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"PRELIMINARY COPY"
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:
<TABLE>
<S> <C>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SCB COMPUTER TECHNOLOGY, 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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[LOGO]
SCB COMPUTER TECHNOLOGY, INC.
1365 WEST BRIERBROOK ROAD
MEMPHIS, TENNESSEE 38138
(901) 754-6577
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 23, 1997
The Annual Meeting of Shareholders of SCB Computer Technology, Inc.
(the "Company") will be held at 10:00 a.m., local time, on Tuesday, September
23, 1997 at the Company's Emerging Technology Center, 3239 Players Club Parkway,
Memphis, Tennessee for the following purposes:
1. To elect five directors to hold office for a term of one year
and until their successors are duly elected and qualified;
2. To consider and act upon a proposal to amend the Company's
Amended and Restated Charter to increase the number of
authorized shares of Common Stock from 20,000,000 to
50,000,000;
3. To consider and act upon a proposal to approve and adopt the
Company's 1997 Stock Incentive Plan;
4. To ratify the appointment of Ernst & Young LLP as the
independent accountants of the Company; and
5. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only shareholders of record at the close of business on July 16, 1997
are entitled to notice of and to vote at the Annual Meeting. Your attention is
directed to the Proxy Statement accompanying this notice for a complete
statement regarding matters to be acted upon at the Annual Meeting.
By order of the Board of Directors,
GORDON L. BATEMAN
Secretary
Memphis, Tennessee
August __, 1997
================================================================================
WE URGE YOU TO ATTEND THE ANNUAL MEETING. WHETHER OR NOT YOU PLAN TO
ATTEND, PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY CARD AND RETURN
IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. A PROXY MAY BE REVOKED BY A
SHAREHOLDER AT ANY TIME PRIOR TO ITS USE AS SPECIFIED IN THE ACCOMPANYING
PROXY STATEMENT.
================================================================================
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SCB COMPUTER TECHNOLOGY, INC.
PROXY STATEMENT FOR
ANNUAL MEETING OF SHAREHOLDERS
The accompanying proxy is solicited by the Board of Directors of SCB
Computer Technology, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held at the Company's Emerging Technology Center, 3239
Players Club Parkway, Memphis, Tennessee on Tuesday, September 23, 1997, at
10:00 a.m., local time, and any adjournment thereof, for the purposes set forth
in the Notice of Annual Meeting of Shareholders. The approximate date on which
this Proxy Statement and the enclosed proxy are first being sent to shareholders
is August __, 1997.
Only holders of the Company's common stock, $.01 par value (the "Common
Stock"), at the close of business on July 16, 1997 are entitled to vote at the
Annual Meeting. On such date, the Company had 7,481,394 shares of the Common
Stock issued and outstanding. Holders of the Common Stock will be entitled to
one vote for each share of Common Stock so held, which may be given in person or
by proxy duly authorized in writing.
Shares represented by valid proxies will be voted in accordance with
instructions contained therein, or, in the absence of such instructions, in
accordance with the Board of Directors' recommendations. Any shareholder of the
Company has the unconditional right to revoke a proxy at any time prior to the
voting thereof by any action inconsistent with the proxy, including notifying
the Secretary of the Company in writing, executing a subsequent proxy, or
personally appearing at the Annual Meeting and casting a contrary vote. No such
revocation will be effective, however, unless and until notice of such
revocation has been received by the Company at or prior to the Annual Meeting.
The Board of Directors knows of no other matters to be brought to a
vote at the Annual Meeting. If any other matter properly does come before the
Annual Meeting, however, the persons appointed in the proxy or their substitutes
will vote in accordance with their best judgment on such matters.
The cost of solicitation of proxies will be borne by the Company,
including expenses in connection with preparing, assembling, and mailing this
Proxy Statement. Such solicitation will be made by mail, and also may be made by
the Company's executive officers or employees personally or by telephone or
telecopy. Upon request, the Company will reimburse brokers, dealers, banks, and
trustees, or their nominees, for reasonable expenses incurred by them in
forwarding solicitation material to beneficial owners of the Common Stock.
PROPOSAL ONE: ELECTION OF DIRECTORS
Under the Company's Amended and Restated Charter, each of the members
of the Board of Directors is elected at the annual meeting of shareholders and
holds office until the next annual meeting of shareholders and until the
incumbent director's successor is duly elected and qualified, subject, however,
to prior death, resignation, retirement, disqualification, or removal from
office. The nominees for election are elected by a plurality of the votes cast
by holders of the shares of Common Stock entitled to vote at the Annual Meeting.
Shareholders have no right to vote cumulatively for directors.
Unless contrary instructions are received, shares of voting securities
of the Company represented by duly executed proxies will be voted in favor of
the election of the nominees named herein. If for any reason a nominee is unable
to serve as a director, it is intended that the proxies solicited hereby will be
voted for such substitute nominee as the Board of Directors of the Company may
propose. The Board of Directors has no reason to expect that the nominees will
be unable to serve and at this time does not have any substitute nominees under
consideration.
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The following persons are the Board of Directors' nominees for election
to serve as directors. The nominees are presently directors of the Company.
Certain information relating to the nominees is set forth in the following
table.
<TABLE>
<CAPTION>
NAME OF NOMINEE BACKGROUND INFORMATION
- --------------------- -----------------------------------------------------------
<S> <C>
T. Scott Cobb Mr. Cobb, 60, is a founder of the Company and has served as
Chairman of the Board since the Company's incorporation in
1984. From 1984 until June 1996, Mr. Cobb also served as
President of the Company. Mr. Cobb was a partner in
Seltmann, Cobb & Bryant, the Company's predecessor, from
its formation in 1976 until 1984. Prior to founding the
Company, Mr. Cobb was associated with Touche Ross &
Company, a predecessor to the accounting firm of Deloitte &
Touche LLP, and also held several engineering positions,
including chief computer engineer for the 1969 lunar landing,
during his 12 years of service at Grumman Aircraft
Engineering Corporation, a predecessor to Northrop
Grumman Corporation. Mr. Cobb is the father of Jeffrey S.
Cobb, Executive Vice President of Operations of the
Company.
Ben C. Bryant, Jr. Mr. Bryant, 50, is a founder of the Company and has served
as Chief Executive Officer, Treasurer, and Vice Chairman of
the Board of the Company since 1984. Mr. Bryant has also
served as President of the Company since June 1996. Mr.
Bryant was a partner in Seltmann, Cobb & Bryant, the
Company's predecessor, from its formation in 1976. From
1974 to 1976, Mr. Bryant was associated with Touche Ross &
Company. Prior to 1974, Mr. Bryant served in a variety of
positions, including manager of business systems
development, with McDonnell Douglas Corporation.
Steve N. White Mr. White, 50, has served as Executive Vice President-
Development since June 1996 and as a Director since
December 1995. Mr. White has also served in varying
capacities for the Company for more than 15 years, including
as Chief Operating Officer from 1990 to June 1996. Prior to
joining the Company, Mr. White was a senior auditor with
Touche Ross & Company.
James E. Harwood Mr. Harwood, 61, has served as a Director of the Company
since January 1996. Mr. Harwood has served as president of
Sterling Equities, Inc., an investment services firm, since
1990. From 1980 to 1990, Mr. Harwood held several
executive positions with Schering-Plough Corporation, a
pharmaceutical and health care products company. Mr.
Harwood also serves as a director for Morgan Keegan, Inc.,
a Memphis, Tennessee based securities firm; Union Planters
Corporation, a bank holding company; and Washington Life
Insurance Co.
</TABLE>
2
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<TABLE>
<CAPTION>
NAME OF NOMINEE BACKGROUND INFORMATION
- --------------------- -----------------------------------------------------------
<S> <C>
Joseph W. McLeary Mr. McLeary, 58, has served as a Director of the Company
since January 1996. Since May 1997, Mr. McLeary has
served as chairman of the board of Executive Financial
Services, Inc., a financial consulting company. Mr. McLeary
served as chairman of the board and chief executive officer of
Midland Financial Group, Inc., a publicly held automobile
insurance company, from 1987 until March 1997. Mr.
McLeary also serves as a director of Equity Inns, Inc., a real
estate investment trust specializing in hotel properties.
</TABLE>
The Board of Directors has established a policy of holding meetings on
a regular quarterly basis and on other occasions when required by special
circumstances. Certain directors also devote their time and attention to the
Board's principal standing committees. The committees and their primary
functions are as follows:
Audit Committee --This committee (the "Audit Committee") makes
recommendations to the Board of Directors with respect to the Company's
financial statements and the appointment of independent accountants,
reviews significant audit and accounting policies and practices, meets
with the Company's independent accountants concerning, among other
things, the scope of audits and reports, and reviews the performance of
the overall accounting and financial controls of the Company. The Audit
Committee is comprised of Messrs. Harwood, McLeary, and White.
Compensation Committee --This committee (the "Compensation
Committee") has the responsibility for reviewing and approving the
salaries, bonuses, and other compensation and benefits of executive
officers, advising management regarding benefits and other terms and
conditions of compensation, and administering the Company's 1995 Stock
Incentive Plan (the "1995 Stock Plan"). The Compensation Committee is
comprised of Messrs. Harwood and McLeary.
The Board of Directors held seven meetings during the fiscal year ended
April 30, 1997. The Compensation Committee held two meetings during the fiscal
year ended April 30, 1997. The Audit Committee held four meetings during the
fiscal year ended April 30, 1997. Each of the incumbent directors attended at
least 75% of the meetings of the Board of Directors and the respective
committees of which they were members during the fiscal year ended April 30,
1997.
The Board of Directors does not have a nominating committee.
Nominations for election to the Board of Directors may be made by the Board of
Directors, a nominating committee appointed by the Board of Directors, or by any
shareholder entitled to vote for the election of directors. Nominations made by
shareholders must be made by written notice (setting forth the information
required by the Company's Amended and Restated Bylaws) received by the Secretary
of the Company at least 120 days in advance of the anniversary date of the proxy
statement for the previous year's annual meeting or within 10 days of the date
on which notice of a special meeting for the election of directors is first
given to shareholders.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the
beneficial ownership of shares of the Common Stock as of the date hereof by (i)
each current director of the Company (including the nominees); (ii) each of the
executive officers named in the Summary Compensation Table on page 5 hereof (the
"Named Executive Officers"); (iii) each shareholder of the Company known to
management of the Company to own beneficially more than 5% of the outstanding
shares of the Common Stock; and (iv) all directors and executive officers of the
Company as a group. Unless otherwise indicated, the Company believes that the
beneficial owner set forth in the table has sole voting and investment power.
<TABLE>
<CAPTION>
AMOUNT AND
NAME OF NATURE OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP (1) OF CLASS
- ---------------------------------------- ------------------------ ------------
<S> <C> <C>
SCB Computer Technology, Inc.
ESOP and Trust (2)(3) 777,509 10.4%
Ben C. Bryant, Jr. (2) 1,747,871(4)(5) 23.4%
T. Scott Cobb (2) 1,633,880(5)(6) 21.8%
Steve N. White 155,118(7) 2.1%
Steven H. Smith 7,706(8) *
Gordon L. Bateman 69,195(9) 1.0%
James E. Harwood 7,000(10) *
Joseph W. McLeary 7,000(10) *
All directors and executive
officers as a group (10 persons) 3,759,123(11) 50.2%
</TABLE>
- ----------
* Indicates ownership of less than one percent of the outstanding
Common Stock.
(1) Pursuant to the rules of the Securities and Exchange Commission, shares
of Common Stock that a beneficial owner has the right to acquire within
60 days of the date hereof are considered to be beneficially owned by
such person and are deemed to be outstanding for the purpose of computing
the percentage ownership of such person but are not deemed outstanding
for the purpose of computing the percentage ownership of any other
person.
(2) Address: 1365 West Brierbrook Road, Memphis, Tennessee 38138.
(3) Approximately 240 employees of the Company participate in the ESOP.
Ben C. Bryant, Jr. and T. Scott Cobb are the trustees of the ESOP.
(4) Includes 94,341 shares allocated to Mr. Bryant by the ESOP and 310,056
shares beneficially owned by Mr. Bryant's wife. Does not include 83,700
shares beneficially owned by Mr. Bryant's children who are 18 years of
age or older.
(5) Does not include shares held by the ESOP that are not allocated to the
accounts of Messrs. Bryant or Cobb. See Notes (4) and (6).
Messrs. Bryant and Cobb, as trustees, have no voting or investment power
with respect to shares held by the ESOP.
(6) Includes 94,341 shares allocated to Mr. Cobb by the ESOP and 375,498
shares owned by Mr. Cobb's wife and minor daughter. Does not include
88,634 shares beneficially owned by Mr. Cobb's children who are 18 years
of age or older.
(7) Includes 52,681 shares allocated to Mr. White by the ESOP and 10,000
shares issuable upon the exercise of options.
(8) Includes 2,681 shares allocated to Mr. Smith by the ESOP and 5,025 shares
issuable upon the exercise of options.
(9) Includes 23,951 shares allocated to Mr. Bateman by the ESOP and 12,525
shares issuable upon the exercise of options.
(10) Includes 5,000 shares issuable upon the exercise of options.
(11) Includes 62,875 shares issuable upon the exercise of options.
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EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued
by the Company on behalf of the Chief Executive Officer and the other four most
highly compensated executive officers who received an annual salary and bonus in
excess of $100,000 (together with the Chief Executive Officer, the "Named
Executive Officers") for the fiscal year ended April 30, 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------------- ----------------------
FISCAL SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY ($)(1) BONUS ($) OPTIONS/SARS (#)
- -------------------------------- ------ ------------- ---------- ----------------------
<S> <C> <C> <C> <C>
Ben C. Bryant, Jr.
Vice Chairman, President, Chief 1997 350,000 -- --
Executive Officer, and Treasurer 1996(2) 1,182,420 700,000 --
1995 1,425,925 659,075 --
T. Scott Cobb 1997 350,000 -- --
Chairman 1996(2) 1,182,420 700,000 --
1995 1,425,925 659,075 --
Steve N. White 1997 175,000 -- 20,000
Executive Vice President - 1996 285,417 661,362(3) --
Development 1995 227,646 -- --
Steven H. Smith 1997 220,365 -- --
Senior Vice President 1996 139,798 -- 20,100
1995 102,708 -- --
Gordon L. Bateman 1997 134,667 -- 20,000
Chief Financial Officer, Executive 1996 151,250 176,612(3) 10,100
Vice President, and Secretary 1995 143,200 -- --
</TABLE>
- ----------
(1) Includes amounts deferred by the employee under the Company's 401(k) plan.
(2) In February 1996, each of Messrs. Bryant and Cobb entered into employment
agreements with the Company. Each employment agreement is for a term
expiring on April 30, 1999. The employment agreements initially provided
for an annual base salary of $600,000, increasing 10% on each of May 1,
1997 and 1998. Effective as of July 1, 1996, each of the employment
agreements was amended to reduce the annual base salary to $300,000. The
agreements also provide for bonuses of $100,000 or $200,000 per year to
each of Messrs. Bryant and Cobb in the event the Company exceeds 110% or
125%, respectively, of pre-tax earnings targets established by the Board of
Directors at the beginning of each fiscal year. No bonuses were paid to
either of Messrs. Bryant or Cobb for the fiscal year ended April 30, 1997.
The employment agreements can be terminated at any time for "cause," as
defined in each employment agreement. Each agreement will also terminate if
the employee becomes disabled or otherwise unable to perform his assigned
duties for a period of 90 consecutive days. In the event the employee is
terminated by the Company without cause or because of a disability, the
Company must continue to pay the employee's salary for the balance of the
term of the agreement. The employment agreements also contain a
noncompetition covenant for a period of one year following a termination of
employment by the employee for any reason or by the Company for cause.
(3) Represents the value of shares of Common Stock ($9.75 per share) granted
to the Named Executive Officer on October 31, 1995.
Beginning with the fiscal year ending April 30, 1998, the Compensation
Committee has established an incentive compensation plan whereby members of
senior management and selected employees may be awarded annual and long-term
incentive bonuses based upon the attainment by the Company of earnings goals
established by the Compensation Committee at the beginning of the fiscal year.
One-half of any bonus award will be automatically subject to the terms of a
Deferred Compensation Plan. The remaining one-half of the bonus award will be
paid to the recipient, who shall have the option to defer such award pursuant to
the terms of the Deferred Compensation Plan.
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The portion of a recipient's bonus which is automatically subject to
the terms of the Deferred Compensation Plan will vest over five years and will
be placed into an account that fluctuates with the price of the Company's common
stock, thereby tying the value of a participant's award to the performance of
the Company and aligning the interests of the participants more closely with
those of the Company's shareholders. The remaining one-half of the bonus award
vests immediately and may be deferred, at the recipient's option, and invested
in a phantom stock account or in one of several investment options established
by the Committee administering the Plan.
The following table summarizes certain information regarding stock
options issued to the Named Executive Officers during the fiscal year ended
April 30, 1997. No stock appreciation rights ("SARs") have been granted by the
Company.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (2)
------------------------------------------------------------- -------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS GRANTED EXERCISE
UNDERLYING OPTIONS TO EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED (#)(1) FISCAL 1997 ($/SHARE) DATE 5%($) 10%($)
- ---------------------- ----------------- --------------- ----------- ---------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Ben C. Bryant, Jr. -- -- -- -- -- --
T. Scott Cobb -- -- -- -- -- --
Steve N. White 20,000 12.0% 16.50 4/14/07 207,535 525,935
Steven H. Smith -- -- -- -- -- --
Gordon L. Bateman 20,000 12.0% 16.50 4/14/07 207,535 525,935
</TABLE>
- ----------
(1) All options were granted pursuant to the 1995 Stock Plan, one-half of which
vested and became exercisable on the date of grant and the balance of which
will vest on the earlier of (a) April 30, 2000, and (b) the Company's
attainment of a pre-established net income target in fiscal 1998.
(2) Potential realizable value is calculated from a base stock price of
$16.50, the exercise price of the options granted.
The following table summarizes certain information with respect to
stock options issued to the Named Executive Officers. No options were exercised
by any of the Named Executive Officers during the fiscal year ended April 30,
1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL 1997 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS HELD AT OPTIONS HELD AT
APRIL 30, 1997 (#) APRIL 30, 1997 (1) ($)
------------------------------------- --------------------------------------
NAME Exercisable Unexercisable Exercisable Unexercisable
- ------------------- ---------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Ben C. Bryant, Jr. -- -- -- --
T. Scott Cobb -- -- -- --
Steve N. White 10,000 10,000 10,000 10,000
Steven H. Smith 5,025 15,075 10,050 30,150
Gordon L. Bateman 12,525 17,575 15,050 25,150
</TABLE>
- ----------
(1) Reflects the market value of the underlying securities at $17.50 per share,
the closing price on The Nasdaq Stock Market's National Market (the "Nasdaq
National Market") on April 30, 1997, less the exercise price.
6
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DIRECTOR COMPENSATION
Directors who are employees of the Company do not receive additional
compensation for serving as directors of the Company. In the fiscal year ended
April 30, 1997, directors who were not employed by the Company (the "Outside
Directors") were entitled to a fee of $3,000 for each board or committee meeting
attended. For the fiscal year ending April 30, 1998, Outside Directors will be
entitled to an annual fee of $20,000, payable quarterly, plus a fee of $500 for
each board or committee meeting attended. All directors are entitled to
reimbursement for their actual out-of-pocket expenses incurred in connection
with attending meetings.
The 1995 Stock Plan provides for automatic grants of up to an aggregate
of 50,000 non-qualified stock options to Outside Directors. Under the 1995 Stock
Plan, options to purchase 5,000 shares of Common Stock will be automatically
granted to additional Outside Directors upon their initial election to the Board
of Directors and options to purchase 2,500 shares of Common Stock will also be
automatically granted to each Outside Director upon his or her reelection to the
Board of Directors. The automatic grant provisions of the 1995 Stock Plan with
respect to Outside Directors will be terminated as of the date of the 1997
Annual Meeting of Shareholders upon the approval of shareholders of the proposed
1997 Stock Incentive Plan (the "1997 Stock Plan") and will be replaced by
similar provisions of the 1997 Stock Plan. See "PROPOSAL THREE: ADOPTION OF 1997
STOCK INCENTIVE PLAN."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company served during fiscal year 1997 as a
member of a compensation committee or as a director of any entity of which any
of the Company's directors serves as an executive officer.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's Compensation Committee is composed of Messrs. Harwood and
McLeary. Neither of these persons has at any time been an officer or employee
of the Company.
Currently, Mr. Bryant, who is the Company's Chief Executive Officer,
and Mr. Cobb are compensated in accordance with the terms of employment
agreements approved by the Board of Directors and entered into upon the
consummation of the Company's initial public offering in February 1996. In July
1996, the Compensation Committee, at the request of Messrs. Bryant and Cobb
agreed to amend each of the employment agreements to reduce the annual base
salary from $600,000 to $300,000. The agreements also provide for bonuses of
$100,000 or $200,000 per year to each of Messrs. Bryant and Cobb in the event
that the Company exceeds 110% or 125%, respectively, of pre-tax earnings targets
established by the Board of Directors at the beginning of each fiscal year. No
bonuses were paid to either Messrs. Bryant or Cobb for the fiscal year ended
April 30, 1997. To date, the Compensation Committee has not awarded any
equity-based compensation to either of Messrs. Bryant and Cobb, in part because
of their significant existing equity ownership positions. See "--Security
Ownership of Certain Beneficial Owners and Management."
The remainder of the executive officers are compensated pursuant to an
executive compensation program established by the Board of Directors. The
overall objectives of the Company's executive compensation program are to:
- attract and retain the highest quality talent to lead the Company;
- reward key executives based on corporate and individual
performance; and
- provide incentives designed to maximize shareholder value.
The philosophy upon which these objectives are based is to provide
incentives to the Company's officers to enhance the profitability of the Company
and to align closely the financial interests of the Company's officers with
those of its shareholders. Consequently, in the fiscal year ended April 30,
1997, the Compensation Committee awarded options
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to purchase an aggregate of 99,000 shares of Common Stock to the Company's
executive officers (four persons in 1997). A majority of these options vest, in
part, based on the Company's achievement of certain pre-established operating
results targets and are, accordingly, "at-risk" with respect to the Company's
performance. During fiscal year 1997, the Compensation Committee engaged
Executive Financial Services, Inc., an independent compensation consulting firm
("EFS"), to assist the Compensation Committee in further developing the
Company's compensation program. EFS detailed for the Compensation Committee the
Company's practices relative to some of the companies included in the CRSP Index
for Nasdaq Computer and Data Processing Stocks, which is presented on the
performance graph on Page 9, and additional companies in the information
technology business with respect to which the Company believes it competes for
executive talent. The compensation levels for fiscal 1998 were then established
by the Compensation Committee based on, among other things, EFS's analysis.
For fiscal 1998, the Compensation Committee has set annual salaries for
senior management somewhat below competitive levels so that the Company could
rely to a significant degree on annual and long-term incentive compensation to
attract and retain senior management and employees of outstanding abilities and
to motivate them to perform to the full extent of their abilities. In that
regard, the Compensation Committee has established an incentive plan whereby
members of senior management and selected employees will be compensated with
annual and long-term incentive awards based upon the Company's achievement of
certain pre-established earnings goals. In addition, the Compensation Committee
has approved the creation of the Deferred Compensation Plan, which further ties
amounts deferred to the performance of the Company. See "Executive
Compensation".
Section 162(m) of the Code generally disallows a corporate deduction
for compensation over $1,000,000 paid to the Company's Chief Executive Officer
and any of the four other most highly compensated officers. The $1,000,000
limitation applies to all types of compensation, including restricted stock
awards and amounts realized on the exercise of stock options and SARs, unless
the awards and plan under which they are made qualify as "performance based"
under the terms of the Code and related regulations. Under the regulations,
stock options awarded pursuant to the Company's 1995 Stock Plan and 1997 Stock
Incentive Plan, if approved, should qualify as performance based compensation
and therefore be excluded from the $1,000,000 limit. Other forms of compensation
provided by the Company, however, may not be excluded from such limit. The
Company currently anticipates that compensation of its executive officers will
be deductible under Section 162(m) because executive officer compensation is
presently below the limit and because the Company intends to continue to utilize
performance based compensation in future periods.
JAMES E. HARWOOD
JOSEPH W. MCLEARY
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PERFORMANCE GRAPH
The following graph compares the cumulative returns of $100 invested on
February 15, 1996 (the date of the Company's initial public offering) in (a) the
Common Stock, (b) the CRSP Index for the Nasdaq Stock Market-U.S. Corporations
and (c) the CRSP Index for Nasdaq Computer and Data Processing Stocks, assuming
reinvestment of all dividends.
<TABLE>
<CAPTION>
2/15/96 4/30/96 4/30/97
<S> <C> <C> <C>
SCB Computer Technology, Inc. $100 $162 $107
NASDAQ $100 $110 $116
NASDAQ Computer & Data Processing $100 $113 $125
</TABLE>
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PROPOSAL TWO: INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
On July 15, 1997, the Board of Directors unanimously approved and
directed that the shareholders consider an amendment to Section 7 of the
Company's Amended and Restated Charter. The amendment to Section 7 would
increase the number of authorized shares of Common Stock from 20,000,000 to
50,000,000. If this proposal is approved by the shareholders at the Annual
Meeting, the amendment to Section 7 will become effective upon the filing of
Articles of Amendment with the Secretary of State of Tennessee, which filing is
expected to take place shortly after the Annual Meeting. The Board of Directors
believes that it is in the best interests of the Company and all of its
shareholders to amend the Amended and Restated Charter.
Except as set forth below, the relative rights of the holders of Common
Stock under the Amended and Restated Charter would remain unchanged. The first
paragraph of Section 7 of the Amended and Restated Charter, as amended by the
proposed amendment, is set forth below. The remainder of Section 7 will remain
unchanged.
"7. The corporation is authorized to issue two classes of stock in
the following number of shares: (i) 50,000,000 shares of common stock,
par value $.01 per share (the "Common Stock"), and (ii) 1,000,000
shares of preferred stock, no par value (the "Preferred Stock")."
As of July 16, 1997, there were 7,481,394 shares of Common Stock issued
and outstanding, 592,075 shares subject to options awarded under the 1995 Stock
Plan, an additional 3,650 shares reserved under the 1995 Stock Plan for future
awards, and, assuming approval of "PROPOSAL THREE: ADOPTION OF 1997 STOCK
INCENTIVE PLAN", an additional 600,000 shares reserved under the 1997 Stock Plan
for future awards. The Company may be required to issue up to $4,000,000 in
shares of Common Stock (based on the price of the stock and time of issuance) in
connection with the Company's February 1997 acquisition of Technology Management
Resources, Inc. ("TMR"), if TMR achieves certain revenues and earnings targets
in the fiscal years ending April 30, 1998, 1999, and 2000. In addition, in
connection with the recent acquisition of Partners Resources, Inc. ("PRI"), the
Company may issue shares of Common Stock as additional purchase price based on
PRI's net income for the fiscal year ending December 31, 1997. Furthermore, the
Board of Directors has declared a three-for-two stock split, to be effected in
the form of a 50% stock dividend, payable on September 3, 1997, to shareholders
of record on August 20, 1997.
The Board of Directors considers the proposed increase in the number of
authorized shares of Common Stock desirable because it would give the Company
the necessary flexibility to issue Common Stock in connection with additional
stock dividends and splits, acquisitions (such as those described above), equity
financings, employee compensation and benefit plans (such as the 1997 Stock
Plan, if approved by the shareholders), and for other general corporate
purposes. The Company has no definitive understanding, arrangement, or agreement
with respect to the issuance of additional shares of Common Stock in connection
with an acquisition or otherwise, except as described above.
Future issuances of Common Stock would be at the discretion of the
Board of Directors without the expense and delay incidental to obtaining
shareholder approval, except as may be required by applicable law or by the
rules of any stock exchange or market on which the Company's securities may then
be listed or authorized for quotation. For example, the Nasdaq National Market,
on which the Common Stock is authorized for quotation, currently requires
shareholder approval as a prerequisite to listing shares in several instances,
including in connection with acquisitions where the present or potential
issuance of shares could result in an increase in the number of shares of Common
Stock outstanding by 20% or more.
Holders of Common Stock have no preemptive rights to subscribe to any
additional securities of any class that the Company may issue. The amendment to
the Amended and Restated Charter is not being proposed in response to any effort
known by management to acquire control of the Company.
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The amendment to the Amended and Restated Charter will be approved if
the votes cast in favor of the proposal exceed the votes cast against it. THE
BOARD OF DIRECTORS RECOMMENDS A VOTE BY THE HOLDERS OF COMMON STOCK "FOR"
PROPOSAL TWO.
PROPOSAL THREE: ADOPTION OF 1997 STOCK INCENTIVE PLAN
DESCRIPTION OF THE PLAN
The Company believes that a key element of director, officer, and
employee compensation is stock-based incentive compensation. Such compensation
advances the interests of the Company by encouraging and providing for, the
acquisition of equity interests in the Company by directors, officers, and
employees, thereby providing substantial motivation for superior performance.
In addition, because of the large number of Company employees (approximately
1,000 persons at July 15, 1997) and the high employee turnover rate in the
Company's industry (approximately 40% for the Company for the fiscal year ended
April 30, 1997), the Company believes equity incentives provide a competitive
advantage in attracting and retaining valuable employees. In that regard, the
Board of Directors and the shareholders approved the 1995 Stock Plan providing
for award of up to 600,000 shares of Common Stock. As of July 15, 1997, there
were only 3,650 shares available for award under the 1995 Stock Plan. Upon
recommendation by the Compensation Committee, on July 15, 1997, the Board of
Directors adopted, subject to shareholder approval, the 1997 Stock Incentive
Plan (the "1997 Stock Plan"), and has recommended its submission to the
Company's shareholders.
Many of the features of the 1997 Stock Plan are similar to those of the
1995 Stock Plan. Under the 1997 Stock Plan, the Compensation Committee has the
authority to grant to employees and consultants of the Company, and the Board of
Directors has the authority to grant to directors who are not employed by the
Company ("Outside Directors"), the following types of awards: (1) stock options;
(2) stock appreciation rights; (3) restricted stock; and/or (4) other stock-
based awards. The Compensation Committee has the power to delegate authority to
the Company's Chief Executive Officer or to a committee composed of officers of
the Company to grant, on behalf of the Compensation Committee, non-qualified
stock options, subject to such guidelines as the Compensation Committee may
determine from time to time. Pursuant to the 1997 Stock Plan, 600,000 shares of
Common Stock have been reserved and will be available for issuance, which may
include authorized and unissued shares or treasury shares.
The maximum number of shares of Common Stock for which awards may be
made under the 1997 Stock Plan to any officer of the Company or other person
whose compensation may be subject to the limitations on deductibility under
Section 162 (m) of the Internal Revenue Code of 1986, as amended (the "Code"),
is 100,000 during any single year. As of the date hereof, no awards have been
made under the 1997 Stock Plan. Any shares as to which an option or other award
expires, lapses unexpired, or is forfeited, terminated, or canceled may become
subject to a new option or other award. The 1997 Stock Plan will terminate on,
and no award may be granted later than, the tenth anniversary of the date of
adoption of the 1997 Stock Plan, but the exercise date of awards granted prior
to such tenth anniversary may extend beyond that date.
The 1997 Stock Plan also provides for automatic grants of up to an
aggregate of 50,000 non-qualified stock options to Outside Directors. Options to
purchase 5,000 shares of Common Stock will be automatically granted to Outside
Directors upon their initial election to the Board of Directors. Options to
purchase 2,500 shares will also be automatically granted to each Outside
Director upon his or her reelection to the Board of Directors at the annual
shareholders' meeting if such director has served as such for the past eleven
months as of the date of the meeting. Such options will vest with respect to all
shares on the first anniversary of the date of grant, if such Outside Director
is still serving as a director on such date. All options automatically granted
to an Outside Director will enable the optionee to purchase shares of Common
Stock at the fair market value of the Common Stock on the date of grant. Outside
Directors will not be able to transfer or assign their options without the prior
written consent of the Board of Directors other than (i) transfers by the
optionee to a member of his or her immediate family or a trust for the benefit
of the optionee or a member of his or her immediate family, or (ii) transfers by
will or by the laws of decent and distribution. Options automatically granted to
Outside Directors will have a term of ten years from the date of grant. The
exercise price may be paid in cash, shares of Common Stock, or a combination
thereof. For periods beginning on the date of the 1997
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Annual Meeting of Shareholders, the 1997 Stock Plan provisions regarding
automatic option grants to Outside Directors will supersede the automatic grant
provisions of the 1995 Stock Plan.
ISO's and non-qualified stock options may be granted for such number of
shares as the Compensation Committee may determine and may be granted alone, in
conjunction with, or in tandem with other awards under the 1997 Stock Plan or
cash awards outside the 1997 Stock Plan. A stock option will be exercisable at
such times and subject to such terms and conditions as the Compensation
Committee will determine. In the case of an ISO, however, the term will be no
more than ten years after the date of grant (five years in the case of ISO's for
certain 10% shareholders). The option price for an ISO will not be less than
100% (110% in the case of certain 10% shareholders) of the fair market value of
the Common Stock as of the date of grant and for any non-qualified stock option
will not be less than 50% of the fair market value as of the date of grant. ISOs
granted under the 1997 Stock Plan may not be transferred or assigned other than
by will or by the laws of descent and distribution. Non-qualified stock options
and stock appreciation rights may not be transferred or assigned without the
prior written consent of the Compensation Committee other than (i) transfers by
the optionee to a member of his or her immediate family or a trust for the
benefit of the optionee or a member of his or her immediate family, or (ii)
transfers by will or by the laws of descent and distribution.
Stock appreciation rights may be granted under the 1997 Stock Plan in
conjunction with all or part of a stock option and will be exercisable only when
the underlying stock option is exercisable. Once a stock appreciation right has
been exercised, the related portion of the stock option underlying the stock
option appreciation right will terminate. Upon the exercise of a stock
appreciation right, the Company will pay to the employee or consultant in cash,
Common Stock, or a combination thereof (the method of payment to be at the
discretion of the Committee), an amount equal to the excess of the fair market
value of the Common Stock on the exercise date over the option price, multiplied
by the number of stock appreciation rights being exercised.
Restricted stock awards may be granted alone, in addition to, or in
tandem with, other awards under the 1997 Stock Plan or cash awards made outside
the 1997 Stock Plan. The provisions attendant to a grant of restricted stock may
vary from participant to participant. In making an award of restricted stock,
the Compensation Committee will determine the periods during which the
restricted stock is subject to forfeiture and may provide such other awards
designed to guarantee a minimum value for such stock. During the restriction
period, the employee or consultant may not sell, transfer, pledge, or assign the
restricted stock but will be entitled to vote the restricted stock and to
receive, at the election of the Compensation Committee, cash or deferred
dividends.
The Compensation Committee also may grant other types of awards such as
performance shares, convertible preferred stock, convertible debentures, or
other exchangeable securities that are valued, as a whole or in part, by
reference to or otherwise based on the Common Stock. These awards may be granted
alone, in addition to, or in tandem with, stock options, stock appreciation
rights, restricted stock, or cash awards outside of the 1997 Stock Plan. Awards
will be made upon such terms and conditions as the Compensation Committee may
determine.
If there is a change in control or a potential change of control of the
Company (as defined in the 1997 Stock Plan), stock appreciation rights and
limited stock appreciation rights, and any stock options which are not then
exercisable, will become fully exercisable and vested and the restrictions and
deferral limitations applicable to restricted stock and other stock-based awards
may lapse and such shares and awards will be deemed fully vested. Stock options,
stock appreciation rights, limited stock appreciation rights, restricted stock
and other stock-based awards, will, unless otherwise determined by the
Compensation Committee in its sole discretion, be cashed out on the basis of the
change in control price (as defined in the 1997 Stock Plan and as described
below). The change in control price will be the highest price per share paid in
any transaction reported on the Nasdaq National Market or paid or offered to be
paid in any bona fide transaction relating to a change in control or potential
change in control at any time during the immediately preceding 60-day period, as
determined by the Compensation Committee.
Because awards under the 1997 Stock Plan are at the discretion of the
Compensation Committee, the benefits that will be awarded under the 1997 Stock
Plan to persons other than Outside Directors are not currently determinable.
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As of August ___, 1997, the market value of a share of Common Stock based on the
closing price for such stock on the Nasdaq National Market was $_________.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a brief summary of the Federal income tax aspects of
awards made under the 1997 Stock Plan based upon the federal income tax laws in
effect on the date hereof. This summary is not intended to be exhaustive and
does not describe state or local tax consequences.
Incentive Stock Options. No taxable income is realized by the
participant upon the grant or exercise of an ISO. If Common Stock is issued to a
participant pursuant to the exercise of an ISO, and if no disqualifying
disposition of the shares is made by the participant within two years of the
date of grant or within one year after the transfer of the shares to the
participant, then: (a) upon the sale of the shares, any amount realized in
excess of the option price will be taxed to the participant as a long-term
capital gain, and any loss sustained will be a capital loss, and (b) no
deduction will be allowed to the Company for Federal income tax purposes. The
exercise of an ISO will give rise to an item of tax preference that may result
in an alternative minimum tax liability for the participant unless the
participant makes a disqualifying disposition of the shares received upon
exercise.
If Common Stock acquired upon the exercise of an ISO is disposed of
prior to the expiration of the holding periods described above, then generally:
(a) the participant will realize ordinary income in the year of disposition in
an amount equal to the excess, if any, of the fair market value of the shares at
exercise (or, if less, the amount realized on the disposition of the shares)
over the option price paid for such shares, and (b) the Company will be entitled
to deduct any such recognized amount. Any further gain or loss realized by the
participant will be taxed as short-term or long-term capital gain or loss, as
the case may be, and will not result in any deduction by the Company.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following the termination of the participant's
employment, the option will generally be taxed as a non-qualified stock option.
Non-Qualified Stock Options. Except as noted below, with respect to
non-qualified stock options: (a) no income is realized by the participant at the
time the option is granted; (b) generally upon exercise of the option, the
participant realizes ordinary income in an amount equal to the difference
between the option price paid for the shares and the fair market value of the
shares on the date of exercise and the Company will be entitled to a tax
deduction in the same amount; and (c) at disposition, any appreciation (or
depreciation) after date of exercise is treated either as short-term or
long-term capital gain or loss, depending upon the length of time that the
participant has held the shares. See "Restricted Stock" for tax rules applicable
where the spread value of an option is settled in an award of restricted stock.
Stock Appreciation Rights. No income will be realized by a participant
in connection with the grant of an SAR. When the SAR is exercised, the
participant will generally be required to include as taxable ordinary income in
the year of exercise, an amount equal to the amount of cash and the fair market
value of any shares received. The Company will be entitled to a deduction at the
time and in the amount included in the participant's income by reason of the
exercise. If the participant receives Common Stock upon exercise of an SAR, the
post-exercise appreciation or depreciation will be treated in the same manner
discussed above under "Non-Qualified Stock Options."
Restricted Stock. A participant receiving restricted stock generally
will recognize ordinary income in the amount of the fair market value of the
restricted stock at the time the stock is no longer subject to forfeiture, less
the consideration paid for the stock. However, a participant may elect, under
Section 83(b) of the Code within 30 days of the grant of the stock, to recognize
taxable ordinary income on the date of grant equal to the excess of the fair
market value of the shares of restricted stock (determined without regard to the
restrictions) over the purchase price of the restricted stock. Thereafter, if
the shares are forfeited, the participant will be entitled to a deduction,
refund, or loss, for tax purposes only, in an amount equal to the purchase price
of the forfeited shares regardless of whether he made a Section 83(b) election.
With respect to the sale of shares after the forfeiture period has expired, the
holding period to
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determine whether the participant has long-term or short-term capital gain or
loss generally begins when the restriction period expires and the tax basis for
such shares will generally be based on the fair market value of such shares on
such date. However, if the participant makes an election under Section 83(b),
the holding period will commence on the date of grant, the tax basis will be
equal to the fair market value of shares on such date (determined without regard
to restrictions), and the Company generally will be entitled to a deduction
equal to the amount that is taxable as ordinary income to the participant in the
year that such income is taxable.
Dividends and Dividend Equivalents. Dividends paid on restricted stock
generally will be treated as compensation that is taxable as ordinary income to
the participant, and will be deductible by the Company. If, however, the
participant makes a Section 83(b) election, the dividends will be taxable as
ordinary income to the participant but will not be deductible by the Company.
Other Stock-Based Awards. The Federal income tax treatment of other
stock-based awards will depend on the nature of any such award and the
restrictions applicable to such award. Such an award may, depending on the
conditions applicable to the award, be taxable as an option, an award of
restricted stock, or in a manner not described herein.
The 1997 Stock Plan is not intended to be a "qualified plan" under
Section 401(a) of the Code.
The 1997 Stock Plan will be approved and adopted if the votes cast in
favor of the 1997 Stock Plan exceed the votes cast against it. Abstentions and
broker non-votes will not be considered in the vote. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" PROPOSAL THREE.
PROPOSAL FOUR: RATIFICATION OF APPOINTMENT OF ACCOUNTANTS
Upon recommendation of the Audit Committee, the Board of Directors has
appointed Ernst & Young LLP, independent public accountants, to audit the
accounts of the Company for the fiscal year ending April 30, 1998 and recommends
that shareholders vote to ratify such selection. A representative of Ernst &
Young LLP is expected to be present at the Annual Meeting, will have an
opportunity to make a statement if he or she so desires, and is expected to be
available to respond to appropriate questions. THE BOARD OF DIRECTORS RECOMMENDS
THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL FOUR.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who beneficially own more than ten percent
of the Common Stock, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission. The executive officers, directors, and
greater than ten percent shareholders are required by federal securities
regulations to furnish the Company with copies of all Section 16(a) reports
filed. Based solely on the Company's review of the copies of such reports and
written representations from certain reporting persons furnished to the Company,
the Company believes that its officers, directors, and greater than ten percent
shareholders were in compliance with all applicable filing requirements.
DEADLINE FOR SUBMISSION TO SHAREHOLDERS
OF PROPOSALS TO BE PRESENTED AT THE
1998 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented for action at the 1998 Annual
Meeting of Shareholders by any shareholder of the Company must be received by
the Secretary of the Company not later than April ___, 1998 in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to its 1998 Annual Meeting of Shareholders. Nothing in this
paragraph shall be deemed to require the Company to include any shareholder
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proposal which does not meet all the requirements for such inclusion established
by the Securities and Exchange Commission.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will
be voted in accordance with the instructions set forth on the back side of the
proxy card. Abstentions and "non-votes" will be counted as present for the
purposes of determining a quorum. A "non-vote" occurs when a nominee holding
shares for a beneficial owner votes on one proposal but does not vote on another
non-routine proposal because the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner. Assuming the
presence of a quorum, abstentions and "non-votes" will have no effect on the
proposals to be submitted to the shareholders at the Annual Meeting.
MISCELLANEOUS
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED APRIL 30, 1997 MAY BE OBTAINED, WITHOUT CHARGE, BY ANY SHAREHOLDER TO WHOM
THIS PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO GORDON L. BATEMAN,
SECRETARY, SCB COMPUTER TECHNOLOGY, INC., 1365 WEST BRIERBROOK ROAD, MEMPHIS,
TENNESSEE 38138. COPIES OF EXHIBITS FILED WITH THE FORM 10-K ALSO WILL BE
AVAILABLE UPON WRITTEN REQUEST ON PAYMENT OF CHARGES APPROXIMATING THE COMPANY'S
COST.
Date: August __, 1997
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APPENDIX A
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SCB COMPUTER TECHNOLOGY, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON TUESDAY, SEPTEMBER 23, 1997.
The undersigned hereby appoints T. Scott Cobb and Ben C. Bryant, Jr., and either
of them, as proxies, will full power of substitution, to vote all shares of the
undersigned as shown on the reverse side of this proxy at the Annual Meeting of
Shareholders of SCB Computer Technology, Inc. to be held at the Company's
Emerging Technology Center, 3239 Players Club Parkway, Memphis, Tennessee, on
Tuesday, September 23, 1997 at 10:00 a.m., local time, and any adjournments
thereof.
PROPOSAL 1: ELECTION OF DIRECTORS:
[ ] FOR all of the following nominees
(except as indicated to the contrary below):
T. Scott Cobb Steve N. White Joseph W. McLeary
Ben C. Bryant, Jr. James E. Harwood
WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees
(please print name or names)
________________________________________
[ ] WITHHOLD AUTHORITY (ABSTAIN) to vote for all nominees
PROPOSAL 2: INCREASE IN AUTHORIZED SHARES OF COMMON STOCK
[ ] FOR the increase in authorized shares of Common Stock
[ ] AGAINST the increase in authorized shares of Common Stock
[ ] ABSTAIN
PROPOSAL 3: ADOPTION OF 1997 STOCK INCENTIVE PLAN
[ ] FOR adoption of the 1997 Stock Incentive Plan
[ ] AGAINST adoption of the 1997 Stock Incentive Plan
[ ] ABSTAIN
PROPOSAL 4: RATIFICATION OF APPOINTMENT OF ACCOUNTANTS:
[ ] FOR the appointment of Ernst & Young LLP
[ ] AGAINST the appointment of Ernst & Young LLP
[ ] ABSTAIN
IMPORTANT: PLEASE DATE AND SIGN THIS PROXY ON THE REVERSE SIDE.
YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS. IF NO CHOICE IS
SPECIFIED, SHARES WILL BE VOTED FOR THE NOMINEES IN THE ELECTION OF DIRECTORS;
FOR THE INCREASE IN THE AUTHORIZED SHARES OF COMMON STOCK; FOR THE ADOPTION OF
THE 1997 STOCK INCENTIVE PLAN; AND FOR THE RATIFICATION OF THE SELECTION OF THE
ACCOUNTANTS.
Date:__________________________, 1997
PLEASE SIGN HERE AND RETURN PROMPTLY
____________________________________
____________________________________
Please sign exactly as your name appears at left. If shares are registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys should show their full titles. If a
corporation is shareholder, the corporate officer should sign in full corporate
name and title, such as President or other officer. If a partnership or limited
liability company is shareholder, please sign in such organization's name by an
authorized person.
________________________________________________________________________________
If you have changed your address, please PRINT your new address on this line.
