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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
Westower Corporation
- --------------------------------------------------------------------------------
(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 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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Notes:
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PRELIMINARY COPY
WESTOWER CORPORATION
7001 N.E. 40TH AVENUE
VANCOUVER, WASHINGTON 98661
----------------
NOTICE OF 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 22, 1999
----------------
TO THE SHAREHOLDERS OF WESTOWER CORPORATION:
Notice is hereby given that the 1999 Annual Meeting of Shareholders (the
"Annual Meeting") of Westower Corporation ( the "Company" or "Westower") will
be held at the Hyatt Regency Hotel, 900 Bellevue Way, N.E., Bellevue,
Washington 98004 on February 22, 1999, at 10:00 a.m. local time for the
following purposes:
1.To elect ten directors to serve until the next annual meeting of
shareholders and until their respective successors have been duly elected
and qualified;
2.To consider a proposal to amend the Articles of Incorporation,
increasing the shares that the Company is authorized to issue from
10,000,000 shares of Common Stock, par value $.01 per share ("Common
Stock"), to 25,000,000 shares of Common Stock;
3.To consider a proposal to adopt the Company's 1998 Stock Incentive
Compensation Plan;
4.To consider a proposal to ratify the appointment of
PricewaterhouseCoopers LLP as the Company's independent auditors for the
fiscal year ending September 30, 1999; and
5.To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
Shareholders of record as of the close of business on December 31, 1998 are
entitled to notice of the Annual Meeting and to vote at the Annual Meeting. A
list of shareholders of the Company as of the close of business on December
31, 1998 will be available for inspection during normal business hours for ten
(10) days prior to the Annual Meeting at the Company's principal office
located at 7001 N.E. 40th Avenue, Vancouver, Washington 98661.
By Order of the Board of Directors
Peter Lucas
Secretary
Vancouver, Washington
January 27, 1999
EACH SHAREHOLDER IS URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF A SHAREHOLDER DECIDES TO ATTEND THE MEETING, HE OR SHE MAY,
IF SO DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
<PAGE>
WESTOWER CORPORATION
7001 N.E. 40TH AVENUE
VANCOUVER, WASHINGTON 98661
----------------
PROXY STATEMENT FOR 1999 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 22, 1999
INTRODUCTION
This proxy statement and accompanying form of proxy are being mailed on or
about January 27, 1999 to the shareholders of Westower Corporation, a
Washington corporation ("Westower" or the "Company"). These materials are
being furnished in connection with the solicitation by the Board of Directors
of the Company of proxies to be voted at the 1999 Annual Meeting of the
Shareholders (the "Annual Meeting") to be held at the Hyatt Regency Hotel, 900
Bellevue Way, N.E., Bellevue, Washington 98004 at 10:00 a.m., local time, on
February 22, 1999, and any adjournments thereof.
At the Annual Meeting, shareholders of the Company will be asked to vote
upon: (i) the election of ten directors to serve until the next annual meeting
of shareholders and until their respective successors have been duly elected
and qualified; (ii) a proposal to amend the Articles of Incorporation to
increase the shares that the Company is authorized to issue from 10,000,000
shares of Common Stock, par value of $.01 per share ("Common Stock"), to
25,000,000 shares of Common Stock; (iii) a proposal to approve the adoption of
the Company's 1998 Stock Incentive Compensation Plan; and (iv) a proposal to
ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for the fiscal year ending September 30, 1999.
The cost of this solicitation of proxies will be borne by the Company. Some
of the officers and directors and regular employees of the Company may solicit
proxies personally or by telephone. These individuals will not be specially
compensated for such service.
The Company recently changed the end of its fiscal year from February 28 to
September 30. The Company's 1998 Annual Report to Shareholders covering the
fiscal year ending February 28, 1998 (the "1998 Fiscal Year") and the
transition period commencing March 1, 1998 and ending September 30, 1998 (the
"Transition Period"), including audited financial statements, is being mailed
to the shareholders with this proxy statement but does not constitute a part
of this proxy statement.
VOTING AT THE MEETING
Holders of record of shares of the Company's Common Stock at the close of
business on December 31, 1998 (the "Record Date") are entitled to vote at the
Annual Meeting. As of December 31, 1998, there were 8,148,852 shares of Common
Stock outstanding. Each shareholder entitled to vote shall have the right to
one vote for each share of Common Stock outstanding in such shareholder's
name.
The Company presently has no other class of stock outstanding and entitled
to be voted at the Annual Meeting. The presence in person or by proxy of
shareholders entitled to cast a majority of all votes entitled to be cast at
the Annual Meeting will constitute a quorum. Broker non-votes received with
respect to the proposals to be acted upon at the Annual Meeting will be
counted for purposes of determining whether a quorum is present at the Annual
Meeting but will not be considered as votes cast and will have no effect on
the proposals with the exception of the proposal to increase the authorized
shares of Common Stock, which requires the affirmative vote of a majority of
the shares outstanding and entitled to vote at the Annual Meeting.
Shares cannot be voted at the Annual Meeting unless the shareholder of
record is present in person or by proxy. The enclosed form of proxy is a means
by which a shareholder may authorize the voting of his, her or its
<PAGE>
shares at the Annual Meeting. The shares of Common Stock represented by each
properly executed proxy will be voted at the Annual Meeting in accordance with
each shareholder's directions. Shareholders are urged to specify their choices
by marking the appropriate boxes on the enclosed proxy card. The proxy may be
revoked by a shareholder at any time prior to its use by giving notice of such
revocation to the Secretary of the Company, by appearing at the Annual Meeting
and voting in person, or by returning a later dated proxy. Unless specific
instructions are given to the contrary, the shares of Common Stock represented
by each properly executed proxy will be voted as recommended by the Board of
Directors. If any other matters are properly presented to the Annual Meeting
for action, the proxy holders will vote the proxies in accordance with their
best judgment.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors of the Company consists of such number of directors
as is fixed from time to time by the Board of Directors. At the Annual Meeting
ten directors are to be elected. Each director shall serve for a one year term
which will expire at the 2000 Annual Meeting of Shareholders, and will hold
office until the election and qualification of the director's successor or
until the director's earlier death, removal or resignation.
The Board of Directors has nominated Michael J. Anderson, Seth A. Buechley,
Ronald P. Erickson, Donald A. Harris, S. Roy Jeffrey, Peter Lucas, Calvin J.
Payne, Robert A. Shuey, III, Leonard M. Tannenbaum and Bruce E. Toll for
election as directors of the Company. All nominees except Mr. Tannenbaum are
presently directors of the Company whose terms expire at the Annual Meeting.
All nominees have consented to be named and to serve if elected. Unless
otherwise instructed by a shareholder, the persons named as proxies will vote
the shares represented thereby for the election of such nominees. The Board of
Directors believes that all nominees will be able to serve as directors. If
this should not be the case, however, the proxies may be voted for one or more
substitute nominees to be designated by the Board of Directors, or the Board
may decide to reduce the number or directors.
Directors are to be elected at the Annual Meeting by a plurality of the
votes cast by holders of Common Stock present in person or represented by
proxy at the Annual Meeting and entitled to vote. With regard to the election
of directors, votes may be cast in favor of a director nominee or withheld.
Votes that are withheld will be excluded entirely from the vote and will have
no effect other than for purposes of determining the presence of a quorum.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH OF THE
NOMINEES NAMED BELOW.
NOMINEES FOR ELECTION
Set forth below is information regarding the nominees, including principal
occupations during the past five years, positions with the Company, other
directorships and age.
MICHAEL J. ANDERSON, 47, has been a director of the Company since May 1998,
when the Company acquired MJA Communications Corp ("MJA Communications"), a
corporation engaged in the construction of towers for the wireless
communications industry that was founded and owned primarily by Mr. Anderson.
He has also been Senior Vice President of the Company since that time. Mr.
Anderson founded M.J. Anderson Construction Corporation in 1979 and served as
Chief Executive Officer of that company. M.J. Anderson Construction
Corporation is a multi-state general contractor that designs and builds
hotels, medical facilities and general commercial structures. MJA
Communications was founded in 1995. Mr. Anderson received a bachelors degree
in construction management from the University of Florida in 1974.
SETH A. BUECHLEY, 27, has been a director of the Company since August 1998,
when the Company acquired Cord Communications, Inc. ("Cord"), which is engaged
in providing construction and related services to telecommunications
companies. He has also served as Vice President to the Company since that
time. Mr.
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Buechley was a co-founder and Chief Executive Officer of Cord. Mr. Buechley
worked at Cord since 1988 and was instrumental in developing the technical
services, cordcomm electrical and professional services divisions.
RONALD P. ERICKSON, 54, has been a director since November 1997. Mr.
Erickson is the Chief Executive Officer of eCHARGE Corporation, an Internet
payments company providing technology which allows consumers to charge
Internet purchases to their phone, cable and utility bills. From 1995 to 1998
he was Chairman and Chief Executive Officer of GlobalTel Resources, Inc., a
provider of telecommunications and networking services in international
markets. From 1992 to 1994 he was, variously, Chairman, Vice-Chairman,
President and Chief Executive Officer of Egghead Software, Inc. (now
Egghead.com). He was a co-founder, in 1981, of MicroRim, Inc., a data base
software development company. Previously, he practiced law in Seattle,
Washington. Early in his career Mr. Erickson worked in public policy at the
White House and for the Rockefeller Commission on Critical Choices. He has
been an active investor and member of the Board of Directors of a number of
companies. He currently sits on the Boards of ITEX Corporation, Upgrade
International Inc., Intrinsyc Software, Inc., as well as other private
companies. Mr. Erickson has a BA from Central Washington University, a MA from
the University of Washington, and a JD from the University of California,
Davis.
DONALD A. HARRIS, 46, has been a director of the Company since January 1998.
Mr. Harris is currently the Chief Executive Officer of Ubiquitel, LLC, a
telecommunications company organized by Mr. Harris and other investors in
1997. Prior to joining Ubiquitel, Mr. Harris was President of Comcast Cellular
Communications, Inc. from March 1992 to March 1997. From 1990 to 1992 Mr.
Harris was Vice President of Pactel Cellular, a wireless telecommunications
provider, and General Manager of Pactel's Los Angeles system. Prior to then
Mr. Harris was President and Chief Executive Officer of Bay Area Cellular
Telephone Company in San Francisco. Mr. Harris began his career in the
cellular communications industry as a consultant with McKinsey & Company. He
is a graduate of the United States Military Academy at West Point and holds an
MBA from Columbia University.
S. ROY JEFFREY, 51, has been a director of the Company or its predecessor
since 1990. He is a co-founder and has been the Chief Operating Officer since
1990. Prior to founding the Company, Mr. Jeffrey has 25 years experience in
all aspects of the supply and installation of communication towers and
equipment. Mr. Jeffrey was employed by a privately held communications company
from 1972 to 1990, when he left to co-found the Company. He started as a high
steel rigger, was promoted to field supervisor and then promoted to branch
manager where he was responsible for as many as 36 office and field employees.
Mr. Jeffrey supervised or managed the supply and installation of towers in the
United States, Canada, the Caribbean, Australia, and the Middle East. Mr.
Jeffrey has managed all aspects of communications site construction including
permit applications, surveys, road-building, foundations, and the supply and
installation of buildings, towers and antennas, and transmission lines. Mr.
Jeffrey has extensive experience in rigging tall towers.
PETER LUCAS, 44, has been a director of the Company since April 1997. He has
also served as the Chief Financial Officer since April 1997. From August 1995
to April 1997, Mr. Lucas served as Chief Financial Officer of Cotton Valley
Resources Corporation, a Dallas-based public oil and gas company. From May
1992 to July 1995, he served as Chief Financial Officer of Canmax Inc., a
Dallas-based public company that develops software for gas stations and
convenience stores. Mr. Lucas is a member of the Canadian Institute of
Chartered Accountants. He received his professional training at Coopers &
Lybrand, which he left in 1984 to form his own tax practice. Six years later,
Mr. Lucas's practice merged with Coopers & Lybrand, with whom he was a partner
until 1992. Mr. Lucas passed the AICPA reciprocity examination in 1993 and is
experienced in domestic taxation, accounting and securities matters. He
received a bachelor of commerce degree from the University of Alberta in 1978.
CALVIN J. PAYNE, 46, Chairman of the Board and Chief Executive Officer, has
been a director of the Company or its predecessor since 1990. He is a co-
founder and has been the Chief Executive Officer since 1990. Prior to founding
the Company, Mr. Payne acquired experience in all aspects of the construction
of steel communication towers. He was a construction worker and rigger in
1975, a field engineer in 1978, a design engineer in 1979, engineering manager
in charge of a tower company's Australian operations in 1983, and Chief
Engineer of the same company's domestic operations in 1988. Mr. Payne has
engineered over 600 towers,
3
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including a 1470 foot tower in Florida designed to withstand hurricane winds.
Mr. Payne won a design award for a steel tower erected on a mountain-top site
near the Alaskan-Canadian border that was completely enclosed in fiberglass to
shield the tower and antenna from wind and ice. Mr. Payne has assisted in the
writing of design standards for communication towers in the United States,
Canada, and Australia. He received a degree in civil engineering from the
University of British Columbia in 1978 and an MBA from the University of
Western Australia in 1985.
ROBERT A. SHUEY, III, 44, has been a director of the Company since November
1997. Mr. Shuey is Chief Executive Officer of EuroMed, Inc., the parent
company of Redstone Securities, Inc. From August 1997 to December 1998 he
acted as Managing Director of Capital Markets for Tejas Securities Group, Inc.
From September 1996 to July 1997, he acted as Managing Director Corporate
Finance for National Securities Corporation; from April 1995 to August 1996,
he acted as Managing Director Corporate Finance for LaJolla Securities
Corporation; from January 1993 to March 1995, he acted as Managing Director
Corporate Finance for National Securities Corporation. Mr. Shuey is a member
of the Board of Directors of EuroMed, Inc., AutoBond Corporation,
Transnational Financial Corporation and BioShield Technologies, Inc. Mr. Shuey
is a graduate of Babson College with a degree in Economics and Finance.
LEONARD M. TANNENBAUM, 27, is a principal with LAR Management, Inc., which
manages a $50,000,000 hedge fund. He joined LAR Management, Inc. in April
1997. Prior to that time he was an associate with Pilgrim Baxter, a mutual
fund manager, from June 1996 to April 1997 and an Assistant Vice President and
analyst in the Small Company Group at Merrill Lynch from 1994 to 1996. Mr.
Tannenbaum is a graduate of The Wharton School of The University of
Pennsylvania, where he received a BS (Strategic Management) and an MBA
(Finance). Mr. Tannenbaum is Bruce E. Toll's son-in-law.
BRUCE E. TOLL, 55, has been a director of the Company since December 1998.
He has been Vice Chairman and a director of Toll Brothers Inc., a homebuilding
company, since October 31, 1998. From 1986 to that date, he was President,
Chief Operating Officer, secretary and a director of Toll Brothers, Inc., and
Mr. Toll was engaged in operations of predecessors of that company since 1967.
Mr. Toll has the right to appoint a director under the terms of the agreement
by which he holds convertible subordinated notes of the Company. See "Certain
Transactions."
MEETINGS AND COMMITTEES OF THE BOARD
Board of Directors Meetings. From October 14, 1997, when the Company
completed its public offering, until February 28, 1998, there was one meeting
of the Board of Directors. During the Transition Period, there were two
meetings of the Board of Directors. On several occasions the Board and its
committees took action by unanimous written consent. Each director attended at
least 75% of the aggregate number of meetings of the full Board and each
committee on which such director served. The Board of Directors has an Audit
Committee and a Compensation Committee. The Board does not have a nominating
committee.
Audit Committee. The Audit Committee is responsible for providing general
oversight with respect to the accounting principles employed in the Company's
financial reporting. The Audit Committee meets at least annually with the
Company's principal financial and accounting officers and independent public
accountants to review the scope of auditing procedures, the Company's policies
relating to internal auditing and accounting procedures and controls, and to
discuss results of the annual audit of the Company's financial statements. The
Audit Committee met once from the date the Company completed its initial
public offering to February 28, 1998 and two times during the Transition
Period. The current members of the Audit Committee are Ronald P. Erickson,
chairman, Donald A. Harris and Robert A. Shuey, III, all non-employee members
of the Board.
Compensation Committee. The Compensation Committee has general supervisory
power over, and the power to grant options under, the Company's stock option
plans. In addition, the Compensation Committee recommends to the Board the
compensation of the Company's Chief Executive Officer, reviews and takes
action
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on the recommendations of the Chief Executive Officer as to the compensation
of the Company's other officers and key personnel, approves the grants of any
bonuses to officers, and reviews other compensation matters generally. The
Compensation Committee met once from the date the Company completed its
initial public offering to February 28, 1998 and two times during the
Transition Period. The current members of the Compensation Committee are
Ronald P. Erickson, chairman, Donald A. Harris and Robert A. Shuey, III, all
non-employee members of the Board.
PROPOSAL NO. 2
INCREASE AUTHORIZED SHARE CAPITAL FROM 10,000,000 TO 25,000,000 SHARES OF
COMMON STOCK
At the Annual Meeting, a proposal will be presented to shareholders to
approve an amendment to the Company's Articles of Incorporation, increasing
the number of shares that the Company is authorized to issue from 10,000,000
shares of Common Stock, to 25,000,000 shares of Common Stock (the "Authorized
Shares Increase"). The Board of Directors has adopted the Authorized Shares
Increase subject to shareholder approval. As of December 31, 1998, the Company
had 8,148,852 shares of Common Stock outstanding.
Reasons for Amendment. The Company believes it is desirable to have the
additional authorized shares of Common Stock available for future capital
raising and acquisition transactions, employee benefit plans and other general
corporate purposes. All authorized but unissued shares of Common Stock,
including the additional shares authorized by the Authorized Shares Increase,
will be available for issuance without further action by the shareholders,
unless such action is required by applicable law or the rules of the American
Stock Exchange, where the Common Stock is currently listed. Shares issuable
pursuant to the Company's presently authorized transactions would, if issued,
exceed the Company's presently authorized shares of Common Stock. Accordingly,
Messrs. Payne, Jeffrey and Lucas have agreed not to exercise stock options
unless and until the number of shares of authorized Common Stock is increased.
Principal Effects. The additional shares of Common Stock to be authorized by
the Authorized Shares Increase would have rights identical to the currently
authorized Common Stock. Any future issuance of additional shares of Common
Stock may, among other things, have a dilutive effect on earnings per share of
Common Stock and on the equity and voting rights of those holding Common Stock
at the time such shares are issued.
The proposal to approve the Authorized Shares Increase will become effective
if it receives the affirmative vote of the holders of a majority of the shares
of Common Stock outstanding and entitled to vote at the Annual Meeting.
Abstentions received with respect to the adoption of the Authorized Shares
Increase will be counted for purposes of determining whether a quorum is
present at the Annual Meeting and will have the effect of a no vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF AN
AMENDMENT TO THE ARTICLES OF INCORPORATION INCREASING THE AUTHORIZED SHARE
CAPITAL FROM 10,000,000 TO 25,000,000 SHARES OF COMMON STOCK.
PROPOSAL NO. 3
APPROVAL OF THE 1998 STOCK INCENTIVE COMPENSATION PLAN
At the Annual Meeting, there will be presented to shareholders a proposal to
approve the Company's 1998 Stock Incentive Compensation Plan (the "Plan"). The
Board of Directors has adopted the Plan subject to shareholder approval. The
Board of Directors believes that the Plan will enhance the long-term
shareholder value of the Company by offering opportunities to employees,
directors, officers, consultants, agents, advisors and independent contractors
of the Company and its subsidiaries to participate in the Company's growth and
success, and to encourage them to remain in the service of the Company and to
acquire and maintain stock ownership in the Company. The principal terms of
the Plan are discussed below.
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The Company currently maintains the 1997 Stock Option Compensation Plan (the
"1997 Plan") for purposes similar to those set forth above for the Plan.
Grants with respect to all 400,000 shares have been made with respect to the
1997 Plan, however. Additional shares are necessary for the Company to
effectively meet the foregoing objectives.
The proposal to approve the Plan will become effective if it receives the
affirmative vote of a majority of the votes cast at the Annual Meeting.
Abstentions received with respect to the adoption of the Plan will be counted
for purposes of determining whether a quorum is present at the Annual Meeting
but will not be counted as votes cast and will have no effect on the result of
the vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
1998 STOCK INCENTIVE COMPENSATION PLAN.
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<PAGE>
PRINCIPAL FEATURES OF THE PLAN
The following is a description of the material features of the Plan and is
qualified in its entirety by the complete text of the Plan. Capitalized terms
not defined herein shall have the meanings given them in the Plan.
Administration of the Plan. The Plan is administered by the Board or a
committee of the Board (the "Plan Administrator") appointed by and consisting
of two or more members of the Board. In making its selection, the Board shall
consider the provisions regarding "outside director" as defined by section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code") and "non-
employee" director as defined in Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). The Board may delegate the
responsibility for administering the Plan with respect to designated classes
of eligible persons to different committees of the Board, subject to such
limitations as the Board deems appropriate. Committee members shall serve for
such term as the Board may determine, subject to removal by the Board at any
time. To the extent consistent with applicable law, the Board may authorize a
senior executive officer of the Company to grant Awards, within limits
specifically prescribed by the Board. Except for the terms and conditions
explicitly set forth in the Plan, the Plan Administrator shall have exclusive
authority, in its discretion, to determine all matters relating to Awards
under the Plan, including the selection of individuals to be granted Awards,
the type of Awards (as defined below), the number of shares of Common Stock
subject to an Award, all terms, conditions, restrictions and limitations, if
any, of an Award and the terms of any instrument that evidences the Award. The
Plan Administrator shall also have exclusive authority to interpret the Plan
and may from time to time adopt, and change, rules and regulations of general
application for the Plan's administration. The Plan Administrator's
interpretation of the Plan and its rules and regulations, and all actions
taken and determinations made by the Plan Administrator pursuant to the Plan,
shall be conclusive and binding on all parties involved or affected. The Plan
Administrator may delegate administrative duties to such of the Company's
officers as it so determines.
Stock Subject to the Plan. Subject to adjustment in certain circumstances,
as discussed below, and to shareholder approval of the Plan, the maximum
number of shares of Common Stock which shall be available for issuance under
the Plan shall not exceed in the aggregate 10% of the issued shares of Common
Stock as of the Plan's effective date; provided that, if the number of issued
shares of Common Stock is increased after the Plan's effective date, the
maximum number of shares of Common Stock which shall be available for issuance
under the Plan shall be increased by 10% of such increase. In no event,
however, shall more than 1,000,000 shares of Common Stock be cumulatively
available for issuance pursuant to the exercise of Incentive Stock Options
under the Plan. The Company has filed a registration statement on Form S-8 to
register the shares of Common Stock issuable under the Plan.
Awards. Awards under the Plan may consist of (i) Incentive Stock Options
designed to qualify as "incentive stock options" under Section 422 of the
Code, (ii) Nonqualified Stock Options, or (iii) grants of stock ("Stock
Awards"; collectively referred to as "Awards"). Options may be granted singly
or in combination. Notwithstanding anything in the Plan to the contrary, the
Plan Administrator may grant Awards under the Plan, in substitution for awards
issued under other plans, or assume under the Plan awards issued under other
plans, if the other plans are or were plans of other acquired entities
("Acquired Entities") (or the parent of an Acquired Entity) and the new Award
is substituted, or the old award is assumed, by reason of merger,
consolidation, acquisition of property or of stock, reorganization or
liquidation (the "Acquisition Transaction"). In the event that a written
agreement pursuant to which the Acquisition Transaction is completed is
approved by the Board and said agreement sets forth the terms and conditions
of the substitution for or assumption of outstanding awards of the Acquired
Entity, said terms and conditions shall be deemed to be the action of the Plan
Administrator without any further action by the Plan Administrator, except as
may be required for compliance with Rule 16b-3 under the Exchange Act, and the
persons holding such Awards shall be deemed to be Holders.
Eligibility for Participation. Awards may be granted to any officers,
directors, employees, advisors, agents, independent auditors or consultants to
the Company or its subsidiaries.
Options. The exercise price for shares purchased under an Option shall be as
determined by the Plan Administrator, but shall not be less than 100% of the
Fair Market Value of the Common Stock on the Grant
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Date with respect to Incentive Stock Options and not less than 100% of the
Fair Market Value of the Common
Stock on the Grant Date with respect to Nonqualified Stock Options. The term
of each Option shall be as established by the Plan Administrator or, if not so
established, shall be 10 years from the Grant Date. The Plan Administrator
shall establish and set forth in each instrument that evidences an Option the
time at which or the installments in which the Option shall vest and become
exercisable, which provisions may be waived or modified by the Plan
Administrator at any time. If not so established in the instrument evidencing
the Option, the Option will vest and become exercisable according to the
following schedule, which may be waived or modified by the Plan Administrator
at any time.
<TABLE>
<CAPTION>
PERIOD OF HOLDER'S CONTINUOUS PERCENT OF
EMPLOYMENT OR SERVICE WITH TOTAL OPTION
THE COMPANY OR ITS SUBSIDIARIES THAT IS VESTED
FROM THE OPTION GRANT DATE AND EXERCISABLE
------------------------------- ---------------
<S> <C>
After 1 year.............................................. 25%
After 2 years............................................. 50%
After 3 years............................................. 75%
After 4 years............................................. 100%
</TABLE>
To the extent that the right to purchase shares has accrued thereunder, an
Option may be exercised from time to time by written notice to the Company, in
accordance with procedures established by the Plan Administrator, setting
forth the number of shares with respect to which the Option is being exercised
and accompanied by payment in full as described below. The Plan Administrator
may determine at any time that an Option may not be exercised as to less than
100 shares at any one time (or the lesser number of remaining shares covered
by the Option).
The exercise price for shares purchased under an Option shall be paid in
full to the Company by delivery of consideration equal to the product of the
Option exercise price and the number of shares purchased. Such consideration
must be paid in cash or by check or, unless the Plan Administrator in its sole
discretion determines otherwise, either at the time the Option is granted or
at any time before it is exercised, a combination of cash and/or check (if
any) and/or one or both of the following alternative forms: (a) tendering
Common Stock already owned by the Holder for at least six months (or any
shorter period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) having a Fair Market Value on the day prior to
the exercise date equal to the aggregate Option exercise price or (b) if and
so long as the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, delivery of a properly executed exercise notice, together with
irrevocable instructions, to (i) a brokerage firm designated by the Company to
deliver promptly to the Company the aggregate amount of sale or loan proceeds
to pay the Option exercise price and any withholding tax obligations that may
arise in connection with the exercise and (ii) the Company to deliver the
certificates for such purchased shares directly to such brokerage firm, all in
accordance with the regulations of the Federal Reserve Board. In addition, the
exercise price for shares purchased under an Option may be paid, either singly
or in combination with one or more of the authorized forms of payment by such
other consideration as the Plan Administrator may permit.
The Plan Administrator shall establish and set forth in each instrument that
evidences an Option whether the Option will continue to be exercisable, and
the terms and conditions of such exercise, if a Holder ceases to be employed
by, or to provide services to, the Company or its Subsidiaries, which
provisions may be waived or modified by the Plan Administrator at any time. If
not so established in the instrument evidencing the Option, the Option will be
exercisable according to the following terms and conditions, which may be
waived or modified by the Plan Administrator at any time.
Termination of Employment. In case of termination of the Holder's employment
or services other than by reason of death or Cause, the Option shall be
exercisable, to the extent of the number of shares purchasable by the Holder
at the date of such termination, only (a) within one year if the termination
of the Holder's employment or services is coincident with Retirement, Early
Retirement at the Company's request or Disability or (b) within
8
<PAGE>
three months after the date the Holder ceases to be any employee, director,
officer, consultant, agent, advisor or independent contractor of the Company
or a Subsidiary if termination of the Holder's employment or services is for
any reason other than Retirement, Early Retirement at the Company's request or
Disability, but in no event later than the remaining term of the Option. Any
Option exercisable at the time of the Holder's death may be exercised, to the
extent of the number of shares purchasable by the Holder at the date of the
Holder's death, by the personal representative of the Holder's estate, the
person(s) to whom the Holder's rights under the Option have passed by will or
the applicable laws of descent and distribution or the Holder's designated
beneficiary at any time or from time to time within one year after the date of
death, but in no event later than the remaining term of the Option. Any
portion of an Option that is not exercisable on the date of termination of the
Holder's employment or services shall terminate on such date, unless the Plan
Administrator determines otherwise. In case of termination of the Holder's
employment or services for Cause, the Option shall automatically termination
upon first notification to the Holder of such termination, unless the Plan
Administrator determines otherwise. If a Holder's employment or services with
the Company are suspended pending an investigation of whether the Holder shall
be terminated for Cause, all the Holder's rights under any Option likewise
shall be suspended during the period of investigation.
A transfer of employment of services between or among the Company and its
Subsidiaries shall not be considered a termination of employment or services.
The effect of a Company-approved leave of absence on the terms and conditions
of an Option shall be determined by the Plan Administrator, in its sole
discretion.
Limitations on Incentive Stock Options. To the extent required by Section
422 of the Code, Incentive Stock Options shall be subject to the following
additional terms and conditions:
1.To the extent the aggregate Fair Market Value (determined as of the
Grant Date) of Common Stock with respect to which Incentive Stock Options
are exercisable for the first time during any calendar year (under the Plan
and all other stock option plans of the Company) exceeds $100,000 such
portion in excess of $100,000 shall be treated as a Nonqualified Stock
Option. In the event the Holder holds two or more such Options that become
exercisable for the first time in the same calendar year, such limitation
shall be applied on the basis of the order in which such Options are
granted.
2.If an individual owns more than 10% of the total voting power of all
classes of the Company's stock, then the exercise price per share of an
Incentive Stock Option shall not be less than 110% of the Fair Market Value
of the Common Stock on the Grant Date and the Option term shall not exceed
five years. The determination of 10% ownership shall be made in accordance
with Section 422 of the Code.
3.Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this determination, "parent corporation" and
"subsidiary corporation" shall have the meanings attributed to those terms
for purposes of Section 422 of the Code.
4.The term of an Incentive Stock Option shall not exceed 10 years.
5.To qualify for Incentive Stock Option tax treatment, an Option
designated as an Incentive Stock Option must be exercised within three
months after termination of employment for reasons other than death, except
that, in the case of termination of employment due to total disability,
such Option must be exercised within one year after such termination.
Employment shall not be deemed to continue beyond the first 90 days of a
leave of absence unless the Holder's reemployment rights are guaranteed by
statute or contract. For purposes of this determination, "total disability"
shall mean a mental or physical impairment of the Holder that is expected
to result in death or that has lasted or is expected to last for a
continuous period of 12 months or more and that causes the Holder to be
unable, in the opinion of the Company and two independent physicians, to
perform his or her duties for the Company and to be engaged in any
substantial gainful activity. Total disability shall be deemed to have
occurred on the first day after the Company and the two independent
physicians have furnished their opinion of total disability to the Plan
Administrator.
9
<PAGE>
In order to obtain certain tax benefits afforded to Incentive Stock Options
under Section 422 of the Code, the Holder must hold the shares issued upon the
exercise of an Incentive Stock Option for two years after the Grant Date of
the Incentive Stock Option and one year from the date of exercise. A Holder
may be subject to the alternative minimum tax at the time of exercise of an
Incentive Stock Option. The Plan Administrator may require a Holder to give
the Company prompt notice of any disposition of shares acquired by the
exercise of an Incentive Stock Option prior to the expiration of such holding
periods.
Stock Awards. The Plan Administrator is authorized to make Awards of Common
Stock on such terms and conditions and subject to such restrictions, if any
(which may be based on continuous service with the Company or the achievement
of performance goals related to profits, profit growth, profit-related return
ratios, cash flow or total shareholder return, where such goals may be stated
in absolute terms or relative to comparison companies), as the Plan
Administrator shall determine, in its sole discretion, which terms, conditions
and restrictions shall be set forth in the instrument evidencing the Award.
The terms, conditions and restrictions that the Plan Administrator shall have
the power to determine shall include, without limitation, the manner in which
shares subject to Stock Awards are held during the periods they are subject to
restrictions and the circumstances under which forfeiture of Restricted Stock
shall occur by reason of termination of the Holder's services.
Upon the satisfaction of any terms, conditions and restrictions prescribed
in respect to a Stock Award, or upon the Holder's release from any terms,
conditions and restrictions of a Stock Award, as determined by the Plan
Administrator, the Company shall release, as soon as practicable, to the
Holder or, in the case of the Holder's death, to the personal representative
of the Holder's estate or as the appropriate court directs, the appropriate
number of shares of Common Stock.
Notwithstanding any other provision of the Plan, the Plan Administrator may,
in its sole discretion, waive the forfeiture period and any other terms,
conditions or restrictions on any Restricted Stock under such circumstances
and subject to such terms and conditions as the Plan Administrator shall deem
appropriate.
Assignability. Awards are generally not transferable by the participant,
except in the event of death and, during Holder's lifetime, such Awards may be
exercised only by the Holder or a permitted assignee or transferee of the
Holder (as provided below). Notwithstanding the foregoing, and to the extent
permitted by Section 422 of the Code, the Plan Administrator, in its sole
discretion, may permit such assignment, transfer and exercisability and may
permit a Holder to designate a beneficiary who may exercise the Award after
the Holder's death; provided, however, that any Award so assigned or
transferred shall be subject to all the same terms and conditions contained in
the instrument evidencing the Award.
Adjustment of Shares. In the event that, at any time or from time to time, a
stock dividend, stock split, spin-off, combination or exchange of shares,
recapitalization, merger, consolidation, distribution to shareholders other
than a normal cash dividend, or other change in the Company's corporate or
capital structure results in (a) the outstanding shares, or any securities
exchanged therefor or received in their place, being exchanged for a different
number or class of securities of the Company or of any other corporation or
(b) new, different or additional securities of the Company or of any other
corporation being received by the holders of shares of Common Stock of the
Company, then the Plan Administrator shall make proportional adjustments in
(i) the maximum number and kind of securities subject to the Plan as set forth
above, (ii) the maximum number and kind of securities that may be made subject
to Awards to any individual as set forth above, and (iii) the number and kind
of securities that are subject to any outstanding Award and the per share
price of such securities, without any change in the aggregate price to be paid
therefor. The determination by the Plan Administrator as to the terms of any
of the foregoing adjustment shall be conclusive and binding.
Except as otherwise provided in the instrument that evidences the Award, in
the event of any Corporate Transaction (a term that includes, among other
things, certain mergers or consolidations involving the Company or a sale of
all or substantially all the assets of the Company), each Award that is at the
time outstanding shall automatically accelerate so that each such Award shall,
immediately prior to the specified effective date for the Corporate
Transaction, become 100% vested and exercisable.
10
<PAGE>
Such Award shall not so accelerate, however, if and to the extent that such
Award is, in connection with the Corporate Transaction, either to be assumed
by the successor corporation or parent thereof (the "Successor Corporation")
or to be replaced with a comparable award for the purchase of shares of the
capital stock of the Successor Corporation. The determination of Award
comparability shall be made by the Plan Administrator, and its determination
shall be conclusive and binding. Any such Awards that are assumed or replaced
in the Corporate Transaction and do not otherwise accelerate at that time
shall be accelerated in the event that the Holder's employment or services
should subsequently terminate within two years following such Corporate
Transaction, unless such employment or services are terminated by the
Successor Corporation for Cause or by the Holder's voluntarily without Good
Reason.
All such Awards shall terminate and cease to remain outstanding immediately
following the consummation of the Corporate Transaction, except to the extent
assumed by the Successor Corporation. The acceleration will not occur if, in
the opinion of the Company's outside accountants, if would render unavailable
"pooling of interest" accounting for a Corporate Transaction that would
otherwise qualify for such accounting treatment.
Further Adjustment of Options. Subject to the above-noted Corporate
Transaction adjustment, the Plan Administrator shall have the discretion,
exercisable at any time before a sale, merger, consolidation, reorganization,
liquidation or change in control of the Company, as defined by the Plan
Administrator, to take such further action as it determines to be necessary or
advisable, and fair and equitable to Holders, with respect to Awards. Such
authorized action may include (but shall not be limited to) establishing,
amending or waiving the type, terms, conditions or duration of, or
restrictions on, Awards so as to provide for earlier, later, extended or
additional time for exercise and other modifications, and the Plan
Administrator may take such actions with respect to all Holders, to certain
categories of Holders or only to individual Holders. The Plan Administrator
may take such action before or after granting Awards to which the action
relates and before or after any public announcement with respect to such sale,
merger, consolidation, reorganization, liquidation or change in control that
is the reason for such action.
Adjustment Limitations. The grant of Awards will in no way affect the
Company's right to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
Tax Withholding. The Company may require the Holder to pay to the Company
the amount of any withholding taxes that the Company is required to withhold
with respect to the grant, vesting or exercise of any Award. Subject to the
Plan and applicable law, the Plan Administrator may, in its sole discretion,
permit the Holder to satisfy withholding obligations, in whole or in part, by
paying cash, by electing to have the Company withhold shares of Common Stock
or by transferring shares of Common Stock to the Company, in such amounts as
are equivalent to the Fair Market Value of the withholding obligation. The
Company shall have the right to withhold from any Award or any shares of
Common Stock issuable pursuant to an Award or from any cash amount otherwise
due or to become due from the Company to the Holder an amount equal to such
taxes. The Company may also deduct from any Award any other amounts due from
the Holder to the Company or a Subsidiary.
Amendment and Termination of Plan. The Plan may be amended only by the Board
in such respects as it shall deem advisable; however, to the extent required
for compliance with Section 422 of the Code or any applicable law or
regulation, shareholder approval will be required for any amendment that will
(a) increase the total number of shares as to which Options may be granted
under the Plan or that may be issued as Stock Awards, (b) modify the class of
persons eligible to receive Options, or (c) otherwise require shareholder
approval under any applicable law or regulation.
The Board may suspend or terminate the Plan at any time. The Plan will have
no fixed expiration date; provided, however, that no Incentive Stock Options
may be granted more than 10 years after the earlier of the Plan's adoption by
the Board and approval by the shareholders. The amendment or termination of
the Plan shall not, without the consent of the Holder of any Award under the
Plan, impair or diminish any rights or obligations
11
<PAGE>
under any Award theretofore granted under the Plan. Any change or adjustment
to an outstanding Incentive Stock Option shall not, without the consent of the
Holder, be made in a manner so as to constitute a "modification" that would
cause such Incentive Stock Option to fail to continue to qualify as an
Incentive Stock Option.
PROPOSAL NO. 4
RATIFICATION OF APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP
AS THE COMPANY'S INDEPENDENT AUDITORS
At the Annual Meeting, there will be presented to shareholders a proposal to
ratify the Company's appointment of PricewaterhouseCoopers LLP as the
independent auditors for the Company for the fiscal year ending September 30,
1999.
On October 28, 1998, the Company dismissed Moss Adams LLP ("Moss Adams") as
its independent auditors and engaged PricewaterhouseCoopers LLP as its
independent auditors. The Company's decision to change its independent
auditors was made as a result of the Company's numerous recent and expected
future acquisitions. The change of independent auditors was recommended by the
Audit Committee and was approved by the Board of Directors.
Moss Adams' report on the Company's financial statements for the prior two
fiscal years did not contain an adverse opinion or disclaimer of opinion, nor
was it qualified or modified as to uncertainty, audit scope, or accounting
principles. In addition, during the Company's two most recent fiscal years and
the subsequent interim periods preceding October 28, 1998, there were no
disagreements with Moss Adams on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which disagreement, if not resolved to the satisfaction of Moss Adams, would
have caused Moss Adams to make a reference to the subject matter of the
disagreement in connection with its report. The Company requested that Moss
Adams furnish it with a letter addressed to the Securities and Exchange
Commission stating whether or not it agreed with the above statements, and
Moss Adams provided a letter stating that it agreed with them.
During its two most recent fiscal years and through October 28, 1998, the
Company did not consult with PricewaterhouseCoopers LLP regarding either the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements or any matter that was either the subject
of a disagreement or a reportable event with Moss Adams.
The proposal to appoint PricewaterhouseCoopers LLP as the independent
auditors for the Company for the new fiscal year will become effective if it
receives the affirmative vote of a majority of the votes cast at the Annual
Meeting. Abstentions received with respect to the appointment of
PricewaterhouseCoopers LLP as the independent auditors will be counted for
purposes of determining whether a quorum is present at the Annual Meeting but
will not be counted as votes cast and will have no effect on the result of the
vote.
12
<PAGE>
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR THE
FISCAL YEAR ENDING SEPTEMBER 30, 1999.
COMMON STOCK OWNERSHIP
The following table sets forth certain information as of December 14, 1998
regarding the beneficial ownership of the Common Stock by: (i) each person
known by the Company to be a beneficial owner of more than 5% of the
outstanding Common Stock; (ii) each director of the Company and the additional
nominee to be a director; (iii) each Named Executive Officer identified in the
Summary Compensation below; and (iv) all directors, the additional nominee and
executive officers of the Company as a group. Unless otherwise indicated, each
beneficial owner named below has sole investment and voting power with respect
to the Common Stock shown below as beneficially owned by him.
<TABLE>
<CAPTION>
SHARES
------------------------
NUMBER OF PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OWNED OWNED
- ------------------------------------ ------------- ----------
DIRECTORS, EXECUTIVE OFFICERS AND NOMINEE
<S> <C> <C>
Calvin J. Payne (1)
7001 N.E. 40th Avenue
Vancouver, WA 98661.................................. 1,126,167 13.70
S. Roy Jeffrey (2)
7001 N.E. 40th Avenue
Vancouver, WA 98661.................................. 1,126,167 13.70
Michael J. Anderson (3)
7001 N.E. 40th Avenue
Vancouver, WA 98661.................................. 337,470 4.14
Peter Lucas (4)
7001 N.E. 40th Avenue
Vancouver, WA 98661.................................. 30,000 *
Ronald P. Erickson (5)
7001 N.E. 40th Avenue
Vancouver, WA 98661.................................. 10,000 *
Donald A. Harris(6)
7001 N.E. 40th Avenue
Vancouver, WA 98661.................................. 11,500 *
Robert A. Shuey, III (7)
7001 N.E. 40th Avenue
Vancouver, WA 98661.................................. 120,700 1.46
Leonard M. Tannenbaum(8)
7001 N.E. 40th Avenue
Vancouver, WA 98661.................................. 43,100 *
Bruce E. Toll (9)
3103 Philmont Avenue
Huntingdon Valley, PA 19006.......................... 805,281 9.16
All directors, the additional nominee and executive
officers as a group (10 persons)..................... 3,503,015 38.97
OTHER 5% OWNERS
Gilder, Gagnon, Howe & Co. (10)
1775 Broadway, 26th Floor
New York, NY 10019................................... 703,767 8.64
Peter Jeffrey (11)
7001 N.E. 40th Avenue
Vancouver, WA 98661.................................. 878,333 10.72
Tom T. Cunningham
1818 Kersten Drive
Houston, TX 77043.................................... 543,950 6.68
</TABLE>
13
<PAGE>
- --------
* Less than 1%
(1) Includes the following shares, a monetary interest in which is
disclaimed: 66,250 shares held by Mr. Payne's spouse and 925,000 held by
the Calvin J. Payne Family Trust. Also includes 68,667 shares subject to
options which may be exercised within 60 days.
(2) Includes the following shares, a monetary interest in which is
disclaimed: 66,250 shares held by Mr. Jeffrey's spouse and 925,000 held
by the S. Roy Jeffrey Family Trust. Also includes 68,667 shares subject
to options which may be exercised within 60 days.
(3) Includes 168,735 shares beneficially owned by Mr. Anderson's spouse.
(4) Comprised entirely of shares subject to options that may be exercised
within 60 days.
(5) Comprised entirely of shares subject to options that may be exercised
within 60 days.
(6) Includes 10,000 shares subject to options that may be exercised within 60
days.
(7) Comprised entirely of shares subject to options and warrants that may be
exercised within 60 days.
(8) Includes 13,700 shares owned jointly with Mr. Tannenbaum's spouse.
(9) Includes 639,281 shares underlying the senior subordinated convertible
notes and warrants issued to BET Associates, L.P. on June 1, 1998 and
10,000 shares held by The Bruce E. and Robbi S. Toll Foundation.
(10) Includes shares held in customer accounts over which partners and/or
employees of Gilder, Gagnon, Howe & Co. have discretionary power to sell
such shares.
(11) Includes the following shares, a monetary interest in which is
disclaimed: 755,000 shares held by Peter Jeffrey Family Trust. Also
includes 43,333 shares subject to options which may be exercised within
60 days.
14
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table sets forth a summary of the compensation paid by the
Company during its last three fiscal years and the annualized income for the
Transition Period for the Chief Executive Officer and each of the officers of
the Company who served as an executive officer during the 1998 Fiscal Year or
the Transition Period and whose total salary and bonus exceeded $100,000, the
"Named Executive Officers."
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------
NAME AND NUMBER OF SHARES
PRINCIPAL POSITION PERIOD SALARY BONUS UNDERLYING OPTIONS
- ------------------ ----------------- ------- -------- ------------------
<S> <C> <C> <C> <C>
Calvin J. Payne........... Transition Period $43,750 -- --
Chief Executive Officer 1998 Fiscal Year 75,000 -- 98,000
1997 Fiscal Year 75,000 $437,780 --
1996 Fiscal Year 70,000 92,530 --
Peter Lucas............... Transition Period 70,000 -- --
Chief Financial Officer 1998 Fiscal Year 105,000 -- 45,000
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Transition Period and
Period End Option Values
No options have been exercised by the Named Executive Officers. The
following table sets forth information regarding the value of unexercised
options held by the Named Executive Officers of the Company.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT PERIOD END THE-MONEY OPTIONS
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------------------- -------------------------
<S> <C> <C>
Calvin J. Payne............. Transition Period Transition Period
Chief Executive Officer 32,667 / 65,333 $432,838 / 865,662
1998 Fiscal Year 1998 Fiscal Year
32,667 / 65,333 $432,838 / 865,662
Peter Lucas................. Transition Period Transition Period
Chief Financial Officer 15,000 / 30,000 $210,000 / 420,000
1998 Fiscal Year 1998 Fiscal Year
15,000 / 30,000 $210,000 / 420,000
</TABLE>
Option Grants in Last Fiscal Year and Transition Period
The following table sets forth information regarding option grants in the
1998 Fiscal Year to the Named Executive Officers of the Company. No options
were granted to the Named Executive Officers during the Transition Period.
<TABLE>
<CAPTION>
NUMBER OF PERCENT
SHARES OF
UNDERLYING TOTAL EXERCISE
OPTION OPTIONS PRICE
NAME GRANT GRANTED $/SHARE EXPIRATION DATE
- ---- ---------- ------- -------- ----------------
<S> <C> <C> <C> <C>
Calvin J. Payne.................... 54,000 9.12 $8.25 June 11, 2002
Chief Executive Officer 44,000 7.43 $8.25 October 15, 2002
Peter Lucas........................ 24,000 4.05 $7.50 June 11, 2002
Chief Financial Officer 21,000 3.55 $7.50 October 15, 2002
</TABLE>
15
<PAGE>
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive any remuneration
in their capacity as directors. Outside directors receive $12,000 annually and
$500 per meeting attended. All of the directors are reimbursed for their out
of pocket expenses for each Board and committee meeting attended.
CERTAIN TRANSACTIONS
Tejas Securities Group, Inc., of which Robert A. Shuey III was formerly
Managing Director of Capital Markets, was the lead underwriter in connection
with the Company's initial public offering in October 1997 of 1,380,000 units
(including units issued upon exercise of the underwriters' overallotment
option), each unit consisting of one share of Common Stock and one warrant to
purchase a share of Common Stock. The units were issued at a price to the
public of $7.50. The underwriters received underwriting discounts and
commissions of $.75 per unit. In addition, the Company paid the managing
underwriters, including Tejas Securities Group, Inc., a 2% nonaccountable
expense allowance and issued underwriters' warrants exercisable for four years
to purchase 120,000 units at 120% of the public offering price.
On October 28, 1997, the Company acquired all of the issued and outstanding
stock of WTC Holding Inc. ("WTC"), which holds all of the issued and
outstanding shares of Western Telecom Construction Ltd., in exchange for
835,000 shares of the Company's Common Stock. WTC was owned by Peter Jeffrey.
Approximately $555,437 of the proceeds of the Company's initial public
offering were used to repay amounts due to Calvin J. Payne and his spouse, a
corporation controlled by S. Roy Jeffrey and another individual. The amount
due to Mr. Payne and his spouse arose when amounts were distributed to them by
the Company for tax planning purposes and then loaned back to the Company in
1993. The amount due to the corporation controlled by S. Roy Jeffrey was
loaned to the Company to assist the Company in purchasing land in 1993.
Prior to the Company's initial public offering, the Company paid Westower
Consulting, an enterprise under control of the Company, for services provided.
Charges for these services were approximately $126,000 in Fiscal Year 1998 and
$94,000 in Fiscal Year 1997. Amounts due to Westower Consulting were $39,000
at February 28, 1998. No charges were incurred for such services following the
Company's initial public offering.
During January 1998, the Company advanced $119,000 to a corporation owned by
Messrs. Calvin J. Payne, S. Roy Jeffrey, Peter Jeffrey and Peter Lucas.
Proceeds were used by the borrowing corporation to purchase facilities leased
by one of the Company's newly acquired subsidiaries. The advances were
unsecured, bore no interest and were repaid in full in May 1998.
The Company acquired MJA Communications on May 29, 1998 in exchange for
397,023 shares of Common Stock of the Company. Michael J. Anderson and his
wife were the principal shareholder of MJA Communications, holding 85% of the
outstanding stock. In connection with the acquisition, the Company entered
into an employment agreement with Mr. Anderson for a three year term ending in
May 2001. Pursuant to the terms of that employment agreement, Mr. Anderson was
elected Senior Vice President of the Company and Chairman and Chief Executive
Officer of MJA Communications. Mr. Anderson is paid a base salary of $150,000
per year and participates in the Company's bonus pool and stock option plans.
Mr. Anderson also entered into a Registration Rights Agreement with the
Company allowing him to require the Company to register the shares of Common
Stock issued in connection with the acquisition of MJA in certain events.
On June 1, 1998 the Company issued $15,000,000 aggregate principal amount of
7% Convertible Senior Subordinated Notes due April 30, 2007 and warrants to
purchase 40,000 shares of Common Stock to BET Associates, L.P., of which the
general partner is an entity controlled by Bruce E. Toll. Leonard M.
Tannenbaum is a limited partner of BET Associates, L.P. The purchase price for
such notes and warrants was $14,850,000. The notes are convertible into shares
of Common Stock at $25.03 per share, subject to adjustment in certain events,
and the warrants are exercisable at a price of $23.00 per share, subject to
adjustment in certain events.
16
<PAGE>
The Company acquired Cord on August 31, 1998, in exchange for $5,000,000 in
cash and 217,387 shares of the Company's Common Stock. Up to an additional
347,826 shares of Common Stock may be issued based on the results of Cord for
the 12 months ending August 31, 1999. Seth A. Buechley owned approximately 33%
of the stock of Cord. In connection with the acquisition of Cord, the Company
entered into an employment agreement with Mr. Buechley for a two year term
ending in August 2000. Pursuant to the terms of that employment agreement, Mr.
Buechley has been elected Vice President of the Company and Senior Vice
President of Cord. Mr. Buechley is paid a base salary of $120,000 per year and
participates in the Company's bonus pool and stock option plans. Mr. Buechley
also entered into a Registration Rights Agreement with the Company allowing
him to require the Company to register the shares of Common Stock issued in
connection with the acquisition of Cord in certain events.
The Company acquired Standby Services, Inc. ("Standby") on August 31, 1998,
in exchange for 543,590 shares of the Company's Common Stock. Tom T.
Cunningham owned 100% of the stock of Standby. In connection with the
acquisition of Standby, the Company entered into an employment agreement with
Mr. Cunningham for a three year term ending in August 2001. Mr. Cunningham is
Chief Executive Officer of Standby and is paid a base salary of $150,000 per
year and participates in the Company's bonus pool and stock option plans. Mr.
Cunningham also entered into a Registration Rights Agreement with the Company
allowing him to require the Company to register the shares of Common Stock
issued in connection with the acquisition of Standby in certain events.
OTHER BUSINESS
The Board of Directors does not intend to present any business other than as
stated herein to the Annual Meeting. If any other matter is properly presented
to the Annual Meeting, the persons named in the accompanying proxy will have
discretionary authority to vote proxies with respect to such matter in
accordance with their best judgment.
INDEPENDENT AUDITORS
Moss Adams LLP, independent auditors, audited the consolidated financial
statements of the Company for the 1998 Fiscal Year. No representatives of Moss
Adams LLP are expected to attend the Annual Meeting.
PricewaterhouseCoopers LLP, independent auditors, audited the consolidated
financial statements of the Company for the Transition Period. Representatives
of PricewaterhouseCoopers LLP are expected to attend the Annual Meeting. They
will have the opportunity to make a statement, if they desire to do so, and
are expected to be available to respond to appropriate questions.
DEADLINE FOR SHAREHOLDER PROPOSALS FOR
THE 2000 ANNUAL MEETING
In order to receive consideration for inclusion in the proxy materials for
the 2000 annual meeting, the Company must receive any proposal which a
shareholder wishes to submit at the 2000 annual meeting of shareholders by
September 28, 1999.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Section 16 of the Exchange Act requires the Company's officers, directors,
and holders of 10% or more of its outstanding Common Stock to file certain
reports with the Securities and Exchange Commission. With reference to
transactions during the last fiscal year, to the Company's knowledge, based
solely on review of the
17
<PAGE>
copies of such reports furnished to the Company, the Company believes that the
following persons failed to file on a timely basis the following reports
required by Section 16(a) of the Exchange Act. In connection with their
election to the Board in November 1997, Messrs. Erickson and Shuey each
received options to purchase 10,000 shares of Common Stock. Neither gentleman
filed a Form 3 within 10 days of his election or a Form 4 to report such
transaction. In addition, neither gentleman has reported such matters on a
Form 5 for the last fiscal year. In connection with his election to the Board
in January 1998, Mr. Harris received options to purchase 10,000 shares of
Common Stock. Mr. Harris did not file a Form 3 within 10 days of his election
or a Form 4 to report such transaction. In addition, Mr. Harris did not report
such matters on a Form 5 for the last fiscal year. In connection with his
election to the Board in August 1998, Mr. Buechley failed to file a Form 3
within 10 days of his election. Bruce E. Toll failed to file a Form 4 on
timely basis in connection with his purchase of 1,000 shares of Common Stock
in August 1998. Except as otherwise stated herein, to the Company's best
knowledge, based solely on information provided to it by the reporting
individuals, all of the reports required to be filed by these individuals have
been filed.
By Order of the Board of Directors
Peter Lucas
Secretary
18
<PAGE>
APPENDIX
The 1998 Stock Incentive Compensation Plan is filed as Exhibit 99.2 to the
Company's Registration Statement on Form S-8 (Registration No. 333-65337).
<PAGE>
Westower Corporation
ANNUAL MEETING OF SHAREHOLDERS--FEBRUARY 22, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Calvin J. Payne, S. Roy Jeffrey and Peter Lucas,
or any of them, acting alone, the proxies of the undersigned, with full powers
of substitution (the "Proxies"), to attend and act as proxy or proxies of the
undersigned at the Annual Meeting of Shareholders of Westower Corporation (the
"Company") to be held at the Hyatt Regency Hotel, 900 Bellevue Way, N.E.,
Bellevue, Washington 98004 on February 22, 1999, at 10:00 a.m. or any
adjournment thereof, and to vote as specified herein the number of shares which
the undersigned, if personally present, would be entitled to vote.
(Continued and to be signed on the reverse side.)
<PAGE>
A [X] Please mark your DO NOT PRINT IN
votes as in this THIS AREA
example.
- --------------------------------------------------------------------------------
FOR the nominees WITHHOLD AUTHORITY
listed at right to vote for
(except as marked all nominees
1. Election of to the contrary)
Directors [_] [_]
INSTRUCTIONS: To withhold authority to vote for any individual nominee, strike
such nominee's name from the list at the right.
Nominees: Michael J. Anderson
Seth A. Buechley
Ronald P. Erickson
Donald A. Harris
S. Roy Jeffrey
Peter Lucas
Calvin J. Payne
Robert A. Shuey, III
Leonard M. Tannenbaum
Bruce E. Toll
FOR AGAINST ABSTAIN
2. Proposal to Amend the Articles of
Incorporation, increasing the shares that the [_] [_] [_]
Company is authorized to issue from
10,000,000 shares of Common Stock to
25,000,000 shares of Common Stock.
3. Proposal to Approve the Company's 1998 Stock [_] [_] [_]
Incentive Compensation Plan.
4. Proposal to Ratify the Appointment of
PricewaterhouseCoopers LLP as the Company's [_] [_] [_]
Independent Auditors for the Fiscal Year
Ending September 30, 1999.
5. Other business. In their discretion, the Proxies are authorized to vote upon
such other business as may properly come before the Annual Meeting and any
and all adjournments thereof.
This Proxy, when properly executed, will be voted as directed by the
shareholder. If no such directions are indicated, the Proxies will have
authority to vote "FOR" the director nominees, "FOR" the amendment of the
Company's Articles of Incorporation, "FOR" Approval of the Company's 1998 Stock
Incentive Compensation Plan and "FOR" the ratification of PricewaterhouseCoopers
LLP as the Independent Auditors of the Company.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
DO NOT PRINT
IN THIS AREA
- --------------------------------------------------------------------------------
Date: , 1999
- ---------------------------------------------- -----
Signature
Date: , 1999
- ---------------------------------------------- -----
Signature if held jointly
NOTE: Please sign exactly as name or names appear on this Proxy. If stock is
held jointly, each holder must sign. If signing as attorney, trustee,
executor, administrator, custodian or corporate officer, please give full
title.
