GROUP LONG DISTANCE, INC.
1451 West Cypress Creek Road, Suite 200
Fort Lauderdale, FL 33309
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 9, 1998
To the Holders of the Common Stock of GROUP LONG DISTANCE, INC:
PLEASE TAKE NOTICE that the Annual Meeting of Shareholders of Group
Long Distance, Inc. (the "Company") will be held at 11:00 a.m. (local time), on
October 9, 1998, at the Sheraton Suites Hotel, 555 N.W. 62nd Street, Fort
Lauderdale, Florida, for the following purposes:
1. To elect two Class 2 Directors of the Company to serve until the
annual meeting of shareholders in 2001 and until their respective
successors are duly elected and qualified;
2. To approve an amendment to the Company's Stock Option Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder by 350,000 shares to a new total of 950,000 shares;
3. To ratify the appointment of Grant Thornton LLP as the independent
public accountants of the Company for the fiscal year ending April
30, 1999; and
4. To transact such other business as may properly come before the
meeting or any postponement or adjournment thereof.
Only holders of the Common Stock at the close of business on August 31,
1998 will be entitled to notice of and to vote at this meeting and any
adjournment or postponement thereof.
You are cordially invited to attend the meeting. Whether or not you
plan to attend the meeting, please complete, sign, date and return the enclosed
proxy card promptly. This will insure that your shares are voted in accordance
with your wishes. Your cooperation is appreciated since a majority of the
outstanding shares entitled to vote must be represented, either in person or by
proxy, to constitute a quorum for the purposes of conducting business at the
meeting.
By Order of the Board of Directors,
Sam D. Hitner,
Secretary
September 28, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
GENERAL INFORMATION....................................................... 1
Solicitation and Voting of Proxies; Revocation; Record Date...... 1
MATTERS SUBMITTED TO SHAREHOLDERS......................................... 2
ELECTION OF DIRECTORS............................................ 2
Nominees Standing for Election.......................... 2
Recommendation.......................................... 2
APPROVAL OF AMENDMENT TO STOCK
OPTION PLAN................................................... 3
Recommendation.......................................... 3
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS................................ 4
Recommendation.......................................... 4
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT....................................... 4
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY........................... 6
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES..................... 7
DIRECTOR COMPENSATION..................................................... 7
EXECUTIVE COMPENSATION.................................................... 8
Summary Compensation Table....................................... 8
Employment Agreement............................................. 9
Option Grants For the Fiscal Year Ended April 30, 1998........... 9
Aggregated Option Exercises In the Year Ended
April 30, 1998 and Fiscal Year-End Option Values............... 10
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................ 10
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934................................. 11
SHAREHOLDER PROPOSALS..................................................... 11
OTHER BUSINESS............................................................ 11
<PAGE>
GROUP LONG DISTANCE, INC.
1451 West Cypress Creek Road, Suite 200
Fort Lauderdale, FL 33309
(954) 771-9696
--------------------
PROXY STATEMENT
for
Annual Meeting of Shareholders
October 9, 1998
--------------------
This proxy statement and the accompanying form of proxy are furnished
in connection with the solicitation of proxies by the Board of Directors of
Group Long Distance, Inc., a Florida corporation (the "Company") to be voted at
its Annual Meeting of Shareholders which will be held at 11:00 a.m. (local
time), on October 9, 1998 at the Sheraton Suites Hotel, 555 N.W. 62nd Street,
Fort Lauderdale, Florida, and at any postponements or adjournments thereof (the
"Annual Meeting").
At the Annual Meeting, the Company's shareholders will be asked (i) to
elect Messrs. Edward Harwood and C. Shelton James as Class 2 Directors of the
Company to serve until the annual meeting of shareholders in 2001 and until
their respective successors are duly elected and qualified, (ii) to approve an
amendment to the Company's Stock Option Plan to increase the number of shares of
Common Stock reserved for issuance thereunder by 350,000 shares to a new total
of 950,000 shares, (iii) to ratify the appointment of Grant Thornton LLP as the
Company's independent public accountants for the fiscal year ending April 30,
1999, and (iii) to take such other action as may properly come before the Annual
Meeting or any adjournments thereof.
This proxy statement and the accompanying form of proxy, together with
the Company's 1998 Annual Report to Shareholders, are being mailed to
shareholders on or about September 2, 1998.
<PAGE>
GENERAL INFORMATION
Solicitation and Voting of Proxies; Revocation; Record Date
Shares represented by each properly executed and returned proxy card
will be voted (unless earlier revoked) in accordance with the instructions
indicated. If no instructions are indicated on the proxy card, all shares
represented by valid proxies received pursuant to this solicitation (and not
revoked before they are voted) will be voted "FOR" the election of the nominees
for director named below, "FOR" the ratification of the Company's independent
public accountants and by the proxies in their discretion on any other matters
to come before the Annual Meeting.
A shareholder may revoke a proxy at any time before it is exercised by
filing with the Secretary of the Company a written revocation or a duly executed
proxy bearing a later date or by voting in person at the meeting. Any written
notice revoking the proxy should be sent to the attention of Sam D. Hitner,
Secretary, Group Long Distance, Inc., 1451 West Cypress Creek Road, Suite 200,
Fort Lauderdale, Florida 33309 or by Facsimile at (954) 771-9910.
Proxies may be solicited by mail, and may also be made by personal
interview, telephone and facsimile transmission, and by directors, officers and
employees of the Company (without special compensation). The expenses for the
preparation of proxy materials and the solicitation of proxies for the Annual
Meeting will be paid by the Company. The Company has retained Continental Stock
Transfer and Trust Company to assist in the solicitation. In accordance with the
regulations of the Securities and Exchange Commission, the Company will
reimburse, upon request, banks, brokers and other institutions, nominees and
fiduciaries for their expenses incurred in sending proxies and proxy materials
to the beneficial owners of the Company's Common Stock. Expenses for the
solicitation are estimated to be approximately $2,500, plus other reasonable
expenses.
Only holders of record of the Company's Common Stock, no par value
("Common Stock"), at the close of business on August 31, 1998 (the "Record
Date") are entitled to notice of and to vote at the Annual Meeting. As of August
7, 1998, there were outstanding 3,502,783 shares of Common Stock. Each share is
entitled to one vote. In order to conduct business at the Annual Meeting, a
quorum must be present, that is a majority of the total number of Common Stock
shares outstanding as of the Record Date must be represented, either in person
or by proxy.
<PAGE>
MATTERS SUBMITTED TO SHAREHOLDERS
ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
Pursuant to the Company's initial Bylaws and its Amended and Restated
Bylaws, the Board of Directors is divided into three classes, the terms of which
expire successively over a three-year period. At each annual meeting of
shareholders, successors to directors whose terms expire at that meeting shall
be elected for three-year terms. The term of office for each class of director
expires as follows: Class 1, at the 2000 annual meeting of Shareholders, Class
2, at the 1998 annual meeting of shareholders; and Class 3, at the 1999 annual
meeting of shareholders.
Nominees Standing for Election
The following nominees are standing for election to serve as Class 2
Directors until the annual meeting of shareholders in 2001 and until their
respective successors are duly elected and qualified:
Edward Harwood, 72, has been a Class 2 Director of the Company since
September 1995. Mr. Harwood retired in 1989. For the 19 years prior to his
retirement, Mr. Harwood held various executive positions with Gould Electronics
Corporation, a computer manufacturing company.
C. Shelton James, 58, has been a Class 2 Director of the Company since
September 1995. Since May 1991, Mr. James has been Chairman of Elcotel, a
publicly traded corporation and manufacturer of telecommunications equipment.
Mr. James is also a director of several other public corporations, including the
following computer-related companies: NAI Technologies, SK Technologies,
Cyberguard Corporation and Concurrent Computer Systems, as well as Fundamental
Management, an investment management company.
Proxies are solicited in favor of the two Class 2 Director nominees and
it is intended that the proxies will be voted for the nominees unless otherwise
specified. Should a nominee become unable to serve for any reason, unless the
Board of Directors by resolution provides for a lesser number of directors, the
persons named in the enclosed proxy will vote for the election of a substitute
nominee. The Board of Directors has no reason to believe that the nominees will
be unable to serve.
Recommendation
The Board of Directors recommends that stockholders vote FOR the
nominees. Assuming the presence of a quorum, the affirmative vote of a plurality
of the votes cast by the holders of the Common Stock shares present and entitled
to vote on this item at the Annual Meeting is required to elect the nominees. In
determining whether this item has received the requisite number of affirmative
votes, abstentions will not be counted and will have no effect on the result of
the vote, although abstentions will count toward the presence of a quorum.
Brokers who hold shares in street name have the authority to vote on certain
routine matters on which they have not received instruction from the beneficial
holders of such shares. Brokers holding shares in street
2
<PAGE>
name, who do not receive instruction, are entitled to vote on the election of
directors, and such broker votes will count toward the presence of a quorum.
APPROVAL OF AMENDMENT TO STOCK OPTION PLAN
(Item 2 on Proxy Card)
The Company's Board of Directors and stockholders have previously
adopted and approved the Company's Stock Option Plan (the "Option Plan"). A
total of 600,000 shares of Common Stock are presently reserved for issuance
under the Option Plan. In August 1998, the Board of Directors approved an
amendment to the Option Plan, subject to stockholder approval, to increase the
shares reserved for issuance thereunder by 350,000 shares, bringing the total
number of shares issuable under the Option Plan to 950,000.
As of April 30, 1998, 150,293 shares were available for future issuance
under the Option Plan, all of which were issued in July 1998.
At the Annual Meeting, the stockholders are being requested to consider
and approve the proposed amendment to the Option Plan to increase the number of
shares of Common Stock reserved for issuance thereunder by 350,000 shares,
bringing the total number of shares issuable under the Option Plan to 950,000.
The Board believes that the amendment will enable the Company to continue its
policy of widespread employee stock ownership as a means to motivate high levels
of performance and to recognize key employee accomplishments.
The Option Plan authorizes the Board of Directors to grant stock
options to eligible employees, directors and consultants of the Company. The
Option Plan is structured to allow the Board of Directors broad discretion in
creating equity incentives in order to assist the Company in attracting,
retaining and motivating the best available personnel for the successful conduct
of the Company's business. The Company has had a longstanding practice of
linking key employee compensation to corporate performance because it believes
that this increases employee motivation to improve shareholder value. The
Company has, therefore, consistently included equity incentives as a significant
component of compensation for a broad range of the Company's employees. This
practice has enabled the Company to attract and retain the talent that it
continues to require.
Recommendation
The Board of Directors recommends that stockholders vote FOR the
amendment to the Stock Option Plan. Assuming the presence of a quorum, the
affirmative vote of a plurality of the votes cast by the holders of the Common
Stock shares present and entitled to vote on this item at the Annual Meeting is
required to amend the Stock Option Plan. In determining whether this item has
received the requisite number of affirmative votes, abstentions will not be
counted and will have no effect on the result of the vote, although abstentions
will count toward the presence of a quorum. Brokers who hold shares in street
name have the authority to vote on certain routine matters on which they have
not received instruction from the beneficial holders of such shares. Brokers
3
<PAGE>
holding shares in street name, who do not receive instruction, are entitled to
vote on the election of directors, and such broker votes will count toward the
presence of a quorum.
RATIFICATION OF SELECTION OF
INDEPENDENT PUBLIC ACCOUNTANTS
(Item 3 on Proxy Card)
The Audit Committee has recommended to the Board of Directors of the
Company the selection of Grant Thornton LLP ("Grant Thornton") as independent
public accountants of the Company for the fiscal year ending April 30, 1999.
A representative of Grant Thornton will be present at the meeting. The
representative will be given the opportunity to make a statement at the meeting
and will be available to respond to appropriate questions.
Recommendation
The Board of Directors recommends that the shareholders RATIFY the
selection of Grant Thornton LLP to be the independent public accountants of the
Company for the fiscal year ending April 30, 1999. Assuming the presence of a
quorum, the affirmative vote of a majority of the votes cast by the holders of
the Common Stock shares present and entitled to vote on this item at the Annual
Meeting is required to ratify the selection. In determining whether this item
has received the requisite number of affirmative votes, abstentions will not be
counted and will have no effect on the result of the vote, although they will
count toward the presence of a quorum. Brokers who hold shares in street name
have the authority to vote on certain routine matters on which they have not
received instruction from the beneficial holders of such shares. Brokers holding
shares in street name, who do not receive instruction, are entitled to vote on
the ratification of the independent public accountants, and such broker votes
will count toward the presence of a quorum.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, known to the Company with
respect to the beneficial ownership of its Common Stock as of August 7, 1998 for
(i) each person who is known to the Company to own beneficially more than 5% of
the Company's Common Stock, (ii) each of the Company's directors, (iii) each of
the Company's executive officers and (iv) all directors and executive officers
as a group.
4
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Name Number of Shares Percentage of
Beneficially Total Voting
Owned Shares(1)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mr. H. T. Ardinger, Jr. 400,000(2) 10.2%
9040 Governors Row
Dallas, Texas 75247-3774
- --------------------------------------------------------------------------------------------------------------
Mr. Gerald M. Dunne, Jr., Chairman, Chief Executive Officer 485,432(3) 12.9%
and Director
- --------------------------------------------------------------------------------------------------------------
Mr. Peter J. Russo, Chief Financial Officer and Director 35,167(4) 1.0%
- --------------------------------------------------------------------------------------------------------------
Mr. Sam D. Hitner, Controller and Secretary 14,313(5) 0.4%
- --------------------------------------------------------------------------------------------------------------
Mr. Edward Harwood, Director 98,418(6) 2.8%
- --------------------------------------------------------------------------------------------------------------
Mr. C. Shelton James, Director 124,928(6) 3.5%
- --------------------------------------------------------------------------------------------------------------
Mr. Glenn S. Koach, formerly a Director 60,966(7) 1.7%
- --------------------------------------------------------------------------------------------------------------
Mr. Stanley A. Gottlieb, Director 10,750(8) 0.3%
- --------------------------------------------------------------------------------------------------------------
Mr. John L. Tomlinson, Director 29,466(6) 0.8%
- --------------------------------------------------------------------------------------------------------------
All directors and executive 859,440(9) 22.0%
Officers as a group (8 persons)
- --------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, the persons named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them. The number of shares of Common Stock
outstanding used in calculating the percentage for each listed person
includes the shares of Common Stock underlying the options or warrants held
by such person that are exercisable within 60 days of the date hereof, but
excludes shares of Common Stock underlying options or warrants held by any
other person.
(2) Includes 100,000 shares of Common Stock and 300,000 shares of Common Stock
issuable upon the exercise of warrants.
(3) Includes currently exercisable options to purchase 256,250 shares of Common
Stock at an exercise price of $1.375 per share and expiring on January 23,
2002.
(4) Includes currently exercisable options to purchase 31,167 shares of Common
Stock at an exercise price of $1.375 per share and expiring on January 23,
2002.
(5) Includes currently exercisable options to purchase 10,313 shares of Common
Stock at an exercise price of $1.375 per share and expiring on January 23,
2002.
(6) Includes currently exercisable options to purchase 23,750 shares of Common
Stock at an exercise price of $1.375 per share and expiring on January 23,
2002.
(7) Includes currently exercisable options to purchase 20,000 shares of Common
Stock at an exercise price of $1.375 per share and expiring on January 23,
2002. In October 1998, Mr. Koach resigned his position as a director of the
Company.
(8) Includes currently exercisable options to purchase 3,750 shares of Common
Stock at an exercise price of $1.375 per share and expiring on January 23,
2002.
5
<PAGE>
(9) Includes an aggregate of currently exercisable options to purchase 392,730
shares of Common Stock at an exercise price of $1.375 per share and expire
on January 23, 2002.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Gerald M. Dunne, Jr., 35, has been President, Chief Executive Officer
and Class 3 Director of the Company since February 1992 and Chairman since
August 1997. From May 1989 to February 1992, Mr. Dunne was Senior Vice President
and Vice President of Sales of the Company.
Edward Harwood, 72, has been a Class 2 Director of the Company since
September 1995. Mr. Harwood retired in 1989. For the 19 years prior to his
retirement, Mr. Harwood held various executive positions with Gould Electronics
Corporation, a computer manufacturing company.
C. Shelton James, 58, has been a Class 2 Director of the Company since
September 1995. Since May 1991, Mr. James has been Chairman of Elcotel, a
publicly traded corporation and manufacturer of telecommunications equipment.
Mr. James is also a director of several other public corporations, including the
following computer-related companies: NAI Technologies, SK Technologies,
Cyberguard Corporation and Concurrent Computer Systems, as well as Fundamental
Management, an investment management company.
Glenn S. Koach, 43, has served as a Class 3 Director of the Company
from September 1995 until October 1998. In October 1998, Mr. Koach resigned his
position as a director of the Company for personal reasons. In December, 1997
Stanley Gottlieb succeeded Mr. Koach as a Class 3 Director.
Stanley A. Gottlieb, 68, has been a Class 3 Director of the Company
since December 1997. Since 1966, Mr. Gottlieb has held various positions at The
Hearst Corporation, most recently as Vice President-Taxes, and continues to act
as consultant to The Hearst Corporation.
John L. Tomlinson, 49, has been a Class 1 Director of the Company since
November 1995. Mr. Tomlinson is a Certified Public Accountant and has been in
private practice since 1990. Mr. Tomlinson also serves as a director of Gateway
American Bank of Florida.
Peter J. Russo, 41, has been a Class 1 Director of the Company since
October 1997. He has been Chief Financial Officer of the Company since December
1996. Mr. Russo was Executive Vice President of the State Bank of South
Australia from February 1992 to June 1996, and Senior Vice President and Chief
Financial Officer for its United States operations from May 1988 to January
1992.
6
<PAGE>
Sam D. Hitner, 40, has been the Controller of the Company since August
1995 and Secretary since October 1997. From November 1994 to August 1995, Mr.
Hitner was employed with John L. Tomlinson C.P.A., P.A., as a tax consultant.
From September 1992 to July 1994, Mr. Hitner was Controller of the sales and
marketing division of South African Druggists, a publicly held pharmaceutical
manufacturer and distributor.
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
During the year ended April 30, 1998, the Board of Directors met 7
times and acted by written consent in lieu of a meeting four times. All
directors attended 75% or more of the aggregate number of meetings of the board
and its committees on which they served, except for Messrs. Gottlieb and Koach.
The following are the current members and functions of the standing
committees of the Board of Directors:
Audit Committee. The Audit Committee is authorized to engage the Corporation's
independent public accountants and review with such public accountants (i) the
scope and timing of their audit services and any other services they are asked
to perform, (ii) their report on the Company's financial statements following
completion of their audit and (iii) the Company's policies and procedures with
respect to internal accounting and financial controls. The Audit Committee is
composed of Messrs. James and Tomlinson. Mr. Tomlinson is the Chairman. During
the fiscal year ending April 30, 1998, the Audit Committee met twice.
Compensation Committee. The Compensation Committee is authorized and empowered
to approve appointments and promotions of executive officers of the Company and
fix salaries for such officers; provided that all actions of the Compensation
Committee must be ratified by the full Board of Directors within six months of
the subject action. The Compensation Committee is composed of Messrs. James and
Harwood. Mr. James is the Chairman. During the fiscal year ending April 30,
1998, the Compensation Committee met twice.
7
<PAGE>
DIRECTOR COMPENSATION
Effective May 1997, non-employee directors of the Company receive a
single annual fee of $18,000 for all services rendered as a director. Such fee
is payable in equal monthly installments. Prior to May 1997, directors of the
Company were not compensated for their services as directors. All directors are
reimbursed for reasonable expenses incurred in connection with their services
rendered as directors.
EXECUTIVE COMPENSATION
The following table sets forth the compensation awarded or paid to, or
earned by, the Company's Chief Executive Officer and Chief Financial Officer
during the fiscal years ended April 30, 1996, 1997 and 1998. No other executive
officer of the Company serving as an executive officer received a total salary
and bonus of $100,000 for the fiscal year ended April 30, 1998. Accordingly, no
information is reported for such persons.
Summary Compensation Table
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
-----------------------------------------------------------------------------
Awards Payouts
----------------------------------
Other Securities
Annual Underlying All Other
Name and Principal Fiscal Compensation Options Compensation
Position Year Salary($) Bonus($) ($) (#) ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gerald M. Dunne, Jr. 1998 $150,000 $255,000 $21,296(1) -- $4,500(2)
Chairman, Chief Executive
Officer and President 1997 $22,000 $8,000 $9,897(1) 250,000 $225(2)
1996 $3,000 $41,807 $40,830(1) -- --
- ----------------------------------------------------------------------------------------------------------------------
Peter J. Russo 1998 $85,000 $70,000 $9,132(3) 14,000 $2,550(2)
Chief Financial Officer
1997 $27,692 $5,000 $1,805(3) 36,000 --
1996 -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------------
(1) For Mr. Dunne, Jr. - Fiscal 1998 amount includes auto expenses of $17,123
and medical expense coverage of $4,173: Fiscal 1997 amount includes: car
allowance of $11,905, medical expense coverage of $4,636 and commission
income of $3,356. For Fiscal 1996 amount includes: commission income of
$30,926, car allowance of $7,200 and medical expense of $2,704.
(2) In April 1997, the Company commenced its 401(k) plan. The amount reported
represents the Company's matching contribution for the fiscal year ended
April 30, 1998.
(3) For Mr. Russo - Fiscal 1998 amount includes auto expenses of $4,800 and
medical expense coverage of $4,032: Fiscal 1997 amount includes: medical
expense coverage of $1,805.
8
<PAGE>
Employment Agreement
In February 1997, the Company and Gerald M. Dunne, Jr. entered into a
two-year employment agreement providing for his employment as the Company's
President and Chief Executive Officer with an annual base salary of $130,000 for
the first year, increasing to $150,000 for the second year and, effective May 1,
1998, $165,000. The agreement provides for a bonus based on certain earnings
criteria. The agreement provides that in the event of termination: (i) without
cause or by Mr. Dunne for cause, or by either party in connection with a change
in control (as defined in the agreement) of the Company, Mr. Dunne will receive
a lump sum severance pay equal to his then annual base salary and disability,
accident and health insurance benefits substantially similar to those insurance
benefits Mr. Dunne is receiving immediately before the termination for cause;
(ii) as a result of the incapacity of Mr. Dunne, Mr. Dunne shall be entitled to
continue to receive 60% of his salary for a two-year period from the date of
termination; and (iii) as a result of the death of Mr. Dunne, his estate shall
be entitled to any benefits accrued under the Company's death, disability or
other benefit plan and shall be entitled to receive a lump sum payment equal to
his then annual base salary. The agreement also includes a one-year noncompete
covenant commencing on the date of termination.
In May 1997, the Company and Peter J. Russo entered into a two-year
employment agreement providing for his employment as the Company's Chief
Financial Officer with an annual base salary of $85,000 per year. The agreement
provides for a bonus based on certain earnings criteria. The agreement provides
that in the event of termination without cause, Mr. Russo will receive a lump
sum severance pay equal to six months of his then annual base salary. The
agreement also includes a six-month noncompete covenant commencing on the date
of termination.
The following table provides certain information regarding the stock
options granted during the year ended April 30, 1998 to the executive officers
named in the Summary Compensation Table.
Option Grants For the Fiscal Year Ended April 30, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Number of % of total
Securities Options Granted Exercise of
Underlying Options to Employees Base Price Expiration
Name Granted(#)(1) in Fiscal Year $/Share Date
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gerald M. Dunne, Jr. -- -- -- --
- --------------------------------------------------------------------------------------------------
Peter J Russo 14,000 100% $1,375 5-23-02
- --------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
- ----------------
(1) All options granted are exercisable for Common Stock at an exercise price
of $1.375 per share and expire on January 23, 2002. These options awarded
to Mr. Russo in May 1997 are exercisable 1/3 beginning of the date of
grant, 1/3 on the first anniversary date of grant and 1/3 on the second
anniversary date of grant.
The following table sets forth certain information for the executive
officers named in the Summary Compensation Table with respect to the exercise of
options to purchase Common Stock during the fiscal year ended April 30, 1998 and
the number and value of securities underlying unexercised options held by the
executive officer as of April 30, 1998.
Aggregated Option Exercises In the Year Ended
April 30, 1998 and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Options Held In-the-Money Options
Acquired on Value at April 30, 1998 at April 30, 1998
Name Exercise(#) Realized Exercisable/Unexercisable Exercisable/Unexercisable
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gerald M. Dunne, Jr. -- -- 250,000/0 $0/$0
------------------------------------------------------------------------------------------------------------------
Peter J. Russo -- -- 18,000/32,000 $0/$0
------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In July 1996, Global Telecom Network, Inc. ("GTN"), a company
controlled by Gerald Dunne, Sr., the father of Gerald M. Dunne, Jr. President
and Chief Executive officer of the company, converted accounts payable to the
Company for long distance services into a promissory note in the principal
amount of $182,050 bearing interest at a rate of 15% per annum. The note was
repaid in full on December 8, 1997.
10
<PAGE>
In September 1995, the Company issued a promissory note to John L.
Tomlinson, a director of the Company, and Phillip C. Cezeaux, an unaffiliated
third-party, in the aggregate principal amount of $ 100,000. The interest rate
on the promissory note adjusts semi-annually based on the prime rate plus 2% and
principal and interest is payable in equal monthly installments of $2,600 until
September 1999. At April 30, 1998, approximately $41,988 was outstanding under
such note. As an inducement for the loan, the Company issued options in
September 1995 to Messrs. Tomlinson and Cezeaux to purchase 47,635 shares of
Common Stock at a price of $3.15 per share. These options expired on September
30, 1997, and 16,700 shares were exercised in September 1997.
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10
percent of any registered class of the Company's equity securities, to file with
the Securities and Exchange Commission (the "SEC") and the Nasdaq Stock Market
and the Boston Stock Exchange reports of ownership of the Common Stock of the
Company. Reporting persons are required by SEC regulation to furnish the Company
with copies of all such reports that they file. To the best of the Company's
knowledge, during the fiscal year ended April 30, 1998, the initial Form 4
report of Peter J. Russo was not timely filed on March 23, 1997, but rather was
filed on or about January 21, 1998.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1999 Annual
Meeting of Shareholders must be received by the Company at the address appearing
on the first page of this proxy statement by May , 1999 in order to be
considered for inclusion in the Company's proxy statement and form of proxy
relating to that meeting.
OTHER BUSINESS
The Board of Directors of the Company is not aware of any other matters
to come before the Annual Meeting. If any other matter should come before the
meeting, the persons named in the enclosed proxy intend to vote the proxy
according to their best judgment.
11
<PAGE>
GROUP LONG DISTANCE, INC.
PROXY SOLICITED BY THE BOARD DIRECTORS
The undersigned, hereby appoints Peter J. Russo, Chief Financial
Officer of Group Long Distance, Inc., a Florida corporation (the "Company"), and
Sam D. Hitner, Controller and Secretary of the Company, and each of them, as
proxies for the undersigned, each with full power of substitution, for and in
the name of the undersigned to act for the undersigned and to vote, as
designated below, all of the shares of common stock, no par value, of the
Company that the undersigned is entitled to vote at the 1998 Annual Meeting of
Shareholders of the Company, to be held on October 9, 1997, at 11:00 a.m. (local
time), at the Sheraton Suites Hotel, 555 N.W. 62nd Street, Fort Lauderdale,
Florida, and at any adjournments or postponements thereof, in accordance with
the directions as follows with respect to the following matters:
Item 1. Election of Class 2 Director Nominees
Messrs. Edward Harwood and C. Shelton James
Item 2. Approval of Amendment to the Company's Stock Option Plan to increase
the number of shares reserved for issuance thereunder by 350,000 shares
to a new total of 950,000 shares.
Item 3. Appointment of Grant Thornton LLP as the independent public
accountants of Company for the fiscal year ending April 30, 1999.
Item 4. Such other matters as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3:
Please mark your votes as in this example /x/.
1. Edward Harwood / / FOR / / WITHHOLD AUTHORITY
C. Shelton James / / FOR / / WITHHOLD AUTHORITY
2. To approve an amendment to the Company's Stock Option Plan to increase
the number of shares of Common Stock reserved for issuance thereunder
by 350,000 shares to a new total of 950,000 shares.
/ / FOR / / AGAINST / / AGAINST
3. To ratify the appointment of Grant Thornton LLP as the independent
public accountants of the company for the fiscal year ending April 30,
1999.
/ / FOR / / AGAINST / / AGAINST
4. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
This proxy will be voted as
directed. Unless otherwise directed,
this Proxy will be voted for
Proposals 1, 2 and 3.
Dated: _______________________, 1998
------------------------------------
Shareholder sign here
------------------------------------
Co-owner sign here
NOTE: Please sign exactly as the
name appears on this card. 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.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3:
Please mark your votes as in this example: /x/.
- --------------------------------------------------------------------------------
1. Election of Class 2 Director:
/ / FOR the nominee as listed below / / WITHHOLD AUTHORITY to vote
(except as marked to the contrary below.) for the nominee listed below.
NOMINEE:
Edward Harwood
C. Shelton James
2. To approve the an amendment to the Company's Stock Option Plan to increase
the number of shares of Common Stock reserved for issuance thereunder by of
the Company for the fiscal year ending April 30, 1999.
/ / FOR / / AGAINST / / AGAINST
3. To approve the appointment of Grant Thornton LLP as the independent public
accountants FORAGAINSTABSTAIN of the Company for the fiscal year ending
April 30, 1999.
/ / FOR / / AGAINST / / AGAINST
4. In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the meeting.
- --------------------------------------------------------------------------------
This Proxy will be voted as
directed. Unless otherwise directed,
this Proxy will be voted for
Proposals 1, 2 and 3.
Please be sure to sign and date this
Proxy.
Date
-------------------------------
------------------------------------
Shareholder sign here
Date
-------------------------------
------------------------------------
Co-owner sign here
NOTE: Please sign exactly as the
name appears on this card. 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.
