ALLSTAR SYSTEMS, INC.
6401 Southwest Freeway
Houston, Texas 77074
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 24, 1999
----------------
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 Thursday, June 24, 1999, at 10:00 a.m., Houston time, and any
adjournment or postponement thereof, for the following purposes:
1. To elect a board of five (5) directors to serve until the next annual
meeting of stockholders or until their successors are elected and
qualified; and
2. To consider and act upon such other business as may properly be
presented at the annual meeting or any adjournments or postponements
thereof.
The Board of Directors has fixed the close of business on April 30,
1999 as the record date for the determination of stockholders entitled to notice
of, and to vote at, the annual meeting and any adjournments or postponements
thereof. A stockholders' list will be available commencing May 10, 1999, 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 postage-paid 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, 1999
<PAGE>
ALLSTAR SYSTEMS, INC.
6401 Southwest Freeway
Houston, Texas 77057
PROXY STATEMENT
This proxy statement and the enclosed proxy card are first being mailed
to the stockholders of Allstar Systems, Inc., a Delaware corporation (the
"Company"), commencing on or about April 30, 1999, 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 stockholders to be held at the
offices of the Company located at 6401 Southwest Freeway, Houston, Texas 77074
on Thursday, June 24, 1999, 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.
A stockholder may revoke a proxy by:
(1) delivering to the Company written notice of revocation,
(2) delivering to the Company a signed proxy of a later date, or
(3) 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, 1999, the record date for the determination of
stockholders entitled to vote at the Meeting, there were outstanding and
entitled to vote 4,168,925 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. Stockholders who are present at the
Meeting in person or by proxy and who abstain and proxies relating to shares
held in "street name" that are marked as "not voted" ("broker non-votes") will
be treated as present for purposes of determining whether a quorum is present.
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).
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. 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
<PAGE>
ELECTION OF DIRECTORS
General Information
At the Meeting, five (5) nominees are to be elected. If elected, each
director to hold office until the next annual meeting of stockholders or until
his successor is elected and qualifies.
On June 16, 1998 six directors were elected by the stockholders. Mr.
Donald Sykora passed away in September 1998 and Mr. G. Chris Andersen has
notified the Board of Directors that he declines stand for reelection. The Board
of Directors has adopted a resolution decreasing the size of the Board from six
to five. The persons named, as proxies, 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
stockholders with the exception of Mr. Mark T. Hilz. 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
that would prevent any nominee from serving.
Approval
The five nominees for election as directors at the Meeting who receive
the greatest number of votes cast for election by the holders of Shares present,
in person or by proxy, at the Meeting will be the duly elected directors of the
Company. Broker non-votes will not have any effect on the outcome of the
election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL FIVE NOMINEES TO THE COMPANY'S
BOARD OF DIRECTORS.
Nominees for Director
Set forth below is certain information regarding the nominees for
election to the Board of Directors:
Name, Age, Positions held, Period serving as Director, Principal occupation:
James H. Long - Chairman of the Board, President and Chief Executive Officer,
April, 1983 to present.
James H. Long, age 39, 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 and
Secretary, September 12, 1996 to present.
Donald R. Chadwick, age 55, 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.
Richard D. Darrell - Director, July 29, 1997 to present.
Richard D. Darrell, age 44, has been President of American Technology
Acquisition Corporation, a company specializing in mergers, acquisitions, and
divestitures of technology related companies, for the last five 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 60, 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 four 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.
Mark T. Hilz - Nominee for Director
Mark T. Hilz, age 40, is Chief Executive Officer of Nichecast, Inc., a privately
held internet services company. From 1990 to 1998, Mr. Hilz was founder,
President and Chief Executive Officer of PC Service Source, Inc., a
publicly-held distributor of personal computer hardware for repair industry.
Board and Committee Activity, Structure and Compensation
During 1998, the board of directors convened on four regularly
scheduled meetings and committees of the board held meetings as follows: Audit
Committee - two meetings; and Compensation Committee - one meeting. Each
director attended at least 75% of the meetings held during 1998 by the board and
all of the meetings of committees on which he served.
Each director who is not an employee of the Company is paid $1,000 for
each Board meeting attended and $500 for each 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 (the
"Director 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. 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).
During 1998, options to acquire 8,000 shares of Common Stock were granted under
the Director Plan.
The Board of Directors has two standing committees, an Audit Committee
and a Compensation Committee.
Audit Committee. The Audit Committee is currently composed Messrs.
Darrell and Johnson. During 1998, the Audit committee met twice. The functions
of the Audit Committee include:
1. reviewing the accounting principles and practices employed by the
Company;
2. meeting with the Company's independent auditors to review their
report on their examination of the Company's accounts, their
comments on the integral controls of the Company and the actions
taken by management in response to such comments; and
3. recommending annually to the Board of Directors the appointment
of the Company's independent auditors.
Compensation Committee. The Compensation Committee is currently
composed of Messrs. Andersen and Darrell. During 1998, the Compensation
Committee met once. The functions of the Compensation Committee include:
1. reviewing and making recommendations regarding the compensation
of the Company's officers, and
2. administrating and making awards under the Company's compensation
plans.
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, Information Technology Division, September, 1997 to
present.
Frank Cano, age 34, became the President, Computer Products Division for
the Company in September, 1997 and was responsible for the management of the
Computer Products Division. In January, 1999, Mr. Cano became President of the
Information Technology Division which includes the former Computer Products and
IT Services divisions. 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 52, 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.
William R. Hennessy - President, Stratasoft, Inc., September, 1996 to present.
William R. Hennessy, age 40, 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.
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.
<PAGE>
Security Ownership of Management
The following table sets forth, as of March 31, 1999 the number of shares
of Common Stock owned by each Director, nominee as a Director, each Named
Executive Officer, as defined in "Executive Compensation," and all Directors and
Officers as a group.
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 50.1%
Common Stock Donald R. Chadwick 44,586 (2) 1.1%
Common Stock Frank Cano 20,300 (3) *
Common Stock William R. Hennessy 5,000 (4) *
Common Stock Thomas N McCulley 5,300 (4) *
*
Common Stock All officers and 2,183,786 51.6%
directors as a group
(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 24,286 restricted shares and 300 shares owned by his minor
children for which Mr. Chadwick disclaims beneficial ownership.
(3) Includes 10,000 restricted shares and 300 shares owned by Mr. Cano's spouse
for which Mr. Cano disclaims beneficial ownership.
(4) Includes 5,000 restricted shares * 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 Of Class
Common Stock Jack B. Corey 267,500 6.4%
37102 FM 149, P.O. Box 525
Pinehurst, TX 77362
<PAGE>
Executive Compensation
Summary Compensation Table. The following table reflects compensation for
services to the Company for the years ended December 31, 1998. 1997 and 1996 of
(i) the Chief Executive Officer of the Company and (ii) the three most highly
compensated executive officers of the Company who were serving as executive
officers at the end of 1998 and whose total annual salary and bonus exceeded
$100,000 in 1998 (the "Named Executive Officers"). <TABLE> <CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
Name and Principal Number of
Other Annual Restricted Securities
Compensation Stock Underlying LTIP
Position Year Salary Bonus (1) Awards Options(8) Payouts ($)
<S> <C> <C> <C> <C> <C> <C> <C>
James H. Long (2) 1998 $150,000 $80,200 - - 2,400 -
Chief Executive 1997 $150,000 - - - -
Officer 1996 $116,000 35,000 - - -
Donald R. Chadwick(3)(5) 1998 $108,853 - $15,000 15,400 -
Chief Financial 1997 $98,458 1,500 - $85,716 13,000 -
Officer 1996 $75,000 - - - - -
Frank Cano (4)(5)(6) 1998 $96,875 $13,051 $10,000 $15,000 21,600 -
President, Information 1997 $78,125 $22,297 - - 16,000 -
Technology 1996 $73,500 $23,125 - - - -
William R. Hennessy 1998 $84,637 $3,000 - $ 7,500 8,000 -
President Stratasoft, 1997 $81,400 $73,880 - - 8,000 -
Inc. (7) 1996 $74,618 $27,501 - - - -
<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 Transactions."
(3) As of December 31, 1998, Mr. Chadwick owned, in the aggregate, 24,286
shares of restricted Common Stock, with an aggregate value of $45,536. Of
those shares, 14,286 will fully vest on July 7, 1999 and the remainder will
vest at the rate of 2,000 shares per year for five years. Dividends, if
any, will not be paid on these shares of restricted Common Stock.
(4) As of December 31, 1998, Mr. Cano owned 10,000 shares of restricted stock
with an aggregate value of $18,750. Those shares will vest ratably over
five years. Dividends, if any, will not be paid on these shares of
restricted Common Stock.
(5) Includes $1,500 as consideration for execution of employment agreements.
(6) Includes compensation based upon attainment of certain performance goals.
(7) Includes compensation based upon gross profit realized.
(8) Number of securities underlying options shown for 1998 includes options
originally issued in 1997 and repriced during 1998 and options newly issued
in 1998.
</FN>
</TABLE>
Stock Options
Under the Company's 1996 Incentive Stock Option Plan (the "Incentive Stock
Option Plan") options to purchase shares of the Common Stock may be granted to
executive officers and other employees. As of December 31, 1998, 268,350 shares
were reserved for issuance upon exercise of outstanding options and 149,150 were
reserved and remained available for future grants pursuant to the Incentive
Stock Option Plan. During 1998, options to purchase 10,400 shares of Common
Stock were granted to the Named Executive Officers under the Incentive Stock
Option Plan and 37,000 options to purchase common stock, issued in the prior
year, were canceled and reissued at an exercise price of $1.50 per share.
Option Grants in Last Fiscal Year
The following table provides information concerning stock options granted
to the Named Executive Officers during the year ended December 31, 1998.
<TABLE>
<CAPTION>
Potential Potential
Realizable Realizable
Number of Percent of Value at Value at
Shares of Total Assumed Annual Assumed Annual
Common Options Rate of Stock Rate of Stock
Stock Granted to Exercise Price Price
Underlying Employees or base Appreciation for Appreciation for
Options in Fiscal Price Expiration Option Term Option Term
Granted Year ($/share) Date 5% (1) 10% (1)
<S> <C> <C> <C> <C> <C> <C>
James H. Long 2,400 0.6% $1.50 10/01/08 $5,856 $9,336
Donald R. Chadwick 2,400 0.6% $1.50 10/01/08 $5,856 $9,336
Frank Cano 5,600 1.4% $1.50 10/01/08 $13,664 $21,784
<FN>
(1) Actual gains, if any, on stock options exercises are dependent on future
performance of the Common Stock. No appreciation in the price of the Common
Stock will result in no gain.
</FN>
</TABLE>
Repricing of Options in Last Fiscal Year
The following table provides information concerning stock options repriced
to all Executive Officers during the year ended December 31, 1998.
<TABLE> <CAPTION>
Number of Length of
Securities Market Exercise Original
Underlying Price of Price of Option
Options Stock at Stock at New Term
Repriced Time of Time of Exercise Remaining
Repricing In Fiscal Repricing Repricing Price At Date of
Name Date Year ($/share) ($/share) ($/share) Repricing
<S> <C> <C> <C> <C> <C> <C>
Donald R. Chadwick 10/01/98 13,000 $1.50 $6.00 $1.50 8.8 years
Frank Cano 10/01/98 16,000 1.50 6.00 1.50 8.8 years
William R. Hennessy 10/01/98 8,000 1.50 6.00 1.50 8.8 years
Thomas n. McCulley 10/01/98 8,000 1.50 6.00 1.50 8.8 years
</TABLE>
Aggregated Option Exercises and Year-End Option Values
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying In-the-money
Shares Unexercised Options at
Named Executive Acquired on Value Options at December 31, 1998
Officer Exercise Realized December 31, 1998
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
James H. Long 0 0 0 2,400 $ 0 $ 900
Donald R. Chadwick 0 0 2,600 12,800 975 4,800
Frank Cano 0 0 3,200 18,400 1,200 6,900
William R. Hennessy 0 0 1,600 6,400 600 2,400
</TABLE>
The Named officers held 7,400 options that were exercisable at December 31,
1998, none were exercised during 1998 and there were 7,400 in-the-money
unexercised options at December 31, 1998.
<PAGE>
Compensation Committee Report
The compensation committee of the Board of Directors (the "Committee") has
furnished the following report on executive compensation for fiscal 1998:
The Committee met on May 5, 1998. The compensation of executive
officers during 1998 was continued under compensation arrangements
existing prior to the formation of the Committee except that equity
based compensation would be enhanced to further align the interests of
the officers of the Company with those of the stockholders. 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, 1998. The amount of such compensation was determined by the terms
of his employment contract with the Company. A bonus in the amount of $80,200
was granted to Mr. Long in 1999 as compensation for the year ended December 31,
1998.
The stock options issued to officers in 1998 were issued relative to the
Company's 1997 performance. During the 1998 the Board, as a whole, determined
that due to the significant decline in the price of the Common Stock the options
issued in 1997 and 1998 no longer represented a significant incentive to
management and other key employees of the Company due to the decrease in the
value of the Company's stock. It was further determined that the loss of key
management and/or its technical personnel would not be conducive to regaining a
higher value for its shares. Therefore, in order to increase the incentive for
employees to remain with the Company and to induce enhanced performance from the
Company's employees, it was determined that all previously issued options, all
of which were "out of the money," would be priced to the then current market
value of the Company's shares.
The Committee will be reformed after the annual meeting of stockholders
with all non-employee directors as members of the committee. The committee
intends to meet during 1999 and review established policies with respect to
executive officer compensation.
THE COMPENSATION COMMITTEE
G. Chris Andersen
Richard D. Darrell
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
Executive Employment 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"), which is 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 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. Effective on December 1, 1998 the note
payable by Equities was extended for an additional twelve months with
installments of $6,500 per month and a final payment due December 1, 1999. At
December 31, 1998, the Company's receivables from Mr. Long and Equities amounted
to approximately $373,000.
The Company subleases office space from Equities. In 1996, Allstar renewed
its office sublease with monthly rental payments of $31,500 in 1997 and $32,500
in 1998, plus certain operating expenses through December 1998. Effective
December 1, 1998 the sublease was extended through December 31, 1999 Rental
expense under this agreement amounted to approximately $390,000 during the year
ended December 31, 1998.
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.
Stock Performance Graph
shapeType75fFlipH0fFlipV0hspNext1041pib[GRAPHIC OMITTED]
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 stockholders who own
more than 10% the Common Stock, are required to file reports of stock ownership
and changes in ownership of common stock with the Securities and Exchange
Commission and to furnish the Company with copies of all such reports they file.
The Company believes that during 1998 the below listed Directors and officers
did not comply with the 16(a) filing requirements and failed to report the
receipt of options to purchase the Common Stock and failed to report the
cancellation and reissuance of options to purchase the Common at a lower
exercise price.
The Company advised each officer and director that the Company would file
the required forms for transactions relating to equity compensation under the
Company's incentive stock options plans but failed to do so with respect to
options grants and restricted stock awards during the fiscal year ended December
31, 1998.
<TABLE>
<CAPTION>
Person failing to file Number of Number of
reports, on a timely Form Event Securities Transaction
basis as required by Not Requiring or Not
Section 16(a) during most Filed Report Underlying Reported or
recent fiscal years Securities Reported
Late
<S> <C> <C> <C> <C>
Shabbir K. Ali (O) Form 5 Restricted stock and options issued, 14,700 3
options repriced
G. Chris Andersen(D) Form 5 Options issued, options repriced 7,000 2
Frank Cano(O) Form 5 Restricted stock and options issued, 21,600 3
options repriced
Donald R. Chadwick(D)(O) Form 5 Restricted stock and options issued, 10,000 3
options repriced
Richard D. Darrell(D) Form 5 Options issued, options repriced 7,000 2
William R. Hennessy(O) Form 5 Restricted stock and options issued, 8,000 3
options repriced
Jack M. Johnson(D) Form 5 Options issued, options repriced 7,000 2
James H. Long (D)(O) Form 5 Options issued 2,400 1
Thomas N. McCulley (O) Form 5 Restricted stock and options issued, 10,400 3
options repriced
Donald D. Sykora (D) Form 5 Options issued, options repriced 7,000 2
Michael A. Torigian (O) Form 5 Restricted stock and options issued, 8,000 3
options repriced
<FN>
(D) - Director
(O) - Officer
</FN>
</TABLE>
Distribution of Annual Reports
The annual report to stockholders covering the year ended December 31,
1998, that was mailed concurrently with this Proxy Statement to each stockholder
entitled to vote at the Meeting.
Stockholder Proposals
Any stockholder 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 stockholders was required to submit such proposals to the Company on
or before April 25, 1998.
Other Matters
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, for which
they will receive no additional compensation. Brokerage houses, banks and other
custodians, nominees and fiduciaries will be reimbursed for their customary
out-of-pocket and reasonable expenses incurred in forwarding proxy materials to
beneficial owners.
The persons designated as proxies intend to exercise their judgment in
voting such shares on other matters that may properly come before the Meeting.
Management does not know of any matters other than those referred to in this
proxy statement that 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, 1999
<PAGE>
ALLSTAR SYSTEMS, INC.
This Proxy is Solicited on Behalf of The Board of Directors
The undersigned appoints THOMAS N. MCCULLEY 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, 1999 at the Annual Meeting of
Stockholders to be held on June 24, 1999 and at any adjournments thereof.
1. To elect a board of five (5) directors to serve until the next annual
meeting of stockholders 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
Richard D. Darrell Jack M. Johnson, Jr.
Mark T. Hilz
2. 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 proposal 1.
The undersigned hereby acknowledges receipt of notice of the meeting and proxy
statement.
Signature of Stockholder
NUMBER OF SHARES:
Dated: __________________, 1999
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 THE ENCLOSED
ENVELOPE.
