SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant[X]
Filed by a Party other than the Registrant[ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
.................................Alyn Corporation...............................
(Name of Registrant as Specified In Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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 (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:
.......................................................................
<PAGE>
[LOGO] ALYN CORPORATION
16761 HALE AVENUE
IRVINE, CALIFORNIA 92606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 3, 1997
TO OUR STOCKHOLDERS:
Please take notice that the 1997 Annual Meeting of Stockholders (the
"Annual Meeting") of Alyn Corporation, a Delaware corporation (the "Company"),
will be held at 10:00 a.m., local time, on Tuesday, June 3, 1997, at the Red
Lion Hotel, 3050 Bristol Street, Costa Mesa, California 92626, for the following
purposes:
1. To elect five directors to hold office until the 1998 Annual
Meeting of Stockholders;
2. To ratify the appointment of Price Waterhouse LLP as
independent accountants of the Company for its fiscal year
ending December 31, 1997; and
3. To transact such other business as may properly come before
the meeting or any postponement or adjournment thereof.
Stockholders of record at the close of business on the record date,
April 25, 1997, are entitled to notice of, and to vote at, the Annual Meeting
and any postponement or adjournment thereof.
By Order of the Board of Directors
/S/WALTER R. MENETREY
----------------------
April 30, 1997 Walter R. Menetrey
Secretary
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED FORM OF PROXY IN THE ENVELOPE PROVIDED WHETHER OR NOT YOU PLAN TO
ATTEND THE ANNUAL MEETING. NO POSTAGE IS REQUIRED FOR MAILING IN THE UNITED
STATES. STOCKHOLDERS WHO ATTEND THE ANNUAL MEETING MAY REVOKE THEIR PROXIES AND
VOTE THEIR SHARES IN PERSON.
- --------------------------------------------------------------------------------
<PAGE>
[LOGO] ALYN CORPORATION
16761 HALE AVENUE
IRVINE, CALIFORNIA 92606
PROXY STATEMENT
FOR THE
1997 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
JUNE 3, 1997
GENERAL INFORMATION
This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Alyn Corporation, a
Delaware corporation ("Alyn" or the "Company"), for use at the 1997 Annual
Meeting of Stockholders scheduled to be held on Tuesday, June 3, 1997, at 10:00
a.m., local time, or any postponement or adjournment thereof (the "Annual
Meeting"). The Annual Meeting will be held at the Red Lion Hotel, 3050 Bristol
Street, Costa Mesa, California 92626. A form of proxy for use at the Annual
Meeting and a return envelope for the proxy are also enclosed.
Purpose of the Annual Meeting. It is proposed that at the Annual
Meeting: (i) five members of the Board of Directors be elected for terms
expiring at the 1998 Annual Meeting of Stockholders; and (ii) the appointment by
the Board of Directors of the independent accountants of the Company for fiscal
year 1997 be ratified.
The Company is not aware at this time of any other business to be acted
upon at the Annual Meeting. However, if any other business properly comes before
the Annual Meeting, it is the intention of the persons named in the enclosed
form of proxy to vote on those matters in accordance with their best judgment.
Solicitation and Voting of Proxies; Revocation. Shares cannot be voted
at the Annual Meeting unless the owner thereof is present in person or by proxy.
The Board of Directors urges stockholders to complete, date, sign and return
their proxies promptly whether or not they plan to attend the Annual Meeting.
All duly executed and unrevoked proxies in the accompanying form that are
received in time for the Annual Meeting will be voted at the Annual Meeting in
accordance with the instructions indicated thereon. In the absence of such
instructions, duly executed proxies will be voted "FOR" the election of the
director nominees listed below and "FOR" the approval of the other proposals set
forth in the Notice of Annual Meeting of Stockholders of the Company.
The submission of a signed proxy will not affect a stockholder's right
to attend, or to vote in person at, the Annual Meeting. A stockholder who
executes a proxy may revoke it at any time before it is voted by filing a
revocation with the Secretary of the Company, executing a proxy bearing a later
date or by attending the Annual Meeting and voting in person. In accordance with
applicable rules, boxes and a designated blank space
<PAGE>
are provided on the form of proxy for stockholders to mark if they wish either
to withhold authority to vote for the nominees for director or abstain on the
other matters presented for a vote of stockholders.
The solicitation will be by mail, and may also be made personally or by
telephone by directors, officers and employees of the Company, for which they
will receive no compensation other than their regular compensation as directors,
officers or employees, if any. All the expenses of the solicitation will be
borne by the Company. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy materials to
beneficial owners of the Company's voting securities, and the Company will
reimburse such brokerage houses and others for their reasonable expenses in so
doing. This Proxy Statement and the enclosed proxy card are being mailed to
stockholders beginning approximately April 30, 1997.
Record Date; Voting Rights. Stockholders of record at the close of
business on April 25, 1997 (the "Record Date"), will be entitled to notice of,
and to vote at, the Annual Meeting. At the close of business on the Record Date,
there were issued and outstanding 10,750,000 shares of Alyn common stock, $0.001
par value per share (the "Common Stock"). Holders of Common Stock are entitled
to one vote for each share of Common Stock registered in their name. The
presence at the Annual Meeting, in person or by proxy, of stockholders holding a
majority of the shares of Common Stock outstanding on the Record Date will
constitute a quorum to transact business at the Annual Meeting. Matters to be
voted upon at the Annual Meeting require the affirmative vote of a majority in
voting power of the shares of Common Stock that are present in person or by
proxy voting as a single class.
In accordance with applicable Securities and Exchange Commission
("SEC") rules, designated blank spaces are provided on the form of proxy for
stockholders to mark if they wish either to abstain on one or more of the
proposals or to withhold authority to vote for any nominee for director. Under
the rules of the principal stock exchanges, when brokers have not received
instructions from their customers, brokers holding shares in street name have
the authority to vote the shares on some matters, but not others. Such missing
votes are called "broker non-votes." Abstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum. Since
the Company's Certificate of Incorporation requires the affirmative vote of a
majority of shares present, in person or by proxy, an abstention on the
Company's proposal to ratify the selection of its auditors will have the
practical effect of a negative vote since it represents one less vote for
approval. With regard to the election of directors, votes that are withheld will
be excluded entirely from the vote and will have no effect. Under applicable
Delaware law, broker non-votes will not be counted for purposes of determining
total votes cast and thus will have no effect on the outcome of the election of
the Board of Directors or the Company's other proposals.
-2-
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
Information concerning the nominees for election to the Company's Board
of Directors is set forth below. Each nominee for election to the Board of
Directors named below has consented to being named as a nominee and has agreed
to serve if elected. If elected, each director would serve for a one-year term,
expiring at the 1998 Annual Meeting of Stockholders. The persons identified as
proxies on the enclosed form of proxy intend to vote each properly executed
proxy "FOR" the election of the listed nominees for the ensuing terms or until
their successors are elected and qualified, unless indicated otherwise in a
properly executed form of proxy. If any of the named nominees is not available
for election at the time of the Annual Meeting, discretionary authority will be
exercised to vote for a substitute or substitutes unless the Board of Directors
chooses to reduce the number of directors. Management is not aware of any
circumstances that would render any nominee for director named below
unavailable.
Messrs. Carden, Menetrey, Edelson, Markbreiter and Toledano are
currently serving on the Company's Board of Directors. Mr. Toledano has been
Chairman of the Board of the Company since January 1997. Messrs. Edelson,
Markbreiter and Toledano were elected as Directors of the Company pursuant to
the terms of a Stockholders' Agreement, dated May 1, 1996, by and among the
Company and certain stockholders of the Company. The voting arrangements in this
Stockholders' Agreement terminated upon the consummation of the Company's
initial public offering on October 25, 1996.
The following information with respect to each nominee has been
furnished to the Company by such nominee. The ages of the nominees are as of
April 30, 1997.
Robin A. Carden, 39, is the founder of the Company and has been the
President, Chief Executive Officer and a Director since its formation in 1990.
Mr. Carden is currently Chairman of the Company's Executive Committee, and a
member of the Company's Compensation Committee. Prior to 1990, Mr. Carden was
employed by Ceradyne Inc., a company engaged in the development and production
of advanced ceramics products, as Senior Sales Engineer, and was engaged in
developing civilian applications for advanced ceramics products originally
developed for military use. Mr. Carden graduated from Long Beach State
University with a Bachelor of Science degree. A number of United States patents
have been issued to Mr. Carden.
Walter R. Menetrey, 63, has been the Executive Vice President, Chief
Operating Officer and a Director of the Company since May 1996. From August 1992
to April 1996, he worked as an independent management consultant to numerous
companies engaged in, among other things, the security and software industries.
Prior to July 1992, Mr. Menetrey was Chief Executive Officer of Meret, Inc., a
company engaged in the manufacture and sale of fiber optics communication
equipment. In July 1995, Mr. Menetrey filed for personal bankruptcy under
Chapter 7 of the Bankruptcy Code, and Mr. Menetrey was granted a discharge of
the claims of certain creditors pursuant to Section 727 of the Bankruptcy Code
in November 1995. Mr. Menetrey received a Bachelor of Science degree in Physics
and a Master of Science degree in Electrical Engineering from the California
Institute of Technology.
-3-
<PAGE>
Harry Edelson, 60, has been a Director of the Company since May 1996.
Mr. Edelson is currently Chairman of the Company's Audit Committee. Mr. Edelson
has been the Managing Partner of Edelson Technology Partners, a venture capital
fund that is an affiliate of Edelson Technology Partners III, a principal
stockholder of the Company, for more than ten years. Edelson Technology Partners
and its related funds have invested in more than 70 companies involved in a wide
range of technologies, including telecommunications, computers, semiconductors,
specialty chemicals, environmental and publishing, with a focus on funding
technologies that could assist its corporate partners. Mr. Edelson was a
financial analyst for over 12 years, covering technology companies for Merrill
Lynch & Co., Drexel Burnham Lambert and First Boston Corporation. He has
consulted for dozens of companies and is a frequent speaker and contributor to
leading business magazines in Europe, Asia and the United States.
Michael Markbreiter, 35, has been a Director of the Company since May
1996. Mr. Markbreiter is currently a member of the Company's Executive, Audit
and Compensation Committees. Since August 1995, Mr. Markbreiter has been a
portfolio manager for private equity investments for Kingdon Capital Management
Corp., a manager of investment funds. In April 1994, he co-founded Ram
Investment Corp., a venture capital company. From March 1993 to January 1994, he
served as a portfolio manager for Kingdon Capital Management Corp. Prior to
February 1993, he worked as an analyst at Alliance Capital Management Corp. Mr.
Markbreiter graduated from Cambridge University with a degree in Engineering.
Udi Toledano, 46, has been a Director of the Company since May 1996 and
Chairman of the Board since January 1997. Mr. Toledano is currently Chairman of
the Company's Compensation Committee, and a member of the Company's Executive
and Audit Committees. Mr. Toledano has been the President of Andromeda
Enterprises, Inc., a private investment company, since December 1993. Prior to
that he was the President of CR Capital Inc., a private investment company, for
more than five years. He has been an advisor to various public and private
corporations, none of which competes with the Company. Since May 1996, Mr.
Toledano has been a Director of HumaScan Inc., a public medical device company,
and since April 1995, he has been a Director of Global Pharmaceutical
Corporation, a public generic pharmaceutical manufacturing company. Since July
1994, Mr. Toledano has been a Director of Universal Stainless & Alloy Products,
Inc., a public specialty steel producing company, and since January 1993, he has
been a Director of Pudgie's Chicken, Inc., a public national fast food chain.
Unless individual stockholders indicate otherwise, each returned proxy
will be voted "FOR" the election to the Board of Directors
of each of the five nominees named above.
-4-
<PAGE>
Board of Directors Committees and Meetings
During 1996, the Board of Directors held three meetings. All members of
the Board of Directors attended all meetings. The Board of Directors has three
standing committees: the Executive Committee; the Audit Committee; and the
Compensation Committee.
The Executive Committee has all the powers of the Company's full Board
of Directors, except that it is not authorized to amend the Company's
Certificate of Incorporation, declare any dividends or issue shares of capital
stock of the Company. The Executive Committee currently consists of Messrs.
Carden (Chairman), Markbreiter and Toledano. The Executive Committee held one
meeting in 1996. Following the Annual Meeting, if all nominees for director are
elected, the Executive Committee is expected to consist of Messrs. Carden,
Markbreiter and Toledano.
The Audit Committee was established in June 1996. The functions of the
Audit Committee are to recommend annually to the Board of Directors the
appointment of the independent public accountants of the Company, review the
scope of the annual audit and other services the independent auditors are asked
to perform, review the report on the Company's financial statements following
the audit, review the accounting and financial policies of the Company and
review management's procedures and policies with respect to the Company's
internal controls. The Audit Committee currently consists of Messrs. Edelson
(Chairman), Markbreiter and Toledano. The Audit Committee held one meeting in
1996. Following the Annual Meeting, if all nominees for director are elected,
the Audit Committee is expected to consist of Messrs. Edelson, Markbreiter and
Toledano.
The Compensation Committee held one meeting in 1996. Its functions are
discussed in the Report on Executive Compensation which starts on page 13. The
Compensation Committee currently consists of Messrs. Toledano (Chairman), Carden
and Markbreiter. Following the Annual Meeting, if all nominees for director are
elected, the Compensation Committee is expected to consist of Messrs. Toledano,
Carden and Markbreiter.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Messrs. Toledano,
Carden and Markbreiter. Mr. Carden is President and Chief Executive Officer of
the Company. Mr. Toledano is Chairman of the Board of the Company.
Director Compensation
Members of the Board of Directors of the Company presently receive no
annual remuneration for acting in that capacity. The Company compensates its
non-employee directors at the rate of $500 (plus reasonable expenses) for each
attended meeting of the Board of Directors or committee thereof. Certain members
of the Board of Directors of the Company are also eligible for the grant of
options under the 1996 Stock Incentive Plan that provides for each non-employee
Director (currently, Messrs. Edelson, Markbreiter and
-5-
<PAGE>
Toledano) to receive an initial grant of options to purchase 15,000 shares of
Common Stock and an annual grant of options to purchase 10,000 shares of Common
Stock.
PROPOSAL 2 - RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed Price Waterhouse LLP as the
Company's independent accountants for the fiscal year ending December 31, 1997,
and has directed that the appointment of the independent accountants be
submitted for ratification by the stockholders at the Annual Meeting. Price
Waterhouse LLP has audited the Company's financial statements since 1996.
Stockholder ratification of the appointment of Price Waterhouse LLP as
the Company's independent accountants is not required by the Company's By-laws
or otherwise. However, the Board of Directors is submitting the appointment of
Price Waterhouse LLP to the stockholders for ratification as a matter of what it
considers to be good corporate practice. If the stockholders fail to ratify the
appointment, the Board of Directors will reconsider whether or not to retain
that firm. Even if the appointment is ratified, the Board of Directors in its
discretion may direct the appointment of a different independent accounting firm
at any time during the year if the Board of Directors determines that such a
change would be in the best interests of the Company and its stockholders.
Representatives of Price Waterhouse LLP are expected to be present at
the Annual Meeting, and will have an opportunity to make a statement if they so
desire and will be available to respond to appropriate questions from
stockholders.
The Board of Directors Recommends a Vote "FOR" Ratification of
the Appointment of Price Waterhouse LLP as the Independent
Accountants for the Current Fiscal Year.
-6-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
The following table sets forth the number of shares of Common Stock
beneficially owned, as of April 4, 1997, by (i) each stockholder known to the
Company to be a beneficial owner of more than 5% of the Common Stock, (ii) each
director and nominee for director and (iii) the directors and officers of the
Company as a group. Unless otherwise noted, all shares are owned directly with
sole voting and dispositive powers.
Beneficial Ownership
Name(1) No. of Shares % of Total
Robin A. Carden 3,132,000 29.13%
Kingdon Capital Management
Corp.(2) 2,488,000 23.14%
Udi Toledano(3) 564,333 5.25%
Herbert V. Turk(4) 560,000 5.21%
Walter R. Menetrey 240,000 2.23%
Harry Edelson(5) 8,333 *
Michael Markbreiter(6) 8,333 *
All executive officers and directors
of the Company as a group
(six persons)(7) 3,904,999 36.33%
- -------------------------------------
*Less than 1%.
(1) The address for each of the persons in the table below is c/o Alyn
Corporation, 16761 Hale Avenue, Irvine, California 92606.
(2) Includes shares of Common Stock held by M. Kingdon Offshore NV, Kingdon
Associates, L.P. and Kingdon Partners, L.P. Does not include the shares
of Common Stock underlying immediately exercisable options that appear
in the table above opposite the name of Michael Markbreiter, a Director
of the Company and an employee of Kingdon Capital Management Corp. Mr.
Mark Kingdon is the sole shareholder, director and executive officer of
Kingdon Capital Management Corp.
(3) Includes options immediately exercisable for 8,333 shares of Common
Stock. Also includes 276,000 shares of Common Stock held by Mr.
Toledano's wife and 80,000 shares of Common Stock held by a certain
trust for the benefit of their minor children. Also includes an
aggregate of 48,000 shares of Common Stock owned by certain other
members of Mr. Toledano's family, with respect to which Mr. Toledano
disclaims beneficial ownership.
(4) Includes 344,000 shares of Common Stock held by Mr. Turk jointly with
his wife. Also includes 216,000 shares of Common Stock held by Mr.
Turk's two adult daughters, with respect to which Mr. Turk disclaims
beneficial ownership.
(5) Includes options immediately exercisable for 8,333 shares of Common
Stock. Does not include 520,000 shares of Common Stock held by Edelson
Technology Partners III, with respect to which Mr. Edelson disclaims
beneficial ownership.
(6) Includes options immediately exercisable for 8,333 shares of Common
Stock. Does not include 420,800 shares of Common Stock held by Kingdon
Partners, L.P. 420,800 shares of Common Stock held by Kingdon
Associates, L.P., and 1,246,400 shares of Common Stock M. Kingdon
Offshore NV, with respect to which Mr. Markbreiter disclaims beneficial
ownership.
(7) Includes options immediately exercisable for 25,000 shares of Common
Stock. Does not include (i) 520,000 shares of Common Stock held by
Edelson Technology Partners III, with respect to which Mr. Edelson, a
Director, disclaims beneficial ownership, (ii) shares of Common Stock
held by Kingdon Partners, L.P., Kingdon Associates, L.P. and M. Kingdon
Offshore NV, with respect to which Mr. Markbreiter, a Director,
disclaims beneficial ownership and (iii) 48,000 shares of Common Stock
owned by certain members of Mr. Toledano's family, with respect to
which Mr. Toledano, a Director, disclaims beneficial ownership.
-7-
<PAGE>
EXECUTIVE OFFICERS
See "Proposal 1 - Election of Directors" above for information
pertaining to Messrs. Carden and Menetrey, the Company's executive officers
holding the offices of President and Chief Executive Officer; and Executive Vice
President and Chief Operating Officer, respectively. What follows is a
description of Mr. Phillip Gustavson, who serves as the Company's Vice
President, Finance and Administration.
Phillip R. Gustavson, 52, has been the Vice President, Finance and
Administration, of the Company since June 1996. From March 1995 to June 1996,
Mr. Gustavson was the Corporate Controller for PIA Merchandising, Co., Inc., a
public company engaged in the retail merchandising services industry. From March
1993 to December 1994, he was the Chief Financial and Administrative Officer of
Aztec Toys, Inc., a toy manufacturing company. Prior to September 1992, he was
the Vice President (Finance and Administration) of Geneva Capital Markets, Inc.,
a private investment company. Mr.
Gustavson is a Certified Public Accountant.
Executive officers of the Company serve at the discretion of the Board.
There are no family relationships between or among any of the Company's
directors or executive officers.
Employment Agreements
In May 1996, the Company entered into a three-year employment agreement
with Robin A. Carden, the Company's President and Chief Executive Officer.
Subject to the provisions for termination provided therein, the term of Mr.
Carden's employment agreement shall automatically be renewed for a one-year term
after the expiration of the initial three-year term, and for successive one-year
terms thereafter for a maximum of 10 years. The employment agreement provides
that Mr. Carden's annual base salary shall be determined by the Board of
Directors, but in no event shall such annual salary be less than $150,000, which
amount shall be increased annually in an amount equal to at least the annual
Consumer Price Index. In addition to his base salary, Mr. Carden is entitled to
a bonus and a customary benefits package. The employment agreement prohibits Mr.
Carden from (i) competing with the Company for a period of two years following
termination of employment with the Company and (ii) disclosing confidential
information or trade secrets in any unauthorized manner.
Each of Walter R. Menetrey and Phillip R. Gustavson has entered into a
two-year employment agreement with the Company for the position of Chief
Operating Officer and Vice President, Finance and Administration, respectively.
Subject to the termination provisions provided therein, Mr. Menetrey's and Mr.
Gustavson's employment agreements shall automatically be renewed for a one-year
term after the expiration of the initial two-year term, and for successive
one-year terms thereafter. Mr. Menetrey's and Mr. Gustavson's employment
agreements provide for an annual base salary to be determined by management (or,
in the case of Mr. Menetrey, by the Compensation Committee of the Board of
Directors), but in no event shall such annual salary be less than $100,000 and
$95,000, respectively. In addition to an annual base salary, Mr. Menetrey's and
Mr.
-8-
<PAGE>
Gustavson's employment agreements provide for a bonus and a customary benefits
package. In the event that the Company terminates the respective employment
agreement without cause, Mr. Menetrey and Mr. Gustavson would be entitled to
receive their base salary and benefits until the earlier of (i) the expiration
of the then current term of the respective employment agreement without any
further extensions and (ii) the date which is six months after the termination
date. Each of the employment agreements of Mr. Menetrey and Mr. Gustavson
prohibits the employee from (i) competing with the Company for a period of two
years following termination of employment with the Company and (ii) disclosing
confidential information or trade secrets in any unauthorized manner.
EXECUTIVE COMPENSATION
The following table sets forth information for the years indicated
concerning the compensation awarded to, earned by or paid to the Chief Executive
Officer of the Company and the two most highly paid executive officers, other
than the Chief Executive Officer (collectively, the "Named Executive Officers")
for services rendered in all capacities to the Company during such period.
<TABLE>
Summary Compensation Table
<CAPTION>
Number of
Annual Compensation Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation Options Compensation(1)
<S> <C> <C> <C> <C> <C> <C>
Robin A. Carden 1996 $100,000 $28,500 -- -- $310,895
President and Chief 1995 29,975 -- -- -- --
Executive Officer 1994 74,961 -- -- -- --
Walter R. Menetrey 1996 $65,000 $27,500 -- 50,000 --
Executive Vice 1995 -- -- -- -- --
President and Chief 1994 -- -- -- -- --
Operating Officer
Phillip R. Gustavson 1996 $53,000 $15,000 -- 40,000 --
Vice President, 1995 -- -- -- -- --
Finance and 1994 -- -- -- -- --
Administration
</TABLE>
- -------------
(1) For 1996, represents Mr. Carden's $4,800 car allowance, $283,100 in deferred
compensation and $22,995 interest on his loan to the Company.
-9-
<PAGE>
Stock Option Grants and Exercise
The following table sets forth information regarding stock options granted
to each Named Executive Officer during fiscal year 1996 pursuant to the
Company's 1996 Stock Option Plan.
<TABLE>
<CAPTION>
% of Total
Awards
Granted to Exercise
Options Employees or Base Grant Date
Granted(1) in Fiscal Price(3) Expiration Present Value(4)
Name (#) Year(2) ($/Sh) Date ($/Sh)
<S> <C> <C> <C> <C> <C>
Robin A. Carden -- -- -- -- --
Walter R. Menetrey 50,000 14.8% 13.50 10/22/06 $7.62
Phillip R. Gustavson 40,000 11.8% 13.50 10/22/06 $7.62
- -------------
(1) Options are granted at fair market value at date of grant and are
exercisable in a series of three (3) equal and successive annual
installments over the optionee's period of service with the Company,
measured from the grant date, with the first installment exercisable one
year from the grant date. Each option must be exercised within 10 years of
the grant date, subject to earlier termination in the event of the
optionee's termination of employment with the Company. An incentive stock
option granted to a person owning more than 10% of the total combined
voting power of all classes of stock of the Company or of any parent or
subsidiary of the Company (a "Ten Percent Stockholder") must be exercised
within five years of the grant date.
(2) A total of 338,000 options were granted to employees, including executive
officers, for the fiscal year ended December 31, 1996.
(3) The exercise price for each option granted under the 1996 Stock Option
Plan shall not be less than 100% of the fair market value (the "Fair
Value") per share of Common Stock on the date such option is granted,
which with respect to the options granted to Messrs. Menetrey and
Gustavson was equal to $13.50 per share, the per share initial public
offering price of the Common Stock in the Company's initial public
offering, which closed in October 1996. For incentive stock options
granted to a Ten Percent Stockholder, the exercise price shall not be less
than 110% of the Fair Value per share of Common Stock. The exercise price
may be paid in cash (by check), by transferring shares of Common Stock
owned by the option holder and having a Fair Value on the date of
surrender equal to the aggregate exercise price of the option or, solely
with respect to options granted to non-employee Directors, consultants,
officers and other key employees of the Company, by cash payments in
installments or pursuant to a full recourse promissory note, in either
case, upon the terms and conditions as the Compensation Committee shall
determine. Upon the exercise of any option, the Company is required to
comply with all applicable withholding tax requirements.
(4) Represents grant date valuation computed under the Black-Scholes option
pricing model adapted for use in valuing stock options. The actual value,
if any, that may be realized will depend on the excess of the stock price
over the exercise price on the date the option is exercised, so there can
be no assurance that the value realized will be at or near the value
estimated by the Black-Scholes model. Grant date values were determined
based in part on the following assumptions for 1996: risk-free rate of
return of 6.34%, no dividend yield, expected life of 5 years, and
historical volatility of 58.09%.
</TABLE>
-10-
<PAGE>
Option Exercises and Holdings as of December 31, 1996
No stock options were exercised in fiscal year 1996 by any of the
Named Executive Officers. The following table sets forth, as of December 31,
1996, the number of unexercised options held by each Named Executive Officer and
the value thereof based on the closing bid price of the Common Stock of $10.38
on December 31, 1996.
Aggregated Option/Warrant Exercises in Last Fiscal Year
and Fiscal Year-End Option/Warrant Values
Number of Unexercised Value of Unexercised In-the-
Options/Warrants Money Options/Warrants
at FY-End(#) at FY-End($)(1)
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
Robin A. Carden 0/0 0/0
Walter R. Menetrey 0/50,000 0/0
Phillip R. Gustavson 0/40,000 0/0
- -------------
(1) Represents (i) the number of shares of Common Stock underlying options
(including options the exercise price of which was more than the market
value of the underlying securities) multiplied by (ii) the market price at
December 31, 1996 of $10.38 minus the exercise price.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Agreement and Plan of Merger; Repayment of Stockholder Loans
Pursuant to an Agreement and Plan of Merger, dated as of May 1, 1996 (the
"Merger Agreement"), among Old Alyn, Robin Carden and the Company, Old Alyn was
merged with and into the Company, with the Company being the surviving
corporation. In accordance with the terms of the Merger Agreement, certain
stockholders of the Company provided a line of credit to the Company (the
"Subordinated Credit Line"), pursuant to which such stockholders became
obligated to loan to the Company on a monthly basis up to an aggregate maximum
amount of $5 million, which loans bear interest at the annual rate of 8%. As of
September 30, 1996, Mr. Toledano, a Director and, since January 1997, Chairman
of the Board of the Company, Kingdon Capital Management Corp., a principal
stockholder of the Company, Herbert V. Turk, a principal stockholder of the
Company, and Edelson Technology Partners III, a principal stockholder of the
Company, had advanced $319,000, $2,766,750, $319,000 and $660,000, respectively,
or an aggregate of approximately $4.1 million of the approximately $4.6 million
of loans outstanding. The outstanding principal amount of the Subordinated
Credit Line (approximately $4.6 million as of September 30, 1996), plus accrued
interest, was repaid with a portion of the net proceeds of the Company's initial
public offering, which closed October 25, 1996 (the "Offering").
In 1990, the Company borrowed $128,000 from Robin A. Carden, the
President, Chief Executive Officer and a Director of the Company. The
outstanding principal amount of
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<PAGE>
such loan, plus accrued and unpaid interest, was repaid in May 1996 with a
portion of the initial proceeds of the Subordinated Credit Line.
Andromeda Enterprises, Inc.
Andromeda Enterprises, Inc., a Delaware corporation ("Andromeda"),
received $100,000 from the Company in May 1996 for sales, marketing and
consulting services performed by Andromeda on behalf of Old Alyn and on behalf
of the Company. Since January 1997, Andromeda has also been entitled to a
monthly fee of $5,000 per month from the Company for ongoing sales, marketing
and consulting services performed on behalf of the Company. Mr. Udi Toledano, a
Director, principal stockholder and Chairman of the Board of the Company, is the
President of Andromeda, and, together with his wife, beneficially owns all of
its outstanding capital stock.
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<PAGE>
REPORT ON EXECUTIVE COMPENSATION(1)
Introduction
Three of Alyn's directors, Messrs. Toledano (Chairman), Carden and
Markbreiter, constitute the Compensation Committee, which, among other things,
is responsible for (1) reviewing and approving salaries, benefits and bonuses
for all executive officers of the Company; (2) reviewing and approving stock
option grants to employees of the Company; and (3) reviewing and recommending to
the Board of Directors matters relating to employee compensation and employee
benefit plans. The Board of Directors did not modify or reject any action or
recommendation of the Compensation Committee regarding compensation for the 1996
fiscal year.
This report sets out the Company's executive compensation philosophy
and objectives, describes the components of its executive compensation program
and describes the bases on which 1996 executive compensation determinations were
made with respect to the executive officers of the Company, including those
named in the Summary Compensation Table preceding this report.
Executive Compensation Philosophy and Objectives
In establishing and evaluating the effectiveness of compensation programs
for executive officers, as well as other employees of the Company, the
Compensation Committee is guided by three basic principles:
o The Company must offer competitive salaries to be able to attract
and retain highly-qualified and experienced executives and other
management personnel;
o Executive cash compensation in excess of base salaries should be
tied to Company and individual performance; and
o The financial interests of the Company's executives should be
aligned with the financial interests of the stockholders, primarily
through stock option grants and incentive compensation.
Compensation Program Components
Consistent with the Company's executive compensation objectives,
compensation for its senior executives consists of three elements: an annual
base salary, annual incentive compensation and long-term incentive compensation.
- --------
(1) Pursuant to Item 402(a)(9) of Regulation S-K promulgated by the SEC,
neither the "Report on Executive Compensation" nor the material under the
caption "Performance Measurement Comparison" shall be deemed to be filed
with the SEC for purposes of the Securities Exchange Act of 1934, as
amended, nor shall such report or such material be deemed to be
incorporated by reference in any past or future filing by the Company under
the Exchange Act or the Securities Act of 1933, as amended.
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<PAGE>
Annual Base Salary. The Compensation Committee annually reviews each
executive's base salary. Salary levels are generally targeted to and correspond
to the median of the range of compensation paid by such other similar companies.
Actual salaries are based on individual performance contributions within a
competitive salary range for each position that is established through job
evaluation and market comparisons. Base pay levels for the executive officers
are competitive within a range that the Compensation Committee considers to be
reasonable and necessary to attract and retain qualified executives. Increases
in base salary are primarily the result of individual performance, which
includes meeting specific goals established by the Compensation Committee. The
criteria used in evaluating individual performance varies depending on the
executive's function, but generally include leadership inside and outside the
Company; advancing the Company's interests with customers, vendors and in other
business relationships; product quality and development; and advancement in
skills and responsibility.
Annual Incentive Compensation. A bonus pool for 1996 was established
by setting aside a portion of the Company's operating capital. That pool was
then divided among a group of managerial employees, including executive
officers, primarily in proportion to their respective base salaries and length
of service. The chief executive officer was treated in the same fashion as all
other executive officers with respect to the bonus determination.
Long-Term Incentive Compensation. The 1996 Stock Incentive Plan
authorizes the Compensation Committee to make grants and awards of stock options
to the Company's employees. The stock options are granted with an exercise price
equal to the market price of the Company's Common Stock on the date of grant,
have a duration of ten years, and generally vest over three years. This approach
is designed to motivate management to increase stockholder value over the
long-term since the full benefit of the compensation package cannot be realized
unless stock price appreciation occurs over a number of years. In determining
the number of options awarded, the Compensation Committee considers competitive
practices, the duties and scope of responsibilities of each officer's position
and the amount and terms of options already held by management.
Chief Executive Officer's Compensation. Mr. Carden's base salary was
determined by agreement with the establishment of the Company, effective May 2,
1996, at an annual rate of $150,000. Mr. Carden earned an annual bonus of
$28,500 in 1996 which was determined in the same fashion as all other executive
officers and management personnel of the Company. Due to his significant
participation in the ownership of the Company, Mr. Carden did not receive a
grant of stock options in 1996.
Summary
The Compensation Committee believes that the compensation program for the
executives of the Company is comparable with the compensation programs provided
by comparable companies and serves the best interests of the stockholders of the
Company. The Compensation Committee also believes that annual performance pay is
appropriately
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<PAGE>
linked to individual performance, annual financial performance of the Company
and stockholder value.
The Compensation Committee
Udi Toledano (Chairman)
Robin A. Carden
Michael Markbreiter
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<PAGE>
Performance Measurement Comparison
The following graph provides a comparison of the cumulative total
shareholder return for the period from October 22, 1996 (the date upon which the
Common Stock was issued in the Offering at $13.50 per share) through December
31, 1996 (assuming reinvestment of any dividends) among the Company, the NASDAQ
Stock Market - U.S.Index and the Russell 2000 Index.
COMPARISON OF 2 MONTH CUMULATIVE TOTAL RETURN
AMONG ALYN CORPORATION, THE NASDAQ STOCK MARKET-U.S. INDEX
AND THE RUSSELL 2000 INDEX
[Alyn Corporation
Performance Graph]
The foregoing graph is based upon the following data:
Cumulative Total Return
10/22/96 10/31/96 11/30/96 12/31/96
-------- -------- -------- --------
ALYN CORPORATION 100 102 96 81
NASDAQ STOCK MARKET - U.S. 100 99 105 105
INDEX
RUSSELL 2000 INDEX 100 99 103 105
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<PAGE>
ANNUAL REPORT
A copy of the Company's Annual Report to Stockholders is being
provided to each stockholder of the Company with this Proxy Statement.
Additional copies may be obtained without charge by writing to Alyn Corporation,
16761 Hale Avenue, Irvine, California 92606, Attention: Secretary.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires certain
officers of the Company and its directors, and persons who own beneficially more
than ten percent of any registered class of the Company's equity securities, to
file reports of ownership and changes in ownership of Common Stock of the
Company with the SEC, the Nasdaq National Market and the Company. Based solely
on a review of the reports and representations provided to the Company by the
above-referenced persons, the Company believes that during 1996, all filing
requirements applicable to its reporting officers, directors and greater than
ten percent beneficial owners were properly and timely satisfied. In making
these statements, the Company has relied on representations of its directors,
officers and greater than ten percent beneficial owners, and copies of reports
they have filed with the SEC.
STOCKHOLDER PROPOSALS
The eligibility of stockholders to submit proposals, the
proper subjects of stockholder proposals and the form of stockholder proposals
are regulated by Rule 14a-8 under Section 14 of the Securities Exchange Act of
1934, as amended. In accordance with regulations issued by the SEC, stockholder
proposals intended for presentation at the 1998 Annual Meeting of stockholders
must be received by the Company at its principal executive office, 16761 Hale
Avenue, Irvine, CA 92606, no later than December 30, 1997, if such proposals are
to be considered for inclusion in the Company's proxy statement for the 1998
Annual Meeting of stockholders. Each proposal submitted should include the full
and correct name and address of the stockholder(s) making the proposal, the
number of shares beneficially owned and their date of acquisition. If beneficial
ownership is claimed, proof thereof should also be submitted with the proposal.
The stockholder or his or her representative must appear in person at the annual
meeting and must present the proposal, unless he or she can show good reason for
not doing so.
By Order of the Board of Directors
/S/WALTER R. MENETREY
---------------------
Walter R. Menetrey
Secretary
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<PAGE>
ALYN CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON JUNE 3, 1997
The undersigned hereby appoints Udi Toledano and Robin A. Carden, and
each of them, with full power of substitution, proxies to vote all shares of
common stock, $.001 par value, of Alyn Corporation, a Delaware corporation (the
"Company"), for which the undersigned is entitled to vote at the Annual Meeting
of Stockholders of the Company to be held at the Red Lion Hotel, 3050 Bristol
Street, Costa Mesa, California 92626, on June 3, 1997, at 10:00 a.m., local
time, and at any and all adjournments or postponements thereof.
(Continued and to be signed on reverse side.)
SEE
REVERSE
SIDE
- ------------
X Please mark your votes as in this example.
- ------------
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS VOTES "FOR" EACH OF
THE FOLLOWING:
FOR WITHHELD Nominees: Robin A. Carden
1. Election of Directors. / / / / Walter R. Menetrey
Harry Edelson
Michael Markbreiter
Udi Toledano
For, except vote withheld for the following nominee(s):
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
2. Approval of Price Waterhouse L.L.P. as Independent Accountants. / / / / / /
3. OTHER MATTERS: / / / / / /
Discretionary authority is hereby granted with respect to such other
matters as may properly come before the meeting or any adjournment or
postponement thereof.
</TABLE>
The shares represented by this Proxy will be voted in the manner directed and,
if no instructions to the contrary are indicated, will be voted FOR the election
of the named nominees and approval of the proposals set forth in the Notice of
the Annual Meeting of Stockholders.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished herewith.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE. YOU MAY REVOKE THIS PROXY AT ANY TIME BY FORWARDING TO THE COMPANY A
SUBSEQUENTLY DATED PROXY RECEIVED BY THE COMPANY PRIOR TO THE TAKING OF A VOTE
ON THE MATTERS HEREIN.
SIGNATURE (title, if any) DATE , 1997
SIGNATURE (if held jointly) DATE , 1997
Note: Please print and sign your name exactly as it appears hereon. When
signing as attorney, agent, executor, administrator, trustee,
guardian or corporate officer, please give full title as such. Each
joint owner should sign the Proxy. If a corporation, please sign as
full corporate name by president or authorized officer. If a
partnership, please sign in partnership name by authorized person.
