<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>
GUNTHER INTERNATIONAL, LTD.
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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
GUNTHER INTERNATIONAL, LTD.
5 WISCONSIN AVENUE
NORWICH, CONNECTICUT 06360
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 27, 1996
------------------------
Notice is hereby given that the Annual Meeting of Stockholders of Gunther
International, Ltd. will be held at the Mystic Hilton Hotel, 20 Coogan
Boulevard, Mystic, Connecticut on Tuesday, August 27, 1996 at 10:30 a.m., local
time, for the following purposes:
(1) To elect a Board of seven Directors to serve until the next Annual
Meeting of Stockholders or until their respective successors shall be
elected and qualified;
(2) To ratify the appointment of Arthur Andersen LLP as the Company's
independent accountants for the current fiscal year; and
(3) To act upon such other matters as may properly come before the meeting
or any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on July 25, 1996 as
the record date for the determination of the stockholders entitled to notice of
and to vote at the Annual Meeting. For ten days prior to the Annual Meeting, a
complete list of stockholders entitled to vote at the Annual Meeting will be
available for examination by any stockholder for any purpose germane to the
Annual Meeting during ordinary business hours at the Company's principal
executive offices located at 5 Wisconsin Avenue, Norwich, Connecticut 06360. All
stockholders are invited to attend the Annual Meeting in person.
By order of the Board of Directors
Frederick W. Kolling, III
Vice President, Chief Financial
Officer
Treasurer and Secretary
July 29, 1996
Norwich, Connecticut
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE SO
THAT YOUR STOCK MAY BE REPRESENTED AT THE ANNUAL MEETING.
<PAGE> 3
GUNTHER INTERNATIONAL, LTD.
5 WISCONSIN AVENUE
NORWICH, CONNECTICUT 06360
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors and management of Gunther International, Ltd., a Delaware
corporation (the "Company"), of proxies for use at the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at the Mystic
Hilton Hotel, 20 Coogan Boulevard, Mystic, Connecticut on Tuesday, August 27,
1996 at 10:30 a.m., local time, and at any and all postponements or adjournments
thereof, for the purposes set forth in the accompanying Notice of Meeting.
This Proxy Statement, Notice of Meeting and accompanying proxy card are
first being mailed to stockholders on or about July 29, 1996.
GENERAL
Only holders of record of either the Company's common stock, par value
$.001 per share ("Common Stock"), or the Company's Series B Common Stock, par
value $.001 per share ("Series B Common Stock"), issued and outstanding at the
close of business on July 25, 1996 (the "Record Date") are entitled to notice of
and to vote at the Annual Meeting. On the Record Date, there were 4,133,269
shares of Common Stock and 500 shares of Series B Common Stock issued and
outstanding.
The presence at the Annual Meeting of the holders of a majority of the
outstanding shares of the Company, either in person or by properly executed
proxy, shall constitute a quorum. In the event that there are not sufficient
votes for a quorum, the Annual Meeting may be adjourned from time to time until
a quorum is obtained.
Those individuals nominated for election to the Board of Directors by the
holders of Common Stock and those individuals nominated for election to the
Board of Directors by the holders of Series B Common Stock, as described in Item
1 below, must each be elected by the affirmative vote of a plurality of the
votes cast by each class voting as a class at the Annual Meeting. The
ratification of Arthur Andersen LLP as the Company's independent accountants for
the current fiscal year, as described in Item 2 below, and any other matters
presented for consideration at the Annual Meeting must be approved by the
affirmative vote of a majority of votes cast at the Annual Meeting. For purposes
of determining the number of affirmative votes cast with respect to a particular
matter, only those votes cast "for" the matter are counted.
The Restated Certificate of Incorporation of the Company provides that the
holders of shares of Common Stock and of Series B Common Stock are entitled to
one vote for each share of stock so held with respect to each matter to be voted
on by the stockholders of the Company. Until January 1, 1999, the holders of
shares of Series B Common Stock, voting separately as a class, are entitled to
elect that number of directors equal to one more than one-half of the total
number of directors comprising the Board of Directors of the Company. The total
number of directors comprising the full Board has been fixed at seven.
Consequently, the holders of shares of Series B Common Stock, voting as a group,
will be entitled to elect four directors and the holders of shares of Common
Stock will be entitled to elect three directors.
Except as described in the preceding paragraph, the holders of shares of
Common Stock and Series B Common Stock will vote together as a single class,
with each such holder being entitled to one vote for each share held as of the
Record Date, on all matters submitted to stockholders at the Annual Meeting.
Abstentions will be treated as shares present and entitled to vote for
purposes of determining the presence of a quorum, but will be counted separately
(as neither a vote for nor a vote against) in the tabulation of the
<PAGE> 4
votes cast on proposals presented to stockholders. If a broker or other record
holder or nominee indicates on a proxy that it does not have authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter. As a
result, these so-called "broker non-votes" will have no effect on the outcome of
the voting for a particular matter.
If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the proxy card will vote for the slate of
nominees proposed by the Board of Directors, for ratification of the appointment
of Arthur Andersen LLP as the Company's independent accountants for the current
fiscal year ending March 31, 1997 and as recommended by the Board of Directors
with regard to all other matters or, if no such recommendation is given, in
their own discretion. Each stockholder may revoke a previously granted proxy at
any time before it is exercised by filing with the Secretary of the Company a
revoking instrument or a duly executed proxy bearing a later date. The powers of
the proxy holders will be suspended if the person executing the proxy attends
the Annual Meeting in person and so requests. Attendance at the Annual Meeting
will not, in itself, constitute revocation of a previously granted proxy.
ITEM 1.
ELECTION OF DIRECTORS
Seven directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting to hold office until the next Annual Meeting of
Stockholders or until their respective successors have been elected and
qualified. The Board of Directors' nominees are the seven individuals named
below, all of whom currently serve on the Board of Directors. As discussed
above, four of the nominees (Messrs. Geneen, Newman, Fiske and Hickman) have
been nominated for election by the holders of shares of Series B Common Stock,
and three of the nominees (Messrs. Whitney, Morton and Kolling) have been
nominated for election by the holders of shares of Common Stock. It is the
intention of the persons named in the enclosed proxy to vote the shares covered
by each proxy for the election of all persons nominated for election by the
holders of shares of Common Stock. Although the Board of Directors does not
anticipate that such nominees will be unavailable for election, in the event of
such occurrence the proxies will be voted for such substitute, if any, as the
Board of Directors may designate.
The following table sets forth information with respect to all nominees,
including the persons who have been nominated for election by the holders of
shares of Series B Common Stock:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ----------------------------------- --- ---------------------------------------- --------
<S> <C> <C> <C>
NOMINATED FOR ELECTION BY HOLDERS OF SERIES B COMMON STOCK
Harold S. Geneen................... 86 Chairman Emeritus of ITT Corporation 1993
Gerald H. Newman................... 55 Private Investor 1993
Guy W. Fiske....................... 71 Chairman and Chief Executive Officer of 1993
Fiske Associates, Inc.
J. Kenneth Hickman................. 68 Independent Business Consultant 1994
NOMINATED FOR ELECTION BY HOLDERS OF COMMON STOCK
James H. Whitney................... 51 President and Chief Executive Officer 1995
Alan W. Morton..................... 58 Vice President and Chief Operating 1995
Officer
Frederick W. Kolling, III.......... 48 Vice President, Chief Financial Officer, 1995
Treasurer and Secretary
</TABLE>
HAROLD S. GENEEN. Mr. Geneen has served as Chairman of the Board and as a
director of the Company since September 1993. Mr. Geneen served as Chief
Executive Officer of ITT Corporation from 1959 until 1977, and as Chairman
thereof from 1965 until 1979. He has been Chairman Emeritus of ITT since 1983.
2
<PAGE> 5
Mr. Geneen is also Chairman and a director of First Rock Financial Corporation,
an equipment leasing company, and of Insurakco Holdings Inc., a holding company.
In addition, Mr. Geneen is a director of Investors Management Corporation, an
owner of restaurants, and of IVAX Corporation, a pharmaceutical company.
GERALD H. NEWMAN. Mr. Newman has been a director of the Company since
September 1993. Since 1971, Mr. Newman has been a private investor and
consultant to various high technology companies. From 1969 to 1971, Mr. Newman
was a registered representative of Eastman Dillon Union Securities. From 1962 to
1969, Mr. Newman was a certified public accountant at the accounting firm of
Hertz Herson & Co.
GUY W. FISKE. Mr. Fiske has been a director of the Company since November
1993. Mr. Fiske, a private investor, has been Chairman and Chief Executive
Officer of Fiske Associates, Inc., an investment company, from 1984 to the
present. He served as Chief Executive Officer of Educational Publishing Corp.
from 1985 to 1991. From 1984 to the present, he has served as a Director of
Bird, Inc., a building materials company. His other directorships include
Graphic Controls Corp., Education Publishing Corp. and SEV Corp. Mr. Fiske also
served as Deputy Secretary of Commerce, and then as Undersecretary of Energy,
from 1981 to 1983. Previously, he served as Executive Vice President and a
director of General Dynamics from 1977 to 1981, and as a Corporate Vice
President of ITT Corporation from 1968 to 1977.
J. KENNETH HICKMAN. Mr. Hickman has been a director of the Company since
September 1994. Since January 1991, Mr. Hickman has been an independent business
consultant. For twenty-seven years prior to that he was a partner in Arthur
Andersen & Co., with various responsibilities including managing partner of the
firm's New Jersey office and director of its international business practice
program. He is a trustee of Fordham University and has served as a director and
officer of a number of not-for-profit international trade organizations.
JAMES H. WHITNEY. Mr. Whitney has been a director of the Company since
September 1995, and has held the positions of President and Chief Executive
Officer of the Company since February 1995. Prior to that, he served as
President of the Intertec Group, a company engaged in international technology
transfer. From 1990 to 1994, Mr. Whitney was President, Sales & Services
Division of Summagraphics Corporation, a manufacturer of digitizers, plotters
and scanners.
ALAN W. MORTON. Mr. Morton has been a director of the Company since
September 1995, and has held the positions of Vice President and Chief Operating
Officer of the Company since February 1995. Prior to that, he had been President
of North American Operations for Summagraphics Corporation since 1992. Prior to
that, he had been President of the Digitizer Division of Summagraphics, and
before that, Senior Vice President of Operations. From 1982 to 1984, Mr. Morton
was Vice President of Operations for Electro Signal Labs, Inc. Prior to that, he
was Director of Technical Services for Timex Corporation and General Manager of
TMX Taiwan, Ltd. Mr. Morton has extensive engineering, manufacturing and
administrative experience from prior managerial positions at Varian Associates
and Caltex Petroleum Corporation.
FREDERICK W. KOLLING, III. Mr. Kolling has been a director of the Company
since September 1995, and has held the positions of Vice President, Chief
Financial Officer, Treasurer and Secretary since July 1995. Prior to that, from
1989 to July 1995, Mr. Kolling was Director of Finance for American Power
Conversion Corporation, a manufacturer of uninterruptible power supplies. From
1984 to 1989, he was Vice President of Finance and Administration at Daly &
Wolcott, a computer software manufacturer and consulting firm. He is a Certified
Public Accountant and was with Price Waterhouse & Company from 1982 to 1984.
DIRECTORS' REMUNERATION; ATTENDANCE
Members of the Board of Directors of the Company receive no compensation
for their service as directors. The Company will reimburse all directors for
reasonable travel expenses incurred in attending meetings. During the prior
fiscal year, the Company made no such payments to any of its Directors.
The Board of Directors met three times during the previous fiscal year and
acted by the unanimous written consent of its members on one occasion. No
director attended fewer than 75% of the total number of meetings of the Board
and the Committees on which such director served.
3
<PAGE> 6
COMMITTEES OF THE BOARD
The standing committees of the Board of Directors are the Audit Committee
and the Executive Compensation Committee.
The Audit Committee of the Board of Directors consists of Messrs. Geneen,
Newman and Hickman. The function of the Audit Committee is to review and report
to the Board of Directors with respect to the selection and the terms of
engagement of the Company's independent public accountants, and to maintain
communications among the Board of Directors, such independent public
accountants, and the Company's internal accounting staff with respect to
accounting and audit procedures, the implementation of recommendations by such
independent public accountants, the adequacy of the Company's internal controls
and related matters. The Audit Committee also reviews certain related-party
transactions and any potential conflict-of-interest situations involving
officers, directors or stockholders beneficially owning more than 10% of any
class of equity security of the Company. During the prior fiscal year, the Audit
Committee met two times.
The Executive Compensation Committee of the Board of Directors consists of
Messrs. Geneen and Newman. The function of the Executive Compensation Committee
is to review the performance of and to fix and determine the compensation of all
officers of the Company and all other employees of the Company whose annual
salary level is $100,000 or more or who might be reasonably anticipated to
receive compensation from the Company at an annual rate of $100,000 or more.
During the prior fiscal year, the Executive Compensation Committee met one time.
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
------------------------------------------ --- -----------------------------------------
<S> <C> <C>
Harold S. Geneen.......................... 86 Chairman of the Board of Directors
James H. Whitney.......................... 51 President and Chief Executive Officer
Alan W. Morton............................ 58 Vice President and Chief Operating
Officer
Frederick W. Kolling, III................. 48 Vice President, Chief Financial Officer,
Treasurer and Secretary
</TABLE>
For the biographies of Messrs. Geneen, Whitney, Morton and Kolling, see the
above section entitled "Election of Directors."
4
<PAGE> 7
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following Summary Compensation Table sets forth information concerning
compensation for services in all capacities to the Company or subsidiaries of
the Company for the fiscal year ended March 31, 1996 of (i) the chief executive
officer and (ii) the other four most highly compensated executive officers of
the Company whose total salary and bonus for the year ended March 31, 1996
exceeded $100,000, for services in all capacities to the Company during such
fiscal year (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
--------------------
ANNUAL COMPENSATION(1) RESTRICTED OPTIONS/ ALL OTHER
----------------------------- STOCK SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($) (#) ($)
- ------------------------------------- ---- --------- -------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
James H. Whitney..................... 1996 120,000 20,000 0 0 0
President and Chief Executive 1995(2) 30,577 0 0 75,000 0
Officer 1994 -- -- -- -- --
Alan W. Morton....................... 1996 100,000 40,000 0 0 0
Vice President and Chief Operating 1995(3) 8,231 3,077 0 50,000 0
Officer 1994 -- -- -- -- --
</TABLE>
- ---------------
(1) Perquisites and other personal benefits are not included because they do not
exceed the lesser of $50,000 or 10% of the total of base salary and annual
bonus for each of the Named Executive Officers.
(2) Mr. Whitney joined the Company in fiscal 1995.
(3) Mr. Morton joined the Company in fiscal 1995.
Option Exercises and Fiscal Year-End Values. Shown below is information
with respect to option exercises in fiscal year 1996 and unexercised options to
purchase the Company's Common Stock and Common Stock granted in fiscal year 1996
under the Company's 1993 Stock Option Plan to the individuals listed.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
SHARES OPTIONS/SARS AT FY-END(#) AT FY-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James H. Whitney............ 0 0 25,000 50,000 65,625 131,250
Alan W. Morton.............. 0 0 16,666 33,334 43,748 87,502
</TABLE>
- ---------------
(1) Represents the difference between the fair market value of the Common Stock
on March 31, 1996 and the exercise price.
EMPLOYMENT AGREEMENTS
The Company currently does not have employment agreements with its Named
Executive Officers.
STOCK OPTION PLANS
In December 1993, the Company adopted a Stock Option Plan, which authorizes
the Executive Compensation Committee of the Board of Directors to grant to key
employees and directors of the Company and subsidiaries of the Company incentive
or non-qualified stock options. Currently, options to purchase up to 215,000
shares of Common Stock may be granted under the plan. The Executive Compensation
Committee determines the prices and terms at which options may be granted.
Options may be exercisable in installments
5
<PAGE> 8
over the option period, but no options may be exercised before six months or
after ten years from the date of grant.
The purpose of the Plan is to encourage stock ownership by persons
instrumental to the success of the Company, in order to give them a greater
personal interest in the Company's business. The exercise price of any incentive
stock option granted to an eligible employee may not be less than 100% of the
fair market value of the shares underlying such option on the date of grant,
unless such employee owns more than 10% of the outstanding Common Stock or stock
of any subsidiary or parent of the Company, in which case the exercise price of
any incentive stock option may not be less than 110% of such fair market value.
No option may be exercisable more than ten years after the date of grant and, in
the case of an incentive stock option granted to an eligible employee owning
more than 10% of the Common Stock or stock of any subsidiary or parent of the
Company, no more than five years from its date of grant. Payment for shares
purchased upon exercise of any option may be in cash or in shares of the
Company's Common Stock. Options are not transferable, except upon the death of
the optionee. In general, upon termination of employment of an optionee, all
options granted to such person which are not exercisable on the date of such
termination immediately expire, and any options that are exercisable expire 30
days following termination of employment, if such termination is not the result
of death or retirement, and one year following such termination if such
termination was because of death or retirement under the provisions of any
retirement plan that may be established by the Company, or with the consent of
the Company. As of July 25, 1995, 160,000 options have been granted under this
plan.
Pursuant to that certain recapitalization agreement by and between the
Company and its then current stockholders, dated September 4, 1992, (the
"Recapitalization Agreement"), an option plan was established for certain key
executives of the Company (the "Founders Option Plan"). The Recapitalization
Agreement contemplated an initial grant under such plan of options to purchase
95,000 shares of Common Stock at an exercise price of $1.88 per share. The
Recapitalization Agreement specified that options would vest 25% on each of the
first, second, third and fourth anniversaries of the date of grant, provided
that (i) the vesting of options for employees would be contingent upon their
continued employment by the Company, unless an employee was terminated without
cause, and (ii) the vesting of options granted to William H. Gunther, Jr. would
be contingent upon his continued employment by the Company for two years from
the date of the Recapitalization Agreement. As of July 25, 1996, no options have
been granted under this plan.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors and persons who beneficially own more than 10% of
the Company's Common Stock to file initial reports of beneficial ownership and
reports of changes in beneficial ownership with the Securities and Exchange
Commission (the "SEC"). Such persons are required by the SEC regulations to
furnish the Company with copies of all Section 16(a) forms filed by such
persons. Based solely on its copies of forms received by it, or written
representations from certain reporting persons that no Form 5's were required
for those persons, the Company believes that during the just completed fiscal
year, its executive officers, directors, and greater than 10% beneficial owners
complied with all applicable filing requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RECAPITALIZATION AGREEMENT
Securities Issuance. On September 4, 1992, the Company and its then
current stockholders (the "Founding Stockholders") entered into the
Recapitalization Agreement, which resulted in the infusion of substantial
capital and the assumption of control of the Company by a group of new
investors, including Park Investment Partners, Inc. ("Park"), a corporation of
which Harold S. Geneen and Gerald H. Newman are the sole stockholders. Pursuant
to the Recapitalization Agreement, the Company issued (i) 1,115,000 shares of
Common Stock to Park in consideration for $582,500, paid by the cancellation of
notes from the Company in that principal amount held by Park or its
stockholders, representing a portion of the financing in the aggregate amount of
$1,007,500 provided to the Company pending completion of the Recapitalization
("Bridge
6
<PAGE> 9
Notes"), (ii) warrants to purchase 43,067 shares of Common Stock at an exercise
price of $1.88 per share (the number of shares and exercise price subject, in
certain events, to adjustment, including to protect against dilution) to holders
of Bridge Notes, and (iii) 2,366,657 shares of Class A Convertible Preferred
Stock at a price of $.75 per share to 27 investors, paid in cash or by the
cancellation of Bridge Notes. All such 2,366,657 shares of Class A Convertible
Preferred Stock were converted into 473,331 shares of Common Stock at the
equivalent of $3.75 per share in connection with the initial public offering of
the Company consummated during December 1993 (the "Offering").
Registration Rights. Under the terms of the Recapitalization Agreement,
the holders of the shares of Common Stock issued to Park and issuable upon
conversion of the Class A Preferred Stock or exercise of warrants issued to
holders of Bridge Notes and the Founding Stockholders (the "Holders") have the
right to include shares of Common Stock in the first two registration statements
filed by the Company under the Securities Act of 1933, as amended (the "Act"),
if a majority of such Holders so elect and subject to the right of the
underwriter of any offering that is the subject of a registration statement to
object to the inclusion of Holders' shares in the registration statement.
Pursuant to the Recapitalization Agreement, the Holders will pay underwriting
discounts and commissions attributable to their shares and fees and
disbursements of their counsel. The Company will pay all other expenses relating
to the registration statements, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel to the
Company, blue sky fees and expenses and the expense of any special audit
incident to or required by any such registration. Representatives of the
underwriters for the Offering, JW Charles Securities, Inc. and Corporate
Securities Group, Inc., indicated that the inclusion of any of the Holders'
shares of Common Stock would have an adverse effect on the Offering, and
accordingly no such shares were registered in connection therewith.
Right of First Refusal. The Recapitalization Agreement also requires, if
any of the Founding Stockholders desires to sell any of his shares of Common
Stock, that (i) the sale be made pursuant to a bona fide offer from a third
party and (ii) before the sale may be made to such third party, the selling
Founding Stockholder must first offer the shares to be sold to the Company
(which may purchase all or any part of the shares so offered), next, to the
extent not purchased by the Company, to Park and then, to the extent not
purchased by the Company or Park, to the other Founding Stockholders. Any
purchaser of such shares who is not a stockholder must agree to be bound by and
comply with the Recapitalization Agreement. The right of first refusal contained
in the Recapitalization Agreement did not terminate upon the completion of the
Offering.
Voting Agreement. Until June 1, 1998, Park and the Founding Stockholders
are required by the Recapitalization Agreement to vote their shares of Common
Stock (however acquired) for the persons designated by Park as directors of the
Company and as directed by Park regarding the size of the Board of Directors.
The Company is required to use its best efforts to cause the nominees of Park to
be recommended to, and elected by, the stockholders at each annual meeting of
stockholders, and at any special meeting of stockholders of the Company called
for the election of directors. In addition, if Park wishes to remove a director
it so designated, the Company, Park and the Founding Stockholders are required
to take such action as may be necessary to call a special meeting of
stockholders for the purpose of effecting any such removal, filling such vacancy
or reducing the size of the board, as the case may be, and as directed by the
stockholders having such right, and at such meeting, Park and the Founding
Stockholders will vote to accomplish such results.
Employment Agreement. In connection with the Recapitalization Agreement,
the Company entered into an employment agreement with William H. Gunther, Jr.
pursuant to which, Mr. Gunther agreed to serve as an employee of the Company and
have the title of Vice Chairman. The agreement had a two-year term, and it
expired on September 4, 1994. The agreement provided for a salary at the annual
rate of $200,000 and severance pay equal to 18 months salary payable in equal
monthly installments on the last day of each month over the two year period
commencing the last day of the month of termination. The Company also was
required to continue a life insurance policy on Mr. Gunther's life in the amount
of $1,000,000 and to provide all employee benefits generally available to
executive officers of the Company. In addition, Mr. Gunther agreed to the
cancellation of the payment of back salary and reimbursable expenses,
aggregating $92,404, to the extent the Company made advances to Mr. Gunther for
the payment of loans to him by The Connecticut
7
<PAGE> 10
National Bank in the amount of $130,000 and federal income taxes owed by him in
the amount of $31,000. The excess of advances by the Company to Mr. Gunther over
$92,404, $68,695, is payable by Mr. Gunther on demand. There is not any interest
payable on such excess amount.
Royalty Agreements. Under the terms of the Recapitalization Agreement, the
Founding Stockholders and Robert E. Wallace (a former officer and stockholder of
the Company) are entitled to receive from the Company royalty payments with
respect to the period which commenced on the date of the Offering. The royalty
payments are required to be made as partial consideration for the agreement of
the Founding Stockholders to enter into and perform their obligations under the
Recapitalization Agreement, including their approval of the transaction (which
resulted in the reduction of their ownership interest from 100% to approximately
15% of the Company's voting stock), their agreements to subject their shares to
the right of first refusal described above, subordinate the payment of Company
debt to them, and to vote their shares for the nominees of Park. The amount of
the royalty payments is to equal (i) one percent of the Company's sales as shown
on the Company's annual audited financial statements covering the period during
which the right to royalty payments arises ("Company Sales") and (ii) an
additional one half percent of Company Sales, so long as the payment of such
additional amount does not reduce the Company's after tax profits below 9% of
Company Sales for the period for which the payment is to be made. The Company's
obligation to pay royalties terminates upon the payment of royalties aggregating
$12,000,000 and does not terminate prior to the payment in full of such amount.
The Company may set off against royalty payments any losses exceeding, in the
aggregate, $50,000 incurred by the Company arising from the breach of any
covenant, representation or warranty of the Founding Stockholders in the
Recapitalization Agreement (the amount of the set-off to be allocated among the
Founding Stockholders in accordance with their relative stockholdings as of the
closing held in connection with the Recapitalization Agreement (the
"Recapitalization Closing")) or of any employment agreement or other obligation
to the Company, which loss is reduced to a non-appealable final judgment in
favor of the Company (any such set-off being applicable only to the Founding
Stockholder who breached such obligation). The Recapitalization Agreement
requires payment of royalties within thirty days after the Company receives its
annual audited financial statements.
LOANS TO COMPANY
Since April 1993, the Company borrowed an aggregate of $855,000 from
Messrs. Geneen and Newman. The principal amount of such borrowings, together
with all accrued interest, was payable on demand and carried an interest rate of
8%. Messrs. Geneen and Newman agreed to cancel $400,000 of such borrowings in
exchange for the issuance to Park of an aggregate of 80,000 units of Common
Stock and warrants in connection with the Offering. The units and the warrants
included therein are identical to the units and the warrants offered and sold in
the Offering. On March 31, 1995, Messers. Geneen and Newman agreed to convert
the remaining principal balance of such loans outstanding ($455,000), together
with accrued interest thereon ($85,172), into 196,426 shares of Common Stock at
a rate of $2.75 per share.
During fiscal 1995 and 1996, Messrs. Geneen and Newman guaranteed payment
of the Company's borrowings under its then existing line of credit with Fleet
Bank, which permitted the Company to borrow up to $2,000,000 for working capital
purposes. The credit facility provided that all borrowings under the facility
would bear interest at the bank's prime rate. Messrs. Geneen and Newman provided
the bank with sufficient cash collateral to secure all borrowings under the
facility. The credit facility was replaced on June 4, 1996.
On June 4, 1996, the Company entered into a new line of credit arrangement
with a bank which was used to refinance the Company's pre-existing line of
credit. The new arrangement provides for two revolving loans totaling
$2,000,000. The available borrowing under Facility A is in the amount of
$1,750,000, and is to be fully cash collateralized by assets provided by Mr.
Harold S. Geneen, a stockholder and a Director of the Company. While there is no
obligation for Mr. Geneen to provide any additional cash collateral to the bank,
he has verbally indicated his willingness to consider providing the bank with
additional cash collateral to permit the Company to borrow up to the maximum
amount of the credit facility during its current term. The funds advanced under
Facility A bear interest at the bank's base rate, and the maturity date of
Facility A is January 10, 1998. The available borrowing under Facility B is in
the amount of $250,000, and is secured by all tangible and intangible personal
property of the Company. The funds advanced under Facility B bear interest at
the bank's base rate, plus 1%. The maturity date of Facility B is January 10,
1998.
8
<PAGE> 11
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of July 25, 1996, with the exception of the person listed below and
those persons listed under "Stock Ownership of Directors and Executive Officers"
below, no person was known by the Company to own more than 5% of the outstanding
Common Stock.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES OF CLASS
--------- ---------
<S> <C> <C>
Four Partners(1)................................................ 584,903 14.1%
667 Madison Avenue
New York, NY 10021
</TABLE>
- ---------------
(1) Four Partners has filed a Schedule 13D under the Securities Exchange Act of
1934, as amended, dated August 17, 1995 stating that it holds sole voting
power with respect to 584,903 shares of Common Stock, shared voting power
with respect to no shares of Common Stock, sole dispositive power with
respect to 584,903 shares of Common Stock and shared dispositive power with
respect to no shares of Common Stock.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reflects shares of Common Stock beneficially owned (or
deemed to be beneficially owned pursuant to the rules of the Securities and
Exchange Commission) as of July 25, 1996 by each director of the Company, each
of the Named Executive Officers and the current directors and executive officers
of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT OF
BENEFICIAL PERCENTAGE OF
NAME(1) OWNERSHIP(2)(3) SHARES
-------------------------------------------------------- --------------- -------------
<S> <C> <C>
Park Investment Partners, Inc.(4)....................... 1,474,318 34.8%
Harold S. Geneen(5)..................................... 1,702,809 40.2%
Gerald H. Newman(5)..................................... 1,549,687 36.6%
Guy W. Fiske(6)......................................... 32,683 *
J. Kenneth Hickman...................................... 0 N/A
Frederick W. Kolling, III(7)............................ 16,167 *
Alan W. Morton(8)....................................... 16,666 *
James H. Whitney(9)..................................... 25,000 *
All Directors and Executive Officers
as a group (seven persons)(10)........................ 1,871,361 43.5%
</TABLE>
- ---------------
* Less than 1%.
(1) The address of Park Investment Partners, Inc., as well as each of the
directors and executive officers is c/o Gunther International, Ltd., 5
Wisconsin Avenue, Norwich, Connecticut 06360.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock owned by them.
(3) Assumes that shares which the named person or group has a contractual right
to acquire within 60 days have been acquired and are outstanding.
(4) Includes 100,400 shares of Common Stock issuable upon the exercise of
outstanding stock subscription warrants and 500 shares of Series B Common
Stock issued and outstanding.
(5) Harold S. Geneen and Gerald H. Newman each individually owns stock
subscription warrants to purchase 2,667 shares of Common Stock, and the
shares purchasable upon exercise of such warrants are included in the
figure shown in the table. Such figure also includes the shares of Common
Stock
9
<PAGE> 12
beneficially owned by Park, as to which Messrs. Geneen and Newman may be
deemed to be beneficial owners.
(6) Includes 5,333 shares of Common Stock purchasable upon the exercise of
outstanding stock subscription warrants.
(7) Includes 11,667 shares of Common Stock issuable upon the exercise of the
vested portion of outstanding stock options and 2,000 shares of Common
Stock purchasable by Mrs. Kolling upon the exercise of outstanding stock
subscription warrants as to which Mr. Kolling disclaims beneficial
ownership.
(8) Includes 16,666 shares of Common Stock issuable upon the exercise of the
vested portion of outstanding stock options.
(9) Includes 25,000 shares of Common Stock issuable upon the exercise of the
vested portion of outstanding stock options.
(10) Includes 111,067 shares of Common Stock purchasable upon the exercise of
outstanding stock subscription warrants, 500 shares of Series B Common
Stock issued and outstanding, and 57,833 shares of Common Stock issuable
upon the exercise of the vested portion of outstanding stock options.
ITEM 2.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company has appointed Arthur Andersen LLP as the Company's independent
accountants for the current fiscal year. Arthur Andersen LLP has served as the
Company's independent accountants for eight years. A representative of Arthur
Andersen LLP will be present at the Annual Meeting to respond to appropriate
questions and to make such statements as they may desire.
Ratification of the appointment of Arthur Andersen LLP as the Company's
independent accountants for the current fiscal year will require the affirmative
vote of a majority of the shares of Common Stock represented in person or by
proxy and entitled to vote at the Annual Meeting. In the event stockholders do
not ratify the appointment of Arthur Andersen LLP as the Company's independent
accountants for the forthcoming fiscal year, such appointment will be
reconsidered by the Audit Committee and the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR THE CURRENT FISCAL YEAR.
ITEM 3.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than the
items referred to above. Proxies in the enclosed form will be voted in respect
of any other business that is properly brought before the Annual Meeting in
accordance with the judgment of the person or persons voting the proxies.
STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Company's
1997 Annual Meeting of Stockholders must be received by the Secretary of the
Company, for inclusion in the Company's proxy, notice of meeting and proxy
statement relating to the 1997 Annual Meeting, by April 1, 1997.
THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED MARCH
31, 1996 FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE COMPANY'S OFFICES, 5 WISCONSIN AVENUE,
NORWICH, CONNECTICUT 06360; ATTENTION: FREDERICK W. KOLLING, III.
10
<PAGE> 13
ADDITIONAL INFORMATION
The cost of soliciting proxies in the enclosed form will be borne by the
Company. Officers and regular employees of the Company may, but without
compensation other than their regular compensation, solicit proxies by further
mailing or personal conversations, or by telephone, telex or facsimile. The
Company will, upon request, reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to the beneficial owners
of stock.
By Order of the Board of Directors,
Frederick W. Kolling, III
Vice President, Chief Financial
Officer,
Treasurer and Secretary
July 29, 1996
11
<PAGE> 14
GUNTHER INTERNATIONAL, LTD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of shares of common stock, par value $.001 per share
("Common Stock"), of GUNTHER INTERNATIONAL, LTD., a Delaware corporation
(hereinafter referred to as the "Company"), does hereby constitute and appoint
FREDERICK W. KOLLING, III and JAMES H. WHITNEY or either of them, as proxies,
with full power to act without the other and with full power of substitution, to
represent the undersigned at the Annual Meeting of Stockholders of the Company
to be held on Tuesday, August 27, 1996 at 10:30 a.m., local time, at the Mystic
Hilton Hotel, 20 Coogan Boulevard, Mystic, Connecticut 06355, and at any
adjournments or postponements thereof, and to vote all shares of Common Stock of
the Company which the undersigned is entitled to vote on all matters coming
before said meeting. The undersigned hereby acknowledges receipt of the Notice
of Annual Meeting and the Proxy Statement, dated July 29, 1996, and instructs
its attorneys and proxies to vote as set forth on this Proxy.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE> 15
PLEASE MARK YOUR
/X/ VOTES AS IN THIS
EXAMPLE.
1. ELECTION OF DIRECTORS
FOR WITHHELD
/ / / /
NOMINEES: James M. Whitney, Alan W. Morton and Frederick W. Kolling III.
For, except vote withheld from the following nominee(s)
_______________________________________________________
2. Arthur Andersen & Co. as independent auditors of the Company for the Fiscal
Year ending March 31, 1996.
FOR AGAINST ABSTAIN
/ / / / / /
3. To vote with discretionary authority upon any other business which may
properly come before the meeting or any adjournment thereof.
The shares represented by this Proxy will be voted as specified. IF NO CHOICE IS
SPECIFIED, THE PROXY WILL BE VOTED IN FAVOR OF THE SPECIFIED NOMINEES AND FOR
THE APPROVAL OF ARTHUR ANDERSEN LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY
FOR THE CURRENT YEAR AND THE PROXIES ARE GIVEN DISCRETIONARY AUTHORITY TO VOTE
ON ANY OTHER MATTERS UPON WHICH THE UNDERSIGNED IS ENTITLED TO VOTE AND WHICH
MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS OR
POSTPONEMENTS THEREOF. THIS PROXY CARD MUST BE PROPERLY COMPLETED, SIGNED,
DATED AND RETURNED IN ORDER TO HAVE YOUR SHARES VOTED.
SIGNATURE(S)________________________________________________ DATE______________
Note: Please sign exactly as name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee,
etc., indicate title. If the signer is a corporation, sign in the
corporate name by a duly authorized officer.
