<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] No fee required.
[_] 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
SPACETEC IMC CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1997 Annual Meeting of Stockholders of Spacetec IMC Corporation, a
Massachusetts corporation (the "Company") will be held at The Boott Cotton Mills
Museum Event Center, 400 Foot of John Street, Lowell, Massachusetts at 10:00
a.m. on Thursday, September 11, 1997 for the following purposes:
1. To elect two directors to hold office for a term of three years and
until their respective successors are elected and qualified.
2. To adopt the Company's Amended and Restated 1995 Director Stock Option
Plan, which, among other things, increases the aggregate number of
shares of the Company's Common Stock as to which options may be
granted under such plan by 150,000 shares.
3. 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 21, 1997 will be
entitled to vote at the meeting or any adjournment thereof.
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,
Neil M. Rossen, Clerk
Dated: July 29, 1997
<PAGE>
SPACETEC IMC CORPORATION
The Boott Mill
100 Foot of John Street
Lowell, Massachusetts 01852-1126
Telephone: (508) 275-6100
Proxy Statement
---------------
The enclosed proxy is solicited on behalf of the Board of Directors of
Spacetec IMC Corporation (the "Company") for use at the 1997 Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Thursday, September 11, 1997,
and at any adjournments thereof. The approximate date on which this proxy
statement and accompanying proxy are first being sent or given to stockholders
is July 29, 1997.
The principal business expected to be transacted at the Annual Meeting, as
more fully described below, will be the election of two directors and the
adoption of the Company's Amended and Restated 1995 Director Stock Option Plan.
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 Annual
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 21, 1997 will be
entitled to vote at the Annual Meeting. On that date, the Company had
outstanding 7,369,208 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 Annual 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. The affirmative vote
of the holders of a majority of the shares of Common Stock present, or
represented, and entitled to vote is required to adopt the Company's Amended and
Restated 1995 Director Stock Option Plan. 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 the directors or the adoption of the
Company's Amended and Restated 1995 Director Stock Option Plan.
<PAGE>
ELECTION OF DIRECTORS
The number of directors remains fixed at five for the coming year. The
Company's Restated Articles of Organization provides that the Board of Directors
is divided into three classes, each with a term of three years. At the Annual
Meeting, two directors will be elected to hold office for three years and until
their successors are elected and qualified. Jerry H. Loyd and Patrick J.
Sullivan, who are presently serving as directors, have been nominated for re-
election by the Board of Directors. Unless a completed proxy withholds
authority to vote for the nominees or is a broker non-vote, the shares
represented by such proxy will be voted for the election of the directors as the
Board's nominees. If any of the nominees are 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 nominees for
director and each other person whose term of office as a director will continue
after the Annual Meeting.
<TABLE>
<CAPTION>
Present
Director Term
Name and Age Business Experience and Other Directorships Since Expires
------------ ------------------------------------------- -------- -------
<S> <C> <C> <C>
Dennis T. Gain Dennis T. Gain has been Chairman of the Board of Directors of the 1991 1998
Age: 54 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 stockholder
of Spatial Systems Ltd. which is an Australian public company that is a
stockholder of the Company. He was a director of Spatial Systems Ltd. until
August 1996. 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.
Patrick J. Sullivan* Patrick J. Sullivan has been a director of the Company since February 1997, - -
Age: 42 having been elected to complete the remainder of Linda S. Linsalata's term.
Mr. Sullivan has extensive consumer electronics and computer industry
experience. During his career, Mr. Sullivan served as vice president of
the merchandising group of the Digital Equipment Corporation since 1993,
and as vice president of worldwide distribution of Conner Peripherals since
1991, and vice president, general manager of North America for Goldstar Products
Co. Ltd. since 1987. Mr. Sullivan attended Northeastern University and
Arizona State University.
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Present
Director Term
Name and Age Business Experience and Other Directorships Since Expires
------------ ------------------------------------------- -------- -------
<S> <C> <C> <C>
Morton E. Goulder Morton E. Goulder has been a director of the Company since 1994 1998
Age: 76 January 1994. Since 1977, Mr. Goulder's principal occupation
has been President of M. E. Goulder Enterprises, a consulting 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. and 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 director of the Company since the Company's 1996 1999
Age: 55 inception in April 1991. He is currently Chairman of Spatial Systems
Ltd., an Australian public company that is a stockholder of the Company.
Jerry H. Loyd* Jerry H. Loyd has been a director of the Company since January 1994. 1994 1997
Age: 67 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 31, 1997
("Fiscal Year 1997") 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 1997. 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 three meetings in
Fiscal Year 1997. The entire Board of Directors functions as a nominating
committee, considering nominations submitted to the Chairman of the Board. The
Board of Directors held five meetings during Fiscal Year 1997, and each director
attended all meetings of the Board and of all committees of the Board on which
he served.
Director Compensation
Directors receive no cash compensation for their services. All directors who
are not employees of the Company (the "Eligible Directors"), however, are
currently eligible to participate in the 1995 Director Stock Option Plan. The
Amended and Restated 1995 Director Stock Option Plan (the "Amended Director
Plan"), as adopted by the Board of Directors, provides for the automatic grant
of options to purchase up to an aggregate of 225,000 shares of Common Stock at
an exercise price equal to the fair market value of the Company's Common Stock
on the date of grant. The options have a term of ten years. A further
description of the 1995 Director Stock Option Plan is set forth under the
heading "Proposal to Adopt the Company's Amended and Restated 1995 Director
Stock Option Plan." During Fiscal Year 1997, Messrs. Goulder and Loyd each
received an option to purchase 20,000 shares under the Amended Director Plan.
Mr. Jagelman received an option to purchase 6,000 shares upon his election as a
director at the 1996 Annual Meeting of Stockholders and an option to purchase
14,000 shares under the Amended Director Plan. Under the Amended Director Plan,
Mr. Sullivan received an option to purchase 10,000 shares on February 12, 1997,
which was immediately exercisable with respect to 3,000 shares and will become
exercisable with respect to 3,000 shares and 4,000 shares on February 12, 1998
and 1999, respectively.The options granted to Messrs. Goulder and Loyd and the
option to purchase 14,000 shares granted to Mr. Jagelman became immediately
exercisable with respect to thirty percent (30%) of the shares. An additional
thirty percent (30%) will become exercisable on December 31, 1997 and the
remaining forty percent (40%) will become exercisable on December 31, 1998. The
option to purchase 6,000 shares granted to Mr. Jagelman became exercisable with
respect to 2,000 shares on September 11, 1996, and will become exercisable with
respect to 2,000 shares on September 11, 1997 and on the next annual meeting of
stockholders.
-4-
<PAGE>
EXECUTIVE COMPENSATION
Compensation Committee Report on 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.
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 six individuals
named in the Summary Compensation Table. The Compensation Committee takes into
account the views of Mr. Gain, the Company's Chief Executive Officer, and Mr.
Rossen, the Company's Chief Financial Officer, in reviewing the individual
performance of the executives (other than Mr. Gain and Mr. Rossen).
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 basis 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 and 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 $180,000 for Fiscal Year 1997, an
increase of approximately 33% from his $135,000 base salary for the fiscal year
ended March 29, 1996 ("Fiscal Year 1996"). The increase was a consequence of
the inclusion of previous bonus-related compensation being included in the base
salary. Mr. Gain's salary has been reduced to $160,000 for the fiscal year
ending March 31, 1998.
-5-
<PAGE>
Annual Bonus. The Company's executive officers are eligible for an annual
cash bonus, based primarily on achievement of significant milestones. Executive
officers were eligible to receive bonuses for Fiscal Year 1997 based upon the
achievement of milestones by the Company during Fiscal Year 1997. No cash
bonuses were earned by the executive officers during Fiscal Year 1997.
Stock Options. Under the Company's Amended and Restated 1993 Stock Option
Plan, which was approved by 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. Mr. Gain did
not receive any stock options to purchase shares during Fiscal Year 1997.
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 1997, 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>
Stock Performance Graph
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 31, 1997, 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.
[LINE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/31/95 3/29/96 6/28/96 8/30/96 12/31/96 3/31/97
-------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
SPACETEC 100.00 131.91 127.66 93.62 43.62 27.66
NASDAQ MARKET INDEX 100.00 104.62 112.37 115.47 120.90 114.76
INDUSRTY INDEX 100.00 104.55 115.12 123.29 126.48 93.94
</TABLE>
-7-
<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 to or for
the Chief Executive Officer of the Company, the Chief Financial Officer (both
current and former) and each of the Company's other executive officers whose
total salary and bonus exceeded $100,000 during Fiscal Year 1997 (collectively,
the "Named Executive Officers"):
<TABLE>
<CAPTION>
Long-Term
Compensation All Other
Annual Compensation Awards Compensation
--------------------------------- ----------- ------------
Other
Annual Securities
Compensation Underlying
Name and Principal Position Year Salary($) Bonus($) ($) Options(#) ($)
- --------------------------- ---- --------- -------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Dennis T. Gain........................... 1997 $180,000 -- -- -- $ 3,507(1)
President and Chief Executive Officer 1996 $135,000 -- -- 40,000 $ 3,237(1)
and Chairman of the Board 1995 $150,000 $30,000 -- 20,000 $ 2,991(1)
Neil Rossen(2)........................... 1997 $ 37,800 -- -- 50,000 --
Senior Vice President, Finance
and Chief Financial Officer
Linda S. Linsalata(3).................... 1997 $ 80,000 -- -- 7,500 $45,500(4)
Former Vice President, Finance and 1996 $ 48,527 -- -- 60,000
Chief Financial Officer
John A. Hilton........................... 1997 $110,000 -- -- -- --
Senior Vice President, Chief 1996 $ 93,333 -- -- 42,000 --
Technology Officer - Hardware 1995 $100,000 $20,000 -- 16,000 --
James J. Wick............................ 1997 $110,000 -- -- 7,500 --
Senior Vice President, Chief 1996 $ 92,000 -- -- 32,000 --
Technology Officer - Software 1995 $ 92,000 $30,000 $28,120(5) 16,000 --
Joyce A. Ouellette....................... 1997 $ 90,000 -- -- -- $45,625(6)
Senior Vice President of Sales 1996 $ 89,000 -- -- 62,000 $64,000(6)
and Marketing 1995 $ 75,000 $21,000 -- 16,000 $33,832(6)
</TABLE>
- ----------------------------
(1) These amounts represent values of a life insurance policy on the life of Mr.
Gain under a split dollar insurance agreement with the Company, where the
Company paid $6,026, $5,992 and $5,963 in Fiscal Years 1995, 1996 and 1997,
respectively, of a $6,787 premium.
(2) Mr. Rossen, the Company's current Senior Vice President of Finance and Chief
Financial Officer, became an employee of the Company on November 22, 1996
and was elected as an officer of the Company by the Board of Directors on
December 4, 1996.
(3) Ms. Linsalata has not been employed by the Company since November 30, 1996.
She joined the Company on September 29, 1995.
(4) Consists of a payment made pursuant to a severance agreement between Ms.
Linsalata and the Company.
(5) Consists of reimbursement of relocation expenses incurred by Mr. Wick during
Fiscal Year 1995 in connection with his becoming an employee of the Company.
(6) Consists of sales commissions received by Ms. Ouellette for each respective
Fiscal Year.
-8-
<PAGE>
Stock Option Grants in Last Fiscal Year
The following table provides information on stock options granted during
Fiscal Year 1997 to the Named Executive Officers.
<TABLE>
<CAPTION>
% of Total
Options Potential Realizable Value at
Securities Granted to Exercise Assumed Annual Rates of Stock
Underlying Employees in or Price Appreciation for Option Term (1)
Options Fiscal Year Base Price Expiration --------------------------------------
Name Granted(#) 1997 ($/share) Date 5%($) 10%($)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dennis T. Gain -- -- -- -- -- --
Neil M. Rossen 50,000(2) 18.3% $4.50 12/04/06 126,434 334,600
Linda S. Linsalata 7,500(3) 2.75% $8.75 7/26/06 38,217 99,726
John A. Hilton -- -- -- -- -- --
James J. Wick 7,500(4) 2.75% $8.75 7/26/06 38,217 99,726
Joyce A. Ouellette -- -- -- -- -- --
</TABLE>
- -----------------
(1) The dollar amounts under these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, in the price of the Common Stock. No gain to the optionees is possible
without an increase in price of the Common Stock, which would benefit all
stockholders proportionately.
(2) These options become exercisable as to 20% of the shares on each of December
4, 1997, 1998, 1999, 2000 and 2001.
(3) These options are immediately exercisable.
(4) These options became exercisable as to 20% on April 27, 1997 and will become
exercisable as to an additional 20% on each April 27, 1998, 1999, 2000 and
2001.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Stock Option
Values
The following table sets forth certain information concerning the unexercised
stock options as of March 31, 1997 held by the Named Executive Officers. No
options were exercised during Fiscal Year 1997 by any Named Executive Officers
other than Ms. Linsalata.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at In-The-Money Options at
March 31, 1997(#) March 31, 1997($)(1)
----------------- --------------------
Shares
Acquired on Value
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dennis T. Gain -- -- 22,000 48,000 $37,080 $45,120
Neil M. Rossen -- -- 0 50,000 0 0
Linda S. Linsalata 12,000 $186,600 38,700 16,800 $32,688 $40,752
John A. Hilton -- -- 14,800 43,200 $18,904 $37,536
James J. Wick -- -- 12,800 42,700 $17,824 $33,216
Joyce A. Ouellette -- -- 28,800 49,200 $24,142 $31,488
</TABLE>
- -----------------
(1) Based on the difference between the respective option exercise price and the
average of the high and low sales prices of the Common Stock on March 31,
1997, which was $3.38.
-9-
<PAGE>
PROPOSAL TO ADOPT THE COMPANY'S AMENDED AND RESTATED 1995 DIRECTOR STOCK
OPTION PLAN
General
The Company's 1995 Director Stock Option Plan (the "Director Plan") was
adopted by the Board of Directors on September 29, 1995 and approved by the
stockholders of the Company on October 6, 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 originally authorized 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 under the heading "Election of Directors--Director Compensation." The
first grant of options under the Director Plan was on the date of the 1996
Annual Meeting of Stockholders. Currently, four of the Company's five directors
are Eligible Directors.
Amendment
On December 4, 1996, the Board of Directors of the Company adopted, subject
to stockholder approval, the Amended and Restated 1995 Director Stock Option
Plan (the "Amended Director Plan"), which among other things, increases the
aggregate number of shares of Common Stock available thereunder by an additional
150,000 shares to an aggregate of 225,000 shares, subject to adjustments for
stock-splits and similar capital changes.
The Amended Director Plan also revised the timing and amount of option
grants by providing that upon the election of any new Eligible Director after
December 31, 1996, such Eligible Director will be granted an option to purchase
10,000 shares of Common Stock (the "Initial Options"). Any Eligible Director
serving on December 31, 1997 and any December 31st thereafter shall receive on
such date, an option to purchase 10,000 shares of Common Stock (the "Annual
Options"). In addition, on December 31, 1996, each of Morton E. Goulder and
Jerry H. Loyd were granted an option to purchase 20,000 shares of Common Stock
and J. Grant Jagelman was granted an option to purchase 14,000 shares of Common
Stock on December 31, 1996 under the Amended Director Plan (these options are
also collectively referred to as "Initial Options").
The Initial Options become exercisable with respect to thirty percent (30%)
of the shares granted on the date of grant, thirty percent (30%) of the shares
granted on the second anniversary of the date of grant, and forty percent (40%)
of the shares granted on the third anniversary of the date of grant, so long as
the optionee is then a director of the Company. The Annual Options become
exercisable with respect to 3,000 shares on the date of grant, 3,000 shares on
the second anniversary of the date of grant, and 4,000 shares on the third
anniversary of the date of grant, so long as the optionee is then a director of
the Company.
Director Plan Activity
As of July 21, 1997, options to purchase an aggregate of 64,000 shares of
Common Stock had been granted under the Amended Director Plan and 6,000 shares
of Common Stock had been granted under the Director Plan, of which none have
been cancelled.
Federal Income Tax Consequences
Options granted under the Director Plan are nonstatutory options not
intended to qualify under Section 422 of the Internal Revenue Code of 1986, as
amended. 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.
-10-
<PAGE>
Votes Required
The affirmative vote of the holders of a majority of the shares of Common
Stock present, or represented, and entitled to vote at the Annual Meeting is
required for the adoption of the Amended Director Plan.
Board Recommendation
The Board of Directors of the Company believes that the adoption of the
Amended and Restated Director Plan is in the best interest of the Company and
its stockholders and recommends a vote FOR the proposal to adopt the Amended
Director Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
AND CERTAIN TRANSACTIONS
During Fiscal Year 1997, 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, was a director
of Spatial Systems Ltd. ("SSL"), an Australian public company and a principal
stockholder of the Company, until August 1996. Mr. Jagelman, a director of the
Company and member of the Board of Directors' Compensation Committee, is a
director of SSL.
Spatial Systems Ltd. License Agreement
In May 1991, SSL transferred to the Company technology valued by the
Company at $97,000. As part of the consideration for transfer of technology,
the Company entered into a license agreement (the "License Agreement") with SSL.
SSL is a stockholder of the Company and J. Grant Jagelman, Chairman of the Board
of SSL, is a director of the Company. In addition, Dennis T. Gain, President
and Chief Executive Officer of the Company, was a director of SSL until August
1996. Under the terms of the License Agreement, the Company granted to SSL a
paid-up, perpetual, irrevocable, royalty-free right and license (i) to use all
technology of the Company relating to programmable computer graphics input
devices, including all tools for certain Spaceball products, in the manufacturer
and sale of such input devices and enhancements or improvements thereto, and
(ii) to use the names "Spaceball" and "Spaceware," together with any designs of
logos owned by the Company, on and in association with such input devices. The
manufacturing and distribution license is exclusive in Australia and New
Zealand. SSL has no right to manufacture the licensed products outside of
Australia and New Zealand, and to the Company's knowledge, SSL is not currently
manufacturing any products. The exclusive license prohibits the Company from
authorizing or appointing a third party to engage in business activities in
Australia and New Zealand which would conflict with the license; however, the
License Agreement expressly permits the Company to authorize original equipment
manufacturers and/or value-added resellers to integrate the Company's products
as components in such third parties' own merchandise and market such merchandise
in Australia and New Zealand.
In addition, the License Agreement grants SSL a perpetual option to obtain
a non-exclusive distribution arrangement to sell the licensed products in
Indonesia, Singapore, Malaysia, Japan, Hong Kong, South Korea, Thailand, The
Philippines, Taiwan, the People's Republic of China, Cambodia and Vietnam. The
option, which has not been exercised, is exercisable upon thirty days written
notice to the Company. Either party to the License Agreement may fully assign
its rights and interests and delegate its obligations (a) to an entity
controlled by such party if such entity assume all of the obligations under the
License Agreement, and (b) to an entity which acquires all or substantially all
of the assets of either party or which is the surviving entity in a merger or
consolidation with such party, if (i) such entity assumes all of the rights and
obligations of such party under the License Agreement, and (ii) if, after giving
effect to the assignment, such entity shall have a tangible net worth at least
equal to the tangible net worth of such party immediately prior thereto. SSL
has paid $140,000 and $278,000 to the Company for product purchases in Fiscal
Year 1996 and 1997, respectively.
-11-
<PAGE>
Upon the closing of the tender offer by the Company to purchase all of the
outstanding shares of SSL, which is more fully discussed below, the License
Agreement between SSL and the Company will be cancelled.
Spatial Systems Ltd. Tender Offer
On April 18, 1997, the Company initiated a tender offer to purchase all of
the outstanding shares of SSL from SSL's stockholders in exchange for shares of
Common Stock of the Company. For each fifteen shares of SSL, the SSL
shareholders will receive two shares of the Company's Common Stock, and for
every option to purchase twelve shares of SSL, the option holder will receive
one share of the Company's Common Stock. The tender offer ended on July 18,
1997. As a result of the tender offer, all shares of Common Stock of the
Company owned by SSL will be cancelled. The tender offer, together with the
cancellation of the shares of the Company's Common Stock owned by SSL, will not
effect the number of shares outstanding 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 17, 1997 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% Stockholders(2)
Dennis Gain(3) 1,617,090 21.8%
J. Grant Jagelman(4) 1,377,748 18.7%
Gain Family Trust(5) 1,242,590 16.9%
Spatial Systems Ltd.(6) 1,133,334 15.4%
Other Directors and Nominees for Director
Morton E. Goulder(7) 122,809 1.7%
Jerry H. Loyd(8) 30,809 *
Patrick J. Sullivan(9) 3,000 *
Other Named Executive Officers
Linda Linsalata(10) 43,900 *
Neil M. Rossen 1,450 *
John A. Hilton(11) 134,800 1.8%
James J. Wick(12) 122,300 1.7%
Joyce A. Ouellette(13) 56,000 *
A. Lorne Grant --
C. Raymond Boelig --
All directors, nominees for director and
executive officers as a group (11 persons)(14) 3,466,006 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 17, 1997.
(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) 1,242,590 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) 32,000 shares of Common Stock subject to
options held by Mr. Gain exercisable as of July 17, 1997 or within 60 days
thereafter and (iii) 110,500 shares held by Mr. Gain's wife and children.
Mr. Gain also is a stockholder of Spatial Systems Ltd. ("SSL") and was a
director until August 1996. See "Compensation Committee Interlocks and
Insider Participation and Certain Transactions - Spatial Systems Ltd.
Tender Offer," with respect to a pending cancellation of SSL shares.
(4) Includes (i) 1,133,334 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
-13-
<PAGE>
children and (v) 40,534 shares of Common Stock subject to options held by
Mr. Jagelman exercisable as of July 17, 1997 or within 60 days thereafter.
Mr. Jagelman disclaims beneficial ownership of the shares held by SSL,
except to the extent of his proportionate pecuniary interests in such
entity.
(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, is a director and stockholder of SSL.
Dennis Gain, President and Chief Executive Officer and a director of the
Company, was a director of SSL until August 1996. Mr. Gain and Mr. Hilton,
the Company's Senior Vice President and Chief Technology Officer of
Hardware, are also stockholders of SSL. Mr. Jagelman is also the Chief
Executive Officer of SSL. Messrs. Jagelman, Gain and Hilton disclaim
beneficial ownership of the shares held by SSL, except to the extent of
their respective proportionate pecuniary interests in SSL. See
"Compensation Committee Interlocks and Insider Participation and Certain
Transactions - Spatial Systems Ltd. Tender Offer," with respect to a
pending cancellation of these shares.
(7) Includes 12,000 shares of Common Stock subject to options held by Mr.
Goulder exercisable as of July 17, 1997 or within 60 days thereafter.
(8) Includes 12,000 shares of Common Stock subject to options held by Mr. Loyd
exercisable as of July 17, 1997 or within 60 days thereafter.
(9) Represents 3,000 shares of Common Stock subject to options held by Mr.
Sullivan exercisable as of July 17, 1997 or within 60 days thereafter.
(10) Represents 43,900 shares of Common Stock subject to options held by Ms.
Linsalata exercisable as of July 17, 1997 or within 60 days thereafter.
(11) Includes 24,800 shares of Common Stock subject to options held by Mr.
Hilton exercisable as of July 17, 1997 or within 60 days thereafter.
(12) Includes 22,300 shares of Common Stock subject to options held by Mr. Wick
exercisable as of July 17, 1997 or within 60 days thereafter.
(13) Includes 36,000 shares of Common Stock subject to options held by Ms.
Ouellette exercisable as of July 17, 1997 or within 60 days thereafter.
(14) Includes shares and options described in footnotes (3) and (4) and (7)-
(13).
-14-
<PAGE>
INFORMATION CONCERNING AUDITORS
The firm of Ernst & Young LLP, independent accountants, has audited the
Company's accounts for a number of years and will do so for the fiscal year
ending March 31, 1998. 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 1998 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: Neil M. Rossen, no later than
March 27, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's executive officers and directors and persons who own
beneficially more than ten percent of the Company's equity securities are
required under Section 16(a) of the Exchange Act to file reports of ownership
and changes in ownership of Company securities with the Securities and Exchange
Commission. Copies of these reports must also be furnished to the Company.
Based solely on a review of the copies of reports furnished to the Company and
written representations that no other reports were required, the Company
believes that during Fiscal Year 1997 the Company's executive officers,
directors and 10% beneficial owners complied with all applicable Section 16(a)
filing requirements, except that (i) Ms. Deborah Agrella, a former officer of
the Company, filed a Form 3 on November 12, 1996 which was due on August 26,
1996; (ii) the Gain Family Trust reported in a Form 5 filed February 13, 1997
(a) the sale of 15,000 shares of Common Stock for which a Form 4 was due on
February 10, 1996, (b) the purchase of 1,000 shares of Common Stock for which a
Form 4 was due on July 10, 1996, and (c) the purchase of 10,000 shares of Common
Stock for which a Form 4 was due on January 10, 1997; (iii) Spatial Systems Ltd.
reported in a Form 5 filed February 13, 1997 the sale of 12,750 shares of Common
Stock for which a Form 4 was due on February 10, 1996 and SSL will report in a
Form 5 to be filed on May 15, 1998 the purchase of 1,170 shares of Common Stock
for which a Form 5 was due on May 15, 1997; (iv) Mr. Jagelman will report in a
Form 5 to be filed on May 15, 1998 the purchase by SSL of 1,170 shares of Common
Stock for which a Form 5 was due on May 15, 1997; (v) Mr. Goulder reported in a
Form 5 filed May 15, 1997 the distribution by a partnership of which Mr. Goulder
was a limited partner of 18,809 shares of Common Stock for which a Form 4 was
due on July 10, 1996; (vi) Mr. Loyd reported in a Form 5 filed May 15, 1997 the
distribution by a partnership of which Mr. Loyd was a limited partner of 18,809
shares of Common Stock for which a Form 4 was due on July 10, 1996; (vii) Mr.
Sullivan filed a Form 3 on April 25, 1997 which was due on February 22, 1997;
and (viii) Mr. Lorne Grant, an officer of the Company, filed a Form 3 on April
25, 1997 which was due on March 14, 1997.
OTHER MATTERS
The Board of Directors does not know of any business to come before the
Annual Meeting other than the matters described in the notice. If other
business is properly presented for consideration at the Annual Meeting, the
enclosed proxy authorizes the persons named therein to vote the shares in their
discretion.
-15-
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SPACETEC IMC CORPORATION
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS SEPTEMBER 11, 1997
The undersigned stockholder of Spacetec IMC Corporation (the "Company")
hereby appoints Dennis T. Gain, Neil M. Rossen 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, 1997 and 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
-------------
<PAGE>
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
A [X] Please mark your votes as in this example
FOR WITHHELD
both nominees from both nominees
1. Proposal to elect [_] [_]
two directors.
Nominees: Jerry H. Loyd
Patrick J. Sullivan
FOR, except vote withheld from the following nominee:
- -----------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
2. To adopt the Company's Amended and Restated 1995 Director Stock Option Plan,
which among other things, increases the aggregate number of shares of the
Company's Common Stock as to which options may be granted by 150,000 shares
to 225,000 shares.
This Proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholders. If no specification is made, this proxy will be
voted for the proposals. In their discretion, the proxies are also authorized
to vote upon such other matters as may properly come before the meeting.
Signature Date: Signature Date: , 1997
------------- ------ ----------------- ------
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 corporate name by President
or other authorized officer. If a partner, please sign in partnership
name by authorized person.
