SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section
14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for the Use of the Commission
Only (as permitted by rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c)
or 240.14a-12
ACCENT COLOR SCIENCES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
/X/ No fee required
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-
6(i)(1), 14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / Fee computed on table below per Exchange Act
Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which
transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
/ / Fee paid previously by written preliminary
materials.
/ / Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously.
Identify the previous filing by
registration statement number, or the Form or Schedule and the
date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
ACCENT COLOR SCIENCES, INC.
800 Connecticut Boulevard
East Hartford, CT 06108
April 1, 1998
Dear Shareholder:
You are cordially invited to attend the fifth Annual Meeting
of Shareholders of Accent Color Sciences, Inc. on Friday, May 8,
1998, at 10:30 a.m. at the offices of the Company. As part of
this year's Annual Meeting, you will have an opportunity to hear
a report on the operations of the Company, as well as ask
questions that you might have about Accent Color.
There are several important matters on the agenda for the
meeting. Your vote is important, regardless of the number of
shares that you hold. We would appreciate it if you would
promptly execute and return the proxy card enclosed with this
material.
Sincerely,
Richard J. Coburn
Chairman of the Board
Norman L. Milliard
President and Chief Executive Officer
Enclosures
ACCENT COLOR SCIENCES, INC.
800 Connecticut Boulevard
East Hartford, CT 06108
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 1, 1998
To the Shareholders of
Accent Color Sciences, Inc.:
The Annual Meeting of Shareholders of Accent Color Sciences,
Inc. will be held at the offices of the Company, at 800
Connecticut Boulevard, East Hartford, Connecticut on Friday,
May 8, 1998, at 10:30 a.m., local time, for the following
purposes:
1. To elect three directors (two Class 2 directors and
one Class 1 director);
2. To ratify the sale and issuance by the Company of
4,500 shares of the Company's Series B Convertible
Preferred Stock, no par value (the "Series B Stock"),
and to approve the issuance by the Company of shares of
the Company's Common Stock, no par value (the "Common
Stock"), upon the conversion of or otherwise pursuant to
the terms of the Series B Stock;
3. To approve an amendment to the Company's Restated
Certificate of Incorporation increasing the number of
authorized shares of the Company's Common Stock from
25,000,000 shares to 35,000,000 shares;
4. To approve amendments to the Company's 1995 Stock
Incentive Plan increasing the number of shares of Common
Stock issuable thereunder from 1,500,000 shares to
2,000,000 shares and extending the eligibility
provisions to cover all employees;
5. To approve the selection by the Board of Directors of
Price Waterhouse LLP as the Company's auditors for the
year ending December 31, 1998;
6. To transact such other business as may properly come
before the meeting or any adjournments or postponements
thereof.
Only shareholders of record at the close of business on
March 20, 1998, will be entitled to notice of and to vote at the
Annual Meeting or any adjournments or postponements thereof.
Shareholders may vote in person or by proxy. The stock transfer
books of the Company will not be closed.
By order of the Board of Directors
Willard F. Pinney, Jr.
Secretary
* * * * * * * * * * * * * * * * * * * * * * * * * * * *
IMPORTANT
It is important that your shares be represented at the Annual
Meeting. Please sign,
date and return the enclosed proxy card promptly in order that
your shares will be
voted at the Annual Meeting. A return envelope which requires no
postage if
mailed in the United States is enclosed for your convenience.
* * * * * * * * * * * * * * * * * * * * * * * * * * * *
PROXY STATEMENT
GENERAL INFORMATION
This proxy statement is furnished in connection with
the solicitation of proxies by the Board of Directors of
Accent Color Sciences, Inc. (the "Company") to be used in
voting at the Annual Meeting of Shareholders of the
Company to be held on Friday, May 8, 1998, and at any
adjournments or postponements thereof (the "Annual
Meeting"). The close of business on March 20, 1998, is
the record date for determining shareholders entitled to
notice of and to vote at the Annual Meeting. At such
record date, there were outstanding 11,989,855 shares of
the Company's common stock, no par value ("Common
Stock"), each of which is entitled to one vote on each
matter to be presented before the shareholders of the
Company, and 4,500 shares of the Company's Series B
Convertible Preferred Stock no par value (the "Series B
Stock"). Holders of Series B Stock vote together with
holders of Common Stock as a single class (unless
otherwise required by law). As of the record date, the
holders of Series B Stock were entitled to 1,287,667
votes, being the number of shares of Common Stock into
which the Series B Stock was then convertible (giving
effect to certain limitations on conversion of the Series
B Stock contained in the Company's Restated Certificate
of Incorporation). This Proxy Statement, the
accompanying form of proxy and the 1997 Annual Report to
Shareholders are being first sent to shareholders on or
about April 1, 1998.
VOTING
Shares may be voted by shareholders of record in
person or by proxy, and shares represented by a properly
executed proxy will be voted with respect to all shares
represented by it in accordance with the instructions, if
any, given therein. If no instructions are given, the
proxy will be voted as recommended by the Board of
Directors and, in the discretion of the persons
designated on the proxy card, the proxy will be voted
with respect to any other matter which may properly come
before the meeting or any adjournments or postponements
thereof.
Any proxy received by the Board of Directors may be
revoked by the shareholder at any time prior to its use
at the meeting by a subsequent written instrument signed
in the same manner as the proxy and received by the
Company either at the Annual Meeting or before the Annual
Meeting at Accent Color Sciences, Inc., 800 Connecticut
Boulevard, East Hartford, Connecticut 06108 Attention:
Secretary.
Under Connecticut law and the governing instruments
of the Company, the presence, either in person or by
proxy, of the holders of shares representing a majority
of the votes entitled to be cast on a matter to be
considered at the Annual Meeting is necessary to
constitute a quorum for the transaction of business with
respect to that matter. Assuming the presence of a
quorum, directors will be elected by a plurality of the
votes cast at the Annual Meeting by shareholders entitled
to vote in the election. Approval of each of the other
proposals set forth in the Notice of the meeting and
approval of any other matters voted on at the Annual
Meeting will be achieved if the votes cast in favor of
the proposal exceed the votes cast against the proposal.
All matters to be considered at the Annual Meeting
will be voted upon by holders of Common Stock and Series
B Stock, voting together as a single class, except that,
pursuant to Connecticut law, holders of Common Stock will
also vote, as a separate class, on the proposed amendment
increasing the authorized number of shares of Common
Stock of the Company discussed in Item 3 below.
An inspector of election will tabulate all votes cast
at the Annual Meeting. For purposes of the foregoing
voting requirements, the inspector of election will treat
shares represented by proxies that withhold authority to
vote for a nominee for election as a director or that
reflect abstentions as shares that are present and
entitled to vote on the matters for purposes of
determining the presence of a quorum, but neither proxies
that withhold authority (without naming an alternative
nominee) nor abstentions will be counted as votes cast at
the Annual Meeting. Accordingly, such proxies will not
have any effect on the outcome of the voting on the
election of directors, or the approval of the other
proposals. In the event that any other matters are
submitted to shareholders at the Annual Meeting,
abstentions will have no impact on the voting with
respect to those matters.
Shares represented at the Annual Meeting that are
held by brokers or nominees as to which instructions have
not been received from the beneficial owners or persons
entitled to vote and over which the broker or nominee
does not have discretionary voting power on a particular
matter (so-called, "broker non-votes") will be treated as
present for purposes of determining the presence of a
quorum. However, such shares will not be treated as
shares that are entitled to vote on the particular matter
as to which the broker or nominee does not have
discretionary authority, nor will they be treated as
votes cast at the Annual Meeting. Accordingly, broker
non-votes will have no impact on the voting with respect
to any matter to come before the Annual Meeting.
SOLICITATION
The cost of this solicitation will be borne by the
Company. Solicitation will be made by use of the mails,
except that, if necessary, directors, officers and
regular employees of the Company (none of whom will
receive any additional compensation therefor) may make
solicitations of proxies by telephone, telecopy, telegram
or personal interview. The Company may also engage a
proxy soliciting firm at the Company's expense. The
Company will reimburse brokers and other persons holding
shares of Common Stock in their names, or in the names of
nominees, for their expenses incurred in sending proxy
materials to beneficial owners and obtaining their
proxies.
ITEM 1. ELECTION OF DIRECTORS
INFORMATION ON NOMINEES
The Company's Restated Certificate of Incorporation
provides for three classes of directors, with each class
to serve a term of three years. The Board is presently
composed of seven directors, two of whom are members of
Class 1, two of whom are members of Class 2 and three of
whom are members of Class 3. The current terms of the
members of Class 2 and one member of Class 1, Charles E.
Buchheit, are scheduled to expire at this Annual Meeting.
The Board has nominated for re-election as Class 2
directors the two persons who are now serving as Class 2
directors of the Company and Mr. Buchheit as a Class 1
director.
The two Class 2 nominees standing for election at
this Annual Meeting are Joseph T. Brophy and Richard
Hodgson. If elected, their terms will expire in 2001.
The term of Mr. Buchheit, if elected as a Class 1
director, will expire in 2000. Biographical summaries of
each nominee and of the continuing directors appear
below.
All nominees have consented to be so named and to
serve if elected. If a nominee becomes unavailable for
election, it is the intention of the persons named in the
accompanying proxy card to vote for such other person, if
any, as the Board of Directors may designate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF EACH OF THE FOLLOWING NOMINEES:
Nominees
For Class 2 directors, whose terms expire in 2001:
Joseph T. Brophy, age 64, became a director of the
Company in March 1998 upon his election by the Board of
Directors of the Company to fill a vacancy created by the
retirement of Raymond N. Smith, a co-founder and former
Chairman of the Board of Directors of the Company. Mr.
Brophy retired as President of Travelers Insurance
Company, a subsidiary of The Travelers Corporation, in
1993. Since then, he has served as a consultant with
Actuarial Sciences Associates working with major
companies such as AT&T, Equifax and others in developing
their business strategies for health care. With The
Travelers, Mr. Brophy led a restructuring resulting in
record sales of $1.7 billion and $100 million in profits
in 1992. His prior experience with The Travelers
included service as its Chief Information Officer in
charge of data processing operations. Mr. Brophy is a
fellow of the Society of Actuaries, holds memberships in
the American Academy of Actuaries, New York Academy of
Sciences, Acoustical Society of America and American
Arbitration Association and has received awards including
the Distinguished Information Sciences Award from the
Data Processing Management Association in 1986 and the
Award of Achievement in Managing Information Technology
from Carnegie Mellon and American Management Systems in
1987. Mr. Brophy currently serves as a trustee of St.
Joseph College and as a director of the Connecticut Opera.
He has also served as a director of LIMRA International, Inc.,
trustee of RPI-Hartford Graduate Center, and director of
the Connecticut Academy for Education in Mathematics,
Sciences and Technology, and the Greater Hartford Chamber
of Commerce. He is currently an owner, director and co-founder
of Solution Point, an information company that provides decision
support tools, analysis and data for employers and health
systems. Mr. Brophy is a cum laude graduate of Fordham
University, from which he received a Bachelor of Science
degree. He has also attended NYU Graduate School and
completed the Advance Management Program at the Sloane
School, MIT.
Richard Hodgson, age 81, became a director of the
Company in 1996 and is Chairman of the Audit Committee.
Since 1980, Mr. Hodgson has been a director of McCowan
Associates, Inc., an investment management firm, where he
is currently in charge of technology investment
strategies. Mr. Hodgson had previously been Corporate
Senior Vice President of ITT Company, a hotels, gaming,
entertainment and information publishing company, where
he was worldwide Product Group Manager for the Engineered
Products Group. Prior to joining ITT in 1968, Mr. Hodgson
was President and CEO of Fairchild Camera, where he
initiated Fairchild's entry into the semiconductor
industry. Mr. Hodgson is a co-founder and a Director
Emeritus of Intel Corporation, a manufacturer of
microprocessor, communications and semiconductor
products, and is also a director of IBIS Technology
Corp., I-Stat Corp., the Aegis Fund and Continental
Capital Corp. Mr. Hodgson received his degree in
engineering from Stanford University and his MBA from
Harvard University.
For Class 1 director, whose term expires in 2000:
Charles E. Buchheit, age 57, became a director of the
Company in March 1998 upon his election by the Board of
Directors of the Company to fill a vacancy created by the
resignation of Peter Teufel. Mr. Buchheit served as a
Corporate Officer and Division President at Moore
Corporation from 1995 to 1997, where he also served as a
member of the Moore Executive Committee. At Moore, Mr.
Buchheit developed Integrated Customer Solutions, a
division which had the capability of managing all forms
of print. Prior to that time, Mr. Buchheit was a
Corporate Officer and Vice President at Xerox Corporation
from 1989 to 1995. At Xerox, he was responsible for
launching the multi-billion dollar Docutech program
worldwide. From 1975 to 1989, he held several executive
positions at IBM Corporation, including Group Marketing
Executive, Director of Operations and Director of Product
Programs and Practices. At IBM, Mr. Buchheit was
responsible for the worldwide marketing of mainframes,
system software, storage and printing devices. He has
served on the Board of Directors for Infomart, and NEPS, a
wholly owned subsidiary of Moore Corporation, and is
currently a member of the Board of Directors for Intercon
Associates Incorporated.
Continuing Directors
Class 1 Director, whose term expires in 2000:
Robert H. Steele, age 59, became a director of the
Company in 1996 and is Chairman of the Executive
Compensation Committee. Mr. Steele is currently Vice
Chairman of John Ryan Company, a banking services
Company, of which he previously served as Senior Vice
President since 1992. Mr. Steele has also been director of Merlin
Retail Banking center since 1992. Mr. Steele was
President of RHS Consulting, Inc., a business consulting
firm, in 1991. From 1985 to 1990, Mr. Steele was
Chairman and Chief Executive Officer of Dollar Dry Dock
Bank of New York. Mr. Steele also served as President
and CEO of Norwich Savings Society. Mr. Steele is a
former U.S. Congressman from the State of Connecticut and
currently serves as a director of Moore Medical Corp., a
pharmaceutical distributor, Scan-Optics, Inc., a
manufacturer of data capture equipment, NLC Insurance
Companies and SmartServ Online, Inc., an online information
provider. Mr. Steele received his undergraduate degree
from Amherst College and his Master's Degree from
Columbia University and holds an honorary Doctor of Laws
from Sacred Heart University.
Class 3 Directors whose terms expire in 1999:
Richard J. Coburn, age 66, has been Chairman of the
Board since May 1996 and is a co-founder of the Company.
Mr. Coburn served as President of the Company from May
1993 until May 1996 and served as Chief Executive Officer
of the Company from May 1993 until August 1996. From
1991 until 1993, Mr. Coburn worked as an independent
consultant to development stage companies. Mr. Coburn
was a co-founder of KCR Technology, Inc., a manufacturer
of high-speed, black-on-white printers, and served in
various roles, both consulting and managerial, including
President from 1977 to 1991. Mr. Coburn was also the
founder of Coburn Technology, Inc., a developer of a
xerographic printer product for word processing, the
rights to which were sold to Wang Laboratories, Inc., and
served as its President from 1974 to 1977. From 1968 to
1974, Mr. Coburn was president of Scan-Optics, Inc., a
manufacturer of data capture equipment, of which he was a
co-founder and currently serves as a director. Prior to
1968, Mr. Coburn had served in various engineering
management positions in aerospace over a 14 year period.
Mr. Coburn received his degree in engineering from Yale
University.
Norman L. Milliard, age 55, has been President of the
Company since May 1996, has been Chief Executive Officer
of the Company since August 1996 and was elected a
director of the Company in 1995. Mr. Milliard served as
Vice President of the Company from January 1994 until May
1996. From 1988 through 1993, Mr. Milliard served as
head of the Special Product Group at AEG Schneider
Automation, Inc. (formerly Modicon, Inc.), an industrial
automation company, and as the Director of Engineering
and Operations for KCR Technology, a manufacturer of high-
speed, black-on-white printers, from 1982 to 1988.
Mr. Milliard founded two companies in the electronic
music field and holds a number of patents in both the
printing and electronic music fields. Mr. Milliard
received his degree in physics, with honors, from The
Citadel, the Military College of South Carolina.
Willard F. Pinney, Jr., age 54, has been Secretary of
the Company since December 1993 and became a director of
the Company in 1996. Mr. Pinney has been a partner since
1973 in the Connecticut law firm of Murtha, Cullina,
Richter and Pinney LLP, which serves as counsel to the
Company. He received his degree in political science
from Yale University and his JD, with honors, from the
University of Michigan Law School.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to a review of the Company's records, all
required filings under Section 16(a) of the Securities
Exchange Act were made in compliance with such section
with the exception that Patrick J. Pedonti, who joined
the Company as Vice President and Chief Financial Officer
on March 20, 1997 was required to file Form 3 by March 30, 1997,
but instead filed this form on April 7, 1997.
COMPENSATION OF DIRECTORS
Directors of the Company who are not employees of the
Company receive a monthly retainer of $750 and a per
meeting fee of $750 for each meeting of the Board of
Directors and any committee meetings attended in person
by such director. The Company also reimburses directors
for reasonable travel expenses incurred in order to
attend meetings.
Under its 1995 Stock Incentive Plan, the Company has
established a stock incentive program for non-employee
directors, whereby each newly elected director receives
an initial option to purchase 5,000 shares of Common
Stock and will receive an option to purchase an
additional 5,000 shares of Common Stock on the date of
the annual meeting of the Board each year through 2000 as
long as the director remains in office. These options
are exercisable at the fair market value of the shares on
the date of grant. Under this program, on May 9, 1997,
the following directors each received options to purchase
5,000 shares at an exercise price of $6.56 per share:
Richard Hodgson, Willard F. Pinney, Jr. and Robert H.
Steele. Messrs. Brophy and Buchheit each received an
option to purchase 5,000 shares upon their election to
the Board on March 23, 1998.
The Company, as permitted by Connecticut law, has
purchased directors and officers liability insurance
policies covering all of the Company's directors and
officers on an annual basis and on a one time three-year
basis with respect to the Company's initial public
offering. The aggregate premiums for these policies paid
or accrued during 1997 was approximately $79,800.
ATTENDANCE; BOARD COMMITTEES
The business and affairs of the Company are managed
under the direction of the Board of Directors. Members
of the Board may serve on one or more committees to carry
out certain responsibilities.
The Board of Directors held a total of nine regular
and special meetings during 1997. Each director attended
at least 75% of the aggregate number of meetings of the
Board and Board committees on which such director served.
An Audit Committee was established in May 1996. This
Committee is responsible for overseeing and reviewing the
audit of the Company's books and accounts, for reviewing
the audited financial statements of the Company, for
reviewing the Company's internal control procedures and
for reviewing the independence of the Company's independ
ent public accountants. No member of this Committee is
an employee of the Company. The Audit Committee met twice
during 1997. The current members of the Audit Committee
are Richard Hodgson (Chairman) and Robert H. Steele.
An Executive Compensation Committee was also
established in May 1996 and is generally responsible for
reviewing and recommending to the Board of Directors
salaries and incentive compensation for the Company's
executive officers. This Committee met three times in
1997. The current members of the Executive Compensation
Committee are Robert H. Steele (Chairman) and Willard F.
Pinney, Jr.
The Company does not have a nominating committee.
PRINCIPAL SHAREHOLDERS AND KEY PERSONNEL
The following table sets forth certain information as
of February 11, 1998 regarding the beneficial ownership
of the Company's Common Stock by (i) each person (or
group of affiliated persons) known by the Company to own
more than 5% of the outstanding shares of Common Stock,
(ii) each of the directors of the Company, (iii) each of
the Named Executive Officers and (iv) all directors and
executive officers of the Company as a group.
Number of
Shares Percentage
Beneficially of Common
Name and Address (1) Owned (2) Stock
Peter Teufel (3) 631,744 5.3%
7 Weingarten Strasse
Huttenberg, Germany 35625
Richard J. Coburn (4) 450,303 3.8%
Norman L. Milliard (5) 260,500 2.2%
Willard F. Pinney, Jr. (6)(7) 80,799 *
Robert H. Steele (6)(8) 61,618 *
Martyn R. Jones (9) 52,500 *
George T. Dolan (10) 42,500 *
Richard Hodgson (6)(11) 38,750 *
Patrick J. Pedonti (12) 25,000 *
All directors and officers of the Company 1,011,970 8.4%
as a group (8 persons) (13)
* Less than 1%
(1) The address of all persons who are executive officers
or directors of the Company is in care of the
Company, 800 Connecticut Boulevard, East Hartford,
Connecticut 06108.
(2) Unless otherwise noted, each person or group
identified possesses sole voting and investment power
with respect to such shares, subject to community
property laws where applicable. Shares not
outstanding but deemed beneficially owned by virtue
of the right of a person or group to acquire them
within 60 days of February 11, 1998 ("currently
exercisable options") are treated as outstanding only
for purposes of determining the amount and percent
owned by such person or group.
(3) Includes 65,454 shares of Common Stock subject to
currently exercisable warrants.
(4) Includes 23,334 shares of Common Stock subject to
currently exercisable options granted pursuant to the
1995 Stock Incentive Plan.
(5) Includes 145,000 shares of Common Stock subject to
currently exercisable options granted pursuant to the
1995 Stock Incentive Plan.
(6) Includes 35,000 shares of Common Stock subject to
currently exercisable options granted pursuant to the
1995 Stock Incentive Plan.
(7) Includes 30,000 shares of Common Stock subject to
currently exercisable options granted to Murtha, Cullina,
Richter and Pinney LLP, counsel to the Company, of which
Mr. Pinney is a partner.
(8) Includes 17,118 shares of Common Stock owned by Mr.
Steele's spouse and 1,500 shares of Common Stock subject
to currently exercisable warrants issued to Mr. Steele's
spouse, all of which he disclaims beneficial ownership.
(9) Includes 52,500 shares of Common Stock subject to
currently exercisable options granted pursuant to the
1995 Stock Incentive Plan.
(10) Includes 42,500 shares of Common Stock subject to
currently exercisable options granted pursuant to the
1995 Stock Incentive Plan.
(11) Includes 3,750 shares of Common Stock subject to
currently exercisable warrants.
(12) Includes 25,000 shares of Common Stock subject to
currently exercisable options granted pursuant to the
1995 Stock Incentive Plan.
(13) Includes 423,334 shares of Common Stock subject to
currently exercisable options granted pursuant to the
1995 Stock Incentive Plan and 5,250 shares of Common
Stock subject to currently exercisable warrants.
EXECUTIVE COMPENSATION
REPORT OF EXECUTIVE COMPENSATION COMMITTEE
Executive Compensation for 1997. The compensation of
senior executives of the Company for 1997 was determined
by the Board of Directors of the Company based upon
recommendations of the Executive Compensation Committee
of the Board of Directors. The base salaries of the
Company's executive officers have been determined at
levels which management and the Board of Directors
believe to be appropriate and competitive in order to
attract and retain individuals with talents and
experience necessary to carry out the Company's business
plan. Management and the Board of Directors have
determined the base compensation of executive officers of
the Company in coordination with awards made to the
executive officers under the Company's 1995 Stock
Incentive Plan, which is administered by the full Board
of Directors. During and with respect to 1997, the Board
of Directors, at the recommendation of the Executive
Compensation Committee, also established a bonus program
for senior executive officers of the Company based upon
specific milestones. Bonuses were paid only with respect
to milestones accomplished during the year. An incentive
bonus program is being considered for 1998.
Responsibilities and Policies of Executive
Compensation Committee. The responsibilities of the
Executive Compensation Committee include formulating
policies and making recommendations to the Board of
Directors with respect to compensation of executive
officers of the Company. The Committee held three
meetings in 1997 in order to consider base salary
adjustments for senior executive officers and formulate
policies with respect to Executive Compensation
generally. The committee also developed a bonus plan for
executive officers intended to incent them to accomplish
specific milestones necessary to complete the development
stage of the Company's business plan. The Committee
believes that, particularly during the balance of the
Company's development stage, executive compensation
should be based significantly upon specific performance
criteria.
Limitation on Deductibility of Executive
Compensation. Section 162(m) of the Internal Revenue
Code of 1986, generally denies a publicly held
corporation, such as the Company, a federal income tax
deduction for compensation in excess of $1,000,000 per
year paid or accrued for its chief executive officer or
any of the four other most highly compensated executive
officers. Certain "performance based" compensation is
not subject to the limitation on deductibility provided
certain stockholder approval and independent director
requirements are met. Because the compensation paid to
each of the Company's executive officers have not
exceeded nor approached $1,000,000 in any year, the
Committee does not believe that this limitation on
deductibility of executive compensation is currently of
any concern to the Company. However, the Committee will
continue to review this limitation in light of future
events with the objective of achieving deductibility of
executive compensation, as appropriate.
EXECUTIVE COMPENSATION
COMMITTEE
Robert H. Steele, Chairman
Willard F. Pinney, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION
Neither of the Executive Compensation Committee
members, Robert H. Steele and Willard F. Pinney, Jr., nor
any executive officer of the Company served during 1997
as a member of the Compensation Committee of any other
company. All members of the Executive Compensation
Committee are outside directors, except that Willard F.
Pinney, Jr., is Secretary of the Company and a partner of
Murtha, Cullina, Richter and Pinney LLP, counsel to the
Company.
SUMMARY EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth
information concerning compensation for services in all
capacities to the Company for the fiscal year ended
December 31, 1997 of (i) the chief executive officer and
(ii) the Company's other most highly compensated
executive officers whose total salary and bonus for the
year ended December 31, 1997 exceeded $100,000 (the
"Named Executive Officers").
Summary Compensation Table
Long-Term
Annual Compensation
Compensation Awards
Securities
Other Annual Underlying
Name & Principal Year Salary Bonus Compensation Options/SARs
Position ($) ($) ($) (#)
Richard J. Coburn 1997 121,923 24,663 - 10,000
Chairman 1996 128,846 - - 30,000
1995 108,958 - - -
Norman L. Milliard 1997 161,077 46,480 - 15,000
President and 1996 155,692 - 26,000 (1) 30,000
CEO 1995 133,958 - - 120,000
Martyn R. Jones 1997 116,000 5,414 28,534 (2) -
Vice President 1996 101,740 - 44,950 (2) 30,000
1995 15,232 - - 45,000
(1) Reflects reimbursement of expenses of Mr. Milliard
relating to his relocation to Connecticut consisting
of rent expense in 1996 under an arrangement which
expired in February, 1997.
(2) Consists of various expense reimbursements to Mr.
Jones in connection with his relocation to
Connecticut.
Option Grants in Last Fiscal Year
The following table contains information concerning
the stock option grants made to each of the Named
Executive Officers in fiscal 1997. No stock appreciation
rights were granted during such year.
Individual Grants
% of Potential
Total Realizable
Options/ Value at
Number of SARs Assumed Annual
Securities Granted Exercise Rates of
Underlying to or Base Stock Price
Options/ Employees Price Per Appreciation for
SAR Grants in Fiscal Share Expiration Option Term (2)
Name (#) Years ($/Sh)(1) Date 5% ($) 10% ($)
Richard 10,000 (3) 4.0% 8.50 3/20/07 53,456 135,468
J. Coburn
Norman 13,947 (3) 5.6% 8.50 3/20/07 74,555 188,937
L. Milliard 1,053 (4) 0.4% 8.50 3/20/07 5,629 14,265
Martyn - 0.0% - N/A
R. Jones
(1) All options were granted at the fair market value on
the date of grant as determined by the Board of
Directors.
(2) The 5% and 10% assumed annual rates of compound stock
price appreciation are mandated by rules of the
Securities and Exchange Commission and do not reflect
the Company's estimates or projections of future
Common Stock prices. There can be no assurance
provided to any executive officer or any other holder
of the Company's securities that the actual stock
price appreciation over the term will be at the
assumed 5% or 10% levels or at any other defined
level. Unless the market price of the Common Stock
appreciates over the option term, no value will be
realized from the option grants made to the executive
officers.
(3) Represents incentive stock options of which 3,947 options
vest on March 20, 1998 and 5,000 options vest on
March 20, 1999 and March 20, 2000, accordingly.
(4) Represents non-qualified stock options which are
exercisable on March 20, 1998.
Aggregate Option Exercise in Last Fiscal Year and Option
Values as of December 31, 1997
None of the Named Executive Officers exercised stock
options during the year ended December 31, 1997. The
following table provides information regarding the number
of shares underlying both exercisable and unexercisable
stock options as of December 31, 1997 and the values of
unexercised "in-the-money" options as of that date. An
option is "in-the-money" if the per share fair market
value of the underlying share exceeds the options
exercise price share.
Number of Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
December 31, 1997 December 31, 1997(1)
Number of
Shares
Acquired Value Exercisable Unexer- Exercisable Unexer-
on Realized cisable cisable
Exercise (#) (#) ($) ($)
Richard - - 10,000 30,000 - -
J. Coburn
Norman - - 105,000 60,000 62,375 31,188
L. Milliard
Martyn - - 47,500 27,500 - -
R. Jones
(1) Based on the closing price at December 31, 1996 of $2-7/16.
EMPLOYMENT AGREEMENTS
Richard J. Coburn and Norman L. Milliard have entered
into employment agreements (the "Employment Agreements")
with the Company effective January 1994. Mr. Coburn's
agreement has a five-year term that expires at the end of
1998. Mr. Milliard's agreement has a three-year term
which is automatically extended each year for an
additional one year, subject to termination before the
extension by either party. If the Employment Agreements
are terminated by the Company without "cause," as defined
therein, Mr. Coburn would be entitled to receive his base
salary and payment of health benefits for a period of one
year and Mr. Milliard would be entitled to receive his
base salary and payment of health benefits for a period
of two years and would become fully vested in any
outstanding options. Mr. Coburn's current base salary is
$120,000, and Mr. Milliard's current base salary is
$175,000.
The Employment Agreements restrict Messrs. Coburn and
Milliard from directly or indirectly competing with the
Company through the participation in the development of
any product related to the Company's product or processes
during the term of the agreement and for a period of two
years (five years in the case of Mr. Coburn) thereafter
if they voluntarily resign from the Company or are
terminated for cause. The Employment Agreements do not
otherwise restrict Messrs. Coburn and Milliard from
pursuing any other business interests that do not
directly compete with the Company.
STOCK INCENTIVE PLAN
In January 1995, the Board of Directors and
shareholders of the Company adopted the 1995 Stock
Incentive Plan (the "Stock Plan"). Pursuant to the Stock
Plan, the Board of Directors or a committee thereof may
grant options or other awards for up to 1,500,000 shares
of Common Stock. In December 1997, the Board of
Directors amended the Plan to increase the number of
shares with respect to which awards may be granted from
1,500,000 shares to 2,000,000 shares, subject to
shareholder approval at the Annual Meeting (see Item 4
below). The Stock Plan is designed to give directors,
officers and employees of the Company and other persons
an expanded opportunity to acquire Common Stock in the
Company or receive other long-term incentive remuneration
in order that they may participate in the Company's
growth and be motivated to remain with the Company and
promote its further development and success.
The Plan includes provisions for granting both
"incentive stock options" intended to qualify for certain
federal tax advantages and "non-statutory options" which
do not qualify for such tax advantages. Qualified
incentive stock options may be granted only to eligible
persons who are full-time employees of the Company while
non-statutory options may be granted to any
persons,including directors, consultants and advisors of
the Company who, in the sole opinion of the Board of
Directors or a committee thereof are, from time to time,
responsible for the management or growth of all or part
of the business of the Company.
The purchase price under each incentive stock option
is as determined by the Board of Directors or a committee
thereof but may not be less than 100% of the fair market
value of the shares subject to such option on the date of
grant, provided that such option price may not be less
than 110% of such fair market value in the case of any
stock option granted to a principal shareholder. The
purchase price per share of Common Stock deliverable upon
the exercise of non-statutory options is determined by
the Committee, but may not be less than 85% of the fair
market value of the Common Stock on the date of grant.
Each option granted under the Stock Plan becomes
exercisable on such date or dates and in such amount or
amounts as the Board of Directors or a committee thereof
determines. To date, all incentive stock options granted
to employees are exercisable with respect to not more
than one-third of the shares subject thereto after the
expiration of one year following the date of its grant,
and are exercisable as to an additional one-third of such
shares after the expiration of each of the succeeding two
years, on a cumulative basis, so that such option, or any
unexercised portion thereof, shall be fully exercisable
on the third anniversary of the date of its grant.
As of March 20, 1998, incentive stock options to
purchase 1,001,224 shares of Common Stock and non-
statutory options to purchase 329,001 shares of Common
Stock have been granted. All such options have been
granted to employees of the Company, except for (i)
options granted to non-employee directors, as described
above, (ii) an option granted in January 1995 to Murtha,
Cullina, Richter and Pinney LLP, counsel to the Company,
entitling it to purchase 30,000 shares of the Company's
Common Stock for a period of five years at an exercise
price of $1.19 per share, (iii) an option granted in
April 1996 to a consultant of the Company entitling him
to purchase 2,250 shares of Common Stock of the Company
for five years at an exercise price of $4.00, (iv) an
option granted in July 1997 to the Company's Investor
Relations firm, entitling it to purchase 10,000 shares of
the Company's Common Stock for a period of five years at
an exercise price of $5.03 and (v) an option granted in
October 1997 to a consultant of the Company entitling him
to purchase 20,000 shares of Common Stock of the Company
for five years at an exercise price of $4.56. All
options, both incentive and non-statutory, have been
granted at fair market value as determined by the Board
of Directors on the date of grant.
CERTAIN TRANSACTIONS
On May 1, 1996, Raymond N. Smith, who resigned as a
director of the Company in August 1997, entered into a
consulting agreement with the Company under which he
agreed to perform services for the Company in
consideration for a quarterly retainer of $21,250. The
consulting agreement required, among other things, that
Mr. Smith be available for up to 25 hours per month to
provide general business and management advice. This
Agreement expired December 31, 1997.
Willard F. Pinney, Jr. is a partner of the law firm
of Murtha, Cullina, Richter and Pinney LLP, which serves
as counsel to the Company.
Performance Graph
The following graph demonstrates a comparison of
cumulative total return based on an initial investment of
$100 in the Company's common stock as compared with the
Nasdaq Computer Manufacturers Index and the Nasdaq
Composite Index and assumes the reinvestment of
dividends, although dividends have not been declared on
the Company's common stock. The stock price performance
shown on the graph below is not necessarily indicative of
future price performance and only reflects the Company's
relative stock price for the period commencing on
December 18, 1996, the date the Company's common stock
began trading on the Nasdaq National Market, and ending
on December 31, 1997. The following graph includes
information required by the Securities and Exchange
Commission and shall not be deemed incorporated by
reference by any general statement incorporating by
reference this Proxy Statement into any filing under the
Securities Act of 1933 or the Securities Exchange Act of
1934, unless the Company specifically incorporates this
information by reference, and shall not otherwise be
deemed soliciting material or filed under such Acts.
COMPARISON OF TOTAL RETURN
(GRAPH APPEARS HERE)
12/18/96 12/31/96 12/31/97
ACLR $100.00 $106.25 $ 30.47
Nasdaq Computer Mfg $100.00 $ 97.37 $117.81
Nasdaq Composite $100.00 $101.95 $124.01
ITEM 2. RATIFICATION OF THE SALE AND ISSUANCE OF 4,500
SHARES OF SERIES B STOCK AND APPROVAL OF THE ISSUANCE OF
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF OR
OTHERWISE PURSUANT TO THE TERMS OF THE SERIES B STOCK
BACKGROUND
The Company is seeking ratification by the
shareholders of the sale and issuance of 4,500 shares of
its Series B Stock which were sold in a private
transaction on January 9, 1998 (the "Series B Stock
Sale") and approval from the shareholders of the issuance
of shares of Common Stock issuable upon conversion of or
otherwise pursuant to the terms of the Series B Stock.
Such approval would have the effect of removing certain
limitations under rules of the National Association of
Securities Dealers, Inc. (the "NASD"), which could limit
the conversion rights of the holders of Series B Stock,
depending on the market value of the Company's Common
Stock. The terms of the Series B Stock Sale require the
Company to seek this approval and provide that if this
approval is not obtained on or before May 31, 1998, the
Company will be subject to certain penalties, including
an immediate adjustment in the terms on which shares of
Series B Stock may be converted. Such an adjustment
could lead to a greater number of shares of Common Stock
being issuable upon conversion and thereby dilute and
reduce the interests of all other Common Stock
shareholders.
HOLDERS OF THE COMPANY'S COMMON STOCK SHOULD NOTE
THAT THEIR INTERESTS IN THE COMPANY MAY BE DILUTED IF
APPROVAL OF THIS PROPOSAL IS NOT OBTAINED AT THE ANNUAL
MEETING.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY
RECOMMENDS RATIFICATION OF THE SALE AND ISSUANCE OF 4,500
SHARES OF SERIES B STOCK AND APPROVAL OF THE ISSUANCE OF
SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF OR
OTHERWISE PURSUANT TO THE TERMS OF THE SERIES B STOCK.
Pursuant to NASD rules, holders of the Series B Stock
are required to abstain in the voting on this matter in
view of their interest in the transaction with respect to
which approval is being sought.
PURPOSE OF SERIES B STOCK SALE
The Series B Stock Sale provided the Company with
gross proceeds of $4,500,000 and net proceeds, after
expenses, of approximately $3,921,038. The net proceeds
are intended to be used primarily as working capital with
approximately $540,000 being applied to the purchase and
installation of machinery and equipment. This financing
was a significant step in funding the Company's business
plan.
TERMS OF SERIES B STOCK
Each share of Series B Stock was sold for $1,000 (the
"Face Amount"), earns an annual premium of 6% (the
"Annual Premium") and is convertible into as many shares
of Common Stock as may be determined by dividing the
conversion price (the "Conversion Price") into the Face
Amount plus the Annual Premium unless the Company elects
to pay the Annual Premium in cash. The Conversion Price
is initially 85% of the average price for the Common
Stock during the five consecutive trading days
immediately preceding the date of determination (the
"Average Price"), subject to certain adjustments and
provided that the Conversion Price shall not exceed $5.
Various circumstances may lead to adjustments in the
Conversion Price and reference is made to the statement
of designations, preferences and rights of the Series B
Stock set forth in the Restated Certificate of
Incorporation of the Company for a complete description
of these provisions. In particular, the Conversion Price
will be adjusted to be 75% of the Average Price (and
thereby result in a proportionally greater number of
shares issuable upon conversion) in the event that the
sale of Series B Stock and the issuance by the Company of
the shares of Common Stock issuable upon the conversion
of or otherwise pursuant to the terms of the Series B
Stock is not approved by shareholders on or before
May 31, 1998. In addition, in order to avoid certain
other penalties, the Company would be required to
resolicit shareholder approval at least three times each
year until shareholder approval is obtained, a process
which would require considerable time and expense.
NASD RULES
Under rules of the NASD which pertain to companies,
such as the Company, with securities listed on The Nasdaq
Stock Market, shareholder approval is required in the
case of a private sale of securities convertible into
common stock if the common stock issuable on conversion
could equal or exceed 20% of the common stock outstanding
immediately prior to the issuance of such convertible
security. Because the Conversion Price may vary in
accordance with the Average Price from time to time and
decrease (thereby increasing the number of shares
issuable upon conversion), or increase (up to a maximum
of $5 thereby decreasing the number of shares issuable
upon conversion), it is possible that, upon conversion of
the Series B Stock, Common Stock of the Company would be
issuable which represents more than 20% of the Common
Stock outstanding immediately prior to the Series B Stock
Sale. Accordingly, the terms of the Series B Stock limit
the number of shares issuable upon conversion to a number
which will not exceed 20% of the Common Stock outstanding
immediately prior to the Series B Stock Sale until
shareholder approval is obtained. These terms also
provide that if shareholder approval is not obtained by
May 31, 1998, the Conversion Price will immediately be
decreased to 75% of the Average Price and holders of
Series B Stock will have certain other rights including
the right to require the Company to delist its Common
Stock from The Nasdaq Stock Market so that the limitation
will no longer apply. Alternatively, holders of Series B
Stock may elect to convert at a conversion price equal to
the Average Price in order to comply with the NASD Rule
without the need for shareholder approval.
REDEMPTION RIGHTS
The Company has the right to redeem the Series B
Stock at any time, provided there is no default under the
terms of the Series B Stock and certain events which
would allow the holder to require redemption have not
occurred, at a price equal to the greater of (a) the Face
Amount plus the Annual Premium divided by the Conversion
Price and multiplied by the closing price of the Common
Stock on the date of the related redemption notice, or
(b) the sum of (x) the product of (I) 100% divided by the
conversion percentage in effect on the date of such
optional redemption notice, times (II) the Face Amount
plus (y) the accrued Annual Premium thereon and amounts
owing because of conversion defaults (if any) with
respect thereto through the effective date of the
optional redemption.
Holders of Series B Stock may require the Company to
redeem some or all of the outstanding shares of Series B
Stock in certain events, including various defaults under
the terms of the Series B Stock, failure to maintain a
listing of the Company's Common Stock on the New York or
American Stock Exchanges, The Nasdaq Stock Market or
Nasdaq Small Cap Market, a sale or substantially all of
the assets of the Company, the merger of the Company and
certain other events.
FURTHER INFORMATION
The terms of the Series B Stock are complex and are
only briefly summarized in this Proxy Statement.
Shareholders wishing further information concerning the
rights, preferences and terms of the Series B Stock are
referred to the full description thereof contained in the
Restated Certificate of Incorporation of the Company, a
copy of which is on file with the Securities and Exchange
Commission and can be viewed in the public reading rooms
maintained by the Commission at Securities Exchange
Commission, Public Reference Branch, Stop 1-2, 450 Fifth
Street, NW, Washington, DC, 20549-1004. The Company's
Restated Certificate of Incorporation may also be viewed
on the web site maintained by the Securities and Exchange
Commission at http://www.sec.gov. The description of
terms, preferences and rights of the Company and holders
of Series B Stock with respect to the outstanding Series
B Stock of the Company contained herein is qualified in
its entirety by reference to the complete description of
these preferences, rights and terms sets forth in the
Company's Restated Certificate of Incorporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
ITEM 3. INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors of the Company has approved an
amendment to the Restated Certificate of Incorporation of
the Company increasing the authorized number of shares of
Common Stock of the Company from 25,000,000 to 35,000,000
shares. Under Connecticut law, this amendment requires
approval by holders of Common Stock voting as a separate
class as well as the Common Stock and Series B Stock,
voting together as a single, combined class.
As of March 20, 1998, there were 11,989,855 shares of
Common Stock issued and outstanding. In addition, as of
March 20, 1998, 1,870,250 shares of Common Stock were
reserved for issuance upon exercise of options or other
awards granted by the Company under its 1995 Stock
Incentive Plan (of which 500,000 shares are subject to
shareholder approval as discussed in Item 4 below) and
1,613,549 shares issuable pursuant to other outstanding
warrants issued in connection with previous financings.
Furthermore, pursuant to the terms of the Series B Stock
Sale, 6,300,000 additional shares of Common Stock have
been reserved for issuance upon conversion of or
otherwise pursuant to the terms of the Series B Stock and
in connection with breaches (if any) by the Company of
its obligations with respect to the Series B Stock.
The number of shares reserved with respect to the
Series B Stock may be in excess of the number of shares
actually required to be issued upon conversion of or
otherwise issuable in connection with the Series B Stock.
For example, if all of the Series B Stock had been
converted on March 20, 1998 without regard to certain
limitations which would otherwise have applied to
conversion on that date, the Company would have issued
1,287,667 shares of Common Stock to the holders of Series
B Stock being converted. However, even if the number of
shares required upon conversion of the Series B Stock on
a given date may be substantially less than the number of
shares reserved with respect to the Series B Stock, the
shares reserved may not be used for any other purpose as
long as any Series B Stock remains outstanding.
Accordingly, there are approximately 3,226,346 shares
of Common Stock currently authorized, unreserved and
available to the Company for use in connection with
financings or other corporate purposes.
The Company has no current plans requiring additional
authorized Common Stock. However, the Board of Directors
of the Company believes that the number of shares of
Common Stock currently available for future corporate
requirements may be insufficient to carry out the
Company's plans and objectives, in which event the
Company could be required to call a special meeting of
stockholders in order to authorize additional shares at a
later time at considerable expense and at the risk of
being unable to capitalize upon current opportunities as
they arise.
All additional shares of Common Stock authorized
pursuant to this proposal would be subject to issuance by
the Board of Directors of the Company without further
shareholder approval except as may be required by law in
connection with any given transaction or pursuant to
rules of The Nasdaq Stock Market or other exchange on
which shares of Common Stock of the Company may be
listed. Any such issuance could dilute and adversely
affect various rights of the holders of shares of Common Stock
and, in addition, could be used to discourage an unsolicited
attempt to acquire control of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
ITEM 4. APPROVAL OF AMENDMENTS TO 1995 STOCK INCENTIVE PLAN.
INCREASE IN AUTHORIZED SHARES
Approval is being sought for an increase in the
number of shares issuable pursuant to the Company's 1995
Stock Incentive Plan (the "Plan") from 1,500,000 shares
to 2,000,000, as approved by the Board of Directors in
September 1997, subject to shareholder approval.
The Company's Plan currently provides for the
issuance of up to 1,500,000 shares of Common Stock upon
the exercise of options or other awards granted pursuant
to such Plan. The terms and provisions of the Plan are
discussed in detail under Item 1 of this Proxy Statement.
As of March 20, 1998, there were 1,870,250 shares of Common Stock
reserved for issuance upon the exercise of outstanding
options granted pursuant to the Plan of which 1,330,225
options are outstanding with 540,025 shares remaining
available for additional option grants or awards pursuant
to the Plan.
Management of the Company regards the Plan as an
important element of the compensation program of the
Company. Management is also attempting to conserve cash
required in the operations of the Company by providing
non-cash equity incentives through the operation of the
Plan. Furthermore, management believes that the Company
has been fortunate in obtaining the services of many
talented, dedicated employees whose incentive to remain
with the Company is substantially enhanced by having a
stake in the Company's future. It has been a policy of
management, to the extent permitted under the terms of
the Plan, to incent all employees through the grant of
options under the Plan.
AMENDMENT OF ELIGIBILITY REQUIREMENTS
The Board of Directors of the Company also amended
the Plan in September 1997, subject to shareholder
approval, in order to provide that all employees are
eligible to receive incentive stock options. Previously,
the Plan had provided that only full-time employees were
eligible to receive incentive stock options. This
modification is in keeping with the policy of the Company
to incent all of its employees through the opportunity to
acquire stock in the Company.
Substantially all of the employees of the Company are
employed on a full-time basis. However, in certain
instances, employees may be employed on a part-time basis
yet still make significant contributions to the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
ITEM 5. APPOINTMENT OF AUDITORS
The Board of Directors has selected Price Waterhouse
LLP as auditors of the Company for the year ending
December 31, 1998, subject to approval by shareholders at
the Annual Meeting. Price Waterhouse LLP has served as
the Company's independent auditors since 1995.
Representatives of Price Waterhouse LLP will be present
at the Annual Meeting and will be given the opportunity
to make a statement if they desire to do so and will be
available to respond to questions of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS
PROPOSAL.
PROPOSALS FOR THE 1999 ANNUAL MEETING
In accordance with the rules of the Securities and
Exchange Commission, shareholder proposals for inclusion
in the Company's proxy statement for the 1999 Annual
Meeting must be received at the Company's offices at 800
Connecticut Boulevard, East Hartford, Connecticut 06108,
Attention: Secretary no later than December 2, 1998.
OTHER MATTERS
The Board of Directors does not intend to present any
other matters before the meeting and is not informed of
any other business which others may bring before the
meeting. However, if any other matters should properly
come before the meeting, or any adjournments or
postponements thereof, it is the intention of the persons
named in the accompanying Proxy Card to vote on each such
matter as they, in their sole discretion, may determine.
ACCENT COLOR SCIENCES, INC.
Proxy Solicited on Behalf of the Board of Directors
of Accent Color Sciences, Inc. for the Annual
Meeting, May 8, 1998
The undersigned hereby constitutes and appoints
RICHARD J. COBURN and NORMAN L. MILLIARD, and each of them, with
full power to act with or without the other and with full power
of substitution, his or her true and lawful agents and proxies
to represent the undersigned at the Annual Meeting of
Shareholders of Accent Color Sciences, Inc. (the "Company") to
be held at 800 Connecticut Boulevard, East Hartford,
Connecticut, at 10:30 a.m. on Friday, May 8, 1998, and at any
adjournments or postponements thereof, and authorizes said
Proxies to vote all shares of the Company shown on the other
side of this card with all the powers the undersigned would
possess if personally present thereat.
You are encouraged to specify your choice by marking the
appropriate box, SEE REVERSE SIDE, but you need not mark any box
if you wish to vote in accordance with the Board of Directors'
recommendations. The Proxies cannot vote your shares unless you
sign and return this card.
THIS PROXY WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN AND AUTHORIZES THE PROXIES TO TAKE ACTION IN
THEIR DISCRETION UPON OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF ALL NOMINEES AND FOR PROPOSALS 2,3,4
AND 5.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
A /X/ Please mark your
votes as in this
example
FOR WITHELD
ALL FROM ALL
NOMINEES NOMINEES
1.Election / / / / Class 1 Nominees:
Of Three Charles E. Buchheit
Directors. Class 2 Nominees:
Joseph T. Brophy
Richard Hodgson
(Instruction: To withhold authority to vote for any nominee,
write such nominee's name(s) below.)
/ / ______________________________________
FOR AGAINST ABSTAIN
2.Proposed ratification of the sale of / / / / / /
the Company's Series B Convertible
Preferred Stock and approval of
the issuance of Common Stock on
conversion or pursuant to the
terms of the Series B
Convertible Preferred Stock;
3.Proposed approval of an amendment / / / / / /
to the Company's Restated Certificate
of Incorporation;
4.Proposed approval of amendments to / / / / / /
the Company's 1995 Stock Incentive
Plan;
5.Proposed approval of the selection / / / / / /
of Price Waterhouse LLP as auditors
of the company for the year ending
December 31, 1998.
6.In their discretion, upon the transaction
of other business as may properly come before the
meeting or any adjournments or postponments thereof.
MARK HERE FOR / / MARK HERE IF / /
ADDRESS CHANGE YOU PLAN TO
AND NOTE AT ATTEND THE
LEFT MEETING
Signature: _____________________ Date ________
Signature: _____________________ Date ________
NOTE: Please sign exactly as your name appears hereon. When
signing as attorney, administrator, executor, guardian or
trustee, please give your full title as such. If a
corporation, please sign by president or other authorized
officer an indicate title. If shares are registered in
the names of joint tenants or trustees, each tenant or
trustee is required to sign.