HELIX TECHNOLOGY CORPORATION
Mansfield Corporate Center
Nine Hampshire Street
Mansfield, MA 02048-9171
Telephone (508) 337-5111 -- Fax (508) 337-5175
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
April 20, 1995
The Annual Meeting of Stockholders of the Company will be held on April
20, 1995, at 11:00 a.m. at the Bank of Boston, 100 Federal Street, Boston,
Massachusetts, for the following purposes:
1. To elect a Board of Directors.
2. To amend the Company's Restated Certificate of Incorporation to
provide for an increase in the number of authorized shares of Common Stock
from 10,000,000 to 30,000,000.
3. To amend the Company's Restated Certificate of Incorporation to
provide for an increase in the number of authorized shares of Preferred
Stock from 2,000,000 to 5,000,000.
4. To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on March 3, 1995,
will be entitled to notice of and to vote at this meeting.
/s/ Beverly L. Armell
Beverly L. Armell
Secretary
Mansfield, Massachusetts
March 20, 1995
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING.
THEREFORE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE
YOUR PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE
IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE
IN PERSON, YOUR PROXY WILL NOT BE USED.
HELIX TECHNOLOGY CORPORATION
Mansfield Corporate Center
Nine Hampshire Street
Mansfield, MA 02048-9171
Telephone (508) 337-5111 - Fax (508) 337-5175
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Directors of the Company for use at the Annual Meeting of
Stockholders of the Company to be held at the Bank of Boston, 100 Federal
Street, Boston, Massachusetts, on April 20, 1995, at 11:00 a.m., and any
adjournments thereof. The matters to be considered and acted upon at the
meeting are set forth in the attached Notice of Annual Meeting. This Proxy
Statement, the Notice of Annual Meeting, and the form of Proxy will first be
sent to stockholders on or about March 20, 1995.
The record date for the determination of stockholders entitled to notice
of and to vote at the meeting has been fixed by the Board of Directors as
the close of business on March 3, 1995. As of that date there were
9,670,842 shares of Common Stock, $1.00 par value per share (the "Common
Stock") of the Company outstanding and entitled to vote at the meeting. Each
share of Common Stock is entitled to one vote on each of the matters listed
in the Notice of Annual Meeting.
If the accompanying Proxy is signed and returned, the shares represented
by the Proxy will be voted as specified in the Proxy. Where no choice is
specified, the Proxy will be voted for all nominees for the Board of
Directors. Stockholders who execute Proxies may revoke them by notifying
Beverly L. Armell, the Secretary of the Company, at any time prior to the
voting of the Proxies.
PROPOSAL ONE
ELECTION OF BOARD OF DIRECTORS
Nominees
A board of seven (7) Directors will be elected by stockholders
represented and entitled to vote at the meeting. Each Director shall be
elected by a plurality of the votes cast at the Annual Meeting. Votes
withheld, abstentions and non-votes (where a broker or nominee does not
exercise discretionary authority to vote on a matter) will not be counted.
Directors will serve until the next Annual Meeting of Stockholders and until
their successors have been elected and qualified. Management does not
contemplate that any of the nominees will be unable to serve as a Director
for any reason, but if that should occur, the persons named in the form of
Proxy shall have the right to vote according to their judgment for another
person instead of such unavailable nominee. THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE ELECTION OF MESSRS.
GABRON, BERMAN, LAUENSTEIN AND LEPOFSKY, AND DRS. SCHORR, SKINNER AND
WRIGHTON TO THE BOARD OF DIRECTORS.
The following information (except insofar as it is within the knowledge
of the Company) has been obtained from the nominees:
Shares of
Common Stock
of the Company
Principal Beneficially Percent
Occupation Director Owned as of of Shares
Name Age or Employment Since March 10, 1995(1) Outstanding
R. Schorr Berman* 46 Administrator and 1993 2,425,000(2) 25.07%
Chief Executive Officer of
Memorial Drive Trust,
a Qualified Tax-Exempt
Retirement Trust, and
President and Chief Executive
Officer of MDT Advisers, Inc.
Frank Gabron* 64 Chairman of the Board 1980 40,260 **
of the Company
Milton C. Lauenstein 69 Chairman of the Board 1977 46,000 **
Telequip Corporation
Robert J. Lepofsky* 50 President and Chief 1987 368,800(3) 3.71%
Executive Officer of
the Company
Marvin G. Schorr 70 Chairman of the Board 1982 52,400 **
Landauer, Inc.,
Tech/Ops Sevcon, Inc.,
and Tech/Ops Corporation
Wickham Skinner 71 Professor, Emeritus 1972 35,000 **
Harvard Business
School
Mark S. Wrighton 45 Provost and Ciba-Geigy 1990 1,200 **
Professor of Chemistry
Massachusetts Institute
of Technology
___________________________________
* Member of the Executive Committee.
** Less than 1 percent of shares outstanding.
(1) Under rules of the Securities and Exchange Commission, persons who have
power to vote or invest in securities, either alone or jointly with
others, are deemed to be the beneficial owners of such securities.
Accordingly, beneficial ownership includes shares held in trust for
minor children, but does not include shares owned separately by spouses
and adult children where there is no direct benefit to the reporting
person as determined by the facts of the particular case. Beneficial
ownership also includes shares that each named individual has the right
to acquire within 60 days from March 10, 1995, through the exercise of
options. The amounts listed include shares under such options as
follows: Mr. Berman 2,000; Mr. Gabron 6,000; Mr. Lauenstein 6,000; Mr.
Lepofsky 260,000; Dr. Schorr 6,000; and Dr. Skinner 6,000.
(2) Includes 2,420,400 shares owned by Memorial Drive Trust of which Mr.
Berman is Administrator and Chief Executive Officer and with respect to
which he has shared voting and investment power (see "Stockholdings of
Principal Stockholders and Management" below). Mr. Berman disclaims
beneficial ownership of these shares.
(3) Includes 20,000 shares held by Mr. Lepofsky as trustee for his children,
with respect to which shares Mr. Lepofsky disclaims beneficial
ownership.
Mr. Gabron has served as Chairman of the Board since January, 1981. He
served as President of the Company from November 1980, to February 1987, and
Chief Executive Officer of the Company from November 1980, to December 1988.
Mr. Berman has served as Administrator and Chief Executive Officer of
Memorial Drive Trust since 1992, and has also served as President of MDT
Advisers, Inc., an investment and asset management company, since 1988, and,
additionally, as Chief Executive Officer since 1993. From 1988 to 1992, Mr.
Berman served as Assistant Administrator of Memorial Drive Trust. He
currently serves as a Director of Arch Communications Group, Inc., and
Acuity Imaging, Inc. In addition, he serves on the board of several
privately held firms.
Mr. Lauenstein is a management consultant. He served as Chairman of the
Board of the Company from May 1979, to January 1981, and currently serves as
Director of Tech/Ops Sevcon, Inc., and as Chairman of the Board of Telequip
Corporation.
Mr. Lepofsky has served as President of the Company since February 1987,
and as Chief Executive Officer of the Company since January 1989. He was
Chief Operating Officer of the Company from December 1982, to December 1988,
and was Senior Vice President from December 1982, to February 1987. Prior
to December 1982, Mr. Lepofsky was a Vice President of the Company for two
years.
Dr. Schorr was President and Chief Executive Officer of Tech/Ops, Inc.,
from 1962 to 1987 and Chairman of the Board of that Company from 1981 to
1987. In 1987 Tech/Ops was reorganized into three companies: Landauer,
Inc., Tech/Ops Sevcon, Inc., and Tech/Ops Corporation, of which the former
two are publicly owned and the latter is privately owned. Dr. Schorr is
Chairman of the Board of Directors of all three companies, which are
manufacturers of technology-based products and services.
Dr. Skinner is the James E. Robison Professor of Business Administration
Emeritus at the Graduate School of Business Administration, Harvard
University, where he was a Professor for over 25 years. He serves as a
Director of Wilevco, Inc., Somerset Industries, and Bath Iron Works.
Dr. Wrighton was named Provost of Massachusetts Institute of Technology
in October 1990, and holds the Ciba-Geigy Chair in Chemistry at M.I.T. He
joined the faculty at M.I.T. in 1972 as Assistant Professor of Chemistry,
was appointed Associate Professor in 1976 and Professor in 1977. From 1981
until 1989, he held the Frederick G. Keyes Chair in Chemistry and was Head
of the Department of Chemistry from 1987 until 1990.
Dr. Wrighton also serves as a Director of Ionics, Inc., and O.I.S. Optical
Imaging Systems, Inc.
COMMITTEES OF THE BOARD
The Board of Directors has an Audit Committee consisting of Messrs.
Berman, Gabron and Lauenstein, and a Human Resources and Compensation
Committee consisting of Drs. Schorr, Skinner and Wrighton. The functions of
the Audit Committee are to review the engagement of auditors, including the
fee, scope, and timing of the audit and any other services rendered; to
review policies and procedures with respect to internal controls; and to
review the financial reporting process. The functions of the Human
Resources and Compensation Committee include the review and approval of
executive compensation and the administration and supervision of the
Company's stock option and restricted stock plans. The Company does not
have a nominating committee.
During the year ended December 31, 1994, the Board of Directors held six
meetings, the Audit Committee held three meetings and the Human Resources
and Compensation Committee held two meetings. During the year, no Director
attended fewer than 100 percent of the aggregate of the total number of
meetings of the Board of Directors and the total number of meetings held by
all Committees of the Board on which he served.
EXECUTIVE COMPENSATION
The following table provides certain summary information concerning
compensation paid by the Company for services in all capacities for fiscal
years ended December 31, 1994, 1993 and 1992, to the Company's Chief
Executive Officer and each of the three other most highly compensated
Executive Officers of the Company (all four hereinafter referred to as the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
SECURITIES UNDERLYING
ANNUAL COMPENSATION STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (SHARES)(1) COMPENSATION(2)
Robert J. Lepofsky 1994 $270,000 $95,000 - $ 5,755
President & 1993 245,000 95,000 - 15,977
Chief Executive Officer 1992 235,000 60,000 - 16,018
Gerald J. Fortier 1994 $160,000 $24,000 8,000 $ 5,132
Vice President 1993 156,000 20,000 - 17,830
1992 150,000 17,500 - 17,963
Robert E. Anastasi 1994 $132,000 $40,000 8,000 $ 4,781
Vice President 1993 118,000 47,000 - 13,656
1992 113,000 50,000 14,000 13,647
Ellen S. Nelson 1994 $110,000 $33,000 12,000 $ 2,596
Vice President 1993 76,923 20,000 10,000 50
__________________________
(1) Although the Company's 1985 Restricted Stock Plan permits the award of
restricted stock, no awards were granted or outstanding under that plan
during 1992, 1993 or 1994.
(2) Represents Company contributions under the Company's 401(k) Plan and
premiums paid by the Company for excess group life insurance in 1992, 1993
and 1994 and Company contributions to the Company's Defined Contribution
Plan in 1992 and 1993. In February 1994, the Board of Directors resolved
that, beginning in 1994, the Company would discontinue all contributions to
the Company's Defined Contribution Plan; accordingly "All Other
Compensation" amounts were lower in 1994 than in either 1993 or 1992. See
"Retirement Program.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information concerning the Grant of Stock
Options (also reported in the Summary Compensation Table) under the
Company's 1981 Stock Option Plan during the fiscal year ended December 31,
1994, to the Named Executive Officers.
NUMBER OF PERCENTAGE OF POTENTIAL REALIZABLE VALUE AT
SECURITIES TOTAL OPTIONS ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE STOCK PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE EXPIRATION OPTION TERM (3)
NAME GRANTED(1)(2) FISCAL 1994 (per share) DATE 5%($) 10%($)
Robert E. Anastasi 8,000 11% $7.69 02/09/2004 $39,000.00 $98,000.00
Gerald J. Fortier 8,000 11% 7.69 02/09/2004 39,000.00 98,000.00
Ellen S. Nelson 12,000 16% 7.69 02/09/2004 58,000.00 147,000.00
____________________________
(1) Options and per share prices have been restated to reflect a two-for-
one stock split in the form of a 100% stock dividend effective November
1, 1994.
(2) These options are exercisable in four equal annual cumulative
installments beginning on the date of grant, which was February 10,
1994. The option exercise price is the fair market value on the date
of grant, which was the mean between the high and low prices of the
Common Stock as quoted on the NASDAQ National Market on the date of
grant.
(3) The 5% and 10% rates used are mandated by the Securities and Exchange
Commission. The actual value, if any, that an executive may realize
will depend on the excess of the stock price over the exercise price on
the date the option is exercised, so that there is no assurance the
value realized by an executive will be at or near the values calculated
by using these assumed appreciation rates.
STOCK EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information, with respect to the
Named Executive Officers, concerning the exercise of options during the last
fiscal year and the value of unexercised options held as of the end of the
last fiscal year, December 31, 1994.
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options Held At In-the-Money Options At
Acquired on Value December 31, 1994(1) December 31, 1994(3)
Name Exercise(1) Realized(2) Exercisable Unexercisable Exercisable Unexercisable
Robert J. Lepofsky 40,000 $177,500 100,000 360,000(4) $1,193,700 $4,995,000
Gerald J. Fortier 17,000 58,500 21,000 6,000 258,117 98,886
Robert E. Anastasi 30,000 203,375 12,500 9,500 130,021 94,867
Ellen S. Nelson - - 8,000 14,000 87,892 145,252
_______________________
(1) Options and per share prices have been restated to reflect a two-for-
one stock split in the form of a 100% stock dividend effective November
1, 1994.
(2) "Value Realized" represents the difference between the exercise price
and the market price of the option shares on the date the option was
exercised. The value realized was determined without considering any
taxes which may have been owed.
(3) Based on the mean between the high and low prices for the Common Stock
of the Company as quoted by the NASDAQ National Market on December 30,
1994 ($17.25).
(4) Performance-related stock option. See "Compensation Committee Report"
and "Employment Agreement." Based on 1994 performance, options for the
purchase of 40,000 shares became exercisable on March 1, 1995. In
addition, based on cumulative performance for the five (5) year period
ending December 31, 1994, 120,000 also became exercisable on March 1,
1995. On that date, the difference between the exercise price and the
market price with respect to the total of 160,000 shares, was
$2,180,000.
RETIREMENT PROGRAM
Pension Plan. Contributions to the Company's Pension Plan, which is a
defined benefit plan, are not included in the Summary Compensation Table
because such contributions are made on an actuarial basis and cannot be
separately calculated. Because this Plan is overfunded, a contribution was
not required and not made in 1994. Employees who are at least 21 years of
age with one year of service are eligible for this Plan. The following
table sets forth estimated annual benefits, on a straight-life annuity
basis, to persons in specified compensation and years-of-service categories,
as if they had retired at age 65 at December 31, 1994:
AVERAGE QUALIFIED
ANNUAL COMPENSATION ESTIMATED ANNUAL PENSION
ON WHICH RETIREMENT BASED ON YEARS OF SERVICE INDICATED
BENEFITS ARE BASED 10 YEARS 20 YEARS 30 YEARS 40 YEARS
$50,000 $8,041 $16,083 $22,603 $27,603
100,000 17,541 35,083 48,853 58,853
150,000 27,041 54,083 75,103 90,103
Compensation covered by the Plan includes salary and commissions but
excludes bonuses or incentive awards, if any. Benefits under the Plan as
set forth above are determined on a straight-life annuity basis based
upon years of participation completed after December 31, 1978, and
highest consecutive 60-month average compensation during the last 120
months of employment and are integrated with Social Security benefits.
As of December 31, 1994, Messrs. Lepofsky, Fortier and Anastasi each had
accrued 16 years of benefit service under the Plan and Ms. Nelson had
accrued one and one-half years of such service.
DEFINED CONTRIBUTION PLAN. On February 10, 1994, the Board of
Directors decided, beginning in 1994, to discontinue future contributions
to the Company's Defined Contribution Plan. Because the primary purpose
of the Plan is to fund retirement benefits under the Pension Plan, this
discontinuation of contributions to the Defined Contribution Plan will
have little effect on the benefits available to employees who retire from
the Company. In addition, all employees with an account balance in the
Defined Contribution Plan were vested as of January 1, 1994, regardless
of years of service. The Company now funds the Pension Plan directly and
not by way of the Defined Contribution Plan.
SUPPLEMENTAL KEY EXECUTIVE RETIREMENT PLAN. In 1992 the Company
adopted a Supplemental Key Executive Retirement Plan which is designed to
supplement benefits paid to participants under Company-funded tax-
qualified retirement plans which benefits are otherwise limited with
respect to highly paid employees by the Internal Revenue Code. In
general, the plan provides that participants with 25 or more years of
service will receive a supplemental annual pension from the Company equal
to 50 percent of the greater of such participant's (i) average
compensation (as described under "Pension Plan" above) or (ii) actual
compensation during the 12 months prior to retirement, less all Company-
funded retirement benefits. Benefits under the plan are reduced for
participants with less than 25 years of service. In 1994, the Board of
Directors included several key executives in this plan and the Company
recorded additional retirement costs of $119,000 in connection with the
plan.
COMPENSATION COMMITTEE REPORT
The Human Resources and Compensation Committee of the Board
of Directors (the "Committee") is composed of three independent,
disinterested Directors who are not employees of the Company.
The Committee regularly reviews and approves generally all
compensation and fringe benefit programs of the Company and also
reviews and determines the actual compensation of the Named
Executive Officers, as well as all stock option grants and
restricted stock awards to all employees. All compensation
actions taken by the Committee are reported to and approved by
the full Board of Directors, excluding employee Directors. The
Committee also reviews and makes recommendations to the Board on
policies and programs for the development of management personnel
and management structure and organization. The Committee reviews
and administers the Company's 1981 Stock Option Plan and the
Company's 1985 Restricted Stock Plan. The Committee regularly
reviews Executive Compensation Reports prepared by independent
organizations in order to evaluate the appropriateness of its
Executive Compensation Program.
The Committee uses its base salary and performance-based
bonus program for the Named Executive Officers to enhance short-
term profitability and stockholder value and uses stock options
and restricted stock awards to enhance long-term growth in
profitability, return on equity and stockholder value. In order
to meet these objectives, the Committee first sets base salaries
for the Named Executive Officers based on a review of base
salaries among competitive peer groups and then sets target bonus
awards comprising about 15 to 35 percent of total target
compensation depending upon the position being reviewed. The
Committee reviews the Company's annual performance plan and the
individual goals and objectives of each Named Executive Officer
for the ensuing fiscal year and sets incentive target bonus
awards which are directly linked to the short-term financial
performance of the Company as a whole and to the specific annual
goals and objectives of each Named Executive Officer. In
February of each year, the Committee meets to review the
performance of the Company and the performance of the Chief
Executive Officer and each Named Executive Officer in relation to
the Company's performance plan for the fiscal year then ended and
in relation to the goals set for the Chief Executive Officer and
each Named Executive Officer and awards bonuses accordingly. The
Committee then sets base salaries and target bonus awards for the
next fiscal year. The Committee has discretion to reward extraordinary
accomplishments with special bonuses. In this process the Committee first
meets with the Chief Executive Officer to review the performance of
the Company and the performance of each Named Executive Officer and
then meets in an executive session to review the performance of all the
Named Executive Officers, including the Chief Executive Officer.
In addition to salaries and incentive bonuses, the Committee
also grants stock options to Named Executive Officers and other
key employees of the Company in order to focus the efforts of
these employees on the long-term enhancement of profitability and
stockholder value. In 1989 the Committee granted a performance-
related stock option for the purchase of 400,000 shares of Common
Stock to the Chief Executive Officer which becomes exercisable
ratably over 10 years, but only to the extent that the Company's
earnings and return on equity increase over certain base levels.
This option was granted under the Company's 1981 Employee Stock
Option Plan.
The Committee believes that the foregoing combination of
base salaries, incentive bonuses, stock options and performance-
related stock options have helped develop a Senior Management
Group dedicated to achieving significant improvement in both the
short-term and long-term financial performance of the Company.
The foregoing report has been furnished by the three members
of the Human Resources and Compensation Committee - Dr. Marvin G.
Schorr (Chairman), Dr. Wickham Skinner and Dr. Mark S. Wrighton.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the change in the
cumulative total stockholder return of the Company's Common
Stock against the change in the cumulative total return of the
S&P High Technology Composite Index and the NASDAQ Composite
Index for the period of five fiscal years ending December 31,
1994.
YEAR-END HELIX S&P HIGH TECH NASDAQ
1989 $100.00 $100.00 $100.00
1990 61.61 102.00 85.00
1991 171.96 116.00 136.00
1992 151.08 121.00 159.00
1993 260.08 149.00 181.00
1994 697.32 174.00 177.00
Assumes the value of the investment in Helix Technology Corporation and each
index was $100.00 on December 31, 1989, and that all dividends were reinvested.
DIRECTORS' COMPENSATION
A Director who is also a full-time employee of the Company
receives no additional compensation for services as a Director.
During 1994, each non-employee Director received an annual
retainer fee of $21,000 ($22,000 for Committee Chairmen) payable
in four equal quarterly installments. This Directors'
compensation policy has been in effect for one year.
In addition, the Company has a stock option plan (the "1992
Directors' Stock Option Plan") covering its non-employee
Directors. Under the terms of the 1992 Plan, each non-employee
Director, when first elected a Director at an Annual Meeting of
Stockholders, receives an option to acquire 10,000 shares of
Common Stock of the Company at a purchase price equal to fair
market value on that date. Options are exercisable beginning at
the date of grant in cumulative installments of 2,000 shares
each, the remaining installments becoming exercisable upon each
further re-election as a Director of the Company.
EMPLOYMENT AGREEMENT
In December of 1989, the Company entered into an employment
agreement with Mr. Lepofsky, which runs through December 31,
1999, at a minimum annual salary which is currently at $300,000.
The agreement provides for annual incentive awards in amounts to
be determined by the Human Resources and Compensation Committee
and salary continuation for the shorter of two years or the
entire length of the agreement in the event (i) Mr. Lepofsky
terminates his agreement following a change of control of the
Company not approved by the Board of Directors and a change in a
majority of the Directors, or (ii) Mr. Lepofsky's employment is
terminated involuntarily and not for cause; except that the two-
year limit shall not apply in either event if the Company has
achieved certain specified performance goals or Mr. Lepofsky has
ceased (prior to termination) to have general charge and
supervision of the Company. (See "Severance and Change of
Control Arrangements" below.) The minimum annual salary may be
increased from time to time at the discretion of the Human
Resources and Compensation Committee. The agreement contains
non-competition covenants in favor of the Company. The agreement
also contains a non-qualified performance stock option granting
to Mr. Lepofsky the right to purchase up to 400,000 shares of
Common Stock of the Company at an option price of $3.375 per
share. This option was granted under the Company's 1981 Employee
Stock Option Plan. The option becomes exercisable in ten annual
installments of up to 40,000 shares each, beginning on March 1,
1991, and ending on March 1, 2000, to the extent that the Company
meets certain targets for return on equity and percentage
increase in earnings per share over certain base levels for the
prior year, or for an average of up to the prior three years, or
for the first five years, or for the entire 10-year period, of
the agreement. Based on 1993 performance, options for the
purchase of 40,000 shares became exercisable on March 1, 1994.
Based on 1994 performance, options for the purchase of 40,000
shares became exercisable on March 1, 1995. In addition, based
on cumulative performance for the five-year period ending
December 31, 1994, 120,000 shares also became exercisable on
March 1, 1995.
SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS
The Company's employment agreement with Mr. Lepofsky
provides for certain benefits in the event of involuntary
termination of his employment not for cause or in the event he
terminates his employment following a change of control of the
Company that is not approved by the Company's Board of Directors,
and a change in a majority of the Directors. Under Mr.
Lepofsky's employment agreement, in the event of his involuntary
termination not for cause, or in the event of his voluntary
termination following both a change of control of the Company not
approved by the Board of Directors, and a change in a majority of
the Directors, Mr. Lepofsky would be entitled to receive base
salary continuance through December 31, 1999, or for two years,
whichever period is shorter, except that the two-year limitation
shall not apply in the event the Company has achieved certain
specified performance targets for return on investment and
percentage increase in earnings per share, or in the event that
Mr. Lepofsky has ceased (prior to termination) to have general
charge and supervision of the Company. In the event of a change
of control of the Company not approved by the Board of Directors,
followed by a change in a majority of the Directors on the Board,
Mr. Lepofsky would have the right to terminate his agreement and
a percentage of all remaining installments of his 400,000 share
stock option would become exercisable equal to the percentage of
installments that had previously become exercisable. In the
event of the involuntary termination of Mr. Lepofsky's employment
not for cause, a percentage of up to three remaining 40,000 share
installments of his 400,000 share stock option would become
exercisable, equal to the percentage of installments that had
previously become exercisable.
Any compensation payable to Mr. Lepofsky contingent on a
change of control which qualifies as a parachute payment under
Section 280G of the Internal Revenue Code, as amended, shall be
limited to the maximum amount that may be paid to him without any
part of all of such compensation being deemed an excess parachute
payment under that Section. Based on his current base salary and
his agreement, Mr. Lepofsky could receive a maximum (as described
above) of $1,035,733 under this severance arrangement.
PROPOSALS 2 AND 3
AMENDMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED
SHARES OF COMMON STOCK AND
PREFERRED STOCK
On February 16, 1995, the Company's Board of Directors
approved a proposed amendment to the Company's Restated
Certificate of Incorporation which would, if approved by the
Stockholders, effect an increase in the number of authorized
shares of Common Stock from 10,000,000 shares to 30,000,000
shares, and an increase in the number of authorized shares of
preferred stock, $1.00 par value per share (the "Preferred
Stock") of the Company, from 2,000,000 shares to 5,000,000
shares.
As of the close of business on March 10, 1995, 9,670,842
shares of Common Stock were issued and outstanding, after giving
effect to the two-for-one stock split of the Company's Common Stock
in the form of a stock dividend effective on November 1, 1994,
and the two-for-one stock split of the Company's Common Stock in the
form of a stock dividend effective on October 28, 1993, leaving
329,158 shares of Common Stock authorized but unissued. As of
the close of business on March 10, 1995, no shares of Preferred
Stock were issued and outstanding, leaving all 2,000,000
currently authorized shares of Preferred Stock available for
issue.
The proposed increase in the authorized Common Stock has
been recommended by the Board of Directors to restore the
flexibility to issue Common Stock that existed before the stock
split and assure that an adequate supply of authorized and
unissued shares of Common Stock is available for general
corporate needs, such as future stock dividends or stock splits
or issuance under the Company's 1981 Stock Option Plan. The
proposed increase in the authorized Preferred Stock has been
recommended by the Board of Directors to maintain, generally the
ratio of available shares of Preferred Stock to available shares
of Common Stock and assure that an adequate supply of authorized
and unissued shares of Preferred Stock is available for general
corporate needs. The availability of additional shares of Common
Stock and Preferred Stock for issue, without the delay and
expense of obtaining the approval of Stockholders at a special
meeting, will afford the Company greater flexibility in taking
corporate action.
The newly authorized Common stock and Preferred Stock, like
the currently authorized Common Stock and Preferred Stock, may be
used by the Company for any proper corporate purpose. Such
purposes might include, without limitation, issuance as part or
all of the consideration required to be paid by the Company in
the acquisition of other businesses or properties, or issuance in
public or private sales for cash as a means of obtaining
additional capital for use in the Company's business and
operations. There are no transactions presently under review by
the Board of Directors which contemplate the issuance of Common
Stock or Preferred Stock by the Company and the Company has no
plans to issue any additional shares of Common Stock or Preferred
Stock other than shares of Common Stock that previously have been
reserved for issuance under the Company's 1981 Stock Option Plan
and the Company's 1992 Directors' Stock Option Plan.
If approved by the Stockholders, the increased number of
authorized shares of Common Stock and Preferred Stock will be
available for issue from time to time for such purposes and
consideration as the Board of Directors may approve and no
further vote of the Stockholders of the Company will be required,
except as required under the Delaware General Corporation Law or
the rules of any national securities exchange or quotation
system, such as the NASDAQ National Market, on which the shares
of the Company are at the time listed or quoted.
The additional shares of Common Stock for which
authorization is sought would be identical to the shares of
Common Stock of the Company currently authorized. The issuance
of additional shares of Common Stock may, among other things,
have a dilutive effect on earnings per share and on the equity
and voting power of existing holders of Common Stock. Holders of
Common Stock are not now, and will not be entitled to preemptive
rights to purchase any shares of any authorized capital stock of
the Company. The additional shares of Preferred Stock for which
authorization is sought would be identical to the shares of
Preferred Stock of the Company currently authorized. Under
Article Fourth of the Restated Certificate of Incorporation, the
Board of Directors currently has the authority without the
necessity of further action or authorization by the Company's
Stockholders, except as provided under the Delaware General
Corporation Law or the rules of any national securities exchange
or quotation system on which the shares of the Company are at the
time listed or quoted, to authorize the issuance of Preferred
Stock from time to time in one or more series or classes, and to
fix by resolution the designations, relative rights, preferences
and limitation of each such series or class. Each series or
class of Preferred Stock could, as determined by the Board of
Directors at the time of issuance, rank, with respect to
dividends, sinking fund provisions and conversion, voting,
redemption and liquidation rights, senior to the Common Stock.
It is not possible to state the precise effects of the
authorization of additional shares of Preferred Stock upon the
rights of the holders of the Company's Common Stock until the
Board of Directors determines the respective preferences,
limitations and relative rights of the holders of each class or
series of the Preferred Stock. However, such effects might
include: (a) reduction of the amount otherwise available for
payment of dividends on Common Stock, to the extent dividends are
payable on any issued Preferred Stock; (b) restrictions on
dividends on the Common Stock; (c) dilution of the voting power
of the Common Stock to the extent that the Preferred Stock had
voting rights; (d) conversion of the Preferred Stock into Common
Stock at such prices as the Board determines, which could include
issuance at below the fair market value or original issue price
of the Common Stock; and (e) the holders of Common Stock not
being entitled to share in the Company's assets upon liquidation
until satisfaction of any liquidation preference granted to
holders of the Preferred Stock.
Although the Board of Directors would authorize the issuance
of additional Preferred Stock and Common Stock based on its
judgment as to the best interests of the Company and its
Stockholders, the issuance of authorized Preferred Stock or
Common Stock could have the effect of diluting the voting power
per share and could have the effect of diluting the book value
per share of the outstanding Common Stock. In addition, the
issuance of additional shares of Preferred Stock and Common Stock
could, in certain instances, render more difficult or discourage
a merger, tender offer or proxy contest and thus potentially have
an "anti-takeover" effect, especially if Preferred Stock or
Common Stock were issued in response to a potential takeover. In
addition, additional issuances of authorized Preferred Stock and
Common Stock can be implemented, and have been implemented by
some companies in recent years, with voting or conversion
privileges intended to make acquisition of the Company more
difficult or more costly. Such an issuance could deter the types
of transactions which may be proposed or could discourage or
limit the Stockholders' participation in certain types of
transactions that might be proposed (such as a tender offer),
whether or not such transactions were favored by the majority of
the Stockholders, and could enhance the ability of officers and
directors to retain their positions.
If the amendment is authorized, Article Fourth of the
Company's Restated Certificate of Incorporation will be amended
to read as follows:
FOURTH (a) The total number of shares of stock
which the Corporation is authorized to issue
is 35,000,000, of which 30,000,000 shares
shall be common stock, par value of $1 per
share ("Common Stock") and 5,000,000 shall be
preferred stock, par value $1 per share
("Preferred Stock").
The affirmative vote of holders of a majority of the shares
of Common Stock outstanding and entitled to vote at the meeting
is required to approve Proposal 2 and adopt the proposed
amendment to the Company's Restated Certificate of Incorporation
increasing the authorized Common Stock of the Company. If the
amendment is not approved by the Stockholders, the Company's
authorized Common Stock will remain at 10,000,000 shares. THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR
OF THE INCREASE IN THE AUTHORIZED COMMON STOCK.
The affirmative vote of holders of a majority of the shares
of Common Stock outstanding and entitled to vote at the meeting
is required to approve Proposal 3 and adopt the proposed
amendment to the Company's Restated Certificate of Incorporation
increasing the authorized Preferred Stock of the Company. If the
amendment is not approved by the Stockholders, the Company's
authorized Preferred Stock will remain at 2,000,000 shares. THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR
OF THE INCREASE IN THE AUTHORIZED PREFERRED STOCK.
STOCKHOLDINGS OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following tabulation shows as of March 10, 1995, (i) any
person (including any partnership, syndicate, or other group)
known to management to be the beneficial owner of more than 5
percent of any class of the Company's voting securities, and (ii)
the total number of shares of the Company's voting securities
beneficially owned by each Named Executive Officer and by all
Directors and Executive Officers as a group.
Amount and
Name and Address Nature of
Title of or Title Beneficial Percent of
Class of Beneficial Owner Ownership Class
Common Memorial Drive Trust 2,420,400 (1) 25.02%
125 CambridgePark Drive
Cambridge, MA 02140
Common Dimensional Fund 483,200 (1) 5.00%
Advisors, Inc.
1299 Ocean Avenue
Suite 650
Santa Monica, CA 90401
Common Robert J. Lepofsky 368,800 (2) 3.71%
President &
Chief Executive Officer
Common Gerald J. Fortier 55,000 (2) **
Vice President
Common Robert E. Anastasi 32,000 (2) **
Vice President
Common Ellen S. Nelson 13,500 (2) **
Vice President
Common All Directors and Executive 648,760 (2) 6.49%
Officers as a group (10)
____________________________
** Less than 1 percent of shares outstanding.
(1) Management has been advised that the beneficial owners have sole
investment and voting power with respect to the shares listed.
(2) Beneficial ownership also includes shares that each named individual
and the Directors and Executive Officers as a group have the right to
acquire within 60 days from March 10, 1995, through the exercise of
options. The amounts listed include shares under such options as
follows: Mr. Lepofsky 260,000; Mr. Fortier 23,000; Mr. Anastasi 18,000;
Ms. Nelson 13,500; and all Directors and Executive Officers as a group
340,500.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's Directors and Executive Officers, and persons who
own more than 10 percent of Common Stock of the Company, to file
with the Securities and Exchange Commission initial reports of
ownership and reports of changes in ownership of Common Stock of
the Company. Officers, Directors and greater than 10 percent
shareholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the
copies of such reports furnished to the Company and written
representations that no other reports were required during the
two fiscal years ended December 31, 1994, all Section 16(a)
filing requirements applicable to its Officers, Directors and
greater than 10 percent beneficial owners were complied with.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the year
ended December 31, 1994, includes financial statements and a
report and opinion of Coopers & Lybrand, L.L.P. who has audited
the accounts of the Company for each year since 1967. A
representative of Coopers & Lybrand, L.L.P. is expected to be
present at the meeting to make a statement, if he so desires, and
to respond to appropriate questions.
OTHER MATTERS
Management does not know of any matters to be presented to
the meeting other than as described above. If any other matters
properly come before the meeting, it is intended that the holders
of the Proxies will vote the Proxies upon those matters in
accordance with their best judgment.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented by a
stockholder at the 1996 Annual Meeting of Stockholders must be
received by the Company no later than November 20, 1995.
EXPENSES OF SOLICITATION
The cost of preparing, assembling, and mailing Proxy mate-
rials will be borne by the Company. In addition to solicitation
by use of the mails, the Company may request brokers and banks to
forward copies of Proxy materials to persons for whom they hold
Common Stock and to obtain authority for the execution and
delivery of Proxies. Several officers and employees of the
Company may request the return of the Proxies by telephone,
facsimile and personal interview.
/s/ Beverly L. Armell
Beverly L. Armell
Secretary
March 20, 1995