UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Information Required in Proxy Statement
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Addition Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ViaGrafix Corporation
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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
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 1999
Notice is hereby given that the Annual Meeting of Stockholders of
ViaGrafix Corporation (the "Company"), will be held at One American Way, Pryor,
Oklahoma, on Thursday, May 20, 1999, at 10:00 A.M. (Local Time), for the
following purposes:
1. To elect five directors for terms ending with the Annual Meeting in 2000;
and
2. To act on a proposal to amend the Company's 1995 Stock Option Plan to
increase the number of shares covered by the Plan from 1,000,000 to
2,000,000.
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
We hope that you will be able to attend this meeting, but if you do not
plan to do so, please date, sign and return the enclosed Proxy as promptly as
possible.
By Order of the Board of Directors
/s/ Robert E. Webster
---------------------------------
Robert E. Webster
Secretary
Pryor, Oklahoma
March 31, 1999
<PAGE 1>
ViaGrafix Corporation
One American Way
Pryor, Oklahoma 74361
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
Board of Directors of ViaGrafix Corporation, for proxies to be used at the
Annual Meeting of Stockholders of the Company to be held on May 20, 1999, at the
time and place set forth in the Notice of Annual Meeting accompanying this Proxy
Statement.
Pursuant to provisions of the Bylaws of the Company and action of its
Board of Directors, the close of business on March 22, 1999, has been
established as the time and record date for determining the stockholders
entitled to notice of and to vote at this annual meeting. The stock transfer
books will not be closed.
Stockholders of record on the record date are entitled to cast their
votes at the Annual Meeting either in person or by properly executed proxy. The
presence, in person or by properly executed proxy, of thirty-three and one-third
percent (33-1/3%) of the Common Stock outstanding on the record date is
necessary to constitute a quorum at the Annual Meeting. If a quorum is not
present at the time the Annual Meeting is convened, the Company may adjourn or
postpone the Annual Meeting. A plurality of votes cast at the Annual Meeting is
required for the election of each director.
The enclosed Proxy may be revoked at any time prior to the voting
thereof, either by giving notice to the Secretary of the Company or by personal
attendance at the meeting. All Proxies received in advance of the meeting may be
revoked prior to exercise.
This Proxy Statement, Notice of Annual Meeting and accompanying Proxy,
as well as the Company's 1998 Annual Report, will be first mailed to
stockholders approximately April 15, 1999.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of March 22, 1999, (the record date), the Company had issued a total
of 5,788,184 shares of $.01 par value Common Stock, its only class of stock
outstanding. Each share is entitled to one vote on all matters submitted to a
vote by stockholders.
<PAGE 2>
Persons and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding such ownership pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"). The following
table sets forth, as of March 22, 1999, the aggregate number of shares of Common
Stock of the Company owned of record or beneficially by each person who owned of
record, or is known by the Company to own beneficially, more than 5% of the
Company's Common Stock, each officer whose 1998 salary and bonus exceeded
$100,000 ("Executive Officers"), and the name and shareholdings of each director
and such officers and all directors as a group. Management knows of no person,
except as listed below, who owned more than 5% of the Company's outstanding
shares of the Common Stock as of March 22, 1999.
<TABLE>
Name and address of the 5% Percent
Shareholders and each Executive Officer Number of shares of
and names of other directors owned (1) class
- - --------------------------------------------------- --------------------- -------------
<CAPTION>
<S> <C> <C>
Michael A. Webster
One American Way
Pryor, Oklahoma 74361 1,867,213 (2) 32.3%
Robert E. Webster
One American Way
Pryor, Oklahoma 74361 1,177,972 (3) 20.4%
Robert C. Moore, Jr.
One American Way
Pryor, Oklahoma 74361 11,908 (4) 0.2%
Austin E. Acuff
One American Way
Pryor, Oklahoma 74361 16,395 (4) 0.3%
Roy L. Bliss 38,500 (5) 0.7%
Stephen P. Gott 28,500 (5) 0.5%
Gerald R. Harris 800 (5) 0.0%
Executive Officers and all directors as a group (7 persons) 3,141,288 54.3%
</TABLE>
(1) All shares are held beneficially and of record and the owner has sole
voting and investment power with respect thereto.
(2) Includes 114,285 shares held by Michael A. Webster as Trustee for trusts
for the benefit of his children
(3) Includes 100 shares held by a son of Robert E. Webster
(4) Robert Moore and Austin Acuff are Executive Officers of the Company
(5) Roy Bliss, Stephen Gott and Gerald Harris are directors of the Company
ELECTION OF DIRECTORS
The five member Board of Directors of the Company serve an annual term
with the term expiring on the date of the 1999 Annual Meeting of Stockholders,
when their successors have been elected and qualified. The nominees for election
as Directors at the 1999 Annual Meeting, to serve until the 2000 Annual Meeting,
are Michael A. Webster, Robert E. Webster, Roy L. Bliss, Stephen P. Gott, and
Gerald R. Harris.
<PAGE 3>
Each of the nominees has consented to serve as a director if elected.
Unless authority to vote for any of the directors is withheld in a proxy, it is
intended that each proxy will be voted FOR such nominees. In the event that any
or all of the nominees for director should, before the Annual Meeting, become
unable to serve if elected, it is intended that all shares represented by
proxies will be voted for such substitute nominee(s) as may be recommended by
the Company's existing Board of Directors. The accompanying form of Proxy
contains a discretionary grant of authority with respect to this matter.
EXECUTIVE OFFICERS, DIRECTORS AND NOMINEES FOR DIRECTOR
The following additional information is provided with respect to the
executive officers and nominees for directors of the Company:
Michael A. Webster, age 40, has served as Chairman of the Board,
President and Chief Executive Officer since the Company's inception in 1990. Mr.
Webster served as General Manager of Champion Electronics, Inc., a company
operating Radio Shack dealership outlets involved in computer retailing, from
October 1984 to December 1989. Michael A. Webster is the brother of Robert E.
Webster.
Robert E. Webster, age 43, has served as Director, Vice President and
Secretary since the Company's inception in 1990. He served as Director and Vice
President of American Small Business Computers, Inc. from July 1981 to August
1995. He has served as Executive Vice President on the Company's management team
since 1995, after the Company acquired ASBC. Robert E. Webster is the brother of
Michael A. Webster.
Robert C. Moore, Jr., age 52, has served as Chief Financial Officer
since July 1997 and Treasurer since October 1997. He served as Vice President
and Chief Financial Officer of Hughes Lumber Company in Tulsa, Oklahoma from
June 1978 to June 1997, and as Assistant Controller of a division of Evans
Products Company from October 1972 to May 1978.
Austin E. Acuff, age 52, has served as Retail Sales Manager since July
1994. He has served as Vice President on the Company's management team since
February 1999. Mr. Acuff served as an instructor of business classes for
Northeast Vo-Tech Center from August 1988 to July 1994 and was employed by
Wal-Mart as Store Manager from July 1971 to August 1988.
Roy L. Bliss, age 56, has served as a director of the Company since
March 4, 1998. He is the founder of United Video Satellite Group, Inc., based in
Tulsa, Oklahoma (now known as TV Guide, Inc.). Mr. Bliss was employed there from
1969 through 1996, at which time it was acquired by Tele-Communications, Inc. He
served as Chief Operating Officer from 1970 to 1996, as President from 1991 to
1996, and as a Director from 1984 to 1996. He is currently engaged in the
management of his investments.
Stephen P. Gott, age 49, has served as a director of the Company since
March 4, 1998. He has been President, Chief Executive Officer and Director of
7th Street.com, Inc., of White Plains, New York, the stock of which is traded on
The Nasdaq Stock Market, since February 1999. From 1995 to February 1999 he was
President and Chief Executive Officer of Street Technologies, Inc. based in
White Plains, New York. Street Technologies, Inc. merged with 7th Level, Inc. in
February 1999 and became 7th Street.com, Inc. He was Partner and Chief
Technology and Operations Officer at Lehman Brothers, Inc. from 1986 to 1995.
<PAGE 4>
Gerald R. Harris, age 67, has served as a director of the Company since
March 4, 1998. He is the founder, President and Chief Executive Officer of Hem,
Inc., in Pryor, Oklahoma, established in 1966.
The Board of Directors of the Company had three meetings during 1998
(subsequent to the Company's initial public offering on March 4, 1998) and all
directors attended each of those meetings.
The Company has an Audit Committee that is composed entirely of outside
directors, consisting of Roy Bliss, Stephen Gott and Gerald Harris. They had two
meetings during the past year at which the committee members posed questions to
representatives of Ernst & Young LLP concerning the Company's audited financial
statements.
EXECUTIVE COMPENSATION
Report of Compensation Committee of the Board on Executive Compensation
The function of administering the Company's executive compensation
policies is currently performed by the Compensation Committee of the Board of
Directors, which is composed entirely of outside directors consisting of Roy L.
Bliss, Stephen P. Gott and Gerald R. Harris. The Compensation Committee held
three meetings last year, attended by all members.
The Compensation Committee has the responsibility for developing and
making recommendations to the Board concerning compensation paid to the Chief
Executive Officer and each of the executive officers, and for administering all
aspects of the Company's executive compensation program, including employee
benefit plans.
The Company's compensation program for executive officers was developed
with guidelines for compensation decisions that will: attract and retain highly
qualified and motivated key executives, recognize and reward outstanding
performance, and maximize stockholder value over time. The following components
are included: (i) base salaries, (ii) variable compensation opportunities
directly linked to the Company's performance, (iii) stock options, and (iv)
miscellaneous other fringe benefits.
The Compensation Committee intends to compensate the Company's
executive officers, including the Chief Executive Officer, with a base salary
that is competitive within the information technology ("IT") industry. The
Compensation Committee will review compensation packages, including base salary
levels, offered by other companies in the IT industry. On July 24, 1998 an
annual bonus plan was approved for Michael Webster and Robert Webster based on
specific earnings per share improvement targets. Michael Webster and Robert
Webster also received directors' fees in 1998. Robert Moore's annual base rate
of salary was increased from $75,000 to $95,000 effective April 1, 1998, and to
$104,500 effective February 1, 1999.
<PAGE 5>
Compensation Committee Interlocks and Insider Participation
On September 30, 1998, the Company paid $620,000 to amend a January 1997
"Development and Licensing Agreement" with Street Technologies, Inc., now known
as 7th Street.com, Inc. ("7th Street") whereby the royalty paid to 7th Street on
networkable licenses sold for multimedia training products developed using 7th
Street's products was reduced through September 30, 2000. At that time, the
Company has the option to pay an additional $250,000 to reduce the royalty paid
on 7th Street's products for the life of 7th Street's products. Under the
agreement, 7th Street pays the Company royalties from its sales of multimedia
training products containing ViaGrafix content. During 1998 7th Street paid net
royalties to the Company of $292,000. (See Note 11 of Notes to Financial
Statements on page F-22 of the Company's 1998 Form 10-K.) Stephen Gott, a
director of the Company was a member of the Compensation Committee in 1998 and
is President and Chief Executive Officer of 7th Street.com, Inc. Other than the
foregoing, the Company has no interlocking relationships or other transactions
involving any of its Compensation Committee members that are required to be
reported by the Securities and Exchange Commission rules and no current or
former officer of the Company serves on its Compensation Committee.
Summary Compensation Table: The following table sets forth information as to the
compensation of the Executive Officers of the Company whose annual salary and
bonus has exceeded $100,000.
<TABLE>
Summary Compensation Table
Long Term Compensation
-----------------------------------------
Annual Compensation Awards Payouts
--------------------------------- --------------------- --------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other All Other
Annual Restricted Securities LTIP Compen-
Name and Compen- Stock Underlying Payouts Sation
Principal Position Year Salary ($) Bonus ($)(1) sation Award ($) Options ($) ($)(2)
- - -------------------- ---- ---------- ------------ ------ --------- ------- ----- ------
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael A. Webster 1998 $ 184,964 0 N/A N/A N/A N/A $ 6,587
Chairman of the Board,
President and Chief
Executive Officer
Robert E. Webster 1998 123,837 0 N/A N/A N/A N/A 5,750
Executive Vice-
President and
Secretary
Robert C. Moore, Jr. 1998 87,709 50,000 N/A N/A N/A N/A 3,867
Treasurer and Chief
Financial Officer
Austin E. Acuff 1998 262,571 0 N/A N/A N/A N/A 4,587
Vice President and
Retail Sales Manager
- - -------------------------
</TABLE>
(1) Amount stated includes a bonus amount earned in fiscal 1998 by Robert Moore
and paid in fiscal 1999
(2) Amounts stated reflect contributions made by the Company to each executive
officer's account under the Company's 401(k) Plan, and directors' fees paid
to Michael Webster and Robert Webster
<PAGE 6>
The Company has no Long-Term Incentive Plan ("LTIP") or "defined
benefit" (pension) plan.
Option Grants in Last Fiscal Year. There were no grants during 1998 of stock
options to executive officers under the ViaGrafix Corporation 1995 Stock Option
Plan, with the exception of David S Schulhof, a Vice President during the last
six months of 1998, who is no longer with the Company.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values. The following table sets forth for each of the executive officers named
in the Summary Compensation Table above, certain information regarding the
exercise of stock options during the fiscal year ended December 31, 1998 and the
value of options held at fiscal year-end.
<TABLE>
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year-End Option Values
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options At Options At
Acquired Value Year End (#) Year End ($)(1)
Name On Exercise (#) Realized ($)(1) Exercisable/Unexercisable Exercisable/Unexercisable
---- --------------- ---------------- ------------------------- -------------------------
<CAPTION>
<S> <C> <C> <C> <C>
Robert C. Moore, Jr. 3,429 $38,696 0 / 13,716 0 / $41,628
Austin E. Acuff 1,714 21,939 0 / 1,714 0 / 24,939
- - ---------------------
</TABLE>
(1) Market value of underlying securities at exercise date or fiscal year end,
as the case may be, minus the exercise price.
Employment Contracts and Change In Control Arrangements
The Company has no employment contracts with any of its officers or
directors. The Company has an agreement with Robert Moore respecting any "change
in control" whereby he is eligible to receive, in the event that his employment
is terminated following a change in control of the Company, other than for just
cause (as defined), an amount equal to eighteen months of his salary immediately
prior to the change in control; an amount for purchase of his home in Mayes
County, Oklahoma, at its then fair market value; and immediate vesting of all
options held. Pursuant to the terms of the agreement, a "change in control"
shall occur when, by reason of a sale of stock or assets, merger or other
business combination, Michael A. Webster and Robert E. Webster no longer have
effective control over the Company or the designation of nominees to its Board
of Directors.
Compensation of Directors
The Company pays directors' fees of $500 per director (plus
reimbursement of expenses) for attendance at each Board meeting, scheduled to be
held on a quarterly basis, but not limited to four meetings per year.
<PAGE 7>
Company Stock Price Performance
The following performance graph compares the cumulative total
shareholder return on the Company's common stock between March 4, 1998 (the date
the Company's common stock commenced public trading) and December 31, 1998, with
the cumulative total return of a broad equity market index and a nationally
recognized industry standard over the same period. The Company has selected The
Nasdaq Stock Market (U.S.) Index for the broad equity index and the Hambrecht &
Quist Technology Index as an industry standard. The stock price information
shown on the following graph is not necessarily indicative of future price
performance.
Comparison of 10 Month Cumulative
Total Return*
---------------------------------------
3/4/98 12/31/98
ViaGrafix Corporation 100 37
Nasdaq Stock Market (U.S.) 100 126
Hambrecht & Quist Technology 100 133
* Assumes $100 invested on 3/4/98,
including reinvestment of dividends.
Year ending December 31, 1998.
<PAGE 8>
PROPOSAL TO APPROVE AMENDMENT TO THE COMPANY'S 1995 STOCK OPTION PLAN
In 1995, the Company adopted a Stock Option Plan (the "Plan") for
certain of its directors, officers, employees and consultants. The purpose of
the Plan is to enable the Company and its stockholders to secure the benefits of
common stock ownership, or increased ownership, by key personnel of the Company
and to promote the success of the Company's business. The Board believes that
the granting of options under the Plan will foster the Company's ability to
attract, retain and motivate those individuals who will be largely responsible
for the continued profitability and long-term future growth of the Company.
Pursuant to the Plan, as amended to date, the Company may issue and
sell a total of 1,000,000 shares of its $.01 par value common stock. As of
December 31, 1998, the Company only had 26,794 shares reserved for future option
grants under the Plan.
On February 9, 1999, the Company's Board of Directors approved a
further amendment to the Plan, which amendment increases the number of shares of
Common Stock subject to the Plan from 1,000,000 to 2,000,000.
The affirmative vote of the holders of a majority of the shares of
common stock entitled to vote and represented in person or by proxy at the
Annual Meeting is required for approval of the proposed amendment. The Board of
Directors recommends that stockholders vote FOR approval of the proposed Plan
amendment.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At December 31, 1997, the Company had two 7.5% promissory notes payable
to Robert E. Webster, an executive officer and director of the Company, and to
Geocapital III, L.P. At that time, Geocapital III, L.P. held in excess of 5% of
the Company's common stock. The notes, amounting to $2,467,100 and $1,193,900
respectively, were repaid with proceeds from the Company's initial public
offering in March 1998. See Notes 6 and 11 of Notes to Consolidated Financial
Statements in the Company's 10-K for the year ending December 31, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 4 furnished to the Company during
its most recent fiscal year, the Company knows of no director, officer or
beneficial owner of more than ten percent of the Company's Common Stock who has
failed to file on a timely basis reports of beneficial ownership of the
Company's Common Stock as required by Section 16(a) of the Securities Exchange
Act of 1934, as amended, except for sales made by Michael Webster and Robert
Webster on March 25, 1998 associated with the sales of overallotment shares
related to the Company's initial public offering of 174,441 and 115,820 shares
respectively, which were reported on Form 4's mailed on May 8, 1998.
<PAGE 9>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANT
Ernst & Young LLP has been selected as the principal accountant of the
Company for the current year. Representatives of Ernst & Young LLP are expected
to be present at the 1999 Annual Meeting of Stockholders with the opportunity to
make a statement if they desire to do so and to respond to appropriate
questions.
DATE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 2000 Annual
Meeting must be received at the Company's executive offices, One American Way,
Pryor, Oklahoma 74361, no later than December 16, 1999, for inclusion in the
Company's Proxy Statement and form of Proxy relating to that meeting;
OTHER MATTERS
Management knows of no business which will be presented at the 1999
Annual Meeting other than to elect directors for the ensuing year and to vote on
the proposed amendment to the Company's 1995 Stock Option Plan.
The cost of preparing, assembling and mailing all proxy solicitation
materials will be paid by the Company. It is contemplated that the solicitation
will be conducted only by use of the mails. The Company will, upon request,
reimburse brokers for the costs incurred by them in forwarding solicitation
materials to such of their customers as are the beneficial holders of Common
Stock of the Company registered in the names of such brokers.
By Order of the Board of Directors
/s/ Michael A. Webster
---------------------------
Michael A. Webster
President
March 31, 1999
