<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Spacetec IMC 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):
[x] $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the Filing Fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
- --------------------------------------------------------------------------------
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE>
SPACETEC IMC CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1996 Annual Meeting of Stockholders of Spacetec IMC Corporation (the
"Company") will be held at the Museum of Science located at Science Park,
Boston, Massachusetts at 10:00 a.m. on Wednesday, September 11, 1996 for the
following purposes:
1. To elect one director to hold office for a term of three years and
until his respective successor is elected and qualified.
2. To transact such other business as may be in furtherance of or
incidental to the foregoing or as may otherwise properly come
before the meeting.
Only stockholders of record at the close of business on July 24, 1996
will be entitled to vote at the meeting or any adjournment thereof. A list of
such stockholders will be open for examination by any stockholder for any
purpose germane to the meeting for ten days before the meeting during ordinary
business hours at the offices of Palmer & Dodge LLP, One Beacon Street, Boston,
Massachusetts 02108.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR
PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN
PERSON, YOUR PROXY WILL NOT BE USED.
By order of the Board of Directors,
Lynnette C. Fallon, Clerk
Dated: August 9, 1996
<PAGE>
SPACETEC IMC CORPORATION
The Boott Mill
100 Foot of John Street
Lowell, Massachusetts 01852-1126
Telephone: (508) 970-0330
Proxy Statement
_______________
The enclosed proxy is solicited on behalf of the Board of Directors of
Spacetec IMC Corporation (the "Company") for use at the 1996 Annual Meeting of
Stockholders to be held on Wednesday, September 11, 1996, and at any
adjournments thereof. The approximate date on which this proxy statement and
accompanying proxy are first being sent or given to security holders is August
9, 1996.
The principal business expected to be transacted at the meeting, as more
fully described below, will be the election of one director.
The authority granted by an executed proxy may be revoked at any time
before its exercise by filing with the Clerk of the Company a written revocation
or a duly executed proxy bearing a later date or by voting in person at the
meeting.
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others for forwarding
solicitation material to beneficial owners of stock. In addition to the use of
mails, proxies may be solicited by officers and employees of the Company in
person or by telephone.
VOTING SECURITIES AND VOTES REQUIRED
Only stockholders of record at the close of business on July 24, 1996
will be entitled to vote at the meeting. On that date, the Company had
outstanding 7,349,908 shares of Common Stock, $0.01 par value (the "Common
Stock"), each of which is entitled to one vote. A majority in interest of the
outstanding Common Stock, represented at the meeting in person or by proxy,
constitutes a quorum for the transaction of business. A plurality of the votes
cast is required to elect the nominees for director. Broker non-votes will not
be counted in determining the shares entitled to vote nor treated as votes cast.
(A "broker non-vote" occurs when a registered broker holding a customer's shares
in the name of the broker has not received voting instructions on the matter
from the customer, is barred by applicable rules from exercising discretionary
voting authority in the matter, and so indicates on the proxy.) Abstentions
will not be treated as votes cast in the election of directors.
<PAGE>
ELECTION OF DIRECTORS
The number of directors is fixed at five for the coming year and is
divided into three classes. At the meeting, one director will be elected to
hold office for three years and until his successor is elected and qualified.
J. Grant Jagelman, who is presently serving as a director, has been nominated
for re-election by the Board of Directors. Unless a completed proxy withholds
authority to vote for the nominee or is a broker non-vote, the shares
represented by such proxy will be voted for the election as the director of the
Board's nominees. If the nominee is unable to serve, which is not expected, the
shares represented by the enclosed proxy will be voted for such other candidate
as may be nominated by the Board of Directors.
The following table contains certain information about the nominee for
director and each other person whose term of office as a director will continue
after the meeting.
<TABLE>
<CAPTION>
Present
Business Experience and Other Director Term
Name and Age Directorships Since Expires
------------ ------------------------------- -------- -------
<S> <C> <C> <C>
Dennis T. Gain Dennis T. Gain has been a 1991 1998
Age: 53 director of the Company and
has served as President and
Chief Executive Officer of the
Company since its
incorporation in 1991. Prior
to joining the Company, Mr.
Gain was President of Focus
North America since 1989 and
President of Woolrest North
America from 1986 until 1989.
Mr. Gain is also a director
and stockholder of Spatial
Systems Ltd. which is an
Australian public company that
is a shareholder of the
Company. Mr. Gain has a B.E.
degree and Post Graduate
Associate degree in Metallurgy
from the University of Otago,
New Zealand and a B. Comm.
degree in Finance from the
University of Auckland, New
Zealand.
Linda S. Linsalata Linda S. Linsalata has been a 1994 1997
Age: 51 director of the Company since
1994 and has served as Chief
Financial Officer, Senior Vice
President of Finance and Director
of Strategic Planning since
September 29, 1995 and prior
to that, was providing
consulting services to the
Company since 1992. As a
consultant to the Company, she
had been acting in the
capacity of Chief Financial
Officer. Ms. Linsalata was
formerly President of Weston
Corporate Development. Prior
to this, she was a General
Partner with I.O.N., an
international venture capital
firm based in Boston, and a
Marketing Manager with
International Business
Machines, Inc. Ms. Linsalata
holds a B.A. degree in
mathematics from Vassar
College, and an M.B.A. from
Harvard University Graduate
School of Business.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Present
Business Experience and Other Director Term
Name and Age Directorships Since Expires
------------ ------------------------------- -------- -------
Morton E. Goulder Morton E. Goulder has been a 1994 1998
Age: 75 director of the Company since
January 1994. Since 1977, Mr.
Goulder's principal occupation
has been President of M.E.
Goulder Enterprises, aconsulting
firm specializing in high
technology. Mr. Goulder
was also a Founder,
Director, Vice President and
Corporate Scientist for
Sanders Associates, Inc. After
leaving Sanders, he served as
the United States Deputy
Assistant Secretary of Defense
for Intelligence and Warning.
He is also a Director of
Computer Devices, Inc.,
several private high
technology companies. Mr.
Goulder earned a degree in
Applied Physics from
Massachusetts Institute of
Technology.
J. Grant Jagelman* J. Grant Jagelman has been a 1991 1996
Age: 54 director of the Company since
the Company's inception in
April 1991. He is currently
Chairman of Spatial Systems
Ltd., an Australian public
company, that is a shareholder
of the Company.
Jerry H. Loyd Jerry H. Loyd has been a 1994 1997
Age: 66 director of the Company since
January 1994. Mr. Loyd was a
Partner and Managing Director
of Morgan Stanley at the time
of his retirement in 1985.
Prior to this, Mr. Loyd was a
management consultant and
partner with Arthur Young.
Mr. Loyd earned degrees in
Business and Engineering from
the University of Vermont and
has an M.B.A. from New York
University.
</TABLE>
- ------------------------------
* Nominee for election as director
-3-
<PAGE>
Committees of the Board
The Audit Committee, which during the fiscal year ended March 29, 1996
("Fiscal Year 1996") consisted of Mr. Goulder and Mr. Loyd, is responsible for
providing the Board of Directors with an independent review of the financial
health of the Company and its financial controls and reporting. Its primary
functions are to recommend independent auditors to the Board of Directors,
review the results of the annual audit and the auditors' reports, and ensure the
adequacy of the Company's financial controls and procedures. The Audit
Committee met once in Fiscal Year 1996. The Compensation Committee, whose
members are Messrs. Jagelman, Goulder and Loyd, acts for the Board of Directors
with respect to the Company's compensation practices and their implementation.
It sets and implements the compensation of the Company's officers and
administers the Amended and Restated 1993 Stock Option Plan and the 1995
Employee Stock Purchase Plan. The Compensation Committee held five meetings in
Fiscal Year 1996. The entire Board of Directors functions as a nominating
committee, considering nominations submitted to the Chairman of the Board. The
Board of Directors held 7 meetings during Fiscal Year 1996, and each director
attended all meetings of the Board and of all committees of the Board on which
he served.
Director Compensation
All directors who are not employees of the Company are currently eligible to
participate in the 1995 Director Stock Option Plan described below under the
heading "1995 Director Stock Option Plan."
-4-
<PAGE>
EXECUTIVE COMPENSATION
The Compensation Committee Report set forth below describes the compensation
policies applicable to executive officers of the Company, including Mr. Gain,
the Company's Chief Executive Officer. The following graph shows the cumulative
total stockholder return on the Company's Common Stock over the period from
December 31, 1995 (the end of the first trading month of the Company's Common
Stock) to March 29, 1996, as compared with that of the Nasdaq Market Index and
the Computer Peripheral Equipment N.E.C. Index, based on an initial investment
of $100 in each on December 31, 1995. Total stockholder return is measured by
dividing share price change plus dividends, if any, for each period by the share
price at the beginning of the respective period, and assumes reinvestment of
dividends. The Computer Peripheral Equipment N.E.C. Index consists of 121
publicly traded computer peripheral equipment companies reporting under the same
Standard Industrial Classification Code (SIC 3577) as the Company.
Stock Performance Graph
<TABLE>
<CAPTION>
1988 12/31/95 3/29/96
-------- ---------- ---------
<S> <C> <C> <C>
SPACETEC IMC CORP 100 92.16 121.57
MAJOR MARKET INDEX 100 99.63 104.35
INDUSTRY INDEX 100 92.24 96.52
</TABLE>
-5-
<PAGE>
Compensation Committee Report on Executive Compensation
Overall Policy. The Company's executive compensation program is designed
to be closely linked to corporate performance and returns to stockholders. To
this end, the Company has developed an overall compensation strategy and
specific compensation plan that tie a portion of executive compensation to the
Company's success in meeting specified performance goals. In addition, through
the use of stock options, the Company ensures that a part of the executives'
compensation is closely tied to appreciation in the Company's stock price. The
overall objectives of this strategy are to attract and retain the best possible
executive talent, to motivate these executives to achieve the goals inherent in
the Company's business strategy, to link executive and stockholder interests
through equity based plans and, finally, to provide a compensation package that
recognizes individual contributions as well as overall business results.
The Compensation Committee determines the compensation of the five
individuals named in the Summary Compensation Table. The Compensation Committee
takes into account the views of Mr. Cain, the Company's Chief Executive Officer,
and Mrs. Linsalata, the Company's Chief Financial Officer, in reviewing the
individual performance of the executives (other than Mr. Gain and Mrs.
Linsalata).
The key elements of the Company's executive compensation consist of base
salary, annual bonus and stock options. The Compensation Committee's policies
with respect to each of these elements, including the bases for the
compensation awarded to Mr. Gain, are discussed below. In addition, while the
elements of compensation described below are considered separately, the
Compensation Committee takes into account the full compensation package afforded
by the Company to the individual, including insurance and other employee
benefits.
Base Salaries. Base salaries for executive officers (of which a
percentage is awarded based on the profitability levels of the Company) are
initially determined by evaluating the responsibilities of the position held and
the experience of the individual. In making determinations regarding base
salaries, the Compensation Committee considers generally available information
regarding salaries prevailing in the industry, but does not utilize any
particular indices or peer groups.
Annual salary adjustments are determined by evaluating the financial
performance of the Company and of each executive officer, and also take into
account new responsibilities. The Compensation Committee, where appropriate,
also considers non-financial performance measures. These non-financial
performance measures may include such factors as efficiency gains, quality
improvements in relations with customers, suppliers and employees. No
particular weight is given to any of these non-financial factors.
Mr. Gain was granted a base salary of $135,000 for Fiscal Year 1996, a
decrease of 10% from his $150,000 base salary for the fiscal year ended March
31, 1995 ("Fiscal Year 1995")
Annual Bonus, The Company's executive officers are eligible for an
annual cash bonus, based primarily on achievement of significant milestones.
Bonuses earned by the executive officers for Fiscal Year 1996 were determined
based upon milestones achieved by the Company during Fiscal Year 1996. No cash
bonuses were earned by the executive officers during Fiscal Year 1996. Mr. Gain
was awarded a bonus of $30,000 for Fiscal Year 1995.
Stock Options, Under the Company's Amended and Restated 1993 Stock
Option Plan, which was approved by the stockholders, stock options are granted
to the Company's executive officers. Stock options are designed to align the
interests of executives with those of the stockholders. Stock options are
granted with an exercise price equal to the fair market value of the Common
Stock on the date of grant and vest over various periods of time, normally five
years. Stock option grants are designed to encourage the creation of stockholder
value over the long term since the full benefit of the compensation package
cannot be realized unless stock price appreciation is achieved, and, once
achieved, is maintained and improved upon. In determining the amount of such
grants, the Compensation Committee evaluates the job level of the executive,
responsibilities to be assumed in the upcoming year, and responsibilities in
prior years, and also takes into account the size of the officer's awards in the
past. Based on these factors and on the level of his existing stock ownership in
Fiscal Year 1996, Mr. Gain received options to purchase 30,000 shares with an
exercise price of $2.84 per share and options to purchase 10,000 shares with an
exercise price of $7.00 per share, representing fair market value of the Common
Stock of Company in April and September of 1995, respectively, prior to the
Company's initial public offering.
Conclusion. Through the programs described above, a very significant
portion of the Company's executive compensation is linked directly to individual
and corporate performance and stock appreciation. In Fiscal Year 1996, as in
previous years, a substantial portion of the Company's targeted executive
compensation consisted of performance-based variable elements. The Compensation
Committee intends to continue the policy of linking executive compensation to
Company performance and returns to stockholders, recognizing that the ups and
downs of the business cycle from time to time may result in an imbalance for a
particular period.
By the Compensation Committee,
J. Grant Jagelman
Morton E. Goulder
Jerry H. Loyd
-6-
<PAGE>
Summary Compensation Table
The following table provides summary information on the cash compensation and
certain other compensation paid, awarded, or accrued by the Company and its
subsidiaries to or for the Chief Executive Officer of the Company and each of
the Company's other executive officers whose total salary and bonus exceeded
$100,000 during Fiscal Year 1996 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Long-Term
Compensation All Other
Annual Compensation Awards Compensation
------------------- ---------- -------------
Securities
Underlying
Name and Principal Position Salary($) Bonus($) Options(#) ($)
- ---------------------------------------- --------- ------------ --------- ------- ---
<S> <C> <C> <C> <C> <C>
Dennis T. Gain.......................... 1996 $135,000 -- 40,000 3,237(1)
President and Chief Executive Officer.. 1995 $150,000 $ 30,000 20,000
and Chairman of the Board
Linda S. Linsalata(2)................... 1996 $ 48,527 -- 60,000
Vice President, Finance and Chief
Financial Officer.....................
John A. Hilton.......................... 1996 $ 93,333 -- 42,000
Senior Vice President, Chief.......... 1995 $100,000 $ 20,000 16,000
Technology Officer - Hardware
James J. Wick........................... 1996 $ 92,000 -- 32,000
Senior Vice President, Chief 1995 $ 92,000 $ 30,000 16,000 28,120(3)
Technology Officer - Software.........
Joyce A. Ouellette...................... 1996 $ 89,000 -- 62,000 64,000(4)
Senior Vice President of Sales........ 1995 $ 75,000 $ 21,000 16,000 33,832(5)
and Marketing
</TABLE>
_______________________
(1) This amount represents the present value of a $6,787 premium payment by the
Company for Fiscal Year 1996 for a split dollar life insurance policy on the
life of Dennis T. Gain.
(2) Linda S. Linsalata, the Company's Chief Financial Officer, Senior Vice
President of Finance and Director of Strategic Planning, became an employee
of the Company on September 29, 1995. Prior to that, Ms. Linsalata served
as a consultant to the Company and acting Chief Financial Officer.
(3) Consists of reimbursement of relocation expenses incurred by Mr. Wick during
Fiscal Year 1995 in connection with his becoming an employee of the Company.
(4) Consists of sales commissions received by Ms. Ouellette for Fiscal Year
1996.
(5) Consists of sales commissions received by Ms. Ouellette for Fiscal Year
1995.
-7-
<PAGE>
Stock Option Grants in Last Fiscal Year
The following table provides information on stock options granted during
Fiscal Year 1996 to the Named Executive Officers.
Option Grants In Last Fiscal Year
Individual Grants
- --------------------------------------------------------------------------------
<TABLE>
Potential Realizable Value at
% of Total Assumed Annual Rates of Stock
Securities Options Price Appreciation for Option
Underlying Granted to Exercise or Term(1)
Options Employees in Base Price Expiration ------------------------------
Name Granted(#) Fiscal 1996 ($/share) Date 5%($) 10%($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dennis T. Gain 30,000(2) 4.41% $2.84 4/27/05 $ 53,337 $135,756
10,000(3) 1.47% $7.00 9/29/05 44,019 111,540
Linda S. Linsalata 30,000(4) 4.41% $2.84 4/27/05 53,337 135,756
30,000(3) 4.41% $7.00 9/29/05 132,057 334,620
John A. Hilton 34,000(2) 4.99% $2.84 4/27/05 60,448 153,856
8,000(3) 1.17% $7.00 9/29/05 32,315 89,232
James J. Wick 24,000(2) 3.53% $2.84 4/27/05 42,669 108,604
8,000(3) 1.17% $7.00 9/29/05 32,315 89,232
Joyce A. Ouellette 32,500(5) 4.78% $2.84 4/27/05 57,781 147,069
29,500(3) 4.33% $7.00 9/29/05 129,856 329,043
==============================================================================================================
</TABLE>
- -----------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, in the price of the Common Stock. No gain to the optionees is possible
without an increase in price of the Common Stock, which would benefit all
stockholders proportionately.
(2) These options become exercisable as to 20% of the shares on each of April
29, 1996, 1997, 1998, 1999 and 2000.
(3) These options become exercisable as to 20% of the shares on each September
29, 1996, 1997, 1998, 1999 and 2000.
(4) These options are exercisable as to 24,500 shares as of the date of grant
and the remaining shares become exercisable as to 20% on each of April 29,
1996, 1997, 1998, 1999 and 2000.
(5) These options are exercisable as to 12,500 shares as of the date of grant
and the remaining shares become exercisable as to 20% on each of April 29,
1996, 1997, 1998, 1999 and 2000.
Aggregated Option Exercises in Last Fiscal Year and Year-End Stock Option Values
The following table sets forth certain information concerning the
unexercised stock options as of March 31, 1996 held by the Named Executive
Officers. No options were exercised during Fiscal Year 1996 by such executives.
Aggregated Option Exercises In Last Fiscal Year And
Fiscal Year-End Option Value
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-The-Money Options at
March 31, 1996(#) March 31, 1996($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Dennis T. Gain 8,000 62,000 $118,000 $407,000
Linda S. Linsalata 36,000 54,000 487,440 606,360
John A. Hilton 3,200 54,800 46,400 680,040
James J. Wick 3,200 44,800 46,400 553,440
Joyce A. Ouellette 15,700 62,300 204,650 689,750
- --------------------
</TABLE>
(1)Based on the difference between the respective option exercise price and the
closing market price of the Common Stock on March 29, 1996, which was $15.50.
-8-
<PAGE>
STOCK OPTION AND STOCK PURCHASE PLANS
The following is certain information relating to the Company's equity
compensation plans under which officers and/or directors may acquire shares of
Common Stock. These plans were approved by the stockholders of the Company
prior to the Company's initial public offering and, therefore, the Company is
not soliciting any votes with respect to these plans. The closing price of the
Company's Common stock on July 24, 1996 as reported by the Nasdaq National
Market System was $8.75.
Amended and Restated 1993 Stock Option Plan
General
The Company's Amended and Restated 1993 Stock Option Plan (the "Option
Plan") was readopted by the Board of Directors on September 29, 1995 and by the
stockholders on October 6, 1995. The purpose of the Option Plan is to attract
and retain key employees and consultants of the Company and its affiliates. The
Option Plan provides for the grant of incentive and nonstatutory stock options
(the "Options") to employees and consultants of the Company and its affiliates
("Eligible Persons").
Currently, Options may be made under the Option Plan for up to a total
of 1,600,000 shares of Common Stock, subject to adjustment for stock splits and
similar capital changes, to employees of the Company and, in the case of
nonstatutory Options, to consultants of the Company or any Affiliate (as defined
in the Option Plan) capable of contributing to the Company's performance.
As of July 24, 1996, 64 employees were eligible to participate in the
Option Plan and options to purchase an aggregate of 841,550 shares of Common
Stock had been granted. Of these, Options to purchase 33,700 shares had been
cancelled, Options to purchase 109,300 shares had been exercised, and Options to
purchase 698,550 shares remained outstanding, leaving only 792,150 shares
available for new Options under the Option Plan.
Administration and Eligibility
Awards are made by the Compensation Committee which has been designated
by the Board of Directors to administer the Option Plan. The Compensation
Committee may delegate to one or more officers the power to make awards under
the Option Plan to persons other than officers of the Company who are subject to
the reporting requirements of Section 16 of the Securities Exchange Act of 1934
(the "Exchange Act").
Options under the Option Plan are granted at the discretion of the
Compensation Committee which determines the recipients and establishes the terms
and conditions of each award, including the exercise price, the form of payment
of the exercise price, the number of shares subject to Options and the time at
which such Options become exercisable. However, the exercise price of any
incentive stock option granted under the Option Plan may not be less than the
fair market value of the Common Stock on the date of grant and the exercise
price of any nonstatutory stock option may not be less than 50% of the fair
market value of the Common Stock on the date of grant.
Federal Income Tax Consequences Relating to Stock Options
Incentive Stock Options. An optionee does not realize taxable income
upon the grant or exercise of an incentive stock option ("ISO") under the Option
Plan.
If no disposition of shares issued to an optionee pursuant to the
exercise of an ISO is made by the optionee within two years from the date of
grant or within one year from the date of exercise, then (a) upon sale of such
-9-
<PAGE>
shares, any amount realized in excess of the option price (the amount paid for
the shares) is taxed to the optionee as long-term capital gain and any loss
sustained will be a long-term capital loss and (b) no deduction is allowed to
the Company for Federal income tax purposes. The exercise of ISOs gives rise to
an adjustment in computing alternative minimum taxable income that may result in
alternative minimum tax liability for the optionee.
If shares of Common Stock acquired upon the exercise of an ISO are
disposed of prior to the expiration of the two-year and one-year holding periods
described above (a "disqualifying disposition") then (a) the optionee realizes
ordinary income in the year of disposition in an amount equal to the excess (if
any) of the fair market value of the shares at exercise (or, if less, the amount
realized on a sale of such shares) over the option price thereof and (b) the
Company is entitled to deduct such amount. Any further gain realized is taxed as
a short-term or long-term capital gain and does not result in any deduction to
the Company. A disqualifying disposition in the year of exercise will generally
avoid the alternative minimum tax consequences of the exercise of an ISO.
Nonstatutory Stock Options. No income is realized by the optionee at the
time a nonstatutory option is granted. Upon exercise, (a) ordinary income is
realized by the optionee in an amount equal to the difference between the option
price and the fair market value of the shares on the date of exercise and (b)
the Company receives a tax deduction for the same amount. Upon disposition of
the shares, appreciation or depreciation after the date of exercise is treated
as a short-term or long-term capital gain or loss and will not result in any
deduction by the Company.
1995 Employee Stock Purchase Plan
The Company's 1995 Employee Stock Purchase Plan (the "Purchase Plan")
was adopted by the Board of Directors on September 29, 1995 and by the
stockholders of the Company on October 6, 1995. Under the Purchase Plan, full
time employees of the Company or its subsidiaries may purchase shares of Common
Stock at a discount from fair market value. 100,000 shares of Common Stock
(subject to adjustments for stock-splits and similar capital changes) are
reserved for issuance under the Purchase Plan. As of July 24, 1996,
approximately 56 employees were eligible to participate under the Purchase Plan.
To date, no shares of Common Stock have been issued under the Purchase Plan. The
Purchase Plan is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Code. Rights to purchase Common Stock under
the Purchase Plan are granted at the discretion of the Compensation Committee,
which determines the frequency and duration of individual offerings under the
Plan and the dates when stock may be purchased. Eligible employees participate
voluntarily and may withdraw from any offering at any time before stock is
purchased. Participation terminates automatically upon termination of
employment. The purchase price per share of Common Stock in an offering is 85%
of the lesser of its fair market value at the beginning of the offering period
or on the applicable exercise date and may be paid through payroll deductions,
periodic lump sum payments or a combination of both. The Purchase Plan
terminates on September 29, 2005.
In accordance with Section 423 of the Code, no employee may subscribe
for shares under the Purchase Plan if, immediately after having subscribed, the
employee would own 5% or more of the voting stock of the Company (including
stock that may be purchased through subscriptions under the Plan or any other
options), nor may an employee buy more than $25,000 worth of stock (determined
by the fair market value of the Common Stock at the time the offering begins)
through the Purchase Plan in any calendar year. The Purchase Plan provides that
no employee may allocate more than 15%, or such lesser percentage as the Board
of Directors may fix, of the employee's annual rate of compensation to the
purchase of stock through the Purchase Plan.
Federal income tax consequences of Plan participation are as follows.
Participants do not realize taxable income at the commencement of an offering or
at the time shares are purchased under the Purchase Plan. If a participant does
not dispose of shares purchased under the Purchase Plan within two years from
the offering commencement date or within one year from the purchase date, upon
sale of such shares 15% of the fair market value of the stock at the
commencement of the offering period (or, if less, the amount realized on sale of
such shares in excess of the purchase price) is taxed to the participant as
ordinary income with any additional gain taxed
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<PAGE>
as a long-term capital gain and any loss sustained is treated as a long-term
capital loss, and no deduction is allowed to the Company for Federal income tax
purposes. If the participant dies at any time while owning shares purchased
under the Plan, then (a) 15% of the fair market value of the stock at the
commencement of the offering period (or, if less, the fair market value of such
shares on the date of death in excess of the purchase price) is taxed to the
participant as ordinary income in the year of death and (b) no deduction is
allowed to the Company for Federal income tax purposes. If shares of Common
Stock purchased under the Purchase Plan are disposed of before the expiration of
the two-year and one-year holding periods described above, the participant will
realize ordinary income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of the shares on the date of purchase
(or, if less, the amount realized on sale of such shares) over the purchase
price thereof, and the Company will be entitled to deduct such amount. Any
further gain realized would be taxed as a short-term or long-term capital gain
and would not result in any deduction by the Company.
1995 Director Stock Option Plan
General
The Company's 1995 Director Stock Option Plan (the "Director Plan") was
adopted by the Board of Directors and approved by the stockholders of the
Company in September 29, 1995. The purpose of the Director Plan is to attract
and retain highly qualified non-employee directors of the Company and to
encourage ownership of stock of the Company by such directors so as to provide
additional incentives to promote the success of the Company. The Director Plan
presently authorizes the grant of nonstatutory stock options for the purchase of
a maximum of 75,000 shares (subject to adjustment for stock splits and similar
capital changes) of Common Stock to Eligible Directors as defined below. The
first grant of options under the Director Plan will be on the date of the 1996
Annual Meeting of Stockholders.
Grant of Rights and Administration of the Plan
Awards made pursuant to the Director Plan are intended to be "formula
awards" within the meaning of Rule 16b-3 of the Exchange Act. All directors of
the Company who are not employees of the Company or of any subsidiary of the
Company ("Eligible Directors") are eligible to participate in the Director Plan,
unless such director irrevocably elects not to participate. Currently, three of
the Company's five directors are Eligible Directors.
Options under the Director Plan are automatically granted once a year at
the annual meeting of the stockholders of the Company to Eligible Directors
elected or reelected at the meeting. Each such Eligible Director receives an
option to purchase 2,000 shares of Common Stock for each year of the term of
office to which the director is elected (6,000 shares for election to a three
year term of office). In addition, upon the election of an Eligible Director
other than at an annual meeting, such director is automatically granted an
option to purchase 2,000 shares of Common Stock for each year or portion thereof
of the term of office to which he or she is elected.
Options become exercisable with respect to 2,000 shares on the date of
grant and on the date of each annual meeting of stockholders thereafter, so long
as the optionee is then a director of the Company. The options have a term of
ten years and an exercise price, payable in cash or shares of Common Stock,
equal to the fair market value of the Common Stock on the day immediately
preceding the date of grant.
Federal Income Tax Consequences
Options granted under the Plan are nonstatutory options not intended to
qualify under Section 422 of the Code. The exercise of an option by a director
results in taxable ordinary income to the director and a corresponding deduction
for the Company, in each case equal to the difference between the fair market
value of the shares on the date the option was granted (the option exercise
price) and their fair market value on the date the option is exercised.
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<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal Year 1996, the Company's Compensation Committee consisted
of Messrs. Jagelman, Goulder and Loyd. None of the members of the Compensation
Committee has been an officer or employee of the Company. Mr. Gain, President,
Chief Executive Officer and Chairman of the Board of the Company, and Mr.
Jagelman, a director of the Company and member of the Board of Directors'
Compensation Committee, are both directors of Spatial Systems, Ltd., an
Australian public company and a principal stockholder of the Company.
-12-
<PAGE>
SHARE OWNERSHIP
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of July 24, 1996 by (i) persons known
by the Company to be beneficial owners of more than 5% of its Common Stock, (ii)
the executive officers named in the Summary Compensation Table, (iii) the
directors and nominees for election as directors of the Company, and (iv) all
current executive officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned(1)
Beneficial Owner Shares Percent of Class
------ ----------------
<S> <C> <C>
5% Shareholders(2)
Dennis Gain(3) 1,592,090 21.7%
J. Grant Jagelman(4) 1,318,044 17.9
Gain Family Trust(5) 1,241,590 16.9
Spatial Systems Ltd.(6) 1,132,164 15.4
Other Directors
Morton E. Goulder(7) 96,000 1.3
Jerry H. Loyd(8) 4,000 *
Linda Linsalata(9) 29,200 *
Other Named Executives
John A. Hilton(10) 118,200 1.6
James J. Wick(11) 111,200 1.5
Joyce A. Ouellette(12) 44,900 *
All directors and executive officers as a group
(8 persons)(13) 3,372,750 45.9
</TABLE>
______________________________________
* Less than one percent.
(1) Except as otherwise indicated in these footnotes, the persons and
entities named in the table have sole voting and investment power with
respect to all shares beneficially owned by them. Includes shares of
Common Stock issuable pursuant to outstanding options which may be
exercised within 60 days after July 24, 1996.
(2) For the purposes hereof, the address of each 5% stockholder shall be
that of the Company set forth elsewhere in this proxy statement.
(3) Includes (i) 1,241,590 shares held by the Gain Family Trust, a trust for
the benefit of certain members of the family of Dennis T. Gain and of
which Mr. Gain is the sole trustee, (ii) 18,000 shares of Common Stock
subject to options held by Mr. Gain exercisable as of July 24, 1996 or
within 60 days thereafter and (iii) 100,500 shares held by Mr. Gain's
wife and children. Mr. Gain also is a director and stockholder of
Spatial Systems Ltd. ("SSL").
(4) Includes (i) 1,132,164 shares held by SSL, of which Mr. Jagelman is
Chief Executive Officer, a director and the largest stockholder, (ii)
139,276 shares held by Rhetford Pty. Ltd., an Australian corporation of
which Mr. Jagelman is Chief Executive Officer and of which his family
members own 100% of the stock, (iii) 27,396 shares held by the Group
Superannuation Fund, an Australian retirement trust of which Mr.
Jagelman holds a 100% interest, (iv) 37,208 shares of Common Stock held
by Mr. Jagelman's wife and children and (v) 22,000 shares of Common
Stock subject to options held by Mr. Jagelman exercisable as of July 24,
1996 or within 60 days thereafter. Mr. Jagelman disclaims beneficial
ownership of the shares held by SSL and the Group Superannuation Fund,
except to the extent of his proportionate pecuniary interests in such
entities.
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<PAGE>
(5) The Gain Family Trust is a trust for the benefit of certain family
members of Dennis T. Gain, President and Chief Executive Officer of the
Company. Mr. Gain is the sole trustee of the Gain Family Trust and has
sole voting control and investment power over the shares held by the
trust.
(6) SSL is a publicly held corporation organized under the laws of the State
of New South Wales, Australia. The Board of Directors of SSL shares
voting control and investment power over the shares held by SSL. J.
Grant Jagelman, a director of the Company, and Dennis Gain, President
and Chief Executive Officer and a director of the Company are directors
and stockholders of SSL. Mr. Jagelman is also the Chief Executive
Officer of SSL. Messrs. Jagelman and Gain disclaim beneficial ownership
of the shares held by SSL, except to the extent of their respective
proportionate pecuniary interests in SSL.
(7) Includes 4,000 shares of Common Stock subject to options held by Mr.
Goulder exercisable as of July 24, 1996 or within 60 days thereafter.
(8) Represents 4,000 shares of Common Stock subject to options held by Mr.
Loyd exercisable as of July 24, 1996 or within 60 days thereafter.
(9) Represents of 29,200 shares of Common Stock subject to options held by
Ms. Linsalata exercisable as of July 24, 1996 or within 60 days
thereafter.
(10) Includes 13,200 shares of Common Stock subject to options held by Mr.
Hilton exercisable as of July 24, 1996 or within 60 days thereafter.
(11) Includes 11,200 shares of Common Stock subject to options held by Mr.
Wick exercisable as of July 24, 1996 or within 60 days thereafter.
(12) Includes 22,900 shares of Common Stock subject to options held by Ms.
Ouellette exercisable as of July 24, 1996 or within 60 days thereafter.
(13) Includes shares and options described in footnotes (3) and (4) and (7)-
(12).
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<PAGE>
INFORMATION CONCERNING AUDITORS
The firm of Ernst & Young, independent accountants, has audited the Company's
accounts for a number of years and will do so for the fiscal year ended March
31, 1997. Representatives of Ernst & Young LLP have been invited to attend the
Annual Meeting.
STOCKHOLDER PROPOSALS
The Company's Bylaws require a stockholder who wishes to bring business before
or propose director nominations at an annual meeting to give written notice to
the Clerk of the Company not less than 45 days nor more than 60 days before the
meeting, unless less than 60 days' notice or public disclosure of the meeting is
given, in which case the stockholder's notice must be received within 15 days
after such notice or disclosure is given. The notice must contain specified
information about the proposed business or nominee and the stockholder making
the proposal or nomination. If any stockholder intends to present a proposal at
the 1997 Annual Meeting of stockholders and desires that it be considered for
inclusion in the Company's proxy statement and form of proxy, it must be
received by the Company at The Boott Mill, 100 Foot of John Street, Lowell,
Massachusetts 01852-1126; Attention: Linda S. Linsalata, no later than March
14, 1997.
OTHER MATTERS
The Board of Directors does not know of any business to come before the
meeting other than the matters described in the notice. If other business is
properly presented for consideration at the meeting, the enclosed proxy
authorizes the persons named therein to vote the shares in their discretion.
IN ADDITION TO THE COMPANY'S ANNUAL REPORT, WHICH HAS BEEN MAILED TO
STOCKHOLDERS, ANY HOLDER OR BENEFICIAL OWNER OF THE COMPANY'S COMMON STOCK MAY
OBTAIN A COPY OF THE COMPANY'S FORM 10-K FOR THE FISCAL YEAR ENDING MARCH 29,
1996, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. WRITTEN REQUESTS
FOR COPIES OF THE COMPANY'S FORM 10-K SHOULD BE ADDRESSED TO LINDA S. LINSALATA,
CHIEF FINANCIAL OFFICER, THE BOOTT MILL, 100 FOOT OF JOHN STREET, LOWELL,
MASSACHUSETTS 01852-1126.
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<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPACETEC IMC CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS SEPTEMBER 11, 1996
The undersigned stockholder of Spacetec IMC Corporation (the "Company")
hereby appoints Dennis T. Gain, Linda S. Linsalata and Lynnette C. Fallon, and
each of them acting singly, the attorneys and proxies of the undersigned, with
full power of substitution, to vote on behalf of the undersigned all the shares
of capital stock of the Company entitled to vote at the Annual Meeting of
Stockholders of the Company to be held on September 11, 1996, and at all
adjournments thereof, hereby revoking any proxy heretofore given with respect
to such shares.
(Continued and to be signed on the reverse side)
-----------
SEE REVERSE
SIDE
-----------
Please mark your
A [X] vote as in this
example
FOR WITHHELD
the from the
nominee nominee Nominee: J. Grant Jagelman
Proposal to
elect director [_] [_] This Proxy when properly executed will be
voted in the manner directed herein by the
FOR, except vote withheld undersigned stockholders. If no
from the following nominee: specification is made, this proxy will be
voted for the proposal. In their discretion,
- -------------------------- the proxies are also authorized to vote
upon such matters as may properly come
before the meeting.
Signature Date 1996 Signature Date 1996
---------------- ----- ---------------- ----
Note: Please sign exactly as name appears on stock certificate. When shares are
held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporation name by President
or other authorized officer. If a partner, please sign in partnership
name by authorized person.
