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TOPAZ GROUP INC - DEF 14A - 20021119 - PROPOSAL_1
PROPOSAL 1
ELECTION OF DIRECTORS
At the Meeting, stockholders will elect seven (7) directors to serve until
the next annual meeting of stockholders and until their respective successors
are elected and qualified. Unless otherwise directed, the persons named in the
Proxy intend to cast all Proxies received for the election of Dr. Aphichart
Fufuangvanich, Terrance C. Cuff, Timothy Matula, Thiti Fufuangvanich, David
Dikinis, Jason Sugarman and Charoen Russametummachot (singularly a "Nominee" and
collectively, the "Nominees"), to serve as directors upon their nomination and
election at the Meeting. Each Nominee has advised the Company of his or her
willingness to serve as a director of the Company. All of the Nominees, with
the exception of Charoen Russametummachot, currently serve as directors of the
Company. In case any Nominee should become unavailable for election to the
Board of Directors for any reason, the persons named in the Proxies have
discretionary authority to vote the Proxies for one or more alternative nominees
who will be designated by the Board of Directors.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company, their ages and their
present positions with the Company are as follows:
NAME AGE POSITION
----------------------------- ------- -----------------------------------------
Dr. Aphichart Fufuangvanich 51 Chairman of the Board of Directors, Chief
Executive Officer and President
Thammatinna Thammaradi 42 Director and Executive Vice President
Terrance C. Cuff 39 Director and Chief Financial Officer
Timothy Matula 41 Director and Treasurer
Leonard T. Orrin 55 Director and Director of Sales
Thiti Fufuangvanich 24 Director and Director of Research and Development
Jeremy Watson* 59 Independent Director
David Dikinis 49 Independent Director
Alson Lee* 74 Independent Director
Jason Sugarman 30 Independent Director
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* Resigned effective October 2002
All directors of the Company shall hold office until the next annual
meeting of stockholders and until their successors have been elected and
qualified. The officers of the Company are elected by the Board of Directors at
the first Board of Directors' meeting after each annual meeting of stockholders
and hold office until their death, until they resign or until they have been
removed from office.
INFORMATION ABOUT NOMINEES
Set forth below is certain information with respect to each Nominee:
DR. APHICHART FUFUANGVANICH has served as our President and as a Director
since 2001 and as Chairman of the Board of Directors and our Chief Executive
Officer since April 2002. Dr. Fufangvanich has worked within the manufacturing
and sales business for over thirty years. Dr. Fufuangvanich has extensive
experience within this field and has spent the last five yeas consulting to
various stone manufacturing and sale companies, including The Topaz Group, Inc.
Dr. Fufuangvanich is the father of Director Thiti Fufangvanich.
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TERRANCE C. CUFF has served as our Chief Financial Officer and as a
Director since 2001. From January 1994 to February 2000, Mr. Cuff was the
President and shareholder of Business Exchange Center, Inc., a mergers and
acquisitions firm. Prior to holding the position as President, he served as
senior valuation analyst from 1989 to 1994 with the same firm.
TIMOTHY MATULA has served as our Treasurer and as a Director since 2001.
Mr. Matula is currently a principal in Quantum Capital Advisors, a money
management and corporate advisory firm. He is also currently a member of the
Board of Directors at Eat at Joe's, Inc. From 1994 to 1997, Mr. Matula served as
Assistant Vice President of Prudential Securities and a portfolio manager at
Quantum Capital Advisors.
THITI FUFUANGVANICH has served as a Director and as our Director of
Research & Development since 2001. He was the President of Student Government at
Chulalongkorn University in 1999. Thiti Fufuangvanich is the son of Chairman of
the Board of Directors, Chief Executive Officer and President, Dr. Aphichart
Fufuangvanich.
DAVID DIKINIS has served as an Independent Director since 2001. He is the
founder of Gemstones.com, Amulet, Gemstone and Jewelry Catalog and Talisman
Catalog each of which he established in 1985. Mr. Dikinis is a Gemologist (GIA)
and former board member of the American Gem Trade Association (AGTA).
JASON SUGARMAN has served as an Independent Director since 2001. Mr.
Sugarman is a principal of MKA Capital, a privately held real estate fund
located in Orange County, California. He started at MKA in March 2000. Prior to
this position, Mr. Sugarman was the President of Cardinal Mortgage from February
1999 to March 2000. From 1994 to 2000, Mr. Sugarman was a principal of Patriot
Homes, a land development and homebuilding company. He has a BA degree in
Economics from Stanford University.
CHAROEN RUSSAMETUMMACHOT is currently majoring in Marketing in the Joint
Doctoral Program of Business Administration at the National Institute of
Development Administration in Bangkok, Thailand. Between 1999 and 2001, Mr.
Russametummachot was a sales trainer at Performa Thailand Ltd., where he was
responsible for training sales representatives throughout Thailand. Prior to
this position, he was Marketing Department Manager for BST Elastomer Co., Ltd.,
in Bangkok, where he was responsible for opening up several overseas markets for
the sale of its synthetic rubber, including to the USA, Europe and Indochina.
Mr. Russametummachot worked in various positions at Mobil Oil Thailand Ltd.
between 1989 and 1996, where he conducted several major advertising and sales
promotion campaigns, which resulted in generating increased sales of Mobil 1
motor oil.
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MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended December 31, 2001, the Board of Directors had
one (1) meeting. Each of the directors attended the meeting. Our board is also
comprised of an Audit Committee, which has the following three members, all of
whom are independent directors: David Dikinis, Jason Sugarman and Alson Lee, who
serves as the Chairman of the Audit Committee. The specific functions and
responsibilities of the Audit Committee are set forth in a written charter of
the Audit Committee, adopted by the Board of Directors, which is attached to
this Proxy Statement as Exhibit A. There is currently no nominating or
compensation committee of the Board of Directors.
If elected, Mr. Russametummachot will replace Mr. Alson as a member of the
Audit Committee. Accordingly, the Audit Committee will be comprised of the
following three members, all of whom are independent directors: David Dikinis,
Jason Sugarman and Charoen Russametummachot. After the election, the Board of
Directors will form a Compensation Committee, which will be comprised of David
Dikinis, Jason Sugarman, and Charoen Russametummachot, if Mr. Russametummachot
is elected.
AUDIT COMMITTEE REPORT
Our Committee has reviewed and discussed with management of the Company and
Grant Thornton LLP ("Grant Thornton"), the independent auditing firm of the
Company, the audited financial statements of the Company as of December 31, 2001
(the "Audited Financial Statements"). In addition, we have discussed with Grant
Thornton the matters required by Codification of Statements on Auditing
Standards No. 61, as amended by Statement on Auditing Standards No. 90.
The Committee also has received and reviewed the written disclosures and
the letters from Grant Thornton required by Independence Standards Board
Standard No. 1, and we have discussed with such firm its independence from the
Company. We also have discussed with management of the Company and Grant
Thornton such other matters and received such assurances from them as we deemed
appropriate.
Management is responsible for the Company's internal controls and the
financial reporting process. Grant Thornton is responsible for performing an
independent audit of the Company's financial statements in accordance with
United States generally accepted auditing standards and issuing a report
thereon. The Committee's responsibility is to monitor and oversee these
processes.
Based on the foregoing review and discussions and a review of the reports
of Grant Thornton with respect to the Audited Financial Statements, and relying
thereon, we have recommended to the Company's Board of Directors that the
Audited Financial Statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2001.
Audit Committee
David Dikinis
Jason Sugarman
Alson Lee
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), officers, directors and holders of more than 10% of the
outstanding shares of the Company's Common Stock ("Reporting Persons") are
required to file periodic reports of their ownership of, and transactions
involving, the Company's Common Stock with the Securities and Exchange
Commission (the "SEC"). Based solely upon a review of copies of such reports
received by the Company, the Company believes that its Reporting Persons have
timely complied with all Section 16 filing requirements applicable to them with
respect to the Company's fiscal year ended December 31, 2001.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning the
compensation that was paid on an annualized basis to our Chief Executive Officer
and the three (3) other most highly paid executive officers for all services
rendered in all capacities to us during the fiscal years ended December 31,
1999, 2000 and 2001. No officers received compensation in excess of $100,000
during such years.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL
POSITION YEAR SALARY ($) BONUS COMPENSATION
--------------------------- ------ ------------- ----- ------------
Jeremy F. Watson 2001 -0- -0- -0-
Chief Executive Officer 2000 29,653 -0- -0-
1999 --- --- ---
Kasem Chitmunchaitham 2001 --- --- ---
President and Chief 2000 --- --- ---
Executive Officer 1999 31,710 -0- -0-
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OPTION GRANTS IN 2001
None.
AGGREGATED OPTION EXERCISES IN 2001 AND FOR YEAR-END OPTION VALUES
None.
DIRECTOR COMPENSATION
There is no compensation for directors either on an annual basis or for
attendance at board meetings.
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EMPLOYMENT AGREEMENTS
We have no employment agreements with any of our executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
We have no compensation committee of the Board of Directors.
BOARD OF DIRECTORS REPORT CONCERNING EXECUTIVE COMPENSATION OVERVIEW
The Company seeks to provide executive compensation that will support the
achievement of the Company's financial goals while attracting and retaining
talented executives and rewarding superior performance. In performing this
function, the Board of Directors reviews executive compensation surveys and
other available information and may from time to time consult with independent
compensation consultants. We do not currently have a compensation committee.
The Company seeks to provide an overall level of compensation to the
Company's executives that is competitive within the Company's industry and other
companies of comparable size and complexity. Compensation in any particular
case may vary from any industry average on the basis of annual and long-term
Company performance as well as individual performance. The Board of Directors
exercises its discretion to set compensation where in its judgment external,
internal or individual circumstances warrant it.
In general, the Company compensates its executive officers through a
combination of base salary and long-term incentive compensation in the form of
stock options. In addition, executive officers participate in benefit plans,
including medical, dental and retirement plans, that are available generally to
the Company's employees.
EXECUTIVE OFFICER COMPENSATION
The base salary and other benefits are determined through a review of
previous employment terms for the Company's executive officers as well as a
review of the recent trends in the Company's revenues and profits. The Company
believes that the base salary levels currently in effect are competitive to
salary levels in similarly situated companies.
The Board of Directors believes that linking executive compensation to
corporate performance results in a better alignment of compensation with
corporate goals and stockholder interests. As performance goals are met or
exceeded, resulting in increased value to stockholders, executives are rewarded
commensurately. The Board of Directors believes that compensation level during
fiscal 2001 adequately reflect the Company's compensation goals and policies.
Board of Directors
Dr. Apichart Fufuangvanich
Thammatinna Thammaradi
Terrance C. Cuff
Timothy Matula
Leonard T. Orrin
Thiti Fufuangvanich
Jeremy Watson
David Dikinis
Alson Lee
Jason Sugarman
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Ms. Jariya Sae-Fa, a director of our wholly owned subsidiary Creative Gems
and Jewelry Co., Ltd. through January 2001 and the managing member of Best Worth
Agents, Ltd., had loaned to us the cumulative amount of $543,929 as of December
31, 2000, $282,675 of which remains due and payable to Ms. Sae-Fa as of December
31, 2001. The loans from Ms. Sae-Fa have no term and do not bear interest. The
debts are classified as a current liability and are expected to be paid within
the fiscal year.
REQUIRED VOTE
Election of the directors requires the affirmative vote of a plurality of the
shares of Common Stock, Series A Preferred Stock and Series B Preferred Stock
present in person or represented by proxy at the Annual Meeting.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE ABOVE NAMED NOMINEES. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO
VOTED UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXIES A CONTRARY CHOICE.
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INDEPENDENT PUBLIC ACCOUNTANTS
The Company selected Grant Thornton LLP ("Grant Thornton") as its
independent auditing firm for the current fiscal year. There will not be any
representatives from Grant Thornton at the Meeting.
AUDIT FEES
The aggregate fees billed for professional services rendered by Grant
Thornton for the audit of the Company's annual financial statements for the
fiscal year ended December 31, 2001 and for the review of the financial
statements included in the Company's Forms 10-Q during the fiscal year ended
December 31, 2001 was $229,222.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company did not engage Grant Thornton to provide advice to the Company
regarding financial information systems design and implementation during the
fiscal year ended December 31, 2001.
ALL OTHER FEES
Fees billed to the Company by Grant Thornton during the fiscal year ended
December 31, 2001 for tax related services rendered to the Company totaled
$16,309. In connection with the recently revised standards for independence of
the Company's independent public accountants promulgated by the SEC, the
Company's audit committee has considered whether the provision of such services
is compatible with maintaining the independence of Grant Thornton.
MISCELLANEOUS
ANNUAL REPORT
A copy of the Company's Annual Report for the fiscal year ended December
31, 2001 is being delivered to each stockholder with this proxy statement.
STOCKHOLDER PROPOSALS
Rule 14a-4 of the SEC proxy rules allows the Company to use discretionary
voting authority to vote on matters coming before an annual meeting of
stockholders if the Company does not have notice of the matter at least 45 days
before the date corresponding to the date on which the Company first mailed its
proxy materials for the prior year's annual meeting of stockholders or the date
specified by an overriding advance notice provision in the Company's By-Laws.
The Company's By-Laws do not contain such an advance notice provision. For the
Company's 2003 Annual Meeting of Stockholders, stockholders must submit such
written notice to the Secretary of the Company on or before October 6, 2003.
Stockholders of the Company wishing to include proposals in the proxy material
for the 2003 Annual Meeting of Stockholders must submit the same in writing so
as to be received by the Terrance C. Cuff, the Secretary of the Company on or
before July 23, 2003. Such proposals must also meet the other requirements of
the rules of the SEC relating to stockholder proposals.
OTHER MATTERS
Management does not intend to bring before the Meeting for action any
matters other than those specifically referred to above and is not aware of any
other matters which are proposed to be presented by others. If any other
matters or motions should properly come before the Meeting, the persons named in
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the Proxy intend to vote thereon in accordance with their judgment on such
matters or motions, including any matters or motions dealing with the conduct of
the Meeting.
By Order of the Board of Directors,
/s/ Dr. Apichart Fufuangvanich
Dr. Apichart Fufuangvanich
Chairman, Chief Executive Officer and President
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PROXY CARD
PROXY PROXY
----- -----
THE TOPAZ GROUP, INC.
(SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS)
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The undersigned holder of Common Stock, revoking all proxies heretofore
given, hereby constitutes and appoints Dr. Apichart Fufuangvanich and Terrance
C. Cuff and each of them, proxies (the "Proxies"), with full power of
substitution, for the undersigned and in the name, place and stead of the
undersigned, to vote all of the undersigned's shares of said stock, according to
the number of votes and with all the powers the undersigned would possess if
personally present, at the 2002 Annual Meeting of Stockholders (the "Meeting")
of THE TOPAZ GROUP, INC. (the "Company") to be held at the Company's offices
located at 126/1 Krungthonburi Road, Banglampoo Lang, Klongsarn, Bangkok 10600
Thailand, on Tuesday, December 10, 2002 at 10:00 a.m., Bangkok time, and at any
adjournments or postponements thereof.
The undersigned hereby acknowledges receipt of the Notice of Meeting and
Proxy Statement relating to the Meeting and hereby revokes any proxy or proxies
heretofore given.
EACH PROPERLY EXECUTED PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS
MADE ON THE REVERSE SIDE OF THIS PROXY AND IN THE DISCRETION OF THE PROXIES ON
ANY OTHER MATTER THAT MAY COME BEFORE THE MEETING. WHERE NO CHOICE IS
SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL LISTED NOMINEES TO SERVE AS
DIRECTORS OF THE COMPANY.
PLEASE MARK DATE AND SIGN THIS PROXY ON THE REVERSE SIDE
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PLEASE CHECK THE APPROPRIATE BOX TO VOTE FOR THE FOLLOWING.
1. Election of seven (7) directors
WITHHOLD
NOMINEES FOR AUTHORITY
-------- --- -----------
Dr. Aphichart Fufuangvanich [ ] [ ]
Terrance Cuff [ ] [ ]
Timothy Matula [ ] [ ]
Thiti Fufuangvanich [ ] [ ]
David Dikinis [ ] [ ]
Jason Sugarman [ ] [ ]
Charoen Russametummachot [ ] [ ]
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(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, CHECK
THE BOX LABELED WITHHOLD AUTHORITY.)
2. The Proxies are authorized to vote in their discretion upon such other
matters as may properly come before the Meeting.
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The shares represented by this proxy will be voted in the manner directed.
In the absence of any direction, the shares will be voted "FOR" each nominee
named in Proposal 1, and in accordance with the Proxies' discretion on such
other matters as may properly come before the meeting.
Dated: __________, 2002
Signature(s)
(Signature(s) should conform to names as
registered. For jointly owned shares, each
owner should sign. When signing as attorney,
executor, administrator, trustee, guardian or
officer of a corporation, please give full
title.)
PLEASE MARK AND SIGN ABOVE AND RETURN PROMPTLY
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EXHIBIT A
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF
THE TOPAZ GROUP, INC.
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors (the "Board") of The Topaz Group, Inc. (the "Corporation") in
fulfilling its oversight responsibilities by reviewing the financial reports and
other financial information provided by the Corporation to any governmental body
or the public; the Corporation's systems of internal controls regarding finance,
accounting, legal compliance and ethics that management and the Board have
established or may establish; and the Corporation's auditing, accounting and
financial reporting processes generally. Consistent with this function, the
Audit Committee should encourage continuous improvement of, and should foster
adherence to, the Corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:
- Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
- Review and appraise the audit efforts of the Corporation's independent
auditors.
- Provide an open avenue of communication among the independent auditors,
financial and senior management and the Board.
The Audit Committee will fulfill these responsibilities by carrying out the
activities enumerated in Section IV of this Charter and such other activities
consistent with this Charter as may from time to time be necessary or
appropriate.
II. COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee shall be comprised of three or more members of the
Board as determined by the Board, each of whom shall be independent directors,
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of his or her independent judgment as a member of
the Audit Committee. For purposes of this Charter, the definition of
independent directors will be based on the rules of The American Stock Exchange
for audit committees, as amended, modified or supplemented from time to time.
All members of the Audit Committee must be able to read and understand
fundamental financial statements, including a balance sheet, income statement
and cash flow statement or will become able to do so within a reasonable period
of time after his or her appointment to the Audit Committee. Additionally, at
least one member of the Committee must have past employment experience in
finance or accounting, requisite professional certification in accounting, or
other comparable experience or background which results in such member's
financial sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.
The members of the Audit Committee shall be elected by the Board at the
annual organizational meeting of the Board and shall serve at the pleasure of
the Board or until their successors shall be duly elected and qualified. Unless
a chairman of the Audit Committee (the "Chairman") is elected by the Board, the
members of the Committee may designate a Chairman by majority vote of the full
Audit Committee membership.
III. MEETINGS
The Audit Committee shall meet from time to time as called by the Chairman
or as requested by the independent auditors. The Audit Committee may ask
members of management or others to attend meetings of the Audit Committee and
provide pertinent information as necessary. As part of its responsibility to
foster open communication, the Audit Committee shall meet at least annually with
management and the independent auditors in separate executive sessions to
discuss any matters that the Audit Committee or any of these groups believe
should be discussed privately. In addition, the Audit Committee or its Chairman
shall discuss with management the Corporation's quarterly financial statements
consistent with Section IV.4. below. The Audit Committee shall maintain minutes
or other records of meetings and activities of the Audit Committee.
IV. RESPONSIBILITIES AND DUTIES
The duties of the Audit Committee shall include the following:
Documents/Reports Review
1. Review this Charter periodically, but at least annually, and update this
Charter as conditions dictate.
2. Review, prior to its filing or prior to its release, as the case may be,
the Corporation's annual report to stockholders.
3. Review such other reports or other financial information submitted to the
Securities and Exchange Commission or the public as the Audit Committee
shall deem appropriate. The Chairman may represent the entire Audit
Committee for purposes of this review.
Independent Auditors
1. Recommend to the Board the selection of the independent auditors for each
fiscal year, confirm and assure their independence and approve the fees and
other compensation to be paid to the independent auditors. On an annual
basis, the Audit Committee should review and discuss with the auditors all
significant relationships which affect the auditors' independence and
should receive the written statement from the independent auditors required
by Independence Standards Board Standard No. 1, as amended, modified or
supplemented from time to time.
2. Recommend to the Board the advisability of having the independent auditors
make specified studies and reports as to auditing matters, accounting
procedures, tax or other matters.
3. Review the performance of the independent auditors and approve any proposed
discharge of the independent auditors when circumstances warrant.
4. Periodically consult with the independent auditors out of the presence of
management about internal controls and the completeness and accuracy of the
Corporation's financial statements.
Financial Reporting Processes
1. Consider the independent auditors' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in
its financial reporting.
2. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the
independent auditors or management.
Process Improvement
1. Establish regular and separate systems of reporting to the Audit Committee
by each of management and the independent auditors regarding any
significant judgments made in management's preparation of the financial
statements and the view of each as to appropriateness of such judgments.
2. Following completion of the annual audit, review separately with each of
management and the independent auditors any significant difficulties
encountered during the course of the audit, including any restrictions on
the scope of work or access to required information.
3. Review any significant disagreement among management and the independent
auditors in connection with the preparation of any of the Corporation's
financial statements.
4. Review with the independent auditors and management the extent to which
changes or improvements in financial or accounting practices, as approved
by the Audit Committee, have been implemented.
Legal Compliance
-----------------
1. Review with the Corporation's counsel any legal matter that could have a
significant impact on the Corporation's financial statements.
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Other Responsibilities
Perform any other activities consistent with this Charter, and the
Corporation's Memorandum and Articles of Association, By-laws and governing law,
as the Audit Committee or the Board deems necessary or appropriate.
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