EGAN SYSTEMS, INC.
1501 Lincoln Avenue
Holbrook, New York 11741
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 17, 1998
To the Shareholders of Egan Systems, Inc.:
An Annual Meeting of Shareholders of Egan Systems, Inc. (the "Company")
will be held at the Sheraton Imperial Hotel, 4700 Emperor Boulevard, Raleigh,
North Carolina at 10:00 a.m., on Thursday, December 17, 1998 for the following
purposes:
1. To elect three directors of the Company to hold office until the next
annual meeting of shareholders or until their successors are duly
elected and qualified.
2. To consider and act upon a proposal to ratify the appointment of
Patrusky, Mintz & Semel as the independent auditors of the books and
accounts of the Company for the year ending December 31, 1998.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on November 6, 1998 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you are
planning to attend the meeting, you are urged to complete, date and sign the
enclosed proxy card and return it promptly.
YOUR VOTE IS IMPORTANT! PLEASE PROMPTLY MARK, DATE, SIGN, AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE. IF YOU ABLE TO ATTEND THE MEETING AND WISH TO
VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS
VOTED.
By Order of the Board of Directors
/s/ Edward J. Egan
----------------------------------
Edward J. Egan
President
Holbrook, New York
November 25, 1998
<PAGE>
EGAN SYSTEMS, INC.
1501 Lincoln Avenue
Holbrook, New York 11741
----------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 17, 1998
----------------
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Egan Systems, Inc. (the
"Company") for the use at the 1998 Annual Meeting of Shareholders of the Company
and at any adjournment thereof (the "Annual Meeting"). The Annual Meeting is
scheduled to be held at the Sheraton Imperial Hotel, 4700 Emperor Boulevard,
Raleigh, North Carolina 27703, on Thursday, December 17, 1998 at 10:00 a.m.
local time. The Proxy Statement and the enclosed form of proxy will first be
sent to shareholders on or about November 25, 1998.
Proxies
The shares represented by any proxy in the enclosed form, if such proxy is
properly executed and is received by the Company prior to or at the Annual
Meeting prior to the closing of the polls, will be voted in accordance with the
specifications made thereon. Proxies on which no specification has been made by
the shareholder will be voted (i) for the election to the Board of Directors of
the nominees of the Board of Directors named herein and (ii) in favor of the
proposal to appoint Patrusky, Mintz & Semel as the independent auditors of the
books and accounts of the Company for the year ending December 31, 1998. Proxies
are revocable by written notice received by the Secretary of the Company at any
time prior to their exercise or by executing a later dated proxy. Proxies will
be deemed revoked by voting in person at the Annual Meeting.
Voting Securities
Shareholders of record at the close of business on November 6, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. On
the Record Date, the total number of shares of common stock of the Company, no
par value per share (the "Common Stock"), outstanding and entitled to vote was
18,560,473. The holders of all outstanding shares of Common Stock are entitled
to one vote for each share of Common Stock registered in their names on the
books of the Company at the close of business on the Record Date.
Quorum and Other Matters
The presence at the Annual Meeting, in person or by proxy, of the holders
of not less than one-third of the eligible votes represented by the outstanding
shares of Common Stock entitled to vote at the Annual Meeting is necessary to
constitute a quorum. The Board of Directors is not aware of any matters that are
expected to come before the Annual Meeting, the persons named in the
accompanying proxy intend to vote such proxies in accordance with their best
judgement.
Shares of Common Stock represented by a properly dated, signed and returned
proxy will be counted as present at the Annual Meeting for purposes of
determining a quorum without regard to whether the proxy is marked as casting a
vote or abstaining. Directors will be elected by a plurality of the votes cast
at the Annual Meeting. The appointment of the independent auditors of the
Company requires the approval of a majority of the votes cast at the Annual
Meeting. Therefore, abstentions and broker non-votes will have no effect on the
election of directors or any such other matter.
<PAGE>
Under the laws of the State of Delaware, dissenters rights are not
available to shareholders of the Company with respect to any matter scheduled to
be brought before the Annual Meeting.
ELECTION OF DIRECTORS
(Proxy Proposal No. 1)
Three directors are to be elected to serve until the next annual meeting of
shareholders and until their successors are elected and shall have qualified.
Directors shall be elected by shareholders holding a plurality of the votes
represented by the shares of Common Stock present at the Annual Meeting. It is
the intention of the persons named in the form of proxy, unless authority is
withheld, to vote the proxies given them for the election of all nominees
hereinafter named. In the event, however, that any one of them is unable or
declines to serve as a director, the appointees named in the form of proxy
reserve the right to substitute another person of their choice as nominee, in
his place and stead, or to vote for such lesser number of directors as may be
presented by the Board of Directors in accordance with the Company's Articles of
Incorporation. The Board of Directors has no reason to believe that any nominee
will be unable to serve or decline to serve as a director. Any vacancy occurring
between shareholders' meetings, including vacancies resulting from an increase
in the number of directors, may be filled by the Board of Directors. A director
elected to fill a vacancy shall hold office until the next annual shareholders'
meeting.
Nominees for Election
The following table sets forth information with respect to each nominee for
election as a director. The information as to age, principal occupation and
directorships held has been furnished by each such nominee.
<TABLE>
Served as
Director
Name and Age Principal Occupation (1) Continuously Since
- ------------------------------ ------------------------------ -------------------
<S> <C> <C>
Edward J. Egan (58). . . . Chairman of the Board of 1987
Directors; President,
Treasurer and Chief
Executive Officer
Jack Laskin(71). . . . . Director 1987
Ralph Jordan (46). . Director 1988
</TABLE>
- -----------------
(1) Unless indicated otherwise in the table or in the section of this Proxy
Statement captioned "Executive Officers of the Company," the individuals
named in the table have held their positions for more than five years.
Jack Laskin has been a Director of the Company since its inception in March
of 1987. Prior to his retirement in 1986, Mr. Laskin was President of Diplomat
Electronics Corp. from 1983 through 1986 and Vice Presidnet for Marketing at
Schweber Electronics until 1983.
Ralph Jordan became a Director of the Company when the Company acquired
Envyr Corp., of which Mr. Jordan was President, in December 1987. Mr. Jordan
left Data General Corp. where he had headed the Languages department, in
November of 1986 to found Envyr Corp.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
ALL NOMINEES NAMED ABOVE TO THE BOARD OF DIRECTORS.
During the year ended December 31, 1997, the Board of Directors held one
formal meeting.
Directors are elected on an annual basis. The present terms for each
director will expire at the next annual meeting of shareholders or at such time
as a successor is duly elected. Officers serve at the discretion of the Board of
Directors.
EXECUTIVE COMPENSATION AND OTHER MATTERS
The aggregate cash compensation paid by the Company to all directors and
officers as a group during 1997 was approximately $ 126,000, of which $88,000
was paid to Edward J. Egan and $38,000 was paid to Barbara Schultz..
BENEFICIAL OWNERSHIP OF STOCK
The following table is furnished as of November 6, 1998, to indicate
beneficial ownership of shares of the Company's Common Stock by (1) each
shareholder of the Company who is known by the Company to be a beneficial owner
of more than 5% of the Company's Common Stock, (2) each director and nominee for
director of the Company, individually, and (3) all officers and directors of the
Company as a group. The information in the following table was provided by such
persons.
<TABLE>
Name and Address of Beneficial Amount and Nature of Title of Class Percentage
Owner Beneficial Ownership (1)
- ----------------------------------- ----------------------------- ---------------- ---------------
<S> <C> <C> <C>
Edward J. Egan 1,542,000 Common 8.3%
Estate of
Barbara Schultz * 200,000 Common 1.1%
Ralph Jordan 490,000 Common 2.6%
Jack Laskin 800,000 Common 4.3%
All executive officers and 3,032,000 Common 16.3%
directors as a group (4 persons)
</TABLE>
- -----------------
Less than 1%
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock and Preferred Stock shown as
beneficially owned by them, subject to community property laws, where
applicable, and the information contained in the footnotes to the table.
(2) Deceased November 8, 1998
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the names, ages and offices of the present
executive officers of the Company. The periods during which such persons have
served in such capacities are indicated in the description of business
experience of such persons below. Information with respect to non-employee
directors is set forth in the section of this Proxy Statement captioned
"Election of Directors - Nominees for Election".
Name and Age Office
- ------------ ---------
Edward J. Egan (58) Chairman of the Board, President, Chief
Executive Officer and
Director
Barbara Jean Schwartz (47) Secretary and Director (*)
(*) Deceased November 8, 1998
Executive Officers
Edward J. Egan has been Chairman of the Board, President, Treasurer and
Chief Executive Officer of the Company since March 10, 1987. From 1983 through
December 1986, Mr. Egan had been Executive Vice President of Diplomat Systems
Corp. Prior to that, Mr. Egan had been Sales and Marketing Manager for Computer
Products at Schweber Electronics Corp., Westbury, New York.
Barbara Jean Schultz has been Corporate Secretary and a Director of the
Company since March 10, 1987. Prior to then Ms. Schultz had been office and
product manager for Diplomat Systems from 1983 through 1986 and a product
manager and assistant product manager at Schweber Electronics.
CERTAIN RELATIONSHIPS AND TRANSACTIONS
There are no transactions involving the Company and its officers and
directors directly, other than those of employer/employee.
All transactions between the Company, its officers, directors, principal
shareholder or affiliates, whether presently existing are, or in the future will
be, in the belief of management, on terms no less favorable to the Company than
may be obtained from unaffiliated third parties.
Other than the elections to office, no director, nominee for director,
executive officer or associate of any of the foregoing persons has any
substantial interest, direct or indirect, by security holdings or otherwise, in
any matter to be acted upon at the Annual Meeting.
INDEPENDENT AUDITORS
(Proxy Proposal No. 2)
The shareholders will be asked to ratify the appointment of Patrusky, Mintz
& Semel as independent auditors of the books and accounts of the Company for the
year ending December 31, 1998. Such ratification will require the favorable vote
of the holders of a majority of the shares of Capital Stock present and voting
in person or by proxy, at the Annual Meeting.
Representatives of Patrusky, Mintz & Semel will be present at the Annual
Meeting, will be afforded an opportunity to make a statement, and will be
available to respond to appropriate inquiries from shareholders.
<PAGE>
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
In order for shareholder proposals to be included in the Company's Proxy
Statement and proxy relating to the Company's 1998 Annual Meeting of
Shareholders, such proposals must be received by the Company at its principal
executive offices not later than December 10, 1998.
EXPENSES OF SOLICITATION
All of the expenses of soliciting proxies from shareholders, including the
reimbursement of brokerage firms and others for their expenses in forwarding
proxies and proxy statements to the beneficial owners of the Company's Common
Stock, will be borne by the Company.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters before
the Annual Meeting and has not been informed that any other matters are to be
presented by others. In the event any other matters properly come before the
Annual Meeting, the persons named in the enclosed form of proxy will vote all
such proxies in accordance with their best judgement on such matters.
Whether or not you are planning to attend the Annual Meeting, you are urged
to complete, date and sign the enclosed proxy and return it in the enclosed
stamped envelope at your earliest convenience.
By Order of the Board of Directors
/s/ Edward J. Egan
----------------------------------
Edward J. Egan
President
Holbrook, New York
November 25, 1998
