UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. _____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
GENELINK, INC.
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
GENELINK, INC.
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FEBRUARY 28, 2007
To the Shareholders of GeneLink, Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of GeneLink,
Inc. (the "Company"), a Pennsylvania corporation, will be held at 10:00 a.m. on
February 28, 2007 at Crowne Plaza Hotel, The Discovery Meeting Room, 5555
Hazeltine National Drive, Orlando, FL 32812 (the "Annual Meeting"), for the
following purposes:
1. To elect five (5) directors to serve until the next Annual Meeting of
Shareholders or until their respective successors are elected and
qualified;
2. To approve and adopt an amendment to the Company's Articles of
Incorporation to increase the Company's capitalization from 75,000,000
shares of Common Stock, $0.01 par value, to 125,000,000 shares of Common
Stock, $0.01 par value;
3. To approve the Company's 2007 Stock Option Plan; and
4. To transact such other business as may properly be brought before the
Annual Meeting or any adjournment(s) thereof.
Only shareholders of record at the close of business on January 30, 2007,
are entitled to notice of, and to vote at, the Annual Meeting or any
adjournment(s) or postponement(s) thereof.
The Annual Meeting may be adjourned from time to time without notice other
than by announcement at the Annual Meeting. We are providing a copy of our
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005 with
this proxy statement.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON, WE URGE YOU TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND
RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE. THE PROMPT RETURN OF PROXIES
WILL ENSURE A QUORUM AND SAVE THE COMPANY THE EXPENSE OF FURTHER SOLICITATION.
EACH PROXY GRANTED MAY BE REVOKED BY THE SHAREHOLDER APPOINTING SUCH PROXY AT
ANY TIME BEFORE IT IS VOTED. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE
YOUR SHARES ARE REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH SUCH PROXY CARD
SHOULD BE SIGNED AND RETURNED TO ASSURE THAT ALL OF YOUR SHARES WILL BE VOTED.
By Order of the Board of Directors,
----------------------------------------
Robert P. Ricciardi
Chairman of the Board
February 1, 2007
GENELINK, INC.
113 PAVONIA AVENUE #313
JERSEY CITY, NEW JERSEY 07310
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
FEBRUARY 28, 2007
This Proxy Statement is furnished to shareholders of GeneLink, Inc. (the
"Company"), a Pennsylvania corporation, in connection with the solicitation of
proxies on behalf of the management of the Company for use at the Annual Meeting
of Shareholders to be held at Crowne Plaza Hotel, The Discovery Meeting Room,
5555 Hazeltine Drive, Orlando, FL 32812 on February 28, 2007, at 10:00 a.m. and
at any and all postponements or adjournment thereof (the "Annual Meeting"), for
the purpose of considering and acting upon the matters set forth in the attached
Notice of Annual Meeting and more fully discussed below.
This Proxy Statement and the accompanying form of proxy were first mailed
to shareholders of the Company entitled to notice of the Annual Meeting on or
about February 1, 2007.
Quorum and Voting
The presence, in person or by proxy, of the holders of a majority of the
shares of Common Stock issued and outstanding, is necessary to constitute a
quorum at the Annual Meeting. Shareholders are entitled to one vote per share of
Common Stock held on any matter which may properly come before the Annual
Meeting.
Any shareholder executing and delivering the accompanying proxy has the
power to revoke the same by giving notice to the Secretary of the Company. The
presence at the Annual Meeting of a shareholder will not revoke his or her
proxy. Proxies in the accompanying form which are properly executed, duly
returned to the Company, and not revoked will be voted in accordance with the
instructions therein.
Abstentions and broker non-votes will be counted for purposes of
determining a quorum, but will not be counted as votes cast. A broker non-vote
occurs when a bank, broker, or other nominee holding shares for a beneficial
owner has not received voting instruction from the beneficial owner on a
particular matter and the bank, broker, or nominee cannot vote the shares on
such matter because the matter is not considered routine.
With respect to Proposal I, directors are elected by a plurality of the
votes cast by shareholders present, in person or by proxy, at the meeting.
Under Pennsylvania law, the approval of Proposal II, the amendment to
Articles of Incorporation to increase the authorized shares of Common Stock, and
Proposal III, the approval of the 2007 Stock Option Plan, requires the
affirmative vote of at least a majority of the votes cast by shareholders
present, in person or by proxy, at the meeting. Abstention and broker non-votes
will, therefore, have no effect in determining the outcome of any of these
matters.
1
Shareholders will not have dissenters rights under the Pennsylvania
Business Corporation Law in connection with the approval and adoption of the
proposed amendment to the Company's Articles of Incorporation.
IF NO INSTRUCTION IS GIVEN WITH RESPECT TO ANY PROPOSAL TO BE ACTED UPON,
THE PROXY WILL BE VOTED FOR THE ELECTION OF ALL OF THE NOMINEES NAMED IN THE
PROXY, FOR APPROVAL OF THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION
AND FOR THE ADOPTION OF THE 2007 STOCK OPTION PLAN. No matter is expected to be
considered at the Meeting other than the proposals set forth in the accompanying
Notice of Annual Meeting, but if any other matters are properly brought before
the Meeting for action, it is intended that the persons named in the proxy and
acting thereunder will vote their discretion on such matters.
Record Date and Shares Outstanding
The close of business on January 30, 2007 has been fixed as the record date
for the determination of shareholders entitled to receive notice of, and to vote
at, the Annual Meeting. The stock transfer books will not be closed. As of
January 30, 2007, there were issued and outstanding 41,681,430 shares of the
Company's Common Stock.
PRINCIPAL SHAREHOLDERS
Security Ownership of Management and Certain Beneficial Owners
The following table sets forth certain information as of January 30, 2007
(the record date for the Annual Meeting) regarding the ownership of Common Stock
(i) by each person known by the Company to be the beneficial owner of more than
five percent of the outstanding Common Stock, (ii) by each current officer and
director of the Company, (iii) by each nominee for director, and (iv) by all
current officers and directors of the Company as a group.
The beneficial owners and amount of securities beneficially owned have been
determined in accordance with Rule 13d-3 under the Exchange Act and, in
accordance therewith, includes all shares of the Company's Common Stock that may
be acquired by such beneficial owners within 60 days of January 30, 2006 upon
the exercise or conversion of any options, warrants or other convertible
securities. This table has been prepared based on 41,681,430 shares of Common
Stock outstanding on January 30, 2007. Unless otherwise indicated, each person
or entity named below has sole voting and investment power with respect to all
Common Stock beneficially owned by that person or entity, subject to the matters
set forth in the footnotes to the table below. Unless otherwise stated, the
beneficial owners exercise sole voting and/or investment power over their
shares.
2
Number of Shares Approximate Percentage
Name Beneficially Owned Of Stock Outstanding
---- ------------------ ----------------------
John R. and Maria D. DePhillipo 4,716,585(1) 11.3%
100 S. Thurlow Avenue
Margate, NJ 08402
Kenneth R. Levine 2,935,632(2) 7.0%
1776 Broadway
Suite 1403
New York, NY 10019
Robert P. Ricciardi, Ph.D. 2,710,000 6.5%
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310
Robert Hoekstra 1,445,054(3) 3.5%
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310
John H. Souza 1,441,998(4) 3.4%
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310
Dr. Bernard L. Kasten, Jr. 979,560 2.4%
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310
Monte E. Taylor, Jr. 27,750(5) *
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310
Directors and Officers as a 2,737,750(5) 6.6%
Group
Nominees for Directors and 6,604,362(3)(4)(5) 15.6%
Officers as a Group
(1) Includes 3,235,885 shares held by John R. DePhillipo and 1,010,700 shares
held by Maria D. DePhillipo, his wife. Mr. DePhillipo disclaims beneficial
ownership of the shares held by Maria D. DePhillipo. Includes 470,000
shares held by various family trusts for which Mrs. DePhillipo is the
trustee, and each of Mr. and Mrs. DePhillipo disclaim any beneficial
ownership of those shares.
(2) Includes 435,000 shares of Common Stock held by First Equity Capital
Securities, Inc., of which Mr. Levine is a principal.
(3) Includes currently exercisable warrants to acquire 170,455 shares of Common
Stock. Includes 647,000 shares of Common Stock held by family trusts for
which Mr. Hoekstra is a trustee. Mr. Hoekstra disclaims beneficial
ownership of those shares.
(4) Includes currently exercisable warrants to acquire 597,328 shares of Common
Stock.
(5) Include 16,000 shares held by Mr. Taylor and various family members in
joint tenancy.
(*) Less than 1%.
3
Certain Relationships and Related Transactions
In May 2006, December 2006 and January 2007, pursuant to the terms of a
Convertible Secured Loan Agreement, dated as of May 12, 2006 (as amended and
supplemented, the "Loan Agreement"), the Company issued $877,890.40 principal
amount of convertible secured loan promissory notes (the "Notes").
The Company issued to First Equity Capital Securities, Inc., as
Administrative Agent under the Loan Agreement, an aggregate of 435,000 shares of
restricted Common Stock of the Company and warrants to acquire 1,740,000 shares
of restricted Common Stock of the Company at an exercise price of $0.05 per
share in connection with the issuance of the Notes. The Company also paid First
Equity Capital Securities, Inc. a placement fee of $60,900, equal to 7% of all
loans raised pursuant to the Loan Agreement. Kenneth R. Levine, a holder of more
than five percent of the equity securities of the Company, is an officer and
principal of First Equity Capital Securities, Inc. Mr. Levine purchased
$56,578.08 of Notes and received 282,890 shares of restricted Common Stock of
the Company in connection with the issuance of the Notes.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Salary All Other
Name and Principal Position Year ($) Compensation ($) Total ($)
- --------------------------- ---- -------- ---------------- ---------
Monte E. Taylor, Jr. Acting 2006 $ 90,000 $22,486(2) $112,486
Chief Executive Officer(1)
2005 $ 90,000 $20,795(2) $110,796
Robert P. Ricciardi, Ph.D., 2006 $116,924(3) -- $116,924
Chief Science Officer
2005 $106,294(3) -- $106,294
(1) Mr. Taylor was appointed Acting Chief Executive Officer effective October
14, 2005.
(2) Represents the cost of health insurance premiums provided from the Company.
(3) This amount has accrued but has not been paid. As of December 31, 2006, the
Company owed Dr. Ricciardi an aggregate of $656,155 for compensation earned
but not received.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The named executive officers did not receive any option or other equity
awards in 2006 and do not hold any options or other equity awards as of December
31, 2006.
DIRECTOR COMPENSATION
Directors are not compensated for their service as directors of the
Company.
Employment Agreements with Executive Officers
The Company entered into a consulting agreement with Dr. Ricciardi on
February 24, 1998, which provides for annual compensation of $116,924 in 2006, a
ten percent (10%) increase in compensation each year, continues for year to
year, and requires Dr. Ricciardi to perform eight (8) hours of consulting
services per week. The Company has never had sufficient funds to pay Dr.
Ricciardi his compensation and as of December 31, 2006, the Company owed Dr.
Ricciardi $656,155 in accrued compensation. Dr. Ricciardi's consulting agreement
provides for a change in control payment equal to two times the compensation in
effect.
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OFFICERS AND DIRECTORS
Information with respect to each of the executive officers and current
directors of the Company is set forth below
Name Age Position
- ---- --- --------
Monte E. Taylor 56 Acting Chief Executive Officer, Acting
Chief Financial Officer, Director
Robert P. Ricciardi, Ph.D. 60 Chairman, Secretary,
Chief Science Officer, Director
The descriptions for Mr. Taylor and Dr. Ricciardi appear under the caption
"Nominees for Director" beginning on page 11.
BOARD OF DIRECTOR MATTERS
Board Committees
The full Board of Directors acts as the Audit Committee, Nominating
Committee and Compensation Committee. Pursuant to Item 7 of Schedule 14A of the
Securities Exchange Act of 1934, as amended, the Board of Directors has adopted
the definition of "independent director" as set forth in the American Stock
Exchange, or AMEX, Company Guide. In applying this definition, the Board has
determined that no director qualifies as an "independent director" pursuant to
AMEX Company Guide Section 121 or for purposes of Section 10A(m)(3) of the
Securities Exchange Act of 1934 and Section 803 of the AMEX Company Guide,
applicable to audit committee members. If the individuals being nominated for
director are elected, it is contemplated that Mr. Hoekstra and Dr. Kasten, who
will be independent directors, would comprise the Audit Committee, Compensation
Committee and Nominating Committee of the Board of Directors.
The Audit Committee does not have an audit committee financial expert or
any independent directors. The Company has not been able to attract qualified
members to serve on its Board of Directors who would be independent and who
would qualify as financial experts. A copy of the Audit Committee Charter is
attached as Appendix C.
Consistent with SEC policies regarding auditor independence, the Audit
Committee has responsibility for appointing, setting compensation and overseeing
the work of the independent auditor. In recognition of this responsibility, the
Audit Committee has established a policy to pre-approve all audit and
permissible non-audit services provided by the independent registered public
accounting firm. Prior to engagement of the independent auditor for the next
year's audit, management will submit a detailed description of the audit and
permissible non-audit services expected to be rendered during that year for each
of four categories of services described above to the Audit Committee for
approval. In addition, management will also provide to the Audit Committee for
its approval a fee proposal for the services proposed to be rendered by the
6
independent auditor. Prior to the engagement of the independent auditor, the
Audit Committee will approve both the description of audit and permissible
non-audit services proposed to be rendered by the independent auditor and the
budget for all such services. The fees are budgeted and the Audit Committee
requires the independent registered public accounting firm and management to
report actual fees versus the budget periodically throughout the year by
category of service.
During the year, circumstances may arise when it may become necessary to
engage the independent registered public accounting firm for additional services
not contemplated in the original pre-approval. In those instances, the Audit
Committee requires separate pre-approval before engaging the independent
registered public accounting firm. To ensure prompt handling of unexpected
matters, the Audit Committee may delegate pre-approval authority to one or more
of its members. The member to whom such authority is delegated must report, for
informational purposes only, any pre-approval decisions to the Audit Committee
at its next scheduled meeting. The four categories of services provided by the
independent registered public accounting firm are as defined in the footnotes to
the fee table set forth above.
The Board of Directors has not created a standing Nominating Committee. The
directors are or have been actively involved in the Company's business and all
are able to contribute valuable insights into the identification of suitable
candidates for nomination to the Board. As a result, the Company believes that
it is in its best interest that the entire Board oversee the composition of the
Board of Directors and therefore, the Company has not created a standing
nominating committee of the Board. Recommendations to the Board of Directors are
approved by a majority of directors. The full Board of Directors is responsible
for identifying and evaluating individuals qualified to become Board members and
to recommend such individuals for nomination. All candidates must possess an
unquestionable commitment to high ethical standards and have a demonstrated
reputation for integrity. Other facts considered include an individual's
business experience, education, civic and community activities, knowledge and
experience with respect to the issues impacting the biogenetic industry and
public companies, as well as the ability of the individual to devote the
necessary time to service as a director.
The Board of Directors does not have a formal policy with regard to the
consideration of any director candidates recommended by security holders. The
Board of Directors will consider candidates recommended by shareholders. All
nominees will be evaluated in the same manner, regardless of whether they were
recommended by the Board of Directors, or recommended by a shareholder. This
will ensure that appropriate director selection continues.
Section 16(a) Beneficial Ownership Reporting Compliance.
Based solely on the Company's review of certain reports filed with the
Securities and Exchange Commission pursuant to Section 16(a) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and written representations
of the Company's officers and directors, the Company believes that all reports
required to be filed pursuant to the 1934 Act with respect to transactions in
the Company's Common Stock through December 31, 2006 were filed on a timely
basis.
Code of Ethics
The Company has adopted a code of ethics that applies to all employees,
including the Company's principal executive officer, principal financial
officer, principal accounting officer or
7
controller, and persons performing similar functions. A copy of the Company's
code of ethics will be provided to anyone without charge upon request therefor.
Compensation of Directors and Meeting of Directors
Directors of the Company are not paid any fees for service as directors of
the Company. The Board of Directors met six (6) times in 2006. Each director
attended at least 75% of the meetings.
Communications with the Board of Directors
You may contact the Board of Directors as a group by writing to them c/o
GeneLink, Inc., 113 Pavonia Avenue, #313, Jersey City, NJ 07310. Any
communications received will be forwarded to all Board members.
Material Proceedings with Directors, Officers and Holders of More Than Five
Percent of the Common Stock of the Company; Resignation of Directors
Effective October 14, 2005, the Company terminated the employment of John
R. DePhillipo, the Company's former Chief Executive Officer and Chief Financial
Officer and a former member of the Board of Directors of the Company. Mr.
DePhillipo commenced a lawsuit against the Company allegedly arising out of his
termination by the Company for "cause," as defined in his Employment Agreement
with the Company.
In an Action filed by Mr. DePhillipo against the Company in November 2005
in the Superior Court of New Jersey, Law Division, Atlantic County, John R.
DePhillipo v. GeneLink, Inc., Docket No. ATL-L-7479-05, Mr. DePhillipo has
alleged that his termination by the Company "for cause" was improper and
therefore he is entitled to in excess of $1,500,000 in severance pay under the
terms of an employment agreement that Mr. DePhillipo alleges was entered into
effective January 1, 2005 (the "Employment Agreement"), and an additional
$84,000 in accrued and unpaid compensation. The Company has filed an Answer
denying the material allegations of the Complaint and asserting a number of
affirmative defenses. The Company believes Mr. DePhillipo's claims are without
merit and intends to vigorously defend against those claims. The Company has
also filed counterclaims against Mr. DePhillipo for breach of fiduciary duty,
conversion, negligent misrepresentation and unjust enrichment while Mr.
DePhillipo served as the Company's Chief Executive Officer, President and Chief
Financial Officer. The counterclaims seek recovery in excess of that sought by
Mr. DePhillipo in the Complaint.
On January 18, 2007, Mr. DePhillipo resigned as a director of the
Company. Mr. DePhillipo in a letter to the Board of Directors of the Company
alleged that the Company has not properly accounted for or disclosed its source
for funding the costs of the litigation described above and alleged that a third
party must be funding the litigation; alleged that the terms of the recent
financing undertaken by the Company are unfair to the Company's shareholders and
amounted to the sale of the Company without shareholder approval; and alleged
that the use of the proceeds of the financings are not adequately described,
including any use of the proceeds to fund the costs of the litigation.
The Board of Directors categorically denies each of Mr. DePhillipo's
unsubstantiated allegations and states that they are completely unfounded. The
Board of Directors expressly confirms that the Company has not entered into an
agreement with any third party to fund the litigation or taken any steps which
would amount to a sale of the Company without shareholder approval. The Board of
Directors further notes that Mr. DePhillipo's resignation was pre-textual and
tendered only after notice to Mr. DePhillipo that he was not part of the
proposed slate of nominees to a newly constituted Board of Directors and after a
meeting of the Board of Directors during which Mr. DePhillipo was not appointed
and elected as a nominee to remain on the Board of Directors following the
Annual Meeting.
REPORT FROM THE AUDIT COMMITTEE
The entire Board of Directors acts as the Audit Committee. The Audit
Committee does not have an audit committee financial expert or any independent
directors. The Company has not been able to attract qualified members to serve
on its Board of Directors who would be independent and who would qualify as
financial experts. The Audit Committee is responsible for considering
management's recommendation of independent certified public accountants for each
fiscal year, recommending the appointment or discharge of independent
accountants to the board of directors and confirming the independence of the
accountants. It is also responsible for reviewing and approving the scope of the
planned audit, the results of the audit and the accountants' compensation for
performing such audit, reviewing the Company's audited
8
financial statements, and reviewing and approving the Company's internal
accounting controls and discussing such controls with the independent
accountants.
In connection with the audit of the Company's financial statements for the
year ended December 31, 2005, the Audit Committee met with representatives from
Buckno, Lisicky & Company, the Company's independent auditors. The Audit
Committee reviewed and discussed with the Company's financial management and
financial structure, as well as the matters relating to the audit required to be
discussed by Statements on Auditing Standards 61 and 90.
In addition, the Audit Committee reviewed and discussed with the Company's
management the Company's audited financial statements relating to fiscal year
ended December 31, 2005.
Based upon the review and discussions described above, the Audit Committee
recommended to the Board of Directors that the Company's financial statements
audited by Buckno, Lisicky & Company be included in the Company's Annual Report
on Form 10-KSB for fiscal year ended December 31, 2005.
Robert P. Ricciardi
Monte E. Taylor, Jr.
9
INDEPENDENT PUBLIC ACCOUNTANTS
Buckno, Lisicky & Company was the Company's independent public accountant
for 2006 and 2005. Representatives of Buckno, Lisicky & Company are not expected
to be present at the 2007 Annual Meeting,
FEES FOR INDEPENDENT AUDITORS FOR FISCAL YEARS 2005 AND 2004
Set forth below are the fees billed for services rendered by Buckno,
Lisicky & Company in 2006 and 2005.
2005 2004
------- -------
Audit Fees $22,000 $22,000
Audit-Related Fees 0 0
------- -------
Tax Fees 0 0
All Other Fees 0 0
------- -------
Total Fees $22,000 $22,000
======= =======
Audit fees consist of fees billed for professional services rendered by the
Company's independent accountant for the audit of the Company's annual financial
statements, review of financial statements included in quarterly reports on Form
10-QSB and services that are normally provided by the independent accountant in
connection with statutory and regulatory filings or engagements.
Audit Committee Pre-Approval Procedures. The function(s) of the audit committee
are currently performed by the full Board of Directors. The Board of Directors
approves the engagement of the independent auditors, and meets with the
independent auditors to approve the annual scope of accounting services to be
performed and the related fee estimates. It also meets with the independent
auditors, on a quarterly basis, following completion of their quarterly reviews
and annual audit and prior to our earnings announcements, if any, to review the
results of their work. During the course of the year, the chairman has the
authority to pre-approve requests for services that were not approved in the
annual pre-approval process. The chairman reports any interim pre-approvals at
the following quarterly meeting. At each of the meetings, management and the
independent auditors update the Board of Directors with material changes to any
service engagement and related fee estimates as compared to amounts previously
approved. During 2006, all audit and non-audit services performed by our
independent accountants were pre-approved by the Board of Directors in
accordance with the foregoing procedures.
10
PROPOSAL 1 - ELECTION OF DIRECTORS
In accordance with the Company's By-Laws, the number of directors has been
fixed at five (5) and, accordingly, five (5) directors will be elected at the
Meeting. Each director elected will serve as a director until his or her
successor is elected and shall have qualified. The five (5) persons named below
are the Board of Director's nominees for election as directors.
Management has no reason to believe that any of its nominees will be unable
to serve if elected to office and, to the knowledge of management, its nominees
intend to serve the entire term for which election is sought.
NOMINEES FOR DIRECTOR
Information with respect to each of management's nominees is set forth in
the following table:
ROBERT HOEKSTRA, 56. Mr. Hoekstra is a nominee for director. Mr. Hoekstra
is a management consultant, organizational therapist and co-founder of Team
Architects, an international management and relationship skills training
company. Mr. Hoekstra is a co-creator and a certified instructor for
"Redirecting Corporate America," a management training course offered world wide
since 1991. Formerly, he was the V.P. of Sales for U.S. Medical and President of
the Hoekstra Agency. Mr. Hoekstra graduated from Loyola University, New Orleans
with a B.S. In Psychology (Cum Laude).
DR. BERNARD L. KASTEN, JR., 60. Dr. Kasten is a nominee for director. He
has been a scientific advisor to the Company since 1999 and a member of the
Company's Advisory Committee since 2001. Dr. Kasten is a graduate of Miami
University (Oxford Ohio), BA Chemistry 1967, and the Ohio State University
College of Medicine MD 1971. His residency was served at the University of
Miami, Florida and fellowships at the National Institutes of Health Clinical
Center and National Cancer Institute, Bethesda, Maryland. Dr. Kasten is a
Diplomat of the American Board of Pathology with Certification in Anatomic and
Clinical Pathology with sub-specialty certification in Medical Microbiology. Dr.
Kasten is an author of "Infectious Disease Handbook" 1st through 5th Editions
1994-2003 and the "Laboratory Test Handbook" 1st through 4th Editions 1984-1996
published by Lexi-Comp Inc., Hudson, Ohio. Dr. Kasten has been active with the
College of American Pathologists (CAP) serving as Chairman of its Publication
Committee from 1985-1993, its Management Resources Committee from 1993-1998 and
its Chairman Internet Editorial Board from 1999-2003. Dr. Kasten received the
College of American Pathologists Presidents Medal Awarded for Outstanding
Service in 1989 and the College of American Pathologists Frank W. Hartman Award,
in 1993 for Meritorious Service to the College (Founding CAP Today) the
organization's highly successful monthly tabloid magazine. Dr. Kasten's
professional staff appointments have included the Cleveland Clinic, Northeastern
Ohio Universities College of Medicine, the Bethesda Hospitals and Quest
Diagnostics. Dr. Kasten served eight years, 1996-2004, at Quest Diagnostics
Incorporated [NYSE-DGX], where he was Chief Laboratory Officer; Vice-President
of Business Development for Science and Medicine and Vice-President of Medical
Affairs of a Quest Diagnostics wholly-owned subsidiary, MedPlus Inc. Dr. Kasten
joined SIGA Technologies, Inc. [NASDAQ-SIGA] as a Board of Directors member in
May 2003, and accepted the appointment as SIGA's Chief Executive Officer in July
of 2004, serving through April 2006. Dr. Kasten is Chairman of the Board of
Cleveland Bio Labs Inc. [NASDAQ-CBLI], and also serves on the Board of Directors
of SeraCare Life Sciences, CytoLogic Inc, Lexi-Comp Inc, Riggs-Heinrich
11
Media Inc, Highway Composites LLC, Monroeville Industrial Molding Inc, PIPO Inc
and Cleveland Bio Labs Inc.
ROBERT P. RICCIARDI, PH.D., 60. Dr. Ricciardi is currently the Chief
Science Officer and a director of the Company. Dr. Robert Ricciardi is also
Professor of Microbiology at the University of Pennsylvania. Dr. Ricciardi
received his Ph.D. from the University of Illinois at Urbana and went on to
Brandeis University and Harvard Medical School in the Department of Biological
Chemistry where he was a Fellow of the American Cancer Society and a Charles A.
King Trust Fellow. He developed one of the first techniques in molecular biology
that has been widely used to map genes. While most of his research has centered
on mechanisms of cancer, Dr. Ricciardi has developed and patented recombinant
delivery systems for use as vaccines and new methods for identifying chemical
therapeutics. Dr. Ricciardi has served as a consultant to The National
Institutes of Health, Smith Kline and Beckman's Department of Molecular
Genetics, and Children's Hospital of Philadelphia's Department of Infectious
Disease. He has authored 85 publications and was a NATO Visiting Professor at
Ferrara Medical School in Italy. Dr. Ricciardi has been an invitational speaker
at numerous scientific meetings and universities.
JOHN H. SOUZA, 44. Mr. Souza is a nominee for director. Mr. Souza has been
a business consultant with the Company since October 2004, working primarily
with the Company's Dermagenetics, Inc. subsidiary as Director of Business
Development. In the past 20 years, Mr. Souza has owned and operated
manufacturing and distribution companies in the packaging and cosmetics fields,
doing business with Fortune 100 and 500 companies as well as retail spa outlets.
Mr. Souza has held executive management positions in both the public and private
sectors where he was responsible for operations, business development and
mergers and acquisitions, and also has an extensive background in sales and
marketing. Mr. Souza received a Bachelor of Science from Rochester Institute of
Technology. Mr. Souza is also a Nationally Certified PT/NC.
MONTE E. TAYLOR, JR., 56. Mr. Taylor currently is the Acting Chief
Executive Officer and Acting Chief Financial Officer and a director of the
Company. Mr. Taylor joined the Company as Director of Business Development in
2001. In such role, Mr. Taylor has focused his efforts in rolling at the
Company's products and technologies to the skin-care, skin health and nutrition
industries worldwide. Prior to joining the Company, Mr. Taylor was a senior
management consultant specializing in strategic marketing plans, business
development and marketing communications for mid-size and Fortune 500 companies.
Mr. Taylor received a masters in business administration from the Crummer School
of Business at Rollins College.
Required Vote
Directors will be elected by a plurality of the votes cast by shareholders
of the Company present at the Annual Meeting in person or represented by proxy.
12
PROPOSAL 2
PROPOSED AMENDMENT TO THE
ARTICLES OF INCORPORATION
On January 18, 2007, the Board of Directors adopted a resolution proposing
that Article 4 of the Company's Articles of Incorporation be amended to increase
the authorized shares of the Capital Stock of the Corporation from 75,000,000
shares of Common Stock, $0.01 par value to 125,000,000 shares of Common Stock,
$0.01 par value (the "Amendment"). The Board directed that the proposed
Amendment be submitted to a vote of the shareholders at the Annual Meeting.
As of January 30, 2007, 41,681,430 shares of Common Stock were issued and
outstanding, 15,101,987 shares were reserved for issuance upon exercise of
options or warrants, and 17,557,808 shares were reserved for issuance upon the
conversion of the Notes, for a total of 74,341,225 shares. The Board of
Directors believes that the flexibility provided by the Amendment to permit the
Company to issue or reserve additional Common Stock, in the discretion of the
Board and without the delay or expense of calling and convening a special
meeting of shareholders, is in the best interests of the Company and its
shareholders. Shares of Common Stock may be used for general purposes, including
stock splits and stock dividends, acquisitions, possible financing activities,
and other employee, executive and director benefit plans, including the 2007
Stock Option Plan. After approval of the proposed Amendment and the 2007 Stock
Option Plan by the shareholders, the Corporation will have authority to issue
125,000,000 shares of Common Stock, of which 44,658,775 shares will be
authorized but not outstanding or reserved for issuance. The Corporation has no
present plans, arrangements, commitments or understanding with respect to the
issuance of any of the additional shares of Common Stock that would be
authorized by adoption of the Amendment, other than the reservation of 6,000,000
shares in connection with the adoption of the 2007 Stock Option Plan.
If the Amendment is not approved, the Company will not be able to issue
additional shares of Common Stock or securities convertible into shares of
Common Stock to raise future funds needed to operate the Company's business
operations and implement its business and marketing initiatives. In such event,
the only remaining options to finance the Company's operations would be to
borrow funds to the extent that such financing would be available on terms
acceptable to the Company.
If the Amendment were approved by the Company's shareholders, Article 4 of
the Company's Articles of Incorporation would be amended and restated in its
entirety to read as follows:
4. The authorized capital stock of the Corporation shall be
125,000,000 shares of Common Stock, $0.01 par value.
A copy of the proposed Amendment is attached as Appendix A.
The additional authorized shares of the Company's Common Stock, if and when
issued, would be part of the existing class of Common Stock and would have the
same rights and privileges as the shares of Common Stock presently issued and
outstanding. Although the additional shares of Common Stock would not have any
effect on the rights and privileges of the Company's existing shareholders, the
issuance of additional shares of Common Stock, other than in connection with a
stock split or stock dividend, may have the effect of diluting the voting power
of existing shareholders and decreasing earnings and the book value attributable
to shares
13
presently issued and outstanding. If the Amendment is approved, in general, no
further approval of the Company's shareholders will be required prior to the
issuance of additional shares of Common Stock.
The availability of additional authorized but unissued shares of Common
Stock may have the effect of discouraging attempts to take over control of the
Company, as additional shares of Common Stock could be issued to dilute the
stock ownership and voting power of, or increase the cost to, a party seeking to
obtain control of the Company. The Amendment is not being proposed in response
to any known effort or threat to acquire control of the Company.
If the Amendment is approved, it will become effective upon its filing with
the Pennsylvania Secretary of the Commonwealth, which will occur as soon as
reasonably practicable after approval.
Required Vote
The affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy and voting at the Annual Meeting will be required
to approve this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THIS PROPOSAL
14
PROPOSAL 3
APPROVAL OF THE 2007 STOCK OPTION PLAN
Introduction
The GeneLink, Inc. 2007 Stock Option Plan (the "Plan") is intended to
attract and retain directors, officers, employees and consultants of the Company
and to motivate these persons to achieve performance objectives related to the
Company's overall goal of increasing shareholder value. The Board of Directors
approved and adopted the Plan on January 18, 2007, and the Plan is being
submitted to the shareholders of the Company for approval. If a quorum is
present at the Annual Meeting, the approval of the Plan must receive the
affirmative vote of a majority of the votes cast at the Annual Meeting.
The Company does not have any equity compensation plan in place and no
options are outstanding with respect to prior equity compensation plans.
The Board of Directors believes approval of the Plan by shareholders is in
the Company's best interest. The principal reason for adopting the Plan is to
ensure that the Company has a mechanism for long-term, equity-based incentive
compensation to directors, officers, employees and consultants. The Plan is
designed to comply with Rule 16b-3 under the Securities and Exchange Act of
1934, as amended, and, to the extent applicable, with the provisions of Section
409A of the Internal Revenue Code of 1986, as amended (the "Code").
Summary of the Plan
The full text of the Plan is set forth at Appendix B to this Proxy
Statement, and the following summary is qualified in its entirety by reference
to Appendix B.
General. The Plan provides that awards may be made for ten years, and the
Plan will remain in effect thereafter until all matters relating to the payment
of awards and administration of the Plan have been settled.
Administration. The Plan, if approved by the shareholders of the Company,
will be administered by the Board of Directors or the compensation committee of
the Board of Directors (the "Committee"). The Committee has sole authority to
administer and interpret the Plan. The Committee, within the terms of the Plan,
selects eligible employees, directors and consultants to participate in the Plan
and determines the type, amount and duration of individual awards.
Shares Available. The Plan provides that the aggregate number of shares of
Common Stock that may be subject to award may not exceed 6,000,000 shares,
subject to adjustment in certain circumstances to prevent dilution. The Common
Stock capitalized everywhere else to be delivered under the Plan will be
authorized and unissued shares. Shares underlying awards that are canceled,
expired, forfeited or terminated shall, in most circumstances, again be
available for the grant of additional awards within the limits provided by the
Plan.
Eligibility. The Plan provides for awards to eligible employees of the
Company and to non-employee directors and consultants of the Company. Because it
is generally within the discretion of the Committee to determine which
participants receive awards and the amount and type of award received, it is not
possible at the present time to determine the amount of awards or the number of
individuals to whom awards will be made under the Plan. The executive
15
officers of the Company named in the table under the caption "Executive
Compensation" herein are among the individuals who would be eligible to receive
awards under the Plan.
Option Awards. Subject to the terms and provisions of the Plan, options to
purchase the Common Stock of the Company may be granted to participants at any
time and from time to time as shall be determined by the Committee. Such options
may be "incentive stock options," as defined in Section 422 of the Code, or
"non-qualified options" under the Code. Incentive stock options may only be
granted to eligible employees and not to non-employee directors. The Committee
will have discretion in determining the number of shares of Common Stock to be
covered by each option granted to the recipient. Each grant of options under the
Plan will be evidenced by an option agreement that will specify the exercise
price, the duration of the option, the number of shares to which the option
pertains, the percentage of the option that becomes exercisable on specified
dates in the future, and such other provisions as the Committee may determine.
The initial exercise price for each option granted under the Plan will be
determined by the Committee in its discretion, provided that the exercise price
of any option may not be less than the fair market value of the Common Stock (as
determined pursuant to the Plan) on the date of grant of the option and, in the
case of any optionee who owns stock representing more than 10% of the total
combined voting power of all classes of capital stock of the Company (within the
meaning of Section 422(b)(6) of the Code), 110% of such fair market value with
respect to any option intended to qualify as an incentive stock option.
All options granted under the Plan will expire no later than ten years from
the date of grant. Subject to the limitations set forth in the Plan, any option
may be exercised by payment to the Company of cash or, at the discretion of the
Committee, by surrender of shares of the Company's Common Stock owned by the
participant (including, if the Committee so permits, a portion of the shares as
to which the option is then being exercised), or a combination of cash and such
shares.
The Plan places limitations on the exercise of options that constitute
incentive stock options under certain circumstances upon or after termination of
employment, and also provides the Committee with the discretion to place similar
limitations on the exercise of any non-qualified options. Options are
nontransferable except by will or in accordance with applicable laws of descent
and distribution. The granting of an option does not provide the recipient the
rights of a shareholder, and such rights accrue only after the exercise of an
option and the payment in full of the exercise price by the optionee for the
shares being purchased.
New Plan Benefits. No options have been granted or will be granted under
the Plan prior to the approval of the Plan by the shareholders of the Company.
Effect of Change in Control. Awards under the Plan are generally subject to
special provisions upon the occurrence of a "change in control" (as defined in
the Plan) transaction with respect to the Company. Under the Plan, upon the
occurrence of a change in control any outstanding stock options under the Plan
will generally become fully vested and exercisable, unless the agreement entered
into with respect to such equity award provides otherwise. Payments under awards
that become subject to the excess parachute tax rules may be reduced under
certain circumstances.
16
Amendment and Termination. The Board of Directors may, at any time and from
time to time, terminate, amend, or modify some or all of the provisions of the
Plan. However, without the approval of the shareholders of the Company (as may
be required by the Code, by Section 16 of the Securities Exchange Act of 1934,
as amended, by any national securities exchange or system on which the shares
are then listed or reported, or by a regulatory body having jurisdiction with
respect hereto) no such termination, amendment, or modification may: (i)
materially increase the total number of shares which may be granted under the
Plan, (ii) materially modify the requirements as to eligibility for
participation in the Plan or (iii) materially increase the benefits accruing to
participants under the Plan. No termination, amendment or modification of the
Plan may in any manner adversely affect any award previously granted under the
Plan, without the written consent of the recipient.
Federal Income Tax Consequences
The following description of federal income tax consequences is based on
current statutes, regulations and interpretations. The description does not
address state or local income tax consequences. In addition, the description is
not intended to address specific tax consequences applicable to an individual
participant who receives an award under the Plan.
Incentive Options. There will not be any federal income tax consequences to
either the optionee or the Company as a result of the grant of an incentive
stock option under the Plan. The exercise by an optionee of an incentive stock
option also will not result in any federal income tax consequences to the
Company or the optionee until the employee sells the underlying stock, except
that (i) an amount equal to the excess of the fair market value of the shares
acquired upon exercise of the incentive stock option, determined at the time of
exercise, over the amount paid for the shares by the optionee will be includable
in the optionee's alternative minimum taxable income for purposes of the
alternative minimum tax and (ii) the optionee may be subject to an additional
excise tax if any amounts are treated as excess parachute payments, as discussed
below. Special rules will apply if previously acquired shares of Common Stock
are permitted to be tendered in payment of an option exercise price or if shares
otherwise to be received pursuant to the exercise of such option are used for
such purpose.
If the optionee disposes of the shares of Common Stock acquired upon
exercise of the incentive stock option, the federal income tax consequences will
depend upon how long the optionee has held the shares. If the optionee does not
dispose of the shares within two years after the incentive stock option was
granted, nor within one year after the incentive stock option was exercised and
the shares were transferred to the optionee, then the optionee will recognize a
long-term capital gain or loss. The amount of the long-term capital gain or loss
will be equal to the difference between (i) the amount the optionee realized on
disposition of the shares and (ii) the option price at which the optionee
acquired the shares. The Company would not be entitled to any compensation
expense deduction under these circumstances.
If the optionee disposes of the shares of Common Stock before both of the
required holding periods have expired (a "disqualifying disposition"), then the
optionee will be required to report as ordinary income, in the year the shares
are disposed of an amount equal to the lesser of (1) the fair market value of
the stock on the date the incentive stock option is exercised (or, for
directors, officers of greater than 10% shareholders of the Company, generally
the fair market value of the shares six months after the date of exercise,
unless such persons file an election under Section 83(b) of the Code within 30
days of exercise) or (2) the amount realized on the disposition of the shares
less the basis of the stock acquired through the exercise of the incentive
17
stock option. The Company will be entitled to a compensation expense deduction
in an amount equal to the ordinary income includable in the taxable income of
the optionee (as such deduction may be limited by certain provisions of the
Code). The remainder of the gain recognized on the disposition, if any, or any
loss recognized on the disposition, will be treated as long-term or short-term
capital gain or loss, depending on the holding period.
Non-qualified Options. Neither the optionee nor the Company incurs any
federal income tax consequences as a result of the grant of a non-qualified
option. However, optionee will be taxed upon grant if option has a "readily
ascertainable value" (i.e. actively traded on an established market). Upon
exercise of a non-qualified option, an optionee will recognize ordinary income,
subject, in the case of employees, to payroll tax withholding and reporting
requirements, on the "includability date" in an amount equal to the difference
between (i) the fair market value of the shares purchased, determined on the
includability date and (ii) the consideration paid for the shares. The
includability date generally will be the date of exercise of the non-qualified
option. However, the includability date for participants who are officers,
directors or greater than 10% shareholders of the Company will generally occur
six months later, unless such persons file an election under Section 83(b) of
the Code within 30 days of the date of exercise to include as ordinary income
the amount realized upon exercise of the non-qualified option. The optionee may
be subject to an additional excise tax if any amounts are treated as excess
parachute payments, as discussed below. Special rules will apply if previously
acquired shares of Common Stock are permitted to be tendered in payment of an
option exercise price or if shares otherwise to be received pursuant to the
exercise of such option are used for such purpose.
At the time of a subsequent sale or disposition of any shares of Common
Stock obtained upon exercise of a non-qualified option, any gain or loss will be
a capital gain or loss. Such capital gain or loss will be long-term capital gain
or loss if the sale or disposition occurs more than one year after the
includability date and short-term capital gain or loss if the sale or
disposition occurs one year or less after the includability date.
In general, the Company will be entitled to a compensation expense
deduction in connection with the exercise of a non-qualified option for any
amounts includable in the taxable income of the optionee as ordinary income (as
such deduction may be limited by certain provisions of the Code).
Excise Tax on Parachute Payments. Section 4999 of the Code imposes an
excise tax on "excess parachute payments," as defined in Section 280G of the
Code. Generally, parachute payments are payments in the nature of compensation
to employees or independent contractors who are also officers, shareholders or
highly-compensated individuals, where such payments are contingent on a change
in ownership or control of the stock or assets of the paying corporation. In
addition, the payments generally must be substantially greater in amount than
the recipient's regular annual compensation. Under Treasury Regulations
finalized by the Internal Revenue Service in 2003, under certain circumstances
the grant, vesting, acceleration or exercise of awards pursuant to the Plan
could be treated as contingent on a change in ownership or control for purposes
of determining the amount of a participant's parachute payments.
In general, the amount of a parachute payment (some portion of which may be
deemed to be an "excess parachute payment") would be the cash or the fair market
value of the property received (or to be received) less the amount paid for such
property. If a participant were found to have received an excess parachute
payment, he or she would be subject to a special
18
nondeductible 20% excise tax on the amount thereof, and the Company would not be
allowed to claim any deduction with respect thereto.
New Plan Benefits Table. The amount, if any, of stock options to be awarded
to key employees is determined on an annual basis by the Committee and is not
presently determinable.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE ADOPTION OF THIS PROPOSAL
SHAREHOLDER PROPOSALS FOR NEXT YEAR
Shareholders who intend to have a proposal considered for inclusion in the
Company's proxy materials for presentation at the 2008 Annual Meeting of
Shareholders pursuant to Rule 14a-8 under the Exchange Act must submit their
proposal to us at the Company's offices at 113 Pavonia Avenue, #313, Jersey
City, New Jersey 07310, not later than October 30, 2007.
Shareholders who intend to present a proposal at such meeting without
inclusion of such proposal in the Company's proxy materials pursuant to Rule
14a-8 under the Exchange Act are required to provide advanced notice of such
proposal to the Company at the aforementioned address not later than December
16, 2007.
If the Company does not receive notice of a shareholder proposal within
this timeframe, management will use its discretionary authority to vote the
shares they represent, as our Board of Directors may recommend. The Company
reserves the right to reject, rule out of order, or take other appropriate
action with respect to any proposal that does not comply with these and all
other applicable requirements.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
Some banks, brokers and other nominee record holders may be participating
in the practice of "householding" proxy statements and annual reports. This
means that only one copy of the Company's Proxy Statement or Annual Report may
have been sent to multiple shareholders in your household. The Company will
promptly deliver a separate copy of either document to you if you write to the
Company at 113 Pavonia Avenue #313, Jersey City, New Jersey 07310, attention:
Chairman or call the Company at (800) 558-4363. If you want to receive separate
copies of the Annual Report and Proxy Statement in the future, or if you are
receiving multiple copies and would like to receive only one copy for your
household, you should contact your bank, broker, or other nominee record holder,
or you may contact the Company at the above address and phone number.
ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 2005, including financial statements for such period, is being mailed to
shareholders with this Proxy Statement, but such report does not constitute a
part of this Proxy Statement.
OTHER MATTERS
As of the date hereof, management does not intend to present, nor has it
been informed that other persons intend to present, any matters for action at
the Meeting, other than those
19
specifically referred to herein. If, however, any other matters should properly
come before the Meeting, it is the intention of the persons named in the proxies
to vote the shares represented thereby in accordance with their best judgment on
such matters.
The expenses of soliciting proxies in the form included with this Proxy
Statement and the cost of preparing, assembling and mailing materials in
connection with such solicitation of proxies will be borne by the Company. In
addition to the use of mail, the Company's directors, executive officers and
employees may solicit proxies personally or by telephone.
By Order of the Board of Directors:
/s/ Robert P. Ricciardi
----------------------------------------
Robert P. Ricciardi, Ph.D.
Chairman of the Board
February 1, 2007
20
APPENDIX A
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION
OF
GENELINK, INC.
THE UNDERSIGNED BUSINESS CORPORATION, desiring to amend its Articles
of Incorporation, in compliance with the requirements of Section 1915 of the
Pennsylvania Business Corporation Law of 1988, hereby certifies that:
1. The name of the Corporation is:
GeneLink, Inc.
2. The address, including street and number, of the Corporation's
registered office is:
c/o CT Corporation
1635 Market Street
Philadelphia, PA 19103
(Philadelphia County)
3. The statute under which the Corporation was incorporated is the
Pennsylvania Business Corporation Law of 1988.
4. The date of its incorporation is: January 6, 1995
5. The amendment was adopted pursuant to Section 1914(a) of the
Pennsylvania Business Corporation Law of 1988 by the Corporation's
Shareholders.
6. The amendment adopted by the Corporation, set forth in full, is as
follows:
Article 4 of the Corporation's Articles of Incorporation is hereby
amended to read in full as follows:
4. The authorized capital stock of the Corporation shall be
125,000,000 shares of Common Stock, $0.01 par value.
IN WITNESS WHEREOF, the undersigned Corporation has caused these Articles
of Amendment to be signed by its duly authorized officer this ___ day of
____________, 2007.
GENELINK, INC.
By:
------------------------------------
Monte E. Taylor,
Acting Chief Executive Officer
A-1
APPENDIX B
GENELINK, INC.
2007 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN
The purposes of this 2007 Stock Option Plan are to enable GeneLink, Inc.
(the "Company") and its Subsidiaries to attract and retain the services of
key employees and persons with managerial, professional or supervisory
responsibilities, including, but not limited to, members of the Board of
Directors, officers of, and consultants to, the Company and its
Subsidiaries, responsible for the past and continued success of the Company
and its Subsidiaries, and to provide them with increased motivation and
incentive to exert their best efforts on behalf of the Company and its
Subsidiaries by enlarging their personal stake in their success.
2. GENERAL PROVISIONS
2.1 Definitions
As used in the Plan:
(a) "Act" means the Securities Exchange Act of 1934, including any
and all amendments thereto.
(b) "Board of Directors" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, including any and
all amendments thereto.
(d) "Committee" means the committee, if any, appointed by the Board
of Directors from time to time to administer the Plan pursuant to
Section 2.2.
(e) "Common Stock" means the Company's Voting Common Stock, $.01 par
value.
(f) "Company" means GeneLink, Inc., a Pennsylvania corporation.
(g) "Fair Market Value" means, with respect to a specific date, the
last reported sale price of the Common Stock in the
over-the-counter market, as reported by NASDAQ if the Common
Stock is trading on the NASDAQ National Market; or, if the Common
Stock is listed or traded on a national securities exchange in
the event that the Fair Market Value is not on the date Fair
Market Value is being determined, Fair Market Value means the
last reported sale price of Common Stock on such exchange; in the
event that the Fair Market Value is not determinable by any of
B-1
the foregoing means, then the Fair Market Value shall be
determined in good faith by the Board of Directors or the
Committee, as the case may be, on the basis of such methods and
considerations as the Board of Directors or the Committee, as the
case may be, shall deem appropriate, including, but not limited
to the last sale price by the Company of its Common Stock or any
securities convertible into Common Stock.
(h) "Incentive Stock Option" means an option granted under the Plan
which is intended to qualify as an incentive stock option under
Section 422 of the Code.
(i) Non-Qualified Stock Option" means an option granted under the
Plan which is not an Incentive Stock Option
(j) "Option Event" means the date upon which beneficial ownership
(determined in accordance with Rule 13d-3 under the Act) of
shares of the Company's Common Stock are acquired (other than
directly from the Company in exchange for cash or property) by
any Person (as used in Sections 13 or 14 of the Act), other than
any persons who is an officer or director of the Company on July
20, 1998, who thereby becomes the beneficial owner (as defined in
Rule 13d-3 under the Act) of more than 40% of the issued and
outstanding share of the Company's Common Stock.
(k) "Participant" means a person to whom a Stock Option has been
granted under the Plan.
(l) "Plan" means this 2000 Stock Option Plan.
(m) "Stock Option" means an Incentive Stock Option or a Non-Qualified
Stock Option granted under the Plan.
(n) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Stock Option, each of the
corporations other than the last corporation in the unbroken
chain owns 50% or more of the total voting power of all classes
of stock in one of the other corporations in such chain.
2.2 Administration of the Plan
(a) The Plan shall be administered by the Board of Directors,
provided, however that the Board of Directors may appoint a
Committee to administer the Plan, which shall at all times
consist of two (2) or more persons, each of whom shall be members
of the Board of Directors. The Board of Directors may from time
to time remove members from, or add members to, the Committee.
Vacancies on the Committee, howsoever caused, shall be filled by
the Board of Directors. The Committee shall select one of its
B-2
members as Chairperson, and shall hold meetings at such times and
places as it may determine.
(b) The Board of Directors or the Committee, as the case may be,
shall have the full power, subject to and within the limits of
the Plan, to: (i) interpret and administer the Plan, and Stock
Options granted under it; (ii) make and interpret rules and
regulations for the administration of the Plan and to make
changes in and revoke such rules and regulations (and in the
exercise of this power, shall generally determine all questions
of policy and expediency that may arise and may correct any
defect, omission, or inconsistency in the Plan or any agreement
evidencing the grant of any Stock Option in a manner and to the
extent it shall deem necessary to make the Plan fully effective);
(iii) determine those persons to whom Stock Options shall be
granted and the number of Stock Options to be granted to any
person; (iv) determine the terms of Stock Options granted under
the Plan, consistent with the provisions of the Plan; and (v)
generally, exercise such powers and perform such acts in
connection with the Plan as are deemed necessary or expedient to
promote the best interests of the Company. The interpretation and
construction by the Board of Directors or the Committee, as the
case may be, of any provision of the Plan or of any Stock Option
shall be final, binding and conclusive.
(c) The Board of Directors or the Committee, as the case may be, may
act only by a majority of its members then in office; however,
the Board of Directors or the Committee, as the case may be, may
authorize any one (1) or more of its members or any officer of
the Company to execute and deliver documents on behalf of the
Board of Directors or the Committee, as the case may be.
(d) No member of the Board of Directors or the Committee, as the case
may be, shall be liable for any action taken or omitted to be
taken or for any determination made by him or her in good faith
with respect to the Plan, and the Company shall indemnify and
hold harmless each member of the Board of Directors or the
Committee, as the case may be, against any cost or expense
(including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Board of Directors
or the Committee, as the case may be) arising out of any act or
omission in connection with the administration or interpretation
of the Plan, unless arising out of such person's own fraud or bad
faith.
2.3 Effective Date
The Plan shall be effective upon approval by the shareholders of the
Company.
B-3
2.4 Duration
Unless sooner terminated by the Board of Directors, the Plan shall
remain in effect until December 31, 2016.
2.5 Shares Subject to the Plan
The maximum number of shares of Common Stock which may be subject to
Stock Options granted under the Plan shall be 6,000,000. The maximum
number of shares of Common Stock and the Stock Options shall be
subject to adjustment in accordance with Section 4.1, and shares to be
issued upon exercise of Stock Options may be either authorized and
unissued shares of Common Stock or authorized and issued shares of
Common Stock purchased or acquired by the Company for any purpose. If
a Stock Option or portion thereof shall expire or is terminated,
canceled or surrendered for any reason without being exercised in
full, the unpurchased shares of Common Stock which were subject to
such Stock Option or portion thereof shall be available for future
grants of Stock Options under the Plan.
2.6 Amendments
The Plan may be suspended, terminated or reinstated, in whole or in
part, at any time by the Board of Directors. The Board of Directors
may from time to time make such amendments to the Plan as it may deem
advisable, including, with respect to Incentive Stock Options,
amendments deemed necessary or desirable to comply with Section 422 of
the Code and any regulations issued thereunder; provided, however,
that without the approval of the Company's shareholders no amendment
shall be made which:
(a) Increases the maximum number of shares of Common Stock which may
be subject to Stock Options granted under the Plan (other than as
provided in Section 4.1); or
(b) Extends the term of the Plan; or
(c) Increases the period during which a Stock Option may be exercised
beyond ten (10) years from the date of grant; or
(d) Otherwise materially increases the benefits accruing to
Participants under the Plan; or
(e) Materially modifies the requirements as to eligibility for
participation in the Plan.
Except as otherwise provided herein, termination or amendment of the
Plan shall not, without the consent of a Participant, affect such
Participant's rights under any Stock Option previously granted to such
Participant.
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2.7 Participants and Grants
Stock Options may be granted by the Board of Directors or the
Committee, as the case may be, to those persons who the Board of
Directors or the Committee, as the case may be, determines have the
capacity to make a substantial contribution to the success of the
Company. The Board of Directors or the Committee, as the case may be,
may grant Stock Options to purchase such number of shares of Common
Stock (subject to the limitation of Section 2.5) as the Board of
Directors or the Committee, as the case may be, may, in its sole
discretion, determine. In granting Stock Options, the Board of
Directors or the Committee, as the case may be, on an individual
basis, may vary the number of Incentive Stock Options or Non-Qualified
Stock Options as between Participants and may grant Incentive Stock
Options and/or Non-Qualified Stock Options to a Participant in such
amounts as the Board of Directors or the Committee, as the case may
be, may determine in its sole discretion.
3. STOCK OPTIONS
3.1 General
All Stock Options granted under the Plan shall be evidenced by written
agreements executed by the Company and the Participant to whom granted
and dated as of the applicable date of grant, which agreement shall
state the number of shares of Common Stock which may be purchased upon
the exercise thereof and shall contain such investment representation
and other terms and conditions as the Board of Directors or the
Committee, as the case may be, may from time to time determine, or, in
the case of Incentive Stock Options, as may be required by Section 422
of the Code, or any other applicable law. Each such grant shall be
signed on behalf of the Company by a member of the Board of Directors
or the Committee, as the case may be, or by an officer delegated such
authority by the Board of Directors or the Committee, as the case may
be.
3.2 Price
Subject to the provisions of Sections 3.6(d) and 4.1, the purchase
price per share of Common Stock subject to a Stock Option shall, in no
case, be less than one hundred percent (100%) of the Fair Market Value
of a share of Common Stock on the date the Stock Option is granted.
3.3 Period
The duration or term of each Stock Option granted under the Plan shall
be for such period as the Committee shall determine but in no event
more than ten (10) years from the date of grant thereof.
3.4 Exercise
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Subject to Section 4.4, Stock Options may be exercisable immediately
upon the grant of the Stock Option or at such other time or times as
the Board of Directors or the Committee, as the case may be, shall
specify when granting the Stock Option. Once exercisable, a Stock
Option shall be exercisable, in whole or in part, by delivery of a
written notice of exercise to the Secretary of the Company at the
principal office of the Company specifying the number of whole shares
of Common Stock as to which the Stock Option is then being exercised
together with payment of the full purchase price for the shares being
purchased upon such exercise. Until the shares of Common Stock as to
which a Stock Option is exercised are issued, the Participant shall
have none of the rights of a shareholder of the Company with respect
to such shares.
3.5 Payment
The purchase price for shares of Common Stock as to which a Stock
Option has been exercised and any amount required to be withheld, as
contemplated by Section 4.3, may be paid:
(a) In United States dollars in cash, or by check, bank draft or
money order payable in United States dollars to the order of the
Company; or
(b) By the delivery by the Participant to the Company of whole shares
of Common Stock having an aggregate Fair Market Value on the date
of payment equal to the aggregate of the purchase price of Common
Stock as to which the Stock Option is then being exercised or by
the withholding of whole shares of Common Stock having such Fair
Market Value upon the exercise of such Stock Option; or
(c) By a combination of both (a) and (b) above.
The Board of Directors or the Committee, as the case may be, may, in
its discretion, impose limitations. conditions and prohibitions on the
use by a Participant of shares of Common Stock to pay the purchase
price payable by such Participant upon the exercise of a Stock Option.
3.6 Special Rules for Incentive Stock Options
Notwithstanding any other provision of the Plan, the following
provisions shall apply to Incentive Stock Options granted under the
Plan:
(a) Incentive Stock Options shall only be granted to Participants who
are employees of the Company or a Subsidiary.
(b) To the extent that the aggregate Fair Market Value of Common
Stock, with respect to which Incentive Stock Options are
exercisable for the first time by a Participant during any
calendar year under the Plan and any other Stock Option Plan of
the
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Company, exceeds $100,000, such Stock Options shall be treated as
Non-Qualified Stock Options.
(c) Any Participant who disposes of shares of Common Stock acquired
upon the exercise of an Incentive Stock Option by sale or
exchange either within two (2) years after the date of the grant
of the Incentive Stock Option under which the shares were
acquired or within one (1) year of the acquisition of such
shares, shall promptly notify the Secretary of the Company at the
principal office of the Company of such disposition, the amount
realized, the purchase price per share paid upon exercise and the
date of disposition.
(d) No Incentive Stock Option shall be granted to a Participant who,
at the time of the grant, owns stock representing more than ten
percent (10%) of the total combined voting power of all classes
of stock either of the Company or any parent or Subsidiary of the
Company, unless the purchase price of the shares of Common Stock
purchasable upon exercise of such Incentive Stock Option is at
least one hundred ten percent (110%) of the Fair Market Value (at
the time the Incentive Stock Option is granted) of the Common
Stock and the Incentive Stock Option is not exercisable more than
five (5) years from the date it is granted.
3.7 Termination of Employment or Relationship
(a) In the event a Participant's employment by, or relationship with,
the Company or its Subsidiaries shall terminate for any reason
other than those reasons specified in Sections 3.7(b), (c), (d),
(e) or (f) while such Participant holds Stock Options, then all
rights of any kind under any outstanding Stock Option held by
such Participant which shall not have previously lapsed or
terminated shall expire immediately.
(b) If a Participant's employment by, or relationship with, the
Company or its Subsidiaries shall terminate as a result of such
Participant's total disability, each Stock Option held by such
Participant (which has not previously lapsed or terminated) shall
immediately become fully exercisable as to the total number of
shares of Common Stock subject thereto (whether or not
exercisable to that extent at the time of such termination) and
shall remain so exercisable by such Participant for a period of
six (6) months after termination unless such Stock Option expires
earlier by its terms. For purposes of the Plan, "total
disability" shall mean permanent mental or physical disability as
determined by the Board of Directors or the Committee, as the
case may be.
(c) In the event of the death of a Participant, each Stock Option
held by such Participant (which has not previously lapsed or
terminated) shall immediately become fully exercisable as to the
total number of shares of Common Stock subject thereto
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(whether or not exercisable to that extent at the time of death)
by the executor or administrator of the Participant's estate or
by the person or persons to whom the deceased Participant's
rights thereunder shall have passed by will or by the laws of
descent or distribution, and shall remain so exercisable for a
period of six (6) months after such Participant's death unless
such Stock Option expires earlier by its terms.
(d) If a Participant's employment by the Company or a Subsidiary
shall terminate by reason of such Participant's retirement in
accordance with Company policies, each Stock Option held by such
Participant at the date of termination (which has not previously
lapsed or terminated) shall immediately become fully exercisable
as to the total number of shares of Common Stock subject hereto
(whether or not exercisable to that extent at the time of such
termination) and shall remain so exercisable by such Participant
for a period of three (3) months after termination, unless such
Stock Option expires earlier by its terms.
(e) In the event the Company or a Subsidiary terminates the
employment of a Participant who at the time of such termination
had been continuously employed by the Company or a Subsidiary
during the three (3) year period immediately preceding such
termination, for any reason except "good cause" (hereafter
defined) and except upon such Participant's death, total
disability or retirement in accordance with Company policies,
each Stock Option held by such Participant (which has not
previously lapsed or terminated and which has been held by such
Participant for more than six (6) months prior to such
termination) shall immediately become fully exercisable as to the
total number of shares of Common Stock subject thereto (whether
or not exercisable to that extent at the time of such
termination) and shall remain so exercisable for a period of
three (3) months after such termination unless such Stock Option
expires earlier by its terms. A termination for "good cause"
shall have occurred only if the Participant in question is
terminated, by written notice (i) because of his or her
conviction of a felony for a crime involving an act of fraud or
dishonesty, (ii) intentional acts or omissions on such
Participant's part causing material injury to the property or
business of the Company or any Subsidiary, or (iii) because such
Participant shall have breached any material term of any
employment agreement in place between such Participant and the
Company or any Subsidiary and shall have failed to correct such
breach within any grace period provided for in such agreement.
"Good cause" for termination shall not include bad judgment or
any act or omission reasonably believed by such Participant, in
good faith, to have been in, or not opposed to, the best
interests of the Company and its Subsidiaries.
(f) In the event of the termination of a Participant's service as a
Director of the Company, who at the time of such termination
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had continuously served as a Director of the Company during the
three (3) year period immediately preceding such termination, and
such termination is for any reason except for such Participant's
death or total disability or the removal of such Participant as
Director (by the shareholders, the Board of Directors or
otherwise) for "good cause" (as defined in Section 3.7(e)(i) and
(ii)), each Stock Option held by such Participant (which has not
previously lapsed or terminated and which has been held by such
Participant for more than six (6) months prior to such
termination) shall immediately become fully exercisable as to the
total number of shares of Common Stock subject thereto (whether
or not exercisable to that extent at the time of such
termination) and shall remain so exercisable for a period of
three (3) months after such termination unless such Stock Option
expires earlier by its terms.
3.8 Effect of Leaves of Absence
It shall not be considered a termination of employment when a
Participant is on military or sick leave or such other type of leave
of absence which is considered a continuing intact the employment
relationship of the Participant with the Company or any of its
Subsidiaries. In case of such leave of absence, the employment
relationship shall be deemed to have continued until the later of (i)
the date when such leave shall have lasted ninety (90) days in
duration, or (ii) the date as of which the Participant's right to
re-employment shall have no longer been guaranteed either by statute
or contract.
3.9 Acceleration and Redemption
Upon the occurrence of an Option Event, (a) all Stock Options granted
and outstanding under the Plan shall become immediately exercisable in
full regardless of any terms of said Stock Option to the contrary: and
(b) until the earlier to occur of the stated expiration date of the
Stock Option and the expiration of the ninety (90) day period
following written notice from the Company to all Participants of the
occurrence of the Option Event, all Participants shall have the right
to demand that the Company cancel and redeem any and all Stock Options
held by the Participants by paying with respect to each such Stock
Option a price equal to the difference between the purchase price per
share of Common Stock subject to such Stock Option and the highest
price that can be determined to have been paid by any Person (as that
word is used in Section 2.1(j)) for any share or shares of the
Company's Common Stock prior to the earlier to occur of the stated
expiration date of the Stock Option and the expiration of the
aforementioned ninety (90) day demand period.
4. MISCELLANEOUS PROVISIONS
4.1 Adjustments Upon Changes in Capitalization
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In the event of changes to the outstanding shares of Common Stock of
the Company through reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend,
stock consolidation or otherwise, or in the event of a sale of all or
substantially all of the assets of the Company, an appropriate and
proportionate adjustment shall be made in the number and class of
shares as to which Stock Options may be granted. A corresponding
adjustment changing the number or class of shares and/or the exercise
price per share of unexercised Stock Options or portions thereof which
shall have been granted prior to any such change shall likewise be
made. Notwithstanding the foregoing, in the case of a reorganization,
merger or consolidation, or sale of all or substantially all of the
assets of the Company, in lieu of adjustments as aforesaid, the Board
of Directors or the Committee, as the case may be, may in is
discretion accelerate the date after which a Stock Option may or may
not be exercised or the stated expiration date thereof. Adjustments or
changes under this Section 4.1 shall be made by the Board of Directors
or the Committee, as the case may be, whose determination as to what
adjustments or changes shall be made, and the extent thereof, shall be
final, binding and conclusive.
4.2 Non-Transferability
No Stock Option shall be transferable except by will or the laws of
descent and distribution, nor shall any Stock Option be exercisable
during the Participant's lifetime by any person other than the
Participant or his or her guardian or legal representative.
4.3 Withholding
The Company's obligations under the Plan shall be subject to
applicable federal, state and local tax withholding requirements.
Federal, state and local withholding tax due at the time of a grant or
upon the exercise of any Stock Option may, in the discretion of the
Board of Directors or the Committee, as the case may be, be paid in
shares of Common Stock already owned by the Participant or through the
withholding of shares otherwise issuable to such Participant, upon
such terms and conditions as the Board of Directors or the Committee,
as the case may be, shall determine. If the Participant shall fail to
pay, or make arrangements satisfactory to the Board of Directors or
the Committee, as the case may be, for the payment, to the Company of
all such federal, state and local taxes required to be withheld by the
Company, then the Company shall, to the extent permitted by law, have
the right to deduct from any payment of any kind otherwise due to such
Participant an amount equal to any federal, state or local taxes of
any kind required to be withheld by the Company.
4.4 Compliance with Law and Approval of Regulatory Bodies
No Stock Option shall be exercisable and no shares will be delivered
under the Plan except in compliance with all applicable federal and
state laws and regulations including, without limitation, compliance
with all federal and state securities laws and withholding tax
requirements and with the
B-10
rules of NASDAQ, if the Common Stock is listed on the NASDAQ National
Market, and of all domestic stock exchanges on which the Common Stock
may be listed. Any share certificate issued to evidence shares for
which a Stock Option is exercised may bear legends and statements the
Board of Directors or the Committee, as the case may be, shall deem
advisable to assure compliance with federal and state laws and
regulations. No Stock Option shall be exercisable and no shares will
be delivered under the Plan, until the Company has obtained the
consent or approval from regulatory bodies, federal or state, having
jurisdiction over such matters as the Board of Directors or the
Committee, as the case may be, may deem advisable. In the case of the
exercise of a Stock Option by a person or estate acquiring the right
to exercise the Stock Option as a result of the death of the
Participant, the Board of Directors or the Committee, as the case may
be, may require reasonable evidence as to the ownership of the Stock
Option and may require consents and releases of taxing authorities
that it may deem advisable.
4.5 No Right to Employment
Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, nor the
granting of any Stock Options hereunder, shall confer upon any
Participant under the Plan any right to continue in the employ of the
Company or any Subsidiary, or shall in any way affect the right and
power of the Company or any Subsidiary to terminate the employment of
any Participant at any time with or without assigning a reason
therefor, to the same extent as might have been done if the Plan had
not been adopted.
4.6 Exclusion from Pension Computations
By acceptance of a grant of a Stock Option under the Plan, the
recipient shall be deemed to agree that any income realized upon the
receipt or exercise thereof or upon the disposition of the shares
received upon exercise will not be taken into account as "base
remuneration", "wages", "salary" or "compensation" in determining the
amount of any contribution to or payment or any other benefit under
any pension, retirement, incentive, profit-sharing or deferred
compensation plan of the Company or any Subsidiary.
4.7 Abandonment of Options
A Participant or Eligible Director may at any time abandon a Stock
Option prior to its expiration date. The abandonment shall be
evidenced in writing, in such form as the Board of Directors or the
Committee, as the case may be, may from time to time prescribe. A
Participant or Eligible Director shall have no further rights with
respect to any Stock Option so abandoned.
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4.8 Interpretation of the Plan
Headings are given to the Sections of the Plan solely as a convenience
to facilitate reference, such headings, numbering and paragraphing
shall not in any case be deemed in any way material or relevant to the
construction of the Plan or any provision hereof. The use of the
masculine gender shall also include within its meaning the feminine.
The use of the singular shall also include within Its meaning the
plural and vice versa.
4.9 Use of Proceeds
Funds received by the Company upon the exercise of Stock Options shall
be used for the general corporate purposes of the Company.
4.10 Construction of Plan
The place of administration of the Plan shall be in the Commonwealth
of Pennsylvania, and the validity, construction, interpretation,
administration and effect of the Plan and of its rules and
regulations, and rights relating to the Plan, shall be determined
solely in accordance with the laws of the Commonwealth of
Pennsylvania.
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APPENDIX C
AUDIT COMMITTEE CHARTER
ORGANIZATION
There shall be a committee of the board of directors of GeneLink, Inc. (the
"Corporation") to be known as the Audit Committee. The Audit Committee shall be
composed of directors who are independent of the management of the Corporation
and are free of any relationship that, in the opinion of the board of directors,
would interfere with their exercise of independent judgment as a committee
member.
STATEMENT OF POLICY
The audit committee shall provide assistance to the Corporation's directors
in fulfilling their responsibilities to the shareholders, potential
shareholders, and investment community relating to corporate accounting,
reporting practices of the Corporation, and the quality and integrity of the
financial reports of the Corporation. In so doing, it is the responsibility of
the Audit Committee to maintain free and open means of communication between the
directors, the independent auditors, the internal auditors, and the financial
management of the Corporation.
RESPONSIBILITIES
In carrying out its responsibilities, the Audit Committee believes its
policies and procedures should remain flexible, in order to best react to
changing conditions and to ensure to the Corporation's directors and
shareholders that the corporate accounting and reporting practices of the
Corporation are in accordance with all requirements and are of the highest
quality.
In carrying out these responsibilities, the Audit Committee will:
- Review and recommend to the Corporation's directors the independent
auditors to be selected to audit the financial statements of the
Corporation and its divisions and subsidiaries.
- Meet with the independent auditors and financial management of the
Corporation to review the scope of the proposed audit for the current
year and the audit procedures to be utilized, and at the conclusion
thereof review such audit, including any comments or recommendations
of the independent auditors.
- Review with the independent auditors, the Corporation's internal
auditor, and financial and accounting personnel, the adequacy and
effectiveness of the accounting and financial controls of the
Corporation, and elicit any recommendations for the improvement of
such internal control procedures or particular areas where new or more
detailed controls or procedures are desirable. Particular emphasis
should be given to the adequacy of such internal controls to expose
any payments, transactions, or procedures that might be deemed illegal
or otherwise improper. Further, the Audit Committee periodically
should review Corporation policy statements to determine their
adherence to the code of conduct.
- Review the internal audit function of the Corporation including the
independence and authority of its reporting obligations, the proposed
audit plans for the coming year, and the coordination of such plans
with the independent auditors.
C-1
- Receive prior to each meeting, a summary of findings from completed
internal audits and a progress report on the proposed internal audit
plan, with explanations for any deviations from the original plan.
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine
that the independent auditors are satisfied with the disclosure and
content of the financial statements to be presented to the
shareholders. Any changes in accounting principles should be reviewed.
- Provide sufficient opportunity for the internal and independent
auditors to meet with the members of the Audit Committee without
members of management present. Among the items to be discussed in
these meetings are the independent auditors' evaluation of the
Corporation's financial, accounting, and auditing personnel, and the
cooperation that the independent auditors received during the course
of the audit.
- Submit the minutes of all meetings of the Audit Committee to, or
discuss the matters discussed at each committee meeting with, the
Corporation's Board of Directors.
- Investigate any matter brought to its attention within the scope of
its duties, w
- Review and assess the adequacy of the charter on an annual basis.
C-2
FORM OF PROXY CARD
GENELINK, INC.
PROXY FOR
ANNUAL MEETING OF SHAREHOLDERS
February 28, 2007
This proxy is solicited on behalf of the Board of Directors. The
undersigned shareholder of GeneLink, Inc., a Pennsylvania corporation
("GeneLink"), hereby appoints Monte E. Taylor, Jr., as proxy with full power of
substitution, for the undersigned to vote the number of shares of common stock
of GeneLink that the undersigned would be entitled to vote if personally present
at the Annual Meeting of Shareholders of GeneLink to be held on February 28,
2007, at 10:00 a.m. local time, at Crowne Plaza Hotel, The Discovery Meeting
Room, 5555 Hazeltine National Drive, Orlando, FL 32812 and at any adjournment or
postponement thereof, on the following matters that are more particularly
described in the Proxy Statement dated February 1, 2007.
This proxy when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted "FOR" Proposals 1, 2 and 3. Receipt of the Proxy Statement dated
February 1, 2007, is hereby acknowledged.
You are encouraged to specify your choices by marking the appropriate
boxes, but you need not mark any boxes if you wish to vote in accordance with
the board of directors' recommendation. The proxies cannot vote your shares
unless you sign and return this card.
1. Proposal to elect directors of GeneLink, each to serve until
GeneLink's next annual meeting of stockholders or until their
respective successors have been duly elected and qualified.
[ ] FOR ALL NOMINEES LISTED BELOW [ ] WITHHOLD AUTHORITY
FOR ALL NOMINEES LISTED
BELOW
[ ] FOR ALL EXCEPT (to withhold authority for any individual nominee,
cross out his name below)
Robert Hoekstra
Dr. Bernard L. Kasten, Jr.
Robert P. Ricciardi, Ph.D.
John H. Souza
Monte E. Taylor, Jr.
2. Proposal to approve the Amendment to GeneLink's Articles of
Incorporation to increase the capitalization from 75,000,000 shares of
common stock, $0.01 par value, to 125,000,000 shares of common stock,
$0.01 par value.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to adopt the 2007 Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
----------------------------------------
Name of Shareholder(s)
----------------------------------------
Signature of Shareholder(s)
Please sign your name exactly as it
appears hereon. Joint owners must each
sign. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title as
it appears thereon.
Date: _______________, 2007
PLEASE MARK, SIGN, DATE AND RETURN USING THE ENCLOSED ENVELOPE