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 ss.240.14a-11(c) or ss.240.14a-12
FOILMARK, INC.
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(Name of Registrant as Specified In Its Charter)
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(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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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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):
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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:
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<PAGE>
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>
FOILMARK, INC.
5 Malcolm Hoyt Drive
Newburyport, Massachusetts 01950
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Tuesday, May 20, 1997
To the Shareholders of Foilmark, Inc.:
The Annual Meeting of Shareholders of Foilmark, Inc., a Delaware
corporation (the "Company"), will be held at Ashworth by the Sea, Hampton Beach,
New Hampshire on Tuesday, May 20, 1997, at 10:00 a.m., E.D.S.T., for the
following purposes:
1. To elect three (3) persons as directors for a three-year term expiring
in 2000.
2. To elect two (2) person as director for a two-year term expiring in
1999.
3. To consider and act upon a proposal to adopt the 1997 Directors Stock
Option Plan.
4. To consider and act upon any other matter which may properly come before
the meeting and any postponements or adjournments thereof, including matters
which the Board of Directors did not know would be presented at the Annual
Meeting a reasonable time before this solicitation.
The Board of Directors of the Company has fixed the close of business on
April 1, 1997 as the record date for the determination of the shareholders
entitled to receive notice of and to vote at the Meeting or any adjournment
thereof. The stock transfer books will not be closed.
All shareholders are cordially invited and urged to attend the Meeting.
PLEASE SIGN, DATE AND RETURN THE PROXY EVEN THOUGH YOU PLAN TO ATTEND THE
MEETING. Upon your arrival your proxy will be returned to you, if you desire to
revoke it or vote in person. Your attendance in person is encouraged, but should
anything prevent your attendance in person, your presence by proxy will still
allow your shares to be voted.
By Order of the Board of Directors,
Carol J. Robie, Secretary
April 28, 1997
<PAGE>
FOILMARK, INC.
5 MALCOLM HOYT DRIVE
NEWBURYPORT, MASSACHUSETTS 01950
PROXY STATEMENT
The Proxy Statement is furnished in connection with the solicitation of the
accompanying Proxy on behalf of the Board of Directors of Foilmark, Inc. (the
"Company"), to be used at the Annual Meeting of Shareholders of the Company and
all adjournments thereof, to be held at the time and place and for the purposes
set forth in the foregoing Notice of the Meeting. A shareholder giving a proxy
may revoke it at any time before it is exercised by delivering to the Secretary
of the Company, at the address set forth in the Notice of the Meeting, a letter
signed by the record holder of the Common Stock indicating the proxy is revoked.
All proxies will be voted in accordance with instructions thereon. ANY PROXY
UPON WHICH NO INSTRUCTION HAS BEEN INDICATED WILL BE VOTED "FOR" THE SPECIFIC
MATTERS SET FORTH IN THE FOREGOING NOTICE OF THE MEETING AND, AT THE DISCRETION
OF THE PERSONS NAMED IN THE PROXY, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE ANNUAL MEETING. The solicitation is being made by use of the mails
and the cost thereof will be borne by the Company. In addition to the
solicitation by the use of the mails, proxies may be solicited personally by
telephone or telegraph by regular employees of the Company or its Subsidiaries
without additional remuneration therefor. The Company will reimburse banks,
brokers, custodians, nominees and fiduciaries for expenses incurred in
forwarding proxies and proxy soliciting materials to their principals.
This Proxy Statement and the related proxy form are first being mailed to
shareholders on or about April 28, 1997.
<PAGE>
VOTING SECURITIES AND PRINCIPAL OWNERS THEREOF
As of the close of business on April 1, 1997, the record date for the
determination of shareholders entitled to notice of and to vote at the Meeting,
the Company had outstanding 4,158,207 common shares, of which 1,727,700 shares,
or 41.5%, were beneficially owned by directors and officers of the Company. Each
share entitles the holder of record to one vote on each matter submitted to
shareholders of the Company. Cumulative voting for the election of directors is
permitted. Accordingly, with respect to the election of directors, each
shareholder may cast a number of votes equal to the number of shares held by
such shareholder multiplied by the number of directors (in this case, five) to
be elected at the Annual Meeting, and may cast all of such votes for a single
director or may distribute them among the number to be voted for, or for any two
or more of them as such shareholder may choose.
The holders of one-third of the shares entitled to vote, present in person
or represented by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting. A plurality of votes cast is required to elect
the directors. A majority of the votes cast is required to adopt the 1997
Directors Stock Option Plan. Abstentions are treated as present and entitled to
vote and therefore have the effect of a vote against a matter. A broker non-vote
on a matter is considered not entitled to vote on the matter and thus is not
counted in determining whether a matter requiring approval of a majority of the
shares present and entitled to vote has been approved.
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<PAGE>
Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of April 1, 1997, as to (a) each person known
to the Company who beneficially owns 5% or more of the outstanding shares of
Common Stock, (b) directors and nominees, (c) each of the named executive
officers and (d) all directors and executive officers as a group. Each of such
shareholders has sole voting and investment power as to shares shown unless
otherwise noted.
<TABLE>
<CAPTION>
Amount and
Name of Nature of Percent of
Beneficial Owner (a) Beneficial Ownership Class
- -------------------- -------------------- -----
<S> <C> <C>
Martin A. Olsen (b)(c) ....................... 543,477 13.1%
Estate of Frank J. Olsen (d) ................. 222,724 5.4%
Frank J. Olsen, Jr. (b)(d)(e) ................ 456,092 11.0%
Leonard A. Mintz (b)(f) ...................... 244,696 5.9%
Wilhelm P. Kutsch (g) ........................ 78,230 1.9%
Philip Leibel (h) ............................ 53,630 1.3%
Carol J. Robie (b)(i) ........................ 203,009 4.9%
Edward D. Sullivan (b) ....................... 153,847 3.7%
Raymond T. Downey ............................ 0 *
Michael J. Bertuch (j) ....................... 0 *
Michael Foster (k) ........................... 0 *
Kenneth R. Harris ............................ 128,522 3.1%
Parties to Voting Agreement (l) .............. 1,601,121 38.5%
All Directors and Executive Officers
as a Group (12 persons) (c)(m) ...... 2,022,600 48.7%
- -----------------------
</TABLE>
* Less than one percent.
(a) If applicable, beneficially owned shares include shares owned by the
spouse, children and certain other relatives of the beneficial owner,
director, nominee or officers, as well as shares held by trusts of which
the person is a trustee or in which he has a beneficial interest. Any such
beneficially owned shares will be noted separately for each owner, except
in the case of shares beneficially owned by all directors and executive
officers as a group. All information with respect to beneficial ownership
has been furnished by the respective directors, officers and 5% owners.
Except as set forth above, management knows of no person who, as of April
1, 1997, owned beneficially more than 5% of the Company's outstanding
Common Stock. The information includes, where applicable, shares issuable
upon exercise of stock options granted under the Company's 1993 Stock
Option Plan, which options are presently or will be exercisable within 60
days of the date of this Proxy Statement.
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<PAGE>
(b) Excludes shares held by other parties to the Voting Agreement described in
"Certain Relationships and Related Transactions" which may be deemed to be
beneficially owned by these individuals. Mr. Olsen's address is 40 Melville
Park Road, Melville, New York 11747.
(c) Includes (i) 11,000 shares held by Mr. Olsen's wife as to which he
disclaims beneficial ownership; and (ii) 27,356 shares deemed beneficially
owned in his capacity as executor of the Estate of Florence J. Olsen. The
address for Mr. Olsen and the estate is c/o Frank J. Olsen, Jr., 5 Malcolm
Hoyt Drive, Newburyport, Massachusetts 01950.
(d) The address for Mr. Olsen and the estate is c/o Frank J. Olsen, Jr., 5
Malcolm Hoyt Drive, Newburyport, Massachusetts 01950.
(e) Includes 33,100 shares issuable upon exercise of options which are
presently or will become exercisable within 60 days, and 222,724 shares
deemed beneficially owned in his capacity as executor of the Estate of
Frank J. Olsen.
(f) Includes 10,000 shares issuable upon exercise of options which are
presently or will become exercisable within 60 days. Mr. Mintz's address is
25 Hale Street, Newburyport, Massachusetts 01950.
(g) Includes 41,400 shares issuable upon exercise of options which are
presently or will become exercisable within 60 days.
(h) Includes 38,200 shares issuable upon exercise of options which are
presently or will become exercisable within 60 days.
(i) Includes 11,700 shares issuable upon exercise of options which are
presently or will become exercisable within 60 days.
(j) Mr. Bertuch's address is c/o DVC Industries, 1440 Fifth Avenue, Bayshore,
New York 11706.
(k) Mr. Foster's address is c/o WPI Group, Inc., 390 Ray Street, Manchester,
New Hampshire 03104.
(l) For purposes of disclosure of beneficial ownership under the Securities
Exchange Act of 1934, the persons identified as parties to the Voting
Agreement described in "Certain Relationships and Related Transactions" are
deemed to be a single person and the beneficial owners of the shares of
Common Stock owned by all parties to the Voting Agreement.
(m) Includes 141,900 shares issuable upon exercise of options which are
presently or will become exercisable within 60 days.
-4-
<PAGE>
Compliance with Section 16(a)
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who beneficially own more than ten
percent (10%) of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission ("SEC") and NASDAQ reports of
securities ownership and changes in such ownership. Officers, directors and ten
percent beneficial owners also are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, or written representations that no other
reports were required for those persons, the Company believes that during the
fiscal year ended December 31, 1996 its officers, directors, and greater than
ten percent (10%) beneficial owners complied with all Section 16(a) filing
requirements.
NOMINATION AND ELECTION OF DIRECTORS
The Board has fixed the number of directors at twelve (12), of which three
board seats are to be left vacant in order to permit qualified additions to the
Board of Directors if the need arises in the future. The remaining nine seats
are divided into three classes, the terms of which expire in 1997, 1998 and 1999
respectively. Currently there are three (3) directors serving terms expiring in
1998 and one (1) director serving a term expiring in 1999. There are five (5)
directors to be elected at the 1997 Annual Meeting: three of the Directors
elected will serve a three year term ending in 2000, and two of the Directors
elected will serve a two year term ending in 1999, and until a successor for
each has been elected and qualified or until the director's earlier resignation
or removal. Each nominee has consented to be named in this Proxy Statement and
to serve, if elected. If any nominee shall be unable to serve, the proxy may be
voted with discretionary authority for a substitute. The Board of Directors has
no reason to believe that any nominee will become unavailable to serve.
Any vacancies occurring in the Board of Directors, regardless of the term,
shall be filled by the Board of Directors to serve only until the next annual or
special meeting of the shareholders.
Martin A. Olsen, Leonard A. Mintz, Edward D. Sullivan, Kenneth R. Harris,
Frank J. Olsen, Jr., Carol J. Robie, Wilhelm P. Kutsch, Michael J. Bertuch and
Michael Foster are currently directors of the Company. Each of Directors Olsen,
Mintz and Sullivan was elected at the 1994 Annual Meeting in June 1994. Michael
J. Bertuch and Michael Foster were elected at a Special Meeting of the Board of
Directors held on January 7, 1997. Michael Foster was elected to fill the
vacancy left by the resignation of Director Daly in December 1996, who accepted
his election as and became a Director on October 30, 1996 to fill the vacancy
left by the resignation of Joseph E. Levangie in July 1996. Raymond T. Downey, a
director since 1994 whose term expires in 1999, resigned in March 1997.
In voting for directors, each shareholder is entitled to five (5) votes for
each share of Common Stock held, one for each of the five directors to be
elected. A shareholder may cast his votes evenly for all nominees or may
cumulate his votes and cast them for one nominee or distribute his votes among
two or more nominees. The five persons receiving the highest number of votes
cast in person
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<PAGE>
or by proxy shall be elected to the Board of Directors. Abstentions from voting
and broker non-votes for the election of directors will have no effect since
they will not represent votes cast at the Meeting for the purpose of electing
directors.
Shareholders may withhold authority to vote for any individual nominee by
striking through the nominee's name on the proxy card. Any proxy which is not so
marked to withhold authority or struck through shall be deemed to be a vote for
such nominee and unless otherwise indicated on the proxy shares will be
distributed evenly among the nominees for whom authority to vote has not been
withheld.
The Board of Directors recommends a vote "FOR" the election of the nominees
for election as directors.
Certain information concerning each nominee for Director, all current
Directors, all executive officers and key employees of the Company is set forth
below. Except as otherwise indicated, each of the persons has been employed by
his or her current employer for the preceding five years. There are no family
relationships between any executive officers, directors or key employees of the
Company, except that Martin A. Olsen is the uncle of Frank J. Olsen, Jr. and his
sister Carol J. Robie.
A. NOMINEES FOR A THREE YEAR TERM ENDING IN 2000:
MARTIN A. OLSEN Director since 1992
Martin A. Olsen, 72, retired as an active employee of the Company in
October 1995. Prior to that time he was Chairman of the Board of Directors since
March 1992, and Secretary of the Company and all of its Subsidiaries since
September 1993. He was employed by Kensol-Olsenmark, Inc., a predecessor of the
Company, in various capacities since 1946, and was its President since 1962.
LEONARD A. MINTZ Director since 1992
Leonard A. Mintz, 61, has been Senior Vice President - Equipment since
March 1992 and is Vice President Norwood Division of Kensol-Olsenmark, Inc.
Previously he served as President of Franklin Manufacturing Corporation since
1967 before its acquisition by the Company in 1992. He had been employed at
Franklin in various capacities since 1958.
EDWARD D. SULLIVAN Director since 1994
Edward Sullivan, 64, served as Vice President - West Coast Operations of
the Company from 1994 until his retirement on December 31, 1996, and Vice
President and General Manager of West Foils, Inc., a subsidiary of the Company,
from 1995 until his retirement on December 31, 1996. He was President of West
Foils, Inc. from 1991 through 1994. He had been employed at West Foils in
various capacities since 1988.
B. NOMINEES FOR A TWO YEAR TERM ENDING IN 1999:
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<PAGE>
MICHAEL J. BERTUCH Director since 1997
Michael J. Bertuch, 36, has been the President of DVC Industries, a
manufacturer of vinyl loose-leaf books, since January 1992. Prior to 1992, he
was employed by DVC Industries in various executive capacities since 1986.
MICHAEL FOSTER Director since 1997
Michael Foster, 62, is the founder, Chairman of the Board and Chief
Executive Officer of WPI Group, Inc., a publicly-held manufacturer of hardware,
software and electronic products for commercial and industrial markets since
1988.
CURRENT DIRECTORS AND OFFICERS:
Director Whose Term Expires in 1999:
KENNETH R. HARRIS Director since 1996
Kenneth R. Harris, 47, is Vice President - Pad Printing Operations of the
Company since August 1995. From 1978 to 1995 he was Vice President of Intram
Industries, Inc. He also is secretary and Treasurer of COMDEC, Inc., a
commercial decorating company. Mr. Harris has over 20 years experience in the
pad printing industry.
Directors whose terms expire in 1998:
FRANK J. OLSEN, JR. Director since 1992
Frank J. Olsen, Jr., 45, has served as Chairman of the Board since October
1995 and President of the Company since March 1992. He is the Chief Executive
Officer of the Company and each of its subsidiaries. Prior to March 1992 he was
employed as Vice President - Engineering, and in various other capacities with
the Company and its predecessors since 1976.
-7-
<PAGE>
WILHELM P. KUTSCH Director since 1994
Wilhelm P. Kutsch, 54, has been Senior Vice President - Foil Operations
since March 1992, and served as Vice President - Foil Operations prior to March
1992. He has also served as Vice President and Operations Manager of Foilmark
Manufacturing Corporation since 1979. Mr. Kutsch has over 20 years experience in
the hot stamping industry.
CAROL J. ROBIE Director since 1992
Carol J. Robie, 41, has been Vice President - Administration since March
1992. She served as Administrative Manager of the Company in 1990 and 1991, and
also has been employed in various capacities by Foilmark Manufacturing
Corporation since 1977. She also serves as Secretary of the Company.
Non-Director Executive Officers:
PHILIP LEIBEL Officer since 1992
Philip Leibel, 59, has been Vice President - Finance since March 1992 and
is Treasurer, Assistant Secretary and Chief Financial Officer of the Company and
each of its Subsidiaries. He is also Vice President - General Manager of
Foilmark Manufacturing Corporation. He has been Chief Financial Officer of the
Company and its predecessors since 1977.
GLENN R. REGAN Officer since 1992
Glenn R. Regan, 49, has been Vice President - Tool & Die of the Company
since November 1994, and has been employed as Sales Manager - Foil with
predecessors of the Company since 1990.
DOUGLAS A. PARKER Officer since 1995
Douglas Parker, 42, has served as Vice President--Machinery Sales since
June 1996 and has been employed by the Company since October 1995. From 1980
through 1995, he was Vice President--Sales of Imtran Industries, Inc.
-8-
<PAGE>
General Information About Board of Directors
There were four (4) regular and no special meetings of the Board of
Directors in the 1996 fiscal year. During this period, each incumbent director
attended at least 75% of the aggregate of (a) the total number of meetings of
the Board held during the period for which such incumbent was a director, and
(b) the total number of meetings held by all committees of the Board on which
such incumbent served.
Directors of the Company who are not full time employees of the Company or
its operating subsidiaries receive $1,250 for each meeting attended, as well as
a fee of $500 per committee meeting attended, plus out-of-pocket expenses for
attending meetings. Effective October 1, 1997, the Board of Directors voted that
directors of the Company who are not full time employees of the Company or its
subsidiaries receive a retainer of $2,000 per calendar quarter as well as a fee
of $750 per Board Meeting attended and $350 per committee meeting attended in
person or telephonically. The Board of Directors has several committees,
including an Executive Committee, a Compensation Committee, an Audit Committee,
and a Stock Option Committee.
The Executive Committee consists of Frank J. Olsen, Jr., Leonard A. Mintz,
Wilhelm P. Kutsch, Edward D. Sullivan and Raymond Downey (until his resignation
in March 1997). In January 1997, Directors Mintz & Kutsch resigned from the
Executive Committee and Directors Bertuch and Foster were elected to serve on
this committee. In addition, Philip Leibel attends Executive Committee Meetings
as Chief Financial Officer in a non-voting capacity. The Executive Committee
conducts the affairs and business of the Company between meetings of the Board
of Directors, subject to certain limitations set forth in the Company's
Certificate of Incorporation. The Executive Committee met four (4) times during
fiscal 1996.
The Compensation Committee consists of Raymond T. Downey (until his
resignation in March 1997), Frank J. Olsen, Jr. and Leonard A. Mintz. Until his
resignation in the Fall of 1996, Joseph E. Levangie served on the Compensation
Committee. The Compensation Committee determines the compensation to be paid by
the Company to its officers. The Compensation Committee met two (2) times during
fiscal 1996.
The Audit Committee consisted of Raymond T. Downey, a non-employee director
(until his resignation in March 1997). Joseph E. Levangie served as a member of
the Audit Committee until his resignation in the Fall of 1996. It is anticipated
that Directors Bertuch and Foster will be elected to serve on the Audit
Committee beginning in the Spring of 1997. The Audit Committee is responsible
primarily for recommending the accounting firm to be appointed as independent
public accountant to audit the Company's financial statements and to perform
services related to the audit; reviewing the scope and results of the audit with
the independent public accountants; reviewing with management and the
independent public accountants the Company year-end operating results;
considering the adequacy of the internal accounting and control procedures of
the Company; reviewing the non-audit services to be performed by the independent
public accountants and considering the effect of such performance on the
accountants' independence. The Audit Committee met two (2) times during fiscal
1996.
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<PAGE>
The Stock Option Committee consisted of Raymond T. Downey, a non-employee
director (until his resignation in March 1997). Joseph E. Levangie served as a
member of the Stock Option Committee until his resignation in the Fall of 1996.
It is anticipated that Directors Bertuch and Foster will be elected to serve as
members of the Stock Option Committee in the Spring of 1997. The Stock Option
Committee administers the 1993 Stock Option Plan and determines to whom such
options will be granted and the number of shares of Common Stock to be included
in such options. No member of the Stock Option Committee is eligible to receive
options. The Stock Option Committee met one (1) time during fiscal 1996.
Martin A. Olsen, a director of the Company and, until October 1995,
Chairman of the Board and Secretary of the Company, received $176,000 pursuant
to a Consulting Services Agreement with the Company which was entered into in
December, 1995. The Consulting Agreement provides for compensation of $176,800
annually, and terminates in December 1998. The compensation is payable
regardless of Mr. Olsen's disability or death. In the event of his death,
amounts payable under the Consulting Agreement would be payable to his spouse or
heirs. The Agreement prohibits Mr. Olsen from competing with the Company during
the term of the Agreement, and for a period of one year thereafter. The
Agreement prohibits the disclosure of any confidential or proprietary
information. The Consulting Agreement also entitles Mr. Olsen to other benefits
from the Company, including the use of an automobile, health insurance, life
insurance and director's and officer's liability insurance.
On January 1, 1997, the Company and Edward D. Sullivan entered into a
Consulting Agreement which terminates and replaces an Employment Agreement with
the same term. The Consulting Agreement shall terminate on December 31, 1998.
Under the Consulting Agreement, Mr. Sullivan shall receive fifty percent (50%)
of his average compensation for 1995 and 1996 which was payable pursuant to his
Employment Agreement. In return, Mr. Sullivan shall provide advisory services to
the Company in conjunction with sales management, strategic sales objectives and
general supervision of the Company's Westfoils subsidiary. The Consulting
Agreement prohibits Mr. Sullivan from competing with the Company during the term
of the Consulting Agreement and for a period of three (3) years thereafter. The
Consulting Agreement prohibits the disclosure of any confidential or proprietary
information, including inventions. The Agreement also entitles Mr. Sullivan to
the use of an automobile.
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<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total compensation of the chief
executive officer and the other four most highly compensated executive officers
of the Company for services in all capacities to the Company or its subsidiaries
for the fiscal year ended December 31, 1996 and the total compensation earned by
such individuals for the Company's two previous fiscal years:
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards
------
<TABLE>
<CAPTION>
All Other
Name and Principal Bonus Options Compensation(b)
Position Year Salary($) ($) (#) ($)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Frank J. Olsen, Jr 1996 195,546 -- 10,000 --
President and Chief 1995 191,610 13,125 23,100 2,874
Executive Offer 1994 171,174 52,500 -- 3,750
Leonard A. Mintz 1996 175,149 -- -- --
Senior Vice 1995 173,090 -- 2,500 2,596
President 1994 155,416 -- 7,500 3,750
Wilhelm P. Kutsch 1996 180,098 -- 8,500 --
Senior Vice 1995 177,318 9,352 32,900 2,666
President 1994 161,707 37,410 -- 3,750
Philip Leibel 1996 155,498 -- 7,500 --
Vice President & 1995 159,668 9,352 30,700 2,395
Chief Financial 1994 142,252 37,410 -- 3,750
Officer
Edward D. Sullivan 1996 169,477 -- -- --
Vice President -- 1995 50,194 -- -- --
West Coast Operations 1994 -- -- -- --
</TABLE>
(a) Any prerequisites or other personal benefits received from the Company by
any of the named executives were substantially less than the reporting
thresholds established by the Securities and Exchange Commission (the
lesser of $50,000 or 10% of the individual's salary and bonus).
(b) Amounts in the "All Other Compensation" column represent contributions to
the Company's Profit-Sharing Plan.
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<PAGE>
Option Plans
The following table sets forth, for the named executive officers,
information regarding stock options granted during 1996 pursuant to the
Company's 1993 Employee Stock Option Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
% of Total Value at Assumed Annual
Options/SARs Rate of Stock Price
Options/ Granted to Exercise Appreciation for
SARs Employees in or Base Expiration Five Years(b)
Name Granted(a) Fiscal Year Price ($/Sh) Date 5%($) 10%($)
- ---- ---------- ----------- ------------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Frank J. Olsen, Jr. 10,000 20.90% $4.50 March 9, 2001 12,400 27,500
Leonard A. Mintz 2,500 5.20% 4.50 March 9, 2001 3,100 6,875
Wilhelm P. Kutsch 8,500 17.10% 4.50 March 9, 2001 10,540 33,375
Philip Leibel 7,500 15.60% 4.50 March 9, 2001 9,300 20,625
Edward D. Sullivan -- -- -- -- -- --
(a) All of these options became exercisable in full on March 9, 1997. They
terminate two months after termination of employment (or one year after
retirement or permanent disability) and immediately if termination is for
cause. The purchase price for the shares on exercise of options may be paid
in cash or in shares of the Company's Common Stock already owned by the
option holder, or by a combination thereof.
(b) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. They are
calculated by multiplying the number of options granted by the difference
between a future hypothetical stock price and the option exercise price and
are shown pursuant to rules of the Securities and Exchange Commission. They
assume the value of the Company's Common Stock appreciates 5% or 10% each
year, compounds annually, for ten years. They are not intended to forecast
possible future appreciation, if any, of such stock price or to establish a
present value for the options.
</TABLE>
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<PAGE>
The following table sets forth certain information regarding stock options
exercised during 1996 and unexercised options held by the named executive
officers as of the end of the 1996 fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options/SAR at Fiscal In-the-Money Option/
Acquired Year End 1996 SARS($)
Options/SARs ($) on Value
Name Exercise Realized($)(a) Exercisable/Unexercisable Exercisable/Unexercisable(b)
---- -------- -------------- ------------------------- ----------------------------
<S> <C> <C> <C> <C>
Frank J. Olsen, Jr. -- -- 23,100/10,000 0/0
Leonard A. Mintz -- -- 7,500/2,500 0/0
Wilhelm P. Kutsch -- -- 32,900/8,500 0/0
Philip Leibel -- -- 30,700/7,500 0/0
Edward D. Sullivan -- -- 0/0 0/0
</TABLE>
(a) Based on closing price of the Common Stock on date of exercise less the
exercise price.
(b) Based on the closing price of the Common Stock on December 31, 1996
($2 3/8) minus the exercise price.
-13-
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting and administering the
policies which govern both annual compensation and incentive programs for key
managerial executives. The Committee usually meets twice annually for the
purpose of granting salary increases and bonus awards. It evaluates corporate
and individual performance, current compensation, and share ownership of the
managerial group. The employees of the Company who participate in the bonus and
stock option plans are those who, in the estimation of the Compensation
Committee, have a substantial opportunity to enhance shareholder value over
time.
The Committee's purpose is to ensure that management is enabled to attract
and retain well-qualified employees who are capable of managing for the benefit
of shareholders and contributing to the Company's success. To accomplish this
goal, compensation is intended to be competitive both within the industry as a
whole and when compared to like-size companies in the geographical areas served
by the Company. Inflation, the cost of living, and business conditions are taken
into consideration. Additionally, the Company surveys other manufacturing
companies and obtains compensation information from approximately 10 industry
participants.
The final determination of the base salary adjustments and incentive bonus
awards is made solely by the Compensation Committee after consultation with the
Chief Executive Officer. Stock Option Grants are made by the Stock Option
Committee, which presents its recommendations to the Compensation Committee for
review before final Stock Option Grants are made by the Stock Option Committee.
In setting an executive's base salary and bonus and in granting stock options,
consideration is given to maintenance of the executive's level of
responsibility, and the performance of the executive's area of responsibility.
Stock options are granted considering the nature of the industry and the
desirability of long-term employee incentives. Bonus awards are paid following
fiscal year end and represent awards for the preceding year.
With respect to compensation of the Chief Executive Officer ("CEO"), the
Compensation Committee meets without him being present to evaluate his
performance and reports on that evaluation to the independent directors of the
Board. The Compensation Committee exercises greater discretion with respect to
CEO compensation than with other key executives, and considers the performance
of the Company relative to the Company's profit goals. The Compensation
Committee also considers the short and long-term performance of the Company
relative to industry peers and to similar industries. Major weight is given to
operating earnings, as with other managers. Finally, the Compensation Committee
considers particular accomplishments of the CEO which are judged to contribute
to long-term shareholder value. Other factors which influence the CEO's
compensation include his establishment of clear and sound objectives and the
achievement of those objectives, his ability to create overall management
strength, his performance in communicating and in causing top managers to
communicate effectively with the Board, and his use of the Board as a resource
to aid effective management. The Committee does not evaluate these factors by a
predetermined formula or weighting, but reaches its conclusions based on the
judgments of its members. There were no bonuses paid to executive officers of
the Company in 1996. In September 1996, Frank J. Olsen, Jr., Leonard
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<PAGE>
A. Mintz, Wilhelm P. Kutsch and Philip Leibel agreed to a ten percent (10%)
reduction in their salaries.
The foregoing reports are presented by the following:
As to matters relating to cash compensation:
Raymond T. Downey
Frank J. Olsen, Jr.
Leonard A. Mintz
As to matters relating to stock options:
Raymond T. Downey
Employment Agreements
The Company entered into employment agreements with executive officers and
key employees in September 1993. The terms of the employment agreements are
substantially the same, except for the base salary and duties to be performed.
The base salary for officers varies. The 1997 base salaries for the officers
listed in the Summary Compensation Table (with the exception of Edward D.
Sullivan, who retired as of December 31, 1996) are as follows: Frank J. Olsen,
Jr., - $176,994, Leonard A. Mintz - $156,092, Wilhelm P. Kutsch - $157,716, and
Philip Leibel - $143,058. Each employment agreement expires December 31, 1998,
with successive one-year renewal terms unless terminated by either party, except
for the agreement with Leonard A. Mintz, which expires on his 65th birthday in
2000. If an employee's employment is terminated with cause or as a result of his
death or disability, the Company's obligation to compensate the employee under
his employment agreement also terminates. If the Company terminates an
employee's employment without cause, the Company is obligated to pay severance
of one month's salary for every year that the employee has been employed. In
addition, the Company will pay Leonard Mintz $50,000 per annum for a period of 5
years following his retirement or termination without cause. In connection with
the Imtran acquisition (see "Certain Relationships and Related Transactions" for
further information), Imtran Foilmark entered into a three year employment
agreement with Kenneth Harris providing for a base salary in the first year of
$100,000, with review at the end of each calendar year by the Board of
Directors. The terms of Harris's employment agreement are substantially the same
as the employment agreements with other executive officers and key employees.
Each employment agreement prohibits the employee from competing with the
Company during the term of the agreement and for a period of up to two years
following the date of termination, or five years in the case of Leonard Mintz.
Each employee is eligible under the agreements to a calendar year-end bonus at
the Board's discretion. Employees' benefits include group medical insurance
coverage (partially contributory), holidays, life insurance, long-term
disability insurance (contributory), short-term disability insurance (partially
contributory), travel accident insurance, profit sharing plan and four weeks
paid vacation each year. The Agreements prohibit employees from using or
disclosing any proprietary information to any other party at any time during the
period of employment by the
-15-
<PAGE>
Company or thereafter, except with the written consent of the Board of Directors
of the Company or as may be required under any state or federal law, rule or
regulation or by a court of competent jurisdiction during the period of
employment by the Company or thereafter.
Compensation Committee Interlocks and Insider Participation
During fiscal 1996, the Compensation Committee consisted of Raymond T.
Downey, Frank J. Olsen, Jr., Leonard A. Mintz, and Joseph E. Levangie (until his
resignation in the Fall of 1996), all of whom, with the exception of Mr. Downey
and Mr. Levangie, are executive officers of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 21, 1995 the Company acquired substantially all of the assets and
assumed certain liabilities of Imtran Industries, Inc. ("Imtran"), and
simultaneously transferred all of the assets to the Company's wholly owned
subsidiary, Imtran Foilmark, Inc. ("Imtran Foilmark"). Kenneth R. Harris and
Steven A. Meredith were the sole shareholders of Imtran. Harris and Meredith
received a purchase price of $2,975,000 in cash, and 257,044 shares of the
Company's Common Stock with a then market value of $2,025,000. The terms of the
acquisition entitle Messrs. Harris and Meredith to nominate one of them for
election to the Company's Board of Directors, or for the Company to nominate one
of them if Harris and Meredith cannot agree on which of them should be
nominated.
In connection with the acquisition of the assets of Imtran, the Company
entered into a Registration Rights Agreement with Harris and Meredith. The
Agreement obligates the Company to include at its expense (except underwriting
commissions) securities owned by Messrs. Harris and Meredith in a registration
statement initiated by the Company on a pro rata basis, to the extent the
managing underwriter advises the Company that the aggregate number of securities
sought to be offered can be sold.
Also in connection with the Imtran acquisition, Imtran Foilmark entered
into a five year lease of the premises where Imtran operated its business.
Messrs. Harris and Meredith are trustees of the trust that owns the premises.
The terms of the lease provide for annual rent of $137,500 during the initial
five year term, and payment of "Market Rent" for the duration of a single
extension term of two years. In July 1996, in consideration of the use by the
Company of additional space, the Company increased its annual rental payments by
$5,000 to $142,500 per year.
In the past the Company leased an apartment at an annual rent of $30,000
under a ten year lease from Merrimac Associates, a Massachusetts partnership
("Merrimac") owned equally by Martin A. Olsen (a Director and former Chairman of
the Board), the Estate of Florence Olsen (a former Director and the sister of
Martin A. Olsen) (beneficiaries include Frank J. Olsen, Jr. and Carol J. Robie)
and the Estate of Frank J. Olsen, Sr. (beneficiaries include Frank J. Olsen, Jr.
and Carol J. Robie). On January 26, 1996 the Company purchased the apartment
from Merrimac for a total purchase price of $210,000.00, which was determined by
an appraisal of the property. $180,250.00 of the purchase price was borrowed
from a bank, payable in two components: $161,500 payable over twenty (20) years,
and $18,750 payable over three years. The apartment is used by customers,
officers, employees and other persons visiting the Massachusetts plants.
-16-
<PAGE>
The Company believes that the above transactions were or are on terms no
less favorable to the Company than could have been obtained in transactions with
independent third parties. All future transactions between the Company and any
of its officers, directors, or principal shareholders or their respective
affiliates, will be on terms at least as favorable to the Company as could be
obtained form unaffiliated third parties and will be approved by a majority of
the independent and disinterested members of the Board of Directors.
In connection with the Consulting Services Agreement with Martin A. Olsen,
the Company entered into a Registration Rights Agreement with him, individually
and in his capacity as guardian for Florence Olsen. (See the section on
Employment Agreements for further information about the Consulting Agreement.)
Mr. Olsen, or persons to whom rights under the Registration Rights Agreement
have been transferred in accordance with the provisions thereof, has the right
to demand that one registration statement be filed by the Company with respect
to any portion of his securities so long as Olsen is a director or officer of
the Company, or he and/or his assignees hold beneficial ownership of at least
ten percent (10%) of the Company's Common Stock. The Company is also obligated
to include stock owned by Mr. Olsen or his assignees on a pro rata basis in any
registration not initiated by Mr. Olsen or his assignees.
In November 1994, Leonard A. Mintz, Martin A. Olsen, Frank J. Olsen, Jr.,
Carol J. Robie, and Florence J. Olsen (collectively, the "Management
Shareholders") entered into a Voting Agreement with Edward Sullivan, which
obligates the parties to vote for each Management Shareholder as a Director so
long as such individual maintains ownership of at least 5% of the Company's
Common Stock outstanding on such date (without regard to new issues) and remains
an officer of the Company or any of its subsidiaries and (ii) obligates the
Management Shareholders to vote for the election of Mr. Sullivan as a Director
of the Company, so long as he is a shareholder of the Company and an officer or
employee of the Company or any of its subsidiaries. The Voting Agreement expires
in 2004. An aggregate of 1,601,121 shares of Common Stock is beneficially owned
by the parties to the Voting Agreement, including 222,724 shares held by Frank
J. Olsen, Jr. in his capacity as executor of the Estate of Frank J. Olsen and
27,356 shares held by Martin A. Olsen in his capacity as executor of the Estate
of Florence J. Olsen.
Comparative Performance Graph
The following graph compares the cumulative total shareholder return on the
Common Stock with the cumulative total shareholder return of (i) the Standard
and Poor's 500 Index (the "S & P 500 Index"), and (ii) the Dow Jones
Industrial-Diversified index selected by the Company for purpose of the
comparison ("DJ Industrial-Dvrsfd"), assuming an investment of $100 on June 23,
1994, in each of the Common Stock of the Company, the S & P 500 Index, and the
DJ Industrial-Dvrsfd stocks. The graph assumes dividend reinvestment with
respect to companies in the DJ Industrial-Dvrsfd, and the returns of each such
company have been weighted at each measurement point to reflect relative stock
market capitalization. The graph commences as of June 23, 1994, the date the
Common Stock became publicly traded.
-17-
<PAGE>
COMPARISON OF 30 MONTH CUMULATIVE TOTAL RETURN*
AMONG FOILMARK, INC., THE S&P INDEX AND THE DOW JONES
INDUSTRIAL, DIVERSIFIED INDEX
[GRAPHIC INSERTION]
*$100 INVESTED ON 6/2/94 IN STOCK OR INDEX
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
-18-
<PAGE>
ADOPTION OF DIRECTORS STOCK OPTION PLAN
On July 31, 1996, the Board of Directors, subject to shareholder approval
at the Annual Meeting, adopted the Foilmark, Inc. Non-Employee Directors' Stock
Plan (the "Plan"). At April 10,1997, the last sale price of the Company's Common
Stock as reported on the Nasdaq National Market System was $1.9375.
Summary of the Plan
Administration
The Plan shall be administered by a committee designated by the Board of
Directors of the Company.
Shares Subject to the Plan
The Plan authorizes up to an aggregate of 75,000 shares of the Company's
Common Stock to be available for the granting of options under the Plan. The
number of shares of Common Stock authorized by the Plan is subject to adjustment
by the Board in the event of any change in the number of shares of the Company's
outstanding Common Stock resulting from stock splits, stock dividends,
combinations or exchanges of shares or other similar capital adjustments. Shares
of Common Stock covered by an option which is no longer exercisable with respect
to such shares shall again be available for issuance under the Plan.
Eligibility
Only non-employee directors of the Company are eligible for participation
in the Plan. Should a non-employee director (i) fail to be re-elected to the
Board, (ii) resign or (iii) become an employee of the Company, such director
shall no longer be eligible to participate in the Plan. If a director fails to
be re-elected, or otherwise ceases to be a director for reasons other than death
or disability, all options not then currently exercisable shall terminate
immediately, and any remaining Options then exercisable may be exercised within
twenty-four months from the date of termination. Options shall terminate if not
exercised before twenty-four months from the date of termination. If a director
ceases to be a director of the Company by reason of death or disability, all
options not then currently exercisable shall become immediately exercisable and
may be exercised at any time within twenty-four months from the date of death or
disability.
Types of Awards
The plan provides for options not qualifying as incentive options under
Section 422 of the Internal Revenue Code ("Non-Qualified Options" or "Options").
Options to purchase 5,000 shares of the Company's Common Stock shall be granted
to each non-employee director upon the Effective Date of the Plan (as defined in
the Plan) or upon date of the first election of each director and Options to
purchase an additional 2,500 shares of the Company's Common Stock shall be
granted yearly on
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<PAGE>
the day of the Company's Annual Meeting of Shareholders. Options may only be
exercised within 10 years of the date of the grant, and shall vest six months
after the date of the grant. Options may be exercised in whole or in part by
written notice accompanied by payment in full, either in cash or in the Common
Stock of the Company. Options granted under the Plan may not be transferred or
assigned other than by will or the laws of descent and distribution. However, if
compliance of the Plan with Rule 16b-3 under the Securities Exchange Act of 1934
("Rule 16b-3") would not be adversely affected, Options may be transferred for
no consideration to members of the Option holder's immediate family, to a trust
for the benefit of members of the Option holder's immediate family or to a
partnership whose only parties are members of the Option holder's immediate
family. In the event of a Change in Control (as defined in the Plan), the Board
may, as to all Options not then currently exercisable, provide by written notice
that all unexercised Options must be exercised within thirty days of the date of
such notice or they will be terminated.
Withholding Taxes
The Company may deduct from shares due an Option holder any federal, state
or local taxes of any kind required to be withheld with respect to the exercise
of an Option.
Amendment or Termination
The Board of Directors may terminate or amend the Plan at any time but
shall amend the Plan no more than once every six months other than to comply
with changes in the Internal Revenue Code or the Employee Retirement Income
Security Act. To the extent required by Rule 16b-3, any amendment which
increases the aggregate number of shares of the Company's Common Stock
materially increases benefits accruing to eligible persons under the Plan, or
materially modifies requirements of eligibility under the Plan, shall be subject
to shareholder approval.
Federal Income Tax Consequences
Upon grant of the Option, the Option holder will recognize no income. Upon
exercise of the Option (if the shares of Common Stock are not subject to
substantial risk of forfeiture), the Option holder will recognize ordinary
compensation income in an amount equal to the excess, if any, of the fair market
value of the shares on the date of exercise over the exercise price, and the
Company will qualify for a deduction in the same amount, subject to the
requirement that the compensation be reasonable. The Company will be required to
comply with applicable Federal income tax withholding requirements with respect
to the amount of ordinary compensation income recognized by the Option holder.
On a disposition of the shares, the Option holder will recognize gain or loss
equal to the difference between the amount realized and the sum of the exercise
price and the ordinary compensation income recognized. Such gain or loss will be
treated as capital gain or loss if the shares are capital assets and as
short-term or long-term capital gain or loss, depending upon the length of time
that the Option holder held the shares.
If the shares acquired upon exercise of an Option are subject to a
substantial risk of forfeiture, the Option holder will recognize income at the
time when the substantial risk of forfeiture is removed and the Company will
qualify for a corresponding deduction at such time.
-20-
<PAGE>
<TABLE>
<CAPTION>
New Plan Benefits
-----------------
Name Dollar Value ($)(1) Number of Units
- ---- ------------------- ---------------
<S> <C> <C>
Michael J. Bertuch 11,875 5,000
Non-Employee Director
Michael Foster 11,875 5,000
Non-Employee Director
All Non-Employee Directors 23,750 10,000
as a Group
Frank J. Olsen, Jr. 0 0
President and Chief Executive
Officer
Leonard A. Mintz 0 0
Senior Vice President
Wilhelm P. Kutsch 0 0
Senior Vice President
Philip Leibel 0 0
Vice President and Chief
Financial Officer
Douglas Parker 0 0
Vice President
All Executive Officers as a group 0 0
Non-executive Officers including all 0 0
employees as a group
</TABLE>
- --------------------------
(1) Dollar value reflects the amount which would have been allocated to each
non-employee director had the Plan been in effect as of December 31, 1996, when
the closing price of the Company's Common Stock was $2 3/8.
OTHER BUSINESS OF THE MEETING
The Board of Directors is not aware of any matters to come before the
meeting other than those stated in the Proxy Statement. In the event that other
matters properly come before the meeting or any adjournment thereof, it is
intended that the persons named in the accompanying proxy and acting thereunder
will vote in accordance with their best judgment.
SHAREHOLDER PROPOSALS
The Company intends to hold its Annual Meeting approximately the same date
next year. Any shareholder proposals for consideration by the Company for
inclusion in the Company's proxy statement and form of proxy must be made in
writing and received by the Company on or before December 12, 1997. All
proposals must comply with the terms of Rule 14a-8(a) of the Securities and
Exchange Act of 1934.
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<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
At the Annual Meeting, representatives from the Company's independent
public accountants, KMPG Peat Marwick LLP, are expected to be present and
available to respond to questions.
ANNUAL REPORT
The Annual Report to Shareholders, including financial statements for the
Company's fiscal year ended December 31, 1996, has been mailed to all
shareholders. The Annual Report is not a part of the proxy soliciting material.
Additional copies of the Annual Report are available upon written request to the
Company.
FORM 10-K
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR 1996, INCLUDING FINANCIAL STATEMENTS AND SCHEDULES
THERETO, REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, UPON
WRITTEN REQUEST TO PHILIP LEIBEL, VICE PRESIDENT - FINANCE, FOILMARK, INC., 5
MALCOLM HOYT DRIVE, NEWBURYPORT, MASSACHUSETTS 01950.
-22-
<PAGE>
EXHIBIT A
---------
FOILMARK, INC.
NON-EMPLOYEE DIRECTORS' STOCK PLAN
This Foilmark, Inc. Non-Employee Directors' Stock Plan (the "Plan") is
adopted by Foilmark, Inc. (the "Company") for the purpose of advancing the
interests of the Company by providing compensation and other incentives for the
continued services of the Company's non-employee directors and by attracting and
retaining able individuals to directorships with the Company.
1. Definitions. For purposes of this Plan, the following terms shall have
the meanings set forth below:
"Administrator" means the person(s) appointed by the Board to administer
the Plan as provided in Paragraph 2 hereof.
"Annual Meeting" means the annual meeting of the Company's shareholders.
"Board" means the Board of Directors of Foilmark, Inc.
"Change of Control" means (i) approval by the Company's shareholders of a
merger in which the Company does not survive as an independent, publicly owned
corporation, a consolidation, or a sale, exchange or other disposition of all or
substantially all the Company's assets, or (ii) any acquisition of voting
securities of the Company by any person or group (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), but excluding (a) the Company or
any of its subsidiaries, (b) any person who was an officer or director of the
Company on the day prior to the Effective Date, or (c) any savings, pension or
other benefits plan for the benefit of employees of the Company or any of its
subsidiaries, which theretofore did not beneficially own voting securities
representing more than 30% of the voting power of all outstanding voting
securities of the Company, if such acquisition results in such entity, person or
group owning beneficially securities representing more than 30% of the voting
power of all outstanding voting securities of the Company. As used herein,
"voting power" means ordinary voting power for the election of directors of the
Company.
"Common Shares" means the Company's common stock, $0.01 par value per
share.
"Company" means Foilmark, Inc., a Delaware corporation.
"Effective Date" means May 20, 1997, subject to the approval of the Plan by
the Company's shareholders.
"Grant Date" means the effective date of a grant of options pursuant to
Paragraph 4(a) hereof.
<PAGE>
"Market Value" means the closing price of the Common Shares as reported by
NASDAQ.
"Participant" means a director who has met the requirements of eligibility
and participation described in Paragraph 3 hereof.
2. Administration. The Plan shall be administered by the Administrator. The
Administrator may establish, subject to the provisions of the Plan, such rules
and regulations as it deems necessary for the proper administration of the Plan,
and make such determination and take such action in connection therewith or in
relation to the Plan as it deems necessary or advisable, consistent with the
Plan.
3. Eligibility and Participation.
(a) A non-employee director of the Company shall automatically become a
Participant in the Plan as of the later of (i) the Effective Date, or (ii) the
date of initial election to the Board. A director who is a regular employee of
the Company is not eligible to participate in the Plan.
(b) A Participant shall cease participation in the Plan as of the date the
Participant (i) fails to be re-elected to the Board, (ii) resigns or otherwise
vacates his position on the Board, or (iii) becomes a regular employee of the
Company.
4. Option Awards
(a) Grant of Options. Each person who is a Participant on the Effective
Date shall be awarded a non-qualified option to purchase 5,000 Common Shares
effective as of the Effective Date, at a price equal to the Market Value of
Common Shares on that date. Any person who becomes a Participant after the
Effective Date shall be awarded non-qualified options to purchase 5,000 Common
Shares effective as of the date of the Annual Meeting at which such election
occurs, or if the Participant is first elected to the Board other than at an
Annual Meeting, as of the date of such election, at a price equal to the Market
Value of Common Shares on that date.
Commencing in 1998, on the day of the Company's annual meeting, a
Participant (other than a director who is first elected after June 30 of the
prior year), shall be awarded non-qualified options to purchase 2,500 Common
Shares, effective as of such date, at a price equal to the Market Value of
Common Shares on that date.
(b) Term and Exercisability. All options shall have a term of 10 years and
shall vest six (6) months after the Grant Date. Notwithstanding the foregoing,
all options shall become immediately exercisable upon a Change of Control of the
Company. In the event of a Change of Control, the Board, or the board of
directors of any corporation assuming the obligations of the Company hereunder
may, as to outstanding options, upon written notice to the Participants, provide
that all unexercised options must be exercised within thirty (30) days of the
date of such notice or they will be terminated.
2
<PAGE>
(c) Method of Exercise. An option granted under the Plan may be exercised,
in whole or in part, by submitting a written notice to the Board, signed by the
Participant or such other person who may be entitled to exercise such option,
and specifying the number of Common Shares as to which the option is being
exercised. Such notice shall be accompanied by the payment of the full option
price for such Common Shares, or shall fix a date (not more than ten business
days from the date of such notice) for the payment of the full option price of
the Common Shares being purchased. Payment shall be made in the form of cash,
Common Shares (to the extent permitted by law), or both. A certificate or
certificates for the Common Shares purchased shall be issued by the Company
after the exercise of the option and full payment therefor.
(d) Termination of Directorship. If a Participant fails to be re-elected to
the Board, resigns or otherwise ceases to be a director of the Company for
reasons other than death or disability (within the meaning of Section 22(e)(3)
of the Internal Revenue Code), all options granted under this Plan to such
Participant which are not exercisable on such date shall immediately terminate,
and any remaining options shall terminate if not exercised before twenty-four
(24) months following such termination, or at such earlier time as may be
applicable under Paragraph 4(b) above.
If a Participant ceases to be a director of the Company by reason of death
or disability (within the meaning of Section 22(e)(3) of the Internal Revenue
Code), all options granted under this Plan to such Participant which are not
exercisable on such date shall become immediately exercisable, and may be
exercised at any time before the expiration of twenty-four (24) months following
the date of death or commencement of disability, or such earlier time as may be
applicable under Paragraph 4(b) above.
(e) Non-transferability. Each option and all rights thereunder shall be
non-assignable and non-transferable by the Participant except, in the event of
the Participant's death, by will or by the laws of descent and distribution;
provided, however, that to the extent that transferability pursuant to the
following provisions would not adversely affect the compliance of the Plan with
Rule 16b-3, this option may also be transferred, for no consideration, by the
Participant to the following transferees ("Transferee"):
(A) a member of the Participant's immediate family. For this purpose,
"immediate family" shall include only brothers and sisters (whether by the whole
or half blood) spouse, parents, and natural or adopted children;
(B) a trust for the benefit of members of the Participant's immediate
family; or
(C) a partnership whose only partners are members of the Participant's
immediate family
if the Transferee shall agree to be subject to the same restrictions and
conditions as relate to the Participant pursuant to the Plan.
3
<PAGE>
In the event of the death of a Participant, the representative or
representatives of the Participant's estate, or the person or persons who
acquired (by bequest or inheritance) the rights to exercise the Participant's
options in whole or in part, or in the event of transfer, the Transferee, may
exercise the option prior to the expiration of the applicable exercise period,
as specified in Paragraph 4(d) above.
(f) No Rights as Shareholder. A Participant shall have no rights as a
shareholder with respect to any Common Shares subject to the option prior to the
date of issuance of a certificate or certificates for such Common Shares.
(g) Compliance with Securities Laws. Options granted and Common Shares
issued by the Company upon exercise of options shall be granted and issued only
in full compliance with all applicable securities laws, including laws, rules
and regulations of the Securities and Exchange Commission and applicable state
Blue Sky Laws. With respect thereto, the Board may impose such conditions on
transfer, restrictions and limitations as it may deem necessary and appropriate
to assure compliance with such applicable securities laws.
5. Shares Subject to the Plan.
(a) The Common Shares to be issued and delivered by the Company upon the
exercise of options under the Plan may be either authorized but unissued shares
or treasury shares of the Company.
(b) The aggregate number of Common Shares of the Company which may be
issued under the Plan shall not exceed 75,000 shares; subject, however, to the
adjustment provided in Paragraph 6 in the event of stock splits, stock
dividends, exchanges of shares or the like occurring after the effective date of
this Plan.
(c) Common Shares covered by an option which is no longer exercisable with
respect to such shares shall again be available for issuance under this Plan.
6. Share Adjustments. In the event there is any change in the Company's
Common Shares resulting from stock splits, stock dividends, combinations or
exchanges of shares, or other similar capital adjustments, equitable
proportionate adjustments shall automatically be made without further action by
the Board or Administrator in (i) the number of Common Shares available for
award under this Plan, (ii) the number of Common Shares subject to options
granted under this Plan, and (iii) the option price of options granted under
this Plan.
7. Amendment or Termination. The Board may terminate this Plan at any time,
and may amend the Plan at any time or from time to time; provided, however, that
the Plan shall not be amended more than once every six months, other than to
comport with changes in the Internal Revenue Code, the Employee Retirement
Income Security Act, or the rules thereunder; and further provided that any
amendment that would increase the aggregate number of Common Shares that may be
issued under the Plan, materially increase the benefits accruing to Participants
under the Plan, or materially modify the requirements as to eligibility for
participation in the Plan
4
<PAGE>
shall be subject to the approval of the Company shareholders to the extent
required by Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or
any other governing rules or regulations except that such increase or
modification that may result from adjustments authorized by Paragraph 6 does not
require such approval. If the Plan is terminated, any unexercised option shall
continue to be exercisable in accordance with its terms.
8. Company Responsibility. All expenses of this Plan, including the cost of
maintaining records, shall be borne by the Company.
9. Implied Consent. Every Participant, by acceptance of an award under this
Plan, shall be deemed to have consented to be bound, on his or her own behalf
and on behalf of his or her heirs, assigns, and legal representatives, by all of
the terms and conditions of this Plan.
10. Delaware Law to Govern. This Plan shall be construed and administered
in accordance with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by its
duly authorized officer as of the 11th day of April, 1997.
FOILMARK, INC.
By: /s/Frank J. Olsen, Jr.
--------------------------
Title: President and Chief Executive
-----------------------------
Officer
-------
5
<PAGE>
<TABLE>
<CAPTION>
_____
Please mark | |
your votes as | X |
indicated in |_____|
this example
PROPOSAL 1 - Election of Michael J. Bertuch, Michael Foster, Martin A. Olsen,
Leonard A. Mintz and Edward Sullivan as directors
<S> <C> <C> <C> <C>
FOR all nominees WITHHOLD (INSTRUCTION: To withhold authority to vote for any Cumulative votes for one or more
listed (except as AUTHORITY individual nominee(s), write the name(s) of such nominees as follows:
marked to the to vote for all nominee(s) on the line below.)
contrary) nominees listed Nominee:
--------------------------------------------------- Michael J. Bertuch
_____ _____ -----------------
| | | | Michael Foster
| | | | --------------------
|_____| |_____|
Martin A. Olsen
-------------------
PROPOSAL 2 - Adoption of 1997 Directors Leonard A. Mintz
Stock Option Plan -------------------
FOR AGAINST ABSTAIN Edward Sullivan
-------------------
_____ _____ _____
| | | | | |
| | | | | |
|_____| |_____| |_____|
_______ This Proxy must be signed exactly as the name of the
| Shareholder(s) appears on
| this card.
| Dated: , 1997
----------------------------------------
Signature:
-----------------------------------------
Signature:
-----------------------------------------
(if held jointly)
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
- ------------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
<PAGE>
FOILMARK, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
Tuesday, May 20, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes and appoints Frank J. Olsen, Jr. and
Carol J. Robie, and each of them, as proxies with full power of substitution, to
vote all shares of Common Stock of FOILMARK, INC. held of record on April 1,
1997 by the undersigned at the Annual Meeting of Shareholders to be held at
10:00 a.m. (E.D.S.T.) on Tuesday, May 20, 1997, at Ashworth by the Sea, Hampton
Beach, New Hampshire and any adjournment or postponement thereof.
This proxy when properly executed will be voted (i) as directed hereon, or,
in the absence of such direction, this proxy will be voted FOR the specified
nominees in Proposal 1 and FOR Proposal 2 and (ii) in accordance with the
judgment of the proxies upon other matters that may properly come before said
meeting or any adjournments or postponements thereof.
THE DIRECTORS RECOMMEND A VOTE FOR EACH PROPOSAL.
(Continued and to be signed on reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
