SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
EUROPEAN MICRO HOLDINGS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
EUROPEAN MICRO HOLDINGS, INC.
6073 N.W. 167TH STREET, UNIT C-25
MIAMI, FLORIDA 33015
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of
Stockholders of European Micro Holdings, Inc. The annual meeting will be held on
Monday, November 15, 1999 at 2:00 p.m., local time, at the Hyatt Regency Miami,
400 S.E. Second Avenue, Miami, Florida 33131.
Your vote is important and I urge you to vote your shares by proxy,
whether or not you plan to attend the meeting. After you read this proxy
statement, please indicate on the proxy card the manner in which you want to
have your shares voted. Then date, sign and mail the proxy card in the
postage-paid envelope that is provided. If you sign and return your proxy card
without indicating your choices, it will be understood that you wish to have
your shares voted in accordance with the recommendations of the Company's Board
of Directors.
We hope to see you at the meeting.
Sincerely,
/s/ John B. Gallagher
----------------------
John B. Gallagher,
Co-Chairman and Co-President
October 29, 1999
<PAGE>
EUROPEAN MICRO HOLDINGS, INC.
6073 N.W. 167TH STREET, UNIT C-25
MIAMI, FLORIDA 33015
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 15, 1999
NOTICE IS HEREBY GIVEN that the 1999 Annual Meeting of Stockholders (the
"ANNUAL MEETING") of European Micro Holdings, Inc. (the "COMPANY") will be held
at the Hyatt Regency Miami, 400 S.E. Second Avenue, Miami, Florida 33131, on
Monday, November 15, 1999 at 2:00 p.m., local time, for the following purposes,
as more fully described in the attached Proxy Statement:
1. To elect two Class II directors, each for a term of three years; and
2. To consider any other matters that may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 22, 1999
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting or at any adjournment thereof. A complete list of the
stockholders entitled to vote at the Annual Meeting will be open for examination
by any stockholder during ordinary business hours for a period of ten days prior
to the Annual Meeting at the executive offices of the Company, 6073 N.W. 167th
Street, Unit C-25, Miami, Florida 33015.
You are cordially invited to attend the Annual Meeting in person. In order
to ensure your representation at the meeting, however, please promptly complete,
date, sign and return the enclosed proxy in the accompanying envelope. If you
should decide to attend the Annual Meeting and vote your shares in person, you
may revoke your proxy at that time.
By Order of the Board of Directors,
/s/ John B. Gallagher
---------------------
John B. Gallagher,
Co-Chairman and Co-President
October 29, 1999
<PAGE>
EUROPEAN MICRO HOLDINGS, INC.
6073 N.W. 167TH STREET, UNIT C-25
MIAMI, FLORIDA 33015
---------------------
PROXY STATEMENT
OCTOBER 29, 1999
-------------------------
PROXY SOLICITATION AND VOTING INFORMATION
The accompanying proxy is solicited by the Board of Directors of European
Micro Holdings, Inc. (the "COMPANY") for use at the 1999 Annual Meeting of
Stockholders (the "ANNUAL MEETING") to be held on Monday, November 15, 1999 at
the Hyatt Regency Miami, 400 S.E. Second Avenue, Miami, Florida 33131, at 2:00
p.m., local time, and at any adjournment or postponement thereof. The proxies
will be voted as specified if properly signed, received by the Secretary of the
Company prior to the close of voting at the Annual Meeting, and not revoked. If
no direction is given in the proxy, it will be voted "FOR" the election of the
directors nominated by the Board of Directors. The Company has not received
timely notice of any stockholder proposals for presentation at the Annual
Meeting as required by Section 14a-4(c) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT"). Therefore, with respect to any other item of
business that may properly come before the Annual Meeting, the proxy holders
have the right to and will vote in accordance with their judgment.
A stockholder who has returned a proxy may revoke it at any time before it
is voted at the Annual Meeting by delivering a revised proxy bearing a later
date, by voting by ballot at the Annual Meeting, or by delivering a written
notice withdrawing the proxy to the Secretary of the Company. This notice may be
mailed to the Secretary at the address set forth above or may be given to the
inspector of election at the Annual Meeting.
This Proxy Statement, together with the accompanying proxy, is first being
mailed to stockholders on or about October 29, 1999. The cost of this
solicitation of proxies will be borne by the Company. In addition to soliciting
proxies by mail, directors, officers and employees of the Company, without
receiving additional compensation for these services, may solicit proxies by
telephone, in person or by other means. Arrangements also will be made with
brokerage firms and other custodians, nominees and fiduciaries to forward proxy
soliciting material to the beneficial owners of common stock, par value $0.01
per share, of the Company ("COMMON STOCK") held of record by such persons and
the Company will reimburse such brokerage firms, custodians, nominees and
fiduciaries for reasonable out-of-pocket expenses incurred by them in doing so.
The cost of this proxy solicitation will consist primarily of printing, legal
fees, and postage and handling.
Holders of record of Common Stock at the close of business on October 22,
1999 (the "RECORD DATE") are entitled to vote at the Annual Meeting. On that
date, 4,933,900 shares of Common Stock were outstanding. The presence, in person
or by proxy, of stockholders holding at least a majority of the shares of stock
entitled to be voted will constitute a quorum for the transaction of business at
the Annual Meeting. Stockholders are entitled to cast one vote per share on each
matter presented for consideration and action at the Annual Meeting.
Approval of the proposals to be brought before the Annual Meeting,
including the election of directors, will require the affirmative vote of at
least a majority in voting interest of the stockholders present in person or by
proxy at the Annual Meeting and entitled to vote thereon. Votes may be cast in
favor of or withheld from the nominees for director. Abstentions may be
specified as to any proposal brought before the Annual Meeting, other than the
election of directors. An abstention will have the effect of a negative vote,
but if a broker indicates that it does not have authority to vote certain shares
(so-called "BROKER NON-VOTES"), those shares will not be considered present and
entitled to vote with respect to that proposal and therefore will have no effect
upon the outcome of the vote.
<PAGE>
BOARD OF DIRECTORS AND ELECTION OF DIRECTORS
The Board of Directors of the Company (the "BOARD OF DIRECTORS") consists
of six members, divided into three classes. The terms of office of the three
classes of directors (Class I, Class II and Class III) end in successive years.
The terms of the Class II directors expire this year and their successors are to
be elected at the Annual Meeting for a three-year term expiring in 2002. The
terms of the Class I and Class III directors do not expire until 2001 and 2000,
respectively.
The Board of Directors has nominated Barnett Sutton and Kyle R. Saxon for
election as Class II directors. The accompanying proxy will be voted for the
election of these nominees, unless authority to vote for one or more nominees is
withheld. In the event that any of the nominees is unable or unwilling to serve
as a director for any reason (which is not anticipated), the proxy will be voted
for the election of any substitute nominee designated by the Board of Directors.
The nominees for directors have previously served as members of the Board of
Directors of the Company.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF
EACH OF THE CLASS II NOMINEES.
CLASS II DIRECTORS--PRESENT TERM EXPIRES IN 1999
KYLE R. SAXON Mr. Saxon has been a Director of the Company
Age 48 since January 1998. He has also been a Director
of European Micro Plc since March 1998. He has
been a shareholder and vice president with the
law firm of Catlin, Saxon, Tuttle and Evans, P.A.
since 1988. Mr. Saxon has a Bachelor of Business
Administration and a Juris Doctorate from the
University of Florida.
BARRETT SUTTON Mr. Sutton has been a Director of the Company
Age 48 since February 1998. He has also been a Director
of European Micro Plc since March 1998. Since
January 1, 1998, he has been a partner at the law
firm of Tuke Yopp & Sweeney, Plc. Prior to that
he was an attorney, Executive Vice-President and
General Counsel for General Capital Corporation
and Gen Cap America, Inc. since 1995. He
practiced law with the firm of White & Reasor
from 1981 to 1994. Mr. Sutton has a Bachelor of
Arts from Vanderbilt University and a Juris
Doctorate from the University of Virginia.
CONTINUING CLASS I DIRECTORS--NOMINEES FOR TERMS TO EXPIRE IN 2001
LAURENCE GILBERT Mr. Gilbert has been a Director of the Company
Age 54 since January 1998. He has been Managing
Director of European Micro Plc since 1996. He
was Finance Director to a group (the "GROUP") of
related companies called the Micro Computer
Center Group(1) from 1995 to 1996. He served as
a management consultant from 1994 to 1995 and
Managing Director of Gilbert Lawton Ltd. from
1991 to 1994. Mr. Gilbert is a Chartered
Accountant.
2
<PAGE>
BERNADETTE SPOFFORTH Ms. Spofforth has been a Director of the Company
Age 30 since January 1998. She has been Director of
Sales of European Micro Plc since 1996 and served
as Sales Manager of European Micro Plc from 1991
to 1994. Ms. Spofforth was a Sales Executive
with Cavelle Data Systems Ltd. from 1988 to 1991.
CONTINUING CLASS III DIRECTORS--NOMINEES FOR TERMS TO EXPIRE IN 2000
JOHN B. GALLAGHER Mr. Gallagher is co-founder of the Company and
Age 44 European Micro Plc. He has served as Co-Chairman,
Co-President and Director of the Company since it
was formed in December 1997. Mr. Gallagher has
also served as Co-Chairman and Director of
European Micro Plc since it was formed in 1991 and
as President of American Surgical Supply Corp. of
Florida d/b/a American Micro Computer Center
("AMCC") since 1989. He was a Director and
President of Ameritech Exports from 1992 to 1997.
Mr. Gallagher is a non-practicing attorney with a
Bachelor of Arts and a Juris Doctorate from the
University of Florida.
HARRY D. SHIELDS Mr. Shields is co-founder of the Company and
Age 49 European Micro Plc. He has served as Co-Chairman,
Co-President and Director of the Company since it
was formed in December 1997. Mr. Shields has also
served as Co-Chairman and Director of European
Micro Plc since it was formed in 1991. He has
served as President of Technology Express since
1986, and was a Director of Ameritech Exports from
1992 to 1997. Mr. Shields has a Bachelor of Arts
from DePaul University and a Masters of Science
from the University of Tennessee.
- --------------------------
(1) The Group was comprised of European Micro Plc, Technology Express, Inc. in
Nashville, Tennessee, AMCC and, until August 1, 1997, Ameritech Exports Inc. in
Miami, Florida and Ameritech Argentina S.A. in Buenos Aires, Argentina. Harry D.
Shields owns all of the outstanding capital stock of Technology Express, Inc.
and, until August 1, 1997, had an ownership interest in Ameritech Exports Inc.
and Ameritech Argentina S.A. John B. Gallagher had an ownership interest in AMCC
until July 1, 1999, at which time it was merged with and into a wholly-owned
subsidiary of the Company. See "Certain Transactions and Relationships with the
Company." Until August 1, 1997, Mr. Gallagher had an ownership interest in
Ameritech Exports, Inc. and Ameritech Argentina S.A.
MEETINGS AND COMMITTEES OF THE BOARD
During the Company's fiscal year ended June 30, 1999 ("FISCAL 1999"), the
Board of Directors met on eight occasions. Only Ms. Spofforth has attended less
than 75% of the total number of meetings of the Board. Ms. Spofforth does not
serve on any committees. Ms. Spofforth's attendance at the meetings of the Board
of Directors was impaired due to maternity leave. None of the other members of
the Board attended less than 75% of the total number of meetings of the Board of
Directors or of all committees on which such members served. The Board has three
standing committees: the Audit, Compensation and Stock Option Committees. The
Board does not have a nominating committee.
The Audit Committee currently consists of Laurence Gilbert, Barrett Sutton
and Kyle Saxon. This committee met on three occasions during Fiscal 1999. All
meetings were unanimously attended by the members thereof. This committee
recommends annually to the Board the appointment of the independent auditors of
the Company, discusses and reviews the scope and fees of the annual audit and
reviews the results thereof.
The Compensation Committee currently consists of John B. Gallagher, Harry
D. Shields, Barrett Sutton and Kyle Saxon. This committee met on two occasions
during Fiscal 1999, which meetings were unanimously attended by the members
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<PAGE>
thereof. This committee recommends to the Board the compensation arrangements
for the Company's officers.
The Stock Option Committee currently consists of Barrett Sutton and Kyle
Saxon. This committee met on one occasion during Fiscal 1999, which meeting was
unanimously attended by the members thereof. This committee recommends to the
Board the adoption of any employee benefit plans and administers the 1998 Stock
Incentive Plan and the 1998 Employee Stock Purchase Plan and the grant of stock
options or other benefits under such plans.
The Board of Directors formed a special committee on February 2, 1999 to
evaluate and determine whether the Company should acquire AMCC and, if so, on
what terms. John B. Gallagher, who is a significant shareholder, Co-Chairman and
Co-President of the Company, was the President and a Director of AMCC and owned
fifty percent of its outstanding capital stock. This committee currently
consists of Barrett Sutton and Kyle Saxon. It met on one occasion during Fiscal
1999. Such meeting was unanimously attended by the members thereof. The
acquisition of AMCC was consummated on July 1, 1999. The committee will remain
in effect to carry out certain obligations in connection with the acquisition of
AMCC.
COMPENSATION OF DIRECTORS
Non-employee directors receive $1,000 for attendance at Board of Directors
and Committee meetings whether in person or by telephone and are reimbursed for
all out-of-pocket expenses incurred in attending such meetings. In addition,
each non-employee director receives options to purchase (i) 10,000 shares of
Common Stock of the Company in connection with his or her appointment to the
Board and (ii) 5,000 shares of Common Stock of the Company each year thereafter
that such non-employee director serves on the Board. The options granted to the
Company's initial non-employee directors had an exercise price of $10.00 per
share (the price of such shares in the Company's initial public offering).
Options granted in subsequent years will be priced no less than 100% of the fair
market value on the date of grant. Options granted to non-employee directors
will be non-statutory options and will become exercisable after one year of
service (unless otherwise determined by the Board or in the event of a change of
control of the Company) on the Board and will be exercisable for ten years from
the date of grant, except that options exercisable at the time of death may be
exercised for twelve months thereafter. Neither the Board nor any committee
thereof has any discretion with respect to options granted to non-employee
directors.
In addition to the compensation above, non-employee directors which served
on the special committee formed to evaluate and determine whether the Company
should acquire AMCC were compensated at a rate of $150 per hour for their
services on such committee. See "Meetings and Committees of the Board.
4
<PAGE>
EXECUTIVE OFFICERS
In addition to John B. Gallagher, Harry D. Shields, Laurence Gilbert and
Bernadette Spofforth, who are listed above, the following individuals are
executive officers of the Company:
JAY NASH Mr. Nash has been Chief Financial Officer,
Age 37 Controller, Secretary and Treasurer of the
Company since January 1998. He has served as
Vice President of Technology Express, Inc. since
1992 and was an accountant with Jacques Miller
from 1986 to 1992 and KPMG Peat Marwick from 1983
to 1986. Mr. Nash is a Certified Public
Accountant with a Bachelor of Science in
Accounting from the University of Tennessee.
FRANK CRUZ Mr. Cruz has been Chief Operating Officer of the
Age 34 Company since November 1998 and has served in the
operations of the Company since October 1997. From
1996 to present, Mr. Cruz has been involved in the
operations of AMCC and from 1994 to 1996 he was
International Sales Manager of AMCC. From 1996 to
1997, Mr. Cruz was General Manager of AmeriTech
Exports and from 1988 to 1994 he was Regional
Sales Manager of Promark Distributors.
5
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for the three
fiscal years ended June 30, 1999 for the Company's Chief Executive Officers, the
other executive officers of the Company and two most highly compensated
executive officers of European Micro Plc for Fiscal 1999 (the "NAMED EXECUTIVE
OFFICERS").
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------------------------
OTHER ANNUAL SECURITIES ALL OTHER
COMPENSATION UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION(S) FISCAL YEAR SALARY($) BONUS($) ($) OPTIONS (#s)(1) ($)(2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John B. Gallagher 1999 $225,000 $100,000 $-- -- $--
Co-Chairman 1998 $ 87,500 -- -- -- --
and Co-President (3)
1997 -- -- -- -- --
Harry D. Shields 1999 $225,000 $100,000 $-- -- $--
Co-Chairman and 1998 $ 87,500 -- -- -- --
Co-President
1997 -- -- -- -- --
Jay Nash 1999 $ 50,000 $5,000 $-- -- $--
Chief Financial 1998 $ 16,666 -- -- 10,000 --
Officer,
Controller, Secretary 1997 -- -- -- -- --
and
Treasurer
Frank Cruz 1999 $ 45,000 $ 10,000 $ 28,030 -- $--
Chief Operating 1998 $ 3,750 -- -- 10,000 --
Officer (4)
1997 -- -- -- -- --
Laurence Gilbert 1999 $ 98,154 $178,136 $-- -- $ 20,450
Managing Director(5) 1998 $100,293 $561,358 -- 25,000 $ 16,351
1997 $ 64,364 $ 90,152 -- -- $ 11,160
Bernadette Spofforth 1999 $ 49,077 $322,987 $-- -- $ 23,329
Director of Sales(6) 1998 $ 59,716 $832,017 -- 50,000 $ 18,475
1997 $ 48,328 $248,902 -- -- $ 13,979
</TABLE>
- -----------------------
(1) Options granted pursuant to the Incentive Plan to purchase shares of Common
Stock.
(2) This consists primarily of employee benefits, including the use of a company
owned car, pension plan and medical insurance.
(3) Excludes compensation paid by AMCC. AMCC was acquired by the Company on July
1, 1999. See "Certain Transactions and Relationships with the Company."
6
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(4) Excludes compensation paid by AMCC. AMCC was acquired by the Company on July
1, 1999. See "Certain Transactions and Relationships with the Company."
(5) Mr. Gilbert is the Managing Director of European Micro Plc.
(6) Ms. Spofforth is the Director of Sales of European Micro Plc.
OPTION GRANTS IN LAST FISCAL YEAR
None of the Named Executive Officers were granted stock options in Fiscal
1999. No options were exercised by the Named Executive Officers in Fiscal 1999.
EMPLOYMENT AGREEMENTS
EMPLOYMENT AGREEMENTS WITH THE CHIEF EXECUTIVE OFFICERS.
The Company has entered into five-year employment agreements with each of
Messrs. Gallagher and Shields. Pursuant to the agreements, each executive is
employed as Co-Chairman and Co-President of the Company. These agreements were
effective as of January 1, 1998, and each provided for annual base salaries of
$175,000, plus annual cost of living adjustments and other increases to be
determined at any time or from time to time by the Board of Directors or any
committee thereof. On January 31, 1999, the annual base salaries for each of
Messrs. Gallagher and Shields were increased to $275,000. In addition, each
executive is entitled to annual incentive bonus compensation in an amount to be
determined by the Board of Directors or a committee thereof.
Each agreement further provides that each of Messrs. Gallagher and Shields
will devote a significant amount of his working time and efforts to the business
and affairs of the Company (which means no less than 50% of his working time);
provided, however, that each of Messrs. Gallagher and Shields may devote a
reasonable amount of time and effort to other business affairs, including, in
the case of Mr. Gallagher, AMCC, and, in the case of Mr. Shields, Technology
Express, and in each case other activities disclosed to the Board of Directors.
The agreements also provide that upon termination of employment without
"cause" or termination by the executive for "good reason" (which includes a
change of control of the Company), the executive is entitled to receive, in
addition to all accrued or earned but unpaid salary, bonus or benefits, an
amount equal to three times the compensation such executive would be entitled to
receive in the then current fiscal year, including base salary and incentive
bonus compensation. For the purposes of the employment agreement, the amount of
incentive bonus compensation such executive would be entitled to receive in the
then current fiscal year is equal to the largest amount accrued for any of the
two most recently completed fiscal years. In addition, the Company will pay
certain relocation expenses incurred by the executive with respect to a change
of principal residence and will indemnify the executive for any loss sustained
in the sale of his principal residence. The agreements also provide that the
executive will not compete with the Company during his employment (except for
activities related to AMCC and Technology Express and such other activities
disclosed to the Board of Directors) and for two years thereafter unless the
Company terminates the executive without "cause" or the executive terminates his
employment for "good reason."
In addition, the agreements grant each of Messrs. Gallagher and Shields
demand and piggy-back registration rights with respect to the shares of Common
Stock held by each. Each executive may individually require the Company to file
a registration statement with respect to these shares on an annual basis.
Moreover, each executive may include these shares in certain other offerings by
the Company.
On July 1, 1999, Mr. Gallagher entered into a two-year employment
agreement with American Micro Computer Center, Inc., a wholly-owned subsidiary
of the Company ("AMERICAN MICRO"). American Micro was formed to acquire AMCC, an
entity in which Mr. Gallagher served as President, a Director and a
fifty-percent shareholder. Pursuant to this agreement, Mr. Gallagher is employed
as President of American Micro. This agreement provides for an annual base
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<PAGE>
salary of $104,000. Except with respect to his duties to the Company, Mr.
Gallagher must devote substantially all of his business time to the business
affairs of American Micro.
EMPLOYMENT AGREEMENTS WITH OTHER NAMED EXECUTIVE OFFICERS.
European Micro Plc has entered into an employment agreement with Ms.
Bernadette Spofforth. Pursuant to the agreement, Ms. Spofforth is employed as
Sales Director of European Micro Plc. Ms. Spofforth's agreement was effective
April 30, 1996, will continue until terminated by either party delivering not
less than six months' written notice to the other party and provides for an
annual base salary of (pound)30,000 (approximately $48,000 assuming an exchange
rate of $1.60 to (pound)1.00) plus a bonus based on the level of net profit
earned by European Micro Plc. Ms. Spofforth is also entitled to the use of a
vehicle owned by European Micro Plc under the terms of her employment agreement.
European Micro Plc has entered into an employment agreement with Mr.
Lawrence Gilbert. Pursuant to the agreement, Mr. Gilbert is employed as Managing
Director of European Micro Plc. Mr. Gilbert's agreement was effective January 1,
1998, will continue until terminated by either party delivering not less than
six months' written notice to the other party and provides for an annual base
salary of (pound)60,000 (approximately $96,000 assuming an exchange rate of
$1.60 to (pound)1.00) plus a bonus based on the level of net profit earned by
European Micro Plc. The minimum bonus is (pound)30,000 (approximately $48,000
assuming an exchange rate of $1.60 to (pound)1.00). Mr. Gilbert is also entitled
to the use of a vehicle owned by European Micro Plc under the terms of his
employment agreement.
European Micro Plc is currently negotiating the terms of new employment
agreements with Mr. Gilbert and Ms. Spofforth. The terms of these agreements
have not been finalized. Once finalized, the Company will report the terms of
these employment agreements in its subsequent periodic filing with the
Commission.
Neither Jay Nash nor Frank Cruz have entered into employment agreements
with the Company. Messrs. Nash and Cruz are employed by the Company on a
part-time basis. Mr. Nash is also employed by Technology Express, Inc., an
entity in which Mr. Shields is the President and sole shareholder. Mr. Cruz is
also employed by American Micro, a wholly-owned subsidiary of the Company formed
to acquire AMCC, and, prior to that, he was employed by AMCC, an entity in which
Mr. Gallagher was the President and a fifty percent shareholder until it was
acquired by the Company on July 1, 1999.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
INTRODUCTORY STATEMENT. The Board of Directors of the Company approved all
of the compensation arrangements with the officers of the Company prior to the
consummation of the Company's initial public offering on June 12, 1998. With the
exception of Jay Nash and Frank Cruz, each of the Company's officers has entered
into long-term employment agreements with the Company or a subsidiary of the
Company as described in the section entitled "Employment Agreements." The
compensation arrangements with the officers of European Micro Plc were approved
by the Board of Directors of European Micro Plc, which at that time consisted
solely of Messrs. Gallagher and Shields. Future decisions regarding the
compensation of officers of the Company will be made by the Compensation
Committee. Such decisions will be made pursuant to the following compensation
policy.
COMPENSATION POLICY. The Compensation Committee of the Board of Directors
is responsible for making recommendations to the Board of Directors concerning
the compensation arrangements for the Company's officers, including salaries and
benefits. The Company's compensation policy is designed to establish an
appropriate relationship between executive pay and the Company's annual
performance, its long-term growth objectives and its ability to attract and
retain qualified officers. The Compensation Committee will attempt to achieve
these goals by integrating competitive annual base salaries with bonuses based
on corporate performance and on the achievement of internal strategic
objectives. In addition, this policy is coordinated with stock options awards
through the Company's 1998 Stock Incentive Plan which is administered by the
Company's Stock Option Committee. The Compensation Committee believes that cash
compensation in the form of salary and bonuses provides the Company's officers
with short-term rewards for success in operations. Long-term compensation comes
in the form of stock options awards and other stock incentives which encourages
8
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growth in management stock ownership. Awards of stock options and other stock
incentives are administered by the Stock Option Committee.
BASE SALARY. Base salaries and adjustments of base salaries for officers
will be determined based on the Compensation Committee's assessment of each
individual's experience level, the scope and complexity of the position held and
the Company's knowledge of salaries being paid for similar positions in the
marketplace. The base salaries of the officers of European Micro Plc were
determined by Messrs. Gallagher and Shields prior to the consummation of the
Company's initial public offering.
BONUS COMPENSATION. In 1999, European Micro Holdings, Inc. paid
discretionary bonuses of $100,000 to each of Mr. Gallagher and Mr. Shields.
Messrs. Nash and Cruz received discretionary bonuses of $5,000 and $10,000,
respectively. No other discretionary bonuses were paid. The officers of European
Micro Plc received bonus awards pursuant to employment agreements based on
achieving certain operating goals. See "Executive Compensation - Summary
Compensation Table." The formulas for these bonuses and operating goals were
determined by Messrs. Gallagher and Shields prior to the consummation of the
Company's initial public offering. The Compensation Committee may grant bonus
compensation to the officers of the Company based on the performance and
contribution of such individual to the Company's operations.
COMPENSATION OF CHIEF EXECUTIVE OFFICERS. In 1998, the Board of Directors
of the Company approved five-year employment agreements for Messrs. Gallagher
and Shields. The compensation arrangements were determined based on their
performance and contributions, their experience and the compensation
arrangements of officers in similar positions in the marketplace. Effective
January 1, 1999, the base salaries of Messrs. Gallagher and Shields increased to
$275,000 each. In addition, Messrs. Gallagher and Shields were paid bonuses of
$100,000 each. These increases to base salaries and bonuses were determined
based on Messrs. Gallagher and Shields contributions in 1998. Mr. Gallagher also
entered into a two-year employment agreement with American Micro, a wholly-owned
subsidiary of the Company. This compensation arrangement was approved by the
entire Board of Directors in connection with the acquisition of AMCC. See
"Certain Transactions and Relationships with the Company." Messrs. Gallagher and
Shields will be entitled to additional adjustments to their base salaries and
bonus awards at the discretion of the Board of Directors.
COMPENSATION COMMITTEE
John B. Gallagher
Kyle R. Saxon
Harry D. Shields
Barrett Sutton
REPORT OF STOCK OPTION COMMITTEE ON EXECUTIVE COMPENSATION
STOCK OPTION POLICY. The Stock Option Committee of the Board of Directors
is responsible for making recommendations to the Board of Directors concerning
the adoption of any employee benefit plans and the administration of the 1998
Stock Incentive Plan and the 1998 Employee Stock Purchase Plan. In addition, the
Stock Option Committee is responsible for making recommendations regarding
awards of stock options or other benefits under these plans. The Company's stock
option policy is designed to provide long-term incentives by encouraging growth
in management stock ownership. The Stock Option Committee believes that the
award of stock options provides an incentive to the recipients to enhance
shareholder value which in turn benefits the stockholders. Stock options and
other equity based awards are granted under the 1998 Stock Incentive Plan by the
non-employee members of the Company's Board of Directors. Key employees,
non-employee directors and consultants of the Company and its subsidiaries are
eligible to participate in the 1998 Stock Incentive Plan. No member of the Stock
Option Committee is a former or current officer or employee of the Company or
any of its subsidiaries.
STOCK OPTION AWARDS. In 1999, the Stock Option Committee awarded stock
options at the fair market value of the shares of common stock of the Company on
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the date of the grant. In determining the number of stock options awarded in
1999, the Stock Option Committee took into account each recipient's performance
and contribution to the Company's operations.
STOCK OPTION AWARDS TO CHIEF EXECUTIVE OFFICERS. In 1999, the Stock Option
Committee did not award any stock options to Messrs. Gallagher and Shields.
Future awards of stock options will be determined based on their performance and
contributions to the Company's operations, their experience and the compensation
arrangements of officers in similar positions in the marketplace. Messrs.
Gallagher and Shields will be entitled to stock option awards at the discretion
of the Stock Option Committee.
STOCK OPTION COMMITTEE
Kyle R. Saxon
Barrett Sutton
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During Fiscal 1999, the Company's Compensation Committee was comprised of
John B. Gallagher, Harry D. Shields, Barrett Sutton and Kyle R. Saxon. Each of
Messrs. Gallagher and Shields is a Co-Chairman, Co-President and Director of the
Company and Co-Chairman of each of the subsidiaries except American Micro in
which Mr. Gallagher is the sole director and officer. In addition, Messrs.
Gallagher and Shields entered into certain transactions with the Company. All of
these transactions are described in the Section entitled "Certain Transactions
and Relationships with the Company." The Compensation Committee is responsible
for making recommendations to the Board of Directors regarding compensation
arrangements for the Company's officers. In addition to the Compensation
Committee, the Board of Directors has also formed a Stock Option Committee which
is responsible for making recommendations to the Board of Directors regarding
the adoption of any employee benefit plans and administering the 1998 Stock
Incentive Plan and the 1998 Employee Stock Purchase Plan and the grant of stock
options or other benefits under such plans. During Fiscal 1999, the Company's
Stock Option Committee was comprised of Barrett Sutton and Kyle R. Saxon.
COMPARATIVE STOCK PERFORMANCE
The following graph compares the performance of the Company's Common Stock
against the Nasdaq Stock Market (U.S.) Index and a peer group for the period
commencing with the consummation of the Company's initial public offering on
June 12, 1998 and ending June 30, 1999. The peer group consists of CHS
Electronics, Inc., Ingram Micro, Inc., Tech Data Corporation and Liuski
International Inc.
The graph assumes that $100 was invested on June 12, 1998, and that
dividends were reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG EUROPEAN MICRO HOLDINGS, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND A PEER GROUP
06/12/98 06/30/98 06/30/99
European Micro Holdings, Inc. 100 103 88
Peer Group* 100 112 69
Nasdaq Stock Market (U.S.) Index 100 109 156
- ---------------------------------
* The Peer Group is comprised of CHS Electronics, Inc., Ingram Micro Inc.,
Tech Data Corporation and Liuski International Inc.
11
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CERTAIN TRANSACTIONS AND RELATIONSHIPS WITH THE COMPANY
On February 2, 1999, the Company's Board of Directors formed an
Acquisition Committee consisting solely of independent directors to evaluate and
determine whether the Company should acquire AMCC and, if so, on what terms. The
members of the committee are Kyle R. Saxon and Barrett Sutton. The committee
members were compensated at $150 per hour each for their service on the
committee. John B. Gallagher, who is a significant shareholder, Co-Chairman and
Co-President of the Company, was the President and a Director of AMCC and owned
fifty percent of its outstanding capital stock. Frank Cruz, who is the Chief
Operating Officer of the Company, has been an employee of AMCC since 1994. He is
currently an employee of American Micro, the newly-formed, wholly-owned
subsidiary of the Company formed to acquire AMCC. The remaining fifty percent of
AMCC's outstanding capital stock was owned by Mr. Gallagher's father. The
committee's charter authorized it to take any action it deemed necessary to
properly evaluate and determine whether the Company should acquire AMCC,
including hiring independent advisors and ensuring that any such transaction is
fair to the Company and its stockholders from a financial point of view. The
committee hired independent legal counsel and an independent financial advisor
to render a fairness opinion. On July 1, 1999, the Company acquired AMCC.
The transaction was structured as a merger of AMCC with and into American
Micro, a newly-formed, wholly-owned subsidiary of the Company. Upon consummation
of the merger, this subsidiary's name was changed to American Micro Computer
Center, Inc. According to the merger agreement, the purchase price for AMCC was
equal to $940,550, plus an earn-out amount payable in cash or shares of the
Company's Common Stock (at the Company's discretion) equal to two times the
after-tax earnings of American Micro in calendar year 1999 and two times the
after-tax earnings of American Micro in calendar year 2000. In addition, the
Company assumed all outstanding indebtedness of AMCC, including a shareholder
loan in the approximate amount of $289,000. This loan is owed to the father of
John B. Gallagher. If the Company elects to pay any portion of the purchase
price in shares of the Company's Common Stock, then AMCC's shareholders have
fifteen days to make arrangements to sell such shares over the next forty
trading days. If the sale of such shares results in net proceeds of less than
the purchase price, then the Company will pay the difference in cash to AMCC's
shareholders. A copy of the merger agreement is attached to the Company's Annual
Report on Form 10-K.
Since its formation in 1991, European Micro Plc has belonged to the Group.
Harry D. Shields owns all of the outstanding capital stock of Technology Express
and, until August 1997, had an ownership interest in Ameritech Exports and
Ameritech Argentina. Until July 1, 1999, John B. Gallagher had an ownership
interest in AMCC and, until August 1997, had an ownership interest in Ameritech
Exports and Ameritech Argentina. Until July 1, 1999, Frank Cruz was an employee
of AMCC. In addition, Jay Nash, who is Chief Financial Officer, Controller,
Secretary and Treasurer of the Company, has been an officer of Technology
Express since 1992. In order to facilitate fast and efficient international
transactions, each member of the Group has acted as a supplier for, and
purchaser from, the other members of the Group. Such factors as country supply,
currency fluctuation, and manufacturer's geographic pricing strategy lead to a
constantly changing model where purchases and sales to other members of the
Group depend on the then current economic balance. Inter-Group sales have
historically been one percent above the selling Group member's cost. The low
mark-up has enabled each Group member to buy product quickly and efficiently in
the others' primary territories and to take advantage of quantity purchasing,
financing and logistics of the other members of the Group. The Group has made
numerous exceptions to the general one-percent mark-up pricing policy in times
of short supply, to cover build-up costs and to reward certain Group members for
exceptional low-cost purchases. Additionally, the Company has paid certain
management and consulting fees to the other members of the Group.
Inter-Group purchases and sales are as follows:
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($ IN THOUSANDS)
YEAR ENDED JUNE 30,
1995 1996 1997 1998 1999
---------------------------------------------
SALES TO GROUP MEMBERS
AMCC $323 306 66 9,875 7,356
Technology Express 22 104 (2) 19,217 7,984
Ameritech Argentina -- -- 90 -- --
Ameritech Exports 1 26 -- -- --
=============================================
$346 436 154 29,092 15,340
=============================================
PURCHASES FROM GROUP MEMBERS
AMCC $4,082 2,289 1,092 507 1,339
Technology Express 3,265 14,890 20,717 8,749 15,559
Ameritech Argentina -- -- -- -- --
Ameritech Exports 70 1,116 848 -- --
=============================================
$7,417 18,295 22,657 9,256 16,898
=============================================
The management and consulting fees paid by the Company to other Group
members are as follows:
YEAR ENDED JUNE 30,
1995 1996 1997 1998 1999
---------------------------------------------
MANAGEMENT FEES
AMCC $56 50 60 45 --
Technology Express 56 50 60 45 --
=============================================
$112 100 120 90 --
=============================================
CONSULTANCY FEES
Technology Express $32 37 16 14 --
=============================================
$32 37 16 14 --
=============================================
RECHARGED CONSULTANCY FEES
AMCC $-- (14) (27) -- --
Technology Express -- (14) (27) -- --
Ameritech Argentina -- (8) (13) -- --
Ameritech Exports -- (7) (14) -- --
=============================================
$-- (43) (81) -- --
=============================================
=============================================
144 94 55 104 --
=============================================
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Sales to and from Group members has resulted in the following accounts
receivable:
YEAR ENDED JUNE 30,
1995 1996 1997 1998 1999
---------------------------------------------
ACCOUNTS RECEIVABLE*
AMCC $97 259 240 54 974
Technology Express -- 15 -- 844 154
Ameritech Argentina -- 274 329 -- --
Ameritech Exports -- 160 -- -- --
=============================================
$97 708 569 898 1,128
=============================================
- -------------------------
* The largest aggregate amount of indebtedness owed from Technology Express and
AMCC, respectively, to the Company between July 1, 1998 and June 30, 1999 was
$1.7 million and $1.7 million. These amounts represent receivables incurred in
the ordinary course of business for sales of product by the Company to the
related parties.
Accounts payable to Group members are as follows:
YEAR ENDED JUNE 30,
1995 1996 1997 1998 1999
---------------------------------------------
ACCOUNTS PAYABLE*
AMCC $34 90 -- 12 3
Technology Express 242 535 188 226 630
Ameritech Argentina -- 281 -- -- --
Ameritech Exports 2 238 -- -- --
=============================================
$278 1,144 188 238 633
=============================================
- -------------------------
* The largest aggregate amount of indebtedness owed by the Company to Technology
Express and AMCC, respectively, between July 1, 1998 and June 30, 1999 was $2.7
million and $0.3 million. These amounts represent payables incurred in the
ordinary course of business of business for sales of product by the related
parties to the Company.
The entities listed above are related to the Company or its officers,
directors and principal stockholders in the following manner:
AMCC
AMCC is a distributor of computer hardware based in Miami, Florida. John
B. Gallagher who is Co-Chairman, Co-President, Director and a stockholder
(owning approximately 38.5% of the outstanding shares of Common Stock of the
Company) of the Company, is the President and sole Director of AMCC and, until
July 1, 1999, owned fifty percent of AMCC's outstanding capital stock. On July
1, 1999, the Company acquired AMCC.
TECHNOLOGY EXPRESS
Until 1996, Technology Express was a full service authorized reseller of
computers and related products based in Nashville, Tennessee, selling primarily
to end-users. Technology Express was sold to Inacom Computers in 1996.
Concurrently with the sale, Mr. Shields founded a new computer company by the
same name. This new company is a distributor of computer products, focusing
primarily on governmental and international sales. It does not sell to
end-users. Harry D. Shields, who is the Co-Chairman, Co-President, director and
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a stockholder (owning approximately 32.5% of the outstanding shares of Common
Stock of the Company) of the Company, is President of Technology Express, and
owns all of the outstanding capital stock of that company.
AMERITECH ARGENTINA
Ameritech Argentina was an authorized distributor of Compaq, Hewlett
Packard, IBM and ACER computers and accessories in Argentina. Each of Messrs.
Gallagher and Shields owned 50% of the outstanding shares of that company's
common stock until its sale in August 1997.
AMERITECH EXPORTS
Ameritech Exports was an authorized distributor of Compaq computers and
accessories into the Caribbean and certain parts of Central and South America.
Messrs. Gallagher and Shields owned 25% and 50%, respectively, of the
outstanding shares of common stock of that company until its sale in August
1997.
15
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF HOLDERS OF MORE THAN FIVE PERCENT BENEFICIAL OWNERSHIP
The following table sets forth the beneficial ownership of the Company's
Common Stock as of October 22, 1999 by each person or group known by the Company
to beneficially own more than five percent of outstanding Common Stock,
stockholders who have an agreement to vote shares together, each director,
nominee for director and the Named Executive Officers, and by all directors and
executive officers as a group. Unless otherwise indicated, the holders of all
shares shown in the table have sole voting and investment power with respect to
such shares. As of October 22, 1999, there were 4,933,900 outstanding shares of
Common Stock.
SHARES
BENEFICIALLY PERCENT OF
NAME AND ADDRESS OWNED CLASS
- ------------------------------------------------ ------------- -------------
John B. Gallagher(1) 1,900,000 38.5%
Harry D. Shields(2) 1,602,696 32.5%
Stuart S. Southard and Robert H.
True, Trustees of the 1997 Henry
Daniel Shields Irrevocable 394,304 8.0%
Educational Trust(3)
Thomas H. Minkoff, Trustee of the
Gallagher Family Trust(4) 97,000 2.0%
Jay Nash(5) -- --
Frank Cruz (6) -- --
Laurence Gilbert(7) -- --
Bernadette Spofforth(8) -- --
Barrett Sutton(9) 10,000 *
Kyle Saxon(10) 11,000 *
All officers and directors as a group 3,523,696 71.4%
- -----------------------
* Indicates that the ownership percent is less than one percent (1%).
(1) Business address is 6073 N.W. 167th Street, Unit C-25, Miami, Florida 33015.
Mr. Gallagher is Co-Chairman, Co-President and Director of the Company.
(2) Business address is 808 Third Avenue South, Nashville, Tennessee 37210. Mr.
Shields is Co-Chairman, Co-President and Director of the Company.
(3) Business address for Mr. Southard is 614 Fourth Avenue, Nashville, Tennessee
37210. Business address for Mr. True is First American Center, No. 2070,
315 Deaderick Street, Nashville, Tennessee 37278.
(4) Business address is 1635D Royal Palm Drive South, Gulfport, Florida 33707.
(5) Mr. Nash is the Chief Financial Officer, Controller, Secretary and Treasurer
of the Company. His business address is 808 Third Avenue South, Nashville,
Tennessee 37210. He has been granted options to purchase 10,000 shares of
Common Stock of the Company. These options are excluded from the table
because they are not exercisable within 60 days of the date hereof.
(6) Mr. Cruz is the Chief Operating Officer of the Company. His business address
is 6073 N.W. 167th Street, Unit C-25, Miami, Florida 33015. He has been
granted options to purchase 10,000 shares of Common Stock of the Company.
These options are excluded from the table because they are not exercisable
within 60 days of the date hereof.
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(7) Mr. Gilbert is a Director of the Company and the Managing Director of
European Micro Plc. His business address is 20-24 Church Street, Altrincham,
Manchester, England WA144DW. He has been granted options to purchase 25,000
shares of Common Stock of the Company. These options are excluded from the
table because they are not exercisable within 60 days of the date hereof.
(8) Ms. Spofforth is a Director of the Company and the Director of Sales for
European Micro Plc. Her business address is 20-24 Church Street, Altrincham,
Manchester, England WA144DW. She has been granted options to purchase 50,000
shares of Common Stock of the Company. These options are excluded from the
table because they are not exercisable within 60 days of the date hereof.
(9) Mr. Sutton is a Director of the Company. His business address is NationsBank
Plaza, Suite 1100, 414 Union Street, Nashville, Tennessee 37219. In 1998,
Mr. Sutton was granted options to purchase 10,000 shares of Common Stock of
the Company. These options are included in the table because they are
exercisable within 60 days of the date hereof. In 1999, Mr. Sutton was
granted options to purchase 5,000 additional shares of Common Stock. These
options are excluded form the table because they are not exercisable within
60 days of the date hereof. See "Option Grants in Last Fiscal Year" for
additional information regarding these options.
(10)Mr. Saxon is a Director of the Company. His business address is 1700 Alfred
I. DuPont Building, 169 East Flagler Street, Miami, Florida 33131-1298. In
1998, Mr. Saxon was granted options to purchase 10,000 shares of Common
Stock of the Company. These options are included in the table because they
are exercisable within 60 days of the date hereof. In 1999, Mr. Saxon was
granted options to purchase 5,000 additional shares of Common Stock. These
options are excluded from the table because they are not exercisable within
60 days of the date hereof. See "Option Grants in Last Fiscal Year" for
additional information regarding these options.
CHANGES IN CONTROL
On August 2, 1999, the Company entered into a commitment letter with
SouthTrust Bank to provide European Micro Holdings, Inc. with a $1.5 million
term loan to fund its working capital needs and two $1.5 million revolving lines
of credit to fund the working capital needs of Nor'Easter and American Micro. As
partial security for these loans, Messrs. Gallagher and Shields will pledge to
SouthTrust Bank a portion of their shares of common stock of European Micro
Holdings, Inc. In the event that the Company defaults on one or more of these
loans, SouthTrust Bank may foreclose on all or a portion of the pledged
securities. Such an event may cause a change of control in the Company because
Messrs. Gallagher and Shields together own approximately 71% of the Company's
outstanding shares of common stock.
STOCKHOLDERS AGREEMENT
Pursuant to a stockholders agreement, each of Messrs. Gallagher and
Shields agreed to vote his shares in concert on all matters submitted to a vote
of stockholders of the Company, including the election of all directors. In the
event that either Messrs. Gallagher or Shields cannot agree to vote his shares
in concert with the other, neither shall vote his shares. It is expected that
Messrs. Gallagher and Shields will vote their shares for the election of each of
the Class II nominees.
The stockholders agreement also provides that each of Thomas H. Minkoff,
Trustee of the Gallagher Family Trust, and Stuart S. Southard and Robert H.
True, Trustees of the 1997 Henry Daniel Shields Irrevocable Educational Trust,
will vote the shares subject to such trusts in concert on all matters submitted
to a vote of the stockholders of the Company, including the election of all
directors. If the parties cannot agree to vote his shares in concert with the
other, neither may vote his shares. It is expected that Thomas H. Minkoff,
Trustee of the Gallagher Family Trust and Stuart S. Southard and Robert H. True,
Trustees of the 1997 Henry Daniel Shields Irrevocable Educational Trust, will
vote the shares subject to such trusts for the election of each of the Class II
nominees.
INDEPENDENT ACCOUNTANTS
The firm of KPMG served as the Company's independent accountants for
Fiscal 1999. Representatives of this firm will be available by telephone to
respond to questions at the 1999 Annual Meeting of the Stockholders. It is
anticipated that the Audit Committee of the Company will recommend that KPMG be
selected to serve as the Company's independent accountants for 2000.
17
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
its executive officers and any persons beneficially holding more than ten
percent of the Company's Common Stock are required to report their ownership of
the Company's Common Stock and any changes in that ownership to the United
States Securities and Exchange Commission (the "COMMISSION") and the Nasdaq
National Market. Specific due dates for these reports have been established and
the Company is required to report in this proxy statement any failure to file by
these dates. To the Company's knowledge, all reports required to be filed have
been filed by these dates except for the reports required to be filed by Messrs.
Saxon, Sutton and Cruz. Messrs. Sutton and Saxon are non-employee directors of
the Company. Pursuant to the Company's 1998 Stock Incentive Plan, non-employee
directors are automatically granted options on each anniversary of their
election to the Board. The anniversary dates are January 13, 1999 for Mr. Saxon
and February 13, 1999 for Mr. Sutton. These option awards were evidenced by an
option agreement dated as of September 7, 1999. The filings required pursuant to
Section 16(a) were filed with the Commission on September 8, 1999. Mr. Cruz
became an officer of the Company on November 16, 1998. The filing required
pursuant to Section 16(a) was filed with the Commission on December 30, 1998. In
making these statements, the Company has relied on copies of the reports that
its officers and directors have filed with the Commission.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Rule 14a-8 of the Exchange Act contains the procedures for including
certain stockholder proposals in the Company's proxy statement and related
materials. The deadline for submitting a stockholder proposal pursuant to Rule
14a-8 for the 2000 Annual Meeting of Stockholders (the "2000 ANNUAL MEETING") of
the Company is July 2, 2000. With respect to any stockholder proposal outside
the procedures provided in Rule 14a-8 and received by the Company between May 3,
2000 and July 2, 2000, the Company may be required to include certain limited
information concerning such proposal in the Company's proxy statement so that
proxies solicited for the 2000 Annual Meeting may confer discretionary authority
to vote on any such matter. Any stockholder proposals should be addressed to the
Secretary of the Company, 6073 N.W. 167th Street, Unit C-25, Miami, Florida
33015.
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OTHER MATTERS
The Board of Directors does not know of any matter other than those
described in this proxy statement that will be presented for action at the 1999
Annual Meeting of Stockholders. If other matters properly come before the
meeting, the persons named as proxies intend to vote the shares they represent
in accordance with their judgment.
By Order of the Board of Directors
/S/ John B. Gallagher
---------------------
John B. Gallagher
Co-Chairman and Co-President
Miami, Florida
October 29, 1999
