SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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THE CHROMALINE CORPORATION
4832 GRAND AVENUE
DULUTH, MINNESOTA 55807
(218) 628-2217
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders
to be held at The Kitchi Gammi Club, 831 E. Superior Street, Duluth, Minnesota,
at 1:00 p.m., Central Time, on April 24, 2001.
The Secretary's Notice of Annual Meeting and the Proxy Statement which
follow describe the matters to come before the meeting. During the meeting, we
will also review the activities of the past year and items of general interest
about the Company.
We hope that you will be able to attend the meeting in person and we
look forward to seeing you. Please mark, date and sign the enclosed proxy and
return it in the accompanying envelope as quickly as possible, even if you plan
to attend the Annual Meeting. You may revoke the proxy and vote in person at
that time if you so desire.
Sincerely,
/s/ William C. Ulland
William C. Ulland
CHAIRMAN OF THE BOARD
March 23, 2001
THE CHROMALINE CORPORATION
----------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 24, 2001
----------------------------------
The Annual Meeting of Shareholders of The Chromaline Corporation will be
held at The Kitchi Gammi Club, 831 E. Superior Street, Duluth, Minnesota, at
1:00 p.m., Central Time, on April 24, 2001 for the following purposes:
1. To elect six directors for a one-year term.
2. To transact such other business as may properly be brought before
the meeting.
The Board of Directors has fixed March 9, 2001 as the record date for
the meeting, and only shareholders of record at the close of business on that
date are entitled to receive notice of and vote at the meeting.
YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. EVEN IF YOU
OWN ONLY A FEW SHARES, AND WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE
MEETING, PLEASE MARK, DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN THE
ACCOMPANYING POSTAGE-PAID REPLY ENVELOPE AS QUICKLY AS POSSIBLE. YOU MAY REVOKE
YOUR PROXY AT ANY TIME PRIOR TO ITS EXERCISE AND RETURNING YOUR PROXY WILL NOT
AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING AND REVOKE THE
PROXY.
By Order of the Board of Directors,
/s/ Jeffery A. Laabs
Jeffery A. Laabs
SECRETARY
Duluth, Minnesota
March 23, 2001
------------------
PROXY STATEMENT
------------------
GENERAL INFORMATION
The enclosed proxy is being solicited by the Board of Directors of The
Chromaline Corporation, a Minnesota corporation ("Chromaline" or the "Company"),
for use in connection with the Annual Meeting of Shareholders to be held on
April 24, 2001 at The Kitchi Gammi Club, 831 E. Superior Street, Duluth,
Minnesota, at 1:00 p.m., Central Time, and at any adjournments thereof. Only
shareholders of record at the close of business on March 9, 2001 will be
entitled to vote at such meeting or adjournment. Proxies in the accompanying
form which are properly signed, duly returned to the Company and not revoked
will be voted in the manner specified. A shareholder executing a proxy retains
the right to revoke it at any time before it is exercised by notice in writing
to the Secretary of the Company of termination of the proxy's authority or a
properly signed and duly returned proxy bearing a later date.
The address of the principal executive office of the Company is 4832
Grand Avenue, Duluth, Minnesota 55807 and the telephone number is (218)
628-2217. The mailing of this Proxy Statement and the Board of Directors' form
of proxy to shareholders will commence on or about March 23, 2001.
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by the use of the mails, certain directors,
officers and employees of the Company may solicit proxies by telephone,
telegram, electronic mail or personal contact, and have requested brokerage
firms and custodians, nominees and other record holders to forward soliciting
materials to the beneficial owners of stock of the Company and will reimburse
them for their reasonable out-of-pocket expenses in so forwarding such
materials.
The Common Stock of the Company, par value $.10 per share, is the only
authorized and issued voting security of the Company. At the close of business
on March 9, 2001 there were 1,271,627 shares of Common Stock issued and
outstanding, each of which is entitled to one vote. Holders of Common Stock are
not entitled to cumulate their votes for the election of directors.
The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock present in person or represented by proxy at the meeting
and entitled to vote is required for approval of each proposal presented in this
Proxy Statement. A shareholder voting through a proxy who abstains with respect
to any matter is considered to be present and entitled to vote on such matter at
the meeting and is in effect a negative vote. However, a shareholder (including
a broker) who does not give authority to vote, or withholds authority to vote,
on any proposal shall not be considered present and entitled to vote on such
proposal.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of February 7, 2001, the number of
shares of Common Stock beneficially owned by each person who is a beneficial
owner of more than 5% of the Common Stock issued and outstanding, by each
executive officer named in the Summary Compensation Table, by each director, and
by all officers and directors as a group. All persons have sole voting and
dispositive power over such shares unless otherwise indicated.
NAME AND ADDRESS NUMBER PERCENTAGE OF
OF BENEFICIAL OWNER(1) OF SHARES OUTSTANDING SHARES
- ----------------------------------- --------------------- --------------------
Directors and executive officers:
William C. Ulland 144,650(2) 11.3%
Philip J. Hourican 11,000(3) *
Charles H. Andresen 11,797(4) *
Gerald W. Simonson 58,460(5) 4.4
David O. Harris 53,038(6) 4.0
Leigh Severance 126,711 10.0
Rondi Erickson 1,000 *
All directors and executive 432,083(7) 33.3
officers as a group (11 persons,
including those named above)
- --------------------
* Less than one percent.
(1) The address for each of the persons listed below is 4832 Grand Avenue,
Duluth, Minnesota 55807.
(2) Includes options to purchase 4,400 shares of Common Stock exercisable within
60 days of February 7, 2001. Mr. Ulland was elected Chief Executive Officer
on February 7, 2000 and President on December 19, 2000 and continues as
Chairman of the Board.
(3) Mr. Hourican resigned his position with the Company on February 7, 2000.
(4) Includes options to purchase 2,640 shares of Common Stock exercisable within
60 days of February 7, 2001.
(5) Includes options to purchase 2,640 shares of Common Stock exercisable within
60 days of February 7, 2001.
(6) Includes options to purchase 2,640 shares of Common stock exercisable within
60 days of February 7, 2001.
(7) Includes options to purchase 24,602 shares of Common Stock exercisable
within 60 days of February 7, 2001.
2
ELECTION OF DIRECTORS
The business of the Company is managed under the direction of a Board of
Directors, with the number of directors fixed from time to time by the Board of
Directors. The Board of Directors has fixed at six the number of directors to be
elected to the Board at the 2001 Annual Meeting of Shareholders and has
nominated the six persons named below for election as directors, each to serve
for a one-year term. Proxies solicited by the Board of Directors will, unless
otherwise directed, be voted to elect the six nominees named below.
Each of the nominees is a current director of the Company and each has
indicated a willingness to serve as a director for the one-year term. In case
any nominee is not a candidate for any reason, the proxies named in the enclosed
form of proxy may vote for a substitute nominee in their discretion.
Following is certain information regarding the nominees for the office
of director:
WILLIAM C. ULLAND, AGE 60
Mr. Ulland has been a director and Chairman of the Board of the Company
since 1972. On February 7, 2000, he became Chief Executive Officer. On December
19, 2000, he was named to the additional position of President. Since 1977, Mr.
Ulland has been Managing Partner of American Shield Company, a mineral
exploration and development company located in Duluth, Minnesota.
CHARLES H. ANDRESEN, AGE 60
Mr. Andresen was elected as a director of the Company in 1979. Mr.
Andresen has been a shareholder in the law firm of Andresen, Haag, Paciotti, &
Butterworth, P.A., in Duluth, Minnesota for more than the past five years.
GERALD W. SIMONSON, AGE 70
Mr. Simonson was elected as a director of the Company in 1978. He has
been the President of Omnetics Connector Corporation, a manufacturer of
microminiature connectors for the electronics industry located in Minneapolis,
Minnesota, for more than the past five years. Mr. Simonson is also a director of
Broadview Media, Inc., a film and video production company.
DAVID O. HARRIS, AGE 66
Mr. Harris was elected a director of the Company in 1965. He has been
President of David O. Harris, Inc., a manufacturer's representative firm in
Minneapolis, Minnesota, for more than the past five years.
3
RONDI ERICKSON, AGE 53
Ms. Erickson was elected as a director of the Company in 2000. She has
been the Chief Executive Officer and a director of Apprise Technologies Inc., a
company that develops and sells optical and electronic-based sensor
technologies, since October 1999. Prior to joining Apprise, Ms. Erickson founded
American Science Corporation, a registered FDA manufacturing establishment that
provided contract manufacturing and research and development support for a
dental pharmaceutical company, in 1995. Prior to founding American Science, Ms.
Erickson founded Bay West, Inc., an environmental services firm, in 1974 and
served as its Chief Executive Officer.
H. LEIGH SEVERANCE, AGE 62
Mr. Severance was elected as a director of the Company in 2000. He has
been the President of Severance Capital Management, a provider of investment
management and research services to partnerships and individual investors, since
1983. Prior to founding Severance Capital Management, Mr. Severance was a
portfolio manager with J.M. Hartwell & Co. Founders Growth Fund and Cambiar
Investors since 1968. Mr. Severance also serves as a director of a private
company.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETING ATTENDANCE
The Board of Directors met seven times during fiscal 2000. All incumbent
directors attended at least 75% of the meetings of the Board and of the
committees on which they served held during the periods for which they served as
a director. The Company currently has an Audit Committee and a Compensation
Committee. Following is a description of the functions performed by each of the
Committees:
AUDIT COMMITTEE
The Company's Audit Committee presently consists of Messrs. Simonson
(Chairman), Andresen, Harris and Severance and Ms. Erickson. A majority of the
members of the Audit Committee are "independent" as that term is defined in the
applicable listing standards of The Nasdaq Stock Market. The Audit Committee
provides assistance to the Board of Directors in fulfilling their duties
relating to corporate accounting, reporting practices of the Company and the
quality and integrity of the Company's financial reports. Among other things,
the Audit Committee reviews and recommends the selection of the Company's
independent auditors, meets with the independent auditors and financial
management to review the scope of the audit and the audit procedures and reviews
annually the responsibilities of the Audit Committee and recommends to the Board
of Directors any changes to these responsibilities. The responsibilities of the
Audit Committee are set forth in the Audit Committee Charter, adopted by the
Company's Board of Directors on June 13, 2000, a copy of which is included as
Exhibit A to this Proxy Statement. The Audit Committee met twice during fiscal
2000.
COMPENSATION COMMITTEE
The Company's Compensation Committee presently consists of Messrs.
Andresen (Chairman), Simonson, Harris and Severance and Ms. Erickson. The
Compensation Committee
4
annually reviews and acts upon the compensation package for the Chief Executive
Officer and sets compensation policy for the other employees of the Company. In
addition, the Compensation Committee acts upon management recommendations
concerning employee stock options, bonuses and other compensation and benefit
plans. The Compensation Committee also administers the Chromaline Corporation
1995 Stock Incentive Plan. The Compensation Committee met three times during
fiscal 2000.
DIRECTOR COMPENSATION
During 1998, each non-employee director of the Company who beneficially
owns not more than 5% of the Company's outstanding Common Stock received a
one-time grant of an option to purchase 3,300 shares of the Company's Common
Stock under the 1995 Stock Incentive Plan. These options have an exercise price
equal to the fair market value on the date of grant and will expire seven years
from the date of grant. In addition, each non-employee director of the Company
who beneficially owns not more than 5% of the Company's outstanding Common Stock
receives a quarterly retainer of $1,000, plus per meeting fees of $700 for each
meeting of the Board of Directors attended in person, $350 for each meeting of
the Board of Directors attended by telephone, $300 for each committee meeting
attended in person and $150 for each committee meeting attended by telephone.
On April 26, 1999, each non-employee director of the Company received a
one-time grant of an option to purchase 1,320 shares of the Company's Common
Stock under the 1995 Stock Incentive Plan. These options have an exercise price
equal to the fair market value on the date of the grant and will expire seven
years from the date of the grant. Mr. Ulland also received a grant of an
incentive stock option to purchase 3,300 shares of the Company's Common Stock
under the 1995 Stock Incentive Plan in connection with his position as Chairman
of the Board of Directors. Mr. Ulland's options have an exercise price equal to
110% of the fair market value on the date of the grant and will expire seven
years from the date of the grant.
On April 26, 2000, each non-employee director of the Company who
beneficially owns not more than 5% of the Company's outstanding Common Stock
received a one-time grant of an option to purchase 1,600 shares of the Company's
Common Stock under the 1995 Stock Incentive Plan. These options have an exercise
price equal to the fair market value on the date of the grant and will expire
five years from the date of the grant. Mr. Ulland also received a grant of an
incentive stock option to purchase 5,000 shares of the Company's Common Stock
under the 1995 Stock Incentive Plan in connection with his position as Chairman
of the Board of Directors. Mr. Ulland's options have an exercise price equal to
110% of the fair market value on the date of the grant and will expire five
years from the date of the grant.
5
REPORT OF THE AUDIT COMMITTEE
The role of the Company's Audit Committee, which is composed of five
independent non-employee directors, is one of oversight of the Company's
management and the Company's outside auditors in regard to the Company's
financial reporting and the Company's controls respecting accounting and
financial reporting. In performing its oversight function, the Audit Committee
relied upon advice and information received in its discussions with the
Company's management and independent auditors.
The Audit Committee has (i) reviewed and discussed the Company's audited
financial statements for the fiscal year ended December 31, 2000 with the
Company's management; (ii) discussed with the Company's independent auditors the
matters required to be discussed by Statement on Auditing Standards No. 61
regarding communication with audit committees (Codification of Statements on
Auditing Standards, AU sec. 380); and (iii) received the written disclosures and
the letter from the Company's independent accountant required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
and has discussed with the Company's independent accountant the independent
accountant's independence.
Based on the review and discussions with management and the Company's
independent auditors referred to above, the Audit Committee recommended to the
Board of Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
2000 for filing with the Securities and Exchange Commission.
AUDIT COMMITTEE
Gerald W. Simonson, Chairman
Charles H. Andresen
David O. Harris
H. Leigh Severance
Rondi Erickson
AUDIT FEES
The aggregate fees billed for the audit of the Company's annual consolidated
financial statements for fiscal 2000 and for the review of the Company's interim
consolidated financial statements for each quarter in fiscal 2000 were
approximately $40,800.
ALL OTHER FEES
The Company also paid its principal accountant approximately $13,600 for fees
related to tax services. No other services were rendered to the Company by the
Company's principal accountant during fiscal 2000. The Audit Committee has
determined that the provision of these services was compatible with maintaining
the independence of the Company's principal accountant.
6
EXECUTIVE OFFICERS
Following is certain information regarding the current executive
officers of the Company other than William C. Ulland:
JEFFERY A. LAABS, AGE 46
Mr. Laabs was named Chief Financial Officer on January 1, 2000. He
previously served as Vice President of Finance and Controller of the Company
since May 1998. He also serves as Treasurer and Secretary of the Company. Mr.
Laabs was a Senior Financial Analyst for Lake Superior Paper Industries in
Duluth, Minnesota from September 1986 until he joined Chromaline in 1998. His
prior experience includes various financial positions with Kimberly Clark
Corporation from September 1981 until September 1986. Mr. Laabs received a
Bachelor of Science degree in Accounting from Lake Superior State University in
1976. He earned the designation of Certified Management Accountant in 1996.
CLAUDE P. PIGUET, AGE 43
Mr. Piguet was named Executive Vice President December 19, 2000.
Previously, he was the Company's Vice President of Operations since May 1994. He
was the Company's Director of Operations from January 1992 to May 1994. Mr.
Piguet joined Chromaline in 1990 and holds a diploma of Engineer ETS/HTL from
the Ecole D'Ingenieurs de l'Etat de Vaud in Switzerland.
TOSHIFUMI KOMATSU, AGE 46
Mr. Komatsu has been the Company's Vice President of Technology since
September 1993. Previously, he served as Chromaline's Director of Research and
Development for two years. Mr. Komatsu has been with Chromaline's Research and
Development Department for 15 years. His prior experience includes positions in
research and development at Alberta Gas Chemicals, a manufacturer of organic
acids. He received a B.S. in Chemistry and Mathematics from the College of Saint
Scholastica in 1980.
ROBERT D. BANKS, JR., AGE 49
Mr. Banks has been the Company's Vice President of International Sales
since February 1997. Previously, he was the Company's Director of International
Sales and Marketing from 1989 to 1997.
7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding
compensation for the fiscal years ended December 31, 2000, 1999, and 1998
provided to the two individuals who served as Chief Executive Officer of the
Company during 2000 (the "Named Executive Officers"). None of the Company's
other executive officers received remuneration exceeding $100,000 in 2000.
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION SHARES
--------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS OPTIONS(2) COMPENSATION(3)
---------------------------- ---- --------- ------- ------------ ---------------
William C. Ulland, 2000 $116,962 $1,960 5,000 $ 0
Chairman, President and Chief 1999 40,000 5,874 3,300 0
Executive Officer 1998 35,385 5,184 0 0
Philip J. Hourican, 2000 14,654 5,880 0 94,490
President and Chief Executive 1999 127,000 7,341 4,950 470
Officer 1998 55,400 2,990 20,526 32,496
- ----------------
(1) Mr. Ulland became Chief Executive Officer on February 7, 2000 upon the
resignation of Mr. Hourican. Prior to that he was Chairman of the Company.
If Mr. Ulland had been employed as both Chairman and Chief Executive
Officer for all of 2000, his salary would have been $127,000. Mr. Ulland
was named to the additional position of President on December 19, 2000. Mr.
Hourican joined the Company as President and Chief Executive Officer on
July 13, 1998. If he had been employed for all for 1998, his salary would
have been $120,000. Mr. Hourican resigned his position with the Company on
February 7, 2000.
(2) Represents options to purchase Common Stock granted under the Company's
1995 Stock Incentive Plan.
(3) Amounts reported for Mr. Hourican in 1998 represent payments made for
reimbursement of moving and temporary living expenses. Amounts reported for
Mr. Hourican in 1999 represent a company car allowance for personal use.
Amounts reported for Mr. Hourican in 2000 represent severance pay, vacation
pay and company car allowances.
8
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes option grants made during fiscal 2000 to
the Named Executive Officers.
INDIVIDUAL GRANTS
---------------------------------------------------
POTENTIAL
REALIZABLE VALUE
PERCENTAGE AT ASSUMED ANNUAL
NUMBER OF OF TOTAL RATES OF STOCK
SHARES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION --------------------
NAME GRANTED(2) FISCAL YEAR SHARE DATE 5% 10%
- ------------------ ------------ -------------- ----------- ----------- --------------------
William C. Ulland 5,000 13.2% $7.2188 4/26/2005 $46,067 $58,129
Philip J. Hourican - - - - - -
- -------------
(1) The potential realizable value is based on a 5-year term of each option at
the time of grant. Assumed stock price appreciation of 5% and 10% is
mandated by rules of the Securities and Exchange Commission and is not
intended to forecast actual future financial performance or possible future
appreciation. The potential realizable value is calculated by assuming that
the fair market value of the Company's Common Stock on the date of grant
appreciates at the indicated rate for the entire term of the option and that
the option is exercised at the exercise price and sold on the last day of
its term at the appreciated price.
(2) Options granted pursuant to the Company's 1995 Stock Incentive Plan are
exercisable at an exercise price equal to the fair market value on the date
of grant. The options in the above table vest in three equal increments on
the day prior to the first, second and third anniversaries of the date of
grant. These options have a maximum term of five years, subject to earlier
termination in the event of the optionee's cessation of service with the
Company.
9
AGGREGATE OPTION
EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The purpose of the following table is to report exercise of stock
options by the Named Executive Officers during fiscal 2000 and the value of
their unexercised stock options as of December 31, 2000.
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
--------------------------- -----------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ ----------- --------- ------------ ------------- ----------- -------------
William C. Ulland - - 4,400 7,200 $2,750 $0
Philip J. Hourican - - - - - -
- -----------
(1) Value is based on the difference between the per share closing price of the
Company's Common Stock on December 31, 2000 ($4.875 per share) and the
exercise price of the options.
EMPLOYMENT CONTRACTS; TERMINATION OF
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company does not have any employment or non-competition agreements
with any members of its executive management team but has entered into
confidentiality and non-solicitation agreements with such persons. Such
agreements provide that the executive will not solicit any other employee of the
Company to leave the Company during the executive's employment with the Company
and for one year following such employment, will not compete with the Company
during the executive's employment and will protect the proprietary information
of the Company during and following such executive's employment.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's directors, executive officers and
persons who own more than ten percent of the Company's Common Stock file initial
reports of ownership of the Company's Common Stock and changes in such ownership
with the Securities and Exchange Commission. To the Company's knowledge based
solely on a review of copies of forms submitted to the Company during and with
respect to fiscal 2000 and on written representations from the Company's
directors and executive officers, all required reports were filed on a timely
basis during fiscal 2000, except for the Form 3 reports for Rondi Erickson and
H. Leigh Severance that were due on May 8, 2000 and were filed on May 17, 2000.
10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Rondi Erickson joined the Company's Board of Directors in April 2000.
Ms. Erickson is the Chief Executive Officer and a director of Apprise
Technologies, Inc. ("Apprise"). In 2000, the Company purchased 150,000 shares of
Common Stock of Apprise and a Warrant to purchase an additional 150,000 shares
of Common Stock for an aggregate purchase price of $112,500. As of January 11,
2001, the Company's ownership of Apprise Common Stock represents approximately
4.0% of the outstanding shares of Common Stock of Apprise and approximately 6.5%
on a fully-diluted basis.
RELATIONSHIP WITH AND APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP has been the auditors for the Company
since January 1996. The Board of Directors again has selected Deloitte & Touche
LLP to serve as the Company's independent auditors for the fiscal year ending
December 31, 2001. It is the judgement of the Board and its Audit Committee,
that Deloitte & Touche LLP has conducted its affairs in an appropriate manner
and warrants continuation as the Company's independent auditors
A representative of Deloitte & Touche LLP will be present at the Annual
Meeting of Shareholders and will be afforded an opportunity to make a statement
if such representative so desires and will be available to respond to
appropriate questions during the meeting.
ADDITIONAL MATTERS
The Annual Report of the Company for the year ended December 31, 2000,
including financial statements, is being mailed with this Proxy Statement.
Shareholder proposals intended to be presented at the 2002 Annual
Meeting of Shareholders must be received by the Company at its principal
executive office no later than November 15, 2001 for inclusion in the Proxy
Statement for that meeting. Any other shareholder proposal must be received by
the Company at its principal executive office no later than January 29, 2002 in
order to be presented at the 2002 Annual Meeting of Shareholders.
As of the date of this Proxy Statement, management knows of no matters that will
be presented for determination at the meeting other than those referred to
herein. If any other matters properly come before the Annual Meeting calling for
a vote of shareholders, it is intended that the shares of Common Stock
represented by the proxies solicited by the Board of Directors will be voted by
the persons named therein in accordance with their best judgment.
By Order of the Board of Directors,
/s/ Jeffery A. Laabs
Jeffery A. Laabs
SECRETARY
Dated: March 23, 2001
11
EXHIBIT A
THE CHROMALINE CORPORATION
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governs the audit committee of the Board of Directors of The
Chromaline Corporation. The audit committee shall be composed of a minimum of
three 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 judgement as a committee member.
POLICY STATEMENT
The audit committee shall provide assistance to the corporate 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 doing so, it is the responsibility of the audit committee to
maintain free and open communication between the directors, the independent
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 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 its responsibilities, the audit committee will:
o Review and recommend to the Directors on an annual basis, the
independent auditors to be selected to audit the financial statements of
the corporation.
o 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. As part of the proposed audit, the committee
will review the range of the cost of the audit for the services to be
performed by the independent auditors.
o Review with management and the independent auditors, the annual and
interim financial statements, including the Form 10-KSB.
A-1
o Review policies and procedures with respect to officers' expense
accounts and perquisites, including their use of corporate assets, and
consider the results of any review of these areas by the independent
auditor.
o Review the adequacy of the Company's systems of internal control.
o Review the programs and policies of the Company designed to ensure
compliance with applicable laws and regulations and monitoring the
results of these compliance efforts.
o Provide an independent, direct communication between the Board of
Directors and the independent auditors.
o Report committee actions to the Board of Directors with any
recommendations as the committee may deem appropriate.
o The committee shall meet at least three times per year or more
frequently as circumstances require. The committee may ask members of
management or others to attend the meeting and provide pertinent
information as necessary.
o The committee shall maintain minutes or other records of meetings and
activities of the audit committee.
o Review the powers of the audit committee annually and report to the
Board of Directors any recommendations of changes to their
responsibilities.
The committee will perform such other functions as assigned by law, the
Company's charter or bylaws, or the Board of Directors.
A-2
THE CHROMALINE CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, APRIL 24, 2001
1:00 P.M., LOCAL TIME
THE KITCHI GAMMI CLUB
831 E. SUPERIOR STREET
DULUTH, MINNESOTA
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THE CHROMALINE CORPORATION
4832 GRAND AVENUE, DULUTH, MN 55807 PROXY
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This proxy is solicited by the Board of Directors for use at the Annual Meeting
on April 24, 2001.
The shares of stock you hold in your account or in a dividend reinvestment
account will be voted as you specify on the reverse side.
If no choice is specified, the proxy will be voted "FOR" Item 1.
By signing the proxy, you revoke all prior proxies and appoint William C. Ulland
and Jeffery A. Laabs, and each of them, with full power of substitution, to vote
your shares on the matter shown on the reverse side and any other matters which
may come before the Annual Meeting and all adjournments.
SEE REVERSE FOR VOTING INSTRUCTIONS.
HOW TO VOTE YOUR PROXY
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to The Chromaline Corporation, c/o Shareowner
Services, P.O. Box 64873, St. Paul, MN 55164-0873.
PLEASE DETACH HERE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
1. Election of directors:
01 Charles H. Andresen 04 William C. Ulland / / Vote FOR / / Vote WITHHELD
02 David O. Harris 05 Rondi C. Erickson all nominees from all nominees
03 Gerald W. Simonson 06 H. Leigh Severance (except as marked)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.
TO CUMULATE VOTES SO INDICATE.)
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THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box / /
Indicate changes below:
Date 2001
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Signature(s) in Box
(If there are co-owners, each must sign.)
Please sign exactly as your name(s) appear on Proxy. If held in joint tenancy,
all persons must sign. Trustees, administrators, etc., should include title and
authority. Corporations should provide full name of corporation and title of
authorized officer signing the proxy.