<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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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.:
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(3) Filing Party:
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(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 SEPTEMBER 9, 1999
------------------------
Notice is hereby given that the 1999 Annual Meeting of Stockholders of
Gunther International, Ltd. will be held at Loew's New York Hotel, 569 Lexington
Avenue, New York, New York on Thursday, September 9, 1999 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 act upon a proposal to adopt the Gunther International, Ltd.
Directors' Equity Plan;
(3) To ratify the appointment of Arthur Andersen LLP as the Company's
independent accountants for the fiscal year ended March 31, 2000; and
(4) 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 15, 1999 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.
By order of the Board of Directors
Michael M. Vehlies
Senior Vice President, Chief Financial
Officer, Treasurer and Secretary
July 29, 1999
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.
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 1999 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at Loew's New York
Hotel, 569 Lexington Avenue, New York, New York on Thursday, September 9, 1999
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, 1999.
GENERAL
Only holders of record of the Company's common stock, par value $.001 per
share ("Common Stock"), issued and outstanding at the close of business on July
15, 1999 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting. On the Record Date, 4,291,769 shares of Common Stock were issued and
outstanding. Each holder of shares of Common Stock is entitled to one vote for
each share of Common Stock held as of the Record Date.
The presence, either in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting shall constitute a quorum for the transaction of business.
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.
Assuming the presence of a quorum, the individuals nominated for election
to the Board of Directors, as described in Item 1 below, will be elected by the
affirmative vote of a plurality of the votes cast at the Annual Meeting. This
means that the candidates receiving the highest number of affirmative votes of
the shares entitled to be voted for them, up to the number of Directors to be
elected by those shares, will be elected. Approval of the Gunther International,
Ltd. Directors' Equity Plan, as described in Item 2 below, as well as the
ratification of Arthur Andersen LLP as the Company's independent accountants for
the current fiscal year, as described in Item 3 below, and any other matters
presented for consideration at the Annual Meeting each must be approved by the
affirmative vote of a majority of the shares present, either in person or by
properly executed proxy, and entitled to vote thereon, unless a higher vote is
required under the applicable provisions of the Company's Restated Certificate
of Incorporation, its bylaws, the laws of the State of Delaware, under whose
laws the Company is incorporated, or other applicable law.
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. 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
with respect to any of the proposals described in this proxy statement.
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 approval of the Directors'
Equity Plan, FOR ratification of the appointment of Arthur Andersen LLP as the
Company's independent accountants for the fiscal year ending March 31, 2000, and
as recommended by the Board of Directors with regard to all other matters or, if
no such recommendation
1
<PAGE> 4
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 the 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. 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.
As discussed in more detail below, the Company consummated a $5.7 million
comprehensive financing transaction on October 2, 1998. See "Certain
Relationships and Related Transactions." In connection with this financing
transaction, the Company and certain stockholders entered into a separate voting
agreement (the "Voting Agreement"), pursuant to which the stockholders agreed to
vote all shares of Common Stock held by them in favor of one or more persons
nominated by the parties to the Voting Agreement. The parties to the Voting
Agreement have advised the Company that they intend to vote all shares of Common
Stock held by them in favor of (i) Messrs. Perkins, Spiegel, Snelling and
Steinberg, who are the nominees of Gunther Partners, LLC, (ii) Mr. Newman, who
is the nominee of Park Investment Partners, Inc., and (iii) Mr. Kirkpatrick, who
is the nominee of the Estate of Harold S. Geneen. Mr. Hickman is an independent
director, who is not the nominee or representative of any party to the Voting
Agreement. As of June 30, 1999, the Company believes that the original parties
to the Voting Agreement, together with any subsequent transferees (who are also
subject to the Voting Agreement), held approximately 2,240,204 shares or Common
Stock, or approximately 52.2% of the issued and outstanding shares of Common
Stock (excluding any shares of Common Stock issuable upon the exercise of
outstanding options, warrants or other similar rights).
The following table sets forth certain information with respect to all
nominees for election as directors of the Company, including those persons who
currently serve in such capacity:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---- --- -------------------- --------
<S> <C> <C> <C>
J. Kenneth Hickman............ 71 Independent Business and Financial 1994
Consultant
Steven S. Kirkpatrick......... 44 Vice President, United States Trust Company 1999
of New York
Gerald H. Newman.............. 58 Private Investor 1993
Marc I. Perkins............... 54 President and Chief Executive Officer of the 1998
Company
Robert Spiegel................ 63 Private Investor 1998
George A. Snelling............ 70 Independent Business Consultant 1999
Thomas M. Steinberg........... 43 President, Tisch Family Interests 1998
</TABLE>
J. KENNETH HICKMAN. Mr. Hickman is a certified public accountant. He has
been an independent business consultant since January 1991. For twenty-seven
years prior to that, he was a partner of Arthur Andersen LLP and its
predecessors, 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 organizations, primarily those concerned
with international trade and foreign affairs.
2
<PAGE> 5
STEVEN S. KIRKPATRICK. Mr. Kirkpatrick is a Vice President of the United
States Trust Company of New York, where he is the manager of the Real Estate,
Closely Held Business and Oil & Gas Departments. He joined the United States
Trust Company of New York in 1986. Prior to that, he was a financial analyst for
Schupak & Company, a merchant banking firm specializing in private placements of
debt and equity securities for the leisure and hospitality industries. Mr.
Kirkpatrick is a member of the American Society of Appraisers in the discipline
of Business Valuation.
GERALD H. NEWMAN. Mr. Newman has been a private investor and consultant to
various high technology companies since 1971. Following the death of Harold S.
Geneen in November of 1997, he served as Chairman of the Board of Directors of
the Company until Mr. Steinberg was elected to that position on October 2, 1998.
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.
MARC I. PERKINS. Mr. Perkins has been the Chief Executive Officer of the
Company since October 2, 1998. He has been the President of the Company since
April 12, 1999. He was Vice Chairman of the Company from October 2, 1998 until
April 12, 1999. Since 1995, he has also served as a registered principal of PMK
Securities and Research, Inc., a securities broker-dealer and a member of the
National Association of Securities Dealers Inc. He served as the Chairman and
Chief Executive Officer of Perkins Capital Advisers, Inc., a registered
investment adviser, from 1992 to 1998, and the President of Crown Financial
Associates, Inc., a securities broker-dealer, from 1992 to 1995. From 1987-1992,
he was a Vice President and shareholder of Private Capital Management, Inc., a
registered investment adviser. He also serves as a director of HealthPlan
Services, Inc., a third-party administrator of health care plans, the shares of
which are listed on the New York Stock Exchange.
ROBERT SPIEGEL. Mr. Spiegel has been a private investor since May 1995.
Prior to that, he was the Chairman and President of RJR Drug Distributors, a
pharmaceutical distribution company, from May 1985 to May 1995. He also serves
as a director of Hoenig Group, Inc., a NASDAQ listed company whose subsidiaries
engage in asset management and brokerage activities.
GEORGE A. SNELLING. Mr. Snelling has been an independent business
consultant since 1991. Prior to that, he served as the Executive Vice
President-Corporate Development of SunTrust Banks, Inc., a bank holding company,
from 1980 to 1991. From 1976 through 1980, he served as the Chief Operating
Officer of Gulfstream Banks and Florida National Banks. From 1966 through 1976,
he served as the Chief Financial Officer of Barnett Banks, Inc. and, from 1956
through 1966, he served as a partner of Smoak, Davis, Nixon & Snelling, a
certified public accounting firm.
THOMAS M. STEINBERG. Mr. Steinberg is the President of Tisch Family
Interests, a position he has held since 1997. In this capacity, he manages and
supervises investments for members of the Laurence A. Tisch and Preston R. Tisch
families. From 1991 to 1997, he was the Managing Director of Tisch Family
Interests. He is also a director of Catellus Development Corporation, a Delaware
corporation engaged in investment activities which is listed on the New York
Stock Exchange. Mr. Steinberg has been Chairman of the Board of the Company
since October 1998.
DIRECTORS' REMUNERATION; ATTENDANCE
Historically, the members of the Board of Directors of the Company received
no compensation for their service as directors, although the Company maintained
a policy of reimbursing all directors for any reasonable travel expenses
incurred in connection with their attendance at meetings.
Effective as of April 1, 1999, each director who is not an officer or
employee of the Company is entitled to receive a quarterly cash retainer fee of
$1,250. Directors who are officers or employees of the Company continue to
receive no additional compensation for their service as members of the Board of
Directors or as members of Board committees. The Company continues to maintain a
policy of reimbursing all directors for any reasonable travel expenses incurred
in connection with their attendance at meetings.
3
<PAGE> 6
The Board of Directors, based upon the recommendation of the Executive
Compensation/Stock Option Committee, has adopted the Gunther International, Ltd.
Directors' Equity Plan (the "Directors' Equity Plan") effective April 1, 1999,
subject to approval by the Company's stockholders at the 1999 Annual Meeting.
See Item 2 below. Pursuant to the Directors' Equity Plan, each participating
director will receive shares of Common Stock of the Company as compensation for
each quarter in which the director serves on the Board. The number of shares
issued for each quarter will have a value equal to $2,500, calculated based on
the fair market value of the Company's Common Stock at the end of such quarter.
All non-employee directors are eligible to participate in the Directors' Equity
Plan. An eligible director may make an irrevocable election not to participate
in the Directors' Equity Plan in any year and instead receive quarterly cash
retainers (currently set at $1,250). The aggregate number of shares of Common
Stock available for awards under the Directors' Equity Plan is 100,000, subject
to specified adjustments in the event of changes in the outstanding shares of
Common Stock.
As of the date of this Proxy Statement, Mr. Kirkpatrick has elected not to
participate in the Directors' Equity Plan, and he has also waived his right to
receive the quarterly cash retainer.
The Board of Directors met eight times during the fiscal year ended March
31, 1999 and acted by the unanimous written consent of its members on five
occasions. 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 Executive
Committee, the Audit Committee and the Executive Compensation/Stock Option
Committee.
The Executive Committee was formed on October 20, 1998 consisting of
Messrs. Perkins, Spiegel and Steinberg. Mr. Steinberg served as Chairman of the
Executive Committee. The Executive Committee is vested with all powers and
authorities of the full Board of Directors, except to the extent that the
Delaware General Corporation Law prohibits such powers and authorities from
being delegated to, or exercised by, a committee of the full Board. The
Executive Committee is authorized to act for the full Board in the management of
the business and affairs of the Company. The Executive Committee did not conduct
any meetings during the fiscal year ended March 31, 1999.
During fiscal 1999, the Audit Committee consisted of Messrs. Hickman,
Newman, Spiegel and Steinberg. Mr. Steinberg served 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 fiscal year ended March 31, 1999, the Audit Committee
met six times.
During fiscal 1999, the Executive Compensation/Stock Option Committee
consisted of Messrs. Hickman, Newman, Spiegel and Steinberg. Mr. Spiegel served
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 fiscal year
ended March 31, 1999, the Executive Compensation/Stock Option Committee met
three times.
4
<PAGE> 7
EXECUTIVE OFFICERS
The current executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
- ---- --- --------------------------
<S> <C> <C>
Marc I. Perkins........................... 54 President and Chief Executive Officer
Michael M. Vehlies........................ 38 Senior Vice President, Chief Financial
Officer, Treasurer and Secretary
</TABLE>
For the biography of Mr. Perkins, see the previous section entitled
"Election of Directors."
MICHAEL M. VEHLIES. Mr. Vehlies has held the positions of Senior Vice
President, Chief Financial Officer, Treasurer and Secretary since he rejoined
the Company in October 1998. Prior to that, he was the Controller of SS&C
Technologies, Inc., a computer software company, from June 1995 to October 1998.
He was the Controller of Digital Graphix, Inc. from February 1995 to June 1995.
He was previously a Vice President and the Chief Financial Officer of the
Company from September 1992 to February 1995. He is a Certified Public
Accountant and was employed by Arthur Andersen & Co. from 1988 to 1992.
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 periods indicated of each person who served as the chief
executive officer of the Company during the fiscal year ended March 31, 1999
(collectively, the "Named Executive Officers"). During the fiscal year ended
March 31, 1999, no other executive officer of the Company received total salary
and bonus payments in excess of $100,000 for services in all capacities to the
Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
----------------------
ANNUAL COMPENSATION(1) RESTRICTED OPTIONS/ ALL OTHER
----------------------------- STOCK SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($) (#) ($)
- --------------------------- ---- --------- -------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Marc I. Perkins............. 1999 $ 39,231 0 0 150,000 0
President and Chief
Executive Officer(2)
James H. Whitney............ 1999 74,308 17,308 0 0 20,192
President and Chief 1998 120,000 30,000 0 0 0
Executive Officer(3) 1997 120,000 30,000 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. Perkins joined the Company effective as of October 2, 1998.
(3) Mr. Whitney left the employ of the Company effective as of November 2, 1998.
He received $20,192 of vacation pay upon his termination.
5
<PAGE> 8
Option Exercises and Fiscal Year-End Values. The following table sets
forth certain information with respect to option exercises in fiscal year 1999
and unexercised options to purchase the Company's Common Stock and Common Stock
granted in fiscal year 1999 to the individuals listed.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS
SHARES OPTIONS/SAR AT FY-END(#) AT FY-END($)(1)
ACQUIRED ON VALUE ----------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Marc I. Perkins........... 0 0 50,000 100,000 29,690 59,380
James H. Whitney(2)....... 0 0 0 0 0 0
</TABLE>
- ---------------
(1) Represents the difference between the fair market value of the Common Stock
on March 31, 1999 and the exercise price. Mr. Whitney left the employ of the
Company and all of the stock options reflected in the table have expired
without having been exercised.
(2) Mr. Whitney left the employ of the Company effective as of November 2, 1998.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE
NAME GRANTED(#) FISCAL YEAR PRICE ($/SH)(1) EXPIRATION DATE(2)
- ---- ------------ ------------ ---------------- ------------------
<S> <C> <C> <C> <C>
Marc I. Perkins............. 150,000 52.0 1.50 10/29/2003
James H. Whitney(3)......... 0 0 N/A N/A
</TABLE>
- ---------------
(1) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares, subject to certain conditions.
(2) The options were granted for a term of 5 years, subject to earlier
termination in certain events related to termination of employment.
(3) Mr. Whitney left the employ of the Company effective as of November 2, 1998.
EMPLOYMENT AGREEMENTS
The Company has entered into separate employment agreements with Messrs.
Perkins and Vehlies. The employment agreement entered into between the Company
and Mr. Perkins provides for him to be employed as the Chief Executive Officer
of the Company at an initial base salary of $156,000 per annum. The employment
agreement also provides for the grant of a non-qualified stock option affording
Mr. Perkins the right and option to purchase up to 150,000 shares of Common
Stock at an exercise price of $1.50 per share. The stock option granted to Mr.
Perkins pursuant to the terms of his employment agreement has a term of five
years, commencing as of October 5, 1998, and vests at the rate of 25,000 shares
every three months until the stock option is fully vested as of January 5, 2000.
The vesting of any unvested portion of the stock option immediately accelerates
upon the occurrence of a change of control of the Company. The employment
agreement may be terminated by either party, with or without cause, on ninety
days' prior written notice. The employment agreement may be terminated
immediately by the Company for "cause" and by Mr. Perkins for "good reason," as
those terms are defined in the employment agreement. In the event that the
employment agreement is terminated by the Company for "cause," Mr. Perkins will
not be entitled to any additional compensation. In the event that the employment
agreement is terminated by Mr. Perkins for "good reason," the Company generally
must pay Mr. Perkins his base salary for the remainder of the calendar month
during which the termination is effective and for six consecutive calendar
months thereafter.
6
<PAGE> 9
The employment agreement entered into between the Company and Mr. Vehlies
is substantially identical to the employment agreement entered into between the
Company and Mr. Perkins, except that Mr. Vehlies' employment agreement provides
that Mr. Vehlies will be employed as a Senior Vice President and the Chief
Financial Officer of the Company at an initial base salary of $100,000. In
addition, Mr. Vehlies' employment agreement provides for the grant of a
non-qualified stock option affording Mr. Vehlies the right and option to
purchase up to 35,000 shares of Common Stock at an exercise price of $1.50 per
share. The stock option has a term of five years, commencing as of October 29,
1998, and vests in equal annual installments over a three-year period commencing
as of the date of grant until the stock option is fully vested as of October 29,
2001. The vesting of any unvested portion of the stock option immediately
accelerates upon the occurrence of a change of control of the Company.
STOCK OPTION PLANS
In December 1993, the Company adopted a Stock Option Plan (the "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. The Stock Option Plan also authorized the grant of non-qualified stock
options to certain then-current key employees of the Company who were designated
as "founders" of the Company. Currently, options to purchase up to 310,000
shares of Common Stock may be granted under the Stock Option 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 Stock Option 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 March 31, 1999, options covering an aggregate of 215,000
shares of Common Stock were outstanding under the Stock Option 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 fiscal year ended March 31,
1999, its executive officers, directors, and greater than 10% beneficial owners
complied with all applicable filing requirements, except that Mr. Perkins did
not timely file his initial beneficial ownership report on Form 3 upon his
election to the Board during May of 1998. The report was subsequently filed as
required.
7
<PAGE> 10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 4, 1996, the Company and the Bank of Boston Connecticut, N.A. (the
"Bank") entered into a Revolving Loan and Security Agreement (as amended, the
"Revolving Credit Facility"), with an aggregate borrowing capacity of
$2,250,000. The Revolving Credit Facility was bifurcated into two separate
subfacilities (hereinafter referred to as "Facility A" and "Facility B").
Facility A had a maximum borrowing capacity of $1,750,000 and Facility B had a
maximum borrowing capacity of $500,000.
In order to induce the Bank to enter into the Revolving Credit Facility,
Mr. Harold S. Geneen, then the Chairman of the Board and a stockholder of the
Company, agreed to provide the Bank with sufficient cash collateral to secure
all borrowings outstanding under Facility A. The borrowings under Facility B
were secured by all of the tangible and intangible assets of the Company. Mr.
Geneen passed away on November 21, 1997, and his death constituted a technical
event of default under the Revolving Credit Facility. Subsequent to Mr. Geneen's
death, the Executors of Mr. Geneen's estate affirmed Mr. Geneen's obligations to
the Bank with respect to the Revolving Credit Facility, and the Bank waived the
technical event of default. The Bank also extended the maturity date of the
Revolving Credit Facility to April 1, 1999.
The Revolving Credit Facility contained several affirmative and negative
covenants pursuant to which the Company, among other things, was required to
have Operating Profits (as defined in the Revolving Credit Facility). The net
loss reported by the Company for the fiscal year ended March 31, 1998 violated
these covenants and constituted an event of default under the Revolving Credit
Facility.
On October 2, 1998, the Company entered into a $5.7 million comprehensive
financing transaction with the Bank, the Estate of Harold S. Geneen (the
"Estate") and Gunther Partners LLC (the "New Lender"), the proceeds of which
have been utilized to restructure and replace the Revolving Credit Facility,
fund a full settlement with the Company's third-party service provider and
provide additional working capital to fund the Company's ongoing business
operations.
Under the terms of the transaction, the New Lender loaned an aggregate of
$4.0 million to the Company. At the same time, the Bank reached an agreement
with the Estate, pursuant to which the Estate consented to the liquidation of
approximately $1.7 million of collateral and the application of the proceeds of
such collateral to satisfy and repay in full a like amount of indebtedness
outstanding under the Revolving Credit Facility. The balance of the indebtedness
outstanding under the Revolving Credit Facility, approximately $350,000, was
repaid in full from the proceeds of the new financing. The Company executed a
new promissory note in favor of the Estate evidencing the Company's obligation
to repay the amount of the collateral that was liquidated by the Bank. The
Company's obligations to the Estate are subordinated to the Company's
obligations to the New Lender.
The principal balance of the $4.0 million loan to the New Lender is to be
repaid in monthly installments of $100,000 from November 1, 1998 through
September 1, 1999, a $400,000 payment due on October 1, 1999 and the balance
shall be due on October 1, 2003. Interest shall be paid quarterly, at the rate
of 8% per annum, beginning January 1, 1999 and continuing until the principal
and interest due is paid in full. The debt is secured by a first priority
interest in all tangible and intangible (excluding patents and trademarks)
personal property and a secondary interest in patents and trademarks.
To induce the New Lender to enter into the financing transaction, the
Company granted the New Lender a stock purchase warrant entitling the New
Lender, at any time during the period commencing on January 1, 1999 and ending
on the fifth anniversary of the transaction, to purchase up to 35% of the pro
forma, fully diluted number of shares of the Common Stock of the Company,
determined as of the date of exercise. The exercise price of the warrant is
$1.50 per share. On or about November 17, 1998, New Lender distributed all of
its rights under the warrant to its members in proportion to their ownership
interests in New Lender. Thus, the warrants are now held by the members of New
Lender (and their transferees) in proportion to their ownership interests in New
Lender. As of June 30, 1999, the Company believes the warrants are exercisable
for an aggregate of 2,494,029 shares of Common Stock.
In addition, the Company, the New Lender, the Estate and certain
shareholders (Park Investment Partners, Gerald H. Newman, Four Partners and
Robert Spiegel) entered into the Voting Agreement,
8
<PAGE> 11
pursuant to which they each agreed to vote all shares of Common Stock held by
them in favor of (i) that number of persons nominated by the New Lender
constituting a majority of the Board of Directors, (ii) one person nominated by
the Estate and (iii) one person nominated by Park Investment Partners. As of
June 30, 1999, the Company believes that the original parties to the Voting
Agreement, together with any subsequent transferees (who are also subject to the
Voting Agreement), hold an aggregate of approximately 2,240,204 shares, or
approximately 52.2% of the outstanding shares, of Common Stock (excluding any
shares of Common Stock issuable upon the exercise of options, warrants or other
similar rights).
The promissory note in favor of the Estate for approximately $1.7 million
is to be repaid at the earlier of one year after the Company's obligations to
the New Lender are paid in full or on October 2, 2004. Interest, at 5.44% per
annum, shall accrue on principal and unpaid interest, which is added to the
outstanding balance and is due at the time of principal payments. The
indebtedness is secured by a second priority interest in all tangible and
intangible personal property of the Company (excluding patents and trademarks)
and a third priority interest in patents and trademarks. Another entity,
Connecticut Innovations, Inc. ("CII"), has a first priority security interest in
certain specified patents and trademarks of the Company dating back to an
earlier financing transaction. The security interests of both the New Lender and
the Estate in the Company's patents and trademarks are subordinate to the
security interest of CII in this specified collateral. The security interest of
the Estate is subordinate to all rights of the New Lender.
In connection with the consummation of these financing transactions, James
H. Whitney and Frederick W. Kolling III resigned from the Board of Directors of
the Company and, pursuant to the provisions of the Voting Agreement, Messrs.
Steinberg and Spiegel were elected to fill the vacancies that were created by
the resignations of Messrs. Whitney and Kolling.
Prior to his death, Mr. Geneen also loaned the Company $150,000 for working
capital purposes. The loan is an unsecured demand loan. As of the date of this
Proxy Statement, no portion of the loan has been repaid.
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of June 30, 1999, with the exception of the persons listed below and the
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(1)(2) OF CLASS
------------ --------
<S> <C> <C>
Gunther Partners, LLC(3).................................... 1,801,916 41.0%
c/o Thomas J. Tisch
667 Madison Avenue
New York, NY 10021
Executors of the Estate of Harold S. Geneen(4).............. 1,613,313 37.6%
c/o United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Four-Fourteen Partners, LLC(5).............................. 2,520,588 39.9%
c/o Thomas J. Tisch
667 Madison Avenue
New York, NY 10021
Park Investment Partners, Inc.(6)........................... 1,387,489 32.3%
c/o Gerald H. Newman
17161 Coral Cove Way
Boca Raton, FL 33496
</TABLE>
- ---------------
(1) 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.
9
<PAGE> 12
(2) Assumes that shares which the named person or group has a contractual right
to acquire within 60 days have been acquired and are outstanding.
(3) Based on information set forth in Amendment No. 6 to Schedule 13D, dated
December 10, 1998 ("Amendment No. 6"), filed under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), by Gunther Partners, LLC, Four
Partners, Robert Spiegel, the Richard Spiegel 1987 Trust and Thomas M.
Steinberg. The shares shown in the table represent the number of shares
which the filing persons believed were held by persons other than the filing
persons and were covered by the Voting Agreement as of the date of filing
(including 105,734 shares of Common Stock issuable upon the exercise of
outstanding stock purchase warrants). As noted above, the Company believes
that, as of June 30, 1999, the parties to the Voting Agreement, including
such filing persons, held an aggregate of 2,240,204 shares, or 52.2% of the
outstanding shares, of Common Stock. See "Certain Relationships and Related
Transactions."
(4) Based on information set forth in Amendment No. 1 to Schedule 13D, dated
January 20, 1999, filed under the Exchange Act by June H. Geneen, Phil E.
Gilbert, Jr., Thomas W. Keesee, Jr. and the United States Trust Company of
New York, as co-executors of the Estate of Harold S. Geneen, the former
Chairman and a significant stockholder of the Company. The shares shown in
the table include 1,387,489 shares of Common Stock held by Park Investment
Partners, Inc., a Delaware corporation which is 50% owned by the Estate. The
shares shown in the table exclude the shares of Common Stock covered by the
Voting Agreement. See note 3 above and "Certain Relationships and Related
Transactions."
(5) Based on information set forth in Amendment No. 6, updated to reflect the
Company's belief that the stock purchase warrants issued in connection with
the October 2, 1998 financing transactions described above are currently
exercisable for an aggregate of 2,494,029 shares of Common Stock. See
"Certain Relationships and Related Transactions." Accordingly, the shares
shown in the table include an aggregate of 2,026,399 shares of Common Stock
that may be acquired upon the exercise of the stock purchase warrants which
have been distributed to Four-Fourteen Partners, LLC. The shares shown in
the table exclude the shares of Common Stock beneficially owned by Gunther
Partners, LLC and the shares of Common Stock covered by the Voting
Agreement. See note 3 above and "Certain Relationships and Related
Transactions."
(6) Based on information set forth in the Schedule 13D, dated January 7, 1999,
filed under the Exchange Act by Park Investment Partners, Inc. and Gerald H.
Newman. The shares shown in the table exclude the shares of Common Stock
covered by the Voting Agreement. See note 3 above and "Certain Relationships
and Related Transactions."
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 June 30, 1999 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>
J. Kenneth Hickman.......................................... 10,000 *
Steven S. Kirkpatrick(4).................................... 0 *
Gerald H. Newman(5)......................................... 1,460,191 34.0%
Marc I. Perkins(6).......................................... 100,000 2.3%
George A. Snelling.......................................... 0 *
Robert Spiegel(7)........................................... 491,104 10.5%
Thomas M. Steinberg(8)...................................... 30,794 *
James H. Whitney............................................ 1,000 *
All Directors and Executive Officers as a group(9).......... 2,092,089 43.6%
</TABLE>
- ---------------
* Less than 1%.
10
<PAGE> 13
(1) The address of each of the directors and executive officers of the Company
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) Mr. Kirkpatrick is a Vice President of the United States Trust Company of
New York, which is the beneficial owner of 1,613,313 shares of Common Stock.
See "Stock Ownership of Certain Beneficial Owners."
(5) Based on information set forth in the Schedule 13D, dated January 7, 1999,
filed under the Exchange Act by Park Investment Partners, Inc. and Gerald H.
Newman. The shares shown in the table include 1,387,489 shares held by Park
Investment Partners, Inc., a Delaware corporation which is 50% owned by Mr.
Newman. See "Stock Ownership of Certain Beneficial Owners." The shares shown
in the table exclude the shares of Common Stock covered by the Voting
Agreement. See note 3 to the preceding table and "Certain Relationships and
Related Transactions."
(6) Represents the exercisable portion of stock options exercisable within 60
days of June 30, 1999.
(7) Based on information set forth in Amendment No. 5 to Schedule 13D, dated
October 7, 1998 ("Amendment No. 5"), filed under the Exchange Act by Gunther
Partners, LLC, Four Partners, Robert Spiegel, the Richard Spiegel 1987 Trust
and Thomas M. Steinberg, updated to reflect the Company's belief that the
stock purchase warrants issued in connection with the October 2, 1998
financing transactions described above are currently exercisable for an
aggregate of 2,494,029 shares of Common Stock. See "Certain Relationships
and Related Transactions." Accordingly, the shares shown as beneficially
owned by Mr. Spiegel include 374,104 shares of Common Stock that may be
acquired pursuant to the exercise of the stock purchase warrants which have
been distributed to Mr. Spiegel. The shares shown in the table also include
40,000 shares of Common Stock held by Mr. Spiegel's wife and 15,500 shares
of Common Stock in an IRA account maintained for the benefit of Mr.
Spiegel's wife, with respect to which Mr. Spiegel disclaims beneficial
ownership, and exclude 15,000 shares of Common Stock and warrants to
purchase 62,351 shares of Common Stock held by a trust of which Mr. Spiegel
is a trustee. Mr. Spiegel may be deemed to be the beneficial owner of the
shares of Common Stock that are beneficially owned by such trust. The shares
shown in the table exclude the shares of Common Stock beneficially owned by
Gunther Partners, LLC and the shares of Common Stock covered by the Voting
Agreement. See note 3 to the preceding table and "Certain Relationships and
Related Transactions."
(8) Based on information set forth in Amendment No. 5, updated to reflect the
Company's belief that the stock purchase warrants issued in connection with
the October 2, 1998 financing transactions described above are currently
exercisable for an aggregate of 2,494,029 shares of Common Stock.
Accordingly, the shares shown as beneficially owned by Mr. Steinberg
represent the 30,794 shares of Common Stock that may be acquired by him
pursuant to the exercise of the stock purchase warrants which have been
distributed to him.
(9) Includes an aggregate of 504,898 shares issuable upon the exercise of
outstanding options, warrants or other similar rights exercisable within 60
days of June 30, 1999 and excludes any shares of Common Stock held by the
other parties to the Voting Agreement. If the shares held by other parties
to the Voting Agreement are included in the calculation, the directors and
executive officers of the Company would be deemed to beneficially own an
aggregate of 2,812,102 shares, or approximately 58.6% of the outstanding
shares, of Common Stock.
11
<PAGE> 14
ITEM 2
APPROVAL OF THE GUNTHER INTERNATIONAL, LTD. DIRECTORS' EQUITY PLAN
The Board of Directors, based on the recommendation of the Executive
Compensation/Stock Option Committee, has adopted the Gunther International, Ltd.
Directors' Equity Plan (the "Directors' Equity Plan") effective as of April 1,
1999, subject, however, to the receipt of stockholder approval at the Annual
Meeting. The full text of the Directors' Equity Plan is attached as Appendix A
to this Proxy Statement.
The purpose of the Directors' Equity Plan is to advance the interests of
the Company by offering eligible directors an opportunity to increase their
proprietary interest in the Company. The Company believes that the Plan will
promote the growth and profitability of the Company by strengthening the
alignment of the personal financial interests of participating directors with
those of stockholders.
PRINCIPAL TERMS OF THE DIRECTORS' EQUITY PLAN
Any director who is not an employee of the Company or any of its
subsidiaries may participate in the Directors' Equity Plan. Assuming the
election of each of the nominees for director at the 1999 Annual Meeting of
Stockholders, six Directors of the Company will be eligible to participate. As
of the date of this Proxy Statement, however, one eligible Director, Mr.
Kirkpatrick, has indicated that he will decline participation in the Directors'
Equity Plan.
Pursuant to the Directors' Equity Plan, each participating Director will
receive grants of Common Stock of the Company in lieu of quarterly cash
retainers as compensation for his service on the Board. The number of shares
issued for each quarter will be equal to (i) $2,500, divided by (ii) the fair
market value of the Common Stock on the last business day of such quarter. An
eligible director may make an irrevocable election not to participate in the
Directors' Equity Plan in any year, and instead receive quarterly cash retainers
(currently set at $1,250). The aggregate number of shares of Common Stock
available for awards under the Directors' Equity Plan is 100,000, subject to
specified adjustments in the event of changes in the outstanding shares of
Common Stock.
Each participating Director may elect to defer receipt of the shares of
Common Stock that would otherwise be distributed to him with respect to any
quarter. If such a deferral election is made, the participating Director making
such an election must also make an irrevocable distribution election specifying
when the participating Director desires to receive a distribution of the shares
of Common Stock the receipt of which is being deferred. This election will
remain in effect for all subsequent quarters in which the participating Director
remains a Director of the Company, unless earlier revoked or modified in
accordance with the terms of the Directors' Equity Plan. In general, a
participating Director may elect to have the deferred shares of Common Stock
distributed in a single lump sum or in up to ten equal annual installments,
commencing as of the January 10 (or the first business day thereafter, if
January 10 is not a business day) of the first to occur of (i) the year
specified in the notice or (ii) the year after the year in which the
participating Director ceases to be a Director of the Company.
In the event that a participating Director elects to defer receipt of the
shares of Common Stock which would otherwise be distributed under the Directors'
Equity Plan, the Company will open and maintain an account in the name of the
participating Director reflecting the value of the deferred benefits allocated
to such participating Director.
The Board of Directors may terminate or amend the Directors' Equity Plan at
any time, except that absent stockholder approval the Board may not amend the
Directors' Equity Plan to (i) increase the total number of shares of Common
Stock subject to the Directors' Equity Plan, or (ii) change or modify the class
of eligible participants. The Compensation Committee is authorized to make
appropriate adjustments in connection with outstanding awards under the
Directors' Equity Plan in the event of stock dividends, stock splits,
recapitalizations, mergers, or other changes in the Company's outstanding stock.
FEDERAL INCOME TAX CONSEQUENCES
In the event that a participating Director elects to defer receipt of
compensation under the Directors' Equity Plan, he will generally recognize
taxable income when such compensation is actually distributed, not
12
<PAGE> 15
when such compensation is earned. The distribution of any shares of Common Stock
or cash under the Directors' Equity Plan generally will result in the receipt of
taxable income by the participating Director receiving such distribution. The
amount of taxable income recognized with respect to any shares of Common Stock
will be equal to the fair market value of the shares on the date they are
distributed. The treatment of a participating Director's subsequent disposition
of such shares will depend on the length of time the shares have been held, but
generally there will be no tax consequences for the Company in connection with
such disposition.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
The affirmative vote of a majority of the shares present, either in person
or by properly executed proxy, and entitled to vote on this proposal is needed
for its adoption.
THE BOARD OF DIRECTORS BELIEVES THAT THE DIRECTORS' EQUITY PLAN IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND THEREFORE RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
ITEM 3.
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company has appointed Arthur Andersen LLP as the Company's independent
accountants for the fiscal year ended March 31, 2000. Arthur Andersen LLP has
served as the Company's independent accountants for nine 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.
Stockholder ratification of the appointment of Arthur Andersen LLP is not
required under the laws of the State of Delaware, the jurisdiction under which
the Company is incorporated, nor is it required under the Restated Certificate
of Incorporation or Bylaws of the Company. Nonetheless, the Board of Directors
is seeking stockholder ratification of the appointment of Arthur Andersen LLP as
a matter of good corporate practice. In the event that stockholders do not
ratify the appointment of Arthur Andersen LLP as the Company's independent
accountants for the fiscal year ended March 31, 2000, such appointment will be
reconsidered by the Audit Committee and the Board of Directors. Even if the
appointment of Arthur Andersen LLP is ratified by the stockholders, the Board of
Directors in its discretion may direct the appointment of a different
independent public accounting firm at any time during the year if the Board
determines that such a change would be in the best interests of the Company and
its stockholders.
Ratification of the appointment of Arthur Andersen LLP as the Company's
independent accountants for the fiscal year ended March 31, 2000 will require
the affirmative vote of a majority of the votes cast at the Annual Meeting by
the holders the Common Stock.
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 FISCAL YEAR ENDED MARCH 31, 2000.
ITEM 4.
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.
13
<PAGE> 16
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
The Company currently expects to convene the 2000 Annual Meeting of
Stockholders during August or September of 2000 (the "2000 Annual Meeting"),
after the announcement of the financial results for the fiscal year ended March
31, 2000. Any proposal of a stockholder intended to be presented at the 2000
Annual Meeting 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
2000 Annual Meeting, on or before June 1, 2000.
THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED MARCH
31, 1999, FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE COMPANY'S OFFICES, ONE WINNENDEN ROAD,
NORWICH, CONNECTICUT 06360; ATTENTION: MICHAEL M. VEHLIES.
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,
Michael M. Vehlies
Senior Vice President, Chief Financial
Officer, Treasurer and Secretary
July 29, 1999
Norwich, Connecticut
14
<PAGE> 17
APPENDIX A
GUNTHER INTERNATIONAL, LTD.
DIRECTORS' EQUITY PLAN
ARTICLE 1
DEFINITIONS
As used herein, the following terms have the meanings hereinafter set forth
unless the context clearly indicates to the contrary:
"Account" shall mean the account established in accordance with Section 7.1
hereof for the benefit of each Participating Director electing deferral of
receipt of Stock pursuant to Article 6 below.
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean: (1) any day on which the principal securities
exchange or national market on which the shares of Stock are traded is open; or
(ii) if the shares of Stock are not traded on an exchange, then any day other
than a Saturday, Sunday, or Company holiday.
"Change in Control" shall have the meaning set forth in Section 6.4 hereof.
"Committee" shall mean the Executive Compensation/Stock Option Committee of
the Board, or a committee of Directors appointed from time to time by the Board
having the duties and authority set forth herein.
"Company" shall mean Gunther International, Ltd., a Delaware corporation,
and any successor to it.
"Determination Date" shall mean the last Business Day of each calendar
quarter.
"Director" shall mean a member of the Board.
"Eligible Director" shall mean a Director who is eligible to participate in
the Plan pursuant to Article 3 of the Plan.
"Employee" shall mean any employee of the Company or any Subsidiary of the
Company, or any Director who also serves as an officer of the Company and whose
duties as such involve a significant time commitment beyond that associated with
preparation for and attendance at meetings of the Board and Committees.
"Fair Market Value" of the Stock on any date shall mean:
(1) the closing or last sale price on such date on the principal
securities exchange or market on which the shares of Stock are traded or,
if there is no such sale on the relevant date, then on the last previous
day on which a sale was reported; or
(2) if there is no price as specified in (1), the amount determined in
good faith by the Committee based on such relevant facts, which may (but
need not) include opinions of independent experts, as may be available to
the Committee.
"Participating Director" shall mean, with respect to any fiscal quarter,
any Eligible Director other than an Eligible Director who has elected not to
participate in the Plan for such quarter in accordance with the terms of Section
5.2 of the Plan.
"Plan" shall mean the Gunther International, Ltd. Directors' Equity Plan as
set forth herein, as amended from time to time.
"Quarterly Retainer" shall mean the cash amount paid to each Director who
is not a Participating Director as compensation for his or her service on the
Board during any fiscal quarter, which amount shall be determined by the Board
or an appropriate committee of the Board.
1
<PAGE> 18
"Stock" shall mean the Common Stock, par value $0.001 per share, of the
Company or, in the event that the outstanding shares of such Stock are hereafter
changed into or exchanged for shares of a different class of stock or securities
of the Company or some other corporation, such other stock or securities.
"Subsidiary" shall mean any corporation (other than the corporation with
respect to which the determination is being made) in an unbroken chain of
corporations beginning with the corporation with respect to which the
determination is being made if, at the time of the grant (or modification) of
the Stock, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
ARTICLE 2
THE PLAN
2.1 NAME. The Plan shall be known as the "Gunther International, Ltd.
Directors' Equity Plan."
2.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Company and its stockholders by offering each Eligible Director the opportunity
to increase his or her proprietary interest in the Company.
2.3 EFFECTIVE DATE. The Plan shall become effective as of April 1, 1999,
subject to approval of the stockholders of the Company.
2.4 DUTIES AND POWERS OF THE COMMITTEE. The Plan shall be administered by
the Committee. To the extent not inconsistent with the provisions of the Plan,
the Committee shall have complete authority to interpret the Plan, to prescribe,
amend, and rescind rules and regulations relating to it, and to take all other
actions that it determines to be necessary or advisable to administer the Plan.
No member of the Board or the Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan.
ARTICLE 3
ELIGIBILITY
Each Director who is not an Employee shall be eligible to participate in
the Plan. Each Participating Director may continue participation for so long as
he or she continues to serve on the Board.
ARTICLE 4
SHARES OF STOCK SUBJECT TO PLAN
4.1 LIMITATIONS. Subject to any antidilution adjustment pursuant to the
provisions of Section 4.2 hereof, the maximum number of shares of Stock that may
be issued and sold hereunder shall be 100,000 shares.
4.2 ANTIDILUTION.
(a) In the event that the outstanding shares of Stock are changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of merger, consolidation, reorganization, recapitalization,
reclassification, combination, or exchange of shares, stock split or stock
dividend, or in the event that any spin-off, spin-out, or other distribution of
assets materially affects the price of the Company's stock, the aggregate number
and kind of shares of Stock which may be issued hereunder shall be adjusted
proportionately by the Committee.
(b) The adjustments described in paragraph (a) of this Section 4.2, and the
manner of their application, shall be determined solely by the Committee, and
any such adjustment may provide for the elimination of fractional share
interests. The adjustments required under this Article 4 shall apply to any
successors of the Company and shall be made regardless of the number or type of
successive events requiring such adjustments.
2
<PAGE> 19
ARTICLE 5
ISSUANCE OF SHARES
5.1 ISSUANCE OF SHARES. For each fiscal quarter, the Company shall issue
shares of Stock to each Participating Director who served as a Director at any
time during such quarter. The number of shares issued to each Participating
Director pursuant to the previous sentence shall equal: (i) $2,500, plus any
amount credited to the Participating Director's Account pursuant to Section 7.4
and 7.5 below; divided by (ii) the Fair Market Value of the Stock on the
Determination Date for such quarter; provided, however, that no fractional
shares shall be issued pursuant to the Plan. Whenever a fractional share would
otherwise be required to be issued, the number of shares issuable shall be
rounded up to the nearest whole number.
5.2 IRREVOCABLE ELECTION NOT TO PARTICIPATE. An Eligible Director may
make an election not to participate in the Plan for all or a portion of any
fiscal year. The Director shall make such election prior to the beginning of
such year. Notwithstanding the foregoing, an Eligible Director may make an
irrevocable election not to participate for the fiscal year ending March 31,
2000 at any time prior to September 30, 1999. Each Eligible Director who elects
not to participate for all or a portion of any fiscal year shall receive
Quarterly Retainers as compensation for such Director's service on the Board
during such year or portion thereof. An Eligible Director's election not to
participate for any year will become irrevocable beginning on the first day of
such year (or beginning on October 1, 1999 for the fiscal year ending March 31,
2000).
5.3 WITHHOLDING TAXES. Whenever the Company is required to issue shares
of Stock under the Plan to a Participating Director, such Participating Director
shall remit to the Company an amount sufficient to satisfy any federal, state,
or local withholding tax liability prior to the delivery of any certificate or
certificates for such shares. Notwithstanding the foregoing, at the option of
the Company and to the extent permitted by applicable law, including regulations
promulgated under the Securities Exchange Act of 1934, such federal, state, or
local withholding tax liability may be satisfied prior to the delivery of any
certificate or certificates for the shares by an adjustment, equal in value to
such liability, in the number of shares to be transferred to the applicable
Participating Director.
ARTICLE 6
DEFERRED RECEIPT OF STOCK
6.1 DEFERRAL ELECTION. Prior to the beginning of any fiscal quarter, each
Participating Director may make an election to defer receipt of all Stock to be
issued to such Participating Director pursuant to Section 5.1 for such fiscal
quarter.
6.2 DISTRIBUTION ELECTION. At the time that a Participating Director
elects to defer receipt of Stock, the Participating Director also shall make an
election with respect to the distribution of such Stock. A Participating
Director may elect to receive Stock credited to his or her Account in one
installment or in some other number of equal annual installments (not exceeding
ten). Such election shall direct that the first installment (or the lump sum
payment if the director has so elected) be issued on January 10 (or if January
10 is not a Business Day, then on the first Business Day thereafter), of the
year immediately following either (i) the calendar year in which the
Participating Director ceases to be a Director of the Company, or (ii) the
earlier of the calendar year in which the Director ceases to be a Director of
the Company or a year designated by the Participating Director. The Company
shall distribute installments subsequent to the first installment to the
Participating Director on January 10 (or if January 10 is not a Business Day,
then on the first Business Day thereafter) of each succeeding calendar year
until the entire amount credited to the Participating Director's Account shall
have been distributed. Subject to the terms of this Plan, the Company shall
issue Stock to each Participating Director in accordance with the terms of his
or her distribution election.
6.3 REVOCATION OF ELECTION OR CHANGE IN DISTRIBUTION. A Participating
Director's deferral and distribution elections for any quarter made pursuant to
Sections 6.1 and 6.2 above shall become irrevocable on the first day of such
quarter, and shall remain in effect for all subsequent quarters in which the
Participating Director is a Director of the Company, unless earlier revoked or
modified. A Participating Director may
3
<PAGE> 20
revoke or modify his or her deferral election with respect to compensation for
any future quarter upon written notice delivered to the Company prior to the
beginning of such quarter. The revocation or modification will become effective
with respect to Stock issued for the quarter subsequent to the date on which
such notice is received by the Company, and will affect future Stock
compensation only. A Participating Director who has revoked his or her deferral
election may thereafter file an election to participate in any fiscal quarter
subsequent to the filing of such election.
6.4 CHANGE IN CONTROL. Notwithstanding an election pursuant to this
Article 6, upon the occurrence of a Change in Control (as defined below), the
Company shall issue the entire balance of all deferred compensation hereunder in
a single distribution. A "Change in Control" shall be deemed to have occurred if
(i) the stockholders of the Company approve a definitive agreement to merge or
consolidate the Company with or into another corporation or to sell or to
otherwise dispose of all or substantially all of its assets, or adopt a plan of
liquidation, or (ii) during any period of two consecutive years, individuals who
at the beginning of such period were members of the Board cease for any reason
to constitute at least a majority thereof (unless the election or the nomination
for election by the Company's stockholders of each new Director was approved by
a vote of at least two-thirds of the Directors then still in office who were
Directors at the beginning of such period).
6.5 BENEFICIARIES. Each Participating Director shall have the right to
designate one or more beneficiaries to succeed to his or her right to receive
future distributions of Stock or payments under this Plan in the event of his or
her death. In the case of a failure of designation or the death of a designated
beneficiary without a designated successor, the Company shall make the
distribution to the Participating Director's estate. No designation of
beneficiary shall be valid unless dated and signed by the Participating
Director, and filed with the Company.
ARTICLE 7
ACCOUNTS; RIGHTS TO DEFERRED COMPENSATION
7.1 ACCOUNTS; OWNERSHIP OF STOCK. The Company shall cause an Account to
be kept in the name of each Participating Director, which Account shall reflect
the value of the deferred benefits allocated to the Participating Director
pursuant to this Plan. Such Account shall be for record-keeping purposes only,
and the Company shall not be obligated to reserve or otherwise set aside any
stock or funds to cover any amounts credited to any Account or to meet any other
obligations of the Plan. Title to and beneficial ownership of any assets,
whether cash or investments which the Company may set aside or earmark to meet
its deferred obligations under this Plan, shall at all times remain in the
Company. No Participating Director or beneficiary shall, under any
circumstances, acquire any property interest in any specific assets under the
Plan until such Participating Director's receipt of compensation pursuant
hereto. Nothing contained in this Plan shall be deemed to create a trust of any
kind or create any fiduciary relationship on the part of the Company. To the
extent that any person acquires a right to receive distributions of Stock or
payments from the Company under this Plan, such right shall be no greater than
the right of any unsecured general creditor of the Company.
7.2 RIGHTS NOT SUBJECT TO ALIENATION. Except to the extent required by
law, the right of any Participating Director or beneficiary in any benefit under
this Plan shall not be subject in any matter to attachment or other legal
process for the debts of a Participating Director or beneficiary, and any such
right to payment or benefits shall not be subject to anticipation, alienation,
lien, sale, transfer, assignment or encumbrance by the Participating Director or
any other third party.
7.3 CREDITED STOCK. If a Participating Director elects deferral for any
quarter pursuant to Article 6 above, then the Company shall credit shares of
Stock to the Participating Director's Account, as of Determination Date for such
quarter, equal to the number of whole shares to which the Participating Director
is entitled pursuant to Section 5.1 hereof.
7.4 CREDITED DIVIDENDS. The Company shall credit each Account with any
dividends with respect to the Stock that is credited to such Account (such
dividends hereinafter referred to as the "Credited Dividends"), in the amount of
dividends that the Participating Director would have received if such Stock had
4
<PAGE> 21
been delivered to the Participating Director and registered in the Participating
Director's name on the applicable Determination Date. The Company shall credit
such amount of any dividends as of the date that such dividends are payable to
the Company's stockholders.
7.5 CREDITED INTEREST. The Company shall credit each Account with any
interest that would have been earned on any Credited Dividends in such Account
between the date as of which the Credited Dividends are credited to such Account
and the earlier of: (i) the Determination Date of the next quarter for which the
Company issues Stock to the Participating Director for whom such Account is
maintained; or (ii) the date on which the Company pays the cash value of such
Credited Dividends to the Participating Director pursuant to Section 7.6 below.
The interest rate applicable to all Credited Dividends for any year shall be the
prime rate published in the Wall Street Journal on the first Business Day of
such year, and shall be calculated based on a 365-day year. Any interest that is
not applied to the Company's calculation of Stock compensation pursuant to
Section 5.1 above shall be compounded quarterly on the applicable Determination
Date.
7.6 DIVIDENDS AND INTEREST CREDITED AFTER PARTICIPATION ENDS. In the
event that the Company credits any Credited Dividends to an individual's Account
after such individual is no longer a Participating Director, then the Company
shall make a cash payment to such individual in the amount of all such Credited
Dividends, and any interest thereon, when the Company next distributes any Stock
to such Director under the terms of the Plan.
7.7 ACCOUNT INFORMATION. Upon the reasonable request of a Participating
Director, the Committee shall furnish the Participating Director with
information regarding his or her Account.
ARTICLE 8
RESTRICTIONS ON STOCK
8.1 RESTRICTIONS ON TRANSFER. Unless the shares of Stock covered by the
Plan are the subject of an effective registration statement under the Securities
Act of 1933, as amended: (i) each issuance of Stock hereunder shall be evidenced
by a written Restricted Stock Agreement executed by the Company and the
applicable Participating Director; (ii) stock certificates issued and delivered
to Participating Directors shall bear such restrictive legends as the Company
shall deem necessary or advisable pursuant to applicable federal and state
securities laws; and (iii) transfer of Stock issued hereunder shall be subject
to such restrictions as the Board or the Committee shall determine to be
necessary or appropriate. In addition to any other restrictions contained in the
Plan or in the applicable Restricted Stock Agreement, no share of Stock issued
pursuant to the Plan shall be transferable by the applicable Participating
Director during the first six months after issuance of such share, other than by
the laws of descent or distribution.
ARTICLE 9
TERMINATION, AMENDMENT AND MODIFICATION OF THE PLAN
9.1 TERM. The term of this Plan shall commence on April 1, 1999, subject
to approval by the stockholders of the Company, and shall continue in effect
until the earlier to occur of: (i) the tenth anniversary of such stockholder
approval; (ii) termination by the Board; or (iii) a Change in Control. Except as
otherwise provided herein, termination of the Plan will not affect the rights of
any Director to receive distribution of deferred compensation in accordance with
a distribution schedule elected by such director pursuant to Section 6.2 above.
In the event that the Plan is terminated, the Company shall distribute amounts
credited to each Participating Director's account at such time and in such
manner as the Board shall determine, but no later than the Company would have
distributed such amounts in accordance with the Participating Director's
election under Section 6.2 above.
5
<PAGE> 22
9.2 TERMINATION OR AMENDMENT BY THE BOARD. The Board may at any time: (i)
terminate the Plan; or (ii) in any respect amend or modify the Plan; provided,
however, that the Board (unless its actions are approved or ratified by the
stockholders of the Company within twelve months of the date the Board amends
the Plan) may not amend the Plan to increase the number of shares of stock
subject to the Plan beyond the amount previously approved or ratified by the
stockholders, or to change or modify the class of persons that may participate
in the Plan.
ARTICLE 10
MISCELLANEOUS
10.1 PLAN BINDING ON SUCCESSORS. The Plan shall be binding upon the
successors to the Company.
10.2 GENDER. Whenever used herein, the masculine pronoun shall include
the feminine gender.
10.3 HEADINGS NOT PART OF PLAN. Headings of Articles and Sections hereof
are inserted for convenience and reference, and do not constitute a part of the
Plan.
6
<PAGE> 23
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
MARC I. PERKINS and MICHAEL M. VEHLIES, 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 September 9, 1999, at 10:30 a.m., local time, at Loew's New York Hotel, 569
Lexington Avenue, New York, N.Y., 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, 1999, and instructs its attorneys and proxies to
vote as set forth on this Proxy.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE> 24
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
GUNTHER INTERNATIONAL, LTD.
September 9, 1999
[down Please Detach and Mail in the Envelope Provided [down
arrow] arrow]
A /X/ Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. ELECTION / / / / Nominees: J. Kenneth Hickman 2. Approval of the Gunther International, / / / / / /
OF Steven S. Kirkpatrick Ltd. Directors' Equity Plan.
DIRECTORS Gerald H. Newman
For, except vote withheld from Marc I. Perkins 3. Ratification of Arthur Andersen LLP
the following nominee(s) Robert Spiegel as independent auditors of the
George A. Snelling Company for the Fiscal Year ending / / / / / /
Thomas M. Steinberg March 31, 2000.
4. 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, FOR THE APPROVAL OF THE DIRECTORS' EQUITY
PLAN AND FOR THE RATIFICATION 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
-------------------------------------------------------------------------------------- ----------------------------
IMPORTANT: Please sign exactly as your name appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, trustee, etc., indicate this. If the signer is a corporation, sign in corporate name by a duly authorized
officer.
</TABLE>
