SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SPANLINK COMMUNICATIONS, 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
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or Item 22(a)(2) of
Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which the
filing fee is calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
SPANLINK COMMUNICATIONS, INC.
7125 NORTHLAND TERRACE
MINNEAPOLIS, MN 55428
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 13,1997
TO THE SHAREHOLDERS:
The Annual Meeting of Shareholders of Spanlink Communications, Inc., a
Minnesota corporation (the "Company"), will be held on Tuesday, May 13, 1997, at
3:30 p.m. local time, at the offices of the Company, 7125 Northland Terrace,
Minneapolis, Minnesota for the following purposes:
1) To approve an increase in the number of shares reserved under the
Company's 1996 Omnibus Stock Plan from 750,000 to 1,000,000;
2) To amend Section 3 of the 1996 Omnibus Stock Plan to incorporate
recent changes to Section 16 of the Securities act of 1934;
3) To elect directors to hold office for the ensuing year;
4) To ratify the appointment of Price Waterhouse LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997;
and
5) To act upon such other business as may properly come before the
Annual Meeting, or any adjournment or adjournments thereof.
Shareholders of record at the close of business on March 28, 1997 are
entitled to notice of and to vote at the Annual Meeting or any adjournment or
adjournments thereof.
Your attention is directed to the Proxy Statement accompanying this Notice
for a more complete statement of matters to be considered at the Annual Meeting.
A copy of the Company's Annual Report for the fiscal year ended December 31,
1996 also accompanies this Notice.
You are cordially invited to attend the Annual Meeting. Whether or not you
plan to attend, please sign, date and return your proxy in the reply envelope
provided.
By Order of the Board of Directors,
Loren A. Singer, Jr.
Secretary
Minneapolis, Minnesota
Dated: April 11, 1997
PLEASE SIGN, DATE AND RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE.
SPANLINK COMMUNICATIONS, INC.
7125 NORTHLAND TERRACE
MINNEAPOLIS, MN 55428
PROXY STATEMENT
ANNUAL MEETING OF THE SHAREHOLDERS
MAY 13, 1997
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "BOARD") of Spanlink Communications, Inc. (the
"COMPANY") of proxies for use at the Annual Meeting of the Shareholders (the
"MEETING") to be held on May 13, 1997, at the offices of the Company, 7125
Northland Terrace, Minneapolis, MN 55428, at 3:30 P.M. local time, and at any
adjournment thereof, for the purposes set forth in the Notice of Annual Meeting
of Shareholders. This Proxy Statement and the accompanying proxy form are
furnished in connection with the proxy solicitation and are first being mailed
to shareholders on or about April 15, 1997.
Shares represented by properly executed and returned proxies will be
voted as specified on the proxies. Shares represented by proxies where no
specification has been made will be voted (i) FOR all nominees for election to
the Board of Directors; (ii) FOR the amendments to the Company's 1996 Omnibus
Stock Plan increasing the number of shares reserved from 750,000 shares to
1,000,000 shares; (iii) FOR THE PROPOSAL to amend Section 3 of the 1996 Omnibus
Stock Plan to incorporate recent changes to Section 16 of the Securities act of
1934; (iv) FOR the appointment of Price Waterhouse LLP as the independent
auditors of the Company for the current fiscal year; and (v) in the discretion
of the proxy holders, as to any other matter that properly comes before the
meeting.
A proxy may be revoked at any time prior to its exercise by providing
written notice of revocation or another proxy bearing a later date to the
Secretary of the Company at the address set forth above.
Copies of the Company's Annual Report for the fiscal year ended
December 31, 1996, are enclosed herewith. The Annual Report describes the
financial condition of the Company as of December 31, 1996. THE COMPANY WILL
FURNISH WITHOUT CHARGE TO ANY PERSON WHOSE PROXY IS BEING SOLICITED A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR 1996 AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING FINANCIAL STATEMENTS
THEREWITH, UPON WRITTEN REQUEST TO SPANLINK COMMUNICATIONS, INC. 7125 NORTHLAND
TERRACE, MINNEAPOLIS, MN 55428, ATTENTION: BRIAN KING - V. P. FINANCE.
The Company will pay all expenses incurred in connection with the
solicitation of proxies. Proxies are being solicited by mail and may also be
solicited personally, by telephone, or telegram by directors, officers, and
other employees of the Company without additional compensation to them. The
Company has requested brokerage houses, nominees, custodians, and fiduciaries to
forward solicitation materials to the beneficial owners of Common Stock of the
Company and will reimburse such persons for their expenses. The Company may
reimburse banks, brokerage firms, and other custodians, nominees, and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to beneficial owners of Common Stock.
RECORD DATE AND VOTING
Shareholders of record on March 28, 1997, are the only persons entitled
to vote at the Meeting. As of March 28, 1997, there were issued and outstanding
5,080,500 shares of no par value Common Stock, the only authorized and issued
voting security of the Company. Each shareholder is entitled to one vote for
each share of Common Stock held. As provided in the Articles of Incorporation of
the Company, there is no right of cumulative voting. All matters being voted
upon by the shareholders require a majority vote of the shares of Common Stock
represented at the Annual Meeting either in person or by proxy.
Votes cast by proxy or in person at the Annual Meeting will be
tabulated by the election inspectors appointed for the meeting and will
determine whether or not a quorum is present. The election inspectors will treat
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum but as unvoted for purposes of determining
the approval of any matter submitted to the shareholders for a vote. If a broker
indicates on the form of proxy that the broker does not have discretionary
authority as to certain shares to vote on a particular matter, those shares will
be considered to be present for the purpose of determining whether a quorum is
present, but will not be considered as present and entitled to vote with respect
to that particular matter.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the information as of March 28, 1997,
regarding beneficial ownership of the Company's common stock as adjusted to
reflect the sale of the Shares, for (i) all directors and each executive officer
named in the Summary Compensation table set forth in "Management," (ii) all
directors and executive officers as a group and (iii) each person known by the
Company to be the beneficial owner of 5% or more of the outstanding shares of
common stock of the Company.
SHARES BENEFICIALLY
OWNED
-----
NAME OF BENEFICIAL OWNER NUMBER PERCENT(1)
- ------------------------ ------ -------
Brett A. Shockley(2) 900,000 17.7%
Loren A. Singer, Jr.(2) 900,000 17.7
Todd A. Parenteau(2) 900,000 17.7
Patrick P. Irestone(2) 444,142(3) 8.1
Thomas F. Madison(2) 7,000(4) *
Joseph D. Mooney(2) 7,000(4) *
Bruce E. Humphrey(2) 7,000(4) *
Total Executive Officers and Directors
as a group (9 persons) 2,275,642(5) 41.5%
--------- ----
* Less than 1%.
(1) Shares of common stock subject to options currently exercisable or
exercisable within 60 days are deemed to be outstanding for purposes of
computing the percentage of shares beneficially owned by the person holding
such options, but are not deemed to be outstanding for purposes of
computing such percentage for any other person. Each person or group
identified has sole voting and investment powers with respect to all shares
of common stock shown as beneficially owned by them.
(2) The address of Messrs. Shockley, Singer, Parenteau , Irestone Madison,
Mooney and Humphrey is 7125 Northland Terrace, Minneapolis, Minnesota
55428.
(3) Includes options to purchase 375,642 shares of common stock currently
exercisable or exercisable within 60 days and excludes options to purchase
28,571 shares not exercisable within 60 days. Includes 1,000 shares owned
indirectly by child.
(4) Includes options to purchase 6,000 shares of common stock currently
exercisable.
(5) Includes options to purchase 403,642 shares of common stock currently
exercisable or exercisable within 60 days.
APPROVAL OF AN INCREASE IN THE NUMBER OF
SHARES RESERVED UNDER THE COMPANY'S 1996 OMNIBUS STOCK PLAN AND
TO AMEND SECTION 3 OF THE PLAN
(PROPOSALS 1 AND 2 ON PROXY CARD)
The Company has granted options covering 711,863 shares pursuant to the 1996
Plan which has reserved 750,000 shares. In order to reserve sufficient shares
for future options, the Board of Directors proposes that the number of shares
reserved under the 1996 Plan be increased from 750,000 to 1,000,000 shares. The
Board believes that granting stock options to employees is an effective means to
promote the future growth and development of the Company. Such options increase
employees' proprietary interest in the Company's success and enables the Company
to attract and retain qualified personnel. The Board therefore recommends that
all shareholders vote in favor of increasing the number of shares reserved under
the 1996 Plan from 750,000 to 1,000,000 shares. In addition, in order to update
the 1996 Plan the Board recommends that Section 3 of the 1996 Plan be amended to
provide for the administration of the Plan by "non-employee directors," as such
term is defined by Rule 16b-3(b)(3) of the Securities Exchange Act of 1934, as
amended.
1996 OMNIBUS STOCK PLAN
A general description of the basic features of the 1996 Omnibus Stock
plan is outlined below. This summary is qualified in its entirety by the terms
of the 1996 Plan, a copy of which, in its amended form, may be obtained from the
Secretary of the Company.
The Company's Board adopted, and the Company's shareholders approved,
the Company's 1996 Omnibus Stock Plan effective January 31, 1996 (the "Plan").
The purpose of the Plan is to promote the interests of the Company and its
shareholders by providing personnel of the Company with an opportunity to
acquire a proprietary interest in the Company and thereby develop a stronger
incentive to put forth maximum effort for the continued success and growth of
the Company and to aid the Company in attracting and retaining personnel of
outstanding ability. As of March 28, 1997 there were approximately 90 employees
and Directors of the Company who may be deemed to be eligible employees under
the 1996 Omnibus Stock Plan, of whom 53 were participants. The Company reserved
a total of 750,000 shares of its common stock for issuance under the Plan and
has proposed to increase that number to 1,000,000.
Under the proposed amendment, the Plan will be administered by a
committee (the "Committee") whose members will be appointed by and serve at the
pleasure of the Board. All option grants and awards under the Plan to officers,
directors and others who are subject to Section 16 under the Securities Exchange
Act of 1934, as amended, and the rules of the Securities and Exchange Commission
promulgated thereunder, shall be made exclusively by the Committee. The
Committee shall be composed solely of three or more members of the Board of
Directors who (i) are not an officer or other employee of the Company (or its
parent or subsidiary), (ii) do not receive compensation from the Company (or its
parent or subsidiary) other than as a director, except for an amount that would
not exceed the dollar amount requiring disclosure under Reg. S-K, Item 404(a)
under the Securities Exchange Act of 1934; and (iii) do not have any interest or
relationship requiring disclosure under Reg. S-K, 404(a) or 404(b) of the
Securities Exchange Act of 1934. The Committee has responsibility to interpret
the Plan and all determinations made by it shall be final and conclusive,
subject in all cases to the provisions of the Plan and the applicable provisions
of the Internal Revenue Code of 1986, as amended (the "Code"). The Committee has
complete discretion to select the participants and to establish the terms and
conditions of each award. To the fullest extent permitted by law, no member of
the Committee shall be liable for any action or determination taken or made in
good faith with respect to the Plan or any award granted thereunder.
Outside Directors are eligible to receive only nonqualified stock
options under the Plan. At the 1996 Annual Meeting of Shareholders, the current
Outside Directors were granted an option to purchase 6,000 shares of common
stock at an exercise price of $3.50 per share. In addition, each Outside
Director will receive an option to purchase 4,000 shares of common stock at each
subsequent annual meeting. Options granted to Outside Directors vest immediately
upon the date of grant.
Employees of the Company who contribute to the strategic and long-term
performance of the Company, are eligible to receive incentive stock options (as
that term is defined in Section 422 of the Code), nonqualified stock options,
reload options, stock appreciation rights and restricted stock under the Plan.
Other key individuals who are not employees, may also be granted nonqualified
options under the Plan. Common stock of the Company granted to recipients may be
unrestricted or may contain restrictions, including provisions requiring
forfeiture and imposing restrictions upon stock transfer. Unless forfeited, the
recipient of restricted common stock will have all other rights of a
shareholder, including without limitation, voting and dividend rights. The value
of a stock appreciation right granted to a recipient is determined by the
appreciation in common stock of the Company, subject to any limitations upon the
amount or percentage of total appreciation that the Committee may determine at
the time the right is granted. Concurrent with the award of any options, the
Committee also may authorize reload options to purchase for cash or shares a
number of shares of common stock.
The Plan requires that the option price of incentive stock options
granted under the Plan shall be not less than 100% of the fair market value of
the Company's common stock as of the date the option is granted and that the
term of an incentive stock option may not exceed ten years. The Plan provides
that nonqualified stock options shall have an option price not less than 85% of
the fair market value of the Company's common stock on the date of grant. The
exercise price of any incentive stock option granted to an employee who owns
capital stock representing more than 10% of the voting rights of the Company's
outstanding capital stock on the date of grant must be equal to at least 110% of
the fair market value on the date of grant and shall expire five years from the
date of grant. The Committee sets the term during which any nonqualified options
may be exercised and determines whether such options are exercisable
immediately, in stages, or otherwise. All options granted under the Plan are
nontransferable and are subject to various other conditions and restrictions.
Shares of common stock subject to canceled options are available for
subsequently granted options under the Plan.
ELECTION OF DIRECTORS
(PROPOSAL 3 ON PROXY CARD)
The Bylaws of the Company provide that the number of directors that
constitute the Board of Directors shall be fixed from time to time by the Board
of the Company and is currently set at six. The Company's Board is classified
into three classes and provides for staggered terms. One class of directors will
be elected each year and the members of such class will hold office for a
three-year term or until their successors are duly elected and qualified or
until their death, resignation or removal from office. Joseph D. Mooney and
Loren A. Singer, Jr. serve in Class 1 with a term expiring at the Annual
Meeting; Patrick P. Irestone and Bruce E. Humphrey serve in Class 2 with a term
expiring in 1998; and Brett A. Shockley and Thomas F. Madison serve in Class 3
with a term expiring in 1999. The Board of Directors has nominated Messrs.
Mooney and Singer for election to the Board at the Annual Meeting for terms
expiring at the annual meeting in 2000. The other directors of the Company will
continue in office for their existing terms. Each person nominated has agreed to
serve if elected, and the Company knows of no reason why any of the listed
nominees would be unavailable to serve.
Shares represented by proxy will be voted, if authority to do so is not
withheld, for the election of Messrs. Mooney and Singer, unless one or more of
such nominees should become unavailable for election by reason of death or other
unexpected occurrence, in which event such shares shall be voted for the
election of such substitute nominees as the Board of Directors may propose. The
favorable vote of a majority of the shares of Common Stock present or
represented and entitled to vote at the meeting is necessary to elect each
director nominee. For this purpose, a shareholder (including a broker) who does
not give authority to a proxy to vote, or withholds authority to vote, on the
election of directors shall not be considered present and entitled to vote on
the election of directors.
Set forth below is information regarding the nominees, including
information furnished by them as to their principal occupations for the last
five years, certain other directorships held by them, and their ages as of the
date hereof. The following table also sets forth the Common Stock ownership of
each of the Company's directors. Unless otherwise indicated, all persons have
sole or joint with spouse voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them. Nominees may be contacted
at the offices of the Company.
The affirmative vote of the holders of a majority of the shares of
Common Stock represented at the Annual Meeting is required for approval of this
proposal, provided that a quorum is present.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR JOSEPH D. MOONEY
AND LOREN A. SINGER, JR. TO THE BOARD OF DIRECTORS.
Certain biographical information furnished by the Company's Board of
Directors is set forth below:
BRETT A. SHOCKLEY, age 37, is Chief Executive Officer, Chairman of the Board
since 1988 and a founder of the Company. Prior to founding the Company in 1988,
Mr. Shockley was a marketing and product management executive at Onan
Corporation, a subsidiary of Cummins Engine Company Inc. From 1982 to 1987, Mr.
Shockley was in marketing and product management at ADC Telecommunications,
Inc., a manufacturer of telecommunications equipment.
PATRICK P. IRESTONE, age 46, has been President, Chief Operating Officer and a
director of the Company since 1994. From 1984 to 1994 Mr. Irestone held a
variety of positions at the Minneapolis Star Tribune, a division of Cowles Media
Company, ending as Vice President New Business Development. As Vice President,
Mr. Irestone was responsible for alliances, acquisitions, new media and research
and development. While at Cowles Media Company, Mr. Irestone was also Chairman
of the Pafet Operating Committee, a research and development consortium of six
major media companies. Mr. Irestone worked for Medtronic Inc. from 1974 to 1984
in a variety of technology management positions, ending as Director Corporate
Information Systems. Mr. Irestone is also a director of Fonahome Corporation.
LOREN A. SINGER, JR., age 41, is a Lead Software Engineer, Secretary, a director
since 1988 and a founder of the Company. Prior to founding the Company in 1988,
Mr. Singer was an Engineering Development Manager at ADC Telecommunications,
Inc. from 1983 to 1987. Mr. Singer was a design engineer at Porta Systems, Inc.
from 1980 to 1983.
THOMAS F. MADISON, age 61, has been a director of the Company since 1996. Mr.
Madison has been the President and Chief Executive Officer of MLM Partners, a
consulting and small business investment company, since January 1993. From
February 1994 to September 1994 he served as Vice Chairman and Office of Chief
Executive Officer at Minnesota Mutual Life Insurance Company. From June 1987 to
December 1992 Mr. Madison was President of US West Communications Markets, a
division of US West Inc. Mr. Madison was President and Chief Executive Officer
of Northwestern Bell Telephone Company from April 1985 to June 1987. Mr. Madison
also serves on the board of directors of Alexander and Alexander, Inc., Eltrax
Systems, Inc., Minnegasco, a division of Noram Energy Corporation, Valmont
Industries, Inc. and Voyageur Funds. He also serves on the board of the
University of Minnesota Carlson School of Management and as a Trustee of the
University of St. Thomas.
JOSEPH D. MOONEY, age 59, has been a director of the Company since 1996. Mr.
Mooney is CEO of Greentree Software, Inc. Prior to that he was the President of
Benchmark Computer Systems, Inc. since he founded the company in January 1973 to
August 1996. In addition, he was a founder and the President of Benchmark
Network Systems, Inc. from 1984 to 1995 and President of Benchmark Nursing Home
Systems, Inc., a software company, from 1973 to 1994. Mr. Mooney also has served
as a director for both Paradata International, Inc. and Cado Systems, Inc.
BRUCE E. HUMPHREY, age 39, has been a director of the Company since 1996. Mr.
Humphrey has been the President and Chief Executive Officer of CSC Insurance
Center, Inc. since he founded the company in December 1982. Mr. Humphrey is also
a director of Community Associations Institute, Inc. and K-Sun, Inc.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board has a Compensation Committee, composed of Messrs. Madison
(Chairman), Mooney and Humphrey, that makes recommendations concerning executive
compensation and incentive compensation for employees of the Company, subject to
ratification by the Board, and administers the Company's 1996 Omnibus Stock
Plan. The Board also has an Audit Committee comprised of Messrs. Humphrey
(Chairman), Madison and Irestone. The Audit Committee reviews the results and
scope of the audit and other services provided by the Company's independent
accountants, as well as the Company's accounting principles and its system of
internal controls, and reports the results of its review to the Board. The
Company has no nominating committee.
During fiscal 1996, the Board of Directors met ten times. All directors
attended 100 percent of such meetings. The Audit and Compensation Committees
held two and three meetings, respectively, in 1996.
DIRECTOR COMPENSATION
Members of the Board receive no cash compensation for serving on the
Board, except for reimbursement for expenses incurred in attending meetings.
Each of the three Outside Directors were issued 1,000 shares of the Company's
common stock on February 28, 1996. In addition, pursuant to the Company's 1996
Omnibus Stock Plan, each Outside Director received an option to purchase 6,000
shares of common stock at an exercise price of $3.50 per share at the 1996
Annual Meeting of Shareholders and will receive an option to purchase 4,000
shares of common stock at each subsequent annual meeting.
EXECUTIVE OFFICERS OF THE COMPANY
NAME AGE POSITION
- ---- --- --------
Brett A. Shockley 37 Chairman of the Board, Chief Executive Officer
Patrick P. Irestone 46 President, Chief Operating Officer
Stephen H. Bostwick 57 Vice President of Sales and Marketing
Brian P. King 49 Vice President Finance, Chief Financial Officer
Jon Silverman 43 Vice President of Research & Development
Brett A. Shockley Biographical information for Mr. Shockley is provided
elsewhere in this proxy Statement under "Election of
Directors."
Patrick P. Irestone Biographical information for Mr. Irestone is provided
elsewhere in this proxy Statement under "Election of
Directors."
Stephen H. Bostwick Mr. Bostwick joined the Company as Vice President of
Sales and Marketing in December of 1996. From 1995 to
1996, Mr. Bostwick was Vice President of Sales at
Answersoft in Dallas. From 1993 to 1995 he was in
various sales positions for Intervoice Inc. ending as
Vice President of Direct sales. Prior to that time he
held various executive sales and marketing positions at
other telecommunication companies including Vice
President of Sales at Teknekron Infoswitch.
Brian P. King Mr. King joined the Company as Vice President of Finance
and Chief Financial Officer in July of 1996. From 1980
to 1996, Mr. King held several positions at Medical
Graphics Corporation including Vice President of
Finance, Vice President of Finance and Operations and
served on the Board of Directors in 1995. Mr. King is a
director of privately held Tekna Seal Corporation.
Jon Silverman Mr. Silverman joined the Company in September of 1992.
Mr. Silverman has held several positions with the
Company and is currently Vice President of Research and
Development. From 1989 to 1992 Mr. Silverman was
Director of Software Development at Racotek and prior to
that was Section Manager for distributed systems in
Honeywell's Corporate Research Center. Mr. Silverman has
published numerous papers in professional journals and
holds patents on software architecture.
SUMMARY COMPENSATION TABLE
The following table provides certain summary information for the past three
years ended December 31 concerning executive compensation paid or accrued by the
Company to the Company's Chief Executive Officer and the other executive
officers whose salary and bonus compensation for 1996 exceeded $100,000.
<TABLE>
<CAPTION>
- ------------------------- ------------------------------------------------------- ---------------------- -----------
Name and Annual Compensation Long-Term All
Principal Position Compensation Other
------------------ Awards Compen-
sation
------------------------------------------------------- ----------------------
Restricted
Stock
Salary Bonus Other Annual Awards Options
Year ($) ($) Compensation(1) ($) (#)
- ------------------------- ---------- ---------- ------------- ------------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Brett A. Shockley 1996 152,175 46,000 $12,025 -0- -0-
Chief Executive 1995 93,333 -0- 2,097 -0- -0-
Officer 1994 112,000 1,966 -0- -0-
- ------------------------- ---------- ---------- ------------- ------------------- ----------- ---------- -----------
Patrick P. Irestone 1996 167,800 282,250(3) -0- 67,500 404,213
President and Chief 1995 133,200 22,350 -0- -0- -0-
Operating Officer 1994(2) 33,680 12,931 -0- -0- -0-
- ------------------------- ---------- ---------- ------------- ------------------- ----------- ---------- -----------
</TABLE>
(1) Reflects taxable compensation to Mr. Shockley for personal use of a leased
company automobile and buyout of the Company obligation in 1996.
(2) Reflects payment for partial year employment.
(3) Includes $236,250 in value related to the issue of 67,500 shares of
restricted common stock to Mr. Irestone on February 28, 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- -------------------------- ----------------- ----------------- ------------------------ ----------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO
OPTIONS/SARS EMPLOYEES IN EXERCISE OR BASE PRICE
NAME GRANTED(1) FISCAL 1996 ($/Sh)(2) EXPIRATION DATE
- -------------------------- ----------------- ----------------- ------------------------ ----------------------------
<S> <C> <C> <C> <C>
Brett A. Shockley
-0- -0-
- -------------------------- ----------------- ----------------- ------------------------ ----------------------------
01/31/01
Patrick P. Irestone 404,213 50.9% $3.50 01/31/06
- -------------------------- ----------------- ----------------- ------------------------ ----------------------------
</TABLE>
(1) The stock option was granted under the 1996 Omnibus Stock Plan. Of the
total options granted, 85,713 were incentive stock options with one-third
of such shares vesting on January 31 in 1996, 1997, and 1998 with an
expiration date of January 31, 2006. The balance of the options granted
318,500, were nonqualified options that vested on the closing of the
Company's initial public offering in May 1996. Of the shares underlying the
nonqualified option, 148,500 expire on January 31, 2001 and 170,000 expire
on January 31, 2006. The stock options were granted on January 31, 1996.
(2) All stock options were granted with an exercise price equal to the fair
market value of the Common Stock on the date of grant, which was the mean
average of the bid and asked prices of the Common Stock as reported on the
Nasdaq SmallCap Market on such date.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table sets forth certain information with respect to
options exercised during fiscal 1996 by the Company's Chief Executive Officer
and the executive officers named in the Summary Compensation Table, and with
respect to unexercised options held by such persons at the end of fiscal 1996.
<TABLE>
<CAPTION>
- ----------------------- ------------- ------------ -------------------------------- --------------------------------
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN THE
SHARES UNDERLYING UNEXERCISED MONEY OPTIONS/SARS
ACQUIRED OPTIONS/SARS AT FY-END(#) AT FY-END ($)(1)
ON VALUE -------------------------------- --------------------------------
EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) -------------- ----------------- --------------- ----------------
- ----------------------- ------------- ------------ -------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Brett A. Shockley -0- -0- -0- -0- -0- -0-
- ----------------------- ------------- ------------ -------------- ----------------- --------------- ----------------
Patrick P. Irestone -0- -0- 375,642 28,571 -0- -0-
- ----------------------- ------------- ------------ -------------- ----------------- --------------- ----------------
</TABLE>
(1) The calculations of the value of unexercised options are based on the
difference between the closing bid price on NASDAQ of the Common Stock on March
28, 1997 and the exercise price of each option, multiplied by the number of
shares covered by the option.
EMPLOYMENT AGREEMENTS
The Company has an employment agreement dated September 23, 1994 with
Patrick P. Irestone, a director, President and Chief Operating Officer of the
Company. Mr. Irestone's employment agreement remains in effect until his death
or the occurrence of a material physical or mental disability, or by mutual
agreement of both parties. The employment agreement provides for a minimum
annual base salary of $148,000 and annual cash bonuses. The Company may also
terminate the agreement immediately for cause or at any time by giving Mr.
Irestone 30 days written notice. In the event that the Company terminates Mr.
Irestone without cause, he shall receive a severance payment ranging from
approximately $12,000 up to an amount equal to his annual base salary at the
time of termination, depending on the net income of the Company during the 12
months immediately preceding Mr. Irestone's termination of employment.
Currently, Mr. Irestone may terminate the agreement upon 75 days prior written
notice. The required notice period declines by 15 days upon each anniversary of
the agreement, until the fifth anniversary when the notice period will remain 30
days.
On January 31, 1996, the Company amended the employment agreement with
Mr. Irestone. In addition to the salary and cash bonuses stated in the
employment agreement, the amendment provided for stock option grants and other
awards under the 1996 Omnibus Stock Plan as determined by the Compensation
Committee. The amendment included a grant of stock options for 404,213 shares of
common stock at an exercise price of $3.50. Of this amount, options for 85,713
shares of common stock are incentive stock options which vest in equal annual
installments over three years beginning with the date of grant. The balance of
the options for 318,500 shares are nonqualified stock options which vested on
the closing of the Company's initial public offering in May 1996. Nonqualified
options for 148,500 shares of common stock expire five years from the date of
grant and options for 170,000 shares of common stock expire ten years from the
date of grant. On February 28, 1996, the Company issued 67,500 shares of
restricted common stock to Mr. Irestone for no cash consideration.
SECTION 16(a) REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors, and certain shareholders to file
reports of ownership and changes in ownership of the Company's Common Stock with
the Securities and Exchange Commission. To the Company's knowledge, based on a
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the Company's fiscal
year ended December 31, 1996, all Section 16(a) filing requirements were
complied with.
CERTAIN TRANSACTIONS
As part of its employment agreement, on December 23, 1996, the Company
loaned to Patrick P. Irestone, President and Chief Operating Officer of the
Company, $94,500 to pay taxes due as a result of the grant of 67,500 shares of
common stock. The agreement provides for interest to accrue at a rate of 6.31%
per annum and a repayment date of December 23, 1997. The loan made to Mr.
Irestone is a nonrecourse basis and will be secured by the 67,500 shares granted
to Mr. Irestone.
The Company has purchased its Property/Casualty and Group Insurance
policy through CSC Insurance Center, Inc. Bruce E. Humphrey, a director of the
Company, owns 70% of the outstanding shares of CSC Insurance Center, Inc. In
addition, CSC Insurance Center, Inc. acts as the agent for the Company's 401(k)
Plan. All transactions with CSC Insurance Center, Inc. and Mr. Humphrey were on
terms no less favorable than could be obtained from an unaffiliated third party.
The Company did not make any payments directly to Mr. Humphrey.
The Company believes that the foregoing transactions are on terms no
less favorable to the Company than could have been obtained from unaffiliated
third parties. Such actions have been ratified by a majority of the independent
outside members of the Company's Board of Directors who do not have an interest
in the transactions. All future transactions, including loans, loan guarantees
or forgiveness of loans, with directors, officers or shareholders holding more
than 5% of the Company's outstanding shares, or affiliates of any such persons,
will be on terms no less favorable than could be obtained from an unaffiliated
third party and will be approved by a majority of the independent outside
directors who do not have an interest in the transactions.
PROPOSAL TO RATIFY THE APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 4 ON PROXY CARD)
The Board of Directors recommends that the shareholders ratify the
appointment of Price Waterhouse LLP as independent auditors for the Company for
the fiscal year ending December 31, 1997. Price Waterhouse LLP has served as
independent Auditors for the Company since 1995. Price Waterhouse LLP provided
services in connection with the audit of the financial statements of the Company
for the fiscal year ended December 31, 1996, including the Company's annual
report on Form 10-KSB filed with the Securities and Exchange Commission, and
matters relating to accounting and financial reporting generally.
Representatives of Price Waterhouse LLP are expected to be present at
the Annual Meeting and will be given an opportunity to make a statement if they
so desire and to respond to appropriate questions. If the appointment of Price
Waterhouse LLP is not ratified by the shareholders, the Board of Directors is
not obligated to appoint other auditors, but the Board of Directors will give
consideration to such unfavorable vote.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS INDEPENDENT AUDITORS.
SHAREHOLDERS PROPOSALS AND OTHER MATTERS
Any shareholder proposals for the Company's Annual Meeting for the
fiscal year ending December 31, 1997 must be received by the Company by January
15, 1998, in order to be included in the proxy statement. The proposals also
must comply with all applicable statutes and regulations.
At the time this Proxy Statement was mailed, the Board was not aware of
any matters to be presented for action at the Annual Meeting than those
discussed in this Proxy Statement. If other matters properly come before the
meeting, the proxy holders have discretionary authority -- unless it is
expressly revoked -- to vote all proxies in accordance with their unanimous
discretion; if the proxy holders are divided on a particular matter to be voted
on with respect to their discretionary voting, the shares subject to such proxy
shall not be voted.
BY ORDER OF THE BOARD OF DIRECTORS
Loren A. Singer, Secretary
April 11, 1997
SPANLINK COMMUNICATIONS, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
For the Annual Meeting of Shareholders
May 13, 1997
The undersigned hereby appoints Patrick P. Irestone and Brian P. King, or either
of them, proxies with full power of substitution to vote all shares of stock of
Spanlink Communications, Inc. of record in the name of the undersigned at the
close of business on March 28, 1997, at the Annual Meeting of Shareholders to be
held in Minneapolis, Minnesota on May 13, 1997, or at any adjournment or
adjournments thereof, hereby revoking all former proxies:
1. PROPOSAL TO APPROVE AN INCREASE IN THE NUMBER OF SHARES RESERVED UNDER THE
COMPANY'S 1996 OMNIBUS STOCK PLAN FROM 750,000 TO 1,000,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. PROPOSAL TO AMEND SECTION 3 OF THE 1996 OMNIBUS STOCK PLAN TO INCORPORATE
RECENT CHANGES TO SECTION 16 OF THE SECURITIES ACT OF 1934.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as indicated to the to vote for nominees listed below
contrary)
(INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name in the list below.)
Joseph D. Mooney and Loren A. Singer
4. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE COMPANY'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. IN THEIR DISCRETION, UPON ANY OTHER MATTERS COMING BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED "FOR" THE MATTERS SUMMARIZED
ABOVE UNLESS OTHERWISE SPECIFIED.
Dated: ______________________________, 1997
___________________________________________
___________________________________________
Please sign name(s) exactly as shown at
left. When signing as executor,
administrator, trustee or guardian, give
full title as such: when shares have been
issued in names of two or more persons, all
should sign.
