CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 28, 1998
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Creative Technologies Corp.
(the "Company") will be held at the offices of the Company, 170
53rd Street, Brooklyn, New York on July 28, 1998 at 10:00 A.M.
New York time, to consider the following proposals:
1. To elect directors, each to serve for a term of one
year or until his respective successor is elected and
qualifies;
2. To approve and ratify the Company's 1998 Employee Stock
Option Plan
3. To ratify the appointment of Goldstein Golub Kessler &
Company, P.C.
as independent accountants of the Company; and
4. To transact such other business as may properly come
before the meeting.
Shareholders of record on the books of the Company at the close
of business on June 1,1998 will be entitled to vote at the
meeting or any adjournment thereof. A copy of the annual report
containing the financial statements of the Company for the year
1997 is enclosed.
All shareholders are cordially invited to attend the meeting.
Whether or not you expect to attend, you are requested to sign,
date and return the enclosed proxy promptly. Shareholders who
execute proxies retain the right to revoke them at any time prior
to the voting thereof. A return envelope which requires no
postage if mailed in the United States is enclosed for your
convenience.
By Order of the Board of Directors
Dated: New York, New York David Selengut
June 25, 1998 Secretary
CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
July 28, 1998
This Proxy Statement is furnished in connection with the
solicitation by the Board of Directors of Creative Technologies
Corp. (the "Company") of proxies in the enclosed form for the
Annual Meeting of Shareholders to be held at the offices of the
Company, 170 53rd Street, Brooklyn, New York on July 28, 1998, at
10:00 A.M. local time, and for any adjournment or adjournments
thereof, for the purposes set forth in the foregoing Notice of
Annual Meeting of Shareholders.
At the Annual Meeting the Shareholders will vote to:
1. Elect the directors of the Company;
5. To approve and ratify the Company's 1998 Employee Stock
Option Plan;
6. Ratify the selection of Goldstein Golub Kessler &
Company, P.C.
as the Company's independent auditors; and
7. Transact such other business as may properly come
before the meeting.
The Company knows of no other matters to be presented at the
Annual Meeting. If any additional matters should be properly
presented, proxies shall be voted in accordance with the judgment
of the proxy holders.
Each shareholder of the Company is requested to complete, sign,
date and return the enclosed proxy without delay in order to
ensure that the shares owned by such shareholder are voted at the
Annual Meeting. Any shareholder may revoke a proxy at any time
before it is voted by: (i) delivering a written notice to the
Secretary of the Company, at the address of the Company set forth
above, stating that the proxy is revoked; (ii) executing a
subsequent proxy and delivering it to the Secretary of the
Company, or (iii) attending the Annual Meeting and voting in
person. Each properly executed proxy returned will be voted as
directed. In addition, if no directions are given or indicated,
the persons named in the accompanying proxy intend to vote
proxies in favor of the foregoing proposals.
The Company will bear the cost of soliciting proxies. Directors,
officers and employees of the Company may solicit proxies
personally or by telephone, telegram or mail. Such directors,
officers and employees will not be additionally compensated for
such solicitation but may be reimbursed for reasonable out-of-
pocket expenses incurred in connection therewith. Arrangements
will also be made with brokerage houses and other custodians,
nominees and fiduciaries for the forwarding of proxy material to
the beneficial owners of the Common Stock held of record by such
persons and the Company will, upon request, reimburse such
custodians, nominees and fiduciaries for reasonable out-of-pocket
expenses incurred in connection therewith.
The principal executive offices of the Company are located at 170
53rd Street, Brooklyn, New York 11232. The approximate date on
which this Proxy Statement and the accompanying form of Proxy
will first be sent or given to the Company's shareholders is June
25, 1998.
VOTING SECURITIES
Only holders of Shares of Common Stock, par value $.09 per share
(the "Shares"), of record as at the close of business on June 1,
1998 are entitled to notice of and to vote at the Annual Meeting
or any adjournment thereof. On the record date there were issued
and outstanding 4,117,444 Shares. Each outstanding Share is
entitled to one vote upon all matters to be acted upon at the
meeting. The holders of a majority of the outstanding Shares
shall constitute a quorum. The affirmative vote of the holders
of the majority of Shares present at the Annual Meeting and
voting is necessary for the election of directors and for the
approval of each resolution. Votes "withheld" will be counted as
present at the meeting and, accordingly, will have the effect of
a negative vote.
The holders of Shares are entitled to receive such dividends, if
any, as may be declared, from time to time, by the Board of
Directors from funds legally available therefor, subject to the
dividend preferences of the Preferred Stock, if any. Upon
liquidation or dissolution of the Company, the holders of Shares
are entitled to share ratably in all assets available for
distribution after payment of liabilities and liquidation
preferences of the Preferred Stock, if any. Holders of Shares
have no preemptive rights, no cumulative voting rights and no
rights to convert their Shares into any other securities.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, as of June 1, 1998, certain
information as to the stock ownership of each person known by the
Company to own beneficially 5% or more of the Company's
outstanding Shares, by each director of the Company who owns any
Shares, and by all officers and directors as a group:
Percentage of
Class
Name of Beneficial Numberof Shares of As of
Owner Common Stock Owned (1) June 1, 1998
Bonnie Septimus (2) 1,390,664 37.2%
72 Lord Avenue
Lawrence, NY
David Guttmann (3) 1,526,738 39%
170 53rd Street
Brooklyn, NY
Richard Helfman (4) 47,777 1.6%
170 53rd Street
Brooklyn, NY
All officers and
directors as a
group (4 persons)(5) 1,574,515 40%
(1) Except as otherwise indicated, all shares are beneficially
owned and sole voting and investment power is held by the
persons named.
(2) A portion of the Common Stock is owned by Mrs. Septimus as
nominee for certain members of her family and shares owned
by her husband, as to which she disclaims beneficial
interest of. Also includes shares of Common Stock issuable
upon conversion of 1996-A Preferred Stock.
(3) A portion of the Common Stock is currently being held by Mr.
Guttmann as nominee for certain members of his immediate
family. Includes 16,666 shares issuable upon exercise of
stock options. Also includes shares of Common Stock
issuable upon conversion of 1996 and 1996-A Preferred Stock.
(4) Includes 25,000 shares underlying immediately exercisable
options.
(5) Includes the shares described in footnotes (3) and (4)
above.
DIRECTORS OF THE COMPANY
The Directors and Executive Officers of the Company are as
follows:
Name Age Title
David Guttmann 51 Chairman of the Board and
Chief Executive Officer
David Refson 52 Vice Chairman and
Director
Richard Helfman 51 Director and President
David Selengut 42 Secretary
David Guttmann has been a director and Chief
Executive Officer of the Company since May 1994 and Chairman of
the Board since May 1997. From June 1983 until May 1994, Mr.
Guttmann was Chief Executive Officer of Applied Microbiology
Inc., and was its chairman until October 1995. Mr. Guttmann also
serves as Chairman of Ace Surgical Supply Co., Inc., a wholly
owned subsidiary of the Company.
David Refson has been Vice Chairman and a Director of
the Company since January 1985. Mr. Refson is the President and
principal stockholder of Newmarket Co. Limited of Liberia
("Newmarket"), which invests in various entities. Mr. Refson has
been a private investor for more than the past five years and in
his capacity as President of Newmarket, acts as a consultant to a
number of foreign companies.
Richard Helfman has been a Director of the Company
since April 1990 and President since March 1990. From May 1987
to June 1989, Mr. Helfman was a commercial lending officer at The
First New York Bank for Business, and from 1979 until May 1987,
was a commercial lending officer at Extebank.
David Selengut has been Secretary of the Company
since September 1987. Mr. Selengut has been an attorney with
Ellenoff Grossman & Schole LLP since May 1998, was a partner at
the law firm of Bernstein and Wasserman LLP from June 1997 to
April 1998 and was a Partner at the law firm of Singer Zamansky
LLP from May 1995 until April 1997. Those firms have acted as
counsel to the Company with respect to certain matters. From May
1988 until April 1995, he was an Associate in the law firm of
Neiman Ginsburg & Mairanz P.C., New York, New York.
Each of the Company's Directors has been elected to
serve until the next annual meeting of the stockholders. The
Company's executive officers are appointed annually by the
Company's Directors. Each of the Company's Directors and
Officers continues to serve until his successor has been elected
and qualified.
To the Company's knowledge, there were no delinquent
16(a) filers for transactions in the Company's securities during
the year ended December 31, 1997.
To the Company's knowledge, there are no material
proceedings to which any Director or executive officer of the
Company, or any associate of any such Director or executive
officer, is a party adverse to the Company or has an interest
adverse to the Company. Each of the directors attended each of
the Board of Directors meetings in 1997.
EXECUTIVE COMPENSATION
The compensation paid to the Company's Chief
Executive Officer and to each of the other executive officers
whose total compensation exceeded $100,000 during each of the
preceding three fiscal years is as follows:
1997 SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
Other Annual Awards
Name and Principal Year Salary Compensation Options
Position ($) ($) (#)
David Guttmann, Chief
Executive Officer 1997 $122,596 16,666(1)
1996 $50,000
1995 $128,218
Richard Helfman,
President 1997 $147,115 25,000(1)
1996 $180,000
1995 $187,692 -0-
(1) Represents options previously granted with the exercise
price lowered to $.44 on August 21, 1997.
OPTION GRANTS IN 1997
Percent of Total
Options Options Granted to Exercise Expiration
Name Granted Employees in FiscalYear Price Date
(a) (b) 1997 $
David Guttmann,
Chief Executive 16,666(1) 14% .44 May 26, 2004
Officer
Richard Helfman 16,666(1) 14% .44 May 25, 2004
8,333(1) 7% .44 April 30, 2001
(1) Represents options previously granted with the exercise price
lowered to $.44 per share on August 21, 1997.
AGGREGATED OPTION EXERCISES IN 1997 AND FOR YEAR-END OPTION
VALUES
Number of Value of
Unexercised Unexercised
Options in-the-Money
at Fiscal Options
Year End at Fiscal
(#) Year-End ($)
Shares Value
Acquired on Realized Exercisable/ Exercisable/
Exercise (#) ($) Unexercisable Unexerciable
Name (b) (c) (d) (e)
(a)
David Guttmann -0- -0- 16,666/0 -0-
Richard Helfman -0- -0- 25,000/0 -0-
At a Board of Directors meeting held on August 21, 1997,
the Board of Directors determined that it should lower the
exercise price of 116,663 stock options previously issued to
officers and employees of the Company from $2.05 per share to
$.44 per share, the market price on August 21, 1997. These
persons agreed to a reduction in their salary to help the
Company out of its cash flow problem.
The Company maintained a Qualified Retirement Plan and
Trust for qualified employees effective as of January 1,
1993. Under the plan, a profit sharing plan, the Company's
contributions are discretionary. The Company terminated the
Plan in 1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Barry Septimus and David Guttmann, personally guaranteed
certain indebtedness of the Company in the amount of
$2,682,000 as of March 31, 1998. In addition, in March 1996,
David Guttmann agreed to repay the remainder of the term loan
owed to a prior lender in the amount of $333,333. The
Company agreed to issue a total of 111,111 Shares of Common
Stock to his designees in consideration of the assumption of
this debt.
In March 1993, the Company borrowed $600,000 from
an affiliated entity of David Refson, director of the
Company. In January, 1995, the Company borrowed an
additional $400,000 from that entity. Interest on these
loans is 12% per annum and are due upon demand. This loan is
also guaranteed by David Guttmann and Barry Septimus.
The Company and Ace's executive offices at 170 53rd
Street, Brooklyn, New York, are leased from an entity owned
by Barry Septimus and David Guttmann. The lease expires May
31, 2011 and provides for annual rent of $750,000, including
real estate taxes. Rent expense for the Brooklyn facility
for 1997 was $638,000. The Company believes that the rent is
not higher than would be paid to a non-affiliated company.
In December 1996, the Company and Ace obtained lines of
credit from Century Business Credit Corporation ("Century") which
is currently up to a maximum of $650,000 and $2,500,000
respectively but in the aggregate no more than $3,000,000. David
Guttmann guaranteed up to $1,000,000 of the Company's and its
subsidiaries' obligations to Century.
On October 27, l997, the Company executed and closed a
transaction pursuant to an Agreement and Plan of Merger (the
"Agreement") between the Company, CTC Acquisition Corporation
("Subsidiary"), Ace Surgical Supply Co., Inc. ("Ace") and David
Guttmann and Barry Septimus, the stockholders (the "Stockholders"
) of Ace. Subsidiary was a New York corporation wholly-owned by
the Company. Ace was a privately held New York corporation,
which distributes medical, janitorial and dietary products in the
tri-state area from its warehouse in Brooklyn, New York.
At the closing, Ace merged into Subsidiary in a merger
carried out pursuant to the laws of the State of New York (the
"Merger"). In connection with the Merger, the Stockholders of
Ace transferred l00% ownership of Ace and two affiliated
companies to the Company and Stockholders of Ace received an
aggregate of 1,000,000 shares of Common Stock of the Company and
3,500 1997 Series A 12% Preferred Stock (the "1997 Preferred
Stock").
The rights, preferences and conditions of the 1997 Preferred
Stock are as follows:
(a) the 1997 Preferred Stock shall have a stated
value of One Thousand Dollars ($1,000) per share;
(b) the holders of the 1997 Preferred Stock are
entitled to a cumulative dividend at the rate of One
Hundred Twenty Dollars ($120.00) per share per annum,
when, as and if declared by the Board of Directors of
the Company;
(c) the holders of the 1997 Preferred Stock are
entitled to receive One Thousand Dollars ($1,000) per
share and accrued and accumulated dividends thereon at
the rate aforesaid, if any, and no more on liquidation
of the Company before any payment is made to the
holders of Common Stock;
(d) the holders of the 1997 Preferred Stock are
not entitled to any vote at any meeting of the
shareholders of the Company unless the dividends are in
arrears longer than one year at which time the holders
of the 1997 Preferred Stock are entitled to 1,000 votes
per share and will vote along with the holders of
Common Stock as one Class;
(e) the shares of the 1997 Preferred Stock are
not convertible;
(f) the shares shall be redeemed for cash at a
redemption price of $1,000 per share, plus accrued, but
unpaid dividends, out of funds legally available
therefore, on October 27, 2017.
(h) the holders of the Preferred Shares share pro-
rata with the holders of the 1996 and 1996-A Preferred
Stock in the event of a liquidation or a dissolution of
the Company.
The consideration paid by the Company was determined by
negotiations between the Stockholders of Ace and a committee made
up of certain members of the Board of Directors of the Company.
The amount of Shares of 1997 Preferred Stock received by the
Stockholders of Ace was calculated by multiplying 1,000,000
(number of shares of Common Stock issued to them) by the average
of the Bid prices of the Common Stock of the Company for thirty
days prior to the closing and subtracting such product from
4,000,000 and dividing the sum by 1,000 (the stated value of each
of the 1997 Preferred Stock).
The Company has received an opinion from Chartered Capital
Advisers, Inc., independent investment advisers, that the amount
of Common Stock and Preferred Stock issued as consideration in
the Merger is fair to the Company and its stockholders from a
financial point of view.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, three Directors will be elected by the
shareholders to serve until the next annual meeting of the
shareholders or until their successors are elected and shall
qualify. The accompanying form of Proxy will be voted for the re-
election as Directors of David Refson, Richard Helfman and David
Guttmann, unless the Proxy contains contrary instructions. See
"Directors of the Company" for a description of such nominees'
business experience. Proxies cannot be voted for a greater
number of persons than the number of nominees named in the Proxy
Statement. Management has no reason to believe that any of the
nominees will not be a candidate or will be unable to serve.
However, in the event that any of the nominees should become
unable or unwilling to serve as a Director, the Proxy will be
voted for the election of such person or persons as shall be
designated by the Directors.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE ABOVE NAMED NOMINEES. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY
IN THEIR PROXIES A CONTRARY CHOICE.
PROPOSAL NO.2
APPROVAL OF 1998 STOCK OPTION PLAN
General
The Board of Directors is proposing for stockholder
approval the Company's 1998 Stock Option Plan,(the "1998 Option
Plan"). The Board of Directors approved the 1998 Option Plan in
May 1998, subject to stockholder approval at this Meeting. The
purposes of the 1998 Option Plan are (I) to align the interests
of the Company's stockholders and recipients of options under the
1998 Option Plan by increasing the proprietary interest of such
recipients in the Company's growth and success, and (ii) to
advance the interests of the Company by providing additional
incentives to officers, key employees and well-qualified
non-employee directors and consultants who provide services to
the Company , who are responsible for management and growth of
the Company ,or otherwise contribute to the conduct and direction
of its business, operations and affairs. Under the 1998 Option
Plan, the Company may grant incentive stock options (within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and nonqualified stock options to purchase
an aggregate of up to 750,000 shares of Common Stock. Reference
is made to Appendix A to this Proxy Statement for the complete
text of the 1998 Option Plan, which is summarized below.
DESCRIPTION OF THE 1998 OPTION PLAN
Shares and Options Subject to the Plan. The 1998 Option Plan
provides for the grant of options to purchase an aggregate of
750,000 shares of Common Stock (subject to adjustment). Options
may be either incentive stock options intended to meet the
requirements of Section 422 of the Code or nonqualified stock
options. The 1998 Option Plan includes provisions for adjustment
of the number of shares of Common Stock available for grant
thereunder and in the number of shares of Common Stock underlying
outstanding options in the event of any stock splits, stock
dividends or other relevant changes in the capitalization of the
Company. No option may be granted after May 20, 2008.
Eligibility. Under the 1998 Option Plan, employees,
including officers, are eligible to receive grants of either
incentive stock options structured to qualify under Section 422
of the Code, or nonqualified stock options which are not intended
to meet the requirements of Code Section 422. Consultants and
non-employee directors are eligible to be granted only
nonqualified options. One
non-employee director, and approximately 30 officers and other
employees of the Company and its subsidiaries are eligible to
participate in the 1998 Option Plan. No consultants of the
Company or its subsidiaries are currently eligible to participate
in the 1998 Option Plan. The 1998 Option Plan contains no present
criteria determining the identity or amount of Options to be
granted to any person or groups of persons. Therefore, no
determination can be made at the present time as to the benefits
or amounts that will be or would have been issued to any
particular person or groups of persons under the 1998 Option
Plan.
Administration. Administration of the 1998 Option Plan has
been delegated to the Board of Directors or a committee of the
Board of Directors which will consist entirely of "disinterested"
directors within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and "outside directors" within the meaning of Section 162(m) of
the Code. The Board or Committee, within the parameters of the
1998 Option Plan, has authority to determine to whom options are
granted the number of options granted, and the terms of such
options. All questions of interpretation or application of the
1998 Option Plan are determined by Board or Committee whose
decisions are final and binding upon all participants.
Terms of Options. Each option granted will be evidenced by a
stock option agreement.
Consideration for granting of the options pursuant to
the 1998 Option Plan will be provided by the recipient's past,
present and expected future contribution to the Company; no
monetary consideration is provided.
Termination. Unless terminated earlier due to termination of
the optionee's status as an employee or consultant of the
Company, options granted under the 1998 Option Plan will
terminate not later than the tenth anniversary of the date of
grant; except that an incentive stock option granted to an
employee who at the date of grant owned more than 10% of the
combined voting power of all
classes of stock of the Company and its subsidiaries will
terminate not later than the fifth anniversary of the date of
grant. Options granted to non-employee directors expire not later
than the fifth anniversary of the grant date.
Nonqualified Options. An optionee whose employment
relationship has terminated, other than by death or disability,
may exercise his or her outstanding nonqualified stock options to
the extent exercisable on the termination date until the earlier
of expiration of the option and one year (or such other period as
set forth in the option agreement) following the termination
date. If employment terminates for any other reason, the optionee
may exercise his or her outstanding nonqualified stock options to
the extent exercisable on the termination date until the earlier
of expiration of the option and three months following the
termination date.
Non-Employee Director Options. Options granted to
non-employee directors expire no later than the fifth anniversary
of the grant date and are not subject to earlier termination
unless the Board or Committee sets forth otherwise.
Incentive Stock Options. Unless otherwise specified in the
option agreement, an incentive stock option may be exercised by
the optionee or his or her legal representative following
termination of employment due to death or permanent and total
disability (as defined in Section 22(e)(3) of the Code), until
the earlier of expiration of the option and one year (or such
shorter period specified in the option agreement) following the
date of termination. An optionee whose employment is terminated
for any other reason may exercise his or her incentive stock
options for a period of three months from the date of such
termination. In each case, options are exercisable only to the
extent they were exercisable on the termination date.
Transfer Restrictions. No option is transferable by the
optionee otherwise than by will or the laws of descent and
distribution.
Exercise Price. The option exercise price per share of
Common Stock to be issued upon exercise of all incentive stock
options under the 1998 Option Plan must be at least 100% of the
fair market value per share of the Company's Common Stock on the
date of grant of the option. Incentive stock options granted to
an employee who on the grant date owns more than 10% of the
combined voting power of all classes of stock of the Company and
its subsidiaries (a "10% Holder") are required to have an
exercise price of at least 110% of fair market value. The fair
market value is determined to be the closing sales price of a
share of Common Stock on the date of grant.
Exercise. The options may be immediately exercisable on the
date of grant or the right to acquire shares underlying the
options may become vested as determined by The Board or Committee
and specified in the option agreement; provided, however, that
options granted to a 10% Holder are not exercisable beyond the
fifth anniversary of the grant date. Payment of the exercise
price is to be made in cash, or if allowed in the option
agreement, by the delivery to the Company of shares of Common
Stock, by instructing the Company to withhold shares of Common
Stock issuable upon exercise having a fair market value equal to
the exercise price, and by a so-called "cashless exercise"
involving a securities broker-dealer or by any combination of the
same. Common Stock surrendered in payment of the exercise price
will be valued at its fair market value as of the exercise date.
Upon termination of employment, options are exercisable only to
the extent vested as of the termination date.
Effective Date; Termination. If approved by stockholders,
the 1998 Option Plan will become effective retroactively as of
May 20, 1998, the date of Board approval thereof. If the 1998
Option Plan is not approved at this meeting of shareholders, it
will terminate on such date and all options previously granted
thereunder (none granted as of June 25, 1998 and, if granted,
will be subject to stockholder approval of the 1998 Option Plan)
will become null and void. If the 1998 Option Plan is approved by
stockholders, it will terminate May 20, 2008.
AMENDMENTS. The Board of Directors may amend the 1998 Option
Plan, provided that an optionee's consent is required to any
amendment which would impair any option or deprive the optionee
of any of his or her rights under the 1998 Option Plan; and
shareholder approval is required of any amendment that would (i)
increase the maximum number of shares for which options may be
granted (except as subject to adjustment under the 1998 Option
Plan), and (ii) effect any change inconsistent with Section 422
of the Code.
Awards Under the Plan. There has not been any award of any
options by the Board or Committee under the 1998 Option Plan, to
date.
Certain Federal Income Tax Consequences. An optionee will
not recognize any income upon the grant of an option. An
optionee will recognize compensation taxable as ordinary income
(and subject to income tax withholding) upon exercise of a
nonqualified stock options equal to the excess of the fair market
value of the shares purchased over their exercise price, and the
Company will be entitled to a corresponding deduction. A
participant will not recognized income (except for purposes of
the alternative minimum tax) upon exercise of an incentive stock
option. If the shares acquired by exercise of an incentive stock
option are held for the longer of two years from the date the
option is granted and one year from the date it is exercised, any
gain or loss arising from subsequent disposition of such shares
will be taxed as long-term capital gain or loss, and the Company
will not be entitled to any deduction. If, however, such shares
are disposed of within the above-described period, then in the
year of such disposition the optionee will recognized
compensation taxable as ordinary income equal to the excess of
the lesser of (I) the amount realized upon such disposition, and
(ii) the fair market value of such shares on the date of exercise
over the exercise price, and the Company will be entitled to a
corresponding deduction.
VOTE REQUIRED AND BOARD OF DIRECTORS RECOMMENDATION
Assuming the presence of a quorum, the affirmative vote
of the holders of a majority of the shares of Common Stock
represented in person or by proxy and entitled to vote is
required to approve the adoption of the 1998 Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THIS
PROPOSAL. EACH PROXY RETURNED TO THE PROXY HOLDERS WILL BE VOTED
"FOR" APPROVAL OF THE 1998 OPTION PLAN, UNLESS OTHERWISE
INSTRUCTED.
PROPOSAL 3
APPROVAL OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Goldstein Golub Kessler &
Company, P.C., independent public accountants, to audit the
accounts of the Company for the fiscal year ending December 31,
1998. Goldstein Golub Kessler & Company, P.C. was initially
appointed by the Board of Directors in 1997 in connection with
the audit of the Company's accounts for the fiscal year ended
December 31, 1997. Goldstein Golub Kessler & Company, P.C. has
advised the Company that neither the firm nor any of its members
or associates has any direct financial interest in the Company
other than as auditors. Although the selection and appointment
of independent auditors is not required to be submitted to a vote
of shareholders, the Directors deem it desirable to obtain the
shareholders' ratification and approval of this appointment.
Representatives of Goldstein Golub Kessler & Company, P.C. are
expected to be present at the Annual Meeting with the opportunity
to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
Approval of the proposal requires the affirmative vote of a
majority of the Shares voted with respect thereto. In the event
the proposal is not approved, the Board will consider the
negative vote as a mandate to appoint other independent auditors
of the Company for the next fiscal year.
THE BOARD OF DIRECTORS RECOMMEND A VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF THE
AUDITORS
The Company will provide without charge to each person being
solicited by this Proxy Statement, on written request of any such
person, a copy of the Annual Report of the Company on Form 10-KSB
for the year ended December 31, 1997 (as filed with the
Securities and Exchange Commission), including financial
statements. All such requests should be directed to Henry Lam at
Creative Technologies Corp., 170 53rd Street, Brooklyn, New York
11232.
All proposals of shareholders intended to be included in the
proxy statement to be presented in the 1999 Annual Meeting
materials must be received by the Company's executive offices in
Brooklyn, New York, no later than February 1, 1999.
By Order of the Board of Directors
Dated: June 25, 1998
David Selengut
Secretary
PROXY
This Proxy is Solicited
on Behalf of the Board of Directors
CREATIVE TECHNOLOGIES CORP.
170 53RD STREET
BROOKLYN, NEW YORK 11232
The undersigned hereby appoints David Selengut and Henry Lam as
Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated
below, all the Shares of Creative Technologies Corp. held of
record by the undersigned on June 1, 1998 at the Annual Meeting
of Shareholders to be held on July 28, 1998 or any adjournment
thereof.
1. Election of Directors
FOR ALL NOMINEES LISTED BELOW
(except as marked to the contrary below)
WITHHOLD AUTHORITY
to vote for all nominees below
(INSTRUCTION: To withhold authority to vote
for any individual nominee strike a line
through the nominee's name in the list below)
David Refson, Richard Helfman, David Guttmann
2. To approve and ratify the Company's 1998 Employee Stock
Option Plan.
FOR ___ AGAINST ___ ABSTAIN ___
3. To ratify the appointment of Goldstein Golub Kessler &
Company, P.C. as the independent auditors for the Company
for the fiscal year ending December 31, 1998.
FOR ___ AGAINST ___ ABSTAIN ___
This proxy when properly executed will be voted in the
manner directed herein by the undersigned shareholder. If
no direction is made, this proxy will be voted FOR Proposals
1, 2 and 3.
Please sign exactly as name appears below. When Shares are
held by joint tenants, both must sign.
Dated: , 1998
Signature
______________________
When signing as attorney, executor administrator, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by president or other
authorized officer. If a partnership, please sign in partnership
name by authorized person.
APPENDIX A
CREATIVE TECHNOLOGIES CORP.
1998 STOCK OPTION PLAN
I. INTRODUCTION
1.1 PURPOSES. The purposes of the 1998 Stock Option Plan (the
"Plan") of Creative Technologies Corp. (the "Company") are (i) to
align the interests of the Company's stockholders and the
recipients of options under this Plan by increasing the
proprietary interest of such recipients in the Company's growth
and success, (ii) to advance the interests of the Company by
attracting and retaining officers, other key employees and
consultants, and well-qualified persons who are not officers or
employees of the Company ("Non-Employee Directors") for service
as directors of the Company and (iii) to motivate such persons to
act in the long-term best interests of the Company's
stockholders.
1.2 ADMINISTRATION. This Plan shall be administered by the Board
of Directors (the "Board") or a committee (the
"Committee")designated by the Board of Directors of the Company
consisting of two or more members of the Board. Each member of
the Committee, if a Committee shall be appointed, shall be a
"Non-Employee Director" within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and an "outside director" within the meaning of Section
162(m) of the Internal Revenue Code of 1986, as amended (the
"Code").
The Board or Committee shall, subject to the terms of this
Plan, select eligible persons for participation in this Plan and
shall determine the number of shares of Common Stock subject to
each option granted hereunder, the exercise price of such option,
the time and conditions of exercise of such option and all other
terms and conditions of such option, including, without
limitation, the form of the option agreement. The Board or
Committee shall, subject to the terms of this Plan, interpret
this Plan and the application thereof, establish rules and
regulations it deems necessary or desirable for the
administration of this Plan and may impose, incidental to the
grant of an option, conditions with respect to the grant, such as
limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions shall be
final, binding and conclusive. The Board or Committee may, in its
sole discretion and for any reason at any time take action such
that any or all outstanding options shall become exercisable in
part or in full. Each option shall be evidenced by a written
agreement (an "Agreement") between the Company and the optionee
setting forth the terms and conditions of such option.
The Board or Committee may delegate some or all of its power
and authority hereunder to the Chief Executive Officer or other
executive officer of the Company as the Board or Committee deems
appropriate; provided, however, that the Board or Committee may
not delegate its power and authority with regard to the selection
for participation in this Plan of an officer or other person
subject to Section 16 of the Exchange Act or decisions concerning
the timing, pricing or amount of
an option grant to such an officer or other person.
No member of the Board of Directors or Committee, and
neither the Chief Executive Officer nor other executive officer
to whom the Board or Committee delegates any of its power and
authority hereunder, shall be liable for any act, omission,
interpretation, construction or determination made in connection
with this Plan in good faith, and the members of the Board of
Directors and the Committee and the Chief Executive Officer or
other executive officer shall be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss,
damage or expense (including attorneys' fees) arising therefrom
to the full extent permitted by law and under any directors' and
officers' liability insurance that may be in effect from time to
time.
A majority of the Board or Committee shall constitute a
quorum. The acts of the Board or Committee shall be either (i)
acts of a majority of the members of the Board or Committee
present at any meeting at which a quorum is present or (ii) acts
approved in writing by all of the members of the Board or
Committee without a meeting.
1.3 ELIGIBILITY. Participants in this Plan shall consist of such
officers and other employees or persons expected to become
employees of the Company or its subsidiaries and consultants who
are providing bona fide services unrelated to the offer or sale
of securities in a capital raising transaction to the Company or
a Subsidiary from time to time (individually a "Subsidiary" and
collectively the "Subsidiaries") as the Board or Committee in its
sole discretion may select from time to time. For purposes of
this Plan, references to employment by the Company shall also
mean employment by a Subsidiary and engagement as a consultant to
the Company or a Subsidiary. The Board or Committee's selection
of a person to participate in this Plan at any time shall not
require the Board or Committee to select such person to
participate in this Plan at any other time. Non-employee
directors of the Company shall be eligible to participate in this
Plan in accordance with Section III.
1.4 SHARES AVAILABLE. Subject to adjustment as provided in
Section 4.7, 750,000 shares of the common stock, $0.09 par
value, of the Company (the "Common Stock"), shall be available
for grants of options under this Plan, reduced by the sum of the
aggregate number of shares of Common Stock which become subject
to outstanding options under this Plan. To the extent that shares
of Common Stock subject to an outstanding option are not issued
or delivered by reason of the expiration, termination,
cancellation or forfeiture of such option or by reason of the
delivery or withholding of shares of Common Stock to pay all or a
portion of the exercise price of such option, or to satisfy all
or a portion of the tax withholding obligations relating to such
option, then such shares of Common Stock shall again be available
under this Plan.
Shares of Common Stock shall be made available from
authorized and unissued shares of Common Stock, or authorized and
issued shares of Common Stock reacquired and held as treasury
shares or otherwise or a combination thereof.
II. STOCK OPTIONS
2.1 GRANTS OF STOCK OPTIONS. The Board or Committee may, in its
discretion, grant options to purchase shares of Common Stock to
such eligible persons as may be selected by the Board or
Committee. Each option, or portion thereof, that is not an
incentive stock option, shall be a non-qualified stock option. An
incentive stock option may not be granted to any person who is
not an employee of the Company or any subsidiary (as defined in
Section 424 of the Code). An incentive stock option shall mean an
option to purchase shares of Common Stock that meets the
requirements of Section 422 of the Code, or any successor
provision, which is intended by the Board or Committee to
constitute an incentive stock option. Each incentive stock option
shall be granted within ten years of the effective date of this
Plan. To the extent that the aggregate Fair Market Value
(determined as of the date of grant) of shares of Common Stock
with respect to which options designated as incentive stock
options are exercisable for the first time by a participant
during any calendar year (under this Plan or any other plan of
the Company, or any parent or subsidiary as defined in Section
424 of the Code) exceeds the amount (currently $100,000)
established by the Code, such options shall constitute
non-qualified stock options. "Fair Market Value" shall mean the
last reported sale price of a share of Common Stock on Nasdaq, or
on such principal stock exchange on which the Common Stock may
then be listed, on the date as of which such value is being
determined or, if there shall be no reported sale price for such
date, on the next preceding date for which a sale was reported,
in each case as such price is officially reported by Nasdaq or
such exchange, or if the Common Stock is not then listed on an
exchange or quoted on a system that reports last sale price, then
the average of the last reported bid and asked prices for the
Common Stock for such date as furnished by Nasdaq or a similar
organization if Nasdaq is not then reporting such information;
provided, that if Fair Market Value for a specified date cannot
be determined as provided in the preceding clause, Fair Market
Value shall be determined by the Board or Committee by whatever
means or method as the Board or Committee, in the good faith
exercise of its discretion, shall at such time deem appropriate.
2.2 TERMS OF STOCK OPTIONS. Options shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of this
Plan, as the Board or Committee shall deem advisable:
(a) Number of Shares and Purchase Price. The number of
shares of Common Stock subject to an option and the purchase
price per share of Common Stock purchasable upon exercise of the
option shall be determined by the Board or Committee; provided,
however, that the purchase price per share of Common Stock
purchasable upon exercise of a non-qualified stock option shall
not be less than the Fair Market Value of a share of Common Stock
on the date of grant of such option and
the purchase price per share of Common Stock purchasable upon
exercise of an incentive stock option shall not be less than 100%
of the Fair Market Value of a share of Common Stock on the date
of grant of such option; provided further, that if an incentive
stock option shall be granted to any person who, at the time such
option is granted, owns capital stock possessing more than 10% of
the
total combined voting power of all classes of capital stock of
the Company (or of any parent or subsidiary as defined in Section
424 of the Code) (a "Ten Percent Holder"), the purchase price per
share of Common Stock shall be the price (currently 110% of Fair
Market Value) required by the Code in order to constitute an
incentive stock option.
(b) Option Period and Exercisability. The period during
which an option may be exercised shall be determined by the Board
or Committee; provided, however, that no incentive stock option
shall be exercised later than ten years after its date of grant;
provided further, that if an incentive stock option shall be
granted to a Ten Percent Holder, such option shall not be
exercised later than five years after its date of grant. The
Board or Committee may, in its discretion, establish performance
measures or other criteria which shall be satisfied or met as a
condition to the grant of an option or to the exercisability of
all or a portion of an option. The Board or Committee shall
determine whether an option shall become exercisable in
cumulative or non-cumulative installments and in part or in full
at any time. An exercisable option, or portion thereof, may be
exercised only with respect to whole shares of Common Stock.
(c) Method of Exercise. An option may be exercised (i) by
giving written notice to the Company specifying the number of
whole shares of Common Stock to be purchased and accompanied by
payment therefor in full (or arrangement made for such payment to
the Company's satisfaction) either (A) in cash, (B) by delivery
(either actual delivery or by attestation procedures established
by the Company) of previously owned whole shares of Common Stock
(which the optionee has held for at least six months prior to the
delivery of such shares or which the optionee purchased on the
open market and in each case for which the optionee has good
title, free and clear of all liens and encumbrances) having an
aggregate Fair Market Value, determined as of the date of
exercise, equal to the aggregate purchase price payable by reason
of such exercise, (C) by authorizing
the Company to withhold whole shares of Common Stock which would
otherwise be delivered upon exercise of the option having an
aggregate Fair Market Value, determined as of the date of
exercise, equal to the aggregate purchase price payable by reason
of such exercise, (D) in cash by a broker-dealer acceptable to
the Company to whom the optionee has submitted an irrevocable
notice of exercise or (E) a combination of (A), (B) and (C), in
each case to the extent set forth in the Agreement relating to
the option and (ii) by executing such documents as the Company
may reasonably request. The Company shall have sole discretion to
disapprove of an election pursuant to any of clauses (B)-(E). Any
fraction of a share of Common Stock which would be required to
pay such purchase price shall be disregarded and the remaining
amount due shall be paid in cash by the
optionee. No certificate representing Common Stock shall be
delivered until the full purchase price therefor has been paid
(or arrangement made for such payment to the Company's
satisfaction).
2.3 TERMINATION OF EMPLOYMENT.
(a) Disability, Retirement and Death. Subject to paragraph
(d) below and unless otherwise specified in the Agreement
relating to an option, if an optionee's employment with the
Company terminates by reason of Disability or death each option
held by such optionee shall be exercisable only to the extent
that such option is exercisable on the effective date of such
optionee's termination of employment or date of death, as
applicable, and may thereafter be exercised by such optionee (or
such optionee's executor, administrator, legal representative,
beneficiary or similar person) until and
including the earliest to occur of (i) the date which is one year
(or such other period as set forth in the Agreement relating to
such option) after the effective date of such optionee's
termination of employment or date of death, as applicable, and
(ii) the expiration date of the term of such option. For purposes
of this Plan, "Disability" shall mean the inability of an
optionee substantially to perform such optionee's duties and
responsibilities for a continuous period of at least six months.
(b) Other Termination. Subject to paragraph (d) below and
unless otherwise specified in the Agreement relating to an option
if an optionee's employment with the Company terminates for any
reason other than Disability or death, each option held by such
optionee shall be exercisable only to the extent that such option
is exercisable on the effective date of such optionee's
termination of employment and may thereafter be exercised by such
optionee (or such optionee's legal representative or similar
person) until and including the earliest to occur of (i) the date
which is three months after the effective date of such optionee's
termination of employment and (ii) the expiration date of the
term of such option.
(c) Death Following Termination of Employment. Subject to
paragraph (d) below and unless otherwise specified in the
Agreement relating to an option, if an optionee dies during the
period set forth in Section 2.3(a) following termination of
employment by reason of Disability or if an optionee dies during
the period set forth in Section 2.3(b) following termination of
employment for any other reason other than Disability, each
option held by such optionee shall be exercisable only to the
extent that such option is exercisable on the date of such
optionee's death and may thereafter be exercised by such
optionee's executor, administrator, legal representative,
beneficiary or similar person until and including the earliest to
occur of (i) the date which is one year (or such other period as
set forth in the Agreement relating to such option) after the
date of death and (ii) the expiration date of the term of such
option.
(d) Termination of Employment - Incentive Stock Options.
(i) Unless otherwise specified in the Agreement relating to
the option, if the employment with the Company of a holder of an
incentive stock option terminates by reason of Permanent and
Total Disability (as defined in Section 22(e)(3) of the Code) or
death, each incentive stock option held by such optionee shall be
exercisable only to the extent that such option is exercisable on
the effective date of such optionee's termination of employment
by reason of Permanent and Total Disability or date of death, as
applicable, and may thereafter be exercised by such optionee (or
such optionee's executor, administrator, legal representative,
beneficiary or similar person) until and including the earliest
to occur of (1) the date which is one year (or such shorter
period as set forth in the Agreement relating to such option)
after the effective date of such optionee's termination of
employment by reason of Permanent and Total Disability or date of
death, as applicable, and (2) the
expiration date of the term of such option.
(ii) If the employment with the Company of a holder of an
incentive stock option terminates for any reason other than
Permanent and Total Disability or death, each incentive stock
option held by such optionee shall be exercisable only to the
extent such option is exercisable on the effective date of such
optionee's termination of employment, and may thereafter be
exercised by such holder (or such holder's legal representative
or similar person) until and including the earliest to occur of
(1) the date which is three months after the effective date of
such optionee's termination of employment and (2) the expiration
date of the term of such option.
(iii) If the holder of an incentive stock option dies during
the period set forth in Section 2.3(d)(i) following termination
of employment by reason of Permanent and Total Disability (or
such shorter period as set forth in the Agreement relating to
such option), or if the holder of an incentive stock option dies
during the period set forth in Section 2.3(d)(ii) following
termination of employment for any reason other than Permanent and
Total Disability or death, each incentive stock option held by
such optionee shall be exercisable only to the extent such option
is exercisable on the date of the optionee's death and may
thereafter be exercised by the optionee's executor,
administrator, legal representative, beneficiary or similar
person until and including the earliest to occur of (1) the date
which is one year (or such shorter period as set forth in the
Agreement relating to such option) after the date of death and
(2) the expiration date of the term of such option.
III. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
3.1 ELIGIBILITY. Each member of the Board of Directors of the
Company who is not an employee, either full-time or part-time, of
the Company or a Subsidiary (a "non-employee director") may be
granted options to purchase shares of Common Stock in accordance
with this Section III. All options granted under this Section III
shall constitute non-qualified stock options.
3.2 GRANTS OF STOCK OPTIONS. Each non-employee director shall be
granted non-qualified stock options in such amount as the Board
or Committee shall determine from time to time.
3.3 EXERCISE PRICE. Each option granted under this Section III
shall have an exercise price equal to the Fair Market Value per
share of Common Stock on the date of grant.
3.4 OPTION PERIOD AND EXERCISABILITY. Each option granted under
this Section III shall be exercisable and shall expire at such
time as the Board or Committee shall determine.
3.5 TERMINATION OF DIRECTORSHIP. Upon the termination of an
optionee's service as a non-employee director for any reason, all
options granted to such non-employee director under this Section
III shall remain fully exercisable to the extent exercisable on
the date of such termination and thereafter may be exercised by
such holder (or such holder's executor, administrator, legal
representative, beneficiary or similar person) until and
including the earliest to occur of (i) the date which is three
months after the effective date of such optionee's termination of
directorship and (ii) the expiration date of the term of such
option.
IV. GENERAL
4.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan shall be submitted
to the stockholders of the Company for approval and, if approved
by the stockholders, shall become effective as of the date of
approval by the Board. No option may be exercised prior to the
date of such stockholder approval. This Plan shall terminate when
shares of Common Stock are no longer available for the grant of
options, unless terminated earlier by the Board. Termination of
this Plan shall not affect the terms or conditions of any option
granted prior to termination.
If this Plan is not approved by the stockholders
of the Company, this Plan and any options granted hereunder shall
be null and void.
4.2 AMENDMENTS. The Board may amend this Plan as it shall deem
advisable, subject to any requirement of stockholder approval
required by applicable law, rule or regulation, including Section
162(m) of the Code; provided, however, that no amendment shall be
made without stockholder approval if such amendment would (i)
increase the maximum number of shares of Common Stock available
under this Plan (subject to Section 4.7) or (ii) effect any
change inconsistent with Section 422 of the Code. No amendment
may impair the rights of a holder of an outstanding option
without the consent of such holder.
4.3 AGREEMENT. No option shall be valid until an Agreement is
executed by the Company and the optionee and, upon execution by
the Company and the optionee and delivery of the Agreement to the
Company, such option shall be effective as of the effective date
set forth in the Agreement.
4.4 NON-TRANSFERABILITY. Unless otherwise specified in the
Agreement relating to an Option, no option hereunder shall be
transferable other than by will or the laws of descent and
distribution or pursuant to beneficiary designation procedures
approved by the Company. Except to the extent permitted by the
foregoing sentence, each option may be exercised during the
optionee's lifetime
only by the optionee or the optionee's legal representative or
similar person. Except as permitted by the second preceding
sentence, no option hereunder shall be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed
of (whether by operation of law or otherwise) or be subject to
execution, attachment or similar process. Upon any attempt to so
sell, transfer, assign, pledge, hypothecate, encumber or
otherwise dispose of any option hereunder, such option and all
rights thereunder shall immediately become null and void.
4.5 TAX WITHHOLDING. The Company shall have the right to require,
prior to the issuance or delivery of any shares of Common Stock,
payment by the optionee of any Federal, state, local or other
taxes which may be required to be withheld or paid in connection
with an option hereunder. An Agreement may provide that (I) the
Company shall withhold whole shares of Common Stock which would
otherwise be delivered upon exercise of the option having an
aggregate Fair Market Value determined as of the date the
obligation to withhold or pay taxes arises in connection with the
option (the "Tax Date") in the amount necessary to satisfy any
such obligation or (ii) the optionee may satisfy any such
obligation by any of the following means: (A) a cash payment to
the Company, (B) delivery (either actual delivery or by
attestation procedures established by the Company) to the Company
of previously owned whole shares of Common Stock (which the
optionee has held for at least six months prior to the delivery
of such shares or which the optionee purchased on the open market
and in each case for which the optionee has good title, free and
clear of all liens and encumbrances) having an aggregate Fair
Market Value determined as of the Tax Date, equal to the amount
necessary to satisfy any such obligation, (C) authorizing the
Company to withhold whole shares of Common Stock which would
otherwise be delivered upon exercise of the option having an
aggregate Fair Market Value determined as of the Tax Date, equal
to the amount necessary to satisfy any such obligation, (D) a
cash payment by a broker-dealer acceptable to the Company to whom
the optionee has submitted an irrevocable notice of exercise or
(E) any combination of (A),
(B) and (C), in each case to the extent set forth in the
Agreement relating to the option; provided, however, that the
Company shall have sole discretion to disapprove of an election
pursuant to any of clauses (B)-(E). Any fraction of a share of
Common Stock which would be required to satisfy such an
obligation shall be disregarded and the remaining amount due
shall be paid in cash by the optionee.
4.6 RESTRICTIONS ON SHARES. Each option hereunder shall be
subject to the requirement that if at any time the Company
determines that the listing, registration or qualification of the
shares of Common Stock subject to such option upon any securities
exchange or under any law, or the consent or approval of any
governmental body, or the taking of any other action is necessary
or desirable
as a condition of, or in connection with, the exercise of such
option or the delivery of shares thereunder, such option shall
not be exercised and such shares shall not be delivered unless
such listing, registration, qualification, consent, approval or
other action shall have been effected or obtained, free of any
conditions not acceptable to the Company. The Company may require
that certificates evidencing shares of Common Stock delivered
pursuant to any option hereunder bear a legend indicating that
the sale, transfer or other disposition thereof by the holder is
prohibited except in compliance with the Securities Act of 1933,
as amended, and the rules and regulations thereunder.
4.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation,
combination, exchange of shares, liquidation, spin-off or other
similar change in capitalization or event, or any distribution to
holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this
Plan, the number and class of securities subject to each
outstanding option, the purchase price per security, and the
number and class of securities subject to each option to be
granted to non-employee directors pursuant to Article III shall
be appropriately adjusted by the Board or Committee, such
adjustments to be made in the case of outstanding options without
an increase in the aggregate purchase price. The decision of the
Board or Committee regarding any such adjustment shall be final,
binding and conclusive. If any adjustment would result in a
fractional security being (a) available under this Plan, such
fractional security shall be disregarded, or (b) subject to an
option under this Plan, the Company shall pay the optionee, in
connection with the first exercise of the option in whole or in
part occurring after such adjustment, an amount in cash
determined by multiplying (A) the fraction of such security
(rounded to the nearest hundredth) by (B) the excess, if any, of
(x) the Fair Market Value on the exercise date over (y) the
exercise price of the option.
4.8 CHANGE IN CONTROL. Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation of the
Company with one or more corporations, or upon the sale of
substantially all the assets or more than 50% or the then
outstanding shares of stock of the Company to another person or
entity, the Board or Committee may provide in writing in
connection with such transaction for any or all of the following
alternatives (separately or in combinations); (i) for
outstanding options to become immediately exercisable and/or for
other acceleration of the
exercisability of options outstanding under this Plan, and may in
either case provide that such options shall terminate unless
exercised within a specified time period; (ii) for the assumption
of the options theretofore granted under this Plan or the
substitution for such options outstanding under this Plan of new
options to purchase shares of capital stock of a successor
corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and exercise
prices; or (iii) for the continuance of this Plan by a successor
corporation in which event this Plan and the options theretofore
granted under this Plan shall continue in the manner and under
the terms so provided.
4.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall have
any right to participate in this Plan. Neither this Plan nor any
option granted hereunder shall confer upon any person any right
to continued employment by the Company, any Subsidiary or any
affiliate of the Company or affect in any manner the right of the
Company, any Subsidiary or any affiliate of the Company to
terminate the employment of any person at any time without
liability hereunder.
4.10 RIGHTS AS STOCKHOLDER. No person shall have any rights as a
stockholder of the Company with respect to any shares of Common
Stock which are subject to an option hereunder until such person
becomes a stockholder of record with respect to such shares of
Common Stock.
4.11 DESIGNATION OF BENEFICIARY. If permitted by the Company, an
optionee may file with the Board or Committee a written
designation of one or more persons as such optionee's beneficiary
or beneficiaries (both primary and contingent) in the event of
the optionee's death. To the extent an outstanding option granted
hereunder is exercisable, such beneficiary or beneficiaries shall
be entitled to exercise such option.
Each beneficiary designation shall become effective only when
filed in writing with the Board or Committee during the
optionee's lifetime on a form prescribed by the Board or
Committee. The spouse of a married optionee domiciled in a
community property jurisdiction shall join in any designation of
a beneficiary other than such spouse. The filing with the Board
or Committee of a new beneficiary designation shall cancel all
previously filed beneficiary designations. If an optionee fails
to designate a beneficiary, or if all designated beneficiaries of
an optionee predecease the optionee, then each outstanding option
hereunder held by such optionee, to the extent exercisable, may
be
exercised by such optionee's executor, administrator, legal
representative or similar person.
4.12 GOVERNING LAW. This Plan, each option hereunder and the
related Agreement, and all determinations made and actions taken
pursuant thereto, to the extent not otherwise governed by the
Code or the laws of the United States, shall be governed by the
laws of the State of New York and
construed in accordance therewith without giving effect to
principles of conflicts of laws.
4.13 FOREIGN EMPLOYEES. Without amending this Plan, the Board or
Committee may grant
options to eligible persons who are foreign nationals on such
terms and conditions different from those specified in this Plan
as may in the judgment of the Board or Committee be necessary or
desirable to foster and promote achievement of the purposes of
this Plan and, in furtherance of such purposes the Board or
Committee may make such modifications, amendments, procedures,
subplans and the like as may be necessary or advisable to comply
with provisions of laws in other countries or jurisdictions in
which the Company or its Subsidiaries operates or has employees.