SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for the Use of the Commission Only (as
permitted by rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
ACCENT COLOR SCIENCES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
/X/ No fee required
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / 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:
/ / Fee paid previously by written 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:
ACCENT COLOR SCIENCES, INC.
800 Connecticut Boulevard
East Hartford, CT 06108
April 1, 1997
Dear Shareholder:
You are cordially invited to attend our Annual Meeting of
Shareholders on Friday, May 9, 1997, at 10:30 a.m. at the offices
of the Company. This will be the Company's fourth Annual Meeting
of Shareholders and the first Annual Meeting since our initial
public offering.
As part of this year's Annual Meeting, you will have an
opportunity to hear a report on the operations of the Company, as
well as ask questions that you might have about Accent Color.
Your vote is important, regardless of the number of shares
that you hold. Accordingly, we would appreciate it if you would
promptly execute and return the proxy card enclosed with this
material.
Sincerely,
Richard J. Coburn
Chairman of the Board
Norman L. Milliard
President and Chief Executive Officer
Enclosures
ACCENT COLOR SCIENCES, INC.
800 Connecticut Boulevard
East Hartford, CT 06103
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 1, 1997
To the Shareholders of
Accent Color Sciences, Inc.:
The Annual Meeting of Shareholders of Accent Color Sciences,
Inc. will be held at the offices of the Company, at 800
Connecticut Boulevard, East Hartford, Connecticut on Friday, May
9, 1997, at 10:30 a.m., local time, for the following purposes:
1. To elect two Class 1 directors;
2. To approve the selection by the Board of Directors of
Price Waterhouse LLP as the Company's auditors for the year
ending December 31, 1997;
3. To transact such other business as may properly come
before the meeting or any adjournments or postponements thereof.
Only shareholders of record at the close of business on March
14, 1997, will be entitled to notice of and to vote at the Annual
Meeting or any adjournments or postponements thereof. Shareholders
may vote in person or by proxy. The stock transfer books
of the Company will not be closed.
By order of the Board of Directors
Willard F. Pinney, Jr.
Secretary
IMPORTANT
It is important that your shares be represented at the Annual
Meeting. Please sign,
date and return the enclosed proxy card promptly in order that
your shares will be
voted at the Annual Meeting. A return envelope which requires no
postage if
mailed in the United States is enclosed for your convenience.
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Accent Color
Sciences, Inc. (the "Company") to be used in voting at the Annual
Meeting of Shareholders of the Company to be held on Friday, May
9, 1997, and at any adjournments or postponements thereof (the
"Annual Meeting"). The close of business on March 14, 1997 is
the record date for determining shareholders entitled to notice
of and to vote at the Annual Meeting. At such record date, there
were outstanding 10,139,775 shares of the Company's Common Stock
("Common Stock"), each of which is entitled to one vote on each
matter to be presented before the shareholders of the Company.
This Proxy Statement, the accompanying form of proxy and the 1996
Annual Report to Shareholders are being first sent to
shareholders on or about April 1, 1997.
VOTING
Shares may be voted by shareholders of record in person or by
proxy, and shares represented by a properly executed proxy will
be voted with respect to all shares represented by it in
accordance with the instructions, if any, given therein. If no
instructions are given, the proxy will be voted as recommended by
the Board of Directors and, in the discretion of the persons
designated on the proxy card, the proxy will be voted with
respect to any other matter which may properly come before the
meeting or any adjournments or postponements thereof.
Any proxy received by the Board of Directors may be revoked by
the shareholder at any time prior to its use at the meeting such
as by a subsequent written instrument signed in the same manner
as the proxy and received by the Company either at the Annual
Meeting or before the Annual Meeting at Accent Color Sciences,
Inc., 800 Connecticut Boulevard, East Hartford, Connecticut 06108
Attention: Secretary.
Under Connecticut law and the governing instruments of the
Company, the presence, either in person or by proxy, of the
holders of a majority of the shares of Common Stock entitled to
vote at the Annual Meeting is necessary to constitute a quorum
for the transaction of business. Assuming the presence of a
quorum, directors will be elected by a plurality of the votes
cast at the Annual Meeting by shareholders entitled to vote in
the election. Approval of the selection of Price Waterhouse LLP
as the Company's auditors and approval of any other matters
to be voted on at the Annual Meeting will be achieved if the
votes cast by holders of shares of Common Stock present in person
or by proxy in favor of the proposal exceed the votes cast
against the proposal.
An inspector of election will tabulate all votes cast at the
Annual Meeting. For purposes of the foregoing voting
requirements, the inspector of election will treat shares
represented by proxies that withhold authority to vote for a
nominee for election as a director or that reflect abstentions as
shares that are present and entitled to vote on the matters for
purposes of determining the presence of a quorum, but neither
proxies that withhold authority (without naming an alternative
nominee) nor abstentions will be counted as votes cast at the
Annual Meeting. Accordingly, such proxies will not have any
effect on the outcome of the voting on the election of directors,
or the proposed approval of the Company's auditors. In the event
that any other matters are submitted to shareholders at the
Annual Meeting, abstentions will have no impact on the voting
with respect to those matters.
Shares represented at the Annual Meeting that are held by brokers
or nominees as to which instructions have not been received from
the beneficial owners or persons entitled to vote and over which
the broker or nominee does not have discretionary voting power on
a particular matter (so-called, "broker non-votes") will be
treated as present for purposes of determining the presence of a
quorum. However, such shares will not be treated as shares that
are entitled to vote on the particular matter as to which the
broker or nominee does not have discretionary authority, nor will
they be treated as votes cast at the Annual Meeting.
Accordingly, broker non-votes will have no impact on the voting
with respect to any matter to come before the Annual Meeting.
SOLICITATION
The cost of this solicitation will be borne by the Company.
Solicitation will be made by use of the mails, except that, if
necessary, directors, officers and regular employees of the
Company (none of whom will receive any additional compensation
therefor) may make solicitations of proxies by telephone,
telecopy, telegram or personal interview. The Company will
reimburse brokers and other persons holding shares of Common
Stock in their names, or in the names of nominees, for their
expenses incurred in sending proxy materials to beneficial owners
and obtaining their proxies.
ITEM 1. ELECTION OF DIRECTORS
INFORMATION ON NOMINEES
The Company's Certificate of Incorporation provides for three
classes of directors, with each class to serve a term of three
years. The Board is presently composed of seven directors, two
of whom are members of Class 1, two of whom are members of Class
2 and three of whom are members of Class 3. The current terms of
the members of Class 1 are scheduled to expire at this Annual
Meeting. The Board has nominated for re-election as Class 1
directors the two persons who are now serving as Class 1
directors of the Company.
The two Class 1 nominees standing for election at this Annual
Meeting are Robert H. Steele and Peter Teufel. If elected, their
terms will expire in 2000. Biographical summaries of each
nominee and of the continuing directors appear below.
All nominees have consented to be so named and to serve if
elected. If a nominee becomes unavailable for election, it is
the intention of the persons named in the accompanying proxy card
to vote for such other person, if any, as the Board of Directors
may designate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE FOLLOWING NOMINEES:
Nominees
For Class 1 Directors, whose terms expire in 2000:
Robert H. Steele became a director of the Company in 1996 and
is Chairman of the Executive Compensation Committee. Mr. Steele
is Executive Vice President of John Ryan Company, an
international bank services company, which he joined in 1991, and
director of the Merlin Retail Banking Center. From 1985 to 1990,
Mr. Steele was Chairman and Chief Executive Officer of Dollar Dry
Dock Bank of New York. Mr. Steele also served as President and
CEO of Norwich Savings Society. Mr. Steele is a former U.S.
Congressman from the State of Connecticut and currently serves as
a director of Moore Medical Corp., a pharmaceutical distributor,
Scan-Optics, Inc., a manufacturer of data capture equipment and
NLC Insurance Companies. Mr. Steele received his undergraduate
degree from Amherst College and his Master's Degree from Columbia
University and holds an honorary Doctor of Laws from Sacred Heart
University.
Peter Teufel became a director of the Company in 1994. Mr.
Teufel is Managing Director of Kaizen Global, the parent of the
Kaizen Institute of Europe, a management consulting firm, which he
co-founded in 1992. From 1979 through 1992, Mr. Teufel was employed
with Canon Inc., a manufacturer of cameras, business machines and
precision optical equipment, where he served as Vice President from
1989 to 1992. Mr. Teufel is a mechanical engineering graduate of
the Technical Institute at Giessen and an industrial engineering
graduate of the Technical Institute at Darmstadt.
Continuing Directors
Class 2 Directors, whose terms expire in 1998:
Richard Hodgson became a director of the Company in 1996 and
is Chairman of the Audit Committee. Since 1980, Mr. Hodgson has
been a director of McCowan Associates, Inc., an investment
management firm, where he is currently in charge of technology
investment strategies. Mr. Hodgson had previously been Corporate
Senior Vice President of ITT Company, a hotels, gaming,
entertainment and information publishing company, where he was
worldwide Product Group Manager for the Engineered Products
Group. Prior to joining ITT in 1968, Mr. Hodgson was President
and CEO of Fairchild Camera, where he initiated Fairchild's entry
into the semiconductor industry. Mr. Hodgson is a co-founder and
a Director Emeritus of Intel Corporation, a manufacturer of
microprocessor, communications and semiconductor products, and is
also a director of IBIS Technology Corp., I-Stat Corp., the Aegis
Fund and Continental Capital Corp. Mr. Hodgson received his
degree in engineering from Stanford University and his MBA from
Harvard University.
Raymond N. Smith, a co-founder of the Company, has been a
director since its inception and was Chairman from its inception
through April 1996. Mr. Smith, currently retired, was involved
in a variety of sales and management roles in various real estate
development concerns from 1971 to 1992. Mr. Smith was President
of FMS Properties of Naples, Florida, a developer and builder of
retirement communities, from 1983 to 1992. From 1966 to 1970,
Mr. Smith was National Sales Manager, Professional Services
Division of Control Data Systems, Inc., a global systems
integrator, and from 1960 to 1965, was an account manager for
IBM. Mr. Smith attended the United States Military Academy at
West Point and the Executive MBA Program at the University of
Chicago.
Class 3 Directors whose terms expire in 1999:
Richard J. Coburn has been Chairman of the Board since May
1996 and is a co-founder of the Company. Mr. Coburn served as
President of the Company from May 1993 until May 1996 and served
as Chief Executive Officer of the Company from May 1993 until
August 1996. From 1991 until 1993, Mr. Coburn worked as an
independent consultant to development stage companies. Mr.
Coburn was a co-founder of KCR Technology, Inc., a manufacturer
of high-speed, black-on-white printers, and served in various
roles, both consulting and managerial, including President from
1977 to 1991. Mr. Coburn was also the founder of Coburn
Technology, Inc., a developer of a xerographic printer product
for word processing, the rights to which were sold to Wang
Laboratories, Inc., and served as its President from 1974 to
1977. From 1968 to 1974, Mr. Coburn was president of Scan-
Optics, Inc., a manufacturer of data capture equipment. Prior to
1968, Mr. Coburn had served in various engineering management
positions in aerospace over a 14 year period. Mr. Coburn is also
a director and co-founder of Scan-Optics, Inc. Mr. Coburn
received his degree in engineering from Yale University.
Norman L. Milliard has been President of the Company since
May 1996, has been Chief Executive Officer of the Company since
August 1996 and was elected a director of the Company in 1995.
Mr. Milliard served as Vice President of the Company from January
1994 until May 1996. From 1988 through 1993, Mr. Milliard served
as head of the Special Product Group at AEG Schneider Automation,
Inc. (formerly Modicon, Inc.), an industrial automation company,
and as the Director of Engineering and Operations for KCR
Technology, a manufacturer of high-speed, black-on-white
printers, from 1982 to 1988. Mr. Milliard founded two companies
in the electronic music field and holds a number of patents in
both the printing and electronic music field. Mr. Milliard
received his degree in physics, with honors, from The Citadel,
the Military College of South Carolina.
Willard F. Pinney, Jr. has been Secretary of the Company
since December 1993 and became a director of the Company in 1996.
Mr. Pinney has been a partner since 1973 in the Connecticut law
firm of Murtha, Cullina, Richter and Pinney, which serves as
counsel to the Company. He received his degree in political
science from Yale University and his JD, with honors, from the
University of Michigan Law School.
COMPENSATION OF DIRECTORS
Directors of the Company received no compensation for their
service as directors prior to May 1996. The Company adopted a
directors' compensation package in May 1996, whereby all outside
directors receive a monthly retainer of $500 and a per meeting
fee of $500 for each meeting of the Board of Directors and of any
Board committee attended in person by such director. The Company
also reimburses directors for reasonable travel expenses incurred
in order to attend meetings.
Under its 1995 Stock Incentive Plan, the Company established a
stock incentive program for non-employee directors, whereby each
received an initial option to purchase 30,000 shares of Common
Stock and will receive an option to purchase an additional 5,000
shares of Common Stock on the date of the annual meeting of the
Board each year for four years beginning in 1997 as long as the
director remains in office. These options are exercisable at the
fair market value of the shares on the date of grant. Under this
program, on May 3, 1996, the following directors each received
options to purchase 30,000 shares at an exercise price of $4.00
per share: Richard Hodgson, Willard F. Pinney, Jr., Raymond N.
Smith, Robert H. Steele and Peter Teufel.
The Company, as permitted by Connecticut law, has purchased
directors and officers liability insurance policies covering all
of the Company's directors and officers on an annual basis and on
a one time three-year basis with respect to the Company's initial
public offering. The aggregate premiums for these policies paid
during 1996 was approximately $245,000.
ATTENDANCE; BOARD COMMITTEES
The business and affairs of the Company are managed under the
direction of the Board of Directors. Members of the Board may
serve on one or more committees to carry out certain
responsibilities.
The Board of Directors held a total of nine regular and special
meetings during 1996. Each director attended at least 75% of the
aggregate number of meetings of the Board and Board committees on
which such director served except for Mr. Teufel who attended six
of the nine meetings of the Board.
An Audit Committee was established in May 1996. This Committee is
responsible for overseeing and reviewing the audit of the
Company's books and accounts, for reviewing the audited financial
statements of the Company, for reviewing the Company's internal
control procedures and for reviewing and approving the
independence of the Company's independent public accountants. No
member of this Committee is an employee of the Company. The
Audit Committee met once during 1996. The current members of the
Audit Committee are Richard Hodgson (Chairman), Raymond N. Smith
and Robert H. Steele.
An Executive Compensation Committee was also established in May
1996 and is generally responsible for reviewing and recommending
to the Board of Directors salaries and incentive compensation for
the Company's executive officers. This Committee did not meet in
1996.
The Company does not have a nominating committee.
PRINCIPAL SHAREHOLDERS AND KEY PERSONNEL
The following table sets forth certain information as of February
1, 1997 regarding the beneficial ownership of the Company's
Common Stock by (i) each person (or group of affiliated persons)
known by the Company to own more than 5% of the outstanding
shares of Common Stock, (ii) each of the directors of the
Company, (iii) each of the Named Executive Officers, as defined
below, and (iv) all directors and executive officers of the
Company as a group.
<TABLE>
<CAPTION>
Number of
Shares Percentage
Beneficially of Common
Name and Address(1) Owned(2) Stock
<S> <C> <C>
Richard J. Coburn (3) 1,017,938 10.0%
Peter Teufel(4)(5) 661,744 6.5%
Raymond N. Smith(4)(6) 608,969 6.0%
Dr. Klaus Werding(7) 585,981 5.7%
73 Langasse Strasse
Wetzlar, Germany 6330
Norman L. Milliard(8) 231,000 2.3%
Willard F. Pinney, Jr.(4)(9) 74,799 *
Robert H. Steele(4)(10) 48,618 *
Martyn R. Jones(11) 35,000 *
Richard Hodgson(4)(12) 33,750 *
All directors and officers 2,192,849 20.7%
of the Company as a group (9
persons)(13)
* Less than 1%
</TABLE>
(1) The address of all persons who are executive officers or
directors of the Company is in care of the Company, 800
Connecticut Boulevard, East Hartford, Connecticut 06108.
(2) Unless otherwise noted, each person or group identified
possesses sole voting and investment power with respect to such
shares, subject to community property laws where applicable.
Shares not outstanding but deemed beneficially owned by virtue of
the right of a person or group to acquire them within 60 days of
February 1, 1997 ("currently exercisable options") are treated as
outstanding only for purposes of determining the amount and
percent owned by such person or group.
(3) Includes 578,969 shares held by Mr. Coburn as trustee of a
trust established by Mr. Smith and of which Mr. Smith
is sole beneficiary. Mr. Coburn has sole voting and investment
power with respect to these shares but disclaims any beneficial
interest.
(4) Includes 30,000 shares of Common Stock subject to currently
exercisable options granted pursuant to the 1995 Stock Incentive
Plan.
(5) Includes 65,454 shares of Common Stock subject to currently
exercisable warrants.
(6) Includes 578,969 shares held through an irrevocable trust
established by Mr. Smith of which Mr. Coburn is the trustee and
Mr. Smith is the sole beneficiary. Mr. Smith has no voting power
or investment power with respect to these shares.
(7) Includes 156,003 shares of Common Stock subject to currently
exercisable warrants.
(8) Includes 105,000 shares of Common Stock subject to currently
exercisable options granted pursuant to the 1995 Stock Incentive
Plan.
(9) Includes 30,000 shares of Common Stock subject to currently
exercisable options granted to Murtha, Cullina, Richter and
Pinney, counsel to the Company, of which Mr. Pinney is a partner.
(10)Includes 17,118 shares of Common Stock owned by Mr.
Steele's spouse and 1,500 shares of common stock subject to
currently exercisable warrants issued to Mr. Steele's spouse, as
to all of which he disclaims beneficial ownership.
(11)Includes 35,000 shares of Common Stock subject to
currently exercisable options granted pursuant to the 1995 Stock
Incentive Plan.
(12)Includes 3,750 shares subject to currently exercisable
warrants.
(13)Includes 380,000 shares of Common Stock subject to
currently exercisable options granted pursuant to the 1995 Stock
Incentive Plan and 70,704 shares of Common Stock subject to
currently exercisable warrants.
EXECUTIVE COMPENSATION
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
Executive Compensation for 1996. The Executive Compensation
Committee of the Board of Directors of the Company was
established at the Annual Meeting of the Board of Directors on
May 3, 1996. The Committee did not participate as such in the
determination of Executive Compensation paid to the executive
officers of the Company with respect to 1996. Each of the
Company's executive officers was compensated during 1996 on the
basis of a base salary which, in the case of the Company's chief
executive officer, Norman L. Milliard, was established pursuant
to the employment agreement between Mr. Milliard and the Company,
the terms of which are discussed further below. The base
salaries of the Company's executive officers have been determined
at levels which management and the Board of Directors believe to
be appropriate and competitive in order to attract and retain
individuals with talents and experience necessary to carry out
the Company's business plan. During 1996, the Company also
maintained the Company's 1995 Stock Incentive Plan, which is
administered by the full Board of Directors. Awards under the
Plan are intended to provide executive officers of the Company
with the opportunity to obtain and retain significant equity
positions in the Company in order to incent them to remain with
the Company and promote its further growth and success.
Responsibilities and Policies of Executive Compensation
Committee. The responsibilities of the Executive Compensation
Committee include formulating policies and making recommendations
to the Board of Directors with respect to compensation of
executive officers of the Company and making recommendations to
the Board of Directors with respect to the compensation levels of
the Company's senior executive officers. The Committee held its
initial meetings in January and March, 1997 in order to consider
base salary adjustments for senior executive officers and begin
formulating policies with respect to Executive Compensation
generally. The Committee is developing a bonus plan for
executive officers intended to motivate them to accomplish
specific milestones necessary to complete the development stage
of the Company's business plan. The Committee believes that,
particularly during the balance of the Company's development
stage, executive compensation should be significantly based upon
specific performance criteria coupled with modest but appropriate
base salary adjustments reflecting industry standards.
Limitation on Deductibility of Executive Compensation. Section
162(m) of the Internal Revenue Code of 1986, generally denies a
publicly held corporation, such as the Company, a federal income
tax deduction for compensation in excess of $1,000,000 per year
paid or accrued for its chief executive officer or any of the
four other most highly compensated executive officers. Certain
"performance based" compensation is not subject to the limitation
on deductibility provided certain stockholder approval and
independent director requirements are met. Because the
compensation paid to each of the Company's executive officers has
not exceeded nor approached $1,000,000 in any year, the Committee
does not believe that this limitation on deductibility of
executive compensation is currently of any concern to the
Company. However, the Committee will continue to review this
limitation in light of future events with the objective of
achieving deductibility of executive compensation, as
appropriate.
EXECUTIVE COMPENSATION COMMITTEE
Robert H. Steele, Chairman
Willard F. Pinney, Jr. and
Peter Teufel
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the Executive Compensation Committee members, Robert H.
Steele, Willard F. Pinney, Jr. and Peter Teufel or any executive
officer of the Company served during 1996 as a member of the
Compensation Committee of any other company. All members of the
Executive Compensation Committee are outside directors, except
that Willard F. Pinney, Jr., is Secretary of the Company and a
partner of Murtha, Cullina, Richter and Pinney, counsel to the
Company.
SUMMARY EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth information
concerning compensation for services in all capacities to the
Company for the fiscal year ended December 31, 1996 of (i) the
chief executive officer and (ii) the Company's other most highly
compensated executive officers whose total salary and bonus for
the year ended December 31, 1996 exceeded $100,000 (the "Named
Executive Officers").
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Annual Compensation
Compensation Awards
Other Securities
Name and Other Annual Underlying
Principal Position Year Salary($) Compensation($) Options/SARs(#)
<S> <C> <C> <C> <C>
Richard J. Coburn, Chairman 1996 128,846 - 30,000
1995 108,958 - -
1994 71,042 - -
Norman L. Milliard,
President and CEO 1996 155,692 26,000(1) 30,000
1995 133,958 - 120,000
1994 86,042 - -
Martyn R. Jones,
Vice President 1996 101,740 44,950(2) 30,000
1995 15,232 - 45,000
1994 - - -
</TABLE>
(1) Reflects reimbursement of expenses of Mr. Milliard relating
to his relocation to Connecticut consisting of rent expense in
1996 under an arrangement which expired in February, 1997.
(2) Consists of various expense reimbursements to Mr. Jones in
connection with his relocation to Connecticut.
Option Grants in Last Fiscal Year
The following table contains information concerning the stock
option grants made to each of the Named Executive Officers in
fiscal 1996. No stock appreciation rights were granted during
such year.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of Stock
Individual Grants Price Appreciation for
Option Term (2)
Number of % of Total Exercise
Securities Options/SARs or Base
Underlying Granted to Price per
Options/SAR Employees in Share Expiration
Name Year Grants (#) Fiscal Years ($/Sh)(1) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Richard J. Coburn 1996 30,000(3) 3.4% 4.00 4/9/06 75,467 191,249
1995 - 0.0% - N/A
1994 - 0.0% - N/A
Norman L. Milliard 1996 30,000(4) 3.4% 3.67 2/2/06 69,178 175,312
1995 75,000(5) 17.7% 1.19 2/28/05 56,129 142,242
45,000(6) 10.6% 3.67 10/9/00 45,586 100,734
1994 - 0.0% - N/A
Martyn R. Jones 1996 15,000(7) 1.7% 4.00 8/29/06 37,734 95,625
15,000(4) 1.7% 3.67 2/2/06 34,589 87,656
1995 22,500(8) 5.3% 3.67 12/5/05 51,884 131,484
22,500(6) 5.3% 3.67 12/5/00 22,793 50,367
1994 - 0.0% - N/A
</TABLE>
(1) All options were granted at the fair market value on the date of
grant as determined by the Board of Directors.
(2) The 5% and 10% assumed annual rates of compound stock price
appreciation are mandated by rules of the Securities and Exchange
Commission and do not reflect the Company's estimates or projections
of future Common Stock prices. There can be no assurance provided
to any executive officer or any other holder of the Company's
securities that the actual stock price appreciation over the term
will be at the assumed 5% or 10% levels or at any other defined level.
Unless the market price of the common Stock appreciates over the
option term, no value will be realized from the option grants made
to the executive officers.
(3) Represents incentive stock options that vest ratably on each
of April 9, 1997, 1998 and 1999.
(4) Represents incentive stock options that vest ratably on each
of February 2, 1997, 1998, 1999.
(5) Represents incentive stock options that vest ratably on each
of February 28, 1996, 1997 and 1998.
(6) Represents non-qualified stock options which are currently
exercisable.
(7) Represents incentive stock options that vest ratably on each
of August 29, 1997, 1998 and 1999.
(8) Represents incentive stock options that vest ratably on each
of December 5, 1996, 1997 and 1998.
Aggregate Option Exercise in Last Fiscal Year and Option Values
as of December 31, 1996
None of the Named Executive Officers exercised stock options during
the year ended December 31, 1996. The following table provides
information regarding the number of shares underlying both
exercisable and unexercisable stock options as of December 31, 1996
and the values of unexercised "in-the-money" options as of
that date. An option is "in-the-money" if the per share fair
market value of the underlying share exceeds the options exercise
price per share.
<TABLE>
<CAPTION>
Number of
Shares Value Exercisable Unexercisable Exercisable Unexercisable
Acquired on Realized (#) (#) ($) ($)
Exercise
<S> <C> <C> <C> <C> <C> <C>
Richard J. Coburn - - - 30,000 - 135,000
Norman L. Milliard - - 70,000 80,000 400,250 510,500
Martyn R. Jones - - 30,000 45,000 145,000 212,500
</TABLE>
(1) Based on the closing price at December 31, 1996 of $8 1/2.
EMPLOYMENT AGREEMENTS
Richard J. Coburn and Norman L. Milliard have entered into
employment agreements (the "Employment Agreements") with the
Company effective January 1994. Mr. Coburn's agreement has a
five-year term that expires at the end of 1998. Mr. Milliard's
agreement has a three-year term which is automatically extended
each year for an additional one year, subject to termination
before the extension by either party. If the Employment
Agreements are terminated by the Company without "cause" as
defined therein, Mr. Coburn would be entitled to receive his base
salary and payment of health benefits for a period of one year
and Mr. Milliard would be entitled to receive his base salary and
payment of health benefits for a period of two years and would
become fully vested in any outstanding options. Mr. Coburn's
current base salary is $130,000, and Mr. Milliard's current base
salary is $175,000.
The Employment Agreements restrict Messrs. Coburn and Milliard
from directly or indirectly competing with the Company through
the participation in the development of any product related to
the Company's product or processes during the term of the
agreement and for a period of two years thereafter. The
Employment Agreements do not otherwise restrict Messrs. Coburn
and Milliard from pursuing any other business interests that do
not directly compete with the Company.
STOCK INCENTIVE PLAN
In January 1995, the Board of Directors and shareholders of the
Company adopted the 1995 Stock Incentive Plan (the "Stock Plan").
Pursuant to the Stock Plan, the Board of Directors or a committee
thereof may grant options or other awards for up to 1,500,000
shares of Common Stock. The Stock Plan is designed to give
directors, officers and employees of the Company and other
persons an expanded opportunity to acquire Common Stock in the
Company or receive other long-term incentive remuneration in
order that they may participate in the Company's growth and be
motivated to remain with the Company and promote its further
development and success.
The Plan includes provisions for granting both "incentive stock
options" intended to qualify for certain federal tax advantages
and "non-statutory options" which do not qualify for such tax
advantages. Qualified incentive stock options may be granted
only to eligible persons who are full-time employees of the
Company while non-statutory options may be granted to any
persons, including directors, consultants and advisors of the
Company who, in the sole opinion of the Board of Directors or a
committee thereof are, from time to time, responsible for the
management or growth of all or part of the business of the
Company.
The purchase price under each incentive stock option shall be as
determined by the Board of Directors or a committee thereof but
shall not be less than 100% of the fair market value of the
shares subject to such option on the date of grant, provided that
such option price shall not be less than 110% of such fair market
value in the case of any stock option granted to a principal
shareholder. The purchase price per share of Common Stock
deliverable upon the exercise of non-statutory options shall be
determined by the Committee, but shall not be less than 85% of
the fair market value of the Common Stock on the date of grant.
Each option granted under the Stock Plan shall become exercisable
on such date or dates and in such amount or amounts as the Board
of Directors or a committee thereof shall determine. To date,
all incentive stock options granted to employees are exercisable
with respect to not more than one-third of the shares subject
thereto after the expiration of one year following the date of
its grant, and are exercisable as to an additional one-third of
such shares after the expiration of each of the succeeding two
years, on a cumulative basis, so that such option, or any
unexercised portion thereof, shall be fully exercisable on the
third anniversary of the date of its grant. To date, all non-
statutory options are exercisable immediately upon grant.
As of March 14, 1997, incentive stock options to purchase 942,600
shares of Common Stock and non-statutory options to purchase
347,250 shares of Common Stock have been granted. All such
options have been granted to full-time employees of the Company,
except for (i) options granted to non-employee directors, as
described above, (ii) an option granted in January 1995 to
Murtha, Cullina, Richter and Pinney, counsel to the Company,
entitling it to purchase 30,000 shares of the Company's Common
Stock for a period of five years at an exercise price of $1.19
per share and (iii) an option granted in April 1996 to a
consultant of the Company entitling him to purchase 2,250 shares
of Common Stock of the company for five years at an exercise
price of $4.00. All options, both incentive and non-statutory,
have been granted at fair market value as determined by the Board
of Directors on the date of grant.
CERTAIN TRANSACTIONS
On May 1, 1996, Raymond N. Smith, a director of the Company,
entered into a consulting agreement with the Company under which
he will perform services for the Company in consideration for a
quarterly retainer of $21,250. The consulting agreement
requires, among other things, that Mr. Smith be available for up
to 25 hours per month to provide general business and management
advice. In addition to general advisory services, the Company
anticipates using Mr. Smith in certain sales and marketing
capacities.
Willard F. Pinney, Jr., a director of the Company, is a partner
of the law firm of Murtha, Cullina, Richter and Pinney which
serves as counsel to the Company.
During February 1996, the Company completed a private placement
of 8.00% subordinated debentures (the "Series IV Debentures") for
net proceeds of $405,000, of which $240,000 was issued to Peter
Teufel, a director of the Company. The Series IV Debentures are
non-convertible and bear interest at 8.00% (excluding debt
discount), and were due and paid August 31, 1996. In addition,
each holder received detachable warrants (the "Series IV
Warrants") to purchase Common Stock equal to the principal amount
of the Series IV Debentures divided by $3.67. The Series IV
Warrants issued to Mr. Teufel are exercisable into 65,454 shares
of Common Stock at an exercise price of $3.67 per share and
expire on February 28, 2001.
Richard Hodgson, a director of the Company, invested $250,000 in
a private offering of debt instruments of the Company in October
1996 (the "Interim Financing"), for which he received a note in
the aggregate principal amount of $287,500 and a warrant to
purchase 3,750 shares of Common Stock. This note was repaid in
full upon the closing of the Company's initial public offering in
December 1996.
Elizabeth Steele, the wife of Robert H. Steele, a director of the
Company, invested $100,000 in the Interim Financing and received
a note in the aggregate principal amount of $115,000 and a
warrant to purchase 1,500 shares of Common Stock. This note was
repaid in full upon the closing of the Company's initial public
offering in December 1996.
Performance Graph
The following graph demonstrates a comparison of cumulative total
return based on an initial investment of $100 in the Company's
common stock as compared with the Nasdaq Computer Manufacturers
Index and the Nasdaq Composite Index and assumes the reinvestment
of dividends, although dividends have not been declared on the
Company's common stock. The stock price performance shown on the
graph below is not necessarily indicative of future price
performance and only reflects the Company's relative stock price
for the period commencing on December 18, 1996, the date the
Company's common stock began trading on the Nasdaq National
Market, and ending on December 31, 1996. The following graph
includes information required by the Securities and Exchange
Commission and shall not be deemed incorporated by reference by
any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the
Securities Exchange Act of 1934, unless the Company specifically
incorporates this information by reference, and shall not
otherwise be deemed soliciting material or filed under such Acts.
COMPARISON OF TOTAL RETURN
[GRAPH APPEARS HERE]
12/18/96 12/31/96
ACLR $100.00 $106.25
Nasdaq Computer Mfg $100.00 $100.25
Nasdaq Composite $100.00 $101.95
ITEM 2. APPOINTMENT OF AUDITORS
The Board of Directors has selected Price Waterhouse LLP as
auditors of the corporation for the year ending December 31,
1997, subject to approval by shareholders at the Annual Meeting.
Price Waterhouse LLP has served as the Company's independent
auditors since inception. Representatives of Price Waterhouse
LLP will be present at the Annual Meeting and will be given the
opportunity to make a statement if they desire to do so and will
be available to respond to questions of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSALS FOR THE 1998 ANNUAL MEETING
In accordance with the rules of the Securities and Exchange
Commission, shareholder proposals for inclusion in the Company's
proxy statement for the 1998 Annual Meeting must be received at
the Company's offices at 800 Connecticut Boulevard, East
Hartford, Connecticut 06108, Attention: Secretary no later than
December 2, 1997.
OTHER MATTERS
The Board of Directors does not intend to present any other
matters before the meeting and is not informed of any other
business which others may bring before the meeting. However, if
any other matters should properly come before the meeting, or any
adjournments or postponements thereof, it is the intention of the
persons named in the accompanying Proxy Card to vote on each such
matter as they, in their sole discretion, may determine.
ACCENT COLOR SCIENCES, INC.
Proxy Solicited on Behalf of the Board of Directors of Accent Color
Sciences, Inc. for the Annual Meeting, May 9, 1997
The undersigned hereby constitutes and appoints RICHARD J.
COBURN and NORMAN L. MILLIARD, and each of them, with full power to
act with or without the other and with full power of substitution,
his or her true and lawful agents and proxies to represent the
undersigned at the Annual Meeting of Shareholders of Accent Color
Sciences, Inc. (the "Company") to be held at 800 Connecticut
Boulevard, East Hartford, Connecticut, at 10:30 a.m. on Friday, May
9, 1997, and at any adjournments or postponements thereof, and
authorizes said Proxies to vote all shares of the Company shown on
the other side of this card with all the powers the undersigned
would possess if personally present thereat.
You are encouraged to specify your choice by marking the
appropriate box, SEE REVERSE SIDE, but you need not mark any box if
you wish to vote in accordance with the Board of Directors'
recommendations. The Proxies cannot vote your shares unless you
sign and return this card.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
A /X/ Please mark your
votes as in this
example
FOR WITHELD
ALL FROM ALL
NOMINEES NOMINEES
1.ELECTION / / / / Class 1 Nominees:
OF TWO Robert H. Steele
DIRECTORS. Peter Teufel
(Instruction: To withhold authority to vote for any
nominee, write such nominee's name(s) below.)
/ / _______________________________________________
FOR AGAINST ABSTAIN
2. PROPOSED APPROVAL OF THE SELECTION / / / / / /
OF PRICE WATERHOUSE LLP AS AUDITORS
OF THE COMPANY FOR THE YEAR ENDING
DECEMBER 31, 1997.
3. In their discretion, upon the transaction of other business
as may properly come before the meeting or any adjournments
or postponements thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN AND AUTHORIZES THE PROXIES TO TAKE ACTION IN
THEIR DISCRETION UPON OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF ALL NOMINEES AND FOR PROPOSAL 2.
MARK HERE FOR / / MARK HERE IF / /
ADDRESS CHANGE YOU PLAN TO
AND NOTE AT ATTEND THE
LEFT MEETING
Signature: ________________________ Date ________
Signature: ________________________ Date ________
NOTE: Please sign exactly as your name appears hereon. When signing
as attorney, administrator, executor, guardian or trustee,
please give your full title as such. If a corporation, please
sign by president or other authorized officer and indicate
title. If shares are registered in the names of joint tenants
or trustees, each tenant or trustee is required to sign.
