SEC File No. 0-18995
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
INTERLINE RESOURCES CORPORATION
(Name of Registrant as Specified In Its Charter)
INTERLINE RESOURCES CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] 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:
N/A
2) Aggregate number of securities to which transaction applies:
N/A
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
4) Proposed maximum aggregate value of transaction:
N/A
5) Total Fee Paid:
N/A
[ ] 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
free 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:
N/A
2) Form, Schedule or Registration Statement No.:
N/A
3) Filing Party: N/A
4) Date Filed: July 26, 2000.
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INTERLINE RESOURCES CORPORATION
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD AUGUST 18, 2000
TO THE SHAREHOLDERS OF INTERLINE RESOURCES CORPORATION
The Annual Meeting of the Shareholders of Interline Resources Corporation
(the "Company") will be held at 160 West Canyon Crest Road, Alpine, Utah, on
August 18, 2000 at 2:00 p.m. local time, for the following purposes:
1. To elect three (3) directors each to serve until the 2001 Annual Meeting of
Shareholders or until their successors shall have been duly elected and
qualified.
2. To ratify and approve 2000 grants of stock options to certain
employee-officers of the Company.
3. To transact such other business as may come before the meeting or any
adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on July 18, 2000 as
the record date for the determination of shareholders entitled to notice of and
to vote at the meeting and any adjournments thereof.
By Order of the Board of Directors
/s/ Michael R. Williams
---------------------------------------
Michael R. Williams
Chief Executive Officer
Alpine, Utah
July 19, 2000
All shareholders are cordially invited to attend the meeting in person. However,
to assure your representation at the meeting, your are urged to sign and return
the enclosed proxy as promptly as possible in the envelope enclosed for that
purpose. Any shareholder attending the meeting may vote in person even if he or
she has returned a proxy.
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INTERLINE RESOURCES CORPORATION
160 West Canyon Crest Road
Alpine, Utah 84004
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
To be held August 18, 2000
The Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Interline Resources Corporation, a Utah
corporation, (the "Company") to be voted at the Annual Meeting of Shareholders
to be held August 18, 2000 and at any adjournment(s) thereof. The Annual Meeting
of Shareholders (the "Meeting") will be held at the Company's offices at 160
West Canyon Crest Road, Alpine, Utah 84004 at 2:00 p.m. local time. The Proxy
Statement, the Notice of Annual Meeting of Shareholders and the Proxy were first
sent or given to the Company's shareholders on or about July 19, 2000.
Matter to come before the Meeting are (1) the election of three (3)
directors to the Board of Directors to serve until the 2001 Annul Meeting of
Shareholders and thereafter until their successors are elected and are
qualified; and (2) the ratification and approval of the Company's 2000 grant of
stock options to certain employee-officers, all as are more fully described
herein.
RECORD DATE AND VOTING SECURITIES
The securities of the Company entitled to vote at the Meeting consist of
shares of the Company's common stock, $.005 par value. Only shareholders of
record at the closing of business on July 18, 2000, the record date for the
Meeting, well be entitled to notice of and to vote at the Meeting. On the record
date the Company had outstanding 14,066,052 shares of common stock. See
"Principal Shareholders and Security Ownership of Management" for information
concerning beneficial ownership of the Company's stock.
Assuming a quorum is present, the three (3) nominees receiving the
greatest number of votes cast by the holders of the common stock will be elected
as directors. There will be no cumulative voting in the election of directors.
Abstentions are treated as present and entitled to vote at the Meeting.
Therefore, abstentions well be counted in determining whether a quorum is
present and will have the effect of a vote against a matter. A broker non-vote
on a matter (i.e., share held by brokers) requiring a minimum number of votes
for approval (but not the election of directors) or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to voted and as to which the broker or nominee does not have
discretionary power to vote on a particular matter) is considered not entitled
to vote on that matter and, thus, will not be counted in determining whether a
quorum is present or whether a matter requiring approval of a majority of the
shares present and entitled to vote has been approved.
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All Proxies received pursuant to this solicitation will be voted at the
Meeting and at any adjournments thereof as indicated in the Proxy. If no
instructions are given, the persons named in the Proxy solicited by the Board of
Directors of the Company intend to vote for the nominees for election as
directors of the Company listed below.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date or by attending the meeting and voting in person
GENERAL INFORMATION ABOUT THE COMPANY
The Company is a Utah corporation with its principal and executive offices
located at 160 West Canyon Crest Road, Utah 84004 (801) 756-3031. Interline
Resources Corporation (the "Company"), a Utah corporation, is engaged in two
areas of business, each operating as separate subsidiaries: Interline
Hydrocarbon Inc., a Wyoming corporation, which commercializes the Company's used
oil refining technology; and Interline Energy Services, Inc., a Wyoming
corporation, which manages the Company's oil and gas operations located in
Wyoming.
The Company has invested substantial resources commercializing a used oil
refining technology and has signed license agreements with companies in England,
South Korea, Dubia, Australia and Spain. The Company's first used oil refinery
was constructed in Salt Lake City, Utah in 1996. The Company's oil and gas
operations consist of natural gas gathering, natural gas processing,
transportation and oil well production all located in Wyoming.
On September 26, 1997, the Company filed a Petition for
Reorganization under Chapter 11 (the "Petition") of the United States Bankruptcy
Code. The Company continued its operations as a debtor-in-possession under the
Bankruptcy Code. The Company's subsidiaries did not join the Company in the
Petition and were not directly involved in the Bankruptcy Reorganization
Proceeding.
On June 18, 1998, the Company filed a Plan of Reorganization and
Disclosure Statement to the Plan of Reorganization with the United States
Bankruptcy Court for the District of Utah, Central Division. On July 14, 1998,
the Company's Plan of Reorganization and Disclosure Statement to the Plan of
Reorganization was approved and circulation thereof authorized by the United
States Bankruptcy Court for the District of Utah, Central Division.
On September 10, 1998, the plan of reorganization under Chapter 11 of
Interline Resources Corporation was confirmed by the United States Bankruptcy
Court for the District of Utah. As a result, restraints on the activities of
Interline imposed by the Bankruptcy code have been removed. Interline reached
agreement with its major creditor during the Chapter 11 case and the terms of
the agreement were incorporated in the plan. All other creditors were paid in
full under the plan.
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PRINCIPAL SHAREHOLDERS AND
SECURITY OWNERSHIP OF MANAGMENT
The following table sets forth information regarding shares of the
Company's common stock owned beneficially as of July 19, 2000 by each director
and nominee for director, each of the executive officers, all officers and
directors as a group and each person known by the Company to beneficially own 5%
or more of the outstanding shares of the Company's common stock.
Name and Address Percentage
of Beneficial Owner Shares Owned(1) Owned
-------------------------------------------------------------------------------
Michael R. Williams(2)(3) 2,703,006 19.07%
160 W. Canyon Crest Rd.
Alpine, UT 84004
Maurice D. Sabbah(4) 2,052,666 14.47%
c/o Fortress RE
262 East Morehead St.
PO Box 700
Burlington, NC 27216
Mark W. Holland(2)(5) 239,720 1.69%
160 W. Canyon Crest Rd.
Alpine, UT 84004
Laurie E. Evans(2)(6) 15,000 .11%
777 North 1570 West
Pleasant Grove, Utah 84062
All Officers and Directors 2,972,726 20.95%
as a Group (3 persons)
Total Shares Issued and 14,172,718 100%
Outstanding(1)
1)As of July 19, 2000 there were 14,066,052 shares of the Company's
common stock issued and outstanding. Under the rules of the Securities and
Exchange Commission and for purposes of the above set forth chart, all
shares issuable to the above referenced persons upon the exercise of
options and warrants and conversion rights are deemed to be issued and
outstanding. A total of 106,666 shares are issuable upon currently
exercisable options and debentures owned by the persons set forth in the
table above. Therefore, for purposes of the above set forth chart, there
are deemed to be 14,172,718 shares issued and outstanding.
(2)These individuals are the officers and directors of the Company.
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(3) Mr. Williams is a Director and the Company's Chief Executive
Officer. The number of shares indicated as owned by Mr. Williams includes
2,561,056 beneficially owned, 104,450 shares owned by his minor children
and 37,500 shares issuable upon the exercise of currently exercisable
options.
(4) Includes 2,052,666 shares which are owned directly by Mr.
Sabbah. The number of shares indicated excludes 29,000 shares owned by Mr.
Sabbah's daughter and 25,000 shares owned by Mr. Sabbah's wife, as to both
of which Mr. Sabbah disclaims beneficial ownership.
(5) Mr. Holland is Director and Chief Financial Officer of the
Company. The number of shares indicated as owned by Mr. Holland includes
178,054 directly owned by Mr. Holland and 61,666 shares which may be
issued upon the exercise of a currently exercisable stock option.
(6) Mrs. Evans is Director and Vice President of Marketing for
Interline Energy Service. The number of shares indicated as owned by Mrs.
Evans is 0 directly owned by Mrs. Evans and 15,000 shares which may be
issued upon the exercise of a currently exercisable stock option.
PROPOSAL 1: ELECTION OF DIRECTORS
Nominees
A board of three (3) directors is to be elected at the Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the Company's nominees named below. In the event that any nominee of the
Company is unable or declines to serve as a director at the time of the Meeting,
the proxies will be voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. It is not expected that any nominee will
be unable or will decline to serve as a director. The term of office of each
person elected as a director will continue until the next Annual Meeting of
Shareholders or until a successor has been elected and qualified.
The following table sets forth for each nominee for election as a director
his name, all position with the Corporation held by him, his principal
occupation, his age and the year in which he first became a director of the
Corporation.
Name Age Position
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Michael R. Williams 49 Director/Chairman/CEO/President
Mark W. Holland 43 Director/Chief Financial Officer
Laurie E. Evans 35 Director/Vice President of Marketing
Interline Energy Service
Background information concerning the Company's officers and directors is
as follows:
Michael R. Williams. Mr. Williams has been an officer and director of the
Company since October 1990. He was also president, founder and majority owner of
Interline Natural Gas, a privately held company acquired by the Company. Mr.
Williams received his Bachelor of Arts degree in Business Management from
Brigham Young University in 1975.
Mark W. Holland. Mr. Holland has been employed as a Controller for the
Company since 1989 and was appointed Chief Financial Officer in 1994. On May 16,
1997 Mr. Holland was
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appointed as a Director of the Company. From 1983 to 1989 Mr. Holland was
employed by Savage Industries, Inc. as an accountant and as a Controller for the
Ideal Corporation and Cornelius Development Corporation subsidiaries. Mr.
Holland received his Certified Public Accountant certification in 1989. Mr.
Holland received his Bachelor of Science degree in Accounting and Business
Administration from Southern Utah State College in 1983.
Laurie E. Evans. Mrs. Evans joined the Company in January 1996, and has
been a member of the Company's executive management team serving as Assistant
for the President since July 1997. In September of 1998, Ms. Evans was appointed
Director for the Company and Vice President of Marketing for Interline Energy
Service. In addition to her duties of marketing, Ms Evans makes a significant
contribution in the areas of accounting and operations of the Company. Upon
joining the Company, Ms Evans brought seven years of previous experience in
retail and medical. Ms. Evans attended Brigham Young University, where she
pursued an undergraduate degree in Business Management.
Committees and Meetings
The Board of Directors held four meetings during the 1999 fiscal year. Mr.
Williams, Mr. Holland and Mrs. Evans were directors of the Company during all of
the meetings during the fiscal year and the number of Board Meetings attended by
each of them is as follow: Michael R. Williams - four; Mark W. Holland - four;
Laurie E. Evans - four.
The Board of Directors presently has no standing audit, compensation or
nominating committees.
Executive Compensation
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the last three years to the Company's Chief
Executive Officer and to the Company's most highly compensated executive
officers other than the CEO, whose annual salary and bonus exceeded $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term Compensation
-----------------------------------
Annual Compensation Awards Payouts
---------------------------- ---------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All
Name and Annual Restrict Options/ LTIP Other
Principal ($) ($) Compen- Stock SAR's Payouts Compen-
Postition Year Salary Bonus sation($) Awards($) (#) ($) sation($)
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael R. Williams 1999 $143,536 $-0- $-0- $-0- 7,500(1) $-0- $-0-
President, CEO 1998 $125,000 $-0- $-0- $-0- 7,500(1) $-0- $-0-
Chairman 1997 $156,216 $-0- $-0- $-0- 7,500(1) $-0- $-0-
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</TABLE>
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(1) According to the Company's 1994 Officers and Directors Stock Option Plan
which was approved by the Company's shareholders on May 10, 1994, Mr.
Williams was granted 7,500 shares of the Company common stock on March
1, 1997 and March 1, 1998 at a price of $4.50 and 7,500 shares of common
stock on March 1, 1999 at a price of $.10.
The Company provides health and life insurance to its employees, including
its officers and certain directors.
Stock Options Granted During 1999
The following table provides information on grants of stock options during
1999 to the persons named in the Summary Compensation Table above.
OPTION GRANTS IN 1999
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(a) (b) (c) (d) (e)
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% of Total
Options Exercise
Options Granted to or Base
Granted Employees Price Expiration
Name (#) in ($/Sh) Date
Fiscal Year
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Michael R. Williams 7,500 33.33% $.10 3/1/03
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Option Values at December 31, 1999
No options were exercised during 1999 by the person named in the Summary
Compensation Table. The following table provides information on the unexercised
options at December 31, 1999 owned by the people named in the Summary
Compensation Table above.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISED IN 1999
AND YEAR-END 1999 OPTION VALUES
-----------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
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Number of Value of Unexercised
Unexercised Options at In-the-Money Options at
Year End 1999 (#) Year End 1999 ($)(1)
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael R. Williams -0- -0- 37,500 -0- -0- -0-
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</TABLE>
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(2) An "In-the-Money" stock option is an option for which the market price of
the Company's common stock underlying the option on December 31, 1999
exceeded the option price. The value shown represents stock price
appreciation since the date of grant. The market price was based upon the
closing price of the Company's common stock on the obtain by a licensed stock
broker on December 31, 1999 ($0.08).
Employment Agreements
The Company has no written employment agreement with any officers or
directors.
Compensation of Directors
The Company's directors receive no compensation for Board of Directors
Meetings attended. On February 24, 1994, the Board of Directors adopted an
Officer and Directors Stock Option Plan. The Plan was adopted by the Company's
shareholders on May 10, 1994 and is a "formula" grant plan. The Plan provides
that each director and officer is to receive an option to purchase 7,500 shares
at market value on the initial date of grant or upon becoming an officer or
director of the Company. The initial date of grant was February 24, 1994. On
March 1st of each year thereafter, an additional option for 7,500 shares is
granted. Such additional options are exercisable at the market value on such
date.
Certain Relationships and Related Transactions
In connection with the Company's purchase of its corporate offices in
Alpine, Utah, in 1992, Michael R. Williams executed a personal and individual
guarantee agreement for the $250,000 SBA 504 portion of the long-term financing.
Michael R. Williams, Timothy G. Williams and Gearle D. Brooks executed
guarantees as individual guarantors of the commercial bank's $562,000 first
mortgage.
During 1993, the Company borrowed funds from officers Michael R. Williams,
Timothy G. Williams and Gearle D. Brooks. These loans accrued interest at the
rate of 6% per annum and are unsecured. The amounts of such loans made by each
lender and the amount due and owed by the Company as of December 31, 1999 was as
follows:
Total Amount Unpaid as of
Lender of Loans 12/31/99
------ ------------ ------------
Michael R. Williams $89,519 $ -0-
Timothy G. Williams $19,000 $14,049
Gearle D. Brooks $79,985 $15,432
As part of the merger with Interline Natural Gas, the Company issued a
total of $300,000 in long-term notes to the shareholders of Interline Natural
Gas. The amounts of such loans made by each lender and the amount due and owed
by the Company as of December 31, 1999 was as follows:
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Total Amount Unpaid as of
Lender of Loans 12/31/99
------ ------------ ------------
Michael R. Williams $165,000 $ -0-
Timothy G. Williams $ 60,000 $ -0-
Gearle D. Brooks $ 75,000 $64,843
On September 9, 1998, the plan of reorganization under Chapter 11 was
confirmed by the United States Bankruptcy Court for the District of Utah. Under
the plan, the Company will pay Mr. Brooks and Mr. Williams quarterly payments of
interest and 2.16% of the principal balance. The Company also reached agreement
with Maurice D. Sabbah, a shareholder of the Company. The following terms of the
agreement were incorporated in the plan.
The terms of the agreement included a new trust deed note dated September
22, 1998 for $3,600,000, together with interest at the rate of 7% per annum on
the unpaid principal. The Company will make quarterly payments of all accrued
interest beginning on December 22, 1998 and continuing until September 22, 2002.
The Company will also make principal payments of $750,000 on September 22, 1999;
$1,000,000 on September 22, 2000; $1,000,000 on September 22, 2001 and $850,000
on September 22, 2002. The note is secured by Trust Deeds securing a security
interest in the Company's Alpine Office located in Alpine, Utah and a security
interest in all assets of Interline Energy Service, Inc. As obligated in the
previous agreements, the Company executed a new Pledge Agreement with this major
creditor pledging stock of the Company and stock of all subsidiaries of the
Company.
In August of 1999, the Company received $4,080 for its interest in the Hat
Creek #2 well. Under the pledge agreement with this major creditor, all proceeds
from the sell of Company assets will go to pay down the principal portion of the
note. After applying the proceeds from this sell the note was reduced to
$3,595,920
On September 22, 1999, the Company was obligated to pay this major creditor
$812,000 which consists of principal of $750,000 and interest of $63,000 under
the new trust deed note (see new terms of trust deed above). On September 22,
1999, the Company paid this major creditor an interest payment of $63,000, but
did not make the principal payment of $750,000 due under the trust note. As a
result, the note for $3,595,920 due to this major creditor is currently in
default. Under the trust deed note if default occurs in the payment of
installments of principal or interest, the holder hereof, at its option and
without notice or demand, may declare the entire principle balance and accrued
interest due and payable. Also if default occurs any installments not paid when
due shall bear interest thereafter at the rate of fourteen percent (14%) per
annum until paid. The note is secured by Trust Deeds securing a security
interest in the Company's Alpine Office located in Alpine, Utah and a security
interest in all assets of Interline Energy Service, Inc. The Company executed a
pledge agreement with this major creditor pledging stock of all subsidiaries of
the Company. Per the trust deed note and pledge agreement, upon default, the
major creditor can exercise his rights and sell or demand the Company to sell
the collateral or any part of the collateral to cure the installment in default
($750,000) or the total ($3,595,920) due under the note. As of July 19, 2000,
the Company is current on all interest payments
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PROPOSAL 2: RATIFICATION AND APPROVAL OF 2000 EMPLOYEE-OFFICER
OPTION GRANTS
The Company believes it is in the best interests of the Company and its
shareholders to provide stock options to employees for the purpose of promoting
the success of the Company and to advance the interest of the Company and its
shareholders by providing an additional means, through the grant of stock
options, to attract, motivate, retain and reward employees with incentives for
high levels of individual performance and improve financial performance of the
Company. On July 11, 2000, the Board of Directors granted options (the
"Options") to purchase a total of 350,000 shares of the Company's common stock
to Michael R. Williams, Mark W. Holland and Laurie E. Evans ("Optionee"), all of
who are executive officers and directors of the Company. The Options are
exercisable at $.25 per share. The closing price of the Company's common stock
on July 11, 2000 was $.19. The Company's common stock is listed in the
over-the-counter market with price quotations published on the NASD Electronic
Bulletin Board under the symbol IRCE.OB.
Term of Options
The Options are exercisable for a term of five years from July 11, 2000.
However, the options are not exercisable for six months from the date of
shareholders approval. To the extent not previously exercised, the Options will
terminate on July 11, 2005: provided, however, the Options will terminate; (i)
ninety days after or disability or termination based upon just cause; (ii)
twelve months after the date that an Optionee ceases to be an employee by reason
of death or disability. In the event of a sale of all or substantially all of
the assets of the Company, or a merger or consolidation or other reorganization
in which the Company is not the surviving corporation, or in which the Company
becomes a subsidiary of another corporation (any of the foregoing events, a
"Corporate Transaction"), then notwithstanding anything else herein, the right
to exercise all outstanding Options will vest immediately prior to such
Corporate Transaction and will terminate immediately after such Corporate
Transaction; provided, however, that if the Board, in its sole discretion,
determines that such immediate vesting of the right to exercise outstanding
Options is not in the best interest of the Company, then the successor
corporation must agree to assume the outstanding Options or substitute thereof
comparable options of such successor corporation or a parent or subsidiary of
such successor corporation.
Transferability
The options granted herein are not transferable by an Optionee otherwise
than at his death by will or by the laws of descent and distribution and are
exercisable during the lifetime of the Optionee only by the Optionee.
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The shares of the Company's common stock underlying the Option have not
been registered under the Securities Act, and such common stock may not be
freely transferable and must be held indefinitely unless such common stock is
either registered under the Securities Act or an exemption from registration is
available. The Company may register the shares underlying the Options in the
future.
The following table shows certain information with respect to the stock
options which were granted on July 11, 2000, subject to shareholder approval.
New Plan Benefits
Name & Position Dollar Value Number of
($) Units
---------------------- -------------- --------------
Executive Officers
Michael W. Williams (1) 150,000
Mark W. Holland (1) 150,000
Laurie E. Evans (1) 150,000
Non-Executive
Directors (2) -0- -0-
All Non-Executive -0- -0-
Employees as a Group (2)
---------------------- -------------- --------------
(1) The "Plan" is limited to written Option Agreement entered into
by the Company and each Optionee. Inasmuch as the exercise
price of the Options granted exceeded the market price of the
Company's common stock on the date of grant (July 11, 2000),
there currently is no determinable value to the Options.
(2) The options granted were one time grants of options to the
three named executives. No other person participated in the
receipt of such options.
Tax Information
The Options are non-qualified stock options. The Optionee will likely
realize no income at the time they were granted the non-qualified stock options.
Such conclusion is predicated on the assumption that, under existing Treasury
Department regulations, a non-qualified stock option, at the time of its grant,
has no readily ascertainable fair market value. Except with respect to the
exercised of a non-qualified stock option for stock which is "not transferable"
and subject to a "substantial risk of forfeiture," as described below, ordinary
income will be realized when a non-qualified stock option is exercised. The
amount of such income will be equal to the excess of the fair market value on
the exercise date of the shares of Common Stock issued to an Optionee over the
option price. The Optionees' holding period with respect to the shares acquired
upon the exercise of the Options will begin on the date excise.
The tax basis of the stock acquired upon the exercise of the Option will
be equal to the sum (i) the exercise price of such Option and (ii) the amount
included in income with respect to such
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Option. Any gain or loss a subsequent sale of the stock will be either long-term
or short-term capital gain or loss, depending on the Optionees holding period
for the stock disposed of.
The Company will be entitled, subject to the usual rules as to
reasonableness of compensation and to other limitations, to a deduction for
Federal income tax purposes at the same time and in the same amount as the
Optionee are considered to have realized ordinary income in connection with the
exercise of the Option. The deduction will be allowed for the taxable year of
the Company in which or with which ends the taxable year of the Employee in
which such ordinary income is recognized.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
Tanner + Co. has served as the Company's independent auditor since 1989. No
change of auditors is contemplated. A representative of Tanner + Co. will be
present at the Annual Meeting, and will have an opportunity to make a statement
if he or she desires to do so, and will be available to respond to any
appropriate questions.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
Section 16 of the Securities Exchange Act of 1934 requires the filing of
reports for sales and purchases of the Company's common stock made by officers,
directors and 10% or greater shareholders. A Form 4 must be filed within 10 days
after the end of the calendar month in which a sale or purchase occurred. Based
upon review of Form 4 filed with the Company, the Company believes that all
persons required to file reports under Section 16 were current on their filing
RIGHTS OF DISSENTING SHAREHOLDERS
The matters to be considered and acted upon at the Meeting do not create
any dissenting shareholders rights under Utah corporation law.
STOCKHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 2001 Annual
Meeting must be received by the Company by January 2, 2001 to be considered for
inclusion in the proxy statement and form of proxy relating to the 2001 Meeting.
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FORM 10-KSB
The Company's Form 10-KSB for the year ended December 31, 1999 is being
mailed to shareholders with this Proxy Statement.
GENERAL
Management of the Company does not know of any matters other than the
foregoing that will be presented for consideration at the meeting. However, if
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote thereon in accordance with their
judgment.
The entire cost of soliciting management proxies will be borne by the
Company. Proxies will be solicited by mail and may be solicited personally by
directors, officers or regular employees of the Company who will not be
compensated for their services. The Company will reimburse banks, brokerage
firms and others custodians nominees and fiduciaries for reasonable expenses
incurred in sending proxy material to their proposals and obtaining their
proxies. A professional proxy solicitor will not be engaged.
Whether or not you expect to be present at the meeting, please sign the
accompanying form of proxy and return promptly in the enclosed envelope.
By Order of the Board of Directors
/s/ Michael R. Williams
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Michael R. Williams
Chief Executive Officer
By: Order of the Board of Directors
July 19, 2000
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