<PAGE>
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:
[_]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
ADVANCED DEPOSITION TECHNOLOGIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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 previously paid 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>
ADVANCED DEPOSITION TECHNOLOGIES, INC.
580 MYLES STANDISH BOULEVARD
MYLES STANDISH INDUSTRIAL PARK
TAUNTON, MASSACHUSETTS 02780
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
Advanced Deposition Technologies, Inc. (the "Company") to be held at 10:00
a.m. on Thursday, May 22, 1997 at the Holiday Inn, 700 Myles Standish
Boulevard, Taunton, Massachusetts 02780.
At the Annual Meeting, you will be asked (i) to elect two (2) Class I
Directors of the Company; (ii) to approve an amendment to the Company's 1993
Stock Option Plan; and (iii) to ratify the selection of the Company's
independent accountants for the year ending December 31, 1997. The Board of
Directors recommends the approval of each of these proposals.
Further details of these matters to be considered at the Annual Meeting are
contained in the attached Proxy Statement that we urge you to consider
carefully. The Company's 1996 Annual Report, which is not part of the Proxy
Statement, is also enclosed and provides additional information regarding the
financial results of the Company in 1996.
We hope that you will be able to attend the Annual Meeting. Whether or not
you plan to attend the Annual Meeting, it is important that your shares are
represented. Therefore, please complete, date, sign and return the enclosed
proxy card promptly in the enclosed envelope, which requires no postage if
mailed in the United States. This will ensure your proper representation at
the Annual Meeting. If you attend the Annual Meeting, you may vote in person
if you wish, even if you have previously returned your Proxy.
Sincerely,
Glenn J. Walters
President and Chief Executive
Officer
Taunton, Massachusetts
April 24, 1997
YOUR VOTE IS IMPORTANT.
PLEASE RETURN YOUR PROXY PROMPTLY.
<PAGE>
ADVANCED DEPOSITION TECHNOLOGIES, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
----------------
To The Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of Advanced
Deposition Technologies, Inc. (the "Company"), a Delaware corporation, will be
held on Thursday, May 22, 1997 at 10:00 a.m. at the Holiday Inn, 700 Myles
Standish Boulevard, Taunton, Massachusetts, for the following purposes:
1. To elect two (2) Class I Directors;
2. To approve an amendment to the Company's 1993 Stock Option Plan to
limit the number of shares of Common Stock that may be granted pursuant to
stock options to any employee in any one year period to a number not to
exceed 500,000 shares.
3. To ratify the appointment of BDO Seidman, LLP as independent
accountants for the Company for the fiscal year ending December 31, 1997;
and
4. To consider and act upon any matters incidental to the foregoing and
any other matters that may properly come before the meeting or any
adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on Friday, April 4,
1997 as the record date for the determination of stockholders entitled to
notice of and vote at the Annual Meeting and at any adjournment or
adjournments thereof.
All Stockholders are cordially invited to attend the Annual Meeting. Whether
you plan to attend the Annual Meeting or not, you are requested to complete,
sign, date and return the enclosed proxy card as soon as possible in
accordance with the instructions on the proxy card. A pre-addressed, postage
prepaid return envelope is enclosed for your convenience.
By Order of the Board of Directors
Mark R. Thomas
Secretary
Taunton, Massachusetts
April 24, 1997
<PAGE>
ADVANCED DEPOSITION TECHNOLOGIES, INC.
580 MYLES STANDISH BOULEVARD
MYLES STANDISH INDUSTRIAL PARK
TAUNTON, MASSACHUSETTS 02780
(508) 823-0707
----------------
PROXY STATEMENT
----------------
GENERAL INFORMATION
The enclosed Proxy is solicited by the Board of Directors of Advanced
Deposition Technologies, Inc. (the "Company"), a Delaware corporation, for use
at the Annual Meeting of Stockholders to be held on Thursday, May 22, 1997 at
10:00 a.m. at the Holiday Inn, 700 Myles Standish Boulevard, Taunton,
Massachusetts, and at any adjournment or adjournments thereof (the "Annual
Meeting").
Where the stockholder specifies a choice on the enclosed Proxy as to how his
or her shares are to be voted on a particular matter, the shares will be voted
accordingly. If no choice is specified, the shares will be voted FOR the
election of the two (2) nominees for Class I Directors named herein, FOR the
proposal to amend the Company's 1993 Stock Option Plan, and FOR the
ratification of the appointment of BDO Seidman, LLP as the Company's
independent public accountants for the fiscal year ending December 31, 1997.
Any Proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivery to the Company of a written
notice of revocation or a duly executed Proxy bearing a later date. Any
Stockholder who has executed a Proxy but is present at the Annual Meeting, and
who wishes to vote in person, may do so by revoking his or her Proxy as
described in the preceding sentence. Shares represented by valid Proxies
received in time for use at the Annual Meeting and not revoked at or prior to
the Annual Meeting, will be voted at the Annual Meeting.
The close of business on April 4, 1997 has been fixed as the record date for
determining the stockholders entitled to notice of and to vote at the Annual
Meeting. On that date, 3,955,945 shares of common stock of the Company, $.01
par value per share (the "Common Stock"), were outstanding and entitled to
vote. Each share of Common Stock entitles the holder to one vote with respect
to all matters submitted to stockholders at the Annual Meeting.
The presence of the holders of a majority of the issued and outstanding
shares of Common Stock entitled to vote at the Annual Meeting, either in
person or represented by a properly executed Proxy, is necessary to constitute
a quorum for the transaction of business at the Annual Meeting. The election
of Directors will be determined by a plurality of the votes cast. Each of the
other proposals to be voted upon by the stockholders of the Company requires
the affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy and voting on the proposal for passage.
Abstentions and broker non-votes (which result when a broker holding shares
for a beneficial holder in "street name" 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 for
purposes of determining the presence or absence of a quorum at the Annual
Meeting. Abstentions and broker non-votes are not counted for purposes of
tabulating the votes cast.
Members of the Board of Directors of the Company and officers of the
Company, as a group, own or may be deemed to control approximately 23% of the
outstanding shares of Common Stock. AS THERE IS NO CUMULATIVE VOTING PROVIDED
FOR IN THE COMPANY'S CERTIFICATE OF INCORPORATION, AS AMENDED, THE BOARD OF
DIRECTORS AND OFFICERS ARE ABLE TO EXERT SUBSTANTIAL INFLUENCE OVER THE
ELECTION OF THE BOARD OF DIRECTORS AND THE OUTCOME OF ANY ISSUES THAT MAY BE
SUBJECT TO A VOTE BY THE COMPANY'S STOCKHOLDERS AT THE ANNUAL MEETING. The
Board of Directors and officers have indicated their intent to vote all shares
of Common Stock owned or controlled by them in favor of each item set forth
herein.
1
<PAGE>
The cost of soliciting Proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, the Company will reimburse brokerage firms and other persons
representing beneficial owners of Common Stock for their expenses in
forwarding proxy materials to such beneficial owners. Solicitation of proxies
by mail may be supplemented by telephone, telegram, telex and personal
solicitation by directors, officers or employees of the Company. No additional
compensation will be paid for such solicitation.
The Annual Report to Stockholders for the fiscal year ended December 31,
1996 is being mailed to the stockholders with this Proxy Statement, but does
not constitute a part hereof. This Proxy Statement and the accompanying Proxy
are being mailed on or about April 24, 1997 to all stockholders entitled to
notice of and to vote at the Annual Meeting.
2
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the number of directors shall be
fixed by the Board of Directors. The Bylaws also provide that the Board of
Directors shall be divided into three classes, as equal in number as possible,
with terms expiring in successive years. Directors are elected for terms of
three years and until their successors are elected and qualified. The Board of
Directors has nominated Mr. John F. Moroney and Mr. Mark R. Thomas, two of the
three Class I Directors, for re-election at the Annual Meeting (collectively,
the "Director Nominees"). The Class II Directors, with terms expiring in 1998,
are Dr. Charles R. Buffler and Mr. Robert Pozzo. The Class III Directors, with
terms expiring in 1999, are Messrs. Glen J. Walters and Gordon E. Walters.
As of the date of the last annual meeting, these were six directorships. In
August 1996, the Board of Directors was expanded from six directorships to
seven directorships and Salvatore F. D'Amato was appointed as a Class I
Director. Mr. D'Amato will not stand for re-election at the Annual Meeting
and, effective on the date of the Annual Meeting, the Board of Directors will
be reduced to six directorships. John M. Buckley resigned from the Board on
March 27, 1997. On April 11, 1997, the Board of Directors appointed Mark
Thomas, the Company's Chief Financial Officer and Secretary, to fill the
vacancy created by Mr. Buckley's resignation.
A plurality of the votes of the shares present in person or represented by
proxy at the Annual Meeting and entitled to vote is required to elect each
Director Nominee. Unless authority to vote for any of the Director Nominees is
withheld, the shares represented by all Proxies received by the Board of
Directors will be voted for the Director Nominees. In the event that any
Director Nominee shall become unable or unwilling to serve, the shares
represented by Proxies will be voted for the election of such other person as
the Board of Directors may recommend in his place. The Board has no reason to
believe that any nominee will be unable or unwilling to serve.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF MESSRS. MORONEY AND THOMAS
AS DIRECTORS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR
THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
The following table sets forth the age, the year elected, the positions and
offices currently held, and the Class of each Director and Director Nominee.
For information about the ownership of the Company's voting securities held by
each Director and Director Nominee, see "Beneficial Ownership of Common
Stock."
<TABLE>
<CAPTION>
DATE INDIVIDUAL
FIRST BECAME
NAME AGE DIRECTOR POSITION CLASS
- ---- --- --------------- -------- -----
<S> <C> <C> <C> <C>
Gordon E. Walters.... 65 1985 Chairman of the Board of Directors III
Glenn J. Walters..... 42 1985 Chief Executive Officer, President, Treasurer and Director III
Mark R. Thomas*...... 43 1997 Chief Financial Officer, Secretary and Director I
John J. Moroney*..... 43 1995 Chief Operating Officer and Director I
Salvatore F.
D'Amato............. 68 1996 Director I
Charles R. Buffler... 63 1993 Director II
Robert M. Pozzo...... 70 1986 Director II
</TABLE>
- --------
* Nominee for election at this Annual Meeting.
3
<PAGE>
COMMITTEES
The Board of Directors established an Audit Committee and a Compensation
Committee in October 1993. Members of the Audit Committee are Glenn J.
Walters, Charles R. Buffler and Robert M. Pozzo. The Audit Committee is
concerned primarily with (i) reviewing the Company's financial results and
recommending the selection of the Company's independent auditors; (ii)
reviewing the effectiveness of the Company's accounting policies and
practices, financial reporting and internal controls; (iii) reviewing the
scope of independent audit coverages, the fees charged by the independent
auditors, any transactions which may involve a potential conflict of interest,
and internal control systems. The Audit Committee did not meet in 1996. The
functions of the Audit Committee were handled by the Board of Directors as a
whole.
The Compensation Committee also consists of Messrs. Walters, Buffler and
Pozzo. The Compensation Committee is responsible for negotiating and approving
compensation arrangements for officers, employees, consultants and Directors
of the Company, excluding the granting of options to purchase Common Stock,
which function has been delegated to the Option Committee consisting of
Messrs. Buffler and Pozzo. The Compensation Committee met once in 1996.
The Company does not have a standing nominating committee or a committee
performing similar functions.
The Board of Directors met six times during 1996. All of the Directors
attended at least 75% of the meetings of the Board of Directors in 1996,
except for John M. Buckley and John J. Moroney, who each attended 66.7% of
such meetings, and Charles R. Buffler, who attended 50% of such meetings.
With the exception of Gordon E. Walters and Glenn J. Walters, who are father
and son, respectively, no Director or executive officer is related to any
other Director or executive officer by blood or marriage.
BACKGROUND
The following is a brief summary of the background of each Director and
Director Nominee of the Company:
GORDON E. WALTERS, Chairman of the Board of Directors. Mr. Walters co-
founded the Company in 1983 and has served as its Chairman of the Board of
Directors since the Company's incorporation in 1985 and as its Chief Executive
Officer from 1986 until March 1996. Mr. Walters currently serves as a
consultant to the Company. From 1971 to 1983, Mr. Walters founded and served
as President of Steinerfilm, Inc., a privately held manufacturer of metallized
film to the electronic capacitor market. Mr. Walters holds a Bachelor of
Science degree in Engineering from Worcester Polytechnic Institute. Mr.
Walters is the father of Mr. Glenn J. Walters, the Chief Executive Officer,
President, Treasurer and a Director of the Company.
GLENN J. WALTERS, Chief Executive Officer, President, Treasurer and
Director. Mr. Walters co-founded the Company in 1983 and has served as its
President, Treasurer and a Director since the Company's incorporation in 1985,
and as its Chief Executive Officer since March 1996. From 1977 to 1983, Mr.
Walters served as General Manager of Steinerfilm, Inc. From July 1991 to the
present, Mr. Walters has served on the Board of Governors of the International
Microwave Power Institute, a non-profit trade association, and as President of
the Microwave Food Technology and Applications section of this association.
Mr. Walters holds a Bachelor of Science degree in Mechanical Engineering and
in Management from Worcester Polytechnic Institute. Mr. Walters is the son of
Mr. Gordon E. Walters, the Chairman of the Board of Directors of the Company.
JOHN J. MORONEY, Chief Operating Officer and Director. Mr. Moroney has
served as Chief Operating Officer of the Company since April 1997, and as a
Director of the Company since May 1995. From 1992 to February 1997, Mr.
Moroney served as Director of New England Operations of Fourth Shift, Inc., a
publicly
4
<PAGE>
traded supplier of manufacturing and accounting software. In 1990, Mr. Moroney
founded Manufacturing Systems Partners, a consulting and sales organization
that was purchased by Fourth Shift, Inc. in 1992. Mr. Moroney holds a Bachelor
of Science degree in Electrical Engineering form Worcester Polytechnic
Institute and a Master's degree in Business Administration from Babson
College.
MARK R. THOMAS, Chief Financial Officer, Secretary and Director. Mr. Thomas
has served as the Chief Financial Officer of the Company since October 1995,
and served as Controller of the Company from May 1995 to October 1995. Mr.
Thomas has served as a Director of the Company since April 1997. Prior to
joining the Company, Mr. Thomas served as the Controller of Ruland
Manufacturing Company, Inc. from January 1994 to May 1995, and as the
Controller of Videocraft Productions, Inc. from May 1989 to December 1993. Mr.
Thomas holds a Bachelor of Arts degree from Stonehill College, a Master's
degree in Business Administration from Northeastern University, and a
Certificate in Management Accountancy.
CHARLES R. BUFFLER, Director. Dr. Buffler has served as a Director of the
Company since October 1993. From 1993 to the present, Dr. Buffler has served
as the Vice President of the Microwave Research Center, a privately held
company which specializes in microwave consulting, design and engineering.
From 1987 to 1993, Dr. Buffler served as a Microwave Technology Specialist for
Kraft General Foods, a publicly held food manufacturer and distributor.
Additionally, from 1984 to 1993, Dr. Buffler was the President of Associated
Sciences Research Foundation, a privately held consulting company that
provided consulting services to the industrial, scientific and medical
microwave communities in non-food technologies. Dr. Buffler holds a Bachelor
of Science degree in Physics from the University of Texas and a Master of
Science degree and a Ph.D., both in Engineering and Applied Physics, from
Harvard University.
ROBERT M. POZZO, Director. Mr. Pozzo has served as a Director of the Company
since 1986. From 1985 to 1991, Mr. Pozzo served as a venture advisor to Zero
Stage Capital Corp., a venture capital company which is a stockholder of the
Company. Mr. Pozzo holds a Bachelor of Science degree in Marine Engineering
from the U.S. Merchant Marine Academy, a Bachelor of Science degree in
Metallurgy from the Colorado School of Mines and a Master's degree in Business
Administration from Harvard Business School.
SALVATORE F. D'AMATO, Director. Mr. D'Amato has served as a Director of the
Company since August 1996. Mr. D'Amato is the founder and a principal of
D'Amato Consulting, a privately held company that provides consulting services
within the banknote, printing and holographic fields. Mr. D'Amato holds a
Bachelor of Science degree in Mechanical Engineering from New York Polytechnic
Institute and a Master of Science degree in Mechanical Engineering from
Columbia University. Mr. D'Amato will cease to be a Director of the Company
following the Annual Meeting.
EXECUTIVE OFFICERS
The executive officers of the Company, their ages and positions held in the
Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Glenn J. Walters........ 42 Chief Executive Officer, President, Treasurer and Director
John J. Moroney......... 43 Chief Operating Officer and Director
Stephen M. Maughan...... 51 Vice President of Operations
Mark R. Thomas.......... 43 Chief Financial Officer, Secretary and Director
</TABLE>
The following is a brief summary of the background of Mr. Maughan whose
background is not summarized above.
STEPHEN M. MAUGHAN, Vice President of Operations. Mr. Maughan has served as
the Vice President of Operations for the Company since September 1995, and
served as its Director of Manufacturing from July 1994 until September 1995.
Prior to joining the Company, Mr. Maughan served from 1987 to 1994 as the
General Manager of General Vacuum Equipment, which is a supplier of vacuum
processing equipment.
5
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and Directors, and persons who beneficially
own more than ten percent (10%) of the Common Stock, to file initial reports
of beneficial ownership on Form 3 and reports of changes in beneficial
ownership on Forms 4 and 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 were complied with for the year ended December 31, 1996,
with the exception of the following: (i) a filing of a Form 4 on December 26,
1996 reporting the November 1996 sale of 12,000 shares of Common Stock by
Glenn Walters; (ii) a filing of a Form 4 on October 10, 1996 reporting the May
1996 sale of 10,000 shares of Common Stock by Glenn Walters; (iii) a filing of
a Form 4 on March 25, 1996 reporting the February 1996 sale of 24,700 shares
of Common Stock by Ruth Walters, the wife of Glenn Walters; (iv) a filing of a
Form 4 on March 25, 1996 reporting the January 1996 sale of 3,300 shares of
Common Stock by Ruth Walters; (v) a filing of a Form 4 on October 10, 1996
reporting the August 1996 sale of 5,800 shares of Common Stock by Gordon
Walters; (vi) a filing of a Form 4 on October 10, 1996 reporting the July 1996
sale of 2,000 shares of Common Stock by Gordon Walters and an April 1996 gift
of 95,000 shares of Common Stock by Gordon Walters; (vii) a filing of a Form 5
on October 10, 1996 reporting gifts by Gordon Walters of 50,000 shares of
Common Stock in January 1995 and 83,000 shares of Common Stock in November
1995; (viii) a filing of a Form 3 for Mark Thomas on June 19, 1996; (ix) a
filing of a Form 3 for Salvatore D'Amato on October 10, 1996; (x) a filing of
a Form 3 for Stephen Maughan on April 9, 1997; (xi) failure to file a Form 5
reporting the exercise in March 1996 by John M. Buckley, who served as a
Director of the Company from July 1993 to March 1997, of options to purchase
8,430 shares of Common Stock; (xii) failure to file a Form 5 reporting the
exercise in December 1995 by John A. McCormick, who formerly served as Vice
President of Technology of the Company and is no longer employed by the
Company, of options to purchase 2,500 shares of Common Stock; and (xiii)
failure to file a Form 5 reporting (1) the exercise in January 1996 by John
McCormick of options to purchase 11,686 shares of Common Stock and (2) the
exercise in September 1996 by Mr. McCormick of options to purchase 4,216
shares of Common Stock.
CERTAIN TRANSACTIONS
In September 1992, the Company entered into three agreements (the
"Agreements") with Printpack Enterprises, Inc. and its affiliates
("Printpack"), a privately held flexible packaging converter.
The Agreements include (i) a Purchase and Tolling Agreement, pursuant to
which Printpack had the exclusive right to sell certain of the Company's
products within North America; (ii) an Equipment Lease Agreement, pursuant to
which the Company leased from Printpack a high-capacity vacuum metallizer ;
and (iii) a Securities Purchase Agreement pursuant to which Printpack
purchased 297,610 shares of Common Stock for $250,000 (approximately $0.84 per
share), which the Company believes reflected the fair market value of the
Common Stock on the date of purchase. In 1995, the Company and Printpack
agreed in principle to terminate the Agreements. On March 25, 1996, the
Company and Printpack entered into a written agreement setting forth the terms
of the termination of the Agreements. Under this written agreement, Printpack
(i) relinquished all of its exclusive rights to sell certain of the Company's
products; (ii) transferred to the Company title to the metallizer it had been
leasing to the Company; and (iii) returned to the Company 297,610 shares of
the Company's Common Stock. The Company (i) paid to Printpack $1,000,000; (ii)
granted Printpack options to purchase 200,000 shares of the Company's Common
Stock at $4.00 per share; and (iii) agreed not to pursue any claims the
Company may have pursuant to the terms of the Agreements. As of March 25,
1996, the 297,610 shares of Common Stock represented approximately 9.5% of the
outstanding Common Stock.
6
<PAGE>
SHARE OWNERSHIP
The following table sets forth certain information as of April 4, 1997
concerning the ownership of Common Stock by (i) each stockholder who is known
by the Company to be the beneficial owner of more than 5% of the outstanding
Common Stock, (ii) each Named Executive Officer (as defined herein), Director
and Director Nominee, and (iii) 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 PERCENTAGE OF
NAME AND ADDRESS(1) BENEFICIALLY OWNED CLASS(2)
- ------------------- ------------------ -------------
<S> <C> <C>
Glenn J. Walters(3)........................... 710,593 17.5%
Gordon E. Walters(4).......................... 279,947 7.0
Robert M. Pozzo(5)............................ 105,558
Charles R. Buffler(6)......................... 2,500 *
John J. Moroney(7)............................ 1,500 *
Salvatore F. D'Amato(8)....................... 500 *
Mark R. Thomas(9)............................. 21,000 *
All Directors and executive officers as a
group
(8 persons)(3)(4)(5)(6)(7)(8)(9)(10)......... 986,883 24.3
</TABLE>
- --------
* Represents beneficial ownership of less than 1% of the Company's
outstanding shares of Common Stock.
(1) The address for all of these individuals is c/o Advanced Deposition
Technologies, Inc., 580 Myles Standish Boulevard, Myles Standish
Industrial Park, Taunton, Massachusetts 02780.
(2) The number of shares of Common Stock issued and outstanding on April 4,
1997 was 3,955,945 shares. The calculation of percentage ownership for
each listed beneficial owner is based upon the number of shares of Common
Stock issued and outstanding on April 4, 1997, plus shares of Common Stock
subject to options and warrants held by such persons on April 4, 1997 and
exercisable within 60 days thereafter.
(3) Includes (i) 101,000 shares of Common Stock owned by Mr. Glenn Walters'
wife and (ii) 60,000 shares of Common Stock registered in the name of the
Walters Family Children's Trust. Excludes shares of Common Stock owned by
Mr. Glenn Walters' siblings or by his father, Mr. Gordon Walters. Mr.
Glenn Walters disclaims any beneficial ownership or control over any of
these shares. Includes 100,000 shares of Common Stock exercisable at $5.00
per share.
(4) Includes 60,000 shares of Common Stock underlying a stock option
exercisable at $2.00 per share. Excludes shares of Common Stock owned by
the children of Mr. Gordon Walters, including those owned by Mr. Glenn
Walters, as to which Mr. Gordon Walters disclaims any beneficial ownership
or control.
(5) Includes (i) 1,000 shares of Common Stock underlying a stock option
exercisable at $2.38 per share and (ii) 16,000 shares underlying a stock
option exercisable at $2.00 per share.
(6) Includes (i) 1,500 shares of Common Stock underlying a stock option
exercisable at $5.44 per share and (ii) 1,000 shares of Common Stock
underlying a stock option exercisable at $2.38 per share.
(7) Includes 1,000 shares of Common Stock underlying a stock option
exercisable at $2.38 per share, and 500 shares of Common Stock underlying
the option that will vest within 60 days of the date hereof.
(8) Includes 500 shares of Common Stock underlying a stock option exercisable
at $2.88 per share.
(9) Includes 6,000 shares of Common Stock underlying a stock option
exercisable at $2.00 per share, but excludes 4,000 shares of Common Stock
underlying the option that will vest in August 1997. Includes 5,000 shares
of Common Stock underlying a stock option exercisable at $2.88 per share,
but excludes 15,000 shares of Common Stock underlying the option that will
vest beginning in August 1997. Excludes 10,000 shares of Common Stock
underlying a stock option exercisable at $4.47 per share that will vest
beginning in August 1997.
(10) Includes 10,000 shares of Common Stock owned by Stephen Maughan, Vice
President of Operations of the Company. Includes 22,000 shares of Common
Stock underlying a stock option owned by Mr. Maughan exercisable at $2.00
per share, but excludes 18,000 shares of Common Stock underlying the
option that will vest beginning in August 1997.
7
<PAGE>
COMPENSATION OF OFFICERS AND DIRECTORS
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid to Mr. Glenn Walters,
the Company's Chief Executive Officer, President and Treasurer, and Mr. Gordon
Walters, who served as the Company's Chief Executive Officer during part of
1996 (together, the "Named Executive Officers"), with respect to services
rendered to the Company during the years ended December 31, 1996; December 31,
1995; and December 31, 1994. Other than Glenn Walters, no executive officer
earned in excess of $100,000 during the periods presented.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) COMPENSATION(1)
--------------------------- ---- ---------- ---------------
<S> <C> <C> <C>
Glenn J. Walters.......................... 1996 $158,845(2) $4,971
Chief Executive Officer, 1995 $157,966(2) $5,159
President, and Treasurer 1994 $158,040(2) $5,135
Gordon E. Walters(3)...................... 1996 $ 60,000 $5,634
Chief Executive Officer 1995 $ 60,000 $5,890
1994 $ 97,000 $6,148
</TABLE>
- --------
(1) Consists of premiums paid by the Company on life insurance for each of
1996, 1995, and 1994, respectively, including $4,971, $5,159 and $5,135
for Glenn J. Walters; and $5,634, $5,890 and $6,148 for Gordon E. Walters.
(2) Approximately $20,556, $20,000 and $15,000 of Glenn J. Walters' salary for
1996, 1995 and 1994, respectively, represents cash received in lieu of
certain benefits. Approximately $20,000, $20,000 and $15,000 of Glenn J.
Walters' salary for 1996, 1995 and 1994, respectively, represents deferred
salary to be paid in 1997.
(3) Gordon E. Walters served as Chief Executive Officer of the Company from
1986 until March 1996.
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
There were no stock options granted to the Named Executive Officers during
the Company's last fiscal year.
8
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEARAND FISCAL-YEAR-END OPTION
VALUES
The following table provides information regarding the unexercised stock
options held by each of the Named Executive Officers during 1996. No stock
options were exercised by the Named Executive Officers during 1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED SECURITIES IN-THE-MONEY OPTIONS
UNDERLYING OPTIONS AT FY-END: AT FY-END ($):
-------------------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------------- ----------------- ----------- -------------
<S> <C> <C> <C> <C>
Glenn J. Walters........ 0 0 0 0
Gordon E. Walters....... 60,000 0 $97,500 0
</TABLE>
- --------
(1) In-the-money-options are those options for which the fair market value of
the underlying Common Stock is greater than the exercise price of the
option. The fair market value of the Common Stock underlying the options
as of December 31, 1996 was $3.625 per share, the closing bid price last
quoted on December 31, 1996 on the NASDAQ SmallCap Market.
COMPENSATION OF DIRECTORS
The Company pays each non-employee Director $500 per year and $200 for each
meeting of the Board of Directors that he attends. Non-employee directors are
also awarded formula options under the Company's 1994 Formula Stock Option
Plan.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Effective as of July 1, 1993, the Company entered into an employment and
non-competition agreement (the "Employment Agreement") with Mr. Glenn Walters,
the initial term of which expired on December 31, 1996. Mr. Glenn Walters
serves as the principal executive officer of the Company. The Employment
Agreement was renewed in accordance with its terms for an additional one-year
term that expires on December 31, 1997. The Employment Agreement provides for
an initial base salary of $125,000 per annum plus annual base salary increases
and such other bonuses as may be determined by the Company's Board of
Directors as well as benefits offered to the Company's employees generally.
Mr. Glenn Walters is also entitled to the use of a Company-leased car and
severance benefits equal to 200% of his base salary, payable in a lump sum if
(i) the Company or a substantial portion of the Company is acquired without
the Board of Directors' approval, (ii) his employment is terminated without
cause, (iii) his base salary is reduced without his consent, (iv) there is a
substantial change in his position or authority within the Company without his
consent, (v) there is a change in his principal place of employment from the
greater Boston, Massachusetts area without his consent, or (vi) the Employment
Agreement is not renewed without his consent.
The Employment Agreement provides for a renewal for successive one-year
periods after the expiration of the initial term and contains a provision
prohibiting Mr. Glenn Walters from competing with the Company, absent the
Company's prior written approval, for a two-year period following the
termination of his employment. Mr. Glenn Walters consented to be included in a
salary deferral plan effective in 1994 and, as a result, received a salary,
exclusive of benefits, of $128,040, $117,966 and $118,289 in 1994, 1995 and
1996, respectively. An aggregate of $55,000 was deferred during these years
and will be paid in 1997.
Mr. Gordon Walters entered into a consulting agreement with the Company
effective as of July 1, 1993 which expired on December 31, 1995, and pursuant
to which he devoted no less than twenty-six hours per week to the Company's
business. This consulting agreement was renewed for a period of one year in
accordance with its terms, which period expired December 31, 1996. This
consulting agreement prohibits Mr. Walters from competing with the Company,
absent the Company's prior written approval, for a period of two years after
this consulting agreement terminates. Mr. Gordon Walters continues to be a
consultant to the Company and is primarily responsible for marketing and
product development within the electronic capacitor market. Mr. Gordon Walters
consented to be included in a salary reduction plan effective January 1, 1995
and, as a result, received a consulting fee of $60,000 in 1996.
9
<PAGE>
PROPOSAL NO. 2
PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1993 STOCK OPTION PLAN
GENERAL
The Company's 1993 Stock Option Plan (the "Plan") was approved by the Board
of Directors and by the stockholders in 1993. A total of 800,000 shares of
Common Stock were initially reserved for issuance under the Plan, of which
171,900 shares are subject to options outstanding as of April 4, 1997.
On April 11, 1997, the Board of Directors voted to approve an amendment to
the Plan to limit the number of shares with respect to which options may be
granted to any employee in any fiscal year. The limit in the proposed
amendment is 500,000 shares per employee per fiscal year. If approved, the
amendment would be made by adding the following as the last sentence of
Article 3.3 of the Plan:
"In no event shall any Employee be granted in any fiscal year Options to
purchase more than 500,000 shares of Stock pursuant to this Plan."
The Board of Directors adopted the amendment to enable the Company to avoid
limitations otherwise imposed by Section 162(m) of the Internal Revenue Code,
as amended (the "Code"). Section 162(m) generally disallows a tax deduction by
a public company for annual compensation over $1 million paid to its chief
executive officer and to any of its four other most highly compensated
executives. Certain performance-based compensation of the type provided in the
Plan can be exempt from the Section 162(m) deduction limit if the Plan
satisfies the requirements of Internal Revenue Service ("IRS") regulations
interpreting Section 162(m). It is the policy of the Compensation Committee
and the Board of Directors to seek to preserve tax deductibility of
compensation paid to employees unless regulatory requirements to do so are
contrary to the best interests of the Company and its shareholders. In order
for compensation corresponding to that which is recognized upon the exercise
of nonqualified stock options under the Plan to be tax deductible, IRS
regulations require that the shareholders approve at this Annual Meeting an
amendment to the Plan to limit the maximum number of shares with respect to
which options may be granted to any one participant under the Plan. To retain
maximum flexibility, the Board of Directors has adopted an amendment to the
Plan to provide for a 500,000 share limit in any fiscal year and is requesting
that the shareholders approve the amendment in this Proposal. If the
shareholders approve the amendment, future compensation to the Company's
employees as a result of option exercise under the Plan will not count against
the Section 162(m) limit. If the stockholders do not approve the amendment ,
the Company intends to restrict the exercisability of any nonqualified option
granted under the Plan having an exercise price not less than the fair market
value of the Common Stock on the date of grant. The restriction will provide
that such options will not be exercisable during those times for which the
Compensation Committee determines that it is likely that Section 162(m) will
limit tax deductibility of compensation corresponding to the exercise of such
options.
The Board of Directors has retained the right to amend, suspend or terminate
the Plan as it deems advisable. However, no amendment may be made to change
the requirements as to eligibility for participation in the Plan or to change
the number of shares as to which options may be granted under the Plan without
submitting such amendment to the stockholders for approval.
MATERIAL FEATURES OF THE PLAN
The purpose of the Plan is to encourage and enable employees, consultants,
directors and others who are in a position to make significant contributions
to the success of the Company and of its affiliated corporations upon whose
judgment, initiative and efforts the Company depends for the successful
conduct of its business, to acquire a closer identification of their interests
with those of the Company by providing them with opportunities to purchase
stock in the Company pursuant to options granted hereunder, thereby
stimulating their efforts on behalf of the Company and strengthening their
desire to remain involved with the Company. As of April 4, 1997, the Company
had forty-two full time employees who were eligible to receive options under
this Plan.
10
<PAGE>
The Plan is administered by the members of the Board of Directors of the
Company who, subject to the provisions of the Plan, determine 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.
Options granted under the Plan may be either (i) options intended to qualify
as "incentive stock options" under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), or (ii) non-qualified stock options. Incentive
stock options may be granted under the Plan 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 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 plan of the Company may not
exceed $100,000. The exercise price for each non-qualified stock option shall
be reasonably related to the fair market value of the shares covered thereby
at the time the non-qualified stock option is granted. Incentive stock options
granted under the Plan may not be granted at a price less than the fair market
value of the Common Stock on the date of grant, or 110% of fair market value
in the case of options granted to an employee holding 10% or more of the
voting stock of the Company. Non-qualified stock options granted under the
Plan expire not more than ten years from the date of grant. 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 option holder's lifetime, only by the option holder and is not
transferable by him or her except by will or by the laws of descent and
distribution.
Each option granted under the 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 of Directors shall have the right to accelerate the date of
exercise of any option, provided that, the Board of Directors 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.
OPTION INFORMATION
The following table sets forth as of April 4, 1997 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.
<TABLE>
<CAPTION>
NO. OF OPTIONS
NAME TITLE GRANTED (#)(1)
- ---- ----- ---------------
<S> <C> <C>
Glenn J. Walters........ Chief Executive Officer, President, Treasurer and Director 100,000
John J. Moroney......... Chief Operating Officer and Director -0-
Stephen M. Maughan...... Vice President of Operations 40,000
Mark R. Thomas.......... Chief Financial Officer and Secretary 40,000
All current executive officers as a group(4 persons)............................... 80,000
All current directors who are not executive officers (3 persons)................... 76,000
All employees who are not executive officers as a group............................ 15,900
</TABLE>
- --------
(1) Net of all canceled options.
11
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
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 of 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.
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.
IMPLEMENTATION
If the proposed amendment to the Plan set forth in this Proposal No. 2 is
approved by the stockholders, it will become effective immediately and be
reflected in the amended Plan, which will be filed in the Company's minute
book.
The affirmative vote of a majority of the shares present in person or
represented by proxy and voting on proposal 2 is required to approve the
amendment to the Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE ADOPTION OF THE
AMENDMENT TO THE PLAN TO LIMIT THE NUMBER OF SHARES OF COMMON STOCK THAT MAY
BE GRANTED PURSUANT TO STOCK OPTIONS TO AN EMPLOYEE IN ANY ONE YEAR PERIOD TO
A NUMBER NOT TO EXCEED 500,000 SHARES, AND PROXIES SOLICITED BY THE BOARD WILL
BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE
PROXY.
12
<PAGE>
PROPOSAL NO. 3
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed BDO Seidman, LLP, independent public
accountants, to audit the financial statements of the Company for the fiscal
year ending December 31, 1997. The Board proposes that the Stockholders ratify
this appointment, although such ratification is not required under Delaware
law or the Company's Certificate of Incorporation or Bylaws. BDO Seidman, LLP
audited the Company's financial statements for the fiscal year ended December
31, 1996. The Company expects that representatives of BDO Seidman, LLP will be
present at the Annual Meeting, with the opportunity to make a statement if
they so desire, and will be available to respond to appropriate questions.
The affirmative vote of a majority of the shares present in person or
represented by proxy and voting on proposal 3 is required to ratify the
appointment of the independent public accounts. In the event that ratification
of the appointment of BDO Seidman, LLP as the independent public accountants
for the Company is not obtained at the Annual Meeting, the Board of Directors
will reconsider its appointment.
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.
Arthur Andersen, LLP ("Arthur Andersen") served as the Company's principal
accountants during the fiscal year ending December 31, 1995. On August 12,
1996, Arthur Andersen, by mutual understanding with the Company, advised the
Company that it would no longer serve as the Company's independent public
accountants. On August 13, 1996, the Board of Directors approved the mutual
termination of Arthur Andersen's services to the Company as its independent
public accountants.
Arthur Andersen's report on the consolidated financial statements for the
Company's fiscal year ended December 31, 1995 did not contain an adverse
opinion or a disclaimer of opinion, and was not modified as to audit scope or
accounting principles. Arthur Andersen's report did contain an explanatory
paragraph relating to the uncertainty regarding the Company's ability to
continue as a going concern due to its working capital deficiency and the
expiration of the Company's banking arrangement. Arthur Andersen disagreed
with the Company's accounting for the termination of an exclusivity agreement
contained in the Company's Form 10-Q for the quarter ended March 31, 1996 as
filed on May 20, 1996. In response, the Company filed an amended Form 10-Q for
such quarter in which it restated its consolidated financial statements to
reverse the gain recorded on the termination of the exclusivity agreement.
Accordingly, the Company believes that Arthur Andersen now agrees with the
Company's accounting for the termination of the exclusivity agreement. Neither
the Board of Directors nor any committee of the Board of Directors discussed
this disagreement with Arthur Andersen. The Company has authorized Arthur
Andersen to respond fully to any inquiries concerning the foregoing by the
Company's successor accountants, BDO Seidman, LLP.
The Company engaged BDO Seidman, LLP as its new independent accountants as
of February 12, 1997. In October 1996, the Company sought guidance from BDO
Seidman, LLP regarding the proposed accounting treatment for a significant
transaction with James River Corporation which involved recognition of
revenues from the assignment of patents to James River Corporation. BDO
Seidman, LLP orally advised the Company that it agreed with the Company's
proposed treatment of this matter.
Except as stated above, the Company did not consult with BDO Seidman, LLP
prior to its engagement of BDO Seidman, LLP on (1) the application of
accounting principles to a completed or proposed transaction, (2) the type of
audit opinion that might be rendered on the Company's financial statements, or
(3) the disagreement with Arthur Andersen.
13
<PAGE>
STOCKHOLDER PROPOSALS
In order to be included in proxy material for the 1998 Annual Meeting of
Stockholders, tentatively scheduled for May 22, 1998, stockholder proposals
must be received by the Company, marked for the attention of the Secretary at
the Company's principal address, on or before December 25, 1997. The Company
suggests that proponents submit their proposals by certified mail, return
receipt requested.
ANNUAL REPORT ON FORM 10-KSB
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996 (other than exhibits thereto) filed with the Securities and
Exchange Commission, which provides additional information about the Company,
is available to beneficial owners of the Common Stock without change upon
written request to the Secretary, Advanced Deposition Technologies, Inc., 580
Myles Standish Industrial Park, Taunton, Massachusetts 02780 (508-823-0707).
OTHER MATTERS
The Board of Directors knows of no other matter to be presented at the
Annual Meeting. If any other matter should be presented at the Annual Meeting
upon which a vote may be taken, such shares represented by all Proxies
received by the Board of Directors will be voted with respect thereto in
accordance with the judgment of the persons named in the Proxies.
By Order of the Board of Directors,
Mark R. Thomas
Secretary
Taunton, Massachusetts
April 24, 1997
14
<PAGE>
ADVANCED DEPOSITION TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 22, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED hereby appoints Glenn J. Walters and Mark R. Thomas as
proxies, with full power of substitution, to vote for and on behalf of the
undersigned at the Annual Meeting of Stockholders of ADVANCED DEPOSITION
TECHNOLOGIES, INC. (the "Company") to be held at 10:00 a.m. at the Holiday Inn,
700 Myles Standish Boulevard, Taunton, Massachusetts 02780, on Thursday, May
22, 1997, and at any adjournment or adjournments thereof, upon and with respect
to all shares of the Common Stock of the Company to which the undersigned would
be entitled to vote and act if personally present. The undersigned hereby
directs Glenn J. Walters and Mark R. Thomas to vote in accordance with their
judgment on any matters which may properly come before the meeting, all as
indicated in the Notice of the meeting, receipt of which is hereby
acknowledged, and to act on the following matters set forth in such Notice as
specified by the undersigned:
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ELECTION OF DIRECTORS
IDENTIFIED BELOW AND FOR PROPOSALS 2, 3 AND 4.
(1) Proposal to elect the following persons as Class
I Directors of the Company:
JOHN J. MORONEY AND MARK R. THOMAS
[_] FOR [_] AGAINST [_] WITHHOLD VOTE
(2) Proposal to approve an amendment to the Company's 1993 Stock Option Plan to
limit the number of shares of Common Stock that may be granted pursuant to
stock options to any employee in any one year period to a number not to
exceed 500,000 shares.
[_] FOR [_] AGAINST [_] ABSTAIN
(3) Proposal to ratify and confirm the appointment of BDO Seidman, LLP as the
independent accountants for the Company for the fiscal year ending December
31, 1997.
[_] FOR [_] ABSTAIN [_] AGAINST
(4) IN THEIR DISCRETION TO TRANSACT SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT OR ADJOURNMENTS THEREOF.
(Continued on reverse side)
<PAGE>
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR AND IN FAVOR OF THE
ITEMS SET FORTH ABOVE UNLESS A CONTRARY SPECIFICATION IS MADE.
Please sign exactly
as name appears below.
Dated:
-------------------199
-----------------------------
Signature
-----------------------------
Signature if held jointly
-----------------------------
Printed Name
-----------------------------
Address
PLEASE MARK, DATE, SIGN AND
RETURN THE PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
NOTE: When shares are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If the person named on the stock certificate has died, please submit
evidence of your authority. If a corporation, please sign in full corporate
name by the President or authorized officer and indicate the signer's office.
If a partnership, please sign in the partnership name by an authorized person.
<PAGE>
Appendix B
----------
ARTHUR
ANDERSEN
April 14, 1997
----------------------------
Arthur Andersen LLP
Chief Accountant ----------------------------
Securities and Exchange Commission 225 Franklin Street
450 Fifth Street, N.W. Boston, MA 02110-2812
Washington, D.C. 20549
Gentlemen:
We have read Proposal 3 in the Proxy Statement of Advanced Deposition
Technologies, Inc. dated April 24, 1997 and are in agreement with the statements
contained therin.
Very truly yours,
/s/ Arthur Andersen LLP
- ------------------------
<PAGE>
Appendix C
----------
ADVANCED DEPOSITION TECHNOLOGIES, INC.
1993 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 to make significant
contributions to the success of ADVANCED DEPOSITION TECHNOLOGIES, INC. 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.
<PAGE>
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 ADVANCED DEPOSITION TECHNOLOGIES, INC., 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 July 13,
1993.
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 1993 Stock Option Plan.
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
<PAGE>
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
<PAGE>
3.2 Powers. The Board of Directors and/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 shares 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
4
<PAGE>
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 Company 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. In no event shall an Employee be granted in any fiscal
year Options to purchase more than 500,000 shares of Stock pursuant to this
Plan.
ARTICLE IV
Eligibility
4.1 Eligible Employees. All Employees (including Directors who are
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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,
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Director (whether or not an Employee) and any other Non-Employee is eligible to
be granted
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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,
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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 IX of this
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Plan, the aggregate number of shares of Stock for which Options may be granted
under this Plan shall not exceed 300,000 shares. The shares to be delivered upon
exercise of Options under this Plan shall be made available, at 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 Company shall reacquire any unvested shares issued
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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 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
Company.
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 10% 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 Options, the exercise price
shall be reasonably related to the fair market value of the shares covered
thereby at the time the Non-Qualified Option is granted.
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
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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 traded, 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
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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 5% or more of the Company's outstanding Common Stock, shall provide
for payment of interest at a rate no less than the interest rate then payable by
the Company to its principal commercial lender, or if the Company has no loan
outstanding to a commercial lender, then the interest rate payable shall equal
the 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)
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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 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.
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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) or its underlying Common Stock.
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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-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 and/or one or more officers of the Corporation to
execute 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 Company or an 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,
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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 at 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
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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 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.
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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 July 13, 1993. 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 no such conversion shall occur until
and unless the Board or the Committee takes appropriate
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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.
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 XVI) 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 Company 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
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is any disposition (including any 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 Commonwealth of
Massachusetts (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.
17
