NAVTECH, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MARCH 29, 2001
To the Shareholders
of NAVTECH, Inc.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
NAVTECH, INC., a Delaware corporation, will be held in the Confederation III
Room of the Royal York Hotel, located at 100 Front Street West, Toronto,
Ontario, Canada, on Thursday, March 29, 2001 at 1:00 p.m., local time, for the
following purposes:
(1) To elect a board of six directors.
(2) To approve an increase in the number of common shares authorized to be
issued pursuant to the 1999 Stock Option Plan from 1,500,000 to 3,000,000.
(3) To approve an amendment to the Certificate of Incorporation to increase the
number of authorized common shares from 10,000,000 to 20,000,000.
(4) To transact such other business as may properly come before the meeting.
Only shareholders of record at the close of business on February 28,
2001 are entitled to notice of, and to vote at, the meeting or any adjournment
thereof.
Denis L. Metherell
Secretary
March 2, 2001
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WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE VOTE, DATE AND SIGN THE
ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF NAVTECH, AND
RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED FOR THAT PURPOSE. A SHAREHOLDER
MAY REVOKE HIS PROXY AT ANY TIME BEFORE THE MEETING BY WRITTEN NOTICE TO SUCH
EFFECT, BY SUBMITTING A SUBSEQUENTLY DATED PROXY OR BY ATTENDING THE MEETING AND
VOTING IN PERSON.
================================================================================
NAVTECH, INC.
PROXY STATEMENT
This Proxy Statement is being mailed to you on or about March 2, 2001.
All of our shareholders of record at the close of business on February 28, 2001
are being mailed this Proxy Statement in connection with the solicitation by our
Board of Directors of proxies to be voted at the Annual Meeting of Shareholders
to be held on Thursday, March 29, 2001, in the Confederation III Room of the
Royal York Hotel, located at 100 Front Street West, Toronto, Ontario, Canada at
1:00 p.m. local time, or any adjournment thereof.
All proxies duly executed and received will be voted on the matters
presented at the meeting in accordance with the specifications made in such
proxies. In the absence of specified instructions, proxies so received will be
voted as follows:
(1) FOR the named nominees to the Board of Directors;
(2) FOR the proposal to increase the number of common shares authorized to be
issued under the 1999 Stock Option Plan from 1,500,000 to 3,000,000;
(3) FOR the proposal to amend the Certificate of Incorporation to increase the
number of authorized common shares from 10,000,000 to 20,000,000.
The Board does not know of any other matters that may be brought before
the meeting nor does it foresee or have reason to believe that proxy holders
will have to vote for substitute or alternate nominees to the Board. In the
event that any other matter should come before the meeting or any nominee is not
available for election, the persons named in the enclosed proxy will have
discretionary authority to vote all proxies not marked to the contrary with
respect to such matters in accordance with their best judgment.
The total number of our common shares, par value $.001 per share,
outstanding as of February 28, 2001 was X,XXX,XXX. Each Common Share is entitled
to one non-cumulative vote. The common shares are the only class of securities
entitled to vote. A majority of the common shares outstanding and entitled to
vote as of February 28, 2001, or X,XXX,XXX common shares, must be present at the
meeting in person or by proxy in order to constitute a quorum for the
transaction of business. Only shareholders of record as of the close of business
on February 28, 2001 will be entitled to vote.
With regard to the election of directors, votes may be cast in favor or
withheld. The directors shall be elected by a plurality of the votes cast in
favor. Accordingly, based upon there being six nominees, each person who
receives one or more votes will be elected as a director. Votes withheld in
connection with the election of one or more of the nominees for director will
not be counted as votes cast for such individuals.
Shareholders may expressly abstain from voting on Proposal 2 and 3 by
so indicating on the proxy. Abstentions and broker non-votes will be counted for
purposes of determining the presence or absence of a quorum for the transaction
of business. Abstentions are counted as present in the tabulation of votes on
each of the proposals presented to shareholders. Broker non-votes will not be
counted for the purpose of determining whether a particular proposal has been
approved. Since Proposal 2 requires the approval of a majority of the common
shares present in person or by proxy at the meeting and entitled to vote
(assuming a quorum is present), abstentions will have the effect of a negative
vote, while broker non-votes will have no effect. Since Proposal 3 requires the
approval of a majority of the outstanding common shares, abstentions and broker
non-votes will have the effect of a negative vote.
Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it at any time before its exercise. The proxy may be
revoked by filing with Navtech written notice of revocation or a fully executed
proxy bearing a later date. The proxy may also be revoked by affirmatively
electing to vote in person while in attendance at the meeting. However, a
shareholder who attends the meeting need not revoke a proxy given and vote in
person unless the shareholder wishes to do so. Written revocation or amended
proxies should be sent to the attention of our Corporate Secretary at the
offices of our subsidiary, Navtech Systems Support Inc. ("Navtech-Canada") ,
located at 175 Columbia Street West, Suite 102, Waterloo, Ontario, Canada N2L
5Z5.
The proxy is being solicited by our Board of Directors. We will bear
the cost of the solicitation of proxies including the charges and expenses of
brokerage firms and other custodians, nominees and fiduciaries for forwarding
proxy materials to beneficial owners of common shares. Solicitations will be
made primarily by mail, but certain of our directors, officers or employees may
solicit proxies in person or by telephone, telecopier or telegram without
special compensation.
A list of shareholders entitled to vote at the meeting will be
available for your examination at the offices of our subsidiary, Navtech Systems
Support Inc., 175 Columbia Street West, Suite 102, Waterloo, Ontario, Canada,
for a period of ten days prior to the meeting and will also be available at the
meeting.
EXECUTIVE COMPENSATION
Summary Compensation Table
During the fiscal year ended October 31, 2000, none of our executive
officers had total salary and bonus in excess of $100,000. The following table
sets forth information concerning the compensation of Duncan Macdonald, our
Chief Executive Officer, for the fiscal year ended October 31, 2000:
================ ======== ==================================== =================================== ==============
Annual Compensation Long-Term Compensation
Awards Payouts
- ---------------- -------- ----------- -------- --------------- ----------- ------------- --------- --------------
Common
Name and Restricted Stock
Principal Other Annual Stock Underlying LTIP All Other
Position Year Salary Bonus Compensation Award(s) Options Payouts Compensation
- ---------------- -------- ----------- -------- --------------- ----------- ------------- --------- --------------
Duncan
Macdonald, 2000 $81,820 -0- $ 2,500(1) -0- 50,000 -0- -0-
Chief 1999 $5,000 $20,000 $ 28,927(1) -0- -0- -0- -0-
Executive 1998 -0- -0- $106,486(1) -0- -0- -0- -0-
Officer
================ ======== =========== ======== =============== =========== ============= ========= ==============
(1) Represents amounts paid as an independent advisor to Navtech. Excludes
amounts paid to Kintyre & Company Limited, an entity controlled by Mr.
Macdonald, for consulting services rendered to Navtech-Canada. See "Certain
Relationships and Related Transactions".
Option Grants Table
The following table sets forth certain information with regard to the
grants of stock options during the fiscal year ended October 31, 2000 to Mr.
Macdonald:
=============================================================================================================
Shares of Common Stock Percent of Total Options
Underlying Options Granted to Employees in Exercise
Name Granted Fiscal Year Price/Share Expiration Date
- -------------------------------------------------------------------------------------------------------------
Duncan Macdonald 50,000 3.9% $0.28125 02/07/05
=============================================================================================================
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value
Table
The following table sets forth certain information concerning options
exercised by Mr. Macdonald during the fiscal year ended October 31, 2000 and the
value as of October 31, 2000 of unexercised options held by Mr. Macdonald:
===================== ================== =============== ========================= ==========================
Number of Unexercised Value of Unexercised
Options at In-the-Money Options
Shares Acquired October 31, 2000 at October 31, 2000
Name on Exercise Value Received
Exercisable/Unexercisable Exercisable/Unexercisable
- --------------------- ------------------ --------------- ------------------------- --------------------------
Duncan Macdonald 200,000 $122,750 -0-/ 50,000 -0-/ $35,938
===================== ================== =============== ========================= ==========================
Compensation of Directors
Our By-Laws provide that directors shall be reimbursed for travel
expenses incurred in attending any meeting of the Board or any of its
committees. The By-Laws also state that the directors, with the exception of
salaried officers, shall be paid a fee for attending Board or committee
meetings. This fee shall be an amount as fixed by the Board. No directors' fees
have been paid to date. Our By-Laws also provide, to the extent permitted by
law, for certain indemnification of our directors. On August 3, 2000, Messrs
Beynon, Gupta, Hamrogue, McGinty and Metherell were each granted options for
25,000 shares of common stock at an exercise price of $1.1875 per share.
Employment Contracts, Termination of Employment and Change-in-Control
Arrangements
See "Certain Relationships and Related Transactions" for a discussion
of a services agreement between Kintyre & Company Limited (an entity controlled
by Mr. Macdonald) and us.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Our common stock is the only class of securities outstanding. Each
share is entitled to one vote. The following table sets forth certain
information regarding our outstanding common stock beneficially owned as of
January 31, 2001 by:
o each person who is known by us to own beneficially or exercise voting
or dispositive control over more than 5% of our common stock,
o each present director,
o each person named in the Summary Compensation Table above, and
o all of our present executive officers and directors as a group
========================================= ============================== =========================
Name and Address of Beneficial Owner Number of Shares Approximate Percentage
Beneficially Owned of Outstanding Shares
- ----------------------------------------- ------------------------------ -------------------------
Robert N. Snyder 815,000(1) 22.7%
#601, 7200 Wisconsin Avenue
Bethesda, Maryland
- ----------------------------------------- ------------------------------ -------------------------
Duncan Macdonald 546,543(2) 15.5%
21 Antares Drive
Nepean, Ontario, Canada
- ----------------------------------------- ------------------------------ -------------------------
EasyFlying S.A. 500,000(3) 14.4%
2 Rue Marcel Doret - Immeuble Antares
31700 Blagnac, France
- ----------------------------------------- ------------------------------ -------------------------
Dorothy A. English 465,000(4) 12.5%
175 Columbia Street West
Waterloo, Ontario, Canada
- ----------------------------------------- ------------------------------ -------------------------
St. Andrews Capital Limited Partnership 296,543(5) 8.6%
11 Bedford Crescent
Ottawa, Ontario, Canada
- ----------------------------------------- ------------------------------ -------------------------
Republic Electronics Corporation 250,000(3) 7.2%
5801 Lee Highway
Arlington, Virginia
- ----------------------------------------- ------------------------------ -------------------------
Denis L. Metherell 168,500(6)(7) 4.8%
175 Columbia Street West
Waterloo, Ontario, Canada
- ----------------------------------------- ------------------------------ -------------------------
Thomas D. Beynon 12,500(6) *
675 Riverbend Drive
Kitchener, Ontario, Canada
- ----------------------------------------- ------------------------------ -------------------------
Prashant Gupta 12,500(6) *
577 Airport Blvd, Ste 800
Burlingame, California
- ----------------------------------------- ------------------------------ -------------------------
Martin J. Hamrogue 12,500(6) *
Virgin House, Shannon Airport
County Clare, Ireland
- ----------------------------------------- ------------------------------ -------------------------
James McGinty 12,500(6) *
7200 Wisconsin Ave, Ste 601
Bethesda, Maryland
- ----------------------------------------- ------------------------------ -------------------------
All executive officers and directors as
a group (9 persons) 905,043(2)(6)(7)(8) 24.6%
========================================= ============================== =========================
* Less than 1%
(1) Based upon Schedule 13D filed with the Securities and Exchange Commission.
Includes (i) 125,000 shares that are issuable upon the exercise of a
warrant that is currently exercisable and (ii) 40,000 shares owned by
Wyoming Investments Limited Partnership, of which Mr. Snyder is a general
partner.
(2) Represents (i) 200,000 shares beneficially owned by Mr. Macdonald, (ii)
296,543 shares owned by St. Andrews Capital Limited Partnership, an entity
controlled by Mr. Macdonald, and (iii) 50,000 shares that are issuable to
Mr. Macdonald upon exercise of options that are currently exercisable.
(3) Based upon Schedule 13G filed with the Securities and Exchange Commission.
(4) Represents (i) 205,000 shares beneficially owned by Ms. English and (ii)
260,000 shares that are issuable to Ms. English upon exercise of options
that are currently exercisable.
(5) See footnote (2).
(6) Includes 12,500 shares that are issuable upon exercise of options that are
currently exercisable.
(7) Based upon Schedule 13D filed with the Securities and Exchange Commission.
Includes 29,045 shares owned jointly with Mr. Metherell's wife, 91,330
shares held by Mr. Metherell in a retirement trust and 35,625 shares held
by Mr. Metherell's wife in a retirement trust. The inclusion of the shares
held by Mr. Metherell's wife in the retirement trust shall not be deemed an
admission by Mr. Metherell that he beneficially owns these shares.
(8) Includes 100,000 shares that are issuable to executive officers upon
exercise of options that are currently exercisable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
1. Dorothy English / Navtech Applied Research Inc.
General
Dorothy English is currently an employee of Navtech-Canada and until July 2000
was one of our officers and directors. She owns all of the stock of Navtech
Applied Research Inc ("NARI").
As of October 23, 2000, NARI was indebted to us in the aggregate amount of
$1,288,724. This balance consisted of several promissory notes with varying
terms as well as unsecured advances. For financial reporting purposes, we had
provided for an allowance of $928,412 against this debt as of October 31, 1999.
The resulting net balance was believed to approximate the estimated fair value
of certain weather software assets owned by NARI at October 31, 1999.
Weather Software Assets
NARI acquired certain weather software assets on July 15, 1998 in a transaction
that included the purchase of 300,000 shares of our common stock for
distribution both to the seller of the assets and an unrelated third party as a
finder's fee. As part of the transaction, we received an assignment of the
customer contracts previously maintained by the seller. Following the
acquisition of these assets, we entered into a non-exclusive, non-transferable
software license agreement with NARI for a term commencing August 1, 1998 and
expiring initially on October 31, 1999. Under this agreement we were granted the
right to install, configure, modify and use in our business the software
acquired by NARI. In return, we were obligated to pay royalties in an amount
equal to 10% of certain revenues derived from the sale of data processed using
the licensed software. In order to finance its purchase of the assets, NARI
borrowed funds from us. Among other terms, the promissory notes it delivered to
us called for the application of any royalties due by us to NARI first to the
reduction of the amounts due under these specific promissory notes.
Debt Reduction
On October 23, 2000, we entered into a series of transactions with NARI to
recover the amount due from NARI to us as follows:
o The weather software assets were transferred to us in return for a
reduction of debt. We believe that the estimated fair value for tax
purposes of $147,651 is equivalent to the software's fair market value
at October 23, 2000, the date of the valuation.
o NARI returned 502,766 shares of our common stock to treasury in return
for a further reduction of debt. At the time of the transfer, the
shares' market value was $942,686.
o NARI signed two promissory notes in the cumulative amount of $56,400
Canadian ($36,809 US as at October 31, 2000) payable on or before
January 15, 2001 from the proceeds NARI anticipated to receive from the
sale of its remaining 150,000 shares of our common stock. Subsequent to
October 31, 2000, NARI delivered an additional promissory note of
$7,000 Canadian payable in the same manner.
o As part of the asset transfer and treasury stock transfer, for
financial reporting purposes, we reduced our allowance for doubtful
accounts by $743,014 and recorded this reduction as an addition to
other income.
The amounts due under the three remaining promissory notes were paid to us on
January 15, 2001; therefore no further amounts are due from NARI.
2. AVCON Associates Inc.
Denis L. Metherell, our Secretary and one of our directors, is a Vice-President
and a director of AVCON Associates Inc. Mr. Metherell's wife is AVCON's
controlling shareholder. AVCON leases certain computer equipment to
Navtech-Canada. Under the present agreements, we are required to make varying
payments until November 2004. We believe that the lease payments, which
commenced July 1999 at $1,952 Canadian per month, are no higher than would be
payable to a nonaffiliated third party.
On October 31, 1996, we executed and delivered to AVCON a promissory note in the
principal amount of $53,000 Canadian to evidence amounts due as of such date. On
June 1, 1999, we amended the note to include additional arrears that had
accumulated on the two leases. The amended note is in the principal amount of
$90,000 Canadian, provides for interest at the rate of 18% per annum and is
payable as follows:
o interest only of $1,350 Canadian per month from July 1999 to September
2000;
o interest and principal of $2,400 Canadian per month from October 2000 to
April 2005; and
o a residual payment of principal and interest of $1,263 Canadian in May
2005.
3. Duncan Macdonald
Effective December 1, 1998, we entered into a 20 month employment agreement
engaging Mr. Macdonald as our Chief Executive Officer. Mr. Macdonald was
entitled to receive a base quarterly fee of $1,250 commencing with the fiscal
quarter ended January 31, 1999. On May 1, 2000, contemporaneous with the
employment of Mr. Macdonald by Navtech-Canada on a full-time basis, the previous
employment agreement was terminated. During the fiscal year ended October 31,
2000, we paid approximately $2,500 under the aforementioned employment
agreement.
Kintyre & Company Limited
Effective January 1, 1999, Navtech-Canada entered into a two year services
agreement with Kintyre & Company Limited, a company controlled by Mr. Macdonald.
Under the agreement, Kintyre agreed to provide the services of Mr. Macdonald, as
well as other Kintyre staff as needed, to assist us in our strategic corporate
structuring and corporate finance and accounting activities. Kintyre was
entitled to receive a base monthly fee of $23,250 Canadian, plus additional
amounts upon the meeting of certain time thresholds and an annual bonus of
$8,700 Canadian. Effective with the employment of Mr. Macdonald by
Navtech-Canada on May 1, 2000, the base amount was reduced to $11,000 Canadian
per month.
During the fiscal year ended October 31, 2000, we paid approximately $182,000
under the agreement with Kintyre. The services contract with Kintyre was
terminated effective December 31, 2000.
St. Andrews Capital Limited Partnership
In April 1999, St. Andrews Capital Limited Partnership advanced $90,000 to us
for working capital purposes. Mr. Macdonald serves as President of the general
partner of St. Andrews Capital and is the controlling stockholder of such
general partner. The advance was repaid in September 2000, together with
interest at the rate of 18% per annum.
On October 1, 1999, St. Andrews Capital advanced $128,830 to us to finance our
acquisition of Skyplan Services (UK) Limited. At the time of the loan, we had
sufficient working capital to undertake the transaction, but determined that it
was prudent to obtain outside financing. St. Andrews Capital and we agreed in
principle that the loan would bear interest at the rate of 10% per annum and
would be repayable in 24 equal monthly payments of approximately $5,945
commencing November 1, 1999. We also agreed in principle that the principal
amount of the loan would be convertible into our common stock at a conversion
price of $0.375 per share effective on the first day following the approval of
an increase in our authorized share capital sufficient for such purpose. We held
an annual meeting of shareholders on January 14, 2000. At this meeting a
proposal to increase our authorized share capital was approved. This provided
sufficient share capital to permit such conversion. On October 31, 2000, St.
Andrews Capital exercised its conversion rights and converted the principal
balance of approximately $111,204 into 296,543 shares of our common stock.
- --------------------------------------------------------------------------------
PROPOSAL 1: ELECTION OF DIRECTORS
- --------------------------------------------------------------------------------
Nominees
Six directors are to be elected at the meeting to serve until the next
annual meeting of shareholders and until their respective successors have been
elected and have qualified, or until their earlier resignation or removal.
The following table sets forth the positions and offices presently held
with us by each nominee for election as director, his age as of February 28,
2001, and the year in which he became a director. Proxies not marked to the
contrary will be voted in favor of their election.
=========================================================================================
Positions and Offices Year Became
Name Age Presently Held with Navtech Director
=========================================================================================
Thomas D. Beynon 59 Director 2000
=========================================================================================
Prashant Gupta 40 Director 2000
=========================================================================================
Martin J. Hamrogue 59 Director 2000
=========================================================================================
Duncan Macdonald 42 Chairman of the Board of Directors 1999
and Chief Executive Officer
=========================================================================================
James McGinty 58 Director 2000
=========================================================================================
Denis L. Metherell 68 Secretary and Director 1994
=========================================================================================
Thomas D. Beynon is a partner in the Waterloo law firm of McCarter
Grespan Robson Beynon Thompson LLP and a member of the Law Society of Upper
Canada. He has been with the firm since March 1996. Prior to this, Mr. Beynon
spent six years with a Canadian national law firm, Sims Clement Eastman, from
1991 to 1996. His primary focus is in the areas of commercial, corporate and
finance law with a diverse client base of both public and private Canadian
corporations. He also served on the Board of Waterloo Microsystems Inc. from
1986 to 1990. Mr. Beynon holds memberships in the Institute of Corporate
Directors and the American Bar Association and he is a founding member and
director of Communitech, a technology association in Southwestern Ontario. Mr.
Beynon has been a director of Navtech since July 2000.
Prashant Gupta serves as President and CEO of Tivre Networks and has
held this position since September 2000. He served as Chief Technology Officer
of CrossWorlds Software Inc. of Burlingame, California from April 1996 to
September 2000. In addition, Mr. Gupta sits on the Board of Directors for the
Open Architecture Group (OAG), a standards organization, as well as for Global
Weather Dynamics, Inc., Intyc Solutions and Wizards. Mr. Gupta has published
eight papers and filed ten patents in the areas of networking,
telecommunications and database technology. Prior to joining CrossWorlds, Mr.
Gupta was the software architect at Illusta/Informix from December 1995 to April
1996. There he designed the server interface that provides specialized and
user-defined data type extensibility to Informix's Universal Data Server. During
his tenure at Sybase, from June 1992 to December 1995, he served as the chief
technical architect for several key middleware and connectivity projects that
established the company as the market leader in this technology segment. Mr.
Gupta has been a director of Navtech since July 2000.
Martin J. Hamrogue is CEO and Chairman of the Board of Virgin Express
Ireland Ltd., an airline serving the European marketplace. He has served as
Virgin's CEO since its formation in 1998. Prior to Virgin, Mr. Hamrogue served
in various capacities at Trans World Airlines, including most recently as
General Manager Operations Control from 1995 to 1998. Prior to this position, he
served as Director, Operations Systems where he was responsible for all computer
and communications systems for TWA's operations department. In total, Mr.
Hamrogue has over 35 years of airline management experience. Mr. Hamrogue has
been a director of Navtech
since July 2000.
Duncan Macdonald has served as Chief Executive Officer of Navtech since
March 1996, Chairman of the Board of Navtech since January 2000, and a director
of Navtech since December 1999. He served as Chief Financial Officer of Navtech
from July 1995 to January 1999. Since January 1992, Mr. Macdonald has also
served as managing partner of Kintyre & Company Limited, a management consulting
firm based in Ottawa, Ontario. In addition, since December 1998, he has served
as President of St. Andrews Technology Associates, Inc., the general partner of
St. Andrews Capital Limited Partnership, a California-based investment
partnership.
James McGinty is President of Cambridge Information Group, a corporate
holding company managing several internet-based information companies. Mr.
McGinty is responsible for the strategic direction and overall management of all
Cambridge companies. He previously served as President of Cambridge Scientific
Abstracts from 1992 to 2000. Prior to that time, Mr. McGinty spent over 20 years
with Dun & Bradstreet Corporation. In his last assignment with D&B, Mr. McGinty
was Managing Director of D&B North Pacific with responsibility for Business
Information Group operations in Hong Kong, Korea, Singapore, Malaysia, the
Philippines and China. Mr. McGinty has been active in the Information Industry
Association, serving on IAA's Board of Directors from 1984 to 1988. Mr. McGinty
has been a director of Navtech since July 2000.
Denis L. Metherell has served as Secretary of Navtech since October
1994 and a director of Navtech since July 1994. Mr. Metherell also served as
Treasurer of Navtech from November 1994 to March 1996 and Chief Financial
Officer from November 1994 to July 1995. He served as Vice President of
Navtech-Canada from June 1993 to July 1995 and also serves as Vice President and
a director of AVCON Associates Inc., which leases computers to Navtech-Canada.
From 1976 to 1992, Mr. Metherell served as a technical consultant to Northwest
Airlines where he was a major contributor to the IATA standard computerization
Aircraft Performance specifications. He has also been a standing member of
numerous committees with the FAA, ATA and IATA.
Committees
The Compensation Committee of the Board of Directors is responsible for
(i) the interpretation of the Company's 1999 Stock Option Plan; (ii)
determinations regarding the timing and amount of option grants to our employees
(including officers), non-employee directors, consultants and advisors and (iii)
determinations regarding the amount and form of compensation to be granted to
our officers. From its inception on January 26, 2000 to July 13, 2000 the
members of the Compensation Committee were Messrs. Metherell and Macdonald.
Currently the Board as a whole is performing the functions of the Compensation
Committee.
The Audit Committee of the Board of Directors assists the Board in
fulfilling its responsibilities for oversight of the quality and integrity of
our accounting, auditing, internal control and financial reporting practices. It
may also have such other duties as may from time to time be assigned to it by
the Board. The members of the Audit Committee currently are Messrs. Beynon and
McGinty. The directors who serve on the Audit Committee are "independent"
directors based on that definition of independence in the listing standards of
the National Association of Securities Dealers.
There are no other committees of the Board of Directors, all other
functions being performed by the Board as a whole. The Board will consider
shareholder recommendations for Board positions that are made in writing to our
Chief Executive Officer.
Report of the Audit Committee
In overseeing the preparation of Navtech's financial statements, the Audit
Committee met with both management and Deloitte & Touche LLP, Navtech's outside
auditors, to review and discuss all financial statements prior to their issuance
and to discuss significant accounting issues. Management advised the Committee
that all financial statements were prepared in accordance with generally
accepted accounting principles, and the Committee discussed the statements with
both management and the outside auditors. The Committee's review included
discussion with the outside auditors of matters required to be discussed
pursuant to Statement of Auditing Standards No. 61 (Communication With Audit
Committees).
The Committee also discussed with Deloitte & Touche LLP matters relating to its
independence, including the written disclosures and the letter delivered to the
Committee as required by the Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees).
On the basis of these reviews and discussions, the Committee recommended to the
Board of Directors that the audited financial statements be included in
Navtech's Annual Report on Form 10-KSB for the fiscal year ended October 31,
2000, for filing with the Securities and Exchange Commission.
Members of the Audit Committee
Thomas D. Beynon
James McGinty
Meetings
The Board held fourteen meetings during the fiscal year ended October
31, 2000. Each of our then directors attended all such meetings, except for
Messrs. Metherell, Hamrogue and Gupta who did not attend one meeting each. Mr.
Thal, a member of the board of directors prior to July 13, 2000, also missed one
meeting during fiscal 2000. From its inception on January 26, 2000 to July 13,
2000 the Compensation Committee held three meetings. Both committee members
attended all of the meetings. Since July 13, 2000 the Board as a whole has
performed the duties of the Compensation Committee at regular board meetings.
The Audit Committee was appointed by the Board of Directors on July 13, 2000 and
held two meetings during the fiscal year ended October 31, 2000. Both committee
members attended the two meetings.
Family Relationships
There is no family relationship among any of our executive officers and
directors.
Term of Office
Each director will hold office until the next annual meeting of
shareholders or until his successor is elected and qualified. Each executive
officer will hold office until the next regular meeting of the Board of
Directors following the next Annual Meeting of Shareholders or until his
successor is elected or appointed and qualified.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on a review of copies of Forms 3, 4 and 5 furnished to us
and written representations that no other reports were required, during the
fiscal year ended October 31, 2000, all Section 16(a) filing requirements
applicable to the officers, directors and 10% stockholders were complied with,
except that Messrs. Beynon, Gupta, Hamrogue and McGinty, Dennis Steinbeck,
Executive Vice President Sales & Marketing and Robert Sosnowski, formerly
considered an executive officer of Navtech, filed their respective Form 3 late.
Also, Robert N. Snyder and EasyFlying S.A., each a 10% stockholder, filed their
respective Form 3 late, and Dorothy English, formerly an officer and director of
Navtech and currently a 10% stockholder, filed four Forms 4 late (two reporting
two transactions each and two reporting one transaction each).
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PROPOSAL 2: AMENDMENT TO 1999 STOCK OPTION PLAN
TO INCREASE AUTHORIZED SHARES
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The Board of Directors recommends that shareholders approve an
amendment to our 1999 Stock Option Plan to increase the number of common shares
authorized to be issued from 1,500,000 to 3,000,000. As of February 20, 2001,
there were X,XXX,XXX common shares issuable pursuant to the exercise of
outstanding options granted under the 1999 Plan. The 1999 Plan plays an
important role in our efforts to attract and retain employees of outstanding
ability and to align the interests of employees with those of the shareholders
through increased stock ownership. In order to continue to provide appropriate
equity incentives to employees in the future the Board has approved an increase
in the number of reserved shares subject to shareholder approval. As discussed
below, the 1999 Plan is also designed to provide incentives to non-employee
directors of, and consultants and advisors to, Navtech.
The following statements include summaries of certain provisions of the
1999 Plan. The statements do not purport to be complete and are qualified in
their entirety by reference to the provisions of the 1999 Plan, a copy of which
is available at our offices.
Purpose
The purpose of the 1999 Plan is to advance our interests by inducing
eligible persons or entities of outstanding ability and potential to join and
remain with, or provide consulting or advisory services to, us by encouraging
and enabling eligible employees, non-employee directors, consultants and
advisors to acquire proprietary interests, and by providing such employees,
non-employee directors, consultants and advisors with an additional incentive to
promote our success.
Administration
The 1999 Plan provides for its administration by the Board or by a
committee thereof. The Board currently administers the 1999 Plan. The Board or
the Committee has authority (subject to certain restrictions) to select from the
group of eligible employees, non-employee directors, consultants and advisors
the individuals or entities to whom options will be granted, and to determine
the times at which and the exercise price for which options will be granted. The
Board or the Committee is authorized to interpret the 1999 Plan and the
interpretation and construction by the Board or the Committee of any provision
of the 1999 Plan or of any option granted thereunder shall be final and
conclusive. The receipt of options by directors or any members of the Committee
shall not preclude their vote on any matters in connection with the
administration or interpretation of the 1999 Plan.
Nature of Options
The Board or Committee may grant under the 1999 Plan options that are
intended to either qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, or options that do
not qualify, "nonstatutory stock options". The United States Federal income tax
consequences relating to the grant and exercise of Incentive Stock Options and
Nonstatutory Stock Options are described below under "United States Federal
Income Tax Consequences."
Eligibility
Subject to certain limitations as set forth in the 1999 Plan, options
to purchase shares may be granted thereunder to persons or entities who are, in
the case of Incentive Stock Options, our employees (including directors and
officers) or, in the case of Nonstatutory Stock Options, our employees
(including directors and officers) or non-employee directors of, or certain
consultants or advisors to, us. At December 31, 2000, approximately 81 employees
and five non-employee directors were eligible to receive options under the 1999
Plan.
Option Price
The option price of the shares subject to an Incentive Stock Option may
not be less than the fair market value (as such term is defined in the 1999
Plan) of the common shares on the date upon which such option is granted. In
addition, in the case of a recipient of an Incentive Stock Option who, at the
time the option is granted, owns more than 10% of the total combined voting
power of all classes of stock of Navtech (a "10% Shareholder"), the purchase
price of the shares must be at least 110% of the fair market value of the common
shares on the date upon which such option is granted.
The option price of shares subject to a Nonstatutory Stock Option will
be determined by the Board of Directors or the Committee at the time of grant
and need not be at least the market price for common shares.
On February 15th, 2001, the closing bid price for our common shares was
$X.XX per share.
Exercise of Options
An option granted under the 1999 Plan shall be exercised by the
delivery by the holder thereof to our Secretary at our offices of a written
notice of the number of shares with respect to which the option is being
exercised. Such notice shall be accompanied by payment of the full option price
of such shares which shall be made by the holder's delivery of (i) his check
payable to the order of Navtech in such amount or (ii) previously acquired
common shares, the fair market value of which shall be determined as of the date
of exercise, or any combination of (i) and (ii).
Duration of Options
No Incentive Stock Option granted under the 1999 Plan shall be
exercisable after the expiration of ten years from the date of its grant.
However, if an Incentive Stock Option is granted to a 10% Shareholder, such
option shall not be exercisable after the expiration of five years from the date
of its grant.
Nonstatutory Stock Options granted under the 1999 Plan may be of such
duration as shall be determined by the Board or the Committee.
Non-Transferability
Options granted under the 1999 Plan are not transferable otherwise than
by will or the laws of descent and distribution and such options are
exercisable, during a holder's lifetime, only by the optionee.
Death, Disability or Termination of Employment
Subject to the terms of the stock option agreement pursuant to which
options are granted, if the employment of an employee or the services of a
non-employee director, consultant or advisor shall be terminated for cause, or
such employment or services shall be terminated voluntarily, the options held by
such persons or entities shall expire immediately. If such employment or
services shall terminate other than by reason of death or disability,
voluntarily by the employee, non-employee director, consultant or advisor or for
cause, then, subject to the terms of the stock option agreement, such option may
be exercised at any time within three months after such termination, but in no
event after the expiration of the option. For purposes of the 1999 Plan, the
retirement of an individual either pursuant to a pension or retirement plan
adopted by us or at the normal retirement date prescribed from time to time by
us shall be deemed to be a termination of such individual's employment other
than voluntarily by the employee or for cause.
Subject to the terms of the stock option agreement, if an option holder
under the 1999 Plan (i) dies while employed by us or while serving as a
non-employee director of, or consultant or advisor to, us, or (ii) dies within
three months after the termination of his employment or services other than
voluntarily or for cause, then such option may be exercised by the estate of the
employee, non-employee director, consultant or advisor, or by a person who
acquired such option by bequest or inheritance from the deceased option holder,
at any time within one year after his death. Subject to the terms of the stock
option agreement, if the holder of an option under the 1999 Plan ceases
employment or services because of permanent and total disability (within the
meaning of Section 22(e)(3) of the Code) while employed by, or while serving as
a non-employee director of, or consultant or advisor to, us, then such option
may be exercised at any time within one year after his termination of
employment, termination of directorship, or termination of consulting or
advisory arrangement or agreement due to the disability.
Amendment and Termination
The 1999 Plan (but not options previously granted thereunder) shall
terminate on November 17, 2009, ten years from the date that it was adopted by
the Board. Subject to certain limitations, the 1999 Plan may be amended or
modified from time to time or terminated at an earlier date by the Board or by
the shareholders.
Plan Benefits
Options under the 1999 Plan to purchase common shares of Navtech have
been granted as follows:
================================================ ================================ ===========================
Name Common Shares Average Weighted
Underlying Options Granted Exercise Price Per Share
================================================ ================================ ===========================
Duncan Macdonald 50,000 $0.28125
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All current executive officers as a group (4 200,000 $0.49294
persons)
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All current directors who are not executive 125,000 $1.1875
officers as a group (5 persons)
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Thomas D. Beynon 25,000 $1.1875
================================================ ================================ ===========================
Prashant Gupta 25,000 $1.1875
================================================ ================================ ===========================
Martin Hamrogue 25,000 $1.1875
================================================ ================================ ===========================
James McGinty 25,000 $1.1875
================================================ ================================ ===========================
Denis L. Metherell 25,000 $1.1875
================================================ ================================ ===========================
Dorothy English 260,000 $0.61178
================================================ ================================ ===========================
All employees, including all current officers 801,015 $0.47612
who are not executive officers, as a group
================================================ ================================ ===========================
United States Federal Income Tax Consequences
Nonstatutory Stock Options
Under the Code and the Treasury Department Regulations (the
"Regulations"), a Nonstatutory Stock Option does not ordinarily have a "readily
ascertainable fair market value" when it is granted. This rule will apply to our
grants of Nonstatutory Stock Options. Consequently, the grant of a Nonstatutory
Stock Option to an optionee will result in neither income to him nor a deduction
to us. Instead, the optionee will recognize compensation income at the time he
exercises the Nonstatutory Stock Option in an amount equal to the excess, if
any, of the then fair market value of the shares transferred to him over the
option price. Subject to the applicable provisions of the Code and the
Regulations regarding withholding of tax, a deduction will be allowable to us in
the year of exercise in the same amount as is includable in the optionee's
income.
For purposes of determining the optionee's gain or loss on the sale or
other disposition of the shares transferred to him upon exercise of a
Nonstatutory Stock Option, the optionee's basis in such shares will be the sum
of his option price plus the amount of compensation income recognized by him on
exercise. Such gain or loss will be capital gain or loss and will be long-term
or short-term depending upon whether the optionee held the shares for more than
one year or one year or less. No part of any such gain will be an "item of tax
preference" for purposes of the "alternative minimum tax."
Incentive Stock Options
Options granted under the 1999 Plan which qualify as Incentive Stock
Options under Section 422 of the Code will be treated as follows:
Except to the extent that the alternative minimum tax rule described
below applies, no tax consequences will result to the optionee or us from the
grant of an Incentive Stock Option to, or the exercise of an Incentive Stock
Option by, the optionee. Instead, the optionee will recognize gain or loss when
he sells or disposes of the shares transferred to him upon exercise of the
Incentive Stock Option. For purposes of determining such gain or loss, the
optionee's basis in such shares will be his option price. If the date of sale or
disposition of such shares is at least two years after the date of the grant of
the Incentive Stock Option, and at least one year after the transfer of the
shares to him upon exercise of the Incentive Stock Option, the optionee will
realize long-term capital gain treatment upon their sale or disposition.
We generally will not be allowed a deduction with respect to an
Incentive Stock Option. However, if an optionee fails to meet the foregoing
holding period requirements (a so-called disqualifying disposition), any gain
recognized by the optionee upon the sale or disposition of the shares
transferred to him upon exercise of an Incentive Stock Option will be treated in
the year of such sale or disposition as ordinary income, rather than capital
gain, to the extent of the excess, if any, of the fair market value of the
shares at the time of exercise (or, if less, in certain cases the amount
realized on such sale or disposition) over their option price, and in that case
we will be allowed a corresponding deduction.
For purposes of the alternative minimum tax, the amount, if any, by
which the fair market value of the shares transferred to the optionee upon such
exercise exceeds the option price will be included in determining the optionee's
alternative minimum taxable income. In addition, for purposes of such tax, the
basis of such shares will include such excess.
To the extent that the aggregate fair market value (determined at the
time the option is granted) of the stock with respect to which Incentive Stock
Options are exercisable for the first time by the optionee during any calendar
year exceeds $100,000, such options will not be Incentive Stock Options. In this
regard, under existing Internal Revenue Service guidelines, we may designate
which shares issued upon exercise of such options are Incentive Stock Options
and which shares are Nonstatutory Stock Options. In the absence of such
designation, a pro rata portion of each share issued is to be treated as issued
pursuant to the exercise of an Incentive Stock Option and the balance of each
share treated as granted pursuant to the exercise of a Nonstatutory Stock
Option.
Recommendation and Required Vote
The affirmative vote of the holders of a majority of our outstanding
common shares present at the meeting, in person or by proxy is required for
approval of this proposal. The Board recommends a vote FOR adoption of this
proposed amendment to 1999 Stock Option Plan.
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PROPOSAL 3: AMENDMENT TO CERTIFICATE OF INCORPORATION
TO INCREASE NUMBER OF AUTHORIZED COMMON SHARES
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The Board of Directors has recommended an amendment to our Certificate
of Incorporation to increase the number of authorized common shares from
10,000,000 to 20,000,000. The Board believes such action to be in our best
interest so as to make additional shares available for acquisitions, financings,
present and future employee benefit programs and other corporate purposes. We
have no current plans or proposals to use the newly authorized shares for
acquisitions, financings, employee benefit plans or other corporate purposes.
As indicated above, we are currently authorized to issue 10,000,000
common shares. As of February 20, 2001, there were X,XXX,XXX common shares
issued and outstanding. In addition, as of such date, there were XXX,XXX common
shares issuable pursuant to the exercise of outstanding options.
The additional common shares may be issued from time to time as the
Board of Directors may determine without further action of our shareholders.
Although the Board has no current plans to utilize such shares to entrench
present management, it may, in the future, be able to utilize the additional
shares, together with or apart from our authorized Preferred Shares, as a
defensive tactic against hostile takeover attempts. The authorization of such
shares shall have no current anti-takeover effect. No hostile takeover attempts
are, to our knowledge, threatened.
The relative rights and limitations of the common shares would remain
unchanged under the amendment. Our shareholders do not currently possess, nor
upon the adoption of the proposed amendment will they acquire, preemptive
rights, which would entitle such persons, as a matter of right, to subscribe for
the purchase of any shares, rights, warrants or other securities or obligations
convertible into, or exchangeable for, our securities.
Recommendation and Required Vote
The affirmative vote of the holders of a majority of our outstanding
common shares is required for approval of this proposal. The Board recommends a
vote FOR adoption of this proposed amendment to the Certificate of
Incorporation.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
On April 25, 2000, we dismissed Grant Thornton LLP as our
independent certified public accountants. This decision was made by our Board of
Directors.
The reports of Grant Thornton LLP on our financial statements as of
October 31, 1998 and 1999 and for the years then ended neither contain an
adverse opinion or a disclaimer of opinion nor are they modified as to
uncertainty, audit scope or accounting principles, except that the opinions
included an explanatory paragraph that there were conditions that raised
substantial doubt about our ability to continue as a going concern.
During the fiscal years ended October 31, 1998 and 1999 and the
period from November 1, 1999 to April 25, 2000, there were no disagreements with
Grant Thornton LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which, if not
resolved to the satisfaction of such firm, would have caused it to make
reference to the subject matter of the disagreement in connection with its
report.
Effective April 27, 2000, we engaged Deloitte & Touche LLP as our
independent certified public accountants for the fiscal year ended October 31,
2000. Our Board of Directors approved the engagement of Deloitte & Touche LLP.
It is not expected that a representative from Deloitte & Touche LLP
will attend the meeting.
Audit Fees
The aggregate fees billed by Deloitte & Touche LLP for professional
services rendered for the audit of our annual financial statements for the 2000
fiscal year and the review of the financial statements included in our Forms
10-QSB for that fiscal year were $18,300.
Financial Information Systems Design and Implementation Fees
During fiscal 2000, Deloitte & Touche LLP did not render to us any of
the professional services with regard to financial information systems design
and implementation described in paragraph (c)(4)(ii) of Rule 2-01 of Regulation
S-X.
All Other Fees
The aggregate fees billed for services rendered by Deloitte & Touche
LLP for fiscal 2000, other than the services described above under "Audit Fees",
were $11,500.
The Audit Committee has determined that the provision of the services
covered in "All Other Fees" is compatable with maintaining Deloitte & Touche
LLP's independence.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the our next Annual
Meeting of Shareholders pursuant to the provisions of Rule 14a-8 of the
Securities and Exchange Commission, promulgated under the Securities Exchange
Act of 1934, must be received at by our Secretary at the offices of our
subsidiary, Navtech Systems Support Inc., 175 Columbia Street West, Suite 102,
Waterloo, Ontario, Canada, N2L 5Z5 by October 25, 2001 for inclusion in our
Proxy Statement and form of proxy relating to such meeting.
The following requirements with respect to shareholder proposals and
shareholder nominees to the Board of Directors are included in our By-Laws.
1. Shareholder Proposals. For a proposal to be properly brought before
an annual meeting by one of our shareholders, the shareholder must have given
timely notice to our Secretary. To be timely, such proposal must be received by
the Secretary at the principal executive offices on a date which is not less
than 60 days nor more than 90 days prior to the date which is one year from the
date of the mailing of the Proxy Statement for the prior year's annual meeting
of shareholders. If during the prior year we did not hold an annual meeting, or
if the date of the meeting for which a shareholder intends to submit a proposal
has changed more than 30 days from the date of the meeting in the prior year,
then such notice must be received a reasonable time before we mail the Proxy
Statement for the current year. A shareholder's notice must set forth as to each
matter the shareholder proposes to bring before the annual meeting certain
information regarding the proposal, including (a) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at such meeting; (b) the name and address of such shareholder
proposing such business; (c) the class and number of our shares which are
beneficially owned by such shareholder; and (d) any material interest of such
shareholder in such business. No business proposed by a shareholder shall be
conducted at an annual meeting except in accordance with these procedures. These
requirements are separate from and in addition to the requirements a shareholder
must meet to have a proposal included in our Proxy Statement.
2. Shareholder Nominees. In order for persons nominated to the Board of
Directors, other than those persons nominated by or at the direction of the
Board of Directors, to be qualified to serve on the Board of Directors, such
nomination must be made pursuant to timely notice in writing to our Secretary.
To be timely, a shareholder's notice must be received at our principal executive
offices not less than 60 days nor more than 90 days prior to the meeting;
provided, however, that, in the event that less than 70 days' notice of the date
of the meeting is given to shareholders and public disclosure of the meeting
date, pursuant to a press release, is either not made or is made less than 70
days prior to the meeting date, then notice by the shareholder to be timely must
be so received not later than the close of business on the tenth day following
the earlier of (a) the day on which such notice of the date of the meeting was
mailed to shareholders or (b) the day on which such public disclosure was made.
The shareholder filing the notice of nomination must describe various matters,
including such information as (a) the name, age, business and residence
addresses, occupation or employment and shares held by the nominee; (b) any
other information relating to such nominee required to be disclosed in a Proxy
Statement; and (c) the name, address and shares held by the shareholder.
Any notice given pursuant to the foregoing requirements must be sent to
our Secretary at c/o Navtech Systems Support Inc., 175 Columbia Street West,
Suite 102, Waterloo, Ontario, Canada, N2L 5Z5. The foregoing is only a summary
of the provisions of our By-Laws that relate to shareholder proposals and
shareholder nominations for director.
OTHER BUSINESS
While the accompanying Notice of Annual Meeting of Shareholders
provides for the transaction of such other business as may properly come before
the meeting, we have no knowledge of any matters to be presented at the meeting
other than those listed as Proposals 1 through 3 in the notice. However, the
enclosed proxy gives discretionary authority in the event that any other matters
should be presented.
INCORPORATION BY REFERENCE
This Proxy Statement is accompanied by a copy of our Annual Report on Form
10-KSB for the fiscal year ended October 31, 2000.
The following information from our 2000 Form 10-KSB (File No. 0-15362),
as filed with the Securities and Exchange Commission pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934, is hereby incorporated by
reference into this Proxy Statement:
(i) "Management's Dicsussion and Analysis or Plan of Operation," included in
Item 6 thereof; and
(ii) our consolidated financial statements as of October 31, 2000 and for the
years ended October 31, 1999 and 2000, included in Item 7 thereof.
This Proxy Statement was prepared after the 2000 Form 10-KSB;
therefore, there may be certain conflicts between the information contained in
this Proxy Statement and information contained in the 2000 Form 10-KSB. If there
are any inconsistencies, then the statements in the 2000 Form 10-KSB should be
read as if they agree with the statements in this Proxy Statement.
Denis L. Metherell
Secretary
Waterloo, Ontario
March 2, 2001