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
Filed by a Party other than the Registrant
Check the appropriate box:
x Preliminary Proxy Statement Confidential, for
Use of the Commission
Only (as permitted
by Rule 14a-6(e)(2))
- - Definitive Proxy Statement
- - Definitive Additional Materials
- - Soliciting Material Pursuant to Rule 14a-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):
X $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:
- 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:
<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 Wyndam 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 13, 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 Wyndam 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 13, 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, 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 15, 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 15, 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
(7 persons) 8,660,016 69%
______________________
(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 or 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 Graduate
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 from the University of
Nebraska. 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 Nataz, 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 TABLE
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
Cheif 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.
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
deliberatons 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 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, totalled $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 totalled $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 are currently 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, are due in July 1999. The
promissory note is convertible into shares of common stock at the
option of the holder from April 1, 1995 to June 30, 1999. In
addition, the Company has the right to convert such indebtedness
after April 1, 1996. The conversion price will be 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.
The Company has entered into an Addendum to Stock
Issuance/Employment Agreement effective January 21, 1991, and
amended July 1995, whereby Annettte 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.
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 30
days 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; (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.
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.
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.
The Company expects that a representative of Deloitte &
Touche LLP will be present at the Annual Meeting and that their
representative will have the opportunity to make a statement if
he so desires and will also be available to answer questions.
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 13, 1996
<PAGE>
APPENDIX 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 cancelled 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
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.
