-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Pp6AcSkBoBZqS0vMnfFePIrsTtmAZ1GS0rVufOaucaTDAq+yrlr+gst3XeTYXMj0 bTw/RUXFht57jjk2Ka0RMQ== 0000795445-98-000008.txt : 19980407 0000795445-98-000008.hdr.sgml : 19980407 ACCESSION NUMBER: 0000795445-98-000008 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980403 FILED AS OF DATE: 19980406 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ADVANCED MACHINE VISION CORP CENTRAL INDEX KEY: 0000795445 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 330256103 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-20097 FILM NUMBER: 98587930 BUSINESS ADDRESS: STREET 1: 2067 COMMERCE DR CITY: MEDFORD STATE: OR ZIP: 97504 BUSINESS PHONE: 5417767700 MAIL ADDRESS: STREET 1: 2067 COMMERCE DR CITY: MEDFORD STATE: OR ZIP: 97504 FORMER COMPANY: FORMER CONFORMED NAME: ARC CAPITAL DATE OF NAME CHANGE: 19951222 FORMER COMPANY: FORMER CONFORMED NAME: APPLIED LASER SYSTEMS /CA DATE OF NAME CHANGE: 19930825 DEF 14A 1 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT SCHEDULE 14A INFORMATION ======================== Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange Act of 1934 Filed by the Registrant [x] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] Confidential, for 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 ADVANCED MACHINE VISION CORPORATION - -------------------------------------------------------------------------------- (Name of Registrant as Specified in its Charter) - -------------------------------------------------------------------------------- (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)(1) and 0-11 1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------- 2) Aggregate number of Securities to which transaction applies: ------------------------------------------------------------------------- 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: Set forth the amount on which the filing fee is calculated and state how it was determined. ------------------------------------------------------------------------- 4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------- 5) Total fee paid: ------------------------------------------------------------------------- [ ] Fee paid previously 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: ------------------------------------------------------------------------- 4) Date Filed: ------------------------------------------------------------------------- ADVANCED MACHINE VISION CORPORATION 2067 Commerce Drive, Medford, Oregon 97504 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS ======================================== May 7, 1998 The Annual Meeting of Stockholders of Advanced Machine Vision Corporation ("AMV" or the "Company"), a California corporation, will be held at the offices of the Company, 2067 Commerce Drive, Medford, Oregon, 97504 on May 7, 1998 at 2:00 p.m., Pacific Daylight Time, for the following purposes: 1. To elect a Board of Directors; 2. To transact such other business as may properly come before the meeting or any adjournment thereof. Your attention is directed to the accompanying proxy statement. Only stockholders of record at the close of business on April 3, 1998, will be entitled to notice of and to vote at the meeting and any adjournment thereof. All stockholders are requested to sign, date and complete the enclosed proxy and return it promptly in the accompanying postage-prepaid, pre-addressed envelope whether or not they expect to attend the meeting to ensure that their shares will be represented. Any stockholder giving a proxy has the right to revoke it at any time before it is voted. By Order of the Board of Directors, /s/ Alan R. Steel ----------------------------------- Alan R. Steel Vice President, Finance and Chief Financial Officer April 3, 1998 PLEASE SIGN AND DATE THE ENCLOSED FORM OF PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE IN ORDER TO ENSURE THAT YOUR VOTES ARE COUNTED. ADVANCED MACHINE VISION CORPORATION 2067 Commerce Drive, Medford, Oregon 97504 PROXY STATEMENT =============== Annual Meeting of Stockholders May 7, 1998 _______________________ General Information =================== Persons Making the Solicitation - ------------------------------- This proxy statement is furnished in connection with the solicitation by the Board of Directors of Advanced Machine Vision Corporation (the "Company" or "AMV") of proxies for use at the Annual Meeting of Stockholders to be held on May 7, 1998, and at any adjournment thereof. This proxy statement is first being mailed to stockholders on or about April 3, 1998. You are requested to sign, date and return the enclosed proxy card in order to ensure that your shares are represented at the meeting. All shares of AMV Common Stock (as defined below under "Record Date") represented by a properly completed proxy received in time for the Annual Meeting will be voted by the proxy holders as provided therein. If no direction is given in the proxy, it will be voted "FOR" the election of the directors nominated. In addition to solicitation by mail, regular employees of the Company and its Transfer Agent may solicit proxies in person or by telephone without additional compensation. The Company will pay persons holding shares in their names or in the names of their nominees, but not owning such shares beneficially, for the expenses of forwarding soliciting materials to the beneficial owners. The Company will bear all expenses incurred in soliciting its stockholders. Such expenses are estimated not to exceed $10,000. Revocability of Proxy - --------------------- Any proxy given by a stockholder of the Company may be revoked at any time before it is voted at the annual meeting by a written notice to the Secretary of the Company, or upon request if the stockholder is present at the meeting. Each valid proxy returned which is not revoked, unless indicated otherwise on the proxy card, will be voted in the election of directors for the nominees as described herein. Record Date and Stock Entitled to Vote - -------------------------------------- Only holders of record of Class A Common Stock (the "Class A Common Stock") and Class B Common Stock (hereinafter referred to collectively as the "Common Stock") at the close of business on April 3, 1998, are entitled to notice of and to vote at the meeting or any adjournment thereof. The outstanding voting securities of the Company on that date consisted of 10,636,384 shares of Class A Common Stock and 76,835 shares of Class B Common Stock. The Class A Common Stock and Class B Common Stock are substantially identical on a share-for-share basis. The holders of Common Stock vote as a single class on all matters to come before stockholders for a vote and may cumulate their votes in the election of directors upon giving notice as required by law. Each share of Class B Common Stock is automatically converted into one share of Class A Common Stock upon its sale or transfer, or the death of the holder. Voting Rights; Election of Directors - ------------------------------------ Holders of the Company's Common Stock are entitled to one vote for each share held as of the above record date, except that in the election of directors each stockholder has cumulative voting rights and is entitled to a number of votes equal to the number of shares held by such stockholder multiplied by the number of directors to be elected. The stockholder may cast these votes all for a single candidate or may distribute the votes among any or all of the candidates. No stockholder will be entitled to cumulate votes for a candidate however, unless that candidate's name has been placed in nomination prior to the voting and the stockholder, or any other stockholder, has given notice at the Meeting prior to the voting of an intention to cumulate votes. In such an event, the proxy holder may allocate among the management nominees the votes represented by proxies in the proxy holder's sole discretion. Quorum; Stockholder Vote - ------------------------ A majority of the outstanding shares of the Company must be present, in person or by proxy, at the Annual Meeting to constitute a quorum for the transaction of business. Shares represented by proxies that reflect abstentions or "broker non-votes" (i.e., shares held by a broker or nominee which are represented at the Annual Meeting, but with respect to which such broker or nominee is not empowered to vote on a particular proposal or proposals) will be counted as shares that are present and entitled to vote for purposes of determining the presence of a quorum. For purposes of determining the outcome of a proposal, shares represented by such proxies will not be treated as affirmative votes. The affirmative vote of a plurality of the votes cast at the meeting is required for the election of directors. A properly executed proxy marked "WITHHELD" with respect to the election of one or more directors will not be voted with respect to the director or directors indicated, although it will be counted for purposes of determining whether there is a quorum. Election of Directors ===================== The following table sets forth information concerning the nominees of management for directors for the ensuing year. The term of office for all nominees listed below will expire at the next annual meeting to be held in 1999 or when their successors are elected and qualified.
Principal Occupation Year First and Business Experience Elected Name Including Service on Other Boards Age Director - -------------------------- ------------------------------------------------- --- ---------- William J. Young (C) President and Chief Executive Officer of the 55 1994 Company and Director of Lithia Automotive Group Haig S. Bagerdjian Senior Vice President, Business Development and 40 1997 General Counsel, Syncor International Corporation Vikram Dutt President of Aaron, Dutt and Edwards, Inc., a 56 1997 benefits and insurance concern James Ewan, Ph.D. President and Chief Executive Officer of 49 1996 SRC VISION, Inc., a wholly-owned subsidiary of the Company Robert M. Loeffler (A) (B) Attorney and Director of PaineWebber Group, Inc. 74 1997 Jack Nelson (A) (B) (C) Chairman of the Board and Chief Executive 47 1994 Officer of Caprius, Inc., a public company; formerly a practicing attorney. Rodger A. Van Voorhis (C) President of Ventek, Inc. a wholly-owned 40 1996 subsidiary of the Company
(A) Member of the Audit Committee (B) Member of the Compensation and Stock Option Committees (C) Member of the Directors Nominating Committee Meetings and Committees - ----------------------- Currently there are four permanent committees of the AMV Board of Directors: the Stock Option Committee, the Compensation Committee, the Audit Committee and the Directors Nominating Committee. The Stock Option, Compensation and Audit Committees held two, one and one formal meetings, respectively, during the fiscal year ended December 31, 1997. In addition, the committees met informally, as appropriate, in conjunction with regular meetings of the Board of Directors. During the fiscal year ended December 31, 1997, the Board of Directors held five meetings. During 1997, each of the above directors attended at least 75% of the aggregate of the total number of meetings of the Board and the total number of meetings of committees of the Board on which he served during his respective term as a director. Management ========== Executive Officers and Directors - -------------------------------- The directors and executive officers of AMV are as follows: Name Age Position - ---------------------- --- ------------------------------------------- William J. Young 55 President and Chief Executive Officer and Chairman of the Board of Directors James Ewan, Ph.D. 49 President and Chief Executive Officer of SRC VISION, Inc. and Director Alan R. Steel 53 Vice President of Finance, Chief Financial Officer and Secretary Haig S. Bagerdjian 40 Director Vikram Dutt 56 Director Robert M. Loeffler 74 Director Jack Nelson 47 Director Rodger A. Van Voorhis 40 President, Ventek, Inc. and Director William J. Young became President and Chief Executive Officer of the Company effective February 1, 1994, and Chairman of the Board in September 1994. Mr. Young was the President and Chief Executive Officer of Volkswagen of America from 1991 through March 1993, where he was responsible for all the company's operations in the United States, which exceeded $2.2 billion in revenue annually. As CEO of Volkswagen of America, Mr. Young also served as President of V-Crest Systems, Inc., a computer services company serving 1,200 automobile agencies, and as a Director of VCI, Inc. a $2 billion financial services company. From January 1989 through December 1991, Mr. Young served as Vice President of Sales and Marketing of Volkswagen United States and its 700 dealers operating in the North American market. From 1982 through 1988, Mr. Young headed W.J. Young and Associates, an automotive marketing consulting company. From 1979 through May 1983, Mr. Young was the General Manager of the Volkswagen Division of Volkswagen of America, where he was responsible for implementing the sales and marketing strategies of the Volkswagen Division and the maintenance and financial health of the Volkswagen dealer organization of 950 dealers. Prior to 1979, Mr. Young served in the capacity of National Sales Manager, and held other management positions in the Volkswagen organization and other companies. Mr. Young is a director of Lithia Motors, Inc., a public company. Dr. James Ewan became President and Chief Executive Officer of the Company's SRC VISION, Inc. ("SRC") subsidiary in May 1994 and a Director of the Company in 1996. Before joining SRC, Dr. Ewan was with Teledyne Corporation from 1985 to 1994 where he was President of Teledyne Microwave and General Manager of Teledyne Monolithic Microwave. At Teledyne Microwave, Dr. Ewan was responsible for restructuring the company from primarily a military electronics company to one that derived half of revenues from commercial applications. Dr. Ewan led Teledyne Monolithic Microwave from its start-up phase until it was eventually merged into Teledyne Microwave as an operating division. Prior to Teledyne, Dr. Ewan was Section Manager of the Gallium-Arsenide Microelectronics Center of The Aerospace Corporation from 1980 to 1985. While at Aerospace, Dr. Ewan was responsible for the development of a range of state-of-the-art compound semiconductor technology, device and circuit processing and digital and analog circuit design. Alan R. Steel became Vice President of Finance and Chief Financial Officer on March 14, 1994. Mr. Steel was the Vice President and Chief Financial Officer of DDL Electronics, Inc. ("DDL"), a New York Stock Exchange listed company, since 1983. From 1980 to 1983, he served as Controller for DDL. While at DDL, Mr. Steel was responsible for handling New York Stock Exchange compliance, financial and SEC reporting, public and private equity offerings and shareholder relations. From 1975 to 1980, he served as financial manager for ARCO Transportation Company, a subsidiary of Atlantic Richfield Company. From 1974 to 1975 he was the Director of Internal Control at Atlantic Richfield Company. From 1967 to 1974, Mr. Steel was a certified public accountant with Arthur Andersen & Company. Rodger Van Voorhis joined the Company's Ventek, Inc. ("Ventek") subsidiary in 1992 as Vice President of Operations and became President in 1996, and a director of the Company in 1996. Mr. Van Voorhis was previously an Assistant Vice President of Marketing for United Financial Systems, and held various management positions at Morvue Electronics, Inc., a designer and manufacturer of wood veneer defect scanning systems. On July 24, 1996, Mr. Van Voorhis entered into a five-year employment agreement with Ventek which provides for an annual base salary of $150,000 and a $375 monthly automobile allowance. The contract provides that if Mr. Van Voorhis is terminated other than for cause before July 24, 1999, he shall be paid his base salary until that date. Haig S. Bagerdjian is currently Senior Vice President, Business Development and General Counsel for Syncor International Corporation, a Woodland Hills, California-based operator of domestic and international nuclear pharmacy service centers, at which he has been employed since 1991. From 1987 to 1991, he served in several executive level positions at Calmark Holding Corporation. He also was General Counsel for American Adventure, Inc., which was a subsidiary of Calmark Holding. Mr. Bagerdjian received a J.D. from Harvard Law School and is admitted to the State Bar of California. Since 1983, Vikram Dutt has been the President of Aaron, Dutt and Edwards, Inc. a Chicago, Illinois consulting firm specializing in consulting and administra- tion of pension and profit sharing plans. Mr. Dutt received a B. S. in Chemical Engineering and an M.B.A. from the University of Illinois. Since 1978, Robert Loeffler has been a Director, Chairman of the Audit Committee and member of the Executive Committee and Compensation Committee at PaineWebber Group, Inc. From 1987 to 1991, Mr. Loeffler was attorney of counsel to Wyman, Bautzer, Kuchel & Silbert in Los Angeles, California. Prior to that, he spent ten years as Partner and Managing Partner at Jones, Day, Reavis & Pogue in Los Angeles prior to his retirement from the firm. From 1965 to 1973, Mr. Loeffler served in a variety of positions at the asset management company, Investors Diversified Services, Inc. (IDS), including Chief Legal Officer. Mr. Loeffler received an LL.B., magna cum laude from Harvard Law School. He is admitted to the state bars of New York, California, Minnesota and Oklahoma. Jack Nelson, Esq. has served as the Chairman of the Board, Chief Executive Officer and Treasurer of Caprius, Inc. (or its predecessor companies), a public company, since June 1991, and was Vice Chairman from 1990 until June 1991. Caprius is a designer and manufacturer of breast imaging equipment used to detect breast cancer. From January 1986 to December 1993, Mr. Nelson was an attorney at the firm of Zaslowsky, Marx & Nelson. Compensation of Directors - ------------------------- The Company currently compensates directors who are not also officers or employees of the Company ("outside" directors) for attending Board meetings and committee meetings in the form of stock options. Generally, outside directors will be granted options to purchase 100,000 shares of Class A Common Stock at the closing price determined on the date such person becomes a director of AMV. The options vest 25% upon becoming a director, with the remaining 75% vesting 25% per year over the next three years, subject to service as a director. Members of the Stock Option, Audit, and Compensation Committees receive $400 per meeting not held in conjunction with a regularly scheduled board meeting. William J. Young, James Ewan and Rodger Van Voorhis receive no compensation as directors. All directors are reimbursed for expenses incurred in attending board and committee meetings. Executive Compensation - ---------------------- The following table sets forth the compensation for the Chief Executive Officer ("CEO") and each executive officer who received over $100,000 in cash compensation for the fiscal year ended December 31, 1997.
Long-Term Compensation Annual Compensation ------------------------------ ----------------------------------- Restricted Stock Name and Principal Positions Year Salary Bonus Other Options-# Awards-# (2)(3) - ---------------------------- ---- ------ ----- ----- ----------- ------------------ William J. Young 1997 $ 250,000 $ 75,000 $ -- -- 107,500 President & Chief Executive 1996 235,000 40,000 30,000 (1) -- -- Officer 1995 150,000 -- -- 500,000 -- James Ewan 1997 225,000 75,000 23,455 (4) -- 69,500 President of SRC VISION, Inc. 1996 200,000 40,000 30,000 (1) -- -- 1995 160,000 -- -- 300,000 -- Alan R. Steel 1997 143,000 35,000 -- -- 55,500 Vice President, Finance and 1996 135,000 20,000 15,000 (1) -- -- Chief Financial Officer 1995 120,000 -- -- 250,000 --
(1) Amounts represent sign-on bonuses. (2) Restricted stock awards are comprised of the following:
Mr. Young Dr. Ewan Mr. Steel ---------- --------- ---------- Shares granted January 1997 952,000 572,000 476,000 Shares donated back to the Company in 1997 (857,000) (515,000) (428,000) ---------- --------- ---------- Remaining from January 1997 grant 95,000 (a) 57,000 (a) 48,000 (a) Restricted bonus shares 12,500 (b) 12,500 (b) 7,500 (b) ---------- --------- ---------- Net restricted shares 107,500 69,500 55,500 ========== ========= ==========
(a) These restricted shares cannot be traded or transferred unless (i) the executive remains in the employ of the Company until January 10, 2000, and (ii) a payment of $1.80 per share is made by the employee to the Company. If either of these conditions is not met, the shares of stock will be forfeited and returned to the Company. The value of the restricted shares (i.e., the positive difference between the market value per share of Class A Common Stock on December 31, 1997 and the $1.80 required payment, times the indicated number of shares) was $27,550, $16,530 and $13,920 for Messrs. Young, Ewan and Steel, respectively. (b) These restricted shares were granted in addition to each executive's cash bonus for 1997. The shares cannot be traded or transferred until the earlier of January 1, 1999 or the date on which the Executive's employment is terminated other than for cause. The Company has the option to repurchase the shares before January 1, 1999 at an independently established valuation price of $1.07 per share upon termination for cause. The value of the restricted shares at the valuation price was $13,375, $13,375 and $8,025 for Messrs. Young, Ewan and Steel, respectively. (3) The restricted shares have the same voting and dividend rights as all other Class A Common Stock. (4) In 1996, the Company authorized a 7.5%, $100,000 loan to Dr. Ewan, which loan was funded in 1997. The loan is secured by real property. The loan, including interest thereon, is due on February 20, 2002. However, if Dr. Ewan ceases to be an employee of the Company, its parent, its subsidiary or an affiliated entity before February 20, 2002, Dr. Ewan shall pay to the Company, on his termination date, in full payment of the Note and accrued interest thereon, an amount equal to (i) the unpaid principal balance ("Principal"), less (ii) the Principal multiplied by a fraction, the numerator of which shall be the number of days from February 20, 1997 that Dr. Ewan was an employee, and the denominator of which is 1,825 (five years times 365 days). All Principal and accrued interest will be forgiven on February 20, 2002 if Dr. Ewan is an employee on that date. The amount shown represents the amount of Principal and interest forgiveness that would have occurred if Dr. Ewan's employment had terminated on December 31, 1997. Employment Agreements - --------------------- Effective January 1, 1997, Messrs. Young, Ewan and Steel entered into individual employment agreements providing for annual salaries of $250,000, $220,000 and $143,000, respectively. Effective January 1, 1998, Messrs. Young, Ewan and Steel entered into new employment agreements replacing the prior agreements providing for annual salaries of $262,500, $250,000 and $150,150, respectively. Except for salary and defined duties (see the above table), the terms of each Executive's separate employment agreement with the Company are the same. Each employment agreement provides that if the Executive is terminated by the Company at any time other than for cause, he is entitled to severance equal to 2.99 times base salary (excluding bonuses). Additionally, the Company provides each Executive with the use of a car. Limitation of Liability and Indemnification Matters - --------------------------------------------------- The Company's Restated Articles of Incorporation limit the liability of its directors. As permitted by amendments to the California General Corporation Law enacted in 1987, directors will not be liable to AMV for monetary damages arising from a breach of their fiduciary duty as directors in certain circumstances. Such limitation does not affect liability for any breach of a director's duty to AMV or its stockholders (i) with respect to approval by the director of any transaction from which he derives an improper personal benefit, (ii) with respect to acts or omissions involving an absence of good faith, that he believes to be contrary to the best interest of AMV or its stockholders, that involve intentional misconduct or a knowing and culpable violation of law, that constitute an unexcused pattern or inattention that amounts to an abdication of his duty to AMV or its stockholders, or that show a reckless disregard for his duty to AMV or its stockholders in circumstances in which he was, or should have been aware, in the ordinary course of performing his duties, of a risk of serious injury to AMV or its stockholders, or (iii) based on transactions between AMV and its directors or another corporation with interrelated directors or on improper distributions, loans or guarantees under applicable sections of the California General Corporation Law. Such limitation of liability also does not affect the availability of equitable remedies such as injunctive relief or rescission. AMV has been informed that in the opinion of the Securities and Exchange Commission, indemnification provisions, such as those contained in AMV's Restated Articles of Incorporation, are unenforceable with respect to claims arising under federal securities laws and, therefore, do not eliminate monetary liability of directors. AMV's Amended and Restated Bylaws provide that AMV shall indemnify its directors and officers to the full extent permitted by California law, including circumstances in which indemnification is otherwise discretionary under California law, and AMV has entered into indemnity agreements with its directors and officers providing such indemnity. Stock Options - ------------- There were no AMV stock options granted to the named executive officers in 1997; nor were any options exercised by such executives. The following table sets forth information concerning options held by each of the named executive officers, and the value of options held at December 31, 1997: Number of Shares Underlying Unexercised Value of Unexercised Options/SARs at In-the-Money Options at December 31, 1997 December 31, 1997 (1) ----------------- --------------------- Name Exercisable/Unexercisable Exercisable/Unexercisable ---------------- ------------------------- ------------------------- William J. Young 500,000/0 $545,000/$0 James Ewan 300,000/0 $327,000/$0 Alan R. Steel 250,000/0 $272,500/$0 (1) Amounts are shown as the difference between exercise price and fair market value (based on a December 31, 1997 closing price of $2.09 per share). 1991, 1994 and 1997 Stock Option Plans - -------------------------------------- The Company has adopted three stock option plans, the 1991 Stock Option Plan (the "1991 Plan"), the 1994 Stock Option Plan (the "1994 Plan") and the 1997 Nonqualified Stock Option Plan (the "1997 Plan" adopted by the Company's Board of Directors on September 23, 1997) (collectively the "Plans"), covering 1,000,000, 2,000,000 and 500,000 shares, respectively, of Class A Common Stock, pursuant to which officers, non-employee directors and employees of the Company, as well as other persons who render services to or are otherwise associated with the Company, are eligible to receive incentive and/or nonqualified stock options. The terms of the Plans are substantially the same, except that incentive stock options are not permitted under the 1997 Plan. The 1991 Plan expires in December 2001. The 1994 Plan expires in November 2004. The 1997 Plan expires in September 2007. The Plans are administered by the Stock Option Committee of the Board of Directors, currently consisting of Jack Nelson and Robert M. Loeffler. The selection of participants, allotments of shares, determination of price and other conditions of purchase of options will be determined by the Board or the Stock Option Committee at its sole discretion in order to attract and retain persons instrumental to the success of the Company. Incentive stock options granted under the 1991 and 1994 Plans are exercisable for a period of up to ten years from the date of grant at an exercise price which is not less than the fair market value of the Class A Common Stock on the date of the grant, except that the term of an incentive stock option granted under the Plans to a shareholder owning more than 10% of the voting power of the Company on the date of grant may not exceed five years and its exercise price may not be less than 110% of the fair market value of the Class A Common Stock on the date of the grant. Non-qualified options granted under the Plans may be granted at less than the fair market value of the Class A Common Stock on the date of grant. As of December 31, 1997, options to purchase 278,000 shares of Class A Common Stock were available for future grant under the Plans. During the year ended December 31, 1997, the Board of Directors granted the following options to the named, newly appointed directors:
Exercise or Name and Options Base Price Relationship to Company Granted (1) ($/Share) Expiration Vesting - ----------------------------- ----------- --------- ---------- ------- Haig S. Bagerdjian, Director 100,000 $ 1.69 01/09/02 25% per year beginning 01/10/97 Vikram Dutt, Director 100,000 $ 1.69 01/09/02 25% per year beginning 01/10/97 Robert M. Loeffler, Director 100,000 $ 1.69 01/09/02 25% per year beginning 01/10/97
(1) Options granted to Messrs. Bagerdjian, Dutt and Loeffler were not part of the 1991 or 1994 Stock Option Plans and were granted by approval of other members of the Company's Board of Directors. SRC Stock Option Plan - --------------------- During the year ended December 31, 1997, the Board of Directors approved the adoption of the SRC VISION, Inc. 1997 Stock Option Plan (the "SRC Plan") covering 396,000 shares of SRC's common stock, pursuant to which officers, directors, employees and other persons providing significant services to SRC are eligible to receive incentive and/or non-qualified stock options. The SRC Plan, which expires in August 2007, is administered by the Stock Option Committee of SRC's Board of Directors. The selection of participants, allotments of shares, determination of price and other conditions of purchase of options will be determined by SRC's Board or the Stock Option Committee at its sole discretion in order to attract and retain persons instrumental to the success of SRC. Incentive stock options granted under the SRC Plan are exercisable for a period of up to ten years from the date of grant at an exercise price which is not less than the fair market value of SRC's common stock on the date of the grant, except that the term of an incentive stock option granted under the SRC Plan to a shareholder owning more than 10% of the voting power of SRC on the date of grant may not exceed five years and its exercise price may not be less than 110% of the fair market value of the SRC common stock on the date of the grant. Non-qualified options granted under the SRC Plan may be granted at less than the fair market value of the SRC common Stock on the date of grant. The SRC Plan was established in contemplation of a possible future initial public offering ("IPO") of SRC common stock to raise long-term growth capital for SRC. While the Company has no current specific plans to effect such an offering, the Company's Board of Directors determined that it would be in the best interest of AMV, as the only stockholder of SRC, to "incentivize" key directors and employees of SRC prior to an IPO in order to retain the services of such individuals. The following table sets forth information with respect to SRC options granted to the named AMV executive officers during the year ended December 31, 1997:
Exercise Name and Number of Price Relationship to SRC Options Granted ($/Share)(1) Expiration Vesting - ------------------------------ --------------- ------------ ---------- -------------------- William J. Young, 42,660 $ 1.86 01/09/07 100% on 01/10/06 (2) Chairman of the Board James Ewan, President 152,300 $ 1.86 01/09/07 100% on 01/10/06 (2) and Chief Executive Officer and Director Alan R. Steel, Chief Financial 25,005 $ 1.86 01/09/07 100% on 01/10/06 (2) Officer and Director
(1) The exercise price represents fair market value on the grant date as determined by independent valuation. (2) Upon completion of an IPO, vesting will accelerate to 100% on the third anniversary date of the IPO. As of December 31, 1997, options to purchase 73,000 shares of SRC common stock are available for future grant under the SRC Plan. 1997 Restricted Stock Plan - -------------------------- In January 1997, the Board of Directors adopted the 1997 Restricted Stock Plan to compensate for past performance, and to retain the services of, selected officers and directors of the Company and its subsidiaries. A maximum of 2,000,000 shares of Class A Common Stock may be issued under the 1997 Restricted Stock Plan, which is administered by the Board of Directors. Subject to the provisions of the 1997 Restricted Stock Plan, the Board may interpret the provisions of, and adopt amendments to, the plan. Stock awards under the 1997 Restricted Stock Plan are subject to terms and conditions as determined by the Board. As of December 31, 1997, 200,000 shares of restricted stock were outstanding pursuant to the 1997 Restricted Stock Plan. Shareholder Rights Plan - ----------------------- In February 1998, the Company implemented a stock rights program. The Rights Plan is designed to protect the Company's shareholders against abusive takeover tactics and to ensure that each shareholder is treated fairly in any transaction involving an acquisition of control of the Company, such as partial or two-tiered tender offers that do not treat all shareholders fairly and equally. The Rights do not affect any takeover proposal which the Board believes is in the best interests of the Company's shareholders. The overriding objective of the Board in adopting the Rights Plan is to preserve and maximize the Company's value for all shareholders. Pursuant to the program, stockholders of record on February 27, 1998 received a dividend of one right to purchase for $15.00 one one-hundredth of a share of a newly created Series A Junior Participating Preferred Stock. The Rights are attached to AMV's Class A and Class B Common Stock ("Common Stock") and will also become attached to shares issued in the future. The Rights will not be traded separately until the occurrence of a triggering event, defined as an accumulation by a single person or group of 20% or more of AMV's Common Stock. The Rights will expire on February 26, 2008 and are redeemable at $.0001 per Right. After a triggering event, the Rights will detach from the Common Stock. If AMV is then merged into, or is acquired by, another corporation, the Company has the opportunity to either (i) redeem the Rights for a nominal price, or (ii) permit the Rights holder to receive in the merger stock of AMV or the acquiring company equal to two times the exercise price of the Right (i.e., $30). In the latter instance, the Rights attached to AMV Common Stock owned by the acquirer will become null and void. The effect of the Rights program is to make a potential acquisition of the Company more expensive for the acquirer if, in the opinion of AMV's Board of Directors, the offer is inadequate. REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION ======================================= During the fiscal year ended December 31, 1997, the Company had a Compensation Committee of the Board of Directors (the "Committee") consisting of directors Jack Nelson and Robert M. Loeffler. The compensation of the executive officers of the Company, including those of the executive officers named in the Executive Compensation table above, is determined by the Committee. The Company's executive compensation programs are designed to: * provide competitive levels of base compensation in order to attract, retain and motivate high quality employees; * tie individual total compensation to individual performance and the success of the Company; and * align the interests of the Company's executive officers with those of its stockholders. In the last several years, the Company has been transformed from a single business entity founded in 1987 to a holding company with two operating subsidiaries. Past and current compensation programs reflect the change in business organization. In view of the relatively brief evolution of the executive management team, the Company's executive compensation program has a limited history, with focus being upon base salary and stock-based compensation, such as grants of stock options and restricted stock. Base Compensation - ----------------- In determining base compensation for the Company's executive officers, the Committee assesses the relative contribution of each executive officer to the Company, the background and skills of each individual and the particular opportunities and problems which the individual confronts in his position with the Company. These factors are then assessed in the context of competitive market factors, including competitive opportunities with other companies. The Committee may also supplement base compensation through discretionary bonuses and/or grants of stock-based compensation in the course of its ongoing assessments of the performance of the Company's executive officers. In making its assessments of the Company's executive officers, other than Mr. Young, the Committee gives significant consideration to the views of Mr. Young including with respect to awards of stock options. Stock Options - ------------- The Committee believes that the Company, its shareholders and its executive officers and other employees are well served by stock-based compensation. Accordingly, the Committee views options granted under the 1991 and the 1994 Plans, the SRC Plan and the restricted stock grants under the 1997 Restricted Stock Plan and for bonus purposes, as important to an effective executive compensation policy. The same rationale is also applicable to the Company's outside directors, pursuant to which awards are granted to new directors meeting specified criteria. Chairman of the Board, President and Chief Executive Officer - ------------------------------------------------------------ In determining the compensation of the Chairman of the Board, President and Chief Executive Officer, the Committee focused upon the programs described above. Mr. Young, the Company's Chairman, President and Chief Executive Officer, was hired in February 1994. Mr. Young receives a base salary and has been granted stock options and restricted stock. The Committee believes that stock-based compensation granted to Mr. Young closely aligns his interests with those of the Company's stockholders. The Committee believes that the factors described in this report are significant for determining the Company's performance, and consequently, compensation of officers; but stockholders should be aware that these are not the only factors which influence Company stock value or overall performance, and that the same factor may not be the most significant in any succeeding period. Also, the achievement of targeted objectives by the Company in any period may not be solely indicative of the Company's future performance. Compensation Committee Robert M. Loeffler Jack Nelson Compensation Committee Interlocks and Insider Participation - ----------------------------------------------------------- During the fiscal year ended December 31, 1997, AMV's Board of Directors had a Compensation Committee consisting of two directors--Jack Nelson and Robert M. Loeffler. There are no interlocks between the Company and other entities involving the Company's executive officers and board members who serve as executive officers or board members of other entities. COMPARATIVE STOCK PERFORMANCE ============================= The chart below sets forth a line graph comparing the performance of the Company's Class A Common Stock against the Nasdaq Stock Market - US Index and a peer group index (Nasdaq Non-Financial Stock Index) for the five years ended December 31, 1997. During the period from December 1992 through December 31, 1993, the Company was primarily engaged in the design, manufacture, and marketing of laser diode devices. The Company purchased SRC and Ventek, Inc., manufacturers of vision systems used in defect identification and machine sorting and defect removal equipment, in 1994 and 1996. As most of the Company's competitors in this business are privately held, a directly comparable peer group index is not available. Therefore, the Nasdaq Non-Financial Stock Index was selected as the peer group index. The indices assume that the value of the investment in Advanced Machine Vision Corporation Class A Common Stock and each index was $100 on December 31, 1992, and that dividends, if any, were reinvested. The performance graph is provided as required under federal proxy rules. [GRAPHIC OMITTED]
12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97 -------- -------- -------- -------- -------- -------- Advanced Machine Vision Corporation $ 100.00 $ 161.40 $ 24.80 $ 59.60 $ 50.30 $ 62.40 Nasdaq Stock Market- US Index 100.00 114.80 112.20 158.70 195.20 239.50 Nasdaq Non-Financial Stocks 100.00 115.50 110.00 154.70 188.00 220.70
CERTAIN TRANSACTIONS ==================== Concurrent with the Company's July 1996 acquisition of the assets, operations and name of Ventek, Inc. (the remaining business being renamed Veneer Technology, Inc. ("Veneer")), Rodger A. Van Voorhis was appointed a director of the Company. Mr. Van Voorhis remains a stockholder of Veneer, a private company engaged in real estate and other business. In connection with the acquisition, AMV issued the following notes due July 24, 1999 to Veneer: (i) a 6.75% $1,000,000 note; (ii) a 6.75% $2,250,000 note convertible into the Company's Class A Common Stock at $2.25 per share; and (iii) a note and stock appreciation rights payable (a) by issuance of up to 1,800,000 shares of Class A Common Stock or at the Company's option, in cash, or (b) solely in cash in the event AMV Common Stock is delisted from the Nasdaq Stock Market. The $2,250,000 note also contains a provision giving Veneer the right to sell back to AMV up to 1,000,000 shares of AMV Class A Common Stock received upon conversion for consideration consisting of SRC common stock owned by AMV, but only if an IPO of SRC common stock is completed before the maturity date of the note. The number of shares of SRC common stock to be paid shall be determined by dividing the total market value (as defined) of the shares of AMV Class A Common Stock to be sold by 70% of the IPO price of SRC's common stock. The Company also issued a warrant to purchase 1,000,000 shares of Class A Common Stock at $2.25 per share which vests over a four-year period subject to Ventek's meeting specified sales and earnings goals. PRINCIPAL STOCKHOLDERS ====================== The following table sets forth certain information regarding the beneficial ownership of Class A Common Stock as of March 20, 1998, by (i) each person who is known by AMV to own beneficially more than 5% of outstanding Class A Common Stock; (ii) each of AMV's directors and named executive officers; and (iii) all executive officers and directors of AMV as a group:
Shares Acquirable Pursuant to: (2) Shares Owned ---------------------------------- Approximate ---------------------------- Conversion Warrant Percent of Name and Address Unrestricted Restricted (1) Options of Debt Exercise Total Ownership - ---------------- ------------ -------------- ------- ---------- -------- --------- --------- Wellington Management 775,000 -- -- -- -- 775,000 7.4% Company, LLP 75 State Street Boston, MA 02109 (3) William J. Young 153,000 107,500 500,000 -- -- 760,500 6.6% 2067 Commerce Drive Medford, OR 97504 Rodger A. Van Voorhis 25,000 -- -- 333,333 250,000 608,333 5.4% 4217 W Fifth Avenue Eugene, OR 97402 Dr. James Ewan 6,200 69,500 300,000 -- -- 375,700 3.4% 2067 Commerce Drive Medford, OR 97504 Alan R. Steel 5,000 55,500 250,000 -- -- 310,500 2.8% 2067 Commerce Drive Medford, OR 97504 Jack Nelson, Esq. -- -- 100,000 -- -- 100,000 * 2 Executive Drive #755 Fort Lee, NJ 07024-3308 Vikram Dutt -- -- 50,000 -- -- 50,000 * 309 W Washington St. #1250 Chicago, IL 60606 Robert M. Loeffler -- -- 50,000 -- -- 50,000 * 10701 Wilshire Blvd. #1401 Los Angeles, CA 90024 Haig S. Bagerdjian -- -- 50,000 -- -- 50,000 * 6464 Canoga Avenue Woodland Hills, CA 91367 All executive officers and 2,274,033 17.7% directors as a group (ten persons)
* Less than 1%. (1) Reference is made to Note 2 of the Executive Compensation table in this Proxy Statement for a description of restrictions. (2) Represents shares acquirable as of December 31, 1997 and 60 days thereafter. (3) Pursuant to Schedule 13G, filed with the Securities and Exchange Commission on January 12, 1998. (4) The 25,000 shares of Class A Common Stock are owned by Whamdyne LLC. The shares acquirable are pursuant to convertible debt and warrants issued to Veneer Technology, Inc. Mr. Van Voorhis is a 25% owner of Whamdyne LLC and Veneer Technology, Inc. and is, therefore, deemed to be a beneficial owner of such shares. See also "Certain Transactions." (5) A schedule 13G was filed on February 11, 1998 by Allen Holding, Inc. ("Allen"), 711 Fifth Avenue, New York, New York, 10022. In the filing, Allen claimed a 5.67% beneficial ownership representing 800,293 shares of stock. The number of shares included 259,409 from the possible exercise of Class A Warrants and 540,344 from the possible exercise of Class B Warrants, or a total of 799,753 shares issuable pursuant to exercise of its holdings of both classes of warrants. The Class A and B Warrants expired unexercised on March 9, 1998 causing Allen's claimed ownership percentage to drop below 5% after that date. Allen is, therefore, excluded from the above table. Section 16(a) Beneficial Ownership Reporting Compliance - ------------------------------------------------------- Under the federal securities laws, the Company's directors, executive officers, and any person holding more than 10% of the Company's Class A Common Stock, Class A Warrants or Class B Warrants are required to report their ownership of the Company's securities and any changes in that ownership to the Securities and Exchange Commission. Specific due dates for these reports have been established, and the Company is required to report in this Proxy Statement any failures to file by these dates during the last fiscal year. The Company knows of no instances of persons who have failed to file or have delinquently filed Section 16(a) reports within the most recently completed fiscal year. INDEPENDENT PUBLIC ACCOUNTANTS ============================== Price Waterhouse LLP has examined, as independent auditors, the financial statements of the Company for the year ended December 31, 1997. The Board of Directors will select the independent auditors for the current year. STOCKHOLDER PROPOSALS AT THE NEXT ANNUAL MEETING OF STOCKHOLDERS ================================= The next Annual Meeting of stockholders is expected to be held by June 15, 1999. Stockholders of the Company who intend to submit proposals to the Company's stockholders at the next annual meeting of stockholders must submit such proposals to the Company no later than January 15, 1999, in order to be included in the proxy materials. Stockholder proposals should be submitted to the Corporate Secretary, Advanced Machine Vision Corporation, 2067 Commerce Drive, Medford, Oregon 97504. OTHER MATTERS ============= If any matters not referred to in this proxy statement should properly come before the meeting, the persons named in the proxies will vote the shares represented thereby in accordance with their judgment. The management is not aware of any such matters which may be presented for action at the meeting. Matters incident to the conduct of the meeting may be voted upon pursuant to the proxies. AVAILABILITY OF ANNUAL REPORT ON FORM 10-K ========================================== The Company will furnish without charge a copy of its Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as filed with the Securities and Exchange Commission, to any stockholder desiring a copy. Stockholders may write to the Company at: Advanced Machine Vision Corporation Attn: Corporate Secretary 2067 Commerce Drive Medford, Oregon 97504 By Order of the Board of Directors, /s/ Alan R. Steel ----------------------------------- Alan R. Steel Vice President, Finance and Chief Financial Officer April 3, 1998 -----END PRIVACY-ENHANCED MESSAGE-----