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 [_]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Exchange Act Rule 14a-11 or Rule 14a-12
VITECH AMERICA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, If Other than Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(45)
and 0-11
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
[ ] 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) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE>
VITECH AMERICA, INC.
8807 Northwest 23rd Street, Miami, Florida 33172-2419
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on June 15, 1998
TO THE HOLDERS OF THE COMMON STOCK:
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Shareholders
(the "Annual Meeting") of Vitech America, Inc., a Florida corporation (the
"Company"), will be held at the Holiday Inn, Westside Corporate Center, 3255 NW
87th Avenue, Miami, Florida 33172 on Monday, June 15, 1998 at 2:00 p.m., Eastern
Standard Time, or at any and all adjournments thereof, for the following
purposes:
(1) To elect six directors to the Company's Board of Directors
to hold office until the Company's 1999 Annual Meeting of
Shareholders or until their successors are duly elected and
qualified;
(2) To consider and vote upon a proposal to increase the number of
shares of Common Stock, no par value per share (the "Common
Stock"), authorized under the Company's 1996 Stock Option Plan
from 200,000 to 500,000 shares (the "Amended Plan");
(3) To ratify the appointment of Pannell Kerr Forster PC as
auditors of the Company's financial statements for the fiscal
year ending December 31, 1998; and
(4) To transact such other business as may properly come
before the Annual Meeting and any adjournment thereof.
The Board of Directors has fixed the close of business on May 1, 1998
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting.
The financial statements of the Company for the fiscal year ended
December 31, 1997 are contained in the Company's Annual Report enclosed with
this Proxy Statement. The Annual Report does not form any part of the material
for the solicitation of proxies.
Whether or not you expect to be present, please sign, date and return
the enclosed proxy card in the enclosed pre-addressed envelope as promptly as
possible. No postage is required if the enclosed envelope is used and mailed in
the United States.
By Order Of The Board Of Directors,,
EDWARD A. KELLY, Secretary
Miami, Florida
May 15, 1998
THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE
MEETING IN PERSON. ALL SHAREHOLDERS ARE RESPECTFULLY URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. SHAREHOLDERS WHO EXECUTE A
PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE
THEIR SHARES IN PERSON.
1
<PAGE>
ANNUAL MEETING OF SHAREHOLDERS
OF
VITECH AMERICA, INC.
8807 Northwest 23rd Street
Miami, Florida 33172-2419
-----------------------------------
PROXY STATEMENT
-----------------------------------
The Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Vitech America, Inc, a Florida corporation (the
"Company"), of proxies for use at the 1998 Annual Meeting of Shareholders
("Annual Meeting") to be held at Holiday Inn, Westside Corporate Center, 3255 NW
87th Avenue, Miami, Florida 33172 on Monday, June 15, 1998 at 2:00 p.m., Eastern
Standard Time, or at any and all adjournments thereof. The cost of this
solicitation will be borne by the Company. Directors, officers and employees of
the Company may solicit proxies by telephone, telegraph or personal interview.
The Annual Report of the Company for the fiscal year ended December 31, 1997, is
being mailed together with this Proxy Statement and form of Proxy. The date of
mailing of this Proxy Statement and form of Proxy is approximately May 15, 1998.
OUTSTANDING STOCK AND VOTING RIGHTS
The Board of Directors has fixed the close of business on May 1, 1998,
as the record date for determining the shareholders entitled to notice of, and
to vote at, the Annual Meeting. Only shareholders of record on that date, on
which the transfer books of the Company remained open, will be entitled to vote.
A shareholder who submits a proxy on the accompanying form has the power to
revoke it by notice of revocation directed to the proxy holders of the Company
at any time before it is voted. Unless authority is withheld in writing, proxies
which are properly executed will be voted for the proposals thereon. Although a
shareholder may have given a proxy, such shareholder may nevertheless attend the
meeting, revoke the proxy and vote in person. The affirmative vote of a
plurality of the shares of Common Stock present or represented at the meeting is
required to elect the directors. Ratification of appointment of the Company's
auditors, approval of the increase in the number of shares authorized for
issuance under the Company's Amended Plan and any other matter that may be
submitted to a vote of the Shareholders, will require the affirmative vote of a
majority of the shares of the Company's Common Stock at the Annual Meeting in
person or by proxy, unless such matter is one for which a greater vote is
required by law or by the Company's Articles of Incorporation or Bylaws.
As of May 1, 1998, the record date for determining the shareholders of
the Company entitled to vote at the Annual Meeting, 11,070,756 shares of the
Common Stock of the Company, no par value per share ("Common Stock"), were
issued and outstanding. Each share of Common Stock entitles the holder to one
vote on all matters brought before the Annual Meeting. The quorum necessary to
conduct business at the Annual Meeting consists of a majority of the outstanding
shares of Common Stock as of the record date. Abstentions and broker non-votes
are counted for purposes of determining the presence or absence of a quorum and
have the effect of a negative vote on the ratification of the appointment of the
Company's independent auditors. Abstentions and broker non-votes have no effect
for the election of directors, the proposal to approve the increase in the
number of shares authorized for issuance under the Company's Amended Plan and
the ratification of the appointment of the Company's independent auditors.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth Common Stock ownership information as of
May 1, 1998, with respect to (i) each person known to the Company to be the
beneficial owner of more than 5% of the Company's Common Stock, (ii) each
director and named executive officer of the Company and (iii) all directors and
executive officers of the Company as a group:
<TABLE>
<CAPTION>
Percentage Beneficially
Name and Address of Beneficial Owner (1) Number of Shares Owned (2)
- ---------------------------------------- ---------------- -----------------------
<S> <C> <C>
Georges C. St. Laurent, III 5,826,000(3) 45.0%
William C. St. Laurent 5,597,250(4)(5) 43.4%
Joseph K. Meyer 435,136(6) 3.8%
1190 Pioneer Tower
8888 Southwest Fifth Avenue
Portland, OR 97204
Touma Makdassi Elias 64,006(7) *
H.R. Shepherd 40,000(8) *
705 B Weed Street
New Canaan, CT 06840
William Robin Blackhurst 10,000(9) *
Rua Prof. Joao Barreto, 72
Sao Conrado, Rio de Janeiro
22610-200, Brazil
Georges C. St. Laurent, Jr. 1,013,206(10) 9.0%
5115 Dubois Avenue
Vancouver, WA 98661
All directors and named executive 11,998,992(11) 78.8%
officers as a group (7 persons)
</TABLE>
- ------------------------------------------------
* Less than 1%
(1) Unless otherwise indicated, the address of each of the listed
beneficial owners identified is c/o Vitech America, Inc., 8807 N.W.
23rd Street, Miami, Florida 33172. Unless otherwise noted, the Company
believes that all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock
beneficially owned by them.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this Proxy
Statement upon the exercise of options. Each beneficial owner's
percentage ownership is determined by assuming that options that are
held by such person (but not those held by any other person) and that
are exercisable within 60 days from the date of this Proxy Statement
have been exercised. As of May 1, 1998 there were 11,070,756 shares of
Common Stock outstanding.
(3) Includes options to purchase 1,887,000 shares of Common Stock.
(4) Includes 2,517,871 shares of Common Stock held by Wolf Partners, a
family Limited Partnership of which William C. St. Laurent is the
general partner.
(5) Includes options to purchase 1,813,000 shares of Common Stock.
3
<PAGE>
(6) Includes options and warrants to purchase 76,633 shares of Common Stock
and an option to convert a promissory note into 303,603 shares of
Common Stock.
(7) Includes options to purchase 10,000 shares of Common Stock.
(8) Includes options to purchase 30,000 shares of Common Stock.
(9) Includes options to purchase 10,000 shares of Common Stock.
(10) Includes options to purchase 75,297 shares of Common Stock. Does not
include an option to convert a promissory note, which requires 90 days
notice to the Company prior to conversion, into 1,287,785 shares of
Common Stock.
(11) See notes (3)-(9) above.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), requires the Company's directors and executive officers,
and persons who own more than ten percent (10%) of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
("SEC") initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent (10%) stockholders are required by Commission
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
The following officers and directors of the Company filed late reports
under Section 16(a) of the Exchange Act relating to Fiscal 1997: (i) William C.
St. Laurent filed five late Form 4's reporting five transactions and one late
Form 5 reporting three transactions; (ii) Joseph K. Meyer filed eight late Form
4's reporting fourteen transactions; and (iii) Georges C. St. Laurent, III filed
three late Form 4's reporting three transactions. There are no known failures to
file a required Form 3, 4 or 5 and no other known late filings of a required
Form 3, 4 or 5 during Fiscal 1997 by any person required to file such forms with
respect to the Company pursuant to Section 16 of the Exchange Act.
ELECTION OF DIRECTORS; NOMINEES
Six individuals have been nominated to serve as Directors for the
ensuing year and until their successors shall have been duly elected and
qualified. The persons named in the accompanying proxy have advised management
that unless authority is withheld in the proxy, they intend to vote FOR the
election of the individuals listed in the table on the following page.
Management does not contemplate that any of the nominees named in the table will
be unable, or will decline, to serve; however, if any of the nominees is unable
to serve or declines to serve, the persons named in the accompanying proxy may
vote for another person, or persons, in their discretion. The following table
sets forth certain information with respect to each nominee for election to the
Board of Directors. All of the nominees currently serve as Directors of the
Company. A summary of the background and experience of each nominee is set forth
in the paragraphs following the table.
<TABLE>
<CAPTION>
Nominees For Election
---------------------
Name Age Position
- ---- --- --------
<S> <C>
Georges C. St. Laurent, III 37 Chairman of the Board of Directors and Chief Executive
Officer
William C. St. Laurent 37 President, Chief Operating Officer, and Director
Joseph K. Meyer 42 Director
H.R. Shepherd 76 Director
4
<PAGE>
Touma Makdassi Elias 52 Director
William Robin Blackhurst 63 Director
</TABLE>
- ---------------
Georges C. St. Laurent III. Mr. St. Laurent has served as Chairman of
the Board and Chief Executive Officer of Vitech since 1993. Between 1986 and
January 1993, Mr. St. Laurent operated a proprietary firm, GSL Trading Co.,
Miami, Florida, which was engaged in the re-manufacturing of computer hardware
for sale to Brazil and other countries in Latin America. Between 1983 and 1986,
Mr. St. Laurent was a member of the Chicago Mercantile Exchange and was engaged
in trading activities for his proprietary account specializing in currency
options and futures market making. Since 1986 to the present, Mr. St. Laurent
has been a director of Clinica Kirpalmar, a not-for-profit Latin American
medical foundation. Mr. St. Laurent graduated from Yale University in 1982 and
received a B.S. in Molecular Biology.
William C. St. Laurent. Mr. St. Laurent has served as President and
Chief Operating Officer of Vitech and a Director since 1993. Mr. St. Laurent has
also served as Vice Chairman of the Board of Directors of the Western Bank of
Oregon from January 1989 through January 1996. Mr. St. Laurent previously owned
several private foods processing companies located in Oregon from 1988 to 1992.
Mr. St. Laurent graduated from Cornell University with a B.S. in Hotel
Administration. Mr. St. Laurent also owns 100% of the voting shares of Vitoria
Tecnologia S.A., the primary customer of Vitech America, Inc. from inception
until Vitoria Tecnologia S.A. ceased manufacturing and selling activities in
March of 1996. William C. St. Laurent is the brother of Georges C. St. Laurent
III.
Joseph K. Meyer. Mr. Meyer has been a director of Vitech since November
1996. Mr. Meyer has served as president and chief executive officer of Compass
Advisors, Inc., an institutional financial and investment consulting firm since
1991. Mr. Meyer is also Managing Member of Compass Partners, LLC, an investment
adivsory and money management firm. Mr. Meyer also serves as Managing Member of
CAI Tradex, LLC, which provides fully-disclosed securities brokerage services to
institutional clients. Prior to 1991 Mr. Meyer was first Vice President and
Senior Consultant at Kemper Securities Group, Inc. and Kemper Consulting Group,
respectively.
H.R. Shepherd. Mr. Shepherd has been a director of Vitech since
November 1996. Since 1993, Mr. Shepherd has served as special advisor to the
Chairman of Medeva PLC, an international pharmaceutical company. From 1955 to
1993 Mr. Shepherd served as Founder and Chairman of Armstrong Pharmaceuticals,
previously known as Aerosol Techniques, a pharmaceutical drug delivery company
which was acquired by Medeva PLC. Mr. Shepherd presently is the Chairman of the
Albert F. Sabin Vaccine Foundation.
Touma Makdassi Elias. Mr. Elias has been a director of Vitech since
July 1997. Mr. Elias founded Microtec Sistemas Industria e Comercio S.A. in 1982
and is credited with the manufacture of the first personal computer clone in
Brazil in 1983. Mr. Elias holds a Bachelor of Science degree from Utah State
University, a Master of Science in Electrical Engineering from California State
University in San Jose, and a PhD in Electronic System Design from the Cranfield
Institute of Technology in Cranfield, England.
William Robin Blackhurst. Mr. Blackhurst has served as Director of
Vitech since January 1998. Mr. Blackhurst retired in 1997 after serving as
managing director for the Sao Paulo office of UBS Securities LLC since 1994.
Prior to 1994, Mr. Blackhurst was engaged in managerial positions at Banco
Multiplic S.A., ACP (Automated Call Processing), Inc. and Brazil Venture Capital
Partic. Ltda. Mr. Blackhurst holds a Master of Arts degree in Law from the
Balliol College, Oxford University in England.
EXECUTIVE OFFICERS
A summary of the background and experience of each executive officer,
other than Georges C. St. Laurent, III and William C. St. Laurent is set forth
below. The background and experience of Georges C. St. Laurent, III and William
C. St. Laurent are described in the section captioned "Election of Directors;
Nominees." All executive officers serve at the discretion of the Board of
Directors.
Edward A. Kelly. Age 30. Mr Kelly has served as the Chief Financial
Officer of the Company since June 1997. Prior to his appointment as Chief
Financial Officer, Mr. Kelly has served as the Company's Corporate Controller
since June of 1996. Mr. Kelly graduated from the University of Florida with a
Bachelor of Science Degree in Finance and holds a Master of Business
Administration from the University of Florida.
Meetings and Committees of the Board of Directors
During the Company's fiscal year ended December 31, 1997, the Company's
Board of Directors held four (4) meetings and took action an additional seven
(7) times by Unanimous Written Consent. Each member of the Board
5
<PAGE>
participated in each action of the Board.
The Board of Directors of the Company has established a Compensation
Committee and an Audit Committee. The Compensation Committee administers the
Company's stock option plan and makes recommendations to the full Board of
Directors concerning compensation, including incentive arrangements, of the
Company's officers and key employees. The members of the Compensation Committee
are Georges C. St. Laurent, Joseph K. Meyer and H.R. Shepherd. During the year
ended December 31, 1997, the Compensation Committee held two (2) meetings. The
Audit Committee reviews the engagement of the independent accountants and
reviews the independence of the accounting firm. The Audit Committee also
reviews the audit and non-audit fees of the independent accountants and the
adequacy of the Company's internal accounting controls. The members of the Audit
Committee are William St. Laurent, Joseph K. Meyer and H.R. Shepherd. During the
year ended December 31, 1997, the Audit Committee held three (3) meetings. The
Compensation Committee and the Audit Committee consist of a majority of
independent directors.
Directors who are not employees of the Company are paid $2,500 per
meeting for serving as directors.
EXECUTIVE COMPENSATION
The following table sets forth information relating to the compensation
paid by the Company for the past three fiscal years to: (i) the Company's
Chairman and Chief Executive Officer; and (ii) each of the Company's executive
officers who earned more than $100,000 during the fiscal year ended December 31,
1996 (collectively, the "Named Executive Officers"):
6
<PAGE>
<TABLE>
<CAPTION>
Stock All Other Annual
Name and Principal Position Year Salary Bonus Options (#) Compensation
- --------------------------- ---- ------ ----- ----------- ------------
<S> <C> <C>
Georges C. St. Laurent, III, 1997 $240,000 -- -- --
Chairman of the Board 1996 $240,000 -- 2,040,000 --
and Chief Executive 1995 $120,000 -- -- --
Officer
William C. St. Laurent, 1997 $240,000 -- -- --
President and 1996 $240,000 -- 1,960,000 --
Chief Operating Officer 1997 1995 $120,000 -- -- $4,500(1)
</TABLE>
- ------------------
(1) Mr. William C. St. Laurent received a car allowance of $750.00 per
month for a portion of the year.
The Company maintains keyman life insurance on the life of each of
Georges C. St. Laurent, III and William C. St. Laurent in the amount of
$2,000,000 payable to the Company.
Option Grants in Last Fiscal Year
No stock options were granted to the Named Executive Officers during
the year ended December 31, 1997.
Aggregated Fiscal Year-End Options Value Table
The table below sets forth certain information pertaining to
unexercised stock options held by the Named Executive Officers during the year
ended December 31, 1997. No stock options were exercised by the Named Executive
Officers during the year ended December 31, 1997.
<TABLE>
<CAPTION>
Number of Unexercised Options Held Value of Unexercised In-the-Money Options
at December 31, 1997 at December 31, 1997
Shares ------------------------------------- ----------------------------------------
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Georges C. St. Laurent, III 0 0 1,887,000 0 $1,071,000 0
William C. St. Laurent 0 0 1,813,000 0 $1,029,000 0
</TABLE>
- ------------------------
(1) The closing bid quotation for the Company's Common Stock as reported by the
Wall Street Journal on December 31, 1997 was $18.00 and $16.75 on April 28,
1998.
Employment Agreements
Messrs. Georges C. St. Laurent, III and William C. St. Laurent are
parties to separate three-year employment agreements which terminate on December
31, 1998. Under the terms of each employment agreement, Messrs. St. Laurent and
St. Laurent will each receive annual compensation of $240,000. In the event that
either Georges C. St. Laurent, III or William C. St. Laurent were to die or
become disabled anywhere outside Brazil, that individual, or his estate, would
receive his annual compensation for twelve months. In the event that either were
to become disabled in Brazil, that individual would receive his annual
compensation for twenty-four months. In the event that either were to die in
Brazil, that individual's estate would receive that individual's compensation
for the greater of twenty-four months or the remaining term of the employment
agreement. Both such employment agreements include non-competition agreements
with the Company which preclude engagement in competitive activities in Latin
America or in the South Florida area as well as solicitation of customers and
employees for a period of twelve months following termination of employment.
Both agreements also require Messrs. St. Laurent and St. Laurent to maintain the
confidentiality of information and proprietary data relating to the Company and
its activities.
Board Compensation Committee Report or Executive Compensation
The following statement made by the Compensation Committee shall not be
deemed incorporated by reference into any filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and shall not otherwise be deemed filed under
either of such Acts.
The Compensation Committee is responsible for making recommendations to
the Board of Directors concerning executive compensation, including base
salaries, bonuses, awards of stock options and reimbursement of certain business
related costs and expenses. The Compensation Committee currently consists of
Messrs. Joseph K. Meyer, Georges C. St. Laurent, III , and H.R. Shepherd,
Messrs. Meyer and Shepherd are non-employee directors of the Company. Mr. St.
Laurent does not vote on or participate in discussions concerning his
compensation.
In determining the compensation of the Company's Executive officers,
the Compensation Committee takes into account all factors which it considers
relevant, including the business conditions in general and in the Company's line
of business during the year in light of such conditions, the market compensation
for executives of similar background and experience, and the performance of the
specific executive officer under consideration and the business area of the
Company for which such executive officer is responsible. The structure of each
executive compnsation package is weighted toward incentive forms of
compensations, including stock options, so that such executive's interest ar
aligned with the interests of the shareholders of the Company. The Compensation
Committee believes that granting stock options provides an additional incentive
to executive officers to continue in the service of the Company and gives them
an interest similar to shareholders in the success of the Company. The
Compensation program for the executive officers in 1997 consisted of base
salaries and reimbursement of certain business related expenses.
To the extent readily determinable, another factor the Compensation
Committee considers when determining compensation is the anticipated tax
treatment to the Company and to the executive officer of various payments and
benefits. For example, some types of compensation plans and their deductibility
by the Company depend upon the timing of an executive officer's vesting or
exercise of previously granted rights. Further interpretations of, and changes
in the tax laws and other factors beyond the Compensation Committee's control
also could affect the deductibility of compensation.
Compensation Committee
Joseph K. Meyer, Chairman
Georges C. St. Laurent, III
H.R. Shepherd
7
<PAGE>
Stock Performance Graph
COMPARISON OF 14 MONTH CUMULATIVE TOTAL RETURN*
AMONG VITECH AMERICA, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ COMPUTER MANUFACTURER INDEX
<TABLE>
<CAPTION>
VITECH AMERICA, INC. NASDAQ STOCK MARKET (U.S.) NASDAQ COMPUTER MANUFACTURER
------------------- -------------------------- ----------------------------
<S> <C> <C> <C>
10/96 100 100 100
12/96 104 105 106
12/97 180 130 126
</TABLE>
*$100 INVESTED ON 10/31/96 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
8
<PAGE>
CERTAIN TRANSACTIONS
During the period from June 24, 1993 to December 31, 1993, the years
1994 and 1995, and the first six months of 1996, the Company had as its primary
customer in Brazil, Vitoria Tecnologia S. A., an affiliate controlled by William
C. St. Laurent, the President and Chief Operating Officer of the Company, to
whom it sold products during those periods on open terms. Also, Bahiatech,
Vitech's wholly owned subsidiary, bought and sold products to and from Vitoria
Tecnologia S.A. during the years ended December 31, 1995 and 1996 on a purely
commercial basis at market prices no less favorable than if the Company or its
subsidiary bought or sold products to or from others. Sales to Vitoria were
$1,156,253 for the period from June 24, 1993 to December 31, 1993, $17,407,363
for the year ended December 31, 1994 and $36,677,077 for the year ended December
31, 1995 and $8,066,878 for the year ended December 31, 1996. In 1996,
management of Vitoria Tecnologia S.A. disclosed to the Company that based on
lack of competitive tax and fiscal incentives in the State of Espirito Santo, it
had ceased all manufacturing and selling operations.
In 1993, Georges C. St. Laurent, Jr., the father of Georges C. St.
Laurent III, the Company's Chairman of the Board and Chief Executive Officer,
and William C. St. Laurent, the President and Chief Operating Officer of the
Company, loaned to Vitoria Tecnologia S.A., an affiliate and primary customer of
the Company, the principal amount of $2,127,440. Such loan was evidenced by a
note bearing interest at 12% per annum. In 1994, as an accommodation for Georges
C. St. Laurent, Jr., for consideration received by the Company in the amount of
the note, the original note was transferred from Vitoria Tecnologia S.A. to the
Company and the rate of interest thereon was reduced to 6% per annum. As of
September 30, 1996, the note was repaid in full. In May 1995, Mr. Georges C. St.
Laurent Jr. loaned the Company an additional $2,000,000 pursuant to the terms of
a secured note which bears interest at the rate of 9% per annum. Such note was
convertible into 5.925% shares of Common Stock at any time during the term
thereof. On November 13, 1996, Mr. Georges C. St. Laurent, Jr., exercised his
right and converted such note into 593,309 shares of the Company's Common Stock.
During the year ended December 31, 1996, the Company sold to Mr.
Georges C. St. Laurent, Jr., a net amount of $12,070,738 of its trade
receivables for $10,637,539 and accordingly recognized a discount in the amount
of $1,433,199. Such receivables were generated in connection with the Company's
10X consumer finance program and were sold at a discount allowing for an annual
return of 30%. Since November of 1996, the Company has not engaged in any such
transaction and as of the date of this Proxy Statement, Mr. St. Laurent Jr., had
collected all funds associated with such receivables.
On December 17, 1996, Mr. Georges C. St. Laurent, Jr. made a loan to
the Company in the amount of $5,000,000. Such loan bears interest at the rate of
20% per annum and has a term of 180 days. In June of 1997, Mr. St. Laurent, Jr.
and the Company mutually agreed to extend the terms of such loan for an
additional 180 days. On April 14, 1997, Mr. St. Laurent, Jr. made an additional
loan to the Company in the amount of $5,000,000. Such loan bears interest at the
rate of 20% per annum and has a term of 180 days. The proceeds of both loans
were used for general corporate and working capital purposes. On October 10,
1997, both notes were repaid in full out of the proceeds of a convertible note
offering.
On June 26, 1997, the Company issued a senior convertible note to Mr.
Georges C. St. Laurent, Jr. for the principal amount of $10,000,000. Such note
has a 10% per annum coupon, payable monthly, and is convertible in whole or in
part into Common Stock of the Company at the rate of one share of Common Stock
for each $15 dollars of principal. The note has a term of two years and is
convertible at the request of the holder with no less than 90 days prior written
notice to the Company. The proceeds from such note were used for the acquisition
of Microtec and for general working capital purposes.
On August 19, 1997, the Company entered into a loan agreement with Mr.
Georges C. St. Laurent, Jr. for a principal amount of up to $10,000,000 to be
evidenced by senior convertible notes. The notes have a two year term and bear
an annual interest rate of 10% payable monthly and are convertible, with 90 days
notice, into common stock of the Company, in whole or in part, at the rate of
one share of common stock for each $16.10 of principal converted. On
9
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August 19, 1997, the Company issued the first of such notes for the principal
sum of $5,000,000. On October 10, 1997, the Company issued the second of such
notes for the principal sum of $5,000,000. The proceeds of the notes are being
used for general working capital purposes.
In connection with the completion of a convertible note offering on
October 10, 1997, the Company issued warrants to purchase 45,633 shares of the
Company's Common Stock and paid fees of $111,585 to Joseph K. Meyer, a director
of the Company. Additionally, an investment fund controlled by Mr. Meyer
purchased a principal sum of $5 million of the 10% Convertible Notes in this
offering.
PROPOSAL TO APPROVE THE INCREASE OF THE NUMBER OF SHARES AUTHORIZED
UNDER THE 1996 STOCK OPTION PLAN TO 500,000 FROM 200,000 SHARES
In order to continue to offer incentive compensation in the form of
stock ownership in the Company and for the Company to be able to continue to
issue stock options and other forms of stock-based incentive compensation under
the Stock Option Plan, the Compensation Committee and the board have deemed it
advisable to amend the 1996 Stock Option Plan (the "Amended Plan") to increase
the number of shares authorized to be issued under the Stock Option Plan to
500,000 shares from 200,000 shares. In the opinion of the Compensation Committee
and the Board, the authorization to issue additional shares would provide an
additional incentive to attract and retain qualified and competent persons who
provide management services or upon whose efforts and judgment the success of
the Company and its subsidiaries is largely dependent, through the encouragement
of stock ownership in the Company by such persons. The affirmative vote of the
holders of a majority of shares of the Company's Common Stock voting at the
Annual Meeting is necessary to approve the Amended Plan.
The Amended Plan provides for the grant of options of purchase up to
500,000 shares of Common Stock to employees, officers, directors, and
consultants of the Company. Options may be either "incentive stock options"
within the meaning of Section 422 of the United States Internal Revenue Code of
1986, as amended (the "Code"), or non-qualified options. Incentive stock options
may be granted only to employees of the Company, while non-qualified options may
be issued to non-employee directors, consultants, and others, as well as to
employees of the Company.
The Plan will be administered by the Board of Directors or a committee
thereof, who determine, among other things, those individuals who shall receive
options, the time period during which the options may be partially or fully
exercised, the number of shares of Common Stock issuable upon the exercise of
each option, and the option exercise price.
The exercise price of an incentive stock option may not be less than
the fair market value per share of Common Stock on the date the option is
granted. The exercise price of a non-qualified option may be established by the
Board of Directors. The aggregate fair market value (determined as of the date
the option is granted) of Common Stock for which any person may be granted
incentive stock options which first become exercisable in any calendar year may
not exceed $100,000. No person who owns, directly or indirectly, at the time of
the granting of an incentive stock option to such person, 10% or more of the
total combined voting power of all classes of stock of the Company (a "10%
Shareholder") shall be eligible to receive any incentive stock options under the
Plan unless the exercise price is at least 110% of the fair market value of the
shares of Common Stock subject to the options, determined on the date of grant.
Non-qualified options are not subject to such limitation.
Incentive stock options may not be transferred by an optionee other
than by will or the laws of descent and distribution, and, during the lifetime
of an optionee, the option will be exercisable only by the optionee. In the
event of termination of employment other than by death or disability, the
optionee, will have no more than three months after such termination during
which the optionee shall be entitled to exercise the options, unless otherwise
determined by the Board of Directors. Upon termination of employment of an
optionee by reason of death or permanent and total disability, such optionee's
options remain exercisable for one year thereafter to the extent such options
were exercisable on the date of such termination. No similar limitation applies
to non-qualified options.
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Options under the Plan must be issued within ten years from the
effective date of the Plan. The effective date of the Plan is August 20, 1996.
Incentive stock options granted under the Plan cannot be exercised more than ten
years from the date of grant. Incentive stock options issued to a 10%
Shareholder are limited to five year terms. Options granted under the Plan
generally provide for the payment of the exercise price in cash and may provide
for the payment of the exercise price by delivery to the Company of Shares of
Common Stock already owned by the optionee having a fair market value equal to
the exercise price of the options being exercised, or by a combination of such
methods. Therefore, if so provided in an optionee's options, such optionee may
be able to tender shares of Common Stock to purchase additional shares of Common
Stock and may theoretically exercise al of his stock options with no additional
investment other than the purchase of his original shares.
Any unexercised options that expire or that terminate upon an
employee's ceasing to be employed by the Company become available again for
issuance under the Plan.
The Plan may be terminated or amended at any time by the Board of
Directors, except that the number of shares of Common Stock reserved for
issuance upon the exercise of options granted under the Plan may not be
increased without the consent of the shareholders of the Company.
As of May 1, 1998 the Company has granted options to purchase an
aggregate of 181,297 options under the Plan. During the year ended December 31,
1996, the Company granted 20,000 options to directors under the Plan. On January
13, 1997, the Company granted options for an additional 10,000 shares each to
Mr. Meyer and Mr. Shepherd with an exercise price of $9 per share. On July 15,
1997, the Company granted options for 10,000 shares to Mr. Elias with an
exercise price of $14. During 1997, the Company granted options to purchase
75,297 shares to Georges St. Laurent Jr., the the father of Georges C. St.
Laurent III, the Company's Chairman of the Board and Chief Executive Officer,
and William C. St. Laurent, the President and Chief Operating Officer of the
Company, pursuant to consulting services performed for the Company.
Certain Federal Income Tax Consequences
The following is a brief summary of certain federal income tax
consequences of option grants and exercises under the Amended Plan based upon
the federal income tax laws in effect on the date hereof. This summary is not
intended to be exhaustive and does not describe state or local tax consequences.
The grant of incentive stock options to an employee does not result in
any income tax consequences. The exercise of an incentive stock option does not
result in any income tax consequences to the employee if the incentive stock
option is exercised by the employee during his employment with the Company, or
within a specified period after termination of employment due to death or
retirement for age or disability under then established rules of the Company.
However, the excess of the fair market value of the shares of stock as of the
date of exercise over the option price is a tax preference item for purposes of
determining an employee's alternative minimum tax. An employee who sells shares
acquired pursuant to the exercise of an incentive stock option after the
expiration of (i) two (2) years from the date of grant of the incentive stock
option, and (ii) one (1) year after the transfer of the shares to him (the
"Waiting Period") will generally recognize long term capital gain or loss on the
sale.
An employee who disposes of his incentive stock option shares prior to
the expiration of the Waiting Period (an "Early Disposition") generally will
recognize ordinary income in the year of sale in an amount equal to the excess,
if any, of (a) the lesser of (i) the fair market value of the shares as of the
date of exercise or (ii) the amount realized on the sale, over (b) the option
price. Any additional amount realized on an Early Disposition should be treated
as capital gain to the employee, short or long term, depending on the employee's
holding period for the shares. If the shares are sold for less than the option
price, the employee will not recognize any ordinary income but will recognize a
capital loss, short or long term, depending on the holding period.
The Company will not be entitled to a deduction as a result of the
grant of an incentive stock option, the exercise
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of an incentive stock option, or the sale of incentive stock option shares after
the Waiting Period. If an employee disposes of his incentive stock option shares
in an Early Disposition, the Company will be entitled to deduct the amount or
ordinary income recognized by the employee.
The grant of non-qualified stock options under the Amended Plan will
not result in the recognition of any taxable income by the participants. A
participant will recognize income on the date of exercise of the non-qualified
stock option equal to the difference between (i) the fair market value on that
date of the shares acquired, and (ii) the exercise price. The tax basis of these
shares for purpose of a subsequent sale includes the option price paid and the
ordinary income reported on exercise of the option. The income reportable on
exercise of the option by an employee is subject to federal and state income and
employment tax withholding.
Generally, the Company will be entitled to a deduction in the amount
reportable as income by the participant on the exercise of a non-qualified stock
option.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE INCREASE OF
THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE 1996 STOCK OPTION PLAN.
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has approved and recommends the appointment of
Pannell Kerr Forster PC as independent auditors of the Company for the fiscal
year ending December 31, 1998.
Although the Board of Directors of the Company is submitting the
appointment of Pannell Kerr Forster PC for shareholder approval, it reserves the
right to change the selection of Pannell Kerr Forster PC as auditors, at any
time during the fiscal year, if it deems such change to be in the best interests
of the Company, even after shareholder approval. One or more Representatives of
Pannell Kerr Forster PC are expected to be present at the Annual Meeting, will
have the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPOINTMENT
OF PANNEL KERR FORSTER PC AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL
YEAR ENDING DECEMBER 31, 1998.
INTEREST OF CERTAIN PERSONS IN
OPPOSITION TO MATTERS TO BE ACTED UPON
The Company is not aware of any substantial interest, direct or
indirect, by securities holdings or otherwise of any officer, director, or
associate of the foregoing persons in any matter to be acted on, as described
herein, other than elections to offices.
OTHER MATTERS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote proxies as in
their discretion they may deem appropriate, unless they are directed by proxy to
do otherwise.
SHAREHOLDERS' PROPOSALS TO BE PRESENTED AT THE
COMPANY'S NEXT ANNUAL MEETING OF SHAREHOLDERS
Shareholder proposals intended to be presented at the 1999 Annual
Meeting of Shareholders of the Company must be received by the Company, at its
principal executive offices not later than January 3, 1999, for inclusion in the
Proxy Statement and Proxy relating to the 1999 Annual Meeting of Shareholders.
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AVAILABILITY OF FORM 10-K ANNUAL REPORT
Copies of the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, and including related exhibits as filed with the Securities
and Exchange Commission, are available without charge to shareholders upon
request to Secretary, 8807 Northwest 23rd Street, Miami, Florida 33172-2419.
BY ORDER OF THE BOARD OF DIRECTORS
EDWARD A. KELLY, Secretary
Miami, Florida
May 15, 1998
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This Proxy Is Solicited By And On Behalf Of The Board of Directors
VITECH AMERICA, INC.
Proxy -- Annual Meeting of Stockholders -- June 15, 1998
The undersigned, revoking all previous proxies, hereby appoint(s)
William C. St. Laurent, with full power of substitution, to represent and to
vote all Common Stock of Vitech America, Inc. owned by the undersigned at the
Annual Meeting of Stockholders to be held in Miami, Florida on Monday, June 15,
1998, including any original or subsequent adjournment thereof, with respect to
the proposals set forth in the Notice of Annual Meeting and Proxy Statement. No
business other than matters described below are expected to come before the
meting, but should any other matter requiring a vote of stockholders arise, the
person named herein will vote thereon in accordance with his best judgment. All
powers may be exercised by said Proxy. Receipt of the Notice of Annual Meeting
and Proxy Statement is hereby acknowledged.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE
DIRECTOR NOMINEES LISTED IN PROPOSAL (1) BELOW AND FOR THE APPROVAL OF PROPOSALS
(2) AND (3).
(1) Election of Georges C. St. Laurent, III, William C. St. Laurent,
Joseph K. Meyer, H.R. Shepard, Touma Makdass, Elias and William Robin
Blackhurst as directors of the Company.
[ ] VOTE FOR all nominees listed above, [ ] VOTE WITHHELD from all
except vote withheld from the following nominees.
nominees(s) (if any).
-------------------------------------------------
(2) Proposal to approve the increase of the number of shares of Common
Stock authorized under the Company's 1996 Employee Stock Option Plan
from 200,000 to 500,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) Proposal to ratify the appointment of Pannell Kerr Forster PC as
auditors of the Company's financial statements for the fiscal year
ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(4) Upon such other matters as may properly come before the Annual Meeting
and any adjournments thereof.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting, and any adjournments or
postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES LISTED IN
PROPOSAL (1) AND "FOR" THE APPROVAL OF PROPOSAL (2) AND PROPOSAL (3).
The undersigned hereby acknowledges receipt of (i) the Notice of Annual
Meeting, (ii) the Proxy Statement and (iii) the Company's 1997 Annual Report.
<PAGE>
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in the corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
__________________________________
Signature
__________________________________
Signature If Held Jointly
__________________________________
(Please Print Name)
__________________________________
Number of Shares Subject to Proxy
Dated: ________________________, 1998
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
