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SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT /X/ FILED BY A PARTY OTHER THAN THE REGISTRANT / /
- --------------------------------------------------------------------------------
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
/ / Confidential, for use of the Commission only
Howtek, Inc.
(Name of Registrant as Specified in its Charter)
Board of Directors of Howtek, Inc.
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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 0-11:1
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
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1Set forth the amount on which the filing fee is calculated and state how it was
determined.
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HOWTEK, INC.
21 PARK AVENUE
HUDSON, NH 03051
April 24, 1996
Dear Fellow Stockholders:
You are cordially invited to attend our Annual Meeting of Stockholders
which will be held on Wednesday, May 29, 1996, at 4:00 p.m. at Club 101, 101
Park Avenue, New York, NY 10178.
The Notice of Annual Meeting and Proxy Statement which follow describe the
business to be conducted at the meeting.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed Notice of
Annual Meeting and Proxy Statement, may I urge you to complete, sign, date and
return your proxy card in the envelope provided. If the address on the
accompanying material is incorrect, please advise our Transfer Agent,
Continental Stock Transfer & Trust Company, in writing, at 2 Broadway, New York,
New York 10004.
Your vote is important. We will appreciate a prompt return of your signed
proxy card and hope to see you at the meeting.
Cordially,
ROBERT HOWARD
Chairman of the Board of Directors
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HOWTEK, INC.
21 PARK AVENUE
HUDSON, NEW HAMPSHIRE 03051
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1996
------------------------
To The Stockholders of HOWTEK, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Howtek, Inc. (the "Company") will be held on WEDNESDAY, MAY 29,
1996, at 4:00 P.M. at Club 101, 101 Park Avenue, New, New York, 10178 for the
following purposes:
1. To elect six (6) directors to hold office until the 1996 Annual Meeting
of Stockholders and until their respective successors have been duly elected and
qualified;
2. To ratify the selection of BDO Seidman as the Company's independent
auditors for the fiscal year ending December 31, 1996; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on April 12, 1996, are
entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
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IT IS IMPORTANT THAT PROXY CARDS BE RETURNED PROMPTLY.
IF YOU DO NOT EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, DATE, SIGN
AND RETURN THE ENCLOSED PROXY CARD, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO EXERCISE, AND IF
YOU ARE PRESENT AT THE MEETING YOU MAY, IF YOU WISH, REVOKE YOUR PROXY AT THAT
TIME AND EXERCISE THE RIGHT TO VOTE YOUR SHARES PERSONALLY.
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By Order of the Board of Directors,
STEWART K. HALL, Secretary
April 24, 1996
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HOWTEK, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 29, 1996
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of HOWTEK, INC. (the "Company") for use at the
Annual Meeting of Stockholders to be held on May 29, 1996, including any
adjournment or adjournments thereof, for the purposes set forth in the
accompanying Notice of Meeting. Management intends to mail this proxy statement
and the accompanying form of proxy to stockholders on or about April 24, 1996.
The costs of soliciting proxies will be borne by the Company. It is estimated
that said costs will be nominal.
Proxies in the accompanying form, duly executed and returned to the
management of the Company and not revoked, will be voted at the Annual Meeting.
Any proxy given pursuant to such solicitation may be revoked by the stockholder
at any time prior to the voting of the proxy by a subsequently dated proxy, by
written notification to the Secretary of the Company, or by personally
withdrawing the proxy at the meeting and voting in person.
VOTING SECURITIES
Only holders of the Company's common stock, par value $.01 per share, (the
"Common Stock") at the close of business on April 12, 1996, (the "Record Date")
are entitled to receive notice of and to vote at the Annual Meeting. As of the
Record Date, the Company had 7,965,218 shares of Common Stock outstanding. Each
share of Common Stock is entitled to one vote on all matters. No other class of
securities will be entitled to vote at the Annual Meeting. There are no
cumulative voting rights.
The six nominees receiving the greatest number of votes cast by the holders
of the Company's shares of Common Stock entitled to vote at the meeting will be
elected directors of the Company.
The affirmative vote of a majority of the votes cast at the meeting is
necessary for the ratification of the selection of independent auditors.
To establish a quorum to transact business at the Annual Meeting, there
must be present at the Annual Meeting, in person or by proxy, a majority of the
shares of Common Stock issued, outstanding, and entitled to vote at the Meeting.
Shares represented by executed proxies received by the Company will be counted
for purposes of establishing a quorum, regardless of how or whether such shares
are voted on any specific proposal.
Votes cast in person or by proxy at the meeting will be tabulated by the
inspector of elections appointed for the meeting. In accordance with Delaware
law, abstentions and "broker non-votes" (i.e. proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares as to a matter with respect to
which the brokers or nominees do not have discretionary power to vote) will be
treated as present for purposes of determining the presence of a quorum. For
purposes of determining approval of a matter presented at the meeting,
abstentions will be deemed present and entitled to vote and will, therefore,
have the same legal effect as a vote "against" a matter presented at the
meeting. Broker non-votes will be deemed not entitled to vote on the subject
matter as to which the non-vote is indicated and will, therefore, have no legal
effect on the vote on that particular matter.
The address of the principal executive offices of the Company is 21 Park
Avenue, Hudson, New Hampshire 03051, Telephone No. (603) 882-5200.
Proxies which are executed but which do not contain any specific
instructions will be voted in favor of the proposals contained herein.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the Common
Stock owned on April 12, 1996, by (i) each person who is known to the Company to
own beneficially more than 5% of the outstanding shares of the Company's Common
Stock, (ii) each executive officer named in the Summary Compensation Table
below, (iii) each director of the Company, and (iv) all current executive
officers and directors as a group.
NUMBER OF
SHARES
NAME AND ADDRESS OF BENEFICIALLY PERCENTAGE
BENEFICIAL OWNER(1) OWNED(2)(3) OF CLASS
------------------- ------------ ----------
Robert Howard......................................... 1,618,980 (4)(5) 19.02%
303 East 57th Street
New York, New York 10022
David R. Bothwell..................................... 65,585 (6) *
Michael Varanka....................................... 48,500 (7) *
M. Russell Leonard.................................... 30,500 (8) *
Nat Rothenberg........................................ 20,500 (9) *
Harvey Teich.......................................... 20,000 (10) *
Ivan Gati............................................. 15,000 (10) *
Sheila Horwitz (Nominee).............................. 9,000 *
All current executive officers and directors as a
group (11 persons).................................. 1,829,065 (4)(5)(6) 21.1%
(7)(8)(9)(11)
[FN]
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* Less than one percent.
(1) The address of Messrs. Bothwell, Varanka, Leonard, Rothenberg, Teich, Gati
and Horwitz is 21 Park Avenue, Hudson, New Hampshire, 03051.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from April 12, 1996, upon the
exercise of options, warrants or rights; through the conversion of a
security; pursuant to the power to revoke a trust, discretionary account or
similar arrangement; or pursuant to the automatic termination of a trust,
discretionary account or similar arrangement. Each beneficial owner's
percentage ownership is determined by assuming that the options or other
rights to acquire beneficial ownership as described above, that are held by
such person (but not those held by any other person) and which are
exercisable within 60 days from April 12, 1996, have been exercised.
(3) Unless otherwise noted, the Company believes that the persons referred to
in the table have sole voting and investment power with respect to all
shares reflected as beneficially owned by them.
(4) Includes 548,780 shares exercisable on conversion of $3,578,600 principal
amount outstanding as of April 12, 1996, pursuant to a loan with the
Company, which is convertible to 258,064 shares of Common Stock at $3.88
per share, 9,114 shares at $8.625 per share, 112,676 at $8.875 per share,
53,333 shares at $9.375 per share, 54,054 shares at $9.25 per share and
61,539 shares at $8.125 per share. See "Certain Relationships and Related
Transactions".
(5) Includes 7,000 shares owned by Mr. Howard's wife.
(6) Includes 56,585 shares issuable upon exercise of stock options which are
currently exercisable.
(7) Includes 47,500 shares issuable upon exercise of stock options which are
currently exercisable.
(8) Includes 29,500 shares issuable upon exercise of stock options which are
currently exercisable.
(9) Includes 20,000 shares issuable upon exercise of stock options which are
currently exercisable.
(10) Represents shares issuable upon exercise of stock options which are
currently exercisable.
(11) Includes shares issuable upon exercise of stock options which are currently
exercisable.
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ELECTION OF DIRECTORS
The proxies granted by stockholders will be voted individually at the
Annual Meeting for the election of the persons listed below as directors of the
Company, to serve until the next annual meeting of stockholders and until their
successors are duly elected and qualified. In the event any of the nominees
listed below shall be unable to serve, it is intended that the proxy will be
voted for such other nominees as are designated by the Board of Directors. Each
of the persons named has indicated to the Board of Directors of the Company that
he or she will be available as a candidate.
DIRECTOR
NAME AGE POSITION SINCE
---- --- -------- ---------
Robert Howard........... 72 Chairman of the Board, and Director 1984
David R. Bothwell....... 47 President, Chief Executive Officer and
Director 1988
Ivan Gati............... 49 Director 1989
Sheila Horwitz.......... 60 Nominee Director
Nat Rothenberg.......... 66 Director 1988
Harvey Teich............ 77 Director, Chairman Audit Committee 1988
With the exception of Ms. Horwitz, all persons listed above are currently
serving a term of office as directors which continues until the next annual
meeting of stockholders.
Robert Howard, the founder and Chairman of the Board of Directors of the
Company, was the inventor of the first impact dot matrix printer. Mr. Howard was
Chief Executive Officer of the Company from its establishment in 1984 until
December of 1993. He was the founder, and from 1969 to April 1980 he served as
President and Chairman of the Board, of Centronics Data Computer Corp.
("Centronics"), a manufacturer of a variety of printers, and resigned from
Centronics' Board of Directors in 1983. From April 1980 until 1983, Mr. Howard
was principally engaged in the management of his investments. Commencing in
mid-1982, Mr. Howard, doing business as R.H. Research, developed the ink jet
technology upon which the Company was initially based and which Mr. Howard
contributed, without compensation, to the Company. Mr. Howard serves as Chairman
of the Board of Presstek, Inc. ("Presstek"), a public company which has
developed proprietary imaging and consumables technologies for the printing and
graphic arts industries. In February 1994 Mr. Howard entered into a settlement
agreement in the form of a consent decree with the Securities and Exchange
Commission (the "Commission") in connection with the Commission's investigation
covering trading in the Company's Common Stock by an acquaintance of Mr. Howard
and a business associate of such acquaintance. Mr. Howard, without admitting or
denying the Commission's allegations of securities laws violations, agreed to
pay a fine and to the entry of a permanent injunction against future violations
of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934.
David R. Bothwell rejoined the Company on December 8, 1993, as Chief
Executive Officer and Acting President after having left on February 26, 1993,
for health reasons. In April of 1994, he relinquished the position of President
to Mr. Finizio, and then, on May 30, 1995, he resumed the position of President.
Prior to his departure in 1993, Mr. Bothwell had served as President and Chief
Operating Officer of the Company since June 1988, and Director and Chief
Financial Officer since August 1988. From October 1985, to June 1988, Mr.
Bothwell served as Executive Vice President and Chief Operating Officer of
Daymarc Corporation, a manufacturer of automatic test handlers for the
semiconductor industry.
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Ivan Gati has served as Chairman of Turner Management, Inc. since 1983.
Turner Management, Inc. is a vertically integrated real estate investment
company with offices located in New York, Texas and Tennessee, and whose
subsidiary companies provide property management and finance services. Mr. Gati
is a member of the Board of Directors of Universal Automation Systems, Inc.
Sheila Horwitz is a Senior Vice President of Schroder Wertheim & Co., Inc.
She has been nominated by the Board of Directors to fill the board position
vacated by Mr. Finizio. She has an extensive background in the securities
industry, having worked at her current firm, formerly known as Wertheim,
Schroder & Co., since 1990. Previously she worked for Oppenheimer & Co., Inc.
from 1988 to 1990. She worked for L. F. Rothschild & Co. from 1978 to 1988.
Nat Rothenberg is President of Micro Management Ltd. and has served in such
capacity since he founded that company in 1978. Micro Management Ltd. is a
supplier of computer hardware, software, training, service and support to the
real estate industry. Previously, he was President of Drum Research &
Development Corp., an affiliate of Fidelity Corp. of Virginia that provided
computer services to that company.
Harvey Teich is a practicing certified public accountant. On January 1,
1992, the accounting firm of Merman & Teich, where Mr. Teich had been a
principal for the past seventeen years, ceased to operate as a partnership. He
is a member of the New York and Florida State Societies for Certified Public
Accountants.
BOARD OF DIRECTOR MEETINGS AND COMMITTEES
During the last fiscal year, the Board of Directors held three meetings,
the Stock Option Committee of the Board of Directors held four meetings and the
Audit Committee held one meeting. The board meetings were attended by all
directors and the committee meetings were attended by all members of each
committee. The Company does not have standing nominating or compensation
committees of the Board of Directors, or committees performing similar
functions.
The members of the Stock Option Committee during the last fiscal year
consisted of Messrs. Harvey Teich and Nat Rothenberg and currently consists of
the same persons. The function of the Stock Option committee is to administer
the Company's 1993 Stock Option Plan (the "Plan"). The Committee consists of not
fewer than two directors who are appointed by and serve at the pleasure of the
Board of Directors. Members of the Committee are not eligible to have
participated in the Plan during the prior twelve months or to be currently
participating in the Plan while serving as members.
The members of the Audit Committee during the last fiscal year consisted of
Harvey Teich, Chairman and Nat Rothenberg and currently consists of Mr. Teich,
Mr. Rothenberg and Mr. Gati.. The Audit Committee provides an independent review
and advisory function for the independent auditors, the Board and the Company's
management with regard to financial reporting, internal controls and corporate
integrity.
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EXECUTIVE COMPENSATION
The following table provides information on the compensation provided by
the Company during fiscal years 1995, 1994 and 1993 to the person serving as the
Company's Chief Executive Officer during fiscal 1995 and the Company's four most
highly compensated executive officers, serving at the end of the 1995 fiscal
year (the "Named Executive"). Included in this list are only those executive
officers whose total annual salary and bonus exceeded $100,000 during the 1995
fiscal year.
SUMMARY COMPENSATION TABLE
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) OPTIONS(#)
--------------------------- ---- --------- ----------
David Bothwell................................................ 1995 141,870 15,000(1)
Chief Executive Officer 1994 145,470 0
1993 102,437 25,000(2)
M. Russell Leonard............................................ 1995 122,858 20,000(1)
Executive Vice President, Chief Operating Officer 1994 110,591 0
1993 106,596 10,000(3)
Michael Varanka............................................... 1995 115,357 10,000(1)
Senior Vice President, Technology 1994 110,226 0
1993 100,322 20,000(3)
[FN]
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(1) Options granted pursuant to the 1993 Stock Option Plan.
(2) Options granted pursuant to the Director Incentive Plan.
(3) Options granted pursuant to the 1984 Howtek Stock Option Plan, as amended.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL
REALIZABLE VALUE
INDIVIDUAL GRANTS AT ASSUMED ANNUAL
-------------------------- RATES OF STOCK
NUMBER OF PERCENT OF PRICE
SECURITIES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OF OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------
NAME GRANTED FISCAL YEAR ($/SH) DATE 5%($) 10%($)
---- --------- ------------- ----------- ---------- ------ -------
David R. Bothwell........... 10,000 7.00 02/27/2005 44,000 129,700
5,000 6.4 7.00 12/19/2005 22,000 64,850
M. Russell Leonard.......... 5,000 7.00 02/27/2005 22,000 64,850
10,000 7.625 08/29/2005 47,950 121,550
5,000 8.6 7.00 12/19/2005 22,000 64,850
Michael Varanka............. 5,000 7.00 02/27/2005 22,000 64,850
5,000 4.3 7.00 12/19/2005 22,000 64,850
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information on an aggregated basis regarding
each exercise of stock options during the Company's last completed fiscal year
by each of the Named Executives and the fiscal year-end value of unexercised
options.
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE MONEY
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($) (1)
SHARES ------------- --------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED UNEXERCISABLE UNEXERCISABLE
---- ------------ -------- ------------- --------------
David Bothwell(2)...................... 0 0 56,585/ 5,000 119,205/0
M. Russell Leonard(2).................. 4,000 13,625 29,500/17,500 49,500/0
Michael Varanka(2)..................... 0 0 47,500/ 7,500 152,750/0
[FN]
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(1) Based upon the closing price of the Common Stock on December 29, 1995
($6.875).
(2) Options granted pursuant to the 1993 Howtek Stock Option Plan, as amended.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
There is no Compensation Committee or other committee of the Company's
Board of Directors performing similar functions. The person who performed the
equivalent function in 1995 was Robert Howard, Chairman of the Board under the
direction of the Board of Directors. David R. Bothwell, Chief Executive Officer
and a director, in his capacity as an executive officer, participated in
discussions with Mr. Howard during the past completed fiscal year in connection
with executive officer compensation.
COMPENSATION OF DIRECTORS
Robert Howard, Chairman of the Board of Directors was compensated by the
Company during the past fiscal year in his capacity as an employee of the
Company. Similarly, David Bothwell was compensated by the Company in his
capacity as Chief Executive Officer and President, respectively. Since the
Company's inception in 1984, non-employee directors served without compensation.
On September 21, 1993, the Company's Board of Directors adopted the Director
Incentive Plan (the "Director Plan"). The Company has reserved for issuance
250,000 shares under the Director Plan. The Director Plan provides for the award
of (i) restricted and unrestricted stock, (ii) qualified stock options, and
(iii) non-qualified stock options. The Director Plan is administered by a
committee of at least one member appointed by the Board. The term of the
Director Plan is ten years and the term of individual grants of stock options
thereunder varies from five to ten years. Vesting periods for exercise of
options and restrictions on the transferability of stock awards are determined
by the committee administering the Director Plan. In addition, Directors who do
not serve on the Stock Option Committee for the Company's 1993 Stock Option Plan
are eligible to receive grants of non-qualified options under the 1993 Stock
Option Plan. During 1995, no options were granted to Directors under the
Director Plan. Options to purchase 15,000 shares of Common Stock were granted to
Mr. Bothwell under the 1993 Stock Option Plan.
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BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
There is no Compensation Committee of the Board of Directors or other
committee of the Board performing an equivalent function. As noted above,
executive compensation in 1995 was determined by the Company's Chairman, Robert
Howard, in consultation with David Bothwell, Chief Executive Officer. There is
no formal compensation policy for either the Chief Executive Officer or the
other executive officers of the Company. Executive compensation is based
generally on performance and the Company's resources, but not on specific
objective criteria.
Compensation for executive officers consists of a combination of salary and
stock options. In 1995 the Company recorded a loss of $5,255,047 on revenues of
$20,603,654 million as compared to a profit of $880,420 in 1994 on revenues of
$24,370,329 million. During 1995 there were increases in salaries to executive
officers of approximately 5%.
In 1995 Mr. Bothwell's compensation of $141,870 decreased slightly from the
preceding year of $145,470 as a result of a change in the method of
reimbursement for certain company related expenses.
Robert Howard, Chairman Ivan Gati Harvey Teich
David Bothwell Nat Rothenberg
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PERFORMANCE GRAPH
The following chart sets forth a line graph comparing the performance of
the Company's Common Stock over the past five years. This graph assumes the
investment of $100 on December 31, 1990, in the Company's Common Stock, and
compares the performance with the NASDAQ Composite Index and the NASDAQ Computer
Manufacturer Index. Measurement points are at December 31 for each respective
year.
On July 13, 1996, the Company's Common Stock ceased trading on the American
Stock Exchange and commenced trading on the NASDAQ National Market.
Those companies which compete with the Company in its principal market,
image scanning, are either small subsidiaries or divisions of large United
States corporations or are foreign companies which are either not quoted on a
stock exchange or for which data is difficult to obtain. For this reason a more
generic index of NASDAQ technology stocks has been adopted. The Company pays no
dividends. The NASDAQ Composite Index and the NASDAQ Computer Manufacturer Index
reflect a cumulative total return based upon the reinvestment of dividends of
the stocks included in those indices.
NASDAQ
Computer
Measurement Period Manufacturer
(Fiscal Year Covered) Howtek NASDAQ Index Index
12/31/90 100.00 100.00 100.00
12/31/91 81.00 160.60 139.90
12/31/92 334.77 186.94 188.03
12/31/93 145.63 214.61 178.25
12/30/94 196.89 209.88 195.72
12/29/95 148.26 296.57 308.06
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On October 26, 1987, the Company entered into a Revolving Loan and Security
Agreement (the "Loan Agreement") with Mr. Robert Howard who is Chairman of the
Board and a principal stockholder of the Company. The Loan Agreement, as
amended, is represented by a Convertible Revolving Credit Promissory Note (the
"Note") for up to a maximum principal amount of $8,000,000. Mr. Howard has
agreed to extend the repayment date of the Note to January 4, 1998 on the
condition that repayment may only be made with Mr. Howard's consent, provided
however, that in any event the Company may repay the Loan after the expiration
of five years from the date of its request to repay. The Note bears interest,
payable monthly, at a specified prime rate plus two percent, is secured by
substantially all the assets of the Company, and is convertible in whole or in
part to shares of the Company's Common Stock at a conversion price equal to the
closing price of the stock on the NASDAQ National Market System or the American
Stock Exchange (where the Company's stock was listed prior to July 13, 1995) on
the day funds are loaned.
As of April 1, 1996, the Company owed $3,578,600 under its Loan Agreement
with Mr. Howard which is convertible into 548,780 shares of the Company's Common
Stock. See footnote 4 to the "Principal Stockholders Table" in this Proxy
Statement.
In February 1984, the Company entered into a lease of its Hudson, New
Hampshire facility with Mr. Howard, at an annual rent of $78,500, plus taxes and
operating expenses. The Company continues to renew this lease each year at the
same rent and the current lease term expires on September 30, 1996.
On April 4, 1996, the Company borrowed $1,000,000 from Dr. Lawrence Howard,
son of the Company's Chairman, Robert Howard, pursuant to a Convertible
Promissory Note (the "Note"). The Note matures on January 4, 1998 or, at the
option of the holder upon the earlier closing of a public offering of the
Company's securities yielding at least $2 million in net proceeds. Under the
terms of the Note the Company agreed to pay interest monthly at the rate of
Citibank's, prime rate plus two percent. The Note is secured by substantially
all of the assets of the Company and allows the holder the right to convert all
or a portion of the principal amount plus accrued interest to the Company's
Common Stock at a conversion price of $3.00 per share. The shares issuable upon
conversion are subject to certain registration rights.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BDO Seidman LLP ("BDO Seidman") has audited and reported upon the financial
statements of the Company for the fiscal year ended December 31, 1995, and has
been selected by the Board of Directors to examine and report upon the financial
statements of the Company for the fiscal year ending December 31, 1996. The
Board of Directors recommends to the stockholders that they ratify this
selection. BDO Seidman has no direct or indirect interest in the Company or any
affiliate of the Company. A representative of BDO Seidman is expected to be
present at the Annual Meeting with the opportunity to make a statement, if such
person desires to do so, and is expected to be available to respond to
appropriate questions.
DEADLINE FOR SUBMISSION OF
1996 STOCKHOLDER PROPOSALS AND NOMINATIONS
Stockholders who wish to present proposals appropriate for consideration at
the Company's Annual Meeting of Stockholders to be held in 1997, must submit the
proposals in proper form to the Company at its address set forth on the first
page of this proxy statement not later than December 10, 1996 in order for the
proposals to be considered for inclusion in the Company's proxy statement and
form of proxy relating to such Annual Meeting.
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13
OTHER INFORMATION
Proxies for the Annual Meeting will be solicited by mail and through
brokerage institutions and all expenses involved, including printing and
postage, will be paid by the Company.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995, IS BEING FURNISHED HEREWITH TO EACH STOCKHOLDER OF RECORD AS
OF THE CLOSE OF BUSINESS ON APRIL 12, 1996. ADDITIONAL COPIES OF THE ANNUAL
REPORT WILL BE PROVIDED FOR A NOMINAL CHARGE UPON WRITTEN REQUEST TO:
HOWTEK, INC.
21 PARK AVENUE
HUDSON, NEW HAMPSHIRE 03051
ATTENTION: MS. CONNIE WEBSTER
IN ADDITION, COPIES OF ANY EXHIBITS TO THE ANNUAL REPORT WILL BE PROVIDED
FOR A NOMINAL CHARGE TO STOCKHOLDERS WHO MAKE A WRITTEN REQUEST TO THE COMPANY
AT THE ABOVE ADDRESS.
The Board of Directors is aware of no other matters, except for those
incident to the conduct of the Annual Meeting, that are to be presented to
stockholders for formal action at the Annual Meeting. If, however, any other
matters properly come before the Annual Meeting or any adjournments thereof, it
is the intention of the persons named in the proxy to vote the proxy in
accordance with their judgment.
By order of the Board of Directors,
ROBERT HOWARD
Chairman of the Board of Directors
April 24, 1996
10
14
HOWTEK, INC.
21 PARK AVENUE
HUDSON, NEW HAMPSHIRE 03051
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY 29, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT HOWARD and DAVID R. BOTHWELL, and each of
them, Proxies, with full power of substitution in each of them, in the name,
place and stead of the undersigned, to vote at the Annual Meeting of
Stockholders of Howtek, Inc. on Wednesday, May 29, 1996, at 4:00 o'clock in the
afternoon, or at any adjournment or adjournments thereof, according to the
number of votes that the undersigned would be entitled to vote if personally
present, upon the following matters:
1. ELECTION OF DIRECTORS:
FOR all nominees listed below (except as marked to the contrary below) / /
WITHHOLD AUTHORITY to vote for all nominees listed below / /
Robert Howard, David R. Bothwell, Ivan Gati, Sheila Horwitz, Nat Rothenberg and
Harvey Teich. (Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space below.)
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2. Ratification of appointment of BDO Seidman, independent certified public
accountants, as auditors for the Corporation for the fiscal year ending December
31, 1995.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
(Continued and to be Signed on Reverse)
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE, IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE ELECTION OF DIRECTORS
AND THE RATIFICATION OF THE APPOINTMENT OF THE AUDITORS LISTED ABOVE.
Please sign exactly as name
appears hereon. When shares
are held by joint tenants,
both should sign. When
signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such. If a
corporation, please sign in
full corporate name by
President or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
DATED: , 1996
-----------------------------
SIGNATURE
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SIGNATURE IF HELD JOINTLY.
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED
ENVELOPE.