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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
FAFCO, 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)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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FAFCO, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 28, 2001
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of FAFCO,
Inc., a California corporation (the "Company"), will be held on Thursday, June
28, 2001 at 3:00 p.m., local time, at the Company's executive offices, 435
Otterson Drive, Chico, California, 95928-8207 (telephone (530) 332-2100) for the
following purposes:
1. To elect five (5) directors to serve for the ensuing year and
until their successors are elected.
2. To ratify the appointment of Burr, Pilger & Mayer as the
independent auditors of the Company for the fiscal year ending
December 31, 2001.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on May 15, 2001 are
entitled to notice of, and to vote at, the meeting and any adjournment thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy card as promptly as possible in the
postage prepaid envelope enclosed for that purpose. Any shareholder attending
the meeting may vote in person even if such shareholder returned a proxy.
Sincerely,
Alex N. Watt, Secretary
Chico, California
May 30, 2001
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FAFCO, INC.
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of FAFCO, Inc. (the "Company")
for use at the Annual Meeting of Shareholders of the Company (the "Annual
Meeting") to be held on Thursday, June 28, 2001 at 3:00 p.m. local time, or at
any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting will
be held at the Company's principal executive offices, 435 Otterson Drive, Chico,
California, 95928-8207. Its telephone number at that address is (530) 332-2100.
These proxy solicitation materials were mailed on or about May 30, 2001
to all shareholders entitled to vote at the meeting.
RECORD DATE AND OUTSTANDING SHARES
Shareholders of record at the close of business on May 15, 2001 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. As
of the Record Date, the Company had 691 shareholders of record.
At the Record Date, 3,854,791 shares of the Company's Common Stock,
$0.125 par value, were issued and outstanding. The only person known by the
Company to be the beneficial owner of more than 5% of the Company's Common Stock
as of the Record Date was Freeman A. Ford. See "ELECTION OF DIRECTORS--Security
Ownership."
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the meeting and voting in person.
VOTING AND SOLICITATION
Every shareholder voting in the election of directors may cumulate such
shareholder's votes and give one candidate a number of votes equal to the number
of directors to be elected (five) multiplied by the number of shares held by
such shareholder, or distribute such number of votes on the same principle among
as many candidates as the shareholder thinks fit, provided that votes cannot be
cast for more than the number of directors to be elected. However, no
shareholder shall be entitled to cumulate votes for a candidate unless such
candidate's name has been properly placed in nomination prior to the voting and
the shareholder, or any other shareholder, has given notice at the meeting prior
to the voting of the intention to cumulate votes. On all other matters, each
share has one vote.
The cost of this solicitation will be borne by the Company. The Company
will reimburse brokerage firms and other persons representing beneficial owners
of shares for their expenses in forwarding solicitation
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material to such beneficial owners in accordance with applicable regulations.
Proxies may also be solicited by certain of the Company's directors, officers
and regular employees, without additional compensation, personally or by
telephone, telegram, telecopy or electronic mail.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual
Meeting is a majority of the shares of Common Stock issued and outstanding on
the Record Date. Shares that are voted "FOR," "AGAINST" or "WITHHELD FROM" a
matter are treated as being present at the meeting for purposes of establishing
a quorum and are also treated as shares "represented and voting" at the Annual
Meeting (the "Votes Cast") with respect to such matter.
While there is no definitive statutory or case law authority in
California as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining the presence or
absence of a quorum for the transaction of business, but should not be counted
as Votes Cast with respect to a proposal since the shareholder has expressly
declined to vote on such proposal. Similarly, broker non-votes will be counted
for purposes of determining the presence or absence of a quorum for the
transaction of business, but will not be counted for purposes of determining the
number of Votes Cast with respect to a proposal on which the broker has
expressly not voted. Accordingly, abstentions and broker non-votes will not
affect the outcome of the voting on a proposal that requires a majority of the
Votes Cast.
SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company that are intended to be
presented by such shareholders at the Company's next annual meeting of
shareholders and that such shareholders desire to have included in the Company's
proxy statement relating to such meeting must be received by the Company no
later than January 30, 2002 (120 calendar days prior to the anniversary of the
mailing date of this proxy statement) in order to be considered for possible
inclusion in the Company's proxy statement and form of proxy relating to that
meeting.
If a shareholder wishes to present a proposal at the Company's annual
meeting in the year 2001 and the proposal is not intended to be included in the
Company's proxy statement relating to that meeting, the shareholder must give
advance notice to the Company prior to April 15, 2002 (45 calendar days prior to
the anniversary of the mailing date of this proxy statement) in order to be
timely. If a shareholder gives notice of such a proposal after that deadline,
the Company's proxy holders will be allowed to use their discretionary voting
authority to vote against the shareholder proposal when and if the proposal is
raised at the Company's year 2002 annual meeting.
The Company has not been notified by any shareholder of his or her
intent to present a shareholder proposal from the floor at this year's Annual
Meeting. The enclosed proxy card grants the proxy holders discretionary
authority to vote on any matter properly brought before the Annual Meeting.
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PROPOSAL 1
ELECTION OF DIRECTORS
NOMINEES
A Board of five directors is proposed to be elected at the meeting.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the Company's five nominees named below, all of whom are currently
directors of the Company. In the event that any nominee of the Company is unable
or declines to serve as a director at the time of the Annual Meeting of
Shareholders, the proxies will be voted for any nominee who shall be designated
by the current Board of Directors to fill the vacancy. In the event that
additional persons are nominated for election as directors, the proxy holders
intend to vote all proxies received by them in such a manner in accordance with
cumulative voting (if it is invoked) as will assure the election of as many of
the nominees listed below as possible, and, in such event, the specific nominees
to be voted for will be determined by the proxy holders. It is not expected that
any nominee will be unable or will decline to serve as a director. The term of
office of each person elected as a director will continue until the next annual
meeting of shareholders or until his successor has been elected and qualified.
The names of the nominees, and certain information about them, are set
forth below.
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ---------------------------------- ------- ----------------------------------- ----------------
Freeman A. Ford................... 60 Chairman of the Board, President 1972
and Chief Executive Officer of the
Company
William A. Berry(*)............... 62 Senior Vice President and Chief 1974
Financial Officer of the Electric
Power Research Institute, an energy
industry research consortium
Robert W. Selig, Jr.(*)........... 61 President of Davis Instruments 1974
Corporation, a manufacturer and
distributor of marine and weather
equipment
William F. Chisholm............... 32 Management Consultant at Bain & 1999
Company, an international strategy
consulting firm
David F. Ford..................... 33 President of Danger! Books, a book 1999
publisher and distributor
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(*) Member of Audit Committee
Except as set forth below, each of the nominees has been engaged in his
principal occupation set forth above during the past five years. Except as set
forth below, there is no family relationship between any directors, director
nominees or executive officers of the Company.
Mr. Freeman Ford is also a director of H.B. Fuller Company.
From April 1992 to May 1996, Mr. Berry served as Senior Vice President
and Chief Financial Officer of Compression Labs, Inc., a supplier of
video-conferencing equipment. In May 1996, Mr. Berry joined the Electric Power
Research Institute, an energy industry research consortium, as Senior Vice
President and Chief Financial Officer.
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From January 1994 to August 1996, Mr. Chisholm attended Wharton Business
School where he received a Master of Business Administration degree. Since
joining Bain & Company, an international strategy consulting firm, in August
1996, Mr. Chisholm has served as a management consultant. Mr. Chisholm is the
son-in-law of Mr. Freeman A. Ford, Chairman of the Board, President and Chief
Executive Officer of the Company.
From February 1993 to January 1995, Mr. David Ford served as Managing
Editor of Beach Magazine, an outdoor recreation-focused publication. In February
1995, Mr. David Ford joined the H.B. Fuller Company as a Communications
Specialist and served in that capacity until May 1997, after which Mr. David
Ford assumed the position of Marketing Analyst, and remained in that capacity
until May 1998. Since February 1996, Mr. David Ford has managed and served as
President of Danger! Books, a book publisher and distributor. Mr. David Ford is
the son of Mr. Freeman A. Ford, Chairman of the Board, President and Chief
Executive Officer of the Company.
RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR EACH OF THE
COMPANY'S NOMINEES FOR DIRECTOR.
VOTE REQUIRED
The five nominees receiving the highest number of affirmative votes of
the shares entitled to be voted for them shall be elected as directors. Votes
withheld from any director are counted for purposes of determining the presence
or absence of a quorum, but have no other legal effect under California law.
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SECURITY OWNERSHIP
The following table sets forth the beneficial ownership of Common Stock
of the Company as of the Record Date by (1) each person known by the Company to
beneficially own more than 5% of the Company's Common Stock, (2) each director
and nominee for director, (3) the current executive officers of the Company
named in the Summary Compensation Table below, and (4) all current directors and
executive officers as a group:
SHARES OF COMMON STOCK
BENEFICIALLY OWNED
--------------------------------
NUMBER OF PERCENT OF
NAME OF BENEFICIAL OWNER SHARES(1) TOTAL(2)
- --------------------------------------------------- ------------- ------------
Freeman A. Ford.................................... 2,076,096(3) 52.7%
c/o FAFCO, Inc.
435 Otterson Drive
Chico, California 95928-8207
Alex N. Watt....................................... 108,950(4) 2.8%
David K. Harris.................................... 90,334(5) 2.3%
Robert W. Selig, Jr................................ 48,528(6) 1.3%
William A. Berry................................... 22,500(7) *
William F. Chisholm................................ 22,750(8) *
David F. Ford...................................... 36,812(9) *
All current directors and executive officers as a 2,446,937(10) 58.7%
group (8 persons)
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* Less than 1%.
(1) Except as otherwise indicated in the footnotes to this table or as
otherwise provided by community property laws, the beneficial owner has
sole voting and investment power with respect to all shares.
(2) Based on shares of Common Stock outstanding as of the Record Date.
(3) Includes (i) 298,000 shares held of record by trusts for the benefit of
Freeman Ford's children, for which he and his spouse serve as trustees
and as to which shares he disclaims beneficial ownership, (ii) 449,344
shares jointly owned by Freeman Ford and his spouse, and (iii) 82,250
shares issuable upon exercise of options held by Freeman Ford
exercisable within 60 days of the Record Date.
(4) Includes (i) 88,764 shares issuable upon exercise of outstanding
options exercisable within 60 days of the Record Date held by Mr. Watt
and (ii) 1,000 shares held by Mr. Watt and Sandra S. Watt as joint
tenants.
(5) Includes 76,085 shares issuable upon exercise of outstanding options
exercisable within 60 days of the Record Date held by Mr. Harris.
(6) Includes (i) 15,000 shares issuable upon exercise of outstanding
options exercisable within 60 days of the Record Date held by Mr.
Selig, and (ii) 5,700 shares held by trusts for the benefit of Mr.
Selig's children, as to which he disclaims beneficial ownership.
(7) Includes 15,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of the Record Date held by Mr. Berry.
(8) Includes (i) 4,000 shares issuable upon exercise of outstanding options
exercisable within 60 days of the Record Date by Mr. Chisholm and (ii)
18,750 shares jointly owned by Mr. Chisholm and his wife.
(9) Includes 4,000 shares issuable upon exercise of outstanding options
held by David Ford exercisable within 60 days of the Record Date.
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(10) Includes (i) 275,959 shares issuable upon exercise of outstanding
options exercisable within 60 days of the Record Date held by four
executive officers (one of whom is also a director), and (ii) 38,000
shares issuable upon exercise of outstanding options exercisable within
60 days of the Record Date held by four outside directors.
By virtue of his position as Chairman of the Board, President and Chief
Executive Officer of the Company and his beneficial ownership of approximately
52.7% of the Company's Common Stock as of the Record Date, Freeman A. Ford may
be deemed to be a "parent" and/or "control person" of the Company within the
meaning of the rules and regulations promulgated under the Securities Act of
1933, as amended. Freeman Ford can elect a majority of the Board of Directors
and controls any shareholder vote that does not require a supermajority with
respect to which his shares are eligible to be voted. In addition, Freeman A.
Ford, his son (David F. Ford) and his son-in-law (William F. Chisholm) comprise
three out of five directors of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the copies of Forms 3, 4 and 5 received by
the Company, or written representations from certain reporting persons that no
Forms 5 were required for such persons, the Company believes that, during the
fiscal year ended December 31, 2000, all filing requirements under Section 16(a)
of the Securities Exchange Act applicable to its officers, directors and 10%
shareholders were complied with.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of two (2) meetings
during the year ended December 31, 2000 (the "Last Fiscal Year").
The Audit Committee of the Board of Directors, which currently consists
of outside directors Berry and Selig, held one (1) meeting during the Last
Fiscal Year. This Committee recommends engagement of the Company's independent
accountants and is primarily responsible for approving the services performed by
the Company's independent accountants and for reviewing and evaluating the
Company's accounting principles and its system of internal accounting controls.
There is no compensation committee or nominating committee or any
committee performing those functions. During the Last Fiscal Year, no director
attended fewer than 75% of the aggregate of the meetings of the Board of
Directors and the committees on which such director served.
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EXECUTIVE COMPENSATION
The following table sets forth certain information regarding
compensation paid by the Company for services rendered during the Last Fiscal
Year to the Company by the Chief Executive Officer and the other executive
officers of the Company who received salary and bonus compensation of $100,000
or more in the Last Fiscal Year (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------------------------- ------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) ($)(1) OPTIONS(#) ($) (2)
- ------------------------------ ------ ----------- ---------- -------------- ------------ ---------------
Freeman A. Ford .............. 2000 $156,000 $ 0 0 0 $ 1,662
Chairman of the Board, 1999 155,793 4,569 0 25,000 1,662
Chief Executive Officer 1998 147,525 52,569 0 0 1,662
Alex N. Watt ................. 2000 137,035 0 0 0 2,218
Executive Vice President 1999 131,779 3,865 0 25,000 2,218
1998 122,978 51,771 0 0 2,218
David K. Harris .............. 2000 143,633 0 0 0 542
Vice President Sales and 1999 131,779 3,865 0 25,000 494
Marketing 1998 131,360 43,771 0 0 414
__________
(1) Under applicable SEC rules, perquisites are excluded if the aggregate value
is less than the lesser of $50,000 or 10% of the Executive officer's salary
plus bonus.
(2) Represents life insurance premiums paid by the Company on behalf of Messrs.
Ford, Watt and Harris.
The Company did not make any grant of stock options to the Named
Executive Officers during the Last Fiscal Year.
The following table sets forth information regarding the value of all
unexercised stock options and warrants held by the Named Executive Officers as
of the end of the Last Fiscal Year.
AGGREGATED OPTION EXERCISED IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION AND WARRANT VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/WARRANTS AT
OPTIONS/WARRANTS AT FISCAL YEAR-END
SHARES FISCAL YEAR-END (#) ($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
- ------------------------- ----------- -------- --------------------------- ---------------------------
Freeman A. Ford.......... 0 N/A 314,250 / 4,000 N/A
Alex N. Watt............. 0 N/A 84,764 / 4,000 N/A
David K. Harris.......... 0 N/A 72,085 / 4,000 N/A
- ----------
(1) Based on the last reported sale price for the Company's Common Stock for the
last trading day prior to 2000 fiscal year-end of $0.10, all outstanding
options and warrants were underwater.
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DIRECTOR COMPENSATION
Directors who are not employees of the Company are entitled to receive
directors' fees in the amount of $750 for each board meeting attended and $750
for each committee meeting attended, provided that such committee meeting is
held on a different day than that of the board meeting. Directors who are not
employees of the Company are also entitled to an annual retainer of $4,000.
The Board of Directors has adopted and the shareholders of the Company
have approved the 1991 Directors' Stock Option Plan (the "Directors' Plan")
pursuant to which each non-employee director of the Company is automatically
granted a nonstatutory stock option to purchase 10,000 shares (a "Director's
Option") on the later to occur of the date of adoption of the Plan (April 15,
1991) or the date of his or her appointment or election to the Board. Each
Director's Option has a term of ten years and becomes exercisable as to 20% of
the shares subject thereto on each anniversary date of its grant. In May 1999,
Messrs. William Chisholm and David Ford each received an automatic grant of a
Director's Option to purchase 10,000 shares of Common Stock at $0.50, the fair
market value on the date of grant.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
By virtue of his position as Chairman of the Board, President and Chief
Executive Office of the Company and his beneficial ownership of approximately
52.7% of the Company's Common Stock as of the Record Date, Freeman A. Ford may
be deemed to be a "parent" and/or "control person" of the Company within the
meaning of the rules and regulations promulgated under the Securities Act of
1933, as amended. See "ELECTION OF DIRECTORS -- Security Ownership."
During 2000, Freeman A. Ford, David F. Ford (Freeman A. Ford's son) and
Kimberley Ford Chisholm (Freeman A. Ford's daughter and William Chisholm's
spouse) exercised options to purchase 240,000, 18,750 and 18,750 shares of FAFCO
Common Stock, respectively. The exercise price paid by each of these individuals
was $.125 per share of Common Stock.
REPORT OF THE AUDIT COMMITTEE
The Board of Directors maintains an Audit Committee comprised of two of
the Company's outside directors. The Audit Committee oversees the Company's
financial process on behalf of the Board of Directors. Management has the
primary responsibility for preparing the financial statements and maintaining
the Company's financial reporting process including the system of internal
controls. In fulfilling its oversight responsibilities, the Committee reviewed
the audited financial statements in the Company's Annual Report Form 10-K for
the year ended December 31, 2000 with management including a discussion of the
quality of the accounting principles, the reasonableness of significant
judgments and the clarity of disclosures in the financial statements. The Board
has adopted a written Audit Committee Charter, a copy of which is attached to
this Proxy Statement as Appendix A.
The Committee reviewed with the Company's independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Committee under generally accepted auditing
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standards, including Statement on Auditing Standards No. 61, "Communication with
Audit Committees". In addition, the Committee discussed with the independent
auditors the auditors' independence from management and the Company including
the matters in the written disclosures and the letter from the independent
auditors required by the Independence Standards Board, Standard No. 1.
The Committee also discussed with the Company's independent auditors the
overall scope and results of their audit. The Committee met with the independent
auditors, with and without management present, to discuss the results of their
examination, their evaluation of the Company's internal controls, and the
overall quality of the Company's financial reporting. The Committee held one
meeting with the auditors in regards to their audit of the annual financial
statements for the year ended December 31, 2000.
In reliance on the reviews and discussions referred to above, the
Committee recommended to the Board of Directors, and the Board has approved,
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2000. The Committee and the Board
also recommended, subject to stockholder approval, the reappointment of Burr,
Pilger & Mayer, as the Company's independent auditors for the year ending
December 31, 2001.
Respectfully Submitted by:
William A. Berry
Robert W. Selig, Jr.
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PROPOSAL 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Burr, Pilger & Mayer, independent
auditors, to audit the financial statements of the Company for the fiscal year
ending December 31, 2001. Burr, Pilger & Mayer audited the Company's financial
statements for the Last Fiscal Year. Representatives of Burr, Pilger & Mayer are
expected to be present at the meeting, will have the opportunity to make a
statement if they desire to do so, and are expected to be available to respond
to appropriate questions.
FEES BILLED TO THE COMPANY BY BURR, PILGER & MAYER
Audit Fees:
Audit fees billed to the Company by Burr, Pilger & Mayer during the
Company's 2000 fiscal year for review of the Company's annual financial
statements and those financial statements included in the Company's quarterly
reports on Form 10-QSB, totaled $36,973.
Financial Information Systems Design and Implementation Fees:
The Company did not engage Burr, Pilger & Mayer to provide advice to the
Company regarding financial information systems design and implementation during
the fiscal year ended December 31, 2000.
All Other Fees:
Fees billed to the Company by Burr, Pilger & Mayer during the Company's
2000 fiscal year for all other non-audit services rendered to the Company,
including tax related services totaled $8,304.
Stockholder ratification of the selection of Burr, Pilger & Mayer as the
Company's independent public accountants is not required by the Company's
by-laws or other applicable legal requirement. However, the Board is submitting
the selection of Burr, Pilger & Mayer to the shareholders for ratification as a
matter of good corporate practice. If the shareholders fail to ratify the
selection, the Audit Committee and the Board will reconsider its selection. Even
if the selection is ratified, the Board at its discretion may direct the
appointment of a different independent accounting firm at any time during the
year if it determines that such a change would be in the best interests of the
Company and its shareholders.
RECOMMENDATION
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE APPOINTMENT OF BURR,
PILGER & MAYER AS THE COMPANY'S AUDITORS FOR FISCAL 2001 AND RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" THIS PROPOSAL.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: May 30, 2001
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APPENDIX A
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FAFCO, INC.
AUDIT COMMITTEE CHARTER
PURPOSES:
The Audit Committee will make such examinations as are necessary to
monitor the corporate financial reporting and the internal and external audits
of the corporation, to provide to the Board of Directors the results of its
examinations and recommendations derived therefrom, to outline to the Board
improvements made, or to be made, in internal accounting controls, to nominate
independent auditors, and to provide to the Board such additional information
and materials as it may deem necessary to make the Board aware of significant
financial matters that require Board attention.
In addition, the Audit Committee will undertake those specific duties
and responsibilities listed below and such other duties as the Board of
Directors from time to time prescribe.
MEMBERSHIP:
The Audit Committee will consist of two to three members of the Board,
all of whom shall be independent directors. The members of the Audit Committee
will be appointed by and will serve at the discretion of the Board of Directors.
RESPONSIBILITIES:
The responsibilities of the Audit Committee shall include:
1. Nominating the independent auditors;
2. Reviewing the plan for the audit and related services;
3. Reviewing audit results and financial statements;
4. Overseeing the adequacy of the corporation's system of internal
accounting controls, including obtaining from the independent auditors
management letters or summaries on such internal accounting controls.
5. Overseeing compliance with the Foreign Corrupt Practices Act;
6. Overseeing compliance with SEC requirements for disclosure of
auditor's services including auditor independence and audit committee members
and activities;
7. Reviewing related party transactions for potential conflicts of
interest.
In addition to the above responsibilities, the Audit Committee will
undertake such other duties as the Board of Directors delegates to it, and will
report, at least annually, to the Board regarding the
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Committee's examinations and recommendations including recommending to the Board
of Directors approving the filing of the Company's annual report to the
Securities and Exchange Commission on Form 10-K.
MEETINGS:
The Audit Committee will meet at least one time per year with the
Auditors and with management to review the audit results and the audited
financial statements, to discuss with the auditors the matters required by
Statement on Auditing Standards No. 61, and to review and discuss with the
Auditors the matters required by Independence Standards Board Statement No. 1
and consider the compatibility of non-audit services with the Auditor's
independence.
The Audit Committee will also meet quarterly, or will designate one of
its members to meet quarterly, with the Auditors and with management to review
the quarterly financial statements prior to their filing with the Securities and
Exchange Commission.
The Audit Committee shall insure open communications between the
Auditors and the Audit Committee at all times.
REPORTS:
The Audit Committee shall prepare a written report to the Board of
Directors based on its meeting with the Auditors and its review of the audited
financial statements, which report shall be incorporated into the Board minutes
and shall be printed in the Annual Meeting Proxy to the stockholders of the
Company.
MINUTES:
The Audit Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of the Board of
Directors.
-12-
15
FAFCO, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
JUNE 28, 2001
The undersigned shareholder of FAFCO, Inc. (the "Company") hereby
acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy
Statement for the 2001 Annual Meeting of Shareholders of the Company to be held
on June 28, 2001 at 3:00 p.m., local time, at the Company's principal place of
business, 435 Otterson Drive, Chico, California, 95928-8207 (telephone (530)
332-2100), and hereby revokes all previous proxies and appoints Freeman A. Ford
and Alex N. Watt, or either of them, with full power of substitution, as Proxies
and Attorneys-in-Fact, on behalf and in the name of the undersigned, to vote and
otherwise represent all of the shares registered in the name of the undersigned
at said Annual Meeting, or any adjournment thereof, with the same effect as if
the undersigned were present and voting such shares, on the matters and in the
manner specified below:
1. Election of Directors
Nominees:
Freeman A. Ford, William A. Berry, Robert W. Selig, Jr., David F. Ford,
William F. Chisholm
[ ] FOR all nominees [ ] WITHHELD from all nominees [ ] FOR all nominees
except any whose name is crossed out above.
2. Proposal to ratify the appointment of Burr, Pilger & Mayer as the independent
auditors of the Company for the fiscal year ending December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are entitled to vote as they deem advisable
upon such other matters as may properly come before the meeting or any
adjournments thereof.
(Continued and to be signed on reverse side)
16
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED FOR EACH OF THE NOMINEES AND THE PROPOSAL LISTED ON THE
REVERSE SIDE AND WILL BE VOTED ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING AS THE PROXIES DEEM ADVISABLE.
Dated , 2001
-----------------------------------
Signature
-----------------------------------
Signature
I plan to attend the meeting: [ ]
-----------------------------------
(This proxy should be marked, dated
and signed by each shareholder
exactly as such shareholder's name
appears hereon, and returned
promptly in the enclosed envelope.
Persons signing in a fiduciary
capacity should so indicate. A
corporation or other entity is
requested to have this proxy signed
in its name by its President or
other authorized officer, with the
office held designated. If shares
are held by joint tenants or as
community property, both holders
should sign.)
TO ENSURE YOUR REPRESENTATION AT
THE ANNUAL MEETING, PLEASE MARK,
SIGN AND DATE THIS PROXY AND RETURN
IT AS PROMPTLY AS POSSIBLE.