-----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, EzTlCNpkMwcmJelluaHCZJqd0LQQCK948aeMTd+TVnge/Mz5++lDrPF8Rzj65R/1 jJn/Frlys62h/puLPV6wsA== 0000950135-97-003794.txt : 19970912 0000950135-97-003794.hdr.sgml : 19970912 ACCESSION NUMBER: 0000950135-97-003794 CONFORMED SUBMISSION TYPE: DEFS14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19970910 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN SCIENCE & ENGINEERING INC CENTRAL INDEX KEY: 0000005768 STANDARD INDUSTRIAL CLASSIFICATION: X-RAY APPARATUS & TUBES & RELATED IRRADIATION APPARATUS [3844] IRS NUMBER: 042240991 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: DEFS14A SEC ACT: SEC FILE NUMBER: 001-06549 FILM NUMBER: 97678047 BUSINESS ADDRESS: STREET 1: 829 MIDDLESEX TURNPIKE STREET 2: 40 ERIE STREET CITY: BILLERICA STATE: MA ZIP: 01821 BUSINESS PHONE: 5082628700 MAIL ADDRESS: STREET 1: 40 ERIE STREET STREET 2: 829 MIDDLESEX TURNPIKE CITY: BILLERICA STATE: MA ZIP: 01821 DEFS14A 1 AMERICAN SCIENCE & ENGINEERING, INC. 1 SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) FILED BY THE REGISTRANT / / 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 / / Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) American Science and Engineering, Inc. (Name of Registrant as Specified In Its Charter) American Science and Engineering, Inc. (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: - -------------------------------------------------------------------------------- 2 AMERICAN SCIENCE AND ENGINEERING, INC. 829 MIDDLESEX TURNPIKE BILLERICA, MASSACHUSETTS 01821 NOTICE OF SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD SEPTEMBER 30, 1997 The Special Meeting in Lieu of Annual Meeting of Stockholders of American Science and Engineering, Inc. (the "Company") will be held Tuesday, September 30, 1997, at 10:00 A.M., at the office of the Company, 829 Middlesex Turnpike, Billerica, Massachusetts, for the following purposes: (1) To fix the number of Directors of the Company at seven for the ensuing year, and to elect the seven persons named in the accompanying Proxy Statement to serve as Directors until the next Annual Meeting and until their successors are elected and qualified; and (2) To consider and act upon any other business that may properly come before the meeting and any adjournment or adjournments thereof. Stockholders of record at the close of business on August 15, 1997 are entitled to notice of, and to vote at, the meeting. By Order of the Board of Directors /s/ Jeffrey A. Bernfeld -------------------------------- Jeffrey A. Bernfeld Clerk September 10, 1997 - -------------------------------------------------------------------------------- YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU INTEND TO ATTEND THE MEETING IN PERSON, PLEASE DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON. - -------------------------------------------------------------------------------- 3 AMERICAN SCIENCE AND ENGINEERING, INC. 829 MIDDLESEX TURNPIKE BILLERICA, MASSACHUSETTS 01821 PROXY STATEMENT The enclosed Proxy is solicited by the Board of Directors of American Science and Engineering, Inc. (the "Company") for use at the Special Meeting in Lieu of Annual Meeting of Stockholders to be held on Tuesday, September 30, 1997, at 10:00 a.m. at the principal office of the Company, 829 Middlesex Turnpike, Billerica, Massachusetts, and at any adjournment of the meeting (the "Meeting"). The matters to be considered and acted upon at the Meeting are described in the attached notice of the Meeting and in this Proxy Statement. Stockholders of record at the close of business on August 15, 1997 are entitled to notice of and to vote at the Meeting. Each share of Common Stock of the Company outstanding on the record date is entitled to one vote. As of the close of business on August 15, 1997, 4,650,683 shares of Common Stock of the Company were outstanding. This Proxy Statement and the accompanying Proxy will first be mailed to stockholders on or about September 10, 1997. A copy of the Annual Report of the Company for its fiscal year ended March 28, 1997 accompanies this Proxy Statement. PROPOSAL NO. 1 ELECTION OF DIRECTORS The Company's By-laws provide that the Board of Directors of the Company shall consist of not less than three nor more than twelve directors. The Board of Directors currently consists of seven members, whose terms expire at the Meeting. The Directors are recommending that the size of the Board be set at seven members and that the seven incumbent directors identified below be re-elected. The affirmative vote of a majority of the shares of Common Stock of the Company voted in person or by proxy at the Meeting is required to fix the number of directors and a plurality of the affirmative votes cast is required to elect each of the seven directors. Each director will serve for one year and until his successor is elected and qualified. If any nominee at the time of the election is unable or unwilling to serve or is otherwise unavailable for election, the Board of Directors may designate another nominee and the persons named as proxies will vote all proxies for such nominee. The Board of Directors has no reason to believe that any nominee is unwilling or unable to serve. There are no arrangements between any nominee and any other person relating to such nominee's nomination. Proxies solicited by the Board of Directors of the Company, if properly signed and returned and containing no instructions to the contrary, will be voted FOR fixing the number of directors at seven and electing the seven nominees listed below as directors of the Company. NOMINEES The names of, and certain information with respect to, the persons nominated by the Board of Directors for election as directors are as follows: 4
Positions and Offices Date Assumed Name Age of Company Held Each Position - ---- --- --------------- ------------- Herman Feshbach 80 Director September 1975 Chairman July 1993 Al Gladen 59 Director September 1995 Hamilton W. Helmer 50 Director February 1993 Donald J. McCarren 57 Director February 1993 William E. Odom 64 Director September 1996 Ralph S. Sheridan 47 Director January 1994 President and Chief Executive Officer September 1993 Carl W. Vogt 61 Director June 1997
Dr. Herman Feshbach is the current Chairman of the Board of Directors, a position he was elected to in 1993 after serving on the Board since 1976. Dr. Feshbach also has been Institute Professor Emeritus at the Massachusetts Institute of Technology for more than five years and has served as Chairman of the Physics Department at MIT, and Director of the MIT Center for Theoretical Physics. He is a past President of the American Physical Society and the American Academy of Arts and Sciences and is a Fellow of both those organizations and of the American Association for the Advancement of Sciences. He is an Emeritus member of the Board of Governors of the Weizmann Institute of Science, Editor of the Annals of Physics, and has served as Chairman or Member on numerous committees for the Department of Energy, the National Science Foundation, the National Academy of Sciences, and the American Physical Society. He was awarded the National Medal of Science by President Reagan in 1986. Dr. Feshbach holds a Ph.D. in Physics from MIT. Mr. Al Gladen has been President of Dabster, Inc., a technology consulting firm specializing in engineering and technology management assistance, located in Kent, Washington, since 1981. Mr. Gladen's consulting activities have included strategic technology planning, new product development, project management and acquisition review. Mr. Gladen has acted as a technology and engineering consultant to the Company since 1993, and it is expected that he will continue to provide such assistance on a part-time basis. Mr. Gladen holds four U.S. patents and is a director of four privately held corporations. Dr. Hamilton W. Helmer has, for the last 14 years, been Managing Partner of Helmer & Associates, a strategic consulting firm located in Los Altos, California. Prior to that, Dr. Helmer worked for Bain & Co. Dr. Helmer holds a Ph.D in Economics from Yale University. Dr. Donald J. McCarren is President of the National Center for Genome Resources, a non-profit corporation located in Santa Fe, New Mexico, which supports genome projects and related research by providing resources such as expertise in bioinformatics. Prior to assuming that position in 1997, Dr. McCarren was President and Chief Executive Officer of Tacora Corporation, a medical technology company located in Seattle, Washington. From July 1992 to June 1994, he was President and Chief Operating Officer of ImmunoGen, Inc., a bio-tech research and development company located in Cambridge, Massachusetts. Prior to that, he was President (1990 to 1992) of the Adria Laboratories Division of Erbamont N.V. in Columbus, Ohio, and Corporate Vice President of Worldwide Marketing and Business Development (1989 to 1990) and Vice President of Far East and Australian Operations (1986 to 1989) of Erbamont, N.V. Dr. McCarren holds a Ph.D. in Developmental Economics. General William E. Odom is the Director of National Security Studies for the Hudson Institute in Washington, D.C. and an adjunct Professor in the Department of Political Science at Yale University. Prior to joining the Hudson Institute in 1988, General Odom spent 34 years as an officer in the United States Army, retiring with the rank of Lieutenant General. While on active duty, General Odom served as Director of the National Security Agency for three years, Assistant Chief of Staff for Intelligence for the Department of the Army for four years and Military Assistant to the President's National Security Advisor for four years. General Odom received his B.S. degree from West Point and Masters and Ph.D. degrees from Columbia University. General Odom is on the Board of Directors of Nichols 2 5 Research Corporation of Huntsville, Alabama, V-ONE Corporation of Rockville, Maryland, Middlebury College, from which he received an honorary doctorate, and the Institute for the Study of Diplomacy at Georgetown University. General Odom is the author of five books and numerous articles. Mr. Ralph S. Sheridan was elected President and Chief Executive Officer of the Company in September 1993, and in January of 1994, he was elected a Director. Prior to joining the Company, Mr. Sheridan ran his own consulting and investment firm, Value Management Corporation, in Waltham, Massachusetts. Prior to that, Mr. Sheridan was President and CEO (1988-1989) and Vice President of Marketing and Operations (1987-1988) of HEC Energy Corp., in Boston, Massachusetts. Before joining HEC, Mr. Sheridan held the position of Vice President of Operations for the Engineered Systems and Controls Group (1984-1986) and Vice President of Corporate Business Development (1981-1984) at Combustion Engineering, Inc. in Stamford, Connecticut. Mr. Sheridan holds a B.S. in Chemistry and an M.B.A., both from Ohio State University. Mr. Carl W. Vogt was elected as a Director by the Board of Directors in June, 1997. He is a partner in the Washington, D.C. office of the national law firm of Fulbright & Jaworski. Mr. Vogt has been with that firm since 1966, with various periods away from the firm to perform government service. In 1992, he was appointed by President Bush as the Chairman of the National Transportation Safety Board, where he served until 1994. Mr. Vogt earned his bachelor's degree from Williams College and his law degree from the University of Texas Law School. . EXECUTIVE OFFICERS (WHO ARE NOT ALSO DIRECTORS)
Positions and Offices Date Assumed Name Age of Company Held Each Position - ---- --- --------------- ------------- Jeffrey A. Bernfeld 40 Vice President, General Counsel and Clerk February 1996 Peter W. Harris 43 Vice President, Sales and Marketing April 1994 Alan H. Rutan 56 Vice President, Engineering July 1996 Lee C. Steele 48 Treasurer, Vice President of Finance, and Chief October 1994 Financial Officer
Mr. Jeffrey A. Bernfeld joined AS&E as Vice President, General Counsel and Clerk in February 1996. Prior to that time, he was Vice President and General Counsel of Spire Corporation in Bedford, Massachusetts for three and one-half years; a founder and Managing Director of Global Solutions, Inc. in Wellesley, Massachusetts for one year; Vice President and General Counsel of The Mediplex Group in Wellesley, Massachusetts for two years; and a partner at Goldstein & Manello in Boston, Massachusetts, where he began his career as an Associate in 1981. Mr. Bernfeld received his B.A. from Brandeis University and his J.D. from New York University School of Law. Mr. Bernfeld is a director of Summit Technology, Inc. of Waltham, Massachusetts. Mr. Peter W. Harris joined the Company in February 1994 as Vice President, Sales and Marketing. Prior to joining the Company, Mr. Harris was Manager of External Affairs for Stone & Webster, an architectural engineering firm in Boston, Massachusetts, where he held a number of positions beginning in 1988. During his time at Stone & Webster, Mr. Harris concentrated on Federal government and international sales. Mr. Harris, a graduate of the U.S. Naval Academy, holds the rank of Captain in the U.S. Naval Reserve and commanded several units during his twelve years of active duty and seven years in the Naval Reserve. Mr. Harris holds a Master's degree in National Security Studies from Georgetown University. Mr. Alan H. Rutan joined the Company in July 1996 as Vice President of Engineering. Prior to that time, Mr. Rutan spent 11 years at Raytheon Company, most recently as Manager of the Air Defense Systems Department, where his work focused on radar systems engineering and signal processing. Prior to his Raytheon experience, Mr. Rutan spent seven years at GTE Laboratories as a Senior Member of the Technical Staff. From 1974 to 1978, Mr. Rutan ran his own consulting firm, Signal Processing Associates, Inc., which specialized in image processing applications for various government security organizations. Mr. Rutan received his B.A. in Physics from Harvard University. 3 6 Mr. Lee C. Steele joined the Company in September 1994 as its Vice President of Finance and Chief Financial Officer. From 1991 until he joined the Company, Mr. Steele was a principal of Asset Management Corporation, a Waltham, Massachusetts consulting firm specializing in the analysis and resolution of complex financial and operational challenges for small and medium size businesses. Until 1991, Mr. Steele was a Partner at Deloitte & Touche, specializing in profit planning, corporate finance and troubled company situations. He holds an M.B.A. from Harvard Business School and an engineering degree from Case Western Reserve University. MEETINGS OF BOARD OF DIRECTORS AND COMMITTEES During the fiscal year ended March 28, 1997, the Board of Directors of the Company met five times. Each incumbent director attended 75% or more of the aggregate of the total number of meetings of the Board held during the period he was a director and of the meetings of committees of the Board on which he served. The Board of Directors has three standing Committees: the Audit, Compensation and Nominating Committees. The Audit Committee consists of Dr. Feshbach, Dr. Helmer, and Dr. McCarren. This Committee, which met once during fiscal 1997, is primarily responsible for reviewing the activities of the Company's independent auditors, reviewing and evaluating recommendations of the auditors, recommending areas of review to the Company's management, and reviewing and evaluating the Company's financial statements, accounting policies, reporting practices and internal controls. The Compensation Committee consists of Dr. Feshbach, Dr. Helmer, and Dr. McCarren. This Committee, which met six times in person or by telephone during fiscal 1997, is responsible for making recommendations to the Company's Board of Directors concerning the levels and types of compensation and benefits to be paid and granted to the Company's Chief Executive Officer and other executive employees of the Company and for the administration of the Company's stock option plans. The Nominating Committee consists of Messrs. Helmer, McCarren and Sheridan. The Committee met three times during fiscal 1997 in person or by telephone during fiscal 1997 and is charged with the responsibility of identifying appropriate candidates for nomination to the Board. The Company's By-Laws currently do not set forth any procedure for the nomination of candidates for director by stockholders. COMPENSATION OF DIRECTORS Directors who are also employees of the Company do not receive additional compensation as Directors. Non-employee Directors (other than the Chairman) receive annual compensation of 2,000 shares of Company Common Stock issuable on January 10th in each year, and options to purchase 7,000 shares of Common Stock at the closing price on the date of the Annual Meeting in each year. The Chairman receives 2,500 shares of Common Stock on January 10th in each year as well as cash payments totaling $ 14,330 in fiscal 1997 and continues to receive deferred compensation under a now discontinued plan described below. No meeting fees or other fees are payable to any Director. Dr. Feshbach, the Company's Chairman, is covered by a nonfunded deferred compensation plan (adopted in 1976 and last amended in 1992) that provides for periodic payments beginning at age 65, based on length of service. During the year, Dr. Feshbach received $4,752 under the Plan. The Company accrues the current cost of the plan, which amounted to $10,000 in fiscal 1997. OWNERSHIP OF COMMON STOCK OF THE COMPANY BY CERTAIN PERSONS As of August 15, 1997, the Company was not aware of any person or entity beneficially owning 5% or more of the Company's Common Stock. The following table sets forth the Common Stock holdings of the Company's directors, 4 7 nominees for director, each named executive officer in the Summary Compensation Table under "Executive Compensation" below and all directors and executive officers as a group as of August 15, 1997. BENEFICIAL HOLDINGS OF THE COMPANY'S COMMON STOCK BY DIRECTORS AND EXECUTIVE OFFICERS AS OF AUGUST 15, 1997.
Name of Amount and Nature of Percent Beneficial Owner Beneficial Ownership(1) of Class - ---------------- ----------------------- -------- Jeffrey A. Bernfeld 20,643 (2) Herman Feshbach 15,290 (2) Al Gladen 51,055 1.09 Peter W. Harris 35,177 (2) Hamilton W. Helmer 42,281 (2) Michael V. Hynes(3) 32,187 (2) Donald J. McCarren 50,081 1.07 William E. Odom 10,000 (2) Alan H. Rutan 12,188 (2) Ralph S. Sheridan 401,743 8.29 Lee C. Steele 57,648 1.23 Carl W. Vogt 14,166 (2) Directors and Executive Officers as a Group (11 persons) 742,459 14.59
(1) Includes shares that may be acquired under stock options and warrants exercisable within sixty days after the date of this table, as follows: Mr. Bernfeld - 20,000; Dr. Feshbach - 3,750; Mr. Gladen - 14,000; Mr. Harris - 32,000; Dr. Helmer -36,500; Dr. Hynes - 32,000; Dr. McCarren - 37,500; Mr. Odom - 7,000; Mr. Rutan - 12,000; Mr. Sheridan - 195,000; Mr. Steele - 50,000; Mr. Vogt - 0; and all Directors and Executive Officers as a group - 439,750. All ownership reported herein includes sole or joint voting and investment power. (2) Amount owned constitutes less than one percent. (3) Dr. Hynes resigned from the Company effective June 30, 1997. 5 8 EXECUTIVE COMPENSATION The following chart provides information concerning compensation paid by the Company during the fiscal year ended March 28, 1997 to the Chief Executive Officer and each of the most highly compensated executive officers of the Company whose aggregate compensation exceeded $100,000 (collectively, the "named executive officers"). SUMMARY COMPENSATION TABLE
Long-Term Compen- Annual sation Awards Compensation Securities All Other Name and Principal Fiscal Underlying Compen- Position Year Salary($) Bonus ($) Options (#) sation($)(1) - ------------------ ------ --------- --------- ----------- ------------ Ralph S. Sheridan 1997 222,213 270,385(3) 225,000 4,479 President and CEO 1996 200,000 202,168(3) 0 2,486 1995 200,000 111,055(3) 0 2,198 Jeffrey A. Bernfeld 1997 120,408 19,000 16,000 408 Vice President and 1996(2) 7,846 N.A. 24,000 408 General Counsel Peter W. Harris 1997 111,941 45,000 30,000 403 Vice President of 1996 110,000 40,000 0 403 Sales and Marketing 1995 110,000 0 0 721 Michael V. Hynes(4) 1997 116,240 N.A. 0 1,240 Vice President and Chief Technical Officer 1996(2) 60,153 N.A. 32,000 1,240 Lee C. Steele 1997 120,560 27,000 0 752 Vice President and CFO 1996 110,752 27,000 0 1,344 1995(2) 55,000 0 50,000 900
(1) All Other Compensation includes imputed income from taxable life insurance. (2) The indicated years were years of partial employment with the Company for each named executive officer. (3) Mr. Sheridan's bonus is paid in respect of "contract years" ending September 30th in each year and includes cash, stock and payments made to him to alleviate the tax impact of his stock bonus. (4) Dr. Hynes resigned from the Company effective June 30, 1997. Mr. Sheridan has an employment contract with the Company that provides for his employment as President and Chief Executive Officer, and as a Director, through September 1999, at an annual salary of $240,000, plus performance bonuses tied to specific accomplishments. Under the contract, Mr. Sheridan is eligible to receive an annual bonus of up to $230,000 in each contract year, based on his accomplishment of goals established by the Compensation Committee. Under the previous contract, but not under the current contract, Mr. Sheridan also received a bonus of up to 10,000 shares of common stock and an amount calculated to compensate him for the taxes due on the stock portion of this bonus. In addition, in October 1996 the Company granted Mr. Sheridan options to purchase 225,000 shares of the Company's Common Stock at an exercise price of $14.00 per share, the fair market value of the Company's Common Stock on the date of grant. The options become exercisable at the rate of 75,000 options per year on the first three anniversaries of the grant. 6 9 Mr. Sheridan recognized no income upon the issuance of the options. When the options are exercised, Mr. Sheridan will recognize ordinary income in an amount equal to the difference between the fair market value of the Common Stock received upon the exercise of the option and the amount paid for the Common Stock. At that time, the Company will be allowed a deduction equal to the amount recognized as ordinary income by Mr. Sheridan. The options provide that to the extent that exercise of an option would give rise to compensation expense that the Company reasonably expects will not be deductible for tax purposes in any given taxable year pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, the number of shares as to which the options may be exercised during that taxable year shall be limited. Under his initial employment contract, Mr. Sheridan purchased 160,000 treasury shares of the Company's Common Stock payable by promissory note. The note is due on the earlier of September 15, 2003 or the termination of Mr. Sheridan's employment. The Company has agreed to reimburse Mr. Sheridan for the interest payable under the note in most circumstances. Mr. Sheridan is entitled to receive the same benefits as other senior executives of the Company, as well as to the use of a car. In the event that Mr. Sheridan's employment with the Company is terminated without Cause, or by him for Good Reason (as defined in the employment contract), he will receive twelve months' pay and any previously earned bonuses. In the event that Mr. Sheridan's employment with the Company is terminated for Cause, or by him other than for Good Reason (as defined in the employment contract), or by his death or disability, he will not be entitled to receive any salary beyond the date of termination, and he will only be entitled to receive previously earned bonuses if the termination is caused by death or disability. Mr. Bernfeld has an agreement with the Company which provides for a minimum base salary of $120,000, adjustable at the discretion of the President, and a bonus of up to $20,000 subject to the achievement of individual and corporate goals; and 24,000 stock options granted at market price, which vest according to a schedule. The agreement is for a three year term ending in February, 1999, and grants Mr. Bernfeld severance payments equal to one year's salary if he is terminated in connection with a change of the control of the Company as defined in the agreement. The agreement also provides that if Mr. Bernfeld is terminated for any reason other than "Cause" as defined in the agreement, he will be entitled to receive an amount equal to at least six months salary. Mr. Rutan has an agreement with the Company granting Mr. Rutan severance payments equal to one year's salary if he is terminated in connection with a change of control of the Company as defined in the agreement. The agreement also provides that if Mr. Rutan is terminated for any reason other than "Cause" as defined in the agreement, he will be entitled to receive an amount equal to at least six months salary. Mr. Steele has an agreement with the Company providing for a three year term ending in September, 1997, subject to termination for "Cause" as defined. The contract establishes a base salary of $110,000 plus a potential bonus of up to $30,000 upon the achievement of semiannual individual and corporate goals as established by the President of the Company in consultation with Mr. Steele. The agreement grants Mr. Steele severance payments equal to one year's salary if he is terminated in connection with a change of control of the Company, as defined in the agreement. 7 10 [ ] THE FOLLOWING TABLES PROVIDE INFORMATION CONCERNING THE GRANT OF OPTIONS IN FISCAL YEAR 1997 TO EXECUTIVE OFFICERS NAMED IN THE SUMMARY COMPENSATION TABLE AND OPTIONS EXERCISED BY THOSE OFFICERS. OPTION GRANTS IN THE LAST FISCAL YEAR
Individual Grants -------------------------------------------------------------- Potential Realizable Value at Assumed Annual Rates of % of Total Stock Price Appreciation for Options Option Term ($) Granted to ---------------------------------- Options All Exercise Expiration Granted Employees Price ($) Date 5%/year 10%/year -------------------------------------------------------------------------------------------------- Ralph S. Sheridan 225,000 52.43 14.000 10/24/06 1,082,217 3,282,776 Jeffrey A. Bernfeld 16,000 3.73 13.125 2/12/07 106,006 293,186 Peter W. Harris 30,000 6.99 9.875 11/21/06 296,260 647,224 Michael V. Hynes(1) 0 0 N/A N/A N/A N/A Alan H. Rutan 24,000 5.59 10.000 7/8/06 199,437 434,163 Lee C. Steele 0 0 N/A N/A N/A N/A
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
Number of Value of Unexercised In- Unexercised Options at The-Money Options at Shares Fiscal Year End - Fiscal Year End - Acquired March 28, 1997(#) March 28, 1997($) on Value ----------------------- ------------------------ Exercise Realized Exerc- Unexerc- Exerc- Unexerc- (#) ($) isable isable isable isable -------------------------------------------------------------------------------------------------- Ralph S. Sheridan 0 0 120,000 225,000 975,000 0 Jeffrey A. Bernfeld 0 0 20,000 20,000 49,500 49,500 Peter W. Harris 0 0 30,000 30,000 236,250 67,500 Michael V. Hynes(1) 0 0 16,000 16,000 90,000 90,000 Alan H. Rutan 0 0 6,000 18,000 12,750 38,250 Lee C. Steele 0 0 37,500 12,500 250,781 83,594
(1) Dr. Hynes resigned from the Company effective June 30, 1997. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Company's Compensation Committee includes Dr. Herman Feshbach, Dr. Hamilton W. Helmer and Dr. Donald J. McCarren. No reportable relationship existed between the Company and any member of the Compensation Committee. 8 11 RELATED PARTY TRANSACTIONS In April, 1995 a group that included three of the Company's Officers and one Company Director made a loan to the Company in the total amount of $650,000. The proceeds of the loan were used for general working capital purposes. The loan was paid off in full on time in August, 1995 and bore interest at the prime rate plus two percent. As additional consideration, the Company issued a total of 6,500 shares of its Common Stock and warrants to purchase 65,000 shares of its Common Stock proportionately to the lenders. The warrant exercise price is the lowest trading price of the stock on the American Stock Exchange during the term of the loan. The Company has registered these shares with the Securities and Exchange Commission. All of the warrants have been exercised. Ralph S. Sheridan, the Company's President and CEO, provided $200,000 of the loan funds. Al Gladen, who subsequently became a Director of, and remains a Consultant to, the Company, provided $300,000. Lee C. Steele, the Company's Vice President of Finance and CFO, provided $75,000. Donald J. McCarren, a Director of the Company, provided $50,000. Peter W. Harris, the Company's Vice President of Sales and Marketing, provided $25,000. Mr. Gladen provides engineering and management services to the Company on a regular basis. In fiscal year 1997, the compensation paid to Dabster, Inc., a corporation of which Mr. Gladen is the President, for such services was $226,350. COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION The Compensation Committee of the Board of Directors (consisting of the three outside Directors whose names appear below this Report) has sole responsibility for compensation issues relating to the Chief Executive Officer. Compensation practices and policies for the other executive officers are set by the Chief Executive Officer with the advice of the Compensation Committee. The Compensation Committee has formulated an approach to all executive compensation that emphasizes the establishment of goals and objectives for each executive and for the Company as a whole and ties a substantial portion of executive compensation to the performance of the executive and the Company with respect to these goals and objectives. Base compensation for executive officers (and many other Company employees) is established on the basis of an analysis of salaries received by comparable employees of high-tech and manufacturing companies in the Greater Boston area, company financial results and prospects, and individual contributions relative to the job description and past performance of each executive. In line with this approach, the Company entered into a new employment agreement with its President and Chief Executive Officer, Mr. Ralph S. Sheridan, in 1996 (effective as of September 1996). This Agreement was based, in part, on an independent consultant's analysis of compensation arrangements for chief executives of comparable companies, and was also based on a careful review of the most important goals and objectives for the Company. The Agreement provides for annual cash compensation of $240,000, plus annual incentive bonuses of up to $230,000 tied to specific, agreed upon performance criteria. In addition, in order to provide for long-term incentives, the Company has issued to Mr. Sheridan nonstatutory stock options to purchase 225,000 shares of Common Stock which vest ratably over three years. For the contract year ended in September 1996, which was performed under Mr. Sheridan's prior contract, the Committee awarded Mr. Sheridan a cash bonus of $75,000 and 10,000 shares of stock, representing 100% of the potential award under his contract. This award represents the Committee's determination that Mr. Sheridan had done an excellent job over the preceding twelve months and had met all of the goals and objectives jointly established by the Committee and Mr. Sheridan. Also in keeping with its performance-based compensation philosophy, in the spring of 1994, the Company implemented an incentive compensation program for all executives who report directly to the Office of the President. Under this new policy, these executives receive a specified portion of their total compensation (ranging from 10% to 50%) based upon two factors: their completion of agreed upon goals and objectives, and the performance of the entire Company. Report Submitted By: Dr. Herman Feshbach, Dr. Hamilton W. Helmer and Dr. Donald J. McCarren. 9 12 [ ] STOCK PERFORMANCE CHART The following chart graphs the performance of the cumulative total return to shareholders (stock price appreciation plus dividends) during the previous five years in comparison to the returns of the Standard & Poor's 500 Composite Stock Price Index and the Standard & Poor's Tech-500 Composite Stock Price Index. INDEXED RETURNS Years Ending March
1992 1993 1994 1995 1996 1997 ---- ---- ---- ---- ---- ---- AS&E 100 140.43 65.96 106.38 168.09 206.38 S&P 500 100 115.19 116.89 135.06 178.28 213.57 S&P Tech-500 100 109.88 129.24 163.54 220.80 298.48
Note: Assumes $100 invested at the close of trading on the last trading day preceding the first day of the fifth preceding fiscal year (and reinvestment of dividends) in the Company's Common Stock, Standard & Poor's 500 Composite Stock Price Index and the Standard & Poor's Tech-500 Composite Stock Price Index. 10 13 OTHER MATTERS VOTING The representation in person or by proxy of at least a majority of the outstanding shares of Common Stock of the Company is necessary to provide a quorum at the Meeting. Directors are elected by a plurality of the affirmative votes cast. Abstentions and broker "non-votes" are each counted as present in determining whether the quorum requirement is satisfied. Abstentions and "non-votes" have the effect of votes against proposals presented to the stockholders other than the election of directors. A "non-vote" occurs when a broker or other nominee holding shares for a beneficial owner votes on one proposal, but does not vote on another proposal because the broker or other nominee does not have discretionary voting power and has not received instructions from the beneficial owner. PROXIES; REVOCATION OF PROXIES All Proxies solicited by the Board of Directors of the Company that are properly executed and returned, but which are not expressly voted, will be voted at the Meeting in accordance with the recommendation of the Board of Directors of the Company, unless such proxies are revoked prior to the Meeting. A Proxy may be revoked by delivering a written notice of revocation to the principal office of the Company or may be revoked in person at the Meeting at any time prior to the voting thereof. Attendance at the Meeting will not, by itself, revoke a Proxy. SOLICITATION All expenses of this solicitation will be paid by the Company. Brokerage firms, nominees, fiduciaries and other custodians have been requested to forward proxy solicitation materials to the beneficial owners of shares of Common Stock of the Company held of record by such persons, and the Company will reimburse such brokerage firms, nominees fiduciaries and other custodians for reasonable out-of-pocket expenses incurred by them in connection therewith. In addition to solicitation of Proxies by mail, directors, officers and employees of the Company, without receiving additional compensation therefor, may solicit Proxies from stockholders of the Company by telephone, telegram, in person or by other means. INDEPENDENT PUBLIC ACCOUNTANTS The Board of Directors has selected Arthur Andersen LLP, as the independent certified public accountants to audit the consolidated financial statements of the Company for the fiscal year ending March 31, 1998. A representative of Arthur Andersen LLP will be at the Meeting and will be given an opportunity to make a statement, if so desired. The representative will be available to respond to appropriate questions. STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING Any stockholder proposal to be included in the proxy statement and form of proxy for the 1998 Annual Meeting of Stockholders must be received at the principal office of the Company by June 1, 1998. It is suggested that proposals be submitted by Certified Mail, Return Receipt Requested. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires certain persons, including the Company's Directors and Executive Officers, to file initial reports of beneficial ownership of the Company's securities and reports of changes in beneficial ownership with the Securities and Exchange Commission. For fiscal year 1997, the Company believes that all required reports were filed on time. 11 14 INCORPORATION BY REFERENCE To the extent that this Proxy Statement has been or will be specifically incorporated by reference into any filing by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the sections of the Proxy Statement entitled "Compensation Committee Report on Executive Compensation" and "Stock Performance Chart" shall not be deemed to be so incorporated, unless specifically otherwise provided in any such filing. OTHER PROPOSED ACTION The Board of Directors knows of no other matters that are to be presented at the Meeting. If, however, any other business should properly come before the Meeting, the persons named in the enclosed proxy intend to vote such proxy upon such matters in accordance with their best judgment. By Order of the Board of Directors Jeffrey A. Bernfeld Clerk 12 15 AMERICAN SCIENCE AND ENGINEERING, INC. SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF STOCKHOLDERS SEPTEMBER 30, 1997 The undersigned hereby appoints Ralph S. Sheridan, Jeffrey A. Bernfeld and Paige Cochran, or any of them, with full power of substitution, attorneys and proxies to represent the undersigned at the Special Meeting in Lieu of Annual Meeting of Stockholders ("Meeting") of American Science and Engineering, Inc. ("Company") to be held Tuesday, September 30, 1997 at 829 Middlesex Turnpike, Billerica, Massachusetts at 10:00 a.m. and at any adjournments thereof, to vote in the name and place of the undersigned, with all powers which the undersigned would possess if personally present, all of the stock of the Company standing in the name of the undersigned on the books of the Company, on all matters set forth in the Notice of the Meeting and upon such other and further business as may properly come before the Meeting. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS INSTRUCTED BY THE UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES FOR DIRECTOR LISTED BELOW, FOR EACH OF THE PROPOSALS DESCRIBED IN THE NOTICE OF THE MEETING AND ACCOMPANYING PROXY STATEMENT, AND IN THE DISCRETION OF THE NAMED PROXIES ON ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENTS OF THE MEETING. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. TO BE COMPLETED AND SIGNED ON THE REVERSE SIDE. SEE REVERSE SIDE [X] Please mark your votes as in this example Your shares will be voted FOR the following proposal unless otherwise indicated: FOR ALL WITHHOLD FROM NOMINEES ALL NOMINEES 1. ELECTION OF DIRECTORS: To fix the number of [ ] [ ] directors at seven and to elect Herman Feshbach, Al Gladen, Hamilton W. Helmer, Donald J. McCarren, William E. Odom, Ralph S. Sheridan and Carl W. Vogt. For, except vote withheld from the following nominees(s) - ------------------------------------------------------------------------------ The undersigned hereby acknowledges receipt of the Notice of Special Meeting in Lieu of Annual Meeting of Stockholders, the Proxy Statement for the Meeting and the 1997 Annual Report of the Company. SIGNATURE______________________________________________DATE_____________________ SIGNATURE______________________________________________DATE_____________________ NOTE: PLEASE SIGN YOUR NAME EXACTLY AS IT APPEARS ON THIS CARD. For joint accounts, both owners should sign. Fiduciaries and corporate officers should indicate their full titles. PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. -----END PRIVACY-ENHANCED MESSAGE-----