SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
LIBERTY TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No Fee Required.
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
_____________________________________________________________________________
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 No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
<PAGE>
LIBERTY TECHNOLOGIES, INC.
555 NORTH LANE
CONSHOHOCKEN, PENNSYLVANIA 19428
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 9, 1998
To our Shareholders:
The Annual Meeting of Shareholders of Liberty Technologies, Inc. (the
"Company") will be held at the Philadelphia Marriott West, 111 Crawford Avenue,
West Conshohocken, Pennsylvania 19428, on Tuesday, June 9, 1998, at 10:30 a.m.
(Eastern Daylight time), for the following purposes:
1. To elect seven directors, constituting the entire Board of
Directors of the Company;
2. To consider and act upon a proposal by the Board of Directors to
ratify the appointment of Arthur Andersen LLP as independent
certified public accountants for the Company for its fiscal year
ending December 31, 1998; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on April 24, 1998 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
It is important that as many shareholders as practicable be represented at
the meeting. Consequently, whether or not you expect to attend the meeting in
person, please complete, date and sign the enclosed proxy card and return it as
soon as possible to the Company in the accompanying envelope, which requires no
postage if mailed in the United States.
THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF
YOU ATTEND THE MEETING. YOU MAY REVOKE THE PROXY AT ANY TIME BEFORE THE
AUTHORITY GRANTED THEREIN IS EXERCISED.
By Order of the Board of Directors
/s/ JAMES D. ROSENER
----------------------
JAMES D. ROSENER
Secretary
Dated: April 27, 1998
<PAGE>
LIBERTY TECHNOLOGIES, INC.
555 NORTH LANE
CONSHOHOCKEN, PENNSYLVANIA 19428
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS--JUNE 9, 1998
This Proxy Statement is furnished to the shareholders of Liberty
Technologies, Inc. (the "Company") in connection with the solicitation on behalf
of the Board of Directors of proxies to be voted at the Annual Meeting of
Shareholders ("Annual Meeting"). The Annual Meeting will be held on Tuesday,
June 9, 1998, at the time and place and for the purposes set forth on the
attached Notice of Annual Meeting of Shareholders. The executive offices of the
Company are located at 555 North Lane, Conshohocken, Pennsylvania 19428.
The approximate date upon which this Proxy Statement, the accompanying form
of Proxy and the Company's Annual Report to its Shareholders are to be mailed to
shareholders is May 1, 1998.
All shares represented by properly executed proxies will be voted in
accordance with directions on the proxies. If no direction is indicated, the
shares will be voted at the Annual Meeting FOR the election of the named
nominees for directors and FOR the ratification of the appointment of Arthur
Andersen LLP as independent certified public accountants for the Company for its
fiscal year ending December 31, 1998. A shareholder executing and returning a
proxy may revoke it at any time before it is exercised by written notice to the
Secretary of the Company or by voting in person at the Annual Meeting.
The Board of Directors does not know of any matters to be brought before
the Annual Meeting other than the items set forth in the foregoing Notice. The
enclosed proxy card confers discretionary authority to the Board-appointed
persons named therein to vote on any other matter that is properly presented for
action at the Annual Meeting.
Cost of solicitation of proxies by the Board of Directors is to be borne by
the Company. In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telecopier transmission by the directors,
officers and employees of the Company. Arrangements may also be made with
brokerage houses and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of stock held of
record by such persons, and the Company may reimburse such custodians, nominees
and fiduciaries for reasonable out-of-pocket expenses incurred by them in
connection therewith.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only holders of record of shares of Common Stock, par value $.01 per share
(the "Common Stock"), of the Company at the close of business on April 24, 1998
will be entitled to vote at the Annual Meeting. On that date, 5,007,718 shares
of Common Stock, the only outstanding voting securities of the Company, were
issued and outstanding. Each share is entitled to one vote. A majority of the
voting power of the outstanding shares of capital stock of the Company,
represented in person or by proxy, shall constitute a quorum for the transaction
of business at the Annual Meeting. Directors will be elected by a plurality of
the votes of the shares present in person or represented by proxy at the Annual
Meeting and entitled to vote on the election of directors. Action on the other
matters scheduled to come before the Annual Meeting will be authorized by the
affirmative vote of the majority of shares present in person or represented by
proxy at the Annual Meeting and entitled to vote on such matters. Abstentions
will be treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the approval of any matter submitted to the shareholders for a vote. If a broker
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will not be
considered as present and entitled to vote with respect to that matter.
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The table below sets forth, as of April 24, 1998, certain information
regarding the beneficial ownership of the Company's Common Stock by each
shareholder known to the Company to be the beneficial owner of more than 5% of
the Common Stock, each of the Company's directors and the executive officers
named in the Company's Summary Compensation Table, and all directors and
executive officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
NAME AND ADDRESS OF -------------------------------------------
BENEFICIAL OWNER(1) NUMBER PERCENT
------------------- ------ -------
<S> <C> <C>
L. Mark Newman ............................................. 475,300 9.5%
Atalanta Selective Fund Number Six
Limited Partnership
The Kauffman Fund, Inc.(2) ................................. 350,000 7.0%
140 East 45th Street, 43rd Floor
New York, New York 10017
Stephen A. Wells(3) ........................................ 287,900 5.7%
P.O. Box 549
Little River, TX 76554
R. Nim Evatt(4)............................................. 280,110 5.6%
Robert L. Leon(5)........................................... 270,012 5.4%
Daniel G. Clare(6).......................................... 26,250 *
Richard J. Defieux(7) ...................................... 17,500 *
Edison Venture Fund, L.P.
997 Lenox Drive #3
Lawrenceville, NJ 08648
James D. Rosener(8) ........................................ 15,000 *
Pepper, Hamilton LLP
1235 Westlakes Drive, Suite 400
Berwyn, PA 19312
Roland K. Bullard, II....................................... 12,000 *
All executive officers and directors %
as a group (8 persons)(9)................................... 1,384,072 27.6
</TABLE>
- ------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) The address of Messrs. Leon, Evatt, Clare, and Bullard is c/o Liberty
Technologies, Inc., 555 North Lane, Conshohocken, PA 19428.
(2) As reported in a Schedule 13G dated December 31, 1997 and filed with the
Securities and Exchange Commission.
(Footnotes continued on next page)
2
<PAGE>
(Footnotes continued from previous page)
(3) Includes 127,500 shares owned by Stephen A. Wells; 129,400 shares owned by
Wells Resources, Inc.; 1,000 shares owned by Stephen A. Wells Profit
Sharing Plan and 30,000 shares owned by Dan Kirkland Wells Foundation.
(4) Includes stock options granted by the Company which are currently
exercisable or exercisable within 60 days of April 24, 1998 to purchase
276,250 shares of Common Stock.
(5) Includes 969 shares owned by Susan Leon, Mr. Leon's spouse, and stock
options granted by the Company which are currently exercisable or
exercisable within 60 days of April 24, 1998 to purchase 67,000 shares of
Common Stock.
(6) Represents stock options granted by the Company which are currently
exercisable or exercisable within 60 days of April 24, 1998 to purchase
26,250 shares of Common Stock.
(7) Mr. Defieux is a General Partner of Edison Partners, L.P., the general
partner of Edison Venture Fund, L.P. Mr. Defieux, together with the other
general partners of Edison Partners, L.P., shares voting and investment
power with respect to the shares beneficially owned by Edison Venture Fund,
L.P. Mr. Defieux does not own any outstanding shares of Common Stock in his
individual capacity and disclaims beneficial ownership of the shares held
by Edison Venture Fund, L.P. except as to his proportionate partnership
interest therein. Represents stock options granted by the Company which are
currently exercisable or exercisable within 60 days of April 24, 1998 to
purchase 17,500 shares of Common Stock.
(8) Represents stock options granted by the Company which are currently
exercisable or exercisable within 60 days of April 24, 1998 to purchase
15,000 shares of Common Stock.
(9) Includes stock options granted by the Company which are currently
exercisable or exercisable within 60 days of April 24, 1998 to purchase
402,000 shares of Common Stock.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than ten percent of the Common Stock, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of the Common Stock and other equity securities of the
Company. Officers, directors and greater than ten percent shareholders are
required under regulations promulgated by the Securities and Exchange Commission
to furnish the Company with copies of all Section 16(a) forms which they file.
To the Company's knowledge, based solely on a review of copies of such reports
furnished to the Company, during the fiscal year ended December 31, 1997, there
were late filings of Form 5 to report option grants to Daniel G. Clare, Richard
J. Defieux, John A. Hinds, and James D. Rosener. All Section 16(a) filing
requirements were satisfied.
NOMINATION AND ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
At the Annual Meeting, all seven of the current members of the Board of
Directors will be elected to hold office until the next annual meeting of
shareholders and until their successors are elected and have qualified. Unless
the proxy received pursuant to this solicitation contains contrary instructions,
the persons appointed therein shall vote all proxies received by them for the
election of the five nominees named below.
Each nominee has consented to be named in this Proxy Statement and to serve
if elected. In the event that any nominee should decline or become unavailable
to stand for election for any presently unforeseen reason, the persons appointed
in the form of proxy will vote for such other person as may be designated by the
present Board
3
<PAGE>
of Directors. The information contained in this Proxy Statement concerning the
nominees and their security holdings has been furnished by them to the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES NAMED BELOW.
Nominees
Set forth below is the name, age, position with the Company and
biographical information concerning each nominee, as of April 24, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
R. Nim Evatt(1)........................ 56 President, Chief Executive Officer
and Chairman of the Board
Robert L. Leon......................... 57 Director
Richard J. Defieux(1)(2)............... 46 Director
James D. Rosener(1)(2)................. 42 Director
Stephen A. Wells(1)(2)................. 54 Director
Roland K. Bullard, II.................. 54 Director
L. Mark Newman......................... 58 Director
</TABLE>
- ------------------
(1) Member of the Compensation and Benefits Committee
(2) Member of the Audit Committee
R. Nim Evatt has been a director of the Company since October 1991 and
Chairman of the Board since April 1992. He joined the Company as Executive Vice
President and Chief Operating Officer in April 1991 and was elected President
and Chief Executive Officer in October 1991. From 1988 to 1990, Mr. Evatt was
President of ICC Technologies, Inc., which develops, manufactures and markets
co-generation and desiccant cooling systems.
Robert L. Leon co-founded the Company in 1984 and served as Vice President
and Chief Technical Officer from its inception until his retirement in January
1996. Mr. Leon has been a director of the Company from its inception until 1990
and from 1991 until the present. Mr. Leon is currently employed by the Company
on a part-time basis.
Richard J. Defieux has been a director of the Company since October 1987.
Mr. Defieux is a General Partner of Edison Partners, L.P., which is the General
Partner of Edison Venture Fund, L.P., a private venture capital firm. Prior to
joining Edison in 1987, he was a General Partner of Princeton/Montrose Partners,
a venture capital firm. Mr. Defieux serves as a member of the Board of Strategic
Diagnostics and a number of private companies in which the Edison Venture Funds
have invested.
James D. Rosener has been a director since December 1994. He is a partner
with the firm of Pepper Hamilton LLP where he has practiced law since 1986. Mr.
Rosener serves on the Boards of Directors of Bonney Forge Corporation, Aonix
Inc., Cedar Investments, Inc. and two U.S. affiliates of Seton Healthcare Group
plc., a U.K. based public company.
4
<PAGE>
Stephen A. Wells has been a director since October 1997. He is president of
Wells Resources, a private company with oil and gas and ranching interests. Mr.
Wells presently serves on the Board of Directors of CONEMSCO, Inc. and Energy
Consolidation, Inc.
Roland K. Bullard, II has been a director since January 1998. He is a
founding partner of Strategic Performance, Inc. Mr. Bullard is Chairman of the
Philadelphia Advisory Board of Directors of First Union National Bank.
L. Mark Newman has been a director since January 1998. He is CEO of
Atalanta Investment Company, and Atalanta Capital Corporation. Mr. Newman is
also a member of the New York Society of Security Analysts.
General Information About Board of Directors
The Board of Directors held seven meetings during 1997, of which one was
telephonic, and took action by unanimous written consent in lieu of a formal
meeting on five occasions. Each director attended in person or by telephonic
conference each Board meeting held during 1997 while such person was a member of
the Board.
The Board of Directors has an Audit Committee and a Compensation and
Benefits Committee.
The Audit Committee, composed of Messrs. Defieux, Hinds, Wells and Rosener,
met once during 1997. Its principal functions include making recommendations to
the Board regarding the annual selection of independent public accountants and
review of the recommendations of the independent public accountants as a result
of their audit of the Company.
The Compensation and Benefits Committee is composed of Messrs. Evatt,
Defieux, Wells and Rosener, all of whom serve with respect to its compensation
function. Messrs. Defieux and Wells serve with respect to grants of stock
options to executive officers. Messrs. Defieux, Evatt, Wells and Rosener serve
with respect to grants to any other persons. This committee met six times during
1997. Mr. John A. Hinds, who submitted his letter of resignation from the
Company's Board of Directors on March 4, 1998, was present at all six meetings.
Mr. Wells, who became a Director in October, 1997, participated in the December
meeting. Its principal functions are to exercise the power of the Board in
approving compensation and benefits objectives, practices and policies for all
employees, setting compensation for the officers of the Company and making
determinations with respect to the granting of stock options under the Company's
1992 Stock Option Plan, including the relevant terms thereof.
Employee directors are not compensated for their services as members of the
Board. Compensation of outside directors is determined by action of the
Compensation and Benefits Committee or the whole Board after receiving the
recommendations of the Chief Executive Officer. Currently, non-employee
directors are paid $1,250 per meeting attended. Each non-employee director has
been granted an option to purchase 10,000 shares of Common Stock on the later to
occur of October 1, 1993 and the date that such director is first elected to the
Board. In addition, each non-employee director is entitled to receive an annual
grant of a stock option under the Company's 1992 Stock Option Plan to purchase
2,500 shares of Common Stock, such option to be granted, priced and fully vested
on the date that is the anniversary of the commencement of such director's
service.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to its
officers for the years ended December 31, 1997, 1996 and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG-TERM COMPENSATION
---------------------------------- --------------------------
OTHER ANNUAL ALL OTHER
NAME AND SALARY BONUS COMPENSATION(1) OPTIONS/ COMPENSATION(2)
PRINCIPAL POSITION YEAR ($) ($) ($) SARS (#) ($)
------------------ ---- ------ ----- --------------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
R. Nim Evatt..................... 1997 206,772 -- -- -- 2,375
Chief Executive 1996 194,500 -- -- 25,000 2,375
Officer; President 1995 180,153 -- -- 55,000 2,310
Daniel G. Clare.................. 1997 140,000 -- -- 10,000 1,842
Chief Financial Officer; 1996 131,176 -- -- 15,000 1,767
Vice President 1995 90,600 -- -- 25,000 486
</TABLE>
- ------------------
(1) Would include perquisites and other personal benefits paid for by the
Company, such as automobile payments, long-term disability and life
insurance premiums and relocation expenses. The value of such personal
benefits for each of the named executive officers was less than the minimum
required to be reported, the lesser of $50,000 or 10% of annual salary and
bonus.
(2) Represents allocations to accounts of executive officers under the Company's
Retirement Savings Plan, which is intended to qualify under Sections 401(a)
and 401(k) of the Internal Revenue Code of 1986, as amended (the "401(k)
Plan"). Employees of the Company who have completed at least one-half year
of service with the Company are eligible to make contributions to the 401(k)
Plan on a pre-tax basis in accordance with certain limitations set forth in
the 401(k) Plan or defined in the Code. The Company matches 25% of each
employee's pre-tax contributions, up to a maximum matching contribution of
1.5% of such participant's annual compensation. The pre-tax contributions by
participants and the earnings thereon are at all times fully vested. The
Company's contribution vests to the employee at a rate of 50% for each year
of service with the Company. A participant's vested benefit under the 401(k)
Plan may be distributed to the participant upon his retirement, death,
disability or termination of employment or upon reaching age 59 1/2.
6
<PAGE>
The following table presents information concerning stock options granted
to the named executive officers in 1997:
OPTION/SAR GRANTS IN 1997
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- ------------------------------------------------------------------------------------ --------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---- ------------ ------------ ----------- ---------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Daniel G. Clare......... 10,000(1) 7% $2.750 5/13/07 $17,295 $ 43,828
</TABLE>
- ------------------
(1) Options under this grant vest over four years on the annual anniversary of
the option grant date in increments of 25% of total shares granted. These
options expire May, 2007.
The following table presents information concerning the exercise of stock
options by any of the named executive officers during 1997 and stock option
values for unexercised stock options held by each of the named executive
officers as of the end of 1997:
AGGREGATED OPTION EXERCISES IN 1997
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF UNEXERCISED OPTIONS VALUE OF IN-THE-MONEY
SHARES AT YEAR END OPTIONS/SARS AT YEAR END
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Nim Evatt............... -- -- 265,500 29,500 $ 96,135 $ 0
Daniel G. Clare............ -- -- 16,250 33,750 $ 0 $ 4,370
</TABLE>
- ------------------
(1) Represents the product of the number of shares acquired on exercise,
multiplied by the difference between (i) the per share fair market value of
the Common Stock on the date of exercise and (ii) the exercise price per
share.
Employment Agreements
The Company has an employment agreement with Mr. Evatt dated April 1, 1991.
Mr. Evatt is employed at will under his agreement and, if terminated without
cause, is entitled to one-half of his then current base salary for a period of
two years from the time notice is given, reduced by any period during which the
agreement's noncompetition provision, which runs for two years after employment
terminates, is violated. The Company entered into an employment agreement with
Mr. Leon, dated December 28, 1995, which provides for, in effect, a phased-in
retirement for the former executive officer with a gradual reduction of time
commitments and responsibilities, as well as compensation, over the term of the
agreement. Mr. Leon's agreement has a three year term from January 1, 1996
through December 31, 1998 and includes covenants not to compete during the term.
7
<PAGE>
Board of Directors
With regard to compensation for the Board of Directors, employee directors
are not compensated for their services as members of the Board. Compensation of
outside directors is determined by action of the Compensation and Benefits
Committee or the whole Board after receiving the recommendations of the Chief
Executive Officer. Currently, non-employee directors are paid $1,250 per meeting
attended. Each non-employee director has been granted an option to purchase
10,000 shares of Common Stock on the later to occur of October 1, 1993 and the
date that such director is first elected to the Board. In addition, each
non-employee director is entitled to receive an annual grant of a stock option
under the Company's 1992 Stock Option Plan to purchase 2,500 shares of Common
Stock, such option to be granted, priced and fully vested on the date that is
the anniversary of the commencement of such director's service. The exercise
price of option grants is set at the NASDAQ closing price on the day prior to
the date of grant.
COMPENSATION AND BENEFITS COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Benefits Committee of the Board of Directors (the
"Committee") is charged with reviewing and approving the Company's compensation
objectives, practices and policies for all employees, setting the specific
compensation for the Chief Executive Officer and other executive officers of the
Company and making determinations with respect to the granting of stock options
under the Company's 1992 Stock Option Plan, including the relevant terms
thereof. The current members of the Committee are Messrs. Evatt, Defieux,
Rosener, and Wells, except with respect to the grant of stock options to
executive officers, in which case the members are Messrs. Defieux and Wells
alone. Mr. Evatt is the Company's President, Chief Executive Officer and
Chairman of the Board, and Messrs. Defieux, Rosener, and Wells are non-employee
directors of the Company.
For the fiscal year ended December 31, 1997, the Committee continued to
implement compensation policies, plans and programs that were developed during
1995 which align the financial interests of the Company's senior management, in
their management capacities, with those of its shareholders. The Committee
believes that (1) executive compensation should be meaningfully related to the
performance of the Company and the value created for shareholders; (2)
compensation programs should support both short and long-term goals and
objectives of the Company; (3) compensation programs should reward individuals
for outstanding contributions to the Company's success; and (4) short and
long-term compensation policies play a significant role in attracting and
retaining well qualified executives.
In setting annual compensation for executive officers, the Committee
reviews a number of criteria relating to the performance of the Company
generally and of each executive officer specifically (other than the Chief
Executive Officer) during the prior fiscal year and evaluates its expectation as
to each such individual's future contributions to the Company. With respect to
the Chief Executive Officer, such review is conducted by the three non-employee
directors of the Company who serve on the Committee.
The salaries of the executive officers for 1997 were based on an evaluation
of individual job performance and the performance of the Company as a whole. In
making its decision on salary levels, the Committee did not use any
predetermined formula or assign any particular weight to any individual
criteria. The Committee also has discretion to pay bonus compensation, although
there is no formalized incentive payment plan or program and no annual bonuses
were paid to executive officers for 1997.
The Committee believes that it is essential for executives, as well as
other employees, of the Company, to own significant amounts of Common Stock,
through the granting of stock options which generally vest over a four year
period, thereby better aligning the long-term interest of executives with that
of the Company's shareholders. The Compensation and Benefits Committee believes
that stock options provide incentive to executives by giving
8
<PAGE>
them a strong economic interest in maximizing stock price appreciation and
enhancing their performance in attaining long-term Company objectives. The
Committee believes that such modification will further align the long-term
interest of the Company's executives and other employees to that of the
Company's shareholders. The Company also uses initial option grants to induce
qualified senior management candidates to accept offers of employment.
Beginning in 1994, Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), limits the deductibility of compensation in excess of $1
million paid to the Company's Chief Executive Officer and to any of the other
four highest-paid executive officers unless such compensation qualifies as
"performance-based," as defined in Section 162(m) and the regulations
thereunder. The Company is assessing, and generally will seek to implement steps
to eliminate or minimize, the impact of this provision on its compensation plans
and policies and to assure future deductibility of senior executive
compensation, to the extent that so qualifying does not compromise the
Committee's flexibility in designing effective, competitive compensation plans
and is not inconsistent with the Company's fundamental compensation policies.
The effect of Section 162(m) did not limit the deductibility of any compensation
paid to any of the "covered employees" of the Company between 1994 to 1997.
R. Nim Evatt
Richard J. Defieux
James D. Rosener
Stephen A. Wells
The above Report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 (the "Securities Act") or the Exchange
Act and shall not otherwise be deemed filed under such Acts.
COMPENSATION AND BENEFITS COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation and Benefits Committee of the Board of Directors currently
consists of R. Nim Evatt, Richard J. Defieux, Stephen A. Wells and James D.
Rosener. Mr. Evatt is the Chairman of the Board, Chief Executive Officer and
President of the Company. Mr. Defieux is an affiliate of one of the two venture
capital funds that together were controlling shareholders of the Company prior
to its initial public offering, each of which had a right to designate one board
member at such time, which right terminated upon the closing of the initial
public offering. See also "Certain Transactions."
9
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The graph below compares cumulative total return (assuming $100 invested at
the opening of the market on March 31, 1993, the date that the Company's Common
Stock began trading on the Nasdaq National Market, and the reinvestment of
dividends paid during the period) of the Common Stock with the Nasdaq Stock
Market -- U.S. Companies Index and the Nasdaq Stock Market-Laboratory Apparatus
and Analytical, Optical, Measuring and Controlling Instruments Index (SIC Code
382). The Company does not make nor endorse any predictions as to future stock
performance.
In the printed version of this document, a line graph appears which
depicts the following plot points.
Liberty Technologies, Inc. Nasdaq Stock Market NASDAQ Stocks (Peer)
------------------------- ------------------- --------------------
03/31/93 100 100 100
12/31/93 104.11 112.678 107.158
12/30/94 41.096 110.14 119.105
12/29/95 54.795 155.767 174.02
12/31/96 35.616 191.587 243.751
12/31/97 25.342 235.157 278.589
The graph set forth above shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or the Exchange Act and shall not otherwise be
deemed filed under such Acts.
10
<PAGE>
CERTAIN TRANSACTIONS
James D. Rosener, a director of the Company who has been nominated for
reelection to the Board, is a partner of the law firm of Pepper Hamilton LLP,
which is general counsel to and provides various legal services for the Company.
AUDITORS
(PROPOSAL NO. 2)
Arthur Andersen LLP have been the Company's auditors since 1992. Upon the
recommendation of the Audit Committee, the Board of Directors has appointed
Arthur Andersen LLP to be the independent auditors of the Company for the year
ending December 31, 1998. It is anticipated that representatives of Arthur
Andersen LLP will be present at the Annual Meeting to respond to questions and,
if they desire, to make a statement. THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR RATIFICATION OF THIS APPOINTMENT.
PROPOSALS OF SHAREHOLDERS
Under certain circumstances, shareholders are entitled to present proposals
at shareholder meetings. Any such proposal to be included in the Proxy Statement
for the Company's 1999 Annual Meeting of Shareholders must be submitted by a
shareholder to the Company's Secretary prior to December 29, 1998 in a form that
complies with applicable regulations.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance thereof files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, or obtained by mail from the
Public Reference Section of the Commission, at prescribed rates.
OTHER BUSINESS
The Board of Directors knows of no other business which will be presented
at the Annual Meeting. If, however, other matters are properly presented, the
persons named in the enclosed proxy will vote the shares represented thereby in
accordance with their best judgment.
By Order of the Board of Directors
/s/ JAMES D. ROSENER
-----------------------------
JAMES D. ROSENER
Secretary
11
<PAGE>
PROXY LIBERTY TECHNOLOGIES, INC. PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, revoking all previous proxies, hereby appoints R. Nim Evatt
and Daniel G. Clare, or any of them acting individually, as the proxy of the
undersigned, with full power of substitution, to vote, as indicated below and in
their discretion upon such other matters as may properly come before the
meeting, all shares which the undersigned would be entitled to vote at the
Annual Meeting of the Company to be held at 10:30 A.M., Eastern Daylight time,
June 9, 1998 at the Philadelphia Marriott West, 111 Crawford Avenue, West
Conshohocken, Pennsylvania 19428, and at any adjournment or postponement
thereof.
1. ELECTION OF DIRECTORS:
<TABLE>
<S> <C>
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY
to vote for all nominees listed below
</TABLE>
<TABLE>
<S> <C>
Nominees: For a one-year term expiring at the next Annual Meeting of
Shareholders:
R. Nim Evatt, Robert L. Leon, Richard J. Defieux, James D.
Rosener, Stephen A. Wells, Roland K. Bullard and
L. Mark Newman.
(Instruction: To withhold authority to vote for any nominee(s), write the
name(s) of such nominee(s) on the line below.)
</TABLE>
- --------------------------------------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS
FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998:
<TABLE>
<S> <C> <C>
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
(Please date and sign your Proxy on the reverse side and return it promptly)
<PAGE>
This Proxy is solicited on behalf of the Board of Directors. Unless
otherwise specified, the shares will be voted "FOR" the election of all nominees
for director listed on the reverse side hereof and "FOR" ratification of
appointment of Arthur Andersen LLP as the Company's independent public
accountants. This Proxy also delegates discretionary authority with respect to
any other business which may properly come before the meeting or any adjournment
or postponement thereof.
The undersigned hereby acknowledges receipt of the notice of Annual Meeting
and Proxy Statement.
Date: ____________________, 1998
--------------------------------
Signature of Shareholder
--------------------------------
Signature of Shareholder
NOTE: PLEASE SIGN THIS PROXY
EXACTLY AS NAME(S) APPEAR ON
YOUR STOCK CERTIFICATE. WHEN
SIGNING AS ATTORNEY-IN-FACT,
EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE ADD YOUR
TITLE AS SUCH, AND IF SIGNER IS
A CORPORATION, PLEASE SIGN WITH
FULL CORPORATE NAME BY A DULY
AUTHORIZED OFFICER OR OFFICERS
AND AFFIX THE CORPORATE SEAL.
WHERE STOCK IS ISSUED IN THE
NAME OF TWO (2) OR MORE PERSONS,
ALL SUCH PERSONS SHOULD SIGN.
