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
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
SAC TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions 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:
SAC TECHNOLOGIES, INC.
4444 WEST 76TH STREET, SUITE 600
EDINA, MINNESOTA 55435
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 19, 1998
TO THE SHAREHOLDERS:
The annual meeting of shareholders (the "Annual Meeting") of SAC
Technologies, Inc., a Minnesota corporation (the "Company"), will be held on
Friday, June 19, 1998, at 2:00 p.m. P.S.T., at The Orleans, 4500 West Tropicana
Ave., Las Vegas, Nevada for the following purposes:
1) To elect directors to hold office for the ensuing year;
2) To ratify the appointment of Divine, Scherzer & Brody, Ltd. as
the Company's independent auditors for the fiscal year ending
December 31, 1998; and
3) To act upon such other business as may properly come before the
Annual Meeting, or any adjournment or adjournments thereof.
Shareholders of record at the close of business on April 17, 1998
are entitled to notice of and to vote at the Annual Meeting or any adjournment
or adjournments thereof.
Your attention is directed to the proxy statement accompanying this
Notice for a more complete statement of matters to be considered at the Annual
Meeting. A copy of the Company's Annual Report for the fiscal year ended
December 31, 1997 also accompanies this Notice.
You are cordially invited to attend the Annual Meeting. Whether or
not you plan to attend, please sign, date and return your proxy in the reply
envelope provided.
By Order of the Board of Directors,
/s/ Benedict A. Wittig
-----------------------------------
Benedict A. Wittig
Secretary
Minneapolis, Minnesota
Dated: April 30, 1998
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
SAC TECHNOLOGIES, INC.
4444 WEST 76TH STREET, SUITE 600
EDINA, MINNESOTA 55435
(MAILING ADDRESS)
---------
PROXY STATEMENT
---------
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 19, 1998 AT 2:00 P.M.
GENERAL INFORMATION
The accompanying proxy is solicited by the Board of Directors of SAC
Technologies, Inc., a Minnesota corporation (the "Company"), for use at its
annual meeting of shareholders to be held on June 19, 1998 (the "Annual
Meeting"), at 2:00 p.m. P.S.T., at The Orleans, 4500 West Tropicana Ave., Las
Vegas, Nevada, or any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Shareholders.
Solicitation of proxies may be made in person or by mail, telephone
or facsimile transmission by directors, officers and regular employees of the
Company. The directors, officers and regular employees of the Company will not
receive any additional compensation for such activities. The Company may also
request banking institutions, brokerage firms, custodians, nominees and
fiduciaries to forward solicitation materials to the beneficial owners of common
stock of the Company held of record by such persons, and the Company will
reimburse the reasonable forwarding expenses. The cost of this solicitation of
proxies will be paid by the Company. This Proxy Statement and the enclosed form
of proxy are furnished in connection with the proxy solicitation and are first
being mailed to shareholders on or about May 8, 1998.
A copy of the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1997, in substantially the form filed with the
Securities and Exchange Commission, is enclosed herewith. THE COMPANY WILL
FURNISH WITHOUT CHARGE TO ANY PERSON WHOSE PROXY IS BEING SOLICITED ADDITIONAL
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB, WITHOUT EXHIBITS, FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1997 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION, INCLUDING FINANCIAL STATEMENTS INCLUDED THEREIN, UPON WRITTEN
REQUEST TO SAC TECHNOLOGIES, INC., 4620 S. VALLEY VIEW BLVD., SUITE A1, LAS
VEGAS, NV 89103, ATTENTION: RONALD A. BURGMEIER. THE COMPANY WILL FURNISH
EXHIBITS UPON WRITTEN REQUEST TO THE ABOVE ADDRESS AND THE PAYMENT OF A FEE
COVERING THE COMPANY'S REASONABLE EXPENSES INCURRED IN FURNISHING SUCH EXHIBITS.
REVOCATION OF PROXY
Any shareholder returning the accompanying proxy may revoke such
proxy at any time prior to its exercise (a) by giving written notice to the
Company of such revocation, (b) by voting in person at the meeting, or (c) by
executing and delivering to the Company a later dated proxy. Attendance at the
Annual Meeting will not in itself constitute revocation of a proxy. Any written
notice or proxy revoking a proxy should be sent to SAC Technologies, Inc., 4620
S. Valley View Blvd., Suite A1, Las Vegas, NV 89103, Attention: Ronald A.
Burgmeier.
RECORD DATE AND VOTING
The voting securities of the Company are shares of its Common Stock,
$.01 par value per share ("Common Stock"), each share of which entitles the
holder thereof to one vote on each matter to come before the Annual Meeting or
any adjournment thereof.
At the close of business on April 17, 1998, the Company had issued
and outstanding 7,472,367 shares of Common Stock held of record by approximately
94 registered holders on behalf of approximately 1,584 beneficial owners. Only
holders of record of Common Stock are entitled to vote on matters that come
before the Annual Meeting or any adjournment thereof. As provided in the
Articles of Incorporation of the Company, there is no right of cumulative
voting. All matters being voted upon by the shareholders require a majority vote
of the shares of Common Stock represented at the Annual Meeting either in person
or by proxy.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the election inspectors appointed for the meeting and will
determine whether or not a quorum is present. The presence in person or by proxy
of the holders of a majority of the outstanding shares of Common Stock entitled
to vote at the Annual Meeting is necessary to constitute a quorum at the Annual
Meeting or any adjournment thereof. If a quorum is not present or represented at
the meeting, the shareholders entitled to vote, present in person, or
represented by proxy, have the power to adjourn the meeting from time to time,
without notice other than an announcement at the meeting, until a quorum is
present or represented. At any such reconvened meeting at which a quorum is
present or represented, any business may be transacted that might have been
transacted at the meeting as originally notified.
If an executed proxy is returned and the shareholder abstained from
voting on any matter, the shares represented by such proxy will be considered
present at the meeting for purposes of determining a quorum and for purposes of
calculating the vote, but will not be considered to have been voted in favor of
such matter. If an executed proxy is returned by a broker holding shares in
street name which indicates that the broker does not have discretionary
authority to vote on one or more matters as to certain shares, such shares will
be considered present at the meeting for purposes of determining a quorum, but
will not be considered to be voted at the meeting for purposes of calculating
the vote with respect to such matter.
ACTION TO BE TAKEN UNDER THE PROXY
Shares represented by properly executed and returned proxies will be
voted as specified on the proxies. Shares represented by proxies where no
specification has been made will be voted (i) FOR the election of the six
persons named in this Proxy Statement as nominees for election to the Board of
Directors, (ii) FOR the appointment of Divine, Scherzer & Brody, Ltd. as the
independent auditors of the Company for the current fiscal year; and (iii) in
the discretion of the proxy holders, as to any other business that properly
comes before the meeting. Shareholders may designate a person or persons other
than those named in the enclosed proxy to vote their shares at the Annual
Meeting or any adjournment thereof.
LEGAL PROCEEDINGS
No director, officer, affiliate, beneficial owner of more than 5% of
the common stock or shareholder of the Company is known to be an adverse party
to the Company or have a material interest adverse to the Company in a legal
proceeding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the information as of April 17, 1998,
regarding beneficial ownership of the Company's Common Stock, for (i) all
directors and executive officers of the Company, (ii) all directors and
executive officers as a group and (iii) each person known by the Company to be
the beneficial owner of 5% or more of the outstanding shares of Common Stock of
the Company.
SHARES BENEFICIALLY OWNED
NAME AND ADDRESS OF BENEFICIAL NUMBER PERCENT
- ------------------------------ ------ -------
OWNER
- -----
Barry M. Wendt 1,237,500 16.6%
4444 West 76th Street, Suite 600
Edina, Minnesota 55435
Richard T. Fiskum 1,237,500 16.6%
4444 West 76th Street, Suite 600
Edina, Minnesota 55435
Gary E. Wendt 405,000 5.4%
4620 S. Valley View Blvd., Suite A1
Las Vegas, NV 89103
Benedict A. Wittig 1,237,500 16.6%
4444 West 76th Street, Suite 600
Edina, Minnesota 55435
Lars T. Carlson 9,167(1) *
4444 West 76th Street, Suite 600
Edina, Minnesota 55435
Thomas J. Schrade 24,167(1) *
4620 S. Valley View Blvd., Suite A1
Las Vegas, NV 89103
Ronald A. Burgmeier 4,000(2) *
4620 S. Valley View Blvd., Suite A1
Las Vegas, NV 89103
All above directors and executive officers 4,132,500 55.3%
as a group (5 persons)
* Less than 1%.
(1) Mr. Carlson and Mr. Schrade each hold nonqualified stock options
to purchase 45,833 shares of Common Stock. The options vest 20% on May 1, 1998
with additional installments of 20% becoming exercisable on the second, third,
fourth and fifth year anniversary dates.
(2) Mr. Burgmeier holds a nonqualified stock option to purchase
40,000 shares of Common Stock. The option vests 5% on July 16, 1997, and five
percent each quarter thereafter, such that on April 16, 1998, 20% of such option
is vested. The option is scheduled to vest 20% annually on each April 16,
thereafter. Mr. Burgmeier exercised and sold 4,000 shares of Common Stock
represented by the option in December 1997.
No arrangements currently exist with the Company which may result in
a change of control of the Company.
ELECTION OF DIRECTORS
(PROPOSAL 1 ON PROXY CARD)
The Bylaws of the Company provide that the number of directors that
constitute the Board of Directors shall not be less than four nor more than
seven. The Bylaws of the Company also provide that each director elected by the
shareholders shall serve an indefinite term not in excess of five years until
such director's successor is duly elected and qualified. The Board of Directors
currently has six members consisting of Barry M. Wendt, Richard T. Fiskum, Gary
E. Wendt, Benedict A. Wittig, Lars T. Carlson and Thomas J. Schrade - each of
whom the Board of Directors has nominated for election to the Board of Directors
at the Annual Meeting for a term of one year. Nominees may be contacted at the
offices of the Company. Each person nominated has agreed to serve if elected,
and the Company knows of no reason why any of the listed nominees would be
unavailable to serve.
Shares represented by proxy will be voted, if authority to do so is
not withheld, for the election of Barry M. Wendt, Richard T. Fiskum, Gary E.
Wendt, Benedict A. Wittig, Lars T. Carlson and Thomas J. Schrade, unless one or
more of such nominees should become unavailable for election by reason of death
or other unexpected occurrence, in which event such shares shall be voted for
the election of such substitute nominees as the Board of Directors may propose.
The favorable vote of a majority of the shares of Common Stock present or
represented and entitled to vote at the meeting is necessary to elect each
director nominee. For this purpose, a shareholder (including a broker) who does
not give authority to a proxy to vote, or withholds authority to vote, on the
election of directors shall not be considered present and entitled to vote on
the election of directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION OF
BARRY M. WENDT, RICHARD T. FISKUM, GARY E. WENDT, BENEDICT A. WITTIG,
LARS T. CARLSON AND THOMAS J. SCHRADE TO THE BOARD OF DIRECTORS.
Certain information about the Board of Directors and Executive
Officers is presented below. The Common Stock ownership of each nominee for
director is provided under "Security Ownership of Certain Beneficial Owners and
Management."
DIRECTORS
- ---------
DIRECTOR
NAME AGE POSITIONS HELD SINCE
- ---- --- -------------- -----
Barry M. Wendt (1) 50 Chief Executive Officer, 1993
Chairman of the Board of
Directors
Richard T. Fiskum (1) 47 President, Director 1995
Gary E. Wendt (1)(2) 56 Chief Financial Officer, Director 1993
Benedict A. Wittig (1) 55 Secretary, Director 1993
Lars T. Carlson(2)(3) 59 Outside Director 1997
Thomas J. Schrade(2)(3) 48 Outside Director 1997
OTHER EXECUTIVE OFFICERS
NAME AGE POSITIONS HELD
- ---- --- --------------
Ronald A. Burgmeier (3) 37 Vice President of Finance
- -----------------------------------------
(1) Member of the Stock Option Plan Committee
(2) Member of the Compensation Committee
(3) Member of the Audit Committee
BARRY M. WENDT, Chief Executive Officer and Chairman of the Board of Directors
since inception of the Company, manages engineering initiatives and marketing.
From 1993 to 1994, Mr. Wendt also acted as the part-time and temporary Chief
Executive Officer of Esprit Technologies, Inc., a computer manufacturer which
produced high speed PCs marketed primarily to government and industry in the
Midwest. From 1988 to 1995, Mr. Wendt worked for (and was the CEO from 1992 to
1995 of) The Technology Congress, Ltd., a service bureau which supported
primarily Fortune 500 companies in CAD/CAM/CAE laser plotting, scanning, and
electrical testing with emphasis on photo- tooling for the fabrication industry.
The Technology Congress, Ltd. filed for protection under Chapter 11 of the
United States Bankruptcy Code in August, 1994 and was ultimately liquidated
under Chapter 7 of the Bankruptcy Code in July, 1995. From 1985 to 1988, Mr.
Wendt was the President and owner of BMW Research, a sole proprietorship
specializing in the independent research and development of contract design of
electronic products. Mr. Wendt was President of Custom Computer Systems, Inc., a
company specializing in the design, manufacture, and sale of small business
computer systems. Mr. Wendt received a Bachelor of Science degree in Electronic
Engineering from Florida International University, a diploma in RF and Consumer
Electronic systems from the De Vry Institute of Technology, and an Associate of
Science in Electronic Engineering from Gulf Coast Community College. Mr. Wendt
is the brother of Gary E. Wendt, Chief Financial Officer and a member of the
Board of Directors of the Company.
RICHARD T. FISKUM, President and a member of the Board of Directors of the
Company since August, 1995, manages and has an active role in the development of
imaging systems and oversees and directs all manufacturing operations. From 1980
to 1996, Mr. Fiskum was Chief Executive Officer of Industrial Research and
Development, Inc., an enterprise formerly owned by Mr. Fiskum specializing in
prototype to production process development and manufacturing of precision
glass, ceramic, and
plastic components and assemblies for industrial and medical applications. From
1975 to 1980, he was a Vice President of Litchfield Precision Components, Inc.,
a manufacturer of chemically milled glass and metal components. Mr. Fiskum
attended Moorhead State University where he studied physics, chemistry,
mathematics, and computer science.
GARY E. WENDT, Chief Financial Officer and a member of the Board of Directors of
the Company since inception, prepares the Company's financial reports and
administers accounting operations. From 1993 to 1994, Mr. Wendt was Treasurer
and Chief Financial Officer of Esprit Technologies, Inc., a computer
manufacturer which produced high speed PCs and marketed primarily to government
and industry in the Midwest. From 1988 to 1995, he was Secretary-Treasurer and
Chief Financial Officer of The Technology Congress, Ltd. The Technology
Congress, Ltd. filed for protection under Chapter 11 of the United States
Bankruptcy Code in August, 1994, and was ultimately liquidated under Chapter 7
of the Bankruptcy Code in July, 1995. From 1979-1985, Mr. Wendt was a systems
analyst for Custom Computer Systems, Inc. Mr. Wendt attended Metropolitan State
University, North Hennepin Community College, and the Academy of Accountancy
where he was certified in public accounting. Mr. Wendt is not a Certified Public
Accountant. Mr. Wendt is the brother of Barry M. Wendt, Chief Executive Officer
and Chairman of the Board of Directors of the Company.
BENEDICT A. WITTIG, Director of Systems Software, Secretary and a member of the
Board of Directors of the Company since inception, manages all software projects
and is actively involved in software development. From 1993 to 1994, Mr. Wittig
was a Systems Software Manager for Esprit Technologies, Inc., a computer
manufacturer which produced high speed PCs and marketed primarily to government
and industry in the Midwest. From 1983 to 1993, Mr. Wittig was an independent
software developer specializing in software systems for processor controlled
hardware. Prior to 1983, he worked as Staff Systems Programmer for Northern
Telecom, Inc. and as Diagnostic Programmer for Control Data Corporation. Mr.
Wittig received both a Master of Science in Electronic Engineering and a
Bachelor of Science in Electronic Engineering from the University of Missouri.
LARS T. CARLSON, a member of the Company's Board of Directors since October
1997. Mr. Carlson presently serves as the Senior Vice President of
Administration for the H.B. Fuller Company. Mr. Carlson has been with the H.B.
Fuller Company since 1977.
THOMAS J. SCHRADE, a member of the Company's Board of Directors since October
1997. Mr. Schrade is currently President of T&F Consultants, Inc., a Las Vegas,
Nevada based consulting company; President of Three Corners LLC, an Owatonna,
Minnesota based land development company; and President of Celebrity Estates of
Las Vegas, a real estate sales company. Mr. Schrade was also co-owner of Tobies
Enterprises, Inc. of Hinckley, Minnesota from 1972 to 1996.
RONALD A. BURGMEIER, Vice President of Finance since April 16, 1997. Mr.
Burgmeier is a Certified Public Accountant and is responsible for preparation of
the Company's financial reports and handles the Company's SEC reporting
requirements. From 1993 to 1997, Mr. Burgmeier served as Audit and Accounting
Manager at Divine, Scherzer & Brody, Ltd., a Certified Public Accounting firm.
Mr. Burgmeier received a Bachelor of Arts in Accounting and Management from
Saint Mary's University of Winona, Minnesota.
Directors who are also employees of the Company have executed
employment agreements and non-competition letters containing nondisclosure
obligations and, except as prohibited by law, the obligation to assign to the
Company all ideas and inventions which relate indirectly or directly to the
Company's business. All non-employee directors and the Company's Vice-President
of Finance have signed the same non-competition letter mentioned above.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has an Audit Committee, a Compensation
Committee, and a Stock Option Plan Committee.
The Audit Committee which was formed in October 1997, is expected to
(i) meet with the Company's independent auditors at least annually to review the
results of the annual audit and discuss the financial statements; (ii) recommend
to the Board of Directors the independent auditors to be retained; and (iii)
receive and consider the accountants' comments as to internal controls, adequacy
of staff and management performance and procedures in connection with audit and
financial controls. The Audit Committee, which did not meet during the year
ended December 31, 1997, is composed of one employee and two non-employee
directors: Ronald A. Burgmeier, Lars Carlson, and Thomas Schrade, respectively.
The Compensation Committee which was formed in October 1997, reviews
and recommends to the Board of Directors the compensation and benefits of all
officers of the Company and reviews general policy relating to compensation and
benefits of employees of the Company. The Compensation Committee, which did not
meet during the year ended December 31, 1997, is composed of one employee
director and two non-employee directors: Gary Wendt, Chief Financial Officer of
the Company, Lars Carlson, and Thomas Schrade, respectively. Before the
Compensation Committee was formed, the Board of Directors administered all of
the responsibilities of the Compensation Committee.
The Stock Option Plan Committee (i) administers the 1996 Stock
Option Plan (the "Plan"); (ii) determines the purchase price of the common stock
covered by each option; (iii) determines the persons to whom and the time or
times at which options or stock awards shall be granted pursuant to the Plan;
(iv) determines the number of shares subject to each option or stock award
granted under the Plan; and (v) authorizes and directs the issuance of the
common shares upon stock awards and the exercise of options granted pursuant to
the Plan. The Stock Option Plan Committee, which did not meet during the year
ended December 31, 1997, is composed of four of the current officers and
directors: Barry M. Wendt, Richard T. Fiskum, Gary E. Wendt and Benedict A.
Wittig.
1997 MEETINGS OF THE BOARD OF DIRECTORS
Two formal meetings of the Board of Directors were held during 1997.
However, the Board of Directors frequently met on an informal basis and
conducted its business through written actions in lieu of meetings. The Board of
Directors currently intends to hold monthly meetings beginning in May 1998. No
incumbent director attended fewer than 75% of the aggregate of (1) the total
number of meetings of the Board of Directors and (2) the total number of
meetings of the Audit Committee, Compensation Committee or Stock Option Plan
Committee of which the director was a member.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the best of the Company's knowledge, all directors, officers and
beneficial owners of more than ten percent of the Company's Common Stock
registered pursuant to section 12 complied with Section 16(a) of the Exchange
Act.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table provides certain summary information for the
past three years ended December 31, 1995, December 31, 1996 and December 31,
1997 concerning executive compensation paid or accrued by the Company to the
Company's Chief Executive Officer and its four other named executive officers.
Other than as listed below, no executive officers salary and bonus compensation
for 1997 exceeded $100,000.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------ ------
SECURITIES
NAME AND PRINCIPAL FISCAL UNDERLYING
POSITION YEAR SALARY BONUS OTHER(1) OPTIONS
- -------- ------ -------- ------- -------- ----------
Barry M. Wendt 1997 $161,642 $20,000 $4,742 None
(Chief Executive 1996 97,672 -- 7,614 None
Officer)
1995 40,584 -- 1,621 None
- ----------------------------------------------------------------------------------------
Benedict A. Wittig 1997 130,599 15,000 4,345 None
(Secretary, Director of 1996 -- -- -- None
Systems Software)
1995 -- -- -- None
- ----------------------------------------------------------------------------------------
Richard T. Fiskum 1997 141,848 15,000 5,111 None
(President) 1996 -- -- -- --
1995 -- -- -- --
- ----------------------------------------------------------------------------------------
Gary E. Wendt 1997 99,753 15,000 4,688 None
(Chief Financial Officer) 1996 -- -- -- None
1995 -- -- -- None
- ----------------------------------------------------------------------------------------
Timothy N. Tracey 1997 127,956 -- 48,301 260,000
(2)
(Former Chief Operating 1996 -- -- -- None
Officer)
1995 -- -- -- None
(1) Other Compensation includes group health insurance premiums and a vehicle
allowance.
(2) Includes reimbursement of $45,378 for moving expenses.
OPTION GRANTS IN LAST FISCAL YEAR
- -----------------------------------------------------------------------------------------------------------------------------
Individual Grants Grant Date Value
- -----------------------------------------------------------------------------------------------------------------------------
Name Number of securities Percent of total Exercise or base Expiration Date Grant Date Present
underlying options options granted to price($/Sh) Value($)
granted(#) employees in fiscal
year
Timothy N. Tracey 260,000 70.94% $3.22 3/2004 $837,200
(former Chief
Operation Officer)
AGGREGATED OPTION EXERCISES IN FISCAL YEAR
AND FY-END OPTION VALUES
- --------------------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised in-the-money
Unexercised Options at Fiscal Year Options at Fiscal Year End($)
End(#)
Name Shares acquired Value Realized Exercisable Unexercisable Exercisable Unexercisable
on exercise(#) ($)
Timothy N. 6,000 $43,430 33,000 0.00(1) $106,260 0
Tracey (Former
Chief Operating
Officer)
(1) Mr. Tracey was terminated by the Company in October 1997. No more options
will become exercisable as a result of the termination.
Additional columns required by Securities and Exchange Commission rules to be
included in the
foregoing table, and certain additional tables required by such rules, have been
omitted because no compensation required to be disclosed therein was paid or
awarded to the Named Executive Officers.
OUTSIDE DIRECTOR COMPENSATION
Members of the Board of Directors have received no cash compensation
for serving on the Board of Directors. Pursuant to the Company's 1996 Stock
Option Plan, each future non-employee director may receive options to purchase
50,000 shares of common stock which will vest 20% annually for five years. Five
years after the initial grant of an option to a non-employee director, and every
fifth year thereafter, non-employee directors who remain on the Board of
Directors shall automatically be granted additional options to purchase 50,000
shares of Common Stock which shall vest 20% on May 1 of each year over a period
of five years. All options granted to non-employee directors shall have an
exercise price equal to 100% of the fair market value of a share of the
Company's Common Stock which, if the stock is traded on the Nasdaq National
Market System or an over-the-counter market price is reported, shall be equal to
the average of the reported bid and asked prices as of the date of valuation
determination.
1996 STOCK OPTION PLAN
The Company's Board of Directors and shareholders adopted the 1996
Stock Option Plan on May 1, 1996 (the "Plan"). The Plan provides for the
reservation of 750,000 shares of Common Stock for issuance pursuant to the
exercise of stock options which may be granted to employees, officers, directors
and consultants of the Company, and permits granting both incentive stock
options (as defined under Section 422 of the Code) and options which do not
qualify as incentive stock options ("nonqualified stock options").
The Plan is administered by a committee appointed by the Board of
Directors of the Company (the "Committee"). The Committee, by action of a
majority of its members, has the authority to establish rules for administering
and interpreting the Plan. The Committee has the authority to select individuals
to whom awards are granted and the timing of such awards; to adopt, amend, and
rescind administrative and interpretive rules and regulations relating to the
Plan; and to make all other determinations necessary or advisable for
administering the Plan. The Committee shall be under no duty to provide terms of
like duration for options granted under the Plan, but the term of an incentive
stock option may not extend more than ten (10) years from the date of granting
of such option.
The Plan also provides for the acceleration of the vesting of
unvested options upon a "Change of Control" of the Company. A Change of Control
is defined in the Plan to include (i) a sale or transfer of substantially all of
the Company's assets; (ii) the dissolution or liquidation of the Company; (iii)
a merger or consolidation to which the Company is a party and after which the
prior shareholders of the Company hold less than 50% of the shares of the
surviving entity; (iv) if any person becomes a "beneficial owner" of more than
50% of the combined voting power of the Company's outstanding securities; (v)
the incumbent directors cease to constitute at least a majority of the Board of
Directors;
or (vi) a change in control of the Company which would otherwise be reportable
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended.
The exercise price per share of stock purchasable under any
incentive stock option granted pursuant to the Plan will be determined by the
Committee, but shall not be less than 100% of the fair market value of the stock
on the date of the grant of such option. The option price for options granted
under the Plan which do not qualify as incentive stock options shall also be
determined by the Committee, but may not be less than 85% of the fair market
value of the Common Stock at the date of granting of such option.
No option granted under the Plan is transferable by an optionee,
other than by will or the laws of descent or distribution. With few exceptions,
during the lifetime of an optionee the option shall be exercisable only by such
optionee.
The foregoing is a brief summary of the provisions of the Plan and
does not purport to be a complete statement of its respective terms and
conditions.
EMPLOYMENT AND CONSULTING AGREEMENT
On May 10, 1996, the Company entered into five-year employment
agreements with four of the Company's officers: Barry M. Wendt, Chief Executive
Officer, Richard T. Fiskum, President, Benedict A. Wittig, Secretary; and Gary
E. Wendt, Chief Financial Officer. The terms of the employment agreements for
each of the above individuals are substantially the same, with differences only
as to base salary. Each officer and director may be terminated only for "cause"
as that term is defined in the employment agreements. In the event of
termination without cause, each employee will receive severance in an amount
equal to the greater of (1) the number of years or portions thereof remaining
between May 10, 1996, and December 31, 2001 or (2) two years. The employment
agreements also contain confidentiality obligations and incorporate a
Non-Competition Letter. The Non-Competition Letter prohibits these individuals
from competing with the Company for a period of three years if the Company
terminates the employment of any one of the said individuals for cause, and a
period of two years if any individual voluntarily terminates employment. In the
event of a "constructive termination" as defined in the employment agreements,
including such matters as an adverse change in an employee's status or position
in the Company, a reduction of such employee's base salary other than for
austerity purposes, or the breach by the Company of any of its other contractual
obligations for other than austerity reasons, the employee's non-competition
obligations lapse, and the employee's salary will be continued for up to two
years. Except as may be prohibited by law, during the term of the employment
agreements, each of the said employees are obligated to disclose and assign to
the Company all ideas, inventions and business plans developed by each of them
which relate directly or indirectly to the Company's business.
During April 1997, the Company hired Ronald A. Burgmeier as Vice
President of Finance on an at will basis. The employment agreement calls for a
base salary of $70,000. Additionally, the Company awarded Mr. Burgmeier a
nonqualified stock option to purchase 40,000 shares of Common
Stock (20,000 shares pre-split). The option vests five percent on July 16, 1997,
and five percent each quarter thereafter, such that on April 16, 1998, twenty
percent of such option is vested. The option is scheduled to vest twenty percent
annually on each April 16, thereafter. The option expires during April 2004. Mr.
Burgmeier executed a Non-Competition Letter which prohibits Mr. Burgmeier from
competing with the Company for a period of two years after the termination of
Mr. Burgmeier's employment with the Company for any reason or no reason. Except
as may be prohibited by law, during the term of the employment agreement, Mr.
Burgmeier is obligated to disclose and assign to the Company all ideas,
inventions and business plans developed by Mr. Burgmeier which relate directly
or indirectly to the Company's business.
OTHER EMPLOYEE BENEFITS
Each officer of the Company receives a vehicle allowance of $300 per
month. The Company provides standard health insurance packages to its officers
and employees.
COMPENSATION COMMITTEE
The Compensation Committee was formed in October 1997. The
Compensation Committee, which did not meet during the year ended December 31,
1997, was composed of one employee director and two non-employee directors: Gary
Wendt, Chief Financial Officer of the Company, Lars Carlson, and Thomas Schrade,
respectively. Before the Compensation Committee was formed, the Board of
Directors, which prior to October 1997 consisted of Barry M. Wendt, Chief
Executive Officer, Richard T. Fiskum, President, Gary E. Wendt, Chief Financial
Officer and Benedict A. Wittig, Secretary, administered all of the
responsibilities of the Compensation Committee. The Board of Directors
considered several factors in determining executive compensation including the
comparison of the Company's executive compensation to competitive norms, the
Company's achievements during the past year and each executive's contribution to
the Company's achievements.
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total return during the
period February 21, 1997 to December 31, 1997 for the Company's Common Stock,
the Nasdaq Stock Market (U.S. Companies) and a peer group index. The peer group
index consists of Digital Biometrics, Inc., National Registry, Inc., Viisage
Technology Inc, Identix, Inc. and Printrak International Inc.
The graph assumes the investment of $100 in the Company's Common
Stock, the Nasdaq Stock Market (U.S. Companies) and the peer group index on
February 21, 1997, and the reinvestment of all dividends as and when
distributed.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
SAC TECHNOLOGIES, INC.
PREPARED BY THE CENTER FOR RESEARCH IN SECURITY PRICES
Produced on 04/23/98 including data to 12/31/97
[PLOT POINTS GRAPH]
Date Company Index Market Index Peer Index
02/21/97 100.000 100.000 100.000
02/28/97 108.197 98.119 93.473
03/31/97 101.230 91.714 82.075
04/30/97 147.541 94.581 78.992
05/30/97 140.984 105.304 94.975
06/30/97 144.262 108.526 99.701
07/31/97 308.197 119.982 95.597
08/29/97 295.082 119.799 93.635
09/30/97 288.525 126.887 95.488
10/31/97 357.377 120.318 82.320
11/28/97 288.525 120.921 76.235
12/31/97 249.180 119.025 72.984
LEGEND
Companies in the Self-Determined Peer Group
DIGITAL BIOMETRICS INC IDENTIX INC
NATIONAL REGISTRY INC PRINTRAK INTERNATIONAL INC
VIISAGE TECHNOLOGY INC
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 02/21/97.
E. Data for SAC TECHNOLOGIES, INC. from 02/21/97 to 04/16/97 was provided by
the client.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 17, 1996, the Company, with Tuschner & Company as its
selling agent, completed a $900,000 private placement of its Common Stock at a
per share price of $1.00 ($2.00 pre-split). One of the investors in this private
placement was Thomas J. Schrade who purchased 15,000 shares of the Company's
Common Stock.
During 1996, the, Company contracted with Industrial Research
Development, Inc. ("IR-D"), a company that was wholly owned by Richard T.
Fiskum, to manufacture initial prototypes and pre-product optic assemblies. The
Company purchased $21,434 of components parts from IR-D. During 1997, Mr. Fiskum
sold his interest in IR-D. The Company continues to purchase optic assemblies
from IR-D.
During Mr. Fiskum's development of the Optic Technology in 1996, he
purchased certain inventory and supplies totaling approximately $70,000. Mr.
Fiskum believes these items could be used in the manufacture of products for
Jasper Consulting, Inc. The Company and Mr. Fiskum have an understanding whereby
if such inventory and supplies are needed by the Company, the Company will
purchase such items from Mr. Fiskum at a fair price, as determined in good faith
by the parties.
In connection with its initial public offering in February of 1997,
the Company adjusted the exercise price of a warrant issued to one of the
lenders who participated in the Bridge Loan from $1.00 ($2.00 pre-split) to
$3.00 ($6.00 pre-split).
During March 1997, the Company entered into a five year employment
agreement with Timothy N. Tracey, Chief Operating Officer. The agreement
provides for an initial base salary of $167,000 and incentive payments. In the
event of constructive termination, as defined, Mr. Tracey is entitled to one
year severance pay as defined (two years in the case of a merger or
acquisition). Additionally, the Company awarded Mr. Tracey a nonqualified stock
option to purchase 260,000 (130,000 shares pre-split) shares of Common Stock at
$3.22 ($6.43 pre-split) per share. The option vests five percent on June 30,
1997, and five percent each quarter thereafter, such that on March 31, 1998,
twenty percent of such option is vested. The option vests twenty percent
annually on March 31 thereafter. The option expires during March 2004. Mr.
Tracey was terminated in October 1997.
During April 1997, the Company hired Ronald A. Burgmeier as Vice
President of Finance on an at will basis. The employment agreement calls for a
base salary of $70,000. Additionally, the Company awarded a nonqualified stock
option to purchase 40,000 shares of Common Stock (20,000 shares pre-split). The
option vests five percent on July 16, 1997, and five percent each quarter
thereafter, such that on April 16, 1998, twenty percent of such option is
vested. The option vests twenty percent annually on April 16, thereafter. The
option expires during April 2004.
During October 1997, the Company awarded a nonqualfied stock option
to purchase 45,833 shares of Common Stock to Lars T. Carlson, a non-employee
director of the Company, at an exercise price per share of $10.75.
During October 1997, the Company awarded a nonqualfied stock option
to purchase 45,833 shares of Common Stock to Thomas J. Schrade, a non-employee
director of the Company, at an exercise price per share of $10.75.
Other than as listed above, the Company has not entered into any
other material transactions with any of its officers, directors or affiliates.
The Company or its affiliates will not engage in any future material
transactions with its officers, directors or affiliates, unless the transactions
are (i) on term no less favorable to the Company or its affiliates than those
that are generally available from unaffiliated third parties, and (ii) ratified
by a majority of independent outside members of the Company's Board of Directors
who do not have an interest in the transactions.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 2 ON PROXY CARD)
The Board of Directors of the Company has selected Divine, Scherzer
& Brody, Ltd. to serve as independent auditors to the Company for the fiscal
year ending December 31, 1998 and recommends that the shareholders of the
Company appoint Divine, Scherzer & Brody, Ltd. as the Company's independent
auditors. A representative of Divine, Scherzer & Brody, Ltd. is expected to be
available by telephone and will be given the opportunity to make a statement if
he or she so desires and to respond to appropriate questions from shareholders.
If the appointment of Divine, Scherzer & Brody, Ltd. is not ratified by the
shareholders, the Board of Directors is not obligated to appoint other auditors,
but the Board of Directors will give consideration to such unfavorable vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" RATIFICATION
OF THE APPOINTMENT OF DIVINE, SCHERZER & BRODY, LTD. AS INDEPENDENT AUDITORS.
SHAREHOLDERS PROPOSALS AND OTHER MATTERS
Any shareholder proposals for the Company's 1999 Annual Meeting
anticipated to be held in the second quarter of 1999 must be received by the
Company no later than January 1, 1999, in order to be included in the Company's
proxy statement. The proposals also must comply with all applicable statutes and
regulations. Such proposals should be directed to the attention of Ronald A.
Burgmeier, SAC Technologies, Inc., 4620 S. Valley View Blvd., Suite A1, Las
Vegas, NV 89103.
The Company knows of no other business that will be presented for
consideration at the Annual Meeting other than that described in this Proxy
Statement. As to other business, if any, that may properly come before the
Annual Meeting, it is intended that proxies solicited by the Board of Directors
will be voted in accordance with the judgment of the person voting the proxies.
If you have any questions with respect to the matters set forth in
this Proxy Statement or the Annual Meeting, please do not hesitate to contact
Barry M. Wendt, Chief Executive Officer, SAC Technologies, Inc., 4444 West 76th
Street, Suite 600, Edina, Minnesota 55435.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Benedict A. Wittig
- -----------------------------------
Benedict A. Wittig, Secretary
April 30, 1998
SAC TECHNOLOGIES, INC.
ANNUAL MEETING OF SHAREHOLDERS - JUNE 19, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Barry M. Wendt, Chief Executive Officer, and
Richard T. Fiskum, President, or either of them acting in the absence of the
other, attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of the Common Stock of SAC Technologies,
Inc., a Minnesota corporation (the "Company"), held or owned by the undersigned
or standing in the name of the undersigned at the Annual Meeting of Shareholders
of the Company to be held at the The Orleans, 4500 West Tropicana Ave., Las
Vegas, Nevada at 2:00 p.m. P.S.T., on June 19, 1998, and any adjournment
thereof, and the undersigned hereby instructs said attorneys to vote as follows.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY APPOINTMENT WILL BE
VOTED "FOR" PROPOSAL 1 AND "FOR" PROPOSAL 2, AND "FOR" PROPOSAL 3.
* DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED *
- --------------------------------------------------------------------------------
SAC TECHNOLOGIES, INC. 1998 ANNUAL MEETING
1. ELECTION OF DIRECTORS:
1 - BARRY M. WENDT 2 - RICHARD T. FISKUM [ ] FOR all [ ] WITHHOLD AUTHORITY
3 - GARY E. WENDT 4 - BENEDICT A. WITTIG nominees listed to to vote for all
5 - LARS T. CARLSON 6 - THOMAS J. SCHRADE the left (except as nominees listed
specified below). to the left.
(Instructions: To withhold authority to vote for any
indicated nominee, write the number(s) of the nominee(s)
in the box provided to the right.) [_________________]
2. To ratify and confirm the appointment of Divine, Scherzer & Brody, Ltd. as
the auditors for the Company for the fiscal year ending December 31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To act upon such other business as may properly come before the Annual
Meeting, or any adjournment or adjournments thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Check appropriate box Date____________ NO. OF SHARES
Indicate changes below:
Address Change? [ ] Name Change [ ]
----------------------------------------
----------------------------------------
SIGNATURE(S) IN BOX
Please sign exactly as your name appears
on this Proxy. When shares are held by
joint tenants, both should sign. When
signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.