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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] 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
ATG INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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ATG INC.
47375 Fremont Boulevard
Fremont, California 94538
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 14, 2000
To the Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of ATG Inc.
(the "Company") will be held at The Marriott Hotel, 46100 Landing Parkway,
Fremont, California on Friday, July 14, 2000 at 10:00 a.m. Pacific Daylight
Time, for the following purposes:
1. To elect six directors of the Company to serve until the next Annual
Meeting of Shareholders and until their respective successors are duly
elected and qualify.
2. To consider and approve an amendment to the Company's Amended and
Restated Articles of Incorporation increasing the number of authorized
shares of stock from a total of 21,000,000 shares, to a total of
50,000,000 shares, of which 8,000,000 shares will be designated
preferred.
3. To consider and act upon such other business as may properly come before
the meeting or any adjournment(s) thereof.
Shareholders of record as of the close of business on May 16, 2000 are
entitled to receive notice of and to vote at the meeting or any adjournment
thereof.
By Order of the Board of Directors
Frank Y. Chiu
Secretary
Fremont, California
June 24, 2000
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE ANNUAL MEETING OF
SHAREHOLDERS, PLEASE FILL IN, DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE>
ATG INC.
47375 Fremont Boulevard
Fremont, CA 94538
----------------
PROXY STATEMENT
----------------
INFORMATION CONCERNING SOLICITATION AND VOTING
General Information
This Proxy Statement is solicited by and on behalf of the Board of Directors
of ATG Inc., a California corporation (the "Company"), for use at the Annual
Meeting of Shareholders (the "Annual Meeting") to be held at The Marriott
Hotel, 46100 Landing Parkway, Fremont, California on Friday, July 14, 2000 at
10:00 a.m. Pacific Daylight Time, and at any adjournment(s) thereof. The
approximate date on which this Proxy Statement and the accompanying Proxy was
first given or sent to security holders was June 24, 2000.
Each Proxy executed and returned by a shareholder may be revoked at any time
thereafter, by written notice to that effect to the Company, attention of the
Secretary, prior to the Annual Meeting, or in person to the Chairman of, or
the Inspectors of Election at, the Annual Meeting, or by the execution and
return of a later-dated Proxy, except as to any matter voted upon prior to
such revocation.
The Proxies in the accompanying form will be voted in accordance with the
specifications made thereon and where no specifications are given, such
Proxies will be voted FOR all proposals herein. In the discretion of the proxy
holders, the Proxies will also be voted FOR or AGAINST such other matters as
may properly come before the Annual Meeting. The management of the Company is
not aware that any other matters are to be presented for action at the Annual
Meeting.
The solicitation of proxies generally will be by mail and by directors,
officers, and regular employees of the Company without additional
compensation. In some instances, solicitation may be made by telephone or
other means. All costs incurred in connection with the solicitation of proxies
will be borne by the Company. Arrangements may be made with brokers and other
custodians, nominees and fiduciaries to send proxies and proxy material to
their principals, and the Company may reimburse them for reasonable out-of-
pocket and clerical expenses in forwarding such material.
Record Date And Voting Rights
Only shareholders of record at the close of business on May 16, 2000 will be
entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. Each share of the Company's Common Stock, no par value
per share (the "Common Stock"), is entitled to one vote on each of the matters
to be presented at the Annual Meeting. As of April 28, 2000, there were
14,104,457 shares of Common Stock outstanding. The holders of a majority of
the outstanding shares of Common Stock, present in person or by proxy and
entitled to vote, will constitute a quorum at the Annual Meeting. Abstentions
and broker non-votes will be counted for purposes of determining the presence
or absence of a quorum. "Broker non-votes" are shares held by brokers or
nominees which are present in person or represented by proxy, but which are
not voted on a particular matter because instructions have not been received
from the beneficial owner. Abstentions are counted in tabulations of the votes
cast on proposals presented to the shareholders, whereas broker non-votes are
not counted for purpose of determining whether a proposal has been approved.
Notwithstanding the foregoing description of voting rights, shareholders may
exercise cumulative voting rights with respect to the election of directors.
Cumulative voting allows a shareholder to cast a number of votes equal to the
number of directors to be elected (six) multiplied by the number of votes held
in his or her name on the record date. This total number of votes may be cast
for one nominee or may be distributed among as many candidates as the
shareholder desires. Pursuant to California law, no shareholder can cumulate
votes unless prior
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to the voting at the Annual Meeting, a shareholder has given notice of the
shareholder's intention to cumulate the shareholder's votes at the Annual
Meeting and the nominee for which the shareholder intends to cumulate votes
has properly been nominated. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination. The Board
of Directors does not, at this time, intend to give such notice or to cumulate
the votes it may hold pursuant to the Proxies solicited herein unless the
required notice by a shareholder is given, in which event votes represented by
Proxies delivered pursuant to this Proxy Statement may be cumulated in the
discretion of the proxy holders, in accordance with the recommendation of the
Board of Directors. Therefore, discretionary authority to cumulate votes in
such event is solicited in this Proxy Statement.
Shareholder Information
A copy of the Company's 2000 Annual Report, including financial statements
and schedules, is enclosed with these proxy solicitation materials. In
compliance with Rule 14a-3 promulgated under the Securities Exchange Act of
1934, the Company hereby undertakes to provide without charge to each person
solicited, upon written request, a copy of the Company's Annual Report on Form
10-K for its 1999 fiscal year, including the financial statements and
financial schedules thereto. Requests for such copies should be directed to
ATG Inc., 47375 Fremont Boulevard, Fremont, California 94538, Attention:
Investor Relations.
PROPOSAL NO. 1--ELECTION OF DIRECTORS
Six directors will be elected at the Annual Meeting to hold office until the
next Annual Meeting of Shareholders and until their respective successors are
duly elected and qualify. One position on the board is currently vacant, and
the Company expects to continue its search for an additional member following
the meeting. It is intended that the Proxies will be voted for the following
nominees, but the holders of the Proxies reserve discretion to cast votes for
individuals other than the nominees for director named below in the event of
the unavailability of any such nominee. The Company has no reason to believe
that any of the nominees will become unavailable for election. Set forth below
are the names of the nominees, age, position with the Company, the year in
which first elected a director of the Company, principal occupation and
certain other information concerning each of the nominees.
Doreen M. Chiu, 46, has served as President, Chief Executive Officer and
Chairman of the Board since joining the Company in 1984. Prior to joining the
Company, Ms. Chiu owned her own certified public accounting firm. Ms. Chiu is
a California CPA and holds a Bachelor of Arts degree in Business
Administration from the University of Wisconsin. Ms. Chiu is the wife of Frank
Chiu.
Frank Y. Chiu, 46, joined the Company in 1980 as Financial Controller,
became Vice-President and a director of the Company in 1984, and became
Executive Vice-President in 1992. Mr. Chiu holds a Bachelor of Arts degree in
Business Administration and a Master's degree in Business Administration from
the University of Wisconsin. Mr. Chiu is the husband of Doreen Chiu.
George Doubleday II, 60, has been a director of the Company since April
1999. Mr. Doubleday has been a private investor and advisor to companies for
18 years, principally through his investment vehicle, Nathan M. Malle
Associates. Since 1983 he has also been Chairman of the InnerAsia Group, a
family of companies with interests in international tourism, trade, and
manufacturing. From 1965 to 1981, he served with Pan American World Airways as
Staff Vice President--Operations Control and Regional Managing Director--
Southeast Asia. From 1961 to 1965, he served as a fighter pilot with the U.S.
Marine Corps. He holds a Bachelor of Science degree in Industrial
Administration from Yale University.
David F. Chan, 48, has agreed to serve as a director of the Company
effective upon his election by the shareholders. Mr. Chan has over 25 years of
experience in public accounting and auditing, and in corporate executive
positions. He is presently the Vice Chairman and major shareholder of American
Safari Cruises, an upscale yacht cruising company in Seattle Washington. Mr.
Chan founded American Safari in 1996 and served as its President and CEO until
1999. From 1994 to 1996, he served as an International Business Consultant at
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Coopers & Lybrand, providing advisory services to international and U.S.
clients in merger and acquisition of companies in Asia and North America. From
1988 to 1995, he was the Chief Financial Officer of Cruise West, a cruise ship
company specializing in the Pacific Northwest and Alaska. From 1984 to 1988,
Mr. Chan was in public accounting at Ernst & Young, and Coopers & Lybrand.
Prior to 1984, Mr. Chan was the Controller of Glendale Federal Savings Bank, a
California commercial bank, for a period of five years. He holds a Bachelor of
Business Administration degree from University of Oregon at Eugene and a
Master of Business Administration degree in Finance from California State
University at Hayward.
David R. Sebastian, 40, has agreed to serve as a director of the Company
effective upon his election by the shareholders. Mr. Sebastian has over 15
years of experience in investment banking and commercial banking. Since 1999
he has been the President of Sebastian & Associates, a financial advisory and
investment banking consulting company he founded. From 1997 to 1999, Mr.
Sebastian served as a Managing Director of Prudential Securities, Inc.,
working as an investment banker primarily in the Consumer Products,
Agribusiness and Automotive sectors. From 1987 to 1997, he served in various
investment banking and merger and acquisition positions at Lehman Brothers,
Inc. From 1982 to 1985, Mr. Sebastian served as the Vice President--Commercial
Lending Group at the Inter-First Bankcorp, a Houston, Texas commercial banking
corporation, responsible for lending, trust and investment services. He holds
a Bachelor of Arts degree in Economics from Rice University and a Master of
Business Administration degree in Finance from the University of Texas at
Austin.
James E. Thomas, 63, has agreed to serve as a director of the Company
effective upon his election by the shareholders. Mr. Thomas has over 40 years
of executive and managerial experience in the commercial lending business.
Since 1980, Mr. Thomas has been the chief executive officer of various
commercial lending institutions, in which capacity he has total management
responsibility including credit, public relations, marketing, finance,
collections and day-to-day operations. Since 1997 he has been the founder and
president of Westmark Financial Company, an equipment leasing company based in
Bellevue, Washington, in which Doreen and Frank Chiu hold a controlling equity
interest. From 1984 to 1997, Mr. Thomas was the General Manager of Great
Western Leasing Inc., based in Redmond, Washington. From 1980 to 1984, Mr.
Thomas was the President of JET Leasing Inc., of Bellevue, Washington. From
1960 to 1980, Mr. Thomas served as a Regional Manager or Vice President at Old
National Leasing Company, Inter-Regional Financial Group, Northwest General
Leasing, and Trans Pacific Financial Corporation. Mr. Thomas graduated with an
Associate of Arts degree from Pasadena City College.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" ALL OF THE NOMINEES LISTED ABOVE
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors conducted seven (7) meetings during fiscal year 1999.
All of the persons who are currently Directors of the Company attended at
least seventy-five percent (75%) of the aggregate of: (i) the total number of
meetings of the board of directors, and (ii) the total number of meetings held
by the committee(s) on which they served during fiscal year 1999. The Board of
Directors has two committees, the Audit Committee and the Compensation
Committee.
Compensation of Directors
Each non-employee director receives a cash fee of $2,000 per Board meeting
attended (but not including conference calls) and an additional $2,000 per
Board Committee meeting attended, if such committee meeting is held on a day
different from that of a Board meeting. Each non-employee Board member, upon
appointment or election to the Board and pursuant to the Company's 1998 Non-
Employee Directors' Stock Option Plan (the "Directors' Plan") receives an
automatic option grant to purchase 20,000 shares of Common Stock at an option
exercise price equal to 100% of the market price of the Common Stock on the
date of grant ($8.50 per share, in the case of Messrs. Gjelde and Kadak and
$6.875 per share in the case of Mr. Doubleday), with each option having a
maximum term of ten (10) years and becoming immediately exercisable as to
5,000 of the option shares upon the date of grant. The balance of the option
shares vest at 5,000 shares each on the succeeding three anniversaries of the
grant date.
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Audit Committee
The Audit Committee of the Board is composed of Messrs. Gjelde, Doubleday
and Kadak and is chaired by Mr. Gjelde. The Audit Committee met two (2) times
in fiscal year 1999. The functions performed by the Audit Committee include
making recommendations to the Board of Directors regarding the selection of
independent accountants to serve the Company for the ensuing year and
reviewing with the independent accountants and management the general scope
and results of the Company's annual audit, the fees charged by the independent
accountants and other matters relating to internal control systems. In
addition, the Audit Committee is responsible for reviewing and monitoring the
performance of non-audit services by the Company's auditors and for
recommending the engagement or discharge of the Company's independent
accountants.
Compensation Committee
The Compensation Committee of the Board is composed of Messrs. Kadak,
Doubleday and Gjelde, and is chaired by Mr. Kadak. All members of this
Committee are non-employee directors. The responsibilities of the Compensation
Committee include establishing the compensation of the Chief Executive
Officer, reviewing and approving executive compensation policies and
practices, reviewing salaries and bonuses for certain executive officers of
the Company and administering the Company's stock option plans. The
Compensation Committee met two (2) times during fiscal year 1999.
PROPOSAL NO. 2--APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF
INCORPORATION TO INCREASE THE COMPANY'S AUTHORIZED CAPITAL STOCK AND AUTHORIZE
"BLANK CHECK" PREFERRED STOCK
At the Annual Meeting, the shareholders of the Company will be asked to
consider and approve an amendment to the Company's Amended and Restated
Articles of Incorporation (the "Articles") increasing the number of authorized
shares of capital stock from 21 million shares to 50 million shares, of which
8 million shares will be designated preferred stock issuable in one or more
series. Important information concerning the current capitalization of the
Company, and the purpose and effect of the proposed amendment, is set forth
below.
Capitalization of the Company
The authorized capital of the Company presently consists of (i) 20 million
shares of Common Stock, and (ii) 1 million shares of preferred stock,
designated "Series A Preferred Stock," having such rights, preferences,
privileges, limitations and other characteristics as are currently set forth
in Article III of the Articles. As of April 28, 2000, the number of issued and
outstanding shares of Common Stock was 14,104,457. As of such date, an
additional 1,517,000 shares of Common Stock were potentially issuable upon
exercise of outstanding options and warrants to purchase such shares
(including such options and warrants as were not then currently exercisable).
As of such date, no shares of the Company's preferred stock were outstanding.
Purpose of the Proposal
The principal purpose of the proposed amendment is to authorize additional
shares of capital stock which will be available in the event the Board of
Directors of the Company determines that it is necessary or appropriate to
raise additional capital through the issuance and sale of securities for any
such appropriate corporate purpose as the Board of Directors may deem
advisable. Depending on the applicable circumstances, the Board may deem it
advisable for any such issuance to consist of shares of Common Stock, shares
of the Company's preferred stock not convertible into Common Stock or shares
of such preferred stock that are so convertible, or any combination thereof.
In addition, the preferred stock authorized pursuant to this amendment, unlike
the preferred stock presently authorized pursuant to the Articles, is so-
called "blank check" preferred stock, which confers on the Board of Directors,
acting alone, the authority to fix all of the rights, preferences, privileges
and limitations attendant thereon. It is the Board of Directors' belief that
this form of preferred stock will allow the Company greater flexibility in
raising equity capital to support its activities, inasmuch as the preferred
stock can be tailored,
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by series, to meet the shifting requirements of the capital markets, and in
particular the requirements of institutional investors who now occupy a
dominant position in these markets. The Board of Directors believes that such
preferred stock will allow the Company to respond more rapidly to the changing
conditions of the capital markets, since each such series can be approved by
the Board of Directors without further shareholder approval. The Board of
Directors believes that these features will enable the Company to raise
additional equity capital, as needed, from a wider variety of financing
sources, and on such terms that may be more favorable than those obtained
through conventional common stock offerings.
The increase in the number of authorized shares of capital stock from 21
million shares to 50 million shares, including the increase of 1 million
shares of preferred stock to 8 million shares of preferred stock, will not
have any immediate effect on the rights of existing shareholders. To the
extent additional shares are issued in the future, however, the existing
shareholders' percentage equity ownership will decrease and the concomitant
voting power may, depending on whether such shares have voting rights,
decrease. Depending on the price at which the shares are issued, any such
issuance also could have the effect of diluting the earnings per share and
book value per share of the outstanding shares. The company presently has no
plan, agreement, arrangement or understanding to issue any of the additional
shares that are the subject of the proposed amendment. If the amendment is
approved by the shareholders of the Company, the Board of Directors does not
intend to solicit further shareholder approval prior to the issuance of any
additional shares, except as may be required by applicable law or any national
securities exchange or automated quotation system on which the Company's
securities are then quoted or included. The Board of Directors has unanimously
authorized the proposed amendment and has voted to recommend the proposed
amendment to the shareholders for adoption.
Requisite Approval
Approval of Proposal No. 2 requires the affirmative vote of the holders of
the majority of the shares present at the Annual Meeting, in person or by
proxy.
Text of Amendment
The text of the shareholders' resolution adopting and approving the proposed
amendment, which includes the text of such amendment verbatim, is set forth
below. Shareholders are encouraged to read the text of the resolution and of
the amendment carefully for a more complete understanding of the proposal.
"WHEREAS, the Board of Directors of this corporation has adopted and
approved an amendment to the Amended and Restated Articles of Incorporation
of this corporation to increase the authorized number of shares of this
corporation's capital stock from 21,000,000 to 50,000,000, including an
increase in this corporation's authorized number of shares of preferred
stock from 1,000,000 to 8,000,000; and
WHEREAS, the shareholders of this corporation deem it in their best
interests and those of this corporation that its Amended and Restated
Articles of Incorporation be amended in the same manner as so adopted and
approved by the Board of Directors of this corporation;
NOW, THEREFORE, BE IT RESOLVED, that the following amendment of the
Amended and Restated Articles of Incorporation of this corporation be, and
hereby is, adopted and approved:
"Article III shall be amended to read in its entirety as follows:
The total number of shares of all classes of stock that this corporation
is authorized to issue is 50 Million (50,000,000) shares, consisting of 42
Million (42,000,000) shares of Common Stock and 8 Million (8,000,000)
shares of Preferred Stock. The Board of Directors is hereby authorized from
time to time to provide by resolution for the issuance of shares of
Preferred Stock in one or more classes or series not exceeding the
aggregate number of shares of Preferred Stock authorized by these Amended
and Restated Articles of Incorporation, as amended from time to time; to
designate, and to fix the number of shares constituting, each such class or
series; and to determine with respect to each such class or series the
voting
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powers, if any (which voting powers if granted may be full or limited),
designations, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions
applicable thereto, including, without limiting the generality of the
foregoing, the voting rights applicable to any class or series (which may
be any whole or fractional number of votes per share, and which may be
applicable generally or only upon stated matters, events or conditions);
the rate of dividend to which holders of Preferred Stock of any class or
series may be entitled (which may or may not be cumulative and/or
participating); the rights of holders of Preferred Stock of any class or
series in the event of liquidation, dissolution or winding up of the
affairs of this corporation or other circumstances; the rights, if any, of
holders of Preferred Stock of any class or series to convert or exchange
such shares of Preferred Stock for shares of any other class of capital
stock of this corporation or any other entity or to convert or exchange
such Preferred Stock for any other form of property (including in each case
the determination of the price or prices or the rate or rates applicable to
such rights to convert or exchange and the adjustment thereof, the time or
times during which the right to convert or exchange shall be applicable and
the time or times during which a particular price or rate shall be
applicable); and the rights, if any, to redeem any class or series of
Preferred Stock (which may be mandatory at a fixed time or upon the
occurrence of a specified event, or may be optional on the part of this
corporation and/or the shareholder).
Unless otherwise provided by law or in a resolution or resolutions
establishing a particular class or series of Preferred Stock, the aggregate
number of authorized shares of Preferred Stock may be increased by an
amendment to the Amended and Restated Articles of Incorporation approved
solely by the holders of Common Stock and of any Preferred Stock which is
entitled pursuant to its voting rights designated by the Board to vote
thereon, if at all, voting together as a class.
The Board of Directors shall be entitled to increase or decrease the
number of shares previously designated by the Board to a class or series of
Preferred Stock without prior shareholder approval, provided that at no
time shall the Board of Directors be entitled to decrease the number of
shares previously so designated to a class or series to a number that is
less than the number of shares of such series then issued and outstanding.
Before this corporation shall issue any shares of Preferred Stock of any
class or series, a certificate, setting forth a copy of the resolution or
resolutions of the Board of Directors, fixing the attributes of such class
or series shall be filed in the manner prescribed by the laws of the State
of California.' "
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL
OF THE AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION
INCREASING THE AUTHORIZED CAPITAL STOCK OF THE COMPANY
AND AUTHORIZING "BLANK CHECK" PREFERRED STOCK
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a summary of certain transactions to which the Company was
or is a party and in which certain executive officers, directors or
shareholders of the Company had or have a direct or indirect material
interest.
From 1992 to 1997, Doreen M. Chiu, the Company's Chairman of the Board and
Chief Executive Officer, extended a series of loans to the Company, each of
which was repayable in full upon demand (collectively, the "Loan"). The Loan,
which was unsecured, bore interest at an annual rate of 10%, payable
concurrently with principal. The outstanding principal balance of the Loan,
including accrued interest, at December 31, 1997 was $1,280,180. This Loan was
repaid in full in 1998.
Doreen M. Chiu and Frank Y. Chiu, the Executive Vice-President and a
director of the Company, have each guaranteed the obligations of the Company
under (i) two Promissory Notes in the principal amounts of $2,069,604 and
$1,996,075 held by Safeco Credit Company, Inc.; (ii) an Equipment Lease
between the Company
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and Great Western Leasing that provides for an aggregate rental amount of
$32,522; and (iii) a Commercial Lease Agreement between the Company and U.S.
Bancorp with an aggregate rental amount of $103,341.
In connection with the issuance of certain bonds, undertakings and other
instruments of guarantee in favor of the Company, Doreen M. Chiu and Frank Y.
Chiu have each executed (i) a blanket Indemnity Agreement in favor of ACSTAR
Insurance Company ("ACSTAR"), indemnifying ACSTAR against any losses that
ACSTAR may incur in connection with the issuance of any such bonds,
undertakings or other instruments of guarantee, and (ii) a blanket Continuing
Agreement of Indemnity-Contractor's Form for the benefit of Reliance Insurance
Company, United Pacific Insurance, Reliance National Indemnity Company and
Reliance Surety Company, indemnifying such entities against any losses that
such entities may incur in connection with the issuance of any such bonds,
undertakings or other instruments of guarantee. As of December 31, 1999, the
potential aggregate liability of Mr. and Mrs. Chiu under the blanket
indemnities was approximately $35,500.
In 1998, the Company entered into a contract to provide certain engineering,
remediation and construction services to Mission Ranch Center, a California
limited partnership ("Mission Ranch"). Doreen M. Chiu and Frank Y. Chiu are
general partners and own a 50% partnership interest in Mission Ranch. The
Company reported revenues of $1,403,000 and costs of $1,354,000 related to
services provided under this contract in 1999. The Company reported revenues
of $785,000 and costs of $432,000 related to services provided under this
contract in 1998. The total project contract value is approximately $4,695,000
and is expected to be completed in fiscal 2000.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership of the Common Stock
of the Company as of April 28, 2000, by each person known by the Company to
own beneficially more than five percent of the Company's outstanding Common
Stock, by each director, by each executive officer named in the Summary
Compensation Table herein below and by all current directors and executive
officers as a group. All shares are subject to the named person's sole voting
and investment power, except where otherwise indicated.
<TABLE>
<CAPTION>
Number of Percent of
Shares Shares
Name (1) Outstanding
---- --------- -----------
<S> <C> <C>
Doreen M. Chiu (2)...................................... 2,719,926 19.3%
George Doubleday, II (3)................................ 507,243 3.6%
Eric C. Su (4).......................................... 121,333 *
William M. Hewitt (5)................................... 83,954 *
Steven J. Guerrettaz (6)................................ 71,484 *
Earl E. Gjelde (7)...................................... 15,000 *
Andrew C. Kadak (7)..................................... 15,000 *
All directors and executive officers as a group (9
persons) (8)........................................... 3,598,940 25.5%
</TABLE>
--------
* The number of shares owned is less than 1%
(1) Beneficial ownership includes shares of Common Stock subject to options
held by the named person that are currently exercisable or will become
exercisable within 60 days.
(2) Includes all shares beneficially owned by Frank Y. Chiu as community
property and options to purchase 20,000 shares of Common Stock.
(3) Includes options to purchase 15,000 shares of Common Stock.
(4) Includes options to purchase 63,333 shares of Common Stock. Mr. Su
resigned as a corporate officer in February 2000 and was reassigned to a
non-management position within the Company.
(5) Represents options to purchase 83,333 shares of Common Stock.
(6) Represents options to purchase 70,000 shares of Common Stock. Mr.
Guerrettaz left the Company's employ in February 2000.
(7) Represents options to purchase 15,000 shares of Common Stock.
(8) Includes 370,666 shares of Common Stock that may be issued upon the
exercise of options outstanding and beneficially owned by the directors
and executive officers as a group.
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COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
(10%) of the Company's Common Stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
and the National Association of Securities Dealers, Inc. Officers, directors
and greater than ten percent (10%) beneficial owners are required by the
Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file. Specific due dates for these
reports have been established and the Company is required to disclose in this
Proxy Statement any late filings during the most recent fiscal year. To the
Company's knowledge, based solely on its review of the copies of such reports
required to be furnished to the Company during the most recent fiscal year,
all of these reports were timely filed with the Securities and Exchange
Commission and the National Association of Securities Dealers, Inc.
COMPENSATION OF EXECUTIVE OFFICERS
The following table discloses compensation received by the Company's Chief
Executive Officer and the four (4) remaining most highly paid executive
officers who received total compensation in excess of $100,000 for the
previous years ended December 31, 1999, 1998 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
(4) Awards
--------------------- ------------
Securities
Underlying
Name and Principal Position Year Salary Bonus Options
--------------------------- ---- -------- ------- ------------
<S> <C> <C> <C> <C>
Doreen M. Chiu.............................. 1999 $245,154 $60,000 *
Chief Executive Officer 1998 156,000 * 50,000
1997 150,000 * 150,000
Frank Y. Chiu............................... 1999 225,846 60,000 *
Executive Vice President 1998 130,000 * 50,000
1997 120,000 * 159,900
William M. Hewitt........................... 1999 220,846 60,000 *
President--Waste Management Services (1) 1998 157,038 * 40,000
1997 103,269 * 70,000
Steven J. Guerrettaz........................ 1999 159,308 30,000 20,000
Chief Financial Officer (2) 1998 150,000 * 10,000
1997 1,731 * 60,000
Eric C. Su.................................. 1999 140,000 50,000 *
Vice President--Marketing & 1998 112,086 * 40,000
Planning (3) 1997 94,386 25,000 20,000
</TABLE>
--------
* None
(1) Joined the Company in April 1997.
(2) Joined the Company in December 1997 and left the Company's employ in
February 2000.
(3) Resigned as a corporate officer in February 2000 and was reassigned to a
non-management position within the Company.
(4) Each of the named executive officers received perquisites and other
personal benefits, the aggregate amount of which did not exceed the lesser
of $50,000 or 10% of the annual base salary reported.
8
<PAGE>
Stock Option Grants and Exercises
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options granted during
the fiscal year ended December 31, 1999.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Number of % of Total Appreciation for
Securities Options Option Term ($)
Underlying Granted to Exercise (1)
Options Employees in Price Per Expiration ----------------
Name Granted (#) Fiscal Year Share ($) Date(2) 5% 10%
---- ----------- ------------ --------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Doreen M. Chiu.......... 0 n.a n.a. n.a. n.a. n.a.
Frank Y. Chiu........... 0 n.a n.a. n.a. n.a. n.a.
William M. Hewitt....... 0 n.a n.a. n.a. n.a. n.a.
Steven J. Guerrettaz.... 20,000 14.8% $7.00 7/15/09 $88,045 $223,124
Eric C. Su.............. 0 n.a n.a. n.a. n.a. n.a.
</TABLE>
--------
(1) Potential realizable value is based on the assumption that the Common
Stock appreciates at the annual rate shown (compounded annually) from the
date of grant until the expiration of the ten-year option term. These
numbers are calculated based on the requirements promulgated by the
Securities and Exchange Commission and do not reflect the Company's
estimate of future stock price growth.
(2) Options may terminate before their expiration date if the optionee's
status as an employee is terminated.
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options exercised
during the fiscal year ended December 31, 1999 and the value of unexercised
options at such date.
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
December 31, 1999 (#) at December 31, 1999 ($)(1)
---------------------- ---------------------------
Shares Acquired Value Exercisable/ Exercisable/
On Exercise (#) Realized ($) Unexercisable Unexercisable
--------------- ------------ ---------------------- ---------------------------
<S> <C> <C> <C> <C>
Doreen M. Chiu.......... 41,000 $167,437 500/158,500 $ 1,656/491,906
Frank Y. Chiu........... 54,000 275,825 53,500/168,400 224,919/524,700
William M. Hewitt....... -- -- 66,666/43,334 0/0
Steven J. Guerrettaz.... -- -- 70,000/20,000 0/0
Eric C. Su.............. 60,000 440,525 63,333/26,667 192,625/0
</TABLE>
--------
(1) Based on the fair market value of the Common Stock at December 31, 1999 of
$4.3125 per share, less the exercise price paid for such shares.
Employment Agreements
None of the individuals named in the Summary Compensation Table above is a
party to an employment agreement with the Company.
9
<PAGE>
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Proxy Statement, in whole or in part, the following
report and the Performance Graph on page 12 shall not be incorporated by
reference into any such filings.
Compensation Philosophy
The Compensation Committee of the Board of Directors of the Company (the
"Committee") consists of the three (3) independent directors who are neither
employees nor officers of the Company. The Committee reviews the Company's
executive compensation program and policies, determines the compensation of
the Company's Chief Executive Officer ("CEO"), and reviews and approves the
CEO's recommendations for the compensation of the other senior executive
officers of the Company.
The Committee's philosophy regarding compensation of the Company's senior
management is to link rewards to financial and operational performance, to
encourage creation of shareholder value and to achieve the Company's strategic
goals and objectives. Through its executive compensation policies, the
Committee seeks to attract, retain and motivate highly qualified executives
who will contribute to the Company's success. Thus, the Committee believes the
Company's compensation arrangements must remain competitive with those offered
by other companies of similar size and scope of operations. To achieve these
goals, the executive compensation program consists of three primary components
which, taken together, constitute a flexible and balanced method of
establishing total compensation for senior management. These components are:
(i) base salary which reflects individual performance and contribution to the
Company; (ii) discretionary annual bonus awards payable in cash and tied to
the Company's achievement of financial targets; and (iii) long-term stock
based incentive awards designed to strengthen the mutuality of interests
between the Company's executive officers and its shareholders. Beginning in
1998, option grants to executive officers are made under the Company's 1998
Stock Ownership Incentive Plan by the Committee.
Cash Based Compensation
Salary. Consistent with the Company's philosophy, the Committee's approach
to base compensation is to offer competitive salaries in comparison with
market practices. Salary decisions are based on an annual review with the CEO,
considering the decision-making responsibilities of each position and the
experience, work performance, and team-building skills of position incumbents,
subject to existing employment agreements, if any. The cash salary of each of
the Company's executive officers is determined by the individual's performance
and past and potential contributions to the Company, as well as the overall
financial performance and resources of the Company.
Bonuses. The Committee has in the past and may in the future authorize the
payment of discretionary bonus compensation based upon an assessment of an
individual's exceptional contributions to the Company. Bonuses are based upon
the overall achievement in increasing the Company's revenue and its level of
profitability.
As a general matter, the Committee endorses the philosophy that executive
compensation should reflect Company performance. The Company, to date, has not
yet adopted any compensation plans which are tied directly to Company
performance by formula.
Equity Based Compensation
The executive officers have, from time to time, received grants of options
to acquire Company Stock. The purpose of the option grants is to provide such
individuals with additional incentives to maximize shareholder value. The
Committee also utilizes vesting periods to encourage key employees to continue
in the employ of the Company. The size of the option grant to each executive
officer is set at a level which is intended to create a meaningful opportunity
for stock ownership based on the individual's current position with the
Company and
10
<PAGE>
may also be based in part upon Company performance factors such as earnings
per share and revenue growth. However, the extent to which these latter
factors are taken into consideration will vary from individual to individual
at the Committee's sole discretion.
Chief Executive Officer Compensation
The process of determining the compensation for the CEO and the factors
taken into consideration in such determination are generally the same as the
process and factors used in determining the compensation of all of the
executive officers of the Company. The Committee considers both the Company's
overall performance and the CEO's individual performance. Bonuses for the CEO
are based upon the overall achievements in increasing the Company's revenue
and its level of profitability. Ms. Chiu's salary was determined based on
analysis of salaries paid by peer companies and on Ms. Chiu's knowledge,
experience and individual performance.
The foregoing report has been furnished by the Compensation Committee of the
Board of Directors of the Company.
Andrew C. Kadak, Chairman
Earl E. Gjelde
George Doubleday, II
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The following persons served on the Compensation Committee of the Company's
Board of Directors during fiscal year 1999: Andrew C. Kadak, Earl E. Gjelde,
and George Doubleday, II. Neither of these persons is a current or former
officer or employee of the Company. There are no "interlocks," as defined by
the Securities and Exchange Commission, with respect to any member of the
Compensation Committee.
11
<PAGE>
PERFORMANCE GRAPH
The following graph demonstrates a comparison of cumulative total
shareholder returns, calculated on a dividend reinvestment basis and based
upon an initial investment of $100 in the Company's Common Stock as compared
with the Russell 2000 Index and the Nasdaq Stock Market (U.S.) Index. No
dividends have been declared or paid on the Company's Common Stock during such
period. The stock price performance shown on the graph below is not
necessarily indicative of future price performance. The Common Stock began
trading on the Nasdaq National Market on May 7, 1998. The graph reflects the
Company's stock price performance from the initial public offering through the
end of fiscal 1999.
COMPARISON OF 20 MONTH CUMULATIVE TOTAL RETURN*
AMONG ATG INC., THE RUSSELL 2000 INDEX
AND THE NASDAQ STOCK MARKET (U.S.) INDEX
[GRAPH]
Cumulative Total Return
---------------------------------------------------------
5/7/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99
ATG INC. 100 90 71 87 76 78 59 51
RUSSELL 2000 100 97 79 87 78 91 84 85
NASDAQ STOCK
MARKET (U.S.) 100 103 93 121 135 148 152 224
<TABLE>
<CAPTION>
Cumulative Total Return
-------------------------------------------
5/7/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99
------ ---- ---- ----- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATG INC............................ 100 90 71 87 76 78 59 51
RUSSELL 2000....................... 100 97 79 87 78 91 84 85
NASDAQ STOCKMARKET (U.S.).......... 100 103 93 121 135 148 152 224
</TABLE>
12
<PAGE>
INDEPENDENT ACCOUNTANTS
The Company's financial statements for the fiscal year ended December 31,
1999, have been audited by the independent accounting firm of
PricewaterhouseCoopers LLP. A representative of PricewaterhouseCoopers LLP
will be present at the Annual Meeting and will have the opportunity to make a
statement if he desires and will be available to respond to appropriate
questions.
SHAREHOLDER PROPOSALS
Shareholder proposals for presentation at the year 2001 Annual Meeting of
Shareholders and to be considered for inclusion in next year's proxy statement
must be received at the Company's principal executive offices on or before
January 1, 2001.
OTHER MATTERS
The Company is not aware of any matters that may come before the Annual
Meeting other than those referred to in the Notice of Annual Meeting of
Shareholders. If any other matters shall properly come before the meeting, the
persons named in the accompanying proxy form intend to vote thereon in
accordance with their best judgment.
ALL SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS,
Frank Y. Chiu
Secretary
June 24, 2000
Fremont, California
13
<PAGE>
ATG INC.
47375 Fremont Boulevard
Fremont, California 94538
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Doreen M. Chiu and Frank Y. Chiu, and each
of them with full power of substitution, as proxies to vote on behalf of the
undersigned all shares which the undersigned may be entitled to vote at the
Annual Meeting of Shareholders of ATG Inc., to be held at The Marriott Hotel,
46100 Landing Parkway, Fremont, California on Friday, July 14, 2000 at 10:00
a.m. Pacific Daylight Time, and at any adjournments thereof.
The undersigned hereby acknowledges receipt of a copy of the Company's 1999
Annual Report and Notice of Annual Meeting and Proxy Statement relating to such
Annual Meeting.
The shares represented by this proxy will be voted in accordance with the
specifications made herein. If no instructions to the contrary are indicated on
the reverse side hereof, this proxy when properly executed will be voted FOR all
nominees in Proposal 1 and FOR Proposal 2. The proxies are authorized to vote in
their discretion with respect to other matters which may come before the
meeting.
(Continued and to be signed on reverse side)
18
<PAGE>
[X] PLEASE MARK YOUR VOTE AS IN THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES IN PROPOSAL 1 AND
"FOR" PROPOSAL 2.
1. ELECTION OF DIRECTORS WITHHOLD FOR ALL
Nominees: Doreen M. Chiu, Frank Y. FOR ALL ALL EXCEPT:
Chiu, George Doubleday II, David F.
Chan, David R. Sebastian, James E. [_] [_] [_]________
Thomas
2. AMENDMENT OF AMENDED AND RESTATED
ARTICLES
Approval of amendment to Amended and FOR AGAINST ABSTAIN
Restated Articles of Incorporation
increasing number of authorized shares [_] [_] [_]
of capitalized stock to 50 million and
authorizing "blank check" preferred
stock.
3. upon any other matters as may properly
come before the meeting or any
adjournment thereof
SIGNATURES(S)______________________________ DATE ____________________________
NOTE: Please mark, date and sign exactly as name appears on your share
certificate and return in the enclosed envelope. If the stock is issued in the
name of two or more persons, each of them should sign the proxy. If the proxy is
executed by a corporation or other entity, it should be signed in the
corporation's or entity's name by a duly authorized officer or representative.
19
