SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
((Amendment No. )
Filed by the Registrant [ x ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6a-12)
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
KRANTOR CORPORATION
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(Name of Registrant as Specified in Its Charter)
------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined)
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] check box if any part of the fee is offset as provided by Exchange Act rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.
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3. Filing Party:
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4. Date Filed:
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KRANTOR CORPORATION
10850 Perry Way
Ste. 203
Wexford, Penna. 15090
PROXY STATEMENT
This statement is furnished in connection with a solicitation of
proxies by the Board of Directors (the "Board of Directors" or the "Board") of
Krantor Corporation (the "Company") to be used at the Annual Meeting of
Stockholders of the Company (the "Meeting") to be held on June 19,1998 at 2:30
P.M. at Long Island Marriott, Uniondale, New York.
VOTING PROCEDURES
Stockholders of record at the close of business on May 1, 1998 will be
entitled to vote at the Meeting. On the said record date, there were 4,583,604
shares of Common Stock, par value $.001 per share ("Common Stock"), outstanding,
each of which being entitled to one vote at the Meeting, and 100,000 shares of
Class A Preferred Stock, par value $.001 per share ("Preferred Stock" and,
together with the Common Stock, collectively the "Company Shares"), outstanding,
each of which being entitled to 13 votes at the Meeting (vote is controlled by
Mair Faibish, Executive Vice President of the Company). Holders of the Common
Stock and the Preferred Stock will vote as a single class as to all matters to
come before the Meeting. A Shareholder List disclosing shareholders of record on
May 1, 1998 shall be made available for inspection by shareholders entitled to
vote at the Annual Meeting at the location of the Meeting on the date of and in
advance of the date of the Meeting.
The By-Laws of the Company (the "By-Laws") provide that the holders of
a minimum of one third of the Company Shares issued and outstanding and entitled
to vote at the Meeting, present in person or represented by proxy, shall
constitute a quorum at the Meeting. The By-Laws further provide that the
directors of the Company shall be elected by a plurality vote and that, except
as otherwise provided by statute, the Certification of Incorporation of the
Company, or the By-Laws, all other matters coming before the meeting shall be
decided by the vote of a majority of the number of Company Shares present in
person or represented by proxy at the Meeting and entitled to vote thereat.
Votes cast at the Meeting will be counted by the person appointed by
the Company to act as inspectors of election for the Meeting. The inspectors of
election will treat Company Shares represented by a properly executed and
returned proxy as present at the Meeting for purpose of determining a quorum.
Abstention and broker non-votes with respect to particular proposals will not
affect the determination of a quorum.
Five directors will be elected by a plurality vote of the Company
Shares present, in person or by proxy, and entitled to vote at the Meeting.
Accordingly, abstentions and broker non-votes as to the election of directors
will have no effect thereon. All other matters to come before the Meeting
require the approval of a majority of the Company Shares present entitled to
vote thereon, therefore, abstentions as to particular proposals will have the
same effect as votes against such proposals. Broker non-votes as to particular
proposals will not, however, be deemed to be a part of the voting power present
with respect to such proposals and will not therefore count as votes for or
against such proposals and will not be included in calculating the number of
votes necessary for approval of such proposals.
Proxies in the enclosed form are solicited by the Board of Directors to
provide an opportunity to every stockholder to vote on all matters to come
before the Meeting, whether or not he or she attends in person. If proxies in
the enclosed form are properly executed and returned, the Company Shares
represented thereby will be voted at the Meeting in accordance with stockholder
direction. Proxies in the enclosed form will be voted FOR the election of each
director and FOR the approval of the specified amendments to the Company 's
Certificate of Incorporation eliminating future dividend rights to existing
Preferred Stock. Any stockholder executing a proxy may revoke that proxy or
submit a revised one at any time before it is voted. A stockholder may also
attend at the Meeting in person and vote by ballot, thereby canceling any proxy
previously given. Except for the election of directors, and approval of the
amendment to by Company's Certificate of Incorporation arranging for the
proposed change in terms of the Preferred Stock, management expects no other
matters to be presented for action at the Meeting. If, however, any other
matters properly come before the Meeting, the persons named as proxies in the
enclosed form of proxy intend to vote in accordance with their judgment on the
matters presented unless otherwise specified in the Proxy.
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<PAGE>
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. In
addition to solicitations by mail, arrangements have been made for brokers and
nominees to send proxy material to their principals, and the Company will
reimburse them for their reasonable expenses in doing so. The Company's transfer
agent, American Stock Transfer and Trust Company will assist it in the
solicitation of proxies from brokers and nominees. The fees for the services of
the transfer agent are included in the monthly fees paid by the Company,
however, the Company will reimburse the transfer agent for its reasonable
out-of-pocket expenses incurred in connection with providing solicitation
services. Certain employees of the Company, who will receive no compensation for
their services other than their regular remuneration, may also solicit by
telephone, telegram, telex, telecopy, or personal interview.
PROPOSAL 1. ELECTION OF DIRECTORS
At the Meeting, five directors are to be elected to a one-year term and
to hold office until their successors are elected and qualified. The Board of
Directors consists of one class, which serves for a one-year term. The persons
named in the enclosed form of proxy intend to vote such proxy, unless otherwise
directed, FOR the election of each of the directors nominated to serve on the
Board to serve until the fiscal 1998 Annual Meeting of Stockholders or other
dates for proposed election on new directors. If contrary to present
expectation, any of the nominees should become unavailable for any reason, votes
may be cast pursuant to the accompanying form of proxy for a substitute nominee
designated by the Board.
INFORMATION CONCERNING DIRECTORS AND DIRECTOR NOMINEES.
Set forth is certain information concerning directors and director
nominees.
Year First
Elected A
Name of Nominee Age Position Director
--------------- --- -------- --------
Henry J. Platek, Jr. 52 President and Director 1989
Mair Faibish 38 Executive Vice President
Chief Financial Officer
and Director 1989
Mitchell Gerstein 42 Vice President, Treasurer,
Secretary and Director 1991
Dominic Marsicovetere 49 Director 1993
Michael Ferrone 46 Director 1995
HENRY J. PLATEK, JR. has been President and a Director of the Company since
December 1989.
MAIR FAIBISH. Mr. Faibish has been Executive Vice President, Chief
Financial Officer and a Director of the Company since May 1989. He serves on the
Compensation and Executive committees.
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MITCHELL GERSTEIN. Mr. Gerstein has been Treasurer since March 1994. Vice
President and a Director of the Company since June 1991. Controller and
Treasurer of the Company since March 1992, and Secretary of the Company from
June 1991 to March 1994, a position he resumed in January 1995. Mr. Gerstein
serves on the Audit Committee.
DOMINIC A. MARSICOVETERE, CPA. Mr. Marsicovetere has been a Director of the
Company since April 1993. Since 1978, Mr. Marsicovetere has been an Accounting
Professor in the school of Business Administration at Hofstra University. Since
1978, Mr. Marsicovetere had been in private practice as a certified public
accountant. Mr. Marsicovetere is the chairman of the Audit Committee and
Independent Compensation Committee.
MICHAEL FERRONE. Mr. Ferrone has been an associate at Certified Financial
Services for 1 year. Mr. Ferrone has been a Vice President and has served on the
Executive Committee of Alliance Financial Group for the past eight years. Mr.
Ferrone serves on the Audit Committee and Independent Compensation Committee.
CORPORATE GOVERNANCE
Directors are elected at the annual meeting of stockholders and hold office
until their successors have been duly elected and qualified, or until their
earlier death, resignation or removal.
The Board of Directors has primary responsibility of directing the
management of the business and affairs of the Company. The Board currently
consist of five members.
The Company has an Audit Committee, an Executive Committee, an Independent
Compensation Committee and an Employee Compensation Committee.
The Audit Committee is comprised of Dominic A. Marsicovetere (chair) and
Mitchell Gerstein and Michael Ferrone and its functions include recommending to
the Board of Directors the engagement of the Company's independent certified
public accountants, reviewing with such accountants the plan and results of
their examination of the consolidated financial statements and determining the
independence of such accountants. The Audit Committee will also have primary
responsibility for reviewing all related party transactions. However, it is the
Company's policy that all related party transactions be approved by a majority
of the disinterested directors of the Company. Such directors will not be
required to make a determination that each related party transaction meets a
fairness test, but will decide whether the transaction is in the best interest
of the Company. The Audit Committee is comprised of a majority of independent
directors as required by NASDAQ.
The Executive Committee is comprised of Henry J. Platek, Jr. and Mair
Faibish and is responsible for establishing policies and procedures relating to
the administration and operation of the Company.
The Independent Compensation Committee, consisting of Dominic Marsicovetere
and Michael Ferrone, the Company's two independent non-employee directors, will
review and make recommendations with respect to compensation of officers and key
employees. They also administer the Company's 1994 Services and Consulting
Compensation Plan, as amended with respect to compensation of directors (except
non-employee directors) and officers and consultants of the Company.
The Employee Compensation Committee, consisting of Mair Faibish and Henry
J. Platek, will review and make recommendations with respect to compensation of
employees who are not officers or directors.
Executive officers serve at the discretion of the Board of Directors,
subject to any employment agreement between the executive officer and the
Company.
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<PAGE>
The Board of Directors and its Committee voted by unanimous or majority (on
notice to others not voting) written consent in lieu of formal meetings with
respect to all actions taken in the year ended December 31, 1996 and December
31, 1997, and thereafter in 1998.
None of the directors or respective officers of the Company have over the
last two fiscal years been involved in any material transactions with the
Company wherein the amount of money involved exceeded $100,000 although the
Company and its affiliates have purchased insurance instruments through Mr.
Ferrone. No material transactions involving the officers and or directors of the
Company and the Company are proposed. There are also no common affiliations
between the Company and officers and/or directors in any other business or
entity, to the best knowledge of the Company.
No officer, director and/or former member or affiliate thereof is or in the
last two fiscal years has been in debt to the Company in excess of $100,000.
COMPENSATION OF DIRECTORS/ NON-EMPLOYEE DIRECTOR PLAN
Directors and committee members who are part of management serve as such
without compensation but are reimbursed for their reasonable out-of-pocket
expenses in attending meetings of the Board and its committees. Pursuant to the
Option Plan, directors who are not employees of the Company are granted an
option to purchase 10,000 shares of Common Stock at an exercise price equal to
fair market value on the date of grant immediately upon their election or
reelection to the Board of Directors.
RECOMMENDATION AND VOTE
The Board of Directors recommends the election of the nominees listed above
as directors of the Company to hold office until the next annual meeting or
until their successors are elected and qualified. The affirmative vote of a
plurality of the Company Shares represented at the Meeting is required for such
approval.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth as of April 1, 1998 information regarding
the beneficial ownership of the Company's voting securities (i) by each person
who is known to the Company to be the owner of more than five percent of the
Company's voting securities, (ii) by each of the Company's directors, and (iii)
by all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership Percent of Class
Name and Address of Common Preferred Common Preferred
Beneficial Owner(1) Stock Stock Stock Stock
- - ------------------- ----- ----- ----- -----
<S> <C> <C> <C> <C>
Henry J. Platek (2).......... 1,391 -0- .03% --
10850 Perry Way
Ste. 203
Wexford, Penna 15090
Mair Faibish (3)............. 167,540 100,000 3.66% 100.0%
10850 Perry Way
Ste. 203
Wexford, Penna 15090
Mitchell Gerstein............ 324 -0- .01% --
10850 Perry Way
Ste. 203
Wexford, Penna 15090
Dominic A. Marsicovetere..... 15,000 -0- .33% --
10850 Perry Way
Ste. 203
Wexford, Penna 15090
Michael Ferrone............. -0- -0- -0- --
10850 Perry Way
Ste. 203
Wexford, Penna 15090
Jemini Investments, Inc..... 302,800 -0- 6.61% --
155 Foxhunt Ct.
Syosset, NY 11791
All Officers and Directors
as Group (4)................ 184,255 100,000 4.0% 100.0%
</TABLE>
*Less than 1%
(1) Unless otherwise indicated, each person named in the table exercises sole
voting and investment power with respect to all shares beneficially owned.
(2) Includes 333 shares owned by Michaleen Platek, wife of Henry J. Platek Jr.,
and 333 shares owned by MNP Corporation d/b/a Twin Cities Wholesale Grocers
Incorporated ("MNP"), a corporation wholly-owned by Mrs. Platek. Henry Platek
disclaims beneficial ownership of the shares held by Michaleen Platek and MNP.
(3) Mr. Faibish owns the 100,000 shares of Preferred Stock outstanding. Each
share of Preferred Stock is entitled to 13 votes on all matters on which Common
Stock may vote. Accordingly, the percentage of overall voting power of the
Company's voting securities beneficially owned by Mair Faibish and all officers
and directors as a group is increased accordingly.
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PROPOSAL 2. PROPOSAL TO AMEND THE COMPANY'S
CERTIFICATE OF INCORPORATION TO ALLOW ELIMINATION OF
FUTURE PREFERRED STOCK DIVIDENDS
GENERAL
At the Annual Meeting, the stockholders of the Company will consider and
vote upon a proposal providing for elimination of all future dividend rights of
the Company's Preferred Stock. The change in terms of the Preferred Stock will
be effected by an amendment to the Company's Certificate of Incorporation (the
"Amendment") that is contained in Exhibit A to this Proxy Statement which is
incorporated by reference herein. The Amendment will become effective upon its
filing with the Secretary of State of Delaware (the "Effective Date"). All of
the Company's authorized Preferred Stock is issued and outstanding and change in
terms thereof requires also the consent of the holder(s) thereof. Such consent
has been received by the Company from the holder of all of the outstanding
Preferred Stock, Mr. Faibish, the Company's Executive Vice President.
RECOMMENDATION AND VOTE
The proposed Amendment must be approved by the holders of at least a
majority of the shares of Common Stock and of the Preferred Stock (and others
having votes similar thereto) present and voting at the Annual Meeting of
Stockholders where quorum requirements have been met, called for that purpose
for which Proxies are hereby being solicited. Quorum at the meeting shall
require attendance in person or by proxy by at least one-third amount of
potential votes outstanding.
The Board of Directors has adopted a resolution setting forth the proposed
amendment, and hereby recommends that the stockholders of the company vote for
the proposed amendment.
PROPOSAL 3. ELECTION OF AUDITORS
Belew, Averitt LLP are expected to be the independent auditors of the
financial statements of the Company and its subsidiaries for the fiscal year
ending December 31, 1998 and have acted as such during the last two years of the
Company. At the meeting, Belew, Averitt LLP are being nominated to serve as the
auditors for the Company for the fiscal year ending December 31, 1998. It is not
expected however that any representative of the auditors will be available at
the Meeting to respond to questions.
The financial statements of the Company as of and for the fiscal years
ended December 31, 1996 and December 31, 1997 were audited by Belew, Averitt LLP
and such did not contain an adverse opinion or a disclaimer of an opinion, and
were not qualified or modified as to uncertainty, audit scope or accounting
principles.
RECOMMENDATION AND VOTE
The Board of Directors recommends the election of Belew, Averitt LLP to
serve as auditors for the Company for the fiscal year ended December 31, 1998
and until successors are elected and qualified. The affirmative vote of a
plurality of the Company Shares represented at the Meeting is required for such
approval.
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PROPOSAL 4. PRIVATE PLACEMENT OF SECURITIES
Subject to Shareholder Approval the Company has entered an agreement with
First Asset Management Inc., a NASD licensed investment banking firm, to act as
placement agent to assist the Company on a best efforts basis to attempt a
private placement offering (the "Offering") of the Company's securities wherein
the Company shall offer up to 30 units of securities, each unit offered for
$100,000 investment, and each unit consisting of a $70,000 12% Convertible
Subordinated Debenture (the "Debenture") and 26,666 shares of restricted common
stock, each unit also allowing for registration rights to the holder of all
common stock included in the unit and underlying conversion rights of the
Debenture. The Debenture shall be convertible at $2.50 per share. Further terms
of the Offering and obligations of the Company regarding same are more
particularly set forth in the Term Sheet included herewith as an Exhibit to the
Proxy Statement. All funds net to the Company after the expenses of the Offering
shall be added to working capital of the Company with no specific restrictions
or prohibitions on the use of such funds, and the Company expects to utilize
such funds to further its corporate operations and its business including
contributing funds to the business of its subsidiaries. The Company believes
that the additional capital will allow for the Company to continue to explore,
enhance and expand upon its business opportunities and provide more of the
products being marketed by the Company and thereby gain an even more firm
foothold on its encouraging position in the product marketplace, with the
hopeful result of enhancement of the value of the Company's stock in the
securities marketplace. The Term Sheet outlines the material terms of the
Offering. The Offering may be terminated or other reasonable terms thereof
negotiated and approved by the President of the Company or his designee.
RECOMMENDATION AND VOTE
The Board of Directors of the Company has authorized and approved the
Offering and recommends its approval by shareholders of the Company. Shareholder
Authorization is necessary for proceeding with the Offering and requires
approval by at least a majority of the Company Shares represented at the
Meeting.
OTHER BUSINESS
Management knows of no other business which is to be presented for action
at the meeting. Should any other matters properly come before the meeting, the
persons named in the accompanying proxy will have discretionary authority to
vote all proxies in accordance with their judgement.
It is important that proxies be returned promptly. Therefore, stockholders
who do not expect to attend in person are urged to execute and return the
enclosed proxy to which no postage need be affixed if mailed in the United
States.
EXECUTIVE COMPENSATION
Set forth below are tables showing (i) in summary form, the compensation
paid to Henry J. Platek and Mair Faibish the only executive officers of the
Company who earned in excess of $100,000 during any of the fiscal year
presented: and (ii) the options and stock appreciation rights (SARs) granted to
such executives in 1997.
<TABLE>
<CAPTION>
Restricted
Stock
Name and Principal Position Year Salary Bonus Options
<S> <C> <C> <C> <C>
Henry J. Platek, President and 1997 62,927 3,750 0
Chief Executive Officer 1996 105,867 0 0
1995 121,000 6,063 0
Mair Faibish, Executive Vice 1997 97,782 0 500,000(1)
President and CEO 1996 112,440 0 0
1995 104,900 11,719 0
</TABLE>
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Compensation Committee Interlocks and Insider Participation
(1) option exercisable at $.50 per share; as of April 1, 1998 55,000 shares have
been exercised.
All decisions with respect to the stock compensation of the Company's
executive officers and key employees are made by the Independent Compensation
Committee, which is comprised of Mr. Marsicovetere and Mr. Ferrone under the
1994 Plan. Neither Mr. Marsicovetere nor Mr. Ferrone are officers or employees
of the Company nor were they at any time.
All decisions with respect to the compensation of employees who are not
officers or key employees are made by the Employee Compensation Committee which
is comprised of Mr. Platek and Mr. Faibish. Mr. Faibish is the Executive Vice
President and Chief Financial Officer of the Company.
REPORT OF THE BOARD OF DIRECTORS ON ANNUAL COMPENSATION
ADMINISTRATION OF COMPENSATION PROGRAM
The Independent Compensation Committee will be responsible for establishing
and administering the stock compensation policies applicable to the Company's
executive officers.
Prior to the establishment of the Committee, decisions with respect to the
compensation of the Company's executive officers have been made by the Board of
Directors.
COMPENSATION POLICY
The goals of the Company's executive compensation policy are to (i) attract
and retain qualified executives and (ii) ensure that an appropriate relationship
exists between executive pay and the creations of shareholder value. To achieve
these goals, the Company's executive compensation policy will reward executives
for long term strategic management and the enhancement of stockholder value by
integrating annual base compensation with other forms of incentive compensation
based upon corporate results and individual performance. Measurement of
corporate performance will be primarily based on the level of achievement of
Company goals and upon Company performance levels compared with industry
performance levels.
The Committee will obtain compensation survey data where available for the
promotional wholesale distribution industry and similar industries to be used as
a guide to establish compensation levels to be competitive with and comparable
to other companies in its industry group.
FISCAL 1997 EXECUTIVE COMPENSATION PROGRAM
The Company's fiscal 1997 executive compensation program was comprised
exclusively of base salary and stock grants pursuant to the Company's
compensation plan. During fiscal 1997 Mr. Faibish and Mr. Platek, the Company's
two executive officers, did not receive salary increases. The decisions not to
grant increases were made by the Board of Directors based on the company
performance and financial condition. The compensation program described below
will be implemented by the Independent Compensation Committee on a going forward
basis.
BASE SALARY. The Independent Compensation Committee will review and approve
all salary changes and stock grants for executive officers. The Committee will
base its approval of such salary changes on: (i) performance of the executive,
(ii) Company performance, (iii) experience, and (iv) external salary surveys.
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ANNUAL INCENTIVE. The Company may use annual performance incentives to
focus management on achieving financial and operating results. The Company may
establish a bonus pool for executive officers for particular year or years, from
which bonuses will be paid at the discretion of the President and Executive Vice
President upon approval of the Committee, except that bonuses awarded to the
President and Executive Vice President will be at the discretion of the
Committee based on the financial performance of the Company.
LONG TERM INCENTIVE. The primary purpose of the long-term incentive
compensation plan (the "Plan") is to link management pay with the long term
interests of stockholders. The Independent Compensation Committee will use stock
options to achieve this link. The grant of options at 100 percent for the fair
value assures that the executive officers will receive a benefit only when stock
price increases.
The amount of options granted is based on comparative data on the estimated
value of long term compensation for other industry executives. In determining
annual stock option grants, the Independent Compensation Committee will base its
decision on the individual's performance and potential to improve stockholder
value.
In March 1994, certain executive officers of the Company were awarded stock
options and stock grants pursuant to the Plan. These options and grants were
made at the discretion of the President and Executive Vice President, and the
options were granted at the market price of the Common Stock on the date of
grant ($3.00 per share). Such options and stock grants were approved by the
Board of Directors. In March 1995, these options were cancelled by the holders.
In March 1995, the Independent Compensation Committee issued new options to
certain of the Company's executive officers. These options were cancelled by the
holders in February, 1997. The Committee believes that options and other stock
based performance compensation arrangements are effective incentive for managers
to create value for stockholders since the value of an option bears a direct
relationship to the Company's stock price.
In 1997 the Committee approved the issuance of options to purchase 500,000
shares of the common stock of the Company, exercisable at $.50 per share to Mair
Faibish, such award being granted in recognition of the valuable services that
Mair Faibish (the optionee) has devoted to the Company allowing the Company to
advance in its operations after losses it incurred in connection with its
discontinued kosher business.
CEO COMPENSATION DURING FISCAL 1997
Mr. Platek's salary is intended to be competitive with salary arrangements
received by other chief executive officers in the promotional wholesale
distribution industry. The Committee will base future bonuses or awards to Mr.
Platek on Company and Individual performance as compared to other promotional
wholesale distribution companies, and the criteria set forth above for executive
officers generally.
COMPENSATION OF DIRECTORS
The Company's executive officers do not receive any compensation for their
services as Directors; however, such officers are reimbursed for their
reasonable out-of-pocket expenses in attending any meetings of the Board and/or
its committees. The Company's two non-employee Directors, on the other hand,
each receive compensation for their service in the form of an option to purchase
10,000 shares of the Company's Common Stock immediately upon their election or
re-election to the Board. These options, which are granted pursuant to the
Company's Stock Option Plan for Non-Employee Directors (the "Option Plan"), are
issued at their fair market value, are immediately exercisable and have a term
of ten years.
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EMPLOYMENT CONTRACTS
The Company entered into employment agreements (the "Agreements") with each
of Messrs. Platek and Faibish on November 14, 1994, providing for their
continued employment in their current capacities until October 1997 and such
agreements have been temporarily extended until terminated or new employment
agreements are executed subject to termination for cause at an annual base
salary, effective November 14, 1994 with respect to Mr. Platek and effective
April 1, 1995 with respect to Mr. Faibish, of $108,000 (with automatic 5% annual
increases). Under these Agreements, Messrs. Platek and Faibish will each be
eligible to receive bonus payments at the discretion of the Independent
Compensation Committee. In addition, the Agreements provide for each of Messrs.
Platek and Faibish to receive certain stock option grants pursuant to the
Company's 1994 Plan. Each officer has agreed that upon termination of his
employment he will not compete with the Company for a period of one year in any
area within a 50 mile radius of the Company's principal place of business. The
Agreements also provide for certain payments in the event of either officers'
disability and for the use of a Company automobile.
CONCLUSION
The Board of Directors and the Independent Compensation Committee believe
that the quality and motivation of management make a significant difference in
the long term performance of the Company. The Board of Directors and the
Committee also believe that a compensation program which rewards performance
that meets or exceeds high standards also benefits the stockholders, so long as
there is an appropriate downside risk element to compensation when performance
falls short of such standards. The Board of Directors and the Committee are of
the opinion that the Company's management compensation program meets these
requirements, has contributed to the Company's success, and is deserving of
stockholder support.
Henry J. Platek, Jr.
Mair Faibish
Mitchell Gerstein
Dominic A. Marsicovetere
Michael Ferrone
STOCK PERFORMANCE TABLE
(PLEASE SEE SCHEDULE A)
ANNUAL REPORT
The Annual Report to Shareholders of the Company for the fiscal year ended
December 31, 1997 which includes audited financial statements has been
previously mailed to stockholders and the 1997 Annual Report shall be mailed to
shareholders when prepared, preparation of which is expected by May 1998. Of
such reports that for fiscal year ended December 31, 1996 is incorporated herein
by reference; that for 1997 is not presently available, but is incorporated if
and to the extent available if completed prior to the scheduled annual meeting
to which this proxy statement relates.
FORM 10-K
The Company is furnishing herewith to each person whose Proxy is being
solicited, a copy of the Annual Report of the Company on Form 10-K for the
fiscal year ended December 31, 1997, as filed with the Securities and Exchange
Commission. The 10-K report of the Company for 1997 is incorporated herein by
reference and should be reviewed by the recipient of this Proxy Statement in
conjunction with review of the other information on the Company included herein.
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STOCKHOLDER PROPOSALS
If any stockholder desires to present a proposal for action at the
Company's annual meeting to be held in 1999, such proposal must be in compliance
with applicable laws and Securities and Exchange Commission regulations and must
be received by the Company on or prior to February 1, 1999.
SECTION 16 REQUIREMENTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission ("SEC"). Such persons are required by SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such reports received by it
with respect to fiscal 1996 and 1997 or written representations from certain
reporting persons, the Company believes that all filing requirements applicable
to its directors, officers and persons who own more than 10% of a registered
class of the Company's equity securities have been timely complied with.
By Order of the Board of Directors
Mitchell Gerstein
Secretary
Wexford, PA
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SCHEDULE A
COMPANY STOCK PERFORMANCE
1993 1994 1995 1996 1997
---- ---- ---- ---- ----
KRANTOR CORPORATION 100 56 28 3 2
NASDAQ MARKET 100 97 138 170 209
PEER GROUP 100 80 100 100 126
PEER GROUP INCLDUES:
FLEMING, SUPERVALU, NASH FICH, RICHFOODS HOLDING, SUPERRITE, SUPER FOODS
SERVICES
(GRAPH ALSO INCLUDED)
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<PAGE>
EXHIBIT A
AMENDED
CERTIFICATION OF DESIGNATION OF
PREFERENCES, RIGHTS AND LIMITATIONS
OF
CLASS A PREFERRED STOCK
OF
KRANTOR CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
KRANTOR CORPORATION, a corporation incorporated, organized and existing
under the laws of the State of Delaware (the "Corporation"), does hereby certify
that pursuant to the authority conferred on the Board of Directors of the
Corporation by the Certificate of Incorporation, as amended, of the Corporation
and in accordance with Sections 141 and 151 of the General Corporation Law of
the State of Delaware, the Board of Directors of the Corporation on April 15,
1998 adopted the following resolution modifying in part the designations, rights
and limitations of 100,000 shares of Preferred Stock of the Corporation
designated as Class A Preferred Stock:
RESOLVED, that pursuant to the authority conferred on the Board of
Directors of this Corporation by the Certificate of Incorporation, the
preferences, rights and limitations of the previously designated Class
A Preferred Stock par value $.001 per share, of the Corporation are
hereby modified as follows:
All dividend rights of the Preferred Stock are eliminated and no further
dividends shall accrue or be paid for any period beyond the date of this
resolution and thereby Section 4. "DIVIDENDS" is amended in its entirety to read
as follows:
4. DIVIDENDS.
Class A Preferred Stock shall not be entitled to any dividends beyond those
given to common stock.
IN WITNESS WHEREOF, Krantor Corporation has caused this Certificate to be
signed on its behalf by Henry J. Platek, its President, and its corporate seal
to be hereunto affixed and attested to by Mitchell Gerstein, its Secretary this
15th day of April 1998.
Attest: KRANTOR CORPORATION
BY:
- - ------------------------------- ------------------------------
Mitchell Gerstein Henry J. Platek, Jr.
Secretary President
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<PAGE>
EXHIBIT B
KRANTOR CORPORATION
Proposed Term Sheet - April 27, 1998
SECURITY: Units to be sold pursuant to Regulation D (the "Offering") at
$100,000, each Unit consisting of a $70,000 Convertible Subordinated Debenture
(the "Debenture") and 26,666 shares of unregistered common stock (the "Shares").
AMOUNT: Approximately $3,000,000.
OFFERING PERIOD: The Offering Period for this Offering shall terminate on July
31,1998 unless continuance is agreed by the Company and the Placement Agent. The
Offering shall not commence until the present registration of securities by the
Company on Form S-3 presently under review by the SEC is declared effective.
THE DEBENTURES
MATURITY: Four years from the date of issue.
INTEREST: 12% per annum, payable quarterly in arrears; 1st payment in 6 months.
The Company may, at its option, pay interest by issuing common stock if such
shares are registered and issued without a restrictive legend. If the Company
elects to do so, the stock shall be valued at 80% of the average closing bid
price for the five trading days immediately preceding the interest payment date.
CONVERSION PERIOD: Convertible at any time.
CONVERSION PRICE: Convertible at a price equal tO $2.50 per share.
REDEMPTION: The Company may, at any time, call the Debentures at par plus
accrued interest as long as (I) a registration allowing for the sale of the
underlying shares is effective or all the shares are saleable pursuant to Rule
144 and (ii) the closing price of the common stock on each of the twenty days
immediately preceding the notice of redemption is at least 200% of the
conversion price.
PLACEMENT AGENT: First Asset Management, Inc.
OTHER PROVISIONS
REGISTRATION: The Company shall, within 60 days, file a registration statement
on Form S-3 (or such other form as may be available if the Company is not
eligible to use Form S-3 for such registration) in order to register the Shares
as well as the shares underlying the Debentures and shares issued to the
Placement Agent and to cause such registration statement to be effective within
six months of the Closing. Should the registration statement not be effective
within such period, the interest rate on the Debentures shall increase by one
percent per month until the registration statement is declared effective or
until all the Shares and shares underlying the other securities are freely
saleable pursuant to Rule 144. At the option of the Company, such increased
interest (but not the base amount of interest due) may be paid in common stock
(valued at the average closing bid price for the five trading days preceding the
penalty date).
RESTRICTIONS ON RESALE: None of the stock issued as part of the Unit or upon
conversion of the Debentures may be sold within one year of issuance without
approval of the Placement Agent and may not be sold at a price less than $1.50
per share without approval of the Company.
SHAREHOLDER APPROVAL: This Offering shall require the approval of the Company's
shareholders as required by NASDAQ regulations.
DOCUMENTATION: The Company shall prepare at its own cost any and all placement
documents deemed appropriate by the Placement Agent including but not limited to
an offering memorandum and form of Debenture. Such documents shall be in form
acceptable to the Placement Agent and its counsel.
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<PAGE>
BLUE SKY: All Blue Sky work shall be performed by the Placement Agent's counsel
at the sole cost of the Company.
PLACEMENT AGENT'S COMPENSATION: The Placement Agent shall be paid a cash fee
equal to 8% of the amount raised and a non-accountable expense allowance equal
to 2% of the gross proceeds raised for the Company. In addition, the Placement
Agent shall receive 100,000 shares of unregistered common stock.
BOARD OF DIRECTORS: The Placement Agent shall have the right to appoint one
person to the Company's board of directors or, alternatively, to designate one
person to attend all meetings (including telephonic meetings) of the board.
RETENTION OF CONSULTANT: If closing on the Offering is on at least fifty percent
of the maximum Offering the Company shall retain Capital vision Group Inc.
("CVG") and Wellfleet Associates, Inc. ("WA") as its co-financial consultants on
terms acceptable to the Company, the Placement Agent, CVG and WA. The Financial
Consultant expects that as compensation for its service, CVG will receive a
total of 100,000 shares of unregistered common stock, 200,000 four year warrants
at $2.00 per share and a retainer equal to $24,000 payable upon execution of the
consulting agreement or as may be acceptable to the Company and CVG. WA will
receive an additional 200,000 four year warrants at $2.00 per share. Additional
amounts may be paid by the Placement Agent to either CVG or WA or both.
Our interest in proceeding with the Private Placement is based in part upon the
representations and warranties contained in the materials supplied by the
Company and obtainable by the Placement Agent and Financial Consultants and in
our private meetings. The financing will be contingent upon a full and proper
due diligence including, but not limited to, a trip to visit the Company's
facilities in the Dominican Republic, a review of the Company's completed year
end audit and any and all other materials deemed necessary by the Placement
Agent and Financial Consultants.
The Offering shall be subject to any rights previously contracted by the Company
giving right of first refusal to other financing sources to match the terms of
the Offering and to participate therein, which other financing sources and their
rights, if any, shall be evidenced in writing by the Company to the Placement
Agent within 10 days of the execution of this Term Sheet by all parties.
If the following properly summarizes our agreement, please sign and return an
original for our records.
Sincerely,
Mark I Lev, Esq.
Chairman & CEO
First Asset Management, Inc.
Lawrence Fleischman
Managing Director
Capital Vision Group, Inc.
Dated: April 27, 1998
Agreed and Accepted to:
Krantor Corporation
By:-----------------------
Mair Faibish, VP
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<PAGE>
EXHIBIT C
KRANTOR CORPORATION
10850 PERRY WAY
STE 203
WEXFORD, PENNA. 15090
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Mair Faibish and Mitchell Gerstein, and
each of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and vote, as designated herein, all of the
shares of the common stock, par value $.001 per share, of Krantor Corporation
(the "Company"), held of record by the undersigned on at the Annual Meeting (the
"Annual Meeting") of Stockholders of the Company to be held on , and any
adjournment(s) thereof.
THIS PROXY, WHEN PROPERLY EXECUTED AND DATED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR PROPOSAL 1, PROPOSAL 2, AND PROPOSAL 3, AND THE PROXIES
WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTERS PRESENTED FOR SHAREHOLDER
VOTE AT THE ANNUAL MEETING.
1. PROPOSAL TO ELECT THE FOLLOWING PERSONS TO SERVE AS THE BOARD OF DIRECTORS
FOR KRANTOR CORPORATION FOR ONE YEAR FROM THE EFFECTIVE DATE OF THE ANNUAL
MEETING OF SHAREHOLDERS TO WHICH THIS PROXY RELATES OR UNTIL THEIR SUCCESSORS
ARE ELECTED AND QUALIFIED:
HENRY J. PLATEK, JR.
MAIR FAIBISH
MITCHELL GERSTEIN
DOMINIC MARSICOVETERE
MICHAEL FERRONE
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATION OF
INCORPORATION TO ALLOW ELIMINATION OF FUTURE PREFERRED STOCK DIVIDENDS, AS
DESCRIBED IN THE COMPANY'S PROXY STATEMENT RELATING TO THE ANNUAL MEETING.
3. PROPOSAL TO ELECT BELEW, AVERITT & COMPANY TO SERVE AS THE COMPANY'S AUDITORS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND UNTIL THEIR SUCCESSORS ARE
ELECTED AND QUALIFIED.
FOR { } AGAINST { } ABSTAIN { }
4. PROPOSAL TO APPROVE PRIVATE PLACEMENT OF SECURITIES, AS DESCRIBED IN THE
COMPANY'S PROXY STATEMENT RELATING TO THE ANNUAL MEETING.
FOR ( ) AGAINST ( ) ABSTAIN ( )
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND ANY ADJOURNMENT(S)
THEREOF.
FOR { } AGAINST { } ABSTAIN { }
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<PAGE>
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW { }
PLEASE EXECUTE THIS PROXY AS YOUR NAME APPEARS HEREON. WHEN SHARES ARE HELD BY
JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A
CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY THE PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
SIGNATURE: DATE:
SIGNATURE: DATE:
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
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