<PAGE>
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
MICRO GENERAL CORPORATION
- --------------------------------------------------------------------------------
(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] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] 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:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
MICRO GENERAL CORPORATION
1740 EAST WILSHIRE AVENUE
SANTA ANA, CALIFORNIA 92705
(714) 667-0557
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 8, 1995
May 8, 1995
To the Stockholders of
Micro General Corporation
The Annual Meeting of Stockholders of Micro General Corporation, a Delaware
corporation (the "Company"), will be held at the Company's headquarters, 1740
E. Wilshire Ave., Santa Ana, California, on June 8, 1995, at 10 A.M., local
time, for the following purposes:
1. To elect a board of five (5) directors, with each director so elected to
hold office until the next Annual Meeting or until his successor has
been elected and qualified or until his earlier death, resignation, or
removal.
2. To approve the Company's 1995 Stock Option Plan.
3. To transact such other business as may properly come before the Annual
Meeting and any continuation or adjournment thereof.
The Board of Directors has fixed May 2, 1995 as the record date for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, and only stockholders of record at the close of business on that date
will be entitled to vote at the Annual Meeting.
All stockholders are cordially invited to attend the Annual Meeting in person.
YOU ARE URGED TO PROMPTLY COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY IN
THE ACCOMPANYING PRE-ADDRESSED, ENVELOPE. Your proxy will not be used if you are
present at the Annual Meeting and desire to vote your shares personally.
By order of the Board of Directors,
/s/ Linda I. Morton
Linda I. Morton
Corporate Secretary
<PAGE>
MICRO GENERAL CORPORATION
----------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 8, 1995
----------------
This Proxy Statement is being furnished to stockholders of Micro General
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Company's Board of Directors for use at the
Annual Meeting of Stockholders of the Company to be held at the Company's
headquarters, 1740 E. Wilshire Avenue., Santa Ana, California, on June 8, 1995,
at 10 A.M., local time, and at any continuation or adjournment thereof.
This proxy statement, and the accompanying Notice of Annual Meeting and proxy
card, are first being mailed to stockholders on or about May 8, 1995. A copy of
the Company's Annual Report to Stockholders for the fiscal year ended December
31, 1994, which contains audited financial statements, is concurrently being
mailed to all stockholders of record on May 2, 1995.
The Company's corporate office is located at 1740 E. Wilshire Ave., Santa
Ana, California 92705. The Company's phone number is 714-667-0557.
VOTING RIGHTS
As of May 2, 1995, the record date for the determination of the stockholders
of the Company entitled to notice of and to vote at the Annual Meeting, there
were 1,948,166 shares of the Company's Common Stock outstanding. Each share
entitles the holder to one vote on each matter to come before the Annual
Meeting, except that stockholders are entitled to cumulative voting rights in
the election of directors. Cumulative voting rights entitled a stockholder to
give one nominee that number of votes equal to the number of directors to be
elected multiplied by the number of shares owned by him or her, or to
distribute such number of votes among two or more nominees in such proportion
as the stockholder may choose. The five nominees receiving the highest number
of votes at the Annual Meeting will be elected. In order for one or all
stockholders to cumulate votes, one stockholder must give notice to the
Secretary prior to the voting at the Annual Meeting of his or her intention to
cumulate his or her votes. In the event that anyone other than the five
nominees listed below should be nominated for election as a director, the
persons named in the proxy will have authority, to be exercised in their
discretion, to vote cumulatively for less than all the nominees.
Properly executed and returned proxies, unless revoked, will be voted as
directed by the stockholder or, in the absence of such direction, by the
persons named therein FOR the election of the 5 director nominees listed below.
As to any other business which may properly come before the Annual Meeting, the
proxy holders will vote in accordance with their best judgment. A proxy may be
revoked at any time before it is voted by delivery of written notice of
revocation to the Secretary of the Company or by delivery of a subsequently
dated proxy, or by attendance at the Annual Meeting and voting in person.
Attendance at the Annual Meeting without also voting will not in and of itself
constitute the revocation of a proxy.
The cost of soliciting proxies will be borne by the Company. It is expected
that proxies will be solicited exclusively by mail; however, if it should
appear desirable to do so, directors, officers and employees of the Company may
communicate with stockholders, banks, brokerage houses, nominees and others by
telephone, telegraph, or in person, to request that proxies be furnished.
1
<PAGE>
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of May 2, 1995, by (I) each of the
current directors of the Company, (ii) by each person known to the Company to
be the beneficial owner of more than 5% of the outstanding Common Stock, and
(iii) all current directors and executive officers of the Company as a group.
Except as may be indicated in the footnotes to the table, each of such persons
has the sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, subject to applicable community
property laws.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF OUTSTANDING
NAME AND ADDRESS BENEFICIAL OWNERSHIP COMMON
OF BENEFICIAL OWNER OF COMMON STOCK(1) STOCK(2)
------------------- -------------------- -----------
<S> <C> <C>
Mr. Thomas E. Pistilli................... 3,334 0.0*
1740 E. Wilshire Ave.
Santa Ana, CA 92705
Fidelity National Financial, Inc. ....... 578,718(1) 29.7
17911 Von Karman Ave., Suite #510
Irvine, CA 92714
Mr. William P. Foley, II. ............... 578,718(1) 29.7
17911 Von Karman Ave., Suite #510
Irvine, CA 92714
Mr. Carl A. Strunk....................... 578,718(1) 29.7
17911 Von Karman Ave., Suite #510
Irvine, CA 92714
Richard H. Pickup........................ 197,800 10.2
500 Newport Center Dr. #550
Newport Beach, CA 92660
Ronald E. Moran & Aldeen E. ............. 96,800 5.0
Moran TR UA 07-06-79 Morgan
Family Trust
18600 Hawthorne Blvd.
Torrance, CA 90504
All Officers and Directors
as a Group (11 persons)................. 588,052(2) 30.2
</TABLE>
- --------
* Represents less than 1%.
(1) Represents shares held of record by Fidelity National Financial, Inc.
Messrs. Foley and Strunk are the Chief Executive Officer and Chief
Financial Officer respectively of Fidelity National Financial Inc.
(2) Includes an aggregate of 9,334 shares which are not outstanding but which
may be acquired on exercise of options held by officers and directors of
the Company. Does not include an aggregate of 141,166 additional shares
covered by stock options which are not currently, and within sixty days,
will not be exercisable.
ELECTION OF DIRECTORS
PROPOSAL 1
NOMINEES
The Company's current Board of Directors has nominated five (5) individuals,
Messrs. John J. Cahill, William P. Foley II, George E. Olenik, Thomas E.
Pistilli, and Carl A. Strunk for election as directors of the Company at the
Annual Meeting, each to serve as such until the next annual meeting of the
Company's stockholders and until their respective successors are elected and
qualified. While the Company's Board of Directors has no reason to believe that
any nominee will be unavailable to serve as a director of the Company, the
proxies solicited hereby will be voted for such other persons as shall be
designated by the Company's Board of Directors should any nominee become
unavailable to serve.
2
<PAGE>
Certain information concerning the five persons to be nominated at the Annual
Meeting by the Company's Board of Directors for election as directors of the
Company for the ensuing year is set forth below:
<TABLE>
<CAPTION>
NOMINEE PRINCIPAL OCCUPATION AGE
------- -------------------- ---
<C> <S> <C>
John J. Cahill Independent Consultant 62
William P. Foley, II Chairman of the Board and 50
Chief Executive Officer of
Fidelity National Financial, Inc.
George E. Olenik President and Chief Executive 63
Officer of Pick Systems
Thomas E. Pistilli President, Chief Executive Officer, 52
Chief Financial Officer and
Director of the Company
Carl A. Strunk Executive Vice President, 57
Chief Financial Officer and Treasurer
of Fidelity National Financial, Inc.
</TABLE>
JOHN J. CAHILL
Mr. Cahill is serving as a director of Dataram Corporation. He served as
President and CEO of Rockaway Corporation (a New York Stock Excange company
prior to its acquistion by ASCOM/Hasler) from 1974 to 1989. Mr. Cahill is a
Certified Public Accountant. Mr. Cahill is a new director to the Board serving
since February 1995.
WILLIAM P. FOLEY, II
Mr. Foley has served as a director of the company since June 1994. He is the
Chairman of the Board and Chief Executive Officer of Fidelity National
Financial, Inc. since its formation and of Fidelity National Title Insurance
Company ("Fidelity Title") from 1984 through December 1994. During this time,
Mr. Foley has also served for a year and a half as the President and a director
of Land Resources Corporation, a Pennsylvania corporation, engaged in
residential and commercial real estate investment and development and a former
affiliate of Fidelity Title. Mr. Foley is also currently serving as the
Chairman of the Board and Chief Executive Officer of CKE Enterprises, Inc., and
is a director of Holly Residential Properties Inc.
GEORGE E. OLENIK
Mr. Olenik has served as a director of the Company since December 1989. Mr.
Olenik is currently the CEO of Pick Systems Inc., Irvine, California. Prior to
joining Pick Systems Inc. he served as an analyst consultant for Inco Venture
Capital Management. He formerly served as President and board member of Micro
Five Corp., Costa Mesa, California.
THOMAS E. PISTILLI
Mr. Pistilli has served as the President, Chief Executive Officer, Chief
Financial Officer, and Director since November 1994. Prior to joining the
Company Mr. Pistilli served as a management consultant to the Company for
approximately two years. Mr. Pistilli is the former President and CEO of
International Mailing Systems, Inc. (Ascom/Hasler), Shelton Connecticut, where
he served in that capacity for 11 years. Mr. Pistilli is a new director to the
Board serving since November 1994.
CARL A. STRUNK
Mr. Strunk has served as a director of the Company since June 1994. Mr.
Strunk joined Fidelity Title in February 1992 as Executive Vice President. He
was named Executive Vice President and Chief Financial Officer of Fidelity
National Financial, Inc. in March 1992. Prior to his employment with Fidelity
National Financial, Inc., Mr. Strunk was President of Land Resources
Corporation from 1986 to 1991. Mr. Strunk is a Certified Public Accountant. He
is also currently serving as a director of Pac Rim Holding Corporation.
3
<PAGE>
STRUCTURE AND FUNCTION OF THE BOARD OF DIRECTORS
During the last fiscal year, the Company's Board of Directors held a total of
4 regular and special meetings or otherwise took action by written consent. The
Board of Directors has no separate nominating or compensation committees, but
does have Audit and Stock Option Committees. The Audit Committee consults with
the Company's independent auditors concerning their engagement and audit plan,
and thereafter concerning the auditor's report and management letter. The Audit
Committee, with the assistance of the independent auditors, also monitors the
adequacy of the Company's internal accounting controls. Messrs. Cahill, Foley,
Olenik and Strunk, none of whom is an employee of the Company, are the current
members of the Audit Committee. During the last fiscal year, the Audit
Committee held 1 meeting. The Stock Option Committee is appointed by the Board
of Directors. During the last fiscal year, each of the directors attended in
excess of 75% of each of the meetings of the Board and each committee, if any,
of which he was a member.
KEY EMPLOYEES
In addition to Mr. Pistilli, the Company has 5 additional key employees
Michael H. Hilford, John J. Horbal, John M. Lyons, Linda I. Morton and Michael
F. Parrilli.
Mr. Hilford joined the Company as Vice President-Engineering in October 1987.
For three years prior to joining the Company, Mr. Hilford organized a fault
tolerant data base company, Safe-Data Systems, and was one of the founding
mangers of Triconex, a fault tolerant process control computer company. He was
a Hardware Engineer Manager and acting Vice President-Engineer at Computer
Automation between 1981 and 1983.
Mr. Horbal joined the Company as Vice President-Research & Development in
January 1995. Prior to joining the Company, Mr. Horbal was with ASCOM/HASLER
and Better Packages, Shelton, Connecticut, for 25 years serving as Director of
Engineering, Director of Research and Development, and Chief Engineer.
Mr. Lyons joined the Company as Vice President-Manufacturing in May 1990.
Before joining the company Mr. Lyons was with Western Digital Corporation for
ten years serving in various positions. His most recent position was that of
Director of Material for the Storage Business Unit (board products).
Ms. Morton was elected as Corporate Secretary in June 1991. She joined the
Company in September 1983 and has served in various management accounting
positions. She is currently serving as Controller of the Company.
Mr. Parrilli was elected as Vice President-Sales and Marketing in November
1994. He joined the Company in February 1987 and has served as National Sales
Manager--NOMDA and Southeast Regional Sales Manager.
4
<PAGE>
REPORT OF THE BOARD OF DIRECTORS ON ANNUAL COMPENSATION
The Board of Directors is composed of outside directors, with the exception
of the CEO, and is responsible for setting and administering the policies which
govern both annual compensation and stock ownership programs.
The annual compensation programs of the Company are based on performance.
Micro General's employee annual compensation is comprised of a base salary
coupled with a management bonus and stock options the amounts of which are
determined based on the achievement of specific goals.
The Company adopted a management bonus plan for fiscal year 1994 which
provided for bonuses in the form of cash to be paid to officers and other key
employees of the Company based upon the fiscal year 1994 performance of the
Company and each participant's individual performance. The Board determined
that no management bonuses were to be paid for fiscal 1994.
MICRO GENERAL CORPORATION
Board of Directors
April 28, 1995
John J. Cahill
William P. Foley II
Thomas E. Pistilli
George E. Olenik
Carl A. Strunk
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
CASH COMPENSATION
The following table sets forth certain information concerning the cash
renumeration paid by the Company to the CEO for services rendered during the
three most recent fiscal years. No other executive officers of the Company
received cash compensation in excess of $100,000 during fiscal year 1994.
<TABLE>
<CAPTION>
NAME AND PRINCIPAL FISCAL OTHER
POSITION YEAR SALARY BONUSES COMPENSATION TOTAL
------------------ ------ -------- ------- ------------ --------
<S> <C> <C> <C> <C> <C>
George D. O'Leary......... 1994(1) $125,186 $ -0- $4,500 $129,686
President & Chief 1993 125,000 10,800 5,400 141,200
Executive Officer 1992 127,404(2) 5,000 5,400 137,804
Thomas E. Pistilli........ 1994 18,025(3) -0- 900 18,925
President & Chief
Executive Officer
</TABLE>
- --------
(1) Mr. O'Leary left the Company effective November 8, 1994.
(2) 53 week fiscal year
(3) Mr. Pistilli was appointed President & Chief Executive Officer on November
8, 1994. Mr. Pistilli's earnings are pro-rated for the period of November
8, 1994 to December 31, 1994, based on an annual salary of $140,000.
The Company currently pays directors' fees of $3,000 per meeting to all non-
employee directors for attending board meetings.
STOCK PERFORMANCE
Pursuant to recent SEC regulations, listed on the next page is the
performance of the cumulative total return to shareholders (stock price
appreciation) during the previous 5 years in comparison to returns on the
NASDAQ Stock market index and Nasdaq Computer Manufacturers Stock index.
5
<PAGE>
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH FOR
MICRO GENERAL CORPORATION
Prepared by the Center for Research in Security Prices
Produced on 02/17/95 including data to 12/30/94
<CAPTION>
MICRO NASDAQ NASDAQ
Measurement period GENERAL STOCK COMPUTER
(Fiscal year Covered) CORPORATION MARKET MANUFACTURERS
- --------------------- ----------- ------ -------------
<S> <C> <C> <C>
12/29/89 100.0 100.0 100.0
12/31/90 62.5 84.9 106.5
12/31/91 78.1 136.3 149.1
12/31/92 56.3 158.6 200.4
12/31/93 80.0 180.9 189.9
12/31/94 85.0 176.9 208.6
</TABLE>
6
<PAGE>
STOCK OPTION PLANS
In October 1981, the Company established its Incentive Stock Option Plan (the
"ISO Plan"), which was approved by the Company's shareholders at the July 7,
1982 annual meeting of shareholders and amended and restated by the Company's
shareholders on August 23, 1983, May 22, 1986. On June 18, 1992 at the annual
meeting of shareholders the 1981 ISO Plan was amended and restated and became
known as the 1991 ISO Plan. The ISO Plan provides for the granting of
"incentive stock options" (within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended) to employees of the Company and is
administered by the Stock Option Committee (the "Option Committee"), which is
appointed by the Board. The purpose of the ISO Plan is to provide employees
with additional incentive by offering them a greater interest in the continued
success of the Company through increased stock ownership. The ISO Plan consists
of 220,000 authorized shares of Common Stock of the Company and will terminate
on October 7, 2001 by its terms. Each option terminates on the fifth
anniversary of its grant or at such earlier time as the Option Committee may
determine. The Option Committee makes recommendations to the Board, for its
approval, as to whom options are granted, the number of shares covered by each
option, the time or times at which such options are granted and exercisable and
the purchase price of Common Stock covered by the option (which is not less
than the fair market value of such stock on the date of grant of such option).
The option holder must remain in the continuous employ of the Company from the
date of the grant to and including the date of exercise or all or a portion of
the options granted, and no option is exercisable more than three months after
termination of an optionee's employment with the Company unless termination of
employment occurs by reason of disability or death.
As of March 31, 1995, there were options outstanding under the ISO Plan in
respect of an aggregate of 160,000 shares of Common Stock with an average
exercise price per share of $2.14 and there were 20 participants in the ISO
Plan.
OPTION GRANT TABLE
OPTIONS GRANTED IN CALENDAR YEAR 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZED
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ----------------------------------------------------------------------- --------------------
(A) (B) (C) (D) (E) (F) (G)
% OF TOTAL EXERCISE
OPTIONS OPTIONS GRANTED OR BASE
GRANTED(#) TO EMPLOYEES IN PRICE EXPIRATION
NAME (A)(B)(C) CALENDAR YEAR ($/SH) DATE 5% ($) 10% ($)
---- ---------- --------------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
T. Pistilli............. -0- -0- $0.00 n/a $0.00 $0.00
</TABLE>
- --------
(A) All shares were granted under the Company's Incentive Stock Option Plan
which is administered by the Company's Stock Option Committee.
(B) Options are exercisable starting 12 months after the grant date with 1/3 of
the shares covered thereby becoming exercisable at that time and with an
additional 1/3 of the option shares becoming exercisable on each successive
anniversary date, with full vesting occurring on the third anniversary
date. Any unaccrued options terminate when the grantee's relationship with
the Company is terminated for any reason.
(C) The options have an exercise term of 4 years, subject to earlier
termination in certain events related to termination of employment.
7
<PAGE>
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATE OPTION EXERCISES IN CALENDAR YEAR 1994
AND CALENDAR YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES 12/31/94 OPTIONS AT 12/31/94
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($)(A) UNEXERCISABLE UNEXERCISABLE
---- ------------ --------------- ------------- --------------------
<S> <C> <C> <C> <C>
George D. O'Leary....... -0- -0- 82,000/64,000 $78,375/$33,000
</TABLE>
- --------
(A) Market Value of shares acquired at exercise date minus the exercise price
of options.
APPROVAL OF 1995 STOCK OPTION PLAN
PROPOSAL 2
DESCRIPTION OF THE 1995 STOCK OPTION PLAN.
Under the Company's existing 1991 Stock Option Plan, no shares of Common
Stock remain available for the grant of options. See "Compensation of Executive
Officers and Directors--Stock Option Plans". The Company's Board of Directors
believes it to be in the best interests of the Company and its stockholders to
increase the number of shares available for the grant of options to provide
incentives to officers and other key employees of the Company to remain with
and increase their efforts on behalf of the Company, and to enable the
Company's management to grant options to non-employee directors and consultants
expected to provide significant services to the Company. Accordingly, the 1995
Stock Option Plan (the "1995 Plan") was unanimously adopted by the Company's
Board of Directors on February 9, 1995, and is being submitted to the Company's
stockholders at the Annual Meeting for their approval.
Subject to typical anti-dilution provisions for stock splits, stock
dividends, and the like, the 1995 Plan authorizes the grant of options to
purchase an aggregate of up to 200,000 additional shares of the Company's
Common Stock. As of March 31, 1995, the aggregate market value of these 200,000
shares of Common Stock was $500,000, based upon the closing sales prices of the
Common Stock on that date, as reported by NASDAQ. If an option granted under
the 1995 Plan expires or terminates, the shares subject to any unexercised
portion of that option will again become available for the issuance of further
options under the 1995 Plan. Options may be granted under the 1995 Plan which
are intended to qualify as "incentive stock options" under Section 422A of the
Code ("Incentive Stock Options") or, alternatively, as stock options which will
not so qualify ("Nonstatutory Options"). The 1995 Plan will terminate on
February 9, 2005, and no options may be granted under the 1995 Plan thereafter.
As of the date of this Proxy Statement, no options had been granted under the
1995 Plan.
The 1995 Plan will be administered by a committee consisting of at least
three disinterested directors of the Board who have been appointed by the Board
(the "Committee"). The Committee will have the authority to select the persons
to receive options granted under the 1995 Plan, the extent of their
participation, and the terms and conditions of each option, subject to certain
limitations set forth in the 1995 Plan. Full-time officers and employees of the
Company or its divisions and subsidiaries are eligible to be granted Incentive
Stock Options under the 1995 Plan. At present, the Company has no active
subsidiaries. In addition, full and part time employees, officers, non-employee
directors and consultants, expected to provide significant services to the
Company may be granted Nonstatutory Options under the 1995 Plan. The Company
presently employs approximately 37 persons on a full-time basis, all of whom
except for the present members of the Committee are currently eligible for
selection as participants in the 1995 Plan.
8
<PAGE>
Options granted under the 1995 Plan will become exercisable in accordance
with the terms of the grant made by the Committee, as set forth in a written
stock option agreement to be entered into by all participants receiving options
granted under the 1995 Plan. The Committee has discretionary authority to
select participants from among eligible persons and to determine at the time an
option is granted whether it is intended to be an Incentive Stock Option or a
Nonstatutory Option, and when and in what increments shares covered by the
option may be purchased. Options may be granted on terms providing that they
will be exercisable either in whole or in part at any time or times during
periods or intervals during the term of the option. While the 1995 Plan does
not limit the number of shares as to which options may be granted to any one
participant (including executive officers and directors of the Company), it
does provide that no employee may be granted Incentive Stock Options which
first become exercisable in any calendar year to purchase shares of Common
Stock having a fair market value (determined at the time of the grant of the
option) in excess of $100,000, reduced by the fair market value (similarly
determined) of any shares subject to incentive stock options granted under any
other plan of the Company which also become exercisable in such calendar year.
If an optionee's employment is terminated other than for cause (as defined in
each option agreement), the employee will have the right to exercise his option
to the extent then exercisable, at any time within a three (3) month period
thereafter, to the extent he was entitled to exercise the option prior thereto.
If an optionee dies while still employed, or within the period of time after
his voluntary retirement specified in his option agreement, the option may be
exercised at any time within twelve (12) months thereafter by his estate of by
the person or persons to whom his rights under the option passed by will or the
laws of descent or distribution, but only to the extent such option was
exercisable by him on that date. The Board of Directors or the Committee may
accelerate the time at which options may be exercised. Options granted under
the 1995 Plan will not be transferable except by will and the laws of descent
and distribution. During the life of the person to whom the option is granted,
that person alone may exercise it.
Within the limits of the 1995 Plan, the Committee may also modify, extend or
renew outstanding options or accept the cancellation of outstanding options (to
the extent not previously exercised) for the granting of new options in
substitution therefor. However, no modification of an option which alters or
impairs any rights or obligations under any option previously granted may be
made without the consent of the optionee.
For employees holding more than ten percent (10%) of the total combined
voting power of all classes of outstanding stock, the purchase price of each
option granted under the 1995 Plan cannot be less than 110% of the fair market
value per share of the Company's Common Stock subject thereto on the date of
the grant. For all other participants, the option exercise price may not be
less than the fair market value per share of the Company's Common Stock subject
thereto on the date of the grant in the case of Incentive Stock Options, nor
less than 85% of the fair market value per share of the Company's Common Stock
on the date of grant in the case of Nonstatutory Options. Upon exercise of an
option, the exercise price shall be payable to the company in full. The fair
market value per share will generally be the closing bid quotation for a share
of the Company's Common Stock on the date an option is or was granted under the
1995 Plan. If there is no market price available on such date, the fair market
value per share will be determined on the basis of factors deemed relevant by
the Committee, including without limitation the book value of the shares on
such date and the earnings of the Company.
The Board of Directors may, without affecting any outstanding options, from
time to time revise or amend the 1995 Plan, and may suspend or discontinue it
at any time. However, no such revision or amendment may either increase the
number of shares subject to the 1995 Plan (with the exception of adjustments
resulting from changes in capitalization) or change the class of participants
eligible to receive options granted under the 1995 Plan without shareholder
approval.
In the event that the Company should elect to dissolve, merge or consolidate
with any other corporation, sell substantially all of its assets to another
person or entity, or enter into any other reorganization in a transaction in
which the Company is not the surviving corporation, the date of exercisability
of each option
9
<PAGE>
outstanding under the 1995 Plan will be accelerated to a date prior to such
transaction unless provision is made in connection with such transaction for
the assumption of the option or substitution of new options with appropriate
adjustments by the surviving corporation.
The foregoing description of the 1995 Plan is only a summary of the principal
terms of the 1995 Plan, does not purport to be complete, and reference is made
to the 1995 Plan which sets forth in detail all of the terms and conditions
upon which options can be granted thereunder. A complete copy of the 1995 Plan
will be provided without charge, upon written or oral request, to any
shareholder to whom this Notice of Annual Meeting and Proxy Statement is being
sent, addressed to Corporate Secretary, Micro General Corporation, 1740 E.
Wilshire Avenue, Santa Ana, California 92705; telephone (714) 667-0557.
FEDERAL INCOME TAX CONSEQUENCES OF THE 1995 PLAN
Except under the circumstances described below, neither the grant or the
exercise of an Incentive Stock Option will result in the recognition of taxable
income to the Optionee. Correspondingly, the Company will not be entitled to a
deduction for federal income tax purposes either at the time an Incentive Stock
Option is granted or when the optionee exercises the Incentive Stock Option or
subsequently sells the option shares.
If the optionee does not dispose of the shares acquired upon exercise of an
Incentive Stock Option until at least two years after the date the option was
granted and at least one year after the date of exercise of the option, any
gain on the sale will be taxed to the optionee as long-term capital gain.
However, the excess of the market value of the shares of Common Stock acquired
upon exercise over the option exercise price constitutes an "item of tax
preference" which is subject to the "alternative minimum tax" provisions of the
Internal Revenue Code, unless the disposition of the shares received upon
exercise results in ordinary income to the optionee.
If an optionee disposes of shares acquired upon the exercise of an Incentive
Stock Option granted under the 1995 Plan sooner than two years after the date
of grant, or within one year after exercise of the option, any gain realized
will generally be taxed as ordinary income in the year of such disposition, in
an amount equal to the difference between the exercise price and either the
value of the shares at the time of exercise or the sale price, whichever is
less. The balance of the optionee's gain, if any, on the disposition of the
shares will be taxable as long-term capital gain, provided the holding period
for long term capital assets, currently six months, has been satisfied. On any
disposition of shares which does not qualify for incentive stock option
treatment under the Internal Revenue Code, the Company will be entitled to a
deduction for federal income tax purposes equal to the amount of ordinary
income taxed to the optionee.
The Tax Reform Act of 1986 (the "Act") has largely eliminated the favorable
treatment afforded to capital gains under prior law. Pursuant to the Act, any
capital gain recognized will be subject to tax at the same rates as are
applicable to other types of income. In addition, the Act also modified the
treatment of Incentive Stock Options for purposes of the alternative minimum
tax. For this purpose, the basis of stock acquired upon exercise of an
incentive stock option will be equal the fair market value taken into account
in determining the amount of the preference for alternative minimum tax
purposes. Accordingly, an optionee can have a basis in stock for regular tax
purposes and a different basis for minimum tax purposes.
At the time of the grant of a Nonstatutory Option, the optionee will
recognize no taxable income, and the Company will not be entitled to a
deduction, as long as such options are not actively traded on an established
market and their fair market value cannot otherwise be measured with reasonable
accuracy. However, upon the exercise of a Nonstatutory Option the optionee will
recognize taxable income in the amount by which the then fair market value of
the shares of the Company's Common Stock acquired upon exercise exceeds the
aggregate exercise price therefor, with the Company being entitled to a
compensation deduction for federal income tax purposes in an equal amount. The
amount of such taxable income will be characterized as compensation income to
the optionee. Persons that may be subject to the application of the provisions
of Section 16(b) are subject to certain additional rules.
10
<PAGE>
Upon subsequent disposition of shares of Common Stock acquired upon exercise
of a Nonstatutory Option, the optionee will recognize capital gain or loss in
an amount equal to the difference between the proceeds received upon
disposition and the basis for the shares (the basis being equal to the sum of
the price paid for the shares upon exercise and the amount of ordinary income
recognized on account thereof), provided that the optionee will be
characterized as long or short term, depending upon whether the holding period
for long-term capital gain treatment, currently six months, has been met.
However, as discussed above, the Act eliminates in future years the
preferential treatment afforded to capital gains under prior law.
RECOMMENDATION
The Company's Board of Directors has unanimously recommended that the
Company's stockholders vote FOR approval of the 1995 Plan. Approval of the 1995
Plan by the Company's stockholders will require the affirmative vote of the
holders of a majority of the shares of Common Stock represented in person or by
proxy at the Annual Meeting and entitled to vote.
CERTAIN TRANSACTIONS
Not applicable.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Rules adopted by the Securities and Exchange Commission ("SEC") under Section
16(a) of the Securities Exchange Act of 1934 require the Company's officers and
directors, and persons who own more than ten percent of the issued and
outstanding shares of the Company's Common Stock, to file reports of their
ownership, and changes in ownership, of such securities with the SEC on SEC
Forms 3, 4 or 5, as appropriate. Officers, directors and greater-than-ten-
percent stockholders are required by the SEC's regulations to furnish the
Company with copies of all forms they file pursuant to Section 16(a).
Based solely upon a review of Forms 3, 4 and 5, and amendments thereto
furnished to the Company during its most recent fiscal year end, and any
written representations provided to it, the Company is advised that all filings
were timely and correctly made.
INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP was retained to serve as the Company's independent
certified public accountants for fiscal year 1994. A representative of KPMG
Peat Marwick LLP is expected to be present at the Annual Meeting, and to be
available to respond to any stockholder questions directed to KPMG Peat Marwick
LLP. This representative will have an opportunity to make a statement if KPMG
Peat Marwick LLP so desires.
STOCKHOLDER PROPOSALS
In order to be considered for inclusion in the Company's proxy statement and
form of proxy relating to the Company's next annual meeting of stockholders,
proposals by the Company's stockholders intended to be presented at such annual
meeting must be received by the Company no later than ninety (90) days prior to
May 2, 1996.
11
<PAGE>
ANNUAL REPORTS
The Company's 1994 Annual Report to Stockholders, which includes audited
financial statements for the Company's fiscal year ended December 31, 1994, is
being mailed with this proxy statement to stockholders of record on May 2,
1995. A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994, and any amendments thereto, is available without
charge to any stockholder of the Company upon written request to Secretary,
Micro General Corporation, 1740 East Wilshire Avenue, Santa Ana, California,
92705. If copies of any of the Exhibits thereto are requested, a copying charge
of $.20 per page will be made.
OTHER MATTERS
The Board of Directors of the Company is unaware of any other business to be
presented for consideration at the Annual Meeting. If any other business should
properly come before the meeting, the proxies will be voted in accordance with
the best judgment of the proxy holders.
By order of the Board of Directors
/s/ Linda I. Morton
Linda I. Morton
Corporate Secretary
Santa Ana, California
May 8, 1995
12
<PAGE>
Micro General Corporation
1995 Stock Option Plan
1. Purpose. The Plan is intended to provide incentive to key employees,
consultants and directors of the Corporation, to encourage proprietary interest
in the Corporation, to encourage such key employees to remain in the employ of
the Corporation and its Subsidiaries, to attract new employees with outstanding
qualifications, and to afford additional incentive to consultants to increase
their efforts in providing significant services to the Corporation.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the committee, if any appointed by the Board
in accordance with Section 4 of the Plan.
(d) "Common Stock" shall mean the Common Stock, par value $.01 per
share, of the Corporation.
(e) "Corporation" shall mean Micro General Corporation, a California
corporation.
(f) "Director Option" shall mean an Option granted pursuant to Section
5.
(g) "Disability" shall mean the condition of an Employee who is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve (12) months.
(h) "Disinterested Director" shall mean a director of the Company who
is "disinterested" within the meaning of Rule 16b-3 under the Exchange Act.
(i) "Employee" shall mean an individual who is employed (within the
meaning of Code Section 3401 and the regulations thereunder) by the Corporation
or a Subsidiary.
(j) "Exercise Price" shall mean the price per Share of Common Stock,
determined by the Board or the Committee, at which an Option may be exercised.
(k) "Fair Market Value" shall mean the value of one (1) Share of Common
1
<PAGE>
Stock, determined as follows:
(1) If the Shares are traded on an exchange, the price at which
Shares traded at the close of business on the date of valuation;
(2) If the Shares are traded over-the-counter on the NASDAQ System,
the closing price if one is available, or the mean between the bid and asked
prices on said System at the close of business on the date of valuation; and
(3) If neither (1) nor (2) applies, the fair market value as
determined by the Board or the Committee in good faith. Such determination shall
be conclusive and binding on all persons.
(l) "Incentive Stock Option" shall mean an option described in Section
422 of the Code.
(m) "Nonstatutory Stock Option" shall mean any stock granted pursuant
to the Plan.
(n) "Optionee" shall mean an employee who has received an Option.
(o) "Outside Director" shall mean a director of the Company who is an
outside director within the meaning of 162(m) of the Code.
(p) "Plan" shall mean the Micro General Corporation 1995 Stock Option
Plan, as it may be amended from time to time.
(q) "Retirement" shall mean the voluntary termination of employment by
an Employee upon the attainment of age sixty-five (65) and the completion of not
less than twenty (20) years of service with the Corporation or a Subsidiary.
(r) "Share" shall mean one (1) share of Common Stock, adjusted in
accordance with Section 10 of the Plan (if applicable).
(s) "Subsidiary" shall mean any corporation at least fifty percent
(50%) of the total combined voting power of which is owned by the Corporation or
by another Subsidiary.
3. Effective Date. The Plan was adopted by the Board on February 9,
1995, subject to the approval by the Corporation's shareholders. The Plan is
being submitted to the shareholders of the Corporation for their approval at the
Annual Meeting thereof scheduled for June 8, 1995. The effective date of the
Plan shall be February 9, 1995, provided that the Plan is approved by the
shareholders of the Corporation at the Annual Meeting.
2
<PAGE>
4. Administration. The Plan shall be administered by the Outside
Directors of the Board, or by a committee appointed by the Board which shall
consist of not less than three (3) members each of whom are Disinterested
Directors and Outside Directors (the "Committee"). The Board shall appoint one
of the members of the Committee, if there be one, as Chairman of the Committee.
If a Committee has been appointed, the Committee shall hold meetings at such
times and places as it may determine. Acts of a majority of the Committee at
which a quorum is present, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee. The Board, or the Committee if there be one, shall from time to time
at its discretion select the Employees and consultants who are to be granted
Options, determine the number of Shares to be granted to each Optionee and
designate such Options such as Incentive Stock Options or Non-statutory Stock
Options, except that no Incentive Stock Option may be granted to a non-Employee
consultant. The interpretation and construction by the Board, or by the
Committee if there be one, of any provision of the Plan or of any Option granted
thereunder shall be final. No member of the Board or of the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any Option granted thereunder.
5. Participation.
(a) Option Grants for Employees and Consultants.
(1) Ten-Percent Shareholders. An Employee who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
stock of the Corporation, its parent or any of its Subsidiaries shall not be
eligible to receive an Option unless (I) the Exercise Price of the Shares
subject to such Option is at least one hundred percent (100%) of the Fair Market
Value of such Shares on the date of grant and (ii) such Option by its terms is
not exercisable after the expiration of five (5) years from the date of grant.
(2) Stock Ownership. For purposes of (1) above, in determining
stock ownership an Employee shall be considered as owning the stock owned,
directly or indirectly, by or for his brothers, sisters, spouses, ancestors and
lineal descendants. Stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust shall be considered as being owned
proportionately by or for its shareholders, partners or beneficiaries. Stock
with respect to which such Employee holds an Option shall not be counted.
(3) Outstanding Stock. For purposes of (1) above, "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant of the Option to the Optionee. "Outstanding stock" shall not include
shares authorized for issue under outstanding Options held by the Optionee or by
any other person.
(b) Option Grants for Non-Employee Directors.
(1) Grant. Subject to the availability of an adequate number of
Shares
3
<PAGE>
designated under the Plan, each non-Employee Director shall be granted Director
Options under the Plan automatically on a non-discretionary basis according to
the following provisions of this Section 5(b). Director Options shall be granted
automatically to non-Employee Directors as follows: (i) each person who is a
non-Employee Director on the first business day following the 1995 annual
meeting of stockholders of the Company shall be granted on such date an Option
to purchase 2,500 Shares; and (ii) thereafter, each person who is a non-Employee
Director on the first business day following the day of a subsequent annual
meeting of stockholders shall be granted on such first business day an Option to
purchase 2,500 Shares.
(2) Duration. Each Director Option shall terminate on the date
which is the tenth anniversary of the grant date, unless terminated earlier as
follows:
(a) If an Optionee's service as a Director terminates for any
reason other than Disability, death, or cause, the Optionee may for a period of
three (3) months after such termination exercise his or her Option to the
extent, and only to the extent, that such Option or portion thereof was
exercisable as of the date of the Optionee's service as a Director was
terminated, after which time the Option shall automatically terminate in full.
(b) If an Optionee's service as a Director terminates by reason
of Disability, the Optionee may, for a period of one (1) year after such
termination, exercise his or her Option to the extent, and only to the extent,
that such Option or portion thereof was vested and exercisable as of the date
the Optionee's service as Director terminated, after which oney (1) year period
the Option shall automatically terminate in full.
(c) If an Optionee's service as a Director terminates for
cause, the Option granted to the Optionee hereunder shall immediately terminate
in full and no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within three (3)
months after termination of service as a Director as described in clause (a) or
(b) of this Section 5(b)2, the Option granted to the Optionee may be exercised
at any time within twelve (12) months aftrer the Optionee's death by the person
or persons to whom such rights under the Option shall pass by will, or by the
laws of descent or distribution, after which time the Option shall terminate in
full; provided, however, that an Option may be exercised to the extent, and only
to the extent, that the Option or portion thereof was exercisable on the date of
termination of the Optionee's services as a Director.
6. Stock. The stock subject to Options granted under the Plan shall be
Shares of the Corporation's authorized but unissued or reacquired Common Stock.
The aggregate number of Shares which may be issued upon exercise of Options
under the Plan shall not exceed 100,000 shares. The number of Shares subject to
Options outstanding at any time shall not exceed the number of Shares remaining
available for issuance under the Plan. In the event that any outstanding Option
for any reason expires or is terminated, the Shares allocable to the
4
<PAGE>
unexercised portion of such Option may again be made subject to any Option. The
limitations established by this Section 6 shall be subject to adjustment in the
manner provided in Section 10 hereof upon the occurrence of an event specified
therein.
7. Terms and Conditions of Options.
(a) Stock Option Agreements. Options shall be evidenced by written
stock option agreements in such form as the Board, or the Committee if there be
one, shall from time to time determine. Such agreements shall comply with and be
subject to the terms and conditions set forth below.
(b) Number of Shares. Each Option shall state the number of Shares to
which it pertains and shall provide for the adjustment thereof in accordance
with the provisions of Section 10 hereof.
(c) Exercise Price. Each Option shall state the Exercise Price. The
Exercise Price in the case of any Incentive Stock Option shall not be less than
the Fair Market Value on the date of grant and, in the case of any Option
granted to an Optionee shall not be less than one hundred percent (100%) of the
Fair Market Value on the date of grant.
(d) Time of Payment. The purchase price shall be payable in full in
United States dollars upon the exercise of the Option.
(e) Term and Nontransferability of Options. Each Option shall state the
time or times which all or part thereof becomes exercisable. No Option shall be
exercisable after the expiration of ten (10) years from the date it was granted,
and no Option granted to an Optionee described in Section 5(a)1 hereof shall be
exercisable after the expiration of five (5) years from the date it was granted.
During the lifetime of the Optionee, the Option shall be exercisable only by the
Optionee and shall not be assignable or transferable. In the event of the
Optionee's death, the Option shall not be transferable by the Optionee other
than by will or the laws of descent and distribution.
(f) Termination of Employment, Except by Death, Disability or
Retirement. If an Optionee ceases to be an Employee for any reason other than
his or her death, Disability or Retirement, such Optionee shall have the right,
subject to the restrictions of (3) above, to exercise the Option at any time
within three (3) months after termination of employment, but only to the extent
that, at the date of termination of employment, the Optionee's right to exercise
such Option had accrued pursuant to the terms of the applicable option agreement
and had not previously been exercised; provided, however, that if the Optionee
was terminated for cause (as defined in the applicable option agreement) any
Option not exercised in full prior to such termination shall be cancelled. For
this purpose, the employment relationship shall be treated as continuing intact
while the Optionee is on military leave, sick leave or other bona fide leave of
absence (to be determined in the sole discretion of the Committee). The
foregoing
5
<PAGE>
notwithstanding, in the case of an Incentive Stock Option, employment shall not
be deemed to continue beyond the ninetieth (90th) day after the Optionee's
reemployment rights are guaranteed by statute or by contract.
(g) Death of Optionee. If an Optionee dies while an Employee, or after
ceasing to be an Employee but during the period while he or she could have
exercised the Option under this Section 7, and has not fully exercised the
Option, then the Option may be exercised in full, subject to the restrictions of
(3) above, at any time within twelve (12) months after the Optionee's death, by
the executors or administrators of his or her estate or by any person or persons
who have acquired the Option directly from the Optionee by bequest or
inheritance, but only to the extent that, at the date of death, the Optionee's
right to exercise such Option had accrued and had not been forfeited pursuant to
the terms of the applicable Option Agreement and had not previously been
exercised.
(h) Disability of Optionee. If an Optionee ceases to be an Employee by
reason of Disability, such Optionee shall have the right, subject to the
restrictions of (f) above, to exercise the Option at any time within twelve (12)
months after termination of employment, the Optionee's right to exercise such
Option had accrued pursuant to the terms of the applicable Option Agreement and
had not previously been exercised.
(i) Retirement of Optionee. If an Optionee ceases to be an Employee by
reason of Retirement, such Optionee shall have the right, subject to the
restrictions of (3) above, to exercise the Option at any time within three (3)
months after termination of employment, but only to the extent that, at the date
of termination of employment, the Optionee's right to exercise such Option had
accrued pursuant to the terms of the applicable Option Agreement and had not
previously been exercised.
(j) Rights as a Stockholder. An Optionee, or a transferee of an
Optionee, shall have no rights as a stockholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property), distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 10 hereof.
(k) Modification, Extension and Renewal of Option. Within the
limitations of the Plan, the Board, or the Committee if there be one, may
modify, extend or renew outstanding Options or accept the cancellation of
outstanding Options (to the extent not previously exercised) for the granting of
new Options in substitution thereof. The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair any rights or obligations under any Option previously granted.
(l) Other Provisions. The stock option agreements authorized under the
Plan may contain such other provisions not inconsistent with the terms of the
Plan (including, without
6
<PAGE>
limitation, restrictions upon the exercise of the Option) as the Board, or the
Committee if there be one, shall deem advisable.
8. Limitation on Value of Exercisable Shares. In the case of Incentive
Stock Options granted hereunder, the aggregate Fair Market Value (determined as
of the date of the grant thereof) of the Shares with respect to which Incentive
Stock Options become exercisable by any employee of the Company for the first
time during any calendar year (under this Plan and all other plans maintained by
the Corporation, its parent or its Subsidiaries) shall not exceed $100,000.
9. Term of Plan. Options may be granted pursuant to the Plan until the
expiration of ten (10) years from the effective date of the Plan.
10. Recapitalizations. Subject to any required action by shareholders,
the number of Shares covered by the Plan as provided in Section 6 hereof, the
number of Shares covered by each outstanding Option and the Exercise Price
thereof shall be proportionately adjusted for any increase or decrease in the
number of issued Shares resulting from a subdivision or consolidation of Shares
or the payment of a stock dividend (but only of Common Stock) or any other
increase or decrease in the number of issued Shares effected without receipt of
consideration by the Corporation. Subject to any required action by
stockholder, if the Corporation is the surviving corporation in any merger or
consolidation, each outstanding Option shall pertain and apply to the securities
to which a holder of the number of Shares subject to the Option would have been
entitled. In the event of a merger or consolidation in which the Corporation is
not the surviving corporation, the date of exercisability of each outstanding
Option shall be accelerated to a date prior to such merger or consolidation,
unless the agreement of merger or consolidation provides for the assumption of
the Option by the successor to the Corporation. To the extent that the
foregoing adjustments relate to securities of the Corporation, such adjustments
shall be made by the Board, or the Committee if there be one, whose
determination shall be conclusive and binding on all persons. Except as
expressly provided in this Section 10, the Optionee shall have no rights by
reason of subdivision or consolidation of shares of stock of any class, the
payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class or by reason of any dissolution, liquidation,
merger or consolidation or spin-off of assets or stock of another corporation,
and any issue by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number of
Exercise Price of Shares subject to an Option. The grant of an Option pursuant
to the Plan shall not affect in any way the right or power to the Corporation to
make adjustments, reclassifications, reorganizations or changes of its capital
or business structure, to merge or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business assets.
11. Securities Law Requirements.
(a) Legality of Issuance. The issuance of any Shares upon the exercise
of any
7
<PAGE>
Option and the grant of any Option shall be contingent upon the following:
(1) The Corporation and the Optionee shall have taken all actions
required to register the Shares under the Securities Act of 1933, as amended
(the "Act"), and to qualify the Option and the Shares under any and all
applicable state securities or "blue sky" laws or regulations, or to perfect an
exemption from the respective registration and qualification requirements
thereof;
(2) Any applicable listing requirement of any stock exchange on
which the Common Stock is listed shall have been satisfied; and
(3) Any other applicable provision of state or Federal law shall be
satisfied.
(b) Restrictions on Transfer. Regardless of whether the offering and
sale of Shares under the Plan has been registered under the Act or has been
registered or qualified under the securities laws of any state, the Corporation
may impose restrictions on the sale, pledge or other transfer of such Shares
(including the placement of appropriate legends on stock certificates) if, in
the judgment of the Corporation and its counsel, such restrictions are necessary
or desirable in order to achieve compliance with the provisions of the Act, the
securities laws of any state or any other law. In the event that the sale of
Shares under the Plan is not required an investment representation or other
representation, each Optionee shall be required to represent that such Shares
are being acquired for investment, and not with a view to the sale or
distribution thereof, and to make such other representations as are deemed
necessary or appropriate by the Corporation and its counsel. Any determination
by the Corporation and its counsel in connection with any of the matter set
forth in this Section 11 shall be conclusive and binding on all persons. Stock
certificates evidencing Shares acquired under the Plan pursuant to an
unregistered transaction shall bear the following restrictive legend and such
other restrictive legends as are required or deemed advisable under the
provisions of any applicable law.
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). ANY TRANSFER OF SUCH SECURITIES
WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER SUCH REGISTRATION IS
UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT."
(c) Registration or Qualification of Securities. The Corporation may,
but shall not be obligated to register or qualify the issuance of Options and/or
the sale of Shares under the Act or any other applicable law. The Corporation
shall not be obligated to take any affirmative action in order to cause the
issuance of Options or the sale of Shares under the Plan to comply with any law.
8
<PAGE>
(d) Exchange of Certificates. If, in the opinion of the Corporation and
its counsel, any legend placed on a stock certificate representing shares sold
under the Plan is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but lacking such legend.
12. Interpretation. Unless otherwise expressly stated in the relevant
Agreement, any grant of Options is intended to be performance-based compensation
within the meaning of Section 162(m)(4)(C) of the Code. The Board, or Committee
if there be one, shall not be entitled to exercise any discretion otherwise
authorized hereunder with respect to such Options if the ability to exercise
such discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options to fail to qualify as performance-
based compensation.
13. Amendment of the Plan. The Board may from time to time, with respect
to any Shares at the time not subject to Options, suspend or discontinue the
Plan or revise or amend it in any respect whatsoever except that, without the
approval of the Corporation's stockholders, no such revision or amendment shall:
(a) Increase the number of Shares subject to the Plan; or
(c) Amend this Section 12 to defeat its purpose.
14. Application of Funds. The proceeds received by the Corporation from
the sale of Common Stock pursuant to the exercise of an Option will be used for
general corporate purposes.
15. Execution. To record the adoption of the Plan in the form set forth
above by the Board effective as of February 9, 1995, the Corporation has caused
this Plan to be executed in the name and on behalf of the Corporation where
provided below by an officer of the Corporation thereunto duly authorized.
9
<PAGE>
MICRO GENERAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas E. Pistilli and Linda Morton, and each
of them, as attorneys-in-fact and proxies for the undersigned, with full power
of substitution, to represent the undersigned and vote, as designated below, all
of the shares of Common Stock of Micro General Corporation which the undersigned
is entitled to vote at the Annual Meeting of Stockholders of Micro General
Corporation to be held on June 8, 1995 or at any adjournment or continuation
thereof.
1. ELECTION OF DIRECTORS:
WITHHOLD
FOR AUTHORITY ABSTAIN
John J. Cahill [ ] [ ] [ ]
William P. Foley II [ ] [ ] [ ]
George E. Olenik [ ] [ ] [ ]
Thomas E. Pistilli [ ] [ ] [ ]
Carl A. Strunk [ ] [ ] [ ]
2. To approve the Company's
1995 Stock Option Plan [ ] [ ] [ ]
3. In their discretion, upon such other business as may properly come before the
Annual Meeting or any adjournment or continuation thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER HEREIN
SPECIFIED BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS INDICATED, THIS
PROXY WILL BE VOTED FOR THE ELECTION AS DIRECTORS OF THE FIVE NOMINEES LISTED
ABOVE AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES ON ANY OTHER MATTERS
TO COME BEFORE THE ANNUAL MEETING.
<PAGE>
Please sign exactly as name appears below, date
and return this card promptly using the enclosed
envelope. Executors, administrators, guardians,
officers of corporations, and others signing in a
fiduciary capacity should state their full titles
as such.
Dated . . . . . . . . , 1995
--------------------------------------
Signature
_______________________________________
Signature (if held jointly)
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO MARK,
SIGN, DATE AND PROMPTLY RETURN THIS PROXY, USING THE ENCLOSED ENVELOPE.
