SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No.)
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14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INTELLIGENT CONTROLS
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[LOGO] INCON(R)
INTELLIGENT CONTROLS
INTELLIGENT CONTROLS, INC.
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
June 6, 2001
Notice is hereby given that the Annual Meeting of Shareholders of
Intelligent Controls, Inc. will be held at the Holiday Inn Express, 352
North Street, Saco, Maine at 10:00 a.m. on Wednesday, June 6, 2001, to
conduct the following business:
1. To elect the Directors;
2. To ratify the appointment of Baker Newman & Noyes, LLP as
independent accountants to the Company for the current fiscal
year; and
3. To conduct any other business which may lawfully come before
said meeting.
A Proxy Statement describing these proposed actions accompanies this Notice
of Meeting.
Dated at Saco, Maine this 27th day of April, 2001.
INTELLIGENT CONTROLS, INC.
By: /s/ Gregory S. Fryer
-----------------------
Gregory S. Fryer, Clerk
NOTE: ALL SHAREHOLDERS ARE ENCOURAGED TO VOTE, DATE, AND SIGN THE PROXY
CARD ENCLOSED WITH THIS NOTICE AND THE ACCOMPANYING PROXY STATEMENT,
AND TO RETURN THE COMPLETED PROXY CARD IN THE ENVELOPE PROVIDED.
[LOGO] INCON(R)
INTELLIGENT CONTROLS
INTELLIGENT CONTROLS, INC.
74 Industrial Park Road
P.O. Box 638
Saco, Maine 04072
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 6, 2001
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Intelligent Controls, Inc. ("INCON"
or the "Company") for use at the 2001 Annual Meeting of Shareholders. The
Meeting will be held at the Holiday Inn Express Hotel, 352 North
Street/Interstate 95, Saco, Maine at 10:00 a.m. on Wednesday, June 6, 2001.
When properly executed and returned, the enclosed proxy will be voted
in accordance with the choices marked. If no choice is specified, the proxy
will be voted as recommended by the Board of Directors. A proxy may be
revoked at any time before it is voted. Shareholders may revoke their
proxies by delivering written notice to the Clerk of the Company prior to
the vote on a given matter, by submitting a later dated proxy at or before
the Meeting, or by voting in person at the Meeting.
The record date for determining shareholders entitled to vote at the
Meeting (and any adjournment thereof) is April 23, 2001. All shareholders
of record as of the close of business on that date will be entitled to cast
one vote per share. This Proxy Statement and the accompanying form of proxy
for the Meeting are first being mailed to shareholders on or around April
27, 2001.
A description of matters to be voted upon is set forth at pages 8 and
9 of this Proxy Statement. Certain information concerning share ownership,
management, and compensation appears below.
OWNERSHIP OF COMMON STOCK
As of April 12, 2001, there were 4,739,399 outstanding shares of
Intelligent Controls, Inc. common stock, the Company's only authorized
class of stock. Set forth below, as of such date, is information concerning
beneficial ownership of the Common Stock by directors and executive
officers of the Company and by each other person known to the Company to
beneficially own more than five percent of the outstanding shares. Except
as otherwise noted, all shares are owned directly.
Number of Shares Percent
Name Beneficially Owned of Class
- ---- ------------------ --------
Ampersand Specialty Materials and Chemicals III 1,638,462 34.6%
Limited Partnership and related entities (1)(6)
Charles D. Yie (2)(6) 1,654,462 34.8%
Alan Lukas (3)(6) 1,004,638 21.2%
Roger E. Brooks (4)(6) 519,673 11.0%
Paul E. Lukas (5)(6) 380,256 8.0%
George Hissong (7) 31,500
Paul F. Walsh (7) 33,000
Enrique Sales (8) 34,662
Dean Richards (9) 10,000
All directors and executive officers
as a group (7 persons) (10) 3,287,935 69.4%
<FN>
<F1> Ampersand Specialty Materials and Chemicals III Limited Partnership
and Ampersand Special Materials and Chemicals III Companion Fund
Limited Partnership own 1,612,247 and 26,215 shares, respectively.
These limited partnerships are herein referred to collectively as
"Ampersand." The other controlling persons of Ampersand include ASMC-
III MCLP LLP, Charles D. Yie, Richard A. Charpie, Peter D. Parker,
and Stuart A. Auerbach. The address of Ampersand and each controlling
person is 55 William Street, Suite 240, Wellesley, Massachusetts
02481.
<F2> Mr. Yie, a Director of INCON, is a General Partner of ASMC-III MCLP
LLP, which in turn is a controlling person of Ampersand. As a result,
he may be deemed to have beneficial ownership of the shares held by
Ampersand. His ownership also includes 16,000 shares purchasable by
him within the next 60 days under a stock option.
<F3> Alan Lukas is a Director and executive officer of INCON. His
ownership includes 892,583 shares owned directly, 10,000 shares
purchasable by him within the next 60 days under a stock option,
66,949 shares owned by his wife, and 35,106 shares held in trust for
his child. His address is c/o 74 Industrial Park Road, Saco, Maine
04072.
<F4> Mr. Brooks is a Director and executive officer of INCON. His address
is 74 Industrial Park Road, Saco, Maine 04072. His ownership includes
486,923 shares of restricted stock purchased from the Company upon
commencement of employment in May 1998, of which 128,125 shares are
currently subject to certain repurchase rights in favor of the
Company, 3,750 shares purchasable by him within the next 60 days
under a stock option, and 29,000 shares acquired by him through other
purchases. See "Restricted Stock Agreement with Mr. Brooks" at page 6
below. His address is c/o 74 Industrial Park Road, Saco, Maine 04072.
<F5> Paul Lukas' ownership includes 375,256 shares owned directly by him
and 5,000 shares purchasable by him within the next 60 days under a
stock option. His address is c/o 74 Industrial Park Road, Saco,
Maine 04072.
<F6> These persons may be deemed to have beneficial ownership over an
aggregate of 3,555,029 shares (75% of the outstanding shares), by
virtue of voting agreements contained in a Stockholders Agreement to
which each of them is a party. See "Stockholders Agreement" at page 7
below.
<F7> Messrs. Hissong and Walsh are non-employee Directors of INCON. Their
ownership includes, respectively, 25,000 and 33,000 shares
purchasable within the next 60 days under stock options.
<F8> Mr. Sales is an executive officer of INCON. His ownership includes
1,850 shares owned directly by him and 32,812 shares purchasable
within the next 60 days under a stock option.
<F9> Mr. Richards is an executive officer of INCON. His ownership includes
10,000 shares purchasable within the next 60 days under stock
options.
<F10> Includes 136,645 shares purchasable within the next 60 days under
stock options.
</FN>
THE BOARD OF DIRECTORS
The Directors of the Company are elected for one year terms at the
Annual Meeting of Shareholders. Set forth below is biographical information
for each member of the Company's Board of Directors.
ROGER E. BROOKS, age 56, became President, Chief Executive Officer,
and a Director of INCON in May 1998, upon completion of Ampersand's
investment in the Company. From April 1997 until May 1998, he was an
Executive in Residence with Ampersand Ventures. From 1984 to 1996, Mr.
Brooks served as a Director and President/CEO of Dynisco, Inc., an
instrumentation and equipment company. From 1977 to 1984, Mr. Brooks was a
Director, Executive Vice President/COO, and Vice President of Marketing &
Sales of Thermo Electric Co. Inc., a temperature measurement and control
products company. He is a Director of Moldflow Corporation.
ALAN LUKAS, age 50, founded INCON in 1978 and currently serves as its
Vice President of Product Development. He has served as a Director and
Chairman of the Board of the Company since its inception, and served as its
President/CEO until May 1998.
CHARLES D. YIE, age 42, is a General Partner of Ampersand Ventures, a
private equity/venture capital firm. He joined Ampersand Ventures'
predecessor firm in 1985, after having gained experience in systems
engineering and manufacturing at Hewlett-Packard. Mr. Yie currently serves
as a Director or Chairman of a number of public and private companies
affiliated with Ampersand Ventures. He became a Director of INCON in May
1998 and serves as Secretary and Treasurer of the Company.
GEORGE E. HISSONG, age 64, has been employed since 1989 by Hissong
Development Corporation, where he serves as Chairman and Treasurer. He also
is the owner of Mousam River Campground and President of Stafford Systems,
Inc. From 1978 to 1986, Mr. Hissong was Chairman and President of Energy
Sciences, Inc. He is a Trustee of the Kennebunk Light and Power District, a
Trustee of the Kennebunk Sewer District, and a Trustee of the Goodall
Hospital Foundation. Mr. Hissong was first elected a Director of INCON in
1996.
PAUL F. WALSH, age 51, is Chairman and CEO of Clareon Corporation, an
Internet based business to business payment engine. From September 1998
until March 2000, he was chairman and CEO of iDeal Partners and a
predecessor company. From 1995 to September 1998, Mr. Walsh served as
President and Chief Executive Officer of Wright Express Corporation, an
information and financial services company. From January 1990 to February
1995, Mr. Walsh was Chairman of BancOne Investor Services Corporation, a
financial services company. He was first elected a Director of INCON in
1996.
Ampersand, Mr. Brooks, Alan Lukas, his brother Paul E. Lukas, and
certain others are parties to a Stockholders Agreement dated as of May 1,
1998, under which each has agreed to vote his or its shares of stock (i) to
limit the size of the Company's Board of Directors to five Directors and
(ii) to elect as those Directors Mr. Yie, Mr. Lukas, the Chief Executive
Officer (Mr. Brooks), and one designee each of Ampersand and Mr. Lukas.
Other provisions of the Stockholders Agreement are described below. See
"Stockholders Agreement" at page 7.
Messrs. Hissong, Walsh, and Yie each receive director compensation as
follows: (i) cash payments of up to $500 per meeting ($300 per committee
meeting) and (ii) one-time grants of stock options for 20,000 shares each
as of August 14, 1998 at an exercise price of $2.00 per share, which
options vest in 16 equal increments over 4 years on a quarterly basis.
The Board of Directors has appointed a Compensation Committee,
responsible for reviewing the general compensation policies of the Company.
The Committee administers the Company's 1998 Employee Stock Option Plan and
provides assistance on such other compensation-related matters as the Board
or the President may request. The Committee presently consists of Messrs.
Yie, Hissong, and Walsh. The Committee met twice in 2000.
The Board of Directors has appointed an Audit Committee, which
presently consists of Messrs. Yie, Hissong, and Walsh. Its function is to
oversee the work of the Company's Controller and external accountants and
to assure the existence of an effective accounting system. The Committee
met once in 2000.
The Board of Directors held six meetings in 2000. Each Director was
present at 75% or more of the total number of Board and Committee meetings
he was eligible to attend in 2000.
EXECUTIVE COMPENSATION AND RELATED MATTERS
Set forth below is certain information concerning the compensation of
the Company's CEO and each of the other executive officers of the Company
who received more than $100,000 in annual compensation during 2000.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-term Compensation
-------------------------------------- -------------------------------------
Name and Other Annual Securities All Other
Principal Position Year Salary Bonus Compensation(1) Underlying Options Compensation(2)
- ------------------ ---- ------ ----- --------------- ------------------ ---------------
Roger E. Brooks (3) 2000 $200,100 $ 0 $ 0 15,000 $2,442
President and CEO 1999 $191,827 $ 0 $ 0 - $4,000
1998 $147,198 $48,948 $ 0 - $ 0
Alan Lukas 2000 $128,600 $ 0 $ 0 - $2,442
VP of Product 1999 $123,600 $ 0 $ 0 - $3,090
Development and 1998 $100,150 $27,624 $ 0 - $1,223
Chairman
Enrique Sales (4) 2000 $110,100 $ 0 $ 0 - $2,442
VP Sales and 1999 $110,000 $ 0 $ 0 5,000 $ 550
Marketing
Dean Richards (5) 2000 $104,139 $ 0 $ 0 5,000 $2,602
VP Manufacturing 1999 $ 63,131 $ 0 $ 0 20,000 $ 0
<FN>
<F1> The aggregate amount of such compensation does not exceed 10% of the
individual's salary plus bonus.
<F2> Includes Company contributions of $2,442 and $4,000 to Mr. Brooks
under the 401(k) Plan for 2000 and 1999, respectively. Mr. Brooks was
not eligible to participate in the Plan before 1999. Includes Company
contributions of $2,442, $3,090, and $1,223 to Mr. Lukas' account
under the 401(k) Plan for 2000, 1999, and 1998, respectively. Also
includes Company-paid premiums of $4,713 in each of 2000, 1999, and
1998 under a variable life insurance policy for Mr. Lukas. The policy
has a guaranteed minimum death benefit of $300,000. In the event of
Mr. Lukas' death, the Company would pay over to Mr. Lukas' estate the
net proceeds of the policy, after reimbursement of the Company's
premium cost. In the event of termination of Mr. Lukas' employment,
he would be entitled to ownership of the policy after reimbursing the
Company's premium cost. Includes $2,442 and $550 to Mr. Sales'
account under the 401(k) Plan in 2000 and 1999, respectively. Mr.
Sales was not eligible to participate in the Plan before 1999.
Includes $2,602 to Mr. Richards' account under the 401(k) Plan. Mr.
Richards was not eligible to participate in the Plan before 2000.
<F3> Mr. Brooks became an executive officer of INCON in May 1998. His 1998
salary amount includes payments made to him as a consultant from
February through April of 1998.
<F4> Mr. Sales became an executive officer of INCON in February 1999.
<F5> Mr. Richards became an executive officer of INCON in May 1999.
</FN>
OPTION GRANTS IN LAST FISCAL YEAR
Number of Securities % of Total Options Exercise
Underlying Options Granted to Employees or Base Expiration
Name Granted in Fiscal Year Price($/sh) Date
- ---- -------------------- -------------------- ----------- ----------
Roger E. Brooks 15,000 (1) 29.7% $1.94 5/1/10
Alan Lukas 0 - - -
Enrique Sales 0 - - -
Dean Richards 5,000 (2) 9.9% $1.44 6/19/10
<FN>
<F1> The options to Mr. Brooks become fully exercisable after May 1, 2004,
with 3,750 option shares becoming exercisable as of May 1, 2001, and
938 becoming exercisable as of August 1, 2001 and each third month
thereafter. Vesting of the options accelerates in the event of a
change in control (as defined).
<F2> The options to Mr. Richards become fully exercisable after June 19,
2004, with 1,250 option shares becoming exercisable as of June 19,
2001, and 313 becoming exercisable as of August 19, 2001 and each
third month thereafter. Vesting of the options accelerates in the
event of a change in control (as defined).
</FN>
2000 OPTION EXERCISES AND YEAR-END VALUES
Number of Securities
Underlying Unexercised Value of Unexercised In-The-
Options at FY-End Money Options at FY-End (1)
---------------------------- ----------------------------
Shares Acquired
Name on Exercise Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ----------- ------------- ----------- -------------
Roger E. Brooks - - 15,000 - -
Alan Lukas - 10,000 - - -
Enrique Sales - 26,250 28,750 - -
Dean Richards - 7,500 22,500 - -
<FN>
<F1> As of December 29, 2000 the fair market value of the Company's stock
as reported on the American Stock Exchange was $1.00. That amount is
less than the exercise prices of all options held by the named
executive officers. Therefore, none of such options was "in the
money."
</FN>
EMPLOYMENT AGREEMENT WITH MR. BROOKS
Under his Employment Agreement, Mr. Brooks receives salary at the
base rate of $175,000 per year (subject to cost of living adjustments and
to future salary increases approved by the Board of Directors) and a $600
per month car allowance. Mr. Brooks is also entitled to annual bonuses
through the Company's bonus pool. The Company may terminate Mr. Brooks'
employment at any time, with or without cause. In the event of a
termination without cause, Mr. Brooks will be entitled to between 6 and 12
months' severance compensation, at a rate equal to his then current salary,
plus continued participation in Company health insurance and other benefits
during such period. The initial term of the agreement ran through June 30,
2000, subject to automatic renewal for successive one-year terms unless
either Mr. Brooks or the Company gives notice to the contrary at least 90
days before the renewal date.
RESTRICTED STOCK AGREEMENT WITH MR. BROOKS
In May 1998 INCON sold Mr. Brooks 486,923 shares of common stock at a
price of $3.25 per share. He paid for these shares by delivering a
promissory note for $1,332,500 and cash in the amount of $250,000. The
promissory note from Mr. Brooks bears interest at 5.69% per annum.
Principal and interest under the note become payable in 5 years, except
that Mr. Brooks' payment obligation may be accelerated if his employment
with the Company terminates for any reason. In such event, the note becomes
due within either 90 days or one year, depending on the reason for
termination of employment. The purchased shares serve as collateral for the
note, and are pledged to the Company. Mr. Brooks' personal liability on the
note is limited to $200,000 plus the value of the purchased shares, all of
which shares are pledged to the Company as collateral.
The Company has the right (but not the obligation) to repurchase some
of the shares from Mr. Brooks at the initial purchase price of $3.25 per
share. Initially, the repurchase right extended to all of the shares except
76,923 (representing the number of shares for which Mr. Brooks paid cash at
the time of the purchase). The repurchase right lapses as to 25,625 shares
for every three months of continued employment (representing 1/16th of the
remaining shares); if Mr. Brooks is still employed by the Company on May 1,
2002, the repurchase right will have lapsed entirely. In addition, the
repurchase right will lapse as to 102,500 shares if Mr. Brooks' employment
terminates due to death or disability or if the Company terminates Mr.
Brooks' employment without cause (as defined under his Employment
Agreement). The repurchase right will also lapse in its entirety in the
event of a "change in control" of the Company (as defined).
EMPLOYMENT AGREEMENT WITH MR. LUKAS
Under his Employment Agreement, Mr. Lukas receives salary at the base
rate of $120,000 per year for his services as Vice President for Product
Development (subject to cost of living adjustments and to future salary
increases approved by the Board of Directors) and a $30,000 per year
retainer for his services as Chairman and a Director. Mr. Lukas is also
entitled to annual bonuses through the Company's bonus pool. The Company
may terminate these arrangements with Mr. Lukas at any time, with or
without cause. In the event of a termination by the Company without cause,
Mr. Lukas would be entitled to (i) between 6 and 12 months' severance
compensation, at a rate equal to his then current salary, plus continued
participation in Company health insurance and other benefits during such
period and (ii) continued payment of his $30,000 retainer and health
insurance benefits through June 30, 2003, in return for up to 400 hours of
consulting services to the Company per year.
APOLLO DEVELOPMENT LEASE
The Company leases a 13,000 square foot facility from a corporation
owned in part by Alan Lukas. This facility is used primarily for corporate
office space. The lease expires November 1, 2003 and is renewable, at the
Company's option, for an additional one-year term. The Company also has the
right to purchase this facility in 2003 at its then fair market value,
subject to a specified minimum price of $550,000. The current rent is
approximately $69,000 per year (exclusive of utilities, taxes, and
insurance and is subject to an automatic increase of 3% per year. The
Company believes that the rent under this lease is reasonable in relation
to prevailing rents for comparable industrial or commercial space.
Presently, the rental payments on the building exceed the landlord
corporation's monthly payments on its underlying mortgage loan; Alan Lukas'
profits from this arrangement currently amount to less than $6,000 per
year.
AMPERSAND INVESTMENT AGREEMENT
The Company is a party to an Investment Agreement with Ampersand
Specialty Materials and Chemicals III Limited Partnership and Ampersand
Specialty Materials and Chemicals III Companion Fund Limited Partnership,
which in May 1998 purchased a total of 1,638,462 shares of INCON common
stock from the Company at a price of $3.25 per share (an aggregate purchase
price of $5,325,001). The agreement provides Ampersand a right of first
refusal on future sales of INCON stock to third parties, and provides
Ampersand and Mr. Brooks with rights to require registration of their
shares to permit resales of stock by them. Under the agreement, Ampersand
and Mr. Brooks also have a right (the "put" right) to require the Company
to repurchase their shares. This right is triggered if (i) the Company
receives a bona fide offer from an unaffiliated third party to acquire
INCON in a transaction that values the common stock at more than $10 per
share and (ii) Ampersand endorses the offer but the Company declines to
accept the offer. The Company would thereafter be required to purchase the
stock of Ampersand and Mr. Brooks at a price equivalent to the third
party's offer. The Company would thereafter be required to purchase the
stock of Ampersand and Mr. Brooks at a price equivalent to the third
party's offer.
STOCKHOLDERS AGREEMENT
The Company, Ampersand, Mr. Brooks, Alan Lukas, Paul E. Lukas, and
certain related parties have entered into a Stockholders Agreement
restricting the voting and transfer of shares of INCON common stock owned
by each. The shares owned by these stockholders currently represents
approximately 75% of the outstanding INCON stock.
The stockholders who are parties to the Stockholders Agreement have
agreed to vote their shares (i) to limit the size of the Company's Board of
Directors to five Directors and (ii) to elect as those Directors Mr. Yie,
Alan Lukas, the Chief Executive Officer (Mr. Brooks), and one designee each
of Ampersand and Alan Lukas. These stockholders have also agreed to vote
their shares in such a way that Ampersand will be able to block certain
significant transactions opposed by it, such as financing transactions
exceeding $5 million or a merger or other sale of the Company. In the event
the "put" right of Ampersand and Mr. Brooks is triggered as described
above, these stockholders agree to vote their shares in such a way as to
increase the size of the Board of Directors by two Directors, and to elect
two nominees of Ampersand to fill those positions. Moreover, for a period
of five years, these stockholders agree not to make open-market purchases
of INCON common stock and not to initiate or assist in proxy solicitations,
except with prior written consent from INCON's Board of Directors. These
stockholders have also granted each other certain rights of first refusal
to purchase shares that a stockholder proposes to sell to a third party;
and to grant each other certain co-sale rights to participate in sales of
stock to a third party.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Securities Exchange Act of 1934, certain
persons associated with the Company (directors, executive officers and
beneficial owners of more than 10% of the outstanding common stock) are
required to file with the Securities and Exchange Commission and the
Company various reports disclosing their ownership of Company securities
and changes in such ownership. In 2000, Mr. Alan Lukas filed a corrected
report for 200 previously unreported shares that he acquired in 1995 and
for 49 shares that he previously disposed of by gift in 1998, and Mr. Roger
E. Brooks filed three late reports for the acquisition of a total of 13,000
shares of the Company's stock during the year. None of these transactions
gave rise to short-swing trading profits. To the Company's knowledge, all
other requisite reports for 2000 were filed in a timely manner.
AUDIT COMMITTEE REPORT
The Audit Committee of the Company consists of three directors. All
members are independent and financially literate as defined in the American
Stock Exchange listing standards. The Charter adopted by the Audit
Committee is reproduced as Exhibit A to this Proxy Statement.
George E. Hissong, as the representative for the Audit Committee,
held quarterly meetings with the Company's independent public accountant,
PricewaterhouseCoopers, LLP ("PWC"), to discuss the overall scope and plans
for the Company's audit, the results of PWC's examinations, the evaluations
of the Company's internal controls, and the overall quality of the
Company's financial reports.
The entire Audit Committee met and discussed with PWC the matters
required to be discussed by Statement on Auditing Standards No. 61
Communication with Audit Committees. The Audit Committee also discussed
with PWC the auditors' independence from the Company and its management,
including the matters in the written disclosures required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit
Committees). In addition, the Audit Committee reviewed the fees paid by the
Company to PWC for the year ended December 31, 2000. During that year, the
Company paid PWC a total of $53,456 for audit fees. No amounts were paid
for financial systems design and implementation.
Based upon the review and discussions referred to above, the Audit
Committee recommended to the Board of Directors, and all members of the
Board have approved, that the audited financial statements of the Company
be included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 2000 for filing with the Securities and Exchange
Commission.
SUBMITTED BY THE AUDIT COMMITTEE
OF THE COMPANY'S BOARD OF DIRECTORS
Charles D. Yie, George E. Hissong, and Paul F. Walsh
SUMMARY OF ACTIONS TO BE TAKEN
Set forth below is a summary of matters to be voted upon by
shareholders at the Meeting. The Company has been advised that Ampersand
and each of the Directors of the Company intend to vote their shares in
favor of these matters, in which case each matter will receive a vote
sufficient to assure its approval.
ELECTION OF DIRECTORS
The Company's Articles of Incorporation provide for a Board of
Directors of not fewer than three nor more than nine members, as from time
to time determined by resolution of the Board of Directors or by the
shareholders. Directors are elected at each Annual Meeting of Shareholders
for one year terms.
A resolution will be offered at the Meeting to establish the number
of Directors at five and to re-elect the following five persons as
Directors:
Alan Lukas, George E. Hissong, Paul F. Walsh,
Charles D. Yie, and Roger E. Brooks
The foregoing individuals have each consented to be named as nominees and
to serve as Directors if elected. Biographical information concerning these
individuals appears at page 3 above.
The Company's Articles of Incorporation allow for cumulative voting
in the election of Directors. A shareholder may require cumulative voting
by giving the Company notice of his or her intention to do so. Notice must
be received prior to voting on Directors. Under cumulative voting, each
holder has the right to as many votes as equals the number of Directors to
be elected, multiplied by the number of shares owned by such holder. The
effect of cumulative voting would be to ensure that the holders of more
than one-sixth of the outstanding shares could (by cumulating their votes)
elect at least one of five Directors of the Company.
Regardless of whether votes are to be cumulated, each Director
position will be filled by plurality vote. Abstentions and broker non-votes
will not affect the tally of votes cast in the election. (A broker non-vote
occurs when a broker, or other fiduciary, votes on at least one matter but
lacks authority to vote on another matter.)
The Board of Directors recommends a vote "for"
the election of each of the nominees listed above.
RATIFICATION OF ACCOUNTANTS
The Company has recently appointed Baker Newman & Noyes, LLC as the
Company's independent public accountants for the fiscal year ending
December 31, 2001. The decision to change auditors was made with the
knowledge and approval of all members of the Board of Directors.
The shareholders will be asked to ratify the appointment of Baker
Newman & Noyes, LLC as the Company's independent accountants for the fiscal
year ending December 31, 2001. One or more representatives of Baker Newman
& Noyes will be present at the Meeting, will have an opportunity to make a
statement to the Meeting if they desire to do so, and will be available to
respond to appropriate questions.
The Board of Directors recommends a vote "for"
ratification of the appointment of Baker Newman & Noyes, LLC.
OTHER MATTERS
All expenses of this solicitation will be borne by the Company. No
person will receive any additional compensation for soliciting proxies from
any shareholder. In addition to use of the mails, proxies may be solicited
directly, or by telephone or other means, by Company employees. The Company
will reimburse brokerage firms, custodians, nominees, and fiduciaries in
accordance with American Stock Exchange rules for the reasonable expenses
of forwarding proxy materials to beneficial owners.
At the date of this Proxy Statement, Management knows of no other
matters that are to be brought before the Meeting. However, if any matters
other than those set forth in the accompanying Notice should properly come
before the Meeting, the persons named in the enclosed proxy will vote the
proxies on such matters in their discretion.
To be eligible for inclusion in the proxy materials for the 2002
Annual Meeting, a shareholder proposal must be received by the Company in
proper written form by December 28, 2001. Any such proposals should be
addressed to the attention of the Board of Directors.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Gregory S. Fryer
Gregory S. Fryer, Clerk
Exhibit A
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INTELLIGENT CONTROLS, INC.
Audit Committee Charter
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I. General Statement of Purpose
The Audit Committee of the Board of Directors (the "Audit Committee")
of Intelligent Controls, Inc. (the "Company") assists the Board of
Directors (the "Board") in general oversight and monitoring of management's
and the independent auditor's participation in the Company's financial
reporting process and of the Company's procedures for compliance with legal
and regulatory requirements. The primary objective of the Audit Committee
in fulfilling these responsibilities is to promote and preserve the
integrity of the Company's financial statements and system of internal
controls and the independence and performance of the Company's external
independent auditor.
II. Audit Committee Composition
The Audit Committee shall consist of at least three members who shall
be appointed annually by the Board and shall satisfy the qualification
requirements set forth in Rule 4310 of the Marketplace Rules of the
National Association of Securities Dealers, Inc. The Board shall designate
one member of the Audit Committee to be Chairman of the committee.
III. Meetings
The Audit Committee generally is to meet at least once per year in
person or by telephone conference call, with any additional meetings as
deemed necessary by the Audit Committee.
IV. Audit Committee Activities
The principal activities of the Audit Committee will generally
include the following:
A. Review of Charter
* Review and reassess the adequacy of this Charter annually and
submit it to the Board for approval.
B. Audited Financial Statements and Annual Audit
* Review the overall audit plan (both external and internal) with
the independent auditor and the members of management who are
responsible for maintaining the Company's accounts and preparing
the Company's financial statements, including the Company's Chief
Financial Officer and/or principal accounting officer or principal
financial officer (the Chief Financial Officer and such other
officer or officers are referred to herein collectively as the
"Senior Accounting Executive").
* Review and discuss with management (including the Company's Senior
Accounting Executive) and with the independent auditor:
(i) the Company's annual audited financial statements,
including any significant financial reporting issues which
have arisen in connection with the preparation of such
audited financial statements;
(ii) the adequacy of the Company's internal financial reporting
controls that could significantly affect the integrity of
the Company's financial statements;
(iii) major changes in and other questions regarding accounting
and auditing principles and procedures; and
(iv) the effectiveness of the Company's internal audit process
(including evaluations of its Senior Accounting Executive
and any other relevant personnel.
* Review and discuss with the independent auditor (outside the
presence of management) how the independent auditor plans to
handle its responsibilities under the Private Securities
Litigation Reform Act of 1995, and receive assurance from the
auditor that Section 10A of the Private Securities Litigation
Reform Act of 1995 has not been implicated.
* Review and discuss with the independent auditor (outside of the
presence of management) any problems or difficulties that the
auditor may have encountered with management or others and any
management letter provided by the auditor and the Company's
response to that letter. This review shall include considering:
(i) any difficulties encountered by the auditor in the coarse
of performing its audit work, including any restrictions on
the scope of its activities or its access to information;
and
(ii) any changes required by the auditor in the scope or
performance of the Company's internal audit.
* Review and discuss major changes to the Company's auditing and
accounting principles and practices as may be suggested by the
independent auditor or management.
* Discuss with the independent auditor such issues as may be brought
to the Audit Committee's attention by the independent auditor
pursuant to Statement on Auditing Standards No. 61 ("SAS 61").
* Based on the Audit Committee's review and discussions (1) with
management of the audited financial statements, (2) with the
independent auditor of the matters required to be discussed by SAS
61, and (3) with the independent auditor concerning the
independent auditor's financial statements should be included in
the Company's Annual Report on Form 10-KSB.
* Request that the independent auditor provide the Audit Committee
with the written disclosures and the letter required by
Independence Standards Board Standard No. 1, and review and
discuss with the independent auditor the independent auditor's
independence.
* Prepare the Audit Committee report required by Item 306 of
Schedule 14A of the Securities Exchange Act of 1934 (or any
successor provision) to be included in the Company's annual proxy
statement.
C. Unaudited Quarterly Financial Statements
* Review and discuss with management and the independent auditor the
Company's quarterly financial statements. Such review shall
include discussions by the Audit Committee or one of its members
with the independent auditor of such issues as may be brought to
the Audit Committee's attention by the independent auditor
pursuant to Statement on Auditing Standards No. 71.
D. Matters Relating to Selection, Performance and Independence of
Independent Auditor
* Recommend to the Board the appointment of the independent auditor.
* Instruct the independent auditor that the independents auditor's
ultimate accountability is to the Board and the Audit Committee as
representatives of the Company's shareholders.
* Evaluate on an annual basis the performance of the independent
auditor and , if necessary in the judgment of the Audit Committee,
recommend that the Board replace the independent auditor.
* Recommend to the Board on an annual basis the fees to be paid to
the independent auditor.
* Require that the independent auditor provide the Audit Committee
with periodic reports regarding the auditor's indepencence, which
reports shall include but not be limited to a formal written
statement setting forth all relationships between the independent
auditor and the Company or any of its officers or directors. The
Audit Committee shall discuss such reports with the independent
auditor, and if necessary in the judgment of the Audit Committee,
the committee shall recommend that the Board take appropriate
action to ensure the independence of the auditor or replace the
auditor.
E. Matters Relating to the Independence of the Audit Committee
* Periodically review the independence of each member of the Audit
committee and promptly bring to the attention of management and
the Board any relationships or other matters that may in any way
compromise or adversely affect the independence of any member of
the Audit Committee or any member's ability to assist the Audit
Committee in fulfilling its responsibilities under this Charter,
including any such relationship or other matter that may have
caused or may in the future cause the Company to fail to comply
with the requirements set forth in Rule 4310 of the Marketplace
Rules of the National Association of Securities Dealers, Inc.
F. General
* The Audit Committee may be requested by the board to review or
investigate on behalf of the Board activities of the Company or of
its employees, including compliance with laws, regulations or
Company policies.
* As necessary, monitor the activities of the Company's legal
counsel, including periodic reviews with such counsel regarding
material legal matters and the Company's legal compliance.
* Provide oversight of the Company's implementation of an ethics
policy and of the process established to insure compliance with
such policy.
* Perform such other oversight functions as may be requested by the
Board.
* In performing its responsibilities, the Audit Committee shall be
entitled to rely upon advice and information that it receives in
its discussions and communications with management and the
independent auditor. The Audit Committee shall have the authority
to retain special legal, accounting or other professionals to
render advice to the committee. The Audit Committee shall have
the authority to request that any officer or employee of the
Company, the Company's outside legal counsel, the Company's
independent auditor or any other professional retained by the
Company to render advice to the Company attend a meeting of the
Audit Committee or meet with any members of or advisors to the
Audit Committee.
* Not withstanding the responsibilities and powers of the Audit
Committee set forth in this Charter, the Audit Committee does not
have the responsibility of planning or conducting audits of the
Company's financial statements or determining whether or not the
Company's financial statements are complete, accurate and in
accordance with generally accepted accounting principles. Such
responsibilities are the duty of management and, to the extent of
the independent auditor's audit responsibilities, the independent
auditor. It also is the duty of the Audit Committee to resolve
disagreement, if any, between management and the independent
auditor or to ensure compliance with laws, regulations or Company
policies.
INTELLIGENT CONTROLS, INC.
PROXY
(Solicited by the Board of Directors)
The undersigned appoints Alan Lukas and Roger E. Brooks, or either of them,
proxies with full power of substitution, to represent and vote all shares
of Common Stock of Intelligent Controls, Inc. held by the undersigned, at
the Annual Meeting of Shareholders to be held June 6, 2001, or any
adjournment thereof.
1. TO FIX THE NUMBER OF DIRECTORS AT FIVE AND TO ELECT THE FOLLOWING
NOMINEES TO THE BOARD OF DIRECTORS:
Alan Lukas, Roger E. Brooks, George E. Hissong, Paul F. Walsh, Charles D.
Yie
(To withhold authority for one or more nominees, cross out his name or
their names)
2. TO RATIFY THE APPOINTMENT OF BAKER, NEWMAN & NOYES LLC AS INDEPENDENT
ACCOUNTANTS TO THE COMPANY FOR THE 2001 FISCAL YEAR
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, upon such other matters as may properly come
before the Meeting.
This proxy, when properly executed, will be voted in the manner directed
hereby by the undersigned shareholder. If no direction is made, this proxy
will be voted "FOR" the nominated directors and "FOR" proposal 2. The
undersigned hereby revokes any proxy previously given and acknowledges
receipt of the Notice of, and Proxy Statement for, the aforesaid Meeting.
Dated: _______________________, 2001
Signature __________________________
Signature __________________________
Personal representatives, custodians, trustees, partners, corporate
officers, and attorneys-in-fact should add their titles as such.
PLEASE VOTE AND DATE THIS PROXY, SIGNING IT AS YOUR NAME APPEARS ABOVE AND
RETURN THE PROXY IN THE ENVELOPE PROVIDED.