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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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 Section240.14a-11(c) or
Section240.14a-12
INVISION TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(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)(1)
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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(3) Filing Party:
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(4) Date Filed:
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[LOGO]
7151 GATEWAY BOULEVARD
NEWARK, CALIFORNIA 94560
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 15, 1999
------------------------
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, July 15, 1999 at 9:30 a.m. local time at the Company's headquarters,
7151 Gateway Boulevard, Newark, California 94560 for the following purposes:
(1) To elect the Class III directors to hold office until the 2002 Annual
Meeting of Stockholders and until their successors are 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 400,000 shares to 3,021,818 shares.
(3) To ratify the selection of PricewaterhouseCoopers LLP as independent
auditors of the Company for its fiscal year ending December 31, 1999.
(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 May 26, 1999 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
[LOGO]
ROBERT L. JONES
SECRETARY
Newark, California
June 21, 1999
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON, TOUR
OUR FACILITY AND VIEW A DEMONSTRATION OF OUR CTX 9000 EXPLOSIVE DETECTION
SYSTEM. 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.
<PAGE>
[LOGO]
7151 GATEWAY BOULEVARD
NEWARK, CA 94560
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JULY 15, 1999
------------------------
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, July 15, 1999, at
9:30 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 Company's
headquarters at 7151 Gateway Boulevard, Newark, California 94560. The Company
intends to mail this proxy statement and accompanying proxy card on or about
June 24, 1999 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 May 26,
1999 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on May 26, 1999 the Company had outstanding and entitled to
vote 12,097,768 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, 7151
Gateway Boulevard, Newark, California 94560, 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.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the Company's
2000 Annual Meeting of Stockholders must be received by the Company not later
than February 24, 2000 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 five members. There are two
directors in the class whose term of office expires in 1999. The nominees for
election to this class are currently directors of the Company. If elected at the
Annual Meeting, the nominees would serve until the 2002 annual meeting of
stockholders and until their successors are elected and have qualified, or until
such directors' earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Proxies cannot be
voted for a greater number of persons than the number of nominees named.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING
DR. DOUGLAS BOYD
DR. DOUGLAS P. BOYD, age 57, served as a Director of the Company from
September 1990 to December 1992, and since June 1993. Dr. Boyd was a founder of
Imatron Inc. ("Imatron") in 1981, 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 62, 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.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF THE NAMED NOMINEES.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
DR. GIOVANNI LANZARA
DR. GIOVANNI LANZARA, age 59, 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, a CT medical scanner company, from August 1993 to June
1996.
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AMBASSADOR MORRIS D. BUSBY
AMBASSADOR MORRIS D. BUSBY, age 61, has served as a Director of the Company
since March 1998 when he was elected by the other directors to fill a vacancy.
Since 1995, Ambassador Busby has served as President of BGI, Inc., an
international consulting firm. From 1991 to 1994 he was ambassador to the
Republic of Colombia and from 1989 to 1991 he was the United States Government's
U.S. coordinator for counter-terrorism and directed the international efforts
against terrorism during the Persian Gulf War. Prior to that time, he was
Principal Deputy Assistant Secretary of State for Inter-American Affairs. From
1984 to 1987 he was Deputy Chief of Mission in Mexico City.
DIRECTOR CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING
DR. SERGIO MAGISTRI
DR. SERGIO MAGISTRI, age 46, 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, 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.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1998 the Board of Directors held
four 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 met once during 1998.
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 three non-employee
directors: Drs. Boyd and Lanzara and Ambassador Busby. The Compensation
Committee did not meet during 1998; all compensation matters were handled by the
Board of Directors during such fiscal year.
During the fiscal year ended December 31, 1998, 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") and subsequently amended again on December
20, 1996, August 8, 1997 and December 23, 1997. As a result of a series of
amendments, at
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December 31, 1998 there were 2,621,818 shares of the Company's Common Stock
authorized for issuance under the Equity Plan.
At December 31, 1998, options (net of cancelled or expired options) covering
an aggregate of 1,712,555 shares of the Company's Common Stock had been granted
under the Equity Plan, and only 410,460 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.
On February 19, 1999, 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 2,621,818 shares to 3,021,818 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"). To date only stock options have been granted under the Equity Plan.
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
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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, all of the members of which
committee must be non-employee directors (unless the Board expressly declares
that such requirement shall not apply) and may also be, in the discretion of the
Board, outside directors. The Board may abolish such committee at any time and
revest in the Board the administration of the Equity Plan. The Board has
delegated administration of the Equity Plan to the Compensation Committee of the
Board. In addition the Board has further delegated the granting of options under
the Equity Plan to employees other than officers to a Non-Officer Stock Option
Committee made up of two directors. 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.
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 incentive 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
incentive 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 incentive 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
The Common Stock that may be sold pursuant to Stock Awards under the Equity
Plan shall not exceed in the aggregate 3,021,818 shares of the Company's Common
Stock. 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. The Common Stock subject to the Equity Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.
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. However, if options are 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 June 16, 1999 the closing price of the Company's Common
Stock as reported on The Nasdaq Stock Market was $5 15/32 per share.
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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 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
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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.
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.
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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 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 to the extent stockholder approval is necessary in order for the
Plan to satisfy Section 422 of the Code or any Nasdaq or securities exchange
listing requirements or Rule16b-3 ("Rule 16b-3") of the Securities Exchange Act
(the "Exchange Act").
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 be transferred if so provided in the optionee's agreement
or 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, then any gain or loss on a disposition of
such stock
9
<PAGE>
will be either long-term or mid-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"), then 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 a disqualifying
disposition will be a capital gain or loss, which will be long-term, mid-term or
short-term depending on the length of time the stock was held. Capital gains
currently are generally subject to lower tax rates than ordinary income. The
maximum long-term capital gains rate for federal income tax purposes is
currently 20% (28% for mid-term capital gain) while the maximum short-term
capital gain rate and ordinary income rate are effectively 39.6% at the present
time. Capital losses are allowed in full against capital gains and up to $3,000
against other income. 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, the optionee recognizes
taxable income generally measured by the excess of the then fair market value of
the shares over the exercise price. Any taxable income recognized in connection
with an option exercise by an employee of the Company is subject to tax
withholding by the Company. Subject to a 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 deduction in
the same amount as the ordinary income recognized by the optionee. Upon a
disposition of such shares by the optionee, any difference between the sale
price and the optionee's exercise price, to the extent not recognized as taxable
income as provided above, is treated as long-term, mid-term, or short-term
capital gain or loss, depending on the holding period.
RESTRICTED STOCK AND STOCK BONUSES. Restricted stock and stock bonuses
granted under the Equity Plan generally have the following federal income tax
consequences:
Stock purchase rights will generally be taxed in the same manner as
nonstatutory stock options. However, restricted stock is generally purchased
upon the exercise of a stock purchase right. At the time of purchase, restricted
stock is subject to a "substantial risk of forfeiture" within the meaning of
Section 83 of the Code, because the Company may repurchase the stock when the
purchaser ceases to provide services to the Company. As a result of this
substantial risk of forfeiture, the purchaser will not recognize ordinary income
at the time of purchase. Instead, the purchaser will recognize ordinary income
on the dates when the stock is no longer subject to a substantial risk of
forfeiture (i.e., when the Company's right of repurchase lapses). The
purchaser's ordinary income is measured as the difference between the purchase
price and the fair market value of the stock on the date the stock is no longer
subject to right of repurchase.
The purchaser may accelerate to the date of purchase his or her recognition
of ordinary income, if any, and begin his or her capital gains holding period by
timely filing, (i.e., within thirty days of the purchase), an election pursuant
to Section 83(b) of the Code. In such event, the ordinary income recognized, if
any, is measured as the difference between the purchase price and the fair
market value of the stock on the date of purchase, and the capital gain holding
period commences on such date. The ordinary income recognized by a purchaser who
is an employee will be subject to tax withholding by the Company. Different
rules may apply if the purchaser is also an officer, director, or 10%
stockholder of the Company. 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.
10
<PAGE>
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.
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 a covered employee in a taxable year to the extent that
non-performance based compensation paid to such a covered employee exceeds $1
million. It is possible that compensation attributable to Stock Awards, 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.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation.
Treasury regulations issued under Section 162(m) of the Code, provide that
compensation attributable to stock options and stock appreciation rights will
qualify as performance-based compensation, if: (i) the stock award plan contains
a per-employee limitation on the number of shares for which stock options and
stock appreciation rights may be granted during a specified period; (ii) the
per-employee limitation is approved by the stockholders; (iii) the award is
granted by a compensation committee comprised solely of "outside directors"; and
(iv) the exercise price of the award is no less than the fair market value of
the stock on the date of grant. Restricted stock and stock bonuses qualify as
performance-based compensation under these Treasury regulations only if: (i) the
award is granted by a compensation committee comprised solely of "outside
directors"; (ii) the award is granted (or exercisable) only upon the achievement
of an objective performance goal established in writhing by the compensation
committee while the outcome is substantially uncertain; (iii) the compensation
committee certifies in writing prior to the granting (or exercisability) of the
award that the performance goal has been satisfied; and (iv) prior too the
granting (or exercisability) of the award, stockholders have approved the
material terms of the award (including the class of employees eligible for such
award, the business criteria on which the performance goal is based, and the
maximum amount (or formula used to calculate the amount) payable upon attainment
of the performance goal).
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON
OPTIONEES, HOLDERS OF STOCK PURCHASE RIGHTS, AND THE COMPANY WITH RESPECT TO THE
GRANT AND EXERCISE OF OPTIONS AND STOCK PURCHASE RIGHTS UNDER THE EQUITY PLAN.
IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF
THE EMPLOYEE'S OR CONSULTANT'S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF
ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE EMPLOYEE OR CONSULTANT
MAY RESIDE.
11
<PAGE>
PROPOSAL 3
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending December 31, 1999 and
has further directed that management submit the selection of independent
auditors for ratification by the stockholders at the Annual Meeting.
PricewaterhouseCoopers LLP has audited the Company's financial statements since
its inception in 1990. Representatives of PricewaterhouseCoopers 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 PricewaterhouseCoopers 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
PricewaterhouseCoopers 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 PricewaterhouseCoopers LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
12
<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 20, 1999 by: (i) each
director; (ii) each of the executive officers named in the Summary Compensation
Table employed by the Company in that capacity as of the end of the last fiscal
year; (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 NUMBER PERCENTAGE
- --------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
HARAX Holding, S.A.(2)............................................... 2,401,584 19.9%
Dr. Sergio Magistri(3)............................................... 311,213 2.6
Curtis P. DiSibio(4)................................................. 96,938 *
David M. Pillor(5)................................................... 200,367 1.7
Dr. Horst Bruening(6)................................................ 0 0.0
Dr. Douglas P. Boyd(7)............................................... 82,918 *
Morris D. Busby(8)................................................... 9,086 *
Dr. Giovanni Lanzara(9).............................................. 468,378 3.9
Dr. Bruno Trezza(10)................................................. 468,651 3.9
All directors and executive officers as a group
(9 persons)(11).................................................... 1,637,551 13.6
</TABLE>
- ------------------------
* Less than 1% of the outstanding InVision Common Stock.
(1) Applicable percentage of ownership at March 26, 1999 is based upon
12,067,627 shares of InVision 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 InVision
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 22, Rue Marie Adelaide,
L-2128, Luxembourg. Arsene Kronshagen is the controlling stockholder of
HARAX and is deemed to beneficially own such shares.
(3) Includes 282,705 shares issuable pursuant to options exercisable within 60
days of March 20, 1998.
(4) Resigned March 19, 1999. Represents 96,938 shares issuable pursuant to
options exercisable within 60 days of March 20, 1998. Pursuant to the terms
of a six-month consulting agreement entered into by Mr. DiSibio and the
Company, Mr. DiSibio's options will continue to vest during the term of the
agreement.
(5) Represents 200,367 shares issuable pursuant to options exercisable within
60 days of March 20, 1998.
(6) Resigned as an officer on October 5, 1998. On leave of absence through
April 5, 1999.
(7) Includes 78,873 shares issuable pursuant to options exercisable within 60
days of March 20, 1998.
(8) Includes 6,586 shares issuable to BGI, Inc. ("BGI") pursuant to vested
options. Ambassador Busby is a controlling shareholder of BGI which
received these options as partial payment for services provided by BGI
pursuant to its consulting agreement with the Company. Also includes 2,500
shares issuable pursuant to options exercisable within 60 days of March 20,
1998.
13
<PAGE>
(9) Includes 341,886 shares held by PASTEC, Holdings, S.A. Giovanni Lanzara is
the controlling stockholder of PASTEC. Also includes 68,570 shares issuable
pursuant to options exercisable within 60 days of March 20, 1998.
(10) Includes 385,474 shares held by HAKON Holdings, S.A. Bruno Trezza is the
controlling stockholder of HAKON. Also includes 83,177 shares issuable
pursuant to options exercisable within 60 days of March 20, 1998.
(11) Includes 818,035 shares held by entities affiliated with certain directors
of InVision as described in footnotes 9 and 10 above and 812,930 shares
subject to options exercisable within 60 days of March 20, 1998.
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, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with; except that a
monthly statement of changes in beneficial ownership was not filed by Eugenio
Rendo, at the time a greater than 10% beneficial holder, who is no longer
required to comply with Section 16(a). In addition, an annual statement of
changes in beneficial ownership was filed late by Ambassador Morris D. Busby, a
director.
14
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Directors receive a $10,000 annual retainer as compensation for their
services as members of the Board. In addition, non-employee directors are
reimbursed for expenses incurred in connection with the performance of services
as directors. Non-employee directors of the Company also receive $2,000 per day
for each day of consulting services rendered to the Company not in connection
with their services as directors.
Aggregate consulting fees earned by directors of the Company were $205,000
in 1998. Giovanni Lanzara (who earned $82,000) and Bruno Trezza (who earned
$70,000) were the only individual directors who earned consulting fees in excess
of $60,000 in 1998. Ambassador Busby, who became a director in March 1998, is a
controlling shareholder of BGI which provided consulting services to the Company
in 1998 in excess of $60,000. See "Certain Transactions."
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 three other executive officers whose
salary and bonus for the year ended December 31, 1998 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......................................... 1998 $225,000 $ 47,700 -- $ 3,000(3)
President and Chief Executive Officer 1997 160,000 60,000 98,000 2,503(3)
1996 136,666 -- -- --
Curtis P. DiSibio........................................... 1998 136,917 40,000 -- 3,900(3)
Senior Vice President and Chief Financial 1997 130,343 90,000 50,000 1,690(3)
Officer (4) 1996 111,250 34,750 -- --
David Pillor................................................ 1998 120,833 347,024(2) -- 4,318(3)
Senior Vice President, Sales and Marketing 1997 110,000 386,646(2) 40,000 412(3)
1996 110,000 117,603(2) -- --
Dr. Horst Bruening.......................................... 1998 141,209 -- -- 24,717(1)
Vice President, Engineering (5)
</TABLE>
- ------------------------
(1) Includes relocation expenses of $22,151 and matching contributions by the
Company to Dr. Bruening's account under the 401(k) Plan of $2,566.
(2) Includes commission payments of $347,024 in 1998, $386,646 in 1997 and
$97,603 in 1996.
(3) Represents matching contributions by the Company to employees' accounts
under the Company's 401(k) Plan.
15
<PAGE>
(4) Mr. DiSibio resigned as Senior Vice President and Chief Financial Officer on
March 19, 1999. Alfred V. Larrenaga joined the Company as Senior Vice
President and Chief Financial Officer on June 21, 1999. Tim Black, who
joined the Company as Chief Operating Officer on November 16, 1998, served
as Acting Chief Financial Officer during the interim.
(5) Dr. Bruening joined the Company as Vice President, Engineering on December
29, 1997 and resigned as an officer on October 5, 1998. He was on leave of
absence through April 5, 1999.
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.
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, 1998, options to purchase a
total of 2,059,398 shares were outstanding under the Equity Plan and options to
purchase 104,186 shares remained available for grant thereunder. No options were
granted to the Named Executive Officers in 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to options exercised
by the Named Executive Officers during 1998, the number of securities underlying
unexercised options held by the Named Executive Officers as of December 31, 1998
and the value of unexercised in-the-money options as of December 31, 1998:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT FISCAL YEAR END FISCAL YEAR END(1)
SHARES ACQUIRED VALUE -------------------------- -------------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- --------------- --------------- ----------- ------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Sergio Magistri............ -- -- 270,455 49,000 $ 1,236,452 $ 0
Curtis P. DiSibio.............. -- -- 90,688 25,000 352,487 0
David Pillor................... -- -- 195,367 20,000 940,420 0
Dr. Horst Bruening............. -- -- -- -- -- --
</TABLE>
- ------------------------
(1) Based on a per share price of $6.1875, the closing price of the Common Stock
as reported on The Nasdaq Stock 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 Bruening which provide for salaries and other employment
terms. These agreements 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 sixty
days notice to the Company, which in the case of Mr. DiSibio was waived. Mr.
DiSibio has signed a six-month consulting agreement with the Company.
16
<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 1998 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 1998. 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 in 1998.
Under the Company's executive bonus plan, executive officers may receive a
certain percentage of their base salary in bonus payments, based on a
combination of the Committee's subjective evaluation of the individual's
performance and advice from the Committee's compensation consultant regarding
competitive rates. 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.
17
<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 1997, in connection with the Committee's review of Dr.
Magistri's compensation, the Committee reviewed certain performance measures of
the Company, primarily success in achieving profitability for the first time 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 $160,000 to $220,000 with
the potential to receive a scaled bonus of up to $143,000 based on net profit
and order backlog. The Committee subsequently determined to make payment of 1998
bonuses to the executive team, including the Chief Executive Officer, contingent
upon the achievement of certain earnings per share in the first quarter of 1999.
As a result, no bonus was awarded with respect to 1998 performance during the
year. In addition, no options were granted in 1998.
FROM THE MEMBERS OF THE BOARD OF DIRECTORS
Dr. Douglas Boyd Dr. Sergio Magistri Dr. Bruno Trezza
Dr. Giovanni Lanzara Ambassador Morris D. Busby
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 1998; all compensation matters
were handled by the non-employee members of Board of Directors, which consisted
of Drs. Boyd, Lanzara, Magistri and Trezza, and Ambassador Busby during such
fiscal year. Dr. Magistri was not present during discussion of his compensation.
The foregoing report was prepared by the Board of Directors at its meeting on
February 19, 1999.
18
<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 THIRTY-TWO MONTH CUMULATIVE TOTAL RETURN ON INVESTMENT(2)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL SHAREHOLDERS EQUITY
<S> <C> <C> <C>
INVISION TECHNOLOGY NASDAQ
TECHNOLOGIES, INC. -500 US
26Apr96 $100 $100 $100
Dec96 $300.00 $123.33 $108.87
Dec97 $138.64 $155.51 $133.52
Dec98 $112.51 $268.99 $188.14
</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.
19
<PAGE>
CERTAIN RELATIONSHIPS AND OTHER TRANSACTIONS
In August of 1996 the Company entered into a consulting agreement with BGI,
Inc. ("BGI") a Virginia-based international consulting firm engaged to assist
the Company with enhancing its methods, strategies and contacts to support the
marketing of the CTX 5000 Series to the U.S. Government. In March 1998,
Ambassador Busby, a controlling shareholder of BGI, was elected to the Company's
Board of Directors. In 1998, the Company paid BGI $240,000 in consulting fees.
BGI also received, in August 1996, an option on 6,586 shares of the Company's
common stock with vesting of these shares based on the achievement of certain
milestones. Based on these milestones the remaining 2,684 shares, not previously
vested, vested in 1998.
The Company believes that the foregoing transaction was in its best interest
and was on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
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
[LOGO]
ROBERT L. JONES
SECRETARY
June 21, 1999
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, 1998, AS AMENDED
ON FORM 10-K/A DATED APRIL 30, 1999 IS AVAILABLE WITHOUT CHARGE UPON WRITTEN
REQUEST TO: MANAGER, INVESTOR RELATIONS, INVISION TECHNOLOGIES, INC., 7151
GATEWAY BOULEVARD, NEWARK, CA 94560.
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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
Amended December 20, 1996
Amended August 8, 1997
Amended December 23, 1997
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.
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(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.
(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) "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.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of the common
stock of the Company determined as follows:
(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.
(n) "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.
(o) "INDEPENDENT STOCK APPRECIATION RIGHT" or "INDEPENDENT RIGHT" means a
right granted pursuant to subsection 8(b)(3) of the Plan.
(p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or officer of the Company or an Affiliate, does not receive
compensation (directly or indirectly) from the Company or an Affiliate for
services rendered as a Consultant or in any capacity other than as a Director
(except for an amount as to which disclosure would not be required under Item
404(a) of Regulation S-K promulgated pursuant to the Securities Act of 1933,
as amended ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
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(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.
(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.
(bb) "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.
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(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.
(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 Non-Employee Directors 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.
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 three million twenty-one thousand eight hundred
eighteen (3,021,818) 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) No person shall be eligible for the grant of an Incentive Stock 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 Incentive Stock Option is at least one
hundred ten percent (110%) of the Fair Market Value of such stock at the date
of grant and the Incentive Stock 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:
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(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 may be
transferred to the extent provided in the Option Agreement; provided that if
the Option Agreement of a Nonstatutory Stock Option does not expressly permit
such transfer, such Nonstatutory Stock Option shall not be transferable
except by will, by the laws of descent and distribution or pursuant to a
domestic relations order satisfying the requirements of Rule 16a-12 of the
Exchange Act and shall be exercisable during the lifetime of the person to
whom such Nonstatutory Stock Option is granted only by such person or any
transferee pursuant to a domestic relations order. 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 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 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
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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 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 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
or to any other restriction the Board determines to be appropriate.
(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
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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 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 domestic relations order satisfying
the requirements of Rule 16a-12 of the Exchange Act 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.
(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 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:
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(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 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 an Incentive Stock Option granted to 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.
A-8
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(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) The Board shall have the power to accelerate the time at which a Stock
Award may first be exercised or the time during which a Stock Award or any
part thereof will vest pursuant to subsection 6(e), 7(d) or 8(b),
notwithstanding the provisions in the Stock Award stating the time at which
it may first be exercised or the time during which it will vest.
(b) 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.
(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.
(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
A-9
<PAGE>
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.
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 to the extent stockholder approval is necessary
for the Plan to satisfy the requirements of Section 422 of the Code, Rule
16b-3 or any Nasdaq or securities exchange listing requirements.
(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.
A-10
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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 as amended shall become effective on the date such amendment is
approved by the Board, but if the Board submits the Plan, as amended for
approval of stockholders, then no Stock Awards granted under the Plan, as
amended, shall be exercised unless and until the Plan, as amended, has been
approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan, as amended, is adopted
by the Board.
A-11
<PAGE>
INVISION TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 15, 1999
The undersigned hereby appoints Dr. Sergio Magistri and Tim Black,
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 Company's
headquarters, 7151 Gateway Boulevard, Newark, California, 94560 on Thursday,
July 15, 1998 at 9:30 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 paragraphs 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, authority 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, 1998.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN
ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
1. To elect Dr. Bruno Trezza and Dr. Douglas Boyd as the Class III directors
to hold office until the 2001 Annual Meeting of Stockholders and until their
successors are elected and qualified.
/ / FOR / / WITHHOLD AUTHORITY
------------------------------------------
(List name of director for whom authority
is being withheld if only one)
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 400,000 shares to 3,021,818 shares.
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the selection of PRICEWATERHOUSECOOPERS LLP as independent
auditors of the Company for its fiscal year ending DECEMBER 31, 1999.
/ / FOR / / AGAINST / / ABSTAIN
1
<PAGE>
DATED: __________________________ , 1998
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.
MARK HERE IF YOU PLAN TO PARTICIPATE IN A TOUR OF OUR FACILITY AND A
DEMONSTRATION OF THE CTX 5000. IF SO, PLEASE ARRIVE AT OUR HEADQUARTERS BY
9:00 A.M.
/ /
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT. / /
2
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<S> <C>
VOTE BY TELEPHONE VOTE BY INTERNET
It's fast, convenient, and immediate! It's fast, convenient, and your vote is
Call Toll-Free on a Touch-Tone Phone immediately confirmed and posted.
1-877-PRX-VOTE (1-877-779-8683).
- -------------------------------------- ---------------------------------------
Follow these four easy steps: Follow these four easy steps:
1. Read the accompanying Proxy 1. Read the accompanying Proxy
Statement/Prospectus and Proxy Statement/Prospectus and Proxy
Card. Card.
2. Call the toll-free number 2. Go to the Website
1-877-PRX-VOTE (1-877-779-8683). http://www.eproxyvote.com/invn
For shareholders residing outside
the United States call collect on
a touch-tone phone 1-201-536-8073.
3. Enter your 14-digit Voter Control 3. Enter your 14-digit Voter Control
Number located on your Proxy Card Number located on your Proxy Card
above your name. above your name.
4. Follow the recorded instructions. 4. Follow the instructions provided.
- -------------------------------------- ---------------------------------------
YOUR VOTE IS IMPORTANT! YOUR VOTE IS IMPORTANT!
Call 1-877-PRX-VOTE anytime! Go to http://www.eproxyvote.com/invn
anytime!
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DO NOT RETURN YOUR PROXY CARD IF YOU ARE VOTING BY TELEPHONE OR INTERNET
DETACH HERE
