<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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ELECTRONIC RETAILING SYSTEMS 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
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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:
------------------------------------------------------------------------
[ ] 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:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 10, 1999
------------------------
Norwalk, Connecticut
May 14, 1999
TO THE HOLDERS OF COMMON STOCK
OF ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.:
The Annual Meeting of the Stockholders of ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC., will be held at the offices of Zilkha & Company, 767 Fifth
Avenue-46th Floor, New York, New York on Thursday, June 10, 1999 at 10:00 A.M.,
local time, for the following purposes, as more fully described in the
accompanying Proxy Statement:
1. To elect five directors of the Company for the ensuing year.
2. To transact such other business as may properly come before the Meeting
or any adjournment or adjournments thereof.
The close of business on April 20, 1999 has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Meeting.
By Order of the Board of Directors
NORTON GARFINKLE,
Chairman of the Board and Secretary
You are cordially invited to attend the meeting in person. If you do not
expect to be present, please mark, sign and date the enclosed form of Proxy and
mail it in the enclosed return envelope which requires no postage if mailed in
the United States, so that your vote can be recorded.
<PAGE> 3
PROXY STATEMENT
GENERAL
This Proxy Statement, which will be mailed commencing on or about May 14,
1999 to the persons entitled to receive the accompanying Notice of Annual
Meeting of Stockholders, is provided in connection with the solicitation of
proxies on behalf of the Board of Directors of Electronic Retailing Systems
International, Inc. for use at the Annual Meeting of Stockholders (the
"Meeting") to be held on June 10, 1999 and at any adjournment or adjournments
thereof, for the purposes set forth in such Notice. The Company's executive
office is located at 488 Main Avenue, Norwalk, Connecticut 06851.
VOTING
At the close of business on April 20, 1999, the record date stated in the
accompanying Notice, the Company had outstanding 21,249,447 shares of common
stock, $.01 par value (the "Common Stock"), each of which is entitled to one
vote with respect to each matter to be voted on at the Meeting. The Company has
no class or series of voting stock outstanding other than the Common Stock.
A majority of the issued and outstanding shares of Common Stock present in
person or by proxy will constitute a quorum for the transaction of business at
the Meeting. Directors are elected by a plurality vote.
Abstentions and broker non-votes (as hereinafter defined) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. For the purpose of determining the vote required for approval of
matters to be voted on at the Meeting, shares held by stockholders who abstain
from voting will be treated as being "present" and "entitled to vote" on the
matter. However, in the case of a broker non-vote, or where a stockholder
withholds authority from his proxy to vote the proxy as to a particular matter,
such shares will not be treated as "present" and "entitled to vote" on the
matter. Accordingly, in the election of directors, an abstention, or a broker
non-vote or the withholding of a proxy's authority, will have no effect on the
outcome of the vote on the matter. A "broker non-vote" refers to shares
represented at the Meeting in person or by proxy by a broker or nominee where
such broker or nominee (i) has not received voting instructions on a particular
matter from the beneficial owner or persons entitled to vote; and (ii) the
broker or nominee does not have the discretionary voting power on such matter.
At April 20, 1999, Norton Garfinkle, Chairman of the Board of the Company,
together with two affiliated limited partnerships, and Bruce F. Failing, Jr.,
the Company's Vice Chairman of the Board and Chief Executive Officer, together
with a trust established for the benefit of his children, beneficially owned
approximately 52% of the outstanding Common Stock of the Company. Messrs.
Garfinkle and Failing have entered into an agreement relating to the voting and
disposition of such shares. Accordingly, Messrs. Garfinkle and Failing, acting
together, will be in a position to elect all of the Company's directors and to
take action requiring stockholder approval. See "I. Election of
Directors -- Information Concerning Certain Stockholders" below.
I. ELECTION OF DIRECTORS
Five directors will be elected at the Meeting, each to serve for one year
and until a successor shall have been chosen and qualified. It is the intention
of each of the persons named in the accompanying form of Proxy to vote the
shares represented thereby in favor of the five nominees listed in the following
table, unless otherwise instructed in such Proxy. Each such nominee is presently
serving as a director. The Board of Directors has no reason to believe that any
person named will be unable or will decline to serve. In case any of the
nominees is unable or declines to serve, such persons reserve the right to vote
the shares represented by such Proxy for another person duly nominated by the
Board of Directors in such nominee's stead, or, if no other person is so
nominated, to vote such shares only for the remaining nominees. Certain
information
1
<PAGE> 4
concerning the nominees for election as directors is set forth below. Such
information was furnished by them to the Company.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
OWNED BENEFICIALLY
NAME OF NOMINEE AND CERTAIN AS OF PERCENT
BIOGRAPHICAL INFORMATION APRIL 1, 1999(1) OF CLASS
--------------------------- ------------------ --------
<S> <C> <C>
DAVID DIAMOND, age 40; Executive Vice President of Marketing
and New Applications, Catalina Marketing Corp., since
1997; consultant to suppliers of products and services to
the supermarket industry from 1994 until 1997; Director of
the Company since 1996.................................... 14,750(2) (3)
BRUCE F. FAILING, JR., age 50; founder of the Company in
1990, and its Vice Chairman of the Board and Chief
Executive Officer; President of the Company through 1997;
Director of the Company since 1990........................ 3,145,637(4)(5) 14.8%
NORTON GARFINKLE, age 68; founder of the Company in 1990,
and its Chairman of the Board; Chairman of Cambridge
Management Corporation (manufacturer and marketer of DAP
series of massively parallel processing computers) since
prior to 1994, and Chairman of its affiliates (engaged in
the research and development of new technologies),
including Oxford Management Corporation, during such
period; Director of the Company since 1990(6)............. 7,890,758(4)(7) 37.2
SHELDON WEINIG, age 71; Adjunct Professor at Columbia
University since 1994 and at State University of New York,
Stony Brook, since prior to 1994; consultant, Sony
Engineering and Manufacturing of America from 1994 to
1996; Director: Aseco Corporation, Insituform
Technologies, Inc., Intermagnetics General Corporation,
Kentek Information Systems, Inc., U.S. Cast Polymers,
Inc.; Director of the Company since 1998.................. 2,500(8) (3)
DONALD E. ZILKHA, age 47; President, Zilkha & Company
(private investment advisor) since prior to 1994; Director
of the Company since 1993................................. 114,972(9) (3)
</TABLE>
- ---------------
(1) Such persons have sole voting and investment power with respect to all
outstanding shares of Common Stock shown as being beneficially owned by
them, subject to the information contained in the footnotes to this table.
(2) Includes (i) 1,000 shares beneficially owned jointly by Mr. Diamond and his
wife, and (ii) 13,750 shares issuable upon exercise of stock options granted
by the Company exercisable within 60 days of April 1, 1999.
(3) Less than 1%.
(4) Such stockholders are party to a stockholders agreement among Norton
Garfinkle, Bruce F. Failing, Jr., certain family trusts and partnerships,
and Elizabeth Z. Failing, as described under "Information Concerning Certain
Stockholders" below.
(5) Includes 1,318,489 shares beneficially owned by a trust established for the
benefit of Mr. Failing's children, 168,318 shares beneficially owned by
Elizabeth Z. Failing, Mr. Failing's sister, and 20,000 shares beneficially
owned jointly by Mr. Failing and his wife, Leigh Q. Failing.
(6) In December 1995, pursuant to an agreement with New York State authorities,
Mr. Garfinkle admitted to a misdemeanor relating to his 1989 New York State
return and paid all taxes required by the agreement.
(7) Includes 600,000 shares held by Garfinkle Limited Partnership I and
6,489,970.5 shares held by Garfinkle Limited Partnership II, both Delaware
limited partnerships with respect to each of which G.F. Management Corp.
(all of the shares of which are held by Norton Garfinkle) acts as sole
general partner.
(8) Represents shares issuable upon exercise of stock options granted by the
Company exercisable within 60 days of April 1, 1999.
2
<PAGE> 5
(9) Includes 17,500 shares issuable upon exercise of stock options granted by
the Company exercisable within 60 days of April 1, 1999.
No family relationship exists between any of the directors or executive
officers of the Company.
BOARD MEETINGS AND COMMITTEES
During the year ended December 31, 1998, the Board of Directors of the
Company met eight times and took action by unanimous written consent on fourteen
occasions. Each current director of the Company, other than David Diamond,
attended at least 75% of the meetings of the Board of Directors and meetings of
any committees of the Board on which such person served which were held during
the time that person served.
The members of the Audit Committee of the Board of Directors of the Company
are Norton Garfinkle, Donald E. Zilkha and Sheldon Weinig, who in May 1999
succeeded to the position of Paul A. Biddelman, who will not continue as a
director after the Meeting. The Audit Committee is responsible for overseeing
that management fulfills its responsibilities in connection with the preparation
of the consolidated financial statements of the Company and its subsidiaries.
The Committee's functions include making recommendations to the Board regarding
the engaging and discharging of the Company's independent accountants, reviewing
with the independent accountants the plan and the results of the auditing
engagement, approving the professional services provided by the independent
accountants, reviewing the independence of the independent accountants, and
reviewing the adequacy of the Company's system of internal accounting controls.
The Audit Committee met once during the year ended December 31, 1998.
The members of the Compensation Committee of the Board of Directors are
Norton Garfinkle, Donald E. Zilkha and Paul A. Biddelman. The functions of the
Compensation Committee include making recommendations to the Board of Directors
of the Company regarding the salaries, bonuses, fringe benefits or compensation
of any kind for the officers of the Company. The Compensation Committee met once
during the year ended December 31, 1998.
The Company has not appointed a nominating committee of the Board of
Directors.
DIRECTOR COMPENSATION
The Company maintains the Electronic Retailing Systems International, Inc.
1993 Director Stock Option Plan (the "Director Option Plan") previously adopted
by the Board of Directors, and approved by the stockholders, of its predecessor
corporation. Under the Director Option Plan, pursuant to amendments approved by
the stockholders of the Company in January 1997 and June 1998, options to
purchase up to 750,000 shares of the Company's Common Stock may be granted to
directors of the Company. The Company has the ability to grant options under the
Director Option Plan to executive officers who are directors, which are intended
to be "incentive stock options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), provided that the option
exercise price is equal to the fair market value of the Common Stock on the date
of grant. Other options granted under the Director Option Plan will be
nonqualified options.
The Director Option Plan is administered by the Board of Directors of the
Company, which determines the persons who are to receive options and the number
of shares subject to each option. David Diamond and Donald Zilkha, in addition
to Paul A. Biddelman (a director who will not continue in office after the
Meeting), hold options granted under the Director Option Plan: (i) in June 1996
covering, respectively, 12,500 shares, 20,000 shares and 20,000 shares of Common
Stock, exercisable at a price per share equal to $1.875, the closing price per
share of Common Stock on the Nasdaq Stock Market on the date of grant, and (ii)
in June 1998 covering, respectively, 17,500 shares, 10,000 shares and 10,000
shares of Common Stock, exercisable at a price per share equal to $4.00, the
closing price per share of Common Stock on the Nasdaq Stock Market on the date
of grant. Sheldon Weinig holds an option granted under the Director Option Plan
in September 1998 covering 10,000 shares of Common Stock, exercisable at a price
per share equal to $2.75, the closing price per share of Common Stock on the
Nasdaq Stock Market on the date of grant. All such options expire five years
from the date of grant and are exercisable on the date of grant with respect to
one-quarter of
3
<PAGE> 6
the shares covered thereby, with an additional one-quarter of such shares
becoming exercisable annually thereafter.
George B. Weathersby, who served as a director through the 1998 annual
meeting of stockholders and as President of the Company through March 1998, held
five-year options covering 20,000 shares of Common Stock granted in June 1996 at
an exercise price of $1.875, and covering 50,000 shares of Common Stock granted
in December 1996 at an exercise price of $3.38, in each case exercisable on the
date of grant with respect to one-quarter of the shares covered thereby and with
respect to an additional one-quarter of such shares annually thereafter. In
addition, Mr. Weathersby was granted a ten-year option in May 1997 covering
50,000 shares, exercisable at a per share price of $5.69, becoming exercisable
after achievement by the Company of specified performance standards. All such
options were granted at an exercise price equal to the closing price of the
Common Stock on the date of grant. During the year ended December 31, 1998, Mr.
Weathersby exercised options with respect to 10,000 shares at an exercise price
per share of $1.875. All other options held by Mr. Weathersby expired without
exercise subsequent to the 1998 annual meeting of stockholders.
During the year ended December 31, 1998, the Company paid to Oxford
Management Corporation ("Oxford") the amount of $97,500 for services rendered by
Norton Garfinkle and $18,600 in reimbursement of other expenses. The Company's
continuing arrangements with Oxford, which are terminable at any time by the
Company or Oxford, provide for payments in the amount per month of $7,500 for
services rendered by Mr. Garfinkle.
The Company has not adopted any director fee arrangement, but reimburses
all of its directors for their out-of-pocket expenses incurred in the
performance of their duties as directors of the Company.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth information
concerning the annual compensation for each of the Company's last three
completed fiscal years of: (i) the Company's chief executive officer and (ii)
each of the other most highly-compensated executive officers whose salary and
bonus exceeded $100,000 during the most recent fiscal year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- --------- -------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Bruce F. Failing, Jr. ................ 1998 155,769 -- -- --
Chief Executive Officer 1997 206,731 -- -- --
1996 246,567 -- -- --
Michael B. Persky..................... 1998 214,385 -- 450,000(2) 500(3)
President(1) 1997 24,615 -- 60,000 --
1996 -- -- -- --
Lester S. Briney...................... 1998 186,923 -- 100,000(5) 500(3)
Vice President, 1997 113,573 -- 100,000 --
Chief Technical Officer(4) 1996 -- -- -- --
Michael R. Valiton.................... 1998 160,385 -- -- 500(3)
Senior Vice President(6) 1997 149,423 -- -- --
1996 140,942 -- 100,000(5) --
</TABLE>
- ---------------
(1) Mr. Persky became an executive officer upon joining the Company in December
1997.
(2) Options with respect to 60,000 shares replaced options previously granted
and surrendered contemporaneously with such replacement.
4
<PAGE> 7
(3) Represents 401(k) contributions by the Company under its defined
contribution plan.
(4) Mr. Briney became an executive officer in July 1997 after joining the
Company earlier in the year and ceased to be an executive officer in January
1999.
(5) Such options replaced options previously granted and surrendered
contemporaneously with such replacement.
(6) Mr. Valiton became an executive officer in January 1995 after joining the
Company in the prior year and ceased to be an executive officer in January
1999.
Option Grant Table. The following table sets forth certain information
regarding options granted by the Company during the year ended December 31,
1998, to the individuals named in the above compensation table:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL MARKET STOCK PRICE
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE PER SHARE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE ON DATE EXPIRATION ---------------------
NAME GRANTED(#) FISCAL YEAR ($/SH) OF GRANT($) DATE 5%($) 10%($)
---- ---------- ------------ -------- ----------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Bruce F. Failing,
Jr. .................. -- -- -- -- -- -- --
Michael B. Persky....... 60,000(2) 5.1 3.50 3.50 06/08/08 132,068 334,686
140,000(3) 12.0 3.125 3.125 06/11/08 275,141 697,262
250,000(4) 21.4 2.906 2.906 07/06/08 456,892 1,157,854
Lester S. Briney........ 100,000(2) 8.6 3.50 3.50 06/08/08 220,113 557,810
Michael R. Valiton...... -- -- -- -- -- -- --
</TABLE>
- ---------------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on arbitrarily assumed rates of stock price appreciation of 5% and
10% compounded annually from the date the respective options are granted to
their expiration date.
(2) Such options replace options previously granted and surrendered
contemporaneously with such replacement, one quarter of which become
exercisable with respect to the shares covered thereby on June 8, 1999, with
an additional one-quarter thereof subject to exercise each anniversary of
the date of grant thereafter.
(3) Such options become exercisable with respect to one-quarter of the shares
covered thereby on May 11, 1999 with an additional one-quarter thereof
subject to exercise each anniversary of the date of grant thereafter.
(4) Such stock options were granted with exercisability subject to achievement
by the Company of specified performance standards.
5
<PAGE> 8
Aggregate Option Exercises and Year-End Option Table. The following table
sets forth certain information regarding exercises of stock options, and stock
options held as of December 31, 1998 by the individuals named in the above
compensation table.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END(#) AT YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Bruce F. Failing, Jr........ -- -- -- -- -- --
Michael B. Persky........... -- -- -- 450,000 -- --
Lester S. Briney............ -- -- -- 100,000 -- --
Michael R. Valiton.......... -- -- 56,250 43,750 31,669 24,631
</TABLE>
- ---------------
(1) Calculated on the basis of the fair market value of the underlying
securities at the exercise date or at year-end, as the case may be, less the
respective exercise prices.
Option Repricings. During the year ended December 31, 1998, the Board of
Directors authorized the repricing of stock options held by employees of the
Company, including two executive officers. See the "Report of the Compensation
Committee" below for a discussion of the repricing. The following table sets
forth certain information with respect to the repricing of options held by any
executive officer of the Company during each completed fiscal year since its
inception:
TEN-YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF LENGTH OF
SECURITIES MARKET PRICE ORIGINAL
UNDERLYING OF STOCK AT EXERCISE PRICE OPTION TERM
OPTIONS TIME OF AT TIME OF NEW REMAINING AT
REPRICED OR REPRICING OR REPRICING OR EXERCISE DATE OF REPRICING
NAME DATE AMENDED(#) AMENDMENT AMENDMENT PRICE($) OR AMENDMENT
- ---- -------- ----------- ------------ --------------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Michael B. Persky........ 06/08/98 60,000 $3.50 $ 4.875 $3.50 9 years,
President 6 months
Lester S. Briney......... 06/08/98 50,000 3.50 6.00 3.50 9 years,
Vice President, 2 months
Chief Technical 06/08/98 50,000 3.50 6.1875 3.50 9 years,
Officer(1) 3 months
Michael B. Valiton....... 07/25/96 30,000 2.25 5.00 2.25 9 years,
Senior Vice President, 1 month
Technology and
Operations(2)
James M. Nolan Jr........ 07/25/97 17,500 2.25 6.00 2.25 6 years,
Vice President, 5 months
Product Development(3) 07/25/97 2,500 2.25 5.00 2.25 9 years,
1 month
William B. Fischer....... 07/25/96 10,000 2.25 5.00 2.25 8 years,
Vice President, 7 months
Finance(4)
Wayne Benoit............. 03/28/95 200,000 5.63 8.50 5.63 9 years,
Executive Vice
President, 1 month
Chief Operating
Officer(5)
</TABLE>
- ---------------
(1) Mr. Briney ceased to be an executive officer of the Company in January 1999.
6
<PAGE> 9
(2) Mr. Valiton ceased to be an executive officer of the Company in January
1999.
(3) Mr. Nolan ceased to be an executive officer of the Company in September
1997.
(4) Mr. Fischer ceased to be an executive officer of the Company in July 1997.
(5) Mr. Benoit ceased to be an executive officer of the Company in March 1996.
1993 EMPLOYEE STOCK OPTION PLAN
The Company maintains the Electronic Retailing Systems International, Inc.
1993 Employee Stock Option Plan (the "Employee Option Plan") previously adopted
by the Board of Directors, and approved by the stockholders, of its predecessor
corporation. Under the Employee Option Plan, pursuant to amendments approved by
the stockholders of the Company in June 1994, December 1996 and June 1998,
options to purchase up to 3,500,000 shares of the Company's Common Stock may be
granted to key employees of the Company and its subsidiaries, including
executive officers who are not directors. The Company is able to grant options
under the Employee Option Plan which are intended to be "incentive stock
options" within the meaning of Section 422 of the Code, provided that the option
exercise price is equal to the fair market value of the Common Stock on the date
of grant. Other options granted under the Employee Option Plan are nonqualified
options.
The Employee Option Plan is administered by the Board of Directors of the
Company, which determines the persons who are to receive options and the number
of shares subject to each option. As of April 1, 1999, options covering an
aggregate of 2,125,462 shares of Common Stock were outstanding pursuant to the
Employee Option Plan and options covering an aggregate of 484,133 shares had
been exercised.
CERTAIN AGREEMENTS WITH EXECUTIVE OFFICERS
The Company's severance arrangements with William W. Erdman, who ceased to
be Executive Vice President, Chief Operating Officer, of the Company in January
1998, provided for bi-weekly payments at the rate of Mr. Erdman's prior base
salary of $9,615, which continued for six months after his departure. Such
payments would have continued for an additional three months in the event Mr.
Erdman had not commenced other full-time employment in March 1998. Mr. Erdman's
severance arrangements also provided for exercisability through December 1998 of
certain options exercisable at the time of his departure, coverage under the
Company's benefit plans until the earlier of commencement of other full-time
employment or December 31, 1998, maintenance of confidentiality restrictions and
non-competition covenants effective for one year after departure.
The Company's severance arrangements with Michael Luetkemeyer, who ceased
to be Vice President, Chief Financial Officer, of the Company in May 1998,
provided for bi-weekly payments at the rate of Mr. Luetkemeyer's prior base
salary of $7,692, which continued for nine months after his departure. Mr.
Luetkemeyer's severance arrangements also provided for exercisability through
December 1998 of certain options exercisable at the time of his departure,
coverage under the Company's benefit plans until the earlier of commencement of
other full-time employment or the end of the period of his severance payments,
payment of relocation expenses, maintenance of confidentiality restrictions and
non-competition covenants effective for one year after departure.
7
<PAGE> 10
PERFORMANCE GRAPH
The following performance graph compares the total stockholder return on
the Company's Common Stock to the S&P 500 Index and to the NASDAQ Computer &
Data Processing Index for the past five years. The graph assumes that $100 was
invested in the Common Stock and each such Index on December 31, 1993 and that
all dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURNS
[LINE GRAPH]
<TABLE>
<CAPTION>
ELECTRONIC RETAILING NASDAQ COMPUTER &
SYSTEMS INTERNATIONAL, INC. S&P 500 INDEX DATA PROCESSING INDEX
--------------------------- ------------- ---------------------
<S> <C> <C> <C>
'1993' 100.00 100.00 100.00
'1994' 93.62 101.32 121.44
'1995' 42.55 139.40 184.92
'1996' 70.21 171.40 228.22
'1997' 74.47 228.59 280.37
'1998' 47.86 293.91 501.73
</TABLE>
Notwithstanding anything set forth in any of the Company's previous filings
under the Securities Act of 1933 or the Securities Exchange Act of 1934 which
might incorporate future filings, including this Proxy Statement, in whole or in
part, the preceding performance graph and the report that follows shall not be
deemed incorporated by reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors makes recommendations
to the Board of Directors regarding the compensation arrangements for executive
officers of the Company. The Compensation Committee's objectives in formulating
the Company's executive compensation program are: (i) to offer levels of
compensation which are competitive with those offered by other companies in
similar businesses; (ii) to compensate executives based on each executive's
level of responsibility and contribution to the Company's business goals; (iii)
to link compensation with the Company's financial performance; and (iv) to align
the interests of the Company's executives with the interests of the Company's
stockholders.
In the case of executive officers other than the Company's chief executive
officer, who is a founder and principal stockholder of the Company, the
Compensation Committee acts upon information provided to it by the Company's
chief executive officer or chief operating officer in response to the
requirements of the Company's operations. During the fiscal year ended December
31, 1998, a principal objective of the Compensation Committee remained the
construction of arrangements that would be effective in attracting and retaining
executive management so as to build an organization sufficient to support a
larger customer base and anticipated sales growth.
8
<PAGE> 11
In 1998, Michael Persky, who became an executive officer in the prior year,
was appointed as President -- Chief Operating Officer, and Paul Lavoie, who
currently holds the position of Vice President -- Retail Marketing, joined the
Company as an executive officer. The Company's efforts during 1998 were
successfully concluded in the early part of the current year with the
appointment of Jerry McAuliffe as Vice President -- Chief Financial Officer, of
Norman Tsang, as Vice President -- Marketing, and of Morty Bachar, as Vice
President, Engineering.
The compensation program for the Company's executives has consisted
primarily of base salary and stock options, and may in appropriate circumstances
extend also to cash bonuses. The Company's chief executive officer has not been
awarded any bonus amounts since the inception of the Company, and has not
participated in the Company's stock option program.
(i) Base Salary. The Compensation Committee determines executive base
salaries by level of responsibility, individual performance and Company
performance, as well as by the need to provide a competitive package that allows
the Company to retain key executives. After reviewing individual and Company
performance and available information on salaries at other companies of similar
size, the chief executive officer and chief operating officer make
recommendations to the Compensation Committee concerning the base salaries of
executive officers junior to them, respectively. The Compensation Committee
reviews and, with any changes it deems appropriate, approves these
recommendations for submission to the Board of Directors of the Company. Base
salary of the Company's chief executive officer during 1998 was approximately
$155,769 per annum. During each of the three most recent fiscal years, base
salary of the Company's chief executive officer has been adjusted downwards from
the prior year, consistent with the Company's objective of recruiting or
promoting additional executive management.
(ii) Cash Bonuses. For the three fiscal years ended December 31, 1998, in
view of the Company's continuing objective of conserving cash and developing its
business, the Company did not implement a general, cash bonus program, and
relied on its stock option program for additional discretionary incentives. The
Company may in the future award bonuses to key management personnel based on the
achievement of corporate goals recommended by senior executive management and
approved by the Board of Directors of the Company, individual objectives
established for executive management by the Compensation Committee in
discussions with the employee, and an evaluation of executive management by the
Compensation Committee.
(iii) Stock Options. The primary purpose of the Company's stock option
program is to align the interests of the Company's executive officers more
closely with the interests of the Company's stockholders by offering the
executives an opportunity to benefit from increases in the market price of the
Common Stock. The Company's stock option program provides long-term incentives
that have enabled the Company to attract and retain key employees by encouraging
their ownership of Common Stock. The Compensation Committee believes that its
stock option program provides opportunities to executives that are consistent
with the returns that are generated on behalf of the Company's stockholders.
The Company's Employee Option Plan is administered by the Board of
Directors, which, in the case of executive officers, acts upon recommendations
of the Compensation Committee. In order more effectively to provide incentives
to option recipients, in 1998 grants under the Employee Option Plan were
modified so that one-quarter thereof will typically become exercisable on the
first anniversary of grant, with one-quarter of the remainder becoming
exercisable on the second, third and fourth anniversaries of grant,
respectively. In addition, the Company will grant options to key employees with
exercisability dependent upon achievement by the Company of identified
milestones, as circumstances warrant.
Each of the Company's executive officers during 1998 (other than Mr.
Failing) held options granted under the Employee Option Plan. In selecting
individuals for options under the plan and determining the terms thereof, the
Company takes into consideration present and potential contributions to the
success of the Company. During 1998, the Company's policy was, generally, to
award options either in connection with new hires or upon promotion of an
employee to a position of enhanced responsibility. Approximately one-third of
the Common Stock covered by options granted in the last year were subject to
options granted to Michael Persky, the Company's President -- Chief Operating
Officer. Of these grants, the exercisability of options
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<PAGE> 12
covering 250,000 shares of Common Stock were subject to achievement by the
Company of specified performance standards.
(iv) Fiscal Year 1998 Repricing of Options. In June 1998, the Board of
Directors determined that the purposes of the stock option program were not
being adequately achieved. Although, in connection with the Company's initial
public offering of Common Stock in 1993, the Company granted ten-year options,
in replacement of its prior existing performance incentive plan, exercisable at
a price of $.01 per share, the Company has since, typically, granted options
with an exercise price equal to the fair market value of the Common Stock at the
date of grant. In June 1998, the Board of Directors determined that, because
downward trends in the market price of the Common Stock had left the exercise
price of more recently granted options at a level substantially above the
current fair market value, it would be in the best interests of the Company to
permit the surrender by employees of existing options upon issuance of new
options with an exercise price at current market value and a different exercise
schedule. Accordingly, employees surrendered options covering an aggregate of
508,863 shares of Common Stock in exchange for new options exercisable at $3.50
per share (the closing price per share of the Common Stock on the Nasdaq Stock
Market on the date of grant), such options to become exercisable with respect to
one-quarter of the shares covered thereby on the first anniversary of grant and
annually thereafter with respect to an additional one-quarter of the grant.
As part of the foregoing opportunity, Mr. Persky surrendered options
granted to him in 1997 to purchase 60,000 shares of Common Stock, with an
exercise price of $4.875 per share, in exchange for options to purchase the same
number of shares, and Lester Briney, another executive officer of the Company,
surrendered two options granted to him in 1997, each to purchase 50,000 shares
of Common Stock at exercise prices per share of $6.00 and $6.1875, respectively,
in exchange for options to purchase 100,000 shares of Common Stock. Each of the
replacement options issued to Messrs. Persky and Briney are exercisable at a
price of $3.50 per share and become exercisable in accordance with the modified
schedule provided to employees generally.
------------------------
Section 162(m) ("Section 162") of the Code generally limits federal income
tax deductions paid after 1993 to the chief executive officer and to the four
other most highly compensated officers of the Company to a total of $1 million
per year, but contains an exception for performance based compensation that
satisfies certain conditions. The Company has not adopted an absolute policy
regarding Section 162. In making compensation decisions, the Company will
consider the net cost of compensation to it and whether it is practicable and
consistent with other compensation objectives to qualify the Company's incentive
compensation under the applicable exemption of Section 162. The Company
anticipates that deductibility of compensation payments will be one among a
number of factors used in ascertaining appropriate levels or modes of
compensation, and that the Company will make its compensation decision based
upon an overall determination of what it believes to be in the best interests of
its stockholders.
Compensation Committee
Norton Garfinkle
Paul A. Biddelman
Donald E. Zilkha
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1998, the members of the Company's
Compensation Committee were Norton Garfinkle, Paul A. Biddelman and Donald E.
Zilkha.
During the year ended December 31, 1998, Oxford Management Corporation, a
company controlled by Mr. Garfinkle, was reimbursed an aggregate amount of
$97,500 for services rendered by Mr. Garfinkle and $18,600 in reimbursement of
other expenses. The Company's continuing arrangements with Oxford, which are
10
<PAGE> 13
terminable at any time by the Company or Oxford, provide for payments in the
amount per month of $7,500 for services rendered by Mr. Garfinkle.
Holders of shares of Common Stock obtained upon conversion of the Company's
previously outstanding Series A Cumulative Convertible Preferred Stock, $1.00
par value (the "Series A Preferred Stock"), remain entitled to certain demand
and incidental registration rights which, in the case of such demand rights,
obligate the Company to register such shares, on two occasions, provided that
the holders of at least 500,000 shares notify the Company that they intend to
offer for sale in the aggregate at least 100,000 shares of Common Stock. Such
holders include Garfinkle Limited Partnership II (an affiliate of Mr.
Garfinkle), an affiliate of Hanseatic Corporation (in which Mr. Biddelman is an
officer), and Mr. Zilkha.
Under agreements entered into by the Company in 1993 with the limited
partners of a partnership affiliated with the Company's predecessor corporation
(including Mr. Zilkha and Hanseatic Corporation's predecessor-in-interest), such
partners hold certain demand and incidental registration rights and co-sale
rights. In addition, the former stockholders of the Company's predecessor
corporation, including Mr. Garfinkle and Bruce F. Failing, Jr., Vice Chairman of
the Board and Chief Executive Officer and a director of the Company, and their
respective affiliates and related family trusts, became entitled to certain
demand and incidental registration rights with respect to shares of Common Stock
held by them upon the Company's acquisition of its predecessor corporation,
which, in the case of such demand registration rights, operate pursuant to the
standards applicable to the shares obtained upon conversion of Series A
Preferred Stock. Garfinkle Limited Partnership II and Messrs. Failing and Zilkha
also hold certain incidental registration rights with respect to shares of
Common Stock purchased by them in the Company's 1996 private placement.
INFORMATION CONCERNING CERTAIN STOCKHOLDERS
The stockholders (including any "group" as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934) who, to the knowledge of the
Board of Directors of the Company, owned beneficially more than 5% of any class
of the outstanding voting securities of the Company as of April 1, 1999 and all
directors and executive officers as a group, and their respective stockholdings
as of such date (according to information furnished by them to the Company), are
set forth in the following table:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
- ---------------- --------------------- --------
<S> <C> <C>
Norton Garfinkle............................................ 7,890,758(3) 37.1%
133 East 62nd Street
New York, NY 10021(2)
Bruce F. Failing, Jr........................................ 3,145,637(4) 14.8
230 Round Hill Road
Greenwich, CT 06831(2)
Fidelity International Limited.............................. 2,099,000(5) 9.9
Pembroke Hall
42 Crow Lane
Hamilton, Bermuda
Connecticut Development Authority........................... 1,508,785(6) 7.1
845 Brook Street
Rocky Hill, CT 06067
Directors and executive officers as a group (thirteen
persons).................................................. 12,374,417(7) 57.7
</TABLE>
- ---------------
(1) Except as otherwise indicated, as of April 1, 1999 all of such shares are
owned with sole voting and investment power.
(2) Such stockholders are party to a stockholders agreement among Norton
Garfinkle, Bruce F. Failing, Jr., certain family trusts and partnerships,
and Elizabeth Z. Failing, as described below.
(3) Includes 600,000 shares held by Garfinkle Limited Partnership I and
6,489,970.5 shares held by Garfinkle Limited Partnership II, both Delaware
limited partnerships and with respect to each of which
11
<PAGE> 14
G.F. Management Corp. (all of the shares of which are held by Norton
Garfinkle) acts as sole general partner.
(4) Includes 1,318,489 shares beneficially owned by a trust established for the
benefit of Mr. Failing's children, 168,318 shares beneficially owned by
Elizabeth Z. Failing, Mr. Failing's sister, and 20,000 shares beneficially
owned jointly by Mr. Failing and his wife Leigh Q. Failing.
(5) In a Statement on Schedule 13D filed with the Securities and Exchange
Commission by Fidelity International Limited ("FIL"), FIL has reported that
it beneficially owns such shares as investment adviser or the parent of the
investment adviser to a number of non-U.S. investment companies or
investment trusts.
(6) Represents (i) 699,724 shares issuable upon exercise of the Company's
warrants exercisable at April 1, 1999 and (ii) 809,061 shares issuable at
such date upon conversion of the Company's convertible promissory note in
the principal amount of $5,000,000. See "Other Information Concerning
Directors, Officers and Stockholders" below.
(7) Includes 286,250 shares issuable upon exercise of stock options granted by
the Company exercisable within 60 days of April 1, 1999.
As of April 1, 1999, no executive officer of the Company named in the
Summary Compensation Table under "Executive Compensation" above (according to
information furnished by them to the Company) owned beneficially any shares of
Common Stock, except for Bruce F. Failing, Jr., a nominee for election as
director at the Meeting, and except as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
- ---------------- --------------------- --------
<S> <C> <C>
Michael B. Persky........................................ 88,000(2) (3)
Michael Valiton.......................................... 150,000(4) (3)
</TABLE>
- ---------------
(1) Except as otherwise indicated, as of April 1, 1999 all of such shares are
owned with sole voting and investment power.
(2) Includes 85,000 shares issuable upon exercise of stock options granted by
the Company exercisable within 60 days of April 1, 1999.
(3) Less than one percent.
(4) Represents shares issuable upon exercise of stock options granted by the
Company exercisable within 60 days of April 1, 1999.
Messrs. Garfinkle and Failing, together with certain family trusts and
partnerships, and Mr. Failing's sister (each, together with his related parties,
a "Stockholder Group"), are parties to an agreement dated March 1993, as amended
(the "Restated Stockholder Agreement"), under which: (i) both Stockholder Groups
have agreed that, through the year 2003, they will use their best efforts to
provide that the Board of Directors of the Company will consist of not more than
seven directors, six of whom (or such lesser number equivalent to the then
current number of directors) will be designated by Mr. Garfinkle and Mr. Failing
in proportion to the respective beneficial holdings of shares of Common Stock of
the Garfinkle Stockholder Group and the Failing Stockholder Group, (ii) except
for sales effected pursuant to Rule 144 and transfers to affiliates, family
members or related trusts, no such Stockholder Group may transfer any shares of
Common Stock to any third party without first offering such shares to the other
Stockholder Group at the same price as offered by such third party, (iii)
through the year 2003, in the event a Stockholder Group proposes to transfer
shares of Common Stock to a third party in a transaction pursuant to which
control of the Company would change, the other Stockholder Group will have the
right, on the same terms, to participate in such transaction, and (iv) through
the year 2003, Mr. Garfinkle has the option to acquire at fair market value all
shares held by the Failing Stockholder Group upon the death or incapacity of Mr.
Failing, which option may be assigned to the Company, subject to the Company's
acceptance of such option. Such arrangements terminate in the event either
Stockholder Group owns less than ten percent of the outstanding Common Stock, or
if Messrs. Garfinkle and Failing are unable to elect at least a majority of the
Board of Directors of the Company.
12
<PAGE> 15
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of copies of reports received by it pursuant to
Section 16(a) of the Securities Exchange Act of 1934, and the written
representations of its directors and officers, and holders of more than ten
percent of any registered class of the Company's equity securities, the Company
believes that, during 1998 all filing requirements applicable to its directors,
officers and ten percent holders under said section were satisfied, except that
Michael B. Persky, President of the Company, on his timely filed Form 5 for 1998
reported two transactions involving the purchase of an aggregate of 1,000 shares
of Common Stock of the Company during such year.
OTHER INFORMATION CONCERNING DIRECTORS, OFFICERS AND STOCKHOLDERS
At April 1, 1999, Norton Garfinkle, Chairman of the Board and a director of
the Company, together with two affiliated limited partnerships, beneficially
owned approximately 37.1% of the outstanding Common Stock of the Company, and
Bruce F. Failing, Jr., Vice Chairman of the Board and Chief Executive Officer
and a director of the Company, together with a trust established for the benefit
of his children, beneficially owned approximately 14.8% of the outstanding
Common Stock of the Company. See "Compensation Committee Interlocks and Insider
Participation" above for information concerning certain demand and incidental
registration rights relating to the Company's Common Stock held by Messrs.
Garfinkle and Failing, and Donald E. Zilkha, a director of the Company, and Paul
A. Biddelman, a director who will not continue in office after the Meeting, or
their affiliates, and certain reimbursements by the Company to a company
controlled by Mr. Garfinkle.
During the year ended December 31, 1998, as a result of the advances by the
Connecticut Development Authority (the "CDA") under the Company's convertible
note (the "CDA Note"), and the exercisability of the Company's warrant (the "CDA
Warrant") held by the CDA, the CDA was the beneficial owner of in excess of 5%
of the outstanding Common Stock. At April 1, 1999, the Company was indebted
under the CDA Note in the aggregate principal amount of $5,000,000. All such
amounts are repayable in August 1999, accrue interest, payable monthly, at a
rate of 7.4% per annum (of which $401,000 was paid during the year ended
December 31, 1998) and are secured by the assets of the Company. Such amounts
are convertible into shares of Common Stock, at an adjusted conversion price
calculated at $3.00 plus the average market price of the Common Stock during the
twelve months prior to conversion. The CDA Warrant is exercisable through August
1999 with respect to 699,724 shares of Common Stock (as adjusted through April
1, 1999), at an adjusted price calculated at $2.58 plus the average market price
of the Common Stock during the twelve months prior to exercise.
The Company believes that the terms of the foregoing transactions between
the Company and its affiliates were no less favorable to the Company than it
could have obtained from unaffiliated third parties. The Company will continue
through August 1999, to remain indebted to the CDA in accordance with its
existing arrangements. As a matter of policy, all future transactions between
the Company and its affiliates will be on terms no less favorable to the Company
than those available with unaffiliated third parties.
II. RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
accountants, as the auditors of the Company for the year ending December 31,
1999. Such firm has examined the consolidated financial statements of the
Company for the year ended December 31, 1998. The Board of Directors considers
PricewaterhouseCoopers LLP to be eminently qualified.
One or more representatives of PricewaterhouseCoopers LLP will attend the
Meeting, will have an opportunity to make a statement and will respond to
appropriate questions from stockholders.
13
<PAGE> 16
V. OTHER MATTERS
The Board of Directors of the Company does not know of any other matters
which may be brought before the Meeting. However, if any such other matters are
properly presented for action, it is the intention of the persons named in the
accompanying form of proxy to vote the shares represented thereby in accordance
with their judgment on such matters.
VI. MISCELLANEOUS
If the accompanying form of proxy is executed and returned, the shares
represented thereby will be voted in accordance with the terms of the proxy,
unless the proxy is revoked. If no directions are indicated in such proxy, the
shares represented thereby will be voted, in the election of the directors, in
favor of the nominees proposed by the Board of Directors. Any proxy may be
revoked at any time before it is exercised by giving written notice to the
Secretary of the Company prior to the actual vote at the Meeting. The casting of
a later dated ballot or proxy at the Meeting by a stockholder who may
theretofore have given a proxy will have the effect of revoking the initial
proxy.
All costs relating to the solicitation of proxies will be borne by the
Company. Proxies may be solicited by officers, directors and regular employees
of the Company and its subsidiaries personally, by mail or by telephone or
telegraph, and the Company may pay brokers and other persons holding shares of
stock in their names or those of their nominees for the reasonable expenses in
sending soliciting material to their principals.
It is important that proxies be returned promptly. Stockholders who do not
expect to attend the Meeting in person are urged to mark, sign and date the
accompanying form of proxy and mail it in the enclosed return envelope, which
requires no postage if mailed in the United States, so that their votes can be
recorded.
The Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998 (the "Annual Report") accompanies this Proxy Statement. The Annual
Report is not to be deemed part of this Proxy Statement.
STOCKHOLDER PROPOSALS
In the event that a stockholder fails to notify the Company by March 30,
2000 of an intent to be present at the Company's 2000 annual meeting of
stockholders in order to present a proposal for a vote, the Company will have
the right to exercise its discretionary authority to vote against the proposal,
if presented, without including any information about the proposal in its proxy
materials. The foregoing requirements are separate from and in addition to the
requirements of the Securities and Exchange Commission that a stockholder must
meet to have a proposal included in the Company's Proxy Statement. Stockholder
proposals intended to be presented at the 2000 annual meeting of stockholders of
the Company must be received by the Company by January 15, 2000 in order to be
considered for inclusion in the Company's Proxy Statement relating to such
meeting.
NORTON GARFINKLE, Chairman of
the Board and Secretary
Norwalk, Connecticut
May 14, 1999
14
<PAGE> 17
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby (1) acknowledges receipt of the notice of the Annual
Meeting of Stockholders of Electronic Retailing Systems International, Inc. (the
"Company") to be held at the offices of Zilkha & Company, 767 Fifth Avenue-46th
Floor, New York, New York on Thursday, June 10, 1999 at 10:00 A.M., local time,
and the Proxy Statement in connection therewith and (2) appoints Norton
Garfinkle and Bruce F. Failing, Jr., and each of them, his proxies with full
power of substitution, for and in the name, place and stead of the undersigned,
to vote and act with respect to all of the shares of Common Stock of the Company
standing in the name of the undersigned or with respect to which the undersigned
is entitled to vote and act, at the meeting and at any adjournment thereof, and
the undersigned directs that this proxy be voted as specified on the reverse
side.
If more than one of the proxies named above shall be present in person or by
substitute at the meeting or any adjournment thereof, all of the proxies so
present and voting, either in person or by substitute, shall exercise all of the
proxies hereby given.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all that
the proxies so present and voting, their substitutes or any of them, may
lawfully do by virtue hereof.
(Continued, and to be signed on reverse side)
SEE REVERSE SIDE
<PAGE> 18
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
FOR WITHHOLD
all nominees listed at AUTHORITY
right (except as marked to vote for all
to the contrary below). nominees listed at right.
(a) Election of Directors: / / / /
NOMINEES: David Diamond
Bruce F. Failing, Jr.
Norton Garfinkle
Sheldon Weinig
Donald E. Zilkha
(INSTRUCTIONS: To withhold authority to vote for any individual nominee as a
Director, write that nominee's name in the space provided
below.)
(b) In the discretion of the proxies on any other matter that may properly come
before the meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE MATTERS SPECIFICALLY REFERRED TO HEREON.
PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN THE ENCLOSED ENVELOPE. NO POSTAGE
IS REQUIRED.
Signature:_____________________________________________ Dated: _______________
Signature:_____________________________________________ Dated: _______________
NOTE: Please date this proxy and sign your name exactly as it appears herein.
Where there is more than one owner, each should sign. When signing as an
attorney, administrator, executor, guardian or trustee, please add your
title as such. If executed by a corporation, the proxy should be signed by
a duly authorized officer.
