------------------------------------------------------- ------------------------------------------
Beth Y. Officer and 0 1,995 17,000 10,000 2,813 27,000
Metzendorf 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.
21
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.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS
On March 1, 2003, there were 1,173,382 shares of Common Stock outstanding.
The following table sets forth as of March 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
NAME AND ADDRESS OWNERSHIP* PERCENT 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%
22
STOCK 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.
23
SECURITIES OWNERSHIP OF DIRECTOR NOMINEES ASSUMING CLOSING OF THE TRANSACTIONS
CURRENT CURRENT PURCHASE NUMBER OF OWNERSHIP ADDITIONAL NEW
OWNERSHIP OWNERSHIP AND SHARES PERCENTAGE PURCHASE OF OWNERSHIP
PERCENTAGE ISSUANCE UNAFFILIATED
OF PARTIES'
250,000 SHARES
SHARES
------------------------------------------------------------------------------------
Yurdin 21,707 1.85% - 21,707 1.53% - 21,707
Goldman 16,921 1.44% - 16,921 1.19% - 16,921
Zimmerman 15,600 1.33% 125,000 140,600 9.88% 47,700 188,300
Cohen 51,000 4.35% 125,000 176,000 12.36% 12,300 188,300
Miller - 0.00% - 0.00% -
------------------------------------------------------------------------------------
105,228 8.97% 250,000 355,228 24.96% 60,000 415,228
TOTAL 1,173,382 250,000 1,423,382 60,000 1,423,382
====================================================================================
WARRANTS OWNERSHIP TOTAL
OWNERSHIP (IF (ASSUMING OWNERSHIP
PERCENTAGE EXERCISED) EXERCISE PERCENTAGE
OF
WARRANTS)
-------------------------------------------------------
Yurdin 1.53% 21,707 1.34%
Goldman 1.19% 16,921 1.04%
Zimmerman 13.23% 100,000 288,300 17.76%
Cohen 13.23% 100,000 288,300 17.76%
Miller 0.00% - 0.00%
29.17% 200,000 615,228 37.90%
TOTAL 200,000 1,623,382
========================================================
24
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 March 6, 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
----------------------------------------------------------------------
March 6, 2003 $0.95 $1.05
------------------------------- -------------------- -----------------
February, 2003 0.95 1.01
------------------------------- -------------------- -----------------
January, 2003 0.75 1.01
------------------------------- -------------------- -----------------
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 $0.65 $0.86
------------------------------- -------------------- -----------------
Third Quarter 0.65 1.10
------------------------------- -------------------- -----------------
Second Quarter 0.65 0.75
------------------------------- -------------------- -----------------
First Quarter 0.64 0.66
----------------------------------------------------------------------
FISCAL YEAR ENDING MARCH 31, 2001
------------------------------- -------------------- -----------------
Fourth Quarter $0.60 $0.64
------------------------------- -------------------- -----------------
Third Quarter 0.57 0.67
------------------------------- -------------------- -----------------
Second Quarter 0.40 0.59
------------------------------- -------------------- -----------------
First Quarter 0.40 0.55
------------------------------- -------------------- -----------------
Following is a summary of the historical and recent market price and book
value of the Company's Common Stock. June 2002 represents the date on which the
Stock Purchase and Asset Purchase Agreements were executed.
DATE LOW BID HIGH ASK BOOK VALUE
June, 2002 $0.65 $0.90 $1.82
February, 2003 0.95 1.01 1.89
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.
25
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
3/97 3/98 3/99 3/00 3/01 3/02 12/02
FIRST CONNECTICUT 100.0 92.00 162.48 228.00 256.00 320.00 300.00
RUSSELL 2000 100.0 142.01 118.93 163.28 138.25 157.59 120.51
PEER GROUP 100.0 137.68 113.04 130.21 105.20 64.80 23.16
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.
26
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 third fiscal quarter ended December 31, 2002,
revenues were $1,136,000 as compared to total revenues for the fiscal year ended
March 31, 2001 of $995,000 and for the third fiscal quarter ended December 31,
2001 of $901,000.
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.
Typically, an arms-length purchaser of loan portfolio assets would pay
considerably less than net book value as a result of: (a) discounts from the
face value of the loans and (b) further reductions attributable to payment
histories, borrowers' credit and quality of the collateral securing the loans.
27
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 additional
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 proposed 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.
28
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, 10 AND 7, 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) at the time 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 December 31, 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 $1,842,000 (see Pro Forma Balance Sheet on
page 7). 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 shall
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
December 31, 2002 and the actual date of closing, currently anticipated to occur
on or about March 31, 2003, subject to extension.
29
The independent appraiser assigned no value to the Company's servicing rights
due to their short term nature and 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 independent 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 Company'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.
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
30
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 distribution 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. Typically, an arms-length purchaser of loan portfolio assets would pay
considerably less than net book value as a result of: (a) discounts from the
face value of the loans and (b) further reductions attributable to payment
histories, borrowers' credit and quality of the collateral securing the loans.
Additionally, 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 proceed 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 7).
SUBSEQUENT PLANS: Following the closing of the transactions contemplated by and
described in the Asset Purchase Agreement, a new,
31
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), 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, was first
engaged in September 2001 to appraise 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 Clayton 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.
The fees paid to the Clayton Group for its services relating to this transaction
from the date of its first engagement are $9,644. There are no fees remaining
payable to the Clayton Group. Over the past two years, the Company has had no
other business with the Clayton Group. The Clayton Group has reviewed and
consented to the description of its appraisal in this Proxy Statement.
EFFECTIVE TIME OF THE SALE: 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 Asset 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.
32
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 of the Company 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).
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 apply.
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 be 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 April 30, 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.
33
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 opinion 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. Westwood was first engaged by the Company on February 11, 2000.
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 all stockholders of the
Company, including those affiliated stockholders who are purchasing the assets
of the Company and whose interests in the transaction may conflict with the
unaffiliated stockholders. A copy of the Fairness Opinion is set forth as Annex
D. Westwood has reviewed and consented to the Company's description of its
opinion in this Proxy Statement.
The fees paid to the financial advisor for its services discussed herein from
the date of first engagement are $50,000. There are no fees remaining payable to
Westwood. Other than the foregoing, there have been no fees paid to Westwood for
services during the past two years.
FINANCIAL DATA: The Company's financial statements for the quarter ended
December 31, 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 Proxy Statement. Messrs. Yurdin and
Goldman, who abstained from the vote of the Board of Directors on this matter,
both have interests in the Buyer.
34
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, 10 AND 7, 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 Purchase 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 the
approval of the stockholders of the Company. The proxy holders will vote the
proxies received by them for the authorization of the Stock Purchase Agreement.
THE AGREEMENT: The Stock Purchase Agreement provides for the sale of an
aggregate 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 7 of this Proxy Statement indicates that the post closing
net book value of the Company's Common Stock per share of $1.73 will be higher
than the purchase price per share of $1.00 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 grant
Bernard Zimmerman & Co. Inc. and the Cohen Profit Sharing Plan to right to
designate three of the Company's five directors.
35
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, assuming conversion of the Warrants. The issuance of such a
large block of shares will negatively affect each stockholder's
potential dividend as well as dilute each stockholder's effective voting
power. Based on the pro forma balance sheet on page 7, the pro forma net
book value of the Company without approval of the proposals would be
$1.89 per share, whereas upon the closing of the Stock Purchase
Transaction, the net book value would be $1.73 per share, assuming that
the closing occurred on December 31, 2002. Further assuming conversion
of the Warrants into 200,000 shares of Common Stock, the post-closing
net book value would be $1.52 per share.
o The sale could also negatively affect the bid price of the Common Stock
as a result of the dilution to other stockholders caused by the issuance
of additional Common Stock and Warrants for Common Stock to the
purchasers.
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 April 30,
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, assuming conversion of the Warrants. Such a large block of
newly issued common 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. See
"Potential Negative Implications to Stockholders from the Stock Purchase
Agreement" above.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY: The Stock Purchase Agreement
contains various customary representations and warranties made by the Company.
36
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.
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 a three month extension by the Company
37
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 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.
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 April 30, 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 February 28, 2003, the Company is now obligated
to reimburse the Purchasers for their reasonable expenses, including legal fees,
in an amount up to $60,000.
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 15).
38
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.
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 options or
non-qualified stock options;
o The exercise price of stock options issued under the Plan will be the
fair market value of the Company's Common Stock at 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 earlier of ten (10) years after the
date of issuance (except for individuals who hold more than 10% of the
outstanding Common Stock of the Company, in which case the expiration
date shall be five (5) years) and ninety (90) days after the holder
ceases to be an employee, officer, director or consultant to the
Company, unless extended or waived in the discretion of the Board of
Directors or the Stock Option Committee.
To date, no options have been issued under the Incentive Plan. A copy of
the proposed Plan is set forth in Annex C.
VOTE REQUIRED: The affirmative 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).
39
PROPOSAL 5
CORPORATE NAME CHANGE
The Board of Directors has approved and recommends that the stockholders
approve a proposal 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 required 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 Saslow Lufkin & 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, 2003. For the fiscal year ended March 31, 2002, Saslow
Lufkin & Buggy, LLP examined the Company's financial statements included in the
Company's report to stockholders.
Audit Fees: Saslow Lufkin & Buggy, LLP billed the Company an aggregate of
$23,000 for the audit of the financial statements for the year ended March 31,
2002 and $3,000 for each of the 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, September 30, 2002 and December 31, 2002.
40
All Other Fees: Saslow Lufkin & Buggy, LLP billed the Company approximately
$20,000 to 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. Representatives 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 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, 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 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, officers and regular employees, who will be
reimbursed for their actual out of pocket expenses incurred. The Company may
request 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. 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 2003 Annual Meeting
must be received by the Company no later than April 30, 2003 for inclusion in
the Company's Proxy Statement and form of Proxy for that meeting.
ADDITIONAL INFORMATION
Enclosed are copies 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 December 31, 2002 on Form 10-QSB, as amended.
Stockholders may obtain an additional copy of each report by writing to: The
First Connecticut Capital Corporation, 1000 Bridgeport Avenue, Shelton,
Connecticut 06484, Attention: Ms. Priscilla E. Ottowell, Secretary, or by
calling (203) 944-5400.
41
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 December 31, 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,
Lawrence R. Yurdin,
PRESIDENT
Dated: March , 2003
Shelton, CT
42
THE FIRST CONNECTICUT CAPITAL CORPORATION
THIS 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
Monday, March 31, 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
December 31, 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.
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1
[GRAPHIC OMITTED]
THE FIRST CONNECTICUT CAPITAL CORPORATION 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
(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.
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.
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.
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 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');
(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.
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;
(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.
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.
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.
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:
- ---------------------------------- ---------------------------------------------
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:
THIRD AMENDMENT TO
ASSET PURCHASE AGREEMENT
This amendment (the "Third Amendment") is made as of this ___ day of
February, 2003 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.
WHEREAS, as of December 15, 2002, the Company and Purchasers entered into
that certain Amendment to Stock Purchase Agreement (the "Second 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 April 30, 2003, 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 Third
Amendment have been duly authorized by all necessary corporate action.
4. This Third Amendment, together with the First Amendment, the Second
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 Third 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 PURCHASE 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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:
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.
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.
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
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.
------------------------------
------------------------------
------------------------------
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
THIRD AMENDMENT TO
STOCK PURCHASE AGREEMENT
This amendment (the "Third Amendment") is made as of this ___ day of
February, 2003 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 Third 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.
WHEREAS, as of December 15, 2002, the Company and Purchasers entered into
that certain amendment to Stock Purchase Agreement (the "Second 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 April 30, 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 Third
Amendment have been duly authorized by all necessary corporate action.
6. This Third Amendment, together with the First Amendment, the Second
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 Third 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 re-codification,
renumbering or otherwise);
(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,
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;
(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;
(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;
(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
(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) 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 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:
(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.
(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. 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.
(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.
(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 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; 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.
(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 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 tradeable 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.
(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.
(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.
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. 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 Approved by Stockholders: , 2002
-----------------
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;
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;
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. Our 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
the Clayton Group, a national independent appraiser. 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 stockholders, including those affiliated stockholders who are
purchasing the assets of the Company and whose interests in the transaction may
conflict with the unaffiliated stockholders. The opinion rendered herein does
not, however, 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 factors, 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
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
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;
(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.)
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.)
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.
(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.)