<PAGE>
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
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Gradco Systems, Inc.
......................................................................
(Name of Registrant as Specified In Its Charter)
Gradco Systems, Inc.
......................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
Exchange Act 0-11.
1) Title of each class of securities to which transaction applies:
..................................................................
2) Aggregate number of securities to which transaction applies:
..................................................................
3) Price per unit or other underlying value of transaction pursuant to
Exchange Act Rule 0-11.
..................................................................
4) Proposed maximum aggregate value of transaction:
...................................................................
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
......................................
2) Form, Schedule or Registration Statement No.:
......................................
3) Filing Party:
......................................
<PAGE>
GRADCO SYSTEMS, INC.
--------------------
NOTICE OF ANNUAL MEETING
To Be Held on September 22, 1995
--------------------
To the Holders of the Common Stock:
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders of GRADCO
SYSTEMS, INC. will be held on September 22, 1995 at 10:00 a.m. local time, at
The Mirage Hotel, 3400 Las Vegas Boulevard South, Las Vegas, Nevada.
The purposes of the meeting are as follows:
1. To elect five directors of the Company to serve a term of one year;
2. To transact such other business as may properly be brought before the
meeting.
Stockholders of record as of the close of business on August 15, 1995 will
be entitled to vote at said meeting.
Enclosed is a copy of the Company's Report on Form 10-K for the fiscal
year ended March 31, 1995 (excluding exhibits), and Letter to Shareholders,
which comprise the Company's 1995 Annual Report to Stockholders, along with a
proxy statement and proxy. Stockholders who do not expect to attend the Annual
Meeting are requested to sign and return the enclosed proxy in the enclosed
envelope.
By Order of the Board of
Directors
Bernard Bressler
Secretary
August 22, 1995
<PAGE>
GRADCO SYSTEMS, INC.
3753 Howard Hughes Parkway
Suite 200
Las Vegas, Nevada 89109
-----------------------
PROXY STATEMENT FOR HOLDERS OF COMMON STOCK
-----------------------
This Proxy Statement is furnished to stockholders of GRADCO SYSTEMS, INC. (the
"Company" or "Gradco") in connection with the solicitation by the Board of
Directors of proxies to be used at the Annual Meeting of Stockholders of the
Company. Such meeting will be held on September 22, 1995, at 10:00 a.m., local
time, at The Mirage Hotel, 3400 Las Vegas Boulevard South, Las Vegas, Nevada,
for the purposes set forth in the Notice of Meeting. It is anticipated that
this Proxy Statement and accompanying material will be mailed to stockholders
on August 22, 1995.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked at any time insofar as it has not been exercised. The
proxy is in ballot form and each stockholder may indicate approval or
disapproval as to the proposal identified in the proxy and accompanying Notice
of Annual Meeting and as set forth and discussed in this Proxy Statement. The
proposal will be presented by the Board of Directors of the Company. Where a
choice is specified with respect to the proposal, the shares represented by the
proxy will be voted in accordance with the specification made. Where a choice
is not so specified, the shares represented by the proxy will be voted in favor
of the proposal. The Proxy Committee appointed by the Board of Directors
consists of Martin E. Tash and Bernard Bressler.
VOTING SECURITIES OUTSTANDING
Stockholders of record entitled to vote will be determined as of the close
of business on August 15, 1995. At that date, there were outstanding and
entitled to vote 7,798,909 shares of Common Stock of the Company. Each share
of Common Stock entitles the holder thereof to one vote.
Set forth below is information concerning persons known to the Company to
be beneficial owners of more than 5% of the Common Stock of the Company as of
August 15, 1995:
Amount and
Nature of
Name and Address of Beneficial Percentage
Title of Class Beneficial Owner Ownership of Class
- -------------- ------------------- ---------- ----------
Common Stock, Plenum-Tash Group
no par value 233 Spring Street 1,213,672(1) 15.5%
New York, NY 10013
Dimensional Fund 563,549(2) 7.2%
Advisors, Inc.
1299 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Ryback Management 575,700(3) 7.4%
Corporation
7711 Carondelet Avenue
Box 16900
St. Louis, MO 63105
_______________
(1) As set forth in their joint statement on Schedule 13D dated December 1,
1989, and amendments thereto through January 3, 1991, Plenum Publishing
Corporation, Martin E. Tash and his wife Arlene S. Tash constitute a "group" as
defined in Rule 13d-5(b)(1) under the Securities and Exchange Act of 1934,
since Plenum, on the one hand, and Mr. and Mrs. Tash, on the other hand, have
agreed to act together for the purpose of voting the securities of the Company
held by them, and in general to act together for the purpose of acquiring and
disposing of such securities (although it is understood that, at any given
time, a purchase or sale may be effected by one such party without the
effectuation of a purchase or sale by the other party). Pursuant to said Rule,
the Group is therefore deemed the beneficial owner of the shares held by each
of its members.
The Group beneficially holds 1,213,672 shares of Common Stock of the
Company (including for this purpose currently exercisable options held by Mr.
Tash to purchase 50,000 shares). Plenum Publishing Corporation has sole voting
and dispositive power as to 913,000 shares owned solely by it, representing
11.7% of the outstanding stock, and Martin E. Tash has sole voting and
dispositive power as to 80,672 shares owned solely by him (35,414 shares of
which are held by a Private Profit Sharing Plan of which Mr. Tash is sole
beneficiary) which, together with his currently exercisable options, represent
1.7% of the outstanding stock. Mr. Tash and his wife, Arlene S. Tash, have
shared voting and dispositive power as to 170,000 shares owned jointly by them,
representing 2.2% of the outstanding stock. The shares which may be acquired
upon exercise of the options held by Mr. Tash have been deemed outstanding for
the purpose of computing his individual percentage ownership of outstanding
shares and the percentage owned by the Group as set forth in the table, but not
for the purpose of computing the percentage owned by any other party. Plenum
has disclaimed beneficial ownership of the shares owned by Mr. and Mrs. Tash,
they have disclaimed beneficial ownership of the shares owned by Plenum, and
Mrs. Tash has disclaimed beneficial ownership of the shares owned solely by Mr.
Tash. The Group may be deemed to have obtained control of Gradco in October
1990 when its nominees were elected as a majority of Gradco's Board of
Directors. The Group may be deemed to continue to have control due to the fact
that the entire Board now consists of five persons designated as nominees at
the request of the Group.
(2) As set forth in Amendment No. 3 to Statement on Schedule 13G dated January
30, 1995, Dimensional Fund Advisors, Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 563,549 shares as
of December 31, 1994, all of which shares are held in portfolios of DFA
Investment Dimensions Group, Inc., a registered open-end investment company, or
in series of the DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional Fund Advisors, Inc.
serves as investment manager. Dimensional disclaims beneficial ownership of
all such shares.
(3) As set forth in Statement on Schedule 13G, dated January 25, 1995, Ryback
Management Corporation ("Ryback"), a registered investment advisor, has sole
voting and dispositive power as to 575,700 shares as of December 31, 1994.
470,000 of such shares are held by Lindner Bulwark Fund, a registered
investment company, and 105,700 are managed by Ryback.
2
<PAGE>
ELECTION OF DIRECTORS
Nominees for Directors.
- ----------------------
The By-laws of the Company provide for a Board of Directors consisting of
five (5) persons who are elected to serve until the next annual meeting and
until their successors are elected and have qualified.
Proxies solicited herein will be voted (unless authority is withheld) for
the election, as directors of the Company, of the five nominees named in the
following table, who will hold office until the Annual Meeting to be held in
1996, and until their respective successors are elected and have qualified.
The nominees comprise the current Board of Directors and were elected by a vote
of stockholders at a meeting in September 1994 at which proxies were solicited.
Management has no reason to expect that any of these nominees will fail to
be a candidate at the meeting and, therefore, does not at this time have in
mind any substitute for any nominee. In the event that any nominee for
director should be unavailable, it is intended that such shares will be voted
for the substitute nominee or nominees, as may be determined by the Board of
Directors.
In accordance with the laws of the State of Nevada and the Company's By-
laws, the election of directors requires a plurality of the votes cast.
Proxies and ballots marked "FOR all nominees," "WITHHOLD AUTHORITY to vote for
all nominees," or specifying that votes be withheld for one or more nominees,
or which are executed without specification of a choice (in which case they
will be voted for all nominees), are counted to determine the total number of
votes cast. Broker non-votes are not counted.
The following table sets forth the names, ages, principal occupations and
other information regarding management's nominees for director, and the
executive officers of the Company. Unless otherwise indicated, the term of
office of all executive officers expires at the Annual Meeting.
Year First
Became a
Name Director Business Experience
- ---- ---------- -------------------
Martin E. Tash, 1990 Mr. Tash has been Chairman of the Board
age 54 and Chief Executive Officer of the Company
Chairman of the since October 1990, and President of the
Board, Chief Company since October 1991. Mr. Tash is
Executive Officer, also Chairman of the Board and President of
and President Plenum Publishing Corporation, a position
he has held since July 1977.
Harland L. Mischler, 1990 Mr. Mischler has been Chief Financial
age 63 Officer and a director of the Company since
Executive Vice October 1990, and Executive Vice President
President, Chief of the Company since October 1991. He is a
Financial Officer, certified public accountant. Mr. Mischler
and Director served as Vice President, Controller and
Treasurer of Hobart Corporation from 1966
to 1981. From 1981 to 1984 he was Vice
President of Finance of Bausch & Lomb, Inc.
At that time he purchased, with another,
Applied Research Laboratories, Inc., an
analytical instrument company, in a
leveraged buyout from Bausch & Lomb. After
3
<PAGE>
such company was sold profitably in 1986,
Mr. Mischler founded HLM Capital Resources,
Inc., a private investment and holding
company of which he is President and
Chairman.
Bernard Bressler, 1990 Mr. Bressler has been Secretary and a
age 67 director of the Company since October 1990
Secretary, Treasurer and Treasurer of the Company since April
and Director 1992. He has been a practicing attorney
since 1952, and is presently a member of
the firm of Bressler, Amery & Ross, P.C.,
counsel to the Company. Mr. Bressler is
also a director of Plenum Publishing
Corporation.
Robert J. Stillwell, 1991 Mr. Stillwell has been a director of the
age 59 Company since October 1991. Mr. Stillwell
Director owns and operates the Robert J. Stillwell
Agency, Inc., an independent life and health
insurance agency which he founded over 20
years ago. In 1985, Mr. Stillwell founded
and is the principal owner of Service
Concepts Unlimited, Inc.
Thomas J. Burger, 1993 Mr. Burger has been a director of the
age 48 Company since October 1993. He is
Director Associate Senior Vice President of NEC
NEC America Inc. (a position he has held
since July 1993), and is responsible for
the sale and marketing of its business
telephone systems throughout the United
States. Prior thereto, he was President
and a director of two wholly-owned
subsidiaries of NEC America Inc., which
conducted the sales, installation and
maintenance of NEC communication systems and
networks in the Central, South and Western
United States. From August 1988 to December
1989 Mr. Burger was President and a director
of Marcom Communications Inc. After he
reorganized its telecommunication
subsidiary, the subsidiary was sold to NEC
America and he became an employee of NEC.
In July 1987 Mr. Burger founded Astra
Services Inc., a computer company providing
various software development services to the
communications industry. Astra Services was
was sold profitably in 1992. From 1973 to
1987 Mr. Burger was employed in various
capacities by Telecom Plus International
Inc., one of the major independent
interconnect companies in the U.S. He became
President in 1980, a position he held until
May 1987 when the company was sold to
Siemens Communications.
4
<PAGE>
Masakazu (Mark) -- Mr. Takeuchi has been President of Gradco
Takeuchi, (1) (Japan) Ltd. ("GJ") since 1989 and a
age 58 director of GJ since 1988. He is also
President and Director President and a director of Gradco (USA)
of Gradco (Japan) Ltd. Inc. He was Senior Vice President of Far
East Operations and New Business Development
of the Company from August 1988 to October
1990, and a director of the Company from
March 1990 until October 1990. Mr. Takeuchi
was also Chairman of GJ from August 1988
until December 1988. Previously, from 1961,
Mr. Takeuchi was employed by C. Itoh & Co.
Ltd. in various positions
Akira (Tony) -- Mr. Shinomiya has been Chief Financial
Shinomiya, (1) Officer and a director of GJ since January
age 52 1989. From 1987 to 1988, he served as
Chief Financial deputy General Manager of C. Itoh
Officer and Director Electronics Corp. and from September 1985
of Gradco (Japan) Ltd. through 1986 he was Section Manager of the
Electronics Division of C. Itoh & Co. Ltd.
From 1975 to 1985 he was Vice President of
C. Itoh Electronics Inc. in Los Angeles,
California.
_____________________
(1) Masakazu (Mark) Takeuchi and Akira (Tony) Shinomiya, who are listed in the
table, are executive officers of Gradco (Japan) Ltd. ("GJ"), the Company's
majority-owned Japanese subsidiary. The Company's primary business is
conducted through GJ. Due to the significance of the role of Messrs. Takeuchi
and Shinomiya in managing the operations of GJ and conducting its relationship
with the Company, information regarding them has been included in various
portions of this Proxy Statement. However, the inclusion of such information
under references to "executive officers of the Company" is not an
acknowedgement that Messrs. Takeuchi and Shinomiya may be so characterized,
since they are not employed by the Company nor do they perform a policy-making
function for the Company.
The term of office of Messrs. Takeuchi and Shinomiya expires at the
ordinary general shareholders meeting of GJ for fiscal 1996, to be held in June
1996.
EQUITY SECURITIES OWNERSHIP OF
MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
the Company by each director, each of the executive officers named in the
Summary Compensation Table set forth below, and by all officers and directors
as a group (7 persons), as of August 15, 1995.
5
<PAGE>
Amount and
Nature of
Name and Address of Beneficial Percentage
Title of Class Beneficial Owner Ownership of Class (1)
- -------------- ------------------- ---------- ------------
Common Stock, Martin E. Tash 1,213,672 (2) 15.5%
no par value 233 Spring Street
New York, NY 10013
Harland L. Mischler 131,932 (3) 1.7%
7900 Glades Road
Boca Raton, FL 33434
Bernard Bressler 15,000 (4) *
17 State Street
New York, NY 10004
Robert J. Stillwell 7,500 (5) *
1009 N. Bethlehem Pike
Springhouse, PA 19477
Thomas J. Burger 5,000 (5) *
1555 West Walnut Hill Lane
Irving, Texas 75038
Masakazu (Mark) Takeuchi 18,000 (6) *
Shibuya-ku, Tokyo 150 Japan
Akira (Tony) Shinomiya 6,000 (7) *
Shibuya-ku, Tokyo 150 Japan
All Officers and Directors 1,397,104 (8) 17.6%
as a Group comprising the 7
persons shown above)
* Less than 1%
_______________
(1) In each instance where a named individual is listed as the holder of a
currently exercisable option, the shares which may be acquired upon exercise
thereof have been deemed outstanding for the purpose of computing the
percentage of outstanding shares owned by such person, but not for the purpose
of computing the percentage owned by any other person, except the group
referred to in note (8).
(2) Mr. Tash, his wife Arlene S. Tash, and Plenum Publishing Corporation, are
members of the Plenum-Tash Group. The shares shown above include all shares
beneficially owned by the Group, including currently exercisable options to
purchase 50,000 shares of Gradco stock held by Mr. Tash. See note (1) to the
table in section, VOTING SECURITIES OUTSTANDING, for a breakdown of such
ownership among the Group's members. Mr. Tash disclaims beneficial ownership
of the 913,000 shares owned by Plenum.
(3) Includes 51,932 shares owned directly by HLM Capital Resources, Inc., a
private investment and holding corporation, of which Mr. Mischler is President,
Chairman and major shareholder, and 30,000 shares owned directly by Mr.
Mischler. Also includes currently exercisable options granted to Mr. Mischler
to purchase 50,000 shares of the Company's stock.
6
<PAGE>
(4) Includes 12,000 shares owned directly by Mr. Bressler and 3,000 shares held
for Mr. Bressler in an individual retirement account.
(5) Represents shares which may be acquired upon the exercise of currently
exercisable options.
(6) See note (1) to table under NOMINEES FOR DIRECTORS, in section, ELECTION OF
DIRECTORS, above. The number of shares shown above represents those which are
subject to currently exercisable options held by Mr. Takeuchi.
(7) See note (1) to table under NOMINEES FOR DIRECTORS, in section, ELECTION OF
DIRECTORS, above. The number of shares shown above represents those which are
subject to currently exercisable options held by Mr. Shinomiya.
(8) Number of shares and percentage owned includes 136,500 shares which may be
acquired through exercise of currently exercisable options held by certain of
such persons individually named. Number of outstanding shares for purpose of
computation of percentage of ownership by the group includes such shares.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors has an Audit Committee. The members of
the Committee currently are Harland L. Mischler (Chairman), Robert J. Stillwell
and Thomas J. Burger. The functions of the Committee include the
recommendation to the Board of independent auditors for the annual audit of the
Company, and the discussion and review of the audit work with the auditors so
appointed. The Audit Committee met once during the last fiscal year.
The Board of Directors has no Nominating Committee or Compensation
Committee.
The Board of Directors met four (4) times during the last fiscal year.
Mr. Burger attended two of the meetings; the other two were held in Las Vegas,
Nevada during the same week in September 1994, and he was unable to attend
either of them. Each of the other directors attended all of the meetings.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table.
- --------------------------
The following table sets forth all compensation awarded to, earned by or
paid to the following persons through August 15, 1995 for services rendered in
all capacities to the Company and its subsidiaries during each of the fiscal
years ended March 31, 1995, 1994 and 1993: (1) the Company's Chief Executive
Officer, and (2) each of the other executive officers whose total compensation
for the fiscal year ended March 31, 1995 required to be disclosed in column (c)
below exceeded $100,000:
SUMMARY COMPENSATION TABLE
--------------------------
(a) (b) (c)(1)(2)
Name and
Principal Position Year Salary ($)
- ------------------ ---- ----------
Martin E. Tash 1995 125,000
Chairman of the 1994 125,000
Board, President 1993 125,000
and Chief Executive
Officer
7
<PAGE>
Masakazu (Mark) Takeuchi 1995 295,800
President, 1994 261,055
Gradco (Japan) Ltd. 1993 226,110
Akira (Tony) Shinomiya 1995 260,520
Chief Financial Officer 1994 229,418
Gradco (Japan) Ltd. 1993 198,708
_______________
(1) With regard to Mr. Tash, the amounts shown in this column represent
compensation for special services rendered as a director.
(2) With regard to Messrs. Takeuchi and Shinomiya, the amounts shown in this
column represent compensation paid to such individuals for services as
executive officers of Gradco (Japan) Ltd. See note (1) to table under NOMINEES
FOR DIRECTORS, in section, ELECTION OF DIRECTORS, above. All such compensation
was paid in yen by GJ and is translated into dollars at year-end exchange rates
on the above table. When measured in yen, there was no increase in
compensation from 1993 to 1994 and a 3% increase from 1994 to 1995.
Stock Option Plans.
- ------------------
Gradco has a 1988 Stock Option Plan providing for the grant of options
which either do or do not qualify as "incentive stock options" within the
meaning of Section 422A of the Internal Revenue Code. Any officer, director or
key employee of Gradco or any of its subsidiaries, in the discretion of the
Stock Option Committee, may be designated to receive options under this plan.
The 1988 Plan provides for the issuance of up to 350,000 shares of Gradco
common stock upon exercise of stock options (subject to adjustment in the event
of a stock split, stock dividend, consolidation, reorganization, or comparable
change in Gradco's capital structure). Gradco also has a 1982 Incentive Stock
Option Plan designed to satisfy Internal Revenue Code requirements relating to
"incentive stock options". The 1982 plan, which provided for the issuance of
up to 550,000 shares of Gradco stock upon exercise of stock options, terminated
on December 31, 1991 in accordance with its terms. Thus, no additional options
may be granted thereunder, but the termination does not affect the validity of
outstanding options.
The Gradco stock option plans are administered by the Stock Option
Committee appointed by the Board of Directors. Bernard Bressler and Robert J.
Stillwell currently comprise the Stock Option Committee. Since no new options
may be issued under the 1982 Plan, the Committee's powers under such Plan will
be limited to such administrative matters as may arise with regard to currently
outstanding options (which cover 4,410 shares).
Subject to limitations contained in the 1988 Plan, the Committee
determines the optionees, option prices, number of shares subject to such
options, the duration of each option (the plans specify a maximum of 10 years
from date of grant or five years for 10% shareholders), the dates of grant, and
the schedule for exercise of each option. The option price is determined by
the Stock Option Committee at the time the option is granted, but in the case
of incentive stock options within the meaning of Section 422A of the Internal
Revenue Code, shall not be less than fair market value of the stock at that
time. The Gradco plans provide that the option price may be paid in cash or in
the form of shares of Gradco common stock, subject to the power of the Stock
Option Committee in its discretion to impose restrictions on an optionee's
right to exercise an option with shares of Gradco common stock. The options
are subject to forfeiture upon termination of employment except by reason of
death, disability or retirement in which event the options may continue to be
exercised for a limited period. Currently, options for 319,500 shares are
8
<PAGE>
outstanding under the 1988 Plan and 11,500 shares are available for issuance
upon exercise of options which may be granted in the future.
During the last fiscal year, no options under the 1982 or 1988 Plan were
granted to or exercised by the executive officers named in the SUMMARY
COMPENSATION TABLE (above).
The following table sets forth the number of unexercised options held at
March 31, 1995 by each of the aforesaid named executive officers. All of such
options were exercisable at that date. The exercise price in each case is
equal to the closing price of the Company's Common Stock on NASDAQ on the date
that the option was granted. The exercise price of the options held by Messrs.
Takeuchi and Shinomiya was above the fair market value of the underlying shares
at fiscal year-end (determined as the closing price of the Company's Common
Stock on NASDAQ on 3/31/95). Therefore, such options were not "in-the-money"
at fiscal year-end. The aggregate dollar value of the options held by Mr. Tash
at 3/31/95 (determined as the difference between the fair market value and the
exercise price of the underlying shares at that date) was $18,750.
Number of Unexercised Options
Name at Fiscal Year-End
- ---- -----------------------------
Martin E. Tash 50,000
Masakazu (Mark) Takeuchi(1) 18,000
Akira (Tony) Shinomiya(1) 6,000
_______________
(1) Messrs. Takeuchi and Shinomiya are executive officers of Gradco (Japan)
Ltd. See note 1 to table under NOMINEES FOR DIRECTORS, in section, ELECTION OF
DIRECTORS, above.
Retirement Plan (GJ).
- --------------------
In June 1994, GJ adopted a retirement plan providing that, subject to
approval by GJ's shareholders at the time of proposed payment, a retirement
allowance be paid by GJ to a member of GJ management who retires after his term
of office or by reason of reaching his mandatory retirement age. The amount of
the retirement allowance is determined by a formula multiplying (1) the monthly
salary at the time of retirement, by (2) the number of years served, by (3) a
factor which varies depending upon the office held by the eligible individual.
Each of Messrs. Takeuchi and Shinomiya is eligible for payments under this Plan
upon his retirement.
Compensation of Directors.
- -------------------------
Each director who is not also an officer receives a fee of $1,250 for each
quarter in a fiscal year during which he serves in such position. Accordingly,
Mr. Stillwell and Mr. Burger each received $5,000 for the 1995 fiscal year.
Martin E. Tash (the Company's President and Chairman of the Board)
received $125,000 in cash for special services rendered to the Company as a
director during the fiscal year ended March 31, 1995. This amount is included
in the SUMMARY COMPENSATION TABLE, above.
HLM Capital Resources, Inc., a closely-held corporation controlled by
Harland L. Mischler (the Company's Executive Vice President and Chief Financial
Officer), received $70,000 in cash for providing to the Company special
services rendered by Mr. Mischler as a director during the fiscal year ended
March 31, 1995.
All directors (and Messrs. Tash, Mischler and Bressler in their capacity
as officers as well) are eligible to receive options under the 1988 Stock
9
<PAGE>
Option Plan. See table under STOCK OPTION PLANS, above, as to options held by
Mr. Tash as of March 31, 1995. As of that date, Mr. Mischler held options for
50,000 shares, Mr. Stillwell held options for 7,500 shares and Mr. Burger held
options for 7,500 shares.
Bernard Bressler, a practicing attorney, receives compensation based on
his usual hourly rate for attendance at Board meetings.
Indemnification.
- ---------------
The Company's By-laws provide that it shall, to the fullest extent
permitted by the Nevada General Corporation Law, indemnify any person against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
fact that any such person is or was a director, officer, employee or agent of
the Company. Accordingly, all current officers and directors of the Company
are entitled to indemnification by the Company under this provision. In
addition, Masakazu (Mark) Takeuchi, who served as an officer and director of
the Company during 1990, and James P. Owens, who served as an officer of the
Company from 1989 until April 1992, each is entitled to indemnification under
such provision based on his activities in such capacity. Mr. Takeuchi is
currently President of Gradco (Japan) Ltd. and Mr. Owens is Vice President,
Finance and Administration, of Gradco (USA) Inc.
Compensation Committee Interlocks and Insider Participation.
- -----------------------------------------------------------
The Company's Board of Directors has no compensation committee (or other
Board committee performing equivalent functions); compensation policies
applicable to executive officers are determined by the Board. During the
fiscal year ended March 31, 1995, the officers of the Company participating in
the Board's deliberations concerning executive compensation were Martin E.
Tash, Harland L. Mischler and Bernard Bressler (who are members of the Board).
During the fiscal year ended March 31, 1995, Martin E. Tash (an executive
officer of the Company) served as a member of the Board of Directors of Plenum
Publishing Corporation ("Plenum"). Plenum has no compensation committee (or
other Board committee performing equivalent functions); compensation policies
applicable to executive officers are determined by its Board. Mr. Tash is an
executive officer of Plenum and is the only such executive officer who also
served on the Company's Board. Bernard Bressler (Secretary and a director of
the Company) is an officer and director of Plenum, but he is not an executive
officer of either entity.
During the period since April 1, 1994 (the beginning of the Company's last
fiscal year), there were no transactions between the Company and Plenum of the
type required to be disclosed under the section, CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.
Board Report on Executive Compensation
- --------------------------------------
The Board of Directors of the Company, currently consisting of five
members, approves all of the policies under which compensation is paid or
awarded to the Company's executive officers. The executive officers of the
Company (Messrs. Tash and Mischler) are members of the Board. While Messrs.
Takeuchi and Shinomiya are listed in the SUMMARY COMPENSATION TABLE for
informational purposes, they are considered to be executive officers of Gradco
(Japan) Ltd. ("GJ") and not of the Company; their compensation is paid by GJ
and is determined by GJ's Board of Directors.
It is the current policy of the Company's Board of Directors to compensate
those directors of the Company who are also executive officers (i.e., Messrs.
Tash and Mischler) only for their special services rendered as directors, and
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not for their services as officers, PER SE. This policy has been implemented as
a means of saving costs for the Company in an area in which it might otherwise
have to expend substantial sums in order to pay said executive officers, as
such, at a level commensurate with their levels of authority. Messrs. Tash and
Mischler (who became directors and officers in October 1990) have thus far been
willing to serve on this basis. Their activities as officers are performed
part time, and they are not separately compensated for them.
The compensation paid to Messrs. Tash and Mischler during the fiscal year
ended March 31, 1995 is in recognition of their extraordinary services as
directors in connection with, among other matters, the continuing
implementation of cost efficiencies, the settlement of the Company's litigation
with Keith Stewart and other former officers of the Company, and the defense of
the Hamma and DuBois lawsuits against the Company. Because this compensation
is for special services as a director, rather than services as an executive
officer, it is not related to corporate performance factors, and the discussion
of said factors, which would otherwise be required by this item, has therefore
not been included.
Gradco Systems, Inc. Board of Directors
Martin E. Tash, Chairman
Bernard Bressler
Harland L. Mischler
Robert J. Stillwell
Thomas J. Burger
Performance Graph
- -----------------
Set forth below is a graph comparing the yearly percentage change in the
cumulative total return of Gradco Common Stock with the cumulative total return
of the NASDAQ Stock Market (US & Foreign) Index and with the cumulative total
return of an index comprised of a group of peer issuers, selected by the
Company, in its industry, over the five-year period ending on March 31, 1995.
Comparison of Five Year Total Return (1)
Total Return Index for: 3/30/90 3/28/91 3/31/92 3/31/93 3/31/94 3/31/95
- ----------------------- ------- ------- ------- ------- ------- -------
Gradco Systems, Inc. 100.0 50.7 34.3 22.4 25.4 40.3
NASDAQ (US & Foreign) 100.0 113.8 145.1 166.6 180.8 198.1
Peer Group 100.0 86.9 108.2 133.5 111.8 92.7
(1) Total return assumes reinvestment of dividends.
It is assumed in the graph that $100 was invested in the Common Stock of
the Company, in the stock of the companies in the NASDAQ Stock Market (US &
Foreign) Index, and in the stocks of the companies comprising the peer group
index, on March 30, 1990, and that all dividends received within a quarter were
reinvested in that quarter. The issuers selected by the Company for inclusion
in the peer group index are: Check Technology Corp., CSP, Inc., Datasouth
Computer Corp., Gateway Industries, Inc., Liuski International, Inc., Mitek
Systems, Inc., NDC Automation, Inc., PCC Group, Inc., Personal Computer
Products, Inc., and Random Access, Inc.
The NASDAQ Stock Market (US & Foreign) and peer group indices were
prepared by the Center for Research in Security Prices.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Business Relationships
- ------------------------------
Bernard Bressler, Secretary, Treasurer and a director of the Company, is a
member of the law firm of Bressler, Amery & Ross, P.C., counsel to the Company.
During the 1995 fiscal year, the Company paid legal fees of $75,700 to such
firm.
Indebtedness of Management
- --------------------------
Messrs. Takeuchi and Shinomiya are indebted to the Company in the
respective approximate amounts of $243,000 and $170,000 (translated from yen at
fiscal year-end exchange rate) under non-interest bearing promissory notes
delivered by them in connection with the purchase of GJ stock from the Company
in March 1991. These notes will be cancelled in September 1995, in accordance
with their terms, since an initial public offering by GJ will not have occurred
as of that date. The cancellation will have no effect on the Company's
earnings, since the gain on the sale of the stock, to the extent represented by
the notes, was deferred pending their payment.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Price Waterhouse LLP are the independent certified public accountants who
audited the Company's financial statements for the fiscal year ended March 31,
1995. The Board of Directors has not yet selected auditors for the current
fiscal year; the Board believes that it will be appropriate to do so at a later
date, closer to the time when the audit is to be conducted, so that the
selection can be made in the context of the Company's specific requirements at
that time.
It is not expected that representatives of Price Waterhouse LLP will be
present in person at the Annual Meeting. However, it is expected that such
representatives will be available by telephone during the meeting to answer
appropriate questions of stockholders.
MISCELLANEOUS
Transaction of Other Business.
- -----------------------------
As of the date of this Proxy Statement, Management has no knowledge of any
business which will be presented for consideration at the meeting other than
that described above. Should any other matter come before the meeting, it is
the intention of the persons named in the accompanying proxy to vote such proxy
in accordance with their best judgment.
Stockholder Proposals.
- ---------------------
In order for stockholder proposals to be presented at the 1996 Annual
Meeting of Stockholders, to be eligible for inclusion in the Company's Proxy
Statement and the form of proxy for such meeting, they must be received by the
Company at its principal offices in Las Vegas, Nevada prior to April 26, 1996.
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SOLICITATION OF PROXIES
The entire expense of preparing, assembling and mailing this Proxy
Statement, the form of proxy and other material used in the solicitation of
proxies will be paid by the Company. In addition to the solicitation of
proxies by mail, arrangements may be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxy material to their
principals, and the Company will reimburse them for expenses in so doing. To
the extent necessary in order to insure sufficient representation, officers and
other regular employees of the Company, who will not be additionally
compensated therefor, may request the return of proxies personally, by
telephone or telegram. The extent to which this will be necessary depends on
how promptly proxies are received, and stockholders are urged to send their
proxies without delay.
By Order of the Board of Directors
MARTIN E. TASH
Chairman
Dated: Las Vegas, Nevada
August 22, 1995
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PROXY
GRADCO SYSTEMS, INC.
SOLICITED BY THE BOARD OF DIRECTORS
For use at the September 22, 1995 Annual Meeting
The undersigned hereby appoints Martin E. Tash and Bernard Bressler, as
Proxies, and each with power of substitution, who shall be present at the
meeting to vote all of the shares of the undersigned as follows regarding the
election of directors:
_____ FOR all nominees listed _____ WITHHOLD AUTHORITY
below (except as indicated to vote for all
to the contrary below) nominees listed
below
Nominees: Martin E. Tash, Harland L. Mischler, Bernard Bressler, Robert J.
Stillwell, Thomas J. Burger.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
________________________________________________________________
and in their discretion upon such other business as may be properly brought
before the Annual Meeting of Stockholders of GRADCO SYSTEMS, INC. to be held at
The Mirage Hotel, 3400 Las Vegas Boulevard South, Las Vegas, Nevada at 10:00
a.m. local time, and any adjournments thereof. This proxy revokes all prior
proxies given by the undersigned.
(Continued on the reverse side)
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF THE
MANAGEMENT SLATE OF DIRECTORS.
Date:_________________________
Signature:____________________
Print Name:___________________
Signature:____________________
(if jointly held)
IMPORTANT: Please sign exactly as name appears here. Joint owners should both
sign. When signing as executor, trustee, guardian, attorney or officer of a
corporation, give title as such. If a partnership, please sign in partnership
name.
PLEASE COMPLETE, SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED ENVELOPE.
