<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant / /
Check the appropriate box:
/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 Section240.14a-11(c) or
Section240.14a-12
ON-SITE SOURCING, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rule 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
ON-SITE SOURCING, INC.
1111 North 19th Street
Sixth Floor
Arlington, Virginia 22209
(703) 276-1123
December 1, 1998
Dear Stockholder:
On behalf of the Board of Directors, it is my pleasure to invite you to
attend the Annual Meeting of Stockholders of On-Site Sourcing, Inc. We will hold
the Annual Meeting on December 29, 1998 at 8 a.m. eastern time in our principal
executive office, which is located at 1111 North 19th Street, Sixth Floor,
Arlington, Virginia.
Enclosed with this letter is a Notice of Annual Meeting, a Proxy Statement,
a proxy card and a return envelope. Both the Notice of Annual Meeting and the
Proxy Statement provide details of the business that will be conducted at the
Annual Meeting and other information about On-Site Sourcing.
In addition to the formal items of business to be brought before the
meeting, members of management will report on the Company's operations and
answer questions.
Your vote is very important. Please ensure that your shares will be
represented at the meeting by completing, signing, and returning your proxy card
in the envelope provided, even if you plan to attend the meeting. Sending us
your proxy will not prevent you from voting in person at the meeting should you
wish to do so.
Sincerely,
Christopher J. Weiler
Chief Executive Officer
<PAGE>
ON-SITE SOURCING, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 29, 1998
December 1, 1998
At the 1998 Annual Meeting we will ask our stockholders to:
1. Elect the Directors of the Company to serve for the ensuing year;
2. Adopt a Classified Board of Directors;
3. Amend the Company's Certificate of Incorporation to require that any
subsequent amendments to the Certificate of Incorporation require
approval by two-thirds of the shares entitled to vote;
4. Amend the Company's Certificate of Incorporation to require that any
action by the Company's stockholders be taken at a duly called meeting
and not by written consent;
5. Approve the 1998 Stock Option Plan;
6. Ratify the selection of Reznick Fedder & Silverman, PC as the Company's
independent auditors for the fiscal year ending December 31, 1998; and
7. Transact any other business that is properly presented at the meeting.
The accompanying Proxy Statement contains further information with respect
to these matters.
You will be able to vote your shares at the 1998 Annual Meeting if you were
a stockholder of record at the close of business on November 16, 1998.
By Order of The Board of Directors,
Alfred T. Duncan
Secretary
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
-------------
<S> <C>
GENERAL INFORMATION..................................................................................... 1
PROPOSALS TO BE PRESENTED AT THE ANNUAL MEETING......................................................... 2
PROPOSAL 1: ELECTION OF DIRECTORS....................................................................... 2
PROPOSAL 2: ADOPTION OF CLASSIFIED BOARD OF DIRECTORS................................................... 5
PROPOSAL 3: ADOPTION OF SUPERMAJORITY VOTING REQUIREMENT................................................ 6
PROPOSAL 4: ADOPTION OF STOCKHOLDER ACTION ONLY BY DULY CALLED ANNUAL OR SPECIAL MEETING................ 7
PROPOSAL 5: APPROVAL OF 1998 STOCK OPTION PLAN.......................................................... 8
PROPOSAL 6: RATIFICATION OF INDEPENDENT ACCOUNTANTS..................................................... 12
EXECUTIVE COMPENSATION AND RELATED MATTERS.............................................................. 14
CERTAIN TRANSACTIONS.................................................................................... 16
AVAILABILITY OF FORM 10-KSB............................................................................. 17
STOCKHOLDER PROPOSALS FOR 1999.......................................................................... 17
</TABLE>
i
<PAGE>
ON-SITE SOURCING, INC.
1111 NORTH 19TH STREET
SIXTH FLOOR
ARLINGTON, VIRGINIA 22209
(703) 276-1123
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 29, 1998
------------------------
GENERAL INFORMATION
This Proxy Statement provides important information that you should read
before you vote on the proposals that will be presented to you at the 1998
Annual Meeting of the stockholders of On-Site Sourcing, Inc. (We will refer to
this meeting as the "Annual Meeting.") The Annual Meeting will be held on
December 29, 1998 at 8:00 a.m. eastern time at the Company's principal executive
office, 1111 North 19th Street, Sixth Floor, Arlington, Virginia.
This Proxy Statement provides detailed information about the Annual Meeting,
the proposals on which you will be asked to vote at the Annual Meeting, and
other relevant information.
On December 1, 1998, we began mailing information to people who, according
to our records, owned shares of On-Site Sourcing's common stock (which we will
refer to as the "Common Stock") at the close of business on November 16, 1998
(the "Record Date").
On-Site Sourcing is paying the cost of requesting these proxies. On-Site
Sourcing's directors, officers and employees may request proxies in person or by
telephone, mail, telecopy or letter. On-Site Sourcing also has retained
Continental Stock Transfer & Trust Company to assist in distributing proxy
solicitation materials and seeking proxies. On-Site Sourcing will pay
Continental Stock Transfer & Trust Company a fee of approximately $5,000 plus
reasonable out-of-pocket expenses for this assistance. On-Site Sourcing will
reimburse brokers and other nominees their reasonable out-of-pocket expenses for
forwarding proxy materials to beneficial owners of On-Site Sourcing's Common
Stock.
A copy of the Company's Annual Report, including financial statements for
the fiscal year ended December 31, 1997, is being mailed with this Proxy
Statement. The Annual Report does not constitute a part of the proxy
solicitation material. The Annual Report tells you how to get additional
information about On-Site Sourcing.
VOTING YOUR SHARES
You have one vote for each share of Common Stock that you owned of record at
the close of business on the Record Date. The number of shares you own (and may
vote at the Annual Meeting) is listed on the enclosed proxy card.
You may vote your shares at the Annual Meeting either in person or by proxy.
To vote in person, you must attend the Annual Meeting and obtain and submit a
ballot. Ballots for voting in person will be available at the Annual Meeting. To
vote by proxy, you must complete and return the enclosed proxy card. By
completing and returning the proxy card, you will be directing the persons
designated on the proxy card to vote your shares at the Annual Meeting in
accordance with the instructions you give on the proxy card.
If you decide to vote by proxy, your proxy card will be valid only if you
sign, date and return it before the Annual Meeting. IF YOU COMPLETE THE PROXY
CARD EXCEPT FOR THE VOTING INSTRUCTIONS, THEN YOUR SHARES WILL BE VOTED FOR THE
ELECTION OF THE NOMINEES FOR DIRECTORS AND FOR PROPOSALS 2, 3, 4, 5 AND 6 IN THE
NOTICE OF ANNUAL MEETING.
<PAGE>
REVOKING YOUR PROXY
If you decide to change your vote, you may revoke your proxy at any time
before it is voted. You may revoke your proxy in any one of three ways:
- You may notify the Secretary of On-Site Sourcing in writing addressed
to: Alfred T. Duncan, On-Site Sourcing, Inc., 1111 North 19th Street,
Sixth Floor, Arlington, Virginia 22209, that you wish to revoke your
proxy.
- You may submit a proxy dated later than your original proxy.
- You may attend the Annual Meeting and vote. Merely attending the Annual
Meeting will not by itself revoke a proxy; you must obtain a ballot and
vote your shares to revoke the proxy.
VOTE REQUIRED FOR APPROVAL
On the Record Date, 4,824,669 shares of Common Stock were issued and
outstanding. A "quorum" must be present at the Annual Meeting in order to
transact business. A quorum will be present if 2,412,335 shares are represented
at the Annual Meeting, either in person (by the stockholders) or by proxy. If a
quorum is not present at the Annual Meeting, a vote cannot occur. Abstention and
broker non-votes will be counted for purposes of determining the presence or
absence of a quorum, but will not be counted as votes cast. "Broker non-votes"
are shares held by brokers or nominees which are present in person or
represented by proxy, but which are not voted on a particular matter because
instructions have not been received from the beneficial owner.
If your shares of Common Stock are held by a broker and you do not instruct
the broker to vote those shares, the broker will not be able to vote on
Proposals 2 or 3, but will have the authority to vote on Proposals 1, 4, 5 and
6.
The six nominees for director who receive the most votes cast at the Annual
Meeting will be elected to serve as the Company's directors.
The approval of 2,412,335 shares is required under Delaware law in order to
pass an amendment to the Company's Certificate of Incorporation. For this
purpose, abstentions and broker non-votes will be deemed shares voted against
Proposals 2, 3 and 4.
All other matters to come before the Annual Meeting require the approval of
the holders of a majority of the votes cast on the proposal at the Annual
Meeting. For this purpose, abstention and broker non-votes will be deemed shares
not voted on such matters, will not count as votes for or against the proposals,
and will not be included in calculating the number of votes necessary for the
approval of such matters.
Votes at the Annual Meeting will be tabulated by Inspectors of Election
appointed by the Company.
PROPOSALS TO BE PRESENTED AT THE ANNUAL MEETING
We will present the following proposals at the Annual Meeting. We do not
expect any other proposals. If anyone validly presents any other proposal, the
named proxies will use your proxy to vote on those proposals as they believe is
appropriate.
PROPOSAL 1: ELECTION OF DIRECTORS
You will elect six directors at the Annual Meeting to serve until the next
annual meeting of stockholders or until their successors are duly elected and
qualified or until their earlier death, resignation or removal. The nominees for
election to the Board of Directors are:
Christopher J. Weiler
Allen C. Outlaw
Anthony A. Kopsidas
Lance Waagner
Charles B. Millar
Jorge R. Forgues
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<PAGE>
The Board of Directors of the Company (which we will refer to as the
"Board") has been informed that all of the nominees for election to the Board
are willing to serve as directors. However, if any of the nominees is unable or
unwilling to stand for election or serve if elected, the named proxies will vote
for such person or persons as the Board in its discretion may choose to replace
any such nominees. The Board has no reason to believe that any nominees will be
unable or unwilling to stand for election or serve if elected.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE ELECTION
OF THESE NOMINEES AS DIRECTORS.
Set forth below for each nominee is his age, length of service as a director
of the Company (if applicable), selected biographical information, principal
occupation and business experience for the past five years, and the names of any
other publicly held companies for which such nominee serves as a director. The
principal occupations listed below refer to positions with the Company unless
otherwise indicated.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION SINCE
- ------------------------------------------------ --- ------------------------------------------------ -----------
<S> <C> <C> <C>
Christopher J. Weiler 36 Chairman of the Board, Chief Executive Officer 1992
and President
Allen C. Outlaw 32 Vice President--Marketing 1994
Anthony A. Kopsidas 28 Vice President--Operations 1994
Lance Waagner 33 Executive Vice President--Information Technology n/a
Charles B. Millar 37 Director 1996
Jorge R. Forgues 43 Director 1996
</TABLE>
CHRISTOPHER J. WEILER founded the Company with John S. Stoppelman in
December 1992 and has been President, Chief Executive Officer and a director of
the Company since that time. Mr. Weiler graduated from the United States Naval
Academy in 1985 and served in the United States Navy as a surface warfare
officer and as a Navy Senate Liaison Officer on Capitol Hill, Washington, D.C.
from 1985 until 1991. Mr. Weiler worked for Pitney Bowes Management Services
from 1991 until 1992.
ALLEN C. OUTLAW has been Vice President of Marketing since September 1997.
From March 1994 until September 1997, Mr. Outlaw served as Vice President of
Sales and Marketing. Mr. Outlaw has also served on the Board of Directors since
March 1994. From January 1991 until September 1997, Mr. Outlaw was owner and
Director of Marketing of Justin Asset Management, an investment management firm.
ANTHONY A. KOPSIDAS has been the Vice President of Operations since December
1994. Mr. Kopsidas served as a supervisor for the Company from March 1994 until
December 1994. Mr. Kopsidas has also served on the Board of Directors since
December 1994. Mr. Kopsidas served as President of Corporate Lawn and
Landscaping, a Maryland corporation, from March 1991 until March 1994.
LANCE WAAGNER has served as the Director of Information Technology since
March 1998. From February 1991 until March 1998, Mr. Waagner established and
directed the information technology department at Kilpatrick & Stockton LLP, a
law firm, where he oversaw the firm's technology needs as the firm expanded in
size from 525 persons to more than 1,000.
CHARLES B. MILLAR has served as a Senior Vice President of the Washington,
D.C. investment banking firm of Johnston, Lemon & Co., Inc. since 1991. Mr.
Millar joined the Board of Directors, Compensation and Audit Committees in
August 1996.
3
<PAGE>
JORGE R. FORGUES has served as Senior Vice President of Finance and
Administration, Chief Financial Officer and Treasurer of Treev Corporation
(formerly Network Imaging Corporation), a Herndon, Virginia-based publicly
traded software developer, since April 1996. From October 1993 until April 1996,
Mr. Forgues was Vice President of Finance and Administration, Chief Financial
Officer and Treasurer of Globalink, a Fairfax, Virginia-based, publicly-traded
software company. From 1992 to 1993, Mr. Forgues was the Director of Accounting
for Spirit Cruises, a harbor cruise line with operations in nine states. From
1987 to 1992, Mr. Forgues was Vice President of Finance at Best Software, Inc.,
a computer software developer. Mr. Forgues joined the Board of Directors,
Compensation and Audit Committees in July 1996.
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
Regular meetings of the Board of Directors of the Company are normally held
every two months. During 1997, the Board of Directors held five meetings. Each
director attended at least 75% of the total number of meetings of the Board of
Directors and all committees of the Board of Directors on which he served.
AUDIT COMMITTEE
The members of the audit committee are Mr. Forgues and Mr. Millar. Mr.
Stoppelman served as a member of the Audit Committee during 1997 and until his
death in 1998. The Audit Committee reviews the financial statements of the
Company to confirm that they reflect fairly the financial condition of the
Company and to appraise the soundness, adequacy and application of accounting
and operating controls. The Audit Committee also recommends independent
accountants to the Board of Directors, reviews the scope of the audit function
of the independent accountants and reviews audit reports rendered by the
independent accountants. The Audit Committee met one time in 1997.
COMPENSATION COMMITTEE
The members of the Compensation Committee are Messrs. Millar, Forgues and
Weiler. Mr. Millar is the Chairman of the Compensation Committee. The
Compensation Committee determines the compensation of the officers of the
Company. The Compensation Committee met four times in 1997.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act"),
as amended, requires the Company's directors, executive officers, and persons
who own more than 10% of a registered class of the Company's equity securities,
to file initial reports of ownership and reports of changes in ownership of the
Common Stock and other equity securities of the Company with the Securities and
Exchange Commission (the "SEC"). SEC regulations require executive officers,
directors and beneficial owners of greater than 10% of the Common Stock to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on a review of copies of such reports of ownership furnished to
the Company, or written representations that no forms were necessary, the
Company believes that during the 1997 fiscal year all filing requirements under
Section 16(a) of the Exchange Act applicable to its officers, directors and
greater than 10% beneficial owners were complied with, except that Messrs.
Millar, Forgues and Arnold J. Wasserman (a former director) did not timely file
Form 4s reporting grants of stock options in September 1997. Such reports have
subsequently been filed.
4
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PROPOSAL 2: ADOPTION OF CLASSIFIED BOARD OF DIRECTORS
GENERAL
The Board of Directors has approved, subject to your vote, an amendment to
Article VII of the Company's Certificate of Incorporation dividing the Board
into three classes of directors (designated Class I, Class II and Class III)
serving staggered, three-year terms, each class as nearly equal in number as
possible. As a result, the stockholders of the Company would elect approximately
one-third of the Board of Directors each year.
If the stockholders approve the proposal to classify the Board of Directors,
the stockholders will initially elect members of all three classes at the annual
meeting of stockholders in 1999. Directors elected to Class I would serve until
the next annual meeting of stockholders held in 2000 (or until their successors
are duly elected and qualified or until their earlier death, resignation or
removal), and directors elected to Classes II and III would serve until the
annual meetings of stockholders to be held in 2001 and 2002, respectively (or
until their successors are duly elected and qualified or until their earlier
death, resignation or removal). Any vacancies on the Board of Directors would be
filled by the directors then in office. Once elected, any director filling such
a vacancy on the Board of Directors would hold office until expiration of the
term of the class to which he or she was elected. The directors of the Company
currently serve until the next annual meeting of the Company or until their
successors are duly elected and qualified or until their earlier death,
resignation or removal.
DELAWARE LAW REGARDING CLASSIFIED BOARD OF DIRECTORS
Section 141(k) of the Delaware General Corporation Law ("Section 141(k)")
provides that directors serving on a classified board cannot be removed without
cause, unless the certificate of incorporation provides otherwise. The Company's
Certificate of Incorporation does not prohibit the application of Section 141(k)
to its Board of Directors. Therefore, Section 141(k) will apply to the Company's
Board of Directors if the stockholders vote to establish a classified Board of
Directors. Under such circumstances, the stockholders of the Company could not
remove incumbent directors from office without a valid reason for doing so.
CONSIDERATIONS IN SUPPORT OF THE STAGGERED BOARD OF DIRECTORS
The Board believes that a staggered Board of Directors will enhance its
ability to protect the Company against abusive or unfair tactics in connection
with unsolicited takeover attempts. Adoption of the proposal would prevent any
person from gaining complete control over the Board of Directors at a single
stockholders' meeting. The staggered Board would encourage persons seeking to
acquire control of the Company to engage in good faith, arms-length negotiations
with the Board regarding the structure and terms of their takeover proposal, and
would also enable the Board to negotiate from a position of greater strength.
The Board also believes that the proposal will encourage greater continuity
of service on the Board, and promote stability and consistency in the Company's
management and business strategies.
OTHER CONSIDERATIONS
Adoption of a staggered Board, combined with application of Section 141(k),
will make it more difficult to remove directors and may have the effect of
discouraging takeover attempts which stockholders may deem to be in their and
the Company's best interests. Potential acquirors may not pursue proxy contests
or other plans to acquire control of the Company because of their inability to
gain control of the Board of Directors in less than two years. Moreover, a
staggered Board will inhibit efforts to change the composition of the Board,
even when the performance of the Board may be the sole reason for such
5
<PAGE>
change. The Board of Directors is not aware of any efforts to obtain control of
the Company and the proposed adoption of a staggered Board of Directors is not
in response to any such efforts.
THE PROPOSAL
To establish a classified Board of Directors, Article VII of the Company's
Certificate of Incorporation would be amended to read in its entirety as
follows:
"The business and affairs of the Corporation shall be managed by, or
under the direction of, a board of directors consisting of not less than
three (3) nor more than nine (9) persons. The exact number of directors
within the minimum and maximum limitation specified herein shall be fixed
from time to time by resolution of a majority of the whole board of
directors.
The board of directors shall be and is divided into three classes: Class
I, Class II and Class III. Such classes shall be as nearly equal in
number of directors as possible. Each director shall serve for a term
ending at the third annual meeting following the annual meeting at which
such director was elected; provided however, that the directors first
elected to Class I shall serve for a term ending on the annual meeting
next following the end of fiscal year 1999, the directors first elected
to Class II shall serve for a term ending on the second annual meeting
following the end of fiscal year 1999 and the directors first elected to
Class III shall serve for a term ending on the third annual meeting
following the end of fiscal year 1999. Notwithstanding the foregoing,
each director shall serve as such until the expiration of his current
term when his successor shall have been duly elected and qualified, or
his prior death, resignation or removal.
At each annual election, directors chosen to succeed those whose terms
then expire shall be of the same class as the directors they succeed,
unless by reason of any intervening changes in the authorized number of
directors, the board shall designate one or more directorships whose term
then expires as directorships of another class in order more nearly to
achieve equality of number of directors among the classes.
Notwithstanding the rule that the three classes shall be as nearly equal
in number of directors as possible, in the event of any change in the
authorized number of directors each director then continuing to serve as
such shall nevertheless continue as a director of the class of which he
is a member until the expiration of his current term, or his prior death,
resignation or removal. If any newly created directorship may,
consistently with the rule that the three classes shall be as nearly
equal in number of directors as possible, be allocated to either class,
the board shall allocate it to that of the available class whose term of
office is due to expire at the earliest date following such allocation."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
TO APPROVE THE FOREGOING AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION.
PROPOSAL 3: ADOPTION OF SUPERMAJORITY VOTING REQUIREMENT
GENERAL
The Board of Directors of the Company has adopted, subject to your approval,
an amendment to Article X of the Company's Certificate of Incorporation which
would require the affirmative approval of holders of at least two-thirds of the
shares of each class entitled to vote thereon to amend, alter, repeal or adopt
any provisions of the Company's Certificate of Incorporation. The proposed
amendment permits the Board to waive the supermajority approval requirement in
circumstances where the Board believes it is in the Company's best interests to
do so.
6
<PAGE>
Pursuant to the Delaware General Corporation Law, the Company's Certificate
of Incorporation currently requires the affirmative vote of a majority of the
holders of shares of each class entitled to vote thereon to amend the Company's
Certificate of Incorporation.
CONSIDERATIONS IN SUPPORT OF THE SUPERMAJORITY VOTING REQUIREMENT
Adoption of the proposal for supermajority voting on amendments to the
Company's Certificate of Incorporation should promote continuity of the
Company's operations and also make it more difficult to avoid the Company's
anti-takeover defenses. The requirement for supermajority stockholder approval
of changes to the Company's Certificate of Incorporation makes it more difficult
for potential acquirors to obtain enough votes to eliminate or change certain
provisions designed to protect against unsolicited takeover bids. As a result,
adoption of the proposal should improve the Board's bargaining position in
connection with tender offers, takeover attempts and similar transactions. The
amendment would also allow the Board of Directors to waive the supermajority
voting requirement so as not to deter friendly mergers or acquisitions or other
actions which the Board deems to be in the best interests of the Company and its
stockholders.
OTHER CONSIDERATIONS
Approval of the supermajority voting requirement would make implementation
of fundamental corporate changes more difficult. Certain fundamental corporate
changes, such as the authorization of additional shares or removal of certain
anti-takeover provisions built into the Company's Certificate of Incorporation,
may be necessary to consummate a merger or similar transaction and could have
the effect of delaying or discouraging certain tender offers or takeover
attempts which some stockholders might consider to be in their best interest.
The Board of Directors is not aware of any efforts to obtain control of the
Company and the proposed adoption of the supermajority voting requirement is not
in response to any such efforts.
THE PROPOSAL
To establish a supermajority voting requirement for amendments to the
Certificate of Incorporation, the Board proposes amending Article X of the
Company's Certificate of Incorporation to read in its entirety as follows:
"Any amendment to this Certificate of Incorporation shall require the
affirmative vote of two-thirds of the shares of each class outstanding
and entitled to vote thereon, provided that the board of directors of the
Corporation may, by the affirmative vote of two-thirds of all Directors,
reduce the number of shares required to amend the Certificate of
Incorporation on a case by case basis only, provided that in no event may
the board reduce the number of shares required to amend the Certificate
of Incorporation below a number equal to the majority of the shares
outstanding entitled to vote thereon."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
TO APPROVE THE FOREGOING AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION.
PROPOSAL 4: ADOPTION OF STOCKHOLDER ACTION ONLY BY
DULY CALLED ANNUAL OR SPECIAL MEETING
GENERAL
The Board of Directors of the Company has proposed amending Article VIII of
the Company's Certificate of Incorporation to require that stockholder action be
taken at a duly called annual or special meeting and to prohibit action by
written consent of the stockholders.
7
<PAGE>
Unless otherwise provided in a company's certificate of incorporation,
Delaware law permits any action permitted or required to be taken by
stockholders to be taken without a meeting if a written consent setting forth
the action to be taken is signed by holders of shares of outstanding stock
having the votes necessary to authorize such action at a meeting of
stockholders.
CONSIDERATIONS IN SUPPORT OF PROHIBITING STOCKHOLDER ACTION BY WRITTEN CONSENT
Adoption of the proposed amendment would delay the implementation of
stockholder actions until a stockholders' meeting could be held. The amendment
should give the Board and non-consenting stockholders sufficient opportunity to
review and consider proposed actions and strengthen the Company's defenses
against takeover attempts which the Board deems not to be in the best interests
of the Company and its stockholders. Prohibiting stockholder action by written
consent should also give the Board sufficient opportunity to negotiate with
potential acquirors and solicit competing bids or proposals and thus maximize
stockholder value. Although the amendment could delay certain actions by the
Company's stockholders, it will not preclude them from taking any action they
deem to be in their best interest or in the best interest of the Company.
OTHER CONSIDERATIONS
Any provision in the Company's Certificate of Incorporation which
effectively requires a potential acquiror to negotiate with the Company's
management and directors could be construed as enhancing management's ability to
retain their positions and resist transactions which may be favored by certain
stockholders. The elimination of stockholder action by written consent may
impede or delay certain business transactions such as tender offers,
reorganizations or mergers which are opposed by the Board of Directors even
though sought by a majority of the stockholders. The Board of Directors is not
aware of any efforts to obtain control of the Company and the proposed
elimination of stockholder action by written consent is not in response to any
such efforts.
THE PROPOSAL
To prohibit the Company's stockholders from acting by written consent, the
Board proposes amending the Company's Certificate of Incorporation by adding the
following provision to Article VIII:
"The stockholders of the Corporation may not take action by written
consent without a meeting and must take any actions at a duly called
annual or special meeting."
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
TO APPROVE THE FOREGOING AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION.
PROPOSAL 5: APPROVAL OF 1998 STOCK OPTION PLAN
Effective February 1998, the Board of Directors of the Company adopted,
subject to stockholder approval, the 1998 Stock Option Plan (the "1998 Plan") to
encourage stock ownership by employees and directors of the Company. Under the
1998 Plan, options to purchase an aggregate of 700,000 shares of Common Stock
(subject to adjustment in the event of certain corporate events) may be granted
from time to time to employees and directors of the Company, its divi sions and
subsidiaries.
The following is a summary of the 1998 Plan. This summary description is a
fair and complete summary of the 1998 Plan; however, it is qualified in its
entirety by reference to the full text of the 1998 Plan, which is attached to
this Proxy Statement as Exhibit A.
SUMMARY OF THE PLAN
The 1998 Plan is designed to attract and retain qualified personnel in key
positions, to provide officers, directors who are employees and other employees
with a proprietary interest in the Company as
8
<PAGE>
an incentive to contribute to the success of the Company, and to reward key
employees for outstanding performance and the attainment of targeted goals. The
1998 Plan provides for the grant of incentive stock options ("ISOs") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), as well as nonqualified stock options, both with respect to the
Company's Common Stock. Options to purchase no more than 700,000 shares of
Common Stock may be granted under the 1998 Plan, all of which may be granted as
either ISOs or nonqualified stock options. Under the 1998 Plan, the Board may
grant options for up to 350,000 shares in a calendar year to any individual. The
number of shares that may be issued under the 1998 Plan may be adjusted to
reflect any changes in the number of shares of the Company's Common Stock due to
the declaration of stock dividends, recapitalization resulting in stock splits
or combinations or exchanges of shares.
The 1998 Plan authorizes the Board of Directors to administer the 1998 Plan,
but the Board may delegate its functions to the Compensation Committee. The
Board's authority includes the authority to grant options to purchase Common
Stock, determine which options constitute ISOs and which constitute nonqualified
stock options and to determine the exercise price of the options granted, as
well as broad discretion to set or amend other terms. In setting the exercise
price for ISOs, the Board is limited by the rule described in the next paragraph
relating to fair market value but may choose another method of setting the price
for nonqualified stock options. (As of November 20, 1998, the fair market value
as defined in the 1998 Plan was $1 1/2 per share, based on the preceding day's
closing price.) Options may be granted to employees, officers and employee
directors of the Company as well as employees of present or future divisions and
subsidiary corporations of the Company, a total of approximately 425 persons as
of October 15, 1998. (We will refer to employees, officers or directors of the
Company who are granted options under the 1998 Plan as "optionees.") The Company
does not receive separate consideration for the granting of options, other than
the provision of services.
Options granted as ISOs are subject to three limitations. The first is that
ISO treatment is limited based on when the options first become
exercisable--only the first $100,000 in common stock (valued as of the date of
grant) that becomes exercisable under an individual's ISOs in a given year will
receive ISO tax treatment. The second limitation is that the option price must
at least equal 100% of the fair market value of the shares of Common Stock of
the Company on the date of grant of the option. The third limitation is that the
option price for stockholders holding 10% or more of the outstanding shares of
Common Stock must at least equal 110% of the fair market value of the Common
Stock.
Options granted under the 1998 Plan may only be exercised while the optionee
is then in the employ of the Company and has remained continuously so employed
since the date of the grant of the option or within 90 days after such
employment ends. If the Company terminates an optionee for cause, all of his or
her options terminate upon such termination. If an optionee is terminated by
reason of death, disability or retirement, all of his or her options, to the
extent already exercisable, may be exercised for 12 months after such date.
Options granted under the 1998 Plan are not transferable other than by will, the
laws of descent and distribution or to a revocable inter vivos trust for the
primary benefit of the optionee and his or her spouse.
Options will terminate no later than 10 years after their date of grant.
However, options intended to be ISOs under the 1998 Plan will expire no later
than five years after the date of grant if the option is granted to an employee
who owns (or is deemed to own) more than 10% of the outstanding Common Stock. No
Options may be granted after 10 years after the earlier of the Board's approval
of the 1998 Plan or the stockholders' approval.
The Board may at any time and from time to time suspend, terminate, modify
or amend the 1998 Plan. However, any such action will be contingent upon
stockholder approval if required to comply with the requirements of law or of
any stock exchange or market on which the Common Stock trades. No suspension,
termination, modification or amendment of the 1998 Plan may adversely affect any
option previously granted, unless the written consent of the optionee is
obtained.
9
<PAGE>
TAX CONSEQUENCES
ISOS. ISOs under the 1998 Plan are intended to be eligible for the
favorable federal income tax treatment accorded "incentive stock options" under
the Code.
There generally are no federal income tax consequences to the optionee or
the Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the optionee's
alternative minimum tax liability, if any.
If an optionee holds stock acquired through exercise of an incentive stock
option for more than two years from the date on which the option is granted and
more than one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss on a disposition of such
stock will be long-term capital gain or loss. Generally, if the optionee
disposes of the stock before the expiration of either of these holding periods
(a "disqualifying disposition"), at the time of disposition, the optionee will
realize taxable ordinary income equal to the lesser of (a) the excess of the
stock's fair market value on the date of exercise over the exercise price, or
(b) the optionee's actual gain, if any, on the purchase and sale. The optionee's
additional gain or any loss upon the disqualifying disposition will be a capital
gain or loss that will be long-term or short-term depending on whether the stock
was held for more than one year. Capital gains currently are generally subject
to lower tax rates than ordinary income. Slightly different rules may apply to
optionees who acquire stock subject to certain repurchase options or who are
subject to Section 16(b) of the Exchange Act.
To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and perhaps, in the future, the satisfaction of a withholding obligation) to a
corresponding business expense deduction in the tax year in which the
disqualifying disposition occurs.
NONSTATUTORY STOCK OPTIONS. Nonstatutory stock options granted under the
1998 Plan generally have the following federal income tax consequences:
There are no tax consequences to the optionee or the Company by reason of
the grant of a nonstatutory stock option. Upon exercise of a nonstatutory stock
option, the optionee normally will recognize taxable ordinary income equal to
the excess of the stock's fair market value on the date of exercise over the
option exercise price. Generally, with respect to employees, the Company is
required to withhold from regular wages or supplemental wage payments an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of any withholding obligation, the Company will generally be
entitled to a business expense deduction equal to the taxable ordinary income
realized by the optionee. Upon disposition of the stock, the optionee will
recognize a capital gain or loss equal to the difference between the selling
price and the sum of the amount paid for such stock plus any amount recognized
as ordinary income upon exercise of the option. Such gain or loss will be long
or short-term depending on whether the stock was held for more than one year.
Slightly different rules may apply to optionees who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. Code Section 162(m) denies a
deduction to any publicly held corporation for compensation paid to certain
employees in a taxable year to the extent that compensation exceeds $1 million
for a covered employee. It is possible that compensation attributable to stock
options, when combined with all other types of compensation received by a
covered employee from the Company, may cause this limitation to be exceeded in
any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Code Section 162(m),
compensation attributable to stock options will qualify as performance-based
compensation, provided that: (i) the option plan contains a per-employee
limitation on the number of shares for which options may be granted during a
specified period; (ii) the per-employee limitation is
10
<PAGE>
approved by the shareholders; (iii) the option is granted by a compensation
committee with voting members comprised solely of "outside directors"; and (iv)
either the exercise price of the option is no less than the fair market value of
the stock on the date of grant, or the option is granted (or exercisable) only
upon the achievement (as certified by the compensation committee) of an
objective performance goal established by the compensation committee while the
outcome is substantially uncertain.
To assist the Company in deducting as a business expense the compensation
attributable to the exercise of stock options under the 1998 Plan, shareholders
are requested in this Proposal to approve the per-employee limitation described
above to satisfy the second condition listed above.
NEW PLAN BENEFITS
Grants under the 1998 Plan are made at the discretion of the Board of
Directors and are therefore not fully determinable with respect to dollar value
or amount. The following table sets forth the total number of options granted
under the 1998 Stock Option Plan contingent upon stockholder approval, with the
dollar value of the outstanding options granted under the 1998 Stock Option Plan
as of October 15, 1998, based on the closing bid price of the Common Stock on
such date.
<TABLE>
<CAPTION>
DOLLAR VALUE AS OF NUMBER OF OPTIONS GRANTED
OCTOBER 15, GRANTED UNDER THE 1998 PLAN
NAME AND POSITION 1998($)(1) (#)
- ------------------------------------------------------------ -------------------- ------------------------------
<S> <C> <C>
Christopher J. Weiler....................................... $ 5,019 4,225
Chairman, President and Chief Executive Officer
Allen C. Outlaw............................................. $ 128,066 107,800
Vice President--Marketing
Executive Group............................................. $ 229,520 193,199
Non-Executive Director Group................................ $ 134,640 113,333
Non-Executive Officer Employee Group........................ $ 295,220 248,502
</TABLE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
TO APPROVE THE 1998 STOCK OPTION PLAN.
11
<PAGE>
.
PROPOSAL 6: RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, with the concurrence of the Audit Committee, has
selected Reznick Fedder & Silverman, P.C. ("Reznick Fedder") of Bethesda,
Maryland as its independent accountants for the fiscal year ending December 31,
1998. Reznick Fedder will serve as the Company's principal accountant to audit
the Company's financial statements. Reznick Fedder has served as the Company's
independent accountants for the years ended December 31, 1996 and 1997. If the
stockholders do not ratify the appointment of Reznick Fedder, the engagement of
independent accountants will be reevaluated by the Board of Directors. Even if
the appointment is ratified, the Board of Directors in its discretion may
nevertheless appoint another firm of independent accountants at any time during
the year if the Board of Directors determines that such change would be in the
best interests of the stockholders and the Company.
Representatives of Reznick Fedder are expected to be present at the Annual
Meeting, will have the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
CHANGE IN ACCOUNTANTS
The former independent auditor for the Company, Grant Thornton, LLP ("Grant
Thornton") was dismissed on November 21, 1996. Grant Thornton's reports on the
Company's financial statements for 1995 and 1996 did not contain an adverse
opinion or disclaimer of opinion, and were not modified as to uncertainty, audit
scope, or accounting principles. During 1995 and 1996 and the subsequent interim
period preceding the dismissal, there were no disagreements with Grant Thornton
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to Grant
Thornton's satisfaction, would have caused Grant Thornton to make reference to
the subject matter of the disagreement in connection with its report. Grant
Thornton communicated certain internal control matters to the Company which meet
the definition of reportable events. For the fiscal year ended December 31,
1995, such reportable events involved recommendations that the Company develop
and maintain stricter internal control policies for the following areas:
accounts receivable, purchases and disbursements, cash receipts, fixed asset
capitalization, inventory, payroll and computer processing. The Company has
implemented systems of internal control which the Company feels address the
issues raised by Grant Thornton. The Company has authorized Grant Thornton to
respond fully to the inquiries of Reznick Fedder concerning the subject matter
of each of the reportable events.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL
TO RATIFY THE ENGAGEMENT OF REZNICK FEDDER & SILVERMAN, PC AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS.
PRINCIPAL SECURITY HOLDERS
There were a total of 4,824,669 shares of Common Stock of On-Site Sourcing
outstanding on November 16, 1998. The following table sets forth how many shares
were owned on that date by (1) each person or group who beneficially owns more
than five percent (5%) of the Company's outstanding Common Stock; (2) each
Director and Named Executive Officer of the Company, individually, and (3) the
Directors and executive officers of the Company as a group.
In preparing the following table, the Company relied upon statements filed
with the SEC by beneficial owners of more than five percent (5%) of the
Company's outstanding Common Stock pursuant to Section 13(d) or 13(g) of the
Securities Act of 1934, unless the Company knew or had reason to believe that
the information contained in such statements was not complete or accurate, in
which case the Company relied upon information which it considered to be
accurate and complete. Unless otherwise
12
<PAGE>
noted, the business address of each of the following is 1111 North 19th Street,
Sixth Floor, Arlington, Virginia 22209.
<TABLE>
<CAPTION>
OF SHARES
NUMBER APPROXIMATE
BENEFICIALLY PERCENTAGE OF BENEFICIAL
NAME OWNED OWNERSHIP
- ----------------------------------------------------------------------- ----------------- -------------------------
<S> <C> <C>
The Estate of John S. Stoppelman (1)................................... 645,000 13.4%
1749 Old Meadow Road
Suite 610
McLean, VA 22102
Christopher J. Weiler (2).............................................. 364,225 7.6%
Allen C. Outlaw (3).................................................... 214,800 4.5%
Anthony A. Kopsidas (4)................................................ 129,412 2.7%
Alfred T. Duncan (5)................................................... 40,225 *
Lance Waagner(6)....................................................... 27,891 *
Jorge R. Forgues (7)................................................... 37,778 *
500 Huntmar Park Drive
Herndon, VA 20170
Charles B. Millar (8).................................................. 41,278 *
1101 Vermont Ave., N.W.
Washington, D.C. 20005
Edward G. Hook (9)..................................................... 9,895 *
All executive officers and Directors as a group........................ 865,504 17.9%
</TABLE>
- ------------------------
* Less than 1%
(1) Includes 15,000 shares subject to options that are exercisable currently or
exercisable within 60 days.
(2) Includes 4,225 shares subject to options that are exercisable currently or
exercisable within 60 days.
(3) 162,000 shares are held by an escrow agent pursuant to a promissory note and
escrow agreement executed in connection with a loan by the Company to Mr.
Outlaw. See "Certain Transactions--Loans and Guarantees". Includes 7,800
shares subject to options that are exercisable currently or exercisable
within 60 days.
(4) Includes 129,412 shares subject to options that are exercisable currently or
exercisable within 60 days.
(5) Includes 40,225 shares subject to options that are exercisable currently or
exercisable within 60 days.
(6) Includes 19,167 shares subject to options that are exercisable currently or
exercisable within 60 days.
(7) Includes 37,778 shares subject to options that are exercisable currently or
exercisable within 60 days.
(8) Includes 37,778 shares subject to options that are exercisable currently or
exercisable within 60 days.
(9) Includes 9,895 shares subject to options that are exercisable currently or
exercisable within 60 days.
13
<PAGE>
EXECUTIVE COMPENSATION AND RELATED MATTERS
EXECUTIVE OFFICERS
The executive officers of the Company as of November 16, 1998, are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------------- --- -------------------------------------------------------
<S> <C> <C>
Christopher J. Weiler.............................. 36 Chairman, Chief Executive Officer and President
Alfred T. Duncan................................... 54 Executive Vice President, Chief Financial Officer
Edward Hook........................................ 44 Executive Vice President, Reprographics Services
Lance Waagner...................................... 33 Executive Vice President, Information Technology
Allen C. Outlaw.................................... 32 Vice President--Marketing
Anthony A. Kopsidas................................ 28 Vice President--Operations
</TABLE>
ALFRED T. DUNCAN joined the Company as Executive Vice President and Chief
Financial Officer in July 1998. From June 1997 until July 1998, Mr. Duncan
served as Vice President and Chief Financial Officer of Meadowlanders, Inc.,
owners of the New Jersey Devils, a National Hockey League team. From 1992 until
June 1997, Mr. Duncan was an independent management consultant to the computer,
software and consumer electronics industries. Mr. Duncan holds a BSCE from Duke
University and an MBA from Harvard University.
EDWARD HOOK joined the Company as Executive Vice President, Reprographics
Services in July 1998, having served the Company as a consultant since April
1998. From February 1997 until April 1998, Mr. Hook served as an independent
consultant for ASE Associates, involving strategic planning and corporate
development. From 1984 to February 1997, Mr. Hook served as Senior Vice
President of Shields Business Solutions, a company engaged in the sale and
service of office products to the financial and legal industries.
See "Proposal 1: Election of Directors" on pages 3-4 for additional
information regarding Messrs. Weiler, Outlaw, Kopsidas and Waagner.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding the
compensation of the Company's Chief Executive Officer and the other executive
officers (collectively, the "Named Executive Officers") whose annual
compensation (salary and bonus) for services rendered in all capacities to the
Company exceeded $100,000 for the year ended December 31, 1997.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------
OTHER
ANNUAL COMPENSATION ANNUAL
----------------------------------- COMPEN- OPTIONS/
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($) SATION ($) SAR'S (#)
- ------------------------------------------------- --------- ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Christopher Weiler............................... 1997 118,917 20,000 -- --
President and CEO 1996 92,000 -- -- --
1995 89,972
Allen C. Outlaw.................................. 1997 99,028 5,000 -- --
Vice President, Marketing 1996 75,734 -- -- --
1995 74,768
<CAPTION>
ALL
OTHER
COMPEN-
NAME AND PRINCIPAL POSITION SATION ($)
- ------------------------------------------------- ---------------
<S> <C>
Christopher Weiler............................... --
President and CEO --
Allen C. Outlaw.................................. --
Vice President, Marketing --
</TABLE>
Other than an employee funded 401K plan which does not receive matching
funds from the Company and the stock option plans described below, as of
December 31, 1997, the Company did not have any contingent forms of
remuneration, including any pension, retirement, stock appreciation, cash or
stock bonus, or other compensation plan.
14
<PAGE>
DIRECTOR COMPENSATION
Directors currently receive no cash compensation for serving on the Board of
Directors other than reimbursement of reasonable expenses incurred in attending
meetings. In 1996, Messrs. Forgues, Millar and Wasserman, the three outside
directors, each received options to purchase 20,000 shares of Common Stock
vesting over a period of one year in equal portions at the end of each quarter.
The options were granted at the market price of Common Stock at the time of
grant. In 1997, Messrs. Forgues, Millar and Wasserman, the three outside
directors, each received options to purchase 20,000 shares of Common Stock
vesting over a period of one year in equal portions at the end of each quarter.
The options were granted at the market price of Common Stock at the time of
grant. In 1998, Mr. Stoppelman was granted options to purchase 60,000 shares of
Common Stock and Messrs. Forgues, Millar and Wasserman were each granted options
to purchase 40,000 shares of Common Stock. These options vest over a period of
three years in equal portions at the end of each quarter and were granted at the
market price of Common Stock at the time of grant. Directors who also serve as
officers of the Company do not receive separate compensation, cash or otherwise,
for their service as directors.
15
<PAGE>
EMPLOYMENT AGREEMENTS
The Company and Mr. Weiler entered into an employment agreement dated as of
January 1998, which is effective until January 2001. Mr. Weiler is compensated
at a rate of $130,000 per year, and is eligible to receive bonuses in cash or
stock at the discretion of the Board of Directors based on quarterly reviews of
Mr. Weiler's and the Company's performance. The Board of Directors may terminate
Mr. Weiler's employment agreement at any time with or without cause. If Mr.
Weiler is terminated without cause, he will be entitled to receive a severance
payment equal to twelve months base salary plus the value of his other
employment benefits accrued at the time of termination. The employment agreement
contains a covenant that restricts Mr. Weiler from competing with the Company
for the term of the agreement and for a period of one year thereafter. In the
event of a change in control of On-Site Sourcing, Mr. Weiler has the right to
exercise any of his options to acquire Company Common Stock, including options
that have not, by their terms, vested prior to the date of the change in
control.
On July 1, 1998 the Company and Mr. Outlaw entered into an employment
agreement which is effective until June 30, 1999. Mr. Outlaw is compensated at
the rate of $240,000 per year and is eligible for a bonus relating to growth in
revenues from the Company's reprographics operations. The agreement is subject
to annual renewal by the Board. The Board of Directors may terminate Mr.
Outlaw's employment agreement at any time with or without cause. If Mr. Outlaw
is terminated without cause, he will be entitled to receive a severance payment
equal to three months base salary plus the value of his other employment
benefits accrued at the time of termination. The employment agreement contains a
covenant that restricts Mr. Outlaw from competing with the Company for the term
of the agreement and for a period of one year thereafter. In the event of a
change in control of On-Site Sourcing, Mr. Outlaw has the right to exercise any
of his options to acquire Company Common Stock, including options that have not,
by their terms, vested prior to the date of the change in control.
CERTAIN TRANSACTIONS
LOANS AND GUARANTEES
In January 1996, Mr. Weiler, the Chief Executive Officer and President of
the Company, Mr. Weiler's wife, and Mr. Stoppelman (the former Chairman of the
Board and Secretary) personally guaranteed the Company's revolving line of
credit with Sequoia National Bank with a principal amount of $450,000 and
interest accruing at an annual rate equal to the prime rate plus 1%. The Company
obtained the line of credit as financing for general business purposes,
including the financing of certain receivables. The revolving line of credit was
terminated on April 1, 1997 and no amounts remain outstanding thereunder.
In March 1996, the Company loaned $89,900 to Mr. Outlaw. The loan bears
interest at an annual rate equal to 6%. At December 31, 1997 the outstanding
balance under this loan was $50,400, with principal and interest due April 1,
1999.
REVENUES AND EXPENSES
During 1997 and 1996, the Company was billed approximately $88,000 and
$208,000, respectively, for legal services rendered by the Stoppelman Law Firm,
P.C., of which Mr. Stoppelman (the former Chairman of the Board and Secretary)
was a principal. In October 1996, the Company entered into an arrangement with
The Stoppelman Law Firm whereby the Company paid a retainer of $5,000 per month
for legal services which was subsequently increased to $7,000 per month in July
1997. The Company believes that the fees charged and retainer arrangement were
no less favorable than those obtainable from an unaffiliated third party. This
arrangement terminated on July 15, 1998 when Mr. Stoppelman died.
16
<PAGE>
AVAILABILITY OF FORM 10-KSB
The Company has mailed a copy of its Annual Report to each stockholder
entitled to vote at this meeting. Copies of the Company's Form 10-KSB for the
year ended December 31, 1997 and Forms 10-QSB for the three-month periods ended
March 31, 1998, June 30, 1998 and September 30, 1998, respectively, are
available at no charge to all stockholders upon request to the Company and will
also be available at the Annual Meeting.
STOCKHOLDER PROPOSALS FOR 1999
If you want to include a proposal in the proxy statement for On-Site
Sourcing's 1999 Annual Meeting, send the proposal to On-Site Sourcing, Inc.,
Attn: Alfred T. Duncan, Chief Financial Officer and Secretary, at 1111 North
19th Street, Sixth Floor, Arlington, Virginia 22209. Proposals must be received
on or before August 2, 1999 to be included in next year's proxy statement.
Please note that proposals must comply with all of the requirements of Rule
14a-8 under the Securities Exchange Act of 1934, as well as the requirements of
On-Site Sourcing's certificate of incorporation and bylaws. On-Site Sourcing
will be able to use proxies given to it for next year's meeting to vote for or
against any proposal at On-Site Sourcing's discretion unless the proposal is
submitted to On-Site Sourcing on or before October 17, 1999.
By Order of the Board of Directors
Alfred T. Duncan
Secretary
Arlington, Virginia
December 1, 1998
17
<PAGE>
EXHIBIT A
ON-SITE SOURCING, INC.
1998 STOCK OPTION PLAN
1. PURPOSE.
This 1998 Stock Option Plan (the "Plan") is intended to encourage stock
ownership by employees and directors of On-Site Sourcing, Inc. (the "Company"),
a Delaware corporation, its divisions and Subsidiary Corporations, so that they
may acquire or increase their proprietary interest in the Company, and to
encourage such employees and directors to remain in the employ of the Company
and to put forth maximum efforts for the success of the business. It is further
intended that options granted by the Board of Directors of the Company (the
"Board") pursuant to Section 5 hereof shall constitute "incentive stock options"
("Incentive Stock Options") within the meaning of Section 422 of the Internal
Revenue Code (the "Code"), as thereafter amended, and the Regulations issued
thereunder (the "Code"), and options granted by the Board pursuant to Section 6
hereof shall constitute "nonqualified stock options" ("Nonqualified Stock
Options") and, together with Incentive Stock Options ("Options").
2. ADMINISTRATION AND AUTHORITY.
The Plan shall be administered by the Board. The Board shall have the
authority in its discretion, subject to and not inconsistent with the express
provisions of the Plan, to administer the Plan and to exercise all the powers
and authorities either specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including, without limitation, the
authority to grant Options; to determine which Options shall constitute
Incentive Stock Options and which Options shall constitute Nonqualified Stock
Options; to determine the purchase price of the shares of Common Stock covered
by each Option (the "Option Price"); to determine the persons to whom, and the
time or times at which, Options shall be granted; to determine the number of
shares of Common Stock to be covered by each Option; to interpret the Plan; to
prescribe, amend and rescind rules and Regulations relating to the Plan; to
determine the terms and provisions of the Option Agreements (which need not be
identical) evidencing Options granted under the Plan; and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Board may delegate some or all of the powers granted to it pursuant to this
Section 2 to a committee (the "Committee") appointed by the Board and consisting
of not less than two (2) members of the Board. The Board may from time to time
remove members from, or add members to, the Committee, and vacancies on the
Committee shall be filled by the Board. All decisions, determinations and
interpretations of the Committee shall be final and binding on all Optionees,
unless otherwise determined by the Board.
2.2 LIABILITY.
No member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option.
3. ELIGIBILITY.
Options may be granted to employees (including, without limitation, officers
and directors who are employees of the Company or its present or future
divisions and Subsidiary Corporations). In determining the persons to whom
Options shall be granted and the number of shares to be covered by each Option,
the Board shall take into account the duties of the respective persons, their
present and potential contributions to the success of the Company and such other
factors as the Board shall deem relevant in connection with accomplishing the
purpose of the Plan. A person to whom an Option has been granted is sometimes
18
<PAGE>
referred to herein as an "Optionee." An Optionee shall be eligible to receive
more than one Option during the term of the Plan, but only on the terms and
subject to the restrictions hereinafter set forth.
4. SHARES.
The shares subject to Options hereunder shall be shares of the Company's
Common Stock (the "Common Stock"). Such shares may, in whole or in part, be
authorized but unissued shares or shares that shall have been or that may be
reacquired by the Company. The aggregate number of shares of Common Stock as to
which Options may be granted from time to time under the Plan shall not exceed
700,000, all of which may be in the form of either Incentive Stock Options or
Nonqualified Stock Options. The aggregate number of shares of Common Stock as to
which Options may be granted under the Plan to an individual in any calendar
year shall not exceed 350,000. The limitation established by this section shall
be subject to adjustment as provided in Section 7.9 hereof. If any outstanding
Option expires or is terminated without having been exercised in full, the
shares of Common Stock allocable to the unexercised portion of such Option shall
(unless the Plan shall have been terminated) become available for subsequent
grants of Options.
5. INCENTIVE STOCK OPTIONS.
Options granted pursuant to this Section 5 are intended to constitute
Incentive Stock Options and shall be subject to the following special terms and
conditions, in addition to the general terms and conditions specified in Section
7 hereof.
5.1 VALUE OF SHARES.
The aggregate Fair Market Value (determined as of the date the Incentive
Stock Option is granted) of the shares of Common Stock with respect to which
Options granted under this Plan and all other option plans of the Company and
any Subsidiary Corporation become exercisable for the first time by an optionee
during any calendar year shall not exceed $100,000.
5.2 TEN PERCENT SHAREHOLDER.
In the case of an Incentive Stock Option granted to a 10% Shareholder, (a)
the Option Price shall not be less than 110% of the Fair Market Value of the
shares of Common Stock of the Company on the date of grant of such Incentive
Stock Option, and (b) the exercise period shall not exceed five (5) years from
the date of grant of such Incentive Stock Option.
6. NONQUALIFIED STOCK OPTIONS.
Options granted pursuant to this Section 6 are intended to constitute
Nonqualified Stock Options and shall be subject only to the general terms and
conditions specified in Section 7 hereof.
7. TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be evidenced by a written Option Agreement between the
Company and the Optionee, which agreement shall comply with and be subject to
the following terms and conditions:
7.1 NUMBER OF SHARES.
Each Option Agreement shall state the number of shares of Common Stock to
which the Option relates.
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7.2 TYPE OF OPTION.
Each Option Agreement shall specifically identify the portion, if any, of
the Option which constitutes an Incentive Stock Option and the portion, if any,
which constitutes a Nonqualified Stock Option.
7.3 OPTION PRICE.
Each Option Agreement shall state the Option Price which, in the case of
Incentive Stock Options, shall be not less than 100% of the Fair Market Value of
the shares of Common Stock of the Company on the date of grant of the Option.
The Option Price shall be subject to adjustment as provided in Section 7.9
hereof. The date as of which the Committee adopts a resolution expressly
granting an Option shall be considered the day on which such Option is granted,
unless the resolution specifies otherwise.
7.4 MEDIUM AND TIME OF PAYMENT.
The Option Price shall be paid in full, at the time of exercise, in cash or,
as the Committee provides in the Option Agreement initially or by amendment, in
shares of Common Stock having a Fair Market Value equal to such Option Price or
in a combination of cash and such shares or by such other method as the
Committee permits (including cashless exercises), and may be effected in whole
or in part (a) with monies received from the Company at the time of exercise as
a compensatory cash payment, or (b) with monies borrowed from the Company
pursuant to repayment terms and conditions as shall be determined from time to
time by the Board, in its discretion separately with respect to each exercise of
Options and each Optionee; provided, however, that each such method and time for
payment and each such borrowing and terms and conditions of repayment shall be
permitted by and be in compliance with applicable law, and provided, further, if
the Option Price is paid with monies borrowed from the Company, such fact shall
be noted conspicuously on the certificate evidencing such shares in accordance
with applicable law.
7.5 TERM AND EXERCISE OF OPTIONS.
Options shall be exercisable over the exercise period as and at the times
and upon the conditions that the Board may determine, as reflected in the Option
Agreement; provided, however, that the Board shall have the authority to
accelerate the exercisability of any outstanding Option at such time and under
such circumstances as it, in its sole discretion, deems appropriate. The
exercise period shall be determined by the Board for all Options; provided,
however that such exercise period shall not exceed ten (10) years from the date
of grant of such Option. The exercise period shall be subject to earlier
termination as provided in Sections 7.6 and 7.7 hereof. An Option may be
exercised, as to any or all full shares of Common Stock as to which the Option
has become exercisable, by giving written notice of such exercise to the Board;
provided, however, that an Option may not be exercised at any one time as to
fewer than 100 shares (or such number of shares as to which the Option is then
exercisable if such number of shares is less than 100).
7.6 TERMINATION.
Except as provided in Section 7.5 and in this Section 7.6 hereof, an Option
may not be exercised unless the Optionee is then in the employ of the Company or
a division or Subsidiary Corporation (or a corporation issuing or assuming the
Option in a transaction to which IRC Section 425(a) applies), and unless the
Optionee has remained continuously so employed since the date of grant of the
Option. If the employment of an Optionee shall terminate (other than by reason
of death, disability or retirement), all Options of such Optionee that are
exercisable at the time of such termination may, unless earlier terminated in
accordance with their terms, be exercised within three months after such
termination; provided, however, that if the employment of an Optionee shall
terminate for cause, all Options theretofore granted to such Optionee shall, to
the extent not theretofore exercised, terminate forthwith. Nothing in the Plan
or in any Option shall confer upon an individual any right to continue in the
employ of the Company or any of its divisions
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or Subsidiary Corporations or interfere in any way with the right of the
Corporation or any such division or Subsidiary Corporation to terminate such
employment.
7.7 DEATH, DISABILITY OR RETIREMENT.
If an Optionee shall die while employed by the Company, or a Subsidiary
Corporation thereof, or within three months after the termination of such
Optionee's employment, other than for cause, or if the Optionee's employment
shall terminate by reason of disability or retirement, all Options theretofore
granted to such Optionee (to the extent otherwise exercisable) may, unless
earlier terminated in accordance with their terms, be exercised by the Optionee
or by the Optionee's estate or by a person who acquired the right to exercise
such Option by bequest or inheritance or otherwise by reason of the death or
disability of the Optionee, at any time within one year after the date of death,
disability or retirement of the Optionee.
7.8 NONTRANSFERABILITY OF OPTIONS.
Options granted under the Plan shall not be transferable otherwise than (a)
by will; (b) by the laws of descent and distribution; or (c) to a revocable
inter vivos trust for the primary benefit of the Optionee and his or her spouse.
Options may be exercised, during the lifetime of the Optionee, only by the
Optionee, his or her guardian, legal representative or the Trustee of an above
described trust.
7.9 EFFECT OF CERTAIN CHANGES.
(1) If there is any change in the number of shares of Common Stock
through the declaration of stock dividends, or through recapitalization
resulting in stock splits, or combinations or exchanges of such shares,
the number of shares of Common Stock available for Options, the number of
such shares covered by outstanding Options and the price per share of
such Options shall be proportionately adjusted by the Board to reflect
any increase or decrease in the number of issued shares of Common Stock;
provided, however, that any fractional shares resulting from such
adjustment shall be eliminated.
(2) In the event of the proposed dissolution or liquidation of the
Company, in the event of any corporate separation or division, including,
but not limited to, split-up, split-off or spin-off, or in the event of a
merger or consolidation of the Company with another corporation, the
Board may provide that the holder of each Option then exercisable shall
have the right to exercise such Option (at its then Option Price) solely
for the kind and amount of shares of stock and other securities,
property, cash or any combination thereof receivable upon such
dissolution, liquidation, or corporate separation or division, or merger
or consolidation by a holder of the number of shares of Common Stock for
which such Option might have been exercised immediately prior to such
dissolution, liquidation, or corporate separation or division, or merger
or consolidation; or the Board may provide, in the alternative, that each
Option granted under the Plan shall terminate as of a date to be fixed by
the Board; provided, however, that not less than 30 days' written notice
of the date so fixed shall be given to each Optionee, who shall have the
right, during the period of 30 days preceding such termination, to
exercise the Options as to all or any part of the shares of Common Stock
covered thereby, including shares as to which such Options would not
otherwise be exercisable; provided, further, that failure to provide such
notice shall not invalidate or affect the action with respect to which
such notice was required.
(3) If while unexercised Options remain outstanding under the Plan,
the stockholders of the Company approve a definitive agreement to merge
or consolidate the Company with or into another corporation or to sell or
otherwise dispose of all or substantially all of its assets, or adopt a
plan of liquidation (each, a "Disposition Transaction"), then the Board
may (a) make an appropriate adjustment to the number and class of shares
available for options, and to the
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amount and kind of shares or other securities or property (including
cash) receivable upon exercise of any outstanding options after the
effective date of such transaction, and the price thereof, or, in lieu of
such adjustment, provide for the cancellation of all options outstanding
at or prior to the effective date of such transaction; (b) provide that
exercisability of all Options shall be accelerated, whether or not
otherwise exercisable; or (c) in its discretion, permit Optionees to
surrender outstanding options for cancellation; provided, however, that
if the stockholders approve such Disposition Transaction within five
years of the date of adoption of this Plan, the Board shall provide for
the alternative in (b) above. Upon any cancellation of an outstanding
Option pursuant to this Section, the Optionee shall be entitled to
receive, in exchange therefore a cash payment under any such Option in an
amount per share determined by the Board in its sole discretion, but not
less than the difference between the per share exercise price of such
Option and the Fair Market Value of a share of the Company Common Stock
on such date as the Board shall determine.
(4) Paragraphs (2) and (3) of this Section 7.9 shall not apply to a
merger or consolidation in which the Company is the surviving corporation
and shares of Common Stock are not converted into or exchanged for stock,
securities of any other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any consolidation or
merger of another corporation into the Company in which the Company is
the surviving corporation and in which there is a reclassification or
change (including a change to the right to receive cash or other
property) of the shares of Common Stock (other than a change in par
value, or from par value to no par value, or as a result of a subdivision
or combination, but including any change in such shares into two or more
classes or series of shares), the Board may provide that the holder of
each Option then exercisable shall have the right to exercise such Option
solely for the kind and amount of shares of stock and other securities
(including those of any new direct or indirect parent of the Company),
property, cash or any combination thereof receivable upon such
reclassification, change, consolidation or merger by the holder of the
number of shares of Common Stock for which such Option might have been
exercised.
(5) In the event of a change in the Common Stock of the Company as
presently constituted which is limited to a change of all, of its
authorized shares with par value into the same number of shares with a
different par value or without par value, the shares resulting from any
such change shall be deemed to be the Common Stock within the meaning of
the Plan.
(6) To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive, provided that each Incentive Stock Option granted pursuant to
this Plan shall not be adjusted in a manner that causes such option to
fail to continue to qualify as an Incentive Stock Option within the
meaning of Section 422 of the Internal Revenue Code.
(7) Except as hereinbefore expressly provided in this Section 7.9,
the Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock or any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of
stock of any class or by reason of any dissolution, liquidation, merger,
or consolidation or spin-off of assets or stock of another corporation;
and may issue by the Company of shares of stock of any class shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the number or price of shares of Common Stock subject to the Option.
The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structures or to
merge or to consolidate or to dissolve, liquidate or sell, or transfer
all or part of its business or assets.
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7.10 RIGHTS AS A SHAREHOLDER.
An Optionee or a transferee of an Option shall have no rights as a
shareholder with respect to any shares covered by the Option until the date of
the issuance of a certificate evidencing such shares. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distribution of other rights for which the record date is
prior to the date such certificate is issued, except as provided in Section 7.9
hereof.
7.11 OTHER PROVISIONS.
The Option Agreements authorized under the Plan shall contain such other
provisions, including, without limitation, (a) the imposition of restrictions
upon the exercise of an Option; (b) in the case of an Incentive Stock Option,
the inclusion of any condition not inconsistent with such Option qualifying as
an Incentive Stock Option; and (c) conditions relating to compliance with
applicable federal and state securities laws, as the Board shall deem advisable.
8. AGREEMENT BY OPTIONEE REGARDING WITHHOLDING TAXES.
If the Board shall so require, as a condition of the exercise, each Optionee
shall agree that (a) no later than the date of exercise of any Option, the
Optionee will pay to the Company or make arrangements satisfactory to the Board
regarding payment of any federal, state or local taxes of any kind required by
law to be withheld upon the exercise of such Options, and (b) the Company shall,
to the extent permitted or required by law, have the right to deduct federal,
state and local taxes of any kind required by law to be withheld upon the
exercise of such Option from any payment of any kind otherwise due to the
Optionee.
9. TERM OF PLAN.
Options may be granted pursuant to the plan from time to time within a
period of ten (10) years from the date the Plan is adopted by the Board, or the
date the Plan is approved by the stockholders of the Company, whichever is
earlier.
10. DEFINITIONS.
As used in this Plan, the following words and phrases shall have the
meanings indicated:
(a) "DISABILITY" shall mean an Optionee's inability to engage in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or
that has lasted or can be expected to last for a continuous period of not
less than one year.
(b) "FAIR MARKET VALUE" per share as of a particular date shall mean
(i) the closing sales price per share of Common Stock on a national
securities exchange for the last preceding date on which there was a sale of
such Common Stock on such exchange; or (ii) if the shares of Common Stock
are then traded on an over-the-counter market, the average of the closing
bid and asked prices for the shares of Common Stock in such over-the-counter
market for the last preceding date on which there was a sale of such Common
Stock in such market, or (iii) in case no reported sale takes place, the
average of the closing bid and asked prices on the National Association of
Securities Dealers' Automated Quotations System ("NASDAQ") or any comparable
system, or if the shares of Common Stock are not listed on NASDAQ or
comparable system, the closing sale price or, in case no reported sale takes
place, the average of the closing bid and asked prices, as furnished by any
member of the National Association of Securities Dealers, Inc. selected from
time to time by the Company for that purpose; or (iv) if the shares of
Common Stock are not then listed on a national securities exchange or traded
in an over-the-counter market, such value as the Board in its discretion may
determine.
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(c) "PARENT COMPANY" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending with the employer
corporation if, at the time of granting an Option, each of the corporations
other than the employer corporation owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
(d) "SUBSIDIARY CORPORATION" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the employer
corporation if, at the time of granting an Option, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
50% or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.
(e) "TEN PERCENT Shareholder" shall mean an Optionee who, at the time
an Incentive Stock Option is granted, owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or of
its Parent or Subsidiary Corporations.
11. AMENDMENT AND TERMINATION OF THE PLAN.
The Board at any time and from time to time may suspend, terminate, modify
or amend the Plan; provided, however, that, to the extent necessary to preserve
Incentive Stock Option treatment or comply with regulatory requirements, any
such amendment shall be subject to the approval of the holders of a majority of
the Common Stock issued and outstanding. Except as provided in Section 7 hereof,
no suspension, termination, modification or amendment of the Plan may adversely
affect any Option previously granted, unless the written consent of the Optionee
is obtained.
12. APPROVAL OF SHAREHOLDERS.
The Plan shall take effect upon its adoption by the Board of Directors but
shall be subject to the approval of the holders of a majority of the issued and
outstanding shares of Common Stock of the Company, which approval must occur
within twelve (12) months after the date the Plan is adopted by the Board.
13. EFFECT OF HEADINGS.
The section and subsection headings contained herein are for convenience
only and shall not affect the construction hereof.
<TABLE>
<S> <C> <C>
ON-SITE SOURCING, INC.
By:
-----------------------------------------
Christopher Weiler
PRESIDENT
</TABLE>
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PROXY
ON-SITE SOURCING, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Christopher J. Weiler and Alfred T. Duncan,
and each of them severally, as their proxies with full power of substitution and
resubstitution for and in the name, place and stead of the undersigned to vote
upon and act with respect to all of the shares of Common Stock of On-Site
Sourcing, Inc. (the "Company") standing in the name of the undersigned, or with
respect to which the undersigned is entitled to vote and act, at the Annual
Meeting of Stockholders to be held on December 29, 1998, at 8:00 AM at the
Company's offices located at 1111 North 19th Street, Sixth Floor, Arlington,
Virginia 22209, or any adjournment(s) thereof. THE UNDERSIGNED ACKNOWLEDGES
RECEIPT OF THE NOTICE OF ANNUAL MEETING AND PROXY STATEMENT DATED DECEMBER 1,
1998.
Proposal 1. Election of each of the following nominees to the Board of
Directors of the Company:
Christopher J. Weiler, Allen C. Outlaw, Anthony A. Kopsidas, Lance
Waagner, Charles B. Millar, Jorge R. Forgues
/ / FOR / / WITHHOLD
The undersigned may withhold authority to vote for any one or more of
the nominees by lining through or otherwise striking out the name of
such nominee.
Proposal 2. To approve the Amendment to the Company's Certificate of
Incorporation to establish a classified Board of Directors.
/ / FOR / / AGAINST / / ABSTAIN
Proposal 3. To approve the Amendment to the Company's Certificate of
Incorporation to establish a supermajority voting requirement for
amendments to the Certificate of Incorporation.
/ / FOR / / AGAINST / / ABSTAIN
Proposal 4. To approve the Amendment to the Company's Certificate of
Incorporation to prohibit stockholder action by written consent.
/ / FOR / / AGAINST / / ABSTAIN
Proposal 5. To approve the 1998 Stock Option Plan.
/ / FOR / / AGAINST / / ABSTAIN
Proposal 6. To ratify the selection of Reznick Fedder & Silverman, PC as
independent accountants for the Company for the fiscal year ending
December 31, 1998.
/ / FOR / / AGAINST / / ABSTAIN
PLEASE MARK YOUR VOTES IN THE CORRESPONDING BOXES ABOVE
(Continued on reverse side)
<PAGE>
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR THE LISTED NOMINEES FOR DIRECTOR, AND FOR PROPOSALS 2,
3, 4, 5 AND 6. If more than one of the proxies named shall be present in person
or by substitution at the meeting or at any adjournment thereof, the majority of
the proxies so present and voting, either in person or by substitution, shall
exercise all of the powers hereby given.
DATE:
-------------------------------------
-------------------------------------
Signature
-------------------------------------
Signature
Please date this proxy and sign your
name exactly as it appears hereon.
When there is more than one owner,
each should sign. When signing as an
attorney, administrator, executor,
guardian or trustee, please add your
title as such. If executed by a
corporation, the proxy should be
signed by a duly authorized officer.
