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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
Filed by the registrant /x/
Filed by a party other than the registrant / / Check the appropriate box:
/x/ Preliminary proxy statement
/ / Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
(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
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 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 materials:
<PAGE> 2
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 11, 2000
The Annual Meeting of Shareholders of Chromatics Color Sciences
International, Inc. (the "Company"), a New York corporation, will be held at the
offices of the Company at 5 East 80th Street, New York, New York, on Monday,
December 11, 2000, at 10:00 A.M., for the following purposes:
1. To approve an amendment to the Company's Certificate of Incorporation to
provide for a classified Board of Directors, divided into three classes with one
class to be elected each year.
2. To elect three Class I directors to serve a term of one year, elect two Class
II directors to serve a term of two years, and elect two Class III directors to
serve a term of three years, or until their respective successors are elected.
3. To ratify the appointment of BDO Seidman, LLP as auditors of the Company for
the year ending December 31, 2000;
4. To consider and vote on a proposal to amend the Company's 1992 Stock Option
Plan to increase the number of shares of common stock, par value $.001 per
share, authorized to be issued thereunder from 5,500,000 to 6,500,000, an
increase of 1,000,000 shares; and
5. To approve an amendment to the Company's Certificate of Incorporation to
effect a one share for three shares reverse stock split of the Company's issued
and outstanding shares of Common Stock.
The approval and adoption of each matter to be presented to the
shareholders is independent of the approval and adoption of each other matter to
be presented to the shareholders. Only shareholders of record at the close of
business on October 12, 2000 are entitled to notice of and to vote at the
meeting, including any adjournments or postponements thereof.
By order of the Board of Directors
Darby S. Macfarlane
Chairperson of the Board of Directors
New York, New York
October 30, 2000
--------------------------------------------------------------------------------
IMPORTANT:
The prompt return of proxies will save the Company the expense of further
requests for proxies and will ensure that your shares are voted.
--------------------------------------------------------------------------------
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CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
--------------------------------------------------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 11, 2000
--------------------------------------------------------------------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of CHROMATICS COLOR SCIENCES INTERNATIONAL,
INC., a New York corporation (the "Company"), for use at the Annual Meeting of
Shareholders of the Company (the "Meeting") which will be held at the offices of
the Company at 5 East 80th Street, New York, New York 10021, on Monday, December
11, 2000, at 10:00 A.M., and at any adjournments or postponements thereof.
Shareholders who execute proxies retain the right to revoke them at any
time by notice in writing to the Secretary of the Company, by revocation in
person at the Meeting or by presenting a later dated proxy. Unless so revoked,
the shares represented by such proxies will be voted at the Meeting in
accordance with the directions given therein. Shareholders vote at the Meeting
by casting ballots (in person or by proxy) which are tabulated by a person who
is appointed by the Board of Directors before the Meeting to serve as inspector
of election at the Meeting and who has executed and verified an oath of office.
Under New York law and the Company's Bylaws, the presence in person or by proxy
of a majority of the outstanding shares of the Company's Common Stock, and the
Company's preferred stock, par value $0.01 per share, designated as Class A
Convertible Preferred Stock (the "Class A Preferred Stock"), in the aggregate,
is necessary to constitute a quorum at the Meeting. Abstentions and broker
"non-votes" are included in the determination of the number of shares present at
the Meeting for quorum purposes but are not counted in the tabulations of the
votes cast on proposals presented to shareholders. A broker "non-vote" occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner.
The principal executive offices of the Company are located at 5 East
80th Street, New York, New York 10021. The approximate date on which this Proxy
Statement and the enclosed form of proxy will first be sent or given to
shareholders is October 30, 2000.
Shareholders of record of the Common Stock and the Class A Preferred
Stock at the close of business on October 12, 2000 shall be entitled to one vote
for each share then held. On September 30, 2000, there were 17,382,318 shares of
Common Stock and 1,380,000 shares of Class A Preferred Stock outstanding.
Only shareholders of record at the close of business on October 12,
2000 are entitled to notice of and to vote at the meeting, including any
adjournments or postponements thereof.
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AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO CLASSIFY THE BOARD OF DIRECTORS
The Board of Directors of the Company proposes to amend the Company's
Certificate of Incorporation to provide that the Board of Directors be divided
into three classes of directors serving staggered three-year terms
("Classification"). Currently, directors are elected annually to serve one-year
terms.
Classification would create three classes of directors, each consisting
as nearly as possible of one-third of the members of the Board, with one class
to be elected each year. Members of all three classes would be elected initially
at the Meeting. If the proposal for Classification is approved and the slate of
seven directors proposed for election at the 2000 annual meeting is elected,
they would be elected in three separate classes as follows: three "Class I
Directors" would be elected for a term expiring at the 2001 annual meeting; two
"Class II Directors" would be elected for a term expiring at the 2002 annual
meeting; and two "Class III Directors" would be elected for a term expiring at
the 2003 Meeting. At each annual meeting after the Meeting, only directors of
the class whose term is expiring that year would be required to stand for
election, and upon election each such director would serve a three-year term. In
accordance with the Bylaws of the Company, if any vacancies should occur in any
class of the Board of Directors or if any new directorships are created, all of
the directors then in office, although less than a quorum, may, by majority
vote, choose a successor or successors, or fill the newly created directorships,
and the directors so chosen shall hold office until the next annual meeting of
the shareholders and until their successors shall be duly elected and qualified,
unless sooner displaced.
The number of directors to be elected at the Meeting is seven, which is
within the range currently specified in the Company's Bylaws for the size of the
Board. The Board of Directors increased the size of the Board from five to seven
in August 2000 and has no present plans, arrangements, commitments or
understandings with respect to increasing or decreasing the size of the Board or
any class of directors.
If Classification is approved, the Company's Certificate of
Incorporation will be amended as set forth above (the "First Certificate of
Amendment"). The text of the proposed First Certificate of Amendment is set
forth in ANNEX A to this Proxy Statement.
The Board of Directors of the Company believes that Classification is
advantageous to the Company and its shareholders for a number of reasons.
Allowing directors to serve three-year terms rather than one-year terms will
enhance the continuity and stability of both the composition of the Company's
Board of Directors and the policies formulated by the Board. In addition, public
companies are potentially subject to attempts by various individuals and
entities to acquire significant minority positions with the intent either of
obtaining actual control by electing their own slate of directors or of
achieving some other goal, such as the repurchase of their shares by the company
at a premium. Public companies also are potentially subject to inadequately
priced or coercive bids for control through majority share ownership. If
Classification is approved, a majority of the Company's directors could not be
replaced by such persons until at least two annual meetings of shareholders have
occurred, unless the proponent of removal achieved sufficient votes to remove
the entire Board of Directors for cause pursuant to the provisions of Section
706 of the New York Business Corporation Law. By eliminating the possibility of
the sudden removal of the Board, the incumbent Board will be given the time and
opportunity to evaluate any proposals for
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acquisition of control of the Company and assess and develop alternatives
without the pressure created by the threat of imminent removal or loss of
control, in a manner consistent with their responsibility to the Company's
shareholders.
If the proposal for Classification were adopted, it would generally
take at least two annual meetings of shareholders to elect a majority of the
Board. Classification may therefore discourage persons from attempting to
acquire control of the Company without the consent of the Board of Directors
because its provisions would operate to delay such person's ability to obtain
control of the Board of Directors. In addition, Classification would similarly
delay shareholders who do not approve of policies of the Board in their attempt
to replace a majority of the directors. For the same reason, the adoption of the
proposal for Classification may also deter certain mergers, tender offers or
other takeover attempts which some or a majority of holders of the Company's
voting stock may deem to be in their best interests.
The Board of Directors of the Company has no knowledge of any present
effort to gain control of the Company or to organize a proxy contest. In
addition, the Company has not experienced any problems in the past or at the
present time with the Board's continuity or stability. However, the Board
believes that adopting the proposal for Classification is prudent, advantageous
and in the best interests of shareholders because it will give the Board more
time to fulfill its responsibilities to shareholders and it will provide greater
assurance of continuity and stability in the composition and policies of the
Board of Directors. The Board also believes such advantages outweigh any
disadvantages relating to discouraging potential acquirers from attempting to
obtain control of the Company.
VOTE REQUIRED AND RECOMMENDATION OF BOARD
The proposal for Classification shall be adopted if approved by a
majority of all outstanding shares of Common Stock and Class A Preferred Stock
entitled to vote at the Meeting. THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR
THE APPROVAL OF THE PROPOSAL FOR CLASSIFICATION.
ELECTION OF THREE CLASS I DIRECTORS,
TWO CLASS II DIRECTORS AND TWO CLASS III DIRECTORS
If the shareholders approve the proposed First Certificate of Amendment
providing for the classification of the Board of Directors into three classes,
as described above, three Class I directors will be elected for a one-year term
expiring at the Company's 2001 annual meeting of shareholders, two Class II
directors will be elected for a two-year term expiring at the 2002 annual
meeting and two Class III directors will be elected for a three-year term
expiring at the 2003 annual meeting, in all cases subject to the election and
qualification of their successors and to their earlier death, resignation or
removal. If this proposed First Certificate of Amendment is not adopted, all
seven directors will be elected for a one-year term expiring at the Company's
2001 annual meeting of shareholders, subject to the election and qualification
of their successors and to their earlier death, resignation or removal.
The following table sets forth the names of the nominees to each class
of the Board of Directors of the Company (for information about each nominee,
see "Directors and Executive Officers"):
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<TABLE>
<CAPTION>
Class I (one year term) Class II (two year term) Class III (three year term)
Leslie Foglesong Darby S. Macfarlane Brian T. Fitzpatrick
Edmund Vimond David Kenneth Macfarlane James Bergman
Edward Mahoney
<C> <C>
</TABLE>
VOTE REQUIRED AND RECOMMENDATION OF BOARD
The election of directors requires a plurality of the combined voting
power of the shares of Common Stock and Class A Preferred Stock present in
person or by proxy at the Meeting. Proxies received in response to this
solicitation will be voted FOR the persons named below unless otherwise
specified in the proxy. THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE
IN FAVOR OF THE ELECTION OF ITS THREE NOMINEES FOR CLASS I DIRECTORS, TWO
NOMINEES FOR CLASS II DIRECTORS, AND TWO NOMINEES FOR CLASS III DIRECTORS.
SELECTION OF AUDITORS
The Board of Directors has selected BDO Seidman, LLP ("BDO"),
independent auditors, to serve as auditors of the Company for the fiscal year
ending December 31, 2000. Although shareholder ratification of the Board of the
Directors' action in this respect is not required, the Board considers it
desirable for shareholders to pass upon the selection of auditors and, if the
shareholders disapprove of the selection, intends to consider the selection of
other auditors for the current fiscal year.
On April 21, 1998, Wiss & Company, LLP ("Wiss") informed the Company
that, based on mutual determination between the Company and Wiss, it would not
stand for re-election as the Company's principal accountants for the audit of
the Company's financial statements following the completion of its most recent
audit of the Company's financial statements on February 17, 1998 in connection
with the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997.
Wiss' report on the financial statements for the fiscal year ended
December 31, 1996 included a statement, indicating that the financial statements
were prepared by Wiss on the assumption that the Company would continue as a
going concern. Wiss' report on the financial statements for the fiscal year
ended December 31, 1997 did not contain such statement. Wiss' reports for fiscal
years 1996 and 1997 contained no other adverse opinions, disclaimers of opinion
or modifications as to uncertainty, audit scope or accounting principles.
Within the two most recent fiscal years and the subsequent interim
period preceding Wiss' notification confirming that it would not stand for
re-election, there were no disagreements between the Company and Wiss on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedures, which disagreements if not resolved to Wiss'
satisfaction would have caused it to make reference in connection with its
report to the subject matter of the disagreement. Wiss has not advised the
Company of any reportable events as defined in paragraphs (A) through (D) of
Regulation S-K Item 304(a)(1)(v).
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On May 1, 1998, the Company engaged BDO as the principal accountant to
audit the Company's financial statements. During the Company's two most recent
fiscal years and the subsequent interim period preceding the date of BDO's
engagement, neither the Company nor any person on the Company's behalf consulted
BDO regarding either (i) the application of accounting principles to a specified
transaction, or the type of audit opinion that might be rendered on the
Company's financial statements, or (ii) any matter that was a subject of
disagreement or a reportable event. A representative from BDO is expected to be
present at the Meeting and shall be available to respond to appropriate
questions from shareholders.
VOTE REQUIRED AND RECOMMENDATION OF BOARD
Proxies received in response to this solicitation will be voted FOR the
ratification of the appointment of the auditors unless otherwise specified in
the proxy. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE
IN FAVOR OF RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP.
AMENDMENT TO 1992 STOCK OPTION PLAN
The Board of Directors has adopted, subject to shareholder approval, an
amendment to the1992 Stock Option Plan (the "Amendment") which increases the
number of shares of Common Stock authorized to be issued thereunder from
5,500,000 to 6,500,000, an increase of 1,000,000 shares. The full text of the
Amendment will be furnished to any shareholder upon written request made to the
Secretary of the Company. For a description of the material features of the 1992
Stock Option Plan, see "1992 Stock Option Plan". Awards of options for the
additional 1,000,000 shares are not yet determinable as none are currently
contemplated.
The Board of Directors believes that the 1992 Stock Option Plan is an
important component of the Company's compensation package because it secures for
the Company and its shareholders the advantages of the incentive inherent in
stock ownership on the part of its key employees. The Company believes that
stock ownership incentives give employees a greater concern for the welfare of
the Company and its future growth and encourage them to continue their
association with the Company. The Company issued a significant portion of the
5,500,000 option shares currently authorized under the 1992 Stock Option Plan.
Additional shares will be needed, in future years, to maintain this element of
the Company's incentive compensation program for the Company's key employees.
Accordingly, the Board of Directors recommends that the shareholders vote in
favor of amending the 1992 Stock Option Plan to increase the shares available
for issuance by the sum of 1,000,000 shares.
VOTE REQUIRED AND RECOMMENDATION OF BOARD
The proposal to amend the 1992 Stock Option Plan shall be adopted if
the affirmative votes cast by the Company's outstanding shares of Common Stock
and Class A Preferred Stock entitled to vote and represented (in person or by
proxy) at the Meeting exceed the negative votes. THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT TO THE 1992 STOCK
OPTION PLAN.
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AMENDMENT TO THE CERTIFICATE OF
INCORPORATION TO EFFECT REVERSE STOCK SPLIT
The Board has unanimously approved, and recommends to the holders of
the Common Stock that they approve, a one-for-three reverse stock split of the
Common Stock (the "Reverse Stock Split"). If approved by the shareholders, the
Reverse Stock Split may be effected in the manner described below at the option
of the Board if the Board determines that such Reverse Stock Split is necessary
to maintain the listing of the Company's Common Stock on the Nasdaq SmallCap
Market.
Upon the approval of this proposal by the shareholders of the Company,
the proposed second Certificate of Amendment of the Company's Certificate of
Incorporation (the "Second Certificate of Amendment"), as set forth in ANNEX B
to this Proxy Statement, will be filed with the Secretary of State of the State
of New York to effectuate the Reverse Stock Split. Except for any changes as a
result of the repurchase by the Company of fractional shares, each shareholder
of the Company will hold the same percentage of Common Stock outstanding
immediately following the Reverse Stock Split as such shareholder did
immediately prior to the Reverse Stock Split. Subject to the receipt of the
requisite shareholder approval, the Reverse Stock Split would be effective on
the date on which the Second Certificate of Amendment is filed with the
Secretary of State of the State of New York (the "Effective Date"), which is
expected to occur promptly following the Meeting. At the Effective Date, each
three shares of Common Stock issued and outstanding will, automatically and
without further action by the Board or shareholders of the Company, be
reclassified and converted into one share of Common Stock. Fractional shares
will not be issued as a result of the Reverse Stock Split, but will be
repurchased by the Company for cash at the current fair market value of the
fractional share interest. The cash payment for the fractional share interest
will be calculated by multiplying the fractional share by the fair market value
per share of Common Stock, which will be the closing sale price per share of
Common Stock on the Nasdaq SmallCap Market (or any other listing or quotation
system on which the shares of Common Stock are then listed or quoted) on the
business day prior to the Effective Date. If this proposal is approved by the
requisite vote of the shareholders of the Company, the Company intends to file
the Second Certificate of Amendment promptly with the Secretary of State of the
State of New York. However, notwithstanding the approval of the proposal by the
shareholders of the Company, the Board may elect not to file, or to delay the
filing of, the Second Certificate of Amendment if the Board determines that
filing the Certificate of Amendment would not be in the best interests of the
Company and its shareholders.
REASONS FOR REVERSE STOCK SPLIT
The principal purpose of the Reverse Stock Split is to reduce the
number of shares of the Common Stock outstanding in order to enable the Company
to maintain compliance with the quantitative maintenance criteria of the Nasdaq
SmallCap Market should the Common Stock remain under $1.00 per share for thirty
consecutive business days and not trade over $1.00 per share for the ten
consecutive business days during the ninety-day period thereafter. The Reverse
Stock Split will reduce the number of issued and outstanding shares of Common
Stock, so it is anticipated that the principal effect of the Reverse Stock Split
will be to increase the market price per share of the Common Stock after giving
effect to the Reverse Stock Split, as compared with the market price per share
of the Common Stock outstanding before giving effect to the Reverse Stock Split.
A higher price per share should enable the Company to maintain
compliance with the quantitative maintenance criteria of the Nasdaq SmallCap
Market, which require that the bid price per share of the Common Stock equal or
exceed $1 in order for the Common Stock to remain listed on the Nasdaq SmallCap
Market. The Common Stock has recently traded at prices lower than $1 per share.
If the
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Reverse Stock Split is not effected, it is possible that the Common Stock will
be delisted from the Nasdaq SmallCap Market.
In addition, the Company believes that the current low price per share
at which the Company's Common Stock is trading reduces the marketability of the
Common Stock because certain brokerage firms and institutional investors are
reluctant to recommend low-priced stock to their clients or hold them in their
own portfolios. Investors may view low-priced stock as unattractive, more risky
or more volatile than alternative investments. In addition, certain brokerage
houses have policies and practices that discourage individual brokers within
those firms from dealing in lower priced stocks. These policies and practices
pertain, among other things, to payment of brokerage commissions and to
time-consuming procedures that function to cause lower priced stocks to be less
attractive to brokers from an economic point of view. In addition, since
fixed-price brokerage commissions on lower priced stocks represent a higher
percentage of the stock price than fixed-price commissions on higher priced
stocks, the current price per share of the Common Stock may result in individual
shareholders paying higher per-share transaction costs.
For the reasons set forth above, the Board believes that the Reverse
Stock Split is in the best interests of the Company and its shareholders,
although the Company cannot assure you that the Reverse Stock Split will have
any of the foregoing effects. The Company anticipates that, following
consummation of the Reverse Stock Split, the Common Stock will trade at a price
per share that is higher than the current market price per share of the Common
Stock. HOWEVER, THERE CAN BE NO ASSURANCE THAT THE TOTAL MARKET CAPITALIZATION
AND AGGREGATE VALUE OF THE PUBLIC FLOAT OF THE COMMON STOCK AFTER THE PROPOSED
REVERSE STOCK SPLIT WILL BE EQUAL TO THE TOTAL MARKET CAPITALIZATION AND THE
AGGREGATE VALUE OF THE PUBLIC FLOAT BEFORE THE PROPOSED REVERSE STOCK SPLIT OR
THAT THE MARKET PRICE FOLLOWING THE REVERSE STOCK SPLIT WILL EITHER EXCEED OR
REMAIN IN EXCESS OF THE CURRENT MARKET PRICE. IN SOME CASES, THE TOTAL MARKET
CAPITALIZATION OF A COMPANY FOLLOWING A REVERSE STOCK SPLIT IS LOWER, AND MAY BE
SUBSTANTIALLY LOWER, THAN THE TOTAL MARKET CAPITALIZATION BEFORE THE REVERSE
STOCK SPLIT. IN ADDITION, THE FEWER NUMBER OF SHARES THAT WILL BE AVAILABLE TO
TRADE WILL CAUSE THE TRADING MARKET OF THE COMMON STOCK TO BECOME LESS LIQUID,
WHICH COULD HAVE AN ADVERSE EFFECT ON THE PRICE OF THE COMMON STOCK.
After the effectiveness of the Reverse Stock Split, each shareholder
would own 33.33% of the number of shares of Common Stock as such shareholder
owned prior to the Reverse Stock Split, but will own the same percentage of the
outstanding shares of Common Stock of the Company, except for the effects of the
Company's repurchase of fractional share interests at the then current fair
market value. The number of shares of Common Stock that may be purchased upon
the exercise or conversion of outstanding options, warrants, and other
securities convertible into or exchangeable for shares of Common Stock of the
Company (collectively, the "Convertible Securities") and the per share exercise
or conversion price per share will be adjusted appropriately so that, as of the
Effective Date, the aggregate number of shares of Common Stock issuable in
respect of Convertible Securities immediately following the Effective Date will
be approximately 33.33% of the number issuable in respect thereof immediately
prior to the Effective Date and the aggregate exercise and conversion prices
thereunder will remain unchanged. As a result of the Reverse Stock Split,
certain shareholders may own "odd lots" of fewer than one hundred (100) shares
of Common Stock. Brokerage commissions and other costs of transactions for odd
lots may be higher than
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for "round lot" transactions, particularly on a per-share basis. The par value
of the Common Stock of $.001 per share will remain unchanged as a result of the
Reverse Stock Split. The number of outstanding shares of Common Stock will be
reduced by 66.67% and by such additional number to account for the repurchase by
the Company of fractional share interests that otherwise would result from the
Reverse Stock Split. Accordingly, the aggregate par value of the issued and
outstanding shares of Common Stock, and therefore the stated capital associated
with the Common Stock, will be reduced, and the additional paid-in capital
(capital paid in excess of the par value) will be increased in a corresponding
amount for statutory and accounting purposes. If the Reverse Stock Split is
effected, all share and per-share information in the Company's financial
statements will be restated to reflect the Reverse Stock Split for all periods
presented in future filings after the Effective Date with the Securities and
Exchange Commission and the Nasdaq Stock Market.
EXCHANGE OF STOCK CERTIFICATES; NO FRACTIONAL SHARES
If the Reverse Stock Split is approved by the shareholders of the
Company, the combination and reclassification of shares of Common Stock pursuant
to the Reverse Stock Split will automatically occur on the Effective Date
without any further action on the part of the shareholders and regardless of the
date on which the certificates representing the share of Common Stock are
physically surrendered to the Company for exchange. Every three issued and
outstanding shares of Common Stock would be converted and reclassified into one
share of Common Stock in the Reverse Stock Split, and any fractional share
interests resulting from such reclassification and combination would be
repurchased by the Company for cash at a price equal to the fair market value of
the Common Stock multiplied by such fractional share interest. The "fair market
value" of the Common Stock means the closing price per share as reported on the
Nasdaq SmallCap Market (or on such other quotation system or exchange on which
the Common Stock is then quoted or listed for trading) on the business day
immediately preceding the Effective Date. The ownership of a fractional share
interest in a share of Common Stock will not give the holder thereof any voting,
dividend or other rights except the right to receive payment therefor as
described herein.
As soon as practicable after the Effective Date, transmittal forms will
be mailed to each holder of record of Common Stock for use in forwarding to the
Company stock certificates for surrender and exchange for certificates
representing the number of shares of Common Stock to which such holder is
entitled and the cash payment (to be paid by check) for any fractional share
interest. The transmittal forms will be accompanied by instructions specifying
the details of the exchange. Upon receipt of the transmittal form, each
shareholder should surrender the certificates representing shares of Common
Stock prior to the effectiveness of the Reverse Stock Split, in accordance with
the applicable instructions. Each holder who surrenders certificates will
receive new certificates representing the whole number of shares of Common Stock
to which such holder is entitled as a result of the Reverse Stock Split, and a
check for the cash payment to which such holder is entitled as a result of the
repurchase by the Company of fractional share interests, if any. SHAREHOLDERS
SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM
FROM THE COMPANY.
As of the Effective Date, each certificate representing shares of
Common Stock outstanding prior to the Effective Date (an "existing certificate")
will be deemed canceled and, for all corporate purposes, will be deemed only to
evidence ownership of the number of shares of Common Stock into which the shares
of Common Stock evidenced by such existing certificates have been converted by
the Reverse Stock Split.
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FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material federal income tax
consequences to shareholders of the Company of the Reverse Stock Split. The
following summary discussion is based upon the Internal Revenue Code of 1986
(the "Code"), treasury regulations thereunder, judicial decisions, and current
administrative rulings and practices, all as in effect on the date hereof and
all of which could be repealed, overruled, or modified at any time, possibly
with retroactive effect. There can be no assurance that such changes will not
adversely affect the matters discussed in this summary. No ruling from the
Internal Revenue Service ("IRS") with respect to the matters discussed herein
has been requested, and there is no assurance that the IRS would agree with the
conclusions set forth in this discussion. This discussion may not address
certain federal income tax consequences that may be relevant to particular
shareholders in light of their personal circumstances or to certain types of
shareholders (such as dealers in securities, insurance companies, foreign
individuals and entities, financial institutions, and tax-exempt entities) who
may be subject to special treatment under the federal income tax laws. This
discussion also does not address any tax consequences under state, local or
foreign laws. SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE REVERSE STOCK SPLIT.
The Company believes that the Reverse Stock Split will qualify as a
"recapitalization" under Section 368(a)(1)(E) of the Code and as a
stock-for-stock exchange under Section 1036(a) of the Code. As a result, the
Company believes that no gain or loss should be recognized by a shareholder in
the Reverse Stock Split, except with respect to any cash received in lieu of
fractional share interests. The aggregate tax basis of the shares of Common
Stock held by a shareholder following the Reverse Stock Split will equal the
shareholder's aggregate basis in the Common Stock held immediately prior to the
Reverse Stock Split. Generally, the aggregate tax basis will be allocated among
the shares of Common Stock held following the Reverse Stock Split on a pro rata
basis. Shareholders who have used the specific identification method to identify
their basis in shares of Common Stock combined in the Reverse Stock Split should
consult their own tax advisors to determine their basis in the shares of Common
Stock received in exchange in the Reverse Stock Split. Shares of Common Stock
received should have the same holding period as the Common Stock surrendered.
Each shareholder who receives cash, if any, in lieu of fractional share
interests will recognize capital gain or loss equal to the difference between
the amount of cash received and the shareholder's tax basis allocable to such
fractional shares.
This summary is provided for general information only and does not
purport to address all aspects of the possible federal income tax consequences
of the Reverse Stock Split and is not intended as tax advice to any person. Each
shareholder should consult his or her tax advisor regarding the specific tax
consequences of the proposed transaction to such shareholder, including the
application and effect of state, local and foreign income and other tax laws. It
is the responsibility of each shareholder to obtain and rely on advice from his
or her personal tax advisor with respect to the effect of the Reverse Stock
Split on his or her personal tax situation, the effect of possible future
legislation and regulations, and the reporting of information required in
connection with the Reverse Stock Split on his or her own tax returns. It also
will be the responsibility of each shareholder to prepare and file appropriate
tax returns.
VOTE REQUIRED AND RECOMMENDATION OF BOARD
The proposal for the Reverse Stock Split shall be adopted if approved
by a majority of all outstanding shares of Common Stock and Class A Preferred
Stock entitled to vote at the Meeting. If this
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<PAGE> 13
proposal is approved by the shareholders, it will become effective if the
Company files and records the Second Certificate of Amendment with the Secretary
of State of the State of New York. IF THIS PROPOSAL IS NOT APPROVED, THE REVERSE
STOCK SPLIT WILL NOT BE IMPLEMENTED. THE BOARD UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE APPROVAL OF THE PROPOSED SECOND CERTIFICATE OF
AMENDMENT TO EFFECT THE REVERSE STOCK SPLIT.
ADDITIONAL DISCLOSURE ITEMS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 1, 2000, the beneficial
ownership of the Common Stock: (i) by each shareholder known by the Company to
beneficially own more than 5% of the Common Stock or the Class A Preferred
Stock; (ii) by each director of the Company; (iii) by the Company's Acting Chief
Executive Officer; and (iv) by all executive officers and directors of the
Company as a group. Amounts presented give effect to the February 1998
three-for-two forward stock split (the 1998 "Stock Split") (including shares
issuable upon the exercise of stock options and/or warrants). Except as
otherwise indicated below, each named beneficial owner has sole voting and
investment power with respect to the shares of Common Stock or Class A Preferred
Stock listed.
<TABLE>
<CAPTION>
Name and Address of Class A Percent Common Stock Percent of
Beneficial Owner Preferred Stock(1) of Class Number of Shares Class
Number of Shares
---------------------------------------- ---------------------- ----------- ------------------- -------------
<S> <C> <C> <C> <C>
Darby Simpson Macfarlane 1,380,000 100% 1,636,220(2) 9.02%
10 Old Jackson Avenue, #28
Hastings-on-Hudson, NY 10706
David Kenneth Macfarlane 1,380,000(3) 100% 1,636,220(4) 9.02%
5 East 80th Street
New York, NY 10021
Brian T. Fitzpatrick (5) 106,233 *
C/o Gordon Laboratories, Inc.
751 East Artesia Boulevard
Carson, CA 90746
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Frank Marchese * *
c/o Chromatics Color Sciences
International, Inc.
5 East 80th Street
New York, NY 10021
Leslie Foglesong (6) 265,000 1.50%
116 Lafayette Avenue
Brooklyn, NY 11217
Edmund Vimond (7) 31,666 *
6967 Country Lakes Circles
Sarasota, FL 34243
Edward Mahoney (8) 31,666 *
2044 Palisades Drive
Pacific Palisades, CA 90272
James N. Bergman (9) 468,581 2.63%
2 First Avenue
Sterling, IL 61081
Gary W. Schreiner (10) 1,498,967 7.94%
2126 Melvin Drive
Rock Falls, IL 61071
LB I Group, Inc. (11) 2,163,951 11.07%
3 World Financial Center
New York, NY 10285
Janssen-Meyers Associates, L.P. (12) 1,206,934 6.78%
17 State Street
New York, NY 10001
All directors and executive officers 1,380,000 100% 2,539,366 13.42%
as a group (8 persons)
</TABLE>
(1) The Class A Preferred Stock is a voting security which votes together with
the Common Stock as a single class and is entitled to one vote per share.
The shares of Class A Preferred Stock are convertible into shares of Common
Stock if (i) the Company's earnings for any two calendar years during the
period ending on December 31, 2000 exceeds $20,000,000 or (ii) the closing
bid price of the Common Stock has been at least $31.11 on 30 consecutive
trading days at any time prior to December 31, 2000. The conversion ratio
is .979 shares of Common Stock for each share of Class A Preferred Stock.
If neither condition to conversion is satisfied by December 31, 2000, the
Class A Preferred Stock will be redeemed by the Company at a price of $.01
per share.
(2) Includes 886,220 issued and outstanding shares of the Common Stock
beneficially owned by Mrs. Macfarlane, 450,000 shares issuable upon the
exercise of options granted to Mrs. Macfarlane and 300,000 shares issuable
upon the exercise of options granted to Mr. Macfarlane which options are
14
<PAGE> 15
currently exercisable. As a result of a certain voting agreement between
them, Mrs. Macfarlane is entitled to sole voting power and sole power of
disposition over all shares of common stock held or acquired by Mr.
Macfarlane.
(3) Represents the 1,380,000 issued and outstanding shares of the Class A
Preferred Stock owned by Mrs. Macfarlane.
(4) Includes 886,220 issued and outstanding shares of Common Stock beneficially
owned by Mrs. Macfarlane, 450,000 shares issuable upon the exercise of
options granted to Mrs. Macfarlane and 300,000 shares issuable upon the
exercise of options granted to Mr. Macfarlane which options are currently
exercisable.
(5) Includes 1,000 shares of Common Stock subject to the Pledge and Escrow
Agreement, dated as of June 2, 2000, by and between the parties thereto,
pursuant to which such shares were pledged as collateral security for Mr.
Fitzpatrick's indemnification obligation under the Agreement of Purchase
Sale, dated as of April 17, 2000, by and among the Company and the other
parties thereto, as amended.
(6) Includes 250,000 shares of Common Stock issuable upon the exercise of
options which are currently exercisable.
(7) Represents 31,666 shares of Common Stock issuable upon the exercise of
options which are currently exercisable.
(8) Represents 31,666 shares of Common Stock issuable upon the exercise of
options which are currently exercisable.
(9) Includes (i) 119,491 shares of Common Stock issuable upon the exercise of
warrants which are currently exercisable and issued in the name of LB
Pension Plan and Trust, a trust for which Mr. Bergman serves as a trustee,
and (ii) 257,299 shares of Common Stock issuable upon the conversion of
Class B Series 5 Convertible Preferred Stock issued in the name of Lawrence
Brothers, Inc., a corporation in which Mr. Bergman owns forty percent of
the voting equity and for which he serves as a director.
(10) Represents 1,298,167 shares of Common Stock issuable upon the conversion of
Class B Series 5 Convertible Preferred Stock and 200,000 shares of Common
Stock issuable upon the exercise of warrants which are currently
exercisable.
(11) Represents 1,388,889 shares of Common Stock issuable upon the conversion of
Class B Series 2 and Class B Series 3 Convertible Preferred Stock and
775,062 shares of Common Stock issuable upon the exercise of currently
exercisable warrants.
(12) Based on a representation letter from Janssen-Meyers Associates, L.P. dated
March 19, 1999, and includes 636,250 shares of Common Stock held by Peter
Janssen (an affiliate of Janssen-Meyers Associates, L.P.), 145,750 shares
of Common Stock and 314,347 warrants held by Janssen-Meyers Associates,
L.P. which, in each case, are currently exercisable, 108,647 warrants held
by limited partners of Janssen-Meyers Associates, L.P. and 1,940 warrants
held by Meyers Janssen Securities Corp., which, in each case, are currently
exercisable. Peter Janssen and Bruce Meyers are deemed to be the beneficial
owners of the shares of Common Stock and warrants held by Janssen-Meyers
Associates, L.P.
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers and the beneficial
owners of more than 10 percent of the Common Stock to file reports of ownership
and changes in ownership of their equity securities of the Company. Directors
and executive officers of the Company and such beneficial owners file such
reports with the Commission and the Nasdaq Stock Market, Inc. Directors and
executive officers and such beneficial owners are required to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of Forms 3, 4 and 5 and
amendments thereto received by the Company, and written representations from
certain directors and executive officers and such beneficial owners of the
Company that no Forms 5 were required for such persons, the Company believes
that all Section 16(a) filing requirements applicable to its directors and
executive officers and such beneficial owners were complied with during 1999.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information concerning each of the
directors and executive officers of the Company as of September 30, 2000:
<TABLE>
<CAPTION>
Name Age Position
----------------------------------- -------- -------------------------------------------------------
<S> <C> <C>
Darby S. Macfarlane 56 Director, Chairperson of the Board, Chief Technology
Officer and Assistant Treasurer
Brian T. Fitzpatrick 47 Director, President and Acting Chief Executive Officer
David Kenneth Macfarlane 53 Director, Vice President-Research and Development
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C> <C>
Frank Marchese 45 Chief Financial Officer
Leslie Foglesong 45 Director, Secretary and Treasurer
Edmund Vimond 64 Director
Edward Mahoney 48 Director
James N. Bergman 39 Director
</TABLE>
Executive officers are elected by the Board of Directors, serve at the direction
of the Board and hold office until their respective successors are elected and
qualified.
Darby S. Macfarlane co-founded the Company in March 1984 and is also
one of the primary inventors of the patented technology used in the ColorMate(R)
System. She has been Chairperson of the Board, Treasurer (or Assistant
Treasurer) and a director of the Company since formation and also served in the
capacity of President until April 9, 1995 and Chief Executive Officer until
August 14, 2000. On August 14, 2000 Ms. Macfarlane was also appointed Chief
Technology Officer of the Company. Prior to her employment with the Company, Ms.
Macfarlane was the co-founder in 1974 of Personalized Colors, Inc. Commencing in
1978, Ms. Macfarlane and Mr. Macfarlane led and directed the Company's research
and development and mass-manufacturing efforts of the color science technology,
instrumentation and cosmetic and related products now offered by the Company.
Brian T. Fitzpatrick was appointed Acting Chief Executive Officer and a
director of the Company on August 14, 2000. He previously served in the capacity
of President and Chief Operating Officer of the Company, which role he assumed
upon the Company's April 2000 acquisition of Gordon Laboratories, Inc., a Carson
City, California based formulator and manufacturer of cosmetics, hair care and
other personal care products. Mr. Fitzpatrick had been the President, Chief
Executive Officer and Chairman of Gordon since April 1996. Prior to Gordon, Mr.
Fitzpatrick served as President of several electronic manufacturing companies
and worked for the Polaroid Corporation in its industrial marketing division.
Mr. Fitzpatrick earned an M.B.A. in Finance and Marketing from Adelphi
University in 1986 and a B.S. in Marketing from Seton Hall University in 1975.
David Kenneth Macfarlane co-founded the Company and is also one of the
primary inventors of the patented technologies used in the ColorMate(Registered
Trademark) System. In addition, Mr. Macfarlane developed the manufacturing,
technical and engineering specifications necessary to have miniaturized and mass
manufactured the ColorMate(Registered Trademark) System. Mr. Macfarlane has been
Vice President-Research and Development, and a director of the Company since
formation. Prior to 1984, Mr. Macfarlane held a variety of executive positions
with finance, sales, marketing, research and development and manufacturing
companies in Europe, South Africa and the United States, including International
Technical Research and Development, Ltd., and Trumach, Inc.
Frank Marchese, a certified public accountant, has been Chief Financial
Officer of the Company since January 2000. Mr. Marchese had previously served as
Chief Financial Officer of Pharmaceutical Formulations, Inc. from 1992 until
1999, Director of Finance for Primex Plastics Corporation from 1989 until 1992
and Senior Manager with the accounting firm of KPMG Peat Marwick,
16
<PAGE> 17
LLP prior to 1989. Mr. Marchese holds an M.B.A. degree from New York University
and a B.B.A. degree from Pace University.
Leslie Foglesong has been the Secretary, Treasurer (or Assistant
Treasurer) and a director of the Company since its formation.
Edmund Vimond has previously provided consulting services to the
Company. On December 1, 1997, Mr. Vimond was appointed to the Company's Board of
Directors and currently acts as Chairman of the Company's Compensation
Committee. From 1991 to 1997, Mr. Vimond was the President and Chief Executive
Officer of Ocurest Laboratories, Inc. Mr. Vimond was responsible for managing
all functions of the business, including marketing, sales, contract
manufacturing, personnel and finance and systems. Prior to 1991, Mr. Vimond held
positions in various executive capacities with RJR Nabisco Inc., American
Cyanamid Co., Johnson & Johnson and Warner-Lambert Companies Inc. Since January
1998, Mr. Vimond has been the principal of Edmund Vimond Associates, a business
development consulting practice. Mr. Vimond received B.S.B.A. and M.B.A. degrees
from Northwestern University.
Edward Mahoney, a certified public accountant, was appointed to the
Board of Directors on January 26, 1998 and currently acts as Chairman of the
Company's Audit Committee. Since January 1998, Mr. Mahoney has owned and
operated a certified public accounting firm and was a tax partner with the
accounting firm of BDO Seidman LLP from 1994 to 1997 and Price Waterhouse from
1973 to 1994. Mr. Mahoney received a Bachelor of Science in Accounting degree
from Brooklyn College of the City University of New York.
James N. Bergman was appointed to the Board of Directors on August 14,
2000. He is currently the Chief Operating Officer of Lawrence Brothers, Inc., a
building hardware manufacturer, and had been a partner in the law firm of Ward,
Murray, Pace and Johnson until August 1999. He is a graduate of Northern
Illinois University Law School and has an undergraduate degree in accounting
from the University of Iowa.
Darby S. Macfarlane and David Kenneth Macfarlane are the founders of
the Company and, as such, may be deemed "promoters" of the Company as those
terms are defined in the rules and regulations promulgated under the Securities
Act of 1933, as amended. There is no family relationship among any other
directors or executive officers of the Company.
During the fiscal year ended December 31, 1999, the Company's Board of
Directors met on five occasions and had five unanimous written consents. All of
the directors participated in all such meetings and consents.
The Company has an audit committee consisting of three members. The
audit committee recommends engagement of the independent auditors, considers the
fee arrangement and scope of the audit, reviews the financial statements and the
independent auditors' report, considers comments made by the independent
auditors with respect to the Company's internal control structure and reviews
internal accounting procedures and controls with the Company's financial and
accounting staff. The members of the audit committee are Leslie Foglesong,
Edward Mahoney and Edmund Vimond.
17
<PAGE> 18
The Company established a compensation committee in January 1998
consisting of two members. The compensation committee is responsible for making
recommendations to the Board of Directors concerning executive compensation
including base salaries, bonuses and criteria for their award, stock option
plans, stock option grants, health and life insurance and other benefits. The
members of the compensation committee are Edward Mahoney and Edmund Vimond. See
"Compensation Committee Interlocks and Insider Participation." The Company does
not have a nominating committee.
EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE
The following table summarizes all plan and non-plan compensation
awarded to, earned by, or paid to, the Company's Chief Executive Officer and its
three other executive officers who were serving as such during and at the end of
fiscal year 1999 for services rendered in all capacities to the Company in the
last three fiscal years. See "Employment Agreements." Name and Principal
Position Annual Compensation Long-Term All other Compensation Compensation
<TABLE>
<CAPTION>
Long-Term All other
Annual Compensation Compensation Compensation
---------------------
Awards
-------------------------------- ----------------------------------------------- ---------- -----------------
Year Salary ($) Bonus ($) Options(1) ( #)
---------- ------------- --------------- ---------------------
<S> <C> <C> <C> <C> <C>
Darby S. Macfarlane, 1999 175,000 0 0 0
Chief Executive Officer (2) 1999 175,000 0 0 0
1997 175,000 0 0 0
Arthur Guiry, President (3) 1999 200,000 0 0 0
1998 200,000 0 0 0
1997 200,000 0 0 0
David Kenneth Macfarlane, 1999 125,000 0 0 0
Vice President, 1998 125,000 0 0 0
Research Development 1997 125,000 0 0 0
Leslie Foglesong 1999 100,000 10,000 0 0
Secretary and Treasurer 1998 100,000 5,000 100,000 0
1997 100,000 0 0 0
</TABLE>
(1) The number of shares issuable upon the exercise of stock options granted
under the 1992 Stock Option Plan give effect to the 1998 Stock Split.
(2) Ms. Macfarlane served as Chief Executive Officer of the Company until
August 14, 2000, at which time she was succeeded by Brian T. Fitzpatrick.
(3) Mr. Guiry died on March 9, 2000.
Leslie Foglesong, the Company's Secretary and Treasurer, was granted 100,000
options under the 1992 Plan on October 30, 1998, which became exercisable on
October 30, 1999 and expire on October 30, 2008.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END
OPTION/SAR VALUE TABLE
The following table sets forth information with respect to stock
options exercised during the fiscal year ended December 31, 1999 and the value
at December 31, 1999 of unexercised stock options
18
<PAGE> 19
\
held by the Chief Executive Officer and the other executive officers of the
Company. The number of shares presented gives effect to the 1998 Stock Split:
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End at Fiscal Year-End(1)
-------------------------- ---------------------
Name Shares Acquired Value Exercisable/ Unexercisable Exercisable/
on Exercise (#) Realized (#) Unexercisable
---------------------------------- ------------------ ------------ --------------------------- ----------------------
<S> <C> <C> <C> <C>
Darby S. Macfarlane 0 0 450,000/0 $1,864,350
Arthur Guiry 0 0 105.000/0 $505,365
David Kenneth Macfarlane 0 0 300,000/0 $1,242,900
Leslie Foglesong 0 0 250,000/0 $797,000
</TABLE>
(1) The value of unexercised in-the-money options was calculated by multiplying
the number of underlying shares held by the difference between the closing
price of the Common Stock on December 31, 1999 ($7.063 per share, as
originally quoted on the Nasdaq SmallCap Market published in The Wall
Street Journal) and the option exercise price, but after giving effect to
the 1998 Stock Split.
COMPENSATION OF DIRECTORS
Directors who are officers of the Company do not receive additional
compensation for serving on the Board of Directors or for their attendance at
Board of Directors' meetings. Edmund Vimond and Edward Mahoney each receive a
monthly director's fee in the amount of $6,000. In addition, (i) Mr. Mahoney
received on January 26, 1998 options exercisable at $9.25 per share to purchase
37,500 shares of the Company's Common Stock under the 1992 Stock Option Plan and
(ii) Mssrs. Mahoney and Vimond received on October 30, 1998 options exercisable
at $5.375 per share to purchase 20,000 shares of the Company's Common Stock
under the 1992 Stock Option Plan. The stock options granted to Mr. Vimond and
Mr. Mahoney vest in equal installments on the first, second and third
anniversaries of the date of grant. Two-thirds of the options granted to Mr.
Mahoney on January 26, 1998 became exercisable on January 26, 2000. Two-thirds
of the options granted to Mssrs. Mahoney and Vimond on October 30, 1998 became
exercisable on October 30, 2000. Mr. Vimond also received (i) 15,000 ten-year
stock options under the 1992 Stock Option Plan exercisable at $5.42 per share on
July 15, 1997, all of which were fully exercisable on the date of grant and (ii)
22,500 ten-year stock options under the 1992 Stock Option Plan exercisable at
$9.71 per share on December 1, 1997, two-thirds of which became exercisable on
December 1, 1999.
EMPLOYMENT AGREEMENTS
The Company entered into separate employment agreements with each of
Darby S. Macfarlane and David Kenneth Macfarlane, providing for Ms. Macfarlane's
employment as Chairperson and Chief Executive Officer and for Mr. Macfarlane's
employment as Vice President, Research and Development, each extendable at the
employee's option until February 1, 2003. These agreements were amended in
August, 2000 to provide for conforming severance benefits in accordance with the
terms of these employment agreements when Brian T. Fitzpatrick was appointed
Acting Chief Executive Officer and Ms. Macfarlane was appointed as Chief
Technology Officer and continued as Chairperson of the Company. The agreements
with Ms. and Mr. Macfarlane provide for current annual base salaries in 1999 of
$175,000 and $125,000, respectively, subject to annual increases as provided for
in their agreements. In addition, Ms. Macfarlane's agreement provides for a
bonus payment of 33% of the first million of the
19
<PAGE> 20
Company's net recovery in excess of $2,000,000 from the Avon Litigation, or
$361,200, of which $98,800 was paid prior to 1999. The remaining $262,400 was
paid to Ms. Macfarlane in the third quarter of 2000. Deferral of this repayment
was made in connection with the amendment to the Company's Certificate of
Incorporation which amendment modified certain terms of the Class A Preferred
Stock, including the following: (i) extension to December 31, 2000 of the
expiration date of the conversion feature and redemption period, (ii) revision
of the market price conversion feature to provide for adjustment upon the
occurrence of certain events involving the Common Stock, and (iii) revision of
the calculation of the earnings goal needed to trigger the conversion feature by
including extraordinary items and revenues and earnings generated by businesses
acquired by the Company. In connection with Ms. Macfarlane's agreement to defer
repayment, she also agreed to forego any discretionary performance bonus in 1999
under her employment agreement. Under the employment agreements, the Company is
obligated to provide Mr. Macfarlane with a $300,000 and Ms. Macfarlane with a
$1,000,000 term life insurance policy and disability insurance. The Company
maintains key-man life insurance on each of Ms. and Mr. Macfarlane in the amount
of $1,000,000.
The employment agreements also provide for the payment of termination
benefits by the Company if employment thereunder is terminated (i) by the
Company for any reason other than death, disability or "cause" as set forth
therein or (ii) by reason of death or disability. If Mr. or Ms. Macfarlane's
employment is terminated by the Company or the employee for any reason other
than death, disability or "cause," (as set forth therein) the Company is
required by each agreement to pay to the terminated employee an amount equal to
(a) the aggregate base salary payable for the remainder of the employment period
of the agreement and (b) the aggregate base salary payable thereunder for three
years, plus, in each case and for each such year, an amount not less than any
bonus granted by the Board of Directors of the Company to the employee in the
year immediately preceding the year in which termination occurred. If the
employee's employment is terminated by reason of death or disability, the
Company is required to pay to Ms. Macfarlane and Mr. Macfarlane, as applicable,
an amount equal to two years aggregate base salary in the case of Ms.
Macfarlane, and one year's base salary in the case of Mr. Macfarlane, plus in
each case and for each such year an amount not less than any bonus granted to
the employee in the year immediately preceding the year in such termination
occurs.
In addition, the Company entered into a three-year employment
agreement, commencing on January 4, 2000, with Frank Marchese, pursuant to which
he serves as Chief Financial Officer of the Company. The term of the agreement
may be extended for an additional two years at the Company's option. The
agreement provides for an annual base salary of $135,000, plus options under the
1992 Stock Option Plan to purchase an aggregate of 50,000 shares of Common Stock
at an exercise price equal to the fair market value per share of the Common
Stock on the date of grant. The options vest in equal installments upon each of
the first, second and third anniversaries of the start date. The Company may
terminate the agreement by reason of physical or mental disability, but in
such case Mr. Marchese would remain entitled to full compensation and benefits
during the period prior to such termination. If Mr. Marchese's employment with
the Company were terminated by reason of his death, he would be entitled to any
unpaid but accrued portion of his base salary through the date of such
termination, including a pro rata portion of the bonus. If his employment were
terminated by the Company upon 30 days written notice or within one year after
a "change of control", but other than for "cause" or by reason of death or
disability, then Mr. Marchese would be entitled to his base salary for the
24-month period following such termination or for the remaining term of the
agreement, whichever is shorter, and medical benefits for one year for himself
and his immediate family.
The Company also entered into a five-year employment agreement with
Brian T. Fitzpatrick, commencing on April 17, 2000, pursuant to which he serves
as the Chief Operating Officer, President and Acting Chief Executive Officer of
the Company and Chief Executive Officer and President of the Company's
subsidiaries, Gordon Acquisition Corp. and H.B. Gordon Manufacturing, Inc. As
compensation, Mr. Fitzpatrick is entitled under the agreement to an annual base
salary of $200,000, plus options under the 1992 Stock Option Plan to purchase an
aggregate of 170,636 shares of Common Stock. The exercise price (i) for the
first 99,364 options exercised is twice the closing bid price of the Common
Stock on April 17, 2000 and (ii) for the remaining options is equal to such
closing bid price. The options vest in equal installments upon each of the
first, second and third anniversaries of the start date. In
20
<PAGE> 21
addition, Mr. Fitzpatrick is to receive with respect to each fiscal year a bonus
to be determined by the Compensation Committee of the Company. The Company
may terminate the agreement by reason of physical or mental disability, but
in such case Mr. Fitzpatrick would remain entitled to full compensation and
benefits during the period prior to such termination. If Mr. Fitzpatrick's
employment were terminated by reason of his death, the Company would have no
further obligations under the agreement other than his stock options. If his
employment were terminated for any reason other than death, disability,
"cause," voluntary resignation or a "change of control," then the Company would
pay Mr. Fitzpatrick his base salary for the 12 months following such
termination.
Additionally, the Company entered into a four-year employment agreement
with Leslie Foglesong, commencing on December 15, 1997, pursuant to which she
serves as Secretary and Treasurer (or Assistant Treasurer) of the Company. The
term of the agreement may be extended for an additional year at Ms. Foglesong's
option. The agreement provides for an annual base salary of $100,000, subject to
an increase as of January 1, 2000 to $135,000, plus a bonus with respect to each
fiscal year to be determined by the Board of Directors, as well as options under
the 1992 Stock Option Plan. The Company may terminate the agreement by reason
of physical or mental disability, but in such case Ms. Foglesong would remain
entitled to full compensation and benefits during the period prior to such
termination. If Ms. Foglesong's employment were terminated by reason of her
death, the Company would have no further obligations under the agreement other
than allowing her stock options to be exercised by her estate for a period of
five years after such termination. If her employment were terminated for any
reason other than death, disability or "cause." then Ms. Foglesong would be
entitled to her base salary for the 24-month period following such termination
or the remaining term of the agreement, whichever is greater; in addition, her
stock options would continue to be exercisable for a period of five years afer
such termination.
The Company had entered into a five year employment agreement,
commencing on April 10, 1995, with Arthur Guiry providing for Mr. Guiry to serve
as President of the Company. The agreement terminated upon the death of Mr.
Guiry on March 9, 2000. The agreement provided for an annual base salary of
$200,000, plus options to purchase an aggregate of 300,000 shares of Common
Stock at an exercise price of $2.25 per share under the Company's 1992 Stock
Option Plan. Upon his death, Mr. Guiry's personal representative received from
the Company accrued salary through the date of his termination and on March 17,
2000 exercised the remaining 105,000 options granted to Mr. Guiry under the 1992
Stock Option Plan.
All of the agreements described above prohibit disclosure of
proprietary and confidential information regarding the Company and its business
to anyone outside the Company both during and subsequent to employment and
provide certain non-competition and non-solicitation restrictions on the
employee for the duration of employment with the Company, and for one year
thereafter.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no reportable compensation committee (Board of Directors)
interlocks or insider participation transactions.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
establishing compensation policies applicable to the Company's executive
officers; evaluating and recommending to the Board the compensation of the Chief
Executive Officer and other executive officers; and recommending to the Board of
Directors individual stock option grants for executive officers from the
Company's 1992 Stock Option Plan. The following report relates to the Company's
compensation policies and the compensation paid to the Chief Executive Officer
for the year ended December 31, 1999.
Compensation Policies: The Company's compensation policies for all
employees, including executive officers, are designed to provide compensation
levels that are competitive with those of small capitalization, early-stage
technology companies, with whom the Company must compete in the recruitment and
retention of highly qualified, motivated personnel. The Company's executive
compensation program is structured (i) to compensate its executive officers on
an annual basis with a cash salary and discretionary bonus at a sufficient level
to retain and motivate these officers and (ii) to provide long-term incentives
to those executives through periodic grant of stock options.
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The salary component of executive compensation and any bonuses granted
in the Company's discretion is based on each executive's level of responsibility
in comparison to similar positions in comparable companies. The Company believes
a competitive base salary, and bonus when warranted, is essential to the
development and retention of capable management. Base salaries for executive
officers are reviewed periodically, based on a review of competitive salaries
obtained from published data and other sources, and discretionary performance
bonuses, if any, are used to augment salary in circumstances where special
achievement is to be rewarded.
The long-term incentive component recognizes the importance of stock
ownership by employees and reflects the use of stock options as an integral part
of each executive's compensation. The Company believes the opportunity for stock
appreciation through stock options which vest over time promotes the
relationship between long-term interests of executive officers and shareholders.
The size of specific grants takes into account the executive officer's salary,
number of options previously granted and overall individual contributions to the
Company.
Chief Executive Officer Compensation: The employment agreement with Ms.
Macfarlane, who served as the Company's Chief Executive Officer until August 14,
2000, provides for an annual base salary of $175,000, with annual increases as
provided therein. Ms. Macfarlane agreed to forego any bonus grant in 1999 in
consideration of the Company extending her employment agreement and agreeing to
modify certain terms of the Class A Preferred Stock owned by Ms. Macfarlane,
including extension of the redemption date for the Class A Preferred Stock to
December 31, 2000. The determination of Ms. Macfarlane's salary level was based
on the same criteria applicable to base salaries of all executive officers. Ms.
Macfarlane received no stock option or bonus grant in 1999.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1997, Ms. Macfarlane agreed to (i) delay payment until
January 1999 on the note she received under her employment agreement in respect
of the Avon Settlement, (ii) extend the term of her employment with the Company
until December 31, 2000, in accordance with the terms of her employment
agreement (which provided for renewal at the option of Ms. Macfarlane), and
(iii) forego any discretionary performance bonus under her employment agreement
for 1999 in connection with the Company's Board of Directors agreeing to modify
certain features of the Company's Class A Preferred Stock. The changes to the
Class A Preferred Stock, approved by the Company's shareholders on February 13,
1998, provide that, if (i) the Company's earnings for any two calendar years
during the period ending on December 31, 2000 exceeds $20,000,000 or (ii) the
closing bid price of the Common Stock has been at least $46.67 ($31.11 giving
effect to the Stock Split) on 30 consecutive trading days at any time prior to
December 31, 2000, each outstanding share of the Class A Preferred Stock shall
be converted into .979 shares of Common Stock, subject to adjustment for
stock-splits, including the 1998 Stock Split, stock dividends, reclassification
or other combinations or subdivisions. If neither condition is satisfied by
December 31, 2000, the Preferred Stock shall be redeemed by the Company at a
price of $0.01 per share, plus any declared but unpaid dividends.
Since August 1990, the Company has occupied office space leased under
Darby S. Macfarlane's name. For the year ended December 31, 1999, the Company
paid $20,440 in connection with such lease, representing the actual lease cost
for such premises. In addition, the Company paid
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approximately $10,200 for the year ended December 31, 1999 for the use of Ms.
Macfarlane's residence as an administrative and research and development office.
In connection with the Avon Settlement and Ms. Macfarlane's employment
agreement, Ms. Macfarlane received $361,200 from the proceeds of the Avon
Settlement.
Management believes that each of the transactions described above were
obtained on terms at least as favorable as could have been obtained from
unaffiliated third parties.
1992 STOCK OPTION PLAN
Pursuant to the 1992 Stock Option Plan, certain directors, employees
and officers of the Company will be given the opportunity to acquire shares of
Common Stock through the grant of options. Such options may be either incentive
stock options within the meaning of the Internal Revenue Code of 1986, as
amended (the "Code"), or nonqualified stock options. A maximum of 5,500,000
shares of Common Stock are currently authorized for issuance with respect to
options granted under the 1992 Stock Option Plan. The material features of the
1992 Stock Option Plan are described below.
The purpose of the 1992 Stock Option Plan is to promote the longterm
success of the Company by providing financial incentives to key employees who
are in positions to make significant contributions toward success. The 1992
Stock Option Plan is designed to attract individuals of outstanding ability to
employment with the Company, to provide key employees with a proprietary
interest in the Company, and to encourage such employees to continue their
employment with the Company and to render superior performance during such
employment.
The 1992 Stock Option Plan is administered by the Compensation
Committee of the Board of Directors, which has authority to determine the
employees to whom awards will be granted, the form and amount of the awards, the
dates of grant, vesting periods, and other terms of each award.
The 1992 Stock Option Plan provides for both incentive stock options,
as defined in Section 422 of the Code, and nonqualified stock options. With
certain limited exceptions, options are granted at an exercise price per share
equal to not less than 100% of the fair market value of the Common Stock on the
date the option is granted. The Company receives no consideration upon the
granting of an option. Full payment of the option exercise price must be made by
the optionee when an option is exercised. The exercise price may be paid in cash
or in such other form as the Company may approve, including shares of Common
Stock valued at their fair market value on the date of option exercise. The
proceeds received by the Company from the sale of shares under the 1992 Stock
Option Plan are used for general corporate purposes. Options granted under the
1992 Stock Option Plan are not exercisable sooner than 12 months after the date
of grant, vest incrementally over a three-year period, and are not exercisable
later than 10 years after the date of grant. Options are not transferable by the
holder other than by will or applicable laws of descent and distribution.
The grant of an incentive stock option generally has no immediate
federal income tax consequences to the Company or the holder. If the holder of
the incentive stock option sells the shares of Common Stock received on the
exercise thereof more than two years after the date the incentive stock
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option was granted to the holder and more than one year after the date of
exercise of the incentive stock option, the difference between the sale proceeds
and the exercise price of the option will be eligible for longterm capital gain
or loss treatment. In such event, no amount will be taxable as ordinary income
and the Company will not be entitled to a deduction for federal income tax
purposes.
However, in general, the difference between the fair market value of
the Common Stock on the date of exercise and the exercise price will be included
in the holder's alternative minimum taxable income for alternative minimum tax
purposes. Whether or not a holder of such an option would be subject to
alternative minimum tax depends on such individual's particular tax situation.
If the holder disposes of the shares of Common Stock acquired upon the exercise
of an incentive stock option or applies such stock to the exercise of another
option prior to the end of the holding periods described above (a "disqualifying
disposition"), the difference between the fair market value of the Common Stock
on the date of exercise and the exercise price is taxable as ordinary income in
the year of disposition and any excess of the amount realized on disposition
over the value of the Common Stock on the date of exercise is eligible for
longterm or shortterm capital gain treatment depending on how long the shares
were held. If, in a disqualifying disposition, the holder sells the Common Stock
for less than its fair market value on the date he or she exercised the
incentive stock option, then, generally, only the amount of the difference
between the amount realized on the disposition and the purchase price will be
treated as ordinary income. If the holder of an incentive stock option makes a
disqualifying disposition, the Company generally will be entitled to a deduction
equal to the amount treated as ordinary income to such holder for the Company's
taxable year in which such holder recognizes such income.
The grant of a nonqualified stock option has no immediate federal
income tax consequences to the Company or the holder. The exercise of a
nonqualified stock option will require the holder to include in the holder's
gross income the amount by which the fair market value of the acquired shares on
the exercise date (or, in the case of certain employees who are officers or
directors subject to the profit recapture provisions of Section 16(b) of the
Securities Exchange Act of 1934, in certain circumstances thereafter) exceeds
the exercise price. An officer or director may avoid this six-month deferral
provision by electing under Section 83(b) of the Code to realize the income with
respect to the exercise of the option at the time of exercise.
The Company is required by the Code to withhold income and employment
taxes from the employee's wages or to receive a payment from the employee to
provide for the taxes on the ordinary income which is considered to have been
paid in shares of Common Stock to the holder upon exercise of the option or, in
the case of an employee subject to Section 16(b) of the Securities Exchange Act
of 1934 who does not make a Section 83(b) election, at the end of the six-month
period following such exercise.
The Company is entitled to an income tax deduction (provided applicable
withholding requirements are met) equal to the amount of ordinary income
included as compensation in the gross income of the holder for the taxable year
of the Company during which the holder includes such amount in the holder's
income.
The closing price of the Company's Common Stock as reported on the
Nasdaq SmallCap Market published in The Wall Street Journal on September 29,
2000 was $0.625 per share. At December 31, 1999 (the end of the Company's 1999
fiscal year), options were outstanding under the 1992 Stock Option Plan to
purchase an aggregate of 3,146,499 shares of Common Stock.
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PERFORMANCE GRAPH
Research Data Group
Peer Group Total Return Worksheet
CHROMATICS COLOR SCIENCES INTL.
Cumulative Total Return
----------------------------------------------
12/95 12/96 12/97 12/98 12/99 9/00
CHROMATICS COLOR SCIENCES 100.00 102.86 342.86 271.07 241.06 60.00
INTERNATIONAL, INC.
NASDAQ STOCK MARKET (U.S.) 100.00 123.04 150.70 212.49 394.81 363.49
RUSSELL 2000 100.00 116.49 142.55 138.92 168.45 158.18
MISCELLANEOUS
Any proposal of an eligible shareholder intended to be presented at the
next Annual Meeting of Shareholders must be received by the Company to be
eligible for inclusion in its proxy material and form of proxy relating to that
Annual Meeting by April 1, 2001.
Notice of any proposal for an eligible shareholder outside the process
of Rule 14a-8 promulgated under the Securities Exchange Act of 1934, in order to
be considered timely, must be received by the Company by April, 2001. The
Company anticipates holding its next Annual Meeting of Shareholders in the
fourth quarter of 2001.
The Board of Directors of the Company does not intend to present, and
does not have any reason to believe that others intend to present, any matter or
business at the Meeting other than that set forth in the accompanying Notice of
Annual Meeting of Shareholders. However, if other matters properly come before
the Meeting, it is the intention of the persons named in the enclosed form of
proxy to vote any proxies in accordance with their judgment.
The Company will bear the cost of preparing, assembling and mailing the
enclosed form of proxy, this Proxy Statement and other materials which may be
sent to shareholders in connection with the solicitation. Solicitation may be
made by mail, telephone and personal interview. The Company may reimburse
persons holding shares in their names or in the names of nominees for their
reasonable expenses in sending proxies and proxy materials to their principals.
Darby S. Macfarlane
Chairperson of the Board of Directors
New York, New York
October 30, 2000
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CHROMATICS COLOR SCIENCES INTERNATIONAL, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
DECEMBER 11, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned shareholder of Chromatics Color Sciences International, Inc.
(the "Company") hereby appoints Darby S. Macfarlane and Leslie Foglesong, or
either of them, attorneys and proxies, with full power of substitution, to
represent the undersigned and vote all shares of the Common Stock of the Company
which the undersigned is entitled to vote, with all powers the undersigned would
possess if personally present, at the Annual Meeting of Shareholders of the
Company to be held at the offices of the Company at 5 East 80th Street, New
York, New York at 10:00 A.M., on Monday, December 11, 2000, and at any
adjournments thereof, with respect to the proposals hereinafter set forth and
upon such other matters as may properly come before the Meeting and any
adjournments thereof.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE APPROVAL OF
THE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO PROVIDE FOR A
CLASSIFIED BOARD OF DIRECTORS, DIVIDED INTO THREE CLASSES WITH ONE CLASS TO BE
ELECTED EACH YEAR, "FOR" THE ELECTION OF THREE CLASS I DIRECTORS TO SERVE A TERM
OF ONE YEAR, TWO CLASS II DIRECTORS TO SERVE A TERM OF TWO YEARS, AND TWO CLASS
III DIRECTORS TO SERVE A TERM OF THREE YEARS, OR UNTIL THEIR RESPECTIVE
SUCCESSORS ARE ELECTED, "FOR" THE RATIFICATION OF BDO SEIDMAN LLP AS AUDITORS OF
THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 2000, "FOR" THE ADOPTION OF THE
AMENDMENT TO THE COMPANY'S 1992 STOCK OPTION PLAN, "FOR" THE APPROVAL OF THE
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO EFFECT A ONE SHARE
FOR THREE SHARES REVERSE STOCK SPLIT OF THE COMPANY'S ISSUED AND OUTSTANDING
SHARES OF COMMON STOCK, AND IN THE DISCRETION OF THE PROXIES WITH RESPECT TO ALL
OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS
THEREOF. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING NOTICE OF
ANNUAL MEETING AND PROXY STATEMENT.
Please mark boxes in blue or black ink.
1. AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO PROVIDE FOR A
CLASSIFIED BOARD OF DIRECTORS, DIVIDED INTO THREE CLASSES WITH ONE CLASS TO
BE ELECTED EACH YEAR.
--------------------------------------------------------------------------------
/ / FOR / / AGAINST / / ABSTAIN
--------------------------------------------------------------------------------
2. ELECTION OF THREE CLASS I DIRECTORS TO SERVE A TERM OF ONE YEAR, TWO CLASS
II DIRECTORS TO SERVE A TERM OF TWO YEARS, AND TWO CLASS III DIRECTORS TO
SERVE A TERM OF THREE YEARS, OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE
ELECTED.
--------------------------------------------------------------------------------
/ / FOR all nominees listed below (except as marked to the / / ABSTAIN
contrary below)
--------------------------------------------------------------------------------
Nominees for Class I: Leslie Foglesong, Edmund Vimond, Edward Mahoney
Nominees for Class II: Darby S. Macfarlane, David Kenneth Macfarlane
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(continued and to be signed and dated on reverse side)
Nominees for Class III: Brian T. Fitzpatrick, James Bergman
Instruction: To withhold authority to vote for any individual nominee, strike a
line through the name:
Darby S. Macfarlane, David Kenneth Macfarlane, Leslie Foglesong, Edward Mahoney,
Edmund Vimond, Brian T. Fitzpatrick, James Bergman
3. RATIFICATION OF THE SELECTION OF BDO SEIDMAN, LLP AS AUDITORS OF THE
COMPANY FOR THE YEAR ENDING DECEMBER 31, 2000.
--------------------------------------------------------------------------------
/ / FOR / / AGAINST / / ABSTAIN
--------------------------------------------------------------------------------
4. AMENDMENT OF THE COMPANY'S 1992 STOCK OPTION PLAN TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK AUTHORIZED TO BE ISSUED THEREUNDER FROM 5,500,000 TO
6,500,000, AN INCREASE OF 1,000,000 SHARES.
--------------------------------------------------------------------------------
/ / FOR / / AGAINST / / ABSTAIN
--------------------------------------------------------------------------------
5. AMENDMENT OF THE COMPANY'S CERTIFICATE OF INCORPORATION TO EFFECT A ONE
SHARE FOR THREE SHARES REVERSE STOCK SPLIT OF THE COMPANY'S ISSUED AND
OUTSTANDING SHARES OF COMMON STOCK.
--------------------------------------------------------------------------------
/ / FOR / / AGAINST / / ABSTAIN
--------------------------------------------------------------------------------
Dated: , 2000
----------------------------------------
--------------------------------------
Signature of Shareholder(s)
--------------------------------------
Name of Shareholder(s)
NOTE: When shares are held by joint tenants, both should
sign. When signing as attorney, executor, administrator,
trustee, custodian, guardian or corporate officer, please
give your full title as such. If a corporation, please sign
full corporate name by
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authorized officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD PROMPTLY
28
