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
_X_ Definitive Proxy Statement
___ Definitive Additional Materials
___ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
___ Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
CENTENNIAL TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
_X_ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
___ $ 500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
___ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
___________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
___________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined).
___________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
___________________________________________________________________________
(5) Total fee paid:
$125 Fee paid in prior filing of preliminary proxy statement
___________________________________________________________________________
_X_ 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:
___________________________________________________________________________
CENTENNIAL TECHNOLOGIES, INC.
37 MANNING ROAD
BILLERICA, MASSACHUSETTS 01821
DEAR STOCKHOLDER:
You are cordially invited to attend the Annual Meeting of Stockholders of
Centennial Technologies, Inc. (the "Company") to be held at 10:00 a.m. on
Wednesday, November 6, 1996 at The First National Bank of Boston, Conference
Center -- 2nd Floor, 100 Federal Street, Boston, Massachusetts 02110.
At the Annual Meeting, you will be asked to elect seven (7) Directors of the
Company and vote upon certain other corporate matters described in the Proxy
Statement.
Details of the matters to be considered at the Annual Meeting are contained
in the Proxy Statement that we urge you to consider carefully. The Company's
1996 Annual Report, which is not part of the enclosed Proxy Statement, is also
enclosed and provides additional information regarding the financial results of
the Company. Holders of the Company's Common Stock are entitled to vote at the
Annual Meeting on the basis of one vote for each share held.
Whether or not you plan to attend the Annual Meeting, please complete, date,
sign and return your Proxy promptly in the enclosed envelope, which requires no
postage if mailed in the United States. If you attend the Annual Meeting, you
may vote in person if you wish, even if you have previously returned your Proxy.
Sincerely,
/S/ EMANUEL PINEZ
EMANUEL PINEZ
Chief Executive Officer
Billerica, Massachusetts
October 3, 1996
CENTENNIAL TECHNOLOGIES, INC.
37 MANNING ROAD
BILLERICA, MASSACHUSETTS 01821
----------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of CENTENNIAL
TECHNOLOGIES, INC., a Delaware corporation (the "Company"), will be held on
Wednesday, November 6, 1996 at 10:00 a.m. at The First National Bank of Boston,
Conference Center -- 2nd Floor, 100 Federal Street, Boston, Massachusetts 02110
for the following purposes:
1. To elect Directors of the Company for the ensuing year;
2. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common
Stock from 15,000,000 shares to 50,000,000 shares;
3. To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of
Preferred Stock from 1,500,000 shares to 2,000,000 shares;
4. To approve an amendment to the Company's 1994 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
under the plan from 750,000 shares to 1,500,000 shares;
5. To approve an amendment to the Company's 1994 Formula Stock Option
Plan to increase the exercise price of options granted under the
plan to a non-employee Director upon his/her first election as a
Director from 85% of the fair market value of the shares of Common
Stock on the date of the grant to 100% of the fair market value of
the shares of Common Stock on the date of the grant;
6. To ratify and confirm the appointment of Coopers & Lybrand L.L.P.
as the independent accountants for the Company for the fiscal year
ending June 30, 1997; and
7. 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 Wednesday,
September 18, 1996, as the record date for the determination of stockholders
entitled to notice of and vote at the meeting and any adjournment or
adjournments thereof.
We hope that all stockholders will be able to attend the meeting in person.
In order to assure that a quorum is present at the meeting, please date, sign
and promptly return the enclosed Proxy whether or not you expect to attend the
meeting. A postage-prepaid envelope, addressed to American Securities Transfer,
Incorporated, the Company's transfer agent and registrar, has been enclosed for
your convenience. If you attend the meeting, your Proxy will, at your request,
be returned to you and you may vote your shares in person.
By Order of the Board of
Directors
ANDREW D. MYERS
Assistant Secretary
Billerica, Massachusetts
October 3, 1996
CENTENNIAL TECHNOLOGIES, INC.
37 MANNING ROAD
BILLERICA, MASSACHUSETTS 01821
----------
PROXY STATEMENT
----------
October 3, 1996
The enclosed Proxy is solicited by the Board of Directors of CENTENNIAL
TECHNOLOGIES, INC., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on Wednesday, November 6, 1996 at
10:00 a.m. at The First National Bank of Boston, Conference Center -- 2nd Floor,
100 Federal Street, Boston, Massachusetts 02110, and at any adjournment or
adjournments thereof.
Stockholders of record at the close of business on September 18, 1996 will
be entitled to vote at the meeting or any adjournment thereof. On that date,
8,521,270 shares of Common Stock, $.01 par value, of the Company (the "Common
Stock") were issued and outstanding. Each share of Common Stock entitles the
holder to one vote with respect to all matters submitted to stockholders at the
meeting. There are no other voting securities of the Company.
The presence of the holders of a majority of the issued and outstanding
shares of Common Stock entitled to vote at the meeting, either in person or
represented by a properly executed proxy, is necessary to constitute a quorum
for the transaction of business at the meeting.
The election of Directors will be determined by a plurality of the votes
cast. The other proposals to be voted upon by the stockholders of the Company
require the votes of a majority of the shares of Common Stock present at the
meeting for passage, except that the proposals to amend the Certificate of
Incorporation of the Company require the affirmative vote of two-thirds of the
outstanding shares of Common Stock 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 meeting. Abstentions are counted in tabulation of the votes cast
on proposals presented to stockholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been approved.
MEMBERS OF THE BOARD OF DIRECTORS OF THE COMPANY OWN OR MAY BE DEEMED TO
CONTROL APPROXIMATELY 26.1% OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE
COMPANY, SUBSTANTIALLY ALL OF WHICH ARE CONTROLLED BY THE CHAIRMAN OF THE BOARD
OF DIRECTORS, MR. EMANUEL PINEZ. AS THERE IS NO CUMULATIVE VOTING PROVIDED FOR
IN THE COMPANY'S CERTIFICATE OF INCORPORATION, THE BOARD OF DIRECTORS AND MR.
PINEZ IN PARTICULAR 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 MEMBERS OF THE
BOARD OF DIRECTORS HAVE INDICATED THEIR INTENT TO VOTE ALL SHARES OF COMMON
STOCK OWNED OR CONTROLLED BY EACH OF THEM IN FAVOR OF EACH ITEM SET FORTH
HEREIN.
Execution of a Proxy will not in any way affect a stockholder's right to
attend the meeting and vote in person. The Proxy may be revoked at any time
before it is exercised by written notice to the Secretary prior to the meeting,
or by giving to the Secretary a duly executed Proxy bearing a later date than
the Proxy being revoked at any time before such Proxy is voted, or by appearing
at the meeting and voting in person. The shares represented by all properly
executed Proxies received in time for the meeting will be voted as specified
therein. In the absence of a special notice, shares will be voted in favor of
the election of Directors of those persons named in this Proxy Statement and in
favor of all other items set forth herein.
The Board of Directors knows of no other matter to be presented at the
meeting. If any other matter should be presented at the 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 person named in the Proxies. The Board of Directors knows of no matter to
be acted upon at the meeting that would give rise to appraisal rights for
dissenting stockholders.
An annual report containing financial statements for the fiscal year ended
June 30, 1996 ("Fiscal 1996") is being mailed herewith to all stockholders
entitled to vote. This Proxy Statement and the accompanying Proxy were first
mailed to stockholders on or about October 3, 1996.
PROPOSAL NO. 1
PROPOSAL TO ELECT DIRECTORS OF THE
COMPANY FOR THE ENSUING YEAR
The Directors of the Company are elected annually and hold office until the
next Annual Meeting of Stockholders and until their successors have been elected
and qualified. Shares represented by all Proxies received by the Board of
Directors and not so marked as to withhold authority to vote for an individual
nominee for Director, or for all nominees for Director, will be voted (unless
one or more nominees are unable or unwilling to serve) for the election of the
nominees named below. The Board of Directors knows of no reason why any such
nominee should be unwilling to serve, but if such should be the case, Proxies
will be voted for the election of some other person or for fixing the number of
Directors at a lesser number.
The following table sets forth the age of each nominee, the year each
nominee was elected a Director, and the positions and offices currently held by
each nominee with the Company. For information about the ownership of the
Company's Common Stock held by each nominee, see "Beneficial Ownership of Common
Stock."
<TABLE>
<CAPTION>
YEAR NOMINEE
FIRST BECAME POSITION AND OFFICES
NAME AGE DIRECTOR WITH THE COMPANY
------- ---- ---------- ---------------
<S> <C> <C> <C>
Emanuel Pinez 58 1987 Chief Executive Officer, Secretary and
Chairman of the Board of Directors
John J. McDonald 37 1995 President, Vice President of Sales and
Marketing and Director
James M. Murphy 45 1994 Chief Financial Officer and Director
John J. Shields 58 1996 Vice Chairman of the Board of Directors
J.P. Luc Beaubien 41 1994 Director
William M. Kinch 64 1995 Director
William J. Shea 48 1996 Director
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
executive officers and Directors, and persons who beneficially own more than ten
percent (10%) of the Company's stock, to file initial reports of ownership on
Form 3 and reports of changes in ownership on Form 4 with the Securities and
Exchange Commission (the "Commission") 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 the
Commission's 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 Fiscal 1996, other than (i) a failure to file a
Form 4 to report the acquisition by William M. Kinch of 1,500 shares of Common
Stock in March 1996, which Form 4 Mr. Kinch intends to file in October 1996; and
(ii) a filing of a Form 4 on March 1, 1996 to report the purchase by Wieslaw
Brys of 325 shares of Common Stock in September 1995.
2
COMMITTEES
The Board of Directors established an Audit Committee and a Compensation
Committee in July 1994. Members of the Audit Committee are Messrs. Beaubien and
Kinch, outside Directors of the Company. 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, financial reporting and
internal controls; and (iii) reviewing the scope of independent audit coverages,
the fees charged by the independent auditors, any transactions that may involve
a potential conflict of interest, and internal control systems. The Audit
Committee met twice in Fiscal 1996.
The Compensation Committee consists of Messrs. Beaubien and Kinch, outside
Directors of the Company. The Compensation Committee is responsible for
negotiating and approving compensation arrangements for officers, employees,
consultants and Directors of the Company, including, but not limited to, the
granting of options to purchase the Company's Common Stock pursuant to the
Company's 1994 Stock Option Plan or otherwise. The Compensation Committee met
twice in Fiscal 1996.
In October 1994, the Board of Directors established a Stock Option Committee
to administer the Company's 1994 Stock Option Plan. Members of the Stock Option
Committee are Messrs. Beaubien and Kinch, outside Directors of the Company.
The Company does not have a standing nominating committee or a committee
performing similar functions. The Board of Directors met four times during
Fiscal 1996. All of the Company's Directors attended at least 75% of the
meetings of the Board of Directors in Fiscal 1996 during the period for which
they were Directors, except for John J. McDonald who attended 66.7% of such
meetings after he became a Director in November 1995.
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 nominee for
Director of the Company:
EMANUEL PINEZ, Chief Executive Officer, Secretary and Chairman of the Board.
Mr. Pinez founded the Company in 1987 and has served as Chief Executive Officer,
Secretary and Chairman of the Board of Directors since the Company's inception.
From 1986 through March 1, 1994, Mr. Pinez was employed by Camwill, S.A., a
Swiss management corporation engaged in executive search and placement, which
contracted out Mr. Pinez's management services to corporate clients, including
the Company. Mr. Pinez holds a Bachelor of Science degree in Chemistry from the
Hebrew University of Jerusalem.
JOHN J. MCDONALD, President, Vice President of Sales and Marketing, and
Director. Mr. McDonald has served as President of the Company since August 1996,
as Vice President of Sales and Marketing since June 1992, and as a Director
since November 1995. From 1989 to 1992, Mr. McDonald served as a sales manager
for Bell Microproducts, Inc., a publicly traded distributor of electronic
components to original equipment manufacturers ("OEMs"). Mr. McDonald holds a
Bachelor of Science degree in Business Administration in Marketing from American
International College.
JAMES M. MURPHY, Chief Financial Officer and Director. Mr. Murphy has served
as the Chief Financial Officer of the Company since December 1993 and as a
Director since January 1994. Mr. Murphy served as Treasurer of the Company from
October 1995 to September 1996. From 1980 through 1993, Mr. Murphy served in
several positions, most recently as an Audit Manager, for the public accounting
firm of Coopers & Lybrand L.L.P. Mr. Murphy holds a Bachelor of Science degree
in Marketing from Boston College and a Master's degree in Business
Administration from Babson College.
JOHN J. SHIELDS, Vice Chairman and Director. Mr. Shields has served as a
Director of the Company since April 1996 and as Vice Chairman of the Board of
Directors of the Company since August 1996. From 1993 to the present, Mr.
Shields has served as President and Chief Executive Officer of King's Point
Holdings, Inc., a company principally engaged in venture capital, technical
consulting and
3
cranberry cultivation. From 1990 to 1993, Mr. Shields served as President and
Chief Executive Officer of Computervision Corporation, a publicly traded company
that provides computer-aided design solutions for complex mechanical and
electrical systems. Mr. Shields currently serves as a Director of Ionics, Inc.,
a publicly traded company principally engaged in water purification. Mr. Shields
is a graduate of the School of Industrial Management of Worcester Polytechnic
Institute, a graduate of the Program in Management Development (PMD) of the
Harvard University Graduate School of Business Administration, and received an
Honorary Ph.D. from Worcester Polytechnic Institute.
J.P. LUC BEAUBIEN, Director. Mr. Beaubien has served as a Director of the
Company since January 1994. Since 1987, Mr. Beaubien has worked as a Principal
for the Boston Agent, a Boston-based venture consulting firm. From September
1992 to July 1996, Mr. Beaubien also served as Chairman of the Board and Chief
Financial Officer of Broadband Networks, Inc., a manufacturer of analog
fiberoptic equipment. From August 1994 to January 1996, Mr. Beaubien was a
general partner of Zero Stage Capital L.L.P., a venture capital firm. Mr.
Beaubien holds a Bachelor of Science degree in Electrical Engineering from
McGill University and a Master's degree in Business Administration from the
Sloan School of Management at the Massachusetts Institute of Technology.
WILLIAM M. KINCH, Director. Mr. Kinch has served as a Director of the
Company since July 1995. He is the founder and President of Kinch Associates,
Inc., an international trade and consulting firm. From July 1989 to August 1996,
Mr. Kinch served as Chairman of the Board of Directors of Inoac USA, Inc., a
trading and investment subsidiary of a Japanese company. From July 1989 to March
1996, he served as Chairman of the Board of Directors of Woodbridge Inoac, Inc.,
a manufacturer of auto parts. Mr. Kinch holds a Bachelor of Science degree in
Civil Engineering and a Master's degree in Business Administration from
Northeastern University.
WILLIAM J. SHEA, Director. Mr. Shea has served as a Director of the Company
since August 1996. Mr. Shea is the Vice Chairman, Chief Financial Officer and
Treasurer of BankBoston Corporation. Prior to joining BankBoston in January
1993, Mr. Shea served in various capacities for the public accounting firm of
Coopers & Lybrand L.L.P. during the preceding 19 years, most recently as Vice
Chairman and Senior Partner. Mr. Shea serves as a Director of Geerlings & Wade,
a publicly traded wine distribution company. He holds Bachelor of Arts and
Master's degrees in Economics from Northeastern University.
EXECUTIVE OFFICERS AND MANAGEMENT OF THE COMPANY
The executive officers and management of the Company, their ages and
positions held in the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Emanuel Pinez 58 Chief Executive Officer, Secretary and Chairman
of the Board of Directors
John J. McDonald 37 President and Vice President of Sales
and Marketing
James M. Murphy 45 Chief Financial Officer
Donald R. Peck 39 Treasurer
Wieslaw Brys 43 Chief Engineer
Thomas J. MacCormack 42 Vice President of Manufacturing and Operations
Steven Schirm 30 Vice President of Quality Assurance
Robert Silva 45 Vice President of Sales and Marketing for the
PC Cards Division
</TABLE>
Executive officers are elected by and serve at the pleasure of the Board of
Directors. The following is a brief summary of the background of each executive
officer of the Company, with the exception of Messrs. Pinez, McDonald and
Murphy, whose backgrounds are summarized above:
DONALD R. PECK, Treasurer. Mr. Peck has served as the Company's Treasurer
and also as its Corporate Counsel since September 1996. From September 1986 to
August 1996, Mr. Peck was an associate at the law firm of Nutter, McClennen &
Fish. He holds a Bachelor of Science degree in Business Administration from the
University of Rhode Island and a Juris Doctor degree from Cornell Law School.
4
WIESLAW BRYS, Chief Engineer. Mr. Brys has served as the Company's Chief
Engineer since September 1995. From 1989 to September 1995, Mr. Brys served as
Vice President of Research and Development for the Company. Mr. Brys holds
Bachelor of Science and Master of Science degrees in Electrical Engineering from
the Technical University of Silesia, Gliwice, Poland.
THOMAS J. MACCORMACK, Vice President of Manufacturing and Operations. Mr.
MacCormack joined the Company in November 1995 as Vice President of
Manufacturing. He has served as Vice President of Manufacturing and Operations
since August 1996. From May 1994 through October 1995, Mr. MacCormack served as
Commodity Manager for Stratus Computer, Inc., a publicly traded manufacturer of
fault-tolerant computers. From April 1988 through April 1994, Mr. MacCormack
served in various manufacturing and sales capacities at Kendall Square Research
Corporation, a publicly traded manufacturer of super-computers, including
Director of Purchasing and Director of Contract Administration. Mr. MacCormack
received a Bachelor of Science degree in Finance from Boston College.
STEVEN SCHIRM, Vice President of Quality Assurance. Mr. Schirm has served as
Vice President of Quality Assurance since August 1996. Mr. Schirm served as
Quality Assurance Manager of the Company from June 1995 through July 1996 and as
a Senior Quality Engineer from January 1995 to June 1995. From October 1993 to
January 1995, Mr. Schirm served as Quality Assurance Manager at BPI Packaging
Technologies, Inc., a publicly traded manufacturer of plastic bags and related
products. From October 1988 to October 1993, Mr. Schirm worked at Fisher Pierce,
a publicly traded manufacturer of electronics for electric utilities, where he
served as Quality Assurance Supervisor until October 1991, and as Senior Quality
Assurance Engineer from October 1991 to October 1993. Mr. Schirm holds a
Bachelor of Science degree in Electrical Engineering from Roger Williams
University.
ROBERT SILVA, Vice President of Sales and Marketing for the PC Cards
Division. Mr. Silva has served as Vice President of Sales and Marketing for the
PC Cards Division since August 1996. Mr. Silva served as one of the Company's
OEM Sales Managers from July 1994 through July 1996. From June 1991 through June
1994, Mr. Silva was employed by Source Electronics, a company engaged in the
principal business of providing program and sourcing services to the electronic
OEM marketplace. He holds a Bachelor of Science degree in Business
Administration from Northeastern University.
CERTAIN TRANSACTIONS
During Fiscal 1996, the Company loaned A. Uri Levy, who served as President
of the Company from February 1995 to August 1996, and as Chief Operating Officer
and a Director of the Company from October 1994 to August 1996, a total of
$170,000 pursuant to three promissory notes that bore interest at the rate of
nine percent (9%) per annum and were due on demand. As of August 21, 1996, all
of the promissory notes had been repaid in full.
William J. Shea, who has served as a Director of the Company since August
1996, is the Vice Chairman, Chief Financial Officer and Treasurer of BankBoston
Corporation ("BankBoston"). In November 1995, the Company renewed its revolving
line of credit with BankBoston, pursuant to which the Company may borrow up to
the lesser of (i) $7.5 million or (ii) an amount based on the Company's eligible
accounts receivable and inventory. Interest on borrowings is at BankBoston's
prime interest rate (8.25% at June 30, 1996). Under the terms of this credit
agreement, which expires in November 1996 and is collateralized by substantially
all of the assets of the Company, the Company is required to comply with certain
covenants relating to the Company's net worth and indebtedness, among others. At
June 30, 1996, approximately $4.7 million was outstanding under this credit
agreement with approximately $2.8 million remaining available for borrowing. The
Company and BankBoston are currently negotiating a renewal of, and increase in
the borrowing amount under, the revolving line of credit. The Company has
maintained a relationship with BankBoston since September 1994.
BankBoston has extended an additional $2.0 million to the Company for lease
financing and a foreign exchange line. At June 30, 1996, there were five loans
outstanding under this additional line aggregating approximately $703,000 with
respect to the leasing of certain equipment. The loans have terms of three years
and bear interest at rates ranging from 7.2% to 9.7% per annum.
5
Transactions with WebSecure, Inc.
As of June 30, 1996, the Company held a minority interest in WebSecure,
Inc., a privately held provider of Internet services ("WebSecure"). John J.
Shields, Vice Chairman of the Board of Directors of the Company, has served as
Chairman of the Board of Directors of WebSecure since April 1996. Robert Kuzara,
who served as a Director of the Company from February 1994 to November 1995,
currently serves as President, Secretary and a Director of WebSecure.
In November 1995, the Company purchased 350,000 shares of common stock of
WebSecure for $10,000. In November 1995, the Company guaranteed the payment
obligations of WebSecure under a lease for offices of WebSecure, and in
September 1996, guaranteed the payment obligations of WebSecure under a lease
for capital equipment. The aggregate rental payments under both leases totaled
approximately $950,000 as of September 10, 1996. To date, the Company has not
made any payments in connection with these guarantees. On April 8, 1996, the
Company purchased 138,750 shares of common stock of WebSecure for $555,000 in
connection with a private placement of WebSecure in which WebSecure raised
$2,000,000.
During Fiscal 1996, the Company from time to time made loans to WebSecure,
which loans bear interest at the rate of 9% per annum and are due on demand. As
of September 9, 1996, the outstanding balances under these loans totaled
approximately $855,000. The Company and WebSecure have agreed that this amount
will be repaid out of a portion of the proceeds of a proposed initial public
offering of WebSecure.
In April 1996, WebSecure granted a non-qualified stock option to John J.
Shields to purchase 100,000 shares of WebSecure's common stock at an exercise
price of $4.00 per share, exercisable between April 30, 1997 and April 29, 2000.
Transactions with Triple I Corporation
As of June 30, 1996, the Company held a minority interest in Triple I
Corporation, a privately held manufacturer of optical equipment ("Triple I").
Emanuel Pinez, the Chief Executive Officer, Secretary and Chairman of the Board
of Directors of the Company, served as a Director of Triple I from February 1996
to August 1996. Mr. A. Uri Levy, who served as President of the Company from
February 1995 to August 1996, as Chief Operating Officer of the Company from
September 1994 to August 1996, and as a Director of the Company from December
1994 to August 1996, currently serves as a Director of Triple I. Mr. Levy
currently serves as the President of Centennial Capital Corporation, a
wholly-owned subsidiary of the Company.
As of June 30, 1996, the Company owned 700,000 shares of the common stock of
Triple I. During Fiscal 1996, the Company purchased a total of 500,000 shares of
common stock of Triple I for $500,000. In addition, on June 17, 1996, the
Company purchased 200,000 shares of common stock of Triple I in consideration of
the cancellation of a $200,000 promissory note from Triple I, described below.
In May 1996, the Company loaned $200,000 to Triple I, which was evidenced by
a promissory note that bore interest at the rate of 10% per annum and matured on
May 17, 1997. This promissory note was canceled on June 17, 1996 in
consideration of the issuance of 200,000 shares of common stock of Triple I to
the Company.
In March 1996, the Company entered into an Agreement with Triple I whereby,
in consideration of a lump sum payment of $200,000 to the Company, the Company
agreed to purchase certain components for Triple I, subject to full
reimbursement from Triple I of the cost of the components within ten days
following the sale by Triple I of the products containing the components
purchased by the Company. The term of the Agreement runs through June 30, 1997.
In November 1995, the Company loaned $95,000 to Triple I, which was
evidenced by a promissory note that bore interest at the rate of 10% per annum
and matured on May 14, 1997. This promissory note was repaid in full on February
8, 1996. In connection with this loan, Triple I issued to the Company warrants
to purchase 95,000 shares of common stock of Triple I, exercisable until
November 13, 1998.
6
PROPOSAL NO. 2
PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF COMMON STOCK FROM 15,000,000 SHARES TO 50,000,000 SHARES
GENERAL
On August 1, 1996, the Board of Directors approved a resolution to amend the
Company's Certificate of Incorporation to increase the number of shares of
Common Stock the Company is authorized to issue from 15,000,000 shares to
50,000,000 shares, subject to the approval of the Company's stockholders.
PURPOSES
The Company continues to evaluate ways to increase value for its
stockholders, and the Board of Directors believes that it is prudent to have
additional shares of Common Stock available for general corporate purposes,
including acquisitions, equity financings, grants of stock options and
recapitalizations, which may be done more expediently if the proposal to amend
the Company's Certificate of Incorporation is approved by the stockholders at
this meeting. A stockholder vote is required to increase the number of
authorized shares of Common Stock. Given the time normally needed to complete a
proxy solicitation, the Company may not be able to amend its Certificate of
Incorporation expediently in the future if an opportunity arose that required
the issuance of additional equity securities of the Company. The Board of
Directors will determine whether, when and on what terms to issue shares of
Common Stock in connection with any of the foregoing purposes.
The Board of Directors believes that the proposed increase in the number of
authorized shares of Common Stock will give the Company greater flexibility in
responding to business needs and opportunities by allowing shares of Common
Stock to be issued by the Board of Directors without the delay and expense of a
special meeting of stockholders. For example, the Board of Directors may deem it
appropriate to issue shares of Common Stock in connection with a private or
public offering, to finance possible future acquisitions, for distribution to
the Company's stockholders in the event of a stock dividend or stock split, or
for distribution pursuant to employee benefit plans.
If such additional authorized shares of Common Stock are subsequently issued
other than pursuant to a stock dividend or stock split, the percentage interest
of existing stockholders in the Company will be reduced. In addition, the
issuance of additional shares of Common Stock could have a material adverse
effect on the earnings per share and market price per share of the Company's
Common Stock. The Company regularly considers financing and acquisition
opportunities that may involve the issuance of equity securities. However, as of
the date of this Proxy Statement, the Company has no commitments to issue any
additional shares of its Common Stock in connection with any offerings,
acquisitions, dividends or distributions. The issuance of any additional shares
will be on terms deemed to be in the best interests of the Company and its
stockholders.
Stockholders of the Company do not now have preemptive rights to subscribe
for or purchase additional shares of Common Stock, and the stockholders will
have no preemptive rights to subscribe for or purchase any of the authorized
shares of Common Stock that will be available for issuance as a result of the
increase in the number of authorized shares of Common Stock. The Company does
not currently intend to issue additional shares of Common Stock with preemptive
rights.
If the proposed amendment is adopted, the authority of the Board of
Directors to issue the authorized but unissued shares of Common Stock might be
considered as having the effect of discouraging an attempt by another person or
entity to effect a takeover or otherwise gain control of the Company because the
possible issuance of additional shares of Common Stock would dilute the voting
power of the Common Stock then outstanding.
7
IMPLEMENTATION
If the proposed amendment is adopted by the stockholders, it will become
effective upon filing and recording a Certificate of Amendment to the Company's
Certificate of Incorporation as required by the General Corporation Law of
Delaware.
RECOMMENDATION AND VOTE
The Board of Directors believes that the proposed increase in the number of
authorized shares of Common Stock is advisable and in the best interests of the
Company. Accordingly, the Board of Directors recommends a vote FOR the approval
of Proposal No. 2.
PROPOSAL NO. 3
PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES
OF PREFERRED STOCK FROM 1,000,000 SHARES TO 2,000,000 SHARES
GENERAL
On September 26, 1996, the Board of Directors approved a resolution to amend
the Company's Certificate of Incorporation to increase the number of shares of
preferred stock, $.01 par value per share (the "Preferred Stock"), the Company
is authorized to issue from 1,000,000 shares to 2,000,000 shares, subject to the
approval of the Company's stockholders.
PURPOSES
The Board of Directors believes that it is prudent to have additional shares
of Preferred Stock available for general corporate purposes, including
acquisitions, equity financings, grants of stock options and recapitalizations,
which may be done more expediently if the proposal to amend the Company's
Certificate of Incorporation is approved by the stockholders at this meeting. A
stockholder vote is required to increase the number of authorized shares of
Preferred Stock. Given the time normally needed to complete a proxy
solicitation, the Company may not be able to amend its Certificate of
Incorporation expediently in the future if an opportunity arose that required
the issuance of additional equity securities of the Company. The Board of
Directors will determine whether, when and on what terms to issue shares of
Preferred Stock in connection with any of the foregoing purposes.
The Board of Directors believes that the proposed increase in the number of
authorized shares of Preferred Stock will give the Company greater flexibility
in responding to business needs and opportunities by allowing shares of
Preferred Stock to be issued by the Board of Directors without the delay and
expense of a special meeting of stockholders. For example, the Board of
Directors may deem it appropriate to issue shares of Preferred Stock in
connection with a private or public offering, to finance possible future
acquisitions, for distribution to the Company's stockholders in the event of a
stock dividend or stock split, or for distribution pursuant to employee benefit
plans.
The Company's Certificate of Incorporation authorizes the Board of Directors
to issue up to 1,000,000 shares of Preferred Stock. The issuance of any shares
of Preferred Stock will be on terms deemed to be in the best interests of the
Company and its stockholders. No shares of Preferred Stock are currently
outstanding, and the Company has no present plans for the issuance thereof. The
Preferred Stock may be issued in one or more series, the terms of which may be
determined at the time of issuance by the Board of Directors, without further
action by stockholders, and may include voting rights (including the right to
vote as a series on particular matters), preferences as to dividends and
liquidation, conversion and redemption rights and sinking fund provisions. The
issuance of any such shares of Preferred Stock could adversely affect the rights
of holders of Common Stock and, therefore, could reduce the value of the Common
Stock. In addition, the ability of the Board of Directors to issue Preferred
Stock could discourage, delay, or prevent a takeover of the Company.
8
IMPLEMENTATION
If the proposed amendment is adopted by the stockholders, it will become
effective upon filing and recording a Certificate of Amendment to the Company's
Certificate of Incorporation as required by the General Corporation Law of
Delaware.
RECOMMENDATION AND VOTE
The Board of Directors believes that the proposed increase in the number of
authorized shares of Preferred Stock is advisable and in the best interests of
the Company. Accordingly, the Board of Directors recommends a vote FOR the
approval of Proposal No. 3.
PROPOSAL NO. 4
PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1994 STOCK OPTION
PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED
FOR ISSUANCE UNDER THE PLAN FROM 750,000 SHARES TO 1,500,000 SHARES
On September 26, 1996, the Board of Directors approved a resolution to amend
the Company's 1994 Stock Option Plan (the "Plan") to increase the aggregate
number of shares of Common Stock reserved for issuance under the Plan from
750,000 shares to 1,500,000 shares, subject to stockholder approval. As of
September 10, 1996, 449,900 shares of the 750,000 shares of Common Stock
issuable under the Plan were subject to outstanding options at exercise prices
ranging from $3.50 to $33.63 per share, and stock options to purchase 207,250
shares of Common Stock had been exercised. Accordingly, as of September 10,
1996, options to purchase 92,850 shares of Common Stock were available for
future grant by the Company under the Plan. Options granted under the Plan
generally vest over a three year period.
THE PLAN
The purpose of the Plan is to strengthen the ability of the Company to
attract and retain well-qualified executive and managerial personnel and to
provide additional incentive to the Company's employees and officers to
contribute to the success of the Company, and thereby to enhance stockholder
value. All employees (including employee Directors) are eligible to be granted
incentive stock options as defined in Section 422 of the Internal Revenue Code,
as amended, as well as "non-qualified options" (options not intended to qualify
as incentive stock options). Non-employees are eligible to be granted
non-qualified options under the Plan. The Plan was originally adopted on January
10, 1994.
The per share exercise price of the Common Stock subject to all options
granted pursuant to the Plan is determined by the Board of Directors at the time
any option is granted. In the case of incentive stock options, the exercise
price may not be less than 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 may be granted under the Plan to
any regular employee of the Company or of a stock corporation of which the
Company directly or indirectly owns a majority of the voting common or capital
stock ("affiliated corporation"), if at the time of grant such employee directly
or indirectly owns shares of Common Stock possessing more than ten percent (10%)
of the combined voting power of all classes of stock of the Company and its
affiliated corporations, unless the exercise price of the incentive stock option
equals no less than 110% of the fair market value of the shares covered thereby
at the time the incentive stock option is granted.
Options under the Plan must be granted within ten years from the effective
date of the Plan. Incentive stock options granted under the Plan cannot be
exercised more than ten years from the date of grant, except that incentive
stock options issued to an 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 are limited to five year terms.
The Board of Directors has retained the right to amend or terminate the Plan
as it deems advisable. However, no amendment may be made to (i) increase the
number of shares of Common Stock reserved for issuance under the Plan, (ii)
change the class of employees eligible under the Plan or (iii) materially
increase the benefits which may accrue to participants under the Plan without
submitting such
9
amendments to stockholders for approval. In addition, no amendments to, or
termination of, the Plan shall impair the rights of any individual under options
previously granted without such individual's consent. The Plan shall terminate
no later than January 2004. Any options outstanding under the Plan at the time
of the Plan's termination shall remain outstanding until such options expire by
their terms.
FEDERAL INCOME TAX CONSEQUENCES
No tax obligation will arise for the optionee or the Company upon the
granting of either incentive stock options or non-qualified stock options under
the Plan if the exercise price of the option is no less than the fair market
value of the underlying shares of Common Stock measured on the date of the
grant. Upon exercise of a non-qualified stock option, an optionee will recognize
ordinary income in an amount equal to the excess, if any, of the fair market
value, on the date of exercise, of the stock acquired over the exercise price of
the option. Thereupon, the Company will be entitled to a tax deduction in an
amount equal to the ordinary income recognized by the optionee. Any additional
gain or loss realized by an optionee on disposition of the shares generally will
be capital gain or loss to the optionee and will not result in any additional
tax deduction to the Company. The taxable event arising from the exercise of
non-qualified stock options by officers of the Company subject to Section 16(b)
of the Securities Exchange Act of 1934, as amended, occurs on the later of the
date on which the option is exercised or the date six months after the date the
option was granted unless the optionee elects, within thirty days of the date of
exercise, to recognize ordinary income as of the date of exercise. The income
recognized at the end of any deferred period will include any appreciation in
the value of the stock during that period and the capital gain holding period
will not begin to run until the completion of such period.
Upon the exercise of an incentive stock option, an optionee recognizes no
immediate taxable income. The tax cost is deferred until the optionee sells the
shares of stock received upon exercise of the option if the optionee does not
dispose of the option shares within two years from the date the option was
granted and within one year after the exercise of the option, and the option is
exercised no later than three months after the termination of the optionee's
employment. Upon sale of the option shares in accordance with the holding period
described above, the optionee will recognize the gain on the sale as long term
capital gain. Subject to the limitations in the Plan, certain of these holding
periods and employment requirements are liberalized in the event of the
optionee's death or disability while employed by the Company. The Company is not
entitled to any tax deduction in connection with the grant, exercise or
disposition of incentive stock options, except that if the stock is not held for
the full term of the holding period outlined above, the gain on the sale of such
stock, being the lesser of (i) the fair market value of the stock on the date of
exercise minus the option price, or (ii) the amount realized on disposition of
the option shares minus the option exercise price, will be taxed to the optionee
as ordinary income and the Company will be entitled to a deduction in the same
amount. Any additional gain or loss realized by an optionee upon disposition of
shares prior to the expiration of the full term of the holding period outlined
above generally will be capital gain or loss to the optionee and will not result
in any additional tax deduction to the Company. The "spread" upon exercise of an
incentive stock option constitutes a tax preference item within the computation
of the "alternative minimum tax" under the Internal Revenue Code. The tax
benefits which might otherwise accrue to an optionee may be affected by the
imposition of such tax if applicable to the optionee's individual circumstances.
This description of the federal income tax consequences of the Plan will not
be updated to reflect possible changes in federal tax laws, rules and
regulations. No person should rely on the description above as providing tax
advice.
GRANT OF OPTIONS UNDER THE PLAN
Pursuant to the terms of the Plan, as of September 10, 1996, options to
purchase 753,950 shares of Common Stock had been granted to executive officers
and other employees of the Company, of which options to purchase 207,250 shares
of Common Stock had been exercised and options to purchase 96,800 shares had
been cancelled and were available for future grant. As of September 10, 1996,
the Company had granted options to purchase 274,050 shares of Common Stock to
all current executive officers as a group, and had granted options to purchase
479,900 shares of Common Stock to all employees, including all current officers
who are not executive officers, as a group. The fair market
10
value of the Common Stock underlying the options as of September 10, 1996 was
$32.625 per share (American Stock Exchange closing sale price on September 10,
1996). If this proposed amendment is approved by the stockholders, 842,850
shares of Common Stock would be issuable upon exercise of stock options
available for future grant by the Company.
RECOMMENDATION AND VOTE
The Board of Directors believes that the proposed increase in the number of
shares of Common Stock underlying the Plan is advisable and in the best
interests of the Company. Accordingly, the Board of Directors recommends a vote
FOR the approval of Proposal No. 4.
PROPOSAL NO. 5
PROPOSAL TO APPROVE AN AMENDMENT TO THE COMPANY'S 1994 FORMULA STOCK
OPTION PLAN TO INCREASE THE EXERCISE PRICE OF OPTIONS GRANTED UNDER
THE PLAN TO A NON-EMPLOYEE DIRECTOR UPON HIS/HER FIRST ELECTION AS A
DIRECTOR FROM 85% OF THE FAIR MARKET VALUE OF THE SHARES OF COMMON STOCK
ON THE DATE OF THE GRANT TO 100% OF THE FAIR MARKET
VALUE OF THE SHARES OF COMMON STOCK ON THE DATE OF THE GRANT
On September 26, 1996, the Board of Directors approved a resolution to amend
the Company's 1994 Formula Stock Option Plan (the "Formula Plan") to increase
the exercise price of options granted under the Formula Plan to a non-employee
Director upon his/her first election as a Director from 85% of the fair market
value of the shares of Common Stock on the date of the grant to 100% of the fair
market value of the shares of Common Stock on the date of the grant, subject to
stockholder approval. By increasing the exercise price as such, the Company
anticipates that it will in the future reduce the compensation expense that it
currently records in connection with the stock options granted to non-employee
Directors under the Formula Plan upon their first election as Directors.
On December 6, 1994, the Company's stockholders approved the Formula Plan.
The purpose of the Formula Plan is to encourage non-employee Directors who are
in a position to make significant contributions to the success of the Company
and of its affiliated corporations to acquire a closer identification of their
interests with those of the Company, thereby stimulating their efforts on behalf
of the Company and strengthening their desire to remain involved with the
Company. The Company has reserved 90,000 shares of Common Stock for issuance
upon exercise of options that have been or may be granted under the Formula
Plan. The Company's non-employee Directors are John J. Shields, J.P. Luc
Beaubien, William M. Kinch and William J. Shea.
The Formula Plan provides that each non-employee Director who has been
elected as a Director for the first time receives on the date he/she becomes a
Director options to purchase a total of 7,500 shares of Common Stock at an
exercise price equal to 85% of the fair market value of the shares of Common
Stock on the date of the grant (the "Initial Options"). The Initial Options vest
and are exercisable on the date of the grant. If the stockholders approve this
proposal, the exercise price of Initial Options granted in the future will be
equal to the fair market value of the Company's Common Stock on the date of the
grant.
The Formula Plan also provides for the Company to grant to each of its
non-employee Directors who has served as a Director of the Company for at least
one full year, options to purchase a total of 1,500 shares of Common Stock at an
exercise price equal to the fair market value of the Common Stock on the date of
the grant (the "Annual Options"). The Annual Options are granted on the first
business day immediately following the Company's annual meeting of stockholders
only if the recipient is a Director on the date of the grant and has attended,
during the Company's fiscal year immediately preceding the grant, at least 75%
of meetings of the Board of Directors and the committees on which the Director
has served. The Annual Options vest and become exercisable one year following
the date of the grant. No change has been proposed with respect to Annual
Options.
The Board of Directors has retained the right to amend or terminate the
Formula Plan as it deems advisable. However, no amendment may be made to change
the price at which options may be granted under the Formula Plan without
submitting such amendment to stockholders for approval. In addition,
11
no amendments to, or termination of, the Formula Plan shall impair the rights of
any individual under options previously granted without such individual's
consent. In any event, the Formula Plan shall terminate no later than October
2004. Any option outstanding under the Formula Plan at the time of the Formula
Plan's termination shall remain outstanding until the option expires by its
terms.
RECOMMENDATION AND VOTE
The Board of Directors believes that the proposed amendment to the Company's
1994 Formula Stock Option Plan will not materially detract from the Company's
ability to attract qualified Directors. The Board of Directors believes that
such proposed amendment is advisable and in the best interests of the Company.
Accordingly, the Board of Directors recommends a vote FOR the approval of
Proposal No. 5.
PROPOSAL NO. 6
PROPOSAL TO RATIFY AND CONFIRM THE APPOINTMENT OF COOPERS & LYBRAND
L.L.P. AS THE INDEPENDENT ACCOUNTANTS FOR THE COMPANY
FOR THE FISCAL YEAR ENDING JUNE 30, 1997
The persons named in the enclosed Proxy will vote to ratify the selection of
Coopers & Lybrand L.L.P. as independent accountants for the fiscal year ending
June 30, 1997 unless otherwise directed by stockholders. A representative of
Coopers & Lybrand L.L.P. is expected to be present at the Annual Meeting, and
will have the opportunity to make a statement and answer questions from
stockholders if he or she so desires.
12
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth as of September 18, 1996, the number and
percentage ownership of the Company's Common Stock by (i) all persons known by
the Company to be the beneficial owner of more than five percent (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 of
the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS BENEFICIALLY PERCENTAGE
OF BENEFICIAL OWNER(1) OWNED(2) OF CLASS
---------------------- -------- --------
<S> <C> <C>
Emanuel Pinez 2,200,010 25.9%
James M. Murphy(3) 59,166 *
John J. McDonald(4) 50,900 *
A. Uri Levy(5) 33,750 *
John J. Shields(6) 11,500 *
J.P. Luc Beaubien(7) 11,250 *
William M. Kinch(8) 10,750 *
William J. Shea(9) 19,300 *
All Officers, Directors and Director Nominees as a Group
(11 persons)(3)(4)(6)(7)(8)(9)(10)(11)(12)(13)(14)(15) 2,414,753 28.4%
</TABLE>
- ----------
* Less than 1%
(1) The address for all of these individuals is Centennial Technologies,
Inc., 37 Manning Road, Billerica, Massachusetts 01821.
(2) Pursuant to the rules of the Securities and Exchange Commission, shares
of Common Stock which an individual or group has a right to acquire
within 60 days pursuant to the exercise of options or warrants are deemed
to be outstanding for the purpose of computing the percentage ownership
of such individual or group, but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person shown
in the table.
(3) Includes 45,000 shares of Common Stock underlying a stock option
exercisable at $3.50 per share that has vested. Includes 6,666 shares of
Common Stock underlying a stock option which will become exercisable at
$12.81 per share within 60 days of the date hereof, but excludes an
additional 13,334 shares underlying the option that will vest beginning
in October 1997.
(4) Includes 900 shares of Common Stock underlying a stock option exercisable
of $3.50 per share that have vested, but excludes an additional 450
shares underlying the option that will vest in July 1997. Includes 15,000
shares of Common Stock underlying a stock option exercisable at $12.81
per share that have vested, and includes 35,000 shares of Common Stock
underlying the option that will vest within 60 days of the date hereof.
Excludes 16,890 shares of Common Stock and 33,110 shares of Common Stock
underlying two separate stock options exercisable at $17.48 per share
that will vest beginning in April 1997.
(5) Includes 18,750 shares of Common Stock underlying a stock option
exercisable at $3.50 per share that have vested, but excludes an
additional 18,750 shares underlying the option that will vest in July
1997. Since August 1996, Mr. Levy has not served as an executive officer
or Director of the Company.
(6) Includes 4,000 shares of Common Stock owned by King's Point Holdings,
Inc. Mr. Shields owns a majority of the stock of King's Point Holdings,
Inc., and is the President and Chief Executive Officer of that
corporation. Includes 7,500 shares of Common Stock underlying a stock
option exercisable at $15.03 per share that has vested.
(7) Includes 11,250 shares of Common Stock underlying a stock option
exercisable at $4.67 per share that has vested. Excludes 1,500 shares of
Common Stock underlying a stock option exercisable at $16.13 per share
that will vest in December 1996.
13
(8) Includes 7,500 shares of Common Stock underlying a stock option
exercisable at $12.36 per share that has vested.
(9) Includes 11,500 shares and 300 shares of the Company's Common Stock owned
by Mr. Shea's wife and son, respectively. Includes 7,500 shares of Common
Stock underlying a stock option exercisable at $25.77 per share that has
vested.
(10) Excludes 33,750 shares of Common Stock beneficially owned by A. Uri Levy
as set forth above in this table since Mr. Levy no longer serves as an
executive officer or Director of the Company.
(11) Includes 2,200 shares of Common Stock owned by Wieslaw Brys, Chief
Engineer of the Company. Includes 2,400 shares of Common Stock underlying
a stock option owned by Mr. Brys exercisable at $3.50 per share that have
vested, but excludes an additional 1,200 shares underlying the option
that will vest in July 1997. Includes 1,200 shares of Common Stock
underlying a stock option owned by Mr. Brys that will become exercisable
at $17.00 per share within 60 days of the date hereof, but excludes an
additional 2,400 shares underlying the option that will vest beginning in
October 1997.
(12) Includes 5,000 shares of Common Stock underlying a stock option owned by
Thomas J. MacCormack, Vice President of Manufacturing and Operations of
the Company, that will become exercisable at $17.31 per share within 60
days of the date hereof, but excludes an additional 10,000 shares
underlying the option that will vest beginning in November 1997.
(13) Includes 77 shares of Common Stock owned by Steven Schirm, Vice President
of Quality Assurance of the Company. Includes 1,000 shares of Common
Stock underlying a stock option owned by Mr. Schirm that will become
exercisable at $17.00 per share within 60 days of the date hereof, but
excludes an additional 2,000 shares underlying the option that will vest
beginning in October 1997.
(14) Includes 35,000 shares of Common Stock underlying a stock option owned by
Robert Silva, Vice President of Sales and Marketing for the PC Cards
Division of the Company, exercisable at $3.50 per share that have vested,
but excludes an additional 17,500 shares underlying the option that will
vest in July 1997. Includes 5,000 shares of Common Stock underlying a
stock option owned by Mr. Silva that will become exercisable at $14.44
per share within 60 days of the date hereof, but excludes an additional
10,000 shares underlying the option that will vest beginning in October
1997.
(15) Excludes 7,500 shares of Common Stock underlying a stock option owned by
Donald R. Peck, the Treasurer of the Company, exercisable at $33.63 per
share that will vest beginning in September 1997.
14
COMPENSATION OF DIRECTORS AND OFFICERS
EXECUTIVE OFFICERS' COMPENSATION
The following table sets forth the compensation paid to Mr. Pinez, the
Company's Chief Executive Officer, with respect to services rendered to the
Company during the fiscal years ended June 30, 1996, 1995, and 1994 ("Fiscal
1996, 1995 and 1994," respectively) and the other executive officers who earned
in excess of $100,000 during Fiscal 1996 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
(A) (B) (C) (D)
--- --- --- ---
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($)
--------------------------- ---- ---------- ---------
<S> <C> <C> <C>
Emanuel Pinez 1996 75,000 0
Chief Executive Officer(1) 1995 152,400 0
1994 224,931 60,000
A. Uri Levy 1996 154,038 0
President and Chief Operating Officer(2) 1995 123,066 15,000
1994 0 0
James M. Murphy 1996 105,961 0
Chief Financial Officer(3) 1995 100,000 0
1994 54,551 0
John J. McDonald 1996 117,981 23,220
Vice President of Sales and Marketing(4) 1995 110,000 0
1994 105,024 0
</TABLE>
- ----------
(1) Mr. Pinez received an annual car allowance from the Company of
approximately $2,408, $1,400 and $8,100 in Fiscal 1996, 1995 and 1994,
respectively. Prior to March 1, 1994, the Company paid the compensation
of Mr. Pinez, the Chief Executive Officer of the Company, to Camwill,
S.A., a Swiss management corporation engaged in executive search and
placement, which employed Mr. Pinez and contracted out his management
services to corporations, including the Company. Camwill paid Mr. Pinez
approximately 70% of amounts the Company paid to Camwill for his
management services rendered to the Company. On March 1, 1994, Mr. Pinez
entered into an employment agreement with the Company. Other than by his
prior employment, Mr. Pinez is unaffiliated with Camwill. For the period
July 1, 1993 to February 28, 1994, Mr. Pinez was paid $176,299 by
Camwill. From March 1, 1994 to June 30, 1994, Mr. Pinez was paid $108,632
by the Company, of which $60,000 was paid to Mr. Pinez in the form of
bonuses ratified by the Company's Board of Directors.
(2) Since August 1996, Mr. Levy has not served as President or Chief
Operating Officer of the Company. During Fiscal 1996, Mr. Levy received
an annual education allowance of up to $10,000 as needed. Mr. Levy
currently serves as President of Centennial Capital Corporation, a wholly
owned subsidiary of the Company.
(3) On October 11, 1995 the Company granted Mr. Murphy a stock option to
purchase 20,000 shares of Common Stock at an exercise price of $12.81 per
share that is exercisable until October 10, 1999. The option will vest
and become exercisable over three years beginning October 11, 1996.
(4) Mr. McDonald received an annual car allowance from the Company of
approximately $7,997, $7,200 and $7,200 in Fiscal 1996, 1995 and 1994,
respectively. On October 11, 1995, the Company granted Mr. McDonald a
stock option to purchase 50,000 shares of Common Stock at an exercise
price of $12.81 per share that is exercisable until October 10, 1999. As
of August 1, 1996, 15,000 shares of Common Stock underlying Mr.
McDonald's option had vested and were exercisable, with full vesting
occurring on October 11, 1996. On April 19, 1996, the Company granted Mr.
McDonald two separate options to purchase, in the aggregate, an
additional 50,000 shares of Common Stock at an exercise price of $17.48
per share that are exercisable until April 18, 2000. These options will
vest and become exercisable over three years beginning April 19, 1997.
Mr. McDonald has also served as the Company's President since August
1996.
16
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
----------------- --------------------
(A) (B) (C) (D) (E) (F) (G)
--- --- --- --- --- --- ---
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE OR
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (2) YEAR (3) ($/SH) DATE 5%($) 10%($)
---- -------- --------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Emanuel Pinez 0 0 N/A N/A N/A N/A
A. Uri Levy 0 0 N/A N/A N/A N/A
James M. Murphy(4) 20,000 6.42 12.81 10/10/99 55,273 118,976
John J. McDonald(5) 50,000 16.05 12.81 10/10/99 138,184 297,439
50,000 16.05 17.48 04/18/00 189,568 407,088
</TABLE>
(1) Amounts reported in these columns represent hypothetical amounts that may
be realized upon exercise of the options immediately prior to the
expiration of their term assuming the specified compounded rates of
appreciation on the Company's Common Stock over the term of the options
as prescribed by the Securities and Exchange Commission and do not
reflect the Company's estimate of future stock price growth.
(2) The Company has registered the shares of Common Stock underlying its 1994
Stock Option Plan (the "Plan") and 1994 Formula Stock Option Plan (the
"Formula Plan"), allowing such shares to become fully tradeable upon
issuance.
(3) In Fiscal 1996, options to purchase up to 305,900 shares of Common Stock
were granted under the Plan to Company employees, including executive
officers, and options to purchase up to 9,000 shares of Common Stock were
granted under the Formula Plan to non-employee Directors. Of the options
granted under the Plan, 168,700 were exercised and 70,000 were canceled
in Fiscal 1996.
(4) The option was granted on October 11, 1995 with options to purchase 6,666
shares becoming vested and exercisable on October 11, 1996, and with an
additional 6,666 and 6,667 options becoming vested and exercisable on
each of October 11, 1997 and October 11, 1998, respectively.
(5) The option to purchase 50,000 shares of Common Stock at $12.81 per share
was granted on October 11, 1995, of which 15,000 options became vested
and exercisable as of January 31, 1996, and with the remaining 35,000
options becoming vested and exercisable on October 11, 1996. Two separate
options to purchase, in the aggregate, an additional 50,000 shares of
Common Stock at $17.48 per share were granted on April 19, 1996, with
16,890 options becoming vested and exercisable over three years
commencing on April 19, 1997 and 33,110 options becoming vested and
exercisable on April 19, 1997.
AGGREGATED OPTION EXERCISES IN FISCAL 1996 AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
--- --- --- --- ---
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
VALUE AT FY-END EXERCISABLE/
SHARES ACQUIRED REALIZED EXERCISABLE/ UNEXERCISABLE
NAME ON EXERCISE ($) UNEXERCISABLE ($) (1)
---- ----------- --- ------------- --------
<S> <C> <C> <C> <C>
Emanuel Pinez 0 0 0/0 0/0
A. Uri Levy 37,500 445,312 0/37,500 0/989,062
James M. Murphy 7,500 102,187 27,500/37,500 725,312/802,862
John J. McDonald 0 0 15,450/85,900 267,843/1,240,762
</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 Company's Common Stock underlying
the options as of June 30, 1996 was $29.875 per share (American Stock
Exchange closing sale price on June 28, 1996).
16
COMPENSATION OF DIRECTORS DURING FISCAL 1996
Since April 12, 1994, the date of the Company's initial public offering (the
"Initial Public Offering"), each non-employee Director has been compensated
$1,000 per year for a full year of service and $250 for each Board of Directors
meeting attended. William M. Kinch, J.P. Luc Beaubien and John J. Shields,
non-employee Directors of the Company, each received $1,417, $2,500 and $250,
respectively, from the Company as compensation for their services to the Company
as Directors during Fiscal 1996. On December 1, 1995, Mr. Beaubien received a
non-qualified option to purchase up to 1,500 shares of Common Stock at a price
of $16.13 per share exercisable at any time between December 1, 1996 and
November 29, 2000. On April 10, 1996, Mr. Shields received a non-qualified
option to purchase up to 7,500 shares of Common Stock at a price of $15.03 per
share exercisable at any time from April 11, 1996 through April 9, 2001.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
On March 1, 1994, the Company entered into an employment and non-competition
agreement with Mr. Pinez, the Company's Chief Executive Officer, that expires on
December 31, 1996 ("Pinez's Employment Agreement"). Pinez's Employment Agreement
provides for a salary of $150,000 per annum plus the use of a Company-owned car,
cost-of-living increases and such other bonuses as may be determined by the
Company's Board of Directors. Mr. Pinez's salary of $75,000 in Fiscal 1996
reflected a reduction of his management duties and responsibilities in Fiscal
1996. In August 1996, Mr. Pinez's annual salary was reinstated to $150,000 due
to an increase in his management duties and responsibilities to levels which
existed prior to Fiscal 1996. Pinez's Employment Agreement also provides that
Mr. Pinez is entitled to receive benefits offered to the Company's employees
generally as well as severance benefits equal to 200% of his 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 salary is reduced without his consent, or
(iv) there is a change in his principal place of employment from the greater
Boston, Massachusetts area without his consent. Pinez's Employment Agreement
provides that "cause" includes (i) the repeated and material neglect of Mr.
Pinez's duties under the agreement, (ii) conviction of a felony, (iii) fraud or
embezzlement involving the Company, (iv) a substantial change in his position or
authority within the Company without his consent, or (v) extended disability.
Pinez's Employment Agreement provides for successive one-year renewals after
the initial term and contains a provision prohibiting Mr. Pinez from competing
with the Company for a two-year period following termination of employment.
On May 1, 1994, the Company entered into an employment and non-competition
agreement with Mr. Murphy, the Company's Chief Financial Officer, that expires
on December 31, 1996 ("Murphy's Employment Agreement"). Murphy's Employment
Agreement provides for an annual salary of $100,000, such other bonuses and
stock options as may be determined by the Company's Board of Directors, and all
benefits offered to other executive officers of the Company. If Mr. Murphy is
terminated without cause, as defined in Murphy's Employment Agreement, the
Company will be obligated to pay him a severance amount equal to six months of
his then current annual salary and for a period of six months provide him with
all of the health and insurance benefits he received at the time of his
termination. For the purposes of Murphy's Employment Agreement, the term "cause"
means the willful breach or habitual neglect of Mr. Murphy's obligations under
the agreement or his duties as an employee of the Company.
In the event that a substantial portion of the Company is acquired without
the approval of the Company's Board of Directors, Murphy's Employment Agreement
provides that he shall be entitled to receive, as severance pay, an amount equal
to 150% of his then current annual salary within thirty days of the date of his
termination. Also, for a period of six months from the date of such termination,
Mr. Murphy shall receive all health and insurance benefits he enjoyed at the
time of his termination.
17
On October 20, 1995, the Company entered into an employment and
non-competition agreement with Mr. McDonald, the Company's President and Vice
President of Sales and Marketing, that expires on December 31, 1998 ("McDonald's
Employment Agreement"). McDonald's Employment Agreement provides for an annual
salary of $120,000, a monthly automobile allowance of $700, such other bonuses
and stock options as may be determined by the Company's Board of Directors, and
all other benefits provided to the other executive officers of the Company. If
Mr. McDonald is terminated without cause, as defined in McDonald's Employment
Agreement, the Company will be obligated to pay him a severance amount equal to
six months of his then current annual salary and also provide him for a period
of six months with all of the health and insurance benefits he enjoyed at the
time of his termination. For the purposes of McDonald's Employment Agreement,
the term "cause" means the intentional falseness of any material warranty or
representation made by Mr. McDonald in McDonald's Employment Agreement, or the
willful breach or habitual neglect of Mr. McDonald's obligations under that
Agreement or his duties as an employee of the Company.
In the event that a substantial portion of the Company is acquired without
the approval of the Company's Board of Directors, McDonald's Employment
Agreement provides that Mr. McDonald shall be entitled to receive as severance
pay, an amount equal to 150% of his then current annual salary within thirty
days of the date of his termination. Mr. McDonald also shall be entitled to
receive, for a period of six months from the date of such termination, all
health and insurance benefits he enjoyed at the time of his termination.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee. This committee, composed of Messrs. Beaubien and Kinch,
is responsible for establishing the policies that govern base salary, as well as
short and long-term incentives for the Company's senior management team.
Following review and approval by the Committee of the compensation policies, all
issues pertaining to executive compensation are submitted to the Board of
Directors for approval. The Committee's informal executive compensation
philosophy (which applies generally to all of the Company's management)
considers a number of factors, which may include providing levels of
compensation competitive with companies at a comparable stage of development and
in the Company's geographic area, recognizing the overall cost of living in the
Company's geographical region, integrating management's pay with the achievement
of performance goals, rewarding above average corporate performance, recognizing
and providing incentive for individual initiative and achievement, and promoting
a cooperative spirit among the executive officers of the Company. The Committee
also endorses the position that equity ownership by management is beneficial in
aligning management's and stockholder's interest in the enhancement of
stockholder value by providing management with longer-term incentives.
Accordingly, compensation structures for management generally include a
combination of salary and stock options.
In setting, reviewing and approving the cash compensation for all executive
officers, the Committee reviews salaries annually. The Committee's policy is to
fix base salaries at levels comparable to the amounts paid to senior executives
with comparable qualifications, experience and responsibilities at other
companies of similar size and engaged in a similar business to that of the
Company. In addition, the base salaries take into account the Company's relative
performance as compared to these companies and the attainment of certain planned
objectives. The Company believes the present compensation for its executive
officers is comparable to these similarly situated companies.
Incentive-based compensation is an integral part of the overall compensation
package of the executive group, other than those executive employees who already
own an appreciable share of the Company's outstanding Common Stock. Incentive
compensation in the form of stock options is designed to provide long-term
incentives to executive officers and other employees, to encourage the executive
officers and other employees to remain with the Company and to enable them to
develop and maintain a stock ownership position in the Company's Common Stock.
The Company's stock option plans have been used for the granting of stock
options to eligible employees, including executive officers.
18
During Fiscal 1996, stock options to purchase shares of the Company's Common
Stock were granted to various employees of the Company. The value realizable
from exercisable options is dependent upon the extent to which the Company's
performance is reflected in the market price of the Company's Common Stock at
any particular point in time. Equity compensation in the form of stock options
is designed to provide long-term incentives to executive officers and other
employees. The options have been granted in order to motivate these employees to
maximize stockholder value. Generally, options granted to these employees expire
after a ten-year period. In addition, the Company has a policy of awarding stock
options at not less than the fair market value at the date of grant. As a result
of this policy, executives and other employees are rewarded economically only to
the extent that the Stockholders also benefit through appreciation in the value
of the Company.
Options granted to employees are used to attract qualified personnel or
granted to existing employees based on such factors as individual initiative,
achievement and performance. The Committee generally reviews the option holdings
of each of the executive officers, including exercise price and the then current
value of unexercised options. The Committee considers equity compensation to be
an integral part of a competitive executive compensation package and an
important mechanism to align the interests of management with those of the
Company's stockholders.
During Fiscal 1996, Emanuel Pinez received a salary of $75,000. The
reduction in Mr. Pinez's annual salary for Fiscal 1996 was attributable to a
reduction of his management duties and responsibilities during Fiscal 1996. In
August 1996, the Compensation Committee and the Company's Board of Directors
reinstated Mr. Pinez's annual salary to $150,000 due to an increase in his
management duties and responsibilities to levels which existed prior to Fiscal
1996.
The Compensation Committee is satisfied that the executive officers of the
Company are dedicated to achieving significant improvements in the long-term
financial performance of the Company and that the compensation policies and
programs implemented and administered have contributed and will continue to
contribute towards achieving this goal.
This report has been submitted by the members of the Compensation Committee.
COMPENSATION COMMITTEE MEMBERS
J.P. Luc Beaubien
William M. Kinch
September 5, 1996
19
PERFORMANCE GRAPH
The following graph and table reflect the cumulative total stockholder
return (assuming reinvestment of dividends, if any) from investing $100 on April
12, 1994 (the date the Company's Common Stock began trading on the American
Stock Exchange (the "AMEX")), and plotted at the end of each fiscal and calendar
year-end thereafter, in each of (i) the Company's Common Stock*; (ii) the AMEX
Market Index of U.S. companies (the "AMEX Market Index"); and (iii) a Peer Group
Index based upon the Company's Standard Industry Classification Number (the "SIC
Code Index").
[PERFORMANCE GRAPH APPEARS HERE WITH FOLLOWING PLOT POINTS]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
4/12/94 6/30/94 12/31/94 6/30/95 12/31/95 6/30/96
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Centennial Technologies $100 $102.44 $178.05 $441.46 $552.16 $ 873.95
AMEX Market Index $100 $ 83.89 $113.35 $141.06 $176.64 $ 203.36
SIC Code Index $100 $ 93.32 $ 97.85 $112.92 $123.10 $130.01
</TABLE>
- ----------
* This graph does not reflect the performance of the Redeemable Warrants
purchased in connection with the Initial Public Offering.
20
PRICE RANGE OF COMMON STOCK AND REDEEMABLE WARRANTS
The Company's Common Stock and Redeemable Warrants have been traded on the
American Stock Exchange ("AMEX") since the Company's Initial Public Offering on
April 12, 1994.
As of September 18, 1996, there were approximately 107 record holders of the
Common Stock. Management believes there are approximately 4,385 beneficial
holders of the Company's Common Stock.
The following table sets forth the high and low sale prices for the Common
Stock as reported by AMEX for the periods indicated.
COMMON STOCK
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1995
First Fiscal Quarter $ 6 3/8 $ 3 1/2
Second Fiscal Quarter 6 5/8 5 1/4
Third Fiscal Quarter 7 7/8 5 1/8
Fourth Fiscal Quarter 16 7 1/4
1996
First Fiscal Quarter 18 5/8 13 3/8
Second Fiscal Quarter 20 3/4 12 1/2
Third Fiscal Quarter 22 17 1/8
Fourth Fiscal Quarter 30 7/8 16 5/8
</TABLE>
REDEEMABLE WARRANTS*
<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1995
First Fiscal Quarter $ 2 1/2 $ 5/8
Second Fiscal Quarter 2 7/8 1 3/8
Third Fiscal Quarter 4 3/4 1 3/4
Fourth Fiscal Quarter 17 3 7/8
1996
First Fiscal Quarter 21 13 5/8
Second Fiscal Quarter (through December 7, 1995) 23 11 3/4
</TABLE>
- ----------
* All of the Redeemable Warrants had been exercised by December 7, 1995.
DIVIDENDS
The Company has not paid dividends on its Common Stock since its inception
and has no intention of paying any dividends to its stockholders in the
foreseeable future. The Company currently intends to reinvest earnings, if any,
in the development and expansion of its business. The declaration of dividends
in the future will be at the election of the Board of Directors and will depend
upon the earnings, capital requirements and financial position of the Company,
general economic conditions and other pertinent factors. In addition, the
Company's bank line of credit agreement currently prohibits the payment of cash
dividends without the bank's prior written consent.
ACCOUNTING MATTERS AND RATIFICATION OF AUDITORS
Coopers & Lybrand L.L.P. served as the Company's independent public
accountants for the fiscal year ended June 30, 1996. The Board of Directors
appoints the Company's independent public accountants annually based upon the
recommendation of the Audit Committee, which reviews several factors, including
the audit scope and estimated audit fees. A representative of Coopers & Lybrand
L.L.P. is expected to be present at the Annual Meeting of Stockholders, and will
have the opportunity to make a statement if he or she so desires, and respond to
appropriate questions from stockholders.
21
VOTING AT MEETING
The Board of Directors has fixed Wednesday, September 18, 1996, as the
record date for the determination of stockholders entitled to vote at this
meeting. At the close of business on that date, there were outstanding and
entitled to vote 8,521,270 shares of Common Stock.
SOLICITATION OF PROXIES
The solicitation of proxies is made by the Company, and the cost of
solicitation of proxies will be borne by the Company. In addition to the
solicitation of proxies by mail, officers and employees of the Company may
solicit in person or by telephone. The Company may reimburse brokers or persons
holding stock in their names, or in the names of their nominees, for their
expenses in sending proxies and proxy material to beneficial owners.
REVOCATION OF PROXY
Subject to the terms and conditions set forth herein, all proxies received
by the Company will be effective, notwithstanding any transfer of the shares to
which such proxies relate, unless prior to the meeting the Company receives a
written notice of revocation signed by the person who, as of the record date,
was the registered holder of such shares. The Notice of Revocation must indicate
the certificate number or numbers of the shares to which such revocation relates
and the aggregate number of shares represented by such certificate(s).
STOCKHOLDER PROPOSALS
In order to be included in Proxy material for the 1997 Annual Meeting,
tentatively scheduled for November 12, 1997, stockholders' proposed resolutions
must be received by the Company on or before May 29, 1997. The Company suggests
that proponents submit their proposals by certified mail, return receipt
requested, addressed to the Secretary of the Company.
ANNUAL REPORT
THE COMPANY IS PROVIDING TO EACH STOCKHOLDER, WITHOUT CHARGE, A COPY OF THE
COMPANY'S ANNUAL REPORT, INCLUDING THE FINANCIAL STATEMENTS AND RELATED
SCHEDULES FOR THE COMPANY'S MOST RECENT FISCAL YEAR ENDED JUNE 30, 1996.
MISCELLANEOUS
The Management does not know of any other matters which may come before this
meeting. However, if any other matters are properly presented to the meeting, it
is the intention of the persons named in the accompanying proxy to vote, or
otherwise act, in accordance with their judgment on such matters.
By Order of the Board of Directors
ANDREW D. MYERS
Assistant Secretary
Billerica, Massachusetts
October 3, 1996
THE MANAGEMENT HOPES THAT THE STOCKHOLDERS WILL ATTEND THE MEETING. WHETHER
OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. PROMPT RESPONSE WILL GREATLY
FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK PERSONALLY
EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
22
APPENDIX TO
PROXY STATEMENT OF
CENTENNIAL TECHNOLOGIES, INC.
-------------------------------
CENTENNIAL TECHNOLOGIES, INC.
1994 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 CENTENNIAL 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.
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 CENTENNIAL 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
January 7, 1994.
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 1994 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.
2.15 "Stock" means the Common Stock, $.01 par value per share, of the
Corporation or any successor, including any adjustments in the event of changes
in capital structure of the type described in Article XI.
-2-
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, as amended, the Board shall
delegate the power to select directors and officers to receive Awards under the
Plan, and the timing, pricing and amount of such Awards to a Committee, all
members of which shall be "disinterested persons" within the meaning of Rule
16b-3 under that Act.
3.2 Powers. The Board of Directors 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,
-3-
(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 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
-4-
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.
ARTICLE IV
ELIGIBILITY
4.1 Eligible Employees. All Employees (including Directors who are
Employees) are eligible to be granted Incentive Stock Option and Non-Qualified
Option Awards under this Plan.
4.2 Consultants, Directors and other Non-Employees. Any Consultant,
Director (whether or not an Employee) and any other Non-Employee is eligible to
be granted Non-Qualified Option Awards under the Plan, provided the person has
not irrevocably elected to be ineligible to participate in the Plan.
4.3 Relevant Factors. In selecting individual Employees, Consultants,
Directors and other Non-Employees to whom Awards shall be granted, the Board
shall weigh such factors as are relevant to accomplish the purpose of the Plan
as stated in Article I. An individual who has been granted an Award may be
granted one or more additional Awards, if the Board so determines. The granting
of an Award to any individual shall neither entitle that individual to, nor
disqualify him from, participation in any other grant of Awards.
-5-
ARTICLE V
Stock Option Awards
5.1 Number of Shares. Subject to the provisions of Article XI of this
Plan, the aggregate number of shares of Stock for which options may be granted
under this Plan shall not exceed seven hundred fifty thousand (750,000) 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 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.
-6-
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 one hundred percent (100%) of the fair
market value of the shares covered thereby at the time the Incentive Stock
Option is granted (but in no event less than par value), provided that no
Incentive Stock Option shall be granted hereunder to any Employee if at the time
of grant the Employee, directly or indirectly, owns Stock possessing more than
ten percent (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 one hundred ten percent (110%) of the fair market
value of the shares covered thereby at the time the Incentive Stock 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 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 establishedquotation 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.
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5.6 Non-Transferability of Options. No Option granted under this Plan
shall be transferable by the grantee otherwise than by will or the laws of
descent and distribution, and such Option may be exercised during the grantee's
lifetime only by the grantee.
5.7 Foreign Nationals. Awards may be granted to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or comply with
applicable laws.
ARTICLE VI
EXERCISE OF OPTION
6.1 Exercise. Each Option granted under this Plan shall be exercisable
on such date or dates and during such period and for such number of shares as
shall be determined pursuant to the provisions of the instrument evidencing such
Option. The Board shall have the right to accelerate the date of exercise of any
option, provided that, the Board shall not accelerate the exercise date of any
Incentive Stock Option granted if such acceleration would violate the annual
vesting limitation contained in Section 422(d)(1) of the Code.
6.2 Notice of Exercise. A person electing to exercise an Option shall
give written notice to the Corporation of such election and of the number of
shares he or she has elected to purchase and shall at the time of exercise
tender the full purchase price of the shares he or she has elected to purchase.
The purchase price can be paid partly or completely in shares of the
Corporation's stock valued at Fair Market Value as defined in Section 5.5
hereof, or by any such other lawful consideration as the Board may determine.
Until such person has been issued a certificate or certificates for the shares
so purchased and has fully paid the purchase price for such shares, he or she
shall possess no rights of a record holder with respect to any of such shares.
In the event that the Corporation elects to receive payment for such shares by
means of a promissory note, such note, if
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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 (2%).
6.3 Option Unaffected by Change in Duties. No Incentive Stock Option
(and, unless otherwise determined by the Board of Directors, no Non-Qualified
Option granted to a person who is, on the date of the grant, an Employee of the
Corporation or an Affiliated Corporation) shall be affected by any change of
duties or position of the optionee (including transfer to or from an Affiliated
Corporation), so long as he or she continues to be an Employee. Employment shall
be considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed ninety (90) days
or, if longer, any period during which such optionee's right to reemployment is
guaranteed by statute. A bona fide leave of absence with the written approval of
the Board shall not be considered an interruption of employment under the Plan,
provided that such written approval contractually obligates the Corporation or
any Affiliated Corporation to continue the employment of the optionee after the
approved period of absence.
If the optionee shall cease to be an Employee for any reason other
than death, such Option shall thereafter be exercisable only to the extent of
the purchase rights, if any, which have accrued as of the date of such
cessation; provided that (i) the Board may provide in the instrument evidencing
any Option that the Board may in its absolute discretion, upon any such
cessation of employment, determine (but be under no obligation to determine)
that such accrued purchase rights shall be
-9-
deemed to include additional shares covered by such Option; and (ii) unless the
Board shall otherwise provide in the instrument evidencing any Option, upon any
such cessation of employment, such remaining rights to purchase shall in any
event terminate upon the earlier of (A) the expiration of the original term of
the Option; or (B) where such cessation of employment is on account of
disability, the expiration of one year from the date of such cessation of
employment and, otherwise, the expiration of three months from such date. For
purposes of the Plan, the term "disability" shall mean "permanent and total
disability" as defined in Section 22(e)(3) of the Code.
In the case of a Participant who is not an employee, provisions
relating to the exercisability of an Option following termination of service
shall be specified in the award. If not so specified, all Options held by such
Participant shall terminate on termination of service to the Corporation.
6.4 Death of Optionee. Should an optionee die while in possession of
the legal right to exercise an Option or Options under this Plan, such persons
as shall have acquired, by will or by the laws of descent and distribution, the
right to exercise any Options theretofore granted, may, unless otherwise
provided by the Board in any instrument evidencing any Option, exercise such
Options at any time prior to one year from the date of death; provided, that
such Option or Options shall expire in all events no later than the last day of
the original term of such Option; provided, further, that any such exercise
shall be limited to the purchase rights which have accrued as of the date when
the optionee ceased to be an Employee, whether by death or otherwise, unless the
Board provides in the instrument evidencing such Option that, in the discretion
of the Board, additional shares covered by such Option may become subject to
purchase immediately upon the death of the optionee.
ARTICLE VII
REPORTING PERSON LIMITATIONS
To the extent required to qualify for the exemption provided by Rule
16b-3 under the Securities Exchange Act of 1934, and any successor provision, at
least six months must elapse from
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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.
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, the
-11-
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 as would affect an actual share of Stock issued and outstanding on
the effective date of such change. Such
-12-
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.
No fractional shares shall be issued under the Plan and the optionee
shall receive from the Corporation cash in lieu of such fractional shares.
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ARTICLE XII
EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective on January 10, 1994. 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 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.
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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 XVII) the Corporation, in
accordance with Section 3402(a) of the Code, may require the optionee to pay
additional withholding taxes in respect of the amount that is considered
compensation includible in such person's gross income. The Board in its
discretion may condition the exercise of an Option on the payment of such
additional withholding taxes.
ARTICLE XVII
NOTICE TO 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 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
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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.
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CENTENNIAL TECHNOLOGIES, INC.
1994 FORMULA STOCK OPTION PLAN
ARTICLE I
PURPOSE OF THE PLAN
The purpose of this Plan is to encourage and enable non-employee
Directors who are in a position to make significant contributions to the success
of CENTENNIAL 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 non-employee Director
designated to participate in the Plan is referred to as a "Participant."
ARTICLE II
DEFINITIONS
2.1 "Affiliated Corporation" means any stock corporation of which a
majority of the voting common or capital stock is owned directly or indirectly
by the Corporation.
2.2 "Award" means an Option granted under Article V.
2.3 "Board" means the Board of Directors of the Corporation or, if one
or more has been appointed, a Committee of the Board of Directors of the
Corporation.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.5 "Committee" means a Committee of not less than two members of the
Board appointed by the Board to administer the Plan.
2.6 "Corporation" means CENTENNIAL TECHNOLOGIES, INC., a Delaware
corporation.
2.7 "Non-Employee" means any person who is not a regular full-time or
part-time employee of the Corporation or an Affiliated Corporation on or after
January 1, 1994.
2.8 "Non-Qualified Option" means any option not intended to qualify as
an Incentive Stock Option.
2.9 "Option" means a 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.
2.10 "Participant" means a person who is to receive an award under the
Plan.
2.11 "Plan" means this 1994 Formula Stock Option Plan.
2.12 "Reporting Person" means a person subject to Section 16 of the
Securities Exchange Act of 1934 or any successor provision.
2.13 "Restricted Period" means the period of time selected by the
Committee during which an award may be forfeited by the person.
2.14 "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 XI.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 Administration by Board. This Plan may be administered by the Board
of Directors or by a Committee of the Board of Directors of the Corporation. If
a Committee administers this
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Plan, the Board may, from time to time, 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.
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 delegate responsibility for Plan operation,
management and administration on such terms, consistent with
the Plan, as the Board may establish,
(e) The power to delegate to other persons the responsibility of
performing ministerial acts in furtherance of the Plan's
purpose, and
(f) 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.
ARTICLE IV
ELIGIBILITY
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4.1 Eligible Persons. All non-employee Directors are eligible to be
granted Non-Qualified Option Awards under this Plan provided the person has not
irrevocably elected to be ineligible to participate in the Plan.
ARTICLE V
STOCK OPTION AWARDS
5.1 Number of Shares. Subject to the provisions of Article XI of this
Plan, the aggregate number of shares of Stock for which Options may be granted
under this Plan shall not exceed ninety thousand (90,000) shares. Options shall
be granted under this Plan, without approval or discretion on the part of the
Board, to non-employee Directors as follows: Effective June 1, 1995, on the
first business day immediately following the Corporation's annual meeting of
shareholders, the Corporation shall grant, to each of its non-employee Directors
who has served as a Director of the Corporation for at least one full year,
options to purchase a total of 1,500 shares of Stock. The options shall be
granted to a non-employee Director only if the Director is a Director on the
date of the grant and has attended, during the Corporation's fiscal year
immediately preceding the grant, at least 75% of meetings of the Board of
Directors and the Committees on which the Director has served. The exercise
price of options granted to non-employee Directors shall be the fair market
value of the shares of Stock on the date of the grant and said options shall
vest completely and be exercisable one year from the date of the grant, subject
to the Director's continued service as a Director on such date.
-4-
Each non-employee Director who becomes a Director after January 1, 1994
will receive, on the later of (i) the date he or she becomes a Director or (ii)
the effective date of this Plan, options to purchase a total of 7,500 shares of
Stock. The exercise price of such options will be 85% of the fair market value
of the shares of Stock on the date of the grant. Said options shall vest
completely and be exercisable immediately on the date of the grant.
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 or repurchase rights as shall be
determined by the Board of Directors.
5.2 Effect of Expiration, Termination or Surrender. If an Option under
this Plan shall expire or terminate unexercised as to any shares covered
thereby, or shall cease for any reason to be exercisable in whole or in part, or
if the Corporation shall reacquire any unvested shares issued pursuant to
Options under the Plan, such shares shall thereafter be available for the
granting of other Options under this Plan.
5.3 Term of Options. Each Option granted hereunder shall be for a term
five (5) years from the date of granting thereof. Each Option shall be subject
to earlier termination as provided in Sections 6.3 and 6.4.
5.4 Fair Market Value. If, at the time an Option is granted under the
Plan, the Corporation's Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such
-5-
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 average of the bid and asked 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.
5.5 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.
5.6 Foreign Nationals. Awards may be granted to Participants who are
foreign nationals or employed outside the United States on such terms and
conditions different from those specified in the Plan as the Committee considers
necessary or advisable to achieve the purposes of the Plan or comply with
applicable laws.
ARTICLE VI
EXERCISE OF OPTION
6.1 Exercise. Each Option granted under this Plan shall be
exercisable on such date or dates and during such period and for such number of
shares as shall be determined pursuant to the provisions of the instrument
evidencing such Option. The Board shall have the right to accelerate
-6-
the date of exercise of any option.
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 5.4
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.
If 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 Corporation's outstanding Common Stock, shall provide for payment of
interest at a rate no less than the interest rate then payable by the
Corporation to its principal commercial lender, or if the Corporation has no
loan outstanding to 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 Certain Changes. A Director's term 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 reemployrnent is
guaranteed by statute. A bona fide leave of absence with the written approval of
the Board shall not be considered an interruption of service under the Plan.
-7-
If the optionee shall cease to be a Director 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 upon any such cessation of service, such remaining rights to
purchase shall in any event terminate upon the expiration of the original term
of the Option.
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 until the expiration of the original term of the Options, provided,
further, that any such exercise shall be limited to the purchase rights that
have accrued as of the date when the optionee ceased to be a Director whether by
death or otherwise.
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.
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
-8-
advisable that 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 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 not discretionary. 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 a
Director of, or consultant or advisor to, the Corporation or an Affiliated
Corporation. Except as specifically provided by the Board in any particular
case, the loss of existing or potential profits granted under this Plan shall
not constitute an element of damages in the event of termination of the
relationship of a Participant even if the termination is in violation of an
obligation of the Corporation to the Participant by contract or otherwise.
-9-
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 Plan may not be amended more than once every six months, unless
such changes are necessary to comport with changes in the Code, the Employee
Retirement Income Security Act, or the rules thereunder. Subject to the
foregoing, the Board may also amend the Plan from time to time, except that
amendments that 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 a which Options may be granted;
(d) The term of the Plan; and
(e) The requirements as to eligibility for participation in the Plan.
Awards granted prior to suspension or termination of the Plan may not
be cancelled solely because of such suspension or termination, except with the
consent of the grantee of the Award.
ARTICLE XI
CHANGES IN CAPITAL STRUCTURE
The instruments evidencing Options granted hereunder shall be subject
to adjustment in the event of changes in the outstanding Stock of the
Corporation by reason of stock dividends, Stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other
relevant changes in capitalization occurring after the date of an Award to the
same extent as would
-10-
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.
In the event of the proposed dissolution or liquidation of the
Corporation, each Option will terminate immediately prior to the consummation of
such proposed action or at such other time and subject to such other conditions
as the Board shall determine.
Except as expressly provided herein, no issuance by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No adjustments
shall be made for dividends paid in cash or in property other than securities of
the Corporation.
No fractional shares shall be issued under the Plan and the optionee
shall receive from the Corporation cash in lieu of such fractional shares.
ARTICLE XII
EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall become effective on October 5, 1994. 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.
-11-
ARTICLE XIII
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 XIV
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 XV
WITHHOLDING OF ADDITIONAL INCOME TAXES
Upon the exercise of a Non-Qualified Option 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 XVI
GOVERNING LAW; CONSTRUCTION
The validity and construction of the Plan and the instruments
evidencing Options shall be governed by the internal 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.
-12-
CENTENNIAL TECHNOLOGIES, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD NOVEMBER 6, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED hereby appoints Emanuel Pinez and James M. Murphy as
proxies, with full power of substitution, to vote for and on behalf of the
undersigned at the Annual Meeting of Stockholders of CENTENNIAL TECHNOLOGIES,
INC. (the "Company") to be held at 10:00 a.m. at The First National Bank of
Boston, Conference Center -- 2nd Floor, 100 Federal Street, Boston,
Massachusetts 02110, on Wednesday, November 6, 1996, 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 Emanuel Pinez and James M.
Murphy 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
PROPOSALS 1, 2 3, 4, 5 AND 6.
(1) Proposal to elect the following persons as Directors of the Company
for the ensuing year.
INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY INDIVIDUAL NOMINEE STRIKE SUCH
NOMINEE'S NAME FROM THE LIST BELOW.
[ ]FOR all nominees listed [ ]AGAINST all nominees [ ]WITHHOLD
below (except as marked listed below. AUTHORITY to
to the contrary below). vote for all
nominees
listed below
EMANUEL PINEZ, JOHN J. MCDONALD, JAMES M. MURPHY, JOHN J. SHIELDS,
J.P. LUC BEAUBIEN, WILLIAM M. KINCH, WILLIAM J. SHEA
(2) Proposal to approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock
from 15,000,000 shares to 50,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(3) Proposal to approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Preferred
Stock from 1,000,000 shares to 2,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(4) Proposal to approve an amendment to the Company's 1994 Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance under
the plan from 750,000 shares to 1,500,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(5) Proposal to approve an amendment to the Company's 1994 Formula Stock Option
Plan to increase the exercise price of options granted under the plan to a
non-employee Director upon his/her first election as a Director from 85% of
the fair market value of the shares of Common Stock on the date of the
grant to 100% of the fair market value of the shares of Common Stock on the
date of the grant.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(6) Proposal to ratify and confirm the appointment of Coopers & Lybrand L.L.P.
as the independent accountants for the Company for the fiscal year ending
June 30, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(7) IN THEIR DISCRETION TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT OR ADJOURNMENTS THEREOF.
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 MARK, DATE, SIGN AND RETURN THE PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
Please sign exactly as name appears below.
Dated:
-------------------------------------
Signature
-------------------------------------
Signature if held jointly
-------------------------------------
Printed Name
-------------------------------------
Address
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 partnership name by
authorized person.
