SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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[ ] Preliminary Proxy Statement
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[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
</Table>
GUNTHER INTERNATIONAL LTD.
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GUNTHER INTERNATIONAL LTD.
One Winnenden Road
Norwich, Connecticut 06360
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER 12, 2002
----------
Notice is hereby given that the 2002 Annual Meeting of Stockholders of
Gunther International Ltd. will be held at the corporate office of the Company,
One Winnenden Road, Norwich, Connecticut, on Thursday, September 12, 2002 at
10:30 a.m., local time, for the following purposes:
(1) To elect a Board of eight directors to serve until the next Annual
Meeting of Stockholders or until their respective successors shall
be elected and qualified;
(2) To approve the Gunther International Ltd. 2002 Stock Option Plan;
(3) To approve an amendment to the Gunther International Ltd. Directors'
Equity Plan; and
(4) To act upon such other matters as may properly come before the
meeting or any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on July 19, 2002 as
the record date for the determination of the stockholders entitled to notice of
and to vote at the Annual Meeting. For ten days prior to the Annual Meeting, a
complete list of stockholders entitled to vote at the Annual Meeting will be
available for examination by any stockholder for any purpose germane to the
Annual Meeting during ordinary business hours at the Company's principal
executive offices located at One Winnenden Road, Norwich, Connecticut 06360. All
stockholders are invited to attend the Annual Meeting in person.
July 29, 2002 By order of the Board of Directors,
Norwich, Connecticut
John K. Carpenter
Senior Vice President, Chief Financial Officer,
Treasurer and Secretary
YOUR VOTE IS IMPORTANT!
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE MARK, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED ENVELOPE SO
THAT YOUR STOCK MAY BE REPRESENTED AT THE ANNUAL MEETING.
GUNTHER INTERNATIONAL LTD.
ONE WINNENDEN ROAD
NORWICH, CONNECTICUT 06360
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors and management of Gunther International Ltd., a Delaware
corporation (the "Company"), of proxies for use at the 2002 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at the corporate
office of the Company, One Winnenden Road, Norwich, Connecticut, on Thursday,
September 12, 2002 at 10:30 a.m., local time, and at any and all postponements
or adjournments thereof, for the purposes set forth in the accompanying Notice
of Meeting.
This Proxy Statement, Notice of Meeting and accompanying proxy card are
first being mailed to stockholders on or about July 29, 2002.
GENERAL
Only holders of record of the Company's common stock, par value $.001 per
share ("Common Stock"), issued and outstanding at the close of business on July
29, 2002 (the "Record Date") are entitled to notice of and to vote at the Annual
Meeting. On the Record Date, 19,372,200 shares of Common Stock were issued and
outstanding. Each holder of shares of Common Stock is entitled to one vote for
each share of Common Stock held as of the Record Date.
The presence, either in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of Common Stock entitled to vote
at the Annual Meeting shall constitute a quorum for the transaction of business.
In the event that there are not sufficient votes for a quorum, the Annual
Meeting may be adjourned from time to time until a quorum is obtained.
Assuming the presence of a quorum, the individuals nominated for election
to the Board of Directors, as described in Item 1 below, will be elected by the
affirmative vote of a plurality of the votes cast at the Annual Meeting. This
means that the candidates receiving the highest number of affirmative votes of
the shares entitled to be voted for them, up to the number of directors to be
elected by those shares, will be elected. Each of the proposals to adopt the
Gunther International Ltd. 2002 Stock Option Plan (see Item 2 below) and to
adopt an amendment to the Gunther International Ltd. Directors' Equity Plan (see
Item 3 below) will be approved if a majority of the shares present at the Annual
Meeting, either in person or by properly executed proxy, and entitled to vote
thereon, are voted in favor of the proposals. Any other matters presented for
consideration at the Annual Meeting each must be approved by the affirmative
vote of a majority of the shares present, either in person or by properly
executed proxy, and entitled to vote thereon, unless a higher vote is required
under the applicable provisions of the Company's Restated Certificate of
Incorporation, its bylaws, the laws of the State of Delaware, under whose laws
the Company is incorporated, or other applicable law.
As more fully described under the heading "Stock Ownership of Certain
Beneficial Owners and Management," Gunther Partners, LLC and its affiliates,
including two members of our Board of Directors, beneficially own in the
aggregate approximately 70% of our outstanding Common Stock and, therefore, have
the voting power to approve each of the items described in this proxy statement.
For purposes of determining the number of affirmative votes cast with
respect to a particular matter, only those votes cast "FOR" the matter are
counted. Abstentions will be treated as shares present and entitled to vote for
purposes of determining the presence of a quorum, but will be counted separately
(as neither a vote for nor a vote against) in the tabulation of the votes cast
on each of the proposals presented to stockholders. Thus, an abstention will
have no effect on the outcome of the election of directors (Item 1). With regard
to the other proposals described in this proxy statement (Items 2 and 3), an
abstention will, although counted separately, have the same effect as a
- 1 -
negative vote. Brokers or other record holders or nominees ("brokers") holding
shares for customers generally are not entitled to vote on certain matters
unless they receive voting instructions from their customers. If a broker
indicates on a proxy that it does not have authority to vote a customer's shares
on a particular matter (so-called "broker non-votes"), the holder of such shares
will still be considered present and entitled to vote for purposes of
determining the presence of a quorum. However, such shares will not be
considered as present and entitled to vote with respect to any matter for which
the broker has not received voting instructions from the customer. As a result,
these so-called "broker non-votes" will have no effect on the outcome of the
voting with respect to any of the proposals described in the proxy statement.
If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the proxy card will vote FOR the slate of
nominees proposed by the Board of Directors, FOR the adoption of the Gunther
International Ltd. 2002 Stock Option Plan, FOR the adoption of the amendment to
the Gunther International Ltd. Directors' Equity Plan, and as recommended by the
Board of Directors with regard to all other matters or, if no such
recommendation is given, in their own discretion. Each stockholder may revoke a
previously granted proxy at any time before it is exercised by filing with the
Secretary of the Company a revoking instrument or a duly executed proxy bearing
a later date. The powers of the proxy holders will be suspended if the person
executing the proxy attends the Annual Meeting in person and so requests.
Attendance at the Annual Meeting will not, in itself, constitute the revocation
of a previously granted proxy.
ITEM 1.
ELECTION OF DIRECTORS
Eight directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting to hold office until the next Annual Meeting of
Stockholders or until their respective successors have been elected and
qualified. The Board of Directors' nominees are the eight individuals named
below. It is the intention of the persons named in the enclosed proxy to vote
the shares covered by each proxy for the election of all persons nominated for
election by the holders of shares of Common Stock. Although the Board of
Directors does not anticipate that such nominees will be unavailable for
election, in the event of such occurrence the proxies will be voted for such
substitute, if any, as the Board of Directors may designate.
The following table sets forth certain information with respect to all
nominees for election as directors of the Company, including those persons who
currently serve in such capacity:
NAME AGE PRINCIPAL OCCUPATION SINCE
- ---- --- -------------------- -----
James A. Cotter, Jr. 62 Managing Member in a Broker/Dealer 2001
Edward F. Hacker 59 Practicing CPA in Hacker Johnson, a CPA firm 2002
J. Kenneth Hickman 74 Independent Business and Financial Consultant 1994
Steven S. Kirkpatrick 47 Vice President 1999
United States Trust Company of New York
Gerald H. Newman 61 Private Investor 1993
Marc I. Perkins 57 President and Chief Executive Officer 1998
of the Company
Robert Spiegel 66 Private Investor 1998
Thomas M. Steinberg 46 President 1998
Tisch Family Interests
- 2 -
JAMES A. COTTER, JR. Mr. Cotter has been a managing member of Capital
Market Investment LLC, a broker/dealer, since June 1999. Prior to that he was a
vice president of H.C. Wainwright & Co., a broker/dealer, from January 1994
until June 1999.
EDWARD F. HACKER. Mr. Hacker has been a practicing CPA and shareholder the
CPA firm Hacker Johnson in Tampa, Florida since 1974. Mr. Hacker was appointed
to the Board of Directors effective June 30, 2002, to fill a newly-created
vacancy on the Board.
J. KENNETH HICKMAN. Mr. Hickman is a certified public accountant. He has
been an independent business consultant since January 1991. For twenty-seven
years prior to that, he was a partner of Arthur Andersen LLP and its
predecessors, with various responsibilities including managing partner of the
firm's New Jersey office and director of its international business practice
program. He is a trustee of Fordham University and has served as a director and
officer of a number of not-for-profit organizations, primarily those concerned
with international trade and foreign affairs.
STEVEN S. KIRKPATRICK. Mr. Kirkpatrick is a Vice President of the
United States Trust Company of New York, where he is the manager of the Real
Estate, Closely Held Business and Oil & Gas Departments. He joined the
United States Trust Company of New York in 1986. Prior to that, he was a
financial analyst for Schupak & Company, a merchant banking firm specializing
in private placements of debt and equity securities for the leisure and
hospitality industries. Mr. Kirkpatrick is a member of the American Society
of Appraisers in the discipline of Business Valuation.
GERALD H. NEWMAN. Mr. Newman has been a private investor and
consultant to various high technology companies since 1971. Following the
death of Harold S. Geneen in November of 1997, he served as Chairman of the
Board of Directors of the Company until Mr. Steinberg was elected to that
position in October 1998.
MARC I. PERKINS. Mr. Perkins has been the Chief Executive Officer of
the Company since October 2, 1998 and has been the President of the Company
since April 12, 1999. He was Vice Chairman of the Company from October 1998
until April 1999. Since 1995, he has also served as a registered principal of
PMK Securities and Research, Inc., a securities broker-dealer and a member of
the National Association of Securities Dealers Inc. He served as the
Chairman and Chief Executive Officer of Perkins Capital Advisers, Inc., a
registered investment adviser, from 1992 to 1998, and the President of Crown
Financial Associates, Inc., a securities broker-dealer, from 1992 to 1995.
From 1987-1992, he was a Vice President and shareholder of Private Capital
Management, Inc., a registered investment adviser.
ROBERT SPIEGEL. Mr. Spiegel has been a private investor since May 1995.
Prior to that, he was the Chairman and President of RJR Drug Distributors, a
retail drug chain, from May 1985 to May 1995. He also serves as a director of
Hoenig Group, Inc., a NASDAQ-listed company that engages in institutional
brokerage activities.
THOMAS M. STEINBERG. Mr. Steinberg is the President of Tisch Family
Interests, a position he has held since 1997. In this capacity, he manages
and supervises investments for members of the Laurence A. Tisch and Preston
R. Tisch families. From 1991 to 1997, he was the Managing Director of Tisch
Family Interests. He is also a director of Catellus Development Corporation,
a Delaware corporation engaged in investment activities which is listed on
the New York Stock Exchange. Mr. Steinberg has been Chairman of the Board of
the Company since October 1998.
DIRECTORS' REMUNERATION; ATTENDANCE
The Company maintains a policy of reimbursing all directors for any
reasonable travel expenses incurred in connection with their attendance at
meetings.
The Company also maintains the Gunther International Ltd. Directors'
Equity Plan (the "Directors' Equity Plan"), pursuant to which each participating
director receives shares of Common Stock of the Company as compensation for each
quarter in which the director serves on the Board. The number of shares issued
for each quarter has a value equal to $2,500, calculated based on the fair
market value of the Company's Common Stock at the end of such quarter.
- 3 -
All non-employee directors are eligible to participate in the Directors' Equity
Plan. An eligible director may make an irrevocable election not to participate
in the Directors' Equity Plan in any year and instead receive quarterly cash
retainers (currently set at $1,250). The aggregate number of shares of Common
Stock available for awards under the Directors' Equity Plan is currently set at
100,000, subject to specified adjustments in the event of changes in the number
of outstanding shares of Common Stock. However, the Board of Directors has
approved an amendment to the Directors' Equity Plan that will increase the
number of shares available for awards to 500,000, subject to stockholder
approval. See Item 3 below - "Approval of Amendment to the Gunther International
Ltd. Directors' Equity Plan."
The Board of Directors met six times during the fiscal year ended March
31, 2002 and acted by the unanimous written consent of its members on three
occasions. No director attended fewer than 75% of the total number of meetings
of the Board and the Committees on which such director served.
COMMITTEES OF THE BOARD
The standing committees of the Board of Directors are the Executive
Committee, the Audit Committee and the Executive Compensation/Stock Option
Committee.
During fiscal 2002, the Executive Committee consisted of Messrs. Perkins,
Spiegel and Steinberg. Mr. Steinberg served as Chairman of the Executive
Committee. The Executive Committee is vested with all powers and authorities of
the full Board of Directors, except to the extent that the Delaware General
Corporation Law prohibits such powers and authorities from being delegated to,
or exercised by, a committee of the full Board. The Executive Committee is
authorized to act for the full Board in the management of the business and
affairs of the Company. The Executive Committee did not conduct any meetings
during the fiscal year ended March 31, 2002.
During fiscal 2002, the Audit Committee consisted of Messrs. Cotter,
Hickman, Kirkpatrick and Steinberg, with Mr. Hickman serving as the Chairman.
The function of the Audit Committee is to review and report to the Board of
Directors with respect to the selection and the terms of engagement of the
Company's independent public accountants, and to maintain communications among
the Board of Directors, such independent public accountants, and the Company's
internal accounting staff with respect to accounting and audit procedures, the
implementation of recommendations by such independent public accountants, the
adequacy of the Company's internal controls and related matters. The Audit
Committee also reviews certain related-party transactions and any potential
conflict-of-interest situations involving officers, directors or stockholders
beneficially owning more than 10% of any class of equity security of the
Company. During the fiscal year ended March 31, 2002, the Audit Committee met
five times.
During fiscal 2002, the Executive Compensation/Stock Option Committee
consisted of Messrs. Kirkpatrick, Newman, Spiegel and Steinberg. Mr. Spiegel
served as Chairman of the Executive Compensation/Stock Option Committee. The
function of the Executive Compensation/Stock Option Committee is to review the
performance of and to fix and determine the compensation of all officers of the
Company and all other employees of the Company whose annual salary level is in
excess of $100,000. During the fiscal year ended March 31, 2002, the Executive
Compensation/Stock Option Committee met once.
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REPORT OF THE AUDIT COMMITTEE
ADDRESSING SPECIFIC MATTERS
The role of the Audit Committee is to assist the Board of Directors in
fulfilling its oversight responsibility relating to the Company's financial
statements and the financial reporting process, the systems of internal
accounting and financial controls, and the annual independent audit of the
Company's financial statements. Management has the primary responsibility for
the financial statement and the reporting process, and the Company's outside
auditors are responsible for auditing the Company's financial statements and
expressing an opinion on the conformity of its audited financial statements to
generally accepted accounting principles.
On July 17, 2000, the Board of Directors adopted a formal, written charter
for the Audit Committee of the Company. The charter was attached to the
Company's proxy statement dated July 31, 2000 issued in connection with the
Company's 2000 Annual Meeting of stockholders. Each member of the Audit
Committee is an "independent director" for purposes of NASD Marketplace Rule
4200(a)(14).
In connection with the preparation and filing of the Company's audited
financial statements for the fiscal year ended March 31, 2002 (the "audited
financial statements"), the Audit Committee performed the following functions:
- - The Audit Committee reviewed and discussed the audited financial statements
with senior management and Ernst & Young LLP, the Company's outside auditors;
- - The Audit Committee also discussed with Ernst & Young LLP the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication With Audit Committees);
- - The Audit Committee received the written disclosures and the letter from
Ernst & Young LLP required by Independence Standards Board Standard No. 1
(Independence Discussions With Audit Committees), and discussed with Ernst &
Young LLP its independence from the Company; and
- - The Audit Committee reviewed and considered whether Ernst & Young LLP's
provision of information-technology and other non-audit services to the
Company is compatible with the auditors' independence.
Based upon the functions performed, the Audit Committee recommended to the
Board of Directors, and the Board approved, that the audited financial
statements be included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended March 31, 2002, for filing with the U.S. Securities and
Exchange Commission.
AUDIT COMMITTEE
J. Kenneth Hickman, Chairman
James A. Cotter, Jr.
Steven S. Kirkpatrick
Thomas M. Steinberg
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EXECUTIVE OFFICERS
The current executive officers of the Company are as follows:
Name Age Positions with the Company
---- --- --------------------------
Marc I. Perkins 57 President and Chief Executive Officer
John K. Carpenter 55 Senior Vice President, Chief Financial Officer,
Treasurer and Secretary
A. Evan Haag 53 Senior Vice President, Operations
Theodore J. Langevin 47 Senior Vice President, Design & Manufacturing
Jeremy H. Greshin 43 Vice President - Sales and Marketing
Per J. Hellsund 38 President - inc.jet, Inc.
For the biography of Mr. Perkins, see the previous section entitled
"Election of Directors."
JOHN K. CARPENTER. Mr. Carpenter has held the positions of Senior Vice
President, Chief Financial Officer, Treasurer and Secretary since July 2002.
Prior to joining Gunther, Mr. Carpenter had been a self-employed financial
consultant since 2001. Prior to that, he had been Vice President--Administration
and Controller of CGI Information Systems & Management Consultants, Inc., the
U.S. outsourcing and software development subsidiary of CGI Group Inc, a
Canadian information technology services firm. He served in that role from
1993-2001. Mr. Carpenter is a certified public accountant.
A. EVAN HAAG. Mr. Haag has held the position of Senior Vice President of
Operations since he joined the Company in February 2000. Prior to that, he was
Director, Strategic Supply Management of Moore Corporation (formerly) from
October 1998 to February 2000 and Operations Manager of Moore Corporation's
Systems Fabrication Moore Business Forms Research Venture from May 1996 to
September 1998. From 1989 to 1995, he was Operations Vice President for Metscan,
Incorporated, a manufacturer of remote data acquisition equipment for the
natural gas industry.
THEODORE J. LANGEVIN. Mr. Langevin has held the position of Senior Vice
President - Design and Manufacturing since May 2001. Prior to that, he had been
Director of Engineering from July 1999 until May 2001 and an electrical engineer
from May 1999 until July 1999. Prior to joining the Company, Mr. Langevin was
the manager of software engineering at Roll Systems Inc., a manufacturer of pre-
and post-processing systems for commercial laser printers, from January 1994
until May 1999.
JEREMY H. GRESHIN. Mr. Greshin has held the position of Vice President -
Sales and Marketing of the Company since February 2001. Prior to that, he had
been the Director of European Sales for John Frieda Professional Hair Care from
March 1999 until February 2001. He had been President of Greshin International
Trade, a trade consulting firm specializing in Latin America, from 1992 to 2001.
PER J. HELLSUND. Mr. Hellsund has held the position of President of
inc.jet, Inc., a wholly-owned subsidiary of the Company, since March 2001.
Prior to that, he was Vice President - Operations of the Company from
September 1999 until March 2001 and Director of Engineering of the Company
from 1993 to 1999.
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EXECUTIVE COMPENSATION AND OTHER MATTERS
The following Summary Compensation Table sets forth information concerning
compensation for services in all capacities to the Company or subsidiaries of
the Company for the periods indicated of (i) each person who served as the chief
executive officer of the Company during the fiscal year ended March 31, 2002,
and (ii) the other most highly compensated executive officers of the Company
whose total salary and bonus for the fiscal year ended March 31, 2002 exceeded
$100,000, for services in all capacities to the Company during such fiscal year
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Annual compensation(1) Awards
---------------------------- ----------------------
Restricted Options/
Stock SARs All other
Name and Principal Position Year Salary($) Bonus($) Awards ($) ($) Compensation ($)
- --------------------------- ---- --------- -------- ---------- --- ----------------
Marc I. Perkins, President and Chief 2002 $172,000 0 0 150,000 0
Executive Officer 2001 $172,000 0 0 0 0
2000 $167,000 0 0 30,000 0
Michael M. Vehlies, Senior Vice- 2002 $110,000 0 0 35,000 0
President, Chief Financial 2001 $110,000 0 0 0 0
Officer, Treasurer and Secretary(2) 2000 $105,962 0 0 0 0
A. Evan Haag, Senior Vice President, 2002 $110,000 0 0 10,000 0
Operations(3) 2001 $110,000 0 0 0 0
2000 $ 14,808 0 0 10,000 0
Jeremy H. Greshin, Senior Vice- 2002 $135,000 0 0 0 0
President, Sales and Marketing(4) 2001 $ 9,865 0 0 0 0
Theodore J. Langevin, Senior 2002 $108,557 0 0 10,000 0
Vice-President, Design and 2001 $ 87,307 0 0 5,000 0
Manufacturing 2000 $ 72,404 0 0 5,000 0
(1) Perquisites and other personal benefits are not included because they do
not exceed the lesser of $50,000 or 10% of the total of base salary and
annual bonus for each of the Named Executive Officers.
(2) Mr. Vehlies left the Company in June 2002.
(3) Mr. Haag joined the Company in February 2000.
(4) Mr. Greshin joined the Company in February 2001.
Option Exercises and Fiscal Year-End Values. The following table sets
forth certain information with respect to option exercises in fiscal year 2002
by the individuals listed and unexercised options to purchase the Company's
Common Stock held by the individuals listed.
- 7 -
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs at
Shares Options/SAR at FY-End(#) FY-End($)(1)
Acquired on Value
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
Marc I. Perkins 0 0 170,000 160,000 0 0
Michael M. Vehlies 0 0 35,000 35,000 0 0
A. Evan Haag 0 0 4,000 16,000 0 0
Jeremy H. Greshin 0 0 0 0 0 0
Theodore J. Langevin 0 0 3,000 17,000 0 0
(1) Represents the difference between the fair market value of the Common
Stock on March 31, 2002 and the exercise price.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price
Name Granted (#) Fiscal Year ($/Sh) (1) Expiration Date (2)
---- ----------- ----------- ---------- -------------------
Marc Perkins 150,000 53.2% $.50 9/6/2011
Michael Vehlies 35,000 12.4% $.60 2/0/2012
A. Evan Haag 10,000 3.5% $.60 2/5/2012
Jeremy H. Greshin 0 0% NA NA
Theodore J. Langevin 10,000 3.5% $.60 2/5/2012
- ---------------
(1) The exercise price and tax withholding obligations related to exercise may
be paid by delivery of already owned shares, subject to certain
conditions.
(2) The options granted were for a term of 10 years, subject to earlier
termination in certain events related to termination of employment.
EMPLOYMENT AGREEMENTS
The Company has entered into an employment agreement with Mr. Greshin,
pursuant to which he is employed as the Senior Vice President, Sales and
Marketing of the Company at an initial base salary of $135,000 per annum. The
employment agreement may be terminated by either party, with or without cause,
on ninety days' prior written notice. The employment agreement may be terminated
immediately by the Company for "cause" and by Mr. Greshin for "good reason," as
those terms are defined in the employment agreement. In the event that the
employment agreement is terminated by the Company for "cause," Mr. Greshin will
not be entitled to any additional compensation. In the event that the employment
agreement is terminated by Mr. Greshin for "good reason," the Company generally
must pay Mr. Greshin his base salary for the remainder of the calendar month
during which the termination is effective and for six consecutive calendar
months thereafter.
- 8 -
STOCK OPTION PLANS
On December 13, 1993, the Company adopted the Gunther International Ltd.
1993 Stock Option Plan (the "1993 Stock Option Plan"), which authorizes the
Executive Compensation/Stock Option Committee of the Board of Directors to grant
to key employees and directors of the Company and subsidiaries of the Company
incentive or non-qualified stock options. The 1993 Stock Option Plan also
authorized the grant of non-qualified stock options to certain then-current key
employees of the Company who were designated as "founders" of the Company. These
options expired unexercised in December 1999. Options to purchase up to 310,000
shares of Common Stock may be granted under the 1993 Stock Option Plan. The
Executive Compensation/Stock Option Committee determines the prices and terms at
which options may be granted. Options may be exercisable in installments over
the option period, but no options may be exercised before six months or after
ten years from the date of grant.
The purpose of the 1993 Stock Option Plan is to encourage stock ownership
by persons instrumental to the success of the Company, in order to give them a
greater personal interest in the Company's business. The exercise price of any
incentive stock option granted to an eligible employee may not be less than 100%
of the fair market value of the shares underlying such option on the date of
grant, unless such employee owns more than 10% of the outstanding Common Stock
or stock of any subsidiary or parent of the Company, in which case the exercise
price of any incentive stock option may not be less than 110% of such fair
market value. No option may be exercisable more than ten years after the date of
grant and, in the case of an incentive stock option granted to an eligible
employee owning more than 10% of the Common Stock or stock of any subsidiary or
parent of the Company, no more than five years from its date of grant. Payment
for shares purchased upon exercise of any option may be in cash or in shares of
the Company's Common Stock. Options are not transferable, except upon the death
of the optionee. In general, upon termination of employment of an optionee, all
options granted to such person which are not exercisable on the date of such
termination immediately expire, and any options that are exercisable expire 30
days following termination of employment, if such termination is not the result
of death or retirement, and one year following such termination if such
termination was because of death or retirement under the provisions of any
retirement plan that may be established by the Company, or with the consent of
the Company. As of March 31, 2002, options covering an aggregate of 274,500
shares of Common Stock were outstanding under the 1993 Stock Option Plan. The
1993 Stock Option Plan terminates on December 13, 2003.
As more fully described in Item 2 below ("Approval of the Gunther
International Ltd. 2002 Stock Option Plan"), the Board of Directors has approved
the adoption of a new equity compensation plan for the Company, the Gunther
International Ltd. 2002 Stock Option Plan. The material features of the 2002
Stock Option Plan are described below in Item 2. As of March 31, 2002, options
covering 129,500 shares of our Common Stock are outstanding under the 2002 Stock
Option Plan, subject to the receipt of stockholder approval (see Item 2 -
"Approval of the Gunther International Ltd. 2002 Stock Option Plan").
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who beneficially own more
than 10% of the Company's Common Stock to file initial reports of beneficial
ownership and reports of changes in beneficial ownership with the Securities and
Exchange Commission (the "SEC"). Such persons are required by the SEC
regulations to furnish the Company with copies of all Section 16(a) forms filed
by such persons. Based solely on its copies of forms received by it, or written
representations from certain reporting persons that no Form 5 were required for
those persons, the Company believes that during the fiscal year ended March 31,
2002, its executive officers, directors, and greater than 10% beneficial owners
complied with all applicable filing requirements, except that Forms 5 were not
timely filed for Messrs. Cotter, Hickman, Kirkpatrick, Steinberg, Spiegel and
Newman with regard to the Directors' Equity Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 25, 2001, the Company entered into a recapitalization agreement
with and among the Estate of Harold S. Geneen, a former chairman of the Board of
the Company, Gunther Partners, LLC, Park Investment Partners, Inc. and two other
stockholders. Gunther Partners, LLC is a Delaware limited liability company
("Gunther
- 9 -
Partners"), the members of which include Robert Spiegel and Thomas M. Steinberg,
two of our directors, and a partnership controlled by certain members of the
Tisch family. See "Item 1 -- Election of Directors" and "Stock Ownership of
Certain Beneficial Owners and Management."
The Recapitalization Agreement provided that the Company would effectuate
a registered public offering ("Rights Offering") of up to 16,000,000 shares of
its Common Stock (the "Offered Shares") to its existing stockholders by
subscription right on a pro-rata basis at a subscription price of $0.50 per
share. The Recapitalization Agreement obligated the Company to use the net
proceeds of the offering to: (i) repay senior secured indebtedness in the total
principal amount of $4.5 million owed to Gunther Partners; (ii) repay
subordinated indebtedness in the total principal amount of $500,000 owed to Mr.
Spiegel; (iii) repurchase subordinated indebtedness in the total principal
amount of $1,851,169 originally owned by the Estate of Mr. Geneen (the "Estate")
for an aggregate purchase price of $500,000; and (iv) repurchase 919,569 shares
of our common stock originally owned by the Estate at a purchase price of $.15
per share, or $137,935 in the aggregate. Under the Recapitalization Agreement,
the Estate agreed to sell such debt and equity to the Company for an aggregate
purchase price of $637,935. In order to facilitate the timely purchase of the
debt and equity held by the Estate, Gunther Partners agreed to purchase the debt
and equity for our benefit. This purchase was consummated on July 25, 2001.
The Company consummated the Rights Offering in November in 2001. Following
the conclusion of the Rights Offering, Gunther Partners resold the debt and
equity to us on the same terms and conditions that were applicable to the sale
from the Estate to Gunther Partners. In connection with these transactions, the
Company recognized an extraordinary gain of $1.4 million on the extinguishment
of debt.
Gunther Partners subscribed for a total of 13,673,904 shares of the
Company's common stock in the Rights Offering. As a result of the Rights
Offering, Gunther Partners and its affiliates, including two of the Company's
directors, beneficially own, in the aggregate, approximately 70% of the
Company's outstanding Common Stock.
In connection with the Company's October 1998 financial restructuring
involving Gunther Partners, the Company granted Gunther Partners a warrant to
purchase up to 35% of the pro forma, fully diluted number of shares of the
Company's Common Stock, determined as of the date of exercise, at any time
through November 2003 at an exercise price of $1.50 a share (2,190,390 shares at
March 31, 2002). The Rights Offering had no effect on the number of shares of
the Company's Common Stock into which the warrants are exercisable. In November
2000, however, the Company agreed to extend the expiration date of the warrant
by one calendar day for each calendar day from and after April 1, 2001 that any
principal or interest owed under debt previously issued to a Company director
remained unpaid. The debt was not repaid until the consummation of the Rights
Offering in November 2001. Thus, the new expiration date of the warrant is now
May 29, 2004.
On July 3, 2002, the Company borrowed $700,000 from Robert Spiegel, a
director and member of Gunther Partners, to alleviate a short-term cash-flow
deficiency which the Company was experiencing. The loan is unsecured and earns
interest at a rate of 8% per annum.
- 10 -
STOCK OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of June 1, 2002, with the exception of the persons listed below no
person was known by the Company to own more than 5% of the outstanding Common
Stock.
Number of Percent
Shares(1)(2) of Class
------------ --------
Gunther Partners, LLC(3) 13,673,904 70.6%
c/o Thomas J. Tisch
667 Madison Avenue
New York, NY 10021
Four-Fourteen Partners, LLC(4) 2,273,880 10.7%
c/o Thomas J. Tisch
667 Madison Avenue
New York, NY 10021
(1) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock owned by them.
(2) Assumes that shares which the named person or group has a contractual
right to acquire within 60 days have been acquired and are outstanding.
(3) Based on information set forth in Amendment No. 8 to Schedule 13D, filed
on December 8, 2001 ("Amendment No. 8") under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), by Thomas J. Tisch, Robert
Spiegel and Thomas M. Steinberg. Shares shown in the table represent the
shares purchased by Gunther Partners pursuant to the Company's November
2001 Rights Offering, and exclude the shares beneficially owned by Four
Fourteen Partners, LLC and shares beneficially owned by Messrs. Steinberg
and Spiegel, both of whom are directors of the Company and members of
Gunther Partners.
(4) Based on information set forth in Amendment No. 8. Includes 494,189 shares
held directly by Four-Fourteen Partners, LLC and an aggregate of 1,779,691
shares of Common Stock that may be acquired (as of March 31, 2002) upon
the exercise of the stock purchase warrants which were distributed to
Four-Fourteen Partners, LLC by Gunther Partners on November 17, 1998. The
shares shown in the table exclude the shares of Common Stock beneficially
owned by Gunther Partners and Messrs. Steinberg and Spiegel. See note 3
above and "Certain Relationships and Related Transactions."
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STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table reflects shares of Common Stock beneficially owned (or
deemed to be beneficially owned pursuant to the rules of the Securities and
Exchange Commission) as of June 1, 2002 by each director of the Company, each of
the Named Executive Officers and the current directors and executive officers of
the Company as a group.
Amount of Beneficial Percentage
Name(1) Ownership (2)(3) of Shares
------- ---------------- ---------
James A. Cotter, Jr.(4) 126,372 *
Edward F. Hacker(5) 0 *
J. Kenneth Hickman (6) 81,381 *
Steven S. Kirkpatrick(7) 9,412 *
Gerald H. Newman(8) 797,827 4.1%
Marc I. Perkins(9) (10) 404,400 2.0%
Robert Spiegel(11) 666,698 3.4%
Thomas M. Steinberg(12) 58,761 *
Michael M. Vehlies(9) (13) 35,000 *
A. Evan Haag(9) 4,000 *
Jeremy H. Greshin 0 *
Theodore J. Langevin(9) 3,000 *
All Directors and Executive 2,195,351 11.0%
Officers as a group(14)
* Less than 1%.
(1) The address of each of the directors and executive officers of the Company
is c/o Gunther International Ltd., One Winnenden Road, Norwich,
Connecticut 06360.
(2) Unless otherwise indicated, the Company believes that all persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock owned by them.
(3) Assumes that shares which the named person or group has a contractual
right to acquire within 60 days have been acquired and are outstanding.
(4) Includes 17,628 shares credited to the account of Mr. Cotter under the
Directors' Equity Plan.
(5) Mr. Hacker joined the Board of Directors effective as of June 30, 2002.
(6) Includes 31,381 shares credited to the account of Mr. Hickman under the
Directors' Equity Plan.
(7) Represents 9,412 shares credited to the account of Mr. Kirkpatrick under
the Directors' Equity Plan.
(8) Based on information set forth in Amendment No. 2 to Schedule 13D, filed
on August 2, 2001 under the Exchange Act by Park Investment Partners, Inc.
and Gerald H. Newman. The shares shown in the table include 766,446 shares
held directly by Mr. Newman, including the 693,744 shares distributed by
Park Investment Partners, Inc. to Mr. Newman in June 2001. Shares listed
in the table also include 31,381 shares credited to the account of Mr.
Newman under the Directors' Equity Plan.
(9) Includes the exercisable portion of stock options exercisable within 60
days of June 1, 2002.
(10) Includes 9,900 shares held directly by Mr. Perkins.
(11) The shares shown as beneficially owned by Mr. Spiegel include 328,558
shares of Common Stock that may be acquired pursuant to the exercise of
the stock purchase warrants which have been distributed by Gunther
Partners to Mr. Spiegel, see "Certain Relationships and Related
Transactions." The shares shown in the table also includes 60,000 shares
of Common Stock
- 12 -
owned directly by Mr. Spiegel, 15,500 shares owned by an IRA account
maintained for Mr. Spiegel's benefit and 31,381 shares credited to the
account of Mr. Spiegel under the Directors' Equity Plan. The shares shown
in the table also include: (i) 20,000 shares held in an IRA account
maintained for the benefit of Richard J. Spiegel, Mr. Spiegel's son; (ii)
40,000 shares of Common Stock held by Mr. Spiegel's wife; (iii) 1,500
shares of Common Stock held in an IRA account maintained for the benefit
of Mr. Spiegel's wife; (iv) 15,000 shares of Common Stock and warrants to
purchase 54,760 shares of Common Stock held by a trust of which Mr.
Spiegel is a trustee; and (v) 100,000 shares of Common Stock held by Lilly
Schwebel, Mr. Spiegel's sister. Mr. Spiegel disclaims beneficial ownership
as to each of the shares and warrants described in (i) through (v) in the
preceding sentence.
(12) The shares shown as beneficially owned by Mr. Steinberg represent the
27,380 shares of Common Stock that may be acquired by him pursuant to the
exercise of the stock purchase warrants which have been distributed by
Gunther Partners to Mr. Steinberg. The shares shown in the table also
include 31,381 shares credited to the account of Mr. Steinberg under the
Directors' Equity Plan.
(13) Mr. Vehlies left the Company in June 2002.
(14) Includes an aggregate of 631,198 shares issuable upon the exercise of
outstanding options, warrants or other similar rights exercisable within
60 days of June 1, 2002.
ITEM 2.
APPROVAL OF THE GUNTHER INTERNATIONAL LTD.
2002 STOCK OPTION PLAN
BACKGROUND
In December 1993, the Company adopted the Gunther International Ltd. 1993
Stock Option Plan (the "1993 Stock Option Plan"), which authorizes the Executive
Compensation/Stock Option Committee of the Board of Directors to grant to key
officers, directors, and employees of the Company and subsidiaries of the
Company incentive or non-qualified stock options. The purpose of the 1993 Stock
Option Plan is to encourage stock ownership by persons instrumental to the
success of the Company, in order to give them a greater personal interest in the
Company's business. For a more detailed description of the terms of the 1993
Stock Option Plan, see "Stock Option Plan" on page 9 of this Proxy Statement.
As of March 31, 2002, 274,500 shares have already been reserved for
issuance in connection with outstanding options granted under the 1993 Stock
Option Plan, leaving approximately 35,500 shares available for future grant
under the 1993 Stock Option Plan. The 1993 Stock Option Plan expires on December
13, 2003.
THE PROPOSAL
The Board of Directors believes that the operation to date of the 1993
Stock Option Plan has proved to be of substantial value in inducing the
continued service to the Company of the Plan's participants, in encouraging
their efforts toward the continued success of the Company and its subsidiaries
and in assisting in the recruitment of qualified individuals to work for the
Company. However, because the 1993 Stock Option Plan has only few shares
remaining available for grant and will expire next year, the Board of Directors
approved a new equity compensation plan, the 2002 Gunther International Ltd.
Stock Option Plan (the "2002 Stock Option Plan" or the "Plan"), subject to the
approval of the Company's stockholders at the Annual Meeting.
Set forth below is a brief summary of certain provisions of the 2002 Stock
Option Plan, This summary does not purport to be complete and is subject in all
respects to the applicable provisions of the Plan itself, a copy of which is
attached hereto as Appendix A.
- 13 -
SUMMARY OF THE 2002 STOCK OPTION PLAN
General
The Board adopted the Plan effective as of February 5, 2002. The Plan
shall continue and remain effective until such time as no further awards may be
granted under the Plan and all awards granted under the Plan are no longer
outstanding. Under the Plan the Executive Compensation/Stock Option Committee of
the Board of Directors or the full Board (either, the "Committee") may grant
stock incentives to key individuals performing services for our company,
including employees, officers, eligible directors, consultants and agents.
Awards under the Plan may be in the form of incentive stock options and
nonqualified stock options.
The purpose of the 2002 Stock Option Plan is to secure for the Company and
its stockholders the continued services of key employees, officers and directors
who have contributed or have the potential to contribute to the continued
success and growth of the business of the Company. The Board also believes that
adoption of the Plan will enhance the Company's ability to attract and retain
such individuals in a competitive business environment. The use of equity-based
compensation should more closely align the incentives of Plan participants with
the long-term goals of the Company's stockholders in a tax-efficient manner.
Shares Available for the Plan
We presently have 500,000 shares of Common Stock reserved for issuance
under the Plan. The aggregate fair market value of shares underlying incentive
stock options made to any one participant in a fiscal year under the Plan may
not exceed $100,000. The number of shares that can be issued and the number of
shares subject to outstanding options may be adjusted by the Committee, in its
discretion, in the event that a stock split, stock dividends, recapitalization
or other similar event occurs that affects the number of shares of our
outstanding Common Stock as a whole.
Plan Administration
The Committee will administer the Plan. Subject to the specific provisions
of the Plan, the Committee determines award eligibility, timing and the type,
amount and terms of the awards. The Committee also interprets the Plan,
establishes rules and regulations under the Plan and makes all other
determinations necessary or advisable for the Plan's administration.
Options under the Plan may be either incentive stock options, as defined
under the tax laws, or nonqualified stock options. The per share exercise price
may not be less than the fair market value of our common stock on the date the
option is granted. The Compensation Committee may specify any period of time
following the date of grant during which options are exercisable, so long as the
exercise period is not more than 10 years. Incentive stock options are subject
to additional limitations relating to such things as employment status, minimum
exercise price, length of exercise period, maximum value of the stock underlying
the options and a required holding period for stock received upon exercise of
the option. Only nonqualified options may be granted to individuals who are not
our employees.
Upon exercise, the option holder may pay the exercise price in several
ways. He or she can pay: (1) in cash; (2) by delivering previously owned Common
Stock with a fair market value equal to the exercise price; (3) by authorizing a
third-party broker-dealer to sell all or a sufficient portion of the shares of
Common Stock acquired upon exercise of the option and to remit the proceeds of
such sale to the Company as payment for the exercise price of the option and any
applicable tax withholding resulting from such exercise; or (4) by a combination
of these methods.
Expiration of Options
Generally, options granted under the Plan expire on the date determined by
the Committee at the time of the grant, subject to earlier expiration as
specified in the award agreement if the holder terminates employment prior to
- 14 -
that date. IRS rules require that incentive stock options expire no later than
three months after the termination of employment for any reason other than death
or disability, or one year after termination of employment by reason of death or
disability, in either case subject to the normal expiration date of the option.
In no event may an option be exercised after its expiration date. Any unvested
portion of an option will expire immediately upon termination of employment.
Outstanding Options
As of March 31, 2002, options covering 129,500 shares of our Common Stock
are outstanding under the 2002 Stock Option Plan, subject to the receipt of
stockholder approval.
Transferability
Generally, an option may not be sold, assigned or otherwise transferred
during its holder's lifetime, except by will or the laws of descent and
distribution.
Tax Consequences
The following is a summary, based on current law, of some significant
federal income tax consequences of awards under the Plan. Participants are
advised to consult with their own tax advisor regarding the federal, state and
local tax consequences of the grant and exercise of an option.
Participants in the Plan do not recognize taxable income by reason of the
grant or vesting of an option, and we do not receive a tax deduction by reason
of either event. At exercise, the federal tax consequences vary depending on
whether the award is an incentive stock option or nonqualified stock option.
Incentive Stock Options
Upon exercise of an incentive stock option, its holder does not recognize
taxable income, and we do not receive a tax deduction. However, the excess of
the fair market value of our Common Stock on the date of exercise over the
exercise price is an adjustment that increases alternative minimum taxable
income, the base upon which alternative minimum tax is computed.
If the shares purchased upon the exercise of an incentive stock option are
sold at a gain within two years from the date of grant, or within one year after
the option is exercised, then the difference, with certain adjustments, between
the fair market value of the stock at the date of exercise and the exercise
price will be considered ordinary income. Any additional gain will be treated as
a capital gain. If the shares are sold at a gain after they have been held at
least one year and more than two years after the grant date, any gain will be
treated as a long-term capital gain. Any loss recognized upon a taxable
disposition of the shares generally would be characterized as a capital loss.
Nonqualified Stock Options
Upon exercise of a nonqualified stock option, its holder recognizes
ordinary income in an amount equal to the difference between the fair market
value of Company Common Stock at the time of exercise and the exercise price.
Generally, the Company is entitled to a corresponding tax deduction for
compensation income recognized by the holder. Upon the subsequent sale of the
shares acquired in the exercise, the holder will recognize a short-term or
long-term capital gain or loss, depending on the length of time he or she has
held the shares.
Plan Amendment and Termination
The Plan will remain effective until no further awards may be granted or
there are no more awards remaining under the Plan. The Board may amend or
terminate the Plan at any time. An amendment is subject to shareholder approval
if it increases the number of shares available for issuance under the Plan,
permits the grant of an incentive stock option at an exercise price less than
that set forth in the Plan, changes the class of individuals
- 15 -
eligible for participation in the Plan, or permits the grant of awards after the
Plan termination date.
New Plan Benefits
The following table shows, as to the Named Executive Officers and the
other individuals and groups indicated, the number of shares of Common Stock
subject to option grants made under the Company's 2002 Stock Option Plan since
February 1, 2002, together with the dollar value of such option shares at an
exercise price of $.60 per share.
Name/Title Dollar Value (1) Number of Units($)
---------- ---------------- ------------------
Marc I. Perkins, President and Chief Executive Officer 0 0
Michael M. Vehlies, Former Chief Financial Officer $21,000 35,000
A. Evan Haag, SVP - Operations $ 6,000 10,000
Jeremy H. Greshin, SVP - Sales & Marketing 0 0
Theodore J. Langevin, SVP - Design & Manufacturing $ 6,000 10,000
All current executive officers as a group (6 persons) $17,100 28,500
All current directors who are not executive officers as a group 0 0
All employees, including officers who are not executive $60,600 66,000
officers, as a group (21 persons)
(1) Based upon an exercise price of $.60 per share (which was the fair market
value of the Company's Common Stock as of February 5, 2002) multiplied by
the number of shares underlying the option(s). The actual value, if any,
an option holder may realize upon exercise of the option(s) will depend on
the excess, if any, of the Company's stock price over the exercise price
on the date the option is exercised.
All future grants under the 2002 Stock Option Plan will be made at the
discretion of the Committee and, accordingly, are not yet determinable. The
value of any benefits awarded under the Plan will depend on a number of factors,
including the fair market value of the Common Stock on future dates and the
exercise decisions made by the recipients of incentive awards. As a result, it
is not possible to determine the benefits that might be received by participants
receiving discretionary awards under the Plan.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
The affirmative vote of a majority of the shares present at the Annual
Meeting, either in person or by properly executed proxy, and entitled to vote on
this proposal is needed for its adoption.
THE BOARD OF DIRECTORS BELIEVES THAT APPROVAL OF THE 2002 STOCK OPTION
PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND THEREFORE
RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
- 16 -
ITEM 3.
APPROVAL OF AMENDMENT TO THE GUNTHER
INTERNATIONAL LTD. DIRECTORS' EQUITY PLAN
BACKGROUND
The Board of Directors, based on the recommendation of the Executive
Compensation/Stock Option Committee, originally adopted the Gunther
International Ltd. Directors' Equity Plan (the "Directors' Equity Plan") on
April 1, 1999. The Directors' Equity Plan was approved by the stockholders of
the Company at the Company's 1999 annual meeting of stockholders held on
September 9, 1999.
On July 9, 2002, the Board of Directors adopted an amendment (the
"Amendment") to the Directors' Equity Plan, subject to approval by the Company's
stockholders at the Annual Meeting. The Amendment provides that the aggregate
number of shares of Common Stock available for awards under the Directors'
Equity Plan will be increased from 100,000 to 500,000 shares. As amended,
Section 4.1 of the Directors' Equity Plan, provides as follows:
4.1 LIMITATIONS. Subject to any antidilution adjustment
pursuant to the provisions of Section 4.2 hereof, the maximum number of
shares of Stock that may be issued and sold hereunder shall be 500,000
shares.
Except for this Amendment, all other terms and provisions of the
Directors' Equity Plan will remain unchanged.
The purpose of the Directors' Equity Plan is to advance the interests of
the Company by offering eligible directors an opportunity to increase their
proprietary interest in the Company. The Company believes that, since 1999, the
Directors' Equity Plan has helped to promote the growth and profitability of the
Company by strengthening the alignment of the personal financial interests of
participating directors with those of the Company's stockholders; and that the
Amendment and the continued operation of the Directors' Equity Plan will help
the Company achieve these important objectives in the future.
As noted above, the Directors' Equity Plan currently provides for the
issuance of only 100,000 shares of Common Stock. Assuming the continuation of
Common Stock accruals throughout the fiscal year ended March 31, 2002, this
aggregate limit was reached during the third quarter of fiscal 2002 and
participating directors have become entitled to receive an additional 60,987
shares of Common Stock, albeit on a deferred basis (as of June 30, 2002 only
8,421 shares of Common Stock have actually been issued to one former director
under the terms of the Directors' Equity Plan). These additional accruals will
only become effective if the proposed Amendment to the Directors' Equity Plan is
approved by stockholders at the Annual Meeting. If the proposed Amendment is not
approved by stockholders at the Annual Meeting, the Common Stock accruals will
not become effective, and the accounts of all participating directors instead
will be credited with the cash to which they otherwise would be entitled. As of
June 30, 2002, that amount was approximately $30,000.
PRINCIPAL TERMS OF THE DIRECTORS' EQUITY PLAN, AS AMENDED
Any director who is not an employee of the Company or any of its
subsidiaries may participate in the Directors' Equity Plan. Assuming the
election of each of the nominees for director at the 2002 Annual Meeting of
Stockholders, seven (7) Directors of the Company will be eligible to
participate.
Pursuant to the Directors' Equity Plan, each participating Director will
receive grants of Common Stock of the Company in lieu of quarterly cash
retainers as compensation for his service on the Board. The number of shares
issued for each quarter will be equal to (i) $2,500, divided by (ii) the fair
market value of the Common Stock on the last business day of such quarter. An
eligible director may make an irrevocable election not to participate in the
Directors' Equity Plan in any year, and instead receive quarterly cash retainers
(currently set at $1,250). The aggregate number of shares of Common Stock
available for awards under the Directors' Equity Plan, as proposed to
- 17 -
be amended, will be 500,000, subject to specified adjustments in the event of
changes in the aggregate number of outstanding shares of Common Stock.
Each participating Director may elect to defer receipt of the shares of
Common Stock that would otherwise be distributed to him with respect to any
quarter. If such a deferral election is made, the participating Director making
such an election must also make an irrevocable distribution election specifying
when the participating Director desires to receive a distribution of the shares
of Common Stock the receipt of which is being deferred. This election will
remain in effect for all subsequent quarters in which the participating Director
remains a Director of the Company, unless earlier revoked or modified in
accordance with the terms of the Directors' Equity Plan. In general, a
participating Director may elect to have the deferred shares of Common Stock
distributed in a single lump sum or in up to ten equal annual installments,
commencing as of the January 10 (or the first business day thereafter, if
January 10 is not a business day) of the first to occur of (i) the year
specified in the notice or (ii) the year after the year in which the
participating Director ceases to be a Director of the Company.
In the event that a participating Director elects to defer receipt of the
shares of Common Stock which would otherwise be distributed under the Directors'
Equity Plan, the Company will open and maintain an account in the name of the
participating Director reflecting the value of the deferred benefits allocated
to such participating Director.
The Board of Directors may terminate or amend the Directors' Equity Plan
at any time, except that absent stockholder approval the Board may not amend the
Directors' Equity Plan to (i) increase the total number of shares of Common
Stock subject to the Directors' Equity Plan, or (ii) change or modify the class
of eligible participants. The Compensation Committee is authorized to make
appropriate adjustments in connection with outstanding awards under the
Directors' Equity Plan in the event of stock dividends, stock splits,
recapitalizations, mergers, or other changes in the Company's outstanding stock.
FEDERAL INCOME TAX CONSEQUENCES
In the event that a participating Director elects to defer receipt of
compensation under the Directors' Equity Plan, he will generally recognize
taxable income when such compensation is actually distributed, not when such
compensation is earned. The distribution of any shares of Common Stock or cash
under the Directors' Equity Plan generally will result in the receipt of taxable
income by the participating Director receiving such distribution. The amount of
taxable income recognized with respect to any shares of Common Stock will be
equal to the fair market value of the shares on the date they are distributed.
The treatment of a participating Director's subsequent disposition of such
shares will depend on the length of time the shares have been held, but
generally there will be no tax consequences for the Company in connection with
such disposition.
VOTE REQUIRED FOR APPROVAL AND RECOMMENDATION
The affirmative vote of a majority of the shares present at the Annual
Meeting, either in person or by properly executed proxy, and entitled to vote on
this proposal is needed for its adoption.
THE BOARD OF DIRECTORS BELIEVES THAT THE AMENDMENT TO THE DIRECTORS'
EQUITY PLAN IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND
THEREFORE RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
- 18 -
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the Company's Common Stock
that may be issued upon the exercise of options and rights under all of the
Company's existing equity compensation plans as of March 31, 2002, including the
Gunther International Ltd. 1993 Stock Option Plan, the 1999 Directors' Equity
Plan, the 2002 Stock Option Plan and certain other equity compensation plans.
(a) (b) (c)
Number of
Securities to be Number of securities
issued upon remaining available for
exercise of Weighted average issuance under equity
outstanding exercise price of compensation plans
options, warrants outstanding options, (excluding securities
Plan Category and rights warrants and rights reflected in column (a))
- ------------- ---------- ------------------- ------------------------
Equity compensation plans approved by 435,487 $2.24 35,500
security holders (1)
Equity compensation plan approved
subject to approval of stockholders (2) 129,500 $.60 370,500
Equity compensation plans not approved 185,000 $1.50 -
by security holders (3)
Total: 789,987 $1.77 406,000
(1) Includes 274,500 shares reserved for issuance under outstanding awards
made previously pursuant to the Gunther International Ltd. 1993 Stock
Option Plan and 160,987 shares previously reserved for issuance to our
directors pursuant to the Gunther International Ltd. Directors' Equity
Plan. The number of shares reserved for issuance pursuant to the
Directors' Equity Plan is proposed to be increased to 500,000 shares (see
Item 3 - "Approval of Amendment to the Gunther International Ltd.
Directors' Equity Plan").
(2) Includes the Gunther International Ltd. 2002 Stock Option Plan. As of
March 31, 2002, options covering 129,500 shares of our Common Stock
have been awarded and are outstanding under this Plan, subject to
stockholder approval at the Annual Meeting (see Item 2 "Approval of the
Gunther International Ltd. 2002 Stock Option Plan").
(3) Includes 150,000 options issued to Marc I. Perkins, our President and
Chief Executive Officer, and 35,000 options issued to Michael M. Vehlies,
our former Chief Financial Officer, in fiscal 1999. Mr. Vehlies'
employment with the Company terminated on June 24, 2002, and Mr. Vehlies'
option covering 35,000 shares of our Common Stock terminated as of July
24, 2002.
- 19 -
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Company engaged Ernst & Young LLP as its independent accountants on
November 15, 1999. Upon the recommendation of the Audit Committee, the Board of
Directors intends to reappoint Ernst & Young LLP as the Company's independent
public accountants for the fiscal year ended March 31, 2003. The Board of
Directors in its discretion may direct the appointment of a different
independent public accounting firm at any time during the year if the Board
determines that such a change would be in the best interests of the Company and
its stockholders. A representative of Ernst & Young LLP will be present at the
Annual Meeting to respond to appropriate questions and to make such statements
as such representatives may desire.
AUDIT FEES
The aggregate fees incurred by the Company for professional services
rendered by Ernst & Young LLP for the audit of the Company's annual financial
statements for the fiscal year ended March 31, 2002, and for the reviews of the
financial statements included in the Company's Quarterly Reports on Form 10-QSB
for that fiscal year were $80,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
There were no fees incurred by the Company for professional services
rendered by Ernst & Young LLP for information technology services relating to
financial information systems design and implementation for the fiscal year
ended March 31, 2002.
ALL OTHER FEES
The aggregate fees incurred by the Company for professional services
rendered by Ernst & Young LLP to the Company, other than the services described
above under "Audit Fees", for the fiscal year ended March 31, 2002, were
approximately $91,000, consisting of 1) $55,000 for accounting and audit
services relating to the Company's registration statement and 401(k) plan, and
2) $36,000 relating to tax return preparation and other tax services.
ITEM 4.
OTHER MATTERS
As of the date of this proxy statement, the Company knows of no business
that will be presented for consideration at the Annual Meeting other than the
items referred to above. Proxies in the enclosed form will be voted in respect
of any other business that is properly brought before the Annual Meeting in
accordance with the judgment of the person or persons voting the proxies.
STOCKHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
The Company currently expects to convene the 2003 Annual Meeting of
Stockholders during August or September of 2003 (the "2003 Annual Meeting"),
after the announcement of the financial results for the fiscal year ended March
31, 2003. Any proposal of a stockholder intended to be presented at the 2003
Annual Meeting must be received by the Secretary of the Company, for inclusion
in the Company's proxy, notice of meeting and proxy statement relating to the
2003 Annual Meeting, on or before April 1, 2003. For any proposal that is not
submitted for inclusion in next year's proxy statement, but is instead sought to
be presented directly at the 2003 Annual Meeting of Stockholders, SEC rules
permit management to vote proxies in its discretion if the Company: (1) receives
notice of the proposal before the close of business on June 14, 2003, and
advises share owners in the 2003 proxy statement about the nature of the matter
and how management intends to vote on such matter; or (2) does not receive
notice of the proposal prior to the close of business on June 14, 2003. Notices
of intention to present proposals at the 2003 Annual Meeting of Stockholders
should be addressed to John K. Carpenter, Secretary, Gunther International Ltd.,
One Winnenden Road, Norwich, Connecticut 06360.
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THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED MARCH
31, 2002, FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE COMPANY'S OFFICES, ONE WINNENDEN ROAD,
NORWICH, CONNECTICUT 06360; ATTENTION: JOHN K. CARPENTER.
ADDITIONAL INFORMATION
The cost of soliciting proxies in the enclosed form will be borne by the
Company. Officers and regular employees of the Company may, but without
compensation other than their regular compensation, solicit proxies by further
mailing or personal conversations, or by telephone, telex or facsimile. The
Company will, upon request, reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to the beneficial owners
of stock.
July 29, 2002 By order of the Board of Directors,
Norwich, Connecticut
John K. Carpenter,
Senior Vice President, Chief Financial Officer,
Treasurer and Secretary
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APPENDIX A
GUNTHER INTERNATIONAL LTD.
2002 STOCK OPTION PLAN
ARTICLE I
PURPOSE; DEFINITIONS
1.1 Purpose. The purpose of the Gunther International Ltd. 2002 Stock
Option Plan (the "Plan") is to enable the Company to offer to its employees,
officers, directors and consultants, whose past, present and/or potential
contributions to the Company and its Subsidiaries have been, are or will be
important to the success of the Company, an opportunity to acquire a proprietary
interest in the Company. The various types of long-term incentive awards that
may be provided under the Plan will enable the Company to respond to changes in
compensation practices, tax laws, accounting regulations and the size and
diversity of its businesses.
1.2 Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below:
(a) "Agreement" means the agreement between the Company and a Holder
setting forth the terms and conditions of an award under the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" means the Executive Compensation/Stock Option
Committee of the Board or any other committee of the Board that the Board may
designate to administer the Plan or any portion thereof. If no Committee is so
designated, then all references in this Plan to "Committee" shall mean the
Board.
(e) "Common Stock" means the Common Stock of the Company, par value
$.001 per share, also referred to as "Shares".
(f) "Company" means Gunther International Ltd., a corporation
organized and existing under the laws of the State of Delaware.
(g) "Director" means a member of the Board.
(h) "Disability" means physical or mental impairment as determined
under procedures established by the Committee for purposes of the Plan.
(i) "Effective Date" means the date set forth in Section 8.1, below.
(j) "Fair Market Value," unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
given date:
(i) if the Common Stock is listed on a national securities
exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the
last sale price of the Common Stock in the principal trading market for the
Common Stock on such date, as reported by the exchange or Nasdaq, as the case
may be;
(ii) if the Common Stock is not listed on a national
securities exchange or quoted on the Nasdaq National Market or Nasdaq SmallCap
Market, but is traded in the over-the-counter market, the closing bid price for
the Common Stock on such date, as reported by the OTC Bulletin Board or the
National Quotation
- 22 -
Bureau, Incorporated or similar publisher of such quotations; and
(iii) if the fair market value of the Common Stock cannot be
determined pursuant to clause (i) or (ii) above, such price as the Committee
shall determine, in good faith.
(k) "Holder" means a person who has received an award under the
Plan.
(l) "Incentive Stock Option" means any Stock Option intended to be
and designated as an "incentive stock option" within the meaning of Section 422
of the Code.
(m) "Mature Shares" means shares of Common Stock that have been held
by the Holder for at least six months.
(n) "Nonqualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.
(o) "Normal Retirement" means retirement from active employment with
the Company or any Subsidiary on or after age 65.
(p) "Parent" means any present or future "parent corporation" of the
Company, as such term is defined in Section 424(e) of the Code.
(q) "Plan" means the Gunther International Ltd. 2002 Stock Option
Plan, as amended from time to time.
(r) "Repurchase Value" shall mean the difference between the Fair
Market Value and the Exercise Price (if lower than the Fair Market Value),
multiplied by the number of shares subject to the award.
(s) "Stock Option" or "Option" means an option to purchase shares of
Common Stock which is granted pursuant to the Plan.
(t) "Subsidiary" means any present or future "subsidiary
corporation" of the Company, as such term is defined in Section 424(f) of the
Code.
ARTICLE II
ADMINISTRATION
2.1 Committee Membership. The Plan shall be administered by the Board or a
Committee. Committee members shall serve for such term as the Board may in each
case determine, and shall be subject to removal at any time by the Board. The
Committee members, to the extent possible and deemed to be appropriate by the
Board, shall be "non-employee directors" as defined in Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
"outside directors" within the meaning of Section 162(m) of the Code.
2.2 Powers of Committee. The Committee shall have full authority to award,
from time to time pursuant to the terms of the Plan, Incentive Stock Options and
Nonqualified Stock Options. For purposes of illustration and not of limitation,
the Committee shall have the authority (subject to the express provisions of
this Plan):
(a) to select the officers, employees, directors and consultants of
the Company or any Subsidiary to whom Stock Options may from time to time be
awarded hereunder;
(b) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not limited
to, number of shares, share exercise price or types of
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consideration paid upon exercise of such options, such as other securities of
the Company or other property, any restrictions or limitations, and any vesting,
exchange, surrender, cancellation, acceleration, termination, exercise or
forfeiture provisions, as the Committee shall determine);
(c) to determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder; and
(d) to substitute new Stock Options for previously granted Stock
Options, which previously granted Stock Options have higher option exercise
prices and/or contain other less favorable terms.
2.3 Interpretation of Plan.
(a) Committee Authority. Subject to Article VII, below, the
Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any award issued under the Plan (and to determine the form and
substance of all Agreements relating thereto), and to otherwise supervise the
administration of the Plan.
(b) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term or provision of the Plan relating to Incentive Stock
Options or any Agreement providing for Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of the Holder(s) affected, to disqualify
any Incentive Stock Option under such Section 422.
ARTICLE III
STOCK SUBJECT TO PLAN
3.1 Number of Shares. The total number of shares of Common Stock reserved
and available for issuance under the Plan shall be 500,000 shares of Common
Stock. Shares of Common Stock under the Plan may consist, in whole or in part,
of authorized and unissued shares or treasury shares. If any shares of Common
Stock that have been granted pursuant to a Stock Option cease to be subject to a
Stock Option, such shares shall again be available for distribution in
connection with future grants and awards under the Plan. If a Holder pays the
exercise price of a Stock Option by surrendering any previously owned shares
and/or arranges to have the appropriate number of shares otherwise issuable upon
exercise withheld to cover the withholding tax liability associated with the
Stock Option exercise, then the number of shares available under the Plan shall
be increased by the number of such surrendered shares and shares used to pay
such taxes.
3.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any
merger, reorganization, consolidation, dividend (other than a cash dividend)
payable on shares of Common Stock, stock split, reverse stock split, combination
or exchange of shares, or other extraordinary or unusual event occurring after
the grant of an award which results in a change in the shares of Common Stock of
the Company as a whole, the Committee shall determine, in its sole discretion,
whether such change equitably requires an adjustment in the terms of any award
or the aggregate number of shares reserved for issuance under the Plan. Any such
adjustments will be made by the Committee, whose determination will be final,
binding and conclusive.
ARTICLE IV
ELIGIBILITY
4.1 General. Awards may be made or granted to employees, officers,
directors and consultants who are deemed to have rendered or to be able to
render significant services to the Company or its Subsidiaries and who are
deemed to have contributed or to have the potential to contribute to the success
of the Company.
4.2 Incentive Stock Options. No Incentive Stock Option shall be granted to
any person who is not an employee of the Company or a Subsidiary at the time of
grant.
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ARTICLE V
STOCK OPTIONS
5.1 Grant and Exercise. Stock Options granted under the Plan may be of two
types: (i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any
Stock Option granted under the Plan shall contain such terms, not inconsistent
with this Plan, or with respect to Incentive Stock Options, not inconsistent
with the Plan and the Code, as the Committee may from time to time approve. The
Committee shall have the authority to grant Incentive Stock Options or
Nonqualified Stock Options, or both types of Stock Options, which may be granted
alone or in addition to other awards granted under any other incentive
compensation plan maintained by the Company. To the extent that any Stock Option
intended to qualify as an Incentive Stock Option does not so qualify, it shall
constitute a separate Nonqualified Stock Option.
5.2 Terms and Conditions. Stock Options granted under the Plan shall be
subject to the following terms and conditions:
(a) Option Term. The term of each Stock Option shall be fixed by the
Committee; provided, however, that an Incentive Stock Option may be granted only
within the ten-year period commencing from the Effective Date and may only be
exercised within ten years of the date of grant (or five years in the case of an
Incentive Stock Option granted to an optionee who, at the time of grant, owns
Common Stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company (a "10% Stockholder")).
(b) Exercise Price. The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant and may not be less than 100% of the Fair Market Value on the day
of grant; provided, however, that the exercise price of an Incentive Stock
Option granted to a 10% Stockholder shall not be less than 110% of the Fair
Market Value on the date of grant.
(c) Exercisability. Stock Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by the
Committee and as set forth in Article VI, below. If the Committee provides, in
its discretion, that any Stock Option is exercisable only in installments, i.e.,
that it vests over time, the Committee may waive such installment exercise
provisions at any time at or after the time of grant in whole or in part, based
upon such factors as the Committee shall determine.
(d) Method of Exercise. Subject to whatever installment, exercise
and waiting period provisions are applicable in a particular case, Stock Options
may be exercised in whole or in part at any time during the term of the Option,
by giving written notice of exercise to the Company specifying the number of
shares of Common Stock to be purchased. Such notice shall be accompanied by:
(i) a cash payment equal to the aggregate exercise price,
(ii) Mature Shares having a Fair Market Value equal to the
aggregate exercise price,
(iii) an election to make a cashless exercise through a
registered broker-dealer, and/or
(iv) any other form of payment which is acceptable to the
Committee.
Cash payments shall be made by wire transfer, certified or bank check or
personal check, in each case payable to the order of the Company; provided,
however, that the Company shall not be required to deliver certificates for
shares of Common Stock with respect to which an Option is exercised until the
Company has confirmed the receipt of good and available funds in payment of the
purchase price thereof. Payments in the form of Mature Shares shall be valued at
the Fair Market Value of the Common Stock on the date prior to the date of
exercise. Such payments shall be made by delivery of stock certificates in
negotiable form that are effective to transfer good and valid title thereto to
the Company, free of any liens or encumbrances. Payments in the form of a
cashless exercise shall be made by authorizing a third-party broker-dealer to
sell all or a portion of the shares of Common Stock acquired upon exercise
- 25 -
of the Option and to remit to the Company a sufficient portion of the sale
proceeds to pay the aggregate exercise price and any applicable tax withholding
resulting from such exercise. A Holder shall have none of the rights of a
Stockholder with respect to the shares subject to the Option until such shares
shall be transferred to the Holder upon the exercise of the Option.
(e) Transferability. Except as may be set forth in the Agreement, no
Stock Option shall be transferable by the Holder other than by will or by the
laws of descent and distribution, and all Stock Options shall be exercisable,
during the Holder's lifetime, only by the Holder (or, to the extent of legal
incapacity or incompetency, the Holder's guardian or legal representative).
(f) Termination by Reason of Death. If a Holder's employment by the
Company or a Subsidiary terminates by reason of death, any Stock Option held by
such Holder, unless otherwise determined by the Committee at the time of grant
and set forth in the Agreement, shall thereupon automatically terminate, except
that the portion of such Stock Option that has vested on the date of death may
thereafter be exercised by the legal representative of the estate or by the
legatee of the Holder under the will of the Holder, for a period of one year (or
such other greater or lesser period as the Committee may specify at grant) from
the date of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.
(g) Termination by Reason of Disability. If a Holder's employment by
the Company or any Subsidiary terminates by reason of Disability, any Stock
Option held by such Holder, unless otherwise determined by the Committee at the
time of grant and set forth in the Agreement, shall thereupon automatically
terminate, except that the portion of such Stock Option that has vested on the
date of termination may thereafter be exercised by the Holder for a period of
one year (or such other greater or lesser period as the Committee may specify at
the time of grant) from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter.
(h) Other Termination. Unless otherwise determined by the Committee
at the time of grant and set forth in the Agreement, if a Holder is an employee
of the Company or a Subsidiary at the time of grant and if such Holder's
employment by the Company or any Subsidiary terminates for any reason other than
death or Disability, the Stock Option shall thereupon automatically terminate,
except that if the Holder's employment is terminated by the Company or a
Subsidiary without cause or due to Normal Retirement, then the portion of such
Stock Option that has vested on the date of termination of employment may be
exercised for the lesser of three months after termination of employment or the
balance of such Stock Option's term.
(i) Additional Incentive Stock Option Limitation. In the case of an
Incentive Stock Option, the aggregate Fair Market Value (on the date of grant of
the Option) with respect to which Incentive Stock Options become exercisable for
the first time by a Holder during any calendar year (under all such plans of the
Company and its Parent and Subsidiary) shall not exceed $100,000.
(j) Buyout and Settlement Provisions. The Committee may at any time,
in its sole discretion, offer to repurchase a Stock Option previously granted,
based upon such terms and conditions as the Committee shall establish and
communicate to the Holder at the time that such offer is made.
ARTICLE VI
ACCELERATED VESTING AND EXERCISABILITY
6.1 Non-Approved Transactions. If any "Person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) other than an "Exempt Person" (as
defined below) is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding securities in one or more transactions, and the Board does not
authorize or otherwise approve such acquisition, then the vesting periods of any
and all Stock Options and other awards granted and outstanding under the Plan
shall be accelerated and all such Stock Options and awards will immediately and
entirely vest, and the respective holders thereof will have the
- 26 -
immediate right to purchase and/or receive any and all Common Stock subject to
such Stock Options and awards on the terms set forth in this Plan and the
respective agreements respecting such Stock Options and awards. For purposes of
the foregoing, an "Exempt Person" shall mean and include any Person who is the
beneficial owner, directly or indirectly, of any outstanding equity securities
of the Company on February 5, 2002.
6.2 Approved Transactions. The Committee may, in the event of an
acquisition of all or substantially all of the Company's assets or at least 50%
of the combined voting power of the Company's then outstanding securities in one
or more transactions (including by way of merger or reorganization) which has
been approved by the Company's Board of Directors, (a) accelerate the vesting of
any and all Stock Options granted and outstanding under the Plan, and (b)
require a Holder of any award granted under this Plan to relinquish such award
to the Company upon the tender by the Company to Holder of cash in an amount
equal to the Repurchase Value of such award.
ARTICLE VII
AMENDMENT AND TERMINATION
The Board may at any time, and from time to time, amend alter, suspend or
discontinue any of the provisions of the Plan, but no amendment, alteration,
suspension or discontinuance shall be made that would impair the rights of a
Holder under any Agreement theretofore entered into hereunder, without the
Holder's consent.
ARTICLE VIII
TERM OF PLAN
8.1 Effective Date. The Plan shall be effective as of February 5, 2002
(the "Effective Date"), subject to the approval of the Plan by the Company's
stockholders within one year after the Effective Date. Any awards granted under
the Plan prior to such approval shall be effective when made (unless otherwise
specified by the Committee at the time of grant), but shall be conditioned upon,
and subject to, such approval of the Plan by the Company's stockholders and no
awards shall vest or otherwise become free of restrictions prior to such
approval.
8.2 Termination Date. Unless terminated by the Board, this Plan shall
continue to remain effective until such time as no further awards may be granted
and all awards granted under the Plan are no longer outstanding. Notwithstanding
the foregoing, grants of Incentive Stock Options may be made only during the ten
year period following the Effective Date.
ARTICLE IX
GENERAL PROVISIONS
9.1 Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms, of the Agreement executed by
the Company and the Holder. The Committee may terminate any award made under the
Plan if the Agreement relating thereto is not executed and returned to the
Company within 10 days after the Agreement has been delivered to the Holder for
his or her execution.
9.2 Employees.
(a) Engaging in Competition With the Company; Disclosure of
Confidential Information. If a Holder's employment with the Company or a
Subsidiary is terminated for any reason whatsoever, and within six months after
the date thereof such Holder either (i) accepts employment with any competitor
of, or otherwise engages in competition with, the Company or (ii) discloses to
anyone outside the Company or uses any confidential information or material of
the Company in violation of the Company's policies or any agreement between the
Holder and the Company, all options or other awards then held by such Holder
shall automatically terminate.
(b) No Right of Employment. Nothing contained in the Plan or in any
award hereunder shall be deemed to confer upon any Holder who is an employee of
the Company or any Subsidiary any right to continued employment with the Company
or any Subsidiary, nor shall it interfere in any way with the right of the
Company or
- 27 -
any Subsidiary to terminate the employment of any Holder who is an employee at
any time.
9.3 Investment Representations; Company Policy. The Committee may require
each person acquiring shares of Common Stock pursuant to a Stock Option or other
award under the Plan to represent to and agree with the Company in writing that
the Holder is acquiring the shares for investment without a view to distribution
thereof. Each person acquiring shares of Common Stock pursuant to a Stock Option
or other award under the Plan shall be required to abide by all policies of the
Company in effect at the time of such acquisition and thereafter with respect to
the ownership and trading of the Company's securities.
9.4 Additional Incentive Arrangements. Nothing contained in the Plan shall
prevent the Board from adopting such other or additional incentive arrangements
as it may deem desirable, including, but not limited to, the granting of Stock
Options and the awarding of Common Stock and cash otherwise than under the Plan;
and such arrangements may be either generally applicable or applicable only in
specific cases.
9.5 Withholding Taxes. Not later than the date as of which an amount must
first be included in the gross income of the Holder for Federal income tax
purposes with respect to any option or other award under the Plan, the Holder
shall pay to the Company, or make arrangements satisfactory to the Committee
regarding the payment of, any Federal, state and local taxes of any kind
required by law to be withheld or paid with respect to such amount. If permitted
by the Committee, tax withholding or payment obligations may be settled with
Common Stock, including Common Stock that is part of the award that gives rise
to the withholding requirement. The obligations of the Company under the Plan
shall be conditioned upon such payment or arrangements and the Company or the
Holder's employer (if not the Company) shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the Holder from the Company or any Subsidiary.
9.6 Governing Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of Connecticut (without regard to choice of law provisions); provided,
however, that all matters relating to or involving corporate law shall be
governed by the laws of the State of Delaware.
9.7 Other Benefit Plans. Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary and shall not affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).
9.8 Non-Transferability. Except as otherwise expressly provided in the
Plan or the Agreement, no right or benefit under the Plan may be alienated,
sold, assigned, hypothecated, pledged, exchanged, transferred, encumbered or
charged, and any attempt to alienate, sell, assign, hypothecate, pledge,
exchange, transfer, encumber or charge the same shall be void.
9.9 Applicable Laws. The obligations of the Company with respect to all
Stock Options under the Plan shall be subject to (i) all applicable laws, rules
and regulations and such approvals by any governmental agencies as may be
required, including, without limitation, the Securities Act of 1933, as amended,
and (ii) the rules and regulations of any securities exchange on which the
Common Stock may be listed.
9.10 Conflicts. If any of the terms or provisions of the Plan or an
Agreement conflict with the requirements of Section 422 of the Code, then such
terms or provisions shall be deemed inoperative to the extent they so conflict
with such requirements. Additionally, if this Plan or any Agreement does not
contain any provision required to be included herein under Section 422 of the
Code, such provision shall be deemed to be incorporated herein and therein with
the same force and effect as if such provision had been set out at length herein
and therein. If any of the terms or provisions of any Agreement conflict with
any terms or provisions of the Plan, then such terms or provisions shall be
deemed inoperative to the extent they so conflict with the requirements of the
Plan. Additionally, if any Agreement does not contain any provision required to
be included therein under the Plan, such provision shall be deemed to be
incorporated therein with the same force and effect as if such provision had
been set out at length
- 28 -
therein.
9.11 Non-Registered Stock. The shares of Common Stock to be distributed
under this Plan have not been, as of the Effective Date, registered under the
Securities Act of 1933, as amended, or any applicable state or foreign
securities laws and the Company has no obligation to any Holder to register the
Common Stock or to assist the Holder in obtaining an exemption from the various
registration requirements, or to list the Common Stock on a national securities
exchange or any other trading or quotation system, including the Nasdaq National
Market and Nasdaq SmallCap Market.
- 29 -
GUNTHER INTERNATIONAL LTD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of shares of common stock, par value $.001 per share
("Common Stock"), of GUNTHER INTERNATIONAL LTD., a Delaware corporation
(hereinafter referred to as the "Company"), does hereby constitute and appoint
MARC I. PERKINS and JOHN K. CARPENTER, or either of them, as proxies, with full
power to act without the other and with full power of substitution, to
represent the undersigned at the Annual Meeting of Stockholders of the Company
to be held on September 12, 2002, at 10:30 a.m., local time, at the corporate
office of the Company, One Winnenden Rd., Norwich, Connecticut 06360, and at
any adjournments or postponements thereof, and to vote all shares of Common
Stock of the Company which the undersigned is entitled to vote on all matters
coming before said meeting. The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting and the Proxy Statement, dated July 29, 2002, and
instructs its attorneys and proxies to vote as set forth on this Proxy.
(TO BE SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
GUNTHER INTERNATIONAL LTD.
SEPTEMBER 12, 2002
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
- -------------------------------------------------------------------------------
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD
1. ELECTION [ ] [ ]
OF
DIRECTORS
For, except vote withheld from the following nominee(s)
- ----------------------------------------------------
Nominees: James A. Cotter, Jr.
Edward F. Hacker
J. Kenneth Hickman
Steven S. Kirkpatrick
Gerald H. Newman
Marc I. Perkins
Robert Spiegel
Thomas M. Steinberg
FOR AGAINST ABSTAIN
2. Approval of the Gunther International Ltd. [ ] [ ] [ ]
2002 Stock Option Plan.
3. Approval of an amendment to the Gunther
International Ltd. Directors' Equity Plan to [ ] [ ] [ ]
increase to 500,000 the number of shares
available for awards under the Plan.
4. To vote with discretionary authority upon any other business which may
properly come before the meeting or any adjournment thereof.
The shares represented by this Proxy will be voted as specified. IF NO
CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED IN FAVOR OF THE SPECIFIED
NOMINEES, IN FAVOR OF ADOPTION OF THE GUNTHER INTERNATIONAL LTD. 2002
STOCK OPTION PLAN, IN FAVOR OF THE AMENDMENT TO THE GUNTHER INTERNATIONAL
LTD. DIRECTORS' EQUITY PLAN AND THE PROXIES ARE GIVEN DISCRETIONARY
AUTHORITY TO VOTE ON ANY OTHER MATTERS UPON WHICH THE UNDERSIGNED IS
ENTITLED TO VOTE AND WHICH MAY PROPERLY COME BEFORE THE ANNUAL MEETING
OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF. THIS PROXY CARD MUST BE
PROPERLY COMPLETED, SIGNED, DATED AND RETURNED IN ORDER TO HAVE YOUR
SHARES VOTED.
SIGNATURE(S) DATE
------------------------------------------------ ----------------
IMPORTANT: Please sign exactly as your name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator,
trustee, etc., indicate title. If the signer is a corporation, sign
in corporate name by a duly authorized officer.