EFI ELECTRONICS CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held July 29, 1997
TO THE STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders (the
"Annual Meeting") of EFI Electronics Corporation ("EFI" or the "Company") which
will be held at the Hilton Hotel, 150 West 500 South, Salt Lake City, Utah, on
Tuesday, July 29, 1997, at 2:30 p.m., local time, for the following purposes:
(1) To elect five (5) Directors to serve for one year and until their
successors shall be elected and duly qualified;
(2) To ratify the appointment of Grant Thornton LLP, as the Company's
independent auditors for the 1998 fiscal year;
(3) To transact such other business as may properly come before the meeting
or at any adjournments thereof.
The Board of Directors has fixed the close of business on June 9, 1997, as the
record date for the determination of stockholders entitled to receive notice of
and to vote at the Annual Meeting. Accordingly, only stockholders of record of
the Company at the close of business on that date will be entitled to vote at
the meeting. The transfer books of the Company will not be closed. A list of
those entitled to vote at the Annual Meeting will be available for inspection
for ten (10) days prior to the meeting at the offices of the Company.
All stockholders are urged to attend the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Richard D. Clasen
President & Chief Executive Officer
Mailing Date: June 19, 1997
IMPORTANT
Whether or not you expect to attend the Annual Meeting in person, to assure that
your shares will be represented, please complete, date, sign and return the
enclosed proxy without delay in the enclosed envelope, which requires no
additional postage if mailed in the United States. Your proxy will not be used
if you are present at the Annual Meeting and desire to vote your shares
personally.
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EFI ELECTRONICS CORPORATION
2415 South 2300 West
Salt Lake City, Utah 84119
PROXY STATEMENT
Annual Meeting of Stockholders
July 29, 1997
SOLICITATION OF PROXIES:
This Proxy Statement is furnished to stockholders of EFI Electronics Corporation
("EFI" or the "Company") in connection with the solicitation by the board of
directors of the Company of proxies for use at the Annual Meeting of
Stockholders (the "Annual Meeting") of the Company scheduled to be held at the
Hilton Hotel, 150 West 500 South, Salt Lake City, Utah, on Tuesday, July 29,
1997, at 2:30 p.m., local time and at any adjournment or postponement of such
meeting.
This Proxy Statement and the accompanying Proxy Card are being mailed on or
about June 19, 1997 to the stockholders of the Company, together with the
Company's Annual Report to Stockholders for the fiscal year ended March 31,
1997.
Stockholders of the Company are cordially invited to attend the Annual Meeting.
Whether or not you expect to attend, it is important that you complete the
enclosed proxy card and sign, date and return it as promptly as possible in the
envelope provided for that purpose. You have the right to revoke your proxy at
any time prior to its use by filing a written notice of revocation with the
secretary of the Company prior to convening of the Annual Meeting or by
presenting another proxy card with a later date. If you attend the Annual
Meeting and desire to vote in person, you may request that your previously
submitted proxy card not be used.
The cost of soliciting proxies and the cost of the Annual Meeting will be borne
by the Company. In addition to the solicitation of proxies by mail, proxies may
be solicited by personal interview, telephone and similar means by directors,
officers or employees of the Company, none of whom will be specially compensated
for such activities. The Company also intends to request that brokers, banks and
nominees solicit proxies from their principals and will pay such brokers, banks
and other nominees expenses incurred by them for such activities.
VOTING SECURITIES:
As of the close of business on the record date, the Company had outstanding
4,216,174 shares of common stock, par value $.0001 per share (the "common
stock"), all of which are entitled to be voted at the Annual Meeting. Each share
is entitled to one (1) vote, and only those stockholders of record of the common
stock as of the close of business on the record date shall be entitled to vote
their shares.
A majority of the outstanding shares of the common stock, represented in person
or by proxy, is required for a quorum at the Annual Meeting. In the proposed
election of directors, stockholders will not be allowed to cumulate their votes
and directors will be elected by a plurality of the votes cast at the meeting.
The five (5) nominees receiving the highest number of votes will be elected. As
a result, abstentions and broker non-votes will not affect the outcome of the
election. All other matters presented for approval to the stockholders will be
decided by the affirmative vote of a majority of the votes cast at the Annual
Meeting on such matters. Accordingly, abstentions and broker non-votes will not
affect the outcome of such matters.
DIRECTORS AND EXECUTIVE OFFICERS:
At the Annual Meeting, five (5) directors are to be elected to hold office until
the Company's 1998 Annual Meeting of Stockholders and until their successors
shall be elected and duly qualified.
3
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DIRECTORS AND EXECUTIVE OFFICERS - Continued:
Set forth below is a table which identifies the current directors (all of whom
are nominees) and the Company's executive officers, and the positions and
offices within the Company held by each. The table is followed by a brief
description concerning the employment and business experience of each such
person.
Name Age Position
Richard D. Clasen 54 President, Chief Executive Officer, Director
David G. Bevan 47 Executive Vice President, Chief Financial Officer
John R. Worden 49 Executive Vice President
Hans Imhof 57 Director
Gaylord K. Swim 48 Director, Chairman of the Board of Directors
K. Bradford Romney, Jr.41 Director
Reino Kerttula 55 Director
Richard D. Clasen was appointed president and chief executive officer of the
Company on September 12, 1994. On October 21, 1994, he was elected to the
Company's board of directors. From 1993 to 1994 he served as chief executive
officer and chairman of the board of Tripac Systems, Inc., a distributor of
computer data storage and imaging products based in Irving, Texas. From 1990 to
1993 he served as president and chief executive officer of Carlisle Memory
Products Groups, Inc. (Bedford, Texas) which manufactured and distributed
computer data storage products. He rose to the position of vice president of
sales and marketing--international operations. Mr. Clasen attended the
University of California, Los Angeles and University of Pennsylvania, Wharton
School of Business.
David G. Bevan was appointed executive vice president in May 1996 and chief
financial officer in July 1995. He has managed the Company's manufacturing and
development activities since April 1991. He served as controller of the Company
from April 1990 to April 1991. From November 1989 to April 1990, he was
secretary and chief financial officer of Douglas Computer, Inc., a Salt Lake
City, Utah based computer reseller. Mr. Bevan is a certified public accountant
and obtained a B.S. degree in economics from Stanford University in 1971 and an
M.B.A. degree from Amos Tuck School at Dartmouth College in 1973.
John R. Worden was appointed executive vice president of sales and marketing of
the Company in October 1996. Mr. Worden joined the Company in April 1996 as vice
president of sales. From 1994 to 1996 he served as vice president of sales and
marketing for SK Technologies. SK is based in Boca Raton, Florida and develops,
markets and supports applications for retail point of sales and back office
automation. From 1989 to 1994 he served in various vice president positions over
sales and marketing for AEG Modcomp based in Ft. Lauderdale, Florida. Modcomp
developed, built and marketed real time computer systems. Positions included
international and regional responsibility. Mr. Worden earned a bachelor of
electrical engineering from Georgia Institute of Technology in 1969, and took
executive courses in general management and strategic marketing from Emory
University and Stanford University in 1983 and 1988.
Hans Imhof has served as a director of the Company since July 1996. He is the
co-founder of Computer Site Technologies which was created in 1990 and produces
computer alarm system software. Since 1990 he has also been vice president of
engineering at Datasphere which designs, engineers and constructs computer
rooms; president of Diversified Protection Systems, Inc. which installs computer
4
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS - Continued:
room fire protection systems; and has been a partner in Warner Management, a
real estate management company, all located in Orange County, California. Mr.
Imhof received an electrical engineering degree from the University of Zurich,
Switzerland, in 1965.
Gaylord K. Swim has been a director of the Company since 1981. He was elected
chairman of the board of directors in May 1997 and previously served as chairman
of the board from December 1989 until December 1991. He is president of Swim
Investment Management Corporation, a subsidiary of Swim Financial Corporation.
K. Bradford Romney, Jr. became a director of the Company in December 1992. Mr.
Romney is president, chairman and chief executive officer of Dayna
Communications Inc., a Salt Lake City, Utah, LAN software and equipment
manufacturer. He joined Dayna in 1986 as executive vice president and corporate
secretary responsible for corporate development and operations. He is also a
member of the board of directors of Gentner Communications Corporation, a public
company, and is active in high technology industry associations. Mr. Romney
received J.D. and M.B.A. degrees, both in 1982, from Brigham Young University.
Reino Kerttula became a director of the Company in July 1996. Mr. Kerttula has
been executive vice president and chief operating officer and director of
Callware Technologies since 1988, a company that provides LAN-based voice and
call processing Netware Loadable Modules. He has spent twelve years in general
management positions where he established and implemented plans and budgets for
multi-phase operations. For seven years he was senior vice president of FPI
Securities, an investment banking firm. Mr. Kerttula immigrated to the United
States in 1964 and received a degree in business management from Brigham Young
University in 1968. He has been active in civic affairs, including president of
the Finnish American Chamber of Commerce.
BOARD COMMITTEES, MEETINGS, AND REPORTS:
There were six meetings of the board of directors held during the fiscal year
ended March 31, 1997. All of the directors attended at least 75% of the
meetings. The Company has audit and compensation committees of the board of
directors. The Company has no nominating committee. The audit committee
periodically makes recommendations concerning the engagement of the Company's
independent public accountants and reviews the results and independence of the
accountants and the scope, adequacy and results of the internal auditing
procedures. The Company's audit committee consists of Messrs. Gaylord K. Swim,
K. Bradford Romney, Jr. and Reino Kerttula. Functions of the compensation
committee include making recommendations concerning director and senior
management remuneration and other compensation plans. The compensation committee
consists of Messrs. K. Bradford Romney, Jr., Gaylord K. Swim and Reino Kerttula.
All of the committee members attended at least 75% of the meetings of their
respective committees. During fiscal 1997, the audit committee held one meeting
and the compensation committee held two meetings.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section
16(a)"), requires the Company's directors and executive officers and persons who
own more than ten percent (10%) of the Company's common stock to file with the
Securities and Exchange Commission (the "Commission") initial reports of
ownership and reports of changes in ownership of the common stock and other
securities which are derivative of the common stock. Executive officers,
directors, and holders of more than ten percent (10%) of the common stock are
required by Commission regulations to furnish the Company with copies of all
such reports they file. It is the Company's belief, based solely upon a review
of copies of all Section 16(a) reports received by the Company, that all reports
of initial ownership and changes thereto in the Company's common stock by said
officers, directors, and ten percent stockholders have been reported in a timely
manner to the Commission.
5
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EXECUTIVE COMPENSATION:
Summary Compensation Table
The compensation of the Company's executive officers for the past three fiscal
years is shown below. No other employees of the Company received more than
$100,000 in total salary and bonus during such period.
<TABLE>
<CAPTION>
Name/ Other Annual Securities Underlying All Other
Principal Position Year Salary Bonus Compensation(1) Options/SARs(#) Compensation
- ------------------ ---- -------- ----- -------------- --------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Clasen 1997 $156,624 $ -0- $ -0- 20,000 $ -0-
President & CEO 1996 150,000 -0- -0- -0- -0-
1995 72,115 5,748 -0- 100,000 50,216 (2)
David G. Bevan 1997 110,097 -0- -0- 74,213 -0-
Executive Vice 1996 84,043 -0- -0- 10,000 -0-
President & CFO 1995 83,000 2,251 -0- 17,572 -0-
John R. Worden 1997 112,069 21,600 -0- 100,000 -0-
Executive Vice 1996 -0- -0- -0- -0- -0-
President 1995 -0- -0- -0- -0- -0-
</TABLE>
(1)Does not include cash and non-cash compensation related to use of automobiles
which did not exceed ten percent of annual salary and bonus.
(2)On December 15, 1994, pursuant to an Employment Agreement between the Company
and Mr. Clasen, the Company issued 17,384 shares of common stock to Mr.
Clasen as reimbursement for the brokerage commission of $26,394 paid by Mr.
Clasen in connection with the sale of his house in Texas. The market value of
the Company's common stock on such date was $1.50 per share. Pursuant to such
Employment Agreement, the Company also reimbursed Mr. Clasen for moving
expenses, aggregating $24,140 (in addition to the 17,384 shares of stock
cited above). (See "Employment Contracts.")
Option/SAR Grants in Last Fiscal Year
The following table sets forth individual grants of stock options made by the
Company during the fiscal year ended March 31, 1997, to the individuals named in
the preceding Summary Compensation Table. As of March 31, 1997, the Company had
not granted any stock appreciation rights to the executive officers named below.
<TABLE>
<CAPTION>
Number of Securities Under- Percent of Total Options/
Name/ lying Options/SARs Granted to SARs Granted to Exercise or Expiration
Principal Position Employees in the Fiscal Year Employees in Fiscal Year Base Price Date
- ------------------ ----------------------------- ------------------------- ----------- -----------
Richard D. Clasen
<S> <C> <C> <C> <C> <C>
President & CEO 20,000 7.32% $1.125 Sept. 20, 1999
David G. Bevan 65,000 23.78% 1.25 May 22, 2002
Executive Vice 9,213 3.37% 1.44 Nov. 5, 2002
President & CFO
John R. Worden 100,000 36.59% 1.25 May 22, 2002
Executive Vice
President
</TABLE>
6
<PAGE>
EXECUTIVE COMPENSATION - Continued
Aggregated Option / SAR Exercise in Last Fiscal Year and Fiscal Year End Option
/ SAR Values
The following table sets forth the number of unexercised stock options held by
the individuals named in the Summary Compensation Table and the value of such
options as of March 31, 1997. No options were exercised by such individuals
during the fiscal year ended March 31, 1997. During the year ended March 31,
1997, the Company did not grant any additional stock appreciation rights to the
executive officers named below.
<TABLE>
<CAPTION>
Number of Securities Under- Value of Unexercised
Shares lying Unexercised Options/ In-the-Money Options/
Name/ Acquired Value SARs at Fiscal Year End SARs at Fiscal Year End(1)
Principal Position on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------ ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Clasen -0- -0- 70,000 50,000 $51,250 $31,250
President & CEO
David G. Bevan -0- -0- 16,894 83,713 17,988 78,249
Executive Vice
President & CFO
John R. Worden -0- -0- -0- 100,000 -0- 87,500
Executive Vice
President
</TABLE>
- -------------------------
(1)Calculated based on the difference between the price of a share of common
stock on March 31, 1997, and the exercise price of the options. The price of
the Company's common stock as reported by NASDAQ on March 31, 1997 was $2-1/8
per share.
Long-term Incentive Plans ("LTIP") - Awards in Last Fiscal Year
During the year ended March 31, 1997, the Company did not grant any long-term
incentive plan awards to the executive officers named above.
Employment Contracts and Arrangements Concerning Termination
Effective September 12, 1994, Mr. Clasen entered into a renewable one-year
employment agreement with the Company (the "Employment Agreement") pursuant to
which, among other things, (i) the Company agreed to pay Mr. Clasen a base
salary of $12,500 per month to be reviewed annually by the compensation
committee; (ii) the Company agreed to grant to Mr. Clasen stock options to
purchase 100,000 shares of common stock at an exercise price of $1.50 per share;
(iii) the Company agreed to loan Mr. Clasen $150,000 to be used by Mr. Clasen
for the purchase of 100,000 shares of common stock (see "Certain Transactions
and Indebtedness of Management"); (iv) the Company granted to Mr. Clasen 100,000
performance units having a base value of $1.50 per unit; (v) the Company agreed
to reimburse Mr. Clasen for moving and transition expenses, including the
brokerage commission paid with respect to the sale of Mr. Clasen's home in Texas
(see "Summary Compensation Table"); (vi) the Company agreed to pay Mr. Clasen
six months base salary plus expected bonus if the Company terminates Mr. Clasen
without cause; and (vii) Mr. Clasen agreed to be bound by certain restrictive
covenants. In September 1996, the compensation committee agreed to extend the
period for Mr. Clasen's performance units until September 12, 1998.
7
<PAGE>
EXECUTIVE COMPENSATION - Continued
Executive Incentive Plan
For the year ended March 31, 1997, the Company maintained an executive incentive
plan (the "Incentive Plan") for certain of its officers and key employees,
including its executive officers. The Incentive Plan was based on the Company's
profits in comparison to the Company's planned profits as well as revenue goal
attainment. During the fiscal year ended March 31, 1997, no awards were made
under the Incentive Plan. The Incentive Plan has not been modified and will
continue in the current fiscal year. Bonuses paid will be allocated by the
compensation committee among the executive officers based on the Company's
success in meeting and exceeding targeted objectives.
Directors' Compensation
Directors who are not employees of the Company were paid fees of $500 per half
day and $1,000 per full day for each board meeting and committee meeting
attended during the 1997 fiscal year.
CERTAIN TRANSACTIONS AND INDEBTEDNESS OF MANAGEMENT:
Pursuant to the Employment Agreement and a subsequent loan agreement, 166,667
shares of common stock were issued to Mr. Clasen for $210,000, which amount was
loaned by the Company to Mr. Clasen. The loan is secured by the 166,667 shares
issued to Mr. Clasen and by any amounts then due to Mr. Clasen pursuant to the
performance units granted to Mr. Clasen in connection with his employment. The
loans bear interest at the prime rate plus one percent (1%) and are due in full
on September 12, 2000 and December 4, 2002, respectively.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
The following tabulation shows as of May 31, 1997, unless otherwise indicated,
the number of shares of common stock owned beneficially by: (a) any person known
to be the holder of more than five percent (5%) of the Company's voting
securities, (b) all directors (all of whom are nominees), (c) the executive
officers named in the Summary Compensation Table, and (d) all officers and
directors of the Company as a group:
<TABLE>
<CAPTION>
Amount and Nature of Beneficial
Ownership (1) As of May 31, 1997
--------------------------------------------
Common Exercisable Total
Name and Address of Beneficial Owner Notes Shares Options & Warrants Ownership Percent (2)
- ------------------------------------ ----- ------ ------------------ --------- -----------
<S> <C> <C> <C> <C> <C>
Gaylord K. Swim* (3) 1,345,325 20,000 1,365,325 32.38%
68 West 620 South
Orem, UT 84058
Hans Imhof* 250,000 -0- 250,000 5.93%
1215 Emerald Bay
Laguna Beach, CA 92651
Richard D. Clasen* + (5) 307,799 70,000 377,799 8.96%
2073 Mahre Drive
Park City, UT 84098-8510
</TABLE>
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - Continued
<TABLE>
<CAPTION>
Amount and Nature of Beneficial
Ownership (1) As of May 31, 1997
------------------------------------------
Common Exercisable Total
Name and Address of Beneficial Owner Notes Shares Options & Warrants Ownership Percent (2)
- ------------------------------------ ----- ------ ------------------ --------- -----------
<S> <C> <C> <C> <C>
David G. Bevan + -0- 42,357 42,357 1.00%
1471 Wilton Way
Salt Lake City, Utah 84108
John R. Worden + 23,748 25,000 48,748 1.16%
6680 South Artesian Way #30
Salt Lake City, Utah 84121
Reino Kerttula* -0- -0- -0- **
4252 Sumac Court
Cedar Hills, Utah 84062
K. Bradford Romney, Jr. * 950 -0- 950 **
1835 Yalecrest Avenue
Salt Lake City, UT 84108
- -----------------------------------------
All officers and Directors
as a group (7 persons) (4) 1,927,822 157,357 2,065,179 48.98%
========================================================================================================
<CAPTION>
(+)Officer of the Company (*)Director of the Company. (**)Indicates less than 1.00% ownership.
</TABLE>
(1)Unless otherwise indicated, each person identified in the table has sole
voting and investment power with respect to the common stock beneficially
owned by such person.
(2)Based on 4,216,174 shares outstanding unless noted otherwise.
(3)Includes 505,567 shares held by Mr. Swim as trustee of the Gaylord K. Swim
Trust, 24,167 shares held by Swim Financial Corporation of which Mr. Swim is
an executive officer, director and majority owner, 20,000 shares held by a
charitable trust of which Mr. Swim is a trustee, and 815,591 shares and
warrants held by Greenwood II Ltd., in which Mr. Swim is a limited partner.
(4)The shares which may be acquired by officers and directors pursuant to
outstanding options have been deemed to be outstanding for the purpose of
computing the percentage of the class owned by each named holder thereof and
by all officers and directors as a group.
(5)Includes 123,748 shares held jointly by Mr. Clasen and his spouse, Barbara J.
Clasen.
RATIFICATION OF SELECTION OF AUDITOR:
The audit committee has recommended, and the board of directors has selected,
the firm of Grant Thornton LLP, independent certified public accountants, to
audit the financial statements of the Company for the fiscal year ending March
31, 1998, subject to ratification by the stockholders. The board of directors
recommends to the stockholders that Grant Thornton be selected as the Company's
independent public accountants for the 1998 fiscal year. Representatives of
Grant Thornton LLP are expected to be present at the Annual Meeting and will
have an opportunity to make a statement, if they desire to do so, and are
expected to be available to respond to appropriate questions.
9
<PAGE>
GENERAL:
Management knows of no other matters to be presented at the meeting.
Proposals of Security Holders for 1998 Annual Meeting
Stockholders desiring to submit proposals for the proxy statement for the 1998
annual meeting will be required to submit them in writing to David G. Bevan,
secretary, at the Company's executive offices (2415 South 2300 West, Salt Lake
City, Utah 84119) on or before April 30, 1998. Any stockholder proposal must
also be proper in form and substance, as determined in accordance with the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH STOCKHOLDER, ON WRITTEN
REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL
YEAR ENDED MARCH 31, 1997, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES
THERETO AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. WRITTEN REQUEST
FOR SUCH INFORMATION SHOULD BE DIRECTED TO THE CORPORATE SECRETARY, EFI
ELECTRONICS CORPORATION, 2415 SOUTH 2300 WEST, SALT LAKE CITY, UTAH 84119.
