SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by party other than the Registrant [ ]
[X] Preliminary Proxy Statement
[ ] Confidential, For Use of the
Commission Only (as permitted
by Rule 14a-6 (e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11 (c) or Rule 14a-12
Gilman + Ciocia, Inc.
---------------------
Payment of Filing Fee (Check appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11 (a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) 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 (a)(2):
- -------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------
(5) Total fee paid:
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GILMAN + CIOCIA, INC.
1311 Mamaroneck Avenue
White Plains, NY 10605
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 2000
----------
To the Stockholders
of Gilman + Ciocia, Inc.
NOTICE IS GIVEN that the 2000 Annual Meeting of Stockholders of Gilman
+ Ciocia, Inc., a Delaware corporation (the "Company"), will be held at 10:30
a.m. local time, on May 5 2000 at the Company's offices located at 1311
Mamaroneck Avenue, White Plains, NY 10605 for the following purposes:
1. To elect two Class B members of the Company's Board of Directors;
2. To consider and vote upon a proposal to amend the Company's
Certificate of Incorporation, to change the Company's name to G + C,
Inc.;
3. To consider and vote upon a proposal to approve the Company's 2000
Employee Stock Purchase Plan;
4. To ratify the reappointment of Arthur Andersen LLP as the Company's
independent certified public accountants for the fiscal year ending
June 30, 2000; and
5. To transact such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on March 24, 2000
as the record date for determining those stockholders entitled to notice of, and
to vote at, the Annual Meeting. You, as a stockholder of the Company, may
examine a list of stockholders entitled to vote at the Annual Meeting at the
offices of the Company situated at 1311 Mamaroneck Avenue, White Plains, NY
10605 during the ten-day period preceding the Annual Meeting.
By order of the Board of Directors,
Kathryn Travis
Secretary
White Plains, New York
March 24, 2000
================================================================================
THIS IS AN IMPORTANT MEETING AND ALL STOCKHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. THOSE STOCKHOLDERS WHO ARE UNABLE TO ATTEND ARE RESPECTFULLY
URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY FORM AS PROMPTLY AS POSSIBLE.
STOCKHOLDERS WHO EXECUTE A PROXY FORM MAY NEVERTHELESS ATTEND THE MEETING,
REVOKE THEIR PROXY, AND VOTE THEIR SHARES IN PERSON. YOUR BOARD RECOMMENDS THAT
YOU VOTE IN FAVOR OF THE NOMINEES FOR DIRECTORS AND FOR THE OTHER PROPOSALS TO
BE CONSIDERED AT THE ANNUAL MEETING.
================================================================================
GILMAN + CIOCIA, INC.
1311 Mamaroneck Avenue
White Plains, NY 10605
----------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 5, 2000
----------
Gilman + Ciocia, Inc., a Delaware corporation (the "Company") is
furnishing to you this Proxy Statement in connection with the solicitation by
the Board of Directors of proxies from the holders of the Company's common
stock, $.01 par value per share (the "Common Stock"), for use at the 2000 Annual
Meeting of Stockholders of the Company to be held at 10:30 a.m. local time, May
5, 2000 at the Company's offices located at 1311 Mamaroneck Avenue, White
Plains, NY 10605 or at any adjournment(s) or postponement(s) of such meeting
(the "Meeting"). Notice of the Meeting is enclosed with this proxy Statement.
The approximate date that the Company is first mailing this Proxy Statement and
the enclosed form of Proxy to holders of Common Stock is April 5, 2000. You, as
a stockholder, should review the information provided herein in conjunction with
the Company's 1999 Annual Report to Stockholders for the fiscal year ended June
30, 1999, which accompanies this Proxy Statement.
INFORMATION CONCERNING PROXY
The Company's Board of Directors is soliciting your proxy. The giving of a
proxy does not preclude your right to vote in person should you desire. If you
execute and deliver a proxy, you may revoke it at any time prior to its use by
(1) giving written notice of such revocation to the Company, care of the
Secretary, Kathryn Travis, 1311 Mamaroneck Avenue, White Plains, NY 10605; (2)
executing and delivering a proxy bearing a later date to the Secretary of the
Company; or (3) appearing at the Meeting and voting in person.
The Company will bear the cost of preparing, assembling and mailing this
Proxy Statement, the Notice of Annual Meeting of Stockholders and the enclosed
proxy. In addition to the use of mail, employees of the Company may solicit
proxies by telephone, telegram or personal interview. The Company's employees
will receive no compensation for soliciting proxies other than their regular
salaries. The Company has also engaged the services of Corporate Stock Transfer,
Inc. to assist in the tabulation of proxies.
PURPOSES OF THE MEETING
At the Meeting, the Company's stockholders will consider and vote upon the
following matters:
1. To elect two Class B members of the Company's Board of Directors;
2. A proposal to amend the Company's Certificate of Incorporation to
change the Company's name to G + C, Inc.;
3. A proposal to approve the Company's 2000 Employee Stock Purchase
Plan;
4. To ratify the reappointment of Arthur Andersen LLP as the Company's
independent certified public accountants for the fiscal year ending
June 30, 2000; and
5. Such other business as may properly come before the Annual Meeting
and any adjournments or postponements.
Unless you indicate contrary instructions on the enclosed proxy, the
officers designated on the enclosed proxy will
1
vote all shares represented by valid proxies that have not been revoked (in
accordance with the procedures set forth above) (a) for the election of the two
nominees for director named below, and (b) in favor of all other proposals
described in the Notice of Annual Meeting. In the event that you specify a
different choice by means of the enclosed proxy, the designated proxies will
vote your shares in accordance with the specification you make.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors has set the close of business on March 24, 2000 as
the record date (the "Record Date") for determining stockholders of the Company
entitled to notice of and to vote at the Meeting. As of the Record Date,
[7,511,059] shares of Common Stock were issued and outstanding, all of which are
entitled to be voted at the Meeting. Each share of Common Stock is entitled to
one vote on all matters at the Meeting, and neither the Company's Certificate of
Incorporation nor its Bylaws provides for cumulative voting rights.
The attendance, in person or by proxy, of the holders of a majority of the
Common Stock shares entitled to vote at the Meeting is necessary to constitute a
quorum. The affirmative vote of a plurality of Common Stock shares present and
voting at the Meeting is required for the election of Directors. The affirmative
vote of a majority of the outstanding shares of Common Stock is required to
amend the Company's Certificate of Incorporation to change the Company's name to
G + C, Inc. The affirmative vote of a majority of the outstanding shares of
Common Stock present and entitled to vote at the meeting is required to pass
upon the proposals to ratify and approve the Company's 1999 Employee Stock
Purchase Plan. Abstentions and broker non-votes (defined in this paragraph) will
be counted as present for determining the presence of a quorum. For determining
the vote required for approval of matters at the Meeting, shares held by
stockholders who abstain from voting will be treated as being "present" and
"entitled to vote" on the matter, and, therefore, an abstention has the same
legal effect as a vote against the matter. However, in the case of a broker
non-vote or where a stockholder withholds authority from his proxy to vote the
proxy as to a particular matter, such shares will not be treated as "present" or
"entitled to vote" on the matter, and, therefore, a broker non-vote or the
withholding of a proxy's authority will have no effect on the outcome of the
vote on the matter. A "broker non-vote" refers to Common Stock shares
represented at the Meeting in person or by proxy by a broker or nominee where
such broker or nominee (1) has not received voting instructions on a particular
matter from the beneficial owners or persons entitled to vote and (2) the broker
or nominee does not have discretionary voting power on such matter.
As of the Record Date, the Company's Directors owned in the aggregate
[3,3397,459] shares of Common Stock constituting approximately [44.0 %] of the
outstanding shares of Common Stock entitled to vote at the Meeting. The
directors have advised the Company that they intend to vote all of their shares
in favor of each of the proposals to be presented at the Meeting.
If you wish to vote shares beneficially owned by you in person at the
Meeting, and such shares are held in a brokerage account, then you must obtain a
proxy from your broker and your broker must obtain a proxy from the trust
company or other registered holder of your shares.
2
Security Ownership of Certain Beneficial Owners
The following table sets forth, as of February 29, 2000, to the extent
known to the Company, certain information regarding the ownership of the
Company's Common Stock by (i) each person who is known by the Company to own of
record or beneficially more than five percent of the Company's Common Stock,
(ii) each of the Company's directors and executive officers and (iii) all
directors and executive officers as a group. Except as otherwise indicated, the
shareholders listed in the table have sole voting and investment powers with
respect to the shares indicated.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent of Class
- ---------------- -------------------- ----------------
James Ciocia 1,063,616(1) 14%
1311 Mamaroneck Avenue
White Plains, NY 10605
Thomas Povinelli 1,118,616(2) 14.8%
1311 Mamaroneck Avenue
White Plains, NY 10605
Kathryn Travis 415,481(3) 5.5%
1311 Mamaroneck Avenue
White Plains, NY 10605
Seth Akabas 8,966(4) .1%
245 West 107th Street
New York, NY
Louis Karol 3,180 .03%
1311 Mamaroneck Avenue
White Plains, NY 10605
Michael P. Ryan 755,004(5) 10%
11 Raymond Avenue
Poughkeepsie, NY 12603
Steven Gilbert 684,000(6) 8.5%
1311 Mamaroneck Avenue
White Plains, NY 10605
Stephen Sacher 60,000(7) .6%
1311 Mamaroneck Avenue
White Plains, NY 10605
Arlington Financial Services, Inc. 755,004(5) 10%
11 Raymond Avenue
Poughkeepsie, NY 12603
All directors and officers 3,399,859(1)(2)(3)(4)(5)(7) 44%
as a group (6 persons)
- ----------
(1) Includes 10,000 shares of Common Stock issuable upon the exercise of
options at a price of $2.75; does not include 60,000 shares issuable
upon the exercise of options not yet vested at 9.50 per share.
(2) Includes 10,000 shares of Common Stock issuable upon the exercise of
currently exercisable options at a
3
price of $2.75; does not include 60,000 shares issuable upon the
exercise of options not yet vested at 9.50 per share.
(3) Includes 10,000 shares of Common Stock issuable upon the exercise of
options at a price of $2.75; does not include 30,000 shares issuable
upon the exercise of options not yet vested at 9.50 per share.
(4) Includes 8,081 shares owned by the law firm of Akabas & Cohen of
which Mr. Akabas is a partner.
(5) Includes 604,000 shares held by Arlington Financial Services, Inc.
and 151, 004 shares held in escrow. Mr. Ryan owns 50% of the stock
of Arlington Financial Services, Inc.
(6) Includes 169, 000 shares owned by the Gilbert Family Limited
Partnership of which Steven Gilbert is a 97% beneficiary. In
addition, includes 340,000 shares issuable upon exercise of options
at $3.50 per share, 100,000 shares issuable upon exercise of options
at $4.75 per share, and 75,000 shares issuable upon the exercise at
$13.00 per share.
(7) Includes 20,000 shares issuable upon exercise of currently
exercisable options at $7.50 per share, 20,000 shares of Common
Stock issuable upon the exercise of options at a price of $8.00;
does not include other shares of Common Stock issuable upon the
exercise of options not yet vested.
ITEM I.
ELECTION OF DIRECTORS
Nominees
The Company's Bylaws provide that the number of directors constituting the
Company's Board of Directors shall be fixed by the Board of Directors, provided
that the number of directors shall not be fewer than one nor more than ten. Each
director elected at the Meeting will serve until his or her term expires and
until his or her successor has been duly elected and qualified. The Board of
Directors of the Company has nominated Seth A. Akabas, and Michael P. Ryan for
election as directors, and your proxy will be voted for them absent contrary
instructions.
The Board of Directors is divided into three classes: Class A, Class B and
Class C. Each class comprises a number of directors as equal in number as
possible as the other classes. Each class generally serves three years with
terms of office of the respective classes expiring in successive years. The
Board of Directors has nominated Seth A. Akabas and Michael Ryan to stand as
Class B directors. Class B directors elected in 2000 will serve terms of three
years, and, in each case, until his or her successor shall be duly elected and
qualified or until his or her earlier death, resignation or removal.
Vacancies on the Board of Directors which occur during the year may be
filled by the Board of Directors for the remainder of the full term.
The Board of Directors has no reason to believe that any nominee will
refuse to act or be unable to accept election; however, in the event that a
nominee for director is unable to accept election or if any other unforeseen
contingency arises, proxies will be voted for the remaining nominees, if any,
and for such other person as may be designated by the Board of Directors, unless
it is directed by a proxy to do otherwise.
Information concerning the nominees for election as directors is follows:
Seth A. Akabas, Director
Since June 1991, Mr. Akabas has been a partner at the law firm of Akabas &
Cohen. Mr. Akabas is a graduate of Princeton University with a BA degree in
economics and a graduate of Columbia University Schools of Law and Journalism.
Michael Ryan
Mr. Ryan is President of Prime Financial Services, Inc., Prime Capital
Services and Asset & Financial Planning, Ltd., all three of which are
wholly-owned subsidiaries of Gilman + Ciocia, Inc. Mr. Ryan is a graduate of
Syracuse University. Mr. Ryan is a Certified Financial Planner.
4
Meetings and Committees of the Board of Directors
During the fiscal year ended June 30, 1999, the Company's Board of
Directors met three times and acted nineteen times by a unanimous written
consent in lieu of a meeting.
The only two Committees of the Board of Directors are the Audit Committee
composed of Thomas Povinelli, Louis P. Karol and Seth A. Akabas and the Stock
Option Committee, composed of Louis P. Karol and Seth A. Akabas. The Audit
Committee, which met three times during the fiscal year ended June 30, 1999,
reviews and acts or reports to the Board with respect to various auditing and
accounting matters, including the selection of the Company's independent
auditors, the accounting and financial practices and controls of the Company,
audit procedures and findings, and the nature of services performed for the
Company by, and the fees paid to, the independent auditors. The Company has no
executive, nominating, compensation or other committees. The Stock Option
Committee, which did not meet during the fiscal year ended June 30, 1999 except
in connection with all Board Meetings, is responsible for the administration of
the Company's 1993 Incentive and Non-Qualified Stock Option Plan, and 1999
Common Stock and Incentive and Non-Qualified Stock Option Plan.
Executive Officers
The executive officers of the Company are as follows:
Executive
Officer or
Director
Name Age Position Since
- ---- --- -------- ----------
James Ciocia 43 Chief Executive Officer, 11/81
President and Director
Thomas Povinelli 39 Chief Operating Officer, 11/84
Executive Vice- President and Director
Kathryn Travis 50 Secretary, Vice President 11/89
and Director
Stephen B. Sacher 40 Chief Financial Officer and Treasurer 1/98
Seth A. Akabas 43 Director 4/95
Louis P. Karol 40 Director 4/95
Michael P. Ryan 41 Director, President of 7/99
Prime Capital Services, Inc.
For further information about the executive officers of
the Company, see "--Nominees" above.
Executive Compensation
Summary Compensation Table
--------------------------
Other Other
Annual Underlying
Name and Principal Position Year Salary Bonus Compensation Options
- --------------------------- ---- ------ ----- ------------ ----------
James Ciocia 1997 $151,200 $240,000 $ 9,580(1) 10,000
Chief Executive 1998 $190,000 -- $ 12,393(7) --
Officer, 1999 $190,000 -- $15,266(8) 60,000
President and Director
5
Summary Compensation Table
--------------------------
Other Other
Annual Underlying
Name and Principal Position Year Salary Bonus Compensation Options
- --------------------------- ---- ------ ----- ------------ ----------
Thomas Povinelli 1997 $ 99,951 $145,000 $ 78,600(2) 10,000
Chief Operating Officer, 1998 $190,000 -- -- --
Executive Vice President 1999 $190,000 -- -- 60,000
and Director
Gary Besmer (5) 1997 $ 92,149 $ 1,000 $ 7,149(3) 10,000
Vice President and 1998 $ 74,782 -- $ 5,908(7) --
Director 1999 -- -- -- --
Kathryn Travis 1997 $ 92,149 $ 3,000 $ 7,149(4) 10,000
Secretary, Vice Pres. 1998 $135,000 -- $ 10,758(7) --
and Director 1999 $135,000 -- $ 10,758(8) 30,000
Michael Ryan, President of
Prime Capital Services, Inc. 1998 -- -- -- --
and Director 1999 $ 60,000 *(9) $ 2,400(8)
Stephen B. Sacher
Chief Financial Officer 1998 $ 36,667 -- $125,717(6) 220,000
and Treasurer 1999 $ 80,000 -- $120,000(6) 15,000
- ----------
(1) Auto expense.
(2) Includes $18,600 auto expense and $60,000 loan forgiveness.
(3) Auto expense.
(4) Auto expense.
(5) On May 19, 1998 Mr. Besmer announced that he was retiring from the
Company effective immediately.
(6) Includes professional fees paid to Sacher & Co., PC, a company of
which Mr. Sacher is President.
(7) Auto expense.
(8) Auto expense.
(9) Represents 3 months salary at $240,000 per year, Mr. Ryan is also
entitled to performance compensation equal to 20% of Prime Capital
Services, Inc. pre-tax consolidated income limited to the amount of
the Chief Operating Officer's total salary.
Mssrs. Ciocia, Povinelli and Besmer and Ms. Travis earned commissions from the
sale of securities and insurance products to the Company's clients as Registered
Representatives of Royal Alliance which are reflected in the table above.
Key Man Insurance
The Company maintains $2.0 million key-man life insurance policies on both
Thomas Povinelli and James Ciocia.
Directors
Directors of the Company receive no compensation for serving as a director
of the Company.
Option Grants
The following table sets forth information regarding options to purchase
shares of Common Stock granted to the Named Executive Officers during Fiscal
1999.
6
OPTION GRANTS IN FISCAL 1999
Individual Grants
- --------------------------------------------------------------------------------------------------------------
Number of Percent of Total Base Price Expiration Date
Securities Options/SARSs Granted ($/sh)
Underlying to Employees in Fiscal
Options/ Year
Name SARSs Granted
- --------------------------------------------------------------------------------------------------------------
Stephen B. Sacher -- Chief 15,000 2.8% $9.50 1/5/04
Financial Officer
- --------------------------------------------------------------------------------------------------------------
Thomas Povinelli -- Chief 60,000 11.4% $9.50 1/5/04
Operating Officer and
Executive Vice President
- --------------------------------------------------------------------------------------------------------------
James Ciocia -- Chief Executive 60,000 11.4% $9.50 1/5/04
Officer and President
- --------------------------------------------------------------------------------------------------------------
Kathryn Travis -- Secretary and 30,000 5.7% $9.50 1/5/04
Vice President
- --------------------------------------------------------------------------------------------------------------
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
- --------------------------------------------------------------------------------------------------------------------------
Name Shares Acquired Upon Value Realized Number of Securitiies Value of Unexercised
Exercise Underlying Unexercised In-The-Money Options
Options at Fiscal-Year Fiscal Year June 30,
June 30, 1999 1999(1)
Exercisable/Unexer- Exercisable/Unexer-
cisable cisable
- --------------------------------------------------------------------------------------------------------------------------
James Ciocia 83,105 485,537 10,000/60,000 $64,375/--
- --------------------------------------------------------------------------------------------------------------------------
Thomas Povinelli 83,105 485,537 10,000/60,000 $64,375/--
- --------------------------------------------------------------------------------------------------------------------------
Kathryn Travis 62,337 364,196 10,000/30,000 $64,375/--
- --------------------------------------------------------------------------------------------------------------------------
Stephen B. Sacher 12,680 106,195 20,000/195,000 $33,750/$27,500
- --------------------------------------------------------------------------------------------------------------------------
Gary Besmer -- -- --/-- 0/0
- --------------------------------------------------------------------------------------------------------------------------
(1) Based on a year-end fair market value of the underlying securities equal
to $9.1875
Indemnification
The Company's Certificate of Incorporation eliminates or limits the
personal financial liability of the Company's directors, except where there has
been a breach of the duty of loyalty, failure to act in good faith, intentional
misconduct or knowing violation of the law. In addition, the Company's By-laws
include provisions to indemnify its officers and directors and other persons
against expenses, judgments, fines and amounts paid in settlement in connection
with threatened, pending or completed suits or proceedings against such persons
by reason of serving or having served as officers, directors or in other
capacities, except when they have acted not in good faith, unlawfully or not in
the best interest of the Company.
7
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES
ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING THE
COMPANY PURSUANT TO THE FOREGOING PROVISIONS, THE COMPANY HAS BEEN INFORMED THAT
IN THE OPINION OF THE SECURITIES AND EXCHANGE COMMISSION, SUCH INDEMNIFICATION
IS AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
FIVE YEAR SHAREHOLDER RETURN COMPARISON
PERFORMANCE GRAPH
The graph on the following page sets forth for the five-year period ended
June 30, 1999, the cumulative total shareholder return to the Company's
shareholders, as well as the cumulative total return of the Standard & Poor's
500 Stock Index and the cumulative total return of the Standard & Poor's
Companies in Service (Commercial & Consumer) Index, the published industry index
to which the Company is currently assigned by Standard & Poor's. The performance
graph assumes that $100 was invested at the market close on June 30, 1994. The
Company effected its initial public offering of securities in December 1994 and
therefore no public market for the Company's securities existed prior to such
date. The data for the graph was furnished by Standard & Poor's Compustat Custom
Business Unit, a division of The McGraw-Hill Companies. The Company has been
advised that the Standard & Poor's Service (Commercial & Consumer) Group
consists of five corporations, including the Company.
TOTAL RETURN TO SHAREHOLDERS
INDEXED RETURNS
Years Ending 1999
BASE PERIOD
COMPANY/INDEX 6/30/95 6/30/96 6/30/97 6/30/98 6/30/99
- -------------------------------------------------------------------------------
GILMAN + CIOCIA, INC. 100 181.48 61.10 537.04 272.24
SERVICE (COMMERCIAL&CONSUMER) 100 126.11 130.65 136.02 121.22
S&P 500 INDEX 100 126.0 169.72 220.91 271.18
[STOCK PERFORMANCE GRAPH OMITTED]
8
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
the Company's Common Stock, to file with the SEC initial reports of ownership
and reports of changes in ownership of Common Stock. The SEC requires such
officers, directors and greater than 10% stockholders to furnish to the Company
copies of all forms that they file under Section 16(a).
To the Company's knowledge, based solely on review of the copies of such
forms furnished to the Company and representations that no other reports were
required, during the fiscal year ended June 30, 1999, the Company's officers,
directors and greater than 10% stockholders complied with all Section 16(a)
filing requirements.
Certain Relationships and Related Transactions
(a) Transactions With Management
The three principal stockholders, Messrs. Ciocia, Povinelli, and Ms.
Travis, personally guaranteed the repayment of the Company's long-term loan of
$500,000 from the State Bank of Long Island, as well as the seasonal loans in
the form of lines of credit. Such stockholders received no consideration for
such guarantees other than their salaries and other compensation.
On July 1, 1995, the Company, Ralph Esposito, who was then its Chief
Financial Officer, Kathryn Travis, an executive officer of the Company, four
individuals who are relatives of the officers and an employee of the Company
formed ATM Partners, LP (the "Partnership"). Such individuals and their initial
investment are as follows: Madeline Esposito, the wife of the former Chief
Financial Officer - $196,000, Anna Saras, the wife of the present Chief
Operating Officer - $198,000, Thomas Povinelli, Sr., father of the present Chief
Operating Officer - $71,000, Tracy Ciocia, wife of the President - $150,000, and
Jospeh Bonocore, an employee - $10,000. The Company's initial investment was
$348,000 and Kathryn Travis' initial investment was $6,000. At June 30, 1997 the
Company had 41% interest in the Partnership and recognized income of
approximately $73,000 from the Partnership for Fiscal 1997. During Fiscal 1997
the Partnership began liquidating its investments and distributing its assets to
its partners. During Fiscal 1998, the Partnership was dissolved, and the Company
wrote-off a $100,000 loan to the Partnership.
In April 1998, Texas Capital Securities, Inc. ("Texas Capital") and its
assignee, Harbor Financial, Inc. ("Harbor Financial") instituted a suit in the
U.S. District Court in Austin, Texas, demanding issuance, collectively, of
100,000 warrants to purchase the Company's common stock at $5 1/8 per share
(alleged to have been issuable under an investment banking agreement pursuant to
which Texas Capital was to have provided investment banking services to the
Company), as well as attorney's fees and exemplary damages. The Company
believes, among other defenses, that Texas Capital Securities, Inc. defaulted
under such agreement and provided no material services to the Company. The
Company entered into a settlement with Texas Capital and Harbor Financial
whereby the Company agreed to issue 72,250 Common Stock Warrants to purchase the
Company's shares of Common Stock at $5 1/8 per share to Harbor Financial and
12,750 Common Stock Warrants to purchase the Company's shares of Common Stock at
$5 1/8 per share to Woodward, Primm & Hall, and Thomas Povinelli, the Company's
Chief Operating Officer, agreed to transfer 1,875 shares of the Company's Common
Stock to Woodward, Primm & Hall and 10,625 shares of the Company's Common Stock
to Harbor Financial. The Company reimbursed Mr. Povinelli for the market value
of the common stock that he transferred at its market value on the date of
transfer.
(b) Certain Business Relationships
James Ciocia, Thomas Povinelli, and Kathryn Travis each acted, and Gary
Besmer while he was a director of the Company acted, as a Registered
Representative for Royal Alliance and as an authorized agent for insurance
carriers. Compensation from such activities is reflected in the table under the
headline "Election of Directors-Summary Compensation Table."
9
From time to time the Company employs the professional services of Sacher
& Co. P.C. The President of Sacher & Co. P.C. is the Chief Financial Officer of
the Company. The amounts paid to Mr. Sacher in this capacity are set forth above
in "Executive Compensation."
The Company retains Akabas & Cohen as counsel. Seth A. Akabas , a Director
of the Company, is a partner of Akabas & Cohen. In Fiscal 1999 the Company paid
Akabas & Cohen $260,313.01.
(c) Indebtedness With Management
The Company loaned the following individuals the following amounts:
$100,000 and $240,000 to James Ciocia, $100,000 and $240,000 to Thomas
Povinelli, $50,000 and $72,000 to Kathryn Travis, $50,000 to Gary Besmer and
$50,000 to Steven Gilbert. These loans are due in fully amortizing biweekly
installments (including interest at 7% annum) through maturity on June 30, 2000,
with the exception of the $240,000 loans to Messrs. Ciocia and Povinelli and the
$72,000 to loan to Kathryn Travis, which have a maturity date of August 1, 2001.
The Company has also made two loans to Steven Gilbert, a stockholder of
the Company. The first loan is for $150,000, with interest charged at 9% per
annum, due in bi-weekly installments through June 15, 1999 which was repaid. .
The second loan is for $100,000, with interest charged at 9% per annum, due on
October 9, 1999. Repayment of this loan is being negotiated, with interest on
the principal continuing to accrue.
In addition, the Company holds notes receivable from Dominic Ciocia, the
brother of the Company's Chief Executive Officer. The notes receivable is for
$106,000 due on June 19, 2000 with interest at 6% per annum.
ITEM II.
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION
TO CHANGE THE COMPANY'S NAME TO G + C, INC.
On April 20, 1999, the Board of Directors unanimously approved an
amendment to the Company's Certificate of Incorporation (Exhibit A) that will
change the Company's name to G + C, Inc. Many large corporations have adopted
the use of initials for their names. The board of Directors the Company has
determined that G+C, Inc. is a better marketing name than the company's current
name, but will retain name recognition among the Company's customers.
Additionally, the Board of Directors believes that the simplification of the
Company name to G+C, Inc. will make it easier for potential customers to
remember and locate it.
The Board of Directors believes that the adoption of the proposed
amendment is advantageous to the Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE FOR
APPROVAL OF THE AMENDMENT TO CHANGE THE COMPANY'S NAME TO G + C INC.
ITEM III.
PROPOSAL TO APPROVE THE COMPANY'S 2000 EMPLOYEE STOCK PURCHASE PLAN
10
On February 1,2000, the Board of Directors of the Company adopted the
Company's 2000 Employee Stock Purchase Plan (the "Plan"). The Plan will not
become effective, however, unless approved by the holders of a majority of the
shares of Common Stock present or represented and voting thereon at the Meeting.
Exhibit B to this proxy statement contains the text of the Plan.
Under the Plan, the Company will sell shares to participants at a price
equal to 85% of the closing price of the Common Stock on (i) the first business
day of such Plan Period or (ii) the Exercise Date (the last day of the Plan
Period), whichever closing price shall be less. Plan Periods are six month
periods commencing January 1st and July 1st. Such closing price shall be (a) the
closing price of the Common Stock on any national securities exchange on which
the Common Stock is listed, (b) the closing price of the Common Stock on the
Nasdaq National Market System or (c) the average of the closing bid and asked
prices in the over-the-counter-market, whichever is applicable, as published in
The Wall Street Journal. If no sales of Common Stock were made on such a day,
the price of the Common Stock for purposes of clauses (a) and (b) above shall be
the reported price for the next preceding day on which sales were made. The Plan
is intended to qualify as an "employee stock purchase plan" under Section 423 of
the Internal Revenue Code of 1986, as amended (the "Code").
The Board of Directors believes that the Plan will further encourage
broader stock ownership by employees of the Company and thereby provide an
incentive for employees to contribute to the profitability and success of the
Company. In particular, the Board intends that the plan offer a convenient means
for employees who might not otherwise own Common Stock in the Company to
purchase and hold Common Stock, and that the discounted sale feature of the Plan
provides a meaningful inducement to participate. The Board believes that
employees' continuing economic interest, as shareholders, in the performance and
success of the Company will further enhance the entrepreneurial spirit of the
Company, which can greatly contribute to the long-term growth and profitability
of the Company.
Description of the Plan
The Plan will be administered by the Company's Board of Directors (the
"Board") or by a Committee appointed by the Board (the "Committee"). The Board
or the Committee has authority to make rules and regulations for the
administration of the Plan and its interpretation and decisions with regard
thereto shall be final and conclusive. The Board may at any time, and from time
to time, amend this Plan in any respect, except that (a) if the approval of any
such amendment by the shareholders of the Company is required by Section 423 of
the Code, such amendment shall not be effected without such approval, and (b) in
no event may any amendment be made which would cause the Plan to fail to comply
with Section 423 of the Code.
All employees of the Company, including Directors who are employees, and
all employees of any subsidiary of the Company (as defined in Section 424(f) of
the Code) designated by the Board or the Committee from time to time (a
"Designated Subsidiary"), are eligible to participate in any one or more of the
offerings of Options to purchase Common Stock under the Plan provided that: (a)
they are customarily employed by the Company or a Designated Subsidiary for more
than 20 hours a week and for more than five months in a calendar year; and (b)
they have been employed by the Company or a Designated Subsidiary for at least
[six months] prior to enrolling in the Plan; and (c) they are employees of the
Company or a Designated Subsidiary on the first day of the applicable Plan
Period.
No employee may be granted an Option under the Plan if such employee,
immediately after the Option is granted, owns 5% or more of the total combined
voting power or value of the stock of the Company or any subsidiary of the
Company. For purposes of the preceding sentence, the attribution rules of
Section 424(d) of the Code shall apply in determining the stock ownership of an
employee, and all stock that the employee has a contractual right to purchase
shall be treated as stock owned by the employee.
The Company will make one or more offerings ("Offerings") to employees to
purchase stock under this Plan. Offerings will begin each January 1 and July 1,
or the first business day thereafter (the "Offering Commencement Dates"). Each
Offering Commencement Date will begin a six-month period (a "Plan Period")
during which payroll deductions will be made and held for the purchase of Common
Stock at the end of the Plan Period. The Board or the Committee may, at its
discretion, choose a different Plan Period of twelve (12) months or less for
subsequent Offerings.
An employee eligible on the Offering Commencement Date of any Offering may
participate in such Offering by completing and forwarding a payroll deduction
authorization form to the employee's appropriate payroll office at least 14
11
days prior to the applicable Offering Commencement Date. The form will authorize
a regular payroll deduction from the Compensation received by the employee
during the Plan Period. Unless an employee files a new form or withdraws from
the Plan, his deductions and purchases will continue at the same rate for future
Offerings under the Plan as long as the Plan remains in effect. The term
"Compensation" means the amount of money reportable on the employee's Federal
Income Tax Withholding Statement, excluding overtime, shift premium, incentive
or bonus awards, allowances and reimbursements for expenses such as relocation
allowances for travel expenses, income or gains on the exercise of Company stock
options or stock appreciation rights, and similar items, whether or not shown on
the employee's Federal Income Tax Withholding Statement, but including, in the
case of salespersons, registered representatives or agents, commissions to the
extent determined by the Board or the Committee.
The Company will maintain payroll deduction accounts for all participating
employees. With respect to any Offering made under this Plan, an employee may
authorize a payroll deduction in any dollar amount from a minimum of 2% up to a
maximum of 10%, only in a whole integral percentage, or such lesser amount as
the Board or Committee shall determine before the start of each Plan Period, of
the Compensation he or she receives during the Plan Period or such shorter
period during which deductions from payroll are made.
No employee may be granted an Option that permits his rights to purchase
Common Stock under this Plan and any other employee stock purchase plan (as
defined in Section 423(b) of the Code) of the Company and its subsidiaries to
accrue at a rate which exceeds $25,000 of the fair market value of such Common
Stock (determined at the Offering Commencement Date of the Plan Period) for each
calendar year in which the Option is outstanding at any time.
An employee may decrease or discontinue his payroll deduction once during
any Plan Period by filing a new payroll deduction authorization form. However,
an employee may not increase his payroll deduction during a Plan Period. If an
employee elects to discontinue his payroll deductions during a Plan Period, but
does not elect to withdraw his funds, the funds deducted prior to his election
to discontinue will be applied to the purchase of Common Stock on the Exercise
Date (as defined below).
Interest will not be paid, unless required by law, on any employee
accounts, except to the extent that the Board or the Committee, in its sole
discretion, elects to credit employee accounts with interest at such per annum
rate as it may from time to time determine.
An employee may at any time prior to the close of business on the last
business day in a Plan Period and for any reason permanently draw out the
balance accumulated in the employee's account and thereby withdraw from
participation in an Offering. Partial withdrawals are not permitted. The
employee may not begin participation again during the remainder of the Plan
Period. The employee may participate in any subsequent Offering in accordance
with terms and conditions established by the Board or the Committee.
On the Offering Commencement Date of each Plan Period, the Company will
grant to each eligible employee who is then a participant in the Plan an Option
to purchase on the last business day of such Plan Period (the "Exercise Date"),
at the option price, the largest number of whole shares of Common Stock of the
Company as does not exceed the number of shares determined by multiplying $2,083
by the number of full months in the Offering Period and dividing the product by
the closing price (as defined above) for such Plan Period.
Each employee who continues to be a participant in the Plan on the
Exercise Date shall be deemed to have exercised his Option at the option price
on such date and shall be deemed to have purchased from the Company the number
of full shares of Common Stock reserved for the purpose of the Plan that his
accumulated payroll deductions on such date will pay for, but not in excess of
the maximum number determined in the manner set forth above.
Any balance remaining in an employee's payroll deduction account at the
end of a Plan Period will be automatically refunded to the employee without
interest, unless required by law.
Certificates representing shares of Common Stock purchased under the Plan
may be issued only in the name of the employee, in the name of the employee and
another person of legal age as joint tenants with rights of survivorship, or (in
the Company's sole discretion) in the name of a brokerage firm, bank or other
nominee holder designated by the employee. The Company may, in its sole
discretion and in compliance with applicable laws, authorize the use of book
entry registration of
12
shares in lieu of issuing stock certificates.
On April ,2000, the last reported sale price of the Company's Common Stock
on the Nasdaq National Market was ( ) per share.
Federal Income Tax Consequences
The Company believes that under present law the following federal income
tax consequences would generally result under the Plan. Rights to purchase
shares under the Plan are intended to constitute "options" issued pursuant to an
`employee stock option plan" within the meaning of Section 423 of the Code:
1. No taxable income results to the participant upon the grant of right to
purchase or upon the purchase of shares for his or her account under the Plan
(although the amount of a participant's payroll contributions under the Plan
will be taxable as ordinary income to the participant).
2. If the participant disposes of shares less than two years after the
first day of an offering period with respect to which he or she purchased such
shares, then at the time of disposition the participant will recognize as
ordinary income an amount equal to the excess of the fair market value of the
shares on the date of purchase over the amount of the participant's payroll
contributions used to purchase the shares.
3. If the participant holds the shares for at least two years after the
first day of an offering period with respect to which he or she purchased such
shares, then at the time of the disposition the participant will recognize as
ordinary income an amount equal to the lesser of (i) the excess of the fair
market value of the shares on the first day of the offering period over the
option price on that date, and (ii) the excess of the fair market value of the
shares on the date of disposition over the amount of the participant's payroll
contributions used to purchase such shares.
4. In addition, the participant will recognize a long-term or short-term
capital gain or loss, as the case may be, in an amount equal to the difference
between the amount realized upon any sale of the Common Stock minus the cost
(i.e., the purchase price plus the amount, if any, taxed to the participant as
ordinary income, as noted in (3) above).
5. If the statutory holding period described in (3) above is satisfied,
the Company will not receive any deduction for federal income tax purposes with
respect to any discount in the sale price of Common Stock or matching
contribution applicable to such participant. If such statutory holding period is
not satisfied, the Company generally should be entitled to deduction in an
amount equal to the amount taxed to the participant as ordinary income.
The foregoing provides only a general description of the application of
federal income tax laws to the Plan. The summary does not address the effects of
other federal taxes or taxes imposed under state, local or foreign tax laws.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE FOR
APPROVAL OF THE 2000 EMPLOYEE STOCK PURCHASE PLAN.
ITEM IV.
PROPOSAL TO RATIFY THE REAPPOINTMENT OF ARTHUR ANDERSEN LLP
AS INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Arthur Andersen LLP to
serve as independent certified public accountants for the Company for the fiscal
year ending June 30, 2000. The firm of Arthur Andersen LLP, independent
certified public accountants, has been the Company's auditors since 1997.
Although the Board of Directors is not required to submit its selection of
auditors for ratification at the Meeting the Board of Directors is submitting
such selection to ascertain the views of stockholders. If the selection is not
ratified, the Board of Directors will reconsider its selection. The Board also
reserves the right to make any change in auditors at any time that it deems
advisable or necessary. One or more
13
representatives of Arthur Andersen LLP are expected to attend the Meeting and
will be given an opportunity to make a statement and are expected to be
available to answer questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE FOR
RATIFICATION OF THE REAPPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS FOR THE COMPANY FOR THE FISCAL YEAR ENDING JUNE 30,
2000.
OTHER BUSINESS
The Board of Directors of the Company does not know of any other matters
that may be brought before the Meeting. However, if any such other matters are
properly presented for action, it is the intention of the persons named in the
accompanying form of Proxy to vote the shares represented thereby in accordance
with their judgment on such matters.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 promulgated under the Securities Exchange Act of
1934, as amended, a stockholder intending to submit a proposal to be presented
at the 2001 Annual Meeting of Stockholders must deliver a proposal in writing to
the Company's principal executive offices on or before February 1, 2001.
By order of the Board of Directors
Kathryn Travis
Secretary
14
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
GILMAN & CIOCIA, INC.
(Under Section 1309 of the General Corporation Law)
The undersigned, being the respective President and Secretary of Gilman &
Ciocia, Inc., a Delaware corporation (the "Corporation"), pursuant to Section
1309 of the General Corporation Law of the State of Delaware, do hereby certify
that:
1. The name of the Corporation is Gilman + Ciocia, Inc.
2. The Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on September 3, 1993.
3. The Certificate of Incorporation of the Corporation is amended as set
forth below to change the Company's name to "G+ + C, Inc." in Article FIRST.
FIRST: Name. The name of the corporation shall be G + C, Inc. (hereinafter
referred to as the "Corporation").
4. This Certificate of Amendment to the Certificate of Incorporation of
the Corporation was authorized by the Board of Directors of the Corporation
acting by unanimous written consent in lieu of a meeting dated April 20, 1999,
1999 and by the stockholders of the Corporation at a meeting on May 5,2000.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed on its behalf by its President and its Secretary, and each of such
officers has subscribed this Certificate and hereby affirms this Certificate to
be true under the penalties of perjury.
GILMAN & CIOCIA, INC.
By: __________________________
James Ciocia, President
By: __________________________
Kathryn Travis, Secretary
EXHIBIT B
GILMAN & CIOCIA, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
The purpose of this Plan is to provide eligible employees of Gilman &
Ciocia, Inc. (the "Company") and certain of its subsidiaries with opportunities
to purchase shares of the Company's common stock, $.01 par value per share (the
"Common Stock"). 1,000,000 shares of Common Stock in the aggregate have been
reserved for this purpose. This Plan is intended to qualify as an "employee
stock purchase plan" as defined in Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"), and the regulations promulgated thereunder, and
shall be interpreted consistent therewith.
1. Administration. The Plan will be administered by the Company's Board of
Directors (the "Board") or by a Committee appointed by the Board (the
"Committee"). The Board or the Committee has authority to make rules and
regulations for the administration of the Plan and its interpretation and
decisions with regard thereto shall be final and conclusive.
2. Eligibility. All employees of the Company, including Directors who are
employees, and all employees of any subsidiary of the Company (as defined in
Section 424(f) of the Code) designated by the Board or the Committee from time
to time (a "Designated Subsidiary"), are eligible to participate in any one or
more of the offerings of Options (as defined in Section 9) to purchase Common
Stock under the Plan provided that:
(a) they are customarily employed by the Company or a Designated
Subsidiary for more than 20 hours a week and for more than five months in
a calendar year; and
(b) they have been employed by the Company or a Designated
Subsidiary for at least [three months] prior to enrolling in the Plan; and
(c) they are employees of the Company or a Designated Subsidiary on
the first day of the applicable Plan Period (as defined below).
No employee may be granted an option hereunder if such employee,
immediately after the option is granted, owns 5% or more of the total combined
voting power or value of the stock of the Company or any subsidiary of the
Company. For purposes of the preceding sentence, the attribution rules of
Section 424(d) of the Code shall apply in determining the stock ownership of an
employee, and all stock that the employee has a contractual right to purchase
shall be treated as stock owned by the employee.
3. Offerings. The Company will make one or more offerings ("Offerings") to
employees to purchase stock under this Plan. Offerings will begin each [January
1] and [July 1], or the first business day thereafter (the "Offering
Commencement Dates"). Each Offering Commencement Date will begin a six-month
period (a "Plan Period") during which payroll deductions will be made and held
for the purchase of Common Stock at the end of the Plan Period. The Board or the
Committee may, at its discretion, choose a different Plan Period of twelve (12)
months or less for
subsequent Offerings. The first Plan Period during which payroll deductions will
be accumulated under the Plan shall commence on July 1, 2000 and shall end on
December 31, 2000.
4. Participation. An employee eligible on the Offering Commencement Date
of any Offering may participate in such Offering by completing and forwarding a
payroll deduction authorization form to the employee*s appropriate payroll
office at least 14 days prior to the applicable Offering Commencement Date. The
form will authorize a regular payroll deduction from the Compensation received
by the employee during the Plan Period. Unless an employee files a new form or
withdraws from the Plan, his deductions and purchases will continue at the same
rate for future Offerings under the Plan as long as the Plan remains in effect.
The term "Compensation" means the amount of money reportable on the employee*s
Federal Income Tax Withholding Statement, excluding overtime, shift premium,
incentive or bonus awards, allowances and reimbursements for expenses such as
relocation allowances for travel expenses, income or gains on the exercise of
Company stock options or stock appreciation rights, and similar items, whether
or not shown on the employee*s Federal Income Tax Withholding Statement, but
including, in the case of salespersons, registered representatives or agents,
commissions to the extent determined by the Board or the Committee.
5. Deductions. The Company will maintain payroll deduction accounts for
all participating employees. With respect to any Offering made under this Plan,
an employee may authorize a payroll deduction in any dollar amount from a
minimum of 2% up to a maximum of [10%], in only a whole, integral percentage, or
such lesser amount as the Board or Committee shall determine before the start of
each Plan Period, of the Compensation he or she receives during the Plan Period
or such shorter period during which deductions from payroll are made.
No employee may be granted an Option (as defined in Section 9) that
permits his rights to purchase Common Stock under this Plan and any other
employee stock purchase plan (as defined in Section 423(b) of the Code) of the
Company and its subsidiaries to accrue at a rate which exceeds $25,000 of the
fair market value of such Common Stock (determined at the Offering Commencement
Date of the Plan Period) for each calendar year in which the Option is
outstanding at any time.
6. Deduction Changes. An employee may decrease or discontinue his payroll
deduction once during any Plan Period, by filing a new payroll deduction
authorization form. However, an employee may not increase his payroll deduction
during a Plan Period. If an employee elects to discontinue his payroll
deductions during a Plan Period, but does not elect to withdraw his funds
pursuant to Section 8 hereof, funds deducted prior to his election to
discontinue will be applied to the purchase of Common Stock on the Exercise Date
(as defined below).
7. Interest. Interest will not be paid, unless required by law, on any
employee accounts, except to the extent that the Board or the Committee, in its
sole discretion, elects to credit employee accounts with interest at such per
annum rate as it may from time to time determine.
8. Withdrawal of Funds. An employee may at any time prior to the close of
business on the last business day in a Plan Period and for any reason
permanently draw out the balance accumulated in the employee*s account and
thereby withdraw from participation in an Offering. Partial withdrawals are not
permitted. The employee may not begin participation again during the remainder
of the Plan Period. The employee may participate in any subsequent Offering in
accordance with terms and conditions established by the Board or the Committee.
9. Purchase of Shares. On the Offering Commencement Date of each Plan
Period, the Company will grant to each eligible employee who is then a
participant in the Plan an option ("Option") to purchase on the last business
day of such Plan Period (the "Exercise Date"), at the Option Price hereinafter
provided for, the largest number of whole shares of Common Stock of the Company
as does not exceed the number of shares determined by multiplying $2,083 by the
number of full months in the Offering Period and dividing the product by the
closing price (as defined below) on the Offering Commencement Date of such Plan
Period.
The purchase price for each share purchased will be 85% of the closing
price of the Common Stock on (i) the first business day of such Plan Period or
(ii) the Exercise Date, whichever closing price shall be less. Such closing
price shall be (a) the closing price on any national securities exchange on
which the Common Stock is listed, (b) the closing price of the Common Stock on
the Nasdaq National Market or (c) the average of the closing bid and asked
prices in the over-the-counter-market, whichever is applicable, as published in
The Wall Street Journal. If no sales of Common Stock were made on such a day,
the price of the Common Stock for purposes of clauses (a) and (b) above shall be
the reported price for the next preceding day on which sales were made.
Each employee who continues to be a participant in the Plan on the
Exercise Date shall be deemed to have exercised his Option at the Option Price
on such date and shall be deemed to have purchased from the Company the number
of full shares of Common Stock reserved for the purpose of the Plan that his
accumulated payroll deductions on such date will pay for, but not in excess of
the maximum number determined in the manner set forth above.
Any balance remaining in an employee*s payroll deduction account at the
end of a Plan Period will be automatically refunded to the employee without
interest, unless required by law.
10. Issuance of Certificates. Certificates representing shares of Common
Stock purchased under the Plan may be issued only in the name of the employee,
in the name of the employee and another person of legal age as joint tenants
with rights of survivorship, or (in the Company*s sole discretion) in the name
of a brokerage firm, bank or other nominee holder designated by the employee.
The Company may, in its sole discretion and in compliance with applicable laws,
authorize the use of book entry registration of shares in lieu of issuing stock
certificates.
11. Rights on Retirement, Death or Termination of Employment. In the event
of a participating employee*s retirement, death or termination of employment
prior to the last business day of a Plan Period, no payroll deduction shall be
taken from any pay due and owing to an employee and the balance in the
employee*s account shall be paid to the employee or, in the event of the
employee*s death, (a) to a beneficiary previously designated in a revocable
notice signed by the employee (with any spousal consent required under state
law) or (b) in the absence of such a designated beneficiary, to the executor or
administrator of the employee*s estate or (c) if no such executor or
administrator has been appointed to the knowledge of the Company, to such other
person(s) as the Company may, in its discretion, designate. If, prior to the
last business day of the Plan Period, the Designated Subsidiary by which an
employee is employed shall cease to be a subsidiary of the Company, or if the
employee is transferred to a subsidiary of the Company that is not a Designated
Subsidiary, the employee shall be deemed to have terminated employment for the
purposes of this Plan.
Eligible employment shall be treated as continuing intact while a
participant is on military leave, sick leave or other bon fide leave of absence,
for up to 90 days, or, if such leave is longer than 90 days, for so long as the
participant's right to re-employment is guaranteed by statute or by written
contract.
12. Optionees Not Stockholders. Neither the granting of an Option to an
employee nor the deductions from his pay shall constitute such employee a
stockholder of the shares of Common Stock covered by an Option under this Plan
until such shares have been purchased by and issued to him.
13. Rights Not Transferable. Rights under this Plan are not transferable
by a participating employee other than by will or the laws of descent and
distribution, and are exercisable during the employee*s lifetime only by the
employee.
14. Application of Funds. All funds received or held by the Company under
this Plan may be combined with other corporate funds and may be used for any
corporate purpose.
15. Adjustment in Case of Changes Affecting Common Stock. In the event of
a subdivision of outstanding shares of Common Stock, or the payment of a
dividend in Common Stock, the number of shares approved for this Plan, and the
share limitation set forth in Section 9, shall be increased proportionately, and
such other adjustment shall be made as may be deemed equitable by the Board or
the Committee. In the event of any other change affecting the Common Stock, such
adjustment shall be made as may be deemed equitable by the Board or the
Committee to give proper effect to such event.
16. Merger. If the Company shall at any time merge or consolidate with
another corporation and the holders of the capital stock of the Company
immediately prior to such merger or consolidation continue to hold at least 80%
by voting power of the capital stock of the surviving corporation ("Continuity
of Control"), the holder of each Option then outstanding will thereafter be
entitled to receive at the next Exercise Date upon the exercise of such Option
for each share as to which such Option shall be exercised the securities or
property which a holder of one share of the Common Stock was entitled to upon
and at the time of such merger or consolidation, and the Board or the Committee
shall take such steps in connection with such merger or consolidation as the
Board or the Committee shall deem necessary to assure that the provisions of
Section 16 shall thereafter be applicable, as nearly as reasonably may be, in
relation to the said securities or property as to which such holder of such
Option might thereafter be entitled to receive thereunder.
In the event of a merger or consolidation of the Company with or into
another corporation which does not involve Continuity of Control, or of a sale
of all or substantially all of the assets of the Company while unexercised
Options remain outstanding under the Plan, (a) subject to the provisions of
clauses (b) and (c), after the effective date of such transaction, each holder
of an outstanding Option shall be entitled, upon exercise of such Option, to
receive in lieu of shares of Common Stock, shares of such stock or other
securities as the holders of shares of Common Stock received pursuant to the
terms of such transaction; or (b) all outstanding Options may be canceled by the
Board or the Committee as of a date prior to the effective date of any such
transaction and all payroll deductions shall be paid out to the participating
employees; or (c) all outstanding Options may be canceled by the Board or the
Committee as of the effective date of any such transaction, provided that notice
of such cancellation shall be given to each holder of an Option, and each holder
of an Option shall have the right to exercise such Option in full based on
payroll deductions then credited to his account as of a date determined by the
Board or the Committee,
which date shall not be less than ten (10) days preceding the effective date of
such transaction.
17. Amendment of the Plan. The Board may at any time, and from time to
time, amend this Plan in any respect, except that (a) if the approval of any
such amendment by the shareholders of the Company is required by Section 423 of
the Code, such amendment shall not be effected without such approval, and (b) in
no event may any amendment be made which would cause the Plan to fail to comply
with Section 423 of the Code.
18. Insufficient Shares. In the event that the total number of shares of
Common Stock specified in elections to be purchased under any Offering plus the
number of shares purchased under previous Offerings under this Plan exceeds the
maximum number of shares issuable under this Plan, the Board or the Committee
will allot the shares then available on a pro rata basis.
19. Termination of the Plan. This Plan may be terminated at any time by
the Board. Upon termination of this Plan all amounts in the accounts of
participating employees shall be promptly refunded.
20. Compliance with Legal and Other Regulations. The Plan, granting and
exercising of the Options hereunder, and the other obligations of the Company
under the Plan will be subject to all applicable federal and sate laws, rules
and regulations, and to such approvals by any regulatory or governmental agency
as may be required. The Company may, in its discretion, postpone the issuance or
delivery of Common Stock upon exercise of the Options until completion of such
registration or qualification of such Common Stock or other required action
under any federal or state law, rule or regulation or listing or other required
action with respect to any automated quotation system or stock exchange upon
which the Common Stock or other Company securities are designated or listed, or
compliance with any other contractual obligation of the Company, as the Company
may consider appropriate, and may require any participating employee to make
such representations and furnish such information as it may consider appropriate
in connection with the issuance or delivery of the Common Stock in compliance
with applicable laws, rules, and regulations, designation or listing
requirements, or other contractual obligations.
21. Compliance with Section 423. It is the intent of the Company that this
Plan comply in all respects with applicable requirements of Section 423 of the
Code and regulations thereunder. Accordingly, if any provision of this Plan does
not comply with such requirements, such provision will be construed or deemed
amended to the extent necessary to conform to such requirements.
22. Withholding of Additional Income Taxes. By electing to participate in
the Plan, each participant acknowledges that the Company and its participating
subsidiaries are required to withhold taxes with respect to the amounts deducted
from the participant's compensation and accumulated for the benefit of the
participant under the Plan, and each participant agrees that the Company and its
subsidiaries may deduct additional amounts from the participant's compensation,
when amounts are added to the participant's account to be used to purchase
Common stock or refunded, in order to satisfy such withholding obligations. Each
participant further acknowledges that, when Common Stock is purchased under the
Plan, the Company and its participating subsidiaries may be required to withhold
taxes with respect to all or a portion of the difference between the fair market
value of the Common Stock purchased and its purchase price, and each participant
agrees that such taxes may be withheld from compensation otherwise payable to
such participant. It is intended that tax withholding will be accomplished in
such a manner that the full amount of payroll deductions elected by the
participant under Section 5 will be used to
purchase Common Stock. However, if amounts sufficient to satisfy applicable tax
withholding obligations have not been withheld from compensation otherwise
payable to any participant, then, notwithstanding any other provision of the
Plan, the Company may withhold such taxes from the participant's accumulated
payroll deductions and apply the net amount to the purchase of Common Stock,
unless the participant pays to the Company, prior to the exercise date, an
amount sufficient to satisfy such withholding obligations. Each participant
further acknowledges that the Company and its participating subsidiaries may be
required to withhold taxes in connection with the disposition of Common Stock
acquired under the Plan and agrees that the Company or any participating
subsidiary may take whatever action it considers appropriate to satisfy such
withholding requirements, including deducting from compensation otherwise
payable to such participant an amount sufficient to satisfy such withholding
requirements or conditioning any disposition of Common Stock by the participant
upon the payment to the Company or such subsidiary of an amount sufficient to
satisfy such withholding requirements.
23. Governing Law. The Plan shall be governed by Delaware law except to
the extent that such law is preempted by federal law.
24. Issuance of Shares. Shares may be issued upon exercise of an Option
from authorized but unissued Common Stock, from shares held in the treasury of
the Company, or from any other proper source.
25. Notification upon Sale of Shares. Each employee agrees, by entering
the Plan, to promptly give to the Company notice of any disposition of shares
purchased under the Plan where such disposition occurs within two years after
the date of grant of the Option pursuant to which such shares were purchased.
Each participant further agrees by enrolling in the Plan to provide
information about such transfer as may be requested by the Company (or any
subsidiary corporation, if applicable) in order to assist it in complying with
applicable tax laws. Such dispositions generally are treated as "disqualifying
dispositions" under Sections 421 and 424 of the Code, which have certain tax
consequences to participants and to the Company (and its participating
subsidiaries, if applicable).
26. Effective Date and Approval of Shareholders. The Plan shall take
effect on ________, 2000 subject to approval by the shareholders of the Company
as required by Section 423 of the Code, which approval must occur within twelve
months of the adoption of the Plan by the Board.
GILMAN + CIOCIA, INC.
ANNUAL MEETING MAY 5, 2000
Nominees for Class B Director:
Seth Akabas
Michael Ryan
PROXY VOTING INSTRUCTIONS Please mark choices in blue or black ink.
The Board of Directors unanimously recommends a vote FOR the nominees and
FOR proposals (2), (3) and (4).
FOR WITHHOLD
1. Election of Directors. (see list above)
--- ---
FOR ALL EXCEPT
To withhold authority for an individual nominee,
check this space and write the nominee's
name in the following space: ---
- ---------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to amend the Company's Certificate of
Incorporation to change the Company's name to
G+C, Inc. --- --- ---
3. Proposal to approve the Company's 2000 Employee
Stock Purchase Plan
--- --- ---
FOR AGAINST ABSTAIN
4. Proposal to ratify the reappointment of Arthur
Andersen LLP as the Company's independent
certified public accountants for the fiscal --- --- ---
year ending June 30, 2000.
FOR AGAINST ABSTAIN
5. To transact such other business as may properly come
before the Annual Meeting and any adjournments or
postponements thereof. --- --- ---
Your shares will be voted as directed herein. If signed and no direction is
given for any item, it will be voted as recommended above.
Please return your executed form as soon as possible Check this space only if
to Corporate Stock Transfer, Republic Plaza, you wish to attend and
370 17th St., Suite 2350, Denver, CO 80202-4614 vote at the meeting. ---
If securities are jointly owned, each should sign.
___________________________________________
Signature Date
___________________________________________
Signature of Joint Owner Date
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. BY RETURNING
YOUR VOTING INSTRUCTIONS PROMPTLY, YOU CAN AVOID THE INCONVENIENCE OF RECEIVING
FOLLOW-UP MAILINGS PLUS HELP TO AVOID THE EXPENSES ASSOCIATED WITH SUCH
ADDITIONAL MAILINGS.