UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
Exchange Act of 1934
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Check the appropriate box:
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(as permitted by Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under (S) 240.14a-12
SIGHT RESOURCE CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the
appropriate box):
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Rules 14a-6(i)(1) and 0-11.
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fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
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[Sight Resource Logo]
SIGHT RESOURCE CORPORATION
6725 MIAMI AVENUE, SUITE 102
CINCINNATI, OH 45243
May 8, 2003
Dear Stockholder,
You are cordially invited to attend the 2003 annual meeting of stockholders of
Sight Resource Corporation to be held at 3:30 p.m. on Tuesday, June 3, 2003, at
the Company's headquarters, 6725 Miami Avenue, Suite 102, Cincinnati, Ohio
45243.
At the annual meeting, we will ask you to elect three members to the board of
directors. We will also ask your approval of amendments to our Restated
Certificate of Incorporation that will allow the board, in its discretion at any
time prior to our 2005 annual meeting of stockholders, to effectuate a reverse
stock split in the ratio of 1-for-5, 1-for-10 or 1-for-20, as determined by the
board. The board of directors recommends the approval of each of these
proposals. Such other business will be transacted as may properly come before
the meeting.
We hope you will be able to attend the annual meeting. Whether you plan to
attend the meeting or not, it is important that your shares are represented.
Therefore, you are urged to promptly complete, sign, date and return the
enclosed proxy card in accordance with the instructions set forth on the card.
This will ensure your proper representation at the annual meeting.
Sincerely,
/s/ Carene S. Kunkler
CARENE S. KUNKLER
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
[Sight Resource Logo]
SIGHT RESOURCE CORPORATION
6725 MIAMI AVENUE, SUITE 102
CINCINNATI, OH 45243
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held June 3, 2003
To the Stockholders of Sight Resource Corporation:
NOTICE IS HEREBY GIVEN that an annual meeting of the stockholders of Sight
Resource Corporation, a Delaware corporation, will be held at 3:30 p.m. on
Tuesday, June 3, 2003 at our headquarters located at 6725 Miami Avenue, Suite
102, Cincinnati, Ohio 45243 for the following purposes:
1. To elect three members to the board of directors to serve until the
annual meeting of stockholders in the year 2006 and until their
successors are duly elected and qualified.
2. To adopt three alternative amendments to our Restated Certificate of
Incorporation, each of which would allow us to effectuate a reverse
stock split of our common stock.
3. To transact such other business as may be properly brought before the
annual meeting and any adjournments or postponements thereof.
The board of directors has fixed the close of business on April 29, 2003 as the
record date for the determination of stockholders entitled to notice of and to
vote at the annual meeting and at any adjournments or postponements thereof.
Your vote is important. All stockholders are cordially invited to attend the
annual meeting. Whether or not you plan to attend the meeting, please promptly
complete, sign, date and return the enclosed proxy card in accordance with the
instructions set forth on the card. A pre-addressed, postage prepaid return
envelope is enclosed for your convenience.
By Order of the Board of Directors,
/s/ Carene S. Kunkler
CARENE S. KUNKLER
President and Chief Executive Officer
May 8, 2003
[Sight Resource Logo]
SIGHT RESOURCE CORPORATION
6725 MIAMI AVENUE, SUITE 102
CINCINNATI, OH 45243
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the
board of directors of Sight Resource Corporation, a Delaware corporation, of
proxies, in the accompanying form, to be used at the annual meeting of
stockholders to be held at 3:30 p.m. on Tuesday, June 3, 2003, at our
headquarters located at 6725 Miami Avenue, Suite 102, Cincinnati, Ohio 45243 and
any adjournments or postponements thereof.
Where the stockholder specifies a choice on the proxy as to how his or her
shares are to be voted, the shares will be voted accordingly. If no choice is
specified, the shares will be voted: FOR the election of the three nominees for
director named herein; and FOR the adoption of the three alternative amendments
to our Restated Certificate of Incorporation.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to us a written notice of
revocation or a signed proxy bearing a later date. Any stockholder who has
executed a proxy but is present at the annual meeting and who wishes to vote in
person, may do so by revoking his or her proxy as described in the preceding
sentence. Shares represented by valid proxies in the form enclosed, received in
time for use at the annual meeting and not revoked at or prior to the annual
meeting, will be voted at the annual meeting. The presence, in person or by
proxy, of the holders of a majority of the shares of our common stock, par value
$0.01 per share, outstanding and entitled to vote is necessary to constitute a
quorum at the annual meeting.
A plurality of the votes duly cast is required for the election of directors.
That is, the nominees receiving the greatest number of votes will be elected.
The affirmative vote of the holders of a majority of the outstanding shares of
common stock entitled to vote is required to adopt each of the proposed
amendments to the Restated Certificate of Incorporation.
With respect to the tabulation of votes on any matter, abstentions are treated
as present or represented and entitled to vote at the meeting, while broker
non-votes are treated as not being present or represented and entitled to vote.
This proxy statement and the accompanying proxy are being mailed on or about May
8, 2003 to all stockholders entitled to notice of and to vote at the annual
meeting.
The close of business on April 29, 2003 has been fixed as the record date for
determining the stockholders entitled to notice of and to vote at the annual
meeting. As of the close of business on April 29, 2003, we had 50,432,261 shares
of common stock outstanding and entitled to vote. Holders of common stock are
entitled to one vote per share on all matters to be voted on by stockholders.
The cost of soliciting proxies, including expenses in connection with preparing
and mailing this proxy statement, will be borne by us. In addition, we will
reimburse brokerage firms and other persons representing beneficial owners of
common stock for their expenses in forwarding proxy materials to such beneficial
owners. Solicitation of proxies by mail may be supplemented by telephone, email,
facsimile, other electronic means and personal solicitation by our directors,
officers or employees. No additional compensation will be paid for such
solicitation.
The Annual Report to stockholders for the fiscal year ended December 28, 2002 is
being mailed to the stockholders with this proxy statement, but does not
constitute a part hereof.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of shares of our common stock as of April 15, 2003, by (i) each
stockholder known by us to own beneficially 5% or more of our outstanding shares
of common stock, (ii) each current director, (iii) each named executive officer
(as identified in the Summary Compensation Table below), and (iv) all directors
and executive officers as a group. The persons and entities named in the table
have sole voting and investment power with respect to all shares shown as
beneficially owned by them, except as noted below.
Options/Warrants
Shares of Common Stock Exercisable Percent of All
Beneficially Owned(1) Within 60 Days Shares
---------------------- ---------------- --------------
Name and Address of Beneficial Owner**
Excalibur Investments B.V. 11,500,000 -0- 22.8%
Leidseplein 98 1017 PP Amsterdam
Postbus 782 1000 AT Amsterdam
Dino Tabacchi (director)(2) 13,307,689 25,000 26.4%
Carlyle Venture Partners, L.P. (3) 10,065,524 1,000,000 19.6%
1000 Pennsylvania Avenue, N.W., Suite 220 South
Washington, D. C. 20004
Ryan M. Schwarz (director)(3) 10,065,524 1,000,000 19.6%
La Sesta S.A. 5,980,511 -0- 11.9%
Mazzucchelli 1849 spa
Via Mazzucchelli 7
21043 Castiglione Olona, Italy
Marco Brustio (director)(4) 5,980,511 -0- 11.9%
E. Dean Butler (director) 3,848,678 44,819 9.2%
62119 Wooster Road
Cincinnati, Ohio 45227
Christian E. Callsen (director) 74,500 47,500 *
Thomas A. Good (director) -0- -0- *
Carene S. Kunkler (director and executive officer) 1,568,869 1,326,588 *
William G. McLendon (director)(5) 390,728 90,833 *
Russell E. Taskey (director) 79,733 60,833 *
Duane E. Kimble, Jr. (executive officer) 208,333 208,333 *
Sandra K. Likes (executive officer) 412,100 169,819 *
All directors and executive officers as a group (11 persons) 36,809,258 3,073,725 68.8%
* Represents beneficial ownership of less than 1% of our common stock.
** Addresses are given for beneficial owners of more than 5% of our outstanding
common stock.
(1) Information concerning beneficial ownership includes the number of shares of
which the person or entity has the right to acquire beneficial ownership as of
or within 60 days after April 15, 2003. Such shares are also set forth in the
column "Options/Warrants Exercisable Within 60 Days."
(2) Includes 11,500,000 shares of our common stock held by Excalibur Investments
B.V. Mr. Tabacchi, a member of our board of directors, is the majority
stockholder of Edec Holdings s.r.l. Excalibur is a wholly owned subsidiary of
Edec. Mr. Tabacchi may be deemed to share beneficial ownership of shares owned
by Excalibur, but Mr. Tabacchi disclaims any such beneficial ownership. Also
includes 1,807,685 shares of our common stock held by Euro Ventures Equity
Holding B.V. Euro Ventures is a wholly-owned subsidiary of E-Venture.it S.p.a.
Mr. Tabacchi is a 30% shareholder of, and is President of, E-Venture. Mr.
Tabacchi may be deemed to share beneficial ownership of shares owned by Euro
Ventures, but Mr. Tabacchi disclaims any such beneficial ownership. Mr.
Tabacchi's address is the same as the address for Excalibur.
(3) Includes 9,065,524 outstanding shares of our common stock, and 1,000,000
shares of our common stock issuable upon the exercise of warrants. The
securities reported for Carlyle Venture Partners L.P. ("CVP") include securities
directly beneficially owned by each of CVP, C/S Venture Investors, L.P. ("C/S"),
Carlyle U.S. Venture Partners, L.P. ("CUS") and Carlyle Venture Coinvestment,
L.L.C. ("CVC" and together with CVP, C/S and CUS, the "Carlyle Entities"), and
indirectly beneficially owned by TCG Ventures, Ltd. ("Ventures Ltd."), the
general partner of CVP and C/S, and TCG Ventures, L.L.C. ("Ventures LLC"), the
general partner of CUS and the managing member of CVC. The outstanding shares
and the warrants are held by the Carlyle Entities as follows:
Outstanding Shares Subject
Entity Shares Owned to Warrants
------ ------------ ----------------
CVP 6,396,290 705,562
C/S 1,306,273 144,092
CUS 848,316 93,576
CVC 514,645 56,770
------- ------
9,065,524 1,000,000
2
Each of the Carlyle Entities has sole voting power and dispositive power with
respect to its shares. Ventures LLC is the sole stockholder of Ventures Ltd.
Each of CVP, C/S, CUS, CVC, Ventures Ltd. and Ventures LLC disclaim beneficial
ownership of all our securities directly beneficially owned by each of the other
Carlyle Entities or deemed indirectly beneficially owned by Ventures Ltd. and/or
Ventures LLC. Mr. Ryan M. Schwarz, a director, is a non-managing member of CVC.
Mr. Schwarz is also a principal of entities affiliated with CVC, Ventures LLC
and Ventures Ltd. Mr. Schwarz disclaims beneficial ownership of all our
securities directly or indirectly owned by CVC, Ventures LLC or any other
affiliate of any of the Carlyle Entities, except to the extent of his pecuniary
interests therein. Each of the Carlyle Entities, Ventures Ltd. and Ventures LLC
and Mr. Schwarz disclaim being part of a "group" for purposes of Section 13(d)
of the Securities Exchange Act of 1934, as amended, or for any other purpose.
(4) Mr. Brustio is President and director of La Sesta S.A. He disclaims
beneficial ownership of the 5,980,511 shares held by La Sesta.
(5) Includes 23,000 shares of common stock held by a member of Mr. McLendon's
immediate family of which Mr. McLendon disclaims beneficial ownership.
BOARD OF DIRECTORS AND MANAGEMENT
BOARD OF DIRECTORS
Our Restated Certificate of Incorporation provides for a classified board of
directors, consisting of three classes of directors, with each class to be as
nearly equal in number as is reasonably possible. We have designated three Class
A Directors (Ms. Kunkler, Mr. Schwarz and Mr. Tabacchi), three Class B Directors
(Mr. Butler, Mr. Callsen and Mr. Taskey) and three Class C Directors (Mr. Good,
Mr. McLendon and Mr. Brustio). The Class A Directors constitute a class with a
term that expires at this year's annual meeting. The Class B and Class C
Directors will serve until the annual meetings of stockholders to be held in
2004 and 2005, respectively, and until their respective successors are duly
elected and qualified. At each annual meeting of stockholders, directors are
elected for a full term of three years to succeed those directors whose terms
are expiring.
Set forth below are the names of the persons nominated as directors and
directors whose terms do not expire this year, their ages, their offices, if
any, their principal occupations or employment for the past five years, the
length of their tenure as directors and the names of other public companies and
certain private companies in which such persons hold directorships.
Name Age Position with the Company
---- --- -------------------------
E. Dean Butler 58 Chairman of the Board of Directors
Carene S. Kunkler 47 President, Chief Executive Officer and Director
Marco Brustio 49 Director
Christian E. Callsen 65 Director
Thomas A. Good 61 Director
William G. McLendon 51 Director
Ryan M. Schwarz 36 Director
Dino Tabacchi 57 Director
Russell E. Taskey 60 Director
NOMINEES TO BE ELECTED FOR A TERM EXPIRING IN 2006
Carene S. Kunkler has been a director since May 2001 and serves as our
President and Chief Executive Officer. Ms. Kunkler served as Chief Executive
Officer of eyeshop.com USA, inc., a subsidiary of eyeshop.com inc. ("Eyeshop"),
from March 2000 to May 2001. She served in the following positions at
LensCrafters, Inc., an optical retail company, from 1987 to 2000: Vice
President, Sun Category; Vice President of Product Supply; Associate General
Manager of Stores; and Senior Marketing Director. Prior thereto, Ms. Kunkler
served in the advertising and marketing division of The Procter & Gamble Company
from 1979 to 1987.
Ryan M. Schwarz has been a director since May 2000. Mr. Schwarz is a
Principal of entities affiliated with the Carlyle Entities and is a non-managing
member of CVC. Prior to joining the Carlyle Entities in 1997, Mr. Schwarz was a
Vice President in Robertson Stephens & Company's health care investment banking
group. Prior thereto, Mr. Schwarz was with the Mergers and Acquisitions
department of Morgan Stanley & Co. Mr. Schwarz serves on the boards of directors
of the following privately held companies: Connecticare Holding Co., Inc.;
Heritage Health Systems, Inc.; Intelistaf, Inc.; Fairchild Imaging, Inc.;
Primary Health, Inc.; Endius, Inc.; LipoSonix, Inc.; and AcuFocus, Inc.
Dino Tabacchi has been a director since July 2001. Since June 2002, Mr.
Tabacchi has been President of Salmoiraghi & Vigano S.p.a., a leading chain of
optical stores in Italy. Since 1974, Mr. Tabacchi has also served as a board
member of Safilo Spa, a frame manufacturer in Italy, and from 1995 to 1997 was
the Deputy Chairman of the Board of Vision Express Group, which is an optical
chain in the United Kingdom.
3
DIRECTORS CONTINUING IN OFFICE UNTIL 2005
Thomas A. Good has been a director since April 2003. From 1999 to
present, Mr. Good has served as a director of and financial and accounting
consultant to several privately held corporations, on the advisory board of
numerous private corporations, and on the boards and audit committees of various
nonprofit entities. From 1974 to 1999, Mr. Good was an audit partner with Arthur
Andersen LLP.
William G. McLendon has been a director since our inception in 1992 and
served as our President from 1992 to January 1998 and Chief Executive Officer
from April 1994 to January 1998. From January 1999 to present, Mr. McLendon has
been President of Epion Corporation, a division of publicly held JDS Uniphase
Corporation. Mr. McLendon served as Vice President and Chief Financial Officer
of IBIS Technology Corporation, a manufacturer of silicon-based materials for
semiconductors, from 1990 to 1992. Prior thereto, Mr. McLendon was the Vice
President, Chief Financial Officer and Treasurer of Summit Technology, Inc. from
1986 to 1990, and was Vice President and Chief Financial Officer of Zymet, Inc.
from 1983 to 1985. Mr. McLendon is a director of Epion Corporation.
Marco Brustio has been a director since December 2002. Since
1991, Mr. Brustio has been President and director of La Sesta S. A., an
investment holding company based in Luxembourg, and since 1995 has been
Managing Director of Mazzucchell: 1849 SpA, a plastics manufacturing company
based in Italy that supplies the frame manufacturing industry. Mr. Brustio
served as a director of Eyeshop, a private optical concept company, from 1999
to 2001 and as a director of Vision Express (UK) Limited, an optical retail
chain, from 1994 until 1997.
DIRECTORS CONTINUING IN OFFICE UNTIL 2004
E. Dean Butler has been a director since May 2001 and serves as our
Chairman. Mr. Butler served as the Chairman of Eyeshop, a private optical
concept company, from December 1999 to May 2001. Mr. Butler served as Chairman
of Vision Express (UK) Limited Group, an optical retailer, which he created,
from 1988 until 1997. Mr. Butler established LensCrafters, Inc., an optical
retail company, in 1983, sold the company to United States Shoe Corp. in 1984
and remained Chief Executive Officer of LensCrafters, Inc. through 1987. Prior
thereto, Mr. Butler held several different positions in the advertising and
marketing division of The Procter & Gamble Company from 1969 to 1983. Mr. Butler
is a director of 1-800 CONTACTS, Inc., a publicly held Utah-based contact lens
retailer.
Christian E. Callsen has been a director since May 1999 and served as
our Chairman from October 2000 until May 2001. Mr. Callsen currently serves as
the Chairman of Taga Medical Technologies, a private Cleveland-based medical
device manufacturer, and has served as President and Chief Executive Officer of
Polymer Concepts, Incorporated, formerly known as Allen Medical Systems, a
private Cleveland-based medical device manufacturer, since 1996. Prior thereto
he served in the following positions at various times throughout his
professional career: President and Chief Operating Officer of Applied Medical
Technology, Inc.; President, Chief Operating Officer and Director of
Professional Veterinary Hospitals of America, Inc.; President and Chief
Operating Officer of HLS Management Company; and Chairman and Chief Executive
Officer of the Optical Group of Cole National Corporation.
Russell E. Taskey has been a director since November 1992. Mr. Taskey is
currently President of R.E. Taskey Associates, a human resource consulting firm.
Mr. Taskey served as Vice President of Human Resources at The Analytic Sciences
Corporation from 1973 to 1994. Mr. Taskey was the founding President and is
presently a director of the Northeast Human Resources Association, a
2,000-person human resource professional association. He also serves on the
advisory board of Active Control Experts and the advisory board of Epion
Corporation.
COMMITTEES OF THE BOARD OF DIRECTORS AND MEETINGS
Meeting Attendance. During the fiscal year ended December 28, 2002, there were
12 meetings of the board of directors, and the Audit Committee met five times.
The Compensation Committee had no formal meetings during fiscal 2002. With the
exception of Mr. Tabacchi, no director attended fewer than 75% of the total
number of meetings of the board of directors and of committees of the board of
directors on which he or she served during fiscal 2002. Mr. Tabacchi attended
70% of the total number of meetings of the board of directors and of the
committee of the board on which he served during fiscal 2002.
Audit Committee. The Audit Committee has three members: Mr. McLendon, Mr.
Callsen and Mr. Tabacchi. The Audit Committee reviews the engagement of our
independent accountants, reviews annual financial statements, considers matters
relating to accounting policy and internal controls and reviews the scope of
annual audits. Please see also the report of the Audit Committee set forth
elsewhere in this proxy statement.
Compensation Committee. The Compensation Committee has two members: Mr. Schwarz
and Mr. Taskey. The Compensation Committee reviews, approves and makes
recommendations on our compensation policies, practices and procedures to ensure
that legal and fiduciary responsibilities of the board of directors are carried
out and that such policies, practices and procedures contribute to our success.
The Compensation Committee also administers our 1992 Employee, Director and
Consultant Stock Option Plan and our 2002 Employee, Director and Consultant
Stock Plan. Please see also the report of the Compensation Committee set forth
elsewhere in this proxy statement.
Compensation Committee Interlocks and Insider Participation. The Compensation
Committee has two members: Mr. Schwarz and Mr. Taskey. None of the members of
the Compensation Committee has interlocking relationships with boards of
directors of other companies. Mr. Schwarz is a Principal of the entities
affiliated with the Carlyle Entities. The Carlyle Entities beneficially own
19.6% of our common stock. See "Certain Relationships and Related Transactions"
set forth elsewhere in this proxy statement.
The Audit Committee and Compensation Committee are the only standing Committees
of the board of directors. We do not have a standing Nominating Committee.
4
COMPENSATION OF DIRECTORS
Mr. Butler received $30,000 in compensation for his services as Chairman during
the fiscal year ended December 28, 2002. All other non-employee directors served
without compensation for their services during the year.
EXECUTIVE OFFICERS
The names of, and certain information regarding, our executive officers who are
not also directors, are set forth below.
Name Age Position
---- --- --------
Duane D. Kimble, Jr. 42 Executive Vice President, Finance and Chief Financial Officer
Sandra K. Likes 52 Vice President
Duane D. Kimble, Jr. has been our Executive Vice President, Finance and Chief
Financial Officer since August 2001. Prior to joining us, Mr. Kimble was the
Executive Vice President and Chief Financial Officer of Baldwin Piano and Organ
Company, which filed a voluntary petition for relief under Chapter 11 of Title
11 of the United States Code in May 2001, from July 1998 until June 2001 and the
Director, Business and Operations, Analysis for Equistar Chemicals, LLC, a joint
venture between Lyondell Petrochemical, Millennium Chemicals and Oxy Chemicals
from 1997 to 1998.
Sandra K. Likes has been our Vice President since May 2001. Ms. Likes served as
Vice President of Eyeshop from June 2000 to May 2001. She served in the
following positions at LensCrafters, Inc., an optical retail company, from 1987
to 2000: Associate Vice President of Future Business; Category Manager for
Contact Lenses; and Associate Vice President of Product. Prior to that, Ms.
Likes served as Vice President and Divisional Merchandise Manager for Junior and
Misses Sportswear of Elder Beerman Stores Corp, an independent retail department
store chain.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee consists of the following non-employee members of the
board of directors: Ryan M. Schwarz and Russell E. Taskey. The Compensation
Committee determines and maintains our executive compensation policies and
objectives and administers our 1992 Employee, Director and Consultant Stock
Option Plan and our 2002 Employee, Director and Consultant Stock Plan.
The objectives of the Compensation Committee are to attract and retain highly
talented and productive executives, to provide incentives for superior
performance and to align the interests of executive officers, officers and
certain senior management with the interests of our stockholders.
Our executive compensation program combines cash compensation with long-term
incentive compensation, consisting principally of stock option grants, to
attract, motivate and maintain our executive officers, officers and senior
management. In addition, executive officers, officers and senior management are
included in our benefit plan which includes health, dental, life and disability
insurance and which is offered to all of our employees.
Cash compensation consists of base salary and annual bonus programs. When
setting base salary levels, including the base salary level for the Chief
Executive Officer, the Compensation Committee considers the individual's salary
history, experience, performance and contribution to the management team. The
Compensation Committee also considers salaries of executives in other companies
of similar size and industry, as well as the competitive market conditions, for
the purpose of determining base salary necessary to recruit and retain highly
talented and productive executives. The Compensation Committee generally intends
to target base salary levels of our executive officers, including our Chief
Executive Officer, to the mid-range of such comparable companies. Also
considered are our performance, the performance of the specific area of business
for which executive officers, officers and senior management, respectively, have
direct responsibility, and progress towards implementing our business plan.
Cash bonuses are awarded to executive officers, officers and senior management
principally as a mechanism to recognize and reward individual and/or our
achievements. Cash bonuses are awarded based upon progress towards meeting
specific goals established in writing at the time that final budgets for the
fiscal year are approved, including the performance of the specific area of
business for which the executive officers, officers and senior management have
direct responsibility and progress towards implementing and achieving our
business plan and profit goals. The amount of such bonuses will vary depending
upon the above mentioned factors and in determining such amounts the
Compensation Committee will consider a bonus range based on minimum and maximum
percentages of the executive officers, officers and senior management's base
salary. No cash bonuses were awarded for 2002.
The Compensation Committee believes that stock option grants: (1) align
executive officers, officers and senior management's interest with stockholder
interest by creating a direct link between compensation and stockholder return;
(2) assure that executive officers, officers and senior management maintain a
significant long-term interest in our success; and (3) help retain executive
officers, officers and senior management in a competitive market. Option grants
are made from time to time to executive officers, officers and senior management
whose contributions have or will have a significant impact on our long-term
performance. Our determination of whether option grants are appropriate each
year is based upon individual and/or our performance measures established for
each individual, including our Chief Executive Officer. Generally, options vest
in equal annual installments over a period of four years and expire ten years
from the date of grant. No stock options were awarded during 2002.
5
Members of the Compensation Committee
Ryan M. Schwarz
Russell E. Taskey
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth summary information, for the fiscal years
indicated, concerning the compensation of our four executive officers. Each of
Ms. Kunkler, Mr. Kimble and Ms. Likes commenced employment with us in 2001.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation
Compensation Awards
------------ ------
Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary($) Options(#)(1) Compensation($)(2)
---- --------- ------------- ------------------
Carene S. Kunkler............................................ 2002 210,177 -0- 1,845
President and Chief Executive Officer 2001 123,575 1,325,000 62
2000 -0- -0- -0-
Duane D. Kimble, Jr.......................................... 2002 175,130 -0- 843
Executive Vice President, Finance and 2001 55,192 625,000 14
Chief Financial Officer 2000 -0- -0- -0-
Craig H. Risk(3)............................................. 2002 137,012 -0- 718
Senior Vice President 2001 80,774 300,000 56
2000 42,955 -0- 4,000
Sandra K. Likes.............................................. 2002 120,271 -0- 634
Vice President 2001 70,613 250,000 67
2000 -0- -0- -0-
(1) Represents the number of shares subject to stock options granted under our
1992 Plan.
(2) During the 2002 fiscal year, the Company made 401(k) contributions on behalf
of Ms. Kunkler in the amount of $869. In that year, the Company also
provided to Ms. Kunkler, Mr. Kimble, Mr. Risk and Ms. Likes insurance
benefits, not generally available to other employees, valued at $976, $843,
$718 and $634, respectively.
(3) Mr. Risk resigned from his position as Senior Vice President on October 25,
2002.
OPTION GRANTS IN LAST FISCAL YEAR
We made no grants of stock options during the fiscal year ended December 28,
2002 to any of the executive officers named in the Summary Compensation Table.
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
As indicated in the following table, there were no options exercised during the
last fiscal year.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
Number of Securities
Underlying Value of Unexercised
Unexercised Options at In-the-Money Options
Fiscal Year-End(#) at Fiscal Year-End($)(1)
Shares ------------------------- ----------------------------
Acquired on Value
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
-------------------------------------------------------------------------------------------------------
Carene S. Kunkler (2) -0- -0- 884,127 1,325,794 -0- -0-
Duane D. Kimble, Jr. -0- -0- 208,333 416,667 -0- -0-
Craig H. Risk (2).......... -0- -0- 381,802 481,801 -0- -0-
6
Sandra K. Likes (2)........ -0- -0- 126,576 209,910 -0- -0-
(1)None of the unexercised options had exercise prices that were less
than the closing sale price per share of our common stock as reported
on the Over-the-Counter Bulletin Board on December 28, 2002.
(2)Includes options received in the 2001 merger with Eyeshop in exchange
for options for Eyeshop common stock.
EMPLOYMENT CONTRACT
We have an employment agreement with Ms. Kunkler. The employment agreement
provides that we will employ Ms. Kunkler as President and Chief Executive
Officer and pay her an annual base salary of $210,000, subject to increase from
time to time by action of the board of directors. Ms. Kunkler is also eligible
to earn annual bonuses, based upon criteria established by the Compensation
Committee. The employment agreement further provides that if we terminate Ms.
Kunkler's employment without cause, or if Ms. Kunkler resigns and terminates her
employment with us for good reason, we will pay Ms. Kunkler her base salary for
two years following the termination of her employment.
PERFORMANCE GRAPH
The graph below compares the performance of Sight Resource Corporation with that
of the Nasdaq Stock Market, the OptiStock Vision Stock Return Index and the
Retail/PPMC/Managed Care Stock Return Index. The comparison of total return on
investment (change in period end stock price plus reinvested dividends) for each
of the periods assumes that $100 was invested on December 31, 1997 in each of
Sight Resource Corporation, the Nasdaq Stock Market, the OptiStock Vision Group
and the Retail/PPMC/Managed Care Group with investment weighted on the basis of
market capitalization. The graph lines merely connect quarter-end dates and do
not reflect fluctuations between those dates.
[CHART]
Sight Resource Nasdaq OptiStock Retail/PPMC/
Corporation Stock Market Vision Stocks Managed Care Stocks
----------- ------------ -------------- --------------------
12/97 100.00 100.00 100.00 100.00
3/98 _____ _____ _____ _____
6/98 _____ _____ _____ _____
9/98 _____ _____ _____ _____
12/98 _____ _____ _____ _____
3/99 _____ _____ _____ _____
6/99 _____ _____ _____ _____
9/99 _____ _____ _____ _____
12/99 _____ _____ _____ _____
3/00 _____ _____ _____ _____
6/00 _____ _____ _____ _____
9/00 _____ _____ _____ _____
12/00 _____ _____ _____ _____
3/01 _____ _____ _____ _____
6/01 _____ _____ _____ _____
9/01 _____ _____ _____ _____
12/01 _____ _____ _____ _____
3/02 _____ _____ _____ _____
6/02 _____ _____ _____ _____
9/02 _____ _____ _____ _____
12/02 _____ _____ _____ _____
In previous proxy statements we have compared our performance to that of the
Nasdaq Health Service Stock Return Index and the Nasdaq Retail Trade Stock
Return Index. We believe those indices have been discontinued and have selected
in their place the OptiStock Vision Stock Return Index and the
Retail/PPMC/Managed Care Stock Return Index.
REPORT OF AUDIT COMMITTEE
The Audit Committee of the board of directors, which consists entirely of
directors who meet the independence and experience standards applicable to
companies listed on the Nasdaq National Market, has furnished the following
report.
The Audit Committee assists the board of directors in overseeing and monitoring
the integrity of our financial reporting process, our compliance with legal and
regulatory requirements and the quality of our internal and external audit
processes. The role and responsibilities of the Audit Committee are set forth in
a written Charter adopted by the board of directors, which was appended to our
2002 proxy statement. The Audit Committee reviews and reassesses the Charter
annually and recommends any changes to the board of directors for approval. The
Audit Committee is responsible for overseeing our overall financial reporting
process. In fulfilling its responsibilities for the financial statements for
fiscal year 2002, the Audit Committee took the following actions: [Note: The
following reflects action expected to be taken by the audit committee prior to
the mailing of the definitive proxy statement.]
- Reviewed and discussed the audited financial statements for the fiscal year
ended December 28, 2002 with management and KPMG LLP, our independent
auditors;
7
- Discussed with KPMG LLP the matters required to be discussed by Statement
on Auditing Standards No. 61 relating to the conduct of the audit; and
- Received written disclosures and the letter from KPMG LLP regarding its
independence as required by Independence Standards Board Standard No. 1.
The Audit Committee further discussed with KPMG LLP their independence. The
Audit Committee considered, with a view to maintaining the independence of
its independent auditors, the nature and scope of the non-audit services
supplied by our independent auditors. The Audit Committee also considered
the status of pending litigation, taxation matters and other areas of
oversight relating to the financial reporting and audit process that the
Audit Committee determined appropriate.
Based on the Audit Committee's review of the audited financial statements and
discussions with management and KPMG LLP, the Audit Committee recommended to
the board of directors that the audited financial statements be included in
our Annual Report on Form 10-K for the fiscal year ended December 28, 2002
filed with the Securities and Exchange Commission.
Members of the Audit Committee
William G. McLendon
Christian E. Callsen
Dino Tabacchi
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and
officers, and persons who own more than 10% of our common stock, to file with
the SEC initial reports of beneficial ownership and reports of changes in
beneficial ownership of our common stock and our other equity securities.
Officers, directors and greater than 10% beneficial owners are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on review of the copies of such reports furnished
to us and written representations that no other reports were required, during
the fiscal year ended December 28, 2002, all Section 16(a) filing requirements
applicable to our officers, directors and greater than 10% beneficial owners
were complied with, except as follows. Mr. Butler, Mr. Callsen, Ms. Kunkler, Mr.
McLendon, Mr. Tabacchi, Mr. Taskey, Mr. Kimble and Ms. Likes were late in filing
a Statement of Annual Change in Beneficial Ownership on Form 5 to report the
receipt of stock options that were granted to them in August 2001.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 20, 2001, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement") dated as of May 23, 2001, among us, our wholly owned subsidiary
Eyeshop Acquisition Corporation ("EAC"), and eyeshop.com, inc. ("Eyeshop"), EAC
merged with and into Eyeshop (the "Merger") and Eyeshop became our wholly owned
subsidiary. On May 23, 2001, we entered into a common stock purchase agreement
with Eyeshop and certain investors associated with Eyeshop (the "Stock Purchase
Agreement") pursuant to which we sold, in two tranches, an aggregate of
5,000,000 shares of our common stock at a price of $0.20 per share, for an
aggregate purchase price of $1,000,000, to persons associated with Eyeshop. On
May 31, 2001, we entered into a second common stock purchase agreement with
certain investors associated with Eyeshop (the "Second Stock Purchase
Agreement"), to sell an aggregate of 6,569,500 shares of our common stock at a
price of $0.20 per share for an aggregate purchase price of $1,313,900. Persons
who received our shares in the Merger and/or who purchased shares pursuant to
the Stock Purchase Agreements included Excalibur Investments B.V., La Sesta
S.A., Mr. Butler and Ms. Kunkler.
Pursuant to the terms of the Merger Agreement, the Stock Purchase Agreement and
the Second Stock Purchase Agreement, certain members of management of Eyeshop
were appointed to management positions as follows: Mr. Butler became the
Chairman of our board of directors; Ms. Kunkler became our President and Chief
Executive Officer and a director; and Mr. William Connell and Mr. Tabacchi were
appointed to our Board of Directors.
In connection with the foregoing, all of the investors who purchased our common
stock pursuant to the Stock Purchase Agreement and the Second Stock Purchase
Agreement, all of the former Eyeshop stockholders and all of our officers and
directors entered into voting agreements, dated May 23, 2001 (the "Voting
Agreements"), as a condition to the closing of the transactions. Each of the
Voting Agreements provides that the security holders subject to the Voting
Agreements agree to vote in favor of the following nominees to the Board of
Directors when the class of directors in which they are members is up for
reelection during the three years following the effective time of the Merger:
Mr. Butler, Ms. Kunkler, Mr. Connell, Mr. Callsen, Mr. McLendon and/or Mr.
Schwarz (and for any of the foregoing who does not serve, that person's
designee); and, to the extent there are positions on the Board of Directors not
filled by any of the foregoing, for any additional nominees recommended to the
stockholders for election by the Board of Directors. Mr. Connell no longer
serves as a director of the Company.
On December 31, 2002, we completed the sale of 12,500,000 shares of Common Stock
at an aggregate purchase price of $2,500,000 ($0.20 per share). The shares were
sold and purchased in a private placement. The purchasers of the shares, and the
number of shares purchased by each purchaser, were as follows:
8
Purchaser Number of Shares Aggregate Purchase Price
--------- ---------------- ------------------------
Carlyle Venture Partners, L.P. 1,940,295 $ 388,059
Carlyle U.S. Venture Partners, L.P. 257,335 $ 51,467
C/S Venture Investors, L.P. 396,255 $ 79,251
Carlyle Venture Coinvestment, L.L.C. 156,115 $ 31,223
E. Dean Butler 1,250,000 $ 250,000
Excalibur Investments B.V. 5,500,000 $ 1,100,000
La Sesta S.A. 3,000,000 $ 600,000
Mr. Butler is Chairman of our Company. The other purchasers were pre-existing
stockholders of the Company. As noted elsewhere in this proxy statement, Messrs.
Schwarz, Tabacchi and Brustio, all of whom are directors of the Company, have
relationships with the Carlyle Entities, Excalibur and La Sesta, respectively.
The sale and purchase of the shares was completed pursuant to a Common Stock
Purchase Agreement dated as of December 31, 2002 among the Company and the
purchasers (the "Purchase Agreement").
The above described share sale transaction was reviewed by a special committee
of the Company's Board of Directors composed of disinterested directors. The
special committee recommended the transaction for approval by the full Board. In
connection with that review and recommendation, the committee received and
considered a fairness opinion from a financial advisory firm.
Also pursuant to the Purchase Agreement and as of December 31, 2002, the Company
issued to Carlyle Venture Partners, L.P., C/S Venture Investors, L.P., Carlyle
U.S. Venture Partners, L.P., and Carlyle Venture Coinvestment, L.L.C. (the
"Carlyle Entities") an aggregate of 1,849,625 shares of Common Stock as payment
of accrued and unpaid dividends (in the amount of $508,000) on the shares of
Series B Convertible Preferred Stock, par value $.01 per share (the "Preferred
Stock"), held by the Carlyle Entities.
Also pursuant to the Purchase Agreement and as of December 31, 2002, the Carlyle
Entities converted all of their Preferred Stock (1,452,119 shares) to 3,243,900
shares of common stock of the Company. There are no remaining shares of
Preferred Stock outstanding.
Also pursuant to the Purchase Agreement, the Carlyle Entities and the Company
agreed to the cancellation of certain warrants (being referred to as Class I
(Mirror) Warrants) representing an obligation to purchase an aggregate of 62,884
shares of common stock of the Company.
The Purchase Agreement provides that, for a period of three years, the Board of
Directors of the Company shall take such action as may be consistent with its
fiduciary duties to cause the Board of Directors to remain consistent with its
then current composition, subject to the following: (i) Mr. Tabacchi (a director
of the Company and an affiliate of Excalibur) and one representative of the
Carlyle Entities will be members of the Board; (ii) Mr. Brustio (who was elected
to the Board on December 31, 2002 and who is President and director of La Sesta)
will be a member of the Board; and (iii) the Board shall nominate an additional
director who shall have significant financial and accounting expertise and who
is neither employed by the Company nor any affiliate of the Company as an
employee or consultant, and the identity and financial and accounting experience
of such director shall be reasonably satisfactory to the Carlyle Entities; and
(iv) Mr. Tabacchi shall have the right to designate a director to fill the first
vacancy on the Board (other than vacancies related to the positions reserved for
the Carlyle Entities and Mr. Brustio).
PROPOSAL ONE:
ELECTION OF DIRECTORS
Our Restated Certificate of Incorporation provides for a classified board of
directors, consisting of three classes of directors, with each class to be as
nearly equal in number as is reasonably possible. We have designated three Class
A directors (Ms. Kunkler, Mr. Schwarz and Mr. Tabacchi), three Class B directors
(Mr. Butler, Mr. Callsen and Mr. Taskey) and three Class C directors (Mr.
Brustio, Mr. Good and Mr. McLendon). The Class A Directors constitute a class
with a term that expires at this year's annual meeting. The Class B and Class C
directors will serve until the annual meetings of stockholders to be held in
2004 and 2005, respectively, and until their respective successors are duly
elected and qualified. At each annual meeting of stockholders, directors are
elected for a full term of three years to succeed those directors whose terms
are expiring.
Pursuant to our bylaws, the board of directors has voted (i) to fix the board of
directors at nine members and (ii) to nominate Ms. Kunkler, Mr. Schwarz and Mr.
Tabacchi for election at the annual meeting to serve for a term of three years
continuing until the annual meeting of stockholders in the year 2006, and until
their respective successors are elected and qualified. The Class B directors
(Mr. Butler, Mr. Callsen and Mr. Taskey) and the Class C directors (Mr. Brustio,
Mr. Good and Mr. McLendon) will serve until the annual meetings of stockholders
to be held in 2004 and 2005, respectively, and until their respective successors
have been elected and qualified.
Unless authority to vote for any of the nominees named above is withheld, the
shares represented by the enclosed proxy will be voted FOR the election of the
nominees as directors. In the event that any nominee shall become unable or
unwilling to serve, the shares represented by the enclosed proxy will be voted
for the election of such other person as the board of directors may recommend in
his place. The board of directors has no reason to believe that any nominee will
be unable or unwilling to serve as a director.
VOTE REQUIRED
A plurality of the votes duly cast is required for the election of directors.
9
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MS. KUNKLER, MR. SCHWARZ AND
MR. TABACCHI AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN
FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
PROPOSALS TWO, THREE AND FOUR:
AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
TO EFFECT A REVERSE STOCK SPLIT AT THE DISCRETION OF THE BOARD OF DIRECTORS
We are asking our stockholders to approve three alternative proposals to amend
our Restated Certificate of Incorporation to effectuate a reverse stock split. A
reverse stock split would reduce the number of outstanding shares of our common
stock, and the individual holdings of each stockholder at the time of the split,
in accordance with the same ratio. The three proposals are identical except that
each proposal has its own ratio. These ratios are 1-for-5, 1-for-10 and
1-for-20. Under these proposals, the board of directors will be given the
authority to effectuate at its discretion any one of the approved proposals, or
none at all, at any time prior to our annual meeting in 2005. The proposals not
effectuated will be abandoned. We are asking you to approve these proposals
because effectuating a reverse stock split may (1) help us satisfy the Nasdaq
National Market System's listing standards relating to minimum stock price, and
(2) raise our stock price, which may attract more investors to purchase our
stock.
If any of the proposals are approved, the board of directors will have the
discretion to effect one reverse stock split at any time prior to our annual
meeting in 2005, using one of the approved ratios, or to choose not to effect a
reverse stock split at all, based on its determination of which action is in the
best interests of the Company and its stockholders. No further action on the
part of our stockholders will be required to complete the reverse stock split.
We currently have authorized 70,000,000 shares of common stock and 5,000,000
shares of preferred stock. As of April 29, 2003, the record date for the annual
meeting, 50,432,261 shares of common stock were outstanding. There were no
shares of preferred stock outstanding. The reverse stock split, if implemented,
would reduce the number of outstanding shares of common stock, but would not
change the par value or the voting rights of the common stock and, except for
the impact of fractional shares, each stockholder's proportionate ownership
interest in the Company would be the same immediately before and after the
reverse stock split. In addition, if the reverse stock split is implemented, the
authorized number of shares of common stock will be reduced to 20,000,000 in the
case of a 1-for-5 reverse split, 10,000,000 in the case of a 1-for-10 reverse
split, and 5,000,000 in the case of a 1-for-20 reverse split.
PURPOSES OF THE REVERSE STOCK SPLIT
We believe that increasing our stock price through a reverse stock split will
have a number of benefits. First, a reverse stock split may assist us in
satisfying the National Market System eligibility criteria so that our common
stock may return to the system. Our stock was removed from the National Market
System in 2000 when our share price fell below the minimum price required for
continued qualification. Among the requirements for renewed qualification is a
minimum bid price per share of $5.00. Approval of the reverse stock split
proposals may assist us in satisfying the minimum share price requirement.
Second, a reverse stock split may attract additional investors. We believe that
a number of institutional investors and investment funds are reluctant to invest
in lower-priced stocks and that brokerage firms are reluctant to recommend
lower-priced stocks to their clients. By effecting a reverse stock split, we may
be able to raise our stock price to a level where our stock would be viewed more
favorably by potential investors. Other investors may also be dissuaded from
purchasing lower-priced stocks because the brokerage commissions, as a
percentage of the total transaction, tend to be higher for such stocks. A higher
stock price after a reverse stock split should reduce this concern.
CERTAIN RISKS ASSOCIATED WITH THE REVERSE STOCK SPLIT
We cannot assure you that the market price per new share of our common stock
after the reverse stock split will rise or remain constant in proportion to the
reduction in the number of shares before the reverse stock split. In many cases,
the market price of a company's shares declines after a reverse stock split.
Thus, while our stock price might meet the National Market System's standards
initially, we cannot assure you that it would continue to do so. We also cannot
assure you that the reverse stock split will result in per share stock prices
that will attract additional investors or increase analyst coverage.
Furthermore, stockholders who otherwise would be entitled to receive fractional
shares will only be entitled to a cash payment in lieu of such shares and will
no longer have any rights as a stockholder with respect to the shares of common
stock that would have been exchanged for such fractional shares.
In addition to reducing the number of outstanding shares, a reverse stock split
will reduce the number of round lot holders of our shares and the trading volume
of our shares. These factors may result in our shares being less liquid. A
decline in liquidity may make it more difficult for you to buy or sell our
shares and may have a downward influence on our share price.
To qualify for designation as a National Market System security, we must satisfy
various criteria in addition to that relating to minimum bid price per share.
Other criteria that may apply include pre-tax annual income, the aggregate
market value of our publicly held shares, and the amount of our stockholders'
equity. There is no assurance that we will satisfy the other criteria.
PRINCIPAL EFFECTS OF THE REVERSE STOCK SPLIT
10
If approved and implemented, the principal effects of the reverse stock split
would include the following:
- depending on the ratio for the reverse stock split selected by the Board,
each 5, 10 or 20 shares of common stock you own will be combined into one
new share of common stock, as applicable;
- the number of shares of our common stock issued and outstanding will be
reduced proportionately based on the ratio selected by the board or
directors;
- appropriate adjustments will be made to stock options granted under our
plans to maintain the economic value of the awards;
- the number of shares reserved for issuance under our existing stock-based
compensation plans will be reduced proportionately based on the ratio
selected by the board or directors (and any other appropriate adjustments
or modifications will be made under the plans);
- the number of one one-thousandths of a share of Series A Junior
Participating Preferred Stock purchasable upon exercise of each of the
preferred share purchase rights granted to stockholders pursuant to our
Rights Agreement will be multiplied by 5, 10 or 20 (depending on the ratio
selected by the board of directors) and one right will continue to be
associated with each share of common stock;
The common stock resulting from the reverse stock split will remain fully paid
and non-assessable. The reverse stock split will not affect the registration of
our common stock under the Securities Exchange Act of 1934.
ADJUSTMENT OF NUMBER OF AUTHORIZED SHARES
As stated above, if the reverse split is implemented, the authorized number of
shares of common stock will be reduced from 70,000,000 to 20,000,000 in the case
of a 1-for-5 reverse split, 10,000,000 in the case of a 1-for-10 reverse split,
and 5,000,000 in the case of a 1-for-20 reverse split. Even though the
authorized number of shares is being reduced, the result, considering the impact
of the reverse split on the number of outstanding shares, will be to increase
the number of our authorized but unissued shares in relation to our issued
shares.
We believe it continues to be in our best interest to have sufficient authorized
but unissued shares of common stock available in order to provide flexibility
for corporate action in the future. The availability of authorized shares for
issuance from time to time in the board of directors' discretion in connection
with possible acquisitions of other companies, future financings, stock splits
or dividends or for other corporate purposes is desirable in order to avoid
repeated separate amendments to our Restated Certificate of Incorporation and
the delay and expense incurred in holding special meetings of the stockholders
to approve such amendments. We currently have no specific plans, arrangements or
agreements with respect to any exchange, merger, combination, acquisition or
similar transaction that would require us to issue authorized but unissued
shares of our common stock.
We will not solicit further authorization by vote of the stockholders for the
issuance of the additional shares of common stock proposed to be authorized,
except as required by law, regulatory authorities or rules of any stock exchange
or system on which our shares may then be listed or quoted. The issuance of
additional shares of common stock could have the effect of diluting existing
stockholder earnings per share, book value per share and voting power. Our
stockholders do not have any preemptive right to purchase or subscribe for any
part of any new or additional issuance of our securities.
FRACTIONAL SHARES
No fractional certificates will be issued in connection with the reverse stock
split. Stockholders who otherwise would be entitled to receive fractional shares
because they hold a number of shares of common stock not evenly divisible by the
number selected by the Board for the reverse stock split ratio will be entitled,
upon surrender of any certificate(s) representing such shares, to a cash payment
in lieu thereof. We will arrange for a third party to aggregate the fractional
shares of registered stockholders, sell them in the open market and deliver the
proceeds to those stockholders upon surrender of their certificates. We will pay
any brokerage commissions in connection with the sale. As an alternative to
arranging for a third party sale of the aggregated fractional interests, the
board of directors may cause the Company to purchase the fractional shares at
their fair market value as of the effective date of the reverse split as
determined by the board.
ACCOUNTING MATTERS
The par value of our common stock will remain at $.01 per share after the
reverse stock split. As a result, as of the effective time, the stated capital
on our balance sheet attributable to our common stock will be reduced
proportionately based on the reverse stock split ratio selected by the board of
directors, and the additional paid-in capital account will be credited with the
amount by which the stated capital is reduced. In future financial statements,
we will restate net income or loss per share and other per share amounts for
periods ending before the reverse stock split to give retroactive effect to the
reverse stock split.
PROCEDURE FOR EFFECTING REVERSE STOCK SPLIT AND EXCHANGE OF STOCK CERTIFICATES
If stockholders approve one or more of the proposals and the board of directors
decides to implement the reverse stock split, we will file with the Secretary of
State of the State of Delaware a certificate of amendment to our Restated
Certificate of Incorporation. The reverse stock split will become effective at
the time and on the date of filing of, or at such later time as is specified in,
the certificate of amendment, which we refer to as the "effective time" and
"effective date," respectively. Beginning at the effective time, each
certificate representing shares of common stock will be deemed for all corporate
purposes to evidence ownership of the number of whole shares of common stock
into which the shares previously
11
represented by the certificate were combined pursuant to the reverse stock
split. The text of the certificate of amendment would be in substantially the
form attached hereto as Annex A, except that the text of the form may be altered
for any changes required by the Secretary of State of the State of Delaware and
changes deemed necessary or advisable by the board of directors, including the
insertion of the effective time, effective date, numbers of authorized shares
and the reverse stock split ratio selected by board of directors.
Following any reverse stock split, stockholders holding physical certificates
will need to exchange those certificates for new certificates and a cash payment
in lieu of any fractional shares, and we expect that our common stock will
receive a new CUSIP number. No action will be required by stockholders who hold
their shares through a brokerage firm or otherwise in "street name."
Our transfer agent, presently American Stock Transfer & Trust Company, will
advise registered stockholders of the procedures to be followed to exchange
certificates in a letter of transmittal to be sent to stockholders. No new
certificates will be issued to a stockholder until the stockholder has
surrendered the stockholder's outstanding certificate(s), together with the
properly completed and executed letter of transmittal, to our transfer agent.
Any old shares submitted for transfer following effectuation of the split,
whether pursuant to a sale, other disposition or otherwise, will automatically
be exchanged for new shares. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK
CERTIFICATE(s) AND SHOULD NOT SUBMIT ANY CERTIFICATE(s) UNTIL REQUESTED TO DO
SO.
NO APPRAISAL RIGHTS
Stockholders do not have appraisal rights under Delaware General Corporation Law
or under our Restated Certificate of Incorporation in connection with the
reverse stock split.
RESERVATION OF RIGHT TO ABANDON REVERSE STOCK SPLIT
We reserve the right to abandon the reverse stock split without further action
by our stockholders at any time before the effectiveness of the filing with the
Secretary of State of the State of Delaware of the certificate of amendment to
our Restated Certificate of Incorporation, even if the reverse stock split has
been authorized by our stockholders at the annual meeting. By voting in favor of
the reverse stock split, you are also expressly authorizing the board of
directors to determine not to proceed with, and abandon, the reverse stock split
if it should so decide.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material U.S. federal income tax consequences
of the proposed reverse stock split. This discussion is based on the Internal
Revenue Code, the Treasury Regulations promulgated thereunder, published
statements by the Internal Revenue Service and other applicable authorities on
the date of this proxy statement, all of which are subject to change, possibly
with retroactive effect. This discussion does not address the tax consequences
to holders that are subject to special tax rules, such as banks, insurance
companies, regulated investment companies, personal holding companies, foreign
entities, nonresident alien individuals, broker-dealers and tax-exempt entities.
Further, it does not address any state, local or foreign income or other tax
consequences. This summary assumes that the shares of common stock held
immediately prior to the effective time of the reverse stock split (the "old
shares") were, and the new shares received will be, held as a "capital asset,"
as defined in the Internal Revenue Code (generally, property held for
investment).
Subject to the discussion below concerning the treatment of the receipt of cash
payments instead of fractional shares, we believe that the material U.S. federal
income tax consequences of the reverse stock split are as follows:
- The Company will not recognize any gain or loss as a result of the reverse
stock split.
- You will not recognize any gain or loss as a result of the reverse stock
split, except with respect to cash received instead of fractional shares.
- The aggregate adjusted basis of the shares you hold following the reverse
stock split will be equal to your aggregate adjusted basis immediately
prior to the reverse stock split, reduced by any tax basis attributable to
a fractional share.
- Your holding period for the shares you continue to hold after the reverse
stock split will include your holding period for the shares you held
immediately prior to the reverse stock split.
In general, if you receive cash instead of a fractional share of our common
stock, you will recognize capital gain or loss based on the difference between
the amount of cash received and your adjusted basis in the fractional share. The
capital gain or loss will constitute long-term capital gain or loss if your
holding period for our common stock is greater than one year as of the date of
the reverse stock split. The deductibility of capital losses is subject to
limitations. This tax treatment will apply whether the cash received results
from a third party sale of your fractional shares or alternatively, from a
repurchase by the Company.
Our view regarding the tax consequences of the reverse stock split is not
binding on the Internal Revenue Service or the courts. ACCORDINGLY, WE URGE YOU
TO CONSULT WITH YOUR OWN TAX ADVISOR WITH RESPECT TO ALL OF THE POTENTIAL TAX
CONSEQUENCES TO YOU OF THE REVERSE STOCK SPLIT.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the outstanding shares of
common stock entitled to vote is required to approve each of the proposals to
amend the Restated Certificate of Incorporation.
12
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE THREE ALTERNATIVE PROPOSALS TO
AMEND OUR RESTATED CERTIFICATE OF INCORPORATION TO EFFECTUATE A REVERSE STOCK
SPLIT IN THE RATIOS OF 1-FOR-5, 1-FOR-10 OR 1-FOR-20, WHICH MAY BE EFFECTUATED,
IF AT ALL, AT THE DISCRETION OF THE BOARD OF DIRECTORS AT ANY TIME PRIOR TO OUR
ANNUAL MEETING IN 2005.
INDEPENDENT PUBLIC ACCOUNTANTS
KPMG LLP has audited our financial statements each fiscal year from ____ through
2002. We expect that representatives of KPMG LLP will be present at the annual
meeting, with the opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions.
For the last two fiscal years, we were billed fees in the following amounts for
services by KPMG:
Year Ended Year Ended
December 28, 2002 December 29, 2001
Audit fees $__________ $132,500
Audit-related fees $__________ $ 15,000
Tax fees $__________ $ 35,300
All other fees $__________ $ 22,240
Audit fees related to KPMG's audit of our annual financial statements and their
review of financial statements included in our quarterly reports on SEC Form
10-Q.
Audit-related fees were incurred in connection with an audit of the Company's
401(k) plan.
Tax fees related to the filing of the Company's federal income tax returns.
Other fees related to assistance in the preparation of the Company's proxy
materials distributed in connection with the Eyeshop merger.
All audit and non-audit services performed for us by our independent public
accountants are subject to pre-approval by our Audit Committee.
We have not yet appointed a firm of independent public accountants to audit our
financial statements for the fiscal year ending December 27, 2003. The
appointment of independent public accountants will be made by our Audit
Committee.
OTHER MATTERS
We do not presently intend to bring any matters other than those described in
this proxy statement before our annual meeting. Further, we have no knowledge of
any other matters that may be introduced by other persons. If any other matters
do properly come before the annual meeting or any adjournment or postponement of
our annual meeting, the persons named in the enclosed proxy, as applicable, will
vote the proxies in keeping with their judgment on such matters.
STOCKHOLDER PROPOSALS
To be considered for inclusion in the proxy statement relating to our annual
meeting of stockholders to be held in 2004, stockholder proposals must be
received no later than January 8, 2004. To be considered for presentation at the
2004 annual meeting, although not included in the proxy statement, proposals
must be received not earlier than February 22, 2004 and not later than March 23,
2004. Proposals received after March 23, 2004 will not be voted on at the 2004
annual meeting. If for any reason a proposal received after March 23, 2004 is
considered at the 2004 annual meeting, the holders of the proxies that the board
of directors solicits for the meeting may exercise discretionary voting
authority on the proposal under circumstances consistent with the proxy rules of
the Securities and Exchange Commission. All stockholder proposals should be
marked for the attention of Secretary, Sight Resource Corporation, 6725 Miami
Avenue, Suite 102, Cincinnati, Ohio 45243.
13
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, YOU ARE URGED TO FILL
OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE.
By Order of the Board of Directors:
/s/ Carene S. Kunkler
CARENE S. KUNKLER
President and Chief Executive Officer
May 8, 2003
Cincinnati, Ohio
Our Annual Report on Form 10-K for the fiscal year ended December 28, 2002
(other than exhibits thereto) filed with the Securities and Exchange Commission,
which provides additional information about us, is available to beneficial
owners of our common stock without charge upon written request to Secretary,
Sight Resource Corporation, 6725 Miami Avenue, Suite 102, Cincinnati, OH 45243.
14
Annex A
[Sight Resource Logo]
FORM OF
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
OF
SIGHT RESOURCE CORPORATION
It is hereby certified that:
1. The name of the corporation (hereinafter called the "Corporation") is
Sight Resource Corporation.
2. The date of filing of the original Certificate of Incorporation of the
Corporation under the name NewVision Technology, Inc. was November 2, 1992.
Thereafter the following documents were filed: (1) a Restated Certificate of
Incorporation filed on May 10, 1994; (2) a Certificate of Ownership filed on
October 10, 1995 to change the name of the Corporation to Sight Resource
Corporation; (3) a Certificate of Designation filed on May 12, 1997; (4) a
Certificate of Designation filed on November 24, 1997; (5) a Certificate of
Amendment of Restated Certificate of Incorporation of Sight Resource Corporation
filed on July 20, 2001; and (6) a Certificate of Amendment of Restated
Certificate of Incorporation of Sight Resource Corporation filed on May 30,
2002.
3. The Restated Certificate of Incorporation is hereby amended by deleting
the first paragraph of Article FOURTH thereof and by substituting the following
in lieu thereof:
"FOURTH: The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is (i)
[20,000,000/10,000,000/5,000,000] shares of Common Stock, $0.01 par
value per share ("Common Stock"), and (ii) 5,000,000 shares of
Preferred Stock, $0.01 par value per share ("Undesignated Preferred
Stock").
Effective at 12:01 a.m., eastern time, on [the first day following
the filing with the Secretary of State of Delaware of a Certificate
of Amendment certifying adoption of this paragraph] (such time being
the "Effective Time"), each [5/10/20] shares of Common Stock of the
Corporation issued and outstanding immediately prior to the Effective
Time (the "Old Common Stock") shall be automatically reclassified as
and combined into (the "Reclassification"), without any further
action, one (1) fully-paid and nonassessable share of Common Stock of
the Corporation, par value $.01 per share (the "New Common Stock"),
with cash being paid, without interest, in lieu of any fractional
share of New Common Stock that would otherwise be issued, as provided
below.
Each stock certificate that, immediately prior to the Effective Time,
represented shares of Old Common Stock (a "Certificate") will from
and after the Effective Time represent, (i) automatically and without
the necessity of surrendering the same for exchange, the number of
shares of New Common Stock, rounded down to the nearest whole number,
determined by dividing the number of shares of Old Common Stock
represented by such Certificate immediately prior to the Effective
Time by [5/10/20] and (ii) the right to receive, upon surrender
thereof to the transfer agent of the Corporation for exchange, a cash
payment, without interest, in lieu of any fraction of a share of New
Common Stock that would have been represented by such Certificate if
fractional shares of New Common Stock had been issued in the
Reclassification, as provided below.
No fractional shares of New Common Stock of the Corporation shall be
issued in the Reclassification. Instead of issuing such fractional
shares, the Corporation shall arrange for the disposition of
fractional interests on behalf of those entitled thereto, and
distribute the proceeds received from the sale among the holders of
the fractional interests as their respective interests appear upon
surrender of their Certificates, if any, to the transfer agent.
Alternatively, the Corporation may, upon authorization by the board
of directors and subject to compliance with the General Corporation
Law of the State of Delaware, pay to stockholders otherwise entitled
to receive a fractional share cash in an amount equal to the fair
market value of such fractional share as of the Effective Date as
determined by the board of directors, such payment to be made upon
surrender of the applicable Certificate. No stockholder of the
Corporation shall transfer any fractional shares of New Common Stock
of the Corporation. The Corporation shall not recognize on its stock
record books any purported transfer of any fractional share of New
Common Stock of the Corporation."
4. At a meeting of the Board of Directors of the Corporation a resolution
was duly adopted, pursuant to Section 242 of the General Corporation Law of the
State of Delaware, setting forth the foregoing amendment to the Restated
Certificate of Incorporation of the Corporation and declaring the amendment to
be advisable. Pursuant to Section 242 of the General Corporation Law of the
State of Delaware, the holders of outstanding shares of the Corporation having
no less than the minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to vote thereon were
present and voted, authorized the adoption of the aforesaid amendment upon
notice duly given.
5. The amendment of the Restated Certificate of Incorporation herein
certified has been duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.
Signed this day of , 20__.
Carene S. Kunkler
President and Chief Executive Officer
15
SIGHT RESOURCE CORPORATION
THIS PROXY IS BEING SOLICITED BY SIGHT RESOURCE CORPORATION'S BOARD OF DIRECTORS
The undersigned, revoking any previous proxies relating to these
shares, hereby acknowledges receipt of the Notice and Proxy
Statement dated May 8, 2003 in connection with the annual meeting
to be held at 3:30 p.m. on Tuesday, June 3, 2003, at the company's
corporate headquarters located at 6725 Miami Avenue, Suite 102,
Cincinnati, Ohio 45243 and hereby appoints Carene S. Kunkler and
Duane D. Kimble, Jr., and each of them (with full power to act
alone), the attorneys and proxies of the undersigned, with power of
substitution to each, to vote all shares of the common stock of
Sight Resource Corporation registered in the name provided herein
which the undersigned is entitled to vote at the June 3, 2003
annual meeting of stockholders, and at any adjournments or
postponements thereof, with all the powers the undersigned would
have if personally present. Without limiting the general
authorization hereby given, the proxies are, and each of them is,
instructed to vote or act as indicated below on the proposals set
forth in the Proxy Statement.
This Proxy when executed will be voted in the manner directed
herein. If no direction is made, this Proxy will be voted FOR the
election of directors in Proposal 1, and FOR Proposals 2, 3, and 4.
In their discretion the proxies are authorized to vote upon such
other matters as may properly come before the meeting or any
adjournments or postponements thereof.
Nominees for election as directors:
Carene S. Kunkler Ryan M. Schwarz Dino Tabacchi
SEE REVERSE SIDE FOR PROPOSALS. If you wish to vote in accordance with the Board
of Directors' recommendations, just sign on the reverse side. You need not mark
any boxes.
(SEE REVERSE SIDE) (SEE REVERSE SIDE)
16
(DETACH HERE)
[X] Please mark votes as in this example.
The Board of Directors recommends a vote FOR Proposals 1, 2, 3, and 4.
1. Election of Directors (see reverse).
[_] FOR ALL NOMINEES [_] WITHHOLD FOR ALL NOMINEES
[_] FOR ALL NOMINEES EXCEPT AS NOTED BELOW
2. Proposal to effect a reverse stock split in the ratio of 1-for-5, at the
discretion of the board of directors.
[_] FOR [_] AGAINST [_] ABSTAIN
3. Proposal to effect a reverse stock split in the ratio of 1-for-10, at the
discretion of the board of directors.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Proposal to effect a reverse stock split in the ratio of 1-for-20, at the
discretion of the board of directors.
[_] FOR [_] AGAINST [_] ABSTAIN
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name(s) appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
Signature: Date
Signature: Date
17