ALLSTAR SYSTEMS, INC.
6401 Southwest Freeway
Houston, Texas 77074
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held June 16, 1998
----------------
Notice is hereby given that the annual meeting of the holders of common
stock of Allstar Systems, Inc. a Delaware corporation (the "Company"), will be
held at the offices of the Company located at 6401 Southwest Freeway, Houston,
Texas 77074 on Tuesday, June 16, 1998, at 10:00 a.m., Houston time, and any
adjournment or postponement thereof, for the following purposes:
1. To elect a board of six (6) directors to serve until the next
annual meeting of shareholders or until their successors are
elected and qualified;
2. To authorize the reduction of the number of authorized common
shares from 50,000,000 shares to 15,000,000 shares; and
3. To consider and act upon such other business as may properly
be presented to the annual meeting or any adjournments or
postponements thereof.
A record of shareholders has been taken as of the close of business on
April 30, 1998, and only those shareholders of record on that date will be
entitled to notice of and to vote at the annual meeting and any adjournments or
postponements thereof. A shareholders' list will be available commencing May 10,
1998, and may be inspected during normal business hours prior to the annual
meeting at the offices of the Company, 6401 Southwest Freeway, Houston, Texas
77074.
Your vote is important. Whether or not you plan to attend the annual
meeting in person, we request that you sign, date and return the enclosed proxy
card promptly in the enclosed stamped envelope. The prompt return of proxies
will ensure a quorum and save the Company the expense of further solicitation.
By Order of the Board of Directors,
/s/ Donald R. Chadwick
Donald R. Chadwick
Secretary
April 30, 1998
<PAGE>
ALLSTAR SYSTEMS, INC.
6401 Southwest Freeway
Houston, Texas 77057
PROXY STATEMENT
This proxy statement and the enclosed proxy card are being mailed to
the shareholders of Allstar Systems, Inc., a Delaware corporation (the
"Company"), commencing on or about April 30, 1998, in connection with the
solicitation by the board of directors of the Company (the "Board of Directors")
of proxies to be voted at the annual meeting of shareholders to be held at the
offices of the Company located at 6401 Southwest Freeway, Houston, Texas 77074
on Tuesday, June 16, 1998, at 10:00 a.m., Houston time and at any adjournments
or postponements thereof (the "Meeting"), for the purposes set forth in the
accompanying notice.
Proxies will be voted in accordance with the directions specified
thereon and otherwise in accordance with the judgment of the persons designated
as proxies. Any proxy on which no direction is specified will be voted for the
election of the nominees named herein to the Board of Directors and in favor of
the resolution to reduce the number of authorized shares. Abstentions will be
treated as present for purposes of determining whether a quorum is present, but
will have the same legal effect as votes against election of the nominees. As to
any other matter, which may properly be presented at the meeting, the person
named on the proxy card will vote according to their best judgment
A shareholder may revoke a proxy by (i) delivering to the Company
written notice of revocation, (ii) delivering to the Company a signed proxy of a
later date, or (iii) appearing at the Meeting and voting in person. Votes will
be tabulated and the results will be certified by election inspectors who are
required to resolve impartially any interpretive questions as to the conduct of
the vote.
As of April 30, 1998, the record date for the determination of
shareholders entitled to vote at the Meeting, there were outstanding and
entitled to vote 4,454,411 shares (the "Shares") of the Company's common stock,
par value $.01 per share (the "Common Stock"). The Company's Common Stock is the
only class of voting securities outstanding. Each Share entitles the holder to
one vote, on all matters presented at the Meeting. Holders of a majority of the
outstanding Shares must be present, in person or by proxy, to constitute a
quorum for the transaction of business.
If a quorum is not obtained, or if fewer Shares are voted in favor of
approval of any of the proposals than the number required for approval, the
Meeting may be adjourned for the purpose of obtaining additional proxies or
votes or for any other purpose, and, at any subsequent reconvening of the
Meeting, all proxies will be voted in the same manner as such proxies would have
been voted at the original convening of the Meeting (except for any proxies
which have theretofore been revoked).
<PAGE>
ELECTION OF DIRECTORS
General Information
At the Meeting, six nominees are to be elected, each director to hold
office until the next annual meeting of shareholders or until his successor is
elected and qualifies. The persons named in the accompanying proxy have been
designated by the Board of Directors, and unless authority is withheld, proxies
will be voted for the election of the nominees named below to the Board of
Directors. All of the nominees previously have been elected directors by the
shareholders, except for Messrs. Andersen, Darrell, Johnson and Sykora, who were
elected to the Board of Directors effective July 29, 1997 by a vote of the Board
of Directors. If any nominee should become unavailable for election, the proxy
may be voted for a substitute nominee selected by the persons named in the proxy
or the board may be reduced accordingly; however, the Board of Directors is not
aware of any circumstances likely to render any nominee unavailable.
Approval
The six nominees for election as directors at the Meeting who receive
the greatest number of votes cast for election by the holders of Shares entitled
to vote and present, in person or by proxy, at the Meeting will be the duly
elected directors of the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL SIX NOMINEES TO THE COMPANY'S
BOARD OF DIRECTORS.
Nominees for Director
Listed Below are the nominees for the Board of Directors together with
certain information regarding the nominees for the Board of Directors:
Name, Age, Positions held, Period serving as Director, Principal occupation:
James H. Long - Chairman of the Board, President Chief Executive Officer April,
1983 to present
James H. Long, age 38, is the founder of the Company and has served as Chairman
of the Board, Chief Executive Officer and President since the Company's
inception in 1983. Prior to founding the Company, Mr. Long served with the
United States Navy in a technical position and was then employed by IBM in a
technical position.
Donald R. Chadwick, - Director, Chief Financial Officer, Treasurer, Secretary,
September 12, 1996 to present.
Donald R. Chadwick, age 54, has been the Chief Financial Officer of the Company
since February 1992. As Chief Financial Officer, his duties include supervision
of finance, accounting and controller functions within the Company.
G. Chris Andersen, - Director, July 29,1997 to present
G. Chris Andersen, age 59, is a principal of Andersen, Weinroth & Co., a
merchant banking firm founded in 1996. From 1990 through 1995, he was Vice
Chairman of Paine Webber Incorporated. Mr. Andersen is also a director of Terex
Corporation, a publicly traded company that manufactures construction equipment
and truck trailers; Sunshine Mining Company, a publicly traded company engaged
in mining; Headway Corporate Resources, Inc., a publicly traded company
providing staffing services; and United Waste Systems, Inc., a publicly traded
company engaged in waste management.
Richard D. Darrell - Director, July 29, 1997 to present
Richard D. Darrell, age 43, has been President of American Technology
Acquisition Corporation, a company specializing in mergers, acquisitions, and
divestitures of technology related companies, for the last four years. Prior to
that, Mr. Darrell served as President and Chief Executive Officer of Direct
Computer Corporation, a computer reseller and distribution company based in
Dallas, Texas.
Jack M. Johnson, Jr. - Director, July 29, 1997 to present
Jack M. Johnson, Jr., age 59, has been Managing General Partner of Winterman &
Company, a general partnership that owns approximately 25,000 acres of real
estate in Texas, which is used in farming, ranching, and oil and gas exploration
activities for over five years. Mr. Johnson is also President of Winco
Agriproducts, an agricultural products company that primarily processes rice for
seed and commercial sale. Mr. Johnson was previously the Chairman of the Board
of the Lower Colorado River Authority, the sixth largest electrical utility in
Texas, with approximately 1,700 employees and an annual budget of over $400
million. Mr. Johnson was previously Chairman of North Houston Bank, a commercial
bank with assets of approximately $75 million. Mr. Johnson currently serves on
the board of directors of Houston National Bank, a commercial bank located in
Houston, Texas with assets of approximately $100 million; Security State Bank, a
commercial bank in Anahuac, Texas with assets of approximately $60 million and
Team, Inc. a publicly traded company which provides environmental services for
industrial operations.
Donald D. Sykora - Director, July 29, 1997 to present
Donald D. Sykora, age 57, was formerly the President and Chief Operating Officer
of Houston Industries, Inc. and is currently attached to the Office of the
Chairman with responsibility for special projects. Houston Industries is an
international holding company with interests in electric and gas utility
companies, including Houston Lighting and Power Co., with over 8,000 employees
and annual revenues of over $4 billion. Mr. Sykora currently serves on the board
of directors of Powell Industries, Inc., a publicly traded company which
manufactures electrical equipment and systems; Pool Energy Services, Inc., a
publicly traded company which provides oil and gas well servicing; American
Residential Services, Inc., a publicly traded company which provides services
for heating, ventilation, and air conditioning, plumbing, electrical, and indoor
air quality systems, and TransTexas Gas Corporation, a publicly traded producer
and marketer of natural gas.
Board and Committee Activity, Structure and Compensation
During 1997, the board of directors convened on two regularly scheduled
meetings and two specially scheduled occasions, and committees of the board held
meetings as follows: audit committee - no meetings; and compensation committee
no meeting. The compensation committee administers the Company's compensation
plans and recommends officers' compensation to the board for approval. Each
director attended at least 75% of the meetings held during 1996 by the board and
each committee on which he served, except Mr. Johnson who became a director in
July, 1997 and did not attend one of the two meetings occurring during his
tenure.
Each director who is not an employee is paid $1,000 per meeting attended
and $500 per committee meeting attended plus reasonable out-of-pocket expenses
incurred to attend Board or committee meetings. In addition, each non-employee
director is entitled to receive stock options pursuant to the Company's
Non-Employee Director Stock Option Plan. Upon his first election to the Board
each such director receives options to purchase 5, 000 shares and upon each time
a director is reelected such director receives options to purchase 2,000 shares
commencing with those directors reelected at the Company's 1998 annual meeting
of stockholders. All options granted vest immediately. All options granted under
the Director Plan will have an exercise price equal to the fair market value of
a share of Common Stock on the date of grant and will expire ten years after the
date of grant (subject to earlier termination under the Director Plan). Options
granted under the Director Plan are subject to early termination on the
occurrence of certain events, including ceasing to be a member of the Company's
Board (other than by death).
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION TO REDUCE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
Introduction
The Company's Certificate of Incorporation currently authorizes the
issuance of 50,000,000 shares of Common Stock, $.01 par value per share (the
"Common Stock") and 5,000,000 shares of Preferred Stock, $.01 par value per
share. In April, 1998, the Board of Directors adopted a resolution proposing to
amend the Certificate of Incorporation to reduce the number of authorized shares
of Common Stock from 50,000,000 to 15,000,000 subject to shareholder approval.
There are currently 45,545,589 unissued shares of Common Stock of which 417,500
are reserved for issuance under the Company's Incentive Stock Option Plan and
100,000 are reserved for issuance under the Company's Non-Employee Director
Stock Option Plan. There are no shares of Preferred Stock issued or outstanding.
The proposed amendment will be effected by substituting a new first paragraph in
Article IV - Authorized Capital stock for the existing Article IV. The new first
paragraph of Article IV is set forth below:
ARTICLE IV
AUTHORIZED CAPITAL STOCK
The amount of authorized capital stock of the Corporation is 15,000,000
shares of common stock, par value $.01 per share ("Common Stock"), and 5,000,000
shares of preferred stock par value $.01 per share ("Preferred Stock")
Purpose and Effect of the Proposed Amendment
The Board of Directors believes 15,000,000 authorized shares of Common
Stock is adequate for the foreseeable future and that the reduction in the
number of unissued shares will not be detrimental to the Company's activities.
Since the State of Delaware imposes a franchise tax which is based upon the
number of shares authorized rather than issued and outstanding shares the
reduction in the number of authorized shares will result in a reduction in the
amount of franchises taxes payable to the State of Delaware. It is estimated
that the reduction in the number of authorized shares will result in a reduction
of franchise taxes of approximately $65,000 per annum.
Upon adoption of the amendment the Company will have 10,545,589
unissued shares of Common Stock of which 417,500 are reserved for issuance under
the Company's Incentive Stock Option Plan and 100,000 are reserved for issuance
under the Company's Non-Employee Director Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION REDUCING THE AUTHORIZED NUMBER OF SHARES OF CAPITAL
STOCKALL SIX NOMINEES TO THE COMPANY'S BOARD OF DIRECTORS.
Executive Officers
The executive officers of the Company serve until resignation or removal
by the Board of Directors. Company's executive officers are as follows:
Name, age, Positions held, Period serving as Executive Officer:
James H. Long - See Nominees for Director.
Donald R. Chadwick - See Nominees for Director.
Frank Cano - President, Computer Products Division, September, 1997 to present.
Frank Cano, age 33, became the President, Computer Products Division
for the Company in September, 1997 and is responsible for the management of the
Computer Products Division. Prior to that Mr. Cano was Senior Vice President,
Branch Operations from July, 1996 to September, 1997, and was responsible for
the general management of the Company's branch offices. From June 1992 to June
1996, Mr. Cano was the Branch Manager of the Company's Dallas-Fort Worth office.
Thomas N. McCulley - Vice President, Information Systems, September, 1996 to
present,
Thomas N. McCulley, age 51, has been the Vice President, Information
Systems for the Company since July 1996. From January 1992 to June 1996, Mr.
McCulley served as the Information Services Director for the Company. He has
responsibility for management and supervision of the Company's Management
Information Systems.
Shabbir K. Ali - President, IT Services Division, September, 1996 to present
Shabbir K. Ali, age 35, has been the President of the IT Services Division since
July 1996. From January 1996 to June 1996, Mr. Ali served as Vice President, IT
Services Division and between August 1993 and December 1995 as Vice President of
Service Operations. Between July 1990 and July 1993 Mr. Ali served as the
Company's Operations Manager. Mr. Ali's present responsibilities include the
overall management of the Company's IT Services Division.
Michael A. Torigian - President, Telecom Systems Division, September, 1996 to
present
Michael A. Torigian, age 39, has been the President of the Telecom
Systems Division since July 1996. Between July 1994 and June 1996 Mr. Torigian
served as Vice President, Telecom Systems Division. His current responsibilities
include the overall management of the Company's Telecom Systems Division. From
July 1992 to May 1994, Mr. Torigian served as Director of Sales for CTWP, Inc.,
an Austin-based computer, copier and office equipment dealer.
William R. Hennessy - President, Stratasoft, Inc., September, 1996 to present.
William R. Hennessy, age 39, has served as the President of Stratasoft,
Inc., the Company's wholly owned subsidiary that was formed in 1995 to develop
and market CTI Software, since joining the Company in January 1996. Mr.
Hennessy's responsibilities include the general management of Stratasoft, Inc.
From July 1991 to January 1996, Mr. Hennessy was employed by Inter-Tel,
Incorporated, a telephone systems manufacturer and sales and service company,
where he served as the Director of MIS and the Director of Voice and Data
Integration for the central region.
Ronald J. Burger - Chief Operating Officer - Computer Products, January 1998 to
present
Ronald J. Burger, age 51, joined the Company as Chief Operating Officer
- - Computer Products in January 1998. His responsibilities include overall
management of purchasing, warehousing, inventory control and shipping and
receiving of inventory products. Prior to joining the Company, Mr. Burger was
Vice President and General Manager for Intelligent Electronics Inc., a computer
industry aggregator/distributor from April 1996 to February 1997. Prior to that
period Mr. Burger was Vice President of Distribution Logistics for National
Computer Distributors, a computer industry distributor, from April 1993 to April
1996. Prior to that time, Mr. Burger was VP Distribution and Logistics for Tech
Data Corporation, a computer industry distributor.
Family Relationships
James H. Long and Frank Cano are brothers-in-law. There are no other
family relationships among any of the directors and executive officers of the
Company.
Security Ownership of Management
Title Of Class Name of Amount and Nature of Percent
Beneficial Owner Beneficial Owner(1) of Class
Common Stock James H Long......................2,118,600 47.6%
Common Stock Donald R. Chadwick...................24,586 (2) *
Common Stock Frank Cano...........................10,300 (3) *
Common Stock Shabbir K. Ali.......................10,000 *
Common Stock Thomas N McCulley.......................300 *
Common Stock Donald D. Sykora......................1,000 *
(1) Beneficial owner of a security includes any person who shares voting or
investment power with respect to or has the right to acquire beneficial
ownership of such security within 60 days based solely on information
provided to the Company.
(2) Includes 14,286 restricted shares and 300 shares owned by his minor
children for which Mr. Chadwick disclaims beneficial ownership.
(3) Includes 300 shares owned by Mr. Cano's spouse for which Mr. Cano disclaims
beneficial ownership.
* Indicates less than 1%
Security Ownership of Certain Beneficial Owners
Title Of Class Name and Address of Amount and Nature of Percent
Beneficial Owner Beneficial Owner(1) of Class
Common Stock Kennedy Capital Management Inc. 230,000 5.2%
10829 Olive Blvd.
St. Louis, MO 63141
Executive Compensation
Summary Compensation Table. The following table reflects compensation for
services to the Company for the years ended December 31, 1997. 1996 and 1995 of
(i) the Chief Executive Officer of the Company or (ii) the three most highly
compensated executive officers of the Company who were serving as executive
officers at the end of 1997 and whose total annual salary and bonus exceeded
$100,000 in 1997 (the "Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
Name and Principal Other Annual Restricted Underlying LTIP All Other
Bonus Compensation Stock
Position Year Salary (1) awards Options ($) Payouts($) Compensation
<S> <C> <C> <C> <C> <C> <C>
James H. Long 1997 $150,000 - - - - - -
CEO (2) 1996 $116,000 $35,000 - - - - -
1995 $40,800 $100,000 - - - - -
Donald R. Chadwick 1997 $98,458 $1,500 - $85,716 - - -
CFO (3)(4) 1996 $75,000 - - - - - -
1995 $75,000 - - - - - -
Frank Cano (4)(5) 1997 $78,125 $22,297 - - - -
President, Computer 1996 $73,500 $23,125 - - - -
Products 1995 $66,000 - - - - - -
William R. Hennessy 1997 $81,400 $73,880 - - - - -
President 1996 $74,618 $27,501 - - - - -
Stratasoft,
Inc. (6) 1995 - - - - - - -
<FN>
(1) Amounts exclude the value of perquisites and personal benefits because the
aggregate amount thereof did not exceed the lesser of $50,000 or 10% of the
Named Executive Officer's total annual salary and bonus.
(2) Company has made personal loans to Mr. Long from time to time. See -
"Certain Relationships and Related Transactions."
(3) As of December 31, 1997, Mr. Chadwick owned, in the aggregate, 14,286
shares of restricted Common Stock, with an aggregate value of $58,037.
These shares will fully vest on July 7, 1999. Dividends, if any, will not
be paid on these shares of restricted Common Stock.
(4) Includes $1,500 as consideration for execution of employment agreements. (5)
Includes compensation based upon attainment of certain performance goals. (6)
Includes compensation based upon gross profit realized.
</FN>
</TABLE>
Stock Options
Under the Company's 1996 Incentive Stock Option Plan shares of the Common
Stock may be granted to executive officers and other employees. As of December
31, 1997, 200,300 shares were reserved for outstanding options and 217,200 were
reserved and remained available for future grants pursuant to the Incentive
Stock Option Plan. During 1997, options to purchase 37,000 shares of Common
Stock were granted to the Named Executive Officers under the Incentive Stock
Option Plan.
Option Grants in Last Fiscal Year The following table provides information
concerning stock options granted to the Named Executive Officers during the year
ended December 31, 1997.
<TABLE>
<CAPTION>
Number of Percent of Potential Value Potential Value
at at
Shares of Total Assumed Annual Assumed Annual
Common Options Rate of Stock Rate of Stock
Stock Granted to Exercise Price Price
Underlying Employees or base Appreciation for Appreciation for
Options in Fiscal Price Expiration Option Term Option Term
Granted Year ($/share) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
James H. Long - - - - - -
Donald R. Chadwick 13,000 7.2% $6.00 07/07/07 $49,054 $124,312
Frank Cano 16,000 8.9% $6.00 07/07/07 $60,374 $152,999
William R. Hennessy 8,000 4.4% $6.00 07/07/07 $30,187 $76,500
</TABLE>
Option Exercises and Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-money
Shares Unexercised Options at
Acquired on Value Options at December 31, 1997
Named Executive Officer Exercise Realized December 31, 1997
<S> <C> <C> <C> <C> <C> <C>
James H. Long...................... 0 0 0 0
Donald R. Chadwick................. 0 0 13,000 0
Frank Cano......................... 0 0 16,000 0
William R. Hennessy................ 0 0 8,000 0
</TABLE>
No options were exercisable at December 31, 1997, none were exercised
during 1997 and there were no in-the-money unexercised options at December 31,
1997.
<PAGE>
Compensation Committee Report
The compensation committee of the Board of Directors (the "Committee")
has furnished the following report on executive compensation for fiscal 1997:
The Committee did not meet in 1997 as the members of the Committee
were appointed on July 29, 1997. The compensation of executive
officers during 1997 was continued under compensation arrangements
existing prior to the formation of the Committee. Those
compensation arrangements are described below:
Base compensation for the executive officers of the Company is intended
to afford a reasonable payment for the services rendered to the Company and the
responsibilities assumed by the executive officer relative to the expected
performance of the areas managed by the officers. With the exception of the
Chief Executive Officer and Chief Financial Officer, bonuses, which are
generally paid monthly, and stock-based awards are contingent upon attaining or
exceeding predetermined financial performance goals established at the beginning
of each fiscal year. The Chief Executive Officer and Chief Financial Officer may
receive bonuses or stock awards based on the overall performance of the Company
as well as the committee's subjective evaluation of their performance. Mr. Long,
Chief Executive Officer, received his base salary for the fiscal year ended
December 31, 1997. The amount of such compensation was determined by the terms
of his employment contract with the Company. No bonus or stock based awards were
granted to Mr. Long.
The Committee intends to meet during 1998 and establish policies with
respect to executive officer compensation.
The Compensation Committee
G. Chris Andersen
Richard D. Darrell
Donald D. Sykora
Compensation Committee Interlocks and Insider Participation
None of the members of the Committee, who are identified in the
preceding paragraph, has ever been an employee of the Company nor is there any
family relationship between the members of the Committee and any executive
officer.
Employment Agreements
Each of the executive officers of the Company has entered into an
employment agreement (collectively, the "Executive Employment Agreements") with
the Company. Under the terms of their respective agreements, Messrs. Long,
Chadwick, Cano and Hennessy are entitled to an annual base salary of $150,000,
$100,000, $75,000 and $81,408, respectively, plus other bonuses, the amounts and
payment of which are within the discretion of the Compensation Committee. The
Executive Employment Agreements may be terminated by the Company or by the
executive officer's resignation at any time by giving proper notice. The
Agreements generally provide that the executive officer will not, for the term
of his employment and for a period of either twelve or eighteen months,
whichever the case may be, following the end of such executive officer's
employment with the Company, compete with the Company, disclose any confidential
information of the Company, solicit any of the Company's employees or customers
or otherwise interfere with the relations of the Company.
Certain Transactions
The Company has from time to time made payments on behalf of Allstar
Equities, Inc. a Texas corporation ("Equities"), wholly-owned by James H. Long,
the Company's Chief Executive Officer, and on behalf of Mr. Long, personally for
taxes, property and equipment. Effective July 1, 1996, the Company and Mr. Long
entered into a promissory note to repay certain advances, which were
<PAGE>
approximately $173,000 at July 1, 1996, in equal annual installments of
principal and interest, from August 1997 through 2001. This note bears interest
at 9% per year. Also effective July 1, 1996, the Company and Equities entered
into a promissory note whereby Equities would repay the balance of amounts
advanced, which were approximately $387,000 at July 1, 1996, in monthly
installments of $6,500, including interest, from July 1996 through November 1998
with a final payment of approximately $275,000 due on December 1, 1998.This note
bears interest at 9% per year. At December 31, 1997, the Company's receivables
from Mr. Long and Equities amounted to approximately $434,000.
The Company subleases office space from Equities. In 1996, Allstar
renewed its office sublease with monthly rental payments of $31,500 in 1997 and
$32,000 in 1998, plus certain operating expenses through December 1998. Rental
expense under this agreement amounted to approximately $378,000 during the year
ended December 31, 1997.
In August 1996, the Company retained an independent real estate
consulting firm to conduct a survey of rental rates for facilities in Houston,
Texas that are comparable to its Houston headquarters facility. Based upon this
survey, and additional consultations with representatives of the real estate
consulting firm, the Company believes that the rental rate and other terms of
the Company's sublease from Allstar Equities are at least as favorable as those
that could be obtained in an arms-length transaction with an unaffiliated third
party.
<PAGE>
Stock Performance Graph
The following graph compares the performance of the Common Stock with
the NASDAQ n Stock Exchange ("AMEX") market value index and with two
Company-determined peer indices. The graph assumes that $100 was invested on
December 31, 1991, in the Common Stock and in each index and that any cash
dividends were reinvested. The Company has not declared any dividends during the
period covered by this graph.
EDGAR PRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Date Allstar NASDAQ Russell 2000
Industrial
7/7/97 100 100 100
9/30/97 110 117 115
12/31/97 68 110 111
This graph depicts the past performance of the Common Stock and in no
way should be used to predict future performance. The Company does not make or
endorse any predictions as to future share performance.
The foregoing price performance comparisons shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or under the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates this graph by reference, and
shall not otherwise be deemed filed under such acts.
Section 16(a) Beneficial Ownership Reporting Compliance
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as
amended, the Company's directors, executive officers, and shareholders who own
more than 10% the Common Stock, are required to file reports of stock ownership
and changes in ownership with the Securities and Exchange Commission and to
furnish the Company with copies of all such reports they file. The Company
believes that during 1997, all filing requirements applicable to its directors,
executive officers and greater than 10% shareholders were filed on a timely
basis.
Other Matters
The annual report to shareholders covering the year ended December 31,
1997, that was mailed concurrently with this Proxy Statement to each shareholder
entitled to vote at the Meeting.
Any shareholder who wishes to submit a proposal for action to be
included in the proxy statement and form of proxy relating to the Company's 1998
annual meeting of shareholders was required to submit such proposals to the
Company on or before April 19, 1998.
The cost of soliciting proxies, including the cost of reimbursing banks
and brokers for forwarding proxies and proxy statements to their principals, in
the accompanying form, will be borne by the Company. In addition to
solicitations by mail, a number of regular employees of the Company may, if
necessary to assure the presence of a quorum, solicit proxies in person or by
telephone.
The persons designated to vote shares covered by Board of Directors'
proxies intend to exercise their judgment in voting such shares on other matters
that may properly come before the Meeting. Management does not expect that any
matters other than those referred to in this proxy statement will be presented
for action at the Meeting.
By Order of the Board of Directors,
/s/ Donald R. Chadwick
Donald R. Chadwick, Secretary
April 30, 1998
<PAGE>
ALLSTAR SYSTEMS, INC.
This Proxy is Solicited on Behalf of The Board of Directors
The undersigned appoints SHABBIR K. ALI and FRANK CANO as proxies, or either of
them, each with power to appoint his substitute, to represent and to vote, as
designated below, all shares of common stock of Allstar Systems, Inc. held of
record by the undersigned on April 30, 1998 at the Annual Meeting of
Shareholders to be held on June 16, 1998 and at any adjournments thereof.
1. To elect a board of six (6) directors to serve until the next
annual meeting of shareholders or until their successors are
elected and qualified
/ /FOR all nominees listed below (except as marked to the contrary
below)
/ /WITHHOLD AUTHORITY to vote for all nominees below (Instruction:
To withhold authority for any nominee strike a line through the
nominee's name in the list below.)
NOMINEES:
James H. Long Donald R. Chadwick G. Chris Andersen
Richard D. Darrell Jack M. Johnson, Jr. Donald D. Sykora
2. To authorize the reduction of the number of authorized common
shares from 50,000,000 shares to 15,000,000 shares.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion, the proxies are authorized to vote upon such
other matters as may properly be presented to the annual meeting or
any adjournments or postponements thereof.
Unless otherwise specified on this proxy, the shares represented by this proxy
will be voted FOR proposals 1 and 2.
The undersigned hereby acknowledges receipt of notice of the meeting and proxy
statement.
Signature of Shareholder
NUMBER OF SHARES:
Dated: , 1998
Please sign exactly as name(s) appears on this proxy card. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title. If a corporation,
please sign in full corporate name by president or other authorized officer. If
a partnership, please sign in the partnership name by an authorized person.
PLEASE MARK, SIGN AND DATE AND RETURN THE PROXY CARD PROMPTLY IN TH ENCLOSED
ENVELOPE.
