<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
INTERNATIONAL ELECTRONICS, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
INTERNATIONAL ELECTRONICS, INC.
------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
________________________________________________________________________
(5) Total fee paid:
________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
________________________________________________________________________
(3) Filing Party:
________________________________________________________________________
(4) Date Filed:
________________________________________________________________________
<PAGE>
INTERNATIONAL ELECTRONICS, INC.
NOTICE OF SPECIAL MEETING IN LIEU OF THE
ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that a Special Meeting in Lieu of the Annual Meeting
of Shareholders of International Electronics, Inc., a Massachusetts corporation
(the "Company") will be held at the offices of Cohan, Rasnick, Myerson & Marcus,
LLP, One State Street, Boston, Massachusetts 02109, at 10:00 a.m. on June 26,
1998 for the following purposes:
1. To consider and act upon a proposal (i) to amend Article III of the
Company's Articles of Organization to authorize 1,500,000 shares of
preferred stock, $.01 par value per share; and (ii) to amend Article IV
of the Company's Articles of Organization to authorize the Directors to
establish one or more series of the authorized preferred stock and to
authorize the Board of Directors to fix and determine the preferences,
voting powers, qualifications and special or relative rights or
privilege of each series, all as more particularly described in PROPOSAL
ONE, an exhibit to the Company's Proxy Statement dated May 19, 1998.
2. To consider and act upon a proposal to provide that amendments to the
Articles of Organization may be by a majority vote of shareholders, all
as more particularly described in PROPOSAL TWO in the Company's Proxy
Statement dated May 19, 1998.
3. To elect a Board of three Directors to serve until the next annual
meeting and until their successors are chosen and qualified.
4. To consider and act upon such other business or further business as may
properly come before the meeting.
Only shareholders of record at the close of business on May 1, 1998 are
entitled to notice of and to vote at the meeting.
Please complete, sign and date the enclosed proxy and mail it as promptly
as possible in the enclosed self-addressed envelope. If you attend the meeting
and desire to vote in person, the proxy will not be used.
By order of the Board of Directors,
Peter Myerson, Clerk
May 19, 1998
<PAGE>
INTERNATIONAL ELECTRONICS, INC.
427 TURNPIKE STREET
CANTON, MASSACHUSETTS 02021
- - --------------------------------------------------------------------------------
PROXY STATEMENT
- - --------------------------------------------------------------------------------
PURPOSE
International Electronics, Inc. believes that it will lose its stock
listing on NASDAQ if the proposal to authorize preferred stock is not approved
by the shareholders. This Proxy is being solicited, in part, to try to reduce
this possibility.
GENERAL
The accompanying proxy is solicited by the Board of Directors of
International Electronics, Inc., a Massachusetts corporation (the "Company") for
use at the Special Meeting of Shareholders to be held on June 26, 1998. The
Board of Directors believes that the Company should amend its Articles of
Organization to: (1) provide for a class of preferred stock, the terms of which
will be determined by the Board of Directors; and (2) change the percentage of
shares which are required to amend the Articles of Organization from two-thirds
to a majority. The proposed amendments are attached as exhibits hereto, and are
respectively identified as PROPOSAL ONE and PROPOSAL TWO. The accompanying
Proxy will also be used in the election of the Company's Directors.
PROXY SOLICITATION
Proxies in the accompanying form, properly executed and received prior to
the meeting and not revoked, will be voted as specified, or if no instructions
are given, will be voted in favor of the proposals described herein and for the
election of the Directors proposed by the Company. Proxies may be revoked at
any time prior to the meeting by written notice given to the clerk or assistant
clerk of the Company. The cost of this solicitation shall be borne by the
Company. The approximate date on which this Proxy Statement and the
accompanying proxy card and Notice of Special Meeting of Shareholders will be
mailed to shareholders is May 19, 1998. Solicitations of proxies may be made in
person or by mail, telephone, electronic mail or facsimile by directors,
officers and regular employees of the Company. All costs of preparing,
printing, assembling and mailing the form of proxy and the material used in the
solicitation thereof and all clerical and other expenses of solicitation will be
borne by the Company.
<PAGE>
INFORMATION AS TO VOTING SECURITIES
Each issued and outstanding share of the Company's common stock, $.01 par
value per share, is entitled to one vote. Only shareholders of record at the
close of business on May 1, 1998 (the "record date") will be entitled to vote at
the meeting. On that date there were 1,493,301 shares of the Company's common
stock outstanding. The Company is presently authorized to issue 5,984,375 shares
of the $.01 par value common stock of the Company.
REASONS FOR THE AMENDMENTS TO THE
ARTICLES OF ORGANIZATION
PROPOSAL ONE
- - ------------
The NASDAQ Stock Market, Inc., a subsidiary of the National Association of
Securities Dealers, Inc. ("NASD") notified the Company by letter dated February
26, 1998 that the Company was not in compliance with the new net tangible asset
requirements of the NASD. NASDAQ indicated to the Company that for this reason,
the Company's securities were scheduled for delisting effective with the close
of business on March 16, 1998. The Company requested a temporary exception to
the new requirements. This temporary exemption was granted to permit the Company
to file a written hearing which was filed with NASDAQ on March 27, 1998. NASDAQ
has informed the Company that the hearing was scheduled for the week of April 6,
1998. Any delisting action will not occur until the NASD makes a written
determination. Through May 13, 1998, the Company had not received the results of
any hearing. If the NASD does not grant an exception to the requirement, the
Company has the right to appeal such action.
The Company's common stock is traded on the quotation system operated by
NASDAQ. The new net tangible asset requirement of the NASD is two million
dollars ($2,000,000). As of February 28, 1998, the Company's unaudited
financial statements reflected net tangible assets of approximately $1,378,000.
In an effort to satisfy this requirement, the Company has entered into a letter
of intent with an investment banker (the "Investment Banker") with approximately
25 offices nationwide, pursuant to which the Company and the Investment Banker
will seek to obtain investors in the Company. The Investment Banker has
indicated to the Company that it believes that the best possibility for raising
equity is for the Company to sell preferred stock in a private placement. The
letter of intent describes a private placement of preferred stock which provides
for dividends, a liquidation preference over common stock and its conversion
into common stock of the Company. The investors and the Investment Banker will
receive warrants in an amount which is as yet undetermined. The terms of any
private
2
<PAGE>
placement may be materially different from the terms described in the letter of
intent because of market or business conditions which exist at the time such
terms are negotiated. It is not possible to determine at present the amount of
dilution to existing shareholders of the Company except such dilution is likely
to be significant. Although the letter of intent has been negotiated, the
Company believes that many of the material terms of a private placement will be
negotiated at a closing of such placement.
The Investment Banker has advised the Company that at the present time, it
cannot, with precision, define the terms and conditions which such preferred
stock will have to provide with respect to conversion rights, dividend rates,
preferences on liquidation, redemption rights and other matters. The Company
believes that it must authorize a class of preferred stock, the terms of which
will be set by the Board of Directors of the Company, so that if the proposal
made by the Investment Banker to raise capital is acceptable to the Directors,
the Directors will be able to authorize and set the terms of a class of
preferred stock which has the characteristics required by investors obtained by
the Investment Banker.
Unless the Company is able to raise equity through the Investment Banker at
this time, the Company does not expect to be able to meet the net tangible asset
requirement of the NASD. Thus, the Company's stock would be delisted by NASDAQ.
All the foregoing aside, there is no assurance that as a result of the hearing
which had been scheduled for the week of April 6, 1998, the Company will receive
a continuing temporary exemption to permit trading on NASDAQ. If the Company's
request for an exception at the hearing is not allowed, the Company may elect to
appeal the delisting decision by an in person or another written hearing. There
can be no assurance that such an oral hearing or further written hearing will
grant relief to the Company from the delisting decision. The Company cannot
evaluate the prospects of receiving an exception. However, the Company sees no
alternative but to proceed in the manner in which it is proceeding.
The value of the NASDAQ listing to the Company is hopefully to enhance the
liquidity of the Company's stock. Whether maintaining listing on NASDAQ
provides actual liquidity depends on a number of things, including the volume of
both buyers and sellers in the market for the Company's shares. However, if the
proposal to authorize preferred shares is defeated, the Company believes that
it will lose its NASDAQ listing, and this may make it more difficult for
shareholders to trade the Company's stock. Even if these amendments are adopted,
there can be no assurance that the Company will be able to continue to meet the
net tangible asset requirement or the other NASD requirements.
3
<PAGE>
EFFECT OF ISSUANCE OF PREFERRED SHARES
If the proposal relating to the authorization of preferred stock is
adopted, and such preferred stock is issued, it is likely that the holders of
the preferred stock will have some priority rights senior to the rights of the
common stock upon the assets of the Company upon liquidation and will have
rights to convert the preferred stock into the common stock. Also, it is
expected that the holders of the preferred stock will have other rights and will
be paid dividends on the preferred stock. Otherwise, there will be no change in
the preferences, voting powers, restrictions, qualifications, special or
relative rights or privileges of the shares of the Company's common stock.
PROPOSAL TWO
- - ------------
The Board of Directors believes that the requirement of two-thirds (2/3)
votes of all shares to authorize amendments to the Articles of Organization is
not in the Company's best interest, and believes that the shareholders should be
authorized to make changes to the Articles of Organization by a vote of a
majority of the shares authorized and outstanding.
VOTE REQUIRED FOR APPROVAL
A two-thirds (2/3) vote of the issued and outstanding shares of the
Company's common stock is required to approve PROPOSAL ONE and PROPOSAL TWO
described in this Proxy Statement. If the proposal to authorize the preferred
shares is not approved, the likely result is that the Company will lose its
listing on NASDAQ. Even if the proposal is approved, the Company may not find
the terms proposed by the Investment Banker satisfactory and may choose to lose
the listing on NASDAQ as opposed to providing equity to investors in an amount
which will dilute the interests of the existing shareholders of the Company in a
manner unacceptable to the Directors.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF THE PROPOSALS DESCRIBED IN THIS
PROXY STATEMENT.
4
<PAGE>
INFORMATION AS TO APPRAISAL RIGHTS, ADJOURNMENTS
OF MEETING AND USE OF PROXIES
Proxies are valid for six months from the date they are signed by
shareholders. Articles of Amendment must be filed with the Secretary of State of
the Commonwealth of Massachusetts within 60 days of the meeting of shareholders,
if PROPOSAL ONE and/or PROPOSAL TWO are approved. Shareholders will have no
right of appraisal with respect to any of the proposals contained herein.
If prior to the scheduled special meeting, a sufficient number of the
Company's shareholders have not voted in favor of the PROPOSAL ONE, the Company
may adjourn the meeting scheduled by the accompanying Notice of Special Meeting
of Shareholders for the purpose of attempting to obtain additional votes in
favor of the proposal.
SECURITY OWNERSHIP OF DIRECTORS AND OFFICERS
Set forth below is information concerning ownership of the Company's common
stock as of April 15, 1998, (i) by all persons known by the Company to own
beneficially 5% or more of the outstanding common stock, (ii) by each director
and each of the two executive officers of the Company named in the Summary
Compensation Table appearing later in this proxy statement, and (iii) by all
directors and executive officers as a group.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF COMMON STOCK
NAME SHARES /(1)/ OUTSTANDING
- - -------------------------------------- ------------ -------------
<S> <C> <C>
EXECUTIVE OFFICERS AND DIRECTORS:
John Waldstein 206,506/(2)/ 12.9%
C/O International Electronics, Inc.
427 Turnpike Street
Canton, Massachusetts
Heath Paley 36,222/(3)/ 2.4%
C/O International Electronics, Inc.
427 Turnpike Street
Canton, Massachusetts
</TABLE>
5
<PAGE>
<TABLE>
<S> <C> <C>
Diane Balcom 14,060/(4)/ 0.9%
3705 5/th/ Avenue
Pittsburgh, Pennsylvania
Robert Voosen/(5)/ 40,279 2.7%
15 Michelle Lane
Randolph, MA 02368
All executive officers and directors
as a group (5 persons) 298,997/(6)/ 17.9%
OTHER 5% SHAREHOLDERS:
Warren Paley 217,267/(7)/ 14.5%
3 Mill Street
New Baltimore, New York
</TABLE>
/(1)/ Except as otherwise indicated below, the named owner has sole voting and
investment power with respect to the shares set forth. No arrangements are
known to the Company which may result in a change in control. The number
of shares shown does include shares which may be acquired through the
exercise of options and warrants, which are exercisable currently or
within sixty (60) days after April 15, 1998.
/(2)/ Includes vested options and warrants to purchase an aggregate 105,667
shares of the Company's common stock granted at prices ranging from $.75
to $2.07 per share. Includes 6,234 shares of common stock held by Mr.
Waldstein's wife. Mr. Waldstein disclaims beneficial ownership of these
shares.
/(3)/ Includes vested options to purchase an aggregate 27,537 shares of the
Company's common stock granted at prices ranging from $.75 to $6.48 per
share.
/(4)/ Includes vested options and warrants to purchase an aggregate 12,512
shares of the Company's common stock granted to Diane Balcom and Balcom &
Associates at prices ranging $.72 to $2.12 per share.
/(5)/ Mr. Voosen resigned as an officer of the Company in September 1997.
6
<PAGE>
/(6)/ Includes vested options and warrants to purchase an aggregate 178,716
shares of the Company's common stock granted at prices ranging from $.72
to $6.48 per share.
/(7)/ Includes 3,333 shares of common stock held by Mr. Paley's wife. Mr. Paley
disclaims beneficial ownership of these shares.
ELECTION OF DIRECTORS
Shares represented by proxies in the enclosed form, unless the proxies
otherwise direct, will be voted to elect the following individuals to the
Company's Board of Directors: John Waldstein, Heath Paley and Diane Balcom.
The following table sets forth the name and age of each executive officer,
director and nominee of the Company. The narrative following the table
describes the principal employment of each executive officer, director and
nominee. For each person presently serving as director, the table sets forth
the date on which he/she was first elected director.
<TABLE>
<CAPTION>
POSITION WITH DIRECTOR
NAME AGE THE COMPANY SINCE
- - ----------------------------- --- ---------------------- -----------------------------
<S> <C> <C> <C>
John Waldstein 44 Chairman of the Board, 1982
President, Chief Executive
Officer, Treasurer and
Director
Christopher Hentschel 53 Vice President of Engineering
James C. Brierley, Jr. 47 Vice President of Sales and
Marketing
Heath Paley 49 Director 1990
Diane Balcom 55 Director 1989
</TABLE>
Directors of the Company hold office until the shareholders' next annual
meeting and thereafter until their successors are chosen and qualified. The
officers of the Company hold office until their successors are chosen and
qualified.
7
<PAGE>
The following is a summary of the background of those individuals listed in
the above table:
John Waldstein has been employed by the Company since 1978, has been
Treasurer since March 1982, was Vice President between January 1983 and May
1988, Chief Operating Officer from February 1988 to May 1988, President and
Chief Executive Officer since May 1988 and Chairman of the Board since November
1990. Mr. Waldstein has a three year employment contract with the Company.
The employment contract self renews for a three year term on May 1 of each year,
the anniversary date of the employment contract. See "Executive Compensation -
Compensation on Involuntary Termination".
Christopher Hentschel was appointed the Company's Vice President of
Engineering in March 1995 and had previously been Chief Engineer since 1989.
Before joining the Company, Mr. Hentschel was a founder and Vice President of
Engineering of Guard Aware, Inc.
James C. Brierley, Jr. has been employed by the Company since October 1995.
Initially engaged as a consultant to develop a business strategy for the
Company's line of industrial access control products, he was appointed Director
of Sales and Marketing in October 1997 and was appointed as Vice President of
Sales and Marketing in April 1998. Prior to joining the Company, from September
1994 to September 1995 he was the Vice President of Product Marketing for The
Shareholders Services Group, a division of First Data Corporation. From 1981 to
June 1994 he was employed by Digital Equipment Corporation where he became
Director of Product Management specializing in distributed database client
server products.
Heath Paley is a self-employed computer consultant. He had been the
Company's director of Management Information Systems from September 1994 until
May 1996 and was the Company's Chief Operating Officer and Executive Vice
President from June 1990 to August 31, 1994. From 1983 to June 1990, Mr. Paley
was President and a founder of Ecco Industries, Inc. From 1980 to 1983, he was
President of the Maine Woods Shoe Division of Bennett Industries. Heath Paley
is the son of Warren Paley.
Diane Balcom became a member of the Board of Directors in July 1989. Since
September 1997, Ms. Balcom has been the Director of Development for Children's
Hospital of Pittsburgh. From August 1994 to August 1997, Ms. Balcom has been
the Chapter Director of the Juvenile Diabetes Foundation of Western
Pennsylvania. She has been an advisor to the Company on corporate and financial
matters since 1985. From January 1989 to August 1994, Ms. Balcom operated a
consulting practice which provided services related to private and public
financing for small and medium sized
8
<PAGE>
companies. From March 1987 to January 1989, she served as Vice President and
Chief Financial Officer for Environmental Diagnostics, Inc., a publicly-held
company. Prior to that, Ms. Balcom held various senior management positions in
corporate finance and research for 13 years with brokerage firms on the West
Coast.
During the fiscal year ending August 31, 1997, the Board of Directors held
10 meetings (including regularly scheduled, telephone, special meetings and
actions by unanimous written consent).
The Board of Directors has an audit committee but no nominating committee.
The audit committee is comprised of John Waldstein, Heath Paley and Diane
Balcom. The audit committee is responsible for financial oversight and review of
potential conflicts of interest. The audit committee was formed on February 9,
1998, and has not had any scheduled meetings. The Company's compensation
committee of the Board of Directors is comprised of Heath Paley and Diane
Balcom. The compensation committee is responsible for evaluating and approving
the compensation arrangements for each of the Company's executive officers,
including the granting of options to purchase shares of common stock under the
Company's Employee Stock Option Plans. The compensation committee, during the
year ended August 31, 1997, held two meetings.
At the last annual meeting, shareholders elected a Board of Directors for
the ensuing year. The Board which was elected consisted of John Waldstein,
Robert Voosen, Diane Balcom, Heath Paley and Robert Prager. Messrs. Voosen and
Prager resigned as Directors during December 1997.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF THE NOMINEES TO THE BOARD OF DIRECTORS.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the compensation for
each of the last three fiscal years ending August 31, 1997, of the Company's
President and Chief Executive Officer, and its Executive Vice President, the
only other executive officer of the Company who received at least $100,000 of
compensation during these years (the "Named Executive Officers"):
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL ------------
COMPENSATION/(2)/ OPTIONS ALL OTHER
NAME YEAR SALARY COMMISSION/BONUS (SHARES) COMPENSATION/(1)/
- - -------------------- ---- ----------------- ---------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
John Waldstein 1997 $135,000 $2,100/(4)/ 10,000/(7)/ $9,180
President 1996 135,519 4,750/(5)/ -- 9,180
Executive Officer 1995 135,519 -- 25,000/(3)/ 9,180
Robert Voosen/(6)/ 1997 100,000 -- 9,000/(7)/ --
Executive Vice 1996 100,416 12,349 -- --
President 1995 100,000 5,889 20,000 --
</TABLE>
/(1)/ Represents the cost of a split dollar whole life insurance policy with a
face value of $755,000 as of August 31, 1997. The Company is a beneficiary
of such policy to the extent of all premiums paid upon the death of John
Waldstein. Mr. Waldstein may purchase this policy upon termination of his
employment for the then current cash surrender value.
/(2)/ Does not include perquisites which do not exceed 10% of annual salary.
/(3)/ Represents warrants granted to purchase 25,000 shares of common stock at
an exercise price of $.74 per share exercisable for a ten year period in
exchange for a personal guarantee of debt then held by the Federal Deposit
Insurance Corporation.
/(4)/ Amount shown represents bonus earned by Mr. Waldstein in fiscal 1997
payable in fiscal 1998.
/(5)/ Amount shown represents bonus earned by Mr. Waldstein in fiscal 1996
payable in fiscal 1997.
/(6)/ Mr. Voosen resigned as an officer of the Company in September 1997.
/(7)/ Represents warrants to purchase 10,000 and 9,000 shares of common stock
granted to Messrs. Waldstein and Voosen, respectively, at an exercise
price of $2.12 per share exercisable for a ten year period.
The Company's Board of Directors, commencing in fiscal 1993, established an
annual bonus plan for officers and certain key employees. The available funds
for the
10
<PAGE>
plan shall be up to five percent of income before taxes. The final amount and
subsequent distribution to employees shall be determined by the Company's
Compensation Committee.
COMPENSATION ON INVOLUNTARY TERMINATION
John Waldstein has an employment contract with the Company which provides
for certain compensation to be paid to him, if he is discharged by the Company
without cause before the end of the term of his contract. Mr. Waldstein has a
three year employment contract which self renews for a three year term on May 1
of each year, the anniversary date of his employment contract. John Waldstein's
current minimum annual salary under his contract is $135,000. The salary of this
officer is subject to performance reviews and annual adjustment by the Board of
Directors of the Company. Mr. Waldstein's salary shall increase for inflation
effective January 1, 1998.
If the employment of John Waldstein is terminated by the Company without
cause (including an involuntary relocation due to an acquisition), the Company
is obligated to pay the greater of an amount equal to one times his salary on
the date of termination or the salary to the conclusion of the contract period.
As of May 1, 1998, John Waldstein's salary to the conclusion of his contract
period is approximately $405,000.
WARRANTS GRANTED DURING FISCAL 1997
The following table sets forth certain information with respect to the
grant of stock warrants in fiscal 1997 to any of the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE OF ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF
SHARES TOTAL WARRANTS STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION FOR
WARRANTS EMPLOYEES PRICE EXPIRATION WARRANT TERM/(2)/
NAME GRANTED IN YEAR PER SHARE DATE 5%($) 10%($)
- - -------------------- ----------- -------------- --------- -------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
John Waldstein 10,000/(1)/ 16.5 $2.12 Sept. 17, 2006 $13,333 $33,787
Robert Voosen/(3)/ 9,000/(1)/ 14.9 2.12 Sept. 17, 2006 11,999 30,409
</TABLE>
/(1)/ The warrants vest annually over a four year period commencing on September
17, 1996.
11
<PAGE>
/(2)/ Amount represents hypothetical gains that could be achieved for the
respective warrants if exercised at the end of the warrant term. These
gains are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective warrants were granted to
their expiration date. This table does not take into account any
appreciation in the price of the common stock.
/(3)/ Mr. Voosen resigned as an officer of the Company in September 1997.
YEAR END OPTION TABLE
The following table sets forth the number and value of unexercised options
held as of August 31, 1997 by the Named Executive Officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT END OF FISCAL 1997 END OF FISCAL 1997/(2)/
----------------------------- -----------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- - ----------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John Waldstein/(1)/ 103,167/(3)/ 10,500/(4)/ $80,997 $ 533
Robert Voosen/(1)(5)/ 33,167 19,500/(4)/ 24,422 7,983
</TABLE>
/(1)/ There were no options exercised during fiscal 1997.
/(2)/ Difference between the fair market value of the underlying common stock on
November 5, 1997 and the option exercise price.
/(3)/ Includes warrants to purchase 25,000 shares of common stock. See "Summary
Compensation Table - Note 3 herein.
/(4)/ Includes warrants to purchase 10,000 and 9,000 shares of common stock
granted to Messrs. Waldstein and Voosen, respectively, at an exercise
price of $2.12 exercisable for a ten year period.
/(5)/ Mr. Voosen resigned as an officer of the Company in September 1997.
12
<PAGE>
OTHER MATTERS
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers, directors, and persons who own more than ten percent of a
registered class of the Company's equity securities to file reports of ownership
with the Securities and Exchange Commission ("SEC") and the NASD. Executive
officers, directors, and greater than ten percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.
The Company believes that all filing requirements applicable under Section
16(a) to its executive officers, directors, and 10% stockholders were complied
with for fiscal 1997 except that Ms. Balcom and Mr. Voosen are required to file
a Form 5 late.
INDEPENDENT AUDITORS
Deloitte & Touche LLP has served as the Company's independent auditors
since 1982. The Company's management anticipates that Deloitte & Touche LLP
will also serve as the Company's auditors in connection with the financial
statements to be prepared for the fiscal year ending August 31, 1998. No
representative of Deloitte & Touche LLP is expected to attend the meeting of
shareholders, and thus will not be available to respond to appropriate
questions.
PROPOSALS BY SHAREHOLDERS
Any shareholder who wishes to include a proposal for presentation at the
next annual meeting of the Company must send such proposal to the Company and
such proposal must be received by the Company no later than January 19, 1998.
Any proposal submitted by a shareholder must comply with the provision of Rule
14A-8 of the Exchange Act of 1934 as amended.
OTHER MATTERS
As of the date hereof, the Company has not been informed of any matters to
be presented for action at the meeting other than those listed in the notice of
meeting and referred to herein. If any other matters come before the meeting or
any adjournment thereof, it is intended that the proxies will be voted in
respect thereof in accordance with the judgment of the persons named therein.
13
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The Company hereby incorporates by reference the Company's Annual Report
for the fiscal year ending August 31, 1997 and the Company's Form 10-QSB for the
quarter ending February 28, 1998.
Shareholders are urged to sign the enclosed form of proxy and return it at
once in the envelope enclosed for that purpose.
By order of the Board of Directors,
Peter Myerson, Clerk
May 19, 1998
14
<PAGE>
PROPOSAL ONE
PROPOSED AMENDMENT TO ARTICLE III
OF THE ARTICLES OF ORGANIZATION
-------------------------------
Article III of the Company's Articles of Organization is hereby amended to
authorize the issuance of 1,500,000 shares of the Company's preferred stock,
$.01 par value per share.
PROPOSED AMENDMENT TO ARTICLE IV
OF THE ARTICLES OF ORGANIZATION
-------------------------------
Article IV of the Company's Articles of Organization is hereby amended as
follows:
1. The Preferred Stock may consist of one or more series. The Board of
Directors may, from time to time, establish and designate the different series
and designate variations in the relative rights and preferences between the
different series as provided below, but in all other respects all shares of the
Preferred Stock shall be identical. In the event that at any time the Board of
Directors shall have established and designated one or more series of Preferred
Stock consisting of a number of shares less than all of the authorized number of
shares of Preferred Stock, the remaining authorized shares of Preferred Stock
shall be deemed to be shares of an undesignated series of Preferred Stock until
designated by the Board of Directors as being a part of a series previously
established or a new series then being established by the Board of Directors.
2. Subject to the provisions hereof, the Board of Directors is authorized to
establish one or more series of Preferred stock and, to the extent now or
hereafter permitted by the laws of the Commonwealth of Massachusetts, to fix and
determine the preferences, voting powers, qualifications and special or relative
rights or privileges of each series including, but not limited to:
a. the number of shares to constitute such series and the distinguishing
designation thereof;
b. the dividend rate on the shares of such series and the preferences, if
any, and the special and relative rights of such shares of such series
as to dividends;
c. whether or not the shares of such series shall be redeemable, and, if
redeemable, the price, terms and manner of redemption;
15
<PAGE>
d. the preferences, if any, and the special and relative rights of the
shares of such series upon liquidation of the Corporation;
e. whether or not the shares of such series shall be subject to the
operation of a sinking or purchase fund and, if so, the terms and
provisions of such fund;
f. whether or not the shares of such series shall be convertible into
shares of any other class or of any other series of the same or any
other class of stock of the Corporation and, if so, the conversion
price or ratio and other conversion rights;
g. the conditions under which the shares of such series shall have
separate voting rights or no voting rights; and
h. such other designations, preferences and relative, participating,
option or other special rights and qualifications, limitations or
restrictions of such series to the full extent now or hereafter
permitted by the laws of the Commonwealth of Massachusetts.
Notwithstanding the fixing of the number of shares constituting a
particular series, the Board of Directors may at any time authorize the issuance
of additional shares of the same series.
16
<PAGE>
PROPOSAL TWO
PROPOSED AMENDMENT TO ARTICLE VI
OF THE ARTICLES OF ORGANIZATION
-------------------------------
Article VI of the Articles of Organization is hereby amended to add the
following: "The shareholders of the corporation may amend the Articles of
Organization by a majority vote of all issued and outstanding shares of the
Company."
17
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John Waldstein and Heath Paley and each of
them, with full power of substitution, as the true and lawful attorney in fact
and proxy for the undersigned to vote all shares of common stock of
International Electronics, Inc. (the "Company") which the undesigned is entitled
to vote at a Special Meeting of Shareholders to be held at the offices of Cohan,
Rasnick, Myerson & Marcus, LLP, One State Street, Boston, Massachusetts 02109,
at 10:00 a.m. on June 26, 1998 or any adjournment thereof; such proxy being
directed to vote as specified below on the election of directors and other
proposals and being authorized to vote in his own discretion for each proposal
as to which a specified vote is not directed. The above named proxies are
directed to vote all of the undersigned's shares as follows:
1. [ ] FOR [ ] AGAINST [ ] ABSTAIN To consider and act upon a proposal (i) to
amend Article III of the Company's Articles of Organization to authorize
1,500,000 shares of preferred stock, $.01 par value per share; and (ii) to amend
Article IV of the Company's Articles of Organization to authorize the Directors
to establish one or more series of the authorized preferred stock and to
authorize the Board of Directors to fix and determine the preferences, voting
powers, qualifications and special or relative rights or privileges of each
series, all as more particularly described in PROPOSAL ONE, an exhibit to the
Company's Proxy Statement dated May 19, 1998.
MANAGEMENT RECOMMENDS A VOTE FOR THIS ACTION
2. [ ] FOR [ ] AGAINST [ ] ABSTAIN To consider and act upon a proposal to
provide that amendments to the Articles of Organization may be by a majority
vote of shareholders, all as more particularly described in PROPOSAL TWO in the
Company's Proxy Statement dated May 19, 1998.
MANAGEMENT RECOMMENDS A VOTE FOR THIS ACTION
3. [ ] FOR [ ] AGAINST [ ] ABSTAIN To elect a Board of three Directors to
serve until the next annual meeting and until their successors are chosen and
qualified.
John Waldstein Heath Paley Diane Balcom
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, DRAW A
LINE THROUGH THE NOMINEE'S NAME ON THE LIST ABOVE.
4. [ ] FOR [ ] AGAINST [ ] ABSTAIN To consider and act upon such other
business or further business as may properly come before the meeting.
MANAGEMENT RECOMMENDS A VOTE FOR THIS ACTION
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS INDICATED. IF NO
SPECIFICATION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NAMED NOMINEES AND FOR THE PROPOSALS.
Management knows of no other matters that may properly be, or which are
likely to be, brought before the meeting. However, if any other matters are
properly brought before the meeting, the persons named in this Proxy or their
substitutes will vote in accordance with their best judgment.
--------------------------------------------
Date
--------------------------------------------
Signature of Shareholder
--------------------------------------------
Signature of Shareholder
IMPORTANT: Please date this Proxy and sign
Proxy exactly as your name appears hereon.
If shares are held jointly, signature should
include both names. Executors,
administrators, trustees, guardians and
others signing in a representative capacity
should indicate the capacity in which they
sign and their titles.
