Proxy Statement Pursuant to Section 14(a) of the Securities and Exchange Act
of 1934
(Amendment No. _____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-
12
NAVIDEC, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid: _____________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date
of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement Number:
3) Filing party:
4) Date filed:
NAVIDEC, INC.
14 Inverness Drive
Building F, Suite 116
Englewood, Colorado 80112
PROXY STATEMENT AND
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 17, 1999 at 1:00 PM
To the Shareholders of NAVIDEC, Inc.:
An Annual Meeting of the shareholders of NAVIDEC, Inc. (the "Company") will be
held at the Inverness Hotel & Golf Club, 200 Inverness Drive West, Englewood,
Colorado 80112 at 1:00 P.M. on June 17, 1999, or at any adjournment or
postponement thereof, to vote upon the election of directors, to vote upon a
proposal to increase from one million to two million the number of shares of
the Company's common stock issuable upon the exercise of options granted under
the Company's Stock Option Plan and to transact such other business as may
properly come before the meeting.
Details relating to these matters are set forth in the attached Proxy
Statement. All shareholders of record as of the close of business on April
21, 1999 will be entitled to notice of, and to vote at, such meeting or at any
adjournment or postponement thereof.
Also enclosed is a copy of the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1998.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. IF YOU DO NOT
PLAN TO ATTEND THE MEETING, YOU ARE URGED TO SIGN, DATE AND PROMPTLY RETURN
THE ENCLOSED PROXY. THE DELIVERY OF A PROXY WILL NOT AFFECT YOUR RIGHT TO
VOTE IN PERSON IF YOU ATTEND THE MEETING.
BY ORDER OF THE
BOARD OF DIRECTORS
Ralph Armijo
President and Director
May 20, 1999
PROXY STATEMENT
NAVIDEC, INC.
c/o American Securities Transfer, Inc.
P.O. Box 1596
Denver, CO 80201-1596
(303) 234-5300
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JUNE 17, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of NAVIDEC, Inc. (the "Company"), a Colorado
corporation, to be voted at an Annual Meeting of Shareholders of the Company
("Annual Meeting") to be held on June 17, 1999 at the Inverness Hotel and Golf
Club, 200 Inverness Drive West, Englewood, Colorado at 1:00 P.M. or at any
adjournment or postponement thereof. The Company anticipates that this Proxy
Statement and accompanying form of Proxy will be first mailed or given to all
shareholders of the Company on or about May 21, 1999. The shares represented
by all proxies that are properly executed and submitted will be voted at the
meeting in accordance with the instructions indicated thereon. Unless
otherwise directed, votes will be cast FOR the proposals presented. The vote
of a majority of the shares represented at the meeting in person or by proxy
will be required to enact any or all of the proposals.
Any shareholder giving a proxy may revoke it at any time before it is
exercised by delivering written notice of such revocation to the Company, by
substituting a new proxy executed at a later date, or by requesting, in
person, at the Annual Meeting that the proxy be returned.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the material enclosed herewith and all costs of soliciting
proxies will be paid by the Company. In addition to the solicitation by mail,
proxies may be solicited by Officers and regular employees of the Company by
telephone, telegraph or personal interview. Such persons will receive no
compensation for their services other than their regular salaries.
Arrangements will also be made with brokerage houses and other
custodians, nominees and fiduciaries to forward solicitation materials to the
beneficial owners of the shares held on record date by such persons, and the
Company may reimburse such persons for reasonable out-of-pocket expenses
incurred by them in so doing.
VOTING SHARES AND PRINCIPAL SHAREHOLDERS
The close of business on April 21, 1999, has been fixed by the Board of
Directors of the Company as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. At such
date, there were outstanding 7,346,419 shares of the Company's no par value
common stock (hereinafter referred to as the "Common Stock"), each of which
entitles the holder thereof to one vote per share on each matter which may
come before the meeting. Cumulative voting is not permitted. The Company has
no other class of voting securities outstanding.
A majority of the issued and outstanding shares of the Company's Common
Stock entitled to vote, represented in person or by proxy, constitutes a
quorum at any shareholders' meeting. If a quorum is present, the affirmative
vote of a majority of shares represented in person or by proxy will be
required to approve the matters upon which the shareholders are to vote.
Accordingly, any shares present but not voted shall have the same effect as
shares voted against approval.
NOMINEES FOR DIRECTOR
The Company's Board of Directors currently consists of seven members. All
directors hold office until the next annual meeting of the Company's
shareholders and their successors are elected and qualified. The nominees for
the directors to be elected at the Annual Meeting are the current directors of
the Company, who are Ralph Armijo, Andrew Davis, Patrick R. Mawhinney, Lloyd
G. Chavez, Jr., Gerald A. Marroney, James Hosch and Michael S. Kranitz.
The proxies will be voted for the nominees for director unless a contrary
specification is made in the proxy. All nominees have indicated their
willingness to serve as directors of the Company. However, if any nominee is
unable or should decline to serve as a director, it is the intention of the
person named in the proxy to vote for such other person as he in his
discretion shall determine.
The following table sets forth, with respect to each nominee for
director, the nominee's age, his positions and offices with the Company, and
the year in which he first became a director of the Company. Individual
background information concerning each of the nominees follows the table.
<TABLE>
Period from
Name Age Position Which Served
- ----- ----- -------- ------------------
<S> <C> <C> <C>
Ralph Armijo 45 President, Chief Executive 7/93
Officer and Director
Patrick R. Mawhinney 35 Chief Financial Officer, 7/96
Treasurer and Director
Michael Kranitz 38 President Automotive Division 12/98
and Director
Andrew Davis 45 Director 4/97
Lloyd G. Chavez, Jr. 48 Director 4/97
Gerald A. Marroney 46 Director 4/97
James Hosch 45 Director 6/98
</TABLE>
RALPH ARMIJO has served as the Company's President, Chief Executive
Officer and as one of the Company's directors since its inception in 1993.
From 1981 to 1993, Mr. Armijo was employed by Tektronix, Inc., a large
communications company which also produced testing and measuring
equipment. Mr. Armijo's responsibilities at Tektronix progressed from
sales manager, to branch manager, to district manager and, ultimately, to
Western Regional Manager, a position he held for five years. In that
position, he was responsible for a $100 million budget in sales, graphics,
technical support and administration, and he was responsible for
developing new distribution channels, including reseller agreements.
From 1976 to 1981, Mr. Armijo was employed by IBM Corporation, where
he sold computerized accounting and financial applications to small
and medium-sized businesses. Mr. Armijo received his B.A. from Colorado
College and his M.B.A. from the University of California, Los Angeles.
PATRICK R. MAWHINNEY served as the President of Interactive Planet,
Inc. from its inception until its merger with the Company in July 1996.
Since that time he has served as the Company's Chief Financial Officer,
Treasurer and as one of the Company's directors. From May 1995 until May 1996,
Mr. Mawhinney also served as a financial/accounting consultant for
MIS\Sunguard, a provider of accounting and investment software. Mr.
Mawhinney was employed as an Assistant Vice President of The Bank of Cherry
Creek from November 1993 to May 1995; as a Vice President of Vectra Banking
Corporation from June 1989 to November 1993; and as Operations Coordinator
for Zions Bancorporation from August 1986 to June 1989. He received his B.S.
from Colorado State University.
MICHAEL KRANITZ has been one of the Company's directors and the
Company's Vice President of Strategic Development since December 1998. From
October 1997 until December 1998, Mr. Kranitz was the CEO and President of
LeaseSource, Inc. From January 1997 until October 1997, Mr. Kranitz worked
with a computer company primarily on the development of the intellectual
property used by LeaseSource, Inc. and in October 1997, Mr. Kranitz
acquired from that company those intellectual property rights. From 1994
until December 1996, Mr. Kranitz was a partner with the law firm of Benesch,
Friedlander, Coplan & Aronoff, LLP located in Cleveland, Ohio. Mr. Kranitz
is also the author of Look Before You Lease: Secrets to Smart Vehicle
Leasing. Mr. Kranitz received a BS in Economics with high honors from the
University of Florida in 1982 and a JD from Vanderbilt School of Law in 1985.
ANDREW DAVIS has been one of the Company's directors since December
1997. Mr. Davis has served as Director of Global & Strategic Accounts for
InFocus Systems. Since December 1997, Mr. Davis served as the Company's Vice
President of Sales and Marketing from May 1996 until December 1997. He
became one of the Company's directors in April 1997. From January 1994 to May
1996, Mr. Davis was manager of wholesale distribution at InFocus Systems,
a manufacturer of high resolution projection systems. From September 1982
to January 1994, Mr. Davis held various sales and marketing positions in
Tektronix, Inc. including Director of Marketing for the Interactive
Technologies Division. Mr. Davis attended the University of Denver from 1971
to 1974 where he studied Business Management and Marketing.
LLOYD G. CHAVEZ, JR. became one of the Company's directors in April
1997. He has been a director of the Burt group of automobile dealerships
in Denver, Colorado since 1988 and Director of Automotive Markets of the
Burt group since 1994. From 1983 to 1994, Mr. Chavez was Vice
President of Fort Dodge Laboratories, a subsidiary of American Home
Products, where he was responsible for business acquisitions, new
products and technologies, joint ventures, intellectual property
acquisitions, strategic planning, market research and sale projections. From
1982 to 1983, Mr. Chavez was Vice President of General Genetics
Corporation, where he was responsible for management of biological and
pharmaceutical research and development. Mr. Chavez received his B.A.
in Molecular, Cellular, Development Biology from the University of Colorado,
his M.A. in Old Testament Studies from Denver Seminary, his Ph.D. in
Microbiology and Immunology from the University of Virginia, and was a post-
doctoral Fellow in Chemistry at Cornell University.
GERALD A. MARRONEY became one of the Company's directors in April 1997.
He has served as a State of Colorado District Court Judge in Pueblo
County, Colorado since 1990. Prior to such time he was a practicing attorney
in Pueblo, Colorado. Mr. Marroney received his B.S. in Political Science
from Southern Colorado State College in 1973 and his J.D. from Oklahoma
City University in 1976.
JAMES HOSCH has been one of the Company's directors since June 1998.
Since November 1998, Mr. Hosch has been an independent representative for
Bathgate McColley Capital Group LLC, a NASD registered broker dealer. From
September 1995 until November1998 Mr. Hosch was a Senior Vice President of
Joseph Charles & Associates, Inc., a NASD registered broker dealer.
From January 1993 until September 1995, he was Executive Vice President of
Cohig & Associates, Inc., a NASD registered broker dealer. From 1989 until
January 1993, he was President of Kober Corporation, a publicly traded real
estate firm.
None of the Company's directors are related to any other director or
executive officer. None of the Company's directors hold any directorships in
any other public company.
Committees and Meetings
The Board has a Compensation Committee and an Audit Committee, but does
not have a standing nominating committee or other committee performing similar
functions. The Compensation Committee's primary function is to oversee the
administration of the Company's employee benefit plans and to establish the
Company's compensation policies. The Compensation Committee recommends to the
Board the compensation arrangements for senior management and directors,
adoption of compensation plans in which officers and directors are eligible to
participate, and the granting of stock options or other benefits under
compensation plans. This committee, comprised of Messrs. Chavez, Marroney,
and Mawhinney, met twice during 1998. All members of the Compensation
Committee attended each meeting. The Audit Committee assists the Board in
fulfilling its responsibilities for financial reporting by the Company. The
Audit Committee recommends the engagement and discharge of independent
auditors, directs and supervises special investigations when necessary,
reviews with independent auditors the audit plan and the results of the audit,
reviews the independence of the independent auditors, considers the range of
audit fees, and reviews the scope and results of the Company's procedures for
internal auditing and the adequacy of its system of internal accounting
controls. Members of the Audit Committee are Messrs. Chavez, Marroney, and
Mawhinney. The Audit Committee met three times during 1998 to review the
audit plan and the results of the audit and to plan and recommend auditors for
the next audit. All members of the Audit Committee attended each meeting.
During 1998, the full Board of Directors met five times. No director
attended less than 75% of the total of Board and committee meetings held
during the director's tenure on the Board and its committees.
Section 16(a) Beneficial Ownership Reporting Compliance
Under U.S. securities laws, directors, certain executive officers and
persons holding more than 10 percent of the Company's common stock must report
their initial ownership of the common stock and any changes in that ownership
to the SEC. The SEC has designated specific due dates for those reports and
the Company must identify in this report those persons who did not file those
reports when due. Based solely on the Company's review of copies of the
reports filed with the SEC and written representations of its directors and
executive officers, the Company believes that all persons subject to reporting
filed the required reports on time in 1998.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the annual compensation paid to the
Company's Chief Executive Officer and one other executive officer of the
Company, for the last three fiscal years and of one executive officer of the
Company during 1998. No other executive officer has received annual
compensation in excess of $100,000 during the Company's last three fiscal
years.
<TABLE>
<CAPTION>
Long Term Compensation
Securities All
Name and Annual Restricted Underlying Other
Principal Compen- Stock Options/ LTIP Compen-
Position Year Salary Bonus sation Award(s) SARs(#) Payouts sation
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ralph
Armijo, 1998 $172,133 $ 0 $0 $ 0 146,000(1) $ 0 $9,600(2)
CEO
1997 $156,141 $12,869 $0 $ 0 0 $ 0 $9,600(2)
1996 $124,384 $ 0 $0 $ 0 0 $ 0 $9,000(2)
Hal
Anderson,1998 $89,708 $20,000 $0 $ 0 50,000(3) $ 0 $ 0
VP
Auto-
motive 1997 $80,000 $19,958 $0 $ 0 22,000(3) $ 0 $ 0
1996 $39,666 $ 0 $0 $ 0 0 $ 0 $ 0
Ken Bero,1998 $104,706 $25,000 $0 $ 0 125,000(4) $ 0 $ 0
VP Sales(5)
</TABLE>
(1) The number indicated represents the number of stock options granted to
Mr. Armijo during 1998.
(2) Consists of an automobile allowance.
(3) The number indicated represents the number of stock options granted to
Mr. Anderson during 1998 and 1997.
(4) The number indicated represents the number of stock options granted to
Mr. Bero during 1998.
(5) Mr. Bero commenced working with the Company in December 1997 but did not
receive any compensation from the Company until after January 1, 1998.
Option/SAR Grants in Last Fiscal Year
The following table sets forth information concerning individual grants
of stock options made during the year ended December 31, 1998 to the Company's
Chief Executive Officer and two other named executive officers.
<TABLE>
<CAPTION>
Individual Grants
Number of
Securities % of Total Options
Underlying Granted to
Options/SARs Employees in Exercise or Base Expiration
Name Granted Fiscal Year Price ($/Sh) Date
<S> <C> <C> <C> <C>
Ralph Armijo 146,000 12% $3.00 2/13/03
Ken Bero 75,000 6% $3.00 2/13/02
Ken Bero 50,000 4% $3.00 10/31/05
Hal Anderson 50,000 6% $2.44 9/11/03
</TABLE>
Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR
Values
The following table sets forth information concerning each exercise of
stock options during the year ended December 31, 1998 by the Company's Chief
Executive Officer and two other named executive officers, and the fiscal year-
end value of unexercised options held by him.
<TABLE>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
Shares at FY-End (#) at FY-End ($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized Unexercisable Unexercisable(2)
<S> <C> <C> <C> <C>
Ralph Armijo 0 (1) 0 146,000/0 $301,125/$0
Ken Bero 0 (1) 0 50,000/75,000 $103,125/$154,687
Hal Anderson 0 (1) 0 22,000/50,000 $0/$131,125
</TABLE>
(1) Messrs. Armijo, Bero and Anderson did not exercise any of the stock
options they held during 1998.
(2) The value indicated was calculated by determining the difference between
the fair market value of the Company's common stock underlying the stock
options and the exercise price of those options at December 31, 1998.
Director Compensation
None of the Company's directors received any compensation during the most
recent fiscal year for serving in their position as a director. Outside
members of the Board of Directors may received 10,000 stock options issued
under the Company's stock option plan.
Employment Agreements and Termination of Employment and Change-in-
Control Arrangements
The Company entered an Employment Agreement with Mr. Armijo that is
effective May 1, 1998. The term of that agreement is for one year and it may
renew automatically for two additional one-year periods provided that neither
Mr. Armijo nor the Company provide the other with notice of its intent to not
renew the agreement at least thirty days before the anniversary date of the
agreement. Mr. Armijo's current annual salary under the agreement is $150,000
and his salary is reviewed annually. The agreement also provides that Mr.
Armijo will be paid an annual bonus. If Mr. Armijo remains employed with the
Company through the first anniversary date of the agreement, the Company must
pay Mr. Armijo a special bonus (the "Special Bonus") in the event that there
is a "Change in Control" of the Company. "Change in Control" is defined in the
agreement. The Special Bonus will be equal to Mr. Armijo's then effective
annual salary, plus the greater of
the annual bonus paid or payable for the most recently completed fiscal
year during the term of the agreement, and
the average of the bonuses paid or payable to Mr. Armijo in respect of
1998, 1997 and 1996.
The higher of the two numbers is referred to as the "Highest Annual Bonus."
The agreement provides that if the Company terminates Mr. Armijo other than
for "Cause" or "Disability" or Mr. Armijo terminates his employment either for
"Good Reason" or without any reason during a thirty day period immediately
following May 1, 1999, the Company must pay Mr. Armijo a lump sum cash payment
equal to
his annual salary through the date of termination,
the Highest Annual Bonus through the date of termination,
the Special Bonus, if any, and
an amount equal to the product of two times his then effective annual
salary, the Highest Annual Bonus and the Special Bonus, if any.
The Company may terminate Mr. Armijo's employment for "Cause" and shall
be obligated only to pay Mr. Armijo his annual salary through the date of
termination.
401(k) Plan
The Company has a 401(k) profit sharing plan. Eligible employees may make
voluntary contributions to the plan. The amount of employee contributions is
limited as specified in the plan. The Company may, at its discretion, make
additional contributions to the plan. The Company did not make any
contributions in 1998.
Stock Option Plan
The Company's officers and directors may receive stock options issued
under the Company's stock option plan.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 9, 1999,
concerning the beneficial ownership of the Company's common stock by each
person who beneficially owns more than five percent of the common stock; by
each of the Company's executive officers and directors; and by all executive
officers and directors as a group.
<TABLE>
COMMON STOCK PERCENT OF
NAME AND ADDRESS OF BENEFICIALLY BENEFICIAL
BENEFICIAL OWNER(2) OWNED OWNERSHIP
<S> <C> <C>
Ralph Armijo 978,659(3) 12.8%
Patrick R. Mawhinney 206,357(3) 2.7%
Harold Anderson II 83,073(3) 1.1%
Kenneth P. Bero 50,000(3) (1)
Michael Kranitz 333,334(3)(6) 4.4%
Andrew Davis 21,250(3) (1)
Lloyd G. Chavez, Jr. 14,250(3)(4) (1)
Gerald A. Marroney 10,000(3) (1)
James Hosch 51,096(5) (1)
All directors and executive
officers as a Group
(Nine Persons) 1,748,019 22.2%
</TABLE>
Rule 13d-3 under the Securities Exchange Act of 1934, provides the
determination of beneficial owners of securities. That rule includes as
beneficial owners of securities, any person who directly or indirectly has, or
shares, voting power and/or investment power with respect to such securities.
Rule 13d-3 also includes as a beneficial owner of a security any person who
has the right to acquire beneficial ownership of such security within sixty
days through means, including, the exercise of any option, warrant or
conversion of a security. Any securities not outstanding which are subject to
such options, warrants or conversion privileges are deemed to be outstanding
for the purpose of computing the percentage of outstanding securities of the
class owned by such person. Those securities are not deemed to be outstanding
for the purpose of computing the percentage of the class by any other person.
(1) Less than one percent.
(2) Except as indicated herein, the address for each person is 14 Inverness
Drive, Building F, Suite 116, Englewood, Colorado 80112.
(3) The number of shares indicated includes shares of common stock
underlying options that are currently exercisable, which are held by the
following persons in the amounts indicated: Mr. Armijo (146,000); Mr.
Mawhinney (57,000); Mr. Anderson (22,000); Mr. Davis (10,000); Mr.
Marroney (10,000); Mr. Chavez (10,000); and Mr. Kranitz (83,334).
(4) LGC Management owns 4,250 shares of common stock. Mr. Chavez is
President of LGC Management and may be deemed the beneficial owner of
such shares.
(5) The number of shares indicated includes 50,500 shares of common stock
underlying options and warrants held by Mr. Hosch that are currently
exercisable.
(6) The number of shares indicated includes 61,250 shares of common stock
owned by Mr. Kranitz's wife, Abby L. Kranitz. Mr. Kranitz is deemed to
beneficially own the shares held by Ms. Kranitz.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1997, Pat Mawhinney made a $30,000 loan to the Company,
evidenced by a promissory note dated October 5, 1997, which did not bear
interest. The loan was repaid in November 1997.
In October 1997, Ralph Armijo guaranteed a line of credit in the amount
of $750,000 extended to the Company by USA Funding, Dallas, Texas. No
compensation was paid by the Company for such personal guarantee.
In March 1998, Pat Mawhinney made a $40,000 loan to the Company,
evidenced by a promissory note dated March 13, 1998, which did not bear
interest. The loan was repaid on March 31, 1998.
In October 1998, Pat Mawhinney made a $45,000 loan to the Company,
evidenced by a promissory note dated October 2, 1998, which did not bear
interest. The loan was repaid on November 25, 1998.
James Hosch, a former Executive Vice President of Joseph Charles &
Associates, Inc., has been one of the Company's directors since June, 1998.
Joseph Charles & Associates received $143,750 in commissions and $35,938 in
expenses as the placement agent for a private placement of an aggregate of
$1,437,500 principal amount of the Company's 10% Unsecured Subordinated
Convertible Promissory Notes. The notes were sold from August 1996 until
October 18, 1996. The notes were automatically converted into an aggregate of
349,126 units in our initial public offering of securities.
Joseph Charles & Associates was the managing underwriter for the
Company's initial public offering of securities. The Company offered 1,000,000
units in that offering consisting of one share of the Company's Common Stock
and one common stock purchase warrant. Of the 1,000,000 shares of common stock
and 1,000,000 warrants included in the offering, 755,000 shares of common
stock and 755,000 warrants were sold by the Company and 245,000 units were
sold by certain of the Company's shareholders. The units were sold on a firm
commitment basis and Joseph Charles & Associates received a 10% discount on
the public offering price of $6.00 per unit. Joseph Charles & Associates
received pursuant to the underwriting agreement for that offering a non-
accountable expense allowance equal to 3% of the total proceeds of the
offering, or $180,000. The Company also agreed to retain Joseph Charles &
Associates as a financial consultant for a period of two years, commencing on
February 10, 1997 for a fee of $3,000 per month. The Company agreed under the
underwriting agreement to sell Joseph Charles & Associates for $100, options
to purchase up to 100,000 shares of common stock. Those options are
exercisable for four years beginning on February 10, 1998 and at an exercise
price of $7.38 per share.
The Company also entered into an engagement letter with Joseph Charles &
Associates to assist the Company to complete an offering of up to 600,000
units, with each unit consisting of one share of common stock and one warrant.
The offering price of the units was $4.50 per unit. In consideration for its
services, the Company agreed to pay Joseph Charles & Associates a sales
commission of 10% of the funds raised in the offering. Joseph Charles &
Associates also was entitled to purchase a number of units equal to 10% of the
units sold in the offering for a period of five years from the date of closing
of the offering at a purchase price of $4.50 per unit. Joseph Charles &
Associates also was entitled to receive a 3% non-accountable expense allowance
based on all funds raised in the offering. That offering was closed during
April 1998 with an aggregate of 594,500 units being sold to investors and
59,450 units being sold to Joseph Charles & Associates and its designees.
On February 16, 1998 the Company entered into an agreement with Joseph
Charles & Associates to engage it on an exclusive basis to complete the
private placement that was started in November 1997 and the Company issued a
total of 250,000 options to Joseph Charles & Associates and its designees.
Those options are exercisable at $3.50 per share and expire on February 15,
2003.
The Company entered into an agreement with Bathgate McColley Capital
Group LLC on December 21, 1998, pursuant to which Bathgate McColley will
provide financial and investment banking services to the Company on a non-
exclusive basis. James Hosch, a director of the Company, is an independent
representative for Bathgate McColley.
On December 28, 1998, the Company issued a total of 250,000 shares of its
common stock to the shareholders of CarWizard, Inc. and LeaseSource Online,
Inc. in exchange for all of their ownership interests of those companies. The
Company also issued options to purchase 83,334 shares of its common stock to
Michael Kranitz as part of that transaction. Those options are exercisable at
$5.08 per share for a five year period commencing on December 28, 1998. Mr.
Kranitz was an executive officer and principal owner of LeaseSource Online,
Inc. and CarWizard, Inc.
Although some of the foregoing transactions were determined without arm's
length negotiations and involved conflicts of interest between the interests
of the related parties and the Company, the Company believes that all of these
transactions were entered into on terms no less favorable to the Company than
could have been obtained from independent third parties.
OTHER MATTERS TO BE VOTED UPON
Stock Option Plan
The Board of Directors has adopted, subject to shareholder approval, an
amendment to the Company's Stock Option Plan (the "Stock Option Plan") to
increase from 1,000,000 to 2,000,000 the number of shares of the Company's
common stock issuable pursuant to options granted under the Stock Option Plan.
The Stock Option Plan allows for the granting of (i) nonstatutory stock
options ("NSOs"), which can be granted to employees of the Company or any
subsidiary of the Company and non-employees (such as consultants and outside
directors) and (ii) tax-qualified incentive stock options ("ISOs"), which can
be granted only to employees of the Company or any subsidiary of the Company.
A prospective grantee of an option who is an employee may elect at the date of
grant the number of options the employee prefers to receive as NSOs and as
ISOs. The purpose of the Stock Option Plan is to enhance shareholder value by
attracting, retaining and motivating key employees, consultants and members of
the Board of Directors of the Company and of any subsidiary of the Company by
providing them with a means to acquire a proprietary interest in the Company's
success. All current and former employees, consultants and members of the
Board of Directors of the Company, and of any subsidiary of the Company are
eligible to participate in the Stock Option Plan. As of December 31, 1998, 70
persons were eligible to participate in the Stock Option Plan.
The aggregate number of shares of the Company's Common Stock that may be
granted under the Stock Option Plan upon the exercise of either an NSO or ISO
is 2,000,000. At the discretion of the Board the Stock Option Plan may be
administered by a committee of two or more non-employee Directors appointed by
the Board. Optionee's under the Stock Option Plan shall be selected at the
discretion of the Board or such committee from among those eligible
participants who, in the opinion of the Board or such committee, are or were
in a position to contribute materially to the Company's continued growth and
development and to its long-term success. Subject to the provisions of the
Stock Option Plan, the Board or such committee shall have complete discretion
in determining the terms and conditions and number of options granted under
the Stock Option Plan.
Options granted under the Stock Option Plan may not have an exercise
price that is less than the market price of the Company's Common Stock on the
date of grant, and are to have a term not to exceed ten years (five years in
the case of ISOs granted to persons who beneficially own more than ten percent
of the Company's Common Stock). Unexercised options will terminate upon the
earliest to occur of (i) the date set forth in the written option agreement,
(ii) upon completion of any acquisition of the Company, (iii) upon termination
of the optionee's employment with the Company for cause or (iv) in the case of
ISOs, ninety days following the termination of the optionee's employment with
the Company other than for cause (unless termination of employment is a result
of the optionee's death or disability, in which event the option will
terminate if not exercised within one year of the optionee's termination of
employment with the Company). Nothing contained in the Stock Option Plan
shall be construed to give any employee or consultant any right to continued
employment or association with the Company.
Each option under the Stock Option Plan shall be evidenced by a written
option agreement that specifies the exercise price, the duration of the
option, the number of shares of stock to which the option applies, and such
vesting or exercisability restrictions and other terms and conditions which
the Board or Committee may impose.
Unless earlier terminated by the Board, the Stock Option Plan shall
terminate on September 1, 2007, after which date no options may be granted
under the Stock Option Plan. The Board may at any time terminate the Stock
Option Plan and from time to time may amend or modify the Stock Option Plan,
provided, however, that no such action of the Board, without approval of the
shareholders, may: (i) increase the total amount of Common Stock that may be
purchased through options granted under the Stock Option Plan; (ii) change the
class of employees, consultants or members of the Board eligible to receive
options under the Stock Option Plan or (iii) otherwise amend or modify the
Stock Option Plan where approval of the shareholders is required by any law or
regulation governing the Company.
The principal federal income tax consequences of the grant and exercise
of options under the Stock Option Plan are, in general, as follows:
NSOs
1. Upon the issuance of an NSO, the optionee will have no taxable
income and the Company will have no tax deduction.
2. Upon the exercise of an NSO, the optionee will realize ordinary
taxable income in an amount equal to the excess of the fair market value of
the underlying shares of stock at the time the option is exercised over the
exercise price of the option for such shares.
3. The amount of income recognized by the optionee will be deductible
by the Company as compensation in the year in which ordinary income is
recognized by the optionee by reason of exercise of the NSO, provided
applicable withholding requirements are satisfied.
4. An optionee's basis for the shares of stock acquired pursuant to the
exercise of an NSO will be the option exercise price plus any amount
recognized as ordinary income by reason of the exercise of the NSO.
5. Upon the sale of the stock acquired pursuant to the exercise of an
NSO, capital gain or loss will be realized by the optionee in the amount by
which the sales price is greater or less than the basis of such stock.
Currently such gain or loss will be long-term or short-term depending on
whether the shares were held for more than eighteen months after the option
was exercised.
ISOs
1. Upon the issuance of an ISO, the optionee will have no taxable
income and the Company will have no tax deduction.
2. The tax consequences upon the exercise of an ISO and later
disposition of the shares of stock acquired thereby depend upon whether the
optionee satisfies the holding period rule whereby the optionee must hold the
shares for more than one year after exercise and two years after the date of
issuance of the option.
3. If the optionee satisfies the holding period rule, the optionee will
not realize income upon exercise of the ISO (although the excess of the fair
market value of the shares on the date of exercise over the option price must
be included as an adjustment in computing alternative minimum taxable income)
and the Company will not be allowed an income tax deduction at any time. The
difference between the option price and the amount realized upon disposition
of the shares by the optionee will constitute a long-term capital gain or
loss, as the case may be.
4. If the optionee fails to observe the holding period rule, the
portion of any gain realized upon such disqualifying disposition of the shares
which does not exceed the excess of the fair market value at the date of
exercise over the option price will be treated as ordinary income to the
optionee, the balance of any gain or any loss will be treated as capital gain
or loss (long-term or short-term depending on whether the shares were held for
more than eighteen months after the option was exercised), and the Company
will be entitled to a deduction equal to the amount of ordinary income upon
which the optionee is taxed.
The Company has not at the present time determined who will receive
options to purchase the additional shares of Common Stock that will be
authorized for issuance under the Stock Option Plan if the proposed amendment
is approved. Approval of the proposal to amend the Stock Option Plan will
require an affirmative vote of a majority of the shares of Common Stock of the
Company represented in person or by proxy at the Annual Meeting and voting in
favor or against the proposal.
Plan Benefits
The following table sets forth information concerning options that the
Company issued to certain persons under the Stock Option Plan during the year
ended December 31, 1998. The exercise price of those options is the price of
the Company's common stock on the date of grant of the options.
<TABLE>
Number of
Aggregate Shares
Exercise Common Stock
Name Price of Covered By
and Position Options Options (1)
<S> <C> <C>
Ralph Armijo $438,000 146,000
President, Chief
Executive Officer,
and Director
Kenneth Bero $375,000 125,000
Vice President of
Sales
Harold Anderson II $122,000 50,000
Vice President
Automotive
Executive Group $1,134,000 378,000
Non-Executive $120,000 40,000
Director Group
Non-Executive Officer $3,755,000 743,500
Employee Group
</TABLE>
__________________
(1) The Company has issued options under the Stock Option Plan to purchase in
excess of one million shares of the Company's Common Stock. The Stock Option
Plan however permits option holders to acquire shares of the Company's Common
Stock upon the surrender of options without paying cash. The surrendered
options are valued at the difference between the exercise price of the options
and the price of the Common Stock underlying the options. The shares of the
Company's Common Stock underlying the options surrendered in those cashless
exercises are eligible to be issued upon the exercise of other options granted
under the Stock Option Plan. The Company believes that one million shares of
the Company's Common Stock will be sufficient to cover the options that have
previously been granted under the Stock Option Plan because it is anticipated
that almost all of the option holders will use cashless exercises of their
options to acquire shares of the Company's Common Stock.
The closing sales price of the Company's common stock on May 10, 1999 was
$9.25 as reported on the Nasdaq SmallCap Market.
The Board of Directors recommends a vote for the proposal to increase the
number of shares of Common Stock subject to the Company's Stock Option Plan.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2000 Annual
Meeting of Shareholders must be received by the Company on or before January
21, 2000 in order to be eligible for inclusion in the Company's Proxy
Statement and form of Proxy. To be so included, a proposal must also comply
with all applicable provisions of Rule 14a-8 under the Securities Exchange Act
of 1934.
OTHER MATTERS
The Board of Directors does not know of any other matters to be brought
before the Annual Meeting. If any other matters not mentioned in this Proxy
Statement are properly brought before the Annual Meeting, the individuals
named in the enclosed proxy intend to vote such proxy in accordance with their
best judgment on such matters.
OTHER INFORMATION
It has not yet been determined whether a representative of Arthur
Andersen LLP will attend the Annual Meeting, make a statement at the Annual
Meeting or will be available to respond to appropriate questions.
By Order of the Board of Directors
RALPH ARMIJO
Chief Executive Officer, President
and Director
May 20, 1999
NAVIDEC, INC.
PROXY
The undersigned shareholder of NAVIDEC, Inc., a Colorado corporation,
hereby appoints Ralph Armijo, President and Chief Executive Officer of
NAVIDEC, Inc., my proxy to attend and represent me at the annual meeting of
the shareholders of the corporation to be held on June 17, 1999 at the
Inverness Hotel and Golf Club, 200 Inverness Drive West, Englewood, Colorado
at 1:00 P.M., and at any adjournment thereof, and to vote my shares on any
matter or resolution that may come before the meeting and to take any other
action which I could personally take if present at the meeting.
1. Election of Directors: Management has nominated the seven following
persons to stand for election. You may note "for" or you may withhold your
vote from any of those persons nominated and vote "for" a person nominated by
others or write in your own nominee.
a. Ralph Armijo For ___________
Withhold ___________
b. Andrew Davis For ___________
Withhold ___________
c. Patrick Mawhinney For ___________
Withhold ___________
d. Lloyd G. Chavez, Jr. For ___________
Withhold ___________
e. Gerald A. Marroney For ___________
Withhold ___________
f. James Hosch For ___________
Withhold ___________
g. Michael Kranitz For ___________
Withhold ___________
h. Other For ___________
Withhold ___________
2. Stock Option Plan
RESOLVED, that the proposal to amend the Stock Option Plan of the
corporation is approved.
For Against Abstain
_____________ _______________ _____________
Failure to check any of these boxes for each proposal will give Ralph Armijo
the authority to vote the proxy at his discretion. This Proxy gives
authority to my proxy to vote for me on such other matters as may properly
come before this meeting.
Shares Owned: _________________
Dated: _________________
_____________________________________
Signature of Shareholder
(Sign exactly as name appears on certificate)
____________________________________
Signature if held jointly
