-----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, QppTC3BcyhttiZ8PU7zCYm25VaDppJfEwcxnnR4ff69+NC9L9yBmDm2IgM0BD7Ar g8z37DaU1bzNU3g0SHleEA== 0000950148-96-001598.txt : 19980212 0000950148-96-001598.hdr.sgml : 19980212 ACCESSION NUMBER: 0000950148-96-001598 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960812 FILED AS OF DATE: 19960812 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ELTRON INTERNATIONAL INC CENTRAL INDEX KEY: 0000915910 STANDARD INDUSTRIAL CLASSIFICATION: 3579 IRS NUMBER: 954302537 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 000-23342 FILM NUMBER: 96608670 BUSINESS ADDRESS: STREET 1: 41 MORELAND RD CITY: SIMI VALLEY STATE: CA ZIP: 93065 BUSINESS PHONE: 8055791800 DEF 14A 1 DEFINITIVE PROXY STATEMENT 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant /X/ Filed by a Party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement /X/ Definitive Proxy Statement / / Definitive Additional Materials / / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12 Eltron International, Inc. - - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) Eltron International, Inc. - - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement) Payment of Filing Fee (Check the appropriate box): /X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2) or Item 22(a)(2) of Schedule 14A. / / $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ---------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ---------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11: ---------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ---------------------------------------------------------------------- Set forth the amount on which the filing fee is calculated and state how it was determined. / / 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: N/A ---------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ---------------------------------------------------------------------- (3) Filing Party: ----------------------------------------------------------------------- (4) Date Filed: ---------------------------------------------------------------------- 2 ELTRON INTERNATIONAL, INC. 41 MORELAND ROAD SIMI VALLEY, CALIFORNIA 93065 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 6, 1996 NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Eltron International, Inc., a California corporation (the "Company"), will be held at the Radisson Hotel, 999 Enchanted Way, Simi Valley, California 93065, on September 6, 1996 at 1:30 p.m., Pacific Daylight Time, for the following purposes: 1. To elect members of the Board of Directors to serve until the next annual meeting of shareholders; 2. To adopt and approve the Company's 1996 Stock Option Plan pursuant to which options for up to 500,000 shares of the Company's Common Stock may be granted; and 3. To transact such other business as may properly come before the meeting or any adjournments thereof. The Board of Directors has fixed the close of business on August 1, 1996 as the record date for the determination of shareholders entitled to notice of and to vote at the meeting. Only shareholders of record at the close of business on the record date will be entitled to vote at the meeting and any adjournments thereof. Accompanying this Notice are a Proxy and Proxy Statement. IF YOU WILL NOT BE ABLE TO ATTEND THE MEETING TO VOTE IN PERSON PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE. The Proxy may be revoked at any time prior to its exercise at the meeting. By Order of the Board of Directors, Daniel C. Toomey, Jr. Vice President Finance and Chief Financial Officer Simi Valley, California August 12, 1996 3 ELTRON INTERNATIONAL, INC. 41 MORELAND ROAD SIMI VALLEY, CALIFORNIA 93065 ANNUAL MEETING OF STOCKHOLDERS SEPTEMBER 6, 1996 PROXY STATEMENT INTRODUCTION This Proxy Statement is furnished to the shareholders of Eltron International, Inc., a California corporation (the "Company"), in connection with the solicitation of proxies by and on behalf of the Board of Directors of the Company. The proxies solicited hereby are to be voted at the Annual Meeting of Stockholders of the Company to be held on September 6, 1996, and at any and all adjournments thereof (the "Annual Meeting"). A form of proxy is enclosed for your use. The shares represented by each properly executed unrevoked proxy will be voted as directed by the shareholder executing the proxy. If no direction is made, the shares represented by each properly executed unrevoked proxy will be voted "FOR" (i) the election of management's nominees for the Board of Directors; and (ii) the adoption and approval of the Company's 1996 Stock Option Plan. With respect to any other item of business that may come before the Annual Meeting, the proxy holders will vote the proxy in accordance with their best judgment. Any proxy given may be revoked at any time prior to the exercise thereof by filing with Daniel C. Toomey, Jr., Secretary of the Company, an instrument revoking such proxy or by the filing of a duly executed proxy bearing a later date. Any shareholder present at the meeting who has given a proxy may withdraw it and vote his or her shares in person if such shareholder so desires. It is contemplated that the solicitation of proxies will be made primarily by mail. Should it, however, appear desirable to do so in order to ensure adequate representation of shares at the Annual Meeting, the officers, agents and employees of the Company may communicate with shareholders, banks, brokerage houses and others by telephone, telegraph, or in person to request that proxies be furnished. All expenses incurred in connection with this solicitation will be borne by the Company. In following up the original solicitation of proxies by mail, the Company may make arrangements with brokerage houses and other custodians, nominees and fiduciaries to send proxies and proxy material to the beneficial owners of the shares eligible to vote at the Annual Meeting and will reimburse them for their expenses in so doing. The Company has no present plans to hire special employees or paid solicitors to assist in obtaining proxies, but reserves the option of doing so if it should appear that a quorum otherwise might not be obtained. This Proxy Statement and the accompanying form of proxy are first being mailed to shareholders on or about August 12, 1996. 1. 4 VOTING SECURITIES Only holders of record of the Company's voting securities at the close of business on August 1, 1996 are entitled to notice of and to vote at the Annual Meeting. As of August 1, 1996, the Company had issued and outstanding 7,231,874 shares of the Company's Common Stock ("Common Stock"), the holders of which are entitled to vote at the Annual Meeting. Each share of Common Stock that was issued and outstanding on August 1, 1996 is entitled to one vote at the Annual Meeting. The presence, in person or by proxy, of shareholders entitled to cast at least a majority of the votes entitled to be cast by all shareholders will constitute a quorum for the transaction of business at the Annual Meeting. Stockholders may cumulate their votes with respect to the election of directors of the Company if one or more shareholder gives notice at the Annual Meeting, prior to voting, of an intention to cumulate votes for a nominated director. A shareholder may cumulate votes by casting for the election of one nominee a number of votes equal to the number of directors to be elected multiplied by the number of votes to which his shares are entitled or by distributing his votes on the same principle among as many candidates as he sees fit. If a proxy is marked "FOR" the election of directors, it may, at the discretion of the proxy holders, be voted cumulatively in the election of directors. Abstentions may be specified as to all proposals to be brought before the Annual Meeting other than the election of directors. Approval of each of the other proposals to be brought before the Annual Meeting (not including the election of directors) will require the affirmative vote of at least a majority in voting interest of the shareholders present in person or by proxy at the Annual Meeting and entitled to vote thereon. As to those proposals, if a shareholder abstains from voting on a proposal it will have the effect of a negative vote on that proposal, but if a broker indicates that it does not have authority to vote certain shares, those votes will not be considered as shares present and entitled to vote at the Annual Meeting with respect to that proposal and therefore will have no effect on the outcome of the vote. 2. 5 ELECTION OF DIRECTORS NOMINEES Directors are elected at each annual meeting of the shareholders and hold office until their respective successors are elected and qualified. The Board of Directors is of the opinion that the election to the Board of Directors of the persons identified below, all of whom are currently serving as Directors of the Company and have consented to continue to serve if elected, would be in the best interests of the Company. The names of such nominees are as follows: Donald K. Skinner Hugh K. Gagnier George L. Bragg Robert G. Bartizal The shares of each properly executed unrevoked proxy will be voted FOR the election of all of the above named nominees unless the shareholder executing such proxy indicates that the proxy shall not be voted for all or any one of the nominees. If cumulative voting is utilized, the proxy holders intend to distribute the votes represented by each proxy, unless such authority is withheld, among the four nominees named, in such proportion as they see fit. Nominees receiving the highest number of affirmative votes cast, up to the number of directors to be elected, will be elected as director. Abstentions, broker non-votes, and instructions on the accompanying proxy card to withhold authority to vote for one or more of the nominees will result in the respective nominees receiving fewer votes. If for any reason any nominee should, prior to the Annual Meeting, become unavailable for election as a Director, an event not now anticipated, the proxies will be voted for such substitute nominee, if any, as may be recommended by the Board of Directors. In no event, however, shall the proxies be voted for a greater number of persons than the number of nominees named. MEETINGS; ATTENDANCE; COMMITTEES The Board of Directors of the Company met six times during the fiscal year ended December 31, 1995. No incumbent member who was a director during the past fiscal year attended fewer than 75% of all meetings of the Board of Directors except Arthur Wang. Mr. Wang resigned as a director in June 1996. The Stock Option Committee consisted of Donald Skinner and Arthur Wang during 1995. Beginning in 1996, such Committee consisted of Messrs. Bragg, Bartizal and Skinner. The Stock Option Committee administers the Company's stock option plans. The Stock Option Committee met six times last year and all members were in attendance. The Compensation Committee consists of Messrs. Bragg, Bartizal and Skinner. The Compensation Committee reviews the performance of the executive officers and determines the compensation of such officers. The Compensation Committee met two times last year and all members were in attendance. The Audit Committee consists of Messrs. Bragg and Bartizal. The Audit Committee met two times last year and all members were in attendance. The duties of the Audit Committee are to review and act or report to the Board of Directors with respect to various audit and accounting matters, including the annual audits of the Company (and their scope), the annual selection of the independent auditors of the Company, and the nature of services to be performed by and the fees to be paid to the independent auditors of the Company. 3. 6 DIRECTORS AND EXECUTIVE OFFICERS Set forth below is certain information with respect to the directors and executive officers of the Company:
NAME AGE POSITION ---- --- -------- Donald K. Skinner (1) 55 Chairman of the Board and Chief Executive Officer Hugh K. Gagnier 40 President, Chief Operating Officer and Director Daniel C. Toomey, Jr. 32 Vice President Finance, Chief Financial Officer and Secretary Patrice J. Foliard 37 President of Card Division Robert G. Bartizal (1)(2) 63 Director George L. Bragg (1)(2) 63 Director - - -----------
(1) Member of Stock Option Committee and Compensation Committee. (2) Member of Audit Committee. Donald K. Skinner co-founded the Company in 1991 and has served as its Chief Executive Officer since December 1992, and as its President from December 1992 until Mr. Gagnier assumed the position of President in September 1995. In July 1995, Mr. Skinner became Chairman of the Board. From January 1991 (inception) to December 1992, Mr. Skinner served as the Company's Executive Vice President and Chief Operating Officer. From September 1989 to January 1991 Mr. Skinner founded and served as President of Eltron, Incorporated, a manufacturer of custom thermal printers. From January 1989 to August 1989, Mr. Skinner served as General Manager of Axiom-Edwards-CPE Incorporated, a manufacturer of thermal printers. In 1985 Mr. Skinner founded Peripheral Technology Corporation, a manufacturer of computer disk drives, and was responsible for new product development, engineering, sales and marketing, and operations. Prior to his tenure at Peripheral Technology Corporation, Mr. Skinner spent 15 years at Dataproducts Corporation, a manufacturer of computer printers. While at Dataproducts Corporation, Mr. Skinner was responsible for the development, manufacturing and marketing of the company's new product lines. Mr. Skinner is a director of Percon, Inc. (Eugene, OR), a manufacturer of bar code reading products. Hugh K. Gagnier has been a director of the Company since February 1994. Mr. Gagnier became Executive Vice President and Chief Operating Officer in June 1994, and became President in September 1995. Mr. Gagnier has been Group President of Wangtek and WangDAT, Inc., which are manufacturers of tape drives for automated data back-up, since October 1991. Wangtek and WangDAT, Inc. are subsidiaries of Rexon Inc., a publicly held company. Prior to his position as Group President, Mr. Gagnier served as President of Wangtek from May 1991 to October 1991, and as Vice President of Engineering from October 1988 to May 1991. Prior to his tenure at Rexon Inc., Mr. Gagnier spent three and one-half years at Peripheral Technology Corporation, a disk drive manufacturer, in various engineering management positions. Daniel C. Toomey, Jr. joined the Company in October 1992 as Vice President Finance and Chief Financial Officer. Since 1993, Mr. Toomey has served as Secretary of the Company. From August 1993 to February 1995, Mr. Toomey also served as a Director of the Company. From December 1987 to October 1992, Mr. Toomey was employed by Arthur Andersen LLP, where he most recently served as a Manager in its Enterprise Division. Patrice J. Foliard, founder and president of Privilege S.A. in France, joined the Company in January 1996 and continues in his role as president of the Company's newly formed Card Division. Prior to founding Privilege in 1994, in 1990 Mr. Foliard founded AP-Print and Newcode, a French 4. 7 company specializing in the design and production of thermal label printers and card printers. From 1988 to 1989, Mr. Foliard was General Manager of Cominor, a French company which designs accounting software. From 1982 to 1988 he served in Paris with the United Kingdom-based International Computers Limited, responsible for sales of minicomputers to end users for two years and then in charge of the sales force for the personal computer line. Robert G. Bartizal has been a director of the Company since February 1994. Mr. Bartizal currently serves on the Board of Directors of L.H. Research (Costa Mesa, CA) and Validyne Engineering Corp. (Northridge, CA), and as Chairman of Datavision Technologies Corp. (San Francisco, CA). In 1986, Mr. Bartizal founded RGB Associates and co-founded Bartizal and Sherby, both business consulting companies, and he has served in executive capacities since then. Prior thereto, Mr. Bartizal served in executive capacities at Logisticon Inc., a manufacturer of real time material management systems, Dataproducts Corporation, a manufacturer of computer printers, Control Data Corporation, and IBM. George L. Bragg has been a director of the Company since February 1995. Since September 1994, Mr. Bragg has been Chairman of Markwood Capital Alliance, which provides management consulting and financing services to high technology and special situation companies. From October 1993 to September 1994, he was President and a Director of Nichols Institute, which provides clinical testing services to hospitals, laboratories and physicians on a nationwide basis. Nichols Institute was merged with Corning Life Science in September 1994. From January 1993 to October 1993, he was the President of George Bragg & Associates, a management consulting firm. From July 1991 to March 1993, Mr. Bragg served in various executive capacities with Western Digital Corporation, which is in the business of manufacturing and selling disk drives for the personal computer market. He served as Vice Chairman from August 1991 to March 1993, and as Chief Financial Officer from July 1991 to October 1991. He has been a director of Western Digital Corporation since October 1990. He served as Chairman and President of Boston Street Capital, a management and investment consulting firm, from September 1990 to December 1991. From July 1989 until September 1990, he served as Chairman of the Board, Chief Executive Officer and President of Sooner Federal Savings Association. At the time Mr. Bragg joined Sooner Federal, it was experiencing severe financial difficulties. Sooner Federal was unable to recover from these difficulties and, consequently, the Resolution Trust Corporation was appointed as the receiver of Sooner Federal in September 1990. Mr. Bragg was appointed President and Chief Operating Officer of Telex Corporation, which was in the computer networking and terminal workstation business, in 1986. When Telex merged with Memorex Corporation in 1988, he became Managing Director and Executive Vice President of Memorex Telex N.V., which positions he held until July 1989. Since June 1993, he has been a director of Old America Stores. Since 1989, he has been a director of Leasing Solutions, Inc. 5. 8 COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS Each outside director receives $1,500 for each board meeting attended and $500 for each committee meeting attended; provided, however, that if two or more committee meetings are held on the same day, outside directors in attendance only receive $1,000 for such committee meetings. The Stock Option Committee has also granted stock options to outside directors, at exercise prices equal to the fair market value on the date of the grant. See "-- Stock Option Plans." The following table sets forth the cash compensation paid or accrued by the Company for the year ended December 31, 1995 to its Chief Executive Officer and the other four most highly compensated executive officers who received total salary and bonuses from the Company of over $100,000 (the "Named Executives").
Payouts Long Term Annual Compensation Awards Compensation ------------------------------------ --------------- ------------ Securities Other Annual Underlying LTIP Name and Principal Position Year Salary Bonus(1) Compensation(2 Options/SARs(#) Payouts($) --------------------------- ---- --------- --------- --------------- --------------- ------------ 1995 $156,850 $ 98,020 -- -- -- Donald K. Skinner, 1994 112,419 183,501 -- -- -- Chief Executive Officer ......... 1993 102,320 24,563 -- -- -- Hugh K. Gagnier, 1995 $149,520 $84,500 __ __ -- President and 1994 65,391 18,000 $29,800(5) 130,000 -- Chief Operating Officer (4) ...... 1993 -- -- -- -- -- Daniel C. Toomey, Jr., 1995 $80,621 $52,390 -- -- __ Chief Financial Officer 1994 66,000 33,000 -- -- __ and Vice President Finance ....... 1993 60,000 -- -- 13,014 __ Vigo H. Gustavsson, 1995 $91,000 $98,453 -- -- -- Vice President New 1994 78,580 27,121 -- -- -- Business Development (3) ......... 1993 76,000 37,245 -- -- -- Robert Scoville, Senior Vice President Sales and Marketing (6) .......... 1995 $89,530 $67,190 -- 70,000 -- - - -----------
(1) Represents commissions and performance-based bonus received. (2) The value of personal benefits furnished to the Named Executives did not exceed $50,000 or 10% of their respective cash compensation. (3) Mr. Gustavsson was Vice President Sales during 1993 and 1994, becoming Vice President New Business Development in April 1995. (4) Mr. Gagnier became Executive Vice President and Chief Operating Officer in June 1994, and President in September 1995. (5) Represents payments for consulting services rendered by Mr. Gagnier prior to becoming an employee of the Company. (6) Mr. Scoville was Senior Vice President Sales and Marketing from April 10, 1995 to December 8, 1995. EMPLOYMENT AGREEMENTS Under the terms of Mr. Skinner's three year employment agreement entered into as of January 1, 1995, Mr. Skinner's current annual base salary is $195,000 (subject to adjustment once per year by the Compensation Committee) and he may receive an incentive bonus not to exceed 50% of his annual base salary. The Company and each of Messrs. Gagnier, Toomey and Foliard have entered into one year employment agreements as of January 1, 1996. Each of Messrs. Gagnier, Toomey and Foliard receives an annual base salary of $155,000, $105,000 and $100,000, respectively, and may receive an incentive bonus not to exceed 50% of his annual base salary. Mr. Gustavsson has also 6. 9 entered into a one year employment agreement with the Company as of January 1, 1996, pursuant to which he receives an annual base salary of $100,000 and may receive an incentive bonus not to exceed 35% of his annual base salary. Each of Messrs. Skinner, Gagnier, Toomey, Foliard and Gustavsson is entitled to receive a severance payment in an amount equal to his annual base salary in the event of a merger or sale of the Company or in the event a third party obtains majority control of the Company. Each of their estates is entitled to receive any earned but unpaid compensation for the period prior to such person's death and an additional payment equal to his base salary and additional compensation paid during the last full year of employment by the Company. If any such person becomes disabled, he is entitled to receive compensation under his employment agreement for up to one year. STOCK OPTION PLANS The Company has adopted a 1992 Stock Option Plan and a 1993 Stock Option Plan (collectively, the "Stock Option Plans" or "Plans") covering 433,812 and 667,188 shares, respectively, of the Company's Common Stock, pursuant to which officers, employees and directors 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 non-qualified stock options. The Plans are administered by the Stock Option Committee of the Board of Directors. The selection of participants, allotment of shares, determination of price and other conditions of purchase of options will be determined by 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 Plans are exercisable for a period of up to 10 years from the date of grant at an exercise price that is not less than the fair market value of the Common Stock on the date of 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 Common Stock on the date of grant. Non-qualified options granted under the Plans may be granted at less than the fair market value of the Common Stock on the date of grant. As of December 31, 1995, stock options with respect to an aggregate of 584,602 shares were outstanding under the Plans at exercise prices ranging from $0.18 to $28.25 per share. The 1992 Plan was approved by the Board of Directors of the Company on February 18, 1992 and, unless sooner terminated by the Board of Directors or the Stock Option Committee, will terminate on February 17, 2002. The 1993 Plan was approved by the Board of Directors of the Company on February 1, 1993 and, unless sooner terminated by the Board of Directors or the Stock Option Committee, will terminate on January 31, 2003. The Plans have been registered under the Securities Act of 1933 on Form S-8. 7. 10 The following table provides information on stock options granted in the year ended December 31, 1995 to the Named Executives and directors: OPTIONS GRANTED IN YEAR ENDED DECEMBER 31, 1995
Individual Grants ---------------------------------------------------------------------------------- Percent of Total Number of Options/SARs Potential Realizable Securities Granted Value at Assumed Underlying to Employees Exercise or Annual Rates of Options in Base Price Expiration Stock Price Appreciation Name Granted (#) Fiscal Year ($/Sh) Date for Option Term(1) ---- ----------- ----------- ------ ---- ------------------------- 5% 10% ----- ----- Donald K. Skinner 0 0.00% N/A N/A N/A N/A Arthur Wang 0 0.00% N/A N/A N/A N/A Hugh K. Gagnier 0 0.00% N/A N/A N/A N/A Daniel C. Toomey, Jr. 0 0.00% N/A N/A N/A N/A Vigo H. Gustavsson 0 0.00% N/A N/A N/A N/A Robert Scoville 70,000 28.47% $ 9.875 01/31/2000 $190,980 $422,015 Robert G. Bartizal 10,000 4.07% $10.50 02/08/2000 $ 29,010 $ 64,104 George L. Bragg 30,000 12.20% $ 9.375 01/03/2005 $176,877 $448,240
__________ (1) The 5% and 10% assumed rates of appreciation are prescribed by the rules and regulations of the Securities and Exchange Commission and do not represent the Company's estimate or projection of future trading prices of the Common Stock. The following table contains information concerning stock options exercised in the last fiscal year and stock options remaining unexercised on December 31, 1995 with respect to the Named Executives and directors. AGGREGATED OPTION EXERCISES IN YEAR ENDED DECEMBER 31, 1995 AND FISCAL YEAR-END OPTION VALUE
Number of Securities Value of Unexercised Underlying Unexercised Options In-the-Money Options At Shares Held at Fiscal Year-End(#) Fiscal Year-End ($) (1) Acquired on Value ------------------------------ -------------------------- Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable ---- ----------- ----------- ----------- ------------- ---------- ------------- Donald K. Skinner 0 $ 0 0 0 $ 0 $ 0 Arthur Wang 0 0 0 0 0 0 Hugh K. Gagnier 32,500 771,250 0 97,500 0 3,103,125 Daniel C. Toomey, Jr. 15,000 488,375 9,222 27,472 320,680 959,374 Vigo H. Gustavsson 43,380 751,559 2 0 71 0 Robert Scoville 0 0 0 70,000 0 1,793,750 Robert G. Bartizal 10,000 81,250 0 30,000 0 900,000 George L. Bragg 0 0 0 30,000 0 783,750 - - ----------------
(1) Amounts are shown as the difference between exercise price and fair market value (based on the closing price of $35.50 per share at fiscal year end). 8. 11 COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During the fiscal year ended December 31, 1995, the Board of Directors had a compensation committee consisting of three directors -- Donald K. Skinner, Robert G. Bartizal and George L. Bragg. Mr. Skinner also serves as Chairman of the Board and Chief Executive Officer of the Company. There are no interlocks between the Company and other entities involving the Company's executive officers and board members who served as executive officers or board members of other entities. PRINCIPAL STOCKHOLDERS The following table sets forth certain information regarding the beneficial ownership of the Company's Common Stock as of August 1, 1996, by (i) each director of the Company, (ii) each Named Executive, (iii) all directors and executive officers as a group, and (iv) each person known by the Company to own beneficially more than 5% of the outstanding shares of Common Stock. Except as noted below, the Company believes that the persons listed below have sole investment and voting power with respect to the Common Stock owned by them.
Shares Beneficially Owned Name and Address of ------------------------------------------------------ Beneficial Owner(1) Number Percent ------------------- -------------------------- -------------------------- Donald K. Skinner . . . . . . . . . . . . . . 738,258 10.2% Taiwan Semiconductor Co., Ltd.(2) . . . . . . 393,446 5.4% Vigo H. Gustavsson . . . . . . . . . . . . . 126,688 1.8% Hugh K. Gagnier(3) . . . . . . . . . . . . . 32,500 * Daniel C. Toomey, Jr. . . . . . . . . . . . . 59,412 * Robert G. Bartizal(4) . . . . . . . . . . . . 41,000 * George L. Bragg(5) . . . . . . . . . . . . . 15,000 * Robert Scoville . . . . . . . . . . . . . . . 0 * All directors and executive officers as a group (six persons) (6) . . . . . . . . 886,170 12.1% - - -----------
* Less than 1%. (1) The address for all persons listed is c/o Eltron at 41 Moreland Road, Simi Valley, CA 93065-1692. (2) TSC is principally owned and controlled by Arthur Wang, a former director of the Company. (3) Of such shares, 32,500 represent options exercisable within 60 days hereof. (4) Of such shares, 15,000 represent options exercisable within 60 days hereof. (5) Of such shares, 15,000 represent options exercisable within 60 days hereof. (6) Includes options exercisable within 60 days hereof to purchase 62,500 shares of Common Stock. 9. 12 CERTAIN TRANSACTIONS In February 1991, the Company entered into a nonexclusive manufacturing and marketing agreement with TSC, a principal shareholder of the Company. TSC is controlled by Arthur Wang, a former director of the Company. Pursuant to the agreement, TSC manufactures printers for the Company. TSC has the exclusive right to market and distribute the Company's printers in Asia, for which it pays a royalty of 3.5% of gross revenues to the Company. The Company and TSC amended the agreement to provide that (i) prices charged by TSC under the agreement would remain at January 1994 levels through December 31, 1994, and (ii) "Asia" shall consist solely of China, Korea, Japan, Taiwan, Hong Kong, Thailand, Vietnam, Malaysia, Singapore, the Philippines, Burma, and Indonesia. For the year ended December 31, 1995, the Company purchased subassemblies and components from TSC totaling $7,899,775, pursuant to the agreement, of which $5,153,426 are recorded in cost of goods sold. For the same period, the amount paid by TSC to the Company under the 3.5% royalty provision was $4,624. Accounts payable to TSC amounted to $1,816,909 at December 31, 1995 and are payable in due course, typically within 45 days of receipt of an invoice. Management believes that the terms of this agreement with TSC are no less favorable than those which could have been obtained from an independent party. In July 1996, the manufacturing and marketing agreement with TSC was terminated by mutual consent. The Company entered into an agreement and plan of merger, dated as of April 10, 1995, by and among the Company, Eltron, Incorporated ("Eltron, Inc.") and Donald K. Skinner, the Chief Executive Officer and Chairman of the Board of the Company (the "Merger Agreement"), pursuant to which Eltron, Inc. merged into the Company on May 30, 1995. Eltron, Inc. was wholly owned by Donald K. Skinner prior to the merger and its sole assets consisted of 1,038,258 shares of the Company's Common Stock and certain patents, which patents were valued by an independent appraiser at approximately $50,000. Eltron, Inc. had no operations and no material liabilities. Pursuant to the Merger Agreement, upon closing, Mr. Skinner received 1,038,258 shares of the Company's Common Stock in exchange for 100% of the outstanding capital stock of Eltron, Inc., and the 1,038,258 shares of the Company's Common Stock that were held by Eltron, Inc. were returned to the Company and retired. As a result of this transaction, the separate existence of Eltron, Inc. ceased and the assets and liabilities of Eltron, Inc. became the assets and liabilities of the Company. This transaction was approved by the disinterested members of the Board of Directors of the Company and has no effect on the outstanding capitalization of the Company. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934 Under the Federal securities laws, the Company's directors, executive officers, and any person holding more than 10% of the Company's Common Stock are required to report their ownership of the Company's securities and any changes in that ownership to the 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 since the Company became public in February, 1994. 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. 10. 13 ADOPTION AND APPROVAL OF THE COMPANY'S 1996 STOCK OPTION PLAN The Board of Directors has adopted and approved, and has voted to recommend to the shareholders that they adopt and approve, the Company's 1996 Stock Option Plan ("1996 Plan") for up to 500,000 shares of Common Stock. The 1996 Plan is set forth as Appendix A to this Proxy Statement. The Board of Directors believes that its existing stock option plans have played a major role in enabling the Company to attract and retain certain officers, directors and other key employees instrumental to the success of the Company. Options granted to such individuals provide long-term incentives to the recipients that are consistent with the Company's compensation policy of providing compensation that is closely related to the performance of the Company. As of the date of this Proxy Statement, 644,679 of the 667,188 options available for grant under the 1993 Plan had been granted, and all of the options available for grant under the 1992 Plan have been granted. To allow the Company to continue to obtain the benefit of incentives available under stock option plans, the Company's Board of Directors has adopted and recommended for submission to the shareholders for their approval a new 1996 Plan pursuant to which options for up to 500,000 shares of Common Stock may be granted. The 1996 Plan must be approved by the affirmative vote of a majority of the shares of the Company's Common Stock represented in person or by proxy and voting at the Annual Meeting, assuming that a quorum is present. The future benefits to various executive officers and directors under the proposed 1996 Plan are not determinable at this time. However, if the 1996 Plan had been in existence during the 1995 fiscal year, based upon the options granted under the 1993 Plan to these individuals, the following persons would have received these benefits under the 1996 Plan: Named Executives (70,000 options), current executive officers (4 persons) as a group (0 options), current non-executive directors (2 persons) as a group (40,000 options), and non- executive officer employees (15 persons) as a group (135,896 options). To date, no options have been granted under the 1996 Plan. Terms of Options. The terms of options to be granted under the 1996 Plan will be determined by the Board of Directors or the Stock Option Committee. Each option granted under the 1996 Plan will be evidenced by a stock option agreement between the Company and the optionee of such option, and will be subject to the following terms and conditions: (a) Exercise of the Option. The term of each option and the manner in which it may be exercised will be determined by the Board of Directors or the Stock Option Committee; provided, however, that no option may be exercisable more than ten years after the date of grant or, in the case of an incentive stock option to an eligible employee owning more than 10% of the Company's outstanding securities, no more than five years. Payment for the shares purchased upon exercise of an option may be in cash, or with the Board's or Committee's consent, in shares of the Company's Common Stock. The 1996 Plan provides that the aggregate fair market value (determined at the time the option is granted) of the Common Stock with respect to which incentive stock options are exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. (b) Termination of Employment. If the optionee's employment terminates for any reason other than death, disability or retirement, options under the 1996 Plan may be exercised no later than 30 days after such termination or such later date as determined by the Board of Directors or the Stock Option Committee (not to exceed three months with respect to incentive stock options) and may be exercised only to the extent the option was exercisable as of the date of such termination. If the optionee's employment terminates because of the retirement of the optionee, then options under the 1996 Plan may be exercised no later than three months after such termination and may be exercised only to the extent the options were exercisable at the date of such retirement or disability. 11. 14 (c) Death or Disability of Optionee. If an optionee should die or become disabled while employed by the Company, options may be exercised at any time within such period as shall be prescribed in his option agreement (such period not to exceed twelve months after death or disability), but only to the extent the options would have been exercisable on the date of death or disability. (d) Non-Transferability of Options. An incentive stock option is non-transferable by the optionee other than by will or the laws of descent and distribution, and is exercisable during the optionee's lifetime only by such optionee, or, in the event of death, by the optionee's estate or by a person who acquires the right to exercise the option by bequest or inheritance. (e) Policy with Respect to Nonemployee Directors. The Company has recently formalized a policy of granting options to nonemployee directors, and intends to grant options under the 1996 Plan in accordance with such policy. Upon initially joining the Board, each nonemployee director will receive an option to purchase 15,000 shares at an exercise price equal to the fair market value on the date of grant, vesting one-third on the first anniversary of becoming a director, one-third on the second anniversary, and the remaining third on the third anniversary, provided that such director remains a director at the time of vesting. Additionally, on each anniversary of his joining the Board, the nonemployee director will receive an option to purchase 5,000 shares at an exercise price equal to the fair market value on the date of grant, which option will be immediately exercisable. Federal Income Tax Aspects. The following is a brief summary of certain of the Federal income tax consequences of certain transactions under the 1996 Plan based on Federal income tax laws in effect on January 1, 1996. This summary is not intended to be exhaustive and does not describe state or local tax consequences. (a) Nonqualified Stock Options. In general, (i) no income will be recognized by an optionee at the time a nonqualified stock option is granted; (ii) at exercise, ordinary income will be recognized by the optionee in an amount equal to the difference between the option price paid for the shares and the fair market value of the shares, if unrestricted, on the date of exercise; and (iii) at sale, appreciation (or depreciation) after the date of exercise will be treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held. (b) Incentive Stock Options. In general, no income will be recognized by an optionee upon the grant or exercise of an incentive stock option (although the difference between the value of the shares and the exercise price is added to the tax base of the alternative minimum tax). If shares of Common Stock are issued to the optionee pursuant to the exercise of an incentive stock option, and if no disqualifying disposition of such shares is made by such optionee within two years after the date of grant or within one year after the issuance of such shares to the optionee, then upon the sale of such shares, any amount realized in excess of the option price will be taxed to the optionee as a long-term capital gain and any loss sustained will be a long-term capital loss. If shares of Common Stock acquired upon the exercise of an incentive stock option are disposed of prior to the expiration of either holding period described above, the optionee generally will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of such shares at the time of exercise (or, if less, the amount realized on the disposition of such shares if a sale or exchange) over the option price paid for such shares. Any further gain (or loss) realized by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period. 12. 15 Notwithstanding anything to the contrary set forth in any of the Company's previous or future filings under the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that might incorporate by reference previous or future filings, including this Proxy Statement, in whole or in part, the following report and the Performance Graph herein shall not be incorporated by reference into any of such filings. REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION The Compensation Committee is comprised of Donald K. Skinner, Robert G. Bartizal and George L. Bragg. Donald K. Skinner serves as the Chairman of the Board and Chief Executive Officer of the Company. The Company has entered into written employment agreements with each of its executive officers as of January 1, 1995. The base compensation for each of the executive officers was fixed at the time of execution of their respective employment agreements. See "Compensation of Directors and Executive Officers." Each such executive officer received a bonus under his employment agreement for the year ended December 31, 1995. The amount of the bonuses was determined by the Compensation Committee based upon the performance of the Company, as well as a review of the performance of each executive officer. In January 1996, those executive officers with one year employment agreements which expired on December 31, 1995 entered into new one year agreements containing similar terms to the 1995 agreements, with salary and bonus increases. The executive officers are eligible to receive a bonus for the current fiscal year in an amount to be determined by the Compensation Committee in accordance with the terms of their new employment agreements. The Company believes that equity ownership by executive officers provides incentive to build stockholder value and align the interests of executive officers with the interests of stockholders. Upon the hiring of executive officers and other key employees, the Stock Option Committee will typically recommend stock option grants to those persons under the Company's stock option plan, subject to applicable vesting periods. Thereafter, the Stock Option Committee will consider awarding grants on a periodic basis. The Stock Option Committee believes that these additional annual grants will provide incentive for executive officers to remain with the Company. Options will be granted at the market price of the Company's Common Stock on the date of grant and, consequently, will have value only if the price of the Company's Common Stock increases over the exercise price. In determining the size of the periodic grants, the Stock Option Committee will consider various factors, including the amount of any prior option grants, the executive's or employee's performance during the current fiscal year and his or her expected contributions during the succeeding fiscal year. The foregoing report on executive compensation is provided by the following directors: Compensation Committee Robert G. Bartizal George L. Bragg Donald K. Skinner 13. 16 PERFORMANCE GRAPH The chart below sets forth a line graph comparing the performance of the Company's Common Stock against the Nasdaq Market (U.S. Companies) index and the Nasdaq Computer Manufacturers Stocks (SIC 3570-3579 US & Foreign) index for the period from February 9, 1994 (the date on which the market price of the Company's shares was first quoted by the Nasdaq National Market following the Company's initial public offering) through December 29, 1995. The indices assume that the value of an investment in the Company's Common Stock and each index was 100 on February 9, 1994 and that dividends were reinvested. PERFORMANCE GRAPH ELTRON INTERNATIONAL, INC. Nasdaq Computer Manufacturing Stock Nasdaq Stock Market (US Companies)
$900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2/09/94 12/30/94 12/29/95 ELTRON INTERNATIONAL, INC. 0 239.4 860.6 Nasdaq Computer Manufacturing Stock 98.8 103.3 162.7 Nasdaq Stock Market (US Companies) 94.0 96.6 136.6
14. 17 INDEPENDENT AUDITORS The Company's independent auditors for the fiscal year ended December 31, 1995 were Coopers & Lybrand LLP. The Board of Directors of the Company has not yet considered the selection of an auditor for the current fiscal year. It is anticipated that the Board will consider the selection and make a decision by October 31, 1996. A representative of Coopers & Lybrand LLP will be available at the Annual Meeting to respond to appropriate questions or make any other statements as such representative deems appropriate. 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 THE COMPANY'S ANNUAL REPORT ON FORM 10-K, AS AMENDED BY FORM 10-K-A, FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION TO ANY SHAREHOLDER DESIRING A COPY. SHAREHOLDERS MAY WRITE TO THE COMPANY AT: Corporate Secretary Eltron International, Inc. 41 Moreland Road Simi Valley, California 93065 SUBMISSION OF SHAREHOLDER PROPOSALS Stockholders are advised that any shareholder proposal, including nominations to the Board of Directors, intended for consideration at next year's Annual Meeting must be received by the Company no later than April 14, 1997 to be included in the proxy material for next year's Annual Meeting. It is recommended that shareholders submitting proposals direct them to the Corporate Secretary, Eltron International, Inc., 41 Moreland Road, Simi Valley, California 93065, and utilize certified mail, return-receipt requested in order to ensure timely delivery. THE STOCKHOLDERS ARE URGED TO COMPLETE, SIGN, AND RETURN PROMPTLY THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. By Order of the Board of Directors Daniel C. Toomey, Jr. Vice President Finance and Chief Financial Officer August 12, 1996 15. 18 APPENDIX A ELTRON INTERNATIONAL, INC. 1996 STOCK OPTION PLAN 1. Purpose. The purpose of the Eltron International, Inc. 1996 Stock Option Plan (the "Plan"), is to provide an incentive to officers, directors and key employees of Eltron International, Inc. (sometimes referred to as the "Parent") and its subsidiaries (individually and collectively, the "Company") and to other persons providing significant services to the Company to remain in the employ of the Company or provide services to the Company and contribute to its success. As used in the Plan, the term "Code" shall mean the Internal Revenue Code of 1986, as amended, and any successor statute, and the terms "Parent" and "Subsidiary" shall have the meaning set forth in Sections 424(e) and (f) of the Code. 2. Administration. The Plan shall be administered by either the Board of Directors of the Company (the "Board") or a Plan Committee which shall be established by the Board. The Board may appoint and remove members of the Plan Committee in its discretion subject only to the requirements set forth herein. The Plan Committee shall be comprised of such number of "non-employee directors" of the Board as defined in Rule 16b-3 (or any successor rule) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, or such other persons as may be permitted under Rule 16b-3, as such may be amended from to time, in order to preserve the status of this Plan as a Rule 16b-3 Plan. The Plan Committee or Board shall determine the meaning and application of the provisions of the Plan and all option agreements executed pursuant thereto, and its decisions shall be conclusive and binding upon all interested persons. Subject to the provisions of the Plan, the Plan Committee and/or the Board shall have the sole authority to determine: (a) The persons to whom options to purchase Stock shall be granted; (b) The number of options to be granted to each person; (c) The price to be paid for the Stock upon the exercise of each option; (d) The period within which each option shall be exercised and, with the consent of the optionee, any extensions of such period (provided, however, that the original period and all extensions shall not exceed the maximum period permissible under the Plan); and (e) The terms and conditions of each stock option agreement entered into between the Company and persons to whom the Company has granted an option and of any amendments thereto (provided that the optionee consents to each such amendment). 3. Eligibility. Officers, directors and key employees of the Company and persons providing significant services to the Company shall be eligible to receive grants of options under the Plan. 4. Stock Subject to Plan. There shall be reserved for issue upon the exercise of options granted under the Plan 500,000 shares of Common Stock of the Parent ("Stock") or the number of shares of Stock, which, in accordance with the provisions of Section 10 hereof, shall be substituted therefor. Such shares may be treasury shares. If an option granted under the Plan shall expire or 16. 19 terminate for any reason without having been exercised in full, unpurchased shares subject thereto shall again be available for the purposes of the Plan. 5. Terms of Options (a) Incentive Stock Options. It is intended that options granted pursuant to this Section 5(a) qualify as incentive stock options as defined in Section 422 of the Code. Incentive stock options shall be granted only to employees of the Company. Each stock option agreement evidencing an incentive stock option shall provide that the option is subject to the following terms and conditions and to such other terms and conditions not inconsistent therewith as the Board or Plan Committee may deem appropriate in each case: (1) Option Price. The price to be paid for each share of Stock upon the exercise of each incentive stock option shall be determined by the Board or Plan Committee at the time the option is granted, but shall in no event be less than 100% of the fair market value of the shares on the date the option is granted, or not less than 110% of the fair market value of such shares on the date such option is granted in the case of an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of its Parent or Subsidiaries. As used in this Plan the term "date the option is granted" means the date on which the Board or Plan Committee authorizes the grant of an option hereunder or any later date specified by the Board or Plan Committee. Fair market value of the shares shall be (i) the mean of the high and low prices of shares of Stock sold on the New York or American Stock Exchange on the date the option is granted (or if there was no sale on such date, the highest asked price for the Stock on such date), or (ii) if the Stock is not listed on either of those exchanges on the date the option is granted, the mean between the "bid" and "asked" prices of the Stock in the Nasdaq National Market or Nasdaq Stock Market on the date the option is granted, or (iii) if the Stock is not traded in any market, the price determined by the Board or Plan Committee to be fair market value, based upon such evidence as it may deem necessary or desirable. (2) Period of Option and Exercise. The period or periods within which an option may be exercised shall be determined by the Board or Plan Committee at the time the option is granted, but in no event shall any option granted hereunder be exercised more than ten years from the date the option was granted nor more than five years from the date the option was granted in the case of an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or of its Parent or Subsidiaries. (3) Payment for Stock. The option exercise price for each share of Stock purchased under an option shall be paid in full at the time of purchase. The Board or Plan Committee may provide that the option price be payable, at the election of the holder of the option and with the consent of the Board or Plan Committee, in whole or in part either in cash or by delivery of Stock in transferable form, such Stock to be valued for such purpose at its fair market value on the date on which the option is exercised. No share of Stock shall be issued upon exercise until full payment therefor has been made, and no optionee shall have any rights as an owner of Stock until the date of issuance to him of the stock certificate evidencing such Stock. (4) Limitation on Amount Becoming Exercisable In Any One Calendar Year. Subject to the overall limitations of Section 4 hereof (relating to the aggregate shares subject to the Plan), the aggregate fair market value (determined as of the time the option is granted) of Stock with respect to which incentive stock options are exercisable for the first time by the optionee during 17. 20 any calendar year (under the Plan and all other incentive stock option plans of the Company, the Parent, and Subsidiaries) shall not exceed $100,000. (b) Nonqualified Stock Options. Nonqualified stock options may be granted not only to employees but also to directors who are not employees of the Company and to persons who provide substantial services to the Company. Each nonqualified stock option granted under the Plan shall be evidenced by a stock option agreement between the person to whom such option is granted and the Company. Such stock option agreement shall provide that the option is subject to the following terms and conditions and to such other terms and conditions not inconsistent therewith as the Board or Plan Committee may deem appropriate in each case: (1) Option Price. The price to be paid for each share of Stock upon the exercise of an option shall be determined by the Board or Plan Committee at the time the option is granted. As used in this Plan, the term "date the option is granted" means the date on which the Board or Plan Committee authorizes the grant of an option hereunder or any later date specified by the Board or Plan Committee. To the extent that the fair market value of Stock is relevant to the pricing of the option by the Board or Plan Committee, fair market value of the Stock shall be determined as set forth in Section 5(a)(1) hereof. (2) Period of Option and Exercise. The period or periods within which an option may be exercised shall be determined by the Board or Plan Committee at the time the option is granted, but in no event shall such period exceed 10 years from the date the option is granted. (3) Payment for Stock. The option exercise price for Stock purchased under an option shall be paid in full at the time of purchase. The Board or Plan Committee may provide that the option exercise price be payable at the election of the holder of the option, with the consent of the Board or Plan Committee, in whole or in part either in cash or by delivery of Stock in transferable form, such Stock to be valued for such purpose at its fair market value on the date on which the option is exercised. No share of Stock shall be issued until full payment therefor has been made, and no optionee shall have any rights as an owner of shares of Stock until the date of issuance to him of the stock certificate evidencing such Stock. 6. Nontransferability. The options granted pursuant to the Plan shall be nontransferable except by will or the laws of descent and distribution, and shall be exercisable during the optionee's lifetime only by him and after his death, by his personal representative or by the person entitled thereto under his will or the laws of intestate succession. 7. Termination of Employment or Other Relationship. Upon termination of the optionee's employment or other relationship with the Company, his rights to exercise options then held by him shall be only as follows (in no case do the time periods referred to below extend the term specified in any option): (a) Death or Disability. Upon the death of an optionee, any option which he holds may be exercised (to the extent exercisable at his death), unless it otherwise expires, within such period after the date of his death (not to exceed twelve (12) months) as the Board or Plan Committee shall prescribe in his option agreement, by the employee's representative or by the person entitled thereto under his will or the laws of intestate succession. Upon the disability (within the meaning of Section 22(e)(3) of the Code) of an employee, any option which he holds may be exercised (to the extent exercisable as of the date of disability), unless it otherwise expires, within 18. 21 such period after the date of his disability (not to exceed twelve (12) months) as the Board or Plan Committee shall prescribe in his option agreement. (b) Retirement. Upon the retirement of an officer, director or employee or the cessation of services provided by a nonemployee (either pursuant to a Company retirement plan, if any, or pursuant to the approval of the Board or Plan Committee), an option may be exercised (to the extent exercisable at the date of such termination or cessation) by him within such period after the date of his retirement or cessation of services (not to exceed three (3) months) as the Board or Plan Committee shall prescribe in his option agreement. (c) Other Termination. In the event an officer, director or employee ceases to serve as an officer or director or leaves the employ of the Company or a nonemployee ceases to provide services to the Company for any reason other than as set forth in (a) and (b), above, any option which he holds shall terminate at (i) the earlier of 30 days after the date (A) his employment terminates, or (B) he ceases providing services to the Company or the date he receives written notice that his employment or rendering of services is or will be terminated, or (ii) such later date as determined by the Board or Plan Committee not to exceed the maximum period under Section 7(b) hereof with respect to incentive stock options. The foregoing shall not extend any option beyond the term specified therein and such option shall be exercisable only to the extent exercisable at the date of termination of employment or cessation of services. (d) Board and Plan Committee Discretion. The Board or Plan Committee may in its discretion accelerate the exercisability of any or all options upon termination of employment or cessation of services. 8. Discretionary Acceleration on Merger or Sale of the Parent. In the event the Parent or its shareholders enter into an agreement to dispose of all or substantially all of the assets or capital stock of the Parent by means of a sale, merger, consolidation, reorganization, liquidation or otherwise, an option granted under the Plan will, in the discretion of the Board or Plan Committee, if such agreement or transaction is authorized by the Board of Directors and conditioned upon consummation of such disposition of assets or stock, become immediately exercisable in full during the period commencing as of the date of the execution of such agreement and ending as of the earlier of the stated termination date of the option or the date on which the disposition of assets or stock contemplated by the agreement is consummated. 9. Transfer to Related Corporation. In the event an employee leaves the employ of the Parent to become an employee of a Subsidiary or any employee leaves the employ of a Subsidiary to become an employee of the Parent or another Subsidiary, such employee shall be deemed to continue as an employee for purposes of this Plan. 10. Adjustment of Shares; Termination of Options. (a) Adjustment of Shares. In the event of changes in the outstanding Stock by reason of stock dividends, split-ups, consolidations, recapitalizations, reorganizations or like events (as determined by the Board or Plan Committee), an appropriate adjustment shall be made by the Board or Plan Committee in the number of shares reserved under the Plan, in the number of shares set forth in Section 4 hereof, and in the number of shares and the option price per share specified in any stock option agreement with respect to any unpurchased shares. The determination of the Board or Plan Committee as to what adjustments shall be made shall be conclusive. Adjustments for any options to purchase fractional shares shall also be determined by the Board or Plan Committee. The 19. 22 Board or Plan Committee shall give prompt notice to all optionees of any adjustment pursuant to this Section. (b) Termination of Options on Merger; Sale or Liquidation of Parent. Notwithstanding anything to the contrary in this Plan, in the event of any merger, consolidation or other reorganization of the Parent in which the Parent is not the surviving or continuing corporation (as determined by the Board or Plan Committee) or in the event of the liquidation or dissolution of the Parent, all options granted hereunder shall terminate on the effective date of the merger, consolidation, reorganization, liquidation, or dissolution unless there is an agreement with respect thereto which expressly provides for the assumption of such options by the continuing or surviving corporation. 11. Securities Law Requirements. The Company's obligation to issue shares of its Stock upon exercise of an option is expressly conditioned upon the completion by the Company of any registration or other qualification of such shares under any state and/or federal law or rulings and regulations of any government regulatory body or the making of such investment representations or other representations and undertakings by the optionee (or his legal representative, heir or legatee, as the case may be) in order to comply with the requirements of any exemption from any such registration or other qualification of such shares which the Company in its sole discretion shall deem necessary or advisable. The Company may refuse to permit the sale or other disposition of any shares acquired pursuant to any such representation until it is satisfied that such sale or other disposition would not be in contravention of applicable state or federal securities law. 12. Tax Withholding. As a condition to exercise of an option or otherwise, the Company may require an optionee to pay over to the Company all applicable federal, state and local taxes which the Company is required to withhold with respect to the exercise of an option granted hereunder. At the discretion of the Board or Plan Committee and upon the request of an optionee, the minimum statutory withholding tax requirements may be satisfied by the withholding of shares of Stock otherwise issuable to the optionee upon the exercise of an option. 13. Amendment. The Board of Directors may amend the Plan at any time, except that without shareholder approval: (a) The number of shares of Stock which may be reserved for issuance under the Plan shall not be increased except as provided in Section 10(a) hereof; (b) The option price per share of Stock subject to incentive options may not be fixed at less than 100% of the fair market value of a share of Stock on the date the option is granted; (c) The maximum period of ten (10) years during which the options may be exercised may not be extended; (d) The class of persons eligible to receive options under the Plan as set forth in Section 3 shall not be changed; and (e) This Section 13 may not be amended in a manner that limits or reduces the amendments which require shareholder approval. 14. Effective Date. The Plan shall be effective upon its adoption by the Board of Directors of the Company. Options may be granted but not exercised prior to shareholder approval of the Plan. If any options are so granted and shareholder approval shall not have been obtained 20. 23 within 12 months of the date of adoption of this Plan by the Board of Directors, such options shall terminate retroactively as of the date they were granted. 15. Termination. The Plan shall terminate automatically as of the close of business on the day preceding the 10th anniversary date of its adoption by the Board of Directors or earlier by resolution of the Board of Directors or upon consummation of the disposition of capital stock or assets of the Parent, as described in Sections 8 and 10(b) hereof. Unless otherwise provided herein, the termination of the Plan shall not affect the validity of any option agreement outstanding at the date of such termination. 16. Stock Option Agreement. Each option granted under the Plan shall be evidenced by a written agreement ("Stock Option Agreement") executed by the Company and accepted by the optionee, which (i) shall contain each of the provisions and agreements herein specifically required to be contained therein, (ii) shall indicate whether such option is to be an incentive stock option or a nonqualified stock option, and if it is to be an incentive stock option, such Stock Option Agreement shall contain terms and conditions permitting such option to qualify for treatment as an incentive stock option under Section 422 of the Code, (iii) may contain the agreement of the optionee to remain in the employ of, and/or to render services to, the Company or any Parent or Subsidiary for a period of time to be determined by the Board or Plan Committee, and (iv) may contain such other terms and conditions as the Board or Plan Committee deems desirable and which are not inconsistent with the Plan. 17. No Right to Employment. Nothing in this Plan or in any option granted hereunder shall confer upon any optionee any right to continue in the employ of the Company or to continue to perform services for the Company or any Parent or Subsidiary, or shall interfere with or restrict in any way the rights of the Company to discharge or terminate any officer, director, employee, independent contractor or consultant at any time for any reason whatsoever, with or without good cause. This 1996 Stock Option Plan was approved by the Board as of August 1, 1996. 21. 24 PRELIMINARY COPY ELTRON INTERNATIONAL, INC. PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, SEPTEMBER 6, 1996 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF ELTRON INTERNATIONAL, INC. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy Statement, each dated August 12, 1996, and does hereby appoint Donald K. Skinner, Hugh K. Gagnier and Daniel C. Toomey, Jr. (the "Proxies"), and each of them, with full power of substitution, as the proxy of the undersigned to represent the undersigned and to vote all shares of Common Stock of Eltron International, Inc. which the undersigned would be entitled to vote if personally present at the Annual Meeting of Stockholders, to be held on September 6, 1996, at the Radisson Hotel, 999 Enchanted Way, Simi Valley, CA 93065, and at any adjournments thereof. 1. ELECTION OF DIRECTORS: / / FOR all nominees listed below / / WITHHOLD AUTHORITY (except as marked to the contrary below) to vote for all nominees listed below
Donald K. Skinner, Hugh K. Gagnier, Robert G. Bartizal, George L. Bragg (Instructions: To withhold authority to vote for any individual nominee, write that nominee's name on the line that follows: - - -------------------------------------------------------------------------------- PROXIES NOT MARKED TO WITHHOLD AUTHORITY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES WHOSE NAMES ARE NOT WRITTEN ON THE ABOVE LINE. 2. The adoption and approval of the Company's 1996 Stock Option Plan pursuant to which options for up to 500,000 shares of Common Stock may be granted. FOR / / AGAINST / / ABSTAIN / / 3. At their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. 25 PRELIMINARY COPY The shares represented hereby will be voted as directed. Where no direction is made, the shares will be voted FOR proposals 1 and 2. ______________________________ ______________________________ (Signature) (Signature, if held jointly) Dated: , 1996 (Please sign exactly as your name or names appear hereon, and when signing as attorney, executor, administrator, trustee or guardian, give your full title as such. If the signatory is a corporation, sign the full corporate name by a duly authorized officer. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE -----END PRIVACY-ENHANCED MESSAGE-----