SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1)
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-12.
COLOR IMAGING, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
--------------------------------------------------------------------------------
(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:
---------------------------------------------------------------------
(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:
---------------------------------------------------------------------
(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:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
---------------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------------
COLOR IMAGING, INC.
4350 PEACHTREE INDUSTRIAL BOULEVARD
SUITE 100
NORCROSS, GEORGIA 30071
MAY 10, 2002
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of Color Imaging, Inc. ("Color Imaging"), which will be held
at 10:00 a.m., local time, on June 10, 2002, at the Hilton Hotel, Atlanta NE,
5993 Peachtree Industrial Blvd, Norcross, GA 30092. All holders of Color
Imaging's outstanding common stock as of the close of business on April 19, 2002
are entitled to vote at the annual meeting. Enclosed is a copy of the Notice of
Annual Meeting of Stockholders, proxy statement and proxy card.
We hope you will be able to attend the annual meeting. Whether or not you
expect to attend, it is important that you complete, sign, date and return the
proxy card in the enclosed envelope in order to make certain that your shares
will be represented at the annual meeting.
Sincerely,
/s/ MORRIS E. VAN ASPEREN
Morris E. Van Asperen
Secretary
COLOR IMAGING, INC.
4350 PEACHTREE INDUSTRIAL BOULEVARD
SUITE 100
NORCROSS, GEORGIA 30071
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 10, 2002
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Color
Imaging, Inc. will be held at 10:00 a.m., local time, on June 10, 2002, at the
Hilton Hotel, Atlanta NE, 5993 Peachtree Industrial Blvd, Norcross, GA 30092,
for the following purposes:
1. To elect directors until their respective successors are elected and
qualified.
2. To ratify the selection of Lazar Levine & Felix, LLP as Color Imaging's
independent accountants for the year ending December 31, 2002.
3. To approve the increase in the authorized shares of common stock of Color
Imaging from 20 million to 30 million.
4. To transact such other business as may properly come before the annual
meeting or any adjournment thereof.
The board of directors has fixed the close of business on April 19, 2002,
as the record date for the determination of stockholders entitled to notice of
and to vote at the annual meeting and all adjourned meetings thereof.
By Order of the Board of Directors
/s/ MORRIS E. VAN ASPEREN
Morris E. Van Asperen
Secretary
Dated: May 10, 2002
Please Complete, Date, Sign And Return The Enclosed Proxy Card In The Return
Envelope As Promptly As Possible, Whether Or Not You Plan To Attend The Annual
Meeting. If You Later Desire To Revoke Your Proxy For Any Reason, You May Do So
In The Manner Described In The Attached Proxy Statement.
COLOR IMAGING, INC.
4350 PEACHTREE INDUSTRIAL BOULEVARD
SUITE 100
NORCROSS, GEORGIA 30071
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the board of directors of Color Imaging, Inc. ("Color Imaging")
for use at the annual meeting of Stockholders (the "Annual Meeting") to be held
at 10:00 a.m., local time, on June 10, 2002, at the Hilton Hotel, Atlanta NE,
5993 Peachtree Industrial Blvd, Norcross, GA 30092, and at any adjournment
thereof. When such proxy is properly executed and returned, the shares it
represents will be voted in accordance with any directions noted thereon. Any
stockholder giving a proxy has the power to revoke it at any time before it is
voted by written notice to the Secretary of Color Imaging or by issuance of a
subsequent proxy. In addition, a stockholder attending the annual meeting may
revoke his or her proxy and vote in person if he or she desires to do so, but
attendance at the annual meeting will not of itself revoke the proxy.
At the close of business on April 19, 2002, the record date for determining
stockholders entitled to notice of and to vote at the annual meeting, Color
Imaging had issued and outstanding 10,099,880 shares of common stock. Each share
of common stock entitles the holder of record thereof to one vote,
non-cumulative, on any matter coming before the annual meeting. Only
stockholders of record at the close of business on April 19, 2002 are entitled
to notice of and to vote at the annual meeting or any adjournment thereof.
The enclosed Proxy, when properly signed, also confers discretionary
authority with respect to amendments or variations to the matters identified in
the Notice of Annual Meeting and with respect to other matters which may be
properly brought before the annual meeting. At the time of printing this proxy
statement, the management of Color Imaging is not aware of any other matters to
be presented for action at the annual meeting. If, however, other matters which
are not now known to the management should properly come before the annual
meeting, the proxies hereby solicited will be exercised on such matters in
accordance with the best judgment of the proxy holders.
Shares represented by executed and unrevoked proxies will be voted in
accordance with the instructions contained therein or, in the absence of such
instructions, in accordance with the recommendations of the board of directors.
Neither abstentions nor broker non-votes will be counted for the purposes of
determining whether any of the proposals has been approved by the stockholders
of Color Imaging, although they will be counted for purposes of determining the
presence of a quorum.
Color Imaging will pay the expenses of soliciting proxies for the annual
meeting, including the cost of preparing, assembling, and mailing the proxy
solicitation materials. Proxies may be solicited personally, by mail, by telex,
or by telephone, by directors, officers, and regular employees of Color Imaging
who will not be additionally compensated therefor. It is anticipated that this
proxy statement and accompanying proxy card will be mailed on or about May 10,
2002 to all stockholders entitled to vote at the annual meeting.
Nominees for election as directors will be elected by a majority of the
votes cast by the holders of shares entitled to vote in the election. It is
expected that shares beneficially owned by current executive officers and
directors of Color Imaging, which in the aggregate represent approximately 49.6
percent of the outstanding shares of common stock, will be voted in favor of
management's nominees for director, for the amendment to Color Imaging's
certificate of incorporation and for the ratification of Lazar Levine & Felix
LLP as Color Imaging's independent accountants. With respect to election of
directors, abstentions, votes "withheld" and broker non-votes will be
disregarded and will have no effect on the outcome of the vote. Abstentions,
votes "withheld" and broker non-votes will have the effect of a vote against the
proposal to amend Color Imaging's certificate of incorporation. There are no
rights of appraisal or similar dissenters' rights with respect to any matter to
be acted upon pursuant to this proxy statement. Assuming a quorum is present,
any proposal properly presented at the meeting will be approved if the votes
cast in favor of it exceed the votes cast against it, except in the case of the
proposal to amend the certificate of incorporation, which requires the
affirmative vote of a majority of Color Imaging's outstanding shares of common
stock.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The board of directors of Color Imaging recommends a vote FOR the election
of each of the nominees named below for election as director, FOR the
ratification of Lazar Levine & Felix, LLP as Color Imaging's independent
accountants and FOR the proposal to amend Color Imaging's certificate of
incorporation.
ELECTION OF DIRECTORS
The proxy holders intend to vote "FOR" election of the nominees named
below, who are currently members of the board, as directors of Color Imaging,
"FOR" the ratification of Lazar Levin & Felix, LLP as Color Imaging's
independent accountants and "FOR" the proposal to amend Color Imaging's
certificate of incorporation, unless otherwise specified in the proxy. Directors
of Color Imaging elected at the annual meeting to be held on June 10, 2002 will
hold office until the next annual meeting or until their successors are elected
and qualified.
Each of the nominees has consented to serve on the board of directors, if
elected. Should any nominee for the office of director become unable to accept
nomination or election, which is not anticipated, it is the intention of the
persons named in the proxy, unless otherwise specifically instructed in the
proxy, to vote for the election of such other person as the board may recommend.
The individuals listed below as nominees for the board of directors were
directors of Color Imaging during 2001, except that Jui-Hung Wang was elected to
the board in June 2001, Jui-Kung Wang was elected to the board in September 2001
and Victor A. Hollander was elected to the board in March 2001. J.T. Lin, a
director of Color Imaging during 2001, will not stand for reelection at the
annual meeting. The name and age of each nominee, and the period during which
such person has served as a director, is set forth below:
SERVED AS DIRECTOR
NAME AGE SINCE POSITION
---------------------------------- ------- --------------------- -------------------------------------------------
Michael W. Brennan 58 June 2000 Chief Executive Officer and Chairman of the
Board
Sueling Wang, PhD 48 June 2000 President, Chief Operating Officer and Vice
Chairman of the Board
Morris E. Van Asperen 58 June 2000 Executive Vice President, Chief Financial
Officer And Director
Charles R. Allison 69 June 2000 Vice President, Sales and Marketing, and
Director
Edwin C. St. Amour 60 June 2000 Director
Robert L. Langsam 56 June 2000 Director
Jui-Chi Wang 45 June 2000 Director
Jui-Hung Wang 55 June 2001 Director
Jui-Kung Wang 58 September 2001 Director
Victor A. Hollander, CPA 69 March 2001 Director
Michael W. Brennan became Chairman of the Board and Chief Executive Officer
of Color Imaging, Inc. in June 2000, when Logical Imaging Solutions, Inc.
(Logical) became a wholly owned subsidiary of Color Imaging. From 1997 to 2000,
2
he served as a director and President of Logical. From 1991 to 1995 he served as
President of Interscience Computer Corporation (Interscience). Mr. Brennan has a
B.S. degree in electrical engineering from the University of Southern
California, an M.B.A. degree from Pepperdine University, is a Fellow of the
Institute of Directors (London, England) and an adjunct faculty member of the
University of Phoenix. He has over twenty years of experience within the
computer industry and participated in the founding of four companies that became
publicly held corporations; three in the U.S. (Computer Automation, Datum, Inc.
and Interscience) and one on the London International Stock Exchange (Optim
PLC). Mr. Brennan has developed many successful products within the computer
industry and holds patents on processes that are widely used in high-speed
printing.
Sueling Wang, PhD., became President, Chief Operating Officer and
Vice-Chairman of Color Imaging in June 2000. From 1989 to 2000, he served as
President and director of Color Image, Inc. which was merged with Color Imaging.
Dr. Wang was also a founder of Color Image Inc. In 1998, Dr. Wang was a founding
member of Kings Brothers LLC, which leases space to Color Imaging used for our
headquarters and manufacturing facilities in Norcross, Georgia. Dr. Wang
received a M.S. degree from the University of Windsor, in Ontario, Canada and a
PhD degree from the University of Detroit. Dr. Wang's expertise in resin
synthesis brought him into the toner industry and led to the formation of Color
Image, Inc. in 1989.
Morris E. Van Asperen has served as Executive Vice President, Chief
Financial Officer and director of Color Imaging since June 2000 and Secretary
since June 2001. Since 1998, he has served as director of Logical. From 1986 to
2000, he was employed by National Bank of California in various positions most
recently as Executive Vice President and Credit Administrator. Mr. Van Asperen
also has extensive experience as a financial and management consultant to
businesses of up to $50 million in revenues and 1,000 employees in construction,
household goods, industrial glass, and electronics manufacturing and software
development. From 1977 to 1984, he served as Vice President & Chief Financial
Officer of ATE Associates, Inc., a supplier of test fixtures and software for
numerous military aircraft programs. Mr. Van Asperen received a B.S. degree in
Mathematics from the University of Oklahoma and an M.B.A. degree from Pepperdine
University.
Charles R. Allison has served as Vice President, Marketing and Sales and
director of Color Imaging since June 2000. From 1992 to 2000, he served as Vice
President of Marketing and Sales of Color Image, Inc., which was merged with and
into Color Imaging. From 1982 to 1991, he served as Vice President of Sales and
Marketing, and general manager, at Synfax Manufacturing, Inc., an early
developer of consumable products for EBI-based printing technologies. Mr.
Allison has held other senior positions in the printing/imaging industry,
including positions with Minolta Corporation, Litton Business Systems and Royal
McBee.
Edwin C. St. Amour has served as a director of Color Imaging since June
2000. In 2001, he founded Golf Car Trader, Inc. and serves as its President. He
is Chairman of American Computer Hardware Corporation having founded the company
in 1979. Mr. St. Amour began developing and marketing Electron Beam Imaging
(EBI) related products in the 1980's. He founded Logical in 1993 to develop EBI
compatible hardware and software products and adapt this technology to produce
plug-and-play products for form manufacturers. He served as Logical's' President
from 1993 until 1997 and Chairman from 1993 until June 2000 when it became a
subsidiary of Color Imaging. Mr. St. Amour entered the printing industry in the
early sixties and began marketing forms and documents for Moore Business Forms
and Standard Register Corp.
Robert L. Langsam has served as a director of Color Imaging since June
2000. In 1980, he founded Diversified Financial Management (DFM), a financial
planning services organization, and has served as its President since then. From
1975 to 1979, he was Assistant Corporate Controller for MCI Communications and
was responsible for the operational accounting controls and systems, as well as
extensive involvement in product pricing and filings. From 1970 to 1975, Mr.
Langsam was Chief Financial Officer of the copier products division of SCM. Mr.
Langsam holds a B.S. degree in Marketing/Accounting from Pace University and
double MBA degrees in Finance and Taxation from Adelphi and St. John's
Universities.
Jui-Chi Wang has served as a director of Color Imaging since June 2000.
From 1994 until 2000, he served as a director of Color Image, Inc., which was
merged with Color Imaging. Since 1984, Mr. Wang has served as President of
General Plastic Industrial Co. Ltd (GPI), a Taiwan-based plastics manufacturer
specializing in injection moldings and more particularly toner cartridges and
accessories for copiers and laser printers. In 1998, Mr. Wang was a founding
member of Kings Brothers LLC, which leases space to Color Imaging used for our
3
headquarters and manufacturing facilities in Norcross, Georgia. Mr. Wang
received a Master's Degree in Computer Engineering from the University of
Southern California.
Jui-Hung Wang has served as a director of Color Imaging since June 2001. He
was a founder and director of Color Image, Inc. until its merger with Color
Imaging. He is a founder and serves as Chairman of General Plastic Industrial
Co., Ltd, a leading Taiwan based manufacturer of after market injection molded
cartridges and accessories for copiers and laser printers. Since January 2001,
Mr. Wang has served as a director of Taiwan Yu-Tzu Company, a food company. In
1998, Mr. Wang was a founding member of Kings Brothers LLC, which leases space
to Color Imaging used for our headquarters and manufacturing facilities in
Norcross, Georgia. From 1986 to 1994, Mr. Wang was governor of Wu-Chi Town,
Taiwan.
Jui-Kung Wang has served as a director of Color Imaging since September
2001. He was a founder of Color Image, Inc. in 1989 and its Chairman until its
merger with Color Imaging. He is a co-founder and has served as a director of
General Plastic Industrial Co., Ltd, a leading Taiwan based manufacturer of
after market injection molded cartridges and accessories for copiers and laser
printers since 1978. In 1998 Mr. Wang was a founding member of Kings Brothers
LLC, which leases space to Color Imaging we use for our headquarters and
manufacturing facilities in Norcross, Georgia. Mr. Wang has been a professor of
management with Tung-Hai University, Taiwan for over 20 years. In 1998, Mr. Wang
was a founding member of Kings Brothers LLC, which leases space to Color Imaging
used for our headquarters and manufacturing facilities in Norcross, Georgia. He
has received a bachelors degree in economics, and MBA and PhD degrees in
management.
Victor A. Hollander, CPA, has served as a director of Color Imaging since
March 2001. Mr. Hollander has been licensed to practice public accounting in
California as a certified public accountant since 1958. Since February 2001, Mr.
Hollander has been the manager of the securities group at Good Swartz Brown &
Berns LLP, an accounting firm. From 1978 to 2001, he was a partner in the
accounting firm he founded Hollander, Lumer & Co. LLP. Mr. Hollander has been
involved with over twenty initial and secondary public offerings since 1990. Mr.
Hollander has served on various Los Angeles Chapter, California Society of
Certified Public Accounts and American Institute of Certified Public Accountants
securities, ethics, accounting and auditing committees. He specializes in
securities and merger and acquisition matters.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF EACH OF THE ABOVE-NAMED NOMINEES.
INFORMATION ABOUT THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
MEETINGS OF THE BOARD OF DIRECTORS
There were four (4) meetings of the board of directors during 2001. Each
incumbent director who was a director during 2001 attended 75 percent or more of
the aggregate of all meetings of the board of directors and any committees on
which that director served.
DIRECTOR COMPENSATION
Each of Color Imaging's non-employee directors receives fees of $1,000.00
per board meeting physically attended. In addition, each director is reimbursed
for certain out-of-pocket expenses incurred in connection with attendance at
board and committee meetings. Each of Color Imaging's nonemployee directors, on
the date they are first elected or appointed to the board, receives a grant of
non-qualified stock options to purchase 25,000 shares of Color Imaging's common
stock at the fair market value of the common stock on the date of grant. The
directors' options vest in equal annual installments over a five year period.
4
AUDIT COMMITTEE
The Audit Committee makes recommendations for selection of Color Imaging's
independent public accountants, reviews with the independent public accountants
the plans and results of the audit engagement, approves professional services
provided by the independent public accountants, reviews the independence of the
independent public accountants, considers the range of audit and any non-audit
fees, and reviews the adequacy of Color Imaging's internal accounting controls
and financial management practices. During 2001, the Audit Committee consisted
of Messrs. Victor A. Hollander, CPA, Robert L. Langsam and Dr. J. T. Lin. Dr.
Lin resigned on March 12, 2002, as a director of Color Imaging and on March 18,
2002 director Edwin C. St. Amour was appointed to the Audit Committee. There
were four (4) meetings of the Audit Committee during 2001. Each incumbent member
who was a member during 2001 attended 75 percent or more of the aggregate of all
meetings of the Audit Committee.
The board of directors nominates and appoints the members of the Audit
Committee. Audit Committee members receive no compensation for their services as
a member of the Audit Committee.
NOMINATING AND COMPENSATION COMMITTEES
The board of directors acts as the nominating and compensation committees
of Color Imaging.
5
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following Summary Compensation Table sets forth the compensation earned
by our Chief Executive Officer and the three other most highly compensated
executive officers who were serving as such as of December 31, 2001 and December
31, 2000 (collectively, the Named Executive Officers), whose aggregate
compensation for fiscal years 2001 and 2000 exceeded $100,000 for services
rendered in all capacities to Color Imaging and its subsidiaries for that fiscal
year.
SUMMARY COMPENSATION TABLE
--------------------------------------------------------- ----------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- ------------------
SECURITIES
UNDERLYING ALL OTHER
NAME YEAR SALARY OPTIONS(#) COMPENSATION (1)
------------------------------------- -------------- -------------- ------------------ ----------------------
Michael W. Brennan 2001 $151,442 150,000 (5) $ 6,403
Chief Executive Officer 2000 $146,485 --- $ 25,591 (2)
Dr. Sueling Wang 2001 $158,423 100,000 (5) $ 22,313 (3)
President & 2000 $149,159 200,000 (6) $ 18,887 (3)
Chief Operating Officer
Morris E. Van Asperen 2001 $146,714 100,000 (5) $ 5,461
Executive Vice President 2000 $ 54,294 200,000 (7) $ ---
Chief Financial Officer &
Secretary
Charles R. Allison 2001 $106,379 50,000 (5) $ 28,145 (4)
Vice President, Sales 2000 $101,996 50,000 (8) $ 25,902 (4)
---------------
(1) For named executive officers the amount reported represents the cost of
group insurance benefits, Color Imaging's matching contribution to the
401(k) plan for the officer and other life insurance policies maintained
for him, as further described in the notes for each officer, respectively.
(2) The split dollar life insurance policy is no longer in force. Premiums paid
during 2000 were $15,584.
(3) The split dollar life insurance premiums were $13,526 and $16,505 during
2001 and 2000, respectively. Pursuant to the policies Color Imaging will,
upon his death or earlier liquidation of each such policy, be entitled to
the refund of all premium payments made by Color Imaging on the policies,
and the balance of the proceeds will be paid to Mr. Wang's designated
beneficiaries.
(4) The life insurance premiums paid by Color Imaging in 2001 and 2000 were
$21,977 and $22,476, respectively. Color Imaging owns and is the
beneficiary of this policy and maintains it to fund the deferred
compensation agreement with Mr. Allison. Upon Mr. Allison's retirement, he,
or his beneficiaries, are to receive 120 monthly payments of $2,500 per
month or, as provided, the net present value of any unpaid amounts.
(5) Options granted by action of the board of directors on March 21, 2001. 25%
vest upon grant and the balance vest 25% per year upon each anniversary of
the date of grant. The options expire five years after their respective
vesting date(s).
(6) The options were granted as part of the officer's employment agreement on
June 28, 2000. 100,000 vested immediately and the remainder vested ratably
over the next two years upon the anniversary date of the grant.
(7) The options were granted as part of the officer's employment agreement on
June 28, 2000. 100,000 vested immediately and the remainder vested ratably
over the next four years upon the anniversary date of the grant. Mr. Van
Asperen joined Color Imaging as Executive Vice President in August 2001.
(8) The options were granted as part of the officer's employment agreement on
June 28, 2000. 25,000 vested immediately and the remainder vested ratably
over the next two years upon the anniversary date of the grant.
6
OPTION GRANTS TABLE
The following table sets forth certain information regarding options
granted to the Named Executive Officers during the year ended December 31, 2001.
No separate stock appreciation rights were granted during 2001.
STOCK OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEE PRICE EXPIRATION
Name (#)(1) IN 2001 ($/SH) DATE
----------------------------- -------------------- ---------------- ---------------- ------------------
Michael W. Brennan 37,500 28% $2.75 3/21/06
37,500 3/21/07
37,500 3/21/08
37,500 3/21/09
--------------------
150,000
Sueling Wang 25,000 19% $2.75 3/21/06
25,000 3/21/07
25,000 3/21/08
25,000 3/21/09
--------------------
100,000
Morris E. Van Asperen 25,000 19% $2.75 3/21/06
25,000 3/21/07
25,000 3/21/08
25,000 3/21/09
--------------------
100,000
Charles R. Allison 12,500 9% $2.75 3/21/06
12,500 3/21/07
12,500 3/21/08
12,500 3/21/09
--------------------
50,000
-----------------
(1) The above options were granted on March 21, 2001, become fully vested after
three years and expire five years, respectively, from the vesting date(s).
7
OPTION EXERCISES AND YEAR-END VALUE TABLE
None of the Named Executive Officers exercised stock options during 2001.
The following table sets forth certain information regarding unexercised options
held at year-end by each of the Named Executive Officers.
AGGREGATED OPTION EXERCISES IN 2001 AND OPTION VALUES AT DECEMBER 31, 2001
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS ($)(1)
---------------------------------- ------------------------------------
SHARES
ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------------------- -------------- ----------- -------------- ---------------- ---------------- ----------------
Michael W. Brennan 0 0 37,500 112,500 13,125 39,375
Sueling Wang 0 0 175,000 125,000 173,750 81,250
Morris E. Van Asperen 0 0 150,000 150,000 146,250 108,750
Charles R. Allison 0 0 50,000 50,000 45,625 26,875
-----------
(1) Based on the closing price of our common stock of $3.10 on December 31,
2001.
EMPLOYMENT AGREEMENTS
On June 28, 2000, Color Imaging entered into employment agreements with its
Chief Executive Officer, Michael W. Brennan, President, Dr. Sueling Wang,
Executive Vice President and Chief Financial Officer, Morris E. Van Asperen, and
Vice President of Marketing and Sales Charles R. Allison. All four of the
employment agreements have a 5 year term. Color Imaging is obligated to pay Mr.
Brennan and Dr. Wang annual salaries of $150,000 with a guaranteed increase of
5% per annum over the term of the agreements. Color Imaging is obligated to pay
Mr. Van Asperen an annual salary of $144,000 with a guaranteed increase of 5%
over the term of his agreement. In addition to commissions earned under Color
Imaging's sales incentive program, Color Imaging is obligated to pay Mr. Allison
an annual salary of $89,250 with a guaranteed increase of 5% per annum over the
term of his agreement. Each employee may terminate the agreement upon 6 months
notice to Color Imaging. Color Imaging may terminate each employee upon 6 months
notice by Color Imaging; provided, however, that Color Imaging is obligated to
pay to the employee his annual base salary, commissions or bonuses earned, and
benefits for a period of 12 months after the date of such notice.
The employment agreements with the above named officers also commits Color
Imaging to purchasing for their benefit certain life insurance plans. For the
year ended December 31, 2001, Color Imaging did not have in place for either Mr.
Brennan or Mr. Van Asperen such supplemental life insurance plans. Color Imaging
owns and is the beneficiary of a life insurance policy on Mr. Allison and
maintains it to fund the deferred compensation agreement with Mr. Allison. Upon
Mr. Allison's retirement, he, or his beneficiaries, are to receive 120 monthly
payments of $2,500 per month or, as provided, the net present value of any
unpaid amounts. The life insurance premiums paid by Color Imaging to fund Mr.
Allison's deferred compensation agreement in 2001 and 2000 were $21,977 and
$11,238, respectively. Color Imaging pays the premiums and is the collateral
assignee of four split dollar life insurance policies owned by Dr. Wang.
Pursuant to the policies Color Imaging will, upon his death or earlier
liquidation of each such policy, be entitled to the refund of all premium
payments made by Color Imaging on the policies, and the balance of the proceeds
will be paid to Mr. Wang's designated beneficiaries. The split dollar life
insurance premiums were $13,526 and $8,253 during 2001 and 2000, respectively.
The monies due from Dr. Wang in connection with these life insurance policies at
the years ended December 31, 2001 and 2000 was $112,103 and $98,578,
respectively.
8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to the merger on June 28, 2000, while operating as Advatex
Associates, Inc., we had an account receivable due from an affiliate of
$161,019, which was collected.
Directors, Jui-Hung Wang, Jui-Kung Wang, Sueling Wang and Jui-Chi Wang, own
Kings Brothers, LLC, the landlord from which we lease our Norcross, Georgia
plant. For the year ended December 31, 2001, lease payments for the plant were
$505,836. The lease was made on April 1, 1999 and expires in April 2009.
On November 19, 2001, we borrowed $200,000 on an unsecured basis from Kings
Brothers LLC. The revolving loan bears interest at the rate of 9% per annum,
matures on November 18, 2002 and is evidenced in writing. We paid the principal
and interest outstanding on December 10, 2001, paying $790.38 in total interest
to Kings Brothers. We borrowed this amount for general corporate purposes,
including working capital. On March 20, 2002 the revolving loan arrangement was
cancelled.
We also had a short-term unsecured loan, due July 26, 2000, evidenced in
writing from Kings Brothers of $240,000 with interest at 8%, paying $5,576 of
interest for the year. As of December 31, 2000 all amounts outstanding under the
loan have been repaid. We used the proceeds of this loan for working capital.
On June 1, 1999, the Development Authority of Gwinnett County, Georgia
issued $4,100,000 of industrial development revenue bonds on behalf of us and
Kings Brothers LLC. Pursuant to a certain joint debtor agreement we are jointly
and severally liable with Kings Brothers to pay the amounts borrowed under the
bond. The 3.5% revenue bonds are payable in varying annual principal and monthly
interest payments through July 2019. The bonds are collateralized by all of our
assets and the real property leased by us and owned by Kings Brothers. The
majority of the proceeds $3,125,872 from the bond issue were used by us to
relocate our manufacturing plant, make leasehold improvements at the new
facility and to purchase certain manufacturing equipment. The remaining proceeds
$974,128 were used by Kings Brothers to pay down the mortgage on its real
property, some of which is leased to us. The proceeds used by Kings Brothers
have been recorded as a receivable on our financial statements. We entered into
a Joint Debtor Agreement with Kings Brothers LLC concerning their rights, duties
and obligations in connection with the bonds. Kings Brothers and we,
collectively, are obligated to repay any outstanding debt under the bonds.
Amounts receivable from Kings Brothers are secured by a lien on all of Kings
Brothers' real estate, including the part we lease from them, and by personal
guarantees by the members of Kings Brothers. Principal due and paid by Kings
Brothers to us during the years ending December 31, 2001 and 2002 was $76,032
and $0, respectively. Interest due and paid by Kings Brothers to us during the
years ending December 31, 2001 and 2000 was $30,368 and $22,255, respectively.
As of December 31, 2001, the principal outstanding was $3,780,000 and the
portion due from Kings Brothers was $898,096.
Directors Jui-Hung Wang, Jui-Kung Wang, Jui-Chi Wang, are owners in and
Chairman, Auditor and President, respectively, of General Plastic Industrial
Co., LTD (GPI), a Taiwanese manufacturer of injection molded cartridges and
accessories for copiers and laser printers. GPI also owned and operated GPI-USA,
Inc. (GPI-USA) a wholly-owned United States distributor of GPI's products. In
2000, we purchased from GPI and GPI-USA $268,966 and $166,526, respectively, of
copier and laser printer products. In 2001, we purchased $4,005,508 of copier
and laser printer products from GPI.
Directors, Jui-Hung Wang, Jui-Kung Wang, Sueling Wang and Jui-Chi J. Wang,
collectively have beneficial ownership interests of 32.6% in AccuRec, LLC, a
distributor of digital versatile disks. From time to time during the year ending
December 31, 2000, we had short-term unsecured loans evidenced in writing and
due on demand issued to AccuRec aggregating $1,850,000 and a maximum outstanding
at any one time of $500,000. The interest rate on these loans was 8%, and we
paid a total of $6,244 in interest during 2000. As of December 31, 2000 all
amounts outstanding under such loans have been repaid. We used the proceeds from
these loans for working capital purposes.
Director, Sueling Wang, as trustee for two of his children, loaned us a
total of $252,000 from 1998 to 1999 at an interest rate of 12% with principal
and interest due at expiry. Each of the loans was paid in full during July 2000,
and we paid interest in the aggregate amount of $47,205 on these loans. We used
the proceeds of this loan for working capital purposes.
9
On March 14, 2002, we borrowed $500,000 from director, Sueling Wang, on an
unsecured basis. The loan bears interest at the rate of 12% per annum, matures
on March 14, 2003 and is evidenced in writing. We borrowed this amount to meet a
supplier commitment for product.
Directors Jui-Chi Wang and Jui-Hung Wang purchased 350,000 and 50,000 Units
(each Unit consisted of one share of common stock and a warrant to purchase one
share of common stock at an exercise price of $2.00 per share) for $700,000 and
$100,000, including promissory notes, respectively. Jui-Chi Wang's $700,000
recourse promissory note without interest was made on December 1, 2001, due
December 31, 2001 and paid in full on December 18, 2001. Jui-Hung Wang's $99,500
recourse promissory note without interest was made on December 24, 2001, Due
April 1, 2002 and paid in full on January 30, 2002. The terms of the notes were
consistent with the terms of notes of third parties who purchased Units in the
private placement from Color Imaging.
We believe that the terms of the loans and borrowings from affiliates were
on terms more favorable than were otherwise available from third parties.
10
Notwithstanding anything to the contrary that is or may be set forth in any
of Color Imaging's filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate Company filings, including this
proxy statement, in whole or in part, the following Report of the Audit
Committee, shall not be incorporated by reference into any such filings.
REPORT OF AUDIT COMMITTEE
Color Imaging has an Audit Committee (the "Committee") composed entirely of
non-management directors. The members of the Committee meet the independence and
experience requirements of the NASD. The Committee met with the independent
auditors and management prior to issuance of Color Imaging's annual report on
Form 10-KSB for the year ending December 31, 2001. In 2001, the Committee
adopted an amended charter, and the board of directors approved, the amended
charter outlining the practices it follows. A copy of the Committee charter, as
amended, is attached as Appendix A to this Proxy Statement.
The Committee recommended to the board of directors the engagement of Lazar
Levine & Felix, LLP as Color Imaging's independent auditors and reviewed with
Color Imaging's financial managers and the independent auditors overall audit
scopes and plans, the results of internal and external audit examinations,
evaluations by the auditors of Color Imaging's internal controls, and the
quality of Color Imaging's financial reporting.
The Committee has reviewed and discussed with management the audited
financial statements in the Annual Report, including a discussion of the
quality, not just the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of disclosures in the
financial statements. In addressing the quality of management's accounting
judgments, members of the Audit Committee asked for management's representations
that the audited consolidated financial statements of Color Imaging have been
prepared in conformity with generally accepted accounting principles and have
expressed to both management and the independent auditors their general
preference for conservative policies when a range of accounting options is
available.
In its meetings with representatives of the independent auditors, the
Committee asks them to address, and discusses their responses to, several
questions that the Committee believes are particularly relevant to its
oversight. These questions include:
- Are there any significant accounting judgments made by management in
preparing the financial statements that would have been made
differently had the independent auditors themselves prepared and been
responsible for the financial statements?
- Based on the independent auditors' experience and their knowledge of
Color Imaging, do Color Imaging's financial statements fairly present
to investors, with clarity and completeness, Color Imaging's financial
position and performance for the reporting period in accordance with
generally accepted accounting principles and SEC disclosure
requirements?
- Based on the independent auditors' experience and their knowledge of
Color Imaging, has Color Imaging implemented internal controls and
internal audit procedures that are appropriate for Color Imaging?
The Committee believes that by thus focusing its discussions with the
independent auditors, it can promote a meaningful dialogue that provides a basis
for its oversight judgments.
The Committee also discussed with the independent auditors all other
matters required to be discussed by the auditors with the Committee under
Statement on Auditing Standards No. 61 ("Communication with Audit Committees").
The Committee received and discussed with the independent auditors their annual
written report on their independence from Color Imaging and its management,
which is made under Independence Standards Board Standard No. 1 ("Independence
Discussions with Audit committees").
11
In performing all of these functions, the Audit Committee acts only in an
oversight capacity. The Committee, in its oversight role, necessarily relies on
the work and assurances of Color Imaging's management, which has the primary
responsibility for financial statements and reports, and of the independent
auditors, who, in their report, express an opinion on the conformity of Color
Imaging's annual financial statements to generally accepted accounting
principles.
In reliance on these reviews and discussions, and the report of the
independent auditors, the Audit Committee has recommended to the board of
directors, and the Board has approved, that the audited financial statements be
included in Color Imaging's Annual Report on Form 10-KSB for the year ended
December 31, 2001, for filing with the Securities and Exchange Commission.
FEES PAID TO COLOR IMAGING'S INDEPENDENT AUDITORS FOR 2001
Color Imaging incurred the following fees for services performed by Lazar
Levine & Felix, LLP for 2001:
AUDIT FEES
Fees for the year 2001 audit and the review of Forms 10-Q in 2001 were
approximately $64,400.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
Lazar Levine & Felix, LLP did not render any services or receive any
payment from Color Imaging related to financial information systems design and
implementation for the year ended December 31, 2001.
ALL OTHER FEES
Aggregate fees billed for all other services rendered by Lazar Levine &
Felix, LLP for the year ended December 31, 2001 were approximately $41,800, of
which $12,500 related to tax services and $21,900 were related to other
non-audit professional services.
The Audit Committee has determined that the payments made to its
independent accountants for non-audit services for 2001 are compatible with
maintaining such auditors' independence.
Management is responsible for planning Color Imaging's financial reporting
process and compliance of the consolidated financial statements with generally
accepted accounting principles. Color Imaging's independent auditors are
responsible for auditing those financial statements. The Audit Committee
necessarily must rely, without independent verification, on (a) management's
representation that the financial statements have been prepared with integrity
and objectivity and in conformity with accounting principles generally accepted
in the United States of America, and (b) on the representations of the
independent auditors included in their report on Color Imaging's financial
statements.
AUDIT COMMITTEE:
Victor A. Hollander
Robert L. Langsam
J. T. Lin, PhD
12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to Color Imaging with
respect to the beneficial ownership of Color Imaging's common stock as of April
22, 2002 by:
o each stockholder known by Color Imaging to own beneficially more than
5% of Color Imaging's common stock;
o each Named Executive Officer;
o each of Color Imaging's directors; and
o all directors and executive officers as a group.
Except as otherwise indicated in the footnotes, Color Imaging believes that
the beneficial owners of the common stock listed below, have sole voting power
and investment power with respect to such shares of common stock indicated.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percent ownership of that person, shares
of common stock subject to options or warrants held by that person that are
currently exercisable or will become exercisable within 60 days of the date of
this proxy statement are deemed outstanding, while such shares are not deemed
outstanding for purposes of computing percent ownership of any other person.
PERCENTAGE OF
NAME OF BENEFICIAL OWNER NO. OF SHARES OWNERSHIP(1)
-------------------------------------- ----------------------------------- -----------------------------------
Michael W. Brennan (2) 999,215 9.8%
Sueling Wang (3) 1,416,551 13.7%
Morris E. Van Asperen (4) 310,906 3.0%
Charles R. Allison (5) 75,000 *
Edwin St. Amour (6) 989,768 9.8%
Robert L. Langsam (7) 143,632 1.5%
Jui-Chi Wang (8) 689,450 6.8%
Jui-Hung Wang 699,178 6.9%
Jui-Kung Wang 316,209 3.1%
Victor A. Hollander (9) 105,000 1.0%
Executive officers and directors
as a group (10 persons) (10) 5,749,909 53.0%
----------------
* Less than 1%
(1) Percentage of ownership is calculated as required by Commission Rule
13d-3(d)(1). The table above includes the number of shares underlying
options and warrants which are exercisable within 60 days after the date of
this proxy statement.
(2) Includes 75,000 shares subject to options that are currently exercisable.
(3) Includes: (a) 60,000 shares owned by Sueling Wang's four children, (b)
141,204 shares owned by Yik-Li Sih, Sueling Wang's wife, in which Sueling
Wang may be deemed to have pecuniary interest. Mr. Wang disclaims
beneficial ownership of such 201,204 shares. Also includes 250,000 shares
subject to options that are currently exercisable.
(4) Includes 200,000 shares subject to options that are currently exercisable.
(5) Includes 75,000 shares subject to options that are currently exercisable.
(6) Edwin St. Amour holds 979,768 shares as co-trustee (Mr. St. Amour's wife
Annette is the other co-trustee) of the St. Amour Revocable Trust. Also
includes 10,000 shares subject to options that are currently exercisable.
(7) Includes 10,000 shares subject to options and 55,453 shares underlying
warrants that are currently exercisable.
(8) Includes 10,000 subject to options that are currently exercisable.
(9) Includes 5,000 options and 50,000 shares underlying warrants that are
currently exercisable.
(10) Includes 635,000 shares subject to options and 105,453 shares underlying
warrants that are exercisable within 60 days after the date of this proxy
statement.
13
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The members of the board of directors, certain executive officers of Color
Imaging and persons who hold more than 10% of Color Imaging's outstanding common
stock are subject to the reporting requirements of Section 16(a) of the Exchange
Act which require them to file reports with respect to their ownership of common
stock and their transactions in common stock. Based upon the copies of Section
16(a) reports that Color Imaging received from such persons for their 2001
fiscal year transactions, Messrs. Jui-Hung Wang and Jui-Kung Wang each filed
their Form 3 reporting their initial stock ownership late, and Messrs. Jui-Kung
Wang and Sueling Wang each filed one Form 4 late reporting one transaction.
Color Imaging did not receive a copy of Form 3 reporting the initial 1,000,000
share holdings of Wall Street Consulting Corp., nor did it receive a Form 4
after the transaction was rescinded. Except for the aforementioned, Color
Imaging believes that all reporting requirements under Section 16(a) for such
fiscal year were met in a timely manner by its executive officers, Board members
and greater than ten-percent stockholders.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(ITEM NO. 2 OF THE PROXY CARD)
The board of directors has selected Lazar Levine & Felix, LLP as Color
Imaging's independent accountants for the year ending December 31, 2002, and has
further directed that management submit the selection of independent accountants
for ratification by the stockholders at the annual meeting. Lazar Levine & Felix
LLP has no financial interest in Color Imaging and neither it nor any member or
employee of the firm has had any connection with Color Imaging in the capacity
of promoter, underwriter, voting trustee, director, officer or employee. The
Delaware General Corporation Law does not require the ratification of the
selection of independent accountants by Color Imaging's stockholders, but in
view of the importance of the financial statements to the stockholders; the
board of directors deems it advisable that the stockholders pass upon such
selection. A representative of Lazar Levine & Felix LLP is not expected to be
present at the annual meeting.
In the event the stockholders fail to ratify the selection of Lazar Levine
& Felix LLP, the Audit Committee will reconsider whether or not to retain the
firm. Even if the selection is ratified, the Audit Committee and the board of
directors in their discretion may direct the appointment of a different
independent accounting firm at any time during the year if they determine that
such a change would be in the best interests of Color Imaging and its
stockholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL.
PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
(ITEM NO. 3 ON THE PROXY CARD)
The Board of Directors has proposed a resolution amending Article Fourth,
Section A, of our Restated Certificate of Incorporation to increase the total
number of shares of common stock which we have authority to issue from twenty
million (20,000,000) shares to thirty million (30,000,000) shares, par value of
$.01 per share.
As of April 19, 2002, of the 20,000,000 shares of common stock which we are
authorized to issue, 10,099,880 were issued and outstanding, an aggregate of
1,210,000 shares are reserved for issuance in connection with options
exercisable into shares of common stock, 1,131,312 shares are reserved for
issuance in connection with warrants exercisable into shares of common stock and
7,000,000 shares are reserved for issuance in connection with the registration
of shares of common stock and warrants exercisable into shares of common stock
pursuant to a Registration Statement on Form SB-2, as amended, filed December
28, 2001. Accordingly, only 558,808 shares remain authorized but unissued. No
shares of Preferred Stock are currently outstanding.
14
The board believes that the amendment is necessary to ensure that we will
have sufficient authorized shares available to meet our ongoing business needs
and to take advantage of future corporate opportunities. In addition, the board
of directors believes that the proposed increase in the authorized shares of
common stock is in the best interests of Color Imaging and its stockholders and
believes that it is advisable to authorize such additional shares and have them
available in connection with the possible future transactions, such as
financings, strategic alliances, corporate mergers, acquisitions, possible
funding of new product programs or businesses and other uses not presently
determinable and as may be deemed to be feasible and in the best interest of
Color Imaging. There are no present plans to issue any of the proposed
additional authorized shares of common stock. Further stockholder authorization
would not be necessary prior to any such issuance, except for certain situations
where stockholder approval may be required under Nasdaq or other exchange rules
or Delaware law.
Under our Restated Certificate of Incorporation, holders of stock are not
entitled to preemptive rights.
The affirmative vote of a majority of the outstanding shares of common
stock entitled to vote is required to adopt the proposed amendment. If this
proposal is adopted, Article Fourth, Section A, will reads as follows:
"Fourth: A. The total number of shares of stock which the Corporation shall
have authority to issue is Thirty One Million (31,000,000) shares,
consisting of Thirty Million (30,000,000) shares of Common Stock having a
par value of $.01 per share and One Million (1,000,000) shares of Preferred
Stock having a par value of $.01 per share."
THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE AMENDMENT AND
RECOMMENDS A VOTE FOR THE PROPOSED AMENDMENT TO OUR RESTATED CERTIFICATE OF
INCORPORATION.
OTHER BUSINESS
Color Imaging does not know of any other business to be presented to the
annual meeting and does not intend to bring any other matters before such
meeting. If any other matters properly do come before the annual meeting,
however, the persons named in the accompanying Proxy are empowered, in the
absence of contrary instructions, to vote according to their best judgment.
STOCKHOLDER PROPOSALS
Appropriate proposals of shareholders intended to be presented at Color
Imaging's 2003 Annual Meeting of Stockholders pursuant to Rule 14a-8 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), must
be received by Color Imaging by February 10, 2003 for inclusion in its proxy
statement and form of proxy relating to that meeting. In addition, all
shareholder proposals submitted outside of the shareholder proposal rules
promulgated pursuant to Rule 14a-8 under the Exchange Act must be received by
Color Imaging by April 26, 2003 in order to be considered timely. If such
shareholder proposals are not timely received, proxy holders will have
discretionary voting authority with regard to any such shareholder proposals
that may come before the 2003 Annual Meeting. With regard to such shareholder
proposals, if the date of the 2003 Annual Meeting is subsequently advanced or
delayed by more than 30 days from the date of the 2002 Annual Meeting, Color
Imaging shall, in a timely manner, inform shareholders of the change and the
date by which proposals must be received.
15
ANNUAL REPORT ON FORM 10-KSB
A copy of Color Imaging's Annual Report on Form 10-KSB for the calendar
year ended December 31, 2001 is being mailed to stockholders with this proxy
statement.
By Order of the Board of Directors
/s/ MORRIS E. VAN ASPEREN
Morris E. Van Asperen
Secretary
Norcross, Georgia
May 10, 2002
Please Complete, Date, And Sign The Enclosed Proxy Card And Return It Promptly
In The Enclosed Reply Envelope. No Postage Is Required If Mailed In The United
States.
16
APPENDIX A
AUDIT COMMITTEE CHARTER
NOVEMBER 1, 2000
AMENDED JUNE 11, 2001
The Audit Committee ("the Committee") of the Board of Directors ("the Board") of
Color Imaging, Inc., a Delaware corporation ("Color Imaging"), will have the
oversight responsibility, authority and specific duties as described below.
COMPOSITION
The Committee will be comprised of three (3) or more directors as determined by
the Board. The members of the Committee must fulfill the independence and
experience requirements of NASDAQ. Accordingly, all of the members will be
directors: (i) who have no relationship to Color Imaging that would interfere
with the exercise of their independence from management and Color Imaging, and
(ii) who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee. In addition, at
least one member of the Committee will have accounting or related financial
management experience. The Members of the Committee will be elected annually at
the organizational meeting of the Board and will be listed in the annual report
to Color Imaging's shareholders. One of the members of the Committee will be
elected Committee Chairman by the Board.
RESPONSIBILITY
The Committee is a part of the Board. Its primary function is to assist the
Board in fulfilling its oversight responsibilities with respect to (i) the
annual financial information to be provided to shareholders and the Securities
and Exchange Commission (SEC); (ii) the system of internal controls that
management has established; and (iii) the internal and external audit process.
In addition, the Committee provides an avenue for communication between internal
auditors, the independent accountants, financial management and the Board. The
Committee should have a clear understanding with the independent accountants
that they must maintain an open and transparent relationship with the Committee,
and that the ultimate accountability of the independent accountants is to the
Board and the Committee. The Committee will report to the Board concerning its
activities.
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that Color Imaging's financial statements are complete and 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 Committee to conduct investigations, to resolve disagreements, if any,
between management and the independent auditor or to assure compliance with laws
and regulations and Color Imaging's business conduct guidelines.
AUTHORITY
The Committee is granted the authority to investigate any matter or activity
involving financial accounting and financial reporting, as well as the internal
control of Color Imaging. In that regard, the Committee will have the authority
to approve the retention of external professionals to render advice and counsel
in such matters. All employees will be directed to cooperate with respect
thereto as requested by members of the Committee.
MEETINGS
The Committee is to meet in separate executive sessions with Color Imaging's
chief financial officer, independent accountants and internal auditors at least
once each year and at other times when considered appropriate. Content of the
agenda for each meeting should be cleared by the Committee Chairman.
A-1
ATTENDANCE
Committee members will strive to be present at all meetings. As necessary or
desirable, the Committee Chairman may request that members of management and
representatives of the independent accountants and internal auditors be present
at Committee meetings.
SPECIFIC DUTIES
In carrying out its oversight responsibilities, the Committee will:
1. Review and reassess the adequacy of this Charter annually and recommend any
proposed changes to the Board for approval. This should be done in compliance
with applicable NASDAQ Audit Committee Requirements.
2. Review with Color Imaging's management, internal auditors and independent
accountants Color Imaging's accounting and financial reporting controls. Obtain
annually in writing from the independent accountants their letter as to the
adequacy of such controls.
3. Review with Color Imaging's management, internal auditors and independent
accountants significant accounting and reporting principles, practices and
procedures applied by Color Imaging in preparing its financial statements.
Discuss with the independent accountants their judgements about the quality, not
just the acceptability, of Color Imaging's accounting principles used in
financial reporting.
4. Review the scope of internal auditor's work plan for the year and receive a
summary report of major findings by internal auditors and how management is
addressing the conditions reported.
5. Review the scope and general extent of the independent accountants' annual
audit. The Committee's review should include an explanation from the independent
accountants of the factors considered by the accountants in determining the
audit scope, including the major risk factors. The independent accountants
should confirm to the Committee that no limitations have been placed on the
scope or nature of their audit procedures. The Committee will review annually
with management the fee arrangement with the independent accountants.
6. Inquire as to the independence of the independent accountants and obtain from
the independent accountants, at least annually, a formal written statement
delineating all relationships between the independent accountants and Color
Imaging as contemplated by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees.
7. Have a predetermined arrangement with the independent accountants that they
will advise the Committee, through its Chairman, and management of Color Imaging
of any matters identified through procedures followed for interim quarterly and
annual financial statements, and that such notification is to be made prior to
the related press release or, if not practicable, prior to filing Color
Imaging's Form 10-Q and Form 10-K. The Committee shall also receive a
confirmation provided by the independent accountants at the end of each of the
first three quarters of the year that they have nothing to report to the
Committee, if that is the case, or the written enumeration of required reporting
issues.
8. At the completion of the annual audit and prior to the release to the public
of the annual financial results, review with management, internal auditors and
the independent accountants the following:
- The annual financial statements and related footnotes and financial
information to be included in Color Imaging's annual report to
shareholders and on Form 10-K.
- Results of the audit of the financial statements and the related
report thereon and, if applicable, a report on changes during the year
in accounting principles and their application.
A-2
- Significant changes to the audit plan, if any, and any serious
disputes or difficulties with management encountered during the audit.
Inquire about the cooperation received by the independent accountants
during their audit, including access to all requested records, data
and information. Inquire of the independent accountants whether there
have been any disagreements with management which, if not
satisfactorily resolved, would have caused them to issue a nonstandard
report on Color Imaging's financial statements.
- Other communications as required to be communicated by the independent
accountants by Statement of Auditing Standards (SAS) 61 as amended by
SAS 90 relating to the conduct of the audit. Further, receive a
communication provided by the independent accountants concerning their
judgment about the quality of Color Imaging's accounting principles,
as outlined in SAS 61 as amended by SAS 90, and that they concur with
management's representation concerning audit adjustments.
If deemed appropriate after such review and discussion, recommend to the
Board that the financial statements be included in Color Imaging's annual report
on Form 10-K.
9. After preparation by management and review by internal auditors and
independent accountants, approve the report required under SEC rules to be
included in Color Imaging's annual proxy statement. The Charter is to be
published as an appendix to the proxy statement every three (3) years.
10. Discuss with the independent accountants the quality of Color Imaging's
financial and accounting personnel. Also, elicit the comments of management
regarding the responsiveness of the independent accountants to Color Imaging's
needs.
11. Meet with management, internal auditors and the independent accountants to
discuss any relevant significant recommendations that the independent
accountants may have, particularly those characterized as "material" or
"serious." Typically, such recommendations will be presented by the independent
accountants in the form of a Letter of Comments and Recommendations to the
Committee. The Committee should review responses of management to the Letter of
Comments and Recommendations from the independent accountants and receive
follow-up reports on action taken concerning the aforementioned recommendations.
12. Recommend to the Board the selection, retention or termination of Color
Imaging's independent accountants.
13. Review the appointment and replacement of the senior internal audit
executive.
14. Review with management, internal auditors and the independent accountants
the methods used to establish and monitor Color Imaging's policies with respect
to unethical or illegal activities by Company employees that may have a material
impact on the financial statements.
15. Generally as part of the review of the annual financial statements, receive
an oral report(s), at least annually, from Color Imaging's general counsel
concerning legal and regulatory matters that may have a material impact on the
financial statements.
16. As the Committee may deem appropriate, obtain, weigh and consider expert
advice as to Audit Committee related rules of NASDAQ, Statements on Auditing
Standards and other accounting, legal and regulatory provisions.
A-3
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
COLOR IMAGING, INC.
The undersigned hereby appoints Michael W. Brennan, Sueling Wang, PhD,
Morris E. Van Asperen, Charles, R. Allison, Edwin C. St. Amour, Robert L.
Langsam, Jui-Chi Wang, Jui-Hung Wang, Jui-Kung Wang and Victor A. Hollander
attorneys and proxies, each with power to act without the other and with power
of substitution, and hereby authorizes them to represent and vote all of the
shares of stock of Color Imaging, Inc., standing in the name of the undersigned
with all powers which the undersigned would possess if present at the Annual
Meeting of Stockholders of Color Imaging to be held June 10, 2002 or any
adjournment or postponement thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH NOMINEE
TO SERVE AS A DIRECTOR, "FOR" PROPOSAL 2 TO RATIFY THE SELECTION OF LAZAR LEVINE
& FELIX LLP AS COLOR IMAGING'S ACCOUNTANTS, AND "FOR" PROPOSAL 3 TO INCREASE THE
NUMBER OF COMMON SHARES AUTHORIZED FROM 20 MILLION TO 30 MILLION. IF NO
DIRECTION IS GIVEN IN THE SPACE PROVIDED ON THE REVERSE SIDE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF DIRECTORS, AND "FOR" PROPOSALS 2 AND 3. IF ANY OTHER
BUSINESS SHOULD COME BEFORE THE MEETING, THIS PROXY WILL BE VOTED IN ACCORDANCE
WITH THE BEST JUDGMENT OF THE PROXY HOLDER.
If you intend to attend the annual meeting, please be sure to check the "I
plan to attend the meeting" box on the reverse side of the Proxy.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF SHAREHOLDERS
COLOR IMAGING, INC.
JUNE 10, 2002
- Please Detach and Mail in the Envelope Provided -
-----------------------------------------------------
A [X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR all nominees WITHHOLD NOMINEES: Michael W. Brennan
listed at right AUTHORITY (to Sueling Wang, PhD
(except as marked vote for all Morris E. Van Asperen
to the contrary) nominees Charles R. Allison
listed at Edwin C. St. Amour
right) Robert L. Langsam
Jui-Chi Wang
1. Election of [ ] [ ] Jui-Hung Wang
Directors Jui-Kung Wang
Victor A Hollander
(INSTRUCTION: To withhold authority to vote for any individual
nominee, write the nominee's name on the line provided below.)
FOR AGAINST ABSTAIN
---------------------------------------------------------------------
2. Ratify the selection of Lazar Levine & Felix LLP as Color [ ] [ ] [ ]
Imaging's Accountants for the year ending December 31, 2002.
3. Approve the increase in the authorized common shares of Color [ ] [ ] [ ]
Imaging from 20 million shares to 30 million shares.
4. In their discretion upon such other business as may properly
come before the meeting or any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE WITH RESPECT TO A
PROPOSAL, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS AND FOR
PROPOSALS 2 and 3 AND OTHERWISE IN ACCORDANCE WITH THE BEST JUDGMENT OF THE
PROXY HOLDER.
PLEASE SIGN, DATED, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
I plan to attend the meeting [ ]
Signature Signature Date:
------------------------- ------------------------- -----------------
NOTE: Please sign exactly as name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in
partnership name by authorized person.
1463753v3