<PAGE>
<PAGE>
Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MSU CORPORATION
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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>
<PAGE>
MSU CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
October 28, 1997
To the Stockholders of
MSU CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the 'Annual
Meeting') of MSU CORPORATION (the 'Company') will be held at The Garden City
Hotel, 45 Seventh Street, Garden City, New York 11530 on Friday, the 14th day of
November, 1997 at 2:00 p.m. (New York time) for the following purposes:
1. To elect the directors of the Company, all of whom shall hold
office until the next annual meeting of stockholders and until their
successors are elected and qualified;
2. To consider and vote upon a proposal to ratify the appointment of
Moore Stephens Lovelace, P.L. as the Company's independent certified public
accountants for the fiscal year ending June 30, 1998; and
3. To transact such other business as may properly come before the
meeting.
By Order of the Board of Directors
WILLIAM DEREK SNOWDON, Secretary
ONLY STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON OCTOBER 31, 1997 WILL BE
ENTITLED TO NOTICE OF OR TO VOTE AT THE MEETING, OR ANY ADJOURNMENT THEREOF.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE A QUORUM,
AS WELL AS YOUR REPRESENTATION, AT THE MEETING. EVEN IF YOU HAVE GIVEN YOUR
PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE NOTE,
HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
<PAGE>
MSU CORPORATION
MANAGEMENT PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS, NOVEMBER 14, 1997
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of MSU Corporation (the 'Company') for use at
the annual meeting of the stockholders of the Company to be held at The Garden
City Hotel, 45 Seventh Street, Garden City, New York 11530, on Friday, November
14, 1997, at 2:00 p.m. (New York time) (the 'Annual Meeting'), or at any
adjournment thereof. Proxy material is being mailed on or about October 28, 1997
to the Company's approximately 155 stockholders of record on that date. The
total number of shares outstanding and entitled to vote as of October 27, 1997,
is:
Common Stock................................................... 16,093,791
The purposes of the Annual Meeting are: (1) to elect directors, (2) to
consider and vote upon a proposal to ratify the appointment of Moore Stephens
Lovelace, P.L., the Company's independent certified public accountants for the
fiscal year ending June 30, 1998, and (3) to transact such other business as may
properly come before the meeting and at any adjournment thereof.
PROPOSALS SUBMITTED FOR STOCKHOLDER VOTE
PROPOSAL 1: ELECTION OF DIRECTORS
At the Annual Meeting, seven directors are to be elected to hold office
until the next annual meeting of stockholders and until their successors are
elected and qualified. Unless otherwise specified in the proxy, the shares
represented by the proxy hereby solicited will be voted by the persons
designated as proxies, both of whom are now directors of the Company, for the
persons named below. Should any of these nominees become unable to accept
nomination or election (which is not anticipated), it is the intention of the
persons designated as proxies to vote for the election of the remaining nominees
named and for such substitute nominees as the management may recommend.
The nominees are: Wynford Peter Holloway, Jeremy Miles Simpson, William
Derek Snowdon, Richard Horby Phillips, Gerald J. Capaci, Keith Edward Peirson
and Fred Kashkooli.
Directors are elected by a plurality of shares of Common Stock represented
at the Annual Meeting.
INFORMATION WITH RESPECT TO NOMINEES
Information with respect to each nominee is set forth below. Additional
information with respect to officers, directors and major stockholders of the
Company, including their percentage ownership in the Company's voting stock is
set forth on pages 5 and 6, and in the Company's Annual Report on Form 10-K,
which is being mailed herewith.
Wynford Peter Holloway, age 48, has served as Chief Executive Officer and a
director of the Company since October 1994, and as Chairman of MSU PLC and MSU
(UK) Limited since June 1994 and March 1991, respectively. He has been president
of MSU US Operations Inc. since its incorporation in February 1997. Mr. Holloway
is the founder of MSU (UK) Limited. From 1991 through 1992, Mr. Holloway was a
self-employed design consultant providing professional design services to
clients in the computer peripherals business.
Jeremy Miles Simpson MA (Cantab), age 63, was appointed a director and
Deputy Chairman of the Company, effective July 1, 1997. Mr. Simpson, who is a
Freeman of the City of London, was executive chairman of Gordon Russell Plc., a
UK publicly quoted company, from 1986 to 1989, prior to the sale of the company.
Since that date Mr. Simpson has held a number of non-executive directorships
with smaller growing and developing companies in the UK and Europe.
William Derek Snowdon LLB, age 43, has served as secretary and a director
of the Company since October 1994 and as secretary of MSU PLC and MSU (UK)
Limited since June 1994 and March 1991, respectively. He was appointed a
director and secretary of MSU US Operations Inc. on its incorporation in
February 1997. Mr. Snowdon is a solicitor and has been a partner with the firm
of Phoenix Walters
<PAGE>
<PAGE>
for the past 15 years. Mr. Snowdon's practice focuses on commercial contracts
and intellectual property law. In addition Mr. Snowdon is a non-executive
director of two Regional Enterprise Agencies in the United Kingdom.
Richard Horby Phillips FCA, age 51, has served as principal financial
officer and a director of the Company since January 2, 1997 and also as a
director of MSU PLC and MSU (UK) Limited since that date. He was appointed
Treasurer and a director of MSU US Operations Inc. on its incorporation in
February 1997. Mr. Phillips is a chartered accountant who was with Coopers &
Lybrand for 25 years. Mr. Phillips was a partner in their London office from
April 1983, providing advisory and audit services to both public and private
companies until August 1994 when he formed his own firm to continue providing
financial advice to emerging growth companies in the US and UK. Mr. Phillips
also currently serves on the Board of five other UK companies, in all cases in a
non-executive capacity.
Gerald J. Capaci, age 40, has served as a director of the Company since
February 1997. He has also served as a director and vice president (business
development and marketing) of MSU US Operations, Inc. since its incorporation in
February 1997. Prior to February 1997, Mr. Capaci spent over 10 years with IBM
where he was most recently Strategic Relationship Manager of their Internet
Division where he was responsible for assessing the technical, business and
strategic value of contracting with other software companies with special
emphasis on internet companies.
Keith Edward Peirson, age 55, has served as a director of the Company since
September 1997 and has been appointed the group's managing director. From 1995
to 1997, Mr. Peirson acted as an independent consultant to various companies
involved with the distribution of computer products, construction of building
facades and automotive security. Mr. Peirson has previously served as managing
director of other companies in the electronics field, including Farnell
Electronic Services, where he spent 24 years, and Arrow Electronics (UK) Limited
from 1991 to 1994.
Fred Kashkooli, age 57, has served as a director of the Company since
August 1997. Mr. Kashkooli has been an independent management consultant since
1991 and has over twenty eight years of experience in the areas of
microprocessors, memory, logic, analog design, manufacturing, CAD design
packaging, testing and marketing. From 1984 to 1991, Mr. Kashkooli was Senior
Vice President of Research and Development at GE Intersil, responsible for
design, manufacturing and strategic marketing for analog and digital products.
Additionally, Mr. Kashkooli managed design centers in Singapore, New Jersey,
North Carolina and Florida. From 1980 to 1984, Mr. Kashkooli was a director of
the microprocessor and memory division of GE Intersil. Prior thereto he worked
for ten years at Sygenetics, a corporation engaged in the manufacture of
semi-conductor chips. Mr. Kashkooli holds a BS in Electrical Engineering from
California State University.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
In the last fiscal year the Board of Directors held 12 regularly scheduled
meetings. The members of the Company's Board of Directors are also members of
the boards of directors of the Company's affiliates and hold joint meetings at
which they conduct all necessary business for each of the Company and such
affiliates. All other actions by the Board of Directors were taken by unanimous
written consent.
PROPOSAL 2: APPOINTMENT OF MOORE STEPHENS LOVELACE, P.L. AS THE COMPANY'S
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING
JUNE 30, 1998.
The Board of Directors has selected Moore Stephens Lovelace, P.L. as the
Company's independent certified public accountants for the fiscal year ending
June 30, 1998, and has further directed that management submit the selection of
independent auditors for ratification by the stockholders at the Annual Meeting.
Moore Stephens Lovelace, P.L. has audited the Company's financial statements
since June 30, 1995.
Stockholder ratification of the selection of Moore Stephens Lovelace, P.L.
as the Company's independent certified public accountants is not required by the
Company's By-laws or otherwise. However, the Board is submitting the selection
of Moore Stephens Lovelace, P.L. to the stockholders for ratification as a
matter of good corporate practice. If the stockholders fail to ratify the
selection, the
2
<PAGE>
<PAGE>
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Board, in their discretion, may direct the appointment of
different independent auditors at any time during the year if they determine
that such a change would be in the best interests of the Company and its
stockholders.
The Board of Directors recommends a vote 'For' this proposal to ratify the
appointment of Moore Stephens Lovelace, P.L. as the Company's independent
accountants for the fiscal year ending June 30, 1998.
The favorable vote of the holders of a majority of the shares of Common
Stock represented at the meeting is needed to approve this Proposal No. 2.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Keith Hall, Wynford Holloway, William Snowdon, Richard Horby Phillips,
Jeremy Simpson, and MSU Employees Discretionary Trust have failed to file on a
timely basis reports required by Section 16(a) of the Exchange Act during the
most recent fiscal year and prior fiscal years. None of the aforesaid
individuals and/or entities have filed Form 3s. In addition, Mr. Holloway did
not report one transaction; Mr. Snowdon did not report three transactions; and
the MSU Employees Discretionary Trust did not report five transactions on Form
4. The Company also believes that Mr. Hall and the McLaughlin Group LLC are
delinquent in their Form 4 filings. The aforesaid parties are also delinquent in
filing Form 5s.
3
<PAGE>
<PAGE>
HOLDINGS OF MANAGEMENT AND OF HOLDERS
OF 5% OR MORE OF THE COMPANY'S COMMON STOCK
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of October 17, 1997 by (i) each director and
nominee for director; (ii) each of the executive officers named in the Summary
Compensation Table employed by the Company in that capacity on September 25,
1997; (iii) all executive officers and directors of the Company as a group; and
(iv) all those known by the Company to be beneficial owners of more than five
percent of its Common Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP AS OF
SEPTEMBER 25,
NAME OF BENEFICIAL OWNER ADDRESS OF BENEFICIAL OWNER 1997 PERCENT OF CLASS
- ------------------------ --------------------------------------- ----------------- ----------------
<S> <C> <C> <C>
Wynford Peter Elder House, 526-528 Elder Gate 4,987,777(1)(2) 31.1%
Holloway.............. Central Milton Keynes (3)(4)
MK9 1LR ENGLAND
William Derek Snowdon... 48 The Parade, Cardiff 522,277(3)(4) 3.3%
CF2 3AB, ENGLAND
Jeremy Miles Simpson.... Elder House, 526-528 Elder Gate 307,068(3)(4) 1.9%
Central Milton Keynes
MK9 1LR ENGLAND
Richard Horby Phillips.. Elder House, 526-528 Elder Gate 100,000 0.6%
Central Milton Keynes
MK9 1LR ENGLAND
Gerald J. Capaci........ Elder House, 526-528 Elder Gate 100,000 0.6%
Central Milton Keynes
MK9 1LR ENGLAND
Keith Peirson........... Elder House, 526-528 Elder Gate (4)
Central Milton Keynes
MK9 1LR ENGLAND
Fred Kashkooli.......... c/o Capital Bay Securities (6)
2200-B Douglass Blvd., Suite 100
Roseville, California 95661
Peter Brian Weber and 48 The Parade, Cardiff 2,699,444(2)(3) 16.7%
Vivian George Bines as CF2 3AB, ENGLAND
Trustees for the
Employee Trust........
TXC Corporation......... 5F No. 15 SEC 2 2,051,333 12.7%
Chung Yang S Road
Peitoi, Taipei, Taiwan
McLaughlin Group LLC.... 13750 US 281 North #660 2,250,000(5) 14.0%
San Antonio, Texas 78232
All Directors and Officers as a Group............................. 6,103,122 37.5%
</TABLE>
- ------------
(1) Mr. Holloway owns 2,138,333 shares of record. Pursuant to an unwritten
agreement and understanding, Mr. Holloway shares voting and dispositive
power with respect to the shares held by the Employee Trust.
(2) The Employee Trust constituted by a Trust Deed dated May 24, 1994 (of which
Wynford Peter Holloway was the Settlor), is in favor of all past, present
and future employees of MSU (UK) Limited and MSU PLC and any subsequent
companies and their spouses and children. No allocations under the Trust
have been made. Under the Trust Deed and so long as Mr. Holloway is living,
his consent, as Settlor, is required for the appointment of beneficiaries
and the appointment of new trustees. The Trustees also have the authority to
delegate powers to Mr. Holloway. Pursuant to an unwritten agreement and
understanding, Mr. Holloway shares voting and dispositive powers with
respect to the shares held by the Employee Trust.
(footnotes continued on next page)
4
<PAGE>
<PAGE>
(footnotes continued from previous page)
(3) For the purpose of the above table, a person or group of persons is deemed
to have 'beneficial ownership' of any shares which such person has the right
to acquire within 60 days. For purposes of computing the percentage of
outstanding shares held by each person or group of persons named above, any
security which such person or group of such persons has the rights to
acquire within 60 days after such date is deemed to be outstanding for the
purpose of computing ownership for such person or persons, but is not deemed
to be outstanding for the purpose of computing the percentage of ownership
of any other person. Accordingly the above table includes the following
shares issuable pursuant to options which are now exercisable, or are
exercisable within 60 days hereof.
<TABLE>
<CAPTION>
NO. OF
NAME SHARES
- ------------------------------------------------------------ ------------
<S> <C>
Wynford Peter Holloway................................... 150,000
William Derek Snowdon.................................... 100,000
Jeremy Miles Simpson..................................... 50,000
Peter Brian Weber and Vivian George Bines................ 100,000
Richard Horby Phillips................................... 100,000
Gerald J Capaci.......................................... 100,000
</TABLE>
(4) Excludes the following shares issuable pursuant to options which are not
currently exercisable (or exercisable within 60 days).
<TABLE>
<CAPTION>
NO. OF
NAME SHARES
- ------------------------------------------------------------ ------------
<S> <C>
Wynford Peter Holloway................................... 20,000
William Derek Snowdon.................................... 20,000
Jeremy Miles Simpson..................................... 12,500
Gerald J Capaci.......................................... 200,000
Keith Edward Peirson..................................... 300,000
</TABLE>
(5) Includes 650,000 shares issuable pursuant to a currently exercisable warrant
to purchase 650,000 shares of Company common stock at $1 each.
(6) Mr. Kashkooli is the beneficial holder of $24,000 10% Convertible Notes
which are convertible into 8,000 shares of the Company's common stock.
CERTAIN TRANSACTIONS
Martin Miller, a former director and executive officer of the Company, is
believed by the Company to be affiliated with Millport Limited ('Millport'), a
corporation retained by MSU (UK) Limited in September 1994 to serve as a
placement agent in connection with a Regulation S offering. The placement agent
arrangement was amended and confirmed by the Company in June 1995 (such
agreements collectively referred to as the 'Millport Agreements') and the
offering was conducted in June and July 1995. In connection with the offering,
Martin Miller was issued 150,000 shares of the Company's common stock and
Millport received commissions on shares sold in addition to being granted a two
year option to acquire up to 500,000 shares of the Company's common stock. The
option was never granted because the Company believes that Millport did not
perform in accordance with the terms of the Millport Agreements. The Company
believes that it is not bound to any of the restrictions under the Millport
Agreements.
The Company and Lawrence Ko, a director and former employee of TXC
Corporation, entered into an agreement in February 1996 pursuant to which Mr. Ko
will represent and promote the Company and its technologies in Taiwan, and at
the Company's request, mainland China and Hong Kong. The Company's intention is
to work through Mr. Ko in most matters relating to such countries and
territories; however the Company has reserved the right to handle independently
all matters relating to existing contacts, negotiations and future contracts.
Mr. Ko will receive compensation based upon revenue attained by the Company
(consisting of from 5% to 10% of revenue, plus warrants to acquire 75,000 shares
of common stock for each $1 million of revenue attained, with an exercise price
of 50% of
5
<PAGE>
<PAGE>
the market value at the time the warrant is issued, up to a maximum of 300,000
shares) as a result of transactions attributable to Mr. Ko.
In August 1996, Direct International Limited, a Taiwanese company, loaned
$300,000 to the Employee Trust. Such loan was secured by 250,000 shares of the
Company's common stock owned by the Employee Trust and was originally due on
October 21, 1996. The loan was then to be repaid in 37,500 shares of the
Company's common stock owned by the Employee Trust no later than December 31,
1996 with Direct International Limited also receiving on December 31, 1996,
10,000 shares of the Company's common stock owned by The Employee Trust as
consideration for the advance of the loan. On June 4, 1997 it was agreed that
the loan would be repaid with 88,000 shares of the Company's common stock owned
by the Employee Trust and this transfer was effected in September 1997. The
$300,000 received by the Employee Trust were loaned by it to Mr. Holloway
($140,000) and the Company ($160,000). Such loans are unsecured, interest free,
due and payable on an as yet to be determined date, and are not evidenced by
written agreements. In July 1997, $33,200 of the amount loaned to the Company
was repaid to the Employee Trust.
Effective January 30, 1996 and February 29, 1996, pursuant to a stock
purchase agreement, McLaughlin Group LLC acquired from the Company, in private
transactions, 800,000 and 800,000 shares, respectively, of the Company's common
stock for an aggregate purchase price of $1 million. McLaughlin Group LLC was
also granted certain demand and piggyback registration rights. The Company has
agreed to indemnify McLaughlin Group LLC against certain liabilities in
connection with any shares so registered.
On July 21, 1997 McLaughlin Group LLC was granted a warrant to purchase
650,000 shares of the Company's common stock at an exercise price of $1.00 per
share, such right to expire on 20 July, 2002. In consideration for the granting
of this warrant McLaughlin Group LLC agreed to waive its rights under the stock
purchase agreement of January 30, 1996 whereby it had been granted (i) a warrant
to purchase such number of shares of Company's common stock as equals 3.5% of
the outstanding shares of the common stock on the date the warrant was exercised
(with such determination to be made on a fully diluted basis). This original
warrant was exercisable, in whole only, at an exercise price of $1.0 million and
was due to expire eighteen months after March 1, 1996; and (ii) the right to
acquire additional shares of capital stock upon issuance by the Company of
additional capital stock (except in certain specified cases) in order to
maintain the same proportion of voting power of the Company as was owned prior
to the issuance.
McLaughlin Group LLC has also been granted certain demand and piggyback
registration rights in connection with the shares issuable under the July 21,
1997 warrant. The Company has agreed to indemnify McLaughlin Group LLC against
certain liabilities in connection with any shares so registered.
Mark McLaughlin, a member of McLaughlin Group LLC, is president and a
principal stockholder of McLaughlin International, Inc. ('MII'). MII serves as a
consultant to the Company pursuant to two engagement letters entered into on
November 8, 1995 and May 17, 1996. The engagement letters provide that MII will
act as a consultant to the Company in connection with certain strategic
transactions, relating to the marketing and distribution of the Company's
products and technology in Japan and to a select numbers of companies located
principally in the United States, for a period of six months, subject to
extension by mutual agreement. The November 8, 1995 engagement letter was
extended for a further six month period. As compensation under the November 8,
1995 engagement letter, which covers Japan, MII, Inc. will receive for a period
of seven years (in the case of revenues and royalties) or an indefinite period
or one time payment (in the case of fees) a percentage of revenues, royalties
and fees (with such percentages ranging from 5% to 10% dependent upon what and
how much is received) received by the Company as a direct or indirect result of
the efforts of MII. As additional compensation, MII will receive warrants to
acquire 75,000 shares of common stock per each $1 million in fees received by
the Company (not to exceed 750,000 warrant shares) plus bonus warrants to
acquire 250,000 shares in the event the Company receives $20 million in fees, in
each case as a direct or indirect result of the efforts of MII. Such warrants
will be exercisable for a five-year term at a price equal to the lesser of $10
or 50% of the market price of the Company's stock on the date of issue. Shares
of common stock issuable upon exercise of the warrants will carry customary
registration rights. As compensation under the May 17, 1996 engagement letter,
MII will receive, for the duration of the relationship
6
<PAGE>
<PAGE>
(between the Company and the party introduced by the consultant), a percentage
of upfront research and development fees/payments; equity private placement
proceeds; service provider revenue/fees; and chip sales (with such percentages
ranging from 4% to 8%) received by the Company as a direct or indirect result of
the efforts of MII. To be entitled to a percentage compensation under either
engagement letter, the revenue, payments, sales or fees must commence or be paid
during the engagement period or during the twelve month period immediately
following the engagement period. In November 1996 McLaughlin International Inc.
declined to renew the engagement letters dated November 8, 1995 and May 17,
1996. As of September 1997 no business has been procured from any companies the
subject of the engagement letters and no compensation payments have yet fallen
due for payment.
Effective May 7, 1997, June 4, 1997 and September 5, 1997 Jeremy Miles
Simpson acquired from the Company, in private transactions, 79,126, 48,042 and
26,900 shares respectively of the Company's common stock. Consideration for the
common stock was, approximately respectively, $162,000, $114,000 and $79,000 in
cash. The price paid for the shares of common stock in each case was the market
price prevailing on the respective dates. In addition, Mr. Simpson was granted
options to acquire 50,000 shares of common stock at a price of $2.12 per share
in respect of the May 7, 1997 transaction and 12,500 shares of common stock at a
price of $2.37 per share in respect of the June 4, 1997 transaction. In both
cases the options are exercisable at any time after six months from the date of
the respective grants. The end of the option term in each case is five years
from the date of the grant.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation earned during the Company's last three fiscal years by the
Company's Chief Executive Officer and the Company's other executive officers
receiving in excess of $100,000 in total annual salary and bonus (collectively
the 'named executive officers'):
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
OTHER
ANNUAL
FISCAL SALARY BONUS COMPENSATION
NAME YEAR ($)(1) ($) ($)(2)
- ------------------------------------------------------------- ------ ------- ----- ------------
<S> <C> <C> <C> <C>
Wynford Peter Holloway....................................... 1997 112,000 -- 29,000
1996 112,000 -- 17,072
1995 112,000 -- 24,083
Keith Charles Hall........................................... 1997 48,000* -- 9,000*
1996 96,000 -- 8,000
1995 96,000 -- 4,400
Richard Horby Phillips....................................... 1997 41,500* -- 7,470*
Gerald J. Capaci............................................. 1997 47,000* -- 3,500*
</TABLE>
- ------------
* Part of the year; to or from date of resignation/appointment
(1) All salaries and other annual compensation were paid by MSU (UK) Limited or
MSU US Operations Inc.
(2) Represents personal benefits in addition to salary. Of Mr. Holloway's
personal benefits, 51% of the 1995 amount was for house rental expense; 40%
and 60% of the 1996 amount were for a Company car and house rental expense,
respectively. The 1997 amount is in respect of a car allowance. Of Mr.
Hall's personal benefits, 100% of each of 1995, 1996 and 1997 amounts were
for a car allowance. All of Mr. Phillips benefits were in respect of a car
allowance and all Mr. Capaci's personal benefits are in respect of
contributions to a personal retirement plan.
7
<PAGE>
<PAGE>
LONG TERM COMPENSATION
Other than in respect of the stock options, details of which are set out on
pages 10 to 11, there were no long term compensation awards or payouts in any of
the years ended June 30, 1997, 1996 or 1995.
EMPLOYMENT AGREEMENTS
Effective September 1, 1994, MSU PLC entered into employment agreements
with each of Wynford Peter Holloway, Keith Hall and William Snowdon providing
for annual base salaries (subject to annual increases within the discretion of
the Board of Directors) of $206,670, $132,800 and $33,200 respectively, which
base salary requirement was waived by each of Messrs. Holloway and Hall for the
first three years of the employment term. Subject to earlier termination as
provided in the agreements, the agreements are each for a three year period
ending August 31, 1997. Unless terminated in accordance with the agreements,
each agreement renews for a further period of three years on each anniversary of
the commencement date.
On January 6, 1997, the employment contract with Mr. Hall was terminated,
by mutual consent, effective December 31, 1996.
Effective January 2, 1997, MSU (UK) Limited entered into an employment
agreement with Richard Horby Phillips providing for an annual base salary of
$107,900, subject to annual increases within the discretion of the Board of
Directors. During an initial period, which is still continuing, Mr. Phillips is
to receive a lower base salary at the annual rate of $83,000 as he is unable to
devote all of his time to the Company's affairs due to other commitments. At
present Mr. Phillips is devoting approximately 4 days a week to the Company's
affairs.
In September 1997, MSU Limited entered into an employment agreement with
Keith Peirson providing for an annual base salary of $160,000, subject to annual
increases within the discretion of the Board of Directors.
All of the above agreements with Messrs. Holloway, Snowdon, Phillips and
Peirson, also provide for a car allowance or use of an automobile, including
reimbursement of any automobile expenses, and participation in bonus plans when
and if formulated by MSU PLC or MSU (UK) Limited. MSU is also obligated to
provide private medical coverage and life insurance. For one year after
termination, the executives are restricted from holding a material interest in
any competitor, seeking or receiving orders for any products or services
produced or marketed by MSU PLC or MSU (UK) Limited during a six month period
prior to termination of the executive.
Effective January 29, 1997, MSU (UK) Limited entered into an employment
agreement with Gerald J. Capaci providing for an annual base salary of $125,000,
subject to annual increases within the discretion of the Board of Directors. In
addition, the Company will make an annual nondiscretionary contribution to a
retirement plan for Mr. Capaci at a rate of 7.5% of his annual salary and will
establish and maintain a medical benefits plan for Mr. Capaci, his spouse and
dependent children.
8
<PAGE>
<PAGE>
COMPENSATION OF DIRECTORS
Directors are reimbursed for all reasonable expenses in attending each
Board Meeting.
STOCK OPTION GRANT TABLE
The following table sets forth certain information concerning options
granted to the named executive officers during the Company's fiscal year ended
June 30, 1997.
OPTIONS GRANTED IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE
TOTAL VALUE AT ASSUMED ANNUAL
NUMBER OF OPTIONS RATE OF STOCK PRICE
SECURITIES GRANTED TO EXERCISE OR MARKET APPRECIATION FOR OPTION
UNDERLYING EMPLOYEES BASE PRICE PRICE ON TERM(5)
OPTIONS IN FISCAL ($ PER DATE OF EXPIRATION ------------------------
NAME GRANTED YEAR SHARE) GRANT DATE 0%($) 5%($) 10%($)
- ------------------------ ---------- ---------- ----------- -------- ---------- ----- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
WYNFORD PETE
HOLLOWAY............... 150,000 23.0% $2.12 $ 2.12 4/18/02 -- 87,858 194,142
(NOTE 1) 3.1% $3.25 $ 3.25 6/24/02 -- 17,958 39,683
20,000
(NOTE 2)
WILLIAM DEREK SNOWDON... 20,000 3.1% $3.25 $ 3.25 6/24/02 -- 17,958 39,683
(NOTE 2)
RICHARD HORBY
PHILLIPS............... 100,000 15.3% $2.12 $ 2.12 5/11/02 -- 58,572 129,428
(NOTE 3)
GERALD J. CAPACI........ 300,000 46.0% $2.12 $ 2.12 5/11/02 -- 58,572 129,428
(NOTE 3)
JEREMY MILES SIMPSON.... 62,500 9.5% $2.12 (50,000) $ 2.12 5/11/02 -- 29,286 64,714
(NOTE 4) $2.37 (12,500) $ 2.37 6/30/02 -- 8,785 18,086
</TABLE>
- ------------
(1) The stock options granted to Mr. Holloway (50,000) and to the Employee Trust
(100,000), in which Mr. Holloway has an interest as the Settler and as a
potential beneficiary, on 12 May 1997 were in consideration of the benefits
derived by the Company from the provision of personal guarantees by Mr.
Holloway and security given by the Trust to secure a loan facility for the
Company.
(2) The stock options granted to Mr. Holloway and Mr. Snowdon were in
consideration for the benefits derived by the Company from their agreeing to
certain additional restrictions on their disposing of their existing
holdings of shares of common stock in the Company; this being one of the
conditions attaching to the issuance of the 10% Convertible Loan Notes on
June 25, 1997.
(3) The stock options granted to Messrs. Phillips and Capaci are in accordance
with the provisions of their employment contracts with the Company. Mr.
Phillips has been granted options in respect of 100,000 shares of common
stock exercisable between November 11, 1997 and May 11, 2002. Mr. Capaci has
been granted options in respect of 300,000 shares of common stock of which
100,000 are exercisable between November 11, 1997 and May 11, 2002; the
options in respect of the other 200,000 shares of common stock vest as to
100,000 after January 1998 provided that the Company's share price has been
quoted at $15.00, and 100,000 after January 1999 provided that the Company's
share price has been quoted at $20.00.
(4) The stock options granted to Mr. Simpson were in consideration of his
agreeing to subscribe for 79,012 shares of common stock of the Company on
May 12, 1997 and 48,012 shares on June 4, 1997.
(5) As required by the rules of the Securities and Exchange Commission,
potential values stated are based on the assumption that the Company's
common stock will appreciate in value from the date of the grant to the end
of the option term (five years from the date of the grant) at annualized
rates of 5% and 10% (total appreciation of approximately 28% and 61%),
respectively, and therefore are not intended to forecast possible future
appreciation, if any, in the price of the common stock.
9
<PAGE>
<PAGE>
STOCK OPTION EXERCISES AND HOLDINGS TABLE
The following table provides information concerning the values of
unexercised options held by the named executive officers at June 30, 1997. No
options were exercised by such officers during the Company's fiscal year ended
June 30, 1997.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)(1)
------------------------------ ------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Wynford Peter Holloway............................... 100,000 170,000(2) -- 78,375
William Derek Snowdon................................ 100,000 20,000 -- 6,250
Richard Horby Phillips............................... 100,000 144,250
Gerald J Capaci...................................... 300,000 144,250
Jeremy Miles Simpson................................. 62,500 87,031
</TABLE>
In September 1997, Keith Peirson was granted options to purchase 300,000
shares of the Company's common stock at the closing price at the date of the
grant. The options are exercisable as to 100,000 from July 1, 1998, 100,000 from
July 1, 1999, and 100,000 from July 1, 2000. The options expire in September
2002.
- ------------
(1) Values stated are based on the average bid and asked prices of $3.56 per
share of the Company's common stock as reported by Bloomberg Financial Inc.
on June 30, 1997, the last trading day of the fiscal year, and equal the
aggregate amount by which the market value of the option shares exceeds the
exercise price of such options at the end of the fiscal year. No value is
attributed to option shares where the option price is higher than the market
value.
(2) The Stock options above attributed to Mr. Holloway include 100,000 granted
during the year ended June 30, 1997 to a Trust in which Mr. Holloway has an
interest.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company has no compensation committee. During fiscal 1997, Messrs.
Holloway, Snowdon, Hall (to December 31, 1996) and Phillips (from January 2,
1997) representing all of the Company's directors and executive officers,
participated in deliberations of the Board of Directors concerning executive
officer compensation.
Since October 1994, the law firm of Phoenix Walters Solicitors has
regularly rendered legal services as counsel to the Company. W.D. Snowdon, a
director and executive officer of the Company, is a partner of Phoenix Walters
Solicitors.
Between September 1994 and March 1995, Mr. Phillips provided consultancy
services to the Company for which he rendered invoices for $16,500. As of
September 1997, the amount remained unpaid.
In November 1992, MSU (UK) Limited, Mr. Holloway, TXC Corporation and a
third party entered into an agreement relating to the development of a CD based
multisystem. Such agreement contemplated that a new entity, owned 46% by Mr.
Holloway, 46% by TXC Corporation and 5% by the third party, would develop and
own such project, however, MSU (UK) Limited, Mr. Holloway and TXC Corporation
subsequently agreed that MSU (UK) Limited would independently develop and own
the product. The third party never performed under the November 1992 agreement
and, accordingly MSU (UK) Limited's position is that such third party has no
rights or claims under such agreement. TXC Corporation and Mr. Holloway agreed
to indemnify MSU (UK) Limited in connection with any claim made by such third
party. Pursuant to the November 1992 agreement, TXC Corporation contributed
$1,541,910 to MSU (UK) Limited. Pursuant to a June 1993 agreement, restating the
1992 agreement, TXC Corporation loaned $618,000 to MSU (UK) Limited. Of the
$2,159,910 aggregate capital contribution, $1,400,000 is represented by an
unsecured, interest free loan payable to TXC Corporation
10
<PAGE>
<PAGE>
at such time as the Company is reasonably able to do so without jeopardizing its
financial condition, and the balance was an equity contribution. Pursuant to a
March 1994 agreement, TXC Corporation agreed to waive certain rights under the
November 1992 and June 1993 agreements in exchange for 550,000 shares of MSU
Limited stock and certain additional consideration. TXC Corporation has waived
any claims it may have had to such additional consideration. The MSU (UK)
Limited stock issued to TXC Corporation was exchanged for MSU PLC stock in June
1994 and the MSU PLC stock was exchanged for Company common stock in October
1994 in connection with the Exchange. TXC Corporation is a principal stockholder
of the Company and holds a non-exclusive license to use the Wynpeg Chipset
technology in connection with the manufacture of video CD players. Such license
was granted to TXC Corporation in connection with a development contract entered
into in July 1994.
In August 1997, Mr. Holloway agreed to the terms of settlement of a loan
made in May 1994 by Sabre Advanced Micro Electronics Ltd., an agent for Americn
Micro Systems Inc. (which until 1996 was the Company's principal chip
manufacturer) in the approximate amount of $231,000. Settlement was effected by
the transfer of 70,000 shares of common stock of the Company owned by Mr.
Holloway. The pledge of all of the shares of common stock of Mr. Holloway given
as security for the loan was released as part of the settlement terms. Mr.
Holloway loaned approximately $68,000 of the loan proceeds to MSU Ltd. in July
1994 on an unsecured interest free basis. At September 1997, approximately
$3,000 was outstanding under that loan.
In June 1996, MSU (UK) Limited obtained a $76,000 credit facility from
National Westminster Bank Plc ('Bank'). The credit facility was secured by a
security interest on all of the Company's assets and the personal guarantees of
each of Messrs. Holloway, Hall and Snowdon. The Guarantees of Messrs. Hall and
Snowdon were secured by a pledge of their shares of Company common stock. In
consideration of the benefit derived by the Company as a result of the
guarantees provided by these directors, each of the directors concerned was
granted, effective June 7, 1996, an option to acquire 100,000 shares of Company
common stock at an exercise price of $5.00. The options are exercisable in full
commencing on June 7, 1997 and expire on June 6, 2001. The credit facility
expired in August 1996 at which time there were no amounts outstanding under the
facility. A security interest remains in place with the Bank to serve as
collateral for additional credit facilities requested by the Company and
approved by the Bank. The pledged shares have been released.
On October 14, 1994, the Company completed an exchange of all the shares of
MSU PLC for 9,422,222 shares of the Company's common stock pursuant to an
Exchange Agreement. After the Exchange, the former stockholders of MSU PLC owned
approximately 73.6% of the Company's common stock. Such stockholders presently
own approximately 51.5% of the Company's common stock. Upon completion of the
Exchange, Mr. Holloway, an officer and director of the Company, TXC Corporation,
and the Employee Discretionary Trust became the owners of more than five percent
(5%) of the Company's common stock. Additionally, each of Keith Hall and William
Snowdon, officers and directors of the Company, received 515,277 shares in
connection with the Exchange. All of MSU PLC shares were acquired in June 1994
in exchange for shares in MSU (UK) Limited.
In September 1996, approximately $163,000 was loaned to the Company by the
Employee Trust. This loan was unsecured, interest free with no date fixed for
repayment. In July 1997, approximately $33,000 was repaid and the balance
remains outstanding.
In consideration of the benefit derived by the Company as a result of the
above interest free loan of $160,000 and the guarantee provided by the Employee
Trust, the Trust was granted an option to acquire 100,000 shares of the
Company's common stock at an exercise price of $2.12 the market price of the
Company's common stock on the date of grant. The options are exercisable in full
commencing on November 11, 1997 and expire on May 11, 2002.
In February 1997, the Company sold 12 Promissory Notes each in the amount
of $50,000 and each bearing interest at 8.5% per annum and which were due to
mature in February 1998. Security for the borrowings was the Company's shares of
its subsidiaries together with 235,000 shares of common stock of the Company
which are owned by the Employee Trust. The Promissory Notes were repaid in June
1997 and no amount is now outstanding.
11
<PAGE>
<PAGE>
In September 1996, the Company sold 50,000 shares of common stock for
$250,000. This transaction was subsequently rescinded and the Company was
indebted to the purchaser for $250,000. Payment was guaranteed personally by Mr.
Holloway and was paid in full in July 1997. In consideration of the benefit
derived by the Company as a result of the above guarantee, Mr. Holloway was
granted an option to acquire 50,000 shares of the Company's common stock at an
exercise price of $2.12, being the market price of the shares of common stock in
the Company at the date of grant. The options are exercisable in full commencing
on November 11, 1997 and expire on May 11, 2002.
On June 25, 1997, as part of the Placement Agent Agreement with Capitol Bay
Securities in connection with the issuance of the Company's 10% Convertible
Notes, Messrs. Holloway and Snowdon agreed to restrictions on their rights to
sell, or otherwise dispose of, their shares of common stock registered in their
respective names. In consideration for the benefit derived by the Company for
their agreeing to these restrictions, Messrs. Holloway and Snowdon were each
granted options to acquire 20,000 shares of the Company's common stock at $3.25
per share, the market price of the shares on the date of agreement. The options
are exercisable in full commencing on December 25, 1997 and expire on June 24,
2002.
The Company believes that the abilities of the foregoing members of the
Board of Directors to make fair compensation decisions have not and will not be
compromised by the relationships referred to above.
ANNUAL PERFORMANCE GRAPH
COMPARISON OF THREE YEARS CUMULATIVE TOTAL RETURN
Assumes $100 invested on May 31, 1995 in the Company's Common Stock,
the S&P Computer Hardware Group Index and the S&P 500 Index.
[PERFORMANCE GRAPH]
1995 1996 1997
---- ---- ----
S&P COMPUTER HARDWARE GP INDEX 100 102 67 83
S&P 500 INDEX 100 98 78 69
MSU CORPORATION 100 58 105 102
12
<PAGE>
<PAGE>
GENERAL INFORMATION
INFORMATION AS TO VOTING SECURITIES
The close of business on October 31, 1997 has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
notice of, and vote at, the Annual Meeting. Holders of shares of Common Stock
have the right to one vote for each share registered in their names on the books
of the Company as of the close of business on the record date. As of October 27,
1997, 16,093,791 shares of the Company's Common Stock were issued and
outstanding.
VOTING AND REVOCATION OF PROXIES
The persons named in the accompanying form of proxy will vote the shares
represented thereby, as directed in the proxy, if the proxy appears to be valid
on its face and is received on time. In the absence of specific instructions,
proxies so received will be voted for the election of the named nominees to the
Company's Board of Directors. Proxies are revocable at any time before they are
exercised by sending in a subsequent proxy (with the same or other
instructions), by appearing at the Annual Meeting of Stockholders and voting in
person, or by notifying the Company in writing that it is revoked.
METHOD AND EXPENSE OF PROXY SOLICITATION
The solicitation of proxies will be made primarily by mail. Proxies may
also be solicited personally and by telephone by regular employees of the
Company at nominal cost. The Company does not expect to pay compensation for any
solicitation of proxies, except for fees paid to American Securities Transfer &
Trust, Inc. for services in connection with the meeting in the approximate
amount of $746. In addition, the Company may pay brokers and other persons
holding shares in their names, or in the names of nominees, their expenses for
sending proxy material to principals for the purpose of obtaining their proxies.
The Company will bear all expenses in connection with the solicitation of
proxies.
INDEPENDENT AUDITORS
The Board of Directors of the Company appointed Moore Stephens Lovelace,
P.L. to audit the accounts of the Company for the fiscal year ended June 30,
1997. Management does not believe it is necessary for stockholders to ratify
this appointment due to the satisfactory services of Moore Stephens Lovelace
P.L., in the prior year and the impracticality and undue expense of calling a
special stockholders meeting solely for that purpose. There is no requirement
under the Company's By-laws or under federal or Florida law that the appointment
of independent auditors be approved by stockholders.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Company's 1998 Annual
Meeting of Stockholders pursuant to the provisions of Rule 14a-8 of the
Securities and Exchange Commission, promulgated under the Securities Exchange
Act of 1934, as amended, must be received at the Company's offices in Central
Milton Keynes, England by June 29, 1998 for inclusion in the Company's proxy
statement and form of proxy relating to that meeting.
GENERAL
The Annual Report on Form 10-K is being mailed to stockholders
simultaneously with this Proxy Statement.
As of the date of this proxy statement, the management knows of no matters
other than Proposals 1 and 2 to come before the meeting. However, if any other
matters should properly come before the meeting, it is the intention of the
persons named in the accompanying form of proxy to vote all proxies not marked
to the contrary in accordance with their judgment on such matters.
By Order of the Board of Directors
WILLIAM DEREK SNOWDON, Secretary
13
<PAGE>
<PAGE>
APPENDIX 1 PROXY CARD
MSU CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of MSU Corporation (the 'Company') hereby
appoints Richard Horby Phillips and William Derek Snowdon, as Proxies, each with
power to appoint his substitute, and hereby authorizes them to represent and
vote as designated below, all of the shares of the Company's Common Stock held
of record by the undersigned on October 31, 1997 at the Annual Meeting of
Stockholders of the Company to be held at The Garden City Hotel, 45 Seventh
Street, Garden City, New York, on November 14, 1997, at 2:00 p.m., or at any
adjournment thereof.
<TABLE>
<S> <C>
(1) Election of Directors [ ] WITHHOLD AUTHORITY to vote for any individual
[ ] FOR all nominees listed below nominee listed below.
(except as marked to the contrary below)
(INSTRUCTION: To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list
below.)
Wynford Peter Holloway, Jeremy Miles Simpson, William Derek Snowdon, Richard Horby Phillips, Gerald J. Capaci, Keith Edward
Peirson and Fred Kashkooli.
- ------------------------------------------------------------------------------------------------------------------------------
(2) Proposal to ratify the appointment of Moore Stephens Lovelace, P.L. as [ ] FOR [ ] AGAINST [ ] ABSTAIN
the Company's independent certified public accountants for the fiscal
year ending June 30, 1998.
(3) In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
</TABLE>
<PAGE>
<PAGE>
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted for Proposal 2 and the nominees on the reverse side.
Date: _____________________,1997
________________________________
SIGNATURE
________________________________
SIGNATURE IF HELD JOINTLY
PLEASE SIGN EXACTLY AS NAME
APPEARS HEREON. WHEN SHARES ARE
HELD BY JOINT TENANTS, BOTH
SHOULD SIGN. WHEN SIGNING AS
ATTORNEY, AS EXECUTOR,
ADMINISTRATOR, TRUSTEE OR
GUARDIAN, PLEASE GIVE FULL TITLE
AS SUCH. IF A CORPORATION,
PLEASE SIGN IN FULL CORPORATE
NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A
PARTNERSHIP, PLEASE SIGN IN
PARTNERSHIP NAME BY AUTHORIZED
PERSON.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
