-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DnkCqH6J15nqgRVl61g1rih8OiJmENN193SwR1VevIG+6QYWBdz+/eVo9WkZORgz ZB+k27zWGHheEQNEXemfKw== 0000892569-00-000376.txt : 20000501 0000892569-00-000376.hdr.sgml : 20000501 ACCESSION NUMBER: 0000892569-00-000376 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MICRO GENERAL CORP CENTRAL INDEX KEY: 0000067383 STANDARD INDUSTRIAL CLASSIFICATION: MISC INDUSTRIAL & COMMERCIAL MACHINERY & EQUIPMENT [3590] IRS NUMBER: 952621545 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-08358 FILM NUMBER: 613896 BUSINESS ADDRESS: STREET 1: 3916 STATE STREET STREET 2: SUITE 330 CITY: SANTA BARBARA STATE: CA ZIP: 93105 BUSINESS PHONE: 8055631566 MAIL ADDRESS: STREET 1: 3916 STATE STREET STREET 2: SUITE 300 CITY: SANTA BARBARA STATE: CA ZIP: 93105 FORMER COMPANY: FORMER CONFORMED NAME: MODULEARN INC DATE OF NAME CHANGE: 19810813 10-K/A 1 AMENDMENT TO FORM 10-K 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) COMMISSION FILE NO. 0-8358 MICRO GENERAL CORPORATION (Exact name of registrant as specified in its charter) --------------- DELAWARE 95-2621545 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 2510 REDHILL, SUITE 200 92705 (949) 622-4444 SANTA ANA, CALIFORNIA (ZIP CODE) (REGISTRANT'S TELEPHONE NUMBER, (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) INCLUDING AREA CODE)
--------------- SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE. SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED Common Stock, $.05 par value NASDAQ National Market System Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A, or any amendment to this Form 10-K/A. [ ] As of April 14 , 2000, 13,005,237 shares of Common Stock ($.05 par value) were outstanding, and the aggregate market value of the shares of the Common Stock held by non-affiliates of the registrant was $40,647,632. The aggregate market value was computed with reference to the closing price on such date. ================================================================================ 2 PART III ITEM 10. DIRECTORS AND THE EXECUTIVE OFFICERS OF THE REGISTRANT The names of the director nominees, all directors, and all executive officers, and certain information about them, are set forth below:
DIRECTOR NAME AGE PRINCIPAL OCCUPATION SINCE - ---- --- -------------------- -------- William P. Foley, II 55 Co-Chairman of the Board 1994 Patrick F. Stone 52 Co-Chairman of the Board 1998 John Snedegar 50 Chief Executive Officer, 1998 President and Director Dwayne Walker 38 Director 1999 Bradley Inman 47 Director 2000 John McGraw 38 Director 2000 Richard H. Pickup 64 Director 1996 Carl A. Strunk 62 Director 1994 Jeff Sanderson 42 Executive Vice President -- ACS Division N/A Product Development Andrew F. Puzder 49 Executive Vice President, Legal N/A Dale Christensen 47 Executive Vice President and Chief N/A Financial Officer Joseph E. Root 55 Senior Vice President, General Counsel N/A M'Liss Jones Kane 47 Vice President and Corporate Secretary N/A
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 and Chief Executive Officer of CKE Restaurants, Inc., as Chairman of the Board of Rally's Hamburgers, Inc., Checkers Drive-In Restaurants, Inc., Santa Barbara Restaurant Group, Inc. and American National Financial, Inc. Additionally, he is a member of the Board of Directors of 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 Chief Operating Officer 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 SNEDEGAR Mr. Snedegar has been a director of the Company since August, 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 1992 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 also serves as President of Kendall Venture Funding, Ltd., a reporting company in Alberta, Canada. Mr. Snedegar is also currently a director of StarBase Corporation and Star Telecommunications, Inc. 2 3 DWAYNE M. WALKER Mr. Walker is currently the President and CEO of ShopNow.com, Inc. and has been since March 1996. Prior to that he served as Chairman of the Board of ShopNow.com, Inc. 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 his 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. JOHN MCGRAW Mr. McGraw is the Co-Founder of HatcheryWorks and Internet Incubator. HatcheryWorks was founded in December 1999 and has successfully launched over eight companies in the financial services arena. Prior to HatcheryWorks, 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 Company, Western Service Contract Corporation, Pacific Loan Administrators and McGraw Commercial Insurance Services. BRADLEY INMAN Mr. Inman is the founder and Chief Executive Officer of HomeGain.com, the internet's first complete home selling resource center. He also has a news service called Inman News Features which delivers real estate stories to more than 3,000 newspapers and Web sites. RICHARD H. PICKUP Mr. Pickup was elected to the board in December 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 and Chief Financial Officer of CKE Restaurants, Inc. and has been since February 1997. Additionally, Mr. Strunk is Executive Vice President and Chief Financial Officer of American National Financial, Inc. Mr. Strunk began with 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. Mr. Strunk is also currently a director of American National Financial, Inc. ANDREW F. PUZDER Mr. Puzder is Executive Vice President, Legal of the Company and has been since March, 2000, and has served in various capacitites including Executive Vice President and General Counsel since 1995. He has been Executive Vice President, General Counsel and Secretary of CKE Restaurants, Inc. since February 1997. Mr. Puzder also serves as Chief Executive Officer of SBRG, where he has been since August 1997. From March 1994 to December 1994, he was a partner with the law firm of Stradling , Yocca, Carlson & Rauth. Prior to that, he was a partner with the law firm of Lewis, D'Amato, Brisbois & Bisgard, from September 1991 through March 1994, and he was a partner of the Stolar Partnership from February 1984 through September 1991. Mr. Puzder is a member of the Board of Directors of SBRG, Pierre Foods, Aspeon, Inc. and Checkers. 3 4 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. JOSEPH E. ROOT Mr. Root is Senior Vice President, General Counsel of the Company and has been since April 12, 2000. Mr. Root was General Counsel of Marquip, Inc. from 1994 to April of 2000. DALE 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. M'LISS JONES KANE Ms. Kane became Secretary of the Company on June 3, 1998. Ms. Kane joined Fidelity National Financial, Inc. in March 1995 as a Senior Vice President and Corporate Counsel of the Fidelity National Financial, Inc. and became Corporate Secretary in April 1995 serving in these capacities until September 15, 1997. From September 15, 1997 to March 17, 1999 she was Senior Vice President, General Counsel and Corporate Secretary of Fidelity National Financial, Inc. Prior to that she was with the ICN Pharmaceuticals, Inc. group of companies from March 1990 as Vice President, General Counsel and Secretary of ICN Biomedicals, Inc. and subsequently became Vice President, General Counsel and Secretary of SPI Pharmaceuticals, Inc. COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934 Rules adopted by the Securities and Exchange Commission ("SEC") under Section 16(a) of the Exchange Act require the Company's officers and directors, and persons who own more than 10% of the issued and outstanding shares of the Company's common stock, to file reports of their ownership, and changes in ownership, of such securities with the SEC on SEC Forms 3, 4 or 5, as appropriate. Officers, directors and greater-than-ten-percent stockholders are required by the SEC's regulations to furnish the Company with copies of all forms they file pursuant to Section 16(a). Based solely upon a review of Forms 3, 4 and 5 and amendments thereto furnished to the Company during its most recent fiscal year end, and any written representations provided to it, the Company is advised that all filings were timely and correctly made. ITEM 11. EXECUTIVE COMPENSATION The following Summary Compensation Table shows compensation paid by the Company for services rendered during fiscal years 1999, 1998 and 1997 for the Company's Chief Executive Officer and the only executive officer in 1999 whose compensation exceeded $100,000. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ------------ OTHER ANNUAL AWARDS- ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION OPTIONS # COMPENSATION($) - --------------------------- ---- --------- -------- ------------ --------- --------------- John Snedegar 1999 $177,073 $150,000 -- 550,000 -- Director, President and 1998 -- -- -- 200,000 -- Chief Executive Officer 1997 N/A N/A -- -- -- Jeff Sanderson 1999 177,375 35,000 6,000 72,500 -- Executive Vice President 1998 -- -- -- 200,000 -- 1997 N/A N/A -- -- --
4 5 OPTION GRANTS The following table provides information as to options to purchase common stock granted to the named individuals during 1999 pursuant to the Company's Stock Option Plan. The Company does not currently grant stock appreciation rights to officers or directors.
PERCENT OF TOTAL NUMBER OF OPTIONS SECURITIES GRANTED TO MARKET UNDERLYING EMPLOYEES PRICE AT EXERCISE OR OPTIONS IN DATE BASE PRICE EXPIRATION NAME GRANTED(#) FISCAL YEAR OF GRANT ($/SHARE) DATE 5%($) 10%($) - ---- ---------- ---------------- -------- ----------- ---------- -------- ---------- John Snedegar 250,000 22.4% $3.63 $3.63 04/07/09 $570,721 $1,446,321 150,000 3.00 3.00 08/22/09 283,002 717,184 150,000 4.875 4.875 11/16/09 459,879 1,165,424 37,500 3.63 3.63 04/07/09 85,608 216,948 Jeff Sanderson 35,000 1.3% 4.875 4.875 11/16/09 107,305 271,932
OPTION EXERCISES AND FISCAL YEAR-END VALUES The following table summarizes information regarding exercises of stock options by the named individuals during 1999 and unexercised options held by them as of December 31, 1999. The Company did not reprice any existing options during the last completed fiscal year. AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED UNEXERCISED OPTIONS AT IN-THE-MONEY FY-END OPTIONS AT FY-END SHARES ACQUIRED VALUE REALIZED (#)EXERCISABLE ($)EXERCISABLE NAME EXERCISE(#) ($) UNEXERCISABLE UNEXERCISABLE - ---- --------------- -------------- -------------- -------------------- John Snedegar 0 0 650,000/100,000 $8,386,250/1,187,500 Jeff Sanderson 0 0 58,677/73,333 699,725/271,932
DIRECTOR COMPENSATION Directors who are not employees of the Company receive $1,500 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. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 1999 Messrs. Pickup and Strunk served as members of the Compensation Committee. The Compensation Committee is currently composed of two independent directors. No member of the Compensation Committee is a former or current officer or employee of the Company or any of its subsidiaries, and there are no interlocking directorships. REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION The following report of the Compensation Committee to the Board of Directors shall not be deemed to be incorporated by reference into any previous filing by the Company under either the Securities Act of 1933 ("Securities Act") or the Securities Exchange Act of 1934 ("Exchange Act") that incorporates future Securities Act or Exchange Act filings in whole or in part by reference. 5 6 To the Board of Directors: 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; Therefore, 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. BASE SALARY The Company is in a growth mode and executives are being recruited based on their expertise. Salary and bonuses are determined based on experience, job responsibility and industry salary standards. 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. In order to meet this desire, the Board of Directors and stockholders had previously approved the adoption of the Company's 1998 Stock Option Plan, pursuant to which the Company may grant stock options to certain key employees and non-employee directors or officers. The purpose of all the stock option plans 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. Consistent with these objectives, the Compensation Committee granted options in 2000 for their performance in 1999 to executive officers as follows under the 1998 Plan: Mr. Snedegar, options to purchase 100,000 shares. Corporate Deduction for Compensation. Section 162(m) of the Internal Revenue Code generally limits to $1.0 million the corporate deduction for compensation paid to certain executive officers, unless certain requirements are met. At this time, the Company deduction for officer compensation is not limited by the provisions of Section 162(m). The Committee intends to monitor regulations issued pursuant to Section 162(m) and to take such actions with respect to the executive compensation program as are reasonably necessary to preserve the corporate tax deduction for executive compensation paid. April 14, 2000 Compensation Committee Richard H. Pickup Carl A. Strunk 6 7 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 Stock Market index and NASDAQ Computer Manufacturers Stock index. COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG MICRO GENERAL CORPORATION, NASDAQ COMPUTER MANUFACTURERS STOCK
DEC 94 DEC 95 DEC 96 DEC 97 DEC 98 Dec 99 ------ ------ ------ ------ ------ ------ Micro General Corp 100.00 70.59 82.35 64.71 200.00 767.67 Nasdaq US 100.00 141.33 173.89 213.07 300.25 542.43 Nasdaq Computer Manufacturing 100.00 157.45 211.09 255.35 553.26 1163.21
ASSUMES $100 INVESTED ON JANUARY 1, 1995 ASSUMES DIVIDEND REINVESTED FISCAL YEAR ENDING DECEMBER 31, 1999 BOARD MEETINGS AND COMMITTEES The Board of Directors held a total of three formal meetings during the year ended December 31, 1999. No director attended fewer than 100% of the aggregate of all meetings of the Board of Directors or any committee in 1999. The Board presently has an Audit Committee and a Compensation Committee, but does not have a Nominating Committee. The Audit Committee, which consists of Messrs. Foley, Pickup and Strunk, did not meet during 1999. The Audit Committee was created to meet independently with the 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 is 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. Pickup and Strunk. The Compensation Committee, either alone or in conjunction with other Board committees, reviews and reports to the Board 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 effort through incentive rewards. The Compensation Committee did not meet during 1999. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT As of April 12, 2000, the following table sets forth the beneficial ownership of the Common Stock of the Company by each director who owns shares, by the director nominees, all executive officers named in the Summary Compensation Table, all directors and executive officers as a group and by all persons known by the Company to be the beneficial owners of more than 5% of the Company's Common Stock. The information as to beneficial stock ownership is based on data furnished by the persons concerning whom such information is given.
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF TOTAL - ---------------- ---------------- ---------------- Fidelity National Financial, Inc. 17911 Von Karman Ave., #300 Irvine, CA 92614 9,478,364(1) 68.7% William P. Foley, II 3916 State Street., #300 Santa Barbara, CA 93105 617,334(2) 4.5%
7 8 Patrick F. Stone 3938 State Street, 2nd Floor Santa Barbara, CA 93105 455,794(3) 3.4% John Snedegar 2510 Redhill Avenue Santa Ana, CA 92705 1,005,803(4) 7.3% Dwayne Walker c/o ShopNow.com 411 1st Street, Suite 200 Seattle, WA 98104 8,334(5) * Richard H. Pickup c/o Wedbush Morgan Securities, Inc. 500 Newport Center Drive, Suite 550 Newport Beach, CA 92660 1,301,197(6) 10% Carl A. Strunk 17911 Von Karman Ave., Suite 300 Irvine, CA 92614 6,667(7) * Bradley Inman c/o HomeGain, Inc. 1250 45th Street, Suite 200 Emeryville, CA 94608 0 * John McGraw c/o Hatchery Works 1001 Bayhill Drive, 2nd Floor San Bruno, CA 94066 0 * All directors and executive officers as a group (11 persons) 3,408,459 25.3%
- ---------- * Represents less than 1%. (1) Represents 8,689,364 shares held of record by Fidelity National Financial, Inc. and 12,500 warrants to purchase 12,500 shares of Common Stock of Micro General Corporation at $1.50, 250,000 warrants to purchase 250,000 shares of Common Stock of Micro General Corporation at $10.00 per share and a convertible note convertible into 526,500 shares of Common Stock of Micro General Corporation. (2) Includes the right to acquire shares pursuant to presently exercisable options under the 1991, 1995 and 1998 Stock Option Plans as follow: 200,000 shares at $4.81, 200,000 shares at $3.63 and 100,000 shares at $3.00 under the 1998 Stock Option Plan and 33,334 shares at $4.87 and 100,000 shares at $15.25 under the 1999 Stock Option Plan. (3) Represents the right to acquire shares pursuant to presently exercisable options under the 1999 and 1998 Stock Option Plans as follows: 200,000 shares at $4.81, 200,000 shares at $3.63 and 22,460 shares at $3.00 under the 1998 Stock Option Plan and 33,334 shares under the 1999 Stock Option Plan. 8 9 (4) Represents warrants to purchase 100,000 shares of Common Stock of Micro General Corporation at $1.00 per share, and the right to acquire shares pursuant to presently exercisable options under the 1999 and 1998 Stock Option Plans as follows: 200,000 shares at $4.75, 250,000 shares at $3.63 and 72,470 shares at $3.00 under the 1998 Stock Option Plan and 150,000 shares at $4.875 and 100,000 at $15.25 under the 1999 Stock Option Plan. (5) Represents the right to acquire 8,334 shares at $4.875 under the 1999 Stock Option Plan. (6) Represents 149,900 shares held of record by Mr. Pickup's Trust. Includes the right to acquire 50,002 shares pursuant to presently exercisable options under the 1995 and 1998 Stock Option Plans. Additionally, 5,000 shares held of record by Dito Devcar Corporation, and 200,000 shares are held by Dito Carree LLP, entities which Mr. Pickup is affiliated with. Includes 225,000 warrants which are convertible into shares of the Company's common stock at $1.50. (7) Represents the right to acquire 6,667 shares pursuant to presently exercisable options under the 1999 Stock Option Plan. (8) This number includes 1,889,934 currently exercisable stock options for all directors and executive officers of the Company. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Company and FNFI completed the merger of Micro General Corporation with ACS Systems, Inc., a wholly-owned subsidiary of FNFI on May 14, 1998. As a result of he merger, all of the outstanding shares of ACS were exchanged for 4.6 million shares of Micro General Corporation common stock. The transaction was valued at $1.3 million. Following the merger of Micro General Corporation and ACS, FNFI owned approximately 81.4% of the common stock of the Company on an undiluted basis. The transaction has been treated as a reverse merger, i.e., Micro General Corporation has been acquired by Fidelity National Financial, Inc. as a majority-owned subsidiary through a merger with and into ACS Systems, Inc., with Micro General Corporation as the surviving entity. As of December 31, 1999, FNFI owned 69.3% of the outstanding common stock of the Company. On November 17, 1998, the Company completed the acquisition of LDExchange.com, Inc. ("LDExchange"), an emerging multinational carrier focused primarily on the international long distance market. LDExchange is a facilities-based, wholesale long distance carrier providing low cost international telecommunications services primarily to U.S. based long distance carriers. The range of services offered by LDExchange complements the domestic long distance services offered by ACS. The LDExchange purchase price was $3.1 million, payable $1.1 million in cash and $2.0 million in Micro General restricted common stock (1,000,000 shares). On October 1, 1999, Micro General entered into an Intellectual Property Transfer Agreement that provided the financing to launch escrow.com as a new company. Under the agreement, the Company sold the escrow.com name and trademark, the escrow.com internet URL, a license for the Micro General proprietary escrow trust accounting software, the Company's computer services provider business unit and approximately $535,000 of related computer equipment. Under the terms of the Intellectual Property Transfer Agreement, the Company received from escrow.com a $4.5 million note with a term of seven years and an accrued interest rate of three percent. The Company also received a warrant giving the Company the right to purchase 15.0 million shares of escrow.com common stock at a price of $0.40 per share. Certain officers and directors of the Company are also officers and directors of escrow.com, Inc. They include John Snedegar -- Chief Executive Officer and Chairman of the Board; William P. Foley -- Vice Chairman of the Board; Patrick F. Stone -- Director; and Dwayne Walker -- Director. INVESTMENTS IN PARTNERSHIPS On October 8, 1998, the Company, in conjunction with FNFI, announced the creation of RealEC, one of the largest real estate electronic commerce networks in the nation. RealEC commenced operations in mid-1999. RealEC develops, operates and maintains a secure business-to-business electronic commerce exchange used to orchestrate real estate settlement services. This open multi-vendor eCommerce network provides real estate and lender customers the ability to select products and services necessary to close their transactions, while at the same time giving them access to over 6,000 issuing locations for title insurance across the United States. RealEC is a fifty percent owned joint venture developed by the Company and Stewart Mortgage Information, a subsidiary of Stewart Information Services Corporation (NYSE:STC). The RealEC network is an Internet based system providing leading edge software that connects all parties involved with real estate transactions. RealEC interfaces with loan origination software systems, windows-based ordering systems, third party networks, real estate office systems and the Internet. RealEC also offers on-line access to documents related to real estate transactions and links with back-end title insurance and escrow production systems. TRANSACTIONS WITH MANAGEMENT AND OTHERS None. 9 10 SIGNATURES PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED. MICRO GENERAL CORPORATION By: /s/ John Snedegar ------------------------------ John Snedegar Chief Executive Officer Date: April 28, 2000 PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURES TITLE DATE - ---------- ----- ---- /s/ William P. Foley, II Co-Chairman of the Board April 28, 2000 - ----------------------------------------------------- WILLIAM P. FOLEY, II /s/ Patrick F. Stone Co-Chairman of the Board April 28, 2000 - ----------------------------------------------------- PATRICK F. STONE /s/ John Snedegar Chief Executive Officer and Director April 28, 2000 - ----------------------------------------------------- JOHN SNEDEGAR Director , 2000 - ----------------------------------------------------- DWAYNE WALKER /s/ Carl A. Strunk Director April 28, 2000 - ----------------------------------------------------- CARL A. STRUNK /s/ Richard H. Pickup Director April 28, 2000 - ----------------------------------------------------- RICHARD H. PICKUP /s/ John McGraw Director April 28, 2000 - ----------------------------------------------------- JOHN MCGRAW /s/ Bradley Inman Director April 28, 2000 - ----------------------------------------------------- BRADLEY INMAN /s/ Dale Christensen Executive Vice President, Chief Accounting Officer April 28, 2000 - ----------------------------------------------------- DALE CHRISTENSEN
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