SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
(Amendment No. )
Check the appropriate box:
[ ] Preliminary Information Statement [ ] Confidential, For Use of the
Commission Only (as Per-
mitted by Rule 14c-5(d)(2))
[X] Definitive Information Statement
CADAPULT GRAPHIC SYSTEMS, INC.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
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<PAGE>
CADAPULT GRAPHIC SYSTEMS, INC.
110 Commerce Drive
Allendale, New Jersey 07401
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be Held on December 15, 1999
The Annual Meeting of Shareholders of Cadapult Graphic Systems, Inc.
("Cadapult") will be held on Wednesday, December 15, 1999 at 10:00 A.M.,
local time, at Park Ridge Marriott, 300 Brae Boulevard, Park Ridge, New Jersey
07656, for the following purposes:
1. To elect four members of the Board of Directors to serve until
the next Annual Meeting and until their successors have been duly elected and
qualified;
2. To ratify the selection of Wiss & Company, LLP as Cadapult's
independent certified public accountants for the fiscal year ending June 30,
2000; and
3. To act on such other business as may properly come before the
Annual Meeting or any adjournment thereof.
These matters are more fully described in the Information Statement
accompanying this Notice.
The record date for determining those shareholders who will be entitled
to vote at the Annual Meeting is October 28, 1999. The stock transfer books
will remain open between the record date and the date of the Annual Meeting.
Shares of common stock can be voted at the meeting only if the holder is
present at the meeting in person or by valid proxy. The Board of
Directors is not soliciting proxies in connection with the Annual Meeting,
and you are requested not to send proxies to us.
By order of the Board of Directors
/s/ Frances Blanco
Frances Blanco
Secretary
Allendale, New Jersey
November 8, 1999
<PAGE>
CADAPULT GRAPHIC SYSTEMS, INC.
INFORMATION STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
DATE, TIME AND PLACE OF MEETING
This Information Statement is provided to you by the Board of Directors
of Cadapult Graphic Systems, Inc. (the "Company" or "Cadapult") in connection
with our Annual Meeting. The Annual Meeting will be held at 10:00 A.M. on
December 15, 1999, at Park Ridge Marriott, 300 Brae Boulevard, Park Ridge,
New Jersey 07656, or at any adjournments or postponements of the Annual
Meeting for the purposes set forth in the accompanying Notice of Annual
Meeting. We intend to mail this Information Statement and the accompanying
Notice of Annual Meeting on or about November 24, 1999, to all shareholders
entitled to vote at the Annual Meeting.
PURPOSE OF MEETING
The proposals that will be considered and acted on at the Annual
Meeting are summarized in the Notice of Annual Meeting. Each proposal is
described in more detail in this Information Statement.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Cadapult's common stock at the close of
business on October 28, 1999 will be entitled to notice of and to vote at the
Annual Meeting. At the close of business on October 28, 1999, Cadapult had
outstanding and entitled to vote 3,137,460 shares of common stock. Our
common stock is the only class of voting stock. We have no preferred stock
issued or outstanding as of October 28, 1999. Each shareholder of record on
October 28, 1999 is entitled to one vote for each share held on all matters
to be voted on at the Annual Meeting, and there is no cumulative voting. A
majority of the outstanding shares of common stock must be present or
represented at the Annual Meeting to have a quorum. Proposals 1 and 2 each
require the affirmative vote of a majority of the outstanding voting shares
of the quorum.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL
The names of the nominees for directors and their positions and offices
with Cadapult are described in the table below. As of the date of this
Information Statement, the Board of Directors is not aware of any nominee who
is unable or will decline to serve as a director. The four nominees
receiving the highest number of affirmative votes of the shares entitled to
vote at the Annual Meeting will be elected directors of Cadapult to serve
until the next Annual Meeting and until their successors have been elected
and qualified.
<TABLE>
Name Age Position
- ---- --- --------
<S> <C> <C>
Michael W. Levin 34 Chief Executive Officer, President and Chairman of the Board
Frances Blanco 39 Vice President Marketing and Investor Relations, Treasurer,
Secretary and Director
Paul C. Baker 62 Director
Edwin Ruzinsky(1) 66 Director
</TABLE>
(1) Became a director on August 27, 1999.
<PAGE>
BUSINESS EXPERIENCE OF DIRECTORS
Michael W. Levin, Chief Executive Officer, President and Chairman of
the Board: Mr. Levin has served as Chief Executive Officer, President and
Chairman of the Board of Cadapult since June 18, 1998. Before June 1998, he
had served as President, Treasurer, Secretary and Chairman of Cadapult
Graphic Systems Inc., a New Jersey corporation ("CGSI") since 1987, when he
founded CGSI while attending Lehigh University. He is responsible for a
senior management team as well as merger and acquisition activity and
corporate finance. He earned a Bachelor of Science degree in Mechanical
Engineering from Lehigh University in 1987, graduating summa cum laude.
Frances Blanco, Vice President of Marketing and Investor Relations,
Treasurer, Secretary and Director: Ms. Blanco has served as Vice President
of Marketing and Investor Relations, Treasurer, Secretary and a Director of
Cadapult since June 18, 1998. Before June 18, 1998, she had served as Vice
President of Marketing and Investor Relations, Treasurer, Secretary and a
director of CGSI. Ms. Blanco joined CGSI in 1993. Ms. Blanco manages all
aspects of marketing, including brand identity, demand creation and vendor
relationships for Cadapult as well as investor relations. From 1984 through
1989, Ms. Blanco was a Reseller Account Manager at Lotus, where she designed
and implemented marketing programs. From August 1989 through June 1993, Ms.
Blanco served as a Business Development Manager at Tektronix, Inc., where she
was responsible for the development of long term and strategic customers.
She earned a Bachelor of Science degree in Marketing from Bentley College in
1982 and a Masters of Business Administration degree from Boston College in
1985.
Paul C. Baker, Director: Mr. Baker has served as a Director of
Cadapult since June 18, 1998. He is the founder and President of Sherwood
Partners, Inc., a venture capital and management consulting company that
focuses on developing companies with high growth potential. Prior to
founding Sherwood Partners, Inc. in 1986, Mr. Baker held numerous positions
during his twenty-five years of employment with American Cyanamid Co.
("Cyanamid"). At Cyanamid, Mr. Baker held several domestic and international
management positions, including President of Domestic Operations from April
1975 through October 1979, President of Shulton Inc. from October 1977
through October 1979 and Group Vice President of Cyanamid from October 1979
through December 1984. Mr. Baker graduated from Lehigh University in 1959
with a Bachelor of Arts degree in Liberal Arts, earned a B.S.I.E. degree in
Engineering in 1960 from Lehigh University, and received a Masters in
Business Administration in 1963 from Fairleigh Dickinson University.
Edwin Ruzinsky, Director: Mr. Ruzinsky has served as a Director of
Cadapult since August 27, 1999. He is a Certified Public Accountant and a
Certified Management Consultant. Prior to his retirement as a Partner in
Deloitte Consulting LLC, a wholly-owned subsidiary of Deloitte & Touche LLP
on June 1, 1996, he served for many years as the firm's National Director-
Media Industry Services. He previously served Times Mirror Company (NYSE-
TMC) as Vice President-Finance & Administration/Book Publishing Group and
Parents' Magazine Enterprises, Inc. as Chief Accounting Officer. Mr.
Ruzinsky continues serving as a member of the Pace University/Dyson School of
Liberal Arts & Sciences/Master of Science in Publishing Advisory Board. He
is currently a member of the Board of Dowden Publishing Company, Inc., a
provider of specialized publications and customized communication products
for healthcare professionals and consumers. In addition, he has been a
consultant to The CPA Journal, published by the New York State Society of
Certified Public Accountants, for the past twenty-five years.
BOARD COMMITTEES AND MEETINGS
During the fiscal year that ended on June 30, 1999, the Board of
Directors held five meetings. During this period, all of the directors
attended or participated in more than 75% of the aggregate of the total number
of meetings of the Board of Directors.
Cadapult intends to create a Compensation Committee and an Audit
Committee consisting of members of the Board of Directors following the
Annual Meeting.
2
<PAGE>
The function of the Compensation Committee will be to recommend
compensation levels of senior management and work with senior management on
benefit and compensation programs for Cadapult's employees. In addition, the
Compensation Committee will administer Cadapult's 1998 Incentive Plan. The
Compensation Committee when formed will consist of Michael W. Levin, Paul C.
Baker, and a director not yet determined.
The function of the Audit Committee will include reviewing internal
financial information, monitoring cash flow, budget variances and credit
arrangements, reviewing the audit program of Cadapult, reviewing with
Cadapult's independent accounts the results of all audits upon their
completion, annually selecting and recommending independent accountants,
overseeing the quarterly unaudited reporting process and taking such other
action as may be necessary to assure the adequacy and integrity of all
financial information distribution by Cadapult. The Audit Committee when
formed will consist of Paul C. Baker, Edwin Ruzinsky, and a director not yet
determined.
DIRECTOR COMPENSATION
Cadapult has recently established a compensation plan for its
independent directors. Outside directors will be paid $500 for attendance at
regular meeting and $1,000 for attendance at the annual meeting and will be
reimbursed for their reasonable out-of-pocket expenses incurred in connection
with their attendance at meetings of the Board of Directors and for other
expenses incurred in their capacity as directors. Outside directors will be
granted five year options to purchase 10,000 shares of common stock,
exercisable at the fair market value on the date of appointment to the Board,
and will be granted, annually, additional options to purchase 5,000 shares of
common stock on each July 1.
In the 1999 fiscal year, Cadapult did not have a defined compensation
plan for members of its Board of Directors. In the 1999 fiscal year,
Cadapult granted its sole non-employee director a total of 33,000 non-
qualified options under Cadapult's 1998 Incentive Plan to purchase the common
stock of Cadapult, exercisable at a price equal to the fair market value of
the common stock on the dates of grant.
REASON FOR APPROVAL
The four nominees for directors are the present members of the Board of
Directors, and with the exception of Mr. Ruzinsky who became a director on
August 27, 1999, each of the nominees are officers of Cadapult who have
served key roles in the growth and development of Cadapult and our
predecessor, CGSI.
The affirmative vote of a majority of the votes of shareholders
entitled to vote at the Annual Meeting at which a quorum is present is
required for the election of the nominees. Shareholders do not have
cumulative votes in the election of directors.
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
GENERAL
We are asking our shareholders to ratify the selection of Wiss &
Company LLP as Cadapult's independent accountants for the fiscal year ending
June 30, 2000.
Wiss & Company, LLP has audited Cadapult's financial statements for the
fiscal year ended April 30, 1998, and for the fiscal year ended June 30,
1999. Wiss & Company, LLP has advised us that it has no direct or indirect
financial interest in Cadapult or in any of its present or former
subsidiaries, and that it has had, during the last three years, no connection
with Cadapult or any of our present or former subsidiaries or affiliates
other than as independent auditors and related activities. A representative
of Wiss & Company, LLP is expected to be present at the Annual Meeting, will
have the opportunity to make a statement if the representative desires to
speak, and will be available to respond to appropriate questions of
shareholders.
3
<PAGE>
REASON FOR APPROVAL
Wiss & Company, LLP has served as our only independent auditors since
June 1999, when we acquired CGSI. Wiss & Company, LLP also served as
independent auditors for our predecessor, CSGI.
The affirmative vote of a majority of the votes of shareholders
entitled to vote at the Annual Meeting at which a quorum is present is
required to ratify the selection of Wiss & Company, LLP as our independent
auditors. If the Cadapult shareholders fail to ratify the appointment, the
Board of Directors will reconsider its selection. Even if the selection is
ratified, the Board of Directors, in its discretion, may direct the
appointment of a different independent accounting firm at any time during the
year if the Board of Directors determines that such a change would be in the
best interests of Cadapult and its shareholders.
OWNERSHIP OF SECURITIES
The following table sets forth, as of October 28, 1999, the shares of
Cadapult's common stock beneficially owned by each person known to Cadapult
to be the beneficial owner of more than five percent (5%) of the outstanding
shares of common stock, by each officer and director, and by all officers and
directors of Cadapult as a group. This information was determined in
accordance with Rule 13(d)-3 under the Securities Exchange Act of 1934, and
is based upon the information provided by the persons listed below. All
persons named in the table have the sole voting and dispositive power with
respect to common stock beneficially owned.
<TABLE>
Name and Address Amount and Nature Percent
of Beneficial Owner(1) of Beneficial Owner of Class(2)
- ------------------- ------------------- --------
<C> <C> <C>
Michael W. Levin 1,569,673 (3) 50.0%
Frances Blanco 48,516 (4) 1.6%
Duncan Huyler 50,040 (5) 1.6%
Paul Baker 100,500 (6) 3.2%
Edwin Ruzinsky 10,000 (7) 0.3%
All officers and directors as a group (4 persons) 1,778,729 (3)-(7) 55.6%
</TABLE>
(1) The address of each of these persons is Cadapult Graphic Systems, Inc.,
110 Commerce Drive, Allendale, New Jersey 07401.
(2) Based upon 3,087,460 shares of common stock outstanding on October 28,
1999, and with respect to each holder of options exercisable within 60
days, the shares represented by such options.
(3) Includes 52,000 shares owned by Mr. Levin's minor children and
exercisable 5-year options to acquire 51,223 shares of common stock.
Excludes 5-year options, subject to future vesting, to acquire 500,000
shares of common stock.
(4) Includes exercisable 10-year options to acquire 7,741 shares of Common
Stock. Excludes 5-year options, subject to future vesting, to acquire
100,000 shares of common stock.
(5) Includes exercisable 10-year options to acquire 9,265 shares of Common
Stock. Excludes 5-year options, subject to future vesting, to acquire
100,000 shares of common stock.
(6) Includes exercisable 10-year options to acquire 33,000 shares of Common
Stock.
(7) Includes exercisable 10-year options to acquire 10,000 shares of Common
Stock.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires Cadapult's
directors and executive officers, and persons who own more than ten percent
of Cadapult's common stock, to file with the SEC initial reports of
beneficial ownership and reports of changes in beneficial ownership of common
stock of Cadapult. Such persons are also required by SEC regulations to
furnish Cadapult with copies of all such Section 16(a) forms they file.
Based solely on a review of the copies of such reports furnished to Cadapult,
Cadapult is not aware of any delinquencies in the filing of such reports.
4
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation during Cadapult's last three fiscal years of
Cadapult's Chief Executive Officer and other most highly compensated
employees and all other officers and directors of Cadapult:
<TABLE>
Summary Compensation Table
Long Term
Compensation
------------
Annual Compensation Awards
----------------------------------------------- ------
Name and Other Securities
Principal Annual Underlying All Other
Position Year(1) Salary Bonus Compensation Options/SARS Compensation(2)
- -------------------------- ---------------------------------------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Michael W. Levin(3) 1999 $ 130,000 $ 0 $ 0 500,000 $ 2,379
Chief Executive Officer, 1998 $ 141,583 $ 0 $ 0 51,223 $ 2,727
President and Chairman
Of the Board
Frances Blanco(3) 1999 $ 80,000 $ 10,000 $ 0 100,000 $ 2,021
Vice President Marketing 1998 $ 75,000 $ 25,000 $ 0 7,714 $ 2,158
and Investor Relations,
Treasurer, Secretary and
Director
Duncan Huyler(3) 1999 $ 95,000 $ 0 $ 0 100,000 $ 4,630
Vice President Technical 1998 $ 91,000 $ 25,000 $ 0 9,265 $ 3,867
Services
Paul C. Baker 1999 $ 0 $ 0 $ 0 33,000 $ 0
Director 1998 $ 0 $ 0 $ 0 0 $ 0
Kathleen L. Morrison 1998(4) $ 0 $ 0 $ 1,250(5) 0 $ 0
Former President and 1997 $ 0 $ 0 $ 0 0 $ 0
Director
Jason Osborn 1998(4) $ 0 $ 0 $ 1,250(5) 0 $ 0
Former Vice President and 1997 $ 0 $ 0 $ 0 0 $ 0
Director
Terry Hardman 1998(4) $ 0 $ 0 $ 1,250(5) 0 $ 0
Former Secretary, 1997 $ 0 $ 0 $ 0 0 $ 0
Treasurer and Director
</TABLE>
(1) In June 1998, each of Cadapult and CGSI changed their fiscal year ends
from December 31 and April 30, respectively, to June 30, 1998. The
1998 fiscal year compensation includes the operations of CGSI, a
privately-held company at the time, for the period May 1, 1997 through
April 30, 1998.
(2) Includes Cadapult's matching contribution to Cadapult's 401(k) profit
sharing plan.
(3) Became officer and/or director on June 18, 1998.
(4) Resigned effective June 18, 1998 pursuant to Cadapult's acquisition of
CGSI.
(5) Received 1,000 shares of common stock pursuant to a Registration
Statement on Form S-8 filed on or about June 5, 1998, for which the
fair market value cannot be adequately determined. For purposes of
this calculation, the fair market value is arbitrarily determined to be
$1.25 per share, based upon the offering price of Cadapult's common
stock sold in a private placement conducted in June through August
1998.
5
<PAGE>
The following table sets forth information concerning options granted
during the fiscal year ended June 30, 1999 to those persons named in the
preceding Summary Compensation Table:
<TABLE>
Option/SAR Grants in Last Fiscal Year
(Individual Grants)
Number of
Securities Percent of total
Underlying options/SARS granted Exercise or
Options/SARs to employees in base price Expiration
Name Granted (#) fiscal year(1) ($/Sh) Date
- ---------------- ------------ -------------------- ------------ ----------
<S> <C> <C> <C> <C>
Michael W. Levin 500,000(2) 47.7% $1.375 6-18-03
Michael W. Levin 51,223(3) 4.8% $1.375 6-18-03
Frances Blanco 100,000(2) 9.3% $2.00 3-05-04
Frances Blanco 7,714(3) 0.7% $1.25 6-18-08
Duncan Huyler 100,000(2) 9.3% $2.00 3-05-04
Duncan Huyler 9,265(3) 0.9% $1.25 6-18-08
Paul Baker 3,000(2) 0.3% $2.00 6-11-08
Paul Baker 30,000(2) 2.8% $3.31 4-06-09
</TABLE>
(1) Based on the aggregate total of options granted to officers, directors,
and employees, including options granted during the two month fiscal
year transition period from May 1 through June 30, 1998. As of June
30, 1999, a total of 1,069,632 options were granted, of which 51,739
options have expired.
(2) Options were granted pursuant to employment agreements and become
exercisable after Cadapult achieves certain defined corporate goals
based on earnings, as further described in the Long-Term Incentive Plan
table. No options have vested.
(3) Options were granted pursuant to the 1998 Stock Option Plan and are
presently exercisable. No options have been exercised.
None of the options held by those individuals listed in the Summary
Compensation Table were exercised in fiscal year 1998. The following table
sets forth information concerning the value of unexercised stock options at
June 30, 1999 for those individuals named in the Summary Compensation Table.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
Number of securities
Shares underlying unexercised Value of unexercised
Acquired Value Options/SARs in-the-money options/SARs
on realized at FY-end (#) at FY-end ($)(a)
Name Exercise (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael W. Levin -- -- 51,223 500,000 $ 134,460 $ 1,312,500
Frances Blanco -- -- 7,714 100,000 $ 20,249 $ 262,500
Duncan Huyler -- -- 9,265 100,000 $ 24,321 $ 262,500
Paul Baker -- -- 33,000 0 $ 86,625 --
</TABLE>
(a) The dollar values were calculated by determining the difference between
the fair market value at fiscal year-end of the common stock underlying
the options and the exercise price of the options. The last sale price
of a share of Cadapult's common stock on June 30, 1999 as reported by
the OTC Bulletin Board was $2.625.
6
<PAGE>
The following table sets forth information concerning long-term options
granted during the fiscal year ended June 30, 1999 to those persons named in
the preceding Summary Compensation Table. Cadapult has not adopted a formal
long-term incentive option plan. The options presented in the following
table were granted pursuant to employment agreements, as amended, with
Cadapult.
<TABLE>
Long-Term Incentive Plans-Awards in Last Fiscal Year
Number Performance
of shares, or other units or
units or period until
other maturation or Estimated Future Payouts under
Name rights (#)(1) payout (2) Non-Stock Price-Based Plans(3)
- ------------------------------------------------------------------------------------------
Threshold Target Maximum
(#) (#) (#)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Michael W. Levin 500,000 5/98 - 4/01 125,000 125,000 500,000
Frances Blanco 100,000 5/99 - 4/01 25,000 25,000 100,000
Duncan Huyler 100,000 5/99 - 4/01 25,000 25,000 100,000
</TABLE>
(1) For purpose of this table, includes options granted during the two
month fiscal year transition period from May 1 through June 30, 1998.
(2) The 5-year options, exercisable into common stock at the fair market
value on the date of grant, were granted pursuant to employment
agreements, as amended. The performance period refers to the term of
the individual's employment term during which the options must vest.
(3) The long-term incentive options are contingent upon attainment of
certain corporate earnings milestones. These options will vest in
equal twenty five percent installments upon each of the following
events: (a) the first fiscal year end in which Cadapult's earnings
before interest, taxes, depreciation and amortization ("EBITDA")
exceeds $500,000; (b) the first fiscal year end in which Cadapult's
EBITDA exceeds $1,000,000; (c) the first fiscal year end in which
Cadapult's EBITDA exceeds $1,500,000; and (d) the first fiscal year end
in which Cadapult's EBITDA exceeds $2,000,000. These options are
cumulative and are subject to anti-dilution rights. The threshold
refers to the minimum number of options that may vest during the
performance period. The target refers to the number of options that
may vest in the 2000 fiscal year.
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS AND CHANGE OF CONTROL
Michael W. Levin serves as Chief Executive Officer and President
pursuant to a five year employment agreement, commenced on May 1, 1998, as
amended, at an annual salary of $130,000, with cost-of-living adjustments
tied to the Consumer Price Index, or such greater annual salary as may be
established by Cadapult's Board of Directors. Commencing in the third year
of the employment agreement, Mr. Levin's base annual salary shall be
increased by an amount such that such increase shall be equal to at least one
percent of Cadapult's earnings before interest, taxes, depreciation and
amortization ("EBITDA") in the most recent fiscal year. Mr. Levin has been
granted 5-year options to purchase up to 500,000 shares, proportioned to vest
only after Cadapult's achievement of certain corporate milestones,
exercisable at $1.375 per share. Mr. Levin may purchase 125,000 shares
following the first fiscal year that Cadapult's EBITDA exceeds each of
$500,000, $1,000,000, $1,500,000 and $2,000,000, respectively. These options
are cumulative and are subject to anti-dilution rights. Mr. Levin is also
entitled to death benefits of $100,000, a fifteen year (15-year) term life
insurance policy with a face amount of benefit of $1,000,000, a luxury
automobile, reimbursement for reasonable travel and other business related
expenses, and other bonuses to be determined by the Board of Directors. In
the event of a "change of control" of Cadapult, Mr. Levin is entitled to
receive a golden parachute payment equal to two hundred and ninety percent
(290%) of his "base amount", as defined in Section 280G(3) of the Internal
Revenue Code of 1986, as amended, and has the right to terminate the
agreement. "Change of control" is defined to be any of the following: (i) a
change in the ownership or management of Cadapult that would be required to
be reported in response to certain provisions of the Securities Exchange Act
of 1934; (ii) an acquisition (other than directly from Cadapult) by a person
or entity (excluding Cadapult) of 25% or more of Cadapult's common stock or
Cadapult's then outstanding voting securities; (iii) a change in a majority
of the current Board of Directors (the "Incumbent Board") (excluding any
persons approved by a vote of at least a majority of the Incumbent Board
other than in connection with an actual or threatened proxy contest); (iv)
consummation of a reorganization, merger, consolidation or sale of all or
substantially all of Cadapult's assets (collectively, a "Transaction") other
than a Transaction in which all or substantially all of the shareholders of
Cadapult prior to such transaction own, in the same proportion, more than 50%
of the voting power of the entity resulting from the Transaction, at least a
majority of the board of directors of the resulting entity were members of the
Incumbent Board, and after which no person (other than the resulting entity
and certain affiliates) beneficially owns 25% or
7
<PAGE>
more of the voting power of the resulting entity, except to the extent such
ownership existed prior to the Transaction; or (v) the approval by Cadapult's
shareholders of a complete liquidation or dissolution of Cadapult.
Frances Blanco serves as Vice President of Marketing and Investor
Relations, Treasurer and Secretary pursuant to a three year employment
agreement, commenced on May 1, 1998 and as amended on March 5, 1999, at an
annual salary of $80,000, plus financial bonuses to be determined by the
Board of Directors. Ms. Blanco has been granted 5-year options to purchase
up to 100,000 shares, proportioned to vest only after Cadapult's achievement
of certain corporate milestones, exercisable at $2.00 per share. Ms. Blanco
may purchase 25,000 shares following the first fiscal year that Cadapult's
EBITDA exceeds each of $500,000, $1,000,000, $1,500,000 and $2,000,000,
respectively. These options are cumulative and are subject to anti-dilution
rights.
Duncan Huyler serves as Vice President of Technical Services pursuant
to a three year employment agreement, commenced on May 1, 1998 and as amended
on March 5, 1999, at an annual salary of $95,000, plus financial bonuses to
be determined by the Board of Directors. Mr. Huyler has been granted 5-year
options to purchase up to 100,000 shares, proportioned to vest only after
Cadapult's achievement of certain corporate milestones, exercisable at $2.00
per share. Mr. Huyler may purchase 25,000 shares following the first fiscal
year that Cadapult's EBITDA exceeds each of $500,000, $1,000,000, $1,500,000
and $2,000,000, respectively. These options are cumulative and are subject
to anti-dilution rights.
STOCK OPTION PLAN
Pursuant to Cadapult's Incentive Stock Option Plan (the "1998 Stock
Option Plan"), which has been adopted the Board of Directors and approved by
its shareholders, 500,000 shares of Cadapult's authorized but unissued common
stock has been reserved for issuance pursuant to the 1998 Stock Option Plan.
The 1998 Stock Option Plan is administered by a person designated by the
Board of Directors (the "Administrator"), presently the Chairman of the
Board. Stock option (which may be "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code")) entitles the holder to purchase shares of common stock during a
specified period at a purchase price of not less than the fair market value
of the common stock on the day the option is granted. We filed a Form S-8 to
register the 500,000 shares underlying the stock options. We granted certain
employees 5-year and 10-year options to purchase up to 295,381 shares of
common stock, of which 88,229 options are presently exercisable, at prices of
$1.25 to $4.00 per share pursuant to the 1998 Stock Option Plan, including
its officers and directors, as follows: Michael W. Levin, 5-year options to
purchase 51,223 shares at $1.375; Frances Blanco, 10-year options to purchase
7,741 shares at $1.25; Duncan Huyler, 10-year options to purchase 9,265
shares at $1.25; and Paul Baker, 10-year options to purchase 3,000 shares at
$2.00.
EMPLOYEE PROFIT SHARING PLAN
On January 1, 1994, Cadapult adopted a tax-qualified employee paired
profit sharing plan (the "401(k) Plan"), sponsored by Kemper Financial
Services, Inc., which covers all of our employees that have been employed for
at least six months and meet other age and eligibility requirements.
Pursuant to the 401(k) Plan, employees may elect to reduce their current
compensation by up to 15% for the plan year and have the amount of such
reduction contributed to the 401(k) Plan. Under the 401(k) Plan, we make
matching contributions, using a discretionary formula, currently equal to
twenty five percent of the employee's contribution. We, in our sole
discretion, may contribute an amount which it designates as a qualified
nonelective contribution to designated participants. The 401(k) Plan is
intended to qualify under Section 401 of the Code, so that contributions by
employees or by Cadapult to the 401(k) Plan, and so that contributions by
Cadapult, if any, will be deductible by Cadapult. The Trustee under the
401(k) Plan, at the direction of each participant, invests the assets of the
401(k) Plan in any of a number of investment options. All employee
contributions to the 401(k) Plan are fully vested at all times, and
Cadapult's contributions, if any, vest 25% after two years and at the rate of
25% a year thereafter until fully vested.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1998, Cadapult filed a registration statement on Form S-8 for
66,068 shares of common stock. We issued the shares to four individuals,
including its officers and directors, pursuant to written compensation
agreements as follows: Leonard W. Burningham, 63,068 shares; Kathleen L.
Morrison, 1,000 shares; Jason Osborn, 1,000 shares; and Terry Hardman, 1,000
shares. Kathleen L. Morrison, Jason Osborn, and Terry Hardman resigned as
directors and officers of Cadapult effectively as of June 18, 1998.
On June 18, 1998, we completed the acquisition of Cadapult Graphic
Systems Inc., a privately-held New Jersey corporation formed on or about May
1, 1987 ("CGSI"), in a transaction viewed as a reverse acquisition. Pursuant
to an Agreement and Plan or Reorganization dated June 5, 1998, between the
Company, CGSI, all of the shareholders of CGSI, Jenson Services, Inc., a Utah
corporation, Duane S. Jenson and Jeffrey D. Jenson, we issued 1,650,000
shares of common stock to the shareholders of CGSI in exchange for all of the
outstanding common stock of CSGI. Pursuant to the reorganization, the
shareholders of CSGI became the controlling shareholders of Cadapult, the
officers and directors of Cadapult resigned and elected the CSGI nominees in
their places, and CSGI became a wholly-owned subsidiary of the Company.
Michael W. Levin acquired 300 shares, no par value, of CGSI on May 1, 1987
for $300. Frances Blanco acquired 7.90 shares, no par value, of CSGI on June
3, 1997 for $15,000. Duncan Huyler acquired 7.90 shares, no par value, of
CSGI on June 3, 1997 for $15,000. Duncan Yates acquired 3.8748 shares, no
par value, of CGSI on April 20, 1998 for $15,000. In May 1998, Mr. Levin
made a gift of 3.1 shares to each of their two minor children. Pursuant to
the reorganization, Mr. Levin and his children, Ms. Blanco, Mr. Huyler and
Mr. Yates, representing all the issued and outstanding shares of CGSI,
exchanged their shares of CGSI proportionally for 1,650,000 shares of
Cadapult pursuant to Cadapult's acquisition of CGSI. Michael W. Levin
currently serves as our Chief Executive Officer, President and Chairman of
the Board. Frances Blanco currently serves as our Vice President, Secretary,
Treasurer and a Director. Duncan Huyler currently serves as our Vice
President and a Director.
Cadapult granted Mr. Levin 5-year stock options to purchase up to
500,000 shares of common stock (no options are presently exercisable) to vest
upon Cadapult attaining certain specified corporate milestones based upon
corporate earnings, exercisable at $1.375. Cadapult granted to each of Ms.
Blanco and Mr. Huyler 5-year stock options to purchase up to 100,000 shares
of common stock each (no options are presently exercisable) to vest upon
Cadapult attaining certain specified corporate milestones based upon
corporate earnings, exercisable at $2.00.
In August 1998, we filed a registration statement on Form S-8 for its
1998 Stock Option Plan. We granted certain employees, 5-year and 10-year
incentive stock options to purchase 295,381 shares, of which 88,229 options
are presently exercisable, at prices of $1.25 to $4.00 per share. Executive
officers and directors have been granted the following options pursuant to
the 1998 Stock Option Plan: Michael W. Levin, 5-year options to purchase
51,223 shares at $1.375; Frances Blanco, 10-year options to purchase 7,741
shares at $1.25; Duncan Huyler, 10-year options to purchase 9,265 shares at
$1.25; and Paul Baker, 10-year options to purchase 3,000 shares at $2.00 and
30,000 shares at $3.31. Pursuant to the 1998 Stock Option Plan, we reserved
500,000 authorized and unissued shares of common stock for issuance upon the
exercise of the incentive stock options.
SHAREHOLDER PROPOSALS
Shareholder proposals for inclusion in Cadapult's Year 2000 Information
Statement or Proxy Statement and related proxy materials must be received by
June 30, 2000. In addition, proposals of Cadapult's shareholders intended to
be presented at the 2001 Annual Meeting of Cadapult must be received by
Cadapult before August 30, 2000. Proposals for inclusion in Cadapult's
Information Statement or Proxy Statement or for presentation at the Annual
Meeting must be submitted to Cadapult in writing at c/o Cadapult Graphic
Systems, Inc., 110 Commerce Drive, Allendale, New Jersey 07401, Attention:
Secretary. There are additional requirements regarding proposals of
hareholders, and a shareholder contemplating submission of a proposal is
referred to Rule 14a-8 promulgated under the Securities Exchange Act of 1934.
We did not receive any shareholder proposals in connection with this
Information Statement and our Annual Meeting.
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FORM 10-KSB
WE WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF CADAPULT'S
ANNUAL REPORT ON FORM 10-KSB, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES,
AND LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO: CADAPULT GRAPHIC SYSTEMS,
INC., 110 COMMERCE DRIVE, ALLENDALE, NEW JERSEY 07401, ATTN.: INVESTOR
RELATIONS.
OTHER ACTION AT MEETING AND VOTING OF PROXIES
The Board of Directors knows of no other matters, except the proposals
in this Information Statement, for shareholder action at the Annual Meeting.
However, if other matters do properly come before the Annual Meeting or any
adjournments or postponements, the Board intends that the persons named in
the proxies will vote upon such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Frances Blanco
Frances Blanco
Secretary
Allendale, New Jersey
November 8, 1999
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