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:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6 (E) (2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
NEWCOM, INC.
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(Name of Registrant as Specified In Its Charter)
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(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 paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PRELIMINARY PROXY MATERIALS
NEWCOM, INC.
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 29, 1999
To the Stockholders of NewCom, Inc.:
A Special Meeting of Stockholders of NewCom, Inc., a Delaware
corporation (the "Company"), will be held on Friday, January 29, 1999, at 10:00
a.m., P.S.T., at the Company's principal executive offices, located at 31166 Via
Colinas, Westlake Village, California 91362, for the following purposes:
(1) To approve the issuance of securities by the Company
pursuant to two private placements completed in November and
December 1998; and
(2) To transact any other business which may properly come
before the meeting.
Stockholders of record at the close of business on January 11, 1999
will be entitled to notice of and to vote at the meeting and any adjournments
thereof.
All Stockholders are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, PLEASE COMPLETE AND SIGN THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE. The giving of
your proxy will not affect your right to vote in person should you later decide
to attend the meeting.
Any Stockholder of record of the Company at the close of business on
January 11, 1999 may attend. Any beneficial owner of shares with a letter of
authorization from his recordholder may attend the meeting.
By Order of the Board of Directors
Michael I. Froch
Secretary
Westlake Village, California
January 18, 1999
<PAGE>
NEWCOM, INC.
31166 Via Colinas
Westlake Village, California 91362
(818) 597-3200
PROXY STATEMENT
January 18, 1999
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of NewCom, Inc. ("NewCom" or the "Company")
for a Special Meeting of Stockholders to be held at 10:00 a.m. on January 29,
1999 (the "Special Meeting") and any postponements or adjournments thereof. Any
Stockholder giving a proxy may revoke it before or at the meeting by providing a
proxy bearing a later date or by attending the meeting and expressing a desire
to vote in person. All proxies will be voted as directed by the Stockholder on
the proxy card; and, if no choice is specified, they will be voted (i) "FOR" the
proposal approving the issuance of the Company's securities pursuant to the
November 1998 and December 1998 Private Placements, and (ii) in the discretion
of the persons acting as proxies, for any other matters. Your cooperation in
promptly returning the enclosed proxy will reduce the Company's expenses and
enable its management and employees to continue their normal duties for your
benefit with minimum interruption for follow-up proxy solicitation.
Only Stockholders of record at the close of business on January 11,
1999 are entitled to receive notice of and to vote at the meeting. On that date,
NewCom had outstanding 11,337,953 shares of Common Stock. The shares of Common
Stock vote as a single class. Holders of shares of Common Stock on the record
date are entitled to one vote for each share held. The presence at the Special
Meeting, either in person or by proxy, of the holders of a majority of the
shares of Common Stock issued, outstanding and entitled to vote is necessary to
constitute a quorum for the transaction of business.
In accordance with Delaware law, abstentions and "broker non-votes"
(i.e. proxies from brokers or nominees indicating that such persons have not
received instructions from the beneficial owners or other persons entitled to
vote shares as to a matter with respect to which brokers or nominees do not have
discretionary power to vote) will be treated as present for purposes of
determining the presence of a quorum. For purposes of determining approval of a
matter presented at the meeting, abstentions will be deemed present and entitled
to vote and will, therefore, have the same legal effect as a vote "against" a
matter presented at the meeting. Broker non-votes will be deemed not entitled to
vote on the matter as to which the non-vote is indicated and will, therefore,
have no legal effect on the vote on such matter.
In the event that sufficient votes in favor of the proposal are not
received by the date of the Special Meeting, the persons named as proxies may
propose one or more adjournments of the Special Meeting to permit further
solicitations of proxies. Any such adjournment will require the affirmative vote
of the holders of a majority of the shares of Common Stock present in person or
by proxy at the Special Meeting. The persons named as proxies will vote in favor
of such adjournment or adjournments.
The cost of preparing, assembling, printing and mailing the materials,
the Notice and the enclosed form of Proxy, as well as the cost of soliciting
proxies relating to the Special Meeting, will be borne by the Company. The
Company will request banks, brokers, dealers, and voting trustees or other
nominees to forward solicitation materials to their customers who are beneficial
owners of shares, and will reimburse them for the reasonable out-of-pocket
expenses of such solicitations. The original solicitation of proxies by mail may
be supplemented by telephone, telegram, personal solicitation or other means by
officers and other regular employees or agents of the Company, but no additional
compensation will be paid to such individuals on account of such activities.
This Proxy Statement and the accompanying Notice of Special Meeting and form of
Proxy are being mailed or delivered to Stockholders on or about January 18,
1999.
The Board of Directors of the Company recommends that the Stockholders
vote "FOR" the Proposal approving the November 1998 and December 1998
Placements.
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PLEASE MARK, DATE, AND SIGN THE ENCLOSED PROXY AND RETURN IT AT AN EARLY DATE IN
THE ENCLOSED POSTAGE-PREPAID RETURN ENVELOPE SO THAT, IF YOU ARE UNABLE TO
ATTEND THE SPECIAL MEETING YOUR SHARES MAY BE VOTED.
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<PAGE>
PROPOSAL TO APPROVE NOVEMBER 1998 AND
DECEMBER 1998 PLACEMENTS
This Proposal seeks Stockholder approval for all of the securities
which have been issued and may in the future be issuable under the terms of two
private placements completed by the Company in November 1998 and December 1998
(these two placements are referred to as the "November 1998 Private Placement"
and the "December 1998 Private Placement," respectively). This Proposal is being
submitted to the Stockholders for their approval in order to assure compliance
with the listing requirements of The Nasdaq Stock Market, Inc. ("Nasdaq") and to
satisfy the terms of the December 1998 Placement. The affirmative vote of the
holders of a majority of the shares of Common Stock voting at the Special
Meeting is required for approval of the Proposal.
In November 1998 and December 1998 the Company completed two private
placements of its securities, resulting in gross proceeds to the Company from
the sale of its equity securities of $1.75 million and $3.0 million,
respectively. The December 1998 Placement also included a short term loan of
$1.0 million. The proceeds of these offerings are being utilized by the Company
for working capital.
Companies whose securities are listed on the Nasdaq National Market are
required to obtain stockholder approval for the sale or issuance of their Common
Stock (or securities convertible into or exercisable for common stock) in an
amount equal to 20% or more of its outstanding shares for less than the greater
of its book or market value. Immediately prior to the December 1998 Placement
the Company had 10,466,665 shares outstanding. The December Placement resulted
in the issuance of 871,288 shares of Common Stock and warrants to purchase
241,337 shares of Common Stock. In addition, the December 1998 Placement
provided for the issuance of "repricing rights" whereby the investors may be
entitled to receive an indeterminate number of additional shares, depending upon
the future market price of NewCom's Common Stock. The December 1998 Placement
also provided for the sale and issuance of an additional $1.0 million of the
Company's Common Stock and "repricing rights" in a second financing which has
not yet been consummated and is subject to certain conditions.
Because of the possibility that the number of shares of Common Stock
issued and issuable in connection with the December 1998 Placement could exceed
20% of NewCom's outstanding Common Stock, depending upon the number of shares
issued upon exercise of the repricing rights, the financing documents required
that NewCom obtain Stockholder approval of the December 1998 Placement within 60
days of the initial closing of the financing. The financing documents also
require that NewCom's majority stockholder, Aura Systems, Inc. ("Aura"), vote in
favor of the financing and furnish a proxy to representatives of the investors
to vote in favor of the financing. Accordingly, the Company is submitting to its
Stockholders for approval the December 1998 Financing.
The Company is also submitting the November 1998 Placement for approval
by the Stockholders as part of this Proposal. Although the Company does not
believe that approval of this financing is required by Nasdaq rules, the Company
is submitting this financing for Stockholder approval as part of the Proposal to
avoid any uncertainty about compliance with Nasdaq rules, as the November 1998
Placement could be deemed by Nasdaq to be related to the December 1998
Placement.
As of January 11, 1999, the record date for the Special Meeting, Aura
owned 6,882,896 shares of Common Stock, or 60.7% of the outstanding Common Stock
on such date. Because approval of this proposal requires the affirmative vote of
a majority of the shares of Common Stock in attendance at the Meeting, either in
person or by proxy, and because Aura has agreed to vote, and has granted an
irrevocable proxy to representatives of the investors to vote, in favor of this
Proposal, Stockholder approval of the December 1998 Placement is assured,
whether or not any other Stockholders vote in favor of the proposal.
The Board of Directors of the Company recommends that the Stockholders
vote "FOR" the Proposal approving the November 1998 and December 1998
Placements.
Following is a summary of certain terms of the November 1998 and
December 1998 Placements.
The December 1998 Placement
On December 1, 1998 (the "Initial Closing Date"), the Company
consummated a private placement of its Common Stock, Warrants and Repricing
Rights pursuant to Regulation D of the Securities Act of 1933 to three private
investors. On the Initial Closing Date the Company received gross proceeds of $3
million in exchange for the issuance of 871,288 shares of its Common Stock,
Warrants exercisable for five years for up to 166,337 shares of Common Stock at
an exercise price of $4.54, and 792,088 Repricing Rights.
Under the terms of this financing the parties are committed to fund an
additional $1 million in exchange for Common Stock and Repricing Rights between
65-95 days after a Registration Statement covering the resale of the securities
issued in connection with the initial $3 million financing has been declared
effective by the Securities and Exchange Commission ("SEC"), subject to the
satisfaction of certain conditions (the "Second Closing"). These conditions
include the requirement that the average market price of NewCom's Common Stock
(defined as the two lowest closing bid prices during the 20 trading days
immediately preceding the Second Closing date) be at least $4.00 at the time of
the Second Closing.
At the Second Closing the investors are entitled to receive the number
of shares of Common Stock equal to 110% of the amount determined by dividing $1
million by the market value of the Common Stock at the time of the Second
Closing (the "Second Closing Date Price," which is equal to the average closing
bid prices for the five consecutive trading days ending on the day immediately
preceding the Second Closing date)(the "Second Closing Shares"). The investors
are also entitled to receive Repricing Rights at the Second Closing equal to
90.91% of the number of Second Closing Shares issued.
On December 28, 1998, the same investors consummated an additional
financing with NewCom and Aura whereby they advanced an aggregate of $1.0
million to NewCom pursuant to certain Notes secured by a junior lien on NewCom's
inventory and accounts receivable and issued an aggregate of 75,000 Warrants to
purchase NewCom Common Stock. The Notes bear interest at the rate of 10% and are
due and payable on the earlier of January 31, 1999, or the date on which NewCom
increases its existing line of credit. The 75,000 Warrants have a term of five
years and are initially exercisable for 75,000 shares of Common Stock at an
exercise price of $3.75. The exercise price is automatically adjusted six months
following their issuance to the lower of $3.75 or the market price of NewCom
Common Stock at such time, in accordance with a specified formula. References in
this Proxy Statement to the December 1998 Placement include the financing
consummated on December 1, 1998 and the additional financing consummated on
December 28, 1998.
Repricing Rights
The Repricing Rights entitle the holder to purchase that number of
shares of Common Stock ("Repricing Shares") determined by multiplying the number
of Repricing Rights by a fraction, the numerator of which is the Repricing Price
minus the Average Market Price (as defined below), and the denominator of which
is the Average Market Price (defined as the two lowest closing bid prices during
the 20 trading days immediately preceding the exercise date of the Repricing
Rights).
The "Repricing Price" for the 792,088 Repricing Rights received on the
Initial Closing Date is $4.32, being 114% of the Initial Closing Date Price of
$3.79 (computed based upon the average closing bid prices for the five
consecutive trading days ending on the day immediately preceding the Initial
Closing Date) if the Repricing Rights are exercised within 135 days of the
Initial Closing Date; $4.40, being 116% of the Initial Closing Date Price, if
the Repricing Rights are exercised between the 136th and 180th day of the
Initial Closing Date; and an additional 2% during each 45 day period following
180 days from the Initial Closing Date.
The "Repricing Price" for the Repricing Rights issuable at the Second
Closing is 114% of the Second Closing Date Price if the Repricing Rights are
exercised within 45 days of the Second Closing Date; 116% if the Repricing
Rights are exercised between the 46th and 90th day of the Second Closing Date;
and an additional 2% during each 45 day period following 180 days from the
Second Closing Date.
The Repricing Price is increased by 7.5% if the Common Stock is listed
for trading on the Nasdaq SmallCap Market, and 15% if the Common Stock is not
listed on a national stock exchange or the Nasdaq Stock Market or upon the
occurrence of a "Repurchase Event" described below.
The investors also have the right to elect to receive shares of Aura
Common Stock ("Aura Repricing Shares") upon exercise of the Repricing Rights in
lieu of NewCom Common Stock, based upon the market value of Aura Common Stock at
the time of exercise of the Repricing Rights.
<PAGE>
Restrictions On Exercise of Repricing Rights
During each consecutive 30 day period during which any Repricing Rights
first become exercisable until June 29, 1999, the investor may not exercise more
than 20% of the then issued Repricing Rights. Any unutilized Repricing Rights in
a 30 day period may be carried forward to subsequent periods. In no event may
Repricing Rights be exercisable if such exercise would result in the investor
and its affiliates beneficially owning more than 9.9% of the Company's
outstanding Common Stock.
Termination of Repricing Rights
Subject to certain terms and conditions, so long as each of the Company
and Aura is in compliance in all material respects with the terms of the
financing documents and a Registration Statement covering the Common Stock held
by the investors is in effect, 20% the Repricing Rights shall terminate on the
first trading date in a calendar month if in the preceding month the average
market price during the preceding month is greater than $4.73 and the average
daily trading volume in such preceding month is greater than the average daily
trading volume for the 30 days prior to December 1, 1998.
Repurchase of Repricing Rights
The Company is entitled to repurchase exercised Repricing Rights within
seven trading days of the date of exercise of Repurchase Rights by paying to the
holder an amount in cash equal to the closing sale price of the Common Stock on
the date of exercise multiplied by the number of Repricing Shares otherwise
required to be issued.
Repurchase Right of Investor
Upon the occurrence of a "Repurchase Event" described below, each
investor has been granted the right to require the Company to repurchase the
Common Stock and Repricing Rights acquired from the Company at the per share
price equal to the average of the closing sale prices of the Common Stock for
the five trading days ending on the trading day preceding the date of
repurchase. In addition, if the Company fails to obtain stockholder approval for
this financing being solicited by this Proxy Statement on or before January 29,
1999, the investors are entitled to require the Company to repurchase the Common
Stock, Repricing Rights and Warrants for the amount equal to the number of
shares of Common Stock received by the investor at the Initial Closing
multiplied by $4.17, being 110% of the Initial Closing Date Price.
For purposes of exercising the investor's repurchase right, a
Repurchase Event includes the following events: no closing bid prices are
reported for the Common Stock on a national securities exchange or the Nasdaq
Stock Market for five consecutive days; the Common Stock ceases to be listed for
trading on a national securities exchange or the Nasdaq Stock Market; a
Registration Statement covering the Common Stock issued or issuable to the
investors is not filed with the SEC by January 29, 1999, or the Registration
Statement is not declared effective by the SEC by March 31, 1999; the investor
is unable to sell shares under the Registration Statement for 30 or more days
after the Registration Statement becomes effective; the Company fails to issue
Repricing Shares as and when required; the Company fails to remove restrictive
legends from share certificates for the Common Stock as and when required; the
Company or Aura defaults under material obligations under the financing
documents and such default remains uncured for a period of 15 days after an
investor provides notice of the default to the Company; NewCom merges with or is
acquired by another company whose common stock is not listed for trading on a
national securities exchange or The Nasdaq Stock Market; or the Company amends
its certificate of incorporation or bylaws in a manner which materially and
adversely affects the rights of the investors.
Restrictions on Issuance of Additional Securities
The financing documents contain certain restrictions on the Company's
ability to issue additional securities. Specifically, the Company may not issue
any additional securities which would require stockholder approval under Nasdaq
rules without either obtaining a waiver from Nasdaq or obtaining stockholder
approval if such issuance would be deemed by Nasdaq to be part of the December
1998 Placement. In addition, until June 26, 1999, subject to certain exceptions,
the Company is prohibited from issuing its equity securities without the consent
of the investors. The investors have also been granted a right of first refusal
for any financings similar to the December 1998 Placement during the period from
the Second Closing Date to December 1, 1999, and for any other proposed
financings involving the sale of Common Stock at a discount during the period
between June 26, 1999 and December 1, 1999.
Restrictions on Transfer of Purchased Securities
The securities issued or proposed to be issued in the December 1998
Placement have not been registered under the Securities Act of 1933 and are
being issued under exemptions from registration afforded under Regulation D of
the Securities Act and Section 4(2). Therefore, these securities cannot be
transferred unless the resale of these securities is registered under the
Securities Act or an exemption from registration is available. The Company has
agreed to use its best efforts to register the resale of the Common Stock
acquired by the investors in the December 1998 Placement, including Repricing
Shares and shares issuable upon exercise of the Warrants. Aura has also agreed
to use its best efforts to register Aura Common Stock issuable upon exercise of
the Repricing Rights.
The November 1998 Placement
In November 1998, the Company completed a private placement of its
Common Stock, Warrants and repricing rights pursuant to Regulation D of the
Securities Act of 1933 to a private investor. Under the terms of the placement
the Company received gross proceeds of $1.75 million in exchange for the
issuance of 466,665 shares of its Common Stock ("November Placement Shares"),
Warrants exercisable for up to 58,000 shares of Common Stock at an exercise
price of $4.87, and repricing rights (the "November Repricing Rights") for the
November Placement Shares. Repricing Rights
The November Repricing Rights entitle the holder to purchase that
number of shares of Common Stock ("November Repricing Shares") determined by
multiplying the number of November Repricing Rights during a repricing period by
a fraction, the numerator of which is the November Repricing Price (as
determined below) minus the average market price (defined as the average of the
20 lowest bid prices in the 45 day period preceding the repricing date, and the
denominator of which is the average market price. 50% of the November Repricing
Rights are automatically exercised on the 45th and 90th days following the
effective date of a Registration Statement covering the Common Stock issued or
issuable in connection with the November 1998 Placement. If no shares are
issuable upon the exercise of the November Repricing Rights, the November
Repricing Rights terminate.
The "November Repricing Price" for the November Repricing Rights is
$4.275 (114% of the initial per share purchase price) if the November Repricing
Rights are exercised on the 45th day following the effectiveness of the
Registration Statement; $4.35 (116% of the initial per share per share purchase
price) if the November Repricing Rights are exercised on 90th day following the
effective date of the Registration Statement.
Right of Redemption by NewCom
The Company is entitled to repurchase the November Placement Shares and
the Warrants for a purchase price equal to the amount of the original purchase
price of the securities plus 1.67% per month for each month following the
closing of the November 1998 Placement. The Company is also entitled to
repurchase the November Repricing Rights for the market value of the November
Repricing Rights.
Restrictions on Transfer of Purchased Securities
The securities issued or proposed to be issued in the November 1998
Placement have not been registered under the Securities Act of 1933 and are
being issued under exemptions from registration afforded under Regulation D of
the Securities Act and Section 4(2). Therefore, these securities cannot be
transferred unless the resale of these securities is registered under the
Securities Act or an exemption from registration is available. The Company has
agreed to use its best efforts to register the Common Stock acquired by the
investors in the November 1998 Placement, including Repricing Shares and shares
issuable upon exercise of the Warrants.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
Company's Common Stock owned as of December 28, 1998 (i) by each person who is
known by NewCom to be the beneficial owner of more than five percent (5%) of its
outstanding Common Stock, (ii) by each of the Company's directors and certain
executive officers, and (iii) by all directors and executive officers as a
group:
<TABLE> <CAPTION>
Directors, Officers and Number of Shares Percent of Shares
Certain Beneficial Owners Beneficially Owned Beneficially Owned (1)
<S> <C> <C>
Aura Systems, Inc.(3) 6,882,896 60.7%
Sultan W. Khan(2)(4) 269,634 *
Asif W. Khan(2)(4) 269,634 *
Steven C. Veen(2) - -
Michael I. Froch (2) -
Zane Alsabery(2)(5) 35,833 *
Gerald S. Papazian(2) - *
Alexander Remington(2) - *
James Curran(2) - *
Saied Kashani(2) - *
Richard A. Rappaport(2) - *
Mellon Bank Corporation(6)(7) 1,100,000 9.7%
P.R.I.F., L.P.(8)(10)(11) 915,867(9) 7.9%
H.B. and Co., Inc.(8)(10)(11) 915,867(9) 7.9%
Henry Brachfeld(8)(10)(11) 915,867(9) 7.9%
Excalibur Limited Partnership(8)(12) 915,867(9) 7.9%
Excalibur Capital Management, Inc.(8)(12) 915,867(9) 7.9%
William S. Hechter(8)(12) 915,867(9) 7.9%
All executive officers and directors
as a group (10 persons) 575,101 5.1%
</TABLE>
*Denotes less than 1%.
(1) Except as indicated by footnote, beneficial ownership is determined
in accordance with rules of the Securities and Exchange Commission, and
includes generally voting power and/or investment power with respect to
securities. Shares of Common Stock subject to options currently
exercisable or exercisable within 60 days are deemed outstanding for
computing the beneficial ownership percentage of the person holding
such options but are not deemed outstanding for computing the
beneficial ownership percentage of any other person. Except as
indicated by footnote, to the knowledge of the Company, the persons
named in the table above have the sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by
them.
(2) C/o NewCom, Inc., 31166 Via Colinas, Westlake Village, CA 91362
(3) May be deemed to be a parent or promoter of the Company, as those terms
are defined in the Securities Act. Aura has agreed to vote all shares
held by it for a period of forty-eight (48) months from September, 1997
for the election to the Company's Board of Directors of two designees
of the Underwriter of the Company's Initial Public Offering reasonably
acceptable to the Company.
(4) Includes 48,329 shares of Common Stock issuable pursuant to options,
which are exercisable within 60 days of December 28, 1998.
(5) Includes 8,777 shares of Common Stock issuable pursuant to options,
which are exercisable within 60 days of December 28, 1998.
(6) Share ownership data based on a Schedule 13G, dated as of January 29,
1998 by Mellon Bank Corporation and affiliated entities.
(7) c/o Mellon Bank Corporation, One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258.
(8) P.R.I.F., L.P., H.B. and Co., Inc., Henry Brachfeld, Excalibur Limited
Partnership, Excalibur Capital Management, Inc. and William S. Hechter
are members of a group which share the power to dispose of these
shares. Therefore, the shares reflected as beneficially owned by each
of such persons are the same shares reflected as being beneficially
owned by each of the other members of the group.
(9) Includes an aggregate of 189,794 shares of Common Stock which are
issuable pursuant to warrants which are exercisable with 60 days of
December 28, 1998. Does not include shares issuable from time to time
upon exercise of Repricing Rights. The Repricing Rights and warrants
may not be exercised if such exercise would result in the investor and
its affiliates beneficially owning more than 9.9% of the Company's
outstanding Common Stock. Such persons directly or indirectly share the
power to dispose all such 915,867 shares. Of such shares, P.R.I.F.,
L.P., H.B. and Co., Inc. and Henry Brachfeld share the power to vote
541,102 shares, and Excalibur Limited Partnership, Excalibur Capital
Management, Inc. and William S. Hechter share the power to vote 374,765
shares.
(10) Lilian Brachfeld is the sole stockholder of H.B. and Co., Inc.
the wife of Mr. Brachfeld. By reason of such status Mrs. Brachfeld
may be deemed to be the beneficial owner of Common Stock beneficially
owned by H.B. and Co., Inc. and Mr. Brachfeld. Mrs. Brachfeld disclaims
beneficial ownership of all such shares pursuant to Rule 13d-4 under
the Securities Exchange Act of 1934.
(11) C/o 175 Bloor Street East, South Tower, 7th Floor, Toronto, Ontario
M4W3R8, Canada.
(12) C/o 205 Venta Drive, Toronto, Ontario M5P 3A1, Canada.
<PAGE>
MISCELLANEOUS
Stockholder Proposals
Stockholder proposals complying with the applicable rules under the
Securities Exchange Act of 1934 intended to be presented at the 1999 Annual
Meeting of Stockholders must be received at the offices of the Company by April
16, 1999 to be considered by the Company for inclusion in the Company's proxy
statement and form of proxy relating to that meeting. Such proposals should be
directed to the attention of the Secretary, NewCom, Inc., 31166 Via Colinas,
Westlake Village, California 91362.
Other Matters
Neither NewCom nor any of the persons named as proxies knows of matters
other than those above stated to be voted on at the Special Meeting. However, if
any other matters are properly presented at the meeting, it is the intention of
the persons named as proxies to vote in accordance with their judgment on such
matters, subject to direction by the Board of Directors.
Representatives of the Company's independent auditors, Pannell Kerr
Forster, are expected to be present at the meeting and will have the opportunity
to make a statement if they so desire, and will be available to respond to
appropriate questions. Pannell Kerr Forster has served as the Company's
independent auditors since 1997.
WHILE YOU HAVE THE MATTER IN MIND, PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD PROMPTLY.
NEWCOM, INC.
31166 Via Colinas
Westlake Village, California 91362
PROXY FOR SPECIAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 29, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Steven C. Veen and Sultan W. Khan, and
each of them, Proxies, with full power of substitution in each of them,
Proxies, with full power of substitution in each of them, in the name,
place and stead of the undersigned, to vote at the Special Meeting of
Shareholders of NewCom, Inc. on Friday, January 29, 1999, at 10:00 a.m. at
the Company's headquarters located at 31166 Via Colinas, Westlake Village,
California 91362, or at any adjournment or adjournments thereof, according
to the number of votes that the undersigned would be entitled to vote if
personally present, upon the following matters:
1. APPROVAL OF THE NOVEMBER 1998 PRIVATE PLACEMENT AND DECEMBER 1998
PRIVATE PLACEMENT
FOR AGAINST ABSTAIN
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSALS LISTED ABOVE.
DATED:___________,1999
Please sign exactly as name appears hereon. When shares
are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or
guardian, please give full title 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.
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Signature
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Signature if held jointly
PLAN DO NOT PLAN TO
ATTEND THE SPECIAL MEETING
Please mark, sign, date and return this proxy card promptly using the
enclosed envelope.
