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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 1)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INVISION TECHNOLOGIES, INC.
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(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:
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2. Aggregate number of securities to which transaction applies:
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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):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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/ / 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:
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2. Form, Schedule or Registration Statement No.:
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4. Date Filed:
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INVISION TECHNOLOGIES, INC.
3420 E. THIRD AVENUE
FOSTER CITY, CA 94404
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 1997
------------------------
TO THE STOCKHOLDERS OF INVISION TECHNOLOGIES, INC.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of InVision
Technologies, Inc. a Delaware corporation (the "Company"), will be held on
Thursday, June 12, 1997 at 9:00 a.m. local time at the Holiday Inn, 1221 Chess
Drive, Foster City, California 94404 for the following purpose:
1. To elect the Class I director to hold office until the 2000 Annual
Meeting of Stockholders and until his successor is elected and qualified.
2. To approve the Company's Equity Incentive Plan, as amended, to increase
the aggregate number of shares of Common Stock authorized for issuance
under such plan by 640,000 shares to 2,221,818 shares.
3. To ratify the selection of Price Waterhouse LLP as independent auditors
of the Company for its fiscal year ending December 31, 1997.
4. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 24, 1997 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
[SIG]
ROBERT L. JONES
SECRETARY
Foster City, California
May 8, 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
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[LOGO]
INVISION TECHNOLOGIES, INC.
3420 E. THIRD AVENUE
FOSTER CITY, CA 94404
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 12, 1997
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
InVision Technologies, Inc., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held on Thursday, June 12, 1997, at
9:00 a.m. local time (the "Annual Meeting"), or at any adjournment or
postponement thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Annual Meeting will be held at the Holiday Inn,
1221 Chess Drive, Foster City, California 94404. The Company intends to mail
this proxy statement and accompanying proxy card on or about May 8, 1997 to all
stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on April 24,
1997 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on April 24, 1997 the Company had outstanding and entitled to
vote 9,205,770 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
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REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 3420 E.
Third Avenue, Foster City, California 94404, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
SHAREHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the Company's
1998 Annual Meeting of Stockholders must be received by the Company not later
than January 8, 1998 in order to be included in the proxy statement and proxy
relating to that Annual Meeting.
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PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and Bylaws
provide that the Board of Directors shall be divided into three classes, each
class consisting, as nearly as possible, of one-third of the total number of
directors, with each class having a three-year term. Vacancies on the Board may
be filled only by persons elected by a majority of the remaining directors,
unless the Board of Directors determines by resolution that any such vacancies
shall be filled by the stockholders. A director elected by the Board to fill a
vacancy (including a vacancy created by an increase in the Board of Directors)
shall serve for the remainder of the full term of the class of directors in
which the vacancy occurred and until such director's successor is elected and
qualified.
The Board of Directors is presently composed of four members. There is one
director in the class whose term of office expires in 1997. The nominee for
election to this class is currently a director of the Company. If elected at the
Annual Meeting, the nominee would serve until the 2000 annual meeting of
stockholders and until his successor is elected and has qualified, or until such
director's earlier death, resignation or removal. There currently exists a
vacancy on the Board of Directors for the position of a director to serve until
the 1998 annual meeting of stockholders, which will remain unfilled as of the
date of the Annual Meeting. The Company is in the process of finding a suitable
candidate to fill such position. Proxies cannot be voted for a greater number of
persons than the number of nominees named.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting.
Set forth below is biographical information for the person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
NOMINEE FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 1997 ANNUAL MEETING
DR. SERGIO MAGISTRI
DR. SERGIO MAGISTRI, age 44, has served as President, Chief Executive
Officer and Director of the Company since December 1992. From June 1991 to
November 1992, he was a Project Manager with AGIE, Switzerland, a manufacturer
of high precision tooling equipment, responsible for all aspects of a family of
new products for high precision electro-erosion machining with sub-micron
precision. From 1988 to June 1991, Dr. Magistri was a consultant to high
technology companies, including FI.M.A.I. Holding, S.A. As a consultant to
FI.M.A.I., Dr. Magistri was involved in the formation of the Company and the
development of its business plan and of its technology. From 1983 to 1988, Dr.
Magistri held various positions with Imatron Inc. ("Imatron"), a CT medical
scanner company, including as an Engineering Physicist and Manager of Advanced
Reconstruction Systems, and Director of Computer Engineering. Dr. Magistri holds
a degree in Electrical Engineering and a doctorate in Biomedical Engineering
from the Swiss Institute of Technology, Zurich, Switzerland.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF THE NAMED NOMINEE.
DIRECTOR CONTINUING IN OFFICE UNTIL THE 1998 ANNUAL MEETING
DR. GIOVANNI LANZARA
DR. GIOVANNI LANZARA, age 57, has served as a Director of the Company since
September 1990 and as Chairman of the Board since March 1994. Since 1978, he has
served as a professor and President of the Transportation Engineering Department
at the University of Aquila, Rome, Italy. Dr. Lanzara has been President of the
International Center for Transportation Studies since 1987. Dr. Lanzara served
as director of Imatron from August 1993 to June 1996.
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DIRECTORS CONTINUING IN OFFICE UNTIL THE 1999 ANNUAL MEETING
DR. DOUGLAS BOYD
DR. DOUGLAS P. BOYD, age 55, served as a Director of the Company from
September 1990 to December 1992, and since June 1993. Dr. Boyd was a founder of
Imatron in 1981, and has held various positions at Imatron, and currently serves
as its Chairman of the Board and Chief Technology Officer. Dr. Boyd is an
Adjunct Professor of Radiology at the University of California, San Francisco.
DR. BRUNO TREZZA
DR. BRUNO TREZZA, age 60, has served as a Director of the Company since
November 1993. Since 1974, he has served as a professor of economics at the
University "La Sapienza" in Rome, Italy. From 1980 to 1981, Dr. Trezza served as
an economic advisor to the Italian Prime Minister. From 1974 to 1983, he served
as a member of the Committee for Economic Planning of the Italian Ministry of
Planning. He has served as a director of several private companies and public
institutions in Italy.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1996 the Board of Directors held
six meetings. The Board has an Audit Committee and a Compensation Committee.
The Audit Committee meets with the Company's independent auditors at least
annually to review the results of the annual audit and discuss the financial
statements; recommends to the Board the independent auditors to be retained; and
receives and considers the accountants' comments as to controls, adequacy of
staff and management performance and procedures in connection with audit and
financial controls. The Audit Committee is composed of two non-employee
directors: Drs. Boyd and Trezza. The Audit Committee did not meet during 1996;
all matters related to the audit were handled by the Board of Directors during
such fiscal year.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board may
delegate. The Compensation Committee is composed of two non-employee directors:
Drs. Boyd and Lanzara. The Compensation Committee did not meet during 1996; all
compensation matters were handled by the Board of Directors during such fiscal
year.
During the fiscal year ended December 31, 1996, each Board member attended
75% or more of the aggregate of the meetings of the Board and of the committees
on which he served, held during the period for which he was a director or
committee member, respectively.
PROPOSAL 2
APPROVAL OF EQUITY INCENTIVE PLAN
In May, 1991, the Board of Directors adopted, and in June 1991 the
stockholders subsequently approved, the Company's 1991 Stock Option Plan. In
March 1996, the 1991 Stock Option was amended and restated as the Equity
Incentive Plan (the "Equity Plan"). As a result of a series of amendments, at
December 31, 1996 there were 1,581,818 shares of the Company's Common Stock
authorized for issuance under the Equity Plan.
At December 31, 1996, options (net of cancelled or expired options) covering
an aggregate of 1,141,500 shares of the Company's Common Stock had been granted
under the Equity Plan, and only 835,000 shares (plus any shares that might in
the future be returned to the plans as a result of cancellations or expiration
of options) remained available for future grant under the Equity Plan. During
the last fiscal
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year, under the Equity Plan, the Company did not grant any options to purchase
shares of Common Stock to any current executive officers or any current
directors.
On December 20, 1996, the Board approved an amendment to the Equity Plan,
subject to stockholder approval, to enhance the flexibility of the Board and the
Compensation Committee in granting stock options to the Company's employees. The
amendment increases the number of shares authorized for issuance under the
Equity Plan from a total of 1,581,818 shares to 2,221,818 shares. The Board
adopted this amendment to ensure that the Company can continue to grant stock
options to employees at levels determined appropriate by the Board and the
Compensation Committee.
Stockholders are requested in this Proposal 2 to approve the Equity Plan, as
amended. The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote at the meeting will be
required to approve the Equity Plan, as amended. Abstentions will be counted
toward the tabulation of votes cast on proposals presented to the stockholders
and will have the same effect as negative votes. Broker non-votes are counted
towards a quorum, but are not counted for any purpose in determining whether
this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the Equity Plan are outlined below:
GENERAL
The Equity Plan provides for the grant of (i) both incentive and
nonstatutory stock options, (ii) stock bonuses, (iii) rights to purchase
restricted stock and (iv) stock appreciation rights (collectively, "Stock
Awards"). Incentive stock options granted under the Equity Plan are intended to
qualify as "incentive stock options" within the meaning of Section 422 of the
Code. Nonstatutory stock options granted under the Equity Plan are intended not
to qualify as incentive stock options under the Code. See "Federal Income Tax
Information" for a discussion of the tax treatment of Stock Awards.
PURPOSE
The Equity Plan was adopted to provide a means by which selected directors
and employees (including officers) of and consultants to the Company and its
affiliates could be given an opportunity to purchase stock in the Company, to
assist in retaining the services of employees holding key positions, to secure
and retain the services of persons capable of filling such positions and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
ADMINISTRATION
The Equity Plan may be administered by the Board or a committee of the
Board. The Board has the power to construe and interpret the Equity Plan and,
subject to the provisions of the Equity Plan, to determine the persons to whom
and the dates on which Stock Awards will be granted; whether a Stock Award will
be an incentive stock option, a nonstatutory stock option, a stock bonus, a
right to purchase restricted stock, a stock appreciation right or a combination
of the foregoing; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive stock pursuant to a Stock Award; whether a person shall be permitted to
receive stock upon exercise of an independent stock appreciation right; and the
number of shares with respect to which a Stock Award shall be granted to each
such person. The Board of Directors is authorized to delegate administration of
the Equity Plan to a committee composed of not fewer than two members of the
Board. The Board has delegated administration of the Equity Plan to the
Compensation Committee of the Board. As used herein with respect to the Equity
Plan, the "Board" refers to the Compensation Committee as well as to the Board
of Directors itself.
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ELIGIBILITY
Incentive stock options and stock appreciation rights related to incentive
stock options may be granted under the Equity Plan only to selected employees
(including officers and directors who are employees) of the Company and its
affiliates. Selected employees, non-employee directors and consultants are
eligible to receive Stock Awards other than incentive stock options and related
stock appreciation rights under the Equity Plan.
No stock option or award to purchase restricted stock may be granted under
the Equity Plan to any person who, at the time of the grant, owns (or is deemed
to own) stock possessing more than 10% of the total combined voting power of the
Company or any affiliate of the Company, unless the stock option exercise price
is at least 110% of the fair market value of the stock subject to the stock
option on the date of grant (100% of the fair market value in the case of an
award to purchase restricted stock), and the term of the stock option does not
exceed five years from the date of grant. For incentive stock options granted
under the Equity Plan, the aggregate fair market value, determined at the time
of grant, of the shares of Common Stock with respect to which such options are
exercisable for the first time by an optionee during any calendar year (under
all such plans of the Company and its affiliates) may not exceed $100,000.
STOCK SUBJECT TO THE EQUITY PLAN
If any Stock Award granted under the Equity Plan (other than a stock
appreciation right) expires or otherwise terminates without being exercised, the
Common Stock not purchased pursuant to such Stock Awards again becomes available
for issuance under the Equity Plan.
TERMS OF OPTIONS
The following is a description of the permissible terms of options under the
Equity Plan. Individual option grants may be more restrictive as to any or all
of the permissible terms described below.
EXERCISE PRICE; PAYMENT. The exercise price of incentive stock options
under the Equity Plan may not be less than the fair market value of the Common
Stock subject to the option on the date of the option grant, and in some cases
(see "Eligibility" above), may not be less than 110% of such fair market value.
The exercise price of nonstatutory options under the Equity Plan may not be less
than 85% of the fair market value of the Common Stock subject to the option on
the date of the option grant, and in some cases (see "Eligibility" above), may
not be less than 110% of such fair market value. However, if options were
granted with exercise prices below fair market value, deductions for
compensation attributable to the exercise of such options could be limited by
Section 162(m). See "Federal Income Tax Information." At April 15, 1997 the
closing price of the Company's Common Stock as reported on The Nasdaq SmallCap
Market was $14 5/8 per share.
In the event of a decline in the value of the Company's Common Stock, the
Board has the authority to offer employees the opportunity to replace
outstanding higher priced options, whether incentive or nonstatutory, with new
lower priced options. To the extent required by Section 162(m), an option
repriced under the Equity Plan is deemed to be canceled and a new option
granted. The exercise price of options granted under the Equity Plan must be
paid either: (a) in cash at the time the option is exercised; or (b) at the
discretion of the Board, (i) by delivery of other Common Stock of the Company,
(ii) pursuant to a deferred payment arrangement, or (iii) in any other form of
legal consideration acceptable to the Board.
OPTION EXERCISE. Options granted under the Equity Plan may become
exercisable ("vest") in cumulative increments as determined by the Board. Shares
covered by currently outstanding options under the Equity Plan typically vest at
the rate of 25% of the shares subject to the option on the first anniversary of
the date of grant and 1/16th of such shares at the end of each quarter
thereafter during the optionee's employment or relationship as a consultant or
director. Shares covered by options granted in the future under the Equity Plan
may be subject to different vesting terms. The Board has the power to accelerate
the
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time during which an option may be exercised. In addition, options granted under
the Equity Plan may permit exercise prior to vesting, but in such event the
optionee may be required to enter into an early exercise stock purchase
agreement that allows the Company to repurchase shares not yet vested at their
exercise price should the optionee leave the employ of the Company before
vesting. To the extent provided by the terms of an option, an optionee may
satisfy any federal, state or local tax withholding obligation relating to the
exercise of such option by a cash payment upon exercise, by authorizing the
Company to withhold a portion of the stock otherwise issuable to the optionee,
by delivering already-owned stock of the Company or by a combination of these
means.
TERM. The maximum term of options under the Equity Plan is ten years,
except that in certain cases (see "Eligibility") the maximum term is five years.
Options under the Equity Plan terminate three months after termination of the
optionee's employment or relationship as a consultant or director of the Company
or any affiliate of the Company, unless: (a) such termination is due to such
person's disability, in which case the option may, but need not, provide that it
may be exercised at any time not exceeding twelve months following such
termination; (b) the optionee dies while employed by or serving as a consultant
or director of the Company or any affiliate of the Company, or within three
months after termination of such relationship, in which case the option may, but
need not, provide that it may be exercised (to the extent the option was
exercisable at the time of the optionee's death) within eighteen months of the
optionee's death by the person or persons to whom the rights to such option pass
by will or by the laws of descent and distribution; or (c) the option by its
terms specifically provides otherwise. Individual options by their terms may
provide for exercise within a longer period of time following termination of
employment or the consulting relationship. The option term may also be extended
in the event that exercise of the option within these periods is prohibited for
specified reasons.
TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK
The following is a description of the permissible terms of stock bonuses and
restricted stock purchase agreements under the Equity Plan. The terms and
conditions of stock bonus or restricted stock purchase agreements may change
from time to time, and the terms and conditions of separate agreements need not
be identical, but each stock bonus or restricted stock purchase agreement
includes the substance of each of the following provisions as appropriate:
PURCHASE PRICE. The purchase price under each restricted stock purchase
agreement is such amount as the Board may determine and designate in such
agreement, but in no event may the purchase price be less than eighty-five
percent (85%) of the stock's fair market value on the date such award is made.
CONSIDERATION. The purchase price of stock acquired pursuant to a stock
purchase agreement must be paid either: (i) in cash at the time of purchase;
(ii) at the discretion of the Board, according to a deferred payment or other
arrangement with the person to whom the stock is sold; or (iii) in any other
form of legal consideration that may be acceptable to the Board in its
discretion. Notwithstanding the foregoing, the Board may award stock pursuant to
a stock bonus agreement in consideration for past services actually rendered to
the Company or for its benefit.
VESTING. Shares of stock sold or awarded under the Plan may, but need not,
be subject to a repurchase option in favor of the Company in accordance with a
vesting schedule to be determined by the Board.
TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT. In
the event a participant's continuous status as an employee, director or
consultant terminates, the Company may repurchase or otherwise re-acquire any or
all of the shares of stock held by that person which have not vested as of the
date of termination under the terms of the stock bonus or restricted stock
purchase agreement between the Company and such person.
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STOCK APPRECIATION RIGHTS
The three types of Stock Appreciation Rights that are authorized for
issuance under the Equity Plan are as follows:
TANDEM STOCK APPRECIATION RIGHTS. Tandem stock appreciation rights may be
granted appurtenant to an option, and are generally subject to the same terms
and conditions applicable to the particular option grant to which they pertain.
Tandem stock appreciation rights require the holder to elect between the
exercise of the underlying option for shares of stock and the surrender, in
whole or in part, of such option for an appreciation distribution. The
appreciation distribution payable on the exercised tandem right is in cash (or,
if so provided, in an equivalent number of shares of stock based on fair market
value on the date of the option surrender) in an amount up to the excess of (i)
the fair market value (on the date of the option surrender) of the number of
shares of stock covered by that portion of the surrendered option in which the
optionee is vested over (ii) the aggregate exercise price payable for such
vested shares.
CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent stock appreciation rights
may be granted appurtenant to an option and may apply to all or any portion of
the shares of stock subject to the underlying option and are generally subject
to the same terms and conditions applicable to the particular option grant to
which they pertain. A concurrent right is exercised automatically at the same
time the underlying option is exercised with respect to the particular shares of
stock to which the concurrent right pertains. The appreciation distribution
payable on an exercised concurrent right is in cash (or, if so provided, in an
equivalent number of shares of stock based on fair market value on the date of
the exercise of the concurrent right) in an amount equal to such portion as
shall be determined by the Board at the time of the grant of the excess of (i)
the aggregate fair market value (on the date of the exercise of the concurrent
right) of the vested shares of stock purchased under the underlying option which
have concurrent rights appurtenant to them over (ii) the aggregate exercise
price paid for such shares.
INDEPENDENT STOCK APPRECIATION RIGHTS. Independent stock appreciation
rights may be granted independently of any option and are generally subject to
the same terms and conditions applicable to nonstatutory stock options. The
appreciation distribution payable on an exercised independent right may not be
greater than an amount equal to the excess of (i) the aggregate fair market
value (on the date of the exercise of the independent right) of a number of
shares of Company stock equal to the number of share equivalents in which the
holder is vested under such independent right, and with respect to which the
holder is exercising the independent right on such date, over (ii) the aggregate
fair market value (on the date of the grant of the independent right) of such
number of shares of Company stock. The appreciation distribution payable on the
exercised independent right is in cash or, if so provided, in an equivalent
number of shares of stock based on fair market value on the date of the exercise
of the independent right.
ADJUSTMENT PROVISIONS
If there is any change in the stock subject to the Equity Plan or subject to
any Stock Award granted under the Equity Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or otherwise), the Equity Plan and Stock
Awards outstanding thereunder will be appropriately adjusted as to the class and
the maximum number of shares subject to such plan, and the class, number of
shares and price per share of stock subject to such outstanding options.
EFFECT OF CERTAIN CORPORATE EVENTS
The Equity Plan provides that, in the event of a dissolution or liquidation
of the Company, specified type of merger or other corporate reorganization, to
the extent permitted by law, any surviving corporation will be required to
either assume Stock Awards outstanding under the Equity Plan or substitute
similar Stock Awards for those outstanding under such plan, or such outstanding
Stock Awards will continue in
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full force and effect. In the event that any surviving corporation declines to
assume or continue Stock Awards outstanding under the Equity Plan, or to
substitute similar Stock Awards, then the time during which such Stock Awards
may be exercised may, at the discretion of the Board of Directors, be
accelerated and the Stock Awards terminated if not exercised during such time.
The acceleration of a Stock Award in the event of an acquisition or similar
corporate event may be viewed as an anti-takeover provision, which may have the
effect of discouraging a proposal to acquire or otherwise obtain control of the
Company.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the Equity Plan without stockholder
approval or ratification at any time or from time to time. Unless sooner
terminated, the Equity Plan will terminate on May 1, 2001.
The Board may also amend the Equity Plan at any time or from time to time.
However, no amendment will be effective unless approved by the stockholders of
the Company within twelve months before or after its adoption by the Board if
the amendment would: (a) modify the requirements as to eligibility for
participation (to the extent such modification requires stockholder approval in
order for the Plan to satisfy Section 422 of the Code; (b) increase the number
of shares reserved for issuance under Stock Awards; or (c) change any other
provision of the Equity Plan in any other way if such modification requires
stockholder approval in order to comply with Rule 16b-3 ("Rule 16b-3") of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or satisfy the
requirements of Section 422 of the Code. The Board may submit any other
amendment to the Equity Plan for stockholder approval, including, but not
limited to, amendments intended to satisfy the requirements of Section 162(m) of
the Code regarding the exclusion of performance-based compensation from the
limitation on the deductibility of compensation paid to certain employees.
RESTRICTIONS ON TRANSFER
Under the Equity Plan, an incentive stock option may not be transferred by
the optionee otherwise than by will or by the laws of descent and distribution
and during the lifetime of the optionee, may be exercised only by the optionee.
Other Stock Awards may not be transferred except by will, by the laws of descent
and distribution, or pursuant to a domestic relations order. In any case, the
optionee may designate in writing a third party who may exercise the option in
the event of the optionee's death. In addition, shares subject to repurchase by
the Company under an early exercise stock purchase agreement may be subject to
such restrictions on transfer which the Board deems appropriate.
FEDERAL INCOME TAX INFORMATION
INCENTIVE STOCK OPTIONS. Incentive stock options under the Equity Plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Code. There generally are no federal income
tax consequences to the optionee or the Company by reason of the grant or
exercise of an incentive stock option. However, the exercise of an incentive
stock option may increase the optionee's alternative minimum tax liability, if
any.
If an optionee holds stock acquired through exercise of an incentive stock
option for at least two years from the date on which the option is granted and
at least one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss on a disposition of such
stock will be long-term capital gain or loss. Generally, if the optionee
disposes of the stock before the expiration of either of these holding periods
(a "disqualifying disposition"), at the time of disposition, the optionee will
realize taxable ordinary income equal to the lesser of (a) the excess of the
stock's fair market value on the date of exercise over the exercise price, or
(b) the optionee's actual gain, if any, on the purchase and sale. The optionee's
additional gain, or any loss, upon the disqualifying disposition will be a
capital gain or loss, which will be long-term or short-term depending on whether
the stock was held for more than one year. Long-term capital gains currently are
generally subject to lower tax rates than ordinary income. The
9
<PAGE>
maximum capital gains rate for federal income tax purposes is currently 28%
while the maximum ordinary income rate is effectively 39.6% at the present time.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition occurs.
NONSTATUTORY STOCK OPTIONS. Nonstatutory stock options granted under the
Equity Plan generally have the following federal income tax consequences:
There are no tax consequences to the optionee or the Company by reason of
the grant of a nonstatutory stock option. Upon exercise of a nonstatutory stock
option, the optionee normally will recognize taxable ordinary income equal to
the excess of the stock's fair market value on the date of exercise over the
option exercise price. Generally, with respect to employees, the Company is
required to withhold from regular wages or supplemental wage payments an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionee. Upon disposition of the stock, the optionee will
recognize a capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any amount recognized
as ordinary income upon exercise of the option. Such gain or loss will be long
or short-term depending on whether the stock was held for more than one year.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
RESTRICTED STOCK AND STOCK BONUSES. Restricted stock and stock bonuses
granted under the Equity Plan generally have the following federal income tax
consequences:
Upon acquisition of stock under a restricted stock or stock bonus award, the
recipient normally will recognize taxable ordinary income equal to the excess of
the stock's fair market value over the purchase price, if any. However, to the
extent the stock is subject to certain types of vesting restrictions, the
taxable event will be delayed until the vesting restrictions lapse unless the
recipient elects to be taxed on receipt of the stock. Generally, with respect to
employees, the Company is required to withhold from regular wages or
supplemental wage payments an amount based on the ordinary income recognized.
Subject to the requirement of reasonableness, Section 162(m) of the Code and the
satisfaction of a tax reporting obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the recipient. Upon disposition of the stock, the recipient will
recognize a capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock, if any, plus any amount
recognized as ordinary income upon acquisition (or vesting) of the stock. Such
gain or loss will be long or short-term depending on whether the stock was held
for more than one year from the date ordinary income is measured. Slightly
different rules may apply to persons who acquire stock subject to forfeiture.
STOCK APPRECIATION RIGHTS. No taxable income is realized upon the receipt
of a stock appreciation right, but upon exercise of the stock appreciation
right, the fair market value of the shares (or cash in lieu of shares) received
must be treated as compensation taxable as ordinary income to the recipient in
the year of such exercise. Generally, with respect to employees, the Company is
required to withhold from the payment made on exercise of the stock appreciation
right or from regular wages or supplemental wage payments an amount based on the
ordinary income recognized. Subject to the requirement of reasonableness,
Section 162(m) of the Code and the satisfaction of a reporting obligation, the
Company will be entitled to a business expense deduction equal to the taxable
ordinary income recognized by the recipient.
10
<PAGE>
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. As part of the Omnibus Budget
Reconciliation Act of 1993, the U.S. Congress amended the Code to add Section
162(m), which denies a deduction to any publicly held corporation for
compensation paid to certain employees in a taxable year to the extent that
compensation exceeds $1 million for a covered employee. It is possible that
compensation attributable to awards under the Equity Plan, when combined with
all other types of compensation received by a covered employee from the Company,
may cause this limitation to be exceeded in any particular year.
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Price Waterhouse LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Price Waterhouse LLP
has audited the Company's financial statements since its inception in 1990.
Representatives of Price Waterhouse LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions.
Stockholder ratification of the selection of Price Waterhouse LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Price Waterhouse
LLP to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board in their discretion may direct
the appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Price Waterhouse LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
11
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 31, 1997 by: (i) each
director and nominee for director; (ii) each of the executive officers named in
the Summary Compensation Table employed by the Company in that capacity on March
31, 1997; (iii) all executive officers and directors of the Company as a group;
and (iv) all those known by the Company to be beneficial owners of more than
five percent of its Common Stock.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED(1)
-------------------------
NAME NAME PERCENTAGE
- --------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
HARAX Holding, S.A.(2)............................................... 3,234,782 35.1%
Eugenio Rendo(3)..................................................... 3,234,782 35.1
ElectroParts S.A.(4)................................................. 540,642 5.9
HAKON Holdings, S.A.(5).............................................. 485,474 5.3
Anaconda Opportunity Fund, L.P.(6)................................... 479,318 5.2
Dr. Sergio Magistri(7)............................................... 242,738 2.6
Sauveur Chemouni(8).................................................. 53,632 *
Curtis P. DiSibio(9)................................................. 57,583 *
David Pillor(10)..................................................... 143,598 1.5
Dr. Benno Stebler(11)................................................ 64,429 *
Dr. Douglas Boyd(12)................................................. 62,533 *
Dr. Giovanni Lanzara(13)............................................. 534,420 5.8
Dr. Bruno Trezza(14)................................................. 531,955 5.7
All directors and executive officers as a group (10 persons)(15)..... 1,759,562 17.8
</TABLE>
- ------------------------
* Less than 1% of the outstanding Common stock.
(1) Applicable percentage of ownership at March 31, 1997 and is based upon
9,205,000 shares of Common Stock outstanding. Beneficial ownership is
determined in accordance with the rules of the Securities and Exchange
Commission and includes sole or shared voting or investment power with
respect to shares shown as beneficially owned. Shares of Common Stock
subject to options currently exercisable or exercisable within 60 days are
deemed outstanding for computing the percentage ownership of the person
holding such options, but are not deemed outstanding for computing the
percentage ownership of any other person.
(2) The business address for the named stockholder is 231, Val des Bons
Malades, Luxembourg Kirchberg, Luxembourg L-2121.
(3) The business address for the named individual is Via de Notaris No. 3
Pairoli, Rome, Italy 00161. Consists solely of 3,234,782 shares held by
HARAX. Eugenio Rendo is the controlling stockholder of HARAX and is deemed
to beneficially own such shares.
(4) Consists solely of 540,642 shares held by ElectroParts. Mario Rendo is the
controlling stockholder of ElectroParts and is deemed to beneficially own
such shares. All of such shares have been pledged to HARAX to secure a loan
made by HARAX to ElectroParts, which loan becomes due and payable in October
1997. The business address for the named stockholder and Mario Rendo is 12
Avenue de la Liberte, L-190 Luxembourg.
(5) The business address for the named stockholder is 2 Boulevard Royal,
Luxembourg.
12
<PAGE>
(6) The business address for the named stockholder is c/o Anaconda Capital
Management, LLC, 730 Fifth Avenue, 15th Floor, New York, NY 10019. The
479,318 shares are held by Anaconda Opportunity Fund, L.P. ("AOF"). Anaconda
Capital L.P., the sole general partner of AOF, and Mitchell J. Kelley, the
managing and sole general partner of Anaconda Capital L.P., may also be
deemed to benefically own such shares.
(7) Includes 216,000 shares issuable pursuant to options exercisable within 60
days of March 31, 1997.
(8) Represents 53,632 shares issuable pursuant to options exercisable within 60
days of March 31, 1997.
(9) Represents 57,583 shares issuable pursuant to options exercisable within 60
days of March 31, 1997.
(10) Represents 143,598 shares issuable pursuant to option exercisable within 60
days of March 31, 1997.
(11) Includes 400 shares held by Dr. Stebler's wife and 64,029 shares issuable
pursuant to options exercisable within 60 days of March 31, 1997.
(12) Includes 54,442 shares issuable pursuant to options exercisable within 60
days March 31, 1997.
(13) Includes 441,888 shares held by PASTEC, Holding, S.A. Giovanni Lanzara is
the controlling stockholder of PASTEC. Also includes 34,090 shares issuable
pursuant to options exercisable within 60 days of March 31, 1997.
(14) Includes 485,474 shares held by HAKON Holdings, S.A. Bruno Trezza is the
controlling stockholder of HAKON. Also includes 46,481 shares issuable
pursuant to options exercisable within 60 days of March 31, 1997.
(15) Includes 927,362 shares held by entities affiliated with certain directors
of the Company as described in footnotes 13 and 14 above and 690,310 shares
subject to options exercisable within 60 days of March 31, 1997.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with; except that
initial reports of ownership were filed late by Messrs. Boyd, Chemouni, DiSibio,
Lanzara, Magistri, Pillor, Rendo, Roder, Stebler, Trezza and Wolff and by HARAX
Holding, S.A. and ElectroParts S.A.
13
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Non-employee directors currently receive $1,200 per day in cash compensation
for their services as members of the Board of Directors and are reimbursed for
expenses incurred in connection with the performance of services as directors.
In addition, non-employee directors of the Company currently receive $1,200 per
day for each day of consulting services rendered to the Company not in
connection with their services as directors. There were no options to purchase
shares of Common Stock of the Company granted to the current directors in 1996.
Aggregate consulting fees earned by directors of the Company were $263,600
in 1996. During 1996 Giovanni Lanzara (who earned $117,600) and Bruno Trezza
(who earned $104,400) were the only individual directors who earned consulting
fees in excess of $60,000 in 1996.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table sets forth certain compensation earned by the Company's
Chief Executive Officer and the Company's four other most highly compensated
executive officers whose salary and bonus for the year ended December 31, 1996
exceeded $100,000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
--------------------------- SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------------------------- ------ -------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Dr. Sergio Magistri ......................... 1996 $136,666 $ -- -- $ --
President and Chief Executive Officer 1995 131,982 -- 63,272 10,000(1)
Curtis P. DiSibio ........................... 1996 111,250 34,750 -- --
Chief Financial Officer 1995 109,000 18,790 39,326 --
David Pillor ................................ 1996 110,000 117,603(2) -- --
Senior Vice President, Sales & Marketing 1995 100,000 117,790(2) 154,186 --
Dr. Benno Stebler ........................... 1996 116,000 37,876 -- --
Vice President, Manufacturing 1995 114,000 19,206 43,798 --
Sauveur Chemouni ............................ 1996 104,478 33,000 -- --
Vice President, Engineering 1995 100,000 -- 51,848 --
</TABLE>
- ------------------------
(1) Represents relocation expenses.
(2) Includes commission payments of $97,603 in 1996 and $70,790 in 1995; amount
in 1995 includes $47,000 related to orders received in 1994.
The Company has a policy of granting certain cash incentive awards to its
senior management based upon the achievement of certain performance goals. The
specific performance goals are determined by the Company's Board of Directors
and are designed to fairly reward senior management for significant positive
contributions to the Company.
14
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its Equity
Incentive Plan (the "Equity Plan"). As of March 31, 1997, options to purchase a
total of 1,086,010 shares were outstanding under the Equity Plan and options to
purchase 845,568 shares remained available for grant thereunder.
RECENT OPTION GRANTS
The Company did not grant any stock options to its Named Executive Officers
during fiscal 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION VALUES
During the last fiscal year no options were exercised by the Named Executive
Officers. The following table sets forth information with respect to the number
of securities underlying unexercised options held by the Named Executive
Officers as of December 31, 1996 and the value of unexercised in-the-money
options as of December 31, 1996:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR END FISCAL YEAR END(1)
-------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Dr. Sergio Magistri.................. 139,732 81,714 $ 2,221,726 $ 1,298,338
Curtis P. DiSibio.................... 50,788 14,895 $ 799,669 $ 230,146
David M. Pillor...................... 125,530 49,829 $ 1,969,076 $ 774,679
Dr. Benno Stebler.................... 58,004 15,054 $ 913,573 $ 231,831
Sauveur Chemouni..................... 45,590 20,092 $ 711,690 $ 309,416
</TABLE>
- ------------------------
(1) Based on a per share price of $16.50, the closing price of the Common Stock
as reported on The Nasdaq SmallCap Market, minus the exercise price of the
option, multiplied by the number of shares underlying the option.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Magistri,
DiSibio, Pillor and Stebler which provide for salaries and other employment
terms. The agreements with Messrs. Magistri, DiSibio, Pillor and Stebler each
provide that if the Company terminates the employee's employment without cause,
the employee is entitled to a severance payment equal to his annual base salary
for six months. All of the employment agreements are terminable at the will of
either the employee or the Company, with or without cause. In each case,
termination by the employee requires two months notice to the Company.
15
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION*
The Compensation Committee of the Board of Directors (the "Committee") is
composed of two non-employee directors; Drs. Boyd and Lanzara. During the fiscal
year 1996 the Committee did not meet and all compensation issues were handled by
the Board of Directors acting in accordance with the Committee's charter. All
references herein to the Committee shall refer to the Board of Directors for
fiscal year 1996. The Committee is responsible for setting and administering the
policies which govern annual executive salaries, bonuses (if any) and stock
ownership programs. The Committee annually evaluates the performance, and
determines the compensation, of the Chief Executive Officer ("CEO"), and other
executive officers of the Company based upon a mix of the achievement of the
corporate financial goals, individual performance and comparisons with other
technology companies. The CEO is not present during the discussions of his
compensation.
The operation of the Committee is subject to the Bylaws of the Company, as
in effect from time to time, and the Delaware General Corporation Law. The
Committee has the full power and authority to carry out the following
responsibilities:
1. To establish salaries, incentives and other forms of compensation paid
to officers and other employees of the company.
2. To administer various incentive compensation and benefit plans,
including the bonus plan.
3. To perform such other functions and have other powers as may be
necessary or convenient in the efficient discharge of the foregoing.
4. To report to the Board from time to time, or whenever it shall be called
upon to do so.
The policies of the Committee with respect to executive officers, including
the CEO, are to provide compensation sufficient to attract, motivate and retain
executives of outstanding ability and potential and to establish an appropriate
relationship between executive compensation and the creation of stockholder
value. To meet these goals, the Committee has adopted a mix among the
compensation elements of salary, bonus and stock options. The Committee has
determined that the salaries for such officers shall be based upon a review of
salary surveys of other technology companies performed for the Committee. The
Committee may further adjust the salaries of such executive officers based upon
the Company's financial performance during the past year and upon each officer's
performance against established objectives related to his area of
responsibility.
In awarding stock options, the Committee considers a number of factors,
including such executive officer's responsibilities and relative position in the
Company, individual performance of such officer, any changes in such officer's
responsibility and position, such officer's equity interest in the Company in
the form of stock and options held by such individual, the extent to which
existing stock options remain unvested and the total number of stock options to
be awarded. No options were granted to the executive officers in 1996 because
the Committee determined that the grants to these officers in late 1995 provided
sufficient equity-based incentives for 1996.
Under the Company's executive bonus plan, executive officers may receive a
certain percentage of their base salary in bonus payments, based on the
Committee's subjective evaluation of the individual's performance. Further, the
Committee seeks to balance the desire for immediate earnings and the longer term
goal of enhancing stockholder value.
- ------------------------
* The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any
filing of the Company under the 1933 Act or 1934 Act, whether made before or
after the date hereof and irrespective of any general incorporation language
contained in such filing.
16
<PAGE>
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee uses the same procedures described above for the other
executive officers in setting the annual salary, bonus and stock option awards
for the CEO. The CEO's salary is determined based on factors such as the
Company's achievement of corporate goals and comparisons with technology
companies as described above. In awarding stock options, the Committee considers
the CEO's performance, the number of unvested options and the total number of
options to be granted. The CEO's bonus is dependent upon the Company achieving
the performance goals established by the Committee and the Committee's
subjective evaluation of the CEO's performance.
In December 1996, in connection with the Committee's review of Dr.
Magistri's compensation, the Committee reviewed certain performance measures of
the Company, primarily progress toward profitability and increases in
stockholder value. In addition, the Committee reviewed the CEO compensation of
other similar sized technology companies. After this review, the Committee
increased Dr. Magistri's base salary from $132,000 to $160,000. Prior to this
increase, Dr. Magistri had not received an increase in cash compensation since
he joined the Company as CEO in December 1992. No stock options were granted to
Dr. Magistri during 1996 because the Committee determined that the grants to Dr.
Magistri in late 1995 provided sufficient equity-based incentives for 1996.
However, prior to 1996 Dr. Magistri had been granted certain performance-based
stock options which vested based on the Company's progress towards profitability
and on increases in stockholder value. In December 1996, the Committee reviewed
the Company's progress towards these goals and determined that the performance
criteria had been met and that the shares would vest effective January 1, 1997.
FROM THE MEMBERS OF THE BOARD OF DIRECTORS
Dr. Douglas Boyd Dr. Sergio Magistri
Dr. Giovanni Lanzara Dr. Brunno
Trezza
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's compensation committee consists of Dr. Boyd and Dr. Lanzara.
The Compensation Committee did not meet during 1996; all compensation matters
were handled by the Board of Directors, which consisted of Drs. Boyd, Lanzara,
Magistri and Trezza, during such fiscal year. Dr. Magistri was not present
during discussion of his compensation.
17
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph shows the total stockholder return of an investment of
$100 in cash on April 23, 1996 (the first trading date after the Company's
Common Stock became registered under Section 12 of the Securities Exchange Act
of 1934, as amended) for (i) the Company's Common Stock, (ii) the cumulative
total return on the Total Return Index for The Nasdaq Stock Market (U.S.
Companies) (the "Nasdaq U.S. Index") and (iii) the S&P Technology Sector Index.
All values assume reinvestment of dividends and are calculated as of December 31
of each year.
COMPARISON OF EIGHT MONTH CUMULATIVE TOTAL RETURN ON INVESTMENT(2)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INVISION TECHNOLGIES, INC. NASDAQ STOCK MARKET - US S & P TECHNOLOGY SECTOR
<S> <C> <C> <C>
4/23/96 100 100 100
12/31/96 300 118 134
</TABLE>
- ------------------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the 1933 Act or the 1934 Act whether made before or after the date
hereof and irrespective of any general incorporation language in any such
filing.
(2) $100 invested on April 23, 1996 in Stock or Index including reinvestment of
dividends. Fiscal year ending December 31.
18
<PAGE>
CERTAIN TRANSACTIONS
In August 1996, Anaconda Opportunity Fund, L.P. ("Anaconda"), the successor
to Anaconda Partners, L.P., exercised warrants to purchase 420,454 shares of
Common Stock at an exercise price of $4.40 per share and 58,864 shares of Common
Stock at an exercise price of $5.50 per share. The original warrants were issued
to Anaconda in connection with a certain Bridge Loan and Security Agreement,
dated as of December 28, 1995, entered into between the Company and Anaconda
Partners, L.P. Also in August 1996, LEO Holding, Inc. exercised a warrant to
purchase 34,090 shares of Common Stock at an exercise price of $4.40 per share
and 4,772 shares of Common Stock at an exercise price of $5.50 per share. Such
warrant was originally issued to Anaconda Partners, L.P. and was subsequently
transferred to LEO Holding, Inc. In connection with the warrant issuance the
Company agreed to register the offer and resale of shares issuable upon exercise
of the warrants. In June 1996, the Company registered the offer and resale of
such shares. Of such shares, 479,318 shares continue to remain registered for
resale by Anaconda.
On December 31, 1996, the Company issued 32,000 shares of Common Stock to
Fredrick L. Roder, Vice President, Federal Systems of the Company, in
consideration of all of the outstanding common voting stock of Imatron Federal
Systems, Inc.
The Company believes that the foregoing transactions were in its best
interests and were on terms no less favorable to the Company than could be
obtained from unaffiliated third parties.
19
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
[SIG]
ROBERT L. JONES
SECRETARY
May 8, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 IS AVAILABLE
WITHOUT CHARGE UPON WRITTEN REQUEST TO: CORPORATE SECRETARY, INVISION
TECHNOLOGIES, INC., 3420 E. THIRD AVENUE, FOSTER CITY, CA 94404.
20
<PAGE>
APPENDIX
INVISION TECHNOLOGIES, INC.
EQUITY INCENTIVE PLAN
ADOPTED MAY 2, 1991
AMENDED APRIL 15, 1992
AMENDED OCTOBER 21, 1994
AMENDED JUNE 10, 1995
AMENDED AND RESTATED MARCH 9, 1996
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to benefit from increases in value of the stock of
the Company through the granting of (i) Incentive Stock Options, (ii)
Nonstatutory Stock Options, (iii) stock bonuses, (iv) rights to purchase
restricted stock, and (v) stock appreciation rights, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof, or (iii) stock
appreciation rights granted pursuant to Section 8 hereof. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options at
the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.
(e) "COMPANY" means Invision Technologies, Inc., a Delaware corporation.
(f) "CONCURRENT STOCK APPRECIATION RIGHT" or "CONCURRENT RIGHT" means a
right granted pursuant to subsection 8(b)(2) of the Plan.
(g) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
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(h) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means the
employment or relationship as a Director or Consultant is not interrupted or
terminated. The Board, in its sole discretion, may determine whether Continuous
Status as an Employee, Director or Consultant shall be considered interrupted in
the case of: (i) any leave of absence approved by the Board, including sick
leave, military leave, or any other personal leave; or (ii) transfers between
locations of the Company or between the Company, Affiliates or their successors.
(i) "COVERED EMPLOYEE" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.
(j) "DIRECTOR" means a member of the Board.
(k) "DISINTERESTED PERSON" means a Director: who either (i) was not during
the one year prior to service as an administrator of the Plan granted or awarded
equity securities pursuant to the Plan or any other plan of the Company or any
Affiliate entitling the participants therein to acquire equity securities of the
Company or any Affiliate except as permitted by Rule 16b-3(c)(2)(i); or (ii) is
otherwise considered to be a "disinterested person" in accordance with Rule
16b-3(c)(2)(i), or any other applicable rules, regulations or interpretations of
the Securities and Exchange Commission.
(l) "EMPLOYEE" means any person, including Officers and Directors, employed
by the Company or any Affiliate of the Company. Neither service as a Director
nor payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(n) "FAIR MARKET VALUE" means, as of any date, the value of the common stock
of the Company determined as follows and in each case in a manner consistent
with Section 260.140.50 of Title 10 of the California Code of Regulations:
(1) If the common stock is listed on any established stock exchange or a
national market system, including without limitation the National Market of
The Nasdaq Stock Market, the Fair Market Value of a share of common stock
shall be the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such system or exchange (or the exchange
with the greatest volume of trading in common stock) on the last market
trading day prior to the day of determination, as reported in the Wall
Street Journal or such other source as the Board deems reliable;
(2) If the common stock is quoted on The Nasdaq Stock Market (but not on
the National Market thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value
of a share of common stock shall be the mean between the bid and asked
prices for the common stock on the last market trading day prior to the day
of determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;
(3) In the absence of an established market for the common stock, the
Fair Market Value shall be determined in good faith by the Board.
(o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(p) "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT" means a
right granted pursuant to subsection 8(b)(3) of the Plan.
(q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(r) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
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(s) "OPTION" means a stock option granted pursuant to the Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. Each
Option Agreement shall be subject to the terms and conditions of the Plan.
(u) "OPTIONEE" means an Employee, Director or Consultant who holds an
outstanding Option.
(v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(w) "PLAN" means this Equity Incentive Plan.
(x) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3, as in effect when discretion is being exercised with respect to the
Plan.
(y) "STOCK APPRECIATION RIGHT" means any of the various types of rights
which may be granted under Section 8 of the Plan.
(z) "STOCK AWARD" means any right granted under the Plan, including any
Option, any stock bonus, any right to purchase restricted stock, and any Stock
Appreciation Right.
(aa) "STOCK AWARD AGREEMENT" means a written agreement between the Company
and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
(ab) "TANDEM STOCK APPRECIATION RIGHT" or "TANDEM RIGHT" means a right
granted pursuant to subsection 8(b)(1) of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible under
the Plan shall be granted Stock Awards; when and how each Stock Award shall
be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted
stock, a Stock Appreciation Right, or a combination of the foregoing; the
provisions of each Stock Award granted (which need not be identical),
including the time or times when a person shall be permitted to receive
stock pursuant to a Stock Award; whether a person shall be permitted to
receive stock upon exercise of an Independent Stock Appreciation Right; and
the number of shares with respect to which a Stock Award shall be granted to
each such person.
(2) To construe and interpret the Plan and Stock Awards granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award
Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section 14.
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(4) Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the members
of which Committee shall be Disinterested Persons and may also be, in the
discretion of the Board, Outside Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board (and references in this
Plan to the Board shall thereafter be to the Committee), subject, however, to
such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan. Notwithstanding
anything in this Section 3 to the contrary, at any time the Board or the
Committee may delegate to a committee of one or more members of the Board the
authority to grant Stock Awards to eligible persons who (1) are not then subject
to Section 16 of the Exchange Act and/or (2) are either (i) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Stock Award, or (ii) not persons with
respect to whom the Company wishes to avoid the application of Section 162(m) of
the Code.
(d) Any requirement that an administrator of the Plan be a Disinterested
Person shall not apply if the Board or the Committee expressly declares that
such requirement shall not apply. Any Disinterested Person shall otherwise
comply with the requirements of Rule 16b-3.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 13 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate seven hundred ninety thousand nine hundred nine
(790,909) shares of the Company's common stock. If any Stock Award shall for any
reason expire or otherwise terminate, in whole or in part, without having been
exercised in full, the stock not acquired under such Stock Award shall revert to
and again become available for issuance under the Plan. Shares subject to Stock
Appreciation Rights exercised in accordance with Section 8 of the Plan shall not
be available for subsequent issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options and Stock Appreciation Rights appurtenant
thereto may be granted only to Employees. Stock Awards other than Incentive
Stock Options and Stock Appreciation Rights appurtenant thereto may be granted
only to Employees, Directors or Consultants.
(b) A Director shall in no event be eligible for the benefits of the Plan
unless at the time discretion is exercised in the selection of the Director as a
person to whom Stock Awards may be granted, or in the determination of the
number of shares which may be covered by Stock Awards granted to the
Director:(i) the Board has delegated its discretionary authority over the Plan
to a Committee which consists solely of Disinterested Persons; or (ii) the Plan
otherwise complies with the requirements of Rule 16b-3. The Board shall
otherwise comply with the requirements of Rule 16b-3. This subsection 5(b) shall
not apply (i) prior to the date of the first registration of an equity security
of the Company under Section 12 of the Exchange Act, or (ii) if the Board or
Committee expressly declares that it shall not apply.
(c) No person shall be eligible for the grant of an Option or an award to
purchase restricted stock if, at the time of grant, such person owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or of any of its Affiliates unless the exercise price of such Option
is at least one hundred ten
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percent (110%) of the Fair Market Value of such stock at the date of grant and
the Option is not exercisable after the expiration of five (5) years from the
date of grant, or in the case of a restricted stock purchase award, the purchase
price is at least one hundred percent (100%) of the Fair Market Value of such
stock at the date of grant.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted; the exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the stock subject to the Option on
the date the Option is granted. Notwithstanding the foregoing, an Option
(whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than that set forth in the preceding
sentence if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 424(a)
of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii)
at the discretion of the Board or the Committee, at the time of the grant of
the Option, (A) by delivery to the Company of other common stock of the
Company, (B) according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the Option is granted
or to whom the Option is transferred pursuant to subsection 6(d), or (C) in
any other form of legal consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option
shall not be transferable except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order satisfying
the requirements of Rule 16b-3 and any administrative interpretations or
pronouncements thereunder (a "QDRO"), and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such person or
any transferee pursuant to a QDRO. Notwithstanding the foregoing, the person
to whom the Option is granted may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who,
in the event of the death of the Optionee, shall thereafter be entitled to
exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period,
and may be exercised with respect to some or all of the shares allotted to
such period and/or any prior period as to
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which the Option became vested but was not fully exercised. The Option may
be subject to such other terms and conditions on the time or times when it
may be exercised (which may be based on performance or other criteria) as
the Board may deem appropriate. The provisions of this subsection 6(e) are
subject to any Option provisions governing the minimum number of shares as
to which an Option may be exercised.
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option (to the extent that
the Optionee was entitled to exercise it at the date of termination) but
only within such period of time ending on the earlier of (i) the date three
(3) months after the termination of the Optionee's Continuous Status as an
Employee, Director or Consultant (or such longer or shorter period, which in
no event shall be less than thirty (30) days, specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in
the Option Agreement. If, after termination, the Optionee does not exercise
his or her Option within the time specified in the Option Agreement, the
Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.
An Optionee's Option Agreement may also provide that if the exercise of
the Option following the termination of the Optionee's Continuous Status as
an Employee, Director, or Consultant (other than upon the Optionee's death
or disability) would result in liability under Section 16(b) of the Exchange
Act, then the Option shall terminate on the earlier of (i) the expiration of
the term of the Option set forth in the Option Agreement, or (ii) the tenth
(10th) day after the last date on which such exercise would result in such
liability under Section 16(b) of the Exchange Act. Finally, an Optionee's
Option Agreement may also provide that if the exercise of the Option
following the termination of the Optionee's Continuous Status as an
Employee, Director or Consultant (other than upon the Optionee's death or
disability) would be prohibited at any time solely because the issuance of
shares would violate the registration requirements under the Act, then the
Option shall terminate on the earlier of (i) the expiration of the term of
the Option set forth in the first paragraph of this subsection 6(f), or (ii)
the expiration of a period of three (3) months after the termination of the
Optionee's Continuous Status as an Employee, Director or Consultant during
which the exercise of the Option would not be in violation of such
registration requirements.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or her Option (to the
extent that the Optionee was entitled to exercise it at the date of
termination), but only within such period of time ending on the earlier of
(i) the date twelve (12) months following such termination (or such longer
or shorter period, which in no event shall be less than six (6) months,
specified in the Option Agreement), or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, at the date of
termination, the Optionee is not entitled to exercise his or her entire
Option, the shares covered by the unexercisable portion of the Option shall
revert to and again become available for issuance under the Plan. If, after
termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to and again become available for issuance under
the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within a period specified in the Option after the termination of,
the Optionee's Continuous Status as an Employee, Director or Consultant, the
Option may be exercised (to the extent the Optionee was entitled to exercise
the Option at the date of death) by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionee's death pursuant
to subsection 6(d), but only within the period ending on the earlier of (i)
the date eighteen (18) months following the date of death (or such longer or
shorter period, which
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in no event shall be less than six (6) months, specified in the Option
Agreement), or (ii) the expiration of the term of such Option as set forth
in the Option Agreement. If, at the time of death, the Optionee was not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become
available for issuance under the Plan. If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate, and
the shares covered by such Option shall revert to and again become available
for issuance under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares
subject to the Option prior to the full vesting of the Option. Any unvested
shares so purchased shall be subject to a repurchase right in favor of the
Company, with the repurchase price to be equal to the original purchase
price of the stock, or to any other restriction the Board determines to be
appropriate; PROVIDED, HOWEVER, that (i) the right to repurchase at the
original purchase price shall lapse at a minimum rate of twenty percent
(20%) per year over five (5) years from the date the Option was granted, and
(ii) such right shall be exercisable only within (A) the ninety (90) day
period following the termination of employment or the relationship as a
Director or Consultant, or (B) such longer period as may be agreed to by the
Company and the Optionee (for example, for purposes of satisfying the
requirements of Section 1202(c)(3) of the Code (regarding "qualified small
business stock")), and (iii) such right shall be exercisable only for cash
or cancellation of purchase money indebtedness for the shares. Should the
right of repurchase be assigned by the Company, the assignee shall pay the
Company cash equal to the difference between the original purchase price and
the stock's Fair Market Value if the original purchase price is less than
the stock's Fair Market Value.
(j) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation) to
include as part of any Option Agreement a provision entitling the Optionee
to a further Option (a "Re-Load Option") in the event the Optionee exercises
the Option evidenced by the Option agreement, in whole or in part, by
surrendering other shares of Common Stock in accordance with this Plan and
the terms and conditions of the Option Agreement. Any such Re-Load Option
(i) shall be for a number of shares equal to the number of shares
surrendered as part or all of the exercise price of such Option; (ii) shall
have an expiration date which is the same as the expiration date of the
Option the exercise of which gave rise to such Re-Load Option; and (iii)
shall have an exercise price which is equal to one hundred percent (100%) of
the Fair Market Value of the Common Stock subject to the Re-Load Option on
the date of exercise of the original Option. Notwithstanding the foregoing,
a Re-Load Option which is granted to a 10% stockholder (as described in
subsection 5(c)), shall have an exercise price which is equal to one hundred
ten percent (110%) of the Fair Market Value of the stock subject to the
Re-Load Option on the date of exercise of the original Option and shall have
a term which is no longer than five (5) years.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the
time of the grant of the original Option; PROVIDED, HOWEVER, that the
designation of any Re-Load Option as an Incentive Stock Option shall be
subject to the one hundred thousand dollar ($100,000) annual limitation on
exercisability of Incentive Stock Options described in subsection 12(e) of
the Plan and in Section 422(d) of the Code. There shall be no Re-Load
Options on a Re-Load Option. Any such Re-Load Option shall be subject to the
availability of sufficient shares under subsection 4(a) and shall be subject
to such other terms and conditions as the Board or Committee may determine
which are not inconsistent with the express provisions of the Plan regarding
the terms of Options.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate. The terms and conditions of
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stock bonus or restricted stock purchase agreements may change from time to
time, and the terms and conditions of separate agreements need not be identical,
but each stock bonus or restricted stock purchase agreement shall include
(through incorporation of provisions hereof by reference in the agreement or
otherwise) the substance of each of the following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement, but in no event shall the
purchase price be less than eighty-five percent (85%) of the stock's Fair
Market Value on the date such award is made. Notwithstanding the foregoing,
the Board or the Committee may determine that eligible participants in the
Plan may be awarded stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order
satisfying the requirements of Rule 16b-3 and any administrative
interpretations or pronouncements thereunder, so long as stock awarded under
such agreement remains subject to the terms of the agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to
a deferred payment or other arrangement with the person to whom the stock is
sold; or (iii) in any other form of legal consideration that may be
acceptable to the Board or the Committee in its discretion. Notwithstanding
the foregoing, the Board or the Committee to which administration of the
Plan has been delegated may award stock pursuant to a stock bonus agreement
in consideration for past services actually rendered to the Company or for
its benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee; PROVIDED, HOWEVER, that (i) the right to repurchase at the
original purchase price shall lapse at a minimum rate of twenty percent
(20%) per year over five (5) years from the date the Stock Award was
granted, and (ii) such right shall be exercisable only (A) within the ninety
(90) day period following the termination of employment or the relationship
as a Director or Consultant, or (B) such longer period as may be agreed to
by the Company and the holder of the Stock Award (for example, for purposes
of satisfying the requirements of Section 1202(c)(3) of the Code (regarding
"qualified small business stock")), and (iii) such right shall be
exercisable only for cash or cancellation of purchase money indebtedness for
the shares. Should the right of repurchase be assigned by the Company, the
assignee shall pay the Company cash equal to the difference between the
original purchase price and the stock's Fair Market Value if the original
purchase price is less than the stock's Fair Market Value.
(e) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire, subject to the limitations described in subsection 7(d), any or
all of the shares of stock held by that person which have not vested as of
the date of termination under the terms of the stock bonus or restricted
stock purchase agreement between the Company and such person.
8. STOCK APPRECIATION RIGHTS.
(a) The Board or Committee shall have full power and authority, exercisable
in its sole discretion, to grant Stock Appreciation Rights under the Plan to
Employees or Directors of or Consultants to, the Company or its Affiliates. To
exercise any outstanding Stock Appreciation Right, the holder must provide
written notice of exercise to the Company in compliance with the provisions of
the Stock Award Agreement evidencing such right. If a Stock Appreciation Right
is granted to an individual who is at the
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time subject to Section 16(b) of the Exchange Act (a "Section 16(b) Insider"),
the Stock Award Agreement of grant shall incorporate all the terms and
conditions at the time necessary to assure that the subsequent exercise of such
right shall qualify for the safe-harbor exemption from short-swing profit
liability provided by Rule 16b-3 promulgated under the Exchange Act (or any
successor rule or regulation). No limitation shall exist on the aggregate amount
of cash payments the Company may make under the Plan in connection with the
exercise of a Stock Appreciation Rights.
(b) Three types of Stock Appreciation Rights shall be authorized for
issuance under the Plan:
(1) TANDEM STOCK APPRECIATION RIGHTS. Tandem Stock Appreciation Rights
will be granted appurtenant to an Option, and shall, except as specifically
set forth in this Section 8, be subject to the same terms and conditions
applicable to the particular Option grant to which it pertains. Tandem Stock
Appreciation Rights will require the holder to elect between the exercise of
the underlying Option for shares of stock and the surrender, in whole or in
part, of such Option for an appreciation distribution. The appreciation
distribution payable on the exercised Tandem Right shall be in cash (or, if
so provided, in an equivalent number of shares of stock based on Fair Market
Value on the date of the Option surrender) in an amount up to the excess of
(A) the Fair Market Value (on the date of the Option surrender) of the
number of shares of stock covered by that portion of the surrendered Option
in which the Optionee is vested over (B) the aggregate exercise price
payable for such vested shares.
(2) CONCURRENT STOCK APPRECIATION RIGHTS. Concurrent Rights will be
granted appurtenant to an Option and may apply to all or any portion of the
shares of stock subject to the underlying Option and shall, except as
specifically set forth in this Section 8, be subject to the same terms and
conditions applicable to the particular Option grant to which it pertains. A
Concurrent Right shall be exercised automatically at the same time the
underlying Option is exercised with respect to the particular shares of
stock to which the Concurrent Right pertains. The appreciation distribution
payable on an exercised Concurrent Right shall be in cash (or, if so
provided, in an equivalent number of shares of stock based on Fair Market
Value on the date of the exercise of the Concurrent Right) in an amount
equal to such portion as shall be determined by the Board or the Committee
at the time of the grant of the excess of (A) the aggregate Fair Market
Value (on the date of the exercise of the Concurrent Right) of the vested
shares of stock purchased under the underlying Option which have Concurrent
Rights appurtenant to them over (B) the aggregate exercise price paid for
such shares.
(3) INDEPENDENT STOCK APPRECIATION RIGHTS. Independent Rights will be
granted independently of any Option and shall, except as specifically set
forth in this Section 8, be subject to the same terms and conditions
applicable to Nonstatutory Stock Options as set forth in Section 6. They
shall be denominated in share equivalents. The appreciation distribution
payable on the exercised Independent Right shall be not greater than an
amount equal to the excess of (A) the aggregate Fair Market Value (on the
date of the exercise of the Independent Right) of a number of shares of
Company stock equal to the number of share equivalents in which the holder
is vested under such Independent Right, and with respect to which the holder
is exercising the Independent Right on such date, over (B) the aggregate
Fair Market Value (on the date of the grant of the Independent Right) of
such number of shares of Company stock. The appreciation distribution
payable on the exercised Independent Right shall be in cash or, if so
provided, in an equivalent number of shares of stock based on Fair Market
Value on the date of the exercise of the Independent Right.
9. CANCELLATION AND RE-GRANT OF OPTIONS.
The Board or the Committee shall have the authority to effect, at any time
and from time to time, (i) the repricing of any outstanding Options and/or any
Stock Appreciation Rights under the Plan and/or (ii) with the consent of the
affected holders of Options and/or Stock Appreciation Rights, the cancellation
of any outstanding Options and/or any Stock Appreciation Rights under the Plan
and the grant in substitution therefor of new Options and/or Stock Appreciation
Rights under the Plan covering the same
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or different numbers of shares of stock, but having an exercise price per share
not less than eighty-five percent (85%) of the Fair Market Value (one hundred
percent (100%) of the Fair Market Value in the case of an Incentive Stock
Option) or, in the case of a 10% stockholder (as described in subsection 5(c)),
not less than one hundred ten percent (110%) of the Fair Market Value) per share
of stock on the new grant date. Notwithstanding the foregoing, the Board or the
Committee may grant an Option and/or Stock Appreciation Right with an exercise
price lower than that set forth above if such Option and/or Stock Appreciation
Right is granted as part of a transaction to which section 424(a) of the Code
applies.
10. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep available
at all times the number of shares of stock required to satisfy such Stock
Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Stock Award; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act of 1933, as amended (the "Securities Act") either the Plan,
any Stock Award or any stock issued or issuable pursuant to any such Stock
Award. If, after reasonable efforts, the Company is unable to obtain from any
such regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of stock under the Plan, the
Company shall be relieved from any liability for failure to issue and sell stock
upon exercise of such Stock Awards unless and until such authority is obtained.
11. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall constitute
general funds of the Company.
12. MISCELLANEOUS.
(a) Neither an Employee, Director or Consultant nor any person to whom a
Stock Award is transferred under subsection 6(d), 7(b), or 8(b) shall be deemed
to be the holder of, or to have any of the rights of a holder with respect to,
any shares subject to such Stock Award unless and until such person has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(b) Throughout the term of any Stock Award, the Company shall deliver to the
holder of such Stock Award, not later than one hundred twenty (120) days after
the close of each of the Company's fiscal years during the term of such Stock
Award, a balance sheet and an income statement. This section shall not apply
when issuance is limited to key employees whose duties in connection with the
Company assure them access to equivalent information.
(c) Nothing in the Plan or any instrument executed or Stock Award granted
pursuant thereto shall confer upon any Employee, Director, Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or any
Affiliate (or to continue acting as a Director or Consultant) or shall affect
the right of the Company or any Affiliate to terminate the employment of any
Employee with or without cause the right of the Company's Board of Directors
and/or the Company's stockholders to remove any Director pursuant to the terms
of the Company's By-Laws and the provisions of the Delaware General Corporation
Law, or the right to terminate the relationship of any Consultant pursuant to
the terms of such Consultant's agreement with the Company or Affiliate.
(d) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.
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(e) The Company may require any person to whom a Stock Award is granted, or
any person to whom a Stock Award is transferred pursuant to subsection 6(d),
7(b) or 8(b), as a condition of exercising or acquiring stock under any Stock
Award, (1) to give written assurances satisfactory to the Company as to such
person's knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (2) to
give written assurances satisfactory to the Company stating that such person is
acquiring the stock subject to the Stock Award for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the common stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(3) delivering to the Company owned and unencumbered shares of the common stock
of the Company.
13. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject to
any Stock Award, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan pursuant to subsection 4(a), and the
outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding Stock
Awards. Such adjustments shall be made by the Board or the Committee, the
determination of which shall be final, binding and conclusive. (The conversion
of any convertible securities of the Company shall not be treated as a
"transaction not involving the receipt of consideration by the Company".)
(b) In the event of: (1) a merger or consolidation in which the Company is
not the surviving corporation or (2) a reverse merger in which the Company is
the surviving corporation but the shares of the Company's common stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or otherwise
then to the extent permitted by applicable law: (i) any surviving corporation or
an Affiliate of such surviving corporation shall assume any Stock Awards
outstanding under the Plan or shall substitute similar Stock Awards for those
outstanding under the Plan, or (ii) such Stock Awards shall continue in full
force and effect. In the event any surviving corporation and its Affiliates
refuse to assume or continue such Stock Awards, or to substitute similar Stock
Awards for those outstanding under the Plan, then such Stock Awards shall be
terminated if not exercised prior to such event. In the event of a dissolution
or liquidation of the Company, any Stock Awards outstanding under the Plan shall
terminate if not exercised prior to such event.
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14. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 13 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
(i) Increase the number of shares reserved for Stock Awards under the
Plan;
(ii) Modify the requirements as to eligibility for participation in the
Plan (to the extent such modification requires stockholder approval in order
for the Plan to satisfy the requirements of Section 422 of the Code); or
(iii) Modify the Plan in any other way if such modification requires
stockholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code or to comply with the requirements of Rule 16b-3.
(b) The Board may in its sole discretion submit any other amendment to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible Employees,
Directors or Consultants with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(d) Rights and obligations under any Stock Award granted before amendment of
the Plan shall not be impaired by any amendment of the Plan unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.
(e) The Board at any time, and from time to time, may amend the terms of any
one or more Stock Award; provided, however, that the rights and obligations
under any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.
15. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on May 1, 2001, which shall be within ten
(10) years from the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom the Stock Award was granted.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no Stock
Awards granted under the Plan shall be exercised unless and until the Plan has
been approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board and
the Company's initial S-1 Registration Statement by which the Company will sell
shares of the Company's common stock to the general public has become effective,
and, if required, an appropriate permit has been issued by the Commissioner of
Corporations of the State of California.
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INVISION TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 12, 1997
The undersigned hereby appoints Dr. Sergio Magistri and Curtis P. DiSibio,
and each of them, as attorneys and proxies of the undersigned, with full power
of substitution, to vote all of the shares of stock of INVISION TECHNOLOGIES,
INC. which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of the Company to be held at the Holiday Inn, 1221 Chess Drive,
Foster City, California, 94404 on Thursday, June 12, 1997 at 9:00 a.m., (local
time), and any and all postponements, continuations, and adjournments thereof,
with all powers that the undersigned would possess if personally present, upon
and in request of the following matters and in accordance with the following
instructions, with discretionary authority as to any and all other matters that
may properly come before the meeting.
The undersigned hereby directs and authorizes said proxies, and each of
them, or their substitutes, to vote as specified herein with respect to the
proposals listed in paragraph 1, 2 and 3. Unless otherwise specified this proxy
will be voted in favor of proposals 1, 2 and 3.
The undersigned hereby further confers upon said proxies, and each of them,
or their substitutes, to vote in respect to all other matters which may properly
come before the meeting or any continuation or adjournment thereof.
The undersigned hereby acknowledges receipt of: (1) Notice of the Annual
Meeting of Stockholders of the Company, (2) accompanying Proxy Statement, and
(3) Annual Report of the Company for the fiscal year ended December 31, 1996.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
1. To elect Dr. Sergio Magistri as the Class I director to hold office until
the 2000 Annual Meeting of Stockholders and until his successor is elected
and qualified.
/ / FOR / / WITHHOLD AUTHORITY
2. To approve the Company's Equity Incentive Plan, as amended, to increase the
aggregate number of shares of Common Stock authorized for issuance under
such plan by 640,000 shares to 2,221,818 shares.
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the selection of PRICE WATERHOUSE LLP as independent auditors of
the Company for its fiscal year ending DECEMBER 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
DATED: ___________________ , 1997
SIGNATURES: _____________________
_________________________________
PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS HEREON. IF THE STOCK IS
REGISTERED IN THE NAMES OF TWO OR
MORE PERSONS, EACH SHOULD SIGN.
EXECUTORS, ADMINISTRATORS,
TRUSTEES, GUARDIANS AND
ATTORNEYS-IN-FACT SHOULD ADD
THEIR TITLES. IF SIGNER IS A
CORPORATION, PLEASE GIVE FULL
CORPORATE NAME AND HAVE A DULY
AUTHORIZED OFFICER SIGN, STATING
TITLE. IF THE SIGNER IS A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
