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. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant []
Check the appropriate box:
[] Preliminary Proxy Statement
[] Confidential, for Use of the Commission Only
(as Permitted by Rule 14a-6(a)(2))
[ X ] Definitive Proxy Statement
[] Definitive Additional Materials
[] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CATALINA LIGHTING, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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the form or schedule and the date of its filing.
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4)Date Filed:
CATALINA LIGHTING, INC.
18191 N.W. 68th Avenue
Miami, Florida 33015
February 23, 2002
Dear Catalina Lighting Shareholder:
You are cordially invited to attend the 2002 Annual Meeting of Shareholders
of Catalina Lighting, Inc. to be held on Thursday, March 14, 2002, at 1:00 p.m.
(local time) at the corporate offices of Catalina Lighting, Inc. located at
18191 N.W. 68th Avenue, Miami, Florida 33015.
The Annual Meeting will include a discussion and voting on the matters
described in the accompanying Notice of Annual Meeting and Proxy Statement. You
will also have an opportunity to ask questions.
Please read the accompanying Notice of Annual Meeting and Proxy Statement
carefully. Whether or not you plan to attend the Annual Meeting, you can ensure
that your shares are represented at the Meeting by promptly completing,
signing, dating and returning the enclosed proxy card in the envelope provided.
If you decide to attend the Annual Meeting and wish to change your proxy vote,
you may do so by voting in person at the Meeting.
We look forward to seeing you on March 14, 2002.
Sincerely,
/s/ Eric Bescoby
Eric Bescoby
Chief Executive Officer
CATALINA LIGHTING, INC.
18191 N.W. 68th Avenue
Miami, Florida 33015
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 14, 2002
----------------
Notice is hereby given that the Annual Meeting of Shareholders of Catalina
Lighting, Inc., a Florida corporation (the "Company"), will be held on March
14, 2002 at 1:00 p.m. (local time) at the Company's corporate offices located
at 18191 N.W. 68th Avenue, Miami, Florida 33015, for the following purposes:
1. To elect nine persons to the Company's Board of Directors to hold office
until their respective terms of office shall expire and until their
respective successors are duly elected and qualified; and
2. To transact such other business as may properly come before the Annual
Meeting and any and all adjournments or postponements thereof.
Our Board of Directors has fixed the close of business on February 22, 2002
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting and any adjournment or postponement thereof.
Our Board is soliciting the enclosed proxy. Please carefully read the
accompanying Proxy Statement for more information regarding the business to be
transacted at the Annual Meeting. You will also find enclosed our Annual Report
for the fiscal year ended September 30, 2001.
For at least ten days before the Annual Meeting, we will make available,
during normal business hours, a complete list of the shareholders entitled to
vote at the Annual Meeting. You may examine the list for any purpose germane to
the Annual Meeting. The list will be available at our offices, located at 18191
N.W. 68th Avenue, Miami, Florida 33015.
Whether or not you plan to attend the Annual Meeting, please complete, sign,
date and return the enclosed proxy card promptly. You are cordially invited to
attend the Annual Meeting in person. Returning the proxy card will not affect
your right to revoke your proxy or to vote in person if you do attend the
Annual Meeting.
By Order of the Board of Directors,
/s/ Lynn Skillen
Lynn Skillen
Chief Financial Officer and
Secretary
Miami, Florida
February 23, 2002
YOUR VOTE IS IMPORTANT
WE URGE YOU TO SIGN, DATE AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES
MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED AT THE ANNUAL MEETING. WE HAVE ENCLOSED FOR YOUR
CONVENIENCE A RETURN ENVELOPE. YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING
IN PERSON. GIVING YOUR PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF
YOU ATTEND THE MEETING. YOU MAY WITHDRAW YOUR PROXY AT ANY TIME BEFORE IT IS
VOTED.
CATALINA LIGHTING, INC.
18191 N.W. 68TH AVENUE
MIAMI, FLORIDA 33015
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PROXY STATEMENT
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ANNUAL MEETING OF SHAREHOLDERS
March 14, 2002
GENERAL INFORMATION
We are furnishing this Proxy Statement to shareholders of Catalina Lighting,
Inc., a Florida corporation (the "Company"), in connection with our Board of
Directors' solicitation of proxies for use at our 2002 Annual Meeting of
Shareholders (the "Annual Meeting"). The Annual Meeting will be held at our
corporate offices at 18191 N.W. 68th Avenue, Miami, Florida 33015, on March 14,
2002 at 1:00 p.m. (local time). The purpose of the Annual Meeting is to elect
nine persons to the Board of Directors and to transact such other business as
may properly come before the meeting.
As of the close of business on February 22, 2002 (the "Record Date"), we had
outstanding 15,878,247 shares of common stock, par value $.01 per share (the
"Common Stock"). We are mailing this Proxy Statement and the proxy card in the
accompanying form on or about February 25, 2002 to shareholders of record as of
the close of business on the Record Date. We have also enclosed our Annual
Report for the fiscal year ended September 30, 2001 ("Fiscal 2001") (which does
not form a part of the proxy solicitation material). The Annual Report includes
consolidated financial statements for Fiscal 2001.
You are urged to sign, date and promptly mail the enclosed proxy in the
addressed envelope provided, which requires no postage in the United States.
PROXIES, QUORUM AND TABULATION OF VOTES
Each share of Common Stock is entitled to one vote per share on each matter
properly brought before the Annual Meeting. The shares represented by your
proxy will be voted at the Annual Meeting in accordance with the choices you
make on the proxy. If you do not specify any choices, the shares represented by
the proxy will be voted FOR the director nominees chosen by our Board. So far
as we presently know, there is no other business to be transacted at the Annual
Meeting. If any other matters properly come before the Annual Meeting, or if
any of the persons named to serve as directors should decline or be unable to
serve, the person named in the proxy will vote on these matters in accordance
with his discretion.
Shares which are present or represented by proxy at the Annual Meeting will
be counted for quorum purposes, regardless of whether the holder of the shares
or proxy fails to vote ("abstentions") or whether a broker with discretionary
authority fails to exercise its discretionary authority to vote ("broker non-
votes"). However, if a broker or nominee limits on the proxy card the number of
shares voted or indicates that the shares represented by the proxy card are not
voted, any "non-votes" will not be voted and will not be counted as affirmative
votes.
If you give a proxy in response to this solicitation, you have the power to
revoke it at any time before it is voted by taking any of the following
actions: filing a written notice of revocation with our Secretary at our
principal executive offices; filing a properly executed proxy showing a later
date with our Secretary at our principal executive offices; or attending the
meeting and voting in person (attendance at the meeting will not, by itself,
revoke a proxy).
Our Amended and Restated Bylaws (the "Bylaws") provide that the holders of a
majority of the shares of stock entitled to vote at any meeting of shareholders
must be present in person or represented by proxy to constitute a quorum for
the transaction of any business at the Annual Meeting. Accordingly, the
presence of 7,939,124 shares, in person or represented by a properly signed and
returned proxy, will constitute a quorum. Our Secretary will tabulate votes at
the Annual Meeting.
MATTERS TO COME BEFORE THE MEETING
Proposal No. 1
ELECTION OF DIRECTORS
Pursuant to its authority under our Bylaws, the Board of Directors has
reduced the number of directors that constitutes the Board from eleven to nine,
effective upon the opening for business of the Annual Meeting. Accordingly, we
will elect nine directors at the Annual Meeting. The Bylaws provide that each
director is to hold office until the next Annual Meeting of Shareholders and
until his successor is elected and qualified or until his earlier death,
resignation or removal. Our Board has nominated Eric Bescoby, Kevin J. Calhoun,
C. Deryl Couch, Michael H. Kalb, Rodger R. Krouse, Marc J. Leder, George R.
Rea, Patrick J. Sullivan and Clarence E. Terry, each of whom is presently a
member of the Board, for election as directors at the Annual Meeting. All of
the nominees have consented to be named as nominees and to serve if elected.
Unless you withhold authority to vote for these persons, it is intended that
your proxy will be voted FOR the election of the nine nominees. If on the date
of the Annual Meeting one or more of the nominees are for any reason not able
to serve, your proxy will be voted for the election of such substitute nominee
or nominees as the Board shall designate.
Information about the nominees is set forth below.
Director Principal Occupation or Employment;
Name Since Directorships; Age
- ---- -------- ------------------------------------------------
Eric Bescoby................... 2001 Chief Executive Officer of the Company since
July 2001; President of JTECH Communications,
Inc. (an electronic communications solutions
provider) from April 2000 to June 2001; Division
Director at Environmental Industries, Inc. (a
full-service site development, landscape and
horticultural services contractor) from
September 1998 to March 2000; Division Director
at Rain Bird Sprinkler Manufacturing Corporation
(a leading irrigation manufacturer) from May
1987 to August 1998; Age 48.
Kevin J. Calhoun............... 2001 Vice President of the Company since July 2001
and Vice President of Sun Capital Partners, Inc.
(a private investment firm) since July 2000;
Chief Financial Officer of FryeTech, Inc. (a
manufacturer of coated papers, specialty inks
and MICR-encoded ribbon products) from September
1998 to June 2000; Chief Financial Officer and
Controller of The Panda Project, Inc. (a
technology company) from September 1996 to
August 1998; Director of Miles Kimball Company,
Smart Papers, LLC and Genicom L.L.C.; Age 42.
2
Director Principal Occupation or Employment;
Name Since Directorships; Age
- ---- -------- ------------------------------------------------
C. Deryl Couch................. 2001 Vice President of the Company since July 2001
and General Counsel of Sun Capital Partners,
Inc. (a private investment firm) since May 2000;
Deputy General Counsel of UniCapital Corporation
(a specialty finance company) from June 1998 to
May 2000; Shareholder of Greenberg Traurig
Hoffman Lipoff Rosen & Quentel, P.A. (a full-
service law firm) from 1995 to June 1998; Age
40.
Michael H. Kalb................ 2001 Vice President of the Company since July 2001
and Vice President of Sun Capital Partners, Inc.
since March 1999; Vice President of UniCapital
Corporation (a specialty finance company) from
May 1998 to February 1999; Consultant from
January 1998 to May 1998; Investment Banker with
Goldsmith Agio Helms (an investment banking
company) from June 1993 to December 1997;
Director of JTECH Communications, Inc. and Miles
Kimball Company; Age 31.
Rodger R. Krouse............... 2001 Vice President of the Company since July 2001
and Managing Director of Sun Capital Partners,
Inc. (a private investment firm) since May 1995;
Director of Northland Cranberries, Inc. (a
publicly-held company), Miles Kimball Company,
Smart Papers, LLC, Genicom, L.L.C. and various
other privately-held companies; Age 40.
Marc J. Leder.................. 2001 Vice President of the Company since July 2001
and Managing Director of Sun Capital Partners,
Inc. (a private investment firm) since May 1995;
Director of Miles Kimball Company, Northland
Cranberries, Inc. (a publicly-held company),
Eckler Industries, LLC, First NLC Financial
Services, LLC and various other privately-held
companies; Age 40.
George R. Rea.................. 2001 Director of Labtec Inc. (a provider of high-
technology peripherals and accessories for
computing, communication and entertainment) from
September 1997 to March 2001; Director of
Imaging Technologies Corporation (a developer
and distributor of high-quality digital imaging
solutions) from March 1994 to March 2000; Age
64.
Patrick J. Sullivan............ 2001 Director of Druid Oaks LLC, New Millenium
Ventures LLC and MMV, LLC; Age 47.
Clarence E. Terry.............. 2001 Vice President of the Company since July 2001
and Managing Director of Sun Capital Partners,
Inc. (a private investment firm) since September
1999; Vice President of Rain Bird Sprinkler
Manufacturing Corporation (a leading irrigation
manufacturer) from October 1973 to September
1999; Director of JTECH Communications, Inc.,
Phoenix Structures & Services, Inc., HealthPlan
Holdings, Inc., Nailite International, Inc.,
Eckler Industries, LLC, Miles Kimball Company,
Atlas Die, Inc. and Genicom, L.L.C.; Age 55.
3
Six of the nominees are employed by Sun Capital Partners, Inc. In
particular, Messrs. Krouse, Leder and Terry are Managing Directors, Mr. Couch
is General Counsel and Messrs. Calhoun and Kalb are Vice Presidents of Sun
Capital Partners, Inc. Sun Capital Partners, Inc. is an affiliate of Sun
Catalina Holdings LLC ("Sun Catalina"), our majority shareholder. Please see
"Certain Relationships and Related Transactions" below regarding our business
relationships with other affiliates of this shareholder.
Meetings and Committees of the Board of Directors
Our Board of Directors held 17 meetings in Fiscal 2001 and also took action
by unanimous written consent on two occasions during the year. All directors
attended at least 75% of the total number of meetings of the Board and the
committees on which they served during Fiscal 2001. The Board has two principal
committees: a Compensation and Stock Option Committee and Audit Committee.
There is no Nominating Committee at this time. The Board will nominate
individuals for election as directors and will also consider nominees
recommended by shareholders if properly submitted. See "2003 Shareholder
Proposals" below.
Our Compensation and Stock Option Committee is responsible for developing
our executive compensation strategy and for administering the policies and
programs that implement this strategy. This Committee did not meet during
Fiscal 2001. Since November 2001, the Committee has consisted of Messrs.
Calhoun, Rea and Terry.
Our Audit Committee recommends a firm to be selected as the independent
auditors to audit our financial statements and to perform other audit-related
services. In addition, this Committee reviews the scope and results of the
audits that are conducted by the independent auditors, reviews interim and
year-end results with management and considers the adequacy of our internal
accounting procedures. The Audit Committee met one time during Fiscal 2001.
Since November 2001, the Committee has consisted of Messrs. Rea, Sullivan and
Wise, all of whom are independent directors, as defined in Rule 4200(a)(15) of
the National Association of Securities Dealers' listing standards.
Vote Required
Only affirmative votes are counted in the election of directors. Under
applicable Florida law and our Bylaws, directors are to be elected by a
plurality of the votes of shares of Common Stock present in person or
represented by proxy at the Annual Meeting. Accordingly, the nine nominees for
election as directors who receive the highest number of votes cast will be
elected. Broker non-votes will be treated as shares that neither are capable of
being voted nor have been voted and, accordingly, will have no effect on the
outcome of the election of directors.
The Board of Directors recommends a vote FOR each of the nominees listed above.
FURTHER INFORMATION
BENEFICIAL OWNERSHIP OF COMMON STOCK
Under the rules of the Securities and Exchange Commission (the "SEC"), a
person who directly or indirectly has or shares voting power and/or investment
power with respect to a security is considered a beneficial owner of the
security. Voting power includes the power to vote or direct the voting of
shares, and investment power includes the power to dispose of or direct the
disposition of shares. Shares as to which voting power and/or investment power
may be acquired within 60 days are also considered beneficially owned under the
SEC's rules.
Management
Our chief executive officer (Eric Bescoby), our former chief executive
officer (Robert Hersh), our other three most highly compensated executive
officers during Fiscal 2001 (David W. Sasnett, Dean Rappaport and Nathan Katz),
our directors, and all of our current directors and executive officers as a
group beneficially owned as of February 12, 2002 the number of shares of Common
Stock set forth in the table below. The information on beneficial ownership in
the table and related footnotes is based upon data furnished to us by, or
4
on behalf of, the persons referred to in the table. Unless otherwise indicated
in the footnotes to the table, each person named has sole voting power and sole
investment power with respect to the shares included in the table.
Beneficial Ownership of
Common Stock
----------------------------
Number of Percentage
Name Shares Outstanding(1)
- ---- ---------- --------------
Eric Bescoby..................................... -- --
Robert Hersh..................................... 684,338(2) 4.2%
David W. Sasnett................................. 231,281(3) 1.4%
Dean Rappaport................................... 463,638(4) 2.8%
Nathan Katz...................................... 929,780(5) 5.7%
Kevin J. Calhoun................................. -- --
C. Deryl Couch................................... -- --
Michael H. Kalb.................................. -- --
Rodger R. Krouse................................. 13,336,455(6) 66.7%
Marc J. Leder.................................... 13,336,455(6) 66.7%
George R. Rea.................................... -- --
Howard Steinberg................................. 42,537 *
Patrick J. Sullivan.............................. -- --
Clarence E. Terry................................ -- --
Brion G. Wise.................................... 9,537 *
All current directors and executive officers as a
group (12 persons)(7)........................... 13,388,529(8) 67.0%
- --------
* Less than 1%.
(1) Based on 15,878,247 shares outstanding as of February 12, 2002.
(2) Includes 461,538 shares purchasable through the exercise of options, which
are immediately exercisable. Mr. Hersh has granted a proxy to Sun Catalina
with respect to these shares.
(3) Includes 229,281 shares purchasable through the exercise of options, which
are immediately exercisable. Mr. Sasnett has granted a proxy to Sun
Catalina with respect to these shares.
(4) Includes 461,538 shares purchasable through the exercise of options, which
are immediately exercisable. Mr. Rappaport has granted a proxy to Sun
Catalina with respect to these shares.
(5) Includes 461,538 shares purchasable through the exercise of options, which
are immediately exercisable. Mr. Katz has granted a proxy to Sun Catalina
with respect to these shares.
(6) Based upon information set forth in a Schedule 13D filed with the SEC as of
August 2, 2001, as amended, and subsequent disclosure, 13,336,455 shares
may be deemed beneficially owned within the meaning of Rule 13d-3 of the
Exchange Act by Messrs. Leder and Krouse and by Sun Catalina, Sun Capital
Partners II, LP, a Delaware limited partnership ("Partners LP"), Sun
Capital Advisors II, LP, a Delaware limited partnership ("Advisors"), and
Sun Capital Partners, LLC, a Delaware limited liability company ("Partners
LLC"). Messrs. Leder and Krouse may each be deemed to control Sun Catalina,
Partners LP, Advisors and Partners LLC, as Messrs. Leder and Krouse each
own 50% of the membership interests in Partners LLC, which in turn is the
general and managing partner of Advisors, which in turn is the general and
managing partner of Partners LP, which in turn owns 100% of the membership
interests of Sun Catalina. Partners LP, Advisors, Partners LLC and Messrs.
Leder and Krouse have shared voting and investment power over these shares.
Includes (i) up to 750,000 shares owned by previous shareholders of Go-Gro
Industries Limited assuming that such shares remain owned by such
shareholders, (ii) 222,800 shares, 468,242 shares, 2,100 shares and 2,000
shares owned by Mr. Hersh, Mr. Katz, Mr. Rappaport and Mr. Sasnett,
respectively, all of which Sun Catalina has the power to vote pursuant to
irrevocable proxies. Except as to such shared voting power, Sun Catalina,
Partners LP, Advisors, Partners LLC, and Messrs. Leder and Krouse disclaim
beneficial ownership of these shares. Also includes warrants to purchase
4,116,606 shares of Common Stock which are immediately exercisable in full.
(7) The group consists of the 11 current directors (including Mr. Bescoby) and
Lynn Skillen, our Chief Financial Officer.
5
(8) Consists of (i) 13,336,455 shares over which Messrs. Leder and Krouse have
shared voting and investment power, (ii) 9,537 shares owned by Mr. Wise and
(iii) 42,537 shares owned by Mr. Steinberg.
Other Beneficial Owners
The following table sets forth information with respect to each other
shareholder known to us to be the beneficial owner of more than 5% of the
outstanding Common Stock as of February 12 2002:
Beneficial Ownership of
Common Stock
----------------------------
Number of Percentage
Name and Address of Beneficial Owner Shares Outstanding(1)
- ------------------------------------ ---------- --------------
Sun Catalina Holdings, LLC......................... 13,336,455(2) 66.7%
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486
Sun Capital Partners II, LP........................ 13,336,455(2) 66.7%
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486
Sun Capital Advisors II, LP........................ 13,336,455(2) 66.7%
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486
Sun Capital Partners, LLC.......................... 13,336,455(2) 66.7%
c/o Sun Capital Partners, Inc.
5200 Town Center Circle, Suite 470
Boca Raton, Florida 33486
- --------
(1) Based on 15,878,247 shares outstanding as of February 12, 2002.
(2) Please see Note 6 to the table above.
Compensation Committee Interlocks and Insider Participation
None of the members of our Compensation and Stock Option Committee during
Fiscal 2001 has ever been an officer or employee of the Company. None of our
executive officers serves as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving on our
Board of Directors or Compensation and Stock Option Committee.
Compensation of Directors
Prior to the July 2001 closing of the transaction with Sun Catalina and
other parties, in which we obtained $11.8 million in additional funding in
exchange for equity and debt (the "Sun transaction"), each of our non-employee
directors received an annual retainer of $14,000, payable $7,000 in cash and in
the number of shares equal to $7,000 calculated on the basis of the fair market
value of the Common Stock on the date of our annual meeting of shareholders.
The stock was restricted and vested after one year or on a pro rata basis if
the director ceased to serve on the board during the year. Directors also
received $1,000 per board meeting and committee meeting attended.
Effective upon the closing of the Sun transaction, we discontinued the
payment to directors of retainers and attendance fees. We currently reimburse
our directors for travel and lodging expenses in connection with attendance at
board and committee meetings. All of our directors are eligible to receive
options under our Stock Incentive Plan.
6
In November 2001, we granted options to purchase 5,000 shares of Common
Stock to each of our directors in consideration for their continuing board
service. The exercise price of all such options is the fair market value on the
date of grant. These options vest over a four-year period.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our directors and executive officers and persons who own more than 10% of a
registered class of our equity securities to file with the SEC reports of
ownership and reports of changes in ownership of the Common Stock and our other
equity securities. These persons are required by SEC regulation to furnish us
with copies of all Section 16(a) reports they file. We believe that all of our
directors and executive officers complied with these filing requirements in
Fiscal 2001.
Compensation of Executive Officers
The following table sets forth the compensation received for services
rendered to us by: (i) our chief executive officer, (ii) our only other
executive officer as of the end of Fiscal 2001, who is no longer an executive
officer of the Company, (iii) the individual who served as our chief executive
officer during a portion of Fiscal 2001, and (iv) two individuals who served as
executive officers during a portion of Fiscal 2001 and are no longer in the
employ of the Company.
Summary Compensation Table
Long-Term
Compensation
Annual Compensation Awards
-------------------- ------------
Securities All Other
Name and Principal Fiscal Underlying Compensation
Position Year Salary ($) Bonus ($) Options (#) ($)
- ------------------ ------ ---------- --------- ------------ ------------
Eric Bescoby (1)......... 2001 38,219 -- -- --
Chief Executive Officer 2000 -- -- -- --
1999 -- -- -- --
David W. Sasnett (2)..... 2001 208,110 10,000 334,615 26,733(8)
Former Senior Vice
President and 2000 190,000 20,000 15,000 3,200(9)
Chief Financial Officer 1999 169,100 20,000 42,000(6) 2,480(9)
Robert Hersh (3)......... 2001 291,113 -- 561,538 61,733(10)
Former Chairman, Chief
Executive 2000 329,815 -- -- 3,200(9)
Officer and President 1999 314,109 168,500 -- 2,480(9)
Dean Rappaport (4)....... 2001 252,755 -- 461,538 61,733(11)
Former Executive Vice
President and 2000 296,832 -- -- 3,200(9)
Chief Operating Officer 1999 282,697 168,500 212,500(7) 2,480(9)
Nathan Katz (5).......... 2001 252,755 -- 461,538 61,733(11)
Former Executive Vice
President 2000 296,832 -- -- 3,200(9)
1999 282,697 168,500 162,500(7) 2,480(9)
- --------
(1) Mr. Bescoby became our chief executive officer on July 31, 2001 in
connection with the Sun transaction.
(2) In connection with the Sun transaction, we entered into a Termination
Agreement and Release with Mr. Sasnett, providing for the termination of
Mr. Sasnett's employment agreement dated October 1, 2000, as amended, in
exchange for our payment to Mr. Sasnett of an aggregate of $280,000
payable in quarterly installments over three years and for our issuance to
Mr. Sasnett of options to purchase 184,615 shares of Common Stock at $1.18
per share. The Termination Agreement and Release was ratified by our
shareholders at a special meeting held in November 2001. We also entered
into an Employment
7
Agreement with Mr. Sasnett, dated July 23, 2001, providing for a base
annual salary of $200,000 and the issuance of options to purchase 150,000
shares of Common Stock at $1.18 per share. Effective as of February 12,
2002, Mr. Sasnett is no longer an executive officer of the Company.
(3) In connection with the Sun transaction, we entered into a Termination
Agreement and Release with Mr. Hersh, providing for the termination of
Mr. Hersh's employment agreement dated October 1, 1989, as amended, and
Mr. Hersh's consulting agreement dated September 30, 1999, in exchange
for our payment to Mr. Hersh of an aggregate of $700,000 payable in
quarterly installments over three years and for our issuance to Mr. Hersh
of options to purchase 461,538 shares of Common Stock at $1.18 per share.
The Termination Agreement and Release was ratified by our shareholders at
the November 2001 special meeting. Additionally, we entered into an
Employment Agreement with Mr. Hersh, dated July 23, 2001, providing for a
base annual salary of $250,000 and the issuance of options to purchase
100,000 shares of Common Stock at $1.18 per share. Effective as of August
8, 2001, Mr. Hersh is no longer employed by the Company.
(4) In connection with the Sun transaction, we entered into a Termination
Agreement and Release and a Separation Agreement and Release with Mr.
Rappaport, providing for the termination of Mr. Rappaport's employment
agreement dated October 1, 1989, as amended, and Mr. Rappaport's
consulting agreement dated September 30, 1999, in exchange for our
payment to Mr. Rappaport of an aggregate of $700,000 payable in quarterly
installments over three years and for our issuance to Mr. Rappaport of
options to purchase 461,538 shares of Common Stock at $1.18 per share.
The Termination Agreement and Release was ratified by our shareholders at
the November 2001 special meeting.
(5) In connection with the Sun transaction, we entered into a Termination
Agreement and Release and a Separation Agreement and Release with Mr.
Katz, providing for the termination of Mr. Katz's employment agreement
dated October 1, 1989, as amended, and Mr. Katz's consulting agreement
dated September 30, 1999, in exchange for our payment to Mr. Katz of an
aggregate of $700,000 payable in quarterly installments over three years
and for our issuance to Mr. Katz of options to purchase 461,538 shares of
Common Stock at $1.18 per share. The Termination Agreement and Release
was ratified by our shareholders at the November 2001 special meeting.
(6) Includes options to purchase 20,000 shares of Common Stock, which options
were repriced on December 11, 1998.
(7) Represents options granted in prior years that were repriced on December
11, 1998. These options were cancelled effective July 23, 2001.
(8) Consists of: (i) a matching contribution to our 401(k) plan in the amount
of $3,400; and (ii) $23,333 paid on September 1, 2001, representing the
first of 12 equal payments to be paid quarterly pursuant to Mr. Sasnett's
Termination Agreement and Release.
(9) Represents a matching contribution to our 401(k) plan.
(10) Consists of: (i) a matching contribution to our 401(k) plan in the amount
of $3,400; and (ii) $58,333 paid on September 1, 2001, representing the
first of 12 equal payments to be paid quarterly pursuant to Mr. Hersh's
Termination Agreement and Release.
(11) Consists of: (i) a matching contribution to our 401(k) plan in the
amount of $3,400; (ii) $50,000 paid on September 1, 2001, representing
the first of 12 equal payments to be paid quarterly pursuant to such
individual's Termination Agreement and Release; and (iii) $8,333 paid on
September 1, 2001, representing the first of 12 equal payments to be
paid quarterly pursuant to such individual's Separation Agreement and
Release.
8
Option Grants
The following table sets forth certain information regarding options granted
during Fiscal 2001 to the individuals named in the Summary Compensation Table.
No stock appreciation rights were granted during Fiscal 2001.
Option Grants During Fiscal 2001
Potential
Realizable Value at
Assumed Annual
Number of Rates of Stock
Securities Percent of Total Appreciation for
Underlying Options Granted to Option Term(5)
Options Employees in Exercise Price Expiration -------------------
Name(1) Granted(2) Fiscal Year 2001(3) Per Share(4) Date 5% 10%
- ------- ---------- ------------------- -------------- ---------- -------- ----------
Eric Bescoby............ -- -- -- -- -- --
David W. Sasnett........ 334,615 18.1% $1.18 7/23/2011 $248,316 $ 629,282
Robert Hersh............ 561,538 30.4% $1.18 7/23/2011 $416,715 $1,056,037
Dean Rappaport.......... 461,538 25.0% $1.18 7/23/2011 $342,505 $ 867,976
Nathan Katz............. 461,538 25.0% $1.18 7/23/2011 $342,505 $ 867,976
- --------
(1) Please see the Summary Compensation Table for titles of the persons named
in the table.
(2) These options were granted under Termination Agreements and Release and
Employment Agreements dated July 23, 2001, which were ratified by our
shareholders at the November 2001 special meeting. All options have vested,
except for 150,000 options granted to Mr. Sasnett which have a four-year
vesting period and 100,000 options granted to Mr. Hersh which were canceled
upon his resignation in August 2001.
(3) Based on 1,845,229 options granted to all employees in Fiscal 2001.
(4) Represents the agreed-upon price per the Termination Agreement and Release
and Employment Agreements dated July 23, 2001.
(5) The 5% and 10% assumed annual rates of compounded stock appreciation are
mandated by the rules of the SEC. We cannot assure you that the actual
stock price will appreciate over the ten-year option term at the 5% or 10%
levels or at any other rate.
Option Exercises
The following table sets forth information concerning the shares of Common
Stock represented by outstanding stock options held as of September 30, 2001 by
each of the individuals named in the Summary Compensation Table. None of these
individuals exercised options during Fiscal 2001.
Option Exercises in Fiscal 2001 and Fiscal Year End Option Values
Number of Securities Value of In-the-Money
Underlying Options at Options at
Fiscal Year End Fiscal Year End ($)(2)
------------------------- -------------------------
Name(1) Exercisable Unexercisable Exercisable Unexercisable
- ------- ----------- ------------- ----------- -------------
Eric Bescoby................ -- -- -- --
David W. Sasnett............ 229,281 162,334 -- --
Robert Hersh................ 461,538 -- -- --
Dean Rappaport.............. 461,538 -- -- --
Nathan Katz................. 461,538 -- -- --
- --------
(1) Please see the Summary Compensation Table for titles of the persons named
in the table.
(2) Based on the closing price per share of our common stock as reported by the
NASDAQ Over-the Counter Bulletin Board on September 30, 2001 of $0.65,
minus the exercise price per share, multiplied by the number of shares of
Common Stock underlying the option.
9
Repricing of Stock Options
The following table sets forth information about the repricing of stock
options held by current and former executive officers during the last ten
fiscal years ended September 30, 2001.
Ten-Year Option Repricings
Number of Exercise Length of Original
Securities Market Price of Price at Option Term
Underlying Stock at Time Time New Remaining at Date of
Date of Options Repriced of Repricing or of Repricing Exercise Repricing or
Name Repricing or Amended Amendment or Amendment Price Amendment (Years)
- ---- --------- ---------------- --------------- ------------ -------- --------------------
David W. Sasnett........ 12/11/98 12,500 $2.4375 $4.125 $2.4375 6.0
Former Senior Vice 12/11/98 7,500 $2.4375 $4.125 $2.4375 6.9
President and Chief
Financial Officer
Dean Rappaport.......... 12/11/98 50,000 $2.4375 $3.375 $2.4375 2.8
Former Executive Vice 12/11/98 50,000 $2.4375 $4.875 $2.4375 3.1
President and Chief 12/11/98 50,000 $2.4375 $4.125 $2.4375 3.8
Operating Officer 12/11/98 62,500 $2.4375 $6.750 $2.4375 6.0
Nathan Katz............. 12/11/98 50,000 $2.4375 $4.875 $2.4375 3.1
Former Executive Vice 12/11/98 50,000 $2.4375 $5.250 $2.4375 4.1
President 12/11/98 62,500 $2.4375 $6.750 $2.4375 6.0
Thomas M. Bluth......... 12/11/98 17,500 $2.4375 $4.125 $2.4375 6.0
Former Senior Vice 12/11/98 5,000 $2.4375 $4.125 $2.4375 6.9
President, Treasurer
and Secretary
William D. Stewart...... 12/11/98 30,000 $2.4375 $2.500 $2.4375 2.8
Former Executive Vice 12/11/98 20,000 $2.4375 $3.375 $2.4375 2.8
President 12/11/98 50,000 $2.4375 $4.875 $2.4375 3.1
12/11/98 50,000 $2.4375 $4.125 $2.4375 3.8
12/11/98 62,500 $2.4375 $6.750 $2.4375 6.0
Employment, Termination and Change in Control Arrangements
We entered into employment agreements (the "Prior Employment Agreements")
with three previous members of executive management: Robert Hersh, Dean
Rappaport and Nathan Katz. Commencing October 1, 1993, the base annual salaries
of Messrs. Hersh, Rappaport and Katz were $246,112, $221,500 and $221,500,
respectively, with annual increases equal to the greater of 5% or the
percentage increases in the consumer price index published by the U.S.
Department of Labor. Each of the Prior Employment Agreements would have expired
on September 30, 2001. The Prior Employment Agreements each provided that,
unless the employee was terminated for cause, 180 days after an Acquisition of
Control (as defined in the Prior Employment Agreements), we were required to
(i) pay to the employee a lump sum payment equal to three times the sum of the
employee's salary for the then-current fiscal year and the bonus payable to the
employee for the fiscal year immediately preceding the current fiscal year, and
(ii) continue to provide benefits to the employee for a three-year period. In
addition, if the employee's employment with the Company were terminated for any
reason other than for cause within one year following an Acquisition of
Control, then the employee would have had the option, for 30 days after the
date of such termination of employment, to enter into a three-year consulting
and non-competition agreement for $250,000 per year.
Effective October 1, 2000, we entered into an employment agreement with
David W. Sasnett (the "2000 Sasnett Employment Agreement") that replaced his
change in control agreement with the Company. The 2000 Sasnett Employment
Agreement would have expired on September 30, 2001 and provided for an annual
salary of $210,000 and a severance payment equal to (i) the pro rata portion of
Mr. Sasnett's annual salary for the remainder of the agreement term plus an
amount equal to Mr. Sasnett's annual salary and benefits if he was
10
terminated without "cause" (as defined in the agreement), or (ii) Mr. Sasnett's
annual salary and annual benefits if the agreement was not renewed upon its
expiration. This agreement also provided for a lump sum payment equal to two
times the sum of his annual salary and annual benefits upon an Acquisition of
Control (as defined in the 2000 Sasnett Employment Agreement). If Mr. Sasnett's
employment with the Company would have been terminated for any reason other
than for cause within one year following an Acquisition of Control, then he
would have had the option, exercisable for 30 days after the date of such
termination of employment, to enter into a two-year consulting and non-
competition agreement for $50,000 per year.
Each of the Prior Employment Agreements and the 2000 Sasnett Employment
Agreement were terminated as of July 23, 2001 in connection with the Sun
transaction. Messrs. Rappaport and Katz terminated their employment with the
Company as of July 23, 2001 pursuant to the terms of the Termination Agreement
and Release and the Separation Agreement and Release described below. Mr.
Sasnett and Mr. Hersh continued their employment with the Company pursuant to
the terms of the Employment Agreements dated July 23, 2001 described below.
Subsequently, Mr. Hersh resigned from the Company as an officer and director
effective as of August 8, 2001, and Mr. Sasnett resigned as an officer of the
Company, effective as of February 12, 2002.
Dean Rappaport. In connection with the Sun transaction, we entered into a
Termination Agreement and Release and a Separation Agreement and Release with
Mr. Rappaport, each of which is dated July 23, 2001, providing for the
termination of Mr. Rappaport's Prior Employment Agreement and Mr. Rappaport's
consulting agreement dated September 30, 1999, in exchange for our payment to
Mr. Rappaport of an aggregate of $700,000 payable in quarterly installments
over three years and for our issuance to Mr. Rappaport of options to purchase
461,538 shares of Common Stock at $1.18 per share.
Nathan Katz. In connection with the Sun transaction, we entered into a
Termination Agreement and Release and a Separation Agreement and Release with
Mr. Katz, each of which is dated July 23, 2001, providing for the termination
of Mr. Katz's Prior Employment Agreement and Mr. Katz's consulting agreement
dated September 30, 1999, in exchange for our payment to Mr. Katz of an
aggregate of $700,000 payable in quarterly installments over three years and
for our issuance to Mr. Katz of options to purchase 461,538 shares of Common
Stock at $1.18 per share.
David W. Sasnett. In connection with the Sun transaction, we entered into a
Termination Agreement and Release with Mr. Sasnett, dated July 23, 2001,
providing for the termination of the 2000 Sasnett Employment Agreement in
exchange for our payment to Mr. Sasnett of an aggregate of $280,000 payable in
quarterly installments over three years and for our issuance to Mr. Sasnett of
options to purchase 184,615 shares of Common Stock at $1.18 per share.
Additionally, we entered into an Employment Agreement with Mr. Sasnett, dated
July 23, 2001 (the "2001 Sasnett Employment Agreement"), providing for a base
annual salary of $200,000, the issuance of options to purchase 150,000 shares
of Common Stock at $1.18 per share, certain fringe benefits and, after Fiscal
2001, eligibility for a discretionary bonus of up to 50% of his base salary.
The 2001 Sasnett Employment Agreement also provides that, for a term of one
year (which renews automatically for subsequent one-year terms, unless
terminated), Mr. Sasnett serves as our senior vice president, chief financial
officer, treasurer and secretary. Mr. Sasnett resigned from these offices,
effective as of February 12, 2002.
Robert Hersh. In connection with the Sun transaction, we entered into a
Termination Agreement and Release with Mr. Hersh, dated July 23, 2001,
providing for the termination of Mr. Hersh's Prior Employment Agreement and Mr.
Hersh's consulting agreement dated September 30, 1999, in exchange for our
payment to Mr. Hersh of an aggregate of $700,000 payable in quarterly
installments over three years and for our issuance to Mr. Hersh of options to
purchase 461,538 shares of Common Stock at $1.18 per share. Additionally, we
entered into an Employment Agreement with Mr. Hersh, dated July 23, 2001 (the
"2001 Hersh Employment Agreement"), providing for a base annual salary of
$250,000, the issuance of options to purchase 100,000 shares of common stock at
$1.18 per share, certain fringe benefits and, after Fiscal 2001, eligibility
for a discretionary bonus of up to 60% of his base salary. The 2001 Hersh
Employment Agreement provided that, for a term of one year (which was to renew
automatically for subsequent one-year terms, unless terminated), Mr. Hersh
would serve as the president of the Company. Subsequently, Mr. Hersh submitted
his resignation from the Company as an officer and director, effective as of
August 8, 2001.
11
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation and Stock Option Committee (the "Committee") was
responsible for developing the Company's executive compensation strategy and
for administering the policies and programs that implement this strategy during
Fiscal 2001.
The Committee reviews and approves the compensation of the Company's
executive officers each year. One of the two individuals that held the position
of chief executive officer as well as the three other most senior executive
officers during the year (two of whom resigned their employment with the
Company during the year) were parties to employment agreements with the Company
during the year. As of July 2001, only the Company's chief financial officer
was party to an employment agreement with the Company. Reference is made to
"Employment, Termination and Change in Control Arrangements" above for a
discussion of the Company's employment and other agreements with its executive
officers. In reviewing these executive officers' compensation for Fiscal 2001,
the Committee determined that corporate and individual performance was
adequately compensated under the terms of these individuals' employment
agreements.
Accordingly, these executive officers' salaries were established at the
minimum level prescribed under such agreements. These officers also
participated in the Company-wide 401(k) plan, under which the Company, subject
to the statutory limits, matches 50% of an employee's contributions up to 1% of
the employee's salary. For the Company's other key employees, the
determinations by the Committee regarding base salary and bonuses were based
upon our determinations regarding individual experience and capabilities,
performance issues specific to the employee's particular responsibilities and
salaries paid by other companies for comparable positions.
The Committee did not grant any stock options or restricted stock to
executive officers during Fiscal 2001, other than those granted in July 2001 to
Messrs. Sasnett, Hersh, Rappaport and Katz pursuant to their Termination
Agreements and Releases and, in the case of Mr. Sasnett, also pursuant to his
employment agreement.
As stated above, two individuals held the position of chief executive
officer during Fiscal 2001: Robert Hersh served as chief executive officer
until July 31, 2001, at which time Eric Bescoby was appointed to the position.
Mr. Hersh resigned his employment with the Company effective as of August 8,
2001. Mr. Hersh's compensation for Fiscal 2001 was determined in accordance
with the provisions of his employment agreement entered into in August 1989, as
amended. As so amended, the agreement provided for a base salary and did not
provide for a bonus in Fiscal 2001. When Mr. Bescoby became the chief executive
officer, the determination of his compensation was based on the philosophy of
providing a competitive level of compensation consistent with Mr. Bescoby's
responsibilities and experience as well as the Company's business performance
goals. Mr. Bescoby did not receive a bonus in Fiscal 2001.
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code which imposes a limit on tax deductions for annual
compensation in excess of $1,000,000 paid to any of the five most highly
compensated executive officers, which is not "performance-based" in accordance
with certain requirements. The Committee has not adopted a policy requiring
that all compensation arrangements qualify for deductibility under Section
162(m), meaning that options granted after April 10, 1997 may not be deductible
if and to the extent their value ever causes one of the Company's executive
officers to receive more than $1,000,000 in compensation during any one year.
However, all options granted prior to April 10, 1997, the date of the Company's
1997 Annual Meeting, are exempt from Section 162(m) under a "grandfather"
provision.
Respectfully submitted,
/s/ Howard Steinberg
12
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee reviews the Company's financial reporting process on
behalf of the Board of Directors. Management is responsible for the Company's
financial reporting process including its system of internal control and for
the preparation of consolidated financial statements in accordance with
generally accepted accounting principles. The Company's independent auditors
are responsible for auditing those financial statements. Our responsibility is
to monitor and review these processes. It is not our duty or our responsibility
to conduct auditing or accounting reviews or procedures. We are not employees
of the Company and we may not be, and we may not represent ourselves to be or
to serve as, accountants or auditors by profession or experts in the fields of
accounting or auditing. Therefore, we have relied, without independent
verification, on management's representation that the financial statements have
been prepared with integrity and objectivity and in conformity with accounting
principles generally accepted in the United States of America and on the
representations of the independent auditors included in their report on the
Company's financial statements. Our oversight does not provide us with an
independent basis to determine that management has maintained appropriate
accounting and financial reporting principles or policies or appropriate
internal controls and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, our considerations
and discussions with management and the independent auditors do not assure that
the Company's financial statements are presented in accordance with generally
accepted accounting principles, that the audit of our Company's financial
statements has been carried out in accordance with generally accepted auditing
standards or that the Company's independent accountants are in fact
"independent".
In this context, and in connection with the September 30, 2001 financial
statements, we (1) reviewed and discussed the audited financial statements with
management; (2) discussed with the auditors the matters required by generally
accepted auditing standards (SAS 61); (3) received and discussed a letter
relating to the independence of Deloitte & Touche LLP, as required by rules
promulgated by the Independence Standards Board; and (4) considered whether
Deloitte & Touche LLP's provision of non-audit services to the Company is
compatible with independence. Based on these reviews and discussions, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Annual Report on Form 10-K filed with the SEC.
Respectfully submitted,
/s/ George R. Rea
/s/ Patrick J. Sullivan
/s/ Brion Wise
13
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP audited our financial statements for Fiscal 2001. A
representative of Deloitte & Touche LLP is expected to be present at the Annual
Meeting and will have the opportunity to make a statement, if he or she desires
to do so, and to respond to appropriate questions.
The Board of Directors, upon the recommendation of the Audit Committee, will
engage an auditing firm for the fiscal year ending September 30, 2002. As of
the date of this Proxy Statement, the Audit Committee has not finalized or
proposed a recommendation to the Board.
Audit Fees
The aggregate fees billed by Deloitte & Touche LLP, the member firms of
Deloitte Touche Tohmatsu and their respective affiliates (collectively
"Deloitte") for professional services rendered to us for the audit of the
Company's annual financial statements for Fiscal 2001 and for the reviews of
the financial statements included in our Quarterly Reports on Form 10-Q for
such year were approximately $358,000.
Financial Information Systems Design and Implementation Fees
We did not engage Deloitte to provide advice to us regarding financial
information systems design and implementation during Fiscal 2001.
All Other Fees
The aggregate fees billed by Deloitte for services rendered to the Company
in Fiscal 2001, other than the services described above under "Audit Fees",
were approximately $119,200. Such other services consisted of tax services, the
audit of the Company's 401(k) plan and other miscellaneous services.
14
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following line graph compares the cumulative total return of our Common
Stock to the total return index for the Standard & Poor's 500 Index and a Peer
Group Index of five stocks for the five-year period from September 30, 1996
through September 30, 2001. The graph assumes $100 invested at the beginning of
the period and reinvestment of dividends, if any.
The Peer Group consists of Applica Inc. (formerly known as Windmere-Durable
Holdings, Inc.), Helen of Troy Corporation, Thomas Industries, Inc., Genlyte
Group, Inc. and Craftmade International, Inc. The companies included as part of
the Peer Group Index were selected on the basis of the similarity of such
companies to us, considering such factors as products sold, sourcing of
products, distribution channels and the industry within which such companies
operate.
The comparisons shown in the graph are based on historical data. We caution
that the stock price performance shown is not indicative of, nor intended to
forecast, the potential future performance of our Common Stock. The information
used in the graph was obtained from U.S. Pricing and World Scope, a source we
believe to be reliable, but we are not responsible for any errors or omissions
in such information.
Comparison of Cumulative Total Return Among the Company, the S&P 500 Index and
a Peer Group
[Graph Appears Here]
9/96 9/97 9/98 9/99 9/00 9/01
------ ------ ------ ------ ------ ------
Catalina Lighting, Inc. 100.00 153.33 60.00 110.00 91.68 17.33
S&P 500 100.00 140.45 153.15 195.74 221.74 162.71
PEER GROUP 100.00 194.72 165.23 147.18 130.35 161.31
Notwithstanding anything to the contrary set forth in any of our previous or
future filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate this Proxy Statement
or future filings made by us under those statutes, the Report of the
Compensation and Stock Option Committee, the Report of the Audit Committee and
the Shareholder Return Performance Graph shall not be deemed to be filed with
the SEC and shall not be deemed incorporated by reference into any of those
prior filings or into any future filings made by us under those statutes.
15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 23, 2001, we entered into a ten-year agreement with an affiliate of
our majority shareholder to provide management services to us at an annual fee
of $500,000, payable quarterly. This management services expense for Fiscal
2001 amounted to $98,000. We also paid an investment banking fee of $400,000 to
another affiliate of our majority shareholder in connection with the Sun
transaction.
We lease our Hong Kong office from a company owned by one of our
shareholders. The lease expires in 2004 but may be extended for an additional
year. Rent expense related to this lease was approximately $222,000 for Fiscal
2001.
During Fiscal 2001, Go-Gro Industries, Inc. ("Go-Gro"), our wholly-owned
subsidiary, purchased $1.9 million in raw materials from an affiliate which is
50% owned by us. Amounts due by Go-Gro to this affiliate were $282,000 as of
September 30, 2001.
Go-Gro also purchased $2.1 million in raw materials in Fiscal 2001 from
another affiliate which is 40% owned by us. Amounts due by Go-Gro to this
affiliate were $239,000 as of September 30, 2001.
Amounts receivable from two former executive vice presidents of the Company
(Mr. Rappaport and Mr. Katz) totaled $212,000 immediately prior to the Sun
transaction. These amounts are being repaid on a quarterly basis in the
aggregate amount of $16,667 from the proceeds due these former executives under
the Settlement and Termination Agreements negotiated as part of the Sun
transaction. As of September 30, 2001, the remaining amounts due from these
individuals totaled $194,000.
OTHER MATTERS
At the time of the mailing of this Proxy Statement, we do not expect any
business other than that set forth above to come before the Annual Meeting or
any adjournment thereof. Should any matters properly come before the Annual
Meeting or any adjournment thereof, the proxy holder will vote on these matters
according to his discretion and best judgment.
EXPENSES OF SOLICITATION
We will bear the cost of solicitation of proxies for the Annual Meeting. We
will make solicitations primarily by mail or by facsimile, but our regular
employees may solicit proxies personally or by telephone or telegraph. We will
ask brokerage houses and other nominees, custodians and fiduciaries to forward
proxy soliciting material and our Annual Report to the beneficial owners of the
shares of our Common Stock held of record by them, and we will reimburse these
record holders for their reasonable out-of-pocket expenses incurred in doing
so.
2003 SHAREHOLDER PROPOSALS
If you would like to submit a proposal for the 2003 Annual Meeting of
Shareholders, it must be received by the Secretary of the Company at 18191 N.W.
68th Avenue, Miami, Florida 33015, at any time prior to October 28, 2002, and
must otherwise comply with Rule 14a-8 under the Securities Exchange Act of
1934, in order to be eligible for inclusion in our proxy statement for that
meeting.
Our Bylaws provide that advance notice of nominations of persons for
election to the Board of Directors or the proposal of business to be considered
by the shareholders generally must be given to the Secretary of the Company not
less than 120 days prior to the first anniversary of the date of the mailing of
materials regarding
16
the prior year's annual meeting, which mailing date is identified above in this
Proxy Statement under the heading "General Information", unless the date of the
next Annual Meeting changes by more than 30 days from the date of this Annual
Meeting. If the date of the next Annual Meeting changes by more than 30 days
from the date of this Annual Meeting, such proposal or nomination must be
delivered not later than the close of business on the later of the 120 days
preceding the next Annual Meeting or ten days after the public announcement of
the date for the next Annual Meeting.
To be in proper form, a shareholder's notice must set forth (i) as to each
person whom the shareholder proposes to nominate for election or reelection as
a director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is
otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (ii) as to any other business that the shareholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of such
shareholder and the beneficial owner, if any, on whose behalf the proposal is
made; and (iii) as to the shareholder giving the notice and the beneficial
owners, if any, on whose behalf the nomination or proposal is made, (A) the
name and address of such shareholder, as they appear on our books, and of such
beneficial owner, (B) the number of shares of Common Stock which are owned
(beneficially or of record) by such shareholder and such beneficial owner, (C)
a description of all arrangements or understandings between such shareholder
and such beneficial owner and any other person or persons (including their
names) in connection with the proposal of such business by such shareholder and
any material interest of such shareholder and of such beneficial owner in such
business, and (D) a representation that such shareholder or its agent or
designee intends to appear in person or by proxy at the annual meeting to bring
such business before the meeting.
By Order of the Board of Directors,
/s/ Lynn Skillen
Lynn Skillen
Chief Financial Officer
and Secretary
17
CATALINA LIGHTING, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Shareholders
March 14, 2002
The undersigned shareholder of Catalina Lighting, Inc. (the "Company") hereby
appoints Eric Bescoby as attorney and proxy of the undersigned, with full power
of substitution, to represent the undersigned and vote all shares of Common
Stock, par value $.01 per share, of the Company which the undersigned would be
entitled to vote if personally present at the Annual Meeting of Shareholders of
the Company, to be held on Thursday, March 14, 2002, at 1:00 p.m. (local time),
at the offices of the Company located at 18191 N.W. 68th Avenue, Miami Florida
33015, and at any adjournments or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED
PROXY IS RETURNED, SUCH SHARES WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES
SPECIFIED IN ITEM 1. THIS PROXY ALSO WILL BE VOTED IN THE DISCRETION OF THE
HOLDER HEREOF UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL
MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.
(Continued and to be signed on the reverse side)
- --------------------------------------------------------------------------------
/\ FOLD AND DETACH HERE /\
Please mark your votes as indicated in this example [X]
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ALL NOMINEES
Proposal 1: Election of the following nominees to the Board of Directors:
01 Eric Bescoby
02 Kevin J. Calhoun
03 C. Deryl Couch
04 Michael H. Kalb
05 Rodger R. Krouse
06 Marc L. Leder
07 George R. Rea
08 Patrick J. Sullivan
09 Clarence E. Terry
FOR [ ] AUTHORITY AUTHORITY WITHHELD FOR THE
WITHHELD FOLLOWING ONLY: (WRITE THE NAME(S)
FOR ALL ON THE LINE BELOW)
NOMINEES [ ]
----------------------------------------
In his discretion, the Proxy holder is authorized to vote upon such other
matters as may properly come before the meeting.
Please disregard if you have previously provided your consent. [ ]
By checking the box to the right, I consent to future delivery of annual
reports, proxy statements, prospectuses and other materials and shareholder
communications electronically via the Internet at a web-page which will be
disclosed to me. I understand that the Company may no longer distribute printed
materials to me from any future shareholder meeting until such consent is
revoked. I understand that I may revoke my consent at any time by contacting the
Company's transfer agent, Mellon Investor Services LLC, Ridgefield Park, NJ and
that costs normally associated with electronic delivery, such as usage and
telephone charges as well as any costs I may incur in printing documents, will
be my responsibility.
When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee, or guardian, please sign full title
as such. If a corporation, then please sign in full corporate name as President
or other authorized officer. If a partnership, then please sign in partnership
name by authorized person.
Dated: , 2002
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Signature(s)
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Signature(s)
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PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
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