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
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
QC OPTICS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x]No fee required.
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
-----------------------------------------------
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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing:
1) Amount previously paid:
2) Form, Schedule or Registration Statement No:
3) Filing party:
4) Date Filed:
<PAGE>
QC OPTICS, INC.
46 Jonspin Road
Wilmington, Massachusetts 01887
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of QC
OPTICS, INC. (the "Company"), a Delaware corporation, will be held on Friday,
June 9, 2000, at 10:00 a.m. at the Holiday Inn Tewksbury/Andover, Four Highwood
Drive, Tewksbury, Massachusetts 01876 for the following purposes:
1. To elect one (1) member of the Board of Directors for a three year term;
2. To ratify and confirm the selection of Arthur Andersen LLP as
independent auditors for the Company for the fiscal year ending December
31, 2000; and
3. To consider and act upon any matters incidental to the foregoing and any
other matters that may properly come before the Annual Meeting or any
adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on April 17,
2000, as the record date for the determination of stockholders entitled to
notice of and vote at the Annual Meeting and any adjournment or adjournments
thereof.
By Order of the Board of Directors
Marguerite J. Hill
Secretary
Wilmington, Massachusetts
April 24, 2000
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IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND IN PERSON, WE URGE YOU TO SIGN, DATE, AND
RETURN THE ENCLOSED PROXY AT YOUR EARLIEST CONVENIENCE. THIS WILL ENSURE THE
PRESENCE OF A QUORUM AT THE ANNUAL MEETING. PROMPTLY SIGNING, DATING, AND
RETURNING THE PROXY WILL SAVE THE COMPANY THE EXPENSES AND EXTRA WORK OF
ADDITIONAL SOLICITATION. AN ADDRESSED ENVELOPE FOR WHICH NO POSTAGE IS REQUIRED
IF MAILED IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE. SENDING IN YOUR
PROXY WILL NOT PREVENT YOU FROM VOTING YOUR STOCK AT THE ANNUAL MEETING IF YOU
DESIRE TO DO SO, AS YOUR PROXY IS REVOCABLE AT YOUR OPTION.
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<PAGE>
QC OPTICS, INC.
46 Jonspin Road
Wilmington, Massachusetts 01887
PROXY STATEMENT
April 24, 2000
The enclosed proxy is solicited by the Board of Directors of QC Optics,
Inc. (the "Company"), a Delaware corporation, for use at the Annual Meeting of
Stockholders (the "Annual Meeting") to be held on Friday, June 9, 2000 at 10:00
a.m. at the Holiday Inn Tewksbury/Andover, Four Highwood Drive, Tewksbury,
Massachusetts 01876 and at any adjournment or adjournments thereof.
Stockholders of record at the close of business on April 17, 2000 will
be entitled to vote at the Annual Meeting or any adjournment thereof. On that
date, 2,994,888 shares of Common Stock, $.01 par value per share, of the Company
(the "Common Stock") were issued and outstanding and entitled to vote at the
Annual Meeting. Each share of Common Stock entitles the holder to one vote with
respect to all matters submitted to stockholders at the Annual Meeting. There
are no other voting securities of the Company.
The presence of the holders of a majority of the issued and outstanding
shares of Common Stock entitled to vote at the Annual Meeting, either in person
or represented by a properly executed proxy, is necessary to constitute a quorum
for the transaction of business at the Annual Meeting.
The election of directors will be determined by a plurality vote. The
other proposal to be voted upon by the stockholders of the Company requires the
vote of a majority of the Common Stock present and voting at the Annual Meeting
for passage. Votes withheld from any nominee, abstentions and broker non-votes
(which result when a broker holding shares for a beneficial holder has not
received timely voting instructions on certain matters from such beneficial
holder and the broker does not have discretionary voting power on such matters)
are counted as present or represented for purposes of determining the presence
or absence of a quorum at the Annual Meeting. Abstentions and broker non-votes
have no effect on whether a proposal has been approved.
THE DIRECTORS AND OFFICERS OF THE COMPANY AS A GROUP OWN OR MAY BE
DEEMED TO CONTROL APPROXIMATELY 34.5% OF THE OUTSTANDING SHARES OF COMMON STOCK.
EACH OF THE DIRECTORS, THE NOMINATED DIRECTOR AND OFFICERS, HAS INDICATED HIS
INTENT TO VOTE ALL SHARES OF COMMON STOCK OWNED OR CONTROLLED BY HIM IN FAVOR OF
EACH ITEM SET FORTH HEREIN.
Stockholders may vote in person or by proxy. Where the stockholder
specifies a choice on the proxy as to how his or her shares are to be voted on a
particular matter, the shares will be voted accordingly. If no choice is
specified, the shares will be voted FOR the election of the nominee for director
named herein and FOR the ratification of the appointment of Arthur Andersen LLP
as the Company's independent auditors for the fiscal year ending December 31,
2000. Execution of a proxy will not in any way affect a stockholder's right to
attend the Annual Meeting and vote in person. The proxy may be revoked at any
time before it is exercised by written notice to the Secretary prior to the
Annual Meeting, or by giving to the Secretary a duly executed proxy bearing a
later date than the proxy being revoked at any time before such proxy is voted,
or by appearing at the Annual Meeting and voting in person. The shares
represented by all properly executed proxies received in time for the Annual
Meeting will be voted as specified therein.
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The Board of Directors knows of no other matter to be presented at the
Annual Meeting. If any other matter should be presented at the Annual Meeting
upon which a vote may be taken, such shares represented by all proxies received
by the Board of Directors will be voted with respect thereto in accordance with
the judgment of the persons named as attorneys in the proxies. The Board of
Directors knows of no matter to be acted upon at the Annual Meeting that would
give rise to appraisal rights for dissenting stockholders.
An annual report containing audited financial statements for the years
ended December 31, 1999 ("Fiscal 1999") and December 31, 1998 ("Fiscal 1998") is
being mailed herewith to all stockholders entitled to vote at the Annual
Meeting. This Proxy Statement and the accompanying proxy were first mailed to
stockholders on or about April 24, 2000.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and Bylaws, as amended,
provide that the members of the Board of Directors (the "Board") shall be
classified as nearly as possible into three classes, each with as nearly as
possible one-third of the members of the Board. A classified board is designed
to assure continuity and stability in the Board's leadership and policies. Eric
T. Chase is classified as a Class I director and shall serve as a director until
the 2002 Annual Meeting; Allan Berman is classified as a Class II director and
shall serve until the 2001 Annual Meeting; and John M. Tarrh is classified as a
Class III director and is being nominated at this Annual Meeting to serve until
the 2003 Annual Meeting.
The successors to the class of directors whose terms expire at an
Annual Meeting would be elected for a term of office to expire at the third
succeeding Annual Meeting after their election and until their successors have
been duly elected by the stockholders. Directors chosen to fill vacancies on a
classified board shall hold office until the next election of the class for
which directors shall have been chosen, and until their successors are duly
elected by the stockholders. Officers are elected by, and serve at the
discretion of, the Board of Directors. No director, executive officer, or
significant employee is related by blood, marriage or adoption to any other
director, executive officer, or significant employee.
Shares represented by all proxies received by the Board of Directors
and not so marked so as to withhold authority to vote for an individual
director, will be voted (unless such nominee is unable or unwilling to serve)
FOR the election of the nominee named herein. The Board of Directors knows of no
reason why such nominee should be unwilling to serve, but if such should be the
case, proxies will be voted for the election of another nominee designated by
the Board of Directors to fill any such vacancy or for fixing the number of
directors at a lesser number.
A plurality of the shares voted affirmatively or negatively at the
Annual Meeting is required to elect the nominee as a director.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MR. JOHN M. TARRH AS
A DIRECTOR, TO SERVE A THREE YEAR TERM, AND PROXIES SOLICITED BY THE BOARD WILL
BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE
PROXY.
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The following table sets forth the year the nominee director and the
directors of the Company were first elected as a director and the age, positions
and offices currently held by each director:
YEAR
FIRST BECAME
NAME AGE DIRECTOR POSITION
- ---- --- ------------ ----------
Eric T. Chase 41 1986 Chief Executive Officer
President, Chairman of the
Board and Founder
Allan Berman 69 1997 Director
John M. Tarrh* 52 1996 Director
*Nominee for election at this Annual Meeting.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met three times during Fiscal 1999. All of the
Company's directors attended all of the meetings of the Board of Directors in
Fiscal 1999 during the period for which they were directors.
The Board of Directors established both an Audit Committee and
Compensation Committee on June 18, 1996. Messrs. Berman and Tarrh serve as
members of the Audit Committee. The Audit Committee is concerned primarily with
recommending the selection of, and reviewing the effectiveness of, the Company's
independent auditors and reviewing the effectiveness of the Company's accounting
policies and practices, financial reporting and internal controls. The Audit
Committee reviews any transactions which involve a potential conflict of
interest and the scope of independent audit coverages, the fees charged by the
independent auditors, and internal control systems. The Audit Committee met once
in Fiscal 1999.
Messrs. Berman and Tarrh also serve as members of the Compensation
Committee. The Compensation Committee is responsible for setting and
administering the policies which govern annual compensation for the Company's
executives. The Compensation Committee negotiates and proposes to the Board of
Directors compensation arrangements for officers, other key employees, certain
consultants and directors of the Company. Following review and approval by the
Compensation Committee of the compensation policies, all issues pertaining to
executive compensation are submitted to the Board of Directors for approval. The
Compensation Committee met once in Fiscal 1999.
The Company does not have a standing nominating committee or a
committee performing similar functions.
BACKGROUND
The following is a brief summary of the background of the nominee
director and the existing directors of the Company:
ERIC T. CHASE, CHIEF EXECUTIVE OFFICER, PRESIDENT, CHAIRMAN OF THE
BOARD AND FOUNDER. Mr. Chase co-founded the Company in July 1986 and served as
its Vice President of Sales and Marketing until May 1990 when he was elected
President of the Company. In June 1996, Mr. Chase was also elected the Chief
Executive Officer and Chairman of the Board. He was formerly with GCA
Corporation, a semiconductor equipment manufacturer, in the position of Staff
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<PAGE>
Scientist and Technical Marketing Specialist. Mr. Chase has authored a variety
of articles related to inspection equipment. Mr. Chase graduated from the
University of California, Irvine with a Bachelor of Science degree in Physics
and a Bachelor of Arts degree in Economics.
ALLAN BERMAN, DIRECTOR. Mr. Berman has served as a director of the
Company since June 1997. Since March 1972, Mr. Berman has served as President of
Imtec Acculine, Inc. ("Imtec"), a closely-held California company specializing
in semi-conductor wafer-fabrication equipment and materials. Prior to organizing
Imtec, Mr. Berman held positions as President and Director of Castle & Cooke
Computer Systems, Inc., a national data processing service bureau, and General
Manager of the Semiconductor Materials Division of Apogee Chemical, Inc., which
division is a supplier of silicone source materials for the semiconductor
industry. Mr. Berman also served as a consultant to the major military services
in the areas of operations research and systems analysis. Mr. Berman received
his Bachelor of Arts and Bachelor of Science degrees at New York University and
completed his basic MBA course work at the University of California, Los
Angeles.
JOHN M. TARRH, DIRECTOR. Mr. Tarrh has served as a director of the
Company since May 1996. From January 1987 to November 1999, Mr. Tarrh was the
Senior Vice President, Chief Financial Officer and a director of Applied Science
and Technology, Inc. ("ASTeX") a publicly held corporation he co-founded that
manufactures products used in semiconductor manufacturing and other electronics
applications, as well as medical and industrial equipment. In November 1999, Mr.
Tarrh assumed the positions of Vice President and Treasurer of ASTeX. Prior to
January 1987, Mr. Tarrh was the Manager of the Mirror Confinement Division for
the Plasma Fusion Center of Massachusetts Institute of Technology ("MIT") where
he was responsible for financial management, project management and
administration. Mr. Tarrh also serves on the board of BinTel Systems, Inc., an
early-stage, privately-held company that develops automated inventory management
hardware and software systems. Mr. Tarrh earned his Master of Science degree in
Electrical Engineering from MIT and his Bachelor of Science degree in Electrical
Engineering from Virginia Polytechnic Institute and State University.
EXECUTIVE OFFICERS
The executive officers of the Company, their ages and positions held in
the Company are as follows:
Name Age Position
- ---- --- --------
Eric T. Chase 41 President, Chief Executive Officer and
Chairman of the Board of Directors
Abdu Boudour 46 Senior Vice President of Customer Operations
Richard C. Allard 54 Vice President of Finance and Treasurer
Marguerite J. Hill 34 Vice President, General Counsel and Secretary
Jay L. Ormsby 60 Vice President of Technology
Albert E. Tobey 63 Vice President of Operations and
Assistant Secretary
The following is a brief summary of the background of each executive officer of
the Company, other than Mr. Chase, whose background is described above.
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ABDU BOUDOUR, SENIOR VICE PRESIDENT OF CUSTOMER OPERATIONS. Mr. Boudour
has held various positions at the Company, including Senior Physicist in the
Engineering Department from April 1987 to February 1994, where he was
responsible for design and development of the Company's equipment, and Far East
Marketing Manager for which he was based in Japan from February 1994 to April
1995. In July 1995, Mr. Boudour advanced to Director of Engineering and in June
1996, he was elected Vice President of Engineering. In January 1998, Mr. Boudour
was elected Senior Vice President of Customer Operations. Prior to joining the
Company in April 1987, Mr. Boudour was with PTR Optics, an optical component
manufacturer. He earned his Bachelor of Science degree from the University of
Oran, Algeria and has a Master of Science degree in Physics from Northeastern
University.
RICHARD C. ALLARD, VICE PRESIDENT OF FINANCE AND TREASURER. Mr. Allard
has been the Company's Vice President of Finance since July 1998. He was elected
Treasurer in October 1998. Prior to joining the Company, Mr. Allard was the
Executive Vice President and Chief Financial Officer as well as a director of
Semicon, Inc., a discrete semiconductor manufacturer. Mr. Allard had been
employed by Semicon for seventeen years. Mr. Allard is a CPA in Massachusetts
and Connecticut. He received a Bachelor of Science degree in Business
Administration from Boston University.
MARGUERITE J. HILL, VICE PRESIDENT AND GENERAL COUNSEL. Ms. Hill has
been the Company's Vice President and General Counsel since October 1998. From
May 1997 to October 1998, she was an attorney with the law firm of Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C. From September 1991 to May 1997, she was
an attorney with the law firm of O'Connor, Broude & Aronson. While serving at
these firms, Ms. Hill's practice focused on general business representation,
securities law and transactional work with an emphasis on mergers and
acquisitions, public offerings, financing and day-to-day corporate matters. Ms.
Hill earned her Bachelor of Science degree in Business Administration from
Merrimack College and her Juris Doctor degree from New England School of Law.
She is a member of the American, Massachusetts and Boston Bar Associations.
JAY L. ORMSBY, VICE PRESIDENT OF TECHNOLOGY AND FOUNDER. Mr. Ormsby
co-founded the Company in July 1986 with Mr. Chase and served as the Company's
Vice President of Engineering until June 1996. In June 1996, he was elected as
the Company's Vice President of Technology. Mr. Ormsby has over 30 years
experience in design, development and marketing of high technology systems. Mr.
Ormsby was formerly with GCA Corporation, a company that was a semiconductor
equipment manufacturer, in the position of Chief Engineer, Technology Division.
Mr. Ormsby has a Bachelor of Science degree in Mechanical Engineering from the
Cooper Union for the Advancement of Science and Art and a Master of Science
degree in Engineering from Northeastern University.
ALBERT E. TOBEY, VICE PRESIDENT OF OPERATIONS AND ASSISTANT SECRETARY.
Since joining the Company in June 1988, Mr. Tobey has served as its Vice
President of Operations with responsibility for manufacturing operations. Mr.
Tobey has over 30 years experience in engineering as a system designer and in
various management positions both in engineering and manufacturing. Mr. Tobey
served as the Principal Engineer - RTOS Program at AVCO Systems ("AVCO"), a
defense contractor, and worked for over 19 years with AVCO, advancing from an
electronics technician to a senior systems engineer. His primary positions at
AVCO were in telemetry and instrumentation systems. Mr. Tobey received his
Bachelor of Science degree in Electrical Engineering from Northeastern
University.
In July 1996, the Company entered into employment agreements with
Messrs. Chase, Boudour, Ormsby and Tobey. See "Employment Contracts, Termination
of Employment and Change-in-Control Arrangements."
5
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CERTAIN TRANSACTIONS
In February 2000, the Company settled the previously reported
litigation with K. Andrew Bernal. Mr. Bernal's suit against the Company has been
dismissed with prejudice, and the 314,754 shares of Common Stock beneficially
owned by Mr. Bernal were repurchased by the Company and are now classified as
treasury shares. The settlement will not have a material adverse effect on the
Company's financial condition or results of operations.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth, as of April 17, 2000, the ownership of
the Company's Common Stock by (i) each person who is known by the Company to own
of record or beneficially more than 5% of the Company's Common Stock; (ii) each
of the Company's directors; (iii) each executive officer named in the Summary
Compensation Table; and (iv) all directors and executive officers as a group.
Except as otherwise indicated, the stockholders listed in the table have sole
voting and investment powers with respect to the shares indicated.
Name and Address of Number of Shares of Common Percentage
Beneficial Owner (1) Stock Beneficially Owned of Class(2)
- ---------------------- -------------------------- -----------
QC Optics, Inc. Voting Trust (3)........ 1,032,859 34.5%
Kobe Steel USA Holdings, Inc. (4)....... 600,787 20.1%
Eric T. Chase (3) (5)................... 1,041,551 34.7%
Jay L. Ormsby (3) (6)................... 170,039 5.7%
Albert E. Tobey (3) (7)................. 85,841 2.9%
Abdu Boudour (3) (8).................... 85,121 2.8%
Richard C. Allard (9)................... 1,650 *
Allan Berman (10)....................... 11,250 *
John M. Tarrh (11)...................... 15,000 *
All Directors and Executive Officers as a group
(8 people) (3) (5) (6) (7) (8)
(9) (10) (11) (12)................. 1,098,641 35.9%
* Less than 1%
(1) The address for all of these individuals, except for Kobe Steel USA
Holdings, Inc. ("Kobe"), is c/o QC Optics, Inc., 46 Jonspin Road,
Wilmington, Massachusetts 01887. The address for Kobe is 535 Madison
Avenue, New York, New York 10022.
(2) The number of shares of Common Stock issued and outstanding on April
17, 2000 was 2,994,888. Pursuant to the rules of the Securities and
Exchange Commission, shares of Common Stock which an individual or
group has a right to acquire within 60 days from April 17, 2000
pursuant to the exercise of options or warrants are deemed to be
outstanding for the purpose of computing the percentage ownership of
such individual or group, but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person shown
in the table.
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<PAGE>
(3) Based on information provided to the Company by Kobe's agent.
(4) Eric T. Chase is the sole voting trustee of the QC Optics Voting Trust
(the "Voting Trust"). The stockholders participating in the Voting
Trust and the number of their shares subject to the Voting Trust are as
follows: Eric T. Chase - 634,517 shares; Jay L. Ormsby - 162,599
shares; John R. Freeman - 78,581; Albert E. Tobey - 78,581 shares; Abdu
Boudour - 78,581 shares.
(5) Includes 1,032,859 shares subject to the Voting Trust for which Mr.
Chase is the sole voting trustee and includes 100 shares of Common
Stock owned by Mr. Chase. Also includes (i) 100 shares of Common Stock
issuable upon the exercise of a warrant at an exercise price of $7.80
per share, which expires on October 23, 2001; (ii) 5,292 shares of
Common Stock issuable upon the exercise of an option at an exercise
price of $1.313 per share, which expires on June 19, 2006; and (iii)
3,300 shares of Common Stock upon the exercise of an option to purchase
5,000 shares of Common Stock at an exercise price of $1.313 per share,
which expires on January 21, 2008 and vests in three equal installments
over a three year period commencing on January 22, 1999.
(6) Includes (i) 4,140 shares of Common Stock issuable upon the exercise of
an option at an exercise price of $1.313 per share, which expires on
June 19, 2006; and (ii) 3,300 shares of Common Stock issuable upon the
exercise of an option to purchase 5,000 shares of Common Stock at an
exercise price of $1.313 per share, which expires on January 21, 2008
and vests in three equal installments over a three year period
commencing on January 22, 1999.
(7) Includes (i) 3,960 shares of Common Stock issuable upon the exercise of
an option at an exercise price of $1.313 per share, which expires on
June 19, 2006; and (ii) 3,300 shares of Common Stock issuable upon the
exercise of an option to purchase 5,000 shares of Common Stock at an
exercise price of $1.313 per share, which expires on January 21, 2008
and vests in three equal installments over a three year period
commencing on January 22, 1999.
(8) Includes (i) 3,240 shares of Common Stock issuable upon the exercise of
an option at an exercise price of $1.313 per share, which expires on
June 19, 2006; and (ii) 3,300 shares of Common Stock issuable upon the
exercise of an option to purchase 5,000 shares of Common Stock at an
exercise price of $1.313 per share, which expires on January 21, 2008
and vests in three equal installments over a three year period
commencing on January 22, 1999.
(9) Includes 1,650 shares of Common Stock issuable upon the exercise of an
option to purchase 5,000 shares of Common Stock at an exercise price of
$1.313 per share. The option expires on October 15, 2008 and vests in
three equal installments over a three year period commencing on October
16, 1999.
(10) Includes 11,250 shares of Common Stock issuable upon the exercise of an
option to purchase 15,000 shares of the Company's Common Stock at an
exercise price of $3.25 per share. The option expires on June 10, 2007
and vests in sixteen (16) equal installments over a four year period
commencing July 1, 1997.
(11) Includes an option to purchase 15,000 shares of Common Stock at an
exercise price of $3.625 per share. The option expires on June 17, 2006
and vests in 16 equal installments over a four year period commencing
July 1, 1996.
(12) Includes (i) 6,300 shares of Common Stock issuable upon the exercise of
an option at an exercise price of $6.30 per share, which expires on
June 19, 2006; and (ii) 1,650 shares of Common Stock issuable upon the
exercise of an option to purchase 5,000 shares of Common Stock at an
exercise price of $1.313 per share, which expires on October 15, 2008
and vests in three equal installments over a three year period
commencing on October 16, 1999.
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<PAGE>
COMPENSATION OF OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and
long-term compensation for services rendered to the Company for the fiscal years
ended December 31, 1999, 1998 and 1997 ("Fiscal 1997") of those persons who were
at December 31, 1999: (i) the chief executive officer of the Company; and (ii)
the Company's four other most highly paid executive officers (collectively, the
"Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
(a) (b) (c) (d) (g) (i)
Securities All Other
Name and Position Year Salary (1) Bonus Underlying Compensation (2)
----------------- ---- ---------- ----- Options # ----------------
---------
<S> <C> <C> <C> <C> <C>
Eric T. Chase . . . . . . . . . 1999 $153,000 $-0- -0- $7,650
Chief Executive Officer, President 1998 $153,000 $-0- 10,292(3) $7,647
and Chairman of the Board 1997 $147,000 $-0- -0- $7,350
Jay L. Ormsby . . . . . . . . . 1999 $119,500 $-0- -0- $5,975
Vice President of Technology 1998 $119,500 $-0- 9,140(4) $5,972
1997 $114,500 $-0- -0- $5,725
Albert E. Tobey . . . . . . . . 1999 $115,500 $-0- -0- $5,775
Vice President of Operations 1998 $115,500 $-0- 8,960(5) $5,771
1997 $110,300 $-0- -0- $5,515
Abdu Boudour . . . . . . . . . . 1999 $110,000 $-0- -0- $5,500
Senior Vice President of 1998 $110,000 $-0- 8,240(6) $5,494
Customer Operations 1997 $100,000 $-0- -0- $4,729
Richard C. Allard . . . . . . . 1999 $100,000 $-0- -0- $5,000
Vice President of Finance 1998 $48,077(7) $-0- 5,000 $962
</TABLE>
(1) Amounts shown indicate cash compensation earned and received by
executive officers. See "Employment Contracts, Termination of
Employment and Change in Control Arrangements." Executive officers
participate in group health and other benefits generally available to
all employees of the Company.
(2) Amounts shown represent the Company's matching contributions and profit
sharing contributions made under its 401(k) plan on behalf of each
named executive officer.
(3) Includes an option to purchase 5,292 shares of Common Stock granted in
June 1996. This option was subsequently repriced during 1998.
(4) Includes an option to purchase 4,140 shares of Common Stock granted in
June 1996. This option was subsequently repriced during 1998.
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<PAGE>
(5) Includes an option to purchase 3,960 shares of Common Stock granted in
June 1996. This option was subsequently repriced during 1998.
(6) Includes an option to purchase 3,240 shares of Common Stock granted in
June 1996. This option was subsequently repriced during 1998.
(7) Mr. Allard commenced employment with the Company on July 6, 1998.
The following table sets forth the value of the Named Executive Officers'
outstanding stock options held as of the end of Fiscal 1999. None of the Named
Executive Officers exercised any stock options during Fiscal 1999.
FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Unexercised
Options at Fiscal
Year-End (#)(1) (2) (3)
---------------------------------
Exercisable Unexercisable
----------- -------------
Eric T. Chase. . . . . . . . . . . . . . 5,292 5,000
Jay L. Ormsby. . . . . . . . . . . . . 4,140 5,000
Albert E. Tobey. . . . . . . . . . . . 3,960 5,000
Abdu Boudour . . . . . . . . . . . . 3,240 5,000
Richard C. Allard . . . . . . . . . . 1,650 3,350
- ----------------------
(1) See "Summary Compensation Table."
(2) In-the-Money options are those options for which the fair market value
of the underlying Common Stock is greater than the exercise price of the
option.
(3) The value of the unexercised options is determined by multiplying the
number of options held by the difference in the fair market value of the
Common Stock underlying the options at the end of Fiscal 1999 (as
determined by the closing price as reported by AMEX, which was $1.0625
per share on December 31, 1999) and the exercise price of the options
granted. Since the fair market value of the Common Stock at the end of
Fiscal 1999 was less than the exercise price of all of the options
reported in this table, none of the options listed in this table are
In-The-Money at the end of Fiscal 1999.
COMPENSATION OF DIRECTORS
During Fiscal 1999, each of the Company's non-management and
non-affiliated directors, Messrs. Berman and Tarrh, received a fee of $1,000 per
meeting plus out-of-pocket expenses. Messrs. Berman and Tarrh each received
$3,000 in Fiscal 1999. In February 2000, the fee was increased to $2,000 per
meeting. Mr. Tarrh received an option under the Company's 1996 Formula Stock
Option Plan (the "Formula Plan") to purchase 15,000 shares of the Company's
Common Stock at an exercise price of $3.625 per share. These options expire on
June 17, 2006 and are fully vested. Pursuant to the terms of the Formula Plan,
Mr. Tarrh will be granted another option to purchase 15,000 shares of the
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Company's Common Stock following the Annual Meeting. This option will vest in 16
equal installments over a period of four years. Mr. Berman also received an
option under the Company's 1996 Formula Stock Option Plan to purchase 15,000
shares of the Company's Common Stock at an exercise price of $3.25 per share.
These options expire on June 10, 2007 and vest in 16 equal installments over a
period of four years commencing July 1, 1997.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Effective as of July 1, 1996, the Company entered into employment and
non-competition agreements (the "Agreements") with each of Eric T. Chase, Jay L.
Ormsby, Albert E. Tobey and Abdu Boudour. Eric T. Chase's and Jay L. Ormsby's
Agreements currently provide for annual base salaries of $153,000 and $119,500,
respectively, and expire on June 30, 2000. Albert E. Tobey's and Abdu Boudour's
Agreements currently provide for annual base salaries of $115,500 and $110,000,
respectively, and expire on December 31, 2000. The Agreements provide for
successive one-year renewals after the initial term. The Agreements also provide
for vacation, insurance, participation in the Company's 401(k) plan, and certain
other benefits as may be determined by the Compensation Committee or the
Company's Board of Directors. Each individual is entitled to receive benefits
offered to the Company's employees generally. Each individual is also entitled
to receive severance in the event his employment is terminated by the Company
without cause (the "Severance Benefits"). The Severance Benefits are equal to
the individual's current annual base salary in Eric T. Chase's and Jay L.
Ormsby's Agreements and six (6) months of the individual's current annual base
salary in Albert E. Tobey's and Abdu Boudour's Agreements.
In the event of a Change in Control in the Company, each individual
will receive severance payments as provided in the Agreements. A Change in
Control is defined generally as: the acquisition by an individual, entity or
group of beneficial ownership of 25% or more of the outstanding shares of Common
Stock; unapproved changes in the Board of Directors; tender offers to acquire
any of the Common Stock; certain reorganizations, mergers or consolidations; a
complete or substantial liquidation or dissolution of the Company; or the sale
or disposition of all or substantially all of the assets of the Company.
In the event of a Change in Control during the term of an Agreement or
any renewal or extension thereof and provided the individual remains employed by
the Company for a period of twelve months from the date of the Change in
Control, the individual will receive, at the one-year anniversary of the Change
in Control, a supplemental amount in a lump sum, irrespective of whether he
thereafter actually terminates employment with the Company. The lump sum is
equal to the individual's annual Base Salary immediately preceding the Change in
Control in Eric T. Chase's and Jay L. Ormsby's Agreements and six (6) months of
the individual's annual Base Salary immediately preceding the Change in Control
in Albert E. Tobey's and Abdu Boudour's Agreements. In the event of the actual
termination of an individual's employment contemporaneous with or following a
Change in Control, except (i) because of the individual's death, (ii) by the
Company for cause or disability (as defined in the employment agreement), or
(iii) by the individual other than for good reason (as defined in the employment
agreement) the individual shall be entitled to receive an amount equal to 299%
of the individual's annual Base Salary immediately preceding the Change in
Control in Eric T. Chase's and Jay L. Ormsby's Agreements and 150% of the
individual's annual Base Salary immediately preceding the Change in Control in
Albert E. Tobey's and Abdu Boudour's Agreements. Certain additional provisions
also apply.
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Each Agreement also contains non-competition provisions for a period of
two (2) years following termination, a confidentiality provision and an
ownership provision in the Company's favor for techniques, discoveries and
inventions arising during the term of employment.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) ("Section 16(a)") of the Securities and Exchange Act of
1934, as amended (the "Exchange Act"), requires executive officers and
directors, and persons who beneficially own more than ten percent (10%) of the
Company's Common Stock, to file initial reports of ownership on Form 3 and
reports of changes in ownership on Form 4 or Form 5 with the Securities and
Exchange Commission (the "SEC") and any national securities exchange on which
the Company's securities are registered. Executive officers, directors and
greater than ten percent (10%) beneficial owners are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than ten percent (10%) beneficial
owners during Fiscal 1999 were complied with.
PROPOSAL NO. 2
ACCOUNTING MATTERS AND RATIFICATION OF AUDITORS
The persons named in the enclosed proxy will vote to ratify the
selection of Arthur Andersen LLP as independent auditors for the fiscal year
ending December 31, 2000. The Board proposes that the stockholders ratify this
appointment, although such ratification is not required under Delaware law or
the Company's Certificate of Incorporation or Bylaws, each as amended. A
representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting of stockholders, and will have the opportunity to make a statement and
answer questions from stockholders if he or she so desires.
The affirmative vote of a majority of the shares present or represented
and entitled to vote at the Annual Meeting is required to ratify the appointment
of the independent auditors.
In the event that the ratification of the appointment of Arthur
Andersen LLP as the independent auditors for the Company is not obtained at the
Annual Meeting, the Board of Directors will reconsider its appointment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS, AND PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS
INDICATED OTHERWISE ON THE PROXY.
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VOTING AT ANNUAL MEETING
The Board of Directors has fixed Monday, April 17, 2000, as the record
date for the determination of stockholders entitled to vote at this Annual
Meeting. At the close of business on that date, there were outstanding and
entitled to vote 2,994,888 shares of Common Stock.
SOLICITATION OF PROXIES
The cost of solicitation of proxies will be borne by the Company. In
addition to the solicitation of proxies by mail, officers and employees of the
Company may solicit in person or by telephone. The Company may reimburse brokers
or persons holding stock in their names, or in the names of their nominees, for
their expenses in sending proxies and proxy material to beneficial owners.
Solicitation of proxies by mail may be supplemented by telephone, telegram,
telex and personal solicitation by the directors, officers or employees of the
Company. No additional compensation will be paid for such solicitation.
REVOCATION OF PROXY
Subject to the terms and conditions set forth herein, all proxies
received by the Company will be effective, notwithstanding any transfer of the
shares to which such proxies relate, unless prior to the Annual Meeting the
Company receives a written notice of revocation signed by the person who, as of
the record date, was the registered holder of such shares. The Notice of
Revocation must indicate the certificate number or numbers of the shares to
which such revocation relates and the aggregate number of shares represented by
such certificate(s).
STOCKHOLDER PROPOSALS
In order to be included in proxy material for the 2001 Annual Meeting,
tentatively scheduled for June 8, 2001, stockholders' proposed resolutions must
be received by the Company on or before December 28, 2000. To be considered for
presentation at the 2001 Annual Meeting, although not included in the proxy
statement, proposals must be received no earlier than March 13, 2001 and no
later than April 11, 2001. The Company suggests that proponents submit their
proposals by certified mail, return receipt requested, addressed to the
Secretary of the Company.
ANNUAL REPORT ON FORM 10-KSB
THE COMPANY IS PROVIDING TO EACH STOCKHOLDER, TOGETHER WITH THIS PROXY
STATEMENT WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB
(OTHER THAN EXHIBITS THERETO), INCLUDING THE FINANCIAL STATEMENTS FOR THE
COMPANY'S MOST RECENT FISCAL YEAR ENDED DECEMBER 31, 1999.
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MISCELLANEOUS
Management does not know of any other matters that may come before this
Annual Meeting. However, if any other matters are properly presented to the
Annual Meeting, it is the intention of the persons named in the accompanying
proxy to vote, or otherwise act, in accordance with their judgment on such
matters.
By Order of the Board of Directors
Marguerite J. Hill
Secretary
Wilmington, Massachusetts
April 24, 2000
MANAGEMENT HOPES THAT THE STOCKHOLDERS WILL ATTEND THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE ANNUAL MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
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QC OPTICS, INC.
THIS PROXY IS BEING SOLICITED BY QC OPTICS, INC.'S BOARD OF DIRECTORS
The undersigned, revoking any previous proxies relating to these shares, hereby
acknowledges receipt of the Notice and Proxy Statement dated April 24, 2000 in
connection with the Annual Meeting to be held at 10:00 a.m. on Friday, June 9,
2000 at the Holiday Inn Tewksbury/Andover, Four Highwood Drive, Tewksbury,
Massachusetts 01876 and hereby appoints Abdu Boudour and Eric T. Chase, and each
of them (with full power to act alone), the attorneys and proxies of the
undersigned, with power of substitution to each, to vote all shares of the
Common Stock of QC Optics, Inc. (the "Company") registered in the name provided
herein which the undersigned is entitled to vote at the 2000 Annual Meeting of
Stockholders, and at any adjournments thereof, with all the powers the
undersigned would have if personally present. Without limiting the general
authorization hereby given, said proxies are, and each of them is, instructed to
vote or act as follows on the proposals set forth in said Proxy.
This Proxy when executed will be voted in the manner directed herein. If no
direction is made this Proxy will be voted FOR the election of Directors and FOR
Proposal 2.
In their discretion the proxies are authorized to vote upon such other matters
as may properly come before the meeting or any adjournments thereof.
Election of Directors (or if any nominee is not available for election, such
substitute as the Board of Directors may designate)
Nominee: John M. Tarrh
SEE REVERSE SIDE FOR BOTH PROPOSALS. If you wish to vote in accordance with the
Board of Directors' recommendations, just sign on the reverse side. You need not
mark any boxes.
(SEE REVERSE SIDE)
<PAGE>
[X] Please mark votes as in this example.
The Board of Directors recommends a vote FOR Proposals 1and 2.
1. Election of Directors (See reverse).
[ ] FOR [ ] WITHHELD
2. Proposal to ratify and confirm the selection of Arthur Andersen LLP
as the Company's independent auditors for the fiscal year ending
December 31, 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as name(s) appears
hereon. Joint owners should each sign. When
signing as attorney, executor, administrator,
trustee or guardian, please give full title
as such.
Signature:___________________________ Date _________
Signature:___________________________ Date _________