SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
Filed by the Registrant /X/
Filed by a Party other than the Registrant o
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
TRINITECH SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Persons(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.
(1) Title of each class of securities to which transaction
applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
<PAGE>
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
-2-
<PAGE>
TRINITECH SYSTEMS, INC.
STAMFORD HARBOR PARK
333 LUDLOW STREET
STAMFORD, CT 06902
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 7, 1999
To the Shareholders of TRINITECH SYSTEMS, INC.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Trinitech Systems, Inc. (the "Company") will be held on Monday,
June 7, 1999 at 10:00 A.M. local time, at Stamford Harbor Park, 333 Ludlow
Street, Stamford, CT 06902 for the following purposes:
1. To elect four (4) Directors to the Board of Directors to a one year term;
2. To ratify the appointment of Arthur Andersen LLP as auditors of the
corporation for the year 1999;
3. To approve an amendment to the Company's Amended and Restated 1991
Incentive and Nonqualified Stock Option Plan (the "Plan") whereby the
total number of shares of the Company's Common Stock available for
issuance under the Plan will be increased to 2,500,000 shares from
1,500,000 shares;
4. To consider and act upon such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 5,
1999 as the record date for the Meeting. Only shareholders of record on the
stock transfer books of the Company at the close of business on that date are
entitled to notice of, and to vote at, the Meeting.
By Order of the Board of Directors.
Richard A. Castillo
SECRETARY
Stamford, Connecticut
April 30, 1999
<PAGE>
1999 PROXY STATEMENT
TRINITECH SYSTEMS, INC.
STAMFORD HARBOR PARK
333 LUDLOW STREET
STAMFORD, CT 06902
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MONDAY, JUNE 7, 1999
This Proxy Statement is furnished to shareholders of Trinitech
Systems, Inc., a New York corporation (the "Company"), in connection with the
solicitation, by order of the Board of Directors of the Company, of proxies to
be voted at the Annual Meeting of Shareholders to be held on June 7, 1999 at
10:00 A.M., Local Time, at the principal executive offices of the Company
located at Stamford Harbor Park, 333 Ludlow Street, Stamford, CT 06902. The
accompanying proxy is being solicited on behalf of the Board of Directors of the
Company. This Proxy Statement and enclosed proxy card will be first mailed to
the shareholders of the Company on or about May 5, 1999, accompanied by the
Company's Annual Report for the year ended December 31, 1998, and the Company
incorporates the contents of such report herein by reference thereto.
As indicated in the Notice of Annual Meeting of the Shareholders,
the Meeting has been called to 1) elect four (4) Directors to the Board of
Directors for the ensuing year (2) ratify the appointment of Arthur Andersen LLP
as auditors of the corporation for the year 1999 (3) increase the Company's
available stock option grants by a total of one million shares and (4) consider
and act upon such other business as may properly come before the Meeting or any
adjournment thereof.
PROXIES AND VOTING RIGHTS
Shareholders of record at the close of business on April 5, 1999
(the "Record Date") are entitled to notice of and to vote at the Meeting. The
voting securities of the Company outstanding on the Record Date consisted of
9,415,030 shares of common stock, par value $.001 (the "Shares"), entitling the
holders thereof to one vote per Share. There was no other class of voting
securities of the Company outstanding on such date. All Shares have equal voting
rights. A majority of the outstanding Shares present in person or by proxy is
required for a quorum.
All proxies delivered pursuant to this solicitation may be revoked
by the person executing the same by notice in writing received at the office of
the Company at any time prior to exercise. If not revoked, the Shares
represented thereby will be voted at the Meeting. All proxies will be voted in
accordance with the instructions specified thereon. If no specification is
indicated on the proxy, the Shares represented thereby will be voted (i) FOR the
election of the persons nominated as Directors (ii) FOR the appointment of
Arthur Andersen LLP as auditors of the corporation for the year 1999 (iii) FOR
an increase of one million shares in the Company's available stock option grants
and (iv) at the discretion of the proxy holders on any other matters that may
properly come before the Meeting. The Board of Directors does not know of any
matters to be considered at the Meeting other than the aforementioned items.
Broker "non-votes" and the Shares as to which a shareholder abstains
are included for purposes of determining whether a quorum of Shares is present
at a meeting. A broker "non-vote" occurs when a nominee holding Shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner. Neither broker "non-votes" nor
abstentions are included in the tabulation of the voting results on the election
of directors or issues requiring approval of a majority of the votes cast and,
therefore, do not have the effect of votes in opposition in such tabulations.
All expenses in connection with the solicitation will be borne by
the Company. It is expected that the solicitation will be made primarily by
mail, but regular employees or representatives of the Company may also solicit
proxies by telephone, telegraph or in person, without additional compensation.
The Company will, upon request, reimburse brokerage houses and persons holding
Shares in the names of their nominees for their reasonable expenses in sending
proxy material to their principals.
<PAGE>
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE
URGED TO FILL IN, DATE, SIGN, AND RETURN THE ENCLOSED PROXY IN THE
ENVELOPE THAT IS PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES.
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of
the Company's Shares, as at the Record Date, by (i) each person known by the
Company to be the beneficial owner of more than five percent of the Shares, (ii)
each director and nominee for election as a director, (iii) each of the
executive officers named in the executive summary compensation table and (iv)
all directors and executive officers of the Company as a group. Unless otherwise
indicated, each shareholder has sole voting power and sole dispositive power
with respect to the indicated Shares.
<TABLE>
<CAPTION>
Shares
Beneficially
Name and Address of Beneficial Owner Owned Percentage of Class (*)
------------------------------------ ------------ -----------------------
<S> <C> <C>
Peter Kilbinger Hansen 1,060,850 (1) 11.3%
333 Ludlow Street
Stamford, CT 06902
Carl E. Warden 450,000 (4) 4.8%
1516 Country Club Drive
Los Altos, CA 94024
Jerome Belson 390,000 4.1%
495 Broadway 6th Floor
New York, NY 10012
Lars Kragh 252,650 (2) 2.7%
333 Ludlow Street
Stamford, CT 06902
Craig M. Shumate 53,287 (3) **
29 Hilltop Road
Mendham, NJ 07945
Dr. John H. Chapman 7,500 (3) **
6 Landmark Square
Stamford, CT 06901
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Richard A. Castillo ** **
333 Ludlow Street
Stamford, CT 06902
All Executive Officers and Directors as a Group (6 persons) 1,824,287 19.4%
</TABLE>
* - Based upon 9,415,030 shares outstanding on April 5, 1999.
** - Less than 1% of outstanding common stock.
(1) - Includes 650,000 shares held by TechSoft, a corporation partially owned by
Mr. Hansen, which shares may be deemed to be beneficially owned by Mr. Hansen.
Also included are 7,500 shares subject to warrants and 122,500 options to
purchase the Company's Common Stock held by Mr. Hansen which are exercisable
within 60 days hereof.
(2) - Includes 40,000 shares issuable upon exercise of options within 60 days
hereof.
(3) - Consists of shares issuable upon exercise of warrants within 60 days
hereof.
(4) - Includes 22,500 shares issuable upon exercise of warrants within 60 days
hereof.
MANAGEMENT
The directors and executive officers of the Company are as follows:
Name Age Position
Peter Kilbinger Hansen 38 President, Chief Executive Officer,
Chairman and Director
Richard A. Castillo 41 Chief Financial Officer and Secretary
Lars Kragh 38 Vice President-Research and
Development
Dr. John H. Chapman 55 Director
Craig M. Shumate 53 Director
Carl E. Warden 60 Director
- --------------------
The Principal Occupation for the Past Five Years and Current Public
Directorships of the executive officers and directors are as follows:
PETER KILBINGER HANSEN, the founder of the Company, has served as
President and Chairman and as a director since the commencement of the Company's
operations in June 1991. Mr. Hansen also serves as a member of the Compensation
Committee of the Board of Directors. Prior to founding Trinitech, Mr. Hansen
served for three years as a director of banking systems of Business Line A/S, a
Danish company, where he installed more than 30 on-line telex trading systems.
Prior thereto, Mr. Hansen was for more than three years the Sales & Marketing
Director of Mark Computer Systems, responsible for developing the business idea
for and successfully launching its turn-key network broker communication system.
Mr. Hansen has a degree in Economics from Neils' Brock Business School of
3
<PAGE>
Copenhagen and associated degree in Economics from the Copenhagen University of
Language and Economics.
RICHARD A. CASTILLO joined Trinitech as Chief Financial Officer and
Secretary in November 1998. Prior to that, he has held positions in long-term
financial management roles involving business analysis and operations
responsibility. Most recently, Mr. Castillo served a ten-year tenure with
American Airlines, which in addition to budgetary responsibilities, directly
involved significant logistical and operational responsibility. One of Mr.
Castillo's most significant roles at American Airlines was that of Controller
for Dallas Fort Worth and Chicago Airports, which combined represented a $500
million dollar operation. Prior to that, Mr. Castillo spent six years with
Datapoint, a pioneer in networking technology. Mr. Castillo is a Certified
Public Accountant and earned a Masters in Business Administration in Finance and
Marketing from the University of Texas and his Bachelor of Business
Administration in Accounting from the University of Texas at San Antonio.
LARS KRAGH has been with the Company since its inception and has served
as Vice President - Research and Development Manager since January 1991. He is
directly involved in all research and development of the Company's products.
Prior to joining the Company, he developed turn-key network systems for banking
involving numerous system integrations with Reuters, Micrognosis and
international data carriers services. Also, Mr. Kragh developed an accounting
and ticketing system for SAS-Airlines and a substantial turn-key PC Network
Communication System for the shipping industry. In total, Mr. Kragh has
developed software for turn-key integrations that are utilized in the daily
operations of more than 300 international companies in Europe, the Far East and
the United States. Mr. Kragh holds a Masters of Science in Electrical
Engineering from the Danish University of Technology.
DR. JOHN HAVEN CHAPMAN has served as a Director of the Company since
May 1992. Dr. Chapman serves as Chairman of the Audit Committee and a member of
the Compensation Committee of the Board of Directors. Dr. Chapman has over
twenty years experience in the computer and telecommunication industries, and
presently serves as President of Strategic Financing Corporation and Strategic
Research Inc., which are involved in the development and financing of corporate
enterprises. His industry experience has included executive positions at Xerox
Corporation and Gartner Group, and he has served as the Executive Director and
is a Research Fellow of the Columbia Institute of Tele-Information at Columbia
University. Dr. Chapman is Managing Director of the Law & Economics Group in
Stamford, CT. In addition, he is Counsel to the Computer and Communications
Industry Association, an international trade association based in Washington,
DC. Dr. Chapman received his Engineering and English Degrees from Brown
University, his MBA in Management and Finance from the University of Southern
California, a Juris Doctor Degree from Boston University School of Law, and his
Ph.D. in Business Economics and Public Policy from Columbia University.
CRAIG M. SHUMATE has served as a Director of the Company since February
1994. Mr. Shumate is a manager and consultant serving firms in the securities
and investment industries, specializing in real-time electronic information
systems and services in support of financial trading. He is principal consultant
and founder of The Morris Group for Information Technology. Over the last 25
years, Mr. Shumate has served as VP Business Development for the publishing firm
of Waters Information Services, VP Marketing and Sales for the quote vendor
CQI/ComStock, VP Operations for the portfolio accounting service bureau of Shaw
Data Services, and SVP of the software/systems house R. Shriver Associates. Mr.
Shumate received his Engineering Degree from Cornell University and his Masters
Degree in Management from the Sloan School of Management at the Massachusetts
Institute of Technology.
CARL E. WARDEN has served as a Director of the Company since August
1993. Mr. Warden serves as Chairman of the Compensation Committee and a member
of the Audit Committee of the Board of Directors. Mr. Warden is the principal
founder of Sanifill, Inc. and a founder of Allwaste, Inc. From June 1989 through
January 1990, Mr. Warden was Chairman of the Board of Directors and Co-Chief
Executive Officer of Sanifill and Vice Chairman of the Board from February 1990
until February 1994.
4
<PAGE>
For more than five years prior thereto, Mr. Warden was a self-employed private
investor. Mr. Warden received his BBA from the Freeman School of Business at
Tulane University.
None of the Directors or Executive Officers has been involved in
material legal proceedings during the last five years in which he has been a
party adverse to or has had a material interest adverse to the Company.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The By-Laws of the Company (the "By-Laws") provide that the Company
shall have not less than two nor more than seven directors, with the exact
number to be fixed by the Board of Directors of the Company from time to time.
The Board of Directors of the Company presently consists of four members. A
total of four directors will be elected at the Meeting to serve, subject to the
provisions of the By-Laws of the Company, until the next annual meeting of the
Shareholders and until the election and qualification of their successors or
until their prior death, resignation or removal. All nominees are currently
directors of the Company. Management has no reason to believe that any of the
nominees will be unable or unwilling to serve as a director, if elected. Should
any nominee not be a candidate at the time of the Meeting (a situation which is
not now anticipated), proxies may be voted in favor of the remaining nominees
and may also be voted for a substitute nominee selected by the Board of
Directors.
The names of the nominees for director are John H. Chapman, Peter K.
Hansen, Craig M. Shumate and Carl E. Warden.
See "Management" for information regarding each of the nominees for
director.
The Board of Directors of the Company recommends a vote FOR the
above-named nominee directors of the Company. The proxy enclosed herewith will
be voted FOR the above-named nominee directors of the Company unless the
shareholder specifically votes against any or all of the nominee directors, or
abstains from voting on this matter.
DIRECTORS MEETINGS AND COMPENSATION
The Board of Directors meets on a regularly scheduled basis and met
five times during 1998. The Board of Directors has assigned certain
responsibilities to committees. The Audit Committee, which met once during 1998,
reviews, analyzes and makes recommendations to the Board of Directors with
respect to the Company's accounting policies, controls and statements and
coordinates with the Company's independent public accountants. The members of
the Audit Committee are John H. Chapman (Chairman) and Carl E. Warden. The
Compensation Committee, which met once during 1998, determines the amounts and
types of remuneration to be paid to management employees. The members of the
Compensation Committee are Carl E. Warden (Chairman), Peter K. Hansen and John
H. Chapman. From time to time, the members of the Board of Directors act by
unanimous written consent pursuant to the laws of the State of New York.
As compensation for their services as members of the Board of
Directors for 1996, 1997 and 1998 pursuant to a formula plan, each Board Member,
except Mr. Hansen, received warrants to purchase Common Stock of the Company.
Mr. Hansen received options to purchase Common Stock. The warrants and options
(exercisable into an aggregate of 67,500 shares and 22,500 shares of Common
Stock, respectively) vest in three equal portions on December 31, 1996, 1997 and
1998, so long as the director completes service for such respective years.
5
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain information, for the years
ended December 31, 1998, 1997 and 1996, respectively, concerning compensation
awarded to, earned by or paid to the chief executive officer of the Company and
(ii) the two most highly compensated executive officers of the Company other
than the CEO whose salary and bonus exceeded $100,000 with respect to the fiscal
year ended December 31, 1998 and who were employed by the Company on December
31, 1998 (the "Named Executive Officers"). Other than the CFO and Vice President
- - Research and Development of the Company, no other executive officer received
compensation in excess of $100,000 for the periods presented below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
Other Annual Securities All Other
Name and Salary Bonus Compensation Underlying Options Compensation
Principal Position Year ($) ($) ($) (Shares) ($) (g)
------------------ ---- --- --- --- -------- -------
<S> <C> <C> <C> <C>
Peter K. Hansen, 1998 $115,000 $ 6,075 (a) $1,732
President 1997 $115,000 $57,900 (a) 250,000 (b) $1,300
1996 $115,000 $41,900 (a) 22,500 (c) $ 466
Richard A. Castillo, 1998 $ 11,058 $ 7,500 (f) 30,000 (d)
Chief Financial Officer 1997 N/A
1996 N/A
Lars Kragh, 1998 $110,000 $5,000 $1,031
Vice President - 1997 $100,000 $2,000 100,000 (e) $ 896
Research and Development 1996 N/A
</TABLE>
(a) - Represents sales commissions.
(b) - Represents 250,000 options which vest ratably over five years at 50,000
per annum beginning on January 3, 1998. (c) - Represents options which vested on
July 29, 1997. (d) -Represents 30,000 options which vest ratably over three
years at 10,000 per annum beginning on November 4, 1999. (e) -Represents 100,000
options which vest ratably over five years at 20,000 per annum beginning on
January 3, 1998.
(f) - Represents relocation allowance.
(g) - Represents car allowance.
6
<PAGE>
STOCK OPTION GRANTS
The following table provides information with respect to the Named
Executive Officers concerning grants of stock options during the year ended
December 31, 1998.
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
Percentage of Total
Options Granted to
Employees in Per Share
Name Number of Options Granted Fiscal 1998 Exercise Price Expiration Date
---- ------------------------- ----------- -------------- ---------------
<S> <C> <C> <C> <C>
Peter K. Hansen - - -
Lars Kragh - - -
Richard A. Castillo 30,000 (1) 7.5% $7.00 November 4, 2008
</TABLE>
(1) - Represents options to purchase the Company's Common Stock granted on
November 4, 1998 at their then fair market value. The options granted
vest 10,000 each year beginning on November 4, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL PERIOD,
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Number of Securities Underlying Unexercised Value of Unexercised
Shares Unexercised Options at In-the-Money Options
Acquired on Value December 31 December 31, 1998 (1)
Name Exercise Realized (E) (U) (E) (U)
---- -------- -------- --- --- --- ---
Peter K. Hansen
<S> <C> <C> <C> <C> <C> <C>
OPTIONS - - 72,500 200,000 $323,400 $810,000
WARRANTS - - 7,500 25,000 $ 50,600 $ 65,600
Richard A. Castillo
OPTIONS - - - 30,000 - $ 60,000
Lars Kragh
OPTIONS - - 20,000 80,000 $ 90,000 $360,000
WARRANTS - - - - - -
</TABLE>
- -----------------
(E) - Exercisable
(U) - Unexercisable
(1) - Based on the December 31, 1998 closing price of $9.00 as
reported by AMEX.
7
<PAGE>
EMPLOYMENT AGREEMENT
In January 1991, the Company entered into a five-year employment
agreement with Peter Kilbinger Hansen, its President. In fiscal 1998, Mr.
Hansen's salary was $115,000 which base salary is to be reviewed on an annual
basis by the Compensation Committee. In addition, Mr. Hansen is entitled to
receive a sales commission on the gross sales of any products of the Company
which are sold through his direct sales efforts, which is equivalent to the
normal sales commission paid to all Company commission employees. During the
years ended December 31, 1998, 1997 and 1996, Mr. Hansen earned commissions of
$6,075, $57,900 and $41,900, respectively. In the event Mr. Hansen is terminated
by the Company without cause, he is entitled to receive an amount equal to four
times his then current base salary and prorated payment of any bonus, cash or
stock earned.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 13, 1998, the Company entered into a three year $3 million
line of credit agreement (the "Agreement") with a financial institution. The
debt is personally secured by Jerome Belson, a beneficial owner of more that 5%
of Company stock and Peter Kilbinger Hansen, the Company's president. In
consideration for securing the Agreement, Mr. Belson and Mr. Hansen received
150,000 and 25,000 warrants respectively, to purchase the Company's common stock
at $6.375 per share, which was the market value of the Company's common stock on
the date such warrants were issued.
On December 30, 1997, Peter Kilbinger Hansen and Lars Kragh, Vice
President - Research and Development, exercised 115,000 and 75,000 common stock
warrants, respectively, at an exercise price of $2.00 per share, by signing
promissory notes payable to the Company for $230,000 and $150,000 respectively.
The notes bear interest at the annual rate of 6%. The related amounts
outstanding from Mr. Hansen and Mr. Kragh at December 31, 1998 were $293,876 and
$159,049, respectively. At December 31, 1998, the Company had $50,000 receivable
from Mr. Hansen relating to an earlier exercise of 50,000 stock options and
$102,180 and $1,000 of advances receivable from Mr Hansen and Mr. Kragh,
respectively.
PROPOSAL NO. 2 - INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Arthur Andersen LLP, served as the Company's
independent public accountants for the year ended December 31, 1998. The Board
of Directors has selected Arthur Andersen LLP to serve as the independent public
accountants of the Company for the current year ending December 31, 1999. Such
firm has no other relationship to the Company. A representative of Arthur
Andersen LLP is expected to attend the Annual Meeting, and such representative
will have the opportunity to make a statement if he/she so desires and will be
available to respond to appropriate questions from shareholders.
PROPOSAL NO. 3 - APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED 1991
INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN
The Board of Directors proposes that the Amended And Restated 1991
Incentive And Nonqualified Stock Option Plan Amendment (the "Plan Amendment"),
whereby the number of Shares reserved for issuance pursuant to the exercise of
options granted under the Plan will be increased from 1,500,000 Shares of Common
Stock to 2,500,000 Shares of Common Stock, be approved.
On February 12, 1996 the Board of Directors of Trinitech Systems,
Inc. adopted certain amendments to the Company's 1991 Incentive Stock Option
Plan. The Amended And Restated 1991 Incentive And Nonqualified Stock Option Plan
(the "Plan") was approved at the 1996 Annual Meeting of Shareholders. On March
30, 1999 at a Special meeting of the Board of Directors, the Board voted to
increase the number of Shares reserved for issuance under the Plan to 2,500,000
Shares of Common Stock.
8
<PAGE>
Shares of Common Stock may be issued under the Plan upon exercise of incentive
stock options, as defined in Section 422 of the Internal Revenue Code (the
"Code"), and nonqualified stock options.
The Plan is intended to assist the Company in securing and retaining
key employees and non-employee directors by allowing them to participate in the
ownership and growth of the Company through the grant of incentive and
nonqualified stock options. The granting of such options serves as partial
consideration for and gives key employees and non-employee directors an
additional inducement to remain in the service of the Company and its
subsidiaries and provides them with an increased incentive to work towards the
Company's success.
The Board of Directors believes it is in the Company's and its
shareholders best interests to approve the Plan amendment because it would (i)
allow the Company to continue to grant options under the Plan which facilitates
the benefits of additional incentive inherent in the ownership of Common Stock
by key employees and non-employee directors and help the Company retain the
services of key employees and non-employee directors and (ii) enable
compensation received under the Plan to qualify as "performance-based" for
purposes of Section 162(m) of the Code.
The Plan currently authorizes the issuance of a maximum of 1,500,000
Shares of Company Common Stock pursuant to the exercise of options granted
thereunder. As of the date hereof, stock options to purchase 1,420,300 Shares of
Common Stock, at exercise prices ranging from $1.00 to $7.625 per share, vesting
over a one-to- three year period have been granted under the Plan, of which
363,500 have lapsed or have been exercised. No options have been heretofor
granted subject to shareholder approval of the Plan Amendment. Options to
purchase 207,500 Shares of Common Stock were exercised in 1998 and in 1999
through the Record Date. Options to purchase 1,056,800 Shares of Common Stock
were outstanding as of the date hereof. During the last completed fiscal year
and through the Record Date, options to purchase Shares of Common Stock have
been granted pursuant to the Plan to (i) the Named Executive Officers, (ii) all
current executive officers as a group and (iii) all employees, including all
current officers who are not executive officers, as a group, as follows (options
to purchase Shares of Common Stock have not been granted to any directors who
are not executive officers of the Company pursuant to the Plan):
Number of Options (1) (2)
Named Executive Officers 30,000
Executive Officers 30,000
Non-executive Officer Employee Group 371,700
(1) On the record date, the last reported sales price of the Common Stock as
reported on the AMEX was $6.75 per share.
(2) Information contained in this table is duplicative information contained
in "Executive Compensation" and does not signify additional grants of
options to purchase Shares of Common Stock.
Administration
The Plan is administered by the Compensation Committee (the
"Compensation Committee"), consisting of members of the Board of Directors
appointed by the Board of Directors. The Compensation Committee will select
individuals who will be granted options to purchase Shares of Common Stock under
the Plan and, subject to the provisions of the Plan, will determine the terms
and conditions and number of Shares of Common Stock subject to each such option.
The Compensation Committee will also make any other determinations necessary or
advisable for the administration of the Plan. The Plan will terminate on June
23, 2001, but may be terminated by the Board of Directors at any time before
that date.
Options
Upon the grant of an option to purchase Shares of Common Stock to an
employee or non-employee director, the Compensation Committee will fix the
number of Shares of the Company's Common Stock that the optionee may purchase
upon exercise of such option and the price at which the Shares may be purchased.
The option price for options shall not be less than 100% of the "fair market
value" of the
9
<PAGE>
Shares of Common Stock at the time such option is granted; provided, however,
that with respect to an incentive stock option in the case of an optionee, who,
at the time such option is granted, owns more than 10% of the voting stock of
the Company or its subsidiaries, then the purchase price per share shall be at
least 110% of the fair market value. "Fair market value" is deemed to be the
closing price of Shares of Common Stock on such date, on the AMEX. The aggregate
fair market value of Shares of Common Stock (determined at the time the
incentive option is granted) subject to incentive stock option plans of the
Company, and of the Company's subsidiaries (if any), and that become exercisable
for the first time by such key employee during any calendar year may not exceed
$100,000. Payment of the exercise price for Shares of Common Stock subject to
options may be made with cash, check or such other instrument as may be
acceptable to the Company. In order to assist an option holder with the
acquisition of Shares pursuant to the exercise of an option granted under the
Plan, the Committee may, in its discretion and subject to the requirements of
applicable statutes, rules and regulations, whenever, in its judgment, such
assistance may reasonably be expected to benefit the Company, authorize, either
at the time of the grant of the option or thereafter the extension of a loan to
the option holder by the Company. The Committee shall determine the terms of any
such loan, including the interest rate and other terms of repayment thereof.
Federal Income Tax Consequences
Incentive Stock Options. Incentive Stock Options granted under the
Plan are intended to be "incentive stock options" as defined by Section 422 of
the Code. Under present law, the grantee of an incentive stock option will not
realize taxable income upon the grant or exercise of the incentive stock option
and the Company will not receive an income tax deduction either at such time. If
the grantee does not sell the Shares acquired upon exercise of an incentive
stock option within either (i) two years after the grant of the incentive stock
option or (ii) one year after the date of exercise of the incentive stock
option, the gain upon a subsequent sale of Shares will be taxed as long-term
capital gain. If the grantee within either of the above periods, disposed of the
Shares acquired upon exercise of the incentive stock option, the grantee will
recognize as ordinary income an amount equal to the lesser of (i) the gain
realized by the grantee upon such disposition or (ii) the difference between the
exercise price at the fair market value of the Shares on the date of exercise.
In such event, the Company would be entitled to a corresponding income tax
deduction equal to the amount recognized as ordinary income by the grantee. The
gain in excess of such amount recognized by the grantee as ordinary income would
be taxed as a long-term capital gain or short-term capital gain (subject to the
holding period requirements for long-term or short-term capital gain treatment).
Unless the Shares subject to an incentive stock option are subject
to a risk of forfeiture at the time the option is exercised, the exercise of the
incentive stock option will result in the excess of the stock's fair market
value on the date of exercise over the exercise price being included in the
optionee's alternative minimum taxable income (AMTI). If the Shares are subject
to a risk of forfeiture and are nontransferable, the excess described above will
be included in the AMTI when risk of forfeiture lapses or the Shares become
transferable, whichever occurs sooner. Liability for the alternative minimum tax
is complex and depends upon an individual's overall tax situation. Before
exercising an incentive stock option, a grantee should discuss the possible
application of the alternative minimum tax with his/her tax advisor in order to
determine the tax's impact.
Non-Qualified Stock Options. Upon exercise of a non-qualified stock
option granted under the Plan, or upon exercise of an incentive stock option
that does not qualify for the tax treatment described above under "Incentive
Stock Options," the grantee will recognize ordinary income in an amount equal
the excess of fair market value of the Shares received over the exercise price
of such Shares. That amount increases the grantee's basis in the stock acquired
pursuant to the exercise of the non-qualified option. Upon subsequent sale of
the stock, the grantee will incur short-term or long-term gain or loss depending
upon his/her holding period for the Shares and upon the Shares' subsequent
appreciation or depreciation in the value. The Company will be allowed a federal
income tax deduction for the amount recognized as ordinary income by the grantee
upon the grantee's exercise of the option.
10
<PAGE>
Summary of Tax Consequences. The forgoing outline is no more than a
summary of the federal income tax provisions relating to the grant and exercise
of options under the Plan and the sale of Shares acquired under the Plan.
Individual circumstances may vary these results. The federal income tax laws and
regulations are constantly being amended, and each participant should rely upon
his/her own tax counsel for advice concerning the federal income tax provisions
applicable to the Plan.
The Board of Directors believes it is in the Company's best
interests to approve the Plan Amendment which would allow the Company to
continue to grant options under the Plan to secure for the Company the benefits
of the additional incentive inherent in the ownership of Shares of the Company's
Common Stock by key employees and non-employee directors and to help the Company
secure and retain the services of key employees and non-employee directors and
to enable compensation under the Plan to qualify as "performance-based" for
purposes of Section 162(m) of the Code. The affirmative vote of the holders of
record of a majority of the Shares of Common Stock present in person or by proxy
at the Meeting is required for approval of the Plan Amendment.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PLAN AMENDMENT.
The Company operates in a competitive environment and offers stock
options as a means of compensation to employees. The increased number of Shares
available for grant under the Plan will help to ensure that the Company will
continue to be able to recruit and retain qualified employees who can contribute
to the overall success of the Company and its shareholders.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended for presentation at the next
Annual Meeting of Shareholders and intended to be included in the Company's
Proxy Statement and form of proxy relating to that meeting must be received at
the offices of the Company no later than December 15, 1999.
OTHER MATTERS
The Board of Directors does not know of any matter, other than those
described above, that may be presented for action at the Meeting. If any other
matter or proposal should be presented and should properly come before the
meeting for action, the persons named in the accompanying proxy will vote upon
such matter or proposal in accordance with their best judgment.
The Annual Report for the fiscal year ended December 31, 1998,
including financial statements, is being mailed herewith. If, for any reason,
you did not receive your copy of the Annual Report, please advise the Company
and another will be sent to you.
By Order of the Board of Directors
Richard A.Castillo
Secretary
Trinitech Systems, Inc.
Stamford, Connecticut
April 30, 1999
<PAGE>
TRINITECH SYSTEMS, INC.
PROXY-ANNUAL MEETING OF STOCKHOLDERS-JUNE 7, 1999
The undersigned hereby constitutes and appoints PETER K. HANSEN, JOHN H.
CHAPMAN, CRAIG M. SHUMATE, and CARL E. WARDEN, and each of them, the attorneys
and proxies of the undersigned, with full power of substitution, to vote on
behalf of the undersigned all of the shares of Trinitech Systems, Inc. (the
"Company"), which the undersigned is entitled to vote at the Annual Meeting of
Stockholders of the Company, to be held at Stamford Harbor Park, 333 Ludlow
Street, Stamford, Connecticut 06902, at 10 o'clock in the morning, Eastern
Daylight Time, on Monday, June 7, 1999, and all adjournments thereof, upon the
following matters: (Continued, and to be signed and dated on the other side)
X Please mark your votes as indicated in this example
1. ELECTION OF DIRECTORS.
FOR all nominees listed (except as marked to the contrary.)
WITHHOLD AUTHORITY to vote for all nominees listed.
PETER K. HANSEN, JOHN H. CHAPMAN, CRAIG M. SHUMATE AND CARL E. WARDEN
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name on the space provided below.)
2. A proposal to rati fy the appointment of Arthur Andersen LLP as auditors
of the corporation for the year 1999.
/ / FOR / / AGAINST / /ABSTAIN
3. To approve an amendment to the Company's Amended And Restated 1991 Incentive
and Nonqualified Stock Option Plan (the "Plan") whereby the total number of
shares of the Company's Common Stock available for issuance under the Plan
will be increased to 2,500,000 shares from 1,500,000 shares.
/ / FOR / / AGAINST / /ABSTAIN
THIS PROXY IS SOLICITED ON BEHALF OF THE MANAGEMENT
Dated:__________________, 1999
_________________________________
(Signature of Shareholder)
Please sign as name appears hereon. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. Joint
tenants should both sign.
