<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
INDUSTRIAL IMAGING 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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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:
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4) Date Filed:
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<PAGE> 2
* PRELIMINARY COPY *
INDUSTRIAL IMAGING CORPORATION
ONE LOWELL RESEARCH CENTER
847 ROGERS STREET
LOWELL, MA 01852
(978) 937-5400
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 23, 1998
--------------------
The Annual Meeting of Stockholders of Industrial Imaging Corporation
(the "Company") will be held at the Company's offices, located at One Lowell
Research Center, 847 Rogers Street, Lowell, Massachusetts 01852 on October 23,
1998 at 10:00 a.m., for the purpose of considering and acting upon the following
matters:
1. To elect the Board of Directors;
2. To amend the Company's By-laws to provide (i) staggered terms for
the Company's Board of Directors, and (ii) that subsequent
amendment of the By-laws with respect to the classification of
Directors require the prior approval of at least 75% of the
Company's voting stock, and (iii) that the removal of any or all
of the Company's Board of Directors by stockholders shall be only
for cause;
3. To ratify the adoption of an amendment to the 1995 Stock Option
Plan to increase by 100,000 the aggregate number of shares of
Common Stock authorized for issuance thereunder;
4. To appoint BDO Seidman, LLP, as auditors for the Company; and
5. To transact such other business as may properly come before the
Annual Meeting or any adjournment or adjournments thereof.
Pursuant to the provisions of the Company's By-laws, the Board of
Directors has fixed the close of business on August 26, 1998 as the record date
for determining the stockholders of the Company entitled to notice of, and to
vote at, the Annual Meeting or any adjournment or adjournments thereof.
Stockholders who do not expect to be present in person at the Annual
Meeting are urged to date and sign the enclosed proxy and promptly mail it in
the accompanying envelope. The proxy will not be used if you attend and vote at
the Annual Meeting in person or if you revoke the proxy prior to the Annual
Meeting.
By Order of the Board of Directors
Juan J. Amodei
Secretary
September 28, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE ANNUAL MEETING. NO POSTAGE
NEED BE AFFIXED IF THE PROXY IS MAILED IN THE UNITED STATES.
<PAGE> 3
INDUSTRIAL IMAGING CORPORATION
ONE LOWELL RESEARCH CENTER
847 ROGERS STREET
LOWELL, MA 01852
(978) 937-5400
--------------------
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
--------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Industrial Imaging Corporation, a
Delaware corporation (the "Company"), for use at the Annual Meeting of
Stockholders to be held on October 23, 1998, and at any adjournment or
adjournments thereof (the "Meeting"). All proxies will be voted in accordance
with the instructions contained therein and, if no choice is specified, the
proxies will be voted in favor of the proposals set forth in the accompanying
Notice of Meeting. Any proxy may be revoked by a stockholder at any time before
it is exercised by giving written notice to that effect to the Secretary of the
Company.
The Board of Directors has fixed August 26, 1998 as the record date for
determining stockholders who are entitled to vote at the Meeting. At the close
of business on August 26, 1998, there were outstanding and entitled to vote
10,890,201 shares of Common Stock of the Company, $.01 par value per share
("Common Stock"). Each share is entitled to one vote.
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Company's Common Stock, $.01 par value per share (the
"Common Stock"), is necessary to constitute a quorum at the Meeting. Therefore,
holders of not less than 5,445,100 shares of Common Stock must be present in
person or by proxy for there to be a quorum. Shares of Common Stock represented
by all proxies received, including proxies that withhold authority for the
election of directors and/or abstain from voting on the ratification of the
accountants, as well as "broker non-votes", discussed below, count toward
establishing the presence of a quorum.
The election of directors will be determined by a plurality of the
shares voted affirmatively or negatively at the Annual Meeting. The other
proposals to be voted upon by the stockholders of the Company requires the vote
of a majority of the Common Stock present and voting at the Annual Meeting for
passage. Votes withheld from any nominee, abstentions and broker non-votes
(which result when a broker holding shares for a beneficial holder has not
received timely voting instructions on certain matters from such beneficial
holder and the broker does not have discretionary voting power on such matters)
are counted as present or represented for purposes of determining the presence
or absence of a quorum at the Annual Meeting. Abstentions and broker non-votes
have no effect on whether a proposal has been approved.
This Proxy Statement and the accompanying proxy are being mailed on or
about September 28, 1998 to all stockholders entitled to notice of and to vote
at the Meeting.
The Company's Form 10-KSB and Form 10-KSB/A for the fiscal year ended
March 31, 1998, are being mailed to stockholders with the mailing of this Notice
and Proxy Statement.
<PAGE> 4
SECURITIES OWNERSHIP
The following table sets forth, as of August 26, 1998, the ownership of
the Company's Common Stock by (i) each person who is known by the Company to own
of record or beneficially more than 5% of the Company's Common Stock; (ii) each
of the Company's directors; (iii) each executive officer named in the Summary
Compensation Table; and (iv) all directors and executive officers as a group.
Except as otherwise indicated, the stockholders listed in the table have sole
voting and investment powers with respect to the shares indicated.
<TABLE>
<CAPTION>
NUMBER OF
SHARES APPROXIMATE
BENEFICIALLY PERCENTAGE OF
NAME OF BENEFICIAL OWNER(2) OWNED OWNERSHIP(1)
- --------------------------- ------------ -------------
<S> <C> <C>
Shaiy Pilpel, Ph.D. (3)(4) 5,000,000 38.79%
Imprimus Investors, LLC (3)(4) 5,000,000 38.79%
Imprimus SB, LP (3)(4) 5,000,000 38.79%
Wexford Spectrum Investors, LLC (3)(4) 5,000,000 38.79%
Harry Hsuan Yeh, Ph.D. (5) 1,535,563 14.10%
Centennial Technologies, Inc. (6) 1,625,000 14.79%
Juan J. Amodei, Ph.D. (7) 905,714 8.18%
Massachusetts Technology Development Corporation (8) 929,749 8.35%
Polaroid Corporation (9) 827,228 7.43%
Massachusetts Community Development Finance Corporation (10) 675,931 6.11%
Charles Broming (10)(11) 675,931 6.11%
Shirley Hsin-Hui Wang (12) 342,400 4.72%
Joseph A. Teves (13) 263,896 2.42%
Joseph Bordogna, Ph.D. (14) 85,013 *
All Officers and Directors as a group (9 persons) 8,530,717 60.07%
(1)(2)(3)(4)(5)(7)(10)(11)(13)(14)(15)
</TABLE>
- ---------------
* Indicates less than 1%.
(1) The number of shares of Common Stock issued and outstanding on August 26,
1998, was 10,890,201. The calculation of percentage ownership for each
listed beneficial owner is based upon the number of shares of Common Stock
issued and outstanding at August 26, 1998, plus shares of Common Stock
subject to options held by such person at August 26, 1998 and exercisable
within 60 days thereafter. The persons and entities named in the table
have sole voting and investment power with respect to all shares shown as
beneficially owned by them, except as noted below.
(2) The address for Drs. Amodei, Bordogna and Yeh and Mr. Teves is c/o
Industrial Imaging Corporation, 847 Rogers Street, Lowell, Massachusetts
01852. The address for Massachusetts Technology Development Corporation is
148 State Street, Boston, Massachusetts 02109. The address for Centennial
Technologies is 7 Lopez Road, Wilmington, Massachusetts 01887. The address
for Polaroid Corporation is 549 Technology Square, Cambridge,
Massachusetts 02139. The address for Mr. Broming and Massachusetts
Community Development Corporation is 10 Post Office Square, Suite 1090,
Boston, Massachusetts 02109. The address for Shirley Wang is c/o Mr.
Howard Yao, 2895 North Beverly Glen Boulevard, Los Angeles, California
90077.
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<PAGE> 5
The address for Dr. Pilpel, Imprimus Investors, LLC, Imprimis SB, LP and
Wexford Spectrum Investors, LLC, is c/o Wexford Management, LLC, 411 West
Putnam Avenue, Greenwich, Connecticut, 06830.
(3) Includes warrants to purchase 2,000,000 shares of Common Stock at exercise
prices ranging from $1.00 to $2.00 per share. Excludes options to purchase
5,000 shares of Common Stock at an exercise price of $1.00 per share.
(4) Dr. Pilpel, a director of the Company, is also an investment officer of
Imprimus Investors, LLC, Imprimis SB, LP and Wexford Spectrum Investors,
LLC. As such, Dr. Pilpel retains voting control over shares owned by
Imprimis Investors, LLC.
(5) Excludes warrants to purchase 248,145 shares of Common Stock at an
exercise price of $1.00 per share and options to purchase 5,000 shares of
Common Stock at an exercise price of $1.00 per share.
(6) Includes warrants to purchase 95,000 shares of Common Stock at an exercise
price of $1.00 per share.
(7) Includes (i) warrants to purchase 108,729 shares of Common Stock with an
exercise price of $1.00 (ii) options to purchase 32,000 shares of Common
Stock at an exercise price of $.20 per share; and (iii) options to
purchase 40,000 shares of Common Stock at an exercise price of $1.00.
Excludes warrants to purchase 206,245 shares of Common Stock at an
exercise price of $1.00 per share, and options to purchase 50,000 shares
of Common stock at $1.00 per share.
(8) Includes (i) warrants to purchase 250,007 shares of Common Stock at an
exercise price of $1.00. Excludes warrants to purchase 180,380 shares of
Common Stock at an exercise price of $1.00 per share.
(9) Includes warrants to purchase 250,028 shares of Common Stock at an
exercise price of $1.00 per share.
(10) Includes warrants to purchase 280,790 shares of Common Stock with exercise
price of $1.00 per share. Excludes warrants to purchase 32,040 shares of
Common Stock at an exercise price of $1.00 per share and options to
purchase 5,000 shares of Common Stock at an exercise price of $1.00 per
share.
(11) Mr. Broming, a director of the Company, is also an Investment Officer of
the Massachusetts Community Development Finance Corporation. As such, Mr.
Broming retains voting control over the shares owned by the Massachusetts
Community Development Finance Corporation.
(12) Excludes warrants to purchase 88,100 shares of Common Stock exercisable at
$1.00 per share.
(13) Excludes (i) warrants to purchase 28,470 shares of Common Stock at an
exercise price of $1.00 per share (ii) warrants to purchase 14,675 shares
of Common Stock at an exercise price of $1.00 per share (iii) 4,510 shares
issuable upon exercise of outstanding warrants granted to Mr. Teves' adult
son, to purchase 4,510 shares of Common Stock at an exercise price of
$1.00 per share and (iv) and options to purchase 5,000 shares of Common
Stock at an exercise price of $1.00 per share.
(14) Excludes warrants to purchase 63,135 shares of Common Stock at an exercise
price of $1.00 per share and options to purchase 5,000 shares of Common
Stock at an exercise price of $1.00 per share.
(15) Includes (i) 10,800 shares issuable upon exercise of the vested portion of
options to purchase 12,400 shares of Common Stock at an exercise price of
$.20 per share and 6,400 shares issuable upon exercise of the vested
portion of an option to purchase 34,000 shares of Common Stock at an
exercise price of $1.00 per share held by Michael Chase, the Company's
Vice President of Manufacturing and Field Service; (ii) 15,600 shares
issuable upon exercise of the vested portion of an option to purchase
17,600 shares of Common Stock at an exercise price of $.20 per share and
11,800 shares issuable upon exercise of the vested portion of an option to
purchase 38,000 shares of Common Stock at an exercise price of $1.00 per
share held by Richard J. Royston,
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<PAGE> 6
the Company's Vice President of Research; and (iii) 20,000 shares issuable
upon exercise of the vested portion of an option to purchase 60,000 shares
of Common Stock at an exercise price of $1.00 per share held by Bryan
Gleason, the Company's former Chief Financial Officer.
DIRECTORS AND EXECUTIVE OFFICERS
The following table and narrative sets forth information regarding the
principal occupation, other affiliations, committee memberships and age for each
of the nominees for director of the Company.
<TABLE>
<CAPTION>
TERM
DIRECTOR EXPIRES AGE POSITION WITH COMPANY
- -------- ------- --- ---------------------
<S> <C> <C> <C>
Juan J. Amodei, Ph.D. (Class I) 2001 64 Chief Executive Officer, President, Secretary and
Chairman of the Board of Directors
Joseph Bordogna, Ph.D. (Class I) 2001 64 Director
Charles G. Broming (Class II) 1999 48 Director
Joseph A. Teves (Class II) 1999 49 Director
Harry Hsuan Yeh, Ph.D. (Class III) 2000 81 Director
Shaiy Pilpel, Ph.D. (Class III) 2000 46 Director
</TABLE>
The following is a brief summary of the background of the directors and
executive officers named above:
JUAN J. AMODEI, PH.D., 64, has served as the Chief Executive Officer,
Chairman of the Board of Directors, President and Secretary of Industrial
Imaging since December 1996. Dr. Amodei has served as Chairman of the Board,
Chief Executive Officer, President and Secretary of Triple I since October 1992.
From September 1986 to October 1992, Dr. Amodei served as Chairman of the Board
of AOI Systems, Inc., a spin-off of Itek Optical Systems, where Dr. Amodei
served as President from March 1976 to August 1986. Dr. Amodei holds a Bachelor
of Science degree from Case Institute of Technology and both a Masters in
Electrical Engineering and a Ph.D. in Electrical Engineering from the University
of Pennsylvania. Dr. Amodei is a former Trustee of the University of
Pennsylvania and Chairman of the Board of Overseers of the School of Engineering
and Applied Science.
JOSEPH BORDOGNA, PH.D., 64, has served as a member of Industrial
Imaging's Board of Directors since December 1996. He has served as a member of
Triple I's Board of Directors since April 1993. Dr. Bordogna is presently Acting
Deputy Director and Chief Operating Officer of the National Science Foundation
("NSF"), having served at NSF as Director of Engineering from 1991 to 1996. He
is also the International President of the Institute of Electrical and
Electronics Engineers. From 1981 to 1990, Dr. Bordogna was Dean of the School of
Engineering and Applied Science at the University of Pennsylvania, and continues
to hold the position of Dean of Engineering Emeritus and Alfred Fitler Moore
Professor of Engineering . Dr. Bordogna also serves as a Director of University
City Science Center, a regional science and technology transfer park located in
Philadelphia, Pennsylvania, chairs the Board of Directors of Weston, Inc. a
privately held comprehensive environment company located in West Chester,
Pennsylvania, and is President-elect of the Institute of Electrical and
Electronic Engineers. Dr. Bordogna received a Bachelor of Science degree and
Ph.D. in electrical engineering from the University of Pennsylvania and a Master
of Science degree in electrical engineering from the Massachusetts Institute of
Technology.
CHARLES G. BROMING, 48, has served as a member of Industrial Imaging's
Board of Directors since December 1996. He has served as a Director of Triple I
since February 1996. Mr. Broming is presently an Investment Officer for the
Massachusetts Community Development Finance Corporation ("CDFC"), a state owned
4
<PAGE> 7
corporation that provides financing for businesses in financially distressed
communities within Massachusetts. Prior to joining CDFC in 1994, Mr. Broming was
a business consultant for Recoll Management Corporation, a privately held
company that specializes in the recovery and collection of distressed loans.
From 1990 to 1991, Mr. Broming ran CGB Associates, an independent management
consulting business. Mr. Broming received a Bachelor of Arts degree from
University of California, Riverside and a Master in Business Administration
degree from University of Michigan, Ann Arbor.
JOSEPH A. TEVES, 49, has served as a member of Industrial Imaging's
Board of Directors since December 1996. He has served as a member of Triple I's
Board of Directors since May 1994. In January 1997, Mr. Teves joined Separation
Technologies, Inc. as Chairman and Chief Executive Officer. Separation
Technologies, Inc. is a closely held company which processes minerals. From 1988
through 1996, Mr. Teves was the President of Distrigas Corporation, a privately
held company located in Everett, Massachusetts engaged in the import, export and
distribution of liquid natural gas. Mr. Teves has also served as a Director of
the New England Gas Association since 1989 and has served as a management
consultant to companies within the gas industry. Mr. Teves holds a degree in
Business Administration from the Massachusetts State College at Salem.
HARRY HSUAN YEH, PH.D., 81, has served as a member of Industrial
Imaging=s Board of Directors since December 1996. Dr. Yeh has served as a member
of Triple I's Board of Directors since 1992. Dr. Yeh is Chairman of Sinonar
Corporation, a Taiwanese company founded by Dr. Yeh in 1982 engaged in the
manufacture of amorphous silicon devices and solar cells. Dr. Yeh is a graduate
of Chai-Tung University in China and holds a Ph.D. in Mechanical Engineering
from the Massachusetts Institute of Technology.
SHAIY PILPEL, PH. D., 46, has served as a member of Industrial
Imaging's Board of Directors since November 1997. Dr. Pilpel currently serves as
a Senior Vice President of Wexford Management LLP, an investment banking firm.
From 1995 to 1996, Dr. Pilpel was a managing Director of Canadian Imperial Bank
of Commerce where he headed the Mortgage Arbitrage and Quantitative Strategies
proprietary trading group and prior to that, was a portfolio manager for
Steinhardt Partners. Dr. Pilpel received a Bachelor of Science degree in
philosophy from the Tel Aviv University, a Masters of Science degree in
Mathematics from the Hebrew University in Jerusalem, a Ph.D. in Statistics from
the University of California at Berkeley and an M.B.A. from Columbia University.
Dr. Pilpel is a retired Lieutenant from the Israel Defense Force.
BOARD AND COMMITTEE MEETINGS
The Company established an Audit Committee and a Compensation Committee
in 1997. No meetings of these committees were held in 1998.
The Audit Committee was established to provide the opportunity for
direct contact between the Company's independent public accountants and the
Board. The Audit Committee intends to review the effectiveness of the auditors
during the annual audit, discuss the Company's internal control policies and
procedures and consider and recommend the selection of the Company's independent
accountants. The Audit Committee is currently comprised of Messrs. Teves and
Broming.
The Compensation Committee was established to provide recommendations
to the Board regarding compensation programs of the Company. The Compensation
Committee is currently comprised of Messrs. Pilpel, Teves and Bordogna.
During the year ended March 31, 1998, the Board of Directors held three
meetings. Each of the directors attended at least 75% of the total number of
meetings of the Board of Directors.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Directors who are not employees of the Company or its affiliates
receive no cash compensation, but do receive reimbursement of out-of-pocket
expenses for attendance at each such meeting.
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<PAGE> 8
In addition, non-employee directors receive an option, at the beginning
of each director's one-year term, to purchase 5,000 shares of the Company's
Common Stock. Such options have an exercise price equal to the fair market value
of the Company's Common Stock at the time of their grant.
The following table sets forth the annual and long-term compensation
awarded or paid to or earned by the Company's Chief Executive Officer. No other
executive officer of the Company received compensation in excess of $100,000 for
the fiscal years ended 1998, 1997 and 1996. The Chief Executive Officer is
referred to herein as the "Named Executive Officer."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- ---------------------------------
SECURITIES
UNDER
WRITING
SALARY BONUS OTHER ANNUAL OPTIONS ALL OTHER
NAME & PRINCIPAL POSITION YEAR(1) ($)(3) ($) COMPENSATION($)(2) (#) COMPENSATION($)(4)
------------------------- ------- ------ -- ------------------ --------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Juan J. Amodei.................. 1998 $110,500 _ $8,400 50,000 $2,010
Chairman and Chief
Executive Officer
Juan J. Amodei ................. 1997 $110,500 _ $4,200 40,000 --
Juan J. Amodei.................. 1996 $ 55,250 _ $8,400 -- --
</TABLE>
(1) Triple I Corporation changed its year end to March 31; therefore, Fiscal
Year for 1996 constitutes the six month period from October 1, 1995 to
March 31, 1996.
(2) This amount is comprised entirely of an automobile allowance.
(3) Amounts shown indicate cash compensation earned and received by Named
Executive Officer. The Named Executive Officer participates in group health
and other benefits generally available to all employees of the Company.
(4) Amounts shown represent the Company's matching contributions made under its
401(k) plan on behalf of the Named Executive Officer.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the grant of
stock options made during the fiscal year ended March 31, 1998 to the Named
Executive Officer.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL POTENTIAL REALIZABLE
SECURITIES OPTIONS VALUE AT ASSUMED
UNDERLYING GRANTED TO RATES OF STOCK
OPTIONS EMPLOYEES EXERCISE OR PRICE APPRECIATION
GRANTED IN FISCAL BASE PRICE EXPIRATION FOR OPTION TERM
NAME (#)(a) YEAR(b) ($/Sh) DATE 5% ($)/10% ($)
---- -------- --------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Juan J. Amodei........... 50,000 25.8% $1.00 10/3/07 $28,212/69,862
</TABLE>
(a) Options to acquire shares of Common Stock of the Company granted pursuant
to the Company's 1995 Stock Option Plan, as amended. Options granted vest
20% upon each anniversary date of the date of grant. Options terminate ten
years after the grant date, subject to earlier termination in accordance
with the Plan and the applicable option agreement. The Board of Directors
has the right to accelerate the date of exercise of any
6
<PAGE> 9
option, provided that, the Board may not accelerate the exercise of any
option if such acceleration would violate the annual vesting limitation
contained in Section 422(d)(1) of the Internal Revenue Code. All options
are exercisable at a price equal to the fair market value of the Common
Stock of the Company on the date of the grant.
(b) Based on a total of 193,700 options granted during the fiscal year ended
March 31, 1998.
EMPLOYMENT CONTRACT, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENT
Effective as of October 13, 1995, the Company entered into an
employment agreement (the "Agreement") with Juan J. Amodei. The Agreement
provides for an annual base salary of $110,500 each year through December 31,
1998. The Agreement also provides for vacation, insurance, and certain other
benefits as may be determined by the Compensation Committee or the Company's
Board of Directors. Dr. Amodei is entitled to receive benefits offered to the
Company's employees generally. Under the Agreement, Dr. Amodei is entitled to
terminate his employment at any time after giving the Company three (3) months
notice. The Company is entitled to terminate Dr. Amodei's employment with or
without cause. In the event his employment is terminated by the Company without
cause, Dr. Amodei is entitled to receive severance (the "Severance Benefits").
The Severance Benefits consist of the continued payment of Dr. Amodei's current
annual base salary and the continued provision of Dr. Amodei's then-current
benefits package for one (1) year following such termination without cause.
In the event of a Change in Control in the Company, Dr. Amodei will
receive severance payments as provided in the Agreement. A Change in Control is
defined generally as: the acquisition by an individual, entity or group of
beneficial ownership of 50% or more of the outstanding shares of Common Stock or
the sale or disposition of all or substantially all of the assets of the
Company.
In the event of a Change in Control during the term of an Agreement or
any renewal or extension thereof, and if, within nine (9) months of a Change of
Control, (i) Dr. Amodei's duties are reduced, or (ii) Dr. Amodei decides to
terminate his employment, or (iii) Dr. Amodei is terminated by the Company, then
Dr. Amodei is entitled to receive: (x) an amount equal to his Base Salary for a
period of one (1) year, payable in a lump sum and the continuation of the
then-current benefits package for one (1) year; and (y) the immediate removal of
all loan guarantees and the repayment of all loans placed by Dr. Amodei on
behalf of or for the benefit of the Company. Certain additional provisions also
apply.
The Agreement also contains non-competition provisions for a period of
one (1) year following termination, a confidentiality provision and an ownership
provision in the Company's favor for techniques, discoveries and inventions
arising during the term of employment. The Agreements provide for automatic
three-year renewals after the initial term expires on December 31, 1998.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1997, Imprimis purchased three million shares of the Common
Stock at $1.00 per share. As part of the transaction, the Company also issued
warrants to purchase one million shares of Common Stock at $1.00 per share
through November 12, 2002, and issued warrants to purchase one million shares of
Common Stock at $2.00 per share through November 12, 2002. The investor was
granted demand registration rights starting six months from the closing date for
both the Common shares purchased and the warrants granted. In addition, the
investor holds a seat on the board of directors.
In November 1997, the Company offered a 50% discount of the exercise
price to all warrantholders of the Company's Common Stock for a specified period
of time, which has expired. Warrantholders exercised warrants to purchase
1,187,406 shares of Common Stock at prices from $.25 per share to $.60 per
share. The Company received $252,145 in cash. Dr. Yeh, a director and a 14.1%
stockholder of the Company, exercised warrants to purchase
7
<PAGE> 10
382,474 shares of the Company's Common Stock at $.50 per share, paid in cash.
Dr. Bordogna, a director and a .8% stockholder of the Company, exercised
warrants to purchase 23,472 shares of the Company's Common Stock at $.50 per
share, paid in cash. In addition, certain employees of Schneider Securities,
Inc., the Placement Agent for the 1997 Bridge Financing and the 1996 Private
Placement exercised warrants to purchase 69,229 shares of the Company=s Common
Stock for cash at a price of $.60 per share. The Company also received a
promissory note from Dr. Amodei, an officer and director of the Company, for
$125,000, interest and principal payable in four years, and which accrues
interest at an rate of 8.5% per annum to purchase 500,000 shares at $.25 per
share. The stock purchased is pledged as collateral against the note. In
addition, Mr. Teves, a director of the Company cancelled a promissory note due
from the Company for $100,000 for the exercise of warrants at a total exercise
price of $98,480 to purchases 196,961 shares at $.50 per share. The balance of
the note payable plus accrued interest will be paid to the noteholder in cash.
In May 1997, the Company and Centennial, a 14.8% stockholder of the
Company, agreed to terminate the Purchasing Agreement. The Company liquidated
amounts owed to Centennial under the agreement by paying approximately $132,000
in cash and issuing 600,000 shares of Common Stock to pay off the remaining
balance of approximately $1.2 million.
In May 1997, MTDC, a 6.2% stockholder of the Company, exercised a
warrant and purchased 100,014 shares of the Company's Common Stock, at a price
of $1.00 per share.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) ("Section 16(a)") of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), requires executive officers and directors, and
persons who beneficially own more than ten percent (10%) of the Company's Common
Stock, to file initial reports of ownership on Form 3 and reports of changes in
ownership on Form 4 or Form 5 with the Securities and Exchange Commission (the
"SEC") and any national securities exchange on which the Company's securities
are registered. Executive officers, directors and greater than ten percent (10%)
beneficial owners are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than ten percent (10%) beneficial
owners during the fiscal year ended March 31, 1998 were complied with, except as
listed below. The following individuals did not file a Form 4 report for the
grant of stock options from the 1995 Stock Option Plan, although such forms were
required to be filed on or before November 10, 1997 to report the following
events: (1) Juan J. Amodei was granted an option to purchase 50,000 shares; (2)
Bryan M. Gleason was granted an option to purchase 10,000 shares; (3) Dr. Harry
Yeh was granted an option to purchase 5,000 shares; (4) Dr. Joseph Bordogna was
granted an option to purchase 5,000 shares; (5) Joseph A. Teves was granted an
option to purchase 5,000 shares; (6) Charles G. Broming was granted an option to
purchase 5,000 shares; and (7) Dr. Shaiy Pilpel was granted an option to
purchase 5,000 shares. In addition, the following individuals did not file a
Form 4 report for the purchase of common stock by exercise of warrants, although
such forms were required to be filed on or before December 10, 1997 to report
the following events: (1) Juan J. Amodei purchased 500,000 shares; (2) Dr. Harry
Yeh purchased 382,474 shares; (3) Dr. Joseph Bordogna purchased 23,742 shares;
and (4) Joseph A. Teves purchased 196,961 shares. The Company expects that all
such forms will be filed not later than September 30, 1998.
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MATTERS TO BE BROUGHT BEFORE THE MEETING
ELECTION OF DIRECTORS
(PROPOSAL 1 ON PROXY CARD)
The Board of Directors currently consists of six members. Directors
serve for one-year terms, expiring at each annual meeting of the stockholders.
If Proposal 2 concerning the classification of the Board of Directors
is adopted at the Annual Meeting (see "Proposal 2 - Amendments of By-laws for
Staggered Board"), proxies solicited by the Board of Directors will be voted for
the election of Juan J. Amodei, Ph.D. and Joseph Bordogna, Ph.D. to Class I of
the Company's Board of Directors for renewal terms expiring at the 2001 Annual
Meeting of Stockholders; the election of Charles G. Broming and Joseph A. Teves
to Class II of the Company's Board of Directors for initial terms expiring at
the 1999 Annual Meeting of Stockholders; and the election of Harry Hsuan Yeh,
Ph.D. and Shaiy Pilpel, Ph.D. to Class III of the Company's Board of Directors
for initial terms expiring at the 2000 Annual Meeting of the Stockholders. If
Proposal 2 is not adopted, the proxies solicited by the Board of Directors will
be voted for the election of the nominees herein named, each to serve until the
1999 Annual Meeting of Stockholders and until their respective successors have
been duly elected and qualified.
Stockholders who do not wish their shares to be voted for a particular
nominee may so indicate in the space provided on the proxy card. Management does
not contemplate that any of the nominees will be unable to serve, but in that
event, proxies solicited hereby will be voted for the election of another person
or persons to be designated by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF JUAN J. AMODEI,
PH.D., JOSEPH BORDOGNA, PH.D., AS CLASS I DIRECTORS, CHARLES G. BROMING AND
JOSEPH A. TEVES AS CLASS II DIRECTORS, AND HARRY HSUAN YEH, PH.D., AND SHAIY
PILPEL, PH.D., AS CLASS III DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL
BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE
PROXY.
AMENDMENTS TO BY-LAWS FOR STAGGERED BOARD
(PROPOSAL 2 ON PROXY CARD)
The Board of Directors has approved amendments to Article III, Sections
1 and 3a of the Company's By-laws (i) to classify the Company's Board of
Directors into three classes of directors serving staggered three-year terms,
(ii) to provide that subsequent amendment of the By-laws with respect to the
classification of directors require the prior approval of at least 75% of the
Company's voting stock, and (iii) to require that the removal of any or all of
the Company's Board of Directors by stockholders be only for cause. The complete
text of Sections 1 and 3, as amended, is provided in Appendix A to this Proxy
Statement. The following description of the amendments is qualified in its
entirety by reference to Appendix A.
DESCRIPTION OF AND REASONS FOR THE BY-LAW AMENDMENTS
The By-laws currently provide for a single class of directors, each
director elected for a term of office of one year. The By-law amendments
submitted for approval in this Proposal 2 would classify the Board of Directors
into three classes of directors serving staggered three-year terms. Under the
amendments, each director will hold office until his successor is elected and
qualified or until his earlier resignation or removal. Initially, Class I
directors (Juan J. Amodei, Ph.D. and Joseph Bordogna, Ph.D.) would be elected
for a one-year term, Class II directors (Charles G. Broming and Joseph A. Teves)
would be elected for a two-year term, and Class III (Harry Hsuan Yeh, Ph.D. and
Shaiy Pilpel, Ph.D.) would be elected for a three-year term. Beginning with the
1999 Annual
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<PAGE> 12
Meeting, 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. At the time the amendments were approved by the Board of
Directors, the initial term for the Class I directors expired in 1998; as a
result, the term of the Class I directors is described as a "renewal term" in
Proposal 1 of this Proxy, expiring in 2001.
The Company believes that the proposed amendments establishing
staggered terms for the election of directors will provide additional continuity
to its management by having persons serve on its Board of Directors for a longer
period of time, without standing for reelection. However, there have been no
problems with continuity of the Board of directors in the past. The Company
believes that three-year terms for its directors will be more attractive to a
potential director candidate and thus will make available to the Company more
candidates.
While the Company believes the proposed amendments to its By-laws are
warranted because of the factors discussed above, the amendments will also make
it more difficult to change control of the Company. If there were an attempt by
the stockholders to change control of the Company by removing and replacing all
or a majority of the Board of Directors, such an attempt will be more difficult
if there are staggered terms for the election of directors. Since not all
directors will stand for election at a single stockholders meeting, as is the
case now, the stockholders desiring to change control would have to vote at
multiple meetings in order to do so. It would require at least two annual
meetings to remove and replace a majority of the directors of the Company and
would require three annual meetings to remove and replace the entire Board of
Directors.
The By-law amendments would also provide that any subsequent amendment
of the Company's By-laws with respect to the classification of Directors require
the approval of at least 75% of the stockholders entitled to vote. At present, a
simple majority of stockholders may vote to enact any amendment of the By-laws,
including the amendments that comprise Proposal 2. If Proposal 2 is not enacted
by a majority of stockholders, the classification scheme described in the
preceding paragraph would not take effect, and future amendment of any provision
of the By-laws would require a simple majority vote of the stockholders.
Increasing to 75% the stockholder vote required to amend the By-laws with
respect to the basic structure and classification of the staggered board of
directors will prevent a stockholder with a majority of the Company's stock from
avoiding such provisions by simply amending the By-laws to change or delete any
or all of these provisions. The Company believes that such a 75% stockholder
vote requirement will have an anti-takeover effect by delaying, preventing or
impeding a change in control of the Company initiated by an unfriendly bidder
for shares of the Company.
Finally, the By-law amendments require that the removal of any or all
of the Company's directors be "for cause." At present, the By-laws include
provisions for the removal of directors "with or without cause." The requirement
for "for cause" removal of directors is included among the amendments that
comprise Proposal 2 because Delaware General Corporation Law Section 141(k)(1)
requires that individuals sitting on staggered boards of directors be subject to
removal only for cause.
In accordance with the By-laws, if any vacancies occur in the Board of
Directors, or if any new directorships are created, they may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director. Each director so chosen shall hold office until the
next annual meeting of stockholders and until his successor is duly elected and
qualified. If there are no directors in office, any officer or stockholder may
call a special meeting of stockholders in accordance with the provisions of the
Certificate of Incorporation or the By-laws, at which meeting such vacancies
will be filled.
NOTE THAT A VOTE "FOR" THIS PROPOSAL CONSTITUTES APPROVAL OF ALL THREE
OF THE FOLLOWING AMENDMENTS TO ARTICLE III, SECTIONS 1 AND 3A OF THE COMPANY'S
BY-LAWS: (i) TO CLASSIFY THE COMPANY'S BOARD OF DIRECTORS INTO THREE CLASSES OF
DIRECTORS SERVING STAGGERED THREE-YEAR TERMS, (ii) TO PROVIDE THAT SUBSEQUENT
AMENDMENT OF THE BY-LAWS WITH RESPECT TO THE CLASSIFICATION OF DIRECTORS REQUIRE
THE PRIOR APPROVAL OF AT LEAST 75% OF THE COMPANY'S VOTING STOCK, AND (iii) TO
REQUIRE THAT THE REMOVAL OF ANY OR ALL OF THE COMPANY'S BOARD OF DIRECTORS BY
STOCKHOLDERS BE ONLY FOR CAUSE. A VOTE "AGAINST" THIS PROPOSAL CONSTITUTES A
REJECTION OF ALL THREE AMENDMENTS.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ABOVE-DESCRIBED
AMENDMENTS OF THE COMPANY'S BY-LAWS. PROXIES SOLICITED BY THE BOARD WILL BE
VOTED IN FAVOR OF SUCH AMENDMENT UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON
THE PROXY.
PROPOSAL TO APPROVE AMENDMENT TO THE 1995 STOCK OPTION PLAN
(PROPOSAL 3 ON PROXY CARD)
GENERAL
In 1995, the Board of Directors authorized, and the Company's
stockholders approved, the 1995 Stock Option Plan (the "Plan"), pursuant to
which the Company may grant stock options to key employees and consultants of
the Company, its subsidiaries and affiliates.
Pursuant to the Plan, and prior to the vote of the Board of Directors
authorizing an increase in the number of shares reserved for issuance under the
Plan, 600,000 shares had been reserved for issuance upon the exercise of options
granted thereunder. By vote of the Board of Directors of the Company dated as of
September 15, 1998, the Plan has been amended to provide that 700,000 shares be
reserved for issuance upon exercise of options granted thereunder. A copy of the
Stock Option Plan, as amended, is attached as Appendix B.
By the terms of the Plan, the Plan may be amended by the Board of
Directors provided that Stockholder approval is required for any amendment
approved by the Board of Directors which increases the number of shares for
which options may be granted. The Board believes that the increase by 100,000 in
the number of shares reserved for issuance under the Plan is advisable to give
the Company the flexibility needed to attract, retain and motivate employees,
directors and consultants. This amendment is being submitted for Stockholder
approval to ensure continued favorable income tax treatment under Section 422 of
the Internal Revenue Code of 1986 (the "Code").
MATERIAL FEATURES OF THE PLAN
The purpose of the Plan is to attract, retain and motivate employees,
directors and consultants through the issuance of stock options and to encourage
ownership of shares of Common Stock by employees, directors and consultants of
the Company. The Plan is administered by the Board of Directors. Subject to the
provisions of the Plan, the Board of Directors determines the persons to whom
options will be granted, the number of shares to be covered by each option and
the terms and conditions upon which an option may be granted, and has the
authority to administer the provisions of the Plan. All employees, directors and
consultants of the Company and its affiliates are eligible to participate in the
Plan. The Company currently has 35 full-time equivalent employees.
Options granted under the Plan may be either (i) options intended to
qualify as "incentive stock options" under Section 422 of the Code, or (ii)
non-qualified stock options. Incentive stock options may be granted to employees
of the Company and its affiliates. Non-qualified stock options may be granted to
consultants, directors and employees of the Company and its affiliates. The
Company provides for the automatic grant of 5,000 non-qualified options to
non-employee directors of the Company. The automatic grant, which is issued
annually on the date of the shareholders' meeting, has a ten year exercise life
and vests twenty percent (20%) per year, assuming continued membership on the
Board. Non-employee directors nominated pursuant to a contractual obligation are
not entitled to such automatic grants. One hundred twenty-seven thousand five
hundred (127,500) options were granted during the fiscal year ended
March 31, 1998.
The aggregate fair market value (determined at the time of grant) of
shares issuable pursuant to incentive stock options which become exercisable in
any calendar year under any incentive stock option of the Company may not exceed
$100,000. Incentive stock options granted under the Plan may not be granted at a
price less than the fair
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<PAGE> 14
market value of the Common Stock on the date of grant, or 110% of fair market
value in the case of employees holding 10% or more of the voting stock of the
Company. Non-qualified stock options granted under the Plan may not be granted
at an exercise price less than the par value per share of the Common Stock.
Incentive stock options granted under the Plan expire not more than ten years
from the date of grant, or not more than five years from the date of grant in
the case of incentive stock options granted to an employee holding 10% or more
of the voting stock of the Company. An option granted under the Plan is
exercisable, during the optionholder's lifetime, only by the optionholder and is
not transferable by him or her except (i) by will or by the laws of decent and
distribution, or (ii) as otherwise determined by the Administrator and set forth
in the applicable Option agreement.
An incentive stock option granted under the Plan may, at the Board of
Directors' discretion, be exercised after the termination of the optionholder's
employment with the Company (other than by reason of death, disability or
termination for cause as defined in the Plan) to the extent exercisable on the
date of such termination, at any time prior to the earlier of the option's
specified expiration date or ninety (90) days after such termination. In
granting any non-qualified stock option, the Board of Directors may specify that
such non-qualified stock option shall be subject to such termination or
cancellation provisions as the Board of Directors shall determine. In the event
of the optionholder's death or disability, both incentive stock options and
non-qualified stock options may be exercised, to the extent exercisable on the
date of death or disability (plus a prorata portion of the option if the option
vests periodically), by the optionholder or the optionholder's survivors at any
time prior to the earlier of the option's specified expiration date or one year
from the date of the optionholder's death or disability.
If the shares of Common Stock shall be subdivided or combined into a
greater or smaller number of shares or if the Company shall issue any shares of
Common Stock as a stock divided on its outstanding Common Stock, the number of
shares of Common Stock deliverable upon the exercise of an option granted under
the Plan shall be appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price per share to reflect
such subdivision, combination or stock dividend. If the Company is to be
consolidated with or acquired by another entity in a merger, sale or all or
substantially all of the Company's assets or otherwise (an "Acquisition"),
outstanding options shall be adjusted by substituting on an equitable basis for
the shares then subject to such options the consideration payable with respect
to the outstanding shares of Common Stock in connection with the Acquisition of
securities of the successor or acquiring entity, provided that such adjustments
may not be made if they would constitute a "modification" of an Incentive Stock
Option (as defined in Section 424 of the Code) or would otherwise cause adverse
tax consequences for holders of the options.
OPTION INFORMATION
The following table sets forth as of August 26, 1998, all options granted
pursuant to the Plan to (i) the named executive officers, (ii) all current
executive officers of the company as a group, (iii) all current directors of the
company who are not executive officers as a group, and (iv) all employees,
including all current officers who are not executive officers, as a group.
NAME TITLE NO. OF OPTIONS
---- ----- GRANTED
--------------
Juan J. Amodei President and Chief Executive Officer 50,000
All current executive officers as a group (1 person)............. 50,000
All current directors who are not executive officers as a group.. 25,000
All employees who are not executive officers as a group (1)...... 312,700
- ----------
(1) Net of all canceled options.
On August 28, 1998, the market value of the company's Common Stock was
$0.625, based on the closing price of such Common Stock on that day.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a description of certain United States federal income
tax consequences of the issuance and exercise of options under the Plan:
Incentive Stock Options. An incentive stock option does not result in
taxable income to the optionee or deduction to the Company at the time it is
granted or exercised, provided that no disposition is made by the optionee of
the shares acquired pursuant to the option within two years after the date of
grant of the option nor within one year after the date of issuance of shares to
him (the "ISO holding period"). However, the difference between the fair market
value of the shares on the date of exercise and the option price will be an item
of tax preference includible in "alternative minimum taxable income." Upon
disposition of the shares after the expiration of the ISO holding period, the
optionee will generally recognize long term capital gain or loss based on the
difference between the disposition proceeds and the option price paid for the
shares. If the shares are disposed or prior to the expiration of the ISO holding
period, the optionee generally will recognize taxable compensation, and the
Company will have a corresponding deduction, in the year of the disposition,
equal to the excess of the fair market value of the shares on the date of
exercise of the option over the option price. Any additional gain realized on
the disposition will normally constitute capital gain. If the amount realized
upon such a disqualifying disposition is less than fair market value of the
shares on the date of exercise, the amount of compensation income will be
limited to the excess of the amount realized over the optionee's adjusted basis
in the shares.
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Non-Qualified Stock Options. The grant of a non-qualified option will
not result in taxable income to the optionee or deduction to the Company at the
time of grant. The optionee will recognize taxable compensation, and the Company
will have a corresponding deduction, at the time of exercise in the amount of
the excess of the then fair market value of the shares acquired over the option
price. Upon disposition of the shares, the optionee will generally realize
capital gain or loss, and his basis for determining gain or loss will be the sum
of the option price paid for the shares plus the amount of compensation income
recognized on exercise of the option.
The affirmative vote of a majority of the shares voted at the Meeting
is required to approve the increase in the aggregate number of shares of Common
Stock available under the Plan.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE ADOPTION OF AN
AMENDMENT TO THE PLAN TO INCREASE BY 100,000 SHARES THE AGGREGATE NUMBER OF
SHARES FOR WHICH STOCK OPTIONS MAY BE GRANTED UNDER THE PLAN, AND PROXIES
SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH AMENDMENT UNLESS A
STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
RATIFICATION OF CHOICE OF INDEPENDENT AUDITORS
(PROPOSAL 4 ON PROXY CARD)
Effective February 9, 1998, Coopers & Lybrand L.L.P. ("Coopers")
resigned as the Company's independent auditors.
Coopers' reports on the financial statements for the Company's most
recent fiscal year ended March 31, 1997 ("Fiscal 1997"), the period from
October 1, 1995 to March 31, 1996 ("Six Months 1996"), and the year ended
September 30, 1995 ("Fiscal 1995") did not contain an adverse opinion or a
disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope or accounting principles. The report of Coopers for the fiscal year
ended March 31, 1997, contained a modification as to the Company's ability to
continue as a going concern. There were no disagreements between the Company
and Coopers during Fiscal 1995, Six Months 1996, Fiscal 1997 and the
subsequent interim periods on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Coopers, would have
caused Coopers to make reference to the subject matter of the disagreements in
conjunction with its reports. In addition, Coopers did not advise the Company
of any events set forth in Item 304(a)(1)(iv)(B) of Regulation S-B, during
Fiscal 1995, Six Months 1996, Fiscal 1997 and the subsequent interim periods.
The Board of Directors has since appointed BDO Seidman, LLP ("BDO")
independent auditors, to audit the books, records and accounts of the Company
for the 1998 fiscal year. This selection is being presented to the stockholders
for ratification at the Annual Meeting of Stockholders.
On June 1, 1998, the Company engaged BDO as its new independent
auditors for the Company's fiscal year ending March 31, 1998. During the
Company's three previous fiscal years and the subsequent interim periods, the
Company did not consult with BDO on items which involved (i) the application of
accounting principles to a specified transaction, either completed or proposed,
(ii) the type of audit opinion that might be rendered on the Company's
financial statements, or (iii) the subject matter of a disagreement or event
set forth in Item 304(a)(1)(iv) of Regulation S-B.
BDO has no direct or indirect material financial interest in the
Company or its subsidiaries. Representatives of BDO are not expected to be
present at the Annual Meeting of Stockholders.
Proxies solicited by the Board of Directors will be so voted unless
stockholders specify otherwise. Ratification by the stockholders is not
required. If the stockholders do not approve the proposal, the Board of
Directors will not change the appointment for fiscal 1999, but will consider the
stockholder vote in appointing auditors for fiscal 1999.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE RATIFICATION OF
THE APPOINTMENT OF BDO SEIDMAN, LLP AS INDEPENDENT PUBLIC ACCOUNTANTS, AND
PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR THEREOF UNLESS A
STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
OTHER MATTERS
The Board of Directors does not know of any other matters, which
may come before the Annual Meeting of Stockholders. However, if any other
matters are properly presented at the Annual Meeting of Stockholders, it is the
intention of the persons named in the accompanying proxy to vote, or otherwise
act, in accordance with their judgment on such matters.
All costs of solicitations of proxies will be borne by the Company.
In addition to solicitations by mail, the Company's directors, officers and
regular employees, without additional remuneration, may solicit proxies by
telephone, telegraph and personal interviews. No additional compensation will be
paid for such solicitation. Brokers, custodians and fiduciaries will be
requested to forward proxy soliciting material to the owners of stock held in
their names, and the Company will reimburse them for out-of-pocket expenses
thereby incurred.
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STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for consideration at
the Company's next Annual Meeting of Stockholders, which is currently scheduled
to be held on August 15, 1999, must submit the proposal to the Company so that
it is received at the principal executive offices of the Company, One Lowell
Research Center, 847 Rogers Street, Lowell, MA 01852, on or before March 15,
1999 for inclusion in the Company's proxy statement and form of proxy related to
the meeting. Stockholders who do not wish to include their proposals in such
proxy statement and form of proxy but who wish to present proposals at the
Company's 1999 Annual Meeting of Stockholders must notify the Secretary of the
Company in writing at the Company's principal executive offices no later than
June 1, 1999 in order for their proposals to be considered timely for purposes
of Rule 14a-4 under the Securities Exchange Act of 1934, as amended. Any
stockholder desiring to submit a proposal should consult applicable regulations
of the Securities and Exchange Commission.
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, YOU ARE
URGED TO FILL OUT, SIGN, DATE AND RETURN THE ENCLOSED PROXY AT YOUR EARLIEST
CONVENIENCE.
By Order of the Board of Directors
Juan J. Amodei
Chairman, Chief Executive Officer and Secretary
September 28, 1998
A COPY OF THE COMPANY'S FORM 10-KSB AND FORM 10-KSB/A AS FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO ANY
STOCKHOLDER AS OF THE RECORD DATE UPON WRITTEN REQUEST TO INDUSTRIAL IMAGING
CORPORATION, INVESTOR RELATIONS, AT ONE LOWELL RESEARCH CENTER, 847 ROGERS
STREET, LOWELL, MA 01852.
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APPENDIX A
BY-LAW AMENDMENTS
ARTICLE III. DIRECTORS.
SECTION 1. GENERAL POWERS, NUMBER, AND TENURE. The business of the
Corporation shall be managed by its Board of Directors, which may exercise all
powers of the Corporation and perform all lawful acts that are not by law, the
Certificate of Incorporation, or these By-laws directed or required to be
exercised or performed by the stockholders. The number of directors shall be
determined by the Board of Directors; if no such determination is made, the
number of directors shall be one.
The Directors shall be classified, with respect to the duration of the
term for which they severally hold office, into three classes (denominated Class
I, Class II and Class III) as nearly equal in number as reasonably possible. The
Board of Directors shall increase or decrease the number of Directors in one or
more classes as may be appropriate whenever it increases or decreases the number
of Directors in order to ensure that the three classes shall be as nearly equal
in number as reasonably possible. The term of office of the initial Class I
Directors shall expire at the annual meeting of stockholders in 1998, the term
of office of the initial Class II Directors shall expire at the annual meeting
of stockholders in 1999, and the term of office of the initial Class III
Directors shall expire at the annual meeting of stockholders in 2000. At each
annual meeting of stockholders, beginning in 1998, the successors of the class
of Directors whose term expires at the meeting shall be elected to hold office
for a term expiring at the annual meeting of stockholders held in the third year
following the year of their election. When a Director is elected, such
Director's Class shall be identified. A Director elected to fill a vacancy on
the Board shall be elected for a term expiring at the annual meeting when the
term of a Director in such class would naturally expire. Each Director shall
serve and hold office until such Director's successor is elected and qualified,
or until such Director's earlier death, resignation or removal.
Notwithstanding any other provision of these By-laws, the provisions of
this Section 1 of this Article III may not be amended except with the prior
approval of stockholders owning at least 75% of all issued and outstanding
shares of Common Stock eligible to vote at such meeting. (AMENDED BY A VOTE OF
THE BOARD OF DIRECTORS OF THE CORPORATION ON NOVEMBER 10, 1997).
***
SECTION 3. REMOVAL OR RESIGNATION.
(a) Except as otherwise provided by law or the Certificate of
Incorporation, any director or the entire Board of Directors may be removed,
only for cause, by the holders of a majority of the shares then entitled to vote
at an election of directors. For purposes of this Section 3(a), "cause shall
mean any action by a director that (i) constitutes fraud, (ii) involves
dishonesty or moral turpitude and constitutes a violation of law, (iii) that
results in a conviction or a guilty plea to a felony or (iv) that is materially
injurious to the financial condition or business of the Corporation." (AMENDED
BY A VOTE OF THE BOARD OF DIRECTORS OF THE CORPORATION ON NOVEMBER 18, 1997).
(b) Any director may resign at any time by giving written notice to the
Board of Directors, the Chairman of the Board, if any, or the President or
Secretary of the Corporation. Unless otherwise specified in such written notice,
a resignation shall take effect on delivery thereof to the Board of Directors or
the designated officer. It shall not be necessary for a resignation to be
accepted before it becomes effective.
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APPENDIX B
1995 STOCK OPTION PLAN, AS AMENDED
TRIPLE I CORPORATION
1995 STOCK OPTION PLAN
ARTICLE I
PURPOSE OF THE PLAN
The purpose of this Plan is to encourage and enable employees,
consultants, directors and others who are in a position TRIPLE I CORPORATION and
of its affiliated corporations upon whose judgment, initiative and efforts the
Corporation depends for the successful conduct of its business, to acquire a
closer identification of their interests with those of the Corporation by
providing them with opportunities to purchase stock in the Corporation pursuant
to options granted hereunder, thereby stimulating their efforts on behalf of the
Corporation and strengthening their desire to remain involved with the
Corporation. Any employee, consultant or advisor designated to participate in
the Plan is referred to as a "Participant."
ARTICLE II
DEFINITIONS
2.1 "Affiliated Corporation" means any stock corporation of which a
majority of the voting common or capital stock is owned directly or indirectly
by the Corporation.
2.2 "Award" means an Option granted under Article V.
2.3 "Board" means the Board of Directors of the Corporation or, if one
or more has been appointed, a Committee of the Board of Directors of the
Corporation.
2.4 "Code" means the internal Revenue Code of 1986, as amended from
time to time.
2.5 "Committee" means a Committee of not less than two members of the
Board appointed by the Board to administer the Plan.
2.6 "Corporation" means TRIPLE I CORPORATION a Delaware corporation, or
its successor.
2.7 "Employee" means any person who is a regular full-time or part-time
employee of the Corporation or an Affiliated Corporation on or after September
1, 1995.
2.8 "Incentive Stock Option" ("ISO") means an option which qualifies as
an incentive stock option as defined in Section 422 of the Code, as amended.
2.9 "Non-Qualified Option" means any option not intended to qualify as
an Incentive Stock Option.
2.10 "Option" means an Incentive Stock Option or Non-Qualified Option
granted by the Board under Article V of this Plan in the form of a right to
purchase Stock evidenced by an instrument containing such provisions as the
Board may establish. Except as otherwise expressly provided with respect to an
Option grant, no Option granted pursuant to the Plan shall be an Incentive Stock
Option.
2.11 "Participant" means a person selected by the Committee to receive
an Award under the Plan.
2.12 "Plan" means this 1995 Stock Option Plan.
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2.13 "Reporting Person" means a person subject to Section 16 of
the Securities Exchange Act of 1934, or any successor provision.
2.14 "Restricted Period" means the period of time selected by the
Committee during which an Award may be forfeited by the person.
2.15 "Stock" means the Common Stock, $.01 par value, of the Corporation
or any successor, including any adjustments in the event of changes in capital
structure of the type described in Article IX.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 ADMINISTRATION BY BOARD. This Plan shall be administered by the
Board of Directors of the Corporation. The Board may, from time to time,
delegate any of its functions under this Plan to one or more Committees. All
references in this Plan to the Board shall also include the Committee or
Committees, if one or more have been appointed by the Board. From time to time
the Board may increase the size of the Committee or Committees and appoint
additional members thereto, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies however caused, or remove
all members of the Committee or Committees and thereafter directly administer
the Plan. No member of the Board or a Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any options
granted hereunder.
If a Committee is appointed by the Board, a majority of the members of
the Committee shall constitute a quorum, and all determinations of the Committee
under the Plan may be made without notice or meeting of the Committee by a
writing signed by a majority of Committee members. On or after registration of
the Stock under the Securities Exchange Act of 1934, the Board shall delegate
the power to select directors and officers to receive Awards under the Plan, and
the timing, pricing and amount of such Awards to a Committee, all members of
which shall be "disinterested persons" within the meaning of rule 16b-3 under
that Act.
3.2 POWERS. The Board of Directors or any Committee appointed by the
Board shall have full and final authority to operate, manage and administer the
Plan on behalf of the Corporation. This authority includes, but is not limited
to:
a. The power to grant Awards conditionally or unconditionally;
b. The power to prescribe the form or forms of any instruments
evidencing Awards granted under this Plan;
c. The power to interpret the Plan;
d. The power to provide regulations for the operation of the
incentive features of the Plan, and otherwise to prescribe and
rescind regulations for interpretation, management and
administration of the Plan;
e. The power to delegate responsibility for Plan operation,
management and administration on such terms, consistent with the
Plan, as the Board may establish;
f. The power to delegate to other persons the responsibility of
performing ministerial acts in furtherance of the Plan's purpose;
and
g. The power to engage the services of persons,
companies, or organizations in furtherance of the
Plan's purpose, including but not limited to, banks,
insurance companies, brokerage firms and consultants.
3.3 ADDITIONAL POWERS. In addition, as to each Option to buy Stock of
the Corporation, the Board shall have full and final authority in its
discretion: (a) to determine the number of shares of Stock subject to each
Option; (b) to determine the time or times at which Options will be granted; (c)
to determine the option price of the
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share of Stock subject to each Option, which price shall be not less than the
minimum price specified in Article V of this Plan; (d) to determine the time or
times when each Option shall become exercisable and the duration of the exercise
period (including the acceleration of any exercise period), which shall not
exceed the maximum period specified in Article V; (e) to determine whether each
Option granted shall be an Incentive Stock Option or a Non-Qualified Option; and
(f) to waive compliance by a Participant with any obligation to be performed by
him under an Option, to waive any condition or provision of an Option, and to
amend or cancel any Option (and if an Option is cancelled, to grant a new Option
on such terms as the Board may specify), except that the Board may not take any
action with respect to an outstanding Option that would adversely affect the
rights of the Participant under such Option without such Participant's consent.
Nothing in the preceding sentence shall be construed as limiting the power of
the Board to make adjustments required by Article XI.
In no event may the Corporation grant an Employee any Incentive Stock
Option that is first exercisable during any one calendar year to the extent the
aggregate fair market value of the Stock (determined at the time the Options are
granted) exceeds $100,000 (under all stock option plans of the Corporation and
any Affiliated Corporation); provided, however, that this paragraph shall have
no force and effect if its inclusion in the Plan is not necessary for Incentive
Stock Options issued under the Plan to qualify as such pursuant to Section
422(d)(1) of the Code.
ARTICLE IV
ELIGIBILITY
4.1 ELIGIBLE EMPLOYEES. All Employees (including Directors who are
Employees) are eligible to be granted Incentive Stock Option and Non-Qualified
Option Awards under this Plan.
4.2 CONSULTANTS, DIRECTORS AND OTHER NON-EMPLOYEES. Any Consultant,
Director (whether or not an Employee) and any other Non-Employee is eligible to
be granted Non-Qualified Option Awards under the Plan, provided the person has
not irrevocably elected to be ineligible to participate in the Plan.
4.3 RELEVANT FACTORS. In selecting individual Employees, Consultants,
Directors and other Non-Employees to whom Awards shall be granted, the Board
shall weigh such factors as are relevant to accomplish the purpose of the Plan
as stated in Article I. An individual who has been granted an Award may be
granted one or more additional Awards, if the Board so determines. The granting
of an Award to any individual shall neither entitle that individual to, nor
disqualify him from, participation in any other grant of Awards.
ARTICLE V
STOCK OPTION AWARDS
5.1 NUMBER OF SHARES. Subject to the provisions of Article XI of this
Plan, the aggregate number of shares of Stock for which Options may be granted
under this Plan shall not exceed 700,000 shares. (AMENDED BY A VOTE OF THE BOARD
OF DIRECTORS OF THE CORPORATION ON SEPTEMBER 15, 1998). The shares to be
delivered upon exercise of Options under this Plan shall be made available, tat
the discretion of the Board, either from authorized but unissued shares or from
previously issued and reacquired shares of Stock held by the Corporation as
treasury shares, including shares purchased in the open market.
Stock issuable upon exercise of an Option granted under the Plan may be
subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board of Directors.
5.2 EFFECT OF EXPIRATION, TERMINATION OR SURRENDER. If an Option under
this Plan shall expire or terminate unexercised as to any shares covered
thereby, or shall cease for any reason to be exercisable in whole or in part, or
if the Corporation shall reacquire any unvested shares issued pursuant to
Options under the Plan, such shares shall thereafter be available for the
granting of other Options under this Plan.
5.3 TERM OF OPTIONS. The full term of each Option granted hereunder
shall be for such period as the Board shall determine. In the case of Incentive
Stock Options granted hereunder, the term shall not exceed ten (10) years from
the date of granting thereof. Each Option shall be subject to earlier
termination as provided in Sections 6.3 and 6.4 Notwithstanding the foregoing,
the term of options intended to qualify as "Incentive Stock Options" shall not
exceed five (5) years from the date of granting hereof if such option is granted
to any Employee who at
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the time such Option is granted owns more than ten percent (10%) of the total
combined voting power of all classes of Stock of the Corporation.
5.4 OPTION PRICE. The Option price shall be determined by the Board at
the time any Option is granted. In the case of Incentive Stock Options, the
exercise price shall not be less than 100% of the fair market value of the
shares covered thereby at the time the Incentive Stock Option is granted (but in
no event less than par value), provided that no Incentive Stock Option shall be
granted hereunder to any Employee if at the time of grant the Employee, directly
or indirectly, owns Stock possessing more than ten percent (100%) of the
combined voting power of all classes of Stock of the Corporation and its
Affiliated Corporations unless the Incentive Stock Option price equals not less
than 110% of the fair market value of the shares covered thereby at the time the
Incentive Stock Option is granted. In the case of Non-Qualified Stock Options,
the exercise price shall not be less than par value.
5.5 FAIR MARKET VALUE. If, at the time an Option is granted under the
Plan, the Corporation's Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Stock on the principal national securities exchange on which the Stock is
graded, if the Stock is then traded on a national securities exchange; or (ii)
the last reported sale price (on that date) of the Stock on the NASDAQ National
Market List, if the Stock is not then traded on a national securities exchange;
or (iii) the closing bid price (or average of bid prices) last quoted (on that
date) by an established quotation service for over-the-counter securities, if
the Stock is not reported on the NASDAQ National Market List. However, if the
Stock is not publicly traded at the time an Option is granted under the Plan,
"fair market value" shall be deemed to be the fair value of the Stock as
determined by the Board after taking into consideration all factors which it
deems appropriate, including, without limitation, recent sale and offer prices
of the Stock in private transactions negotiated at arm's length.
5.6 NON-TRANSFERABILITY OF OPTIONS. No Option granted under this Plan
shall be transferable by the grantee otherwise than by will or the laws of
descent and distribution, and such Option may be exercised during the grantee's
lifetime only by the grantee.
5.7 FOREIGN NATIONALS. Awards may be granted to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or comply with
applicable laws.
ARTICLE VI
EXERCISE OF OPTION
6.1 EXERCISE. Each Option granted under this Plan shall be exercisable
on such date or dates and during such period and for such number of shares as
shall be determined pursuant to the provisions of the instrument evidencing such
Option. The Board shall have the right to accelerate the date of exercise of any
Option, provided that, the Board shall not accelerate the exercise date of any
Incentive Stock Option granted if such acceleration would violate the annual
vesting limitation contained in Section 422(d)(1) of the Code.
6.2 NOTICE OF EXERCISE. A person electing to exercise an Option shall
give written notice to the Corporation of such election and of the number of
shares he or she has elected to purchase and shall at the time of exercise
tender the full purchase price of the shares he or she has elected to purchase.
The purchase price can be paid partly or completely in shares of the
Corporation's Stock valued at Fair Market Value as defined in Section 5.5
hereof, or by any such other lawful consideration as the Board may determine.
Until such person has been issued a certificate or certificates for the shares
so purchased and has fully paid the purchase price for such shares, he or she
shall possess no rights of a record holder with respect to any of such shares.
In the event that the Corporation elects to receive payment for such shares by
means of a promissory note, such note, if issued to an officer, director or
holder of five percent (5%) or more of the Corporation's outstanding Common
Stock, shall provide for payment of interest at a rate no less than the interest
rate then payable by the Corporation to its principal commercial lender, or if
the Corporation has no loan outstanding to an commercial lender, then the
interest rate payable shall equal the
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prevailing prime rate of interest then charged by commercial banks headquartered
in Massachusetts (as determined by the Board of Directors in its reasonable
discretion) plus two percent.
6.3 OPTION UNAFFECTED BY CHANGE IN DUTIES. No Incentive Stock Option
(and, unless otherwise determined by the Board of Directors, no Non-Qualified
Option granted to a person who is, on the date of the grant, an Employee of the
Corporation or an Affiliated Corporation) shall be affected by any change of
duties or position of the optionee (including transfer to or from an Affiliated
Corporation), so long as he or she continues to be an Employee. Employment shall
be considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed ninety (90) days
or, if longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval of
the Board shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Corporation or
any Affiliated Corporation to continue the employment of the optionee after the
approved period of absence.
If the optionee shall cease to be an Employee for any reason other than
death, such Option shall thereafter be exercisable only to the extent of the
purchase rights, if any, which have accrued as of the date of such cessation;
provided that (i) the Board may provide in the instrument evidencing any Option
that the Board may in its absolute discretion, upon any such cessation of
employment, determine (but be under no obligation to determine) that such
accrued purchase rights shall be deemed to include additional shares covered by
such Option; and (ii) unless the Board shall otherwise provide in the instrument
evidencing any Option, upon any such cessation of employment, such remaining
rights to purchase shall in any event terminate upon the earlier of (A) the
expiration of the original term of the Option; or (B) where such cessation of
employment is on account of disability, the expiration of one year from the date
of such cessation of employment and, otherwise, the expiration of three months
from such date. For purposes of the Plan, the term "disability" shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code.
In the case of a Participant who is not an Employee, provisions
relating to the exercisability of an Option following termination of service
shall be specified in the Award. If not so specified, all Options held by such
Participant shall terminate on termination of service to the Corporation.
6.4 DEATH OF OPTIONEE. Should an optionee die while in possession of
the legal right to exercise an Option or Options under this Plan, such persons
as shall have acquired, by will or by the laws of descent and distribution, the
right to exercise any Options theretofore granted, may, unless otherwise
provided by the Board in any instrument evidencing any Option, exercise such
Options at any time prior to one year from the date of death; provided, that
such Option or Options shall expire in all events no later than the last day of
the original term of such Option; provided, further, that any such exercise
shall be limited to the purchase rights which have accrued as of the date when
the optionee ceased to be an Employee, whether by death or otherwise, unless the
Board provides in the instrument evidencing such Option that, in the discretion
of the Board, additional shares covered by such Option may become subject to
purchase immediately upon the death of the optionee.
ARTICLE VII
REPORTING PERSON LIMITATIONS
To the extent required to qualify for the exemption provided by Rule
16b-3 under the Securities Exchange Act of 1934, and any successor provision, at
least six months must elapse from the date of acquisition of an Option by a
Reporting Person to the date of disposition of such Option (other than upon
exercise) its underlying Common Stock.
ARTICLE VIII
TERMS AND CONDITIONS OF OPTIONS
Options shall be evidenced by instruments (which need not be identical)
in such forms as the Board may from time to time approve. Such instruments shall
conform to the terms and conditions set forth in Articles V and VI hereof and
may contain such other provisions as the Board deems advisable which are not
inconsistent with the Plan, including restrictions applicable to shares of Stock
issuable upon exercise of Options. In granting any Non-
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Qualified Option, the Board may specify that such Non-Qualified Option shall be
subject to the restrictions set forth herein with respect to Incentive Stock
Options, or to such other termination and cancellation provisions as the Board
may determine. The Board may from time to time confer authority and
responsibility on one or more of its own members or one or more officers of the
Corporation to executive and deliver such instruments. The proper officers of
the Corporation are authorized and directed to take any and all action necessary
or advisable from time to time to carry out the terms of such instruments.
ARTICLE IX
BENEFIT PLANS
Awards under the Plan are discretionary and are not a part of regular
salary. Awards may not be used in determining the amount of compensation for any
purpose under the benefit plans of the Corporation, or an Affiliated
Corporation, except as the Board may from time to time expressly provide.
Neither the Plan, an Option or any instrument evidencing an Option confers upon
any Participant any right to continue as an Employee of, or consultant or
advisor to, the Corporation or any Affiliated Corporation or affect the right of
the Corporation or any Affiliated Corporation to terminate them at any time.
Except as specifically provided by the Board in any particular case, the loss of
existing or potential profits granted under this Plan shall not constitute an
element of damages in the event of termination of the relationship of a
Participant even if the termination is in violation of an obligation of the
Corporation to the Participant by contract or otherwise.
ARTICLE X
AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
The Board may suspend the Plan or any part thereof any time or may
terminate the Plan in its entirety. Awards shall not be granted after Plan
termination. The Board may also amend the Plan from time to time, except that
amendments which affect the following subjects must be approved by stockholders
of the corporation:
(a) Except as provided in Article XI relative to capital
changes, the number of shares as to which Options may
be granted pursuant to Article V;
(b) The maximum term of Options granted;
(c) The minimum price at which Options may be granted;
(d) The term of the Plan; and
(e) The requirements as to eligibility for participation
in the Plan.
Awards granted prior to suspension or termination of the Plan may not
be cancelled solely because of such suspension or termination, except with the
consent of the grantee of the Award.
ARTICLE XI
CHANGES IN CAPITAL STRUCTURE
The instruments evidencing Options granted hereunder shall be subject
to adjustment in the event of changes in the outstanding Stock of the
Corporation by reason of Stock dividends, Stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other
relevant changes in capitalization occurring after the date of an Award to the
same extent as would affect an actual share of Stock issued and outstanding on
the effective date of such change. Such adjustment to outstanding Options shall
be made without change in the total price applicable to the unexercised portion
of such Options, and a corresponding adjustment in the applicable Option price
per share shall be made. In the event of any such change, the aggregate number
and classes of shares for which Options may thereafter be granted under Section
5.1 of this Plan may be appropriately adjusted as determined by the Board so as
to reflect such change.
Notwithstanding the foregoing, any adjustments made pursuant to this
Article XI with respect to Incentive Stock Options shall be made only after the
Board, after consulting with counsel for the Corporation, determines whether
such adjustments would constitute a "modification" of such Incentive Stock
Options (as that term is defined in Section 424 of the Code) or would cause any
adverse tax consequences for the holders of such Incentive Stock
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Options. If the Board determines that such adjustments made with respect to
Incentive Stock Options would constitute a modification of such Incentive Stock
Options, it may refrain from making such adjustments.
In the event of the proposed dissolution or liquidation of the
Corporation, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as the Board shall determine.
Except as expressly provided herein, no issuance by the Corporation of
shares of Stock of any class, or securities convertible into shares of Stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities of
the Corporation.
No fractional shares shall be issued under the Plan and the optionee
shall receive from the Corporation cash in lieu of such fractional shares.
ARTICLE XII
EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective on September 1, 1995. The Plan shall
continue until such time as it may be terminated by action of the Board or the
Committee; provided, however, that no Options may be granted under this Plan on
or after the tenth anniversary of the effective date hereof.
ARTICLE XIII
CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOS
The Board, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's
Incentive Stock Options, that have not been exercised on the date of conversion,
into Non-Qualified Options at any time prior to the expiration of such Incentive
Stock Options, regardless of whether the optionee is an Employee of the
Corporation or an Affiliated Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of such Options. At the time of such conversion, the
Board or the Committee (with the consent of the optionee) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the Board
or the Committee in its discretion may determine, provided that such conditions
shall not be inconsistent with the Plan. Nothing in the Plan shall be deemed to
give any optionee the right to have such optionee's Incentive Stock Options
converted into Non-Qualified Options, and non such conversion shall occur until
and unless the Board or the Committee takes appropriate action. The Board, with
the optionee's consent, may also terminate any portion of any Incentive Stock
Option that has not been exercised at the time of such termination.
ARTICLE XIV
APPLICATION OF FUNDS
The proceeds received by the Corporation from the sale of shares
pursuant to Options granted under the Plan shall be used for general corporate
purposes.
ARTICLE XV
GOVERNMENTAL REGULATION
The Corporation's obligation to sell and deliver shares of Stock under
this Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.
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ARTICLE XVI
WITHHOLDING OF ADDITIONAL INCOME TAXES
Upon the exercise of a Non-Qualified Option or the making of a
Disqualifying Disposition (as defined in Article XVII) the Corporation, in
accordance with Section 3402(a) of the Code, may require the optionee to pay
additional withholding taxes in respect of the amount that is considered
compensation includible in such person's gross income. The Board in its
discretion may condition the exercise of an Option on the payment of such
additional withholding taxes.
ARTICLE XVII
NOTICE TO CORPORATION OF DISQUALIFYING DISPOSITION
Each Employee who receives an Incentive Stock Option must agree to
notify the Corporation in writing immediately after the Employee makes a
Disqualifying disposition of any Stock acquired pursuant to the exercise of an
Incentive Stock Option. A Disqualifying Disposition is any disposition
(including sale) of such Stock before the later of (a) two years after the date
the Employee was granted the Incentive Stock Option or (b) one year after the
date the Employee acquired Stock by exercising the Incentive Stock Option. If
the Employee has died before such Stock is sold, these holding period
requirements do not apply and no Disqualifying disposition can occur thereafter.
ARTICLE XVIII
GOVERNING LAW; CONSTRUCTION
The validity and construction of the Plan and the instruments
evidencing Options shall be governed by the laws of the State of Delaware
(without regard to the conflict of law principles thereof). In construing this
Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise requires.
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INDUSTRIAL IMAGING CORPORATION
THIS PROXY IS BEING SOLICITED BY INDUSTRIAL IMAGING CORPORATION'S
BOARD OF DIRECTORS
The undersigned, revoking any previous proxies relating to these
shares, hereby acknowledges receipt of the Notice and Proxy Statement
dated September 28, 1998 in connection with the Annual Meeting to be
held at 10:00 a.m. on Friday, October 23, 1998 at One Lowell Research
Center, 847 Rogers Street, Lowell, Massachusetts 01852 and hereby
appoints Juan J. Amodei, the attorney and proxy of the undersigned, to
vote all shares of the Common Stock of Industrial Imaging Corporation
(the "Company") registered in the name provided herein which the
undersigned is entitled to vote at the 1998 Annual Meeting of
Stockholders, and at any adjournments thereof, with all the powers the
undersigned would have if personally present. Without limiting the
general authorization hereby given, said proxy is, instructed to vote
or act as follows on the proposals set forth in said Proxy.
THIS PROXY WHEN EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND FOR PROPOSALS 2, 3 AND 4.
IN HIS DISCRETION THE PROXY IS AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS
THEREOF.
ELECTION OF DIRECTORS (or if any nominee is not available for election,
such substitute as the Board of Directors may designate)
NOMINEES: CLASS I: JUAN J. AMODEI, PH.D. JOSEPH BORDOGNA, PH.D.
CLASS II: CHARLES G. BROMING JOSEPH A. TEVES
CLASS III: HARRY HSUAN YEH, PH.D. SHAIY PILPEL, PH.D.
SEE REVERSE SIDE FOR THE FOUR PROPOSALS. If you wish to vote in
accordance with the Board of Directors' recommendations, just sign on
the reverse side. You need not mark any boxes.
(SEE REVERSE SIDE)
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE.
The Board of Directors recommends a vote FOR Proposals 1, 2, 3 and 4.
1. Election of Directors (See reverse). FOR [ ] WITHHELD [ ]
------------------------------------------
[ ] For all nominees except as noted above.
2. Proposal to amend the Company's By-laws to provide (i) staggered
terms for the Company's Board of Directors, AND (ii) that subsequent
amendment of the By-laws with respect to the classification of
Directors require the prior approval of at least 75% of the Company's
voting stock, AND (iii) that the removal of any or all of the Company's
Board of Directors by stockholders shall be only for cause.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the adoption of an amendment to the 1995 Stock
Option Plan to increase by 100,000 the aggregate number of shares of
Common Stock authorized for issuance thereunder.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to appoint, ratify and confirm the selection of BDO Seidman
LLP as the Company's independent auditors for the fiscal year ending
March 31, 1999.
<PAGE> 27
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Please sign exactly as name(s) appears hereon.
Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or
guardian, please give full title as such.
Signature: _________________ Date ______________
Signature: _________________ Date ______________
