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[LOGO]
350 FIFTH AVENUE
SUITE 3922
NEW YORK, NEW YORK 10118
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
July 2, 1998
To the Stockholders of
LEADING EDGE PACKAGING, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of LEADING
EDGE PACKAGING, INC. (the "Company") will be held at The Plaza Hotel, Fifth
Avenue at Central Park South, New York, New York, on Thursday, July 30, 1998 at
2:00 p.m. (New York time) for the following purposes:
1. To elect the directors of the Company, all of whom shall hold office
until the next annual meeting of stockholders and until their successors are
elected and qualified;
2. To consider and vote upon a proposal to ratify the appointment of
Deloitte & Touche LLP as the Company's independent auditors for the fiscal
year ending March 31, 1999; and
3. To transact such other business as may properly come before the
meeting and at any adjournment thereof.
By Order of the Board of Directors
CASEY K. TJANG, Secretary
ONLY STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON JUNE 18, 1998 WILL BE
ENTITLED TO NOTICE OF OR TO VOTE AT THE MEETING, OR ANY ADJOURNMENT THEREOF.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE A QUORUM,
AS WELL AS YOUR REPRESENTATION, AT THE MEETING. EVEN IF YOU HAVE GIVEN YOUR
PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE,
HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
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[LOGO]
350 FIFTH AVENUE
SUITE 3922
NEW YORK, NEW YORK 10118
MANAGEMENT PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS, JULY 30, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Leading Edge Packaging, Inc. (the
"Company") for use at the Annual Meeting of Stockholders of the Company to be
held at The Plaza Hotel, Fifth Avenue at Central Park South, New York, New York,
on Thursday, July 30, 1998, at 2:00 p.m. (New York time), and at any adjournment
thereof (the "Annual Meeting"). Proxy material is being mailed beginning on July
6, 1998 to the Company's stockholders of record on June 18, 1998, the record
date. The total number of shares of the Common Stock outstanding and entitled to
vote on June 18, 1998 was 4,562,500.
The purposes of the Annual Meeting are: (1) to elect directors, (2) to
consider and vote upon a proposal to ratify the appointment of Deloitte & Touche
LLP as the Company's independent auditors for the fiscal year ending March 31,
1999, and (3) to transact such other business as may properly come before the
meeting and at any adjournment thereof.
PROPOSALS SUBMITTED FOR STOCKHOLDER VOTE
PROPOSAL 1: ELECTION OF DIRECTORS.
At the Annual Meeting, five directors are to be elected to hold office until
the next annual meeting of stockholders and until their successors are elected
and qualified. Unless otherwise specified in the proxy, the shares represented
by the proxy hereby solicited will be voted for the persons named below, by the
persons designated as proxies, both of whom are now directors of the Company.
Should any of these nominees become unable to accept nomination or election
(which is not anticipated), it is the intention of the persons designated as
proxies to vote for the election of the remaining nominees named and for such
substitute nominees as management may recommend.
The nominees are: Lip-Boon Saw, Casey K. Tjang, Peter L. Coker, Robert B.
Goergen and Richard Fung-Gea Wong.
Directors are elected by a plurality of shares of Common Stock represented
at the Annual Meeting.
INFORMATION WITH RESPECT TO NOMINEES
Information with respect to each nominee is set forth below. Additional
information with respect to officers, directors and the major stockholder of the
Company, including their percentage ownership in the Company's voting stock, is
set forth on pages 4, 6 and 7.
LIP-BOON SAW, age 41, has served as Chairman, Chief Executive Officer and
Director of the Company since April 1996. He served as the Company's President
from its inception through April 1996. From April 1994 until the time of the
Company's initial public offering he was also the Managing Director of Leading
Edge Packaging Limited (then known as Rich City International Packaging Limited
and the Company's parent) ("LEP Ltd."). LEP Ltd. was recently acquired by, and
is now a subsidiary of, the Company, and Mr. Saw continues to serve as a
director of LEP Ltd. Mr. Saw is the founder and sole stockholder of L.B. Saw and
Associates, Ltd., an investment firm in Hong Kong, and has served as its
Chairman since October 1992. He currently serves on the boards of directors of
various privately-held foreign companies. Mr. Saw spends a significant portion
of his time in Hong Kong.
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CASEY K. TJANG, age 59, has served as President of the Company since April
1998, as Chief Financial Officer and Secretary of the Company since 1996 and as
a Director of the Company since its inception in 1995. Mr. Tjang served as
Executive Director and President of Starlite Holdings Limited (a public company
listed on The Stock Exchange of Hong Kong, Limited), from 1993 to 1995, and was
responsible for facilitating the acquisition of exclusive rights to distribute
Hallmark greeting cards in the People's Republic of China and of paper consumer
products of Warner Bros. characters in China and Southeast Asia. From 1991 to
1993, Mr. Tjang served as President and Chief Executive Officer of First
Merchant Bankers, Inc., a company specializing in corporate finance and
international trading. From 1979 to 1991, Mr. Tjang was the Managing Director
and Vice President of the International Department of Midlantic National Bank,
managing corporate finance, import-export and project financing transactions.
Presently, he serves on the board of directors of Kent Financial Services, Inc.,
a public company, and is the executive director of Andrew-Case International
Limited, a corporate finance firm.
PETER L. COKER, age 55, has served as a Director of the Company since 1996.
Mr. Coker has been a Partner and Senior Managing Director of Capital Investment
Partners LLC, an investment banking firm in Raleigh, NC, since 1996. In 1978,
Mr. Coker founded American Asset Management Company. As its President, he built
the investment advisory firm to $500 million under management, including equity,
debt and hedging currency risk for foreign clients. Mr. Coker continues to serve
as a Consultant to American Asset Management Company, Inc. From 1968 to 1977, he
was Assistant Vice President/Investment Officer of Bethlehem Steel Corporation
with investment responsibilities for its self-managed one billion dollar pension
fund. From 1977 to 1978, Mr. Coker was a senior officer at McGlinn Investment
Service, Reading, Pennsylvania. He currently sits on the boards of directors of
Remote Source Lighting International, Inc., Persimmon IT, Inc. Bear Rock Foods,
Inc. and North Carolina State University Endowment Fund. He is also a member of
the New York Society of Security Analysts.
ROBERT B. GOERGEN, age 60, has served as a Director of the Company since
1996. Since 1977, he has been the Chairman, and since 1978, the Chief Executive
Officer, of Blyth Industries, Inc., a public company and manufacturer and
importer of candles, home decorating accessories and home fragrance products.
Mr. Goergen has served as President of Blyth Industries, Inc. since 1994. From
1990 to the present, Mr. Goergen has served as Chairman of XTRA Corporation, a
public company engaged in the trailer leasing industry. From 1979 to the
present, he has been Chairman of The Ropart Group, a private company, whose
business is investing in securities for its own account. Mr. Goergen currently
serves as a director of Blyth Industries, Inc. and XTRA Corporation and serves
on the Compensation Committee of XTRA Corporation.
RICHARD FUNG-GEA WONG, age 41, has served as a Director of the Company since
1995. From July 1994 to the present, Mr. Wong has served as the Executive
Director of LEP Ltd., responsible for the supervision of the administration,
logistics and finance related matters. From October 1990 until October 1992, Mr.
Wong served as General Manager of Lolliman Holdings Ltd., an investment and
property holding company. Mr. Wong will continue to spend a significant portion
of his time in Hong Kong.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
In the last fiscal year the Board of Directors held three regularly
scheduled meetings and did not hold any special meetings. All other actions by
the Board of Directors were taken by unanimous written consent.
The Company has a Compensation Committee and an Audit Committee of the Board
of Directors, each consisting of two independent outside directors. The members
of the Compensation Committee are Lip-Boon Saw, Peter L. Coker and Robert B.
Goergen. The members of the Audit Committee are Casey K. Tjang, Peter L. Coker
and Robert B. Goergen. The Compensation Committee's function is to approve the
compensation packages (salary and bonus) of the Chief Executive Officer and the
named executive officers appearing in the Summary Compensation Table on page 6,
to administer the Company's 1996 Incentive Stock Option Plan and 1997 Associate
Stock Option Plan and to review the Company's compensation policies for all
executive officers and key employees. The Compensation Committee held
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one meeting in fiscal 1998. The Audit Committee recommends to the Board of
Directors the engagement of the independent auditors of the Company and reviews
with the independent auditors the scope and results of the Company's audits, the
professional services furnished by the independent auditors to the Company and
their Management Letter with comments on the Company's internal accounting
controls. The Audit Committee met once during fiscal 1998. The Company does not
have a special nominating or other committee charged with the search for and
recommendation to the Board of potential nominees for Board positions. This
function is performed by the Board, which considers all recommendations for
potential nominees.
Directors who are not officers or related to officers receive $1,000 per
year as well as $500 per meeting attended plus any costs to attend the meeting.
PROPOSAL 2: APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE FISCAL YEAR ENDING MARCH 31, 1999.
The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending March 31, 1999, and has further
directed that management submit the selection of independent auditors for
ratification by the stockholders at the Annual Meeting. Deloitte Touche
Tomahtsu, an affiliate of Deloitte & Touche LLP, has audited the Company's
financial statements since its initial public offering. Representatives of
Deloitte & Touche LLP are expected to be present at the Annual Meeting, will
have an opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.
Stockholder ratification of the selection of Deloitte & Touche LLP as the
Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of Deloitte & Touche
LLP to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may direct
the appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.
The Board of Directors recommends a vote "For" this proposal to ratify the
appointment of Deloitte & Touche LLP as the Company's independent auditors for
the fiscal year ending March 31, 1999.
The favorable vote of the holders of a majority of the shares of Common
Stock represented at the meeting is needed to approve this Proposal No. 2.
SECTION 16(A) REPORTING
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's Common Stock, to file with the Securities and
Exchange Commission and the Nasdaq National Market initial reports of ownership
and reports of changes in ownership of the Common Stock of the Company.
Officers, directors and holders of greater than ten percent of the Company's
Common Stock are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. To the Company's knowledge, based solely
on review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended March 31, 1998, all Section 16(a) filing requirements applicable to its
officers and directors were complied with.
HOLDINGS OF MANAGEMENT AND OF HOLDERS
OF 5% OR MORE OF THE COMPANY'S COMMON STOCK
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of June 18, 1998 by (i) each director and
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table employed by the Company in that capacity on
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June 18, 1998; (iii) all executive officers and directors of the Company as a
group; and (iv) all those known by the Company to be beneficial owners of more
than five percent of its Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
OWNERSHIP AS OF OUTSTANDING
ADDRESS OF BENEFICIAL OWNER JUNE 18, 1998 SHARES(1)
---------------------------------------- --------------- -----------------
<S> <C> <C> <C>
Chung Hwa Development Holdings Rm. 402-3 Join-in Hang Sing Centre, 4,125,000(3) 72%
Limited(2) .............................. 71-75 Container Port Road
Kwai Chung, N.T., Hong Kong
Lip-Boon Saw,.............................. 350 Fifth Avenue, Suite 3922 20,000(4) *
Chairman and Chief Executive Officer New York, NY 10118
Casey K. Tjang,............................ 350 Fifth Avenue, Suite 3922 13,333(5) *
President, Chief Financial Officer, New York, NY 10118
Secretary and Director
Peter L. Coker,............................ 1305 Statestone Ct. 5,000(6) *
Director Raleigh, NC 27615
Robert B. Goergen,......................... c/o Blyth Industries, Inc. 22,000(7) *
Director 100 Field Point Road
Greenwich, CT 06830-6442
Richard Fung-Gea Wong,..................... 350 Fifth Avenue, Suite 3922 6,667(8) *
Director New York, NY 10118
All Directors and Officers as a Group...... 4,192,000 73%
</TABLE>
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(1) Based upon 5,717,500 shares outstanding. As of the date of this Proxy
Statement, the Company has 3,467,500 shares outstanding, including 125,000
shares underlying outstanding warrants and 30,000 shares underlying
presently exercisable options. An additional 1,000,000 shares will be issued
by the Company to Chung Hwa Development Holdings Limited upon the amendment
to the Company's certificate of incorporation to increase the Company's
authorized share capital.
(2) Chung Hwa Development Holdings Limited is a Bermuda company whose securities
are listed on The Stock Exchange of Hong Kong Limited.
(3) Includes 1,000,000 shares which Chung Hwa Development Holdings Limited has
the right to receive as partial consideration for the transfer of all of the
share capital of Justrite Investments Limited to the Company. These
1,000,000 shares will be issued to Chung Hwa 20 days after the distribution
to the Company's stockholders of an information statement relating to the
increase in the Company's authorized share capital necessary to permit the
issuance of the 1,000,000 shares.
(4) All 20,000 shares underly options granted to Mr. Saw under the 1996
Incentive Stock Option Plan.
(5) All 13,333 shares underly options granted to Mr. Tjang under the 1996
Incentive Stock Option Plan.
(6) All 5,000 shares underly options granted to Mr. Coker under the 1997
Associate Stock Option Plan.
(7) Includes 5,000 shares underlying options granted to Mr. Goergen under the
1997 Associate Stock Option Plan.
(8) All 6,667 shares underly options granted to Mr. Wong under the 1997
Associate Stock Option Plan.
* Represents less than 1% of the Company's outstanding Common Stock.
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CERTAIN TRANSACTIONS
On January 23, 1998, the Company entered into a Share Exchange Agreement
(the "Agreement") with Chung Hwa Development Holdings Limited, a Bermuda company
which is listed on The Stock Exchange of Hong Kong Limited ("Chung Hwa"), its
majority stockholder. The Company and Chung Hwa completed the transaction on
March 13, 1998, subject to the issuance of 2,250,000 shares of the Company's
Common Stock to Chung Hwa. On June 10, 1998, the Company issued 1,250,000 of
such shares. The remaining 1,000,000 shares are expected to be issued in July
1998. Pursuant to the Agreement, the Company received all of the issued and
outstanding shares of Justrite Investments Limited ("Justrite"), a wholly owned
subsidiary of Chung Hwa in exchange for 2,250,000 shares of the Company's Common
Stock valued at $6.00 per share.
Justrite is the parent corporation of Leading Edge Packaging Limited ("LEP
Ltd."), the Company's former parent and supplier of packaging products which the
Company distributes in North America. LEP Ltd. distributes its packaging
products in other parts of the world, including Europe and Asia. Justrite also
owns 100% of Breakspear Limited, a British Virgin Islands company, which in turn
holds a 60% interest in a joint venture in the People's Republic of China. LEP
Ltd. also has indirect interests in a joint venture in China.
The Agreement provides that the Company is to acquire all of the outstanding
capital stock of Justrite in exchange for the issuance to Chung Hwa of 2,250,000
shares of the Company's Common Stock, par value $.01 per share. The Company has
issued 1,250,000 of the 2,250,000 shares to Chung Hwa and will issue the
remaining 1,000,000 shares upon the filing of an amendment to the Company's
certificate of incorporation increasing the Company's authorized share capital.
Aside from the amendment to the Company's certificate of incorporation and the
issuance of the remaining shares to Chung Hwa, all other conditions to closing
under the Agreement have been satisfied or waived. The amendment to the
certificate of incorporation and the issuance of remaining 1,000,000 shares of
the Company's Common Stock to the Chung Hwa is expected to take place in July
1998, or 20 days from the date of mailing of the information statement relating
to the increase in authorized share capital to the Company's stockholders. Prior
to the issuance of the shares to Chung Hwa, it held 57% of the Company's
outstanding Common Stock. Upon issuance of all of the shares, it will hold 74%
of the outstanding Common Stock (excluding shares underlying warrants and
options).
The Agreement contains certain warranties by Chung Hwa with respect to
Justrite and its subsidiaries. The Agreement limits the liability of Chung Hwa
arising under the Agreement to no more than US$13,500,000. The Agreement also
provides for the assumption by the Company of any guarantees and letters of
undertaking by Chung Hwa for the benefit of Justrite or its subsidiaries.
The 2,250,000 shares of the Company's Common Stock issuable to Chung Hwa
under the Agreement have been valued by the Company and Chung Hwa at $6.00 per
share, as specified in the Agreement, or US$13,500,000 in the aggregate. Chung
Hwa undertakes, pursuant to the Agreement, that in the event the audited net
assets of Justrite for the year ended March 31,1998, as reflected in its audited
report and financial statements, is less than US$4,500,000, Chung Hwa will pay
to the Company, on a US-dollar for US-dollar basis, the amount of any shortfall.
The US$13,500,000 valuation was reached by negotiations between the parties and
takes account of the $4.5 million net asset value undertaking referred to above,
profits generated by Justrite and the subsidiaries in prior years and an
adjustment for estimated downtime during the setup of new facilities.
The above discussion contains forward-looking statements which are
inherently subject to risks and uncertainties. The Company cannot be certain of
the date on which the issuance of the remaining shares will occur. Actual events
could differ materially from the Company's anticipation.
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EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the annual compensation for the Chief
Executive Officer and all other executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-----------
AWARDS
ANNUAL COMPENSATION -----------
---------------------------------------- SECURITIES
OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
- -------------------------------------------------- --------- ---------- --------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Lip-Boon Saw,..................................... 1998 $ 120,000 -- -- 60,000
Chairman and Chief Executive Officer 1997 120,000 -- --
Casey K. Tjang,................................... 1998 60,000 24,000 -- 40,000
President, Chief Financial Officer and Secretary 1997 32,000 -- --
<CAPTION>
PAYOUTS
-----------------
ALL OTHER
NAME AND PRINCIPAL POSITION COMPENSATION
- -------------------------------------------------- -----------------
<S> <C>
Lip-Boon Saw,..................................... --
Chairman and Chief Executive Officer
Casey K. Tjang,................................... --
President, Chief Financial Officer and Secretary
</TABLE>
COMPENSATION OF DIRECTORS
Non-employee directors of the Company are paid a fee of $1,000 per year
(payable at the end of the year) as well as $500 per meeting attended plus costs
of attending the meeting (payable after the meeting's adjustment). Non-employee
directors are eligible to participate in grants of stock options under the 1997
Associate Stock Option Plan.
STOCK OPTION PLANS
1996 INCENTIVE STOCK OPTION PLAN
Executive officers may receive, in addition to their salaries and other
compensation, options to purchase shares of the Company's Common Stock under the
1996 Incentive Stock Option Plan (the "1996 Plan") under which stock options may
be granted to such officers, directors and/or employees of the Company as the
1996 Plan's administration committee selects and recommends to the Board of
Directors. 312,500 shares of Common Stock are reserved for that purpose. Options
to purchase 252,500 shares are outstanding under the 1996 Plan as of the date of
this Proxy Statement.
1997 ASSOCIATE STOCK OPTION PLAN
Directors and other employees and consultants of the Company may receive, in
addition to their fees, options to purchase shares of the Company's Common Stock
under the 1997 Associate Stock Option Plan (the "1997 Plan"). The 1997 Plan
provides for the grant of non-qualified stock options to non-family outside
directors, consultants hired by the Company and employees not otherwise
qualified to receive options under the 1996 Plan. Options to purchase a maximum
of 312,500 shares of the Company's Common Stock in the aggregate, taken together
with options issued under the 1996 Plan, may be granted under the 1997 Plan.
Options to purchase 95,000 shares of Common Stock have been issued under the
1997 Plan.
Currently, the Compensation Committee serves as the administration committee
for both the 1996 and 1997 Plans. Because the members of the Compensation
Committee are each entitled to participate in one of the two plans, it has been
the Company's practice to have all option grants approved by its entire Board of
Directors. Stock options entitle the holder to acquire shares of Common Stock
during a fixed period at an exercise price equal to 110% of the fair market
value at the time of the grant. Payment by
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option holders upon exercise of an option may be made only in cash. No new
options were granted during the 1998 fiscal year.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
No options issued by the Company were exercisable or in-the-money in fiscal
1998. The following table lists the number of securities underlying unexercised
options at March 31, 1998.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END
----------------- -----------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
- ----------------------------------------------- ------------------- ------------- ----------------- -----------------------
<S> <C> <C> <C> <C>
Lip-Boon Saw................................... -- -- --/60,000 --
Casey K. Tjang................................. -- -- --/40,000 --
Peter L. Coker................................. -- -- --/15,000 --
Robert B. Goergen.............................. -- -- --/15,000 --
Richard Fung-Gea Wong.......................... -- -- --/20,000 --
</TABLE>
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REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
GENERAL
INTRODUCTION. The Compensation Committee (the "Committee"), with L.B. Saw
as Chairman, is responsible for determining the compensation to be paid to the
Company's executive officers. The Committee is also responsible for making
policy decisions regarding recruitment and compensation of executive officers
and key employees.
The Committee's philosophy with respect to the compensation of the Company's
executive officers is (i) to provide a fair and competitive compensation package
that enables the Company to attract and retain experienced and qualified
executives and align their compensation with the Company's overall business
strategies and goals, and (ii) to cultivate initiative by allowing the Committee
to grant key personnel an equity stake in the Company through stock options. To
this end, the Committee determines executive compensation with a focus on each
employee's individual level of responsibility and the Company's performance. The
primary components of the Company's executive compensation program are base
salaries and stock options.
STOCK OPTIONS. The Company's executive officers are eligible to participate
in the Company s 1996 Incentive Stock Option Plan (the "1996 Plan"). Non-key
employees, including independent directors, are not eligible to participate in
the 1996 Plan but can participate in the 1997 Associate Stock Option Plan (the
"1997 Plan"). The 1997 Plan gives the plan administration committee the
authority to award stock options to deserving individuals, other than key
employees, who have performed well. Under the 1997 Plan, any key person whose
performance is exceptional may be assigned stock options as both a motivating
tool and an initiative by which the plan administration committee can reward
individual performance. Currently, the Compensation Committee serves as the plan
administration committee for both the 1996 and 1997 Plans. Because the members
of the Compensation Committee are each entitled to participate in one of the two
plans, it has been the Company's practice to have all option grants approved by
its entire Board of Directors. There are 312,500 shares in the aggregate
reserved for issuance under both the 1996 and 1997 Plans. Of these, 252,500 have
been granted. Options to purchase of 50,000 shares each, granted to Peter Yu-Siu
Chu and Dan Ben-Moshe, have been terminated upon termination of their respective
employment agreements.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Lip-Boon Saw, its Chairman and
Chief Executive Officer, and with Casey K. Tjang, its President, Chief Financial
Officer and Secretary. Each agreement is for an initial term of three years,
which commenced on September 23, 1996. These agreements each provide that
salaries beyond the first year may be determined by the Board of Directors in
its sole discretion. Each agreement may be terminated by either the Company or
the employee on six months prior notice, and prohibits the employee from
soliciting other Company employees during the two-year period following his
termination of employment. Mr. Saw's employment agreement also provides that for
two years after the termination of his employment, he will not have an ownership
interest in, nor be employed by any business which directly competes with the
business of the Company. Under the terms of his agreement, Mr. Saw is required
to devote a majority of his time and efforts to the Company's business. Mr.
Tjang is required to devote full time to the Company's business under the terms
of his agreement.
The agreement with Mr. Saw provides for a salary of $120,000 for the first
year, and this has remained his annual salary to-date. The agreement with Mr.
Tjang provides for a salary of $60,000, which has been increased to $84,000 by
the issuance to Mr. Tjang of an annual bonus of $24,000 beginning in the fiscal
year ended March 31, 1998. Mr. Tjang received this bonus during the fiscal year
ended March 31, 1998 in recognition of extraordinary services performed by him
beyond those initially contemplated in determining
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his base salary. Mr. Tjang will receive the same bonus in the 1999 fiscal year.
No other bonuses have been issued to executives of the Company to-date, and no
bonuses are planned in the 1999 fiscal year.
Employment agreements with Peter Yu-Siu Chu, the Company's former President
and Chief Operating Officer, and with Dan Ben-Moshe, the Company's former Vice
President of Marketing and Sales, have both been terminated. Mr. Tjang will
temporarily assume the responsibilities of Mr. Chu as President while the
Company fills his position.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Lip-Boon Saw, the Company's Chairman and Chief Executive Officer, is a
member of the Compensation Committee. His presence on the Committee creates a
possible conflict of interest inasmuch as the Compensation Committee sets the
compensation level for the Chairman and Chief Executive Officer each year, along
with that of the other executive officers. The compensation levels set by the
Compensation Committee are subject to approval by the entire Board of Directors.
Submitted by:
Lip-Boon Saw
Peter L. Coker
Robert B. Goergen
ANNUAL PERFORMANCE GRAPH
COMPARISON OF ANNUAL CUMULATIVE TOTAL RETURN*
PERFORMANCE GRAPH APPEARS HERE
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
12/02/96 03/31/97 03/31/98
<S> <C> <C> <C> <C>
Leading Edge Packaging,
Inc. 100 85 108
Nasdaq Composite 100 94 130
S&P 500 100 100 146
</TABLE>
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* Assumes $100 invested on December 2, 1996 in Leading Edge Packaging, Inc.
Common Stock and the Nasdaq Composite and S&P 500 Index.
9
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The preceding Report of the Compensation Committee and Performance Graph are
not "soliciting material", are not deemed "filed" with the SEC and are not
intended to be incorporated by reference in any filing of the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, whether made
before or after the date hereof and irrespective of any general incorporation
language in any such filing.
GENERAL INFORMATION
INFORMATION AS TO VOTING SECURITIES
Holders of shares of Common Stock have the right to one vote for each share
registered in their names on the books of the Company as of the close of
business on June 18, 1998.
The close of business on June 18, 1998 has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
notice of, and vote at, the Annual Meeting.
VOTING AND REVOCATION OF PROXIES
The persons named in the accompanying form of proxy will vote the shares
represented thereby, as directed in the proxy, if the proxy appears to be valid
on its face and is received on time. In the absence of specific instructions,
proxies so received will be voted for the election of the named nominees to the
Company's Board of Directors and for the ratification of Deloitte & Touche LLP
as the Company's independent auditors for fiscal 1999. Proxies are revocable at
any time before they are exercised by attending the Annual Meeting and voting in
person, by filing an instrument in writing revoking the proxy or by delivering a
proxy bearing a later date to the Secretary of the Company.
METHOD AND EXPENSE OF PROXY SOLICITATION
The solicitation of proxies will be made primarily by mail by Continental
Stock Transfer & Trust Co. Proxies may also be solicited by overnight courier,
personally and by telephone by regular employees of the Company at nominal cost.
The Company does not expect to pay compensation for any solicitation of
proxies but may pay brokers and other persons holding shares in their names, or
in the names of nominees, their expenses for sending proxy material to
principals for the purpose of obtaining their proxies. The Company will bear all
expenses in connection with the solicitation of proxies.
INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed Deloitte Touche Tomahtsu
to audit the accounts of the Company for the fiscal year ended March 31, 1998,
notwithstanding the approval of Deloitte & Touche LLP by the stockholders at the
1997 Annual Meeting. Management determined that because several of the Company's
accounts were still maintained in Hong Kong during fiscal 1998, it would be more
expedient and cost effective for Deloitte Touche Tomahtsu to perform the audit
instead of its U.S. affiliate, Deloitte & Touche LLP. Management does not
believe it is necessary for stockholders to ratify this appointment due to the
satisfactory services of Deloitte Touche Tomahtsu in prior years and the
impracticality and undue expense of calling a special stockholders meeting
solely for that purpose. There is no requirement under federal or Delaware law
or the Company's By-laws that the appointment of independent auditors be
approved by stockholders. Management's recommendation for the appointment of
Deloitte Touche Tomahtsu was unanimously approved by the Audit Committee of the
Board of Directors consisting of Messrs. Tjang, Coker and Goergen.
10
<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1999 Annual
Meeting of Stockholders pursuant to the provisions of Rule 14a-8 of the
Securities and Exchange Commission, promulgated under the Securities Exchange
Act of 1934, must be received at the Company's offices in New York, New York by
April 1, 1999 for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
GENERAL
The Company's 1998 Annual Report is being mailed to stockholders
simultaneously with this Proxy Statement. A copy of the Company's Annual Report
on Form 10-K will be furnished free of charge to any stockholder who requests it
(except for Exhibits thereto for which a nominal fee covering reproduction and
mailing expenses will be charged).
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no matters other
than Proposals 1 and 2 to come before the meeting. However, if any other matters
should properly come before the meeting, it is the intention of the persons
named in the accompanying form of proxy to vote all proxies not marked to the
contrary in accordance with their judgment on such matters.
By Order of the Board of Directors
CASEY K. TJANG, Secretary
11
<PAGE>
LEADING EDGE PACKAGING, INC.
This proxy is solicited on behalf of the Board of Directors.
The undersigned stockholder of LEADING EDGE PACKAGING, INC. (the "Company")
hereby appoints LIP-BOON SAW and CASEY K. TJANG, as Proxies, each with power to
appoint his substitute, and hereby authorizes them to represent and vote as
designated below, all of the shares of the Company's Common Stock held of record
by the undersigned on June 18, 1998 at the Annual Meeting of Stockholders of the
Company to be held at The Plaza Hotel, Fifth Avenue at Central Park South, New
York, New York, on Thursday, July 30, 1998 at 2:00 p.m. (New York time) and at
any adjournment thereof.
(1) Election of Directors.
/ / FOR all nominees listed below (except as marked to the contrary
below).
/ / WITHHOLD AUTHORITY to vote for any individual nominee listed
below.
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below.)
LIP-BOON SAW, CASEY K. TJANG, PETER L. COKER, ROBERT B. GOERGEN AND RICHARD
FUNG-GEA WONG
(2) Proposal to ratify the appointment of Deloitte & Touche LLP as the
Company s independent auditors for the fiscal year ending March 31,
1999.
/ / FOR / / AGAINST / / ABSTAIN
(3) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
<PAGE>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSAL 2 AND THE NOMINEES ON THE REVERSE SIDE.
DATE: _________________, 1998
-----------------------------
SIGNATURE
-----------------------------
SIGNATURE IF HELD JOINTLY
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
