<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 Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
GUNTHER INTERNATIONAL
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(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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<PAGE> 2
GUNTHER INTERNATIONAL, LTD.
One Winnenden Road
Norwich, Connecticut 06360
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 26, 1997
----------
Notice is hereby given that the Annual Meeting of Stockholders of
Gunther International, Ltd. will be held at the Hotel Inter-Continental, 111
East 48th Street, New York, New York on Tuesday, August 26, 1997 at 10:00 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, 1997
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 One Winnenden Road, Norwich, Connecticut 06360. All
stockholders are invited to attend the Annual Meeting in person.
July 29, 1997 By order of the Board of Directors
Norwich, Connecticut
Frederick W. Kolling, III
Vice President, Chief Financial Officer
Treasurer and Secretary
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.
ONE WINNENDEN ROAD
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 Hotel
Inter-Continental, 111 East 48th Street, New York, New York on Tuesday, August
26, 1997 at 10:00 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, 1997.
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, 1997 (the "Record Date") are entitled to notice of
and to vote at the Annual Meeting. On the Record Date, there were 4,283,269
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 the 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.
<PAGE> 4
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 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, 1998 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.
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<PAGE> 5
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 87 Chairman Emeritus of ITT Corporation 1993
Gerald H. Newman 56 Private Investor 1993
Guy W. Fiske 72 Chairman and Chief Executive Officer 1993
of Fiske Associates, Inc.
J. Kenneth Hickman 69 Independent Business Consultant 1994
NOMINATED FOR ELECTION BY HOLDERS OF COMMON STOCK
- -------------------------------------------------
James H. Whitney 52 President and Chief Executive Officer 1995
Alan W. Morton 59 Vice President and Chief Operating Officer 1995
Frederick W. Kolling, III 49 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 Corporation
since 1983, of ITT Industries, Inc. since 1996, and of Hartford Financial
Services Group, Inc. since 1996. 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
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<PAGE> 6
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 four 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.
COMMITTEES OF THE BOARD
The standing committees of the Board of Directors are the Audit
Committee and the Executive Compensation/Stock Option Committee.
The Audit Committee of the Board of Directors consists of Messrs.
Fiske, Geneen, Newman and Hickman. Mr. Geneen serves as Chairman of the Audit
Committee. 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 three times.
-4-
<PAGE> 7
The Executive Compensation/Stock Option Committee of the Board of
Directors consists of Messrs. Fiske, Geneen, Hickman and Newman. Mr. Geneen
serves as Chairman of the Executive Compensation/Stock Option Committee. The
function of the Executive Compensation/Stock Option 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 87 Chairman of the Board of Directors
James H. Whitney 52 President and Chief Executive Officer
Alan W. Morton 59 Vice President and Chief Operating Officer
Frederick W. Kolling, III 49 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."
-5-
<PAGE> 8
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, 1997 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, 1997 exceeded $100,000, for services in all capacities to the
Company during such fiscal year (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-term
Compensation
Annual Compensation(1) Awards
----------------------------------- ----------------------
Restricted Options/ All Other
Stock SARs Compensation
Name and Principal Position Year Salary($) Bonus($) Awards($) (#) ($)
- --------------------------- ---- --------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
James H. Whitney, President 1997 120,000 30,000 0 0 0
and Chief Executive Officer 1996 120,000 30,000 0 0 0
1995(2) 30,577 0 0 75,000 0
Alan W. Morton, Vice 1997 100,000 40,000 0 0 0
President and Chief 1996 100,000 40,000 0 0 0
Operating Officer 1995(3) 8,231 3,077 0 50,000 0
Frederick W. Kolling III 1997 85,000 26,981 0 0 0
Vice President and Chief 1996 50,116 22,750 0 35,000 0
Financial Officer 1995(4) 0 0 0 0 0
</TABLE>
- --------------------
(1) Perquisites and other personal benefits are not included because they
do not exceed the lesser of $50,000 or 10% of the total of base salary
and annual bonus for each of the Named Executive Officers.
(2) Mr. Whitney joined the Company in fiscal 1995.
(3) Mr. Morton joined the Company in fiscal 1995.
(4) Mr. Kolling joined the Company in fiscal 1996.
Option Exercises and Fiscal Year-End Values. Shown below is information
with respect to option exercises in fiscal year 1997 and unexercised options to
purchase the Company's Common Stock and Common Stock granted in fiscal year 1997
under the Company's 1993 Stock Option Plan to the individuals listed.
-6-
<PAGE> 9
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Shares Options/SAR at FY-End(#) at FY-End($)(1)
Acquired on Value -------------------------------- -----------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James H. Whitney 0 0 50,000 25,000 168,750 84,375
Alan W. Morton 0 0 33,333 16,667 112,500 56,250
Frederick W. Kolling III 0 0 11,667 23,333 35,000 70,000
</TABLE>
(1) Represents the difference between the fair market value of the Common
Stock on March 31, 1997 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/Stock Option 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/Stock Option Committee determines the
prices and terms at which options may be granted. Options may be exercisable in
installments 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, 1997, 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 of the
founding stockholders 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
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<PAGE> 10
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,
1997, 95,000 options have been granted under this plan.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 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 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.
-8-
<PAGE> 11
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 (except with respect to shares held by three of the Founding Stockholders
that were acquired through the exercise of stock options issued under the
Founders Option Plan), 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 (except with respect to shares held by three of the Founding
Stockholders that were acquired through the exercise of stock options issued
under the Founders Option Plan) 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.
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
nominees of Park. The amount of the royalty payments is to equal 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 with respect to three of the Founding Stockholders and Mr.
Wallace, 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
On June 4, 1996, the Company entered into a line of credit arrangement
with a bank which was used to refinance the Company's pre-existing line of
credit. This arrangement, as amended, provides for two revolving loans totaling
$2,250,000. The available borrowing under Facility A is in the amount of
$1,750,000, and is to be fully cash
-9-
<PAGE> 12
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 credit Facility A
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 July 31, 1998.
The available borrowing under Facility B is in the amount of $500,000 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 July 31, 1998.
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) 649,189 15.2%
667 Madison Avenue
New York, NY 10021
</TABLE>
(1) Four Partners filed (i) 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 and
(ii) a Schedule 13D under the Securities Exchange Act of 1934, as
amended, dated August 26, 1996 stating that it holds sole voting power
with respect to 64,286 shares of Common Stock, shared voting power with
respect to no shares of Common Stock, sole dispositive power with
respect to 64,286 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, 1997 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) 1,487,889 33.9%
Harold S. Geneen(5) 1,716,380 39.1%
Gerald H. Newman(5) 1,563,258 35.6%
Guy W. Fiske(6) 32,683 *
J. Kenneth Hickman 10,000 *
Frederick W. Kolling, III(7) 30,833 *
Alan W. Morton(8) 34,333 *
James H. Whitney(9) 51,000 *
All Directors and Executive
Officers as a group (seven persons)(10) 1,950,030 45.5%
</TABLE>
- ----------
-10-
<PAGE> 13
* 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.,
One Winnenden Road, 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 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 warrants.
(7) Includes 23,333 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. Fred Kolling, III upon the exercise
of outstanding stock subscription warrants, in which shares of Common
Stock Mr. Kolling disclaims beneficial ownership.
(8) Includes 33,333 shares of Common Stock issuable upon the exercise of
the vested portion of outstanding stock options.
(9) Includes 50,000 shares of Common Stock issuable upon the exercise of
the vested portion of outstanding stock options.
(10) Includes 111,999 shares of Common Stock purchasable upon the exercise
of outstanding stock subscription warrants and stock options, 500
shares of Series B Common Stock issued and outstanding, and 106,666
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
-11-
<PAGE> 14
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 & CO. 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 1998 ANNUAL MEETING
Any proposal of a stockholder intended to be presented at the Company's
1998 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 1998 Annual Meeting, by April 1, 1998.
THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
MARCH 31, 1997 FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY'S OFFICES,
ONE WINNENDEN ROAD, NORWICH, CONNECTICUT 06360; ATTENTION: FREDERICK W. KOLLING,
III.
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, 1997
-12-
<PAGE> 15
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 26, 1997 at 10:00 a.m., local time, at the Hotel
Inter-Continental, 111 East 48th Street, New York, New York, 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, 1997, and instructs
its attorneys and proxies to vote as set forth on this Proxy.
(To be Signed on Reverse Side)
<PAGE> 16
[ X ] Please mark your votes
as in this example.
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.
FOR WITHHELD
1. ELECTION OF [ ] [ ] James H. Whitney,
DIRECTORS Alan W. Morton and
Frederick W. Kolling, III.
For, except vote withheld from the following nominee(s)
-------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Arthur Andersen LLP as independent [ ] [ ] [ ]
auditors of the Company for the Fiscal
Year ending March 31, 1998.
3. To vote with discretionary authority upon any other business which may
properly come before the meeting or any adjournments thereof.
SHAREHOLDER NAME AND ADDRESS
DO NOT PRINT IN THIS AREA
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.
