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
[ ]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 (S) 240.14a-11(c) or (S) 240.14a-12
MILLENNIUM ELECTRONICS
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[ ]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[ ]$500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ]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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ]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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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MILLENNIUM ELECTRONICS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 14, 1998
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Millennium
Electronics, Inc. ("the Company"), a Nevada corporation, will be held on July
14, 1998 at 5:00 p.m., local time, in the Willow Room of the Crystal Lake
Holiday Inn, 800 South Route 31, Crystal Lake, Illinois 60014 for the following
purposes:
1. To elect five directors of the Company to serve until the 1999 Annual Meeting
of Stockholders or until their successors have been duly elected and qualified
(Proposal 1);
2. To approve the adoption of the 1998 Non-employee Directors Stock Option Plan
and the reservation of 300,000 shares of Common Stock for issuance thereunder
(Proposal 2);
3. To ratify the appointment of Singer Lewak Greenbaum & Goldstein LLP as
independent public accountants of the Company for the fiscal year ending
December 31, 1998 (Proposal 3); and
4. To transact such other business as may properly be brought before the meeting
and any adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Stockholders of record at the close of business on June 2, 1998, 1998
shall be entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting. However, to
assure your representation at the meeting, you are urged to mark, sign, date and
return the enclosed proxy card as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if he or she has returned a proxy.
Sincerely,
/s/ Troy D. Barnes
Troy D. Barnes
President, Chief Executive Officer
and Secretary
Irvine, California
June 12, 1998
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE MEETING YOU ARE REQUESTED TO
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND
RETURN IT IN THE ENCLOSED ENVELOPE.
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MILLENNIUM ELECTRONICS, INC.
51 Discovery
Irvine, California 92618
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Millennium Electronics, Inc. (the "Company") for use at the Annual Meeting of
Stockholders to be held on July 14, 1998 at 5:00 p.m., local time, in the Willow
Room of the Crystal Lake Holiday Inn, 800 South Route 31, Crystal Lake, Illinois
60014, and at any adjournment(s) thereof, for the purposes set forth herein and
in the accompanying Notice of Annual Meeting of Stockholders. The Company's
telephone number is (714) 788-8100. These proxy solicitation materials were
mailed on or about June 12, 1998 to all stockholders entitled to vote at the
meeting.
RECORD DATE AND SHARE OWNERSHIP
Stockholders of record at the close of business on June 2, 1998 (the
"Record Date") are entitled to notice of and to vote at the meeting and at any
adjournment(s) thereof. As of March 12, 1998, 8,282,366 shares of the Company's
Common Stock, $.001 par value, were issued and outstanding.
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 Company (Attention:
Troy D. Barnes) a written notice of revocation or a duly executed proxy bearing
a later date or by attending the meeting and voting in person.
VOTING AND SOLICITATION
On all matters each share of Common Stock has one vote. Directors are
elected by a plurality vote of the Common Stock in person or represented by
proxy at a meeting. See "Election of Directors - Vote Required."
The cost of this solicitation will be borne by the Company. The Company
has retained the services of Corporate Investor Communications (the "Agent") to
perform a search of brokers, bank nominees and other institutional owners. The
Company estimates that it will pay the Agent a fee of $1,000 for its services
and will reimburse it for reasonable out-of-pocket expenses, if necessary. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for their expenses in forwarding
solicitation material to such beneficial owners. Proxies may also be solicited
by certain of the Company's directors, officers and regular employees, without
additional compensation, personally or by telephone or telegram.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The Company's Bylaws provide that stockholders holding a majority of the
votes shares of Common Stock issued and outstanding and entitled to vote on the
Record Date shall constitute a quorum at meetings of stockholders. Shares that
are voted "FOR," "AGAINST" or "WITHHELD" on a matter are treated as being
present at the meeting for purposes of establishing a quorum and are also
treated as "entitled to vote on the subject matter" (the "Votes Cast") at the
Annual Meeting with respect to such matter.
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Pursuant to Section 78.320(a) of the Nevada General Corporation Law,
stockholders holding at least a majority of the voting power constitute a
quorum. Accordingly, the Company believes that abstentions should be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business and the total number of Votes Cast with respect to a particular
matter (other than the election of directors). In the absence of controlling
precedent to the contrary, the Company intends to treat abstentions in this
manner. Accordingly, with the exception of the proposal for the election of
directors, abstentions will have the same effect as a vote against the proposal.
Because directors are elected by a plurality vote, abstentions in the election
of directors have no impact once a quorum exists.
While there is no comparable Nevada authority, in a 1988 Delaware case,
Berlin v. Emerald Partners, the Delaware Supreme Court held that, while broker
non-votes may be counted for purposes of determining the presence or absence of
a quorum for the transaction of business, broker non-votes should not be counted
for purposes of determining the number of Votes Cast with respect to the
particular proposal on which the broker has expressly not voted. Broker
non-votes with respect to proposals set forth in this Proxy Statement will
therefore not be considered "Votes Cast" and, accordingly, will not affect the
determination as to whether the requisite majority of Votes Cast has been
obtained with respect to a particular matter.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
The Company currently intends to hold its 1999 Annual Meeting of
Stockholders in June 1999 and to mail proxy statements relating to such meeting
in May 1999. Proposals of stockholders of the Company that are intended to be
presented by such stockholders at the Company's 1999 Annual Meeting of
Stockholders must be received by the Company no later than February 9, 1999 and
must otherwise be in compliance with applicable laws and regulations in order to
be considered for inclusion in the proxy statement and form of proxy relating to
that meeting.
EXECUTIVE OFFICERS
The executive officers of the Company are:
Name Age Office
- ---- --- ------
Troy D. Barnes (1) 34 President, Chief Executive Officer
and Secretary
Philip A. Harvey (2) 43 Chief Financial Officer and
Treasurer
(1) For the biography of Mr. Barnes, see "Election of Directors - Nominees".
(2) Philip A. Harvey was appointed Chief Financial Officer and Treasurer
effective as of April 1, 1998. From 1988 to 1997, Mr. Harvey was employed
as the Manager, Treasury Operations by Filenet Corporation, a $270 million
publicly-held software developer of electronic document management,
imaging and business process automation solutions. Among his other duties,
Mr. Harvey managed the corporation's foreign currency exposure, in excess
of $50 million, and investment portfolio, in excess of $60 million. In
addition, Mr. Harvey was responsible for worldwide cash management, risk
management and SEC reporting.
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COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership on Form 3 and changes in ownership on Form 4 or 5 with the Securities
and Exchange Commission (the "SEC") and the National Association of Securities
Dealers. Such officers, directors and ten-percent stockholders are also required
by SEC rules to furnish the Company with copies of all forms that they file
pursuant to Section 16(a). Based solely on its review of the copies of such
forms received by it, or written representations from certain reporting persons
that no other reports were required for such persons, the Company believes that
all Section 16(a) filing requirements applicable to its officers, directors and
ten-percent stockholders were complied with in a timely fashion with the
following exceptions:
(1) Fred Newton had to travel to the Phillippines on business shortly
after becoming a director. As a result, the filing of his initial report on Form
3, which was due to be filed by March 20, was delayed and was not filed until
March 26.
(2) Certain shares which were granted to Daniel Glick, director, and held
in escrow pending the achievement of certain performance milestones by the
Company were canceled when a milestone was not met. The cancellation of the
4,345 shares of the Company's Common Stock was not reported within the ten day
requirement.
(3) Certain shares which were granted to Bradley Barnes, who was the
beneficial holder of 10% of the Company's securities prior to the exercise of
various warrants and options, and held in escrow pending the achievement of
certain performance milestones by the Company were canceled when a milestone was
not met. The cancellation of the 18,214 shares of the Company's Common Stock was
not reported within the ten day requirement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 12, 1998 certain information
with respect to the beneficial ownership of the Company's Common Stock by (i)
any person (including any "group" as that term is used in Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) known by
the Company to be the beneficial owner of more than 5% of the Company's voting
securities, (ii) each director and each nominee for director of the Company,
(iii) each of the executive officers named in the Summary Compensation Table
appearing herein, and (iv) all directors and executive officers of the Company
as a group.
NUMBER OF PERCENT
NAME AND ADDRESS (1) SHARES OF TOTAL
- -------------------- ------ --------
Troy D. Barnes (2) ........................................4,078,760 49.2%
715 Marlin Drive
Laguna Beach, CA
Celeste Barnes (3).........................................4,078,760 49.2%
715 Marlin Drive
Laguna Beach, CA
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Bradley Stuart Barnes .......................................710,336 8.6%
P.O. Box 9706
Laguna Beach, CA
Douglas P. Morris (4)........................................333,330 3.9%
515 Red Cypress Drive
Cary, IL
Daniel H. Glick (5)..........................................169,434 2.0%
7025 Texhoma Avenue
Van Nuys, CA
Fred O. Newton ..................................................-0- 0%
2113 E. Knoll Circle
Mesa, AZ
Philip A. Harvey ................................................-0- 0%
24 Via Di Nola
Laguna Niguel, CA
All directors and executive officers as a group (five
persons)(6)...............................................4,581,524 53.4%
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(1) Except as otherwise indicated below, the persons whose names appear in the
table above have sole voting and investment power with respect to all
shares of stock shown as beneficially owned by them subject to community
property laws, where applicable.
(2) Includes (i) 250 shares held with wife, Celeste Barnes, as community
property, (ii) 102,444 shares held as Trustee of The Troy D. Barnes Trust,
and (iii) 3,976,066 shares held as Co-Trustee of The Barnes Family Trust.
(3) Includes (i) 250 shares held with husband, Troy D. Barnes, as community
property, (ii) 102,444 shares held by husband as Trustee of The Troy D.
Barnes Trust, and (iii) 3,976,066 shares as Co-Trustee of The Barnes
Family Trust. Ms. Barnes was an executive officer of the Company until her
resignation effective as of January 7, 1998.
(4) Includes (i) options to purchase 300,000 shares Common Stock exercisable
within sixty (60) days of the Record Date, and (ii) 33,330 shares held by
H & M Capital Investments, Inc., a company 100% owned by Mr. Morris.
(5) Mr. Glick, currently a director and a partner with Barry G. Morganstern in
Gkick Morganstern, has declined to be nominated for re-election to the
Board. Mr. Morganstern, who has been nominated to the Board of Directors,
holds beneficially 169,909 shares of the Company's common stock, or
approximately 2.1% of the total outstanding shares. Mr. Morganstern's
beneficial holdings of the Company's securities include (i) 164,434 shares
held by Barry G. Morganstern and Carol A. Morganstern, Co-Trustees FBO The
Barry and Carol Morganstern Family Trust; (ii) 5,000 shares held by Barry
G. And Carol A. Morganstern, Co-Trustees FBO The Barry G. Morganstern
Profit Sharing Plan; and (iii) 475 shares held by Barry Morganstern C/F
Arielle S. Morganstern.
(6) Includes the shares described in footnotes 2 and 4 above.
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<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES
Management is proposing five nominees for election to the Board of
Directors for terms expiring at the Company's 1999 Annual Meeting of
Stockholders or until their successors are appointed. Three of the five
nominees named below, all but Mr. Morganstern and Mr. Coppola, are presently
directors of the Company. In the election of directors, stockholders have the
right to cumulate votes. See "Vote Required."
Unless otherwise specified, each properly executed proxy received will be
voted for the election of the five listed nominees named below to serve as
directors until the 1999 Annual Meeting of Stockholders or until their
successors are elected. The nominees have consented to be named as nominees in
the proxy statement and to serve as directors if elected. Should a nominee
become unable or unwilling to accept a nomination or election, or should
additional persons be nominated at the meeting, the persons named in the
enclosed proxy will vote for the election of the nominees hereafter designated
by the Board of Directors (or if new nominees have been designated by the Board,
in such a manner as to elect such new nominees). The Company is not aware of any
reason that any of the nominees will be unable or will decline to serve as a
director. There are no arrangements or understandings between any director or
executive officer and any other person pursuant to which he is or was to be
selected as a director or officer of the Company.
The following persons have been nominated as directors:
Director
Name Age* Position Since
---- ---- -------- -----
Troy D. Barnes ............34 Chief Executive Officer, President, 1997
Secretary and Chairman of the Board
of Directors of the Company
Douglas P. Morris..........42 Vice President of Capital Markets 1997
and Director
Fred O. Newton (1).........59 Director 1998
Barry G. Morganstern.......46 Nominee --
Anthony F. Coppola (1).....58 Nominee --
- ------------------------
* As of April 30, 1998.
(1) Member of the Audit Committee
There is no family relationship between any director or executive officer
of the Company.
Troy D. Barnes was the founder, president, chief executive officer and
chairman of the board of Millennium Memory, Inc., a California corporation and
wholly owned subsidiary of the Company ("Millennium Memory"), since its
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inception in 1994. In 1985, Mr. Barnes founded Kelly Micro Systems, Inc., a
company involved in the design, manufacture and distribution of memory upgrades
for personal computers. As its chairman and chief executive officer, Mr. Barnes
oversaw the growth of Kelly Micro Systems, Inc. into a company with $70 million
in annual revenues. Kelly Micro Systems, Inc. was sold to MicroAge Corporation,
a $2 billion distributor of computer hardware, in 1994. Upon the merger of
Millennium Memory with Beacon Capital Investments, Inc. ("Beacon") in 1997, Mr.
Barnes became director, president, chief executive officer and chief financial
officer of the Company. Upon the resignation by his wife, Celeste Barnes, of her
office as secretary of the Company in January of 1998, Mr. Barnes became the
secretary of the Company. Mr. Barnes resigned as chief financial officer,
effective as of April 1, 1998 when Philip Harvey became the Company's CFO. Mr.
Barnes resides in Laguna Beach, California.
Mr. Morris, 42, was appointed a director of Beacon in December 1994. Mr.
Morris is, and has been since 1988, the owner of H&M Capital Investments, Inc.,
a privately-held business consulting firm. H&M Capital Investments, Inc. is
engaged in consulting with privately-held and publicly-held companies relating
to management, debt financing and equity financing. From 1984 to 1988, Mr.
Morris was self-employed in managing his own investments. From 1981 to 1984, he
was Assistant City Administrator for the City of Palmdale, California. From 1979
to 1981, he was the Assistant Mayor of Burbank, California. Mr. Morris is the
president and a director of Celtic Investment, Inc., a publicly-held company
which is engaged in the financial services business, a director of Dauphin
Technology, Inc., a publicly-held company engaged in the computer hardware
business, and the secretary and a director of Emerald Capitol Investments, Inc.
an inactive publicly-held company. Mr. Morris received his Masters Degree in
Public Administration at the University of Southern California in 1982 and his
Bachelor of Arts Degree in Judicial Administration from Brigham Young University
in 1978. Mr. Morris resides in Cary, Illinois.
Since 1992 Mr. Newton has been Managing Consultant for Lockwood Greene
Consulting. In this capacity he has provided strategic business planning for a
number of businesses including Minnesota Mining & Manufacturing Company ("3M"),
PPG Industries, Inc., McDonnell Douglas Corporation, Raytheon E-Systems
Richardson, an aerospace development and electronic device designer and
manufacturer; Intel Corporation, a microprocessor designer and manufacturer, and
Syntex Chemicals Inc., a pharmaceutical company. Mr. Newton resides in Mesa,
Arizona.
Mr. Morganstern co-founded Glick Morganstern along with Mr. Glick. Glick
Morganstern is a corporate finance firm which advises and represents middle
market companies in dealing with asset based lenders, in June 1986. Glick
Morganstern is located at 21755 Ventura Boulevard, Suite 200, Woodland Hills,
California 91364. Prior to co-founding Glick Morganstern, Mr. Morganstern served
as Vice President of Finance for Winston Financial Corporation, an equipment
leasing company specializing in providing equipment financing to early stage
telecommunication and broadcasting companies. Mr. Morganstern served on the
Board of Directors of Kelly Micro Systems, Inc. from December of 1992 until its
sale in 1994, and is currently on the Board of Directors of Distinctive
Solutions Corp., a provider of standard software packages to asset based lenders
and factors. Mr. Morganstern graduated cum laude in 1974 with a Bachelor of
Science degree in Business Administration-Accounting from California State
University at Northridge and is a member of the American Institute of Certified
Public Accountants. Mr. Morganstern resides in Woodland Hills, California.
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Mr. Coppola has served as a principal and president of Computer Products
Marketing, Inc. ("CPM") since 1982. CPM is a computer and communications
advisory firm providing strategic and tactical issue analysis for major
equipment vendors, equipment lessors and related trade associations. CPM has
also served as executive advisor in related mergers and acquisitions. Past
clients of CPM include IBM, Xerox, Unisys and EDS. From 1980 to 1982, Mr.
Coppola was the president of Computer Equipment Services, Inc. And engaged in
the sales, leasing and service of IBM-compatible add-on and add-in memories.
From 1970 to 1980, Mr. Coppola was Senior Vice President Sales/Marketing at
Electronic Memories & Magnetics Corporation. From 1968 to 1970, Mr. Coppola was
Account Executive at Honeywell Corporation. Prior to his employment at
Honeywell, Mr. Coppola was engaged in various applied research programs with
Bell Laboratories, the RCA David Sarnoff Research Center and the Engineering and
Aircraft Divisions of Grumman. Mr. Coppola resides in Laguna Niguel, California.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of three meetings and
took six actions by unanimous written consent during the fiscal year ended
December 31, 1997. No incumbent director serving during such fiscal year
attended fewer than 75% of the aggregate of all meetings of the Board of
Directors.
The Board of Directors created the Audit Committee on March 10, 1998.
During the fiscal year ended December 31, 1997 the Board of Directors had no
audit, nominating or compensation committee or any committees performing similar
functions.
DIRECTOR COMPENSATION
The Company currently reimburses directors for travel and other
out-of-pocket expenses incurred in attending Board meetings and does not
currently give any compensation to directors.
However, the 1998 Non-Employee Directors' Stock Option Plan (the "Director
Plan") is being submitted to the Stockholders for approval at the 1998 Annual
Meeting. See "Proposal Two." The Director Plan provides for automatic
non-discretionary grants of warrants to non-employee directors ("Outside
Directors").
Each Outside Director elected on or after the date of adoption of this
plan is automatically granted an option to purchase 10,000 shares of Common
Stock upon the later of the date he or she becomes a director of the Company or
the Director Plan is adopted. Thereafter, each Outside Director (other than the
Chairman of the Board) is automatically granted an option to purchase 10,000
shares of Common Stock on the date of the Annual Meeting each year, provided
that he or she is then serving as an Outside Director. The Director Plan
provides that the exercise price shall be equal to 100% of the fair market value
of the Common Stock on the date of grant of the options.
Following the approval of the Director Plan, employee directors will be
eligible for similar grants under the Company's 1997 Incentive Stock Option
Plan.
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VOTE REQUIRED
The directors will be elected by a plurality vote of the shares of the
Company's Common Stock present or represented and entitled to vote on this
matter at the meeting. Cumulative voting in the election of directors is
required under Section 2115 of the California Corporations Code. Under
cumulative voting, each share of stock entitled to vote in the election of
directors has such number of votes as is equal to the number of directors to be
elected. A stockholder may then cast all of his or her votes for a single
candidate or may allocate them among as many candidates as the stockholder may
choose. As a result, stockholders holding a significant minority percentage of
the outstanding shares entitled to vote in the election of directors may be able
to effect the election of one or more directors. Votes withheld from a nominee
and broker non-votes will be counted for purposes of determining the presence or
absence of a quorum but because directors are elected by a plurality vote, have
no impact once a quorum is present. See "Information Concerning Solicitation and
Voting - Quorum; Abstentions; Broker Non-Votes."
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
THE FOREGOING NOMINEES
PROPOSAL TWO
APPROVAL AND ADOPTION OF THE
1998 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
INTRODUCTION
The 1998 Non-Employee Directors Stock Option Plan (the "Plan") was adopted
by the Board of Directors prior to the Meeting, subject to stockholder approval.
The Plan provides for the grant of options to purchase shares of the Company's
Common Stock to non-employee directors ("Outside Directors"). A total of 300,000
shares of Common Stock are reserved for issuance under the Plan.
The Board believes that an option plan is necessary to enable the Company
to attract qualified individuals to sit as members of the Board of Directors,
and the Plan will fulfill this purpose.
SUMMARY OF THE PLAN
The full text of the Plan is set forth as Exhibit "A" to this Proxy
Statement. The following summary of the Plan is qualified by reference to that
text.
Purpose. The purposes of the Plan are to provide non-employee directors an
opportunity to acquire a proprietary interest in the Company and to attract
individuals with outstanding qualifications for the Company's Board of
Directors.
Eligibility. Only non-employee directors are eligible for option grants
under the Plan. Each non-employee director will be granted an option to purchase
10,000 shares of the Company's Common Stock upon election to the Board of
Directors (the "Initial Grant") and will receive options to purchase an
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additional 10,000 shares at the date of each Annual Meeting thereafter ("Annual
Grants"). Each option, whether or not vested, and all rights and obligations
thereunder expires ten years from the date of grant.
Exercise of Options and Purchase of Restricted Shares. Initial Grants vest
over a two-year period with 50% of the options vesting on the first anniversary
of the grant and the remaining shares vesting on the second anniversary of the
grant. Annual Grants become fully vested on the first anniversary of the date of
grant.
An option is exercised by delivery of written notice to the Company
specifying the number of full shares of Common Stock to be purchased and payment
of the purchase price.
Exercise Price. The exercise price of the options granted under the Plan
is 100% of the fair market value of the Common Stock on the date of grant.
Termination. If an optionee ceases to be a director of the Company for any
reason other than death or disability, vesting shall cease and the optionee
shall have the right to exercise existing vested but unexercised options for one
year after the date optionee ceases to be a director. If such termination is due
to the optionee becoming permanently and totally disabled, vesting shall cease
and the optionee shall have the right to exercise existing vested but
unexercised options at any time within five years after the optionee ceases to
be a director. If the optionee ceases to be a director of the Company by reason
of the optionee's death, vesting shall cease and the vested but unexercised
options may be exercised within five years after the date of the optionee's
death.
Non-Transferability. An option is non-transferable by the optionee other
than by will or the laws of decent and distribution or as permitted by Rule
16b-3 of the Securities Exchange Act of 1934, as amended, and is exercisable
during the optionee's lifetime only by the optionee, or in the event of the
optionee's death, by a person who acquires the right to exercise the option by
bequest or inheritance or by reason of the death of an optionee.
Adjustments Upon Changes in Capitalization; Changes of Control. The number
of shares covered by each outstanding option, and the exercise price thereof
shall be proportionately adjusted for any increase or decrease in the number of
issued shares resulting from a change in the Company's capitalization, such as a
stock split, stock dividend and the like. If the Company is a participant in any
merger or consolidation, each outstanding and unexercised option may be
canceled, provided that for a period of 30 days prior to the effective date of
such transaction optionee may exercise all unexercised options including
unvested options.
Amendment. The Board may from time to time, with respect to any shares at
the time not subject to options, suspend or discontinue the Plan. If necessary
to allow the Plan to meet the conditions of Rule 16b-3, the Board of Directors
will obtain the approval of a majority of the Company's stockholders to (a)
materially increase the benefits accruing to participants under the Plan; (b)
materially increase the number of shares subject to the Plan; or (c) change the
designation of the class of persons eligible to receive options.
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Terms of Plan. Options may be granted pursuant to the Plan during the
period ending on July 14, 2008.
The Company's Common Stock is traded on the over-the-counter securities
market under the symbol "MILM". On December 31, 1997, the last reported sale
price for the Common Stock was $5.00. As of July 14, 1998, no options or stock
purchase rights had been granted under the Plan.
REQUIRED VOTE
The approval of the Plan requires the affirmative vote of a majority of
the shares of the Company's Common Stock present or represented and entitled to
vote on this subject matter at the meeting. An abstention is not an affirmative
vote and, therefore, will have the same effect as a vote against the proposal. A
broker non-vote will not be treated as entitled to vote on this subject matter
at the meeting. See "Information Concerning Solicitation and Voting - Quorum;
Abstentions; Broker Non-Votes."
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
ADOPTION OF THE 1998 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANT
The Board of Directors has selected Singer Lewak Greenbaum & Goldstein
LLP, independent public accountants, to audit the financial statements of the
Company for the fiscal year ending December 31, 1998, and recommends that
stockholders vote for ratification of such appointment. In the event of a
negative vote on ratification, the Board of Directors will reconsider its
selection. A representative of Singer Lewak Greenbaum & Goldstein LLP is
expected to attend the Meeting to make any statements he may desire and respond
to stockholders' questions.
MANAGEMENT RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table shows, as to the Chief Executive Officer and each of
the other executive officers whose salary plus bonus exceeded $100,000,
information concerning compensation awarded to, earned by or paid for services
to the Company in all capacities during the last three fiscal years (to the
extent that such person was the Chief Executive Officer and/or an executive
officer, as the case may be, during any part of such fiscal year):
SUMMARY COMPENSATION TABLE
Name and Annual Compensation
Principal -------------------------- All Other
Position Year Salary($)<F1> Bonus($)<F1> Compensation<F2>
-------- ---- ------------- ------------ ----------------
TROY D. BARNES -- 1995 -0- $264,000
Chairman of the Board 1996 -0- $250,000 $281,322
of Directors, President 1997 $257,978 -0- $495,157
and Chief Executive
Officer
[FN]
<F1> Prior to the merger with Beacon, Millennium Memory, Inc. operated as an S
corporation. In 1995, Troy Barnes, through his personal trust, received
distributions of approximately $264,000 but no salary. Mr. Barnes received
a bonus of $250,000 in December of 1996. In the first quarter of 1997,
distributions were made to all of the then current shareholders of
Millennium Memory, Inc. before the effective date of the merger with
Beacon to pay their tax liability with respect to the income attributable
to them from the Company. The total distribution was $612,788 of which
approximately $477,925 was paid to Mr. Barnes. Commencing with the
effective date of the Merger, Mr. Barnes received an annual salary of
$250,000. Mr. Barnes' wife, Celeste Barnes, was a Company employee for the
fiscal year ended December 31, 1997 and earned an annual salary of
$91,250.
<F2> Includes an annual automobile allowance of $17,232 and distributions from
Millennium Memory, Inc. prior to the merger with Beacon.
STOCK OPTION GRANTS AND EXERCISES IN FISCAL 1997
In 1997, the Company granted 140,000 options to purchase shares of the
Company's common stock to Steven Weinberg, the Company's former Vice President
of Sales and Marketing exercisable at $3.00 per share. Such options expired
March 4, 1998. In addition, Mr. Weinberg was granted options to purchase 70,000
shares of the Company's common stock exercisable at $3.00 per share which expire
April 1, 2000. No other stock options or stock purchase rights ("SPRs") were
granted to or exercised by any of the Company's executive officers in 1995, 1996
or 1997.
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<PAGE>
EMPLOYMENT CONTRACTS
In December of 1996 Millennium Memory, Inc., a wholly-owned subsidiary of
the Company ("MMI"), entered into a five year employment agreement with its
Chief Executive Officer and Chairman, Troy Barnes. Under that agreement, which
is terminable by the Company only for cause, Mr. Barnes is to receive an annual
salary of $250,000 plus an annual performance bonus after 1997 to be determined
in the discretion of the Company's Board of Directors plus an automobile
allowance of $1,436 per month. The Company does not presently have an employment
contract in effect with its other executive officer.
Beacon entered into a one year Consulting Agreement with Douglas P. Morris
prior to the effective date of the merger with Millennium Memory which provided
for an advisory fee of $50,000, incentive stock options entitling Mr. Morris to
purchase 300,000 shares of Beacon's common stock at $3.00 per share, exercisable
over the five year period beginning with March 31, 1997, the effective date of
the merger, and reimbursement of reasonable expenses incurred by him on behalf
of Beacon. Effective April 1, 1998, the Company renewed the Consulting Agreement
for another year. For the one year period beginning April 1, 1998, the Company
will pay Mr. Morris $100,000.
CERTAIN TRANSACTIONS
MMI obtained a line of credit of $500,000 from Troy D. Barnes, its
Chairman of the Board, Chief Executive Officer and principal shareholder, which
was subordinated to MMI's principal bank line of credit. Interest on the
subordinated line of credit was at the rate of 7.6% per annum. The balance of
the line of credit was $298,491 and $298,811 as of December 31, 1995 and
September 30, 1996, respectively. Under the terms of the merger agreement, this
loan was repaid by MMI promptly after the effective date of the merger with
Beacon, March 31, 1997.
In May of 1996, MMI loaned its Chief Executive Officer, Chairman of the
Board and principal shareholder $150,000. That loan was interest free and was
due and payable on February 1, 1997. Pursuant to the terms of the merger
agreement, that loan was repaid concurrently with MMI's repayment of the
outstanding balance of the subordinated line of credit extended to MMI as
described in the preceding paragraph.
MMI paid an advisory fee of $50,000 to Glick Morganstern in connection
with the private placement by MMI prior to the merger with Beacon. Glick
Morganstern currently receives $5,000 per month in consulting fees for work
interfacing with the Company's secured financing lender and for general
organizational consulting.
The Company renewed its Consulting Agreement with Douglas Morris. Mr.
Morris is a director of the Company. See "Executive Compensation - Employment
Contracts."
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<PAGE>
REPORT OF THE BOARD OF DIRECTORS
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Exchange Act of 1933, as amended, or the
Securities Act of 1934, as amended, that might incorporate future filings,
including this Proxy Statement, in whole or in part, the following report and
the Performance Graph on page 14 shall not be incorporated by reference into any
such filings.
The Board of Directors has not created a Compensation Committee to
formulate policy regarding the Company's executive officers. For the fiscal year
ended December 31, 1997, Troy D. Barnes was the only executive officer in the
Company. Mr. Barnes compensation is governed by an employment agreement. See
"Executive Compensation-Employment Contracts."
EXECUTIVE OFFICER COMPENSATION PROGRAMS
The objectives of the overall executive officer compensation program are
to attract, retain, motivate and reward key personnel who possess the necessary
leadership and management skills through competitive base salary, annual cash
bonus incentives, long-term incentive compensation in the form of stock options,
and various benefits (including medical and life insurance plans) generally
available to employees of the Company.
The executive compensation policies of the Company are intended to combine
competitive levels of compensation with rewards for above average performance
and to align relative compensation with the achievements of the business
objectives, optimal satisfaction of customers, and maximization of stockholder
value. The Board of Directors believes that stock ownership by management is
beneficial in aligning management and stockholder interests and thereby
enhancing stockholder value.
Base Salary. Base salary levels for the Company's executive officers are
set relative to other companies in the same stage of development in the same
industry and geographic area. In determining salaries, the Committee also takes
into account the Chief Executive Officer's recommendations, individual
experience and contributions to corporate goals, the Company's performance, and,
in the case of Mr. Barnes, existing contractual commitments. Measures of the
Company's performance taken into account by the Committee in establishing
executive officer compensation include the achievement of significant milestones
in the Company's development plan and the relationship of the individual's
contribution to the achievement of these goals.
Incentive Bonuses. The Committee believes that a cash incentive bonus plan
can serve to motivate the Company's executive officers and management to address
annual performance goals, using more immediate measures for performance than
those reflected in the appreciation in value of stock options. However, for
fiscal 1997, the Company's goals were targeted toward longer-term objectives for
corporate development. As a consequence, the Company did not have any incentive
bonus plan for executive officers for fiscal 1997 although certain incentive
payments were made to sales executives.
Stock Option Grants. Although no stock options were granted to executive
officers in the fiscal year ended December 31, 1997, stock options are expected
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Page 16 of 26
<PAGE>
to be granted to executive officers and other employees under the Company's
option plan. Stock option grants are intended to focus the attention of the
recipient on long-term Company performance which should result in improved
stockholder value, and to retain the services of the executive officers in a
competitive job market by providing significant long-term earning potential. One
of the principal factors considered in granting stock options to executive
officers of the Company is the executive's ability to influence the Company's
long-term growth and profitability. All options are granted at the current
market price. Because of the direct relationship between the value of an option
and the stock price, the Committee believes that options may motivate executive
officers to manage the Company in a manner that is consistent with stockholder
interests.
The Company views stock options as one component of long-term performance-
based compensation for executive officers. Senior management generally receives
larger grants of stock options, so that their compensation is weighted more
heavily toward compensation contingent upon the Company achieving improvements
in stockholder value. Option awards to executive officers will generally made at
the time of their employment and from time to time thereafter at the discretion
of the Committee.
Other Compensation Plans. The Company has adopted certain general employee
benefit plans in which executive officers are permitted to participate on a
parity with other employees. The incremental cost to the Company in fiscal 1997
of benefits provided to executive officers under these life insurance and health
plans was less than 10% of the base compensation for executive officers.
Benefits under these general plans are not directly or indirectly tied to
Company performance.
CHIEF EXECUTIVE OFFICER COMPENSATION.
In making compensation decisions regarding the Chief Executive Officer,
the Board of Directors generally considers factors such as the Company's
progress towards achieving its goals for the year, his leadership and
establishment and implementation of strategic direction for the Company. In
fiscal 1997, Mr. Barnes' compensation was governed by the Employment Agreement.
No incentive bonus program was adopted for Mr. Barnes during fiscal 1997
although the Committee is considering adopting such a program for fiscal 1998.
The foregoing report has been furnished by the Board of Directors of
Millennium Electronics, Inc.
MEMBERS OF THE BOARD OF
Dated: June 12, 1998 DIRECTORS
Troy D. Barnes
Douglas P. Morris
Daniel H. Glick
Fred O. Newton
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Page 17 of 26
<PAGE>
COMPANY STOCK PRICE PERFORMANCE
The Company's stock began active trading in April 1997. The following
graph demonstrates a nine-month comparison of cumulative total stockholder
return, calculated on a dividend reinvestment basis and based on an initial
investment of $100 in the Company's Common stock as compared with the NASDAQ
Stock Market Index and the Nasdaq Electronic Component Index. No dividends have
been declared or paid on the Company's Common Stock during such period. The
stock price performance shown on the graph following is not necessarily
indicative of future price performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Millennium Electronics, Inc. vs. Peer Group
Millennium
Electronics, Inc. NASDAQ NASDAQ Comp.
----------------- ------ ------------
4/30/97 $100 $100 $100
5/30/97 125 111 103
6/30/97 125 115 99
7/31/97 125 127 124
8/29/97 125 127 127
9/30/97 125 134 128
10/31/97 138 127 107
11/28/97 131 128 107
12/31/97 125 126 96
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<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of Proxy to vote the shares they represent as
the Board of Directors may recommend.
THE BOARD OF DIRECTORS
Dated: June 12, 1998
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<PAGE>
[Front]
PROXY
MILLENNIUM ELECTRONICS, INC.
51 Discovery
Irvine, California 92618
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. THE BOARD
RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
The undersigned hereby appoints Troy D. Barnes and Philip A. Harvey or
either of them, with unlimited power of substitution, as Proxies to represent
the undersigned at the Annual Meeting of Stockholders of MILLENNIUM ELECTRONICS,
INC. to be held on Tuesday, July 14, 1998, at 5:00 p.m., local time, or any
adjournment or adjournments thereof, and to vote, as directed below, all shares
of Common Stock, which the undersigned would be entitled to vote if then
personally present.
PLEASE MARK YOUR VOTES LIKE THIS [ X ]
1. ELECTION OF FIVE DIRECTORS, EACH TO HOLD OFFICE UNTIL HIS OR HER SUCCESSOR
SHALL HAVE BEEN ELECTED AND QUALIFIED. If no allocation or abstention is
indicated, an equal number of voting shares will be cast for each nominee.
WRITE THE NUMBER
OF VOTES CAST
FOR EACH NOMINEE ABSTAIN
(See Proposal One-Vote Required
for an explanation of cumulative
voting.)
TROY D. BARNES [ ] [ ]
DOUGLAS P. MORRIS [ ]
FRED O. NEWTON [ ]
BARRY G. MORGANSTERN [ ]
ANTHONY F. COPPOLA [ ]
- --------------------------------------------------
2. APPROVAL AND ADOPTION OF THE 1998 NON-EMPLOYEE DIRECTORS STOCK PLAN.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANT
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
- -------------------------------------------------------------------------------
Page 20 of 26
<PAGE>
[Back]
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 PROPOSALS 1, 2 AND 3.
[ ] I PLAN [ ] I DO NOT PLAN to attend the meeting
NOTE: PLEASE SIGN EXACTLY AS YOUR
NAME APPEARS BELOW. If stock is
registered in the name of two or
more persons, each should sign.
Executors, administrators, trustees,
guardians, attorneys, and corporate
officers should show their full
titles.
Date:______________________________
___________________________________
Signature of Stockholder
___________________________________
Signature of Stockholder
PLEASE MARK, SIGN, DATE, AND RETURN YOUR PROXY PROMPTLY
IN THE POSTPAID ENVELOPE PROVIDED
Page 21 of 26
<PAGE>
EXHIBIT A
MILLENNIUM ELECTRONICS, INC.
1998 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
1. Purpose. Millennium Electronics, Inc., a Nevada corporation (the
"Company"), hereby establishes its 1998 Non-Employee Directors Stock Option Plan
(the "Plan"). The purpose of the Plan is to attract the most qualified
individuals to sit as members of the Company's Board of Directors and provide
non-employee directors with an opportunity to participate in the growth of the
Company through stock ownership.
2. Eligibility. Only non-employee directors of the Company shall be
eligible to participate in the Plan.
3. Stock Available for Options Under the Plan. Subject to adjustment as
provided in Section 5 hereof, the aggregate number of shares of the common stock
of the Company ("Common Stock") as to which options may be granted under the
Plan shall not exceed 300,000 shares. Any of such shares which may remain unsold
and which are not subject to outstanding options at the termination of the Plan
shall cease to be reserved for the purpose of the Plan, but until termination of
the Plan, the Company shall at all times reserve a sufficient number of shares
to meet the requirements of the Plan.
In the event that any option granted under the Plan shall expire or
terminate for any reason, including termination by the voluntary surrender
thereof for cancellation, without having been exercised in whole or in part, the
unpurchased shares subject thereto shall again be available for options to be
granted under the Plan.
4. Stock Option. The options granted under the Plan shall be evidenced by
a written option agreement which shall contain the following terms and
conditions:
a. Option Price. The option price of shares of Common Stock covered
by each option shall be 100% of the fair market value of the Common Stock
on the date such option is granted. The fair market value shall be equal
to (i) the closing sales price on such date of a share of Common Stock as
reported on the principal securities exchange on which such shares of
Common Stock are then listed or admitted to trading, or as reported on the
National Association of Securities Dealers Automated Quotation ("Nasdaq")
National Market System, or (ii) if not so reported, the average of the
closing bid and ask prices on such date as reported on the Nasdaq System
published in The Wall Street Journal or on the World Wide Web at
"http://quote.yahoo.com."
-1-
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<PAGE>
b. Number of Shares.
(i) Each non-employee director shall automatically receive an
option to purchase 10,000 shares of Common Stock on the later of the date
of his or her first election as a director or the approval of the Plan by
the stockholders of the Company (the "Initial Grant").
(ii) Each year, as of the date of the Annual Meeting of
Stockholders of the Company, each non-employee director who has been
elected or re-elected or who is continuing as a member of the Board of
Directors as of the adjournment of the Annual Meeting (other than any
non-employee director eligible for an initial grant at such meeting
pursuant to Section 4(b)(i) hereof) shall automatically receive an option
to purchase 10,000 shares of Common Stock (the "Annual Grant").
c. Expiration and Termination of Options.
(i) Expiration. Each option and all rights and obligations
thereunder shall, subject to the provisions of Section 4(c)(ii) hereof,
expire ten (10) years from the date of grant.
(ii) Termination. In the event that an optionee shall cease to
be a director of the Company for any reason, the vesting of his or her
options shall immediately and automatically terminate. In the event that
an optionee shall cease to be a director of the Company for any reason
other than a disability (as defined in Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended from time to time, herein "Disability")
or death, the vested portion of the option at the time the optionee ceases
to be a director shall be exercisable for one year subsequent to the date
the optionee ceased to be a director unless such option would expire
pursuant to Section 4(c)(i) hereof at an earlier date, in which case such
option shall remain exercisable only until the earlier expiration date. In
the event that the optionee shall cease to be a director of the Company
due to Disability, the portion of his or her options vested at the date
the optionee ceased to be a director shall remain exercisable for five
years after such cessation unless such options would expire pursuant to
Section 4(c)(i) at an earlier date, in which case such options shall
remain exercisable only until the earlier expiration date. In the event
that the optionee should die while a director of the Company or during
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<PAGE>
the one year period following resignation as a director due to Disability,
the portion of his or her options vested at the date the optionee ceased
to be a director shall remain exercisable for five years after the date of
the optionee's death, unless such options would expire pursuant to Section
4(c)(i) at an earlier date, in which case the options shall remain
exercisable only until the earlier expiration date.
d. Non-Transferability of the Options. An option granted under the
Plan may not be transferred otherwise than by will or the laws of descent
and distribution or as permitted by Rule 16b-3 of the Securities Exchange
Act of 1934, as amended, or successor rule or regulation ("Rule 16b-3").
An option granted under the Plan may, during the lifetime of the optionee
to whom granted, be exercised only by such optionee, his or her guardian
or legal representative, or by a transferee permitted by Rule 16b-3.
e. Exercise of Options.
(i) Subject to the provisions of the Plan, an Initial Grant
pursuant to Section 4(b)(i) shall be exercisable as follows:
Percentage
From To Exercisable
---- -- -----------
Date of Grant Day prior to 1st 0%
Anniversary
1st Anniversary Day prior to 2nd 50%
Anniversary
2nd Anniversary Expiration Date 100%
(ii) Subject to the provisions of the Plan, an Annual Grant
pursuant to Section 4(b)(ii) shall be exercisable in full beginning on the
first anniversary date of the date of grant.
(iii) Options may be exercised by giving written notice to the
Secretary of the Company stating the number of shares of Common Stock with
respect to which the option is being exercised and tendering payment
therefor. Payment for shares of Common Stock shall be made in full at the
time that an option or any part thereof is exercised. Payment may be made
(i) in cash, or (ii) by delivery of shares of stock of the Company held by
optionee, which shares shall be valued, for purposes of payment, at their
-3-
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<PAGE>
fair market value on the date of payment, determined in accordance with
procedures established in Subsection 4(a).
5. Capital Adjustments and Changes in the Company. In the event of any
stock dividend, stock split, exchange of shares, recapitalization, subdivision
or consolidation of shares, or other similar transaction, the aggregate number
of shares available under the Plan, the number of shares subject to each
outstanding option and the option price per share, shall all be proportionately
adjusted.
In the event the Company shall be a party to a transaction involving
a sale of substantially all its assets, a merger or a consolidation, all then
outstanding options under the Plan may be cancelled by the Company as of the
effective date of any such transaction by giving notice to each optionee of its
intention to do so at least 30 days prior to the effective date of such
transaction and by permitting the exercise during the 30-day period preceding
the effective date of such transaction of all partly or wholly unexercised
options in full, including the portion not yet exercisable pursuant to the
vesting schedule set forth in Subsection 4(e) above.
In the case of dissolution of the Company (other than a dissolution
following a sale of substantially all of the Company's assets), every option
outstanding hereunder shall terminate; provided, however, that each optionee
shall have 30 days' prior written notice of such event, during which time the
optionee shall have a right to exercise any partly or wholly unexercised option
in full, including the portion not yet exercisable pursuant to the vesting
schedule set forth in Subsection 4(e) above.
6. No Obligation. The granting of an option shall impose no obligation on
the Company to continue optionee's service as a director for any period.
7. Legal and Other Requirements. The obligation of the Company to issue or
transfer shares of Common Stock under options granted under the Plan shall be
subject to all applicable laws, regulations, rules and approvals including, but
not by way of limitation, the effectiveness of a registration statement under
the Securities Act of 1933, as amended, the qualification of the options and the
shares of Common Stock reserved for issuance upon exercise of options under
applicable state securities laws, the satisfaction of applicable listing
requirements of the principal securities exchange on which the Company's Common
Stock is listed or admitted to trading, if deemed necessary or appropriate by
the Company, and the payment by the optionee to the Company, upon its demand, of
such amount, or in lieu thereof of such number of shares of Common Stock of the
Company, as may be requested by the Company for the purpose of satisfying any
liability to withhold federal, state or local income or other taxes incurred by
reason of the exercise of such options or the delivery of shares of Common Stock
incident thereto.
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<PAGE>
8. Termination and Amendment of Plan. The Board of Directors, without
further action on the part of the stockholders, may suspend or terminate the
Plan except that no such action may materially and adversely affect any
outstanding option without the consent of the optionee. Only if and to the
extent stockholder approval is necessary to allow this Plan to meet the
conditions of Rule 16b-3, the Board of Directors shall obtain stockholder
approval of any amendments to this Plan which would: (a) materially increase the
benefits accruing to participants under the Plan, (b) materially increase the
number of securities which may be issued under the Plan, or (c) materially
modify the requirements as to eligibility for participation in the Plan. This
Plan may not be amended more than once every six months, other than to comport
with changes in the Internal Revenue Code, the Employee Retirement Income
Security Act or the rules thereunder.
9. Effective Date and Duration of Plan. This Plan shall become effective
("Effective Date") as of the date of its ratification by the stockholders of the
Company. No options may be granted under this Plan subsequent to the date which
is 10 years from the Effective Date. The Plan shall continue in effect, however,
insofar as is necessary to complete all the Company's obligations under
outstanding options and to conclude the administration of the Plan.
-5-
Page 26 of 26
