<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
------------------------
/x/ Filed by the Registrant
/ / Filed by a Party other than the Registrant
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
COPYTELE, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
COPYTELE, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
PAYMENT OF FILING FEE (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(j)(2).
/ / $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:*
____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
____________________________________________________________________________
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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: ________________________________
/ / Filing fee of $ was previously paid on , 199 , the
date the Preliminary Proxy Statement was filed.
- --------------------------------------------------------------------------------
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<PAGE>
COPYTELE, INC.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JULY 19, 1995
------------------------
TO THE SHAREHOLDERS OF COPYTELE, INC.
You are cordially invited to attend the Annual Meeting of Shareholders (the
'Annual Meeting') of CopyTele, Inc., a Delaware corporation (the 'Company'), to
be held at the Fox Hollow, Woodbury, New York, on Wednesday, July 19, 1995, at
10:30 A.M., for the following purposes:
(1) To elect five directors.
(2) To approve proposed amendments to the CopyTele, Inc. 1993 Stock
Option Plan (a) to increase the number of shares of the Company's Common
Stock available for issuance pursuant to grants thereunder from 3,000,000
to 7,000,000, (b) to provide that in any given year of the CopyTele, Inc.
1993 Stock Option Plan, no individual may be granted stock options and
stock appreciation rights to purchase, in the aggregate, more than 500,000
shares of the Company's Common Stock, (c) to provide that the purchase
price of shares of the Company's Common Stock issuable upon exercise of a
nonqualified stock option granted to any individual shall be no less than
80% of the fair market value of such shares on the date of grant, and (d)
to increase from 10,000 to 20,000 the number of shares of the Company's
Common Stock subject to the option automatically granted annually to each
incumbent nonemployee director of the Company.
(3) To ratify the selection of Arthur Andersen LLP, independent public
accountants, as independent auditors of the Company for the fiscal year
ending October 31, 1995.
(4) To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
The Board of Directors by resolution has fixed the close of business on
June 8, 1995 as the record date for the determination of shareholders entitled
to notice of, and to vote at, the Annual Meeting and at any adjournment thereof
and only holders of record of Common Stock at the close of business on such date
will be entitled to notice of, and to vote at, the Annual Meeting.
PLEASE COMPLETE, DATE, SIGN AND PROMPTLY MAIL THE ENCLOSED PROXY SO THAT
YOUR SHARES MAY BE REPRESENTED AT THE ANNUAL MEETING IF YOU ARE UNABLE TO ATTEND
AND VOTE IN PERSON.
By Order of the Board of Directors,
/s/ Anne Rotondo
ANNE ROTONDO
Secretary
Huntington Station, New York
June 15, 1995
<PAGE>
COPYTELE, INC.
900 WALT WHITMAN ROAD
HUNTINGTON STATION, NEW YORK 11746
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
JULY 19, 1995
------------------------
This Proxy Statement is furnished to the holders of Common Stock, par value
$.01 per share (the 'Common Stock'), of CopyTele, Inc., a Delaware corporation
(the 'Company'), in connection with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of Shareholders to be
held on Wednesday, July 19, 1995, and at any adjournments thereof (the 'Annual
Meeting'). This Proxy Statement and the accompanying form of proxy are first
being sent to shareholders on or about June 15, 1995.
RECORD DATE
The Board of Directors has fixed the close of business on June 8, 1995 as
the record date (the 'Record Date') for the determination of shareholders
entitled to notice of, and to vote at, the Annual Meeting. Each such shareholder
will be entitled to one vote for each share of Common Stock held on all matters
to come before the Annual Meeting and may vote in person or by proxy authorized
in writing. At the Record Date, there were 25,281,403 shares of Common Stock
issued and outstanding.
MATTERS TO BE CONSIDERED
At the Annual Meeting, shareholders will be asked to consider and vote upon
the election of five directors, to approve proposed amendments to the CopyTele,
Inc. 1993 Stock Option Plan (the '1993 Stock Option Plan') (i) to increase the
number of shares of the Company's Common Stock available for issuance pursuant
to grants thereunder from 3,000,000 to 7,000,000, (ii) to provide that in any
given year of the 1993 Stock Option Plan, no individual may be granted stock
options and stock appreciation rights to purchase, in the aggregate, more than
500,000 shares of the Company's Common Stock, (iii) to provide that the purchase
price of shares of the Company's Common Stock issuable upon exercise of a
nonqualified stock option granted to any individual shall be no less than 80% of
the fair market value of such shares on the date of grant, and (iv) to increase
the number of shares of the Company's Common Stock subject to the option
automatically granted annually to each incumbent nonemployee director of the
Company, and to ratify the selection of Arthur Andersen LLP as the Company's
independent auditors for fiscal year 1995. The Board of Directors knows of no
matters that are to be brought before the Annual Meeting other than as set forth
in the Notice of Annual Meeting. If any other matters properly come before the
Annual Meeting, the persons named in the enclosed form of proxy or their
substitutes will vote in accordance with their best judgment on such matters.
REQUIRED VOTES
The affirmative vote of a plurality of the shares of Common Stock present
in person or represented by proxy at the Annual Meeting and entitled to vote on
such matter is required for the election of directors, assuming a quorum is
present. Only shares of Common Stock that are voted in favor of a nominee will
be counted toward that nominee's achievement of a plurality. Shares of Common
Stock held by shareholders present in person at the Annual Meeting that are not
voted for a nominee or shares held by shareholders represented at the Annual
Meeting by proxy from which authority to vote for a nominee has been properly
withheld (including broker non-votes) will not be counted toward that nominee's
achievement of a plurality.
Assuming a quorum is present, the affirmative vote of the holders of a
majority of the shares of Common Stock present in person or represented by proxy
and entitled to vote on the matters at the Annual Meeting is required for
approval of the proposed amendments to the 1993 Stock Option Plan and
ratification of the selection of Arthur Andersen LLP as the Company's
independent auditors for fiscal year 1995. With respect to an abstention on
either of these matters, the shares will be considered present and entitled to
vote at the Annual
<PAGE>
Meeting and they will have the same effect as votes against the matter. With
respect to broker non-votes, the shares will not be considered entitled to vote
at the Annual Meeting for such matter and the broker non-votes will have the
practical effect of reducing the number of affirmative votes required to achieve
a majority vote for such matter by reducing the total number of shares from
which the majority is calculated.
VOTING AND REVOCATION OF PROXIES
Shareholders are requested to complete, date, sign and promptly return the
accompanying form of proxy in the enclosed envelope. Common Stock represented by
properly executed proxies received by the Company and not revoked will be voted
at the Annual Meeting in accordance with the instructions contained therein. If
instructions are not given, proxies will be voted FOR the election of each
nominee for election as a director named herein, FOR the approval of the
proposed amendments to the 1993 Stock Option Plan, and FOR the ratification of
the selection of Arthur Andersen LLP as the Company's independent auditors for
fiscal year 1995.
Any proxy signed and returned by a shareholder may be revoked at any time
before it is voted by filing with the Secretary of the Company written notice of
such revocation or a duly executed proxy bearing a later date or by attending
the Annual Meeting and voting in person. Attendance at the Annual Meeting will
not in and of itself constitute revocation of a proxy.
PROXY SOLICITATION
The Company will bear the costs of solicitations of proxies for the Annual
Meeting. In addition to solicitation by mail, directors, officers and regular
employees of the Company may solicit proxies from shareholders by telephone,
telegram, personal interview or otherwise. Such directors, officers and
employees will not receive additional compensation, but may be reimbursed for
out-of-pocket expenses in connection with such solicitation. Brokers, nominees,
fiduciaries and other custodians have been requested to forward soliciting
material to the beneficial owners of Common Stock held of record by them, and
such custodians will be reimbursed for their reasonable expenses.
ELECTION OF DIRECTORS
Five directors are to be elected at the Annual Meeting by the holders of
Common Stock, each to serve until the next Annual Meeting of Shareholders and
until his successor shall be elected and shall qualify. All of the nominees at
present are available for election as members of the Board of Directors. If for
any reason a nominee becomes unavailable for election, the proxies solicited by
the Board of Directors will be voted for a substitute nominee selected by the
Board of Directors. Information regarding the nominees is as follows:
<TABLE>
<CAPTION>
POSITION WITH THE COMPANY DIRECTOR
NAME AND PRINCIPAL OCCUPATION AGE SINCE
- ----------------------- ----------------------------------------- --- --------
<S> <C> <C> <C>
Denis A. Krusos........ Director, Chairman of the Board and Chief 67 1982
Executive Officer
Frank J. DiSanto....... Director and President 70 1982
Gerald J. Bentivegna... Vice President--Finance and Chief 45 --
Financial Officer
John E. Gillies........ Director; Partner of Gillies and Meares, 68 1992
Attorneys-at-Law
John R. Shonnard....... Director 79 1988
</TABLE>
Mr. Krusos has been a Director, Chairman of the Board and Chief Executive
Officer of the Company since November 1982. He holds an M.S.E.E. degree from
Newark College of Engineering, a B.E.E. degree from City College of New York and
a Juris Doctor from St. John's University and is a member of the New York bar.
Mr. DiSanto has been a Director and President of the Company since November
1982. He holds a B.E.E. degree from Polytechnic Institute of Brooklyn and an
M.E.E. degree from New York University.
2
<PAGE>
Mr. Bentivegna has been Vice President--Finance and Chief Financial Officer
since September 1994. Prior to joining the Company, Mr. Bentivegna was employed
at Marino Industries Corp. for approximately 10 years, where he served as
Controller, Treasurer and Chief Financial Officer. He holds an MBA degree from
Long Island University and a B.B.A. from Dowling College.
Mr. Gillies has been a Director of the Company since January 1992. He has
been an attorney for over forty years and formerly served as a Village Justice
and as a Village Attorney of the Incorporated Village of Farmingdale. He is also
Honorary President of St. Mary's Children and Family Services, a not-for-profit
child care agency for which he has served in various capacities for over twenty
years.
Mr. Shonnard has been a Director of the Company since January 1988. He had
been a research consultant to the Company from August 1983 until his retirement
in May 1988. Mr. Shonnard was engaged in development engineering in the
communications field for over fifty years. Mr. Shonnard has held numerous
patents in the communications field.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1994 and February 1995, Peri D. Krusos, Denis Z. Krusos and Daniel
A. DiSanto each exercised warrants to purchase 21,740 and 18,000 shares of
Common Stock, respectively. The exercise price of $5.71 per share with respect
to the warrants exercised in July 1994 and $6.12 per share with respect to the
warrants exercised in February 1995 represented the fair market value of the
Company's Common Stock on the date of issuance of the warrants, subsequently
adjusted for the two-for-one stock split declared by the Company in February
1991 and the anti-dilution provisions of the warrants. The warrants were issued
in 1988 in conjunction with sales of Common Stock by the Company to the
foregoing individuals. Peri D. Krusos and Denis Z. Krusos are the daughter and
son, respectively, of Denis A. Krusos and Daniel A. DiSanto is the son of Frank
J. DiSanto.
As of June 2, 1995, after adjustments for the two-for-one stock split
declared in February 1991, Peri D. Krusos, Denis Z. Krusos and Daniel A. DiSanto
each held warrants to purchase 176,061 shares of Common Stock, all of which are
exercisable.
BOARD COMMITTEES, FUNCTIONS AND ATTENDANCE
The Company has an Audit Committee consisting of Messrs. Denis A. Krusos,
John E. Gillies and John R. Shonnard. The primary functions of this committee
are to review the internal controls and financial statements of the Company,
recommend independent public accountants to the Board of Directors and review
the results of the independent public accountants' audits.
The Company has a Stock Option Committee to administer the 1993 Stock
Option Plan consisting of Mr. John E. Gillies and Mr. John R. Shonnard.
The Company currently has no other standing, nominating or compensation
committees of the Board of Directors or committees performing similar functions.
Four meetings of the Board of Directors, one meeting of the Audit Committee
and five meetings of the Stock Option Committee were held during the fiscal year
ended October 31, 1994. During such year, each director attended at least 75% of
the aggregate number of meetings of the Board of Directors and committee on
which he served while a member thereof.
3
<PAGE>
PRINCIPAL HOLDERS OF COMMON STOCK
The following table sets forth certain information with respect to the
Common Stock beneficially owned as of June 2, 1995 by (a) each person who is
known by the management of the Company to be the beneficial owner of more than
5% of the Common Stock, (b) each director or executive officer of the Company
and (c) all directors and executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
BENEFICIAL OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS
- ------------------------------------- -------------------- -------
<S> <C> <C>
Denis A. Krusos...................... 3,434,630(2) 13.15%
900 Walt Whitman Road
Huntington Station, NY 11746
Frank J. DiSanto..................... 3,415,390(2) 13.08%
900 Walt Whitman Road
Huntington Station, NY 11746
Gerald J. Bentivegna................. 15,000(2) .06%
900 Walt Whitman Road
Huntington Station, NY 11746
John E. Gillies...................... 30,500(2) .12%
320 Conklin Street
Farmingdale, NY 11735
John R. Shonnard..................... 119,500(2)(3) .47%
12521 Rios Road
San Diego, CA 92128
All Directors and Executive Officers
as a Group (5 persons)............... 7,015,020(2)(3) 25.88%
</TABLE>
- ------------------
(1) A beneficial owner of a security includes any person who directly or
indirectly has or shares voting power and/or investment power with respect
to such security or has the right to obtain such voting power and/or
investment power within sixty (60) days. Except as otherwise noted, each
designated beneficial owner in this Proxy Statement has sole voting power
and investment power with respect to the Common Stock beneficially owned by
such person.
(2) Includes 878,500 shares, 882,500 shares, 15,000 shares, 30,000 shares,
67,800 shares and 1,873,800 shares as to which Denis A. Krusos, Frank J.
DiSanto, Gerald J. Bentivegna, John E. Gillies, John R. Shonnard, and all
directors and executive officers as a group, respectively, have the right to
acquire upon exercise of options granted pursuant to the CopyTele, Inc.
Stock Option Plan adopted in 1987 (the '1987 Stock Option Plan') and the
1993 Stock Option Plan.
(3) Includes 51,700 shares of Common Stock, all of which are held in a revokable
trust by First Interstate Bank of California, as trustee of such trust. Mr.
Shonnard and his wife, Janet L. Shonnard, are the beneficiaires of such
trust and, under certain circumstances, may exercise the voting power and
investment power of the trust jointly.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Messrs. Denis A. Krusos, Chairman of the Board, Chief Executive Officer and
Director, Frank J. DiSanto, President and Director, and Gerald J. Bentivegna,
Vice President--Finance, Chief Financial Officer, are the executive officers of
the Company. While there are no formal agreements, Denis A. Krusos and Frank J.
DiSanto waived any and all rights to receive salary and related pension benefits
for an undetermined period of time commencing November 1, 1985. As a result, Mr.
Krusos received no salary or bonus during the last three fiscal years and no
other executive officer received a salary or bonus in excess of $100,000 during
the fiscal year ended October 31, 1994. The following is compensation
information regarding Mr. Krusos for the fiscal years ended October 31, 1994,
1993 and 1992:
4
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
FISCAL ----------------------
YEAR SECURITIES
NAME AND PRINCIPAL POSITION ENDED UNDERLYING OPTIONS (#)
- --------------------------------- -------- ----------------------
<S> <C> <C>
Denis A. Krusos--Chairman of 10/31/94 100,000
the Board, Chief Executive 10/31/93 500,000
Officer and Director 10/31/92 --
</TABLE>
The following is information regarding stock options granted to Mr. Krusos
pursuant to the 1993 Stock Option Plan during the fiscal year ended October 31,
1994:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL
------------------------------------------------------------ RATES
NUMBER OF PERCENT OF OF STOCK PRICE
SECURITIES TOTAL APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM
OPTIONS TO EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED (#)(1) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ------------------ -------------- --------------- --------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Denis A. Krusos... 7,500 .61% $12.650(2) 2/13/99 $ 15,204 $ 44,031
92,500 7.58% $11.500(3) 2/13/04 $668,987 $1,695,344
</TABLE>
- ------------------
(1) The options are exercisable in whole or in part commencing one year
following the date of grant. The options are not issued in tandem with stock
appreciation or similar rights and are not transferable other than by will
or the laws of descent and distribution. The options terminate upon
termination of employment, except that in the case of death, disability or
termination for reasons other than cause, options may be exercised for
certain periods of time thereafter as set forth in the 1993 Stock Option
Plan.
(2) The exercise price of these options was equal to 110% of the fair market
value of the underlying Common Stock on the date of grant (fair market value
being defined in the 1993 Stock Option Plan as the last sales price of the
Company's Common Stock on NASDAQ-NMS on the date of grant). These options
are incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended.
(3) The exercise price of these options was equal to the fair market value of
the underlying Common Stock on the date of grant. These options are
nonqualified options.
The following is information regarding stock option exercises during fiscal
1994 by Mr. Krusos and values of his options as of October 31, 1994:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
SHARES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
ACQUIRED ON AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)
EXERCISE VALUE ---------------------------- ----------------------------
NAME (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------ ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Denis A. Krusos... 105,000 $573,440(1) 818,500 100,000 $--(2) $--(2)
</TABLE>
- ------------------
(1) Such value was determined by applying the net difference between the last
sales price of the Company's Common Stock on the day preceding the date of
exercise and the exercise price for Mr. Krusos' options to the number of
options exercised. The exercise price of these options was equal to the fair
market value of the underlying Common Stock on the date of grant (fair
market value being defined in the 1987 Stock Option Plan as the last sales
price of the Company's Common Stock on NASDAQ-NMS on the day preceding the
date of grant).
(2) As of October 31, 1994, the exercise price of all options held exceeded the
fair market value of the shares underlying the options on that date.
5
<PAGE>
There is no present arrangement for the compensation of directors for services
in that capacity. The 1993 Stock Option Plan currently provides that each
nonemployee director of the Company is automatically granted nonqualified stock
options to purchase 10,000 shares of Common Stock upon such director's initial
election to the Board of Directors and at the time of each subsequent annual
meeting of the Company's shareholders at which such director is elected to the
Board of Directors. If approved by the Company's shareholders, however, each
incumbent nonemployee director elected at the Annual Meeting will receive
nonqualified stock options to purchase 20,000 shares of Common Stock and such
nonemployee director will receive nonqualified stock options to purchase 20,000
shares of Common Stock at each subsequent annual meeting of the Company's
shareholders at which such director is elected to the Board of Directors. In
addition, any future nonemployee director elected to the Board of Directors will
receive nonqualified stock options to purchase 10,000 shares of Common Stock
upon such director's initial election to the Board of Directors and 20,000
shares in each subsequent year that such director is elected to the Board of
Directors.
REPORT OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION*
Since the Company is a development stage enterprise, it has not had any
revenues to support its operations since its inception. In view of the fact that
the Company's executive officers, with the exception of Gerald J. Bentivegna,
have waived all salary and related pension benefits for fiscal year 1994, the
Board of Directors did not adopt any policy with respect to the payment of cash
compensation to the executive officers of the Company for such period. At such
time as the executive officers of the Company, other than Mr. Bentivegna,
withdraw their waivers, it is contemplated that the Board of Directors will
develop and adopt a compensation policy for its executive officers generally,
including the Company's Chief Executive Officer. Although a salary of less than
$100,000 was paid to Mr. Bentivegna in fiscal year 1994, such compensation was
not part of an overall compensation policy, was determined solely by the
Company's Chief Executive Officer, and was not specifically related to corporate
performance.
Generally, options under the 1993 Stock Option Plan are granted as an
inducement in respect of future performance. During fiscal year 1994, options
were granted to Denis A. Krusos, Frank J. DiSanto and Gerald J. Bentivegna for
100,000, 100,000 and 30,000 shares of Common Stock, respectively, under the 1993
Stock Option Plan. In granting such options, the Stock Option Committee, which
is comprised solely of nonemployee directors of the Company, did not take into
account the number of shares of Common Stock owned by such persons. The Board of
Directors believes that the 1993 Stock Option Plan has been, and will continue
to be, effective in attracting and retaining executives and employees.
With certain exceptions, Section 162(m) ('Section 162(m)') of the Internal
Revenue Code of 1986, as amended (the 'Code') denies a deduction to the Company
for compensation paid to certain executive officers in excess of $1 million per
executive per taxable year. (See 'Proposal to Amend the 1993 Stock Option Plan--
Certain Federal Income Tax Consequences--Certain Limitations on the
Deductibility of Executive Compensation').
This Report has been prepared by the Board of Directors.
Denis A. Krusos John E. Gillies
Frank J. DiSanto John R. Shonnard
- ------------------
* The disclosure contained in the Report of the Board of Directors on Executive
Compensation and the Performance Graph which follows this section is not
incorporated by reference into any prior filings by the Company under the
Securities Act or the Exchange Act that incorporated future filings or
portions thereof (including this Proxy Statement).
6
<PAGE>
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a graph showing the five-year cumulative total return
for (i) the Common Stock, (ii) the NASDAQ Stock Market U.S. Index, a broad
market index covering shares of common stock of domestic companies that are
listed on NASDAQ, and (iii) the NASDAQ Electronic Component Stock Index, a group
of companies that are engaged in the manufacture of electronic components and
related accessories with a Standard Industrial Classification code of 367 and
listed on NASDAQ.
The Board of Directors recognizes that the market price of stock is
influenced by many factors, only one of which is Company performance. The stock
price performance shown on the graph is not necessarily indicative of future
price performance.
[GRAPH]
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN(1)
The NASDAQ Stock NASDAQ Electronic
Year Company Market U.S. Components
---- ------- ------------ -----------------
1989 100 100 100
1990 65 74 84
1991 192 126 121
1992 200 141 170
1993 180 181 290
1994 78 182 321
- ------------------
(1) The comparison of total return on investment for each fiscal year ended
October 31 assumes that $100 was invested on November 1, 1989 in each of the
Company, the NASDAQ Stock Market U.S. Index and the NASDAQ Electronic
Component Index with investment weighted on the basis of market
capitalization and all dividends reinvested. In addition, the total returns
account for the Company's two-for-one stock split in February 1991.
(2) The total returns for each NASDAQ index are based on information provided by
NASDAQ, which had been prepared by the Center for Research in Securities
Prices at the University of Chicago.
7
<PAGE>
PROPOSAL TO AMEND THE 1993 STOCK OPTION PLAN
The 1993 Stock Option Plan was adopted by the Company's Board of Directors
on April 28, 1993, and approved by the Company's shareholders on July 14, 1993.
The purpose of the 1993 Stock Option Plan is to attract, retain and motivate
employees, consultants and Director Participants (as hereinafter defined) of the
Company or any subsidiary or parent corporation thereof now existing or
hereafter formed or acquired, and to give such persons an opportunity to acquire
a proprietary interest or increase their existing ownership interest in the
Company, with the intention of creating in such persons a greater concern for
the welfare of the Company. As of June 2, 1995, only 4,000 shares of Common
Stock remained available under the 1993 Stock Option Plan for future grants of
stock options and/or stock appreciation rights.
The Board of Directors has recommended that the shareholders approve
certain amendments to the 1993 Stock Option Plan (a) to increase the number of
shares of the Company's Common Stock available for issuance pursuant to grants
thereunder from 3,000,000 to 7,000,000, (b) to provide that in any given year of
the 1993 Stock Option Plan, no individual may be granted Options and Rights
(each as hereinafter defined) to purchase, in the aggregate, more than 500,000
shares of the Company's Common Stock, (c) to provide that the purchase price of
shares of the Company's Common Stock issuable upon exercise of a Nonqualified
Option (as defined below) granted to any individual shall be not less than 80%
of the fair market value of such shares on the date of grant of such
Nonqualified Option and (d) to increase from 10,000 to 20,000 the number of
shares of the Company's Common Stock subject to the option automatically granted
annually to incumbent Director Participants (as hereinafter defined).
The Board of Directors believes that the proposed increases in the number
of authorized shares and the number of shares subject to the option
automatically granted annually to incumbent Director Participants are necessary
because of the need to continue to make grants under the 1993 Stock Option Plan
to attract, retain and motivate key employees, consultants and Director
Participants. In addition, shareholder approval of the proposed amendments (i)
to limit the aggregate annual amount of Options and Rights to purchase shares of
the Company's Common Stock that may be granted in any given year of the 1993
Stock Option Plan to any individual, and (ii) to provide that the purchase price
of shares of the Company's Common Stock issuable upon exercise of a Nonqualified
Option granted to any individual shall be no less than 80% of the fair market
value of such shares on the date of grant of such Nonqualified Option is
necessary in order to qualify such Options and Rights for the performance-based
compensation exemption of Section 162(m). Provided the Options and Rights
granted under the 1993 Stock Option Plan qualify for such exemption, the
Company's deduction with respect to such Options and Rights will not be subject
to limitation under Section 162(m). (See 'Certain Federal Income Tax
Consequences--Certain Limitations on Deductibility of Executive Compensation'
below.)
On May 3, 1995, the Stock Option Committee granted to certain of the
Company's employees and consultants Options to purchase an aggregate of
1,585,000 Shares, subject to shareholder approval of the amendment to the 1993
Stock Option Plan discussed herein to increase the number of shares of the
Company's Common Stock available for issuance thereunder. If the amendments to
the 1993 Stock Option Plan discussed herein are approved by the Company's
shareholders, such amendments will be effective as of May 3, 1995. If the
amendments are not approved, they will not take effect and any grants of Options
or Rights made pursuant thereto shall be null and void.
The following summary of the 1993 Stock Option Plan is not intended to be
complete and is qualified in its entirety by reference to the 1993 Stock Option
Plan.
The 1993 Stock Option Plan has been, and will continue to be, administered
by the Stock Option Committee. Two types of options ('Options') may be granted
pursuant to the 1993 Stock Option Plan: those intended to qualify as 'incentive
stock options' ('Incentive Options') within the meaning of Section 422 of the
Code, and those not intended to satisfy the requirements for Incentive Options
('Nonqualified Options'). In addition, stock appreciation rights ('Rights') may
be granted alone or in conjunction with or in the alternative to Options. The
1993 Stock Option Plan currently provides for the granting of Options or Rights
to purchase or acquire, in the aggregate, up to 3,000,000 shares of Common Stock
(which number is subject to adjustment in the event of stock dividends, stock
splits and other contingencies) (the 'Shares') during the ten year period from
April 28, 1993 through April 27, 2003. If approved by the Company's
shareholders, however, the 1993 Stock
8
<PAGE>
Option Plan will be amended to provide for the granting of Options or Rights to
purchase or acquire, in the aggregate, up to 7,000,000 Shares.
ELIGIBILITY AND EXTENT OF PARTICIPATION
Incentive Options and Rights may be granted only to salaried employees of
the Company or any subsidiary or parent corporation thereof now existing or
hereafter formed or acquired. Nonqualified Options and Rights may be granted to
employees and consultants (serving on a continuous basis) or any person who
shall have retired from active employment by or service with the Company or any
subsidiary or parent corporation thereof now existing or hereafter formed or
acquired. Nonqualified Options are granted to Director Participants as set forth
below. As of June 2, 1995 approximately 28 employees and consultants were
eligible to participate in the 1993 Stock Option Plan, which number includes the
three executive officers of the Company. Two directors are deemed Director
Participants under the 1993 Stock Option Plan.
KEY EMPLOYEES AND CONSULTANTS
Options or Rights. The purchase price of Shares issuable upon exercise of
each Incentive Option granted pursuant to the 1993 Stock Option Plan may be not
less than 100% of the fair market value of such Shares on the date the Option is
granted, as determined by the Committee in accordance with the 1993 Stock Option
Plan. In the case of an Incentive Option granted to any holder of capital stock
of the Company (or any subsidiary or parent corporation) representing 10% or
more of the voting power of the Company (or any subsidiary or parent
corporation), the purchase price of Shares issuable upon exercise of such
Incentive Option may be not less than 110% of the fair market value of such
Shares on the date the Option is granted, as determined by the Committee in
accordance with the 1993 Stock Option Plan. The 1993 Stock Option Plan currently
provides that the purchase price for Shares issuable upon exercise of each
Nonqualified Option shall be determined by the Stock Option Committee. If
approved by the Company's shareholders, however, the 1993 Stock Option Plan will
be amended to provide that the purchase of Shares issuable upon exercise of a
Nonqualified Option shall be no less than 80% of the fair market value of such
Shares on the date of grant of such Nonqualified Option. The term of each Option
granted under the 1993 Stock Option Plan shall be determined by the Stock Option
Committee, except that no Incentive Option may be exercisable more than ten
years after the date on which it is granted and no Incentive Option granted to
any holder of capital stock of the Company (or any subsidiary or parent
corporation) representing 10% or more of the voting power of the Company (or any
subsidiary or parent corporation), may be exercisable more than five years after
the date on which it is granted. The Stock Option Committee has the right to
accelerate, in whole or in part, rights to exercise any Option granted under the
1993 Stock Option Plan.
Stock Appreciation Rights. In the discretion of the Stock Option
Committee, a Right may be granted (i) alone, (ii) simultaneously with the grant
of an Option (either Incentive or Nonqualified) and in conjunction therewith or
(iii) subsequent to the grant of a Nonqualified Option and in conjunction
therewith or in the alternative thereto. The exercise price of a Right granted
alone shall be determined by the Stock Option Committee but may not be less than
one hundred percent (100%) of the fair market value of one Share on the date of
grant of such Right. A Right granted simultaneously with or subsequent to the
grant of an Option and in conjunction therewith or in the alternative thereto
will have the same exercise price as the related Option, will be transferable
only upon the same terms and conditions as the related Option, and will be
exercisable only to the same extent as the related Option; provided, however,
that a Right, by its terms, will be exercisable only when the fair market value
of the Shares subject to the Right and related Option exceeds the exercise price
thereof.
The holder of a Right may elect to receive from the Company, upon a written
request filed with the Secretary of the Company at its principal office (the
'Request'), a number of Shares, an amount of cash or any combination of Shares
and cash as specified in the Request (subject to the approval of the Stock
Option Committee) having an aggregate value equal to the product of (i) the
excess of the fair value on the date of the Request of one Share over the
exercise price specified in such Right or its related Option, multiplied by (ii)
the number of Shares for which such Right is being exercised. The Stock Option
Committee, in its discretion, may impose a maximum limitation on the amount of
cash, the fair market value of Shares, or a combination thereof, which may be
received by a holder upon exercise of a Right. Within 30 days of the receipt by
the Company of a Request to receive cash in full or partial settlement of a
Right or to exercise such Right for cash, the Stock Option Committee shall, in
its sole discretion, either consent to or disapprove, in whole or in part, such
Request.
9
<PAGE>
Termination of Options and Rights. Upon the termination of employment of
an employee or of the continuing services of any consultant, any Option or Right
granted to such employee or consultant pursuant to the 1993 Stock Option Plan
will, to the extent not theretofore exercised, terminate and become null and
void; provided, however, that in case of death, disability or termination for
reasons other than cause such Options and Rights may be exercised for certain
periods of time thereafter as set forth in the 1993 Stock Option Plan.
DIRECTOR PARTICIPANTS
Annual Stock Option Grants to Director Participants. Each nonemployee
director of the Company (a 'Director Participant') is currently automatically
granted Nonqualified Options to purchase 10,000 Shares upon their initial
election to the Board of Directors and at the time of each subsequent annual
meeting of the Company's shareholders at which such director is elected to the
Board of Directors. If approved by the Company's shareholders, however, each
current Director Participant will automatically be granted Nonqualified Options
to purchase 20,000 Shares at the Annual Meeting and at the time of each
subsequent annual meeting at which such directors are elected to the Board of
Directors. In addition, any future nonemployee director elected to the Board of
Directors will receive Nonqualified Options to purchase 10,000 shares of Common
Stock upon such director's initial election to the Board of Directors and
Nonqualified Options to purchase 20,000 shares in each subsequent year that such
director is elected to the Board of Directors. The purchase price of the Shares
covered by the Nonqualified Options to be granted to a Director Participant
shall be the fair market value of such Shares on the date such Option is
granted.
Nonqualified Options granted to Director Participants may not be exercised
for the twelve month period immediately following the date of grant. Thereafter,
such Nonqualified Options will be exercisable for the period ending five years
from the date of grant, subject to limitations or restrictions pursuant to the
terms of the 1993 Stock Option Plan. Upon termination of a Director
Participant's directorship, any Nonqualified Option granted to such Director
Participant will, to the extent not theretofore exercised, terminate and be null
and void; provided, however, that in case of death or disability such Options
may be exercised for certain period of time thereafter as set forth in the 1993
Stock Option Plan.
GENERAL
Amendment of the 1993 Stock Option Plan and Termination. Subject to
certain exceptions with respect to Nonqualified Options granted to Director
Participants, the 1993 Stock Option Plan may be amended from time to time by the
Board of Directors, provided that no amendment will be made, without the
approval of the shareholders, that will (i) increase the total number of Shares
reserved for Options and Rights under the 1993 Stock Option Plan (other than an
increase resulting from an adjustment for changes in capitalization such as a
stock dividend or stock split), (ii) reduce the exercise price of any Incentive
Option granted below the price required by the 1993 Stock Option Plan, (iii)
modify the provisions of the 1993 Stock Option Plan relating to eligibility or
(iv) materially increase the benefits accruing to participants under the 1993
Stock Option Plan.
The Board of Directors may at any time suspend or terminate the 1993 Stock
Option Plan, provided that rights and obligations under any Option or Right
granted while the 1993 Stock Option Plan is in effect may not be altered or
impaired by suspension or termination, except upon the consent of the person to
whom the Option or Right was granted.
Adjustment of Shares upon the Occurrence of Certain Events. In the event
of any change in the outstanding Shares through merger, consolidation,
reorganization, recapitalization, stock dividend, stock split, split-up,
split-off, spin-off, combination of shares, exchange of shares, or other like
change in capital structure of the Company, appropriate adjustments will be made
by the Committee to each outstanding Option and Right under the 1993 Stock
Option Plan and to the maximum number of Shares which may be acquired pursuant
to the exercise of Options and Rights, and the number of Shares and price per
Share subject to outstanding Options or Rights as shall be equitable to prevent
dilution or enlargement of rights under such Options or Rights, and the
determination of the Committee as to these matters will be conclusive.
Change in Control. In the event of a 'change in control' of the Company,
as described in the 1993 Stock Option Plan, all then outstanding Options and
Rights shall immediately become exercisable. The Committee, in its sole
discretion, may determine that, upon the occurrence of a change in control, each
Option or Right then
10
<PAGE>
outstanding will terminate within a specified number of days after notice to the
holder, and such holder will receive, with respect to each Share subject to such
Option or Right, cash in an amount equal to the excess of the fair market value
of such Share immediately prior to the occurrence of such transaction over the
exercise price per Share of such Option or Right. The provisions contained in
the preceding sentence will be inapplicable to an Option or Right granted within
six (6) months before the occurrence of a transaction described above if the
holder of such Option or Right is subject to the reporting requirements of
Section 16(a) of the Exchange Act.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The statements in the following paragraphs are based on current
interpretations of existing federal income tax law, which are subject to change
at any time (possibly with retroactive effect). The law is technical and complex
and the statements represent only a general summary of some of the applicable
provisions.
Incentive Options. An employee who receives an Incentive Option does not
recognize any taxable income upon the grant of such Incentive Option. Similarly,
the exercise of an Incentive Option generally does not give rise to federal
income tax to the employee, provided that (i) the federal 'alternative minimum
tax', which depends on the employee's particular tax situation, does not apply
and (ii) the employee is employed by the Company from the date of grant of the
Option until 3 months prior to the exercise thereof, except where such
employment terminates by reason of disability (where the 3 month period is
extended to 1 year) or death (where this requirement does not apply). If an
employee exercises an Incentive Option after these requisite periods, the
Incentive Option will be treated as a Nonqualified Option and will be subject to
the rules set forth below under the caption 'Nonqualified Options and Stock
Appreciation Rights'.
Further, if after exercising an Incentive Option, an employee disposes of
the Shares so acquired more than two years from the date of grant and more than
one year from the date of transfer of the Shares pursuant to the exercise of
such Incentive Option (the 'applicable holding period'), the employee will
normally recognize a long-term capital gain or loss equal to the difference, if
any, between the amount received for the Shares and the exercise price. If,
however, an employee does not hold the Shares so acquired for the applicable
holding period-- thereby making a 'disqualifying disposition'--the employee
would realize ordinary income on the excess of the fair market value of the
Shares at the time the Incentive Option was exercised over the exercise price
and the balance, if any, income would be long-term capital gain (provided the
holding period for the Shares exceeded one year and the employee held such
Shares as a capital asset at such time).
If, in a disqualifying disposition, the employee sells the Shares at a
price that is below the fair market value of the Shares at the time the
Incentive Option is exercised, the amount of ordinary income will be limited to
the amount by which the amount realized on the sale exceeds the exercise price.
An employee who exercises an Incentive Option by delivering shares
previously acquired pursuant to the exercise of an Incentive Option is treated
as making a 'disqualifying disposition' of such shares if the employee delivers
such shares before the expiration of the holding period applicable to such
shares. Upon the exercise of an Incentive Option with previously acquired shares
as to which no disqualifying disposition occurs, it would appear that the
employee would not recognize gain or loss with respect to such previously
acquired shares.
A deduction will not be allowed to the employer corporation for federal
income tax purposes with respect to the grant or exercise of an Incentive Option
or the disposition, after the applicable holding period, of the Shares acquired
upon exercise of an Incentive Option. In the event of a disqualifying
disposition, a federal income tax deduction will be allowed to the employer
corporation in an amount equal to the ordinary income included in the gross
income of the employee, provided that (i) such amount constitutes an ordinary
and necessary business expense to the employer corporation and is reasonable and
(ii) the limitations of Section 280G and 162(m) of the Code (as described below)
are inapplicable.
Nonqualified Options and Stock Appreciation Rights. In general, an
individual who receives a Nonqualified Option will not recognize any taxable
income upon the grant of such Nonqualified Option. Generally, upon exercise of a
Nonqualified Option an individual will be treated as having received ordinary
income in an amount equal to the excess of (i) the fair market value of the
Shares at the time of exercise over (ii) the exercise price.
11
<PAGE>
In general, an individual who receives a Right will not recognize any
taxable income upon the grant of such Right. Generally, upon the receipt of cash
or the transfer of Shares pursuant to the exercise of a Right, an individual
will recognize ordinary income in an amount equal to the sum of the cash and the
fair market value of the Shares received. However, the holder of a Right which
pursuant to its terms (i) may be exercised without resulting in the cancellation
of a related Option or reducing the number of Shares for which a related Option
may be exercised and (ii) which is subject to a limitation on the amount of
cash, the fair market value of Shares or a combination thereof that a holder may
receive upon exercise, may be deemed for federal income tax purposes to have
exercised such Right on the first date on which the aggregate value of cash
and/or Shares which may be received by such holder upon the exercise of such
Right equals or exceeds such limitation. The federal income tax consequences of
such deemed exercise would be the same as in the case of an actual exercise of a
Right. Holders of Rights should consult their tax advisers about the federal
income tax consequences of a failure to actually exercise a Right on the date
that it may be deemed exercised.
As a result of Section 16(b) of the Exchange Act, the timing of income
recognition may be deferred for a period of time (i.e., the 'Deferral Period')
for any individual who is an officer or director of the Company or a beneficial
owner of more than ten percent (10%) of any class of equity securities of the
Company. Absent a written election (pursuant to Section 83(b) of the Code) filed
with the Internal Revenue Service within 30 days after the date of transfer of
the Shares pursuant to the exercise of the Nonqualified Option or Right to
include in income, as of the transfer date, the excess (on such date) of the
fair market value of such Shares over their exercise price, recognition of
income by the individual will be deferred until the expiration of the Deferral
Period, if any.
The ordinary income recognized with respect to the transfer of Shares or
receipt of cash upon exercise of a Non-Qualified Option or a Right under the
1993 Stock Option Plan will be subject to both wage withholding and employment
taxes. In addition to the customary methods of satisfying the withholding tax
liabilities that arise upon the exercise of a Right for Shares or upon the
exercise of a Non-Qualified Option, an individual may elect, subject to the
approval of the Committee, to satisfy the liability in whole or in part by
directing the Company to withhold Shares from those that would otherwise be
issuable to the individual or by tendering other shares of Common Stock owned by
the individual. The withheld Shares and other tendered shares will be valued at
their fair market value as of the date that the tax withholding obligation
arises. Individuals who, by virtue of their positions with the Company, are
subject to Section 16(b) of the Exchange Act may elect this method of satisfying
the withholding obligation only during certain restricted periods.
An individual's tax basis in the Shares received on exercise of a
Nonqualified Option or a Right will be equal to the amount of any cash paid on
exercise, plus the amount of ordinary income recognized by such individual as a
result of the receipt of such Shares, and the holding period for such Shares
would begin just after the transfer of the Shares, or, in the case of an officer
or beneficial owner of more than 10% of any class of registered equity
securities of the Company who does not elect to be taxed as of the exercise
date, just after the expiration of the Deferral Period, if any. A deduction for
federal income tax purposes will be allowed to the employer corporation in an
amount equal to the ordinary income included in the gross income of the
individual, provided that (i) such amount constitutes an ordinary and necessary
business expense and is reasonable and (ii) the limitations of Sections 280G and
162(m) of the Code (as described below) are inapplicable.
If an individual exercises a Nonqualified Option by delivering other
shares, the individual will not recognize gain or loss with respect to the
exchange of such shares, even if their then fair market value is different from
the individual's tax basis. The individual, however, will be taxed as described
above with respect to the exercise of the Nonqualified Option as if he or she
had paid the exercise price in cash, and the employer corporation likewise
generally will be entitled to an equivalent tax deduction. So long as the
individual receives a separate identifiable stock certificate therefor, his or
her tax basis in that number of Shares received on such exercise that is equal
to the number of shares surrendered on such exercise will be equal to his or her
tax basis in the shares surrendered and his or her holding period for such
number of Shares received will include his or her holding period for the shares
surrendered. The individual's tax basis and holding period for the additional
Shares received on exercise of a Nonqualified Option paid for, in whole or in
part, with shares will be the same as if the individual had exercised the
Nonqualified Option solely for cash.
12
<PAGE>
Change in Control. As described above, upon a 'change in control' of the
Company, all the then outstanding Options and Rights will immediately become
exercisable. In general, if the total amount of payments to an individual that
are contingent upon a 'change in control' of the Company (as defined in Section
280G of the Code), including certain payments upon the exercise of Options or
Rights under the 1993 Stock Option Plan that vest upon a 'change in control,'
equals or exceeds three times the individual's 'base amount' (generally, such
individual's average annual compensation for the five complete years preceding
the 'change in control'), then, subject to certain exceptions, the payments may
be treated as 'parachute payments' under the Code, in which case a portion of
such payments would be non-deductible to the Corporation and the individual
would be subject to a 20% excise tax on such portion of the payments.
Certain Limitations on Deductibility of Executive Compensation. As
described above under the caption 'Report of the Board of Directors on Executive
Compensation', with certain exceptions, Section 162(m) denies a deduction to the
Company for compensation paid to certain executive officers in excess of $1
million per executive per taxable year (including any deduction with respect to
the exercise of a Nonqualified Option or Right or the disqualifying disposition
of stock purchases pursuant to an Incentive Option). The Company believes that
any Options or Rights that were granted or could have been granted under the
1993 Stock Option Plan prior to the proposed amendments described above should
qualify for a special transition rule that exempts such Options and Rights from
such limitations on deductibility pursuant to an exemption for certain
previously approved plans. In addition, provided the proposed amendments
described above are approved by the shareholders, the Company believes that any
future Options (provided such Options are granted at fair market value) and
Rights granted under the 1993 Stock Option Plan, as amended, should qualify for
the performance-based compensation exemption to Section 162(m).
BENEFITS UNDER THE 1993 STOCK OPTION PLAN
The number of Options or Rights that may be granted to employees,
consultants or executive officers in the future under the 1993 Stock Option Plan
cannot be determined with any reasonable degree of certainty, although it is
anticipated that grants to executive officers will be made in the future. If
approved by the Company's shareholders, Options to acquire 20,000 Shares will be
granted to each current Director Participant at the Annual Meeting and at the
time of each subsequent annual meeting at which such directors are elected to
the Board of Directors, the value of which cannot be determined with any
reasonable certainty.
The following table reflects the Options that were received by or allocated
to each of the persons set forth below during fiscal year 1994 and fiscal year
1995 through June 2, 1995:
1993 STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION SHARES(1)
- ------------------------------------------------ ---------
<S> <C>
Denis A. Krusos, Chief Executive Officer........ 550,000
Frank J. DiSanto, President..................... 550,000
Gerald J. Bentivegna, Chief Financial Officer... 105,000
Executive Group................................. 1,205,000
Nonexecutive Director Group..................... 20,000
Nonexecutive Officer Employee Group............. 1,646,000
</TABLE>
- ------------------
(1) Includes Options to acquire the following number of Shares which were
granted subject to shareholder approval of the amendment to the 1993 Stock
Option Plan discussed herein to increase the number of shares of the
Company's Common Stock available for issuance pursuant to grants thereunder:
(i) 250,000 Shares with respect to Denis A. Krusos, (ii) 250,000 Shares with
respect to Frank J. DiSanto, (iii) 60,000 Shares with respect to Gerald J.
Bentivegna, (iv) 560,000 Shares with respect to all current executive
officers as a group, (v) no Shares with respect to all current non-employee
directors as a group, and (vi) 735,000 Shares with respect to all employees
(other than executive officers) as a group.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
13
<PAGE>
SELECTION OF AUDITORS
The shareholders are being asked to ratify the selection of Arthur Andersen
LLP as the independent auditors of the Company for the fiscal year ending
October 31, 1995. A representative of Arthur Andersen LLP will be present at the
Annual Meeting to answer questions and to make a statement if he desires to do
so.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
SHAREHOLDER PROPOSALS
All proposals from shareholders to be considered at the next annual meeting
must be received by the Secretary of the Company, 900 Walt Whitman Road,
Huntington Station, New York 11746, not later than the close of business
February 15, 1996.
ANNUAL REPORT
A copy of the Annual Report of the Company, including financial statements
for the fiscal year ended October 31, 1994 accompanies this Proxy Statement.
By Order of the Board of Directors,
/s/ Anne Rotondo
ANNE ROTONDO
Secretary
Huntington Station, New York
June 15, 1995
14
<PAGE>
COPYTELE, INC.
Annual Meeting of Shareholders
July 19, 1995 -- 10:30 A.M.
To be held at:
FOX HOLLOW
7725 Jericho Turnpike
Woodbury, New York
(516) 921-1415
------------------------
Long Island Expressway to Exit 44 North )
(which is Rt. 135 North) to Exit 14 East )
(which is Woodbury 25 East) )
) At exit, make right turn
Northern State Parkway to Exit 36B North ) onto Jericho Turnpike (25
(which is Rt. 135 North) to Exit 14 East ) East). Fox Hollow is on
(which is Woodbury 25 East) ) left after first traffic
) light.
Belt Parkway to Southern State Parkway to )
Exit 28A North (which is Rt. 135 North) to )
Exit 14 East (which is Woodbury 25 East) )
<PAGE>
THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS PROXY
COPYTELE, INC.
ANNUAL MEETING OF SHAREHOLDERS--JULY 19, 1995
THE UNDERSIGNED shareholder of CopyTele, Inc., a Delaware corporation (the
'Company'), hereby appoints DENIS A. KRUSOS and FRANK J. DISANTO, or either of
them, with full power of substitution, as the proxy or proxies of the
undersigned at the Annual Meeting of Shareholders of the Company to be held at
the Fox Hollow, Woodbury, New York, on July 19, 1995, at 10:30 a.m., and any
adjournment(s) thereof, and to vote thereat all shares of Common Stock of the
Company which the undersigned would be entitled to vote if personally present in
accordance with the instructions on the reverse side of this Proxy.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ON THE
REVERSE SIDE HEREOF, BUT IF NO SPECIFICATION IS MADE, THE PROXIES INTEND TO VOTE
FOR THE ELECTION OF ALL NOMINEES AS DIRECTORS, FOR THE PROPOSED AMENDMENTS TO
THE COPYTELE, INC. 1993 STOCK OPTION PLAN, AND FOR THE RATIFICATION OF THE
SELECTION OF AUDITORS AND, IN THE DISCRETION OF SUCH PROXIES, FOR OR AGAINST
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE SAID MEETING OR ANY
ADJOURNMENT(S) THEREOF.
(continued--to be dated and signed on reverse side)
<PAGE>
1. Election of Directors All nominees listed below (except as marked to
the contrary).
For Withheld Denis A. Krusos, Frank J. DiSanto, Gerald J.
/ / / / Bentivegna, John E. Gillies and John R. Shonnard
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL NOMINEE, MARK FOR AND WRITE THAT
NOMINEE'S NAME BELOW.)
____________________________________________________
2. Approval of amendments to the CopyTele, Inc. 1993 Stock Option Plan.
For Against Abstain
/ / / / / /
3. Ratification of the selection of Arthur Andersen LLP as independent auditors
of the Company for the fiscal year ending October 31, 1995.
For Against Abstain
/ / / / / /
4. In the discretion of such proxies, upon such other matters as may properly
come before the meeting or any adjournment(s) thereof.
Receipt is acknowledged of Notice of said Meeting, Proxy Statement and Annual
Report for the fiscal year ended October 31, 1994.
Dated: ________________________________, 1995
_________________________________________________________________ (Seal)
_________________________________________________________________ (Seal)
Please sign here exactly as your name appears at the left. When signing as
attorney, executor, administrator, trustee or guardian, please give your title,
as such. Each joint owner or trustee should sign the proxy.
PLEASE MARK INSIDE BLUE BOXES SO THAT DATA
PROCESSING EQUIPMENT WILL RECORD YOUR VOTE.
