<PAGE> 1
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
Computer Identics Corporation
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / 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:
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<PAGE> 2
COMPUTER IDENTICS CORPORATION
[COMPUTER INDENTICS LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF COMPUTER IDENTICS CORPORATION
TO BE HELD ON MAY 14, 1996
The Annual Meeting of Stockholders of Computer Identics Corporation will be
held on May 14, 1996 at 10:00 a.m., local time, at the offices of the Company, 5
Shawmut Road, Canton, Massachusetts, for the following purposes:
1. To elect six (6) directors to serve for the ensuing year and until
their successors are duly elected and qualified.
2. To consider and act upon a proposal to amend the Computer Identics
Corporation Restated Articles of Organization, as amended, to increase the
number of authorized shares of Voting Common Stock from 14,000,000 to
25,000,000.
3. To consider and act upon a proposal to adopt the Computer Identics
Corporation 1996 Incentive Stock Plan.
4. To consider and act upon any matters incidental to the foregoing
purposes and any other matters which may properly come before the Meeting
or any adjourned session thereof.
The Board of Directors has fixed March 29, 1996 as the record date for
determining the stockholders entitled to notice of, and to vote at, the Meeting.
You are cordially invited to attend the Meeting.
By Order of the Board of Directors
Steven R. London, Clerk
Canton, Massachusetts
April 8, 1996
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YOUR VOTE IS IMPORTANT
YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN THE ACCOMPANYING FORM OF PROXY,
SO THAT IF YOU ARE UNABLE TO ATTEND THE MEETING YOUR SHARES MAY NEVERTHELESS BE
VOTED. HOWEVER, THE PROXY IS REVOCABLE AS DESCRIBED IN THE PROXY STATEMENT.
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<PAGE> 3
COMPUTER IDENTICS CORPORATION
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 1996
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Computer Identics Corporation, a
Massachusetts corporation (the "Company") for use at the Annual Meeting of
Stockholders to be held at the principal executive offices of the Company, 5
Shawmut Road, Canton, Massachusetts 02021, on May 14, 1996, at 10:00 a.m. and at
any adjournment or adjournments thereof (the "Meeting"). The enclosed proxy
relating to the Meeting is solicited on behalf of the Board of Directors of the
Company and the cost of such solicitation will be borne by the Company. It is
expected that this proxy statement and the accompanying proxy will be mailed to
stockholders on or about April 8, 1996. Certain of the officers and regular
employees of the Company may solicit proxies by correspondence, telephone or in
person, without extra compensation. The Company may also pay to banks, brokers,
nominees and certain other fiduciaries their reasonable expenses incurred in
forwarding proxy material to the beneficial owners of securities held by them.
Only stockholders of record at the close of business on March 29, 1996 will
be entitled to receive notice of, and to vote at, the Meeting. As of that date,
there were outstanding and entitled to vote 10,866,793 shares of Voting Common
Stock, $.10 par value (the "Common Stock") of the Company. Each such stockholder
is entitled to one vote for each share of Common Stock so held and may vote such
shares either in person or by proxy.
The enclosed proxy, if executed and returned, will be voted as directed on
the proxy or, in the absence of such direction, for the election of the nominees
as directors, for the proposal to amend the Company's Restated Articles of
Organization, as amended, (the "Articles of Organization") to increase the
number of shares of Common Stock from 14,000,000 to 25,000,000, and for the
proposal to adopt the 1996 Incentive Stock Plan. If any other matters shall
properly come before the Meeting, the enclosed proxy will be voted by the
proxies in accordance with their best judgment. The proxy may be revoked at any
time prior to exercise by filing with the Clerk of the Company a written
revocation, by executing a proxy with a later date, or by attending and voting
at the Meeting.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Section 50A of the Massachusetts Business Corporation Law ("Section 50A")
requires most publicly-held Massachusetts corporations, including the Company,
to divide their boards of directors into three classes, notwithstanding any
provisions to the contrary in a corporation's articles of organization or
by-laws. At each annual meeting of stockholders following the initial
classification, the directors elected to succeed those whose terms expire shall
be elected to hold office for a term to expire at the third annual meeting of
stockholders after their election. Pursuant to an elective provision of Section
50A, the Board of Directors of the Company voted to remove the Company from the
operation of Section 50A. Thus the provisions of the Company's Articles of
Organization and By-laws continue to govern the election and term of office of
the Board of Directors.
The Company's By-laws provide that the number of directors constituting the
Board of Directors shall be such number, not less than that required by
applicable law, as the Board of Directors from time to time shall determine. The
Board of Directors has fixed the number of directors constituting the Board of
Directors for
<PAGE> 4
the ensuing year at six. At the Meeting, six directors are to be elected to
serve until the next annual meeting of stockholders and until their respective
successors have been duly elected and qualified. The persons listed in the table
below have been nominated by the Board of Directors for election as directors.
All such nominees are currently directors of the Company.
It is the intention of the persons named as proxies to vote for the
election of the nominees. In the unanticipated event that any such nominee
should be unable to serve, the persons named as proxies will vote the proxy for
such substitutes, if any, as the present Board of Directors may designate.
<TABLE>
The following table sets forth certain information with respect to the
nominees.
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
---- --- -------- --------------
<S> <C> <C> <C>
Richard C. Close 53 President, Chief Executive 1992
Officer and Director
John M. Hill(1) 58 Director 1992
Tomas Kohn(2) 55 Chairman of the Board, Director 1987
Jan A. Smolders(1)(2) 56 Director 1993
Edward J. Stewart, 50 Director 1995
III(2)
Richard S. Wilcox(1) 66 Director 1969
<FN>
- ---------------
(1) Member of the Company's Audit Committee.
(2) Member of the Company's Stock Incentive, Nominations and Compensation
Committee.
</TABLE>
Mr. Close has been the President and Chief Executive Officer of the Company
since May 1993. See "Executive Compensation -- Employment Agreement." From 1987
to 1993, Mr. Close served as President of Kodak Electronic Printing Systems,
Inc., a manufacturer of digital pre-press equipment for the printing and
publishing industries.
Mr. Hill has been a self-employed management consultant in strategic
planning and business development in material handling, warehousing and
distribution since 1990. From 1989 to 1990, Mr. Hill was Vice President of
Control Module, Inc., a manufacturer of automatic identification and data
collection systems. From 1988 to 1989, Mr. Hill was an independent consultant
and was affiliated with Tompkins Associates, a material handling consulting
firm. From 1985 to 1988, Mr. Hill served as President of Logisticon, Inc., a
supplier of material management systems.
Mr. Kohn has been a Professor at Boston University since 1988. Mr. Kohn has
been a Director of Conduit del Ecuador, a steel tubing manufacturer, since 1974,
and a Director of the steel wire manufacturer, Ideal-Alambrec, since 1971. Mr.
Kohn serves as a Director of the Company as a designee of N.V. Bekaert S.A., a
manufacturer of steel wire and wire products (see "Security Ownership of
Directors, Officers and Certain Other Persons").
Mr. Smolders has been the President of Bekaert Corporation, the United
States affiliate of Bekaert, since 1992. From 1989 through 1991, Mr. Smolders
was the Vice President and General Manager of the steel cord division of Bekaert
Corporation. Mr. Smolders serves on the Board of Directors of the Company as a
designee of Bekaert (see "Security Ownership of Directors, Officers and Certain
Other Persons").
Mr. Stewart has been the General Partner of Kestrel Venture Management for
two years and of Corning Venture Management since 1983, both venture capital
firms. From 1982 to 1992, Mr. Stewart served as the President of Corning Capital
Corporation, a private investment firm. Mr. Stewart has been a Director of
Corning Capital Corporation since 1982 and a Director of MicroTouch Systems,
Inc., a manufacturer of touch-sensitive computer screens, since 1984.
2
<PAGE> 5
Mr. Wilcox, is a private investor. Mr. Wilcox has also served for more than
five years as a Director of Sheldahl, Inc., a manufacturer of flexible printed
circuits and composite materials for the electronics industry.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held seven meetings during the fiscal
year ended December 31, 1995. Each current Director attended at least 75% of the
aggregate number of all meetings of the Board of Directors and committees of
which he was a member during such fiscal year.
The Board of Directors has an Audit Committee, currently composed of
Messrs. Hill, Smolders and Wilcox, which met on two occasions during the fiscal
year ended December 31, 1995. The functions performed by this Committee include
recommending to the Board of Directors the engagement of the independent
auditors, reviewing the scope of and other matters relevant to the audit,
reviewing the scope of internal controls and the implementation by management of
recommendations made by the independent auditors.
The Board of Directors has a Stock Incentive, Nominations and Compensation
Committee, currently composed of Messrs. Kohn, Smolders and Stewart, which met
on four occasions during the fiscal year ended December 31, 1995. The functions
of this Committee include recommending nominees for election as Directors,
advising the Board of Directors on employment arrangements with key executive
personnel and determining salaries, bonuses, awards under the Company's stock
incentive plans, employee benefits and overall employee compensation. This
Committee considers recommendations for potential members of the Board of
Directors from other Directors, management and stockholders.
COMPENSATION OF DIRECTORS
Each Director who is not also an employee of the Company (the "Nonemployee
Directors") receives a fee of $500 for each meeting of the Board of Directors
and each meeting of any Committee of the Board (except those held in conjunction
with meetings of the Board of Directors) attended. Nonemployee Directors are
also reimbursed for travel expenses incurred in attending such meetings. In
addition, Nonemployee Directors receive an annual fee of $2,000.
The Company has a 1994 Restricted Stock Plan for Nonemployee Directors (the
"Directors' Plan"). Pursuant to the Plan, each Nonemployee Director who was a
Director on March 10, 1994 (the "Effective Date") received 9,600 shares of
Common Stock. Each Nonemployee Director elected subsequent to the Effective Date
will receive 9,600 less 200 shares for each full month elapsed since the
Effective Date until such election. The Chairman of the Board of Directors
received an additional 19,200 shares on the Effective Date, and any new Chairman
of the Board who is also a Nonemployee Director first elected subsequent to the
Effective Date will receive an additional 19,200 less 400 shares for each full
month elapsed from the Effective Date until such election. Shares granted to
Nonemployee Directors vest at the rate of 200 shares per month, and the
additional shares granted to the Chairman vest at the rate of 400 shares per
month.
The Company carries directors' and officers' liability insurance.
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN OTHER PERSONS
The following table sets forth certain information as of March 15, 1996
with respect to the beneficial ownership of the Company's Common Stock by each
Director, the named executive officers in the Summary Compensation Table under
"Executive Compensation" below, all executive officers and Directors as a group,
3
<PAGE> 6
and each person known by the Company to be the beneficial owner of 5% or more of
the Company's Common Stock. This information is based upon information received
from or on behalf of the named individuals.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK PERCENT
NAME BENEFICIALLY OWNED(1) OF CLASS
---- ---------------------- --------
<S> <C> <C>
Richard C. Close(2) 352,500 3.2%
John M. Hill(3) 15,750 *
Tomas Kohn(4) 233,380 2.2%
Jan A. Smolders 17,100 *
Edward J. Stewart, III(5) 158,600 1.5%
Richard S. Wilcox(6) 388,728 3.6%
Jeffrey A. Weber(7) 100,000 1.0%
Stephen L. Abbey(8) 60,000 *
Thomas J. Chisholm(9) 54,500 *
All executive officers and directors as a
group 1,357,858 12.1%
(9 persons)(2)(3)(4)(5)(6)(7)(8)(9)
Frank J. Wezniak(10) 856,610 7.7%
5 Arlington Street
Boston, MA 02116
N.V. Bekaert S.A. 2,431,033 22.4%
Bekaertstratt 2
B-8550 Zwevegem
Belgium
The Wilcox Group (11) 951,667 8.8%
c/o Richard S. Wilcox, Jr.
119 South Main Street
Stillwater, MN 55082
<FN>
- ---------------
* Less than 1% of the outstanding Common Stock.
(1) Unless otherwise noted, each person possesses sole voting and investment
power with respect to the shares listed.
(2) Includes 200,000 shares issuable pursuant to immediately exercisable stock
options and stock options exercisable within 60 days, as well as 24,000
shares of restricted stock which vest on May 1, 1996.
(3) Includes 1,150 shares held jointly with Mr. Hill's wife.
(4) Includes 37,000 shares held by Mr. Kohn's sister-in-law, brother-in-law and
mother as to which he disclaims beneficial ownership. Includes 3,500 shares
held by Mr. Kohn's spouse.
(5) Includes 55,000 shares held jointly with Mr. Stewart's spouse and 30,000
shares held by two of Mr. Stewart's adult children.
(6) Includes 159,436 shares held by a trust for which Mr. Wilcox serves as a
Trustee. Mr. Wilcox disclaims beneficial ownership of such shares. See also
Note 11, below.
(7) Includes 70,000 shares issuable pursuant to immediately exercisable stock
options.
(8) Includes 45,000 shares issuable pursuant to immediately exercisable stock
options.
(9) Includes 44,500 shares issuable pursuant to immediately exercisable stock
options.
(10) Includes 200,000 shares issuable pursuant to immediately exercisable
warrants.
(11) Includes the 388,728 shares held by Richard S. Wilcox. The Wilcox Group
consists of Richard S. Wilcox, and a number of his relatives. Richard S.
Wilcox does not have any voting or investment power with respect to the
562,939 shares held by his relatives and disclaims beneficial ownership of
such shares.
</TABLE>
4
<PAGE> 7
EXECUTIVE COMPENSATION
<TABLE>
The following Summary Compensation Table sets forth the compensation during
the last three fiscal years of the Chief Executive Officer and each of the other
most highly compensated executive officers of the Company whose annual salary
and incentive compensation, if any, exceeded $100,000 for services in all
capacities to the Company during the last fiscal year ended December 31, 1995.
The executive officers listed in the Summary Compensation Table are collectively
referred to as the "Named Executive Officers." No other executive officer of the
Company received an annual salary and bonus in excess of $100,000 for services
in all capacities to the Company during the last fiscal year.
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION --------------------
-------------------------------------- RESTRICTED SECURITIES
FISCAL OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS COMPENSATION
POSITION ENDED ($) ($) ($) ($) (#) ($)(1)
------------------ ------ -------- ------- ------------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Richard C. Close............. 1995 $150,000 $ 0 $ 0 $ 0(2) 150,000(3) $2,640
President and Chief 1994 150,000 0 0 0 0 2,640
Executive Officer 1993 98,077 0 1,167(4) 144,000(5) 200,000(6) 2,160
Jeffrey A. Weber............. 1995 115,000 10,000 0 0 0 1,826
Senior Vice President 1994 65,512(7) 14,583 0 31,875(8) 100,000(9) 1,513
Operations & Finance 1993 -- -- -- -- -- --
Stephen L. Abbey............. 1995 98,578(10) 18,333 0 28,125(11) 75,000(12) 1,518
Vice President, North 1994 -- -- -- -- -- --
American Sales & 1993 -- -- -- -- -- --
Marketing
Thomas J. Chisholm........... 1995 102,827 6,167 0 0 30,000(13) 1,739
Vice President, Research 1994 99,106 2,125 0 0 25,000(14) 1,712
& Development 1993 93,797 0 0 0 25,000(15) 1,481
<FN>
- ---------------
(1) Consisting of $1,200 of matching contributions by the Company to its 401K
plan for employees plus the income value of term life insurance premiums
paid by the Company.
(2) As of December 29, 1995, Mr. Close held 72,000 shares of restricted stock
having a value of $175,500 based upon a market price of $2.4375 on such
date.
(3) These options vest at the rate of 33.3% per year, commencing April 6, 1996.
(4) Consisting of fees paid to Mr. Close as a Nonemployee Director prior to his
becoming President and Chief Executive Officer of the Company.
(5) In 1993, the Company granted Mr. Close 96,000 shares of Restricted Stock
under its 1993 Stock Incentive Plan. These shares vest at the rate of 25%
per year commencing on May 1, 1993. If the Company terminates Mr. Close
without cause prior to May 1, 1996, an additional 24,000 of these shares
shall automatically vest.
(6) These options vest at the rate of 25% per year, commencing May 1, 1994.
(7) Mr. Weber commenced employment with the Company on June 1, 1994 at an
annual salary of $115,000. Salary reported is from such date.
(8) In 1994, the Company granted Mr. Weber 30,000 shares of Restricted Stock
under its 1993 Stock Incentive Plan. These shares are currently fully
vested.
(9) These options are currently exercisable for 40,000 shares and the remaining
60,000 shares will become exercisable in equal installments on June 1, 1996
and June 1, 1997.
</TABLE>
5
<PAGE> 8
(10) Mr. Abbey commenced employment with the Company on February 1, 1995 at an
annual salary of $110,000. Salary reported is from such date.
(11) In 1995, the Company granted Mr. Abbey 15,000 shares of Restricted Stock
under its 1993 Stock Incentive Plan. These shares are currently fully
vested.
(12) These options are currently exercisable for 45,000 shares and the remaining
30,000 shares will become exercisable on February 3, 1997.
(13) These options vest 100% on January 1, 1997. These options were granted
subject to approval by stockholders at the Meeting of the 1996 Incentive
Stock Plan which is the subject of Proposal No. 3 -- Proposal to Adopt the
Company's 1996 Incentive Stock Plan.
(14) These options are currently exercisable for 15,000 shares and the remaining
10,000 shares will become exercisable on December 9, 1996.
(15) These options are currently exercisable for 17,500 shares and the remaining
7,500 shares will become exercisable on October 7, 1996.
BONUS PLAN
The Company maintains an informal bonus program for certain employees,
including executive officers, under which such employees may be awarded
discretionary cash bonuses based upon an evaluation of individual performance
and the performance of the Company during the year.
STOCK OPTION PLANS
<TABLE>
The following table sets forth certain information regarding grants of
stock options during the fiscal year ended December 31, 1995 to the Named
Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
---------------------------------------------------------- REALIZABLE
NUMBER OF VALUE AT ASSUMED
SHARES % OF TOTAL RATES OF STOCK
UNDERLYING OPTIONS PRICE APPRECIATION
OPTIONS GRANTED EXERCISE OR FOR OPTION TERM
GRANTED TO EMPLOYEES BASE PRICE EXPIRATION -------------------
NAME (#) IN FISCAL YEAR ($/SH) DATE $5%($) 10%($)
---- ----------- --------------- ------------ ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Richard C. Close.............. 150,000 51% $1.8125 4/5/05 $170,980 $433,299
Jeffrey A. Weber.............. -- -- -- -- -- --
Stephen L. Abbey.............. 75,000 26% $ 1.875 2/2/05 88,438 224,120
Thomas J. Chisholm(1)......... 30,000 10% $ 2.625 12/12/05 49,526 125,507
<FN>
- ---------------
(1) Subject to stockholder approval at the Meeting of Stockholders of the 1996
Incentive Stock Plan, which is the subject of Proposal No. 3 -- Proposal to
Adopt the Company's 1996 Incentive Stock Plan.
</TABLE>
6
<PAGE> 9
<TABLE>
The following table sets forth certain information with respect the
aggregate number and value of options exercised and exercisable by the Named
Executive Officers during the fiscal year ended December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
12/31/95 12/31/95(2)
---------------- -----------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
ON EXERCISE VALUE REALIZED UNEXERCISABLE UNEXERCISABLE
NAME (#) ($)(1) (#) ($)
---- ---------------- --------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Richard C. Close......... 0 0 100,000/250,000 $131,250/$225,000
Jeffrey A. Weber......... 0 0 40,000/ 60,000 55,000/ 82,500
Stephen L. Abbey......... 0 0 45,000/ 30,000 25,313/ 16,875
Thomas J. Chisholm....... 0 0 54,500/ 47,500(3) 64,181/ 18,590
<FN>
- ---------------
(1) Messrs. Close, Weber, Abbey and Chisholm did not exercise any stock options
during 1995.
(2) Based upon the closing price of the Company's Common Stock on December 29,
1995 on the Nasdaq National Market of $2.4375 minus the respective option
exercise prices.
(3) Includes 30,000 options that are subject to stockholder approval at the
Meeting of Stockholders of the 1996 Incentive Stock Plan, which is the
subject of Proposal No. 3 -- Proposal to Adopt the Company's 1996 Incentive
Stock Plan.
</TABLE>
EMPLOYMENT AGREEMENTS
In April 1993, the Company entered into an employment agreement with
Richard C. Close, its President and Chief Executive Officer. The Agreement,
which has a four-year term, entitles Mr. Close to an annual salary of
$150,000.00. Pursuant to the Agreement, the Company granted Mr. Close 96,000
shares of Common Stock and incentive stock options for 200,000 shares of Common
Stock at an exercise price of $1.125 per share, subject to a four year vesting
schedule. In the event of the termination of Mr. Close's employment without
cause, the Agreement entitles Mr. Close to his salary for six months. The
employment agreement also entitles Mr. Close to receive such employment benefits
as may be generally available to the Company's employees, and prohibits Mr.
Close from directly or indirectly competing with the Company for so long as he
is an employee of the Company and for a period of two years thereafter.
The Company entered into an employment agreement with Jeffrey A. Weber, its
Senior Vice President, Operations and Finance in May 1994. The Agreement, which
has a three-year term, entitles Mr. Weber to an annual salary of $115,000 and
such employment benefits as may be generally available to the Company's
employees. Pursuant to the Agreement, the Company granted Mr. Weber 30,000
shares of Common Stock and incentive stock options to purchase 100,000 shares of
the Company's Common Stock at an exercise price of $1.0625 per share, subject to
a three year vesting schedule. If Mr. Weber's employment is terminated without
cause, the Agreement entitles Mr. Weber to severance equal to four months'
salary. The employment agreement also entitles Mr. Weber to receive such
employment benefits as may be generally available to the Company's employees,
and prohibits Mr. Weber from directly or indirectly competing with the Company
for so long as he is an employee of the Company and for a period of two years
thereafter.
7
<PAGE> 10
COMPENSATION COMMITTEE REPORT
The primary objectives of the Stock Incentive, Nominations and Compensation
Committee (the "Compensation Committee") in developing executive compensation
policies are to attract, motivate and retain superior talent to enable the
Company to achieve its business objectives and to align the financial interests
of its executive officers with the Company's stockholders.
The compensation of executive officers consists of base compensation,
bonuses, the grant of stock and stock options, and participation in benefit
plans generally available to employees. In setting compensation, the
Compensation Committee strives to achieve a balance between base salary and
bonus to provide executives with competitive compensation based on analyses of
executive compensation plans for comparably sized companies, as reported in
surveys conducted by the American Electronics Association and in other relevant
industry and regional sources. The Compensation Committee relies on bonuses and
grants of stock and stock options to provide significant performance incentives.
Executive officers are eligible to participate in the bonus plan, which is
administered by the Compensation Committee. Executive officers receive
discretionary bonuses based upon a subjective evaluation of their contributions
to the Company. See "Bonus Plan."
All employees, including executive officers and Mr. Close, were eligible to
receive grants of restricted stock and stock options under the 1993 Stock
Incentive Plan (the "1993 Plan"), and will be eligible to receive such grants
under the 1996 Incentive Stock Plan (the "1996 Plan") if Proposal No. 3 is
approved by stockholders at the Meeting. The 1993 Plan has been, and the 1996
Plan will be, used to align the interests of executive officers and employees
with the stockholders' interests and the long term success of the Company. In
determining the number of shares of restricted stock or stock options to be
granted to each executive officer, the Compensation Committee reviews
recommendations provided by Mr. Close and makes a subjective determination
regarding those recommendations based upon the following criteria: (i) the
individual performance and position of responsibility of the executive officer,
(ii) the number of shares of restricted stock and stock options held by the
executive officer, and (iii) the performance of the Company. No particular
weight is given to any of these factors; rather, each executive officer's total
compensation package is reviewed as a whole. During the fiscal year ended
December 31, 1995, the Company granted options to purchase 293,750 shares of
common stock and 15,000 shares of restricted stock. Of these, options to
purchase 255,000 shares and 15,000 restricted shares were granted to the Named
Executive Officers, as follows: options to purchase 150,000 shares were granted
to Mr. Close, options to purchase 75,000 shares and 15,000 restricted shares
were granted to Mr. Abbey and options to purchase 30,000 shares were granted to
Mr. Chisholm (subject to approval by stockholders of the 1996 Plan at the
Meeting). As a special 1995 year-end bonus, 12,600 shares of restricted stock
were distributed to all employees except executive officers.
The Compensation Committee believes that the base salaries of the executive
officers are comparable to the cash compensation of officers with similar
responsibilities in comparable companies.
During the fiscal year ended December 31, 1995, Mr. Close, the Company's
Chief Executive Officer, received a base salary of $150,000 in accordance with
his employment agreement. See "Employment Agreements," above. The Compensation
Committee believes that this compensation is comparable to the cash compensation
of chief executive officers of comparable companies. Mr. Close received stock
options for 150,000 shares and restricted stock amounting to $47,250 in 1995 as
incentive components of his compensation.
Compensation Committee
Jan A. Smolders
Tomas Kohn
Edward J. Stewart, III
8
<PAGE> 11
PERFORMANCE GRAPH
<TABLE>
The following graph compares the yearly change in the Company's cumulative
total shareholder return for fiscal years ended December 31, 1991, December 31,
1992, December 31, 1993, December 31, 1994 and December 31, 1995, the cumulative
total return on the Nasdaq Stock Market Index (U.S. companies) and the Nasdaq
Computer Manufacturers Stocks Index (SIC 3570-3579 U.S. and foreign) based upon
the market price of the Company's Common Stock.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
<CAPTION>
NASDAQ COMP
UTER
MANUFACTUR-
COMPUTER NASDAQ STOCK ERS STOCKS
MEASUREMENT PERIOD IDENTICS COR- MARKET (US SIC 3570- 3579
(FISCAL YEAR COVERED) PORATION COMPANIES) US & FOREIGN
--------------------- ------------- ------------ --------------
<S> <C> <C> <C>
12/31/90 100.0 100.0 100.0
12/31/91 340.0 160.5 139.9
12/31/92 180.0 186.9 188.1
12/31/93 220.0 214.5 178.2
12/30/94 260.0 209.7 195.7
12/29/95 390.0 296.5 308.4
</TABLE>
Assumes $100 invested on December 31, 1990 in the Company's Common Stock, the
CRSP Index for the Nasdaq Stock Market Index (U.S. companies) and Nasdaq
Computer Manufacturers Stocks Index (SIC 3570-3579 U.S. and foreign), and the
reinvestment of any and all dividends.
9
<PAGE> 12
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE
RESTATED ARTICLES OF ORGANIZATION, AS AMENDED, TO INCREASE
THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors unanimously approved and recommends to the Company's
stockholders that they consider and approve Proposal No. 2 to amend the
Company's Restated Articles of Organization, as amended, (the "Articles of
Organization") to increase the number of authorized shares of Voting Common
Stock, $.10 par value (the "Common Stock"), from 14,000,000 to 25,000,000. The
additional shares of Common Stock would be part of the existing class of Common
Stock and, if and when issued, would have the same rights and privileges as the
shares of Common Stock presently outstanding.
As of December 29, 1995, there were 10,856,793 shares of Common Stock
outstanding. An aggregate of 10,450 shares of Common Stock were reserved for
issuance as restricted stock and upon exercise of options granted or to be
granted under the Company's 1993 Stock Incentive Plan. In addition, 200,000
shares of Common Stock were reserved for issuance upon exercise of certain
immediately exercisable warrants.
Pursuant to Massachusetts corporate law, the Board of Directors is
authorized to issue from time to time any and all authorized and unissued shares
of Common Stock for any proper corporate purposes without prior stockholder
approval, except as may be required for a particular transaction by the
Company's Articles of Organization, or by the rules of the NASD, or any other
stock exchange or interdealer quotation system on which the Company's securities
may then be listed. The Nasdaq National Market System, on which the Common Stock
is listed, for example, currently requires stockholder approval as a
prerequisite to listing shares to be issued in several instances, including an
issuance that will result in a change of control, a transaction other than a
public offering involving the sale or issuance of common stock equal to 20% or
more of the common stock or voting power outstanding before the issuance for
less than the greater of book or market value of the common stock, or, an
acquisition, where a director, officer or substantial stockholder has at least a
5% interest in the company or assets to be acquired and the issuance of shares
could result in an increase in outstanding common stock or voting power of 5% or
more.
The Board of Directors believes that the proposed increase in the number of
authorized shares of Common Stock is in the best interests of the Company and
its stockholders. The increase will give the Company greater flexibility by
allowing shares of Common Stock to be issued by the Board of Directors without
the delay and expense of a special meeting of stockholders. For example, the
Board of Directors may deem it appropriate to make a private or public offering
of the Company's Common Stock in order to raise funds for working capital or
other purposes, or the Common Stock may be issued to finance possible future
acquisitions, or for distribution to the Company's stockholders in the event of
a stock dividend or stock split, or for distribution pursuant to employee
benefit plans. However, the Company does not currently have any plans to pursue
any of the foregoing with the exception of distribution pursuant to employee
benefit plans as further discussed in "Proposal No. 3 -- Proposal to Adopt the
Company's 1996 Incentive Stock Plan."
Stockholders of the Company do not now have preemptive rights to subscribe
for or purchase additional shares of Common Stock, and the stockholders will
have no preemptive rights to subscribe for or purchase any of the additional
shares authorized by the proposed amendment.
VOTE REQUIRED TO AMEND THE ARTICLES OF ORGANIZATION
An affirmative vote by the holders of a majority of the Common Stock
outstanding and entitled to vote is required for the adoption of Proposal No. 2
to increase the number of authorized shares of Common Stock.
10
<PAGE> 13
The Board of Directors recommends that the stockholders vote "FOR" this
proposed amendment to the Articles of Organization.
Possible Effects of the Proposal. If the proposed amendment is adopted, the
authority of the Board of Directors to issue the newly-authorized but unissued
shares of Common Stock might be considered as having the effect of discouraging
an attempt by another person or entity to effect a takeover or otherwise gain
control of the Company, since the issuance of additional shares of Common Stock
would dilute the voting power of the Common Stock then outstanding.
The Company's Articles of Organization and By-Laws do not currently contain
any antitakeover provisions.
Massachusetts Statute. Pursuant to Chapter 110F of the Massachusetts
General Laws entitled "Business Combinations with Interested Shareholders,"
publicly held Massachusetts corporations are prohibited from engaging in a wide
range of specified transactions with any "interested stockholder," defined to
include, among others, any person or entity who owns (or at any time within the
past three years did own) 5% or more of the outstanding voting stock of a
corporation, for a three year period following the date the person becomes an
interested stockholder, unless, among other things, (a) the interested
stockholder obtains approval of the corporation's board of directors prior to
becoming an interested stockholder, (b) the interested stockholder acquires at
least 90% of the voting stock of the corporation (excluding shares held by
certain affiliates of the corporation) outstanding at the time of becoming an
interested stockholder, or (c) the business combination is both approved by the
board of directors and authorized at a meeting of stockholders by the holders of
at least two-thirds of the outstanding voting stock of the corporation
(excluding shares held by the interested stockholder).
Under Chapter 110D of the Massachusetts General Laws governing "control
share acquisitions," any stockholder of a publicly-held Massachusetts
corporation who acquires 20% or more of certain ranges of voting
power -- one-fifth or more but less than one-third, one-third or more but less
than a majority, or the majority of all voting power -- may not, except in
certain transactions, vote such stock unless the stockholders of the corporation
so authorize.
Chapter 110C of the Massachusetts General Laws, entitled "Regulation of
Take-Over Bids in the Acquisition of Corporations," sets forth disclosure and
other requirements with which a person making a take-over bid must comply.
Further, the statute generally requires that if the offeror increases the
consideration he is willing to pay for shares of the target corporation, then
all stockholders of the target corporation will be entitled to such higher price
for their shares, whether or not such shares are tendered before or after the
offeror increases the consideration he is willing to pay.
Each of the statutory provisions described above, as well as the authority
of the Company's Board of Directors to issue additional shares of Common Stock
if the proposal to increase the number of shares of Common Stock is approved by
stockholders, could be used by the Board of Directors in a manner calculated to
prevent the removal of management and make more difficult or discourage a change
in control of the Company.
The Company is not aware of any efforts to accumulate the Company's
securities or to obtain control of the Company, and the Company has no present
intention or agreement to issue any additional shares of Common Stock, other
than pursuant to employee benefit plans, outstanding options and the 1996 Stock
Incentive Plan, which is the subject of Proposal No. 3 -- Proposal to Adopt the
Company's 1996 Incentive Stock Plan.
11
<PAGE> 14
PROPOSAL NO. 3
PROPOSAL TO ADOPT THE COMPANY'S
1996 INCENTIVE STOCK PLAN
The Board of Directors has adopted, subject to stockholder approval, the
Company's 1996 Incentive Stock Plan (the "1996 Plan"). The following is a
summary description of the 1996 Plan and is qualified in its entirety by
reference to the full text of the 1996 Plan, which is set forth as Exhibit A to
this Proxy Statement.
Purposes. The 1996 Plan is intended to provide employees and other persons
who are in a position to contribute to the long-term success of the Company with
long-term incentives and rewards, to assist the Company in attracting and
retaining executives and key employees with requisite experience and ability and
to associate more closely the interests of such executives and key employees
with those of the Company's stockholders.
Administration. The 1996 Plan will be administered by the Stock Incentive,
Nominations and Compensation Committee (the "Committee"). The Committee will
serve at the pleasure of the Board of Directors which may discharge any member,
appoint new members or fill vacancies. No member of the Committee while a member
thereof is eligible to participate in the 1996 Plan nor may any person be
appointed to the Committee unless he was not eligible to participate in the 1996
Plan or any other plan of the Company at any time within one year prior to such
appointment as provided in Rule 16b-3 under the Securities Exchange Act of 1934,
as amended.
Stock Available for Awards. Subject to stockholder approval, a maximum of
500,000 shares of Common Stock will be available for issuance under the 1996
Plan. The shares of Common Stock to be delivered under the 1996 Plan may be
either authorized but unissued shares or treasury shares. Any shares subject to
an option under the 1996 Plan which for any reason terminates, is canceled or
otherwise expires unexercised, any shares reacquired by the Company due to
restrictions imposed on the shares, shares returned because payment is made
under the 1996 Plan in Common Stock of equivalent value rather than in cash, and
shares reacquired from a recipient for any other reason, shall no longer count
towards the aggregate number of shares which may be the subject of stock options
or restricted share awards and such number of shares may be subject to further
awards under the 1996 Plan.
Eligibility; Grant of Awards. Subject to the terms of the 1996 Plan, the
Committee has the authority and sole discretion to determine those key employees
and other individuals eligible to participate in the 1996 Plan, select to whom
awards will be granted, determine the size and form of awards and the times that
awards are to be granted, establish the terms under which awards will be made
and make or alter any restrictions or conditions on any award and adopt such
rules and regulations, establish, define and interpret other terms and
conditions and make all other determinations necessary or desirable for the
administration of the 1996 Plan. Under the 1996 Plan, the Company may grant
incentive stock options intended to qualify under Section 422 of the Internal
Revenue Code of 1986, as amended ("incentive stock options"), other options
which are not qualified as incentive stock options ("nonqualified stock
options") and restricted share awards. Incentive stock options may only be
granted to employees.
Stock Option Awards; Price; Exercise; Restrictions. Stock options are
rights to purchase shares of the Company's Common Stock at a fixed price for a
predetermined period of time. The 1996 Plan authorizes the Committee to
determine the number of shares of Common Stock to be covered by each option, the
purchase or exercise price of stock subject to such stock options and the term
of each stock option, which may not be longer than ten (10) years after the date
of grant. The exercise price may not be less than par value in the case of
nonqualified stock options. It may not be less than the greater of fair market
value at the time of grant of such stock option or par value in the case of
incentive stock options. The purchase price must be paid in full
12
<PAGE> 15
upon exercise either in cash or, at the Committee's discretion, by delivery of
shares of Common Stock, any other property or any combination of cash, stock and
other property. No stock option or any rights or interests of the recipient
therein may be assignable or transferable by such recipient except by will or
the laws of descent and distribution. During the lifetime of a recipient, a
stock option may be exercisable only by the recipient thereof. The aggregate
fair market value of the Common Stock (at the time of grant of any incentive
stock option) with respect to which incentive stock options are exercisable for
the first time by any employee during any calendar year under all plans of the
Company and any subsidiaries may not exceed $100,000. At the Committee's
discretion, the Common Stock issued pursuant to stock options granted under the
1996 Plan may be subject to restrictions on vesting or transferability.
Stock Option Awards; Rights in the Event of Termination or Death. In the
event of the death, retirement or permanent disability of the recipient of a
stock option, the stock option may be exercised by the recipient or the
recipient's estate, to the extent exercisable on the date of death, disability
or retirement, provided that the period during which the incentive stock option
may be exercised shall not extend beyond the earlier of one year from the date
of such death, disability or retirement or the expiration date of the stock
option. If the recipient's employment is terminated for reasons other than
death, retirement or permanent disability, the period during which an incentive
stock option may be exercised shall not extend beyond three months after the
recipient leaves the Company, to the extent such stock option was exercisable on
the date of termination.
Restricted Share Awards. Restricted share awards are grants of restricted
shares. Restricted shares may be issued for any lawful consideration and on such
other terms as the Committee may determine. Restricted shares are held by the
recipient subject to certain restrictions on disposition which lapse over time.
With the consent of the Committee, restricted shares as to which restrictions
have not yet lapsed may be pledged or otherwise encumbered to secure borrowing.
Restricted Share Awards; Rights in the Event of Termination or Death. In
the event of the recipient's termination of employment for any reason except
death, retirement or permanent disability, the Company may repurchase all or a
portion of the restricted shares as to which restrictions have not already
lapsed for the recipient's original acquisition price, if any. The restrictions
against disposition and the obligation of resale to the Company will lapse as to
any restricted shares that the Company declines to purchase. Upon the death,
retirement or permanent disability of the recipient of a restricted share award,
the restrictions against disposition and the obligation of resale to the Company
of the restricted shares as to which such restrictions and obligations have not
otherwise lapsed will immediately lapse.
Indemnity. Neither the Board of Directors nor the Committee, nor any
members of either, nor any employees of the Company or any parent, subsidiary or
other affiliate, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with their
responsibilities with respect to the 1996 Plan. The Company will indemnify the
members of the Board of Directors, the members of the Committee and the
employees of the Company and its parent or subsidiaries in respect of any claim,
loss, damage or expense (including reasonable counsel fees) arising from any
such act, omission, interpretation, construction or determination to the full
extent permitted by law.
Amendment or Termination of the 1996 Plan. The Board of Directors may at
any time, amend, suspend or terminate the 1996 Plan; provided, however, that
neither the Board of Directors nor the Committee may materially increase the
benefits accruing to participants in the 1996 Plan, increase the number of
shares of Common Stock reserved for purposes of the 1996 Plan, extend the term
of the 1996 Plan, materially modify the requirements to be a participant in the
1996 Plan or otherwise modify the 1996 Plan in any way or manner requiring the
approval of the stockholders without such approval and compliance with any
applicable law, rules or regulations. No amendment, suspension or termination of
the 1996 Plan may affect the rights of a participant to whom an award has been
granted without such participant's consent.
13
<PAGE> 16
Share Adjustments. If there is any change in the Common Stock through
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split or other change in the corporate structure of the Company, appropriate
adjustments may be made by the Committee (or if the Company is not the surviving
Corporation in any transaction, the Board of Directors of the surviving
Corporation, or its designee) in the aggregate number and kind of shares subject
to the 1996 Plan, and the number and kind of shares and the price per share
subject to outstanding options and restricted shares.
Duration of the 1996 Plan. Subject to stockholder approval of the 1996
Plan, awards may be made under the 1996 Plan for a period of ten years ending on
December 14, 2005. The period during which a stock option or other award may be
exercised, however, may extend beyond that time.
Federal Income Tax Consequences of the 1996 Plan. The following general
discussion of the Federal income tax consequences of options and restricted
share awards granted under the 1996 Plan is based upon the provisions of the
Internal Revenue Code as in effect on the date hereof, current regulations
thereunder, and existing public and private administrative rulings of the
Internal Revenue Service (the "IRS"). This discussion is not intended to be a
complete discussion of all of the Federal income tax consequences of the 1996
Plan or of all of the requirements that must be met in order to qualify for the
tax treatment described herein. Changes in the law and regulations may modify
the discussion, and in some cases the changes may be retroactive. No information
is provided as to state tax laws. The 1996 Plan is not qualified under Section
401 of the Code, nor is it subject to the provisions of the Employee Retirement
Income Security Act of 1974, as amended.
Federal Tax Consequences of Nonqualified Options Under the 1996 Plan. An
option holder will not recognize any taxable income upon the grant of a
nonqualified option under the 1996 Plan. Generally, an option holder recognizes
ordinary taxable income at the time a nonqualified option is exercised in an
amount equal to the excess of the fair market value of the shares of Common
Stock on the date of exercise over the exercise price. However, if (a) the
Company imposes restrictions on the shares which do not permit the recipient to
transfer the shares to others and which require the recipient to return the
shares to the Company at less than fair market value upon termination of
employment prior to a specified date, or (b) the recipient is an officer or
director of the Company subject to Section 16(b) of the Securities Exchange Act
of 1934 ("Section 16(b)") upon their sale of shares of Common Stock, then there
may be a different tax result. In either case, the recognition of income by the
option holder will be postponed. In general, the date on which taxable income
(if any) is recognized (the "Recognition Date") will be the date on which the
stock becomes "freely transferable" or not subject to "risk of forfeiture" in
the case of stock on which the Company has imposed restrictions. The IRS
regulations have not yet been amended to conform with the latest rules under
Section 16(b). However, it is generally anticipated that the Recognition Date
will be the earlier of (i) six months after the date the option was granted, or
(ii) the first day on which the sale of the shares would not subject the
individual to liability under Section 16(b). It is possible that the six month
period will instead run from the option holder's most recent grant or purchase
of Common Stock prior to his or her exercise of the option. The option holder
will generally recognize ordinary taxable income on the Recognition Date in an
amount equal to the excess of the fair market value of the shares at that time
over the exercise price.
Despite this general rule, if the Recognition Date is after the date of
exercise, then the option holder may make an election pursuant to Section 83(b)
of the Code. In this case, the option holder will recognize ordinary taxable
income at the time the option is exercised and not on the later date.
The Company will generally be entitled to a compensation deduction for
Federal income tax purposes in an amount equal to the taxable income recognized
by the option holder, provided the Company reports the income on a form W-2 or
1099, whichever is applicable, that is timely provided to the option holder and
filed with the IRS.
14
<PAGE> 17
When an option holder subsequently disposes of the shares of Common Stock
received upon exercise of a nonqualified option, he or she will recognize
long-term or short-term capital gain or loss (depending upon the holding
period), in an amount equal to the difference between the sale price and the
fair market value on the date on which the option holder recognized ordinary
taxable income as a result of the exercise of the nonqualified option.
An option holder who pays the exercise price for a nonqualified option, in
whole or in part, by delivering shares of Common Stock already owned by him or
her will recognize no gain or loss for Federal income tax purposes on the shares
surrendered, but otherwise will be taxed according to the rules described above.
To the extent the shares acquired upon exercise are equal in number to the
shares surrendered, the basis of the shares received will be equal to the basis
of the shares surrendered. The basis of shares received in excess of the shares
surrendered upon exercise will be equal to the fair market value of the shares
on the date of exercise, and the holding period for the shares received will
commence on that date.
Incentive Stock Options Under the 1996 Plan. An option holder generally
will not recognize taxable income upon either the grant or the exercise of an
incentive stock option. However, under certain circumstances, there may be
alternative minimum tax or other tax consequences, as discussed below.
An option holder will recognize taxable income upon the disposition of the
shares received upon exercise of an incentive stock option. Any gain recognized
upon a disposition that is not a "disqualifying disposition" (as defined below)
will be taxable as long-term capital gain.
A "disqualifying disposition" means any disposition of shares acquired on
the exercise of an incentive stock option within two years of the date the
option was granted or within one year of the date the shares were issued to the
option holder. The use of shares acquired pursuant to the exercise of an
incentive stock option to pay the option price under another incentive stock
option is treated as a disposition for this purpose. In general, if an option
holder makes a disqualifying disposition, an amount equal to the excess of (a)
the lesser of (i) the fair market value of the shares on the date of exercise or
(ii) the amount actually realized over (b) the option exercise price will be
taxable as ordinary income and the balance of the gain recognized, if any, will
be taxable as either long-term or short-term capital gain, depending on the
optionee's holding period for the shares. In the case of a gift or certain other
transfers, the amount of ordinary income taxable to the optionee is not limited
to the amount of gain which would be recognized in the case of a sale. Instead,
it is equal to the excess of fair market value of the shares on the date of
exercise over the option exercise price.
As noted previously, the tax result may change if (a) the Company imposes
restrictions on the shares which do not permit the recipient to transfer the
shares to others and which require the recipient to return the shares to the
Company at less than fair market value upon termination of employment prior to a
specified date, or (b) the recipient is an officer or director of the Company
subject to Section 16(b). In the case of a disqualifying disposition of shares
acquired pursuant to the exercise of such an incentive stock option, the date on
which the fair market value of the shares is determined will be postponed, and
the tax consequences will be similar to the treatment that applies to shares
purchased pursuant to nonqualified stock options granted under the 1996 Plan,
including the ability to make a Section 83(b) election.
In general, in the year an incentive stock option is exercised, the holder
must include the excess of the fair market value of the shares issued upon
exercise over the exercise price in the calculation of alternative minimum
taxable income. The application of the alternative minimum tax rules for an
option holder subject to Section 16(b) or who receives shares that are not
"substantially vested" are more complex and may depend upon whether the holder
makes a Section 83(b) election, as described above.
The Company will not be entitled to any deduction with respect to the grant
or exercise of an incentive stock option provided the holder does not make a
disqualifying disposition. If the option holder does make a
15
<PAGE> 18
disqualifying disposition, the Company will generally be entitled to a deduction
for Federal income tax purposes in an amount equal to the taxable income
recognized by the holder, provided the Company reports the income on a form W-2
or 1099, whichever is applicable, that is timely provided to the option holder
and filed with the IRS.
Restricted Share Awards Under the 1996 Plan. The 1996 Plan provides for
restrictions on the Restricted Shares which do not permit the recipient to
transfer the shares to others and which require the recipient to return the
shares to the Company at less than fair market value upon termination of
employment prior to a specified date. In addition, the recipient may be an
officer or director of the Company subject to Section 16(b). In either of these
situations, the tax treatment will be delayed until the restrictions lapse, as
described above for nonqualified options. At that time, the recipient will
generally recognize ordinary taxable income in an amount equal to the excess of
the fair market value of the shares on the date the restrictions lapse over the
amount that the recipient is required to pay (if anything). It is possible that
if the Company permits the holder of Restricted Shares to pledge the shares as
security for a loan, then the restrictions will be considered to have lapsed at
the time of such a pledge.
Alternatively, the recipient will be eligible to file a Section 83(b)
election to be taxed at the time the shares are received, rather than when the
restrictions lapse. The rules for making a Section 83(b) election are described
above in the section discussing nonqualified options.
Upon a subsequent sale of the shares, long-term or short-term gain or loss
(depending upon the holding period) will generally be recognized equal to the
difference between the amount realized and the fair market value of the shares
on the date they were acquired (if a Section 83(b) election was filed) or the
date the restrictions lapse (if no election was filed).
The Company will generally be entitled to a compensation deduction for
Federal income tax purposes in an amount equal to the taxable income recognized
by the recipient, provided the Company reports the income on a form W-2 or 1099,
whichever is applicable, that is timely provided to the option holder and filed
with the IRS.
VOTE REQUIRED TO ADOPT THE 1996 INCENTIVE STOCK PLAN
An affirmative vote by the holders of a majority of the Common Stock
present or represented at the Meeting and entitled to vote is required for the
adoption of the proposal to adopt the 1996 Incentive Stock Plan.
The Board of Directors recommends that the stockholders vote "FOR" the
proposed adoption of the 1996 Incentive Stock Plan.
OTHER MATTERS
INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as the independent
auditors to audit the Company's consolidated financial statements for the fiscal
year ending December 31, 1996. Ernst & Young LLP was engaged initially as the
Company's principal accountants to audit its financial statements on October 27,
1994. On October 21, 1994, the Company dismissed its prior independent certified
public accountants, Deloitte & Touche LLP. The decision to change accountants
was approved by the Audit Committee of the Board of Directors and by the Board
of Directors.
During (i) the fiscal year ended December 31, 1993, and (ii) the subsequent
quarterly periods ending March 31, 1994, June 30, 1994 and September 30, 1994,
the Company did not have any disagreements with
16
<PAGE> 19
Deloitte & Touche LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Deloitte & Touche LLP would
have caused them to make reference to the subject matter of the disagreements in
connection with their report.
The report of Deloitte & Touche LLP on the Company's financial statements
for the fiscal years ended December 31, 1993 (i) did not contain any adverse
opinion or a disclaimer of opinion, and (ii) was not qualified or modified as to
certainty, audit scope or accounting principles.
A representative of Ernst & Young LLP will be present at the Meeting to
make a statement if such representative desires to do so and to respond to
appropriate questions. Representatives of Deloitte & Touche LLP will not be
present at the Meeting.
VOTING PROCEDURES
The votes of stockholders present in person or represented by proxy at the
Meeting will be tabulated by an inspector of elections appointed by the Company.
The six nominees for Directors of the Company who receive the greatest number of
votes cast by stockholders present in person or represented by proxy at the
Meeting and entitled to vote thereon will be elected Directors of the Company.
The affirmative vote of a majority of the outstanding shares of Common Stock is
required for the approval of Proposal No. 2, and the affirmative vote of a
majority of the shares of Common Stock present in person or represented by proxy
and entitled to vote at the Meeting is required for the approval of Proposal No.
3. Abstentions and broker non-votes will be counted as present in determining
whether the quorum requirement is satisfied. Abstentions and broker non-votes
will have no effect on the outcome of the vote for the election of Directors,
and will have the same effect as a vote against the proposal to amend the
Company's Articles of Organization and the proposal to adopt the 1996 Incentive
Stock Plan.
REPORTING UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
10% of the Company's Common Stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the Securities and Exchange Commission and
the National Association of Securities Dealers. Executive officers, directors
and greater than 10% stockholders are required to furnish the Company with
copies of all Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such Forms it has
received and written representations from certain reporting persons that they
were not required to file Forms 5 for specified fiscal years, the Company
believes that all of its executive officers, directors and greater than 10%
stockholders complied with all Section 16(a) filing requirements applicable to
them during the Company's fiscal year ended December 31, 1995 except as follows:
<TABLE>
The executive officers and directors listed in the table below filed a Form
4 on the dates indicated, reporting, as indicated in the table, the purchase of
shares of Common Stock.
<CAPTION>
NAME FORM 4 FILING DATE
---- ------------------
<S> <C>
Jan A. Smolders(1) 4/7/95
Edward J. Stewart, III(2) 12/26/95
<FN>
- ---------------
(1) On this date, Mr. Smolders filed a Form 4 dated February 1995 reflecting a
purchase of shares of Common Stock on February 10, 1995.
</TABLE>
17
<PAGE> 20
(2) On this date, Mr. Stewart filed a Form 4 dated November 1995 reflecting a
purchase of shares of Common Stock on November 13, 1995.
OTHER PROPOSED ACTION
The Board of Directors knows of no matters which may come before the
Meeting other than the election of directors, the proposal to amend the
Company's Articles of Organization to increase the number of authorized shares
of Voting Common Stock from 14,000,000 to 25,000,000 and the proposal to adopt
the 1996 Incentive Stock Plan. However, if any other matters should properly be
presented to the Meeting, the persons named as proxies shall have discretionary
authority to vote the shares represented by the accompanying proxy in accordance
with their own judgment.
STOCKHOLDER PROPOSALS
Proposals which stockholders intend to present at the Company's 1997 Annual
Meeting of Stockholders and wish to have included in the Company's proxy
materials must be received by the Company no later than January 15, 1997.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of the Proxy Statement entitled "Compensation Committee Report" and
"Performance Graph" shall not be deemed to be so incorporated, unless
specifically otherwise provided in any such filing.
ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 1995 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ARE
AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST ADDRESSED TO
INVESTOR RELATIONS, COMPUTER IDENTICS CORPORATION, 5 SHAWMUT ROAD, CANTON,
MASSACHUSETTS 02021.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
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EXHIBIT A
COMPUTER IDENTICS CORPORATION
1996 INCENTIVE STOCK PLAN
Section I. Purpose of the Plan.
The purposes of this Computer Identics Corporation 1996 Incentive Stock
Plan (the "1996 Plan") are (i) to provide long-term incentives and rewards to
those key employees (the "Employee Participants") of Computer Identics
Corporation (the "Corporation") and its subsidiaries (if any), and any other
persons other than non-employee directors (the "Non-employee Participants") who
are in a position to contribute to the long-term success and growth of the
Corporation and its subsidiaries, (ii) to assist the Corporation in retaining
and attracting executives and key employees with requisite experience and
ability, and (iii) to associate more closely the interests of such executives
and key employees with those of the Corporation's stockholders. Notwithstanding
the foregoing, if Section 16, as defined in Section II, is applicable to the
Corporation, then any director of the Corporation who is, or within the past
year was, a member of the Committee, as defined in paragraph (a) of Section III,
shall not be eligible to receive any Stock Options.
Section II. Definitions.
"Code" is the Internal Revenue Code of 1986, as it may be amended from time
to time.
"Common Stock" is the $.10 par value common stock of the Corporation.
"Committee" is defined in Section III, paragraph (a).
"Corporation" is defined in Section I.
"Corporation ISOs" are all stock options (including 1996 Plan ISOs) which
(i) are Incentive Stock Options and (ii) are granted under any plans (including
this 1996 Plan) of the Corporation, a Parent Corporation and/or a Subsidiary
Corporation.
"Employee Participants" is defined in Section I.
"Fair Market Value" of any property is the value of the property as
reasonably determined by the Committee.
"Free Shares" are Restricted Shares as to which the restrictions against
disposition and the obligation of resale to the Corporation have lapsed.
"Incentive Stock Option" is a stock option which is treated as an incentive
stock option under Section 422 of the Code.
"1996 Plan" is defined in Section I.
"1996 Plan ISOs" are Stock Options which are Incentive Stock Options.
"Non-employee Participants" is defined in Section I.
"Non-qualified Option" is a Stock Option which does not qualify as an
Incentive Stock Option or for which the Committee provides, in the terms of such
option and at the time such option is granted, that the option shall not be
treated as an Incentive Stock Option.
"Parent Corporation" has the meaning provided in Section 424(e) of the
Code.
"Participants" are all persons who are either Employee Participants or
Non-employee Participants.
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"Permanent and Total Disability" has the meaning provided in Section
22(e)(3) of the Code.
"Restricted Share Awards" are grants of Restricted Shares.
"Restricted Shares" are shares of Common Stock acquired by a Participant
subject to the restrictions set forth in Section IV.
"Section 16" means Section 16 of the Securities Exchange Act of 1934, as
amended, or any similar or successor statute, and any rules, regulations, or
policies adopted or applied thereunder.
"Stockholder Approval" means the affirmative vote of at least a majority of
the shares of Common Stock present and entitled to vote at a duly held meeting
of the stockholders of the Corporation, unless a greater vote is required by
state law or Section 16, if applicable to the Corporation, in which case such
greater requirement shall apply. Stockholder approval may be obtained by written
consent or other means, to the extent permitted by applicable state law.
"Stock Options" are rights granted pursuant to this 1996 Plan to purchase
shares of Common Stock at a fixed price.
"Subsidiary Corporation" has the meaning provided in Section 424(f) of the
Code.
"Ten Percent Stockholder" means, with respect to a 1996 Plan ISO, any
individual who directly or indirectly owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Corporation or any
Parent Corporation or any Subsidiary Corporation at the time such 1996 Plan ISO
is granted.
Section III. Administration.
(a) The Committee. This 1996 Plan shall be administered by a compensation
committee designated by the Board of Directors of the Corporation, which may
include any persons (including any or all of the directors) designated by the
Board of Directors (the administering body is hereafter referred to as the
"Committee"). The Committee shall serve at the pleasure of the Board of
Directors, which may from time to time, and in its sole discretion, discharge
any member, appoint additional new members in substitution for those previously
appointed and/or fill vacancies however caused. A majority of the Committee
shall constitute a quorum and the acts of a majority of the members present at
any meeting at which a quorum is present shall be deemed the action of the
Committee. No person shall be eligible to be a member of the Committee if that
person's membership would prevent the plan from complying with Section 16, if
applicable to the Corporation. At such time as any class of equity security of
the Corporation is registered pursuant to Section 12 of the Securities Exchange
Act of 1934, as amended (the "Act"), (i) the Committee shall consist of at least
two members of the Board of Directors and (ii) no member of the Committee while
a member thereof shall be eligible to participate in this Plan, nor may any
person be appointed to the Committee unless he was not eligible to participate
in this 1996 Plan or any other plan of the Corporation at any time within the
one-year period immediately prior to such appointment as provided in Rule 16b-3
promulgated under the Act.
(b) Authority and Discretion of the Committee. Subject to the express
provisions of this 1996 Plan and provided that all actions taken shall be
consistent with the purposes of this 1996 Plan, and subject to ratification by
the Board of Directors only if required by applicable law, the Committee shall
have full and complete authority and the sole discretion to: (i) determine those
persons who shall constitute key employees eligible to be Employee Participants;
(ii) select the Participants to whom awards shall be granted under this 1996
Plan; (iii) determine the size and the form of the award or, if any, to be
granted to any Participant; (iv) determine the time or times such awards shall
be granted including the grant of Stock Options and Restricted Share Awards in
connection with other awards made, or compensation paid, to the Participant; (v)
establish the terms and conditions upon which such awards may be exercised
and/or transferred, including
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the exercise of Stock Options in connection with other awards made, or
compensation paid, to the Participant; (vi) make or alter any restrictions and
conditions upon such awards; and (vii) adopt such rules and regulations,
establish, define and/or interpret these and any other terms and conditions, and
make all determinations (which may be on a case-by-case basis) deemed necessary
or desirable for the administration of this 1996 Plan. Notwithstanding any
provision of this 1996 Plan to the contrary, only Employee Participants shall be
eligible to receive 1996 Plan ISOs.
(c) Applicable Law. This 1996 Plan, and all awards shall be governed by the
law of the state in which the Corporation is incorporated.
Section IV. Awards.
Awards under this 1996 Plan may include Stock Options and Restricted Share
Awards, all as described herein.
(a) Stock Options.
(i) Stock Options shall be evidenced by a written agreement between
the Corporation and the Participant awarded the Stock Option. This
agreement shall be in such form, and contain such terms and conditions (not
inconsistent with this 1996 Plan) as the Committee may determine. If the
Stock Option described therein is not intended to be an Incentive Stock
Option, but otherwise qualifies as an Incentive Stock Option, the agreement
shall include the following, or a similar, statement: "This stock option is
not intended to be an Incentive Stock Option, as that term is described in
Section 422 of the Internal Revenue Code of 1986, as amended."
(ii) Stock Options shall be for such periods as may be determined by
the Committee, provided that in the case of 1996 Plan ISOs, the term of any
such 1996 Plan ISO shall not extend beyond three months after the time the
Participant ceases to be an employee of the Corporation. Notwithstanding
the foregoing, the Committee may provide in a 1996 Plan ISO that in the
event of the Permanent and Total Disability or Death of the Participant,
the 1996 Plan ISO may be exercised by the Participant or his estate (if
applicable) for a period of up to one year after the date of such Permanent
and Total Disability or Death. In no event may a 1996 Plan ISO be
exercisable (including provisions, if any, for exercise in installments)
subsequent to ten years after the date of grant, or, in the case of 1996
Plan ISOs granted to Ten Percent Stockholders, more than five years after
the date of grant.
(iii) The purchase price of shares purchased pursuant to any Stock
Option shall be determined by the Committee, and shall be paid by the
Participant or other person permitted to exercise the Stock Option in full
upon exercise, (A) in cash, (B) by delivery of shares of Common Stock
(valued at their Fair Market Value on the date of such exercise), (C) any
other property (valued at its Fair Market Value on the date of such
exercise), or (D) any combination of cash, stock and other property, with
any payment made pursuant to clauses (B), (C) or (D) only as permitted by
the Committee, in its sole discretion. In no event will the purchase price
of Common Stock be less than the par value of the Common Stock.
Furthermore, the purchase price of Common Stock subject to a 1996 Plan ISO
shall not be less than the Fair Market Value of the Common Stock on the
date of the issuance of the 1996 Plan ISO, provided that in the case of
1996 Plan ISOs granted to Ten Percent Stockholders, the purchase price
shall not be less than 110% of the Fair Market Value of the Common Stock on
the date of issuance of the 1996 Plan ISO.
(iv) To the extent that the aggregate Fair Market Value of Common
Stock with respect to which Corporation ISOs (determined without regard to
this section) are exercisable for the first time by any Employee
Participant during any calendar year exceeds $100,000, such Corporation
ISOs shall be treated
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as options which are not Incentive Stock Options. For the purpose of this
limitation, options shall be taken into account in the order granted, and
the Committee may designate that portion of any Corporation ISO that shall
be treated as not an Incentive Stock Option in the event that the
provisions of this paragraph apply to a portion of any option, unless
otherwise required by the Code or regulations of the Internal Revenue
Service. The designation described in the preceding sentence may be made at
such time as the Committee considers appropriate, including after the
issuance of the Stock Option or at the time of its exercise. For the
purpose of this section, Fair Market Value shall be determined as of the
time the option with respect to such stock is granted. For the purposes of
this limitation, options shall be taken into account in the order granted.
(v) At the discretion of the Committee, the Common Stock issued
pursuant to the Stock Options granted hereunder may be subject to
restrictions on vesting or transferability.
(b) Restricted Share Awards. Restricted Shares may be issued for any lawful
consideration and on such terms as may be determined by the Committee, subject
to the restrictions described in the following subsections.
(i) Restricted Shares may not be sold, transferred or otherwise
disposed of, pledged or otherwise encumbered, except (A) if they become
Free Shares in accordance with their terms and the terms of this 1996 Plan,
(B) if the Corporation declines to repurchase such shares, as provided in
this paragraph, or (C) as provided in paragraph (g) of Section VII. In the
event of the recipient's termination of employment for any reason except
death, retirement or permanent disability, Restricted Shares which have not
become Free Shares shall be delivered to the Corporation within 30 days
following such termination. Within 60 days following a timely delivery of
said shares, the Corporation may repurchase all or a portion of said shares
by paying to the recipient the original acquisition price, if any, for the
number of shares that the Corporation elects to purchase, and the
Corporation will return to the recipient any shares not so purchased. The
restrictions against disposition and the obligation of resale to the
Corporation shall lapse as to any shares which the Corporation declines to
purchase. Any of such shares which are not delivered to the Corporation
within 30 days following the termination of employment shall be deemed void
for all corporate purposes, and shall remain subject to the restrictions
imposed thereon which restrictions shall not lapse as otherwise provided.
Nothing in this Section shall require the Company to repurchase Restricted
Shares issued to Participants under the 1996 Plan.
(ii) Upon the occurrence of the earlier of the death, retirement or
permanent disability of the recipient of a Restricted Share Award, the
restrictions against disposition and the obligation of resale to the
Corporation of shares as to which such restrictions and obligations have
not otherwise lapsed shall immediately lapse.
(iii) In addition to or in lieu of the terms provided in paragraph
(b)(ii) above, the Committee may, in its discretion, provide terms pursuant
to which Restricted Shares issued to a Participant shall become Free
Shares. In this regard, the Committee may, in its discretion, provide that
the Restricted Shares shall immediately become Free Shares upon issuance.
Such terms shall be incorporated into the terms of the Restricted Share
Award at the time of the granting of the award, and may also be made a part
of an agreement between the Corporation and the recipient at the time of
the transfer of the Restricted Shares.
(iv) Certificates issued in respect of Restricted Shares awarded under
the 1996 Plan shall be registered in the name of the recipient but shall
bear the following legend if such Restricted Shares do not immediately
become Free Shares:
"The transferability of this certificate and the shares of stock
represented hereby is restricted and the shares are subject to the further
terms and conditions contained in the 1996 Incentive Stock Plan of
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Computer Identics Corporation and in a repurchase agreement executed
pursuant thereto. Copies of said plan and agreement are on file in the
office of the Treasurer of the Company at the Company's offices in Canton,
Massachusetts."
(v) In order to enforce the restrictions, terms and conditions on
Restricted Shares, the Committee may in its discretion require each
recipient thereof, immediately upon receipt of a certificate or
certificates representing such shares, to deposit such certificates
together with stock powers and other instructions of transfer as the
Committee may require, appropriately endorsed in blank, with the
Corporation as Escrow Agent under an escrow agreement in such form as shall
be determined by the Committee.
Section V. Amendment and Termination; Adjustments Upon Changes in Stock.
(a) The Board of Directors of the Corporation may at any time, and from
time to time, amend, suspend or terminate this 1996 Plan in whole or in part;
provided, however, that neither the Board of Directors nor the Committee may
amend or modify the definition of Employee Participants, materially increase the
benefits accruing to Participants, increase the number of shares of Common Stock
reserved for purposes of this 1996 Plan, extend the term of this 1996 Plan,
materially modify the requirements to be a Participant in this 1996 Plan, or
otherwise modify this 1996 Plan in any way or manner requiring the approval of
the Stockholders under the Code, or rules and regulations thereunder, or Section
16, if applicable to the Corporation, without Stockholder Approval and
compliance with any applicable law, rules, or regulations. Except as provided
herein, no amendment, suspension or termination of this 1996 Plan may affect the
rights of a Participant to whom an award has been granted without such
Participant's consent. The Committee is specifically authorized to convert, in
its discretion, the unexercised portion of any 1996 Plan ISO granted to an
Employee Participant to a Non-qualified Option at any time prior to the
exercise, in full, of such 1996 Plan ISO.
(b) If the Corporation is a party to any merger or consolidation, any
purchase or acquisition of property or stock, or any separation, reorganization
or liquidation, the Board of Directors (or, if the Corporation is not the
surviving corporation, the Board of Directors of the surviving corporation)
shall have the power to make arrangements, which shall be binding upon the
holders of Restricted Shares and unexpired Stock Options, for the substitution
of new options for, or the assumption by another corporation of, any Restricted
Shares or unexpired Stock Options then outstanding hereunder.
(c) If by reason or recapitalization, reclassification, stock split-up,
combination of shares, separation (including a spin-off) or dividend on the
stock payable in shares of Common Stock, the outstanding shares of Common Stock
are increased or decreased or changed into or exchanged for a different number
or kind of shares or other securities of the Corporation, the Board of Directors
shall conclusively determine the appropriate adjustment in the exercise prices
of outstanding Stock Options and repurchase price of outstanding Restricted
Shares and in the number and kind of shares as to which outstanding Stock
Options shall be exercisable.
(d) In the event of a transaction of the type described in paragraphs (b)
and (c) above, the total number of shares of Common Stock on which Stock Options
or as to which Restricted Shares may be granted under this 1996 Plan shall be
appropriately adjusted by the Board of Directors.
Section VI. Shares of Stock Subject to the Plan.
The number of shares of Common Stock that may be the subject of awards
under this 1996 Plan shall not exceed an aggregate of 500,000 shares. Shares to
be delivered under this 1996 Plan may be either authorized but unissued shares
of Common Stock or treasury shares. Any shares subject to a Stock Option
hereunder which for any reason terminates, is canceled or otherwise expires
unexercised, shares reacquired by the
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Corporation because restrictions do not lapse and any shares reacquired by the
Corporation due to restrictions imposed on the shares, shares returned because
payment is made hereunder in stock of equivalent value rather than in cash,
and/or shares reacquired from a recipient for any other reason shall, at such
time, no longer count towards the aggregate number of shares which have been the
subject of Stock Options and Restricted Shares issued hereunder, and such number
of shares shall be subject to further awards under this 1996 Plan.
Section VII. Miscellaneous Provisions.
(a) Indemnity. Neither the Board of Directors nor the Committee, nor any
members of either, nor any employees of the Corporation or any parent,
subsidiary, or other affiliate, shall be liable for any act, omission,
interpretation, construction or determination made in good faith in connection
with their responsibilities with respect to this 1996 Plan, and the Corporation
hereby agrees to indemnify the members of the Board of Directors, the members of
the Committee, and the employees of the Corporation and its parent or
subsidiaries in respect of any claim, loss, damage, or expense (including
reasonable counsel fees) arising from any such act, omission, interpretation,
construction or determination to the full extent permitted by law.
(b) Participation by Foreigners. Without amending this 1996 Plan, except
to the extent required by the Code in the case of Incentive Stock Options, the
Committee may modify grants made to participants who are foreign nationals or
employed outside the United States so as to recognize differences in local law,
tax policy, or custom.
(c) Rights of Recipients of Awards. The holder of any Stock Option granted
under the 1996 Plan shall have no rights as a stockholder of the Corporation
with respect thereto unless and until certificates for shares are issued. Except
as otherwise provided herein, the holder of Restricted Shares will be entitled
to receive any dividends on such shares in the same amount and at the same time
as declared on shares of Common Stock of the Company and shall be entitled to
vote such shares as a stockholder of record.
(d) Assignment of Stock Options. No Stock Option or Restricted Shares or
any rights or interests of the recipient therein shall be assignable or
transferable by such recipient except by will or the laws of descent and
distribution. During the lifetime of the recipient, such Stock Option shall be
exercisable only by, or payable only to, the recipient thereof.
(e) Legal and Other Requirements. No shares of Common Stock shall be issued
or transferred upon grant or exercise of any award under the 1996 Plan unless
and until all legal requirements applicable to the issuance or transfer of such
shares and such other requirements as are consistent with the 1996 Plan have
been complied with to the satisfaction of the Committee. Furthermore, the
Corporation is not obligated to register or qualify Restricted Shares or the
shares of Common Stock to be issued upon exercise of a Stock Option under
federal or state securities laws (or to register them at any time thereafter),
and it may refuse to issue such shares if, in its sole discretion, registration
or exemption from registration is not practical or available. The Committee may
require that prior to the issuance or transfer of Common Stock hereunder, the
recipient thereof shall enter into a written agreement to comply with any
restrictions on subsequent disposition that the Committee or the Company deem
necessary or advisable under any applicable law, regulation or official
interpretation thereof. Certificates of stock issued hereunder may be legended
to reflect such restrictions.
(f) Withholding of Taxes. Pursuant to applicable federal, state, local or
foreign laws, the Corporation may be required to collect income or other taxes
upon the grant of awards to, or exercise of a Stock Option by, a holder. The
Corporation may require, as a condition to the issuance of Restricted Shares or
the exercise of a Stock Option, or demand, at such other time as it may consider
appropriate, that the Participant pay the Corporation the amount of any taxes
which the Corporation may determine is required to be withheld or collected, and
the Participant shall comply with the requirement or demand of the Corporation.
In its
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discretion, the Corporation may withhold shares to be received upon exercise of
a Stock Option if it deems this an appropriate method for withholding or
collecting taxes.
(g) Pledge of Shares. Notwithstanding restrictions against disposition of
any award made pursuant to the 1996 Plan, the Committee, in its discretion, may
permit any shares acquired under the 1996 Plan to be pledged or otherwise
encumbered to secure borrowing by the recipient thereof solely for the purpose
of obtaining the acquisition price to be paid for such shares, provided, that
the amount of such borrowing may not exceed the acquisition price of such
shares, and the recipient must provide the Corporation with a copy of the
documents executed in connection with such borrowing. Any borrowing made by the
recipient of an award pursuant to this paragraph (g) must permit the Corporation
to repay the outstanding indebtedness and reacquire the pledged shares in the
event of a default by the recipient under the borrowing documents. Nothing in
this paragraph (g) shall require the Corporation to repay any indebtedness of a
Participant or reacquire shares pledged hereunder.
(h) Right to Awards. No employee of the Corporation or other person shall
have any claim or right to be a Participant in this 1996 Plan or to be granted
an award hereunder. Neither this 1996 Plan nor any action taken hereunder shall
be construed as giving any Participant any right to be retained in the employ of
the Corporation. Nothing contained hereunder shall be construed as giving any
Participant or any other person any equity or interest of any kind in any assets
of the Company or creating a trust of any kind or a fiduciary relationship of
any kind between the Company and any such person. As to any claim for any unpaid
amounts under the 1996 Plan, any Participant or any other person having a claim
for payments shall be an unsecured creditor.
SECTION VII. EFFECTIVE DATE AND TERM OF THIS PLAN.
Provided there is Stockholder Approval on or before December 14, 1996, the
effective date of this 1996 Plan is December 14, 1995 (the "Effective Date") and
awards under this 1996 Plan may be made for a period of ten years commencing on
the Effective Date. The period during which a Stock Option or other award may be
exercised may extend beyond that time as provided herein.
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BRF&G Draft 3/27/96
PROXY COMPUTER IDENTICS CORPORATION PROXY
The undersigned hereby appoints Richard C. Close, Jeffrey A. Weber and
Steven R. London, and each of them, acting singly, with full power of
substitution, attorneys and proxies to represent the undersigned at the 1996
Annual Meeting of Stockholders of Computer Identics Corporation to be held on
Tuesday, May 14, 1996, and at any adjournment or adjournments thereof, with all
power which the undersigned would possess if personally present, and to vote
all shares of stock which the undersigned may be entitled to vote at said
meeting upon the matters set forth in the Notice of and Proxy Statement for the
Meeting in accordance with the instructions on the reverse side and with
discretionary authority upon such other matters as may come before the Meeting.
All previous proxies are hereby revoked.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. IT WILL BE VOTED
AS DIRECTED BY THE UNDERSIGNED AND IF NO DIRECTION IS INDICATED, IT WILL BE
VOTED FOR THE ELECTION OF THE NOMINEES AS DIRECTORS, FOR THE PROPOSAL TO AMEND
THE RESTATED ARTICLES OF ORGANIZATION AND FOR THE PROPOSAL TO ADOPT THE 1996
INCENTIVE STOCK PLAN.
Continued, and to be signed, on reverse side
(Please fill in the reverse side and mail in enclosed envelope)
<PAGE> 29
/ / PLEASE MARK VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES AS DIRECTORS.
1. Election of Directors:
Nominees: Richard C. Close, John M. Hill, Tomas Kohn, Jan A. Smolders,
Edward J. Steward, III, Richard S. Wilcox
/ / FOR ALL NOMINEES (except as marked to the contrary)
/ / WITHHOLD AUTHORITY to vote for all nominees
FOR except vote withheld from the following nominee(s):
- -------------------------------------------------------
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE WRITE THAT NOMINEE'S NAME IN THE
SPACE PROVIDED ABOVE.)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR PROPOSAL NO. 2.
FOR AGAINST ABSTAIN
2. To amend the Restated Articles of Organization as / / / / / /
described in the accompanying Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR PROPOSAL NO. 3.
3. To adopt the 1996 Incentive Stock Plan / / / / / /
as described in the accompanying Proxy Statement.
MARK HERE FOR / /
ADDRESS CHANGE
AND NOTE AT LEFT
(Signatures should be the same as the name printed hereon. Executors,
administrators, trustees, guardians, attorneys, and officers of corporations
should add their titles when signing.)
Signatures: Date:
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Signatures: Date:
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