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HELMSTAR GROUP, INC.
2 World Trade Center
Suite 2112
New York, New York 10048
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, JUNE 3, 1999
The Annual Meeting of Stockholders of Helmstar Group, Inc. (the "Company") will
be held at the offices of Richard A. Eisner & Company, LLP, 575 Madison Avenue,
8th Floor, New York, New York 10022, on Thursday, June 3, 1999 at 3:00 p.m. for
the following purposes:
1. To elect two (2) Directors to serve for a term of three (3) years;
2. To approve and adopt the 1999 Stock Option Plan; and
3. To ratify the selection of independent public accountants for 1999;
and
4. To transact such other business as may properly come before the
meeting and any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on April 16, 1999 as the
record date for determining the stockholders entitled to notice of and to vote
at the Annual Meeting and any adjournment or postponement thereof.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, IT IS IMPORTANT THAT
YOU PROMPTLY COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY. IF YOU ATTEND THE
MEETING YOU MAY WITHDRAW YOUR PROXY AND VOTE IN PERSON IF YOU DESIRE.
By Order of the Board of Directors
/s/ George W.Benoit
-------------------
George W.Benoit
Chairman
New York, New York
April 29, 1999
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HELMSTAR GROUP, INC.
2 World Trade Center
Suite 2112
New York, New York 10048
-------------------
PROXY STATEMENT
-------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Helmstar Group, Inc., a Delaware corporation (the
"Company"), of proxies for use in voting at the Annual Meeting of Stockholders
to be held at the offices of Richard A. Eisner & Company, LLP, 575 Madison
Avenue, 8th Floor, New York, New York 10022, on Thursday, June 3, 1999 at 3:00
p.m., and any adjournment or postponement thereof, for the purposes set forth in
the attached Notice of Annual Meeting. The approximate date on which this Proxy
Statement and the accompanying proxy will be mailed to stockholders is April 29,
1999. The Company's Annual Report, including financial statements, is being
mailed to stockholders along with this Proxy Statement. The shares represented
by the proxies received, properly dated and executed and not revoked, will be
voted at the Annual Meeting. A proxy may be revoked in writing at any time
before it is exercised by filing with the Secretary of the Company at its
principal office, 2 World Trade Center, Suite 2112, New York, New York 10048, an
instrument of revocation or a duly executed proxy bearing a later date. A proxy
may also be revoked by attendance at the meeting and election to vote in person.
On the matters coming before the Annual Meeting, shares for which proxies
are received will be voted in accordance with choices specified by the
stockholders by means of the ballot on the proxy. If no choice is specified,
each share will be voted FOR the election of the two (2) nominees for Director
listed in this Proxy Statement and FOR approval of Proposal 2 and Proposal 3
described in the attached notice and in this Proxy Statement.
The close of business on April 16, 1999 has been fixed as the record date
for determining the stockholders entitled to notice of and to vote at the Annual
Meeting and any adjournment or postponement thereof. As of the close of business
on such date, the Company had 5,435,673 shares of Common Stock, $.10 par value,
outstanding. Each outstanding share of Common Stock is entitled to one vote on
all matters submitted for a vote of stockholders at the Annual Meeting.
A majority of the outstanding shares of Common Stock of the Company will
constitute a quorum for the transaction of business at the Annual Meeting, but
if a quorum is not present, in person or by proxy, the meeting may be adjourned
from time to time until a quorum is obtained.
The expense of printing and mailing proxy materials will be borne by the
Company. In addition to the solicitation of proxies by mail, solicitation may be
made by certain Directors, officers and other employees of the Company by
personal interview, telephone or telegraph. No additional compensation will be
paid for such solicitation. Copies of solicitation material will be furnished to
brokerage houses, fiduciaries and custodians to forward to beneficial owners of
Common Stock held in their names. The Company will reimburse those persons for
their reasonable expenses in forwarding solicitation material to such beneficial
owners.
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MANAGEMENT
BOARD OF DIRECTORS
Under the Company's By-Laws, the Board of Directors is divided into three
classes. Members of each class are elected to serve for a term of three years
and until their successors are elected or until their resignation, removal or
ineligibility. Roger J. Burns retired as a Director and officer of the Company
on February 17, 1999.
During 1998, the Board had 4 meetings.
The Company's By-Laws provide for an Executive Committee consisting of the
Chairman of the Board and not less than two other Directors to exercise the
powers of the Board during the intervals between meetings of the Board. During
1998, the Executive Committee consisting of Messrs. George W. Benoit, Roger J.
Burns and Charles W. Currie had 6 meetings.
The Board has an Audit Committee consisting of Directors who are not
employees of the Company. This committee discusses audit and financial reporting
matters with both management and the Company's independent public accountants.
To ensure independence, the independent public accountants may meet with the
Audit Committee with or without the presence of management representatives.
During 1998, the Audit Committee consisting of Messrs. Joseph J. Anastasi,
Charles W. Currie, David W. Dube and James J. Murtha had 1 meeting.
The Board has a Compensation Committee for the purpose of reviewing the
compensation of officers and employees of the Company and making recommendations
to the Board with respect thereto. During 1998, the Compensation Committee
consisting of Messrs. Benoit, Burns, Currie and Dube had 2 meetings.
The Board has a Nominating Committee to propose nominees for election to
the Board. During 1998, the Nominating Committee consisting of Messrs. Benoit,
Burns, Currie and Dube had 1 meeting. The Nominating Committee will consider
suggestions for potential nominees submitted by stockholders if mailed to the
Chairman of the Board.
The Board has an Incentive Compensation Committee for the purpose of
administering and making incentive compensation awards under the Company's 1990
Incentive Compensation Plan. During 1998, the Incentive Compensation Committee
consisting of Messrs. Anastasi, Currie, Dube and Murtha had 1 meeting.
Each Director attended at least 75% of the aggregate of the total number of
Board meetings and meetings of all committees of the Board on which he serves,
except Mr. Murtha.
ELECTION OF DIRECTORS
Two Directors whose terms expire at the Annual Meeting have been nominated
for reelection for a term of three years. They are Joseph G. Anastasi and James
J. Murtha.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THESE NOMINEES AND IT IS
INTENDED THAT THE PROXIES RECEIVED WILL BE VOTED "FOR" THESE NOMINEES UNLESS
OTHERWISE PROVIDED THEREIN. THE BOARD KNOWS OF NO REASON WHY ANY OF THESE
NOMINEES WILL BE UNABLE TO SERVE, BUT, IN SUCH EVENT, THE PROXIES RECEIVED WILL
BE VOTED FOR SUCH SUBSTITUTE NOMINEE AS THE BOARD MAY RECOMMEND.
DIRECTORS AND EXECUTIVE OFFICERS
There are no family relationships among any of the Directors or executive
officers of the Company.
The Company does not pay Directors who are employees of the Company any
fees for serving as Directors, but reimburses them for their out-of-pocket
expenses in connection with such duties. The Company pays Directors who are not
employees of the Company an annual retainer of $12,000 plus expenses incurred
for attending meetings of the Board, Annual Stockholders Meetings and for each
meeting of a committee of the Board not held in conjunction with a Board
meeting.
NOMINEES FOR DIRECTOR FOR A 3 YEAR TERM
JOSEPH G. ANASTASI, 62, has been a Director of the Company since September
1986. Since 1960, Mr. Anastasi has been owner and president of Montgomery Realty
Company, Inc., a firm specializing in commercial sales, development consulting
and property management. He was president of The Anastasi Stephens Group, Inc.
which was engaged in real estate development and was the general partner of
Muirkirk Manor Associates Limited Partnership. Muirkirk Manor filed bankruptcy
in December 1994 and it was discharged in December 1995. The Anastasi Stephens
Group, Inc. has been inactive since that time.
JAMES J. MURTHA, 50, has been a Director of the Company since December
1986. Since June 1997, Mr. Murtha has been self-employed as a real estate
investor. From August 1994 to June 1997, Mr. Murtha held the position of
President of Kenwood Capital, L.P. He was the President of Kenwood Holdings,
Inc. from February 1992 through August 1994. Both companies focus on real estate
investments. In June 1997, Mr. Murtha filed a petition for personal bankruptcy,
which was discharged in August 1998.
DIRECTORS CONTINUING IN OFFICE
GEORGE W. BENOIT, 62, has been President of the Company and a Director
since 1971. His current term as a Director expires in 2001. In addition, Mr.
Benoit has been Chairman of the Board of Directors since 1972.
CHARLES W. CURRIE, 56, has been a Director of the Company since 1986. His
current term as a Director expires in 2000. Mr. Currie has been a partner with
Asset Management Services LLC, a company that provides marketing services to
investment managers, since August 1996. From June 1993 to July 1996, he was a
Senior Vice President with Pryor, McClendon, Counts &Co., Inc., investment
bankers. From July 1990 to June 1993, Mr. Currie was a Vice President with
Reinoso &Co., Inc., a municipal bond dealer.
DAVID W. DUBE, 43, has been a Director of the Company since June 1996. His
current term as a Director expires in 2001. Mr. Dube is presently Senior Vice
President and Chief Financial Officer of FABCapital Corp., a merchant banking
and securities investment firm, and has served in various capacities since
September 1997. Mr.Dube was President and Chief Executive Officer of Optimax
Industries, Inc., a publicly-traded company with operating interests in the
horticultural, decorative giftware and truck parts accessories industries, from
July 1996 to September 1997. FromFebruary 1991 to June 1996, Mr. Dube was the
principal of Dube &Company, a financial consulting firm. Mr.Dube serves on the
Boards of Directors of publicly-traded Kings Road Entertainment, Inc., New World
Wine Communications, Ltd., and SafeScience, Inc. and privately-held Meyers
Capital Management, LLC, a registered investment advisory firm. Mr. Dube is a
certified public accountant in the state of New Hampshire and holds general and
principal securities licenses.
-3-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information, as of March 31, 1999,
concerning the beneficial ownership of the Company's Common Stock by (i) each
Director of the Company and (ii) all Directors and executive officers of the
Company as a group.
Beneficial Ownership
--------------------
Number of
Name Shares Percent
---- ------ -------
George W. Benoit 1,605,420 29.53%
Charles W. Currie(1) 300,280 5.52
Joseph G. Anastasi 2,200 (2)
David W.Dube 4,000 (2)
James J. Murtha 4,000 (2)
All Directors and executive officers as a group (5 persons) 1,915,900 35.25%
- ----------
(1) Includes 200 shares of Common Stock owned by Mr. Currie's wife as to which
Mr. Currie disclaims any beneficial ownership.
(2) Less than 1 percent.
Officers, Directors and persons who own more than ten percent of a
registered class of the Company's equity securities are required by Section
16(a) of the Exchange Act to file reports of ownership and changes in ownership
with the Commission. Officers, Directors and greater than ten-percent
shareholders are required by the Commission's rules to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on review of the copies of such forms furnished to the
Company, or representations that no Forms 5 were required, the Company believes
that all Section 16(a) filing requirements were complied with, except that
Charles W. Currie, a Director of the Company, failed to report one purchase and
one sale in a timely manner, and David W. Dube, a Director of the Company,
failed to report one sale in a timely manner.
-4-
The following table sets forth information, as of March 31, 1999,
concerning the beneficial ownership of the Company's Common Stock by each
stockholder known by the Company to own more than 5% of the outstanding Common
Stock.
Beneficial Ownership
--------------------
Number of
Name and Address Shares Percent
---------------- ------ -------
George W. Benoit (1) 1,605,420 29.53%
Helmstar Group, Inc.
2 World Trade Center
New York, NY 10048
Kevin J.Benoit (1)(2) 278,300 5.12
Helmstar Group, Inc.
2 World Trade Center
New York, NY 10048
Barry W. Blank (3) 359,800 6.62
P.O. Box 32056
Phoenix, AZ 85064
Charles W. Currie (4) 300,280 5.52
Asset Management Services LLC
126 East 56 Street
New York, NY 10022
(1) George W.Benoit is the father of Kevin J. Benoit.
(2) Includes 15,000 shares held in the Kevin J. Benoit 1998 Family Trust, of
which Kevin J. Benoit is the Trustee. Mr. Benoit disclaims any beneficial
ownership of such shares.
(3) This information has been confirmed to the Company by Mr. Blank on April
1, 1999.
(4) Includes 200 shares of Common Stock owned by Mr. Currie's wife as to which
Mr. Currie disclaims any beneficial ownership.
-5-
EXECUTIVE OFFICER COMPENSATION
The following table shows, for the fiscal years ending December 31, 1998,
1997 and 1996, the cash and other compensation paid or accrued to the named
executives for services in all capacities.
SUMMARY COMPENSATION TABLE
Annual Compensation
-------------------
Name and All Other
Principal Position Year Salary Bonus Compensation (a)
------------------ ---- ------ ----- ----------------
George W. Benoit 1998 $201,414 $ 50,000 $36,344
Chairman of the Board 1997 $201,830 200,000 36,576
of Directors, President 1996 203,376 36,774
Roger J. Burns (b) 1998 85,567 25,000
Director, First Vice President, 1997 85,212 35,000
Secretary,Treasurer and 1996 93,397
Chief Financial Officer
Thomas J. Ferrara 1998 62,307
President, CareerEngine, Inc.,
a wholly-owned subsidiary of
Helmstar Group, Inc.
- ----------
(a) Company's share of insurance premium on Split Dollar Life Insurance
Agreement.
(b) Roger J. Burns retired as a Director and officer of the Company on
February 17, 1999.
Executive compensation can vary widely from year to year. The Company may
pay discretionary bonuses to its salaried employees. Bonuses are determined by
the Compensation Committee of the Board of Directors.
COMPENSATION PURSUANT TO PLANS
401(k) Cash or Deferred Compensation Plan. The Company maintains a
tax-qualified 401(k) cash or deferred compensation plan that covers all
employees who have completed one year of service and attained age 21.
Participants are permitted, within the limitations imposed by the Internal
Revenue Code, to make pre-tax contributions to the plan pursuant to salary
reduction agreements. The Company may, in its discretion on an annual basis,
make additional contributions. The contributions of the participants and the
Company are held in separate accounts. Participants are always fully vested in
both accounts.
-6-
1990 Incentive Compensation Plan. The stockholders approved the Company's
1990 Incentive Compensation Plan (the "Plan") on June 7, 1990. On June 5, 1996,
the Plan was amended to increase the number of shares available for grant (the
"Amended Plan"). Pursuant to the Amended Plan, 750,000 shares of the Company's
Common Stock have been reserved for issuance to officers and other key employees
as incentive or nonqualified stock options, stock appreciation rights ("SARs")
or restricted stock awards. Incentive stock options must have an exercise price
per share equal to no less than the fair market value of the Company's Common
Stock on the date of grant (110% in the case of a 10% stockholder). Incentive
stock options may not be exercised after 10 years from the date of grant (five
years in the case of a 10% stockholder). Nonqualified stock options cannot be
exercised prior to one year or after ten years from the date of grant.
Concurrently with nonqualified options granted, participants may also receive
SARs. SARs will provide participants with cash equal to the difference between
the fair market value of the number of shares for which the SAR award is
exercised and the exercise price of nonqualified stock options on the date the
SAR award is exercised. Restricted stock will be subject to restrictions which
will render such shares subject to forfeiture. Additionally, restricted stock
will be nontransferable during the period any restrictions apply. The Board of
Directors has established an Incentive Compensation Committee to administer the
Plan. No member of such committee shall be eligible to receive any type of award
under the Plan. During 1992, options to purchase an aggregate of 150,000 shares
were granted to employees, none of whom were executive officers. During 1996,
options to purchase 50,000 of those shares expired. On April 7, 1999, options to
purchase 460,000 shares were granted to various employees, including George W.
Benoit (150,000), Kevin J. Benoit (100,000) and Thomas J. Ferrara (100,000). No
other awards have been made under the Plan and no options have been exercised.
In connection with, and subject to, the adoption of the 1999 Stock Option Plan,
the Company will terminate the Plan and no further awards will be made under the
Plan.
Split Dollar Life Insurance Agreement. The Company's Chairman, George W.
Benoit, is presently the owner and holder of 1,605,420 shares of the Company's
Common Stock. The Company has been advised that on the death of George Benoit,
his estate may be required to publicly sell all or substantially all of such
shares to satisfy estate tax obligations. The public sale of all such shares
might destabilize the market for the Company's publicly traded stock.
Accordingly, as of January 20, 1995, the Company entered into an agreement
(commonly known as a split dollar life insurance agreement) with a trust created
by Mr. Benoit (the "Trust"). Under the terms of the agreement, the Company will
pay the premiums for a $1,000,000 life insurance policy on the life of Mr.
Benoit. The Trust has granted an interest in the policy to the Company to the
extent of the sum of all premium payments made by the Company. These
arrangements are designed so that if the assumptions made as to mortality
experience, policy dividends and other factors are realized upon Mr. Benoit's
death or the surrender of the policy, the Company will recover all of its
insurance premium payments. The portion of the premium paid by the Company in
1998 pursuant to this arrangement was $36,344.
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THE 1999 STOCK OPTION PLAN
On April 23, 1999, the Board adopted the 1999 Stock Option Plan (the "99
Plan"), which provides, among other matters, for incentive and non-qualified
stock options to purchase 350,000 shares of Common Stock. The purpose of the 99
Plan is to provide incentives to officers, key employees, directors, independent
contractors and agents whose performance will contribute to the long-term
success and growth of the Company, to strengthen the ability of the Company to
attract and retain officers, key employees, directors, independent contractors
and agents of high competence, to increase the identity of interests of such
people with those of the Company's stockholders and to help build loyalty to the
Company through recognition and the opportunity for stock ownership. The 99 Plan
will be administered by the Incentive Compensation Committee of the Board.
The following summary of the 99 Plan is qualified in its entirety by
reference to the complete text of the 99 Plan which is attached to the Proxy
Statement as Appendix A.
TERMS OF OPTIONS
The 99 Plan permits the granting of both incentive stock options and
non-qualified stock options. Generally, the option price of both incentive stock
options and non-qualified stock options must be at least equal to 100% of the
fair market value of the shares on the date of grant. The maximum term of each
option is ten years. For any participant who owns shares possessing more than
10% of the voting rights of the Company's outstanding shares of Common Stock,
the exercise price of any incentive stock option must be at least equal to 110%
of the fair market value of the shares subject to such option on the date of
grant and the term of the option may not be longer than five years. Options
become exercisable at such time or times as the Board may determine at the time
it grants options.
FEDERAL INCOME TAX CONSEQUENCES
Non-qualified Stock Options. The grant of non-qualified stock options will
have no immediate tax consequences to the Company or the employee. The exercise
of a non-qualified stock option will require an employee to include in his gross
income the amount by which the fair market value of the acquired shares on the
exercise date (or the date on which any substantial risk of forfeiture lapses)
exceeds the option price.
Upon a subsequent sale or taxable exchange of the shares acquired upon
exercise of a non-qualified stock option, an employee will recognize long or
short-term capital gain or loss equal to the difference between the amount
realized on the sale and the tax basis of such shares.
The Company will be entitled (provided applicable withholding requirements
are met) to a deduction for Federal income tax purposes at the same time and in
the same amount as the employee is in receipt of income in connection with the
exercise of a non-qualified stock option.
Incentive Stock Options. The grant of an incentive stock option will have
no immediate tax consequences to the Company or the employee. If the employee
exercises an incentive stock option and does not dispose of the acquired shares
within two years after the grant of the incentive stock option nor within one
year after the date of the transfer of such shares to him (a "disqualifying
disposition"), he will realize no compensation income and any gain or loss that
he realizes on a subsequent disposition of such shares will be treated as a
long-term capital gain or loss. For purposes of calculating the employee's
alternative minimum taxable income, however, the option will be taxed as if it
were a non-qualified stock option.
-8-
ELIGIBILITY
Under the 99 Plan, incentive stock options may be granted only to officers
and employees and non-qualified stock options may be granted to officers,
employees as well as directors, independent contractors and agents. The Company
has no present plans or understandings to grant any Options under the 99 Plan.
Persons eligible to receive options consist primarily of three (3) officers and
ten (10) key employees.
GENERAL
The 99 Plan shall be effective immediately if approved by the holders of a
majority of the shares of the Company entitled to vote at the Annual Meeting,
and shall continue thereafter until March 31, 2009 unless earlier terminated or
suspended by the Board. The 99 Plan may be amended, terminated or modified by
the Board at any time, except that the Board may not, without approval by a vote
of the stockholders of the Company (i) increase the maximum number of shares for
which options may be granted under the 99 Plan, (ii) change the persons eligible
to participate in the 99 Plan, or (iii) materially increase the benefits
accruing to participants under the 99 Plan. No such termination, modification or
amendment may affect the rights of an optionee under an outstanding option or
the grantee of an award.
The Company believes that the 99 Plan should be approved so that shares of
Common Stock are available for grant to key employees, officers and directors as
well as independent contractors and agents upon whose performance and
contribution the long-term success and growth of the Company is dependent.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL AND ADOPTION OF THE
1999 STOCK OPTION PLAN AND, UNLESS A STOCKHOLDER SIGNIFIES OTHERWISE, THE
PERSONS NAMED IN THE PROXY WILL SO VOTE.
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected Richard A.
Eisner & Company, LLP, as independent public accountants to audit the financial
statements of the Company and its subsidiaries for the fiscal year 1999. This
selection is being presented to the stockholders for their ratification at the
Annual Meeting. The firm of Richard A. Eisner & Company, LLP, has audited the
Company's financial statements since 1987.
It is expected that representatives of Richard A. Eisner & Company, LLP,
will attend the Annual Meeting and will have the opportunity to make a
statement, if they so desire, and will be available to respond to appropriate
stockholder questions.
Ratification of the selection of Richard A. Eisner & Company, LLP, as
independent public accountants will require the affirmative vote of a majority
of the shares present in person or represented by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" SUCH RATIFICATION AND,
UNLESS A STOCKHOLDER SIGNIFIES OTHERWISE, THE PERSONS NAMED IN THE PROXY WILL SO
VOTE.
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OTHER MATTERS
The Board of Directors of the Company does not know of any other matters to
be presented for action at the Annual Meeting. Should any other matter come
before the Annual Meeting, however, the persons named in the enclosed proxy will
have discretionary authority to vote all proxies with respect to such matters in
accordance with their judgment.
In order for stockholders' proposals for the 2000 Annual Meeting of
Stockholders to be eligible for inclusion in the Company's Proxy Statement, they
must be received by the Company at its principal office in New York, New York,
prior to January 1, 2000.
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-KSB (without exhibits) will be provided without charge to
any stockholder who submits a written request addressed to the Secretary of the
Company.
By Order of the Board of Directors
/s/ George W. Benoit
--------------------
George W. Benoit
Chairman
April 29, 1999
-10-
Appendix A
HELMSTAR GROUP, INC.
1999 STOCK OPTION PLAN
1. PURPOSES. The purposes of the 1999 Stock Option Plan (the "Plan") are to
attract and retain qualified personnel for positions of substantial
responsibility, to provide additional incentive to the Employees of the Company
or its Subsidiaries (as defined below), as well as other individuals who perform
services for the Company or its Subsidiaries, and to promote the success of the
Company's business. The provisions of the Plan are intended to satisfy the
requirements of Section 16(b) of the Exchange Act (as defined below) and Section
162(m) of the Code (as defined below).
Options granted hereunder may be either "incentive stock options", as
defined in Section 422 of the Code, or "non-qualified stock options", at the
discretion of the Board and as reflected in the terms of the written instrument
evidencing an Option.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Common Stock" shall mean the Common Stock of the Company (par value
$.10 per share).
(d) "Company" shall mean Helmstar Group, Inc., a Delaware corporation.
(e) "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan,
if one is appointed.
(f) "Continuous Status as an Employee" shall mean the absence of any
interruption or termination of service as an Employee. Continuous
Status as an Employee shall not be considered interrupted in the
case of sick leave, military leave, or any other leave of absence
approved by the Board.
(g) "Employee" shall mean any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be
sufficient to constitute "employment" by the Company.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Incentive Stock Option" shall mean a stock option intended to
qualify as an incentive stock option within the meaning of Section
422 of the Code.
(j) "Non-qualified Stock Option" shall mean a stock option not intended
to qualify as an Incentive Stock Option.
(k) "Option" shall mean a stock option granted pursuant to the Plan.
(l) "Optioned Stock" shall mean the Common Stock subject to an Option.
(m) "Optionee" shall mean an Employee or other person who receives an
Option.
(n) "Parent" shall mean a "parent corporation," whether now or hereafter
existing, as defined in Section 425(e) of the Code.
(o) "Securities Act" shall mean the Securities Act of 1933, as amended.
(p) "SEC" shall mean the Securities and Exchange Commission.
(q) "Share" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(r) "Subsidiary" shall mean a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 425(f) of the Code.
-A-1-
3. STOCK. Subject to the provisions of Section 11 of the Plan, the maximum
aggregate number of shares which may be optioned and sold under the Plan is
350,000 shares of Common Stock. If an Option should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, become available for further grant under the Plan.
4. ADMINISTRATION.
(a) Procedure. The Board may appoint a Committee to administer the Plan.
The Committee shall consist of not less than three members of the Board who
shall administer the Plan on behalf of the Board, subject to such terms and
conditions as the Board may prescribe. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board. From time to time the
Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause), and appoint new members in
substitution therefor, fill vacancies however caused, or remove all members of
the Committee and thereafter directly administer the Plan.
If a majority of the Board is eligible to be granted Options or has
been eligible at any time within the preceding year, a Committee must be
appointed to administer the Plan. The Committee must consist of not less than
three members of the Board, all of whom are "non-employee directors" as defined
in Rule 16b-3 of the General Rules and Regulations promulgated under the
Exchange Act and "outside directors" under Section 162(m) of the Code.
(b) Powers of the Board. Subject to the provisions of the Plan, the Board,
or the Committee shall have the authority, in its discretion: (i) to grant
Incentive Stock Options, in accordance with Section 422A of the Code, as
amended, or to grant Non-qualified Stock Options; (ii) to determine, upon review
of relevant information and in accordance with Section 8(b) of the Plan, the
fair market value of the Common Stock; (iii) to determine the exercise price per
share of Options to be granted which exercise price shall be determined in
accordance with Section 8(a) of the Plan; (iv) to determine the persons to whom,
and the time or times at which, Options shall be granted and the number of
shares to be represented by each Option; (v) to interpret the Plan; (vi) to
prescribe, amend and rescind rules and regulations relating to the Plan; (vii)
to determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option; (viii) to accelerate or defer (with the consent of the Optionee) the
exercise date of any Option; (ix) to authorize any person to execute on behalf
of the Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (x) to make all other determinations deemed
necessary or advisable for the administration of the Plan.
(c) Effect of the Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
5. ELIGIBILITY
(a) General. Incentive Stock Options may be granted only to Employees.
Non-qualified Stock Options may be granted to employees as well as directors
(subject to the limitations set forth in Section 4), independent contractors and
agents, as determined by the Board. Any person who has been granted an Option
may, if he is otherwise eligible, be granted an additional Option or Options.
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it interfere in any way
with his right or the Company's right to terminate his employment at any time.
(b) Limitation on Incentive Stock Options. No Incentive Stock Option may be
granted to an Employee if, as the result of such grant, the aggregate fair
market value (determined at the time each option was granted) of the Shares with
respect to which such Incentive Stock Options are exercisable for the first time
by such Employee during any calendar year (under all such plans of the Company
and any Parent and Subsidiary) shall exceed One Hundred Thousand Dollars
($100,000).
-A-2-
6. TERM OF THE PLAN. The Plan shall become effective upon the earlier to occur
of (i) its adoption by the Board, or (ii) its approval by vote of the holders of
a majority of the outstanding shares of the Company entitled to vote on the
adoption of the Plan. The Plan shall continue in effect until March 31, 2009
unless sooner terminated under Section 13 of the Plan.
7. TERM OF OPTION. The term of each Option shall be ten (10) years from the date
of grant hereof or such shorter term as may be provided in the instrument
evidencing the Option. However, in the case of an Incentive Stock Option granted
to an Employee who, immediately before the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the day of grant thereof or
such shorter time as may be provided in the instrument evidencing the Option.
8. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued pursuant to
the exercise of an Option shall be such price as is determined by the Board, but
shall be subject to the following:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, immediately before the grant of
such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of
the Company or any Parent or Subsidiary, the per Share exercise
price shall be no less than 110% of the fair market value per
Share on the date of grant, as the case may be;
(B) granted to an Employee not subject to the provisions of
Section 8(a)(i)(A), the per Share exercise price shall be no
less than one hundred percent (100%) of the fair market value
per Share on the date of grant.
(ii) In the case of a Non-qualified Stock Option, the per Share
exercise price shall be no less than one hundred percent (100%) of
the fair market value per Share on the date of grant.
(b) The fair market value shall be determined by the Board in its
discretion; provided, however, that where there is a public market for the
Common Stock, the fair market value per Share shall be the mean of the bid and
asked prices or, if applicable, the closing price of the Common Stock on the
date of grant, as reported by the National Association of Securities Dealers
Automated Quotation (NASDAQ) System or, in the event the Common Stock is listed
on a stock exchange, the fair market value per Share shall be the closing price
on such exchange on the date of grant of the Option, as reported in the Wall
Street Journal.
(c) The consideration to be paid for the Shares to be issued upon exercise
of an Option or in payment of any withholding taxes thereon, including the
method of payment, shall be determined by the Board and may consist entirely of
(i) cash, check or promissory note; (ii) other Shares of Common Stock owned by
the Employee having a fair market value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised; (iii) other Options owned by the Employee having an aggregate
in-the-money value equal to the aggregate exercise price of the Options being
exercised (Options are in-the-money if the fair market value of the underlying
Shares exceeds the exercise price of the Options); (iv) an assignment by the
Employee of the net proceeds to be received from a registered broker upon the
sale of the Shares or the proceeds of a loan from such broker in such amount; or
(v) any combination of such methods of payment, or such other consideration and
method of payment for the issuance of Shares to the extent permitted under
Delaware Law and meeting rules and regulations of the SEC to plans meeting the
requirements of Section 16(b)(3) of the Exchange Act.
-A-3-
9. PROCEDURES AND LIMITATIONS ON EXERCISE OF OPTIONS.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder shall be exercisable at such times and subject to such conditions as
may be determined by the Board, including performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible under the terms of
the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
instrument evidencing the Option by the person entitled to exercise the Option
and full payment for the Shares with respect to which the Option is exercised
has been received by the Company. Full payment may, as authorized by the Board,
consist of any consideration and method of payment allowable under Section 8(c)
of the Plan; it being understood that the Company shall take such action as may
be reasonably required to permit use of an approved payment method. Until the
issuance, which in no event will be delayed more than thirty (30) days from the
date of the exercise of the Option, (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company)
of the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee. If any Employee ceases to serve
as an Employee, he may, but only within thirty (30) days (or such other period
of time not exceeding ninety (90) days as is determined by the Board) after the
date he ceases to be an Employee of the Company, exercise his Option to the
extent that he was entitled to exercise it as of the date of such termination.
To the extent that he was not entitled to exercise the Option at the date of
such termination, or if he does not exercise such Option (which he was entitled
to exercise) within the time specified herein, the Option shall terminate.
(c) Disability of an Employee. Notwithstanding the provisions of Section
9(b) above, in the event an Employee is unable to continue his employment with
the Company as a result of his total and permanent disability (as defined in
Section 105(d)(4) of the Internal Revenue Code of 1986, as amended), he may, but
only within three (3) months (or such other period of time not exceeding twelve
(12) months as is determined by the Board) from the date of disability, exercise
his Option to the extent he was entitled to exercise it at the date of such
disability. To the extent that he was not entitled to exercise the Option at the
date of disability, or if he does not exercise such Option (which he was
entitled to exercise) within the time specified herein, the Option shall
terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his death an
Employee of the Company and who shall have been in Continuous Status
as an Employee since the date of grant of the Option, the Option may
be exercised, at any time within twelve (12) months following the
date of death, by the Optionee's estate or by a person who acquired
the right to exercise the Option by bequest or inheritance, but only
to the extent of the right to exercise that would have accrued had
the Optionee continued living one (1) month after the date of death;
or
(ii)within thirty (30) days (or such other period of time not exceeding
three (3) months as is determined by the Board) after the
termination of Continuous Status as an Employee, the Option may be
exercised, at any time within three (3) months following the date of
death, by the Optionee's estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of
termination.
-A-4-
10. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or the payment of a stock dividend with
respect to the Common Stock or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, or
in the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, the
Board of Directors of the Company shall, as to outstanding Options, either (i)
make appropriate provision for the protection of any such outstanding Options by
the substitution on an equitable basis of appropriate stock of the Company or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect to one share of Common Stock of the Company; provided, only
that the excess of the aggregate fair market value of the shares subject to the
Options immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to such Options immediately before such substitution over the purchase
price thereof, or (ii) upon written notice to an Optionee, provide that all
unexercised Options must be exercised within a specified number of days of the
date of such notice or they will be terminated. In any such case, the Board of
Directors may, in its discretion, advance the lapse of any waiting or
installment periods and exercise dates.
12. TIME FOR GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each person to whom an
Option is so granted within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) General. The Board may amend or terminate the Plan from time to time in
such respects as the Board may deem advisable; provided, however, that the
following revisions or amendments shall require approval of the holders of a
majority of the outstanding shares of the Company entitled to vote:
(i) any increase in the number of Shares subject to the Plan, other than
in connection with an adjustment under Section 11 of the Plan;
(ii) any change in the designation of the class of persons eligible to be
granted options; or
(iii) any material increase in the benefits accruing to participants under
the Plan.
(b) Stockholder Approval. If any amendment requiring stockholder approval
under Section 13(a) of the Plan is made, such stockholder approval shall be
solicited as described in Section 17(a) of the Plan.
(c) Effect of Amendment or Termination. Any such amendment or termination
of the Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the Board,
which agreement must be in writing and signed by the Optionee and the Company.
-A-5-
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by, or appropriate
under, any of the aforementioned relevant provisions of law.
15. RESERVATION OF SHARES. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
16. OPTION AGREEMENT. Options shall be evidenced by written option agreements in
such form as the Board shall approve.
17. STOCKHOLDER APPROVAL. Continuation of the Plan shall be subject to approval
by the stockholders of the Company within twelve (12) months after the date the
Plan is adopted by the Board. If such stockholder approval is obtained at a duly
held Stockholders' Meeting, it may be obtained by the affirmative vote of the
holders of a majority of the outstanding shares of the Company present or
represented and entitled to vote thereon. The approval of such stockholders of
the Company shall be (1) solicited substantially in accordance with Section
14(a) of the Exchange Act and the rules and regulations promulgated thereunder,
or (2) solicited after the Company has furnished in writing to the holders
entitled to vote substantially the same information concerning the Plan as that
which would be required by the rules and regulations in effect under Section
14(a) of the Exchange Act at the time such information is furnished.
If such stockholder approval is obtained by written consent in the absence
of a Stockholders' Meeting, it must be obtained by the written consent of
stockholders of the Company who would have been entitled to cast the minimum
number of votes which would be necessary to authorize such action at a meeting
at which all stockholders entitled to vote thereon were present and voting.
18. OTHER PROVISIONS. The Stock Option Agreement authorized under the Plan shall
contain such other provisions, including, without limitation, restrictions upon
the exercise of the Option, as the Board shall deem advisable. Any Incentive
Stock Option Agreement shall contain such limitations and restrictions upon the
exercise of the Incentive Stock Option as shall be necessary in order that such
option will be an Incentive Stock Option as defined in Section 422 of the Code.
-A-6-
19. INDEMNIFICATION OF BOARD. In addition to such other rights of
indemnification as they may have as directors or as members of the Board, the
members of the Board shall be indemnified by the Company against the reasonable
expenses, including attorneys' fees actually and necessarily incurred in
connection with the defense of any action suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan or
any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such Board
member is liable for negligence or misconduct in the performance of his duties,
provided that within sixty (60) days after institution of any such action, suit
or proceeding a Board member shall, in writing, offer the Company the
opportunity, as its own expense, to handle and defend the same.
20. OTHER COMPENSATION PLANS. The adoption of the Plan shall not affect any
other stock option or incentive or other compensation plans in effect for the
Company or any Subsidiary, nor shall the Plan preclude the Company from
establishing any other forms of incentive or other compensation for employees
and directors of the Company or any Subsidiary.
21. COMPLIANCE WITH EXCHANGE ACT RULE 16b-3 AND SECTION 162(m) OF THE CODE.
Transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 under the Exchange Act and Section 162(m) under the
Code. To the extent any provision of the Plan or action by the Board fails to so
comply, it shall be deemed null and void, to the extent permitted by law and
deemed advisable by the Board.
22. SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in the singular shall
include the plural, and the masculine pronoun shall include the feminine gender.
23. HEADINGS, ETC., NO PART OF PLAN. Headings of Articles and Sections hereof
are inserted for convenience and reference; they constitute no part of the Plan.
-A-7-
REVOCABLE PROXY
HELMSTAR GROUP, INC.
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
Revoking any such prior appointment, the undersigned hereby appoints George W.
Benoit and David W. Dube, and each of them, attorneys and agents, with power of
substitution to vote as Proxy for the undersigned as herein stated, at the
Annual Meeting of Stockholders of Helmstar Group, Inc. (the "Company"), to be
held at the offices of Richard A. Eisner & Company, LLP, 575 Madison Avenue, 8th
Floor, New York, New York 10022 on Thursday, June 3, 1999 at 3:00 p.m., and at
any adjournments thereof, with respect to the number of shares the undersigned
would be entitled to vote if personally present.
1. Election of Directors:To elect the nominees listed below:
For All
Joseph G. Anastasi [ ] For [ ] Withhold [ ] Except
James J. Murtha
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
- --------------------------------------------------------------------------------
2. Proposal to approve and adopt the 1999 Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
3. Proposal to ratify the selection of independent public accountants.
[ ] For [ ] Against [ ] Abstain
Check the appropriate box to indicate the manner in which you direct the
proxies to vote your shares.
The Board of Directors recommends a vote FOR the election of the nominees and
FOR each of the proposals.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED (1) FOR THE ELECTION OF THE
DIRECTORS, (2) FOR THE APPROVAL AND ADOPTION OF THE 1999 STOCK OPTION PLAN AND
(3) FOR THE PROPOSAL TO RATIFY THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS,
IF NO INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN ITEMS (1), (2) AND (3)
ABOVE, AND IN THE DISCRETION OF THE NAMED ATTORNEYS AND AGENTS ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
The stockholder(s) hereby acknowledge(s) receipt of a copy of the Proxy
Statement relating to such Annual Meeting.
Please be sure to sign and date
this Proxy in the box below.
________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
HELMSTAR GROUP, INC.
Your signature should appear the same as your name appears hereon. If signing
as attorney, executor, administrator, trustee or guardian, please indicate the
capacity in which you are signing. When signing as joint tenants, all parties to
the joint tenancy must sign. When the proxy is given by a corporation, it should
be signed by an authorized officer.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY