SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment no. 1)
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted by
[ ] Definitive Additional Materials Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
FIBERSTARS, INC.
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(Name of Registrant as Specified in Its Charter)
FIBERSTARS, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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(2) Aggregate number of securities to which transactions applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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.
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[Logo]
March 31, 1999
Dear Shareholder:
This year's annual meeting of shareholders will be held on Wednesday,
May 12, 1999 at 2:00 P.M. local time, at the Mandarin Oriental Hotel, 222
Sansome Street, San Francisco, California, 94104. You are cordially invited to
attend.
The Notice of Annual Meeting of Shareholders and a Proxy Statement,
which describe the formal business to be conducted at the meeting, follow this
letter.
After reading the Proxy Statement, please promptly mark, sign, and
return the enclosed proxy in the prepaid envelope to assure that your shares
will be represented. Your shares cannot be voted unless you date, sign, and
return the enclosed proxy or attend the annual meeting in person. Regardless of
the number of shares you own, your careful consideration of, and vote on, the
matters before our shareholders are important.
A copy of the Company's 1998 Annual Report also is enclosed.
The Board of Directors and Management look forward to seeing you at the
annual meeting.
Very truly yours,
/s/ David N. Ruckert
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David N. Ruckert
Chief Executive Officer
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FIBERSTARS, INC.
2883 Bayview Drive
Fremont, California 94538
Notice Of Annual Meeting Of Shareholders
To Be Held Wednesday, May 12, 1999
TO THE SHAREHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Fiberstars, Inc. (the "Company") will be held on Wednesday, May 12, 1999, at
2:00 P.M., local time, at the Mandarin Oriental Hotel, 222 Sansome Street, San
Francisco, California, 94104, for the following purposes:
1. To elect seven (7) directors to serve for the ensuing year and
until their successors are elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent auditors for the fiscal year ending
December 31, 1999; and
3. To consider and vote upon a proposal to increase the number of
shares of the Company's Common Stock reserved for issuance
under its 1994 Employee Stock Purchase Plan;
4. To consider and vote upon a proposal to increase the number of
shares of the Company's Common Stock reserved for issuance
under its 1994 Directors Stock Option Plan;
5. To transact such other business as may properly come before
the meeting or any adjournments or postponements thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on April 2, 1999
are entitled to notice of and to vote at the meeting and any adjournments or
postponements thereof.
FOR THE BOARD OF DIRECTORS
/s/ David N. Ruckert
---------------------------------------------
Chief Executive Officer
Fremont, California
March 31, 1999
IMPORTANT: Please fill in, date, sign and promptly mail the enclosed proxy card
in the accompanying post-paid envelope to assure that your shares are
represented at the meeting. If you attend the meeting, you may choose to vote in
person even if you have previously sent in your proxy card.
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PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
FIBERSTARS, INC.
2883 Bayview Drive
Fremont, California 94538
INFORMATION CONCERNING SOLICITATION AND VOTING OF PROXIES
General
The enclosed Proxy is solicited on behalf of the Board of Directors of
Fiberstars, Inc., a California Corporation ("Fiberstars" or the "Company") for
use at the Annual Meeting of Shareholders (the "Annual Meeting") to be held on
May 12, 1999 at 2:00 P.M local time, or at any adjournments or postponements
thereof, for the purposes set forth herein and in an accompanying Notice of
Annual Meeting of Shareholders. The Annual Meeting will be held at the Mandarin
Oriental Hotel, 222 Sansome Street, San Francisco, California, 94104.
The date of this Proxy Statement is March 31, 1999, the approximate
date on which this Proxy Statement and accompanying form of proxy were first
sent or given to Shareholders. The cost of soliciting these proxies will be
borne by the Company. Regular employees and directors of the Company may solicit
proxies in person, by telephone, or by mail. No additional compensation will be
given to employees or directors for such solicitation. The Company will request
brokers and nominees who hold stock in their names to furnish proxy material to
beneficial owners of the shares and will reimburse such brokers and nominees for
their reasonable expenses incurred in forwarding solicitation material to such
beneficial owners.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use either by delivering to the Company
(2883 Bayview Drive, Fremont, California 94538, Attention: David N. Ruckert) a
written notice of revocation or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and voting in person. If a proxy is properly
signed and not revoked, the shares it represents will be voted in accordance
with the instructions of the shareholder.
Voting
Generally, each share of Common Stock (as defined below) entitles its
holder to one vote on matters to be acted upon at the Annual Meeting, including
the election of directors. However, if, prior to the voting to elect directors,
any shareholder gives notice at the Annual Meeting of his or her intention to
cumulate his or her votes, and if the names of the candidate or candidates for
whom that shareholder intends to vote have been placed in nomination prior to
the voting, then all shareholders may cumulate their votes for candidates in
nomination. This means that each shareholder may give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number of
shares he or she holds, or such shareholder may distribute that total number of
votes among as many candidates as he or she thinks fit. The person authorized to
vote shares represented by executed proxies in the enclosed form (if authority
to vote for the election of directors is not withheld) will have full discretion
and authority to vote cumulatively and to allocate votes among any or all of the
nominees as he may determine or, if authority to vote for a specified candidate
or candidates has been withheld, among those candidates for whom authority to
vote has not been withheld. On all matters except the election of directors,
each share carries one vote.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the Company's transfer agent, which will act as Inspector of
Elections. The Inspector of Elections will also determine whether or not a
quorum is present. Except with respect to the election of directors and except
in certain other specific circumstances, the affirmative vote of a majority of
shares represented and voting at a duly held meeting at which a quorum is
present (which shares voting affirmatively also constitute at least a majority
of the required quorum) is required under California
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law for approval of proposals presented to shareholders. In general, California
law also provides that a quorum consists of a majority of the shares entitled to
vote, represented either in person or by proxy. The Inspector of Elections will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as not voting for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
The shares represented by the proxies received, properly marked,
signed, dated and not revoked will be voted at the Annual Meeting. Where such
proxies specify a choice with respect to any matter to be acted upon, the shares
will be voted in accordance with the specifications made. Any proxy in the
enclosed form which is returned but is not marked will be voted FOR the election
of directors, FOR approval of the proposal to amend the 1994 Employee Stock
Purchase Plan to increase the number of shares of the company's Common Stock
reserved for issuance under the 1994 Employee Stock Purchase Plan, FOR approval
of the proposal to amend the 1994 Directors' Stock Option Plan to increase the
number of shares of the Company's Common Stock reserved for issuance under the
1994 Directors' Stock Option Plan, FOR the ratification of the appointment of
the designated independent auditors, and as the proxy holders deem advisable on
other matters that may come before the meeting. If a broker indicates on the
enclosed proxy or its substitute that it does not have discretionary authority
as to certain shares to vote on a particular matter ("broker non-votes"), those
shares will not be considered as voting with respect to that matter. While there
is no definitive statutory or case law authority in California concerning the
proper treatment of abstentions and broker non-votes, the Company believes that
the tabulation procedures to be followed by the Inspector of Elections are
consistent with the general statutory requirements in California concerning
voting of shares and determination of a quorum.
Record Date and Share Ownership
Only shareholders of record at the close of business on April 2, 1999
will be entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof. As of the record date, there will be 3,982,601 shares of
Common Stock of the Company, par value $.0001 per share ("Common Stock"), issued
and outstanding.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Nominees
Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the nominees named below, regardless of whether any other
names are placed in nomination by anyone other than one of the proxy holders. If
the candidacy of anyone or more of such nominees should, for any reason, be
withdrawn, the proxy holders will vote in favor of the remainder of those
nominated and for such substituted nominees, if any, as shall be designated by
the proxy holders, or the number of directors to be elected at this time may be
reduced by the Board of Directors. The Board of Directors has no reason to
believe that any of the persons named will be unable or unwilling to serve as a
nominee or as a director if elected.
If a quorum is present and voting, the nominees receiving the highest
number of votes will be elected as directors at the Annual Meeting to serve
until the next Annual Meeting and until their respective successors are elected
or appointed. Abstentions and shares held by brokers that are present, but not
voted because the brokers were prohibited from exercising discretionary
authority, i.e., "broker non-votes," will be counted as present for purposes of
determining if a quorum is present.
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As of the date of the Annual Meeting, the Company's Bylaws will provide
for the election of seven (7) directors. The names of the nominees, their ages
as of March 31, 1999, and their backgrounds are set forth below.
Name Age Director Since
- ---- --- --------------
John B. Stuppin 65 1993
David N. Ruckert 61 1987
Theodore L. Eliot, Jr. 71 1994
Michael Feuer, Ph.D. 56 1991
B.J. Garet 71 1995
Wayne R. Hellman 53 1997
Philip Wolfson 55 1987
Mr. Stuppin joined the Company as a director in February 1993 and was
elected Chairman of the Board in May 1995. Since September 1987, Mr. Stuppin has
served in various executive capacities with Neurological Technologies, Inc.
("NTI"), a biomedical development company he co-founded, and he currently serves
as a director of NTI. Mr. Stuppin also has been an investment banker and a
venture capitalist, with over 25 years of experience in the founding and
management of companies active in emerging technologies.
Mr. Ruckert joined the Company in November 1987 as President, Chief
Operating Officer and a director. He has served as Chief Executive Officer of
the Company since October 1988 and served as Secretary of the Company from
February 1990 to February 1994. From June 1985 to October 1987, he was Executive
Vice President of Greybridge, a toy company which he co-founded and that was
acquired by Worlds of Wonder in 1987. Prior to that time, he was Executive Vice
President of Atari from October 1982 to June 1984 and was a Manager/Vice
President of Bristol-Myers Company in New York from October 1966 to October
1982. Mr. Ruckert is also a director of Fiberstars Australasia Pty Ltd., a joint
venture of the Company.
Mr. Eliot has served as a director of the Company since May 1994. Mr.
Eliot retired from the United States Department of State in 1978 with the rank
of Ambassador. He served as the Dean of the Fletcher School of Law and Diplomacy
from 1979 to 1985 and as Secretary General for the United States of the
Bilderberg Meetings from 1981 to October 1993. Mr. Eliot also is a director of
Raytheon Company and NTI, a biomedical development company.
Dr. Feuer has served as a director of the Company since October 1991.
Since March 1992, Dr. Feuer has been president of Santa Clara Associates, Inc.,
and a general partner of Pacific Technology Fund, a venture capital firm in
Santa Clara, California. Prior to that time, Dr. Feuer was a technical partner
of Santa Clara Associates, Inc., from September 1987 to February 1992. From
April 1986 to September 1987, Dr. Feuer was President of Micro Integration
Corp., an integrated circuit company. From January 1984 to April 1986, he served
as Vice President, Engineering at Mentor Graphics, an electronic design
automation company.
Mr. Garet has served as a director of the Company since December 1995.
From 1984 until his retirement in 1993, Mr. Garet served as Chairman of Hanson
Lighting Group and Chief Executive Officer of USI Lighting. From 1973 to 1984,
he served in several executive capacities with U.S. Industries, Inc., a
diversified manufacturer of lighting and other products, where his
responsibilities included eight operating divisions.
Mr. Hellman has served as a director of the Company since September
1997. Since May 1995, Mr. Hellman has been chairman of the board and chief
executive officer of Advanced Lighting Technologies, Inc. ("ADLT"). From 1983
until May 1995, Mr. Hellman founded a total of seventeen affiliated companies
that specialize in the production and distribution of metal halide lighting
systems, all of which were eventually acquired by ADLT. From 1968 until 1983,
Mr. Hellman served in various capacities at General Electric, including Manager
of Strategy Analysis for the GE Lighting Business Group, Manager of Engineering
for the Photographic Lamp Department, and Manager of Metal
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Halide Product Engineering. While he was GE's Manager of Metal Halide Product
Engineering, Mr. Hellman developed what remains the standard in metal halide
technology.
Dr. Wolfson has served as a director of the Company since January 1986.
Dr. Wolfson has also served as a director and a consultant to NTI, a biomedical
development company. He has been Assistant Clinical Professor at the University
of California School of Medicine in San Francisco since 1986. Dr. Wolfson has
maintained a private practice in psychiatric medicine since 1982.
Board Meetings and Committees
The Board of Directors held a total of six (6) meetings during the
fiscal year ended December 31, 1998. The Board of Directors has an Audit and
Finance Committee and a Compensation Committee. It does not have a nominating
committee or a committee performing the functions of a nominating committee.
The Audit and Finance Committee of the Board of Directors, which
currently consists of directors Eliot, Feuer, Garet, and Stuppin, held one (1)
meeting during fiscal year 1998. The Audit and Finance Committee reviews the
results and scope of the audit and other services provided by the Company's
independent auditors, and reviews the management of the Company's investments.
The Compensation Committee of the Board of Directors currently consists
of directors Eliot, Feuer, Garet, Stuppin and Wolfson, and held one (1) meeting
during fiscal year 1998. The Compensation Committee makes recommendations
concerning salaries and incentive compensation for employees of the Company and
administers the Company's stock plans and determines the terms and conditions of
stock option grants.
No incumbent director, except for director Hellman, attended fewer than
eighty percent of the aggregate number of meetings of the Board of Directors and
meetings of the committees of the Board of Directors on which he serves.
Director Compensation
Each non-employee director receives $1000 per Board or Committee
meeting attended to cover out-of-pocket expenses incurred in connection with
such attendance. During the fiscal year ended December 31, 1998, Messrs. Eliot,
Feuer, Garet, Hellman, Stuppin, and Wolfson received aggregate payments of
$1,250, $1,500, $1,500, $750, $1,500, $1,500 respectively, for their services as
directors.
Following his appointment as a director in June 1994, Mr. Eliot was
granted an option to purchase 10,000 shares of Common Stock at an exercise price
of $4.50 per share, which option has a ten-year term and vests in four equal
installments on the first four anniversaries of the date of his appointment to
the Board. Upon the effective date of the 1994 Directors' Stock Option Plan,
each of Messrs. Feuer, Eliot, Stuppin, Wang and Wolfson was automatically
granted an option to purchase 5,000 shares of Common Stock at an exercise price
of $4.50 per share, which options have ten-year terms and vest in twelve equal
monthly installments following the date of grant of the option. Dr. Wolfson,
under a consulting agreement with the Company dated August 25, 1994, received an
option to purchase 10,000 shares of the Company's Common Stock at an exercise
price of $5.875 per share (which was the fair market value of the Company's
Common Stock on the date of grant), which option vests in four equal
installments on the first four anniversaries of the date of the consulting
agreement. Dr. Wolfson does not receive any other compensation under the
consulting agreement. Subsequently, options have been granted automatically
under the Company's 1994 Directors' Stock Option Plan as follows, all of which
options have ten-year terms, vest in twelve equal monthly installments following
the date of grant of the option and have exercise prices equal to the fair
market value of the Company's Common Stock on the date of grant: Options to
purchase 5,000 shares each to Messrs. Stuppin, Eliot, Feuer, Wang and Wolfson
upon their election to the Board of Directors in May 1995 at an exercise price
per share of $5.625; options to purchase 5,000 shares each to Messrs. Stuppin,
Eliot, Feuer, Garet, and Wolfson upon their election to the Board of Directors
in May 1996 at an exercise price per share of $5.125; an option to purchase
10,000 shares to Mr. Garet upon his appointment as a director in December 1995
at an exercise price of $4.00 per share; options to purchase 5,000 shares to
Messrs. Stuppin, Eliot, Feuer, Garet, and Wolfson upon
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their election to the Board of Directors in May 1997 at an exercise price per
share of $4.625; an option to purchase 10,000 shares to Mr. Hellman upon his
becoming a non-employee director in September 1997 at an exercise price of
$6.250 per share; and, options to purchase 5,000 shares to Messrs. Stuppin,
Eliot, Feuer, Garet, Hellman, and Wolfson upon their election to the Board of
Directors in June 1998.
Required Vote
Seven (7) persons have been nominated by the Board of Directors for
election as directors at the Annual Meeting to serve until the next Annual
Meeting and until their respective successors are elected or appointed. The
seven (7) nominees receiving the highest number of votes at the Annual Meeting
will be elected as directors of the Company.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES LISTED
ABOVE.
PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of
PricewaterhouseCoopers, LLP, independent public accountants, to audit the
financial statements of the Company for the fiscal year ending December 31,
1999, and recommends that shareholders vote for ratification of this
appointment. In the event the shareholders do not ratify such appointment, the
Board of Directors will reconsider its selection. Representatives of
PricewaterhouseCoopers, LLP are expected to be present at the Annual Meeting.
They will have an opportunity to make a statement if they desire to do so and
will be able to respond to appropriate questions from the shareholders.
The ratification of the appointment of PricewaterhouseCoopers, LLP as
the Company's independent auditors requires the affirmative vote of the holders
of a majority of the shares of Common Stock present at the Annual Meeting in
person or by proxy and entitled to vote.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP, AS THE COMPANY'S INDEPENDENT AUDITORS
FOR THE YEAR ENDING DECEMBER 31, 1999.
PROPOSAL NO. 3: APPROVAL OF AMENDMENT TO 1994 EMPLOYEE STOCK PURCHASE PLAN
General
The Company's 1994 Employee Stock Purchase Plan was adopted by the
Board in April 1994 and approved by the Company's shareholders in May 1994 (the
"Purchase Plan"). The Purchase Plan provides a means by which employees may
purchase Common Stock of the Company through payroll deductions. As of April 2,
1999 approximately 10,618 shares remained available for future issuance under
the Purchase Plan. On February 19, 1999, subject to shareholder approval, the
Board increased the number of shares authorized for issuance under the Purchase
Plan by 50,000, to a total of 100,000 shares.
Description of Plan
The following summary of the Purchase Plan is qualified in its entirety
by the specific language of the Purchase Plan, a copy of which is available to
any shareholder upon request.
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General. The Purchase Plan is intended to qualify as an "employee stock
purchase plan" under section 423 of the Code. Each participant in the Purchase
Plan is granted at the beginning of each offering under the plan (an "Offering")
the right to purchase through accumulated payroll deductions up to a number of
shares of the Common Stock of the Company (a "Purchase Right") determined on the
last day of the Offering. The Purchase Right is automatically exercised on the
last day of the Offering unless the participant has withdrawn from participation
in the Offering or in the Purchase Plan prior to such date.
Shares Subject to Plan. Currently, a maximum of 50,000 shares of the
Company's Common Stock may be issued under the Purchase Plan, subject to
appropriate adjustment in the event of a stock dividend, stock split, reverse
stock split, combination, reclassification or similar change in the Company's
capital structure or in the event of any merger, sale of assets or other
reorganization of the Company. On February 19, 1999, the Board, subject to
shareholder approval, amended the Purchase Plan to increase its share reserve by
50,000 shares to an aggregate of 100,000 shares. The shareholders are now being
requested to approve the increase in the Purchase Plan reserve at the Annual
Meeting.
Administration. The Purchase Plan is administered by the Board or a
duly appointed committee of the Board. Subject to the provisions of the Purchase
Plan, the Board determines the terms and conditions of Purchase Rights granted
under the plan. The Board will interpret the Purchase Plan and Purchase Rights
granted thereunder, and all determinations of the Board will be final and
binding on all persons having an interest in the Purchase Plan or any Purchase
Rights.
Eligibility. Any employee of the Company or of any present or future
subsidiary corporation of the Company designated by the Board for inclusion in
the Purchase Plan as of the first day of the Offering is eligible to participate
in an Offering under the plan, so long as the employee is employed for more than
20 hours per week and more than five (5) months in a calendar year. However, no
employee shall be granted an option who owns or holds options to purchase, or as
a result of participation in the Purchase Plan would own or hold options to
purchase, five percent or more of the total combined voting power or value of
all classes of stock of the Company or of any parent or subsidiary corporation
of the Company is entitled to participate in the Purchase Plan. As of March 25,
1999, the Company had 87 employees that would be eligible to participate in the
Purchase Plan.
Offerings. Generally, each Offering of Common Stock under the Purchase
Plan is for a period of six months (an "Offering Period") commencing on or about
January 1 and July 1 of each year (an "Offering Date"). The Board may establish
a different term for one or more Offerings or different commencement or ending
dates for any Offering Period, so long as such change is announced at least
fifteen (15) days prior to the scheduled beginning of the first Offering to be
affected. Generally, shares are purchased on the last day of the Offering Period
(a "Purchase Date"). The Board may establish Offering Periods of different
lengths and commencement dates.
Participation and Purchase of Shares. Participation in an Offering
under the Purchase Plan is limited to eligible employees who authorize payroll
deductions prior to the Offering Date. Payroll deductions may not exceed 5% (or
such other rate as the Board determines) of an employee's compensation on any
payday during the Offering Period. Once an employee becomes a participant in the
Purchase Plan, that employee will automatically participate in each successive
Offering Period until such time as the employee withdraws from the Purchase
Plan, becomes ineligible to participate, or terminates employment. Subject to
certain limitations, each participant in an Offering has a Purchase Right equal
to the number of whole shares determined by dividing $12,500 by the fair market
value of a share of Common Stock on the Offering Date. However, no participant
may purchase under the Purchase Plan shares of Common Stock having a fair market
value exceeding $25,000 in any calendar year (measured by the fair market value
of the Company's Common Stock on the first day of the Offering Period in which
the shares are purchased).
On each Purchase Date, the Company issues to each participant in the
Offering the number of shares of the Company's Common Stock determined by
dividing the amount of payroll deductions accumulated for the participant during
the Offering Period by the purchase price, limited in any case by the number of
shares subject to the participant's Purchase Right for that Offering. The price
at which shares are sold under the Purchase Plan is equal to 85% of the lesser
of the fair market value per share of the Company's Common Stock on the Offering
Date
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or on the Purchase Date. The fair market value of the Common Stock on any
relevant date is established by the Board based on the closing price per share
on such date as reported on the Nasdaq National Market. Any payroll deductions
under the Purchase Plan not applied to the purchase of shares will be returned
to the participant, unless the amount remaining is less than the amount
necessary to purchase a whole share of Common Stock, in which case the remaining
amount may be applied to the next Offering Period.
A participant may withdraw from an Offering at any time without
affecting his or her eligibility to participate in future Offerings. However,
once a participant withdraws from an Offering, that participant may not again
participate in the same Offering.
Transfer of Control. The Purchase Plan provides that, in the event of
(i) a proposed sale of all or substantially all of the assets of the Company, or
(ii) a merger of the Company with or into another corporation (a "Transfer of
Control"), the acquiring or successor corporation will assume the Company's
rights and obligations under the Purchase Plan or substitute equivalent Purchase
Rights for such corporation's stock, unless the Board in its sole discretion
adjusts the next Purchase Date to a date on or before the date of the Transfer
of Control. In the event of a proposed dissolution or liquidation of the
Company, the Offering Period will terminate unless otherwise provided by the
Board.
Termination or Amendment. The Purchase Plan will continue in effect for
a term of 20 years unless it is terminated by the Board prior to such date. The
Board may at any time amend or terminate the Purchase Plan, except that the
approval of the Company's shareholders is required within twelve months of the
adoption of any amendment increasing the number of shares authorized for
issuance under the Purchase Plan, or changing the definition of the corporations
which may be designated by the Board as corporations the employees of which may
participate in the Purchase Plan.
Summary of United States Federal Income Tax Consequences
The following summary is intended only as a general guide as to the
United States federal income tax consequences under current law of participation
in the Purchase Plan and does not attempt to describe all possible federal or
other tax consequences of such participation or tax consequences based on
particular circumstances.
Generally, there are no tax consequences to an employee of either
becoming a participant in the Purchase Plan or purchasing shares under the
Purchase Plan. The tax consequences of a disposition of shares vary depending on
the period such stock is held before its disposition. If a participant disposes
of shares within two years after the Offering Date or within one year after the
Purchase Date on which the shares are acquired (a "disqualifying disposition"),
the participant recognizes ordinary income in the year of disposition in an
amount equal to the difference between the fair market value of the shares on
the Purchase Date and the purchase price. Such income may be subject to
withholding of tax. Any additional gain or resulting loss recognized by the
participant from the disposition of the shares is a capital gain or loss. If the
participant disposes of shares at least two years after the Offering Date and at
least one year after the Purchase Date on which the shares are acquired, the
participant recognizes ordinary income in the year of disposition in an amount
equal to the lesser of (i) the difference between the fair market value of the
shares on the date of disposition and the purchase price or (ii) 15% of the fair
market value of the shares on the Offering Date. Any additional gain recognized
by the participant on the disposition of the shares is a capital gain. If the
fair market value of the shares on the date of disposition is less than the
purchase price, there is no ordinary income, and the loss recognized is a
capital loss. If the participant owns the shares at the time of the
participant's death, the lesser of (i) the difference between the fair market
value of the shares on the date of death and the purchase price or (ii) 15% of
the fair market value of the shares on the Offering Date is recognized as
ordinary income in the year of the participant's death.
If the exercise of a Purchase Right does not constitute an exercise
pursuant to an "employee stock purchase plan" under section 423 of the Code, the
exercise of the Purchase Right will be treated as the exercise of a nonstatutory
stock option. The participant would therefore recognize ordinary income on the
Purchase Date equal to the excess of the fair market value of the shares
acquired over the purchase price. Such income is subject to withholding of
income and employment taxes. Any gain or loss recognized on a subsequent sale of
the shares, as
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measured by the difference between the sale proceeds and the sum of (i) the
purchase price for such shares and (ii) the amount of ordinary income recognized
on the exercise of the Purchase Right, will be treated as a capital gain or
loss, as the case may be.
A capital gain or loss will be long-term if the participant holds the
shares for more than 12 months and short-term if the participant holds the
shares for 12 months or less. Long-term capital gains are currently subject to a
maximum tax rate of 20%. Short-term capital gains are generally subject to the
same tax rates as ordinary income.
If the participant disposes of the shares in a disqualifying
disposition the Company should be entitled to a deduction equal to the amount of
ordinary income recognized by the participant as a result of the disposition,
except to the extent such deduction is limited by applicable provisions of the
Code or the regulations thereunder. In all other cases, no deduction is allowed
the Company.
Changed Plan Benefits
Because benefits under the Purchase Plan will depend on employees'
elections to participate and the fair market value of the Company's Common Stock
at various future dates, it is not possible to determine the benefits that will
be received by executive officers and other employees if the Purchase Plan is
approved by the stockholders. Nonemployee directors are not eligible to
participate in the Purchase Plan. As a point of reference, the numbers of shares
of Common Stock purchased under the Purchase Plan by certain persons in the last
fiscal year are as follows: Mr. Greenwald, Mr. Hatley, Mr. Keplinger and Mr.
Martin purchased 694 shares, 116 shares, 1,854 shares, and 1,040 shares,
respectively; all current executive officers as a group purchased 3,704 shares;
and all current employees, including officers who are not executive officers, as
a group purchased 6,397 shares. No shares were purchased under the 1998 Purchase
Plan by any directors who are not executive officers, any other nominees for
election as directors or any associates of such directors or nominees or of any
executive officers, and no person has purchased five percent or more of the
total number of shares issued under the Purchase Plan.
Vote Required and Board's Recommendation
The affirmative vote of a majority of the votes present or represented
by proxy and entitled to a vote at the Annual Meeting, at which a quorum
representing a majority of all outstanding shares of Common Stock of the Company
is present and voting, is required for approval of this proposal. Abstentions
and broker nonvotes will each be counted present for purposes of determining the
presence of a quorum, but will have no effect on the outcome of the vote.
The Board believes that the availability of an opportunity to purchase
shares under the Purchase Plan at a discount from market price is important to
attracting and retaining qualified officers and employees essential to the
success of the Company, and that stock ownership is important to providing such
persons with incentive to perform in the best interest of the Company.
THEREFORE, THE BOARD UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE
THE INCREASE IN THE NUMBER OF SHARES RESERVED FOR ISSUANCE UNDER THE 1994
EMPLOYEE STOCK PURCHASE PLAN TO 100,000 SHARES.
PROPOSAL NO. 4: APPROVAL OF AMENDMENT TO 1994 DIRECTORS' STOCK OPTION PLAN
General
The Company's 1994 Directors' Stock Option Plan was adopted by the
Board of Directors and approved by the shareholders in 1994 (the "Directors'
Plan"). The Directors' Plan provides for the automatic grant of nonstatutory
stock options to members of the Board of Directors who are not employees of the
Company. Currently, the Company has six (6) nonemployee directors. As of March
31, 1999, an aggregate of 42,084 shares were available for future grants under
the Directors' Plan.
The shareholders are being asked to approve the amendment to increase
the number of shares of Common Stock reserved for issuance under the Directors'
Plan by 100,000 shares from 200,000 to 300,000. The Board of
8
<PAGE>
Directors believes that the approval of the amendment of the Directors' Plan is
in the best interests of the Company and its shareholders because the
availability of stock options is an important factor in attracting and retaining
qualified nonemployee directors essential to the success of the Company.
Summary of the Provisions of the Directors' Plan
The following summary of the Directors' Plan is qualified in its
entirety by the specific language of the Directors' Plan, a copy of which is
available to any shareholder upon request.
General. The Directors' Plan provides for the automatic grant of
nonstatutory stock options to nonemployee directors of the Company. As of March
31, 1999, none of the options to purchase Common Stock granted under the
Directors' Plan had been exercised, options to purchase an aggregate of
approximately 140,000 shares remained outstanding and approximately 42,084
shares remained available for future grant under the Directors' Plan.
Shares Subject to Plan. Currently, a maximum of 7,200,000 shares of the
authorized but unissued or reacquired shares of the Common Stock of the Company
may be issued upon the exercise of options granted pursuant to the Directors'
Plan. In the event of any stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or similar change in the
capital structure of the Company, appropriate adjustments will be made to the
shares subject to the Directors' Plan, to the terms of automatic option grants
under the plan, and to outstanding options. To the extent that any outstanding
option under the Directors' Plan expires or terminates prior to exercise in full
or if shares issued upon the exercise of an option are repurchased by the
Company, the shares of Common Stock for which such option is not exercised or
the repurchased shares are returned to the plan and become available for future
grants.
Administration. The Directors' Plan is administered by the Board of
Directors or a duly appointed committee of the Board (hereinafter referred to as
the "Board"). Although the Directors' Plan is designed to work automatically
without administration, to the extent administration is necessary, the Board is
authorized to interpret the Directors' Plan and options granted thereunder, and
all determinations of the Board will be final and binding on all persons having
an interest in the Directors' Plan or any option.
Eligibility. Only directors of the Company who are not at the time of
option grant employees of the Company or of any parent or subsidiary corporation
of the Company (the "Outside Directors") are eligible to participate in the
Directors' Plan. Currently, the Company has six (6) Outside Directors.
Automatic Grant of Options. The Directors' Plan provides that each
Outside Director who first serves on the Board after August 18, 1994 (the
"Effective Date") automatically will be granted an option to purchase 10,000
shares of Common Stock on the date of his or her initial election or
appointment. The Directors' Plan also provides for the annual automatic grant of
an additional option to purchase 5,000 shares of Common Stock on the date of
each Annual Meeting of the Company's shareholders at which each nonemployee
director is elected to the Board, provided that on such date, he or she shall
have served on the Board for at least three months prior to the date of such
Annual Meeting.
Terms and Conditions of Options. Each option granted under the
Directors' Plan will be evidenced by a written agreement between the Company and
the Outside Director specifying the number of shares subject to the option and
the other terms and conditions of the option, consistent with the requirements
of the Directors' Plan. The per share exercise price of any option granted under
the Directors' Plan must equal the fair market value of a share of the Company's
Common Stock on the date of grant. Generally, the fair market value of the
Common Stock will be the closing price of the Company's Common Stock on the date
of grant as reported on the Nasdaq National Market. As of March 1, 1999, the
closing price of the Company's Common Stock, as reported on the Nasdaq National
Market, was $3.625 per share. No option granted under the Directors' Plan is
exercisable after the expiration of 10 years after the date such option is
granted, subject to earlier termination in the event the optionee's service as a
director of the Company ceases or in the event of an acquisition, dissolution or
liquidation of the
9
<PAGE>
Company, as discussed below (see "Transfer of Control"). Shares subject to
options granted under the Directors' Plan will vest and become exercisable in
twelve (12) equal monthly installments following the date of grant.
Generally, the exercise price may be paid in cash, by check, or in cash
equivalent. During the lifetime of the optionee, the option may be exercised
only by the optionee. An option may not be transferred or assigned, except by
will or the laws of descent and distribution.
Transfer of Control. The Directors' Plan provides that in the event of
the proposed dissolution or liquidation of the Company, options granted pursuant
to the Directors' Plan will terminate immediately prior to the consummation of
the proposed action, unless otherwise provided by the Board. The Board may, in
its sole discretion, declare that any such options will terminate as of a date
fixed by the Board, and give each optionee the right to exercise their option as
to all or any part of the shares subject to such options, including shares as to
which the options would not otherwise be exercisable. The Directors' Plan
further provides that in the event of a proposed (i) sale of all or
substantially all of the assets of the Company, or (ii) merger of the Company
with or into another corporation which results in the transfer of ownership of
more than fifty percent (50%) of the voting power of the Company, the Company's
outstanding options will be assumed or an equivalent option substituted by such
acquiring or successor corporation or its parent or subsidiary, unless the
Board, in its sole discretion, and in lieu of such assumption or substitution,
gives optionees the right to exercise their options as to some or all of the
shares subject to such options, including shares as to which the options would
not otherwise be exercisable.
Termination or Amendment. The Directors' Plan will continue until
February 2004, unless earlier terminated by the Board. The Board may terminate
or amend the Directors' Plan at any time, but, the Board may not adopt an
amendment to the Directors' Plan which would require shareholder approval under
any law or regulation, including an amendment increasing the total number of
shares of Common Stock reserved for issuance thereunder without the approval of
the shareholders. No termination or amendment of the Directors' Plan may
adversely affect an outstanding option without the consent of the optionee.
Summary of Federal Income Tax Consequences of the Directors' Plan
The following summary is intended only as a general guide as to the
United States federal income tax consequences under current law of participation
in the Directors' Plan and does not attempt to describe all possible federal or
other tax consequences of such participation or tax consequences based on
particular circumstances.
Options granted under the Directors' Plan are nonstatutory stock
options, which have no special tax status. An optionee generally recognizes no
taxable income as the result of the grant of such an option. Upon exercise of a
nonstatutory stock option, the optionee normally recognizes ordinary income in
the amount of the difference between the option exercise price and the fair
market value of the shares on the exercise date. Upon the sale of stock acquired
by the exercise of a nonstatutory stock option, any gain or loss, based on the
difference between the sale price and the fair market value on the exercise
date, will be taxed as capital gain or loss. A capital gain or loss will be
long-term if the optionee's holding period of the shares is more 12 months. No
tax deduction is available to the Company with respect to the grant of a
nonstatutory stock option or the sale of the stock acquired pursuant to such
grant. The Company generally should be entitled to a deduction equal to the
amount of ordinary income recognized by the optionee as a result of the exercise
of a nonstatutory stock option, except to the extent such deduction is limited
by applicable provisions of the Code or the regulations thereunder.
Changed Plan Benefits
From the inception of the Directors' Plan through March 25, 1999, the
current directors who are not executive officers of the Company have received,
in the aggregate, options under the Directors' Plan for the following numbers of
shares: Mr. Eliot, 35,000 shares, Mr. Feuer, 25,000 shares, Mr. Garet, 25,000
shares, Mr. Hellman, 15,000 shares, Mr. Stuppin, 25,000 shares, and Mr. Wolfson,
25,000 shares. Benefits under the Directors' Plan depend on a number of factors,
including the fair market value of the Company's Common Stock on future dates
and the exercise decisions made by the optionees. Consequently it is not
possible to determine the dollar value of benefits that might be received by
persons granted options under the Directors' Plan.
10
<PAGE>
Vote Required and Board of Directors' Recommendation
The affirmative vote of a majority of the votes cast at the Annual
Meeting of Shareholders, at which a quorum representing a majority of all
outstanding shares of Common Stock of the Company is present and voting, either
in person or by proxy, is required for approval of this proposal. Abstentions
and broker non-votes will each be counted as present for purposes of determining
the presence of a quorum. Abstentions will have the same effect as a negative
vote. Broker non-votes, on the other hand, will have no effect on the outcome of
the vote.
The Board of Directors believes that the increase in the share reserve
of the Directors' Plan is in the best interests of the shareholders and the
Company for the reasons stated above. THEREFORE, THE BOARD OF DIRECTORS
UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF THE INCREASE IN THE SHARE
RESERVE OF THE DIRECTORS' PLAN.
11
<PAGE>
SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of March 31, 1999 as to
(i) each person known by the Company to own beneficially more than five percent
of the outstanding shares of Common Stock, (ii) each director of the Company or
director nominee who beneficially owns shares, (iii) each of the executive
officers of the Company named in the Summary Compensation Table, and (iv) all
executive officers and directors of the Company as a group. Unless otherwise
specified, the address for each officer and director is 2883 Bayview Drive,
Fremont, California 94538.
Shares Beneficially Owned
-------------------------
Percent
Name and Address (1) Number of Total
-------------------- ------ --------
Advanced Lighting Technologies, Inc. (2)
Wayne Hellman
2307 E. Aurora Rd., Suite 1
Twinsburg, OH 44087........................... 1,037,177 26.3
David N. Ruckert (3).......................... 271,573 6.9
Philip Wolfson (4)........................... 151,508 3.8
Michael Feuer (5)............................. 110,567 2.8
John B. Stuppin (6)........................... 98,332 2.5
Barry R. Greenwald (7)........................ 79,211 2.0
J. Steven Keplinger (8)....................... 70,746 1.8
Theodore L. Eliot, Jr. (9).................... 35,166 *
B. J. Garet (10).............................. 24,166 *
Frederick Martin (11)......................... 34,771 *
J. Arthur Hatley (12)......................... 15,227 *
All officers and directors as a group
(14 persons)(13).............................. 1,928,444 42.8
- ---------------------------
* Less than one percent.
1) To the Company's knowledge, the persons named in the table have sole voting
and investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to community property laws where
applicable and the information contained in the footnotes to this table.
2) Includes 1,023,011 shares held by Advanced Lighting Technologies, Inc., of
which Mr. Hellman is President and as to which Mr. Hellman disclaims
beneficial ownership. Also includes 14,166 shares subject to outstanding
stock options held by Mr. Hellman that are exercisable on or before May 1,
1999.
3) Includes 137,500 shares subject to outstanding stock options exercisable on
or before May 1, 1999.
4) Includes 46,666 shares subject to outstanding stock options exercisable on
or before May 1, 1999.
5) Includes 37,968 shares subject to outstanding stock options exercisable on
or before May 1, 1999.
6) Includes 36,666 shares subject to outstanding stock options exercisable on
or before May 1, 1999.
12
<PAGE>
7) Includes 75,330 shares subject to outstanding stock options exercisable on
or before May 1, 1999.
8) Includes 66,331 shares subject to outstanding stock options exercisable on
or before May 1, 1999.
9) Includes 1,000 owned by the Eliot Trust, of which Mr. Eliot is a
beneficiary. Also, includes 34,166 shares subject to outstanding stock
options exercisable on or before May 1, 1999.
10) Includes 24,166 shares subject to outstanding stock options exercisable on
or before May 1, 1999.
11) Includes 32,500 shares subject to outstanding stock options exercisable on
or before May 1, 1999.
12) Includes 15,000 shares subject to outstanding stock options exercisable on
or before May 1, 1999.
13) Includes 529,459 shares subject to outstanding stock options exercisable on
or before May 1, 1999.
13
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
Summary Compensation Table
The following table sets forth all compensation paid to the Company's
Chief Executive Officer and certain other executive officers whose total annual
salary and bonus exceeded $100,000 during the year ended December 31, 1998.
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term
Compensation
------------
Annual Compensation Awards
------------------- ------
Securities
Underlying
Fiscal Options/ All Other
Name and Principal Position Year Salary($) Bonus($) SARs(#) Compensation(1)
- --------------------------- ---- --------- -------- ------- ---------------
<S> <C> <C> <C> <C> <C>
David N. Ruckert 1998 $190,800 -- 0 $5,340.84
President and Chief 1997 $171,000 -- 50,000 $4,741
Executive Officer 1996 $156,000 -- 50,000 $4,188
Barry Greenwald 1998 $80,000 $77,607 0 $973
Senior Vice President, Pool 1997 $80,000 $99,920 30,000 $831
& Spa Division 1996 $70,000 $76,620 15,000 $690
Fredrick Martin 1998 $150,166 -- 0 $1,138
Chief Operating Officer 1997 $111,304 -- 80,000 $17,138
1996 -- -- -- --
J. Arthur Hatley 1998 $76,000 $66,458 0 $1,087
Vice President and 1997 $76,000 $49,879 25,000 $186
General Manager, 1996 $69,000 $36,624 10,000 --
Commercial Lighting
J. Steven Keplinger 1998 $128,081 -- 0 $438
Senior Vice President, 1997 $115,000 -- 30,000 $408
Operations & Retail Products 1996 $115,000 -- 33,000 $378
<FN>
(1) Represents premiums paid on life insurance policies for the officer's
benefit.
</FN>
</TABLE>
14
<PAGE>
The following table sets forth certain information for the year ended
December 31, 1998 with respect to stock options granted to the individuals named
in the Summary Compensation Table above.
<TABLE>
Option/SAR Grants in Fiscal Year 1998
<CAPTION>
Individual Grants in Fiscal 1998
-----------------------------------------------------------------------------------------------
Number of Securities % of Total Options/ SARs
Underlying Options/ Granted to Employees in
SARs Granted(#)(1) Fiscal Year Exercise or Base Expiration Date(3)
Name Price ($/Share)(2)
- ------------------------ ----------------------- ---------------------------- ---------------------- -------------------
<S> <C> <C> <C> <C>
David N. Ruckert 0 0 N/A N/A
Barry Greenwald 0 0 N/A N/A
Steven Keplinger 0 0 N/A N/A
J. Arthur Hatley 0 0 N/A N/A
Fredrick Martin 0 0 N/A N/A
<FN>
(1) Such stock options vest as to 25% of the shares covered by the respective options on each anniversary of the grant
date, becoming fully vested on the fourth anniversary of the date of grant. Under the terms of the Company's 1994
Stock Option Plan, the Board of Directors or a duly appointed committee of the Board retains the discretion,
subject to certain limitations within the Option Plan, to modify, extend, or renew outstanding options and to
reprice outstanding options, and to accelerate the vesting of options in the event of any merger, consolidation, or
reorganization in which the Company is not the surviving corporation. Options may be repriced by canceling
outstanding options and reissuing new options with an exercise price equal to the fair market value on the date of
reissue which may be lower than the original exercise price of such canceled options.
(2) The exercise price on the date of grant was equal to 100% of the fair market value on the date of grant.
(3) Subject to earlier termination upon certain events related to termination of employment.
</FN>
</TABLE>
Option Exercises and Fiscal 1998 Year End Value
The following table provides certain information concerning exercises
of options to purchase the Company's Common Stock in the fiscal year ended
December 31, 1998, and unexercised options held as of December 31, 1998, by the
persons named in the Summary Compensation Table.
<TABLE>
Aggregate Options/SAR Exercises in Last Fiscal Year
and Fiscal Year-End Option/SAR Values
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Fiscal Options/SARs at
Year End (#) Fiscal Year-End ($)(1)
Shares Acquired ------------ ---------------------
Name on Exercise (#) Value Realized ($) Exercisable / Unexercisable Exercisable / Unexercisable
---- --------------- ------------------ --------------------------- ---------------------------
<S> <C> <C> <C> <C>
David N. Ruckert 0 0 125,000/75,000 0/0
Barry Greenwald 0 0 75,330/30,000 56,823/0
Steven Keplinger 0 0 63,331/42,000 56,826/0
J. Arthur Hatley 0 0 15,000/25,000 0/0
Fredrick Martin 0 0 20,000/60,000 0/0
<FN>
(1) Based upon the closing price of the Company's Common Stock on the Nasdaq National Market on the last trading day of
fiscal 1998, which was $4.00.
</FN>
</TABLE>
15
<PAGE>
CHANGES TO BENEFIT PLANS
1994 Employees Stock Purchase Plan. The Board of Directors of the
Company has adopted, subject to shareholder approval, an amendment to the 1994
Employees Stock Purchase Plan to increase the maximum number of shares that may
be issued thereunder by 50,000 shares. See "PROPOSAL NO. 3: APPROVAL OF
AMENDMENT TO 1994 EMPLOYEE STOCK PURCHASE PLAN." As of April 2, 1999, no grant
of options had been made to any person conditioned upon shareholder approval of
the increase in the share reserve of the 1994 Employee Stock Purchase Plan.
1994 Directors' Stock Option Plan. The Board of Directors of the
Company has adopted, subject to shareholder approval, an amendment to the 1994
Directors' Stock Option Plan to increase the maximum number of shares that may
be issued thereunder by 100,000 shares. See "PROPOSAL NO. 4: APPROVAL OF
AMENDMENT TO 1994 DIRECTORS STOCK OPTION PLAN." As of April 2, 1999, no grant of
options had been made to any person conditioned upon shareholder approval of the
increase in the share reserve of the 1994 Directors' Stock Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1987, the Company loaned David N. Ruckert, an officer and director,
the amount of $75,000, and bearing interest at the rate of 9% per year in
connection with the purchase of shares of Common Stock. On June 8, 1994, the
loan was amended by letter agreement. The loan was again amended and restated on
April 23, 1998 as a loan in the amount of $75,000, bearing interest at the rate
of 9% per year and due on April 23, 2003. The loan is secured by shares of
Common Stock of the Company held by Mr. Ruckert.
In 1996, the Company made certain loans to Barry R. Greenwald, an
officer, in the aggregate amount of $125,000, and bearing interest at the rate
of 8% per year in connection with his purchase of a permanent residence. On
March 25, 1997, the loans were restructured as one loan in the amount of
$125,000, which bore interest at 8% per year, compounded monthly, and was due
and payable in full on December 31, 1999. Because of principle and interest
repayment by Mr. Greenwald, this loan was restructured on March 15, 1998 as a
loan in the amount of $106,600, bearing interest at 8% per year, compounded
monthly, repayable in monthly installments of principle and accrued interest and
due in full on December 31, 1999, or upon any earlier termination of Mr.
Greenwald's employment with the Company. The loan is secured by all shares of
the Company's Common Stock owned by Mr. Greenwald acquired pursuant to the terms
of the Company's 1994 Employee Stock Purchase Plan, the Company's 1988 Stock
Option Plan and 1994 Stock Option Plan, and any shares issuable or potentially
issuable pursuant to the 1988 Stock Option Plan and the 1994 Stock Option Plan.
The outstanding balance of the loan as of March 31, 1999 was $92,085.86.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors and executive officers, and persons who
own more than ten percent of a registered class of the Company's equity
securities to file with the Securities and Exchange Commission (the "SEC")
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
ten percent shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) reports they file.
With the exception of the inadvertent failure to timely file a Form 4
by Philip Wolfson, which failure was subsequently corrected, to the Company's
knowledge, based solely upon review of the copies of such reports furnished to
the Company and written representations that no other reports were required,
during the fiscal year ended December 31, 1998, all Section 16(a) filing
requirements applicable to its officers, directors and greater than ten percent
beneficial owners were timely met.
16
<PAGE>
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Pursuant to Rule 14a-4(c)(i) of the Exchange Act, the Company's proxy
for the 2000 Annual Meeting of Shareholders may confer discretionary authority
to vote on any proposal submitted by a shareholder if written notice of such
proposal submitted by a shareholder if written notice of such proposal is not
received by the Company at its officers at 2883 Bayview Drive, Fremont, CA
94538, on or before February 15, 1999, or, if the 2000 Annual Meeting of
Shareholders is held more than 30 days before or after May 12, 1999, within a
reasonable time before the mailing of the Company's proxy materials for the 2000
Annual Meeting of Shareholders.
Proposals of shareholders of the Company that are intended to be
presented by such shareholders at the Company's 2000 Annual Meeting of
Shareholders must be received by the Company no later than December 2, 1999 to
be considered for inclusion in the proxy statement and form of proxy relating to
such meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be submitted to the
Annual Meeting. If any other matters properly come before the Annual Meeting,
then the persons named in the enclosed form of proxy will vote the shares they
represent in such manner as the Board may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ DAVID N. RUCKERT
DAVID N. RUCKERT
President, Chief Executive Officer,
Chief Operating Officer and Director
Dated: March 31, 1999
17
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------
PROXY FIBERSTARS, INC. PROXY
Proxy for Annual Meeting of Shareholders
The undersigned hereby appoints David N. Ruckert, John B. Stuppin and
Robert A. Connors, or any of them, proxy and attorney-in-fact, with full power
to designate a substitute representative, to represent the undersigned and to
vote all of the shares of stock in Fiberstars, Inc., a California corporation
(the "Company"), which the undersigned is entitled to vote at the Annual Meeting
of the Shareholders of the Company to be held at the Mandarin Oriental Hotel,
222 Sansome St., San Francisco, CA 94104, Wednesday, May 12, 1999 at 2:00 P.M.
local time, and at any adjournment thereof as hereinafter specified upon the
proposals listed below and as more particularly described in the Proxy Statement
of the Company dated March 31, 1999 (the "Proxy Statement"), receipt of which is
hereby acknowledged.
(Continued, and to be signed on the other side)
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
<PAGE>
- --------------------------------------------------------------------------------
Please mark
[X] your votes
as this
WITHHOLD
1. ELECTION OF DIRECTORS: FOR FOR ALL
NOMINEES: [ ] [ ]
Theodore L. Eliot, Jr.,
Michael Feuer, Ph.D., B.J. Garet, Wayne R. Hellman,
David N. Ruckert, John B. Stuppin, Philip Wolfson
INSTRUCTION: To withhold authority for any
individual nominee, write that nominee's name in the
space provided below.
---------------------------
I PLAN TO ATTEND THE MEETING [ ]
FOR AGAINST ABSTAIN
2. A vote FOR the approval of the proposal to amend the 1994
Employee Stock Purchase Plan to increase the number of [ ] [ ] [ ]
shares of the Company's Common Stock reserved for
issuance under the Plan is recommended by the Board of
Directors.
3. A vote FOR the approval of the proposal to amend the 1994
Directors Stock Option Plan (the "Directors Plan") to [ ] [ ] [ ]
increase the number of shares of the Company's Common
Stock reserved for issuance under the Directors Plan is
recommended by the Board of Directors.
4. A vote FOR the ratification of the appointment of
PricewaterhouseCoopers as the Company's independent [ ] [ ] [ ]
auditors for the year ending December 31, 1999 is
recommended by the Board of Directors.
The shares represented hereby will be voted as specified. If
no specification is made, such shares will be voted FOR the
above proposals 1, 2, 3 and 4.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS
MEETING REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. PLEASE
DATE, SIGN, AND RETURN THE PROXY PROMPTLY IN THE ENCLOSED,
STAMPED ENVELOPE.
(Be sure to date proxy.)
Signature(s) --------------------------------------- Dated ---------------, 1999
- --------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
