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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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HELISYS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
HELISYS, INC.
24015 GARNIER STREET
TORRANCE, CALIFORNIA 90505
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
January 7, 1997
----------------
To the Stockholders of Helisys, Inc.:
The Annual Meeting of Stockholders of Helisys, Inc., a Delaware corporation
(the "Company"), will be held at the Torrance Hilton at South Bay, 21333
Hawthorne Blvd., Torrance, California 90503, on Tuesday, January 7, 1997 at
2:00 p.m. Pacific Time, to consider and vote on the following matters
described in the attached Proxy Statement:
(1) The election of five (5) directors to serve until the next Annual
Meeting of Stockholders or until their successors are elected and duly
qualified (Proposal 1);
(2) The approval (recommended by the Board of Directors) of an Amendment to
the Company's 1995 Stock Incentive Plan to increase the authorized number of
shares of Common Stock issuable thereunder from 200,000 to 500,000 (Proposal
2); and
(3) Such other business as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on November 8, 1996
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting or any postponement and adjournment thereof. The
stock transfer books will not be closed.
The Board of Directors welcomes the personal attendance of stockholders at
the meeting. HOWEVER, PLEASE SIGN AND RETURN THE ENCLOSED PROXY, which you may
revoke at any time prior to its use, WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. A self-addressed, postage prepaid envelope is enclosed for your
convenience. Your proxy will not be used if you attend the meeting and choose
to vote in person.
By Order of the Board of Directors
Dave T. Okazaki
Secretary
Torrance, California
December 23, 1996
HELISYS, INC.
24015 GARNIER STREET
TORRANCE, CALIFORNIA 90505
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
To Be Held January 7, 1997
2:00 p.m.
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SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy is solicited by and on behalf of the Board of
Directors of Helisys, Inc., a Delaware corporation (the "Company"), and the
Company will bear the cost of such solicitation. Solicitation of proxies will
be primarily by mail, although some of the officers, directors and employees
of the Company may solicit proxies personally or by telephone. The Company
will also reimburse brokerage houses and other custodians, nominees or
fiduciaries for their expenses in sending proxy materials to their principals.
The persons named as proxies were designated by the Board of Directors and
are directors of the Company. All properly executed proxies will be voted
(except to the extent that authority to vote has been withheld) and where a
choice has been specified by the stockholder as provided in the proxy it will
be voted in accordance with the specification so made. Proxies submitted
without specification will be voted FOR the election as directors of the
nominees proposed by the Board of Directors and FOR the amendment to the
Company's 1995 Stock Incentive Plan to increase the authorized number of
shares of Common Stock issuable thereunder from 200,000 to 500,000.
Any stockholder may revoke a proxy at any time before it is voted at the
meeting by a proxy bearing a later date. A proxy may also be revoked by any
stockholder by delivering written notice of revocation to the Secretary of the
Company or by voting in person at the meeting.
This Proxy Statement and proxy are being mailed to stockholders of the
Company on or about December 23, 1996. The mailing address of the executive
offices of the Company is 24015 Garnier Street, Torrance, California 90505.
VOTING AT THE MEETING
Only record holders of Common Stock of the Company at the close of business
on November 8, 1996 will be entitled to notice of, and to vote at, the
meeting. As of the record date, there were 3,991,654 shares of the Company's
Common Stock outstanding. Each share is entitled to one vote at the meeting.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. Abstentions
are counted in tabulating the votes cast on proposals presented to
stockholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved.
PROPOSAL ONE
ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect the five (5)
proposed nominees named below unless contrary instructions are given in the
proxy. The election of directors shall be by the affirmative vote of the
holders of a plurality of the shares voting in person or by proxy at the
meeting. Each director is to hold office until the next annual meeting and
until his successor is elected and qualified.
The names and certain information concerning the persons nominated by the
Board of Directors to become directors at the meeting are set forth below. THE
COMPANY'S BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH
OF THE NOMINEES NAMED BELOW. It is intended that shares represented by the
proxies will be voted FOR the election to the Board of Directors of the
persons named below unless authority to vote for nominees has been withheld in
the proxy. Although each of the persons named below has consented to serve as
a director if elected and the Board of Directors has no reason to believe that
any of the nominees named below will be unable to serve as a director, if any
nominee withdraws or otherwise becomes unavailable to serve, the persons named
as proxies will vote for any substitute nominee designated by the Board of
Directors. The following information regarding the nominees is relevant to
your consideration of the slate proposed by the Board of Directors:
NOMINEES FOR DIRECTOR
Michael Feygin, 43, co-founded the Company's predecessor in 1985 and has
served as Chairman of the Board, Chief Executive Officer and Chief Technical
Officer since the Company's inception in 1990. Mr. Feygin developed the
Laminated Object Manufacturing technology ("LOM") on behalf of the Company.
Mr. Feygin completed his Master of Science degree in Mechanical Engineering in
Moscow at the Technological Institute of Food Industry and earned a Master of
Science degree at the Illinois Institute of Technology.
Robert D. Crangle, 53, co founded the Company's predecessor in 1985 and
served as Senior Vice President and Secretary of the Company from 1990 until
October 1995, and has served as a Director of the Company since its inception
in 1990. Mr. Crangle earned the Certified Management Consultant designation in
1980 and is also an attorney admitted to the bar in the Massachusetts,
Illinois, and Kansas. Mr. Crangle has been President of Rose & Crangle Ltd., a
management consulting firm emphasizing in science policy as well as
manufacturing operations and entrepreneurship, since 1984. He has been a
practicing attorney, emphasizing in business law, with the firm of Metz and
Crangle since 1987. Mr. Crangle received a degree in Nuclear Engineering from
Kansas State University and a law degree from Harvard Law School.
Dave T. Okazaki, 48, has been Chief Financial Officer, Secretary and a
Director of the Company since October 1995, and from March 1994 to October
1995 was Controller of the Company. Mr. Okazaki was Vice President of Finance
and Administration at Superior Engineered products from July 1993 to March
1994. From May 1992 to June 1993, Mr. Okazaki concentrated on a private
business venture to raise capital to fund the manufacturing of a desktop
digital film recorder, and from December 1988 to April 1992, Mr. Okazaki
served as Vice President of Cymbolic Sciences International, a manufacturer of
automated inspection equipment, photoplotters and digital film recorders. Mr.
Okazaki received a Bachelor of Science degree in Accounting from the
University of Denver.
B. Allen Lay, 62, a nominee to serve as a member of the Company's Board of
Directors, has been Chief Executive Officer of Vestro Natural Foods ("Vestro")
since January 1995, and has been a director of Vestro since 1987. Mr. Lay was
the Chief Executive Officer of Meridian Data, Inc. from July 1993 to December
1994. Since 1982 he has been a General Partner of Southern California
Ventures. Mr. Lay is a director of ViaSat, Inc. and PairGain Technologies,
Inc. Mr. Lay received a degree in Industrial Management from the University of
Kansas.
Frederick M. Haney, 55, has been a Director of the Company since March 1996.
Since May 1991, Mr. Haney has been President of The Venture Management
Company, a management consulting firm specializing in strategic growth,
technology transfer and the formation of new businesses, and has served as a
member of the Board of Directors of Adaptive Solutions, Inc., a publicly
traded developer and manufacturer of neural network and imaging processing
computers. Since February 1996, Mr. Haney has also served as a Senior
2
Vice President--Private Equity for Cruttenden Roth Incorporated. From January
1984 until March 1991, Mr. Haney was Senior Vice President and Manager of West
Coast Activities for 3i Ventures, a venture capital firm. Mr. Haney also
currently serves on the Board of Directors of several privately held
companies, as well as Rainbow Technologies, Inc., a publicly traded developer
and manufacturer of security software. Mr. Haney received a Bachelor of Arts
degree in Mathematics from Ohio Wesleyan University, a Masters of Science in
Mathematics from Colorado State University and a Ph.D. in Computer Sciences
from Carnegie-Mellon University.
EXECUTIVE OFFICER
Jack Andersen, 58, has been Vice President--Worldwide Sales of the Company
since June 1996. Mr. Andersen served as Director of Worldwide Sales and
Service at Industrial Electronic Engineers Inc. from June 1994 until May 1996.
From July 1992 until May 1994, Mr. Andersen served as Vice President--
Worldwide Sales and Support of Sanyo Icon, Inc. and from January 1990 until
June 1992, Mr. Andersen served as President of Supreme Connection, Inc., a
private consulting firm. Mr. Andersen received a Bachelor of Science degree in
Business Administration from the University of California, Los Angeles.
BOARD COMMITTEES
The Board of Directors of the Company has a standing Compensation Committee,
Audit Committee and Executive Committee. The Board of Directors does not have
a standing Nominating Committee. The functions of the Compensation Committee
include advising the Board of Directors on officer compensation and on
employee compensation generally. The Compensation Committee held two meetings
during fiscal 1996, and currently consists of Mr. Crangle, Louis Delmonico,
who has decided not to stand for re-election as a member of the Board of
Directors, and Mr. Haney. The Audit Committee has the responsibility of
recommending to the Board of Directors the appointment of the Company's
outside auditors, examining the results of audits and reviewing internal
accounting controls. The Audit Committee held two meetings during fiscal 1996.
The Audit Committee currently consists of Mr. Crangle, Mr. Delmonico and Mr.
Haney. The function of the Executive Committee is to determine the persons
entitled to participate in stock option, bonus and other similar plans. The
Executive Committee held one meeting during fiscal 1996, and currently
consists of Mr. Feygin, Mr. Okazaki, Mr. Crangle, Mr. Delmonico and Mr. Haney.
ATTENDANCE AT MEETINGS
During the fiscal year ended July 31, 1996, the Board of Directors held a
total of three meetings. No member of the Board of Directors attended fewer
than 75% of the meetings of the Board and of the committees of which he was a
member.
3
The following table sets forth summary information concerning compensation
paid or accrued by the Company for services rendered during the two fiscal
years ended July 31, 1996, to the Company's Chief Executive Officer and to the
other executive officers employed by the Company as of July 31, 1996.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
----------------------------------
SECURITIES
FISCAL UNDERLYING OTHER ANNUAL
YEAR SALARY BONUS OPTIONS (#) COMPENSATION(1)
------ -------- ------- ---------- --------------
Michael Feygin
Chief Executive Officer,
President and Chief
Technical Officer......... 1996 $159,614 $91,942 -- $ --
1995 99,359 83,509 -- --
Michael Tsenter (2)
Vice President--
Sales/Marketing........... 1996 115,000 8,338 -- 43,216
1995 65,903 3,623 -- 55,949
Jerome A. Janson
Vice President--North
American Sales............ 1996 111,200 -- -- 23,607
1995 60,333 2,000 -- 89,588
Dave T. Okazaki
Chief Financial Officer... 1996 88,308 15,619 22,600 --
1995 83,867 6,709 -- --
Jack Andersen (5)
Vice President--Worldwide
Sales..................... 1996 20,708 -- 30,000 --
1995 -- -- -- --
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(1)Represents commissions earned.
(2)Mr. Tsenter's employment with the Company terminated on July 31, 1996.
(3)Mr. Andersen commenced service as Vice President--Worldwide Sales of the
Company in June 1996.
His annual base salary is $125,000.
OPTION MATTERS
Option Grants. The following table sets forth certain information concerning
grants of stock options to each of the Company's executive officers named in
the Summary Compensation Table during the fiscal year ended July 31, 1996.
OPTION GRANTS IN LAST FISCAL YEAR
% OF TOTAL
OPTIONS
GRANTED TO
EMPLOYEES
OPTIONS IN FISCAL EXERCISE EXPIRATION
NAME GRANTED YEAR PRICE($/SH) DATE
---- ------- ---------- ----------- ----------
Michael Feygin..................... -- -- -- --
Michael Tsenter.................... -- -- -- --
Jerome A. Janson................... -- -- -- --
Dave T. Okazaki.................... 5,000 3.1% 2.50 7/8/06
5,000 3.1% 5.50 3/6/06
12,600 7.8% 4.09 11/22/06
Jack Andersen...................... 30,000 1.9% $4.75 6/3/06
4
Option Exercises. No options were exercised by any of the Company's
executive officers named in the Summary Compensation Table during the fiscal
year ended July 31, 1996.
The following table includes the number of shares covered by both
exercisable and unexercisable stock options as of July 31, 1996. None of the
options reflected below were "in the money" at July 31, 1996 (i.e., with a
positive spread between the closing sales price as reported by NASDAQ/NMS of
$2.0625 per share of Common Stock as of July 31, 1996, and the exercise price
of such stock options).
AGGREGATE FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED
OPTIONS AT FISCAL YEAR-
END
-------------------------
EXERCISABLE UNEXERCISABLE
----------- -------------
Michael Feygin..................................... -- --
Michael Tsenter.................................... -- --
Jerome A. Janson................................... -- --
Dave T. Okazaki.................................... 3,150 19,450
Jack Andersen...................................... 0 30,000
CONSULTING AGREEMENTS
On April 1, 1996, the Company entered into a Professional Services Agreement
with Mr. Crangle and Rose & Crangle, Ltd., a Kansas corporation of which Mr.
Crangle is a 50% shareholder. Under the terms of this Agreement, Rose &
Crangle is paid $6,000 per month for consulting services performed on behalf
of the Company and the Company reimburses Rose & Crangle's expenses incurred
in connection with performing such consulting services.
DIRECTOR COMPENSATION
Each non-employee director is paid $1,500 for each Board meeting attended.
The Company has and will continue to pay the expenses of its non-employee
directors incurred in attending Board meetings. In addition, pursuant to the
terms of the Company's 1995 Stock Incentive Plan, each non-employee director
of the Company, so long as they beneficially own less than 1% of the
outstanding Common Stock of the Company, including any outstanding options to
purchase Common Stock which are exercisable within 60 days of the date of
grant, will be granted nonstatutory options to purchase 6,000 shares of Common
Stock, at fair market value on the date of commencement of service on the
Company's Board of Directors and every four years thereafter, provided that
all unvested options shall terminate upon the termination of the non-employee
director's service on the Board of Directors. All options granted to non-
employee directors under the Company's 1995 Stock Incentive Plan become 25%
exercisable on the date of grant and become exercisable at the rate of 25%
every 12 months thereafter.
CERTAIN TRANSACTIONS
Robert D. Crangle, a director of the Company, owns 50% of the outstanding
equity of Rose & Crangle, Ltd., a management consulting firm that provides
professional consulting services to the Company. Such services include the
administration of research grants, preparation of business plans and other
documents, and certain contractual and other matters. The Company paid Rose &
Crangle, Ltd. aggregate fees and reimbursed expenses of $76,125 in the fiscal
year ended July 31, 1995 and $106,935 in the fiscal year ended July 31, 1996,
for such services, the majority of which were performed by Mr. Crangle.
Jerome A. Janson, the Company's Vice President--North American Sales, was
the President of Paradigm, Inc., a Michigan sales agency, which represented
the Company prior to Mr. Janson's joining the Company. The total fees paid to
Paradigm, Inc. totaled $60,036 for the fiscal year ended July 31, 1996.
5
In connection with the acquisition of its facility in Torrance, California,
the Company entered into a loan agreement with Bank of America in the
aggregate amount of $1,930,500, which amount is collateralized by the facility
and personally guaranteed by Michael Feygin.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could otherwise be obtained
from unaffiliated third parties. In the future, the Company will not enter
into any transaction with its officers and directors unless such transaction
is approved by the independent directors of the Company.
The Company's Restated Certificate of Incorporation provides that, pursuant
to Delaware Law, directors of the Company shall not be liable for monetary
damages for breach of the directors' fiduciary duty of care to the Company and
its stockholders. This provision does not eliminate the duty of care, and in
appropriate circumstances equitable remedies such as injunctions or other
forms of non-monetary relief remain available under Delaware Law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to the Company, for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director and for payment
of dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware Law. The provision also does not affect a director's
responsibility under any other law, such as the federal securities laws. The
Company has entered into Indemnification Agreements with each of its officers
and directors that obligate the Company to indemnify them as permitted by
applicable law.
PRINCIPAL STOCKHOLDERS
The following table sets forth, to the knowledge of the Company, certain
information regarding the beneficial ownership of the Company's Common Stock
as of December 2, 1996, by (i) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding Common Stock, (ii) each of
the Company's directors and nominees, (iii) each of the named executive
officers in the Summary Compensation Table and (iv) all of the Company's
executive officers and directors as a group. Except as indicated in the
footnotes to this table, the Company believes that the persons named in this
table have sole voting and investment power with respect to the shares of
Common Stock indicated.
SHARES
BENEFICIALLY
OWNED(1)
-----------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
------------------------------------ --------- -------
Michael Feygin (2)(3)...................................... 1,993,260 49.9%
Rose & Crangle, Ltd........................................ 372,928 9.3%
Robert D. Crangle (4)
102 E. Lincoln Avenue
Lincoln, Kansas 67455
Jerome A. Janson........................................... 44,696 1.1%
1091 Centre, Suite 200
Auburn Hills, Michigan 48326
Dave T. Okazaki (2)(5)..................................... 6,040 *
Jack Andersen (2).......................................... 0 *
Frederick M. Haney (6)..................................... 1,500 *
3433 Paseo del Campo
Palos Verdes Estates, California 90274
All directors and officers as a group (7) persons (8)...... 2,418,424 59.9%
- - --------
*Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
6
subject to options or warrants currently exercisable or convertible, or
exercisable or convertible within60 days of December 2, 1996, are deemed
outstanding for computing the percentage of the persons holding such
options but are not deemed outstanding for computing the percentage of any
other person.
(2) The address of such stockholder is c/o Helisys, Inc., 24015 Garnier
Street, Torrance, California 90505.
(3) Does not include 120,000 shares held in irrevocable trust for the benefit
of Mr. Feygin's children, over which Mr. Feygin disclaims beneficial
ownership.
(4) The shares shown are owned of record by Rose & Crangle, Ltd., a Kansas
corporation ("Rose & Crangle") and management consulting firm, Robert
Crangle, a Director of the Company, owns 50% of the shares of Rose &
Crangle, Mr. Crangle's spouse owns the remaining 50% of the shares of Rose
& Crangle. However, pursuant to an arrangement entered into between Mr.
Crangle and Rose & Crangle, Mr. Crangle is entitled to vote 100% of the
shares of the Company owned of record by Rose & Crangle.
(5) Consists of 5,040 shares subject to options exercisable within 60 days of
December 2, 1996.
(6) Consists of 1,500 shares subject to options exercisable within 60 days of
December 2, 1996.
(7) Includes directors' and executive officers' shares listed above, including
6,540 shares subject to options exercisable within 60 days of December 2,
1996.
The Company is not aware of any arrangements that may at a subsequent date
result in a change of control of the Company.
PROPOSAL TWO
AMENDMENT TO THE 1995 STOCK INCENTIVE PLAN,
TO INCREASE THE TOTAL NUMBER OF SHARES
ISSUABLE THEREUNDER
Subject to approval by the Company's stockholders, the Board of Directors
has amended the 1995 Stock Incentive Plan ("1995 Plan") to increase the number
of shares of Common Stock issuable under the 1995 Plan by 300,000 shares of
Common Stock, and to reserve such additional shares for issuance under the
1995 Plan, bringing the total number of shares of Common Stock subject to the
1995 Plan to 500,000. The additional shares available for issuance under the
1995 Plan will enable the Company to continue to use equity incentives to
attract, retain and motivate its officers, directors and key employees. The
last reported sale price for the Company's Common Stock on December 2, 1996 as
reported by Nasdaq, was $2.875.
Approval of the additional shares of Common Stock reserved for issuance
under the 1995 Plan will require the affirmative vote of the holders of a
majority of the shares of outstanding Common Stock present or represented at
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL TO
AMEND THE 1995 PLAN TO INCREASE THE TOTAL NUMBER OF SHARES OF COMMON STOCK
ISSUABLE THEREUNDER FROM 200,000 TO 500,000.
The essential features of the 1995 Plan are summarized below. The summary
does not purport to be a complete description of the 1995 Plan. The Company's
stockholders may obtain a copy of the 1995 Plan upon written request to the
Secretary of the Company.
GENERAL NATURE AND PURPOSE
The 1995 Plan provides for the granting of incentive stock options
("incentive options") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), options that do not qualify as
incentive stock options ("nonqualified options") and rights to purchase Common
Stock subject to restrictions as more fully described in the 1995 Plan
("restricted stock").
7
The 1995 Plan was adopted by the Board of Directors and the Company's
Stockholders in October 1995. Pursuant to the terms of the 1995 Plan, options
may be granted or rights of purchase may be offered on or prior to October 31,
1995. Options outstanding at that time or at the time the 1995 Plan is
otherwise terminated will remain outstanding and will continue to be
exercisable within the period specified in stock option agreements between the
optionees and the Company.
The purposes of the 1995 Plan are to promote the interests of the Company by
providing incentives for the retention of the services of existing directors,
executive personnel and key employees of the Company or its affiliates, to
attract and retain competent new directors, executive personnel and key
employees, and to provide incentives to all such directors, executive
personnel and key employees to devote their utmost effort and skill to the
advancement and betterment of the Company, by permitting them to participate
in the success and increased value of the Company. Approximately 50 persons
are eligible for participation in the 1995 Plan.
The 1995 Plan has been designed to be exempt from the provisions of the
Employment Retirement Income Security Act of 1974 ("ERISA") and is not a
qualified deferred compensation plan under Section 401(a) of the Code.
ELIGIBILITY
Incentive Options. In general, any officer or other key employee of the
Company, including any director who is also an employee, is eligible to
receive incentive options under the 1995 Plan, subject to the following
limitations imposed by the Code. An incentive option may not be granted under
the 1995 Plan to any person who, at the time the option is granted, owns more
than 10% of the total combined voting power of all classes of stock of the
Company or any subsidiary corporation (a "ten-percent stockholder"), unless
the exercise price of the shares of Common Stock covered by the option is at
least 110% of the fair market value of the shares as of the date of grant, and
such incentive option by its terms is not exercisable after the expiration of
five years from the date such option is granted. In addition, the aggregate
fair market value (determined as of the date of grant) of the Common Stock
with respect to which incentive options become exercisable for the first time
under all incentive options held by any ten-percent stockholder may not exceed
$100,000 in any calendar year.
Nonqualified Options and Restricted Stock. Nonqualified options and/or
rights to purchase restricted stock may be granted under the 1995 Plan to
officers, key employees or directors (whether or not employed by the Company)
of the Company.
Subject to the foregoing limitations applicable to incentive options and the
total number of shares reserved for issuance under the 1995 Plan, there is no
maximum or minimum number of shares for which stock options may be granted or
offered to any one person under the 1995 Plan.
ADMINISTRATION
The 1995 Plan is administered by the Executive Committee of the Board of
Directors (the "Committee"). Subject to the limitations on eligibility
discussed above and the specific provisions of the 1995 Plan, the Committee
has authority to determine which persons are to receive incentive options,
nonqualified options and rights to purchase restricted stock under the 1995
Plan, the number of shares of Common Stock to be covered by each option or
right to purchase restricted stock, the exercise price, form of consideration
and all other terms and conditions of each option, and, generally, to take all
actions and make all determinations necessary or appropriate to administer the
1995 Plan. Determinations of the Committee as to all matters of interpretation
of the 1995 Plan are final and binding upon all participants and prospective
participants.
AMENDMENT AND TERMINATION OF THE 1995 PLAN
Except as restricted with respect to formula grants of stock options to non-
employee directors, the 1995 Plan may be modified, amended, suspended or
terminated by the Board at any time. In addition, to the extent
8
necessary and desirable to comply with Section 422 of the Code (or any other
applicable law or regulation), the Company shall obtain stockholder approval
of any amendment or modification to the 1995 Plan. No amendment, modification
or termination of the 1995 Plan shall affect or impair any rights or
obligations under any option or right to purchase restricted stock granted
prior to the date of such amendment, modification or termination without the
consent of the holder of such option or right to purchase restricted stock.
Unless previously terminated by the Board, the 1995 Plan will terminate on
October 30, 2005.
TERMS AND CONDITIONS OF OPTIONS AND RESTRICTED STOCK
Exercise or Purchase Price. The purchase price of a share of Common Stock
payable upon the exercise of an incentive option granted under the 1995 Plan
may not be less than the fair market value per share on the date the option is
granted; except that with respect to an incentive option granted to a ten-
percent stockholder, the exercise price may not be less than 110% of the fair
market value on the date of grant. The purchase price of a share of Common
Stock payable upon the exercise of a nonqualified option granted under the
1995 Plan may not be less than 85% of the fair market value per share on the
date the option is granted.
Under the 1995 Plan, the fair market value per share on a specified date
shall be determined by the Committee. If the shares of Common Stock are
publicly traded, the "fair market value" as of such date shall be the closing
price of a share of Common Stock on the principal exchange on which shares of
Common Stock are listed on such date, or if shares were not traded on such
date, then on the next preceding day during which a sale occurred; or, if the
shares are not so listed but are traded in the over-the-counter market, the
closing bid price; or, if none of the above is applicable, the value of a
share as established by the Committee for such date using any reasonable
method of evaluation.
The purchase price of restricted stock shall be fixed by the Committee but
may not be less than 85% of the fair market value per share at the time the
right to purchase the restricted stock is granted.
Vesting of Options. The Committee has discretionary authority at the time an
option is granted under the 1995 Plan to determine when and in what increments
shares covered by the option may be purchased. An option may be granted on
terms providing that it will vest (i.e., become exercisable) either in whole
or in part at any time during its term, or only in specified percentages at
stated time periods or intervals during the term of the option. Vesting may be
based upon tenure of employment or affiliation with the Company, upon
achievement of specified goals, or upon such other events as the Committee
determines. The Committee also may accelerate any optionee's right to exercise
options granted under the 1995 Plan.
Term of Options. The term of each option granted under the 1995 Plan is
determined by the Committee at the time the option is granted; provided,
however, that no option granted under the 1995 Plan may have a term in excess
of ten years from the date of grant. Further, with respect to an incentive
option granted to a ten-percent stockholder, the term may not be in excess of
five years from the date of grant.
Assignability. Options granted under the 1995 Plan are not assignable or
transferable except by will or under the laws of descent and distribution and,
during the lifetime of an optionee, are exercisable only by such optionee;
provided, however, that a nonqualified option may be transferred pursuant to a
"qualified domestic relations order" as defined in the Code.
Termination of Employment Other Than by Death or Disability. Under the 1995
Plan, in the event that an optionee who is an employee of the Company shall
cease to be employed by the Company for any reason other than his or her death
or disability, all options granted to such optionee under the 1995 Plan may be
exercised (but only to the extent they were exercisable as of the date of the
cessation of the optionee's employment), at any time within three months after
such cessation, but in any event no later than the expiration date of the
option.
Termination of Employment by Reason of Death or Disability. Under the 1995
Plan, in the event that an optionee who is an employee of the Company shall
cease to be employed by the Company by reason of his or
9
her death or disability, all options granted to such optionee under the 1995
Plan may be exercised (but only to the extent they were exercisable as of the
date of the cessation of the optionee's employment as the result of such death
or disability), at any time within 12 months after the optionee's death or
disability, but in any event no later than the expiration date of the option.
Restrictions, Repurchase and Forfeiture of Restricted Stock. Restricted
stock may not be sold, assigned, transferred, pledged, hypothecated or
otherwise encumbered or disposed of until the restrictions thereon are removed
or expire. The Committee may require that the certificates representing
restricted stock remain in the physical custody of an escrow holder or the
Company until all restrictions are removed or expire. Each certificate
representing restricted stock will bear such legend or legends making
reference to the restrictions imposed upon such restricted stock as the
Committee in its discretion deems necessary or appropriate to enforce such
restrictions. The Committee may impose such other conditions on restricted
stock as it may deem appropriate including, without limitation, restrictions
under federal and state securities laws.
Restrictions imposed upon restricted stock will lapse in accordance with
such schedule or other conditions as are determined by the Committee and set
forth in the Restricted Stock Agreement. Under such provisions, if the
purchaser's employment with the Company terminates before all of the shares
have vested, the Company will have the right to repurchase any unvested shares
at the original purchase price. Until the shares have become vested, they will
be held by the Company and may not be sold or otherwise transferred by the
purchaser, but the purchaser will retain the right to vote the shares and all
other rights incident to the ownership of the shares, subject to the
restrictions contained in the Stock Purchase Agreement. In addition, the
Committee may at any time, in its sole discretion, accelerate the time at
which all restrictions with respect to any restricted stock will lapse, or
remove any and all such restrictions.
Payment. The form of consideration payable upon exercise of an option or
upon issuance of restricted stock, including the method of payment, shall be
determined in the sole discretion of the Committee (and, in the case of an
incentive option, shall be determined at the time of grant). In the case of
options, such consideration may consist of: (i) cash; (ii) check; (iii)
subject to applicable legal restrictions, other shares of Common Stock of the
Company owned by the optionee having a fair market value on the date of
exercise equal to the aggregate exercise price of the shares as to which such
option is exercised; or (iv) any combination of the foregoing methods of
payment as shall be permitted by the Board of Directors or the Committee and
applicable corporate law. Consideration payable for restricted stock may, at
the discretion of the Committee, consist of: (i) cash;(ii) check; (iii)
secured promissory notes; or (iv) any combination of the foregoing methods of
payment as shall be permitted by the Committee.
FORMULA GRANTS TO NON-EMPLOYEE DIRECTORS
Under the 1995 Plan, each non-employee director, so long as they
beneficially own less than 1% of the outstanding Common Stock of the Company,
including any outstanding options to purchase Common Stock which are
exercisable within 60 days of the date of grant, shall be automatically
granted options to purchase 6,000 shares of Common Stock upon commencement of
service as a director and every four years thereafter. These nonqualified
options have an exercise price equal to 100% of the fair market value of the
Common Stock on the date of grant, have a ten-year term and vest in four equal
annual installments commencing on the date of grant. In addition, any such
options which are unvested shall terminate upon the termination of the non-
employee director's service on the Board of Directors.
ADJUSTMENTS UPON CHANGES OF CAPITALIZATION AND REORGANIZATIONS
In order to preserve, but not increase, the benefits to holders of options
under the 1995 Plan, in the event that the outstanding shares of Common Stock
of the Company are increased, decreased, changed into or exchanged for a
different number or kind of shares or other securities of the Company by
reason of a stock split, reverse stock split, stock dividend, reclassification
or similar change in the capital structure of the Company, appropriate
adjustments shall be made by the Committee in the aggregate number and kind of
shares subject to
10
the 1995 Plan, and the number and kind of shares and the price per share
subject to outstanding options granted under the 1995 Plan.
In the event that the Company at any time proposes to merge into, or
consolidate with, any other corporation, or enters into any other
reorganization (including the sale of substantially all of its assets) in
which the Company is not the surviving corporation, the 1995 Plan, and all
outstanding options and rights of purchase under the 1995 Plan not exercised
prior to such transaction, shall terminate, unless provision is made in
connection with such transaction for the continuance of the 1995 Plan and for
the assumption by the successor corporation of the options and rights of
purchase or substitution of new options and rights of purchase with
appropriate adjustments. If no provision is made in such transaction for the
continuance of the 1995 Plan and the assumption or substitution of options and
rights of purchase, all holders of options and rights of purchase under the
1995 Plan shall be given written notice of such proposed transaction not less
than 30 days prior to the proposed effective date, and prior to the
anticipated effective date, such persons shall have the right to exercise all
or any portion of the options and rights of purchase held by such holder with
respect to any or all shares then subject thereto.
SUMMARY OF FEDERAL TAX CONSEQUENCES
The following is a brief summary of certain federal income tax consequences
of participation in the 1995 Plan.
Incentive Options
No taxable income will be recognized by an optionee upon either the grant or
the exercise of an incentive option under the 1995 Plan. Instead, a taxable
event will occur upon the sale or other disposition of the shares acquired
upon exercise of an incentive option, and the tax treatment of the gain or
loss realized will depend upon how long the shares were held before their sale
or disposition.
If a sale or other disposition of the shares received upon the exercise of
an incentive option occurs more than (i) one year after the date of exercise
of the option and (ii) two years after the date of grant of the option, the
holder will recognize a long-term capital gain or loss at such time equal to
the full amount of the difference between the proceeds realized and the
exercise price paid. However, a sale, exchange, gift or other transfer of
legal title of such stock before the expiration of either the one-year or two-
year period described above will constitute a "disqualifying disposition." A
disqualifying disposition involving a sale or exchange will result in ordinary
income to the optionee in an amount equal to the lesser of (i) the fair market
value of the stock on the date of exercise minus the exercise price, or (ii)
the amount realized on disposition minus the exercise price. If the amount
realized in a disqualifying disposition exceeds the fair market value of the
stock on the date of exercise, the gain realized, in excess of that taxed as
ordinary income as indicated above, will be taxed as a capital gain. A
disqualifying disposition as a result of a gift will result in ordinary income
to the optionee in an amount equal to the difference between the exercise
price and the fair market value of the stock on the date of exercise. Any loss
realized upon a disqualifying disposition will be treated as a capital loss.
Capital gains and losses resulting from disqualifying dispositions will be
treated as long-term or short-term depending upon whether the shares were held
for more or less than the applicable statutory holding period (currently one
year). The Company will be entitled to a tax deduction in an amount equal to
the ordinary income recognized by the optionee as a result of the
disqualifying disposition.
If legal title to any shares acquired upon exercise of an incentive option
is transferred by sale, gift or exchange, such transfer will be treated as a
disposition for purposes of determining whether a "disqualifying disposition"
has occurred. However, certain transfers will not be treated as dispositions
for such purposes, such as transfers to an estate or by inheritance upon an
optionee's death, a mere pledge or hypothecation, or a transfer into the name
of the optionee and another person as joint tenants.
11
Nonqualified Options
No taxable income is recognized by an optionee upon the grant of a
nonqualified option. Upon exercise, however, the optionee will recognize
ordinary income in the amount by which the fair market value of the shares
purchased exceeds, as of the date of exercise, the exercise price paid for
such shares. The income recognized by the optionee will be subject to income
tax withholding by the Company out of the optionee's current compensation. If
such compensation is insufficient to pay the taxes due, the optionee will be
required to make a direct payment to the Company for the balance of the tax
withholding obligation. The Company will be entitled to a tax deduction equal
to the amount of ordinary income recognized by the optionee, provided certain
reporting requirements are satisfied.
Restricted Stock
The receipt of restricted stock will not result in a taxable event until the
expiration of any repurchase rights retained by the Company with respect to
such stock, unless the participant makes an election under Section 83(b) of
the Code to be taxed as of the date of purchase. If no repurchase rights are
retained or if a Section 83(b) election is made, the participant will
recognize ordinary income in an amount equal to the excess of the fair market
value of such shares on the date of purchase over the purchase price paid for
such shares. Even if the purchase price and the fair market value of the
shares are the same (and, therefore, no ordinary income is received by the
participant), a Section 83(b) election must be made to avoid deferral of the
date ordinary income is recognized. The election must be filed with the
Internal Revenue Service not later than 30 days after the date of purchase, or
in the case of restricted stock granted for no monetary consideration, the
date of grant.
If no Section 83(b) election is made or if no repurchase rights are
retained, a taxable event will occur on each date the participant's ownership
rights vest (i.e., when the Company's repurchase rights expire) as to the
number of shares that vest on that date, and the holding period for long-term
capital gain purposes will not commence until the date the shares vest. The
participant will recognize ordinary income on each date shares vest in an
amount equal to the excess of the fair market value of such shares on that
date over the purchase price paid for such shares.
INDEPENDENT AUDITORS
The Board of Directors has not yet formally appointed independent auditors
for fiscal 1997. A representative of Arthur Andersen LLP, the Company's
independent auditors for the fiscal year ended July 31, 1996, will be present
at the Annual Meeting to respond to questions and to make a statement on
behalf of Arthur Andersen LLP if the representative so desires.
STOCKHOLDER PROPOSALS
Stockholder proposals for the 1997 Annual Meeting of Stockholders of the
Company must be received at the Company's offices, 24015 Garnier Street,
Torrance, California 90505, addressed to the Secretary, no later than August
25, 1997.
12
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers and persons who own more than ten percent of
a registered class of the Company's equity securities to file with the
Securities and Exchange Commission (the "SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and ten-percent stockholders
are required by SEC regulations to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on the
review of copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
endedJuly 31, 1996 the Company's officers, directors and ten-percent
stockholders complied with all applicableSection 16(a) filing requirements.
TRANSACTION OF OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not aware
of any matters other than those set forth herein and in the Notice of Annual
Meeting of Stockholders that will come before the meeting. Should any other
matters arise requiring the vote of stockholders, it is intended that proxies
will be voted in respect thereto in accordance with the best judgment of the
person or persons voting the proxies.
Please return your proxy as soon as possible. Unless a quorum consisting of
a majority of the outstanding shares entitled to vote is represented at the
meeting, no business can be transacted. Therefore, PLEASE BE SURE TO DATE AND
SIGN YOUR PROXY EXACTLY AS YOUR NAME APPEARS ON YOUR STOCK CERTIFICATE AND
RETURN IT IN THE ENCLOSED POSTAGE PREPAID RETURN ENVELOPE. PLEASE ACT PROMPTLY
TO ENSURE THAT YOU WILL BE REPRESENTED AT THIS IMPORTANT MEETING.
A COPY (WITHOUT EXHIBITS) OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB,
INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED JULY 31,
1996 IS BEING MAILED TO STOCKHOLDERS TOGETHER WITH THIS PROXY STATEMENT.
COPIES OF THE EXHIBITS TO THE ANNUAL REPORT ON FORM 10-KSB WILL BE PROVIDED
WITHOUT CHARGE, AT THE WRITTEN REQUEST OF ANY BENEFICIAL OWNER OF SHARES
ENTITLED TO VOTE AT THE ANNUAL MEETING OF STOCKHOLDERS. REQUESTS SHOULD BE
MAILED TO THE SECRETARY, HELISYS, INC., 24015 GARNIER STREET, TORRANCE,
CALIFORNIA 90505.
By Order of the Board of Directors
Dave T. Okazaki
Secretary
December 23, 1996
13
PROXY PROXY
HELISYS, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
Dave T. Okazaki and Michael Feygin, and each or either of them, with full
power of substitution, are hereby appointed proxies to vote the stock of the
undersigned in Helisys, Inc. at the Annual Meeting of Stockholders on January
7, 1997, and at any postponement and adjournment thereof, to be held at the
Torrance Hilton at South Bay, 21333 Hawthorne Blvd., Torrance, California 90503
at 2:00 p.m. Pacific Time.
MANAGEMENT RECOMMENDS THAT YOU VOTE "FOR" PROPOSAL 1 AND "FOR" PROPOSAL 2.
1. PROPOSAL 1 ELECTION OF DIRECTORS.
[_] FOR all Nominees listed below (except as indicated to the contrary below)
[_] WITHHOLD AUTHORITY to vote for all Nominees listed below
Michael Feygin, Robert Crangle, Dave Okazaki, B. Allen Lay and Frederick
Haney.
INSTRUCTION: To withhold authority to vote for any individual Nominee, write
that Nominee's name in the space provided below.
2. PROPOSAL 2 AMENDMENT TO 1995 STOCK PLAN.
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof,
including procedural and other matters relating to the conduct of the meeting.
THIS PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE FIVE DIRECTOR NOMINEES LISTED ABOVE AND
FOR PROPOSAL 2.
Please sign exactly as
name appears hereon.
________________________
________________________
Dated: ___________, 199
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.
PLEASE IMMEDIATELY DATE, SIGN AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE.
THANK YOU FOR YOUR PROMPT ATTENTION TO THIS IMPORTANT MATTER.