<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(A) Of
The Securities Exchange Act Of 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant: / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
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(l)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
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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:
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/ / Fee paid previously by written preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-1 1(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 7, 2000
------------------------
Notice is hereby given that the 2000 Annual Meeting of Stockholders of
Gunther International, Ltd. will be held at Loew's New York Hotel, 569 Lexington
Ave., New York, New York, on Thursday, September 7, 2000 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 and until their respective successors shall be
elected and qualified; and
(2) 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 17, 2000 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 31, 2000
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 2000 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at Loew's New York
Hotel, 569 Lexington Ave., New York, New York, on Thursday, September 7, 2000 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 31, 2000.
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
17, 2000 (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. 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 the 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, 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
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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 and 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, 2000, 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 2,255,704 shares or Common
Stock, or approximately 52.6% 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............ 72 Independent Business and Financial 1994
Consultant
Steven S. Kirkpatrick......... 45 Vice President, United States Trust Company 1999
of New York
Gerald H. Newman.............. 59 Private Investor 1993
Marc I. Perkins............... 55 President and Chief Executive Officer of the 1998
Company
Robert Spiegel................ 64 Private Investor 1998
George A. Snelling............ 71 Independent Business Consultant 1999
Thomas M. Steinberg........... 44 President, Tisch Family Interests 1998
</TABLE>
J. KENNETH HICKMAN. Mr. Hickman has been an independent business and
financial 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. He is a certified public accountant.
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
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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.
MARC I. PERKINS. Mr. Perkins has been the Chief Executive Officer of the
Company since October 2, 1998 and 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
retail drug store chain, 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
The Company maintains a policy of reimbursing all directors for any
reasonable travel expenses incurred in connection with their attendance at
meetings.
The Company also maintains the Gunther International, Ltd. Directors'
Equity Plan (the "Director's Equity Plan"), pursuant to which each participating
director receives 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 has 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 number of 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.
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The Board of Directors met five times during the fiscal year ended March
31, 2000 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 Executive
Committee, the Executive Compensation/Stock Option Committee and the Audit
Committee.
During fiscal 2000, the Executive Committee consisted 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, 2000.
During fiscal 2000, the Executive Compensation/Stock Option Committee
consisted of Messrs. Kirkpatrick, 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, 2000, the Executive Compensation/Stock Option Committee met two
times and acted by the unanimous written consent of its members on one occasion.
During fiscal 2000, the Audit Committee consisted of Messrs. Snelling,
Hickman, Kirkpatrick, and Steinberg. Mr. Snelling 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, 2000, the Audit Committee
met six times. On July 17, 2000, the Board of Directors adopted a formal,
written charter for the Audit Committee. See "Report of the Audit Committee
Addressing Specific Matters" below regarding the adoption of the formal, written
charter and the functions the Audit Committee performed in connection with the
Company's audited financial statements.
REPORT OF THE AUDIT COMMITTEE ADDRESSING SPECIFIC MATTERS
On July 17, 2000, the Board of Directors adopted a formal, written charter
for the Audit Committee of the Company. A copy of the charter is attached to
this Proxy Statement as Appendix A. Each member of the Audit Committee is an
"independent director" for purposes of NASD Marketplace Rule 4200(a)(14).
In connection with the preparation and filing of the Company's audited
financial statements for the fiscal year ended March 31, 2000 (the "audited
financial statements"), the Audit Committee performed the following functions:
- The Audit Committee reviewed and discussed the audited financial
statements with senior management and Ernst & Young LLP, the Company's
independent auditors.
- The Audit Committee also discussed with Ernst & Young LLP the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication With Audit Committees).
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- The Audit Committee received the written disclosures and the letter from
Ernst & Young LLP required by Independence Standards Board Standard No. 1
(Independence Discussions With Audit Committees), and discussed with
Ernst & Young LLP its independence from the Company.
Based upon the functions performed, the Audit Committee recommended to the
Board of Directors, and the Board approved, that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended March 31, 2000, for filing with the U.S. Securities and
Exchange Commission.
AUDIT COMMITTEE
George A. Snelling, Chairman
J. Kenneth Hickman
Steven S. Kirkpatrick
Thomas M. Steinberg
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........................... 55 President and Chief Executive Officer
Michael M. Vehlies........................ 39 Senior Vice President, Chief Financial
Officer, Treasurer and Secretary
A. Evan Haag.............................. 51 Senior Vice President, Operations
Per J. Hellsund........................... 36 Vice President -- Operations
Daniel J. Chevalier....................... 44 Vice President -- Sales and Marketing
</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.
A. EVAN HAAG. Mr. Haag has held the position of Senior Vice President of
Operations since he joined the Company in February 2000. Prior to that, he was
Director, Strategic Supply Management of Moore Corporation (formerly Moore
Business Forms) from October 1998 to February 2000 and Operations Manager of
Moore Corporation's Systems Fabrication Research Venture from May 1996 to
September 1998. From 1989 to 1995, he was Operations Vice President for Metscan,
Incorporated, a manufacturer of remote data acquisition equipment for the
natural gas industry.
PER J. HELLSUND. Mr. Hellsund has held the position of Vice
President -- Operations of the Company since September 1999. Prior to that, he
had been the Director of Engineering of the Company from 1993 to 1999.
DANIEL J. CHEVALIER. Mr. Chevalier has held the position of Vice
President -- Sales and Marketing of the Company since October 1998. Prior to
that, he had been the Director of Sales since he joined the Company in March
1997. From 1996 to 1997, he had been the Sales Manager for Cathedral
Corporation, a service bureau company. From 1991 to 1996, he was founder and
President of Electronic Output Strategies, Inc., a reseller of refurbished
printers.
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<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 periods indicated of (i) each person who served as the chief
executive officer of the Company during the fiscal year ended March 31, 2000,
and (ii) the other most highly compensated executive officers of the Company
whose total salary and bonus for the fiscal year ended March 31, 2000 exceeded
$100,000, for services in all capacities to the Company during such fiscal year
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-----------------------
ANNUAL COMPENSATION(1) RESTRICTED OPTIONS/ ALL OTHER
--------------------------- STOCK SARS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($) (#) ($)
--------------------------- ---- --------- -------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Marc I. Perkins................ 2000 $167,000 0 0 30,000 0
President and Chief 1999 $ 72,000 0 0 150,000 0
Executive Officer(2)
Michael M. Vehlies............. 2000 $105,962 0 0 0 0
Senior Vice President, 1999 $ 39,231 0 0 35,000 0
Chief Financial Officer,
Treasurer and Secretary(2)
Daniel J. Chevalier............ 2000 $122,025 0 0 0 0
Vice President -- 1999 $130,223 0 0 7,500 0
Sales and Marketing 1998 $115,000 0 0 20,000 0
</TABLE>
---------------
(1) Perquisites and other personal benefits are not included because they do not
exceed the lesser of $50,000 or 10% of the total of base salary and annual
bonus for each of the Named Executive Officers.
(2) Mr. Perkins and Mr. Vehlies joined the Company in October 1998.
Option Exercises and Fiscal Year-End Values. The following tables set
forth certain information with respect to (i) option exercises in fiscal year
2000 and unexercised options to purchase the Company's Common Stock and (ii)
options to purchase Common Stock granted in fiscal year 2000 to the individuals
listed.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-THE-MONEY
UNDERLYING UNEXERCISED OPTIONS/SARS
SHARES OPTIONS/SAR AT FY-END(#) AT FY-END($)(1)
ACQUIRED ON VALUE ----------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Marc I. Perkins........... 0 0 150,000 30,000 150,000 0
Michael M. Vehlies........ 0 0 11,667 23,333 11,667 23,333
Daniel J. Chevalier....... 0 0 21,500 6,000 938 3,750
</TABLE>
---------------
(1) Represents the difference between the fair market value of the Common Stock
on March 31, 2000 and the exercise price.
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<PAGE> 9
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE
NAME GRANTED(#) FISCAL YEAR PRICE($/SH)(1) EXPIRATION DATE(2)
---- ------------ ------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Marc I. Perkins............. 30,000 67% 3.00 10/03/2004
</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 granted have a term of 5 years, subject to earlier termination
in certain events related to termination of employment.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. Perkins. The
agreement provides for him to be employed as the Chief Executive Officer of the
Company at a base salary of $172,000 per annum. 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.
The Company has also entered into an employment agreement with Mr. Vehlies,
which 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 (which was subsequently increased to $110,000 on October 29, 1999).
STOCK OPTION PLAN
In December 1993, the Company adopted the Gunther International, Ltd. 1993
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. These options expired
unexercised in December 1999. 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
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<PAGE> 10
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, 2000, options covering an
aggregate of 160,000 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 SEC regulations to furnish
the Company with copies of all Section 16(a) forms filed by such persons. Based
solely on the copies of such 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, 2000, its
executive officers, directors, and greater than 10% beneficial owners complied
with all applicable filing requirements.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 2, 1998, the Company entered into a $5.7 million comprehensive
financing transaction with the Bank of Boston Connecticut, N.A. (the "Bank"),
the Estate of Harold S. Geneen (the "Estate") and Gunther Partners, LLC
("Gunther Partners"), the proceeds of which were utilized to restructure and
replace the Company's then-existing revolving credit facility with the Bank (the
"Revolving Credit Facility"), fund a full settlement with the Company's
then-existing third-party service provider and provide additional working
capital to fund the Company's ongoing business operations. At the time of his
death on November 21, 1997, Mr. Geneen was Chairman of the Board of Directors
and a significant stockholder of the Company. Gunther Partners is a Delaware
limited liability company, the members of which include Robert Spiegel, Thomas
M. Steinberg and a partnership controlled by certain members of the Tisch
family. See "Item 1 -- Election of Directors" and "Stock Ownership of Certain
Beneficial Owners and Management."
Under the terms of the transaction, Gunther Partners loaned the Company an
aggregate of $4.0 million. 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 which had been pledged by Mr. Geneen to
secure the Company's obligations under the Revolving Credit Facility 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 collateral that was
liquidated by the Bank. The Company's obligations to the Estate are subordinate
to the Company's obligations to Gunther Partners.
The $4 million term note (the "Term Note") issued to Gunther Partners
originally provided that the principal was to be repaid commencing as of
November 1, 1998 through the payment of (i) eleven monthly installments of
$100,000 from November 1, 1998 and continuing to and including September 1,
1999, (ii) a single installment of $400,000 due on October 1, 1999, and (iii) a
single installment of $2,500,000 due on October 1, 2003. Interest was to be paid
quarterly, at the rate of 8% per annum, beginning January 1, 1999 and was to
continue until all principal and interest was paid in full. In September 1999,
the Company and Gunther Partners agreed to modify the repayment provisions of
the Term Note in light of the Company's then-current and projected cash flows.
To induce Gunther Partners to enter into the financing transaction, the
Company granted Gunther Partners a stock purchase warrant entitling Gunther
Partners, 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.
8
<PAGE> 11
The exercise price of the warrant is $1.50 per share. On or about November 17,
1998, Gunther Partners distributed all of its rights under the warrant to its
members in proportion to their ownership interests in Gunther Partners. Thus,
the warrants are now held by the members of Gunther Partners (and their
transferees) in proportion to their ownership interests in Gunther Partners. As
of June 30, 2000, the Company believes the warrants are exercisable for an
aggregate of 2,567,619 shares of Common Stock.
In addition, the Company, Gunther Partners, the Estate and certain
shareholders (Park Investment Partners, Gerald H. Newman, Four Partners and
Robert Spiegel) entered into a Voting Agreement, pursuant to which they agreed
to vote all shares of Common Stock held by them in favor of (i) that number of
persons nominated by Gunther Partners 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, 2000, 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 2,255,704 shares, or approximately 52.6% 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
Gunther Partners 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 Gunther Partners
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 Gunther Partners.
Through June 30, 1999, the Company had made principal payments under the
Term Note aggregating $800,000 and had paid all interest when it was due and
payable (taking into account any applicable grace periods). In September 1999,
the Company and Gunther Partners agreed to modify the Term Note to defer payment
of the $700,000 in principal otherwise due and payable from July 1999 through
October 1999 and to relend the Company the $800,000 in principal that was
previously repaid, thereby restoring the aggregate principal amount of the Term
Note to the original principal amount of $4.0 million. As amended, the $4
million principal amount of the Term Note is to be repaid in nine payments as
follows: (a) $200,000 shall be paid on the first day of each calendar month
commencing as of October 1, 2001 and continuing through April 1, 2002; (b)
$100,000 shall be paid on May 1, 2002; and (c) the balance of $2,500,000 shall
be paid on October 1, 2003. If, at any time prior to October 1, 2001, the
accumulated deficit of the Company, determined in accordance with generally
accepted accounting principles, improves by $1.0 million or more above the
Company's accumulated deficit at June 30, 1999 (a "Triggering Event"), then the
principal payments due on October 1, 2001 through May 1, 2002 shall be
accelerated and become due in consecutive monthly installments beginning on the
first day of the second month following the Triggering Event.
On December 16, 1999, the Company borrowed an additional $200,000 from
Robert Spiegel, a director of the Company and a member of Gunther Partners, to
alleviate a short-term cash-flow deficiency which the Company was experiencing.
The loan was unsecured and earned interest at the rate of 8% per annum. All
principal and accrued interest was repaid prior to December 31, 1999.
On April 21, 2000, the Company borrowed an additional $150,000 from Mr.
Spiegel to alleviate a subsequent cash-flow deficiency. This amount, together
with interest at the rate of 8% per annum, was repaid in full on April 28, 2000.
On April 4, 2000, the Company borrowed an additional $500,000 from Gunther
Partners on an unsecured basis. The promissory note evidencing this indebtedness
originally provided that the note was to be due and payable, together with
interest at the rate of 8% per annum, on demand at any time after May 4, 2000.
Subsequent to the execution and delivery of the original promissory note,
however, Gunther Partners delivered a letter to the Company evidencing its
agreement, in the event that the Company is unable to meet the
9
<PAGE> 12
payment obligation upon demand, to extend the payment date until such time as
the Company's cash flows will permit payment, but no later than April 1, 2001.
In addition, Gunther Partners has agreed to lend the Company an additional
$500,000 in the event the Company's cash flows, in the opinion of management and
Gunther Partners, require such additional amount. The terms and conditions of
any additional funding will be similar to the terms and conditions of the
existing debt agreements between the parties. This commitment for additional
funding expires on April 1, 2001.
Prior to his death, Mr. Geneen 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, 2000, 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 41.9%
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).............................. 2,580,379 40.5%
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.
(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, filed on
December 10, 1998 ("Amendment No. 6") 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, 2000, the parties to the Voting Agreement, including
such filing persons, beneficially owned an aggregate of 2,255,704 shares, or
52.6% 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, filed on
January 20, 1999 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
10
<PAGE> 13
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 beneficially owned by
other parties to 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 2,567,619 shares of Common Stock. See
"Certain Relationships and Related Transactions." Accordingly, the shares
shown in the table include an aggregate of 2,086,190 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 beneficially owned by other
parties to the Voting Agreement. See note 3 above and "Certain Relationships
and Related Transactions."
(6) Based on information set forth in the Schedule 13D, filed on January 6, 1999
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
beneficially owned by the other parties to 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, 2000 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(4)....................................... 13,911 *
Steven S. Kirkpatrick(5).................................... 0 *
Gerald H. Newman(6)......................................... 1,464,103 34.1%
Marc I. Perkins(7).......................................... 160,000 3.6%
George A. Snelling(8)....................................... 8,911 *
Robert Spiegel(9)........................................... 585,244 12.3%
Thomas M. Steinberg(10)..................................... 36,007 *
Michael M. Vehlies(7)....................................... 11,667 *
Daniel J. Chevalier(7)...................................... 21,500 *
All Directors and Executive Officers as a group(11)......... 2,303,544 46.3%
</TABLE>
---------------
* Less than 1%.
(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) Includes 3,911 shares credited to the account of Mr. Hickman under the
Directors' Equity Plan.
(5) 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."
11
<PAGE> 14
(6) Based on information set forth in the Schedule 13D, filed on January 6,
1999 under the Exchange Act by Park Investment Partners, Inc. and Gerald H.
Newman. The shares shown in the table include 1,387,489 shares beneficially
owned by Park Investment Partners, Inc., a Delaware corporation which is
50% owned by Mr. Newman. See "Stock Ownership of Certain Beneficial
Owners." Includes 3,911 shares credited to the account of Mr. Newman under
the Directors' Equity Plan. The shares shown in the table exclude the
shares of Common Stock beneficially owned by the other parties to the
Voting Agreement. See note 3 to the preceding table and "Certain
Relationships and Related Transactions."
(7) Includes the exercisable portion of stock options exercisable within 60
days of June 30, 2000.
(8) Includes 3,911 shares credited to the account of Mr. Snelling under the
Directors' Equity Plan.
(9) Based on information set forth in Amendment No. 5 to Schedule 13D, filed on
October 7, 1998 ("Amendment No. 5") 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 2,567,619 shares of Common Stock. See "Certain Relationships
and Related Transactions." Accordingly, the shares shown as beneficially
owned by Mr. Spiegel include 385,143 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
the following: (i) 40,000 shares of Common Stock held by Mr. Spiegel's
wife; (ii) 1,500 shares of Common Stock held in an IRA account maintained
for the benefit of Mr. Spiegel's wife; and (iii) 15,000 shares of Common
Stock and warrants to purchase 64,190 shares of Common Stock held by a
trust of which Mr. Spiegel is a trustee. Mr. Spiegel disclaims beneficial
ownership as to each of the shares and warrants described in (i) through
(iii) in the preceding sentence. The shares shown in the table also include
3,911 shares credited to the account of Mr. Spiegel under the Directors'
Equity Plan. The shares shown in the table exclude the shares of Common
Stock beneficially owned by Gunther Partners, LLC and the shares of Common
Stock beneficially owned by the other parties to the Voting Agreement. See
note 3 to the preceding table and "Certain Relationships and Related
Transactions."
(10) 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 2,567,619 shares of Common Stock.
Accordingly, the shares shown as beneficially owned by Mr. Steinberg
represent the 32,095 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.
(11) Includes an aggregate of 602,105 shares issuable upon the exercise of
outstanding options, warrants or other similar rights exercisable within 60
days of June 30, 2000 and excludes any shares of Common Stock beneficially
owned 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 3,023,557 shares, or approximately 60.7%
of the outstanding shares, of Common Stock.
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
On November 15, 1999, the Company dismissed Arthur Andersen LLP as the
Company's independent public accountants. Prior to November 15, 1999, Arthur
Andersen LLP had served as the Company's independent public accountants for nine
years. The reports of Arthur Andersen LLP on the financial statements of the
Company for the past two fiscal years contained no adverse opinion or disclaimer
of opinion and were not modified as to uncertainty, audit scope, or accounting
principles. The Audit Committee of the Board of Directors approved the decision
to change the independent accountants of the Company. In connection with its
audits for the two most recent fiscal years, there have been no disagreements
with Arthur Andersen LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Arthur Andersen LLP would
12
<PAGE> 15
have caused them to make reference thereto in their reports on the financial
statements of the Company for such years.
The Company previously requested that Arthur Andersen LLP furnish it with a
letter addressed to the SEC stating whether or not it agrees with the statements
contained above. A copy of that letter, dated November 15, 1999, indicating that
Arthur Andersen LLP is in agreement with such statements, was previously filed
as Exhibit 16.1 to the Company's Form 8-K filed on November 15, 1999.
The Company engaged Ernst & Young LLP as its new independent accountants as
of November 15, 1999. Ernst & Young LLP issued its report dated June 19, 2000
regarding the Company's financial statements for the fiscal year ended March 31,
2000. During the two most recent fiscal years, the Company has not consulted
with Ernst & Young LLP, regarding either (i) the application of accounting
principles to a specified completed or contemplated transaction, or the type of
audit opinion that might be rendered on the Company's financial statements and
no written or oral advice was provided that was an important factor considered
by the Company in reaching a decision as to any accounting, auditing or
financial reporting issue, or (ii) any matter that was the subject of a
disagreement or event identified in response to Item 304(a)(1)(iv) of Regulation
S-B.
Upon the recommendation of the Audit Committee, the Board of Directors has
reappointed Ernst & Young LLP as the Company's independent public accountants
for the fiscal year ended March 31, 2001. 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.
A representative of Ernst & Young LLP will be present at the Annual Meeting
to respond to appropriate questions and to make such statements as such
representatives may desire.
ITEM 2.
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 NEXT ANNUAL MEETING
The Company currently expects to convene the 2001 Annual Meeting of
Stockholders during August or September of 2001 (the "2001 Annual Meeting"),
after the announcement of the financial results for the fiscal year ended March
31, 2001. Any proposal of a stockholder intended to be presented at the 2001
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
2001 Annual Meeting, on or before April 13, 2001.
THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED MARCH
31, 2000, 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.
13
<PAGE> 16
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 31, 2000
Norwich, Connecticut
14
<PAGE> 17
APPENDIX A
AUDIT COMMITTEE CHARTER
OF
GUNTHER INTERNATIONAL, LTD.
ORGANIZATION
This charter (the "Charter") governs the operations of the audit committee
of the board of directors (the "Board") of Gunther International, Ltd. (the
"Company"). The audit committee (the "Committee") shall be comprised of not less
than three members of the Board (including a chairman) each of whom shall be
independent of management and the Company. Members of the Committee shall be
considered independent if they have no relationship which may, in the opinion of
the Board, interfere with the exercise of their independent judgment in carrying
out the responsibilities of a director and they otherwise qualify as
"independent directors" within the meaning of NASD Marketplace Rule 4200(a)(14).
The members of the Committee and its Chairman shall be elected by and serve at
the discretion of the Board. All Committee members shall be financially
literate, or shall become financially literate within a reasonable period of
time after appointment to the Committee. At least one member of the Committee
shall have accounting or related financial management expertise.
The operation of the Committee shall be subject to the provisions of the
Company's by-laws, as in effect from time to time. The Committee shall hold
meetings as the Chairman or Committee deems appropriate or at the request of the
Company's independent auditors. The Chairman of the Committee shall arrange with
the Corporate Secretary's office for the completion of an official set of
minutes of each Committee meeting. The official minutes shall be approved by the
Committee members, and shall be given to the Corporate Secretary for filing with
the Corporate Records. The Chairman shall report to the Board from time to time
and as requested by the Board.
STATEMENT OF POLICY
The Committee shall provide assistance to the Board in fulfilling its
oversight responsibility relating to the Company's financial statements and the
financial reporting process, the systems of internal accounting and financial
controls, and the annual independent audit of the Company's financial
statements. The Committee shall maintain free and open communication among the
Committee, the independent auditors and management of the Company. In assisting
the Board in its oversight role, the Committee shall have full access to all
books, records, facilities, and personnel of the Company and shall have the
authority to retain special legal, accounting or other consultants.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the Committee is to oversee the Company's
financial reporting process and monitor the integrity of the financial
statements of the Company on behalf of the Board and report the results of its
activities to the Board. Management is responsible for preparing the Company's
financial statements, and the independent auditors are responsible for auditing
those financial statements. The Committee in carrying out its responsibilities
should remain flexible, in order to best react to changing conditions and
circumstances. The Committee should take the appropriate actions to demonstrate
the Company's commitment to quality financial reporting, sound business risk
practices, and ethical behavior.
The following shall be the principal recurring processes of the Committee
in carrying out its oversight responsibilities. These processes are set forth as
a guide with the understanding that the Committee may supplement them as
appropriate.
- The Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are accountable to the
Board and the Committee, as representatives of the Company's
stockholders. The Committee and the Board, as stockholders'
representatives, shall have the ultimate authority and responsibility to
select and evaluate the performance of the independent
<PAGE> 18
auditors. If so determined by the Committee, the Committee may recommend
that the Board replace the independent auditors.
- The Committee shall discuss with the independent auditors the overall
scope of, and plans for, their audits. Also, the Committee shall discuss
with management and the independent auditors the adequacy and
effectiveness of the Company's accounting and financial controls,
including the Company's system to monitor and manage business risk and
legal and ethical compliance matters. Further, the Committee shall meet
separately with the independent auditors, with and without management
present as the Committee shall determine, to discuss the results of their
examinations.
- The Committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-QSB. Also, prior to the filing of
the Form 10-QSB the Committee shall discuss with the independent auditors
the results of the quarterly review and any other matters required to be
communicated to the Committee by the independent auditors under generally
accepted auditing standards. The Chairman of the Committee may represent
the entire Committee for the purposes of this review.
- The Committee shall discuss with the auditors their independence from
management and the Company and the matters included in the written
disclosures required by the Independence Standards Board. If so
determined by the Committee, the Committee shall recommend that the Board
take appropriate action to ensure the independence of the auditors.
- The Committee shall review and discuss with management and the
independent auditors the financial statements to be included in the
Company's Annual Report on Form 10-KSB (or the annual report to
stockholders if distributed prior to the filing of Form 10-KSB),
including their judgment about the quality, not just acceptability, of
accounting principles, the reasonableness of significant judgments, and
the clarity of the disclosures in the financial statements. Also, the
Committee shall discuss the results of the annual audit and any other
matters required to be communicated to the Committee by the independent
auditors under Statement on Auditing Standards 61 ("SAS 61") and
generally accepted auditing standards. Based upon the reviews and
discussions referred to in this paragraph and the preceding paragraph,
the Committee shall determine whether to recommend to the Board of
Directors that the audited financial statements of the Company for the
last fiscal year be included in the Company's Annual Report on Form
10-KSB for the last fiscal year for filing with the Securities and
Exchange Commission.
- The Committee shall review related-party transactions and any potential
conflict-of-interests situations involving officers, directors or
stockholders beneficially owning more than 10% of any class of equity
security of the Company.
- The Committee shall review and reassess the adequacy of this Charter at
least annually and submit the Charter (and any recommended amendments
thereto) to the Board for its approval.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, the Committee does not have the responsibility to plan or conduct
audits or to determine that the Company's financial statements are complete,
accurate and in accordance with generally accepted accounting principles, as
that is the responsibility of the Company's management and/or the independent
auditors.
2
<PAGE> 19
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 7, 2000, 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 31, 2000, and instructs its
attorneys and proxies to vote as set forth on this Proxy.
(To be Signed on Reverse Side)
<PAGE> 20
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
GUNTHER INTERNATIONAL, LTD.
September 7, 2000
| Please Detach and Mail in the Envelope Provided |
/X/ Please mark your
votes as in this
example
FOR WITHHELD
1. ELECTION / / / / Nominees: J. Kenneth Hickman
OF Steven S. Kirkpatrick
DIRECTORS Gerald M. Newman
Marc I. Perkins
For, except vote Robert Spiegel
withheld from the George A. Snelling
following nominee(s) Thomas M. Steinberg
________________________________________________________________________________
2. To vote with discretionary authority upon any other business which may
properly come before the meeting or any adjournment thereof.
The shares represented by this Proxy will be voted as specified. IF NO CHOICE IS
SPECIFIED, THE PROXY WILL BE VOTED IN FAVOR OF THE SPECIFIED NOMINEES AND 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 title. If the signer is a corporation, sign in corporate name by a
duly authorized officer.
