<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
HOWTEK, INC.
(Name of Registrant as Specified In Its Charter)
(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> 2
HOWTEK, INC.
21 PARK AVENUE
HUDSON, NH 03051
October 13, 1998
Dear Fellow Stockholders:
You are cordially invited to attend our Annual Meeting of Stockholders to
be held on Wednesday, November 4, 1998, at 3:30 p.m. at the company's offices at
21 Park Avenue, Hudson, New Hampshire 03051.
The Notice of Annual Meeting and Proxy Statement that follow describe the
business to be conducted at the meeting.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed Notice of
Annual Meeting and Proxy Statement, I urge you to complete, sign, date and
return your proxy card in the envelope provided. If the address on the
accompanying material is incorrect, please advise our Transfer Agent,
Continental Stock Transfer & Trust Company, in writing, at 2 Broadway, New York,
New York 10004.
Your vote is important. We will appreciate a prompt return of your signed
proxy card and hope to see you at the meeting.
Cordially,
Robert Howard
Chairman of the Board of Directors
<PAGE> 3
HOWTEK, INC.
21 PARK AVENUE
HUDSON, NEW HAMPSHIRE 03051
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 4, 1998
------------------------
To The Stockholders of HOWTEK, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Howtek, Inc. (the "Company") will be held on Wednesday, November 4,
1998, at 3:30 P.M. at the Company's offices located at 21 Park Avenue, Hudson,
New Hampshire 03051 for the following purposes:
1. To elect six (6) directors to hold office until the 1998 Annual Meeting
of Stockholders and until their respective successors have been duly elected and
qualified;
2. To ratify the selection of BDO Seidman, LLP as the Company's independent
auditors for the fiscal year ended December 31, 1998; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on October 2, 1998,
are entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
- -------------------------------------------------------------------------------
IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY. IF YOU DO NOT EXPECT TO
BE PRESENT AT THE MEETING, PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED
PROXY CARD, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. THE PROXY
MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF YOU ARE PRESENT AT THE
MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT TIME AND EXERCISE THE
RIGHT TO VOTE YOUR SHARES PERSONALLY.
- -------------------------------------------------------------------------------
By Order of the Board of Directors,
Connie Webster, Secretary
October 13, 1998
<PAGE> 4
HOWTEK, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 4, 1998
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of HOWTEK, INC. (the "Company") for use at the
Annual Meeting of Stockholders to be held on Wednesday, November 4, 1998,
including any adjournment or adjournments thereof, for the purposes set forth in
the accompanying Notice of Meeting. Management intends to mail this proxy
statement and the accompanying form of proxy to stockholders on or about October
13, 1998. The costs of soliciting proxies will be borne by the Company. It is
estimated that said costs will be nominal.
Proxies in the accompanying form, duly executed and returned to the
management of the Company and not revoked, will be voted at the Annual Meeting.
Any proxy given pursuant to such solicitation may be revoked by the stockholder
at any time prior to the voting of the proxy by a subsequently dated proxy, by
written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the meeting and voting in person.
VOTING SECURITIES
Only holders of the Company's common stock, par value $.01 per share, (the
"Common Stock") at the close of business on October 2, 1998, (the "Record Date")
are entitled to receive notice of and to vote at the Annual Meeting. As of the
Record Date, the Company had 10,760,206 shares of Common Stock outstanding. Each
share of Common Stock is entitled to one vote on all matters. No other class of
securities will be entitled to vote at the Annual Meeting. There are no
cumulative voting rights.
The six nominees receiving the greatest number of votes cast by the holders
of the Company's shares of Common Stock entitled to vote at the meeting will be
elected directors of the Company.
The affirmative vote of a majority of the votes cast at the meeting is
necessary for the ratification of the selection of independent auditors.
Shares represented by executed proxies received by the Company will be
counted for purposes of establishing a quorum, regardless of how or whether such
shares are voted on any specific proposal.
Votes cast in person or by proxy at the meeting will be tabulated by the
inspector of elections appointed for the meeting. In accordance with Delaware
law, abstentions and "broker non-votes" (i.e. proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares as to a matter with respect to
which the brokers or nominees do not have discretionary power to vote) will be
treated as present for purposes of determining the presence of a quorum. For
purposes of determining approval of a matter presented at the meeting,
abstentions will be deemed present and entitled to vote and will, therefore,
have the same legal effect as a vote "against" a matter presented at the
meeting. Broker non-votes will be deemed not entitled to vote on the subject
matter as to which the non-vote is indicated and will, therefore, have no legal
effect on the vote on that particular matter.
The address of the principal executive offices of the Company is 21 Park
Avenue, Hudson, New Hampshire 03051, Telephone No. (603) 882-5200.
Proxies which are executed but which do not contain any specific
instructions will be voted in favor of the proposals contained herein.
1
<PAGE> 5
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the Common
Stock owned on September 15, 1998, by (i) each person who is known to the
Company to own beneficially more than 5% of the outstanding shares of the
Company's Common Stock, (ii) each executive officer named in the Summary
Compensation Table below (excluding David Bothwell and Russell Leonard who each
resigned in January of 1998 and for whom the Company maintains no records of
stock ownership and are no longer reporting person under Section 16 of the
Securities and Exchange Act of 1934), (iii) each director of the Company, and
(iv) all current executive officers and directors as a group.
<TABLE>
<CAPTION>
NUMBER OF
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENTAGE
BENEFICIAL OWNER(1) OWNED (2) (3) OF CLASS
- ------------------- -------------- ----------
<S> <C> <C>
Robert Howard ............................. 1,901,982 (4) 17.67%
303 East 57th Street
New York, New York 10022
Dr. Lawrence Howard ....................... 709,462 6.59%
Donald S. Chapman ......................... 1,180,000 (5) 10.96%
W. Scott Parr ............................. 24,250 (6) *
Sheila Horwitz ............................ 36,500 (7) *
Richard Lehman ............................ 44,876 (8) *
Nat Rothenberg ............................ 33,000 (9) *
Harvey Teich .............................. 32,500 (10) *
Ivan Gati.................................. 27,500 (11) *
All current executive officers and
directors as a group (9 persons) .......... 4,017,486 (4) through (11) 36.88%
</TABLE>
- -----------------------------------
* Less than one percent.
1. The address of Messrs. Dr. Howard, Chapman, Parr, Gati, Lehman, Rothenberg
and Teich, and Ms. Horwitz is 21 Park Avenue, Hudson, New Hampshire 03051.
2. A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from September 15, 1998, upon the
exercise of options, warrants or rights; through the conversion of a
security; pursuant to the power to revoke a trust, discretionary account or
similar arrangement; or pursuant to the automatic termination of a trust,
discretionary account or similar arrangement. Each beneficial owner's
percentage ownership is determined by assuming that the options or other
rights to acquire beneficial ownership as described above, that are held by
such person (but not those held by any other person) and which are
exercisable within 60 days from September 15, 1998, have been exercised.
3. Unless otherwise noted, the Company believes that the persons referred to
in the table have sole voting and investment power with respect to all
shares reflected as beneficially owned by them.
4. Includes options to purchase 10,000 shares of the Company's Common Stock at
$1.72 per share. Also includes 23,000 shares owned by Mr. Howard's wife.
5. Includes 15,000 shares owned by Mrs. Chapman.
6. Includes options to purchase 1,125 shares of the Company's Common Stock at
$1.13 per share and 1,000 shares at $1.00 per share. Also includes 11,000
shares owned by Mr. Parr's wife.
2
<PAGE> 6
7. Includes options to purchase 10,000 shares of the Company's Common Stock at
$1.72 per share, and 12,500 shares at $1.50 per share.
8. Includes 2,000 shares owned by Mr. Lehman's wife. Also includes options to
purchase 20,500 shares of the Company's Common Stock at $1.72 per share,
16,376 shares at $1.13 per share and 1,376 shares at $1.00 per share.
9. Includes options to purchase 20,000 of the Company's Common Stock at $1.72
per share, and 12,500 shares at $1.50 per share.
10. Includes options to purchase 20,000 of the Company's Common Stock at $1.72
per share, and 12,500 shares at $1.50 per share.
11. Includes options to purchase 15,000 of the Company's Common Stock at $1.72
per share, and 12,500 shares at $1.50 per share.
3
<PAGE> 7
ELECTION OF DIRECTORS
The proxies granted by stockholders will be voted individually at the
Annual Meeting for the election of the persons listed below as directors of the
Company, to serve until the next annual meeting of stockholders and until their
successors are duly elected and qualified. In the event any of the nominees
listed below shall be unable to serve, it is intended that the proxy will be
voted for such other nominees as are designated by the Board of Directors. Each
of the persons named has indicated to the Board of Directors of the Company that
he or she will be available as a candidate.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
- ---- --- -------- --------
<S> <C> <C>
Robert Howard............. 75 Chairman of the Board, and Director 1984
W. Scott Parr............. 48 President, Chief Executive Officer
and Director 1998
Ivan Gati................. 51 Director 1989
Sheila Horwitz............ 62 Director 1996
Nat Rothenberg............ 68 Director 1988
Harvey Teich.............. 79 Director, Chairman Audit Committee 1988
</TABLE>
All persons listed above are currently serving a term of office as
directors which continues until the next annual meeting of stockholders.
Robert Howard, the founder and Chairman of the Board of Directors of the
Company, was the inventor of the first impact dot matrix printer. Mr. Howard was
Chief Executive Officer of the Company from its establishment in 1984 until
December of 1993. He was the founder, and from 1969 to April 1980 he served as
President and Chairman of the Board, of Centronics Data Computer Corp.
("Centronics"), a manufacturer of a variety of computer printers. He resigned
from Centronics' Board of Directors in 1983. From April 1980 until 1983, Mr.
Howard was principally engaged in the management of his investments. Commencing
in mid-1982, Mr. Howard, doing business as R.H. Research, developed the ink jet
technology upon which the Company was initially based. Mr. Howard contributed
this technology, without compensation, to the Company. Until September 8, 1998,
Mr. Howard served as Chairman of the Board of Presstek, Inc. ("Presstek"), a
public company which has developed proprietary imaging and consumables
technologies for the printing and graphic arts industries. He currently serves
as Chairman Emeritus of Presstek. In February 1994 Mr. Howard entered into a
settlement agreement in the form of a consent decree with the Securities and
Exchange Commission (the "Commission") in connection with the Commission's
investigation covering trading in the Company's Common Stock by an acquaintance
of Mr. Howard and a business associate of such acquaintance. Mr. Howard, without
admitting or denying the Commission's allegations of securities laws violations,
agreed to pay a fine and to the entry of a permanent injunction against future
violations of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of
1934.
W. Scott Parr joined the Company in January 1998, as President and Chief
Executive Officer. He was appointed to the Company's Board of Directors on
February 4, 1998. Prior to joining Howtek, Mr. Parr served as Divisional
Director and a member of the Board of Directors of SABi International Ventures,
Inc., responsible for restructuring and upgrading certain US companies owned by
foreign and venture investors. From 1995 to 1997, Mr. Parr was Chief Executive
Officer, General Counsel, and Director of Allied Logic Corporation, a start-up
venture specializing in proprietary molding and manufacturing technologies. From
1990 to 1995 Mr. Parr was General Counsel and a Director of LaserMaster
Technologies, Inc. (now ColorSpan, Inc.), a public company involved in the
development and commercialization of high resolution and wide format printing
technologies.
Ivan Gati has served as Chairman of Turner Management, Inc. since 1983.
Turner Management, Inc. is a vertically integrated real estate investment
company with offices located in New York, Texas and Tennessee, and whose
subsidiary companies provide property management and finance services. Mr. Gati
is a member of the Board of Directors of Universal Automation Systems, Inc.
4
<PAGE> 8
Sheila Horwitz is a Senior Vice President of Schroder Wertheim & Co., Inc.,
a broker dealer firm. She has an extensive background in the securities
brokerage industry, having worked at her current firm, formerly known as
Wertheim, Schroder & Co., since 1990. Previously Ms. Horwitz worked for
Oppenheimer & Co. from 1988 to 1990, and for L. F. Rothschild & Co. from 1978 to
1988, in similar capacities.
Nat Rothenberg is President of Micro Management Ltd. and has served in such
capacity since he founded that company in 1978. Micro Management Ltd. is a
supplier of computer hardware, software, training, service and support to the
real estate industry. Previously, he was President of Drum Research &
Development Corp., an affiliate of Fidelity Corp. of Virginia that provided
computer services to that company.
Harvey Teich is a practicing certified public accountant. On January 1,
1992, the accounting firm of Merman & Teich, where Mr. Teich had been a
principal for the past seventeen years, ceased to operate as a partnership. He
is a member of the New York and Florida State Societies for Certified Public
Accountants.
BOARD OF DIRECTOR MEETINGS AND COMMITTEES
During the last fiscal year, the Board of Directors held two meetings, the
Stock Option Committee of the Board of Directors held three meetings, the
Directors Incentive Plan Committee held one meeting and the Audit Committee held
one meeting. The Company does not have standing nominating or compensation
committees of the Board of Directors, or committees performing similar
functions.
The members of the Stock Option Committee during the last fiscal year
consisted of Ivan Gati and Sheila Horwitz and currently consists of the same
persons. The function of the Stock Option committee is to administer the
Company's 1993 Stock Option Plan. The Committee consists of not fewer than two
directors who are appointed by and serve at the pleasure of the Board of
Directors. Members of the Committee are not eligible to have participated in the
Plan during the prior twelve months or to be currently participating in the Plan
while serving as members.
The Directors Incentive Plan Committee consists of one member, Robert
Howard, who serves as Chairman. The purpose of this Committee is to administer
the Company's Directors Incentive Plan pursuant to which the Directors are
eligible to receive grants of stock options for shares of Company Common Stock
as compensation for serving on the Board of Directors.
The members of the Audit Committee during the last fiscal year consisted of
Harvey Teich, Chairman, Ivan Gati and Nat Rothenberg and currently consists of
the same persons. The Audit Committee provides an independent review and
advisory function for the independent auditors, the Board and the Company's
management with regard to financial reporting, internal controls and corporate
integrity.
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following table provides information on the compensation provided by
the Company during fiscal years 1997, 1996 and 1995 to the person serving as the
Company's Chief Executive Officer during fiscal 1997 and the Company's four most
highly compensated executive officers, serving at the end of the 1997 fiscal
year. Included in this list are only those executive officers whose total annual
salary and bonus exceeded $100,000 during the 1997 fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) OPTIONS(#)
- --------------------------- ---- --------- ----------
<S> <C> <C> <C>
David Bothwell *
Chief Executive Officer.................................... 1997 83,210 - 0 -
1996 151,303 61,585 (1)
1995 141,870 15,000 (2)
M. Russell Leonard **
Executive Vice President, Chief Operating Officer.......... 1997 130,674 10,000
1996 128,231 47,000 (1)
1995 122,858 20,000 (2)
Richard Lehman
Vice President, Engineering................................ 1997 113,698 5,000
1996 102,082 26,500 (1)(3)
1995 95,461 1,000 (2)
</TABLE>
- --------------
* Resigned as a director, President and Chief Executive Officer on January
20, 1998.
** Resigned as Executive Vice President, Chief Operating Officer on January
27, 1998.
1) Represents options to purchase Common Stock which had been granted in
previous years pursuant to the 1993 Stock Option Plan and which were
relinquished by the optionee and canceled by the Company in exchange for an
equal number of new options granted in 1996 and exercisable at $1.72 per
share. See Ten Year Option Repricings Table.
2) Options which were granted pursuant to the 1993 Stock Option Plan in 1995
and which were included in those options that were subsequently
relinquished by the optionee in 1996 in exchange for an equal number of new
options. See note 1 above and the Ten Year Option Repricings Table.
3) Includes options to purchase 8,000 shares of Common Stock granted in 1996.
Mr. Lehman subsequently exchanged these options in 1996, along with options
to purchase 18,500 shares of Common Stock granted in prior years, for an
equal number of new options with an exercise price of $1.72 per share. See
note 1 above and the Ten Year Repricings Table.
6
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
-------------------------- REALIZABLE VALUE AT
NUMBER OF PERCENT OF ASSUMED ANNUAL
SECURITIES TOTAL OPTIONS RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE OF PRICE APPRECIATION
OPTIONS EMPLOYEES BASE PRICE EXPIRATION FOR OPTION TERM
NAME GRANTED IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- ------- -------------- ----------- ----------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
M. Russell Leonard 10,000 8 1.00 12/16/2007 13,200 17,500
Richard Lehman 5,000 4 1.00 12/16/2007 6,600 8,750
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information on an aggregated basis regarding
each exercise of stock options during the Company's last completed fiscal year
by each of the named executive officers and the fiscal year-end value of
unexercised options.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END($) (1)
SHARES ---------- -------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED UNEXERCISABLE UNEXERCISABLE
- ---- ------------ -------- ------------- -------------
<S> <C> <C> <C> <C>
David Bothwell (2) 0 0 61,585/0 0/0
M. Russell Leonard (2) 0 0 47,000/10,000 0/4,380
Richard Lehman (2) 0 0 20,500/11,000 0/2,190
</TABLE>
- --------------
(1) Based upon the closing price of the Common Stock on December 31, 1997, of
$1.438 per share.
(2) Options granted pursuant to the Company's 1993 Stock Option Plan, as
amended.
7
<PAGE> 11
REPORT ON REPRICING OF OPTIONS
TEN YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET PRICE EXERCISE ORIGINAL
SECURITIES OF STOCK AT PRICE AT OPTION TERM
UNDERLYING TIME OF TIME OF REMAINING AT
OPTIONS REPRICING OR REPRICING OR NEW DATE OF
REPRICED OR AMENDMENT AMENDMENT EXERCISE REPRICING OR
NAME DATE AMENDED $ $ PRICE ($) AMENDMENT
- ---- ---- ------- ------------ ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
David R. Bothwell 04/09/96 11,585 3.63 4.50 3.63 5 years
04/09/96 10,000 3.63 10.25 3.63 6 years
04/09/96 10,000 3.63 7.00 3.63 9 years
04/09/96 5,000 3.63 7.00 3.63 9 years
04/09/96 25,000 3.63 6.50 3.63 7 years
12/20/96 61,585 1.72 3.63 1.72 9.5 years
M. Russell Leonard 04/09/96 11,000 3.63 4.50 3.63 5 years
04/09/96 6,000 3.63 10.25 3.63 6 years
04/09/96 10,000 3.63 8.75 3.63 7 years
04/09/96 5,000 3.63 7.00 3.63 9 years
04/09/96 10,000 3.63 7.63 3.63 9 years
04/09/96 5,000 3.63 7.00 3.63 9 years
12/20/96 47,000 1.72 3.63 1.72 9.5 years
Richard Lehman 04/09/96 4,500 3.63 4.50 3.63 5 years
04/09/96 3,000 3.63 5.25 3.63 5 years
04/09/96 5,000 3.63 8.75 3.63 7 years
04/09/96 5,000 3.63 6.50 3.63 7 years
04/09/96 1,000 3.63 7.00 3.63 9 years
12/20/96 18,500 1.72 3.63 1.72 9.5 years
12/20/96 8,000 1.72 2.38 1.72 9.7 years
</TABLE>
8
<PAGE> 12
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
There is no Compensation Committee or other committee of the Company's
Board of Directors performing similar functions. The person who performed the
equivalent function in 1997 was Robert Howard, Chairman of the Board under the
direction of the Board of Directors. David R. Bothwell, the Company's former
Chief Executive Officer and a director, participated in discussions with Mr.
Howard during the 1997 fiscal year in his capacity as an executive officer in
connection with executive officer compensation.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
There is no Compensation Committee of the Board of Directors or other
committee of the Board of Directors performing an equivalent function. As noted
above, executive compensation in 1997 was determined by the Company's Chairman,
Robert Howard, in consultation with David Bothwell, the Company's former Chief
Executive Officer. There is no formal compensation policy for either the Chief
Executive Officer or the other executive officers of the Company. Executive
compensation is based generally on performance and the Company's resources, but
not on specific objective criteria.
Compensation for executive officers consists of a combination of salary and
stock options. In 1997 the Company recorded a loss of $832,072 on revenues of
$7,874,813 as compared to a loss of $6,060,220 in 1996 on revenues of
$11,263,253. During 1997 there were no increases in salaries to executive
officers.
During 1997, Mr. Bothwell's compensation was $83,210 which was a decrease
from the $151,303 he received in 1996.
Robert Howard, Chairman Ivan Gati Nat Rothenberg
Sheila Horwitz W. Scott Parr Harvey Teich
9
<PAGE> 13
PERFORMANCE GRAPH
The following chart sets forth a line graph comparing the performance of
the Company's Common Stock, over the past five years. This graph assumes the
investment of $100 on December 31, 1992, in the Company's Common Stock, and
compares the performance with the NASDAQ Composite Index and the NASDAQ Computer
Manufacturer Index. Measurement points are at December 31 for each respective
year.
On July 13, 1995, the Company's Common Stock ceased trading on the American
Stock Exchange and commenced trading on the NASDAQ National Market.
Those companies which compete with the Company in its principal market,
image scanning, are either small subsidiaries or divisions of large United
States corporations or are foreign companies which are either not quoted on a
stock exchange or for which data is difficult to obtain. For this reason a more
generic index of NASDAQ technology stocks has been adopted. The Company pays no
dividends. The NASDAQ Composite Index and the NASDAQ Computer Manufacturer Index
reflect a cumulative total return based upon the reinvestment of dividends of
the stocks included in those indices.
[GRAPHIC OMITTED]
----------------------------------------------------------
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
- --------------------------------------------------------------------------------
HOWTEK $100.00 $ 43.55 $ 58.87 $ 44.35 $ 11.70 $ 9.28
NASDAQ Index $100.00 $114.80 $112.21 $158.70 $195.20 $239.53
NASDAQ Computer $100.00 $ 94.77 $104.08 $163.93 $220.12 $266.33
Manufacturer Index
- --------------------------------------------------------------------------------
10
<PAGE> 14
RELATED TRANSACTIONS
The Company has a Convertible Revolving Credit Promissory Note ("the
Convertible Note") and Revolving Loan and Security Agreement (the "Loan
Agreement") with Mr. Robert Howard, Chairman of the Company, under which Mr.
Howard has agreed to advance funds, or to provide guarantees of advances made by
third parties in an amount up to $8,000,000. The Loan Agreement expires January
4, 1999. Such outstanding advances are collateralized by substantially all of
the assets of the Company and bear interest at prime interest rate plus 2%. The
Convertible Note entitles Mr. Howard to convert outstanding advances into shares
of the Company's common stock at any time based on the outstanding closing
market price of the Company's common stock at the time each advance is made.
On April 25, 1997, The Company repaid the balance due, including interest,
on the Revolving Note and Security Agreement held by Mr. Howard in the amount of
$3,775,555. As of December 31, 1997 no moneys were owed and the Company had
$8,000,000 available for future borrowings under the Loan Agreement.
In February 1984, the Company entered into a lease of its Hudson, New
Hampshire facility with Mr. Howard, at an annual rent of $78,500, plus taxes and
operating expenses. The Company continues to renew this lease each year at the
same rent and the current lease term expires on September 30, 1999.
On May 12, 1998, the Company issued a total of 1,700,000 shares of its
$0.01 per share par value Common Stock ("Common Stock"), at a price of $1.00 per
share, in a private placement pursuant to Section 4(2) of the Securities Act of
1933, to Donald S. Chapman (1,000,000 shares), Robert Howard (400,000 shares)
and Dr. Lawrence Howard (300,000 shares). Mr. Robert Howard is Chairman of the
Company and a principal stockholder and Dr. Howard is a principal stockholder of
the Company and Mr. Howard's son.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman, LLP has audited and reported upon the financial statements of
the Company for the fiscal year ended December 31, 1997, and has been selected
by the Board of Directors to examine and report upon the financial statements of
the Company for the fiscal year ending December 31, 1998. The Board of Directors
recommends to the stockholders that they ratify this selection. BDO Seidman, LLP
has no direct or indirect interest in the Company or any affiliate of the
Company. A representative of BDO Seidman, LLP is expected to be present at the
Annual Meeting with the opportunity to make a statement, if such person desires
to do so, and is expected to be available to respond to appropriate questions.
DEADLINE FOR SUBMISSION OF
1999 STOCKHOLDER PROPOSALS AND NOMINATIONS
Stockholders who wish to present proposals appropriate for consideration at
the Company's Annual Meeting of Stockholders to be held in 1999, must submit the
proposals in proper form to the Company at its address set forth on the first
page of this proxy statement not later than December 31, 1998 in order for the
proposals to be considered for inclusion in the Company's proxy statement and
form of proxy relating to such Annual Meeting.
11
<PAGE> 15
OTHER INFORMATION
Proxies for the Annual Meeting will be solicited by mail and through
brokerage institutions and all expenses involved, including printing and
postage, will be paid by the Company.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER
31, 1997, IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF RECORD AS OF THE
CLOSE OF BUSINESS ON OCTOBER 2, 1998. ADDITIONAL COPIES OF THE ANNUAL REPORT
WILL BE PROVIDED FOR A NOMINAL CHARGE UPON WRITTEN REQUEST TO:
HOWTEK, INC.
21 PARK AVENUE
HUDSON, NEW HAMPSHIRE 03051
ATTENTION: MS. CONNIE WEBSTER
IN ADDITION, COPIES OF ANY EXHIBITS TO THE ANNUAL REPORT WILL BE PROVIDED FOR A
NOMINAL CHARGE TO STOCKHOLDERS WHO MAKE A WRITTEN REQUEST TO THE COMPANY AT THE
ABOVE ADDRESS.
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
stockholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board of
Directors,
ROBERT HOWARD
Chairman of the Board of Directors
October 13, 1998
12
<PAGE> 16
HOWTEK, INC.
21 PARK AVENUE
HUDSON, NEW HAMPSHIRE 03051
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD NOVEMBER 4, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT HOWARD and W. SCOTT PARR, and each of
them, Proxies, with full power of substitution in each of them, in the name,
place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of Howtek, Inc. on Wednesday, November 4, 1998, at 3:30 o'clock in
the afternoon, or at any adjournment or adjournments thereof, according to the
number of votes that the undersigned would be entitled to vote if personally
present, upon the following matters:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below (except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
Robert Howard, W. Scott Parr, Ivan Gati, Sheila Horwitz, Nat Rothenberg and
Harvey Teich.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name in the space below.)
- --------------------------------------------------------------------------------
2. Ratification of appointment of BDO Seidman, LLP independent certified public
accountants, as auditors for the Corporation for the fiscal year ending
December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be signed on reverse)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF
NO INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND THE RATIFICATION OF THE APPOINTMENT OF THE AUDITORS LISTED ABOVE.
Dated:__________________, 1998
------------------------------
Signature
------------------------------
Signature (if held jointly)
Please sign exactly as name
appears hereon. When shares
are held by joint tenants,
both should sign. When signing
as attorney, executor,
administrator, trustee or
guardian, please give full
title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
