<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
STEARNS & LEHMAN, INC.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11,
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
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):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
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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<PAGE> 2
STEARNS & LEHMAN, INC.
P.O. Box 1748
30 Paragon Parkway
Mansfield, Oh 44901-1748
--------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 10, 2000
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The 2000 Annual Meeting of Shareholders (the "Annual Meeting") of Stearns &
Lehman, Inc. (the "Company") will be held at the Company's facility, 30 Paragon
Parkway, Mansfield, Ohio 44903 on October 10, 2000 at 10:00 A.M., Eastern
Standard Time, for the following purposes:
1. To elect four (4) directors to serve until the next Annual Meeting or
until their successors are duly elected and qualified; and
2. To transact any other business which properly comes before the meeting
or any adjournment thereof.
All Company shareholders of record as of the close of business on August 31,
2000 are entitled to vote at the Annual Meeting. A complete list of shareholders
entitled to vote at the Annual Meeting will be available for examination by any
Company shareholder at 30 Paragon Parkway, Mansfield, Ohio, for purposes germane
to the Annual Meeting, during normal business hours from August 31, 2000 until
the Annual Meeting.
A copy of the Company's annual report for the year ended April 30, 2000 is
enclosed.
The accompanying form of proxy is being solicited by the Board of Directors of
the Company. Whether or not you plan to attend the Annual Meeting and any
adjournment thereof, shareholders are requested to DATE, SIGN AND RETURN THE
ENCLOSED PROXY in the return envelope furnished for your convenience. If you
attend the Annual Meeting and prefer to vote in person, you can revoke your
proxy. We warmly invite you to be present at the meeting.
By order of the Board of
Directors STEARNS & LEHMAN,
INC.
/s/ William C. Stearns
-----------------------------
William C. Stearns, President
Mansfield, Ohio
September 5, 2000
<PAGE> 3
STEARNS & LEHMAN, INC.
P.O. Box 1748
30 Paragon Parkway
Mansfield, Oh 44901-1748
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PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 10, 2000
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THIS PROXY STATEMENT AND ACCOMPANYING FORM OF PROXY SUPPORT A PROXY SOLICITATION
ON BEHALF OF THE BOARD OF DIRECTORS OF STEARNS & LEHMAN, INC. (THE "COMPANY")
FOR USE AT THE OCTOBER 10, 2000 ANNUAL MEETING OF SHAREHOLDERS AND AT ANY
ADJOURNMENT OF THAT MEETING. This proxy statement and form of proxy, together
with the Company's Annual Report for the year ended April 30, 2000 will be sent
by the Company by mail to shareholders beginning September 6, 2000.
The form of proxy, when properly signed, dated and returned to the Company, will
be voted by the proxies at the Annual Meeting as directed. A proxy returned
without direction about business to be transacted at the Annual Meeting will be
voted in favor of the election of William C Stearns, Sally A. Stearns, Frank E.
Duval, and Carter F. Randolph, Ph.D. to the Board of Directors of the Company.
The proxies will use their best judgment regarding other matters that properly
come before the Annual Meeting. The Company is not aware of any matters, other
than those discussed in this proxy statement, that will be presented at the
Annual Meeting.
The Company can conduct business at the Annual Meeting only if holders of a
majority of the outstanding common shares of the Company (the "Common Stock")
entitled to vote are present, either in person or by proxy. Abstentions will be
counted in determining whether a quorum has been reached. Assuming a quorum
exists, the affirmative vote of a majority of the Common Stock outstanding as of
the close of business on August 31, 2000 is necessary to approve each of the
proposed matters to be voted on.
In the event that a quorum is not present at the time the Annual Meeting is
convened, a majority in interest of the holders of the Common Stock represented
in person or by proxy may adjourn the meeting from time to time, without notice
other than announcement at the Annual Meeting, until holders of the amount of
Common Stock requisite to constitute a quorum shall attend. At any such
adjourned meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the Annual Meeting as originally
called.
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<PAGE> 4
REVOCABILITY OF PROXY
Execution of the enclosed form of proxy will not affect a shareholder's right to
attend the Annual Meeting and vote in person. Any shareholder giving a proxy may
revoke it at any time before it is exercised by delivering a later-dated proxy
or a written notice of revocation to the Secretary of the Company at the address
set forth above or by giving notice of revocation at the Annual Meeting.
Shareholders may vote all their eligible shares of Common Stock if they are
personally present at the Annual Meeting. When a shareholder votes at the Annual
Meeting, his or her vote will revoke any proxy previously granted by the
shareholder.
VOTING SECURITIES AND PRINCIPAL HOLDERS
As of August 31, 2000, the record date, 3,285,865 shares of Common Stock were
outstanding and entitled to vote at the Annual Meeting. Each share may cast one
vote on each separate matter of business properly brought before the Annual
Meeting. There are no cumulative voting rights. Only holders of record at the
close of business on August 31, 2000 may vote.
Under the rules of Securities and Exchange Commission ("SEC"), boxes and a
designated blank space are provided on the form of proxy for shareholders to
mark if they wish either to abstain on a proposal presented for shareholder
approval or to withhold authority to vote for one or more nominees for election
as a director of the Company. Common Stock as to which the authority to vote is
withheld will be counted for quorum purposes but will not be counted toward the
election of directors or toward the election of individual nominees specified on
the form of proxy. Abstentions are counted as present for quorum purposes.
Brokers/dealers who hold their customers' Common Stock in street name may, under
the applicable rules of the self-regulatory organizations of which the
broker/dealers are members, sign and submit proxies for such Common Stock and
may vote such Common Stock on routine matters, which, under such rules,
typically include the election of directors; but broker/dealers may not vote
such Common Stock on other matters without specific instructions from the
customer who owns such Common Stock. Proxies signed and submitted by
broker/dealers which have not been voted on certain matters as described in the
previous sentence are referred to as broker non-votes. Such proxies count
towards the establishment of a quorum.
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The following table sets forth certain information, so far as is known to
management of the Company, regarding beneficial ownership of Common Stock held
of record, as of August 31, 2000, by (i) each shareholder who owns beneficially
more than five percent (5%) of the outstanding Common Stock; (ii) each officer
and director of the Company; and (iii) all officers and directors as a group.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME AND ADDRESS OF AMOUNT AND PERCENTAGE OF
BENEFICIAL OWNER (1) NATURE OF CLASS
BENEFICIAL
OWNERSHIP (2)
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, no par William C. Stearns 614,391 18.5%
value Director, President and
Treasurer
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Common Stock, no par Sally A. Stearns 631,916 19.1%
value Director, Vice President
and Secretary
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Common Stock, no par Frank E. Duval 125,000 (3) 3.8%
value Director
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Common Stock, no par Carter F. Randolph, Ph.D. 63,906 (4) 1.9%
value Director
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Common Stock, no par John A. Chuprinko 2,140 (5) 0.1%
value Chief Financial Officer
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Common Stock, no par All Directors and Officers 1,437,353 (6) 43.4%
value as a group (5 persons)
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</TABLE>
(1) The address for all persons listed is 30 Paragon Parkway, Mansfield, Ohio
44903.
(2) Unless otherwise indicated, the named shareholder has sole voting and
investment power.
(3) Includes 15,000 shares purchasable on exercise of currently exercisable
warrants.
(4) Of such shares, 51,198 are beneficially owned by the Randolph Company, Inc.,
an Ohio corporation, of which Dr. Randolph owns the controlling interest. The
Randolph Company, Inc. and, therefore, Dr. Randolph have full discretionary
investment authority over such shares, including the right to vote and sell such
shares. Includes 12,708 shares for which Dr. Randolph and his wife, Kathy, have
shared voting and investment power. Includes 8,798 shares purchasable on
exercise of currently exercisable warrants.
(5) Includes 1,500 shares purchasable on the exercise of currently exercisable
stock options.
(6) Includes 25,298 shares purchasable on exercise of currently exercisable
warrants and stock options.
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INDEPENDENT PUBLIC ACCOUNTANTS
During the fiscal year ended April 30, 2000, PricewaterhouseCoopers LLP served
as the Company's independent public accountants and in that capacity rendered an
opinion on the Company's financial statements as of and the for the fiscal year
ended April 30, 2000. The Company annually reviews the selection of the
independent public accountants, but has not yet selected the independent public
accountants for the current fiscal year.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
annual meeting and will be available to respond to appropriate questions and may
make a statement if they so desire.
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains the name, position, and age of each director and
executive officer of the Company as of August 31, 2000. Directors are elected to
a one year term, to serve until the next annual meeting of shareholders and
until their successors are duly elected and qualified or until their earlier
resignation, removal from office, or death. The respective background of each
director and executive officer is described following the table. Each of the
executive officers devotes his or her full-time efforts to the affairs of the
Company.
<TABLE>
<CAPTION>
NAME POSITION AGE
---- -------- ---
<S> <C> <C>
William C. Stearns President, Treasurer and Director 47
Sally A. Stearns Executive Vice President, Secretary and Director 40
John A. Chuprinko Chief Financial Officer 45
Frank E. Duval Director 56
Carter F. Randolph Director 44
</TABLE>
WILLIAM C. STEARNS - PRESIDENT, TREASURER AND DIRECTOR
William C. Stearns is President, Treasurer and a Director of the Company. Mr.
Stearns founded the Company in March of 1988 and has been its President and a
Director since that time. Mr. Stearns attended both Cleveland State University
and Baldwin-Wallace University and is a member of the Manufacturers' Board of
Directors of the National Food Distributors Association and the National
Association of Specialty Food Trade. Mr. Stearns is the husband of Sally A.
Stearns.
SALLY A. STEARNS - EXECUTIVE VICE PRESIDENT, SECRETARY AND DIRECTOR
Sally A. Stearns graduated from Bowling Green State University in June of 1982
with a Bachelor of Science Degree in Business Administration, with a major
concentration in Human Resource Management. From October 1987 to February 8,
1989, she was a senior accountant for Autocall, Inc., a division of Federal
Signal located in Shelby, Ohio. From February 18, 1989 to the present Ms.
Stearns has served as Executive Vice President, Secretary and a Director of the
Company. Ms. Stearns is the wife of William C. Stearns
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<PAGE> 7
JOHN A. CHUPRINKO - CHIEF FINANCIAL OFFICER
John A. Chuprinko is a graduate of The Ohio State University, where he obtained
a Bachelor of Science Degree in accounting, and the United States Navy Supply
School in Athens, Georgia. Mr. Chuprinko was hired as the Chief Financial
Officer of the Company on January 10, 1996 and is a Certified Public Accountant.
Mr. Chuprinko is a member and past President of the Knox County, Ohio Airport
Advisory Board and is a member and past Chairman of the Marion Technical College
Accounting Advisory Committee. From October 1994 to January 1996, Mr. Chuprinko
served as the Chief Financial Officer and Treasurer of Na-Churs Plant Food
Company, a national manufacturing company with $18,000,000 in sales, located in
Marion, Ohio. Prior to that position, Mr. Chuprinko was the Controller at
Na-Churs Plant Food Company and Controller at The J.E. Grote Company,
Incorporated in Blacklick, Ohio.
FRANK E. DUVAL - DIRECTOR
Mr. Duval has served as a Director of the Company since January 3, 1995. Mr.
Duval has been the President of J&S Capital, Inc. since 1990 where he oversees a
portfolio of real estate, limited partnership and stock and bond investments.
Mr. Duval has a Bachelor of Science Degree in Education from the University of
Buffalo. From 1979 to 1990, Mr. Duval served as President and Chief Executive
Officer of International Automated Machines, Inc., a manufacturer of single
service and portion control condiments. From 1973 to 1979, he served as
President and Chief Executive Officer of United Wild Rice, Inc. Prior to 1973,
Mr. Duval held various sales and marketing management positions with Ralston
Purina, Wm. Underwood Company and Scott Paper Company. Mr. Duval is a member of
the Board of Directors' Audit Committee.
CARTER F. RANDOLPH, PH.D. - DIRECTOR
Dr. Randolph, was appointed as a Director of the Company on March 29, 1996.
Since 1987, Dr. Randolph has been the President of The Randolph Company, Inc.
where he is responsible for the management of pension plans, foundations and
trusts. From 1989 to the present, Dr. Randolph has been Executive Vice President
and Trustee of the Green Acres Foundation where he is responsible for
management, including all aspects of organization and operation of the private
nonprofit foundation. Dr. Randolph has experience in the areas of estate
planning, tax planning, IRS audit management, investment management, real estate
management, farm management and property management. Dr. Randolph is also
Chairman and Chief Executive Officer of Planet Products and Apex Machine Design.
Planet Products is a manufacturing company focused on precision machining, food
processing automation and precision packaging. Apex Machine Design is an
engineering firm oriented on the design of factory automation machines and
lines. Dr. Randolph currently serves on the Board of Directors of Cintech
Tele-Management Systems, Inc. Dr. Randolph is a member of the Board of
Directors' Audit Committee.
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<PAGE> 8
SIGNIFICANT EMPLOYEES
PHYLLIS J. THOMAS
Ms. Thomas, age 46, has been employed by the Company since November 1993 and
currently is the Assistant Vice-President of Corporate Affairs. Ms. Thomas is
the Company's principal liaison with Starbucks and is a graduate of Ashland
University with a Bachelor of Science Degree in Business Administration. Prior
to working for the Company, Ms. Thomas was a promotion specialist for R.J.R.
Nabisco from 1990 to 1993.
JAMIE L. DAY
Mr. Day, age 30, is a graduate of The Ohio State University with a Bachelor of
Science Degree in Business Administration and has been employed by the Company
since January 1999. Mr Day currently is the National Sales Manager. Prior to
working for the Company, Mr. Day owned and operated Tropic Thirst, a frozen
beverage distribution company located in California.
JAMES E. POWERS
Mr. Powers, age 26, has been employed by the Company since May 1996. Mr. Powers
currently is the Director of Operations. Mr. Powers started with the Company as
its Maintenance Manager and was then promoted to Production Manager in 1998. He
assumed his current responsibility in June 1999. Prior to working for the
Company, Mr. Powers was a Maintenance Technician enrolled in a management
trainee program at Hedstrom Corporation located in Mansfield, Ohio.
FAMILY RELATIONSHIPS
Except for Mr. and Mrs. Stearns, there are no family relationships among the
directors and executive officers of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
William C. Stearns, the President, Treasurer and a Director of the Company,
owned a twin engine airplane which he regularly used for Company business up to
and including August 3, 1999. The Company paid Corporate Flight Services, a sole
proprietorship of Mr. Stearns, $315 per hour for the use of the airplane. During
the fiscal years ended April 30, 2000 and 1999, Corporate Flight Services was
paid $18,714 and $48,049, respectively, pursuant to this arrangement. As of
August 3, 1999, this arrangement was terminated.
The Company carries and pays the premium for a "key man" life insurance policy
on Mr. Stearns in the amount of $1,000,000, and as one of the named
beneficiaries, the Company is entitled to ninety (90%) of the benefits of such
policy. Sally A. Stearns is the other named beneficiary of Mr. Stearns'
insurance policy and is entitled to ten percent (10%) of the benefits of such
insurance policy. The Company also carries and pays the premium for a "key man"
life insurance policy on
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<PAGE> 9
Ms. Stearns, the Vice President, Secretary and a Director of the Company, in the
amount of $500,000 and is entitled to eighty percent (80%) of the benefits of
such policy. William C. Stearns is the other named beneficiary of Ms. Stearns'
policy and is entitled to receive the remaining twenty percent (20%) of the
benefits of such insurance policy.
MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors met four times during the fiscal year ended
April 30, 2000. All directors were present at these meetings.
COMMITTEES
The Company's Board of Directors has an Audit Committee that is comprised of
three directors, of which two would be considered independent and are not
officers of the Company. The composition of the Audit Committee is in compliance
with NASDAQ Stock Market(sm) requirements for issuers that file reports under
SEC Regulation S-B and operates under a written charter adopted by the Board of
Directors on June 7, 2000 (see Appendix A attached hereto).
During fiscal year ended April 30, 2000, the Audit Committee met twice to review
and discuss with management and PricewaterhouseCoopers LLP the audited financial
statements for the fiscal year ended April 30, 1999 and to recommend the
retention of PricewaterhouseCoopers LLP as the independent public accountants
for the Company for the fiscal year ended April 30, 2000.
On July 7, 2000, the Audit Committee met with management and
PricewaterhouseCoopers LLP to review and discuss the audited financial
statements for the fiscal year ended April 30, 2000. The Audit Committee
believes that management maintains an effective system of internal controls that
results in fairly presented financial statements. The discussions with
PricewaterhouseCoopers LLP included matters required by the Statement on
Auditing Standards No. 61 (Communications with Audit Committees) and their
independence from the Company. In addition, the Audit Committee has also
received from PricewaterhouseCoopers LLP written disclosures and the letter
regarding its independence as required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees).
Based on the reviews and discussions referred to above, the Audit Committee
recommended that the Board of Directors include the audited consolidated
financial statements in the Company's Annual Report on Form 10-KSB. The members
of the Audit Committee are:
Frank E. Duval Carter F. Randolph, Ph.D. Sally A. Stearns.
The Board of Directors does not have a Compensation Committee. William C.
Stearns and Sally A. Stearns, both executive officers of the Company, are
directors and participated in deliberations of the Company's Board of Directors
concerning executive compensation. The Board of Directors does not have a
Nominating Committee. Frank E. Duval and Carter F. Randolph, Ph.D. are members
of the Stock Option Committee.
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<PAGE> 10
EXECUTIVE COMPENSATION
The following table and notes set forth information regarding remuneration of
the only officer of the Company whose total annual salary and bonus during the
fiscal year ended April 30, 2000 exceeded $100,000:
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL FISCAL ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($)
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
William C. Stearns, 2000 $125,000 $10,000 $123 (1)
President 1999 $109,635 $ 0 $123 (1)
1998 $104,000 $ 0 $123 (1)
1997 $104,000 $ 0 $123 (1)
1996 $127,500 $ 0 $115 (1)
------------------------------------------------------------------------------------------
</TABLE>
(1) The Company carries and pays the premium on a "key man" life insurance
policy on Sally A. Stearns in the amount of $500,000 and is entitled to eighty
percent (80%) of the benefits of such a policy. Mr. Stearns is the other named
beneficiary of this policy and is entitled to receive the remaining twenty
percent (20%) of the benefits of such insurance policy. For the fiscal years
ended April 30, 2000 through 1997 and 1996, the premium value of this benefit to
Mr. Stearns was $123 and $115, respectively.
DIRECTORS COMPENSATION
The independent Directors of the Company receive cash compensation of $1,000 per
meeting for serving on the Board of Directors, and are reimbursed reasonable
expenses incurred while attending these meetings. Frank E. Duval and Carter F
Randolph, Ph.D. each received $4,000 for attending Board of Directors meetings
for the fiscal year ended April 30, 2000. The Company has agreed to pay $15,000
to each of the independent Directors for services rendered during a calendar
year, on a pro rata basis for the actual time served as a Director during such
calendar year. Frank E. Duval and Carter F. Randolph, Ph.D. each received
$15,000 on January 20, 2000 for services rendered in calendar year 1999.
STOCK OPTION PLAN
At the Company's Annual Meeting of Shareholders held on March 31, 1994, the
Company adopted the 1994 Stock Option Plan (the "Plan"). The shares of Common
Stock that may be issued upon the exercise of options granted under the Plan
shall not exceed 275,000 shares in the aggregate. The options granted under the
Plan may be designed as "incentive stock options" or "non-qualified stock
options", at the discretion of the committee designated by the Board of
Directors of the Company to administer the Plan. The option price of
"non-qualified stock options" shall not be less than 100% of the fair market
value of a share of Common Stock on the effective date of the grant. The option
price for "incentive stock options" shall not be less than 110% of the fair
market value of a share of Common Stock on the effective date of the grant. As
of April 30, 2000, 17,000 options have been granted.
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<PAGE> 11
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires executive officers
and directors, and persons who beneficially own more than ten percent (10%) of
the Common Stock, to file initial reports of ownership and reports of changes in
ownership with the SEC. Executive officers, directors and persons who
beneficially own more than ten percent (10%) of the Common Stock and are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file. Carter F. Randolph failed, on a timely basis, to file a
Form 4 detailing the transfer of Common Stock to his spouse.
EXPENSE AND MANNER OF SOLICITATION
The expenses of the solicitation of the proxies for the Annual Meeting,
including the cost of preparing, assembling and mailing the notice, form of
proxy, proxy statement and return envelopes, the handling and tabulation of
proxies received, and charges of brokerage houses and other institutions,
nominees or fiduciaries for forwarding such documents to beneficial owners, will
be paid by the Company. In addition to the mailing of the proxy material,
solicitation may be made in person or by telephone by officers, directors or
regular employees of the Company (none whom have been employed to specifically
solicit shareholders).
ANNUAL REPORT
The Annual Report on Form 10-KSB for the Company for the year ended April 30,
2000 is enclosed herewith but is not a part of the proxy solicitation material.
PROPOSAL 1
ELECTION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has nominated William C. Stearns, Sally A.
Stearns, Frank E. Duval, and Carter F. Randolph, Ph.D., all members of the
existing Board of Directors, for election to the Board of Directors of the
Company. Each of these nominees was elected to the Board of Directors at the
Company's 1999 Annual Meeting of Shareholders.
A proposal to elect William C. Stearns, Sally A. Stearns, Frank E. Duval, and
Carter F. Randolph, Ph.D. to the Company's Board of Directors will be presented
to the shareholders at the Annual Meeting. Each director to be elected will hold
office until the next annual meeting of shareholders of the Company and until
his or her successor is elected and has qualified, or until such director's
earlier resignation, death or removal. The nominees receiving the highest number
of votes, up to the number of directors to elected, will be elected.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THE ELECTION OF WILLIAM C. STEARNS, SALLY A.
STEARNS, FRANK E. DUVAL, AND CARTER F. RANDOLPH, PH.D. TO THE COMPANY'S
BOARD OF DIRECTORS.
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SHAREHOLDER PROPOSALS
Shareholders are entitled to submit proposals on matters appropriate for
shareholder action consistent with SEC regulations and the Company's Code of
Regulations. Should a shareholder wish to have a proposal appear in the
Company's proxy statement for next year's annual meeting, under the regulations
of the SEC, it must be received by the Secretary of the Company at P.O. Box
1748, 30 Paragon Parkway, Mansfield, Ohio 44901-1748 on or before May 8, 2001.
If a shareholder intends to present a proposal at next year's annual meeting but
does not intend to seek the inclusion of such proposal in the Company's proxy
statement, such proposal must be received by the Company prior to July 24, 2001,
or the Company's management proxies will be entitled to use their discretionary
voting authority should such proposal be raised without any discussion of the
matter in the proxy statement.
OTHER BUSINESS
All items of business to be brought before the Annual Meeting are set forth in
this proxy statement. Management knows of no other business to be presented. If
other matters of business not presently known to management are properly raised
at the Annual Meeting, the proxies will vote on the matters in accordance with
their best judgment.
NOTE: SHAREHOLDERS ARE REQUESTED TO SIGN, DATE AND PROMPTLY
RETURN THE ENCLOSED PROXY, USING THE ENCLOSED ENVELOPE.
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APPENDIX A: STEARNS & LEHMAN, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The Audit Committee shall provide assistance to the corporate directors
in fulfilling their responsibility to the shareholders, potential shareholders,
and investment community relating to corporate accounting, reporting practices
of the Corporation, and the quality and integrity of the financial reports of
the Corporation. The Audit Committee's primary duties and responsibilities are
to:
o Oversee that management has maintained the reliability and
integrity of the accounting policies and financial reporting
and disclosure practices of the Corporation.
o Oversee that management has established and maintained
processes to assure that an adequate system of internal
control is functioning within the Corporation.
o Oversee that management has established and maintained
processes to assure compliance by the Corporation with all
applicable laws, regulations and corporate policy.
The Audit Committee will fulfill these responsibilities primarily by
carrying out the activities enumerated in Section IV of this Charter.
I. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors, and free
from any relationship that, in the opinion of the Board, would interfere with
the exercise of his or her independent judgment as a member of the Audit
Committee. All members of the Audit Committee shall have a working familiarity
with basic finance and accounting practices, and at least one member of the
Audit Committee shall have accounting or related financial management expertise.
Audit Committee members may enhance their familiarity with finance and
accounting by participating in educational programs conducted by the Corporation
or an outside consultant. For NASD there are exceptions for Small Business
filers having a non-independent director (See NASD Rule 4310).
The members of the Audit Committee shall be elected by the Board at the
annual organizational meeting of the Board or until their successors shall be
duly elected and qualified. Unless a Chairperson is elected by the full Board,
the members of the Audit Committee may designate a Chairperson by majority vote
of the full Audit Committee membership.
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<PAGE> 14
II. MEETINGS
The Audit Committee shall meet at least four times annually, or more
frequently as circumstances dictate. As part of its job to foster open
communication, the Audit Committee should meet at least annually with
management, the director of the internal auditing department and the independent
accountants separately to discuss any matters that the Audit Committee or each
of these groups believes should be discussed privately. In addition, the Audit
Committee or at least its Chairperson should meet with the independent
accountants and management quarterly to review the Corporation's financials
consistent with Section IV.4 below.
III. RESPONSIBILITIES AND DUTIE
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
------------------------
1. Review and reassess, at least annually, the adequacy of this Charter.
Make recommendations to the Board, as conditions dictate, to update
this Charter.
2. Review with management and the independent accountants the
Corporation's annual financial statements, including a discussion with
the independent accountants of the matters required to be discussed by
Statement of Auditing Standards No. 61 ("SAS No. 61").
3. Review with management and the independent accountants the 10-Q prior
to its filing or prior to the release of earnings, including a
discussion with the independent accountants of the matters to be
discussed by SAS No. 61. The Chairperson of the Audit Committee may
represent the entire Audit Committee for purposes of this review.
Independent Accountants
-----------------------
4. Review the performance of the independent accountants an make
recommendations to the Board regarding the appointment or termination
of the independent accountants. The Audit Committee and the Board have
the ultimate authority and responsibility to select, evaluate and,
where appropriate, replace the outside auditor. The independent
accountants are ultimately accountable to the Audit Committee and the
entire Board for such accountants' review of the financial statements
and controls of the Corporation. On an annual basis, the Audit
Committee should review and discuss with the accountants all
significant relationships the accountants have with the Corporation to
determine the accountants' independence.
5. Oversee independence of the accountants by:
12
<PAGE> 15
o receiving from the accountants, on a periodic basis, a formal
written statement delineating all relationships between the
accountants and the Corporation consistent with Independence
Standards Board Standard 1 ("ISB No. 1");
o reviewing, and actively discussing wit the Board, if
necessary, and the accountants, on a periodic basis, any
disclosed relationships or services between the accountants
and the Corporation or any other disclosed relationships or
services that may impact the objectivity and independence of
the accountants; and
o recommending, if necessary, that the Board take certain action
to satisfy itself of the auditor's independence. 1. Based on
the review and discussions referred to in section IV.2 and
IV.5, the Audit Committee shall determine whether to recommend
to the Board that the Corporation's audited financial
statements be included in the Corporation's Annual Report on
Form 10-K for the last fiscal year for filing with the
Securities and Exchange Commission.
Financial Reporting Process
---------------------------
2. In conjunction with the independent accountants and the internal
auditors, review the integrity of the Corporation's financial reporting
processes, both internal and external.
3. Consider and approve, if appropriate, major changes to the
Corporation's auditing and accounting principles and practices as
suggested by the independent accountants, management, or the internal
auditing department.
4. Establish regular systems of reporting to the Audit Committee by each
of management, the independent accountants and the internal auditors
regarding any significant judgments made in management's preparation of
the financial statements and any significant difficulties encountered
during the course of the review or audit, including any restrictions on
the scope of the work or access to required information.
5. Review any significant disagreement among management and the
independent accountants or the internal auditing department in
connection with the preparation of the financial statements.
Legal Compliance/General
------------------------
6. Review with the Corporation's counsel, any legal matter that could have
a significant impact on the Corporation's financial statements.
7. Report through its Chairperson to the Board following meetings of the
Audit Committee.
8. Maintain minutes or other records of meetings and activities of the
Audit Committee.
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<PAGE> 16
STEARNS & LEHMAN, INC.
P.O. Box 1748
30 Paragon Parkway
Mansfield, Oh 44901-1748
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints each of Sally A. Stearns and Frank E. Duval as
Proxies, each with the power to appoint his or her substitute, and hereby
authorizes them to represent and to vote, as designated below, all the common
shares of Stearns & Lehman, Inc. (the "Company") held of record by the
undersigned on August 31, 2000, at the Annual Meeting of shareholders to be held
on October 10, 2000, or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN ITEM 1.
ITEM 1 - ELECTION OF DIRECTORS
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY for all nominees
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.
WILLIAM C. STEARNS SALLY A. STEARNS
FRANK E. DUVAL CARTER F. RANDOLPH, PH.D.
The common shares represented by this proxy will be voted as directed by the
shareholder. If no direction is given when the duly executed proxy is returned,
such shares will be voted "FOR all nominees" in Item 1.
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. This
proxy when properly executed will be voted in the manner directed herein by the
undersigned shareholder.
Please complete, sign, date and return the proxy promptly, using the enclosed
envelope.
Signature
Signature: if held jointly:
----------------------- -----------------------
Date: Name (Printed)
----------------------- -----------------------
Please sign and print name exactly as name appears on certificate evidencing
your common shares. 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
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
<PAGE> 17
STEARNS & LEHMAN, INC.
P.O. Box 1748
30 Paragon Parkway
Mansfield, Oh 44901-1748
BALLOT FOR ANNUAL MEETING OF SHAREHOLDERS, OCTOBER 10, 2000
The undersigned holder of common shares of Stearns & Lehman, Inc. (the "Company)
hereby votes all of the common shares of the Company which the undersigned is
entitled to vote, as a result of being the shareholder of record on August 31,
2000, at the Annual Meeting of shareholders of the Company held on October 10,
2000 as follows:
ITEM 1 - ELECTION OF DIRECTORS
[ ] William C. Stearns [ ]
[ ] Sally A. Stearns [ ]
[ ] Frank E. Duval [ ]
[ ] Carter F. Randolph, Ph.D. [ ]
Signature
Signature: if held jointly:
----------------------- -----------------------
Printed name: Printed name:
----------------------- -----------------------
Please sign and print exactly as name appears on certificate evidencing your
common shares. 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
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
