UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
________________SCHEDULE 14A
INFORMATIONProxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement
o
Confidential, for use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
o
Definitive Additional Materials
o
Soliciting Material Pursuant to Section 240.14a-12
FCCC, INC.
(Name of Registrant as Specified in its Charter)n/a
(Name of Person(s) Filing Proxy Statement, if other than theRegistrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to SS240.14a-11(c) or SS240.14a-12 THE FIRST CONNECTICUT CAPITAL CORPORATION ----------------------------------------- (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, 2002THE FIRST CONNECTICUT CAPITAL CORPORATION 1000 BridgeportRegistrant)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
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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:
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(4) Date Filed:
FCCC, INC.
(formerly The First Connecticut Capital Corporation)
200 Connecticut Avenue,Shelton,5th Floor
Norwalk, Connecticut06484 ----------------06854
203-855-7700
203-838-8500 ext. 20
(fax) 203-854-1652________________________
NOTICE OF
ANNUALSPECIAL MEETING OF STOCKHOLDERS----------------
TO BE HELD ON DECEMBER 23, 2003________________________
To
the Stockholders:Our Shareholders:NOTICE is hereby given that
the Annual Meetinga special meeting ofStockholdersstockholders ofTHE FIRST CONNECTICUT CAPITAL CORPORATIONFCCC, Inc. (formerly The First Connecticut Capital Corporation) (the "Company") will be held atthe First Union Bank, Shelton Square Office, Greater Valley Chamber of Commerce,200 Connecticut Avenue, Lobby Conference Room,2nd Floor, 900 Bridgeport Avenue, Shelton,Norwalk, Connecticut onTuesday, June 3,December 23, 2003 at 9:30 a.m. local time 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
1. | To consider and vote upon the approval of an amendment to the Company's amended and restated certificate of incorporation to increase the aggregate number of shares of common stock authorized to be issued by the Company from 3,000,000 shares to 22,000,000 shares; | ||
2. | To consider and vote upon the postponement or adjournment of the special meeting, if necessary, to solicit additional proxies; and | ||
3. | To consider any and all other matters that may properly come before the special meeting or any adjournment thereof. |
Only stockholders who owned shares at the close of business on November 14, 2003 are entitled to attend and vote at the special meeting or any adjournment of the special meeting.
Only stockholders of record on the books of the Company at close of
business on April 10, 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 reviewmeeting and we have enclosed copiesurge you to attend the special meeting in person. If you are unable to attend, the board of directors would appreciate 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 signprompt return of the enclosed proxy exactly ascard, dated and signed or, if your name appears onproxy card or voting instruction form so indicates, your prompt vote electronically via the Internet or telephone. You may revoke your proxy at any time before it is exercised, 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 eventbe exercised if you attend the meeting.
Prior to the actual voting at thespecial meeting a proxy may be revokedand vote 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: April 10,person.
By Order of the Board of Directors, | |||
/s/Martin Cohen | |||
/s/Bernard Zimmerman |
Norwalk, Connecticut
November 14, 2003
By order of the Board of Directors,
Lawrence R. Yurdin
PRESIDENT
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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....................................... 27
Proposal No. 1 - Approval of Asset Purchase Agreement........................ 29
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 29);
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
FCCC, INC.
(formerly The First Connecticut Capital Corporation toCorporation)
200 Connecticut Avenue, 5th Floor
Norwalk, Connecticut 06854
203-855-7700
203-838-8500 ext. 20
(fax) 203-854-1652
________________________
PROXY STATEMENT FOR THE FCCC, Inc.
(see page 41);
6. Consider, vote upon and approve the appointmentINC.
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 23, 2003
________________________
Our board of the firm of
Saslow Lufkin & Buggy, LLP as auditors of the Companydirectors is soliciting proxies 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.
o The purchase price of the Company's principal assets, its
portfolio of real estate mortgage loans, will be determined by an
independent appraiser at the time of the closing. The purchase
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price will be approximately equal to the net book value of the
loan portfolio and other 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.
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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.
HISTORICAL AND RECENT MARKET PRICE AND BOOK VALUE OF THE COMPANY'S COMMON STOCK
The 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
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
-3-
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.
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
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vote as to whether there should be a complete liquidation of the
Company three (3) years from closing of the transactions if a
material transaction (as defined in the Asset Purchase Agreement
as having an aggregate value in excess of $750,000) had not been
concluded during that period.
OPINION OF OUR FINANCIAL ADVISOR WITH RESPECT TO THE ASSET PURCHASE 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 34.
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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.
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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 117 117
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
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NOTES TO PRO FORMA BALANCE SHEET
NOTE 1 - ORGANIZATION
The Company is engaged in the construction mortgage banking business, which
involves the origination, purchase, sale and servicing of mortgage loans secured
by residential or commercial real estate. The Company's revenues consist of loan
servicing fees, loan origination fees, interest on mortgage loans held prior to
sale and gains from the sale of loans and mortgage servicing rights. Mortgage
loans that are originated or purchased by the Company may be resold. The Company
also engages in mortgage servicing of its own Portfolio Loan Program, which
includes the processing and administration of mortgage loan payments and
remitting principal and interest to purchasers.
NOTE 2 - OVERVIEW OF THE TRANSACTIONS
The Company announced the execution of definitive agreements for the sale of its
mortgage business (the "Asset Sale") to FCCC Holding Company, LLC, a company
organized by members of the Board of Directors and management, including
Lawrence Yurdin (the current President of the Company). The Asset Sale would
include all of the assets (excluding cash and deferred income taxes) of the
mortgage business, subject to the assumption of all liabilities and other
obligations, including contingent liabilities. Upon closing of the Asset Sale
and the transactions described in the Stock Purchase Agreement (the "Securities
Sale"), the Company would have no operating business.
The sale price, currently estimated to be the approximate net book value of the
assets to be sold, will be an amount determined, in part, in accordance with an
independent appraisal of the loan portfolio by a nationally recognized portfolio
valuation company. The Asset Sale will be reviewed and determined to be fair
pursuant to an opinion to be delivered by an NASD registered broker-dealer.
The Purchaser (of which Lawrence Yurdin, the President of the Company, is a
Member and Manager) expects to pay the approximate net book value for the assets
of the Company (excluding cash and deferred income taxes) at the time of the
closing if approved by the stockholders of the Company.
Simultaneously with the proposed Asset Sale, the Company would issue and sell to
Bernard Zimmerman, of Weston, Connecticut, and Martin Cohen, of New York City,
New York or their affiliates, for a purchase price of $252,000 in cash, a total
of 250,000 Common Shares of the Company, together with five year Warrants to
purchase an additional 200,000 shares at a purchase price of $.01 per Warrant,
exercisable at a price of $1 per share. Messrs. Zimmerman and Cohen or their
affiliates may also purchase additional Common Shares from other sources. Upon
completion of the Securities Sale, Messrs. Zimmerman and Cohen will each own
188,300 shares and Warrants to purchase 100,000 shares at $1.00 per share.
Assuming consummation of the Asset Sale and the Securities Sale and after
payment of expenses, the Company would have 1,423,382 shares outstanding,
excluding shares reserved for outstanding options and Warrants. If the Company
has total cash on hand of not less than $1,500,000, after payment of all fees,
expenses related to the Asset Purchase and Stock Purchase transactions,
liabilities of the Company to be paid at or prior to closing and 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.
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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.
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 subjectheld on December 23, 2003 at 9:30 a.m. local time at 200 Connecticut Avenue, Lobby Conference Room, Norwalk, Connecticut. This proxy statement contains important information for you 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 toconsider when deciding 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 Purchasematters before the special meeting.
Our board of directors has set November 14, 2003 as the record date for the special meeting. Stockholders who owned shares of common stock of FCCC, Inc. on that date are entitled to vote at and Stock Purchase Agreements withoutattend the special meeting. Each share is entitled to one vote. There were 1,423,382 shares of common stock of FCCC, Inc. outstanding on the record date.
Voting materials, which include this proxy statement and the proxy card, are being ablemailed to assure them that it will be
able to pay any dividend.
RISKS IF THE ASSET PURCHASE AGREEMENT WERE NOT APPROVED. Ifstockholders on or about November 25, 2003.
GENERAL INFORMATION
This proxy statement is being provided and 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 enclosedaccompanying proxy is being solicited by the Boardour board of Directors of The
First Connecticut Capital Corporation (the "Company")directors for use at the Annual
Meetingspecial meeting of Stockholdersstockholders of FCCC, Inc. to be held at 200 Connecticut Avenue, Lobby Conference Room, Norwalk, Connecticut on December 23, 2003 at 9:30 a.m. on Tuesday, June 3, 2003local time, or 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 or postponement of the special meeting, for the purposes set forth in the attached Notice of
Meeting. The approximate date on which this Proxy Statementproxy statement. We are mailing this proxy statement and the enclosed
proxy is first sent or given to stockholders is April 22, 2003.
The shares represented by a duly executedaccompanying proxy card received by the
Secretary of the Company in the accompanying form prioron or about November 25, 2003 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 April 10, 2003 (the
"Record Date") as the date for the determination of Company'sall our stockholders entitled to notice of, and to vote at, the Annual Meeting. Asspecial meeting. Our principal executive office is located at 200 Connecticut Avenue, 5th Floor, Norwalk, Connecticut 06854, and our telephone number is (203) 855-7700.
Solicitation
We will bear the cost of the solicitation of proxies, including expenses in connection with preparing and mailing this proxy statement. We will furnish copies of solicitation materials to brokerage houses, fiduciaries, and custodians to forward to beneficial owners of our common stock held in their names. In addition, we will reimburse brokerage firms and other persons representing beneficial owners of stock for their expenses in forwarding solicitation materials to such beneficial owners. Original solicitation of proxies by mail may be supplemented by telephone, telegram and personal solicitation by our directors, officers and other employees. No additional compensation will be paid to our directors, officers or other employees for such services.
Record Date, there were 1,173,382 sharesVoting Rights and Outstanding Shares
Only holders of Common Stock outstanding. Only stockholdersrecord at the close of business on the Record Date areNovember 14, 2003 will be entitled to notice of, and to vote at, the Annual Meetingspecial meeting. As of Stockholders or any continuation or adjournmentNovember 14, 2003, we had 1,423,382 shares of the meeting.common stock outstanding. Each share of Common Stockcommon stock is entitled to one vote per share. Any share of Common Stock held
of record on each proposal that will come before 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%)special meeting. A majority of the outstanding Common Stockshares of common stock will constitute a quorum at the special meeting. Abstentions and broker non-votes (as described below) are counted as present for purposes of determining the presence or absence of a quorum for the transaction of business.
Broker Non-Votes
A broker non-vote occurs when a broker cannot vote a customer's shares registered in the broker's name because the customer did not send the broker instructions on how to vote on the matter. If the broker does not have instructions or is barred by law or applicable rules from exercising its discretionary voting authority in the particular matter, then the shares will not be voted on the matter, resulting in a "broker non-vote."
Revocability of Proxy and Voting of Shares
Any stockholder giving a proxy has the power to revoke it at any time before the special meeting. It may be revoked by mailing to our principal executive offices at 200 Connecticut Avenue, 5th Floor, Norwalk, Connecticut 06854, Attn: Secretary, an instrument of revocation or a duly executed proxy bearing a later date. If a stockholder is permitted to vote electronically via the Internet or telephone, a proxy may be revoked by the submission of a later electronic proxy. A proxy may also be revoked by attendance at the special meeting and an election given to our Secretary to vote in person (subject to the restriction that a stockholder holding shares in street name must bring to the special meeting a legal proxy from the broker, bank or other nominee holding that stockholder's shares that confirms that stockholder's beneficial ownership of the Company onshares and gives the Record Date, intendstockholder the right to vote "FOR" the slateshares). If not revoked, the proxy will be voted at the special meeting in accordance with the stockholder's instructions. If no instructions are indicated, the proxy will be voted (i) FOR the proposal to amend the Company's amended and restated certificate of directors, "FOR"incorporation to increase the adoptionaggregate number of shares of common stock authorized to be issued by the 2002 Equity
Incentive Plan, "FOR"Company from 3,000,000 shares to 22,000,000 shares; (ii) 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 special meeting, if necessary, to continuesolicit additional proxies; and (iii) in accordance with the solicitation of proxies.
-12-
VOTES REQUIRED FOR APPROVAL
o The approvaljudgment of the Asset Purchase Agreement requiresproxy holders as to any other matter that may properly come before 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-votesspecial meeting 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-
DIRECTORSthereof.
YOUR VOTE IS IMPORTANT. YOU ARE URGED TO ATTEND THE SPECIAL MEETING IN PERSON. IF YOU ARE UNABLE TO DO SO, WE URGE YOU TO PROMPTLY RETURN THE ENCLOSED PROXY CARD, DATED 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 OFSIGNED OR, IF YOUR PROXY CARD OR VOTING INSTRUCTION FORM SO INDICATES, PROMPTLY VOTE ELECTRONICALLY VIA 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
-14-
independent auditors the matters required to be discussed by SAS 61. The audit
committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1
and has discussed with the independent accountant the independent accountant's
independence. Based on the review of the audited financial statements, the
written disclosures and the letter from the independent accountants and on
discussions with the independent auditors, the Audit Committee recommended to
the Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-KSB, as amended, for the last fiscal year for
filing with the Securities and Exchange Commission. Members of the Audit
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-
SECURITIESINTERNET OR TELEPHONE.
SECURITY OWNERSHIP OFBY MANAGEMENT AND CURRENT DIRECTORS AS AT DECEMBER 31, 2002
On April 1,November 14, 2003, there were 1,173,3821,423,382 shares of Common Stockcommon stock outstanding. The following table sets forth as of April 1,November 14, 2003 the number of shares of the Company's Common Stockcommon 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 OWNERSHIPgroup:
2
Name and Address of Beneficial Owner | Amount of |
| Percent of Class |
| Options and |
| Total |
| Percent of |
|
|
|
|
|
|
|
|
|
|
5% Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert E. Humphreys | 114,900 (1) |
| 8.07% |
| - |
| 114,900 |
| 8.07% |
|
|
|
|
|
|
|
|
|
|
Executive Officer and Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin Cohen | 188,300 (2) |
| 13.23% |
| 100,000 |
| 288,300 |
| 18.92% |
|
|
|
|
|
|
|
|
|
|
Bernard Zimmerman | 288,300 (3) |
| 13.23% |
| 100,000 |
| 288,300 |
| 18.92% |
|
|
|
|
|
|
|
|
|
|
Lawrence R. Yurdin | 21,707 |
| 1.53% |
| 28,500 |
| 50,207 |
| 3.46% |
|
|
|
|
|
|
|
|
|
|
Michael L. Goldman | 16,921 |
| 1.19% |
| 16,000 |
| 32,921 |
| 2.29% |
|
|
|
|
|
|
|
|
|
|
Jay J. Miller | - |
| - |
| - |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (five persons) | 415,228 |
| 29.17% |
| 244,500 |
| 659,728 |
| 39.55% |
___________________________
(1) | Total includes shares beneficially owned by members of Mr. Humphreys' immediate family and affiliated trusts. | |
(2) | Includes shares held by Cohen Profit Sharing Plan, an affiliate of Mr. Cohen. | |
(3) | Includes shares held by Bernard Zimmerman & Company, Inc., an affiliate of Mr. Zimmerman. |
3
PROPOSAL 1
General
PROPOSAL TO AMEND THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF CURRENT EXECUTIVE OFFICERS AND DIRECTORS
AMOUNT AND
NATUREINCORPORATION TO INCREASE THE AGGREGATE NUMBER OF BENEFICIAL PERCENTSHARES OF NAME AND ADDRESS OWNERSHIP* 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
AllCOMMON STOCK AUTHORIZED TO BE ISSUED BY THE COMPANY FROM 3,000,000 SHARES TO 22,000,000 SHARES
On October 31, 2003, the board of directors of the Company approved, and executive
officers as a group (six persons)............... 185,935 15.85%
-22-
STOCK OWNERSHIP OF SIGNIFICANT STOCKHOLDERS
Carucci Family Partners......................... 121,300(1) 10.34%
C/O Carr Securities Corp
14 Vanderventer Avenue
Port Washington, NY
Robert E. Humphreys............................. 114, 900(2) 9.79%
64 Alcott Street
Acton, MA
STOCK OWNERSHIP OF PROPOSED DIRECTORS
Bernard Zimmerman............................... 15,600(3) 1.33%
18 High Meadow Road
Weston, CT
Martin Cohen.................................... 51,000(4) 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 effectrecommends 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 consummationstockholders, that Article 3 of the transactions contemplated byCompany's amended and described in the Asset Purchase and Stock Purchase Agreements,restated certificate of incorporation be amended, as set forth in Proposals 1 and 2 below.
(2) Total includesExhibit A hereto, to increase the aggregate number of 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 sharescommon stock authorized 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 WARRANTS OWNERSHIP TOTAL
OWNERSHIP OWNERSHIP AND SHARES PERCENTAGE PURCHASE OF OWNERSHIP PERCENTAGE (IF (ASSUMING OWNERSHIP
PERCENTAGE ISSUANCE UNAFFILIATED EXERCISED) EXERCISE PERCENTAGE
OF 250,000 PARTIES' OF WARRANTS)
SHARES SHARES
-------------------------------------------------------------------------------------------------------
Yurdin 21,707 1.85% -- 21,707 1.53% -- 21,707 1.53% 21,707 1.34%
Goldman 16,921 1.44% -- 16,921 1.19% -- 16,921 1.19% 16,921 1.04%
Zimmerman 15,600 1.33% 125,000 140,600 9.88% 47,700 188,300 13.23% 100,000 288,300 17.76%
Cohen 51,000 4.35% 125,000 176,000 12.36% 12,300 188,300 13.23% 100,000 288,300 17.76%
Miller -- 0.00% -- 0.00% -- 0.00% -- 0.00%
- -----------------------------------------------------------------------------------------------------------------------------------
105,228 8.97% 250,000 355,228 24.96% 60,000 415,228 29.17% 200,000 615,228 37.90%
TOTAL 1,173,382 250,000 1,423,382 60,000 1,423,382 200,000 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.
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 3/03
---- ---- ---- ---- ---- ---- ----
FIRST CONNECTICU 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
* $100 invested on 3/31/97 in stock or index -
including reinvestment of dividends.
Fiscal year ending March 31.
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 saleissued by the Company from 3,000,000 shares to Holding22,000,000 shares.
Background
As of June 30, 2003, the Company sold all of the operating assets and the business of the Company,
including but not limitedsubject 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 itsliabilities (excluding cash and certain deferred tax assets. Holding was formed byassets) of the Company's commercial mortgage lending business and, simultaneously therewith, issued and sold an aggregate of 250,000 shares of its common stock and 5-year Warrants to purchase an aggregate of 200,000 shares of common stock to Mr. Martin Cohen, the current directorsChairman of the Board and managementTreasurer of the Company, and will be operatedMr. Bernard Zimmerman, the current President and ownedChief Executive Officer of the Company, or their affiliates. These transactions were authorized 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 Company's principal assets, its
portfolio of real estate mortgage loans, 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 Company's
loan portfolio and other assetsshareholders 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 ($66,000) 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.
-30-
Accordingly, the Board of Directors has determined that the best way
to increase stockholder value is to sell the operating assets for cash in an
amount equal to the approximate net book value and permit a new, experienced
management team to attempt to find an operating business that would be more
suitable for the resulting publicly held entity. In the event that the new
management team is unable to effect a "material transaction" (defined in the
Asset Purchase Agreement as a transaction or transactions having a value of not
less that $750,000) with such an operating company within 36 months (subject to
a three month extension in certain circumstances) of the closing of the asset
sale, then upon the request of the holders of 20% or more outstanding stock of
the Company held by non-affiliates of management, the Company shall schedule a
meeting of stockholders, pursuant to a proxy solicitation, at which the
stockholders will vote on whether to liquidate the Company. All shares held by
management shall be voted at any such meeting in the same proportion as the
non-management shares.
ALTERNATIVES TO PROPOSED SALE: The Board of Directors carefully considered
several alternatives to the proposed transaction.
One alternative would be the immediate liquidation of the operating
assets and 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 less than net book value for the assets. The reason is based on several
factors. First, a purchaser would apply a discount based upon the risk of
collection of the underlying loans due to factors such as payment histories,
borrowers' credit and quality of the collateral securing the loans.
Additionally, purchasers may discount the assets due to other economic factors
such as the cost of the purchaser's own borrowed funds used to purchase the
assets compared with the interest and principal payments to be received on the
loans. Purchasers may also apply significant discounts based on the term of the
loan assets purchased. For example, discounts are often required when the loans
are relatively short-term, as is the case with respect to the Company's
construction mortgage loan assets, which typically have terms of only several
months. With such a short period between the granting of the loan and the
maturity date, there is a limited period for the holder to collect interest on
the loans, thereby rendering them less valuable than long-term loans in which
substantial interest charges accrue to the benefit of the holder over the term
of the loan. In addition, the borrower usually pays loan origination fees to the
original lender as a primary economic incentive to grant such short-term loans.
These fees are not available to the purchaser of the loan, thereby creating
another basis for a discounted purchase price. Accordingly, the primary economic
incentive for purchasers of these types of loans is to purchase them at a
material discount. In a liquidation the Company would, as a practical matter,
consider allowing such short-term loans to mature rather than sell them at a
very substantial discount.
In the event that the Company's loan portfolio assets were purchased
pursuant to liquidation for more than their net book value, the purchase price
would exceed that being paid by Holding under the Asset Purchase Agreement.
Additionally, any value in the Company's public status would be lost
in liquidation. 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.
-31-
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: June 3, 2003.
As a result of the proposed transaction,sale of the Company's assets, the Company would
have no liabilities and its sole assets would be cash, including the net
proceedshas limited operations. The operations of the sale, and certain deferred tax assets, the valueCompany currently consist 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, experienced management team
will seeksearch for an appropriate mergeracquisition or business combination foropportunity with an operating business. The board of directors believes that an increase in the number of shares of authorized common stock as contemplated by this Proposal would benefit the Company and its stockholders by giving the Company the needed flexibility in orderits corporate planning and in responding to increase stockholder value and better realize the value inherentdevelopments 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 between
$3,473,534.79 and $3,574,530.69 and a book value on that same date of
$4,227,721.84 (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.
-32-
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.search. Such representations and warrantiesflexibility might include, without limitation, authorization,
organization, binding obligationthe issuance 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 completionsale of common stock (i) as consideration, in whole or in part, for the acquisition of the transactions contemplated by the
Asset Purchase Agreement depends upon the satisfactionstock or assets of such a number of
conditions, including, among others:
o Approval of the Asset Purchase Agreement by stockholders of the
Company holding not less than the two-thirds of the issued and
outstanding shares of Common Stock.
o Accuracy in all material respects of the representations and
warranties contained in the Asset Purchase Agreement.
o Compliance in all material respects with all agreements and
obligations of each of the Company and Holding that are required
to be complied with before consummation of the sale.
o Receipt of any and all consents and waivers of third parties that
are required to be obtained before the consummation of the sale.
o Assumption by Holding of all liabilities of the Company.
o Absence of any law or injunction preventing the sale.
o Approval by the stockholders 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.
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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 June 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.
REGULATORY REQUIREMENTS: No federal or state regulatory requirements must be
complied with or approval must be obtained (other than stockholder approval)business, (ii) in connection with the sale.
OPINION OF FINANCIAL ADVISOR: In connection with the saleexercise of the assetsoptions or warrants, (iii) pursuant to any stock option plan or other benefit plan 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(iv) in connection with the proposed salestock splits or dividends and other general corporate purposes. The Company has had discussions with a number of the assets and the
business. Westwood was first engaged bypotential acquisition or business combination prospects; however, at this time the Company on February 11, 2000.
has no arrangement or agreement with any such prospects, nor does it have any specific plans or agreements for issuing the additional shares of common stock.
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 involvedincrease in the securitiesnumber of shares authorized for issuance will not have any immediate effect on the rights of existing stockholders. The board of directors will, however, have the authority to issue the authorized shares without requiring future stockholders' approval of such issuances, except as may be required by applicable law. To the extent that additional authorized shares are issued in the future, they will decrease the existing stockholders percentage equity ownership and, corporate finance industries for approximately 15 years, including senior
positions in leading Wall Street securities firms. Mr. Kleban is also a
principal ofdepending upon 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. Bothprice at which they 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 limitedissued, could be dilutive to the formexisting stockholders. Any additional authorized shares shall have identical powers and rights of the transaction since the amount of the purchase price
has been determined in accordance with the valuation of certain of the Company's
assets by a qualified independent appraiser (see "Independent Appraiser" above).
In rendering its opinion, Westwood reviewed the corporate and financial recordsshares currently authorized. Stockholders of the Company interviewed management andhave no preemptive rights to purchase additional shares, nor are the Board of Directors and reviewed
the historical price and volume datastockholders entitled to appraisal rights to obtain payment of the Common Stockfair value 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 fairshares, with respect to the stockholders. The opinion of Westwood is directedabove Proposal.
Votes Required to all stockholders ofApprove 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.
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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: Amendment
The affirmative vote of the holders of two-thirdsa majority of the Company's issued and outstanding Common Stock asshares of the Record Datecommon stock is required to approve the transaction contemplated byproposed amendment to the amended and described inrestated certificate of incorporation. Therefore, abstentions and broker non-votes will have the Asset Purchase
Agreement.
RECOMMENDATION OF effect of votes against this proposal.
THE BOARD OF DIRECTORS: The Board of Directors unanimously
recommendsDIRECTORS RECOMMENDS A VOTE TO APPROVE THE AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE IN THE PROXY.
4
ADJOURNMENT OF THE SPECIAL MEETING
In the event that there are insufficient votes to approve Proposal 1 at the stockholders vote "FOR" the approvaltime of the Asset Purchase
Agreement (Item No. 1 onspecial meeting, the proxy card). All material factorsproposal could not be approved unless the Boardmeeting were adjourned in order to permit further solicitation 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 abstainedproxies from the vote of the Board of Directors on this matter,
both have interests in the Buyer.
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PROPOSAL 2
STOCK PURCHASE AGREEMENT
PLEASE REFER TO THE SECTIONS ENTITLED "SUMMARY," "RISK FACTORS" AND
THE PRO FORMA BALANCE SHEET SET FORTH ON PAGES 1, 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 sharesholders 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 indicatescommon stock. Proxies 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.
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EXEMPTION FROM SECURITIES ACT OF 1933: The offering of securities contemplated
by the Stock Purchase Agreement is exempt from the registration requirements of
Section 5 of the Securities Act of 1933 (the "Securities Act") pursuant to
Section 4(2) of the Securities Act as a transaction not involving any public
offering of securities.
USE OF PROCEEDS: The proceeds of the proposed sale of the securities would be
used for general corporate purposes.
POTENTIAL NEGATIVE IMPLICATIONS TO STOCKHOLDERS FROM THE STOCK PURCHASE
AGREEMENT: While the Board of Directors and Management believe the proposed
transactions represent the best available opportunity for stockholders to
maximize the value of their stock, they also stress that the proposed Stock
Purchase Agreement may present potentially negative implications to stockholders
for the following reasons:
o The 250,000 Common Shares and Warrants to purchase 200,000 Common
Shares would represent 27.72% of the Company's total shares
outstanding after the closing, 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 approvalbeing solicited by the Company's stockholders.board of directors grant discretionary authority to vote for any adjournment, if necessary. If it were necessary to adjourn the closing has not occurred on or prior to June 30,
2003,special meeting, and the Purchasers have not waived any conditions precedent, the
obligationadjournment is for a period of less than 30 days, no notice of the Purchasers to close the transactions contemplated by the Stock
Purchase Agreement shall be nulltime 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%place of the Company's total
shares outstanding, assuming conversionadjourned meeting would be required other than an announcement 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 affecttime and place at 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.
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.
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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 thespecial meeting. A majority of the shares of
Common Stockrepresented and 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
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:
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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 June 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
thespecial meeting is required to approve the Stock Purchase Agreement.
RECOMMENDATION OF adjournment, regardless of whether there is a quorum present at the meeting.
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).
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.
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REQUIRED: Five directors shall be elected by a majority of the votes cast
at the meeting, assuming the presence of a quorum.
RECOMMENDATIONTO APPROVE THE POSTPONEMENT OR ADJOURNMENT 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 OFSPECIAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS: WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE IN THE PROXY.
OTHER MATTERS
The Boardboard of Directors unanimously
recommends that the stockholders vote "FOR" the approval of the 2002 Equity
Incentive Plan (Item No. 4 on the proxy card).
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PROPOSAL 5
CORPORATE NAME CHANGE
The Board of Directors has approved and recommends that the
stockholders approve a 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
Boarddirectors 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 voteknow 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
recommendsany other matter 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.
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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 2004 Annual
Meeting must be received by the Company no later than March 1, 2004 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.
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OTHER MATTERS
The persons named in the enclosed form of proxy have no present
intention of bringingcome 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.special meeting. If any other business shouldmatters are properly come beforepresented to the special meeting, it is the intention of the persons named in the accompanying proxy intended to vote, thereonor otherwise to act, in accordance with their best judgment.
INCORPORATION BY REFERENCE
judgment on such matters.
The Company's Annual Reports on Form 10-KSB, as amended,board of directors hopes that stockholders will attend the special meeting. Whether or not you plan to attend, you are urged to complete, sign and return the enclosed proxy in the accompanying envelope or, if your proxy card or voting instruction form so indicates, vote electronically via the Internet or telephone. A prompt response will greatly facilitate arrangements for the fiscal years ended March 31, 2001special meeting, and 2002, and Quarterly Report on Form 10-QSB,
as amended, foryour cooperation will be appreciated. Stockholders of record who attend the period ended December 31, 2002 are incorporated by reference
into this Proxy Statement. Copiesspecial meeting may vote their shares even though they have sent in their proxies.
By Order of the Board of Directors, | |||
/s/Martin Cohen | |||
/s/Bernard Zimmerman |
Norwalk, Connecticut
November 14, 2003
5
APPENDIX A
Section 3 of the Company's above referenced reports on
Form 10-KSBamended and 10-QSB,restated certificate of incorporation of FCCC, Inc. is proposed to be amended and modified so that it reads 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 tofollows:
"3. The total number of shares of all classes of capital stock that the Corporation shall have authority to issue is 22,000,000 shares of Common Stock with no par value (the "Common Stock")." |
REVOCABLE PROXY
FCCC, INC.
(formerly 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: April 10, 2003
Shelton, CT
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THE FIRST CONNECTICUT CAPITAL CORPORATION
THIS Corporation)
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Lawrence R. YurdinMr. Martin Cohen and Pricilla E.
Ottowell,Mr. Bernard Zimmerman, jointly and either of them,severally, as proxyholders and attorneys-in-fact of the
undersigned,proxies, with full power of substitution, to vote all shares of common stock thatof FCCC, Inc., a Connecticut corporation (the "Company"), which the undersigned is entitled to vote at the Annual Meetingspecial meeting of Stockholders of The
First Connecticut Capital Corporation (the "Company")stockholders to be held at the First
Union Bank, Shelton Square Office, Greater Valley Chamber of Commerce,200 Connecticut Avenue, Lobby Conference Room, 2nd Floor, 900 Bridgeport Avenue, Shelton,Norwalk, Connecticut on Tuesday, June 3,December 23, 2003 at 9:30 a.m., local time, or any adjournment thereof. The proxies are being directed to vote as specified below or, if no specification is made, FOR the proposal to amend the Company's amended and at any continuationrestated certificate of incorporation to increase the aggregate number of shares of common stock authorized to be issued by the Company from 3,000,000 shares to 22,000,000 shares, FOR the approval of the postponement 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
Meetingspecial meeting, if necessary, to solicit additional proxies and Proxy Statement, dated April 10, 2003, and a copy ofin accordance with their discretion on such other matters that may properly come before 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.
special meeting.
WHERE NO CONTRARY CHOICE IS INDICATED BY THE STOCKHOLDER, THIS PROXY, WHEN RETURNED, WILL BE VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS FOR ALL PROPOSALS AND WITH DISCRETIONARY AUTHORITY UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
PLEASE COMPLETE, DATE AND SIGN THIS PROXY AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
-1-
THE FIRST CONNECTICUT Mark, sign, and date your proxy card and return
CAPITAL CORPORATION 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.
FCCC, INC. | Mark, sign, and date your proxy card andreturn it in the postage-paid envelope we have provided or return it to FCCC, Inc., Attn: Secretary, 200 Connecticut Avenue, 5th Floor, Norwalk, Connecticut 06854. |
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 [ ]
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 [ ]
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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 [ ]
DATED
1. | To approve an amendment to the Company's amended and restated certificate of incorporation to increase the aggregate number of shares of common stock authorized to be issued by the Company from 3,000,000 shares to 22,000,000 shares. | |||
FOR o | AGAINST o | ABSTAIN o | ||
2. | To approve the postponement or adjournment of the special meeting, if necessary, to solicit additional proxies. | |||
FOR o | AGAINST o | ABSTAIN o |
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
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ANNEX A
Asset Purchase Agreement
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made this 28th day of
June, 2002 by and between FCCC Holding Company, LLC, a limited liability company
duly organized under the laws of the State of Connecticut ("Buyer"), The First
Connecticut Capital Corporation, a corporation duly organized under the laws of
the State of Connecticut ("Seller" or "Company").
WHEREAS Seller is the owner of certain assets used in connection with
the operation of its business; and
WHEREAS, the members and managers of Buyer are or have been current
officers and directors of the Seller and are familiar with the management and
operations of the Seller; and
WHEREAS Buyer desires to purchase the hereinafter described assets of
Seller pursuant to the terms and conditions set forth herein; and
WHEREAS Seller desires to sell and transfer such assets to Buyer
pursuant to the terms and conditions set forth herein:
NOW, THEREFORE, for and in consideration of the premises and mutual
promises and covenants hereinafter contained, it is agreed between Buyer and
Seller as follows:
1. PURCHASE AND SALE OF ASSETS
Subject to the terms and conditions of this Agreement, at the Closing
(as hereinafter defined) Seller shall sell, convey, assign, transfer and deliver
to Buyer, and Buyer shall purchase and acquire from Seller, all of Seller's
right, title and interest in, to and under those assets set forth in Schedule
1(a) (the "Assets"), attached hereto and deemed a part hereof.
2. EFFECTIVE TIME. The transaction contemplated by this Agreement
shall become effective as of 10 a.m. on the Closing Date, as defined
hereinbelow, at which time the risk of loss with respect to the Assets shall
pass to Buyer.
3. PURCHASE PRICE.
As consideration for the Assets being purchased hereby, Buyer shall
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(a) Pay to Seller on the Closing Date, by bank or certified check or
by wire transfer of funds in an e aggregate sum equal to the approximate Net
Book Value of the Assets, as determined, in part, by an independent appraisal of
the assets within the Seller's portfolio of real estate mortgage loans (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,
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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.
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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.
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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
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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');
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(c) The Taxes;
(d) Any partnership, joint venture or similar entity of
which Seller is a member of or participant (collectively,
the "Affiliated Entities") , for which Buyer or an affiliate of Buyer shall as
of the Closing, be substituted for Seller with respect to such membership or
participation, as the case may be, and obtain a release of Seller from each such
entity;
(e) The Employment Obligations;
(f) The Lease; and
(g) Any loan participations in which Seller is a party.
5.2.2 MINIMAL TANGIBLE NET WORTH. For the period commencing
on the Closing Date and terminating on the third anniversary of the Closing
Date, Buyer shall maintain a tangible net worth of not less than $1,000,000 and,
not later than sixty (60) days after the expiration of each six (6) month period
following the Closing, provide an Officer's Certificate of Buyer attesting to
compliance with such net worth requirement.
6. INDEMNIFICATION.
6.1 INDEMNIFICATION BY SELLER. Without limiting any other
indemnification set forth herein, Seller hereby agrees to indemnify and defend
Buyer against and hold it harmless from any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses) suffered or incurred by
Buyer to the extent arising from any breach of any representation, warranty or
covenant of the Seller contained in this Agreement. In addition, Seller hereby
agrees to indemnify Buyer against all liability for reasonable legal, accounting
and other fees and expenses directly attributable to any such indemnification.
6.2 INDEMNIFICATION BY BUYER. Buyer shall indemnify and defend Seller
against, and hold it harmless from, any loss, liability, claim, damage or
expense (including reasonable legal fees and expenses) suffered or incurred by
Seller to the extent arising from any breach of any representation, warranty or
covenant of Buyer set forth herein or arising from the conduct of the business
relating to the Assets after the Closing. In addition, Buyer agrees to indemnify
Seller against all liability for reasonable legal, accounting and other fees and
expenses directly attributable to any such indemnification.
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7. DURATION OF REPRESENTATIONS. The representations, warranties,
covenants and indemnities in this Agreement and in any other document delivered
in connection herewith (other than those with respect to the Taxes, which shall
continue until the expiration of each statutory period of limitations), shall
continue until the close of business on the date which is two (2) years
following the Closing Date, unless the specific provision herein for which
indemnification is sought has a longer duration.
8. CONFIDENTIAL INFORMATION. Each party agrees to maintain as
confidential all information which is delivered to it by the other and agrees
further not to disclose the same to any third party whatsoever or use any such
information for any purpose except in connection with the implementation of the
undertakings of the parties described herein, PROVIDED, HOWEVER, that the Seller
may be required to release information concerning the transactions contemplated
hereby in furtherance of its responsibilities as a publicly traded company.
9. CLOSING. The Closing of the transactions contemplated hereby shall
take place at the offices of Seller, 1000 Bridgeport Avenue, Shelton,
Connecticut and shall occur on or about the tenth (10th) business day following
the approval by the Seller's shareholders of the transactions contemplated and
described by this agreement. If the Closing has not occurred on or prior to
October 31, 2002, and the Buyer has not waived any conditions precedent, the
obligation of Buyer to close the transactions contemplated hereby shall be null
and void unless waived in writing by Buyer.
10. CONDITIONS PRECEDENT TO CLOSING.
(a) The obligation of Buyer to consummate the transactions
contemplated herein and to perform its obligations hereunder on or
prior to the Closing Date is, at the option of Buyer, subject to the
following conditions, any or all of which may be waived by Buyer in
whole or in part at or prior to the Closing:
(i) no action or proceeding shall have been instituted or threatened
or claim or demand made against Buyer or Seller before any court
or other governmental body, seeking to restrain or prohibit, or
to obtain damages with respect to, the consummation of the
transactions contemplated hereby, or which, if adversely
determined to Buyer or Seller, might have a material adverse
effect on the Assets or the business, operations or prospects of
Buyer or Seller;
(ii) since March 31, 2002 there shall not have been any change,
destruction or loss, whether or not covered by insurance,
materially and adversely affecting the Assets or the business of
Seller or any suit, action or proceeding pending or threatened
which, if adversely determined, would result in the loss of a
material part of the Assets or would adversely affect Seller's
business;
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(iii) Seller shall deliver to Buyer a certificate of an officer of
Seller stating that the transactions contemplated hereby have
been approved by Seller's stockholders;
(iv) Seller shall deliver to Buyer a certificate executed by an
authorized representative of Seller certifying that each of the
representations, warranties and covenants of Seller herein shall
be true and correct in all respects on the date hereof and on
the Closing Date;
(v) The execution by the counterparties to the Contracts, the Lease
and the constituent documents of the Affiliated Entities of
consents to the transfer of each such contract, agreement or
instrument to the Buyer, to the extent required;
(vi) Seller shall deliver to Buyer a certificate of an officer of
Seller stating that the Seller's Board of Directors and
shareholders have approved the transactions contemplated and
described herein;
(b) The obligation of Seller to consummate the
transactions contemplated herein and to perform its obligations hereunder on and
after the Closing Date is, at the option of the Seller, subject to the following
conditions, any or all of which may be waived by Seller in whole or in part at
or prior to the Closing:
(i) no action or proceeding shall have been instituted
or threatened or claim or demand made against Buyer or Seller
before any court or other governmental body, seeking to restrain
or prohibit, or seeking to obtain damages with respect to, the
consummation of the transactions contemplated hereby;
(ii) The Seller shall have received an appraisal from
a qualified loan asset valuation company and a fairness opinion
from an NASD registered Broker-Dealer confirming and certifying
that the consideration to be paid by the Buyer for the Assets
and the other terms and conditions of the transactions
contemplated and described herein are fair and reasonable.
(iii) Upon consummation of the transactions
contemplated and described herein, the Seller shall have, net of
all costs, fees and expenses associated with such transactions
and after provision for any obligations of the Seller arising
prior to the Closing, excluding all cash derived from the sale
of shares of the Company's Common Stock to the Investors, as set
forth and described in the Stock Purchase Agreement, not less
than One Million Two Hundred Fifty Thousand Dollars
($1,250,000).
(iv) The Contracts, Disclosed Liabilities, Taxes,
Affiliated Entities, Lease and Employment Obligations shall have
been terminated or assumed by Buyer or Buyer shall have
indemnified and held Seller harmless with respect to same to
Seller's reasonable satisfaction.
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11. MISCELLANEOUS PROVISIONS.
11.1 FURTHER ASSURANCES. Each party hereto agrees to execute and
deliver such other documents, agreements or instruments and take such further
action as may be reasonably requested by any other party hereto for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
11.2 NOTICES. Any notices required or permitted hereunder shall be
sufficiently given if in writing and personally delivered, by telecopy and
confirmed by telephone, by nationally recognized overnight courier, or by
certified or registered mail, postage prepaid, addressed as follows or to such
other address as the parties shall have given notice of pursuant hereto:
(a) If to the Seller:
The First Connecticut Capital Corporation
1000 Bridgeport Avenue
Shelton CT 06484
With a copy to:
Duane L. Berlin, Esq.
Lev & Berlin, P.C.
535 Connecticut Avenue
Norwalk, CT 06851
(b) If to Buyer: FCCC Holding Company, LLC
1000 Bridgeport Avenue Shelton, CT
06484 Attention: Lawrence R. Yurdin,
President
With a copy to:
Michael L. Goldman, Esquire
Goldman & Gruder, L.L.C.
200 Connecticut Avenue
Suite 2F
Norwalk, CT 06854
All such notices shall be effective upon the earlier of receipt or, in the case
of certified or registered mail, seven (7) days after depositing in the mail,
postage prepaid, return receipt requested and addressed as shown above.
11.3 ENTIRE AGREEMENT. This Agreement (including the Schedules and
Exhibits hereto) represents the entire understanding and agreement between the
parties with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the parties
hereto. This Agreement supersedes all prior agreements and arrangements between
the parties hereto and their affiliates.
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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.
A-11
11.11 SCHEDULES AND EXHIBITS. All Schedules and Exhibits referenced
herein are incorporated herein by reference and shall be initialed by both
parties in order to be deemed an integral part of this Agreement. The contents
of such Schedules and Exhibits are deemed to be disclosures to Buyer by Seller.
In the event that any Schedule or Exhibit provided for herein is incomplete or
has not been prepared by Seller and attached hereto as of the execution and
delivery of this Agreement, it shall be a condition precedent to Closing that
such Schedule or Exhibit shall be in form and substance reasonably satisfactory
to Buyer.
EXECUTED as of the date first indicated above:
- ------------------------------------- -----------------------------------------
FCCC HOLDING COMPANY, LLC THE FIRST CONNECTICUT CAPITAL CORPORATION
- ------------------------------------- -----------------------------------------
- ------------------------------------- -----------------------------------------
By:_____________________________ By:_______________________________
Its: Its:
- ------------------------------------- -----------------------------------------
A-12
SCHEDULE 1(A) AND 3(B)
THE FIRST CONNECTICUT CAPITAL CORPORATION
Asset and Liability Schedule
12-Jun-02
ASSETS:
Loans net of provision 3,591,207
Interest receivable 1,286
Prepaid expenses less state corp tax 12,794
Investments in Partnerships 20,125
Servicing Rights FCCC 69,000
Leasehold Furniture & Fixtures less depreciation
14,401
---------
TOTAL ASSETS
3,708,813
LIABILITIES:
Accounts payable
Credit line Hudson 289,270
Payroll taxes payable 2,040,225
4,774
TOTAL LIABILITIES ---------
2,334,269
A-13
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:
A-14
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:
A-15
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 June 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:
A-16
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:
B-1
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.
B-2
3.8 OFFERING. Subject to the accuracy of the Purchasers'
representations in Section 4 hereof, the offer, sale and issuance of the Shares,
the Warrants and the Warrant Shares constitute transactions exempt from the
registration requirements of Section 5 of the Act.
3.9 PERMITS. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it. The Company is not in default under any of such franchises,
permits, licenses or other similar authority.
3.10 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation of any term of its Certificate of Incorporation or Bylaws, or in any
respect of any term or provision of any mortgage, indenture, contract,
agreement, instrument, judgment or decree, or any order, statute, rule or
regulation applicable to the Company. The execution, delivery and performance of
and compliance with this Agreement, and the consummation of the transactions
contemplated hereby, and the issuance of the Shares, the Warrants and the
Warrant Shares have not resulted and will not result in any violation of, or
conflict with, or constitute a default under any such term or provision, or
result in the creation of, any mortgage, pledge, lien, encumbrance or charge
upon any of the properties or assets of the Company; and there is no such
violation or default or event which, with the passage of time or giving of
notice or both, would constitute a violation or default which would adversely
affect the business of the Company or any of its properties or assets.
3.11 SALE TRANSACTION. The Company is a party to an agreement of even
date herewith, pursuant to which it is proposed that it will sell the assets
comprising the Company's mortgage banking business (herein the "Business") in
the manner described in and contemplated thereby (the "Sale Agreement"). The
Sale Agreement has been executed and delivered by the Company and the
performance thereof has been duly authorized by all required corporate action,
subject to approval of the Company's shareholders at the Annual or a Special
Meeting of Shareholders to be convened as promptly as practicable after the date
hereof. The Sale Agreement is a valid and binding agreement of the parties
thereto, enforceable in accordance with its terms, subject only to the aforesaid
shareholders' approval. The representations and warranties made by the Company
and the other parties thereto contained in the Sale Agreement are deemed
incorporated herein as if made by the Company and such other parties and the
Purchaser shall be a third party beneficiary thereof with the rights attendant
thereto if there were any breach of, or misrepresentation contained in, any such
representations or warranties.
3.12 LITIGATION. There is neither pending nor threatened any action,
suit, proceeding or claim, whether or not purportedly on behalf of the Company,
to which the Company or any employee of the Company is or may be named as a
party or to which the Company's, or any such person's property is or may be
subject, except collection proceedings or foreclosures in the ordinary course of
the Company's business in which the Company is plaintiff. To the best of the
Company's knowledge, there is no basis for any such action, suit, proceeding or
claim, in which an unfavorable outcome, ruling or finding in any such matter or
for all such matters, taken as a whole, might have a material adverse effect on
the condition, financial or otherwise, operations or prospects of the Company.
The Company has no knowledge of any unasserted claim, the assertion of which is
likely and which, if asserted, will seek damages, an injunction or other legal,
equitable, monetary or nonmonetary relief which if granted would have a material
adverse effect on the condition, financial or otherwise, operations or prospects
of the Company.
B-3
3.13 ISSUANCE TAXES. All taxes imposed by any taxing authority in
connection with the issuance, sale and delivery of the Shares, the Warrants and
the Warrant Shares shall have been fully paid, and all laws imposing such taxes
shall have been fully complied with, prior to the Closing Date; however,
Purchasers acknowledge their responsibility for any income, capital gain or
similar tax arising out of the purchase or sale of the Securities or the
exercise of the Warrants and that the Company has made no representation as to
the tax consequences of said transactions.
3.14 ILLEGAL OR UNAUTHORIZED PAYMENTS; POLITICAL CONTRIBUTIONS.
Neither the Company nor any of its officers, directors, employees, agents or
other representatives, or any other business entity or enterprise with which the
Company is or has been affiliated or associated, has, directly or indirectly,
made or authorized any payment, contribution or gift of money, property, or
services, whether or not in contravention of applicable law, (a) as a kickback
or bribe to any person or (b) to any political organization, or the holder of or
any aspirant to any elective or appointive public office except for personal
political contributions not involving the direct or indirect use of funds of the
Company.
3.15 FINANCIAL STATEMENTS. The Balance Sheets of the Company as of
March 31, 2001 and 2002, and the related statements of income, changes in
stockholders' equity and cash flow for the fiscal years then ended, as restated
in 2001, audited by Saslow Lufkin & Buggy, LLP, including related notes and
schedules (the "Financial Statements") are true and complete in all material
respects and fairly present in all material respects the financial position and
results of operations of the Company as at said dates and for the periods then
ended, except as to the unaudited Financial Statements, which are subject to
customary year and audit adjustments, not material in amount. The Financial
Statements have been prepared in accordance with generally accepted accounting
principles, (GAAP), consistently applied, except the unaudited financial
statements may not have complete notes.
3.16 ABSENCE OF UNDISCLOSED LIABILITIES. The Financial Statements, as
restated, make full and adequate provision for all material obligations,
liabilities and commitments (fixed and contingent) of the Company as of the
dates thereof, and the Company had no material obligations, liabilities or
commitments (fixed or contingent) which were required to be set forth or
reserved in the Financial Statements or notes thereto in accordance with GAAP
and were not so set forth or reserved.
3.17 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the most recent
Balance Sheet date, the Company has:
(a) conducted its business only in the ordinary course;
(b) not suffered any material adverse change in its financial
condition or results of operations;
(c) not incurred any material obligation, liability or commitment
(fixed or contingent), except trade obligations in the ordinary
course of business; and
(d) not sold, transferred or leased any of its properties or assets
or entered into any transaction other than in the ordinary course
of business, except this Agreement and the Sale Agreement.
B-4
3.18 TAX MATTERS. The Company has prepared and filed, or duly
obtained extensions therefor, with the appropriate Federal, State or local
government agencies, all tax returns required to be filed; the Company has paid
all taxes shown on such returns to be payable or which have come due pursuant to
any assessment, etc.; the provisions, if any, in the Financial Statements are
sufficient for all accrued and unpaid taxes; and the Deferred Income Taxes item
on the March 31, 2002 Balance Sheet is true and correct in all material
respects.
3.19 SEC REPORTS. The Company has filed and is current with all
reports, including but not limited to, Form 10-K Annual Report and Form-10Q
Quarterly Report, required to be filed with the SEC, and each such report is
correct and complete in all material respects and provides the information
required to be included therein pursuant to SEC rules and regulations under the
Exchange Act.
3.20 BROKERS OR FINDERS. The Purchasers have not and will not incur,
directly or indirectly, as a result of any action taken by the Company, any
liability for brokerage or finders' fees in connection with the transactions
contemplated hereby.
3.21 INSURANCE.The Company has delivered to Purchasers a schedule
setting forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, key person,
workers' compensation coverage and bond and surety arrangements) which the
Company is a party, a named insured, or otherwise the beneficiary of coverage:
(a) The name, address, and telephone number of the agent.
(b) The name of the insurer, the name of the policyholder, and the
name of each covered insured.
(c) The policy number and the period of coverage.
(d) The scope (including an indication of whether the coverage is on
a claims made, occurrence or other basis) and amount (including a
description of how deductibles and ceilings are calculated and
operate) of coverage.
(e) A description of any retroactive premium adjustments or other
material loss-sharing arrangements.
With respect to each such insurance policy; (i) the policy is valid, binding,
enforceable and in full force and effect; (ii) neither the Company nor, to the
best knowledge of the Company, any other party to the policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and, to the best knowledge of the Company, no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification or acceleration, under the policy;
and (iii) no party to the policy has repudiated any material provision thereof.
3.22 DISCLOSURE. Neither this Agreement, nor any other written
statement furnished to the Purchaser or its counsel in connection with the offer
and sale of the Shares, the Warrants and the Warrant Shares or in connection
with the Sale Agreement, including the proxy statement related thereto to be
filed by the Company as contemplated herein, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary in order to make the statements contained therein or herein not
misleading in the light of the circumstances under which they were made. There
is no fact which the Company has not disclosed to the Purchasers in writing
that, to the best knowledge of the Company, materially adversely affects, the
ability of the Company to perform this Agreement and the Sale Agreement or the
other actions contemplated herein.
B-5
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
The Purchasers hereby severally represent and warrant to the Company
as follows:
4.1 BUSINESS AND FINANCIAL EXPERIENCE. Each Purchaser is an
accredited investor within the meaning of Rule 501 of Regulation D promulgated
under the Securities Act and has such knowledge and experience in financial and
business matters that each Purchaser is capable of evaluating the merits and
risks of the Purchaser's purchase of the Shares, the Warrants and the Warrant
Shares as contemplated by this Agreement. Each Purchaser's financial situation
is such that he or it can afford to bear the economic risk of holding the
Shares, the Warrants and the Warrant Shares for an indefinite period of time and
suffer complete loss of such Purchaser's investment.
4.2 INVESTMENT INTENT; BLUE SKY. Each Purchaser is acquiring the
Shares, the Warrants and the Warrant Shares for investment for such Purchaser's
own account, not as a nominee or agent, and not with a view to or for resale in
connection with any distribution thereof. Each Purchaser understands that the
issuance of the Shares, the Warrants and the Warrant Shares has not been, and
will not be, registered under the Act by reason of a specific exemption from the
registration provisions of the Act, the availability of which depends upon,
among other things, the bona fide nature of the Purchaser's true and correct
state of domicile, upon which the Company may rely for the purpose of complying
with applicable Blue Sky laws.
4.3 RULE 144. Each Purchaser acknowledges that the Shares, the
Warrants and the Warrant Shares must be held indefinitely unless subsequently
registered under the Act or unless an exemption from such registration is
available. The Purchaser is aware of the provisions of Rule 144 promulgated
under the Act which permit limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the shares, the availability
of certain current public information about the Company, the resale occurring
not less than one year after a party has purchased and paid for the security to
be sold, the sale being effected through a "broker's transaction" or in a
transaction directly with a "market maker", and the number of shares being sold
during any three-month period not exceeding specified limitations. The Company
makes no representation as to the future availability of any exemption from such
registration requirements.
4.4 RESTRICTIONS ON TRANSFER; RESTRICTIVE LEGENDS. Each Purchaser
understands that the transfer of the Shares, the Warrants and the Warrant
Shares, if applicable, is restricted by applicable state and federal securities
laws, and that the certificates representing the Shares, the Warrants and the
Warrant Shares will be imprinted with legends restricting transfer except in
compliance therewith.
4.5 ACCESS TO COMPANY INFORMATION. Each Purchaser has had an
opportunity to discuss the Company's business, management and financial affairs
with the Company's management. The Purchaser has also had an opportunity to ask
questions of officers of the Company. The Purchaser understands that such
discussions, as well as any written information issued by the Company, were
intended to describe the material aspects of the Company's business, including
the transactions contemplated by the Sale Agreement, but were not a thorough or
exhaustive description.
4.6 AUTHORIZATION. All action on the part of each Purchaser, the
Purchaser's Board of Directors and stockholders or Trustees, as applicable,
necessary for the authorization, execution, delivery and performance of this
Agreement by the Purchaser, the purchase of and payment for the Shares, the
Warrants and the Warrant Shares, if applicable, and the performance of all of
such Purchaser's obligations under this Agreement has been taken or will be
taken prior to the Closing. This Agreement, when executed and delivered by each
Purchaser, shall constitute the valid and binding obligation of each Purchaser,
B-6
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.
B-7
5.7 BOARD OF DIRECTORS. Upon the Closing date, the number of
directors constituting the Board of Directors of the Company shall initially be
five (5) and shall consist of Lawrence Yurdin, Michael Goldman, Martin Cohen,
Bernard Zimmerman and one additional individual to be designated by Messrs.
Cohen and Zimmerman.
5.8 2002 EQUITY INCENTIVE PLAN. The Board of Directors and
shareholders of the Company shall have authorized and adopted a 2002 Equity
Incentive Plan, in form and content satisfactory to the Purchasers, for
officers, directors, key employees and consultants of the Company other than
Messrs. Cohen and Zimmerman, covering an aggregate of 150,000 shares of the
Company's authorized and unissued Common Stock.
5.9 EMPLOYMENT AGREEMENTS. All of the Company's employment agreements
or relationships, written or oral, shall have been cancelled as of the Closing
Date and the Company shall have no liability or obligation for severance,
accrued vacation, bonus or other payment of any kind to any current or past
employee of the Company.
5.10 OUTSTANDING STOCK OPTIONS. Each holder of an option to purchase
Common Stock of the Company who holds an option which is exercisable after the
Closing Date shall have agreed in writing with the Company that notwithstanding
any term or provision of any such option that any shares acquired upon exercise
of an option may not be publicly offered or sold for a period of eighteen (18)
months after the Closing Date.
5.11 SUCCESSOR GENERAL PARTNER. The purchaser designated in the Sale
Agreement shall provide for a successor general partner in any limited
partnership in which the Company serves in such capacity and shall indemnify and
hold harmless the Company from any claim or liability which it may incur by
reason of having served in such capacity.
5.12 RELEASES. Each of the officers and directors of the Company
shall execute and deliver a general release in customary form in favor of the
Company.
5.13 LEGAL OPINION. The Purchaser shall have received an opinion of
Lev & Berlin, P.C., counsel to the Company covering such matters as Purchasers
reasonably may request.
5.14 SHARE AND WARRANT CERTIFICATES. The Company shall have issued to
the Purchasers certificates representing the Shares and Warrants in accordance
with this Agreement.
5.15 INVESTIGATION SATISFACTORY. The Purchasers shall be satisfied in
all respects with the results of their investigation of the Company and the
proposed sale of the Business as described in the proxy statement contemplated
herein and the independent evaluation of the Business.
5.16 EXPENSES. The Company shall have paid the expenses set forth in
Section 9.5.
5.17 PROCEEDINGS. On or before the Closing Date, all actions,
proceedings, instruments and documents required by, or on behalf of, the Company
to execute, deliver and carry out this Agreement, and all agreements incidental
hereto, and all other related legal matters, shall be reasonably satisfactory to
the Purchasers and their counsel.
5.18 NO MATERIAL EVENT. The Purchasers shall not have discovered any
material error in, misstatement of or omission to disclose any material fact
relating to the Company or the Sale Agreement.
5.19 REPORTS AND RETURNS. The Company shall have filed its From 10-K
Annual Report for the fiscal year ended March 31, 2002 and such other periodic
reports as may be required and shall have filed Federal and State tax returns
for such fiscal year.
B-8
SECTION 6. CONDITIONS TO CLOSING OF THE COMPANY.
The Company's obligation to issue and sell and issue the Shares and
Warrants is, unless waived in writing by the Company, subject to the fulfillment
as of the Closing Date of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and
warranties made by the Purchasers in Section 4 hereof shall be true and correct
in all material respects as of the Closing Date.
6.2 COVENANTS. All covenants, agreements, and conditions contained in
this Agreement to be performed or complied with by the Purchasers on or prior to
the Closing Date shall have been performed or complied with in all material
respects.
6.3 COHEN AND ZIMMERMAN CONSULTING ARRANGEMENTS. The Company and
Messrs. Cohen and Zimmerman shall have executed and delivered Consulting
Agreements in form and content reasonably satisfactory to the Company and
Messrs. Cohen and Zimmerman.
6.4 SALE AGREEMENT. The Company shall have consummated the Sale
Agreement in accordance with the terms and provisions thereof.
6.5 INVESTMENT. The Purchasers shall have tendered, in the aggregate,
at the Closing, consideration of not less than $252,000 for the Shares and
Warrants.
6.6 LEGAL OPINION. The Company shall have received an opinion from
Jay J. Miller, Esq., counsel to the Purchasers, covering such matters as the
Company reasonably may request.
6.7 SHAREHOLDER APPROVAL. The Company's shareholders shall have
approved this Agreement, the Sale Agreement and the other matters requiring
their approval as provided herein and in the Sale Agreement.
6.8 PROCEEDINGS. On or before the Closing Date, all actions,
proceedings, instruments and documents, by or on behalf of the Purchasers to
execute, deliver and carry out this Agreement and all agreements incidental
hereto, and all other related legal matters, shall be reasonably satisfactory to
the Company and its counsel.
6.9 EXPENSES. The Company shall have paid the expenses set forth in
Section 9.5.
6.10 COMPLIANCE CERTIFICATE. The Purchasers shall have delivered to
the Company a certificate executed by each of the Purchasers dated as of the
Closing Date certifying to the fulfillment of the conditions specified in
Sections 6.1 and 6.2.
SECTION 7. COVENANTS OF THE COMPANY.
The Company hereby covenants and agrees for the benefit of the Purchasers as
follows:
B-9
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:
B-10
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:
B-11
Jay J. Miller, Esq.
430 East 57th Street Fax: 212-758-0624
Suite 5D
New York, NY 10022
(b) if to the Company, to:
The First Connecticut Capital Corporation
1000 Bridgeport Avenue
Shelton, CT 06484 Fax: 203-944-5405
or at such other address as the Company shall have
furnished to the Purchasers with a copy to:
Duane Berlin, Esq.
Lev & Berlin, P.C.
535 Connecticut Avenue
Norwalk, CT 06854 Fax: 203-854-1652
Each such notice or other communication shall for all purposes of
this Agreement be treated as effective or having been given when
received if delivered personally, if sent by facsimile, the first
business day after the date of confirmation that the facsimile has
been successfully transmitted to the facsimile number for the party
notified, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained
receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
9.4 DELAYS OR OMISSIONS. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any party,
upon any breach or default of another party under this Agreement, shall impair
any such right, power or remedy of such party nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of any
similar breach or default thereafter occurring; nor shall nay waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be cumulative
and not alternative.
9.5 EXPENSES. Each of the parties to this Agreement shall bear its
own costs, expenses and professional fees in connection with the negotiation and
consummation of the terms hereof; however, if the transactions contemplated
herein were not consummated for any reason other than Purchasers inability or
unwillingness (except for a breach by the Company of its representations,
warranties or obligations herein or a default by Buyer under the Sale Agreement,
including the failure of Buyer to obtain all necessary consents of third
parties) to perform their obligations herein or the failure by the Company's
shareholders to authorize and approve the transactions contemplated herein and
in the Sale Agreement, the Company shall reimburse the Purchasers, promptly upon
request, for all of their expenses, including counsel or other professional
fees, reasonably incurred in connection with the negotiation and preparation of
this Agreement and the transactions contemplated herein, but in an amount not to
exceed $35,000.
B-12
9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and all of which together
shall constitute one instrument.
9.7 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision, which shall be replaced with an enforceable provision
closest in intent and economic effect as the severed provision; provided that no
such severability shall be effective if it materially changes the economic
benefit of this Agreement to any party.
9.8 TITLE AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.9 SURVIVAL OF WARRANTIES. The representations and warranties of the
Company and the Purchasers contained in or made pursuant to this Agreement shall
survive execution and delivery of this Agreement and the Closing for a period of
two years and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Purchasers or the Company.
B-13
9.10 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto, as the case may be.
9.11 FURTHER ASSURANCES. Each party hereto agrees to do all acts and
things, and to make, execute and delivery such written instruments, as shall
from time to time be reasonably required to carry out the terms and provisions
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Stock
Purchase Agreement as of the day and year first above written.
PURCHASERS:
-----------------------------------
Name:
Address:
Fax No.
------------------------------------
Name:
Address:
Fax No.
The First Connecticut Capital Corporation
By:
--------------------------------------
Lawrence Yurdin
President and Chief Executive Officer
B-14
To induce Purchasers to execute and deliver this Agreement and to
perform their obligations hereunder, the undersigned hereby agree to vote all of
their shares of Common Stock of the Company in favor of the transactions
provided herein at the Annual or a Special Meeting of Shareholders of the
Company contemplated herein.
------------------------------
------------------------------
------------------------------
B-15
EXHIBIT A
PURCHASER SHARES WARRANTS
Bernard Zimmerman & Co. Inc. 25,000 100,000
18 High Meadow Road
Weston, Conn. 06883
EIN # 13-2736451
Martin Cohen, Trustee 125,000 100,000
Cohen Profit Sharing Plan
27 E. 65th Street
Apartment 11A
New York, NY 10021
EIN # 22-3415892
B-16
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.
B-17
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
B-18
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." Such extension
of the Closing Date shall not affect the Company's obligation to
reimburse Purchasers for expenses in an amount not to exceed
$60,000, by reason of the failure to hold the shareholders meeting
by November 30, 2002, which obligation has now matured.
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."
B-19
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
B-20
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 June 30, 2003." Such extension of
the Closing Date shall not affect the Company's obligation to
reimburse Purchasers for expenses in an amount not to exceed
$60,000, by reason of the failure to hold the shareholders meeting
by February 15, 2003, which obligation has now matured.
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 Purchasers as
applicable and is enforceable against each party in accordance
with its terms.
B-21
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
B-22
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);
C-1
(f)"Committee" means a committee of two or more directors, appointed
by the Board, to administer and interpret this Plan; provided that
the term "Committee" will refer to the Board during such times as no
Committee is appointed by the Board.
(g)"Company" means The First Connecticut Capital Corporation, a
Connecticut corporation;
(h)"Disability" has the same meaning as "permanent and total
disability," as defined in Section 22(e)(3) of the Code;
(i)"Eligible Participants" means persons who, at a particular time,
are employees, officers, consultants, or directors of the Company or
its subsidiaries;
(j)"Fair Market Value" means, with respect to the Stock and as of the
date an ISO is granted hereunder, the market price per share of such
Stock determined by the Committee, consistent with the requirements
of Section 422 of the Code and to the extent consistent therewith, as
follows:
(i) If the Stock was traded on a stock exchange on the date in
question, when the Fair Market Value will be equal to the closing
price reported by the applicable composite-transactions report for
such date;
(ii) If the Stock was traded over-the-counter on the date in
question and was classified as a national market issue, then the Fair
Market Value will be equal to the last-transaction price quoted by
the NASDAQ system for such date;
(iii) If the Stock was traded over-the-counter on the date in
question but was not classified as a national market issue, then the
Fair Market Value will be equal to the average of the last reported
representative bid and asked prices quoted by the NASDAQ system for
such date; and
(iv) If none of the foregoing provisions is applicable, then the
Fair Market Value will be determined by the Committee in good faith
on such basis as it deems appropriate.
(k) "ISO" has the same meaning as "incentive stock option," as
defined in Section 422 of the Code;
(l) "Involuntary Transfer" means a Transfer that occurs pursuant to
any of the following: an assignment of Option Stock for the benefit
of creditors of the Optionee; a Transfer by operation of law,
including, without limitation, a Transfer by will or under the laws
of descent and distribution; an execution of judgment against the
Option Stock or the acquisition of record or beneficial ownership of
Option Stock by a lender or creditor; a Transfer pursuant to any
decree of divorce, dissolution or separate maintenance, any property
settlement, any separation agreement or any other agreement with a
spouse (except for estate planning purposes) under which a part or
all of any Option Stock are Transferred or awarded to the spouse of
the Optionee or are required to be sold; or a Transfer resulting from
the filing by the Optionee of a petition for relief, or the filing of
an involuntary petition against the Optionee, under the bankruptcy
laws of the United States or of any other nation;
C-2
(m)"Just Cause Termination" means a termination by the Company of an
Optionee's employment by and/or service to the Company (or if the
Optionee is a director, removal of the Optionee from the Board by
action of the stockholders or, if permitted by applicable law and the
by-laws of the Company, the other directors), in connection with the
good faith determination of the Company's board of directors (or of
the Company's stockholders if the Optionee is a director and the
removal of the Optionee from the Board is by action of the
stockholders, but in either case excluding the vote of the Optionee
if he or she is a director or a stockholder) that the Optionee has
engaged in any acts involving dishonesty or moral turpitude or in any
acts that materially and adversely affect the business, affairs or
reputation of the Company or its subsidiaries;
(n) "NSO" means any option granted under this Plan whether designated
by the Committee as a "non-qualified stock option," a "non-statutory
stock option" or otherwise, other than an option designated by the
Committee as an ISO, or any option so designated but which, for any
reason, fails to qualify as an ISO pursuant to Section 422 of the
Code and the rules and regulations thereunder;
(o) "Option" means an option granted pursuant to this Plan entitling
the option holder to acquire shares of Stock issued by the Company
pursuant to the valid exercise of the option;
(p) "Option Agreement" means an agreement between the Company and an
Optionee, in form and substance satisfactory to the Committee in its
sole discretion, consistent with this Plan;
(q)"Option Price" with respect to any particular Option means the
exercise price at which the Optionee may acquire each share of the
Option Stock called for under such Option;
(r)"Option Stock" means Stock issued or issuable by the Company
pursuant to the valid exercise of an Option;
(s) "Optionee" means an Eligible Participant to whom Options are
granted hereunder, and any transferee thereof pursuant to a Transfer
authorized under this Plan;
(t) "Plan" means this 1999 Stock Option Plan of the Company;
(u) "QDRO" has the same meaning as "qualified domestic relations
order" as defined in Section 414(p) of the Code;
(v) "Stock" means shares of the Company's Common voting stock;
C-3
(w) "Subsidiary" has the same meaning as "Subsidiary Corporation" as
defined in Section 424(f) of the Code;
(x) "Transfer," with respect to Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment, transfer,
conveyance, pledge, hypothecation, encumbrance, disposal, loan, gift,
attachment or levy of such Option Stock; and
(y) "Voluntary Transfer" means any Transfer other than an Involuntary
Transfer.
3. ELIGIBILITY. The Company may grant Options under this Plan only to
persons who are Eligible Participants as of the time of such grant. Subject to
the provisions of sections 4(d), 5 and 6 hereof, there is no limitation on the
number of Options that may be granted to an Eligible Participant.
4. ADMINISTRATION.
(a) COMMITTEE. The Committee, if appointed by the Board, will
administer this Plan. If the Board, in its discretion, does not appoint such a
Committee, the Board itself will administer this Plan and take such other
actions as the Committee is authorized to take hereunder; provided that the
Board may take such actions hereunder in the same manner as the Board may take
other actions under the Company's certificate of incorporation and by-laws
generally.
(b) AUTHORITY AND DISCRETION OF COMMITTEE. The Committee will have
full and final authority in its discretion, at any time and from time to time,
subject only to the express terms, conditions and other provisions of the
Company's certificate of incorporation, by-laws and this Plan, and the specific
limitations on such discretion set forth herein:
(i) to select and approve the persons who will be granted
Options under this Plan from among the Eligible
Participants, and to grant to any person so selected one or
more Options to purchase such number of shares of Option
Stock as the Committee may determine;
(ii) to determine the period or periods of time during which
Options may be exercised, the Option Price and the duration
of such Options, and other matters to be determined by the
Committee in connection with specific Option grants and
Option Agreements as specified under this Plan;
(iii) to interpret this Plan, to prescribe, amend and rescind
rules and regulations relating to this Plan, and to make
all other determinations necessary or advisable for the
operation and administration of this Plan; and
(iv) to delegate all or a portion of its authority under
subsections (i) and (ii) of this section 4(b) to one or
more directors of the Company who are executive officers of
the Company, but only in connection with Options granted to
Eligible Participants who are not officers or directors of
the Company, and subject to such restrictions and
limitations (such as the aggregate number of shares of
Option Stock called for by such Options that may be
granted) as the Committee may decide to impose on such
delegate directors.
C-4
(c) LIMITATION ON AUTHORITY. Notwithstanding the foregoing, or any
other provision of this Plan, the Committee will have no authority to grant
Options to any of its members, unless approved by the Board.
(d) DESIGNATION OF OPTIONS. Except as otherwise provided herein, the
Committee will designate any Option granted hereunder either as an ISO or as an
NSO. To the extent that the Fair Market Value (determined at the time the Option
is granted) of Stock with respect to which all ISOs are exercisable for the
first time by any individual during any calendar year (pursuant to this Plan and
all other plans of the Company and/or its subsidiaries) exceeds $100,000, such
option will be treated as an NSO. Notwithstanding the general eligibility
provisions of section 3 hereof, the Committee may grant ISOs only to persons who
are employees of the Company and/or its subsidiaries.
(e) OPTION AGREEMENTS. Options will be deemed granted hereunder only
upon the execution and delivery of an Option Agreement by the Optionee and a
duly authorized officer of the Company. Options will not be deemed granted
hereunder merely upon the authorization of such grant by the Committee.
5. SHARES RESERVED FOR OPTIONS.
(a) OPTION POOL. The aggregate number of shares of Option Stock that
may be issued pursuant to the exercise of Options granted under this Plan will
not exceed One Hundred Fifty Thousand (150,000) (the "Option Pool"), provided
that such number will be increased by the number of shares of Option Stock that
the Company subsequently may reacquire through repurchase or otherwise. Shares
of Option Stock that would have been issuable pursuant to Options, but that are
no longer issuable because all or part of those Options have terminated or
expired, will be deemed not to have been issued for purposes of computing the
number of shares of Option Stock remaining in the Option Pool and available for
issuance.
(b) ADJUSTMENTS UPON CHANGES IN STOCK. In the event of any change in
the outstanding Stock of the Company as a result of a stock split, reverse stock
split, stock dividend, recapitalization, combination or reclassification,
appropriate proportionate adjustments will be made in: (i) the aggregate number
of shares of Option Stock in the Option Pool that may be issued pursuant to the
exercise of Options granted hereunder; (ii) the Option Price and the number of
shares of Option Stock called for in each outstanding Option granted hereunder;
and (iii) other rights and matters determined on a per share basis under this
Plan of any Option Agreement hereunder. Any such adjustments will be made only
by the Board, and when so made will be effective, conclusive and binding for all
purposes with respect to this Plan and all Options then outstanding. No such
adjustments will be required by reason of the issuance or sale by the Company
for cash or other consideration of additional shares of its Stock or securities
convertible into or exchangeable for shares of its Stock.
6. TERMS OF STOCK OPTION AGREEMENTS. Each Option granted pursuant to
this Plan will be evidenced by an agreement (an "Option Agreement") between the
Company and the person to whom such Option is granted, in form and substance
satisfactory to the Committee in its sole discretion, consistent with this Plan.
Without limiting the foregoing, each Option Agreement (unless otherwise stated
therein) will be deemed to include the following terms and conditions:
C-5
(a) COVENANTS OF OPTIONEE. At the discretion of the Committee, the
person to whom an Option is granted hereunder, as a condition to the granting of
the Option, must execute and deliver to the Company a confidential information
agreement approved by the Committee. Nothing contained in this Plan, any Option
Agreement or in any other agreement executed in connection with the granting of
an Option under this Plan will confer upon any Optionee any right with respect
to the continuation of his or her status as an employee of, consultant or
independent contractor to, or director of, the Company or its subsidiaries.
(b) VESTING PERIODS. Except as otherwise provided herein, each Option
Agreement may specify the period or periods of time within which each Option or
portion thereof will first become exercisable (the "Vesting Period") with
respect to the total number of shares of Option Stock called for thereunder (the
"Total Award Option Stock"). Such Vesting Periods will be fixed by the Committee
in its discretion, and may be accelerated or shortened by the Committee in its
discretion. Unless the Option Agreement executed by an Optionee expressly
otherwise provides and except as set forth herein, the right to exercise an
Option granted hereunder will vest immediately upon the grant thereof by the
Committee, or on such later Grant Date as may be specified in such Option
Agreement.
(c) EXERCISE OF THE OPTION.
(i) MECHANICS AND NOTICE. An Option may be exercised to the extent
exercisable (1) by giving written notice of exercise to the Company,
specifying the number of full shares of Option Stock to be purchased
and accompanied by full payment of the Option Price thereof and the
amount of withholding taxes pursuant to subsection 6(c)(ii) below;
and (2) by giving assurances satisfactory to the Company that the
shares of Option Stock to be purchased upon such exercise are being
purchased for investment and not with a view to resale in connection
with any distribution of such shares in violation of the 1933 Act;
provided, however, that in the event the Option Stock called for
under the Option is registered under the 1933 Act, or in the event
resale of such Option Stock without such registration would otherwise
be permissible, this second condition will be inoperative if, in the
opinion of counsel for the Company, such condition is not required
under the 1933 Act, or any other applicable law, regulation or rule
of any governmental agency.
(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.
C-6
(d) PAYMENT OF OPTION PRICE. Each Option Agreement will specify the
Option Price with respect to the exercise of Option Stock thereunder, to be
fixed by the Committee in its discretion, but in no event will the Option Price
for an ISO granted hereunder be less than the Fair Market Value (or, in case the
Optionee is a 10% Stockholder, one hundred ten percent (110%) of such Fair
Market Value) of the Option Stock at the time such ISO is granted. The Option
Price will be payable to the Company in United States dollars in cash or by
check or, such other legal consideration as may be approved by the Committee, in
its discretion.
(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.
C-7
(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.
C-8
(k) STOCK CERTIFICATES. Certificates representing the Option Stock
issued pursuant to the exercise of Options will bear all legends required by law
and necessary to effectuate this Plan's provisions. The Company may place a
"stop transfer" order against shares of the Option Stock until all restrictions
and conditions set forth in this Plan and in the legends referred to in this
section 6(k) have been complied with.
(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.
C-9
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
-----------------
C-10
ANNEX D
Fairness Opinion
WESTWOOD PARTNERS, LTD
420 LEXINGTON AVENUE
NEW YORK, N.Y. 10170
September 9, 2002
Board of Directors
The First Connecticut Capital Corporation
1000 Bridgeport Avenue
Shelton, CT. 06484
RE: FAIRNESS OPINION
Dear Members of the Board:
The First Connecticut Capital Corporation ("First Connecticut" or the
"Company") and FCCC Holding Company, LLC, a Connecticut limited liability
company, whose members comprise the board of directors of First Connecticut have
entered into an Asset Purchase Agreement dated as of June 28, 2002 (the "Asset
Purchase Agreement") relating to a certain transaction described herein. You
have requested our opinion as to the fairness, from a financial point of view,
of the transaction contemplated in connection with the Asset Purchase Agreement
to the existing holders of the Company's outstanding shares of Common Stock (the
"Common Stock"). The asset purchase transaction contemplated by and described in
the Asset Purchase Agreement is herein sometimes referred to as the
"Transaction".
Pursuant to the Asset Purchase Agreement, and subject to the
conditions thereof, it is contemplated, among other things, that the Company
will sell, transfer and assign to Holding all of the operating assets and the
business of the Company (the "Assets"), excluding cash and certain deferred tax
assets, the value of which (if any) cannot be determined at this time, in
consideration of (1) the assumption by Holding of all liabilities, debts and
obligations of the Company as at the date of closing and (2) the cash payment by
Holding to the Company of an amount equal to the approximate net book value of
the Assets as at the date of closing, as determined by the report of the Clayton
Group, an independent appraiser of financial services assets ("Clayton"). Based
upon Clayton's report, in the event that the Transaction had closed as of June
30, 2002, then, on a Pro Forma basis, the aggregate purchase price to be
received by the Company would be $1,046,000, the approximate book value of the
Assets, less cash and deferred tax assets.
While the parties to the Asset Purchase Agreement make certain
customary representations and warranties with respect to their existence and
ability to consummate the Transaction, the Company does not make any substantive
representations or warranties with respect to the Assets. The obligations of the
parties to close the transaction are subject to certain conditions, which
include, among others:
1. Approval of the Asset Purchase Agreement by the stockholders of
the Company holding not less than the two-thirds of the issued and
outstanding shares of Common Stock;
2. Accuracy in all material respects of the representations and
warranties contained in the Asset Purchase Agreement;
D-1
3. Compliance in all material respects with all agreements and
obligations of each of the Company and Holding that are required to
be complied with before consummation of the Transaction;
4. Receipt of any and all consents and waivers of third parties that
are required to be obtained before the consummation of the
Transaction;
5. Assumption by Holding of all liabilities of the Company
6. Absence of any law or injunction preventing the Transaction;
7. Approval by the stockholders of the Company of:
(i) The election of the five nominees for directors of the
Company;
(ii) That certain 2002 Equity Incentive Plan;
(iii) That certain Stock Purchase Agreement (the Stock Purchase
Agreement among the Company, Bernard Zimmerman & Co,
Inc.("Zimmerman") and the Cohen Profit sharing Plan ("Cohen"); and
(iv) The change of the Company's corporate name.
Westwood Partners, Ltd. has from time to time acted as financial advisor to the
Company and has acted as its financial advisor in connection with the
Transaction and will receive a fee for rendering this opinion pursuant to our
engagement agreement with the Company dated February 11, 2000, as amended from
time to time (the "Engagement Agreement"). In addition, as you know, Westwood's
President is an of-counsel attorney to and our Vice President and Managing
director is the Managing Partner of the law firm of Lev & Berlin, P.C., which
has acted as special counsel to the Company in connection with the Transaction.
In arriving at our opinion expressed in this letter, we have, among
other things:
1. Reviewed the terms and conditions of the Asset Purchase Agreement and
the agreements and instruments to be entered into pursuant thereto;
2. Reviewed the Preliminary Proxy Statement dated September 13, 2002 (the
"Proxy Statement") relating to the Annual Meeting of Shareholders to be held on
or about October 31, 2002 and regarding, among other things, the approval of the
Transaction;
3. Analyzed certain historical business and financial information relating
to the Company, including the Annual Reports on Form 10-KSB of the Company for
each of its fiscal years ended March, 1996 through March, 2001, the Company's
Quarterly Report on Form 10-QSB for its fiscal quarter ended June 30, 2002 and
certain internal business and financial information prepared by management of
the Company;
4. Conducted discussions with members of the senior management of the
Company with respect to the business and prospects of the Company as well as
management's assessment of the prospects for the construction mortgage lending
industry in general;
5. Considered the views of the Company's management concerning the costs
associated with continuing to operate the current business of the Company
through a publicly traded corporation;
D-2
6. Considered the current financial condition of the Company, including its
current need for capital, alternatives for raising capital and the relative
costs of such alternatives, the terms of its present credit facilities and the
substantial resources required to continue the growth of the Company's business
within a publicly traded corporation under present economic and market
conditions; and
7. Conducted such other financial studies, analyses and investigations as
we deemed appropriate.
In addition to the specific information summarized above, our opinion expressed
herein reflects our general familiarity with the Company as well as information
regarding the current prospects for the Company and business combination
alternatives available to it, which information we acquired during the course of
our association with the Company, and, in particular, our engagement under the
Engagement Agreement. Our opinion does not, however, constitute a recommendation
of the Transaction over any other alternative transactions which may be
available to the Company.
We have assumed and relied upon the accuracy and completeness of the financial
and other information provided by the Company to us and, representations
contained in the Asset Purchase Agreement, and the report of the Clayton Group
and we have not undertaken any independent verification of such information or
any independent valuation or appraisal of any of the Assets. 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
D-3
WESTWOOD PARTNERS, LTD
420 LEXINGTON AVENUE
NEW YORK, N.Y. 10170
September 9, 2002
Board of Directors
The First Connecticut Capital Corporation
1000 Bridgeport Avenue
Shelton, CT. 06484
RE: CONSENT TO ANNEX FAIRNESS OPINION TO PROXY STATEMENT
Gentlemen:
This will serve as our consent for you to annex our fairness opinion
relating to the proposed sale of the assets of The First Connecticut Capital
Corp. to that certain Proxy Statement dated September, 2002, provided that you
agree to reimburse us with respect to any cost or expense arising out of or
related to such annexation.
Very truly yours,
WESTWOOD PARTNERS, LTD.
----------------------------
By: Duane L. Berlin
Its: Vice President and Managing Director
D-4
ANNEX E
April 3, 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 AS OF DECEMBER 30,
2002 (4TH UPDATE)
Dear Larry:
I have re-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 book value is $3,625,118.84 less the Hudson United
Line of Credit of $1,796,500.00, leaving 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.
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:
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