SCHEDULE 14A
[Rule 14a-101]
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of the Securities Exchange
Act of 1934 (Amendment No. )
Filed by registrant [X] Filed by party other than 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 materials pursuant to Rule 14a-11(c) or Rule 14a-12
MARK SOLUTIONS, INC.
-----------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Board of Directors of Registrant
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(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:________________________
(4) Proposed maximum aggregate value of transaction:________________________
(5) Total fee paid:_________________________________________________________
[ ] Fee paid previously with preliminary proxy materials:___________________
[ ] Check box if any part of fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
previously paid. Identify the previous filing by registration number, or the
for or schedule and the date of its filing.
(1) Amount previously paid:_________________________________________________
(2) Form, schedule or registration number:__________________________________
(3) Filing party:___________________________________________________________
(4) Date filed:_____________________________________________________________
<PAGE>
MARK SOLUTIONS, INC.
Parkway Technical Center
1515 Broad Street
Bloomfield, New Jersey 07003
----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 28,1998
---------------------
To the Shareholders of
Mark Solutions, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of shareholders of Mark
Solutions, Inc. (the "Company") will be held at its offices at 1515 Broad
Street, Bloomfield, New Jersey 07003, on December 28, 1998 at 10:00 a.m. for the
following purposes:
1. To elect six directors;
2. To approve the issuance of Common Stock in excess of 3,615,334
shares in connection with the Company's June 1998 private
placement;
3. To approve the creation of a new class of 5,000,000 shares of
Preferred Stock;
4. To approve a reverse stock split of the Company's issued,
outstanding and reserved shares of Common Stock; and
5. To consider and act upon such other business as may properly
come before the Annual Meeting.
Only shareholders of record at the close of business on October 30, 1998
are entitled to receive notice of the Annual Meeting and to vote at the Annual
Meeting.
You are cordially invited to attend the Annual Meeting in person. Whether
or not you plan to attend the Annual Meeting, you are urged to date and sign the
enclosed proxy card and promptly return it in the enclosed reply envelope (which
requires no postage if mailed in the United States) so that your shares may be
voted for you.
By Order of the Board of Directors,
CARL COPPOLA,
Chairman
Dated: Bloomfield, New Jersey
November 12, 1998
<PAGE>
MARK SOLUTIONS, INC.
Parkway Technical Center
1515 Broad Street
Bloomfield, New Jersey 07003
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
December 28, 1998
---------------------
This Proxy Statement and accompanying proxy card are being furnished to the
shareholders of Mark Solutions, Inc. (the "Company") in connection with the
solicitation of proxies on behalf of the Board of Directors of the Company for
use in voting at the Annual Meeting of Shareholders (the "Annual Meeting") to be
held at its offices at 1515 Broad Street, Bloomfield, New Jersey 07003, on
December 28, 1998 at 10:00 a.m. At the Annual Meeting the shareholders will
consider the following proposals: (i) the election of six (6) directors; (ii)
approval of the issuance of Common Stock in excess of 3,615,334 shares in
connection with the Company's June 1998 private placement, (iii) approval to
create a new class of 5,000,000 shares of Preferred Stock; (iv) approval of a
reverse stock split of the Company's issued, outstanding and reserved shares of
Common Stock and (v) such other business as may properly come before the Annual
Meeting.
This Proxy Statement and accompanying proxy card is being distributed to
shareholders on or about November 13, 1998.
PROXIES; VOTING SECURITIES
Only holders of shares of common stock, $.01 par value, of the Company the
"Common Stock") of record at the close of business on October 30, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. On
the Record Date there were issued and outstanding 19,296,674 shares of Common
Stock, held by approximately 185 shareholders of record. Each share of Common
Stock entitles the holder thereof to one vote. Holders of Common Stock are not
entitled to cumulative voting rights.
The presence, in person or by proxy, of a majority of the outstanding
Common Stock is required to constitute a quorum at the Annual Meeting.
Abstentions are counted for purposes of determining a quorum. The election of
directors will be determined by a plurality of votes, with the six nominees
receiving the most votes being elected. Approval of the creation of a class of
Preferred Stock and the approval of the reverse stock split will each require
the affirmative vote of a majority of the outstanding Common Stock. Each of the
other proposals scheduled to come before the Annual Meeting will require the
affirmative vote of a majority of the Common Stock present at the Annual
Meeting. Therefore, abstentions and broker non-votes will have the same effect
as a vote AGAINST Proposals No. 3 and 4 but will have no effect on any other
matter.
Proxies in the form enclosed, if properly submitted and not revoked prior
to or at the Annual Meeting will be voted in accordance with the instructions
indicated in such proxies. Proxies properly submitted which do not indicate
voting instructions will be voted FOR the election of the named nominees as
directors and FOR Proposals No. 2, 3 and 4.
A proxy may be revoked by (i) delivery of a written statement to the
Secretary of the Company stating that such proxy is revoked, (ii) by a
subsequently dated proxy duly executed and presented at or prior to the Annual
Meeting, or (iii) voting in person at the Annual Meeting.
1
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
At the Annual Meeting, six directors of the Company are to be elected, each
to serve for a term of one year and until their respective successors are
elected and qualified. All of the nominees currently serve as directors of the
Company.
Unless authority is specifically withheld, proxies will be voted FOR the
election of the nominees named below. Each of the nominees has consented to
being named in this Proxy Statement and to serve if elected. Should any nominee
not be a candidate at the time of the Annual Meeting (a situation which is not
anticipated), proxies will be voted in favor of the remaining nominees and may
also be voted for substitute nominees.
<TABLE>
<CAPTION>
Positions with Company and Principal Director
Name Age Occupations And Current Public Directorships Since
- ------------- --- --------------------------------------------- ----------
<S> <C> <C> <C>
Carl C. Coppola(1) 58 Chairman of the Board, President, Chief Executive 1984
Officer of the Company and its predecessors
since 1984. President and Chief Executive
Officer of Mark Lighting Fixture Co., Inc., an
unaffiliated entity, for more than 30 years.
Richard Branca(2) 50 President and Chief Executive Officer of Bergen 1992
Engineering Co., a construction company since
1980.
Ronald E. Olszowy 52 President and Chief Executive Officer of Nationwide 1992
Bail Bonds, which provides bail, performance and
fidelity bonds since 1966. President of Interstate
Insurance Agency since 1980.
William Westerhoff(1)(2) 60 Retired since June 1992. Prior thereto, Partner of Sax, 1992
Macy, Fromm & Co., certified public accountants
for more than five years.
Michael Nafash 37 Chief Financial Officer of the Company since January 1995
1998. From February 1994 to January 1998,
President and Chief Executive Officer of Evolutions,
Inc. (OTC), an environmental oriented apparel
company. On January 5, 1998, Evolutions, Inc. filed a
Chapter 7 bankruptcy petition (Case No. 98-20010) in
the U.S. Bankruptcy Court in Newark, New Jersey.
From June 1992 to June 1996, employed by Pure Tech
International, Inc., a plastics and metal recycling
company, including as Chief Financial Officer from
October 1993 to March 1995.
Yitz Grossman 43 President and Chairman of Target Capital Corporation, 1997
a financial consulting company since 1983.
<FN>
- -----------------------------
(1) Member of the Compensation Committee
(2) Member of the Audit Committee
</FN>
</TABLE>
The Board of Directors Unanimously Recommends That Shareholders Vote FOR the
Nominees.
2
<PAGE>
Board of Directors and Committees
The business of the Company is managed under the direction of the Board of
Directors. During the fiscal year ended June 30, 1998, the Board of Directors
met six times. In addition the Board took action by unanimous written consent on
three occasions. Each member of the Board of Directors participated in all
meetings held during fiscal 1998.
The Board of Directors has established audit and compensation committees.
The function of those committees, their current members and the number of
meetings held or actions taken are described below.
Audit Committee. The Audit Committee recommends to the Board of Directors
the firm to be appointed as the Company's independent public accountants and
monitors the performance of such firm. In addition, the committee reviews and
approves the scope of the annual audit and reviews and evaluates issues having a
potential financial impact on the Company which are brought to its attention by
management, the independent public accountants or the Board of Directors. The
Audit Committee also reviews all public financial reporting documents of the
Company. Messrs. Branca and Westerhoff currently are members of the Audit
Committee. The Audit Committee met on September 17, 1998 to review the audit and
public filings for the fiscal year ended 1998. The Audit Committee plans to meet
at least once a year to review the year end results and audit of the Company and
to review quarterly reports when available.
Compensation Committee. The Compensation Committee establishes the
compensation policies for executive officers of the Company, evaluates and
approves the compensation of the Chief Executive Officer and reviews his
recommendations as to the compensation of the other executive officers. The
Compensation Committee also administers the Company's 1993 Incentive Stock
Option Plan. Messrs. Coppola and Westerhoff currently are members of the
Compensation Committee. The Compensation Committee met on September 17, 1998 to
review the fiscal year ended June 30, 1998 compensation arrangements and to
consider compensation plans for the future. The Compensation Committee plans to
meet at least once a year to review the compensation arrangements of the
Company's executive officers.
The Company does not have a nominating or executive committee. The
customary functions of these committees are performed by the Board of Directors
as a whole.
Director's Compensation
Each outside director receives a $1,000 fee and is reimbursed for travel
expenses for each meeting attended. The fees will be accrued but remain unpaid
until the Company's financial condition sufficiently improves as determined by
Mr. Coppola. The Company has established a policy of granting stock options to
directors exercisable at the closing sales price of the Common Stock on the date
of grant. On December 4, 1997, each of the outside directors received five-year
options to purchase 100,000 shares of Common Stock at between $2.875 and $3.375
per share. On June 25, 1998, the foregoing options were cancelled and each
outside director received five-year options to purchase 100,000 shares of Common
Stock at $1.125 per share, the closing sales price on the date of grant. Future
compensation policies will be reviewed annually based upon the Company's
financial condition and results of operations.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and 10% shareholders to file with
the Securities and Exchange Commission reports of ownership and changes in
ownership of the Company's equity securities including its Common Stock. Such
persons are also required to furnish the Company with such reports.
To the Company's knowledge during the fiscal year ended June 30, 1998, all
Section 16(a) filing requirements were satisfied.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information with respect to each
beneficial owner of 5% or more of the Common Stock, each Director/Nominee of the
Company, each executive officer of the Company who is named in the Summary
Compensation Table below and all executive officers and Directors/Nominees as a
group as of October 30, 1998. The persons named in the table have sole voting
and investment power with respect to all shares of Common Stock owned by them,
unless otherwise noted.
Number of Shares % of Shares
Beneficial Owner Owned Outstanding
- ---------------- ---------------- -----------
Carl C. Coppola
c/o Mark Solutions, Inc.
1515 Broad Street
Bloomfield, NJ 07003 2,797,100 (1) 13.8%
Joseph Salvani
1 Duran Avenue
Ridgewood, NJ 07450 1,159,956 (2) 6.0%
William Westerhoff 160,000 (3) (4)
Richard Branca 225,000 (3) (4)
Ronald E. Olszowy 210,000 (3) (4)
Michael Nafash 213,500 (5) (4)
Yitz Grossman 119,333 (6) (4)
All executive officers
and Directors as
a group (7 persons) 3,923,833 (7) 18.5%
(1) Includes 63,200 shares held in trust for the benefit of three children of
Mr. Coppola. Mr. Coppola disclaims beneficial ownership of these shares.
Also includes 1,000,000 shares of Common Stock issuable pursuant to options
which are presently exercisable.
(2) Includes 100,000 shares of Common Stock issuable pursuant to warrants which
are presently exercisable.
(3) Represents or includes 160,000 shares of Common Stock issuable pursuant to
options which are presently exercisable.
(4) Less than 1%
(5) Includes 210,000 shares of Common Stock issuable pursuant to options which
are presently exercisable.
(6) Includes 19,333 shares held in a charitable trust of which Mr. Grossman
serves as one of the trustees. Mr. Grossman disclaims beneficial ownership
of these shares. Also includes 100,000 shares of Common Stock issuable
pursuant to options which are presently exercisable.
(7) Includes 1,940,000 shares of Common Stock issuable pursuant to warrants or
options which are presently exercisable.
4
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the amount of all compensation paid to each
of the Company's executive officers whose compensation exceeded $100,000,
including its Chief Executive Officer, for the Company's last three fiscal years
ended June 30.
<TABLE>
<CAPTION>
================================================================================================================================
| | | Annual Compensation | Long Term Compensation | |
| | | | Awards/Payouts | |
================================================================================================================================
|Name and | Year | Salary ($) | Bonus | Other Annual | Restricted | Options/ | LTIP | All other|
|Principal | | | ($) | Compensation | Stock | SARs# | Payouts| Compen- |
|Position | | | | | Awards $ | | $ | sation |
- -------------------------------------------------------------------------------------------------------------------------------|
|<S> <C> <C> <C> <C> <C> <C> <C> <C>
||Carl Coppola, | | | | | | | |
|President & CEO | 1998 | 200,000 | -0- | -0- | -0- | 200,000 | -0- | -0- |
| | 1997 | 300,000 | -0- | -0- | -0- | 750,000 | -0- | -0- |
| | 1996 | 275,000 | -0- | -0- | -0- | -0- | -0- | -0- |
|----------------------------------------------------------------------------------------------------------------------------- |
|Michael Nafash, | 1998 | 50,000 | -0- | -0- | -0- | 150,000 | -0- | -0- |
|VP- Finance & | | | | | | | | |
|CFO(1) | | | | | | | | |
===============================================================================================================================
<FN>
(1) Mr. Nafash became an employee of the Company on January 1, 1998 and receives an annual salary of
$100,000.
</FN>
</TABLE>
Options/SAR Grants in Fiscal Year 1998
The following table sets forth individual grants of stock options to the
named executive officers in the Summary Compensation Table for the fiscal year
ended June 30, 1998.
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation for
Option Term (1)
-------------------
% of Total
Options
Options Granted to Exercise
Granted Employees in Price Expiration
Name (#)(2) Fiscal Year ($/Sh) Date 5%($) 10% ($)
- -------------- -------- ----------- --------- ----------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Carl Coppola 250,000 52.1% $ 1.125 06/24/03 43,750 93,750
Michael Nafash 150,000 31.1% $ 1.125 06/24/03 26,250 56,250
<FN>
(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior to
the expiration of their term, assuming the specified compounded rates of
appreciation on the Common Stock over the term of the options. These numbers do
not take into account provisions of certain options providing for termination of
the option following termination of employment, nontransferability or
differences in vesting periods.
(2) The closing sales price on date of option grants was $ 1.125 per share.
</FN>
</TABLE>
5
<PAGE>
1998 Fiscal Year End Option Values
The following table sets forth the value of options granted to the named
executive officers in the Summary Compensation Table for the fiscal year ended
June 30, 1998.
Number of Securities Value of Unexercised
Underlying Unexercised in-the Money Options
Options at Fiscal Year(#) at Fiscal Year End($)
Name Exercisable/Unexercisable Exercisable
- ----------------- ------------------------- --------------------
Carl Coppola 1,000,000/0 0 (1)
Michael Nafash 210,000/0 0 (1)
- --------------------------------------
(1) Based upon a closing sales price of $0.6875 per share of Common Stock on
November 6, 1998.
1998 Fiscal Year End Repricing of Options
The following table sets forth all repricings of stock options held by the
named executive officers in the Summary Compensation Table in the last ten
years. See "Report of the Board of Directors on Executive Compensation- Stock
Option Repricing".
<TABLE>
<CAPTION>
========================================================================================================================
| | | | | | | Length of |
| | | Number of | Market Price | Exercise | | Original Term |
| | | Securities | of Stock at | Price at Time | | Remaining at |
| | | Underlying | Time of | of Repricing | New | Date of |
| | | Options/SARs | Repricing or | or Exercise | Exercise | Repricing or |
|Name and | | Repriced or | Amendment | Amendment | Price | Amendment |
|Title | Date | Amended(#) | ($) | ($) | | (Years/Days) |
|----------------|---------------|---------------|-------------------|------------------|-------------|-----------------|
|<S> <C> <C> <C> <C> <C> <C>
| | | | | | | |
|Carl Coppola, | 06/25/98 | 250,000 | 1.125 | 2.875 | 1.125 | 2/156 |
|CEO | | | | | | |
|----------------|---------------|---------------|-------------------|------------------|-------------|-----------------|
| | | | | | | |
|Michael Nafash, | 06/25/98 | 150,000 | 1.125 | 2.875 | 1.125 | 2/156 |
|CFO | | | | | | |
=========================================================================================================================
</TABLE>
Employment Agreements
Pursuant to a three-year employment agreement expiring on June 30, 2000,
Mr. Coppola receives an annual base salary of $200,000 and was granted
three-year options to purchase 250,000 shares of Common Stock at an exercise
price of $1.25; 250,000 shares of Common Stock at an exercise price of $2.00 and
250,000 shares of Common Stock at an exercise price of $2.75. In addition, Mr.
Coppola is entitled to reimbursement of expenses not to exceed $15,000 annually
and is provided with an automobile and maintenance and use reimbursement by the
Company. Mr. Coppola's employment is terminable by the Company upon 90 days
written notice and provides for a two-year non-compete period to take effect
upon the termination of Mr. Coppola's employment.
6
<PAGE>
Report of the Board of Directors on Executive Compensation
General. The compensation of the Chief Executive Officer of the Company is
determined and evaluated by the Board of Directors. The Board's determinations
regarding such compensation are based on a number of factors including (i)
providing a level of compensation designed to retain a superior executive in a
highly competitive environment, (ii) the individual's contribution to the
Company and its operations, (iii) evaluation of the progress achieved as
compared to prior periods in establishing the Company's competitive position,
and (iv) consideration of the overall operating and financial performance of the
Company during the relevant operating period as compared with prior operating
periods.
Compensation for the Company's other executive officers is determined
based upon the recommendation of the Chief Executive Officer who considers the
same factors considered by the Board of Directors in establishing the
compensation of the Chief Executive Officer. The Company has not established a
policy with regard to Section 162(m) of the Internal Revenue Code of 1986, as
amended, since the Company has not and does not anticipate paying annual
compensation in excess of $1,000,000 to any employee.
The Company applies a consistent approach to compensation for all
employees, including senior management. This approached is based on the believe
that the achievements of the Company result from coordinated efforts of all
employees working toward common objectives.
As described above under "Employment Agreements" Mr. Coppola will receive
an annual base salary of $200,000 through fiscal year end June 30, 2000.
Stock Option Repricing. On June 25, 1998, the Board of Directors of the
Company determined to effectively lower the exercise price of options granted on
December 4, 1997 to employees of the Company, including Messrs. Coppola and
Nafash, by canceling such options and granting new options. The terms of the new
options were identical in all respects to the cancelled options except for the
exercise price and new expiration date. The purpose and intention of the
repricing was to maintain equity incentives for key employees to foster loyalty
and economic motivation. The Board of Directors believes that stock options
which are significantly out of the money provide no particular compensatory
incentive to employees regarding performance or to forego alternate employment
opportunities.
The Board of Directors
Carl Coppola (Chairman) William Westerhoff
Richard Branca Michael Nafash
Ronald E. Olszowy
7
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the total cumulative return on the Company's
Common Stock during the five fiscal years ended June 30, 1998 with the
cumulative total return on the Nasdaq Stock Market (US & Foreign) and NASDAQ
Stocks (SIC 3400-3499 US Companies), assuming an investment of $100 in each on
November 11, 1993 and the reinvestment of all dividends. The information is
presented from November 11, 1993 the first day after the Common Stock was listed
on the Nasdaq SmallCap Market.
<TABLE>
<CAPTION>
PERFORMANCE GRAPH
SYMBOL DATA POINTS 11/11/93 06/30/94 06/30/95 06/30/96 06/30/97 06/30/98
=============== ==============================================================================================================
<S> <C> <C> <C> <C> <C> <C>
- -------------------- Mark Solutions, Inc. Common Stock 100.0 64.5 75.8 83.9 33.1 13.3
- ------------------------------------------------------------------------------------------------------------------------------------
Nasdaq Stock Market
- - - - ----- - - - (US & Foreign) 100.0 90.7 118.9 153.3 186.4 244.1
- ------------------------------------------------------------------------------------------------------------------------------------
Nasdaq Stocks
- - - - - - - - - - (SIC 3400-3499 US Companies)
Fabricated Metal Products
except machinery
& transportation equipment 100.0 101.9 119.4 147.9 202.7 213.8
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company purchases lighting fixtures, fabricating services and other
related services from Mark Lighting Fixture Co., Inc. ("Mark Lighting"), a
company wholly owned by Carl Coppola, President and Chief Executive Officer of
the Company. For the fiscal year ended June 30, 1998, the Company paid Mark
Lighting $416,497 for such goods and services.
On December 4, 1997, Mr. Coppola was granted three-year options to
purchase 250,000 shares of Common Stock at $2.875 per share. On June 25, 1998,
the foregoing options were cancelled and Mr. Coppola was granted three-year
options to purchase 250,000 shares of Common Stock at $1.125 per share the
closing sales price on the date of grant.
In May 1997, Mr. Coppola made loans aggregating $160,000 to the Company
for working capital purposes. The loans are represented by demand notes with an
annual interest rate of 10% payable semiannually. These notes were repaid on
April 16, 1998.
In May 1998, the Company loaned Mr. Coppola $100,000 at 10% interest per
annum. The loan was payable on demand and was repaid in full in September 1998.
On December 4, 1997, Mr. Nafash was granted three-year options to purchase
150,000 shares of Common Stock at $2.875 per share. On June 25, 1998, the
foregoing options were cancelled and Mr. Nafash was granted three-year options
to purchase 150,000 shares of Common Stock at $1.125 per share the closing sales
price on the date of grant.
In order to induce their exercise, on September 9, 1997, the Company
reduced the exercise price of warrants to purchase 100,000 shares of Common
Stock issued to Joseph Salvani from $5.00 to $2.50 per share.
The Company grants each nonemployee director options as compensation for
serving on the Board of Directors. On December 4, 1997, each of the outside
directors received five-year options to purchase 100,000 shares of Common Stock
at between $2.875 and $3.375 per share. On June 25, 1998, the foregoing options
were cancelled and each outside director received five-year options to purchase
100,000 shares of Common Stock at $1.125 per share the closing sales price on
the date of grant.
Management believes that each of the foregoing transactions are on terms
no less favorable to the Company than could be obtained from unaffiliated third
parties.
9
<PAGE>
PROPOSAL NO. 2
AUTHORIZATION OF THE ISSUANCE OF COMMON STOCK IN
EXCESS OF 3,615,334 SHARES IN CONNECTION WITH THE COMPANY'S JUNE 1998
PRIVATE PLACEMENT
In June 1998, the Company completed a $2,750,000 private placement of
equity and debt units (the "Private Placement") pursuant to which the Company
issued 1,220,000 shares of Common Stock (the "Private Placement Common Stock"),
(ii) $1,530,000 principal amount convertible debentures due December 28, 1999
(the "Convertible Debentures"), (iii) warrants to purchase 1,375,000 shares of
Common Stock (the "Warrants") and (iv) an option exercisable by the investors to
purchase an additional $2,550,000 principal amount convertible debentures with
warrants to purchase 1,275,000 shares of Common Stock (the, "Debt Unit Option").
See the following paragraph for additional principal terms of the Convertible
Debentures, Warrants and Debt Unit Option. Existing shareholders do not have
preemptive rights regarding the sale of additional Common Stock by the Company.
The Private Placement was effected to comply with the continued listing
requirements of The Nasdaq SmallCap Market related to "net tangible assets" and
to provide for adequate working capital to fund operations. The Company reviewed
and evaluated other proposals, including the loss of its Nasdaq listing and
other financing options, and determined to proceed with the Private Placement.
The holders of the Private Placement Common Stock are entitled to
additional shares of Common Stock to the extent the net proceeds from the sale
of the Private Placement Common Stock is less than $ 1.30 per share (the "Share
Adjustment"). The Convertible Debentures are convertible into shares of Common
Stock at the lesser of (i) $1.50 per share or (ii) 75% of the average closing
bid price of the Common Stock for the five trading days immediately preceding
the conversion. The Warrants are exercisable until June 28, 2002 at $1.50 per
share. The Debt Unit Option is exercisable for a twelve month period after
registration of the shares of Common Stock underyling the Convertible Debentures
and entitles the investors to purchase up to an additional $2,550,000 in
18-month principal amount convertible debentures with terms identical to the
Convertible Debentures with four-year warrants to purchase an aggregate of
1,275,000 shares of Common Stock at $1.50 per share.
The Share Adjustment and the conversion price of the Convertible
Debentures are variable based on the current price of the Company's Common Stock
at the time of sale and conversion respectively. Because of the discount to the
current market price of the Common Stock, sales of the Private Placement Common
Stock and the shares of Common Stock underlying the Convertible Debentures may
cause a downward trend in the trading price of the Common Stock until such
shares are sold if the interest to buy the Common Stock by investors is weak.
The investors in the Private Placement are not prohibited from taking or
maintaining a short position in the Common Stock. While each investor has
represented that as of October 26, 1998 they do not maintain a short position in
the Common Stock, they reserve the right to do so in the future.
As of November 12, 1998, all of the Convertible Debentures and Warrants
remained issued and outstanding.
The Company is obligated to register under the Securities Act of 1933 the
Private Placement Common Stock and the Common Stock underlying the securities
issued in the Private Placement. The investor are deemed "underwriters" of the
Private Placement Common Stock and the shares, if any issued under the Share
Adjustment in connection with any resale by the investors pursuant to such
registration.
10
<PAGE>
The investors in the Private Placement are set forth in the following table.
Share of
Shares of Common
Private Principle Stock
Placement Amount Issuable
Common Convertible Under
Name (1) Stock(2) Debentures Warrants
- -------- -------------------------------------------------
Jules Nordlicht 320,000 480,000 400,000
Huberfeld Bodner
Family Foundation 300,000 450,000 375,000
Mark Nordlicht 80,000 120,000 100,000
John Georgallas 200,000 0 100,000
Harry Adler 40,000 60,000 50,000
Rita Folger 40,000 60,000 50,000
Mechon L'Hoyroa 22,500 33,750 28,125
Joseph Antine 20,000 30,000 25,000
Philip Huberfeld 20,000 30,000 25,000
Issac Levy 20,000 30,000 25,000
Beth Medrash Gevoa of Israel 20,000 30,000 25,000
Abraham Elias 20,000 30,000 25,000
Congregation of Ahavas Tzdodak
V'Chesed 20,000 30,000 25,000
Abraham Ziskind 20,000 30,000 25,000
Jerusalem Fund 20,000 30,000 25,000
Shor Yoshuv Institute 20,000 30,000 25,000
Josh Berkowitz 10,000 15,000 12,500
Yeshiva of Telshe Alumni 10,000 15,000 12,500
Shekel HaKodesh 5,000 7,500 6,250
Judah Perstein 5,000 7,500 6,250
Ahron Schiller 2,500 3,750 3,125
Rebecca Adika 2,500 3,750 3,125
Elissa Eisner 2,500 3,750 3,125
___________________________________________
(1) Each holder of Convertible Debentures has a pro rata interest in the Debt
Unit Option.
(2) Excludes potential Adjustment Shares.
Issuance of Common Stock in excess of 3,615,334 shares pursuant to the
Private Placement including the (i) Share Adjustment, (ii) conversion of the
Convertible Debentures, (iii) exercise of Warrants and (iv) exercise of the Debt
Unit Option is subject to the approval of the Company's shareholders. In the
absence of shareholder approval of issuances in excess of 3,615,334 shares of
Common Stock, the holders of the Private Placement Common Stock and Convertible
Debentures will have the right to demand cash payment equal to the value of the
Share Adjustment and the redemption of the Convertible Debentures at 125% of the
principal amount plus accrued interest.
Pursuant to The Nasdaq Stock Market's corporate governance rules, the
Company may not permit the issuance of shares in excess of 20% of the shares of
Common Stock outstanding prior to the issuance unless shareholder approval is
obtained (the "20% Limit"). In order to insure compliance with such rules, the
Common Stock issuable in connection with the Private Placement has been limited
to 3,615,334 shares, subject to shareholder approval for issuances in excess of
the 20% Limit. The Private Placement Common Stock will not be counted for
purposes of a quorum or be entitled to vote regarding this
Proposal No. 2.
11
<PAGE>
Shareholder approval is being sought for issuances of Common Stock over the
20% Limit pursuant to the Private Placement including the Share Adjustment, the
conversion of Convertible Debentures, exercise of Warrants and exercise of the
Debt Unit Option. Shareholder approval will allow the holders of the Convertible
Debentures, Warrants and Debt Unit Option to exercise all of their rights
thereunder and acquire in excess of the 20% Limit. Based on the closing bid
price of the Company's Common Stock on November 9, 1998 of $0.78125, shares of
Common Stock issuable under the Private Placement would equal 11,643,280,
including 810,080 shares under the Share Adjustment. Because the Share
Adjustment and the conversion of Convertible Debentures is dependent on the
price of the Common Stock at future dates, the actual number of shares of Common
Stock which will be issued in undeterminable, and may exceed the assumed number
given above.
Due to issues regarding certain terms of the Private Placement, each of the
investors of the Private Placement Common Stock has rescission rights through
November 4, 1999. Consequently, the Company has classified $1,220,000 of the
proceeds as "temporary Stockholders Equity" at June 30, 1998. If all of the
investors assert rescission rights the investors would be entitled to (i) return
the Private Placement Common Stock, related Warrants and the rights to the
shares issued under the Share Adjustment, if any, and receive a refund of their
purchase price of $1,220,000 plus interest or (ii) if the Private Placement
Common Stock, related Warrants and the rights to the shares issued under the
Share Adjustment, if any, are sold, sue for the difference between the purchase
price of $1,220,000 and the sales price of these securities. The Company
believes it is unlikely that any of the investors would assert rescission rights
since, under the terms of the Private Placement, each investor is effectively
assured a return on their investment in excess of the amount they would receive
in a rescission award. Accordingly, the Company has not and does not intend to
reserve any funds to provide for this contingency. If a significant number of
investors decide to assert rescission rights, the Company's working capital
position (which at June 30, 1998 was $3,078,217) would be materially adversely
effected.
If shareholder approval for this Proposal No. 2 is not obtained, the
Company would be obligated to make substantial cash payments to the holders, at
their election, pursuant to the Share Adjustment and redemption rights of the
Convertible Debentures. Based on the closing bid price of the Company's Common
Stock on November 9, 1998 of $0.78125, the amount the Company would be required
to pay would be $ 2,545,375 and the Convertible Debentures would accrued
interest at 18% per annum until redeemed. The Company does not presently have
sufficient capital resources or alternative financing sources to make such cash
payments. Based on the Company's financing requirements and the absence of other
financing sources, management believes that the approval of this Proposal No. 2
is in the best interest of the Company.
The Board of Directors Unanimously Recommends That Shareholders Vote FOR
Proposal No. 2.
PROPOSAL NO. 3
AUTHORIZATION FOR A NEW CLASS OF
5,000,0000 SHARES OF PREFERRED STOCK
The Board of Directors propose that the shareholders of the Company
authorize an amendment to the Company's Certificate of Incorporation to create a
new class of preferred stock consisting of 5,000,000 shares. See below for the
full text of the proposed amendment.
12
<PAGE>
Upon the adoption of the proposed amendment, the Board of Directors,
without further action or vote by the shareholders, will have the authority to
issue up to 5,000,000 shares of Preferred Stock in one or more classes or series
and to fix the rights and preferences of each such class or series, including
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption, redemption prices, liquidation preferences and the number of shares
constituting any class or series, or the designations of such class or series.
The Company has no present commitments, arrangements or plans to issue any
Preferred Stock. Nevertheless, all of the Preferred Stock may be issued by the
Company upon authorization of the Board of Directors without further action by
the shareholders unless otherwise required by applicable law.
The Board of Directors believes that the proposed creation of the
Preferred Stock is in the best interest of the shareholders. The Board of
Directors believes that the Company should have maximum flexibility in
connection with the sale of securities to raise additional working capital, the
negotiation of mergers and acquisitions and other proper business purposes. In
many situations prompt action may be required which would not permit seeking
shareholder approval to authorize additional shares for a specific transaction
or purpose on a timely basis. The Board of Directors believes that it is
important to have the flexibility to act promptly in the best interests of
shareholders.
The voting and other rights of the holders of the Common Stock may be
subject to and adversely effected by, the rights of any Preferred Stock that may
be issued in the future, including dilution of the ownership of current
shareholders. In addition, the issuance of Preferred Stock could have potential
anti-takeover effects in that the shares could be used to issue control blocks
to persons or entities considered favorable by management shareholders rendering
an unfriendly tender-offer, proxy contest or merger more difficult. The
existence of the authorized but unissued Preferred Stock, and the Board of
Directors' ability to issue such shares and set its terms without shareholder
approval, may deter persons from seeking to acquire the Company on a hostile
basis and could make any attempt at gaining control of the Company or changing
management of the Company more difficult or time consuming. The Board of
Directors purpose for seeking the creation of the Preferred Stock is not for
anti-takeover purposes.
The proposed amendment to the Certificate of Incorporation would revise
Article Fourth to read in its entirety as follows:
"FOURTH: The Corporation shall be authorized to issue the following
shares:
Number of
Class Shares Par Value
------------- ------------ ---------
Common Stock 50,000,000 $ .01
Preferred Stock 5,000,000 $ 1.00
The Board of Directors is authorized, subject to the limitations
prescribed by law and the provisions of this Article FOURTH, to provide
for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each
series shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends on
shares of that series;
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<PAGE>
(c) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and if so, the terms of such
voting rights;
(d) Whether that series shall have conversion privileges,
and, if so, the terms and conditions of such conversion, including
provision of adjustment of the conversion rate in such events as the
Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and if so, the terms and conditions of such redemption,
including the date or date upon which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary
under different conditions and at different redemption dates;
(f) Whether that series will have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of
shares that series;
(h) Any other relative rights, preferences and limitations of
that series."
The Board of Directors Unanimously Recommends That Shareholders Vote FOR
Proposal No. 3.
PROPOSAL NO. 4
TO APPROVE A REVERSE STOCK SPLIT OF THE ISSUED, OUTSTANDING AND RESERVED
SHARES OF COMMON STOCK
General
In August 1998, the Company's Board of Directors adopted a proposal to
effect a reverse stock split of the Company's issued, outstanding and reserved
shares of Common Stock (the "Reverse Stock Split"). Neither the par value of
$.01 per share or the total authorized number of 50,000,000 shares of Common
Stock will be affected. If the Reverse Stock Split is approved by shareholders,
the Board of Directors will be granted the discretion to effect, without further
shareholder action, either (i) a one-for-four reverse split, (ii) a
one-for-eight reverse split or (iii) no stock split. Due to the changing trading
prices of the Common Stock, the Board of Directors believe that its ability to
select among the foregoing alternatives is necessary to increase the Company's
ability to maintain the Common Stock's listing on the Nasdaq SmallCap Market and
to increase the per share trading price of the Common Stock to levels more
acceptable to investors and the securities industry. If the trading price
increases and continually trades at $1.00 or greater, the Board of Directors is
more likely to effect a one-for-four reverse split. If the trading price remains
below $1.00, the Board of Directors is more likely to effect a one-for-eight
reverse split.
Shareholders must approve both reverse stock split ratios and the Board of
Directors discretion to effect either or reject the Reverse Stock Split proposal
in its entirety. If shareholders approve this Proposal No. 4, the Reverse Stock
Split would be implemented as set forth below in "Implementation of the Reverse
Stock Split". If the Reverse Stock Split is not effected by the Board of
Directors prior to the next annual meeting of shareholders, the Company will
abandon the Reverse Stock Split.
The Reverse Stock Split, if effected, will not affect any shareholders
proportionate equity interest in the Company (except for the fractional share
adjustment) or the relative rights, preferences, privileges or priorities of any
shareholder. In addition, pursuant to the terms of the Company's stock option
14
<PAGE>
plan, outstanding warrants, options and convertible debentures, the number of
shares issuable upon their exercise or conversion and the related exercise or
conversion price per share, will be proportionately adjusted.
Purpose of the Reverse Stock Split
The Board of Directors believes a Reverse Stock Split is in the best
interest of the Company and it shareholders.
In February 1998, new maintenance requirements for continued listing on the
Nasdaq SmallCap Market became effective. Under these requirements, the Company
is required to maintain, among other things, a minimum bid price of $1.00 per
share of Common Stock. As of the date of this Proxy Statement, the Company does
not comply with this requirement and the Reverse Stock Split is intended to
enable the Company to achieve and maintain a minimum bid price of $1.00 per
share of Common Stock. The Board of Directors believes a Reverse Stock Split may
have the effect of increasing the per share market price and allow the Common
Stock to continue to be listed on the Nasdaq SmallCap Market, although there is
no assurance that the market price of the Common Stock will rise proportionately
with the Reverse Stock Split or that the post-Reverse Stock Split per share
market price of a least $1.00 can be achieved or maintained. Even if the Company
achieves the required minimum bid price, there is no assurance that the Company
will continue to meet the other Nasdaq SmallCap Market continued listing
requirements. If the Common Stock was no longer listed on the Nasdaq SmallCap
Market, it would be traded in the over-the-counter market through an electronic
bulletin board or in the "pink sheets". Market interest in the Common Stock
would likely decrease significantly because of the difficulty in obtaining
accurate trading quotations. In addition, in the event the Common Stock fails to
maintain its Nasdaq listing, it would be subject to the "penny stock" rules of
the Securities Exchange Act of 1934 which impose additional customer disclosure,
record keeping obligations and other sales practice requirements on brokers
effecting transactions in the security. Because of these additional obligations,
certain brokers may decide not to effect transactions in the Common Stock which
could adversely effect the ability of shareholders to sell their Common Stock.
The Board of Directors further believes that the intended increase in the
per share market price of the Common Stock will improve the Common Stock's
investment suitability to investors and the securities industry and result in a
broader market. Certain brokerage firms are reluctant to or will not recommend
low priced stocks to their clients or will not make a market in such stocks.
These practices may adversely affect the liquidity of the Common Stock and the
ability of the company to raise additional equity capital. In addition,
brokerage commissions for transactions involving low priced stock are often
higher than for higher priced stocks.
Effects of the Reverse Stock Split
The principal effect of the Reverse Stock Split will be to (i) decrease
the number of outstanding shares of Common Stock, which at of the Record Date
was 19,296,674 shares, (ii) proportionately decrease the number of shares of
Common Stock issuable on the exercise of outstanding options, warrants and under
the Company's stock option plan, which at the Record Date was 4,960,000, and
(iii) proportionately decrease the number of shares of Common Stock issuable on
the conversion of convertible debt, which at the Record Date was $1,630,000. The
Reverse Stock Split will not affect any shareholders proportionate equity
interest in the Company (except for the fractional share adjustment) or the
relative rights (including voting rights), preferences, privileges or priorities
of any shareholder. The total number of authorized share will remain at
50,000,000 shares of Common Stock, $.01 par value and 5,000,000 shares of
Preferred Stock, $1.00 par value (assuming Proposal No. 3 is approved by the
shareholders). The Reverse Stock Split will have the effect of significantly
increasing the number of shares of Common Stock available for issuance without
further shareholder approval.
15
<PAGE>
In general, the future issuance of additional shares of Common Stock
available as a result of the Reverse Stock Split, other than on a pro rata
basis, will dilute the ownership of the current shareholders. In addition, the
increased number of authorized shares of Common Stock could have potential
anti-takeover effects in that the shares could be used to issue control blocks
to persons or entities considered favorable by management rendering an
unfriendly tender-offer, proxy contest or merger more difficult. The existence
of the authorized but unissued Common Stock, and the Board of Directors' ability
to issue such shares without shareholder approval, may deter persons from
seeking to acquire the Company on a hostile basis and could make any attempt at
gaining control of the Company or changing management of the Company more
difficult or time consuming. The Board of Directors' purpose for proposing the
Reverse Stock Split is not for anti-takeover purposes and management is not
aware of any specific effort to accumulate the Company's securities or to obtain
control of the Company by merger, tender offer, proxy contest or otherwise.
Implementation of the Reverse Stock Split
The Reverse Stock Split selected by the Board of Directors will be
effected on the date an amendment to the Company's Certificate of Incorporation
is filed with the Delaware Secretary of State (the "Effective Date"). See
Exhibit A for the form of the amendment to effect the Reverse Stock Split. On
the Effective Date, automatically and without any further action on the part of
the shareholders, certificates representing the pre-Reverse Stock Split number
of shares of Common Stock ("Old Shares") will be deemed to represent the number
of post-Reverse Stock Split shares of Common Stock ("New Shares"). Certificates
reflecting the number of New Shares will be issued in due course by the
Company's transfer agent, Continental Stock Transfer and Trust Company (the
"Transfer Agent"), upon tender of certificates representing the Old Shares for
transfer.
No fractional shares resulting from the Reverse Stock Split will be
issued. To the extent fractional shares result from the Reverse Stock Split, the
number of New Shares shall be rounded up if the fractional share is greater than
1/2 and rounded down if the fractional share is 1/2 or less. No cash will be
paid for fractional shares.
As soon as practicable after the Effective Date, the Company will send a
letter of transmittal to each holder of record of Old Shares. Shareholders
should not submit any certificates until requested to due so. The letter of
transmittal will contain instructions for the surrender of certificate(s)
representing the Old Shares to the Transfer Agent. Upon proper completion and
execution of the letter of transmittal and return to the Transfer Agent,
together with the certificate(s) representing the Old Shares and payment of the
new certificate fee established by the Transfer Agent, a shareholder will be
entitled to receive a certificate representing the number of New Shares.
Shareholders will not be required to exchange their certificates representing
the Old Shares. Until exchanged, certificates representing Old Shares will be
deemed to represent the corresponding number of New Shares.
With respect to the shares of Common Stock underlying outstanding
warrants, option and convertible debt, the Company will send to each holder a
notice of the proportionate adjustment regarding the number of shares of Common
Stock issuable and the exercise or conversion price.
Federal Income Tax Consequences of the Reverse Stock Split
The following is a summary of the Federal income tax consequences of the
Reverse Stock Split. This summary is based on existing law which is subject to
change by legislation, administrative action and judicial decision and dose not
consider the individual investment circumstances. Therefore the information is
necessarily general in nature and shareholders are advised to consult their own
tax advisors relating to their individual circumstance.
A shareholder will not be required to recognize gain or loss as a result
of the Reverse Stock Split and the shareholder's basis in the New Shares will
equal his basis in the Old Shares.
16
<PAGE>
A shareholder's holding period for the New Shares will be the same as the
holding period of the Old Shares for which they were exchanged.
The Reverse Stock Split would be a tax-free recapitalization and the
Company would not recognize and gain or loss.
The Board of Directors Unanimously Recommends That Shareholders Vote FOR
Proposal No. 4.
OTHER MATTERS
The Company knows of no other business that will be presented for
consideration at the Annual Meeting. However, the enclosed proxy confers
discretionary authority to vote with respect to those matters described in Rule
14a-4(c) under the Securities Exchange Act of 1934 (the "Exchange Act"),
including matters that the Board of Directors does not know, a reasonable time
before proxy solicitation, are to be presented at the Annual Meeting. If any
such matters are presented at the Annual Meeting, then the proxy agents named in
the proxy card will have the discretionary authority to vote the shares in
accordance with their best judgment.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The accounting firm of Holtz Rubenstein & Co., LLP has acted as the
Company's independent public accountants for the fiscal year ended June 30,
1998. The services provided by Holtz Rubenstein & Co., LLP to the Company for
1998 included the audit of the Company's annual consolidated financial
statements, consultation with regard to Federal securities law financial filings
and consultation on various tax, securities and other matters. Holtz Rubenstein
& Co., LLP is expected to be selected as the Company's independent public
accountants for the fiscal year ending June 30, 1999, however the final decision
of the Board of Directors will be based on the recommendation of the Audit
Committee and is customarily made by the Company near the end of its fiscal
year.
A representative of Holtz Rubenstein & Co., LLP is expected to be present
at the Annual Meeting, have the opportunity to make a statement and to be
available to respond to appropriate questions.
On April 15, 1998, the Company terminated its former independent
accountants, Sax Macy Fromm & Co., P.C. ("SMF"). The decision to change
accountants was approved by the Company's Board of Directors. There were no
disagreements between the Company and SMF on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure
during the Company's last two fiscal years ended June 30, 1997 and through April
15, 1998. Neither of SMF's reports on the Company's financial statements for the
fiscal years ended June 30, 1996 and June 30, 1997 contained an adverse opinion
or disclaimer of opinion, or was qualified or modified as to uncertainty, audit
scope or accounting principles.
SOLICITATION OF PROXIES
The Company will pay the cost of this solicitation which will be made
primarily by mail. Proxies may also be solicited by directors, officers or
employees of the Company without additional compensation, in person, or by
telephone, facsimile or other similar means. The Company will, on request,
reimburse shareholders who are brokers, dealers, banks, or their nominees, for
their reasonable expenses in sending proxy materials and annual reports to the
beneficial owners of Common Stock they hold of record.
17
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SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Any shareholder who wishes to present a proposal to be considered at the
1999 annual meeting of shareholders and who wishes to have such proposal receive
consideration for inclusion in the Company's proxy statement must deliver such
proposal in writing to the Company at Parkway Technical Center, 1515 Broad
Street, Bloomfield, New Jersey 07003 not later than June 18, 1999. Any
shareholder proposal must comply with the requirements of Rule 14a-8 under the
Exchange Act.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
In connection with Proposals No. 2, 3 and 4, the Company is required to
provide certain financial information with this Proxy Statement. The Company
incorporates herein by reference its financial statements for the year ended
June 30, 1998 and the related Management's Discussion and Analysis of Financial
Condition and Results of Operations from its Form 10-K for the fiscal year ended
June 30, 1998, which has been previously filed by the Company (Commission File
No. 0-17118) with the Securities and Exchange Commission pursuant to the
Exchange Act and made a part of this Proxy Statement. The Form 10-K for the year
ended June 30, 1998 is being mailed herewith.
All documents filed by the Company pursuant to Section 13(a), 13(c) or
15(d) of the Exchange Act subsequent to the date of this Proxy Statement and
prior to the Annual Meeting shall be deemed to be incorporated by reference into
this Proxy Statement and to be part hereof from the date of filing such
documents. Any statements contained herein or in a document incorporated by
reference herein shall be deemed modified or superseded for purposes of this
Proxy Statement to the extent that a statement contained herein or in any
subsequently filed documents which also is incorporated by reference modifies or
superseded such earlier statement. A copy of any document incorporated by
reference may be obtained without charge by any shareholder of record on the
Record Date upon written request to the Company's executive offices, Attention:
Corporate Secretary.
ANNUAL REPORT AND FORM 10-K
The 1998 Annual Report to Shareholders on Form 10-K for the fiscal year
ended June 30, 1998, including financial statements, is being mailed herewith.
If you did not receive a copy please advise the Company and another will be sent
to you. A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1998, as filed with the Securities and Exchange Commission, may
be obtained without charge by any shareholder of record on the Record Date upon
written request to the Company's executive offices, Attention: Corporate
Secretary.
By Order of the Board of Directors,
CARL COPPOLA, Chairman
November 12, 1998
Bloomfield, New Jersey
18
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EXHIBIT A
CERTIFICATE OF AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION OF
MARK SOLUTIONS, INC.
Mark Solutions, Inc., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
FIRST: That at a meeting of the board of directors of the corporation,
resolutions were duly adopted setting forth a proposed amendment to the Restated
Certificate of Incorporation of the corporation, declaring said amendment to be
advisable and calling a meeting of shareholders of the corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Restated Certificate of Incorporation of Mark Solutions,
Inc., as amended to date, shall be amended so that Article Fourth shall read in
its entirety as follows:
"FOURTH: The Corporation shall be authorized to issue the following
shares:
Number of
Class Shares Par Value
------------- ------------ ---------
Common Stock 50,000,000 $ .01
Preferred Stock 5,000,000 $ 1.00
The Board of Directors is authorized, subject to the limitations
prescribed by law and the provisions of this Article FOURTH, to provide
for the issuance of the shares of Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of
Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers,
preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each
series shall include, but not be limited to, determination of the
following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends on
shares of that series;
(c) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and if so, the terms of such
voting rights;
(d) Whether that series shall have conversion privileges,
and, if so, the terms and conditions of such conversion, including
provision of adjustment of the conversion rate in such events as the
Board of Directors shall determine;
(e) Whether or not the shares of that series shall be
redeemable, and if so, the terms and conditions of such redemption,
including the date or date upon which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary
under different conditions and at different redemption dates;
19
<PAGE>
(f) Whether that series will have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms
and amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
corporation, and the relative rights of priority, if any, of payment of
shares that series;
(h) Any other relative rights, preferences and limitations of
that series."
Simultaneously with the effective date of this amendment (the "Effective
Date"), (i) 19,296,674 shares of Common Stock outstanding, (ii) 4,960,000
shares of Common Stock reserved for grant of options and/or subject to
outstanding options and warrants immediately prior to the Effective Date and
(iii) the shares reserved for issuance on the conversion of outstanding debt
immediately prior to the Effective Date (the Old Shares"), shall
automatically and without any action on the part of the holder thereof be
reverse split on a 1-for- basis so that each Old Share shall automatically be
converted and reconstituted as of a share (New Shares") of Common Stock (the
"Reverse Stock Split"). The par value of the New Shares shall be $.01 per
share. No fractional shares resulting from the Reverse Stock Split will be
issued. To the extent fractional shares result from the Reverse Stock Split,
the number of New Shares shall be rounded up if the fractional share is
greater than 1/2 and rounded down if the fractional share is 1/2 or less.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
meeting of the shareholders of the corporation was duly called and held, upon
notice in accordance with Section 322 of the General corporation Law of the
State of Delaware at which meeting the necessary number of shares as required
by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, Mark Solutions, Inc. has caused this Certificate
to be signed by Carl Coppola, its president this day of , 199 .
MARK SOLUTIONS, INC.
By:_____________________________
Carl Coppola, President
20
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PROXY MARK SOLUTIONS, INC.
1515 Broad Street
Bloomfield, New Jersey 07003
This Proxy is being solicited on Behalf of the
Mark Solutions, Inc. Board of Directors
The undersigned hereby appoints Carl C. Coppola and Cheryl Gomes, and
either of them, as proxies, each of them with the power to appoint his
substitute, and hereby authorizes either of them to represent and to vote, as
designated below, all the shares of Common Stock of Mark Solutions, Inc.
("Mark") held of record by the undersigned on October 30, 1998 or with respect
to which the undersigned is otherwise entitled to vote or act, at the Annual
Meeting of Shareholders to be held on December 28, 1998 (the "Annual Meeting"),
or any adjournment thereof.
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS ................ [ ] FOR all nominees listed below [ ] WITHHOLD authority
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
(INSTRUCTION: To withhold authority for any individual,
mark the box next to the nominees name below.)
Carl C. Coppola [ ] Richard Branca [ ] Michael Nafash [ ]
Ronald E. Olszowy [ ] William Westerhoff [ ] Yitz Grossman [ ]
2. To approve the issuance of Common Stock in excess of 3,615,334 shares in
connection with the Company's 1998 private placement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. To approve the creation of a new class of 5,000,000 shares of
Preferred Stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To approve a reverse split of the Company's issued, outstanding and reserved
shares of Common Stock
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(To be signed and dated on the other side)
- --------------------------------------------------------------------------------
<PAGE>
(Continued from other side)
5. In their discretion the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting or any adjournment
thereof, upon matters incident to the conduct of the Annual Meeting and upon
the election of substituted nominees for Director designated by the Board of
Directors if one or more of the persons named above is unable to serve as a
Director.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF THE DIRECTORS AND FOR PROPOSALS NO. 2, 3, AND 4, AND
AUTHORITY WILL BE DEEMED GRANTED UNDER PROPOSAL NO. 5.
Dated:_____________________________, 1998
________________________________________
Signature
________________________________________
Signature if held jointly
Please sign exactly as the name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please sign
in full corporate name by President or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
