FORM OF PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF COMTECH
CONSOLIDATION GROUP, INC. (THE "CORPORATION").
The undersigned does hereby appoint Walter D. Davis and Lamont Waddell,* or
either of them, as proxies of the Corporation which the undersigned is entitled
to vote all of the shares of Common Stock of Stockholders of the Corporation at
an annual meeting to be held on April 26, 2000, commencing at 1:00 p.m. local
time, at 1902 Mechanic Street, Galveston, Texas 77550 and at any or all
adjournments of said meeting, and instructs them to vote as follows:
1. ELECTION OF FOR all nominees WITHHOLD
-------- -------
DIRECTORS listed below AUTHORITY
(except as marked to the contrary below)
names of nominees
Walter D. Davis, Vincent Edward Alexander, Dr Beatrice Beasley, Lamont
Waddell and Jesse Funchess, J.D.
INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name in the space provided below).
2. Increase in Authorize Shares of Common Stock from 30,000,000 to
100,000,000
FOR AGAINST ABSTAIN
------ ------ ------
3. Approval of the Corporation's 2000 Employee Stock Option Plan
FOR AGAINST ABSTAIN
------ ------ ------
4. Proposal to approve the appointment of R.E. Bassie & Co. P.C. as
auditors for corporation.
FOR AGAINST ABSTAIN
------ ------ ------
(Please read the reverse side, date and sign on the reverse side, and return
promptly in the enclosed envelope.)
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* Shareholder may strike out the persons named and designate some
person of his or her choice and may send this Proxy directly to that person.
5. In their discretion, the Proxies are authorized to vote upon any
other proposal which may properly come before the meeting or any
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.
Please sign exactly as name (or names) appears below. When shares are held
by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name
by authorized person.
[Printed name of Stockholder:
No. of Shares of Common Stock ________]
DATED: ----------------------------------
---------------- Signature
----------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
DATE: APRIL 26, 2000
TIME: 1:00 P.M.
PLACE: 1902 MECHANIC STREET
GALVESTON, TEXAS 77550
MATTERS TO BE VOTED ON:
1. Election of five directors.
2. Approval of an Increase in authorized shares
3. Approval of our 2000 Employee Stock Option Plan.
4. Ratification of the appointment of R.E. Bassie & Co., P.C. as
our independent accountants for 2000.
5. Any other matters properly brought before the shareholders at
the meeting.
By orders of the Board of Directors,
Dr. Beatrice Beasley
March 31, 2000 Secretary
|-----------------------------------------------------------------------|
| CONTENTS |
| PAGE |
| ---- |
| General Information about voting 2 |
| Proposal No. 1: Election of Directors 5 |
| Proposal No. 2: Increase in authorized shares 10 |
| Proposal No. 3: Approval of Employee Stock Option Plan 12 |
| Proposal No. 4: Appointment of Independent Accountants 14 |
|-----------------------------------------------------------------------|
PROXY STATEMENT
Your vote at the annual meeting is important to us. Please vote your shares of
common stock by completing the enclosed proxy card and returning it to us in the
enclosed envelope. This proxy statement has information about the annual
meeting and was prepared by the Company's management for the board of directors.
This proxy statement was first mailed to shareholders on March 31, 2000.
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GENERAL INFORMATION ABOUT VOTING
WHO CAN VOTE?
You can vote your shares of common stock if our records show that you owned the
shares on March 9, 2000. A total of 22, 327, 072 shares of common stock can
vote at the annual meeting. You get one vote for each share of common stock,
unless cumulative voting is in effect. Cumulative voting is described on page 5
hereof. The enclosed proxy card shows the number of shares you can vote.
HOW DO I VOTE BY PROXY?
Follow the instructions on the enclosed proxy card to vote on each proposal to
be considered at the annual meeting. Sign and date the proxy card and mail it
back to us in the enclosed envelope. The proxyholders named on the proxy card
will vote your shares as you instruct. If you sign and return the proxy card
but do not vote on a proposal, the proxyholders will vote for you on that
proposal. Unless you instruct otherwise, the proxyholders will vote for each of
the other proposals to be considered at the meeting.
WHAT IF OTHER MATTERS COME UP AT THE ANNUAL MEETING?
The matters described in this proxy statement are the only matters we know will
be voted on at the annual meeting. If other matters are properly presented at
the meeting, the proxyholders will vote your shares as they see fit.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. At any time before the vote on a proposal, you can change your vote either
by giving the Company's secretary a written notice revoking your proxy card or
by signing, dating, and returning to us a new proxy card. We will honor the
proxy card with the latest date.
CAN I VOTE IN PERSON AT THE ANNUAL MEETING RATHER THAN BY COMPLETING THE PROXY
CARD?
Although we encourage you to complete and return the proxy card to ensure that
your vote is counted, you can attend the annual meeting and vote your shares in
person.
WHAT DO I DO IF MY SHARES ARE HELD IN "STREET NAME"?
If your shares are held in the name of your broker, a bank, or other nominee,
that party should give you instructions for voting your shares.
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HOW ARE VOTES COUNTED?
We will hold the annual meeting if holders of a majority of the shares of common
stock entitled to vote either sign and return their proxy cards or attend the
meeting. If you sign and return your proxy card, your shares will be counted to
determine whether we have a quorum even if you abstain or fail to vote on any of
the proposals listed on the proxy card.
If your shares are held in the name of a nominee, and you do not tell the
nominee by April 25, 2000 how to vote your shares (so-called "broker nonvotes"),
the nominee can vote them as it sees fit only on matters that the National
Association of Securities Dealers Automated Quotation System (NASDAQ")
determines to be routine, and not on any other proposal. Broker nonvotes will
be counted as present to determine if a quorum exists but will not be counted as
present and entitled to vote on any nonroutine proposal.
WHO PAYS FOR THIS PROXY SOLICITATION?
We do. In addition to sending you these materials, some or our employees may
contact you by telephone, by mail, or in person. Non of theses employees will
receive any extra compensation for doing this. We have retained ADP-Process
Control, 51 Mercedes Way, Edgewood, New York 11717, to assist us in soliciting
your proxy for a fee of $ plus reasonable out-of-pocket expenses.
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STOCK OWNERSHIP
The Annual Report on Form 10-K for the Company (the "Form 10-K") includes a
table showing the number of shares of common stock beneficially owned (as of
December 31, 1999) by :
- - each person who we know beneficially owns more than 5% of the common stock
- - each director;
- - each executive officer named in the Summary Compensation Table on page 8;
and
- - the directors and executive officers as a group.
The Form 10-K also includes a table of each beneficial Owner in the Company who
owns at least 1% of the Company's voting securities.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
An entire board of directors, consisting of five (5) members, will be
elected at the annual meeting. The directors elected will hold office until
their successors are elected, which should occur at the next annual meeting.
VOTE REQUIRED. The five (5) nominees receiving the highest number of votes
will be elected. Votes withheld for a nominee will not be counted. You get one
vote for each of your shares of common stock, unless cumulative voting is in
effect. For cumulative voting to be in effect, at least one shareholder must
notify the Chair of the annual meeting, before the vote on directors, of his or
her intent to cumulate votes. If this notice is given, all shareholders may
cumulative votes. If cumulative voting is in effect, you will be entitled to a
number of votes in the election of directors equal to five (5) (the total number
of directors to be elected) multiplied by the number of shares you are entitled
to vote. For example, if you have 100 shares, you have 500 votes. You can give
all your votes to one nominee or distribute your votes among as many nominees as
you want. Proxyholders can cumulate the shares they are entitled to vote as
they see fit.
NOMINATIONS. At the annual meeting, we will nominate the persons named in
this proxy statement as directors. Although we don't know of any reason why one
of these nominees might not be able to serve, the board of directors will
propose a substitute nominee if any nominee is not available for election.
Shareholders also can nominate persons to be directors. If you want to nominate
a person, you must follow the procedures in the Company's bylaws. You must
deliver a notice to the Company's secretary at the Company's principal executive
offices between March 31, 2000 and April 25, 2000. That notice must contain the
information required by the bylaws about you and your nominees. Unless you have
complied with these bylaws provision, your nominee won't be accepted and can't
be voted on by the shareholders.
GENERAL INFORMATION ABOUT THE NOMINEES. All of the nominees are currently
directors of the Company. Each has agreed to be named in this proxy statement
and to serve as a director if elected. The ages listed for the nominees are as
of April 1, 2000.
WALTER DAVIS Director since December 1999
Walter Davis, 48, has been chairman of the board and the chief
executive officer/president of CCGI since 1/20/00. He served as the chief
financial officer from 9/1/99-1/20/00. He also serves as trustee on the Houston
Municipal Pension Board.
VINCENT EDWARD ALEXANDER Director since December 1999
Vincent Edward Alexander, 38, serves as director and chair of the
audit committee. He was elected to the board in 12/99. He is a financial
officer of the Infinity Brokerage Corporation. He is also a member of the
greater Houston partnership.
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DR. BEATRICE BEASLEY Director since January 2000
Dr. Beatrice Beasley, 55 has been a member of the board since 1/20/00
and the chair of the compensation committee. She is a tenured professor at
Texas Southern University and is president of Beasley & Associates, a business
training and consulting firm. Dr. Beasley also serves on the board of the
Harris County Children's Protective Services Agency.
LAMONT WADDELL Director since January 2000
Lamont Waddell, 57 is a director and has been the Chief Financial
Officer since 1/20/00. He formerly served as comptroller of CCGI and prior to
that he was the CFO of the Faro Pharmaceutical Corp.
JESSE FUNCHESS, J.D. Director since January 2000
Attorney Jesse Funchess, 69 was elected to the board in 2/00. He is
managing partner of Jesse Funchess & Associates Attorneys at Law in Houston and
Beaumont Texas. Attorney Funchess is also the Chairman of the board of the
South Central Houston Community Action Council, Inc.
COMMITTEES OF THE BOARD. The board of directors has two principal
committees. The following chart describes the function and membership of each
committee and the number of times it met in 1999:
AUDIT COMMITTEE-1 MEETINGS
FUNCTION MEMBERS
- -------- --------
- - Review internal financial information Vincent Edward Alexander (Chair)
- - Review audit program Dr. Beatrice Beasley
- - Review the results of audits with Attorney Jesse Funchess
the independent auditors
- - Oversee quarterly reporting
COMPENSATION COMMITTEE-0 MEETINGS
FUNCTION MEMBERS
- -------- --------
- - Review and approve compensation Dr. Beatrice Beasley (Chair)
and benefit programs Vincent Edward Alexander
- - Approve compensation of senior executives Attorney Jesse Funchess
- - Administer Stock Option Plan
The board of directors had four meetings during 1999. Of the current board
members, only Walter Davis and Vincent Edward Alexander were on the board in
1999 and they attended one meeting of the board and one meeting of the audit
committee.
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EXECUTIVE COMPENSATION
The following report and the performance graph on page 9 do not constitute
soliciting materials and are not considered filed or incorporated by reference
into any other Company filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934, unless we state otherwise.
REPORT OF THE COMPENSATION COMMITTEE
GENERAL PHILOSOPHY ON EXECUTIVE COMPENSATION
The Committee's goal are to:
- - provide compensation competitive with other similar companies;
- - reward executives consistent with the performance of the Company;
- - recognize individual performance;
- - retain and attract qualified executives; and
- - encourage executives to increase shareholder value.
To achieve these goals, the Committee has put in place an executive-compensation
program with three basis elements: base salary, annual cash bonus, and stock
options.
BASE SALARY. The Committee determines the base salary of each executive officer
other than the CEO. The Committee considers competitive industry salaries, the
nature of the officer's position, the officer's contribution and experience, and
the officer's length of service.
ANNUAL CASH BONUS. Before the beginning of each year, the Committee sets
specific annual performance targets for each executive officer. The performance
targets are tailored to the officer's position. They can be based on net
income, return on equity, customer satisfaction, and other factors. The
Committee sets each annual bonus based on the officer's success in meeting or
exceeding the performance targets.
STOCK OPTIONS. If proposal No. 3 is adopted, the Committee will grant options
to an executive officer when the officer is hired, when the officer is promoted,
and during the officer's existing employment. The Committee determines the
number of options to be granted to an officer based on the officer's level of
responsibility. Options vest over a four-year period. The Committee believes
that the use of stock options ties a significant portion of an officer's
compensation to increases in the price of the Company's stock realized by all of
the Company's shareholders.
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INTERNAL REVENUE CODE LIMITS
Section 162(a) of the Internal Revenue Code disallows a tax deduction to public
corporations for compensation over $1,000,000 paid for any fiscal year to the
corporation's chief executive officer or to any of the four other most highly
compensated executive officers. The statute exempts qualifying
performance-based compensation from the deduction limit if certain requirements
are met. The Committee currently intends to structure its
executive-compensation packages to meet these requirements.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the Compensation Committee members is or has been a Company officer or
employee. No Company executive officer currently serves on the Compensation
Committee or any similar committee of another public company.
SUMMARY COMPENSATION TABLE
(1999)
Name and Annual Long-Term
Principal Position Year Compensation Compensation Awards
- ------------------ ---- ------------ -------------------
NUMBER OF STOCK
SALARY BONUS OPTIONS GRANTED
------ ----- ----------------
RICK BELHMAN 1999 $100,000 0
Chief Executive Officer
WINFRED FIELDS 1999 $100,000 0
Chief Executive Officer
JOEL FLOWERS 1999 $ 36,000 0
Chief Financial Officer
WALTER DAVIS
Chief Financial Officer 1999 $ 85,000 0
SUMMARY COMPENSATION TABLE
(2000)(1)
Name and Annual Long-Term
Principal Position Year Compensation Compensation Awards
- ------------------ ---- ------------ -------------------
NUMBER OF STOCK
SALARY BONUS OPTIONS GRANTED
------ ----- ----------------
WALTER DAVIS 2000 $120,000 $48,000 0
Chief Executive Officer
LAMONT WADDELL
Chief Financial Officer 2000 $ 95,000 $20,000 0
- ------------------------------------
1. Annualized compensation amounts projected for the year 2000. The current
officers of the Company were not officers in 1999.
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OPTIONS GRANTED IN 1999 (1)
PERCENT OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING ALL EXERCISE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED 1999 (PER SHARE) DATE VALUE
- ---- ------- ---- ------------ ---- -----
Rick Belhman 0 0 -- -- 0
Winfred Fields 0 0 -- -- 0
Joel Flowers 0 0 -- -- 0
Walter Davis 0 0 -- -- 0
<TABLE>
<CAPTION>
OPTION EXERCISES AND YEAR-END VALUE TABLE
NUMBER
SECURITIES VALUE OF
NUMBER OF UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS AT OPTION AS OF
NAME ON EXERCISE REALIZED DECEMBER 31, 1999 DECEMBER 31, 1999
- ----- ----------- --------- -------------------------- ---------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Rick Belhman 0 -- -- -- -- --
Winfred Fields 0 -- -- -- -- --
Joel Flowers 0 -- -- -- -- --
Walter Davis 0 -- -- -- -- --
<FN>
_______________________________
1. The Company did not have an option plan in 1999.
</TABLE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING REQUIREMENT
Our directors and executive officers must file reports with the Securities and
Exchange Commission indicating the number of shares of the Company's common
stock they beneficially own and any changes in their beneficial ownership.
Copies of these reports must be provided to us. Based on our review of these
reports and written representations from the persons required to file them, we
believe each of our directors and executive officers filed all the required
reports during 1999.
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PROPOSAL NO. 2
INCREASE IN AUTHORIZED SHARES
At the annual meeting, you will be asked to vote to approve an
increase in authorized shares of the Common Stock, from 30,000,000 to
100,000,000 (the "Share Increase"). We recommend that you vote for it.
VOTE REQUIRED. If a majority of the shares of common stock entitled
to vote at the meeting are voted for the Share Increase., the Share Increase
will be approved.
POTENTIAL USES OF SHARE INCREASE. An increase in the amount of
authorized shares of common stock of the Company will allow the Company to issue
additional shares of common stock to (i) raise capital though private or public
offerings, (ii) fund its Employee Stock Option Plan or (iii) offset any debt to
its vendors and other creditors with issuances of shares of common stock.
EFFECT OF SHARE INCREASE. If the Company issues additional shares, such
issuances will dilute the current percentage ownership of all holders of the
Company's common stock. In addition, such issuances may dilute the current
value per share of each outstanding share of common stock
Total Number of
Shares Covered 3,000,000
Administration The board of directors administers the Plan.
Eligible Persons Officers and other key employees of the Company.
Exercise Price Generally the closing price of the Company's
Common stock on the date we grant the option,
but could be lower.
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Term of Options Generally 10 years, but could be a shorter
period.
Vesting of Options Options will generally vest over a four-year
period, with 25% of the options becoming
exercisable on each anniversary of the date the
option was granted. But we can alter this vesting
schedule.
Exercise of Options The holder of an option can choose to pay the
Exercise price of the option in cash, with the
Companys common stock (valued at the closing price
of the common stock on the exercise date) or by
a cashless exercise. In a cashless exercise, the
optionholder irrevocably instructs his or her
stockbroker to sell the shares to be acquired upon
exercise of the option and pay the exercise price
to the Company.
Transferability Options are not transferable except by will or
By intestate succession.
Acceleration of Vesting
of Options If a Change in Control Event (as defined in the
Plan) occurs, the options will vest immediately
and become exercisable in full unless we determine
otherwise before the event.
Term of Plan The Plan will expire on January 20, 2010, unless
we terminate it earlier.
FEDERAL INCOME TAX CONSEQUENCES TO OPTION -HOLDERS. All options granted under
the Plan will be nonstatutory options. An option-holder will not recognize any
taxable income when the option is granted. But when the option is exercised,
the option-holder will recognize ordinary income for tax purposes measured by
the excess of the then fair market value of the shares over the exercise price.
In certain circumstances, where the shares are subject to a substantial risk of
forfeiture when acquired, the date of taxation may be deferred unless the
option-holder files an election with the Internal Revenue Service under Section
83(b) of the Internal Revenue Code within 30 days after the exercise. The
income recognized by an option-holder who is also a Company employee will be
subject to tax withholding by the Company by payment of cash or out of the
current earnings paid to the option-holder who is also a Company employee will
be subject to tax withholding by the Company by payment of cash or out of the
current earnings paid to the option-holder. When shares are resold by the
option-holder, any difference between the sale price and the exercise price, to
the extent not recognized as ordinary income as provided above, will be treated
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as capital gain or loss. The Company will be entitled to a deduction in the
same amount as the ordinary income recognized by the option-holder.
This is only a summary of the federal income tax consequences of the grant
and exercise of options under the Plan. It is not a complete statement of all
tax consequences. In particular, we have not discussed the income tax laws of
any municipality, state, or foreign country where an optionee resides.
PROPOSAL NO. 4
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
We recommend that you vote for ratification of the appointment of R.E.
Bassie & Co., P.C.
We have appointed the accounting firm of R.E. Bassie & Co., P.C. as our
independent accountants to examine the Company's financial statements for the
year ending December 31, 2000. A resolution to ratify the appointment will be
presented at the annual meeting. A majority of the votes cast must vote in
favor to ratify the appointment. If the shareholders do not ratify the
appointment, we will reconsider our selection of R.E. Bassie & Co., P.C.
R.E. Bassie & Co., P.C. examined the Company's financial statements for
1999. A representative of R.E. Bassie & Co., P.C. will be at the meeting and
available to answer questions.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
If you want to include a shareholder proposal in the proxy statement for
the 2000 annual meeting, it must be delivered to the Company's secretary at the
Company's executive offices before March 30, 2000.
SHAREHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
If you want to include a shareholder proposal in the proxy statement for
the 2001annual meeting, it must be delivered to the Company's secretary at the
Company's executive offices before January 11, 2001.
OTHER MATTERS
At the date of mailing of this proxy statement, we are not aware of any
business to be presented at the annual meeting other than the proposals
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discussed above. If other proposals are properly brought before the meeting,
any proxies returned to us will be voted as the proxyholders see fit.
You can obtain a copy of the Company's Annual Report on Form 10-K for the
year ended December 31, 1999at no charge by writing to the Company at P.O. Box
980580 Houston, Texas 77098-0580, attention Shareholder Relations.
By order of the Board of Directors,
Dr. Beatrice Beasley
Secretary
March 31, 2000
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