<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] 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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
FAIRMOUNT CHEMICAL CO., INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
FAIRMOUNT CHEMICAL CO., INC.
117 BLANCHARD STREET
NEWARK, NEW JERSEY 07105
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1999
To The Stockholders of
Fairmount Chemical Co., Inc.
The Annual Meeting of Stockholders of FAIRMOUNT CHEMICAL CO., INC.
will be held at the offices of Fairmount Chemical Co., Inc., on May 18, 1999, 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 LLP as
independent certified accountants for Fairmount Chemical Co.,
Inc. for 1999.
3. To transact such other business as may properly come before
the meeting or any adjournments thereof.
This notice is accompanied by Fairmount's annual report to
stockholders for the year ended December 31, 1998, 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 16,
1999, 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
MARIA HAYDUCKA
Secretary
Dated: April 27, 1999
Newark, New Jersey
<PAGE> 3
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. ("FAIRMOUNT") TO BE VOTED AT THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON MAY 18, 1999, AND AT ANY ADJOURNMENT OF 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 Fairmount will not be closed, but the
board of directors has fixed the close of business on April 16, 1999 as the
record date for determining the stockholders entitled to notice of and to vote
at the annual meeting or at any adjournment of the annual meeting. On that date,
there were 8,292,866 shares of common stock outstanding. Each share is entitled
to one vote on each matter properly brought before the meeting.
The bylaws of Fairmount provide that, except as otherwise required
by law or by Fairmount'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 LLP as independent certified public
accountants for Fairmount for 1999.
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 LLP as independent public accountants for Fairmount for 1999.
This proxy statement and the enclosed form of proxy are first being
mailed on or about April 27, 1999.
1
<PAGE> 4
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
Fairmount as of April , 1999 by persons owning more than 5% of such stock, (ii)
each director of Fairmount, (iii) each executive officer and (iv) by all
officers and directors of Fairmount 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
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) (3) 4,789,200 57.7%
Richard Mizrack (3) 4,789,300 57.7%
Dr. Reidar Halle (3) (4) (6) 334,000 3.9%
James Gilday (5) 15,000 --
Todd Walker (5) 20,000 --
All Officers and Directors as a 5,123,300 59.4%
Group (3 Persons)
The Howard Leistner, Hedi Mizrack and Gilbert Leistner Irrevocable
Grantor Trust, which controls 57.7% of the outstanding shares of Fairmount,
could elect the entire Board of Directors and ratify the appointment of KPMG LLP
as independent certified public accountants. However, Howard Leistner, Hedi
Mizrack and Gilbert Leistner each has been granted voting investment and power
over 1,596,400 common shares held in the trust.
2
<PAGE> 5
(1) On April 9, 1998 the transfer of 4,789,200 common shares and 5,400,000 of
preferred shares of Fairmount's stock was executed from the Estate of
William E. Leistner to the Howard Leistner, Hedi Mizrack and Gilbert
Leistner Irrevocable Grantor Trust. This trust will terminate on June 19,
2002. Howard Leistner, Hedi Mizrack and Gilbert Leistner are William E.
Leistner's children and each has been granted voting and investment power
over 1,596,400 common shares held in the trust. Richard Mizrack is married
to Hedi Leistner.
(2) Includes shares held by Leistner trust (See Note 1 above).
(3) The named individual is a director and nominee of Fairmount.
(4) The named individual is an executive officer of Fairmount.
(5) The named individual was an executive officer of Fairmount during the last
fiscal year.
(6) Includes stock options of 1,000,000 shares of which 334,000 are
exercisable as of January 12, 1999.
ITEM ONE. ELECTION OF DIRECTORS
NOMINEES
There are three directors to be elected. 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 Fairmount and was elected at
Fairmount's Annual Meeting of Stockholder's on May 20, 1998.
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 of directors will be reduced. It is not anticipated that any
nominee will be unavailable for election.
3
<PAGE> 6
The following table and text furnishes for each nominee, name, age,
principal occupation for the past five years and the year he first became a
director of the company.
Name and Age Principal Occupation
- ------------ --------------------
Dr. Reidar T. Halle, 56 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, 67 Chairman of the Board of Directors,
Director since September 1997 since 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, 56 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.
RELATED TRANSACTIONS
In May 1993, William E. Leistner purchased 5,400,000 shares of
Fairmount's Convertible Cumulative Preferred Stock, par value $1.00 per share,
in exchange for the cancellation of $5,400,000 of indebtedness owed him by
Fairmount, which are held by the Leistner trust. Fairmount 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 after such conversion. On
July 2, 1997 Fairmount 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.
4
<PAGE> 7
On March 20, 1992, a Credit Facility Loan agreement was created with
monies contributed to a 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 Fairmount 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 a "control person" of
Fairmount as such term is defined in Exchange Act Rule 12b-2.
EXECUTIVE OFFICERS OF THE COMPANY
The name, age and all positions and officers with Fairmount of each
executive officer is set forth below:
Name and Age Position and Offices
------------ --------------------
Dr. Seymon Moshchitsky, 67 Vice President, Research and
Development
Dr. Reidar T. Halle, 56 Director, Chief Executive
Officer, President
Maria Hayducka, 45 Secretary
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.
Dr. Seymon Moshchitsky was elected Vice President, Research and
Development of Fairmount in August 1992. Prior to that Dr. Moshchitsky had been
manager of Fairmount's Research and Development Department for over five years,
and a Senior Research Chemist at Fairmount starting in 1982.
Fairmount's executive officers are elected by the board of directors
to hold office until the first meeting of the board of directors 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.
Ms. Hayducka was elected Secretary in May 1998. Ms. Hayducka has
held various administrative positions since 1973.
5
<PAGE> 8
MEETINGS OF THE BOARD OF
DIRECTORS AND AUDIT COMMITTEE
During 1998, the board of directors held 8 meetings, each of the
directors attended all the meetings. The audit committee consists of one
director, Howard Leistner. The committee held 1 meeting. Among the audit
committee's functions are making recommendations to the board of directors
regarding the continued engagement, reviewing the adequacy of Fairmount'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 1 meeting in 1998.
The compensation committee develops and administers the compensation programs
for Fairmount'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 Fairmount.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under SEC rules, Fairmount's directors, executive officers and
beneficial owners of more than 10% of any Fairmount 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, Fairmount believes during fiscal
1998, such SEC filing requirements were satisfied.
6
<PAGE> 9
COMPENSATION OF DIRECTORS AND
EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
Non-employee directors of Fairmount received an annual cash retainer
of $10,000. Non-employee directors received an additional fee of $1,000 for
attending each board meeting of the board of directors. 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 Fairmount on December 31, 1998
whose aggregate remuneration exceeded $100,000 during 1998 is set forth in
tabular form below with respect to each of Fairmount's last three fiscal years:
<TABLE>
<CAPTION>
Long-term
Compensation
Securities
Name and Principal Annual Compensation All Other Underlying
Position Salary Bonus Compensation Options (#)
-------- ------ ----- ------------ -----------
<S> <C> <C> <C> <C>
Dr. Reidar Halle 1998 $ 94,000 $ 54,000 (1) 1,000,000
(President and Chief 1997
Executive Officer) 1996
Dr. Seymon Moshchitsky 1998 $102,300
(Vice President. Research 1997 $ 93,800
and Development) 1996 $ 92,500 $ 4,000
Todd K. Walker 1998 $ 14,800
(President and Chief 1997 $117,200
Executive Officer from 1996 $110,000
December 1996 to January
1998; previously Vice
President, Marketing)
</TABLE>
(1) Consulting fees paid to Dr. Halle while he served as interim President and
Chief Executive Officer.
Dr. Reidar Halle was elected by the board of directors as President
and Chief Executive Officer on an interim basis in January 1998.
On July 23, 1998 Fairmount entered an employment agreement with Dr.
Halle. Under the agreement, which was made effective January 12, 1998, Dr. Halle
became President and Chief Executive Officer. The agreement can be terminated by
either party by giving thirty days notice. If Fairmount terminates agreement for
any reason other than for cause, as defined, then Dr. Halle shall be paid an
amount equal to six month's annual base salary on January 12, 1998.
7
<PAGE> 10
This table presents information regarding options granted to Fairmount's
executive officers during 1998 to purchase shares of Fairmount's common stock.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Number Of Percent Of Total
Securities Options Granted
Underlying To Employees Exercise Price Expiration
Name Options Granted In Fiscal Year Per Share Date
---- --------------- -------------- --------- ----
<S> <C> <C> <C> <C>
Dr. Reidar Halle 1,000,000(1) 100% $1.00 1/12/2018
</TABLE>
(1) These option are subject to the following vesting schedule:
<TABLE>
<CAPTION>
Exercise Date Exercisable Options
------------- -------------------
<S> <C>
January 12, 1999 334,000
January 12, 2000 333,000
January 12, 2001 333,000
</TABLE>
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. Dr. Seymon
Moshchitsky and Dr. Reidar Halle were granted the use of a leased company car in
1998.
PENSION PLAN
Fairmount 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 an 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 65 in calendar year 1998, based
on the post-1989 benefit formula, in the final average pay and service
classifications specified:
Years of Service
<TABLE>
<CAPTION>
Final Average
Annual Pay 10 15 20 25 30 35
- ---------- -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C>
$ 30,000 3,600 5,400 7,200 9,000 10,800 12,600
60,000 9,077 13,615 18,153 22,692 27,230 31,768
90,000 14,627 21,940 29,253 36,567 43,880 51,193
120,000 20,177 30,265 40,353 50,442 60,530 70,618
150,000 25,727 38,590 51,453 64,317 77,180 90,043
160,000 27,577 41,365 55,153 68,942 82,730 96,518
</TABLE>
Estimated annual benefits upon retirement for all officers as a group are
$17,942.
8
<PAGE> 11
Other than as described in this proxy statement and provisions under
a union contract, Fairmount 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.
Fairmount'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 both, $0.05.
As of April 27, 1999, options for 72,500 shares are outstanding
under the Fairmount Chemical Co., Inc. Pension Plan held by 11 persons,
including two executive officer who hold options to purchase 30,000 shares. As
of April 1, 1999 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 LLP
as independent certified public accountants to audit the financial statements of
Fairmount for 1999, a service which such firm has furnished to Fairmount 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 LLP as independent certified public accountants to audit
the financial statements of Fairmount for 1999.
SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be submitted at the 2000
Annual Meeting of Stockholders must be received by the Secretary of the Company
no later than December 23, 1999. If Fairmount receives notice of a shareholder
proposal after March 8, 2000, the persons named as proxies for the 2000 annual
meeting of shareholders will have discretionary voting authority to vote on that
proposal at the meeting.
EXPENSES OF SOLICITATION
Solicitation of proxies is being made by management on behalf of the
board of directors of Fairmount 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 Fairmount. Fairmount will also reimburse
brokerage houses and others for forwarding proxy material to beneficial owners
of the shares.
9
<PAGE> 12
OTHER MATTERS
Fairmount's annual report to stockholders for the fiscal year ended
December 31, 1998, 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 one by writing or calling Maria Hayducka,
Secretary, Fairmount Chemical Co.,Inc., 117 Blanchard Street, Newark, NJ 07105,
(973) 344-5790.
At the date of this proxy statement, Fairmount 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 27, 1999
By Order of the Board of Directors,
MARIA HAYDUCKA
Secretary
10
<PAGE> 13
ANNUAL MEETING, MAY 18, 1999
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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 Annual Meeting of stockholders of FAIRMOUNT CHEMICAL CO., Inc.
to be held at 10:00 a.m., local time, May 18, 1999, the offices of Fairmount,
117 Blanchard Street, Newark, N.J., 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 Fairmount 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 except as indicated to the contrary) [ ] listed) [ ]
Nominees: Howard R. Leistner, Dr. Reidar T. Halle, and Richard Miizrack
Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below
______________________________________________________________________________
(continued, and to be signed and dated, on reverse side)
<PAGE> 14
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:________________________, 1999
____________________________________
Signature
____________________________________
Signature
