<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
IMAGING TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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>
[ITEC LETTERHEAD]
11031 VIA FRONTERA SAN DIEGO, CA 92127
PHONE: 619-613-1300 FAX: 619-613-1311
October 6, 1997
Dear Stockholder:
It is a pleasure to send to you the attached notice and proxy material with
regard to the annual meeting of stockholders of Imaging Technologies
Corporation.
The matters to be considered at this meeting include election of directors,
ratification of the selection of accountants, and amendment of the Company's By-
laws to allow for staggered terms for the Company's Board of Directors.
I hope you will be able to attend the annual meeting. Whether or not you plan to
attend the annual meeting, however, we request that you sign, date and return
the enclosed proxy card as soon as possible.
We are grateful for the confidence you have shown in us.
Sincerely yours,
/s/ EDWARD W. SAVARESE
Edward W. Savarese
Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 6, 1997
To the Stockholders of
Imaging Technologies Corporation:
The Annual Meeting of Stockholders of Imaging Technologies Corporation, a
Delaware corporation ("ITEC"), will be held at 11031 Via Frontera, San Diego,
California on Thursday, November 6, 1997 at 2:00 p.m. for the following
purposes:
1. To elect six members of the Company's Board of Directors;
2. To act upon a proposal to ratify the selection of Boros & Farrington
APC as ITEC's independent accountants for fiscal year 1998; and
3. To consider and vote upon a proposal to approve an amendment to the
Company's By-laws to create three classes of the Company's Board of
Directors, consisting of Class I, to be comprised of directors
serving a term of one year and thereafter for a term of three years;
Class II, to be comprised of directors serving a term of two years
and thereafter for a term of three years; and Class III, to be
comprised of directors, serving a term of three years; or, in each
case, until their respective successors have been duly elected and
qualified;
4. To transact such other business as may properly come before the
Meeting, or any postponements or adjournments thereof.
The Board of Directors has fixed the close of business on September 23,
1997 as the record date for determination of stockholders entitled to notice of
and to vote at the Meeting.
All stockholders are cordially invited to attend the Meeting. In order to
allow us to provide adequate accommodations, please indicate on the enclosed
proxy card if you plan to attend.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ RALPH R. BARRY
------------------
Ralph R. Barry,
Secretary
San Diego, California
October 6, 1997
YOUR VOTE IS IMPORTANT!
Please immediately date, sign and return your proxy in the enclosed envelope. If
you attend the meeting, you may withdraw your proxy and vote in person.
THANK YOU FOR ACTING PROMPTLY.
<PAGE>
IMAGING TECHNOLOGIES CORPORATION
- --------------------------------------------------------------------------------
11031 Via Frontera San Diego, California 92127
PROXY STATEMENT
INTRODUCTION
GENERAL INFORMATION FOR STOCKHOLDERS
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Imaging Technologies Corporation, a
Delaware corporation ("ITEC" or the "Company"), for use at the Annual Meeting of
Stockholders of ITEC to be held on November 6, 1997 or at any postponements or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders. This proxy statement, the accompanying form of
proxy and ITEC's annual report for fiscal year 1997 are first being sent to
stockholders on or about October 6, 1997. If a proxy in the accompanying form is
duly executed and returned, the shares represented thereby will be voted, and
where a specification is made by the stockholder as provided therein, will be
voted in accordance with such specification. A stockholder giving a proxy may,
nevertheless, revoke it before its exercise by filing with the Secretary of ITEC
either an instrument revoking the proxy or a duly executed proxy bearing a later
date. A proxy will be revoked automatically if the stockholder who executed it
is present at the Meeting and votes in person.
The cost of the solicitation of proxies will be borne by ITEC. In addition
to solicitation by mail, certain directors, officers and regular employees of
ITEC, without receiving any additional compensation, may solicit proxies
personally or by telephone or telegram. ITEC will reimburse brokers and others
holding stock in their names, or in the names of nominees, for forwarding proxy
material to their principals.
VOTING SECURITIES
On September 23, 1997 (the "record date" for determination of stockholders
entitled to notice of and to vote at the Meeting), ITEC had outstanding
10,022,315 shares of Common Stock, which is the only class of stock entitled to
vote at the Meeting. Each share entitles the holder thereof to one vote on all
matters to be presented at the meeting.
BENEFICIAL OWNERSHIP OF VOTING SECURITIES
The following table sets forth the number of shares of equity securities
of ITEC owned beneficially (as determined in accordance with the rules adopted
by the Securities and Exchange Commission ("SEC") under the Securities Exchange
Act of 1934) for all persons (including any "group") known to ITEC to be the
beneficial owner of more than five percent of any class of voting securities of
ITEC as of September 23, 1997, except as disclosed in the Security Ownership of
Management section below.
<TABLE>
<CAPTION>
TITLE OF CLASS NAME SHARES BENEFICIALLY OWNED PERCENT OF CLASS
-------------- ---- ------------------------- ----------------
<S> <C> <C> <C>
ITEC Common The Dreyfus Corporation 1,220,000 12.2
ITEC Common MCM Partners LP 840,907 8.4
</TABLE>
The Dreyfus Corporation, beneficially owns 1,220,000 shares which are held as
follows: 620,000 are invested in the Dreyfus Premier Aggressive Growth Fund and
600,000 in the Dreyfus Aggressive Growth Fund. The Dreyfus Corporation is
located c/o Mellon Bank Corporation at One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258.
MCM Partners LP is a private investment group located at 1 Embarcadero Center,
Suite 2830, San Francisco, California 94111.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of equity securities
of ITEC owned beneficially (as determined in accordance with the rules
adopted by the SEC under the Securities Exchange Act of 1934) as of September
23, 1997 by each director and nominee for election as a director of ITEC, by
each executive officer of ITEC who earned more than $100,000 during fiscal
year 1997, and by all directors and executive officers as a group. In each
case, such beneficial ownership includes both sole voting and sole investment
power. Dr. Saal, Mr. Kavanaugh, The Dreyfus Corporation and MCM Partners LP
were, to the knowledge of ITEC, the only persons owning beneficially (as
determined in accordance with such rules) more than 5% of any class of voting
securities of ITEC as of such date. The business addresses of Dr. Saal, Dr.
Savarese, Mr. Bonar, Mr. Roth, Mr. Kavanaugh and Mr. Dubrow are the same as
that of the Company.
1
<PAGE>
<TABLE>
<CAPTION>
TITLE OF CLASS NAME SHARES BENEFICIALLY OWNED PERCENT OF CLASS
-------------- ---- ------------------------- ----------------
<S> <C> <C> <C>
ITEC Common Harry J. Saal 2,185,763 (a) 19.0
ITEC Common Frank P. Kavanaugh 768,240 (b) 7.7
ITEC Common Edward W. Savarese 397,741 (c) 3.8
ITEC Common Irwin Roth 383,380 (d) 3.7
ITEC Common Alvin L. Dubrow 314,205 (e) 3.1
ITEC Common Brian Bonar 64,631 (f) .6
ITEC Common All directors and executive 4,166,389 (g) 34.0
officers as a group
(7 persons)
</TABLE>
(a) Includes options and/or warrants, now exercisable or exercisable within 60
days, to purchase 1,454,836 shares of ITEC Common Stock.
(b) Includes options and/or warrants, now exercisable or exercisable within 60
days, to purchase 8,418 shares of ITEC Common Stock.
(c) Includes options and/or warrants, now exercisable or exercisable within 60
days, to purchase 333,125 shares of ITEC Common Stock. Also includes 64,516
shares of ITEC Common Stock issuable upon conversion of a $100,000 7%
convertible note.
(d) Includes options and/or warrants, now exercisable or exercisable within 60
days, to purchase 264,167 shares of ITEC Common Stock.
(e) Includes options and/or warrants, now exercisable or exercisable within 60
days, to purchase 8,418 shares of ITEC Common Stock.
(f) Includes options and/or warrants, now exercisable or exercisable within
60 days, to purchase 56,625 shares of ITEC Common Stock.
(g) Includes options and/or warrants, now exercisable or exercisable within 60
days, to purchase 2,172,018 shares of ITEC Common Stock. Also includes
64,516 shares of ITEC Common Stock issuable upon conversion of a $100,000
7% convertible note.
All percentages in this section were calculated on the basis of outstanding
securities plus securities deemed outstanding pursuant to Item 403 of
Regulation S-B, under the Securities Exchange Act of 1934, as amended.
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
ITEM NO. 1 - ELECTION OF DIRECTORS
NOMINEES FOR ELECTION AS DIRECTORS; EXECUTIVE OFFICERS
Six (6) Directors are to be elected at the Meeting, each to serve until
the next annual meeting or until a successor is elected. All of the nominees are
now serving as directors of ITEC and all six have consented to be named and have
indicated their intent to serve if elected, and the proxyholders named in the
accompanying form of proxy will vote the shares represented by the proxy for all
of the nominees unless withholding of authority to vote has been specified on
the proxy with respect to one or more directors. If for any reason any nominee
named is not a candidate (which is not expected) when the election occurs, the
proxyholders will vote the shares for the other nominees named and for such
other person as may be designated by the Board of Directors.
If the Proposal with respect to the classification of the Board of
Directors, described under Item No. 3 "Amendment to By-laws," is adopted, it is
intended that the proxies solicited by the Board of Directors will be voted for
the election of Messrs. Bonar and Kavanaugh to Class I of the Company's Board of
Directors for initial terms expiring at the 1998 Annual Meeting of Shareholders;
the election of Messrs. Roth and Dubrow to Class II of the Company's Board of
Directors for initial terms expiring at the 1999 Annual Meeting of Shareholders;
and the election of Drs. Saal and Savarese to Class III of the Company's Board
of Directors for initial terms expiring at the 2000 Annual Meeting of
Shareholders. If such Proposal is not adopted, it is intended that the proxies
solicited by the Board of Directors will be voted for the election of the
nominees herein named, each to serve until the next Annual Meeting of
Shareholders and until their respective successors have been duly elected and
qualified. Proxies cannot be voted at the Annual Meeting for a greater number of
persons than the six nominees named in this Proxy Statement, although persons in
addition to those nominees may be nominated by the shareholders at the Annual
Meeting.
2
<PAGE>
The following table sets forth certain information regarding the nominees for
election to the Board of Directors of ITEC.
<TABLE>
<CAPTION>
NAME AGE SINCE DIRECTOR TITLE
- ---- --- ----- ---------------
<S> <C> <C> <C>
Harry J. Saal 53 1983 Director, Chairman of the Board
Edward W. Savarese 50 1983 Director, Vice Chairman of the Board and Chief Executive Officer
Brian Bonar 50 1995 Director, President and Chief Operating Officer
Irwin Roth 66 1983 Director
Alvin L. Dubrow 64 1997 Director, Vice President Special Projects
Frank P. Kavanaugh 37 1997 Director, Vice President Business Development
</TABLE>
Dr. Saal has been a Director of ITEC since 1983 and became the Company's
Chairman in December 1995. He was President and Chief Executive Officer of Smart
Valley, Inc., a company which is working to create an electronic community in
the San Francisco Bay Area of California, from September 1, 1993 until November
1995. In addition, from 1986 until 1993 Dr. Saal was the President of Network
General Corp., which is engaged in the design, manufacture and sale of
diagnostic systems for local area networks (and related products). Dr. Saal
continues to serve as a Director and Chairman of Network General Corp. Dr. Saal
also serves as a Director of Borland International and GlobalNet Systems, Ltd.
Dr. Savarese is a founder of ITEC and has been Chairman and Chief
Executive Officer of ITEC and its predecessor from 1982 until 1995, when he
became the Company's Vice Chairman. In addition, Dr. Savarese served as the
President of ITEC from 1989 to 1997. Dr. Savarese also serves as a Director of
GlobalNet Systems, Ltd.
Mr. Bonar has been with ITEC since August 1992 as Director of Technology
Sales, and in April 1994 was appointed Vice President, Sales and Marketing. In
September 1994, Mr. Bonar became Executive Vice President Sales, Marketing and
Engineering and in August 1995 a Director. In July 1997, Mr. Bonar was
appointed President and Chief Operating Officer of ITEC. From 1991 to 1992, Mr.
Bonar was Vice President of Worldwide Sales and Marketing for Bezier Systems,
Inc., a San Jose, California-based manufacturer and marketer of laser printers.
From 1990 to 1991, he was Worldwide Sales Manager for Adaptec, Inc., a San Jose-
based laser printer controller developer. From 1988 to 1990, he was Vice
President of Sales and Marketing for Rastek Corporation, a laser printer
controller developer located in Huntsville, Alabama.
Mr. Roth is an attorney, and has been practicing law in New York City for
more than the past five years. He has served on the Company's Board of Directors
since 1982. He was a co-founder of Panafax, Inc., the first marketer of
facsimile machines in the United States. He holds Bachelor's and law degrees
from the University of Michigan. Mr. Roth also serves as the Chairman of
GlobalNet Systems, Ltd.
Mr. Dubrow, has been a Director of ITEC since February 1997, at which
time he was appointed Vice President, Special Projects. He is an established
executive with operational expertise and extensive experience in
manufacturing, operations, and finance. In 1996, he was involved in the
acquisition and restructuring of NewGen Systems. He held the position of
President and CEO. In April 1995, Mr. Dubrow left Borg Warner Industrial
Products (BWIP) after thirty years of service, as Chief Operating Officer.
Mr. Dubrow holds an MBA and Engineering degree from UCLA.
Mr. Kavanaugh, has been a Director of ITEC since February 1997, at which
time he was appointed Vice President, Business Development. He was involved
in the acquisition and restructuring of NewGen Systems in 1996 and held the
position of Vice President of Strategy and Business Development. As a
principal in DK Capital, he has been involved in the restructuring of
numerous technology companies in Southern California. Mr. Kavanaugh served as
Chairman of Enterprise Planning Systems, a company he founded in 1992 and
served as President of QuickStart Technologies, Inc., a company he co-founded
in 1988. Prior to that he was employed by Microsoft and Hewlett Packard. Mr.
Kavanaugh holds a bachelor's degree in Information and Computer Science from
The University of California in Irvine.
In addition to Dr. Savarese, Mr. Bonar, Mr. Dubrow and Mr. Kavanaugh, Mr.
Ralph R. Barry, age 39, is an executive officer of ITEC and serves as its Vice
President Finance, Chief Financial Officer, Secretary and Treasurer. Mr. Barry,
a CPA, joined ITEC as Controller and Chief Accounting Officer, and Assistant
Secretary in October 1993 and became Chief Financial Officer and Secretary in
August 1995 and Vice President Finance in December 1996. Prior thereto, Mr.
Barry served with Price Waterhouse LLP since August 1989.
3
<PAGE>
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held 13 meetings in fiscal year 1997. In addition
to action taken at meetings, the Board on occasion acts by unanimous written
consent. Each of ITEC's current directors attended at least 75% of the fiscal
year 1997 meetings of the Board during their terms as Directors.
The Board of Directors of the Company has an Audit and Compensation
Committee. The members of each committee have been appointed by the Board of
Directors to serve until their respective successors are elected and qualified.
AUDIT COMMITTEE. The Audit Committee reviews the scope and results of the
audit of the financial statements of the Company and reviews the internal
accounting, financial and operating control procedures of the Company. The Audit
Committee is composed of Dr. Saal and Messrs. Roth and DuBrow, each of whom, in
accordance with the rules of the NASD, is independent of management and free
from any relationship that, in the opinion of the Board of Directors, would
interfere with the exercise of independent judgment as a committee member. The
Audit Committee met two times in fiscal 1997.
COMPENSATION COMMITTEE. The Compensation Committee determines the cash and
other incentive compensation, if any, to be paid to the Company's executive
officers. The Compensation Committee is also responsible for the administration
and award of stock options under the Company's stock option plans as well as the
award of non-qualified stock options and warrants issued pursuant to individual
stock option and warrant agreements. The Compensation Committee is composed of
Dr. Saal and Mr. Roth, each of whom is a "disinterested person" within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934.
The Compensation Committee reviews and approves each of the elements of the
executive compensation program of the Company and continually assesses the
effectiveness and competitiveness of the program. In addition, the Compensation
Committee administers the stock option program and other key provisions of the
executive compensation program and reviews with the Board of Directors all
aspects of compensation for the Company's executives.
The Company's executive compensation program has been designed to (i) align
executive compensation with shareholder interests; (ii) attract, retain and
motivate a highly competent executive team, (iii) link compensation to
individual and Company performance and (iv) achieve a balance between incentives
for short-term and long-term results. The Company positions base salaries at
competitive levels; however, an annual bonus plan has been established to reward
exceptional performance in amounts above competitive levels. The Company also
believes in providing rewards for the creation of stockholder value through the
use of stock options. The Company and the Compensation Committee believe that
this philosophy will motivate the Company's executives and thereby reinforce the
accomplishment of the Company's strategic and financial goals. The Compensation
Committee uses a variety of information services and compensation studies to
assist in determining competitive compensation in the industry in which the
Company operates and to recommend executive compensation strategy.
The Company does not presently anticipate that the compensation of any
of the above Named Executive Officers will exceed the $1,000,000
non-performance based compensation threshold of Section 162(m) of the
Internal Revenue Code. The Company and the Committee will continue to monitor
the compensation levels of the Named Executive Officers and determine the
appropriate response to Section 162(m) when and if necessary. It is the
Company's intention to bring the Company's stock option program into
compliance with Section 162(m), if necessary, to insure that stock option
grants are excluded from the compensation calculation for the purposes of
Section 162(m).
ITEM NO. 2 - SELECTION OF INDEPENDENT ACCOUNTANTS
The Board has selected the firm of Boros & Farrington APC as independent
accountants for ITEC for the fiscal year ending June 30, 1998, it being intended
that such selection would be proposed for ratification by the stockholders. The
proxyholders named in the accompanying form of proxy will vote the shares
represented by the proxy for ratification of the selection of Boros & Farrington
APC unless a contrary choice has been specified on the proxy. If the
stockholders do not ratify the selection of Boros & Farrington, APC, the
selection of independent accountants will be reconsidered by the Board of
Directors. The Board retains the power to select another firm as independent
accountants for ITEC to replace a firm whose selection was ratified by the
stockholders in the event the Board determines that a change would be in the
best interest of ITEC.
Representatives of Boros & Farrington APC are expected to be present at
the Meeting to respond to appropriate questions and to make a statement if they
desire to do so.
4
<PAGE>
ITEM NO. 3 - AMENDMENT OF BY-LAWS
GENERAL
The Board of Directors has approved an amendment to Article III of the
Company's By-laws to classify the Company's Board of Directors into three
classes of directors serving staggered three-year terms; and to make
technical amendments to the By-laws to adjust certain of the Company's
corporate governance procedures to accommodate the existence of a classified
board and staggered three-year terms for directors (the" Amendment").
DESCRIPTION OF PROPOSED AMENDMENT
The By-laws currently provide for a single class of directors. The
Amendment would classify the Board of Directors into three classes of
directors serving staggered terms and provide that the number of directors
may be increased or decreased from time to time, provided that in no event
may the number of directors be fewer than three. The Amendment provides that
in the event of any increase in the number of directors, the directors then
in office may select the class or classes to which the additional directors
shall be assigned, provided that the directors shall be distributed among the
three classes as nearly equally as possible.
The By-laws currently provide that the term of office for each director
is one year. If the Amendment is approved, the slate of six directors
proposed for election at the 1997 Annual Meeting would be elected to three
separate classes with assigned terms of from one to three years, as follows:
directors in Class I, consisting of two directors, would be elected for a one
year term expiring at the 1998 Annual Meeting; directors in Class II,
consisting of two directors, would be elected for two year terms expiring at
the 1999 Annual Meeting; and directors in Class III, consisting of two
directors, would be elected for three year terms expiring at the 2000 Annual
Meeting. Beginning with the 1998 Annual Meeting, only one class of directors
would be elected at each Annual Meeting, the directors so elected would
succeed the directors of the class whose term was then expiring and each
newly elected director would serve for a three-year term. If the Amendment is
not approved, the six nominees named herein will be nominated to serve for a
one year term ending at the 1998 Annual Meeting of Shareholders and until
their respective successors have been duly elected and qualified. See Item 1
- -- Election of Directors for information regarding the individual nominees for
director.
REASONS FOR THE AMENDMENT
The Board of Directors believes that a classified board would serve the
best interests of the Company and its shareholders by promoting the
continuity and stability of the Company and its business.
The Board also believes that a classified board would better enable the
Board to protect the interests of shareholders in the event that another
entity seeks to accumulate a substantial amount of the Company's Common Stock
in order to gain control of the Company or replace its management. A
corporate raider may accumulate a substantial equity position in a public
company as a prelude to proposing a takeover, a restructuring or a sale of
all or part of the company or other similar extraordinary corporate action.
Such actions are often undertaken without advance notice to or consultation
with the target company's board of directors or management. The purchaser may
have its own agenda and little or no concern for the interests of other
shareholders. In many cases, the purchaser seeks representation on the target
company's board in order to increase the likelihood that any such transaction
will be consummated. If the target company resists these efforts to obtain
board representation, the purchaser may initiate a proxy contest to have
itself or its nominees elected to the board in place of certain directors or
the entire board.
The Board believes that if such a purchaser acquired a significant or
controlling interest in the Company's Common Stock, the purchaser's ability to
promptly remove and replace the Board without the Board's consent would severely
curtail the directors' ability to negotiate effectively with the purchaser. The
threat of imminent removal also would deprive the Board of the time and
opportunity necessary to evaluate appropriately any takeover proposal, to obtain
and study alternative proposals and to help ensure that the best price would be
obtained in any transaction involving the Company. The Board believes that such
a sudden change in its membership could also be harmful to the continuity of the
Company's operations, deprive shareholders of maximum value for their shares and
jeopardize the rights of the minority shareholders.
Under a three-class structure, at least two annual shareholder meetings,
instead of one, would generally be required for such an acquirer to obtain
control of the Board of Directors by electing a majority of its
representatives to the Board. The Amendment is designed to make it more
time-consuming to obtain majority control of the Board without its consent,
and thus reduce the vulnerability of the Company to an unsolicited takeover
proposal or to an unsolicited proposal for the restructuring or sale of all
or part of the Company or to enter into any other
5
<PAGE>
extraordinary transaction. The Board believes that the Amendment will serve
to encourage any person intending to attempt such a takeover or other
transaction to negotiate with the Board, and that the Board therefore will be
better able to protect the interests of all of the Company's shareholders.
SUMMARY
The Amendment is intended to encourage persons seeking to acquire
control of the Company to initiate such transaction through arms-length
negotiations with the Company's Board of Directors. The Board is charged with
protecting the interests of the Company and its shareholders. The Amendment
can help prevent the bidder's use of coercive tactics, which can deprive the
Board of the opportunity to review and evaluate a take-over proposal, seek
alternative transactions, help protect the interests of the Company as an
on-going enterprise and, if the Company is to be acquired, obtain the most
beneficial terms for all shareholders. These provisions will better ensure
that neither the Board nor shareholders are coerced into a transaction that
is of primary benefit only to the acquirer. They are also intended to help
ensure that the Board will be given ample time to review and evaluate any
acquisition proposal and if appropriate, to seek alternative proposals, and
to arrive at a result which is in the best interests of the Company, its
shareholders and employees.
Approval of the Amendment will require the affirmative vote of a majority
of the outstanding shares of Common Stock entitled to vote at the Annual
Meeting.
EXECUTIVE COMPENSATION
The following table shows as to each of the executive officers who earned
more than $100,000 during the fiscal year ended June 30, 1997, information
concerning compensation for services rendered in all capacities to ITEC and its
subsidiaries during the previous three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION> LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
---------------------------------- ------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL OPTIONS/ ALL OTHER
POSITION YEAR SALARY BONUS COMPENSATION SARs(*) COMPENSATION (4)
- ------------------ ------ ------ ----- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Edward W. Savarese....... 1997 $268,500 $-- $ -- 150,000 $ 11,472
Director, Vice Chairman of 1996 242,082 -- 72,850(1) 1,675,000 4,710
the Board, and Chief 1995 225,000 -- 74,000(2) -- 4,290
Executive Officer
Brian Bonar............. 1997 173,391 -- -- 150,000
Director, President and Chief 1996 155,646 -- 12,000(2) 750,000
Operating Officer 1997 173,391 -- -- 350,000
All executive officers as a 1997 601,588 5,000 -- 440,000 11,472
group 1996 468,110 -- 94,159 2,578,300 4,710
(5 persons for 1997, 3 1995 415,347 -- 74,000 360,000 4,290
persons for 1996 and 1995)
</TABLE>
(1) This amount includes $42,500 of accrued but unpaid vacation benefits and
$30,350 of accrued but unpaid compensation due to Dr. Savarese which was
converted into unregistered shares of the Company's common stock.
(2) As of June 30, 1995, $2,811 remained unpaid to Dr. Savarese. The amount for
1995 includes $74,000 of accrued but unpaid vacation benefits used by Dr.
Savarese to exercise warrants to purchase stock.
(3) This amount includes $12,009 of accrued but unpaid vacation due to Mr.
Bonar which was converted into unregistered shares of the Company's common
stock.
(4) The amounts represent the total insurance premiums paid for term life
insurance for the benefit of Dr. Savarese for fiscal 1995 and 1996. For
1997, the policy was converted to a whole life policy.
6
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table provides information on options/SARs granted in fiscal
year 1997 to the named executive officers:
<TABLE>
<CAPTION>
NUMBER OF PERCEMT OF TOTAL
SECURITIES OPTIONS/SARs EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS/SARS EMPLOYEES IN PRICE
NAME GRANTED (#) FISCAL YEAR ($/SHARE) EXPIRATION DATE
---- ------------ ---------------- --------- ---------------
<S> <C> <C> <C> <C>
Edward W. Savarese 150,000(1) 24.61% $6.25 June 3, 2007
Brian Bonar 150,000(1) 24.61% $6.25 June 3, 2007
All executive officers
as a group (5 440,000 72.19%
persons)
</TABLE>
(1) Warrants for 150,000 shares were issued, of which 12,500 were exercisable
immediately and 3,125 become exercisable monthly over 44 months.
(2) Warrants for 440,000 shares were issued, of which 36,608 were exercisable
immediately and 9,168 become exercisable monthly over 44 months.
AGGREGATED OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table provides information on option/SAR exercises in fiscal
year 1997 by the named executive officers and the value of such officers'
unexercised options/SARs at June 30, 1997. Warrants to purchase ITEC common
stock are included as options.
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARs
NAME EXECISE(#) REALIZED($) OPTIONS/SARs AT FY-END($) AT FISCAL YEAR END ($)(1)
- ---- ----------- ----------- ------------------------- --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
Edward W. Savarese 30,000 $172,500 317,500 137,500 $1,391,563 --
Brian Bonar 49,500 255,750 82,000 160,500 317,094 $104,938
All executive officers
as a group (3 persons) 79,500 428,250 446,508 426,392 1,856,423 104,938
</TABLE>
(1) Includes stock options and warrants to purchase common stock of ITEC. At
fiscal year end June 30, 1997 the average of the bid and asked price of the
Company's common stock on that date as quoted by The Nasdaq SmallCap Market
was $5.44.
DIRECTOR COMPENSATION
As fees for service on ITEC's Board of Directors, the non-employee
directors of ITEC, Dr. Saal and Mr. Irwin, received in fiscal 1997 and will
receive in fiscal 1998 $4,500 and $2,500, respectively, per month plus travel
expenses. Employee directors receive no additional compensation for service on
the ITEC Board of Directors. In fiscal 1997, the Company paid $46,500 and
$30,000 to Dr. Saal and Mr. Roth, respectively, for director fees. At June 30,
1997, $9,000 of accrued directors fees were unpaid to Dr. Saal. In addition, the
Company calls upon Mr. Roth from time to time to provide special consulting
services on various corporate matters, for cash compensation. The Company and
Mr. Roth entered into a consulting agreement, expiring on April 1, 2002, for Mr.
Roth to continue to provide these services payable in monthly installments of
$9,000 through June 30, 1996 and $10,000 thereafter. The Company paid Mr. Roth
$120,000 in such consulting fees during fiscal 1997.
7
<PAGE>
EMPLOYMENT AGREEMENTS
ITEC entered into an employment agreement with Dr. Savarese, effective as
of July 1, 1990, calling for employment for five years. On February 25, 1994,
the agreement was amended to extend the term for an additional four years
through June 30, 2004. Minimum salaries under the amended agreement commencing
July 1, 1997 are $270,000 and $285,000.
ITEC also entered into an employment agreement with Mr. Bonar, effective
September 1, 1994, calling for employment through June 30, 2004, at an annual
base salary of $120,000 with a 3.5% cost of living increase each year commencing
July 1, 1995. In addition to the annual base salary, Mr. Bonar will be subject
to commission under a plan and quotas to be established at the start of each
fiscal year.
ITEC also entered into an employment agreement with Mr. Dubrow, calling
for employment through February 14, 2001, at an annual base salary of $100,000
per year.
ITEC also entered into an employment agreement with Mr. Kavanaugh, calling
for employment through February 14, 2001, at an annual base salary of $100,000
per year.
These employment agreements provide that, in the event of termination
without cause, whether or not occurring in the aftermath of a change in
corporate control, the Company shall pay the executive, within 72 hours after
his termination, his entire salary for the remainder of the entire term, and
shall also continue his fringe benefits for the remainder of the entire term.
In the event of the executive's death or permanent disability, his salary
shall continue during the entire term, and his stock options shall be
exercisable until two years after his death or permanent disability.
The executive shall be entitled to severance pay equal to one-half of his
fiscal 1999 annual salary if his employment terminates upon the scheduled
expiration of the employment agreement, or if he is terminated without cause
within six months before the scheduled expiration of the employment agreement.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1995, Dr. Savarese agreed to loan the Company a gross aggregate
amount of up to $100,000 with interest at the rate of 7% per year. As of June
30, 1997, borrowings under this Note aggregated $100,000.
In January 1996, the Company sold to its Chairman for $500,000 a five-year
warrant to purchase 2,000,000 unregistered shares of its common stock at the
rate of $5.00 per share. The warrant contains certain anti-dilution provisions
should the Company issue equity instruments at less than 50% of the exercise
price. Subsequently, in connection with a private placement with various private
investors of approximately $2.5 million, the exercise price of this warrant was
reduced to $3.00 per share in accordance with the warrant's anti-dilution
provision. During fiscal 1997 and 1996, warrants to purchase 684,667 shares were
exercised and as of June 30, 1997, warrants to purchase 1,315,333 shares were
outstanding.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and greater than ten
percent shareholders are required by regulations promulgated by the Securities
and Exchange Commission to furnish the Company with copies of all Section 16(a)
forms they file. With reference to transactions during fiscal 1997, to the
Company's knowledge, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten percent shareholders were complied
with.
8
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the nominees listed herein,
FOR ratification of the selection of independent certified public accountants
and FOR the Amendment of the Company's By-laws.
OTHER MATTERS
OTHER BUSINESS
So far as the management of ITEC is aware, no business other than that
described in this proxy statement will come before the Meeting. If any other
business properly comes before the Meeting, or any postponements or adjournments
thereof, the proxyholders named in the accompanying proxy will vote thereon the
shares represented by the proxy in accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Stockholder proposals intended to be presented at the 1998 Annual Meeting
(i.e., the meeting to be held following the end of fiscal year 1998) must be
received on or before June 30, 1998 by the Company at its office address set
forth on the first page of this proxy statement, and all the other conditions of
Rule 14a-8 under the Securities Exchange Act of 1934 must be satisfied, for such
proposals to be included in ITEC's proxy statement and form of proxy relating to
that meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Ralph R. Barry,
Secretary
San Diego, California
October 6, 1997
9
<PAGE>
IMAGING TECHNOLOGIES CORPORATION
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Harry J. Saal, Edward W. Savarese, Brian
Bonar, Irwin Roth, A. L. Dubrow, Frank Kavanaugh or any of them with full power
of substitution, proxies to vote at the annual Meeting of Stockholders of
Imaging Technologies Corporation (the "Company") to be held on November 6, 1997
at 2:00 p.m., local time, and at any adjournments thereof, hereby revoking any
proxies heretofore given, to vote all shares of common stock of the Company held
or owned by the undersigned as directed below, and in their discretion upon such
other matters as may come before the meeting.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
Please mark your
A /X/ votes as in this
example
FOR Withheld
1. Election of Directors / / / /
For, except vote withheld from the following nominee(s):
NOMINEES: Harry J. Saal,
Edward W. Savarese,
Brian Bonar,
Irwin Roth,
A. L. Dubrow,
Frank Kavanaugh
FOR Withheld Abstain
2. Approval of Boros & Farrington, APC as / / / / / /
Independent Accountants for fiscal 1998.
3. To amend the Company's By-laws, to allow for / / / / / /
staggered terms of the Company's Board of
Directors.
PLEASE DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED SELF-
ADDRESSED, POSTAGE PAID ENVELOPE.
Signature(s): Date:
---------------------- ---------------------- ---------------
Signature if Held
Jointly
Note: Please sign exactly as your name appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full titles as such.
