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:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Soliciting material pursuant to Rule 14a-1(c) or Rule 14a-2
WINSTON RESOURCES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/ / $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
WINSTON RESOURCES, INC.
535 FIFTH AVENUE
NEW YORK, NEW YORK 10017
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 22, 1997
------------------------
The Annual Meeting of Stockholders of Winston Resources, Inc. (the
"Company") will be held at the offices of Newman Tannenbaum Helpern Syracuse &
Hirschtritt LLP, 900 Third Avenue, New York, New York 10022 on Thursday, May 22,
1997, at 9:00 a.m. local time for the following purposes:
1. To elect a director to hold office for a term of three years and until
his successor has been elected and qualified.
2. To consider and act upon a proposal to ratify the selection of Ernst &
Young LLP as the Company's independent auditors for the current fiscal year.
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Only stockholders of record at the close of business on April 18, 1997 are
entitled to notice of and to vote at the Annual Meeting. A list of such
stockholders will be available at the Annual Meeting for examination by any
stockholder. During the ten days prior to the Annual Meeting, the list may be
inspected by any stockholder, for any purpose germane to the Annual Meeting,
during usual business hours at the offices of Newman Tannenbaum Helpern Syracuse
& Hirschtritt LLP, 900 Third Avenue, New York, New York 10022.
Your attention is drawn to the accompanying Proxy Statement.
By Order of the Board of Directors,
David Silver
Secretary
April 28, 1997
New York, New York
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON ARE
URGED TO DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING PROXY CARD IN THE
ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE.
WINSTON RESOURCES, INC.
535 FIFTH AVENUE
NEW YORK, NEW YORK 10017
------------------------
PROXY STATEMENT
------------------------
This Proxy Statement and the accompanying proxy card are to be mailed to
holders of shares of common stock, par value $.01 per share (the "Common
Stock"), of Winston Resources, Inc., a Delaware corporation (the "Company"),
commencing on or about April 28, 1997, in connection with the solicitation of
proxies by the Board of Directors of the Company (the "Board") for use at the
1997 Annual Meeting of Stockholders (the "Meeting") to be held on Thursday, May
22, 1997 at 9:00 a.m. local time at the offices of Newman Tannenbaum Helpern
Syracuse & Hirschtritt LLP.
Proxies in the form enclosed are solicited by the Board for use at the
Meeting. All properly executed proxies received prior to or at the Meeting will
be voted. If a proxy specifies how it is to be voted, it will be so voted. If no
specification is made, it will be voted (1) for the election of management's
nominee as director, (2) for ratification of the selection of Ernst & Young LLP
as the Company's independent auditors for the current fiscal year, and (3) if
other matters properly come before the Meeting, in the discretion of either of
the persons named in the proxy. The proxy may be revoked by a properly executed
writing of the stockholder delivered to the Company's Chairman of the Board or
Secretary before the Meeting, or by the stockholder at the Meeting before it is
voted.
The Board has fixed the close of business on April 18, 1997 as the record
date for determining the stockholders of the Company entitled to notice of and
to vote at the Meeting. On that date, there were 3,180,104 shares of Common
Stock outstanding and entitled to vote. Each such share is entitled to one vote
on each matter submitted to a vote at the Meeting. Stockholders are not entitled
to vote cumulatively in the election of directors.
As required under Section 231 of the Delaware General Corporation Law (the
"DGCL"), the Company will, in advance of the Meeting, appoint one or more
Inspectors of Election to conduct the vote of the Meeting. The Company may
designate one or more persons as alternate Inspectors of Election to replace any
Inspector of Election who fails to act. If no Inspector or alternate Inspector
is able to act at the Meeting, the person presiding at the Meeting will appoint
one or more Inspectors of Election. Each Inspector of Election before entering
the discharge of his duties shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality. The Inspectors of Election
will (i) ascertain the number of shares of Common Stock outstanding as of the
record date, (ii) determine the number of shares of Common Stock present or
represented by proxy at the Meeting and the validity of the proxies and ballots,
(iii) count all votes and ballots, and (iv) certify the determination of the
number of shares of Common Stock present in person or represented by proxy at
the Meeting and the count of all votes and ballots.
The holders of a majority of the shares of Common Stock issued and
outstanding and entitled to vote at the Meeting, present in person or
represented by proxy, shall constitute a quorum at the Meeting. Under Section
216 of the DGCL, any stockholder who abstains from voting on any particular
matter described herein will be counted for purposes of determining a quorum.
For purposes of voting on the matters described herein, the affirmative vote of
(i) a plurality of the shares of Common Stock present or represented at the
Meeting is required to elect management's nominee as director; and (ii) a
majority of the shares present or represented at the Meeting is required to
ratify the selection by the Board of Ernst & Young LLP as the Company's
independent auditors for the current fiscal year.
1
EXECUTIVE OFFICERS
The executive officers of the Company are identified in the table below.
Each executive officer of the Company serves at the pleasure of the Board of
Directors.
YEAR BECAME AN
NAME AGE POSITION EXECUTIVE OFFICER
- -------------------------------------------- --- -------------------------------------------- -----------------
Seymour Kugler.............................. 60 Chairman, President and Chief Executive 1967
Officer
Jesse Ulezalka.............................. 48 Chief Financial Officer 1995
Alan E. Wolf................................ 52 Vice President 1974
Todd Kugler................................. 31 Vice President 1995
Gregg S. Kugler............................. 34 Vice President 1993
David Silver................................ 66 Vice President and Secretary 1992
ELECTION OF DIRECTORS
The Restated Certificate of Incorporation, as amended (the "Restated
Certificate of Incorporation"), and By-Laws, as amended (the "By-Laws"), of the
Company provide that the number of directors of the Company shall be fixed from
time to time by the Board of Directors but shall not be less than three
classified into three approximately equal classes. The Board of Directors has
fixed the number of directors constituting the entire Board of Directors at
eight. Classes II and III of the Board each consist of three directors, who hold
office until the 1998 and 1999 Annual Meetings of Stockholders, respectively.
The current Class II directors are Martin Wolfson, Martin A. Fischer and Martin
J. Simon. The current Class III directors are Seymour Kugler, Alan E. Wolf and
Gregg S. Kugler. Class I of the Board consists of one director, who holds office
until the 1997 Annual Meeting of Stockholders. There is currently one unfilled
directorship on the Board in Class I, which directorship may only be filled by
action of the Stockholders.
The Board of Directors has selected, and will cause to be nominated at the
Meeting, one person for election as a Class I director, to hold office until the
2000 Annual Meeting and until his successor shall have been duly elected and
qualified. Assuming that a quorum of stockholders is present at the Meeting in
person or by proxy, the director will be elected by a plurality of the votes
cast at the Meeting.
The persons named on the enclosed proxy card or their substitutes will vote
all of the shares that they represent for the nominee listed below unless
instructed otherwise on the proxy card. If such nominee should be unavailable to
stand for election, the persons named on the proxy card or their substitutes may
vote for a substitute designated by the Board of Directors. At the date of this
Proxy Statement, the Board of Directors has no reason to believe that the
nominee listed below will be unable to stand for election.
Set forth below is certain information concerning the directors of the
Company, including the person nominated by the Board of Directors for election
at the Meeting. The nominee for election at the Meeting was previously elected
by the Company's stockholders as a director of the Company.
NOMINEE FOR ELECTION
NAME AGE DIRECTOR SINCE
- ------------------------------------------------------------------------- --- ---------------
Reuben W. Abrams......................................................... 74 1990
2
CONTINUING DIRECTORS
CLASS II AGE DIRECTOR SINCE
- ------------------------------------------------------------------------- --------- ---------------
Martin Wolfson........................................................... 60 1987
Martin A. Fischer........................................................ 60 1987
Martin J. Simon.......................................................... 77 1992
CLASS III
- -------------------------------------------------------------------------
Seymour Kugler........................................................... 60 1967
Alan E. Wolf............................................................. 52 1974
Gregg S. Kugler.......................................................... 34 1992
THE BOARD RECOMMENDS A VOTE FOR THE NOMINEE FOR ELECTION AS A DIRECTOR.
BIOGRAPHICAL INFORMATION
Certain information about the executive officers and the directors of the
Company is set forth below. This information has been furnished to the Company
by the individuals named.
Mr. Seymour Kugler, who is generally known to employees of the Company as Sy
Kaye, founded the Company in 1967 and has been its Chief Executive Officer since
that time.
Mr. Wolf has been a Vice President of the Company since September 17, 1987
and has been an Executive Vice President of the Company's permanent placement
division since 1974.
Mr. Gregg Kugler (who is known generally to clients and employees of the
Company as Gregg Kaye) has been employed by the Company since 1983. He became a
Vice President of the Company on August 12, 1993 and is President of the
Permanent Placement Division. Mr. Kugler is Sy Kaye's son.
Mr. Wolfson, a certified public accountant, is Senior Vice President, Chief
Financial Officer and a director of Concord Fabrics, Inc., New York, New York,
which develops, designs, styles and produces woven and knitted fabrics for sale
to clothing manufacturers and fabric retailers. He has been employed by that
corporation since 1966, has been an officer and a director since 1973 and was
first elected to his present offices in 1981.
Mr. Fischer is a member of the Board of Trustees of Brooklyn Law School. He
has been of counsel to the New York City law firm of Warshaw Burstein Cohen
Schlesinger & Kuh since 1986.
Mr. Simon served as the Chairman of the Board and President of First Central
Financial Corporation and First Central Insurance Company from August 1985 and
August 1980, respectively, through February 1997, at which time he resigned from
such positions. Mr. Simon is a partner in the law firm of Simon, Drabkin &
Margulies, and a member of the Board of Directors of Continental Bank in Garden
City, New York.
Mr. Abrams served as the Treasurer and Chief Financial Officer of the
Company from August 1988 through January 2, 1992, at which time he resigned from
such positions. He currently acts as a consultant to the Company on financial
and accounting matters.
Mr. Silver has been Secretary of the Company since December 31, 1991 and
Vice President-- Administration/Human Resources of the Company since November
1987.
Mr. Ulezalka has been the Chief Financial Officer of the Company since
August 4, 1995. Prior thereto he was CFO of Consultants for Architects, Inc.
from April 1995 - August 1995, a financial consultant from April 1994 - April
1995, CFO, Vice President--Finance of ECCO Staffing Services, Inc. from March
1992 - April 1994, and Vice President--Finance and corporate secretary of Unity
Healthcare Holding Co., Inc. from January 1989 - March 1992.
3
Mr. Todd Kugler (who is known generally to clients and employees of the
Company as Todd Kaye) has been employed by the Company since 1988. He became a
Vice President of the Company and its temporary staffing division on November
23, 1995. Mr. Kugler is Sy Kaye's son.
FUNCTIONS OF THE BOARD OF DIRECTORS AND CERTAIN COMMITTEES
Under the DGCL, the business and affairs of the Company are managed under
the direction of the Board. The Board establishes fundamental corporate policies
and authorizes various types of significant transactions, but is not involved in
day-to-day operational decisions. During 1996, the Board held four meetings.
Each of the directors attended over 75% of the meetings of the Board held in
1996. The Board has appointed from its members an Executive Committee, an Audit
Committee, a Compensation Committee, an Option Committee and an Alternate Option
Committee with the areas of responsibility described below.
The EXECUTIVE COMMITTEE consists of Seymour Kugler, Reuben W. Abrams and
Alan E. Wolf. Gregg Kugler is an alternate member. It is empowered to exercise
all of the authority of the Board, subject to certain limitations specified in
the By-Laws, during the intervals between meetings of the Board. It is
contemplated that meetings of the Executive Committee will be convened only in
extraordinary circumstances when it is not practicable to call a meeting of the
full Board. The Executive Committee did not meet during 1996.
The AUDIT COMMITTEE consists of Martin A. Fischer, Martin Wolfson and Martin
J. Simon. It is responsible for overseeing and reporting to the Board of
Directors concerning the policies and practices of the Company and its
subsidiaries with respect to accounting, financial reporting, and internal
auditing and financial controls. It also is responsible for maintaining a direct
exchange of information between the Board of Directors and the Company's
independent auditors. The Audit Committee held one meeting during 1996.
The COMPENSATION COMMITTEE consists of Martin J. Simon, Martin A. Fischer
and Martin Wolfson. It must approve the salary of each officer of the Company
and its subsidiaries which exceeds a specified amount and is responsible for
reviewing, and making recommendations to the management of the Company
concerning the general policies and practices of the Company and its
subsidiaries with respect to compensation and employee benefits. The
Compensation Committee did not meet during 1996.
The OPTION COMMITTEE consists of Martin A. Fischer, Martin Wolfson and
Martin J. Simon. It administers the Company's 1996 Stock Plan. The ALTERNATE
OPTION COMMITTEE, which administers grants to outside directors under the
Company's 1990 Incentive Program consists of Seymour Kugler, Alan E. Wolf and
Gregg Kugler. The Option Committee acted by unanimous written consent twice
during 1996 and the Alternate Option Committee acted by unanimous written
consent once during 1996.
The Board of Directors has not appointed a nominating committee.
SECURITY OWNERSHIP OF MANAGEMENT AND
CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock with respect to any person who is known to the
Company to be the beneficial owner of more than five percent of any class of the
Company's voting securities, the Company's directors, the Company's "named
executive officers" within the meaning of Item 402(a)(2) of Regulation S-B of
the Securities Act of 1933, as amended (the "Act") and by all of the Company's
directors and executive officers as a group, as reported to the Company as of
March 21, 1997. Beneficial ownership has been determined for purposes of the
following table in accordance, with Rule 13d-3 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), under which a person is deemed to be the
beneficial owner of securities if he or she has
4
or shares voting power or investment power in respect of such securities or has
the right to acquire beneficial ownership within 60 days.
PERCENTAGE OF
NAME AND ADDRESS NUMBER OF SHARES (1) OUTSTANDING SHARES
- ------------------------------------------------------------------------ -------------------- -------------------
DIRECTORS AND OFFICERS
Seymour Kugler (2)(3)................................................... 1,323,689 41.66%
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017
Gregg Kugler (3)(4)..................................................... 127,396 4.01%
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017
Todd Kugler (3)(5)...................................................... 127,464 4.01%
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017
Alan E. Wolf (3)(6)..................................................... 126,624 3.99%
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017
David Silver (3)(7)..................................................... 43,566 1.37%
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017
Reuben W. Abrams (8).................................................... 27,633 (9)
c/o Winston Resources, Inc.
535 Fifth Avenue
New York, New York 10017
Martin Wolfson (10)..................................................... 3,667 (9)
c/o Concord Fabrics Inc.
1359 Broadway
New York, New York 10018
Martin A. Fischer (11).................................................. 6,667 (9)
c/o Warshaw Burstein Cohen Schlesinger & Kuh
535 Fifth Avenue
New York, New York 10017
Martin J. Simon (12).................................................... 7,667 (9)
c/o First Central Insurance Company
266 Merrick Road
Lynbrook, New York 11563
All directors and executive officers as a group (10 persons) (13)....... 1,796,873 56.56%
OTHER BENEFICIAL OWNER
Heartland Advisors, Inc. (14)........................................... 350,500 11.03%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
5
- ------------------------
(1) All shares are beneficially owned and, unless otherwise stated, the sole
voting power and investment power is held by the persons named.
(2) The amount set forth above does not include shares owned by Alec Peters, a
former Vice President of the Company, and Melvin A. Winograd, a former
director and officer of the Company, as to which Mr. Kugler has sole voting
power, but not investment power, pursuant to irrevocable proxies granted in
connection with a voting agreement among the three stockholders. The Company
has no current information in respect of the respective shareholdings of
Messrs. Peters and Winograd, who are no longer affiliated with the Company.
The amount set forth above includes 46,667 shares currently issuable upon
the exercise of stock options issued pursuant to the 1990 Incentive Program
and 16,667 shares currently issuable upon the exercise of stock options
issued pursuant to the 1996 Stock Plan.
(3) For the year ended December 31, 1996 such person was a "Named Executive
Officer" of the Company within the meaning of Item 402(a)(2) of Regulation
S-B of the Act.
(4) The amount set forth above includes 36,667 shares currently issuable upon
the exercise of stock options issued pursuant to the 1990 Incentive Program
and 10,000 shares currently issuable upon the exercise of stock options
issued pursuant to the 1996 Stock Plan. Mr. Kugler disclaims beneficial
ownership of 26,000 shares owned by his children.
(5) The amount set forth above includes: (i) 26,667 shares and 15,333 shares
currently issuable upon the exercise of stock options issued to Mr. Kugler
and his wife, respectively, pursuant to the 1990 Incentive Program and (ii)
6,667 shares and 3,333 shares currently issuable upon the exercise of stock
options issued to Mr. Kugler and his wife, respectively, pursuant to the
1996 Stock Plan. Mr. Kugler disclaims beneficial ownership of 7,000 shares
owned by his child.
(6) The amount set forth above includes 15,000 shares currently issuable upon
the exercise of stock options issued pursuant to the 1990 Incentive Program
and 1,667 shares currently issuable upon the exercise of stock options
issued pursuant to the 1996 Stock Plan.
(7) The amount set forth includes 18,133 shares currently issuable upon the
exercise of stock options issued pursuant to the 1990 Incentive Program and
833 shares currently issuable upon the exercise of stock options issued
pursuant to the 1996 Stock Plan.
(8) The amount set forth above includes 1,660 shares currently issuable upon the
exercise of stock options issued pursuant to the 1990 Incentive Program and
333 shares currently issuable upon the exercise of stock options issued
pursuant to the 1996 Stock Plan.
(9) Represents less than 1% of the outstanding shares.
(10) Reflects shares currently issuable upon the exercise of stock options
issued pursuant to the 1990 Incentive Program.
(11) The amount set forth above includes 3,667 shares currently issuable upon
the exercise of stock options issued pursuant to the 1990 Incentive Program.
(12) The amount set forth above includes 3,667 shares currently issuable upon
the exercise of stock options issued pursuant to the 1990 Incentive Program.
(13) The amount set forth above includes 171,961 shares currently issuable upon
the exercise of stock options issued pursuant to the 1990 Incentive Program
and 41,167 shares currently issuable upon the exercise of stock options
issued pursuant to the 1996 Stock Plan.
(14) To the Company's knowledge, Heartland Advisors, Inc. and Seymour Kugler are
the only beneficial owners of more than five percent of the Common Stock.
6
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation table sets forth certain information
concerning the compensation of the Company's "named executive officers" within
the meaning of Item 402(a)(2) of Regulation S-B of the Act, as amended, for each
of the three fiscal years during the period ending December 31, 1996.
LONG TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION(1) ------------------- ALL OTHER
-------------------- OPTIONS TO PURCHASE COMPENSATION(3)
SALARY BONUS SHARES(2) -----------------
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- -------------------------------------- ------------- --------- --------- ------------------- -----------------
Seymour Kugler........................ Fiscal 1996 433,502 134,209 100,000 7,300
Chairman of the Board and Fiscal 1995 413,600 61,901 25,000 7,300
Chief Executive Officer Fiscal 1994 400,000 51,000 30,000 7,000
Alan E. Wolf.......................... Fiscal 1996 190,000 40,613 10,000 2,900
Vice President, Executive Fiscal 1995 190,000 34,852 5,000 2,900
Vice President of Permanent Fiscal 1994 180,000 35,000 12,000 3,000
Placement Division
Gregg S. Kugler....................... Fiscal 1996 199,500 76,691 50,000 2,500
Vice President Fiscal 1995 190,000 55,635 10,000 1,600
President of Permanent Fiscal 1994 164,000 35,000 20,000 2,000
Placement Division
Todd Kugler........................... Fiscal 1996 147,000 76,691 40,000 2,300
Vice President Fiscal 1995 140,000 67,718 10,000 600
Vice President of Temporary Fiscal 1994 N/A N/A N/A N/A
Staffing Division
David Silver.......................... Fiscal 1996 125,000 10,000 5,500 2,400
Vice President and Fiscal 1995 125,000 10,000 5,000 2,400
Secretary Fiscal 1994 112,000 0 6,300 2,000
- ------------------------
(1) The aggregate amount of perquisites and other personal benefits for each of
the "named executive officers" did not equal or exceed the lesser of either
$50,000 or 10% of the total of such individual's base salary and bonus, as
reported herein for the last fiscal year, and is not reflected in the table.
(2) Stock options are granted under the terms and provisions of the Company's
1996 Stock Plan. For a description of the stock options issued in fiscal
1996, see "Option Grants in Last Fiscal Year."
(3) Amounts reported under this column reflect premiums paid by the Company on
behalf of the "named executive officers" for supplemental long-term
disability coverage in excess of the coverage provided to employees
generally.
7
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides certain summary information concerning
individual grants of stock options made to "named executive officers" within the
meaning of Item 402(a)(2) of Regulation S-B of the Act during the fiscal year
ended December 31, 1996 under the 1996 Stock Plan. Except as set forth in the
table below, during fiscal year 1996, the Company did not grant any stock
options under the Company's 1996 Stock Plan to any of the Named Executive
Officers.
INDIVIDUAL GRANTS
PERCENTAGE OF TOTAL OPTIONS
NUMBER OF SHARES GRANTED TO EMPLOYEES IN EXERCISE
UNDERLYING GRANT(1) FISCAL YEAR PRICE EXPIRATION
NAME (#) (%) ($) DATE
- -------------------------------------------- ------------------- ----------------------------- ----------- -----------
Seymour Kugler.............................. 50,000 16.5% 1.2375 04/09/06
50,000 16.5% 3.4375 12/05/06
Alan E. Wolf................................ 5,000 1.6% 1.125 04/09/06
5,000 1.6% 3.125 12/05/06
Gregg S. Kugler............................. 30,000 9.9% 1.125 04/09/06
20,000 6.6% 3.125 12/05/06
Todd Kugler................................. 20,000 6.6% 1.125 04/09/06
20,000 6.6% 3.125 12/05/06
David Silver................................ 2,500 0.8% 1.125 04/09/06
3,000 1.0% 3.125 12/05/06
- ------------------------
(1) The stock options reported in this column vest in equal annual installments
of one third of the underlying shares commencing on the one year anniversary
of the date of grant and become fully exercisable on the third year
anniversary of the date of grant, provided that the Optionee has been
continuously employed by the Company during such time. Subject to earlier
termination as provided below, the Plan provides that the options terminate
no later than (i) ten years after the date of grant for Optionees in general
and (ii) five years after the date of grant for Optionees who own stock
possessing more than 10% of the total combined voting power of all classes
of stock of the Company or any of its affiliates. If an Optionee ceases to
be employed by the Company for any reason other than death, disability,
termination "for cause" by the Company or voluntary termination by Optionee,
no further installments or options shall become exercisable, and the options
shall terminate on the earlier of (i) ninety (90) days after the date of
termination of employment or (ii) the specified expiration dates of the
options. If the Optionee's employment is terminated "for cause" or if
Optionee voluntarily terminates his employment, all of his options then
outstanding shall terminate immediately. Options outstanding upon the death
or disability of an Optionee may be exercised by him, or his heirs or legal
representative, to the extent otherwise exercisable on the date of death or
the date of termination due to disability, until the earlier of (i) the
specified expiration date of the options or (ii) one (1) year from the date
of the Optionee's death or date of termination due to disability. Payment of
options exercised may be in cash or shares of Common Stock.
8
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table provides certain summary information concerning stock
option exercises during the fiscal year ended December 31, 1996, by the "named
executive officers" within the meaning of Item 402(a)(2) of Regulation S-B under
the Act and the value of unexercised stock options held by the "named executive
officers" as of December 31, 1996.
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED "IN THE MONEY"
NUMBER OF OPTIONS AT FISCAL OPTIONS AT FISCAL
SHARES YEAR END(2) YEAR END(2)
ACQUIRED VALUE (#) ($)
ON REALIZED -------------------------------------- --------------------------
NAME EXERCISE ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- --------- ----------------- ------------------- ----------- -------------
Seymour Kugler.................. 225,000 673,755 28,333 126,667 39,645 152,167
Alan E. Wolf.................... 3,000 9,188 12,667 17,333 27,063 26,999
Gregg S. Kugler................. 10,000 30,625 26,666 63,334 55,624 98,126
Todd Kugler..................... 5,000 15,313 20,000 50,000 46,042 70,209
David Silver.................... 21,000 64,313 14,367 10,933 34,767 16,195
- ------------------------
(1) Values were calculated by multiplying the closing market price of the Common
Stock as reported on the American Stock Exchange on December 31, 1996
($3.4375 per share), by the respective number of shares and subtracting the
exercise price per share, without any adjustment for any termination or
vesting contingencies.
(2) Represents the aggregate number of stock options held as of December 31,
1996 which can and cannot be exercised pursuant to the terms and provisions
of the stock options.
EXECUTIVE EMPLOYMENT AGREEMENT
Mr. Seymour Kugler entered into a five-year employment agreement with the
Company, effective as of May 1, 1987, which was amended on March 2, 1992 and
January 1, 1997 (the "Employment Agreement"), pursuant to which he serves as
Chairman of the Board of Directors and the Chief Executive Officer of the
Company. Under the terms of the Amendment to the Employment Agreement dated
January 1, 1997, Mr. Kugler's term of employment was extended for an additional
five (5) year period ending on August 14, 2002. The Employment Agreement
provides for the payment to Mr. Kugler of (i) a base salary at the annual rate
of $445,638 per annum, subject to annual cost of living increases equal to the
greater of (a) three percent (3%) per annum, compounded or (b) an amount which
is determined by multiplying the base salary by the percentage increase, if any,
of the Consumer Price Index for all Urban Workers (New York-Northeastern New
Jersey) (1967 = 100), issued by the Bureau of Labor Statistics of the United
States Department of Labor (the "Index") for such subsequent year over the Index
for the fiscal year ended December 31, 1996, and (ii) incentive compensation
with respect to each fiscal year during his term of employment of an amount
equal to the aggregate of the following percentages of Pre-Tax Income (as
defined in the Employment Agreement): (a) 6% of Pre-Tax Income up to $1,000,000;
(b) 10% of Pre-Tax Income over $1,000,000 up to $2,000,000; (c) 20% of Pre-Tax
Income over $2,000,000 up to $3,200,000; and (d) 6% of Pre-Tax Income over
$3,200,000, without limitation. In the event of the termination of Mr. Kugler's
employment by reason of his death or disability, the Company will continue to
pay his salary, including the Incentive Compensation, to him or his beneficiary
or estate, for a period of one year thereafter.
In the event of the Company's termination of Mr. Kugler's employment for any
reason other than for death, disability or for cause, or in the event Mr. Kugler
resigns from his employment for Good Reason (as defined in the Employment
Agreement), Mr. Kugler is entitled to receive (i) his base salary, fringe
benefits and incentive compensation, if any, through the date of termination,
(ii) a lump sum severance payment equal to 2.99 times Mr. Kugler's "base amount"
as such term is defined in Section 28OG of the Internal Revenue Code of 1986, as
amended, and (iii) continued coverage for the term of the Employment Agreement
under the Company's health and insurance plans applicable to Mr. Kugler
immediately prior to
9
such termination or resignation or, if any such plan does not permit continued
coverage of Mr. Kugler, the Company shall arrange to provide a benefit
substantially similar to and no less favorable than the benefits he was entitled
to under such plan.
COMPENSATION OF DIRECTORS
Directors who are officers or employees of the Company or any of its
subsidiaries do not receive any compensation, other than their regular salaries,
for attending meetings of the Board of Directors or any committee thereof. See
"Summary Compensation Table." Other members of the Board (the "Non-Employee
Directors") receive a retainer of $2,000 per year payable quarterly in arrears,
plus a fee of $500 for each meeting of the Board and of any committee thereof
attended, but only for committee meetings that take place on days other than the
day of a Board meeting. Additionally, Non-Employee Directors are eligible to
receive stock options pursuant to the 1990 Incentive Program (the "Director
Options"). In 1996, the Non-Employee Directors, presently consisting of Messrs.
Martin Wolfson, Martin A. Fischer and Martin J. Simon, each received a Director
Option to purchase 2,000 shares of Common Stock exercisable at the fair market
value of the Common Stock on the date of grant. The Director Options vest in
annual installments of one-third of the underlying shares commencing on the one
year anniversary of the date of grant and terminate automatically ten years
after the date of grant, subject to early termination in the event that the
optionee ceases being a member of the Board.
SECTION 16(A) REPORTING UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than ten percent of the Common Stock of the
Company to file reports of ownership and changes
in ownership with the Securities and Exchange Commission and the exchange on
which the Common Stock is listed for trading. Officers, directors and more than
ten percent stockholders are required by regulations promulgated under the
Exchange Act to furnish the Company with copies of all Section 16(a) reports
filed.
The Company has reviewed copies of the Section 16(a) reports filed for the
year ended December 31, 1996 and written representations from certain reporting
persons that no delinquent Form 3 holdings or Form 4 transactions were required
to be reported on Form 5 for such persons for the year ended December 31, 1996.
Based solely on this review, the Company believes that all reporting
requirements applicable to its officers, directors and more than ten percent
stockholders were complied with for the year ended December 31, 1996, except
that (i) Mr. S. Kugler failed to report on a timely basis his ownership of 2,400
shares of Common Stock which are held in a joint account with his son, Todd
Kugler; and (ii) Mr. T. Kugler failed to report on a timely basis (a) his
holdings of shares of Common Stock and derivative securities, as well as his
wife's holdings of derivative securities, on November 25, 1995, the date on
which he became an officer of the Company, and (b) his acquisition of 6,000
shares of Common Stock in connection with a gift to his daughter.
RATIFICATION OF SELECTION
OF
THE COMPANY'S INDEPENDENT AUDITORS
The Board has selected Ernst & Young LLP to serve as the Company's
independent auditors for the fiscal year ending December 31, 1997. Ernst & Young
LLP has acted as the Company's independent auditors since May 1, 1996 (the
"Effective Date"), the date on which the Company, upon consultation with the
Audit Committee of the Board of Directors, replaced the accounting firm of
Richard A. Eisner & Company, LLP. Prior to the Effective Date, Richard A. Eisner
& Company, LLP had served as the Company's independent auditors since 1992.
During the fiscal years 1992 through 1995, (i) the reports of Richard A. Eisner
& Company, LLP did not contain an adverse opinion or disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or accounting
principles; and (ii) the Company did not have any disagreements with Richard A.
Eisner & Company, LLP on any matter of accounting principle or practice,
financial statement disclosure or auditing scope or procedure, which
disagreements if
10
not resolved to the satisfaction of Richard A. Eisner & Company, LLP would have
caused them to make reference thereto in their report on the financial
statements for such years. In addition, during such period the Company's
financial statements did not contain any adverse opinion or disclaimer of
opinion, nor were they qualified as to uncertainty, audit scope or accounting
principles.
If the stockholders do not ratify the appointment of Ernst & Young LLP as
the Company's independent auditors for the current fiscal year, the Audit
Committee will recommend another accounting firm for the selection by the Board
of Directors. A representative of Ernst & Young LLP is expected to be present at
the Meeting and will have an opportunity to make a statement and will be
available to answer appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE SELECTION
OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
SOLICITATION EXPENSES
The costs of this solicitation will be paid by the Company.Proxies will be
solicited principally by mail, but some telephone, telegraph or personal
solicitations of stockholders may be made. Officers or employees of the Company
who make or assist in such solicitations will receive no additional compensation
for doing so. The Company will request brokers, banks and other custodians and
fiduciaries holding shares in their names or in the names of nominees to forward
copies of the proxy solicitation materials to the beneficial owners of the
shares, and the Company will reimburse them for their reasonable expenses
incurred in doing so.
STOCKHOLDER PROPOSALS
Stockholder proposals for presentation at the Company's next Annual Meeting
of Stockholders must be received by the Secretary of the Company at its
principal executive offices for inclusion in its proxy statement and form of
proxy relating to that meeting no later than December 29, 1997.
ANNUAL REPORT
Concurrently with the mailing of these Proxy Materials, the Company is
mailing a copy of its Annual Report to Stockholders for the fiscal year ended
December 31, 1996. Such Annual Report is not to be regarded as proxy
solicitation material.
UPON WRITTEN REQUEST BY A STOCKHOLDER ENTITLED TO VOTE AT THE 1997 ANNUAL
MEETING, THE COMPANY WILL FURNISH THAT PERSON WITHOUT CHARGE WITH A COPY OF THE
FORM 10-KSB ANNUAL REPORT FOR 1996 WHICH IS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO.
If the person requesting the report was not a Stockholder of record on April 18,
1997, the request must contain a good faith representation that the person
making the request was a beneficial owner of the Common Stock of the Company at
the close of business on such date. Requests should be addressed to Winston
Resources, Inc., 535 Fifth Avenue, New York, New York 10017 (Attn: David
Silver).
OTHER BUSINESS
Management does not know of any other matters to be brought before the
Meeting except those set forth in the notice thereof. If other business is
properly presented for consideration at the Meeting, it is intended that the
Proxies will be voted by the persons named therein in accordance with their
judgment on such matters.
By Order of the Board of Directors
DAVID SILVER
SECRETARY
Dated: April 28, 1997
11
PROXY WINSTON RESOURCES, INC. PROXY
535 FIFTH AVENUE, NEW YORK, NEW YORK 10017
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 22, 1997
The undersigned hereby appoints SEYMOUR KUGLER AND DAVID SILVER as Proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below, all the shares of Common Stock of
Winston Resources, Inc., held of record by the undersigned on April 18, 1997 at
the Annual Meeting of Stockholders to be held on May 22, 1997, or any
adjournment thereof.
1. The election of Reuben W. Abrams as a director of the Company.
/ / FOR the nominee / / WITHHOLD AUTHORITY TO VOTE
2. Ratification of the selection of Ernst & Young LLP as the Company's independent auditors.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion upon any other matters which may properly come before such meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE.
THIS PROXY CONFERS AUTHORITY TO VOTE "FOR" EACH PROPOSITION LISTED ABOVE UNLESS
OTHERWISE INDICATED.
(CONTINUED ON REVERSE SIDE)
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
DATE........................, 1997
..................................
SIGNATURE
..................................
SIGNATURE OF JOINT HOLDER, IF ANY
Please sign exactly as your name
appears to the left. If joint
owners, both should sign.
Executors, administrators,
trustees, etc. should sign and
give full titles as such. If the
signer is a corporation or
partnership, please sign full
corporate or partnership name by a
duly authorized officer or
partner.