<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
TRANSCRYPT INTERNATIONAL, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
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[ ] 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
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> 2
TRANSCRYPT INTERNATIONAL, INC.
4800 NW 1ST STREET
LINCOLN, NEBRASKA 68521
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 6, 1997
TO EACH STOCKHOLDER OF TRANSCRYPT INTERNATIONAL, INC.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Stockholders (the
"Meeting") of Transcrypt International, Inc. (the "Company"), which will be held
on Tuesday, May 6, 1997, at 10:00 o'clock a.m., Central Time, at the Company's
offices located at 4800 NW 1st Street, Lincoln, Nebraska 68521, for the
following purposes, all as set forth in the attached Proxy Statement:
(1) To elect two directors to serve until the election of directors in 2000
and until their respective successors are elected and have qualified.
The nominees of the Board of Directors are Thomas R. Larsen and Winston
J. Wade, each of whom is currently a director of the Company;
(2) To consider and act on the ratification of Coopers & Lybrand L.L.P. as
independent public accountants for the Company for its fiscal year
ended December 31, 1997; and
(3) To transact such other business as may properly come before the Meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on March 12, 1997 as
the record date for the determination of stockholders entitled to receive notice
of and to vote at the Meeting and any and all adjournments thereof.
The Bylaws of the Company provide for the nomination of directors at the
Meeting in the following manner:
Section 7. STOCKHOLDER PROPOSALS AND NOMINATIONS OF DIRECTORS. Nominations
for election to the Board of Directors of the Corporation at a meeting of the
stockholders may be made by the Board of Directors, or on behalf of the Board of
Directors by a Nominating Committee appointed by the Board of Directors, or by
any stockholder of the Corporation entitled to vote for the election of
directors at such meeting. Any nominations, other than those made by or on
behalf of the Board of Directors, and any proposal by any stockholder to
transact any corporate business . . . shall be made by notice in writing and
mailed by certified mail to the Secretary of the Corporation and . . . received
no later than 35 days prior to the date of the annual meeting; provided,
however, that if less than 35 days' notice of a meeting of stockholders is given
to the stockholders, such notice of proposed business or nomination by such
stockholder shall have been made or delivered to the Secretary of the
Corporation not later than the close of business on the seventh day following
the day on which the notice of a meeting was mailed. A notice of nominations by
stockholders shall set forth as to each proposed nominee who is not an incumbent
director (i) the name, age, business address and, if known, residence address of
each nominee proposed in such notice, (ii) the principal occupation or
employment of each such nominee, (iii) the number of shares of stock of the
Corporation which are beneficially owned by each such nominee and the nominating
stockholder and (iv) any other information concerning the nominee that must be
disclosed regarding nominees in proxy solicitations pursuant to Section 14(a) of
the Securities Exchange Act of 1934, as amended, and the rules under such
section.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, WHETHER OR NOT YOU EXPECT TO ATTEND, YOU ARE URGED TO READ THE ATTACHED
PROXY STATEMENT AND THEN COMPLETE, SIGN AND DATE THE
<PAGE> 3
ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE AS
PROMPTLY AS POSSIBLE. IF YOU RECEIVED MORE THAN ONE PROXY CARD BECAUSE YOU OWN
SHARES REGISTERED IN DIFFERENT NAMES OR AT DIFFERENT ADDRESSES, EACH PROXY CARD
SHOULD BE SEPARATELY COMPLETED AND RETURNED. IF YOU ATTEND THE MEETING AND WISH
TO VOTE IN PERSON, YOU MAY WITHDRAW YOUR PROXY. THE PROXY MAY BE REVOKED AT ANY
TIME PRIOR TO ITS EXERCISE.
IN ORDER TO FACILITATE THE PROVIDING OF ADEQUATE ACCOMMODATIONS, PLEASE
INDICATE ON THE PROXY WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING.
By Order of the Board of Directors
Rebecca L. Schultz
Corporate Secretary
Dated: April 4, 1997
<PAGE> 4
TRANSCRYPT INTERNATIONAL, INC.
4800 NW 1ST STREET
LINCOLN, NEBRASKA 68521
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 6, 1997
This proxy statement is furnished to stockholders of Transcrypt
International, Inc. (the "Company"), in connection with the solicitation by the
Board of Directors of the Company of proxies for use at the Company's Annual
Meeting of Stockholders (the "Meeting") to be held on Tuesday, May 6, 1997, and
at any and all adjournments thereof, for the purposes set forth in the foregoing
notice of the Meeting.
This Proxy Statement and the enclosed proxy card are first being mailed to
stockholders on or about April 4, 1997.
YOUR VOTE IS IMPORTANT. PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND MAIL IT PROMPTLY IN THE RETURN ENVELOPE PROVIDED.
THE DATE OF THIS PROXY STATEMENT IS APRIL 4, 1997.
<PAGE> 5
INTRODUCTION
MATTERS TO BE CONSIDERED
At the Meeting, the stockholders of the Company will vote upon (i) the
election of two directors; (ii) the ratification of the selection of Coopers &
Lybrand L.L.P. as independent public accountants for the Company for its fiscal
year ended December 31, 1997; and (iii) such other business as may properly come
before the Meeting or any adjournment thereof. The Board of Directors does not
know of any matter to be brought before the Meeting other than those described
in this Proxy Statement.
VOTING RIGHTS AND VOTES REQUIRED
The Board of Directors has fixed March 12, 1997 as the date (the "Record
Date") for the determination of stockholders entitled to notice of, and to vote
at, the Meeting. At the close of business on the Record Date, there were
outstanding 9,283,078 shares of common stock, $0.01 par value per share, of the
Company (the "Common Stock"), of which 9,065,536 shares were entitled to vote.
A majority of the outstanding shares of Common Stock entitled to vote at
the Meeting must be present in person or represented by proxy at the Meeting in
order to constitute a quorum for the transaction of business. Abstentions and
broker non-votes will be treated as shares present and entitled to vote for
purposes of determining the presence of a quorum. The holder of record of each
share of Common Stock entitled to vote at the Meeting will have one vote for
each share so held on each matter to be presented at the Meeting.
In the election of directors, the two candidates receiving the highest
number of votes at the Meeting will be elected as directors. In order to approve
the ratification of the selection of Coopers & Lybrand L.L.P. as independent
public accountants for the Company, the affirmative vote of the holders of a
majority of the Common Stock present in person or represented by proxy and
properly voting at the Meeting will be required. For the purpose of determining
whether such proposals have received the necessary votes to be approved, neither
abstentions nor broker non-votes will be included in the vote totals, with the
result that abstentions and broker non-votes will have no effect.
In the event that the votes necessary to approve any of the foregoing
proposals have not been obtained by the date of the Meeting or a quorum is not
present at the Meeting, the Chairman of the Meeting may, in his discretion,
adjourn the Meeting from time-to-time to permit the solicitation of additional
proxies by the Board of Directors.
SOLICITATION AND VOTING OF PROXIES
In connection with the solicitation by the Board of Directors of proxies
for use at the Meeting, the Board of Directors has designated John T. Connor and
Terry L. Fairfield as proxies. Common Stock represented by all properly executed
proxies will be voted at the Meeting in accordance with the instructions
specified thereon. If no instructions are specified, Common Stock represented by
any properly executed proxy will be voted "FOR" the election of each of the
nominees listed below under "Election of Directors," and "FOR" the ratification
of the selection of Coopers & Lybrand L.L.P. as independent public accountants
for the Company. The Board of Directors is not aware of any other matters that
will come before the Meeting other than as described above.
A stockholder may revoke his or her proxy at any time prior to its exercise
by filing with the Secretary of the Company an instrument of revocation or a
valid proxy bearing a later date, or by attending the Meeting and requesting
that such proxy be revoked. Attendance at the Meeting will not, in itself,
constitute revocation of a previously granted proxy.
The expense of this proxy solicitation will be paid by the Company. To the
extent necessary to assure sufficient representation at the Meeting, proxies may
be solicited by any appropriate means by directors, officers and other employees
of the Company, who will receive no additional compensation therefor. The
Company will reimburse persons holding Common Stock in their names or the names
of their nominees but not owning such Common Stock beneficially (such as
brokerage houses, banks and other fiduciaries) for the expense of forwarding
soliciting material to their principals.
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<PAGE> 6
SECURITY OWNERSHIP OF MANAGEMENT
AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's Common Stock as of
December 31, 1996 by (i) each person (or group of affiliated persons) known by
the Company to be the beneficial owner of more than five percent of the
Company's Common Stock, (ii) each director, (iii) each Named Executive Officer
(as defined below) and (iv) all executive officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENT OF
NAME OF BENEFICIAL OWNER OWNED CLASS(1)
------------------------------------------------------- ------------ ----------
<S> <C> <C>
John T. Connor(2)...................................... 1,945,785 20.1%
2504 Ridge Road
Lincoln, Nebraska 68512
Janice K. Connor(3).................................... 1,556,528 16.8
2504 Ridge Road
Lincoln, Nebraska 68512
Farm Bureau Insurance Company.......................... 1,154,168 12.4
5400 University Avenue
Des Moines, Iowa 50265
University of Nebraska Foundation...................... 1,056,622 11.4
1111 Lincoln Mall, Suite 200
P.O. Box 82555
Lincoln, Nebraska 68501-2555
First Commerce Bancshares, Inc.(4)..................... 681,692 7.3
NBC Center, 3rd Floor
13th & O Streets
Lincoln, Nebraska 68508
Estate of Harold S. Myers(5)........................... 791,281 8.5
635 South 14th Street, Suite 320
Lincoln, Nebraska 68508
Terry L. Fairfield(6)(7)............................... 1,000 *
Jeffery L. Fuller(6)................................... 163,829 1.7
Thomas E. Henning(8)................................... 1,000 *
Thomas R. Larsen(6).................................... 1,000 *
Thomas C. Smith(6)..................................... 1,000 *
Thomas R. Thomsen(6)................................... 7,553 *
Winston J. Wade(6)(9).................................. 7,553 *
C. Eric Baumann(6)..................................... 32,766 *
Joel K. Young(6)....................................... 32,766 *
All executive officers and directors as a group (11
persons)............................................. 2,227,018 24.0%
</TABLE>
- - ---------------
* Less than 1%
(1) Shares of Common Stock issuable upon exercise of stock options currently
exercisable, or exercisable within 60 days of March 17, 1997, are deemed
outstanding for computing the percentage of the person or entity holding
such securities but are not deemed outstanding for computing the percentage
of any other person or entity. Except as indicated by footnote, and subject
to community property laws where applicable, the persons named in the table
above have sole voting and investment power, if any, with respect to all
shares of Common Stock shown as beneficially owned by them.
(2) Includes 714,033 shares held of record by Janice K. Connor and 95,358 shares
held by or in trust for other members of the Connor family, of which Mr.
Connor disclaims beneficial ownership, and 389,257 shares issuable upon the
exercise of stock options that are exercisable within 60 days of March 17,
1997.
3
<PAGE> 7
(3) Includes 747,137 shares held of record by John T. Connor and 95,358 shares
held by or in trust for other members of the Connor family, of which Mrs.
Connor disclaims beneficial ownership.
(4) Shares of Common Stock owned by First Commerce Bancshares, Inc. include
217,542 shares of Non-Voting Common Stock. Pursuant to the Company's
Certificate of Incorporation, upon the disposition of the Non-Voting Common
Stock by First Commerce Bancshares, Inc., voting rights will be restored to
these shares.
(5) Mr. Myers, prior to his death on December 26, 1996, was a director and
principal stockholder of the Company. The amounts indicated include 391,299
shares held by the Estate of Harold S. Myers, 71,949 shares held by the
Harold S. Myers III Trust, for which Mr. Myers served as the Trustee, and
328,033 shares held by or in trust for members of the Myers family.
(6) Consists of shares issuable upon the exercise of stock options that are
exercisable within 60 days of March 17, 1997.
(7) Does not include shares held by the University of Nebraska Foundation, of
which Mr. Fairfield serves as President and Chief Executive Officer.
(8) Does not include 340,972 shares held by The Security Mutual Life Insurance
Company, of which Mr. Henning serves as President, Chief Executive Officer
and director.
(9) Does not include shares held by the University of Nebraska Foundation, of
which Mr. Wade serves as director.
ELECTION OF DIRECTORS
The Board of Directors consists of eight members, and is divided into three
classes designated as Class I (consisting of two members), Class II (consisting
of three members) and Class III (consisting of three members). The members of
Class I, whose terms of office expire in 1997, are Thomas R. Larsen and Winston
J. Wade. Messrs. Larsen and Wade have been nominated for re-election to terms
expiring in 2000. The members of Class II, whose terms of office expires in
1998, are Jeffery L. Fuller, Thomas R. Thomsen and Thomas C. Smith. The members
of Class III, whose terms of office expires in 1999, are John T. Connor, Terry
L. Fairfield and Thomas E. Henning. Each director's term of office expires at
the Annual Meeting of Stockholders in the year in which his term expires and
when his successor is elected and has qualified.
NOMINEES FOR ELECTION
The Company's Bylaws provide that the Board of Directors or a nominating
committee of the Board may select management nominees for election as directors.
The Board of Directors will consider nominees recommended by stockholders, if
such recommendations are made in writing and are delivered to the Secretary of
the Company in accordance with the procedures for stockholder nominations
described in the Company's Bylaws.
The nominees of the Board of Directors for election of Class I directors at
the Meeting are Thomas R. Larsen and Winston J. Wade. Each such nominee is an
incumbent director and has consented to being named as a nominee for election of
directors in this Proxy Statement and to serving as a director if elected.
Unless otherwise indicated on a proxy, each proxy will be voted for the election
of such individuals to serve until the annual meeting of stockholders to be held
in 2000 and until their successors are elected and have qualified.
Although the Board of Directors does not know of any reason why any nominee
will be unavailable for election, in the event any nominee should be unavailable
at the time of the Meeting, the proxies may be voted for a substitute nominee
selected by the Board of Directors.
THE BOARD OF DIRECTORS HAS APPROVED THE ELECTION OF THE NOMINEES NAMED ABOVE AND
RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF THEM AS A DIRECTOR OF THE COMPANY.
4
<PAGE> 8
The following sets forth, as of March 17, 1997, certain information
concerning each of the individuals nominated for election as a director (Class
I) at the Meeting:
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- - ------------------------- ------------------------------------------------------------------
<S> <C>
Thomas R. Larsen (52) Mr. Larsen has served as a director of the Company since October
1995. Mr. Larsen has been a certified public accountant since 1975
and is currently President and Chief Executive Officer of Larsen,
Bryant & Porter, CPAs, P.C., a public accounting, tax and
consulting firm. Mr. Larsen is also a director of Smith Hayes
Trust, Inc., a mutual fund management company.
Winston J. Wade (58) Mr. Wade has served as a director of the Company since July 1996.
Since February 1996, he has served as managing director of BPL
U.S. West Cellular. From November 1990 to February 1996, he held
numerous management positions with U.S. West Communications,
serving most recently as Vice President of Network Operations. Mr.
Wade also serves as a director of the University of Nebraska
Foundation.
</TABLE>
The following sets forth, as of March 17, 1997, certain information
concerning each of the Company's Class II directors:
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- - ------------------------- ------------------------------------------------------------------
<S> <C>
Jeffrey L. Fuller (43) Mr. Fuller has served as the Company's President and Chief
Operating Officer since July 1995 and has served as a director
since July 1996. Mr. Fuller has served for over 20 years in
managerial positions at various wireless communications product
manufacturers, including Motorola, General Electric Mobile Radio
Communications, Inc. and Icom America, Inc. From January 1990 to
July 1995, he held several management positions with E.F. Johnson
Co., a manufacturer and distributor of wireless communication
products, serving most recently as Vice President North American
Sales and executive officer in charge of the North American
business unit.
Thomas R. Thomsen (61) Mr. Thomsen has served as a director of the Company since July
1995. Since August 1995, he has served as Chairman of the Board of
Directors and Chief Executive Officer of Lithium Technology
Corporation ("LTC"), a public company that manufactures
rechargeable batteries. Mr. Thomsen has served as a director of
LTC since February 1995. In January 1990, Mr. Thomsen retired as
President of AT&T Technologies, after holding numerous senior
management positions including director of Sandia Labs, Lucent
Technologies and Oliveti Inc. Mr. Thomsen also serves as a
director of the University of Nebraska Technology Park.
Thomas C. Smith (51) Mr. Smith has served as a director of the Company since October
1995 and was originally appointed director as a representative of
the Farm Bureau Insurance Company, a principal stockholder of the
Company. Since December 1985, he has been Chairman of the Board of
Directors and President of Consolidated Investment Corporation,
the parent company of Smith Hayes Financial Services Corporation,
a financial services firm, and Conley Smith Inc., a registered
investment advisor. Mr. Smith is the chairman of both subsidiaries
and President of Smith Hayes Financial Services Corporation. He is
also a director of the Nebraska Research and Development Authority
and First Mid-America Finance Corporation.
</TABLE>
5
<PAGE> 9
The following sets forth, as of March 17, 1997, certain information
concerning each of the Company's Class III directors:
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- - ------------------------- ------------------------------------------------------------------
<S> <C>
John T. Connor (53) Mr. Connor led the investor group which purchased the Company from
its founder in 1991. Mr. Connor has served as Chief Executive
Officer and Chairman of the Board of Directors of the Company
since December 1991. From 1969 to June 1991, he held numerous
senior management positions with Deloitte & Touche LLP, an
international accounting, tax and consulting firm, and its
predecessor firm, Touche Ross & Co., including National Director
of Tax, Associate Managing Partner, Mid-Atlantic Regional Managing
Partner and a member of the management committee and Board of
Directors.
Terry L. Fairfield (48) Mr. Fairfield has served as a director of the Company since
December 1991. Since 1987, he has served as President and Chief
Executive Officer of the University of Nebraska Foundation, a
nonprofit corporation. Mr. Fairfield also serves as a director of
Aliant Communications Inc., a Nasdaq NMS listed, public
telecommunications company.
Thomas E. Henning (44) Mr. Henning was appointed to serve the remaining term as director
for Harold S. Myers, a former director of the Company who passed
away in December 1996. Mr. Henning previously served as director
of the Company or its predecessor from February 1993 through July
1996. Mr. Henning has, since February 1995, served as President,
Chief Executive Officer and director of The Security Mutual Life
Insurance Company, a life insurance, annuity and pension products
company, and also serves as a director of National Bank of
Commerce, a subsidiary of First Commerce Bancshares, Inc., a
publicly-held, exchange-listed bank holding company.
</TABLE>
The following sets forth, as of March 17, 1997, certain information
concerning each of the Company's executive officers, other than Messrs. Connor
and Fuller:
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION AND BUSINESS EXPERIENCE
- - ------------------------- ------------------------------------------------------------------
<S> <C>
C. Eric Baumann (31) Mr. Baumann has served as the Company's Vice President of Sales
and Distribution since November 1996, and from January to November
1996 served as Vice President of Sales and Marketing. From
November 1995 to January 1996, he served as the Vice President of
Sales. From January 1990 to November 1995, he held numerous
positions at E.F. Johnson Co., a manufacturer and distributor of
wireless communication products, serving most recently as Director
North American Sales and Telemetry.
Randal P. Hansen (34) Mr. Hansen joined the Company as Vice President of Finance and
Chief Financial Officer in August 1996. From January 1986 to
August 1996, he held numerous positions with KPMG Peat Marwick
LLP, an international public accounting firm, serving most
recently as a Senior Audit Manager. Mr. Hansen is a licensed
Certified Public Accountant.
Michael P. Wallace (35) Mr. Wallace joined the Company as Vice President of Operations in
February 1994. From December 1989 to February 1994, he served as
the Electric Card Assembly and Test Engineering Manager of
Scientific Atlanta Inc., a manufacturer and distributor of
broadband communications products.
Joel K. Young (32) Mr. Young joined the Company as Vice President of Engineering in
February 1996. From 1986 to January 1996, he held numerous
positions with the former AT&T Bell Laboratories, a
telecommunications research company, and specialized in signaling,
network implementation and voice processing. He served most
recently as District Manager, AT&T Business Communication
Services. Mr. Young has been awarded five patents on various
telecommunications systems and techniques.
</TABLE>
6
<PAGE> 10
INFORMATION REGARDING THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors has four committees, an Audit Committee, a
Compensation Committee, a Nominating Committee and an Executive Committee. The
Audit Committee, comprised of Messrs. Henning, Smith and Larsen, oversees
actions taken by the Company's independent auditors and reviews the Company's
internal accounting controls. The Compensation Committee, comprised of Messrs.
Fairfield, Thomsen and Wade, is responsible for determining the Company's
compensation policies and administering the Company's compensation plans and
1996 Stock Incentive Plan. The Compensation Committee also reviews the
compensation levels of the Company's employees and makes recommendations to the
Board regarding changes in compensation. The Executive Committee, comprised of
Messrs. Connor, Fuller and Fairfield, has the power to act on behalf of the
Board of Directors on matters pertaining to the day-to-day operations of the
Company. The Nominating Committee, comprised of Messrs. Fairfield, Connor and
Thomsen, recommends to the Board of Directors nominees for election to the
Board.
The Compensation Committee of the Board of Directors consists of Messrs.
Fairfield, Thomsen and Wade, none of whom has been or is an officer or employee
of the Company. No interlocking relationship exists between any member of the
Compensation Committee and any member of any other company's board of directors
or compensation committee.
The members of the Company's Board of Directors are reimbursed for
out-of-pocket and travel expenses incurred in attending Board meetings. The
Company pays to each director who is not employed by the Company, subject to a
limitation of $5,000 plus expenses per calendar year, $1,000 for each board
meeting attended and $400 for each committee meeting attended.
During 1996, the Board of Directors held eleven meetings. Each director
attended at least 75% of the aggregate meetings of the Board of Directors and
the committees of which he was a member in 1996.
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<PAGE> 11
EXECUTIVE COMPENSATION
The following table shows the compensation earned by or paid to, for
services rendered in 1996 and 1995 (or for such shorter period that the
individual was employed by the Company), the Company's Chief Executive Officer
and the other executive officers who received cash compensation in excess of
$100,000 in such years (collectively, the "Named Executive Officers"). No other
executive officer of the Company received salary and bonus in excess of $100,000
during 1996.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM ALL OTHER(7)
---------------------------------------- COMPENSATION COMPENSATION
NAME AND PRINCIPAL OTHER ------------ ------------
POSITIONS YEAR SALARY BONUS(1) ANNUAL OPTIONS #
- - ------------------------------------- ---- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
John T. Connor 1996 $172,885 $20,000 $210,000(2) -- $ 8,716
President and 1995 169,808 86,830 -- -- 4,760
Chief Executive Officer
Jeffery L. Fuller 1996 $156,923 $20,000 -- -- $ 1,440
President, Chief 1995 66,346(3) 14,840 -- 163,829 25,066
Operating Officer and Director
C. Eric Baumann 1996 $103,000 $ -- $ 58,254(5) -- $ 14,705
Vice President of Sales 1995 15,054(4) 3,168 154(5) 32,766 --
and Distribution
Joel K. Young 1996 $ 88,461(6) $ -- -- 32,766 $ 36,852
Vice President
of Engineering
</TABLE>
- - ---------------
(1) Bonuses listed were earned during indicated year and paid in the following
year.
(2) Represents remaining amount due to Mr. Connor for deferred fees payable
under his employment contract.
(3) Represents salary at the rate of $150,000 per year beginning in July 1995.
(4) Represents salary at the rate of $103,000 per year beginning in November
1995.
(5) Represents sales commissions earned by Mr. Baumann.
(6) Represents salary at the rate of $100,000 per year beginning in February
1996.
(7) Represents contributions to the Company's 401(k) Profit Sharing & Savings
Plan, moving allowances and personal use of Company-owned automobiles.
1996 STOCK INCENTIVE PLAN
Effective as of September 6, 1996, the Company established the 1996 Stock
Incentive Plan (the "Plan"), in order to enable the Company to attract, retain
and motivate its employees, non-employee directors and independent contractors
by providing for or increasing the proprietary interests of such employees, non-
employee directors and independent contractors in the Company. The Company's
stockholders approved the Plan on September 18, 1996. Any person, including any
director of the Company, who is an employee of the Company or any of its
subsidiaries (an "Employee"), and any nonemployee director (a "Non-Employee
Director") or independent contractor of the Company (an "Independent
Contractor," or, together with the Employees and the Non-Employee Directors, the
"Eligible Persons") is eligible to be considered for the issuance of (i) shares
of Common Stock, $0.01 par value per share, of the Company or of any other class
of security of the Company which is convertible into shares of the Company's
Common Stock ("Shares") or (ii) a right or interest with an exercise or
conversion privilege at a price related to the Common Stock or with a value
derived from the value of the Common Stock, which right or interest may, but
need not, constitute a "Derivative Security," as such term is defined in Rule
16a-1 promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as such Rule may be amended from time to time.
Effective as of June 30, 1996, the Company converted from a limited
partnership form of organization to a Subchapter "C" corporation (the
"Reorganization"). Pursuant to the Reorganization, the Company assumed all of
the outstanding options (the "Partnership Options") to acquire limited
partnership interests in the Company's predecessor (the "Partnership"), which
were granted pursuant to the terms of the Partner-
8
<PAGE> 12
ship's 1992 Partnership Interest Option Plan (the "Partnership Option Plan"),
with each Partnership Option becoming an option to acquire the same number of
shares of Common Stock of the Company at the same exercise price and on the same
terms and conditions as set forth in the Partnership Option Agreement entered
into with the optionee. As a result of this arrangement, the Company issued an
aggregate of 716,916 options under the Plan in the Reorganization in exchange
for Partnership Options, all of which are vested.
Grants made pursuant to the Plan are not restricted to any specified form
or structure and may include, without limitation, sales or bonuses of stock,
restricted stock, stock options, reload stock options, stock purchase warrants,
other rights to acquire stock, securities convertible into or redeemable for
stock, stock appreciation rights, limited stock appreciation rights, phantom
stock, dividend equivalents, performance units or performance shares, and a
grant made pursuant to the Plan may consist of one such security or benefit, or
two or more of them in tandem or in the alternative.
With certain exceptions regarding "performance based compensation" as
defined under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), the aggregate number of Shares which may be granted during any
calendar year to any one Eligible Person shall not exceed 400,000.
Subject to certain adjustment provisions under the Plan, the aggregate
number of Shares issued and issuable pursuant to all incentive stock options
granted under the Plan shall not exceed 1,200,000. Such maximum number does not
include the number of Shares subject to the unexercised portion of any incentive
stock option granted under the Plan that expires or is terminated. As of
December 31, 1996, there were outstanding options to purchase 716,916 shares of
Common Stock with a weighted average exercise price of $1.81 per share. In 1997,
the Company granted stock options for an additional 325,000 shares, including
5,000 shares to five Non-Employee Directors with an exercise price equal to the
price per share in the Company's recently completed initial public offering, or
$8.00 per share, and 5,000 shares to one Non-Employee Director at $8.75 per
share.
The Plan may be administered by one or more committees of the Board of
Directors (any such committee, the "Committee") or, if no Committee is
designated by the Board of Directors, the Plan shall be administered by the
Board of Directors and all references herein to the Committee shall refer to the
Board of Directors. The Committee shall consist of (i) two or more directors,
each of whom is a "non-employee director" (as such term is defined in Rule 16b-3
promulgated under the Exchange Act, as such Rule may be amended from time to
time), (ii) with respect to any grant that is intended to qualify as
"performance based compensation" under Section 162(m) of the Code, the Committee
shall consist of two or more directors, each of whom is an "outside director"
(as such term is defined under Section 162(m) of the Code), and (iii) with
respect to any other grant, the Committee shall consist of one or more directors
(any of whom also may be an Eligible Person who has been granted or is eligible
to be granted Shares under the Plan).
Subject to the provisions of the Plan, the Committee is authorized to
determine which persons are Eligible Persons and to which of such Eligible
Persons, if any, and when Shares, options or other performance awards shall be
granted, the terms and conditions of any grant, including the number of Shares
subject thereto and the circumstances under which the award will become
exercisable or vested or are forfeited or expire. The Committee is also
authorized to interpret and construe the Plan and adopt, amend and rescind rules
and regulations relating to administration of the Plan.
The Plan provides that unless otherwise provided by the Committee in the
written agreement evidencing the award, the terms of any stock option granted
under the Plan shall provide (i) that the exercise price thereof shall not be
less than 100% of the market value of a share of Common Stock on the date the
option is granted, (ii) that the term of such option shall be ten years from the
date of grant, (iii) that, upon an Employee ceasing to be employed by the
Company for any reason other than death or disability, or a Non-Employee
Director ceasing to be a Non-Employee Director of the Company, an option shall
not become exercisable to an extent greater than it could have been exercised on
the date the Employee's employment by the Company, or the Non-Employee
Director's incumbency, as the case may be, ceased, and (iv) that the option
shall expire ninety (90) days after the Employee ceases to be employed with the
Company or a Non-Employee Director ceases to be a Non-Employee Director of the
Company.
9
<PAGE> 13
Pursuant to the Plan, the Committee is permitted to allow or require the
recipient of any award under the Plan, including any Eligible Person who is a
director or officer of the Company, to pay the purchase price of the Shares or
other property issuable pursuant to such award, or such recipient's tax
withholding obligation with respect to such issuance, or both, in whole or in
part, by any one or more of the following means: the delivery of cash; the
delivery of other property deemed acceptable by the Committee; the delivery of
previously owned shares of capital stock of the Company (including "pyramiding")
or other property; a reduction in the amount of Shares or other property
otherwise issuable pursuant to such award; or the delivery of a promissory note
of the Eligible Person or of a third party, the terms and conditions of which
shall be determined by the Committee.
If the outstanding securities of the class then subject to this Plan are
increased, decreased or exchanged for or converted into cash, property or a
different number or kind of shares or securities, or if cash, property or shares
or securities are distributed in respect of such outstanding securities, in
either case as a result of a reorganization, merger, consolidation,
recapitalization, restructuring, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split, spin-off or the like, or if substantially all of the property and
assets of the Company are sold, then, unless the terms of such transaction shall
provide otherwise, the Committee shall make appropriate and proportionate
adjustments in (i) the number and type of shares or other securities or cash or
other property that may be acquired pursuant to awards theretofore granted under
this Plan and the exercise or settlement price of such awards, and (ii) the
maximum number and type of shares or other securities that may be issued
pursuant to such awards thereafter granted under this Plan. The foregoing
adjustments shall be applied to any awards or Incentive Stock Options only to
the extent permitted by Sections 162(m) and 422 of the Code, respectively.
Pursuant to the Plan, the Board of Directors may amend or terminate the
Plan at any time and in any manner; provided, however, that no such amendment or
termination shall deprive the recipient of any award theretofore granted under
this Plan, without the consent of such recipient, of any of his or her rights
thereunder or with respect thereto; provided, further, that if an amendment to
the Plan would affect the Plan's compliance with Rule 16b-3 under the Exchange
Act or Section 422 or 162(m) or other applicable provisions of the Code, the
amendment shall be approved by the Company's stockholders to the extent required
to comply with Rule 16b-3 under the Exchange Act, Sections 422 and 162(m) of the
Code, or other applicable provisions of or rules under the Code.
The following table sets forth information concerning stock options granted
to the Named Executive Officers during 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANT POTENTIAL REALIZABLE
------------------------------------------------ VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF
NUMBER OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION --------------------
NAME GRANTED 1996 PRICE DATE 5%(1) 10%(1)
- - ------------------------------- --------- ------------ -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Joel K. Young.................. 32,766 66.7% $ 3.05 02/01/06 $62,849 $159,273
</TABLE>
- - ---------------
(1) The amounts shown are hypothetical gains based on the indicated assumed
rates of appreciation of the Common Stock, compounded annually over a
ten-year period and assuming a fair market value of the Common Stock of
$3.05 per share on the date of grant. Actual gains, if any, on stock option
exercises are dependent on the future performance of the Common Stock and
overall stock market conditions. There can be no assurance that the Common
Stock will appreciate at any particular rate or at all in future years.
10
<PAGE> 14
The following table sets forth the number and value of stock options held
by the Named Executive Officers at December 31, 1996. No stock options granted
to the Named Executive Officers were exercised during 1996.
FISCAL YEAR-END OPTION VALUE TABLE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END AT YEAR-END(1)
------------------------- -------------------------
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - ------------------------------------------------- ------------------------- -------------------------
<S> <C> <C>
John T. Connor................................... 389,257/-- $2,817,056/--
Jeffery L. Fuller................................ 163,829/-- 810,632/--
C. Eric Baumann.................................. 32,766/-- 162,127/--
Joel K. Young.................................... 32,766/-- 162,127/--
</TABLE>
- - ---------------
(1) The Company's initial public offering of its Common Stock was completed in
January 1997. Therefore, solely for purposes of this table, the fair market
value per share of Common Stock at December 31, 1996 is assumed to be the
offering price per share in the initial public offering or $8.00.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with John T. Connor, the
Company's Chairman and Chief Executive Officer, for a two-year term beginning
July 18, 1996. The agreement sets forth a base salary of $180,000 per year and
provides for an annual bonus to be determined by the Board of Directors. The
agreement provides for certain benefits to Mr. Connor, including paid vacations,
pension benefits, qualified profit-sharing plans, employee group insurance and
disability insurance. The agreement includes a Noncompete Agreement, which is
effective during the term of the agreement.
The Company entered into an employment agreement with Jeffery L. Fuller,
the Company's President and Chief Operating Officer, for a two-year term
beginning July 18, 1996. The agreement sets forth a base salary of $165,000 per
year and provides for an annual bonus in an amount to be determined by the Board
of Directors, provided the Company meets or exceeds certain performance
objectives provided to the Board of Directors. Mr. Fuller is entitled, at a
minimum, to receive a bonus of 20% of his annual salary if the Company meets its
annual sales goals and an additional 20% if the Company meets its annual profit
goals. The agreement also provides for certain benefits to Mr. Fuller, including
paid vacations, pension benefits, qualified profit-sharing plans, employee group
insurance and disability insurance. The agreement includes a Noncompete
Agreement, which is effective during the term of the agreement.
On September 30, 1996, Company entered into employment agreements with C.
Eric Baumann, Michael P. Wallace and Joel K. Young, each of whom is a Company
Vice President. The agreements set forth base salaries and provide for annual
bonuses to be determined by the Board of Directors, and provide for certain
benefits, including paid vacations, pension benefits, qualified profit-sharing
plans, employee group insurance and disability insurance. The term of each such
agreement continues for two years, unless otherwise terminated pursuant to the
terms of the agreements. Each of these individuals has entered into a Noncompete
Agreement effective during the term of each individual's employment agreement.
401(K) PROFIT SHARING & SAVINGS PLAN
In July 1992, the Company established the Transcrypt International
Employees Profit Sharing & Savings Plan (the "Benefit Plan"). The Benefit Plan
consists of a 401(k) eligible savings plan, which is intended to comply with
Sections 401(a) and 401(k) of the Code and the applicable provisions of the
Employee Retirement Income Security Act of 1974, and a profit sharing plan.
Amounts contributed to the Benefit Plan are held under a trust intended to be
exempt from income tax pursuant to Section 501(a) of the Code. Employees of the
Company that have completed at least one year of service are eligible to
participate in the profit sharing plan and employees that have completed six
months of service are eligible to participate in the
11
<PAGE> 15
401(k) eligible savings plan. Participating employees are entitled to make
pre-tax contributions to their 401(k) accounts, subject to certain maximum
annual limits imposed by law ($9,500 in 1996), and certain other limitations.
The Company may elect to make a discretionary contribution to the Benefit Plan
each year. Employees are always fully vested in their own contributions, and the
Company's contributions vest in participating employees over a six-year period
at 20% per year beginning in the second year. Distributions generally are
payable in a lump-sum after retirement, disability or death and, in certain
circumstances, upon termination of employment with the Company for other
reasons. The Company has paid contributions to the Benefit Plan (including the
401(k) eligible savings plan and profit sharing plan) of $75,700 in 1996.
CERTAIN TRANSACTIONS
On January 15, 1994, the Company borrowed from the Nebraska Investment
Finance Authority ("NIFA") $850,000 in proceeds through the issuance of
Industrial Development Revenue Bonds, Series 1994, issued pursuant to a Trust
Indenture by and between NIFA and Norwest Bank of Nebraska, N.A., as trustee. In
connection with the borrowing, the Company executed a non-amortizing promissory
note under which the principal is due in a balloon payment in January 2004. The
note bears interest at a rate of 6.25% per annum, with interest due quarterly on
July 15, October 15, January 15 and April 15 of each year. The note is secured
by a Deed of Trust and Construction Security Agreement from the Company to the
trustee. The Company has used the proceeds from the NIFA borrowing to finance
the construction of its existing Lincoln facility. The bonds were privately
placed with Security National Bank of Superior, which is owned and controlled by
certain stockholders of the Company, including the Estate of Harold S. Myers,
David C. Myers and Steven Wright.
PERSONNEL/COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The following Personnel/Compensation Committee Report on Executive
Compensation shall not be deemed to be "soliciting material" or to be "filed"
with the Securities and Exchange Commission ("SEC") or subject to Regulations
14A or 14C of the SEC or to the liabilities of Section 18 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed
incorporated by reference into any filing under the Securities Act of 1933 or
the Exchange Act, notwithstanding any general incorporation by reference of this
Proxy Statement into any other document.
THE REPORT
The Compensation Committee of the Board of Directors (the "Committee") is
composed of three directors who are not also employees of the Company. The
Committee establishes the overall compensation and employee benefits of the
Company and the specific compensation of the Company's executive officers. It is
a goal of the Committee to implement executive officer compensation programs
that further the business objectives of the Company and that attract, retain and
motivate the best qualified executive officers.
The Company's executive compensation policies and specific executive
compensation programs are adopted and administered in accordance with the
principal goal of maximizing return on stockholders' equity. The Committee
believes that this performance goal, and the long-term interests of the
Company's stockholders generally, are best achieved by attracting and retaining
management of high quality, and that such management will require commensurate
compensation. The Committee believes that the Company's executive officer
compensation policies are consistent with this policy.
Certain of the Company's executive officers, including the Chief Executive
Officer, have written, two-year employment agreements with the Company (see
"EXECUTIVE COMPENSATION -- Employment Agreements"). The levels of compensation
granted by the Company in such employment agreements, and the levels of
compensation granted to other executive officers from time to time, is
determined by the Committee based on factors that the Committee deems
appropriate. As indicated below, the overall financial performance
12
<PAGE> 16
of the Company is a key factor considered by the Committee in setting
compensation levels for executive officers.
Annual compensation levels for executive officers, including the Chief
Executive Officer, and compensation levels to be implemented from time to time
in written employment agreements with executive officers, are determined by the
Committee based primarily on its review and analysis of the following factors:
(i) the responsibilities of the position, (ii) the performance of the individual
and his or her general experience and qualifications, (iii) the overall
financial performance (including return on equity, levels of general and
administrative expense and budget variances) of the Company for the previous
year and the contributions to such performance measures by the individual or his
or her department, (iv) the officer's total compensation during the previous
year, (v) compensation levels paid by comparable companies in similar industries
(telecommunications and information security), (vi) the officer's length of
service with the Company, and (vii) the officer's effectiveness in dealing with
external and internal audiences. In addition, the Committee receives the
recommendations of the Chief Executive Officer with respect to the compensation
of other executive officers, which the Committee reviews in light of the above
factors. The Committee believes, based on a review of relevant compensation
surveys, that the base compensation of the executive officers is competitive
with companies of similar size and with comparable operating results in similar
industries.
In addition to the above criteria applicable to executive officers
generally, the Chief Executive Officer's compensation for 1996 was based in
large part on his progress in satisfying certain additional criteria. These
criteria include progress in completing the Company's initial public offering,
results in meeting the Company's strategic business plan, achievement of budget
and performance objectives that were established for the Company in September
1995 and leadership abilities (including developing an effective senior
management team).
While the Committee establishes salary and bonus levels based on the above
described criteria, the Committee also believes that encouraging equity
ownership by executive officers further aligns the interests of the officers
with the performance objectives of the Company's stockholders and enhances the
Company's ability to attract and retain highly qualified personnel on a basis
competitive with industry practices. Stock options granted by the Company
pursuant to the 1996 Stock Incentive Plan help achieve this objective, and
provide additional compensation to the officers to the extent that the price of
the Common Stock increases over fair market value on the date of grant. Stock
options have been granted to each of the Named Executive Officers and to 19
other officers or key employees of the Company. Through the Stock Incentive
Plan, there will be an additional direct relationship between the Company's
performance and benefits to executive officer Plan participants.
Members of the Compensation Committee of the Board of Directors:
Terry L. Fairfield, Chairman
Thomas R. Thomsen
Winston J. Wade
PERFORMANCE GRAPH
The Company's Common Stock was registered under Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), on January 22,
1997, the date of completion of the Company's initial public offering of its
Common Stock. Prior to such date, there was no market for the Common Stock and
no shares were traded. Accordingly, the performance graph has been omitted, as
the limited trading history of the Common Stock would not provide meaningful
information. Between January 22, 1997 and March 17, 1997, the high and low
trading prices of the Common Stock on the Nasdaq National Market, as reported by
The Nasdaq Stock Market, Inc., was $10 1/2 and $7 3/4 per share, respectively.
13
<PAGE> 17
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Audit Committee of the Board of Directors has selected Coopers &
Lybrand L.L.P. as the independent public accountants to audit the consolidated
financial statements of the Company for the fiscal year ended December 31, 1997.
A member of such firm is expected to be present at the Meeting, will have an
opportunity to make a statement if so desired, and will be available to respond
to appropriate questions.
If the stockholders of the Company do not ratify the selection of Coopers &
Lybrand L.L.P., or if such firm should decline to act or otherwise become
incapable of acting, or if its employment is discontinued, the Board of
Directors or the Audit Committee will appoint other independent public
accountants.
Ratification of the selection of Coopers & Lybrand L.L.P. as the Company's
independent public accounts will require the affirmative vote of a majority of
the Common Stock present and properly voting at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF COOPERS & LYBRAND L.L.P. AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
During 1996, the Company was not a reporting company under the Exchange
Act. Accordingly, no filings were required to be made in 1996 under Section
16(a) of the Exchange Act.
STOCKHOLDER PROPOSALS
Stockholder proposals to be presented at the 1998 Annual Meeting of
Stockholders must be received at the Company's executive offices at 4800 NW 1st
Street, Lincoln, Nebraska 68521, addressed to the attention of the Secretary, by
December 5, 1997 in order to be considered for inclusion in the Proxy Statement
and form of proxy relating to such meeting.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1996 is
being mailed to the stockholders of the Company along with this Proxy Statement.
The Annual Report contains the Company's Annual Report for the year ended
December 31, 1996, including the financial statements and the financial
statement schedules and management's discussion and analysis of such financial
statements and the report thereon of Coopers & Lybrand L.L.P.
OTHER BUSINESS
The Board of Directors knows of no other business which will be presented
for consideration at the Meeting other than as stated in the accompanying Notice
of Annual Meeting of Stockholders. If, however, other matters are properly
brought before the Meeting, it is the intention of the persons named in the
accompanying form of Proxy to vote the shares represented thereby on such
matters in accordance with their best judgment and in their discretion, and
authority to do so is included in the Proxy.
14
<PAGE> 18
PROXY TRANSCRYPT INTERNATIONAL, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
John T. Connor and Terry L. Fairfield, and each of them, with full power of
substitution, are hereby appointed proxy to vote the stock of the undersigned in
Transcrypt International, Inc. at the Annual Meeting of Stockholders on May 6,
1997, and at any adjournments, to be held at the Company's offices located at
4800 NW 1st Street, Lincoln, Nebraska 68521.
MANAGEMENT RECOMMENDS THAT YOU VOTE "FOR" AUTHORITY ON ELECTION OF DIRECTORS AND
"FOR" THE RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS.
PROPOSAL ONE. ELECTION OF DIRECTORS
<TABLE>
<S> <C>
[ ] FOR all Nominees listed below (except as indicated to [ ] WITHHOLD AUTHORITY to vote for
the contrary below) all Nominees listed below
</TABLE>
Thomas R. Larsen and Winston J. Wade
INSTRUCTION: To withhold authority to vote for any individual Nominee, write
that Nominee's name in the space provided below.
- - --------------------------------------------------------------------------------
PROPOSAL TWO. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
[ ] FOR [ ] AGAINST [ ] ABSTAIN
Ratification of appointment of Coopers & Lybrand L.L.P. as independent
public accountants for fiscal 1997.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof,
including procedural and other matters relating to the conduct of the meeting.
<PAGE> 19
THIS PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, THIS PROXY WILL
BE VOTED FOR THE ELECTION OF THE TWO DIRECTOR NOMINEES AND FOR RATIFICATION OF
THE APPOINTMENT OF COOPERS & LYBRAND L.L.P.
Please sign exactly as
name appears hereon.
--------------------------
--------------------------
Dated: _____________, 1997
When shares are held by
joint tenants, both should
sign. When signing as
attorney, as executor,
administrator, trustee or
guardian, please indicate
as such. If a corporation,
please sign in full
corporate name by
President or other
authorized officer. If a
partnership, please sign
in partnership name by
authorized person.
I (WE) DO [ ] DO NOT [ ] EXPECT TO ATTEND THE MEETING.
PLEASE DATE, SIGN AND RETURN THIS CARD IN THE ENCLOSED
ENVELOPE.
