SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / 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 Rule 14a-11(c) or Rule 14(a)-12
THE QUIGLEY CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than 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:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(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):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-1-
(5) Total fee paid:
/ / 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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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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THE QUIGLEY CORPORATION
Kells Building
621 Shady Retreat Road
P. O. Box 1349
Doylestown, PA 18901
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held May 4, 2001
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TO THE STOCKHOLDERS OF THE QUIGLEY CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of THE QUIGLEY
CORPORATION, a NEVADA Corporation (the "Company") will be held at Aldie Mansion,
85 Old Dublin Pike, Doylestown, PA 18901 on Friday, May 4, 2001, at 4:00 P.M.,
local time, for the following purposes:
(i) To elect a Board of Directors to serve for the ensuing year until
the next Annual Meeting of Stockholders and until their
respective successors have been duly elected and qualified.
(ii) To increase the total stock subject to the 1997 Stock Option
Plan.
(iii) To ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors for the year ending December 31, 2001.
(iv) To transact such other business as may properly come before the
Meeting and any adjournments thereof.
Only stockholders of record at the close of business on March 15, 2001 will be
entitled to notice of and to vote at the Annual Meeting of Stockholders or any
adjournment thereof. Any stockholder may revoke a proxy at any time prior to its
exercise by filing a later-dated proxy, or a written notice of revocation with
the Secretary of the Company, or by voting in person at the Meeting. If a
stockholder is not attending the Meeting, any proxy or notice should be returned
in time for receipt no later than the close of business on the day preceding the
Meeting.
DUE TO LIMITED SEATING CAPACITY, ADMISSION WILL BE LIMITED TO ONE (1) SEAT PER
STOCKHOLDER OF RECORD. IF YOUR SHARES ARE HELD BY A BANK OR BROKER, YOU MUST
BRING YOUR BANK OR BROKERS' STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP OF
THE QUIGLEY CORPORATION STOCK TO THE MEETING.
By Order of the Board of Directors
ERIC H. KAYTES, Secretary
Doylestown, PA
April 3, 2001
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED, WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE QUIGLEY CORPORATION
Kells Building
621 Shady Retreat Road
P. O. Box 1349
Doylestown, PA 18901
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PROXY STATEMENT
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April 3, 2001
This Proxy Statement is being furnished in connection with the solicitation of
proxies by the Board of Directors of The Quigley Corporation, (the "Company")
for use at the Annual Meeting of Stockholders of the Company to be held at Aldie
Mansion, 85 Old Dublin Pike, Doylestown, PA 18901, on Friday, May 4, 2001 at
4.00 P.M., local time, and any adjournments thereof (the "Meeting").
The principal executive offices of the Company are located at the Kells
Building, 621 Shady Retreat Road, P.O. Box 1349, Doylestown, Pennsylvania 18901.
The approximate date on which this Proxy Statement and the accompanying Proxy
will first be sent or given to stockholders is April 3, 2001.
At the Meeting, the following proposals will be presented to the Stockholders
for approval:
(i) To elect a Board of Directors to serve for the ensuing year until the
next Annual Meeting of Stockholders and until their respective
successors have been duly elected and qualified.
(ii) To increase the total stock subject to the 1997 Stock Option Plan.
(iii) To ratify the appointment of PricewaterhouseCoopers LLP as
independent auditors for the year ending December 31, 2001.
(iv) To transact such other business as may properly come before the
Meeting and any adjournments thereof.
DUE TO LIMITED SEATING CAPACITY, ADMISSION WILL BE LIMITED TO ONE (1) SEAT PER
STOCKHOLDER OF RECORD. IF YOUR SHARES ARE HELD BY A BANK OR BROKER, YOU MUST
BRING YOUR BANK OR BROKERS' STATEMENT EVIDENCING YOUR BENEFICIAL OWNERSHIP OF
THE QUIGLEY CORPORATION STOCK TO THE MEETING.
RECORD AND VOTING SECURITIES
Only stockholders of record at the close of business on March 15, 2001 will be
entitled to notice of and to vote at the Meeting. At the close of business on
such record date, the Company had 10,675,153 shares of Common Stock, par value
$.0005 per share (the "Common Stock") outstanding and entitled to vote at the
Meeting. Each outstanding share of Common Stock is entitled to one vote. There
was no other class of voting securities of the Company outstanding on the Record
Date. A majority of the outstanding shares of Common Stock present in person or
by Proxy is required for a quorum.
PROXIES AND VOTING RIGHTS
Shares of Common Stock represented by Proxies that are properly executed, duly
returned and not revoked will be voted in accordance with the instructions
contained therein. If no instructions are contained in a Proxy, the shares of
Common Stock represented thereby will be voted (i) for election as directors of
the persons who have been nominated by the Board of Directors, (ii) for increase
to the total stock reserved for the 1997 Stock Option Plan, (iii) for
ratification of the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for the year ending December 31, 2001, and (iv) upon any
other matter that may properly be brought before the Meeting, in accordance with
the judgment of the person or persons voting the Proxy. The execution of a Proxy
will in no way affect a stockholder's right to attend the Meeting and to vote in
person. Any Proxy executed and returned by a stockholder may be revoked at any
time thereafter by written notice of revocation given to the Secretary of the
Company prior to the vote to be taken at the Meeting, by execution of a
subsequent Proxy that is presented at the
Meeting, or by voting in person at the Meeting, in any such case, except as to
any matter or matters upon which a vote shall have been cast pursuant to the
authority conferred by such Proxy prior to such revocation. Broker "non-votes"
and the shares of Common Stock as to which a stockholder abstains are included
for purposes of determining the presence or absence of a quorum for the
transaction of business at the Annual Meeting. A broker "non-vote" occurs when a
nominee holding shares for a beneficial owner does not vote on a particular
proposal because the nominee does not have discretionary voting power with
respect to that item and has not received instructions from the beneficial
owner.
ANNUAL REPORT PROVIDED WITH PROXY STATEMENT
Copies of the Company's Annual Report containing audited financial statements of
the Company for the year ended December 31, 2000, are being mailed together with
this Proxy Statement to all stockholders entitled to vote at the Meeting.
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the Company's
Common Stock as of March 15, 2001 by each person known by the Company to be the
beneficial owner of more than five percent of the Common Stock, each director
and executive officer and by all directors and executive officers of the Company
as a group. Unless otherwise indicated, the address of each person or entity
listed below is the Company's principal executive office.
Five Percent Stockholders, Directors, and Common Stock
all Executive Officers and Beneficially Percent of
Directors as a Group Owned (1) Class
-------------------- ---------- -----
GUY J. QUIGLEY (2) (3) (4) 3,964,264 34.0
CHARLES A. PHILLIPS (2) (3) (5) 1,736,206 15.2
GEORGE J. LONGO (2) (3) (6) 445,000 4.0
ERIC H. KAYTES (2) (3) (7) 603,404 5.5
JACQUELINE F. LEWIS (2) (8) 40,000 -
ROUNSEVELLE W. SCHAUM (2) (9) 20,000 -
ALL DIRECTORS AND OFFICERS (10) 6,808,874 51.5
(Six Persons)
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act ("Rule 13d-3") and unless otherwise indicated,
represents shares for which the beneficial owner has sole voting and
investment power. The percentage of class is calculated in accordance with
Rule 13d-3 and includes options of other rights to subscribe which are
exercisable within sixty (60) days of March 15, 2001.
(2) Director of the Company.
(3) Officer of the Company.
(4) Mr. Quigley's beneficial ownership includes options and warrants
exercisable within sixty (60) days from March 15, 2001, to purchase 770,000
shares of Common Stock, options and warrants to purchase 233,000 shares of
Common Stock beneficially owned by Mr. Quigley's wife and an aggregate of
514,705 shares beneficially owned by members of Mr. Quigley's immediate
family.
(5) Mr. Phillips' beneficial ownership includes options and warrants
exercisable within sixty (60) days from March 15, 2001, to purchase 715,000
shares of Common Stock, and options to purchase 13,500 shares of Common
Stock beneficially owned by Mr. Phillips' wife.
(6) Mr. Longo's beneficial ownership includes options and warrants exercisable
within sixty (60) days from March 15, 2001, to purchase 420,000 shares of
Common Stock.
(7) Mr. Kaytes' beneficial ownership includes options and warrants exercisable
within sixty (60) days from March 15, 2001, to purchase 330,000 shares of
Common Stock.
(8) Ms. Lewis' address is 3805 Old Easton Road, Doylestown, PA 18901. Ms.
Lewis' beneficial ownership includes options exercisable within sixty (60)
days from March 15, 2001, to purchase 40,000 shares of Common Stock.
(9) Mr. Schaum's address is One Bannister's Warf, Newport, RI 02840. Mr.
Schaum's beneficial ownership includes options exercisable within sixty
(60) days from March 15, 2001, to purchase 20,000 shares of Common Stock.
(10) Includes an aggregate of 2,541,500 shares of Common Stock underlying
options and warrants that are exercisable within sixty (60) days from March
15, 2001.
-2-
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
Executive Compensation
The following table provides summary information concerning cash and certain
other compensation for the years ended December 31, 2000, 1999 and 1998 paid or
accrued by the Company to or on behalf of the Company's Chief Executive Officer
and each of the other most highly compensated executive officers of the Company
whose compensation exceeded $100,000 during 2000:
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
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Other Annual Securities All Other
Name and Principal Position Salary Bonus Compensation Underlying Compensation
Year (1) (2) (3) (4) Options (5)
($) ($) ($) (#) ($)
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Guy J. Quigley 2000 504,000 536,851 70,000 66,403
Chairman of the 1999 420,000 814,701 85,000 65,903
Board, President, 1998 350,000 262,500 1,289,963 55,903
Chief Executive Officer
Charles A. Phillips 2000 352,800 178,949 70,000 52,101
Executive Vice President, 1999 294,000 271,567 85,000 51,601
Chief Operating Officer 1998 245,000 183,750 430,923 42,959
George J. Longo 2000 302,400 70,000 28,320
Vice President, 1999 252,000 100,000 27,820
Chief Financial Officer 1998 210,000 157,500 17,820
Eric H. Kaytes 2000 230,400 70,000 27,539
Vice President, MIS, 1999 192,000 50,000 27,039
Secretary-Treasurer, 1998 160,000 120,000 17,039
Chief Information Officer
(1) Compensation paid pursuant to employment agreements.
(2) Bonus's paid pursuant to the Company attaining specified sales and net
income goals.
(3) Additional compensation, including founder's commission at 3.75% of
sales collected less certain deductions for Mr. Quigley, and founder's
commission at 1.25% of sales collected less certain deductions for Mr.
Phillips.
(4) The value of personal benefits for the executive officers of the
Company that might be attributable to management as executive fringe
benefits, such as vehicles can not be specifically or precisely
determined; however, it would not exceed the lesser of $50,000 or 10%
of the total annual salary and bonus reported for any individual named
above.
(5) Includes amounts attributable to the executive officers for reverse
split dollar life insurance policies on which the Company pays the
premiums. These insurance policies currently provide for the proceeds
to be used by the Company for, among other things, the purchase of the
officer's stock, at the fair market value, from the officer's estate if
desired by the executor of the estate. Also, included are matching
contributions attributable to each officer in the Company's 401(k)
Plan.
Compensation Pursuant to Plans
An incentive stock option plan was instituted in 1997, (the "1997 Stock Option
Plan") and approved by the stockholders in 1998. Options pursuant to the 1997
Stock Option Plan have been granted to directors, executive officers, and
employees during 2000, 1999 and 1997. In early 1999, the Company implemented a
defined contribution plan for its employees with the Company's contribution to
the plan being based on the amount of the employee plan contribution.
-3-
Option Grants Table
The following table sets forth certain information regarding stock option grants
made to each of the executive officers during 2000:
OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Percent of Value at Assumed Rates
Number of Total Options of Annual Rates of Stock
Securities Granted to Price Appreciation for
Underlying Employees in Exercise Option ($) (1)
Options Fiscal Year or Base Price Expiration
Name Granted (%) ($/sh) Date 5% 10%
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Guy J. Quigley 70,000 18.4 0.8125 12/20/10 35,700 91,000
Charles A. Phillips 70,000 18.4 0.8125 12/20/10 35,700 91,000
George J. Longo 70,000 18.4 0.8125 12/20/10 35,700 91,000
Eric H. Kaytes 70,000 18.4 0.8125 12/20/10 35,700 91,000
(1) The potential realizable portion of the foregoing table illustrates
value that might be realized upon exercise of options immediately
prior to the expiration of their term, assuming (for illustrative
purposes only) the specified compounded rates of appreciation on the
Company's Common Stock over the term of the option. These numbers do
not take into account provisions providing for termination of the
option following termination of employment, non-transferability or
difference in vesting periods.
Aggregated Option Exercises and Year-End Option Values Table
The following table sets forth certain information concerning stock options
exercised during 2000 and stock options, which were unexercised at the end of
2000 with respect to the executive officers:
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY
COMPLETED FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
Number of Value of
Shares Securities Unexercised
Acquired Value Underlying In-the Money
on Exercise Realized Unexercised Options at Year
Name (#) ($) Options End ($) (1)
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Guy J. Quigley 200,000 206,300 770,000 -
Charles A. Phillips - - 715,000 -
George J. Longo - - 420,000 -
Eric H. Kaytes 60,000 61,890 330,000 -
(1) Represents the total gain that would be realized if all in-the-money
options held at December 31, 2000 were exercised, determined by
multiplying the number of shares underlying the options by the
difference between the per share option exercise price and $0.8125
per share, which was the closing price per share of the Company's
Common Stock on December 31, 2000. An option is in-the-money if the
fair market value of the underlying shares exceeds the exercise price
of the option.
Option Re-pricing Table
As discussed in the Report on Executive Compensation below, in May 1998 certain
employee stock options, including options held by executive officers, were
re-priced to $9.68 per share, with all other terms and conditions remaining
unchanged. The following table sets forth certain information regarding the
re-pricing of stock options for executive officers of the Company in May 1998
and within the ten previous years:
-4-
Ten-Year Option Re-pricing
--------------------------
Number of Market Price of Exercise Length of
Securities Stock at Time Price at New Original Term
Re-pricing Underlying of Time of Exercise Remaining at
Name Date Options Re-priced Re-pricing Re-pricing Price Date of
(#) ($) ($) ($) Re-pricing
- - -------------------------------------------------------------------------------------------------------------------------------
Guy J. Quigley 5/08/98 100,000 9.68 15.00 9.68 9 yrs. 7 mos.
Charles A. Phillips 5/08/98 100,000 9.68 15.00 9.68 9 yrs. 7 mos.
George J. Longo 5/08/98 115,000 9.68 15.00 9.68 9 yrs. 7 mos.
5/08/98 10,000 9.68 17.50 9.68 9 yrs. 7 mos.
Eric H. Kaytes 5/08/98 90,000 9.68 15.00 9.68 9 yrs. 7 mos.
5/08/98 10,000 9.68 17.50 9.68 9 yrs. 7 mos.
Royalty and Employment Agreements
The Cold-Eeze(R)product is manufactured for the Company by an independent
manufacturer and marketed by the Company in accordance with the terms of the
licensing agreement (between the Company and Godfrey Science & Design, Inc. and
John C. Godfrey, Ph.D.; hereinafter "Dr. Godfrey"). The contract is assignable
by the Company with Dr. Godfrey's consent. Throughout the duration of the
agreement Dr. Godfrey is to receive a three percent (3%) royalty on sales
collected, less certain deductions, of the Company's Cold-Eeze(R)products.
A separate consulting agreement between the parties referred to directly above
was similarly entered into on May 4, 1992 whereby Dr. John C. Godfrey and Dr.
Nancy J. Godfrey are to receive a consulting fee of two percent (2%) on sales
collected, less certain deductions of the Company's Cold-Eeze(R) products for
consulting services to the Company with respect to such products.
Pursuant to the license agreement entered into between the Company and George
Eby Research, the Company pays a royalty fee of three percent (3%) on sales
collected, less certain deductions, of the Company's Cold-Eeze(R) products.
An employment agreement between the Company and Guy J. Quigley was entered into
on June 1, 1995, whereby Guy J. Quigley is employed as the Chief Executive
Officer of the Company for a term ending on May 31, 2005. In addition to
compensation for services as an officer of the Company, Mr. Quigley is entitled
to receive a founder's commission of five percent (5%) on sales collected, less
certain deductions, of the Company's Cold-Eeze(R) products, which is shared with
Charles A. Phillips in a ration of 75% and 25%, respectively. Upon the
termination of the contract for any reason, Mr. Quigley is entitled to the
remainder of his compensation owed him through May 31, 2005.
An employment agreement between the Company and Charles A. Phillips was entered
into on June 1, 1995, whereby Charles A. Phillips is employed as the Executive
Vice President and Chief Operating Officer of the Company for a term ending on
May 31, 2005. In addition to compensation for services as an officer of the
Company, Mr. Phillips is entitled to receive twenty five percent (25%) of the
founder's commission received by Guy J. Quigley, either directly from Guy J.
Quigley or, if requested, directly from the Company. Should Mr. Phillips make
such a request upon the Company, the amount owed to him would be deducted from
any commissions due Guy J. Quigley. Upon the termination of the contract for any
reason, Mr. Phillips is entitled to the remainder of his compensation owed him
through May 31, 2005.
George J. Longo is employed as the Chief Financial Officer of the Company
pursuant to an employment agreement dated November 5, 1996, for a term ending on
December 31, 2001. The agreement provides for a base salary of $150,000, or such
greater amount, as the Board of Directors may from time to time determine, with
annual increases over the prior year's base salary except for the final year of
the contract. In the event of his disability, Mr. Longo is to receive the full
amount of his base salary for eighteen months. Upon a change of control of the
Company, Mr. Longo is entitled to receive severance compensation equal to
forty-eight months of his current compensation. Upon early termination by the
Company without cause (as defined in the agreement), the Company is required to
pay Mr. Longo the remainder of the salary owed him through December 31, 2001.
-5-
The Company entered into an employment agreement dated as of January 1, 1997,
with Eric H. Kaytes on terms substantially similar to those of George J. Longo's
employment agreement for a term ending on December 31, 2001. Mr. Kaytes'
agreement provides for his employment by the Company as its Chief Information
Officer at a base salary of $100,000, or such greater amount, as the Board of
Directors may from time to time determine, with annual increases over the prior
year's base salary except for the final year of the contract. Mr. Kaytes is
entitled to receive severance compensation equal to twelve months of his current
compensation upon a change of control of the Company. Upon early termination by
the Company without cause (as defined in the agreement), the Company is required
to pay Mr. Kaytes the remainder of the salary owed him through December 31,
2001.
REPORTS ABOUT OWNERSHIP OF THE COMPANY'S COMMON STOCK AND COMPLIANCE
WITH SECTION 16 (a) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and greater than ten-percent
stockholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Each of Messrs. Quigley, Phillips, Longo, Kaytes, Schaum and Ms. Lewis filed on
a timely basis statements of changes in beneficial ownership of securities for
2000 as required by Section 16(a).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
For the year ended December 31, 2000, $715,800 was paid or payable under
founder's commission agreements between the Company and Guy J. Quigley and
Charles A. Phillips, who share a commission of 5% on sales collected, less
certain deductions, of the Company's Cold-Eeze(R) products.
In the ordinary course of business, the Company has sales brokerage arrangements
with ScandaSystems Ltd. whose President and major stockholder is Mr. Gary
Quigley, a relative of the Company's Chief Executive Officer. Approximately
$314,995 was paid or payable by the Company to such firm during 2000. Also, the
Company has consulting arrangements with the Kay Group, Inc. whose President and
major stockholder is Mr. David Kaytes, a relative to the Company's Chief
Information Officer. Approximately $151,037 was paid or payable by the Company
to such firm during 2000. The Company believes that the services performed by
these firms are on terms no more favorable than could have otherwise been
obtained from an unaffiliated third party.
The Company is in the process of acquiring licenses in certain countries through
related party entities. During 2000, fees amounting $251,607 have been paid to a
related entity to obtain such licenses.
PROPOSALS TO BE SUBMITTED FOR STOCKHOLDER APPROVAL
Proposal 1. ELECTION OF A BOARD OF DIRECTORS
The Directors of the Company are elected annually and hold office for the
ensuing year until the next annual meeting of stockholders and until their
successors have been duly elected and qualified. The directors are elected by
plurality of votes cast by stockholders. The Company's by-laws state that the
number of directors constituting the entire Board of Directors shall be
determined by resolution of the Board of Directors. The number of directors
currently fixed by the Board of Directors is six.
No proxy may be voted for more people than the number of nominees listed below.
Shares represented by all proxies received by the Board of Directors and not so
marked as to withhold authority to vote for any individual director (by writing
that individual director's name where indicated on the proxy) or for all
directors will be voted "FOR" the election of all the nominees named below
(unless one or more nominees are unable or unwilling to serve). The Board of
Directors knows of no reason why any such nominee would be unable or unwilling
to serve, but if such should be the case, proxies may be voted for the election
of substitute nominees selected by the Board of Directors.
-6-
The following table and the paragraphs following the table set forth information
regarding the current ages, terms of office and business experience of the
current directors and executive officers of the Company, all of whom are being
nominated for re-election to the Board of Directors:
Year First
Name Position Age Elected
------------------------------------------------------------------------------------------------------
Guy J. Quigley (1) Chairman of the Board, President, CEO 59 1989
Charles A. Phillips* (1) Executive Vice President, COO and Director 53 1989
George J. Longo Vice President, CFO and Director 54 1997
Eric H. Kaytes Vice President, CIO and Director 46 1989
Jacqueline F. Lewis* Director 55 1997
Rounsevelle W. Schaum* Director 68 2000
* Member of the audit committee (1) Member of the compensation committee
GUY J. QUIGLEY has been Chairman of the Board, President, and Chief Executive
Officer of the Company since September 1989. Prior to this date, Mr. Quigley, an
accomplished author, established and operated various manufacturing, sales,
marketing and real estate companies in the United States, Europe and the African
Continent.
CHARLES A. PHILLIPS has been Executive Vice President, Chief Operations Officer
and a Director of the Company since September 1989. Before his employment with
the Company, Mr. Phillips founded and operated KEB Enterprises, a gold and
diamond mining operation that was based in Sierra Leone, West Africa. In
addition, Mr. Phillips served as a technical consultant for Re-Tech, Inc.,
Horsham, Pennsylvania, where he was responsible for full marketing and
production of a prototype electrical device. Mr. Phillips also serves as a
director of Invicta Corporation.
GEORGE J. LONGO currently serves as Vice President, Chief Financial Officer and
Director of the Company. Mr. Longo assumed his duties as Vice President and
Chief Financial Officer for the Company in January 1997. Mr. Longo was also
appointed as a Director of the Company in March 1997. Before joining the
Company, Mr. Longo served as Chief Financial Officer of two privately held
international manufacturing firms and Manager of Corporate Accounting with the
predecessor pharmaceutical company to Aventis S.A. (NYSE-AVE), being responsible
for SEC and IRS compliance, and was involved in acquisition and general
accounting issues. Prior to that, Mr. Longo was with KPMG LLP.
ERIC H. KAYTES currently serves as Vice President, Chief Information Officer,
Secretary, Treasurer and Director of the Company. From 1989 until January 1997,
Mr. Kaytes also served as the Chief Financial Officer of the Company. Prior to
1989 and concurrent with his responsibilities for the Company, Mr. Kaytes had
been an independent programmer and designer of computer software.
JACQUELINE F. LEWIS, appointed to the Board of Directors in December 1997, is
presently Vice President and Chief Operating Officer of D. A. Lewis, Inc., a
direct mail advertising company that she co-founded in 1976. D. A. Lewis now
employs 250 people. Ms. Lewis has also served on the Board of Directors of
Suburban Community Bank since 1993.
ROUNSEVELLE W. SCHAUM, was appointed to the Board of Directors in March 2000.
Since 1993, Mr. Shaum has served as Chairman of Newport Capital Partners, Inc.,
an investment-banking firm, specializing in the private placement of equity and
convertible debt securities. In such capacity, Mr. Schaum has directed and
organized over thirty private equity placements and served on the board of
directors of numerous public and private emerging growth companies. Prior to
1993, Mr. Schaum has held senior management positions with international
manufacturing companies. He also served as the Chairman of the California Small
Business Development Corporation, a private venture capital syndicate, and was
the founder of the Center of Management Sciences, a management-consulting firm
that services multinational high technology companies and government agencies,
including NASA and the Department of Defense.
-7-
Required Vote
Directors are elected by a plurality of the votes cast, in person or by proxy,
at the Meeting. Votes withheld and broker non-votes are not counted toward a
nominee's total.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote "FOR" the election of
each of the nominees.
Meetings and Committees of the Board of Directors
For the fiscal year ended December 31, 2000, there were seven meetings of the
Board of Directors. Each of the directors attended (or participated by
telephone) more than 75% of such meetings of the Board of Directors and
Committees on which they served in 2000. During 2000, the Board of Directors
also acted by unanimous written consent in lieu of a meeting on one occasion.
The Company has three standing committees, the Audit Committee, Executive
Operating Committee and Compensation Committee. Prior to establishing these
Committees, the customary functions of such committees had been performed by the
entire Board of Directors. The Board of Directors does not presently have a
standing nominating committee, the customary functions of such committee being
performed by the entire Board of Directors. Stockholders wishing to recommend
candidates for consideration by the Board of Directors may do so by writing to
the Secretary of the Company and providing the candidate's name, biographical
data and qualifications.
The members of the Audit Committee are Messrs. Phillips, Schaum and Ms. Lewis.
Mr. Schaum, elected to the Board of Directors in March 2000, replaced Mr. Sloan
as a member of the Audit Committee after his resignation from the Board of
Directors on March 1, 2000. The Audit Committee reviews, analyzes and makes
recommendations to the Board of Directors with respect to the Company's
accounting policies, controls and statements, consults with the Company's
independent public accountants, and reviews filings containing financial
information of the Company to be made with the Securities and Exchange
Commission. The Audit Committee met one time during 2000.
The members of the Executive Operating Committee are Messrs. Quigley, Phillips,
Longo, and Kaytes. The Executive Operating Committee possesses and exercises all
the power and authority of the Board of Directors in the management and
direction of the business and affairs of the Company, except as limited by law,
and except for the power to change the membership or to fill vacancies on the
Board of Directors or the Executive Operating Committee. The Executive Operating
Committee met five times during 2000.
The members of the Compensation Committee are Messrs. Quigley and Phillips. The
Compensation Committee reviews and recommends the salary and other compensation
of officers and key employees of the Company, including non-cash benefits, and
designates the employees entitled to participate in the Company's benefits plans
and other arrangements, as from time to time constituted. The Compensation
Committee also administers the Company's Stock Option Plans and recommends the
terms of grants of stock options and the persons to whom such options shall be
granted in accordance with such plans. These recommendations are then subject to
approval by the full Board of Directors. The Compensation Committee met two
times during 2000.
Compensation of Directors
Outside directors receive compensation annualized at $10,000. In the event that
there are more than five meetings of the Board during any particular year, such
director will receive an additional $2,000 for each such meeting. In addition,
in 2000 the Board of Directors approved the grant of Options to purchase 20,000
shares of Common Stock to each of the outside directors, at the time of grant,
under the Company's 1997 Stock Option Plan. Officers of the Company receive no
compensation for their service on the Board or on any Committee.
Compensation Committee Interlocks and Insider Participation
The Board of Directors as a whole provides overall guidance and approval of the
Company's executive compensation program. All members of the Board participate
in the approval of each of the components of the
-8-
Company's executive compensation program described in the "Report on Executive
Compensation" except that no director who is also a Company employee
participates in the approval of their respective compensation. Mr. Quigley
serves on the Compensation Committee and Mr. Phillips serves on the Compensation
and Audit Committees. No other executive officer of the Company served on any
other committee or the compensation committee of another entity performing
similar functions during the fiscal year.
The report of the Audit Committee, the report of the Compensation Committee and
the performance graph that follow shall not be deemed incorporated by reference
by any general statement incorporating by reference this proxy statement or
future filings into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates the information by reference, and shall not otherwise
be deemed filed under such Acts.
Report of the Audit Committee
- - -----------------------------
The members of the Audit Committee are Messrs. Phillips, Schaum and Ms. Lewis.
Mr. Schaum and Ms. Lewis are independent as defined under the rules of NASD and
operate under a written charter adopted by the Board of Directors (Appendix B).
The only non-independent member of the Audit Committee during 2000 was Mr.
Phillips, the Company's Chief Operating Officer and Executive Vice President who
has been with the Company since 1989. As permitted under the NASD requirements,
the Board of Directors carefully considered Mr. Phillips' affiliation with the
Company and his membership on the Audit Committee and determined that based on
the need for continuity of membership and stability of the Audit Committee, it
is in the best interest of the Company and its stockholders that Mr. Phillips
continue to serve as a member of the Audit Committee.
We have reviewed and discussed with management the Company's audited financial
statements as of and for the year ended December 31, 2000.
We have discussed with the independent auditors, PricewaterhouseCoopers LLP, the
matters required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended, by the Auditing Standards Board
of the American Institute of Certified Public Accountants. Additionally, audit
fees, information technology fees, and all other service fees that were paid or
payable to PricewaterhouseCoopers LLP for 2000 were $77,500, zero, $25,496,
respectively.
We have received and reviewed written disclosures and the letter from
PricewaterhouseCoopers LLP required by Independent Standards No. 1, Independence
Discussions with Audit Committees, as amended, by the Independence Standards
Board, and have discussed with the auditors the auditor's independence.
Based on the reviews and discussions referred to above, we recommend to the
Board of Directors that the financial statements referred to above be included
in the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2000 for filing with the Securities and Exchange Commission.
Audit Committee
Charles A. Phillips
Jacqueline F. Lewis
Rounsevelle W. Schaum
Report on Executive Compensation
- - --------------------------------
General
- - -------
The Compensation Committee reviews and recommends the salary and other
compensation of officers and key employees of the Company. The Compensation
Committee also administers the Company's Stock Option Plan and recommends the
terms of grants of stock options and the persons to whom such options shall be
granted in accordance with such plan. These recommendations, as previously
indicated, are subject to approval by the full Board of Directors.
-9-
Compensation Philosophy
- - -----------------------
In reaching decisions regarding executive compensation, the Compensation
Committee as well as the full board upon approval of such recommendations,
balances the total compensation package for each executive, and makes it
variable, with sales and profits attained as well as achievement of annual and
long-term goals. Competitive levels of compensation are necessary in attracting,
rewarding, motivating, and retaining qualified management. The board also
believes that the potential for equity ownership by management is beneficial in
aligning management's and stockholders' interests in the enhancement of
stockholder value. Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), places a limit of $1,000,000 on the amount of compensation
that may be deducted by the Company in any year with respect to certain of the
Company's highest paid executives. Certain performance-based compensation that
has been approved by stockholders is not subject to the deduction limit. If
necessary, the Company may attempt to qualify certain compensation paid to
executive officers for deductibility under the Code, including Section 162(m).
However, the Company may from time to time pay compensation to its executive
officers that may not be deductible.
Compensation Program
- - --------------------
The Company has a comprehensive compensation program, which consists of cash
compensation, both fixed and variable, and equity-based compensation. Overall
compensation is predicated on industry and peer group comparisons and on
performance judgments as to the past and expected future contributions of the
individual executive officer. Specific compensation for each executive is
designed to fairly remunerate that employee of the Company for the effective
exercise of their responsibilities, their management of the business functions
for which they are responsible, their extended period of service to the Company
and their dedication and diligence in carrying out their responsibilities for
the Company.
The fixed aspect is intended to meet the requirements of the employment
contracts in effect for all of the Company's officers. See "Executive
Compensation - Royalty and Employment Agreements". Employment agreements are in
place to insure the Company of consistency of leadership and the retention of
qualified executives, and to foster a spirit of employment security, which
thereby encourages decisions that will benefit long-term stockholders. Variable
compensation is based upon the entire board adopting and approving annually,
sales and profit goals to be attained for the ensuing year.
Equity-based compensation is through options periodically granted under the 1997
Stock Option Plan. These grants are designed to directly reward and create a
proprietary interest, among the executive officers and other employees, in the
Company, which will be an incentive for these employees to work to maximize the
long-term total return to stockholders.
Option Re-pricing
- - -----------------
In May 1998, following stockholder approval of the 1997 Stock Option Plan, the
Board amended certain stock options previously granted under such plan to
certain employees of the Company, including certain options held by Messrs.
Quigley, Phillips, Longo and Kaytes. The options re-priced were approved by the
Board of Directors in light of the decline in the market value of the Common
Stock that had occurred since the options were originally granted. The Board
believed that drop in market price was due to factors unrelated to the
accomplishments and efforts of the employees whose options were re-priced and
that such re-pricing would afford these individuals with a significant incentive
that the options were originally intended to provide.
Compensation Committee
Guy J. Quigley
Charles A. Phillips
-10-
PERFORMANCE GRAPH
The following graph reflects a five-year comparison, calculated on a dividend
reinvested basis, of the cumulative total stockholder return on the Common Stock
of the Company, the NASDAQ Market Index, and a "peer group" index classified as
drug related products by Media General Financial Services ("MG Group Index").
The comparisons utilize an investment of $100 on January 1, 1995 for the Company
and the comparative indices, which then measure the values for each group at
December 31 of each year presented. There can be no assurance that the Company's
stock performance will continue with the same or similar trends depicted in the
following performance graph.
1995 1996 1997 1998 1999 2000
---- ---- ---- ---- ---- ----
THE QUIGLEY CORPORATION 100.00 1992.85 3300.57 1264.00 363.43 185.83
MG GROUP INDEX 100.00 149.80 208.39 139.52 119.81 103.51
NASDAQ MARKET INDEX 100.00 124.27 152.00 214.39 378.12 237.66
-11-
Proposal 2. APPROVAL TO INCREASE THE TOTAL STOCK SUBJECT TO THE 1997 STOCK
OPTION PLAN
At the Annual Meeting of Stockholders held on May 8, 1998, the 1997 Stock Option
Plan was approved by a majority of the shares qualified to vote.
On December 21, 2000, the Board of Directors has unanimously approved for
submission to a vote of stockholders a proposal to authorizes the increase of
total stock subject to the 1997 Stock Option Plan from its current maximum limit
of 1,500,000 shares to maximum limit of 3,000,000 shares of Common Stock
(hereinafter the 1997 Stock Option Plan as it is proposed to be amended shall be
referred to as the 1997 Plan).
On December 2, 1997, the Board of Directors had unanimously approved for
submission to a vote of stockholders a proposal to approve the 1997 Plan set
forth in Appendix A to this proxy statement. The following discussion of the
1997 Plan is qualified in its entirety by reference to Appendix A.
The purpose of the 1997 Plan is to provide additional incentive to the officers,
directors, and employees of the Company who are primarily responsible for the
management and growth of the Company, in order to strengthen their desire to
remain in the employ or retention of the Company and to stimulate their efforts
on behalf of the Company, and to retain and attract to the employ of the Company
persons of competence. The 1997 Plan provides for the grant of both "incentive
stock options" and "nonqualified stock options." Any employee shall be eligible
to receive incentive stock options or nonqualified stock options. Directors of
the Company who are not employees shall be eligible to receive nonqualified
stock options.
Administration
- - --------------
The Plan shall be administered by the Compensation Committee (the "Committee").
Replacements to the Committee shall be appointed by the Board of Directors. The
members shall serve at the pleasure of the Board.
Notwithstanding the foregoing, with respect to any options granted to directors
and "officers" (as such term is defined in Rule 16a-1 of the Securities and
Exchange Commission ("Rule 16a-1"), if and as "Rule 16b-3 is then in effect) of
the Company, the Plan shall be administered by the entire Board, unless the
Committee at the time of grant, award or other acquisition under the Plan of
Options to any such person consists of two or more directors of the Company that
are "Non-Employee Directors" (as such term is defined in Rule 16b-3 of the
Securities and Exchange Commission ("Rule 16b-3"), if and as Rule 16b-3 is then
in effect). In addition, any options granted to the Company's Chief Executive
Officer or to any of the Company's other four most highly compensated officers
that are intended to qualify as performance-based compensation under Section 162
(m) of the Code may only be granted by a Committee consisting of two or more
directors of the Company that are "Outside Directors" (as such term is defined
in Section 162 (m) of the Code).
Common Stock Subject to the 1997 Plan
- - -------------------------------------
The 1997 Plan currently authorizes the issuance of a maximum of 1,500,000 shares
of Common Stock, which maximum amount the Board of Directors proposes to
increase to 3,000,000. On December 21, 2000 the Board of Directors has
unanimously approved for submission to a vote of stockholders a proposal to
authorize the increase of total stock subject to the 1997 Plan from its current
maximum limit of 1,500,000 shares to maximum limit of 3,000,000 shares of Common
Stock.
The maximum number of shares that may be subject to options granted under the
1997 Plan to any individual in any calendar year may not exceed 500,000, and the
method of counting such shares shall conform to any requirements applicable to
"performance-based" compensation under Section 162 (m) of the Code. If any
option under the 1997 Plan shall expire or terminate for any reason, without
having been exercised in full, the unpurchased shares subject thereto shall
again be available for the purposes of the 1997 Plan.
Options to purchase an aggregate of 500,000 shares of Common Stock were granted
by the Board in December 1997 and January 1998 under the 1997 Plan. Of such
options, (i) Guy J. Quigley was granted an option to purchase an aggregate of
100,000 shares, (ii) Charles A. Phillips was granted an option to purchase an
aggregate of 100,000 shares, (iii) George J. Longo was granted an option to
purchase an aggregate of 125,000 shares, and (iv) Eric H. Kaytes was granted an
option to purchase an aggregate of 100,000 shares. All of such options have
become effective upon the approval of the 1997 Plan.
-12-
Exercise Price and Terms
- - ------------------------
The option price per share applicable to options granted under the 1997 Plan
shall be determined by the Committee, but (i) as to an incentive stock option
shall not be less than 100% of the fair market value per share of Common Stock
on the date such option is granted and (ii) as to a non-qualified stock option,
shall not be less than 80% of the fair market value on the date such option is
granted. If an option granted to the Company's Chief Executive Officer or to any
of the Company's other four most highly compensated officers is intended to
qualify as "performance-based" compensation under Section 162 (m) of the Code,
the exercise price of such option shall not be less than 100% of the fair market
value on the date such option is granted. The Committee shall fix the term of
each option, provided that the maximum length of the term of each option granted
under the 1997 Plan shall be ten years.
Federal Income Tax Consequences
- - -------------------------------
Incentive Stock Options. Incentive stock options granted under the 1997 Plan are
intended to be "incentive stock options" within the meaning of Section 422 of
the Code. Under present law, the grantee of an incentive stock option will not
realize taxable income upon the grant or the exercise of the incentive stock
option and the Company will not receive an income tax deduction at either such
time. However, if the incentive stock option is exercised more than three (3)
months after the optionee has left the employ of the Company, the optionee will
recognize taxable income equal to the difference between the fair market value
of the Common Stock at the time of exercise and the sum of the optionee's basis
in the option (if any) plus any consideration paid by the optionee upon such
exercise. Generally, if the optionee was an employee of the Company at any time
during the period beginning on the date the option is granted and ending on the
date three (3) months before the date such option is exercised and the optionee
does not sell the Common Stock acquired upon exercise of an incentive stock
option within either (i) two years after the grant of the incentive stock option
or (ii) one year after the date of exercise of the incentive stock option, the
gain upon a subsequent sale of the Common Stock will be taxed as long-term
capital gain. If the optionee, within either of the above periods, disposes of
the Common Stock acquired upon exercise of the incentive stock option ( a
"disqualifying disposition"), the optionee must recognize as compensation
income, the gain upon such disposition. Generally, the gain would be equal to
the difference between the option's exercise price and the Common Stock's fair
market value at the time of exercise. This compensation income will be added to
the option's basis for purposes of determining the capital gain, as discussed
below, on the disposition of the acquired Common Stock. If the price that the
optionee received on the disqualifying dispositions of the Common Stock would
result in a loss to the optionee if the foregoing tax rule regarding
disqualifying dispositions were applied, then the amount of compensation income
that the optionee would recognize would be the excess, if any, of the amount
realized on the sale over the basis of the acquired Common Stock. In such event,
the Company would be entitled to a corresponding income tax deduction equal to
the amount recognized as compensation income by the optionee. The gain in excess
of such amount recognized by the optionee as compensation income would be taxed
as long-term capital gain or short-term capital gain (subject to the holding
period requirements for long-term or short-term capital gain treatment).
The exercise of an incentive stock option will generally result in the excess of
the Common Stock's fair market value on the date of exercise over the exercise
price being included in the optionee's alternative minimum taxable income
("AMTI"). If, however, a disqualifying disposition occurs in the year in which
the option is exercised, the maximum amount that will be included in AMTI is the
gain on the disposition of the Common Stock. Should there be a disqualifying
disposition in a year other that the year of exercise, the income resulting from
the disqualifying disposition will not be considered income for alternative
minimum tax purposes. In addition, the basis of the Common Stock for determining
gain or loss for alternative minimum tax purposes will be the exercise price for
the Common Stock increased by the amount that AMTI was increased due to the
earlier exercise of the Common Stock. Liability for the alternative minimum tax
is a complex determination and depends upon an individual's overall tax
situation. Before exercising an incentive stock option, an optionee should
discuss the possible application of the alternative minimum tax with his tax
advisor.
Non-Qualified Stock Options. Upon exercise of a non-qualified stock option
granted under the Plan, the optionee will recognize ordinary income in an amount
equal to the excess of the fair market value of the Common Stock received over
the exercise price of such Common Stock. That amount will increase the
optionee's basis in the Common Stock acquired pursuant to the exercise of the
option. Upon a subsequent sale of the Common Stock, the optionee will recognize
short term or long term gain or loss depending upon his holding period for the
Common Stock and upon the subsequent appreciation or depreciation in the market
value of the Common Stock. The Company will be allowed an income tax deduction
for the amount recognized as compensation income by the optionee upon the
optionee's exercise of the option.
-13-
NEW PLAN BENEFITS (1)
1997 STOCK OPTION PLAN (2)
Name and Position Dollar Value Number of Units
----------------------------------------------------- ------------------------------ --------------------------
Guy J. Quigley
Chairman of the Board,
President, Chief Executive Officer N/D N/D
Executive Group N/D N/D
Non-Executive Director Group N/D N/D
Non-Executive Employee Group N/D N/D
(1) N/D means that the amount is not determinable.
(2) As benefits are not determinable pursuant to Instruction 3 of Item
10 of Regulation Section 240.14a-101 of the Exchange Act, benefits
stated are the number of shares covered by options granted to each
of the groups of employees under the 1997 Plan. Such grants are
subject to stockholder approval of the 1997 Plan. The future value,
if any, is not determinable.
Required Vote
- - -------------
The affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by Proxy, is required to approve the increase to the total
stock subject to the 1997 Plan. An abstention, withholding of authority to vote
or broker non-vote, therefore, will not have the same legal effect as an
"against" vote and will not be counted in determining whether the proposal has
received the requisite stockholder vote.
Recommendation of the Board of Directors
- - ----------------------------------------
The Board of Directors of the Company recommends a vote "FOR" the approval of
the increase to the total stock subject to the 1997 Plan.
-14-
Proposal 2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed PricewaterhouseCoopers LLP as the Company's
independent public auditor for the fiscal year ending December 31, 2001.
Although the selection of auditors does not require ratification, the Board of
Directors has directed that the appointment of PricewaterhouseCoopers LLP be
submitted to stockholders for ratification due to the significance of their
appointment to the Company. A representative of PricewaterhouseCoopers LLP is
expected to be present at the Meeting. Such representative will have an
opportunity to make a statement if so desired, and will be available to respond
to appropriate questions from stockholders.
Required Vote
- - -------------
The affirmative vote of the holders of a majority of the shares of Common Stock
present, in person or by Proxy is required for ratification of the appointment
of PricewaterhouseCoopers LLP as independent auditors of the Company. An
abstention, withholding of authority to vote or broker non-vote, therefore, will
not have the same legal effect as an "against" vote and will not be counted in
determining whether the proposal has received the requisite stockholder vote.
Recommendation of the Board of Directors
- - ----------------------------------------
The Board of Directors of the Company recommends a vote "FOR" the ratification
of the appointment of PricewaterhouseCoopers LLP as the Company's independent
auditors for the year ending December 31, 2001.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the Proxy Statement to be
furnished to all stockholders entitled to vote at the next Annual Meeting of
Stockholders of the Company must be received at the Company's principal
executive offices not later than December 5, 2001. In order to curtail
controversy as to the date on which a proposal was received by the Company, it
is suggested that proponents submit their proposals by Certified Mail - Return
Receipt Requested.
With respect to any stockholder proposals to be presented at the next annual
meeting which are not included in the Company's proxy materials, management
proxies for such meeting will be entitled to exercise their discretionary
authority to vote on such proposals notwithstanding that they are not discussed
in the proxy materials unless the proponent notifies the Company of such
proposal by not later than February 19, 2002.
EXPENSES AND SOLICITATION
All expenses in connection with this solicitation will be borne by the Company.
In addition to the use of the mail, proxy solicitation may be made by telephone,
telegraph and personal interview by officers, directors and employees of the
Company. The Company will, upon request, reimburse brokerage houses and persons
holding shares in the names of their nominees for their reasonable expenses in
sending soliciting material to their principals.
OTHER BUSINESS
The Board of Directors knows of no business that will be presented for
consideration at the Meeting other than those items stated above. If any other
business should come before the Meeting, votes may be cast, pursuant to proxies,
in respect to any such business in the best judgment of the person or persons
acting under the proxies.
Dated: March 30, 2001 THE QUIGLEY CORPORATION
By: /s/ ERIC H. KAYTES
---------------------------
ERIC H. KAYTES, Secretary
-15-
Appendix A
1997 STOCK OPTION PLAN
OF
THE QUIGLEY CORPORATION
1. Purpose of the Plan.
This 1997 Stock Option Plan (the "Plan") is intended as an
incentive, to retain in the employ or as directors, of The Quigley Corporation
(the "Company") and any Subsidiary of the Company (within the meaning of Section
424(f) of the Internal Revenue Code of 1986, as amended (the "Code")), persons
of training, experience and ability, to attract new employees, and directors
whose services are considered valuable, to encourage the sense of proprietorship
and to stimulate the active interest of such persons in the development and
financial success of the Company and its Subsidiaries.
It is further intended that certain options granted pursuant to the
Plan shall constitute incentive stock options within the meaning of Section 422
of the Code ("Incentive Options") while certain other options granted pursuant
to the Plan shall be nonqualified stock options ("Nonqualified Options").
Incentive Options and the Nonqualified Options are hereinafter referred to
collectively as "Options."
The Company intends that the Plan meet the requirements of Rule
16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan will be exempt from the operation of Section
16(b) of the Exchange Act. In all cases, the terms, provisions, conditions and
limitations of the Plan shall be construed and interpreted consistent with the
Company's intent as stated in this Section 1.
2. Administration of the Plan.
The Plan shall be administered by a committee initially consisting
of Mr. Guy J. Quigley, and Mr. Charles A. Phillips (the "Committee").
Replacements on the Committee shall be appointed by the Board of Directors of
the Company (the "Board"). The members of the Committee shall serve at the
pleasure of the Board. Notwithstanding the foregoing, with respect to any
Options granted to directors and "officers" (as such term is defined in Rule
16a-1 of the Securities and Exchange Commission ("Rule 16a-1"), if and as Rule
16b-3 is then in effect) of the Company, the Plan shall be administered by the
entire Board, unless the Committee at the time of grant, award or other
acquisition under the Plan of Options to any such person consists of two or more
directors of the Company that are "Non-Employee Directors" (as such term is
defined in Rule 16b-3 of the Securities and Exchange Commission ("Rule 16b-3"),
if and as Rule 16b-3 is then in effect).
The Committee, subject to Section 3 hereof, shall have full power
and authority to designate recipients of Options, to determine the terms and
conditions of respective Option agreements (which need not be identical) and to
interpret the provisions and supervise the administration of the Plan. Subject
to Section 7 hereof, the Committee shall have the authority, without limitation,
to designate which Options granted under the Plan shall be Incentive Options and
which shall be Nonqualified Options. To the extent any Option does not qualify
as an Incentive Option, it shall constitute a separate Nonqualified Option.
Subject to the provisions of the Plan, the Committee shall interpret
the Plan and all Options granted under the Plan shall make such rules as it
deems necessary for the proper administration of the Plan, make all other
determinations necessary or advisable for the administration of the Plan and
correct any defects or supply any omission or reconcile any inconsistency in the
Plan or in any Options granted under the Plan in the manner and to the extent
that the Committee deems desirable to carry the Plan or any Options into effect.
The act or determination of a majority of the Committee shall be deemed to be
the act or determination of the Committee and any decision reduced to writing
and signed by all of the members of the Committee shall be fully effective as if
it had been made by a majority at a meeting duly held. Subject to the provisions
of the Plan, any action taken or determination made by the Committee pursuant to
this and the other paragraphs of the Plan shall be conclusive on all parties.
In the event that for any reason the Committee is unable to act or
if the Committee at the time of any grant, award or other acquisition under the
Plan of Options or Stock as hereinafter defined does not consist of two or more
Non-Employee Directors, or if there shall be no such Committee, then the Plan
shall be administered by the Board and any such grant, award or other
acquisition may be approved or ratified in any other manner contemplated by
subparagraph (d) of Rule 16b-3.
Notwithstanding anything herein to the contrary, any options granted
to the Company's Chief Executive Officer or to any of the Company's other four
most highly compensation officers that are intended to qualify as
performance-based compensation under Section 162(m) of the Code may only be
granted by a Committee consisting of two or more directors of the Company that
are "Outside Directors" (as such term is defined in Section 162(m) of the Code).
3. Designation of Optionees.
The persons eligible for participation in the Plan as recipients of
Options ("Optionees") shall include full-time and part-time employees, officers
and directors of the Company or any Subsidiary; provided that Incentive Options
may only be granted to employees of the Company and the Subsidiaries. In
selecting Optionees, and in determining the number of shares to be covered by
each Option granted to Optionees, the Committee may consider the office or
position held by the Optionee, the Optionee's degree of responsibility for and
contribution to the growth and success of the Company or any Subsidiary, the
Optionee's length of service, promotions, potential and any other facts to which
the Committee may consider relevant. Subject to the next sentence, an employee
who has been granted an Option hereunder may be granted an additional Option or
Options, if the Committee shall so determine.
4. Stock Reserved for the Plan.
Subject to adjustment as provided in Section 7 hereof, a total of
three million (3,000,000) shares of common stock, $.0005 par value ("Stock"), of
the Company shall be subject to the Plan. The shares of Stock subject to the
Plan shall consist of unissued shares or previously issued shares reacquired and
held by the Company or any Subsidiary of the Company, and such amount of shares
of Stock shall be and is hereby reserved for such purpose. Any of such shares of
Stock which may remain unsold and which are not subject to outstanding Options
at the termination of the Plan shall cease to be reserved for the purpose of the
Plan, but until termination of the Plan the Company shall at all times reserve a
sufficient number of shares of Stock to meet the requirements of the Plan.
Should any Option expire or be canceled prior to its exercise in full or should
the number of shares of Stock to be delivered upon the exercise in full of any
Option be reduced for any reason, the shares of Stock theretofore subject to
such Option may again be subject to an Option under the Plan.
Notwithstanding the foregoing, with respect to any options that are
intended to qualify as performance-based compensation under Section 162(m) of
the Code, the maximum number of shares of stock that may be subject to options
granted under the Plan to any individual in any calendar year shall not exceed
500,000, and the method of counting such shares shall conform to any
requirements applicable to performance-based compensation under Section 162(m)
of the Code.
5. Terms and Conditions of Options.
Options granted under the Plan shall be subject to the following
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The purchase price of each share of
Stock purchasable under an Option shall be determined by the
Committee at the time of grant but shall not be less than 100% of
the Fair Market Value (as defined below) of such share of Stock on
the date the Option is granted in the case of an Incentive Option
and not less than 80% of the fair market value of such share of
Stock on the date the Option is granted in the case of a
non-Incentive Option; provided, however, that with respect to an
Incentive Option, in the case of an Optionee who, at the time such
Option is granted, owns (within the meaning of Section 424(d) of the
Code) more than 10% of the total combined voting power of all
classes of stock of the Company or of any Subsidiary, then the
purchase price per share of stock shall be at least 110% of the Fair
Market Value per share of Stock at the time of grant, provided,
however, that if an option granted to the Company's Chief Executive
Officer or to any of the Company's other four most highly
compensation officers is intended to qualify as performance-based
compensation under Section 162(m) of the Code, the exercise price of
such Option shall not be less than 100% of the Fair Market Value of
such share of Stock on the date the Option is granted. The purchase
price of each share of Stock purchasable under a Nonqualified Option
shall not be less than 80% of the Fair Market Value of such share of
Stock on the date the Option is granted. The exercise price for each
incentive stock option shall be subject to adjustment as provided in
Section 7 below. The fair market value ("Fair Market Value") means
the closing price of publicly traded shares of Stock on the national
securities exchange on which shares of Stock are listed (if the
shares of Stock are so listed) or on the Nasdaq National Market (if
the shares of stock are regularly quoted on the Nasdaq National
Market), or, if not so listed or regularly quoted, the mean between
the closing bid and asked prices of publicly traded shares of Stock
in the over-the-counter market, or, if such bid and asked prices
shall not be available, as reported by any nationally recognized
quotation service selected by the Company, or as determined by the
Committee in a manner
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consistent with the provisions of the Code. Anything in this Section
5(a) to the contrary notwithstanding, in no event shall the purchase
price of a share of Stock be less than the minimum price permitted
under the rules and policies of the securities exchange or automated
quotation system on which the shares of Stock are listed.
(b) Option Term. The term of each Option shall be fixed
by the Committee, but no Option shall be exercisable more than ten
years after the date such Option is granted; provided, however, that
in the case of an Optionee who, at the time such Option is granted,
owns more than 10% of the total combined voting power of all classes
of stock of the Company or any Subsidiary, then such Incentive Stock
Option shall not be exercisable with respect to any of the shares
subject to such Incentive Stock Option later than the date which is
five years after the date of grant.
(c) Exercisability. Subject to paragraph (j) of this
Section 5, Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the
Committee at grant.
(d) Method of Exercise. Options may be exercised in
whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price, in
cash, by check or such other instrument as may be acceptable to the
Committee, including a cashless exercise. As determined by the
Committee, in its sole discretion, at or after grant, payment in
full or in part may also be made in the form of Stock owned by the
Optionee (based on the Fair Market Value of the Stock owned by the
Optionee (based on the Fair Market Value of the Stock on the trading
day before the Option is exercised); provided, however, that if such
Stock was issued pursuant to the exercise of an Incentive Option
under the Plan, the holding requirements for such Stock under the
Code shall first have been satisfied. An Optionee shall have the
rights to dividends or other rights of a shareholder with respect to
shares subject to the Option after (i) the Optionee has given
written notice of exercise and has paid in full for such shares and
(ii) becomes a shareholder of record.
(e) Transferability of Options. No Option granted
hereunder shall be transferable otherwise than by (i) will, (ii) the
laws of descent and distribution or (iii) pursuant to a qualified
domestic relations order as defined by the Internal Revenue Code or
Title 1 of the Employee Retirement Income Security Act of 1986, as
amended, or the rules and regulations promulgated thereunder;
provided however, that to the extent the option agreement provisions
do not disqualify such option for exemption under Rule 16b-3 under
the Act of 1934, as amended, Nonqualified Options may be
transferable during an Optionee's lifetime to immediate family
members of an optionee, partnerships in which the only partners are
members of the Optionee's immediate family, and trusts established
solely for the benefit of such immediate family members.
(f) Termination by Death. Unless otherwise determined by
the Committee at grant, if any Optionee's employment with the
Company or any Subsidiary terminates by reason of death, the Option
may thereafter be immediately exercised, to the extent then
exercisable (or on such accelerated basis as the Committee shall
determine at or after grant), by the legal representative of the
estate or by the legatee or the Optionee under the will of the
Optionee, for a period of one year from the date of such death or
until the expiration of the stated term of such Option as provided
under the Plan, whichever period is shorter.
(g) Termination by Reason of Disability. Unless
otherwise determined by the Committee at grant, if any Optionee's
employment with the Company or any Subsidiary terminates by reason
of total and permanent disability as determined under the Company's
long term disability policy ("Disability"), any Option held by such
Optionee may thereafter be exercised, to the extent it was
exercisable at the time of termination due to Disability (or on such
accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after one year from the date of
such termination of employment or the expiration of the stated term
of such Option, whichever period is shorter; provided, however,
that, if the Optionee dies within such one-year period, any
unexercised Option held by such Optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of
death for a period of one year from the date of such death or for
the stated term of such Option, whichever period is shorter.
(h) Other Termination. Unless otherwise determined by
the Committee at grant, if any Optionee's employment with the
Company or any Subsidiary terminates for any reason other than
death, or disability, any Option held by such Optionee may
thereafter be exercised to the extent it was exercisable at the time
of such termination of employment (or on such accelerated basis as
the Committee shall determine at or after grant), but may not be
exercised after one year from the date of such termination of
employment or the expiration of the stated term of such Option,
whichever period is shorter. Notwithstanding the foregoing, if any
Optionee's employment
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with the Company or any Subsidiary terminates for Cause, such Option
may not be exercised following the expiration of three months after
the date of such termination of employment. "Cause" shall mean a
felony conviction or the failure of an Optionee to contest
prosecution for a felony or an Optionee's willful misconduct or
dishonesty, any of which is harmful to the business or reputation of
the Company or any Subsidiary. The transfer of an Optionee from the
employ of the Company to a Subsidiary, or vice versa, or from one
Subsidiary to another, shall not be deemed to constitute a
termination of employment for purposes of the Plan.
Notwithstanding anything herein to the contrary,
Incentive Options may not be exercised after three months from the
date of such termination of employment or the expiration of the
stated term of such Option, whichever period is shorter; provided,
however, that, if the Optionee dies within such three-month period,
any unexercised Option held by such Optionee shall thereafter be
exercisable, to the extent to which it was exercisable at the time
of death, for a period of one year from the date of such death or
for the stated term of such Option, whichever period is shorter.
(i) Limit on Value of Incentive Option. The aggregate
Fair Market Value, determined as of the date the Option is granted,
of the Stock for which Incentive Options are exercisable for the
first time by any Optionee during any calendar year under the Plan
(and/or any other stock option plans of the Company or any
Subsidiary) shall not exceed $100,000.
(j) Disposition of Incentive Option Shares. The stock
option agreement evidencing any Incentive Options granted under this
Plan shall provide that if the Optionee makes a disposition, within
the meaning of Section 424(c) of the Code and regulations
promulgated thereunder, of any share or shares of Stock issued to
him pursuant to his exercise of an Incentive Option granted under
the Plan within the two-year period commencing on the day after the
date of the grant of such Incentive Option or within a one-year
period commencing on the day after the date of transfer of the share
or shares to him pursuant to the exercise of such Incentive option,
he shall, within ten days of such disposition, notify the Company
thereof and immediately deliver to the Company any amount of federal
income tax withholding required by law.
6. Term of Plan.
No Option shall be granted pursuant to the Plan on or after December 2, 2007,
but Options granted may extend beyond that date.
7. Capital Change of the Company.
In the event of any merger, reorganization or consolidation of the
Company with one or more corporations as a result of which the Company is not
the surviving corporation, or upon a sale of substantially all of the property
or more than 80% of the then-outstanding shares of Stock of the Company to
another corporation, all Options granted under the Plan shall immediately vest.
In the event of a stock dividend or recapitalization, or other change in
corporate structure affecting the Stock not covered in the first sentence of
this Section 7 (or in the event of a merger, reorganization or consolidation
where the Optionee has not held the Option for at last six months), the
Committee shall make an appropriate and equitable adjustment in the number and
kind of shares reserved for issuance under the Plan and in the number and option
price of shares subject to outstanding Options granted under the Plan, to the
end that after such event each Optionees's proportionate interest shall be
maintained as immediately before the occurrence of such event.
8. Proportionate Adjustments.
If the outstanding shares of Stock are increased, decreased, changed
into or exchanged into a different number or kind of shares of Stock or
securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an appropriate and proportionate adjustment shall be made
to the maximum number and kind of shares of Stock as to which Options may be
granted under this Plan. A corresponding adjustment changing the number or kind
of shares of Stock allocated to unexercised Options or portions thereof, which
shall have been granted prior to any such change, shall likewise be made. Any
such adjustment in the outstanding Options shall be made without change in the
purchase price applicable to the unexercised portion of the Option with a
corresponding adjustment in the exercise price of the shares of Stock covered by
the Option. Notwithstanding the foregoing, there shall be no adjustment for the
issuance of shares of Stock on conversion of notes, preferred stock or exercise
of warrants or shares of Stock issued by the Board for such consideration as the
Board deems appropriate.
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9. Purchase for Investment.
Unless the Options and shares covered by the Plan have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or the Company has determined that such registration is unnecessary, each person
exercising an Option under the Plan may be required by the Company to give a
representation in writing that he is acquiring the shares for his own account
for investment and not with a view to, or for sale in connection with, the
distribution of any part thereof.
10. Taxes.
The Company may make such provisions as it may deem appropriate,
consistent with applicable law, in connection with any Options granted under the
Plan with respect to the withholding of any taxes or any other tax matters.
11. Effective Date of Plan.
The Plan shall be effective on December 2, 1997 (the date that it
was approved by the Board), provided, however, that the Plan shall subsequently
be approved by majority vote of the Company's shareholders not later than
December 1, 1998.
12. Amendment and Termination.
The Board may amend, suspend, or terminate the Plan, except that
no amendment shall be made which would impair the right of any Optionee under
any Option theretofore granted without his consent, and except that no amendment
shall be made which, without the approval of the shareholders, would:
(a) materially increase the number of shares which may be
issued under the Plan, except as is provided in Sections 7 and 8;
(b) materially increase the benefits accruing to the
Optionees under the Plan;
(c) materially modify the requirements as to eligibility for
participation in the Plan;
(d) decrease the exercise price of an Incentive Option to
less than 100% of the Fair Market Value on the date of grant thereof
or the exercise price of a Nonqualified option to less than 80% of
the Fair Market Value on the date of grant thereof; or
(e) extend the Option term provided for in Section 5(b).
The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair
the rights of any Optionee without his consent. The Committee may
also substitute new Options for previously granted Options,
including options granted under other plans applicable to the
participant and previously granted Options having higher option
prices, upon such terms as the Committee may deem appropriate.
13. Government Regulations.
The Plan, and the granting and exercise of Options hereunder,
and the obligation of the Company to sell and deliver shares under such Options,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required.
14. General Provisions.
(a) Certificates. All certificates for shares of Stock
delivered under the Plan shall be subject to such stock transfer
orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which
the Stock is then listed, and any applicable Federal or state
securities law, and the Committee may cause a legend or legends to
be placed on any such certificates to make appropriate reference to
such restrictions.
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(b) Employment Matters. The adoption of the Plan shall
not confer upon any Optionee of the Company or any Subsidiary, any
right to continued employment (or, in case the Optionee is also a
director, continued retention as a director) with the Company or a
Subsidiary, as the case may be, nor shall it interfere in any way
with the right of the Company or any Subsidiary to terminate the
employment of any of its employees at any time.
(c) Limitation of Liability. No member of the Board or
the Committee, or any officer or employee of the Company acting on
behalf of the Board or the Committee, shall be personally liable for
any action, determination, or interpretation taken or made in good
faith with respect to the Plan, and all members of the Board of the
Committee and each and any officer or employee of the Company acting
on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such
action, determination or interpretation.
(d) Registration of Stock. Notwithstanding any other
provision in the Plan, no Option may be exercised unless and until
the Stock to be issued upon the exercise thereof has been registered
under the Securities Act and applicable state securities laws, or
are, in the opinion of counsel to the Company, exempt from such
registration. The Company shall not be under any obligation to
register under applicable federal or state securities laws any Stock
to be issued upon the exercise of any Option granted hereunder, or
to comply with an appropriate exemption from registration under such
laws in order to permit the exercise of an Option and the issuance
and sale of the Stock subject to such Option, however, the Company
may in its sole discretion register such Stock at such time as the
Company shall determine. If the Company chooses to comply with such
an exemption from registration, the Stock issued under the Plan may,
at the direction of the Committee, bear an a appropriate restrictive
legend restricting the transfer or pledge of the Stock represented
thereby, and the Committee may also give appropriate stop-transfer
instructions to the transfer agent to the Company.
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Appendix B
THE QUIGLEY CORPORATION
AUDIT COMMITTEE CHARTER
The Audit Committee is appointed by the Board to assist the Board in monitoring
(1) the integrity of the financial statements, policies and the internal
financial controls of the Company, (2) the compliance by the Company with legal
and regulatory requirements, (3) the independence and performance of the
Company's external auditors, and (4) any other items as required by the full
Board of Directors
The members of the Audit Committee shall, or within a reasonable period of
joining the Committee, meet the independence, number of members, and experience
requirements of NASD and NASDAQ Stock Market, Inc. The members of the Audit
Committee shall be recommended and appointed by the entire Board until such time
that the Company has a Nominating Committee who will then make such
recommendations. The Members of the Committee shall serve at the pleasure of the
Board with no fixed term of service.
The Audit Committee shall have the authority to recommend special legal,
accounting or other consultants to advise the Committee. The Audit Committee may
request any officer or employee of the Company or the Company's outside counsel
or independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall make periodic reports to the Board.
The Audit Committee shall:
1. Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
2. Review the annual audited financial statements with management, including
major issues regarding accounting and auditing principles and practices as
well as the adequacy of internal financial controls that could
significantly affect the Company's financial statements.
3. Discuss with management and the independent auditor the significant
financial reporting issues and judgments made in connection with the
preparation of the Company's financial statements.
4. Review with management and the independent auditor the Company's quarterly
financial statements prior to filing Form 10-Q.
5. Meet periodically in person or via telephone with management to review the
Company's major financial risk exposures or other issues and the steps
management has taken to monitor and control such exposures.
6. Review major changes to the Company's accounting principles and practices
as suggested by the independent auditor or management.
7. Recommend to the Board the appointment of the independent auditor, which
firm is ultimately accountable to the Audit Committee and the Board.
8. Review the estimated annual audit fee and major components of such fees
with the independent auditor.
9. Receive periodic reports, or at least annually, from the independent
auditor regarding the auditor's independence, discuss such reports with
the auditor, and if so determined by the Audit Committee, recommend that
the Board take appropriate action to satisfy itself of the independence of
the auditor.
10. Evaluate together with the Board the performance of the independent
auditor and, if so determined by the Audit Committee, recommend that the
Board replace the independent auditor.
11. Meet with the independent auditor to review the planning and staffing of
the audit.
12. Obtain from the independent auditor assurance that it has informed the
Company's management and Audit Committee concerning any information
indicating any acts which may have occurred that could have a material
effect on the Company's financial statements.
13. Discuss with management and the independent auditor any condition, which
comes to their attention indicating that the Company's subsidiaries and
affiliated entities, domestic and foreign, are not conforming to
applicable legal requirements of the Company's Acceptable Code of Conduct.
14. Discuss with the independent auditor the matters required to be discussed
by Statement on Auditing Standards No. 61 relating to the conduct of the
audit and quarterly reviews.
15. Review with the independent auditor any problems or difficulties the
auditor may have encountered and any management letter provided by the
auditor and the Company's response to that letter. Such review should
include, among other things, any difficulties encountered in the course of
the audit work, including any restrictions on the scope of activities or
access to required information.
16. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement.
17. Advise the Board with respect to the Company's policies and procedures
regarding compliance with applicable laws and regulations and with the
Company's Acceptable Code of Conduct.
18. Review with the Company's general counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators or
governmental agencies.
19. Meet a least annually with the chief financial officer and the independent
auditor in separate executive sessions.
20. Maintain minutes of formal Audit Committee meetings (not separate
executive sessions) and report findings to the full Board of Directors.
While the Audit Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Audit Committee to plan or conduct audits or
to determine that the Company's financial statements are complete and materially
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of management and the independent auditor. Nor is it
the duty of the Audit Committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditor or to
assure compliance with laws and regulations and the Company's Acceptable Code of
Conduct.
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