<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement)
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:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
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[THE AMERICAN MATERIALS & TECHNOLOGIES CORP LOGO]
================================================================================
THE AMERICAN MATERIALS &
TECHNOLOGIES CORPORATION
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON MAY 30, 1997
AND
PROXY STATEMENT
================================================================================
IMPORTANT
PLEASE MARK, SIGN AND DATE YOUR PROXY
AND PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 3
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
5915 RODEO ROAD
LOS ANGELES, CA 90016
April 28, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
The American Materials & Technologies Corporation (the "Company"). The meeting
will be held at the offices of the Company, 5915 Rodeo Road, Los Angeles,
California 90016, on Friday, May 30, 1997, beginning at 10:00 A.M., local time.
As a stockholder, your vote is important. We encourage you to execute and
return your proxy promptly whether you plan to attend the meeting or not so that
we may have as many shares as possible represented at the meeting. Returning
your completed proxy will not prevent you from voting in person at the meeting
prior to the proxy's exercise if you wish to do so. If you do wish to attend the
meeting in person, we ask that you notify the Company by contacting Christina
Carrabino at (310) 841-5266 so that arrangements can be made to accommodate all
stockholders wishing to attend.
Thank you for your cooperation, continued support and interest in The
American Materials & Technologies Corporation.
Sincerely,
/s/ Paul W. Pendorf
Paul W. Pendorf
President
<PAGE> 4
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 30, 1997
------------------------
Notice is hereby given that the annual meeting of stockholders (the "Annual
Meeting") of The American Materials & Technologies Corporation (the "Company")
will be held at the offices of the Company, 5915 Rodeo Road, Los Angeles,
California 90016, on Friday, May 30, 1997, beginning at 10:00 A.M. PDT, for the
following purposes:
1. To consider and act upon a proposal to amend the Company's Restated
Certificate of Incorporation to (a) divide the Board of Directors into
three classes, each class consisting as nearly as possible of one-third
of the whole number of the Board of Directors; (b) require that action
required or permitted to be taken by stockholders of the Company be
taken at an annual or special meeting of stockholders and not by written
consent of stockholders; and (c) provide that, unless certain conditions
are met, the proposed amendments may not be amended without a vote of
the holders of seventy-five percent (75%) of outstanding voting shares
of stock of the Corporation entitled to vote at a meeting of
stockholders held for the purpose of voting on such amendment, all as
set forth in the accompanying Proxy Statement.
2. To elect one Class I Director, one Class II Director and two Class III
Directors for initial terms of 1, 2 and 3 years, respectively or,
alternatively (if Proposal No. 1 should not be approved), to elect the
Directors of the Company to serve until the 1998 annual meeting of
stockholders and until their respective successors are elected and have
qualified.
3. To consider and act upon a proposal to adopt the 1997 Stock Option Plan.
4. To consider and act upon a proposal to select Feldman Radin & Co., P.C.
as the Company's independent auditors for fiscal 1997.
5. To transact such further business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 25, 1997 as
the record date for the determination of the stockholders of the Company
entitled to notice of, and to vote at, said Annual Meeting and any adjournment
thereof. Only stockholders of record on such date are entitled to notice of, and
to vote at, said Annual Meeting or any adjournment thereof.
By Order of the Board of Directors,
David A. Broadwin
Secretary
Boston, Massachusetts
April 28, 1997
YOUR VOTE IS IMPORTANT
PLEASE SIGN AND RETURN THE ENCLOSED PROXY, WHETHER OR
NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
<PAGE> 5
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
5915 RODEO ROAD
LOS ANGELES, CALIFORNIA 90016
(310) 841-5200
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 30, 1997
------------------------
This Proxy Statement and the enclosed form of proxy are being mailed to
stockholders on or about April 28, 1997 in connection with the solicitation by
the Board of Directors of The American Materials & Technologies Corporation (the
"Company") of proxies to be used at the annual meeting of stockholders of the
Company, to be held on Friday, May 30, 1997, and at any and all adjournments
thereof (the "Annual Meeting"). When proxies are returned properly executed, the
shares represented will be voted in accordance with the stockholders'
directions. Stockholders are encouraged to vote on the matters to be considered.
However, if no choice has been specified by a stockholder, the shares will be
voted as recommended by management. Any stockholder may revoke such
stockholder's proxy at any time before it has been exercised by providing the
Company with a later dated proxy, by notifying the Company's Secretary in
writing or by orally notifying the Company in person.
The Board of Directors of the Company (the "Board") has fixed the close of
business on April 25, 1997, as the record date for the determination of the
stockholders of the Company entitled to notice of, and to vote at, the Annual
Meeting and any adjournment thereof. Only stockholders of record on such date
are entitled to notice of, and to vote at, the Annual Meeting or any adjournment
thereof. At the close of business on the record date, there were issued and
outstanding 4,393,554 shares of the Company's common stock, $0.01 par value
("Common Stock"), entitled to cast 4,393,554 votes.
The By-laws of the Company provide that the holders of a majority of the
shares of Common Stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum at the
Annual Meeting. Shares of Common Stock represented by a properly signed and
returned proxy will be treated as present at the Annual Meeting for purposes of
determining a quorum. Abstentions and broker non-votes with respect to
particular proposals will not affect the determination of a quorum. Thus, shares
voted to abstain as to a particular matter, or as to which a nominee (such as a
broker holding shares in street name for a beneficial owner) has no voting
authority in respect of a particular matter, shall be deemed present for
purposes of determining a quorum. Any stockholder who attends the Annual Meeting
may not withhold his shares from the quorum count by declaring such shares
absent from the Annual Meeting.
The affirmative vote of a majority of the issued and outstanding shares of
Common Stock properly cast at the Annual Meeting will be necessary to approve
the proposals to amend the Company's Restated Certificate of Incorporation (the
"Restated Certificate of Incorporation"). Abstentions will count as being
present and represented at the Annual Meeting and entitled to vote, and will be
included in calculating the number of votes cast on these proposals (and thus
will have the effect of "no" votes). Broker non-votes will not be included in
calculating the number of votes cast on these proposals. The Class I, II and III
Directors will be elected by a plurality of the votes properly cast. Abstentions
and broker non-votes as to this election do not count as votes for or against
such election.
Votes will be tabulated by the Company's transfer agent, American Stock
Transfer & Trust Company.
<PAGE> 6
PROPOSAL NO. 1
AMENDMENTS TO RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has unanimously approved certain amendments to the
Restated Certificate of Incorporation and has directed that they be submitted to
a vote of the stockholders at the Annual Meeting. Inasmuch as the Board deems
such amendments to be interrelated in purpose and effect, they are being
submitted as a single proposal to be voted upon. To be adopted, the proposed
amendments require the affirmative vote of holders of a majority of all
outstanding shares of Common Stock of the Company entitled to vote thereon at
the Annual Meeting. Management believes it to be in the best interests of the
Company to amend the Restated Certificate of Incorporation to give effect to the
proposed amendments.
The proposed amendments would, among other things:
(1) divide the Company's Board of Directors into three classes;
(2) provide that stockholder action only be taken at a meeting of
stockholders and not by written consent; and
(3) provide that, unless certain conditions are met, the proposed
amendments may not be further amended or repealed without a vote of 75% of
the Company's stockholders.
The principal purposes of the proposed amendments are to promote continuity
and stability in the Company's leadership and policies and to encourage any
persons who might wish to acquire the Company to negotiate with its management
rather than to attempt to effect certain types of business combinations without
the approval of management or of a substantial portion of the Company's
stockholders. The proposed amendments may be considered "anti-takeover" in
nature and the effect of such amendments may be to render more difficult or to
discourage a merger or tender offer, even if such transaction is favorable to
the interests of the stockholders, or the assumption of control by a holder of a
large block of the Company's shares and the removal of incumbent management,
even if such removal would be beneficial to stockholders.
Stockholders should note that the proposed amendments may discourage tender
offers and other non-open market acquisitions made at prices above the
prevailing market price of the Company's stock and acquisitions of stock by
persons attempting to acquire control through market purchases that may cause
the market price of the stock to reach levels that are higher than would
otherwise be the case. Discouragement of such acquisitions may have the effect
of depriving stockholders of opportunities to sell their stock at a premium
under such circumstances.
The Board of Directors has no knowledge of any efforts by any person to
obtain control of the Company or to change its management. However, in view of
the number of hostile tender offers and proxy contests experienced by public
companies, the Board of Directors believes that it is prudent and in the
interest of the stockholders to adopt the proposed amendments. The Board of
Directors has further concluded that it is desirable to consider these proposed
amendments at a time when the Company is not subject to a takeover attempt.
CURRENT PROVISIONS OF RESTATED CERTIFICATE OF INCORPORATION AND BY-LAWS
The Company does not believe that its Restated Certificate of Incorporation
and By-laws as presently constituted contain any provisions which are intended
to have an anti-takeover effect. However, under the Certificate of Incorporation
9,863,144 shares of Common Stock and 5,000,000 shares of preferred stock remain
authorized and not reserved for any purpose and are available for issuance.
Although these shares were authorized to allow the Board of Directors, without
further stockholder approval, to issue additional shares of the Company's
capital stock to raise capital or to effect potential acquisitions in the
future, the authorization of such additional shares could incidentally have an
anti-takeover effect, in that such shares could potentially be issued in such
manner as to hamper the efforts of persons who might attempt to gain control of
the Company. Also, Article Fourth of the Restated Certificate specifically
provides that the Board has the authority to create the special terms and
conditions of the preferred stock which it issues. The Board is authorized to
establish the number of shares of preferred stock to be issued in any series it
decides to issue,
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and to fix the voting powers, designations, preferences and relative,
participating, optional or other special rights of the preferred stock,
including voting rights and conversion rights, and the qualifications,
limitations and restrictions thereon. Accordingly, it is possible for the Board
to seek to authorize the issuance of a series of preferred stock with rights and
preferences that could affect an attempt to acquire control of the Corporation.
For example, such additional authorized shares could potentially be issued to
dilute the stock ownership of persons seeking to obtain control of the Company,
or shares of preferred stock with favorable voting rights, such as the right to
elect certain additional directors, or to provide the holders of other special
rights could be created and issued to parties that support the management of the
Company.
The proposed amendments, combined with the power of the Board of Directors
to issue shares of authorized preferred stock, may have the effect of
maintaining the continuity of management and may make changes in management more
difficult, even if a majority of stockholders might consider such changes
advisable. The Company does not have a present intention to adopt any proposals
that have an anti-takeover effect, or to submit any such proposals for further
consideration by stockholders, except for the amendments proposed herein and
amendments to the Company's By-laws to conform them thereto.
Cumulative voting for the election of directors is not permitted under the
Restated Certificate of Incorporation, as now in effect and as proposed to be
amended.
The following sections set forth an explanation of the proposed amendments,
which are set forth in their entirety in Exhibit A hereto.
CLASSIFICATION OF BOARD OF DIRECTORS
Summary
The Company's By-laws currently provide for a Board of Directors consisting
of such number as shall be determined from time to time by a majority of the
directors or by the stockholders. Directors are elected to serve until the next
annual meeting of stockholders and until their respective successors are duly
elected and have qualified. The number of directors constituting the whole Board
is currently fixed at four. The terms of all of the Company's Directors will
expire at the Annual Meeting.
Proposal No. 1 would amend Article Fifth of the Restated Certificate of
Incorporation to divide the Board of Directors into three classes, labeled Class
I, Class II and Class III, each containing, insofar as possible, an equal number
of directors, with the term of one of the three classes expiring each year at
the Company's annual meeting or special meeting in lieu thereof. The text of the
proposed amendment is set forth in Exhibit A hereto. The Company's Directors
unanimously approved the proposed amendment at a regular meeting of Directors on
March 7, 1997.
Under proposed Article Fifth, there would be limits prescribed for the size
of the entire Board of Directors with a minimum set at three directors and a
maximum set at twelve directors, exclusive of directors to be elected by any
class or series of the Company's stock other than Common Stock voting separately
as a class. The exact number of directors, and the number of members of each
class of directors, would be fixed or changed from time to time within such
limits by resolution of the Board of Directors. The provisions of proposed
Article Fifth would not apply to any director elected by holders of a class or
series of the Company's preferred stock at any time such holders might have a
right to vote separately as a class for the election of directors.
If the proposed amendment is approved, the Company will designate nominees
for each of the three classes of Directors as set forth in Proposal No. 2. The
Class I Director would serve initially for a one-year term, until the 1998
annual meeting of stockholders and until a successor is duly elected and
qualifies, and thereafter be elected for three-year terms. The Class II Director
would serve initially for a two-year term, until the 1999 annual meeting of
stockholders and until a successor is duly elected and qualifies, and thereafter
be elected for three-year terms. The Class III Directors would immediately
commence service for a three-year term, and serve until the 2000 annual meeting
of stockholders and until their respective successors are duly elected and have
qualified. The proposed amendment provides that any vacancy on the Board of
Directors resulting from an increase in the number of Directors may be filled by
the affirmative vote of a majority of the
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Directors then in office, and any other vacancy on the Board of Directors may be
filled by the affirmative vote of a majority of the Directors then in office,
although less than a quorum, or by a sole remaining Director. Any Director
elected to fill a vacancy not resulting from an increase in the number of
Directors would serve for a term equivalent to the remaining unserved portion of
the term of such newly elected Director's predecessor.
Under Delaware law, the holders of a majority of a corporation's
outstanding shares may remove directors with or without cause unless such power
of removal is limited by the corporation's certificate of incorporation. The
Restated Certificate of Incorporation presently contains no provision limiting
such power. Such law also provides that if a corporation's certificate of
incorporation provides for classification of directors, directors may be removed
only for cause unless otherwise set forth in the certificate of incorporation.
Cause is not defined under Delaware law for this purpose. The Board intends,
upon the adoption of the proposed amendment by the stockholders, to amend the
Company's By-laws to provide that incumbent Directors may be removed by a
majority of stockholders only for "Cause." "Cause," for the purposes of the
proposed By-law provision, is defined as (a) willful and continued material
failure, refusal or inability to perform one's duties to the Corporation or the
willful engaging in gross misconduct materially and demonstrably damaging to the
Corporation; or (b) conviction for any crime involving moral turpitude or any
other illegal act that materially and adversely reflects upon the business,
affairs or reputation of the Company or on one's ability to perform one's duties
to the Corporation.
The vote of holders of record of a majority of the outstanding Common Stock
entitled to vote thereon at the Annual Meeting is required for adoption of the
proposed amendment.
Reasons for and Effects of Proposed Article Fifth
Designation of a classified board of directors is permitted under Section
141(d) of the General Corporation Law of the State of Delaware. Section 141(d)
provides that a corporation may divide its board into one, two or three classes,
with (in the case of a board divided into three classes) the classes serving for
staggered three-year terms, so that the directors of one class stand for
re-election in any given year.
The proposal to adopt a classified Board of Directors is not the result of
management's knowledge of any specific effort to accumulate the Company's
securities or to obtain control of the Company through a merger, tender offer,
consent solicitation or otherwise. The Board of Directors believes that the
adoption of proposed Article Fifth will enhance the likelihood of continuity and
stability in the composition of the Company's Board of Directors and in the
policies formulated by the Board, in that only about one-third of the Board of
Directors would be subject to election each year. Staggered terms would also
guarantee that, except in the unusual circumstances of the death or resignation
of Directors, approximately two-thirds of the Directors, or more, at any one
time would have at least one year's experience as Directors of the Company.
The proposed Article Fifth will also restrict the ability of stockholders
of the Company to change the composition of the Board of Directors by extending
the time required to elect a majority of Directors from one to two years, under
most circumstances. Thus, the existence of a classified Board may have an
anti-takeover effect because a person who has gained voting control of the
Company will be unable to gain immediate control of the Board of Directors
unless he can obtain sufficient votes to amend proposed Article Fifth pursuant
to the requirements for such an amendment as set forth therein. See
"Supermajority Requirements for Amendment of the Proposed Amendments" below.
Adoption of the proposed amendment would thus tend to make more difficult,
or discourage, any attempt to remove current management of the Company by means
of a merger, a tender offer for the Company's stock, a proxy contest or any
other transaction resulting in a change in control, even where such an action
would be favorable to the Company's stockholders or was supported by a majority
of the stockholders. The proposed amendment would also make it more difficult
for the Company's stockholders to change the composition of the Board and the
Company's management, even for reasons of performance of the present Board and
management. The provisions of proposed Article Fifth would be applicable to
every election of Directors and not just elections occurring in connection with
a specified event such as a hostile tender offer.
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ELIMINATION OF STOCKHOLDER ACTION BY WRITTEN CONSENT
Summary
The Board has unanimously authorized the Company to amend its Restated
Certificate of Incorporation to add a new provision to require that action
required or permitted to be taken by stockholders of the Company must be taken
at an annual or special meeting of stockholders and may not be taken by written
consent of stockholders. The full text of proposed Article Seventh is set forth
in Exhibit A hereto.
Under Delaware law, any actions required or permitted to be taken by
stockholders may be taken (unless a company's certificate of incorporation
otherwise provides) without a stockholder meeting, without prior notice and
without a stockholder vote if written consents setting forth the action to be
taken are signed by the holders of stock having the requisite number of votes.
The Restated Certificate of Incorporation currently does not prohibit such
action by written consent, and the Company's present By-laws provide that such
action may be taken by written consent. The Company's stockholders do not,
however, have the ability to call a meeting of stockholders. Conditional upon
the approval of the proposed amendment to the Restated Certificate of
Incorporation, the Board of Directors plans to adopt various conforming
amendments to the Company's By-laws consistent with the proposed amendments to
the Restated Certificate of Incorporation, including the elimination of
stockholder action by written consent. The text of such conforming By-law
amendments is set forth in Exhibit A.
The vote of holders of record of a majority of the outstanding Common Stock
entitled to vote thereon at the Annual Meeting is required for adoption of the
proposed amendment.
Reasons for and Effects of Proposed Article Seventh
The proposed amendment is not the result of management's knowledge of any
specific effort to accumulate the Company's securities or to obtain control of
the Company through a merger, tender offer, consent solicitation or otherwise.
The elimination of stockholder action by written consent would ensure that all
stockholders of the Company will have notice of, and the opportunity to
participate in determining, any proposed stockholder action and would prevent
the holders of a majority of the voting power of the Company from using the
written consent procedure to take stockholder action unilaterally and without
prior notice. The Board believes it is important that stockholders be able to
discuss matters which may affect their rights, that the Board and the
stockholders be able to give advance consideration to any such action, and that
it is therefore appropriate for stockholders of a publicly held corporation to
take action affecting the corporation and its stockholders only at a meeting.
The elimination of stockholder action by written consent may have the
effect of delaying consideration of a stockholder proposal until the next annual
meeting unless a special meeting is called by the Board, the Chairman of the
Board or the President. In addition, elimination of the written consent
procedure may lengthen the amount of time required to take stockholder action,
since certain actions by written consent are not subject to the minimum notice
requirement of a stockholders meeting.
Because the Company's shares are listed on The Pacific Stock Exchange
Incorporated (the "PSE"), the Company is subject to the Rules of the Board of
Governors of the PSE (the "PSE Rules"). The PSE Rules require, among other
things, that listed companies must submit all matters requiring stockholder
approval to a meeting of stockholder unless the PSE determines that such a
meeting is not necessary. Therefore, the ability of stockholders to act by
written consent is already limited to a certain degree by the PSE Rules.
Because elimination of the procedures for stockholders to act by written
consent could make more difficult an attempt to obtain control of the Company,
such action could have the effect of deterring a third party from making a
tender offer or otherwise attempting to obtain control of the Company. By
eliminating stockholder action by written consent, the Board intends to
encourage persons seeking to acquire control of the Company to initiate such an
acquisition through negotiations with the Company's management and the Board.
However, any provision in the Restated Certificate of Incorporation which
effectively requires a potential acquiror to negotiate with the Company's
management and the Board could be characterized as increasing
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<PAGE> 10
management's and the Board's ability to retain their positions with the Company
and to resist a transaction which may be desired by, or be beneficial to, the
Company's stockholders.
Elimination of the written consent procedure also means that a meeting of
stockholders would be required in order for the Company's stockholders to
replace the Board. With the proposed classified Board, two such meetings would
ordinarily be required. Thus, elimination of stockholder action by written
consent will make the removal of Directors more difficult. Accordingly, the
effect of the proposed amendment may be, under certain circumstances, to deter,
impede or delay actions that are desired by, or beneficial to, some or all of
the Company's stockholders, including stockholder attempts to change the
membership of the Board and the initiation or consummation of certain business
transactions, such as an acquisition, reorganization or recapitalization of the
Company.
Supermajority Required to Repeal Proposed Amendments
Under Delaware law, amendments to the Restated Certificate of Incorporation
may be made with the approval of holders of majority of the Company's
outstanding Common Stock, since the Restated Certificate of Incorporation does
not currently provide otherwise.
Each of the proposed amendments would also provide that any further
amendment to the Restated Certificate of Incorporation that would amend, alter
or repeal such proposed amendment would require the vote of the holders of
seventy-five percent (75%) of all shares of stock of the Corporation entitled to
vote at a meeting held for the purpose of voting on such further amendment. The
75% requirement would not apply in the case of such an amendment recommended to
the stockholders pursuant to a resolution of the Board of Directors approved by
two-thirds of the "Continuing Directors." "Continuing Directors," for the
purposes of the proposed amendment, are (a) Directors of the Company who are or
become Directors on the date on which the proposed amendment is adopted by the
stockholders, or (b) any Director elected by a majority of the Continuing
Directors then in office to succeed any Director to fill any vacancy on the
Board of Directors.
This "supermajority" requirement is designed to prevent the circumvention
of the proposed amendments described herein by any person or persons holding
more than 50% but less than 75% of the voting stock. Presently, the Company's
senior management and directors and their affiliates own, collectively,
approximately 38.8% of the issued and outstanding shares of the Company's common
stock entitled to vote, and so could effectively veto any attempt by
unaffiliated stockholders to repeal the proposed amendment.
THE BOARD DEEMS EACH OF THE PROPOSED AMENDMENTS TO THE RESTATED CERTIFICATE
OF INCORPORATION TO BE IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS VOTE
FOR THE ADOPTION OF THE PROPOSED AMENDMENTS.
PROPOSAL NO. 2
ELECTION OF DIRECTORS
At the Annual Meeting four Directors will be elected. The Board has
nominated Mr. Pendorf for election as a Class I Director, to serve until the
Company's 1998 annual meeting of stockholders or special meeting in lieu
thereof, and until his successor is duly elected and qualifies. The Board has
also nominated Steven Georgiev for election as a Class II Director, to serve
until the Company's 1999 annual meeting of stockholders or special meeting in
lieu thereof, and until his successor is duly elected and qualifies, and each of
Buster C. Glosson and Robert V. Glaser for election as Class III Directors, to
serve until the Company's 2000 annual meeting of stockholders or special meeting
in lieu thereof, and until their respective successors are duly elected and have
qualified. Each of the nominees presently serves as a Director of the Company.
Information relating to each of the nominees for election as a Director is set
forth below under the captions "Directors and Executive Officers" and "Certain
Transactions."
In case Proposal No. 1 to amend the Restated Certificate of Incorporation
to provide for three classes of Directors should not be approved by the
stockholders, the Board has, in the alternative, nominated
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Messrs. Pendorf, Georgiev, Glosson and Glaser for election as Directors, to
serve until the next annual meeting of stockholders and until their respective
successors shall have been elected and qualified.
The nominees have agreed to serve as Directors if elected, and the Company
has no reason to believe that they will be unable to serve. In the event that
any of them is unable or declines to serve as a Director at the time of the
Annual Meeting, proxies may be voted for such other nominee as is then
designated by the Board.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MR.
PENDORF AS A CLASS I DIRECTOR, MR. GEORGIEV AS A CLASS II DIRECTOR AND MESSRS.
GLOSSON AND GLASER AS CLASS III DIRECTORS OF THE COMPANY. IN THE EVENT THAT
PROPOSAL NO. 1 IS NOT ADOPTED BY THE STOCKHOLDERS, THE BOARD UNANIMOUSLY
RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF MESSRS. PENDORF, GEORGIEV, GLOSSON
AND GLASER AS DIRECTORS OF THE COMPANY.
PROPOSAL NO. 3
1997 STOCK OPTION PLAN
The Board of Directors of the Corporation has adopted the 1997 Stock Option
Plan (the "1997 Plan"), subject to approval by the stockholders. Under the
Internal Revenue Code (the "Code"), stockholder approval of the 1997 Plan is
necessary for stock options relating to the shares issuable under the 1997 Plan
to qualify as incentive stock options under Section 422 of the Code. In
addition, Nasdaq Stock Market, Inc. rules (the "Nasdaq Rules") require
stockholder approval of the 1997 Plan. Approval for purposes of the Code and the
Nasdaq Rules will require the affirmative vote of a majority of the shares of
Common Stock present or represented at the meeting and voting on the 1997 Plan.
The full text of the 1997 Plan as adopted by the Board of Directors is printed
as Appendix A, beginning on page A-1. A summary of some of its provisions is set
forth hereinafter under the caption "Benefit Plans."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO APPROVE THE 1997 STOCK OPTION PLAN.
PROPOSAL NO. 4
SELECTION OF AUDITORS FOR FISCAL 1997
The accounting firm of Feldman Radin & Co., P.C., which has served as the
Company's principal independent accountants continuously since the Company's
formation, was selected by the Board to continue in that capacity for fiscal
1997. See "Information Concerning Auditors."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THIS
PROPOSAL TO SELECT FELDMAN RADIN & CO., P.C. AS THE CORPORATION'S INDEPENDENT
AUDITORS FOR FISCAL 1997.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
None of the directors or executive officers of the Company has any interest
in the adoption of Proposal Nos. 1, 3 or 4 except that, with respect to the 1997
Stock Option Plan which is the subject of Proposal No. 3, in the future the
Company's Directors (other than non-employee Directors, who will receive
automatic grants thereunder) and executive officers might, in the discretion of
the Board, be granted stock options.
7
<PAGE> 12
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning each director
and nominee for election as a director and each executive officer of the
Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- --- --------------------------------------------
<S> <C> <C>
Steven Georgiev.................... 62 Chairman of the Board of Directors
Paul W. Pendorf.................... 56 President, Chief Executive Officer and
Director
William A. Timmerman............... 51 Chief Financial Officer
Robert V. Glaser................... 45 Director
Buster C. Glosson.................. 55 Director
Philip D. Cunningham............... 58 Vice President of Operations
Leslie Jay Cohen, Ph.D............. 56 Senior Vice President, Business Development,
Culver City Composites Corporation
</TABLE>
The Company currently has four Directors. All Directors are elected to hold
office until the next annual meeting of stockholders of the Company and until
their successors have been duly elected and qualified. Proposal No. 1 would
divide the Board into three classes, each serving for staggered three-year
terms. See "Proposal No. 1 -- Amendments Of Restated Certificate of
Incorporation." Officers are elected to serve subject to the discretion of the
Board of Directors and until their successors are appointed. There are no family
relationships among executive officers and directors of the Company.
Steven Georgiev has been Chairman of the Board of Directors of the Company
since its inception in March 1995. Mr. Georgiev is also Chairman and Chief
Executive Officer of Palomar Medical Technologies, Inc. ("Palomar"). Palomar
owns 463,664 shares of Common Stock of the Company. Mr. Georgiev was named
Chairman of Palomar in 1991 and President and CEO of Palomar in 1993. Palomar
designs, manufactures, and markets lasers, delivery systems and related
disposable products for use in medical and cosmetic procedures, and also
manufacturers and distributes flexible circuit boards and personal computers.
Mr. Georgiev has served as a financial consultant to emerging high growth
companies, and has served as a director of Excel Technologies, Inc. since 1992.
Mr. Georgiev became a director of Dynagen, Inc., a publicly held company, in
October 1996. He was a director at Cybernetics Products, Inc., a publicly held
company, from 1988 to 1992 and a director at XXsys Technologies, Inc., a
publicly held company engaged in developing advanced composites for use in
infrastructure repair and design ("XXsys"), from 1993 to 1995. Mr. Georgiev was
Chairman of the Board of Directors of Dynatrend, Inc., a publicly held
consulting firm that he co-founded in 1972, until 1989. Mr. Georgiev also serves
as a director of Nexar Technologies, Inc., a publicly held company. Mr. Georgiev
received a B.S. degree in Engineering Physics from Cornell University and an
M.S. degree in Management from the Massachusetts Institute of Technology, where
he was a Sloan Fellow.
Paul W. Pendorf has been President and Chief Executive Officer and a
director of the Company since its inception in March 1995. Prior to that, Mr.
Pendorf served from 1991 to 1995 as President and Chief Executive Officer and a
director of XXsys. He was a consultant to XXsys from 1990 until he was named
President. From 1989 to 1990 he was a Vice President of Quadrax Corporation, a
publicly traded advanced composites company. From 1985 to 1989 Mr. Pendorf held
a series of senior executive positions with ICI Fiberite, a subsidiary of
Imperial Chemical Industries ("ICI") engaged in the advanced composites
business. From 1982 to 1985, he was Director of International Ventures of
Beatrice Chemicals Group (acquired by ICI in 1985), where he worked extensively
in expanding Beatrice's composites business. Prior to his involvement in the
composites industry, Mr. Pendorf held executive positions with American Cyanamid
Company (now part of American Home Products Inc. and Cytec Inc.), Virginia
Chemicals Company (now part of Hoechst Celanese Corp.), and Pfizer, Inc. Mr.
Pendorf received a B.S. degree in Chemical Engineering from the University of
Maryland and an M.S. degree in Management from Rensselaer Polytechnic Institute.
Robert V. Glaser has been a director of the Company since July 1996. Mr.
Glaser is the founder and Chief Executive Officer of MapleWood Inc., a private
company formed in 1995 ("MapleWood") that undertakes corporate investments for
its own account and provides merger and acquisition advisory services to others.
Prior to the foundation of MapleWood, Mr. Glaser was a member of the worldwide
Management
8
<PAGE> 13
Committee of the Investcorp group of companies (the "Investcorp Group"), from
1983, the first year of the Investcorp Group's operation, through 1995. From
1987 to 1995, he was a member of the board of directors of Investcorp
International Inc., the U.S. arm of the Investcorp Group. From 1983 to 1987, Mr.
Glaser was employed by other entities of the Investcorp Group. The Investcorp
Group invests, for its own account and on behalf of its clients, in corporate
and real estate investments in the United States and Europe. During his career
at Investcorp, Mr. Glaser was active in numerous areas of corporate acquisitions
for Investcorp, including: the screening, evaluating and selecting of
acquisition targets, overseeing the due diligence process, leading negotiations
with sellers, arranging senior and subordinated financing for companies
acquired, overseeing companies acquired, and selling investments. During this
period, Mr. Glaser worked on numerous acquisitions and sat on over a dozen
boards of directors of acquired companies on Investcorp's behalf. Prior to
joining the Investcorp Group in 1983, Mr. Glaser was employed by The Chase
Manhattan Bank, N.A. for 10 years, and was a vice president at the time of his
departure. Mr. Glaser is a member of the Board of Trustees of the National
Foundation for Advancement of the Arts, St. Thomas University and the Greater
Miami Chamber of Commerce. He is also a member of the Board of Directors of
Miami's Community Partnership for Homeless Inc. Mr. Glaser is also a member of
the National Association of Corporate Directors. Mr. Glaser received an MBA in
Finance and International Business from New York University and a B.A. degree in
Political Science from the University of Buffalo.
Lt. Gen. Buster C. Glosson (USAF ret.) has been a director of the Company
since July 1996. Gen. Glosson has been a director of Palomar since September
1996. From 1965 until June 1994, he was an officer in the United States Air
Force ("USAF"), most recently as a Lieutenant General and Deputy Chief of Staff
for plans and operations, Headquarters USAF, Washington, D.C. Gen. Glosson is a
veteran of combat missions in Vietnam and, during the Gulf War, he commanded the
14th Air Force Division and was director of campaign plans for the United States
Central Command Air Forces, Riyadh, Saudi Arabia. Gen. Glosson is Chairman and
CEO of Alliance Partners Inc., an investment holding company with a focus on
international business. In 1994 he founded and has since served as President of
Eagle Ltd., a consulting firm concentrating on international business
opportunities in the high-technology arena. He also serves as a director of the
following publicly held companies: GreenMan Technologies, Inc., Nexar
Technologies, Inc. and Skyset Communication Network Corporation. Gen. Glosson
received a B.S. degree in Electrical Engineering from North Carolina State
University.
William A. Timmerman has been Chief Financial Officer of the Company since
its inception in March 1995. Prior to that, Mr. Timmerman was Chief Financial
Officer and Secretary of XXsys from 1994 to 1995. From 1993 to 1994, he was
Chief Financial Officer of Trion Capitol Corporation, a real estate development
firm based in San Diego. Prior to that, he was President and served on the
boards of directors of several private entrepreneurial companies, including
serving as President and Chief Executive Officer from 1990 to 1993 of The
France-USA Link, Inc., a company he founded that manufactured and distributed
recreational products. Earlier, he was with Chase Manhattan Bank for 11 years,
during which time he served in the New York headquarters, as well as in Paris,
France and the Ivory Coast. He was named a Vice President with Chase Manhattan
Bank in 1978. He received a B.A. degree in Philosophy from Washington and Lee
University, an MBA in Economics from New York University, and a Certificate
d'etudes from L'Institute des Etudes Politiques in Paris, France.
Philip D. Cunningham has been Vice President of Operations of the Company
since April 1997. Mr. Cunningham joined the Company's wholly-owned subsidiary,
Culver City Composites Corporation ("CCC"), as Director of Operations in January
1996 and was named Vice President of Operations of CCC in October 1996. From
1994 to 1995, Mr. Cunningham served as a Plant Manager for Bio-Rad Laboratories,
a company engaged in chemical reagent manufacturing and packaging. For the ten
years prior to that, he managed Hexcel Corporation's Livermore, California
advanced composites plant, one of the largest such plants in the world. For the
twenty years prior to that, he held various executive and manufacturing
positions with Stauffer Chemical Company and E.I. Dupont de Nemours & Co. Mr.
Cunningham holds a B.S. degree in Chemical Engineering from the Massachusetts
Institute of Technology.
Leslie Jay Cohen, Ph.D. has been Senior Vice President of Business
Development of CCC since April 1997. Mr. Cohen joined CCC as Director of
Business Development in April 1996 and was named Vice
9
<PAGE> 14
President of Business Development in October 1996. In 1995, Dr. Cohen elected
early retirement from McDonnell Douglas Corporation after a 29-year career. He
was a private consultant to industry prior to joining the Company. From 1993 to
1995, Dr. Cohen was Director of Advanced Programs for McDonnell Douglas
Aerospace -- Huntington Beach and was responsible for all new business
development in Russia and the Commonwealth of Independent States. From 1988 to
1993, Dr. Cohen served as the Program Manager for the U.S. Army/McDonnell
Douglas Aerospace Neutron Particle Beam Space Experiment -- NPBSE, and was
responsible for the cost, scheduling and technical performance of the
experiment. For ten years prior to that, he held various management positions
with McDonnell Douglas Aerospace. Dr. Cohen holds B.S., M.S., and Ph.D. degrees
in Civil Engineering from Carnegie Institute of Technology, and was a
Fulbright-Hayes Post-Doctoral Fellow at the Technion-Israel Institute of
Technology. Dr. Cohen received the Gold Medal for Science and Technology from
the U.S.S.R. Academy of Sciences and is an Academician of the International
Academy of Engineering.
The Company's executive officers are elected by the directors and hold
office until the first directors' meeting after the next annual meeting of
stockholders or special meeting in lieu thereof, and thereafter until their
successors are chosen and qualified, unless a shorter term is specified in the
vote appointing them.
COMMITTEES AND MEETINGS OF THE BOARD
During the year ended December 31, 1996, the Board met twice and acted nine
times by unanimous written consent. Each incumbent director attended all of the
meetings held by the Board.
The Board currently has two committees. The Audit Committee (currently
composed of Messrs. Glaser and Glosson) reviews the internal accounting
procedures of the Company and consults with and reviews the services provided by
the Company's independent auditors. The Audit Committee was formed on July 30,
1996 and did not meet during the remainder of 1996. The Compensation Committee
(currently composed of Messrs. Georgiev, Glaser and Glosson) makes general
policy decisions relating to compensation and benefits for the Company's
employees, including decisions with respect to compensation for the Company's
executive officers, and administers the 1996 Incentive and Nonqualified Stock
Option Plan. The Compensation Committee was formed on July 30, 1996 and did not
meet during the remainder of 1996.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
DIRECTORS' COMPENSATION
The Company's directors do not currently receive any cash compensation for
service on the Board of Directors, but directors are reimbursed for reasonable
expenses incurred in connection with attendance at Board and committee meetings.
Under the terms of the 1996 Incentive and Nonqualified Stock Option Plan, each
year Directors who are not employees of the Company automatically receive
options to purchase 5,000 shares of the Company's Common Stock with a per share
exercise price equal to the fair market value of a share of Common Stock at the
time of such grant. Mr. Georgiev waived his right to receive such options for
1996. See "Executive Compensation -- 1996 Incentive and Nonqualified Stock
Option Plan." Under the terms of the 1997 Stock Option Plan, each year Directors
who are not employees of the Company automatically receive options to purchase
10,000 shares of the Company's Common Stock with a per share exercise price
equal to the fair market value of a share of Common Stock at the time of such
grant. See "Executive Compensation -- 1997 Stock Option Plan." In accordance
with Company policy, Directors who are employees of the Company serve as
Directors without compensation. The Company has entered into consulting
agreements with Messrs. Georgiev and Glaser. See "Certain Transactions."
10
<PAGE> 15
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation for services rendered in all capacities to the Company for the
fiscal years ended December 31, 1995 and 1996 of (i) the Chief Executive Officer
of the Company during 1996 and (ii) the other executive officers of the Company
serving on December 31, 1996 whose salary and bonus for 1996 exceeded $100,000
(the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
--------------------- SECURITIES ALL OTHER
FISCAL SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS(1)(#) ($)
- --------------------------------------- ------ -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Paul W. Pendorf........................ 1996 $155,000 $40,000 -- --
President and Chief Executive Officer 1995 116,025 -- 86,937 --
William A. Timmerman................... 1996 100,000 20,000 -- --
Chief Financial Officer 1995 75,000 -- 46,366 --
Philip D. Cunningham................... 1996 110,434(2) 20,000 25,000 59,385(3)
Vice President of Operations 1995(2) -- -- -- --
</TABLE>
- ---------------
(1) During fiscal 1996 and fiscal 1995, the Company did not grant any restricted
stock awards or stock appreciation rights or make any long-term incentive
plan payouts to any of the Named Executive Officers.
(2) Mr. Cunningham was hired as of February 12, 1996 at an annual salary of
$120,000.
(3) Includes a one-time payment of relocation expenses in the amount of $51,885
and $7,500 in costs associated with the lease of an automobile.
OPTION GRANTS
The following table sets forth certain information regarding stock options
granted during 1996 by the Company to the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
NUMBER OF PERCENT OF
SHARES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED TO PRICE PER
OPTIONS EMPLOYEES IN SHARE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE
- ----------------------------------------------------- ---------- ------------- --------- ----------
<S> <C> <C> <C> <C>
Philip D. Cunninghan................................. 25,000 8.8% $1.00 2/13/06
</TABLE>
11
<PAGE> 16
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Except for an over-allotment option granted to the representative of the
underwriters of the Company's initial public offering, no options to purchase
securities of the Company have been exercised. The following table sets forth
certain information concerning the number and value of unexercised stock options
held by the Named Executive Officers as of December 31, 1996.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS HELD AT HELD AT DECEMBER 31,
DECEMBER 31, 1996(#) 1996($)(1)
--------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Paul W. Pendorf.................................. 0 86,937 0 $ 284,284
William A. Timmerman............................. 0 46,366 0 $ 151,617
Philip D. Cunningham............................. 0 25,000 0 $ 78,250
</TABLE>
- ---------------
(1) Value is based on the December 31, 1996 closing price on the Nasdaq SmallCap
Market of $4.13 per share. Actual gains, if any, on exercise will depend on
the value of the Common Stock on the date of the sale of shares.
EMPLOYMENT AND SEVERANCE AGREEMENTS
On March 25, 1995, the Company entered into employment agreements with each
of Paul W. Pendorf, the Company's President and Chief Executive Officer, and
William A. Timmerman, the Company's Chief Financial Officer. Pursuant to their
employment agreements, as amended, which expire on March 24, 1998, Mr. Pendorf
is entitled to an annual base salary of $160,000 and is eligible for annual
bonuses up to 120% of his base salary and Mr. Timmerman is entitled to an annual
base salary of $103,000 and is eligible for annual bonuses up to 120% of his
base salary. In addition, in July 1996 Messrs. Pendorf and Timmerman received
one-time performance bonuses of $40,000 and $20,000, respectively. Mr. Pendorf
was granted options to purchase 86,937 shares of Common Stock at an exercise
price of $0.86 per share under the terms of his agreement with the Company. Mr.
Timmerman was granted options to purchase 46,366 shares of Common Stock at an
exercise price of $0.86 per share under the terms of his agreement with the
Company. The options vest in three equal annual installments beginning on the
first anniversary of the effective date of the Company's initial public
offering, June 27, 1996. The employment agreements provide that, in the event of
termination of employment by the Company without cause or upon certain events
following a change in control of the Company, all options will vest, and each of
Messrs. Pendorf and Timmerman will be entitled to continued payment of salary
for a minimum of twelve months and a bonus of up to 60% of annual base salary.
On February 12, 1996, the Company entered into a one-year employment
agreement with Philip D. Cunningham, CCC's Vice President of Operations.
Pursuant to his employment agreement, Mr. Cunningham is entitled to an annual
base salary of $120,000 and is eligible for annual bonuses up to 40% of his base
salary. Mr. Cunningham also received relocation assistance from the Company in
the amount of $51,885 and a bonus of $20,000. The Company granted Mr. Cunningham
options to purchase 25,000 shares of Common Stock under the Company's 1996
Incentive and Nonqualified Stock Option Plan in connection with this agreement,
at an exercise price of $1.00 per share. Pursuant to this agreement, if Mr.
Cunningham's employment terminates for any reason other than resignation or for
cause, he will be eligible to receive six months' severance pay, increasing at
the rate of one-half month per month of employment up to a maximum of twelve
months' severance after two full years of employment. Mr. Cunningham's right to
receive severance pay under this agreement would terminate upon his obtaining
new employment.
SALARY DEFERRAL ARRANGEMENT
On March 7, 1997, the Company's Compensation Committee approved, and the
Board of Directors ratified, an arrangement whereby Mr. Pendorf deferred until
January 1, 1998 his right to receive $116,250 of his salary for 1995, $115,000
of his salary for 1996 and $80,000 of his salary for 1997. In consideration for
so
12
<PAGE> 17
deferring the obligation to pay Mr. Pendorf $311,250 of his accrued salary, the
Company granted him an option to purchase up to 77,813 shares of Common Stock at
an exercise price of $4.00 per share.
BENEFIT PLANS
1997 Stock Option Plan
On March 7, 1997, the Company's Board of Directors adopted the Company's
1997 Stock Option Plan (the "1997 Plan"), subject to the Company's stockholders'
approval at the Annual Meeting. A total of 350,000 shares of Common Stock are
reserved for issuance under the 1997 Plan. The 1997 Plan authorizes (i) the
grant of options to purchase Common Stock intended to qualify as incentive stock
options ("Incentive Options"), as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), and (ii) the grant of options that do not
so qualify ("Nonqualified Options"). As of March 21, 1997, options to purchase
131,113 shares of Common Stock were outstanding under the 1997 Plan. The 1997
Plan is set forth in its entirety as Appendix A, beginning at page A-1.
The 1997 Plan is administered by the Board of Directors. The Board selects
the individuals to whom awards will be granted, and determines the option
exercise price and other terms of each award, subject to the provisions of the
1997 Plan.
Incentive Options may be granted under the 1997 Plan to employees and
officers of the Company, including members of the Board of Directors who are
also employees. Nonqualified Options may be granted under the 1997 Plan to
employees, officers, individuals providing services to the Company and members
of the Board of Directors, whether or not they are employees of the Company.
No options may extend for more than ten years from the date of grant (five
years in the case of employees or officers holding 10% or more of the total
combined voting power of all classes of stock of the Company or any subsidiary
or parent ("greater-than-ten-percent-stockholders"). The exercise price for
Incentive Options may not be less than the fair market value of the Common Stock
on the date of grant or, in the case of a greater-than-ten-percent-stockholder,
not less than 110% of the fair market value. The aggregate fair market value
(determined at the time of grant) of shares issuable pursuant to Incentive
Options first becoming exercisable by any employee or officer in any calendar
year may not exceed $100,000.
Options are non-transferable except by will or by the laws of descent or
distribution. Options generally may not be exercised after (i) termination by
the Company for cause or voluntary termination by the optionee of the optionee's
employment with the Company, (ii) sixty days following termination by the
Company without cause of the optionee's employment with the Company, or (iii) in
the event of the optionee's permanent and total disability or death, the earlier
of the expiration date of such option or one year following the date of such
disability or death.
Payment of the exercise price for shares subject to options may be made
with cash, certified check, bank draft, postal or express money order payable to
the order of the Company for an amount equal to the exercise price for such
shares, or, with the consent of the Company, shares of Common Stock of the
Company having a fair market value equal to the option price of such shares, or,
with the consent of the Company, a combination of the foregoing. Full payment
for shares exercised must be made at the time of exercise.
The 1997 Plan provides for automatic grants of Nonqualified Options to the
Company's non-employee Directors. Each non-employee Director is annually granted
a five-year option for 10,000 shares at the then current fair market value.
These options become exercisable one year after the date of grant, subject to
continuing service as a Director. Directors may also be granted additional
options to acquire shares of the Company's Common Stock at the discretion of the
Board of Directors.
Shares underlying options which expire or terminate may be the subject of
future options. The 1997 Plan terminates on March 7, 2007.
13
<PAGE> 18
Federal Income Tax Information With Respect to the 1997 Stock Option Plan
The grantee of a Nonqualified Option recognizes no income for federal
income tax purposes on the grant thereof. On the exercise of a Nonqualified
Option, the difference between the fair market value of the underlying shares of
Common Stock on the exercise date and the option exercise price is treated as
compensation to the holder of the option taxable as ordinary income in the year
of exercise, and such fair market value becomes the basis for the underlying
shares which will be used in computing any capital gain or loss upon disposition
of such shares. Subject to certain limitations, the Company may deduct for the
year of exercise an amount equal to the amount recognized by the option holder
as ordinary income upon exercise of a Nonqualified Option.
The grantee of an Incentive Option recognizes no income for federal income
tax purposes on the grant thereof. Except as provided below with respect to the
alternative minimum tax, there is no tax upon exercise of an Incentive Option.
If no disposition of shares acquired upon exercise of the Incentive Option is
made by the option holder within two years from the date of the grant of the
Incentive Option or within one year after exercise of the Incentive Option, any
gain realized by the option holder on the subsequent sale of such shares is
treated as a long-term capital gain for federal income tax purposes. If the
shares are sold prior to the expiration of such periods, the difference between
the lesser of the value of the shares at the date of exercise or at the date of
sale and the exercise price of the Incentive Option is treated as compensation
to the employee taxable as ordinary income and the excess gain, if any, is
treated as capital gain (which will be long-term capital gain if the shares are
held for more than one year).
The excess of the fair market value of the underlying shares over the
option price at the time of exercise of an Incentive Option will constitute an
item of tax preference for purposes of the alternative minimum tax. Taxpayers
who incur the alternative minimum tax are allowed a credit which may be carried
forward indefinitely to be used as a credit against the regular tax liability in
a later year; however, the minimum tax credit can not reduce the regular tax
below the alternative minimum tax for that carryover year.
In connection with the sale of the shares covered by Incentive Options, the
Company is allowed a deduction for tax purposes only to the extent, and at the
time, the option holder receives ordinary income (for example, by reason of the
sale of shares by the holder of an Incentive Option within two years of the date
of the granting of the Incentive Option or one year after the exercise of the
Incentive Option), subject to certain limitations on the deductibility of
compensation paid to executives.
New Plan Benefits
Except for the automatic non-discretionary formula stock option grants to
non-employee Directors described above, options under the 1997 Plan are granted
by the Board of Directors on a discretionary basis. Therefore, except as set
forth below, the Company is unable to determine the dollar value and number of
options which will be received by or allocated to, or which would have, had the
1997 Plan been in effect during 1996, been received by or allocated to, (i) any
of the Company's executive officers, (ii) the Company's current executive
officers, as a group, and (iii) the Company's employees who are not executive
officers, as a group, as a result of the adoption of the 1997 Plan.
The following table sets forth information concerning the benefit that will
be received by or allocated to the persons specified, assuming that Proposal No.
3 is approved:
<TABLE>
<CAPTION>
NUMBER OF
DOLLAR SECURITIES UNDERLYING
NAME AND POSITION VALUE($) OPTIONS GRANTED
--------------------------------------------------------- -------- ---------------------
<S> <C> <C>
Directors who are not executive officers (as a group).... (1) 30,000(2)(3)
</TABLE>
- ---------------
(1) The dollar value of the options to be granted is not determinable at this
time. Each such option will be granted at an exercise price equal to the
fair market value of the Common Stock on the date of option grant
(determined in accordance with the terms of the 1997 Plan).
14
<PAGE> 19
(2) Represents shares of Common Stock issuable pursuant to Nonqualified Options
to be granted to Messrs. Georgiev, Glaser and Glosson pursuant to automatic
formula stock option grants under the 1997 Stock Option Plan, as amended, at
the time of the Annual Meeting.
(3) Does not include shares of Common Stock issuable pursuant to Nonqualified
Options that would automatically be granted to non-employee Directors under
the 1997 Plan, as amended, in connection with future annual meetings or
special meetings in lieu thereof.
Amendment of 1997 Plan
The Company's Board of Directors may amend or terminate the 1997 Plan at
any time and from time to time, except that (i) the class of persons eligible to
receive options may not be changed, nor the aggregate number of shares issuable
thereunder increased, (other than pursuant to certain changes in the Company's
capital structure) without the approval of the stockholders of the Company, and
(ii) the provisions of the 1997 Plan relating to formula stock option grants to
non-employee Directors may not be amended more than once every six months, other
than to comport with changes in the Code, the Employee Retirement Income
Security Act, or the rules thereunder. The Board is expressly authorized to
amend the 1997 Plan, at any time and from time to time, to conform it to the
provisions of Rule 16b-3 under the Exchange Act, as that rule may be amended
from time to time.
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 21, 1997, by (i) each person
or entity known to the Company to own beneficially five percent or more of the
Company's Common Stock, (ii) each of the Company's directors, (iii) the
Company's principal executive officer and each of the other Named Executive
Officers, and (iv) all directors and executive officers of the Company as a
group. Except as otherwise noted, each beneficial owner has sole voting and
investment power with respect to the shares shown.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY OWNED(2)
--------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER(1) NUMBER PERCENT(3)
------------------------------------------------------------ --------- ----------
<S> <C> <C>
Steven Georgiev............................................. 521,623(4) 11.9%
Paul W. Pendorf............................................. 556,602(5) 12.0
Robert V. Glaser............................................ 16,364(6) *
Buster C. Glosson........................................... 35,000(7) *
Palomar Medical Technologies, Inc........................... 463,664 10.6
66 Cherry Hill Drive, Beverly, MA 01915
William A. Timmerman........................................ 189,329(8) 4.0
All directors and executive officers as group (7 persons)... 1,301,543(9) 29.3
</TABLE>
- ---------------
* Less than one percent.
(1) With the exception of Palomar Medical Technologies, Inc., each person's
address is in care of The American Materials & Technologies Corporation,
5915 Rodeo Road, Los Angeles, California 90016.
(2) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes table.
(3) Percentage ownership is based on 4,393,554 shares of Common Stock
outstanding.
(4) Does not include shares owned by Palomar. Mr. Georgiev is Chairman and Chief
Executive Officer of Palomar.
(5) Includes 28,979 shares of Common Stock issuable pursuant to an option
exercisable within 60 days of the date hereof.
(6) Includes 5,000 shares of Common Stock issuable pursuant to an option
exercisable within 60 days of the date hereof.
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<PAGE> 20
(7) Represents 35,000 shares of Common Stock which may be purchased pursuant to
options exercisable within 60 days of the date hereof.
(8) Includes 173,874 shares of Common Stock owned by the Timmerman Family Trust
of September 1, 1996, of which Mr. Timmerman is a trustee, and 15,455 shares
of Common Stock issuable pursuant to an option exercisable within 60 days of
the date hereof.
(9) Includes 63,684 shares of Common Stock issuable pursuant to options
exercisable within 60 days of the date hereof.
CERTAIN TRANSACTIONS
The Company's policy, as adopted by its Board of Directors on April 1,
1996, regarding related party transactions is that any transaction between the
Company and any of its officers, directors, 5% stockholders, or their affiliates
will be entered into only if such transaction is approved by a majority of the
directors disinterested in such transaction, is on terms no less favorable to
the Company than could be obtained from unaffiliated parties, and is reasonably
expected to benefit the Company. The Company believes that all related party
transactions entered into by the Company prior to April 1, 1996 would have met
the criteria set forth in this policy if the policy had then been in effect.
On December 19, 1995, Palomar loaned to the Company a total of $3,150,000,
and the Company issued to Palomar two promissory notes, one in the principal
amount of $3,000,000 and one in the principal amount of $150,000 (the "Loans").
The proceeds of the Loans were used to pay part of the purchase price of the
shares of CCC. The Loans were secured by a pledge of the shares of the Common
Stock owned by Messrs. Georgiev, Pendorf, and Timmerman and Pierrette Timmerman,
Mr. Timmerman's wife. The Loans were paid in full with a portion of the proceeds
of the Company's initial public offering.
On July 30, 1996, the Company entered into a consulting contract with Mr.
Steven Georgiev, its Chairman. Pursuant to this contract, the Company paid a
total of $70,000 to Mr. Georgiev in 1996. The Company entered into another
consulting agreement with Mr. Georgiev on March 7, 1997. Pursuant to this
contract, the Company will pay a total of $70,000 to Mr. Georgiev in 1997.
On July 1, 1996, the Company entered into a consulting agreement with
MapleWood, Inc. ("MapleWood"). Robert V. Glaser, a director of the Company, is
President of MapleWood. The agreement, which is for the term of Mr. Glaser's
tenure as a director of the Company unless earlier terminated, provides that the
Company will pay MapleWood $5,000 quarterly for consulting services.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater-than-10% stockholders are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
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Based solely upon review of Forms 3 and 4 and amendments thereto furnished
to the Company during fiscal 1996 and Forms 5 and amendments thereto furnished
to the Company with respect to fiscal 1996, or written representations that Form
5 was not required, the Company believes that all Section 16(a) filing
requirements applicable to its officers, directors and greater-than-10%
stockholders were fulfilled in a timely manner, except that initial reports of
beneficial ownership of securities on Form 3, filed in connection with the
Company's initial public offering for Paul W. Pendorf, William A. Timmerman,
Steven Georgiev, Philip D. Cunningham, Leslie Jay Cohen and Palomar Medical
Technologies, Inc., were filed approximately one week late, and reports on Form
4 for Messrs. Pendorf and Cohen were filed late.
INFORMATION CONCERNING AUDITORS
The accounting firm of Feldman Radin & Co., P.C., which has served as the
Company's principal independent accountants continuously since the Company's
formation, was selected by the Board to continue in that capacity for fiscal
1997. A representative of Feldman Radin & Co., P.C. is expected to be present at
the Annual Meeting. This representative will have the opportunity to make a
statement if such representative desires to do so and will be available to
respond to appropriate questions presented at the Annual Meeting.
SOLICITATION
No compensation will be paid by any person in connection with the
solicitation of proxies. Brokers, banks and other nominees will be reimbursed
for their out-of-pocket expenses and other reasonable clerical expenses incurred
in obtaining instructions from beneficial owners of the Common Stock. In
addition to the solicitation by mail, special solicitation of proxies may, in
certain instances, be made personally or by telephone by directors, officers and
certain employees of the Company. It is expected that the expense of such
special solicitation will be nominal. All expenses incurred in connection with
this solicitation will be borne by the Company.
STOCKHOLDER PROPOSALS
Stockholder proposals for inclusion in the proxy materials related to the
1998 Annual Meeting of Stockholders or special meeting in lieu thereof must be
received by the Company at its executive offices no later than January 2, 1998.
MISCELLANEOUS
The Board does not intend to present to the Annual Meeting any business
other than the proposals listed herein, and the Board was not aware, a
reasonable time before mailing this Proxy Statement to stockholders, of any
other business which may be properly presented for action at the Annual Meeting.
If any other business should come before the Annual Meeting, the persons present
will have discretionary authority to vote the shares they own or represent by
proxy in accordance with their judgment.
AVAILABLE INFORMATION
Stockholders of record on April 25, 1997 will receive a Proxy Statement and
the Company's 1996 Annual Report on Form 10-KSB (excluding exhibits), which
contains detailed financial information concerning the Company. The Company will
mail, without charge, a copy of the Company's Annual Report on Form 10-KSB
(excluding exhibits) to any stockholder solicited hereby who requests it in
writing. Please submit any such written request to Christina Carrabino, Investor
Relations, The American Materials & Technologies Corporation, 5915 Rodeo Road,
Los Angeles, CA 90016.
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EXHIBIT A
AMENDMENTS TO RESTATED CERTIFICATE OF INCORPORATION
STAGGERED BOARD OF DIRECTORS
Proposed Amendment: The Restated Certificate of Incorporation of the
Corporation is hereby amended by deleting Article FIFTH thereof in its entirety
and substituting therefor the following new Article FIFTH:
"FIFTH. (a) (1) The business and affairs of the Corporation shall be
managed under the direction of a Board of Directors, consisting of not less
than three nor more than twelve Directors, the number of which shall be
determined from time to time by resolution adopted by affirmative of a
majority of Directors then in office. The Directors shall be classified
with respect to the time for which they shall severally hold office by
dividing them into three classes, Class I, Class II and Class III, each
consisting as nearly as possible of one-third of the whole number of the
Board of Directors. All Directors shall hold office until their successors
are chosen and qualified, or until their earlier death, resignation,
disqualification or removal. At the first election of Directors following
adoption of this provision by the stockholders of the Corporation, Class I
Directors shall be elected for a term of one year; Class II Directors shall
be elected for a term of two years; and Class III Directors shall be
elected for a term of three years; and at each annual election thereafter,
successors to the Directors whose terms shall expire that year shall be
elected to hold office for a term of three years, so that the term of
office of one class of Directors shall expire in each year. Any vacancy on
the Board of Directors that results from an increase in the number of
Directors may be filled by the affirmative vote of a majority of the
Directors then in office, and any other vacancy on the Board of Directors
may be filled by the affirmative vote of a majority of the Directors then
in office, although less than a quorum, or by a sole remaining Director.
Any Director elected to fill a vacancy not resulting from an increase in
the number of Directors shall serve for a term equivalent to the remaining
unserved portion of the term of such newly elected Director's predecessor.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of preferred stock issued by the Corporation shall have
the right, voting separately by class or series, to elect Directors at an
annual or special meeting of stockholders, the election, term of office,
filling of vacancies and other features of such directorships shall be
governed by the terms of the Certificate of Incorporation applicable
thereto, and such Directors shall not be divided into classes pursuant to
this Article FIFTH (a)(1) unless expressly provided by such terms.
(2) No amendment to the Certificate of Incorporation of the
Corporation shall amend, alter, or repeal any of the provisions of this
Article FIFTH (a) unless the amendment effecting such amendment, alteration
or repeal shall receive the affirmative vote of or consent of the holders
of seventy-five percent (75%) of all shares of stock of the Corporation
entitled to vote at a meeting of stockholders held for the purpose of
voting on such amendment, considered for the purposes of this Article FIFTH
as one class; provided that this paragraph FIFTH (a)(2) shall not apply to,
and such seventy-five percent (75%) vote shall not be required for, any
such amendment recommended to the stockholders pursuant to a resolution of
the Board of Directors approved by two-thirds of the Continuing Directors.
For purposes of this paragraph FIFTH (a)(2), a "Continuing Director" shall
mean any Director of the Corporation who is or becomes a Director on the
date that this Article FIFTH is first adopted by the Corporation's
stockholders or any Director elected by a majority of the Continuing
Directors then in office to succeed any Director or to fill any vacancy on
the Board of Directors whether resulting from an increase in the number of
Directors or otherwise.
(b) In furtherance and not in limitation of powers conferred by
statute, it is further provided that:
(1) election of Directors need not be by written ballot unless so
provided in the By-laws of the Corporation; and
(2) the Board of Directors is expressly authorized to adopt, amend
or repeal the By-laws of the Corporation."
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ELIMINATION OF ACTION BY STOCKHOLDER CONSENT
Proposed Amendment: The Restated Certificate of Incorporation of the
Corporation is hereby amended by (a) amending Article Seventh thereof by
deleting the word "SEVENTH" and inserting in its place the word "EIGHTH," and
(b) by inserting, after Article Sixth, the following new Article:
"SEVENTH: (a) No action shall be taken by the stockholders of the
Corporation except at an annual or special meeting of the stockholders of
the Corporation."
(b) No amendment to the Certificate of Incorporation of the
Corporation shall amend, alter, or repeal any of the provisions of this
Article SEVENTH unless the amendment effecting such amendment, alteration
or repeal shall receive the affirmative vote of or consent of the holders
of seventy-five percent (75%) of all shares of stock of the Corporation
entitled to vote at a meeting of stockholders held for the purpose of
voting on such amendment, considered for the purposes of this Article
SEVENTH as one class; provided that this paragraph SEVENTH (b) shall not
apply to, and such seventy-five percent (75%) vote shall not be required
for, any such amendment recommended to the stockholders pursuant to a
resolution of the Board of Directors approved by two-thirds of the
Continuing Directors. For purposes of this paragraph SEVENTH (b), a
"Continuing Director" shall mean any Director of the Corporation who is or
becomes a Director on the date that this Article SEVENTH is first adopted
by the Corporation's stockholders or any Director elected by a majority of
the Continuing Directors then in office to succeed any Director or to fill
any vacancy on the Board of Directors whether resulting from an increase in
the number of Directors or otherwise."
TEXT OF PROPOSED CONFORMING BY-LAW AMENDMENTS
The Bylaws are hereby amended by:
- - deleting Section 3.14 thereof in its entirety;
- - deleting Section 4.1 thereof in its entirety and substituting therefor the
following new Section 4.1:
4.1 Number. The board shall consist of not less than three nor more than
twelve directors, the number of which shall be determined from time to time
by resolution adopted by affirmative of a majority of directors then in
office. Subject to the foregoing and to the provisions of the certificate
of incorporation, the number of directors may be increased or decreased at
any time or from time to time by vote of a majority of directors then in
office, except that such decrease by vote of directors shall only be made
to eliminate vacancies existing by reason of the death, resignation or
removal of one or more directors. The directors shall be elected at the
annual meeting of stockholders except as provided in Section 4.5 of these
by-laws. Directors need not be stockholders.
- - deleting Section 4.2 thereof in its entirety and substituting therefor the
following new Section 4.2:
4.2 Tenure. The directors shall be classified with respect to the time for
which they shall severally hold office by dividing them into three classes,
each consisting of one-third of the whole number of the board of directors,
and all directors shall hold office until their successors are chosen and
qualified, or until their earlier death, resignation, or removal. At the
first meeting held for election of the board of directors pursuant to such
classification, directors of the first class shall be elected for a term of
one year; directors of the second class shall be elected for a term of two
years; directors of the third class shall be elected for a term of three
years; and at each annual election thereafter, successors to the directors
whose terms shall expire that year shall be elected to hold office for a
term of three years, so that the term of office of one class of directors
shall expire in each year.
- - deleting Section 4.17 thereof in its entirety and substituting therefor the
following new Section 4.17:
4.17 Resignation or Removal of Directors. Any director or the entire board
of directors may be removed for "Cause," as hereinafter defined, by the
holders of a majority of the stock issued and outstanding and entitled to
vote at an election of directors; provided, however, that the directors
elected by a particular class of stockholders may be removed only by the
vote of the holders of a majority of the shares of such
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class. Any director may resign at any time by delivering a resignation in
writing to the principal executive officer or the secretary or to a meeting
of the board of directors. Such resignation shall be effective upon receipt
unless specified to be effective at some other time; and without in either
case the necessity of its being accepted unless the resignation shall so
state. No director resigning and (except where a right to receive
compensation shall be expressly provided in a duly authorized written
agreement with the Corporation) no director removed shall have any right to
receive compensation as such director for any period following the
director's resignation or removal, or any right to damages on account of
such removal, whether the director's compensation be by the month or by the
year or otherwise; unless in the case of a resignation, the directors, or
in the case of removal, the body acting on the removal, shall in their or
its discretion provide for compensation. For purposes of this Section 4.17,
"Cause" means:
(A) willful and continued material failure, refusal or inability to
perform one's duties to the Corporation or the willful engaging in gross
misconduct materially and demonstrably damaging to the Corporation; or
(B) conviction for any crime involving moral turpitude or any other
illegal act that materially and adversely reflects upon the business,
affairs or reputation of the Company or on one's ability to perform
one's duties to the Corporation.
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APPENDIX A
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
1997 STOCK OPTION PLAN
SECTION 1. PURPOSE
This 1997 Stock Option Plan (the "Plan") of The American Materials &
Technologies Corporation, a Delaware corporation (the "Company"), is designed to
provide additional incentive to executives and other key employees of the
Company and its subsidiaries and for certain other individuals providing
services to or acting as directors of the Company and its subsidiaries. The
Company intends that this purpose will be effected by the granting of incentive
stock options ("Incentive Stock Options") as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and nonqualified stock
options ("Nonqualified Options") under the Plan which afford such executives,
key employees, directors and other eligible individuals an opportunity to
acquire or increase their proprietary interest in the Company through the
acquisition of shares of its Common Stock. The Company intends that Incentive
Stock Options issued under the Plan will qualify as "incentive stock options" as
defined in Section 422 of the Code and the terms of the Plan shall be
interpreted in accordance with this intention, provided, however, that no option
granted hereunder will qualify as an "incentive stock option" unless the Plan is
approved by the stockholders of the Company within twelve months prior to or
following the adoption of the Plan by the Board. The term "subsidiary" shall
have the meaning set forth in Section 424 of the Code.
SECTION 2. ADMINISTRATION
2.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
Board of Directors.
2.2 POWERS OF THE BOARD. Subject to the terms and conditions of the Plan,
the Board shall have the power:
(a) To determine from time to time the persons eligible to receive
options and the options to be granted to such persons under the Plan and to
prescribe the terms, conditions, restrictions, if any, and provisions
(which need not be identical) of each option granted under the Plan to such
persons;
(b) To construe and interpret the Plan and options granted thereunder
and to establish, amend, and revoke rules and regulations for
administration of the Plan. In this connection, the Board may correct any
defect or supply any omission, or reconcile any inconsistency in the Plan,
or in any option agreement, in the manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective. All decisions and
determinations by the Board in the exercise of this power shall be final
and binding upon the Company and optionees;
(c) To make, in its sole discretion, changes to any outstanding option
granted under the Plan, including: (i) to reduce the exercise price, (ii)
to accelerate the vesting schedule or (iii) to extend the expiration date;
and
(d) Generally, to exercise such powers and to perform such acts as are
deemed necessary or expedient to promote the best interests of the Company
with respect to the Plan.
SECTION 3. STOCK
3.1 STOCK TO BE ISSUED. The stock subject to the options granted under
the Plan shall be shares of the Company's authorized but unissued Common Stock,
$0.01 par value (the "Common Stock"), or shares of the Company's Common Stock
held in treasury. The total number of shares that may be issued pursuant to
options granted under the Plan shall not exceed an aggregate of 350,000 shares
of Common Stock; provided, however, that the class and aggregate number of
shares which may be subject to options granted under the Plan shall be subject
to adjustment as provided in Section 8 hereof.
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3.2 EXPIRATION, CANCELLATION OR TERMINATION OF OPTION. Whenever any
outstanding option under the Plan expires, is cancelled or is otherwise
terminated (other than by exercise), the shares of Common Stock allocable to the
unexercised portion of such option may again be the subject of options under the
Plan.
3.3 LIMITATION ON GRANTS. In no event may any Plan participant be granted
options with respect to more than 100,000 shares of Common Stock under the Plan
in any calendar year. The number of shares of Common Stock issuable pursuant to
an option granted to a Plan participant in a calendar year that is subsequently
forfeited, cancelled or otherwise terminated shall continue to count toward the
foregoing limitation in such calendar year. In addition, if the exercise price
of an option is subsequently reduced, the transaction shall be deemed a
cancellation of the original option and the grant of a new one so that both
transactions shall count toward the maximum shares issuable in the calendar year
of each respective transaction.
SECTION 4. ELIGIBILITY
4.1 PERSONS ELIGIBLE. Incentive Stock Options under the Plan may be
granted only to officers and other employees of the Company or its subsidiaries.
Nonqualified Options may be granted to officers or other employees of the
Company or its subsidiaries, and to members of the Board and consultants or
other persons who render services to the Company (regardless of whether they are
also employees).
4.2 GREATER-THAN-TEN-PERCENT STOCKHOLDERS. Except as may otherwise be
permitted by the Code or other applicable law or regulation, no Incentive Stock
Option shall be granted to an individual who, at the time the option is granted,
owns (including ownership attributed pursuant to Section 424 of the Code) more
than ten percent of the total combined voting power of all classes of stock of
the Company or any subsidiary (a "greater-than-ten-percent stockholder"), unless
such Incentive Stock Option provides that (i) the purchase price per share shall
not be less than one hundred ten percent of the fair market value of the Common
Stock at the time such option is granted, and (ii) that such option shall not be
exercisable to any extent after the expiration of five years from the date it is
granted.
4.3 MAXIMUM AGGREGATE FAIR MARKET VALUE. The aggregate fair market value
(determined at the time the option is granted) of the Common Stock with respect
to which Incentive Stock Options are exercisable for the first time by any
optionee during any calendar year (under the Plan and any other plans of the
Company or its subsidiary for the issuance of incentive stock options) shall not
exceed $100,000 (or such greater amount as may from time to time be permitted
with respect to incentive stock options by the Code or any other applicable law
or regulation).
4.4 OPTION GRANTS TO NON-EMPLOYEE DIRECTORS. As compensation for services
to the Company, each director of the Company who is a "Non-Employee Director,"
as that term is defined in Rule 16b-3(b)(3) under the Exchange Act shall be
automatically granted a Nonqualified Option to purchase 10,000 shares of Common
Stock upon his or her election to the Board initially on or subsequent to the
date on which the Plan is approved by stockholders as set forth in Section 12.
Any director of the Company who is elected to the Board but who is not a
Non-Employee Director at the time of his or her initial election and later
becomes a Non-Employee Director shall be automatically granted an option to
purchase 10,000 shares of Common Stock upon his or her first election to the
Board as a Non-Employee Director. Each such grant (an "Initial Option Grant")
shall become exercisable in its entirety on the first anniversary of the date of
grant and shall expire on the fifth annual anniversary of the date of grant. At
the first meeting of the Board of Directors following each annual meeting of
stockholders, commencing with the first meeting of the Board of Directors
following the Company's annual meeting of stockholders in 1997, each
Non-Employee Director (other than any Non-Employee Director who has received an
Initial Option Grant as a result of election to the Board at such meeting) shall
be automatically granted an additional Nonqualified Option to purchase 10,000
shares of Common Stock of the Company (the "Subsequent Option Grant"). Each
Subsequent Option Grant shall become exercisable in its entirety on the first
anniversary of the date of grant and shall expire on the fifth annual
anniversary of the date of grant. The exercise price per share of Common Stock
of each Nonqualified Option granted pursuant to this Section 4.4 shall be equal
to the fair market value of the Common Stock on
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the date the Nonqualified Option is granted, such fair market value to be
determined in accordance with the provisions of Section 6.3.
The rights of a Non-Employee Director in an Option granted under this
Section 4.4 shall terminate 60 days after such Director ceases to be a Director
of the Company or on the specified expiration date, if earlier; provided,
however, that if the Non-Employee ceases to be a Director for cause, as defined
in Section 5.1, the rights shall terminate immediately on the date on which he
ceases to be a Director.
No Nonqualified Option granted under this Section 4.4 shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution, and such Options shall be exercisable during the optionee's
lifetime only by the optionee. Any Nonqualified Option granted to a Non-Employee
Director and outstanding on the date of his or her death may be exercised by the
legal representative or legatee of the optionee until the expiration of the
stated term of the option.
Nonqualified Options granted under this Section 4.4 may be exercised only
by written notice to the Company specifying the number of shares to be
purchased. Payment of the full purchase may be made by one or more of the
methods specified in Section 7.2. An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of an option and not as
to unexercised options.
The provisions of this Section 4.4 shall apply only to options granted or
to be granted to Non-Employee Directors, and shall not be deemed to modify,
limit or otherwise apply to any other provision of the Plan or to any option
issued under the Plan to a participant who is not a Non-Employee Director of the
Company. To the extent inconsistent with the provisions of any other Section of
the Plan, the provisions of this Section 4.4 shall govern the rights and
obligations of the Company and Non-Employee Directors respecting options granted
or to be granted to Non-Employee Directors.
SECTION 5. TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE
5.1 TERMINATION OF EMPLOYMENT. Except as may be otherwise expressly
provided herein, options shall terminate on the earlier of:
(a) the date of expiration thereof,
(b) the date of termination of the optionee's employment with or
services to the Company by it for cause (as determined by the Company), or
voluntarily by the optionee; or
(c) thirty days after the date of termination of the optionee's
employment with or services to the Company by it without cause;
provided that Nonqualified Options granted to persons who are not employees of
the Company need not, unless the Board determines otherwise, be subject to the
provisions set forth in clauses (b) and (c) above.
An employment relationship between the Company and the optionee shall be
deemed to exist during any period in which the optionee is employed by the
Company or any subsidiary. Whether authorized leave of absence, or absence on
military or government service, shall constitute termination of the employment
relationship between the Company and the optionee shall be determined by the
Board at the time thereof.
As used herein, "cause" shall mean (x) any material breach by the optionee
of any agreement to which the optionee and the Company are both parties, (y) any
act or omission to act by the optionee which may have a material and adverse
effect on the Company's business or on the optionee's ability to perform
services for the Company, including, without limitation, the commission of any
crime (other than ordinary traffic violations), or (z) any material misconduct
or material neglect of duties by the optionee in connection with the business or
affairs of the Company or any affiliate of the Company.
5.2 DEATH OR PERMANENT DISABILITY OF OPTIONEE. In the event of the death
or permanent and total disability of the holder of an option prior to
termination of the optionee's employment with or services to the Company and
before the date of expiration of such option, such option shall terminate on the
earlier of such date of expiration or one year following the date of such death
or disability. After the death of the optionee, his/her executors,
administrators or any person or persons to whom his/her option may be
transferred by will
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or by the laws of descent and distribution, shall have the right, at any time
prior to such termination, to exercise the option to the extent the optionee was
entitled to exercise such option immediately prior to his/her death. An optionee
is permanently and totally disabled if he/she is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to last for a continuous period of not
less than twelve months; permanent and total disability shall be determined in
accordance with Section 22(e)(3) of the Code and the regulations issued
thereunder.
SECTION 6. TERMS OF THE OPTION AGREEMENTS
Each option agreement shall be in writing and shall contain such terms,
conditions, restrictions, if any, and provisions as the Board shall from time to
time deem appropriate. Such provisions or conditions may include without
limitation restrictions on transfer, repurchase rights, or such other provisions
as shall be determined by the Board; provided that such additional provisions
shall not be inconsistent with any other term or condition of the Plan and such
additional provisions shall not cause any Incentive Stock Option granted under
the Plan to fail to qualify as an incentive option within the meaning of Section
422 of the Code. Option agreements need not be identical, but each option
agreement by appropriate language shall include the substance of all of the
following provisions:
6.1 EXPIRATION OF OPTION. Subject to Section 4.4 hereof, notwithstanding
any other provision of the Plan or of any option agreement, each option shall
expire on the date specified in the option agreement, which date shall not, in
the case of an Incentive Stock Option, be later than the tenth anniversary
(fifth anniversary in the case of a greater-than-ten-percent stockholder) of the
date on which the option was granted, or as specified in Section 5 hereof.
6.2 EXERCISE. Subject to Sections 4.4 and 7.3 hereof, each option may be
exercised, so long as it is valid and outstanding, from time to time in part or
as a whole, subject to any limitations with respect to the number of shares for
which the option may be exercised at a particular time and to such other
conditions as the Board in its discretion may specify upon granting the option.
6.3 PURCHASE PRICE. Subject to Section 4.4 hereof, the purchase price per
share under each option shall be determined by the Board at the time the option
is granted; provided, however, that the option price of any Incentive Stock
Option shall not, unless otherwise permitted by the Code or other applicable law
or regulation, be less than the fair market value of the Common Stock on the
date the option is granted (110% of the fair market value in the case of a
greater-than-ten-percent stockholder). For the purpose of the Plan the fair
market value of the Common Stock shall be the closing price per share on the
date of the grant of the option as reported by The Nasdaq Stock Market, Inc.
("Nasdaq"), or, if the Common Stock is not quoted on Nasdaq, as reported by a
nationally recognized stock exchange, or, if the Common Stock is not listed on
such an exchange, the fair market value as determined by the Board.
6.4 TRANSFERABILITY OF OPTIONS. Options shall not be transferable by the
optionee otherwise than by will or under the laws of descent and distribution,
and shall be exercisable, during his or her lifetime, only by him or her.
6.5 RIGHTS OF OPTIONEES. Except as required under any law or regulation
respecting, reporting or disclosure of beneficial ownership of securities, no
optionee shall be deemed for any purpose to be the owner of any shares of Common
Stock subject to any option unless and until the option shall have been
exercised pursuant to the terms thereof, and the Company shall have issued and
delivered the shares to the optionee.
6.6 "LOCKUP" AGREEMENT. The Board may in its discretion specify upon
granting an option that the optionee shall agree for a period of time from the
effective date of any registration of securities of the Company (upon request of
the Company or the underwriters managing any underwritten offering of the
Company's securities), not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any shares issued pursuant
to the exercise of such option, without the prior written consent of the Company
or such underwriters, as the case may be.
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SECTION 7. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
7.1 METHOD OF EXERCISE. Any option granted under the Plan may be
exercised by the optionee by delivering to the Company on any business day a
written notice specifying the number of shares of Common Stock the optionee then
desires to purchase and specifying the address to which the certificates for
such shares are to be mailed (the "Notice"), accompanied by payment for such
shares.
7.2 PAYMENT OF PURCHASE PRICE. Payment for the shares of Common Stock
purchased pursuant to the exercise of an option shall be made by:
(a) cash in an amount, or a check, bank draft or postal or express
money order payable in an amount, equal to the aggregate exercise price for
the number of shares specified in the Notice;
(b) with the consent of the Board, shares of Common Stock of the
Company having a fair market value (as defined for purposes of Section 6.3
hereof) equal to such aggregate exercise price;
(c) with the consent of the Board, a personal recourse note issued by
the optionee to the Company in a principal amount equal to such aggregate
exercise price and with such other terms, including interest rate and
maturity, as the Board may determine in its discretion; provided that the
interest rate borne by such note shall not be less than the lowest
applicable federal rate, as defined in Section 1274(d) of the Code;
(d) with the consent of the Board, such other consideration that is
acceptable to the Board and that has a fair market value, as determined by
the Board, equal to such aggregate exercise price, including any
broker-directed cashless exercise/resale procedure adopted by the Board; or
(e) with the consent of the Board, any combination of the foregoing.
As promptly as practicable after receipt of the Notice and accompanying
payment, the Company shall deliver to the optionee certificates for the
number of shares with respect to which such option has been so exercised,
issued in the optionee's name; provided, however, that such delivery shall
be deemed effected for all purposes when the Company or a stock transfer
agent of the Company shall have deposited such certificates in the United
States mail, addressed to the optionee, at the address specified in the
Notice.
7.3 SPECIAL LIMITS AFFECTING SECTION 16(b) OPTION HOLDERS. Shares
issuable upon exercise of options granted to a person who in the opinion of the
Board may be deemed to be a director or officer of the Company within the
meaning of Section 16(b) of the Exchange Act and the rules and regulations
thereunder shall not be sold or disposed of until after the expiration of six
months following the date of grant.
SECTION 8. CHANGES IN COMPANY'S CAPITAL STRUCTURE
8.1 RIGHTS OF COMPANY. The existence of outstanding options shall not
affect in any way the right or power of the Company or its stockholders to make
or authorize, without limitation, any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of Common
Stock, or any issue of bonds, debentures, preferred or prior preference stock or
other capital stock ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
8.2 RECAPITALIZATION, STOCK SPLITS AND DIVIDENDS. If the Company shall
effect a subdivision or consolidation of shares or other capital readjustment,
the payment of a stock dividend, or other increase or reduction of the number of
shares of the Common Stock outstanding, in any such case without receiving
compensation therefor in money, services or property, then (i) the number,
class, and price per share of shares of stock subject to outstanding options
hereunder shall be appropriately adjusted in such a manner as to entitle an
optionee to receive upon exercise of an option, for the same aggregate cash
consideration, the same total number and class of shares as he or she would have
received as a result of the event requiring the adjustment had he or she
exercised his or her option in full immediately prior to such event; and (ii)
the number and class of shares with respect to which options may be granted
under the Plan, and the number and class of shares set forth in Sections 3.3 and
4.4, shall be adjusted by substituting for the total number of shares of Common
Stock
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then reserved for issuance under the Plan that number and class of shares of
stock that the owner of an equal number of outstanding shares of Common Stock
would own as the result of the event requiring the adjustment.
8.3 MERGER WITHOUT CHANGE OF CONTROL. After a merger of one or more
corporations into the Company, or after a consolidation of the Company and one
or more corporations in which (i) the Company shall be the surviving
corporation, and (ii) the stockholders of the Company immediately prior to such
merger or consolidation own after such merger or consolidation shares
representing at least fifty percent of the voting power of the Company, each
holder of an outstanding option shall, at no additional cost, be entitled upon
exercise of such option to receive in lieu of the number of shares as to which
such option shall then be so exercisable, the number and class of shares of
stock or other securities to which such holder would have been entitled pursuant
to the terms of the agreement of merger or consolidation if, immediately prior
to such merger or consolidation, such holder had been the holder of record of a
number of shares of Common Stock equal to the number of shares for which such
option was exercisable.
8.4 SALE OR MERGER WITH CHANGE OF CONTROL. If the Company is merged into
or consolidated with another corporation under circumstances where the Company
is not the surviving corporation, or if there is a merger or consolidation where
the Company is the surviving corporation but the stockholders of the Company
immediately prior to such merger or consolidation do not own after such merger
or consolidation shares representing at least fifty percent of the voting power
of the Company, or if the Company is liquidated, or sells or otherwise disposes
of substantially all of its assets to another corporation while unexercised
options remain outstanding under the Plan, (i) subject to the provisions of
clause (iii) below, after the effective date of such merger, consolidation,
liquidation, sale or disposition, as the case may be, each holder of an
outstanding option shall be entitled, upon exercise of such option, to receive,
in lieu of shares of Common Stock, shares of such stock or other securities,
cash or property as the holders of shares of Common Stock received pursuant to
the terms of the merger, consolidation, liquidation, sale or disposition; (ii)
the Board may accelerate the time for exercise of all unexercised and unexpired
options to and after a date prior to the effective date of such merger,
consolidation, liquidation, sale or disposition, as the case may be, specified
by the Board; or (iii) all outstanding options may be cancelled by the Board as
of the effective date of any such merger, consolidation, liquidation, sale or
disposition provided that (x) notice of such cancellation shall be given to each
holder of an option and (y) each holder of an option shall have the right to
exercise such option to the extent that the same is then exercisable or, if the
Board shall have accelerated the time for exercise of all unexercised and
unexpired options, in full during the 30-day period preceding the effective date
of such merger, consolidation, liquidation, sale or disposition.
8.5 ADJUSTMENTS TO COMMON STOCK SUBJECT TO OPTIONS. Except as
hereinbefore expressly provided, the issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, for cash
or property, or for labor or services, either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock then subject to
outstanding options.
8.6 MISCELLANEOUS. Adjustments under this Section 8 shall be determined
by the Board, and such determinations shall be conclusive. No fractional shares
of Common Stock shall be issued under the Plan on account of any adjustment
specified above.
SECTION 9. GENERAL RESTRICTIONS
9.1 INVESTMENT REPRESENTATIONS. The Company may require any person to
whom an option is granted, as a condition of exercising such option, to give
written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the option for
his or her own account for investment and not with any present intention of
selling or otherwise distributing the same, and to such other effects as the
Company deems necessary or appropriate in order to comply with federal and
applicable state securities laws.
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9.2 COMPLIANCE WITH SECURITIES LAWS. The Company shall not be required to
sell or issue any shares under any option if the issuance of such shares shall
constitute a violation by the optionee or by the Company of any provisions of
any law or regulation of any governmental authority. In addition, in connection
with the Securities Act of 1933, as now in effect or hereafter amended (the
"Act"), upon exercise of any option, the Company shall not be required to issue
such shares unless the Board has received evidence satisfactory to it to the
effect that the holder of such option will not transfer such shares except
pursuant to a registration statement in effect under such Act or unless an
opinion of counsel satisfactory to the Company has been received by the Company
to the effect that such registration is not required. Any determination in this
connection by the Board shall be final, binding and conclusive. In the event the
shares issuable on exercise of an option are not registered under the Act, the
Company may imprint upon any certificate representing shares so issued the
following legend or any other legend which counsel for the Company considers
necessary or advisable to comply with the Act and with applicable state
securities laws:
The shares of stock represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933.
Such securities may not be sold, transferred, pledged or hypothecated
unless the registration provisions of said Act have been complied with or
unless the Corporation has received an opinion of its counsel that such
registration is not required, except upon such registration or upon receipt
by the Corporation of an opinion of counsel satisfactory to the
Corporation, in form and substance satisfactory to the Corporation, that
registration is not required for such sale or transfer.
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Act; and in the event any shares are
so registered the Company may remove any legend on certificates representing
such shares. The Company shall not be obligated to take any other affirmative
action in order to cause the exercise of an option or the issuance of shares
pursuant thereto to comply with any law or regulation of any governmental
authority.
9.3 EMPLOYMENT OBLIGATION. The granting of any option shall not impose
upon the Company any obligation to employ or continue to employ any optionee;
and the right of the Company to terminate the employment of any officer or other
employee shall not be diminished or affected by reason of the fact that an
option has been granted to him or her.
SECTION 10. WITHHOLDING TAXES
10.1 RIGHTS OF COMPANY. The Company may require an employee exercising a
Nonqualified Option, or disposing of shares of Common Stock acquired pursuant to
the exercise of an Incentive Option in a disqualifying disposition (as defined
in Section 421(b) of the Code), to reimburse the Company for any taxes required
by any government to be withheld or otherwise deducted and paid by the Company
in respect of the issuance or disposition of such shares. In lieu thereof, the
Company shall have the right to withhold the amount of such taxes from any other
sums due or to become due from the Company to the employee upon such terms and
conditions as the Company may prescribe. The Company may, in its discretion,
hold the stock certificate to which such employee is otherwise entitled upon the
exercise of an Option as security for the payment of any such withholding tax
liability, until cash sufficient to pay that liability has been received or
accumulated.
10.2 PAYMENT IN SHARES. An employee may elect to have such tax
withholding obligation satisfied, in whole or in part, by (i) authorizing the
Company to withhold from shares of Common Stock to be issued pursuant to the
exercise of a Nonqualified Option a number of shares with an aggregate fair
market value (as defined in Section 6.3 hereof determined as of the date the
withholding is effected) that would satisfy the withholding amount due with
respect to such exercise, or (ii) transferring to the Company shares of Common
Stock owned by the employee with an aggregate fair market value (as defined in
Section 6.3 hereof determined as of the date the withholding is effected) that
would satisfy the withholding amount due. With respect to any employee who is
subject to Section 16 of the Exchange Act, the following additional restrictions
shall apply:
(a) the election to satisfy tax withholding obligations relating to an
option exercise in the manner permitted by this Section 10.2 shall be made
either (1) during the period beginning on the third business
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day following the date of release of quarterly or annual summary statements
of sales and earnings of the Company and ending on the twelfth business day
following such date, or (2) at least six (6) months prior to the date of
exercise of the option;
(b) such election shall be irrevocable;
(c) such election shall be subject to the consent or approval of the
Board; and
(d) the Common Stock withheld to satisfy tax withholding, if granted
at the discretion of the Board, must pertain to an option which has been
held by the employee for at least six (6) months from the date of grant of
the option.
10.3 NOTICE OF DISQUALIFYING DISPOSITION. Each holder of an Incentive
Option shall agree to notify the Company in writing immediately after making a
disqualifying disposition (as defined in Section 421(b) of the Code) of any
Common Stock purchased upon exercise of the Incentive Option.
SECTION 11. AMENDMENT OR TERMINATION OF PLAN
11.1 AMENDMENT. The Board may terminate the Plan and may amend the Plan
at any time, and from time to time, subject to the limitation that, except as
provided in Section 8 hereof, no amendment shall be effective unless approved by
the stockholders of the Company in accordance with applicable law and
regulations, at an annual or special meeting held within 12 months before or
after the date of adoption of such amendment, in any instance in which such
amendment would: (i) increase the number of shares of Common Stock that may be
issued under, or as to which Options may be granted pursuant to, the Plan; or
(ii) change in substance the provisions of Section 4 hereof relating to
eligibility to participate in the Plan. In addition, the provisions of Section
4.4 shall not be amended more than once every six months, other than to comport
with changes in the Code, the Employee Retirement Income Security Act, or the
rules thereunder. Without limiting the generality of the foregoing, the Board is
expressly authorized to amend the Plan, at any time and from time to time, to
conform it to the provisions of Rule 16b-3 under the Exchange Act, as that Rule
may be amended from time to time.
Except as provided in Section 8 hereof, the rights and obligations under
any option granted before amendment of the Plan or any unexercised portion of
such option shall not be adversely affected by amendment of the Plan or such
option without the consent of the holder of such option.
11.2 TERMINATION. The Plan shall terminate as of the tenth anniversary of
its effective date. The Board may terminate the Plan at any earlier time for any
or no reason. No Option may be granted after the Plan has been terminated. No
Option granted while the Plan is in effect shall be altered or impaired by
termination of the Plan, except upon the consent of the holder of such Option.
The power of the Board to construe and interpret the Plan and the Options
granted prior to the termination of the Plan shall continue after such
termination.
SECTION 12. NONEXCLUSIVITY OF PLAN
Neither the adoption of the Plan by the Board of Directors nor the
submission of the Plan to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including the granting of
stock options otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.
SECTION 13. EFFECTIVE DATE AND DURATION OF PLAN
The Plan shall become effective upon its adoption by the Board, provided
that the stockholders of the Company shall have approved the Plan within twelve
months prior to or following the adoption of the Plan by the Board. Subject to
the foregoing, options may be granted under the Plan at any time subsequent to
its effective date; provided, however, that (a) no such option shall be
exercised or exercisable unless the stockholders of the Company shall have
approved the Plan within twelve months prior to or following the
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<PAGE> 33
adoption of the Plan by the Board, and (b) all options issued prior to the date
of such stockholders' approval shall contain a reference to such condition. No
option may be granted under the Plan after the tenth anniversary of the
effective date. The Plan shall terminate (i) when the total amount of the Common
Stock with respect to which options may be granted shall have been issued upon
the exercise of options or (ii) by action of the Board of Directors pursuant to
Section 11 hereof, whichever shall first occur.
SECTION 14. PROVISIONS OF GENERAL APPLICATION
14.1 SEVERABILITY. The invalidity or unenforceability of any provision of
the Plan shall not affect the validity or enforceability of any other provision
of the Plan, each of which shall remain in full force and effect.
14.2 CONSTRUCTION. The headings in the Plan are included for convenience
only and shall not in any way effect the meaning or interpretation of the Plan.
Any term defined in the singular shall include the plural, and vice versa. The
words "herein," "hereof" and "hereunder" refer to the Plan as a whole and not to
any particular part of the Plan. The word "including" as used herein shall not
be construed so as to exclude any other thing not referred to or described.
14.3 FURTHER ASSURANCES. The Company and any holder of an option shall
from time to time execute and deliver any and all further instruments, documents
and agreements and do such other and further acts and things as may be required
or useful to carry out the intent and purpose of the Plan and such option and to
assure to the Company and such option holder the benefits contemplated by the
Plan; provided, however, that neither the Company nor any option holder shall in
any event be required to take any action inconsistent with the provisions of the
Plan.
14.4 GOVERNING LAW. The Plan and each Option shall be governed by the
laws of the State of Delaware.
* * * * *
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<PAGE> 34
THE AMERICAN MATERIALS & TECHNOLOGIES CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 30, 1997
The undersigned stockholder of The American Materials & Technologies
Corporation (the "Company"), revoking all prior proxies, hereby appoints Paul W.
Pendorf and David A. Broadwin, Esq., or any of them acting singly, proxies, with
full power of substitution, to vote all shares of capital stock of the Company
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
to be held at the offices of the Company, 5915 Rodeo Road, Los Angeles,
California 90016, on Friday, May 30, 1997, beginning at 10:00 a.m., local time,
and at any adjournments thereof, upon matters set forth in the Notice of Annual
Meeting dated April 28, 1997 and the related Proxy Statement, copies of which
have been received by the undersigned, and in their discretion upon any business
that may properly come before the meeting or any adjournments thereof.
Attendance of the undersigned at the meeting or any adjourned session thereof
will not be deemed to revoke this proxy unless the undersigned shall
affirmatively indicate the intention of the undersigned to vote the shares
represented hereby in person prior to the exercise of this proxy.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
AMERICAN MATERIALS & TECHNOLOGIES CORPORATION. A STOCKHOLDER
WISHING TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE
BOARD OF DIRECTORS NEED ONLY SIGN AND DATE THIS PROXY AND RETURN IT
IN THE ENCLOSED ENVELOPE.
(CONTINUED ON REVERSE SIDE)
A [X] Please mark your
votes as in this
example. |_
1. To amend the Company's Restated Certificate of Incorporation to (a) divide
the Board of Directors into three classes, each class consisting as nearly as
possible of one-third of the whole number of the Board of Directors; (b)
require that action required or permitted to be taken by stockholders of the
Company be taken at an annual or special meeting of stockholders and not by
written consent of stockholders; and (c) provide that, unless certain conditions
are met, the proposed amendments may not be amended without a vote of the
holders of seventy-five percent (75%) of outstanding voting shares of stock of
the Corporation entitled to vote at a meeting of stockholders held for the
purpose of voting on such amendment.
/ / FOR / / AGAINST / / ABSTAIN
2. To elect Paul W. Pendorf as a Class I Director for an initial term of one
year; to elect Steven Georgiev as a Class II Director for an initial term of
two years; and to elect Buster C. Glosson and Robert V. Glaser as Class III
Directors of the Company, each for a term of three years; or, in the
alternative, should Proposal No. 1 not be approved, to elect each of the
foregoing nominees as Directors of the Company to serve until the 1998 annual
meeting of stockholders and until their respective successors are elected and
have qualified.
/ / FOR / / AGAINST the nominees / / FOR except vote
withheld from the following
nominee(s):________________
___________________________
3. To adopt the 1997 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
4. To select Feldman Radin & Co., P.C. as the Company's auditors for fiscal
1997.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE> 35
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO
DIRECTION IS GIVEN WITH RESPECT TO ONE OR MORE OF THE PROPOSALS SET FORTH ABOVE,
WILL BE VOTED FOR SUCH PROPOSAL OR PROPOSALS.
DATED: , 1997
Signature of Stockholder(s)
Please promptly date and sign this proxy and mail it in the enclosed envelope to
assure representation of your shares. No postage need be affixed if mailed in
the United States. PLEASE SIGN EXACTLY AS NAME(S) APPEAR ON STOCK CERTIFICATE.
If stockholder is a corporation, please sign full corporate name by president or
other authorized officer and, if a partnership, please sign full partnership
name by an authorized partner or other person.
Mark here if you plan to attend the meeting. / /
