SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a 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 Rule 14a-11(c) or Rule 14a-12
Fairmount Chemical Co., Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
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(1) Title of each class of securities to which transaction applies:
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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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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
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FAIRMOUNT CHEMICAL CO., INC.
117 Blanchard Street
Newark, New Jersey 07105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 20, 1998
To The Stockholders of
Fairmount Chemical Co., Inc.
The Annual Meeting of Stockholders of FAIRMOUNT CHEMICAL CO.,
INC. (the "Company") will be held at the offices of Ross & Hardies, Park Avenue
Tower, 65 East 55th Street, New York, on May 20, 1998, at 10:00 A.M., local
time, for the following purposes:
1. To elect three (3) directors.
2. To vote on the ratification of the appointment of KPMG
Peat Marwick LLP as independent certified accountants for
the Company for 1998.
3. To transact such other business as may properly come
before the meeting or any adjournments thereof.
This notice is accompanied by the Company's Annual Report to
Stockholders for the year ended December 31, 1997, which shall not be deemed to
be soliciting material or incorporated in the annexed Proxy Statement by
reference.
The Board of Directors has fixed the close of business on
April 15, 1998, as the record date for the determination of stockholders
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
Whether or not you plan to attend the meeting, you are urged to complete the
enclosed proxy card and sign and return it promptly in the enclosed postpaid
return envelope. Returning the proxy card will not affect your right to revoke
the proxy or to vote in person at the meeting.
By Order of the Board of Directors,
JAMES F. GILDAY
Secretary
Dated: April 21 ,1998
Newark, New Jersey
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FAIRMOUNT CHEMICAL CO., INC.
117 Blanchard Street
Newark, New Jersey 07105
PROXY STATEMENT
SOLICATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of
Fairmount Chemical Co., Inc. (the "Company") to be voted at the Annual Meeting
of Stockholders to be held on May 20, 1998, and at any adjournment thereof (the
"Annual Meeting"). The proxy is revocable at any time prior to its exercise
either by execution of another proxy or by voting in person at the Annual
Meeting.
The stock transfer books of the Company will not be closed,
but the Board of Directors has fixed the close of business on April 15, 1998 as
the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting or at any adjournment thereof. On that date, there
were 8,292,866 shares of common stock (the "Common Stock") outstanding. Each
share is entitled to one vote on each matter properly brought before the
meeting.
The Bylaws of the Company provide that, except as otherwise
required by law or by the Company's Certificate of Incorporation, a majority in
interest of all the stock issued and outstanding and entitled to vote shall
constitute a quorum for the consideration of any question, but a lesser interest
may adjourn the meeting from time to time. The affirmative vote of a plurality
of the votes cast at the Annual Meeting is required to elect the three nominees
for director named on the proxy, and the affirmative vote of a majority of the
votes cast is required to ratify the appointment of KPMG Peat Marwick LLP as
independent certified public accountants for the Company for 1998.
Abstentions and broker non-votes will be included when
determining whether a quorum is present at the Annual Meting. Abstentions and
broker non-votes have no effect on voting for the election of directors because
neither is considered a vote cast. An abstention has the effect of voting
against a matter where a vote of a majority of the shares present is required
since an abstention is counted as a share present but is not counted as a vote
for such matter. Broker non-votes have no effect where a majority of the shares
present is required since they are not counted as shares present with respect to
such matter. A broker non-vote occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that proposal and has not
received instructions from the beneficial owner (despite voting on at least one
other proposal for which the nominee has discretionary voting power or has
received such instructions).
To assure adequate representation at the Annual Meeting,
stockholders are requested to sign and return the enclosed proxy promptly. The
shares represented by the proxy will be voted in accordance with the
instructions of the person executing the same. In the absence of instructions to
the contrary, proxies will be votes "FOR" the election of the three nominees for
director named in the proxy, and "FOR" the ratification of the appointment of
KPMG Peat Marwick LLP as independent public accountants for the Company for
1998.
This proxy Statement and the enclosed form of Proxy are first
being mailed on or about April 21, 1998.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Principal Holders of Voting Securities
To management's knowledge, the table set forth below indicates
the beneficial ownership (direct unless otherwise indicated) of the Common Stock
of the Company as of April 16, 1998 by (i) persons owning more than 5% of such
stock, (ii) each director of the Company, (iii) each named executive officer and
(iv) by all executive officers and directors of the Company as a group.
Amount and
Name and Address of Beneficial Nature of
Owner or Designation of Group Beneficial
Class Ownership Percentage
Howard Leistner, Hedi Mizrack 4,789,200 57.7%
and Gilbert Leistner Irrevocable
Grantor Trust (1)
117 Blanchard Street
Newark, New Jersey 07105
Da Mota Family Partnership 1,313,590 15.8%
Estate of Dona Da Mota 833,624 10.1%
c/o Glen Da Mota
37 Taunton Hill Road
Newtown, CT 06470
Howard Leistner (2) (4) 1,596,900 19.3%
Richard Mizrack (3) (4) 1,596,600 19.3%
Dr. Reidar Halle (4) (5) - -
James Gilday (6) 15,000 -
William Setzler (7) 43,000 -
Todd Walker (8) 20,000 -
All Officers and Directors as a 3,208,400 38.7%
Group (6 Persons)
The Howard Leistner, Hedi Mizrack and Gilbert Leistner
Irrevocable Grantor Trust (the "Leistner Trust"), which controls 57.7% of the
outstanding shares of the Company, can elect the entire Board of Directors and
ratify the appointment of KPMG Peat Marwick LLP as independent certified public
accountants.
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(1) On April 9, 1998 the transfer of 4,789,200 common shares and 5,400,000
preferred shares of the Company's stock was executed from the Estate of
William E. Leistner (the "Leistner Estate") to the Howard Leistner, Hedi
Mizrack and Gilbert Leistner Irrevocable Grantor Trust (the "Leistner
Trust"). The Leistner Trust will terminate on June 19, 2002. Howard
Leistner, Hedi Mizrack and Gilbert Leistner are William E. Leistner's
children and each has sole voting and investment power over 1,596,400
common shares held in the Leistner Trust. Richard Mizrack is married to
Hedi Mizrack.
(2) Includes 1,596,400 shares in the Leistner Trust over which Howard Leistner
has sole voting and investment power (See Note 1 above).
(3) Richard Mizrack disclaims beneficial ownership over 1,596,500 common
shares, 1,596,400 common shares of which are owned by his wife, Hedi
Mizrack, in the Leistner Trust and over which she has sole voting and
investment power and another 100 shares which are owned by his wife
individually (See Note 1 above).
(4) The named individual is a director and nominee of the Company.
(5) The named individual is interim Chief Executive Officer and President of
the Company.
(6) The named individual is a director of the Company.
(7) The named individual was Chief Executive Officer of the Company during the
last fiscal year.
(8) The named individual was Chief Executive Officer and President of the
Company during the last fiscal year.
ITEM ONE. ELECTION OF DIRECTORS
Nominees
There are three directors to be elected. One of the current
directors, James F. Gilday, has declined to stand for reelection. The Company
has not identified a successor at this time. There will be a vacancy on the
Board in the interim. The Board of Directors recommends a vote "FOR" the
election as directors of the following nominees, and unless otherwise directed,
proxies received in response to this solicitation will be voted for the election
as directors of the following three nominees to serve until the next Annual
Meeting and until their successors are elected and qualified. Each nominee is
currently a director of the Company and was elected at a Special Meeting of the
Board of Directors on September 11, 1997.
If for any reason any of these nominees becomes unable or
unwilling to serve at the time of the meeting, it is the intention of the
persons named in the proxy to vote the proxies for the remaining nominees and
for such substitute nominees as the Board of Directors may designate, or if none
are designated, the size of the Board will be reduced. It is not anticipated
that any nominee will be unavailable for election.
The following table and text furnishes for each director and
nominee, his name, age, principal occupation for the past five years and the
year he first became a director of the company.
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Name and Age Principal Occupation
Dr. Reidar T. Halle, 55 President and Chief Executive Officer
Director since September, 1997 since January, 1998. Elected Director in
September, 1997. Managing Director of
Qual Tech Enterprises, Inc. 1987 to 1998.
Howard R. Leistner, 66 Chairman of the Board of Directors, since
Director since September, 1997 January, 1998. Elected director in
September, 1997. Consultant (self-
employed), 1986 to present. Vice President
of Witco Corp., a major international
specialty chemical manufacturer listed on
the New York Stock Exchange (1970 to 1985).
Richard Mizrack, 55 Elected director in September, 1997.
Director since September, 1997 Partner in the law offices of Mizrack
and Gantt, 1997 to present. Counsel
in the law offices of Feingold & Napoli,
LLP 1995 to 1996. Partner/Shareholder
in the law offices of Ober, Khaler,
Grimes and Shriver, 1990 to 1995.
Director at UBE Industries (American), Inc.
James F. Gilday, 48 Not a nominee. Elected a director,
Director since June, 1997 Chief Financial Officer, Corporate
Secretary in June, 1997. Controller
January,1994 to June,1997. FL
Industries 1987-1993, controller at two
locations, management positions in the
treasury and risk insurance functions.
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Related Tranactions
In May 1993, William E. Leistner purchased 5,400,000 shares of
the Company's Convertible Cumulative Preferred Stock, par value $1.00 per share
(the "Preferred Stock"), in exchange for the cancellation of $5,400,000 of
indebtedness owed him by the Company, which are held by the Leistner Trust. The
Company authorized the Preferred stock in its Restated Certificate of
Incorporation, which was filed with the Secretary of State of New Jersey on May
13, 1993, and amended in May 1994. Holders of Preferred Stock are entitled to
Common Stock. Shares of Preferred Stock are redeemable under certain
circumstances. A balance of the indebtedness of $491,600 remained as accrued
interest (the "Leistner Loan") after such conversion. On July 2, 1997 the
Company replaced the $491,600 balance of the Leistner Loan, that was due April
1, 1998, with a promissory note to the Leistner Estate for the same amount, due
January 1, 2005.
On March 20, 1992, a Credit Facility Loan Agreement ("Credit
Facility) was created with monies contributed to a fund ("the Fairmount Fund")
by William E. Leistner and the Estate of Olga H. Knoepke. The outstanding
borrowings from the Credit Facility were $1,080,000. On July 2, 1997 the Credit
Facility was terminated and the Company replaced the $1,080,000 of credit
facility borrowings with new promissory notes due January 1, 2005. The Leistner
Estate received a note for $648,000. Three notes were issued to beneficiaries of
the Knoepke Estate. These three notes were issued to the da Mota Family
Partnership - $224,640, Glen da Mota - $142,560 and Lynn da Mota - $64,800.
The Leistner Trust may be deemed to be "control persons" of
the Company as such term is defined in Exchange Act Rule 12b-2.
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Executive Officers of the Company
The name, age and all positions and officers with the Company
of each executive officer are set forth below:
Name and Age Position and Offices
Robert C. Boyd, 53 Vice President, Manufacturing
James F. Gilday, 48 Director, Vice President;
Chief Financial Officer;
Secretary, Treasurer
Dr. Seymon Moshchitsky, 66 Vice President, Research and
Development
Dr. Reidar T. Halle, 55 Director, Chief Executive
Officer, President
The principal occupations for the past five years and stock ownership of
Dr. Reidar T. Halle, Howard R. Leistner and Richard Mizrack are described under
the sub caption "Nominees" above.
Robert C. Boyd joined the Company in June, 1996 as Vice President,
Manufacturing. He is responsible for all manufacturing, environmental,
engineering, maintenance and shipping activities at the Company's plant. Prior
to that he was Vice President of Operations and Planning at De Soto, Inc. from
1993 to 1996 and Director of Purchasing at Lever Brothers Company from 1984 to
1993.
Dr. Seymon Moshchitsky was elected Vice President, Research and Development
of the Company in August, 1992. Prior to that Dr. Moshchitsky had been manager
of the Company's Research and Development Department for over five years, and a
Senior Research Chemist at the Company starting in 1982.
Company executive officers are elected by the Board of Directors to hold
office until the first meeting of the Board following the next Annual Meeting of
Stockholders and until their respective successors are elected. All officers are
subject to removal, with or without cause, by the Board of Directors at any
time.
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Meetings of the Board of
Directors and Committees
During 1997, the Board of Directors held five meetings, each
of the Directors attended all the meetings. The audit committee consists of one
director, Howard Leistner. The committee held one meeting. Among the Committee's
functions are making recommendations to the Board of Directors regarding the
continued engagement, reviewing the adequacy of the Company's system of internal
accounting controls and reviewing and approving audit and non-audit fees.
The compensation committee consists of one director, Richard
Mizrack, who is a non-employee director. The committee had one meeting in 1997.
The compensation committee develops and administers the compensation programs
for the Company's executive officers and other salaried employees. The
compensation committee also works with the Chief Executive Officer in the
assessment of the organization's effectiveness, leadership depth and the
development of highly valued executives and other managers throughout the
Company.
Section 16(a) Beneficial Ownership Reporting Compliance
Under SEC rules, the Company's directors, executive officers and beneficial
owners of more than 10% of any Company common stock are required to file
periodic reports of their ownership, and changes in that ownership, with the
SEC. Based solely on its review of copies of these reports and representations
of such reporting persons, the Company believes during fiscal 1997, such SEC
filing requirements were satisfied, except as described in the following
sentences.
Dr. Reidar Halle and James F. Gilday, each a director and executive officer
of the Company, and Robert C. Boyd, an executive officer of the Company,
knowingly failed to file on a timely basis one report each as required by
Section 16(a) of the Securities Exchange Act of 1934, as amended, (the "Exchange
Act"), during 1997. All of the required reports for Dr. Halle, Mr. Gilday and
Mr. Boyd were subsequently filed in February, 1998. Dr. Halle's report covered
his new position as officer and director, and Mr. Gilday's and Mr. Boyd's
reports covered their new positions as officers of the Company.
The DaMota Family Partnership, a 10% shareholder of the Company, knowingly
failed to file on a timely basis a Form 3 reflecting its 10% shareholder status,
and knowingly failed to file on a timely basis during 1995 a Form 4 reflecting
the sale of some its common stock of the Company. The Estate of Dona DaMota, a
10% shareholder of the Company, knowingly failed to file on a timely basis
during 1997 a Form 3 reflecting her acquisition of 10% of the Company's common
stock.
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COMPENSATION OF DIRECTORS AND
EXECUTIVE OFFICERS
Compensation of Directors
Non-employee directors of the Company received an annual cash
retainer of $5,000. Non-employee directors received an additional fee of $1,000
for attending each Board Meeting. Directors who are also officers are not
compensated for being directors.
Executive Compensation
Information with respect to the Chief Executive Officer and
each individual serving as an executive officer of the Company on December 31,
1997 whose aggregate remuneration exceeded $100,000 during 1997 is set forth in
tabular form below with respect to each of the Company's last three fiscal
years.
Summary Compensation Table
Fiscal
Name and Position Year Compensation
Howard R. Leistner 1997 $ 7,000
Chairman of the Board 1996 -
1995 -
Todd K. Walker 1997 $117,200
President and Chief 1996 $110,000
Operating Officer 1995 $103,000
(from December 1996;
previously Vice President,
Marketing (from September 1994)
William E. Setzler 1997 $ 28,400
Chairman of the Board 1996 $ 52,200
1995 $ 28,000
Dr. Reidar Halle 1997 -
1996 -
1995 -
Dr. Reidar Halle was elected by the Board of Directors as President and
Chief Executive Officer on an interim basis in January, 1998. His monthly
compensation is $15,500. The Board of Directors is in the process of negotiating
an employment agreement with Dr. Halle. The employment agreement is expected to
provide for annual compensation of $141,500 and certain performance bonuses
which have not yet been determined.
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During the past three fiscal years, no compensation was
awarded to, earned by or paid to any of the named executives (in the form of
salary, bonus, stock appreciation rights, stock options or any other form of
cash or non-cash consideration) other than as set forth in the chart above. Each
of Todd K. Walker, Robert C. Boyd, Dr. Seymon Moshchitsky and James F. Gilday
were granted the use of a leased company car in 1997.
Pension Plan
The Company maintains a defined benefit pension plan for its
employees. Pension benefits to be paid from, and contributions to the plan are
of a unit benefit type related to basic salary including a base wage, overtime
payments and shift premiums, but excluding bonuses, commissions and other
special additional Security benefits.
The following table sets forth, in straight life annuity
amounts the estimated annual benefits upon retirement at age 60 in calendar year
1997, based on the post-1989 benefit formula, in the final average pay and
service classifications specified:
Years of Service
Final Average
Annual Pay 10 15 20 25 30 35
- ---------- -- -- -- -- -- --
$ 15,000 1,200 1,800 2,400 3,000 3,600 4,200
30,000 2,430 3,646 4,860 6,076 7,291 8,506
45,000 4,280 6,420 8,560 10,701 12,841 14,981
60,000 6,130 9,196 12,261 15,326 18,392 21,456
75,000 7,980 11,971 15,961 19,952 23,942 27,932
90,000 9,830 14,746 19,661 24,577 29,492 34,407
Estimated annual benefits upon retirement at 65 for all officers as a group are
$18,712.
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Other than as described in this Proxy Statement and provisions
under a union contract, the Company does not have, and within the past five
years has not had, any other bonus plan, profit-sharing, pension, retirement,
stock option, stock purchase, deferred compensation or other remuneration or
incentive plan for its directors, officers and employees. The Company paid a
holiday bonus to employees in the aggregate amount of $5,000 of which none was
awarded to officers of the Company in January 1998 for the fiscal year ended
December 31, 1997.
The Company's securities are not traded on any exchange. There
has been no over-the-counter market activity with respect to the Common Stock
since the last quarter of 1991, at which time the highest per share asked and
bid prices of such shares were, respectively, $0.05 and $0.05.
As of April 21,1998, options for 72,500 shares are outstanding
under the Plan held by 11 persons, including one executive officer who hold
options to purchase 25,000 shares. As of April 21,1998 the average per share
exercise price of all options under the Amended Plan is $1.00.
ITEM TWO. RATIFICATION OF APPOINTMENT OF AUDITORS
Subject to stockholder ratification, the Board of Directors,
upon the recommendation of the Audit Committee, has reappointed the firm of KPMG
Peat Marwick LLP as independent certified public accountants to audit the
financial statements of the Company for 1998, a service which such firm has
furnished to the Company since 1982. If the appointment is not ratified by the
stockholders, the Board of Directors may reconsider its appointment. One or more
members of this firm are expected to be present at the Annual Meeting, will have
an opportunity to make a statement, and will be available to respond to
appropriate questions.
The Board of Directors recommends a vote "FOR" the
ratification of the appointment of KPMG Peat Marwick LLP as independent
certified public accountants to audit the financial statements of the Company
for 1998.
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SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be submitted at the 1999
Annual Meeting of Stockholders must be received by the Secretary of the Company
no later than December 9, 1998.
EXPENSES OF SOLICITATION
Solicitation of proxies is being made by management on behalf
of the Board of Directors of the Company through the mail, in person and
telephone through its regular employees who will not be additionally
compensated. The cost of soliciting proxies will be borne by the Company. The
Company will also reimburse brokerage houses and others for forwarding proxy
material to beneficial owners of the shares.
OTHER MATTERS
The Company's Annual Report to Stockholders for the fiscal
year ended December 31, 1997, a copy of which accompanies this Proxy Statement,
is hereby incorporated by reference. Stockholders not receiving a copy of the
Annual Report to Stockholders may obtain on by writing or calling James F.
Gilday, Secretary, Fairmount Chemical Co., Inc., 117 Blanchard Street, Newark,
NJ 07105, (973) 344-5790.
At the date of this proxy statement, the Company knows of no
other matters which might be presented for shareholder action at the meeting. If
any matter not described herein arises, the persons appointed by the enclosed
proxy intend to vote the shares represented by them in accordance with their
best judgment.
Dated: April 21,1998
By Order of the Board of Directors,
/s/ JAMES F. GILDAY
Secretary
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PROXY FAIRMOUNT CHEMICAL CO., INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 20, 1998
The undersigned hereby appoints HOWARD R. LEISTNER AND DR. REIDAR T.
HALLE and each of them with power of substitution, proxies of the undersigned to
act on behalf of the undersigned at the Annual Meeting of stockholders of
FAIRMOUNT CHEMICAL CO., Inc. to be held at 10:00 a.m., local time, May 20, 1998,
at the offices of Ross & Hardies, Park Avenue Tower, 65 East 55th Street, New
York, New York, and at any adjournments thereof, and to vote and to act as
specified hereon, with respect to all of the undersigner's shares of Common
stock of the Company which the undersigned would be entitled to vote if
personally present.
The shares represented hereby will be voted in accordance with the
specifications made hereon, or, if no specification is made will be voted FOR
the election of the nominees of the Board of Directors and FOR Proposal 2 and in
accordance with the proxies' best judgment on any other matter that may properly
come before the meeting.
Please mark boxes |_| or |_| in blue or black ink AUTHORITY TO VOTE WITHHELD
1.FOR ELECTION OF DIRECTORS (all nominees (as to all nominees listed)|_|
listed except as indicted to the contrary) |_|
Nominees: Howard R. Leistner, Dr. Reidar T. Halle, and Richard Mitzrack
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.
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(Continued, and to be signed and dated, on reverse side)
2. Ratification of Appointment of Auditors FOR |_| AGAINST |_| ABSTAIN |_|
3. Upon such other business as may properly come before the meeting.
Give Title when signing as attorney, executor, administrator, trustee or
corporate officer. EACH joint owner should sign. Sign EXACTLY as name is printed
hereon.
Dated: ___________________________________, 1998
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Signature
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Signature
