SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.)
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
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 Rule 14a-11(c) or Rule 14a-12
Boatracs,Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
(Payment of Filing Fee (Check the appropriate box):
$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 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:
X Fee paid previously with preliminary materials.
0 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: $125.00
(2) Form, Schedule or Registration Statement No.: PRE 14A
(3) Filing Party: Registrant
(4) Date Filed: April 3, 1996
<PAGE>
BOATRACS, INC.
NOTICE OF ANNUAL MEETING
to be held on
May 9, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of the
Stockholders of BOATRACS, Inc., a California corporation
(the "Company"), will be held at the Wyndham Hotel, 5975
Lusk Boulevard, San Diego, California 92121 on May 9, 1996,
at 10:00 a.m. for the following purposes:
1. To elect a Board of six Directors;
2. To consider and act upon a proposal to ratify and
approve the BOATRACS, Inc. 1996 Stock Option Plan;
3. To consider and act upon a proposal to ratify and
approve the amendment of the By-laws of BOATRACS, Inc. to
increase the number of authorized Directors from five to
nine; and
4. To consider and act upon any other matters which
may properly come before the Annual Meeting and any
adjournment thereof.
In accordance with the provisions of the By-Laws, the
Board of Directors has fixed the close of business on March
22, 1996, as the record date for the determination of the
holders of Common Stock entitled to notice of and to vote at
said Annual Meeting.
Your attention is directed to the accompanying Proxy
Statement. Stockholders who do not expect to attend the
Annual Meeting in person are requested to date, sign and
mail the enclosed proxy as promptly as possible in the
enclosed envelope.
By Order of the Board of Directors,
MICHAEL SILVERMAN
President
San Diego, California
April 15, 1996
<PAGE>
PROXY STATEMENT
BOATRACS, INC.
6440 Lusk Boulevard, Suite D201
San Diego, California 92121
ANNUAL MEETING OF STOCKHOLDERS
to be held on
May 9, 1996
I. PROXIES
The enclosed proxy is solicited by and on behalf of the
Board of Directors of BOATRACS, Inc., a California
corporation (the "Company"), for use at the Company's 1996
Annual Meeting of Stockholders to be held on May 9, 1996, at
the Wyndham Hotel, 5957 Lusk Boulevard, San Diego,
California 92121 at 10:00 a.m., and at any and all
adjournments thereof (the "Annual Meeting"), for the
purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. Any Stockholder has the power to
revoke his or her proxy at any time before it is voted. A
proxy may be revoked by delivering written notice of
revocation to the Company at its principal office, 6440 Lusk
Boulevard, Suite D201, San Diego, California 92121, by a
subsequent proxy executed by the person executing the prior
proxy and presented to the Annual Meeting, or by attendance
at the Annual Meeting and voting in person by the person
executing the proxy. The solicitation of proxies is being
made only by use of the mails and the cost thereof will be
borne by the Company. This Proxy Statement and the Annual
Report of the Company for the year ended December 31, 1995,
will be mailed on or about April 15, 1996, to each
stockholder of record as of the close of business on March
22, 1996.
The cost of preparing, assembling and mailing these
proxy materials will be paid by the Company. Following the
mailing of this Proxy Statement, Directors, officers and
regular employees of the Company may solicit proxies by
mail, telephone, telegraph or personal interview. Such
persons will receive no additional compensation for such
services. Brokerage houses and other nominees, fiduciaries
and custodians nominally holding shares of the Company's
common stock of record will be requested to forward proxy
soliciting material to the beneficial owners of such shares,
and will be reimbursed by the Company for their reasonable
charges and expenses in connection therewith.
When your proxy is returned properly signed, the shares
represented will be voted in accordance with your
directions. Where specific choices are not indicated,
proxies will be voted in favor of the six persons nominated
to be Directors in Proposal One and in favor of Proposals
Two and Three. If a proxy or ballot indicates that a
stockholder or nominee abstains from voting or that shares
are not to be voted on a particular proposal, the shares
will not be counted as having been voted on that proposal,
and those shares will not be reflected in the final tally of
the votes cast with regard to that proposal, although such
shares will be counted as in attendance at the Annual
Meeting for purposes of determining a quorum. Additionally,
broker non-votes are not counted as votes cast on any matter
to which they relate.
The presence at the Annual Meeting in person or by
proxy of the holders of a majority of the shares of Common
Stock entitled to vote at the Annual Meeting is necessary to
constitute a quorum for the transaction of business.
No shareholder may cumulate votes unless a shareholder
has announced at the Annual Meeting the intention to do so
before the voting has begun, but if any shareholder makes
such an announcement, all shareholders may cumulate votes.
Cumulative voting rights entitle a shareholder to give one
nominee as many votes as are equal to the number of
Directors to be elected, multiplied by the number of shares
owned by such shareholder, or to distribute his or her votes
as the shareholder sees fit among two or more nominees on
the same principle, up to the total number of nominees to be
elected. The six nominees for Director receiving the
highest number of votes at the Annual Meeting from the
holders of Common Stock will be elected.
With respect to voting on Proposal Two, an affirmative
vote of a majority of the shares represented and voting at
the Annual Meeting is required for approval of the matter.
With respect to voting on Proposal Three, an affirmative
vote of a majority of the shares entitled to vote at the
Annual Meeting is required for approval of the matter.
Directors and officers beneficially own approximately
59% of the outstanding shares of Common Stock. The
Directors and officers have indicated that they intend to
vote for each of the nominees for Director and in favor of
Proposals Two and Three. Therefore, in the absence of
cumulative voting, the election of each nominee as a
Director is assured. Further, the approval of Proposals Two
and Three is assured.
II. Voting Securities
The Company had 12,602,310 shares of Common Stock, no
par value (the "Common Stock"), outstanding as of March 22,
1996. Holders of record of shares of the Common Stock at the
close of business on March 22, 1996, will be entitled to
notice of and to vote at the Annual Meeting and will be
entitled to one vote for each such share so held of record.
Set forth below is certain information concerning the
ownership of the Company's Common Stock as of March 1, 1996,
by (i) all persons known to the Company to be beneficial
owners of more than 5% of the outstanding Common Stock, (ii)
each Director of the Company, (iii) each executive officer
of the Company, and (iv) all executive officers and
Directors of the Company as a group. Except as otherwise
indicated, and subject to applicable community property and
similar laws, the persons named have sole voting and
investment power with respect to the securities owned by
them.
Number of Shares Percent of
Beneficially Owned Outstanding Shares
QUALCOMM Incorporated 1,112,265 9%
6455 Lusk Boulevard
San Diego, CA 92121
Michael Silverman 6,005,027(1) 48
Annette Friskopp 377,931 3
Dale Fisher 12,001(5) *
Giles Bateman 599,525(2) 5
Luis Maizel 83,600(3) *
Norman Kane 469,667(4) 4
All Directors and Executive
Officers as a group
(6 persons) 7,547,750 59%
______________________
(1) Includes 285,894 shares held by Mr. Silverman's son.
(2) Includes 132,400 shares held by trusts for Mr. Bateman's children.
Neither Mr. Bateman nor his wife serve as trustee.
(3) All of Mr. Maizel's shares are held by the Maiz Family Trust of which
Mr. Maizel is a trustee.
(4) Includes 92,150 shares held by the Norman Kane Defined Benefit Plan of
which Dr. Kane has beneficial ownership.
(5) Includes 10,000 shares held in a Family Trust for which Ms. Fisher is
a trustee, and 2,000 shares are held in an IRA account.
* Less than 1%
III. Election Of Directors
The persons named below have been nominated by
management for election as Directors of the Company to serve
until the 1997 Annual Meeting of Stockholders or until their
respective successors are duly elected and qualify.
Unless otherwise instructed, the enclosed proxy will be
voted for election of the nominees listed below, except that
the persons designated as proxies reserve full discretion to
cast their votes for another person recommended by
management in the unanticipated event that any nominee is
unable to or declines to serve.
Name of Nominee Age Position with the Company
Michael Silverman 51 Chairman, Chief Executive Officer,
President, Director
Annette Friskopp 31 Chief Operating Officer,
Secretary, Director
Giles Bateman 51 Director
Luis Maizel 45 Director
Norman Kane 45 Director
Ilana Silverman 48 Director
Mr. Silverman formed Old BOATRACS in 1990 and served as
Chairman, Chief Executive Officer, President and a Director
of that company from its inception until the merger of
BOATRACS, Inc. ("Old BOATRACS") with the Company (the
"Merger"), at which time he assumed his present positions
with the Company. Mr. Silverman is also a Director of
JAYARK Corporation, an importer and distributor of
furniture. Mr. Silverman is a Chartered Accountant (South
Africa) and received a Master of Business Administration
degree from Stanford University.
Ms. Friskopp joined Old BOATRACS in 1991 as Senior Vice
President of Production, Development and Operations and
assumed her present positions with the Company following the
Merger. She became a Director of the Company at the Merger.
Prior to Ms. Friskopp joining Old BOATRACS, she attended
Harvard Business School full-time where a Master of Business
Administration degree was conferred upon her. Ms. Friskopp
holds a Bachelor of Science degree in Accounting with
emphasis on International Business from the University of
Nebraska and she has credits from other universities for her
studies in Europe and Asia. She is a Certified Public
Accountant and previously worked in the audit division of
Price Waterhouse.
Mr. Bateman was elected a Director of Old BOATRACS in
1994 and became a Director of the Company upon the Merger.
Since 1991, Mr. Bateman has served as a Director of Comp
USA, a superstore computer retailer, and has served as that
company's Chairman since 1993. Mr. Bateman was a co-founder
of The Price Company and served as Chief Financial Officer
and a Director of that company from 1976 to 1991 and as Vice
Chairman from 1986 to 1991.
Mr. Maizel became a Director of the Company in October
1995. For more than the past five years, Mr. Maizel has been
president of LM Advisors, LM Capital Management, money
management firms and board member of several financial and
commercial corporations both in the U.S. and Mexico. He was
born and raised in Mexico City, holds a BS in Mechanical
Electrical Engineering, an MS in Industrial Engineering from
the National University of Mexico and an MBA from Harvard
Business School where he also was a faculty member.
Dr. Kane became a Director of the Company in October
1995. Dr. Kane is an orthopedic surgeon practicing in San
Diego. For more than the past five years, Dr. Kane has been
the President of La Jolla Sports and Knee Surgery Medical
Group and a Director of TRI CITY Orthopedic Medical Group.
From 1986-1989, Dr. Kane was the surgeon for the San Diego
Chargers, and in 1988 was the surgeon for the San Diego
Soccers.
Ms. Silverman was appointed a Director in March 1996,
subject to shareholder approval of the amendment of the By-
laws to increase the authorized number of directors to nine
from the current number of five. For more than the past
five years, Ms. Silverman has been active in charitable and
community organizations. She holds a Bachelor of Arts
degree from the University of Natal, South Africa.
There is no family relationship between any of the
Company's Directors and officers, except that Michael
Silverman and Ilana Silverman are married. There are no
arrangements or understandings between any Director or
executive officer and any other person pursuant to which any
person has been elected or nominated as a Director or
executive officer. All Directors and executive officers
serve for a term of one year until the next Annual Meeting
of stockholders.
Selwyn Klein, who was nominated to the Board of
Directors in October 1995, resigned as a Director in
December 1995.
During the year ended December 31, 1995, the Board of
Directors held one meeting where all Directors were present
except Ms. Friskopp who was traveling on business for the
Company. The Company intends to hold quarterly meetings of
its Board of Directors in the future. The Company presently
has a Compensation Committee of the Board of Directors
consisting of Luis Maizel and Giles Bateman. The
Compensation Committee's basic function is to set the salary
for employees and promotions. In October 1995, the Company
established an Audit Committee consisting of Giles Bateman
and Norman Kane. The Audit Committee's basic function is to
advise the Board of Directors as to the selection of the
Company's independent accountants. During 1995, the
Compensation and Audit Committees held no formal meetings.
IV. Executive Compensation
Executive Compensation
The following table sets forth for the years indicated
certain compensation of the Company's current chief
executive officer and the executive officers of the Company
who earned more than $100,000 in such years
SUMMARY COMPENSATION TAB
Annual Compensation
Principal Position Year Salary Bonus
Michael Silverman 1995 $100,000(1) $0
Chairman, President 1994 100,000 $0
and Chief Executive 1993 100,000 $0
Officer
Annette Friskopp 1995 $107,654 $31,800
Chief Operating Officer 1994 92,654 $0
1993 72,000 $0
________________
(1) All of Mr. Silverman's compensation earned during 1993
and $69,230 of compensation earned during 1994 was deferred
pursuant to a deferred compensation arrangement entered into
between the Company and Mr. Silverman. At December 31,
1995, deferred compensation totaled $369,230.
The Company also provides certain compensatory benefits
and other non-cash compensation to the person named in the
Summary Compensation Table. The incremental cost to the
Company of all such benefits and other compensation paid in
the years indicated to such named individual was less than
10% of his reported compensation and also less than $50,000.
The Company entered into an employment agreement with
Michael Silverman, its Chairman, Chief Executive Officer,
President and majority shareholder, effective January 1,
1995. Under the agreement, Mr. Silverman's annual base
compensation is $100,000, with such increases, bonus
compensation and benefits as the Board of Directors may
determine from time to time. The agreement has a one-year
term and automatically renews annually for successive one-
year periods unless terminated by the Board of Directors
upon notice given by November 1 of the prior year. The
agreement is terminable by the Company only for good cause,
as defined in the agreement.
Pursuant to the terms of the subscription agreement
between the Company and certain shareholders of the Company,
Mr. Silverman shall not be entitled to (i) compensation from
the Company in excess of $100,000 per year or (ii) any stock
options or profit sharing from the Company, and the Company
shall not make any payments on any loans or debts owed
to Mr. Silverman, until certain conditions are satisfied.
These conditions include, among other items, profitable
operations for the preceding year.
The Company has entered into an Addendum to Stock
Issuance/Employment Agreement effective January 21, 1991,
and amended July 1995, whereby Annette Friskopp's salary
from April to December 1995 shall be $108,000 and after
December 1995 shall be $120,000 per annum. In addition,
beginning January 1995 she will receive a bonus for each
unit sold to an end user. In addition, the Agreement
granted Ms. Friskopp an option to acquire 100,000 additional
shares of capital stock, which has been treated as being a
grant pursuant to the Company's 1996 Stock Option Plan at a
price equal to the fair market value of such shares on the
date of grant. The options will vest 20% annually over five
years.
Compensation Committee Interlock and Insider Participation
During the last completed fiscal year, Michael Silverman
and Annette Friskopp, both of whom are officers of the
Company, participated in deliberations of the Company's
Board of Directors concerning executive officer
compensation.
Director Compensation
Non-employee directors of the Company receive $500 for
each meeting of the Board of Directors that they attend.
Directors are reimbursed for certain expenses in connection
with attendance at Board and committee meetings. The
Company currently intends for
non-employee Directors to participate in the 1996 Stock
Option Plan.
Compliance with Section 16(a) of the Securities Exchange Act
of 1934
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's executive officers and Directors, and
persons who beneficially own more than 10% of the Company's
stock, to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange
Commission.
Executive officers, Directors and greater than 10%
beneficial owners are required by applicable regulations to
furnish the Company with copies of all Section 16(a) forms
they file.
Based solely upon a review of the copies of such forms
furnished to the Company and information involving
securities transactions of which the Company is aware, the
Company believes that during the fiscal year ending December
31, 1995, all Section 16(a) filing requirements applicable
to its executive officers, Directors and greater than 10%
beneficial stockholders were complied with.
V. Certain Transactions
In March 1995, QUALCOMM, the sole supplier of the
OmniTRACS equipment sold by the Company, purchased 1,112,265
shares of the Company's Common Stock in consideration of a
reduction in price of certain products and services provided
by QUALCOMM to the Company. As a result of such purchase,
QUALCOMM owns approximately 9% of the Company's issued and
outstanding Common Stock.
In March 1995, the Company entered into the License
Agreement with QUALCOMM authorizing QUALCOMM to use,
sublicense and distribute certain interface software
developed and owned by the Company as an enhancement to
QUALCOMM's OmniTRACS System. The License Agreement will
terminate upon the termination of the Distribution Agreement
between the Company and QUALCOMM.
In March 1995, the Distribution Agreement between the
Company and QUALCOMM was amended. As a result of such
amendment, the Company will have the exclusive distribution
rights in the United States for marine application of the
OmniTRACS System after the Company purchases 700 MCTs from
QUALCOMM, subject to certain minimum purchase requirements.
During 1992, Old BOATRACS issued two notes payable
aggregating $260,000 to two investors. Principle and
interest, accrued at 7.5% per annum, totaled $297,328 at
December 31, 1993 and was due in April 1995. In October
1994, $158,221 of the outstanding principal and accrued
interest were extinguished through the conversion into
267,884 shares of newly issued common stock of the Company.
The remaining balance of such notes at December 31, 1994
totaled $160,539, including $2,318 of accrued interest. The
notes had an interest rate of 7.5% per annum and were paid
in 1995. The notes were held by the Company's President and
Chief Operating Officer.
In July 1994, Old BOATRACS issued a convertible
promissory note for $200,000 to a director of Old BOATRACS.
Principal and interest, accrued at 8% per annum, were due in
July 1999. The promissory note was convertible into shares
of common stock at the option of the holder from April 1,
1995 to June 30, 1999. In addition, the Company had the
right to convert such indebtedness after April 1, 1996. The
conversion price was equal to 80% of the common stock fair
market value at the exercise date. In connection with the
issuance of the convertible promissory note, Old BOATRACS
granted the holder an option to purchase up to 5% of Old
BOATRACS' outstanding common stock for a maximum aggregate
purchase price of $50,000. In July 1994, 419,840 shares of
common stock were issued by Old BOATRACS pursuant to the
exercise of such option resulting in net proceeds to Old
BOATRACS of $50,000. As of June 15, 1995, the director
converted the principal and accrued interest on the
promissory note into 179,684 shares of common stock.
VI. Approval of 1996 Stock Option Plan
The Board of Directors of the Company believes that a
key element of executive compensation is stock-based
incentive compensation. Such compensation advances the
interests of the Company by encouraging and providing for
the acquisition of equity interests in the Company by
officers and other key employees, consultants and agents,
thereby providing substantial motivation for superior
performance. In order to provide the Board with greater
flexibility to adapt to changing economic and competitive
conditions and to implement stock-based compensation
strategies which will attract and retain those employees and
independent contractors who are important to the long-term
success of the Company, the Board has adopted, subject to
stockholder approval, the 1996 Stock Option Plan (the "1996
Plan"). If approved by the stockholders, the 1996 Plan will
become effective as of the date of such approval. A summary
of the 1996 Plan follows, but is qualified in its entirety
by reference to the full text of the 1996 Plan, which is
attached as Appendix I to this Proxy Statement.
Shares
There will be 1,000,000 shares of the Common Stock
authorized under the 1996 Plan. Shares awarded under the
1996 Plan may be composed of, in whole or in part,
authorized and unissued shares or treasury shares. If
shares subject to an option under the 1996 Plan cease to be
subject to such option, such shares will again be available
for future distribution under the 1996 Plan. At no time
during the term of the 1996 Plan, however, may the total
number of shares of Common Stock subject to outstanding
options under the 1996 Plan, any other stock option plan or
any stock purchase plan, stock bonus plan or singular plan
of the Company in the aggregate exceed 30% of the total
number of shares of Common Stock outstanding on the date of
the grant of any option under the 1996 Plan.
Administration
The 1996 Plan will be administered by a compensation
committee or such other committee designated by the Board of
Directors consisting of not less than two Directors, each of
whom is a "disinterested person" within the meaning of Rule
16b-3 of the Securities and Exchange Commission, or if there
are not at least two disinterested persons on the Board of
Directors willing to serve on such compensation committee or
other committee, by the Board of Directors (in any case, the
"Committee"). Subject to the provisions of the 1996 Plan,
the Committee will have the authority, among other things,
to set the terms of stock options granted thereunder,
establish rules and regulations which is may deem
appropriate for the proper administration of the 1996 Plan
and interpret and make determinations under the 1996 Plan.
Participation
Non-Qualified Options (as defined below) may be granted
to any person who is or has agreed to become an officer or
other employee, consultant, adviser, independent contractor
or agent (each of which relationships is hereinafter
referred to as a "Relationship") of the Company or any of
its Subsidiaries (as defined in the 1996 Plan). Incentive
Options (as defined below) may be granted to any officer or
other employee of the Company or a Subsidiary. The
participants under the 1996 Plan shall be selected from time
to time by the Committee, in its sole discretion, from among
those eligible.
Notwithstanding the foregoing, no optionee may receive
in any year, whether under the 1996 Plan or any other plan
of the Company, Incentive Options if the aggregate fair
market value (determined at the time the Incentive Option is
granted) of Common Stock for which Incentive Options are
exercisable for the first time during any calendar year
exceeds $100,000.
Grants Under the 1996 Plan
The Committee will have the authority to grant stock
options under the 1996 Plan.
Stock Options
Options issued under the 1996 Plan may be either
incentive stock options ("Incentive Options") under Section
422 of the Internal Revenue Code of 1986, as amended (the
"Code"), or non- qualified stock options ("Non-Qualified
Options").
Incentive Options and Non-Qualified Options granted
under the 1996 Plan expire on such date as is determined by
the Committee, unless earlier terminated as provided in the
1996 Plan; provided, however, that options granted under the
1996 Plan must expire within seven years after the grant
date. Notwithstanding the previous sentence, with respect to
Incentive Options, if an optionee owns, or would be
considered to own by reason of Section 424(d) of the Code,
more than 10% of the outstanding Common Stock of the Company
on the grant date and if the Committee fails to fix an
earlier termination date, Incentive Options expire five
years after the grant date. An option is exercisable at
such times as are determined on the grant date by the
Committee. An optionee may exercise a part of the option
from the date that part first becomes exercisable until the
option expires or is otherwise terminated.
The purchase price for shares to be issued to an
optionee with respect to an Incentive Option will be not
less than 100% of the fair market value (as defined in the
1996 Plan) of the Common Stock on the grant date (110% of
the fair market value in the case of Incentive Options
granted to a person who on the grant date owns or is
considered to own more than 10% of the outstanding Common
Stock). The purchase price for shares issued with respect
to a Non-Qualified Option will be not less than 85% of the
fair market value of the Common Stock on the grant date. The
exercise price of an option, plus an applicable withholding
tax, is payable in full at the time of delivery of the
shares, in cash or, at the option of the Committee, in
shares of the Common Stock.
Options granted under the 1996 Plan are not transferable
or assignable other than by will or by the laws of descent
and distribution. Upon the termination of an optionee's
Relationship with the Company or a Subsidiary by reason
other than death or disability, any options granted to him
shall terminate 30 days from the date on which such
Relationship terminates. During such 30-day period, the
optionee may exercise any option granted to him to the
extent such option was exercisable on the date of
termination of his Relationship and provided that such
option has not expired or otherwise terminated. The
optionee will also be entitled to exercise a percentage of
the options that are not yet exercisable as determined by a
formula based on the length of service during each period
that the options become exercisable.
Except as the Committee may expressly determine
otherwise, upon the termination of an optionee's
Relationship by reason of death or disability, any option
granted to him shall terminate six months after the date of
termination of his Relationship unless by its terms the
option shall expire before such date, and shall only be
exercisable to the extent exercisable on its terms the
option shall expire before such date, and shall only be
exercisable to the extent exercisable on the date of
termination of his Relationship. The optionee will also be
entitled to exercise a percentage of the options that are
not yet exercisable as determined by a formula based on the
length of service during each period that the options become
exercisable. In the case of termination by reason of death,
the option may be exercised by the person to whom the
optionee's rights under the option shall pass by will or by
the laws of descent and distribution. These and other terms
and conditions of the options will be set forth in an
agreement entered into between the Company and the optionee
at the time an option is granted to such optionee.
Term
The 1996 Plan will become effective upon stockholder
approval and will expire by its terms upon the earlier of
the expiration of the eight period measured from the date of
the Board's adoption of the 1996 Plan or the date on which
all shares available for issuance under the 1996 Plan shall
have been issued or canceled pursuant to the exercise or
surrender of options granted under the 1996 Plan.
Amendment
The 1996 Plan may be discontinued or amended by the
Board of Directors, except that no amendment or
discontinuation may adversely affect any outstanding award
without the written consent of the recipient of such award.
Amendments may be made without stockholder approval except
amendments which would (i) materially increase the benefits
accruing to participants under the 1996 Plan, (ii) increase
the number of shares of Common Stock which may be issued
under the 1996 Plan, except as permitted under the
adjustment provisions described below, or (iii) materially
modify the requirements as to eligibility for participation
in the 1996 Plan, provided, however, that the Board may
amend the 1996 Plan without stockholder approval as may be
required to comply with federal and state securities laws.
Adjustments
If the number of outstanding shares of Common Stock is
increased or decreased, or if such shares are exchanged for
a different number or kind of shares or securities of the
company through reorganization, merger, recapitalization,
reclassification, stock dividend, stock split, combination
of shares or other similar transaction the aggregate number
of shares of Common Stock subject to the 1996 Plan and the
shares of Common Stock subject to issued and outstanding
options under the 1996 Plan, will be appropriately and
proportionately adjusted by the Committee. Any such
adjustment in the outstanding options will be made without
change in the aggregate purchase price applicable to the
unexercised portion of the option but with an appropriate
adjustment in the price for each share or other unit of any
security covered by the option.
Notwithstanding the foregoing, upon the dissolution or
liquidation of the Company or upon any reorganization,
merger or consolidation with one or more corporations as a
result of which the Company is not the surviving
corporation, or upon a sale of all or substantially all of
the assets of the company to another corporation or entity,
the 1996 Plan and each outstanding option shall terminate;
provided, however, that: (i) each option for which no option
has been tendered by the surviving or acquiring corporation,
if any, in accordance with all of the terms of provision
(ii) immediately below will become fully exercisable
immediately before the effective date of such dissolution,
liquidation, merger, consolidation or sale of assets in
which the Company is not the surviving or acquiring
corporation; and (iii) in its sole and absolute discretion,
the surviving or acquiring corporation may, but will not be
obligated to tender to any optionee holding an option, an
option or options to purchase shares of the surviving or
acquiring corporation, and such new option or options will
contain such terms and provisions as shall be required
substantially to preserve the rights and benefits of any
option then outstanding under the 1996 Plan.
Certain Federal Income Tax Consequences
Incentive Options. The Company believes that Incentive
Options which are granted under the 1996 Plan will qualify
as incentive stock options within the purview of Section 422
of the Code. The following is a summary of the principal
federal income tax aspects of Incentive Options.
In general, no income is recognized by an optionee at
the time an Incentive Option is granted, and no income is
recognized by an optionee upon its exercise of the option.
If the optionee makes no disposition of the shares received
upon exercise of the option within two years from the date
the option was granted and one year from the date the shares
were issued to the optionee upon exercise of the option, the
optionee will recognize long- term capital gain or loss when
the optionee disposes of the shares. Such gain or loss will
be measured by the difference between the option price and
the amount received for the shares at the time of
disposition.
If the optionee disposes of shares acquired upon
exercise of an Incentive Option before the expiration of the
applicable holding periods, any amount realized from such
disqualifying disposition will be taxable as ordinary income
in the year of disposition generally to the extent of the
lesser of the fair market value of the shares on the date
the option was exercised or the fair market value at the
time of such disposition exceeds the option price. Any
amount realized upon such a disposition in excess of the
fair market value of the shares on the date of exercise will
be treated as long-term or short-term capital gain,
depending upon whether the shares have been held for more
than one year.
The tax consequences may vary if an Incentive Option is
exercised by paying the exercise price, in whole or in part,
by the transfer to the Company of shares of common stock.
If the optionee transfers shares of common stock which he or
she received through the exercise of an incentive stock
option and which he or she had not held for the requisite
holding period prior to the transfer, the optionee will
recognize income as if the shares had been sold or
exchanged. The basis of the new shares received pursuant to
the exercise would be the optionee's basis in the tendered
shares, plus the amount of income recognized, plus the
amount of cash paid, if any.
The Company will not be allowed a deduction for federal
income tax purposes at the time of the grant or exercise of
an Incentive Option. At the time of a disqualifying
disposition by an optionee, the Company generally will be
entitled to a deduction to the extent that the optionee
recognizes ordinary income.
Non-Qualified Options. An optionee recognizes no income
at the time a Non-Qualified Option is granted under the 1996
Plan. An optionee will recognize ordinary income at the time
a Non- Qualified Option is exercised in an amount equal to
the excess of the fair market value of the shares on the
date of exercise over the exercise price; provided, however,
that if an optionee who is subject to the provisions of
Section 16(b) of the Securities Exchange Act of 1934 (an
officer, director or 10% stockholder) exercises a Non-
Qualified Option within six months of the date of grant, the
optionee will recognize ordinary income on the date that is
six months after the date of grant unless the optionee makes
an election under Section 83(b) of the Code to recognize
income at the time of the exercise. The Company generally
will be entitled to a deduction for federal income tax
purposes in the year and in the same amount as the optionee
is considered to have recognized ordinary income in
connection with the exercise of a Non-Qualified Option if
provision is made for withholding of federal income taxes,
where applicable.
An optionee will recognize gain or loss on the
subsequent sale of shares acquired upon exercise of a Non-
Qualified Option in an amount equal to the difference
between the amount realized and the tax basis of such
shares, which will equal the option price paid plus the
amount included in the employee's income by reason of the
exercise of the option. Provided such shares are held as a
capital asset, such gain or loss will be long-term or short-
term capital gain or loss depending upon whether the shares
have been held for more than one year.
The Company has the right to deduct any sums required by
federal, state or local tax laws to be withheld with respect
to the exercise of any Non-Qualified Option from sums owing
to the person exercising the option or, in the alternative,
may require the person exercising the option to pay such
sums to the Company prior to or in connection with such
exercise.
Optionees should consult with their own tax advisors
regarding the tax consequences of the Incentive and Non-
Qualified Options.
Vote Required
Approval of the 1996 Plan requires the affirmative vote
of the holders of at least a majority of the outstanding
shares of Common Stock present, or represented, and entitled
to vote at the Annual Meeting.
The Board of Directors unanimously recommends a vote FOR
the approval of the 1996 Plan.
New Plan Benefits- 1996 Stock Option Plan
Pursuant to the 1996 Plan, the Committee currently
intends to approve the grant of options, subject to
shareholder approval, to the following persons and groups,
in the amounts reflected in the table.
Estimated
Number Exercise
Name and Position of Options Price
Michael Silverman
Chairman, President and
Chief Executive Officer 0 $0
Annette Friskopp
Chief Operating Officer 100,000 $1.00
Executive Group 165,000 $1.00
Non-Executive Director Group 30,000 $1.00
Non-Executive
Officer Employee Group 0 $0
VII. APPROVAL OF AMENDMENT OF THE BY-LAWS
The Board of Directors believes that the Company should
have additional flexibility in the number of seats available
for the appointment of Directors. Therefore, the Board
recommends that the shareholders approve an amendment to the
By-laws increasing the authorized maximum number of
Directors from five to nine. If shareholders vote to
approve this proposal, Article III, Section 2, of the By-
laws will be revised to read as follows.
Section 2. NUMBER AND QUALIFICATION OF DIRECTORS.
The authorized number of directors shall be not less
than five nor more than nine; provided, however,
whenever the corporation has fewer than (3) three
shareholders, the minimum number of directors shall be
equal to the number of shareholders. The exact number of
authorized directors shall be six until changed, within the
limits specified above, by an amendment to this section
duly adopted by the board of directors or by the
shareholders. The maximum or minimum number of directors
cannot be changed, nor can a fixed number be substituted
for the maximum and minimum numbers, except by approval of
the outstanding shares, as defined in Section 152 of the
Code. Any amendment of the Bylaws or Articles that would
reduce the minimum number to a number less than five (5),
however, cannot be adopted if the votes cast against
its adoption at a shareholders' meeting or the shares not
consenting to an action by written consent are equal to
more than sixteen and two-thirds percent (16-2/3%) of the
outstanding shares entitled to vote. No amendment may
change the stated maximum number of authorized directors
to a number greater than two times the stated
minimum number minus one.
Approval of the amendment of the By-laws requires the
affirmative vote of the holders of at least a majority of
the outstanding shares of Common Stock entitled to vote at
the Annual Meeting.
The Board of Directors unanimously recommends a vote FOR
the approval of the amendment of the By-laws.
VIII. Independent Public Accountants
Deloitte & Touche LLP has acted as the Company's
independent public accountants since the fiscal year ending
December 31, 1994. The Company intends to engage their
services again to perform the 1997 audit. Deloitte & Touche
LLP has advised the Company that they had no direct or
indirect financial interest in the Company and its
subsidiaries. Deloitte & Touche
LLP has not indicated to the Company that it is unwilling
to serve again as the Company's independent public
accountants. The Company does not anticipate Deloitte &
Touche LLP to attend the Annual Meeting.
In connection with its audits for the two most recent
years ended December 31, 1995, and the subsequent interim
period through March 31, 1996, there have been no
disagreements with Deloitte & Touche LLP on any matter of
accounting principles or practices, financial statement
disclosure or auditing scope or procedures which
disagreements if not resolved to their satisfaction would
have caused them to make reference in connection with their
opinion to the subject matter of the disagreements.
IX. Date for Submission of Stockholder Proposals
For 1997 Annual Meeting
Any proposal relating to a proper subject which a
stockholder may intend to present for action at the 1997
Annual Meeting of Stockholders and which such stockholder
may wish to have included in the Company's proxy materials
for such meeting must, in accordance with the provisions of
Rule 14a-8 promulgated under the Securities Exchange Act of
1934, be received in proper form by the Company at its
principal executive office not later than January 9, 1997.
It is suggested that any such proposal be submitted by
certified mail, return receipt requested.
X. Other Business
Management is not aware of any matters to come before
the Annual Meeting other than those stated in this Proxy
Statement. However, inasmuch as matters of which management
is not now aware may come before the Annual Meeting or any
adjournment thereof, the proxies confer discretionary
authority with respect to acting thereon, and the persons
named in such proxies intend to vote, act, and consent in
accordance with their best judgment with respect thereto.
Upon receipt of such proxies (in the form enclosed and
properly signed) in time for voting, the shares represented
thereby will be voted as indicated thereon and in this Proxy
Statement.
By Order of the Board of Directors,
MICHAEL SILVERMAN
President
San Diego, California
April 15, 1996
<PAGE>
EXHIBIT I
This Document Constitutes Part of a
Prospectus Covering Securities That
Have Been Registered under The
Securities Act of 1933.
Dated: February 8, 1996
BOATRACS, INC.
1996 STOCK OPTION PLAN
1.Purposes of the Plan.
The Boatracs, Inc. 1996 Stock Option Plan (the "Plan") is
intended to promote the interests of Boatracs, Inc., a California
corporation (the "Company"), by providing a method whereby
(i) employees of the Company (or its parent or subsidiary
corporations) responsible for the management, growth and
financial success of the Company (or its parent or subsidiary
corporations), and (ii) non-employees who provide valuable
services to the Company (or its parent or subsidiary
corporations), as determined by the Plan Administrator, may be
offered incentives and rewards which will encourage them to
acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Company and continue to render
services to the Company (or its parent or subsidiary
corporations).
2.Administration of the Plan.
(a) The Plan shall be administered by the Company's Board
of Directors (the "Board") or, to the extent provided by the
Board, a committee (the "Committee") appointed by the Board,
which shall consist of not less than two disinterested persons
(as such term is defined in Rule 16b-3, or any successor rule,
under the Securities Exchange Act of 1934), who shall serve at
the pleasure of the Board; provided, however, that if there are
not at least two directors who are disinterested persons and
willing to serve on the Committee, the Plan shall be administered
by the Board. For purposes of the Plan, the term "Plan
Administrator" shall mean the Board, or if the Board delegates
responsibility for any matter to the Committee, the Committee.
(b) Subject to the provisions of the Plan, the Plan
Administrator shall have full power and authority to select the
Optionees (as defined in Section 3) to be granted the options
under the Plan, and to determine (i) whether each granted option
is to be an incentive stock option ("Incentive Stock Option")
which satisfies the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code") or
a non-statutory Stock Option not intended to meet such
requirements, (ii) the number of shares to be subject to such
option; (iii) the exercise prices of such shares, (iv) the terms
of exercise, (v) the expiration dates and (vi) all other terms
and conditions upon which such option may be exercised. The Plan
Administrator shall have the full power and authority (subject to
the provisions of the Plan) to establish such rules and
regulations as it may deem appropriate for the proper
administration of the Plan and to make such determinations under,
and issue such interpretations of, the Plan and any outstanding
option as it may deem necessary or advisable. Decisions of the
Plan Administrator shall be final and binding on all parties who
have an interest in the Plan or any outstanding option. No
person acting under this subsection shall be held liable for any
action or determination made in good faith with respect to the
Plan or any option granted under the Plan.
(c) The Company shall indemnify and hold harmless each
Committee member and each director of the Company, and the estate
and heirs of such Committee member or director, against all
claims, liabilities, expenses, penalties, damages or other
pecuniary losses, including legal fees, which such Committee
member or director, his or her estate or heirs may suffer as a
result of his or her responsibilities, obligations or duties in
connection with the Plan, to the extent that insurance, if any,
does not cover the payment of such items.
3.Eligibility for Option Grants.
The persons eligible to receive option grants pursuant to the
Plan ("Optionees") are as follows:
(i) employees of the Company (or its parent or subsidiary
corporations) who render services which contribute to the
success and growth of the Company (or its parent or
subsidiary corporations) or which may reasonably be
anticipated to contribute to the future success and growth of
the Company (or its parent or subsidiary corporations); and
(ii) non-employees who provide valuable services to the
Company (or its parent or subsidiary corporations).
4.Stock Subject to the Plan.
(a) The stock issuable under the Plan shall be shares of
the Company's authorized but unissued or reacquired common stock
(the "Common Stock"). The aggregate number of shares which may
be issued under the Plan shall not exceed 1,000,000 shares of
Common Stock. The total number of shares issuable under the Plan
shall be subject to adjustment from time to time in accordance
with the provisions of this Section 4.
(b) Should an option be terminated for any reason without
being exercised or surrendered in whole or in part, the shares
subject to the portion of the option not so exercised or
surrendered shall be available for subsequent option grants under
the Plan.
(c) In the event that the outstanding shares of Common
Stock issuable under the Plan as a class are increased or
decreased, or changed into or exchanged for a different number or
kind of shares or securities, as a result of any Corporate
Transactions (as defined in Section 7), stock splits, stock
dividends, or the like affecting the outstanding Common Stock as
a class, then appropriate adjustments shall be made to the
aggregate number of shares issuable under the Plan and to the
number of shares and price per share of the Common Stock subject
to each outstanding option, in order to prevent the dilution or
enlargement of benefits under such outstanding options.
5.Terms and Conditions of Options.
Options granted pursuant to the Plan shall be authorized by
action of the Plan Administrator and may, at the Plan
Administrator's discretion, be either Incentive Stock Options or
non-statutory Stock Options. Individuals who are not employees
of the Company or its parent or subsidiary corporations may only
be granted non-statutory Stock Options. Each granted option
shall be evidenced by one or more written instruments in a form
approved by the Plan Administrator; provided, however, that each
such instrument shall comply with and incorporate the terms and
conditions specified in this Section 5.
(a) Option Price.
(1) The option price per share (the "Option Price"),
(a) with respect to a non-qualified Stock Option, shall be
between eighty-five percent (85%) and one hundred percent (100%)
of the fair market value of a share of Common Stock on the date
of the option grant, as determined by the Company on a case by
case basis and (b) with respect to an Incentive Stock Option,
shall, subject to subsection (a)(2) below, be one hundred percent
(100%) of the fair market value of a share of Common Stock on the
date of the option grant.
(2) 10% Shareholder. If any Optionee under the Plan
is on the date of grant of an Incentive Stock Option the owner of
stock (as determined under Section 424(d) of the Internal Revenue
Code) possessing ten percent (10%) or more of the total combined
voting power of all classes of stock of the Company or any one of
its parent or subsidiary corporations (a "10% Shareholder"), then
the option price per share acquired pursuant to exercise of an
Incentive Stock Option shall not be less than one hundred and ten
percent (110%) of the fair market value of a share of Common
Stock on the date of the option grant.
(3) The option price shall become immediately due
upon exercise of the option and shall, subject to the provisions
of the instrument evidencing the grant, be payable in one of the
alternative forms specified below:
(i) full payment in cash or cash
equivalents; or
(ii) full payment in shares of Common Stock having
a fair market value on the Exercise Date (as defined below)
in an amount equal to the option price; or
(iii) a combination of shares of Common Stock valued
at fair market value on the Exercise Date and cash or cash
equivalents, equal in the aggregate to the option price; or
(iv) any other form of consideration as the Plan
Administrator may approve.
For purposes of this Section 5(a)(3), the Exercise Date shall
be the first date on which the Company shall have received both
written notice of the exercise of the option and payment of the
option price for the purchased shares of Common Stock.
(4) For all valuation purposes under the Plan, the
fair market value of a share of Common Stock shall be determined
in accordance with the following provisions:
(i) If the Common Stock is not at the time listed
or admitted to trading on any stock exchange but is traded in
the over-the-counter market, the fair market value shall be
the mean between the highest bid and lowest asked prices (or,
if such information is available, the closing selling price)
of one share of Common Stock in the over-the-counter market,
as such prices are reported by the National Association of
Securities Dealers through its NASDAQ system or any successor
system, on the date of the option grant or Exercise Date, as
the case may be. If there are no reported bid and asked
prices (or closing selling price) for the Common Stock on the
date in question, then the mean between the highest bid price
and lowest asked price (or the closing selling price) on the
last preceding date for which such quotations exist shall be
determinative of fair market value.
(ii) If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the fair
market value shall be the closing selling price of one share
of Common Stock on the date in question on the stock exchange
determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If
there is no reported sale of Common Stock on such exchange on
the date in question, then the fair market value shall be the
closing selling price on the exchange on the last preceding
date for which such quotation exists.
(iii) If the Common Stock at the time is neither
listed nor admitted to trading on any stock exchange nor
traded in the over-the-counter market, then the fair market
value shall be determined by the Plan Administrator in
accordance with Section 260.140.50 of the California Code of
Regulations or any successor rule.
(b) Option Period. The term of each option shall
commence on the date of grant of the option and shall be seven
(7) years, except that if an Incentive Stock Option is granted to
an Optionee who, immediately before the grant of the Incentive
Stock Option, owns stock representing more than ten percent (10%)
of the total combined voting power of all classes of stock of the
Company or its parent or subsidiary corporations, the exercise
period specified in the option agreement for which the Incentive
Stock Option thereunder is granted, shall not exceed five years
from the date of grant. Subject to other provisions of the Plan,
(a) each Incentive Stock Option shall be exercisable during its
term as to twenty percent (20%) of the Incentive Stock Option
shares during the twelve (12) months beginning on the first
anniversary of the date of grant, and twenty percent (20%)
thereafter during each of the four (4) next successive twelve
(12) month periods, and (b) each non-qualified Stock Option shall
be exercisable over a five (5) year term, as determined by the
Company on a case by case basis, provided, however, that each non-
qualified Stock Option shall be exercisable at a rate of at least
twenty percent (20%) per year over five (5) years from the date
the non-qualified Stock Option is granted. Additionally, if an
Optionee shall not in any period purchase all of the option
shares which the Optionee is entitled to purchase in such period,
then the Optionee may purchase all or any part of such shares
subject to this Agreement at any time after the end of such
period and prior to the expiration of the option.
(c) Effect of Termination.
(1) Subject to the other provisions of the Plan,
should an Optionee cease to be a service provider to the Company
("Service Provider"), or employee or director, for any reason
(including death or permanent disability as defined in
Section 105(d)(4) of the Internal Revenue Code), then any option
or options granted under the Plan to such Optionee and
outstanding on the Cessation Date (as defined below) shall remain
exercisable for a period not to exceed six (6) months from the
date of such cessation of Service Provider, employee or director,
status (the "Cessation Date"), the specific amount of time to be
determined at the time of granting the option; provided, however,
that under no circumstances shall such options be exercisable
after the expiration date of the option term specified in the
instrument evidencing the option grant. Notwithstanding the
foregoing, such shorter period of exercisability following the
Cessation Date, as determined by the Company at the time of
original grant, shall in no event be less than: (i) six
(6) months in the event that employment termination is due to the
death or disability of the Optionee and (ii) thirty (30) days in
the event that employment termination is due to any other reason.
Each such option shall, during such six (6) month or shorter
period, be exercisable to the extent of the number of shares (if
any) for which the option is exercisable on the Cessation Date
(the "Vested Shares"), and to the extent that on the Cessation
Date the number of shares (if any) for which the option is not
exercisable will become exercisable within the following year,
the Optionee may exercise the option for a percentage of such
shares based on the following fraction: the numerator shall be
the number of days from the last anniversary date of the grant of
the option to the Cessation Date and the denominator shall be the
number of days from the last anniversary date of the grant of the
option to the next anniversary date of the grant of the option.
Upon the expiration of such six (6) month or shorter period or
(if earlier) upon the expiration of the option term, the option
shall terminate and cease to be exercisable.
(2) Notwithstanding subsection (c)(1) above, the Plan
Administrator shall have complete discretion, exercisable either
at the time the option is granted or at the Cessation Date to
provide that options held by such Optionee may be exercised not
only with respect to Vested Shares as of the Cessation Date, but
also with respect to one or more subsequent installments of
shares for which the option would otherwise have become
exercisable had such cessation of Service Provider status not
occurred.
(3) For purposes of the Plan, the Optionee shall be
deemed to be a Service Provider of the Company for so long as the
Optionee renders periodic services to the Company or one or more
of its parent or subsidiary corporations.
(d) No Employment or Service Contract. Nothing in the
Plan shall confer upon the Optionee any right to continue in the
service of the Company (or any parent or subsidiary corporation
of the Company employing or retaining the Optionee) for any
period of specific duration or interfere with or otherwise
restrict in any way the rights of the Company (or any parent or
subsidiary corporation of the Company employing or retaining
Optionee) or the Optionee, to terminate the service provider
status of Optionee at any time for any reason or no reason
whatsoever, with or without cause.
(e) Stockholder Rights. An Optionee shall have none of
the rights of a stockholder with respect to any shares covered by
the option until such individual shall have duly exercised the
option and paid the option price.
6. Exercise of Options.
(a) Each Option may be exercised in whole or in part (but
not as to fractional shares) by delivering it for surrender or
endorsement to the Company, attention of the Corporate Secretary,
at the Company's principal office, together with payment of the
Exercise Price and an executed Notice and Agreement of Exercise
in the form prescribed by the Company.
(b) Exercise of each Option is conditioned upon the
agreement of the Optionee to the terms and conditions of this
Plan and of such Option as evidenced by the Optionee's execution
and delivery of a Notice and Agreement of Exercise in a form to
be determined by the Committee in its discretion. Such Notice
and Agreement of Exercise shall set forth the agreement of the
Optionee that: (a) no Option Shares will be sold or otherwise
distributed in violation of the Securities Act of 1933 (the
"Securities Act") or any other applicable federal or state
securities laws, (b) each Option Share certificate may be
imprinted with legends reflecting any applicable federal and
state securities law restrictions and conditions, (c) the Company
may comply with said securities law restrictions and issue "stop
transfer" instructions to its Transfer Agent and Registrar
without liability, (d) each Optionee will timely file all reports
required under federal securities laws, and (e) each Optionee
will report all sales of Option Shares to the Company in writing
on a form prescribed by the Company.
(c) No Option shall be exercisable unless and until any
applicable registration or qualification requirements of federal
and state securities laws, and all other legal requirements, have
been fully complied with. The Company will use reasonable efforts
to maintain the effectiveness of a Registration Statement under
the Securities Act for the issuance of Options and shares
acquired thereunder, but there may be times when no such
Registration Statement will be currently effective. The exercise
of Options may be temporarily suspended without liability to the
Company during times when no such Registration Statement is
currently effective, or during times when, in the reasonable
opinion of the Committee, such suspension is necessary to
preclude violation of any requirements of applicable law or
regulatory bodies having jurisdiction over the Company. If any
Option would expire for any reason except the end of its term
during such a suspension, then if exercise of such Option is duly
tendered before its expiration, such Option shall be exercisable
and exercised (unless the attempted exercise is withdrawn) as of
the first day after the end of such suspension. The Company
shall have no obligation to file any Registration Statement
covering resales of Option Shares.
(d) Withholding Taxes. The Company shall have the right
at the time of exercise of any Stock Option to make adequate
provision for any federal, state, local, or foreign taxes which
it believes are or may be required by law to be withheld with
respect to such exercise.
(e) Dollar Limitation. The aggregate fair market value
(determined as of the respective date or dates of grant) of the
Common Stock for which one or more options granted to any
Employee under the Plan (or any other option plan of the Company
or its parent or subsidiary corporations) may for the first time
become exercisable as Incentive Stock Options during any one
calendar year shall not exceed the sum of One Hundred Thousand
Dollars ($100,000). In the event that Section 422 of the
Internal Revenue Code is amended to alter the limitation set
forth therein so that following such amendment such limitation
shall differ from the $100,000 limitation set forth above, the
dollar limitation of this Section 6(e) shall be automatically
adjusted accordingly. To the extent the Employee holds two or
more such options which become exercisable for the first time in
the same calendar year, the foregoing limitation on the
exercisability thereof as Incentive Stock Options shall be
applied on the basis of the order in which such options are
granted, and any Incentive Stock Options subject to the
limitations of this Section 6(e) shall be treated as non-
qualified Stock Options subject to the applicable terms and
conditions of the Plan.
7.Corporate Transactions.
(a) In the event of any of the following transactions (a
"Corporate Transaction"):
(i) a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Company's
incorporation,
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company, or
(iii)any reverse merger in which the Company is the
surviving entity but in which fifty percent (50%) or more of the
Company's outstanding voting stock is transferred to holders
different from those who held the stock immediately prior to such
merger,
then each outstanding option which is not to be assumed by the
successor corporation or parent thereof (or to be replaced with a
comparable option to purchase shares of the capital stock of such
successor corporation or parent thereof) automatically shall be
accelerated so that each such option, immediately prior to the
specified effective date for such Corporate Transaction, shall
become fully exercisable with respect to the total number of
shares of Common Stock purchasable under such option. Any such
accelerated options not exercised as of the consummation of the
Corporate Transaction shall terminate and cease to be
exercisable, unless assumed by the successor corporation or
parent thereof (or replaced with a comparable option to purchase
shares of the capital stock of such successor corporation or
parent thereof).
(b) In connection with any Corporate Transaction, the
exercisability of any accelerated options under the Plan as an
Incentive Stock Option shall remain subject to the applicable
dollar limitation of Section 6(e).
(c) The Plan Administrator shall have the right and power
at any time to waive in whole or in part, absolutely or
conditionally, any right of the Company contained in any
instrument or option agreement evidencing any options granted
under the Plan.
(d) The grant of options under the Plan shall in no way
affect the right of the Company to adjust, reclassify, reorganize
or otherwise change its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
8.Amendment of the Plan.
(a) The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects
whatsoever; provided, however, that no such amendment or
modification shall, without the consent of the holders, adversely
affect rights and obligations with respect to options at the time
outstanding under the Plan; and provided further, that the Board
shall not, without the approval of the stockholders of the
Company (i) increase the maximum number of shares issuable under
the Plan, except for permissible adjustments under Section 4(c),
(ii) materially modify the eligibility requirements for the grant
of options under the Plan or (iii) otherwise materially increase
the benefits accruing to participants under the Plan.
(b) The provisions of this Plan pertaining to Incentive
Stock Options are intended to comply with all requirements of the
Internal Revenue Code pertaining to qualification of such
incentive stock options as Incentive Stock Options under the
Internal Revenue Code and all provisions of the Plan with respect
thereto shall be construed in a manner consistent therewith.
9.Effective Date and Term of Plan.
(a) The Plan shall become effective when adopted by the
Board, but no option granted under the Plan shall become
exercisable unless and until the Plan shall have been approved by
the shareholders of the Company. If such shareholder approval is
not obtained within twelve (12) months after the date of the
Board's adoption of the Plan, then all options previously granted
under the Plan shall terminate and no further options shall be
granted. Subject to such limitation, the Plan Administrator may
grant options under the Plan at any time after the Plan effective
date and before the date fixed herein for termination of the
Plan.
(b) Unless sooner terminated in accordance with the
provisions hereof, the Plan shall terminate upon the earlier of
(i) the expiration of the eight (8) year period measured from the
date of the Board's adoption of the Plan or (ii) the date on
which all shares available for issuance under the Plan shall have
been issued or canceled pursuant to the exercise or surrender of
options granted under the Plan.
10. Regulatory Approvals.
The implementation of the Plan, the granting of any option
under the Plan, and the issuance of Common Stock upon the
exercise or surrender of any such option, shall be subject to the
procurement by the Company of all approvals and permits required
by regulatory authorities having jurisdiction over the Plan, the
options granted under the Plan and the Common Stock issued
pursuant to the Plan.
11. Requests for Information.
For additional information about the Plan or the Plan
Administrator, please direct all such requests to the Chief
Financial Officer of Boatracs, Inc., 6440 Lusk Boulevard,
Suite D201, San Diego, CA 92121, telephone number (619) 587-1981.
12. Financial Reports.
The Company shall deliver financial and other information
regarding the Company, on an annual or other periodic basis, to
each individual holding an outstanding option under the Plan, to
the extent the Company is required to provide such information
pursuant to Section 260.140.46 (or any successor thereto) of the
Rules of the California Corporations Commissioner.
13. Successors in Interest.
The Company shall not assign or delegate to any other person
this Plan or any rights or obligations under this Plan. Subject
to any restriction on transferability contained in this Plan,
this Plan shall be binding upon and shall inure to the benefit of
the successors-in-interest and assigns of each party to this
Plan. Nothing in this Paragraph shall create any rights
enforceable by any person not a party to this Plan, except for
the rights of the successors-in-interest and assigns of each
party to this Plan, unless such rights are expressly granted in
this Plan to other specifically identified persons.
14. Governing Law.
This Plan shall be construed in accordance with, and governed
by, the laws of the State of California.
15. Attorney's Fees.
In the event any litigation, arbitration, mediation, or other
proceeding ("Proceeding") is initiated by any party(ies) against
any other party(ies) to enforce, interpret or otherwise obtain
judicial or quasi-judicial relief in connection with this Plan
the prevailing party(ies) in such Proceeding shall be entitled to
recover from the unsuccessful party(ies) all costs, expenses, and
actual attorney's and expert witness fees relating to or arising
out of (a) such Proceeding (whether or not such Proceeding
proceeds to judgment), and (b) any post-judgment or post-award
proceeding including without limitation one to enforce any
judgment or award resulting from any such Proceeding. Any such
judgment or award shall contain a specific provision for the
recovery of all such subsequently incurred costs, expenses, and
actual attorney's and expert witness fees.
16. Prior Understandings.
This Plan contains the entire agreement between the parties
with respect to the subject matter of the Plan, is intended as a
final expression with respect to such terms as are included in
the Plan, and supersedes all negotiations, stipulations,
understandings, agreements, representations and warranties, if
any, with respect to such subject matter, which precede or
accompany the execution of the Plan.
17. Arbitration.
All disputes pertaining to this Plan shall be resolved by the
American Arbitration Association pursuant to its rules in San
Diego, California.
18. Option Non-Transferable; Exceptions
This option shall be neither transferable nor assignable by
Optionee other than by will or by the laws of descent and
distribution and may be exercised, during Optionee's lifetime,
only by Optionee.
<PAGE>
FORM OF PROXY FRONT
SOLICITED BY THE BOARD OF DIRECTORS OF BOATRACS, INC.
ANNUAL MEETING OF SHAREHOLDERS--THURSDAY MAY 9, 1996
BOATRACS, INC.
THE UNDERSIGNED hereby appoints Michael Silverman &
Annette Friskopp their true and lawful proxies (with full
power of substitution to vote in their name, place and stead
all shares in Boatracs, Inc. that the undersigned owns or is
entitled to vote at the Annual Meeting of Shareholders to be
held May 9, 1996, and at any adjournment thereof, upon the
matters listed below in accordance with the following
instructions:
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Please specify choices, date, sign and return the proxy in
the enclosed envelope. No postage is required if returned
in the enclosed envelope and mailed in the United States.
(Continued, and to be marked, dated and signed, on the other
side)
<PAGE>
FORM OF PROXY BACK
If any of the following boxes are checked the shares covered
by this proxy will be voted in accordance herewith. If no
box is checked the proxies will be voted for the persons
nominated as directors by the Board of Directors. On other
matters presented, the shares will be voted in accordance
with the persons best judgement.
WITHHELD
FOR FOR ALL FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS // // 2. TO VOTE FOR APPROVAL
NOMINEES: OF THE BOATRACS INC.
Michael Silverman 1996 STOCK OPTION PLAN
Annette Friskopp // // //
Giles Bateman
Norman Kane 3. TO VOTE FOR APPROVAL
Luis Maizel OF THE AMENDMENT OF
Ilana Silverman THE BYLAWS // // //
______________________________________
For all nominees except as noted above Receipt of the Boatracs Inc.
____ Proxy Statement and Annual
| Report for the year ended
| December 31, 1995 is hereby
| acknowledged. Please vote my
shares as indicated on the
face of this proxy.
Signature(s)______________________________ Date___________________________
NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
