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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under Rule 14a-12
MICRO GENERAL 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 fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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MICRO GENERAL CORPORATION
2510 RED HILL AVENUE
SANTA ANA, CALIFORNIA 92705
April 30, 2001
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
Annual Meeting of Stockholders of Micro General Corporation. The meeting will be
held on June 19, 2001 at 10:00 a.m., Pacific Daylight Time, at the offices of
Micro General Corporation, 2510 N. Red Hill Avenue, Suite 230, Santa Ana,
California. The formal Notice and Proxy Statement for this Meeting are attached
to this letter.
It is important that you sign, date and return your proxy as soon as
possible, even if you currently plan to attend the Annual Meeting. You may still
attend the Annual Meeting and vote in person if you desire, but returning your
proxy card now will assure that your vote is counted if you are unable to
attend. Your vote is important, regardless of the number of shares you own.
On behalf of the Board of Directors, I thank you for your cooperation.
Sincerely,
/s/ WILLIAM P. FOLEY, II
WILLIAM P. FOLEY, II
Co-Chairman of the Board
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MICRO GENERAL CORPORATION
2510 RED HILL AVENUE
SANTA ANA, CALIFORNIA 92705
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 19, 2001
TO OUR STOCKHOLDERS:
The Annual Meeting of Stockholders of Micro General Corporation, a Delaware
corporation, will be held on June 19, 2001, at 10:00 a.m., Pacific Daylight
Time, the offices of Micro General Corporation, 2510 N. Red Hill Avenue, Suite
230, Santa Ana, California for the following purposes:
(1) to elect eight directors to serve for the next year or until their
successors are duly elected and qualified or until their earlier death,
resignation or removal;
(2) to approve an amendment to the Company's 1999 Stock Incentive Plan;
(3) to approve an amendment to the Company's Certificate of Incorporation,
to increase the number of shares authorized for issuance; and
(4) 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 23, 2001, are entitled to notice of and to vote at the
Meeting. All stockholders are cordially invited to attend the Meeting in person.
Sincerely,
/s/ JOSEPH E. ROOT
JOSEPH E. ROOT
Corporate Secretary
Irvine, California
April 30, 2001
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED ENVELOPE TO ASSURE REPRESENTATION OF YOUR SHARES.
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MICRO GENERAL CORPORATION
2510 RED HILL AVENUE
SANTA ANA, CALIFORNIA 92705
------------------------
PROXY STATEMENT
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited by the Board of Directors of Micro General
Corporation (the "Company"). The proxy is for use at the Annual Meeting of
Stockholders (the "Meeting") to be held June 19, 2001, at 10:00 a.m., Pacific
Daylight Time, or at any adjournment thereof, for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Stockholders. The Meeting
will be held at the offices of the Company, 2510 Red Hill Avenue, Suite 230,
Santa Ana, California 92705.
It is anticipated that such proxy, together with this Proxy Statement, will
be first mailed on or about April 30, 2001, to all stockholders entitled to vote
at the Meeting.
The Company's principal executive offices are located at 2510 Red Hill
Avenue, Santa Ana, California 92705, and its telephone number at that address is
(949) 622-4444.
All shares represented by each properly signed and returned proxy card in
the accompanying form, unless revoked, will be voted at the Meeting in
accordance with the stockholder's instructions indicated on the proxy card. If
no instructions are marked on the proxy card, the shares will be voted in favor
of the proposals described in this Proxy Statement. The accompanying proxy may
be revoked by a stockholder at any time before it is voted, either by delivering
a subsequent proxy or other written notice of revocation to the attention of the
Corporate Secretary of the Company at 2510 Red Hill Avenue, Santa Ana,
California 92705 or by attending the Meeting and voting in person.
The only outstanding voting securities of the Company are shares of its
Common Stock, par value $.05 per share ("Common Stock"). Each stockholder of
record at the close of business on April 23, 2001 is entitled to notice of and
to vote at the Meeting and at any adjournment or adjournments thereof. On that
date, there were 13,267,581 shares of Common Stock outstanding, with each share
entitled to one vote. The presence, in person or by proxy, of a majority of the
shares entitled to vote will constitute a quorum for the Meeting. Abstentions
from voting, which may be specified on all matters except the election of
directors, will be considered shares present and entitled to vote on a matter
and, accordingly, will have the same effect as a vote against a matter. Broker
non-votes are included in the determination of the number of shares present and
voting; however, they are not counted for purposes of determining the number of
votes cast with respect to a particular proposal. Accordingly, broker non-votes
are not counted as votes for or against a proposal.
The Company will pay the cost of the solicitation of proxies, including
preparing and mailing the Notice of Annual Meeting of Stockholders, this Proxy
Statement and the proxy card. Following the mailing of this Proxy Statement,
directors, officers and employees of the Company may solicit proxies by
telephone, facsimile transmission or other personal contact, for which services
such persons will receive no additional compensation. Brokerage houses and other
nominees, fiduciaries and custodians who are holders of record of shares of
Common Stock will be requested to forward proxy soliciting material to the
beneficial owners of such shares and will be reimbursed by the Company for their
charges and expenses in connection therewith at customary and reasonable rates.
5
PROPOSAL 1
ELECTION OF DIRECTORS
Under its Bylaws, the Board may set the number of Directors at no less than
four and no more than nine. The number of Directors is currently fixed at eight.
Terms of the members of the Board of Directors are for a one-year period.
Directors will be elected by a plurality of the votes of the shares of
Common Stock present in person or represented by proxy at the Meeting and
entitled to vote on the election of directors. Each nominee elected as a
Director will continue in office until his or her successor has been elected or
until his or her earlier death, resignation or retirement. Each nominee is
currently a member of the Board of Directors. The Board of Directors has
proposed the following nominees for election as Directors with terms expiring in
2002:
William P. Foley, II
Patrick F. Stone
John R. Snedegar
Dwayne M. Walker
Bradley Inman
John McGraw
Richard H. Pickup
Carl A. Strunk
Each director will be elected by a plurality of the votes cast at the
meeting. Unless otherwise instructed, the proxy holders will vote the proxies
received by them for the stated nominees. In the event that a nominee of the
Company is unable or declines to serve as a director at the time of the Meeting,
proxies will be voted for any nominee who shall be designated by the present
Board of Directors to fill the vacancy. It is not expected any nominee will be
unable or will decline to serve as a director.
THE BOARD OF DIRECTORS OF MICRO GENERAL CORPORATION RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE ABOVE NOMINEES
The principal occupation and certain other information about the nominees
is included in the following table:
NOMINEES FOR ELECTION
DIRECTOR
NAME OCCUPATION AGE SINCE
---- ---------- --- --------
William P. Foley, II Chairman of the Board and Chief Executive Officer 56 1994
Fidelity National Financial, Inc.
Irvine, California
Patrick F. Stone President 53 1998
Fidelity National Financial, Inc.
Irvine, California
John R. Snedegar Chief Executive Officer and President Micro 51 1998
General Corporation
Santa Ana, California
Dwayne Walker President and Chief Executive Officer Network 39 1999
Commerce, Inc.
Seattle, Washington
Bradley Inman Chief Executive Officer HomeGain.com 48 2000
Emeryville, California
John McGraw Co-Founder HatcheryWorks 39 2000
San Jose, California
Richard H. Pickup Senior Vice President Wedbush Morgan Securities 65 1996
Newport Beach, California
Carl A. Strunk Executive Vice-President, Finance 63 1994
CKE Restaurants, Inc.
Anaheim, California
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WILLIAM P. FOLEY, II
Mr. Foley has been Co-Chairman of the Board since March 28, 2000. He has
been a director of the Company since June 1994. Mr. Foley was the Chairman of
the Board of the Company from June 1994 until April 9, 1999. Mr. Foley is
Chairman of the Board and Chief Executive Officer of Fidelity National
Financial, Inc. and has been since its formation in 1984. Mr. Foley is also
currently serving as Chairman of the Board of CKE Restaurants, Inc., Checkers
Drive-In Restaurants, Inc. and Santa Barbara Restaurant Group, Inc.
Additionally, he is a member of the Board of Directors of American National
Financial, Inc., Miravant Medical Technologies, Inc. and Fresh Foods, Inc.
PATRICK F. STONE
Mr. Stone has been a director of the Company since 1998. Mr. Stone became
Chairman of the Board on April 9, 1999, and Co-Chairman of the Board on March
28, 2000. Mr. Stone is President of Fidelity National Financial, Inc. and has
been since March 1997. From May 1995 through March 1997 he was an Executive Vice
President of Fidelity National Financial, Inc. He is also President of Fidelity
National Title Insurance Company and the four other underwriters of Fidelity
National Financial, Inc. From February 1989 to May 1995 he was President of
Fidelity National Title Company of Oregon.
JOHN R. SNEDEGAR
Mr. Snedegar has been a director of the Company since 1998. Mr. Snedegar
became Chief Executive Officer and President of the Company on April 9, 1999.
Mr. Snedegar was the President of United Digital Network, Inc. from 1990 until
April 1, 1999. Prior to his involvement with United Digital Network, Inc., Mr.
Snedegar was the President and Chief Executive Officer of AmeriTel Management,
Inc. Mr. Snedegar is also currently a director of StarBase Corporation.
DWAYNE M. WALKER
Mr. Walker has been a director of the Company since 1999. Mr. Walker is
currently the President and Chief Executive Officer of Network Commerce, Inc.
and has been since March 1996. During 1995 and 1996, Mr. Walker was also
Chairman of US Connect which was acquired by IKON Office Systems. Mr. Walker is
also an investor and advisor to NETDelivery, Inc. and other technology service
companies. In 1989, Mr. Walker began a seven year tenure with Microsoft
Corporation where he held several positions including, General Manager of Sales
and Marketing, Director of Windows NT and Networking Products, Director of SQL
Server and Network Products, and other senior management positions. Mr. Walker
was recruited by Microsoft Corporation to spearhead the launching of the first
two versions of SQL Server and Windows NT. In addition, Mr. Walker designed and
led the worldwide deployment of the Microsoft Solutions Channel program.
BRADLEY INMAN
Mr. Inman has been a director of the Company since 2000. Mr. Inman is the
founder and Chief Executive Officer of HomeGain.com, the internet's first
complete home selling resource center. He also owns and operates a news service,
Inman News Features, which delivers real estate stories to more than 3,000
newspapers and Web sites.
JOHN MCGRAW
Mr. McGraw has been a director of the Company since 2000. Mr. McGraw is the
Co-Founder of HatcheryWorks, an Internet Incubator. HatcheryWorks was founded in
December 1999 and has successfully launched over eight companies in the
financial services arena. Prior to HatcheryWorks, Mr. McGraw served as President
of Portola Dimensional Systems, a company that pioneered the use of 3D
technology in business intelligence. Mr. McGraw got his start in technology when
he Co-Founded InsWeb.com, the first mover in the insurance on the internet
space. Prior to InsWeb, Mr. McGraw founded Pacific Specialty Insurance
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Company, Western Service Contract Corporation, Pacific Loan Administrators and
McGraw Commercial Insurance Services.
RICHARD H. PICKUP
Mr. Pickup has been a director of the Company since 1996. Mr. Pickup is
currently a Senior Vice President of the New York Stock Exchange Member Firm of
Wedbush Morgan Securities. For the past 36 years, he has been involved with
major ownership of numerous public companies.
CARL A. STRUNK
Mr. Strunk has been a director of the Company since June 1994. Mr. Strunk
is Executive Vice President, Finance, of CKE Restaurants, Inc. and has been
since April 2001, after having been Executive Vice President and Chief Financial
Officer since 1997. Additionally, Mr. Strunk is Executive Vice President and
Chief Financial Officer of American National Financial, Inc. Mr. Strunk joined
Fidelity National Title Insurance Company in February 1992 as an Executive Vice
President. He was elected an Executive Vice President and Chief Financial
Officer of Fidelity National Financial, Inc. in March 1992 and served in this
capacity until September 15, 1997. In September, 1997 he became Executive Vice
President, Finance of Fidelity National Financial, Inc. until March 1998. Prior
to his employment with Fidelity National Financial, Inc., Mr. Strunk was
President of Land Resources Corporation from 1986 to 1991. Mr. Strunk is a
certified public accountant and is also currently a director of American
National Financial, Inc.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held a total of three formal meetings during the
year ended December 31, 2000. All directors attended 100% of all meetings of the
Board of Directors.
The Board presently has an Audit Committee and a Compensation Committee.
The Audit Committee, which consisted of Messrs. Strunk, Pickup and Inman met
once during 2000, which meeting was attended by all members of the Committee.
The Audit Committee meets independently with internal audit staff,
representatives of the Company's independent auditors and representatives of
senior management. The Audit Committee reviews the general scope of the
Company's annual audit, the fee charged by the independent auditors and other
matters relating to internal control systems. In addition, the Audit Committee
will be responsible for reviewing and monitoring the performance of non-audit
services by the Company's auditors. The Committee is also responsible for
recommending the engagement or discharge of the Company's independent auditors.
The Compensation Committee currently consists of Messrs. Foley, Walker and
McGraw. The Compensation Committee, either alone or in conjunction with other
Board committees, reviews and reports to the Board on the salary, fee and
benefit programs designed for senior management, officers and directors with a
view to ensure that the Company is attracting and retaining highly-qualified
individuals through competitive salary, fee and benefit programs and encouraging
continued extraordinary efforts through incentive rewards. The Compensation
Committee met seven times during 2000, and each such meeting was attended by all
members of the Committee.
DIRECTOR COMPENSATION
Directors who are not employees of the Company receive $3,000 per Board of
Directors meeting attended, plus reimbursement of reasonable expenses. Directors
who are employees of the Company do not receive any compensation for acting as
directors, except for reimbursement of reasonable expenses, if any, for Board
meeting attendance.
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EXECUTIVE OFFICERS
The executive officers of the Company as of the date of this Proxy
Statement are set forth in the table below. Certain biographical information
with respect to those executive officers who do not also serve as directors
follows the table. Biographical information for those executive officers who
also serve as directors is set forth above.
EMPLOYED
NAME OCCUPATION AGE SINCE
---- ---------- --- --------
John R. Snedegar Chief Executive Officer and President 51 1998
Dale W. Christensen Executive Vice-President and Chief Financial Officer 48 1999
Jeff Sanderson Executive Vice-President, Business Development 43 1985
Nancy Pope Nelson Executive Vice-President and Chief Operating Officer 48 2001
Sue Fritts Executive Vice-President 45 2001
Joseph E. Root Senior Vice-President, General Counsel and Secretary 56 2000
DALE W. CHRISTENSEN
Mr. Christensen is the Executive Vice President and Chief Financial Officer
of the Company and has been since June 14, 1999. Mr. Christensen was Chief
Financial Officer and Controller of Teltrust, Inc. from February 1999 to June
1999. He was Chief Operating Officer and Chief Financial Officer of United
Digital Network, Inc. from June 1992 through February 1999.
JEFF SANDERSON
Mr. Sanderson, Executive Vice President of the Company, was one of the
original founders of ACS Systems, Inc. in 1985. In May 1998, ACS Systems, Inc.
was merged into the Company. Prior to this position, Mr. Sanderson served as
President, System Development Division, of ACS Systems, Inc. since 1994. Prior
to forming ACS Systems, Inc., Mr. Sanderson was a Senior Systems Programmer for
Pacific Bell from June 1980 until November 1990.
NANCY POPE NELSON
Ms. Nelson is Executive Vice-President and Chief Operating Officer of the
Company and has been since January 2001. Prior to joining the Company, she
served as Chief Operating Officer for QuadraMed and, prior to its acquisition by
QuadraMed in March 1999, for Compucare, both of which companies provide software
and services to healthcare providers. In her career, Ms. Nelson has managed
software development, high tech product management, customer service and
support, outsourcing, sales and marketing, and other business functions for
technology companies and consulting firms in the public and private sectors.
SUE FRITTS
Ms. Fritts is Executive Vice-President of the Company, a position she has
held since March 2001. Previously Ms. Fritts was National Lender Solutions
Executive Vice-President and Regional Manager of Fidelity National Financial,
Inc., a position she had held since January 1999. She joined the Fidelity
organization as Executive Vice-President of the Credit Division in 1998, coming
from the First American Financial organization. She had been with that company
through a number of acquisitions, extending back to First American's purchase of
real estate-related businesses from TRW Information Services in 1993.
JOSEPH E. ROOT
Mr. Root is Senior Vice President and General Counsel of the Company and
has been since April 12, 2000. Mr. Root was General Counsel of Marquip, Inc.,
Phillips, Wisconsin, from 1994 to April of 2000. Prior to that he was Group
Counsel to Johnson Controls, Inc., Milwaukee, Wisconsin. He previously engaged
in private practice in New York, NY.
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PRINCIPAL STOCKHOLDERS
The following table shows, with respect to each person or entity known to
the Company to be the beneficial owner of more than 5% of the Company's Common
Stock as of April 2, 2001 (1) the number of shares of Common Stock so owned, and
(2) the percentage of all shares outstanding represented by such ownership
(based upon the number of shares outstanding as of April 2, 2000).
NUMBER PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OF SHARES OF CLASS
------------------------------------ --------- --------
Fidelity National Financial, Inc. ...................... 9,478,364(1) 71.2%
17911 Von Karman Avenue
Irvine, California 92614
Richard H. Pickup....................................... 1,577,859 11.8%
Wedbush Morgan Securities
610 Newport Center Dr.
Newport Beach, CA 92660
John R. Snedegar........................................ 1,041,603(3) 7.8%
Micro General Corp.
2510 North Red Hill Ave.
Santa Ana, CA 92705
Carolyn P. Hallinan..................................... 666,667 5.0%
Cross Atlantic Capital Partners
Five Radnor Corporate Center
Radnor, PA 19087
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(1) Represents 8,689,364 shares held of record by Fidelity National Financial,
Inc.; presently exercisable warrants to purchase 12,500 shares of Common
Stock at $1.50; presently exercisable warrants to purchase 250,000 shares of
Common Stock at $1.00 per share; and a note convertible into 526,500 shares
of Common Stock.
(2) Includes 149,900 shares of Common Stock held by the Pickup Trust; presently
exercisable warrants held by Dito Caree LP to purchase 225,000 shares of
Common Stock at $1.50 per share; and presently exercisable options to
purchase 71,667 shares of Common Stock.
(3) Includes presently exercisable warrants to purchase 100,000 shares of Common
Stock at $1.50 per share; and presently exercisable options to purchase
718,270 shares of Common Stock.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership as of April 2,
2001, of the Common Stock of the Company by each director/nominee who owns
shares, all executive officers named in the Summary Compensation Table, and all
directors and executive officers as a group. The information as to beneficial
stock ownership is based on data furnished by the persons concerning whom such
information is given. Percentage of Class is based on number of shares
outstanding as of April 2, 2001.
NUMBER OF
SHARES NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OPTIONS(1) TOTAL OF CLASS
------------------------------------ --------- ---------- --------- --------
William P. Foley, II.......................... 616,667 616,667 4.6%
Fidelity National Financial, Inc.
17911 Von Karman Avenue
Irvine, CA 92614
Patrick F. Stone.............................. 489,129 489,129 3.7
Fidelity National Financial, Inc.
17911 Von Karman Avenue
Irvine, CA 92614
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NUMBER OF
SHARES NUMBER OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED OPTIONS(1) TOTAL OF CLASS
------------------------------------ --------- ---------- --------- --------
John R. Snedegar.............................. 323,333 718,270 1,041,603 7.8
Micro General Corp.
2510 North Red Hill Ave.
Santa Ana, CA 92705
Dwayne Walker................................. 30,001 30,001 *
NetworkCommerce
411 First St., #200
Seattle, WA 98104
Bradley Inman................................. 20,000 20,000 *
HomeGain
1250 45th St., #200
Emeryville, CA 94608
John McGraw................................... 20,000 20,000 *
TopClaims
1922 Zanker Rd., #4
San Jose, CA 95112
Richard H. Pickup............................. 1,506,192 71,667 1,577,859 11.8
Wedbush Morgan Securities
610 Newport Center Dr.
Newport Beach, CA 92660
Carl A. Strunk................................ 38,332 38,332 *
American National Financial
1111 E. Katella, #220
Orange, CA 92867
Dale W. Christensen........................... 1,929 51,667 53,596 *
Micro General Corp.
2510 North Red Hill Ave.
Santa Ana, CA 92705
Jeff Sanderson................................ 97,834 97,834 *
Micro General Corp.
2510 North Red Hill Ave.
Santa Ana, CA 92705
Nancy Pope Nelson............................. 0 0 *
Micro General Corp.
2510 North Red Hill Ave.
Santa Ana, CA 92705
Sue Fritts.................................... 0 0 *
Micro General Corp.
2510 North Red Hill Ave.
Santa Ana, CA 92705
Joseph E. Root................................ 33,333 33,333 *
Micro General Corp.
2510 North Red Hill Ave.
Santa Ana, CA 92705
All directors and officers (13 persons)....... 1,831,454 2,186,900 4,018,354 30.2%
- ---------------
* Represents less than 1% of the Company's Common Stock.
(1) Represents shares subject to stock options that are exercisable on April 2,
2001 or become exercisable within 60 days of April 2, 2001.
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EXECUTIVE COMPENSATION
The following Summary Compensation Table shows compensation paid by the
Company and its subsidiaries to the Chief Executive Officer and the three most
highly compensated executive officers receiving over $100,000 in total
compensation during the years indicated.
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
SALARY BONUS AWARDS --
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(2) OPTIONS(#)
--------------------------- ---- --------- ------- ------------
John R. Snedegar................................... 2000 249,984 150,000 100,000
Chief Executive Officer 1999 177,073 150,000 250,000
and President 1998 N/A 600,000
Dale W. Christensen................................ 2000 131,867 25,000 25,000
Executive Vice-President and 1999 68,670 100,000
Chief Financial Officer 1998 N/A
Jeff Sanderson..................................... 2000 213,733
Executive Vice President, 1999 177,375 35,000 72,000
Business Development 1998 102,156 75,000
Joseph E. Root..................................... 2000 176,539 50,000
Senior Vice President, General Counsel 1999 N/A
and Secretary 1998 N/A
- ---------------
(1) Amounts shown for the indicated fiscal year include amounts deferred at the
election of the named executive officer pursuant to the Company's 401(k)
plan.
(2) Bonuses were awarded during the year following the fiscal year to which the
bonuses relate, based on an evaluation by the Compensation Committee of the
Board of Directors. Amounts shown for the indicated fiscal year include cash
bonus amounts earned in the indicated year.
OPTION GRANTS
The following table provides information as to options to purchase Common
Stock granted to the persons named in the Summary Compensation Table during 2000
pursuant to the Company's 1998 and 1999 Stock Incentive Plans.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
PERCENTAGE OF TOTAL STOCK PRICE APPRECIATION
NUMBER OF OPTIONS GRANTED TO EXERCISE OR FOR OPTION TERM(1)
SECURITIES UNDERLYING EMPLOYEES IN BASE PRICE ------------------------
NAME OPTIONS GRANTS FISCAL YEAR ($/SHARE) EXPIRATION DATE 5%($) 10%($)
---- --------------------- ------------------- ----------- --------------- --------- -----------
John R. Snedegar..... 100,000 15.0% 15.25 Jan. 11, 2010 959,064 2,430,457
Dale W. Christensen.. 25,000 3.8% 9.88 Jun. 7, 2010 155,133 393,330
Joseph E. Root....... 50,000 7.5% 17.00 Feb. 14, 2010 534,560 1,354,681
These are assumed rates of appreciation, and are not intended to forecast future
appreciation of the Company's Common Stock.
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OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table summarizes information regarding exercises of stock
options by the persons named in the Summary Compensation Table during 2000 and
unexercised options held by them as of December 31, 2000.
AGGREGATED STOCK OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2000 DECEMBER 31, 2000
ACQUIRED ON VALUE ---------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISEABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- -------------- ----------- -------------
John R. Snedegar............ 81,730 1,400,120 718,270 50,000 1,432,350 78,500
Dale W. Christensen......... 15,000 232,216 51,667 58,333 132,784 85,499
Jeff Sanderson.............. 22,500 263,523 86,334 24,166 139,208 53,382
Joseph E. Root.............. None 16,667 33,333 N/A N/A
In accordance with the rules of the Securities and Exchange Commission,
values are calculated by subtracting the exercise price from the fair market
value of the underlying Common Stock. For purposes of this table, the fair
market value on December 31, 2000 is deemed to be $6.44, the closing price of
the Company's Common Stock on December 31, 2000.
EMPLOYMENT AGREEMENTS
The Company entered into a three-year employment agreement (the
"Agreement") with its President and Chief Executive Officer, Mr. Snedegar,
effective April 15, 1999, replacing all other agreements entered into between
the parties, but not superceding the Inducement Agreement dated August 1998. His
minimum annual base salary is $250,000. The Agreement includes other
compensation and executive fringe benefits, including an annual bonus equal to
ten percent (10%) of the audited pre-tax profits for each calendar year, but no
less than $150,000 for 1999. For calendar year 2002, the bonus calculation shall
be prorated for the period from January 1, 2002 through the end of the term.
There will be a transactional bonus paid equal to 5% of the net transaction
proceeds, as defined in the Agreement for the sale of all or a majority interest
in the Company's subsidiaries, or all or substantially all of the assets of any
material division of the Company or its subsidiaries. In the event of
termination of the agreement for Good Reason (as defined in the agreement as a
change in control) or if Mr. Snedegar's employment is terminated in breach of
this Agreement then he shall receive (i) his salary through the date of
termination, (ii) severance pay in an amount equal to his annual salary in
effect as of the date of termination multiplied by the greater number of years
remaining in the term of employment, including partial years, or 2 years, any
pro-rated bonus earned, any transaction bonus due and accrued and unpaid expense
reimbursement, and (iii) any transaction bonus owing. The Agreement allows the
Company to terminate Mr. Snedegar upon written notice without cause with terms
specified in the Agreement. Upon Mr. Snedegar's death, his estate will receive a
payment in the amount of the base salary through date of death, any pro-rated
bonus, any transaction bonus and unpaid expense reimbursement. Upon incapacity
or disability for a continuous period of four months, the Company may terminate
the employment contract with Mr. Snedegar upon payment of an amount equal to his
minimum annual base salary, without offset for the remainder of the Agreement.
CHANGE IN CONTROL ARRANGEMENTS
All stock options awarded under Company stock incentive plans become fully
vested upon a change in control of the Company, including by merger or sale of
all or substantially all of the Company assets.
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REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
GENERAL
The Compensation Committee of the Board of Directors is responsible for
establishing and administering the policies that govern executive compensation
and benefit practices. The Compensation Committee evaluates the performance of
the executive officers and determines their compensation levels, in terms of
salary, annual bonus and related benefits, all subject to Board approval. The
Compensation Committee has access to independent compensation data for use in
assessing levels of compensation for officers of the Company.
COMPENSATION PHILOSOPHY
The Company's executive compensation programs are designed to (i) provide
levels of compensation that integrate pay and incentive plans with the Company's
strategic goals, so as to align the interests of executive management with the
long-term interests of the stockholders; (ii) motivate Company executives to
achieve the strategic business goals of the Company and to recognize their
individual contributions; and (iii) provide compensation opportunities which are
competitive to those offered by other national title insurance companies and
other middle-market corporations similar in size and performance. Although the
exact identity of the corporations surveyed varies, these generally include
technology companies and other corporations equal to or larger than the Company.
The Compensation Committee believes that the components of executive
compensation should include base salary, annual cash bonus, stock option grants
and other benefits and should be linked to individual and Company performance.
With regard to the Company's performance, the measures used for determining
appropriate levels of compensation for executive officers include the Company's
national market share, net margin, quality of service, meeting strategic goals
within the current economic climate and industry environment, scope of
responsibilities, expansion by acquisition or otherwise, and profit retention
and profitability, all of which combine to enhance stockholder value.
STOCK OPTION GRANTS
As indicated above, an important element of the Company's compensation
philosophy is the desire to align the interests of the executive officers with
the long-term interests of the Company's stockholders. The purpose of the
Company's Stock Incentive Plan is to attract, retain and award executive
officers and directors and to furnish incentives to these persons to improve
operations, increase profits and positively impact the Company's long-term
performance.
April 2, 2001
The Compensation Committee
William P. Foley, II
Dwayne Walker
John McGraw
REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors submits the following report
on the performance of certain of its responsibilities for the year 2000. The
Audit Committee is composed of three independent directors, as determined under
NASDAQ rules, including Messrs. Strunk, Pickup and Inman. The Charter of the
Audit Committee was adopted by the Board of Directors in its present form on
April 12, 2000 and is included in this proxy statement as Exhibit A.
Management of the Company has primary responsibility for the financial
statements and the overall reporting process, including the Company's system of
internal controls. The independent auditors are responsible for performing an
independent audit of the Company's consolidated financial statements in
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accordance with auditing standards generally accepted in the United States. This
audit serves as a basis for the auditors' opinion in the annual report to
stockholders addressing whether the financial statements fairly present the
Company's financial position, results of operations and cash flows. The Audit
Committee's responsibility is to monitor and oversee these processes.
In reviewing the independence of the Company's outside auditors, the
Committee has received from KPMG the written disclosures and letter regarding
relationships between KPMG and its related entities and the Company and its
related entities and has discussed with KPMG its independence from the Company,
as required by Independence Standards Board Standard No. 1.
In fulfilling its responsibilities relating to the Company's internal
control, accounting and financial reporting policies and auditing practices, the
Committee has reviewed and discussed with management and KPMG the Company's
audited financial statements for 2000. In this connection, the Committee has
discussed with KPMG its judgments about the quality, in addition to the
acceptability, of the Company's accounting principles as applied in its
financial reporting, as required by Statement on Auditing Standards No. 61.
Based on these reviews and discussions, the Committee recommended to the Board
of Directors that the audited financial statements be included in the Company's
Annual Report on SEC Form 10-K for the year ended December 31, 2000, for filing
with the Securities and Exchange Commission.
The Audit Committee
Carl A. Strunk
Richard H. Pickup
Bradley Inman
April 19, 2001
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PERFORMANCE GRAPH
Pursuant to recent SEC regulations, listed below is the performance of the
cumulative total return to shareholders (stock price appreciation) during the
previous 5 years in comparison to returns on the NASDAQ 100 index and NASDAQ
Computer index. The graph assumes an initial investment of $100.00 on January 1,
1996, with dividends reinvested over the periods indicated.
[PERFORMANCE GRAPH]
---------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000
---------------------------------------------------------------------------------
MGEN 100.00 116.66 91.67 283.33 1,087.51 417.96
NASDAQ 100.00 123.04 150.76 212.45 383.80 245.19
NASDAQ Computer 100.00 134.07 162.18 351.39 738.78 229.02
---------------------------------------------------------------------------------
CERTAIN RELATIONSHIPS
None
TRANSACTIONS WITH MANAGEMENT AND OTHERS
On May 19, 2000, Micro General entered into an Intellectual Property
Transfer Agreement with TXMNet, Inc. that provided the assets to enable TXMNet
to begin operations in the field of real estate transaction facilitation. Under
the agreement, the Company conveyed its 50% joint venture interest in RealEC,
Inc., together with software and other intellectual property related to the real
estate transaction business, in return for 6,500,000 shares of convertible,
non-voting preferred stock. TXMNet changed its name to RealEC Technologies, Inc.
on February 13, 2001.
The following officers and directors of the Company are also officers and
directors of RealEC Technologies, Inc.: John R. Snedegar -- Chief Executive
Officer; William P. Foley, II -- Director; and Patrick F. Stone -- Director.
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PROPOSAL 2
APPROVAL OF AN AMENDMENT TO THE MICRO GENERAL CORPORATION
1999 STOCK INCENTIVE PLAN
The Board of Directors of the Company has adopted, subject to stockholder
approval, an amendment to the Micro General Corporation 1999 Stock Incentive
Plan (the "1999 Plan") to increase the number of shares of Common Stock which
may be granted under the 1999 Plan from an aggregate of 2,000,000 to an
aggregate of 3,000,000 (the "1999 Plan Amendment"). Assuming the 1999 Plan
Amendment is approved, the total number of shares which may be granted under the
1999 Plan following the Annual Meeting will be 1,031,450. The Board of Directors
believes that the 1999 Plan Amendment is necessary to enhance the ability of the
Company to attract and retain the services of qualified employees, officers and
directors (including non-employee officers and directors), and consultants and
other service providers upon whose judgment, initiative and efforts and
successful conduct and development of the business of the Company largely
depends, by providing them with an opportunity to participate in the ownership
of the Company and thereby have an interest in the success and increased value
of the Company. The issuance of the newly authorized shares of Common Stock as
stock options will, upon exercise by the holder, have a dilutive effect on the
Company's outstanding shares of Common Stock.
VOTE REQUIRED FOR APPROVAL OF THE AMENDMENT
Approval of a majority of the shares of Common Stock present or represented
by proxy and entitled to vote at the Annual Meeting is required to approve the
Amendment.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THIS
PROPOSAL AMENDING THE MICRO GENERAL CORPORATION 1999 STOCK INCENTIVE PLAN.
1999 PLAN TERMS
The purpose of the 1999 Plan is to enable the Company to attract and retain
persons of ability as employees, officers, directors and consultants and to
motivate such persons by providing them with an equity participation in the
Company. The 1999 Plan provides for the grant by the Company of options to
purchase up to an aggregate of 2,000,000 shares of Common Stock of the Company
to its officers, directors, key employees, consultants and other business
persons having important business relationships with the Company, or any parent
or subsidiary corporation of the Company. Upon approval of the proposed
amendment, a total of 3,000,000 shares of Common Stock will be reserved for
issuance under the 1999 Plan. Shares subject to options granted that can no
longer be exercised and shares issued pursuant to an option exercise that are
reacquired by the Company shall be again eligible for issuance under the 1999
Plan. The 1999 Plan expires in 2009, unless terminated earlier by the Board of
Directors.
The 1999 Plan provides that it is to be administered by the Board of
Directors or a committee appointed by the Board. Presently, the Compensation
Committee of the Company's Board of Directors administers the 1999 Plan (the
"Administrator"). The Administrator has broad discretion to determine the
persons entitled to receive options under the 1999 Plan, the terms and
conditions on which options are granted and the number of shares subject
thereto. For this reason, it is not possible to determine the benefits or
amounts that will be received by any particular individual or individuals in the
future.
Options granted under the 1999 Plan are "nonqualified stock options," i.e.,
options that do not qualify as "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code. Options may be granted under the 1999
Plan for terms of up to 10 years. The exercise price of options must be at least
equal to the fair market value of the Common Stock of the Company as of the date
of grant. No optionee may be granted options in excess of 500,000 shares in any
year. Options granted under the 1999 Plan to officers, employees, directors, or
consultants of the Company are nontransferable other than upon death by will and
the laws of descent and distribution, and generally may be exercised only while
the optionee is employed or
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retained by the Company or within three months after termination for any reason,
with the exact date of expiration to be determined by the Administrator.
Upon the occurrence of a consolidation or merger in which the Company is
not the surviving corporation, the sale of substantially all of the Company's
assets, the acquisition of more than 50% of the total combined voting power of
the Company's outstanding stock, a liquidation or dissolution of the Company and
certain other similar events (a "Change-of-Control Event"), all outstanding
options under the 1999 Plan shall accelerate immediately prior to such
Change-of-Control Event. In addition, upon a Change-of-Control Event,
outstanding options shall terminate unless (i) the Common Stock of the Company
remains listed or admitted to trading on a national stock exchange or NASDAQ,
(ii) provision is made in writing for the continuance of the 1999 Plan and for
the assumption of outstanding options or (iii) other adjustments are made in the
Administrator's discretion to reflect the Change-of-Control Event. The
Administrator shall provide notice to all participants 15 days prior to a
Change-of-Control Event. In the event that the outstanding shares of Common
Stock under the 1999 Plan are increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of a recapitalization, stock split, combination of shares,
reclassification, reincorporation, stock dividend or other change in the
corporate structure of the Company, appropriate adjustments will be made by the
Board of Directors to the aggregate number and kind of shares subject to the
1999 Plan and the number and kind of shares and the price per share subject to
outstanding options in order to preserve, but not to increase, the benefits to
persons then holding options.
Payment for shares upon exercise of an option must be made in full at the
time of exercise. The form of consideration payable upon exercise of an option
shall, at the discretion of the Administrator and subject to any legal
restrictions, be by (i) tender of United States dollars in cash or check, (ii)
surrender of shares of Common Stock held by the option holder for at least 6
months, which shall be deemed to have a value equal to the aggregate fair market
value of such shares determined on the date of exercise, (iii) issuance of a
promissory note acceptable to the Administrator, (iv) waiver of compensation due
or accrued to the option holder or (v) pursuant to other methods described in
the 1999 Plan.
The 1999 Plan may be amended, altered, suspended or terminated at any time
by the Board of Directors as it may deem advisable, subject to any required
stockholder approval.
SUMMARY OF FEDERAL INCOME TAX CONSEQUENCES OF THE 1999 PLAN
The following is a summary of certain federal income tax consequences of
participation in the 1999 Plan. The summary should not be relied upon as being a
complete statement of all possible federal income tax consequences. Federal tax
laws are complex and subject to change. Participation in the 1999 Plan may also
have consequences under state and local tax laws which vary from the federal tax
consequences described below. For such reasons, the Company recommends that each
participant consult his or her personal tax advisor to determine the specific
tax consequences applicable to him or her.
No taxable income is recognized by an optionee upon the grant of a
nonqualified option. Upon exercise, however, the optionee will recognize
ordinary income in the amount by which the fair market value of the shares
purchased, on the date of exercise, exceeds the exercise price paid for such
shares. The income recognized by the optionee who is an employee will be subject
to income tax withholding by the Company out of the optionee's current
compensation. If such compensation is insufficient to pay the taxes due, the
optionee will be required to make a direct payment to the Company for the
balance of the tax withholding obligation. The Company will be entitled to a tax
deduction equal to the amount of ordinary income recognized by the optionee,
provided that certain reporting requirements are satisfied. If the exercise
price of a nonqualified option is paid by the optionee in cash, the tax basis of
the shares acquired will be equal to the cash paid plus the amount of income
recognized by the optionee as a result of such exercise. If the exercise price
is paid by delivering shares of Common Stock of the Company already owned by the
optionee or by a combination of cash and already-owned shares, there will be no
current taxable gain or loss recognized by the optionee on the already-owned
shares exchanged (however, the optionee will nevertheless recognize ordinary
income to the extent that the fair market value of the shares purchased on the
date of exercise exceeds the price paid, as
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described above). The new shares received by the optionee, up to the number of
the old shares exchanged, will have the same tax basis and holding period as the
optionee's basis and holding period in the old shares. The balance of the new
shares received will have a tax basis equal to any cash paid by the optionee
plus the amount of income recognized by the optionee as a result of such
exercise, and will have a holding period commencing with the date of exercise.
Upon the sale or disposition of shares acquired pursuant to the exercise of a
nonqualified option, the difference between the proceeds realized and the
optionee's basis in the shares will be a capital gain or loss and will be
treated as long-term capital gain or loss if the shares have been held for more
than the applicable statutory holding period (which is currently more than one
year for long-term capital gains).
TAX WITHHOLDING
Under the 1999 Plan, the Company has the power to withhold, or require a
participant to remit to the Company, an amount sufficient to satisfy Federal,
state and local withholding tax requirements with respect to any options
exercised under the 1999 Plan. To the extent permissible under applicable tax,
securities, and other laws, the Administrator may, in its sole discretion,
permit a participant to satisfy an obligation to pay any tax to any governmental
entity in respect of any option up to an amount determined on the basis of the
highest marginal tax rate applicable to such participant, in whole or in part,
by (i) directing the Company to apply shares of Common Stock to which the
participant is entitled as a result of the exercise of an option or (ii)
delivering to the Company shares of Common Stock owned by the participant.
STOCK PRICE
On April 2, 2001, the closing price of the Common Stock of the Company as
quoted on the NASDAQ National Market was $8.06.
PARTICIPATION IN THE 1999 PLAN
Since the 1999 Plan was approved by the stockholders, a total of 1,968,550
options have been granted, including options that terminated before being
exercised. As of April 2, 2001, there were options to purchase 1,804,671 shares
of Common Stock outstanding and 99,213 shares of Common Stock had been issued
pursuant to the exercise of options.
The following table sets forth certain information as of April 2, 2001 with
respect to options and rights granted under the 1999 Plan since inception to (i)
each named executive officer listed in the Summary Compensation Table; (ii) all
current executive officers as a group; (iii) all current non-employee directors
as a group; (iv) each director nominee; (v) each holder of at least five percent
of options granted under the 1999 Plan; and (vi) all current employees,
excluding executive officers, as a group. Grants under the 1999 Plan are
discretionary, and as of the date of this Proxy Statement there has been no
determination by the Board of
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Directors with respect to future awards under the 1999 Plan. The Company expects
to grant options to officers, directors and other employees of the Company in
the future.
NUMBER OF AVERAGE WEIGHTED
SECURITIES EXERCISE
UNDERLYING OPTIONS OR BASE
NAME GRANTED(#) PRICE($/SH)
---- ------------------ ----------------
William P. Foley, II................................ 200,000 10.06
Patrick F. Stone.................................... 100,000 4.875
John R. Snedegar.................................... 250,000 9.025
Dwayne Walker....................................... 25,000 4.875
Bradley Inman....................................... 40,000 9.50
John McGraw......................................... 40,000 9.50
Richard H. Pickup................................... 25,000 4.875
Carl A. Strunk...................................... 25,000 4.875
Dale W. Christensen................................. 25,000 9.88
Jeff Sanderson...................................... 35,000 4.875
Nancy Pope Nelson................................... 100,000 7.50
Joseph E. Root...................................... 50,000 17.00
All Current Executive Officers (5 persons).......... 460,000 9.29
All Current Non-Employee Directors (7 persons)...... 455,000 6.53
All Current Employees, Excluding Executive
Officers.......................................... 934,050 8.70
All Holders of at least 5% of Options Granted, as a
group............................................. 650,000 8.47
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PROPOSAL 3
APPROVAL OF AN AMENDMENT
TO THE MICRO GENERAL CORPORATION CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF SHARES AUTHORIZED FOR ISSUANCE
The Micro General Corporation Certificate of Incorporation, as amended on
February 8, 1999, authorizes the Company to issue a total of 20,000,000 shares
of Common Stock. The purpose of this increase is to have available for issuance
a sufficient number of shares of Common Stock to permit additional issuances
under the Company's Stock Incentive and Employee Stock Purchase Plans, as well
as to permit the Company to consider transactions requiring the issuance of
stock, without requiring additional approvals of stockholders, other than those
required by applicable laws. The issuance of additional shares of Common Stock
could have the effect of diluting earnings per share and book value per share.
Issuing additional shares of Common Stock may also have the effect of delaying
or preventing a change of control of the Company. The authorized but unissued
Common Stock could be issued in transactions that would make more difficult or
costly a takeover of the Company. The proposed Amendment is not being
recommended in response to any specific effort of which the Company is aware to
obtain control, and the Board has no present intention to use additional shares
of Common Stock to impede a takeover. The Board has no present intention to
issue additional shares at this time.
On April 23, 2001, the Company had issued a total of 13,267,581 shares of
Common Stock.
On March 7, 2001 the Board of Directors determined that it was in the
Company's best interest to have additional shares of Common Stock available for
issuance, and the Board adopted a resolution recommending that the Company's
stockholders approve an increase in the number of shares of Common Stock
authorized for issuance to a total of 50,000,000.
After approval by the stockholders and entry of the amendment by the
Secretary of State of the State of Delaware, Article 4 of the Company's
Certificate of Incorporation will read in its entirety as follows:
The total number of shares of stock which the Corporation shall
have the authority to issue is Fifty-One Million (51,000,000),
consisting of Fifty Million (50,000,000) shares of Common Stock,
par value $.05 per share (the "Common Stock"), and One Million
(1,000,000) shares of preferred stock, par value $.05 per share
(the "Preferred Stock").
VOTE REQUIRED FOR APPROVAL OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION
Approval of a majority of the shares of Common Stock present or represented
by proxy and entitled to vote at the Annual Meeting is required to approve the
amendment to the Certificate of Incorporation. Broker non-votes with respect to
this matter will not be deemed to have been cast either "for" or "against" the
matter, although they will be counted in determining if a quorum is present.
Proxies marked "abstain" or a vote to abstain by a stockholder present in person
at the Annual Meeting will have the same legal effect as a vote "against" the
matter because it represents a share present or represented at the meeting and
entitled to vote, thereby increasing the number of affirmative votes required to
approve this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF PROPOSAL 3, THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
INFORMATION CONCERNING AUDITORS
The Board has selected the accounting firm of KPMG LLP ("KPMG") to audit
the Company's financial statements for, and otherwise act as the Company's
independent certified public accountants with respect to, the fiscal year ending
December 31, 2001. KPMG or its predecessors have continuously acted as
independent certified public accountants for the Company in respect of its
fiscal years commencing with the fiscal year ended December 31, 1988.
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The Company incurred the following fees for audit (and non-audit) services
performed by KPMG with respect to fiscal 2000:
FINANCIAL INFORMATION
SYSTEMS DESIGN AND
AUDIT FEES(1) IMPLEMENTATION FEES ALL OTHER FEES
------------- --------------------- --------------
$152,800 $0 $0
- ---------------
(1) For the audit of the Company's financial statements for fiscal 2000 and for
the review of the Company's financial statements included in the Company's
Forms 10Q filed during fiscal 2000.
KPMG, the Company's independent public accountants, did not perform
non-audit services for the Company in 2000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16 of the Exchange Act of 1934, as amended, requires the Company's
executive officers and directors to file reports of their ownership, and changes
in ownership, of such securities with the SEC. Executive officers and directors
are required by the SEC's regulations to furnish the Company with copies of all
forms they file pursuant to Section 16 and the Company is required to report in
this Proxy Statement any failure of its directors and executive officers to file
by the relevant due date any of these reports during fiscal year 2000. Based
solely upon a review of the copies of the reports received by it, the Company
believes that all such filing requirements were satisfied.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Meeting. If
any other matters properly come before the Meeting, the enclosed proxy card
confers discretionary authority on the persons named in the enclosed proxy card
to vote as they deem appropriate on such matters. It is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
STOCKHOLDER PROPOSALS
Any proposal that a stockholder wishes to be considered for inclusion in
the Proxy and Proxy Statement relating to the Annual Meeting of Stockholders to
be held in 2002 must be received by the Company no later than January 2, 2002.
Any other proposal that a stockholder wishes to bring before the 2002 Annual
Meeting of Stockholders without inclusion of such proposal in the Company's
proxy materials must also be received by the Company no later than January 2,
2002. All proposals must comply with the applicable requirements or conditions
established by the Securities and Exchange Commission, which requires among
other things, certain information to be provided in connection with the
submission of stockholder proposals. All proposals must be directed to the
Secretary of the Company at 2510 Red Hill Avenue, Suite 230, Santa Ana,
California 92705. The persons designated as proxies by the Company in connection
with the 2002 Annual Meeting of Stockholders will have discretionary voting
authority with respect to any stockholder proposal for which the Company does
not receive timely notice.
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AVAILABLE INFORMATION
The Company files Annual Reports on Form 10-K with the Securities and
Exchange Commission. A copy of the Annual Report on Form 10-K for the fiscal
year ended December 31, 2000 (except for certain exhibits thereto), may be
obtained, free of charge, upon written request by any stockholder to Micro
General Corp., 2510 Red Hill Avenue, Suite 230, Santa Ana, California 92705,
Attention: Investor Relations. Copies of all exhibits to the Annual Report on
Form 10-K are available upon a similar request, subject to payment of a $.15 per
page charge to reimburse the Company for its expenses in supplying any exhibit.
By Order of the Board of Directors
/s/ JOSEPH E. ROOT
JOSEPH E. ROOT
Corporate Secretary
Dated: April 30, 2001
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EXHIBIT A
CHARTER OF THE AUDIT COMMITTEE OF THE
MICRO GENERAL CORPORATION
BOARD OF DIRECTORS, INC.
I. Audit Committee Purpose
The Audit Committee (hereinafter sometimes referred to as the "Committee")
is appointed by the Board of Directors (the "Board") to assist the Board in
fulfilling its oversight responsibilities. The Audit Committee's primary duties
and responsibilities are to:
1. Monitor the integrity of the Company's financial reporting process and
systems of internal controls regarding finance, and accounting.
2. Monitor the independence and performance of the Company's independent
auditors and internal auditing department.
3. Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of
Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct access to the
independent auditors as well as anyone in the organization. The Audit Committee
has the ability to retain, at the Company's expense, legal, accounting or other
consultants or experts it deems necessary in the performance of its duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the National
Association of Securities Dealers Automated Quotation ("NASDAQ"). The Audit
Committee shall be comprised of three or more directors as determined by the
Board, each of whom shall be independent non-executive directors, free from any
relationship that would interfere with the exercise of his or her independent
judgment. The NASDAQ requires annual written affirmation of the Audit Committee
independence. The criteria for assessing independence are:
1. Former employees and family members of former employees. Must be a
minimum of three years since employment with the Company, except that
NASDAQ rules allow one former employee or one family member of a former
employee, with less than three years separation, to be an audit
committee member if it is determined by the Board to be in the Company's
best interest.
2. Business Relationships. If a director's employer receives revenue in
excess of $200,000 per year, or five (5%) percent of its total revenue
from the Company, the director is not considered independent.
3. Cross-directorships. An audit committee member's compensation cannot be
impacted by an employee of the Company.
All members of the Committee shall have a basic understanding of finance
and accounting and be able to read and understand fundamental financial
statements, and at least one member of the Committee shall have accounting or
related financial management expertise.
Audit Committee members shall be appointed by the Board on recommendation
of the Nominating Committee. If the Chairman of the Audit Committee (the
"Committee Chairman") is not designated or present, the members of the Committee
may designate a Committee Chairman by majority vote of the Committee membership.
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. The Audit Committee Chairman shall prepare and/or
approve an agenda in advance of each meeting. The Committee should meet
privately in executive session at least annually with management, the director
of the internal auditing department, the independent auditors, and as a
committee to discuss any matters that the Committee or each of these groups
believe should be discussed. In addition, the Committee, or at least its
Committee Chairman, should communicate with management and the independent
auditors quarterly to
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24
review the Company's financial statements and significant findings based upon
the auditors limited review procedures.
III. Audit Committee Responsibilities and Duties
REVIEW PROCEDURES
1. Review and re-assess the adequacy of this Charter at least annually.
Submit the charter to the Board for approval and have the document
published at least every three years in accordance with Securities and
Exchange Commission ("SEC") regulations.
2. Review the Company's annual audited financial statements prior to filing
or distribution. Review should include discussion with management and
independent auditors of significant issues regarding accounting
principles, practices, and judgments.
3. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial
reporting processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control, and
report such exposures. Review significant findings prepared by the
independent auditors and the internal auditing department together with
management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of earnings
and/or the Company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's
accounting principles and any items required to be communicated by the
independent auditors in accordance with SAS 61 (see below). The
Committee Chairman may represent the entire Audit Committee for purposes
of this review.
INDEPENDENT AUDITORS
1. The independent auditors are ultimately accountable to the Audit
Committee and the Board. The Committee shall review the independence and
performance of the auditors and annually recommend to the Board the
appointment of the independent auditors or approve any discharge of
auditors when circumstances warrant.
2. Approve the fees and other significant compensation to be paid to the
independent auditors. Review and approve requests for significant
management consulting engagements to be performed by the independent
auditors' firm and be advised of any other significant study undertaken
at the request of management that is beyond the scope of the audit
engagement letter.
3. On an annual basis, the Committee shall review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditors' independence.
4. Review the independent auditors' audit plan. Discuss scope, staffing,
locations, reliance upon management, and internal audit and general
audit approach.
5. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required to
be communicated to audit committees in accordance with AICPA SAS 61.
6. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in its
financial reporting.
INTERNAL AUDIT DEPARTMENT AND LEGAL COMPLIANCE
1. Review the budget, plan, changes in plan, activities, organizational
structure, and qualifications of the internal audit department, as
needed.
2. Review the appointment, performance, and replacement of the senior
internal audit executive.
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25
3. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
4. On at least an annual basis, review with the Company's counsel, any
legal matters that could have a significant impact on the organization's
financial statements, the Company's compliance with applicable laws and
regulations, and inquiries received from regulators or governmental
agencies.
OTHER AUDIT COMMITTEE RESPONSIBILITIES
1. Annually prepare a report to stockholders as required by the SEC. The
report should be included in the Company's annual proxy statement.
2. Perform any other activities consistent with this Charter, the Company's
by-laws, and governing law, as the Committee or the Board deems
necessary or appropriate.
3. Maintain minutes of meetings and periodically report to the Board on
significant results of the foregoing activities.
A-3
26
PROXY
MICRO GENERAL CORPORATION
2510 RED HILL AVENUE
SANTA ANA, CALIFORNIA 92705
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William P. Foley, II and Patrick F. Stone as
proxies, each with the power to appoint his substitute, and hereby authorizes
each of them to represent and to vote, as designated below, all shares of Common
Stock of Micro General Corporation held of record by the undersigned on April
23, 2000 at the Annual Meeting of Stockholders to be held on June 19, 2001 or
any adjournment thereof.
1. ELECTION OF [ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote
DIRECTORS: (except as marked to the contrary for the nominees listed below
below)
(INSTRUCTION: to withhold authority to vote for an individual nominee, strike a
line through the nominee's name below)
William P. Foley, II Patrick F. Stone Bradley Inman John McGraw
Carl A. Strunk Richard H. Pickup John Snedegar Dwayne M. Walker
2. To consider and vote upon a proposal to approve an amendment to increase
shares available under Micro General Corporation's 1999 Stock Incentive Plan;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To consider and vote upon a proposal to amend the Micro General Corporation's
Certificate of Incorporation;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the proxies are authorized to vote upon such other business
as may properly come before the meeting thereof.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE COMPANY NOMINEES AND
FOR ALL PROPOSALS.
DATED:
---------------------------------
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(Signature)
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(Signature)
27
Please sign exactly as name(s)
appear below. When shares are held by more
than one owner, all should sign. When
signing as attorney, executor,
administrator, trustee, or guardian, please
give full title as such. If a corporation,
please sign in full corporate name by
President or authorized officer. If a
partnership, please sign in partnership name
by authorized person.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER.