<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (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 Rule 14a-11(c) or Rule 14a-12
OIS OPTICAL IMAGING SYSTEMS, INC.
- -------------------------------------------------------------------------------
(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)(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
OIS OPTICAL IMAGING SYSTEMS, INC.
47050 Five Mile Road
Northville, Michigan 48167
Dear Stockholder:
The Annual Meeting of the Stockholders of OIS Optical Imaging Systems,
Inc. will be held at 10:00 a.m. on November 20, 1997, at The Hotel Baronette,
27790 Novi Road, Novi, Michigan 48377, in the Claridge/Dorchester meeting room.
You are cordially invited to attend.
At the Annual Meeting, Stockholders will vote to elect directors and vote
on the approval of independent accountants.
The OIS Annual Report to Stockholders and the Proxy Statement for the
Annual Meeting are enclosed. Whether or not you will be able to attend the
Annual Meeting, please complete, sign, date and return the enclosed Proxy Card
in the accompanying postage paid envelope so that your shares will be voted at
the meeting.
Sincerely yours,
Rex Tapp
President and Chief Executive Officer
Charles C. Wilson
Executive Vice President and
Chief Financial Officer
<PAGE> 3
OIS OPTICAL IMAGING SYSTEMS, INC.
____________________________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
____________________________________________________
Northville, Michigan
October 3, 1997
To the Stockholders of OIS OPTICAL IMAGING SYSTEMS, INC.:
NOTICE is hereby given that the Annual Meeting of Stockholders of OIS
Optical Imaging Systems, Inc., a Delaware corporation, will be held on
Thursday, November 20, 1997, at 10:00 a.m., local time, at The Hotel Baronette,
27790 Novi Road, Novi, Michigan 48377, in the Claridge/Dorchester meeting room,
for the following purposes:
1. To elect eight directors to hold office until the next Annual
Meeting of Stockholders or until their successors are elected and
qualified;
2. To approve the appointment of Arthur Andersen LLP as independent public
accountants for the fiscal year ending June 30, 1998; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment.
Stockholders of record at the close of business on September 18, 1997 (the
"Record Date") are entitled to notice of, and to vote at, the Annual Meeting
and any adjournments or postponements thereof.
The OIS Annual Report to Stockholders for the year ended June 30, 1997 is
enclosed.
THE BUSINESS OF THIS MEETING IS VERY IMPORTANT. PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING POSTAGE PAID
ENVELOPE. You are invited to attend the meeting where you may vote in person
even though you have already signed and returned a Proxy Card.
Sincerely yours,
Robert H. Gorlin
Corporate Secretary
<PAGE> 4
OIS OPTICAL IMAGING SYSTEMS, INC.
47050 FIVE MILE ROAD
NORTHVILLE, MICHIGAN 48167
__________________________________________
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 20, 1997
The enclosed Proxy is solicited on behalf of the Board of Directors of OIS
Optical Imaging Systems, Inc. ("OIS") for use at the Annual Meeting of
Stockholders ("Annual Meeting" or "Meeting") to be held on Thursday, November
20, 1997, at 10:00 a.m., local time, or at any adjournments or postponements
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting of Stockholders. The Meeting will be held at the above time in
the Claridge/Dorchester meeting room at The Hotel Baronette, 27790 Novi Road,
Novi, Michigan 48377.
Voting Rights of Stockholders and Voting of Proxies
As of the close of business on September 18, 1997 (the "Record Date"),
there were outstanding 97,468,576 shares of OIS Common Stock, $0.01 par value
("Common Stock") and 73,637 shares of OIS Series B Cumulative Preferred Stock
("Series B Preferred Stock"). Holders of record of the Common Stock on the
Record Date are entitled to vote at the Meeting and are entitled to one vote
for each share of Common Stock held on the Record Date. Holders of record of
the Series B Preferred Stock on the Record Date are entitled to vote at the
Meeting and are entitled to 350 votes for each share of Series B Preferred
Stock held on the Record Date. The holders of a majority of the shares
entitled to vote, present in person or represented by proxy, will constitute a
quorum for the transaction of business at the Meeting. Proxies will be voted
in accordance with the directions of the stockholders. Unless a stockholder
specifies otherwise, the proxy will be voted:
FOR: each of the eight nominees for director;
FOR: the appointment of Arthur Andersen LLP as independent public accountants;
and
by the proxy in his or their discretion on any other matters to come before
the Meeting.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of OIS a
written notice of revocation or a duly executed proxy bearing a later date or
by attending the Meeting and voting in person. The mailing address of OIS is
47050 Five Mile Road, Northville, Michigan 48167.
-1-
<PAGE> 5
Expenses and Methods of Solicitation
It is estimated that these proxy solicitation materials will be mailed to
stockholders of record on or about October 3, 1997. The cost of this
solicitation will be borne by OIS. In addition to solicitation by mail,
directors, officers and other employees of OIS may solicit proxies personally
or by telephone or other means of communication. Arrangements may be made with
brokerage houses and other custodians, nominees and fiduciaries to forward, at
the expense of OIS, copies of the proxy materials to the beneficial owners of
shares held of record by such persons. OIS has retained Morrow & Co., Inc. to
aid in the solicitation of proxies, which company will receive a fee of $3,000
plus reimbursement of expenses, all of which will be borne by OIS.
Other Information
OIS's Annual Report to Stockholders for the year ended June 30, 1997
accompanies this Proxy Statement.
OIS WILL PROVIDE TO ANY STOCKHOLDER THE OIS ANNUAL REPORT ON FORM 10-K FOR
THE YEAR ENDED JUNE 30, 1997, WITHOUT CHARGE, AND THE EXHIBITS TO ITS ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 30, 1997, AT A COPYING CHARGE OF
TWENTY CENTS PER PAGE, UPON WRITTEN REQUEST TO OIS OPTICAL IMAGING SYSTEMS,
INC., 47050 FIVE MILE ROAD, NORTHVILLE, MICHIGAN 48167, ATTENTION: STOCKHOLDER
RELATIONS, (313) 454 - 5560.
SUMMARY OF PROPOSALS
Election of Directors
Currently, the OIS By-laws permit the Board of Directors (the "Board") to
consist of "one or more members." The Board of Directors has nominated eight
persons for election as directors, five of whom are designees of Guardian
Industries Corp.
Appointment of Independent Public Accountants
The stockholders will also be asked to approve the appointment of Arthur
Andersen LLP as independent public accountants for the fiscal year ending June
30, 1998.
-2-
<PAGE> 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows, as of September 18, 1997, the beneficial
ownership of shares of OIS Common Stock and Series B Preferred Stock by each
person (i) known to OIS to be the beneficial owner of more than five percent
(5%) of the voting securities of OIS (ii) each director, (iii) each executive
officer named in the Summary Compensation Table and (iv) executive officers and
directors as a group. All shares are owned directly except as otherwise
indicated.
<TABLE>
<CAPTION>
Common Stock Series B Preferred Stock
----------------------------------- ------------------------------------------
Amount and Percent Amount and Percent
Nature of of Nature of of
Name and Address of Owner Beneficial Ownership (1) Class (2) Beneficial Owner Class
- ------------------------- -------------------- ----- ---------------- -------
<S> <C> <C> <C> <C>
GD Investments Corp. 77,562,451 79.6 % 73,637 100 %
2300 Harmon Road
Auburn Hills, MI 48326
William Davidson 78,562,451(3) 80.6 % 73,637(4) 100 %
2300 Harmon Road
Auburn Hills, MI 48326
Vincent D. Cannella 40,400(5) (14) -- --
Ralph J. Gerson 20,108(6) (14) -- --
Jeffrey A. Knight 310,000(7) (14) -- --
C.K. Prahalad 10,000(8) (14) -- --
Rex Tapp 111,400(9) (14) -- --
Robert M. Teeter 20,000(10) (14) -- --
Scott V. Thomsen 75,000(11) (14) -- --
Charles C. Wilson 96,900(12) (14) -- --
Mark S. Wrighton 11,000(13) (14) -- --
Peter Joel C. Young 41,000 (14) -- --
All executive officers and directors
as a group (10 persons) 660,808 (14) -- --
</TABLE>
-3-
<PAGE> 7
Footnotes to the table of security ownership:
(1) Under the rules of the Securities and Exchange Commission, a person is
deemed to be the beneficial owner of a security if that person has the
right to acquire beneficial ownership of such security within 60 days,
whether through the exercise of options or warrants or through the
conversion of another security.
(2) Under the rules of the Securities and Exchange Commission, shares of OIS
Common Stock issuable upon exercise of options which are deemed to be
beneficially owned by the holder thereof (See Note (1) above) are deemed
to be outstanding for the purpose of computing the percentage of
outstanding securities of the class owned by such person (but are not
deemed to be outstanding for the purpose of computing the percentage of
the class owned by any other person). The calculation of percent of class
is computed, in accordance with the Rules of the Securities and Exchange
Commission, on the basis of the number of shares actually outstanding on
September 18, 1997, plus the number of shares subject to options that
could be exercised within 60 days.
(3) Of these shares, William Davidson owns 1,000,000 shares directly and is
deemed to beneficially own all of the shares owned directly by GD
Investments Corp.
(4) Of these shares, William Davidson is deemed to beneficially own all
shares owned directly by GD Investments Corp.
(5) Of these shares, 11,750 represent exercisable options. In addition, 50
shares are owned by Mr. Canella's children.
(6) Of these shares, 4,608 are owned by Mr. Gerson's children.
(7) Of these shares, 307,000 shares are owned indirectly by Jeffrey A. Knight
as a general partner of a limited partnership which has a 0.5% interest in
OIS. Mr. Knight disclaims beneficial ownership of such shares held by the
partnership.
(8) These 10,000 shares represent exercisable options.
(9) Of these shares, 40,000 represent exercisable options.
(10) Of these shares, 10,000 represent exercisable options.
(11) Of these shares, 10,000 represent exercisable options.
(12) Of these shares, 29,500 represent exercisable options.
(13) Of these shares, 10,000 represent exercisable options.
(14) Less than 1%.
-4-
<PAGE> 8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Exchange and Purchase of Series B Preferred Stock.
On October 29, 1996, the Board of Directors of OIS authorized the issuance
of 100,000 shares of a Series B Cumulative Preferred Stock, par value $0.01
(the "Series B Preferred Stock"). The Series B Preferred Stock is not
convertible into Common Stock or any other security of OIS. However, each
share of Series B Preferred Stock entitles the holder thereof to 350 votes on
every matter submitted to a vote of the shareholders of OIS. The Series B
Preferred Stock bears a cumulative dividend at a rate of 8% for three years
from the date of issuance and at an increasing floating rate thereafter
(subject to a cap of 16.5% per year). The purchaser of shares of Series B
Preferred Stock cannot cause their redemption, and OIS can redeem shares of
Series B Preferred Stock only upon a vote of the directors of OIS that are
independent of the owner or owners of the shares of Series B Preferred Stock
being redeemed. The foregoing description of the rights and preferences of the
Series B Preferred Stock is qualified in its entirety by reference to the
express provisions of the resolution adopted by the Board of Directors of OIS
setting forth the rights and preferences of the Series B Preferred Stock, a
copy of which Resolution was attached as Exhibit 4.1 to the Form 8-K filed by
OIS on November 5, 1996, which is incorporated herein by reference.
On October 30, 1996, OIS issued 38,137 shares of Series B Preferred Stock
to Guardian Industries Corp. ("Guardian") in exchange for the 35,000 shares of
Series A Preferred Cumulative Preferred Stock of OIS previously acquired by
Guardian. This exchange was approved by the independent members of the Board of
Directors of OIS.
On October 31, 1996, GD Investments Corp., a Delaware corporation and
subsidiary of Guardian ("GDIC"), purchased 21,000 shares of Series B Preferred
Stock from OIS for $1,000 per share. Subsequently during Fiscal 1997, GDIC
purchased an additional 14,500 shares of Series B Preferred Stock from OIS for
$1,000 per share. As of September 18, 1997, GDIC's purchases of Series B
Preferred Stock totalled $35,500,000. These investments were approved by the
independent members of the Board of Directors of OIS and are accounted for as
equity by OIS.
Tax Consolidation and Tax Sharing Agreement
On October 31, 1996, OIS became eligible, and has elected, to become a
member of an affiliated group under Section 1504(a) of the Internal Revenue
Code of 1986, as amended, with Guardian, GDIC and Guardian's other qualifying
subsidiaries (the "Affiliated Group"). As a member of the Affiliated Group,
OIS's tax attributes generated after October 31, 1996, will be included in the
single consolidated federal income tax return filed by the Affiliated Group.
Net operating losses of OIS generated prior to October 31, 1996, will only be
eligible to offset future taxable income of OIS and cannot be used to offset
the income of other companies included in the Affiliated Group.
In order to provide funding for future operations of OIS, OIS has entered
into a Tax Sharing Agreement with Guardian effective November 1, 1996. Under
the terms of the Tax Sharing Agreement, Guardian will compensate OIS for the
value of OIS's losses and credits which are utilized by the Affiliated Group by
making payments to OIS in an amount equal to the difference between (i) the
liability reflected on the Affiliated Group's consolidated federal income tax
return with the inclusion of OIS and (ii) the liability without the inclusion
of OIS. The foregoing description of the terms of the Tax Sharing Agreement is
qualified in its entirety by reference to the express terms of the Tax Sharing
Agreement, a copy of which Agreement was attached as Exhibit 99 to the Form 8-K
filed by OIS on November 5, 1996, which is incorporated herein by reference.
-5-
<PAGE> 9
Loans by Guardian and GDIC
Approximately $18,900,000 of the proceeds from the sale of Series B
Preferred Stock to GDIC on October 31, 1996, were used by OIS to repay loans
previously made by Guardian to OIS. OIS no longer has any outstanding loans
from Guardian. As of September 19, 1997, GDIC has loaned OIS $9,000,000.
These loans bear interest at an annual rate of 6%, and all interest and
principal is due and payable on written demand of GDIC.
Services Agreement
Pursuant to a Services Agreement, Guardian provides certain
administrative, accounting, technical, travel arrangement, management and tax
services to OIS for $50,000 per year and provides legal services to OIS through
its corporate legal department at an hourly rate of $100.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Policies Applicable to Compensation of Executive Officers
The compensation of executive officers other than the President and Chief
Executive Officer, Rex Tapp, is determined by Mr. Tapp in consultation with the
Compensation Committee. Before the end of each fiscal year and again before
bonuses are determined, Mr. Tapp meets with the Compensation Committee and
discusses the overall compensation situation of the Company, the range of
increases he proposes to implement and any special circumstances present. Mr.
Tapp makes compensation determinations for executive officers on a subjective
basis, taking into account the financial performance (i.e., the ongoing losses)
of OIS, the performance reviews and individual compensation history of each
individual executive officer, the range of comparable salaries from other
companies in OIS's industry and geographic region as well as other factors that
he considers relevant. The information on comparable salaries is drawn from
general published survey information and does not relate specifically to the
companies included in the industry line of the performance graph. OIS's
compensation of executive officers is, on average, in the median range of
surveyed companies. No one factor is accorded more weight than any other.
Although OIS's performance is taken into consideration, there is no formal or
formulaic relationship between OIS's performance and executive compensation and
no performance targets have been set. OIS feels that this relatively informal
method of determining executive compensation is appropriate given the current
stage of development of OIS's business.
Salary adjustments for executive officers are made effective as of July 1
of each year and bonuses are awarded each December. Bonuses for executive
officers consist solely of awards of stock options and restricted stock.
Restricted stock is required to be forfeited if the officer's employment
terminates within a specified period after the award. The number of stock
options and shares of restricted stock awarded to each executive officer is
determined as part of the overall compensation process described above. Awards
of stock options and restricted stock made in prior years are not taken into
account when determining grants to be made in the current year. Mr. Tapp
determined the levels of salary increases and bonuses on a subjective basis
taking into account all of the factors discussed above. Awards of restricted
stock and stock options are made by the Stock Option Committee of the Board
after its receipt of recommendations from Mr. Tapp.
-6-
<PAGE> 10
The salary adjustments and bonuses were lower than they would have been
had OIS not incurred significant losses.
No executive officer receives annual compensation that approaches $1
million, and OIS does not anticipate compensation approaching $1 million in the
foreseeable future. Accordingly, the Compensation Committee has not considered
the recent change in the tax laws which made certain non-performance based
compensation to executives of public companies in excess of $1 million
non-deductible.
CEO Compensation
Mr. Tapp's compensation is determined by the Compensation Committee. The
Compensation Committee has determined to apply OIS's informal method of
compensation determination to Mr. Tapp. The Chairman of the Board, Ralph J.
Gerson, will make compensation recommendations to the Compensation Committee
before the July salary adjustment and the December bonus determination.
Mr. Gerson will make his recommendations on a subjective basis taking into
account the financial performance (i.e., the ongoing losses) of OIS, his
subjective view of Mr. Tapp's job performance, Mr. Tapp's compensation history,
OIS's financial performance and other factors that he considers relevant. In
addition, the Compensation Committee has undertaken to review periodically
information concerning the compensation of chief executive officers at similar
companies.
The Compensation Committee does not expect to accord any one factor more
weight than any other. Although OIS's performance will be taken into account,
and Mr. Tapp's compensation is lower than it would be if OIS had not incurred
significant losses, the Compensation Committee will not apply any formal or
formulaic relationship between OIS's performance and Mr. Tapp's compensation
and no formal targets have been set. The Compensation Committee believes that
this relatively informal method of determining the compensation of the chief
executive officer is appropriate given the current stage of development of
OIS's business.
COMPENSATION COMMITTEE
Ralph J. Gerson
Mark S. Wrighton
-7-
<PAGE> 11
EXECUTIVE COMPENSATION
The following table shows compensation paid, with respect to the three
most recent fiscal years, to the Chief Executive Officer and the three other
executive officers of OIS serving at the end of fiscal 1997 (collectively, the
"Named Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
---------------------------- --------------------------------
Awards Payouts
---------------------- --------
Other All
Annual Restricted Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Awards(1) SARs Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Rex Tapp, CEO & 1997 $190,050 --- (3) --- 20,000
President(2) 1996 $181,000 --- (3) $225,000(4) 50,000 $23,000(8)
1995 $181,512 $35,992 (3) $ 20,150 15,000 $23,000(8)
Charles C. Wilson, 1997 $150,500 --- $ 70,313(5) 12,500 $12,685(8)
Executive Vice 1996 $144,500 --- $184,500 35,000 $12,685(8)
President & CFO 1995 $131,365 --- $ 18,200 12,000 $12,685(8)
Scott V. Thomsen, 1997 $136,154 --- $ 70,313(6) 12,500 $ 6,500(8)
Vice President 1996 $109,692 --- $202,500 20,000 $ 6,500(8)
Engineering and Fab 1995 $ 69,230 --- --- --- $ 3,532(8)
Operations
Vincent D. Cannella, 1997 $113,230 --- $ 11,250(7) 2,000 $10,234(8)
Vice President 1996 $105,750 --- $ 31,500 3,500 $10,234(8)
1995 $101,368 $5,250 $ 8,450 10,000 $10,432(8)
</TABLE>
-8-
<PAGE> 12
Footnotes to the table of compensation of Named Officers:
(1) Represents the market value of restricted stock on the date of grant.
(2) Until July 1, 1995, Mr. Tapp was an employee of Guardian, and this table
shows amounts paid to Mr. Tapp by Guardian, except for restricted stock,
which was granted by OIS. Under the Guardian-OIS Services Agreement, OIS
paid $80,000 to Guardian for Mr. Tapp's services during fiscal 1994 and
1995.
(3) The aggregate amount of other compensation is less than 10% of the total
of salary and bonus.
(4) As of June 30, 1997, Mr. Tapp held 53,100 restricted shares with a market
value of $129,431. Of these 53,100 restricted shares, Mr. Tapp will
forfeit (a) the 50,000 shares granted on January 17, 1996, if he does not
remain an employee through October 13, 1998, and (b) the 3,100 shares
granted on January 13, 1995, if he does not remain an employee through
October 13, 1997.
(5) As of June 30, 1997, Mr. Wilson held 62,800 restricted shares with a
market value of $153,075. Of these 62,800 restricted shares, Mr. Wilson
will forfeit (a) the 25,000 shares granted on February 18, 1997, if he
does not remain an employee through October 13, 1999, (b) the 35,000
shares granted on January 17, 1996, if he does not remain an employee
through October 13, 1999, and (c) the 2,800 shares granted on January 13,
1995, if he does not remain an employee through October 13, 1997.
(6) As of June 30, 1997, Mr. Thomsen held 65,000 restricted shares with a
market value of $158,438. Of theses 65,000 shares, Mr. Thomsen will
forfeit (a) the 25,000 shares granted on February 18, 1997, if he does not
remain an employee through October 13, 1999, and (b) the 40,000 shares
granted on January 17, 1996, if he does not remain an employee through
October 13, 1998 (with respect to 35,000 shares) and October 13, 1997
(with respect to 5,000 shares).
(7) As of June 30, 1997 Mr. Cannella, held 12,300 restricted shares with a
market value of $29,981. Of these 12,300 restricted shares, Mr. Cannella
will forfeit (a) the 4,000 shares granted on February 18, 1997, if he does
not remain an employee through October 13, 1999, (b) the 7,000 shares
granted on January 17, 1996 if he does not remain an employee through
October 13, 1998, and (c) the 1,300 shares granted on January 13, 1995, if
he does not remain an employee through October 13, 1997.
(8) Amount is for the cost of premiums paid for split-dollar life insurance
provided by OIS.
-9-
<PAGE> 13
The following tables show grants, exercises and fiscal year-end values of stock
options for the Named Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value
At Assumed Annual
Rates of Stock Option
Individual Grants Appreciation for Option Term
- ------------------------------------------------------------------------------------------------- ----------------------------
Number of % of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees or Base Expiration
Name Granted (#)(1) In Fiscal Year Price ($/Sh)(2) Date 5% ($) 10% ($)
- ---- -------------- -------------- --------------- ---------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Rex Tapp,
President & CEO 20,000 21.3 $2.8125 February 17, 2007 $35,375 $89,648
Charles C. Wilson,
Executive Vice
President & CFO 12,500 13.3 $2.8125 February 17, 2007 $22,110 $56,030
Scott V. Thomsen,
Vice President
Engineering and Fab
Operations 12,500 13.3 $2.8125 February 17, 2007 $22,110 $56,030
Vincent D. Cannella,
Vice President 2,000 2.1 $2.8125 February 17, 2007 $ 3,538 $ 8,965
</TABLE>
Footnotes to table of option grants for last fiscal year:
(1) These options become exercisable with respect to 50% of the underlying
shares on October 13, 1998 and 1999, respectively.
(2) These options were granted at the market price of the shares on the date
of grant.
-10-
<PAGE> 14
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
at FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise(#) Value Realized ($) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Rex Tapp, President &
CEO -0- -0- 15,000/70,000 -0-
Charles C. Wilson, Executive
Vice President & CFO -0- -0- 12,000/37,500 -0-
Vincent D. Cannella,
Vice President 29,000 4,500 10,000/5,500 -0-
Scott V. Thomsen,
Vice President Engineering
and Fab Operations -0- -0- 0/32,500 -0-
</TABLE>
-11-
<PAGE> 15
The following graph compares the five-year cumulative total return to the
shareholders of OIS to Standard and Poor's Midcap 400 Index and Standard and
Poor's Electronics (Semiconductor) Index.
[LINE GRAPH]
TOTAL SHAREHOLDER RETURNS
(DIVIDENDS REINVESTED)
<TABLE>
<CAPTION>
COMPANY / INDEX JUN93 JUN94 JUN95 JUN96 JUN97
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OIS OPTICAL IMAGING SYSTEMS 54.96 183.94 -6.82 -40.25 -20.41
S&P MIDCAP 400 INDEX 22.69 -0.06 22.34 21.58 23.33
ELECTRONICS(SEMICNDCTR)-500 109.47 5.83 88.70 -21.18 87.08
<CAPTION>
BASE
PERIOD
COMPANY / INDEX JUN92 JUN93 JUN94 JUN95 JUN96 JUN97
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OIS OPTICAL IMAGING SYSTEMS 100 154.96 440.96 410.00 224.96 194.96
S&P MIDCAP 400 INDEX 100 122.69 122.62 150.01 182.39 224.94
ELECTRONICS(SEMICNDCTR)-500 100 209.47 209.47 418.31 329.71 616.83
</TABLE>
-12-
<PAGE> 16
PROPOSAL I
ELECTION OF DIRECTORS
The Board proposes that the persons named below be elected as directors of
OIS to hold office until the next Annual Meeting of Stockholders and until
their successors are duly elected and qualified. Unless otherwise directed by
a stockholder's proxy, the persons named as proxy voters in the accompanying
proxy will vote for the nominees named below. If any of such nominees become
unavailable, which is not anticipated, the Board in its discretion may
designate substitute nominees, in which event the enclosed proxy will be voted
for such substitute nominee. A vacancy unfilled at the Annual Meeting or a
vacancy created thereafter can be filled by the Board. Proxies cannot be voted
for a greater number of persons than the number of nominees named. Provided a
quorum is present, the affirmative vote of a majority of the shares of OIS
present in person or proxy is required to elect each director.
The following information is furnished with respect to each nominee for
election as a director:
<TABLE>
<CAPTION>
Position Held Year First Became
Name Age with OIS a Director
- ---- --- ------------- -----------------
<S> <C> <C> <C>
Rex Tapp 47 President, Chief Executive 1991
Officer & Director
Charles C. Wilson 45 Executive Vice President, 1991
Chief Financial Officer &
Director
Ralph J. Gerson 47 Chairman & Director 1992
Jeffrey A. Knight 46 Director 1991
C. K. Prahalad 56 Director 1995
Robert M. Teeter 58 Director 1995
Mark S. Wrighton 48 Director 1995
Peter Joel C. Young 37 Director 1991
</TABLE>
Rex Tapp was first elected to the Board of Directors in November 1991 and
is a Guardian designee. Mr. Tapp has been the President of OIS since December
1991 and until July 1, 1995 was also the Director of Technical Development for
Guardian Industries Corp.
Charles C. Wilson was first elected to the Board of Directors in November
1991 and is a Guardian designee. Mr. Wilson has been OIS's Executive Vice
President and Chief Financial Officer since November 1991. From July 1987
until joining OIS, Mr. Wilson was the Vice President and Treasurer of Guardian
Photo, Inc.
Ralph J. Gerson was first elected to the Board of Directors in November
1992, is the Chairman of the Board and is a Guardian designee. Mr. Gerson has
been Guardian's Executive Vice President and a member of the Guardian Board of
Directors since 1988.
Jeffrey A. Knight was first elected to the Board of Directors in November
1991 and is a Guardian designee. Since 1989, Mr. Knight has been Group Vice
President-Finance and Chief Financial Officer of Guardian.
C.K. Prahalad was first elected to the Board of Directors in February
1995. Dr. Prahalad is a Harvey C. Fruehauf Professor of Business
Administration at The University of Michigan.
-13-
<PAGE> 17
Robert Teeter was first elected to the Board of Directors in February
1995. Mr. Teeter is President of Coldwater Corporation of Ann Arbor, Michigan.
Mark S. Wrighton was first elected to the Board of Directors in February
1995. Dr. Wrighton is the Chancellor of Washington University in St. Louis,
Missouri. From October 1990 to June 1995, Dr. Wrighton was Provost and
Ciba-Geigy Professor of Chemistry at The Massachusetts Institute of Technology
in Cambridge, Massachusetts.
Peter Joel C. Young was first elected to the Board of Directors in
November 1991 and is a Guardian designee. Mr. Young is Executive Vice
President of Harry London Candies, Inc. of North Canton, Ohio, and is also
providing consulting services to OIS. From March 1991 through August 1993, Mr.
Young was the director of International Business Development of Guardian.
All directors serve until the Annual Meeting of Stockholders at which
elections are held and until their successors are duly elected and qualified.
All officers serve at the pleasure of the Board of Directors.
Compensation of Directors
OIS has established an annual director compensation program that consists
of $15,000 basic compensation, an additional $1,000 for each of four regular
board meetings attended by the director, an additional $500 for each committee
meeting attended by the director and the grant of options to purchase 5,000
shares of OIS Common Stock within five years from the date of grant at the
market price of the stock on the date of grant. All Guardian designees have
waived all director compensation.
Meetings and Committees
During the fiscal year ended June 30, 1997, four meetings were held by the
Board of Directors. All directors attended 75% or more of the meetings of the
Board of Directors and committees on which they served.
The Audit Committee of the Board of Directors currently consists of Robert
M. Teeter, Jeffrey A. Knight and Charles C. Wilson (ex officio). The principal
duties of the Audit Committee are to (a) recommend selection of OIS's
independent public accountants, (b) review with the independent public
accountants the results of their audits, (c) review with the independent public
accountants and management OIS's financial reporting and operating controls and
the scope of audits and (d) make recommendations concerning OIS's financial
reporting, accounting practices and policies and financial, accounting and
operating controls and safeguards.
The Compensation Committee of the Board of Directors met once during the
fiscal year ended June 30, 1997, and currently consists of Mark S. Wrighton and
Ralph J. Gerson. The principal duties of the Compensation Committee are to
make recommendations concerning, and to review, the compensation packages of
OIS's executive officers and key personnel.
The Stock Option Plan Committee of the Board of Directors currently
consists of Ralph J. Gerson, Jeffrey A. Knight and Peter Joel C. Young, who met
once during the fiscal year ended June 30, 1997, and took action by unanimous
consent. The principal duties of the Stock Option Plan Committee are to make,
administer, and interpret all rules and regulations that it deems necessary to
administer OIS stock option plans and to recommend and make awards of stock
options and restricted stock under the plans. Members of the Stock Option Plan
Committee are not eligible for awards under the plans.
-14-
<PAGE> 18
The Nominating Committee of the Board of Directors currently consists of
C.K. Prahalad, Peter Joel C. Young and Rex Tapp (ex officio). The principal
duties of the Nominating Committee are to make recommendations of nominees for
election to the Board of Directors.
Executive Officers
The executive officers of OIS are as follows:
<TABLE>
<CAPTION>
NAME AGE OFFICE
---- --- ------
<S> <C> <C>
Rex Tapp 47 President and Chief Executive Officer
Charles C. Wilson 45 Executive Vice President & Chief Financial Officer
Vincent D. Cannella 59 Vice President
Scott V. Thomsen 33 Vice President Engineering and Fab Operations
</TABLE>
Information with respect to Mr. Tapp and Mr. Wilson is provided above.
Dr. Vincent D. Cannella was Vice President of Manufacturing Engineering at
OIS from June 1986 until August 1990, Vice President of New Business
Development from August 1990 until January 1994, Vice President of Technology
from January 1994 to September 1994, and has been Vice President since
September 1994.
Scott V. Thomsen joined OIS in September 1994 as Director of Technical
Development. In July 1995 he assumed the position of Director of Product
Engineering and in June 1997 was appointed Vice President Engineering and Fab
Operations. From December 1989 until joining OIS, Mr. Thomsen was employed by
the Satellite Systems Operations Division of Honeywell, Inc. as a technical
director and computer systems design engineer on the space shuttle cockpit and
trainer programs.
PROPOSAL II
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Upon the recommendation of the Audit Committee, the Board of Directors
has, subject to stockholder approval, appointed Arthur Andersen LLP to serve as
independent public accountants to OIS for the fiscal year ending June 30, 1998.
The services to be performed by Arthur Andersen LLP will include review of
reports and registration statements filed by OIS with the Securities and
Exchange Commission and consultation in connection with various accounting and
financial reporting matters. Arthur Andersen LLP was elected to and did serve
as independent public accountants to OIS for the fiscal year ended June 30,
1997.
The affirmative vote of a majority of the votes cast is required to
approve this proposal. A representative of Arthur Andersen LLP will be present
at the Meeting, will be available to respond to appropriate questions, and will
also have the opportunity to make a statement if he or she desires.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THE APPOINTMENT FOR FISCAL 1998 OF ARTHUR ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS.
-15-
<PAGE> 19
ADDITIONAL INFORMATION
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Based solely on a review of Forms 3, 4 and 5 and amendments thereto filed
with the Securities and Exchange Commission and furnished to OIS, OIS believes
that its officers and directors filed all required reports on a timely basis
and that several purchases of Series B Preferred Stock by GDIC were reported
late on a Form 5.
Other Action at the Meeting
OIS management, on the date hereof, does not know of any other matter to
be presented that is a proper subject for action by the stockholders at the
Meeting. If any other matters shall properly come before the Meeting, the
shares represented by a properly executed proxy card will be voted in
accordance with the judgment of the persons designated on the proxy card.
Stockholder Proposals for 1998 Annual Meeting
Any stockholder proposal that is intended to be presented at the 1998
Annual Meeting of Stockholders must be received by OIS at its principal
executive offices at 47050 Five Mile Road, Northville, Michigan 48167, by June
4, 1998.
Material Incorporated by Reference
OIS specifically incorporates by reference into this Proxy Statement the
financial statements and management's discussion and analysis of financial
condition and results of operations contained in OIS Annual Report for the year
ended June 30, 1997, which is enclosed.
By Order of the Board of Directors
Robert H. Gorlin
Corporate Secretary
Dated: October 3, 1997
-16-
<PAGE> 20
OIS OPTICAL IMAGING SYSTEMS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON NOVEMBER 20, 1997
The undersigned hereby appoints Charles C. Wilson and Rex Tapp, or either of
them with full power to act alone (with full power of substitution, and in
place of either in case of substitution, his substitute), the attorneys and
proxies for and on behalf of the undersigned to attend the Annual Meeting of
Stockholders (the "Meeting") of OIS OPTICAL IMAGING SYSTEMS, INC. (the
"Company") to be held at the Hotel Baronette, 27790 Novi Road, Novi, Michigan
48377, in the Claridge/Dorchester meeting room on Thursday, November 20, 1997,
at 10:00 A.M., and any and all adjournments thereof, and to cast the number of
votes the undersigned would be entitled to vote if then personally present.
The undersigned instructs such proxies to vote as specified on this card.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES FOR DIRECTORS AND FOR PROPOSAL 2 AS DESCRIBED IN THE
ACCOMPANYING PROXY STATEMENT.
<PAGE> 21
<TABLE>
<S><C>
[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ---------------------------------- 1. Election of Directors. FOR ALL WITH- FOR ALL
OIS OPTICAL IMAGING SYSTEMS, INC. NOMINEES HOLD EXCEPT
- ---------------------------------- RALPH J. GERSON ROBERT M. TEETER
JEFFREY A. KNIGHT CHARLES C. WILSON [ ] [ ] [ ]
C.K. PRAHALAD MARK S. WRIGHTON
REX TAPP PETER JOEL C. YOUNG
NOTE: If you do not wish your shares voted "For" a particular nominee, mark
the "For All Except" box and strike a line through the name(s) of the nominee(s).
Your shares will be voted for the remaining nominee(s).
RECORD DATE SHARES:
FOR AGAINST ABSTAIN
2. Proposal to approve appointment of Arthur Andersen [ ] [ ] [ ]
LLP as independent public accountants for the fiscal
year ending June 30, 1998.
3. In his discretion, the Proxy is authorized to vote upon such other business as may
properly come before the meeting.
--------------
Please be sure to sign and date this Proxy. | Date |
- ----------------------------------------------------------- If shares are registered in the names of two or more persons, each
| | should sign. Executors, administrators, trustees, guardians, attorneys
| | and corporate officers should show their full titles.
|-------Stockholder sign here----------Co-owner sign here-|
- -----------------------------------------------------------------------------------------------------------------------------------
DETACH CARD DETACH CARD
</TABLE>
