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SCHEDULE 14A INFORMATION
REVISED PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BOREALIS TECHNOLOGY CORPORATION
(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 filing fee required.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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BOREALIS TECHNOLOGY CORPORATION
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 29, 1998
To the Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Borealis
Technology Corporation, a Delaware corporation (the "Company"), will be held on
Friday, May 29, 1998 at 2:00 p.m., at the principal executive offices of the
Company located at 4070 Silver Sage Drive, Carson City, Nevada 89701, for the
following purposes:
1. To elect three (3) directors to the Company's Board of Directors.
2. To approve an amendment to the Company's 1996 Stock Plan to increase the
number of shares of the Company's Common Stock reserved for issuance
thereunder from 649,304 to 1,849,304 shares.
3. To approve an amendment to the Company's 1996 Director Option Plan to
increase the number of shares of the Company's Common Stock reserved for
issuance thereunder from 115,000 to 400,000 shares.
4. To approve a plan of financing pursuant to which the Company may raise
up to $10,000,000 upon the issuance of shares of Common Stock and
warrants to purchase Common Stock upon the terms and conditions set
forth in the attached Proxy Statement.
5. To approve an amendment to the Company's Certificate of Incorporation to
increase the authorized number of shares of the Company's Common Stock
by 20,000,000 to a total of 30,000,000.
6. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1998.
7. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on April 16, 1998 are
entitled to notice of and to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign, date and return the enclosed proxy as promptly as possible in the postage
prepaid envelope enclosed for that purpose. Any stockholder attending the
meeting may vote in person even if he or she has returned a proxy.
By order of the Board of Directors
Elizabeth Gasper
Secretary
Carson City, Nevada
May 8, 1998
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BOREALIS TECHNOLOGY CORPORATION
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PROXY STATEMENT
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Borealis Technology Corporation (the "Company"), for use at the Annual Meeting
of Stockholders (the "Annual Meeting") to be held on Friday, May 29, 1998 at
2:00 p.m. at the principal executive offices of the Company located at 4070
Silver Sage Drive, Carson City, Nevada 89701, or at any adjournment or
adjournments, thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting. The Company's telephone number is (702) 888-3200.
These proxy solicitation materials and the Company's Annual Report to
Stockholders on Form 10-KSB for the year ended December 31, 1997 were first
mailed on or about May 8, 1998 to all stockholders entitled to vote at the
meeting.
RECORD; OUTSTANDING SHARES; PROCEDURAL MATTERS
Stockholders of record as of the close of business on April 16, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. On
the Record Date, 5,879,148 shares of the Company's common stock, $.001 par value
(the "Common Stock"), were issued and outstanding. Each share has one vote on
all matters. For information regarding holders of more than 5% of the
outstanding Common Stock, see "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT." The closing sale price of the Company's Common Stock as
reported on the Nasdaq National Market System on the Record Date was $3.00 per
share.
REVOCABILITY OF PROXIES
A stockholder may revoke any proxy given pursuant to this solicitation by
attending the Annual Meeting and voting in person, or by delivering to the
Company's Corporate Secretary at the Company's principal executive offices
referred to above prior to the Annual Meeting a written notice of revocation, or
by delivering a duly executed proxy bearing a date later than that of the
previous proxy.
The solicitation of proxies is made on behalf of the Board of Directors of
the Company and the associated costs will be borne by the Company. The Company
has engaged W.F. Doring & Company ("Doring") to assist in the solicitation of
proxies for the meeting. The Company will pay Doring a customary fee and will
reimburse Doring for reasonable out-of-pocket expenses.
In addition to solicitation by mail, the Company may use the services of
its directors, officers and others to solicit proxies, personally or by
telephone. Arrangements may also be made with brokerage houses and other
custodians, nominees and fiduciaries to forward solicitation material to the
beneficial owners of the stock held of record by such persons and the Company
may reimburse them for reasonable out-of-pocket and clerical expenses incurred
by them in so doing.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS FOR ANNUAL MEETING FOR FISCAL YEAR
1998
Proposals of stockholders which are intended to be presented by such
stockholders at the Company's 1999 Annual Meeting must be received by the
Company no later than December 23, 1998 to be included in the proxy statement
and form of proxy relating to that meeting.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
There are three nominees for director. Each director to be elected will
hold office until his successor is duly elected and qualified (or until his
earlier death, resignation or removal). Of the nominees listed below, all are
currently directors of the Company.
Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the three nominees named below. If any
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, the proxy holders will vote for a nominee designated by the present
Board of Directors to fill the vacancy. It is not presently expected that any
nominee will be unable or will decline to serve as a director.
The name of the nominees of the Company, and certain information about them
as of April 16, 1998 are set forth below. Information as to the stock ownership
of each director and all current directors and executive officers of the Company
as a group is set forth below under "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT."
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION AND DIRECTORSHIP SINCE
--------------- --- ------------------------------------- --------
Edward Esber..................... 45 President, Chief Executive Officer and 1996
Chairman of the Board, SoloPoint, Inc.
Patrick Grady.................... 30 President, Chief Executive Officer and 1996
Chairman of the Board
Joseph Marengi................... 44 Senior Vice President, Dell Computer 1997
Mr. Esber joined the Company as a Director in July 1996. Mr. Esber has been
Chairman of the Board of SoloPoint, Inc. since February 1998 and Chief Executive
Officer and President since October 1995. Mr. Esber has served as principal of
The Esber Group, a strategy consulting group in Silicon Valley, since April
1990. From July 1994 to October 1995 he was Chairman, Chief Executive Officer
and President of Creative Insights. Prior thereto, he served as President and
Chief Operating Officer of Creative Labs from May 1993 to July 1994. Mr. Esber
also serves on the boards of directors of Quantum Corporation and SoloPoint,
Inc. Pursuant to the Underwriting Agreement between the Company and H.J. Meyers
& Co., Inc. dated July 21, 1997, the Company has agreed, until July 28, 2000,
that H.J. Meyers & Co., Inc. shall have the right to designate two members to
the Company's Board of Directors provided that such members are acceptable to
the Company. Mr. Esber has been nominated to the Company's Board of Directors
pursuant to this Agreement.
Mr. Grady has been a Director of the Company since July 1996. He was
appointed Chairman of the Board in January 1998 and assumed the roles of
President and Chief Executive Officer in March 1998. Prior to assuming the roles
of President and Chief Executive Officer, from March 1996 to March 1998, Mr.
Grady was Managing Director, Venture Capital of H.J. Meyers & Co., Inc. From
June 1993 to March 1996, Mr. Grady served as the Senior Vice President of
Corporate Finance at H.J. Meyers & Co., Inc. Pursuant to the Underwriting
Agreement between the Company and H.J. Meyers & Co., Inc. dated July 21, 1997,
the Company has agreed, until July 28, 2000, that H.J. Meyers & Co., Inc. shall
have the right to designate two members to the Company's Board of Directors
provided that such members are acceptable to the Company. Mr. Grady has been
nominated to the Company's Board of Directors pursuant to this Agreement.
Mr. Marengi has been a Director of the Company since July 1997. Mr. Marengi
has served as Senior Vice President of Dell Computer Corporation since June
1997. Prior to joining Dell, Mr. Marengi was President of Novell, Inc. from
August 1996 to July 1997. Prior to that, Mr. Marengi served as Executive Vice
President, Worldwide Sales and as Vice President of Channel Sales at Novell. Mr.
Marengi also serves on the board of directors of Network Peripherals, Inc.
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BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company met a total of nine (9) times during
the fiscal year ended December 1997.
The Audit Committee of the Board of Directors currently consists of Mr.
Esber. Such committee met three (3) times during the fiscal year ended December
1997.
The Compensation Committee of the Board of Directors consists of Messrs.
Esber and Marengi. Such committee met one (1) time during the fiscal year ended
December 1997.
The Nominating Committee of the Board of Directors currently consists of
Mr. Grady. Such committee did not meet during the fiscal year ended December
1997.
During the last fiscal year, no director attended less than 75% of the
aggregate of all meetings of the Board of Directors and the committees, if any,
upon which such director served and which were held during the period of time
that such person served on the board or such committee.
DIRECTORS' FEES
Except as otherwise described in this proxy, the Company did not pay cash
or other compensation to its directors for attendance at meetings in the fiscal
year ended December 1997, except that from January 16, 1997 to August 17, 1997,
Mr. Pitsker was compensated for his services as interim President and Chief
Operating Officer of the Company pursuant to a consulting arrangement and Mr.
Grady currently is earning an annual compensation of $120,000 for his services
as President and Chief Executive Officer of the Company. In March 1998 the Board
of Directors approved a resolution providing that Directors will be paid $1,400
for attendance at each Board meeting and $500 for participation in each
telephonic meeting of the Board of Directors. Under the Company's 1996 Director
Option Plan, each outside Director of the Company is granted options to purchase
20,000 shares of Common Stock at the time of initial appointment or election to
the board, and 6,667 shares of Common Stock annually thereafter on the day
immediately following each Annual Meeting of the Stockholders, if on such date
he or she has served on the Board for at least three years. See "Proposal No.
3." The Company reimburses its Directors for reasonable expenses incurred in
connection with attending Board and Board Committee meetings.
REQUIRED VOTE
The three nominees receiving the highest number of affirmative votes will
be elected as directors of the Company.
RECOMMENDATION
The Company's Board of Directors unanimously recommends a vote FOR each of
the nominees listed above.
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE
1996 STOCK PLAN
The Company's 1996 Stock Plan (the "1996 Plan") was adopted by the Board of
Directors and approved by the stockholders of the Company in May 1996. The 1996
Plan is designed to retain, motivate and reward employees by providing such
personnel long term equity participation in the Company relating directly to the
financial performance and long-term growth of the Company. A total of 649,304
shares of the Company's Common Stock have been reserved for issuance upon the
exercise of options granted under the 1996 Plan. As of the Record Date, options
to purchase 469,985 shares had been granted under the 1996 Plan, net of
forfeitures.
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PROPOSAL
The stockholders are being asked to approve an increase in the number of
shares reserved for issuance under the 1996 Plan from 649,304 to 1,849,304. This
increase was approved by the Board of Directors in October 1997. Excluding the
proposed share increase, 179,319 remained available for grant under the 1996
Plan on the Record Date.
RECOMMENDATION
The Board of Directors unanimously recommends that stockholders vote FOR
approval of the proposed amendment of the 1996 Plan.
DESCRIPTION OF THE 1996 PLAN
The essential features of the 1996 Plan are outlined below. Such outline is
qualified in its entirety by the provisions of the 1996 Plan, a copy of which
has been filed by the Company as an exhibit to the Company's Registration
Statement on Form SB-2 originally filed with the Securities and Exchange
Commission (the "SEC") on May 2, 1996, and is incorporated herein by reference.
Copies of the 1996 Plan are available upon written request to the Company at
4070 Silver Sage Drive, Carson City, Nevada 89701, Attn: Chief Financial
Officer.
General Provisions
The 1996 Plan was adopted by the Board of Directors and approved by the
stockholders of the Company in May 1996. The Company's 1996 Plan provides for
the granting to employees of incentive stock options within the meaning of
Section 422 of the Federal Income Tax Code (the "Code"), and for the granting to
employees and consultants of nonstatutory stock options and stock purchase
rights ("SPRs"). A total of 649,304 shares of Common Stock have been reserved
for issuance pursuant to the 1996 Plan. The Board has the authority to amend,
suspend or terminate the 1996 Plan, provided that no such action may affect any
share of Common Stock previously issued and sold or any option previously
granted under the 1996 Plan.
The 1996 Plan may be administered by the Board of Directors or a committee
of the Board (the "Committee"), which Committee is required to be constituted to
comply with Section 16(b) of the Exchange Act and applicable laws. The Committee
has the power to determine the terms of the options or SPRs granted, including
the exercise price, the number of shares subject to each option or SPR and the
exercisability thereof, and the form of consideration payable upon exercise.
Options and SPRs granted under the 1996 Plan will not generally be transferable
by the optionee, and each option and SPR will be exercisable during the lifetime
of the optionee only by such optionee. Options granted under the 1996 Plan must
be exercised within three months of the end of the optionee's status as an
employee or consultant of the Company, or within twelve months after such
optionee's termination by death or disability, but in no event later than the
expiration of the option's ten year term. The exercise price of all incentive
stock options granted under the 1996 Plan must be at least equal to the fair
market value of the Common Stock on the date of grant. The exercise price of
nonstatutory stock options and SPRs granted under the 1996 Plan is determined by
the Committee. With respect to any participant who owns stock possessing more
that 10% of the voting power of all classes of the Company's outstanding capital
stock, the exercise price of any incentive stock option granted must equal at
least 110% of the fair market value on the grant date and the term of such
incentive stock option must not exceed five years. The term of all other options
granted under the 1996 Plan may not exceed ten years. No optionee under the 1996
Plan may be granted more than 100,000 shares in any fiscal year, except that up
to an additional 100,000 shares may be granted to new employees.
The 1996 Plan provides that in the event of a merger of the Company with or
into another corporation, a sale of substantially all of the Company's assets or
a like transaction involving the Company, each option shall be assumed or an
equivalent option substituted by the successor corporation. If the outstanding
options are not assumed or substituted as described in the preceding sentence,
the Committee shall provide for the optionee to have the right to exercise the
option or SPR as to all or a portion of the optioned stock, including shares as
to which it would not otherwise be exercisable. If the Committee makes an option
or SPR exercisable in full in
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the event of a merger or sale of assets, the Committee shall notify the optionee
that the option or SPR shall be fully exercisable for a period of fifteen days
from the date of such notice, and the option or SPR will terminate upon the
expiration of such period.
Federal Tax Information for 1996 Plan
The following is a summary of the effect of federal income taxation upon
the optionee and the Company with respect to the grant and exercise of options
under the 1996 Plan. Options granted under the 1996 Plan may be either
"incentive stock options," as defined in Section 422 of the Code, or
nonstatutory options.
An optionee who is granted an incentive stock option will not recognize
taxable income either at the time the option is granted or upon its exercise,
although the exercise may subject the optionee to the alternative minimum tax.
Upon the sale or exchange of the shares more than two years after grant of the
option and one year after exercising the option, any gain or loss will be
treated as long-term capital gain or loss. If these holding periods are not
satisfied, the optionee will recognize ordinary income at the time of sale or
exchange equal to the difference between the exercise price and the lower of (i)
the fair market value of the shares at the date of the option exercise or (ii)
the sale price of the shares. A different rule for measuring ordinary income
upon such a premature disposition may apply if the optionee is also an officer,
director, or 10% stockholder of the Company. The Company will be entitled to a
deduction in the same amount as the ordinary income recognized by the optionee.
Any gain or loss recognized on such a premature disposition of the shares in
excess of the amount treated as ordinary income will be characterized as
long-term or short-term capital gain or loss, depending on the holding period.
All other options which do not qualify as incentive stock options are
referred to as nonstatutory options. An optionee will not recognize any taxable
income at the time he or she is granted a nonstatutory option. However, upon its
exercise, the optionee generally will recognize taxable income generally
measured as the excess of the then fair market value of the shares purchased
over the purchase price. Any taxable income recognized in connection with an
option exercise by an optionee who is also an employee of the Company may be
subject to tax withholding by the Company. Upon resale of such shares by the
optionee, any difference between the sales price and the optionee's purchase
price, to the extent not recognized by taxable income as described above, will
be treated as long-term or short-term capital gain or loss, depending on the
holding period. The Company will be entitled to a tax deduction in the same
amount as the ordinary income recognized by the optionee with respect to shares
acquired upon exercise of a nonstatutory option.
The foregoing does not purport to be a complete summary of the effect of
federal income taxation upon holders of options or upon the Company. It also
does not reflect provisions of the income tax laws of any municipality, state or
foreign country in which an optionee may reside.
PLAN BENEFITS
The Company cannot now determine the exact number of options to be granted
in the future under the 1996 Plan to the executive officers named under
"EXECUTIVE OFFICER COMPENSATION Summary Compensation Table," all current
executive officers as a group or all employee (including executive officers) as
a group. In the fiscal year ended December 31, 1997, options to purchase 622,296
shares of Common Stock were granted under the 1996 Plan, net of forfeitures.
PROPOSAL NO. 3
APPROVAL OF AMENDMENT TO THE
1996 DIRECTOR OPTION PLAN
The Company's 1996 Director Option Plan (the "1996 Director Plan") was
adopted by the Board of Directors and approved by the stockholders of the
Company in May 1996. The 1996 Director Plan is designed to retain, motivate and
reward non-employee directors by providing such directors long term equity
participation in the Company relating directly to the financial performance and
long-term growth of the Company. A total of 115,000 shares of the Company's
Common Stock has been reserved for issuance upon
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the exercise of options granted under the 1996 Director Plan. As of the Record
Date, options to purchase 75,000 shares had been granted under the 1996 Director
Plan, net of forfeitures.
PROPOSAL
The stockholders are being asked to approve an increase in the number of
shares reserved for issuance under the 1996 Director Plan from 115,000 to
400,000. This increase was approved by the Board of Directors in March 1998.
Excluding the proposed share increase, 40,000 shares remained available for
grant under the 1996 Plan on the Record Date.
RECOMMENDATION
The Board of Directors unanimously recommends that stockholders vote FOR
approval of the proposed amendment of the 1996 Director Plan.
DESCRIPTION OF THE 1996 DIRECTOR PLAN
The essential features of the 1996 Director Plan are outlined below. Such
outline is qualified in its entirety by the provisions of the 1996 Director
Plan, a copy of which has been filed by the Company as an exhibit to the
Company's Registration Statement on Form SB-2 originally filed with the SEC on
May 2, 1996, and is incorporated herein by reference. Copies of the 1996
Director Plan are available upon written request to the Company at 4070 Silver
Sage Drive, Carson City, Nevada 89701, Attn: Chief Financial Officer.
General Provisions
The 1996 Director Plan was adopted by the Board of Directors and approved
by the stockholders of the Company in May 1996. Directors of the Company are
entitled to participate in the 1996 Director Plan. The 1996 Director Plan has a
term of ten years, unless terminated sooner by the Board. A total of 115,000
shares of Common Stock have been reserved for issuance under the 1996 Director
Plan.
The 1996 Director Plan provides for the automatic grant of 20,000 shares of
Common Stock to each non-employee director on the date on which the person first
becomes a non-employee director (the "First Option"), unless immediately prior
to becoming a non-employee director, such person was a director of the Company.
After the First Option is granted to the non-employee director, he or she shall
automatically be granted an option to purchase 6,667 additional shares (a
"Subsequent Option") each year on the day immediately following the annual
stockholder's meeting of the Company, if on such date he or she shall have
served on the Board for at least three years. Each First Option and each
Subsequent Option will have a term of 10 years. The exercise prices of the First
Option and each Subsequent Option shall be the fair market value per share of
the Common Stock, generally determined with reference to the closing price of
the Common Stock as reported on the Nasdaq SmallCap Market.
In the event of a merger of the Company or the sale of substantially all of
the assets of the Company, each option may be assumed or an equivalent option
substituted by the successor corporation. Options granted under the 1996
Director Plan must be exercised within three months of the end of the optionee's
tenure as a director of the Company, or within twelve months after such
director's termination by death or disability, but in no event later than the
expiration of the option's ten year term. No option granted under the 1996
Director Plan is transferable by the optionee other than by will or the laws of
descent and distribution, and each option is exercisable, during the lifetime of
the optionee, only by such optionee.
Federal Tax Information for 1996 Director Plan
The following is a summary of the effect of federal income taxation upon
the optionee and the Company with respect to the grant and exercise of options
under the 1996 Director Plan. Options granted under the 1996 Director Plan will
be nonstatutory options for purposes of Section 422 of the Code.
All options which do not qualify as incentive stock options under Section
422 of the Code are referred to as nonstatutory options. An optionee will not
recognize any taxable income at the time he or she is granted a
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nonstatutory option. However, upon its exercise, the optionee generally will
recognize taxable income generally measured as the excess of the then fair
market value of the shares purchased over the purchase price. Any taxable income
recognized in connection with an option exercise by an optionee who is also an
employee of the Company may be subject to tax withholding by the Company. Upon
resale of such shares by the optionee, any difference between the sales price
and the optionee's purchase price, to the extent not recognized as taxable
income as described above, will be treated as long-term or short-term capital
gain or loss, depending on the holding period. The Company will be entitled to a
tax deduction in the same amount as the ordinary income recognized by the
optionee with respect to shares acquired upon exercise of the nonstatutory
option.
The foregoing does not purport to be a complete summary of the effect of
federal income taxation upon holders of options or upon the Company. It also
does not reflect provisions of the income tax laws of any municipality, state or
foreign country in which an optionee may reside.
PROPOSAL NO. 4
APPROVAL OF FINANCING
The Company is requesting that stockholders approve a plan of financing as
described below. The Company has recently raised approximately $2.2 million net
of fees and commissions, in connection with the private placement of 1,001,000
shares of Company Common Stock and warrants to purchase an additional 500,500
shares of Common Stock at a strike price of $5.00 per share. The Board of
Directors of the Company believes that it is in the best interest of the Company
to raise up to an additional $10 million of equity capital as set forth below
and, pursuant to Nasdaq SmallCap Market rules, is requesting that the
stockholders of the Company approve such financing.
PROPOSAL
The stockholders are requested to approve the plan of financing described
below.
RECOMMENDATION
The Board of Directors unanimously recommends that stockholders vote FOR
approval of the proposed plan of financing.
DESCRIPTION OF PLAN OF FINANCING
The proposed financing will consist of the sale of units (the "Units")
consisting of shares of Common Stock and warrants to purchase additional shares
of Common Stock. The Units are expected to be offered without registration under
the Securities Act of 1933, as amended (the "Securities Act"), and the
securities laws of certain states, in reliance on the private offering exemption
contained in Section 4(2) of the Securities Act and on Regulation D of the SEC
thereunder ("Regulation D") and in reliance on similar exemptions under certain
applicable state laws. At the discretion of the Board of Directors of the
Company, the Company may retain one or more brokers or placement agents to
assist with the proposed financing and may pay such persons such fees and
expenses as the Board of Directors shall deem reasonable.
Amount to be Raised
The amount of equity capital to be raised by the Company pursuant to the
proposed financing will not exceed $10,000,000.
Description of the Units
Each Unit will consist of one share of Common Stock and a warrant (a
"Warrant") to purchase a number of shares of Common Stock as determined by the
Board of Directors of the Company, such number not to be greater than one third
of a share of Common Stock. Units will be sold in lots such that no investor
shall be entitled to purchase a fraction of a share of Common Stock.
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Price Per Unit
The price per Unit (the "Price per Unit") will be determined by the Board
of Directors and will be no less than 70% of the average last sale price for the
Common Stock for the five trading days ending one day immediately prior to the
first closing of the purchase and sale of the Units (the "First Closing").
Warrants
The exercise price of the Warrants will be determined by the Board of
Directors of the Company. Such price shall not be less than 125% of the average
last sale price for the Common Stock for the five trading days ending one day
immediately prior to the First Closing, subject to customary antidilution
provisions. The Warrants will be exercisable at any time prior to the date three
years following the First Closing. The Warrants will not entitle the holders
thereof to any rights as a stockholder of the Company until the Warrants are
exercised and the shares of Common Stock are purchased thereunder. The Warrants
and the shares of Common Stock thereunder may not be offered for sale except in
compliance with the applicable provisions of the Securities Act.
Common Stock
The holders of Common Stock are entitled to one vote per share on all
matters to be voted on by stockholders. Subject to preferences that may be
applicable to any outstanding Preferred Stock, if any, the holders of Common
Stock are entitled to receive ratably such dividends, if any, as may be declared
from time to time by the Board of Directors in its discretion out of funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to share
ratably in all assets remaining after payment of liabilities, subject to prior
rights of Preferred Stock, if any, then outstanding. The Common Stock has no
preemptive or other subscription rights and there are no conversion rights or
redemption or sinking fund provision with respect to such shares. All of the
outstanding shares of Common Stock are fully paid and nonassessable.
Registration Obligation
The Company will, following the last closing of the purchase and sale of
Units, use its commercially reasonable efforts to effect a registration on Form
S-3 for the resale of shares of Common Stock offered thereby and the shares
issuable upon exercise of the Warrants.
Use of Proceeds
The proceeds of the proposed financing will be used for working capital.
PROPOSAL NO. 5
APPROVAL OF AMENDMENT TO CERTIFICATE OF INCORPORATION
The Board of Directors determined in March 1998 that it is in the best
interest of the Company and its stockholders to amend the Certificate of
Incorporation to increase the number of authorized shares of Common Stock to
30,000,000. The Certificate of Incorporation currently provides that the number
of shares of Common Stock available for issuance by the Company is 10,000,000.
The proposal to increase the number of authorized shares of Common Stock is
being made to provide greater flexibility to the Company including, but not
limited to, flexibility for future financings by the Company. The increase in
the authorized number of shares would enable the Board of Directors to utilize
such shares for further financings, possible acquisitions and other uses, any of
which could have a dilutive effect on the Company's current stockholders.
The affirmative vote of the holders of a majority of shares represented in
person or by proxy, and voting at the Annual Meeting (which shares voting
affirmatively also constitute at least a majority of the required
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quorum) will be required to approve the above-proposed amendment to the
Certificate of Incorporation. If this proposal is approved, the authorized
Common Stock of the Company will be 30,000,000
The Board of Directors recommends that the stockholders vote FOR approval
of the increase in the authorized shares of Common Stock.
PROPOSAL NO. 6
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as the Company's
independent auditors to audit the books, records and accounts of the Company for
the current fiscal year ending December 31, 1998. Such appointment is being
presented to the stockholders for ratification at the Annual Meeting.
Representatives of Ernst & Young LLP will be present at the Annual Meeting, will
have the opportunity to make a statement if they desire to do so, and will be
available to respond to appropriate questions from stockholders.
The Board of Directors recommends voting FOR the ratification of its
appointment of Ernst & Young LLP as the Company's independent auditors.
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MANAGEMENT
The current executive officers of the Company, and their ages as of April
16, 1998 are as follows:
NAME AGE POSITION
---- --- --------
Patrick Grady........................... 30 President, Chief Executive Officer and
Chairman of the Board
Elizabeth Gasper........................ 44 Executive Vice President and Chief
Financial Officer
Dave Bouchard........................... 38 Senior Vice President of Worldwide
Sales and Services
Michael D'Eath.......................... 44 Vice President of Business Development
and Product Marketing
Henry (Ric) Rodriguez................... 37 Vice President of Engineering Services
Mr. Grady has been a Director of the Company since July 1996. He was
appointed Chairman of the Board in January 1998 and assumed the roles of
President and Chief Executive Officer in March 1998. Prior to assuming the roles
of President and Chief Executive Officer, from March 1996 to March 1998 Mr.
Grady was Managing Director, Venture Capital of H.J. Meyers & Co., Inc. From
June 1993 to March 1996, Mr. Grady served as the Senior Vice President of
Corporate Finance at H.J. Meyers & Co., Inc.
Ms. Gasper joined the Company as Chief Financial Officer in November 1996.
She previously served as Controller at Scopus Technology, Inc. from March 1993
to October 1996. From August 1992 to March 1993 she served as Controller at
Sonic Solutions. Prior thereto, she served in various management positions at
Sybase, Inc. from May 1990 to August 1992.
Mr. Bouchard joined the Company as Senior Vice President of Worldwide Sales
and Services in November 1997. From June 1995 to November 1997 he served as Vice
President of Leveraged Sales at Tivoli Systems, Inc. Prior thereto, he served as
Sales Manager of Powersoft Corporation from February 1993 to June 1995.
Mr. D'Eath joined the Company as Vice President of Business Development in
November 1997. He has assumed the additional position of Vice President of
Product Marketing as of January 1998. From May 1994 to November 1997, he served
as Director of Business Development and as General Manager of the Workgroup
Business Unit at Tivoli Systems, Inc. Prior thereto, he served as Executive
Director of Strategic Relations at Novell, Inc. from May 1989 to May 1994.
Mr. Rodriguez joined the Company as Vice President of Engineering Services
in February 1998. From November 1995 to February 1998 Mr. Rodriguez served as
Vice President of Research and Development and Chief Architect of Seagate
Software, Inc. From May 1993 to November 1995 Mr. Rodriguez was Vice President
of Development and General Manager of MobileWare Corporation. Prior thereto, he
served as Director of Strategic Development at Novell, Inc. from March 1992 to
May 1993.
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CERTAIN TRANSACTIONS
The Company is negotiating a Settlement Agreement and Mutual Release with
its former President and Chief Executive Officer, Jack Murphy, pursuant to which
it is expected that, among other things, $18,125 in borrowings by Mr. Murphy
from the Company will be forgiven.
The Company granted Dave Bouchard, its Senior Vice President of Worldwide
Sales and Services, a $425,000 secured loan for the purchase of a residence.
Such loan does not bear interest except in the event of a default. The principal
and interest on such loan is due and payable upon the earlier of (i) sixty days
following the date that Mr. Bouchard voluntarily leaves the Company, (ii) one
hundred eighty days following the date of termination of the employment of Mr.
Bouchard for cause, (iii) the date of any sale, conveyance, assignment,
alienation or any other form of transfer, whether voluntary or involuntary, of
the residence, or any part thereof or interest therein, subject to certain
exceptions, or (iv) November 17, 2000. $23,611.10 of the principal amount of the
loan was forgiven on the date of borrowing. Commencing on December 17, 1997 and
on the 17th day of each and every calendar month thereafter, so long as Mr.
Bouchard is an employee of the Company and so long as there is then no uncured
default in connection with the loan, the principal amount of the loan is
automatically reduced by $11,805.55. If Mr. Bouchard is terminated without
cause, the outstanding principal balance on the loan will be forgiven entirely.
The Company does not believe that it would lend money to Mr. Bouchard on such
terms were Mr. Bouchard not a key employee of the Company's.
OTHER INFORMATION
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Exchange Act requires the Company's executive
officers, directors, and persons who own more than ten percent (10%) of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission.
Based solely on its review of the copies of such forms received by the
Company, or representations from certain reporting persons, the Company believes
that during the Company's last fiscal year all executive officers and directors
timely filed all filings required under 16(a) for all reportable transactions
during the year except that Pete Pitsker filed two late Form 4's.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of the Record Date information relating
to the beneficial ownership of the Company's Common Stock by each person known
by the Company to be the beneficial owner of more than five percent (5%) of the
outstanding shares of Common Stock, by each director, by each of the executive
officers named in the Summary Compensation Table (the "Named Officers"), and by
all directors and executive officers as a group. Unless otherwise indicated, all
persons named as beneficial owners of Common Stock have sole voting power and
sole investment power with respect to the shares indicated as beneficially
owned. A total of 5,879,148 shares of the Company's Common Stock were issued and
outstanding as of the Record Date.
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NO. OF SHARES APPROXIMATE
NAME OWNED PERCENTAGE OWNED
---- ------------- ----------------
John H. Webley(1)........................................ 738,000 12.14%
16875 Coleman Valley Road
Occidental, CA 95465
Curtis Faith(2).......................................... 441,464 7.50%
Peter W.J. Stonebridge Revocable Trust(3)................ 400,000 6.69%
529 Ponderosa Ave
Incline Village, NV 89451
Dave Bouchard(4)......................................... 15,000 *
Brian Breidenbach(5)..................................... -- *
Michael D'Eath(6)........................................ 41,859 *
Edward Esber(7).......................................... 145,666 2.45%
Elizabeth Gasper(8)...................................... 20,416 *
Patrick Grady(9)......................................... 100,826 1.69%
Joe Marengi(10).......................................... 15,222 *
Jack Murphy(11).......................................... 5,000 *
Peter Pitsker(12)........................................ 209,731 3.53%
All directors and officers as a group (9 people)(13)..... 995,184 16.21%
- ---------------
* Less than one percent (1%).
(1) Based on information provided in the Form 13D filed by Mr. Webley on March
18, 1998. Includes 200,000 shares issuable upon exercise of warrants.
(2) Mr. Faith has agreed, until July 2000, to vote all of his shares for the
election of two nominees to the Board of Directors identified by H.J.
Meyers & Co., Inc. Mr. Faith's ownership includes 4,444 shares issuable
upon exercise of stock options within 60 days of the Record Date.
(3) Based on information provided in the Form 13D filed by Mr. Stonebridge on
March 18, 1998. Includes 100,000 shares issuable upon exercise of warrants.
(4) Includes 5,000 shares issuable upon exercise of warrants.
(5) Mr. Breidenbach resigned as an officer of the Company on January 5, 1998.
(6) Includes 5,000 shares issuable upon exercise of warrants and 23,859 shares
issuable upon exercise of stock options within 60 days of the Record Date.
(7) Includes 20,000 shares held by the Esber Family Trust, 16,666 shares
issuable upon exercise of stock options within 60 days of the Record Date
and 25,000 shares issuable upon exercise of warrants.
(8) Includes 7,916 shares issuable upon exercise of stock options within 60
days of the Record Date.
(9) Includes 84,160 shares issuable upon exercise of warrants and 16,666 shares
issuable upon exercise of stock options within 60 days of the Record Date.
(10) Includes 12,222 shares issuable upon exercise of stock options within 60
days of the Record Date.
(11) Mr. Murphy was hired as Chief Executive Officer of the Company effective
July 10, 1997. Mr. Murphy resigned as an officer of the Company on March
13, 1998.
(12) Includes 70,290 shares held by the Pitsker Revocable Living Trust dated
9-11-85, 23,148 shares held by the Pitsker Partnership, 42,441 shares
issuable upon exercise of stock options within 60 days of the Record Date
and 17,000 shares issuable upon exercise of warrants.
(13) Includes 124,214 shares issuable upon exercise of stock options within 60
days of the Record Date and 136,160 shares issuable upon exercise of
warrants.
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EXECUTIVE OFFICER COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning compensation
paid by the Company for services during the previous three fiscal years to (i)
those individuals who served as the Company's Chief Executive Officer during the
Last Fiscal Year, (ii) each of the four other most highly compensated executive
officers whose salary plus bonus exceeded $100,000 during the Last Fiscal Year,
and (iii) up to two former executive officers who would have been included under
(ii) above but for the fact that they were not serving as an executive officer
of the Company through the end of the Last Fiscal Year.
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------------- AWARDS
OTHER ANNUAL ------------- ALL OTHER
SALARY BONUS COMPENSATION STOCK OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($)(1) ($) (#) ($)
- --------------------------- ---- -------- -------- ------------ ------------- ------------
Jack Murphy(2).............. 1997 $ 85,269(3) -- $7,920(4) 300,346(5) $ 486(6)
Curtis Faith(7)............. 1997 $125,000(8) -- -- 21,156 $ 1,465(6)
1996 $ 87,500(8) -- -- -- $ 3,263
1995 $ 53,333(8) $ 6,667 -- -- $ 2,869
Elizabeth Gasper............ 1997 $110,000(9) -- -- 56,000 $ 1,523(6)
Chief Financial Officer 1996 $ 9,167(9) 20,000 -- 20,000(5) --
Dave Bouchard(10)........... 1997 $ 18,750(11) $250,000(12) -- 200,000(5) $65,217(13)
Senior Vice President,
Worldwide Sales and
Services
Brian Breidenbach(14)....... 1997 $110,000(15) -- 250 $ 1,465(6)
Vice President, 1996 $ 9,167(15) $ 7,500 18,000(5)
Engineering
Michael D'Eath(16).......... 1997 $ 18,125(17) $ 80,000(18) -- 100,000(5)
Vice President, Business
Development and Product
Marketing
Peter Pitsker(19)........... 1997 -- -- -- 20,000(20) $35,000(21)
Interim President and 1996 -- -- -- 15,971(20)
Chief Operating Officer 1995 -- -- -- 6,470(20)
and Director
- ---------------
(1) Bonus amounts are reported for the fiscal year in which earned without
regard to when paid.
(2) Mr. Murphy was hired as President and Chief Executive Officer of the
Company effective July 10, 1997. Mr. Murphy resigned as an officer of the
Company on March 13, 1998.
(3) Mr. Murphy's 1997 salary includes $7,500 earned in 1997 but paid in 1998.
(4) Represents annual temporary housing allowance.
(5) Includes options granted pursuant to commencement of employment with the
Company.
(6) The amounts disclosed include payments made by the Company in the fiscal
year indicated of premiums for a combined life and health insurance policy
on behalf of Mr. Murphy, Mr. Faith, Ms. Gasper and Mr. Breidenbach.
(7) Mr. Faith resigned as President and Chief Executive Officer of the Company
on January 16, 1997.
(8) Mr. Faith's salary includes $5,208 earned in 1997 but paid in 1998, and
$4,167 earned in 1996 but paid in 1997, and $3,333 earned in 1995 but paid
in 1996.
(9) Ms. Gasper's salary includes $4,583 earned in 1997 but paid in 1998, and
$4,583 earned in 1996 but paid in 1997.
(10) Mr. Bouchard was hired as Senior Vice President of Worldwide Sales and
Services of the Company effective November 17, 1997. In addition to the
compensation amounts listed, Mr. Bouchard was granted, pursuant to his
commencement of employment with the Company, a $425,000 secured loan for
the purchase of a residence, to be conditionally forgiven over a three year
period.
(11) Mr. Bouchard's 1997 salary includes $6,250 earned in 1997 but paid in 1998.
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(12) Represents a conditionally recoverable sign-on bonus. This bonus is
recoverable in the event Mr. Bouchard leaves the Company or is terminated
for cause but the recoverable amount is reduced pro rate over three years.
(13) Represents $29,800 for reimbursement of relocation expenses and $35,417 of
loan forgiveness.
(14) Mr. Breidenbach resigned as an officer of the Company on January 5, 1998.
(15) Mr. Breidenbach's salary includes $4,583 earned in 1997 but paid in 1998,
and $4,583 earned in 1996 but paid in 1997.
(16) Mr. D'Eath was hired as Vice President of Business Development of the
Company as of November 17, 1997.
(17) Mr. D'Eath's 1997 salary includes $6,042 earned in 1997 but paid in 1998.
(18) Represents a sign-on bonus.
(19) Mr. Pitsker, through his private consulting practice, served as acting
President and Chief Operating Officer of the Company from January 1997
through August 1997.
(20) Includes, for 1997, 15,600 options granted to Mr. Pitsker for services as a
consultant to the Company and 4,400 options granted pursuant to services as
a Director to the Company; for 1996, 15,971 options pursuant to services as
a Director to the Company; and for 1995, 6,470 options pursuant to services
as a Director to the Company.
(21) Represents consulting fee paid for Mr. Pitsker's services as acting Officer
of the Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth, as to the Named Officers, certain
information relating to stock options granted during fiscal 1997.
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION
OPTIONS EMPLOYEES EXERCISE EXPIRATION FOR OPTION TERM(3)
GRANTED IN FISCAL PRICE DATE ---------------------
NAME (#) YEAR(1) ($/SH)(2) (MO/YR) 5% 10%
---- ----------- ---------------- --------- ---------- -------- ----------
Jack Murphy.................. 300,000 34.46% $3.81 7/07 $719,393 $1,823,082
346 * $4.00 6/07 $ 870 $ 2,026
Curtis Faith................. 20,000 2.30% $5.50 10/07 $ 69,178 $ 175,312
1,156 * $4.00 6/07 $ 3,199 $ 8,106
Elizabeth Gasper............. 55,000 6.32% $5.41 10/07 $186,989 $ 473,867
1,000 * $4.00 6/07 $ 2,516 $ 6,375
Dave Bouchard................ 200,000 22.97% $4.50 10/07 $566,005 $1,434,368
Michael D'Eath............... 100,000 11.49% $4.50 10/07 $283,003 $ 717,184
Brian Breidenbach............ 250 * $4.00 6/07 $ 629 $ 1,594
Peter Pitsker................ 15,600 1.79% $4.25 1/07 $ 41,696 $ 105,665
- ---------------
* Represents less than 1%.
(1) The total number of shares subject to options granted to employees in fiscal
1997 was 870,630.
(2) The exercise price per share is equal to the closing price of the Company's
Common Stock on the date of grant.
(3) The Potential Realizable Value is calculated based on the fair market value
on the date of grant, which is equal to the exercise price of options
granted in fiscal 1997, assuming that the stock appreciates in value from
the date of grant until the end of the option term at the annual rate
specified (5% and 10%). Potential Realizable Value is net of the option
exercise price. The assumed rates of appreciation are specified in rules of
the SEC, and do not represent the Company's estimate or projection of future
stock price. Actual gains, if any, resulting from stock option exercises and
Common Stock holdings are dependent on the future performance of the Common
Stock, overall stock market conditions, as well as
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the option holders' continued employment through the exercise/vesting
period. There can be no assurance that the amounts reflected in this table
will be achieved.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
The following table provides information with respect to option exercises
in fiscal 1997 by the Named Officers and the value of such officers' unexercised
options at the close of business on December 31, 1997.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR END (#) FISCAL YEAR END($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- --------------- ----------- ------------- ----------- -------------
Jack Murphy.............. -- -- -- 300,346 -- --
Curtis Faith............. -- -- 1,111 18,889 -- --
Elizabeth Gasper......... -- -- 5,416 14,584 -- --
Dave Bouchard............ -- -- -- 200,000 -- --
Michael D'Eath........... -- -- -- 100,000 -- --
Brian Breidenbach........ -- -- 4,500 13,500 -- --
Peter Pitsker............ -- -- 11,006 15,835 $2,281 $3,542
- ---------------
(1) Market value of underlying securities based on the closing price of the
Company's Common Stock on the date of exercise, minus the exercise price.
(2) Market value of underlying securities based on the closing price of the
Company's Common Stock on December 31 1997, minus the exercise price.
COMPENSATION COMMITTEE REPORT
From January to August 1997, the Compensation Committee consisted of Shekar
Swamy and Peter Pitsker; from August to October 1997, the Committee consisted of
Peter Pitsker and Ed Esber; from October 1997 to the end of the fiscal year the
Committee consisted of Peter Pitsker, Ed Esber and Joe Marengi. All such members
of the Compensation committee were independent directors of the Company during
fiscal 1997, except for Peter Pitsker who served as interim President and Chief
Operating Officer as well as director from January to August 1997. The Committee
is responsible for administering the Company's compensation and benefits
programs. The Committee sets executive salary levels, establishes the Company's
executive bonus plan and determines target bonuses thereunder, and determines
option grants under the Company's stock option programs.
The Company's executive compensation program has been designed to ensure
that the compensation provided to executive officers is closely aligned with the
Company's financial performance and, ultimately, the creation of stockholder
value, and to ensure that the Company can attract and retain key executives
critical to the Company's long-term success.
The Committee establishes the salary of each executive officer, including
the Chief Executive Officer, by considering (i) the salaries of executive
officers in similar positions with comparably sized companies in the Company's
and related industries, (ii) the experience and contribution levels of the
individual executive officers, (iii) the Company's financial performance during
the past year, and (iv) in the case of executive officers other than the Chief
Executive Officer, the recommendations of the Chief Executive Officer.
The Committee also grants stock options to executive officers to provide
long-term incentive to the executive officers aligned with the creation of
increased stockholder value over time. The Committee grants options based upon a
number of factors, including each such officer's responsibilities and position
in the Company, any changes in the executive officer's responsibility and
position, and the executive officer's existing equity interest in the Company in
the form of vested and unvested options. All options are granted at the current
market price of the Company's Common Stock on the date of grant. During fiscal
year 1997, the Committee granted options to purchase 300,346 shares of Common
Stock to the Chief Executive Officer, and
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options to purchase an aggregate of 371,850 shares of Common Stock to five (5)
other officers at exercise prices ranging from $4.00 to $5.41 per share.
No member of the Compensation Committee is a former or current executive
officer or employee of the Company, except for Peter Pitsker, as discussed
above.
Joe Marengi
Ed Esber
PERFORMANCE GRAPH
Set forth below is a line graph comparing the annual percentage change in
the cumulative total return among Borealis Technology Corporation, the S&P 500
Index and the H&Q Technology Index, from June 27, 1996 (the date of the
Company's initial public offering) through December 31, 1997, the end of the
Company's last fiscal year.
COMPARISON OF CUMULATIVE TOTAL RETURN*
* Assumes $100 invested on June 27, 1996, the date of the Company's initial
public offering, through the fiscal year ended December 31, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee has a relationship that would
constitute an interlocking relationship with executive officers or directors of
another entity.
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OTHER MATTERS
The Board of Directors does not intend to bring before the meeting any
matters other than those set forth herein, and has no present knowledge that any
other matters will or may be brought before the meeting by others. If, however,
any other matters properly come before the meeting, it is the intention of the
persons named in the enclosed form of proxy to vote the proxies in accordance
with their judgment.
Dated: May 8, 1998
BY ORDER OF THE
BOARD OF DIRECTORS
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PROXY
BOREALIS TECHNOLOGY CORPORATION
4070 SILVER SAGE DRIVE, CARSON CITY, NV 89701
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Patrick Grady and Elizabeth Gasper, and
each of them, as Proxies, each with the power to appoint his or her substitute,
and hereby authorizes them to represent and to vote, as designated below, all
the shares of Common Stock, par value $0.001 per share ("Common Stock") of
Borealis Technology Corporation ("Borealis") held of record by the undersigned
on April 16, 1998, at the annual meeting of stockholders to be held on May 29,
1998, and any adjournment thereof (the "Meeting").
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
21
WITHHOLD
FOR AUTHORITY
all nominees for all nominees
listed below listed below
1. ELECTION OF DIRECTORS TO THE BOARD OF
DIRECTORS OF BOREALIS: / / / /
(Instruction: To withhold authority to
vote for any individual nominee strike a
line through the nominee's name in the
box below)
Ed Esber Patrick Grady Joe Marengi
2. PROPOSAL TO APPROVE AN AMENDMENT TO THE FOR AGAINST ABSTAIN
BOREALIS 1996 STOCK PLAN TO INCREASE THE
NUMBER OF SHARES OF COMMON STOCK RESERVED / / / / / /
FOR ISSUANCE THEREUNDER FROM 649,304 TO
1,849,304
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE FOR AGAINST ABSTAIN
BOREALIS 1996 DIRECTOR OPTION PLAN TO
INCREASE THE NUMBER OF SHARES OF COMMON / / / / / /
STOCK RESERVED FOR ISSUANCE THEREUNDER
FROM 115,000 TO 400,000 SHARES
4. PROPOSAL TO APPROVE A PLAN OF FINANCING FOR AGAINST ABSTAIN
PURSUANT TO WHICH THE COMPANY MAY RAISE
UP TO $10,000,000. / / / / / /
5. PROPOSAL TO APPROVE AN AMENDMENT TO THE FOR AGAINST ABSTAIN
COMPANY'S CERTIFICATE OF INCORPORATION
TO INCREASE THE AUTHORIZED NUMBER OF / / / / / /
SHARES OF THE COMPANY'S COMMON STOCK
BY 20,000,000 TO A TOTAL OF 30,000,000.
6. PROPOSAL TO RATIFY THE APPOINTMENT OF FOR AGAINST ABSTAIN
ERNST & YOUNG LLP AS BOREALIS'
INDEPENDENT AUDITORS FOR THE FISCAL / / / / / /
YEAR ENDING DECEMBER 31, 1998
7. In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted for Ed Esber, Patrick Grady and Joe Marengi as Directors and will be
voted for Proposals 2, 3, 4, 5 and 6.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature ________________________________ Signature if held jointly _____________________ Dated __________ 1998
Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing
as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation,
please sign in full corporation name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
FOLD AND DETACH HERE