<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. 2)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
LASERTECHNICS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
LASERTECHNICS, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 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:
------------------------------------------------------------------------
/X/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
LASERTECHNICS, INC.
5500 WILSHIRE AVENUE, N.E.
ALBUQUERQUE, NEW MEXICO 87113
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
------------------
You are hereby notified that the annual meeting of stockholders of
Lasertechnics, Inc. (the "Company") will be held at the Whitney Room of the
Hotel Inter-Continental New York, 111 East 48th Street, New York, New York, on
June 17, 1996 at 10:00 a.m. Eastern Daylight Time, for the following purposes:
1. to elect seven directors;
2. to consider and vote upon a proposal to approve a stock option plan
for non-employee directors of the Company, as described in the
accompanying proxy statement;
3. to consider and vote upon a proposal to amend Article Fourth of the
Company's Certificate of Incorporation relating to the Company's
authorized capital stock, as described in the accompanying proxy
statement;
4. to consider and vote upon a proposal to amend Article Fourth of the
Company's Certificate of Incorporation relating to conversion of
Preferred Stock into Common Stock, as described in the accompanying
proxy statement;
5. to consider and act upon a proposal to confirm the appointment of KPMG
Peat Marwick LLP as the independent auditors of the Company; and
6. to transact such other business as may properly come before the
meeting or any adjournment thereof.
Only those stockholders of record at the close of business on May 3, 1996
shall be entitled to receive notice of, and vote at, the meeting.
Whether or not you expect to attend the annual meeting of stockholders,
please mark, date, sign and return the enclosed proxy in the enclosed return
envelope (requiring no postage if mailed in the United States) as promptly as
possible to assure representation
<PAGE>
of your shares and a quorum at the meeting. You may revoke your proxy at any
time prior to its exercise by written notice to the Company prior to the
meeting, or by attending the meeting personally and voting.
By Order of the Board of Directors,
JAMES B. ALLEY, JR.
Secretary
June 3, 1996
<PAGE>
LASERTECHNICS, INC.
5500 Wilshire Avenue, N.E.
Albuquerque, New Mexico 87113
------------------
PROXY STATEMENT
------------------
This Proxy Statement, which is first being mailed to stockholders on or
about June 3, 1996, is furnished in connection with the solicitation of
proxies to be voted at the annual meeting of stockholders of Lasertechnics,
Inc., a Delaware corporation (the "Company") to be held on Monday, June 17,
1996 (the "Annual Meeting").
VOTING PROCEDURES
The enclosed proxy is solicited by the Board of Directors of the Company
and will be voted in accordance with stockholder direction at the Annual Meeting
and any adjournments thereof. The enclosed proxy may be revoked at any time
before it is exercised by granting a subsequent proxy covering the same shares
or by appearing at the meeting and voting in person.
The only business which the Board of Directors intends to present or knows
will be presented is (i) the election of seven directors; (ii) approval of a
stock option plan for non-employee directors (the "Plan"); (iii) approval of the
amendment to the Certificate of Incorporation with respect to Company's
authorized capital stock (the "Authorized Stock Amendment"), (iv) approval of
the amendment to the Certificate of Incorporation with respect to conversion of
Preferred Stock (the Preferred Stock Conversion Amendment") and (v) the
ratification of the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year. Both of the proposed amendments are
to Articles Fourth of the Company's Certificate of Incorporation. A copy of
the Plan and the Amendments is attached hereto as Exhibits A and B.
Unless a contrary stockholder direction is given, proxies in the enclosed
form will be voted for the election of the directors, the Plan, the Amendments
and the ratification of auditors. The proxy confers discretionary authority
upon the persons named therein or their substitutes with respect to any other
business which may properly come before the Annual Meeting.
As of May 3, 1996, the record date for the Annual Meeting (the "Record
Date"), the Company had issued and outstanding 30,147,527 shares of Common
Stock, par value $.01 per share ("Common Stock"). Each share is entitled to one
vote. There are no cumulative voting rights. The Company also had outstanding
on the Record Date 2,249,842 shares of Non-Voting Common Stock and 2,918,715
shares of Convertible Preferred Stock which are each entitled to vote as a class
at the Annual Meeting on the Amendments because the Amendments may be deemed to
affect the rights of the holders of Non-Voting Common Stock and Convertible
Preferred Stock. Each share of Convertible Preferred Stock is entitled to the
same one vote as the voting Common Stock on the election of directors and
approval of the Plan.
Directors will be elected by a plurality vote of the shares of voting
Common Stock and Convertible Preferred Stock present, in person or by proxy, and
entitled to vote at the Annual
1
<PAGE>
Meeting. Accordingly, abstentions and broker non-votes as to the election of
directors will have no effect thereon.
Approval of the Plan requires a vote of a majority of the aggregate shares
of voting Common Stock and convertible Preferred Stock present at the meeting at
which a quorum is present. In order for each Amendment to become effective,
it must be voted for by a majority of the outstanding shares of each class of
stock, namely the voting Common Stock, the Non-Voting Common Stock and the
Convertible Preferred Stock of the Company. Accordingly, abstentions will have
the effect of votes against the Plan and the Amendments, and broker non-votes
will have no effect thereon.
The Company will pay the expenses of soliciting proxies for the Annual
Meeting, including the costs of preparing, assembling, and mailing the notice,
proxy, proxy statement, and return envelopes, of handling and tabulating proxies
received, and of forwarding such documents by brokerage houses and other
institutions, nominees, or fiduciaries to beneficial owners. The Company has
retained American Stock Transfer & Trust Company as its stock transfer agent and
registrar. The Company pays it $750 per month, plus reasonable out-of-pocket
expenses, for its services as stock transfer agent and registrar, which include
proxy solicitation services.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The only persons known by the Company to be the beneficial owners of more
than five percent of the outstanding shares of the Common Stock as of the Record
Date are listed below, based upon information provided by such persons to the
Company.
SHARES
NAME AND ADDRESS OF OWNED PERCENT OF
BENEFICIAL OWNER BENEFICIALLY CLASS
- ------------------- ------------ ----------
Wolfensohn Associates L.P. 9,240,795(1) 28%
40th Floor
599 Lexington Avenue
New York, New York 10022
Richard C.E. Morgan 9,378,572(2) 28%
40th Floor
599 Lexington Avenue
New York, New York 10022
- ----------------
(1) Includes 76,855 shares issuable upon exercise of options and 2,720,039
shares issuable upon conversion of a like number of shares of convertible
preferred stock.
(2) Represents 12,500 shares issuable upon exercise of the vested portion of
a 50,000 share option owned by Mr. Morgan, 125,277 shares owned directly by
Mr. Morgan and the 9,240,795 shares shown above for Wolfensohn Associates
L.P., a Delaware limited partnership, whose sole general partner is
Wolfensohn Partners L.P. Mr. Morgan is a general partner of Wolfensohn
Partners L.P. He disclaims beneficial ownership of all shares owned by
Wolfensohn Associates L.P.
2
<PAGE>
J.P. Morgan Investment Corporation 7,605,891(3) 23%
60 Wall Street
New York, New York 10260
C. Seth Cunningham 7,605,891(4) 23%
c/o J.P. Morgan Investment Corporation
60 Wall Street
New York, New York 10260
As footnotes 1 and 3 to the foregoing table state, the shares beneficially
owned by each party listed above include the voting Common Stock into which the
Non-Voting Common Stock and Convertible Preferred stock are convertible, all on
a one-for-one basis. Because the holders of the Non-Voting Common Stock and
Convertible Preferred Stock are each entitled to vote as a class on each
Amendment, the following information with respect to the beneficial ownership of
the Non-Voting Common Stock and Convertible Preferred Stock as of the record
date is set forth below.
SHARES
NAME AND ADDRESS OF OWNED PERCENT OF
BENEFICIAL OWNER BENEFICIALLY CLASS
- ------------------- ------------ ----------
J.P. Morgan Investment
Corporation 2,249,842 100%
60 Wall Street (Non-Voting Common
New York, New York 10260 Stock)
Wolfensohn Associates, L.P. 2,720,339 93%
40th Floor (Convertible Pre-
599 Lexington Avenue ferred Stock)
New York, New York 10022
Jackson Hole Investments
Acquisitions L.P. 198,676 7%
40th Floor (Convertible Pre-
599 Lexington Avenue ferred Stock)
New York, New York 10022
The foregoing table shows the beneficial ownership of all the outstanding
shares of Non-Voting Common Stock and Convertible Preferred Stock as of the
record date. As previously stated in footnotes 2 and 4 above, Richard C.E.
Morgan disclaims beneficial ownership of all
- ----------------------
(3) Includes 2,249,842 shares of voting Common Stock issuable upon conversion
of non-voting Common Stock and 125,049 shares issuable upon exercise of
warrants.
(4) Represents only shares owned by J.P. Morgan Investment Corporation and
shown above. Mr. Cunningham is Managing Director of J.P. Morgan Investment
Corporation. He disclaims beneficial ownership of all shares owned by J.P.
Morgan Investment Corporation.
3
<PAGE>
shares owned by Wolfensohn Associates, L.P. (as well as Jackson Hole
Investments Acquisitions L.P.) and C. Seth Cunningham disclaims beneficial
ownership of all the shares of Non-Voting Common Stock owned by J.P. Morgan
Investment Corporation.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
According to information furnished by the Chairman and each of the four
highest paid executive officers of the Company and its controlled subsidiaries,
Sandia Imaging Systems Corporation ("SIS") and Lasertechnics Marking Corporation
("LMC"), other than the Chairman, and by each of the directors of the Company,
the number of shares of the Company's Common Stock beneficially owned by each of
them as of the Record Date was as set forth on the table below. Except as
otherwise noted, each individual has sole voting and investment power over the
shares he beneficially owns. Where no percentage is shown for the shares owned
by the individual named, such percentage is less than 1%.
NUMBER OF SHARES OF COMMON PERCENT
NAME AND TITLE STOCK BENEFICIALLY OWNED OF CLASS
- -------------- -------------------------- --------
Jean-Pierre Arnaudo 12,500(5)
President of SIS and
Director
Ronald Bencke 10,000(6)
Vice President
and Chief Financial Officer
- ---------------
(5) Consists entirely of shares issuable upon exercise of options but does
not include unvested options to purchase 37,500 shares.
(6) Consists entirely of shares issuable upon exercise of options but does
not include unvested options to purchase 20,000 shares.
4
<PAGE>
Eugene A. Bourque 143,786(7)
President of LMC and
Director
Richard M. Clarke 252,587
Director
Paul J. Coleman, Jr. 62,000(8)
Director
C. Seth Cunningham 7,605,891(9) 21%
Director
Milo Mattorano
Vice President and
Chief Financial Officer of SIS - 0 -
Richard C.E. Morgan 9,378,572(10) 26%
Chairman
Alfred E. Paulekas 47,500(11)
Director
All directors and executive
officers of the Company as
a group 17,512,83 49%
The following shows the number of shares of common stock of SIS
beneficially owned by each of the foregoing directors and executive officers.
No such officer or director holds any stock in LMC. The omission of any of the
foregoing directors and officers in the following table indicates no SIS stock
ownership. Where no percentage is shown for the shares owned by the individual
named, such percentage is less than 1%.
- ------------------
(7) Includes 133,786 shares issuable upon exercise of vested options.
Does not include 12,500 shares issuable upon exercise of unvested options.
(8) Includes 1,000 shares owned by Dr. Coleman's wife.
(9) See footnote 4 above.
(10) See footnote 2 above.
(11) Includes 37,500 shares issuable upon exercise of options. Does not
include unvested options to purchase 12,500 shares.
(12) Calculations assume all such directors and officers of the Company
exercised all presently exercisable options and warrants and converted
all other classes of stock attributed to them into Voting Common Stock.
5
<PAGE>
NUMBER OF SHARES OF SIS COMMON PERCENT
NAME AND TITLE STOCK BENEFICIALLY OWNED OF CLASS
- -------------- ------------------------------- --------
Jean-Pierre Arnaudo 30,000
President of SIS and
Director
Eugene A. Bourque 10,000
President of LMC and
Director
Richard M. Clarke 7,500
Director
Milo Mattorano
Vice President and
Chief Financial Officer of SIS 1,250
Richard C.E. Morgan
Chairman 10,000
All of such SIS stock ownership is held in the form of options.
ELECTION OF DIRECTORS
At the date of the Annual Meeting, the Board of Directors will consist of
seven members because director Theodore F. Patlovich has declined to stand for
re-election. Seven nominees are to be elected to serve for a term of one year.
Each of the nominees is now a director of the Company and has agreed to serve if
elected. The proxy holders will vote the proxies received by them for the seven
nominees except to the extent otherwise specified in the proxies, or, in the
event of an unforeseen contingency, for different persons as substitutes
therefor.
The following sets forth with respect to each nominee his name, age, the
year in which he first became a director of the Company, principal occupation
and directorships in other public corporations, as well as certain other
positions held.
INFORMATION ABOUT
NOMINEES AND DIRECTORS
JEAN-PIERRE ARNAUDO, 51, joined the Board in August, 1995; President and
Chief Executive Officer of the Company's controlled subsidiary, Sandia Imaging
systems Corporation ("SIS") since May, 1995; Since 1993 President and General
Manager of Sandia Imaging Systems Europe, S.A. a controlled subsidiary of SIS;
Formerly, General Manager of Terminal Computer Systems from 1990 to 1992.
EUGENE A. BOURQUE, 50, joined the Board in January of 1993; President and
Chief
6
<PAGE>
Executive Officer of Lasertechnics Marking Corporation ("LMC"), since
1995; President of the Company from 1993 to 1995 and Vice President and Chief
Financial Officer from 1988 through 1992; Financial and Business Service Manager
for Cynara Co., a partnership controlled by The Dow Chemical Co., from 1985 to
1987.
RICHARD M. CLARKE, 64, joined the Board in 1988 and Chairman from 1990
through 1994; Chairman, Yankelovich Partners, Inc. (market research firm);
former Chairman and Chief Executive Officer, Akzo America Inc. (diversified
chemical and health care international corporation); former Vice Chairman and
Director, Hoechst Celanese Corporation (diversified chemicals); former
President, Celanese Specialties Group; former President and Chief Executive
Officer, Wickes Industrial Group (diversified manufacturing); Director, Menasha
Corporation, Rx Remedy, Nash Engineering Company, and AMP Inc. Advisory Board.
PAUL J. COLEMAN, JR., 64, joined the Board in 1985; Professor of Geophysics
and Space Physics, UCLA; President and Trustee, Universities Space Research
Association; Director, Fairchild Space and Defense Corp., CACI International,
Inc.
C. SETH CUNNINGHAM, 40, joined the Board in 1994; Managing Director of J.P.
Morgan Investment Corporation and Managing Director J.P. Morgan Capital
Corporation.
RICHARD C.E. MORGAN, 51, joined the Board in 1985 and elected Chairman in
1995; General Partner, Wolfensohn Partners L.P. (a general partner of Wolfensohn
Associates L.P., a venture capital partnership); Executive, James D. Wolfensohn,
Inc. (investment banking); founder and former General Manager, Schroder Strategy
Group (strategic consulting); Chairman and a Director of MediSense Inc. and of
Quidel Corporation, a Director of Celgene Corporation and SEQUUS
Pharmaceuticals, Inc. and Chairman of ONTOS, Inc.
ALFRED E. PAULEKAS, 64, joined the Board in 1994; President, A.T.C.
Associates (business consulting) since 1993; Director of Development/Community
Relations, University of Connecticut Health Center, 1989-1993; President and
sole shareholder, Airport Truck Center, Inc., Hartford, CT 1969-1989.
INFORMATION ABOUT EXECUTIVE OFFICERS
RICHARD C.E. MORGAN, Chairman, who replaced Richard M. Clarke at the
beginning of 1995 (see information above under Nominees and Directors), serves
at the pleasure of the Board of Directors. He also serves as Chairman of the
Company's two subsidiaries, LMC and SIS.
JEAN-PIERRE ARNAUDO, 51, President and Chief Executive Officer of SIS (see
information under Nominees and Directors) serves at the pleasure of the Board of
Directors of SIS.
EUGENE A. BOURQUE, 50, President and Chief Executive Officer of LMC (see
information above under Nominees and Directors), serves at the pleasure of the
Board of Directors of LMC.
7
<PAGE>
RONALD BENCKE, 56, Vice President and Chief Financial Officer, joined the
Company in September 1994, serves at pleasure of the Board of Directors. He
also serves as Vice President and Chief Financial Officer of LMC. Prior to
joining the Company, he was Chief Financial Officer for QED Communications, a
public television station, from 1992 to 1994 and prior thereto he spent 23 years
with Westinghouse Electric Corporation in a variety of progressively responsible
financial and executive positions.
MILO MATTORANO, 50, Vice President and Chief Financial Officer of SIS,
joined SIS in 1995, serves at the pleasure of the Board of Directors of SIS.
Prior to joining SIS he was Vice President of Finance for Insilco Corporation, a
manufacturing conglomerate, from 1988 to 1994.
BOARD OF DIRECTORS AND ITS COMMITTEES
There were 13 meetings of the Board of Directors of the Company in 1995,
four of which were in person and nine by telephone conference. During 1995 each
incumbent director, except Mr. Arnaudo who joined the Board in August 1995 and
Mr. Patlovich who is not a nominee, attended at least 75% of the total number of
Board meetings. The Board of Directors has an Audit Committee and had a
Compensation Committee but after the 1995 annual meeting in May, the Company
became a holding company for the stock of its two subsidiaries, SIS and LMC.
Thereafter the duties of the Compensation Committee were transferred to each
subsidiary's compensation committee. The Board of Directors now reviews and
sets the compensation of its two compensated officers. The Company has no
Nominating Committee.
The Audit Committee, which reviews the financial and accounting procedures
of the Company, met 2 times during 1995 with the full Board. Messrs. Coleman,
Cunningham and Paulekas are and were during 1995 members of the Audit Committee.
The Company's Compensation Committee, consisting of Messrs. Coleman, Morgan and
Paulekas, met twice in 1995 before its duties were transferred to the
subsidiaries. The Compensation Committee of SIS consisted of Messrs. Morgan and
Mr. Arnaudo and the Compensation Committee of LMC consisted of Messrs.
Cunningham, Paulekas and Patlovich.
DIRECTOR COMPENSATION
Directors who are not officers or employees of the Company receive an
annual fee of $10,000 (payable at least quarterly) as earned for preparing for
and attending meetings of directors and committees. Directors who are officers
or employees of the Company receive no fees for service on the Board or
committees thereof.
During 1994 and 1995 the Company received consulting services from nominee
Alfred E. Paulekas relating to the Company's manufacturing and production
operations and from Theodore F. Patlovich, a director during 1995, relating to
the Company's international marketing efforts. Both were paid at the rate of
$500 per day and the total compensation paid to both of them in 1994 was less
than $22,000 and in 1995 was $17,750. The Company has complete discretion over
whether or not to use the services of either.
EXECUTIVE COMPENSATION
8
<PAGE>
The following table shows the compensation awarded to, earned by, or paid
to each of the named executive officers of the Company and its subsidiaries,
Lasertechnics Marking Corporation ("LMC") and Sandia Imaging Systems Corporation
("SIS"), for all services rendered in all capacities to the Company or its
subsidiaries in 1995, 1994 and 1993.
SUMMARY COMPENSATION TABLE
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
SECURITIES
UNDERLYING
NAME AND TITLE YEAR SALARY BONUS ($) OPTIONS (#)
- -------------- ---- ------- --------- -----------
Richard C.E. 1995 $100,000 $ - 0 - 5,000(SIS)
Morgan, 1994 $ - 0 - $ - 0 - 5,000(SIS)
Chairman of the 1993 $ - 0 - $ - 0 - - 0 -
Board and Chief
Executive
Officer; also
Chairman of LMC
and SIS;
formerly in
1993-4 a
director only.
Eugene A. 1995 $125,029 $ - 0 - - 0 -
Bourque 1994 $124,064 $ - 0 - 10,000(SIS)
President and 1993 $ 95,002 $ - 0 - 50,000
Chief Executive
Officer of LMC;
formerly
President of
the Company in
1993-4.
Jean-Pierre 1995 $150,000 $ 20,000 50,000 (13)
Arnaudo, 1994 $150,000 $ 10,000 10,000(SIS)
President and 1993 $ 37,500 $ - 0 - 10,000(SIS)
Chief Executive $ - 0 -
Officer of SIS;
formerly
President and
General Manager
of SIS Europe,
S.A.
Ronald Bencke, 1995 $ 79,088 $ - 0 - 30,000 (14)
Vice President 1994 $ 19,763 $ - 0 - - 0 -
and Chief 1993 $ - 0 - $ - 0 - - 0 -
Financial
Officer of the
Company and LMC
since 1994
_______________
(13) Consists entirely of shares issuable upon exercise of options including
37,500 unvested options. Represent s stock options in the Company
granted under 1991 Stock Option Plan for employees of the Company and
its subsidiaries and under SIS stock option plan.
(14) Consists entirely of shares issuable upon exercise of options including
20,000 unvested options.
9
<PAGE>
Milo Mattorano, 1995 $ 65,000 $ 10,000 5,000(SIS)
Vice President
and Chief
Financial
Officer of SIS
(employee of
SIS only since
January, 1995.
STOCK OPTIONS
After the expiration of the 1981 Incentive Stock Option Plan in November of
1991, the Board of Directors acting on the recommendation of the Compensation
Committee, unanimously approved a new stock option plan for the Company (the
"1991 Plan"). It was approved by the stockholders of the Company at the 1991
annual meeting.
The 1991 Plan provides for the granting of options to purchase up to
1,000,000 shares of the Company's Common Stock. The 1991 Plan had been
administered by the Compensation Committee of the Board of Directors until 1995
when the Board of Directors took over this function after the Company became a
holding company for its two subsidiaries. The 1991 Plan enables the Company to
grant either "non-qualified options" or "incentive stock options" to key
employees of the Company and its domestic subsidiaries at a price not less than
the fair-market value of the Company's Common Stock at the time of the grant.
In determining persons who are to receive options and the number of shares of
Common Stock to be covered by each option, the Board considers the person's
position and responsibilities, his/her services and accomplishments, present and
future value to the Company, the anticipated length of his/her future service,
and other relevant factors. The Board fixes the exercise period of each option,
which in the case of incentive stock options cannot be longer than ten years
from the date of the grant. No option may be granted under the 1991 Plan later
than May 28, 2001, but options outstanding at that time may be exercised until
the expiration of their terms.
The following table sets forth information with respect to the only stock
options granted in 1995 by the Company under the 1991 Plan to an executive
officer.
10
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXP.
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE
- ---- ----------- ------------- -------- -------
Jean-Pierre Arnaudo 50,000(15) 100% $1.58 8/24/05
Milo Mattorano 5,000(SIS)(16) 100% .50 1/22/05
__________________________
(15) 12,500 these options are vested. The remainder vest at the rate of
12,500 per year.
(16) The Board of Directors of SIS valued the Common Stock of SIS for
purposes of compensation and options at $1.00 per share as of February 6,
1996. At that time (as well as currently) Messrs. Morgan, Arnaudo, Clarke and
Cunningham, who are also board members of the Company, plus David Goodstein,
a consultant in the imaging business, and Stephen C. Nesbit, a recently
appointed officer of SIS, comprised the SIS board. In valuing the Common
Stock of SIS, the SIS board considered the market value of the whole Company
by multiplying the then current market price per share of the Company's
Common Stock times the number of shares of Common Stock that would be
outstanding on a fully diluted and converted basis. The portion of that
figure attributable to SIS was determined by deducting from the total
valuation of the Company the value attributed to the Company's other
subsidiary, LMC, or two times its annual sales. The resulting difference was
determined to constitute the total valuation of SIS. Then the board
determined the relative difference in value between the outstanding Preferred
Stock of SIS (held by the Company) and the outstanding Common Stock of SIS
(held by certain individuals related to SIS), based primarily on the
Preferred's liquidation preference and the continuing losses, weak balance
sheet and lack of liquidity of SIS. This process resulted in the board's
determination of a $1.00 value for a share of SIS Common Stock.
11
<PAGE>
The following table sets forth information with respect to all exercises
of Company stock options in 1995 by each named executive officer and all
outstanding Company stock options held by each named executive officer as of
December 31, 1995.
OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
SHARES UNDERLYING IN-THE-MONEY
ACQUIRED UNEXERCISED OPTIONS AT
ON VALUE OPTIONS AT FY-END (#) FY-END 1995
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE
- ---- -------- -------- ------------------ -------------
<S> <C> <C> <C> <C>
Richard C.E. Morgan 50,000 79,500 10,000/10,000(SIS) -0-(17)
Eugene A. Bourque 50,000 76,250 143,786/12,500 233,652/20,313
Jean-Pierre Arnaudo 0 0 12,500/37,500 20,313/60,938
Jean-Pierre Arnaudo 0 0 20,000/20,000(S(SIS) -0-(18)
Milo Mattorano 0 0 5,000/5,000(SIS) -0-(19)
</TABLE>
Except as described above, the Company has no compensation plans other than
group life and health insurance and a 401(k) program available generally to all
qualified full time employees.
_________________
(17) See footnote 16 above.
(18) See footnote 16 above.
(19) See footnote 16 above.
12
<PAGE>
APPROVAL OF NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
Effective 1 July 1995 the Board of Directors adopted, subject to the
approval of the Company's stockholders, a Non-employee Directors' Stock Option
Plan (the "Plan"). The purpose of the Plan is "to provide incentive to non-
employee directors of the Company by providing those persons with opportunities
to purchase shares of the Company's Common Stock under stock options."
The Plan implements this purpose in two ways. First, it helps the Company
attract qualified outside directors to serve on its Board by automatically
granting to a newly elected Outside Director an option to purchase 50,000 shares
of voting Common Stock over a 3 year vesting period. (The Plan defines an
"Outside Director" as a director "who is not an employee of the Company or any
Affiliate of the Company" such as an employee of a Company subsidiary.) The
exercise price for the shares subject to the option is the fair market value of
the Common Stock at the time of grant. The term of the option is 10 years from
the date of grant.
Only persons who first become a director after 1 July 1995 can qualify for
the 50,000 share stock option and those persons cannot be an employee of the
Company or any of its affiliates such as its two controlled subsidiaries, LMC
and SIS. No director has yet qualified for any such stock option because no new
director has joined the Board since 1 July 1995 except Mr. Arnaudo but he does
not qualify under the Plan for any option grant because he is not an Outside
Director. He is an employee of SIS.
A second feature of the Plan is to provide future incentive compensation to
Outside Directors for continuing service on the Board in addition to their
regular annual cash compensation of $10,000. Each Outside Director
automatically receives, after each full year of service on the Board following
the stockholders' annual election of directors, an option to purchase 5,000
shares of Common Stock. If an Outside Director has served less than a full year
on the Board at the time he or she is elected by the stockholders, the number of
shares is reduced from 5,000 on an annual PRO RATA basis. Thus, if at the time
the Outside Director is first elected by the stockholders, he or she has only
served 6 months on the Board, the stock option would be for only 2,500 shares.
The other terms of the annual option grant to Outside Directors are the
same as described above for the initial 50,000 share grant for joining the Board
except there is no vesting period for the right to exercise the option. It is
regarded as part payment for the past year of service. The exercise price is
the fair market value of the common stock at the time of grant. The option can
be exercised in whole or in part at any time during the 10 year option term
following the grant date.
A complete copy of the Plan is attached hereto as Exhibit A.
The Board of Directors has reserved and set aside for the Plan a total of
300,000 shares of voting Common Stock, less than 1% of the number of presently
outstanding. The Company has also registered with the U.S. Securities and
Exchange Commission (the "Commission") the 300,000 shares set aside for the
Plan. This means that upon exercise of any stock option under the Plan and full
payment for the shares purchased, the director may sell those shares on the open
market free of any restriction. The market price of the Company's Voting Common
Stock closed at 1 5/8 on April 8, 1996. There are no federal income tax
consequences upon the granting of an option under the Plan but upon exercise,
the difference between the exercise price and market value of the shares
purchased constitutes ordinary income to the director and a deduction to the
Company.
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The Plan and the options granted under it are intended to qualify for an
exemption to the insider short swing provision of Section 16(b) of the
Securities Exchange Act of 1934 under Rule 16b-3. This law allows the Company
or a stockholder on its behalf to recover from a director or executive officer
any profit made on a purchase and sale or sale and purchase of the Company's
Common Stock within a six month period. Without the exemption the regular
granting of an option under the Plan to a director would be considered a
purchase of the Company's Common Stock which could be matched against any sale
of Common Stock by such director within 6 months before or after the stock
option grant. Any resulting profit could be recovered from the director.
Under the Plan neither the Board of Directors nor the Outside Directors
have any discretion or control over the granting of options under the Plan or
the exercise price of the options. The option grants, upon approval of the Plan
by the stockholders, happen automatically. Therefore, it is felt that stock
option grants pursuant to the Plan should not be counted as purchases of the
Company's Common Stock which can be matched against sales by the grantees within
6 months of the grants. This is the policy underlying the rule creating the
exemption from the short swing profit provision of Section 16(b). The stock
option grants under the Plan, however, are still reportable to the Securities
and Exchange Commission by the Outside Directors under Section 16(a).
The Company and its management believe the Plan is necessary to help
attract and retain good Outside Directors to serve on the Board. Their judgment
and experience is necessary for improved management of the Company. Without the
inducement and incentive compensation provided by the Plan, the Company believes
it will experience more difficulty attracting good Outside Directors to its
Board.
The following table shows the Non-Employee Directors and the stock options
they would receive in the year 1996 if the Plan is approved by the stockholders
and these directors are elected at the Annual Meeting:
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
NO. OF SHARES
NON-EMPLOYEE DIRECTOR SUBJECT TO OPTION EXERCISE PRICE
- --------------------- ----------------- --------------
Richard M. Clarke 5,000 Fair Market Value at
Time of 1996 Annual
Meeting
Paul J. Coleman, Jr. 5,000 Fair Market Value at
Time of 1996 Annual
Meeting
Alfred E. Paulekas 5,000 Fair Market Value at
----- Time of 1996 Annual
Meeting
Total Shares Subject to Option 15,000
MANAGEMENT RECOMMENDATION
Approval of the Plan requires the affirmative vote of a majority of the
aggregate shares of Common Stock present at the Annual Meeting provided a quorum
is present.
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The Board recommends a vote FOR approval of the Non-Employee Directors' Stock
Option Plan.
AMENDMENT OF COMPANY'S CERTIFICATE OF INCORPORATION
TO CHANGE AUTHORIZED STOCK
Article Fourth of the Company's Certificate of Incorporation, as amended
to date, presently provides for authorized capital stock of 60,000,000 shares
allocated as follows:
Voting Common Stock . . . . . . . . . . . . . . . . . . . . 41,500,000
Non-Voting Common Stock . . . . . . . . . . . . . . . . . . 8,500,000
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 10,000,000
----------
Total Shares Authorized . . . . . . . . . . . . . . . . . . 60,000,000
THE AMENDMENT
The Board of Directors has declared it advisable and recommends to the
stockholders the Authorized Stock Amendment to Article Fourth of the
Certificate of Incorporation as follows:
(a) Increase the total authorized capital stock from 60,000,000
shares to 66,000,000 shares;
(b) Increase the authorized Voting Common Stock shares form
41,500,000 to 56,750,000;
(c) Reduce the authorized Non-Voting Common Stock shares from
8,500,000 to 2,250,000; and
(d) Reduce the authorized Preferred Stock shares from 10,000,000
to 7,000,000.
The full text of Article Fourth as it would be amended if the Authorized
Stock Amendment is approved by stockholders is set forth as Exhibit B to this
proxy statement.
REASONS FOR AMENDMENT
The Company completed two convertible debenture financings in October of
1995 and March of 1996 for a total gross amount of $12.5 million. The
debentures issued in both financings are convertible, after various waiting
periods, into the Company's Voting Common Stock on the basis of a fixed
conversion price and a floating conversion price which depends upon the
market price of the Company's Voting Common Stock of the time of conversion.
As a result, the exact number of shares which will be required for conversion
of all of the debentures cannot be determined. As of May 13, 1996 only $4.1
million of the debentures, plus accrued interest, have been converted into
Voting Common Stock. Therefore, $8.4 million of outstanding debentures
remain subject to future conversion into Voting Common Stock.
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<PAGE>
This commitment for the Company's authorized but unissued Voting Common
Stock, when added to other commitments for such shares from stock options,
outstanding warrants and convertible Preferred Stock, and to the presently
outstanding shares, is likely to exceed the present authorized Voting Common
Stock of 41,500,000. As a result the Company believes it should increase its
authorized Voting Common Stock not only to cover all existing commitments but
also to meet the Company's future needs. Having a reasonable reserve of
authorized but uncommitted Voting Common Stock gives the Board of Directors
one of the tools it needs to help the Company grow and respond quickly to
business opportunities. The Company has no present plans to issue shares in
addition to the shares presently committed to be issued.
Wolfensohn Associates L.P. ("Wolfensohn"), an affiliate of the Company,
currently owns 2,720,339 shares of Convertible Preferred Stock for which
there are not currently available sufficient authorized shares of Common
Stock to allow full conversion. If the Authorized Stock Amendment is
approved, Wolfensohn will benefit because of the authorization of enough
Common Stock to allow full conversion should Wolfensohn so elect. This could
have the effect of increasing Wolfensohn's percentage ownership of Common
Stock and related voting rights.
Management does not want to increase the total number of authorized
shares covering all classes of stock any more than it believes is necessary
for the reasonably foreseeable needs of the Company. The Company can keep
this number down by reducing the number of authorized but unissued shares for
classes of stock management does not foresee the need.
Management believes the Company will not need all the Non-Voting Common
Stock shares originally authorized. It only has 2,249,842 shares of
Non-Voting Common Stock outstanding and does not foresee any further need for
the issuance of Non-Voting Common Stock shares. Therefore, the proposed
Amendment reduces the authorized Non-Voting common Stock from 8,500,000 to
2,250,000 shares.
With the elimination of the required one-for-one conversion rate between
any convertible Preferred Stock shares and Common Stock shares proposed in
the next section, management also does not foresee the need for all
10,000,000 shares of authorized Preferred Stock. There are presently
outstanding 2,918,715 shares of Preferred Stock. By reducing the authorized
Preferred Stock from 10,000,000 to 7,000,000 shares, there still would be
available for future issuance more than 4,000,000 shares. Management
believes that 4,000,000 shares of authorized but unissued Preferred Stock are
sufficient to meet the Company's future equity financing needs through the
use of Preferred Stock.
Finally, with the foregoing reductions in Non-Voting Common Stock and
Preferred Stock the Company recommends that only an additional 6,000,000
shares of capital stock be authorized to meet the future equity capital needs
of the Company. The additional authorized shares, plus the number of
authorized Non-Voting and Preferred shares reduced, are all allocated to
increasing the authorized Voting Common shares. These changes will result in
the following changes to the Company's authorized capital:
EXISTING SHARES PROPOSED SHARES AUTHORIZED
AUTHORIZED
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Voting Common Stock 41,500,000 56,750,000
Non-Voting Common Stock 8,500,000 2,250,000
Preferred Stock 10,000,000 7,000,000
---------- ----------
Total Shares Authorized 60,000,000 66,000,000
The Company believes that the proposed changes in its authorized capital stock
will meet its future needs.
OTHER CONSIDERATIONS
The Company's Certificate of Incorporation does not provide any
preemptive rights in existing stockholders to subscribe for any of the
Company's shares issued in the future. The additional shares of Voting
Common Stock which would be authorized by the Authorized Stock Amendment
could be issued at the direction of the Board of Directors from time-to-time
for any proper corporate purpose, including the acquisition of other
businesses, the raising of additional capital for use in the Company's
business, or a split of or a dividend on then outstanding shares. They could
also be issued in connection with stock option plans or other authorized
options and warrants. The Company currently has no immediate plans to effect
any such transactions.
Stockholders should recognize that, although the Board of Directors will
issue Voting Common Stock only when it considers such issuance to be in the
best interests of the Company, the issuance of additional Voting Common Stock
may, among other things, have a dilutive effect on earnings per share of
Voting Common Stock and on the equity and voting rights of holders of shares
of Voting Common Stock. Furthermore, since Delaware law requires the vote of
a majority of the outstanding shares entitled to vote thereon in order to
approve certain mergers and reorganizations, the Authorized Stock Amendment
could permit the Board to issue a sufficient number of shares of Voting
Common Stock to a person who might vote to prevent a proposed business
combination that might be unfavorable to continuance of the incumbent Board
and deemed unacceptable to the Board, although perceived to be desirable by
some stockholders, including, potentially, a majority stockholder or
stockholders. The ability to issue additional shares of Voting Common Stock
would also allow incumbent management to issue shares to stockholders
supportive of management's position. The Authorized Stock Amendment may thus
discourage potential acquirors from making bids, thereby frustrating the
ability of acquirors to consummate acquisitions of the Company at substantial
premiums to the market price, even when favored by a majority of
stockholders. Except as just pointed out, the Company's Certificate of
Incorporation (as it exists and is proposed to be amended herein), its
By-Laws and contractual obligations do not contain any provisions which have
material anti-takeover effects.
In spite of the disadvantages to existing stockholders pointed out
above, the Board believes that the benefits of providing it with the
flexibility to issue shares without delay for any valid business purpose it
decides to be in the best interests of the Company outweigh the possible
disadvantages and that approval of the Authorized Stock Amendment is in the
best interests of the stockholders.
MANAGEMENT RECOMMENDATION
The proposal requires for approval the affirmative vote of the holders
of a majority of the
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<PAGE>
outstanding shares of Voting Common Stock, Non-Voting Common Stock and
Convertible Preferred Stock of the Company. The Board recommends a vote FOR
the Authorized Stock Amendment.
AMENDMENT OF COMPANY'S CERTIFICATE OF INCORPORATION
AS TO CONVERSION OF CONVERTIBLE PREFERRED STOCK
Article Fourth of the Company's Certificate of Incorporation, as amended
to date, presently requires in subparagraph (F) of paragraph (b) that any
convertible Preferred Stock shall be convertible into common stock of the
Company on a one-share for one-share basis. This means that if any share of
convertible Preferred Stock is issued, it can only be convertible into one
share of Common Stock and not more or less than one share of Common Stock.
THE AMENDMENT
The Board of Directors has declared it advisable and recommends to the
stockholders the Preferred Stock Conversion Amendment to Article Fourth of
the Certificate of Incorporation so as to delete the last clause in
Subparagraph (F) of paragraph (b) requiring a one-for-one conversion rate
from Convertible Preferred Stock to Common Stock. The full text of Article
Fourth, as it would be amended if the Preferred Stock Conversion Amendment is
approved by the stockholders, is set forth as Exhibit B to this Proxy
Statement.
REASONS FOR AMENDMENT
Article Fourth of the Certificate of Incorporation specifies in a
provision governing the authorized Preferred Stock that any Preferred Stock
which is convertible into Common Stock, whether voting or non-voting, shall
be convertible only on a one share to one share basis. This provision
restricts the Company's ability to raise capital through the sale of
Preferred Stock. It prevents any Preferred Stock from being converted into
Voting Common Stock, either on a discounted or a premium basis. It requires
all shares of convertible Preferred Stock to be converted into an equal
number of shares of Voting Common Stock. The existing language eliminates
the flexibility needed to have a series of convertible Preferred Stock which
is convertible into more than or less than an equal number of shares of
Voting Common Stock. Deletion of this requirement from the language of
Article Fourth will provide the flexibility the Board of Directors needs in
negotiating future financings.
When the Company raised additional capital recently, it issued
convertible debentures. They were convertible into Voting Common Stock based
upon the lower of a fixed conversion price or a 15% discount from the current
market price of Voting Common Stock at the time of conversion. This
financing might have been accomplished on comparable terms through the
issuance of Preferred Stock except for the restrictive provision in Article
Fourth.
The proposed change would provide the Company with the option to issue a
convertible equity security (Convertible Preferred Stock) instead of a debt
security (convertible debenture). It might have enabled the Company to avoid
a recent equity capital deficiency in its balance sheet which threatened the
continued listing of the Company's Voting Common Stock on the
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<PAGE>
NASDAQ Small-Cap Market. The Company has since corrected the deficiency but
the problem may have been avoided if the Company had then had the option to
issue convertible Preferred Stock instead of convertible debentures. The
Company wants the flexibility in the future to be able to issue Preferred
Stock which can be converted into more than or less than an equal number of
shares of Voting Common Stock.
The Company has no present plans to issue Preferred Stock which can be
converted into more than or less than an equal number of shares of Voting
Common Stock. When and if it does in the future, the ability to issue
Preferred Stock which can be converted into more than an equal number of
share of Voting Common Stock could be dilutive to the holders of Common Stock
depending upon the price paid for each share of such Convertible Preferred
Stock at the time of issuance. Management always intends, however, to issue
the Company's shares for not less than the reasonable fair market value of
such shares which in the case of convertible Preferred Stock would take into
account the market value of the Common Stock into which it is convertible.
OTHER CONSIDERATIONS
Reference is made to "Other Considerations" under the above discussion
of the Amendment of the Company's Certificate of Incorporation to Change
Authorized Stock for a discussion of the effect of the ability to issue
additional Common Stock on the Company's ability to avoid a takeover attempt.
Similar considerations would apply to elimination of the one-for-one
conversion ratio from Preferred Stock to Common Stock.
In addition, elimination of the one-for-one conversion ratio from
Preferred Stock to Common Stock would enable the Company to issue Preferred
Stock which is convertible into Common Stock at any multiple of shares of
Common Stock to one share of Preferred Stock, which could be dilutive to
holders of Common Stock if the chosen ratio were greater than one share of
Common Stock for each share of Preferred Stock. In pricing the Preferred
Stock, however, the Company would be obliged to consider the number of shares
of Common Stock into which Preferred Stock is convertible, so the Company
could not necessarily reduce the price to the acquirer of such Convertible
Preferred Stock by using a high conversion ratio.
MANAGEMENT RECOMMENDATION
The proposal requires the approval of the affirmative vote of the
holders of a majority of the outstanding shares of Voting Common Stock,
Non-Voting Common Stock and Convertible Preferred Stock of the Company. The
Board recommends a vote for the Preferred Stock Conversion Amendment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to the terms of a Common Stock and Convertible Note Purchase
Agreement dated as of July 8, 1994, J.P. Morgan Investment Corporation
("JPMIC") purchased 4,900,000 shares of Voting Common Stock at a price of
$.95 per share. At the same time the Company issued a 10% note to JPMIC in
the principal amount of $345,000 convertible into Nonvoting Common Stock at
$.95 per share, subject to anti-dilution adjustments. In November 1994,
JPMIC converted the $345,000 principal amount of the note plus accrued
interest into 377,684
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<PAGE>
shares of Non-Voting Common Stock.
In December 1994 J.P. Morgan Investment Corporation ("JPMIC") loaned the
Company a total of $2,000,000 primarily to provide interim financing for the
expanding international imaging business of the Company's controlled
subsidiary, Sandia Imaging Systems Corporation ("SIS"). The Company's debt
to JPMIC was evidenced by two $1,000,000 demand promissory notes providing a
12% per annum interest rate and a maximum term to February 1, 1996. JPMIC
also received in the loan transactions 5 year warrants to purchase a total of
$200,000 of Common Stock at its fair market values at the times the funds
were advanced to the Company. As a result, JPMIC acquired warrants to
purchase a total of 125,049 shares of Common Stock at prices of $1.51 per
share and $1.70 per share.
20
<PAGE>
Between February and September 15, 1995 Wolfensohn also loaned the Company
a total of $6,900,000 primarily to provide interim financing for the expanding
international imaging business of SIS. The Company's debt to Wolfensohn is
evidenced by a series of demand promissory notes providing a 12% per annum
interest rate and a maximum term of one year. Wolfensohn also received in the
loan transactions 5 year warrants to purchase a total of 534,105 shares of
Common Stock at prices ranging from $1.01 per share to $1.76 per share.
On May 10, 1995, Wolfensohn and JPMIC converted $1,000,000 and $2,093,000
of their short-term indebtedness into Common Stock of the Company at $.95 per
share for the purpose of satisfying the NASDAQ minimum net capital requirement.
This resulted in the issuance of 1,872,158 shares of Non-Voting Common Stock and
1,383,632 shares of voting Common Stock.
In order to maintain for the Company the amount of capital required for its
continued listing on the NASDAQ Small Cap Market during the last half of 1995,
Wolfensohn on three separate occasions converted into equity a total of
$3,210,000 of the Company's debt held by Wolfensohn. In each case Wolfensohn
received a separate series of shares of convertible Preferred Stock for the debt
converted. All shares of Preferred Stock received by Wolfensohn are convertible
into Common Stock on a one share for one share basis as was required by Article
Fourth of the Certificate of Incorporation.
The following table sets forth the basic terms of these three debt
conversions.
CONVERSION NUMBER OF SHARES
DATE DEBT CONVERTED PRICE RECEIVED
---- -------------- ----- -------
8/8/95 $1,500,000 $1.30 1,153,846 Series A
9/26/95 $1,500,000 $1.42 1,056,338 Series B
12/27/95 $469,879* $1.51 311,179 Series C
________
*Includes $259,879 of accrued interest on the Wolfensohn debt.
All three such series of Convertible Preferred Stock are convertible into
Common Stock on a one-for-one basis at any time at the option of the stockholder
in accordance with the presently existing requirement in Article Fourth of the
Company's Certificate of Incorporation. The Preferred Stock Conversion
Amendment described above will not change that conversion rate which will remain
one share of Common Stock for each share of Convertible Preferred Stock
converted. Each such series of Convertible Preferred Stock has a liquidation
preference over all Common Stock of the Company equal to the stated value of
each such series of Convertible Preferred Stock. The stated value is the same
as the conversion price stated in the table above. Cumulative dividends are
payable on the stated value per share of each such series of Convertible
Preferred Stock which are payable at the annual rate of 10% (except certain for
lesser rates for periods of less than a year following the date of issuance of
such Convertible Preferred Stock.) All such shares of each of the foregoing
series of Convertible Preferred Stock are entitled to vote as if converted into
Common Stock except upon matters as to which such Preferred Stock is entitled by
law to vote as a separate class.
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<PAGE>
In addition on December 15, 1995 Wolfensohn exercised the common stock
purchase warrants it received from the Company as part of the consideration to
Wolfensohn for the loans to the Company. Wolfensohn exercised these warrants
for the purchase of 534,105 shares of common stock and paid the aggregate
exercise price by cancelling $690,000 of the Company's debt held by Wolfensohn,
as permitted in the warrants. Finally, on December 27, 1995 Wolfensohn and a
related party purchased from the Company for $600,000 a total of 397,351 shares
of Series C Convertible Preferred Stock at $1.51 per share.
From the net proceeds of the Company's sale of $7,000,000 of convertible
debentures in October of 1995, $2,000,000 was used to repay a portion of the
Company's debt to Wolfensohn. As a result of the foregoing transactions the
Company either paid off of converted into equity all of the outstanding
Wolfensohn debt, plus accrued interest thereon, by the end of 1995, as well as
all of the JPMIC debt and interest.
During 1994 and 1995 the Company paid the law firm of James B. Alley, Jr.
for legal services as general counsel. Pursuant to an agreement between the
parties, the law firm, Rubin, Katz, Salazar, Alley & Rouse, charges the Company
for legal services at its usual hourly rates. Mr. Alley serves as Secretary of
the Company without salary.
COMPLIANCE WITH SECTION 16(a)
Jean-Pierre Arnaudo, President and Chief Executive Officer of SIS, became a
director of the Company on August 24, 1995 and at that time was granted an
incentive stock option to purchase 50,000 shares of the Company's voting Common
Stock over a three year vesting period. These transactions were not reported to
the Securities and Exchange Commission on Form 3 until November of 1995.
INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG Peat Marwick LLP, certified
public accountants, as independent auditors of the Company for the year ending
December 31, 1996, and the Board recommends that the stockholders of the Company
confirm such appointment. Representatives of KPMG Peat Marwick LLP are expected
to be present at the Annual Meeting to respond to appropriate questions and will
be given the opportunity to make a statement if they desire to do so.
FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS
Financial statements and management's discussion and analysis of
financial condition and results of operations for the year ended December 31,
1995 appearing on pages 13 through 34 of the Company's annual report for the
year ended December 31, 1995 and Form 10-QSB/A-1 for the quarter ended March
31, 1996, and filed with the Securities and Exchange Commission on May 31,
1996 are being furnished to stockholders herewith, and are incorporated
herein by reference.
DATES FOR SUBMISSION OF STOCKHOLDER PROPOSALS
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Stockholders of the Company wishing to include proposals in the proxy
material relating to the annual meeting of stockholders of the Company to be
held in 1997 must submit the same in writing so as to be received at the
executive offices of the Company on or before February 3, 1997. Such
proposals must also meet the other requirements of the rules of the
Securities and Exchange Commission relating to stockholders' proposals.
By Order of the Board of Directors,
JAMES B. ALLEY, JR.
Secretary
June 3, 1996
23
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Exhibit A
LASERTECHNICS, INC.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
1. PURPOSE
This Stock Option Plan for Lasertechnics, Inc., a Delaware corporation (the
"Company"), is intended to provide incentive to non-employee directors of the
Company by providing those persons with opportunities to purchase shares of the
Company's Common Stock under stock options.
2. DEFINITIONS
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "Affiliate" shall mean any entity controlling, controlled by or
under common control with the Company.
(b) "Board" shall mean the Company's board of directors.
(c) "Common Stock" shall mean the voting common stock, $.01 par value
per share, of the Company.
(d) "Fair Market Value" of a share of Common Stock on any day shall
be the closing sale quotation on the National Association of
Securities Dealers' National Market System as reported for such day by
the automated quotations system of the National Association of
Securities Dealers, Inc. or, if no such quotation is reported for such
day, the average of the high bid and low asked price of Common Stock
as reported for such day. The "30 Day Average Fair Market Value" of a
share of Common Stock shall be the average "Fair Market Value" of a
share of Common Stock for the 30 calendar days immediately prior to
the date of the Option grant. In no event shall the Fair Market Value
of any share of Common Stock be less than its par value.
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(e) "Plan" shall mean this Non-Employee Directors' Stock Option Plan
established by the Company.
(f) "Option" shall mean any option issued under this Plan.
(g) "Optionee" shall mean any person to whom an Option is granted
under this Plan.
(h) "Outside Director" shall mean any member of the Board who is not
an employee of the Company or any Affiliate of the Company.
(i) "Termination of Service" shall mean termination of service as a
member of the Board.
3. GENERAL ADMINISTRATION
(a) This Plan shall be administered by the Board. The Board shall
have the authority (i) to exercise all of the powers granted to it
under this Plan, (ii) to construe, interpret and implement this Plan
and any Option Agreements executed pursuant to Section 7 below, (iii)
to prescribe, amend and rescind rules and regulations relating to this
Plan, (iv) to make all determinations necessary or advisable in
administering this Plan, (v) to correct any defect, supply any
omission and reconcile any inconsistency in this Plan and (vi) to
amend this Plan to reflect changes in applicable law.
(b) The determination of the Board on all matters relating to this
Plan or any Option Agreement shall be final, binding and conclusive.
(c) No Board member shall be liable for any action or determination
made in good faith with respect to this Plan, including any Option.
4. TERMS OF PLAN
Options may be granted from time to time within a period of 10 years from
the effective
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<PAGE>
date on which this Plan is adopted by the Board.
5. ELIGIBILITY AND GRANTING OF OPTIONS
(a) Each Outside Director of the Company shall automatically be
granted an Option (fully vested) to purchase 5,000 shares of Common
Stock at the first meeting of directors following each stockholder
election of such Outside Director to the Board provided, however, if
the Outside Director shall not theretofore have been a director of the
Company for the entire period since the last stockholder election of
directors, then the number of shares subject to the Option be reduced
from 5,000 PRO RATA based upon the number of months in the prior 12
month period such Outside Director served on the Board. Such Options
shall have the terms and be subject to the conditions set forth in
Section 7 below.
(b) Each person who first becomes a director of the Company after
July 1, 1995, provided that he or she is an Outside Director, shall
automatically be granted an Option to purchase 50,000 shares of Common
Stock (subject to the vesting provisions of Section 7(c) below) upon
his or her first election or appointment to the Board. The grant
provided in this paragraph 5(b) shall be in addition to any grant
provided in the prior paragraph 5(a). Such Options shall have the
terms and be subject to the conditions set forth in Section 7 below.
(c) An Option shall be granted hereunder only if as of each date of
grant the director is an Outside Director.
(d) In the event that the number of shares of Common Stock available
for future grant under the Plan is insufficient to make all grants
required to be made on any date, then all Outside Directors entitled
to a grant on such date shall share ratably in the number of options
on shares available for grant under the Plan.
(e) The provisions of Section 5 and Section 7 may not be amended more
often than once every six months.
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6. COMMON STOCK
(a) The stock subject to the Options shall be Common Stock.
(b) The total number of shares of Common Stock with respect to which
Options may be granted shall not exceed 300,000. Common Stock issued
pursuant to this Plan may be authorized but unissued Common Stock or
authorized and issued Common Stock held in the Company's treasury or
acquired by the Company for the purposes of this Plan. The Board may
direct that any certificate evidencing Common Stock pursuant to this
Plan shall bear a legend setting forth such restrictions on
transferability as may apply to such shares.
(c) If there is any change in the number of outstanding shares of
Common Stock by reason of a stock dividend or distribution, stock
split-up, reverse stock split, recapitalization, combination or
exchange of shares, or by reason of any merger, consolidation, spinoff
or other corporate reorganization in which the Company is the
surviving corporation, the number of shares of Common Stock available
for issuance both in the aggregate and with respect to each
outstanding Option, and the purchase price per share under each
outstanding Option, shall be equitably adjusted by the Board, whose
determination shall be final, binding and conclusive. In the event of
any merger, consolidation or combination of the Company with or into
another corporation (other than a merger, consolidation or combination
in which the Company is the surviving corporation and which does not
result in any reclassification or other change in the number of
outstanding shares of Common Stock), each Optionee shall have the
right thereafter and during the term of each such Option to receive
upon exercise (subject to the provisions of the Option Agreement) of
such Option, for each share of Common Stock as to which the Option
shall be exercised, the kind and amount of shares of the surviving or
new corporation, cash, securities, evidence of indebtedness, other
property or any combination thereof which would have been received
upon such merger, consolidation or combination by the holder of one
share of Common Stock immediately prior to such merger, consolidation
or combination.
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<PAGE>
(d) If any outstanding Option for any reason expires or is terminated
without having been exercised in full, the Common Stock allocable to
the unexercised portion of such Option shall (unless this Plan shall
have been terminated) become available for subsequent grants of
Options.
7. TERMS AND CONDITIONS OF OPTIONS
Each Option granted shall be evidenced by an Option Agreement in such form
as the Board may from time to time approve. By accepting an Option, an Optionee
thereby agrees that the Option shall be subject to the provisions of the
applicable Option Agreement. Options shall comply with and be subject to the
following terms and conditions:
(a) OPTION PRICE. The Option Price for each Option shall be 100% of
the 30 Day Average Fair Market Value of the shares of Common Stock on
the date of grant of the Option.
(b) MEDIUM AND TIME OF PAYMENT. The Option Price shall be paid in
full, at the time of exercise, in cash or, with the Board's approval,
in Common Stock held by the Optionee for at least six months having a
Fair Market Value in the aggregate equal to such Option Price or in a
combination of cash and such shares.
(c) TERM AND EXERCISE OF OPTIONS.
(1) Except as provided in paragraphs (3) and (4) of this Section
7(c), each Option shall be fully vested and exercisable on the date of
grant of the Option.
(2) Except as provided in paragraphs (3) and (4) of this Section
7(c), Options shall be exercisable for 10 years from the date of the
grant. The exercise period shall be subject to earlier termination as
provided in Section 7(d) below. An Option may be exercised, as to any
or all full shares of Common Stock as to which the Option is
exercisable, by giving written notice of such exercise to the Board.
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<PAGE>
(3) Any Option granted prior to the receipt of the approval of
the Company's stockholders of this Plan shall not vest, nor shall such
Option become exercisable, until such stockholder approval shall be
obtained in accordance with the terms of this Plan.
(4) Each Option granted pursuant to Section 5(b) above shall
become vested and first exercisable in the following installments:
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES EXERCISABLE TIME OF VESTING
-------------------------------- ---------------
<S> <C>
25% Immediately
50% After 1 full year of service on the Board
75% After 2 full years of service on the Board
100% After 3 full years of service on the Board
</TABLE>
(d) TERMINATION OF SERVICE; DEATH.
(1) If an Optionee's service terminates for any reason other
than dismissal for cause, as determined in the Board's sole
discretion, any exercise must occur prior to the earlier of (x) 5:00
p.m. (Eastern Time) on the 90th day after Termination of Service or,
in respect of death or disability, on the 180th day thereafter, and
(y) the expiration date of the Option. Any such exercise of an Option
following an Optionee's death or adjudication of mental incapacity
shall be made only by the Optionee's executor or administrator or
other duly appointed representative, as the case may be, reasonably
acceptable to the Board unless the Optionee's will specifically
disposes of such Option, in which case such exercise shall be made
only by the recipient of such specific disposition. If an Optionee's
legal representative or the recipient of a specific disposition under
the Optionee's will is entitled to exercise any Option pursuant to the
preceding sentence, such representative or recipient shall be bound by
the provisions of this Plan and the
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<PAGE>
applicable Option Agreement which would have applied to the Optionee.
(2) Except to the extent otherwise provided in paragraph (1) of
this Section 7(d) or in the applicable Option Agreement, any portion
of an Option not theretofore exercised shall terminate upon the
Optionee's Termination of Service for any reason or without reason
(including death).
(e) NONTRANSFERABILITY OF OPTIONS. Options shall not be transferable
other than by will or by the laws of descent and distribution, and
Options may be exercised, during the lifetime of the Optionee, only by
the Optionee or the Optionee's legal representative.
(f) RIGHTS AS A STOCKHOLDER. An Optionee or a transferee of an
Option shall have no rights as a stockholder with respect to any
Common Stock covered by his Option until the date of the issuance of a
stock certificate to him for such shares. No adjustments shall be
made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided in Section 6(c) above.
(g) OTHER PROVISIONS. The Option Agreements authorized under this
Plan shall contain such other provisions, including (i) the imposition
of restrictions upon the exercise of an Option and (ii) the inclusion
of any condition as the Board shall deem advisable, including
provisions with respect to compliance with federal
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<PAGE>
and applicable state securities laws.
8. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES
No later than the date of exercise of any Option, the Optionee will pay to
the Company or make arrangements satisfactory to the Board regarding payment of
any federal, state or local taxes of any kind required by law to be withheld
upon the exercise of such Option. The Optionee may, with the Board's prior
approval, make such payment in whole or in part by surrendering Common Stock to
the Company, valued at its Fair Market Value on the date of surrender.
9. RESTRICTIONS
(a) If the Board shall at any time determine that any Consent (as
hereinafter defined) is necessary or desirable as a condition of, or in
connection with, the granting of any Option, the issuance or purchase of Common
Stock or other rights thereunder, or the taking of any other action thereunder
(each such action being hereinafter referred to as a "Plan Action"), then such
Plan Action shall not be taken, in whole or in part, unless and until such
Consent shall have been effected or obtained to the Board's full satisfaction.
(b) The term "Consent" as used herein with respect to any Plan Action
means (i) any and all listings, registrations or qualifications in respect
thereof upon any inter-dealer quotation system of a registered national
securities association or any national securities exchange or under any federal,
state or local law, rule or regulation, (ii) any and all written agreements and
representations by the Optionee with respect to the disposition of Common Stock,
or with respect to any other matter, which the Board shall deem necessary or
desirable to comply with the terms
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<PAGE>
of any such listing, registration or qualification, or to obtain an exemption
from the requirement that any such listing, qualification or registration be
made, and (iii) any and all consents, clearances and approvals in respect of
a Plan Action by any governmental or other regulatory bodies.
(c) In furtherance of the foregoing, at the time of any exercise of an
Option, the Board may, if it shall determine it necessary or desirable for any
reason, require the Optionee as a condition to the exercise thereof, to deliver
to the Board a written representation of the Optionee's present intention to
purchase the Common Stock for investment and not for distribution. If such
representation is required to be delivered, an appropriate legend may be placed
upon each certificate delivered to the Optionee upon his exercise of part or all
of an Option and a stop transfer order may be placed with the transfer agent.
Each such Option shall also be subject to the requirement that, if at any time
the Board determines, in its discretion, that either (i) the listing,
registration or qualification of Common Stock subject to an Option upon any
securities exchange or under any state, federal or foreign law, or (ii) the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with, the issue or purchase of
Common Stock thereunder, the Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Board.
An Optionee shall not have the power to require or oblige the Company to
register any Common Stock subject to an Option.
(d) The Board shall submit this Plan for approval of the Company's
stockholders in accordance with the requirements of Securities Exchange Act Rule
16b-3 within 12 months
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<PAGE>
following the adoption of this Plan by the Board.
10. NATURE OF PAYMENTS
All Options granted shall be in consideration of services performed for the
Company by the Optionee.
11. OTHER PAYMENTS OR OPTIONS
Nothing contained in this Plan shall be deemed in any way to limit or
restrict the Company from granting any option to purchase Common Stock or making
any payment to any person under any other plan, arrangement or understanding,
whether now existing or hereafter in effect.
12. SECTION HEADINGS
The section headings contained herein are for the purpose of convenience
only and are not intended to define or limit the contents of said sections.
13. AMENDMENT AND TERMINATION
(a) The Board may from time to time suspend, discontinue, revise or amend
this Plan in any respect whatsoever, provided that any amendment that would
materially increase the aggregate number of shares of Common Stock as to which
Options may be granted, materially increase the benefits accruing to
participants under this Plan, or materially modify the requirements as to
eligibility for participation in this Plan shall be subject to the approval of
the holders of a majority of the outstanding Common Stock voting at a meeting of
stockholders at which a quorum is present. In addition, no such amendment shall
materially impair any rights
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<PAGE>
or materially increase any obligations under any outstanding Option without
the consent of the Optionee (or, upon the Optionee's death or adjudication of
mental incapacity, the person having the right to exercise the Option).
(b) The Board may amend any outstanding Option Agreement. However, any
such amendment that materially impairs the rights or materially increases the
obligations of an Optionee under an outstanding Option shall be made only with
the consent of the Optionee (or, upon the Optionee's death, the person having
the right to exercise the Option).
(c) This Plan shall terminate, and any outstanding Options shall be
cancelled, if this Plan has not been approved by the Company's stockholders in
accordance with the requirements of Securities Exchange Act Rule 16b-3 within 12
months following the adoption of this Plan by the Board.
Adopted by the Board effective as of 1 July 1995, subject to the approval of the
Company's stockholders.
11
<PAGE>
Exhibit B
I. Article FOURTH of the Certificate of Incorporation is deleted
in its entirety and replaced with the following:
FOURTH: (a) The total number of shares of capital stock that the
Corporation shall have authority to issue is 66,000,000, consisting of
56,750,00 shares of Common Stock, par value $.01 per share ("Common Stock"),
2,250,000 shares of Non-Voting Common Stock, par value $.01 per share
("Non-Voting Common Stock" and together with the Common Stock, "Common
Shares"), and 7,000,000 shares of preferred stock, par value $.01 per share
("Preferred Stock").
(b) PREFERRED STOCK. A statement of the designations, powers, preferences,
rights, qualifications, limitations and restrictions of the Preferred Stock is
as follows:
The Preferred Stock may be issued in one or more series at such time or
times and for such consideration or considerations as the Corporation's board of
directors (the "Board of Directors") may determine pursuant to a resolution or
resolutions providing for such issuance duly adopted by the Board of Directors
(authority to do so being hereby expressly vested in the Board of Directors) and
such resolution or resolutions shall also set forth, with respect to each such
series of Preferred Stock, the following:
(A) The distinctive designation, stated value and number of shares
comprising such series, which number may (except where otherwise provided
herein or by the Board of Directors in creating such series) be increased
or decreased (but not below the number of shares then outstanding) from
time to time by action of the Board of Directors;
(B) The rate of dividend, if any, on the shares of that series,
whether dividends shall be cumulative and, if so, from which date or dates,
and the relative rights of priority, if any, of payment of dividends on
shares of that series over shares of any other series or class;
(C) Whether the shares of that series shall be redeemable in whole or
in part and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the
amount per share payable in case of redemption, which amount may vary under
different conditions and at different redemption dates, or the property or
rights, including securities of any other corporation, payable in case of
redemption;
(D) Whether that series shall have a sinking fund for the redemption
or purchase of shares of that series, and, if so, the terms and amounts
payable into such sinking fund;
(E) The rights to which the holders of the shares of that series
shall be entitled
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<PAGE>
in the event of voluntary or involuntary liquidation, dissolution,
distribution of assets or winding-up of the Corporation, and the relative
rights of priority, if any, of payment of shares of that series;
(F) Whether the shares of that series shall be convertible in whole
or in part into or exchangeable in whole or in part for shares of capital
stock of any class or any other series of Preferred Stock and, if so, the
terms and conditions of such conversion or exchange, including the rate or
rates of conversion or exchange, the date or dates upon or after which they
shall be convertible or exchangeable, the duration for which they shall be
convertible or exchangeable, the event or events upon or after which they
shall be convertible or exchangeable and at whose option they shall be
convertible or exchangeable, and the method of adjusting the rates of
conversion or exchange in the event of a stock split, stock dividend,
combination of shares or similar event.
(G) Whether the shares of that series shall have voting rights in
addition to the voting rights provided by law, and if so, the terms of such
voting rights, provided however, Preferred Stock convertible into Common
Stock shall vote together with the Common Stock and shall have no greater
voting rights than the Common Stock into which it is convertible.
(H) Whether the issuance of any additional shares of such series, or
of any shares of any other series, shall be subject to restrictions as to
issuance, or as to the powers, preferences or rights of any such other
series; and
(I) Any other preferences, privileges and powers, and relative,
participation, option or other special rights, and qualifications,
limitations or restrictions of such series, as the Board of Directors may
deem advisable and as shall not be inconsistent with the provisions of the
Certificate of Incorporation, as amended, and to the full extent now or
hereafter permitted by the laws of the State of Delaware.
(c) COMMON SHARES. A statement of the designations, powers, preferences,
rights, qualifications, limitations and restrictions in respect of the Common
Shares is as follows:
(A) DIVIDENDS. The Board of Directors of the Corporation may
cause dividends to be paid to the holders of shares of Common Stock or
Non-Voting Common Stock out of funds legally available for the payment
of dividends by declaring an amount per share as a dividend. When and
as dividends or other distributions are declared, whether payable in
cash, in property or in shares of stock of the Corporation, other than
in shares of Common Stock or Non-Voting Common Stock, the holders of
Common Stock and the holders of Non-Voting Common Stock shall be
entitled to share equally, share for share, in such dividends or other
distributions, subject to the rights of holders of Preferred Stock.
No dividends or other distributions shall be declared or paid in
shares of Common Stock or Non-Voting Common Stock or options, warrants
or rights to acquire such
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<PAGE>
stock or securities convertible into or exchangeable for shares of such
stock, except dividends or other distributions payable ratably according
to the number of shares of Common Stock and Non-Voting Common Stock held
by them, in shares of, or options, warrants or rights to acquire or
securities convertible into or exchangeable for, Common Stock to holders
of that class of stock and Non-Voting Common Stock to holders of that
class of stock.
(B) LIQUIDATION RIGHTS. Subject to the liquidation rights of
holders of Preferred Stock, in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of
the Corporation, the holders of Common Shares shall be entitled to
share, ratably according to the number of shares of Common Stock and
Non-Voting Common Stock held by them, in all assets of the Corporation
available for distribution to its stockholders.
(C) VOTING RIGHTS.
(1) Except as otherwise provided in this Certificate of
Incorporation or required by applicable law, the holders of
Common Stock shall be entitled to vote on each matter on which
the stockholders of the Corporation shall be entitled to vote,
and each holder of Common Stock shall be entitled to one vote for
each share of such stock held by such holder.
(2) The holders of Non-Voting Common Stock shall not have
any voting rights except as otherwise provided in this
Certificate of Incorporation or required by applicable law and
except that such holders shall be entitled to vote as a separate
class on any amendment to this paragraph (C)(2) and on any
amendment, repeal or modification of any provision of this
Certificate of Incorporation that adversely affects the powers,
preferences or special rights of holders of Non-Voting Common
Stock.
(3) Except as otherwise provided in paragraph (C)(2) above,
on any matter on which the holders of Common Stock and the
holders of Non-Voting Common Stock are entitled to vote, both
classes of Common Shares entitled to vote shall vote together as
a single class, and each holder of Common Shares entitled to vote
shall be entitled to one vote for each share of Common Stock and
one vote for each share of Non-Voting Common Stock held by such
holder.
(4) In addition to any affirmative vote required by law or
by this Certificate of Incorporation, the affirmative vote or
written consent of the holders of not less than a majority of the
then outstanding shares of both classes of Common Shares, voting
together as a single class, shall be required for any of the
following actions: (i) any increase, reduction or other change in
the authorized number of shares of any class of Common Shares,
(ii) the authorization of any new series or class of stock of the
Corporation senior to or on a parity with Common Shares with
respect to
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<PAGE>
the payment of dividends or the distribution of assets on
liquidation, and increases in the authorized shares of any such
series or class, and (iii) any amendment to the Certificate of
Incorporation that adversely affects the rights of the Common Stock
or the Non-Voting Common Stock. The affirmative vote or written
consent specified in the preceding sentence shall be required
notwithstanding the fact that no vote may be required, or that a
lesser percentage vote may be specified, by law, by the By-Laws of
the Corporation or otherwise.
(D) CONVERSION.
(1) Upon compliance with the provisions of paragraph (D)(3)
below, any Regulated Stockholder (as defined below) shall be
entitled to convert, at any time and from time to time, any or
all of the shares of Common Stock held by such stockholder into
the same number of shares of Non-Voting Common Stock. The term
"Regulated Stockholder" shall mean (a) the stockholder ("the SBIC
Stockholder") that purchased shares of Common Stock pursuant to
the Common Stock and Convertible Note Purchase Agreement dated
July 8, 1994 (the "Purchase Agreement"), (b) any stockholder that
is subject to the provisions of Regulation Y of the Board of
Governors of the Federal Reserve System (12 C.F.R. Part 225) or
any successor to such regulation ("Regulation Y"), and that holds
shares of Common Stock or Non-Voting Common Stock originally
issued pursuant to the Purchase Agreement or upon conversion of
the Convertible Note issued thereunder, or shares issued upon
conversion(s) of such shares, so long as such stockholder shall
hold any such shares of Common Stock or Non-Voting Common Stock
or shares issued upon conversion(s) of such shares, (c) any
Affiliate (as defined below) of any such Regulated Stockholder
specified in clause (a) or (b) above that is a transferee of any
shares of Common Stock or Non-Voting Common Stock of the
Corporation, so long as such Affiliate shall hold any such shares
of Common Stock or Non-Voting Common Stock or shares issued upon
conversion(s) of such shares and (d) any individual, partnership,
joint venture, corporation, association, trust, or any other
entity or organization, including a government or political
subdivision or an agency or instrumentality thereof (a "Person")
(i) to which any such Regulated Stockholder specified in clause
(a) or (b) above or any of its Affiliates has transferred such
shares, so long as such transferee shall hold, and only with
respect to, any shares transferred by such Regulated Stockholder
or Affiliate or any shares issued upon conversion(s) of such
shares, and (ii) which transferee is, or any Affiliate of which
is, subject to the provisions of Regulation Y. As used in this
Certificate of Incorporation, the term "Affiliate" shall mean
with respect to any Person, or any other Person directly or
indirectly controlling, controlled by or under common control
with such Person. For the purpose of this definition, the term
"control" (including with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"),
as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to
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<PAGE>
direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or by
contract or otherwise.
(2) Upon compliance with the provisions of paragraph (D)(3)
below, any stockholder shall be entitled to convert, at any time
and from time-to-time, any and all shares of Non-Voting Common
Stock held by such stockholder into the same number of shares of
Common Stock; PROVIDED, HOWEVER, that no holder of any shares of
Non-Voting Common Stock shall be entitled to convert any such
shares into shares of Common Stock, to the extent that, as a
result of such conversion, such holder and its Affiliates,
directly or indirectly, would own, control or have the power to
vote a greater number of shares of Common Stock or other
securities of any kind issued by the Corporation than such holder
and its Affiliates shall be permitted to own, control or have the
power to vote under any law, regulation, rule or other
requirement of any governmental authority at the time applicable
to such holder or its Affiliates.
(3)(a) Each conversion of Common Shares of the Corporation
into another class of Common Shares of the Corporation shall be
effected by the surrender of the certificate(s) evidencing the
shares of the class of stock to be converted (the "Converting
Shares") at the principal office of the Corporation (or such
other office or agency of the Corporation as the Corporation may
designate by notice in writing to the holders of Common Shares)
at any time during its usual business hours, together with
written notice by the holder of such Converting Shares, (i)
stating that the holder desires to convert the Converting Shares
or a specified number of such Converting Shares, evidenced by
such certificate(s) into an equal number of shares of the class
into which such shares may be converted (the "Converted Shares"),
and (ii) giving the name(s) (with addresses) and denominations in
which the certificate(s) evidencing the Converted Shares shall be
issued, and instructions for the delivery thereof. The
Corporation shall promptly notify each Regulated Stockholder of
record of its receipt of such notice. Except as otherwise
provided in paragraph (D)(3)(b), upon receipt of the notice
described in the first sentence of this paragraph (D)(3)(a),
together with the certificate(s) evidencing the Converting
Shares, the Corporation shall be obligated to, and shall, issue
and deliver in accordance with such instructions the
certificate(s) evidencing the Converted Shares issuable upon such
conversion and a certificate (which shall contain such legends,
if any, as were set forth on the surrendered certificate(s))
representing any shares which were represented by the
certificate(s) surrendered to the Corporation in connection with
such conversion but which were not Converting Shares and,
therefore, were not converted; PROVIDED, HOWEVER, that if such
conversion is subject to paragraph (D)(3)(d) below, the
Corporation shall not issue said certificate(s) until the
expiration of the Deferral Period referred to therein. Such
conversion, to the extent permitted by law, shall be deemed to
have been effected as of the close of business on the date on
which such
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<PAGE>
certificate(s) shall have been surrendered and such written notice
shall have been received by the Corporation, and at such time the
rights of the holder of such Converting Shares as such holder shall
cease (except that in the case of a conversion subject to paragraph
(D)(3)(d) below, the conversion shall be deemed effective upon
expiration of the Deferral Period referred to therein), and the
person(s) in whose name or names any certificate(s) evidencing the
Converted Shares are to be issued upon such conversion shall be
deemed to have become the holder(s) of record of the Converted
Shares.
(b) Notwithstanding any provision of paragraph (D)(3)(a) to
the contrary, the Corporation shall not be required to record the
conversion of, and no holder of shares shall be entitled to
convert, shares of Non-Voting Common Stock into shares of Common
Stock unless such conversion is permitted under applicable law;
PROVIDED, HOWEVER, that the Corporation shall be entitled to rely
without independent verification upon the representation of any
holder that the conversion of shares by such holder is permitted
under applicable law, and in no event shall the Corporation be
liable to any such holder or any third party arising from such
conversion whether or not permitted by applicable law.
(c) Upon the issuance of the Converted Shares in accordance
with this paragraph (D), such shares shall be deemed to be duly
authorized, validly issued, fully paid and non-assessable.
(d) The Corporation shall not convert or directly or
indirectly redeem, purchase or otherwise acquire any shares of
Common Stock or take any other action affecting the voting rights
of such shares, if such action will increase the percentage of
outstanding voting securities owned or controlled by any
Regulated Stockholder (other than the stockholder which requested
that the Corporation take such action, or which otherwise waives
in writing its rights under this paragraph (D)) unless the
Corporation gives written notice (the "First Notice") of such
action to each such Regulated Stockholder. The Corporation will
defer making any conversion, redemption, purchase or other
acquisition or taking any such other action for a period of 30
days (the "Deferral Period") after giving the First Notice in
order to allow each such Regulated Stockholder to determine
whether it wishes to convert or take any other action with
respect to the Common Shares it owns, controls or has the power
to vote, and if any such Regulated Stockholder then elects to
convert any shares of Common Stock, it shall notify the
Corporation in writing within 20 days of the issuance of the
First Notice, in which case the Corporation (i) shall promptly
notify from time to time each other Regulated Stockholder holding
shares of each proposed conversion and the proposed transactions,
and (ii) effect the conversion requested by all Regulated
Stockholders in response to the notices issued pursuant to this
paragraph (D)(3)(d) at the end of the Deferral Period or as soon
thereafter as is reasonably practicable. Notwithstanding the
foregoing, at any time at which any
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<PAGE>
shares of Common Stock or Non-Voting Common Stock are held by a
Regulated Stockholder which is subject to the provisions of
Regulation Y, the Corporation will not directly or indirectly
redeem, purchase, acquire or take any other action affecting
outstanding shares of Common Stock or Non-Voting Common Stock if
such action will increase above 4.9% the percentage of any class of
voting securities of the Corporation, or increase above 24.9% the
percentage of outstanding Common Stock or Non-Voting Common Stock,
owned, held or controlled by any Regulated Stockholder and its
Affiliates (other than a stockholder which waives in writing its
rights under this paragraph (D)).
(e) The Corporation will at all times reserve and keep
available out of its authorized but unissued shares of Common
Stock and Non-Voting Common Stock or its treasury shares, solely
for the purpose of issue upon conversion of shares of Common
Stock and Non-Voting Common Stock, such number of shares of such
class as shall then be issuable upon the conversion of all
outstanding shares of Common Stock and Non-Voting Common Stock.
(f) Shares of Common Stock and Non-Voting Common Stock that
are converted into shares of any other class shall not be
reissued, except, in the case of shares of Common Stock and Non-
Voting Common Stock, for reissuance in connection with the
conversion of shares of Common Stock held by Regulated
Stockholders or Non-Voting Common Stock into shares of Non-Voting
Common Stock or Common Stock.
(g) The issue of certificates evidencing shares of any
class of Common Shares upon conversion of shares of any other
class of Common Shares shall be made without charge to the
holders of such shares for any issue tax in respect thereof or
other cost incurred by the Corporation in connection with such
conversion; PROVIDED, HOWEVER, the Corporation shall not be
required to pay any tax that may be payable in respect of any
transfer involved in the issuance and delivery of any certificate
in a name other than that of the holder of the Common Shares
converted.
(4) If the Corporation shall in any manner subdivide (by
stock split, stock dividend or otherwise) or combine (by reverse
stock split or otherwise) the outstanding shares of the Common
Stock or the Non-Voting Common Stock, the outstanding shares of
each other class of Common Shares shall be proportionately
subdivided or combined, as the case may be, and effective
provision shall be made for the protection of all conversion
rights hereunder. In case of any reorganization,
reclassification or change of shares of Common Stock or Non-
Voting Common Stock (other than a change in par value, or from
par value to no par value as a result of a subdivision or
combination), or in case of any consolidation of the Corporation
with one or more other corporations or a merger of the
Corporation with another corporation (other than a consolidation
or merger in which the Corporation is the continuing corporation
and which does not
7
<PAGE>
result in any reclassification or change of outstanding shares of
Common Stock or Non-Voting Common Stock), or in case of any sale,
lease or other disposition to another corporation (other than a
wholly-owned subsidiary of the Corporation) of all or substantially
all the assets of the Corporation, each holder of Common Shares,
irrespective of class, shall have the right at any time thereafter,
so long as the conversion right hereunder with respect to such
Common Shares would exist had such event not occurred, to convert
such shares into the kind and amount of shares of stock and other
securities and property (including cash) receivable upon such
reorganization, reclassification, change, consolidation, merger,
sale, lease or other disposition by a holder of the number of
shares of the class of Common Shares into which such Common Shares
might have been converted immediately prior to such reorganization,
reclassification, change, consolidation, merger, sale, lease or
other disposition. In the event of such a reorganization,
reclassification, change, consolidation, merger, sale, lease or
other disposition, effective provision shall be made in the
certificate of incorporation of the resulting or surviving
corporation or otherwise for the protection of the conversion
rights of the Common Shares of each class that shall be applicable,
as nearly as reasonably may be, to any such other shares of stock
and other securities and property deliverable upon conversion of
Common Shares into which such Common Shares might have been
converted immediately prior to such event. The Corporation shall
not be a party to any merger, consolidation or recapitalization
pursuant to which any holder of shares of Non-Voting Common Stock
would be required to take (i) any voting securities which would
cause such holder to violate any law, regulation or other
requirement of any governmental body applicable to such holder, or
(ii) any securities convertible into voting securities which if
such conversion took place would cause such holder to violate any
law, regulation or other requirement of any governmental body
applicable to such holder other than securities which are
specifically provided to be convertible only in the event that such
conversion may occur without any such violation.
8
<PAGE>
LASERTECHNICS, INC. PROXY FOR THE ANNUAL THE UNDERSIGNED HEREBY
5500 WILSHIRE AVENUE, N.E. MEETING OF STOCKHOLDERS APPOINTS RICHARD C.E.
ALBUQUERQUE, NM 87113 JUNE 17, 1996 MORGAN, EUGENE A. BOURQUE
AND JEAN-PIERRE ARNAUDO
AS PROXIES, EACH WITH
THE POWER TO APPOINT HIS
SUBSTITUTE AND HEREBY
AUTHORIZES THEM TO
REPRESENT AND TO VOTE, AS
DESIGNATED BELOW, ALL THE
SHARES OF COMMON STOCK OF
LASERTECHNICS, INC. HELD
OF RECORD BY THE UNDER-
SIGNED ON MAY 3, 1996 AT
THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD
AT 10:00 A.M. EASTERN
DAYLIGHT TIME ON JUNE 17,
1996 AT THE WHITNEY ROOM
OF THE HOTEL INTER-
CONTINENTAL NEW YORK,
111 EAST 48TH STREET,
NEW YORK, N.Y. OR ANY
ADJOURNMENT THEREOF.
1. ELECTION OF DIRECTORS: [ ] FOR ALL NOMINEES JEAN-PIERRE ARNAUDO,
[ ] WITHHELD EUGENE A. BOURQUE,
RICHARD M. CLARKE, PAUL
J. COLEMAN, JR., C. SETH
CUNNINGHAM, RICHARD C.E.
MORGAN, ALFRED E. PAULEKAS
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S
NAME IN THE SPACE PROVIDED BELOW
______________________________________________________
FOR AGAINST ABSTAIN
[ ] [ ] [ ] 2. PROPOSAL TO APPROVE A STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS OF THE COMPANY, AS DESCRIBED
IN THE ACCOMPANYING PROXY STATEMENT.
[ ] [ ] [ ] 3. PROPOSAL TO AMEND ARTICLE FOURTH OF THE COMPANY'S
CERTIFICATE OF INCORPORATION RELATING TO THE
COMPANY'S AUTHORIZED CAPITAL STOCK, AS DESCRIBED IN
THE ACCOMPANYING PROXY STATEMENT.
[ ] [ ] [ ] 4. PROPOSAL TO AMEND ARTICLE FOURTH OF THE COMPANY'S
CERTIFICATE OF INCORPORATION RELATING TO CONVERSION
OF PREFERRED STOCK INTO COMMON STOCK, AS DESCRIBED
IN THE ACCOMPANYING PROXY STATEMENT.
[ ] [ ] [ ] 5. PROPOSAL TO CONFIRM THE APPOINTMENT OF KPMG PEAT
MARWICK LLP AS THE INDEPENDENT AUDITORS FOR THE
COMPANY.
[ ] [ ] [ ] 6. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO
VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2, 3, 4, 5 AND 6.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURE(S)____________________________________ DATE:____________, 1996
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS HEREON. WHEN SHARES ARE HELD
BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF
A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR
OTHER AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP
NAME BY AUTHORIZED PERSON.
