<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sections 240.14a-11(c) or 240.14a-12
MOTORVAC TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
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<PAGE> 2
MOTORVAC TECHNOLOGIES, INC.
1431 SOUTH VILLAGE WAY
SANTA ANA, CALIFORNIA 92705
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON THURSDAY, MAY 11, 2000
TO THE STOCKHOLDERS OF MOTORVAC TECHNOLOGIES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of MotorVac
Technologies, Inc., a Delaware corporation (the "Company"), will be held on
Thursday, May 11, 2000, at 2:00 p.m., local time, at the Crowne Plaza Hotel,
located at 17941 Von Karman Avenue, Irvine, California, 92614 for the following
purposes:
1. To elect directors to serve for the ensuing year and until their
successors are elected;
2. To ratify the selection of Deloitte & Touche LLP as independent auditors
of the Company for its fiscal year ending December 31, 2000; and
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 30, 2000 as
the record date for the determination of stockholders entitled to notice of and
to vote at this Annual Meeting and at any adjournment or postponement thereof.
By Order of the Board of Directors
DAVID P. NELSON
Secretary
Santa Ana, California
April 13, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE> 3
MOTORVAC TECHNOLOGIES, INC.
1431 SOUTH VILLAGE WAY
SANTA ANA, CALIFORNIA 92705
(714) 558-4822
------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 11, 2000
The enclosed proxy is solicited on behalf of the Board of Directors of
MotorVac Technologies, Inc., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held on Thursday, May 11, 2000 at 2:00
p.m. local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the Crowne Plaza Hotel,
located at 17941 Von Karman Avenue, Irvine, California 92614. The Company
intends to mail this proxy statement and accompanying proxy card on or about
April 17, 2000, to all stockholders entitled to vote at the Annual Meeting.
INFORMATION CONCERNING SOLICITATION AND VOTING
SOLICITATION
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on March
30, 2000 will be entitled to notice of and to vote at the Annual Meeting. On
that date, the Company had outstanding and entitled to vote 4,539,158 shares of
Common Stock, each of which is entitled to one vote.
A majority of the shares entitled to vote, represented in person or by
proxy, constitutes a quorum at the Meeting. Abstentions and broker non-votes are
counted as present for purposes of determining the existence of a quorum.
Abstentions will be counted towards the tabulation of votes cast on proposals
presented to the stockholders and will have the same effect as negative votes.
Broker non-votes are not counted for any purpose in determining whether a matter
has been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 1431 South
Village Way, Santa Ana, California, 92705, a written notice of revocation or a
duly executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
<PAGE> 4
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is December 20, 2000. Unless a stockholder who wishes to bring a
matter before the stockholders at the Company's 2001 annual meeting of
stockholders notifies the Company of such matter prior to March 3, 2001,
management will have discretionary authority to vote all shares for which it has
proxies in opposition to such matter.
PROPOSAL 1
ELECTION OF DIRECTORS
There are six nominees for election to the Board of Directors. Each
director will hold office until the next annual meeting of stockholders and
until his successor is elected and has qualified, or until such director's
earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote. Shares represented by executed
proxies will be voted, if authority to do so is not withheld, for the election
of the six nominees named below. In the event that any nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected and
management has no reason to believe that any nominee will be unable to serve.
THE BOARD RECOMMENDS THAT YOU VOTE FOR EACH OF THE FOLLOWING NOMINEES:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
---- --- -------------------- --------
<S> <C> <C> <C>
Grant Ferrier(1)(3).................. 38 President, Environmental Business 1998
International, Inc.
Stephen L. Greaves(2)................ 41 President and General Manager, Erin Mills 1994
International Investment Corporation
Lee W. Melody........................ 58 President and Chief Executive Officer, 1995
MotorVac Technologies, Inc.
Ronald J. Monark(1)(2)(3)............ 60 Consultant 1997
Gerald C. Quinn(1)(3)................ 51 President, The Erin Mills Investment 1992
Corporation
A. J. "Rudy" Wolf.................... 58 Group Publisher, Cygnus Business Media 1999
</TABLE>
- ---------------
(1) Member of Nominating Committee of the Board of Directors.
(2) Member of Audit Committee of the Board of Directors.
(3) Member of Compensation Committee of the Board of Directors.
Mr. Ferrier has been President and Chief Executive Officer of Environmental
Business International, Inc., a business research, management consulting and
publishing company serving the environmental industry, since 1988. Mr. Ferrier
also serves as Chief Executive Officer of Nutrition Business International LLC.
Mr. Ferrier holds B.S. degrees in mechanical engineering, and conservation and
resource studies from the University of California, Berkeley.
Mr. Greaves has served as General Manager and a director of Erin Mills
International Investment Corporation, a venture capital firm, since 1993, and
was appointed President in 1997. See, "Security Ownership of Certain Beneficial
Owners and Management." From 1985 through 1991, Mr. Greaves held key marketing
positions with ESSO, Standard Oil's regional office in Barbados. From 1992 to
1993, he was a self-employed marketing consultant. Mr. Greaves is also a
director of HighwayMaster Communications, Inc., and several private companies.
Mr. Greaves holds a B.A. in Economics from the University of Western Ontario,
London, Canada, and an MBA in Marketing/Finance from Concordia University,
Montreal, Canada.
2
<PAGE> 5
Mr. Melody joined the Company in 1994 as Vice President -- Marketing,
assumed the position of Chief Operating Officer later that year, was appointed
President in 1995, and was appointed Chief Executive Officer in 1997. From 1993
to 1994, Mr. Melody was a principal in an automotive after-market franchise, and
from 1991 to 1993 Mr. Melody was President and CEO of McGuire Nicholas, a
consumer goods product company. Mr. Melody served in the U.S. Navy Submarine
Service from 1960 to 1966 and graduated from the Executive Program of the UCLA
Graduate School of Management in 1989.
Mr. Monark, Chairman of the Board, is owner of Monark Group, an independent
consulting firm. In 1997 and 1998, Mr. Monark served on the Managing Committee
of Mitchell Repair Information Company LLC, a company jointly-owned by Snap-on,
Inc. and The Thomson Corporation. Mr. Monark was President and Chief Executive
Officer of Mitchell Repair Information Company throughout 1997. From 1989 to
1996, Mr. Monark was President and Chief Executive Officer of Mitchell
International, an automotive information company. Prior to 1989, Mr. Monark's
assignments included a five-year term as a consultant with McKinsey & Company.
Mr. Monark graduated Phi Beta Kappa from the College of William and Mary in
Williamsburg, Virginia, and holds an MBA from the University of Chicago.
Mr. Quinn has been President of The Erin Mills Investment Corporation, a
venture capital firm, and Executive Vice President of The Erin Mills Development
Corporation, a land development company, since 1989. See, "Security Ownership of
Certain Beneficial Owners and Management." Mr. Quinn is also a director of Erin
Mills International Investment Corporation, Synsorb Biotech, Inc., a
biotechnology research and development company, and HighwayMaster
Communications, Inc., a manufacturer and distributor of cellular truck tracking
systems. Mr. Quinn is a Chartered Accountant and has a Bachelor of Science in
Chemistry.
Mr. Wolf was founder and President of Professional Tool & Equipment News
Publishing, Inc., a group of three leading automotive and truck
business-to-business magazines, from 1990 until its sale to Cygnus Business
Media in 1999. He now serves as group publisher with Cygnus. Mr. Wolf previously
served as publisher of Tire Review and Heavy Duty Marketing Magazine before
starting his own independent representation firm in 1985, where he represented
eleven national magazines, including Motor Magazine, Modern Tire Dealer, Jobber
Retailer, Sportscar and SEMA News. Mr. Wolf has a degree in marketing from
Fairleigh Dickenson University in Teaneck, New Jersey.
BOARD COMMITTEES AND MEETINGS
The Board of Directors held nine meetings in 1999. The Board has
established an Audit Committee, a Compensation Committee and a Nominating
Committee.
The Audit Committee meets with the Company's independent auditors
concerning their engagement, audit plan and report and management letter and,
with the assistance of the independent auditors, monitors the adequacy of the
Company's internal accounting controls and financial management practices. The
Audit Committee is composed of: Messrs. Greaves and Monark. It met two times
during 1999.
The Compensation Committee is responsible for reviewing the compensation
and benefits of the Company's executive officers, making recommendations to the
Board of Directors concerning the compensation and benefits of the Company's
executive officers and administering the Company's stock purchase and option
plans. The Compensation Committee is composed of Messrs. Quinn, Monark and
Ferrier. It met two times during 1999.
The Nominating Committee interviews, evaluates, nominates and recommends
individuals for membership on the Company's Board of Directors. No procedure has
been established for the consideration of nominees recommended by stockholders.
The Nominating Committee is composed of Messrs. Monark, Quinn and Ferrier. It
did not meet during 1999.
COMPENSATION OF DIRECTORS
For information concerning the compensation paid to non-employee directors
in 1999, see "Executive Compensation -- Compensation of Directors."
3
<PAGE> 6
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000, and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Deloitte & Touche
LLP has audited the Company's financial statements since the fiscal year ended
March 31, 1995. Representatives of Deloitte & Touche LLP are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they so desire and will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Deloitte & Touche LLP. Stockholder
ratification of the selection of Deloitte & Touche LLP as the Company's
independent auditors is not required by the Company's Bylaws or otherwise.
However, the Board is submitting the selection of Deloitte & Touche LLP to the
stockholders for ratification as a matter of good corporate practice. If the
stockholders fail to ratify the selection, the Board will reconsider whether or
not to retain that firm. Even if the selection is ratified, the Board in its
discretion may direct the appointment of different independent auditors at any
time during the year if they determine that such a change would be in the best
interests of the Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
ADDITIONAL INFORMATION
MANAGEMENT
The following is information regarding the Company's current executive
officers.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Lee W. Melody........................ 58 President and Chief Executive Officer
Michael G. Arkell.................... 53 Senior Vice President -- Sales
David P. Nelson...................... 58 Vice President of Finance, Chief
Financial Officer, Treasurer and
Secretary
John A. Rome......................... 61 Vice President -- Operations
</TABLE>
Information regarding Mr. Melody's business experience is set forth under
Proposal 1 above.
Mr. Arkell joined the Company in 1995 and was appointed Senior Vice
President of Sales in 1999. Mr. Arkell has over 25 years of management
experience in sales and marketing in the automotive, heavy duty and industrial
industries. From 1989 through 1995, Mr. Arkell was Director, Domestic Sales for
Korody-Colyer, a manufacturer and remanufacturer of diesel internal engine
parts. Mr. Arkell holds a Bachelor of Science in Business Administration from
the University of Washington.
Mr. Nelson has served as Vice President of Finance, Chief Financial
Officer, Treasurer and Secretary of the Company since 1997. From 1990 to 1997,
Mr. Nelson served as Vice President of Finance of Geodynamics Corp., a
publicly-traded aerospace company which was acquired by Logicon Inc. in 1996.
Mr. Nelson holds a B.A. and M.A. degree in Economics from U.C.L.A.
Mr. Rome joined the Company in 1995 as Vice President of Operations. From
1993 to 1995, Mr. Rome was an author of technical, operational and instructional
manuals, which are currently being implemented at the Company. From 1992 to
1993, he served as the Manager of Operations for Sierracin/Harrison, a
manufacturer of aerospace fasteners. From 1990 through 1992, Mr. Rome was Vice
President of Operations and Director of Quality Assurance for Robertshaw
Controls Company, a manufacturer of thermostats and gas valves for the heating
and air conditioning industries. Mr. Rome holds a Bachelor of Science degree in
Mechanical Engineering from Barrow-In-Furness of Cumbria, England.
4
<PAGE> 7
Officers of the Company serve at the discretion of the Board of Directors,
subject to the terms of any employment agreement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 15, 2000 by: (i) each
Director and nominee for Director; (ii) each of the Named Executive Officers
(defined below); (iii) all executive officers and Directors of the Company as a
group; and (iv) all those known by the Company to be beneficial owners of more
than five percent of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
------------------------------------
NAME NUMBER OF SHARES PERCENT OF CLASS
---- ---------------- ----------------
<S> <C> <C>
Erin Mills International Investment Corporation(2).... 2,771,012 61.0%
Radley Court, Suite 200
Collymore Rock
St. Michael, Barbados, West Indies
Stephen A. Springer(3)................................ 339,430 7.5%
345 E. 57th Street
New York, New York 10022
Stephen L. Greaves(4)................................. 2,793,577 61.4%
Ronald J. Monark...................................... 78,737 1.7%
Lee W. Melody......................................... 207,312 4.4%
David P. Nelson....................................... 17,071 *
Michael G. Arkell..................................... 22,401 *
John A. Rome.......................................... 38,262 *
Gerald C. Quinn (5)................................... 2,798,909 61.5%
Grant Ferrier......................................... 23,737 *
A. J. "Rudy" Wolf..................................... 21,494 *
All Directors and Executive Officers as a Group (9
Persons)(6)......................................... 3,230,943 67.2%
</TABLE>
- ---------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G, if any, filed with the
Securities and Exchange Commission. Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the stockholders named in this
table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
4,539,158 shares outstanding on March 15, 2000. Share numbers include the
following number of shares subject to options granted by the Company
exercisable within 60 days of March 15, 2000: Mr. Melody, 171,960; Mr.
Arkell, 19,464; Mr. Quinn, 11,828; Mr. Greaves, 11,196; Mr. Monark, 20,000;
Mr. Ferrier, 4,000; Mr. Wolf, 0; Mr. Nelson, 10,000; and Mr. Rome, 18,608.
The share numbers also include 1,003 shares earned by each of Messrs.
Ferrier, Greaves, Monark, Quinn and Wolf (but not yet issued) under the 1998
Stock Compensation Plan. These option shares and earned shares are deemed
outstanding for the purposes of computing the percentage ownership of each
such person, but are not deemed outstanding for computing the percentage
ownership of any other person.
(2) Erin Mills International Investment Corporation, a Barbadian corporation
("EMIIC"), is a majority-owned subsidiary of The Erin Mills Investment
Corporation, a corporation organized under the laws of the province of
Ontario, Canada ("TEMIC"). TEMIC is a wholly-owned subsidiary of The Erin
Mills Development Corporation, a corporation organized under the laws of the
province of Ontario, Canada ("EMDC"). Consequently, TEMIC and EMDC, by
virtue of their control of EMIIC, would be deemed to share voting and
investment power of the shares of Common Stock owned by EMIIC. The directors
of EMIIC may also be deemed to have beneficial ownership of the shares of
Common Stock owned by EMIIC. The directors of EMIIC are Gerald C. Quinn (who
is also a director of the Company),
5
<PAGE> 8
Humphrey Metzger, Andrew C. Ferreira, Dr. Trevor A. Carmichael, and Stephen
L. Greaves (who is also a director of the Company). In addition, the
directors of TEMIC and EMDC may be deemed to have beneficial ownership of
the shares of Common Stock of the Company owned by EMIIC by virtue of
TEMIC's and EMDC's control of EMIIC. The directors of TEMIC and EMDC are
Rudy Bratty, John H. Daniels, Peter Daniels, Alfredo DeGasperis, Marco
Muzzo, Elly Reisman, and Larry Robbins, none of whom are officers or
directors of the Company. Stephen L. Greaves, a director of the Company, is
General Manager of EMIIC. Gerald C. Quinn, a director of the Company, is
President of TEMIC and Executive Vice President of EMDC. Except as indicated
in Note (5) below, each of the directors of EMIIC, TEMIC and EDMC disclaims
beneficial ownership of any of the shares of the Company's Common Stock
beneficially owned by EMIIC, TEMIC or EMDC.
(3) Mr. Springer has shared voting and investment power with respect to 7,000 of
these shares.
(4) Includes 2,771,012 shares of Common Stock beneficially held by EMIIC. See
Note (2) above. Mr. Greaves disclaims beneficial ownership of any of the
shares of the Company's Common Stock held by EMIIC.
(5) Includes 2,771,012 shares of Common Stock beneficially held by EMIIC. See
Note (2) above. Mr. Quinn has the right to acquire 83,130 shares of the
Company's Common Stock from EMIIC. Except with respect to the shares subject
to his purchase rights, Mr. Quinn disclaims beneficial ownership of any of
the shares of the Company's Common Stock held by EMIIC.
(6) See Notes (2), (4) and (5) above. The 2,771,012 shares held by EMIIC which
are also included in the beneficial holdings of Messrs. Quinn and Greaves
are counted only once in the number of shares held by all directors and
executive officers as a group.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during 1999, all Section 16(a) filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with, except that the following persons did not timely file
a Form 5 to report exempt acquisitions of shares and/or options in fiscal years
1998 and 1999 under Company stock compensation and stock option plans: Mr.
Ferrier -- 21 transactions; Mr. Greaves -- 19 transactions; Mr. Monark -- 23
transactions; Mr. Quinn -- 19 transactions; Daniel P. Whelan (former
director) -- 1 transaction; Mr. Melody -- 1 transaction; Mr. Wolf -- 3
transactions; Mr. Arkell -- 1 transaction; Mr. Nelson -- 1 transaction; and Mr.
Rome -- 1 transaction.
6
<PAGE> 9
EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning the compensation of
the Company's Chief Executive Officer and the other most highly compensated
executive officers of the Company who earned in excess of $100,000 in salary and
bonus (collectively, the "Named Executive Officers") for services rendered to
the Company during fiscal years 1999, 1998 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------------------------- UNDERLYING
OTHER ANNUAL OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) (#) COMPENSATION(3)
--------------------------- ---- -------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Lee W. Melody................ 1999 $185,000 $74,141 $20,581 130,000 4,896
President and Chief 1998 175,000 -0- 18,270 -0- -0-
Executive Officer 1997 166,650 15,794 15,267 -0- -0-
Michael G. Arkell............ 1999 125,000 46,354 18,023 20,000 1,200
Sr. Vice President of Sales 1998 110,000 -0- 16,116 -0- -0-
1997 100,000 1,000 15,465 2,680 -0-
David P. Nelson.............. 1999 120,000 17,571 17,750 10,000 1,907
Vice President, Finance and 1998 115,000 5,000 15,303 20,000 -0-
Chief Financial Officer 1997 13,750 -0- 700 -0- -0-
John A. Rome................. 1999 100,000 17,084 19,071 20,000 3,253
Vice President of
Operations 1998 95,000 -0- 15,295 -0- -0-
1997 90,000 2,000 14,847 6,960 -0-
</TABLE>
- ---------------
(1) Under a cash bonus plan implemented by the Board of Directors in 1996, an
amount equal to 10% of the Company's net pre-tax income for each fiscal year
is available for bonus awards to employees and officers of the Company. The
recipients and bonus amounts are determined in the discretion of the Board
or Compensation Committee, after due consideration of the President's
recommendations. In 1996, the Board resolved that Lee W. Melody will be
entitled to receive at least 50% of any amount paid under this plan. In
accordance with the terms of his employment agreement, Mr. Arkell's bonus is
based upon the Company achieving certain sales and operating profit goals.
(2) These amounts represent automobile allowances and health and life insurance
benefits as follows:
<TABLE>
<CAPTION>
NAME YEAR AUTOMOBILE ALLOWANCE INSURANCE BENEFITS
---- ---- -------------------- ------------------
<S> <C> <C> <C>
Lee W. Melody..................... 1999 $7,250 $13,331
1998 6,000 12,270
1997 6,000 9,267
Michael G. Arkell................. 1999 7,250 10,773
1998 6,000 10,116
1997 6,000 9,465
David P. Nelson................... 1999 7,250 10,500
1998 6,000 9,303
1997 750 -0-
John A. Rome...................... 1999 7,250 11,821
1998 6,000 9,295
1997 6,000 8,847
</TABLE>
(3) Represents Company contributions to the 401(k) plan.
7
<PAGE> 10
The following table sets forth certain information regarding options
granted by the Company during the fiscal year ended December 31, 1999 to the
Named Executive Officers.
OPTIONS GRANTED IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES % OF TOTAL OPTIONS
UNDERLYING OPTIONS GRANTED TO EMPLOYEES EXERCISE PRICE EXPIRATION
NAME GRANTED(1) IN FISCAL YEAR ($/SHARE) DATE
---- -------------------- -------------------- -------------- ----------
<S> <C> <C> <C> <C>
Lee W. Melody........ 130,000(1) 70% $1.81 3/10/09
Michael G. Arkell.... 20,000(1) 11% $1.81 3/10/09
David P. Nelson...... 10,000(1) 5% $1.81 3/10/09
John A. Rome......... 20,000(1) 11% $1.81 3/10/09
</TABLE>
- ---------------
(1) The exercise price of each option is equal to the fair market value of the
Common Stock on the date of grant. Each option is exercisable at the rate of
20% per year beginning one year after the grant date. Upon the consummation
of certain events, including the dissolution or liquidation of the Company,
the merger or consolidation of the Company, the sale of all or substantially
all of the assets of the Company, the acquisition of equity securities of
the Company representing 20% or more of the aggregate voting power of the
outstanding equity securities of the Company or a change in the composition
of a majority of the Board of Directors, all outstanding options will become
immediately exercisable.
The following table sets forth information regarding the aggregate value of
unexercised options held by the Named Executive Officers of the Company at
December 31, 1999. No options were exercised by the Named Executive Officers in
1999.
AGGREGATED FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Lee W. Melody............. 171,960 158,040 $ 0 $138,450
Michael G. Arkell......... 11,464 28,536 0 21,300
David P. Nelson........... 8,000 22,000 8,000 21,300
John A. Rome.............. 11,556 28,444 0 22,650
</TABLE>
- ---------------
(1) Calculated based on the fair market value of the Company's Common Stock as
of December 31, 1999 ($2.875 per share), less the exercise price of options
with an exercise price less than $2.875 per share.
EMPLOYMENT AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
The Company has entered into employment agreements with each of the Named
Executive Officers. Mr. Melody's agreement expires in February 2002 and provides
for a minimum annual salary of $135,000. Mr. Arkell's agreement expires in
February 2001 (subject to automatic one-year renewals unless 60 days prior
notice is given) and provides for a minimum annual salary of $100,000. Mr.
Nelson's agreement expires in February 2001 (subject to automatic one-year
renewals unless 60 days prior notice is given) and provides for a minimum annual
salary of $110,000. Mr. Rome's agreement expires in July 2000 and provides for a
minimum annual salary of $70,000. Messrs. Melody, Nelson and Rome are entitled
to discretionary bonuses and Mr. Arkell is entitled to an incentive bonus based
upon the Company achieving certain sales and operating profit goals. Each
officer receives a $750 per month automobile allowance and payment of health
insurance premiums for himself and his dependents.
If an officer's employment with the Company is terminated for cause (as
defined in each agreement), then he is entitled to receive his base salary
through the date of termination. If an officer's employment with the Company is
terminated without cause (including on account of non-renewal of the Arkell,
Rome and
8
<PAGE> 11
Nelson agreements), then he is entitled to receive payment of his base salary
and health care benefits for a period of six months from the date of such
termination (twelve months in the case of Mr. Melody). If an officer's
employment is terminated without cause or he resigns from his employment for
"good reason" (as defined in each agreement) following a change in control of
the Company (as defined in each agreement), then the officer is entitled to
receive an amount equal to his base annual salary (two times annual salary in
the case of Mr. Melody) in a lump sum payment within ten days of the date of his
termination and the Company is required to pay the annual premiums for health
benefits for him and his dependents for a period of 12 months (24 months in the
case of Mr. Melody) following the date of such termination.
COMPENSATION OF DIRECTORS
Each of the Company's non-employee directors receives a monthly directors'
fee of $1,000 and a fee of $750 for attendance at each meeting of the Board of
Directors. Non-employee directors of the Company who are also members of the
Audit or Compensation Committees of the Board of Directors receive $375 for
attendance at each committee meeting that is held on a day other than a day on
which a meeting of the Board of Directors is held. Non-employee directors are
also reimbursed for expenses incurred in connection with attendance at meetings
of the Board of Directors or committees thereof.
Under the Company's 1998 Stock Compensation Plan, non-employee directors of
the Company may elect to receive shares of Common Stock in lieu of the monthly
director fees and meeting attendance fees paid by the Company for their services
as directors. Only directors who are not employees or consultants of the Company
are eligible to participate in this plan. Each eligible director is entitled to
receive a number of shares determined by dividing the cash value of the
compensation elected to be exchanged by the fair market value of the shares on
the date the compensation otherwise would have been paid in cash. In accordance
with their elections made under this plan, during 1999 the following directors
received the number of shares of Common Stock set forth opposite their
respective names below at prices ranging from $1.00 to $3.00 per share in lieu
of the cash fees indicated below:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES DOLLAR VALUE
---- ---------------- ------------
<S> <C> <C>
Grant Ferrier................... 7,691 $15,000
Stephen Greaves................. 7,691 15,000
Gerald C. Quinn................. 7,691 15,000
Ronald J. Monark................ 7,691 15,000
A. J. Wolf...................... 946 2,750
</TABLE>
On March 11, 1999 and May 13, 1999, Mr. Monark, Chairman of the Board, was
granted options to purchase 50,000 and 2,000 shares, respectively, of the
Company's Common Stock at an exercise price of $1.81 and $2.25 per share (fair
market value on the date of grant), respectively. Such options are exercisable
at the rate of 20% per year beginning one year after the grant date and have a
term of ten years.
Pursuant to the Company's 1996 Director Stock Plan each director who is not
an employee of the Company or any Participating Company (as defined in the plan)
including EMIIC, TEMIC and EMDC, is automatically granted a non-qualified stock
option to purchase 2,000 shares of Common Stock on the date of the annual
meeting of stockholders at which he is elected. The exercise price is equal to
100% of the fair market value of a share of Common Stock on the grant date. All
options are immediately exercisable in full and have a term of ten years,
subject to earlier termination following the eligible director's cessation of
Board service. Pursuant to this plan, on May 13, 1999, Messrs. Ferrier and
Monark were each granted options to purchase 2,000 shares of the Company's
Common Stock at an exercise price of $2.25 per share. Messrs. Quinn and Greaves
were also each granted 2,000 options on the same terms and conditions under the
Company's 1996 Stock Incentive Award Plan.
CERTAIN TRANSACTIONS
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to
9
<PAGE> 12
the extent provided for therein, for expenses, damages, judgments, fines and
settlements he may be required to pay in actions or proceedings which he is or
may be made a party by reason of his position as a director, officer or other
agent of the Company, and otherwise to the full extent permitted under Delaware
law and the Company's Bylaws.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
DAVID P. NELSON
Secretary
April 13, 2000
10
<PAGE> 13
MOTORVAC TECHNOLOGIES, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 11, 2000
The undersigned stockholder of MotorVac Technologies, Inc., a Delaware
corporation, hereby acknowledges receipt of the Notice of Annual Meeting of
Stockholders and Proxy Statement, with respect to the Annual Meeting of
Stockholders, and hereby appoints Lee W. Melody and David P. Nelson, and each of
them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of MotorVac Technologies, Inc.
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of MotorVac Technologies, Inc. to be held at the Crown Plaza Hotel
located at 17941 Von Karman Avenue, Irvine, California 92614 on Thursday, May
11, 2000 at 2:00 p.m., local time, and at any and all postponements,
continuations and adjournments thereof, with all powers that the undersigned
would possess if personally present, upon and in respect of the following
matters and in accordance with the following instructions, with discretionary
authority as to any and all other matters that may properly come before the
meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY DESCRIBED
IN THE PROXY STATEMENT, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS
THAT MAY PROPERLY COME BEFORE THE MEETING. IF SPECIFIC INSTRUCTIONS ARE
INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED BELOW.
PROPOSAL 1: To elect directors to hold office until the next Annual Meeting of
Stockholders and until their successors are elected.
<TABLE>
<S> <C>
[ ]FOR all nominees listed below (except as marked to the [ ] WITHHOLD AUTHORITY to vote for all nominees listed
contrary below) below.
</TABLE>
NOMINEES: Grant Ferrier, Stephen L. Greaves, Lee W. Melody, Gerald C. Quinn,
Ronald J. Monark and Rudy Wolf
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), WRITE SUCH NOMINEE(S)'
NAME(S) BELOW:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Continued on other side)
<PAGE> 14
(Continued from the other side)
MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2.
PROPOSAL 2:To ratify the selection of Deloitte & Touche LLP as independent
auditors of the Company for fiscal year 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
DATED
----------------------------
Signature(s)
Please sign exactly as your
name appears hereon. If the
stock is registered in the
names of two or more
persons, each should sign.
Executors, administrators,
trustees, guardians and
attorneys-in-fact should add
their titles. If signer is a
corporation, please give
full corporate name and have
a duly authorized officer
sign, stating title. If
signer is a partnership,
please sign in partnership
name by authorized person.
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE
WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
