NOTICE OF A SPECIAL MEETING OF SHAREHOLDERS
October 28, 1997
MAGELLAN TECHNOLOGY, INC.
You are cordially invited to attend a special Meeting of Shareholders of
Magellan Technology, Inc. (the "Company"), which will be held on Tuesday,
October 28, 1997 at 9:00 a.m., at the offices of Magellan Technology, Inc.,
13526 South 110 West, Draper, Utah 84020 (the "Special" Meeting"), for the
following purposes, which are more fully described in the Information Statement
accompanying this Notice:
(i) To consider and vote upon a proposal to amend the Magellan
Technology, Inc. Stock Incentive Plan to increase by 1,800,000 the
number of shares of the Common Stock of the Company available for
issuance pursuant to grants thereunder, and certain other
amendments as described in the Information Statement.
(ii) To transact such other business as may properly come before
the Special Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on September 15,
1997 as the record date for the determination of shareholders entitled to
receive notice of and to vote at the Special Meeting and at any adjournment or
postponement thereof.
All shareholders are cordially invited to attend the Special Meeting in
person.
By Order of the Board of Directors
/s/ Douglas M. Angus
---------------------------------
Douglas M. Angus
Secretary
October 1, 1997
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
SCHEDULE 14c INFORMATION STATEMENT PURSUANT
TO SECTION 14c OF THE SECURITIES
EXCHANGE ACT OF 1934
Check the appropriate box:
{ } Preliminary Information Statement
{ } Confidential, Use of the Commission Only (as permitted by Rule 14c-
5(d)(2)) Statement
{x} Definitive Information Statement
{ } Definitive Additional Materials
Magellan Technology, Inc.
-----------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
{x} No fee required
{ } Fee computed on table below per Exchange Act Rules 14c-5(g)(4)
and 0-11.
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which
transaction applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
{ } Fee paid previously with preliminary materials.
{ } Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed
<PAGE>
Magellan Technology, Inc.
13526 South 110 West
Draper, Utah 84020
INFORMATION STATEMENT
Special Meeting of Shareholders
October 28, 1997
This Information Statement is being furnished to the shareholders of
Magellan Technology, Inc., a Utah Corporation (the "Company"), pursuant to
Section 14(c) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Regulation 14(c) in connection with the Special Meeting of
Shareholders of the Company to be held Tuesday, October 28, 1997 and at any
adjournment or postponement thereof (the "Special Meeting"). This Information
Statement and the Notice of Special Meeting of Shareholders are first being
mailed to shareholders of the Company on or about October 1, 1997.
WE ARE NOT ASKING YOU FOR A PROXY AND
YOU ARE REQUESTED NOT TO SEND US A PROXY
The Company will bear all costs and expenses relating to preparing,
printing and mailing to shareholders this Information Statement and
accompanying materials. Arrangements will be made with brokerage firms and
other custodians,nominees and fiduciaries representing beneficial owners
and the Company will reimburse such brokerage firms, custodians, nominees
and fiduciaries for reasonable out-of-pocket expenses incurred by them in
doing so.
VOTING
Record Date
The Board has fixed the close of business on September 15, 1997 as the
record date for determination of shareholders entitled to notice of and to vote
at the Special Meeting (the "Record Date"). As of the Record Date, there were
issued and outstanding 14,448,893 shares of Common Stock, $.0002 per value per
share (the "Common Stock"). The holders of record of the shares of Common
Stock on the Record Date entitled to be voted at the Special Meeting are
entitled to cast one vote per share on each matter submitted to a vote at the
Special Meeting. Accordingly, 14,448,893 votes are entitled to be cast on each
matter submitted to a vote at the Special Meeting.
<PAGE>
Required Vote
A majority of the outstanding shares of Common Stock entitled to vote,
represented in person or by properly executed proxy, is required for a quorum
at the Special Meeting. Abstentions and broker non-votes, which are
indications by a broker that it does not have discretionary authority to vote
on a particular matter, will be counted as "represented" for the purpose of
determining the presence or absence of a quorum. Under Utah corporate law and
the Articles and Bylaws of the Company (the "Bylaws"), once a quorum is
established, shareholder approval with respect to a particular proposal is
generally obtained when the votes cast in favor of the proposal exceed the
votes cast against such proposal.
For approval of the proposed amendment to the Option Plan to increase
the number of shares available for issuance pursuant to grants thereunder,
the votes cast in favor of must exceed the votes cast against the proposal.
Accordingly, abstentions and broker non-votes will not have the effect of being
considered as votes cast against any matter considered at the Special Meeting.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth, for the three
- --------------------------
fiscal years ended December 31, 1996, the compensation paid to the Company's
Chief Executive Officer. No executive officer of the Company received salary
and bonus compensation in excess of $100,000. The Chairman and CEO of the
Company has agreed to serve without salary compensation until the Company
achieves profitable operations.
Long-term
Annual Compensation Compensation
__________________________________________ ___________
Name Other
and Annual Securities
Principle Salary Bonus Compensation Underlying
Position Year ($) ($) ($) Options
________________________________________________________________ ___________
William A. Fresh 1996 -0- -0- -0- -0-
Chief Executive
Officer 1995 -0- -0- -0- -0-
1994 -0- -0- -0- 1,000
_____________________
Aggregated Option Exercises in Last Fiscal Year and Year End Option Values
The following table sets forth the aggregate value of options to
acquire shares of the Common Stock held by the Chief Executive Officer on
December 31,1996.
Value of Unexercised
Number of Unexercised In-the-Money Options at
Options at FY-End(#) FY- End ($)(1)
-------------------- -----------------------
Name Unexercisable/Exercisable Unexercisable/Exercisable
- ---------------------
William A. Fresh . . . 700/300 $0/$0
_____________________
(1) Calculated based on the difference between the exercise price and the
price of a share of the Company's Common Stock on December 31, 1996.
Director Compensation. Directors of the Company are paid no fee for
---------------------
their service on the Board of Directors. Directors are also not paid
a fee for, orreimbursed for expenses incurred with respect to,
attendance at board orcommitte meetings. Each director receives options to
purchase 1,000 shares of Common Stock at board or committee meetings. Each
director receives options to purchase 1,000 shares of Common Stock following
each Annual Meeting of Shareholders at which he is elected or re-elected to the
Board of Directors.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table lists the number of shares of Common Stock
beneficially owned as of September 15, 1997, by each person known by the
Company to be the beneficial owner of more than five percent (5%) of the Common
Stock, by each director of the Company, by the Chief Executive Officer, and by
all officers and directors of the Company as a group. Unless noted otherwise,
each person named has sole voting and investment power with respect to the
shares indicated.
Beneficial Ownership
As of September 15, 1997
Percentage
Number of of Class
Name and Address of Beneficial Owner Shares Outstanding
- ------------------------------------- ---------- -----------
William A. Fresh 2,615,568 (1) 24.2%
2238 E. Gambel Oak Drive
Sandy, Utah 84092
Richard Winwood 3,226,882 (2) 22.2%
7069 S. Highland Drive, Suite 102
Salt Lake City, Utah 84121
Ballard Investment 1,759,987 (3) 12.0%
2611 East 1300 South
Salt Lake City, Utah 84108
Reginald Hughes 855,332 (4) 5.9%
1482 East 920 South
Provo, Utah 84606
Donald P. Cox 1,045,336 (5) 7.2%
509 South 590 East
Orem, Utah 84058
Steven E. Garner 942,932 (6) 6.5%
166 West 1440 North
Orem, Utah 84058
Darwin D. Millet 285,003 (7) 2.0%
12090 South Woodridge Road
Sandy, Utah 84124
All officers and directors as 7,982,785 52.9%
a group (4 persons)
The percentages set forth above have been computed based on 14,448,893(*)
shares, which is the number of shares of the Common Stock, excluding treasury
shares held by the Company, outstanding as of September 15, 1997.
________________________
(*) Includes 801,899 shares owned by former STI management but held in
escrow. If certain operating results are not obtained through October 1997,
these shares will be forfeited to the Company.
(1) Includes 853,000 shares held by WAF Investment Company, a Utah limited
partnership, of which Mr. Fresh is a general partner, 1,133,332 shares held by
Reva Luana Fresh, spouse, 100,000 shares held by the William A. and Reva Luana
Charitable Remainder Trust, 50,000 shares held by the William A. and Reva Luana
Fresh Family Living Trust, 218,338 shares issuable upon the exercise of
currently exercisable warrants, and 250,300 shares issuable upon presently
exercisable options (pending shareholder approval of Option Plan amendments).
<PAGE>
(2) The shares are held by Keystone Ventures, L.C., a Utah limited liability
company, of which Mr. Winwood is a member. Includes 87,500 shares issuable
upon the exercise of currently exercisable warrants.
(3) Includes 120,837 shares issuable upon presently exercisable
warrants, and 100,000 shares issuable upon presently exercisable options.
Craig Ballard, a general partner of Ballard Investment, has the power to vote
the shares and to make investment decisions with respect to the shares on
behalf of Ballard Investment.
(4) The shares are held by a Utah limited liability partnership of
which Mr. Hughes is a general partner. 239,999 of these shares are held in
escrow. If certain operating results are not obtained through October 1997,
the shares held in escrow will be forfeited to the Company.
(5) The shares are held by a Nevada Corporation, of which Mr. Cox is
a director. 325,000 of these shares are held in escrow. If certain operating
results are not obtained through October 1997, the shares held in escrow will
be forfeited to the Company.
(6) The shares are held by a family trust of which Mr. Garner is a
trustee. 236,900 of these shares are held in escrow. If certain operating
results are not obtained through October 1997, the shares held in escrow will
be forfeited to the Company.
(7) Includes 70,502 shares issuable upon presently exercisable warrants or
options which become exercisable in the next 60 days.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, as well as persons who
beneficially own more than ten percent of the Common Stock of the Company, to
file initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission (the "SEC") and the National Association of
Securities Dealers. Reporting persons are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms furnished to the Company and
written representations from Company's executive officers and directors, the
Company believes that all required forms were timely filed during the past
fiscal year.
<PAGE>
AMENDMENT OF OPTION PLAN
TO INCREASE NUMBER OF SHARES AVAILABLE FOR ISSUANCE
PURSUANT TO GRANTS THEREUNDER
The Board has unanimously adopted proposed amendments to the Option Plan
to increase by 1,800,000, from 700,000 to 2,500,000 the number of shares of
Common Stock available for issuance pursuant to grants under the Option Plan,
to provide that the Option Plan will be administered by the Board or a
Committee of non-employee Directors and to terminate the formula award
provision of the Option Plan.
Description of the Option Plan
General. The Option Plan was adopted by the Board as of March 18, 1994.
The following description of the Option Plan does not purport to be compete
and is qualified in its entirety by reference to the full text of the Option
Plan, a copy of which will be provided to any stockholder upon written
request.
Purpose. The purpose of the Option Plan is to promote the long-term
success of the Company and the creation of incremental stockholder value by
(a) encouraging directors and key employees of the Company and its
subsidiaries to focus on critical long-range objectives, (b) encouraging the
attraction and retention of key employees with exceptional qualifications, and
(c) linking the interests of key employees of the Company directly to
stockholder interests through increased stock ownership.
Administration. As a result of changes to Rule 16b-3 promulgated by the
Securities and Exchange Commission, the Board has amended the Option Plan to
provide that it shall be administered by the Board or by a committee of the
Board consisting of two or more non-employee directors appointed by the Board
(The Board and/or the Committee are herein referred to as "The Option Plan
Committee"). The Option Plan Committee is currently composed of the
Compensation Committee of the Board. The Option Plan Committee, in its sole
discretion, determines the number and type of awards granted to a participant
under the Option Plan and the terms and conditions of such awards, including
any vesting conditions. The Option Plan Committee executes agreements setting
forth the terms of such awards (each, a "stock Award Agreement") and makes all
other decisions relating to the operation of the Option Plan. As a result of
the proposed changes, all directors will be eligible to receive options and
awards under the Option Plan even if they are serving on the Option Plan
Committee.
Duration. The Option Plan will remain in effect until terminated by the
Board. Notwithstanding the termination of the Option Plan, the Option Plan
will continue in effect after such termination for purposes of the
administration of any Option Plan award granted prior to such termination.
Shares Subject to the Option Plan. The Option Plan provides for the
issuance of Incentive Stock Options (the "Incentive Options"), as that term is
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), nonqualified stock options which are not governed by the provisions
of Section 422 of the Code ("Nonqualified Options" and, together with
Incentive Options, "Options") for shares of Common Stock, and certain
corresponding stock appreciation rights ("SARs"). The maximum number of
<PAGE>
Options that may be awarded under the Option Plan is currently 700,000. If
any Options are forfeited or if any Option terminates for any reason before
being exercised, then such Options, become available again for Awards under
the Option Plan. Notwithstanding the above, if any Options are surrendered
because corresponding SARs are exercised, such Options will not become
available again for Awards under the Option Plan. Common Stock issued
pursuant to the Option Plan may be authorized but unissued shares or treasury
shares. As of September 15, 1997, the Company had granted options for the
purchase of 1,877,336 shares (including Options for 1,177,336 shares that have
been issued subject to the approval of this amendment) of Common Stock under
the Option Plan. The following table sets forth as of September 22, 1997, the
Options which have been granted under the plan. (Excluding Options granted
subject to the approval of this Amendment).
OPTIONS
NAME GRANTED
- -------------------------------------------------------- -----------
William A. Fresh, Chairman of the Board, CEO and Director 0
Darwin Millet, Director, President SIS, LLC 167,668
Directors who are not Executive Officers as a group 0
Executive Officers as a group 0
Employees who are not Executive Officers as a group 485,668
In the event of a subdivision of the outstanding shares of Common Stock,
a declaration of a dividend payable in Common Stock, a declaration of a
dividend payable in a form other than Common Stock in an amount that has a
material effect on the price of the Common Stock, a combination of
consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise) into a lesser number of shares of Common Stock, a
recapitalization or similar occurrence (the occurrence of each of which may be
referred to as a "Capital Change"), the Option Plan Committee will make
appropriate adjustments in the number of Options, Restricted Shares and Stock
Units available for future Awards under the Option Plan.
Eligibility. Awards may be granted to directors, officers and employees
of the Company and its subsidiaries that the Option Plan Committee, in its
sole discretion, determines to be key employees (the "Key Employees").
Because the Option Plan Committee has complete discretion to determine the
number and selection of Key Employees eligible to participate in the Option
Plan, it is not possible to estimate accurately the number of persons who are
or may become eligible to participate in the Option Plan.
Options. The Option Plan Committee, in its sole discretion, may grant
both Incentive Options and Nonqualified Options from time to time. The Option
Plan provides that the exercise price of Options, restrictions upon the
exercise of Options and restrictions on the transferability of shares issued
upon the exercise of Options, will be determined by the Option Plan Committee
in its sole discretion, except that the exercise price of any Incentive Option
will not be less than the fair market value of a share of Common Stock as of
the date of the grant. The Option Plan Committee has sole discretion to
determine the time or times when each Option vests and becomes exercisable.
<PAGE>
The term of an Incentive Option, however, may not be more than ten years from
the date of grant. During the lifetime of the employee receiving the Option
(the "Optionee"), the Option will be exercisable only by the Optionee and will
not be assignable or transferable. Each Option will become exercisable in
such installments, at such time or times, and is subject to such conditions,
as the Option Plan Committee, in its discretion, may determine at or before
the time the Option is granted. The Option Plan Committee may provide for the
accelerated exercisability of an Option in the event of the death, disability
or retirement of the Optionee. Unless otherwise provided by the Option Plan
Committee, all Options will terminate ninety days after the termination of the
employment of an Optionee, unless the Optionee's employment was terminated for
cause, in which event the Options will immediately terminate upon the
termination of such Optionee's employment.
Formula Award to Non-Employee Directors. The Option Plan specifically
provides for stock awards to Non-Employee Directors of the Company. 4,000
Formula Award Options have been granted under the plan. The Board elected to
discontinue granting Formula Award Options after March 1995. All Directors,
however, are eligible to receive discretionary grants of Options under the
Option Plan.
Payment. The exercise price of Options granted under the Option Plan is
payable at the time of exercise in cash or, in the discretion of the Option
Plan Committee, in shares of Common Stock or other forms approved by the
Option Plan Committee. In the case of an Incentive Option, payment must be
made only pursuant to the express provisions with regard to exercise that the
Option Plan Committee determines to include in the applicable Stock Award
Agreement. Any payment method approved by the Option Plan Committee must by
consistent with applicable law, regulations and rules as well as the terms and
conditions of the Option Plan.
Stock Appreciation Rights. In connection with the grant of any Option,
the Option Plan Committee, in its sole discretion, may also grant a SAR, which
will relate to a specific Option granted to the Optionee. A SAR entitles the
Optionee to surrender to the Company, unexercised, all or any part of that
portion of the Option which is then exercisable and to receive from the
Company an amount equal to the difference between the aggregate exercise price
of the shares of Common Stock subject to the Option and the fair market value,
as determined under the Option Plan, of such shares on the date of such
exercise. Payment by the Company of any amount owing pursuant to the exercise
of a SAR may be made in shares of Common Stock, cash or any combination of
cash and shares, as determined in the sole discretion of the Option Plan
Committee. The determination of the Option Plan Committee to include an SAR
in an Incentive Option may be made only at the time of the grant of the
Incentive Option. The Option Plan Committee may include a SAR with a
Nonqualified Option at the time of the grant, and any time thereafter until
six months before the expiration of the Nonqualified Option.
<PAGE>
A SAR may be exercised only to the extent the Option to which it is
applicable is exercisable and may not be exercised unless both the SAR and the
related Option have been outstanding for more than six months. If, on the
date an Option expires, the exercise price of the Option is less than the fair
market value of the shares of Common Stock on such date, then any SARs
included in such Option is automatically deemed to be exercised as of such
date with respect to any portion of such Option that has not been exercised or
surrendered.
Amendments. The Board may, at any time and for any reason, amend or
terminate the Option Plan; provided, that any amendment to the Option Plan
will be subject to the approval of the Company's stockholders to the extent
required by applicable laws, regulations or rules. No amendment, suspension
or termination of the Option Plan will affect an Award granted on or prior to
the effective date of such amendment.
General Provisions. Neither the Option Plan nor the grant of any Award
thereunder gives any individual the right to remain employed by the Company or
any of its subsidiaries. The Option Plan does not inhibit the Company's
ability to terminate or modify the terms of the employment of any employee at
anytime, with or without cause. Participants in the Option Plan have no
rights with respect to dividends, voting or any other privileges accorded to
the Company's stockholders at the issuance of stock certificates for shares of
Common Stock. Recipients of Options have no obligation to exercise such
Options. Participants in the Option Plan have no rights or interest under the
Option Plan in any Option or shares of the Common Stock prior to the grant of
an Option or the issuance of shares upon exercise thereof.
New Plan Benefits
Because the Option Plan committee has complete discretion to determine
the number and selection of Key Employees, as well as the recipients, number,
type, vesting requirements and other terms of any Award under the Option Plan,
it is not possible to determine the benefits or amounts, if any, that will be
received by or allocated to any person under the Option Plan. The following
table sets forth as of September 22, 1997, new Options which have been
granted subject to shareholder approval of the plan amendment.
OPTIONS
NAME GRANTED
- -------------------------------------------------------- -------
William A. Fresh, Chairman of the Board, CEO and Director . . . . 251,000
Directors who are not Executive Officers as a Group . . . . . . . 0
Executive Officers as a Group (4) . . . . . . . . . . . . . . . . 450,000
Employees who are not Executive Officers as a Group . . . . . . . 523,000
Federal Income Tax Consequences
The following tax discussion is a brief summary of federal income tax
law applicable to the Option Plan. The discussion is intended solely for
general information and omits certain information which does not apply
generally to all participants in the Option Plan.
<PAGE>
Initial Grant of Options and SARS. A recipient of Options, whether
Nonqualified Options or Incentive Options, or SARs incurs no income tax
liability, and the Company obtains no deduction, from the grant of Options or
SARS.
Incentive Options. The holder of an Incentive Option is not subject to
federal income tax upon the exercise of the Incentive Option, and the Company
is not entitled to a tax deduction by reason of such exercise, provided that
the holder is still employed by the Company (or terminated employment no
longer than three months before the exercise date). Additional exceptions to
this exercise timing requirement apply upon the death or disability of the
Optionee. A sale of the shares of Common Stock received upon the exercise in
an Incentive Option which occurs both more than one year after the exercise of
the Incentive Option and more than two years after the grant of the Incentive
Option will result in the realization of long-term capital gain of loss to the
Optionee in the amount of the difference between the amount realized on the
sale and the exercise price for such shares. Generally, upon a sale or
disposition of the shares prior to the foregoing holding requirements
(referred to as a "disqualifying disposition"), the Optionee will recognize
ordinary compensation income, and the Company will receive a corresponding
deduction, equal to the lesser of (i) the excess of the fair market value of
the shares on the date of transfer to the Optionee over the exercise price, or
(ii) the excess of the amount realized on the disposition over the exercise
price.
The excess of the fair market value of the shares of Common Stock at the
time of the exercise of an Incentive Option over the Option price will
increase the Optionee's alternative minimum taxable income subject to the
alternative minimum tax, unless a subsequent disqualifying disposition occurs
in the same taxable year of the Optionee in which the Common Stock was
purchased.
Nonqualifying Options. Upon the exercise of a Nonqualified Option, the
amount by which the fair market value of the shares of Common Stock on the
date of exercise exceeds the exercise price is taxed to the Optionee as
ordinary compensation income. The Company is generally entitled to a
deduction in the same amount, provided it satisfies certain requirements
relating to the terms of the Option and makes all required wage withholdings
on the compensation element attributable to the exercise. In general, the
Optionee's tax basis in the shares acquired by exercising a Nonqualified
Option is equal to the fair market value of such shares on the date of
exercise. Upon a subsequent sale of any such shares in a taxable transaction,
the Optionee will realize capital gain or loss in an amount equal to the
difference between the sale price and his or her basis in the shares.
SARs. Upon the exercise of a SAR a participant under the Option Plan
will recognize ordinary compensation income in the amount of both the cash and
the fair market value of the shares of Common Stock received upon the exercise
of the SAR and generally the Company will be entitled to a corresponding
deduction. In the event the participant receives shares of Common Stock upon
the exercise of the SAR, any shares so acquired will have a tax basis equal to
<PAGE>
their fair market value on the date of such exercise or payment, and the
holding period of the shares will commence on the day following that date.
Upon a subsequent sale of such shares, the participant will recognize capital
gain or loss (long-term or short-term, depending on whether the shares were
held for more than twelve months before the sale) in an amount equal to the
difference between the sale price and his or her basis in the shares.
Withholding Tax Obligations. To the extent required by applicable
federal, state, local or foreign law, the recipient of any payment or
distribution under the Option Plan must make arrangements satisfactory to the
Company for the satisfaction of any withholding tax obligations that arise by
reason of such payment or distribution. The Company is not required to make
such payment of distribution until such obligations are satisfied. The
Committee may permit an Option Plan participant who exercises a Nonqualified
Option to satisfy all or part of his or her withholding tax obligation by
having the Company withhold a portion of the Common Stock that otherwise would
be issued to the participant under such Nonqualified Option.
Approval of Amendments of Option Plan
Approval of the proposed amendments to the Option Plan requires that
votes cast in favor of the proposed amendment exceeds votes cast against it.
The Board recommends a vote FOR amendment of the Option Plan to increase by
1,800,000 the number of shares of Common Stock, available for issuance
pursuant to grants under the Option Plan, and the other amendments described
above.
Certain Interests of Directors
In considering the recommendation with respect to the amendment of the
Option Plan, stockholders should be aware that members of the Board have
certain interests which may present them with conflicts of interest in
connection with such proposal. As discussed above, all directors are eligible
to participate in the Option Plan. The Board recognizes that adoption of the
proposed amendment to the Option Plan may benefit individual directors of the
Company and their successors, but it believes that approval of the amendment
of the Option plan will strengthen the Company's ability to continue to
attract, motivate and retain qualified employees, officers and directors. As
of September 15, 1997 current members of the Board owned, in the aggregate,
approximately 52.9% of the outstanding shares of Common Stock. See "Principal
Holders of Voting Securities."
OTHER MATTERS
As of the date of this Information Statement, the Board knows of no
other matters to be presented for action at the Annual Meeting.
8
