Auto-trol Technology Corporation
12500 North Washington Street
Denver, Colorado 80241-2400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Auto-trol Technology Corporation (the
"Company") will be held on Tuesday, January 25, 2000, at the Company's
headquarters, 12500 North Washington Street, Denver, Colorado, at 10:00 a.m.
Mountain Standard Time. At the meeting, the shareholders will consider and act
upon the following matters:
1. The election of directors to serve until the next annual meeting or
until their successors are duly elected and qualified.
2. The approval and adoption of a proposal to amend the Company's Special
Purpose Stock Option Plan and Incentive Stock Option Plan to increase
the number of shares of Common Stock available for grant collectively
under the Plans.
3. Such other business as may properly come before the meeting.
Only shareholders of record at the close of business on December 7, 1999,
are entitled to notice of, and to vote at, the meeting.
By Order of the Board of Directors
Allyson S. Kissell
Secretary
Denver, Colorado
December 22, 1999
It is important that all shareholders be represented at the meeting. We urge you
to sign and return the enclosed Proxy as promptly as possible, whether or not
you plan to attend the meeting. The Proxy should be returned in the enclosed
postage prepaid envelope. If you do attend the meeting, you may then withdraw
your Proxy. The Proxy may be revoked at any time prior to its exercise.
<PAGE>
Auto-trol Technology Corporation
12500 North Washington Street
Denver, Colorado 80241-2400
----------------------------------------------------------------------
Proxy Statement
For
Annual Meeting of Shareholders
To Be Held January 25, 2000
This Proxy Statement (the "Proxy Statement") is furnished to shareholders
of Auto-trol Technology Corporation (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders to be held on Tuesday, January 25, 2000, at the
Company's headquarters, 12500 North Washington Street, Denver, Colorado, at
10:00 a.m. Mountain Standard Time, and at any adjournment thereof. The
approximate mailing date of this Proxy Statement and the accompanying proxy is
December 22, 1999. ANY PROXY MAY BE REVOKED IN PERSON AT THE MEETING, EITHER BY
SUBMITTING A PROXY DATED LATER THAN THE PROXY TO BE REVOKED OR BY NOTIFYING THE
SECRETARY OF THE COMPANY IN WRITING AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
In addition to the solicitation of proxies by mail, officers and other
representatives of the Company may solicit the return of proxies by telephone,
telegraph or personal contact. The Company will bear the expense of preparing,
printing, assembling and mailing this Proxy Statement and accompanying material
to its shareholders and will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
forwarding proxy solicitation material to beneficial owners.
All references in this Proxy Statement to the Company's last fiscal year
refer to the period from October 1, 1998 to September 30, 1999.
The list of shareholders of record on December 7, 1999, will be
available for review at the Company's headquarters for ten (10) days prior to
the annual meeting.
SHAREHOLDER PROPOSALS
Subject to the rules of the Securities Exchange Act of 1934, any
shareholder who intends to submit a proposal for action at the annual meeting of
shareholders must be a record or beneficial owner of at least one percent (1%)
or $2,000 in market value of securities entitled to be voted at the meeting and
must have held such securities for at least one year. Further, the shareholder
must continue to own such securities through the date on which the meeting is
held. Currently, the 2000 Annual Meeting of Shareholders is scheduled to be held
on January 30, 2001. To be considered for inclusion in the proxy material for
the next annual meeting, proposals must be received by the Secretary of the
Company at 12500 North Washington Street, Denver, Colorado 80241-2400 on or
before September 30, 2000.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The Company's outstanding voting stock consists of Common Stock. Only
holders of Common Stock of record at the close of business on December 7, 1999
(the "Record Date") will be entitled to notice of, and to vote at, the meeting.
On the Record Date there were 29,296,757 shares of Common Stock outstanding.
Each outstanding share of Common Stock is entitled to one vote on each matter to
be acted upon at the meeting.
1
<PAGE>
A majority of the Company's outstanding voting Common Stock, represented in
person or by proxy, is necessary to constitute a quorum to take action at the
meeting. Cumulative voting is not permitted. If a quorum is present at the
meeting, the simple majority vote of shares voting is required for election of
the directors. Abstaining votes and broker non-votes will not be counted as
votes for or against a proposal, and will have no effect on the result of a
vote, although both will be counted towards the presence of a quorum.
The following table sets forth, as of November 30, 1999, information with
respect to beneficial ownership of the Company's Common Stock by each person
beneficially owning more than five percent (5%) of the outstanding shares of
such Common Stock:
- --------------------------------------------------------------------------------
Shares Percent
Beneficially of
Title of Class Name and Address Owned Class
================================================================================
Common Stock Hillman Trusts(1) 1,843,922(2) 6%
- --------------------------------------------------------------------------------
Common Stock Howard B. Hillman(1) 29,092,163(2)(3) 99%
- --------------------------------------------------------------------------------
Common Stock Venhill Limited Partnership(1) 26,578,474(4) 90%
- --------------------------------------------------------------------------------
(1) The address is c/o Howard B. Hillman, Taconic Group, 158 Main Street, New
Canaan, CT 06840.
(2) The Hillman Trusts are comprised of thirteen separate trusts holding in
aggregate 1,843,922 shares. These shares are also included in the total for
Howard B. Hillman, President, CEO and a director of the Company. Under the
terms and conditions of the Trusts, Mr. Hillman has sole voting and
investment powers for one Trust which includes 1,000 shares; shared voting
and investment powers for eleven Trusts which include 936,255 shares; and
neither voting nor investment powers for one Trust which includes 669,767
shares. Additionally, Mr. Hillman is the beneficiary and Trustee of one of
the Trusts; beneficiary of two of the Trusts; and the Trustee of ten of the
Trusts. The other Trustees and beneficiaries of the Hillman Trusts are
neither officers nor directors of the Company.
(3) Includes 669,767 shares held directly by Howard B. Hillman; 26,578,474
shares owned by Venhill Limited Partnership of which Mr. Hillman is a
general partner; and 1,843,922 shares held by the Hillman Trusts. Excludes
an aggregate of 800 shares owned by Mr. Hillman's adult children, as to
which shares Mr. Hillman disclaims beneficial ownership.
(4) Howard B. Hillman is a general partner of Venhill Limited Partnership.
2
<PAGE>
The following table sets forth, as of November 30, 1999, information with
respect to beneficial ownership of the Company's Common Stock by each director
of the Company, each of whom is a nominee for election as director, by each
named executive officer, and by the present directors and officers of the
Company as a group:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Amount and Nature Percent
of of
Title of Class Name Beneficial Ownership Class
==========================================================================================
<S> <C> <C> <C>
Common Stock Howard B. Hillman 29,092,163 (1) 99.3%
-------------------------------------------------------------------------
Major General William R. Usher, USAF (Ret.) 2,200 (2) *
-------------------------------------------------------------------------
J. Roderick Heller, III 2,500 (2) *
-------------------------------------------------------------------------
Dewayn Davis 45,160 (2) *
- ------------------------------------------------------------------------------------------
Common Stock All current directors and officers as a group
(6 persons) 29,159,715 (1) (2) 99.5%
- ------------------------------------------------------------------------------------------
</TABLE>
* Less than 1 percent.
(1) Includes 770,333 shares of Common Stock held of record by the Hillman
Trusts of which Howard B. Hillman is both a Trustee and a beneficiary;
166,922 shares of Common Stock held of record by the Hillman Trusts of
which Mr. Hillman is a Trustee but not a beneficiary and as to which he
disclaims beneficial ownership; 906,667 shares of Common Stock of which Mr.
Hillman is a grantor and neither a Trustee nor a beneficiary; 669,767
shares of Common Stock owned directly by Mr. Hillman; 26,578,474 shares
owned by Venhill Limited Partnership of which Mr. Hillman is a general
partner; and excludes an aggregate of 800 shares held by Mr. Hillman's
adult children, as to which shares Mr. Hillman disclaims beneficial
ownership.
(2) Includes stock options that will have vested by January 25, 2000.
Section 16(a) Beneficial Ownership Reporting Compliance
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 a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("Commission") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity securities
of the Company. Officers, directors, and greater than ten percent (10%)
shareholders are required by Commission regulation to furnish the Company with
copies of all Section 16(a) forms they file.
During the twelve months ended September 30, 1999, Ms. Lisa A. Jayne was
delinquent in filing a form 3 to report becoming an officer of the company.
Otherwise, to the Company's knowledge, based solely on a review of the copies of
reports furnished to the Company, the Company believes that all filings
applicable to its executive officers, directors, and ten percent (10%)
beneficial owners complied with applicable Commission regulations during the
last fiscal year.
3
<PAGE>
Performance Graph
The following graph compares the Company's, the peer group's and the
Standard & Poors' 500 yearly percentage change in cumulative total shareholder
return for the past five years, as measured by dividing (i) the sum of (A) the
cumulative amount of dividends for the measurement period, assuming dividend
reinvestment, and (B) the difference between the registrant's share price at the
end and the beginning of the measurement period; by (ii) the share price at the
beginning of the measurement period. The graph assumes that $100 was invested on
September 30, 1994 and that all dividends were reinvested.
For purposes of this Proxy Statement, the peer group, which Auto-trol
Technology Corporation considers to be its competitors, is made up of the
following four companies: Altris Software, Inc.; Documentum, Inc.; Structural
Dynamics Research Corporation; and Intergraph Corporation. This is the same peer
group that was used for comparative purposes in the Company's Proxy Statement
dated December 22, 1998.
[GRAPHIC OMITTED]
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Bylaws provide that the Board of Directors shall consist of
not fewer than three persons. In accordance with the Bylaws, three directors are
to be elected to hold office until the next annual meeting of shareholders or
until their successors are duly elected and qualified. The proxies will be
voted, unless authority to do so is withheld, in favor of the nominees listed
below, all of whom comprise the current Board of Directors of the Company, each
having served in that capacity since the dates indicated. In the event any of
the nominees shall become unavailable, the persons named as proxies may vote for
a substitute nominee or vote for fewer than three directors.
4
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
Nominees For Directors
The following table sets forth certain information regarding each nominee
for election as director of the Company:
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------
Business Experience for the Past Five Years;
Position with the Company; Year Became Director and
Name; Age Principal Occupation Other Directorships
===================================================================================================
Howard B. Hillman President of the Company, Director of the Company since 1973.
Age 65 Chief Executive Officer and President and Chief Executive Officer of
Chairman of the Board of Directors. the Company since 1985. Private
investor, Trustee and beneficiary of
certain Hillman Family Trusts. Mr.
Hillman is also a director of Public
Broadcasting System (Channel Six,
Denver, Colorado).
- ---------------------------------------------------------------------------------------------------
Major General Director of the Company. Director of the Company since 1988.
William R. Usher, October 1997 to present, self-employed
USAF (Ret.) Consultant. September 1994 through
Age 66 September 1997, Director, Business
Development, Lockheed Martin
Corporation.
- ---------------------------------------------------------------------------------------------------
J. Roderick Heller, Director of the Company. Director of the Company since 1984. 1997
III to Present, Chairman and Chief Executive
Age 62 Officer of Carnton Capital Associates.
1985 to December 1997, Chairman and
Chief Executive Officer of NHP
Incorporated. Director, WMF Group, Inc.
Director, City First Bank, N.A.
- ---------------------------------------------------------------------------------------------------
</TABLE>
There are no arrangements or understandings between any of the above-listed
directors, or any other persons, pursuant to which any of the directors have
been selected as such.
Meetings and Committees of the Board of Directors
During the Company's last fiscal year, the Board of Directors met four
times. Messrs. Hillman, Heller, and Usher were present at all meetings. The
Board of Directors has an Audit Committee and a Compensation Committee, but does
not have a nominating committee.
The Audit Committee advises the Board of Directors with respect to (i) the
selection of independent certified public accountants, who annually audit the
books and records of the Company and its consolidated subsidiaries; (ii) the
scope of such audit; (iii) the adequacy of the financial statements prepared for
publication by management and the adequacy of the audits of such statements; and
(iv) the adequacy of the financial and accounting control procedures and the
financial management of the Company. The current members are Messrs. Hillman and
Heller. The Audit Committee did not meet separately from the Board of Directors
meetings during the twelve months ended September 30, 1999.
The Compensation Committee advises the Board of Directors with respect to
executive compensation, stock options and other forms of compensation. The
current members are Messrs. Usher and Heller. The Compensation Committee met
once during the twelve months ended September 30, 1999. Messrs. Heller and Usher
attended the meeting of the Compensation Committee.
Each director who is not also an officer of the Company received $2,000 for
attending each of the scheduled meetings of the Board of Directors in fiscal
year 1999. Directors were reimbursed for travel expenses for attending the Board
Meetings.
5
<PAGE>
OFFICERS
Set forth below is a description of the present executive officers and
officers of the Company except for Mr. Hillman, President, Chief Executive
Officer and Chairman of the Board, who is described above. All officers of the
Company hold office until their successors are appointed by the Board of
Directors. There are no arrangements or understandings between any of the
officers listed below, or any other persons, pursuant to which any of the
officers have been selected as such.
Dewayn Davis - Vice President
Mr. Davis, age 43, joined the Company in 1984, initially as an Applications
Engineer. He entered the Company's sales force in 1987 and was shortly
thereafter promoted to Regional Sales Manager. In January, 1993 Mr. Davis was
promoted to Director of Western Area Field Operations, and was appointed Vice
President of the Company effective September 8, 1994.
Allyson S. Kissell - Secretary
Ms. Kissell, age 51, joined the Company in 1984, and has various managerial
responsibilities, including management of the Legal Department. Ms. Kissell was
appointed Assistant Secretary in 1987, and was appointed Secretary of the
Company effective September 16, 1992.
Lisa A. Jayne - Assistant Secretary
Ms. Jayne, age 31, joined the Company in 1990, and has held various
positions with the Human Resource Department during her employment with the
Company. In July, 1995 Ms. Jayne was promoted to Human Resource Manager, and was
appointed Assistant Secretary of the Company effective April 14, 1999.
Carol Hamline - Corporate Controller
Ms. Hamline, age 48, joined the Company in 1998, as Controller. Prior to
her employment with the Company, Ms. Hamline was Manager of Business Systems
Development Team for Ball Corporation from 1996 to 1998. Ms. Hamline was General
Accounting Supervisor for Ball Packaging Operations, of Westminster, Colorado
from 1995 to 1996, and was Corporate Controller for Bethco, Inc. of Huntsville,
Alabama from 1993 to 1994.
Ms. Valerie R. Gautreaux, resigned her position as the Company's Assistant
Secretary, effective April 14, 1999.
EXECUTIVE COMPENSATION
Report from the Company's Compensation Committee
The Compensation Committee of the Board of Directors has reviewed executive
compensation and concluded that salaries for executive officers should be based
on a combination of factors including evaluation of compensation for executive
positions within the industry, as well as the individual's past performance,
education, job responsibilities and future potential with the Company.
For its evaluation of compensation, the Committee did not rely on specific
data from specific companies within the systems integration industry, but
rather, on its broad understanding of competitive salaries for comparable
executive positions. Based on this approach, there is no direct relationship
between other companies and the broad industry "norms" used by the Committee in
its deliberations regarding Company executive compensation.
The objective of the Committee is to determine salaries that are sufficient
to attract, motivate and retain executives of outstanding ability and potential.
The Committee further attempts to establish a relationship between executive
compensation and the creation of shareholder value. These objectives are
achieved by providing a combination of cash compensation and stock option
grants. Options are granted to executives based on subjective performance
evaluation and not the attainment of specific performance goals.
All of the above factors and policies were considered in determining the
compensation of Mr. Hillman, President and Chief Executive Officer of the
Company. However, in May 1991, Mr. Hillman voluntarily lowered his salary to its
present level and has again asked the Compensation Committee not to increase his
salary this fiscal year.
6
<PAGE>
/s/ Major General William R. Usher, USAF (Ret.) Director
- -----------------------------------------------
Major General William R. Usher, USAF (Ret.)
/s/ J. Roderick Heller, III Director
- ---------------------------
J. Roderick Heller, III
The following Summary Compensation Table sets forth the salary, bonus and
other compensation earned during the last three fiscal years by Howard B.
Hillman, the Company's Chief Executive Officer, and by the other executive
officer of the Company whose aggregate compensation for that year exceeded
$100,000. No stock appreciation rights were granted to the named executive
officers for the years indicated.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
------------------------------
Annual Compensation Awards Payouts
----------------------------------------- -------------------- -------
All Restricted
Other Annual Stock Options LTIP
Name and Principal Fiscal Salary Bonus Compensation Award(s) Granted Payouts
Position Year ($) ($)(1) ($) ($) (shares) ($)
==============================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
Howard B. Hillman 1999 $ 100,000 $240 -- N/A -- N/A
President and Chief 1998 $ 100,000 $240 -- N/A -- N/A
Executive Officer 1997 $ 100,000 $240 -- N/A -- N/A
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
Dewayn Davis 1999 $ 132,590 $240 -- N/A 25,000 N/A
Vice President 1998 $ 130,000 $240 -- N/A -- N/A
1997 $ 122,991 $120 -- N/A 40,000 N/A
- ----------------------------------------------------------------------------------------------
1. This column reflects compensation to named executive officers under the
Company's 401(k) Retirement Plan.
</TABLE>
Compensation Committee Interlocks and Insider Participation
The two members of the Company's Compensation Committee, Mr. Usher and Mr.
Heller, have no interlocking relationships as defined by SEC rules and
regulations.
STOCK OPTIONS AND OTHER PLANS
The Company has an Incentive Stock Option Plan ("ISO Plan"), a Special
Purpose Stock Option Plan ("SPSO Plan") and an Employee Stock Purchase Plan
("ESP Plan"). The Board of Directors may from time to time alter, amend, suspend
or discontinue the ISO Plan, the SPSO Plan and the ESP Plan, except that the
Board may not take action which adversely affects the rights and obligations
with respect to stock options outstanding under the Plans. The Board may not,
without approval of the shareholders: (i) increase the maximum number of shares
of Common Stock that may be made subject to options under any of the Plans; (ii)
materially increase the benefits accruing to participants under any of the
Plans; or (iii) materially modify the requirements as to eligibility for
participation in any of the Plans.
As amended by the shareholders in January 1992, the ISO Plan and the SPSO
Plan options were pooled, combining the number of shares available for grant
under both Plans. In 1998, the shareholders approved an increase of shares
available for grant under the Plans to 1,000,000. A proposal to amend the ISO
Plan and SPSO Plan to increase the number of shares available for issuance under
these Plans is being submitted to shareholders for approval at the Annual
Meeting. (See Proposal 2 on Page 10.)
Any shares of Common Stock which were subject to Stock Options, but for
which such Stock Options have expired, shall again be available for purposes of
granting Stock Options under the ISO Plan and the SPSO Plan. As of September 30,
1999 a total of 145,332 options for shares of Common Stock remained available
for grant collectively under these Plans.
7
<PAGE>
Incentive Stock Option Plan
Under the ISO Plan, Key Employees are granted options to purchase Common
Stock of the Company at a per share price equal to the fair market value of a
share of Common Stock on the date that the option is granted. Almost all of the
Company's approximately 167 employees could qualify as Key Employees. The
Compensation Committee determines the optionees, the number of shares covered by
the options, and the exercise price of options granted under the ISO Plan.
Compensation Committee members are not eligible to receive options under the ISO
Plan.
A copy of the ISO Plan is available upon shareholder request.
Special Purpose Stock Option Plan
The SPSO Plan was adopted in 1981, approved by the shareholders in 1982,
revised in 1994, 1995 and revised again in 1998. Under the SPSO Plan, options
are granted at the fair market value of the shares on the date of grant. The
Compensation Committee determines the optionees, the number of shares covered by
the options, and the exercise price of the options granted under the Plan. The
options granted and to be granted under the SPSO Plan are not "incentive" stock
options which meet the requirements of Section 422A of the Internal Revenue Code
of 1986, as amended. Compensation Committee members are eligible to receive
options under the SPSO Plan.
A copy of the SPSO Plan is available upon shareholder request.
Option Reporting Requirements
The following Option Grants Table sets forth options to purchase Common
Stock granted from October 1, 1998 through September 30, 1999 under the ISO Plan
and the SPSO Plan, to the named executive officers referred to in the Summary
Compensation Table who were granted stock options during that period.
<TABLE>
<CAPTION>
Option Grants Table*
Potential Realizable Value
at Assumed Annual Rates
of Stock Price
Appreciation for Option
Term
--------------------------
Number of
Securities
Underlying % of Total
Options Options Granted Exercise
Granted to Employees in Price Expiration 5% 10%
Name ($)/sh(1) Fiscal Year 1999 ($)/sh(1) Date ($)/sh(1) ($)/sh(1)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Dewayn Davis 25,000 4.24 $ .375 8/18/09 $5,896 $14,942
- ---------------------------------------------------------------------------------------------
* SEC regulations require disclosure of stock appreciation rights ("SARs")
issued; however, Auto-trol Technology Corporation has not granted any SARs.
(1) Actual gains on exercise, if any, are dependent upon the future performance
of the Company's Common Stock.
8
</TABLE>
<PAGE>
Under either the ISO Plan or the SPSO Plan, options become exercisable in five
cumulative annual installments of twenty percent (20%) per year, and remain
exercisable until the option expires. A change of ownership of the Company may
accelerate the vesting schedule of the options. An unexercised option generally
expires on the tenth anniversary of the date on which it was granted, or thirty
(30) days after termination of the employment, or six months after the death or
disability, of the optionee. The exercise price on the date of grant may be paid
either in cash or at the discretion of the Compensation Committee by delivery of
shares of the Company's Common Stock previously purchased, valued at the market
price as of the date such shares are tendered to the Company. The Compensation
Committee may, in its discretion, establish provisions for the exercise of stock
options different from those described in this paragraph. No named executive
officer exercised any stock options in fiscal year 1999.
The following Aggregated Option Exercises and Fiscal Year End Option Value
Table sets forth the options held by the named executive officers at the end of
the last fiscal year.
<TABLE>
<CAPTION>
Aggregated Option Exercises and Fiscal Year End Option Value Table
- --------------------------------------------------------------------------------------------------------
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Money Options at Fiscal
Options at Fiscal Year End Year End ($)
Shares Acquired Value -------------------------- ----------------------------
Name on Exercise Realized Vested Unexercisable Vested Unexercisable
========================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Howard B. Hillman -- -- -- -- $ -- $ --
- --------------------------------------------------------------------------------------------------------
Dewayn Davis -- -- 30,000 70,000 $90,000 $144,375
- --------------------------------------------------------------------------------------------------------
</TABLE>
Employee Stock Purchase Plan
The Company's Employee Stock Purchase Plan ("ESP Plan") became effective in
1980, and is administered by two members of the Board of Directors (the
"Committee"). Almost all full-time employees who have been with the Company for
at least six months and who work seventeen and one-half (17 1/2) hours per week
are entitled to participate in the ESP Plan. The purchase period for the ESP
Plan begins on March 1 and ends October 31, for each calendar year. All
employees who wish to participate in the ESP Plan must re-enroll at the
beginning of each purchase period.
An employee may purchase stock equal to the lesser of ten percent (10%) of
his annual salary, or the number of shares authorized by the Committee. The ESP
Plan allows employees to purchase Common Stock at the lesser of either full
market price, or at a five percent (5%) discount of the fair market price of the
stock at the beginning of the purchase period, or at a five percent (5%)
discount of the fair market price when the stock is purchased.
No shares of Common Stock were acquired under the ESP Plan from October 1,
1998 through September 30, 1999 by the named executive officers. During fiscal
year 1999 an aggregate of 3,848 shares were purchased by employees of the
Company pursuant to the ESP Plan.
A copy of the ESP Plan is available upon shareholder request.
9
<PAGE>
Retirement Savings Plan
The Company's Retirement Savings Plan (the "Retirement Plan") is a cash or
deferred profit-sharing plan designed to comply with the requirements of Section
401(a) and 401(k) of the Internal Revenue Code of 1986, as amended. All
employees of the Company may participate in the Retirement Plan, provided that
they have six months of service with the Company. The Retirement Plan is
administered by a committee appointed by the Board of Directors.
Funds of the Plan are held, invested and administered by an independent
company. Plan funds may not be invested in Common Stock of the Company.
Under the Plan, employees may contribute an amount equal to up to twenty
percent (20%) of their compensation per pay period, subject to statutory limits,
to a tax deferral account. The percentage of compensation that may be
contributed by the highly compensated employees under the Internal Revenue Code
depends on the average percentage of compensation contributed by the non-highly
compensated employees.
The Company will contribute, to the employee's account, an amount equal to
the employee's contribution, up to ten dollars ($10) per pay period. The value
of an employee's account is payable to the employee or the employee's
beneficiary upon the employee's retirement, voluntary or involuntary termination
of employment, death, or disability. Prior to such time, withdrawals may only be
made for financial hardships as defined by the Internal Revenue Code and
Regulations.
The Board of Directors may, in its discretion, terminate the Retirement
Plan at any time, in whole or in part. Upon such termination, the Retirement
Plan provides for the distribution of the assets of the fund for the benefit of
its participants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal year 1999 the Company borrowed $7,925,000 from the Venhill
Limited Partnership ("Venhill"), in which Mr. Hillman, the general partner, has
voting and investment powers. In December 1998 the Board of Directors approved
the conversion of $2,000,000 of the debt to Venhill for 3,200,00 shares of
Common Stock at a conversion price of $0.625 per share. In May 1999 the Board of
Directors approved the conversion of $2,000,000 of the debt to Venhill for
3,200,000 shares of Common Stock at a conversion price of $0.625 per share. In
August 1999 the Board of Directors approved the conversion of $4,000,000 of the
debt to Venhill for shares of Common Stock at a conversion price of $.50 per
share. The price per share for each conversion approximates the market bid price
at the date of conversion. The Company's related party debt activity for the
fiscal year ending September 30, 1999 was as follows:
Note payable balance as of October 1, 1998 $ 4,125,000
Additional amount borrowed 7,925,000
Amount paid 0
Amount converted to Common Stock by Venhill (8,000,000)
-----------
Note payable balance as of September 30, 1999 $ 4,050,000
===========
The outstanding Venhill notes are payable October 1, 2000 and bear interest
at ten percent (10%). Interest payable relating to this debt was approximately
$531,824 as of September 30, 1999, of which all is due to Venhill.
10
<PAGE>
PROPOSAL 2. APPROVAL TO AMEND THE COMPANY'S
OPTION PLANS
Amendment to Increase the Number of Shares Available for Grant Under the
Company's Stock Option Plans
The shareholders will be asked to approve a proposal to amend the Company's
Special Purpose Stock Option Plan and Incentive Stock Option Plan ("the Plans")
to increase the number of shares of Common Stock collectively available for
grant under the Plans. The amendments, if approved, would provide a maximum of
2,000,000 shares of Common Stock available for grant collectively under the
Plans. (See Exhibit A on Page 13.)
The Company's Special Purpose Stock Option Plan Section 5.1 will be amended
to read as follows:
5.1 Maximum Number
------------------
The maximum, aggregate number of shares of Common Stock that may be
made subject to Stock Options granted under the Plan shall be two
million (2,000,000) under this Plan and the Company's Incentive Stock
Option Plan, as determined from time to time to be appropriate by the
Compensation Committee. In no event shall the total amount of shares
for which options are granted under both Plans exceed 2,000,000
shares. If any shares of Common Stock subject to Stock Options are not
purchased or otherwise paid for before such Stock Options expire, such
shares may again be made available for Stock Option grant.
The Company's Incentive Stock Option Plan contains the same section 5.1
which will be amended to read as follows:
5.1 Maximum Number
------------------
The maximum, aggregate number of shares of Common Stock that may be
made subject to Stock Options granted under the Plan shall be two
million (2,000,000) under this Plan and the Company's Special Purpose
Stock Option Plan, as determined from time to time to be appropriate
by the Compensation Committee. In no event shall the total amount of
shares for which options are granted under both Plans exceed 2,000,000
shares. If any shares of Common Stock subject to Stock Options are not
purchased or otherwise paid for before such Stock Options expire, such
shares may again be made available for Stock Option grant.
Outstanding Option Grants
Background
The Company has a Special Purpose Stock Option Plan and an Incentive Stock
Option Plan (the "Plans"), which provide for the grant of Stock Options to Key
Employees and members of the Board of Directors in order to advance the
interests of the Company and its participating subsidiaries through the
motivation, attraction and retention of Board members and Key Employees.
Reason for the Action
As of September 30, 1999, of the 1,000,000 authorized shares of common
stock available for grant under the Special Purpose Stock Option Plan and the
Incentive Stock Option Plan collectively, there were 145,332 shares of Common
Stock remaining available for grant. The number of shares remaining available
for grant under the Plans is insufficient to continue to meet the goals of the
Plans.
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Board Recommendation
Based on the foregoing consideration, the Board of Directors approved an
amendment to the Company's Special Purpose Stock Option Plan and Incentive Stock
Option Plan to increase the number of shares available for grant collectively
under the Plans.
The Board of Directors unanimously recommends that the shareholders of the
Company vote FOR the proposal.
Vote Required for Approval of the Proposal to Amend the Company's Special
Purpose Stock Option Plan and Incentive Stock Option Plan to Increase the Number
of Shares of Common Stock Available for Grant Collectively Under the Plans.
The shareholders will be asked to approve the proposal to amend the
Company's Incentive Stock Option Plan and Special Purpose Stock Option Plan, to
increase the number of shares collectively available for grant under the Plans,
at the Annual Meeting of Shareholders on January 25, 2000.
The affirmative vote of the majority of the shares entitled to vote,
represented in person or by proxy, will be necessary to approve the proposal.
Approval is assured since the Hillman entities intend to vote in favor of the
proposal.
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OTHER MATTERS
The items discussed above are the only items of business, other than
routine procedural matters, which management intends to present or is informed
that others intend to present, for action as to which proxies received or
presented at the meeting are to be used. However, if other matters are properly
presented at the meeting, proxies named by the Board of Directors will vote the
shares represented by them in accordance with the recommendations of the Board
of Directors of the Company.
RELATIONSHIPS WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company retained Gelfond Hochstadt Pangburn & Co., as its independent
certified public accountants effective 1999, and they have been selected to
continue in such capacity for the current fiscal year.
Representatives of Gelfond Hochstadt Pangburn & Co., are expected to attend
the Annual Meeting, will have an opportunity to make a statement if they desire
to do so, and are expected to be available to respond to appropriate questions.
FINANCIAL STATEMENTS
Consolidated financial statements for the Company are included in Auto-trol
Technology Corporation's Annual Report on Form 10-K, which has been filed with
the Securities and Exchange Commission. A copy of this Report may be obtained
without charge upon written request directed to Ms. Allyson S. Kissell,
Secretary, 12500 North Washington Street, Denver, Colorado 80241-2400.
By Order of the Board of Directors
Allyson S. Kissell
Secretary
Denver, Colorado
December 22, 1999
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EXHIBIT A
PROPOSED AMENDMENTS TO
AUTO-TROL TECHNOLOGY CORPORATION
SPECIAL PURPOSE STOCK OPTION AND INCENTIVE STOCK OPTION PLANS
Section 5.1 of the Company's Special Purpose Stock Option Plan will be
amended to read as follows:
"5.1 Maximum Number. The maximum, aggregate number of shares of Common
Stock that may be made subject to Stock Options granted under the Plan shall be
one million (1,000,000) (to be removed and replaced with:) two million
(2,000,000) under this Plan and the Company's Incentive Stock Option Plan, as
determined from time to time to be appropriate by the Compensation Committee. In
no event shall the total amount of shares for which options are granted under
both Plans exceed 1,000,000 (to be removed and replaced with:) 2,000,000 shares.
If any shares of Common Stock subject to Stock Options are not purchased or
otherwise paid for before such Stock Options expire, such shares may again be
made available for Stock Option grant."
Section 5.1 of the Company's Incentive Stock Option Plan will be amended to
read as follows:
"5.1 Maximum Number. The maximum, aggregate number of shares of Common
Stock that may be made subject to Stock Options granted under the Plan shall be
one million (1,000,000) (to be removed and replaced with:) two million
(2,000,000) under this Plan and the Company's Special Purpose Stock Option Plan,
as determined from time to time to be appropriate by the Compensation Committee.
In no event shall the total amount of shares for which options are granted under
both Plans exceed 1,000,000 (to be removed and replaced with:) 2,000,000 shares.
If any shares of Common Stock subject to Stock Options are not purchased or
otherwise paid for before such Stock Options expire, such shares may again be
made available for Stock Option grant."
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