<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
FOILMARK, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
FOILMARK, INC.
4 MULLIKAN WAY
NEWBURYPORT, MASSACHUSETTS 01950
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD THURSDAY, NOVEMBER 4, 1999
To the Shareholders of Foilmark, Inc.:
The Annual Meeting of Shareholders of Foilmark, Inc., a Delaware corporation
(the "Company"), will be held at the Back Bay Hilton, Boston, Massachusetts on
Thursday, November 4, 1999, at 10:00 a.m., local time, for the following
purposes:
1. To elect three directors for a term of three years;
2. To increase the number of authorized shares of common stock of the
Company reserved for issuance under the Foilmark, Inc. 1995 Amended and Restated
Stock Incentive Compensation Plan from 400,000 to 600,000;
3. To increase the number of authorized shares of common stock of the
Company reserved for issuance under the Foilmark, Inc. Non-Employee Directors
Stock Plan from 75,000 to 150,000;
4. To approve the appointment of KPMG LLP as the Company's independent
auditors; and
5. 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
September 24, 1999 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.
This is the first Meeting of Shareholders of Foilmark since the merger of
HoloPak Technologies, Inc. into a subsidiary of Foilmark. All shareholders are
cordially invited and urged to attend the Meeting. PLEASE SIGN, DATE AND RETURN
THE ACCOMPANYING PROXY EVEN IF 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,
[SIGNATURE]
Carol J. Robie, Secretary
October 5, 1999
<PAGE>
FOILMARK, INC.
4 MULLIKAN WAY
NEWBURYPORT, MASSACHUSETTS 01950
PROXY STATEMENT
This 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 (the
"Annual Meeting") and all adjournments thereof, to be held at the time and place
and for the purposes set forth in the foregoing Notice of Annual Meeting. A
shareholder giving a proxy may revoke it at any time before it is voted at the
Annual Meeting by (i) delivering to the Secretary of the Company, at the address
set forth in the Notice of Annual Meeting, a letter of revocation or properly
executed proxy of a later date; (ii) submitting a proxy bearing a later date; or
(iii) attending the Annual Meeting and voting in person. 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 ANNUAL MEETING AND, AT THE DISCRETION OF THE
PERSONS NAMED IN THE PROXY, FOR 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.
On April 23, 1999, (the "Merger Date"), HoloPak Technologies, Inc.
("HoloPak") merged with and into a subsidiary of the Company. Since April 24,
1999, HoloPak has operated as a wholly owned subsidiary of the Company. In
connection therewith, the Board of Directors of the Company approved the change
of the fiscal year of the Company to June 30 of each year. Prior to this change
in fiscal year, the Company's fiscal year ended on December 31 of each year.
Thus, the 1999 fiscal year, which began on January 1, 1999 and ended on June 30,
1999 is referred to herein as the 1999 fiscal year or fiscal 1999. The fiscal
year ended December 31, 1998 is referred to herein as the 1998 fiscal year or
fiscal 1998.
This Proxy Statement and the related proxy form are first being mailed to
shareholders on or about October 5, 1999.
VOTING SECURITIES AND PRINCIPAL OWNERS THEREOF
As of the close of business on September 24, 1999, the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting, the Company had outstanding 7,899,956 shares of Common Stock held by
136 record holders and approximately 823 beneficial holders, of which 2,521,467
shares, or 31.9%, were beneficially owned by directors and officers of the
Company. Each share entitles the holder of record to one vote.
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 majority of votes cast is required to elect
the directors and to approve every other proposal to be considered at the Annual
Meeting. Shares of Common Stock present but not voting at the Annual Meeting and
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.
<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 September 10, 1999 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. This information is based upon a review of statements filed
with the Securities and Exchange Commission pursuant to Sections 13(d), 13(f)
and 13(g) of the Securities Exchange Act of 1934 with respect to shares of
Common Stock, except for information about the Company's officers and directors.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OF BENEFICIAL OWNER(a) OWNERSHIP CLASS
- ------------------------------------------------------------------------------- ---------------------- -----------
<S> <C> <C>
Martin A. Olsen(b)(c).......................................................... 507,177 6.73%
Frank J. Olsen, Jr.(b)(d)...................................................... 505,658 6.40%
Robert J. Simon(b)(e)(f)(g).................................................... 1,696,576 21.48%
Wilhelm P. Kutsch(h)........................................................... 125,696 1.59%
Philip Leibel(i)............................................................... 88,664 1.12%
Carol J. Robie(b)(j)........................................................... 216,409 2.74%
David Sleight.................................................................. 0 *
Edward D. Sullivan(b)(k)....................................................... 163,347 2.07%
Michael J. Bertuch(b)(l)....................................................... 5,000 *
Michael Foster(b)(m)........................................................... 10,000 *
Thomas R. Schwarz(b)(n)........................................................ 5,000 *
Leonard A. Mintz(b)............................................................ 234,696 2.97%
Kenneth R. Harris(b)........................................................... 131,022 1.66%
Barbara M. Henagan(e)(g)(o).................................................... 1,674,462 21.20%
James L. Rooney(b)(p).......................................................... 135,998 1.72%
Michael S. Matthews(b)(q)...................................................... 24,847 *
Brian Kelly(b)(r).............................................................. 13,800 *
Harvey S. Share(b)(s).......................................................... 7,220 *
Bradford Venture Partners, L.P.(b)(c)(t)....................................... 835,925 10.58%
Overseas Private Investor Partners(b)(g)(u).................................... 835,925 10.58%
Parties to Voting Agreement(b)................................................. 3,657,048 46.30%
All Directors and Executive Officers as a Group (14 persons)(c)(v)............. 3,000,871 37.90%
</TABLE>
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* 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 September 24, 1999,
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 and 1995 Stock Option Plans,
the Non-Employee Directors Stock Option Plan and the HoloPak Technologies,
Inc. 1993 non-qualified stock Option Plan, which options are presently or
will be exercisable within 60 days of the date of this Proxy Statement.
Unless otherwise indicated, the address of the persons identified in above
is c/o Foilmark, Inc., 4 Mullikan Way, Newburyport, MA 01950.
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<PAGE>
(b) Excludes shares held by other parties to a Voting Agreement described more
fully in "Certain Relationships and Related Transactions" which may be
deemed to be beneficially owned by these individuals. For the 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", holding in the aggregate
3,657,048 shares of Common Stock, 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. With respect to Mr. Mintz, a former officer and director
of the Company, and Mr. Harris, a former director and current employee of
the Company, beneficial ownership is presented as of the Merger Date. For a
discussion of Mr. Mintz's relationship with the Company, see "General
Information about the Board of Directors".
(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. Mr. Olsen's address
is 3299 Old Barn Road East, Ponte Vedra Beach, Florida 32082.
(d) Includes 82,666 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.
(e) Includes the shares of Common Stock owned of record by Bradford Venture
Partners as to which each of Mr. Simon and Ms. Henagan may be deemed to
share beneficial ownership due to their having voting and dispositive power
over these shares of Common Stock. Bradford Associates, a general
partnership of which Mr. Simon and Ms. Henagan are the partners, is the sole
general partner of Bradford Venture Partners.
(f) Includes 18,200 shares issuable upon exercise of options which are presently
or will be exercisable within 60 days. Mr. Simon's address is One
Rockefeller Plaza, New York, New York 10020.
(g) Includes the shares of Common Stock owned of record by Overseas Private
Investor Partners, as to which each of Mr. Simon and Ms Henagan may be
deemed to share beneficial ownership due to having voting power over such
shares of Common Stock. Mr. Simon serves as Chairman of the Board of
Directors of the corporation that acts as the managing partner of Overseas
Private Investor Partners. Bradford Associates holds a 1% partnership
interest in Overseas Private Investor Partners, which may increase upon the
satisfaction of certain contingencies related to the overall performance of
Overseas Private Investor Partners' investment portfolio, and also acts as
an investment advisor for Overseas Private Investor Partners.
(h) Includes 82,866 shares issuable upon exercise of options which are presently
or will become exercisable within 60 days.
(i) Includes 70,734 shares issuable upon exercise of options which are presently
or will become exercisable within 60 days.
(j) Includes 25,100 shares issuable upon exercise of options which are presently
or will become exercisable within 60 days.
(k) Includes 9,500 shares issuable upon exercise of options which are properties
or will become exercisable within 60 days.
(l) Includes 5,000 shares issuable upon exercise of options which are presently
or will become exercisable within 60 days. Mr. Bertuch's address is c/o
ViaTech Publishing Solutions, 1440 Fifth Avenue, Bayshore, New York 11706.
(m) Includes 5,000 shares issuable upon exercise of options which are presently
or will become exercisable within 60 days. Mr. Foster's address is c/o WPI
Group, Inc., 1155 Elm Street, Manchester, New Hampshire 03101.
3
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(n) Includes 5,000 shares issuable upon exercise of options which are presently
or will become exercisable within 60 days. Mr. Schwarz's address is c/o
Foilmark, Inc., 5 Malcolm Hoyt Drive, Newburyport, Massachusetts 01950.
(o) The amount shown for Ms. Henagan includes 2,611 shares of Common Stock that
she owns of record as trustee under two trusts for the benefit of two
relatives of Ms. Henagan. The address of the stockholder is 44 Nassau
Street, Princeton, New Jersey 08542.
(p) Includes 135,998 shares issuable upon exercise of options which are
presently or will become exercisable within 60 days.
(q) Includes 18,320 shares issuable upon exercise of options which are presently
or will become exercisable within 60 days.
(r) Includes 13,800 shares issuable upon exercise of options which are presently
or will become exercisable within 60 days.
(s) Includes 7,220 shares issuable upon exercise of options which are presently
or will become exercisable within 60 days.
(t) The address of the stockholder is 44 Nassau Street, Princeton, New Jersey
08542.
(u) The address of the stockholder is Clarendon House, Church Street, Hamilton
5-31, Bermuda.
(v) Includes 461,404 shares issuable upon exercise of options which are
presently or will become exercisable within 60 days.
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 and furnish the Company with reports
of securities ownership and changes in such ownership
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, 1998 and the fiscal year ended June 30, 1999, 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 ten (10). The ten seats are
divided into three classes, the terms of which expire in 1999, 2000 and 2001,
respectively. Currently there are three (3) directors serving terms expiring in
1999, three (3) directors whose terms expire in 2000, and four (4) directors
whose terms expire in 2001. There are three (3) directors to be elected at the
1999 Annual Meeting, to serve three year terms ending in 2002, in each case
until a successor 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.
In voting for directors, each shareholder is entitled to one (1) vote for
each share of Common Stock held. The three (3) persons receiving a majority of
votes cast, in person 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 Annual Meeting
for the purpose of electing directors.
4
<PAGE>
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.
In connection with the merger of HoloPak Technologies into the Company and
as of the Merger Date, certain stockholders of the Company, representing
approximately 42% of the outstanding shares of Common Stock of the Company,
entered into a voting agreement pursuant to which, among other things, they
agreed to vote their shares of Common Stock for the election of each of the
current directors. For a more detailed description of the voting agreement, see
"Certain Relationships and Related Transactions".
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR.
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 Frank J. Olsen, Jr. and Carol J. Robie, are brother and
sister.
A. NOMINEES FOR A THREE YEAR TERM ENDING IN 2002:
MICHAEL J. BERTUCH Director since 1997
Michael J. Bertuch, 38, has been the President of ViaTech Publishing
Solutions, 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, 64, is the founder, and, since 1988, has served as 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.
HARVEY S. SHARE Director since 1999
Harvey S. Share, 67, is the former President and Chairman of Bobst Group
Inc., one of the world's largest manufacturers and suppliers of folding carton,
corrugated and flexible packaging converting and printing equipment. Mr. Share
retired from Bobst Group Inc. at the end of 1996. Mr. Share is a consultant to
the packaging and printing equipment industry. Mr. Share is a member of a number
of industry and professional associations. Mr. Share was a director of HoloPak
Technologies, Inc. from July 1998 to April 1999.
B. CURRENT DIRECTORS AND OFFICERS:
DIRECTORS WHOSE TERMS EXPIRE IN 2001:
FRANK J. OLSEN, JR. Director since 1992
Frank J. Olsen, Jr., 47, has served as President and Chief Executive Officer
of the Company since March 1992. He served as the Chairman of the Board from
October 1995 to April 1999. 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. Mr. Olsen is the brother of Carol J. Robie.
5
<PAGE>
THOMAS R. SCHWARZ Director since 1997
Thomas R. Schwarz, 62, was Chairman of Grossman's Inc., a retailer of
building materials, from 1990 to 1994. From 1980 to 1990, he was President,
Chief Operating Officer and a director of Dunkin' Donuts Incorporated, a food
service company. Mr. Schwarz has been a director of Tridex Corporation since
1995 (and a member of the Compensation Committee) and Chairman of the Board of
Directors of TransAct Technologies Incorporated (and a member of the
Compensation Committee) since 1996.
ROBERT J. SIMON Director since 1999
Robert J. Simon, 40, has been a Senior Managing Director of Bradford
Ventures Ltd., a private investment firm, since 1992 and a general partner of
Bradford Associates since 1989. Mr. Simon is Chairman of the Board or a director
of numerous public and private companies, including Ampco Metal Inc., Overseas
Private Investors Ltd., Overseas Equity Investors Ltd., Pamarco Technologies,
Inc., FoodServ Equipment & Supply, Inc., Overseas Callander Fund and Tufco
Technologies, Inc. Mr. Simon was the Chairman of the Board of Directors of
HoloPak Technologies, Inc. from May 1992, and a director from 1990 to April
1999.
BRIAN KELLY Director since 1999
Brian Kelly, 56, has been the President of Delafoil, Inc., a manufacturer of
metal components for the electronics industry, since March 1995. From March 1994
to March 1995, Mr. Kelly was President of Waverly Partners, Inc., a private
investment firm. From September 1989 to March 1994, Mr. Kelly was President of
Fitchburg Coated Products, a manufacturer of coated and laminated products. Mr.
Kelly was a director of HoloPak Technologies, Inc. from June 1995 to April 1999.
DIRECTORS WHOSE TERMS EXPIRE IN 2000:
EDWARD D. SULLIVAN Director since 1994
Edward D. Sullivan, 66, has served as a consultant to the Company since his
retirement on December 31, 1996. Mr. Sullivan 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 December 31, 1996. He was President of West
Foils, Inc., which he founded in 1988, through 1994.
JAMES L. ROONEY Director since 1999
James L. Rooney, 62, has served as a consultant to the Company since the
Merger Date. He was the Chief Executive Officer and a director of HoloPak from
September 1997 to April 1999. He was the President of C&C Consulting from
January 1995 to September 1997. He was Senior Vice President at Rexam Inc.,
Coated Products Group, from 1993 to 1995. From 1991 to 1993, he was the
President of Release International, a Rexam Inc. company, and from 1984 to 1991
he was the President of H.P. Smith Inc., a division of Specialty Coatings
International, formerly James River Corp. He also serves as a director of Lexon
Technologies.
MICHAEL S. MATHEWS Director since 1999
Michael S. Mathews, 59, has been a managing director of Westgate Capital
Co., a private investment firm, since January 1993. Mr. Mathews was a director
of HoloPak from 1990 to 1999. From 1989 through January 1993, Mr. Mathews served
as a managing director of Bradford Ventures Ltd., a private investment firm and
prior to such time, he was the President of DnC Capital Corporation, a merchant
banking and investment firm, for more than five years. Mr. Mathews is also a
director of Petroleum Geo-Services A/S.
6
<PAGE>
NON-DIRECTOR EXECUTIVE OFFICERS:
PHILIP LEIBEL Officer since 1992
Philip Leibel, 61, 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 has been Chief Financial Officer of the Company and
its predecessors since 1977.
WILHELM P. KUTSCH Officer since 1992
Wilhelm P. Kutsch, 56, has been Senior Vice President--Foil Operations since
March 1992, and served as Vice President--Foil Operations prior to March 1992.
Mr. Kutsch served on the Board of Directors from 1994 to 1999. 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 Officer since 1992
Carol J. Robie, 43, has been Vice President--Administration since March
1992. Ms. Robie served on the Board of Directors from 1992 to 1999. 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. Ms. Robie is the sister of Frank J.
Olsen, Jr.
DAVID SLEIGHT Officer since 1999
David Sleight, 46, joined the Company in June 1999 as Vice President--Sales
and Marketing. Prior thereto, Mr. Sleight served as National Marketing Manager
and National Sales Manager of AEP Industries (formerly Borden Global Packaging)
(from 1986 to 1999). Prior thereto, he was employed as District Sales Manager
for Mobil Corporation (from 1984 to 1986).
GENERAL INFORMATION ABOUT THE BOARD OF DIRECTORS
There were four (4) regular and two (2) special meetings of the Board of
Directors in the 1998 fiscal year. There was one (1) meeting of the Board of
Directors during the 1999 fiscal year prior to the Merger Date. There was one
(1) regular and one (1) special meeting of the new Board of Directors after the
Merger Date during fiscal 1999. During the 1998 and 1999 fiscal years 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 a retainer of $2,000 per calendar quarter as
well as a fee of $750 for each Board meeting attended, and a fee of $350 per
committee meeting attended, in person or telephonically. The Board of Directors
has three standing committees: the Executive Committee, the Compensation
Committee and the Audit Committee.
The Executive Committee has consisted of Frank J. Olsen, Jr., Michael
Foster, Robert J. Simon and Michael S. Matthews since the Merger Date. Michael
J. Bertuch and Edward D. Sullivan served on the Executive Committee during the
1998 fiscal year and the 1999 fiscal year until their resignations on the Merger
Date. In addition, Philip Leibel attends Executive Committee Meetings 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 3 times during fiscal 1998 and 2 times during fiscal
1999.
The Compensation Committee has consisted of Thomas R. Schwarz, Edward D.
Sullivan, Michael S. Mathews and Robert J. Simon since the Merger Date. Michael
Bertuch, Michael Foster and Frank J. Olsen, Jr., served on the Compensation
Committee during the 1998 fiscal year and the 1999 fiscal year
7
<PAGE>
until their resignations on the Merger Date. Leonard A. Mintz served on this
committee until his resignation in December 1998. The Compensation Committee
determines the compensation to be paid by the Company to its officers,
administers the 1993 Stock Option Plan, the 1995 Incentive Compensation Plan,
the Non-Employee Directors' Stock Plan and the HoloPak 1993 Stock Plan and
determines to whom such options will be granted and the number of shares of
Common Stock to be included in such options. The Compensation Committee met 3
times during fiscal 1998 and 2 times during fiscal 1999.
The Audit Committee has consisted of Michael J. Bertuch, Michael Foster,
Brian Kelly and Harvey S. Share since the Merger Date. During fiscal 1998 and
fiscal 1999 until the Merger Date, the Audit Committee consisted of Michael J.
Bertuch and Michael Foster. 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 2 times during fiscal 1998 and 3 times
during fiscal 1999.
Martin A. Olsen, a director of the Company until the Merger Date and, until
October 1995, Chairman of the Board and Secretary of the Company, received
$176,800 in fiscal 1998 pursuant to a Consulting Services Agreement with the
Company which was entered into in December 1995. The Consulting Agreement
terminated in December 1998. The agreement prohibits Mr. Olsen from competing
with the Company until after December 1999, and prohibits the disclosure of any
confidential or proprietary information.
On December 21, 1998, Leonard Mintz resigned as a director and Senior Vice
President of the Company. At that time, Mr. Mintz agreed to the termination of
his 1992 employment agreement with the Company and entered into a
non-competition agreement with the Company which expires on December 1, 2003.
Under the non-competition agreement, the Company has agreed to pay Mr. Mintz:
(1) $14,886.50 per month for 18 months commencing January 1, 1999; (2) $5,762.52
on July 1, 2000; (3) $4,167 per month commencing January 1, 1999, through
December 1, 2003; and (4) other incidental health and related benefits. During
the term of the non-competition agreement, Mr. Mintz has agreed not to compete
with the Company or its affiliates or solicit sales, customers or employees of
the Company or its affiliates.
On January 1, 1999, the Company and Edward D. Sullivan entered into a
Consulting Agreement which expires December 31, 1999 unless renewed by the
parties for successive one year terms. Under the Consulting Agreement, Mr.
Sullivan shall receive fifty percent (50%) of his average compensation for 1995
and 1996 which was payable under an employment agreement that was terminated by
a Consulting Agreement which expired December 31, 1998. Mr. Sullivan received
$89,856 during the 1998 fiscal year and $48,384 during the 1999 fiscal year
under the Consulting Agreement. In return, Mr. Sullivan provides advisory
services to the Company in conjunction with sales management, strategic sales
objectives and general supervision of the Company's Westfoils division. The
Consulting Agreement prohibits Mr. Sullivan from competing with the Company
during the term 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.
On the Merger Date and in connection with the consummation of the merger of
HoloPak Technologies, Inc. with and into the Company, James L. Rooney entered
into a one year consulting agreement with the Company pursuant to which he will
receive compensation of $105,000 in return for the provision of advisory
services to the Company, HoloPak and Transfer Print Foils, a wholly-owned
subsidiary of HoloPak.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the total compensation of the chief executive
officer and the other two most highly compensated executive officers (the "Named
Executive Officers") of the Company for services in all capacities to the
Company or its subsidiaries for the fiscal year ended June 30, 1999 and the
total compensation earned by such individuals for the Company's three previous
fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION(a) ----------------------------
------------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION(b)
- ---------------------------------------------------- ------ --------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Frank J. Olsen, Jr.................................. 1999(c) 135,131 -- 15,000 3,000
President and Chief Financial Officer 1998 233,295 -- 34,666 3,000
1997 202,413 -- -- 4,160
1996 195,546 -- 10,000 --
Wilhelm P. Kutsch................................... 1999(c) 120,399 -- 12,000 3,000
Senior Vice President 1998 184,235 -- 29,466 3,000
1997 172,272 -- -- 4,160
1996 180,098 9,352 32,900 --
Philip Leibel....................................... 1999(c) 97,080 -- 8,000 3,000
Vice President & Chief Financial Officer 1998 173,785 -- 24,534 3,000
1997 160,789 -- -- 4,160
1996 155,498 -- 30,700 2,395
</TABLE>
- ------------------------
(a) Any perquisites 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 $50,000 or 10% of the individual's salary and bonus).
(b) Amounts in the "All Other Compensation" column represent contributions to
the Company's Profit-Sharing Plan.
(c) Information presented for the six month period ending June 30, 1999.
9
<PAGE>
The following table sets forth certain information regarding stock options
exercised during fiscal 1999 and unexercised options held by the Named Executive
Officers as of the end of the 1999 fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS/SAR AT FISCAL IN-THE-MONEY OPTION/
ACQUIRED YEAR END 1999 SARS($)
ON VALUE ----------------------- -------------------------------
NAME EXERCISE REALIZED($)(a) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(b)
- ---------------------------------- ------------- ----------------- ----------------------- -------------------------------
<S> <C> <C> <C> <C>
Frank J. Olsen, Jr.(c)............ -- -- 82,666/0 0/0
Wilhelm P. Kutsch(d).............. -- -- 82,866/0 0/0
Philip Leibel(e).................. -- -- 70,734/0 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 June 30, 1999 (2.44) minus
the exercise price. For information presented for fiscal 1998, the value of
unexercised in-the-money options and SARS was derived from subtracting the
exercise price from the closing price of the common stock on December 31,
1998 (1.72).
(c) For fiscal 1998, Mr. Olsen had 67,766 exercisable and no unexercisable
options.
(d) For fiscal 1998, Mr. Kutsch had 70,866 exercisable and no unexercisable
options.
(e) For fiscal 1998, Mr. Leibel had 62,734 exercisable and no unexercisable
options.
10
<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 Compensation
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 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. In connection with the merger of HoloPak into Foilmark and on the Merger
Date, Mr. Olsen entered into an employment agreement with the Company, which
agreement and compensation thereunder was approved by the Compensation
Committee. For a more detailed description of the terms of Mr. Olsen's
employment agreement, see "--Employment Agreements". 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 fiscal 1998 or fiscal 1999.
The foregoing reports are presented by the following:
As to the matters relating to cash compensation and stock options for fiscal
1998:
Michael J. Bertuch
Michael Foster
Thomas R. Schwarz
Frank J. Olsen, Jr.
Leonard A. Mintz
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<PAGE>
As to the matters relating to cash compensation and stock options for fiscal
1999:
Michael J. Bertuch (until the Merger Date)
Michael Foster (until the Merger Date)
Thomas R. Schwarz
Frank J. Olsen, Jr.(until the Merger Date)
Edward Sullivan (since the Merger Date)
Michael S. Matthews (since the Merger Date)
Robert J. Simon (since the Merger Date)
EMPLOYMENT AGREEMENTS
On the Merger Date, in connection with the completion of the merger of
HoloPak into Foilmark, the Company entered into employment agreements with Frank
J. Olsen, Jr.
Mr. Olsen's employment agreement is for a term of five years. During the
employment period, Mr. Olsen will serve as Chief Executive Officer and President
of Foilmark. During the employment period, Mr. Olsen will receive an annual
salary of $260,000 plus bonus. Under Mr. Olsen's employment agreement, upon the
termination of his employment other than for cause or for reason of death or
disability, he will be entitled to receive, for a period equal to the greater of
the remainder of the initial employment period or any renewal period or 3 years
after the date of termination, monthly payments, in an amount equal to
one-twelfth of his then current annual base salary together with pro-rated
annual target bonus and continuation of all benefits. In addition, upon a
termination as a result of a terminating event, all of Mr. Olsen's stock options
will vest immediately. The employment agreement prohibits Mr. Olsen from
disclosing confidential information and competing with Foilmark during his
employment period and for specified periods thereafter.
As of July 1, 1999, the Company entered into an employment agreement with
each of Wilhelm P. Kutsch, Philip Leibel and Carol J. Robie. The terms of the
employment agreements are substantially the same, except for the base salary and
duties to be performed. Ms. Robie's employment agreement expires on June 30,
2002, with successive one-year renewal terms unless terminated by either party.
Mr. Kutsch's agreement expires on June 30, 2002 with successive two-year renewal
terms unless earlier terminated by either party and Mr. Leibel's agreement
expires on June 30, 2001 with successive one-year renewal terms unless earlier
terminated by either party. 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 the employee's salary for the longer of (a) any
remaining part of the initial term or (b) 12 months.
Each employment agreement prohibits the employee from competing with the
Company during the term of the agreement and for a period equal to the longer of
(a) the period in which any compensation is paid to the employee under the
employment agreement or (b) one year following the date of termination. Each
employee is eligible under the agreements to a fiscal 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 and profit sharing plan. 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 Company or
thereafter, except information that the employee is authorized to disclose.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1998, the Compensation Committee consisted of Michael J.
Bertuch, Michael Foster, Thomas R. Schwarz, Frank J. Olsen, Jr. and Leonard A.
Mintz. During fiscal 1999, the Compensation Committee consisted of Michael
Bertuch, Michael Foster, Frank J. Olsen, Jr. and Thomas Schwarz until
12
<PAGE>
the Merger Date. Since the Merger Date, the Compensation Committee has consisted
of Thomas R. Schwarz, Edward Sullivan, Michael Mathews and Robert J. Simon. Mr.
Olsen is an executive officer of the Company, and Mr. Mintz was an executive
officer of the Company until his resignation in December 1998. Mr. Sullivan
serves as a consultant to the Company pursuant to a consulting agreement. Mr.
Sullivan was an executive officer of the Company until his retirement in
December 1996.
In connection with the merger of HoloPak into the Company, the Company
agreed to guarantee the payment obligation of HoloPak under a consulting
agreement among HoloPak and Transfer Print Foils, Inc., a subsidiary of HoloPak,
and Bradford Associates which was entered into in February 1990 and restated in
October 1991. On November 17, 1998, HoloPak, Transfer Print and Bradford
Associates amended the consulting agreement in order to extend its term to March
1, 2004, with automatic renewals for successive one-year terms unless notice of
termination is given by either party to the other at least 120 days prior to the
close of the then current one-year period. Under this agreement, Bradford
Associates provides various financial consulting services to HoloPak and
Transfer Print. Mr. Simon is a partner of Bradford Associates, which is a
general partner of Bradford Venture Partners, which holds 10.6% of the
outstanding Common Stock of the Company. HoloPak is obligated to pay Bradford
Associates a monthly fee of $16,667.67 (or $200,000 per year) under the
agreement, plus reasonable out-of-pocket expenses. During the period from the
Merger Date to June 30, 1999, HoloPak paid Bradford Associates $33,335.34.
Bradford Venture Partners, the beneficial owner of approximately 10.6% of
the outstanding shares of Common Stock, Overseas Private Investor Partners, the
beneficial owner of approximately 10.6% of the outstanding shares of Common
Stock, James L. Rooney, Robert J. Simon, Michael S. Mathews, Brian Kelly and
Harvey S. Share have been granted demand and piggy-back registration rights by
the Company pursuant to a registration rights agreement dated as of the Merger
Date. Robert J. Simon, Chairman of the Board, is a partner of Bradford
Associates, which is a general partner of Bradford Venture Partners. Mr. Simon
is also the Chairman of the Board of Directors of Overseas Private Investors,
Ltd., the managing partner of Overseas Private Investor Partners.
Under the registration rights agreement, all expenses associated with the
registration of Common Stock will be paid by the Company, except for
underwriting discounts and commissions. In addition, the Company has agreed to
indemnify the stockholders holding registration rights for liability arising out
of information contained in a registration statement, except for information
provided by these stockholders. Similarly, the stockholders holding registration
rights have agreed to indemnify the Company for information furnished by them to
the Company for use in a registration statement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the merger of HoloPak into the Company, as of the Merger Date,
the Company entered into a number of agreements, including the registration
rights agreement and the guarantee of payment obligations under the Bradford
consulting agreement. In addition, on the Merger Date, a voting agreement was
entered into by the following stockholders representing approximately 46% of the
outstanding shares of Common Stock: Robert J. Simon, Chairman of the Board,
Bradford Venture Partners, Overseas Private Investor Partners, James L. Rooney,
Harvey S. Share, Brian Kelly, Michael S. Mathews, Frank J. Olsen, Jr., President
and Chief Executive Officer, Carol Robie, Vice President-Administration, Michael
Foster, Martin A. Olsen, Leonard Mintz, Edward Sullivan, Thomas Schwarz, Kenneth
Harris, Vice President-Pad Printing Operations, and Michael Bertuch. Under the
voting agreement, the above-listed stockholders agreed to vote all of their
shares of Common Stock to:
- elect each of Mr. Olsen, Mr. Bertuch, Mr. Schwarz, Mr. Sullivan, Mr.
Foster, Mr. Simon, Mr. Rooney, Mr. Share, Mr. Kelly and Mr. Mathews to the
Board of Directors of the Company. In the event of a vacancy due to the
resignation or removal of any of Mr. Bertuch, Mr. Schwarz, Mr. Foster or
Mr. Sullivan, Mr. Olsen shall designate a replacement director. In the
event of a vacancy due to the resignation or removal of any of Mr. Rooney,
Mr. Share, Mr. Kelly or
13
<PAGE>
Mr. Mathews, Bradford Associates shall designate a replacement director.
The voting agreement shall terminate on the earlier of the fifth
anniversary of the Merger Date or when either of the Foilmark parties or
the HoloPak parties as a group own less than 5% of the outstanding shares
of Common Stock;
- elect Mr. Simon as the Chairman of the Board of the Company;
- elect Mr. Simon, Mr. Mathews, Mr. Olsen and Mr. Foster to the Executive
Committee, of which Mr. Simon will be the Chairman;
- elect Mr. Schwarz, Mr. Sullivan, Mr. Mathews and Mr. Simon to the
Compensation Committee, of which Mr. Schwarz will be the Chairman; and
- elect Mr. Foster, Mr. Kelly, Mr. Share and Michael Bertuch to the Audit
Committee of which Mr. Bertuch will be the Chairman.
The Company also entered into a replacement registration rights agreement,
dated as of the Merger Date, pursuant to which certain registration rights
previously granted by the Company to Martin A. Olsen, Leonard Mintz, Kenneth
Harris, Steven Meredith and Edward Sullivan were terminated, and replacement
registration rights were granted.
In November 1994, Leonard A. Mintz, Martin A. Olsen, Frank J. Olsen, Jr.,
Carol J. Robie, and Florence J. Olsen entered into a voting agreement with
Edward Sullivan, which obligated the parties to vote for each management
shareholder and Edward Sullivan as a director of the Company. This voting
agreement was terminated as of the Merger Date. For a more detailed discussion
of each of Mr. Mintz's and Mr. Sullivan's relationship with the Company, see
"General Information About the Board of Directors".
In connection with the acquisition of the assets of Imtran Industries, Inc.
in 1995, Foilmark Manufacturing Corporation, the successor entity to Imtran
Foilmark, Inc., the wholly-owned subsidiary of the Company to which Imtran's
assets were transferred, entered into a five year lease of the premises where
Imtran operated its business. Mr. Harris is a trustee of the trust that owns the
premises and served as a director of the Company until the Merger Date. 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 per
month to $197,500 per year.
AMENDMENT OF 1995 AMENDED AND RESTATED STOCK INCENTIVE COMPENSATION PLAN
The Foilmark, Inc. 1995 Amended and Restated Stock Incentive Compensation
Plan (the "1995 Plan") is proposed to be amended to increase the number of
authorized shares reserved for issuance thereunder from 400,000 to 600,000.
On August 19, 1999 the Board of Directors, subject to shareholder approval
at the Annual Meeting, adopted an amendment to the 1995 Plan to increase the
number of authorized shares from 400,000 to 600,000. At September 15, 1999,
349,408 of the 400,000 shares of Common Stock were subject to existing options.
The proposed amendment would allow the Company grater flexibility to attract,
motivate, retain and reward key employees of the Company and other selected
persons. THE BOARD RECOMMENDS A VOTE FOR THIS PROPOSAL. The affirmative vote of
the holders of a majority of shares of Common Stock eligible to vote at the
Annual Meeting is required to approve the proposal to amend the 1995 Plan.
A summary of the principal provisions of the 1995 Plan, as it is proposed to
be amended, is set forth below. As amended, there are 250,592 shares of common
stock available for issuance under the 1995 Plan. Options to purchase 75,000
shares of Common Stock have been granted under the 1995 Plan, as amended,
subject to stockholder approval of the increase in the number of authorized
shares under the 1995 Plan. The number of shares of Common Stock authorized by
the Plan is subject to adjustment by the Board in
14
<PAGE>
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.
ADMINISTRATION AND ELIGIBILITY
The 1995 Plan is administered by the Board of Directors or a committee
appointed by the Board of Directors (the "Compensation Committee"). The 1995
Plan empowers the Compensation Committee, among other things, to interpret the
1995 Plan, to make all determinations deemed necessary or available for the
administration of the 1995 Plan and to award to officers and other key employees
of the Company and its subsidiaries and certain other key employees of the
Company and its subsidiaries and certain other eligible persons ("Eligible
Employees"), as selected by the Compensation Committee, options, including
incentive stock options ("ISOs") as defined in the Internal Revenue Code (the
"Code"), stock appreciation rights ("SARs"), limited stock appreciation rights
("LSARs"), shares of restricted stock, deferred stock, stock purchase rights,
and other stock-based awards valued by reference to Common Stock, based on the
performance of the participant, the performance of the Company or its Common
Stock and/or such other factors as the Compensation Committee deeds appropriate.
The various types of awards under the 1995 Plan are collectively referred to as
"Awards".
TRANSFERABILITY
Generally speaking, Awards under the 1995 Plan are not transferable other
than by will or the laws of descent and distribution, are exercisable only by
the participant, and may be paid only to the participant or the participant's
beneficiary or representatives. A stock option granted under the 1995 Plan which
is not
intended to qualify as an ISO may be transferred to a family member, trust or
partnership for the benefit of such person so long as the transfer is in
compliance with Rule 16b-3 under the Securities Exchange Act of 1934.
OPTIONS
An option is the right to purchase shares of Common Stock at a future date
at a specified price. The option price is generally the closing price for a
share of Common Stock as reported on the Nasdaq National Market ("fair market
value") on the date of grant, but may be lesser amount if authorized by the
Committee. The 1995 Plan authorizes the Compensation Committee to award options
to purchase Common Stock at an exercise price which may be less than 100% of the
fair market value of such stock at the time the option is granted, except in the
case of ISOs.
An option may be granted as an incentive stock option, as defined in the
Code, or a nonqualified stock option. An ISO may not be granted to a person who,
at the time the ISO is granted, owns more than 10% of the total combined voting
exercise power of all classes of stock of the Company and its subsidiaries
unless the exercise price is at least 110% of the fair market value of shares of
Common Stock subject to the option and such option by its terms is non
exercisable after the expiration of five years from the date such option is
granted. The aggregate fair market value of shares of Common Stock (determined
at the time the option is granted) for which ISOs may be first exercisable by an
option holder during any calendar years under the 1995 Plan or any other plan of
the Company or its subsidiaries may not exceed $100,000. A nonqualified stock
option is not subject to any of these limitations.
The 1995 Plan permits optionees, with certain exceptions, to pay the
exercise price of options in cash, Common Stock (valued at its fair market value
on the date of exercise), a promissory note, or a combination thereof. Cash
received by the Company upon exercise will constitute general funds of the
Company and shares of Common Stock received by the Company upon exercise will
return to the status of authorized but unissued shares.
15
<PAGE>
SARS
The 1995 Plan authorizes the Compensation Committee to grant SARs
concurrently (and in tandem) with the grant of options. An SAR granted in tandem
with an option is only exercisable when and to the extent that the related
option is exercisable. An SAR entitles the holder to receive upon exercise the
excess of the fair market value of a specific number of shares of Common Stock
at the time of exercise over the option price. This amount may be paid in Common
Stock (valued at its fair market value on the date of exercise), cash or a
combination thereof, as the Compensation Committee may determine. Unless the
Award agreement provides otherwise, the option granted concurrently with the SAR
must be cancelled to the extent that the appreciation right is exercised and the
SAR must be cancelled to the extent the option is exercised. LSARs, limited to
certain periods of time around a major event, such as a reorganization or change
in control, may be also granted under the 1995 Plan.
RESTRICTED STOCK
The 1995 Plan authorizes the Compensation Committee to grant restricted
stock to Eligible Employees on such conditions and with such restricted periods
as the Compensation Committee may designate. During the restricted period, stock
certificates evidencing the restricted shares will be held by the Company or a
third party designated by the Compensation Committee and the restricted shares
may not be sold, assigned, transferred, pledged or otherwise encumbered.
DEFERRED STOCK
The 1995 Plan authorizes the Compensation Committee to grant Deferred Stock
either alone or in tandem with other Awards on such terms and conditions as the
Compensation Committee shall determine.
STOCK PURCHASE RIGHTS
The Compensation Committee may grant to Eligible Employees Stock Purchase
Rights allowing the purchase of Common Stock including Restricted Stock and
Deferred Stock.
OTHER STOCK-BASED AWARDS
In addition to awards granted under other provisions of the 1995 Plan,
performance shares, convertible preferred stock, convertible debentures and
other performance-based awards may be granted under the 1995 Plan.
TERMS AND EXERCISE PERIOD OF AWARDS
The 1995 Plan provides that Awards may be granted for such terms as the
Compensation Committee may determine but not greater than ten years after the
date of the Award. Options and SARs will generally be exercisable ten years from
the date of grant and unearned restricted stock and other Awards will generally
vest or be forfeited upon the termination of the holder's employment prior to
the end of the restricted period. Generally speaking, options which have been
exercisable prior to termination of employment will remain exercisable for three
months thereafter (12 months in the case of death). Such periods, however,
cannot exceed the expiration dates of the Options. SARs have the same
post-termination provisions as the Options to which they relate. The
Compensation Committee has the authority to accelerate the exercisability of
Awards or (within the maximum ten-year term) extend the exercisability periods.
TERMINATION, AMENDMENT AND ADJUSTMENT
The 1995 Plan may be terminated by the Board of Directors at any time. In
addition, the Board may amend the 1995 Plan from time to time, without the
authorization or approval of the Company's
16
<PAGE>
shareholders, unless the amendment (i) materially increases the benefits
accruing the participants under the 1995 Plan, (ii) materially increases the
aggregate number of securities that may be issued under the 1995 Plan or (iii)
materially modifies the requirements as to eligibility for participation in the
1995 Plan, but in each case only to the extent then required by the Code or
applicable law, or deemed necessary or advisable by the Board of Directors.
Upon occurrence of the Change in Control Event (as defined in the Stock
Option Plan), there will be an acceleration of vesting.
Individual awards may be amended by the Compensation Committee in any manner
consistent with the Stock Option Plan. Amendments that adversely affect the
holder of any Award, however, are subject to his or her consent.
The 1995 Plan is not exclusive and does not limit the authority of the Board
of Directors or the Compensation Committee to grant other awards, in stock or
cash, or to authorize other compensation, under any other plan or authority.
FEDERAL INCOME TAX CONSEQUENCES
The federal income tax consequences of the 1995 Plan under current federal
law are summarized in the following discussion of general tax principles
applicable to the 1995 Plan. This summary is not intended to be exhaustive and
does not describe state or local tax consequences.
The Company is generally entitled to deduct and the optionee recognizes
taxable income in an amount equal to the difference between the option price and
the fair market value of the shares at the time of exercise of nonqualified
stock options. With respect to ISOs, the Company is generally not entitled to a
deduction nor does the participant recognize income, either at the time of grant
or exercise or (provided the participant holds the share at least two years
after grant and one year after exercise) at any later time. Rather, the
participant receives capital gains treatment on the difference between his basis
and ultimate sales price.
The current federal income tax consequences of other Awards authorized under
the 1995 Plan generally follow certain basic patterns: SARs are taxed and
deductible in substantially the same manner as Options; restricted stock is
taxed at a time of vesting, unless effectively deferred, although employees may
elect earlier taxation and convert future gains to capital gains; bonuses and
stock units are generally subject to tax at the time of payment; and
compensation otherwise effectively deferred is taxed when paid. In each of the
foregoing cases, the Company will generally have a corresponding deduction at
the time the participant recognizes income.
If an award is accelerated under the 1995 Plan in connection with a change
in control (as this term is used under the Code), the Company may not be
permitted to deduct the portion of the compensation attributable to the
acceleration if it exceeds certain threshold limits under the Code, and certain
related excise taxed may be triggered. Furthermore, if compensation attributable
to Awards is not "performance-based" within the meaning of Section 162(m) of the
Code, the Company may not be permitted to deduct aggregate compensation that is
not performance-based, to the extent it exceeds $1,000,000 in any tax year.
AMENDMENT OF NON-EMPLOYEE DIRECTORS STOCK PLAN
The Foilmark, Inc. Non-Employee Directors Stock Plan (the "Directors Plan")
is proposed to be amended to increase the number of authorized shares reserved
for issuance thereunder from 75,000 to 150,000.
On August 19, 1999, the Board of Directors, subject to shareholder approval
at the Annual Meeting, adopted an amendment to the Directors Plan to increase
the number of authorized shares from 75,000 to 150,000. At September 15, 1999,
40,000 of the 75,000 shares of Common Stock were subject to existing
17
<PAGE>
options. The proposed amendment would allow the Company to continue its program
of granting options to eligible directors. THE BOARD RECOMMENDS A VOTE FOR THIS
PROPOSAL. The affirmative vote of the holders of a majority of shares of Common
Stock eligible to vote at the Meeting is required to approve the proposal to
amend the Directors Plan.
The purpose of the Directors Plan is to promote the success of the Company
by providing an additional means through the grant of stock options to attract,
motivate and retain experienced and knowledgeable directors.
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.
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 date of election of each director, and
Options to purchase an additional 2,500 shares of Common Stock shall be granted
yearly on the date 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 30 days of the date of such notice or they will be terminated.
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.
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.
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
18
<PAGE>
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.
APPROVAL OF SELECTION OF AUDITORS
Upon recommendation of the Audit Committee, the Foilmark Board has selected
KPMG LLP, certified public accountants, as independent auditors for the Company
for the fiscal year ending June 30, 2000. That firm has acted as independent
auditors for the Company for more than 7 years, and the Board considers it
highly qualified. Although it is not required to do so, the Board of Directors
wishes to submit the selection of KPMG LLP for shareholders' approval at the
Annual Meeting. If the shareholders do not give approval, the Board will
reconsider its selection.
Representatives of KPMG LLP will be present at the Annual Meeting, will have
the opportunity to make a statement if they desire and will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THIS
APPOINTMENT.
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) a peer group of companies
consisting of Advanced Deposition Technologies, CFC International Inc., Outlook
Group Corp. and Viskase Corporation (the "Peer Group") 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 Peer Group stocks. The graph assumes dividend reinvestment with
respect to companies in the Peer Group, 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. HoloPak Technologies, Inc. was a part of the peer
group until its merger with the Company on the Merger Date.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
<S> <C> <C> <C>
AMONG FOILMARK, INC., THE S & P 500 INDEX
AND A PEER GROUP
FOILMARK, INC. PEER GROUP S & P 500
06/94 100 100 100
12/94 111 103 104
12/95 102 72 143
12/96 40 94 175
12/97 53 114 234
12/98 29 68 301
06/99 41 71 338
* $100 INVESTED ON 6/23/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
</TABLE>
19
<PAGE>
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 June 5, 2000. All proposals
must comply with the terms of Rule 14a-8 of the Securities and Exchange Act of
1934.
INDEPENDENT PUBLIC ACCOUNTANTS
At the Annual Meeting, representatives from the Company's independent public
accountants, KPMG 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 June 30, 1999, 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 ENDED JUNE 30, 1999, 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., 4 MULLIKAN WAY, NEWBURYPORT, MASSACHUSETTS
01950.
20
<PAGE>
APPENDIX A
FIRST AMENDMENT TO THE
FOILMARK, INC.
AMENDED AND RESTATED
1995 STOCK INCENTIVE COMPENSATION PLAN
WHEREAS, Foilmark, Inc. (the "Company") adopted the 1995 Stock Incentive
Compensation Plan (the "Plan") for its employees, officers and directors; and
WHERAS, the Board of Directors of the Company has reserved the right to
amend the Plan pursuant to Section 12 of the Plan; and
WHEREAS, the Company amended and restated the Plan in 1998; and
WHEREAS, the Company desires to amend the Plan again to increase the number
of shares available for distribution under the Plan;
NOW THEREFORE, the Plan is hereby amended, subject to approval by the
Company's shareholders, as follows:
The first clause in Section 2 of the Plan is hereby amended to read as
follows:
"The maximum aggregate number of shares of Stock reserved and available for
distribution under the Plan shall be 600,000 shares of Stock:"
IN WITNESS WHEREOF, the Company has caused this First Amendment to be
executed this 19(th) day of August, 1999.
FOILMARK, INC.
By:/s/ Philip Leibel
Title: Vice President--Finance &
Chief Financial Officer
A-1
<PAGE>
APPENDIX B
FIRST AMENDMENT TO THE
FOILMARK, INC.
NON-EMPLOYEE DIRECTORS' STOCK PLAN
WHEREAS, Foilmark, Inc. (the "Company") has adopted the Foilmark, Inc.
Non-Employee Directors' Stock Plan (the "Plan") for its non-employee directors;
WHEREAS, the Board of Directors of the Company has reserved the right to
amend the Plan pursuant to Section 7 of the Plan;
WHEREAS, the Company desires to amend the Plan to increase the number of
shares of stock which may be issued under the Plan;
NOW THEREFORE, the Plan is hereby amended, subject to approval by the
Company's shareholders, as follows:
Section 5 of the Plan is amended by removing clause (b) and replacing it
with the following:
"(b) The aggregate number of Common Shares of the Company which may be
issued under the Plan shall not exceed 150,000 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."
IN WITNESS WHEREOF, the Company has caused this First Amendment to be
executed this 19(th) day of August, 1999.
FOILMARK, INC.
By: /s/ Philip Leibel
Title: Vice President--Finance &
Chief Financial Officer
B-1
<PAGE>
FOILMARK, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
Thursday, November 4, 1999
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby authorizes and appoints Frank J. Olsen, Jr. and
Robert J. Simon, 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 September
24, 1999 by the undersigned at the Annual Meeting of Shareholders to be held at
10:00 a.m. local time, on Thursday, November 4, 1999, at the Back Bay Hilton,
Boston, Massachusetts and any adjournment or postponement thereof.
This proxy when properly executed will be voted:
- as directed below, or, in the absence of such direction, this proxy
will be voted FOR the specified nominees in Proposal 1 and FOR each
of Proposals 2, 3 and 4 and
- 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 the reverse side)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark your votes as indicated in this example /X/
The board of directors of Foilmark recommends a vote for each of the following.
FOR WITHOLD
all nominees AUTHORITY
listed to vote
1. To consider and vote upon a proposal to elect / / / /
each of Michael Bertuch, Michael Foster and Harvey
Share as directors of Foilmark, Inc.
(Instruction: To withhold authority to vote for any
individual nominee(s), write the name(s) of such
nominee(s) on the line below.)
- ------------------------------------
FOR AGAINST ABSTAIN
2. To consider and vote upon a proposal to adopt an / / / / / /
amendment to the Foilmark, Inc. 1995 Amended and
Restated Stock Incentive Compensation Plan to
increase the number of shares of common stock
reserved for issuance under the 1995 Plan from
400,000 to 600,000.
3. To consider and vote upon a proposal to adopt an / / / / / /
amendment to Foilmark, Inc. Non-Employee Directors
Stock Option Plan to increase the number of shares
of common stock reserved for issuance under the
Directors Plan from 75,000 to 150,000.
4. To consider and vote upon a proposal to approve
KPMG LLP as Foilmark's independent auditors for the
fiscal year ended June 30, 2000.
This Proxy must be signed exactly as the name of the Shareholder(s) appears on
this card.
Signature Signature (if held jointly) Dated , 1999
------------ ------------ -----
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
