<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
IMPACT SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
IMPACT SYSTEMS, INC.
-------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 15, 1997
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Impact Systems, Inc., a California corporation (the "Company"), will be held on
Wednesday, October 15, 1997 at 3:00 p.m., local time, at the principal offices
of the Company located at 14600 Winchester Boulevard, Los Gatos, California
95030, for the following purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected.
2. To ratify the appointment of Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending March 31,
1998.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on August 15, 1997
are entitled to notice of and to vote at the meeting and any adjournment
thereof.
All shareholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to
complete, date and sign the enclosed Proxy and return it as promptly as possible
in the postage prepaid envelope enclosed for that purpose. If you should attend
the meeting, you may vote in person even though you returned a Proxy.
FOR THE BOARD OF DIRECTORS
KENNETH P. OSTROW, President
Los Gatos, California
September 9, 1997
<PAGE> 3
IMPACT SYSTEMS, INC.
--------------
PROXY STATEMENT FOR 1997 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Impact Systems, Inc., a California corporation (the "Company"), for use at the
Company's 1997 Annual Meeting of Shareholders to be held on Wednesday, October
15, 1997 at 3:00 p.m., local time, or at any adjournment thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Shareholders. The Annual Meeting will be held at the principal offices of the
Company, 14600 Winchester Boulevard, Los Gatos, California 95030. The Company's
telephone number at that address is (408) 379-0910.
These proxy solicitation materials were mailed on or about September 9,
1997 to all shareholders entitled to vote at the meeting.
RECORD DATE
Shareholders of record at the close of business on August 15, 1997 are
entitled to notice of and to vote at the meeting. At the record date, 10,471,076
shares of the Company's Common Stock were issued and outstanding. There were
approximately 2,360 shareholders at that date. The last reported sale price of
the Company's Common Stock on the Nasdaq National Market was $1.53125 on August
15, 1997.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company
(Attention: Robert M. Gorski, Vice President, Finance and Chief Financial
Officer) a written notice of revocation or a duly executed proxy bearing a later
date or by attending the Annual Meeting and voting in person.
VOTING AND SOLICITATION
Each shareholder voting for the election of directors may cumulate such
shareholder's votes, giving one candidate a number of votes equal to the number
of directors to be elected (three) multiplied by the number of shares which the
shareholder is entitled to vote, or distributing the shareholder's votes on the
same principle among as many candidates as the shareholder chooses, provided
that votes may not be cast for more than three candidates. However, no
shareholder shall be entitled to cumulate votes for any candidate unless the
candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the meeting prior to
the voting of the intention to cumulate the shareholder's votes. In the event
that cumulative voting is invoked, the proxy holders will have the discretionary
authority to vote all proxies received by them in such a manner as to ensure the
election of as many of the Board of Directors nominees as possible. See
"Proposal No. 1 -- Election of Directors." On all other matters, each share has
one vote.
The cost of this solicitation will be borne by the Company. The Company
has retained Corporate Investor Communications, Inc. to aid in the distribution
to brokers, banks and other institutional nominees. In addition, the Company may
reimburse brokerage firms and other persons representing beneficial owners of
shares for their expenses in forwarding solicitation material to such beneficial
owners of shares. Solicitation fees and expenses are not expected to exceed
$8,000. Original solicitation of proxies by mail may be supplemented by
telephone, telegram or personal solicitations by directors, officers or regular
employees of the Company. No additional compensation will be paid for any such
services.
<PAGE> 4
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Proposals of shareholders of the Company which are intended to be
presented by such shareholders at the Company's 1998 Annual Meeting of
Shareholders must be received by the Company not later than May 13, 1998 in
order that they may be considered for inclusion in the proxy statement and form
of proxy relating to that meeting.
SECURITY OWNERSHIP
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Company's Common Stock as of August
15, 1997, by (a) each director of the Company, (b) the Company's Chief Executive
Officer and each of the other executive officers, (c) all directors and
executive officers of the Company as a group, and (d) each beneficial owner of
5% or more of the outstanding shares of the Company's Common Stock. Except as
otherwise indicated, each person has sole voting and investment power with
respect to all shares shown as beneficially owned, subject to community property
laws where applicable.
<TABLE>
<CAPTION>
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER(1) OWNED OWNED
- ------------------- ------------ ------------
<S> <C> <C>
Elsag Bailey Process Automation N.V.(2) 2,378,900 22.7%
Schiphol Boulevard 157, 1118 BG Luchthaven Schiphol,
The Netherlands
Kenneth P. Ostrow (3) 1,019,734 9.7%
14600 Winchester Boulevard, Los Gatos, CA 95030
Joseph J. Cusimano (4) 43,461 *
M. N. Zaharna (5)(6) 10,000 *
Robert M. Gorski (7) 141,250 1.3%
John F. Lynch, III (8) 126,250 1.2%
All directors and executive officers as a
group (5 persons) (5)(9) 1,340,695 12.8%
</TABLE>
- -----------------------------
* Represents less than 1% of the outstanding Common Stock.
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in the footnotes hereunder.
(2) All 2,378,900 shares are held of record by Elsag International N.V. which
is ultimately owned and controlled by Elsag Bailey Process Automation N.V..
(3) Includes 351,250 shares issuable upon exercise of options exercisable
within 60 days of August 15, 1997.
(4) Excludes 1,500 shares beneficially owned by children of Mr. Cusimano, as to
which Mr. Cusimano disclaims beneficial ownership. Includes 10,000 shares
issuable upon exercise of options exercisable within 60 days of August 15,
1997.
(5) Excludes 2,378,900 shares beneficially owned by Elsag Bailey Process
Automation N.V., as to which Mr. Zaharna disclaims beneficial ownership. As
is noted elsewhere in these proxy solicitation materials, Mr. Zaharna is
currently the Group Executive Vice President and Chief Operating Officer of
Elsag Bailey Process Automation N.V..
(6) Consists of 10,000 shares issuable upon exercise of options exercisable
within 60 days of August 15, 1997.
(7) Consists of 141,250 shares issuable upon exercise of options exercisable
within 60 days of August 15, 1997.
(8) Includes 96,250 shares issuable upon exercise of options exercisable within
60 days of August 15, 1997.
(9) Includes 608,750 shares issuable upon exercise of options exercisable
within 60 days of August 15, 1997.
2
<PAGE> 5
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
NOMINEES
A board of three (3) directors is to be elected at the Annual Meeting.
Unless otherwise instructed, the proxy holders will vote the proxies received by
them for the Company's nominees named below, all of whom are presently directors
of the Company. In the event that any nominee of the Company is unable or
declines to serve as a director at the time of the Annual Meeting, the proxies
will be voted for any nominee who shall be designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. In the event that additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them in such a manner in accordance with cumulative
voting as will assure the election of as many of the nominees listed below as
possible, and in such event the specific nominees to be voted for will be
determined by the proxy holders. The term of office of each person elected as a
director will continue until the next Annual Meeting of Shareholders or until a
successor has been elected and qualified.
The nominees, and certain information about them, are set forth below.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
- --------------- --- -------------------- --------
<S> <C> <C> <C>
Joseph J. Cusimano 57 President, Honematic Machine 1991
Corporation
Kenneth P. Ostrow 55 President and Chief Executive Officer 1980
of the Company
M. N. Zaharna 55 Group Executive Vice President, 1992
Elsag Bailey Process Automation N.V.
</TABLE>
There are no family relationships among the directors and executive
officers of the Company.
MR. OSTROW, a founder of the Company, has been an officer and director
of the Company from its inception in 1980. Prior to founding the Company, Mr.
Ostrow was with Measurex in senior sales, service and marketing capacities. Mr.
Ostrow holds a B.A. in Mechanical Engineering from Ohio State University and a
M.B.A. from Northeastern University.
MR. CUSIMANO was elected a director of the Company in November 1991.
Mr. Cusimano is President of Honematic Machine Corporation in Boylston,
Massachusetts. Prior to that, he had been a Corporate Vice President of Norton
Company in Worcester, Massachusetts in charge of its Superabrasives and
Abrasives, Asia Operations. Mr. Cusimano joined Norton Company in 1966 and held
several positions within the company prior to his appointment as Marketing Vice
President, Abrasives, Europe, in 1986. In early 1988, Mr. Cusimano was appointed
Divisional Vice President of Seeded-Gel Products, and in early 1989 he was
elected a Corporate Vice President, Chemical Process Products.
MR. ZAHARNA was elected a director of the Company in July 1992. Mr.
Zaharna was appointed to the Board of Directors as a representative of Elsag
International N.V., the parent company of Elsag Bailey, Inc. and a wholly-owned
subsidiary of Elsag Bailey Process Automation N.V. (NYSE:EBY). M. N. Zaharna is
Group Executive Vice President and Chief Operating Officer of Elsag Bailey
Process Automation N.V.. Mr. Zaharna has served as Senior Group Vice
President-Americas, Pacific and the Far East and Group Vice President-Strategic
Marketing and Technology for the Elsag Bailey group of companies since 1992. Mr.
Zaharna has been with Bailey for over 25 years, serving in numerous key
management positions, including Executive Vice President and Chief Operating
Officer of Bailey Controls Company.
3
<PAGE> 6
VOTE REQUIRED AND RECOMMENDATION OF BOARD OF DIRECTORS
The three nominees receiving the highest number of affirmative votes of
the shares entitled to be voted shall be elected as directors. Votes withheld
will be counted for purposes of determining the presence or absence of a quorum
for the transaction of business at the meeting, but have no other legal effect
upon election of directors under California law.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR"
THE NOMINEES SET FORTH HEREIN.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of two meetings
during the fiscal year ended March 31, 1997. During the 1997 fiscal year no
director attended fewer than 75% of the aggregate of all meetings of the Board
of Directors and the committees, if any, on which such director served. The
Board of Directors has an audit committee. The Board of Directors has no
compensation or nominating committee or any other committee performing those
functions.
The Audit Committee of the Board of Directors recommends engagement of
the Company's independent accountants and approves the services performed by
such accountants. In addition, the Audit Committee reviews and evaluates the
Company's accounting principles and its system of internal accounting controls.
The Audit Committee currently consists of Joseph J. Cusimano and M. N. Zaharna.
DIRECTOR COMPENSATION
The Company currently does not pay any cash compensation to directors
for service on the Company's Board. Outside directors are, however, eligible to
participate in the Company's Discount Stock Option Plan. Each non-employee
director will receive an option to purchase on an annual basis $15,000 worth of
DSOs, the number determined by reference to the closing NASDAQ price of the
Company's stock on the date of grant or 5,000 DSOs, whichever is greater. The
options are exercisable upon vesting at 10% of the fair market value on the date
of grant. Options granted to non-employee directors vest in full on the first
anniversary of the date of grant and expire if not exercised within five years
from date of grant.
During the fiscal year which ended March 31, 1997, the Company granted
options to purchase 5,000 shares under its Discount Option Plan exercisable at
$0.20 per share to each of its Outside Directors, Messrs. Cusimano and Zaharna.
This option was not exercisable by either Mr. Cusimano or Mr. Zaharna during the
fiscal year.
EXECUTIVE OFFICERS
The executive officers of the Company and their ages as of August 15,
1997 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ---- --- ---------------------
<S> <C> <C>
Kenneth P. Ostrow 55 President, Chief Executive Officer and Chairman of the Board
Robert M. Gorski 45 Vice President, Finance and Chief Financial Officer
John F. Lynch, III 56 Vice President, Operations
</TABLE>
See "Nominees" above for background information on Mr. Ostrow.
MR. GORSKI joined the Company in April 1988 as Vice President, Finance
and Administration, Chief Financial Officer and Assistant Secretary. Prior to
joining the Company, he was in senior finance capacities with
4
<PAGE> 7
computer manufacturers, Amdahl Corporation and Kaypro Corporation, and Price
Waterhouse. He holds a B.S. in Business Administration from the University of
Illinois and is a Certified Public Accountant.
MR. LYNCH joined the Company in December 1982 as Vice President,
Midwestern Sales and is currently Vice President, Operations. Prior to joining
the Company, he was a Vice President of Measurex Corporation and served in
various senior sales, marketing, and service capacities. He holds a B.S. in
Chemical Engineering from the University of Mississippi and a M.B.A. from the
Harvard Business School.
EXECUTIVE OFFICER COMPENSATION
The following table sets forth all compensation received for services
rendered to the Company in all capacities for each of the three executive
officers of the Company (collectively, the "Named Officers") for the fiscal
years ended March 31, 1997, 1996 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
-------------------- ------------------------------
NUMBER OF
NAME AND RESTRICTED SHARES UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS STOCK AWARD OPTIONS
- ------------------ ---- ------ ----- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Kenneth P. Ostrow, 1997 $230,230 $ 0 - 15,000
President & Chief 1996 $224,700 $ 83,590(1) - 15,000
Executive Officer 1995 $213,400 $ 85,860 - 15,000
Robert M. Gorski, 1997 $153,034 $ 0 - 15,000
Vice President, 1996 $147,210 $ 36,506(1) - 15,000
Finance & Chief 1995 $147,210 $ 46,598 - 15,000
Financial Officer
John F. Lynch III, 1997 $139,749 $ 0 - 15,000
Vice President, 1996 $136,005 $ 41,345(1) - 15,000
Operations 1995 $135,381 $ 30,350 - 15,000
</TABLE>
- ---------------------------
(1) Earned in fiscal 1996 but paid in fiscal 1997.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to
stock options granted to each of the Named Officers during the fiscal year ended
March 31, 1997. In accordance with the rules of the Securities and Exchange
Commission, also shown below is the potential realizable value over the term of
the option (the period from the grant date to the expiration date) based on
assumed rates of stock appreciation of 5% and 10%, compounded annually. These
amounts are based on certain assumed rates of appreciation and do not represent
the Company's estimate of future stock price. Actual gains, if any, on stock
option exercises will be dependent on the future performance of the Common
Stock.
5
<PAGE> 8
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------ POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SHARES OPTIONS GRANTED PRICE APPRECIATION FOR
UNDERLYING TO EMPLOYEES IN EXERCISE OPTION TERM
OPTIONS EXERCISE PRICE PRICE PER EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR SHARE DATE 5% 10%
---- ---------- --------------- ---------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Kenneth P. Ostrow 15,000(1) 17.7% $2.00 10-16-06 $18,867 $47,812
Robert M. Gorski 15,000(1) 17.7% 2.00 10-16-06 18,867 47,812
John F. Lynch III 15,000(1) 17.7% 2.00 10-16-06 18,867 47,812
</TABLE>
- ---------------------------------
(1) Options granted under the Company's 1995 Incentive Stock Option Plan
typically have a 10-year term, vest over a four-year period of employment
and have an exercise price equal to market value on the date of grant.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to option
exercises in fiscal 1997 by the Named Officers and the value of such officers'
unexercised options at March 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END(2)
ACQUIRED ON VALUE ----------------------------- ------------------------------
NAM EXERCISE REALIZED(1) Exercisable Unexercisable Exercisable Unexercisable
- --- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth P. Ostrow 0 0 351,250 33,750 $306,875 $9,375
Robert M. Gorski 0 0 141,250 33,750 $ 90,624 $0
John F. Lynch III 0 0 96,250 33,750 $ 63,438 $0
</TABLE>
- ----------------------------
(1) Market value of underlying securities on the exercise date, minus the
exercise price.
(2) Value is based on the last reported sale price of the Company's Common
Stock on the Nasdaq National Market System of $1.4375 per share on March
31, 1997 (the last trading day for fiscal 1997), minus the exercise price.
SEVERANCE AGREEMENTS
6
<PAGE> 9
The Company has entered into severance agreements (a Senior Plan and a
General Plan) with its officers pursuant to which they may become entitled to
certain special severance benefits in the event their employment is terminated
in connection with certain changes in control of the Company. The Senior Plan is
applicable to Mr. Ostrow and the General Plan is applicable to Mr. Gorski and
Mr. Lynch.
In the case of the Senior Plan:
(i) all outstanding options at the time held by the officer under the
Option Plan will immediately accelerate and become fully exercisable for all the
option shares,
(ii) the Company will make a cash lump sum payment to the officer in an
amount equal to 2.95 times the officer's average W-2 wages from the Company for
the immediately preceding calendar year in which the change in control occurs,
and
(iii) in the event of voluntary termination, an amount equal to 1.5
times the officer's annual compensation.
In the case of the General Plan, the Company will make a lump sum
payment to the officer equal to the minimum of:
(i) six times one-twelfth of the officer's annualized compensation, or
(ii) one-twelfth of the officer's annualized compensation times the
number of years of continuous employment not to exceed nine.
A change in control is defined under each agreement to include (i) a
business combination which has been approved by the requisite vote of
shareholders, (ii) the acquisition of 30% or more of the Company's outstanding
voting stock, (iii) a change in the composition of the Impact Board as a result
of which fewer than a majority of Directors are Incumbent Directors who either
(a) have been Board members since the beginning of such period or (b) are
elected or nominated for election to the Board with the affirmative votes of at
least a majority of the Incumbent Directors at the time of such election or
nomination.
Involuntary termination is defined in each severance agreement as the
officer's discharge (other than for cause) or other termination of employment,
whether voluntary or involuntary, following a 15% or more reduction in the
officer's compensation or level of responsibilities or a change in the officer's
job location without his or her consent. Termination for cause includes any
involuntary termination triggered by the officer's intentional misconduct.
CERTAIN TRANSACTION -- WORKING AGREEMENT
In fiscal 1993, the Company entered into an agreement with Elsag
Bailey, Inc. ("Bailey") which serves as the framework for cross-OEM agreements
with Bailey, a wholly-owned subsidiary of Elsag International N.V. ("Elsag
International"), the Company's largest shareholder. Elsag Bailey Process
Automation N.V. ("EBPA") which ultimately owns and controls both Elsag
International and Bailey, owns 22.9% of the Company's outstanding common shares
at March 31, 1997. The cross-OEM agreement covers both hardware and software.
Impact OEM's the Unity(TM)" Distributed Control System and related software from
Bailey; Bailey OEM's Impact's complete line of cross-direction actuators and
related software, drying systems, and the "AdvantagePlus(TM)" line of scanners
and sensors, which is specifically designed for Distributed Control Systems
(DCS).
During fiscal 1997, the Company recorded revenue of approximately
$2,568,000 on sales to Bailey and Elsag Bailey (Canada) Inc. ("Bailey Canada"),
both of which are subsidiaries to Elsag International. During fiscal 1996, the
Company recorded revenue of $300,000 to Bailey. There were no sales during
fiscal 1995 to Bailey or its affiliates.
7
<PAGE> 10
For fiscal years ended 1995, 1996, and 1997, the Company purchased
$190,000, $213,000, and $540,000, respectively, in hardware and software from
Bailey or Bailey Canada.
At March 31, 1996 the Company had a net outstanding receivable of
$441,000 from Elsag Bailey and Bailey Canada, and a liability of $42,000 in
customer deposits received from an Elsag International subsidiary in Europe. At
March 31, 1997 the Company had a net outstanding receivable of $13,000 from
Bailey.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file an initial report
of ownership on Form 3 and changes in ownership on Form 4 or 5 with the
Securities and Exchange Commission (the "SEC"). Such officers, directors and 10%
shareholders are also required by SEC rules to furnish the Company with copies
of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons that no Forms 5 were
required for such persons, the Company believes that, during the period from
April 1, 1996 to March 31, 1997, all Section 16(a) filing requirements
applicable to its executive officers, directors and ten percent shareholders
were complied with, except that:
M. N. Zaharna, a director of the Company, filed a Form 4 due November
10, 1996, with respect to the grant of an option for 5,000 shares of the
Company's Common Stock, one month late.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected Price Waterhouse LLP, independent
accountants, to audit the financial statements of the Company for the current
fiscal year ending March 31, 1998. Such selection is being presented to the
shareholders for ratification at the Annual Meeting. The affirmative vote of the
holders of a majority of the shares represented and voting at the meeting is
required to ratify the selection. In the event of a negative vote on such
ratification, the Board of Directors will reconsider its selection.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS.
Price Waterhouse LLP has audited the Company's financial statements
since 1982.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting.
If any other matters properly come before the meeting, or any adjournment or
postponement thereof, it is the intention of the persons named in the enclosed
Proxy card to vote the shares they represent as the Board of Directors may
recommend.
FOR THE BOARD OF DIRECTORS
8
<PAGE> 11
KENNETH P. OSTROW, President
Dated: September 9, 1997
9
<PAGE> 12
IMPACT SYSTEMS, INC.
1997 ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 15, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder(s) of Impact Systems, Inc., a California
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated September 9, 1997, and
the Company's Annual Report on Form Consolidated Financial Statements for the
fiscal year ended March 31, 1997, and hereby appoints Kenneth P. Ostrow and
Robert M. Gorski, and each of them, as proxies and attorneys-in-fact, with full
power to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the Annual Meeting of Shareholders of the Company,
to be held on Wednesday, October 15, 1997, at 3:00 p.m. local time, at the
Company's principal offices located at 14600 Winchester Boulevard, Los Gatos,
California 95030, and at any adjournment or postponement thereof, and to vote
all shares of Common Stock which the undersigned would be entitled to vote in
then and there personally present, on the matters set forth below:
1. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
____ FOR all nominees listed below ____ WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
If you wish to withhold authority to vote for any individual nominee,
strike a line through that nominee's name in the list below:
Joseph J. Cusimano, Kenneth P. Ostrow, M. N. Zaharna
2. Proposal to ratify the Board of Director's selection of Price Waterhouse
LLP as the Company's independent accountants for the current fiscal year ending
March 31, 1998.
____ FOR ____ AGAINST ____ ABSTAIN
3. Authority to vote or otherwise represent the shares in their discretion
upon such other matter or matters which may properly come before the meeting or
any adjournment or postponement thereof:
____ AUTHORITY GRANTED ____ AUTHORITY WITHHELD ____ ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED ABOVE OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF THE THREE NOMINEES FOR DIRECTOR,
FOR RATIFICATION OF THE SELECTION OF PRICE WATERHOUSE LLP AS INDEPENDENT
ACCOUNTANTS, AND AS PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME
BEFORE THE MEETING.
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Printed Name
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Title
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Signature
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Signature
Dated: ___________________________ 1997.
(This Proxy should be marked, dated, and signed by the shareholder(s) exactly as
his or her name appears hereon, and returned promptly in the enclosed envelope.
A corporation is requested to sign its name by its President or other authorized
officer, with the office held designated. Executors, administrators, trustees,
etc., are requested to so indicate when signing. If shares are held in two
names, both holders should sign.)
I plan to attend the meeting ____ Yes ____ No
