<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
SEL-LEB MARKETING, 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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(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): N/A
<PAGE>
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] 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:
N/A
(2) Form, Schedule or Registration Statement No.:
N/A
(3) Filing Party:
N/A
(4) Date Filed:
N/A
<PAGE>
S E L - L E B M A R K E T I N G, I N C.
495 River Street
Paterson, New Jersey 07524
--------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 27, 1999
--------------------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
Sel-Leb Marketing, Inc. (the "Company") will be held on May 27, 1999 at 10:00
a.m. (local time) at the Company's principal executive offices located at 495
River Street, Paterson, New Jersey 07524, for the following purposes:
1. To elect eight members to the Board of Directors to serve until the next
annual meeting of shareholders and until their respective successors are duly
elected and qualified;
2. To consider and vote upon a proposal to amend the 1995 Stock Option Plan
of the Company to (a) increase by 250,000 shares the number of shares of the
Company's Common Stock available for options to be granted under the Plan and
(b) increase to 30,000 the limit on the total number of shares for which options
may be granted to any one optionee in any year under the Plan; and
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed April 14, 1999 as the record date for the
determination of the shareholders entitled to notice of and to vote at such
meeting or any adjournment thereof, and only shareholders of record at the close
of business on that date are entitled to notice of and to vote at such meeting.
A copy of the Company's Annual Report for the fiscal year ended December
31, 1998 is enclosed herewith.
You are cordially invited to attend the meeting. Whether or not you plan to
attend, you are urged to complete, date and sign the enclosed proxy and return
it promptly. If you receive more than one form of proxy, it is an indication
that your shares are registered in more than one account, and each such proxy
must be completed and returned if you wish to vote all of your shares eligible
to be voted at the meeting.
By Order of the Board of Directors,
Jorge Lazaro
Secretary
Dated: Paterson, New Jersey
April 29, 1999
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT.
THE ATTACHED PROXY STATEMENT SHOULD BE READ CAREFULLY. SHAREHOLDERS ARE URGED TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE. NO
ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOU MAY REVOKE
YOUR PROXY AT ANY TIME BEFORE IT IS VOTED BY GIVING WRITTEN NOTICE TO THE
COMPANY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON THOUGH YOU
HAVE PREVIOUSLY SENT IN YOUR PROXY.
- --------------------------------------------------------------------------------
<PAGE>
S E L - L E B M A R K E T I N G, I N C.
495 River Street
Paterson, New Jersey 07524
-----------------------------
P R O X Y S T A T E M E N T
-----------------------------
The enclosed proxy is solicited on behalf of the Board of Directors of
Sel-Leb Marketing, Inc. (the "Company") pursuant to this proxy statement (to be
mailed on or about April 29, 1999) for use at the Annual Meeting of Shareholders
to be held at the time and place shown in the attached notice of annual meeting
and at any adjournment or postponement thereof (the "Annual Meeting"). Shares
represented by properly executed proxies, if returned in time, will be voted at
the Annual Meeting as specified or, if not otherwise specified, in favor of the
election as directors of the nominees named herein and in favor of the adoption
of the amendment to the Company's 1995 Stock Option Plan (the "Stock Option
Plan") described herein. Such proxies are revocable at any time before they are
exercised by written notice to the Secretary of the Company or by your
requesting the return of the proxy at the Annual Meeting. Any later dated
proxies will revoke proxies submitted earlier.
RECORD DATE
The record date for the determination of holders of common stock, par value
$0.01 per share, of the Company ("Common Stock") who are entitled to notice of
and to vote at the Annual Meeting is April 14, 1999 (the "Record Date").
VOTING SECURITIES
As of the Record Date, 1,105,193 shares of Common Stock of the Company were
outstanding. The number of outstanding shares of Common Stock, and all other
references contained in the Proxy Statement to numbers of shares of Common
Stock, give effect to a one-for-eight reverse stock split effected by the
Company on June 19, 1998 (the "Reverse Stock Split"). Holders of record of
Common Stock as of the Record Date will be entitled to one vote for each share
held. A majority of all shares of Common Stock issued, outstanding and entitled
to vote at the Annual Meeting, present in person or represented by proxy, shall
constitute a quorum. Abstentions and broker non-votes are considered present for
purposes of determining whether the quorum requirement is met. A broker non-vote
occurs when a nominee holds shares for a beneficial owner but cannot vote on a
proposal because the nominee does not have discretionary voting power and has
not received instructions from the beneficial owner as to how to vote the
shares.
With respect to the matters to come before the shareholders at the Annual
Meeting, (i) the election of directors (Proposal No. 1) shall be determined by a
plurality of the voting power present in person or represented by proxy at the
Annual Meeting and entitled to vote and (ii) the proposal to approve the
amendment to the Stock Option Plan (Proposal No. 2) shall be determined by the
affirmative vote of a majority of the voting power present in person or
represented by proxy at the Annual Meeting and entitled to vote. With respect to
the election of directors, only shares that are voted in favor of a particular
nominee will be counted towards such nominee's achievement of a plurality.
Shares present at the Annual Meeting that are not voted for a particular
nominee, shares present by proxy where the shareholder properly withholds
authority to vote for such nominee, and broker non-votes will not be counted
towards such nominee's achievement of a plurality. With respect to Proposal No.
2, shares with respect to which a shareholder abstains from voting or directs
his proxy to abstain from voting and shares represented
<PAGE>
by broker non-votes will have the same effect as votes against the matter since
they are not affirmative votes for the matter.
PRINCIPAL SHAREHOLDERS OF THE COMPANY
The following table sets forth, as of the Record Date, the beneficial
ownership of shares of Common Stock by (i) each person who is known by the
Company to own more than 5% of the outstanding shares of Common Stock, (ii) each
director of the Company, each nominee for election as a director of the Company
and each executive officer of the Company listed in the Summary Compensation
Table and (iii) all of the Company's officers and directors as a group:
<TABLE>
<CAPTION>
Amount and Nature of
Name and Address of Beneficial Owner(1) Beneficial Ownership(2) Percent owned
- --------------------------------------- ----------------------- -------------
<S> <C> <C>
Harold Markowitz 179,309(3) 16.1%
Paul Sharp 179,371(4) 16.1%
Jorge Lazaro 179,309(5) 16.1%
Jan Mirsky 109,304(6) 9.0%
Jack Koegel 42,750(7) 3.7%
Stanley R. Goodman 3,750(8) *
Edward C. Ross 1,875(9) *
L. Douglas Bailey 2,500(10) *
All officers and directors 698,168(3)(10) 54.4%
as a group (8 persons)
</TABLE>
- -------------------------
* Less than 1%
(1) The address for each such person is c/o Sel-Leb Marketing, Inc., 495 River
Street, Paterson, New Jersey 07524.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this Proxy
Statement upon the exercise of options or warrants. Each beneficial owner's
percentage ownership is determined by assuming that options or warrants
that are held by such person (but not those held by any other person) and
which are exercisable within 60 days from the date of this Proxy Statement
have been exercised. Unless otherwise noted, the Company believes that all
persons named in the table have sole voting and investment power with
respect to all shares of Common Stock beneficially owned by them.
(3) Includes 6,484 shares of Common Stock issuable upon exercise of options
granted to Mr. Markowitz under the Stock Option Plan. Does not include
13,828 shares of Common Stock issuable upon exercise of options granted to
Mr. Markowitz under the Stock Option Plan which are not exercisable within
60 days of the date of this Proxy Statement.
- 2 -
<PAGE>
(4) Includes 6,484 shares of Common Stock issuable upon exercise of options
granted to Mr. Sharp under the Stock Option Plan. Does not include 13,828
shares of Common Stock issuable upon exercise of options granted to Mr.
Sharp under the Stock Option Plan which are not exercisable within 60 days
of the date of this Proxy Statement.
(5) Includes 6,484 shares of Common Stock issuable upon exercise of options
granted to Mr. Lazaro under the Stock Option Plan. Does not include 13,828
shares of Common Stock issuable upon exercise of options granted to Mr.
Lazaro under the Stock Option Plan which are not exercisable within 60 days
of the date of this Proxy Statement.
(6) Includes (i) 47,711 shares of Common Stock issuable upon exercise of a
warrant granted to Mr. Mirsky by the Company and (ii) 61,593 shares of
Common Stock issuable upon exercise of options granted to Mr. Mirsky under
the Stock Option Plan. Does not include 13,657 shares of Common Stock
issuable upon exercise of options granted to Mr. Mirsky under the Stock
Option Plan which are not exercisable within 60 days of the date of this
Proxy Statement.
(7) Includes 42,125 shares of Common Stock issuable upon the exercise of
options granted to Mr. Koegel under the Stock Option Plan. Does not include
13,125 shares of Common Stock issuable upon exercise of options granted to
Mr. Koegel under the Stock Option Plan which are not exercisable within 60
days of the date of this Proxy Statement.
(8) Includes 3,750 shares of Common Stock issuable upon exercise of options
granted to Mr. Goodman under the Company's 1995 Nonemployee Directors'
Stock Option Plan (the "Nonemployee Directors' Plan").
(9) Includes 1,875 shares of Common Stock issuable upon exercise of options
granted to Mr. Ross under the Nonemployee Directors' Plan.
(10) Includes 2,500 shares of Common Stock issuable upon exercise of options
granted to Mr. Bailey under the Nonemployee Directors' Plan.
- 3 -
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Effective October 1, 1998, Carl A. Bellini, a director of the Company since
May 1997, resigned from the Board of Directors for personal reasons. Following
such resignation, the Board of Directors, pursuant to authority granted to it by
the Company's Amended and Restated By-Laws, elected to reduce the size of the
Board of Directors from nine members to eight members. The Board of Directors
has nominated the eight individuals whose names are set forth below for election
to the Board of Directors, each to hold office until the next Annual Meeting of
Shareholders and until his successor is duly elected and qualified. Unless
otherwise specified, the enclosed proxy will be voted in favor of the persons
named below, all of whom are now directors of the Company. In the event that any
of such nominees for election at the Annual Meeting should become unavailable
for election for any reason not presently known, it is intended that votes will
be cast pursuant to the accompanying proxy for such substitute nominees as the
Board of Directors may designate unless the Board of Directors reduces the
number of directors. The directors are to be elected by the affirmative vote of
the holders of a plurality of the shares of Common Stock entitled to vote and
present in person or represented by proxy at the Annual Meeting.
Recommendation of Board of Directors
The Board of Directors recommends a vote FOR election of the nominees
identified below as directors of the Company.
Information Regarding Nominees
The information set forth below, furnished to the Board of Directors by the
respective individuals, shows as to each nominee for election as a director of
the Company (i) his name and age, (ii) his principal position with the Company,
(iii) his principal occupation or employment, if different, and (iv) the month
and year in which he began to serve as a director.
<TABLE>
<CAPTION>
Principal Occupation
Name and Age or Employment Director Since
- ------------ -------------------- --------------
<S> <C> <C>
Harold Markowitz (58) Chairman of the Board of the Company September 1993
Paul Sharp (49) President and Chief Executive Officer of December 1994
the Company
Jan S. Mirsky (58) Executive Vice President - Finance of December 1994
the Company
Jorge Lazaro (50) Executive Vice President and Secretary September 1993
of the Company
Jack Koegel (47) Vice Chairman of the Board and Chief December 1994
Operating Officer of the Company
Stanley R. Goodman (69) Partner, Goodman & Saperstein (law firm) December 1994
</TABLE>
- 4 -
<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Name and Age or Employment Director Since
- ------------ -------------------- --------------
<S> <C> <C>
Edward C. Ross (55) Partner, Finkle, Ross & Rost December 1994
(accounting firm)
L. Douglas Bailey (57) President, Bailey & Associates, Inc. March 1996
(consulting firm); President and Chief
Executive Officer, Precision Fixtures
and Graphics (manufacturing company)
</TABLE>
Biographical Information Regarding Directors
Harold Markowitz, a co-founder of the Company, has been Chairman of the
Board of the Company since December 1994. Prior to such time, he served as
President and a director of the Company from its inception in September 1993 to
December 1994. Mr. Markowitz was also a co-founder of Linette Cosmetics, Inc.
("Linette Cosmetics") and served as a director of Linette Cosmetics from its
inception in 1985 until the May 1995 merger of Linette Cosmetics with and into
the Company (the "Linette Merger"). In 1986, Mr. Markowitz co-founded Beauty
Labs, Inc. ("Beauty Labs"), a publicly-held company which marketed cosmetics and
other accessories to mass merchandisers, and served as the Chairman of the Board
and a director of Beauty Labs from 1987 to 1991.
Paul Sharp has served as Chief Executive Officer of the Company since May
1995 and as President and a director of the Company since December 1994. Mr.
Sharp also served as Secretary and Treasurer and a director of Linette Cosmetics
from 1990 to December 1994. From 1987 to 1989, Mr. Sharp served as Corporate
Vice President of Zayre Corporation, a mass merchandising retailer, where he was
responsible for the fragrance, cosmetic and health and beauty product lines.
Prior to 1987, Mr. Sharp served in various other capacities at Zayre Corporation
and on the Retail Advisory Board of The Gillette Company, a manufacturer of
personal care products, and was engaged as a retail marketing consultant for
Smith-Kline Beecham Company, a manufacturer of health and beauty aids and
pharmaceuticals.
Jan Mirsky has served as Executive Vice President-Finance of the Company
since January 1995 and as a director of the Company since December 1994 and,
from January 1995 to June 1997 served as the Chief Operating Officer of the
Company. In addition, he acted as a marketing consultant to the Company from
January 1994 to January 1995, at which time he became an employee of the
Company. From 1991 to January 1995, Mr. Mirsky was engaged as an independent
management, marketing and financial consultant. Mr. Mirsky also served as a
director of Builders Transport, Inc., a publicly-held trucking company, from
1992 to 1995, and from 1984 to 1991 served as the Chief Financial Officer and a
director of Angio-Medical Corporation, a publicly-held bio-pharmaceutical
company co-founded by him which ceased conducting business in 1991.
Jorge Lazaro, a co-founder of the Company, has been Executive Vice
President of the Company since May 1995 and the Secretary and a director of the
Company since its inception in September 1993. Mr. Lazaro also served as the
President of the Company from December 1994 to May 1995 and as Treasurer of the
Company from its inception to December 1994. Mr. Lazaro was also a co-founder of
Linette Cosmetics and served as President and a director of Linette Cosmetics
from its inception in 1985 until the Linette Merger, and has served as the
Secretary and Treasurer and as a director of Lea Cosmetics, Inc. ("Lea
Cosmetics") from its inception in October 1992 until the merger of Lea Cosmetics
with and into the Company in August 1995.
Jack Koegel has served as the Vice Chairman of the Company since September
1995, as the Chief Operating Officer of the Company since June 1997 and as a
director of the Company since December 1994. From 1993 until
- 5 -
<PAGE>
September 1995, Mr. Koegel served as President of Retail Concepts 2000, Inc., a
retail consulting company founded by him. Mr. Koegel served as President of Twin
Valu Stores (a division of Super Valu Inc.) from 1991 to 1993 and as Executive
Vice President of ShopKo Stores/Twin Valu Stores (a division of Super Valu Inc.)
from 1989 to 1991.
Stanley R. Goodman has served as Assistant Secretary of the Company since
May 1995 and as a director of the Company since December 1994. Since 1989, Mr.
Goodman has been a partner at Goodman & Saperstein, a law firm specializing in
statutory and regulatory issues concerning pharmaceuticals, cosmetics and
related consumer products. He also served as a director and General Counsel of
Beauty Labs from 1987 until the time of its merger with Robern Industries, Inc.
in 1992.
Edward C. Ross has served as a director of the Company since December 1994.
Mr. Ross has been a partner in the accounting firm of Finkle, Ross & Rost since
1975. He has also been involved as a principal in various start-up companies as
well as established operating businesses, ranging in type from manufacturing to
real estate to financial consulting. Mr. Ross is a Certified Public Accountant
in New York and New Jersey, and is a member of the American Institute of
Certified Public Accountants.
L. Douglas Bailey has served as a director of the Company since March 1996.
Beginning in 1996, Mr. Bailey became the President and Chief Executive Officer
of Precision Fixtures and Graphics, a manufacturer of store fixtures, and since
1995 he has served as President of Bailey & Associates, Inc., a consulting firm
for the retail industry. Mr. Bailey also serves as a developer for Regent
Properties, an industrial property development and management company founded
and operated by Mr. Bailey and his wife. From 1993 to 1995, Mr. Bailey served as
President of Home Shopping Club, Inc., a subsidiary of Home Shopping Network,
Inc. and the operator of Home Shopping Network, a live, customer-interactive
retail sales television network, and from 1970 to 1992 served as the Senior Vice
President of Eckerd Drug Company, a retail drug store chain. Mr. Bailey also
serves as a director of 800 Travel Systems, Inc., a publicly-held discount
travel reservations company.
Meetings and Committees of the Board
The Board of Directors of the Company held three meetings during 1998 and
acted by written consent on three occasions. All directors attended 75% or more
of the total number of meetings of the Board and of the committees of which they
were members.
The Executive Committee, the Audit Committee, the Stock Option Committee
and the Compensation Committee are the only standing committees of the Board.
There is no formal nominating committee; the Board of Directors or the Executive
Committee performs this function.
The Executive Committee, which is currently composed of Mr. Markowitz, its
Chairman, and Messrs. Sharp, Mirsky, Lazaro and Koegel, has all the powers of
the Board of Directors in the management of the business and affairs of the
Company, except as such powers are limited by the New York Business Corporation
Law. During 1998, the Executive Committee held twelve meetings.
The Audit Committee, which is currently composed of Mr. Ross, its Chairman,
and Messrs. Goodman and Koegel, consults with the auditors of the Company and
such other persons as the members deem appropriate, reviews the preparations for
and scope of the audit of the Company's annual financial statements, makes
recommendations as to the engagement and fees of the independent auditors, and
performs such other duties relating to the financial statements of the Company
as the Board of Directors may assign from time to time. The Audit Committee held
one meeting during 1998.
- 6 -
<PAGE>
The Stock Option Committee, which is currently composed of Mr. Goodman, its
Chairman, and Mr. Ross, has all of the powers of the Board of Directors,
including the authority to issue stock or other securities of the Company, in
respect of any matters relating to the administration of the Company's stock
option plans (other than the grant of options under the Non-Employee Directors'
Plan). The Stock Option Committee held eight meetings during 1998.
The Compensation Committee, which is currently composed of Mr. Markowitz,
its Chairman, and Messrs. Goodman and Ross, reviews with the Board of Directors
on a periodic basis existing and proposed compensation plans, programs and
arrangements for executive officers and other employees. All recommendations
regarding compensation arrangements for Mr. Markowitz are made solely by Messrs.
Goodman and Ross. The Compensation Committee held three meetings during 1998.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires officers and directors of the Company and holders of
more than 10% of the Common Stock (collectively, "Reporting Persons") to file
reports of ownership and changes in ownership of the Common Stock with the
Securities and Exchange Commission within certain time periods and to furnish
the Company with copies of all such reports. Based solely on its review of the
copies of such reports furnished to the Company by such Reporting Persons or on
the written representations of such Reporting Persons that no reports on Form 5
were required, the Company believes that during the year ended December 31,
1998, all of the Reporting Persons complied with their Section 16(a) filing
requirements.
Directors' Compensation
Each director who is not an employee of the Company was paid $500 for each
meeting of the Board of Directors attended by such director during 1998. The
Company also reimbursed each such director for all reasonable expenses incurred
by him in attending meetings. In addition, non-employee directors of the Company
are eligible to participate in the Nonemployee Director's Plan, pursuant to
which an aggregate of 37,500 shares of Common Stock may be granted to
non-employee directors. Pursuant to such Plan, each non-employee director is
automatically granted (i) upon becoming a director of the Company, an option to
purchase 625 shares of Common Stock and (ii) each year, on the day of the
Company's annual meeting of shareholders, an option to purchase 625 shares of
Common Stock. To date, the Company has granted to Messrs. Bailey, Goodman and
Ross, pursuant to the Nonemployee Directors' Plan, options to purchase 2,500
shares, 3,750 shares and 3,750 shares, respectively.
- 7 -
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding the
compensation in each of the last three fiscal years of the person who served as
the Company's Chief Executive Officer during the fiscal year ended December 31,
1998, and the Company's four most highly compensated officers (other than the
Chief Executive Officer) who were serving as officers at December 31, 1998
(collectively, the "Named Officers").
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
------------------------------- ------------------------- -------
Other
Annual Restricted Securities All Other
Compen- Stock Underlying LTIP Compen-
Name and Principal Fiscal Bonus sation Award(s) Options/ Payouts sation
Position Year Salary ($) ($) ($) ($) SARs(#) ($) ($)
- -------------------- ----- ---------- ----- --------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul Sharp 1998 101,202 -0- 6,104(1) -0- 15,313(2) -0- -0-
President and 1997 93,750 -0- 8,766(1) -0- 2,813(3) -0- -0-
Chief Executive 1996 99,159 -0- 8,628(1) -0- 2,813(3) -0- -0-
Officer
Harold Markowitz 1998 101,202 -0- 13,085(4) -0- 15,313(2) -0- -0-
Chairman of the 1997 104,766 -0- 12,060(4) -0- 2,813(3) -0- -0-
Board 1996 88,143 -0- 12,434(4) -0- 2,813(3) -0- -0-
Jan S. Mirsky 1998 93,106 -0- 6,926(5) -0- 61,750(6) -0- -0-
Executive Vice 1997 84,923 -0- 5,554(5) -0- 2,125(3) -0- -0-
President - Finance 1996 91,226 -0- 5,554(5) -0- 2,125(3) -0- -0-
Jorge Lazaro 1998 101,202 -0- 11,358(7) -0- 15,313(2) -0- -0-
Executive Vice 1997 93,750 -0- 9,246(7) -0- 2,813(3) -0- -0-
President and 1996 99,159 -0- 9,600(7) -0- 2,813(3) -0- -0-
Secretary
Jack Koegel 1998 80,962 -0- 14,400(8) -0- 37,750(9) -0- -0-
Vice Chairman of 1997 77,750 -0- 14,400(8) -0- 6,250(10)
the Board and Chief 1996 77,885 -0- 14,400(8) -0- -0- -0- -0-
Operating Officer
</TABLE>
- ----------
(1) Represents amounts paid by the Company with respect to an automobile for
use by Mr. Sharp in connection with his services to the Company.
(2) Reflects (i) the October 8, 1998 grant by the Company to each of Messrs.
Sharp, Markowitz and Lazaro of 12,500 options, each with an exercise price
of $.875 per share (the fair market value of the Common Stock
- 8 -
<PAGE>
on October 8, 1998), and (ii) the October 8, 1998 adjustment of the
exercise price of 2,813 outstanding options held by each of Messrs. Sharp,
Markowitz and Lazaro, in connection with which the Company cancelled the
outstanding options and granted a corresponding number of new options. See
"-- Repricing of Certain Options During Fiscal 1998."
(3) On August 18, 1997, the Company adjusted the exercise price of 2,813
outstanding options originally granted to each of Messrs. Sharp, Markowitz
and Lazaro on December 26, 1996 and 2,125 outstanding options originally
granted to Mr. Mirsky on December 26, 1996. In connection with such
repricing, the Company cancelled the outstanding options, each with an
exercise price of $45.00, and granted a corresponding number of new
options, each with an exercise price of $4.00 (the fair market value of the
Common Stock on the date of repricing).
(4) Includes for 1998, 1997 and 1996 (i) $10,800, $9,900 and $10,434,
respectively, paid by the Company with respect to an automobile for use by
Mr. Markowitz in connection with his services to the Company and (ii)
$2,285, $2,160 and $2,000, respectively, for certain membership fees paid
by the Company on behalf of Mr. Markowitz.
(5) Represents amounts paid by the Company with respect to an automobile for
use by Mr. Mirsky in connection with his services to the Company.
(6) Reflects the October 8, 1998 grant by the Company to Mr. Mirsky of 12,500
options, each with an exercise price of $.875 per share (the fair market
value of the Common Stock on October 8, 1998), and (ii) the October 8, 1998
and November 4, 1998 adjustments of an aggregate of 61,750 outstanding
options held by Mr. Mirsky, in connection with which, in each case, the
Company cancelled the outstanding options and granted a corresponding
number of new options. See "-- Repricing of Certain Options During Fiscal
1998."
(7) Represents amounts paid by the Company with respect to an automobile for
use by Mr. Lazaro in connection with his services to the Company.
(8) Includes for 1997, 1996 and 1995 (i) $4,800, $4,800 and $1,200,
respectively, paid by the Company to Mr. Koegel with respect to medical
insurance purchased directly by him and (ii) $9,600, $9,600 and $2,400,
respectively, paid by the Company with respect to an automobile for use by
Mr. Koegel in connection with his services to the Company.
(9) Reflects (i) the October 8, 1998 grant by the Company to Mr. Koegel of
12,500 options, each with an exercise price of $.875 per share (the fair
market value of the Common Stock on October 8, 1998), and (ii) the June 4,
1998 and November 4, 1998 adjustments of the exercise price of an aggregate
of 40,875 outstanding options held by Mr. Koegel, in connection with which,
in each case, the Company cancelled the outstanding options and granted a
corresponding number of new options. See "-- Repricing of Certain Options
During Fiscal 1998."
(10) On July 15, 1997, the Company adjusted the exercise price of 6,250
outstanding options originally granted to Mr. Koegel on September 27, 1995.
In connection with such repricing, the Company cancelled the outstanding
options, each with an exercise price of $22.00, and granted a corresponding
number of new options, each with an exercise price of $13.00 (the fair
market value of the Common Stock on the date of repricing).
- 9 -
<PAGE>
Option/SAR Grants During Fiscal 1998
The following table provides information related to options granted to the
Named Executive Officers during fiscal 1998. No stock appreciation rights were
issued by the Company during fiscal 1998.
<TABLE>
<CAPTION>
% of Total
Number of Options/SARs
Securities Granted to
Underlying Employees
Options/SARs in Fiscal Exercise or Base Expiration
Name Granted(#) Year Price ($/sh) Date
---- ------------ ------------ ---------------- ----------
<S> <C> <C> <C> <C>
Paul Sharp 12,500(1) 6.6% $.875 10/7/08
2,813(2) 1.5% $.875 12/25/06
Harold Markowitz 12,500(1) 6.6% $.875 10/7/08
2,813(2) 1.5% $.875 12/25/06
Jan S. Mirsky 12,500(1) 6.6% $.875 10/7/08
2,125(2) 1.1% $.875 12/25/06
59,625(3) 31.4% $6.50 7/12/05
Jorge Lazaro 12,500(1) 6.6% $.875 10/7/08
2,813(2) 1.5% $.875 12/25/06
Jack Koegel 12,500(1) 6.6% $.875 10/7/08
31,500(4) 16.6% $7.50 9/26/05
6,250(4) 3.3% $6.50 9/26/05
3,125(5) 1.6% $4.00 9/26/05
</TABLE>
- ----------
(1) Reflects the October 8, 1998 grant by the Company to each of Messrs.
Markowitz, Sharp, Mirsky, Lazaro and Koegel of 12,500 options, each with an
exercise price of $.875 per share.
(2) Reflects the October 8, 1998 repricing of 2,813, 2813, 2,125 and 2,813
outstanding options originally granted to Messrs. Markowitz, Sharp, Mirsky
and Lazaro, respectively, on December 26, 1996. In connection with such
repricing, the Company cancelled the outstanding options and granted a
corresponding number of new options. See "-- Repricing of Certain Options
During Fiscal 1998."
(3) Reflects the November 4, 1998 repricing of 59,625 outstanding options
originally granted to Mr. Mirsky on July 13, 1995. In connection with such
repricing, the Company cancelled the outstanding options and granted a
corresponding number of new options. See "-- Repricing of Certain Options
During Fiscal 1998."
(4) Reflects the November 4, 1998 repricing of an aggregate of 37,750
outstanding options originally granted to Mr. Koegel on September 27, 1995.
In connection with such repricing, the Company cancelled the outstanding
options and granted a corresponding number of new options. See "--
Repricing of Certain Options During Fiscal 1998."
(5) Reflects the June 4, 1998 repricing of 3,125 outstanding options originally
granted to Mr. Koegel on September 27, 1995. In connection with such
repricing, the Company cancelled the outstanding options and granted a
corresponding number of new options. See "-- Repricing of Certain Options
During Fiscal 1998."
- 10 -
<PAGE>
Aggregated Option/SAR Exercises During Fiscal 1998 and Year End Option/SAR
Values
The following table provides information related to options exercised by
the Named Executive Officers during fiscal 1998 and the number and value of
options and stock appreciation rights held at fiscal year end which are
currently exercisable. No stock appreciation rights were exercised during fiscal
1998.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Shares Options/SARs at FY-End at FY-End ($)(1)
Acquired on Value ----------------------------- -----------------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Paul Sharp -0- -0- 5,234 10,078 $8,505 $16,377
Harold Markowitz -0- -0- 5,234 10,078 $8,505 $16,377
Jan S. Mirsky -0- -0- 64,343 9,907 $7,667 $16,099
Jorge Lazaro -0- -0- 5,234 10,078 $8,505 $16,377
Jack Koegel -0- -0- 44,000 9,375 $5,078 $15,234
</TABLE>
- ----------
(1) The values of Unexercised In-the-Money Options/SARs represents the
aggregate amount of the excess of $2.50, the closing sales price for a
share of Common Stock on December 31, 1998, over the relevant exercise
price of all "in-the-money" options.
Repricing of Certain Options During Fiscal 1998
In June 1988, the Company repriced 3,125 options that had originally been
granted in September 1995 to Mr. Koegel, the Vice Chairman of the Board and
Chief Operating Officer of the Company. Pursuant to such repricing, the Company
cancelled the outstanding options, each with an exercise price of $22.00 per
share, and granted a corresponding number of new shares, each with an exercise
price of $4.00 per share. In October 1998, the Company repriced 2,813, 2,813,
2,125 and 2,813 options, respectively, that had originally been granted in
December 1996 to Mr. Sharp, the President and Chief Executive Officer of the
Company, Mr. Markowitz, the Chairman of the Board of the Company, Mr. Mirsky,
the Executive Vice President - Finance of the Company, and Mr. Lazaro, the
Executive Vice President of the Company. Pursuant to such repricing, the Company
cancelled the outstanding options, each with an exercise price of $4.00 per
share, and granted a corresponding number of new options, each with an exercise
price of $.875 per share (representing the fair market value of the Common Stock
at the time of the repricing). In November 1998, the Company repriced an
additional 37,750 options that had originally been granted in September 1995 to
Mr. Koegel. Pursuant to such repricing, the Company (i) cancelled 31,500
outstanding options, each with the original exercise price of $22.00 per share,
and granted a corresponding number of new options, each with an exercise price
of $7.50 per share, and (ii) cancelled 6,250 outstanding options, each of which
had an original exercise price of $22.00 per share and was repriced to $13.00
per share in July 1997, and granted a corresponding number of new options with
an exercise price of $6.50 per share. In addition, in November 1998 the Company
also repriced 59,625 options that had originally been granted to Mr. Mirsky in
July 1995. Pursuant to such repricing, the Company cancelled the outstanding
options, each with an exercise price of $13.28 per share, and granted a
corresponding number of new options, each with an exercise price of $6.50 per
share. On the date of the November 1998 option repricings, the closing sale
price of the Common Stock was $2.625. The Board of Directors decided to reprice
the foregoing options as a result of a long-term decline in the market price of
the Company's Common Stock which the Board believed would make it unlikely that
any holder would exercise the
- 11 -
<PAGE>
options at the then existing exercise price. The Board also believed that the
purpose behind its grant of such options -- i.e., to act as additional
motivation for the Company's officers -- would be undermined by the decline in
the price of the Common Stock to a level substantially below the exercise price
of the options.
Description of Stock Option Plan
Pursuant to the Stock Option Plan, as amended, stock options covering an
aggregate of 231,250 shares of the Company's Common Stock may be granted to
employees (including officers), directors, consultants and other persons who
perform substantial services for or on behalf of the Company. The Stock Option
Plan is administered by the Stock Option Committee (the "Committee"), which is
vested with complete authority to administer and interpret the Stock Option
Plan, to determine the terms upon which options may be granted, to prescribe,
amend and rescind such interpretations and determinations and to grant options.
Under the Stock Option Plan, "incentive stock options" ("Incentive Options")
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), may be granted to employees (including officers), and
non-incentive stock options ("Non-incentive Options") may be granted to
employees and to other persons (including directors) who perform substantial
services for or on behalf of the Company. Incentive Options and Non-incentive
Options are collectively referred to herein as "Options."
The price at which shares covered by an Option granted under the Stock
Option Plan may be purchased pursuant thereto shall be determined by the
Committee, but shall be no less than the par value of such shares and no less
than the Fair Market Value (as hereinafter defined) of such shares on the date
of grant; provided, however, that in the case of Incentive Options, if the
optionee directly or indirectly beneficially owns more than 10% of the total
combined voting power of all of the outstanding voting stock of the Company (a
"10% Holder"), the purchase price shall not be less than 110% of the Fair Market
Value on the date of grant. As used herein, the term "Fair Market Value" means
the last sale price of a share of Common Stock as reported by the principal
quotation service on which the Common Stock is listed for the date of grant, if
available, or, if the last sale prices are not reported, the mean of the high
bid and low asked prices of a share of Common Stock as reported by such
principal quotation service for the date of grant; provided, however, that if no
such report is available for the date of grant, the Fair Market Value shall be
the last sale price or the mean of the high bid and low asked prices, as the
case may be, on the day next preceding such day for which there was a report;
and provided further, however, that if no such representative quotes are
available, the Fair Market Value shall mean the amount determined by the
Committee to be the fair market value pursuant to any reasonable method in
accordance with applicable regulations of the Internal Revenue Service.
The purchase price of shares issuable upon exercise of an Option granted
under the Stock Option Plan may be paid in cash or by delivery of shares of
Common Stock having an aggregate Fair Market Value on the date of exercise equal
to the exercise price of the option. The Company may also loan the purchase
price to the optionee, or guarantee third-party loans to the optionee, on terms
and conditions acceptable to the Committee.
Under the Stock Option Plan, the total number of shares for Common Stock
for which options may be granted to any one person in any given calendar year
may not exceed 18,750. The Stock Option Plan also provides that the aggregate
fair market value of the stock with respect to which Incentive Options are first
exercisable by any employee during any calendar year under the Stock Option Plan
and all other stock option plans of the Company shall not exceed $100,000. To
the extent that the Fair Market Value of the stock with respect to which
Incentive Options are first exercisable by any employee during any calendar year
(under all plans of the Company) exceeds $100,000, such Options shall be treated
as Options which are not Incentive Options. The number of shares covered by an
Option is subject to adjustment for stock dividends, stock splits, mergers,
consolidations, combinations of shares, reorganizations and recapitalizations.
- 12 -
<PAGE>
The Stock Option Plan provides that Options may be exercised within a
period not exceeding ten years after the date of grant, except that the term of
any Incentive Options granted to a 10% Holder may not exceed five years from the
date of grant. Options are generally non-transferable except by will or by the
laws of descent and distribution, and during a participant's lifetime are
exercisable only by him or her. In addition, pursuant to the Stock Option Plan,
various limitations may apply to the exercise of Options by optionees whose
employment is terminated on retirement, disability or otherwise.
As of April 28, 1999, of the 231,250 shares of Common Stock available for
issuance under the Stock Option Plan, 48,683 of such shares have been issued in
connection with exercises of options granted under the Stock Option Plan and
175,257 of such shares are reserved for issuance upon exercise of currently
outstanding options. Accordingly, only 7,310 shares of Common Stock are
available for future awards under the Stock Option Plan. The Board of Directors
has adopted, subject to the approval of the Company's shareholders, an amendment
to the Stock Option Plan pursuant to which the number of shares available for
issuance under the Plan will be increased to 481,250. See "Proposal No. 2 --
Amendment of Stock Option Plan."
Description of Employment Agreements, Severance Arrangements and Change of
Control Arrangements
Employment Agreements with Messrs. Markowitz, Sharp and Lazaro. On June 30,
1995, the Company entered into identical employment agreements with each of
Messrs. Markowitz, Sharp and Lazaro. Pursuant to such agreements, Messrs.
Markowitz, Sharp and Lazaro are employed as the Chairman of the Board, the
President and Chief Executive Officer, and an Executive Vice President,
respectively, of the Company. The agreements provide that such individuals shall
devote substantially all of their working time and attention to the business of
the Company. Each such agreement has an initial term of five years commencing
July 20, 1995, and shall be automatically renewable for successive one-year
periods unless either the Company or the employee elects not to renew his
employment. Pursuant to the employment agreements, as amended, Messrs.
Markowitz, Sharp and Lazaro each received a base salary in 1998 of $101,202, and
are each entitled to receive an annual base salary of $125,000 in each year
during the remainder of the term of his respective agreement, subject to such
increases as shall be approved by the Board of Directors of the Company. The
employment agreements also provide that each of Messrs. Markowitz, Sharp and
Lazaro will be eligible to participate in any medical insurance, pension, profit
sharing or other employment benefit programs generally made available to senior
executives of the Company.
Employment Agreement with Jan Mirsky. On June 30, 1995, the Company entered
into an employment agreement with Mr. Mirsky, pursuant to which Mr. Mirsky is
employed as the Executive Vice President - Finance of the Company and is to
devote substantially all of his working time and attention to the business of
the Company. Such agreement, which became effective July 13, 1995, had an
initial term of eighteen months, was automatically renewed for a one-year period
on each of January 13, 1997, 1998 and 1999 and is automatically renewable for
successive one-year periods unless either the Company or Mr. Mirsky elects not
to renew his employment. Pursuant to the employment agreement, as amended, Mr.
Mirsky received a base salary in 1998 of $93,106, and is entitled to receive an
annual base salary of $115,000 in each year during the remainder of the term of
the agreement, subject to such increases as shall be approved by the Board of
Directors of the Company. The agreement further provides that Mr. Mirsky will be
eligible to participate in any medical insurance, pension, profit sharing or
other employment benefit programs generally made available to senior executives
of the Company.
Employment Agreement with Jack Koegel. Pursuant to the Company's employment
agreement with Mr. Koegel, which became effective September 27, 1995, Mr. Koegel
is employed by the Company as the Vice Chairman of the Company and, since June
1997, has been employed as the Chief Operating Officer of the Company. The
agreement provides that Mr. Koegel is to devote substantially all of his working
time and attention to the business of the Company. The agreement provides that
services performed by Mr. Koegel shall be rendered in the St. Paul, Minnesota
metropolitan area; however, Mr. Koegel and the Company have subsequently
mutually agreed that his services shall be performed at the Company's executive
offices in Paterson, New Jersey. Such agreement had an initial term of
thirty-six months, was automatically renewed for a one-year period on September
23, 1998 and is
- 13 -
<PAGE>
automatically renewable for successive one-year periods unless either the
Company or Mr. Koegel elects not to renew his employment. Pursuant to the
employment agreement, as amended, Mr. Koegel received a base salary of $80,962
in 1998, and is entitled to receive an annual base salary of $100,000 in each
year during the remainder of the term of the agreement, subject to such
increases as shall be approved by the Board of Directors of the Company. The
agreement further provides that Mr. Koegel will be eligible to participate in
any pension, profit sharing or other employment benefit programs generally made
available to senior executives of the Company other than medical insurance
benefits. However, the agreement provides that the Company will pay Mr. Koegel
$400 per month to cover costs incurred by him in purchasing medical insurance
directly. In addition, pursuant to the agreement, the Company provides Mr.
Koegel with a monthly automobile allowance of $800 and, in 1995, paid an
aggregate of $25,000 for the construction of an office for him in St. Paul,
Minnesota.
Pursuant to the employment agreement, Mr. Koegel was granted an option in
September 1995 to purchase an aggregate of 46,875 shares of Common Stock at an
exercise price of $22.00 per share. On July 15, 1997, the Company adjusted the
exercise price of 6,250 of such options to $13.00 per share. On June 4, 1998,
the Company adjusted the exercise price of an additional 3,125 of such options
to $4.00 per share, and on November 4, 1998, the Company adjusted the exercise
price of 31,500 of such options to $7.50 per share. In addition, on November 4,
1998, the Company also adjusted to $6.50 per share the exercise price of the
6,250 options which had been repriced in July 1997 and, subsequent to the end of
fiscal 1998, the Company adjusted the exercise price of such options to $4.00
per share. Mr. Koegel's agreement provides that, in the event the Company grants
options, either under the Stock Option Plan or any other stock option plan
adopted by the Company, to Messrs. Markowitz, Sharp, Mirsky and Lazaro during
the term of Mr. Koegel's employment, Mr. Koegel shall be entitled to receive a
proportionate amount of additional options on such terms as may be established
by the Board of Directors.
Severance Arrangements. Each of the employment agreements with Messrs.
Markowitz, Sharp, Lazaro, Mirsky and Koegel provides that the employee's
employment shall terminate (i) for "cause" (as defined in each of the respective
agreements), (ii) by reason of the employee's disability, resignation or death,
(iii) upon the expiration of the employment agreement in accordance with its
terms or (iv) in the event the employee is no longer employed by the Company
after a "Change of Control" (as defined below). Each of the agreements further
provides that, in the event the employee's employment terminates for any reason
(other than termination without cause or in connection with a Change of
Control), the employee shall be entitled to receive his annual base salary, and
any expense reimbursements, due and owing to him at the time of such
termination. In the event the employee is terminated without cause, the employee
shall be entitled to receive annual base salary and expense reimbursements then
due and owing to him, as well as a lump-sum severance payment in an amount equal
to his then annual base salary for the balance of the term of the employment
agreement.
Change of Control Arrangements. Each of the employment agreements with
Messrs. Markowitz, Sharp, Lazaro, Mirsky and Koegel provides that, in the event
of a Change of Control of the Company, each such employee will be entitled to
receive a lump-sum severance payment equal to three times his then annual base
salary if he is discharged for any reason (other than for cause) or terminates
his employment for "Good Reason" prior to the first anniversary of such Change
of Control, and shall be entitled to receive a lump-sum payment equal to his
then annual base salary if he voluntarily leaves the employ of the Company for
reasons other than discharge or for Good Reason prior to the first anniversary
of such Change of Control. As used in the employment agreements, the term
"Change of Control" means (a) any transaction or series of transactions
(including, without limitation, a tender offer, merger or consolidation) the
result of which is that any "person" or "group" (within the meaning of Sections
13(d) and 14(d)(2) of the Exchange Act), other than Messrs. Markowitz, Sharp,
Mirsky and Lazaro (and, in the case of Mr. Koegel's employment agreement, Mr.
Koegel) or certain related parties and any "person" or "group" solicited by any
of such persons or their related parties, (i) becomes the beneficial owner of
more than 50% of the total aggregate voting power of all classes of the voting
stock of the Company and/or warrants or options to acquire such voting stock,
calculated on a fully diluted basis, (ii) acquires all or substantially all of
the assets of the Company or (iii) enters into a contract with respect to any of
the foregoing, or (b) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Company's Board of Directors
cease for any reason
- 14 -
<PAGE>
to constitute a majority of the directors then in office, unless such majority
of the directors then in office has been elected or nominated by Messrs.
Markowitz, Sharp, Mirsky and Lazaro (and, in the case of Mr. Koegel's employment
agreement, Mr. Koegel) or certain related parties. In addition, as used in the
agreements, the term "Good Reason" means (i) a change in the status or position
of the employee which reflects a change from the status and position(s) as were
in effect immediately prior to a Change of Control, (ii) the assignment to the
employee of any duties or responsibilities which, in the employee's reasonable
judgment, are inconsistent with his status or position(s), (iii) the removal of
the employee from his current position or reduction in his pay or requiring him
to relocate or (iv) the removal of the employee, without his consent, to any
location outside of the New York/New Jersey metropolitan area (or, in the case
of Mr. Koegel, the St. Paul, Minnesota metropolitan area) for a continuous
period of more than 30 days.
PROPOSAL NO. 2
AMENDMENT OF STOCK OPTION PLAN
General
The Stock Option Plan was approved by the Company's Board of Directors and
shareholders in May 1995 prior to the Company's July 1995 initial public
offering, and was subsequently amended pursuant to shareholder approval in 1997.
The purpose of the Stock Option Plan is to attract, retain and motivate
employees (including officers), directors, consultants and other persons who
perform substantial services for or on behalf of the Company by enabling them to
share in the future growth of the Company's business. Pursuant to the Stock
Option Plan as currently in effect, the Company may grant such persons stock
options covering an aggregate of 231,250 shares of Common Stock. The Board of
Directors of the Company has adopted, and recommends that the shareholders of
the Company approve the adoption of, an amendment to the Stock Option Plan to
(i) increase by 250,000 shares the number of shares of the Company's Common
Stock available for options to be granted under the Stock Option Plan and (b)
increase to 30,000 the limit on the total number of shares for which options may
be granted to any one optionee in any year under the Stock Option Plan. A copy
of the Stock Option Plan, as amended by the Board of Directors, is attached
hereto as Appendix A.
The material features of the Stock Option Plan as currently in effect are
described above under "Executive Compensation -- Description of Stock Option
Plan."
Reasons for and Principal Effects of the Proposal
Increase in Number of Shares. As of April 28, 1999, of the 231,250 shares
of Common Stock available for issuance under the Stock Option Plan, 48,683 of
such shares have been issued connection with exercises of options granted under
the Stock Option Plan and 175,257 of such shares are reserved for issuance upon
exercise of currently outstanding options. Accordingly, only 7,310 shares of
Common Stock available for future awards under the Stock Option Plan. As the
Stock Option Committee believes that the Company's stock-based performance
compensation arrangements are beneficial in aligning management's interests with
those of the Company's shareholders over the long term, the Board has adopted,
and recommends that the shareholders approve the adoption of, the amendment to
the Stock Option Plan providing for the increase in the number of shares of
Common Stock which may be issued upon exercise of options granted thereunder
from 231,250 shares to 481,250 shares. If the amendment is approved, the
employees (including officers), directors, consultants and other persons who are
eligible to participate in the Stock Option Plan could receive, in the
aggregate, an additional 250,000 shares of Common Stock.
- 15 -
<PAGE>
Increase in Limitation on Number of Shares Covered by Options. Pursuant to
Section 162(m) ("Section 162(m)") of the Internal Revenue Code of 1986, as
amended, the amount of compensation payments to a company's chief executive
officer and its four other highest paid executive officers that may be deducted
by the company for federal income tax purposes has been limited to $1 million
per person per year. When an employee exercises Non- incentive Options, the
amount by which the market value of the underlying stock exceeds the exercise
price at the time of exercise may be deemed ordinary income to the employee.
Assuming the amount of compensation provided to an employee is not unreasonable
and certain other requirements for deductibility are met, the employer may
deduct from its income the amount of ordinary income recognized by the employee,
subject to the $1 million limitation. Compensation, including Non-incentive
Options, may, however, be exempt from the $1 million limitation if certain
requirements are satisfied, including the requirement that the option plan
pursuant to which the options are granted state the maximum number of shares for
which options may be granted to an employee. In order to satisfy this
requirement and thereby ensure the deductibility (provided that all other
applicable conditions of Section 162(m) have been met) of compensation paid to
the Company's highly compensated officers in the form of Non-incentive Options
granted under the Stock Option Plan, the Plan currently limits to 18,750 the
total number of shares of Common Stock for which options may be granted under
the Stock Option Plan to any one person in any given calendar year. In
connection with the proposed amendment to increase the total number of shares of
Common Stock available under the Stock Option Plan, the Board of Directors has
also adopted, and recommends that the shareholders approve the adoption of, an
amendment to the Stock Option Plan pursuant to which such limit on the total
number of shares of Common Stock for which options may be granted under the Plan
to any one optionee in any year will be increased to 30,000 shares.
Under present employment arrangements between the Company and each of its
Chief Executive Officer and its four other highest paid executive officers, it
is not anticipated that any such officer will receive compensation subject to
the limitations of Section 162(m) during the fiscal year ending December 31,
1999.
Other Information
On January 6, 1999, the Stock Option Committee and the Board of Directors
authorized the grant under the Stock Option Plan, subject to shareholder
approval of the proposed amendment to the Stock Option Plan, of options to
purchase an aggregate of 30,000 shares of Common Stock at a per share exercise
price of $2.50 per share (the fair market value of the Common Stock on the date
of grant), including options to purchase 5,000 shares at an exercise price of
$2.50 per share granted to each of Messrs. Markowitz, Sharp, Mirsky, Lazaro and
Koegel, and, on February 2, 1999, authorized the grant of options to purchase an
aggregate of 6,250 shares of Common Stock at a per share exercise price of $5.00
per share (which price exceeded the fair market value of the Common Stock on the
date of grant). On April 1, 1999, the Stock Option Committee and the Board of
Directors also authorized the grant under the Stock Option Plan, subject to
shareholder approval of the proposed amendment to the Stock Option Plan, of
options to purchase an aggregate of 47,900 shares of Common Stock at a per share
exercise price of $4.75 per share (the fair market value of the Common Stock on
the date of grant), including options to purchase 7,500 shares granted to each
of Messrs. Markowitz, Sharp, Mirsky, Lazaro and Koegel.
Vote Required for Approval
Approval of the amendment to the Stock Option Plan requires the affirmative
vote of a majority of the voting power present in person or represented by proxy
at the Annual Meeting and entitled to vote.
Recommendation of the Board of Directors
The Company's Board of Directors recommends a vote FOR Proposal No. 2.
- 16 -
<PAGE>
STOCKHOLDER PROPOSALS
Shareholder proposals intended to be presented at the next annual meeting
of shareholders, to be held in 2000, must be received by the Company at 495
River Street, Paterson, New Jersey 07524, Attention: Secretary by December 30,
1999 to be included in the proxy statement and form of proxy relating to that
meeting.
AUDITORS
Representatives of J.H. Cohn LLP are expected to attend the Annual Meeting
and, while they are not expected to make a statement, they will have an
opportunity to do so if they desire. They will also be available to respond to
appropriate questions.
OTHER INFORMATION
The cost of soliciting proxies will be borne by the Company. Following the
original mailing of proxy soliciting material, regular employees of the Company
may solicit proxies by mail, telephone, telegraph and personal interview.
Arrangements have been made with brokerage houses and other custodians, nominees
and fiduciaries which are record holders of the Company's stock to forward proxy
soliciting material and annual reports to the beneficial owners of such stock,
and the Company will reimburse such record holders for their reasonable expenses
incurred in providing such services. As of the date of this Proxy Statement, the
Company has not retained the services of a proxy solicitor to assist in the
solicitation of proxies.
A copy of the Company's Annual Report for the fiscal year ended December
31, 1998 is enclosed.
OTHER MATTERS
The Board of Directors is aware of no other matters that are to be
presented to shareholders for formal action at the Annual Meeting. If, however,
any other matters properly come before the Annual Meeting or any adjournment
thereof, it is the intention of the persons named in the enclosed form of proxy
to vote such proxy in accordance with their judgment on such matters.
By Order of the Board of Directors,
Jorge Lazaro
Secretary
Dated: Paterson, New Jersey
April 29, 1999
- 17 -
<PAGE>
APPENDIX A
SEL-LEB MARKETING, INC.
1995 STOCK OPTION PLAN
(As Amended and Restated)
SECTION 1. Establishment. There is hereby established the Sel-Leb
Marketing, Inc. 1995 Stock Option Plan ("Plan"), pursuant to which employees
(including officers), directors, consultants and other persons who perform
substantial services for or on behalf of SEL-LEB MARKETING, INC. (the "Company")
and consultants and any other persons who perform substantial services for or on
behalf of the Company, any subsidiaries of the Company and certain other
entities may be granted options to purchase shares of common stock of the
Company, par value $.01 per share ("Common Stock"), and thereby share in the
future growth of the business. The subsidiaries of the Company included in this
Plan (the "Subsidiaries") shall be any subsidiary of the Company as defined in
Section 424 of the Internal Revenue Code of 1986, as amended (the "Code").
SECTION 2. Status of Options. The options which may be granted pursuant to
this Plan will constitute either incentive stock options within the meaning of
Section 422 of the Code ("Incentive Stock Options") or options which are not
Incentive Stock Options ("Non-incentive Stock Options"). Incentive Stock Options
and Non-incentive Stock Options shall be collectively referred to herein as
"Options".
SECTION 3. Eligibility. All employees (including officers, whether or not
they are members of the Board of Directors) of the Company or any of its
Subsidiaries who are employed at the time of the adoption of this Plan or
thereafter, any directors of the Company, and any consultants and other persons
who perform substantial services for or on behalf of the Company, any of its
Subsidiaries or affiliates, or any entity in which the Company has an interest
(collectively, the "Grantees") shall be eligible to be granted Non-incentive
Stock Options under this Plan. All employees (including officers, whether or not
they are members of the Board of Directors) of the Company or any of its
Subsidiaries who are employed at the time of adoption of this Plan or thereafter
shall be eligible to be granted Incentive Stock Options under this Plan.
SECTION 4. Number of Shares Covered by Options; No Preemptive Rights. The
total number of shares which may be issued and sold pursuant to Options granted
under this Plan shall be 481,250 shares of Common Stock (or the number and kind
of shares of stock or other securities which, in accordance with Section 9 of
this Plan, shall be substituted for such shares of Common Stock or to which said
shares shall be adjusted; hereinafter, all references to shares of Common Stock
are deemed to be references to said shares or shares so adjusted.) The issuance
of shares upon exercise of an Option shall be free from any preemptive or
preferential right of subscription or purchase on the part of any shareholder.
If any outstanding Option granted under this Plan expires or is terminated, for
any reason, the shares of Common Stock subject to the unexercised portion of the
Option will again be available for Options issued under this Plan.
SECTION 5. Administration.
(a) This Plan shall be administered by the committee (the "Committee")
referred to in paragraph (b) of this Section. Subject to the express provisions
of this Plan, the Committee shall have complete authority, in its discretion, to
interpret this Plan, to prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and provisions of the respective option
agreements (which need not be identical), to determine the Grantees to whom, and
the times and the prices at which, Options shall be granted, the option periods,
the number of shares of the Common Stock to be subject to each Option and
whether each Option shall be an Incentive Stock Option or a Non-incentive Stock
Option, and to make all other determinations necessary or advisable for the
administration of the Plan. Each Option shall be clearly identified at the time
of grant as to its status. In making such
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determinations, the Committee may take into account the nature of the services
rendered by the respective Grantees, their present and potential contributions
to the success of the Company and such other factors as the Committee, in its
discretion, shall deem relevant. Nothing contained in this Plan shall be deemed
to give any Grantee any right to be granted an Option to purchase shares of
Common Stock except to the extent and upon such terms and conditions as may be
determined by the Committee. The Committee's determination on all of the matters
referred to in this Section 5 shall be conclusive.
(b) The Committee shall consist of from two (2) to five (5) individuals who
are "outside directors" within the meaning of Section 162(m) of the Code. The
Committee shall be appointed by the Board, which may at any time, and from time
to time, remove any member of the Committee, with or without cause, appoint
additional members to the Committee and fill vacancies, however caused, in the
Committee. A majority of the members of the Committee shall constitute a quorum
and all determinations of the Committee shall be made by a majority of such
quorum. Any decision or determination of the Committee reduced to writing and
signed by all of the members of the Committee shall be fully as effective as if
it had been made at a meeting duly called and held.
(c) The Committee may at its election provide in any option agreement
covering the grant of Options under this Plan that, upon the exercise of such
Options, the Company will loan to the holder thereof such amount as shall equal
the purchase price of the shares of Common Stock issuable upon such exercise,
such loan to be on terms and conditions deemed appropriate by the Committee.
(d) Notwithstanding any provision hereof to the contrary, the Committee
shall have sole and exclusive authority with respect to the grant of Options to
directors.
SECTION 6. Terms of Incentive Stock Options. Each Incentive Stock Option
granted under this Plan shall be evidenced by an Incentive Stock Option
Agreement which shall be executed by the Company and by the person to whom such
Incentive Stock Option is granted, and shall be subject to the following terms
and conditions:
(a) The price at which shares of Common Stock covered by each Incentive
Stock Option may be purchased pursuant thereto shall be determined in each case
on the date of grant by the Committee, but shall be an amount not less than the
par value of such shares and not less than the fair market value of such shares
on the date of grant. For purposes of this Section and Section 7, the fair
market value of shares of Common Stock on any day shall be (i) in the event the
Common Stock is not publicly traded, the fair market value on such day as
determined in good faith by the Committee or (ii) in the event the Common Stock
is publicly traded, the last sale price of a share of Common Stock as reported
by the principal quotation service on which the Common Stock is listed, if
available, or, if last sale prices are not reported with respect to the Common
Stock, the mean of the high bid and low asked prices of a share of Common Stock
as reported by such principal quotation service, or, if there is no such report
by such quotation service for such day, such fair market value shall be the
average of (i) the last sale price (or, if last sale prices are not reported
with respect to the Common Stock, the mean of the high bid and low asked prices)
on the day next preceding such day for which there was a report and (ii) the
last sale price (or, if last sale prices are not reported with respect to the
Common Stock, the mean of the high bid and low asked prices) on the day next
succeeding such day for which there was a report, or as otherwise determined by
the Committee in its discretion pursuant to any reasonable method contemplated
by Section 422 of the Code and any regulations issued pursuant to that Section.
(b) The option price of the shares to be purchased pursuant to each
Incentive Stock Option shall be paid in full in cash, or by delivery (i.e.,
surrender) of shares of Common Stock of the Company then owned by the Grantee,
at the time of the exercise of the Incentive Stock Option. Shares of Common
Stock so delivered will be valued on the day of delivery for the purpose of
determining the extent to which the option price has been paid thereby, in the
same manner as provided for the purchase price of Incentive Stock Options as set
forth in paragraph (a) of this Section, or as otherwise determined by the
Committee, in its discretion, pursuant to any reasonable method contemplated by
Section 422 of the Code and any regulations issued pursuant to that Section.
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(c) Each Incentive Stock Option Agreement shall provide that such Incentive
Stock Option may be exercised by the Grantee, in such parts and at such times as
may be specified in such Agreement, within a period not exceeding ten years
after the date on which the Incentive Stock Option is granted (hereinafter
called the "Incentive Stock Option Period") and, in any event, only during the
continuance of the employee's employment by the Company or any of its
Subsidiaries or during the period of three months after the termination of such
employment to the extent that the right to exercise such Incentive Stock Option
had accrued at the date of such termination; provided, however, that if
Incentive Stock Options as to 100 or more shares are held by a Grantee, then
such Incentive Stock Options may not be exercised for less than 100 shares at
any one time, and if Incentive Stock Options for less than 100 shares are held
by a Grantee, then Incentive Stock Options for all such shares must be exercised
at one time; and provided, further, that if the Grantee, while still employed by
the Company or any of its Subsidiaries, shall die within the Incentive Stock
Option Period, the Incentive Stock Option may be exercised, to the extent
specified in the Incentive Stock Option Agreement, and as herein provided, but
only prior to the first to occur of:
(i) the expiration of the period of one year after the date of the
Grantee's death, or
(ii) the expiration of the Incentive Stock Option Period,
by the person or persons entitled to do so under the Grantee's will, or, if the
Grantee shall fail to make testamentary disposition of said Incentive Stock
Option, or shall die intestate, by the Grantee's legal representative or
representatives.
(d) Each Incentive Stock Option granted under this Plan shall by its terms
be non-transferable by the Grantee except by will or by the laws of descent and
distribution, and each Incentive Stock Option shall by its terms be exercisable
during the Grantee's lifetime only by him.
(e) Notwithstanding the foregoing, if an Incentive Stock Option is granted
to a person at any time when such person owns, within the meaning of Section
424(d) of the Code, more than 10% of the total combined voting power of all
classes of stock of the employer corporation (or a parent or subsidiary of such
corporation within the meaning of Section 424 of the Code), the price at which
each share of Common Stock covered by such Incentive Stock Option may be
purchased pursuant to such Incentive Stock Option shall not be less than 110% of
the fair market value (determined as in paragraph (a) of this Section) of the
shares of Common Stock at the time the Incentive Stock Option is granted, and
such Incentive Stock Option must be exercised within a period specified in the
Incentive Stock Option Agreement which does not exceed five years after the date
on which such Incentive Stock Option is granted.
(f) The Incentive Stock Option Agreement entered into pursuant hereto may
contain such other terms, provisions and conditions not inconsistent herewith as
shall be determined by the Committee including, without limitation, provisions
(i) requiring the giving of satisfactory assurances by the Grantee that the
shares are purchased for investment and not with a view to resale in connection
with a distribution of such shares, and will not be transferred in violation of
applicable securities laws, (ii) restricting the transferability of such shares
during a specified period and (iii) requiring the resale of such shares to the
Company at the option price if the employment of the employee terminates prior
to a specified time. In addition, the Committee, in its discretion, may afford
to holders of Incentive Stock Options granted under this Plan the right to
require the Company to cause to be registered under the Securities Act of 1933,
as amended, for public sale by the holders thereof, shares of Common Stock
subject to such Incentive Stock Options upon such terms and subject to such
conditions as the Committee may determine to be appropriate.
(g) In the discretion of the Committee, a single Stock Option Agreement may
include both Incentive Stock Options and Non-incentive Stock Options, or those
options may be included in separate stock option agreements.
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SECTION 7. Terms of Non-incentive Stock Options. Each Non-incentive Stock
Option granted under this Plan shall be evidenced by a Non-incentive Stock
Option Agreement which shall be executed by the Company and by the person to
whom such Non-incentive Stock Option is granted, and shall be subject to the
following terms and conditions:
(a) The price at which shares of Common Stock covered by each Non-incentive
Stock Option may be purchased pursuant thereto shall be an amount not less than
the par value of such shares and not less than the fair market value of such
shares on the date of grant.
(b) Each Non-incentive Stock Option Agreement shall provide that such
Non-incentive Stock Option may be exercised by the Grantee, in such parts and at
such times as may be specified in such Agreement, within a period up to and
including ten years after the date on which the Non-incentive Stock Option is
granted.
(c) Each Non-incentive Stock Option granted under this Plan shall by its
terms be non-transferable by the optionee except by will or by the laws of
descent and distribution, and each Non-incentive Stock Option shall by its terms
be exercisable during the Grantee's lifetime only by him.
(d) The Non-incentive Stock Option Agreement entered into pursuant hereto
may contain such other terms, provisions and conditions not inconsistent
herewith as shall be determined by the Committee, in its sole discretion,
including without limitation the terms, provisions and conditions set forth in
Section 6(f) with respect to Incentive Stock Option Agreements.
SECTION 8. Limit on Option Amount.
(a) Notwithstanding any provision contained herein, the aggregate fair
market value (determined under Section 6(a) as of the time Incentive Stock
Options are granted) of the shares of Common Stock with respect to which
Incentive Stock Options are first exercisable by any employee during any
calendar year (under all stock option plans of the employee's employer
corporation and its parent and subsidiary corporation within the meaning of
Section 424 of the Code) shall not exceed $100,000. If an Incentive Stock Option
exceeds this $100,000 limitation, the portion of such Option which is
exercisable for shares of Common Stock in excess of the $100,000 limitation
shall be treated as a Non-incentive Stock Option. The limit in this paragraph
shall not apply to Options which are designated as Non-incentive Stock Options,
and, except as otherwise provided herein, there shall be no limit on the amount
of such Options which may be first exercisable in any year.
(b) Notwithstanding any provision contained herein, grants of options under
this Plan to any one optionee who is an employee of the Company shall be limited
to Options to purchase no more than 30,000 shares of Common Stock per calendar
year.
SECTION 9. Adjustment of Number of Shares.
(a) In the event that a dividend shall be declared upon the shares of
Common Stock payable in shares of Common Stock, the number of shares of Common
Stock then subject to any Option granted hereunder, and the number of shares
reserved for issuance pursuant to this Plan but not yet covered by an Option,
shall be adjusted by adding to each of such shares the number of shares which
would be distributable thereon if such share had been outstanding on the date
fixed for determining the shareholders entitled to receive such stock dividend.
In the event that the outstanding shares of Common Stock shall be changed into
or exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of shares, merger
or consolidation, then there shall be substituted for each share of Common Stock
subject to any such Option and for each share of Common Stock reserved for
issuance pursuant to the Plan but not yet covered by an Option, the number and
kind of shares of stock or other securities into which each outstanding share of
Common Stock shall be so changed or for which each such share shall be
exchanged; provided, however, that in the event that such change or exchange
results from a merger
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or consolidation, and in the judgment of the Committee such substitution cannot
be effected or would be inappropriate, or if the Company shall sell all or
substantially all of its assets, the Company shall use reasonable efforts to
effect some other adjustment of each then outstanding Option which the
Committee, in its sole discretion, shall deem equitable. In the event that there
shall be any change, other than as specified above in this Section 9(a), in the
number or kind of outstanding shares of Common Stock or of any stock or other
securities into which such shares of Common Stock shall have been changed or for
which they shall have been exchanged, then, if the Committee shall determine
that such change equitably requires an adjustment in the number or kind of
shares theretofore reserved for issuance pursuant to the Plan but not yet
covered by an Option and of the shares then subject to an Option or Options,
such adjustment shall be made by the Committee and shall be effective and
binding for all purposes of this Plan and of each stock option agreement.
Notwithstanding the foregoing, if any adjustment in the number of shares which
may be issued and sold pursuant to Options is required by the Code or
regulations issued pursuant thereto to be approved by the shareholders in order
to enable the Company to issue Incentive Stock Options pursuant to this Plan,
then no such adjustment shall be made without the approval of the shareholders.
In the case of any such substitution or adjustment as provided for in this
Section 9(a), the option price in each stock option agreement for each share
covered thereby prior to such substitution or adjustment will be the total
option price for all shares of stock or other securities which shall have been
substituted for each such share or to which such share shall have been adjusted
pursuant to this Section 9. No adjustment or substitution provided for in this
Section 9 shall require the Company, in any stock option agreement, to sell a
fractional share, and the total substitution or adjustment with respect to each
stock option agreement shall be limited accordingly. Notwithstanding the
foregoing, in the case of Incentive Stock Options, if the effect of the
adjustments or substitution is to cause the Incentive Stock Option to fail to
continue to qualify as an Incentive Stock Option or to cause a modification,
extension or renewal of such Incentive Stock Option within the meaning of
Section 424 of the Code, the Board of Directors shall use reasonable efforts to
effect such other adjustment of each then outstanding option as the Board of
Directors, in its sole discretion, shall deem equitable.
(b) In the event that the Company shall effect a distribution, other than a
normal and customary cash dividend, upon shares of Common Stock, the Committee
may, in order to prevent significant diminution in the value of Options as a
result of any such distribution, take such measures as it deems fair and
equitable, including, without limitation, the adjustment of the option price per
share for shares not issued and sold hereunder prior to the record date for said
distribution.
SECTION 10. Amendments. This Plan may be terminated or amended from time to
time by vote of the Committee; provided, however, that no such termination or
amendment shall materially adversely affect or impair any then outstanding
Option without the consent of the Grantee thereof and no amendment which shall
(i) change the total number of shares which may be issued and sold pursuant to
Options granted under this Plan, or (ii) change the designation or class of
employees or other persons eligible to receive Incentive Options or
Non-incentive Options, shall be effective without the approval of the
shareholders. Notwithstanding the foregoing, the Plan may be amended by the
Committee to incorporate any amendments made to the Code or regulations
promulgated thereunder which the Committee deems to be necessary or desirable to
preserve (i) incentive stock option status for outstanding Incentive Stock
Options and the ability to issue Incentive Stock Options pursuant to this Plan,
and (ii) the deductibility by the Company pursuant to Section 162(m) of the Code
of amounts taxed to Plan participants as ordinary compensation income.
SECTION 11. Effective Date and Termination. This Plan shall become
effective on the date its adoption is approved by the shareholders of the
Company. Except to the extent necessary to govern outstanding Options, this Plan
shall terminate on, and no additional Options shall be granted after, ten years
from the date the Plan is adopted, or ten years from the date the Plan is
approved by the shareholders, whichever is earlier.
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PROXY SEL-LEB MARKETING, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF SEL-LEB MARKETING, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS--MAY 27, 1999
The undersigned hereby appoints HAROLD MARKOWITZ, JAN S. MIRSKY and JORGE
LAZARO, and each of them, as Proxies, each with full power of substitution and
resubstitution, to represent and to vote, as designated below, all shares of
Common Stock of Sel-Leb Marketing, Inc. (the "Company") which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Shareholders of the Company to be held at the Company's offices located at 495
River Street, Paterson, New Jersey at 10:00 a.m. (local time) on May 27, 1999,
and at any adjournment or postponement thereof.
1. Election of Directors
/ / FOR all nominees listed / / WITHHOLD APPROVAL
below (except as marked to vote for all nominees listed below
to the contrary below)
Harold Markowitz, Paul Sharp, Jan S. Mirsky, Jorge Lazaro, Jack
Koegel, Stanley R. Goodman, Edward C. Ross and L. Douglas Bailey
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided below)
_______________________________________________________________
2. Approval and adoption of an amendment to the Company's 1995 Stock Option
Plan to (a) increase by 250,000 shares the number of shares available for
grant under the Plan and (b) increase to 30,000 the limit on the total
number of shares for which options may be granted to any one optionee in
any year under the Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournment
or postponement thereof.
TO BE VALID, THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE>
If no direction is given, this proxy will be voted FOR the election of the
nominees set forth in Proposal No. 1 and FOR Proposal No. 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
SET FORTH IN PROPOSAL NO. 1 AND FOR PROPOSAL NO. 2
Please sign exactly as name appears at left.
When shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
your full title as such. If a corporation, please
sign in full corporate name by president or other
authorized officer. If a partnership, please sign
in partnership name by authorized person.
Dated: _____________________________________, 1999
__________________________________________________
(Signature)
__________________________________________________
(Signature)
This Proxy is solicited on behalf of the Board
of Directors.
