<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
</TABLE>
MICRO-ASI,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:
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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):
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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<PAGE> 2
August 11, 2000
Dear Shareholder:
On behalf of the directors and officers of Micro-ASI, Inc. (the "Company"), I
invite you to attend a special meeting of our shareholders on Thursday, August
31, 2000 at 10:00 a.m. at the offices of Micro-ASI's Technology Integration and
Deployment Center, 1445 MacArthur Drive, Suite 100, Carrollton, Texas 75007.
The enclosed material includes the notice of special meeting and proxy statement
which describes the business to be transacted at the meeting, and proxy for you
to complete and return to the Company. The primary purpose of this special
meeting is to increase the number of shares of Common Stock reserved for the
1999 Stock Option Plan and to consider a proposal for an Employee Stock Purchase
Plan.
The proposals are explained in more detail in the notice of special meeting and
proxy statement that appear on the following pages. After reading the proxy
statement, please mark, sign and return the enclosed proxy card to ensure that
your vote on the business matters of the meeting will be recorded. If you do
attend the special meeting, you may withdraw your proxy should you wish to vote
in person.
On behalf of the Board of Directors and management of Micro-ASI, Inc., we would
like to thank you for your continued support and confidence.
Sincerely yours,
Joel E. Claybrook
Vice Chairman and CEO
<PAGE> 3
MICRO-ASI, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 31, 2000
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "Special
Meeting") of Micro-ASI, Inc. (the "Company") will be held at the offices of
Micro-ASI's Technology Integration and Deployment Center, 1445 MacArthur Drive,
Suite 100, Carrollton, Texas 75007 on Thursday, August 31, 2000 at 10:00 am
local time for the following purposes:
1. To consider a proposal to increase the number of shares of Common Stock
reserved under the 1999 Stock Option Plan from 4,000,000 to 10,000,000; and
2. To consider a proposal to adopt an Employee Stock Purchase Plan covering of
500,000 shares of the Company's Common Stock; and
3. To transact such other business as may properly come before the Special
Meeting and any adjournments thereof.
As of July 21, 2000, there were 22,562,961 shares of Common Stock outstanding
and 8,091,300 shares of Preferred Stock outstanding.
Holders of the Company's Common Stock and Preferred Stock of record as of the
close of business on July 21, 2000, are entitled to receive notice of, and to
vote at, the Special Meeting and any adjournments thereof.
It is important that your shares be represented at the Special Meeting. For that
reason, we ask that you promptly sign, date and mail the enclosed proxy in the
return envelope provided. Shareholders who attend the Special Meeting may revoke
their proxies and vote in person. To help us prepare properly for your
attendance at the Special Meeting, we ask that you indicate on your proxy
whether you plan to attend the meeting.
By Order of the Board of Directors,
Joel E. Claybrook
Vice Chairman and CEO
Dallas, Texas
August , 2000
<PAGE> 4
10
MICRO-ASI, INC.
12655 NORTH CENTRAL EXPRESSWAY
SUITE 1000
DALLAS, TEXAS 75243
SPECIAL MEETING OF SHAREHOLDERS, AUGUST 31, 2000
This proxy statement and the accompanying notice of special meeting and proxy
are being furnished to the shareholders of Micro-ASI, Inc. (the "Company") in
connection with the solicitation of proxies by the Board of Directors of the
Company (the "Board") for use at a Special Meeting of Shareholders of the
Company (the "Special Meeting") to be held at the offices of Micro-ASI's
Technology Integration and Deployment Center, 1445 MacArthur Drive, Suite 100,
Carrollton, Texas 75007 at 10:00 am local time, and any adjournments or
postponement thereof. These proxy materials are being mailed on or about August
, 2000 to holders of record on July 21, 2000, of the Company's Common Stock,
$0.001 par value (the "Common Stock") and the Company's Preferred Stock, $.001
par value (the "Preferred Stock").
At the Special Meeting, the shareholders of the Company will be asked to (i)
consider a proposal to increase the number of shares of Common Stock reserved
for stock options available under the 1999 Stock Option Plan, an increase from
4,000,000 shares to 10,000,000 shares, (ii) to consider a proposal to adopt an
Employee Stock Purchase Plan and (iii) transact such other business as may
properly come before the Special Meeting or any adjournment thereof.
INFORMATION CONCERNING SOLICITATION AND VOTING
REVOCABILITY OF PROXIES
A proxy may be revoked by a shareholder prior to its exercise by written notice
to the Secretary of the Company, by submission of another proxy bearing a later
date or by revoking the prior proxy and voting in person at the Special Meeting.
Such notice or later proxy will not affect a vote on any matter taken prior to
the receipt thereof by the Secretary of the Company. The mere presence at the
Special Meeting of the shareholder appointing the proxy will not revoke the
appointment. If not revoked, the proxy will be voted at the Special Meeting in
accordance with the instructions indicated on the proxy by the shareholder or,
if no instructions are indicated, will be voted FOR each of the matter of
business described herein and, as to any other matter of business that may
properly be brought before the Special Meeting, in accordance with the judgment
of the person or persons voting the same.
DISCRETIONARY VOTING AUTHORITY
A proxy holder shall be allowed to use his or her discretionary voting
authority for matters raised from the floor of the Special Meeting which the
Board was not aware of within a reasonable time before sending these proxy
materials to shareholders.
EXPENSES
All expenses of the Company in connection with this solicitation will be borne
by the Company. In addition to solicitation by mail, proxies may be solicited by
directors, officers and other employees of the Company, by telephone, telegraph,
fax, telex, in person or otherwise, without additional compensation.
RECORD DATE AND VOTING SECURITIES
As of July 21, 2000, there were 22,562,961 shares of Common Stock and 8,091,300
shares of Preferred Stock outstanding. Holders of record at the close of
business on July 21, 2000, of the Company's Common Stock and Preferred Stock are
entitled to notice of, and to vote at, the Special Meeting and any adjournments
thereof. Each outstanding share of Common Stock or Preferred Stock entitles the
holder thereof to one vote with respect to each matter considered at the Special
Meeting. Each matter of business requires the presence in person or by proxy of
a
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<PAGE> 5
majority of the shares of Common Stock and Preferred Stock entitled to vote to
constitute a quorum. Abstentions may be specified on all proposals. Abstentions
will have the same effect as a vote against such proposal. Broker non-votes, if
any, will not be included in vote totals and, as such, will have no effect on
any proposal. The Company's Articles of Incorporation do not provide for
cumulative voting. Assuming the presence of a quorum at the Special Meeting, all
matters will be determined by a majority of the votes cast.
Only holders of record of Common Stock and Preferred Stock outstanding on July
21, 2000, are entitled to notice of, and to vote at, the Special Meeting.
MANAGEMENT
EXECUTIVE COMPENSATION
The following Summary Compensation Table shows cash and non-cash compensation
for the last three fiscal years paid by the Company to the Chief Executive
Officer and the four other most highly compensated executive officers.
The entire Board of Directors agreed on the salaries set forth in the Summary
Compensation Table below. These amounts were based on the fair market value of
employees considering their experience and anticipated contributions to the
Company. As of July 21,2000 there is no current public market for any securities
of Micro-ASI and until there is a public market, the Board of Directors will
determine the market value.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Securities
Underlying All Other
Name and Fiscal Salary Options/SAR's Compensation
Principal Position(7) Year ($) (1) (#)(8) ($)(2) (3)
--------------------- ------ --------- --------------- --------------
<S> <C> <C> <C> <C>
Cecil E. Smith, Jr. 1999 45,000 750,000 245,000
Chairman of the 1998 -- -- 330,000
Board (2) 1997 -- -- 135,000
Joel E. Claybrook 1999 180,000 750,000
Vice Chairman & CEO 1998 -- -- 95,000
(3) 1997 -- -- 40,000
Dr. James A. Dukowitz 1999 60,000 400,000
Executive Vice President
& Chairman of the
Executive Committee of
the Office of the Chief
Executive (4)
Scott E. Smith 1999 110,000 450,000
President (5)
Jerry Kline 1999 71,846 400,000
VP Technological
Development (6)
</TABLE>
----------
(1) Salaries shown above are from the period of January 1 through December 31
of the indicated years.
(2) Cecil E. Smith, Jr. received consulting fees and expenses in lieu of salary
until October 1, 1999. This consulting agreement ended September 30, 1999
when Mr. Smith became an employee of the Company.
(3) Joel E. Claybrook received consulting fees and expenses in lieu of salary
until December 31, 1998. This consulting agreement ended December 31, 1998
when Mr. Claybrook became an employee of the Company.
(4) Dr. Dukowitz joined the Company September 1, 1999. He deferred $45,000 of
his salary until January 2000 and the deferred amount has not been included
in the above table.
(5) Scott Smith joined the Company effective February 15, 1999.
(6) Jerry Kline joined the Company effective February 8, 1999.
(7) The above officers and Directors were granted options pursuant to the 1999
Stock Option Plan. The total options granted have been included in the
above table. Please refer to the Option Exercises and Holdings section for
further detail on the options granted.
2
<PAGE> 6
STOCK OWNERSHIP OF PRINCIPAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial ownership
of the Company's Common Stock as of July 21, 2000, by (i) each person who is
known by the Company to own beneficially more than 5% of the Common Stock or 5%
of the Preferred Stock, (ii) each director of the Company, (iii) each of the
executive officers of the Company, and (iv) all directors and executive officers
of the Company as a group.
<TABLE>
<CAPTION>
Name Title of Class Amount and Nature of Ownership Beneficial % of Class
-------------------------------------- -------------- ----------------------------------------- ----------
<S> <C> <C> <C>
Cecil E. Smith, Jr. Common 3,753,396 15.49%
(3)
12655 N. Central Expressway, Suite
1000
Dallas, Texas 75243
-------------- ----------------------------------------- ----------
Joel E. Claybrook Common 1,726,700 7.45%
(4)
12655 N. Central Expressway, Suite
1000
Dallas, Texas 75243
-------------- ----------------------------------------- ----------
Robert J. Common 1,800,000 7.98%
Hoyt
174 The Masters
Circle
Costa Mesa, CA 92627
-------------- ----------------------------------------- ----------
Dr. Meng-Sheng Lin (5) Common 1,175,000 5.18%
12655 N. Central Expressway, Suite
1000
Dallas, Texas 75243
-------------- ----------------------------------------- ----------
Dr. Myles Welborn Common 111,900 **
-------------- ----------------------------------------- ----------
James Hamner (6) Common 205,000 **
-------------- ----------------------------------------- ----------
Dr. James Dukowitz (7) Common 425,000 1.85%
-------------- ----------------------------------------- ----------
Jerry Kline (8) Common 350,000 1.53%
-------------- ----------------------------------------- ----------
Scott E. Smith (9) Common 262,500 1.15%
-------------- ----------------------------------------- ----------
Eaglestone Partners I, L.P. (10) Common 2,100,000 8.51%
400 Oceangate, Suite 1125 Preferred 3,539,943.75 43.75%
Long Beach, CA 90802
-------------- ----------------------------------------- ----------
Hare & Co. (11) Common 1,200,000 5.05%
C/O Bank of New York Securities Preferred 2,022,825 25.00%
Dept.
P.O. Box 11203
New York, NY 10249
-------------- ----------------------------------------- ----------
Signal Lake Venture Fund, L.P. (12) Common 900,000 3.84%
578 Post Rd. Post #667 Preferred 1,517,118.75 18.75%
Westport, CT 06880
-------------- ----------------------------------------- ----------
Competitive Technologies, Inc. (13) Common 300,000 1.31%
1960 Bronson Rd. Preferred 505,706.25 6.25%
Fairfield, CT 06430
-------------- ----------------------------------------- ----------
Marise Segelov (14) Common 300,000 1.31%
2166 Broadway Preferred 505,706.25 6.25%
New York, NY 10024
-------------- ----------------------------------------- ----------
All Directors and Officers as a Common 8,009,496 30.69%
Group
-------------- ----------------------------------------- ----------
</TABLE>
----------
** Denotes less than 1% ownership
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<PAGE> 7
(1) The rules of the SEC provide that, for the purposes hereof, a person is
considered the "beneficial owner" of shares with respect to which the person,
directly or indirectly, has or shares the voting or investment power,
irrespective of his or her economic interest in the shares. Unless otherwise
noted, each person identified possesses sole voting and investment power over
the shares listed, subject to community property laws.
(2) Based on 22,562,961 shares of Common Stock or 8,091,300 shares of Preferred
Stock outstanding on July 21, 2000. Shares of Common Stock subject to options
and warrants that are exercisable within 60 days of July 21, 2000, are deemed
beneficially owned by the person holding such options for the purposes of
calculating the percentage of ownership of such person but are not treated as
outstanding for the purpose of computing the percentage of any other person.
(3) Includes 175,000 Options and 1,500,000 warrants
(4) Includes 175,000 Options and 450,000 warrants
(5) Includes 125,000 Options
(6) Includes 200,000 Options
(7) Includes 400,000 Options which were granted outside the 1999 Stock Option
Plan
(8) Includes 250,000 Options of which 200,000 were granted outside the 1999
Stock Option Plan
(9) Includes 262,500 Options of which 200,000 were granted outside the 1999
Stock Option Plan
(10) Included 2,100,000 Common Stock Warrants
(11) Includes 1,200,000 Common Stock Warrants
(12) Includes 900,000 Common Stock Warrants
(13) Includes 300,000 Common Stock Warrants
(14) Includes 300,000 Common Stock Warrants
PROPOSAL ONE
PROPOSAL TO AMEND THE 1999 STOCK OPTION PLAN
THE 1999 PLAN
The Micro-ASI, Inc. 1999 Stock Option Plan (the "Option Plan") became effective
when it was approved by the shareholders at the Annual Meeting held on December
15, 1999. The Board of Directors believes that the use of long term incentives
based on the value of the common stock is helpful in attracting and retaining
qualified key executives and other key employees, non-employee directors,
independent contractors and consultants and motivating such personnel to achieve
long-range goals through providing compensation opportunities that are
competitive with those offered by other corporations similar to the Company.
Pursuant to the Option Plan, 4,000,000 shares of Common Stock are reserved for
issuance under the Option Plan. The Board of Directors has approved an increase
of 6,000,000 shares of Common Stock reserved under the Option Plan for a total
of 10,000,000 shares.
DESCRIPTION OF THE 1999 STOCK OPTION PLAN
The following description of the Option Plan is only a summary and is not the
detailed plan. A copy of the Option Plan in its entirety will be forwarded to
any shareholder upon receiving a request in writing to the Company Secretary.
Capitalized terms used and not otherwise defined in this portion of this Proxy
Statement have the respective meanings ascribed to such terms in the Option
Plan.
Pursuant to the Option Plan, the purpose of the Option Plan is to provide key
employees and others with a proprietary interest in the Company through the
granting of options, which will increase the interest of the grantee, furnish an
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<PAGE> 8
incentive to key employees, non-employee directors, independent contractors and
consultants. The Option Plan will also provide a means through which the Company
may attract qualified persons to enter into employment with the Company. As of
July 21, 2000 the Company had 30 employees, all of which are eligible under the
Option Plan.
The Option Plan is administered by the Board of Directors or a committee
designated by the Board of Directors to administer the Option Plan, which
committee is constituted in such a manner as to permit the Option Plan to comply
with Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with respect to a plan intended to qualify as a discretionary
plan. With respect to grants of options to employees, consultants or advisors
who are not directors or officers of the Company, the Option Plan is
administered by the Board of Directors or a committee designated by the Board of
Directors, which committee is constituted in such a manner as to satisfy the
legal requirements relating to the administration of a stock option plan under
applicable corporate and securities laws and the Internal Revenue Code of 1986,
as amended.
The Board has designated a Stock Option Committee (the "Committee"), which has
the authority to select employees, directors and advisors to whom stock options
are granted. Subject to limitations set forth in the Option Plan, the Committee
has the authority in its discretion to determine the persons to whom options
shall be granted and the number of shares covered by each option, to interpret
the Option Plan, to establish vesting schedules, to specify the type of
consideration to be paid upon exercise and, subject to certain restrictions, to
specify other terms of the options.
The maximum term of the options granted under the Option Plan is ten years,
except that the term of an Incentive Stock Option ("ISO") granted to an optionee
owning more than ten percent of the voting stock of the Company may not exceed
five years. Options granted under the Option Plan are in most cases
nontransferable and generally expire 90 days after the termination of the
optionee's services. In general, if an optionee is disabled or dies, such option
may be exercised up to 12 months following such disability or death.
The aggregate fair market value of the shares of Common Stock which any employee
is first eligible to purchase in any calendar year by exercise of ISOs granted
under the Option Plan and all ISO plans of the Company shall not exceed
$100,000. For this purpose, the fair market value (determined at the respective
date of grant of each option) of the stock purchasable by exercise of an ISO (or
an Installment) shall be counted against the $100,000 annual limitation for an
employee only for the calendar year such stock is first purchasable.
The option price for an ISO shall not be less than 100% of the fair market value
per share of the Common Stock, or 110% of the fair market value per share for
any employee that owns more than 10% of the voting stock of the Company on the
date the option is granted. The option price for a Nonqualified Option shall be,
as determined by the Committee, any price per share of the Common Stock that is
greater than the par value per share of the Common Stock. For purposes of the
Option Plan, fair market value of a share of Common Stock shall be the closing
price of the Common Stock for the day before the option is granted if the stock
is traded on an established securities market or if the stock is not traded, an
amount determined by the Committee in good faith using any reasonable valuation
method it deems relevant to the determination.
The Option Plan shall automatically terminate on September 5, 2009. The
Committee may not grant options under the Option Plan after that date.
The Committee may establish rules and procedures in order to satisfy any
obligation of the Company to withhold federal income taxes or other taxes with
respect to any option granted under the Option Plan. If the Common Stock is
traded in the over-the-counter market or on any securities exchange, such rules
and procedures may provide that in the case of the exercise of a Nonqualified
Option, the withholding obligation shall be satisfied by the Company withholding
shares of Common Stock otherwise issuable upon exercise of such option, in an
amount equal to the statutory prescribed minimum withholding applicable to the
ordinary income resulting from the exercise of the option.
The Company recommends ratification the amendment to the Option Plan in order to
offer key employees and others the opportunity to acquire an equity interest in
the Company, thereby aligning the interests of these persons more closely with
the long term interests of shareholders. Awards under the Option Plan may be in
the form of ISO or Nonqualified Options.
TAX STATUS OF STOCK OPTIONS
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<PAGE> 9
The Committee may provide for an option under the Option Plan to qualify either
as an ISO or as a Nonqualified Option for United States federal income tax
purposes.
ISOs. All stock options that qualify under the rules of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), will be entitled to ISO
treatment. To receive ISO treatment, an optionee must not dispose of the
acquired stock within two years after the option is granted or within one year
after exercise. In addition, the individual must have been an employee of the
Company for the entire time from the date of grant of the option until three
months (or one year if the employee is disabled) before the date of the
exercise. The requirement that the individual be an employee and the two-year
and one-year holding periods are waived in the case of death of the employee. If
all such requirements are met, no tax will be imposed upon exercise of the
option, and any gain upon sale of the acquired stock will be entitled to capital
gain treatment. The employee's gain on exercise (the excess of fair market value
at the time of exercise over the exercise price) of an ISO is a tax preference
item and, accordingly, is included in the computation of alternative minimum
taxable income.
If an employee does not meet the two-year and one-year holding requirement (a
"disqualifying disposition"), but does meet all other requirements, tax will be
imposed at the time of sale of the acquired stock, but the employee's gain on
exercise will be treated as ordinary income, rather than capital gain, and the
Company will get a corresponding deduction at the time of sale in an amount
equal to the income that the employee would have recognized on exercise of the
option. Any remaining gain on sale will be short-term or long-term capital gain,
depending on the holding period of the stock. If the amount realized on the
disqualifying disposition is less than the value at the date of exercise, the
amount includible in gross income, and the amount deductible by the Company,
will equal the excess of the amount realized on the sale or exchange over the
exercise price.
An option agreement with the Company may permit payment for stock upon the
exercise of an ISO to be made with other shares of Common Stock. In such a case,
in general, if an employee uses stock acquired pursuant to the exercise of an
ISO to acquire other stock in connection with the exercise of an ISO, it may
result in ordinary income if the stock so used has not met the minimum statutory
holding period necessary for favorable tax treatment as an ISO.
Nonqualified Options. In general, no taxable income will be recognized by the
optionee, and no deduction will be allowed to the Company, upon the grant of an
option. Upon exercise of a Nonqualified Option, an optionee will recognize
ordinary income (and the Company will be entitled to a corresponding tax
deduction if applicable withholding requirements are satisfied) in an amount
equal to the amount by which the fair market value of the shares on the exercise
date exceeds the option exercise price. Any gain or loss realized by an optionee
on disposition of such shares generally is a capital gain or loss and does not
result in any tax deduction to the Company.
The foregoing statements are based upon present federal income tax laws and
regulations are subject to change if the tax laws and regulations, or
interpretations thereof, are changed.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information regarding options granted under the
Option Plan for each of the executive officers and employees named below:
[Balance of Page Left Intentionally Blank]
6
<PAGE> 10
<TABLE>
<CAPTION>
Number of Number of
Securities % of Securities % of
Underlying Total Exercise Underlying Total Exercise
Incentive Incentive Price Non-Qualified Non-Qualified Price
Options(#) Options Per Expiration Options Options per Expiration
Name (1)(2) Granted Share($) Date (#)(3) Granted Share($) Date
---- ---------- --------- -------- ---------- ------------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cecil E. Smith, Jr 500,000 17.48% 1.10 09/06/2004 250,000 35.71% 1.00 09/6/2009
Joel E. Claybrook 500,000 17.48% 1.10 09/06/2004 250,000 35.71% 1.00 09/6/2009
Scott Smith 250,000 8.74% 1.00 09/06/2009
Jerry Kline 200,000 6.99% 1.00 09/06/2009
Executive Officers as a Group 1,450,000 50.69% 500,000 71.42%
Current Directors
Dr. Meng-Sheng Lin 500,000 17.48% 1.00 9/6/2009
James Hamner 200,000 28.57% 1.00 05/01/2000
Total Directors as a Group 500,000 17.48% 200,000 28.57%
All Others 911,000 31.83% 1.00
---------- --------- -------- ---------- ------------- ------------- ---------- ----------
Totals 2,861,000 100.00% 700,000 100.00%
</TABLE>
(1) No options have been exercised under this Plan.
(2) The ISOs are first exercisable 25% immediately upon grant, 25% after
one year, 25% after two years and 25% after three years. The exercise
price is $1.00 per share except for Messer's. Cecil E. Smith, Jr. and
Joel E. Claybrook who have an exercise price of $1.10 per share.
(3) The Nonqualified Options are first exercisable 20% immediately upon
grant, 20% after one year, 20% after two years, 20% after three years
and 20% after four years beginning in 1999 at $1.00 per share.
REQUIRED VOTE
The favorable vote of the holders of a majority of the shares of Common Stock
present and entitled to vote at the Annual Meeting in person or by proxy is
required to approve an amendment to the 1999 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE AMENDMENT TO
THE 1999 STOCK OPTION PLAN.
PROPOSAL TWO
PROPOSAL TO ADOPT AN EMPLOYEE STOCK PURCHASE PLAN
SUMMARY OF PLAN
On May 25, 2000, the Board of Directors established the Employee Stock Purchase
Plan (the "Purchase Plan"), subject to shareholder approval, pursuant to which
Offerings may be granted to eligible employees for the purchase of a maximum of
500,000 shares of Common Stock. Employees of the Company (as defined in section
2.05 of the Purchase Plan) and its designated subsidiaries as defined under
section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
and any other entity that is taxed as a corporation under Code Section
7701(a)(3) and is a member of the "affiliated group" as defined in Code Section
1504(a) are eligible to participate in the Purchase Plan. A Committee appointed
by the Board of Directors will administer the Purchase Plan. The proposed start
date of the Purchase Plan is September 1, 2000.
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<PAGE> 11
Any employee that has completed ninety days of employment and shall be employed
by the Company on the date that his or her participation in the Purchase Plan is
to become effective shall be eligible to participate in Offerings under the
Purchase Plan, which commence on or after such ninety day period has concluded.
No employee shall be granted an option to purchase Common Stock under the
Purchase Plan (i) if immediately after the grant, such employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company or
(ii) which permits his or her rights to purchase stock under all employee stock
purchase plans of the Company to accrue at a rate which exceeds $25,000 in fair
market value of the stock for each calendar year. As of July 31, 2000 the
Company had 100 employees, all of which are eligible under the Option Plan.
The proceeds from the sale of Common Stock pursuant to the exercise of options
granted under the Purchase Plan will be added to the general funds of the
Company and used for general corporate purposes. It is the intention of the
Company to have the Purchase Plan qualify as an "Employee Stock Purchase Plan"
under section 423 of the Code.
The total number of shares of Common Stock available under the Purchase Plan is
500,000 shares. If any Offering expires without the rights under the Offering
having been exercised in full, the unpurchased shares will be added to the
shares available for future Offerings.
The Company may make periodic Offerings to eligible employees, the duration of
which may be for a period of three months up to one year. The initial Offering
Commencement Date may be for a period of less than three months. Offering
Periods commencing after the initial Offering Period will commence on January 1,
April 1, July 1, or October 1. The Committee may specify the maximum number of
shares of Common Stock that may be purchased under the Offering or other
limitations as it may deem appropriate.
As used in the Purchase Plan, "Offering Commencement Date" means the January 1,
April 1, July 1, or October 1, as the case may be. "Offering Termination Date"
means the March 31, June 30, September 30 or December 31, as the case may be on
which the particular Offering terminates, and "Offering Period" means the period
from the Offering Commencement Date to the Offering Termination Date.
An eligible employee may elect to have deductions made from his or her pay on
each pay day at the rate of any specified whole percentage from 1% up to and
including 10% of his or her base pay in effect at the Offering Commencement Date
or he or she can elect to have a specific dollar amount deducted from his or her
pay, provided however, the deduction shall not be less than $30 per calendar
month. A Participant in the Purchase Plan may generally not make any separate
cash payment except for his or her payroll deductions. Prior to any Commencement
Date, a Participant may increase or decrease his or her payroll deductions
within the limits of the Purchase Plan.
On each Offering Commencement Date, a Participant shall be deemed to have been
granted an option to purchase shares of Common Stock of the Company equal to the
percentage of the employee's base pay that he or she has elected to have
withheld through payroll deductions multiplied by the employee's base pay during
the Offering Period, or the specified portion elected, divided by the purchase
price per share determined under Section 6.04, subject to the allotments, if
any, for the Offering Period.
The purchase price per share at which Common Stock may be purchased under each
Offering shall be a percentage established by the Committee prior to the
Offering Commencement Date which is from 85% to 100% of the lesser of the fair
market value of a share of Common Stock as determined as of (i) the Offering
Commencement Date or (ii) the Offering Termination Date. In determining the
purchase price, the fair market value per share of Common Stock shall be the
closing price reported, if any, on the NASDAQ Stock Market or successor exchange
for the date on which such value is being determined; provided, however, that if
the closing sales price is not reported on such date, then the closing price on
the most recently preceding date on which such price was reported shall be used.
If no trading market on NASDAQ exists, the Board of Directors or the Committee
shall determine the fair market value for this purpose.
An option shall not be transferable by the Participant to whom it has been
granted otherwise than by will or the laws of descent and distribution and shall
be exercisable, during the Participant's lifetime, only by the Participant.
Further, in the discretion of the Board, the terms of any Offering may prohibit
transfer under any circumstances and provide for cancellation of the unexercised
portion of any option upon the death of a Participant.
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<PAGE> 12
The issuance of any Common Stock is conditioned upon registration or exemption
of the Common Stock to be issued under applicable federal and state securities
laws and its listing on any applicable stock exchange. In no event shall any
Common Stock be issued prior to the effective date of any such registration,
exemption or listing application. In addition, unless and until the Purchase
Plan is approved by a proper vote of the stockholders of the Company, the
purchase price per share shall be at least 100% of the fair market value
determined thereunder.
The shares of Common Stock purchased by each Participant with respect to each
Offering will be considered to be issued and outstanding to his or her credit as
of the close of business on the Offering Termination Date. Certificates for
shares of Common Stock will be issued only in the name of the Participant unless
the Participant, or in the event of death, the Participant's designee, elects
otherwise by written notice to the Company and the Company gives prior written
consent to such election. As soon as practicable after each Offering Period,
each Participant will receive a stock certificate representing all of the shares
of Common Stock (in a whole number of shares) held in his or her account. A
Participant will not be permitted to pledge, transfer, or sell shares of Common
Stock held in his or her account until they are issued in certificate form.
Upon termination of a Participant's employment with the Company for any reason,
whether voluntary or involuntary, his or her participation in the Purchase Plan
will immediately terminate. As soon thereafter as is practicable, the
Participant will receive (i) cash in an amount equal to the balance in his or
her account as of the date of his or her termination of employment, without
interest; (ii) a stock certificate for all whole shares of Common Stock not yet
delivered out of the account; and (iii) cash equivalent to any fractional shares
of Common Stock in the account.
In the event of a dissolution or liquidation of the Company, or any merger,
consolidation, or share exchange pursuant to which the holders of Common Stock
would receive cash, securities or property from another person or entity, the
Board, at its election, may cause each outstanding option to terminate;
provided, however, that each Participant will in such event, subject to such
rules and limitations of uniform application as the Board may prescribe, be
entitled to the rights of a terminating Participant.
The Board in its sole and absolute discretion may suspend or terminate the
Purchase Plan, reconstitute the Purchase Plan in whole or in part, or amend or
revise the Purchase Plan in any respect whatsoever except that (i) no amendment
shall cause any option to fail to qualify as an option under section 423 of the
Code; (ii) without approval of the shareholders, no amendment shall increase the
number shares of Common Stock that may be sold under the Purchase Plan or make
any change in the employees or class of employees eligible to participate in the
Purchase Plan; and (iii) without the approval of a Participant, no change shall
be made in the terms of any outstanding option adverse to the interest of the
Participant. The Purchase Plan shall terminate on the date that all shares of
Common Stock authorized for sale under the Purchase Plan have been purchased,
except as otherwise extended by authorizing additional shares under the Purchase
Plan.
Except by the laws of descent and distribution, no benefit provided hereunder
will be subject to alienation, assignment, or transfer by a Participant (or by
any person entitled to such benefit pursuant to the terms of this Purchase
Plan), nor shall it be subject to attachment or other legal process of whatever
nature, and any attempted alienation, assignment, attachment, or transfer shall
be void and of no effect whatsoever and, upon any such attempt, the benefit will
terminate and be of no force or effect. During a Participant's lifetime, options
granted to the Participant will be exercisable only by the Participant. Shares
of Common Stock will be delivered only to the Participant or death beneficiary
entitled to receive the same or to the Participant's authorized legal
representative.
The Company will have the right to deduct from all payments hereunder any
federal, state, local, or employment taxes that it deems are required by law to
be withheld with respect to such payments.
The obligation of the Company to deliver shares of Common Stock or make cash
payments hereunder will be subject to all applicable laws, rules, and
regulations and to such approvals by any government agencies or regulatory
authority as may be deemed necessary or appropriate by the Committee. If shares
of Common Stock deliverable hereunder may in certain circumstances be exempt
from registration under the Securities Act of 1933, as amended, the Company may
restrict its transfer in such manner as it deems advisable to ensure such exempt
status. The Purchase Plan is intended to comply with Rule 16b-3 under the
Securities Exchange Act of 1934, as amended. Any provision inconsistent with
such Rule shall be inoperative and shall not affect the validity of the Purchase
Plan. The Purchase Plan shall be subject to any provision necessary to assure
compliance with federal and state securities laws.
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<PAGE> 13
OTHER MATTERS
As of the date of this proxy statement, the Company has no knowledge of any
business other than that described above that will be presented at the Special
Meeting. If any other business should come before the Special Meeting, it is
intended that the persons named in the enclosed proxy will have discretionary
authority to vote the shares that they represent.
You are urged to sign and return your proxy promptly in the enclosed envelope to
make certain your shares will be voted at the Special Meeting.
By Order of the Board of Directors,
Joel E. Claybrook
Vice Chairman and CEO
August , 2000
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<PAGE> 14
MICRO-ASI, INC.
PROXY
The undersigned hereby (i) acknowledges receipt of the notice dated August ,
2000, of the Special Meeting of Shareholders of Micro-ASI, Inc. (the "Company")
to be held at 10:00 am local time on Thursday, August 31, 2000 at offices of
Micro-ASI's Technology Integration and Deployment Center, 1445 MacArthur Drive,
Suite 100, Carrollton, Texas 75007 and the proxy statement in connection
therewith; and (ii) appoints JOEL E. CLAYBROOK and CECIL E. SMITH, JR. and each
of them, the undersigned's proxies with full power of substitution, for and in
the name, place and stead of the undersigned, to vote upon and act with respect
to all of the shares of Common Stock of the Company standing in the name of the
undersigned or with respect to which the undersigned is entitled to vote and
act, at the meeting and at any adjournment thereof, and the undersigned directs
that this proxy be voted as follows:
(a) Proposal to approve the amendment to the Company's 1999 Stock Option Plan
to increase the authorized number of options from 4,000,000 to 10,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(b) Proposal to adopt the Employee Stock Purchase Plan covering 500,000 shares
of the Company's Common Stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(c) In the discretion of the proxies on any other matter that may properly come
before the meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS SPECIFIED ABOVE. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY REFERRED TO ABOVE.
If more than one of the proxies named above shall be present in person or by
substitute at the meeting or any adjournment thereof, both of the proxies so
present and voting, either in person or by substitute, shall exercise all of the
proxies hereby given.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such Common Stock and hereby ratifies and confirms
all that the proxies, their substitutes, or any of them may lawfully do by
virtue hereof.
<PAGE> 15
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
[ ] I PLAN TO ATTEND THE SPECIAL MEETING.
DATED:
------------------------- ----------------------------------------
SIGNATURE OF SHAREHOLDER
TELEPHONE:
--------------------- ----------------------------------------
NAME (please print)
NUMBER OF SHARES:
-------------- ----------------------------------------
SIGNATURE OF JOINT SHAREHOLDER
(if applicable)
----------------------------------------
NAME OF JOINT SHAREHOLDER (please print)
-----------------------------------------
TITLE (if applicable)
When signing as an attorney, administrator, executor, guardian or trustee,
please add your title as such. If executed by a corporation or other entity, the
proxy should be signed by a duly authorized officer or representative of such
entity. Each joint tenant should sign the proxy.
NOTE: PLEASE MARK, SIGN, DATE AND RETURN VIA MAIL OR FACSIMILE (972-392-9639)
THIS PROXY CARD PROMPTLY TO:
MICRO-ASI, INC.
12655 N. Central Expressway
Suite 1000
Dallas, Texas 75243
