<PAGE>
SCHEDULE 14A
(RULE 14A-101)
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ___________)
Filed by the Registrant: |X|
Filed by a party other than the Registrant: |_|
Check the appropriate box:
<TABLE>
<S> <C>
|_| Preliminary Proxy Statement |_| Confidential for Use of the
|X| Definitive Proxy Statement Commission Only (as permitted
|_| Definitive Additional Materials by Rule 14a-6(e)(2))
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
OMTOOL, LTD.
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
April 25, 2000
Dear Fellow Stockholder:
You are cordially invited to attend our Annual Meeting of Stockholders,
which will be held this year on Friday, June 2, 2000 at 10:00 A.M. local time,
at the Needham Sheraton, 100 Cabot Street, Needham, Massachusetts 02494.
At this year's meeting, you are asked to elect two Class III directors
and to ratify the selection of the Company's auditors. The accompanying Notice
of Meeting and Proxy Statement describe these proposals. We urge you to read
this information carefully.
Your Board of Directors unanimously believes that the election of its
nominees as directors and the ratification of its appointment of auditors are in
the best interest of Omtool, Ltd. and its stockholders, and accordingly
recommends a vote FOR Items 1 and 2 on the enclosed proxy card.
Whether or not you plan to attend the meeting in person, it is
important that your shares be represented and voted. After reading the enclosed
Notice of Annual Meeting and Proxy Statement, may I urge you to complete, sign,
date and return your proxy ballot in the envelope provided. If the address on
the accompanying material is incorrect, please advise the Company in writing at
8 Industrial Way, Salem, New Hampshire 03079, Attention: Kira Nelson.
For the Board of Directors
Robert L. Voelk
CHAIRMAN OF THE BOARD
<PAGE>
OMTOOL, LTD.
8 INDUSTRIAL WAY
SALEM, NEW HAMPSHIRE 03079
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 2000
-------------------
To The Stockholders:
The Annual Meeting of Stockholders of Omtool, Ltd., a Delaware
corporation, will be held on Friday, June 2, 2000 at 10:00 A.M. local time at
the Needham Sheraton, 100 Cabot Street, Needham, Massachusetts 02494 for the
following purposes:
1. To elect two Class III directors each to serve for a three-year
term.
2. To ratify the selection of the firm of Arthur Andersen LLP as
auditors for the fiscal year ending December 31, 2000.
3. To transact such other business as may properly come before
the meeting and any adjournments thereof.
Stockholders entitled to notice of and to vote at the meeting shall be
determined as of the close of business on Wednesday, April 19, 2000, the record
date fixed by the Board of Directors for such purpose.
By Order of the Board of Directors,
Kira A. Nelson
SECRETARY
Salem, New Hampshire
April 25, 2000
- --------------------------------------------------------------------------------
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN
THE ENCLOSED PROXY CARD AND MAIL IT PROMPTLY IN THE ENCLOSED STAMPED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES.
- --------------------------------------------------------------------------------
<PAGE>
OMTOOL, LTD.
8 INDUSTRIAL WAY
SALEM, NEW HAMPSHIRE 03079
-------------------
PROXY STATEMENT
-------------------
April 25, 2000
Proxies in the form enclosed with this proxy statement are solicited by
the Board of Directors of Omtool, Ltd. (the "Company") for use at the Annual
Meeting of Stockholders of the Company to be held on Friday, June 2, 2000 at
10:00 A.M. local time, at the Needham Sheraton, 100 Cabot Street, Needham,
Massachusetts 02494.
Only stockholders of record as of the close of business on April 19,
2000 (the "Record Date") will be entitled to vote at the meeting and any
adjournments thereof. As of that date, 12,715,781 shares of common stock, par
value $.01 per share (the "Common Stock"), of the Company were issued and
outstanding. Each share of Common Stock outstanding as of the Record Date will
be entitled to one vote and stockholders may vote in person or by proxy.
Execution of a proxy will not in any way affect a stockholder's right to attend
the meeting and vote in person. Any stockholder giving a proxy has the right to
revoke it by written notice to the Secretary of the Company at any time before
it is exercised. Each of the persons named as a proxy in the proxy is a director
and/or executive officer of the Company.
An Annual Report to Stockholders, containing audited financial
statements for the fiscal year ended December 31, 1999, is being mailed together
with this proxy statement to all stockholders entitled to vote. It is
anticipated that this proxy statement and the accompanying proxy will be first
mailed to stockholders on or about April 27, 2000.
The mailing address of the Company's principal executive offices is 8
Industrial Way, Salem, New Hampshire 03079.
All properly executed proxies returned in time to be counted at the
meeting and not revoked will be voted, and with respect to the election of
members of the Board of Directors, will be voted as stated below under "Election
of Directors." In addition to the election of directors, the stockholders will
act on a proposal to ratify the selection of auditors, as further described in
this proxy statement. Where a choice has been specified on the proxy with
respect to the foregoing matters, the shares represented by the proxy will be
voted in accordance with the specification and will be voted FOR the matters if
no specification is indicated.
The representation in person or by proxy of at least a majority of all
shares of Common Stock issued, outstanding and entitled to vote at the meeting
is necessary to constitute a quorum for the transaction of business. Votes
withheld from any nominee for election as director, or which contain one or more
abstentions or broker "non-votes," are counted as present or represented for
purposes of determining the presence or absence of a quorum for the meeting. A
"non-vote" occurs when a broker or other nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because, in
respect of such other proposal, the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner.
<PAGE>
The election of directors by the stockholders shall be determined by a
plurality of the votes cast by stockholders entitled to vote. On all other
matters being submitted to stockholders, an affirmative vote of a majority of
the shares present in person or by proxy and entitled to vote on each such
matter is required for approval; therefore, abstentions will have the practical
effect of voting against each such matter since they are included in the number
of shares present and voting on each such matter. However, broker "non-votes"
are not considered shares entitled to vote and therefore will have no impact on
the outcome of the vote. An automated system administered by the Company's
transfer agent tabulates the votes. The vote on each matter submitted to
stockholders is tabulated separately.
The Board of Directors knows of no other matter to be presented at the
meeting. If any other matter should be presented at the meeting upon which a
vote may be properly taken, 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 proxies in the proxy.
2
<PAGE>
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock as of the Record Date (except as set
forth below): (i) by each person who, to the knowledge of the Company, owned
beneficially more than 5% of the 12,715,781 shares of Common Stock of the
Company outstanding at such date; (ii) by each director and nominee; (iii) by
each executive officer identified in the Summary Compensation Table set forth
below under "Compensation and Other Information Concerning Directors and
Officers," and (iv) by the directors, nominees and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF OF BENEFICIAL
BENEFICIAL OWNER OWNERSHIP (1)(2) PERCENT OF CLASS
---------------- ---------------- ----------------
<S> <C> <C>
Summit Partners (3)............................... 1,698,378 13.4%
600 Atlantic Avenue
Boston, MA 02110
Martin A. Schultz (4)............................. 1,534,654 12.1%
Omtool, Ltd.
8 Industrial Way
Salem, NH 03079
Robert L. Voelk (5)............................... 1,465,954 11.5%
Omtool, Ltd.
8 Industrial Way
Salem, NH 03079
Dimensions Fund Advisors, Inc. (6)................ 975,600 7.7%
1299 Ocean Ave
Santa Monica, CA 90401
Richard D. Cramer................................. 23,250 *
Bruce R. Evans (7)................................ 1,698,378 13.4%
Adrian A. Peters (8).............................. 162,500 1.3%
William C. Styslinger, III (9).................... 7,500 *
Ellen Ohlenbusch Flaherty (10).................... 84,833 *
Darioush Mardan (11).............................. 18,347 *
All executive officers, nominees and directors as a
group (8 persons) (12)............................ 4,949,538 38.9%
</TABLE>
- -----------
* Less than 1% of the outstanding Common Stock.
(1) The persons and entities named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, except as noted in the footnotes below
and except to the extent authority is shared by spouses under
applicable law.
(2) The number of shares of Common Stock deemed outstanding includes (i)
12,715,781 shares of Common Stock outstanding as of the Record Date
and (ii) shares of Common Stock issuable pursuant to options held by
the respective person or group which may be exercised within 60 days
after the Record Date, as set forth below.
(3) Includes 1,609,966 shares held by Summit Ventures IV, L.P. and 88,412
shares held by Summit Investors III, L.P. The respective general
partners of these entities exercise sole voting and investment power
with respect to the shares owned by such entities.
(4) Excludes 120,000 shares held in trust for the benefit of certain
family members; Mr. Schultz disclaims beneficial ownership of such
shares.
(5) Excludes 62,000 shares held in trust for the benefit of certain
family members; Mr. Voelk disclaims beneficial ownership of such
shares.
3
<PAGE>
(6) Based on a Schedule 13G dated February 3, 2000 filed by Dimensional
Fund Advisors, Inc. ("DFA") reflecting beneficial ownership as of
December 31, 1999. According to the Schedule 13G, DFA exercises sole
voting power and sole disposition power to all such shares. DFA, as
an investment advisor registered under the Investment Act of 1940,
disclaims beneficial ownership to all such shares.
(7) Includes 1,609,966 shares held by Summit Ventures IV, L.P. and 88,412
shares held by Summit Investors III, L.P. Mr. Evans is a general
partner of Summit Investors III, L.P. and is the general partner of
Stamps, Woodsum & Co. IV, which is the general partner of Summit
Partners IV, L.P., which is the general partner of Summit Ventures
IV, L.P. Mr. Evans may be deemed to share voting and investment power
with respect to all shares held by the partnerships. Mr. Evans
disclaims beneficial ownership of these shares, except to the extent
of his pecuniary interest therein.
(8) Mr. Peters joined the Company as the President, Chief Operating
Officer, and a Director in May 1999. In January, 2000, Mr. Peters was
also named Chief Executive Officer. Mr. Peter's beneficial ownership
consists of 162,500 options to purchase shares of Common Stock which
may be exercised within 60 days of the Record Date.
(9) Mr. Styslinger's beneficial ownership consists of 7,500 options to
purchase shares of Common Stock which may be exercised within 60 days
of the Record Date.
(10) Ms. Flaherty left the Company in October 1999. Beneficial ownership
is based on Ms. Flaherty's most recently filed Form 4.
(11) Mr. Mardan left the Company in January 2000.
(12) All current directors, nominees and executive officers as a group
hold options to purchase 222,500 shares of Common Stock which may be
exercised within 60 days of the Record Date. Excludes 84,833 shares
held by Ms. Flaherty and 18,347 shares held by Mr. Mardan.
PROPOSAL I
ELECTION OF DIRECTORS
No proxy may be voted for more people than the number of nominees set
forth below. Shares represented by all proxies received by the Board of
Directors and not so marked to withhold authority to vote for Robert L. Voelk or
Martin A. Schultz (by writing that individual director's name where indicated on
the proxy) will be voted FOR the election of Messrs. Voelk and Schultz,
respectively. The Board of Directors knows of no reason why Messrs. Voelk or
Schultz should be unable or unwilling to serve, but if such should be the case,
proxies may be voted for the election of some other person or persons or for
fixing the number of directors at a lesser number.
INFORMATION PERTAINING TO DIRECTORS AND NOMINEES
In accordance with the Company's Amended and Restated By-laws (the
"By-laws"), the Company's Board of Directors is divided into three classes.
Richard D. Cramer, one of the Company's two Class I Directors, has served as a
director since January 1996. Adrian A. Peters, the Company's other Class I
Director, has served as a director since May 1999. The terms of Messrs. Cramer
and Peters expire as of the date of the Annual Meeting of Stockholders to be
held in 2001. Bruce R. Evans, one of the Company's two Class II Directors, has
served as a director since July 1996. William C. Styslinger, III, the Company's
other Class II Director, has served as a director since June 1997. The terms of
Messrs. Evans and Styslinger expire as of the date of the Annual Meeting of
Stockholders to be held in 2002. Martin A. Schultz, one of the Company's two
Class III Directors and the Company founder, has served as a director since the
Company's inception in 1991. Robert L. Voelk, the Company's other Class III
Director, has served as a director since August 1993. The terms of Messrs.
Schultz and Voelk expire as of the date of the Annual Meeting of Stockholders to
be held in 2000.
Each director serves for a three-year term, with one class of directors
being elected at each Annual Meeting. Each director holds office until his
successor is duly elected and qualified, or until his earlier death, resignation
or removal.
4
<PAGE>
The following table sets forth for each nominee to be elected at the
meeting and for each Director who will continue to serve as a director beyond
the meeting, the year such nominee or director was first elected as a director,
the positions currently held by such nominee or director with the Company, the
year such nominee's or director's term will expire and the class of director of
such nominee or director.
<TABLE>
<CAPTION>
NOMINEE'S OR DIRECTOR'S NAME AND YEAR
NOMINEE OR DIRECTOR YEAR TERM CLASS OF
FIRST BECAME A DIRECTOR POSITION(S) HELD WILL EXPIRE DIRECTOR
- ----------------------- ---------------- ----------- --------
<S> <C> <C> <C>
Robert L. Voelk Chairman of the Board 2000 III
(1993)
Martin A. Schultz Director 2000 III
(1991)
Richard D. Cramer Director 2001 I
(1996)
Adrian A. Peters Chief Executive Officer, 2001 I
(1999) President, Chief Operating
Officer and Director
Bruce R. Evans Director 2002 II
(1996)
William C. Styslinger, III Director 2002 II
(1997)
</TABLE>
OCCUPATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the Class III nominees to be elected at
the meeting, the current directors who will continue to serve as directors
beyond the meeting, and the current executive officers of the Company, their
ages and the positions currently held by each such person with the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Robert L. Voelk............................. 44 Chairman of the Board
Adrian A. Peters............................ 50 Chief Executive Officer, President, Chief Operating Officer
and Director
Kira A. Nelson.............................. 31 Vice President of Finance, Acting Chief Financial Officer,
Treasurer and Secretary
Paul A. Smith............................... 52 Managing Director, Omtool Europe, Ltd.
Richard D. Cramer (1, 2).................... 37 Director
Bruce R. Evans (2).......................... 41 Director
Martin A. Schultz........................... 44 Director
William C. Styslinger, III (1, 2)........... 54 Director
</TABLE>
- ----------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
5
<PAGE>
DIRECTORS TO BE ELECTED AT THE MEETING
ROBERT L. VOELK has served as a Director of the Company since August
1993. Mr. Voelk served as Chief Executive Officer of the Company from January
1996 to December 1999 and President of the Company from August 1993 to January
1996. Mr. Voelk is the Chairman and Chief Executive Officer of eSped.com, Inc.,
which provides internet based applications, services and information to the K-12
education community. Mr. Voelk was employed in various positions at ASA
International, Ltd., a designer and developer of proprietary vertical market
software, from 1981 to 1993, most recently serving as Executive Vice President
and Director. Mr. Voelk is a Director of ASA International, Ltd.
MARTIN A. SCHULTZ, the founder of the Company, has served as a Director
of the Company since its inception in March 1991. Mr. Schultz most recently
served the Company as its Chief Technology Officer from May 1998 to December
1999. Mr. Schultz served as the Company's President from its inception through
August 1993 and from January 1996 through May 1999. Mr. Schultz served as Chief
Executive Officer of the Company from March 1991 to January 1996. Mr. Schultz
served as Vice President of ASA International, Ltd. from April 1989 to January
1991.
DIRECTORS WHOSE TERMS EXTEND BEYOND THE MEETING
BRUCE R. EVANS has served as a Director of the Company since July
1996. Since 1991, Mr. Evans has been a general partner of Summit Partners, a
venture capital firm, where he has been employed since 1986. Mr. Evans serves
as a Director of DSET Corporation, a provider of telecommunications software
and services and Private Business, Inc., a provider of software and services
to community banks.
RICHARD D. CRAMER has served as a Director of the Company since January
1996. Mr. Cramer is currently a sales and marketing consultant. Mr. Cramer has
served as Vice President, Sales and Marketing of CENTRA Software, Inc., a
developer and marketer of Web-Centric distance learning software, from May 1996
to January 1999. Mr. Cramer served as Vice President of North American Field
Operations at Avid Technology, Inc., a developer of nonlinear film, video and
audio solutions, from 1989 to 1995 and Vice President and General Manager of the
Desktop Division of Avid Technology, Inc. during 1996.
ADRIAN A. PETERS has served as Chief Executive Officer of the Company
since January 2000 and as President, Chief Operating Officer and a Director of
the Company since May 1999. Prior to joining the Company, Mr. Peters was
President of Boston Partners, a private consulting firm to software start-ups.
From 1996 to 1997, Mr. Peters served as President and Chief Executive Officer of
Computron Software, an application and software tools company. From 1986 to
1995, Mr. Peters held various executive positions at Siemens AG, most recently
as President and Chief Executive Officer of Siemens Nixdorf USA.
WILLIAM C. STYSLINGER, III has served as a Director of the Company
since June 1997. Mr. Styslinger has served as President, Chief Executive Officer
and Director of SeaChange International, Inc., a provider of software products
to manage, store and distribute digital video for cable television operators and
telecommunications companies, since 1993 and as Chairman of the Board of
SeaChange International, Inc. since January 1995. From March 1978 to July 1993,
Mr. Styslinger was employed at Digital Equipment Company, most recently as
manager of the Cable Television Business Unit.
EXECUTIVE OFFICERS
KIRA A. NELSON has served the Company as Acting Chief Financial
Officer, Secretary and Treasurer since January 2000 and served as Vice President
of Finance since July 1998. She joined the Company in November 1996 as Corporate
Controller. Prior to joining the Company, Ms. Nelson served as a Senior
Financial Analyst at Discreet Logic, a developer of software for visual effects
used in the creation of digital moving pictures, from November 1995 to September
1996. From 1991 to 1995, Ms. Nelson was employed in various positions by
6
<PAGE>
Arthur Andersen LLP, a national public accounting firm, most recently serving as
a senior accountant in the audit division of the firm's Boston office. Ms.
Nelson is a certified public accountant.
PAUL A. SMITH joined the Company in March 1999 and in April 1999 was
named Managing Director, Omtool Europe Ltd., a wholly owned subsidiary of the
Company. Mr. Smith served as the Executive Director of Northamber PLC, a
computer, software and telephone distributor, from January 1995 to January 1999.
Prior to January 1995, Mr. Smith served as Managing Director of Fontware Group
Limited, a developer of font technology and a distributor of LAN fax software.
Executive officers of the Company are elected by the Board of Directors
on an annual basis and serve until their successors have been duly elected and
qualified. There are no family relationships among any of the executive officers
or directors of the Company.
BOARD MEETINGS AND COMMITTEES
The Board of Directors met three times, and took action by unanimous
written consent five times, during the fiscal year ended December 31, 1999. The
standing committees of the Board of Directors are the Audit Committee and the
Compensation Committee. The Audit Committee met once and the Compensation
Committee met twice, and took action by unanimous written consent two times,
during the fiscal year ended December 31, 1999. The Board of Directors does not
currently have a standing nominating committee. Each director attended at least
75% of the aggregate of all the meetings of the Board of Directors and of all
the committees of the Board of Directors of which he is a member during the
fiscal year ending December 31, 1999.
The Compensation Committee makes recommendations to the Board of
Directors concerning the compensation of executives and salaries of the
employees and consultants to the Company. The Compensation Committee also
makes recommendations to the Board of Directors concerning incentive
compensation of employees and directors of and consultants to the Company.
During January 1999, the members of the Compensation Committee were Bruce R.
Evans and Anthony J. Mark. As a result of Mr. Mark's resignation from the
Board of Directors in February 1999, Mr. Evans was the only member of the
Compensation Committee from February 1999 until April 1999. In April 1999,
Mr. Cramer and Mr. Styslinger were elected to the Compensation Committee. The
current members of the Compensation Committee are Messrs. Cramer, Evans and
Styslinger. The Audit Committee recommends the engagement of auditors and is
responsible for reviewing the results and scope of audits and other services
provided by the Company's independent auditors. During the fiscal January
1999, the members of the Audit Committee were Richard D. Cramer and Mr. Mark.
As a result of Mr. Mark's resignation from the Board of Directors in February
1999, Mr. Cramer was the only member of the Audit Committee from February
1999 until April 1999. In April 1999, Mr. Styslinger was elected to the Audit
Committee. The current members of the Audit Committee are Messrs. Cramer and
Styslinger.
COMPENSATION OF DIRECTORS
Outside directors have been granted stock options by the Company under
the 1996 Stock Plan. During 1999, independent directors received a participation
fee of $1,000 for each Board of Directors meeting and $500 for each Board
committee meeting that they attended in person. Outside directors have been and
will continue to be reimbursed for their reasonable out-of-pocket expenses
incurred in attending meetings. No director who is an employee of the Company
will receive separate compensation for services rendered as a director.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Evans, a member of the Compensation Committee, is a general partner
of Summit Investors III, L.P. a stockholder of the Company, and is also a
general partner of Stamps, Woodsum & Co. IV, which is the general partner of
Summit Partners IV, L.P. which is the general partner of Summit Ventures IV,
L.P., another stockholder of the Company.
7
<PAGE>
COMPENSATION AND OTHER INFORMATION
CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation
for services in all capacities paid or accrued by the Company for the fiscal
years ended December 31, 1999, 1998 and 1997, to (i) the individual who served
as the Chief Executive Officer for the fiscal year ended December 31, 1999 and
(ii) each of the four other most highly compensated executive officers whose
aggregate salary and bonus exceeded $100,000 in the fiscal year ended December
31, 1999 (with the Chief Executive Officer, collectively, the "Named Executive
Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION (1)
----------------
ANNUAL COMPENSATION (2) AWARDS
------------------------ ---------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND OPTIONS/ COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)(3) SARS (#) ($)(4)
- ------------------ ---- ---------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Robert L. Voelk (5).................... 1999 225,000 -- -- 6,820 (6)
Chairman of the Board and Chief 1998 223,462 -- -- 7,080 (6)
Executive Officer 1997 175,000 50,000 -- 8,600 (6)
Adrian A. Peters (7)................... 1999 190,385 40,000 650,000 2,077
President, Chief Operating Officer and 1998 -- -- -- --
Director 1997 -- -- -- --
Martin A. Schultz (8).................. 1999 225,000 -- -- 472,502 (9)
Chief Technology Officer and Director 1998 223,462 -- -- 6,490 (10)
1997 175,000 50,000 -- 9,075 (10)
Ellen Ohlenbusch Flaherty (11)......... 1999 128,538 68,455 (12) 20,000 132,226 (14)
Senior Vice President, Sales 1998 116,923 86,855 (12) 200,000 (13) 5,115
1997 99,058 102,300 (12) 160,000 4,750
Darioush Mardan (15)................... 1999 168,615 42,500 20,000 118,855 (17)
Chief Financial Officer, Secretary and 1998 129,077 -- 100,000 (16) 3,911
Treasurer 1997 90,500 -- -- 3,098
</TABLE>
- -----------
(1) The Company did not grant any restricted stock awards or stock
appreciation rights during fiscal 1999, 1998 and 1997. The Company does
not have any long term incentive plan.
(2) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal
benefits have been omitted because such perquisites and other personal
benefits constituted less than the lesser of $50,000 or 10% of the
total annual salary and bonus reported for the executive officer during
the year ended December 31, 1999.
(3) Bonuses are reported in the year earned, even if actually paid in a
subsequent year.
(4) Consists of the Company's matching contributions related to the
Company's 401(k) Plan, premiums for life insurance paid by the Company
on behalf of the Named Executive Officers and amounts payable upon the
resignation of certain of the Named Executive Officers noted in the
footnotes below.
(5) Mr. Voelk was the Company's Chief Executive Officer from January 1996
to December 31, 1999.
(6) Includes life insurance premiums paid by the Company on behalf of Mr.
Voelk.
8
<PAGE>
(7) Mr. Peters joined the Company in May 1999 as the President, Chief
Operating Officer and a Director. In January 2000, he was named Chief
Executive Officer.
(8) Mr. Schultz was the Company's Chief Technology Officer from May 1998 to
December 31, 1999.
(9) Includes a payment of $466,272 to Mr. Schultz as a result of his
resignation from the Company in December 1999 and life insurance
premiums paid by the Company on behalf of Mr. Schultz.
(10) Includes life insurance premiums paid by the Company on behalf of Mr.
Schultz.
(11) Ms. Flaherty left the Company in October 1999.
(12) Represents amounts earned as sales commissions.
(13) Includes options to purchase 100,000 shares of Common Stock granted
pursuant to the repricing of options.
(14) Includes a payment of $127,226 to Ms. Flaherty as a result of her
resignation from the Company in October 1999.
(15) Mr. Mardan left the Company in January 2000.
(16) Includes options to purchase 50,000 shares of Common Stock granted
pursuant to the repricing of options.
(17) Includes a payment of $115,187 to Mr. Mardan as a result of his
resignation from the Company in January 2000.
9
<PAGE>
OPTION GRANTS
The following table sets forth information concerning options granted
during the last fiscal year under the Company's 1997 Stock Plan to the Named
Executive Officers. The Company did not grant any stock appreciation rights in
1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF
TOTAL
NUMBER OF OPTIONS/ POTENTIAL REALIZABLE VALUE AT
SECURITIES SARS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTION/SARS EMPLOYEES OR BASE OPTION TERM (2)
GRANTED IN FISCAL PRICE EXPIRATION ------------------------------
NAME (#)(1) YEAR ($/SH) DATE 5%($) 10%($)
---- ---------- ---------- ------ ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Voelk................. -- -- -- -- -- --
Adrian A. Peters................ 650,000 36% 4.125 5/01/09 1,686,224 4,273,222
Martin A. Schultz............... -- -- -- -- -- --
Ellen Ohlenbusch Flaherty (3)... 20,000 1% 2.75 1/4/09 34,589 87,656
Darioush Mardan (4)............. 20,000 1% 2.75 1/4/09 34,589 87,656
</TABLE>
- ----------------
(1) All of Mr. Peters' options were granted on May 1, 1999 and are exercisable
in sixteen equal quarterly installments commencing August 1, 1999. All of
Ms. Flaherty's and Mr. Mardan's options were granted on January 4, 1999 and
are were exercisable in four equal annual installments commencing on January
4, 2000. All options were granted at fair market value on the date of grant
as determined by the Board of Directors of the Company.
(2) Amounts represent hypothetical gains that could be achieved for the option
if exercised at the end of the option term. These gains are based on the
fair market value on the date of grant and assumed rates of stock price
appreciation of 5% and 10% compounded annually from the date the respective
options were granted to their expiration date. These assumptions are
mandated by the rules of the Securities and Exchange Commission and are not
intended to forecast future appreciation of the Company's stock price. The
potential realizable value computation is net of the applicable exercise
price, but does not take into account federal or state income tax
consequences and other expenses of option exercises or sales of appreciated
stock. Actual gains, if any, are dependent upon the timing of such exercise
and the future performance of the Company's Common Stock. There can be no
assurance that the rates of appreciation in this table can be achieved. This
table does not take into account any appreciation in the price of the Common
Stock to date.
(3) Ms. Flaherty left the Company in October 1999, at which time her options
were not exercisable and therefore terminated.
(4) Mr. Mardan left the Company in January 2000, at which time one-quarter of
his options were exercisable and the remaining options were not exercisable
and therefore terminated.
10
<PAGE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to options to purchase the
Company's Common Stock granted under the Company's 1996 Stock Option Plan and
1997 Stock Plan, including (i) the number of shares of Common Stock received
upon exercise of options in the fiscal year ended December 31, 1999; (ii) the
net value realized upon such exercise; (iii) the number of unexercised options
held at December 31, 1999; and (iv) the aggregate dollar value of unexercised
options held at December 31, 1999:
AGGREGATED OPTION/SAR EXERCISES IN THE LAST
FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS AT
ON VALUE FISCAL YEAR-END (#) FISCAL YEAR-END ($)(2)
EXERCISE REALIZED ------------------------------- --------------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------- ----------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Voelk................. -- -- -- -- -- --
Adrian A. Peters................ -- -- 81,250 568,750 -- --
Martin A. Schultz............... -- -- -- -- -- --
Ellen Ohlenbusch Flaherty (3)... -- -- 25,000 95,000 -- --
Darioush Mardan (4)............. 90,847 376,926 12,500 57,500 -- --
</TABLE>
- ---------------
(1) Amounts disclosed in this column do not reflect amounts actually
received by the Named Executive Officers, but are calculated based on
the difference between the fair market value of the Company's Common
Stock on the date of exercise and the exercise price of the options.
Named Executive Officers will receive cash only if and when they sell
the Common Stock issued upon exercise of the options and the amount of
cash received by such individuals is dependent on the price of the
Company's Common Stock at the time of such sale.
(2) Value is based on the difference between the option exercise price and
the fair market value at December 31, 1999 ($2.375 per share)
multiplied by the number of shares of Common Stock underlying the
option. As the fair market value of the options on December 31, 1999
was below the option exercise price, no unexercisable options were
In-the-Money on December 31, 1999 for all Named Executive Officers.
(3) Ms. Flaherty left the Company in October 1999, at which time her
options were not exercisable and therefore terminated.
(4) Mr. Mardan left the Company in January 2000, at which time one-quarter
of his options were exercisable and the remaining options were not
exercisable and therefore terminated.
11
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Prior to April 1999, the Company's executive compensation program was
administered by a two member Compensation Committee of the Board of Directors
(the "Compensation Committee"). In April 1999, the Board of Directors passed a
resolution to increase the number of Directors administering the Compensation
Committee from two members to three members. The members of the Compensation
Committee are non-employee Directors. The Compensation Committee makes
recommendations to the Board of Directors concerning the compensation of
executive officers and the salaries of the employees of and consultants to the
Company. The Compensation Committee also makes recommendations to the Board of
Directors concerning incentive compensation of employees and directors of and
consultants to the Company.
The Company's executive compensation program is designed to provide
levels of compensation that assist the Company in attracting, motivating and
retaining qualified executive officers and aligning the financial interests of
the Company's executive officers and other employees with those of its
stockholders by providing a competitive compensation package based on corporate
and individual performance. In addition to cash compensation in the form of base
salary, compensation under the executive compensation program can be comprised
of annual cash incentive bonuses and long-term incentive awards in the form of
stock option grants. The compensation program is also comprised of various
benefits, including medical and insurance plans, as well as the Company's 1997
Employee Stock Purchase Plan, as amended, and 401(k) Plan, which plans are
generally available to all employees of the Company.
BASE SALARY
Base salary compensation levels for each of the Company's executive
officers, including the Chief Executive Officer, are generally set within the
range of base salaries that the Compensation Committee believes are paid to
executive officers with comparable qualifications, experience and
responsibilities at other companies located in the northeastern United States of
similar size and engaged in similar business to that of the Company. In setting
compensation levels, the Compensation Committee generally takes into account
such factors as (i) the Company's past operating and financial performance and
future expectations, (ii) individual performance and experience and (iii) past
salary levels. The Compensation Committee does not assign relative weights or
rankings to these factors, but instead makes determinations based upon the
consideration of all of these factors as well as the progress made with respect
to the Company's long-term goals and strategies.
INCENTIVE COMPENSATION
Incentive Compensation in the form of performance-based bonuses for the
Chief Executive Officer and the Company's other executive officers is based upon
management's success in meeting the Company's financial and strategic goals as
well as meeting individual performance goals.
STOCK OPTIONS
Stock Options are the principal vehicle used by the Company to provide
long-term incentive-based compensation to improve the Company's operating and
financial performance and to support the recruitment, motivation and retention
of key professional and managerial personnel. The Company's stock option plans
are administered by the Board of Directors. To date, the Board of Directors has
not granted stock options at less than fair market value.
Stock options are granted from time to time to eligible employees and
based upon the Company's overall financial performance and their contributions
thereto. Stock options are designed to align the interest of the Company's
executive officers and other employees with those of its stockholders by
encouraging them to enhance the value of the Company, the price of the Common
Stock and, hence, the stockholders' return. In addition, the vesting of stock
options over a period of time is designed to defer the receipt of compensation
by the option holder, thus creating an incentive for the individual to remain
with the Company. The Company periodically grants new options to provide
continuing incentives for future performance.
12
<PAGE>
During the fiscal year ended December 31, 1999, options to purchase
650,000 shares were awarded to Adrian A. Peters, Chief Executive Officer,
President and Chief Operating Officer. Such grant was made as part of Mr. Peters
compensation package upon his joining the Company as its President and Chief
Operating Officer in May 1999. In addition, during the fiscal year ended
December 31, 1999, options to purchase 20,000 shares were awarded to Ellen
Flaherty, Senior Vice President, Sales, and Darioush Mardan, Chief Financial
Officer, Secretary and Treasurer. Such grants were made in recognition of such
officers' contributions to the Company's performance in fiscal 1998. No other
stock options were granted to any of the Company's Named Executive Officers,
including the Chief Executive Officer, during fiscal 1999. Ms. Flaherty left the
Company in October 1999, at which time such options were not exercisable and
were terminated. Mr. Mardan left the Company in January, 2000, at which time
one-quarter of such options were exercisable and the remaining options were not
exercisable and therefore terminated.
OTHER BENEFITS
The Company also has various broad-based employee benefit plans.
Executive officers participate in these plans on the same terms as eligible,
non-executive employees, subject to any legal limits on the amounts that may be
contributed or paid to executive officers under these plans. The Company offers
a stock purchase plan, pursuant to which employees may purchase Common Stock at
a discount and a 401(k) Plan. The Company matches each employee's contributions
to the 401(k) Plan up to 3% of such employee's salary. The Company also
maintains medical, disability and life insurance plans and other benefit plans
for its employees.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Compensation for the Company's Chief Executive Officer, Robert L.
Voelk, was determined in accordance with the policies applicable to the other
executive officers of the Company described above. The 1999 base salary
compensation for Mr. Voelk was $225,000. In addition to achievement of
performance targets in accordance with the Company's executive compensation
policies, the Compensation Committee determines the Chief Executive Officer's
cash compensation based upon the Company's overall performance, the performance
of his management team, the compensation paid at competing companies and the
Company's prospects, among other objective and subjective factors. The
Compensation Committee does not find it practicable to quantify or assign
relative weight to the factors on which the Chief Executive Officer's
compensation is based.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the tax deduction to $1 million for compensation paid to any of the executive
officers unless certain requirements are met. The Compensation Committee has
considered these requirements and it is the Compensation Committee's present
intention that, so long as it is consistent with its overall compensation
objectives, not to exceed the deduction limitations of Section 162(m).
The Compensation Committee is satisfied that the executive officers of
the Company are dedicated to achieving significant improvements in the long-term
financial performance of the Company and that the compensation policies and
programs implemented and administered have contributed and will continue to
contribute towards achieving this goal.
This report has been respectfully submitted by the members of the
Compensation Committee of the Board of Directors.*
Bruce R. Evans
Anthony J. Mark
Richard D. Cramer
William C. Styslinger, III
<PAGE>
- ---------------
* From April 15, 1997 to February 9, 1999, the Compensation Committee was
comprised of Messrs. Mark and Evans. From February 9, 1999 until April 16, 1999,
the Compensation Committee was comprised of Mr. Evans. Since April 16, 1999, the
Compensation Committee has been comprised of Mr. Evans, Mr. Cramer and Mr.
Styslinger. The Compensation Committee Report is not deemed filed with the
Securities and Exchange Commission and is not to be incorporated by reference in
any filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after the
date hereof and irrespective of any general incorporation language in any such
filing.
13
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the percentage change in the cumulative
total stockholder return on the Company's Common Stock during the period from
the Company's initial public offering through December 31, 1999 with the
cumulative total return on (i) the Nasdaq Market Index, and (ii) a broad peer
group index prepared by Media General Financial Services consisting of Nasdaq
listed companies grouped under SIC Code 7372.
COMPARISON OF FIVE YEAR* CUMULATIVE TOTAL RETURN** AMONG
OMTOOL, LTD., NASDAQ MARKET INDEX
AND PEER GROUP INDEX
[OBJECT OMITTED]
[below are plot points of the graph]
- -----------------------------------------------------------------------------
8/8/97 12/31/97 12/31/98 12/31/99
- -----------------------------------------------------------------------------
Omtool, Ltd. 100.00 102.50 29.38 23.75
- -----------------------------------------------------------------------------
Nasdaq Market Index 100.00 98.95 139.38 246.14
- -----------------------------------------------------------------------------
Peer Group Index 100.00 92.72 155.28 291.24
- -----------------------------------------------------------------------------
- ----------
* Prior to August 8, 1997 the Company's Common Stock was not publicly
traded. Comparative data is provided only for the period since that
date. This graph is not "soliciting material," is not deemed filed with
the Securities and Exchange Commission and is not to be incorporated by
reference in any filing of the Company under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended,
whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing.
** Cumulative Total Return assumes $100 was invested on August 8, 1997 in
the Corporation's Common Stock and in the Nasdaq Market Index and Peer
Group Index and assure reinvestment of dividends, if any.
The stock price performance shown on the graph above is not necessarily
indicative of future price performance. Information used in the graph was
obtained from Media General Financial Services, a source believed to be
reliable, however, the Company is not responsible for any errors or omissions in
such information.
14
<PAGE>
PROPOSAL II
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Arthur Andersen LLP,
independent auditors, to serve as auditors for the fiscal year ending December
31, 2000. Arthur Andersen LLP has served as the Company's auditors and outside
accountants since 1996. It is expected that a member of the firm will be present
at the Annual Meeting of Stockholders with the opportunity to make a statement
if so desired and will be available to respond to appropriate questions. The
Board of Directors recommends a vote FOR ratification of this selection. The
ratification of this selection is not required under the laws of the State of
Delaware, where the Company is incorporated, but the results of this vote will
be considered by the Board of Directors in selecting auditors for future fiscal
years.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended,
requires the Company's directors, executive officers and holders of more than
10% of the Company's Common Stock (collectively, "Reporting Persons") to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Stock of the Company. Such persons are
required by regulations of the Commission to furnish the Company with copies of
all such filings. Based on its review of the copies of such filings received by
it with respect to the fiscal year ended December 31, 1999 and written
representations from certain Reporting Persons, the Company believes that all
Reporting Persons complied with all Section 16(a) filing requirements in the
fiscal year ended December 31, 1999, except that Mr. Cramer failed to file one
transaction in a timely manner. Mr. Cramer filed an amended Form 4 to report the
missed transaction.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended for inclusion in the proxy statement
to be furnished to all stockholders entitled to vote at the next Annual Meeting
of the Company must be received at the Company's principal executive offices no
later than January 1, 2001. Under the Company's By-Laws, stockholders who wish
to make a proposal at the next Annual Meeting - other than one that will be
included in the Company's proxy materials - must notify the Company no earlier
than December 1, 2000 and no later than January 1, 2001. If a stockholder who
wishes to present a proposal fails to notify the Company by January 1, 2001, the
stockholder would not be entitled to present the proposal at the meeting. If,
however, notwithstanding the requirements of the Company's By-laws, the proposal
is brought before the meeting, then under the Securities and Exchange
Commission's proxy rules the proxies solicited by management with respect to the
next Annual Meeting will confer discretionary voting authority with respect to
the stockholder's proposal on the persons selected by management to vote the
proxies. If a stockholder makes a timely notification, the proxies may still
exercise discretionary voting authority under circumstances consistent with the
Securities and Exchange Commission's proxy rules. In order to curtail
controversy as to the date on which a proposal was received by the Company, it
is suggested that proponents submit their proposals by Certified Mail -- Return
Receipt Requested to Omtool, Ltd., 8 Industrial Way, Salem, New Hampshire 03079,
attention: Kira Nelson.
EXPENSES AND SOLICITATION
Proxies may be solicited by the Company, by personal interview, mail
and telephone. The Company may request banks, brokers and other custodians,
nominees and fiduciaries to solicit their customers who have stock of the
Company registered in the names of a nominee and, if so, will reimburse such
banks, brokers and other custodians, nominees and fiduciaries for their
reasonable out-of-pocket costs. The cost of solicitation of proxies will be
borne by the Company.
15
<PAGE>
PROXY PROXY
OMTOOL, LTD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 2, 2000
The undersigned hereby appoints Robert L. Voelk and Kira Nelson, or any of
them, proxies for the undersigned, each with full power of substitution, to
attend the Annual Meeting of Stockholders of Omtool, Ltd., to be held on June 2,
2000 at 10:00 a.m., at the Needham Sheraton, Needham, Massachusetts, and at any
adjournments or postponements of the Annual Meeting, and to vote as specified in
this Proxy all the Common Stock of the Company which the undersigned would be
entitled to vote if personally present. This Proxy when properly executed will
be voted in accordance with your indicated directions. IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE DIRECTORS AND FOR PROPOSALS 2
AND 3.
The Board of Directors recommends a vote FOR the election of the Directors
and FOR Proposals 2 and 3.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE REVERSE
SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE>
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
OMTOOL, LTD.
JUNE 2, 2000
[arrow down] Please Detach and Mail in the Envelope Provided [arrow down]
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
FOR WITHHELD
1. To elect two
Class III / / / /
Directors each
to serve for a
three-year term.
INSTRUCTIONS: To withhold for a specific nominee, write
that nominee's name in the space provided.
_______________________________________________________
NOMINEES: Robert L. Voelk
Martin A. Schultz
FOR AGAINST ABSTAIN
2. To ratify the selection of the firm of Arthur
Andersen LLP as auditors for the fiscal / / / / / /
year ending December 31, 2000.
3. To transact such other business as may
properly come before the meeting and any / / / / / /
adjournments thereof.
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL
MEETING OF STOCKHOLDERS AND THE PROXY STATEMENT.
Signature(s)__________________________________ _______________________________
Dated: ___________________, 2000
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS. JOINT OWNERS SHOULD EACH SIGN
SEPARATELY. WHERE APPLICABLE, INDICATE YOUR OFFICIAL POSITION OR REPRESENTATIVE
CAPACITY.
