SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
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 Rule 14a-11(c) or Rule 14a-12
Sloan Electronics, Inc.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
Sloan Electronics, Inc.
-------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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 O-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 O-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 O-11(a) (2) and identify the filing for which the
offseting 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>
Sloan Electronics, Inc.
1715 Stickney Point Rd., Sarasota FL 34242
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON SATURDAY MAY 22, 1999
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Sloan Electronics, Inc., a Delaware corporation (the "Company"), will
be held at the offices of Bobbitt Pittenger & Co., at the following
address:
Bobbitt Pittenger & Co.
1605 Main St. Suite 1010
Sarasota FL 34236
on May 22, 1999 at 2 PM, for the purpose of considering and acting
upon the following matters:
1. The ratification of an anti-takeover amendment to the
Company's Articles to classify the Company's Board of Directors into
three classes and to provide for removal of directors only for cause
("Amendment No. 1").
2. The ratification of an anti-takeover amendment to the
Company's Articles to issue previously approved Preferred Stock, which
the Company intends to issue to Larry Provost and Paul Sloan
("Amendment No. 2").
3. The election of two Class I directors to serve until the
2000 Annual Meeting of Stockholders and until their respective
successors are elected and qualified, the election of two Class II
directors to serve until the 2001 Annual Meeting of Stockholders and
until their respective successors are elected and qualified, and The
election of one Class III director to serve until the 2002 Annual
Meeting of Stockholders and until his respective successor is elected
and qualified.
4. The ratification of the re-appointment of Bobbitt Pittenger
and Company PA, to audit the company's financial statements.
5. The approval by the shareholders of options issued to
officers, directors and consultants of the company under the 1998
Stock Option Plan.
6. Approval for the Board of Directors to change the Company
name to better reflect management's business plan.
7. The transaction of such other business as may properly
come before the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 9,
1999 as the record date for the determination of stockholders entitled
to notice of and to vote at the meeting. Accordingly, only
stockholders of record at the close of business on that date will be
entitled to vote at the meeting. A complete list of the stockholders
entitled to vote will be available for inspection by any stockholder
during the meeting. In addition, the list will be open for
examination by any stockholder, for any purpose germane to the
meeting, during ordinary business hours, for a period of at least ten
days prior to the meeting at the office of the Company, located at
1715 Stickney Point Rd., Sarasota FL 34242.
The Board of Directors of the Company is not soliciting proxies for
this meeting. Reference is made to the attached statement for further
information with respect to the business to be transacted at the
meeting. You are cordially invited to attend the meeting in person, or
to appoint by proxy a substitute to vote your shares.
/s/Larry Provost
Secretary DATE: April 5, 1999
<PAGE>
Sloan Electronics, Inc.
1715 Stickney Point Rd., Sarasota FL 34242
PROXY INFORMATION STATEMENT
GENERAL
This information is furnished by the Board of Directors of Sloan
Electronics, Inc. (the "Company") for the Company's 1999 Annual
Meeting of Stockholders (the "Meeting"), which will be held on the
date, at the time and place and for the purposes set forth in the
foregoing notice, and at any adjournment or postponement thereof.
This proxy statement and the foregoing notice are first being sent to
stockholders of the Company (the "Stockholders") on or about April 30,
1999.
The Board of Directors does not intend to bring any matter before the
Meeting except as specifically indicated in the notice and does not
know of anyone else who intends to do so. If any other matters
properly come before the Meeting, however, shareholders in attendance,
or their duly constituted substitutes acting at the Meeting, will be
authorized to vote or otherwise act thereon in accordance with their
judgment on such matters. Any proxy may be revoked at any time prior
to its exercise by notifying the Secretary in writing, by delivering a
duly executed proxy bearing a later date, or by attending the Meeting
and voting in person.
VOTING SECURITIES AND SECURITY OWNERSHIP
Voting Securities
At the close of business on April 9, 1999, the record date fixed for
the determination of Stockholders entitled to notice of and to vote at
the Meeting, there were 11135249 outstanding shares of the Company's
Common Stock, its only class of voting securities currently issued.
Each share of Common Stock entitles the record holder thereof to one
vote. The presence at the Meeting, in person or by proxy, of a
majority of such outstanding shares of Common Stock will constitute a
quorum.
The affirmative vote of a majority of shares of Common Stock present,
in person or by proxy, and entitled to vote at the Meeting will be
required to approve the anti-takeover amendment to the Company's
Articles to classify directors. The affirmative vote of a majority of
shares of Common Stock present, in person or by proxy, and entitled to
vote at the Meeting will be required to approve the anti-takeover
amendment to the Company's Articles to approve the issue of Preferred
Stock. The affirmative vote of a majority of votes cast at the Meeting
is required to elect directors. The affirmative vote of a majority of
shares of Common Stock present, in person or by proxy, and entitled to
vote at the Meeting will be required to approve the stock options
issued to officers, directors and consultants. The affirmative vote of
a majority of shares of Common Stock present, in person or by proxy,
and entitled to vote at the Meeting will be required to approve the
ratification of the appointment of Bobbitt Pittenger and Company PA,
to audit the company's financial statements for the year ended
December 31, 1999. The affirmative vote of a majority of shares of
Common Stock present, in person or by proxy, and entitled to vote at
the Meeting will be required to approve the Company's change of name.
<PAGE>
Proxies submitted which contain abstentions or broker non-votes will
be deemed present at the Meeting in determining the presence of a
quorum. Shares of Common Stock that are voted to abstain with respect
to any matter are considered shares entitled to vote, and cast, with
respect to that matter. Shares of Common Stock subject to broker non-
votes with respect to any matter will not be considered as shares
entitled to vote with respect to that matter.
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of April 9,
1999 regarding the beneficial ownership of the Company's Common Stock
by (i)each stockholder known by the Company to be the beneficial owner
of more than 5% of the Company's Common Stock, (ii) by each Director
and executive officer of the Company and (iii) by all executive
officer and Directors of the Company as a group. Each of the persons
named in the table has sole voting and investment power with respect
to Common Stock beneficially owned. The number of shares indicated
does not include unexercised stock options.
Name of Number of Shares
Beneficial Owner Beneficially Owned Percent of Class
- -------------------- ------------------ ----------------
Larry Provost 1,290,992(1) 11.59%
Chairman, Secretary
and Chief Financial Officer
Paul Sloan 2,962,535 26.61%
President, Director
Lester Cohen (2) 588,763 5.29%
Director,
Vice President - Marketing
Margery Cohen Trust 588,763 5.29%
Michael Solomon 288,626 2.59%
Director,
Senior Vice President
James Vondra 414,758 3.72%
Director
Donald Grimes 0 0.00%
VP Sales
Gregory Tuai 703,234 6.32%
John Rothrock 693,234 6.23%
Walter Eckman 609,093 5.47%
All Directors & Officers 5,545,674 49.8%
as a group (6 persons)
(1) Includes 7000 shares purchased for Mr. Provost's personal IRA
account in March, 1999 and 3000 shares purchased in March, 1999.
(2) Mr. Lester Cohen is the husband of Mrs. Margery Cohen.
<PAGE>
The following table sets forth information at April 9, 1998 with
respect to the beneficial ownership of the Company's Stock by (a) each
director and each nominee for election as a director of the Company,
(b) each current executive officer named in the Summary Compensation
Table under the caption "EXECUTIVE COMPENSATION" and (c) all directors
and executive officers of the Company as a group (6 persons). Unless
otherwise indicated, each person named below and each person in the
group named below has sole voting and dispositive power with respect
to the shares of Common Stock indicated as beneficially owned by such
person or group. The number of shares indicated does not include
unexercised stock options
Name of Number of Shares
Beneficial Owner Beneficially Owned Percent of Class
- -------------------- ------------------ ----------------
Larry Provost 1,290,992(1) 11.59%
Chairman, Secretary
and Chief Financial Officer
Paul Sloan 2,962,535 26.61%
President, Director
Lester Cohen (2) 588,763 5.29%
Director,
Vice President - Marketing
Michael Solomon 288,626 2.59%
Director,
Senior Vice President
James Vondra 414,758 3.72%
Director
Donald Grimes 0 0.00%
VP Sales
Richard Brooks 0 0.00%
Nominee for Director
Jim Marquis 0 0.00%
Nominee for Director
All Directors, Director
Nominees & Officers 5,548,674 49.8%
as a group (8 persons)
(1) Includes 7000 shares purchased for Mr. Provost's personal IRA
account in March, 1999 and 3000 shares purchased in March, 1999.
(2) Mr. Lester Cohen is the husband of Mrs. Margery Cohen.
<PAGE>
PROPOSAL ONE -- AMENDMENT TO CLASSIFY THE BOARD OF DIRECTORS
On April 2, 1999 the Company's Board of Directors approved an
amendment to the Company's By-Law Articles to classify the Company's
Board of Directors into three classes and to provide for removal of
directors only for cause ("Amendment No. 1"). Amendment No. 1 may have
an impact upon the rights of shareholders and may be characterized as
an anti-takeover measure which, if adopted, may tend to insulate
management and make the accomplishment of certain transactions
involving a potential change of control of the Company more difficult.
Each shareholder should carefully study the description of Amendment
No. 1 contained herein and the text of the proposed amendment as set
forth on Exhibit A to this Proxy Statement. The description of
Amendment No. 1 set forth below is qualified in its entirety by
reference to the text of Amendment No. 1 set forth on Exhibit A.
CLASSIFIED BOARD
The Company's existing charter documents provide that directors
are to be elected annually for one-year terms. Proposed Amendment No.1
would change this process by dividing the Board of Directors into
three classes, with each class to be as nearly equal in number as
possible. Starting with the annual meeting of shareholders in 1999,
one class will be elected each year for a three-year term.
The classification of directors will have the effect of making it
more difficult to change the composition of the Board of Directors at
every election of directors. At least two shareholder meetings,
instead of one (as under the current charter provisions), will be
required to effect a change in the majority control of the Board and
at least three shareholder meetings will be required to effect a
change in the entire Board of Directors, except in the event of
vacancies resulting from resignation, removal for cause or other
reasons (in which case the remaining directors will fill the vacancies
so created - see "Removal of Directors Only for Cause; Filling
Vacancies on the Board of Directors" below).
The Board believes that Amendment No. 1 would help ensure
continuity of experience, which is desirable and in the best interests
of the Company and its shareholders' equity. The Board believes that
the longer time required to elect a majority of a classified Board
will also help to assure continuity and stability of the Company's
management and policies, since a majority of the directors at any
given time will have prior experience as directors of the Company.
REMOVAL OF DIRECTORS ONLY FOR CAUSE; FILLING VACANCIES ON THE BOARD OF
DIRECTORS
Under Delaware law, unless the articles of incorporation
otherwise provide, a director, or the entire board of directors, may
be removed by the shareholders with or without cause. The Company's
present Bylaws provides that the entire Board of Directors, or any
member thereof, may be removed by an affirmative vote of the holders
of a majority of shares entitled to vote. Amendment No.1 provides that
directors may be removed only by shareholders holding at least a
majority of the outstanding Common Stock acting at a meeting called
for such purpose and only for cause. "Cause" is defined in Amendment
No. 1 to exist only if the director whose removal is proposed (i) has
been convicted of a felony by a court of competent jurisdiction or
(ii)
<PAGE>
has been adjudged by a court of competent jurisdiction to be liable
for engaging in an act involving willful malfeasance which had a
material adverse effect on the Company. Amendment No.1 also provides
that a majority of the remaining directors may fill a vacancy on the
Board occurring during the course of the year, and the new director
so elected will serve for the remainder of his or her predecessor's
term. In the event that a new directorship is created due to an
increase in the fixed number of directors, a majority of the directors
then in office may fill such newly created directorship, and the new
director so elected will serve for the same terms as that of the other
directors of the class of which he or she is a member. The provisions
of Amendment No.1 relating to the removal of directors will preclude a
third party from removing incumbent directors without cause and
simultaneously gaining control of the Board by filling the vacancies
created by such removal with its own nominees. These provisions will
also reduce the power of shareholders generally, even those with a
majority interest in the Company, to remove incumbent directors and to
fill vacancies on the Board without the support of the incumbent
directors.
REASONS FOR THE PROPOSED AMENDMENT
Over the last several years, there has been a trend toward the
accumulation of substantial stock positions in public corporations by
outside parties either with a view toward using a controlling block of
stock to force a merger or consolidation, or as a prelude to proposing
a restructuring or sale of all or part of a corporation or other
similar extraordinary corporate action requiring the approval of its
board of directors. These actions are often undertaken without advance
notice to, or consultation with, management of the corporation. In
many cases, such third parties seek representation on the
corporation's board of directors in order to increase the likelihood
that their proposals will be implemented by the corporation. If the
corporation resists the efforts to obtain representation on its board,
the outside parties may commence proxy contests to have themselves or
their nominees elected to the board in place of certain directors or
the entire board.
Although takeovers or changes in management of a corporation,
which are proposed and effected without prior consultation and
negotiation with the corporation's management are not necessarily
detrimental to the corporation and its shareholders, it is believed
that in many circumstances such efforts may not be beneficial to the
interests of a corporation and its shareholders because they may
deprive management of the time and information necessary to evaluate
the proposals, to study alternative proposals and to help ensure that
the best price is obtained in any transaction which may ultimately be
undertaken. Thus, Amendment No. 1 is designed to protect against rapid
shifts in control of the Board, to encourage persons seeking to
acquire control of the Company to initiate such an acquisition through
arm's-length negotiations with the Company's management and the Board
and assist in assuring continuity in the management, affairs and
business strategies of the Company.
However, it should be noted that Amendment No. 1 would make a
change in directors and management for any reason more difficult at
each election of directors, even if this would be beneficial to
shareholders. The staggering of terms of directors would have the
effect of requiring at least two shareholder meetings, instead of one,
as at present, to effect a change in majority control of the Board and
would prohibit removal of incumbent directors by a holder of a large
block of the Company's shares except for cause. If Amendment No. 1 is
adopted, shareholders will elect directors to longer terms, and
<PAGE>
existing directors, if re-elected, would be the initial beneficiaries
of the extended terms. In addition, if Amendment No. 1 is approved, it
could have the effect of discouraging a third party from making a
tender offer or otherwise attempting to obtain control of the Company,
even if the Company's shareholders may consider such a change in
control to be in their best interests. See "Anti-Takeover
Considerations."
Amendment No. 1 is consistent with Delaware corporate law, which
authorizes the classification of a board of directors into two or more
classes. Delaware corporate law also provides that a corporation's
articles of incorporation may contain procedures for removal of
directors and filling vacancies on the board. As stated above,
shareholders should note that absent the limitation of the removal of
directors contained in Amendment No. 1, they would have the right
under applicable Delaware corporate law to remove directors, with or
without cause, by a majority vote.
Amendment No. 1 is not the result of any specific efforts of
which the Company is aware to accumulate the Company's securities or
to obtain control of the Company. However, for the reasons stated
above, the Company's Board of Directors believes that the benefits of
seeking to protect its ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to takeover or restructure the
Company by adopting Amendment No. 1 at this time outweigh the
disadvantages of discouraging such proposals.
ANTI-TAKEOVER CONSIDERATIONS
As described above, Amendment No. 1 may have an impact upon the
rights of shareholders and may be characterized as an anti-takeover
measure which, if adopted, may tend to insulate management and make
the accomplishment of certain transactions involving a potential
change of control of the Company more difficult, even if the Company's
shareholders may consider such a change in control to be in their best
interests. The Company's existing Articles contain certain anti-
takeover provisions which could discourage a third party from
attempting to acquire, or make it more difficult for a third party to
acquire, control of the Company without approval of the Company's
Board of Directors. Such provisions could also limit the price that
certain investors might be willing to pay in the future for the Common
Stock.
CLASS NOMINEES
Subject to shareholder approval of Amendment No. 1, the Board of
Directors to be elected at the Annual Meeting will be divided into
three classes. The Class I director will hold office until the 2000
annual meeting of shareholders and his successor is elected and
qualified, the Class II director will hold office until the annual
meeting of shareholders in 2001 and his successor is elected and
qualified, and the Class III director will hold office until the 2002
annual meeting of shareholders, and until his successor is elected and
qualified. Thereafter, each director will be elected to a three-year
term, with one-third of the number of authorized directors being
elected at each annual meeting of shareholders. The Board of Directors
has unanimously approved the classification of the nominees listed
below.
Class I: Jim Marquis, Richard Brooks
Class II: Jim Vondra, Paul Sloan
Class III: Larry Provost
<PAGE>
Accordingly, the Board of Directors will offer the following
resolution at the Annual Meeting:
RESOLVED, that Article II(1), Article II(2), Article II(3) and Article
II(5) of the Restated By-Laws of the Company shall be deleted in their
entirety and replaced with Amendment No. 1, as set forth in the text
of the proposed amendment as Exhibit A to this Proxy Statement.
The affirmative vote of at least a majority of the shares represented
and voting at the Annual Meeting at which a quorum is present (which
shares voting affirmatively also constitute at least a majority of the
required quorum) is necessary for approval of Proposal No. 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL ONE,
AMENDMENT TO THE RESTATED BY-LAW ARTICLES.
PROPOSAL TWO -- AMENDMENT TO ISSUE PREFERRED STOCK
On April 2, 1999, the Company's Board of Directors approved an
amendment to the Company's Certificate of Incorporation to issue
previously approved Preferred Stock. The Company's intention is to
issue ten shares of Preferred Stock to Larry Provost and ten shares of
Preferred Stock to Paul Sloan with each share of Preferred Stock being
freely convertible into one million five hundred thousand shares of
the Company's Common Stock at anytime upon the discretion of the
Preferred shareholder ("Amendment No.2"). Each shareholder should
carefully study the description of Amendment No. 2 contained herein
and the text of Amendment No. 2 as set forth on Exhibit B to this
Proxy Statement. The description of Amendment No. 2 set forth below is
qualified in its entirety by reference to the text of Amendment No. 2
set forth on Exhibit B.
REASONS FOR THE PROPOSED AMENDMENT
The Company hereby incorporates by reference the same reasons as
set forth in Proposed Amendment Number One. In addition, the Company
notes that although Proposed Amendment One can be deemed an anti-
takeover measure, there is still a risk that a hostile party could
accumulate enough stock so as to have enough voting control to amend
the articles and by-laws of the Company. As an added protection, the
Company intends to issue its Preferred Stock to its Chairman and
President so that each may convert their Preferred into Common Stock
in the event a hostile person or entity obtained a majority of the
shares of Common Stock outstanding. This Preferred Stock has the
advantage of assisting the present management in making sure that they
will be a substantial voice in the on going operation of the Company.
The Company is presently undergoing a rapid acquisition campaign and
hence, even without a hostile individual or entity acquiring shares in
the open market, the Board of Directors believes that the Preferred
Stock is necessary to make sure that the present Chairman and
President maintain their power and authority since all of the
acquisitions announced as of this date are anticipated to close
through the use of Common Stock. Hence, the Preferred Stock will
assure that present management is maintained after the closure of all
announced acquisitions.
<PAGE>
Accordingly, the Board of Directors will offer the following
resolution at the Annual Meeting:
RESOLVED, Amendment No. 2 contained herein be adopted and that Article
numbered "FORTH" of the Amended Certificate of Incorporation of the
Company shall be deleted in its entirety and replaced with the text as
set forth in Exhibit B to this Proxy Statement.
The affirmative vote of at least a majority of the shares represented
and voting at the Annual Meeting at which a quorum is present (which
shares voting affirmatively also constitute at least a majority of the
required quorum) is necessary for approval of Proposal No. 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL
NUMBER TWO, AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
PROPOSAL THREE - ELECTION OF DIRECTORS
The Company's By-Laws fix the number of directors of the Company at
five. At the Meeting, shareholders will elect five directors to serve
until the election and qualification of their respective successors.
Each of the nominees has indicated a willingness to serve as a
director of the Company. In the event that any of the nominees should
become unavailable or unable to serve for any reason, shareholders
present in person or represented by proxy will vote for one or more
alternate nominees as the Board of Directors may recommend.
The following table sets forth certain information about each nominee.
Name Age Position
- ----- --- --------
Larry Provost 50 Chairman of the Board of Directors,
Secretary and Chief Financial Officer.
Paul A. Sloan 40 President, Chief Executive Officer and
Director.
Richard Brooks 50 Nominee for Director.
Jim Marquis 56 Nominee for Director.
James Vondra 58 Director.
Mr. Larry Provost became Chairman, Secretary and Chief Financial
Officer of the Company since the merger on December 5, 1997. Mr.
Provost is presently President of Production Talent, Inc., a film and
video production company. He graduated with a B.A. degree in
Psychology from New York University in 1970. Mr. Provost has 25 years
of experience in equipment leasing.
Mr. Paul A. Sloan became President, Chief Executive Officer and a
Director of the Company since the merger on December 5, 1997. Mr.
Sloan co-founded Vorec Corporation in 1986 and served as design team
leader.
<PAGE>
Mr. Richard Brooks is nominee for Director. He is CEO, CFO and
Chairman of Response USA Inc., a fully-integrated security systems
provider. He served as general counsel to Response Ability Systems,
Inc. from August 1986 to February 1990. Mr. Brooks was general counsel
for the Interstate Commerce Commission from May 1979 to March 1983 and
was senior attorney for the US Treasury Department from March 1974 to
April 1979. He received a Bachelor of Science Degree in Business
Administration in June 1970 from Temple University, and graduated from
Temple University School of Law in 1973.
Mr. Jim Marquis is nominee for director. In March of 1971 he joined
Kimchik, Inc. and formed their electronics equipment fabrication
division. He is currently Vice President and Board member of Kimchuk
and Board member of Smartcom, Inc., Thermal Waste Technologies, Smart
Communications, Inc., Investment Funding LLC, and Baron Express LLC
and a partner of Professional Properties. Mr. Marquis received a BSEE
from the University of Bridgeport in 1968 and a MBA from the
University of Connecticut in 1974.
Mr. Vondra became a Director of the Company since the merger on
December 5, 1997. Mr. Vondra is a computer scientist with 30 years
experience on mainframe computers, and is an independent investor.
Subject to shareholder approval of Amendment No. 1, the Board of
Directors to be elected at the Annual Meeting will be divided into
three classes. The Class I director will hold office until the 2000
annual meeting of shareholders and his successor is elected and
qualified, the Class II director will hold office until the annual
meeting of shareholders in 2001 and his successor is elected and
qualified, and the Class III director will hold office until the 2002
annual meeting of shareholders, and until his successor is elected and
qualified. Thereafter, each director will be elected to a three-year
term, with one-third of the number of authorized directors being
elected at each annual meeting of shareholders. The Board of Directors
has unanimously approved the classification of the nominees listed
below.
Class I: Jim Marquis, Richard Brooks
Class II: Jim Vondra, Paul Sloan
Class III: Larry Provost
The affirmative vote of at least a majority of the shares represented
and voting at the Annual Meeting at which a quorum is present (which
shares voting affirmatively also constitute at least a majority of the
required quorum) is necessary for election of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF ALL NOMINEES FOR THE DIRECTORS.
INFORMATION CONCERNING LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings.
INFORMATION CONCERNING MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors met one time in 1998, all of the directors
attended the meeting except for Mr. Cohen. In addition, the Directors
held several informal telephone discussions and voted on issues by
special ballot. The entire Board of Directors considers issues before
it, and may form committees for certain purposes.
<PAGE>
COMPENSATION OF DIRECTORS
The Directors received no cash compensation in 1998, but did receive
the following stock options during 1998:
Name Amount Exercise Price Term Amount Exercised
- ----- ------ -------------- ---- ----------------
Mr. Provost 20000 $0.32 5 yr 0
Mr. Sloan 20000 $0.32 5 yr 0
Mr. Cohen 10000 $0.25 10 yr 0
Mr. Solomon 10000 $0.25 10 yr 0
Mr. Vondra 10000 $0.25 10 yr 0
EXECUTIVE COMPENSATION.
The primary objectives of the Company's executive compensation
structure are to maintain executive compensation at competitive levels
to retain qualified personnel and to reward individuals for their
respective contributions to the Company's success. Bonuses may be
granted in order to reward and acknowledge employees for, among other
things, individual initiative and achievement. A number of factors are
considered in determining compensation of executives, such as
historical financial results, anticipated revenues and earnings for
the next fiscal year, individual contributions to, and length of
service with, the Company, compensation levels at other companies
(both within and outside the Company's industry), and equity and
fairness within the top levels of management. Decisions on executive
officer compensation are, however, primarily subjective. No
predetermined weight is generally assigned to any of the factors
mentioned above. A guideline in determining bonus compensation for
division presidents and other designated executive officers has
historically been the achievement of budgeted sales and earnings
levels, but no other specific corporate performance related targets
are otherwise used and the achievement of such goals is not, in all
cases, determinative of whether an executive officer will receive
bonus compensation or the amount of such compensation.
Summary Compensation Table
Name and Principle All Other
Position Year Salary Compensation
- ------------------- ---- ------ ------------
Larry Provost 1998 $52,000(3) $18,000(1) 20,000(4)
Chairman, Secretary 1997 $18,000 196,350 (2)
Treasurer and Chief 1996 12,000
Financial Officer
Paul Sloan 1998 $60,000(5) 20,000(4)
President, Chief 1997 $60,000(6)
Executive Officer 1996 $53,500
and Director
<PAGE>
Lester Cohen 1998 10,000(4)
VP Marketing,
Director
Michael Solomon 1998 10,000(4)
Senior VP
Director
Donald Grimes 1998 $6,153 (7) 50,000(8)
VP Sales
Jim Vondra 1998 10,000(4)
Director
(1) Mr. Provost received a $18,000 stipend to cover the costs of
maintaining an office.
(2) Mr. Provost received an aggregate of 196,350 shares as part of
total compensation during fiscal year 1997.
(3) Mr. Provost received $0 as of December 31, 1998. This amount is
accrued and payable by the Company
(4) Shares in stock option plan (unexercised)
(5) Mr. Sloan has received $25,000 as of December 31, 1998. The balance
of $35,000 is accrued and payable by the Company.
(6) Mr. Sloan has received $40,000 as of December 31, 1997. The balance
of $20,000 is accrued and payable by the Company.
(7) This represents one month's salary.
(8) Mr. Grimes will receive 50,000 shares as a signing bonus contingent
upon one year's service.
In addition, the Company may award stock options to key employees,
members of management, directors and consultants under stock option
programs as bonuses based on service and performance.
CERTAIN TRANSACTIONS AND RELATED TRANSACTIONS
Except as described below or under "Compensation of Directors" and
"Executive Compensation" the Company has not engaged in transactions
required to be disclosed with individuals who were officers,
directors, principal stockholders or affiliates thereof.
Mr. Greg Tuai, a 5% or greater shareholder, provided outside services
to the company as a design engineer, product developer and consultant
through his company Discovery Consulting. In 1998 Discovery Consulting
invoiced $75,000 for services and received payment of $18,750 for
services. The balance due Discovery Consulting was $100,370 in
December of 1998. In December of 1998 Discovery Consulting agreed to
forgive $50,185 of this amount.
Mr. Sloan provided office and work space during 1998 to the Company in
owned properties at 2527 Montery St, Sarasota FL and 4266 Higel
Avenue, Sarasota FL. The total amount paid was $11, 513.
COMPLIANCE WITH SECTION 16(a)
Management believes all reports required by this section have been
filed by Directors, Officers and Beneficial Owners.
<PAGE>
PROPOSAL FOUR - SHAREHOLDER APPROVAL OF OPTIONS GRANTED UNDER THE 1998
STOCK OPTION PLAN
The 1998 Stock Option Plan was approved by the Board of Directors of
the Company on April 10, 1998, and ratified by the Shareholders on May
16, 1998.
The purpose of the 1998 Stock Option Plan is to attract and retain and
provide additional incentive to selected employees, officers,
directors, agents, consultants and independent contractors of the
Company, or of any parent or subsidiary of the Company. Each option
granted pursuant to the 1998 Stock Option Plan is required to be
designated at the time of grant as either an "incentive stock option"
or as a "non-qualified stock option." The following description of the
1998 Stock Option Plan is qualified in its entirety by reference to
the 1998 Stock Option Plan itself.
Administration of the Plan
The 1998 Stock Option Plan is administered under the direction of the
Board of Directors of the Company by the committee appointed by the
Board, which consists of the President and Secretary/Treasurer of the
Company, which determines who among those eligible will be granted
options, the time or times at which options will be granted, the
number of shares to be subject to options, the durations of options,
any conditions to the exercise of options and the manner in and price
at which options may be exercised. The Board is authorized to amend,
suspend or terminate the 1998 Stock Option Plan, except that it is not
authorized without stockholder approval (except with regard to
adjustments resulting from changes in capitalization) to (i) increase
the maximum number of shares that may be issued pursuant to the
exercise of options granted under the 1998 Stock Option Plan; (ii)
permit the grant of a stock option under the 1998 Stock Option Plan
with an option price less than 85% of the fair market value of the
shares at the time such option is granted (or 11O% for greater than
1O% stockholders); (iii) change the eligibility requirements for
participation in the 1998 Stock Option Plan; (iv) extend the term of
any option or the period during which any option may be granted under
the 1998 Stock Option Plan; or (v) decrease an option exercise price
(although an option may be canceled and a new option granted at a
lower exercise price).
Shares Subject to the Plan
The 1998 Stock Option Plan provides that options may be granted with
respect to a total of 500,000 shares of Common Stock, subject to
adjustment upon certain changes in capitalization without receipt of
consideration by the Company. In addition, if the Company is involved
in a merger, consolidation, dissolution or liquidation, the options
granted under the 1998 Stock Option Plan will be adjusted or, under
certain conditions, will terminate, subject to the right of the option
holder to exercise his option or a comparable option substituted at
the discretion of the Company prior to such event. If any option
expires or terminates for any reason, without having been exercised in
full, the unpurchased shares subject to such option will be available
again for the purposes of the 1998 Stock Option plan.
<PAGE>
Participation
Any employee, officer, director, agent, consultant or independent
contractor of the Company is eligible to receive incentive stock
options or non-qualified stock options granted under the 1998 Stock
Option Plan.
Option Price
The exercise price of each option will be determined by the Board (or
any committee appointed by the Board), but incentive stock options may
not be priced less than 85% of the fair market value of the shares of
Common Stock covered by the option on the date the option is granted.
If an incentive stock option is to be granted to an employee who owns
over 10% of the total combined voting power of all classes of the
Company's stock, then the exercise price may not be less than 110% of
the fair market value of the Common Stock covered by the option on the
date the option is granted.
Terms of Options
The Board (or any committee appointed by the Board), in its
discretion, establishes the term of each option, provided that the
maximum term of each option is 1O years. Options granted to an
employee who owns over 1O% of the total combined voting power of all
classes of stock of the Company expires not more than five years after
the date of grant. The 1998 Stock Option Plan provides for the
earlier expiration of options of a participant in the event of certain
terminations of employment.
Options Grants
As of the date hereof, the following options to purchase a total of
220,000 shares of Common Stock have been granted pursuant to the 1998
Stock Option Plan:
Issue Exercise Amount
Name Amount Date Price Term Exercised
- ---- ------ ----- ------ ---- ---------
Mr. Provost 20000 5/15/98 $0.32 5 yr 0
50000 2/24/99 1.44 5 yr 0
Mr. Sloan 20000 5/15/98 $0.32 5 yr 0
50000 2/24/99 1.44 5 yr 0
Mr. Cohen 10000 5/15/98 $0.25 10 yr 0
10000 2/24/99 1.12 10 yr 0
Mr. Solomon 10000 5/15/99 $0.25 10 yr 0
10000 2/24/99 1.12 10 yr 0
Mr. Vondra 10000 5/15/98 $0.25 10 yr 0
10000 2/24/99 1.12 10 yr 0
Options to purchase an aggregate of 20000 shares were also issued in
1998 to consultants. The Company currently intends to grant options to
purchase 10,000 shares of Common Stock to each of the five board
members elected at the 1999 Stockholders Meeting.
<PAGE>
Approval and Termination
The 1998 Stock Option Plan was approved by the Board of Directors of
the Company on April 10, 1998 and the Shareholders on May 16, 1998
and, unless sooner terminated by the Board of Directors (or any
committee appointed by the Board), will terminate on April 10, 2008.
Accordingly, the Board of Directors will offer the following
resolution at the Annual Meeting:
RESOLVED, that the shares listed above as Option Grants under the 1998
Stock Option Plan are ratified and approved.
The affirmative vote of at least a majority of the shares represented
and voting at the Annual Meeting at which a quorum is present (which
shares voting affirmatively also constitute at least a majority of the
required quorum) is necessary for approval of Proposal No. 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF PROPOSAL
NUMBER FOUR.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Bobbitt, Pittenger
and Company PA as the Company's principal certified public accountants
for the fiscal year ending December 31, 1999. It is anticipated that
a representative of Bobbitt, Pittenger and Company will be present at
the Meeting, and will respond to appropriate questions of
stockholders.
PROPOSAL FIVE - RATIFICATION OF SELECTION OF AUDITORS
The firm of S. M. Ward and Company ("Ward") audited the financial
statements of the Company for the fiscal years ended Dec. 31, 1995
through Dec. 31, 1997. On April 6, 1998, pursuant to a vote of the
Board of Directors, the firm of Bobbitt, Pittenger and Company PA was
selected to audit the financial statements of the Company for the year
ended Dec. 31, 1998.
The report of Ward on the Company's financial statements for the
previous years did not contain an adverse opinion or a disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit
scope, or accounting principles. During the entire period of the
engagement of Ward, through Dec. 31, 1997, there had been no
disagreement on any matter of accounting
principles or practices, financial statement disclosure, or auditing
scope or procedure, which disagreement, if not resolved to Wards
satisfaction, would have caused Ward to make reference in connection
with its reports to the subject matter of the disagreement.
The firm of Bobbitt, Pittenger and Company PA audited the financial
statements of the Company for the year ended Dec. 31, 1998.
Accordingly, the Board of Directors will offer the following
resolution at the Annual Meeting:
<PAGE>
RESOLVED, that the appointment by the Board of Directors of Bobbitt,
Pittenger and Company PA, independent public accountants, to audit the
financial statements of the Company for the year ended Dec. 31, 1999
be, and hereby is, ratified and approved.
The affirmative vote of at least a majority of the shares represented
and voting at the Annual Meeting at which a quorum is present (which
shares voting affirmatively also constitute at least a majority of the
required quorum) is necessary for approval of Proposal No. 5. Under
Delaware law, there are no rights of appraisal or dissenters rights
which arise as a result of a vote to ratify the selection of auditors.
THE BOARD OF DIRECTORS DEEMS PROPOSAL FIVE TO BE IN THE BEST INTERESTS
OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR"
APPROVAL THEREOF.
PROPOSAL SIX - CHANGE OF COMPANY NAME
On January 29, 1999 the Board of Directors approved that the Company
change its name change to better reflect the growth strategy of the
Company.
Accordingly, the Board of Directors will offer the following
resolution at the Annual Meeting:
RESOLVED, that the Board of Directors shall have the authority to
change the name of the Company.
The affirmative vote of at least a majority of the shares represented
and voting at the Annual Meeting at which a quorum is present (which
shares voting affirmatively also constitute at least a majority of the
required quorum) is necessary for approval of Proposal No. 6.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 6 TO BE IN THE BEST
INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE
"FOR" APPROVAL THEREOF.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the 2000 Annual
Meeting of Stockholders must be received by the Company by December
31, 1999 in order to be considered for inclusion in the Company's
proxy statement and any form of proxy relating to that meeting.
SOLICITATION OF PROXIES
The Company is not soliciting proxies for the Meeting. Shareholders
are cordially invited to attend the Meeting or appoint by proxy a
substitute to vote their shares.
ANNUAL REPORT ON FORM 10-KSB
The Company's audited financial statements for the year ending
December 31, 1998 and related disclosures are incorporated by
reference herein from the Company's 1998 Annual Report 10-KSB which is
available at no cost upon written or oral request from the Secretary,
and is also available from the SEC Filings link from the Company web
site at www.seialert24.com.
By order of the Board of Directors,
/s/Larry Provost
Secretary date: April 5, 1999
<PAGE>
EXHIBIT A - PROPOSED AMENDMENT NO. 1
Subject to approval by the shareholders of the Company, Article
II(1), Article II(2), Article II(3) and Article II(5) of the Restated
By-Laws of the Company shall be deleted in their entirety and replaced
with the following:
DIRECTORS- ELECTION, TERM AND REMOVAL
The management of all the affairs, property and interests of the
corporation shall be vested in a Board of Directors consisting of not
less than three members, the exact number to be fixed by resolution of
the Board of Directors. Each director shall be a natural person of
full age. The Board shall fix the compensation of directors. The Board
of Directors shall be divided into three classes, respectively
designated Class I, II and III, each class to consist of as close to
one-third of the total number of authorized Directors as possible. The
terms of the Directors in Class I shall expire at the annual
shareholders meeting held in 2000, the terms of the Directors in Class
II shall expire at the annual shareholders meeting held in 2001, and
the terms of the Directors in Class III shall expire at the annual
shareholders meeting held in 2002. At annual meetings thereafter, the
number of Directors equal to the number of Directors in the class
whose term expires at the time of such meeting shall be elected to
serve until the third ensuing meeting of shareholders; provided,
however, that, if necessary to maintain relative equality among the
classes of Directors created due to vacancies or removals of
Directors, Directors may be elected to a class whose term expires
prior to such third ensuing annual meeting of shareholders. Newly
created directorships resulting from any increase in the number of
Directors or any vacancies on the Board of Directors resulting from
death, resignation, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining Directors then in
office, even though less than a quorum of the Board of Directors. Any
Director elected to fill a vacancy in accordance with the preceding
sentence shall be of the same class as the Directors he or she
succeeds and shall hold office for the remainder of the full term of
such class, unless, by reason of any previous changes in the
authorized number of Directors, the Board shall designate the vacant
directorship as a directorship of another class in order to achieve
more equality in the number of Directors among the classes.
Notwithstanding any of the foregoing provisions of this Articles,
Directors shall serve until their successors are elected and qualified
or until their earlier death, resignation or removal from office, or
until there is a decrease in the number of authorized Directors.
At any meeting of shareholders called expressly for that purpose,
the entire Board of Directors, or any member thereof, may be removed
from office at any time, but only (i) for Cause and (2) by the
affirmative vote of the holders of not less than two-thirds of the
shares entitled to elect the Director or Directors whose removal is
sought. For purposes of this Article II, "Cause" shall be construed to
exist only if the Director whose removal is proposed (i) has been
convicted of a felony by a court of competent jurisdiction or (ii) has
been adjudged by a court of competent jurisdiction
<PAGE>
to be liable for engaging in an act involving willful malfeasance
which had a material adverse effect on the corporation. Where a
question of the removal of a Director for Cause is to be presented for
shareholder consideration, an opportunity must be provided such
Director to present his or her defense to the shareholders by a
statement which must accompany or precede the notice of the meeting at
which removal of such Director for Cause shall be considered. Under
such circumstances, the Director involved shall be served with notice
of the meeting at which such action is proposed to be taken together
with a statement of the specific charges and shall be given an
opportunity to be present and to be heard at the meeting at which his
or her removal is considered.
The qualifications, manner of election, time and place of
meetings, and
powers and duties of the Directors of the corporation shall be as set
forth in the bylaws of the corporation.
EXHIBIT B - PROPOSED AMENDMENT NO. 2
Subject to approval by the shareholders of the Company, Article
numbered "FORTH" of the Certificate of Incorporation of the Company
shall be deleted in its entirety and replaced with the following:
FORTH. The Corporation shall be authorized to issue two (2)
classes of shares of stock to be designated, respectively, "Common
Stock" and "Preferred Stock"; the total number of shares that the
Corporation shall have authority to issue is eighty million
(80,000,000) shares of Common Stock with a par value of $.001 and
authority to issue twenty shares of Preferred Stock. Each Share of
Preferred Stock shall be convertible to one million five hundred
thousand shares of Common Stock at the will of the holder of the
Preferred Stock. The Preferred Stock shall be without par value.
