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 Rule 14a-(11(c) or Rule 14a-12
CSL LIGHTING MANUFACTURING, 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
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CSL LIGHTING MANUFACTURING, INC.
27615 Avenue Hopkins
Valencia, California 91355-3493
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 28, 1998
-------------------------
To the Stockholders of
CSL Lighting Manufacturing, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CSL
Lighting Manufacturing, Inc. (the "Company") will be held on August 28, 1998 at
4:00 p.m. at the offices of Morse, Zelnick, Rose & Lander, LLP, 450 Park Avenue,
Suite 902, New York, N.Y. 10022, for the following purposes:
1. To elect a board of four directors.
2. To approve an amendment to the Company's Certificate of
Incorporation to effect a reverse split of the Company's Common
Stock, $.01 par value per share (the "Common Stock"), pursuant to
which each thirteen shares of Common Stock then outstanding will be
converted into one share.
3. To ratify the appointment of independent auditors for 1998.
4. To consider and take action upon such other matters as may properly
come before the meeting or any adjournments thereof.
The close of business on July 17, 1998 has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting and any adjournment thereof.
All stockholders are cordially invited to attend the meeting. Whether or
not you expect to attend, you are requested to sign, date and return the
enclosed proxy promptly. Stockholders who execute proxies retain the right to
revoke them at any time prior to the voting thereof. A return envelope which
requires no postage if mailed in the United States is enclosed for your
convenience.
By Order of the Board of Directors
Mark Allen, Secretary
Dated: July 24, 1998
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WHETHER OR NOT
YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN THE ENCLOSED PROXY CARD AND RETURN
IT IN THE ENCLOSED ENVELOPE PROVIDED BY RETURN MAIL.
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CSL LIGHTING MANUFACTURING, INC.
27615 Avenue Hopkins
Valencia, California 91355-3493
-------------------------
PROXY STATEMENT
-------------------------
ANNUAL MEETING OF STOCKHOLDERS
------------------------------
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of CSL Lighting Manufacturing, Inc. (the "Company") of
proxies in the form enclosed for the Annual Meeting of Stockholders to be held
August 28, 1998 at 4:00 p.m. (the "Meeting") at the offices of Morse, Zelnick,
Rose & Lander, LLP, 450 Park Avenue, Suite 902, New York, N.Y. 10022, and for
any adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. The Board of Directors
knows of no other business which will come before the meeting.
All shares represented by each properly executed unrevoked proxy received
in time for the meeting will be voted as specified. In the absence of any
specification, proxies will be voted (a) for the election of the four persons
listed herein as nominees as directors, (b) to amend the Company's Certificate
of Incorporation to effect a one-for-thirteen reverse stock-split of the
Company's Common Stock, (c) for the ratification of auditors, and (e) in the
judgment of the Board of Directors on any other matters which may properly come
before the meeting. Any stockholder giving a proxy has the power to revoke the
same at any time before it is voted.
The approximate date on which this Proxy Statement and the accompanying
form of proxy along with the Company's 1997 Annual Report will be mailed to the
Company's stockholders on July 24, 1998. The principal executive offices of the
Company are located at 27615 Avenue Hopkins, Valencia, California 91355-3493.
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VOTING SECURITIES
Only stockholders of record at the close of business on July 17, 1998 are
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof. On the record date there were issued and outstanding 14,228,205
Common Shares. Each outstanding Common Share is entitled to one vote upon all
matters to be acted upon at the meeting. Stockholders may vote in person or by
proxy. Execution of a proxy will not in any way affect a stockholder's right to
attend the Meeting and vote in person. Any stockholder giving a proxy has the
right to revoke it at any time before it is exercised. Proxies may be revoked by
(a) filing with the Secretary of the Company, before the taking of the vote at
the Meeting, a written notice of revocation bearing a later date than the proxy,
(b) duly executing a later dated proxy relating to the same shares and
delivering it to the Secretary of the Company before the taking of the vote at
the Meeting, or (c) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute a revocation of a
proxy). Any written notice of revocation or subsequent proxy should be sent so
as to be delivered to CSL Lighting Manufacturing, Inc., 27615 Avenue Hopkins,
Valencia, CA 91355-3493, Attention: Secretary, at or before the taking of the
vote at the Meeting.
The representation in person or by proxy of at least a majority of the
outstanding shares of Common Stock entitled to vote at the Meeting is necessary
to establish a quorum for the transaction of business. Votes withheld from any
nominee, abstentions and broker non-votes are counted as present or represented
for purposes of determining the presence or absence of a quorum. A "non-vote"
occurs when a broker holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the broker does not have
discretionary voting power and has not received instructions from the beneficial
owner. Directors are elected by a plurality of the votes cast by stockholders
entitled to vote at the Meeting. All other matters being submitted to
stockholders require the affirmative vote of the majority of shares present in
person or represented by proxy at the Meeting, except that the proposal to amend
the Company' Certificate of Incorporation requires the affirmative vote of a
majority of the outstanding shares of Common Stock entitled to vote at the
Meeting. An automated system administered by the Company's transfer agent
tabulates the votes. The vote on each matter submitted to stockholders is
tabulated separately. Abstentions are included in the number of shares present
or represented and voting on each matter and, therefore, with respect to votes
on specific proposals, will have the effect of negative votes. Broker
"non-votes" are not so included but have the effect of a vote "against" the
proposal to amend the Certificate of Incorporation.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGMENT
The following table, together with the accompanying footnotes, sets forth
information, as of June 30, 1998 regarding stock ownership of all persons known
by the Company to own beneficially 5% or more of the Company's outstanding
Common Stock, all directors, each of the Named Executive Officers and directors
and executive officers of the Company as a group:
Number of Shares
Name and Address of Beneficially Percent of
Beneficial Owner Owned Ownership
- ------------------- ---------------------- ----------------
Sylvan Gerber 1,511,909(1) 11.0%
Mark Allen 303,500(2) 2.2%
Scott Searle 100,000 *
Michael Smith 150,000(3) 1.1%
Scott Gilderman 25,000(4) *
Directors and Officers as
a Group (5 persons) 2,090,409(5) 15.1%
- -----------------------
* less than 1%
(1) Includes (i) 206,250 common shares that are subject to a seven year escrow
agreement with H.J. Meyers & Co., Inc. (Formerly Thomas James &
Associates, Inc.), the underwriter of the Company's initial public
offering ("H.J. Meyers"), (ii) an aggregate of 150,000 common shares that
Mr. Gerber has gifted in equal amounts to his three adult children, all
shares are subject to a ten year voting trusts of which Mr. Gerber is the
sole voting trustee, and (iii) 215,000 shares subject to currently
exercisable warrants. The address of Mr. Gerber is c/o CSL Lighting
Manufacturing, Inc., 27615 Avenue Hopkins, Valencia, California
91355-3493.
(2) Includes 32,000 shares subject to currently exercisable warrants.
(3) Includes (i) 75,000 shares subject to currently exercisable warrants
including 25,000 held by Mr. Smith as custodian for his minor nieces, and
(ii) 25,000 shares held by Mr. Smith as custodian for the same minors. Mr.
Smith disclaims beneficial ownership of the securities held for the
benefit of such minors.
(4) Represents shares subject to currently exercisable options.
(5) Includes 347,000 shares subject to currently exercisable warrants.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on review of the copies of such forms
furnished to the Company, or written representations that no Forms 5 were
required, the Company believes that all Section 16(a) filing requirements
applicable to its officers and directors were complied with except as follows:
Mark Allen, one report regarding one transaction.
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COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to the
annual and long-term compensation of the Company's Chief Executive Officer, and
the other two most highly paid executive officers of the Company who earned more
than $100,000 during the fiscal years ended December 31, 1997 (the "Named
Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------------
Annual Compensation Awards Payout
--------------------------------------- -------------------- ---------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Year
Ending Other Restricted
Name and Principal December Annual Annual Stock Options/ LTIP All Other
Position 31, Salary Bonus Compensation Awards(1) SARS Payouts Compensation
- ------------------ -------- ------ ----- ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sylvan Gerber 1997 -- -- -- $16,250 -- -- --
Former Chief 1996 $ 98,077 -- -- 16,250 -- -- --
Executive 1995 11,250 -- -- 2,500 -- -- --
Officer(2)
Mark Allen 1997 $159,000 -- -- $32,500 -- -- --
Chief Executive 1996 180,125 -- -- 32,500 -- -- --
Officer, Vice 1995 112,325 -- -- 5,000 -- -- --
President--
Finance(2)
Scott Searle 1997 $247,515 -- -- $16,250 -- -- --
President 1996 299,030 -- -- 16,250 -- -- --
1995 86,500 -- -- 2,500 -- -- --
James P. Norris 1997 $196,000 -- -- -- -- -- --
Vice President-- 1996 64,115 -- -- -- -- -- --
Distribution 1995 -- -- -- -- -- -- --
Sales(3)
</TABLE>
- ----------------------
(1) In November 1995, the Company issued 100,000, 100,000 and 200,000 shares
of its common stock pursuant to restricted stock bonus grants to Sylvan
Gerber its Chairman and Chief Executive Officer, Scott Searle its
President and Mark Allen its Chief Operating Officer, respectively. Such
shares vest ratably over a period of ten years. The unvested portion is
subject, upon the occurrence of certain events, to either forfeiture or
accelerated vesting. The aggregate value of such restricted stock bonus
grants to Messrs. Gerber, Searle and Allen (calculated by multiplying
closing market price of the Company's unrestricted stock on the date of
grant by the number of shares awarded) was $162,500, $162,500 and
$325,000, respectively.
(2) In December 1997, Mark Allen replaced Sy Gerber as Chief Executive
Officer.
(3) Mr. Norris joined the Company in August 1996. Mr. Norris' employment with
the Company terminated in May 1998.
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Employment Agreements
The Company is party to an employment agreement with Mark Allen, for a
term expiring in October 2000, pursuant to which he serves as Chief Executive
Officer. Mr. Allen's agreements provide for a base salary of $150,000 and for
the payment to him upon a "change of control" (as defined in the agreement) of
an amount equal to the greater of $150,000 or the compensation remaining due to
him for the balance of the employment term.
Mr. Allen's employment agreement contains strict confidentiality
provisions and non-competition covenants. Compensation is subject to annual
increases and bonuses at the discretion of the Board of Directors. The
agreements also entitles Mr. Allen to participate in any employee benefit plans,
such as group life, health, hospitalization and life insurance offered by the
Company. Under the agreement, Mr. Allen's employment shall terminate upon his
death or disability and may be terminated by the Company for "cause," which is
defined as, among other things, an act of fraud or embezzlement, material gross
misconduct, conviction of a felony involving moral turpitude and breach of the
employee's non-competition or confidentiality covenants.
Option Grants in Fiscal Year 1997 and Fiscal Year-End Option Values
No options were granted or outstanding to any Named Executive Officer
under the Option Plans at December 31, 1997.
Restricted Stock Grants
In November 1995, the Company issued 100,000, 100,000 and 200,000 shares
of Common Stock, respectively, pursuant to restricted stock grants to Sylvan
Gerber, Scott Searle and Mark Allen, executive officers of the Corporation. Such
shares vest ratably over a period of ten years. The unvested portion is subject,
upon the occurrence of certain events, to either forfeiture or accelerated
vesting.
Stock Option Plans
In February 1998 the Company's stockholders approved the CSL 1996 Stock
Option Plan (the "1996 Plan") which provides that a total of 400,000 shares of
Common Stock are available for issuance thereunder. In November 1995, the
Company's stockholders approved the CSL 1995 Stock Option Plan (the "1995 Plan")
which provides that a total of 210,000 shares of Common Stock are available for
issuance thereunder. In February 1994, the Board of Directors and stockholders
of the Company adopted the CSL 1994 Stock Option Plan (the "1994 Plan") which
provides that a total of 120,000 shares of Common Stock are available for
issuance thereunder. (The 1996 Plan, 1995 Plan and 1994 Plan are sometimes
referred to herein as the "Option Plans.")
Under the Option Plans, the Company may grant options to purchase Common
Stock to its officers, key employees, directors and non-employees performing
services for the Company. Payment of the option exercise price is to be made (i)
in cash, (ii) by delivery of Common Stock already owned by and in the possession
of the option holder, or (iii) if so provided for in the option being exercised,
by delivery of the option holder's promissory note
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<PAGE>
in favor of the Company. If an option granted under an Option Plan expires,
terminates or is canceled without being exercised in full, the unpurchased
shares subject to such options will again be available for options to be granted
under such Plan. Options may be granted in the form of incentive stock options
("Incentive Option") or options which do not qualify for the favorable tax
treatment of Incentive Options which are known as non-qualified options.
The Option Plans are administered by a committee of the Board of Directors
consisting of Messrs. Smith and Gilderman who are ineligible to participate in
the Plans. The Stock Option Committee determines those individuals who shall
receive options, the time period during which the options may be partially or
fully exercised, the number of Common Shares that may be purchased under each
option, and the option price.
No options may be exercised more than ten years from the date of grant,
and no options may be granted after February 1, 2004, May 1, 2005 and May 2,
2006 under the 1994 Plan, 1995 Plan and 1996 Plan, respectively.
The option price of each Incentive Option granted under the Option Plans
shall be not less than 100% of the fair market value of the Common Stock as of
the date the option is granted (110% of the fair market value if the grant is to
an employee holding 10% or more of the Company's outstanding Common Stock).
Options other than Incentive Options may be granted at an exercise price as
determined by the Board. The exercise prices of such non-qualified options must
be at least 85% of the fair market value of the underlying shares of Common
Stock at the date of grant. Options granted are not transferable and are subject
to various other conditions and restrictions.
No incentive stock option may be transferred by an optionee other than by
will or the laws of descent and distribution, and during the lifetime of an
optionee, the option will be exercisable only by him or her. In the event of
termination of employment other than by death or disability, the optionee will
have three months after such termination during which to exercise the option.
Upon termination of employment of an optionee by reason of death or permanent
total disability, the option remains exercisable for one year thereafter to the
extent it was exercisable on the date of such termination. No similar limitation
applies to non-qualified options.
In February 1994, the Board of Directors and stockholders of the Company
adopted a non-discretionary non-employee directors' stock option plan (the
"Directors' Plan") that provides for the grant to non-employee directors of
non-qualified options to purchase up to 30,000 Common Shares. Pursuant to the
Directors' Plan, each new non-employee director of the Company is automatically
granted, six-months after becoming a director, an option to purchase 2,500
Common Shares at the fair market value of such shares on the grant date. In
addition, each non-employee director shall automatically be granted an option to
purchase 2,500 shares at the fair market value of such shares on the date of
grant, every six-months thereafter during which he serves as a director of the
Company. All such options shall vest one year from the date of grant.
Options under the Option Plan and Directors' Plan must be granted within
10 years from the effective date of each respective plan. Incentive stock
options granted under the plans cannot be exercised more than 10 years from the
date of grant, except that incentive stock options issued to greater than 10%
stockholders are limited to five year terms. All options
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granted under the plans provide for the payment of the exercise price in cash or
by delivery to the Company of Common Shares already owned by the optionee having
a fair market value equal to the exercise price of the options being exercised,
or by a combination of such methods of payment. Therefore, an optionee may be
able to tender Common Shares to purchase additional Common Shares and may
theoretically exercise all of his stock options without making any additional
cash investment.
Any unexercised options that expire or that terminate upon an optionee's
ceasing to be affiliated with the Company become available once again for
issuance. As of December 31, 1997, the Company had outstanding incentive stock
options to purchase 20,000 Common Shares under the Plans exercisable at a
weighted average exercise price of $4.75 per share.
Director Committees
The Board of Directors of the Company currently maintains an Audit
Committee, Compensation Committee and Stock Option Committee. The Audit
Committee reviews the engagement of the independent accountants, reviews and
approves the scope of the annual audit undertaken by the independent accountants
and review the independence of the accounting firm. The Audit Committee also
reviews the audit and non-audit fees of the independent accountants and the
adequacy of the Company's internal control procedures. The Audit Committee is
comprised of Messrs. Gerber, Gilderman and Smith. The Compensation Committee
establishes and reviews the compensation terms for management and key employees
of the Company. The Compensation Committee is comprised of Messrs. Smith and
Gilderman. The Company's Stock Option Plans are administered by a disinterested
committee of Directors comprised of Messrs. Smith and Gilderman.
Certain Transactions
During 1997, the Company paid approximately $98,000 to Gilderman, Johnson
& Co., LLP, an accounting firm, as fees for accounting services performed. Scott
Gilderman, a director of the Company, is a partner in such firm.
The foregoing transactions between the Company and its officers, directors
or principal stockholders were for bona fide business purposes, and were on
terms no less favorable than could be obtained from unaffiliated third parties
and were approved by a majority of the Company's independent and disinterested
directors.
Director Compensation
The Company pays a fee of $500 per meeting to outside directors as
compensation for their services rendered as directors. Each director is
reimbursement for travel expenses incurred in connection with attendance at
meetings of the Board of Directors and its committees.
7
<PAGE>
ELECTION OF DIRECTORS
At the meeting, four Directors will be elected by the stockholders to
serve until the next annual meeting or until their successors are elected and
qualified. The accompanying form of proxy will be voted for the election as
Directors of the four persons named below, unless the proxy contains contrary
instructions. Proxies cannot be voted for a greater number of persons than the
number of nominees named herein. Management has no reason to believe that any of
the nominees will not be a candidate or will be unable to serve. However, in the
event that any of the nominees should become unable or unwilling to serve as
Director, the proxy will be voted for the election of such person or persons as
shall be designated by the Board of Directors.
Sylvan Gerber, age 69, is currently Chairman of the Board. Mr. Gerber was
the Chief Executive Officer of the Company from February 1995 to December 1997,
President from inception to August 1, 1995, and has been a Director of the
Company since inception. From 1974 to 1986, Mr. Gerber was the President and
Chief Executive Officer of Capri Lighting Manufacturing Company ("Capri
Lighting") which Mr. Gerber co-founded in 1974. Capri Lighting was sold in 1984
to Thomas Industries, Inc., although Mr. Gerber continued to manage the
day-to-day operations of Capri Lighting until 1986.
Mark Allen, age 37, is currently Chief Executive Officer. Mr. Allen has
been Vice President / Finance since October 1994. In March 1995, Mr. Allen was
appointed Chief Operating Officer, Executive V. P / Finance and was elected to
the Board of Directors. In December 1997 Mr. Allen was appointed Chief Executive
Officer. From 1991 to 1994, Mr. Allen was employed by Thomas James, Inc. (now
known as H. J. Meyers & Co., Inc.) an investment banking firm, as Vice
President, Corporate Finance and Director of Private Placements. Mr. Allen
received a B.S. in finance from Syracuse University.
Michael Smith, age 42, was elected to the Board of Directors in 1995 and
is a member of the Audit and Compensation committees. Mr. Smith is a principal
of International Capital & Management Inc., a merchant banking and venture
capital firm. From October 1992 through January 1997, Mr. Smith was the Managing
Director of Corporate Finance of H.J. Meyers & Co. (formerly known as Thomas
James Associates, Inc.) an investment banking firm and was general counsel of
such firm from May 1991 through May 1995. Mr. Smith serves on the Board of
Directors of Group, Inc. Mr. Smith was associated with the law firm of Harter,
Secrest & Emery from 1987 until 1991. Mr. Smith received a B.A. from Cornell
University and a J.D. from Cornell University School of Law.
Scott Gilderman, age 36, was appointed to the Board in December 1997. Mr.
Gilderman is a member of the Audit and Compensation committees. Since 1992, Mr.
Gilderman has been a partner in the accounting firm of Gilderman, Johnson and
Company, LLP. (and its predecessor). Mr. Gilderman is a certified public
accountant and holds a B.S. degree from California Polytechnic University at San
Luis Obispo, California.
During the year ended December 31, 1997, the Board of Directors held four
meetings. Each Director standing for re-election who was a Director at the time
attended at least 75% of such meetings.
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The affirmative vote of holders of a plurality of the shares of Common
Stock present or represented at the Annual Meeting is required for the
election of directors.
The Board of Directors unanimously recommends a vote FOR the election of
the foregoing nominees.
APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION TO
EFFECT ONE-FOR-THIRTEEN REVERSE STOCK SPLIT
The Board of Directors has adopted a resolution declaring the advisability
of, and submitting to the stockholders for approval, a proposal to amend the
Company's Certificate of Incorporation (the "Proposed Amendment") to effect a
reverse split of the Company's Common Stock, pursuant to which each thirteen
shares of Common Stock will be automatically converted into one share without
any action on the part of the stockholder (the "Reverse Split"). The text of the
Proposed Amendment is set forth in Exhibit I to this Proxy Statement.
Consummation of the Reverse Split will not change the number of shares of
Common Stock authorized by the Company's Certificate of Incorporation, which
will remain at 30,000,000 shares or the par value of the Common Stock per share.
The Reverse Split will become effective as of 5:00 p.m., New York time (the
"Effective Date"), on the date that the certificate of amendment to the
Company's Certificate of Incorporation is filed with the Secretary of State of
Delaware. If for any reason the Board of Directors deems it advisable, the
Proposed Amendment may be abandoned at any time before the Effective Date,
whether before or after the Meeting (even if such proposal has been approved by
the Stockholders).
In lieu of issuing less than one whole share resulting from the Reverse
Split to holders of an odd number of shares, the Company will determine the fair
value of each outstanding share of Common Stock held on the Effective Date of
the Reverse Split (the "Fractional Share Purchase Price"). The Company currently
anticipates that the Fractional Share Purchase price will be based on the
average daily closing bid price per share of the Common Stock as reported by the
primary trading market for the Company's Common Stock for the ten (10) trading
days immediately preceding the Effective Date. In the event the Company
determines that unusual trading activity would cause such amount to be an
inappropriate measure of the fair value of the Common Stock, the Company may
base the Fractional Share Purchase Price on the fair market value of the Common
Stock as reasonably determined in good faith by the Board of Directors of the
Company. Stockholders who hold an odd number of shares on the Effective Date
will be entitled to receive, in lieu of the less than one whole share arising as
a result of the Reverse Split, cash in the amount of the relevant portion of the
Fractional Share Purchase Price.
As soon as practical after the Effective Date, the Company will mail a
letter of transmittal to each holder of record of a stock certificate or
certificates which represent issued Common Stock outstanding on the Effective
Date. The letter of transmittal will contain instructions for the surrender of
such certificate or certificates to the Company's designated exchange agent in
exchange for certificates representing the number of whole shares of Common
Stock (plus the relevant portion of the Fractional Share Purchase price, if any)
into which the shares of Common Stock have been converted as a result of the
Reverse Split. No
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cash payment will be made or new certificate issued to a stockholder until he
has surrendered his outstanding certificates together with the letter of
transmittal to the Company's exchange agent. See "--Exchange of Stock
Certificates."
THE BOARD OF DIRECTORS BELIEVES THE ADOPTION OF THE PROPOSED AMENDMENT IS IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE PROPOSED AMENDMENT.
Purpose of the Reverse Split
The Company's shares of Common Stock have been listed, and have traded, on
the Nasdaq Small Cap Market ("Nasdaq") since March 1994 when the Company
completed its initial public offering. The Company recently received a notice
from The Nasdaq Stock Market, Inc. ("NASDAQ") stating that the Company's
securities would be delisted from Nasdaq if the Company could not demonstrate
compliance with the minimum $1.00 bid price for ten consecutive trading days.
The Company is currently exploring a number of potential transactions
designed to enable the Company to meet this criteria. However, there can be no
assurance that the Company will consummate any of such transactions or that the
consummation of any of such transactions would result in the Company complying
with the maintenance requirements.
The Company believes that if the Reverse Split is approved by the
stockholders at the Meeting, and the Reverse Split is effectuated, the Company's
shares of Common Stock will have a minimum bid price in excess of $1.00 per
share, and therefore will satisfy one of the aforementioned listing maintenance
criteria.
If the Reverse Split is not approved by the stockholders at the Meeting,
then it is unlikely that the Company will meet the new listing criteria. The
delisting of the Company's Common Stock from Nasdaq could adversely affect the
liquidity of the Company's Common Stock and the ability of the Company to raise
capital. In such event, the shares of Common Stock will likely be quoted in the
"pink sheets" maintained by the National Quotation Bureau, Inc. or the NASD
Electronic Bulletin Board and the spread between the bid and ask prices of the
shares of Common Stock is likely to be greater than at present and stockholders
may experience a greater degree of difficulty in engaging in trades of shares of
Common Stock.
In addition, the Board of Directors further believes that low trading
prices of the Company's Common Stock may have an adverse impact upon the
efficient operation of the trading market in the securities. In particular,
brokerage firms often charge a greater percentage commission on low-priced
shares than that which would be charged on a transaction in the same dollar
amount of securities with a higher per share price. A number of brokerage firms
will not recommend purchases of low-priced stocks to their clients or make a
market in such shares, which tendencies may adversely affect the Company.
Stockholders should note that the effect of the Reverse Split upon the
market prices for the Company's Common Stock cannot be accurately predicted. In
particular, there is no assurance that prices for shares of the Common Stock
after the Reverse Split will be thirteen times the prices for shares of the
Common Stock immediately prior to the Reverse Split.
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Furthermore, there can be no assurance that the proposed Reverse Split will
achieve the desired results which have been outlined above, nor can there be any
assurance that the Reverse Split will not adversely impact the market price of
the Common Stock or, alternatively, that any increased price per share of the
Common Stock immediately after the proposed Reverse Split will be sustained for
any prolonged period of time. In addition, the Reverse Split may have the effect
of creating odd lots of stock for some stockholders and such odd lots may be
more difficult to sell or have higher brokerage commissions associated with the
sale of such odd lots.
Effect of the Reverse Split
As a result of the Reverse Split, the number of whole shares of Common
Stock held by stockholders of record as of the close of business on the
Effective Date will be equal to the number of shares of Common Stock held
immediately prior to the close of business on the Effective Date divided by
thirteen, plus cash in lieu of any fractional share. The Reverse Split will not
affect a stockholder's percentage ownership interest in the Company or
proportional voting power, except for minor differences resulting from the
payment of cash in lieu of fractional shares. The rights and privileges of the
holders of shares of Common Stock will be unaffected by the Reverse Split. The
par value of the Common Stock will remain at $.01 per share following the
Effective Date of the Reverse Split, and the number of shares of Common Stock
issued will be reduced. Consequently, the aggregate par value of the issued
Common Stock also will be reduced. In addition, the number of authorized but
unissued shares of Common Stock will be increased by the Reverse Split, the
issuance of which may have the effect of diluting the earnings per share and
book value per share, as well as the stock ownership and voting rights, of
outstanding Common Stock. As the Reverse Split will increase the number of
authorized but unissued shares of Common Stock, it may be construed as having an
anti-takeover effect by permitting the issuance of shares to purchasers who
might oppose a hostile takeover bid or oppose any efforts to amend or repeal
certain provisions of the Company's Certificate of Incorporation or By-Laws.
Stockholders have no right under Delaware law or under the Company's
Certificate of Incorporation or By-Laws to dissent from the Reverse Split.
The Common Stock is currently registered under Section 12(g) of the
Exchange Act and as a result, the Company is subject to the periodic reporting
and other requirements of the Exchange Act. The Reverse Split will not affect
the registration of the Common Stock under the Exchange Act, and the Company has
no current intention of terminating its registration under the Exchange Act.
Upon consummation of the Reverse Split, the total number of shares
currently reserved for grants of stock options and all stock options previously
granted would be decreased proportionately. The cash consideration payable per
share upon exercise of the stock options would be increased proportionately.
Exchange of Stock Certificates
As soon as practicable after the Effective Date, the Company intends to
require stockholders to exchange their stock certificates ("Old Certificates")
for new certificates ("New Certificates") representing the number of whole
shares of Common Stock into which their shares of Common Stock have been
converted as a result of the Reverse Split (as well as cash
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in lieu of fractional shares resulting from the reverse split). Stockholders
will be furnished with the necessary materials and instructions for the
surrender and exchange of stock certificates at the appropriate time by the
Company's transfer agent. Stockholders will not be required to pay a transfer or
other fee in connection with the exchange of certificates. STOCKHOLDERS SHOULD
NOT SUBMIT ANY CERTIFICATES TO THE TRANSFER AGENT UNTIL REQUESTED TO DO SO.
Federal Income Tax Consequences of the Reverse Split
The following description of the material federal income tax consequences
of the Reverse Split is based upon the Internal Revenue Code of 1986, as
amended, the applicable Treasury Regulations promulgated thereunder, judicial
authority and current administrative rulings and practices all as in effect on
the date of this Proxy Statement. The Company has not sought and will not seek
an opinion of counsel or a ruling from the Internal Revenue Service regarding
the federal income tax consequences of the Reverse Split. This discussion is for
general information only and does not discuss consequences which may apply to
special classes of taxpayers (e.g., non-resident aliens, broker-dealers or
insurance companies) and does not discuss the tax consequences under the laws of
any foreign, state or local jurisdictions. Stockholders are urged to consult
their own tax advisors to determine the particular consequences to them.
In general, the federal income tax consequences of the proposed Reverse
Split will vary among stockholders depending upon whether they receive the
Fractional Share Purchase Price or solely New Certificates in exchange for Old
Certificates. The Company believes that because the Reverse Split is not part of
a plan to increase periodically a stockholder's proportionate interest in the
Company's assets or earnings and profits, the Reverse Split probably will have
the following federal income tax effects:
1. A stockholder who receives solely New Certificates will not recognize
gain or loss on the exchange. In the aggregate, the stockholder's basis in the
Common Stock represented by New Certificates will equal the holder's basis in
the Common Stock represented by Old Certificates.
2. A stockholder who receives a portion of the Fractional Share Purchase
Price as a result of the Reverse Split will generally be treated as having
received the payment as a distribution in redemption of the Fractional Share, as
provided in Section 302(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). Each affected stockholder will be required to consult such
stockholder's own tax advisor for the tax effect of such redemption (i.e.,
exchange or dividend treatment) in light of such stockholder's particular facts
and circumstances.
3. The Reverse Split will constitute a reorganization within the meaning
of Section 368(a) (1) (E) of the Code, and the Company will not recognize any
gain or loss as a result of the Reverse Split.
The affirmative vote a majority of the outstanding shares of Common
Stock entitled to vote is required for the adoption of this proposed
amendment.
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The Board of Directors unanimously recommends a vote FOR this amendment.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The directors propose that the stockholders ratify the appointment of
Arthur Andersen LLP, as the Company's independent auditors for 1998. Arthur
Andersen LLP was the Company's independent auditors for its last fiscal year.
The report of Arthur Andersen LLP with respect to the Company's financial
statements appears in the Company's annual report on Form 10-K for such year. A
representative of Arthur Andersen, LLP will be at the annual meeting and will
have an opportunity to make a statement if he desires to do so and will be
available to respond to appropriate questions. In the event the stockholders
fail to ratify the appointment, the directors will consider it a directive to
consider other auditors for a subsequent year.
The affirmative vote of holders of a plurality of the shares of Common
Stock present or represented at the Annual Meeting is required for the
ratification of appointment of independent auditors.
The Board of Directors unanimously recommends a vote FOR the ratification
of appointment of independent auditors.
GENERAL
The management of the Company does not know of any matters other than
those stated in this Proxy Statement which are to be presented for action at the
meeting. If any other matters should properly come before the meeting, it is
intended that proxies in the accompanying form will be voted on any such other
matters in accordance with the judgment of the persons voting such proxies.
Discretionary authority to vote on such other matters is conferred by such
proxies upon the persons voting them.
The Company expects representatives of Arthur Andersen LLP, the Company's
independent auditors, to be available at the Annual Meeting and to respond to
pertinent questions of stockholders.
The Company will bear the cost of preparing, assembling and mailing the
Proxy, Proxy Statement and other material which may be sent to the stockholders
in connection with this solicitation. In addition to the solicitation of proxies
by use of the mail, officers and regular employees may solicit the return of
proxies. The Company may reimburse persons holding stock in their names or in
the names of other nominees for their expenses in sending proxies and proxy
material to principals. Proxies may be solicited by mail, personal interview,
telephone and telegraph.
The Company will provide without charge to each person being solicited by
this Proxy Statement, upon the written request of any such person, a copy of the
Annual Report of the Company on Form 10-KSB for the year ended December 31, 1997
(as filed with the Securities and Exchange Commission) including the financial
statements thereto. All such requests should be directed to CSL Lighting
Manufacturing, Inc., 27615 Avenue Hopkins, Valencia, California 91355-3493, Att:
Secretary.
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All proposals of stockholders intended to be included in the proxy
statement to be presented at the 1998 Annual Meeting of Stockholders must be
received at the Company's executive offices no later than December 31, 1998 and
should be directed to the Secretary of the Company.
By Order of the Board of Directors
Mark Allen, Secretary
Dated: July 24, 1998
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EXHIBIT I
Text of Proposed Amendment
To the Certificate of Incorporation
To Effect a 13 to 1 Reverse Stock Split
RESOLVED: THAT THE Certificate of Incorporation of the corporation is amended by
adding a new paragraph at the end of Article Fourth in the following
form:
"C" At the same time as the filing of this Amendment to the Certificate of
Incorporation of the corporation with the Secretary of the State of Delaware
becomes effective, each thirteen (13) shares of common stock $0.01 par value per
share of the corporation (the "Old Common Stock"), issued and outstanding or
held in the treasury of the corporation immediately prior to the effectiveness
of such filing, shall be combined, reclassified and changed into one (1) fully
paid and nonassessable share of Common Stock.
Each holder of record of a certificate or certificates for one or more
shares of the Old Common Stock shall be entitled to receive as soon as
practicable, upon surrender of such certificate, a certificate or certificates
representing the largest whole number of shares of Common Stock to which such
holder shall be entitled pursuant to the provisions of the immediately preceding
paragraph. Any certificate for one or more shares of the Old Common Stock not so
surrendered shall be deemed to represent one share of the Common Stock for each
thirteen (13) shares of the Old Common Stock previously represented by such
certificate.
No fractional share of Common Stock or scrip representing fractional
shares shall be issued upon such combination and reclassification of the Old
Common Stock into shares of Common Stock. Instead of there being issued any
fractional shares of Common Stock which would otherwise be issuable upon such
combination and reclassification, the corporation shall pay to the holders of
the shares of Old Common Stock which were thus combined and reclassified cash in
respect of such fraction in an amount equal to the same fraction of the market
price per share of the Common Stock (as determined in a manner prescribed by the
Board of Directors) at the close of business on the date such combination and
reclassification becomes effective."
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PROXY
CSL LIGHTING MANUFACTURING, INC.
ANNUAL MEETING OF STOCKHOLDERS
This Proxy is solicited by the Board of Directors for the Annual Meeting
of Stockholders to be held on August 28, 1998.
The undersigned hereby appoints Sylvan Gerber and Mark Allen and each of
them, with full power of substitution, the attorneys and proxies of the
undersigned to attend the Annual Meeting of Stockholders of CSL Lighting
Manufacturing, Inc. to be held on August 28, 1998 at 4:00 p.m., and at any
adjournment thereof, hereby revoking any proxies heretofore given, to vote all
shares of Common Stock of the Company held or owned by the undersigned as
indicated on the proposals as more fully set forth in the Proxy Statement, and
in their discretion upon such other matters as may come before the meeting.
1. ELECTION OF DIRECTORS-- Sylvan Gerber, Mark Allen, Michael Smith and Scott
Gilderman.
____ FOR all nominees ____ WITHHOLD authority to vote for all nominees.
____ FOR all nominees, EXCEPT nominee(s) written in below.
2. TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO EFFECT A
THIRTEEN-FOR-ONE REVERSE STOCK SPLIT OF THE COMPANY'S COMMON STOCK.
FOR _____ AGAINST _____ ABSTAIN _____
3. TO RATIFY THE APPOINTMENT OF AUDITORS FOR 1998.
FOR _____ AGAINST _____ ABSTAIN _____
The Board of Directors recommends a vote for each of the foregoing
proposals.
<PAGE>
The shares represented by this proxy will be voted as directed or if no
direction is indicated, will be voted FOR each of the proposals.
Dated:___________, 1998
------------------------
Signature of Stockholder
------------------------
Signature of Stockholder
DATE AND SIGN EXACTLY AS NAME APPEARS ON YOUR STOCK
CERTIFICATE. EACH JOINT TENANT MUST SIGN. WHEN SIGNING
AS ATTORNEY, EXECUTOR, TRUSTEE, ETC., GIVE FULL TITLE.
IF SIGNER IS CORPORATION, SIGN IN FULL CORPORATE NAME BY
AUTHORIZED OFFICER.
