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:
[ ] 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 Section 240.14a-11(c) or Section 240.14a-12
DISC GRAPHICS, INC.
(Name of Registrant as Specified in its Charter)
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:
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Disc Graphics, Inc.
10 Gilpin Avenue
Hauppauge, New York 11788
May 19, 2000
To Our Stockholders:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of Disc Graphics, Inc. (the "Annual Meeting"), to be held at the Watermill, 711
Route 347, Smithtown, New York, on Monday, June 19, 2000 at 9:30 a.m. Your Board
of Directors looks forward to greeting personally those stockholders able to be
present.
At the Annual Meeting, you will be asked to elect two Class III Directors
and to approve the appointment of KPMG LLP as the Company's independent auditors
for its 2000 fiscal year. These matters are described in detail in the
accompanying Notice of 2000 Annual Meeting of Stockholders and Proxy Statement.
A proxy, as well as a copy of the Company's 1999 Annual Report, is included
along with the Proxy Statement. These materials are being sent to stockholders
on or about May 19, 2000.
It is important that your shares be represented at the Annual Meeting,
regardless of the number of shares you may own, and whether or not you plan to
attend. Accordingly, please take a moment now to complete, sign, date and mail
the enclosed proxy.
We appreciate your cooperation, and look forward to seeing you at the
meeting.
Sincerely,
Donald Sinkin
Chairman, President and Chief Executive Officer
<PAGE>
DISC GRAPHICS, INC.
10 Gilpin Avenue
Hauppauge, New York 11788
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
To Our Stockholders:
NOTICE IS HEREBY GIVEN that the 2000 Annual Meeting of Stockholders of Disc
Graphics, Inc. ("Disc Graphics" or the "Company") will be held at the Watermill,
711 Route 347, Smithtown, New York, on Monday, June 19, 2000 at 9:30 a.m. for
the following purposes:
1. To elect two Class III directors to serve until the 2003 Annual
Meeting of Stockholders and until their successors have been
elected and qualified or until their earlier resignation,
retirement, disqualification, removal or death. The Board of
Directors has nominated Stephen Frey and John Rebecchi for
election as Class III directors.
2. To vote on a proposal to ratify the selection of KPMG LLP as the
Company's independent auditors for the 2000 fiscal year.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on May 15, 2000 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
By Order of the Board of Directors
Stephen Frey
Secretary
Hauppauge, New York
May 19, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
DISC GRAPHICS, INC.
PROXY STATEMENT
May 19, 2000
The accompanying proxy is solicited on behalf of the Board of Directors of
Disc Graphics, Inc., a Delaware corporation ("Disc Graphics" or the "Company"),
for use at its 2000 Annual Meeting of Stockholders to be held at the Watermill,
711 Route 347, Smithtown, New York, on Monday, June 19, 2000 at 9:30 a.m. (the
"2000 Annual Meeting" or the "Meeting"). Only holders of record of the Company's
Common Stock, $0.01 par value per share (the "Common Stock") at the close of
business on May 15, 2000 (the "Record Date") will be entitled to vote. At the
close of business on that date, the Company had 5,548,761 shares of Common Stock
outstanding, of which 28,264 shares were held in treasury. Accordingly,
5,520,497 shares of Common Stock were outstanding and entitled to vote on the
Record Date. A majority of the outstanding Common Stock 2,760,249 shares) will
constitute a quorum for the transaction of business. This Proxy Statement and
the accompanying proxy were first mailed to stockholders on or about May 19,
2000. An Annual Report containing all information specified by Rule 14a-3 of the
rules of the Securities and Exchange Commission (the "SEC") was mailed to each
stockholder concurrently with a copy of this Proxy Statement.
TABLE OF CONTENTS
Page
Voting Rights................................................................ 1
Solicitation and Revocability of Proxies..................................... 2
Company Background........................................................... 2
Proposal No. 1............................................................... 2
Election of Class III Directors..................................... 2
Proposal No. 2................................................................ 6
Ratification of Selection of Independent Auditors.................... 6
Security Ownership of Certain Beneficial Owners and Management................ 6
Compensation of Executive Officers........................................... 10
Report of the Compensation Committee on Executive Compensation............... 14
Company Performance Graph.................................................... 16
Certain Relationships and Related Transactions............................... 17
Stockholder Proposals for 2001 Annual Meeting................................ 17
Other Business............................................................... 17
Annual Report on Form 10-K................................................... 18
ENCLOSURE: Disc Graphics, Inc. 1999 Annual Report
VOTING RIGHTS
Holders of Common Stock are entitled to one vote for each share held as of
the Record Date. Shares of Common Stock may not be voted cumulatively for the
election of directors. If the enclosed proxy is properly signed and returned,
the shares represented thereby will be voted. If voting by proxy with respect to
the election of directors, stockholders may vote in favor of all nominees,
withhold their votes as to all nominees or withhold their votes as to specific
nominees. With respect to Proposal No. 2 and any other proposals that the
stockholders may be asked to vote upon at the Annual Meeting, stockholders may
vote for the proposal, vote against the proposal or abstain from voting with
respect to the proposal. If the stockholder specifies in the proxy how the
shares are to be voted, they will be voted as specified. If the stockholder does
not specify how the shares are to be voted, they will be voted for the Company's
nominees for election to the Board of Directors, and in favor of Proposal No 2.
Representatives of the Company will tabulate all votes cast. Abstentions will be
counted as present in determining whether a quorum exists, but will have the
same effect as a vote against a proposal (other than with respect to the
proposal relating to the election of directors). Shares held by nominees that
are present but not voted on a proposal because the nominees were not instructed
by the beneficial owner and did not have the discretionary voting power ("broker
non-votes") will be counted as present in determining whether a quorum exists,
but will be disregarded in determining whether a proposal has been approved. See
"Security Ownership of Certain Beneficial Owners and Management."
1
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SOLICITATION AND REVOCABILITY OF PROXIES
Proxies in the enclosed form are being solicited by the Company, and the
expenses of soliciting such proxies will be paid by the Company. Following the
original mailing of the proxies and other soliciting materials, the Company
and/or its agents may also solicit proxies by mail, telephone, telegraph,
facsimile or in person. The Company does not currently expect that it will
retain a proxy solicitation firm. Following the original mailing of the proxies
and other soliciting materials, the Company will request brokers, custodians,
nominees and other record holders of the Company's Common Stock to forward
copies of the proxy and other soliciting materials to persons for whom they hold
shares of Common Stock and to request authority for the exercise of proxies. In
such cases, the Company, upon the request of the record holders, will reimburse
such holders for their reasonable expenses.
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to the 2000 Annual Meeting, or at the Meeting
prior to the vote pursuant to the proxy. A proxy may be revoked by: (i) a notice
in writing delivered to the Secretary of the Company stating that the proxy is
revoked; (ii) a subsequent proxy executed by the person executing the prior
proxy and presented at the Meeting; or (iii) attendance at the Meeting and
voting in person.
COMPANY BACKGROUND
Disc Graphics, headquartered in Hauppauge, New York, is a diversified
manufacturer and printer of specialty paperboard packaging focused on the home
video, music, entertainment software, cosmetics, pharmaceutical and other
consumer markets. Products include: pre-recorded video sleeves, compact disc and
audio cassette packaging; folding cartons for entertainment software, food,
pharmaceuticals and cosmetics; posters, pressure sensitive labels and general
commercial printing. Customers include leading software, CD-ROM and video
distributors; vitamin, cosmetic and fragrance companies; major book publishers;
and many Fortune 500 companies. The Company operates in one business segment:
the manufacturing and printing of specialty paperboard packaging. Historically,
the Company has grown primarily through the development of new customers by
capitalizing on its superior service and response capabilities and increases in
orders from existing customers. In 1996, the Company acquired Pointille, Inc., a
packaging printer; in 1997, the Company acquired Benham Press, Inc., an Indiana
based commercial printing company (the "Benham Acquisition"); and in 1999, the
Company acquired the assets and certain liabilities of Contemporary Color
Graphics, Inc. ("CCG"), a New York based commercial printing company (the "CCG
Acquisition). The Company has since integrated each of their manufacturing
facilities and sales/marketing programs into Disc Graphics. The Company intends
to continue to grow by acquiring strategically located folding carton and
printing companies, expanding existing facilities to serve regional U.S.
markets, broadening the Company's product line and continuing ongoing internal
expansion.
The Company was formed as the result of a merger between RCL Capital Corp.,
a Delaware corporation ("RCL"), and a packaging company formerly known as Disc
Graphics, Inc., a New York corporation ("Old Disc"). RCL was incorporated in
1992 to serve as a vehicle to effect a business combination with an operating
business. On October 30, 1995, Old Disc merged with and into RCL, which was the
successor corporation (the "Merger"). In connection with the Merger, RCL changed
its name to Disc Graphics, Inc. References to "Disc Graphics" or the "Company"
include subsidiaries of Disc Graphics, and its predecessor, Old Disc, unless the
context indicates otherwise.
PROPOSAL NO. 1
ELECTION OF CLASS III DIRECTORS
Background
The number of directors comprising the Company's full Board of Directors is
six, divided into three classes, designated Class I, Class II and Class III. The
Class I directors (Seymour W. Zises and Mark L. Friedman) were elected at the
1999 Annual Meeting of Stockholders for three-year terms that will expire at the
2002 Annual Meeting of Stockholders. The Class II directors (Donald Sinkin and
Daniel A. Levinson) were elected at the 1998 Annual Meeting of Stockholders for
a three-year term that will expire at the 2001 Annual Meeting. The Class III
directors (Stephen Frey and John Rebecchi) were elected at the 1997 Annual
Meeting for three-year terms that will expire at the 2000 Annual Meeting. A
director may be removed from office before the expiration of his elected term,
with or without cause, at any meeting
2
called for such purpose, upon the approval of a majority of the holders of
shares entitled to vote in the election of directors.
The Company's current Class III directors, Stephen Frey and John Rebecchi,
have been nominated by the Board for reelection as the Class III directors.
Following the 2000 Annual Meeting, the Company will have two Class I directors,
two Class II directors and two Class III directors constituting the full Board.
Election of Class III Directors
At the 2000 Annual Meeting, stockholders will elect two Class III directors
each of whom will hold office until the 2003 Annual Meeting of Stockholders and
until his successor has been elected and qualified or until his earlier
resignation, retirement, disqualification, removal or death. The Class III
directors will be elected by a majority vote of the holders of Common Stock
represented and voting at the Meeting. Shares represented by the accompanying
proxy will be voted for the election of the nominee recommended by the Company's
management, unless the proxy is marked in such a manner as to withhold authority
to so vote. If the nominee for any reason is unable to serve or for good cause
will not serve, the proxies may be voted for such substitute nominee as the
proxy holder may determine. The Company is not aware that either of its nominees
will be unable to, or for good cause will not, serve as a director.
Director/Nominee
Certain information concerning the Company's incumbent directors, as well
as the nominees for election as Class III directors, is set forth below.
Name of Director Age Principal Occupation Director Since
- ---------------- --- -------------------- --------------
Class I Directors
Seymour W. Zises (1)(4) 47 President and Chief Executive 1992
Officer, Family Management
Corporation and Family
Management Securities, LLC
Mark L. Friedman (2)(3) 52 Managing Director, Millennium Capital 1996
Group, Ltd.
Class II Directors:
Donald Sinkin (1)(4) 52 Chairman, Chief Executive Officer 1986
and President of the Company
Daniel A. Levinson
(2)(3)(4) 39 Founder, Colt Capital Group 1991
Class III Directors/Nominees:
Stephen Frey (1) 46 Senior Vice President of Operations 1986
and Secretary of the Company
John Rebecchi (2) 45 Senior Vice President of Sales 1995
and Marketing of the Company
- ----------------------------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Incentive Stock Option Committee
(4) Member of Compensation Committee
<PAGE>
3
Class I Directors
Seymour W. Zises has been a director of the Company since August 1992, and
was a Vice President and Treasurer from August 1992 until October 1995. He is
currently President and Chief Executive Officer of Family Management
Corporation, a registered investment advisory firm in New York City, which he
established in 1989. Additionally, Mr. Zises is the President and Chief
Executive Officer of Family Management Securities, LLC, a registered
broker-dealer.
Mark L. Friedman has been a director of the Company since April 1996 and
was a Vice President, Secretary and director of RCL from August 1992 until
October 1995. He has been a Managing Director of Millennium Capital Group, Ltd.,
an investment and merchant banking firm, since April 1999. From February 1995 to
April 1999 he was counsel to the law firm of Baer Marks & Upham LLP. From
January 1993 through January 1995 he was counsel to the law firm of Proskauer
Rose LLP. From 1982 through January 1993 he was (individually or through a
professional corporation) a partner of the law firm of Shea & Gould. From July
1996 to July 1997, Mr. Friedman served as corporate secretary of a private
company which in July 1997 filed a voluntary petition under Chapter 11 of the
United States Bankruptcy Code.
Class II Directors
Donald Sinkin has been Chairman of the Board, President and Chief Executive
Officer of the Company and Old Disc since 1986. He also serves as a director and
the President and Chief Executive Officer of Disc Graphics Label Group, Inc. and
Four Seasons Litho, Inc. and is a director and the President and Chief Executive
Officer of Cosmetic Sampling Technologies, Inc. These entities are subsidiaries
of the Company. Mr. Sinkin joined the Company as Pre-Press Supervisor in 1977
and became Plant Manager in 1982. Prior to joining the Company, he helped found
and manage Rutgers Packaging, a division of Queens Group, Inc. d/b/a Queens
Litho. Mr. Sinkin also serves as a director and the President of Horizon
Equities, Inc., a New York corporation controlled by him ("Horizon Equities"),
and is the managing member of Spring Hollow Holding, LLC, a New York limited
liability company.
Daniel A. Levinson has been a director of the Company and Old Disc since
October 1991. He is also a director of two of the Company's subsidiaries, Disc
Graphics Label Group, Inc. and Cosmetic Sampling Technologies, Inc. In 1998, Mr.
Levinson founded Colt Capital Group, a niche provider of investment capital,
resources and support to small and mid- size growing companies. Between 1988 and
1998, Mr. Levinson was a group executive of Holding Capital Management Corp., a
stockholder of the Company engaging in activities similar to those of Colt
Capital Group. See "Security Ownership of Certain Beneficial Owners and
Management," below.
Class III Directors/Nominees
Stephen Frey has been the Senior Vice President of Operations of the
Company since August 1998, the Secretary of the Company and Old Disc since 1988,
and a director of the Company and Old Disc since 1986. Between 1986 and August
1998, Mr. Frey was the Vice President of Operations of the Company and Old Disc.
Mr. Frey also serves as a director, Vice President and Secretary of Disc
Graphics Label Group, Inc., a director and the Vice President and Secretary of
Four Seasons Litho, Inc., and a director and the Vice President of Operations of
Cosmetic Sampling Technologies, Inc., each of which is a wholly-owned subsidiary
of the Company. Mr. Frey joined the Company in its Pre-Press Department in 1978,
became the Supervisor of that department in 1983, and established the Production
and Planning Department in 1985. Mr. Frey served as Chief Operating Officer from
1991 to 1995. Prior to joining the Company, Mr. Frey held various management
positions with Kordet Color Corporation and Terrace Litho. Mr. Frey also serves
on the Board of Directors of the Association of Graphic Communication, a trade
organization, and is a director and the Secretary of Horizon Equities and the
managing member of Stephen Ashley, LLC, a New York limited liability company.
4
<PAGE>
John Rebecchi has been the Senior Vice President of Sales and Marketing of
the Company since August 1998 and a director since October 1995. Between October
1995 and August 1998, Mr. Rebecchi was the Company's Vice President of Sales.
Between October 1995 and January 1996, he also served as the Company's Chief
Financial Officer. Between 1988 and October 1995, Mr. Rebecchi was Vice
President of Marketing and Chief Financial Officer of Old Disc. He also serves
as Vice President and a director of Disc Graphics Label Group, Inc.; Vice
President and a director of Four Seasons Litho, Inc.; and Vice President of
Sales and a director of Cosmetic Sampling Technologies, Inc., each of which is a
wholly-owned subsidiary of the Company. Mr. Rebecchi joined Old Disc in its
accounting department and in 1983 became the Controller of Old Disc. He took a
brief leave of absence between 1985 and 1988, when he rejoined Old Disc. He also
serves as a director and the Vice President and Treasurer of Horizon Equities,
the managing member of Tin Box Holding, LLC, a New York limited liability
company, and a director and the President of 92-37 Metro Corp., a New York
corporation formed for the purpose of acquiring real estate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ELECTION OF STEPHEN FREY AND JOHN REBECCHI AS
CLASS III DIRECTORS.
Board and Committee Meetings
During the year ended December 31, 1999, the Board of Directors met twice.
Each director who served on the Board during fiscal 1999 attended at least 75%
of all Board meetings and meetings of Board committees on which he served,
during the periods in fiscal 1999 that he served, except for Daniel Levinson.
Standing committees of the Board include an Executive Committee, an Audit
Committee, a Compensation Committee and an Incentive Stock Option Committee. The
Board does not have a nominating committee or a committee performing a similar
function. See "Security Ownership of Certain Beneficial Owners and Management."
Messrs. Sinkin, Frey and Zises are currently the members of the Executive
Committee. The Executive Committee is generally authorized to exercise the
powers and authority of the Board to the extent provided in the resolutions of
the Board designating the Committee, except for issuing stock; declaring
dividends; amending the Company's Certificate of Incorporation or By-Laws; and
taking actions relating to any merger, consolidation, sale, lease or exchange of
all or substantially all of the Company's assets, or any dissolution of the
Company. The Executive Committee did not meet during fiscal 1999.
Messrs. Rebecchi, Friedman and Levinson are currently the members of the
Audit Committee. The Audit Committee reviews and evaluates the results and scope
of the audit and other services provided by the Company's independent
accountants, as well as the Company's accounting principles and system of
internal accounting controls. The Audit Committee met twice during fiscal 1999.
Messrs. Sinkin, Levinson and Zises are currently the members of the
Compensation Committee. The Compensation Committee reviews management
recommendations regarding compensation of employees above a certain salary level
and compensation of the Company's Directors, except for compensation under the
1995 Incentive Stock Option Plan, which is administered by the Incentive Stock
Option Committee. The Compensation Committee met once during fiscal 1999.
Messrs. Friedman and Levinson are currently the members of the Incentive
Stock Option Committee. The Incentive Stock Option Committee reviews and
approves of recommendations concerning incentive stock options and awards stock
options under the 1995 Incentive Stock Option Plan. See "Security Ownership of
Certain Beneficial Owners and Management." The Incentive Stock Option Committee
met once during fiscal 1999.
Directors' Compensation
Directors who are officers of the Company receive no additional
compensation for serving on the Board or any Board committee. For 1999, the
Company paid an annual fee to non-employee directors of $2,500 each for service
on the Board, plus $1,000 for each Board and committee meeting attended.
Accordingly, the Company paid $7,500 to Mr. Friedman and $5,500 to Mr. Zises in
1999. Pursuant to the 1995 Incentive Stock Option Plan, the Company has also
5
<PAGE>
agreed to grant annually to each member of the Incentive Stock Option Committee
for service on that Committee an option to purchase 1,000 shares of Common Stock
on January 1 of each year. This arrangement will terminate in 2005, in
accordance with the 1995 Incentive Stock Option Plan. On January 1, 1999, the
Company granted to Mr. Friedman and Mr. Levinson an option to purchase 1,000
shares of Common Stock at an exercise price of $4.438 per share, which was the
fair market value of the Common Stock at the time of grant. These options vest
on January 1, 2001 and will expire on January 1, 2009.
Compensation Committee Interlocks and Insider Participation
in Compensation Decisions
Each of Messrs. Sinkin, Frey and Rebecchi served as an executive officer
and director of the Company, and also served as an executive officer and
director of Horizon Equities, Inc., a New York corporation. Mr. Sinkin serves on
the Company's Compensation Committee.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Company has selected KPMG LLP ("KPMG") as its independent accountant to
perform the audit of the Company's financial statements for fiscal 2000, and the
stockholders are being asked to ratify this selection. KPMG and its predecessors
have audited the financial statements of the Company and its predecessor, Old
Disc, since 1991. The Company expects that representatives of KPMG will be
present at the Meeting, will be given an opportunity to make a statement at the
Meeting if they desire to do so, and will be available to respond to appropriate
questions. The affirmative vote of the holders of a majority of the Company's
outstanding shares of Common Stock represented and voting at the Meeting is
required for approval of this Proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
---
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
General
As of the date of this Proxy Statement, the Company's authorized capital
stock consists of Common Stock, and Preferred Stock, par value $.01 per share
(the "Preferred Stock"). On the Record Date, there were 5,548,761 shares of
Common Stock outstanding, of which 28,264 shares were held in treasury, and no
shares of Preferred Stock outstanding. The holders of Common Stock are entitled
to elect all members of the Board. As of the Record Date, there were 46 record
holders of Common Stock (reflecting approximately 770 beneficial owners), and no
record holders of Preferred Stock.
The Company had outstanding as of March 1, 2000, 1,000,000 Common Stock
Purchase Warrants, 250,000 of which are exercisable to purchase one share of
Common Stock at $7.00 per share, 250,000 of which are exercisable to purchase
one share of Common Stock at $8.00 per share, 250,000 of which are exercisable
to purchase one share of Common Stock at $9.00 per share, and 250,000 of which
are exercisable to purchase one share of Common Stock at $10.00 per share (the
"Merger Warrants"). The outstanding Merger Warrants will expire on November 9,
2002.
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information regarding the beneficial
ownership of the Company's voting securities by each person known by the Company
to be the beneficial owner of more than 5% of the Company's voting securities as
of the Record Date. Unless otherwise indicated, the persons named in the table
below have sole voting and investment power with respect to all shares shown as
beneficially owned by them. The inclusion of any shares for any stockholder in
the table below shall not be deemed an admission that such stockholder is, for
any purpose, the beneficial owner of such shares.
6
<PAGE>
Amount and
Nature of
Name and Address of Beneficial Percentage
Title of Class Beneficial Owner Ownership of Class
- -------------- ---------------- --------- --------
Common Stock, Donald Sinkin 1,720,266(1) 29.2%
$0.01 par value
Stephen Frey 650,979(2) 11.5%
John Rebecchi 616,186(3) 10.9%
Holding Capital 395,643(4) 7.0%
Management Corp.
Allen & Company
Incorporated 350,827(5) 6.3%
- ---------------------------
(1) Donald Sinkin is Chairman of the Board, President and Chief Executive
Officer of the Company. His address is 10 Gilpin Avenue, Hauppauge, New
York 11788. The number of shares of Common Stock shown in the table as
beneficially owned by Mr. Sinkin includes the following: 1,339,698 shares
owned directly by Mr. Sinkin and indirectly by his spouse and a limited
liability company controlled by him; and Merger Warrants to purchase
380,368 shares of Common Stock owned directly by Mr. Sinkin and indirectly
by the same limited liability company. Of the total number of shares
reported as beneficially owned, Mr. Sinkin shares investment power with
respect to 165,601 shares.
(2) Stephen Frey is a director and the Senior Vice President of Operations and
Secretary of the Company. His address is 10 Gilpin Avenue, Hauppauge, New
York 11788. The number of shares of Common Stock shown in the table as
beneficially owned by Mr. Frey includes 506,387 shares owned directly by
Mr. Frey and indirectly by a limited liability company controlled by him;
and Merger Warrants to purchase 144,592 shares of Common Stock owned
directly by Mr. Frey and indirectly by the same limited liability company.
Of the total number of shares reported as beneficially owned, Mr. Frey
shares investment power with respect to 158,044 shares.
(3) John Rebecchi is a director and the Senior Vice President of Sales and
Marketing of the Company. His address is 10 Gilpin Avenue, Hauppauge, New
York 11788. The number of shares of Common Stock shown in the table as
beneficially owned by Mr. Rebecchi includes 479,322 shares owned directly
by Mr. Rebecchi and indirectly by a limited liability controlled by him;
and Merger Warrants to purchase 136,864 shares of Common Stock owned
directly by Mr. Rebecchi and indirectly by the same limited liability
company. Of the total number of shares reported as beneficially owned, Mr.
Rebecchi shares investment power with respect to 158,044 shares.
(4) Holding Capital Management Corp. is a Connecticut corporation ("Holding
Capital"). Its address is 685 Fifth Avenue, New York, New York 10022. The
number of shares of Common Stock shown in the table as beneficially owned
by Holding Capital includes 292,560 shares of Common Stock and Merger
Warrants to purchase an aggregate of 103,083 shares of Common Stock. The
information regarding ownership of Common Stock by Holding Capital was
furnished to the Company by Holding Capital.
(5) Allen & Company Incorporated is a New York corporation ("Allen & Co."). Its
address is 711 Fifth Avenue, New York, New York 10022. The number of shares
of Common Stock shown in the table as beneficially owned by Allen & Co.
includes the following: 264,915 shares of Common Stock and Merger Warrants
to purchase an additional 85,912 shares of Common Stock. Allen Holding
Inc., a Delaware corporation ("Allen Holding"), is an affiliate of Allen &
Co. that is deemed to own beneficially all of the shares reported on the
table above as owned by Allen & Co. The information regarding ownership of
7
<PAGE>
Common Stock by Allen & Co. and Allen Holding was contained in a Schedule
13G/A dated February 11, 2000 and filed with the SEC on February 14, 2000.
According to the Schedule 13G/A, Allen & Co. has sole voting and investment
power with respect to all shares reported as beneficially owned.
Security Ownership of Management
The following table sets forth certain information as to each class of
outstanding equity securities of the Company beneficially owned as of the Record
Date by: (i) each director and nominee; (ii) the Company's Chief Executive
Officer and the other four most highly compensated executive officers who were
officers as of December 31, 1999 (the "Named Executives"); and (iii) all current
directors and executive officers as a group. No executive officer or director of
the Company owns securities of any parent or subsidiary of the Company, except
as indicated in the footnotes to the table below. Unless otherwise indicated,
the persons named in the table below have sole voting and investment power with
respect to all shares shown as beneficially owned by them. The inclusion of any
shares for any stockholder in the table below shall not be deemed an admission
that such stockholder is, for any purpose, the beneficial owner of such shares.
An asterisk denotes beneficial ownership of less than 1% of the class of
securities indicated.
Amount and
Nature of
Name of Beneficial Percentage
Title of Class Beneficial Owner Ownership of Class
-------------- ---------------- --------- --------
Common Stock, Donald Sinkin 1,720,066(1) 29.2%
$0.01 par value
Stephen Frey 650,979(2) 11.5%
John Rebecchi 616,186(3) 10.9%
Daniel A. Levinson 262,856(4) 4.7%
Seymour W. Zises 176,722(5) 3.2%
Mark L. Friedman 168,920(6) 3.1%
Margaret M. Krumholz 91,870(7) 1.6%
Frank A. Bress 21,150(8) *
All directors and 3,708,749 58.2%
executive officers
as a group
- ---------------------------
(1) See Note (1) under "Security Ownership of Certain Beneficial Owners" table
above.
(2) See Note (2) under "Security Ownership of Certain Beneficial Owners" table
above.
(3) See Note (3) under "Security Ownership of Certain Beneficial Owners" table
above.
(4) Includes 200,584 shares owned directly by Mr. Levinson and indirectly by a
family trust of which he is the trustee; Merger Warrants to purchase 57,272
shares of Common Stock owned directly by Mr. Levinson and indirectly by
such trust; and options granted under the Company's 1995 Incentive Stock
Option Plan to purchase 5,000 shares of Common Stock, of which 2,000 such
options were exercisable as of the Record Date. Of the total number shares
reported as beneficially owned, Mr. Levinson shares investment power with
respect to 128,928 shares.
8
<PAGE>
(5) Includes 155,722 shares owned directly by Mr. Zises and indirectly by a
limited liability company controlled by him; and options granted under the
1995 Incentive Stock Option Plan to purchase 25,000 shares of Common Stock,
all of which options were exercisable as of the Record Date. Of the total
number shares reported as beneficially owned, Mr. Zises shares voting and
investment power with respect to 28,827 shares.
(6) Includes shares held in a joint account with Mr. Friedman's wife; and
options to purchase 29,000 shares, of which options to purchase 26,000
shares were exercisable as of the Record Date. Mr. Friedman shares voting
power pursuant to a voting agreement with respect to all shares reported in
the table above.
(7) Includes 16,870 shares owned directly by Ms. Krumholz and indirectly by
members of her immediate family; and options to purchase 75,000 shares
pursuant to the 1995 Incentive Stock Option Plan, of which options to
purchase 25,000 shares were exercisable as of the Record Date. Ms. Krumholz
has sole voting and investment power with respect to 51,270 shares reported
above.
(8) This number represents 5,150 shares owned directly by Mr. Bress and
indirectly by members of his immediate family; and options granted under
the Company's 1995 Incentive Stock Option Plan to purchase 16,000 shares,
none of which options were exercisable as of the Record Date.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors, and certain stockholders owning
more than 10% of any class of the Company's equity securities ("10%
Stockholders") to file reports with the SEC indicating their ownership of
securities of the Company and any changes in such ownership. Executive officers,
directors and 10% Stockholders are required to provide copies of these reports
to the Company. Based on a review of copies of all such reports filed with
respect to fiscal 1999 and furnished to the Company, as well as certain written
representations provided to the Company by executive officers, directors and
certain 10% Stockholders, all such reports required to be filed with respect to
fiscal 1999 have been filed in a timely manner, except that a transaction made
by Seymour Zises, a director of the Company, was reported in a Form 5 filed with
the SEC on March 17, 2000.
9
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
Summary of Compensation
The following table summarizes the compensation earned by or paid to the
Company's Chief Executive Officer and the other four most highly compensated
executive officers during 1999 who were officers as of December 31, 1999
(collectively, the "Named Executives") for their services to the Company and its
subsidiaries during fiscal 1997, 1998 and 1999.
<TABLE>
Summary Compensation Table
Long-Term Compensation
------------------------------------------- ------------
Annual Compensation Awards Payouts
Other Long Term
Annual Securities Incentive All Other
Compen- Restricted Underlying Plan Compen-
Name and Bonus sation Stock Options/ Payouts($) sation
Principal Position Year Salary ($) ($)(1) ($) Awards SARs(#) ($)(2)
- ------------------ ---- ---------- --- --- ------ ------- --------- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald Sinkin, 1999 $289,400 $115,760 $0 0 0 $0 $26,090
Chairman 1998 275,625 137,813 0 0 0 0 27,262
President and 1997 262,500 157,500 0 0 0 0 21,123
Chief Executive
Officer
Stephen Frey, 1999 185,220 74,088 0 0 0 0 7,669
Senior Vice 1998 176,400 88,200 0 0 0 0 9,820
President of 1997 168,000 143,425 0 0 0 0 6,291
Operations
John Rebecchi, 1999 185,220 74,088 0 0 0 0 15,563
Senior Vice 1998 176,400 88,200 0 0 0 0 12,499
President of 1997 168,000 145,832 0 0 0 0 8,937
Sales and
Marketing
Margaret 1999 171,150 68,460 0 0 0 0 15,461
Krumholz, 1998 163,000 81,500 0 25,000 25,000 0 12,200
Senior Vice 1997 131,291 59,062 0 0 0 0 1,273
President of
Finance and
Chief Financial
Officer
Frank A. Bress, 1999 157,500 11,100 0 1,000 1,000 0 13,103
Vice President 1998 150,000 13,500 0 5,000 5,000 0 8,153
for Legal Affairs 1997 0 0 0 0 0 0 0
and Human
Resources Policy
and General
Counsel
- --------------------------
</TABLE>
10
<PAGE>
(1) For Messrs. Sinkin, Frey and Rebecchi, the total bonus amounts shown in
this column were payable under the employment agreements described below
under "Employment Contracts and Termination of Employment and Change of
Control Arrangements."
(2) For fiscal 1999, All Other Compensation includes: (a) $20,805, $5,000,
$8,572 and $3,960 of premiums paid by the Company for certain life and
disability insurance policies for Messrs. Sinkin, Frey, Rebecchi, and Ms.
Krumholz respectively; (b) Company contributions under the Company's 401(k)
Retirement Plan of $3,005, $1,384, $2,021 and 2,501 to Messrs. Sinkin,
Frey, Rebecchi and Ms. Krumholz respectively; and $2,003 to Mr. Bress; and
(c) miscellaneous car allowances for each named executive.
Employment Contracts and Termination of Employment
and Change-in-Control Arrangements
The Company is party to employment agreements dated as of June 28, 1995
with each of Messrs. Sinkin, Frey and Rebecchi. Each agreement provides for an
annual base salary, annual salary increases calculated with reference to the
Consumer Price Index, bonus compensation based on the Company's performance (as
measured by its gross revenues and its earnings before interest, taxes,
depreciation and amortization), and a monthly car allowance. Bonuses under these
agreements cannot exceed 100% of an employee's base salary. If in any year the
Company does not meet the specific performance requirements set forth in these
agreements, the Company will be obligated to pay, in lieu of bonus compensation,
incentive compensation pursuant to a management incentive plan. The amounts paid
to each of Messrs. Sinkin, Frey and Rebecchi under his employment agreement are
set forth above in the "Summary Compensation Table." In addition, the Company
will pay a fee to each of these executives for any Company loans which they have
personally guaranteed. Each of these employment agreements also provides for
continued payments of salary, bonus and incentive compensation for two years in
the event of the death, disability or termination without cause of the officers
party to these agreements. These agreements require the executives to dedicate
substantially all of their business time to the Company's affairs, and will
terminate on December 31, 2001.
The Company has also entered into employment agreements dated December 15,
1998 with each of Margaret M. Krumholz and Frank A. Bress. The agreement with
Ms. Krumholz provides for an annual base salary, annual salary increases
calculated with reference to the Consumer Price Index, bonus compensation based
upon the Company's performance (as described above in relation to the employment
contracts with Messrs. Sinkin, Frey and Rebecchi), and monthly car, gas and
cellular telephone allowances. Her agreement also provides for the payment of
salary, incentive compensation and bonus for two years following her death,
disability or discharge without cause, which includes a change of control, among
other things. This agreement will terminate on December 31, 2001. The agreement
with Mr. Bress provides for an annual base salary, annual salary increases
calculated with reference to the Consumer Price Index, bonus compensation
pursuant to a management incentive plan, and monthly car, gas and cellular
telephone allowances. His agreement also provides for the payment of salary,
incentive compensation and bonus for one year following his death, disability or
discharge without cause, which includes a change of control, among other things.
This agreement will terminate on December 31, 2001.
1995 Incentive Stock Option Plan
In 1995, the Company adopted the Disc Graphics, Inc. 1995 Incentive Stock
Option Plan (the "1995 Stock Incentive Plan") in order to advance the interests
of the Company by encouraging and enabling the acquisition of a larger personal
proprietary interest in the Company by key employees and directors of, and
consultants to, the Company and its subsidiaries upon whose judgment and keen
interest the Company is largely dependent for the successful conduct of its
operations. The 1995 Stock Incentive Plan provides for the grant of incentive
stock options within the meaning of the Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), non-qualified stock options not meeting the
requirements of Section 422 of the Code, stock appreciation rights, restricted
stock, performance grants and other types of awards.
The 1995 Stock Incentive Plan, which is administered by the Incentive Stock
Option Committee of the Board of Directors (currently comprised of Mark L.
Friedman and Daniel Levinson) authorizes the issuance of a maximum of 500,000
shares of Common Stock, which may be either newly issued shares, treasury
shares, re-acquired shares, shares purchased in the open market or any
combination thereof. Incentive stock options generally may be granted at an
exercise
11
<PAGE>
price of not less than the fair market value of shares of Common Stock on the
date of grant, and non-qualified stock options maybe be granted at an exercise
price determined by the Incentive Stock Option Committee. If any award under the
1995 Incentive Plan terminates, expires unexercised, or is canceled, the shares
of Common Stock that would otherwise have been issuable pursuant thereto will be
available for issuance pursuant to the grant of new awards. As of the Record
Date, the Company had outstanding options to purchase an aggregate of 414,257
shares of Common Stock under the 1995 Incentive Stock Option Plan.
Option/SAR Grants
The following table describes the options to purchase shares of Common
Stock granted to the Named Executives during fiscal 1999 and the potential value
of such options at the end of their terms, assuming certain levels of stock
price appreciation.
Option/SAR Grants in Fiscal 1999
<TABLE>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (1)(2)
----------------- ----------------------
% of Total
Options/
Number of SARs
Securities Granted to
Underlying Employees Exercise or
Options/ SARs in Fiscal Year Base Price Expiration
Name Granted (#) (3) ($/share) Date 5%($) 10%($)
- ---- ----------- ----- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Donald Sinkin 0 n/a n/a n/a n/a n/a
Stephen Frey 0 n/a n/a n/a n/a n/a
John Rebecchi 0 n/a n/a n/a n/a n/a
Margaret M. Krumholz 0 n/a n/a n/a n/a n/a
Frank A. Bress 1,000 5.3% $4.438 1/1/09 $ 7,230 $ 11,510
- ------------------------
(1) All options are either incentive or non-qualified stock options granted
under the Company's 1995 Incentive Stock Option Plan. All options were
granted with an exercise price greater than or equal to the fair market
value on the date of grant.
(2) Potential realizable values reflect the difference between the option
exercise price on the date of grant and the fair market value of the
Company's Common Stock at the end of the option term, assuming 5% and
10% compounded annual appreciation of the stock price from the date of
grant until the expiration of the option. The 5% and 10% appreciation
rates are assumed pursuant to rules promulgated by the SEC and do not
reflect actual historical or projected rates of appreciation of the
Common Stock. Assuming such appreciation, on January 1, 2009 the per
share value would be $7.23 at 5% or $11.51 at 10% (based on a fair
market value of $4.438 on January 1, 1999, which was the grant date for
the option listed in the table above). The foregoing values do not
reflect appreciation actually realized by the Named Executives. See
"Option/SAR Exercises and Values," below.
12
</TABLE>
<PAGE>
(3) For purposes of calculating these percentages, the total number of options
granted to all employees in fiscal 1999 was 18,879.
Option/SAR Exercises and Values
The following table provides certain information concerning the
exercise of stock options during 1999 and the value of unexercised options to
purchase shares of Common Stock held by the Named Executives as of December 31,
1999.
Aggregated Option/SAR Exercises in Fiscal 1999 and
Fiscal Year End Option/SAR Values
<TABLE>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year End Fiscal Year End(1)
--------------- ------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald Sinkin 0 n/a 0 0 0 0
Stephen Frey 0 n/a 0 0 0 0
John Rebecchi 0 n/a 0 0 0 0
Margaret M. Krumholz 0 n/a 25,000 25,000 26,575 0
Frank A. Bress 0 n/a 0 6,000 0 0
- ------------------------
</TABLE>
(1) The fair market value per share of Common Stock on December 31, 1999
was $3.063 based on the closing price on the Nasdaq National Market
System on December 31, 1999 which was the last trading day of the year.
13
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
NOTE: THE FOLLOWING SECTION OF THIS PROXY STATEMENT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY FILING BY THE COMPANY WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, NOTWITHSTANDING ANY INCORPORATION
BY REFERENCE OF ANY OTHER PORTIONS OF THIS PROXY STATEMENT.
The compensation of the Company's executive officers is generally
determined by either the Board of Directors or the Compensation Committee of the
Board of Directors, subject to approval by the Board of Directors, and subject
to applicable employment agreements. See "Compensation of Executive Officers --
Employment and Change in Control Arrangements." Each member of the Compensation
Committee, except for Donald Sinkin, is a director who is not an employee of the
Company or any of its affiliates.
General Policies
The Company's compensation programs are intended to enable the Company to
attract, motivate, reward and retain the management talent required to achieve
its corporate objectives, and thereby increase shareholder value. It is the
Company's policy to provide incentives to its senior management to achieve both
short-term and long-term objectives and to reward exceptional performance and
contributions to the development of the Company's businesses. To attain these
objectives, the Company's executive compensation program includes a competitive
base salary, cash incentive bonuses and stock-based compensation.
Stock options are granted to employees, including the Company's executive
officers, by the Compensation Committee under the Company's 1995 Incentive Stock
Option Plan. The Committee believes that stock options provide an incentive that
focuses the executive's attention on managing the Company from the perspective
of an owner with an equity stake in the business. Incentive stock options are
awarded with an exercise price equal to the market value of Common Stock on the
date of grant, and all options have a maximum term of ten years and generally
become exercisable not less than six months from the date of grant. Among the
Company's executive officers, the number of shares subject to options granted to
each individual generally depends upon the level of that officer's
responsibility. Subsequent to the Merger, the largest grants generally have been
awarded to the most senior officers who, in the view of the Compensation
Committee, have the greatest potential impact on the Company's profitability and
growth. Previous grants of stock options are reviewed but are not considered the
most important factor in determining the size of any executive's stock option
award in a particular year.
Relationship of Compensation to Performance
The Compensation Committee annually establishes, subject to the approval of
the Board of Directors and any applicable employment agreements, the salaries
that will be paid to the Company's executive officers during the coming year. In
setting salaries, the Compensation Committee takes into account several factors,
including competitive compensation data, the extent to which an individual may
participate in the stock plans maintained by the Company, and qualitative
factors bearing on an individual's experience, responsibilities, management and
leadership abilities, and job performance.
For fiscal 1999, pursuant to the terms of their employment agreements with
the Company, Donald Sinkin, Stephen Frey and John Rebecchi each received a base
salary and a cash incentive bonus based on the Company's pre-tax income. See
"Compensation of Executive Officers -- Employment Contracts and Termination of
Employment and Change in Control Arrangements." Each of Margaret M. Krumholz and
Frank A. Bress received a base salary and a cash bonus. Mr. Bress was granted
options under the same Plan to purchase 1,000 shares at the fair market value on
the date of grant. The Compensation Committee determined that these amounts were
appropriate given the Company's financial performance, the substantial
contribution made by each of Ms. Krumholz and Mr. Bress to such performance, and
the compensation levels of executives at companies competitive with the Company.
14
<PAGE>
Compensation of Chief Executive Officer
For fiscal 1999, pursuant to the terms of his employment agreement with the
Company, Donald Sinkin received a base salary and a cash incentive bonus based
on the Company's pre-tax income. See "Compensation of Executive Officers --
Employment Contracts and Termination of Employment and Change in Control
Arrangements." In light of this employment agreement, the Compensation Committee
was not required to make any decision regarding the cash compensation of Mr.
Sinkin.
COMPENSATION COMMITTEE
Daniel Levinson
Donald Sinkin
Seymour W. Zises
15
COMPANY PERFORMANCE GRAPH
NOTE: THE FOLLOWING SECTION OF THIS PROXY STATEMENT SHALL NOT BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO ANY FILING BY THE COMPANY WITH THE SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, NOTWITHSTANDING ANY INCORPORATION
BY REFERENCE OF ANY OTHER PORTIONS OF THIS PROXY STATEMENT.
The following chart compares the stock price performance of the Company
from December 31, 1995 through December 31, 1999 to those of all United States
companies listed in the Nasdaq Stock Market (the "Market Index"), and all United
States companies in the printing, publishing and allied industries (SIC numbers
2700-2799) that are listed in the Nasdaq Stock Market (the "Peer Group Index").
The Company's Common Stock began trading on the OTC Bulletin Board on
November 19, 1993, and the average of the bid and asked prices on that date was
$4.375. The performance graph below was prepared by the Center for Research in
Security Prices of the University of Chicago Graduate School of Business.
COMPARISON OF CUMULATIVE TOTAL RETURNS AMONG DISC GRAPHICS, INC.,
MARKET INDEX AND PEER GROUP INDEX THROUGH DECEMBER 31, 1999
16
<PAGE>
December 31,
-------------------------------------------------------
1995 1996 1997 1998 1999
---- ---- ---- ---- ----
Disc Graphics, Inc. $ 76.5 $ 48.5 $ 105.9 $ 104.4 $ 72.1
Market Index $ 101.4 $ 124.7 $ 152.9 $ 215.4 $ 399.5
Peer Group Index $ 114.8 $ 111.8 $ 124.7 $ 105.3 $ 139.6
- -------------------
* Assumes $100 invested on October 30, 1995 in the Company's Common
Stock, the Market Index and the Peer Group Index. Assumes reinvestment
of dividends. The Company has not paid any dividends.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From January 1, 1999 to the present, there have been no transactions
involving more than $60,000 to which the Company or any of its subsidiaries was
a party and in which any executive officer, director or nominee for director,
beneficial owner of more than 5% of any class of the Company's voting
securities, or member of the immediate family of any of the foregoing persons,
had a material interest, except as indicated in "Compensation of Executive
Officers," above, and as follows.
The Company leases a 55,000 square foot building in Hauppauge, New York
from Horizon Equities L.P., a Delaware limited partnership ("Horizon") under a
15 year lease that will terminate on December 31, 2007. Horizon Equities, Inc.,
the corporate general partner of Horizon, is owned by Messrs. Sinkin, Frey and
Rebecchi, executive officers and directors of the Company, and one other
employee of the Company. The limited partners of Horizon include, among others,
Holding Capital (which owns more than five percent of the Company) and one of
its affiliates, and Investment Services Corp., an affiliate of Mr. Levinson. The
aggregate payments made by the Company in 1999 for rental of the building were
$348,000. The Company believes that the terms of the building lease are at least
as favorable to the Company as the terms for an equivalent lease which could
have been obtained from unaffiliated third parties.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals for inclusion in the Company's Proxy Statement and
proxy relating to the Company's 2001 Annual Meeting of Stockholders must be
received by the Company on or before December 22, 2000.
OTHER BUSINESS
The Board does not presently intend to bring any other business before the
Meeting and, so far as is known to the Board, no matters are to be brought
before the Meeting except as specified in the accompanying Notice of Meeting. As
to any business that may properly come before the Meeting, however, it is
intended that proxies, in the form enclosed, will be voted in accordance with
the judgment of the persons voting such proxies.
17
<PAGE>
ANNUAL REPORT ON FORM 10-K
The Company will provide without charge to each person whose proxy is
solicited, upon the written request of any such person, a copy of the Company's
Annual Report on Form 10-K for its fiscal year ended December 31, 1999 filed
with the SEC, including the financial statements and the schedules thereto. The
Company does not undertake to furnish without charge copies of all exhibits to
its Form 10-K, but will furnish any exhibit upon the payment of a charge equal
to the Company's costs of copying and mailing any such exhibits. Such written
requests should be directed to Ms. Margaret M. Krumholz, Chief Financial
Officer, Disc Graphics, Inc., 10 Gilpin Avenue, Hauppauge, New York 11788. Each
such request must set forth a good faith representation that, as of May 15,
2000, the person making the request was a beneficial owner of securities
entitled to vote at the Meeting.
By Order of the Board of Directors
Donald Sinkin
Chairman
ALL STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
18
<PAGE>
PROXY CARD
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE
ANNUAL MEETING OF STOCKHOLDERS
DISC GRAPHICS, INC.
JUNE 19, 2000
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
PLEASE MARK YOUR VOTES
[ X ] AS IN THIS EXAMPLE
FOR the nominee WITHHOLD Authority to vote for
listed at right the nominee listed at right
1. ELECTION OF [ ] [ ] NOMINEE: Stephen Frey
CLASS III [ ] [ ] NOMINEE: John Rebecchi
DIRECTORS
FOR AGAINST ABSTAIN
PROPOSAL TO RATIFY THE SELECTION [ ] [ ] [ ]
OF KPMG LLP AS INDEPENDENT
AUDITORS FOR THE 2000 FISCAL YEAR
3. Upon such other business as may properly come before the meeting or any
adjournment thereof.
I PLAN TO ATTEND THE MEETING [ ]
The undersigned acknowledges receipt of (a) the Notice of 2000 Annual Meeting of
Stockholders, (b) the accompanying Proxy Statement and (c) the Company's 1999
Annual Report.
STOCKHOLDERS ARE URGED TO DATE, MARK, SIGN AND RETURN THIS PROXY PROMPTLY IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES
SIGNATURE____________________ DATE__________, 2000
SIGNATURE (if held jointly) DATE__________, 2000
--------------------------------
PROXY INSTRUCTIONS:
1. Please sign exactly as the name or names appear on your stock certificate
(as indicated hereon).
2. If the shares are issued in the name of two or more persons, all of them
must sign the proxy.
3. A proxy executed by a corporation must be signed in its name by an
authorized officer.
4. Executors, administrators, trustees and partners should indicate their
capacity when signing.
<PAGE>
DISC GRAPHICS, INC.
COMMON STOCK PROXY
FOR ANNUAL MEETING OF STOCKHOLDERS ON JUNE 19, 2000
The undersigned hereby appoints Donald Sinkin and Margaret M. Krumholz, or
either of them, each with full power of substitution, as proxies to represent
the undersigned at the Annual Meeting of Stockholders of DISC GRAPHICS, INC. to
be held at the Watermill, 711 Route 347, Smithtown, New York, on June 19, 2000
at 9:30 a.m., and any adjournments thereof, and to vote the number of shares of
the COMMON STOCK of DISC GRAPHICS, INC. that the undersigned would be entitled
to vote if personally present.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DISC
GRAPHICS, INC. THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF
DIRECTION, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR ELECTION NAMED ON THE
REVERSE AND FOR PROPOSAL 2.
IN THEIR DISCRETION, THE PROXY HOLDERS ARE AUTHORIZED TO VOTE UPON SUCH
OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF TO THE EXTENT AUTHORIZED BY RULE 14A-4(C) PROMULGATED BY THE SECURITIES
AND EXCHANGE COMMISSION AND BY APPLICABLE STATE LAWS (INCLUDING MATTERS THAT THE
PROXY HOLDERS DO NOT KNOW, A REASONABLE TIME BEFORE THIS SOLICITATION, ARE TO BE
PRESENTED).
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
