<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
TANISYS TECNOLOGIES, 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)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE>
February 12, 1998
Dear Fellow Stockholders and Friends:
Fiscal year 1997 was a year of growth and change for Tanisys. The
continued support of the Company's stockholders, coupled with the subsequent
strengthening of the management team, have positioned Tanisys for the
opportunities ahead.
FINANCIAL PERFORMANCE
Our 1997 financial results were very encouraging. Net sales increased
by 218%, from $15.0 million to $47.7 million. This is meaningful as it
occurred during a period when the prices of semiconductor memory chips, the
most significant raw material in our module products, declined significantly.
An increase in gross profit of 166%, from $2.3 million to $6.2 million, is
another indication of the overall growth of the Company during this period.
The entire Company is focused on translating these increasing revenues first
into positive cash flow and then into positive net income. Our C.L.A.S.S.
program, discussed more fully under Manufacturing Operations below, is one of
the primary tools we will use to accomplish these goals.
The Company raised $8.1 million in additional capital through the sale
of equity in a private placement, the exercise of various stock options and
the exercise of all the then outstanding stock warrants. This capital made
it possible for the Company to establish an $8.5 million credit facility with
a prominent financial institution, which in turn allowed the Company to
support the growth in inventories and accounts receivable that accompany an
increase in revenues.
MANUFACTURING OPERATIONS
During fiscal 1997, the Company focused on its manufacturing operations
since the market it serves is by far the largest segment of the industry in
which we are active. We implemented our Comprehensive Logistics and Supply
Solutions ("C.L.A.S.S.") program, which has as its strategic objective the
support of original equipment manufacturers ("OEMs") with engineering and
design expertise, quick-turn quality manufacturing capabilities and
comprehensive logistical and supply services, at precisely the right time to
be prepared to support the build to order ("BTO") initiatives when they were
announced by the major computer OEMs. The investments we made in this area
in people, equipment and processes gave us credibility for servicing this
significantly expanded market. We remain focused on continuing the
development of contractual relationships with global companies whose emphasis
is on quality, range of responsive services and capacity for growth rather
than simply finding the lowest price each time an order is placed.
<PAGE>
In conjunction with the implementation of this program, we invested the
time and funds required for our manufacturing facility to be ISO 9002
certified. During the year, the Company's operations were audited by
prospective customers. As a result of these favorable reviews, we are
certified to manufacture product for some of the world's most quality
conscious OEMs. By completely satisfying the toughest of these auditors, we
have established that the Company is capable of successfully competing
globally.
The Company also is benefitting from another significant industry
change. The transition to Synchronous Dynamic Random Access Memory ("SDRAM")
by the major computer OEMs is occurring at an unprecedented pace. Our
engineering and design professionals are providing quick-turn module designs
which our manufacturing personnel build into prototypes to support our
customers in providing samples to the computer OEMs for qualification.
Simultaneously, our DarkHorse Systems design professionals have provided the
industry with the ability to rapidly test this new technology accurately and
economically. The DarkHorse System testers not only provided additional
revenue from the transition to SDRAM, but solidified the recognition of
DarkHorse System professionals as experts in designing, prototyping,
manufacturing and testing this new technology.
MEMORY TESTERS
The Company's DarkHorse Systems proprietary memory testers continue to
gain recognition as the cost effective system of choice for the testing of
memory modules by module manufacturers and by OEMs seeking to verify the
quality of modules being delivered to their factories. The DarkHorse Systems
testers have proven themselves to be extremely reliable, as well as being one
of the most cost effective solutions available. The increasing complexity of
memory modules caused by the transition to SDRAM and other advances in memory
technology in fiscal 1997 was accompanied by the requirement for new tester
technology capable of coping with these advances. Tanisys engineering and
design personnel produced tester modifications and new designs that met
customers' time line requirements for delivery of new systems and proved to
be capable of much more than merely coping with the transition. This
achievement enhanced the reputation of DarkHorse Systems as a serious
competitor and has led many companies with complex requirements for existing
and future technological advances to look to Tanisys for these solutions.
THE OUTLOOK
Tanisys has invested in its future by assembling the right people,
equipment and processes to be able to support OEM customers and their
customers anywhere in the world. Now we are focusing on finalizing the
contractual relationships with these customers and continuously improving all
phases of our operations. This will ensure that we not only continue the
growth of total revenues and gross profit, but due to the quality and value
we bring to our customers, Tanisys expects to see dramatic improvements in
<PAGE>
financial operations. We have developed and are continuing to develop many
strengths that position the Company to compete in the areas in which we
choose to focus. The Company has earned the respect of the industry with its
technical expertise and the total quality, customer focused attitude of our
employees.
We are confident of the Company's opportunities for continued growth and
prosperity this coming year and well into the future. Tanisys will continue
to focus on the very basic building blocks that are contributing to our
current successes. Our continuing emphasis on customer satisfaction,
increasing the quality and value of all our products and services and the
exceptional experience and capabilities of our employees create the
foundation we will use for this push into tomorrow. An additional and
extremely important part of this foundation is the continuing support of our
stockholders, vendors and other friends. We are excited about the coming
year and look forward to reporting our progress on a quarterly basis.
Sincerely,
/s/ CHARLES T. COMISO
Charles T. Comiso
President and Chief Executive Officer
<PAGE>
TANISYS TECHNOLOGY, INC.
12201 TECHNOLOGY BOULEVARD, SUITE 125
AUSTIN, TEXAS 78727
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 24, 1998
NOTICE IS HEREBY GIVEN that the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") of Tanisys Technology, Inc., a Wyoming corporation ("Tanisys"
or the "Company"), will be held on Tuesday, March 24, 1998, at 1:00 p.m. local
time at the Austin Marriott at the Capitol, 701 East 11th Street, in Austin,
Texas, for the purpose of considering and voting upon the following:
(1) A proposal to elect two directors to hold office until the 2001
Annual Meeting of Stockholders or until the election and
qualification of their respective successors.
(2) A proposal to ratify the appointment of Arthur Andersen LLP as
independent public accountants of the Company for the fiscal year
ending September 30, 1998.
(3) Such other business as may properly come before the Annual
Meeting or any adjournment(s) thereof. The Board of Directors is
presently unaware of any other business to be presented to a vote
of the stockholders at the Annual Meeting.
The items of business are more fully described in the Proxy Statement
accompanying this notice.
The Board of Directors has fixed January 30, 1998, as the record date
(the "Record Date") for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting or any adjournment(s) thereof. Only
stockholders of record at the close of business on the Record Date are entitled
to notice of and to vote at the Annual Meeting. The stock transfer books will
not be closed. A list of stockholders entitled to vote at the Annual Meeting
will be available for examination at the offices of the Company for ten days
prior to the Annual Meeting.
By Order of the Board of Directors
JOE O. DAVIS
CORPORATE SECRETARY
Austin, Texas
February 12, 1998
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. HOWEVER, WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO
PROMPTLY MARK, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED,
SELF-ADDRESSED, STAMPED ENVELOPE SO THAT YOUR SHARES OF STOCK MAY BE REPRESENTED
AND VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED AT THE ANNUAL MEETING. YOUR PROXY WILL BE RETURNED TO YOU
IF YOU SHOULD BE PRESENT AT THE ANNUAL MEETING AND SHOULD REQUEST SUCH RETURN OR
IF YOU SHOULD REQUEST SUCH RETURN IN THE MANNER PROVIDED FOR REVOCATION OF
PROXIES ON THE INITIAL PAGES OF THE ENCLOSED PROXY STATEMENT. PROMPT RESPONSE BY
OUR STOCKHOLDERS WILL REDUCE THE TIME AND EXPENSE OF SOLICITATION.
<PAGE>
TANISYS TECHNOLOGY, INC.
12201 TECHNOLOGY BOULEVARD, SUITE 125
AUSTIN, TEXAS 78727
------------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 24, 1998
SOLICITATION AND REVOCABILITY OF PROXIES
This Proxy Statement and the accompanying proxy are furnished in
connection with the solicitation by the Board of Directors of Tanisys
Technology, Inc. ("Tanisys" or the "Company") of proxies for the Annual Meeting
of Stockholders of the Company (the "Annual Meeting"), to be held on Tuesday,
March 24, 1998, at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders and any adjournment(s)
thereof. This Proxy Statement, the accompanying proxy and the Company's Annual
Report on Form 10-K for the fiscal year ended September 30, 1997, as filed with
the Securities and Exchange Commission (the "SEC") on December 29, 1997, are
being first mailed to the Company's stockholders on or about February 12, 1998.
The accompanying proxy is designed to permit each holder of the
Company's common stock, no par value (the "Common Stock"), to vote for or
withhold voting for the nominees for election as directors of the Company set
forth under proposal 1, to vote for or against or to abstain from voting on
proposal 2 and to authorize the proxies to vote in their discretion with respect
to any other proposal brought before the Annual Meeting. When a stockholder's
executed proxy card specifies a choice with respect to a voting matter, the
shares will be voted accordingly. IF NO SUCH SPECIFICATIONS ARE MADE, THE
PROXIES FOR THE COMMON STOCK WILL BE VOTED BY THOSE PERSONS NAMED IN THE PROXIES
AT THE ANNUAL MEETING: FOR THE ELECTION OF THE NOMINEES UNDER THE CAPTION
"ELECTION OF DIRECTORS" AND FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR
ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE CURRENT FISCAL YEAR. If
any other matters properly come before the Annual Meeting, the proxies will vote
upon such matters according to their judgment.
The Company encourages the personal attendance of its stockholders at
the Annual Meeting, and execution of the accompanying proxy will not affect a
stockholder's right to attend the Annual Meeting and to vote his or her shares
in person. Any stockholder giving a proxy has the right to revoke it by giving
written notice of revocation to Joe O. Davis, Senior Vice President, Chief
Financial Officer and Corporate Secretary, Tanisys Technology, Inc., at the
Company's principal executive offices, 12201 Technology Boulevard, Suite 125,
Austin, Texas 78727, at any time before the proxy is voted, by executing and
delivering a later-dated proxy, or by attending the Annual Meeting and voting
his or her shares in person. No such notice of revocation or later-dated proxy
will be effective, however, until received by the Company at or prior to the
Annual Meeting. Such revocation will not affect a vote on any matters taken
prior to the receipt of such revocation. Mere attendance at the Annual Meeting
will not of itself revoke the proxy.
All expenses of the Company in connection with this solicitation will be
borne by the Company. In addition to the solicitation of proxies by use of the
mail, officers, directors and employees of the Company may solicit the return of
proxies by personal interview, mail, telephone and/or facsimile. Such persons
will not be additionally compensated, but will be reimbursed for out-of-pocket
expenses. The Company also will request brokerage houses and other custodians,
nominees and fiduciaries to forward solicitation materials to the beneficial
owners of shares held of record by such persons and will reimburse such persons
and the Company's transfer agent for their reasonable out-of-pocket expenses in
forwarding such materials. Additionally, the Company has elected to retain the
services of D.F. King & Co., Inc. for the purpose of soliciting proxies to be
voted at the Annual Meeting at an estimated cost of $2,500, plus out-of-pocket
expenses.
The Annual Report on Form 10-K covering the Company's fiscal year ended
September 30, 1997, including audited financial statements, is enclosed
herewith. The Form 10-K Annual Report does not form any part of the material for
the solicitation of proxies.
<PAGE>
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
GENERAL
The Board of Directors has fixed January 30, 1998, as the record date
(the "Record Date") for the Annual Meeting. Only holders of record of the
outstanding shares of Common Stock at the close of business on the Record Date
are entitled to notice of and to vote at the Annual Meeting and any
adjournment(s) thereof. At the close of business on January 30, 1998, 20,529,714
shares of the Common Stock were outstanding and entitled to be voted at the
Annual Meeting. The Common Stock is the only class of stock entitled to vote at
the Annual Meeting. Each share of Common Stock is entitled to one vote on each
matter presented to the stockholders.
QUORUM AND VOTE REQUIRED
The presence, in person or by proxy, of a majority of the outstanding
shares of Common Stock is necessary to constitute a quorum at the Annual
Meeting. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions are counted in tabulations of the votes cast on proposals presented
to stockholders, whereas broker non-votes are not counted for purposes of
determining whether a proposal has been approved. Assuming the presence of a
quorum, the affirmative vote of the holders on the Record Date of a plurality of
the shares of Common Stock outstanding, represented in person or by proxy at the
Annual Meeting, is required to elect directors for the Company and the
affirmative vote of the holders on the Record Date of a majority of the shares
of Common Stock outstanding, represented in person or by proxy at the Annual
Meeting, is required for ratification of the appointment of the Company's
independent public accountants.
SECURITY OWNERSHIP OF MANAGEMENT
The following table and notes thereto set forth certain information with
respect to the shares of Common Stock beneficially owned by (i) each director
and nominee for director of the Company, (ii) all executive officers of the
Company, including those listed in the Summary Compensation Table set forth
under the caption "Executive Compensation" below, and (iii) all executive
officers and directors of the Company as a group, as of the Record Date.
<TABLE>
COMMON STOCK
-------------------------------------------------
AMOUNT AND NATURE OF PERCENT OF CLASS
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (L) OWNED BENEFICIALLY (2)
------------------------ ------------------------ ----------------------
<S> <C> <C>
Charles T. Comiso 100,000 *
Joe O. Davis 58,000 (3) *
John R. Bennett 26,816 (4) *
Chris Efstathiou, Jr. 65,000 (5) *
Benjamin S. Marz 71,667 (6) *
Parris H. Holmes Jr. 1,270,425 (7) 6.1%
Mark C. Holliday 496,578 (8) 2.4%
Gordon H. Matthews 170,900 (9) *
Gary W. Pankonien 1,983,000 (10) 9.6%
Theodore W. Van Duyn 265,000 1.3%
All executive officers and directors as a group
(13 persons, including the executive officers
and directors listed above) 4,578,552 (11) 21.3%
</TABLE>
- ---------------
*Represents less than one percent (1%) of the issued and outstanding shares of
Common Stock.
(1) Unless otherwise noted, each of the persons named has sole voting and
investment power with respect to the shares reported.
(2) The percentages indicated are based on outstanding stock options and
stock purchase warrants exercisable within 60 days for each individual
and 20,529,714 shares of Common Stock issued and outstanding on the
Record Date.
2
<PAGE>
(3) Includes 50,000 shares that Mr. Davis has the right to acquire upon
exercise of stock options, exercisable within 60 days.
(4) Includes 6,666 shares that Mr. Bennett has the right to acquire upon
exercise of stock options, exercisable within 60 days.
(5) Includes 40,000 shares that Mr. Efstathiou has the right to acquire upon
exercise of stock options, exercisable within 60 days.
(6) Includes 66,667 shares that Mr. Marz has the right to acquire upon
exercise of stock options, exercisable within 60 days.
(7) Includes 105,000 shares that Mr. Holmes has the right to acquire upon
exercise of stock options, exercisable within 60 days, and 200,000
shares that Mr. Holmes has the right to acquire upon the exercise of
stock purchase warrants, exercisable within 60 days.
(8) Includes 376,666 shares that Mr. Holliday has the right to acquire upon
exercise of stock options, exercisable within 60 days.
(9) Includes 82,500 shares that Mr. Matthews has the right to acquire upon
exercise of stock options, exercisable within 60 days, and 1,900 shares
owned by his daughter.
(10) Includes 50,000 shares that Mr. Pankonien has the right to acquire upon
exercise of stock options, exercisable within 60 days.
(11) Includes 814,165 shares that 13 directors and executive officers have
the right to acquire upon exercise of stock options, exercisable within
60 days, and 200,000 shares that such directors and executive officers
have the right to acquire upon the exercise of stock purchase warrants,
exercisable within 60 days.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to
persons who are known to the Company to be the beneficial owners of 5% or more
of the outstanding Common Stock as of the Record Date:
<TABLE>
NO. OF SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (1) OF CLASS (2)
------------------------------------ ------------- ------------
<S> <C> <C>
Gary W. Pankonien 1,983,000 (3) 9.6%
3107 Toro Ring
Austin, Texas 78746
Parris H. Holmes, Jr. 1,270,425 (4) 6.1%
7411 John Smith Drive, Suite 200
San Antonio, Texas 78229
</TABLE>
- --------------------
(1) Unless otherwise noted, each of the persons named has sole voting and
investment power with respect to the shares reported.
(2) The percentages indicated are based on outstanding stock options and
stock purchase warrants exercisable within 60 days for each individual
and 20,529,714 shares of Common Stock issued and outstanding on the
Record Date.
(3) Includes 50,000 shares that Mr. Pankonien has the right to acquire upon
exercise of stock options, exercisable within 60 days.
3
<PAGE>
(4) Includes 105,000 shares that Mr. Holmes has the right to acquire upon
exercise of stock options, exercisable within 60 days, and 200,000
shares that Mr. Holmes has the right to acquire upon the exercise of
stock purchase warrants, exercisable within 60 days.
ITEM 1 ON PROXY
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company, as amended, provide that the Board of
Directors shall consist of not fewer than three nor more than fifteen members
and that the number of directors, within such limits, shall be determined by
resolution of the Board of Directors at any meeting or by the stockholders at
the Annual Meeting. The Board of Directors of the Company has set the number of
directors comprising the Board of Directors at seven, with such directors being
divided into three classes.
The Board of Directors has nominated for director the individuals named
below to be elected at the Annual Meeting. The nominees will constitute the
Class I directors whose term will expire at the 2001 Annual Meeting of
Stockholders. The other directors of the Company will continue in office for
their existing terms. If both of the nominees listed below are elected by the
stockholders at the Annual Meeting, two vacancies will remain, which may be
filled by the Board of Directors upon selection of qualified candidates.
The table below sets forth the names and ages of the nominees for
director and the year each nominee first became a director of the Company. Each
of the nominees is presently serving as a director of the Company. Biographical
information on the nominees is set forth below under "Management - Executive
Officers and Directors."
NOMINEES FOR DIRECTOR
CLASS I - TERM TO EXPIRE AT 2001 ANNUAL MEETING
<TABLE>
YEAR FIRST BECAME A
NAME AND AGE DIRECTOR OF THE COMPANY
------------ -----------------------
<S> <C>
Gordon H. Matthews (61) 1994
Charles T. Comiso (60) 1997
</TABLE>
Unless otherwise indicated on any duly executed and dated proxy, the
persons named in the enclosed proxy intend to vote the shares that it represents
for the election of the nominees listed in the table above for the term
specified. Although the Company does not anticipate that the above-named
nominees will refuse or be unable to accept or serve as directors of the Company
for the term specified, the persons named in the enclosed form of proxy intend,
if either of such nominees is unable or unwilling to serve as a director, to
vote the shares represented by the proxy for the election of such other person
as may be nominated or designated by management, unless they are directed by the
proxy to do otherwise.
Assuming the presence of a quorum, the affirmative vote of the holders
of a plurality of the shares of Common Stock, represented in person or by proxy
at the Annual Meeting, is required for the election of directors. Assuming the
receipt by each such nominee of the affirmative vote of at least a plurality of
the shares of Common Stock represented at the Annual Meeting, such nominees will
be elected as directors. Proxies will be voted for the nominees in accordance
with the specifications marked thereon, and if no specification is made, will be
voted "FOR" the nominees.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE INDIVIDUALS NOMINATED
FOR ELECTION AS DIRECTORS.
4
<PAGE>
CONTINUING DIRECTORS NOT STANDING FOR RE-ELECTION
The following directors serve terms expiring at the 1999 and 2000 Annual
Meetings of the Stockholders:
CLASS II - CONTINUING TO SERVE UNTIL 1999 ANNUAL MEETING
YEAR FIRST BECAME A
NAME AND AGE DIRECTOR OF THE COMPANY
------------ -----------------------
Parris H. Holmes, Jr. (54) 1993
Theodore W. Van Duyn (48) 1994
CLASS III - CONTINUING TO SERVE UNTIL 2000 ANNUAL MEETING
YEAR FIRST BECAME A
NAME AND AGE DIRECTOR OF THE COMPANY
------------ -----------------------
Gary W. Pankonien (47) 1996
Biographical information on these continuing directors is set forth
below under "Management - Executive Officers and Directors."
ITEM 2 ON PROXY
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors of the Company has appointed the firm of Arthur
Andersen LLP to serve as independent public accountants of the Company for the
fiscal year ending September 30, 1998. Although stockholder ratification is not
required, the Board of Directors has directed that such appointment be submitted
to the stockholders of the Company for ratification at the Annual Meeting.
Arthur Andersen LLP has served as independent public accountants of the Company
with respect to the Company's consolidated financial statements for fiscal years
1994 through 1997 and is considered by management of the Company to be well
qualified. If the stockholders do not ratify the appointment of Arthur Andersen
LLP, the Board of Directors may reconsider the appointment.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting. They will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions from stockholders.
Assuming the presence of a quorum, the affirmative vote of the holders
of a majority of the outstanding shares of Common Stock present at the Annual
Meeting in person or by proxy is necessary for the adoption of the proposal.
Proxies will be voted for or against such ratification in accordance with
specifications marked thereon, and if no specification is made, the proxies will
be voted "FOR" such ratification.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1998.
ITEM 3 ON PROXY
OTHER MATTERS THAT MAY COME BEFORE THE ANNUAL MEETING
The Board of Directors of the Company knows of no matters, other than
those referred to in the accompanying Notice of Annual Meeting of Stockholders,
which properly may come before the Annual Meeting. However, if any other matter
should be properly presented for consideration and voting at the Annual Meeting
or any adjournment(s) thereof, it is the intention of the persons named as
proxies on the enclosed form of proxy card to vote the proxy cards in accordance
with their judgment.
5
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
On the Record Date, the executive officers and directors of the Company
were as follows:
NAME AGE POSITION
- -------------------- --- -----------------------------------------------
Charles T. Comiso 60 President, Chief Executive Officer and Director
Joe O. Davis 54 Senior Vice President, Chief Financial Officer
and Corporate Secretary
John R. Bennett 37 Vice President of Sales and Customer Service
Chris Efstathiou, Jr. 38 Vice President and General Manager
Joseph C. Klein 41 Vice President of Engineering
Donald G. McCord 42 Vice President of Marketing
Donald R. Turner 42 Corporate Controller
Parris H. Holmes, Jr. 54 Chairman of the Board (1)(2)
Gordon H. Matthews 61 Director (1)
Gary W. Pankonien 47 Director
Theodore W. Van Duyn 48 Director (2)
- -------------
(1) Member of the Audit Committee.
(2) Member of the Compensation/Stock Option Committee.
The following are biographies of the Company's executive officers,
directors and key employees for the past five years.
CHARLES T. COMISO joined the Company as President, Chief Executive
Officer and Director in October 1997. Prior to joining the Company, Mr. Comiso
served as a Senior Officer of Wyse Technology, Inc. from 1984 to September 1997.
From 1995 to September 1997, Mr. Comiso served as Senior Vice President of the
parent company and from 1990 to 1995 as President and Chief Executive Officer of
Link Technologies, Inc., a wholly owned subsidiary of Wyse Technology, Inc. Mr.
Comiso is an electrical engineer with more than 35 years of technology industry
experience and also has held positions with Hewlett Packard Company, Texas
Instruments, IT&T Labs and Bendix Corporation.
JOE O. DAVIS, CPA, joined the Company as Senior Vice President, Chief
Financial Officer and Corporate Secretary in July 1996. Prior to joining the
Company, Mr. Davis served from June 1990 to April 1993 as Chief Financial
Officer of San Marcos Telephone Company, which was acquired by Century Telephone
Enterprises, a long distance telephone company listed on the New York Stock
Exchange and located in Monroe, Louisiana, in April 1993. Mr. Davis continued
his employment with Century Telephone Enterprises as Vice President of Finance
and Planning until July 1996. He has 27 years of experience in financial
management and business planning, both domestically and internationally, has
served as a member of the board of directors of various public and private
companies in the United States and Australia, and was a partner with Peat
Marwick Mitchell & Co., now known as KPMG Peat Marwick, for three years.
JOHN R. BENNETT, Vice President of Sales and Service, joined the Company
in November 1996 with many years of sales and marketing experience in the
electronics, computer and peripherals businesses. Prior to being promoted to his
current position of Vice President, Sales and Customer Service in October 1997,
Mr. Bennett most recently acted in the role
6
<PAGE>
as Director of Sales at Tanisys, with prior responsibilities for the sales
management of Tanisys' DarkHorse line of memory test equipment. Other
positions held by Mr. Bennett include Senior Consultant, IBM, from October
1995 to November 1996, Vice President, Marketing, CACTUS Inc., from August
1994 to October 1995 and National Marketing Manager and National Sales
Manager, CalComp (Division of Lockheed), from July 1988 to August 1994.
CHRIS EFSTATHIOU, JR., Vice President and General Manager, has more than
17 years of experience in the electronics industry in high-tech purchasing. Mr.
Efstathiou joined 1st Tech Corporation ("1st Tech") in December 1994 as Vice
President of Materials and the Company in May 1996 upon its acquisition of 1st
Tech. Mr. Efstathiou was promoted to Vice President and General Manager of the
Company in September 1997. Previously, Mr. Efstathiou worked from May 1990 to
December 1994 as the Director of Strategic Materials for Dell Computer
Corporation, a personal computer manufacturer. Prior to working with Dell, Mr.
Efstathiou was involved for more than 10 years in high-tech purchasing,
including 4 years with Advent Corporation and more than 2 years with Wang
Laboratories, Inc.
JOSEPH C. KLEIN, Ph.D., Vice President of Engineering, joined the
Company in November 1997. Dr. Klein has over 15 years of experience in the
electronics and computer industry. Prior to joining the Company, Dr. Klein
was Vice President of Engineering/Research and Development for PNY
Technologies, Inc. from November 1994 to November 1997 and was World Wide
Manager of Semiconductor Memory Product for IBM from November 1984 to
November 1994.
DONALD G. MCCORD, Vice President of Marketing, joined the Company in
June 1997 initially as a consultant and then as Vice President of Marketing. Mr.
McCord has over 17 years in high technology businesses. Mr. McCord served as
Regional Sales Manager for Creative Labs from August 1994 to November 1996 and
Manager of Desktop Development for IBM's AMBRA subsidiary from October 1993 to
August 1994. Marketing roles have included Manager of Desktop Product Marketing
at Dell Computer from August 1988 to October 1993 as well as positions at Intel,
Western Digital and Texas Instruments, Inc.
DONALD R. TURNER, CPA, Corporate Controller, joined the Company effective
upon the acquisition of 1st Tech in May 1996. Mr. Turner was a founding officer
and board member of 1st Tech, where he served as Vice President, Chief Financial
Officer and Secretary-Treasurer from January 1993 until the purchase by Tanisys
in May 1996. Mr. Turner was Controller of Stratum Technologies, Inc. from
September 1992 to January 1993. Prior to joining Stratum, Mr. Turner was
Controller of Phillips Distribution, a San Antonio, Texas based packaging
distribution company, from March 1984 until September 1992.
PARRIS H. HOLMES, JR. has served as Chairman of the Board since October
1997 and as Director of the Company since August 1993. Mr. Holmes also served
as Chairman of the Board from August 1993 until March 1994, at which time he
was elected Vice Chairman of the Board. Mr. Holmes has been Chairman and Chief
Executive Officer of Billing Information Concepts Corp., a third-party billing
clearinghouse and information management services business, since May 1996.
Mr. Holmes served as Chairman of the Board and Chief Executive Officer of USLD
Communications Corp. from September 1986 until August 1996 and continued as
Chairman of the Board of USLD Communications Corp. until June 1997.
GORDON H. MATTHEWS has served as a Director of the Company since
September 1994. Since June 1992, Mr. Matthews has owned and operated Matthews
Voice Mail Management, Inc., which provides voice mailboxes on a monthly rental
basis for specialized applications. Mr. Matthews has owned and operated Matthews
Communications Systems, Inc., which tracks the pace of golf course play and
increases efficiency and net profitability of golf courses, since May 1989. In
June 1996, Mr. Matthews started a new company, Matthews Communications
Management, Inc., which offers advanced telephone control products. Mr. Matthews
serves on the Board of Directors of V-Tel Corporation, an Austin, Texas company
specializing in teleconferencing services.
GARY W. PANKONIEN was appointed President and Chief Operating Officer of
the Company after the acquisition of 1st Tech and DarkHorse in May 1996 and was
elected a Director in July 1996. In October 1997, Mr. Pankonien resigned as
President and Chief Operating Officer and currently serves the Company in the
capacity of director. Prior to 1st Tech's acquisition by the Company, Mr.
Pankonien served as Chairman and Chief Executive Officer of 1st Tech since its
inception in January 1993 and as Chairman and Chief Executive Officer of
DarkHorse since May 1992. Mr. Pankonien was Chief Operations Officer of Stratum
Technologies, Inc., a memory module manufacturer and reseller located in Austin,
Texas, from January 1992 until August 1992, when he purchased Stratum and was
appointed Chairman of the Board and Chief Executive Officer. Stratum was
dissolved in June 1995. Mr. Pankonien was employed with Compaq Computer
7
<PAGE>
Corporation, a personal computer manufacturer, from February 1984 until October
1991 as Notebook Computer Design and Operations Manager and co-developed and
currently holds the patent for the first notebook computer.
THEODORE W. VAN DUYN has served as a Director since March 1994. Mr. Van
Duyn has been Chief Technology Officer for BMC Software, Inc. since February
1993. Mr. Van Duyn joined BMC Software, Inc. in 1985 as Director of Research and
served as Senior Vice President, Research and Development, from 1986 until
assuming his current position.
All directors hold office for their elected term or until their
successors are duly elected and qualified. If a director should be disqualified
or unable to serve as a director, the vacancy so arising may be filled by the
Board of Directors for the unexpired portion of his term. All officers serve at
the discretion of the Board of Directors. There are no family relationships
between members of the Board of Directors or any executive officers of the
Company.
COMMITTEES, MEETINGS AND BOARD COMPENSATION
The Board of Directors conducts its business through meetings of the
Board of Directors and through its committees. In accordance with the Bylaws of
the Company, the Board of Directors has established an Audit Committee and a
Compensation/Stock Option Committee. The Board of Directors does not currently
utilize a nominating committee or committee performing similar functions.
AUDIT COMMITTEE
The Audit Committee acts on behalf of the Board of Directors with
respect to the Company's financial statements, record-keeping, auditing
practices and matters relating to the Company's independent public accountants,
including recommending to the Board of Directors the firm to be engaged as
independent public accountants for the next fiscal year; reviewing with the
Company's independent public accountants the scope and results of the audit and
any related management letter; consulting with the independent public
accountants and management with regard to the Company's accounting methods and
the adequacy of its internal accounting controls; approving professional
services by the independent public accountants; and reviewing the independence
of the independent public accountants. The Audit Committee is comprised of
Directors Holmes and Matthews.
COMPENSATION/STOCK OPTION COMMITTEE
The Compensation/Stock Option Committee reviews and makes
recommendations to the Board of Directors concerning major compensation policies
and compensation of officers and executive employees and administers the
Company's 1993 Stock Option Plan. This committee is comprised of Directors
Holmes and Van Duyn.
BOARD OF DIRECTOR AND COMMITTEE MEETINGS
During the fiscal year ended September 30, 1997, the Board of Directors
met 11 times and took actions on 15 other occasions by unanimous written
consents. During the year, the Audit Committee and the Compensation/Stock Option
Committee of the Board of Directors did not meet but took actions by unanimous
written consent.
DIRECTORS' COMPENSATION
Directors are not paid a fee for attending Board of Director or
committee meetings but are reimbursed for their travel expenses to and from the
meetings.
STOCK OPTIONS. Outside directors were granted stock options under the
Company's 1993 Stock Option Plan at the time of their election or appointment to
the Board of Directors from April 1994 until January 1997, when the Board of
Directors approved the Company's 1997 Stock Option Plan for Non-Employee
Directors. See "Executive Compensation - Employee Benefit Plans - Stock Option
Plans." At September 30, 1997, the outside directors of the Company held the
following number and value of options granted under the Company's 1997 Stock
Option Plan for Non-Employee Directors, and outside such plan:
8
<PAGE>
<TABLE>
SECURITIES UNDERLYING UNREALIZED VALUE OF OPTIONS
OPTIONS AT SEPTEMBER 30, 1997 ($)(1)
-------------------------- EXERCISE PRICE ----------------------------
DIRECTOR EXERCISABLE UNEXERCISABLE PER SHARE EXERCISABLE UNEXERCISABLE
- --------------------- ----------- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
PARRIS H. HOLMES, JR. 85,000 20,000 $1.71 - $2.72 $144,950 $44,800
GORDON H. MATTHEWS 27,500 55,000 $2.94 27,775 55,550
ALAN H. PORTNOY (2) 0 25,000 $3.13 0 20,500
THEODORE W. VAN DUYN 50,000 25,000 $1.71 112,000 56,000
</TABLE>
- ---------------
(1) Reflects the aggregate market value of the underlying securities as
determined by reference to the closing price of the Common Stock on the
Nasdaq Stock Market's SmallCap Market (the "Nasdaq SmallCap Market") on
September 30, 1997 ($4.0625 per share) minus the aggregate exercise price
for each option.
(2) Mr. Portnoy resigned from the Board of Directors in January 1998.
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION/STOCK OPTION COMMITTEE
The Compensation/Stock Option Committee of the Board of Directors of the
Company (the "Committee") has furnished the following report on the Company's
executive compensation policies. The report describes the Committee's
compensation policies applicable to the Company's executive officers and
provides specific information regarding the compensation of the Company's Chief
Executive Officer. (The information contained in the report shall not be deemed
to be "soliciting material" or to be "filed" with the SEC, nor shall such
information be incorporated by reference into any future filings under the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
into such filing.)
The Committee is comprised of two outside directors who administer and
oversee all aspects of the Company's executive compensation policy and report
its determinations to the Board of Directors. See "Management - Committees,
Meetings and Board Compensation - Compensation/Stock Option Committee." The
Committee's overall goal is to develop executive compensation policies that are
consistent with, and linked to, strategic business objectives and Company
values. The Committee approves the design of, assesses the effectiveness of, and
administers executive compensation programs in support of, the Company's
compensation policies. The Committee also reviews and approves all salary
arrangements and other remuneration for executives, evaluates executive
performance and considers related matters.
COMPENSATION PHILOSOPHY
The Company's executive compensation policies have four primary
objectives: to attract and retain highly competent executives to manage the
Company's business, to offer executives appropriate incentives for
accomplishment of the Company's business objectives and strategy, to encourage
stock ownership by executives to enhance mutuality of interest with stockholders
and to maximize long-term stockholder value. The Committee believes that the
compensation policies should operate in support of these objectives and should
emphasize the following: a long-term and at-risk focus, a pay-for-performance
culture, an equity orientation and management development.
ELEMENTS OF COMPENSATION
Each element of compensation considers median compensation levels paid
within the competitive market. Competitive market data compares the Company's
compensation practices to a group of comparator companies that tend to have
similar sales volumes, market capitalizations, employment levels and lines of
business. The Committee reviews and approves the selection of companies used for
compensation comparison purposes.
9
<PAGE>
The key elements of the Company's executive compensation are base
salary, annual incentive and long-term incentive. These key elements are
addressed separately below. In determining compensation, the Committee considers
all elements of an executive's total compensation package.
BASE SALARIES. Base salaries for executives are initially determined by
evaluating executives' levels of responsibility, prior experience, breadth of
knowledge, internal equity issues and external pay practices. Base salaries are
below the size-adjusted medians of the competitive market.
Increases to base salaries are driven primarily by individual
performance. Individual performance is evaluated based on sustained levels of
individual contribution to the Company. When evaluating individual performance,
the Committee considers the executive's efforts in promoting Company values,
continuing educational and management training, improving product quality,
developing relationships with customers, suppliers and employees, and
demonstrating leadership abilities among co-workers.
As reflected in the Summary Compensation Table below, the base salary
for Mr. Holliday was increased in fiscal 1997 by approximately $3,700. In
determining the base salary for Mr. Holliday for fiscal 1997, the Committee,
without his participation in the process and in its subjective determination,
considered the Company's overall performance, his individual performance and his
long-term contributions to the success of the Company. The Committee also
compared Mr. Holliday's base salary to those of chief executive officers at
comparator companies.
ANNUAL INCENTIVE. Each year, the Committee evaluates the performance of
the Company as a whole, as well as the performance of each individual executive.
Factors considered include revenue growth, net profitability and cost control.
The Committee does not utilize formalized mathematical formulae, nor does it
assign weightings to these factors. The Committee, in its sole discretion,
determines the amount, if any, of incentive payments to each executive. The
Committee believes that the Company's growth in revenue and profitability
requires subjectivity on the part of the Committee when determining incentive
payments. The Committee believes that specific formulae restrict flexibility and
are too rigid at this stage of the Company's development. No cash bonus was paid
to Mr. Holliday in fiscal 1997. Pursuant to the terms of the Agreement and Plan
of Merger dated as of May 21, 1996 between the Company and 1st Tech, Mr.
Pankonien received a bonus of $182,667 in fiscal 1997, which was paid monthly
(see "Executive Compensation - Employment Agreements"). Bonuses may be paid to
other executive officers in the future.
LONG-TERM INCENTIVES. The Company's long-term compensation philosophy
provides that long-term incentives should relate to improvement in stockholder
value, thereby creating a mutuality of interests between executives and
stockholders. Additionally, the Committee believes that the long-term security
of executives is critical for the perpetuation of the Company. Long-term
incentives are provided to executives through the Company's 1993 Stock Option
Plan.
In keeping with the Company's commitment to provide a total compensation
package that favors at-risk components of pay, long-term incentives comprise an
appreciable portion of an executive's total compensation package. When awarding
long-term incentives, the Committee considers executives' respective levels of
responsibility, prior experience, historical award data, various performance
criteria and compensation practices at comparator companies. Again, the
Committee does not utilize formal mathematical formulae when determining the
number of options/shares granted to executives.
STOCK OPTIONS. Stock options are granted at an option price not less
than the fair market value of the Common Stock on the date of grant.
Accordingly, stock options have value only if the price of the Common Stock
appreciates after the date the options are granted. This design focuses
executives on the creation of stockholder value over the long term and
encourages equity ownership in the Company.
Mark C. Holliday resigned as Chairman of the Board and Chief Executive
Officer in October 1997. Mr. Holliday remained as a member of the Board of
Directors until his resignation in January 1998. Charles T. Comiso joined the
Company and was elected Chief Executive Officer and President and appointed to
the Board of Directors in October 1997. Mr. Comiso's employment agreement
provides for the granting of certain stock options under the Company's 1993
Stock Option Plan. At December 31, 1997, Mr. Comiso owned 50,000 shares of the
Company's Common Stock and held options to purchase an additional 1,000,000
shares. In addition, pursuant to the terms of his employment agreement with the
Company, Mr. Comiso purchased an additional 50,000 shares of the Company's
Common Stock in January 1998. See "Executive Compensation - Employment
Agreements."
10
<PAGE>
CONCLUSION. The Committee believes these executive compensation policies
serve the interests of the stockholders and the Company effectively. The
Committee believes that the various pay vehicles offered are appropriately
balanced to provide increased motivation for executives to contribute to the
Company's overall future successes, thereby enhancing the value of the Company
for the stockholders' benefit.
Parris H. Holmes, Jr. Theodore W. Van Duyn
SUMMARY COMPENSATION TABLE
The following Summary Compensation Table sets forth information
concerning compensation paid during each of the Company's last three fiscal
years ended September 30, 1997, 1996 and 1995 to its Chief Executive Officer
and each of its four other most highly compensated officers whose base salary
and bonus exceeded $100,000 for fiscal 1997:
<TABLE>
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------------------
FISCAL ----------------------- SECURITIES UNDER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS/SARS GRANTED (#)
- ------------------ ---- ---------- --------- ------------------------
<S> <C> <C> <C> <C>
MARK C. HOLLIDAY (1) 1997 $131,043 $ 0 0
CHAIRMAN OF THE BOARD 1996 127,341 0 100,000
AND CHIEF EXECUTIVE OFFICER 1995 125,000 0 110,000
GARY W. PANKONIEN (2) 1997 125,000 182,667 100,000
PRESIDENT AND CHIEF 1996 95,336 66,664 150,000
OPERATING OFFICER 1995 N/A N/A N/A
BENJAMIN S. MARZ (3) 1997 118,791 0 60,000
VICE PRESIDENT OF SALES 1996 103,262 0 0
AND CUSTOMER SERVICE 1995 102,000 0 0
CHRIS EFSTATHIOU, JR. 1997 116,884 0 60,000
VICE PRESIDENT AND 1996 37,458 (4) 0 60,000
GENERAL MANAGER 1995 N/A N/A N/A
JOE O. DAVIS 1997 115,000 0 30,000
SENIOR VICE PRESIDENT, CHIEF 1996 55,322 (5) 0 120,000
FINANCIAL OFFICER AND 1995 N/A N/A N/A
CORPORATE SECRETARY
JOHN R. BENNETT (6) 1997 109,032 25,000 20,000
VICE PRESIDENT OF SALES 1996 N/A N/A 0
AND CUSTOMER SERVICE 1995 N/A N/A N/A
</TABLE>
- --------------------
(1) Mr. Holliday resigned as Chairman of the Board and Chief Executive Officer
in October 1997 and resigned as a member of the Board of Directors of the
Company in January 1998.
(2) Mr. Pankonien resigned as President and Chief Operating Officer in October
1997 and currently serves as a member of the Board of Directors of the
Company. The amount shown as compensation for fiscal 1996 is from May 21,
1996, the date Mr. Pankonien became an employee of the Company, through the
end of fiscal 1996.
(3) Mr. Marz resigned as Vice President of Sales and Customer Service in June
1997 and since October 4, 1997 is no longer an employee of the Company.
11
<PAGE>
(4) The amount shown reflects Mr. Efstathiou's salary from May 21, 1996, the
date he became an employee of the Company, through the end of fiscal 1996.
(5) The amount shown reflects Mr. Davis' salary from July 11, 1996, the
beginning date of his employment with the Company, through the end of
fiscal 1996.
(6) Mr. Bennett was elected Vice President of Sales and Customer Service on
October 1, 1997 and previously served as Director of Sales of the Company.
Amount shown reflects Mr. Bennett's salary from November 1, 1996, the
beginning date of his employment with the Company, through the end of
fiscal 1997.
STOCK OPTION GRANTS IN FISCAL 1997
The following table provides information related to stock options
granted to the named executive officers during fiscal 1997:
<TABLE>
INDIVIDUAL GRANTS
------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
NUMBER OF OPTIONS ANNUAL RATES OF STOCK
SECURITIES GRANTED TO EXERCISE PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES OR BASE OPTION TERM(2)
OPTIONS IN FISCAL PRICE EXPIRATION -----------------------
NAME GRANTED(#)(1) 1997 ($/SH) DATE 5%($) 10%($)
- --------------------- ------------- --------- -------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
GARY W. PANKONIEN 100,000 11.3% $4.50 (3) $124,327 $274,730
CHRIS EFSTATHIOU, JR. 60,000 6.8% $4.09 10/10/01 67,799 149,819
JOE O. DAVIS 30,000 3.4% $4.09 10/10/01 33,900 74,910
JOHN R. BENNETT 20,000 2.3% $4.09 10/10/01 22,600 49,940
</TABLE>
- ---------------
(1) For each named executive officer, the option listed represents a grant
under the Company's 1993 Stock Option Plan. See "Executive Compensation -
Employee Benefit Plans - 1993 Stock Option Plan." The options granted in
fiscal 1997 to Mr. Pankonien are exercisable one-fourth on each of the
first four anniversaries following the date of grant. The options granted
in fiscal 1997 to Messrs. Efstathiou, Davis and Bennett are exercisable
one-third on each of the first three anniversaries following the date of
grant.
(2) Calculation based on stock option exercise price over period of option
assuming annual compounding. The columns present estimates of potential
values based on certain mathematical assumptions. The actual value, if any,
that an executive officer may realize is dependent upon the market price on
the date of option exercise.
(3) Pursuant to the terms of the Separation Agreement entered into between the
Company and Mr. Pankonien, the stock option agreements covering options
granted to Mr. Pankonien, including this option, were amended to provide
for the continued vesting and exercise of the options through the date of
the 2000 Annual Meeting of Stockholders of the Company.
12
<PAGE>
AGGREGATED STOCK OPTION EXERCISES IN FISCAL 1997 AND FISCAL YEAR-END OPTION
VALUES
The following table provides information related to stock options
exercised by the named executive officers during the 1997 fiscal year and the
number and value of options held at fiscal year end. The Company does not
have any outstanding stock appreciation rights.
<TABLE>
INDIVIDUAL GRANTS
----------------------- NUMBER OF SECURITIES VALUE(1) OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT FY END(#) OPTIONS AT FY END($)
UPON OPTION VALUE -------------------------- ---------------------------
NAME EXERCISE(#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
MARK C. HOLLIDAY 0 N/A 306,667 103,333 $556,688 $70,666
GARY W. PANKONIEN 0 N/A 200,000 50,000 18,650 (6,400)
BENJAMIN S. MARZ 0 N/A 66,667 0 197,338 0
CHRIS EFSTATHIOU, JR. 0 N/A 20,000 100,000 7,460 13,300
JOE O. DAVIS 0 N/A 40,000 110,000 37,320 73,830
JOHN R. BENNETT 0 N/A 0 20,000 0 (550)
</TABLE>
- ---------------
(1) Market value of the underlying securities at September 30, 1997 ($4.0625),
minus the exercise price.
EMPLOYEE BENEFIT PLANS
401(K) PLAN
On May 21, 1996, the effective date of the Company's acquisition of 1st
Tech, the Company adopted the 1st Tech 401(k) Plan (the "401(k) Plan").
Participation in the 401(k) Plan is offered to eligible employees of the
Company (collectively, "Participants"). Generally, all employees of the
Company who are 21 years of age and who as of December 31 or July 31 have
completed six months of service during which they worked at least 500 hours
are eligible for participation in the 401(k) Plan.
The 401(k) Plan is a form of defined contribution plan that provides
that Participants generally may make voluntary salary deferral contributions,
on a pre-tax basis, of between 1% and 15% of their base compensation in the
form of voluntary payroll deductions up to a maximum amount as indexed for
cost-of-living adjustments ("Voluntary Contributions"). Since its adoption of
the 401(k) Plan, the Company has not made any matching contributions but may
elect in the future to make matching contributions of up to 100% of the first
6% of a Participant's compensation contributed as salary deferral.
STOCK OPTION PLANS
1993 STOCK OPTION PLAN. The Company's 1993 Stock Option Plan (as
thereafter amended, the "1993 Option Plan") is administered by a committee
(the "Compensation/Stock Option Committee") which currently consists of two
non-employee members of the Board of Directors, Parris H. Holmes, Jr. and
Theodore W. Van Duyn. The 1993 Option Plan grants broad authority to the
Compensation/Stock Option Committee to grant options to key employees and
consultants selected by the Compensation/Stock Option Committee; to determine
the number of shares subject to options; the exercise or purchase price per
share, subject to regulatory requirements; the appropriate periods and
methods of exercise and requirements regarding the vesting of options;
whether each option granted shall be an incentive stock option ("ISO") or a
non-qualified stock option ("NQSO") and whether restrictions such as
repurchase options are to be imposed on shares subject to options and the
nature of such restrictions, if any. In making such determinations, the
13
<PAGE>
Compensation/Stock Option Committee may take into account the nature and
period of service of eligible participants, their level of compensation,
their past, present and potential contributions to the Company and such other
factors as the Compensation/Stock Option Committee in its discretion deems
relevant. The purposes of the 1993 Option Plan are to advance the best
interests of the Company by providing its employees and consultants who have
substantial responsibility for the Company's management, success and growth,
with additional incentive and to increase their proprietary interest in the
success of the Company, thereby encouraging them to remain in the Company's
employ or service.
The 1993 Option Plan further directs the Compensation/Stock Option
Committee to set forth provisions in option agreements regarding the exercise
and expiration of options according to stated criteria. The
Compensation/Stock Option Committee oversees the methods of exercise of
options, with attention being given to compliance with appropriate securities
laws and regulations.
The options have certain anti-dilution provisions and are not assignable
or transferable, other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order. During the
lifetime of an optionee, the options granted under the 1993 Option Plan are
exercisable only by the optionee or his or her guardian or legal
representative. The Company or its subsidiaries may not make or guarantee
loans to individuals to finance the exercise of options under the 1993 Option
Plan. The duration of options granted under the 1993 Option Plan cannot
exceed ten years (five years with respect to a holder of 10% or more of the
Company's shares in the case of an ISO).
The 1993 Option Plan provides for the grant of ISOs under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and stock options
that do not qualify under Section 422 of the Code ("NQSOs"). The option price
for ISOs may not be less than 100% of the fair market value of the Common
Stock on the date of grant, or 110% of fair market value with respect to any
ISO issued to a holder of 10% or more of the Company's shares. The exercise
price of NQSOs also is limited to the fair market value of the Common Stock
on the date of grant. Common Stock issued under the 1993 Option Plan may be
newly issued or treasury shares. The 1993 Option Plan does not permit the use
of already owned Common Stock as payment for the exercise price of options.
If any option granted under the 1993 Option Plan terminates, expires or is
surrendered, new options may thereafter be granted covering such shares. Fair
market value is defined as the closing price of the Common Stock as reported
for that day in THE WALL STREET JOURNAL listing of composite transactions for
Nasdaq.
On March 31, 1994, the stockholders of the Company approved the 1993
Option Plan, which was adopted by the Board of Directors on October 25, 1993.
Under the terms of the 1993 Option Plan, 2,600,000 shares of Common Stock were
reserved for the granting of options. On December 1, 1997, the Board of
Directors of the Company approved an amendment to the 1993 Option Plan to
increase the number of shares of Common Stock authorized thereunder from
2,600,000 shares to 5,000,000 shares. This amendment was effective December 1,
1997. At December 31, 1997, options to purchase 3,489,517 shares had been
granted. In addition, at December 31, 1997, options to purchase 155,000 shares
had been granted outside the 1993 Option Plan, prior to its adoption.
The 1993 Option Plan terminates on October 24, 2003. The
Compensation/Stock Option Committee is authorized to amend or terminate the
1993 Option Plan at any time, except that it is not authorized without
stockholder approval (except with regard to adjustments resulting from
changes in capitalization) to (i) reduce the option price at which an ISO may
be granted to an amount less than the fair market value per share at the time
such option is granted; (ii) change the class of employees eligible to
receive options; (iii) materially modify the requirements as to affiliate
eligibility for participation in the 1993 Option Plan; (iv) materially
increase the benefits accruing to participants under the 1993 Option Plan; or
(v) effect an amendment that would cause ISOs issued pursuant to the 1993
Option Plan to fail to meet the requirements of "incentive stock options" as
defined in Section 422 of the Code, provided, however, that the
Compensation/Stock Option Committee shall have the power to make such changes
in the 1993 Option Plan and in the regulations and administrative provisions
thereunder or in any outstanding option as in the opinion of counsel for the
Company may be necessary or appropriate from time to time to enable any ISOs
granted pursuant to the Plan to continue to qualify as "incentive stock
options" under the Code and the regulations which may be issued thereunder as
in existence from time to time.
1997 NON-EMPLOYEE DIRECTOR PLAN. The Company's 1997 Non-Employee
Director Plan (the "Director Plan") is administered by the Board of
Directors. The Director Plan authorizes the granting of nonqualified options
to eligible persons.
14
<PAGE>
The Director Plan was adopted by the Company's Board of Directors on
January 15, 1997. Prior to this date, non-employee directors were granted
options under the 1993 Option Plan. Effective December 1, 1997, the Board of
Directors approved an amendment to the Director Plan to extend the maximum
exercise period for discretionary options (as described below) from five to
seven years from the date of grant. The purpose of the plan is to advance the
interests of the Company by providing an additional incentive to attract and
retain qualified and competent directors, upon whose efforts and judgment the
success of the Company is largely dependent, through the encouragement of
stock ownership in the Company by such persons.
The Director Plan authorizes the granting to non-employee directors
(totaling four eligible individuals on the Record Date) of nonqualified
options ("Director Options") exercisable for the purchase of 25,000 shares of
Common Stock on the date they are elected or appointed to the Board of
Directors, whether at the annual meeting of stockholders or otherwise, at an
exercise price equal to the fair market value of the Common Stock on the date
such non-employee director is elected or appointed. In addition, upon their
re-election, each non-employee director receives, on the first business day
after the date of each annual meeting of stockholders of the Company,
commencing with the annual meeting of stockholders immediately following the
full vesting of any previously granted Director Option, a Director Option to
purchase an additional 25,000 shares of Common Stock at an exercise price per
share equal to the fair market value of the Common Stock on the date of
grant. In each case, such Director Options vest in three equal portions over
three years from the first date of the individual's service to the Company as
a director or date of grant, as the case may be, and are exercisable for a
period of five years from the date of grant.
The Director Plan also provides for the granting of discretionary
options ("Discretionary Options") from time to time by the Board of Directors
to any non-employee director of the Company. The Discretionary Options will
vest according to the vesting schedule determined by the Board of Directors
and will expire five to seven years from the date of grant, as determined by
the Board of Directors upon the granting of a Discretionary Option. At least
six months must elapse from the date of the acquisition of the Discretionary
Option to the date of disposition of the Director Fee Option (other than upon
exercise or conversion) or its underlying Common Stock.
Common Stock issued under the Director Plan may be newly issued or
treasury shares. Already owned Common Stock may be used as payment for the
exercise price of options if approved by the Board of Directors at the time
of exercise. If any option granted under the Director Plan terminates,
expires or is surrendered, new options may thereafter be granted covering
such shares.
Under the terms of the Director Plan, 800,000 shares of Common Stock
(subject to certain adjustments) have been reserved for issuance upon
exercise of Director Options and Discretionary Options, including options for
242,500 shares previously granted to current outside directors under the 1993
Option Plan. At December 31, 1997, options to purchase 592,500 shares had
been granted. Options, once granted and to the extent vested and exercisable,
will remain exercisable throughout their term, except that the unexercised
portion of a Director Option will terminate 30 days after the date an
optionee ceases to be a director for any reason other than death, in which
case the Director Option will terminate one year after the optionee's death
or six months after the optionee's death if the death occurs during the
30-day period referenced above.
The Director Plan terminates on January 15, 2007, and any Director
Option or Discretionary Option outstanding on such date will remain
outstanding until it has either expired or been exercised.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Charles T. Comiso
effective October 21, 1997. This agreement expires on October 20, 1998 and
will continue thereafter unless terminated by either party with 120 days'
notice. Mr. Comiso's annual salary will be $180,000 until such time as the
Company reports positive cash flow from operations for all three months of a
fiscal quarter, then his annual salary will increase to $240,000. The
agreement provides for the granting of a seven-year option to purchase
1,000,000 shares of Common Stock at an exercise price to be determined during
the first 60 days of the employment period. The exercise price has been
determined to be $2.00 per share. The option vests as to 100,000 and 150,000
shares on the first and second anniversaries of the agreement, respectively,
and as to 250,000 shares on each of the third, fourth and fifth anniversaries
of the agreement. Additionally, at such time as the Company reports positive
cash flow from operations for all three months of a fiscal quarter, the
Company will grant to Mr. Comiso a seven-year option to purchase 500,000
shares of Common Stock at an exercise price equal to the closing price of the
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Company's Common Stock as reported on the Nasdaq SmallCap Market on the date
of grant. The option shall vest as to 125,000 shares on each of the second,
third, fourth and fifth anniversaries of the date of grant. As part of the
employment agreement, Mr. Comiso agreed to purchase $150,000 of the Company's
Common Stock at a maximum price of $3.00 per share. Subsequently, Mr. Comiso
purchased 100,000 shares of Common stock from the Company for $150,000. These
shares are restricted, and the Company has no registration obligations.
Effective July 11, 1996, the Company entered into an employment
agreement with Joe Davis with a term of one year, after which the agreement
continues on a month-to-month basis until terminated by the Company or the
employee upon 120 days' notice as provided therein. Pursuant to the terms of
the employment agreement, Mr. Davis' annual base salary is $115,000 and he
was granted a stock option under the 1993 Option Plan, exercisable over a
five-year period, for the purchase of an aggregate of 120,000 shares of
Common Stock at $3.13 per share. The shares underlying the option vest
one-third on each of the first three anniversaries of the grant date.
Effective September 11, 1997, the Company entered into an employment
agreement with Don McCord with a term of one year, after which the agreement
continues on a month-to-month basis until terminated by the Company or the
employee upon 120 days' prior written notice to the other of the desire to
terminate such employment. Pursuant to the terms of the employment agreement,
Mr. McCord's annual base salary is $100,000 and he was granted a seven-year
stock option under the 1993 Option Plan, vesting in equal installments over
four years, for the purchase of an aggregate of 100,000 shares of Common
Stock at an exercise price of $4.63 per share.
Effective November 10, 1997, the Company entered into an employment
agreement with Joseph C. Klein, Ph.D., for a term of two years at an annual
base salary of $120,000. Pursuant to the terms of the employment agreement,
Dr. Klein was granted a seven-year stock option under the 1993 Option Plan,
vesting in equal installments over four years, for the purchase of an
aggregate of 100,000 shares of Common Stock at an exercise price of $2.00 per
share. Additionally, at such time as the Company reports a profitable quarter
and shipments of the Company's new tester system, the Company will grant to
Dr. Klein a seven-year option to purchase 50,000 shares of Common Stock at an
exercise price equal to the closing price of the Company's Common Stock as
reported on the Nasdaq SmallCap Market on the date of grant.
Effective February 15, 1994 and April 18, 1994, the Company entered into
employment agreements with Mr. Holliday and Mr. Marz, respectively, with a
term of one year, after which they continue on a month-to-month basis until
terminated by the Company or the employee upon 120 days' notice as provided
therein. Pursuant to the terms of the employment agreements, annual base
salaries were $127,341 for Mr. Holliday and $103,262 for Mr. Marz.
The Company entered into an employment agreement with Gary W. Pankonien
effective May 21, 1996 with a term of two years and automatic annual renewals
if mutually agreed upon by the Company and the employee. The Company or the
employee may terminate the agreement upon giving notice at least 30 days
prior to the expiration of the then current term. Pursuant to the terms of
the employment agreement, Mr. Pankonien's annual base salary is $125,000. In
addition, he will be paid minimum bonuses of $200,000 and $150,000, payable
pro rata on a monthly basis during the first and second years of employment,
respectively. In the event the employment relationship is terminated by the
Company during the initial two-year term, other than for "cause" as defined
therein, Mr. Pankonien would receive the pro rata balance of his salary,
bonus and benefits which would have been payable for a 24-month period based
on amounts in effect on the termination date. The minimum amount he would be
entitled to receive under the agreement is $300,000. The agreement also
provides that in the event his employment is terminated, Mr. Pankonien will
continue to be a director of the Company as long as he beneficially owns at
least 1,000,000 shares of Common Stock.
In October 1997, Mark C. Holliday, Chairman of the Board and
Chief Executive Officer, and Gary W. Pankonien, President and Chief Operating
Officer, resigned and Charles T. Comiso assumed the responsibilities of
President and Chief Executive Officer. Parris H. Holmes, Jr., Vice Chairman
of the Board, was named Chairman of the Board. These changes were immediate.
Messrs. Holliday and Pankonien both agreed to remain on the Company's Board
of Directors; however, Mr. Holliday resigned as a member of the Board of
Directors in January 1998.
The Company entered in Separation Agreements in January 1998, effective
as of October 1997, with each of Mark C. Holliday, the former Chairman of the
Board and Chief Executive Officer, and Gary W. Pankonien, the former
President and Chief Operating Officer, the terms of which were approved by
the Board of Directors. The Separation Agreements provide for the
continuation of the salaries and bonuses of both Messrs. Holliday and
Pankonien until April 15, 1998 and May 21, 1998, respectively, during which
periods Messrs. Holliday and Pankonien will consult with the Company on
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certain matters as requested from time to time. Under the terms of the
Separation Agreements, the stock options granted to Messrs. Holliday and
Pankonien were amended to provide that they shall remain in full force and
effect, including vesting rights, until the 2000 Annual Meeting of
Stockholders of the Company, and the stock option granted to Mr. Pankonien on
August 19, 1997 was further amended to provide for 100% vesting on January
15, 1999. In addition, Mr. Pankonien's agreement provides for the payment of
the remainder of his $150,000 bonus for the period of May 21, 1997 through
May 21, 1998 on a monthly basis through May 21, 1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
SECTION 16(a) REPORTING
Paragraph Section 16(a) of the Exchange Act requires the Company's
directors and executive officers, and persons who own more than 10% of the
Company's Common Stock, 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 10% stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) reports they file. To the Company's knowledge, based solely on review
of the copies of such reports furnished to the Company and written
representations, during the fiscal year ended September 30, 1997, all Section
16(a) filing requirements applicable to its officers, directors and greater
than 10% beneficial owners were complied with.
STOCKHOLDERS' PROPOSALS FOR 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders should be submitted by certified mail, return receipt
requested, and must be received by the Company at its principal executive
offices in Austin, Texas on or before October 15, 1998, to be eligible for
inclusion in the Company's proxy statement and form of proxy relating to that
meeting.
By Order of the Board of Directors
JOE O. DAVIS
CORPORATE SECRETARY
Austin, Texas
February 12, 1998
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO DO
NOT EXPECT TO ATTEND THE ANNUAL MEETING AND DESIRE THEIR STOCK TO BE VOTED
ARE URGED TO DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED
SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
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TANISYS TECHNOLOGY, INC.
12201 TECHNOLOGY BOULEVARD, SUITE 130
AUSTIN, TEXAS 78727
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles T. Comiso, Joe O. Davis and each of
them, as Proxies, each with the power to appoint his substitute, and hereby
authorizes each of them to represent and vote, as designated below, all of the
shares of the Common Stock, no par value, of Tanisys Technology, Inc. (the
"Company") held of record by the undersigned at the close of business on January
30, 1998, at the Annual Meeting of Stockholders to be held on March 24, 1998, or
any adjournment(s) thereof.
<TABLE>
<S> <C> <C> <C> <C> <C>
1. PROPOSAL TO ELECT TWO DIRECTORS TO HOLD OFFICE UNTIL THE 2001 ANNUAL MEETING OF STOCKHOLDERS OR UNTIL THE
ELECTION AND QUALIFICATION OF THEIR RESPECTIVE SUCCESSORS.
/ / FOR both the nominees listed below / / WITHHOLD AUTHORITY to vote for both
(except as marked to the contrary nominees listed below
below)
2001 CLASS -- TERM EXPIRING AT 2001 ANNUAL MEETING: GORDON H. MATTHEWS CHARLES T. COMISO
INSTRUCTION: To withhold authority to vote for either individual nominee, write that nominee's name on the line
provided:
-------------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR
THE FISCAL YEAR ENDING SEPTEMBER 30, 1998.
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
(PLEASE SIGN ON OTHER SIDE)
<PAGE>
(CONTINUED FROM FRONT)
<TABLE>
<S> <C> <C> <C> <C> <C>
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE
MEETING.
/ / FOR / / AGAINST / / ABSTAIN
</TABLE>
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder(s). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES UNDER PROPOSAL 1, "FOR" THE
PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC
ACCOUNTANTS OF THE COMPANY UNDER PROPOSAL 2, and in the discretion of the
Proxies with respect to any other matter that is properly presented at the
meeting.
Please execute this proxy as your name appears hereon. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
Dated: , 1998
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Signature
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Signature If Held Jointly