SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 ss.240.14a-12
Z-TEL TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
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.
i Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
ii Aggregate number of securities to which transaction applies:
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iii 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.)
------------------------------------------------------------------------
iv Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
v 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.:
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3. Filing Party:
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4. Date Filed:
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Z-TEL TECHNOLOGIES, INC.
601 South Harbour Island Boulevard, Suite 220
Tampa, Florida 33602
May 4, 2000
TO OUR STOCKHOLDERS:
You are cordially invited to attend our 2000 Annual Meeting of
Stockholders, which will be held at the Wyndham Harbour Island Hotel, Tampa,
Florida 33602, on Tuesday, May 30, 2000 at 1:00 p.m., local time.
We believe that the Wyndham Harbour Island Hotel in Tampa will be an
excellent venue for the first Annual Meeting of Stockholders since we became a
publicly-traded company. I look forward to this opportunity to let you become
better acquainted with our company, our directors and officers, our
achievements and our exciting plans for the future.
Please read these materials so that you'll know what we plan to do at the
meeting. Also, please sign and return the accompanying proxy card. That way,
your shares will be voted as you direct even if you can't attend the meeting.
D. GREGORY SMITH
/s/ D. GREGORY SMITH
--------------------
CHIEF EXECUTIVE OFFICER AND
CHAIRMAN OF THE BOARD
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Z-TEL TECHNOLOGIES, INC.
601 South Harbour Island Boulevard, Suite 220
Tampa, Florida 33602
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 30, 2000
TO THE STOCKHOLDERS OF Z-TEL TECHNOLOGIES, INC.:
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<S> <C>
TIME 1:00 p.m., local time, on Tuesday, May 30, 2000
PLACE Wyndham Harbour Island Hotel, Tampa, Florida 33602
ITEMS OF BUSINESS 1. To elect directors;
2. To approve an amendment to the company's Amended
and Restated Certificate of Incorporation to
provide for a classified Board of Directors;
3. To approve the company's 2000 Equity
Participation Plan; and
4. To transact such other business as may properly
come before the meeting or any adjournments or
postponements thereof.
RECORD DATE You can vote if you were a stockholder of record on April 11, 2000.
ANNUAL REPORT Our 2000 Annual Report to Stockholders, which is not a part of this
proxy statement, is enclosed.
PROXY VOTING It is important that your shares be represented and voted at the
Annual Meeting. Please vote by dating, signing and mailing the
enclosed proxy card promptly in the enclosed postage paid
pre-addressed envelope. If you should be present at the meeting and
desire to vote in person, you may withdraw your proxy.
</TABLE>
By Order of the Board of Directors,
/s/ JOHN M. HUTCHENS
-----------------------------------
JOHN M. HUTCHENS,
CHIEF FINANCIAL OFFICER
May 4, 2000
<PAGE>
Z-TEL TECHNOLOGIES, INC.
601 South Harbour Island Boulevard, Suite 220
Tampa, Florida 33602
-----------------
PROXY STATEMENT
-----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 30, 2000
TO THE STOCKHOLDERS OF Z-TEL TECHNOLOGIES, INC. May 4, 2000
These proxy materials are delivered in connection with the solicitation by
the Board of Directors of Z-Tel Technologies, Inc. ("Z -Tel," the "company,"
"we," or "us"), a Delaware corporation, of proxies to be voted at our 2000
Annual Meeting of Stockholders and at any adjournments or postponements
thereof.
You are invited to attend our Annual Meeting of Stockholders on May 30,
2000, beginning at 1:00 p.m., local time. The Annual Meeting will be held at
the Wyndham Harbour Island Hotel, Tampa, Florida, 33602. Stockholders will be
admitted beginning at 12:30 p.m.
It is important that your proxy be returned promptly to avoid unnecessary
expense to the company. Therefore, whether you plan to attend the Annual
Meeting or not and regardless of the number of shares of stock you own, please
date, sign and return the enclosed proxy promptly.
ABOUT THE ANNUAL MEETING
WHAT IS THE PURPOSE OF THE MEETING?
At the Annual Meeting, stockholders will act upon the matters outlined in
the accompanying notice of meeting, including 1) the election of directors; 2)
the Second Amendment to our Amended and Restated Certificate of Incorporation
to provide for a classified board of directors (the "Second Amendment"); and 3)
the approval of our 2000 Equity Participation Plan. In addition, our management
will report on our performance during 1999 and respond to questions from
stockholders.
WHEN ARE THESE MATERIALS BEING MAILED?
This Proxy Statement, form of proxy and voting instructions are being
mailed starting on approximately May 5, 2000.
WHO IS ENTITLED TO VOTE?
Only stockholders of record at the close of business on the record date,
April 11, 2000, are entitled to receive notice of the Annual Meeting and to
vote at the Annual Meeting (or any adjournment or postponement thereof) the
shares of common stock that they held on the record date. As of that date,
there were 31,938,798 common shares outstanding. Each common share is entitled
to one vote on each matter properly brought before the Annual Meeting. Shares
of common stock, par value $.01 per share (the "Common Stock"), are the only
outstanding voting securities of the company.
WHAT CONSTITUTES A QUORUM?
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of common stock entitled to vote on the record date
will constitute a quorum, permitting us to conduct the business of the meeting.
Proxies received but marked as abstentions and broker non-votes will be
included in the calculation of the number of shares considered to be present at
the Annual Meeting, but will not be counted for any other purpose. A broker
non-vote occurs when a nominee holding shares for a beneficial owner does not
vote on a
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particular proposal because the nominee does not have discretionary voting
power for that particular item and has not received instructions as to that
item from the beneficial owner.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and return
it to our transfer agent, it will be voted as you direct. If you are a
registered stockholder and attend the Annual Meeting, you may vote at the
Annual Meeting either by delivering your completed proxy card in person or by
voting instead by ballot. If your shares are held in the name of a bank, broker
or other holder of record, you must obtain a proxy, executed in your favor,
from the holder of record to be able to vote at the Annual Meeting.
CAN I VOTE BY TELEPHONE OR ELECTRONICALLY?
No, you must vote by completing and returning the enclosed proxy card in
the enclosed postage page pre-addressed envelope, or by voting in person at the
meeting.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may revoke the proxy
and you may change your vote at any time before the proxy is exercised by
filing with the Secretary of Z-Tel either a written notice of revocation or a
duly executed proxy bearing a later date or by attending the Annual Meeting and
voting the shares in person. No such notice of revocation or later dated proxy,
however, will be effective until received by us at or prior to the Annual
Meeting. Unless the proxy is revoked, the shares represented thereby will be
voted at the Annual Meeting or any adjournment thereof as indicated on the
proxy card. Sending in a proxy does not affect your right to vote in person if
you attend the meeting, although attendance at the meeting will not by itself
revoke a previously granted proxy.
IF I SUBMIT A PROXY, HOW WILL MY SHARES BE VOTED?
Unless you give other instructions on your proxy card, the persons named
as proxy holders on the proxy card will vote in accordance with the
recommendations of the Board of Directors.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
The Board's recommendations are set forth, together with the description
of each item, in this proxy statement. In summary, The Board recommends a vote:
o FOR election of the nominees for director positions (see page 4);
o FOR approval of the Second Amendment to the company's Certificate of
Incorporation to provide for a classified board of directors (see page
6); and
o FOR approval of the adoption of the company's 2000 Equity Participation
Plan (see page 9).
With respect to any other matter that properly comes before the meeting,
the proxy holders will vote as recommended by the Board of Directors or, if no
recommendation is given, in their own discretion. As of the date this proxy
statement went to press, we did not know of any other matter to be raised at
the Annual Meeting.
WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast at the Annual Meeting is required for the election of directors. A
properly executed proxy marked "WITHHOLD AUTHORITY" with respect to the
election of one or more directors will not be voted with respect to the
director or directors indicated, even though it will be counted for purposes of
determining whether there is a quorum present at the Annual Meeting.
APPROVAL OF SECOND AMENDMENT TO CERTIFICATE OF INCORPORATION. The
affirmative vote of a majority of the shares of outstanding Common Stock of the
company entitled to vote is required for approval of the Second Amendment to
the Certificate of Incorporation. A properly executed proxy marked "ABSTAIN"
with respect to
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the Second Amendment will not be voted, even though it will be counted for
purposes of determining whether there is a quorum present at the Annual
Meeting.
APPROVAL OF 2000 EQUITY PARTICIPATION PLAN AND OTHER ITEMS. For approval
of the 2000 Equity Participation Plan and any other item of business to come
before the meeting, the item will be approved if a majority of the votes cast
on the matter are affirmative. A properly executed proxy marked "ABSTAIN" with
respect to any such matter will not be voted, even though it will be counted
for purposes of determining whether there is a quorum present at the Annual
Meeting.
HOW WILL VOTES BE COUNTED?
All votes will be tabulated by employees of American Stock Transfer &
Trust Company, our transfer agent for the Common Stock, whose representatives
will serve as one or more of the inspectors of election. Although abstentions
and broker non-votes are each included in the determination of the number of
shares present, they are not counted on any matters brought before the meeting.
WHO IS PAYING FOR THE PREPARATION AND MAILING OF THE PROXY MATERIALS AND HOW
WILL SOLICITATIONS BE MADE?
We will pay the expenses of soliciting proxies. Proxies may be solicited
on our behalf by directors, officers or employees in person or by telephone,
mail, electronic transmission, facsimile transmission or telegram. The company
will request brokerage houses and other custodians, nominees and fiduciaries to
forward soliciting material to stockholders and the company will reimburse such
institutions for their out-of-pocket expenses.
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PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
At the Annual Meeting, five directors are to be elected. Presently, all
directors are elected annually for one year terms. If Proposal No. 2 is adopted
at the meeting, then, to establish the classified terms for the members of the
Board of Directors contemplated by the Second Amendment, there will be elected
at the Annual Meeting one Class I director to serve an initial one year term,
two Class II directors to serve an initial two year term, and two Class III
directors to serve an initial three year term (or, in all cases, until their
successors have been elected and qualified). As the term of each director
expires, his or her successor will be elected to a three year term. If Proposal
No. 2 is not approved, each director elected will serve a one year term as
director until the next Annual Meeting of Stockholders or until his successor
is duly elected and qualified. The Board of Directors has nominated the persons
named below to stand for election at the 2000 Annual Meeting of Stockholders.
Each of the proposed nominees for election as a director has consented to
serve if elected. If, as a result of circumstances not now known or foreseen,
one or more of the nominees shall be unavailable or unwilling to serve as a
director, proxies may be voted for the election of such other persons as the
Board of Directors may select. The Board of Directors has no reason to believe
that any of the nominees will be unable or unwilling to serve.
The persons named in the enclosed form of proxy intend, unless otherwise
directed, to vote such proxy "FOR" the election of the nominees listed below.
The nominees that receive a plurality of the votes cast by the shares entitled
to vote at the Annual Meeting shall be elected as the directors.
DIRECTORS STANDING FOR ELECTION
LAURENCE S. GRAFSTEIN (CLASS I), 39, has been a director of Z-Tel since
October 1999. Mr. Grafstein is a co-founder of Gramercy Communications
Partners, a private equity fund based in New York specializing in
telecommunications investments. Previously, he was head of the global
telecommunications practice at Credit Suisse First Boston. He is currently a
member of the Executive Committee of the Wall Street Division of the United
Jewish Appeal and a member of the boards of the Arts Connection and the
Jerusalem Foundation. Mr. Grafstein received his B.A. from Harvard University,
his M. Phil from Balliol College of Oxford University and an LL.B from the
University of Toronto Law.
EDUARD J. MAYER (CLASS II), 47, has been a director of Z-Tel since July
1998 and vice president -- strategic alliances since July 1999. Mr. Mayer is
the president of Acorn Ventures, Inc., a venture investment company. Mr. Mayer
holds a Bachelor of Commerce from the University of Windsor and an M.B.A. from
New York University.
BUFORD H. ORTALE (CLASS II), 38, has been a director of Z-Tel since July
1998. Since 1996 Mr. Ortale has been the president of Sewanee Ventures, LLC, a
private investment firm. From 1993 to 1996 Mr. Ortale was a director and then a
managing director of NationsBanc Capital Markets Inc. He is a member of the
board of directors of Digital Medical Systems. Mr. Ortale received his B.A.
degree from The University of the South and an M.B.A. from Vanderbilt
University.
JEFFREY A. BOWDEN (CLASS III), 55, a founder of Z-Tel, has served as a
director of Z-Tel since July 1998. Mr. Bowden is currently a director of the
Boston Consulting Group. Mr. Bowden was vice president of Bell Atlantic
Corporation from 1997 to 1998. Mr. Bowden was a vice president of The Nynex
Corporation from 1994 to 1997 and vice president and a director of The Boston
Consulting Group from 1988 to 1994. Mr. Bowden received his B.S. from the
University of Michigan and his M.B.A. from the Harvard Graduate School of
Business.
D. GREGORY SMITH (CLASS III), 40, a founder of Z-Tel, has served as
chairman of the board and chief executive officer of Z-Tel since its inception.
Mr. Smith was a director of Premiere Technologies, Inc. from 1991 to 1997,
executive vice president from 1994 to 1997 and vice president from 1991 to
1994. From 1987 to 1991, Mr. Smith was a management and financial consultant
with Olympus Telecommunications, Inc. and Olympus Partners, Inc., companies
that he founded. Mr. Smith has also held positions with NationsBank of Florida,
N.A. and Chase Bank of Florida. Mr. Smith received his B.S. in Commerce from
the University of Virginia.
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MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
The Board of Directors held five formal meetings during 1999. In 1999,
each incumbent Director other than Mr. Grafstein attended 100% of the total
number of Board meetings. One Board meeting was held during 1999 while Mr.
Grafstein was a director, which he was unable to attend. All other actions
during the year were accomplished through unanimous written consents without a
meeting.
The Board of Directors has a standing Audit Committee and Compensation
Committee, but does not have a Nominating Committee. The Board of Directors
functions as a Nominating Committee, and the Board will consider written
recommendations from stockholders for positions on the Board of Directors in
accordance with the procedures set forth in the Amended and Restated
Certificate of Incorporation of the Company. See "Stockholder Proposals for
Presentation at the 2001 Annual Meeting" for further information.
The current members of the Audit Committee are Jeffrey A. Bowden and
Douglas C. Williamson. The Audit Committee had one formal meeting during 1999
apart from meetings of the full Board of Directors. The Audit Committee's
principal responsibilities are to recommend annually a firm of independent
certified public accountants to the Board of Directors, to review the annual
audit of the Company's financial statements and to meet with the independent
certified public accountants of the Company from time to time in order to
review the Company's internal controls and financial management practices.
The current members of the Compensation Committee are Buford H. Ortale and
Douglas C. Williamson. The Compensation Committee did not formally meet during
1999 apart from meetings of the full Board of Directors. The principal
responsibilities of the Compensation Committee to date have been to serve as
the committee responsible for administering the 1998 Equity Participation Plan,
a function which in practice has been assumed by the full Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF EACH OF THE NOMINEES
AS DIRECTORS OF THE COMPANY -- ITEM 1 ON YOUR PROXY CARD.
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PROPOSAL NO. 2 -- APPROVAL OF THE SECOND AMENDMENT TO OUR AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
The Board of Directors has unanimously approved and recommended for
stockholder approval the Second Amendment to our Amended and Restated
Certificate of Incorporation to create a classified Board of Directors and make
certain related changes. Under Delaware law, the Second Amendment would become
effective upon stockholder approval and upon filing the Second Amendment with
the Secretary of State of the State of Delaware. The background, reasons and
effects of the proposal are set forth below, followed by a more detailed
description of the proposal and how it would operate.
THE PROPOSAL
We believe that Z-Tel may be vulnerable to certain tactics -- such as the
accumulation of substantial voting blocks of our stock as a prelude to an
attempt to gain control of the company or to effect significant corporate
restructuring, a proxy fight and other similar devices -- which have become
relatively more common in recent years. For the reasons discussed below, the
Board of Directors believes that such tactics can be highly disruptive to the
operation of a company and can result in dissimilar and unfair treatment of a
company's stockholders. This proposal is being submitted to help protect Z-Tel
from these kinds of tactics, but not in response to any pending or threatened
attempt to acquire control of Z-Tel. Rather, the proposal is being submitted in
order to help ensure that the company is adequately prepared for any such
activities that might arise in the future.
The Second Amendment provides that, at the 2000 Annual Meeting, our Board
of Directors will be divided into three classes (denominated Class I, Class II
and Class III), which shall be as nearly equal in number as possible. The
directors in each class will hold office following their initial classification
for terms of one year, two years and three years, respectively. Thus, the term
of office of the Class I Directors will expire at the year 2001 Annual Meeting
of Stockholders, the term of office of the Class II Directors will expire at
the year 2002 Annual Meeting of Stockholders, and the term of office of the
Class III Directors will expire at the year 2003 Annual Meeting of
Stockholders. Thereafter, the successors to each class of directors shall be
elected for three-year terms. If this proposal is not approved by the
stockholders, the directors will be elected to serve for a term of one year and
until their successors are elected and qualified.
Under Delaware law, a director of a corporation with a classified board of
directors may be removed by the stockholders only "for cause" unless the
corporation's certificate of incorporation provides otherwise (ours does not).
The Second Amendment would also provide that directors may be removed during
their terms only "for cause," and only by affirmative vote of at least 80
percent in voting power of all shares of the corporation entitled to vote
generally in the election of directors, voting as a single class. In this
context, the term "for cause" is not defined by statute.
Under the Second Amendment, the number of directors may be fixed or
changed by the Board of Directors. If the number of directors is changed, any
increase or decrease shall be apportioned among each class so as to keep the
number of directors in each class as nearly equal as possible. No decrease in
the number of directors may shorten the term of any incumbent.
The Second Amendment also provides that if a vacancy occurs during the
term of any director, including any vacancy occurring because of the Board of
Directors' creation of an additional director position or positions, the
majority of the remaining directors then in office will fill the vacancy, and
the director so appointed will hold office until the next election of the class
to which he or she was appointed.
If the Second Amendment is approved, because only one of the three classes
of a classified Board of Directors will be elected annually, at least two
annual stockholders' meetings, instead of one, will be required to effect a
change in control of the Board of Directors through the normal election
processes. The Second Amendment and related changes would require a person
seeking to acquire control of Z-Tel to wait up to two years to obtain control
of the Board of Directors, even though that person has acquired ownership of a
majority or controlling minority interest in the company.
The Second Amendment and related changes, of course, would affect all
stockholders, not just those seeking to acquire control of the company, in the
following ways: (1) because at least two annual meetings will be required
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to change majority control of the Board of Directors, the Second Amendment
would tend to perpetuate present management and (2) the Second Amendment may
tend to discourage accumulations of large blocks of stock by reducing the
control effect of such blocks, thus reducing temporary fluctuations in market
price that could be caused by such accumulations.
ADVANTAGES OF PROPOSAL. Classification of the Board of Directors will
promote continuity and stability in the company's management and policies since
a majority of the company's directors at any given time will have prior
experience with the company. The Board of Directors further believes that such
continuity and stability will facilitate long-range planning and will have a
beneficial effect on employee loyalty and customer confidence. Currently, the
entire Board of Directors must stand for election each year. Accordingly, it is
possible that all or a majority of the current directors could be replaced at
any given Annual Meeting. If this proposal is approved, the Board of Directors
will be divided into three classes effective with the 2000 Annual Meeting, only
one of which will stand for election at each Annual Meeting thereafter.
The Second Amendment is also intended to encourage persons seeking to
acquire control of Z-Tel to initiate such an acquisition through arm's length
negotiations with our Board of Directors. If the Board of Directors is
presented with a proposal from a third party that has acquired a substantial
block of our Common Stock, the directors will be able to evaluate the proposal
and study alternative proposals without the imminent threat of removal. This
will help ensure that the best price is obtained in any acquisition transaction
that may ultimately be consummated.
DISADVANTAGES OF PROPOSAL. Adoption of the Second Amendment may have the
effect of delaying, deferring or preventing a change of control that some or
even a majority of our stockholders believe to be in their best interest, and
may make removal of management more difficult even if such removal would be
beneficial to stockholders generally.
The provisions for electing only one out of three classes of the Board of
Directors each year, rather than the entire Board of Directors, will be
applicable to every annual election of directors, and not just to any election
occurring after a change in control of Z-Tel. A classified Board of Directors
could delay stockholders who do not like the policies of the Board of Directors
from removing a majority of the Board of Directors for up to two years.
Not all takeovers or changes in control of the Board of Directors that are
proposed and effected without prior consultation and negotiation with the
incumbent Board of Directors are necessarily detrimental to the company and its
stockholders. However, the Board of Directors believes that the benefits of
enhanced board continuity and protection of Z-Tel's ability to negotiate with
the proponent of an unfriendly or unsolicited proposal outweigh the
disadvantages associated with the Second Amendment.
RELATIONSHIP OF THE SECOND AMENDMENT TO CERTAIN PROVISIONS OF THE COMPANY'S
CERTIFICATE OF INCORPORATION AND BYLAWS
The Certificate of Incorporation authorizes the issuance of up to
150,000,000 shares of Common Stock, not all of which have been issued or
reserved for issuance. This authorized and available Common Stock could (within
the limits imposed by applicable law and the rules of the Nasdaq National
Market) be issued by the company and used to discourage a change in control of
the company. For example, the company could privately place shares with
purchasers who might side with the Board of Directors in opposing a hostile
takeover bid. Shares of Common Stock could also be issued to a holder that
would thereafter have sufficient voting power to assure that any proposal to
amend or repeal the bylaws or certain provisions of the Certificate of
Incorporation would not receive the required vote.
The Certificate of Incorporation also authorizes the issuance of up to
50,000,000 shares of Preferred Stock, in one or more series, approximately
40,000,000 shares of which are currently available for future issuance. The
Board of Directors is authorized, without any further action by the
stockholders, to determine the dividend rights, dividend rate, conversion
rights, voting rights, rights and terms of redemption, liquidation preferences,
sinking fund terms and other rights, preferences, privileges and restrictions
of any series and the designation thereof. The Board of Directors may, without
stockholder approval, issue Preferred Stock with rights and privileges which
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could, among other things, have the effect of delaying, deferring or preventing
a change in control of the company. The company has no present plans to issue
any shares of Preferred Stock.
In addition, the bylaws of the company do not permit stockholders of the
company to call a special meeting of stockholders.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of Common Stock entitled to vote at the Annual Meeting is
required for approval of the Second Amendment to provide for a classified Board
of Directors. The persons named in the enclosed form of proxy intend, unless
otherwise directed, to vote such proxy "FOR" the Second Amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SECOND AMEND-MENT,
WHICH IS PROPOSAL NO. 2 ON YOUR PROXY CARD.
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PROPOSAL NO. 3 -- APPROVAL OF THE 2000 EQUITY PARTICIPATION PLAN
BACKGROUND
In April 2000, the Board of Directors adopted The 2000 Equity
Participation Plan of Z-Tel Technologies, Inc. (the "2000 Plan"). The purpose
of the 2000 Plan is to enable Z-Tel to continue to effectively attract and
retain executive officers, employees, directors, and consultants. The Board of
Directors determined that the number of shares available for grant to such
persons under The 1998 Equity Participation Plan was insufficient for the
future needs of the company, and that the 2000 Plan would offer the company
additional flexibility in the use of incentive compensation.
SUMMARY OF THE PLAN
Under the 2000 Plan, incentive stock options, nonqualified stock options,
restricted stock, performance awards, dividend equivalents, stock payments,
deferred stock, stock appreciation rights, or any combination thereof
(collectively, the "Awards") may be granted to eligible individuals. The 2000
Plan is to be administered by the Compensation Committee of the Board of
Directors, except with respect to certain matters as to which only the entire
Board of Directors may act. See "Election of Directors" for information
regarding the Compensation Committee, its responsibilities and its members.
The Compensation Committee may grant Awards to any person who is an
employee or consultant of Z-Tel or any of its subsidiaries, including any
officer, on the date of a grant of such Award. Z-Tel currently has
approximately 1,400 employees who would be eligible for Awards under the 2000
Plan. The Board of Directors may grant Awards to non-employee directors, of
which there are currently four persons eligible for Awards under the 2000 Plan.
Awards are to be made primarily to officers, employees, and non-employee
directors of Z-Tel. Any individual who has been granted an Award (a
"Participant") is bound by the terms of the 2000 Plan as well as the terms and
conditions of the specific agreement issued in connection with the grant of the
Award. We will not receive any consideration for the granting of any Awards
under the 2000 Plan other than the services rendered to us by the employee or
director.
The aggregate number of shares of Common Stock which may be issued upon
exercise of Awards under the 2000 Plan is 2,000,000, plus an annual increase to
be added on the first day of the company's fiscal year beginning in 2001 equal
to the lesser of (i) 3,000,000 shares, (ii) 6% of the outstanding shares of
Common Stock on such date, or (iii) a lesser amount determined by the Board of
Directors. Subject to certain limitations, the Board of Directors may amend the
2000 Plan (or suspend or discontinue it) without stockholder approval. However,
no amendment may adversely affect any then outstanding Award.
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PLAN BENEFITS TABLE
The following table sets forth information regarding the number and value
of Awards to be granted under the 2000 Plan.
NEW PLAN BENEFITS
<TABLE>
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NUMBER
NAME AND POSITION DOLLAR VALUE OF UNITS
- ------------------------------------------------------- -------------- ---------
<S> <C> <C>
D. Gregory Smith (1) (1)
President, Chief Executive Officer and
Chairman of the Board
Russell T. Alba* * *
Senior Vice President - Business Development
and Chief Legal Officer
James A. Kitchen (1) (1)
Senior Vice President - Chief Architect
J. Bryan Bunting (1) (1)
Senior Vice President - Engineering and
Technical Support
Charles W. McDonough (1) (1)
Senior Vice President - Chief Technology
Officer
David J. Malfara, Sr. (1) (1)
President, Z-Tel Network Services, Inc.
Executive Group (2) (1) (1)
Non-Executive Director Group (1) (1)
Non-Executive Officer Employee Group (1) (1)
</TABLE>
- --------
* Not eligible for participation. Effective September 1999, Mr. Alba was
no longer employed by us.
(1) The nature, timing and amounts of any future awards and the benefits
thereof are generally not known and cannot be determined at this time,
because such awards are within the discretion of the Compensation
Committee or the Board of Directors. However, during the term of the 2000
Plan, option grants to independent directors (non-employee directors) will
occur automatically, in the amount of 1,100 options upon the director's
initial appointment to the Board of Directors, and 1,100 options each year
thereafter during the director's continued service.
(2) Consists of thirteen executive officers, including the five listed above,
but does not include Russell T. Alba.
TYPES OF AWARDS UNDER THE 2000 PLAN
Set forth below is a summary of the principal kinds of Awards that can be
granted under the 2000 Plan and the expected usual terms of such Awards.
However, the Compensation Committee generally has broad discretion to grant
Awards on terms other than as described below, subject only to any limitations
under the 2000 Plan or under applicable law.
STOCK OPTIONS. Generally, options to purchase shares of our Common Stock
may become exercisable at any time. However, options granted to independent
directors will expire ten years after the date of grant, and incentive stock
options will not be exercisable more than ten years after the date of grant (or
five years after the date of grant if the recipient of the option owns more
than ten percent of the voting power of the stock of the company on the date of
grant). Options granted to executive officers and directors may not be
exercisable until at least six months after the date of grant. Subject to
limitations set forth in the 2000 Plan, the vesting of options is determined at
the time of grant in the discretion of the Compensation Committee, except that
options which are automatically granted to independent directors will become
exercisable in equal annual installments on each of the first, second, third,
and fourth anniversaries of the date of grant. If an individual's affiliation
with us as an
10
<PAGE>
employee, officer, consultant, or director is terminated during the term of an
option granted to that individual, the vesting of that option will cease. The
Committee may in its own discretion accelerate the period during which an
option vests.
Generally, an individual may not transfer any option granted under the
2000 Plan, although, in some circumstances after the individual's death, the
individual's personal representative may exercise the option.
For federal income tax purposes, a stock option may be classified as
either an incentive stock option ("ISO") or a non-qualified stock option
("NSO"), as further described below. The Compensation Committee (or the Board
of Directors in the case of grants to independent directors) may determine
whether options granted under the 2000 Plan will be ISOs or NSOs. No stock
option issued under the 2000 Plan may be treated for tax purposes as an ISO
unless the 2000 Plan is approved by the stockholders at the Annual Meeting.
The exercise price of each option will generally be set by the Committee.
The exercise price of any ISO may not be less than the fair market value of our
Common Stock on the date of grant, but the option price of certain NSOs may be
less than the fair market value of our Common Stock on the date of grant. The
exercise price of any option automatically granted to an independent director
shall equal the fair market value of our Common Stock on the date of grant. On
April 18, 2000, the last sale price of our Common Stock on the Nasdaq National
Market System was $24.00 per share.
STOCK PAYMENTS, RESTRICTED STOCK, AND DEFERRED STOCK. Shares of Common
Stock which are not Restricted Stock may be awarded ("Stock Payments").
"Restricted Stock" and "Deferred Stock" are shares of Common Stock awarded
subject to the fulfillment of certain performance or other conditions. When the
conditions are fulfilled, the shares are delivered free and clear of all
restrictions.
PERFORMANCE AWARDS. A Performance Award entitles the recipient, upon
achievement of a time or price/time goal or a performance goal established by
the Committee (or the Board of Directors in the case of an award to an
independent director), to receive cash and/or shares of Common Stock based on
the market value, book value, net profits, or other measure of the value of our
Common Stock on a specified date or over a period of time. Performance Awards
may also be valued by reference to the performance of a Z-Tel subsidiary or
division, or to the performance of particular individuals.
STOCK APPRECIATION RIGHTS. A Stock Appreciation Right ("SAR") award
entitles the recipient, upon exercise, to receive either cash and/or shares of
Common Stock based on the amount by which the market price of the Common Stock
at the time of exercise exceeds the market price of the Common Stock when the
SAR was awarded.
DIVIDEND EQUIVALENTS. With respect to any Option, SAR, Deferred Stock, or
Performance Award, participants may also be granted dividend equivalents based
on any dividends declared on our Common Stock.
FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTION GRANTS
Participants in the 2000 Plan generally have tax consequences associated
with stock option grants. As indicated above, for federal income tax purposes,
a stock option may be classified as either an ISO or NSO. Generally, no taxable
income is recognized by the optionee at the time either an ISO or NSO is
granted. On the date of exercise, (i) the holder of an NSO recognizes ordinary
income in an amount equal to the difference between the exercise price and the
fair market value of the shares on the date of exercise, and the Company
receives a tax deduction for the same amount, but (ii) the holder of an ISO
does not recognize income and the company does not receive a tax deduction,
although the difference between the exercise price and the market price of the
Common Stock may be subject to the alternative minimum tax. Upon disposition of
the shares acquired, an optionee generally recognizes appreciation or
depreciation on the shares as either short-term or long-term capital gain or
loss depending on how long the shares have been held. There are holding period,
exercise price and other requirements applicable to ISOs that do not apply to
NSOs. ISOs cannot be granted under a stock option plan unless the plan is
approved by our stockholders.
11
<PAGE>
Section 162(m) of the Internal Revenue Code limits the deductibility of
certain compensation in excess of $1,000,000 paid to certain executive
officers. The 2000 Plan has been designed such that, if the 2000 Plan is
approved by the Company's stockholders, the plan should meet the requirements
of Section 162(m), so that the compensation expense associated with Awards
would be deductible for grants to executive officers.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE 2000 PLAN --
ITEM 3 ON YOUR PROXY CARD. If the stockholders do not approve the 2000 Plan,
the Compensation Committee and the Board of Directors will reconsider the
adoption of the plan.
12
<PAGE>
COMPENSATION COMMITTEE REPORT
TO: THE BOARD OF DIRECTORS
OVERVIEW AND PHILOSOPHY; ROLE OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Compensation
Committee") was originally formed in late 1998 and is currently composed of two
members, Mr. Ortale and Mr. Williamson, each of whom is a "non-employee
director" for purposes of Rule 16b-3 under the Exchange Act and an "outside
director" under Section 162(m) of the Internal Revenue Code. The principal
responsibilities of the Compensation Committee to date have been to serve as
the committee responsible for administering the 1998 Equity Participation Plan,
a function which in practice has been assumed by the full Board of Directors.
It is expected that in the future the Compensation Committee will play a more
active role in Z-Tel's compensation and benefits philosophy, and, in addition,
will approve and monitor our executive compensation and benefits programs,
executive employment agreements, and The 2000 Equity Participation Plan.
The primary objectives of the Compensation Committee are to assure that
our executive compensation and benefits program:
o is competitive with other growing companies in our industry,
o safeguards the interests of the company and its stockholders,
o is effective in driving performance to achieve financial goals and
create stockholder value,
o fosters teamwork on the part of management,
o is cost-effective and fair to employees, management, and stockholders,
and
o is well communicated and understood by program participants.
Z-Tel's executive compensation policies are designed to attract, motivate,
and retain highly qualified executive officers who can enhance stockholder
value, and to support a performance-oriented environment that rewards
achievement of our planned financial goals. To that end, we compensate our
executive officers through two principal types of compensation: annual base
salary and equity-based incentive compensation, which to date has consisted
primarily of stock options. Our philosophy with respect to executive officer
compensation is to establish relatively low base salaries and to place
substantial emphasis on equity-based incentive compensation, which is viewed by
the company as very effective at correlating executive officer compensation
with corporate performance and increases in stockholder value.
1998 EQUITY PARTICIPATION PLAN
Equity-based incentive compensation to date has been awarded by the
company under The 1998 Equity Participation Plan of Z-Tel Technologies, Inc.
(the "1998 Plan"), the principal purpose of which was to attract, retain and
motivate selected officers, employees, consultants and directors through the
granting of stock-based compensation awards. The 1998 Plan provides for
non-qualified and incentive stock options. A total of 8,250,000 shares of
common stock are reserved for issuance under the 1998 Plan. Awards under the
1998 Plan were generally made at no less than fair market value. The maximum
number of shares which may be subject to awards granted under the 1998 Plan to
any individual in any calendar year cannot exceed 550,000. If the 2000 Plan is
approved by the stockholders at the 2000 Annual Meeting of Stockholders, it is
intended to serve the same purpose in our company's compensation structure as
the 1998 Plan.
The Compensation Committee is authorized to administer grants under the
1998 Plan to employees and consultants, while the full Board administers the
1998 Plan with respect to options granted to independent directors. To date, in
practice, the full Board has administered both aspects of the 1998 Plan.
The 1998 Plan provides that the Compensation Committee has the authority
to select the employees and consultants to whom awards are to be made, to
determine the number of shares to be subject to awards and the terms and
conditions of the awards, and to make all other determinations and to take all
other actions necessary or advisable for the administration of the 1998 Plan
with respect to employees or consultants.
13
<PAGE>
The 1998 Plan also provides that at certain times our independent
directors will automatically be granted options to purchase shares of our
common stock. All options granted to our independent directors will have an
exercise price per share equal to the fair market value per share of our common
stock as of the date of grant. Each individual who was an independent director
at the time of the initial public offering of our common stock was granted an
option to purchase 1,100 shares of our common stock at the time of the initial
public offering and will be granted an option to purchase an additional 1,100
shares of our common stock at each annual meeting of our stockholders at which
he or she is reelected to our Board of Directors. Independent directors who are
initially elected to our Board of Directors in the future will be granted an
option to purchase 1,100 shares of our common stock on the date of such initial
election and will be granted an option to purchase an additional 1,100 shares
of our common stock at each annual meeting of our stockholders after the
initial public offering at which he or she is reelected to our Board of
Directors. The 2000 Plan contains a similar provision (which is intended to
supercede and replace the one contained in the 1998 Plan), and also permits
discretionary grants of options to independent directors.
The Compensation Committee (and the Board) is authorized to adopt, amend
and rescind rules relating to the administration of the 1998 Plan, and to
amend, suspend and terminate the 1998 Plan. We have attempted to structure the
1998 Plan so that remuneration attributable to stock options and other awards
will not be subject to the deduction limitation contained in Section 162(m) of
the Internal Revenue Code.
1999 COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER
The general policies described above for the compensation of the executive
officers also apply to the compensation approved by the Board of Directors
during 1999 for Mr. Smith, our President, Chairman of the Board and Chief
Executive Officer. Mr. Smith received a base salary of $162,000 during 1999,
and was granted a total of 1,100 options to purchase Common Stock at an
exercise price of $3.64 per share. Those options expire in August of 2004. Mr.
Smith has an employment agreement with the company, the initial term of which
expires in July 2001. The agreement provides for (i) automatic renewal for
subsequent one year terms (subject to nonrenewal by either party 90 days prior
to the end of the term), (ii) a bonus or other incentive compensation in an
amount to be determined by the Compensation Committee, (iii) the payment of his
base salary and benefits for the term of the agreement in the event of
termination without cause, and (iv) in the event of a change in control of
Z-Tel, the payment of 2.9 times his base salary and any incentive or bonus paid
in the prior year if certain specified events occur within three years of the
occurrence of a change of control. Under the agreement, Mr. Smith has also
agreed to certain noncompetition and nonsolicitation covenants.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M)
The Compensation Committee has reviewed the applicability of Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), which
disallows a tax deduction for compensation to an executive officer when the
included compensation exceeds $1 million per year. No executive officer of the
company exceeded this threshold in 1999 and the Compensation Committee does not
anticipate that any executive officer of the company will exceed this threshold
during 2000. The Compensation Committee intends to periodically review the
potential consequences of Section 162(m) and, depending upon the risk of
applicability of this provision to us, may elect to structure the
performance-based portion of its executive officer compensation in a manner so
as to comply with certain exemptions provided for in Section 162(m).
This report has been provided by the Compensation Committee.
COMPENSATION COMMITTEE:
Buford H. Ortale
Douglas C. Williamson
14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total return on Z-Tel's Common
Stock with the cumulative total return of the companies in the Nasdaq Composite
Index and the Nasdaq Telecommunications Index. Cumulative total return shown in
the Performance Graph is measured assuming an initial investment of $100 on
December 14, 1999, the date of Z-Tel's initial public offering, and assuming
the reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN
[COMPARISON GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
NASDAQ
Z-TEL NASDAQ COMPOSITE TELECOMMUNICATIONS
DATE INDEX INDEX INDEX
<S> <C> <C> <C>
12/14/99 100.00 100.00 100.00
12/16/99 208.09 104.62 100.81
12/20/99 249.26 106.32 102.11
12/22/99 209.56 110.41 105.26
12/27/99 212.50 111.82 107.07
12/29/99 244.12 113.87 107.87
12/31/99 237.50 114.36 109.19
</TABLE>
15
<PAGE>
EXECUTIVE OFFICERS AND KEY EMPLOYEES
NON-DIRECTOR EXECUTIVE OFFICERS
The following sets forth certain information regarding our non-director
executive officers as of April 20, 2000.
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------- ----- -----------------------------------------------------------
<S> <C> <C>
David J. Malfara, Sr. .......... 45 President, Z-Tel Network Services, Inc.
James F. Corman ................ 47 President, Touch 1 Communications, Inc.
John M. Hutchens ............... 52 Senior Vice President -- Chief Financial Officer
Charles W. McDonough ........... 48 Senior Vice President -- Chief Technology Officer
J. Bryan Bunting ............... 53 Senior Vice President -- Engineering and Technical Support
James A. Kitchen ............... 40 Senior Vice President -- Chief Architect
N. Dumas Garrett ............... 39 Senior Vice President -- Business Development
Mark H. Johnson ................ 43 Secretary and Treasurer
Jeffrey H. Kupor ............... 31 General Counsel
Andrew L. Graham ............... 42 Chief Legal Officer
Robert A. Curtis ............... 32 Senior Vice President -- Strategic Planning
Doug W. Jackson ................ 34 Vice President -- Marketing
</TABLE>
David J. Malfara, Sr. has served as president of Z-Tel Network Services,
Inc. since February 1999. Mr. Malfara has over twenty-four years of
telecommunications experience. He founded and sold Pace Long Distance Service
and Pace Network Services. He has previously served as vice president of
engineering at National Computer Corporation, as technical
advisor/telecommunications at Honeywell Information Systems and as senior
engineer at GTE Telenet.
James F. Corman has served as President of Touch 1 Communications, Inc., a
wholly-owned subsidiary of Z-Tel doing business as Z-Tel Consumer Services,
from 1989 through the present. Z-Tel acquired Touch 1 Communications, Inc. on
April 10, 2000. From 1987 through 1989, he was Senior Vice President of Telecom
USA, after holding several positions within Southland Communications and its
subsidiaries from 1969 to 1987, including service as President from 1981
through 1987. Mr. Corman received a B.S. in Finance from Auburn University and
an M.B.A. from the University of Texas.
John M. Hutchens has served as senior vice president -- chief financial
officer since September 1999. From 1982 through 1999 he was an employee and
then a partner at Arthur Andersen LLP. Mr. Hutchens received a B.S. in
Accountancy from the University of Illinois, and a Masters of Health
Administration from the Ohio State University. Mr. Hutchens is a Certified
Public Accountant licensed in Florida.
Charles W. McDonough has served as senior vice president -- chief
technology officer since August 1998. From 1975 through 1998, he was an
employee and then a partner at Andersen Consulting LLP. Mr. McDonough received
a B.A. in Industrial Engineering and a M.S. in Industrial Administration from
Carnegie Mellon University.
J. Bryan Bunting has served as senior vice president-engineering and
technical services since January 1999. Mr. Bunting served as senior vice
president -- Z-Tel Business Networks from August l998 to January 1999. From
1968 through 1998, he was an officer of NationsBank, serving most recently as
senior vice president of direct banking. Mr. Bunting attended Old Dominion
University.
James A. Kitchen, a founder of Z-Tel, has served as senior vice president
- -- chief architect of Z-Tel since January 1999. He served as vice president,
engineering from January 1998 to December 1998 and was a chief architect and
developer of Premiere Communications, Inc. from 1992 to 1997. Mr. Kitchen
received his B.S. in Engineering from Georgia Institute of Technology.
N. Dumas Garrett has served as senior vice president -- business
development of Z-Tel since December 1999. From 1987 through 1999, he was an
officer of Stephens, Inc., serving most recently as managing director and
senior vice president and head of the technology and telecomunications group.
Mr. Garrett has a B.S. in Industrial Engineering from the University of
Arkansas and an M.B.A. from the University of Virginia.
16
<PAGE>
Mark H. Johnson has served as secretary and treasurer of Z-Tel since
August 1999. From May 1998 until his arrival at Z-Tel, Mr. Johnson was an
employee of Olympus Management, a venture firm. From November 1991 until May
1998, Mr. Johnson was a credit policy executive of First Union National Bank.
Mr. Johnson holds a B.A. from the University of Virginia.
Jeffrey H. Kupor has served as General Counsel of Z-Tel since November
1999. From September 1993 until January 1998, Mr. Kupor was an attorney with
the Houston office of Fulbright & Jaworski LLP, specializing in complex
commercial and securities litigation. From January 1998 until November 1999 Mr.
Kupor was a Staff Attorney and later Counsel at AIM Management Group, Inc., an
investment adviser to a group of registered investment companies, where his
responsibilities included securities registration, corporate and fund
litigation, and labor and employment-related legal issues. Mr. Kupor has a B.S.
in Economics from the University of Pennsylvania and a J.D. from the Boalt Hall
School of Law at the University of California at Berkeley.
Andrew L. Graham has served as chief legal officer of Z-Tel since
September 1999. He has practiced corporate and tax law in Tampa, Florida since
1988, most recently with the firm of Cass & Graham. He earned his Bachelor's in
accounting from Florida State University and his law degree, with honors, from
the University of Florida College of law in 1987 and went on to earn a Master
of Laws in Taxation there in 1988.
Robert A. Curtis has served as senior vice president -- strategic planning
since July 1999. From May 1998 to June 1999, Mr. Curtis was vice president --
business development and legal affairs at Z-Tel. From September 1995 to April
1998, Mr. Curtis was an attorney at the Houston office of Fulbright & Jaworski
LLP, where he specialized in antitrust and complex federal litigation. Mr.
Curtis graduated from the Duke University School of Law in 1995. Mr. Curtis
received his B.A. in Philosophy from Trinity University and his Doctor of
Philosophy (D. Phil) from the University of Oxford (England).
Doug W. Jackson has served as vice president -- marketing of Z-Tel since
June 1999. From 1996 through 1999 he held the position of senior brand manager
for the Coca-Cola Company and prior to that from 1992 to 1996 he was an
associate product manager for Kraft General Foods Corp. Mr. Jackson received
his B.A. from University of Virginia and his M.B.A. from University of
Michigan.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
All Section 16(a) filing requirements have been complied with since our
initial public offering on December 15, 1999, except that for each of the
following directors and officers, one form was not timely filed relating to the
indicated number of transactions: Messrs. Bowden, Ortale, Grafstein, and
Williamson, one transaction; Mr. Garrett, two transactions and his initial
report upon becoming a Section 16(a) reporting person. In addition, the initial
beneficial ownership report of Mr. Curtis did not accurately reflect the
character of certain of his holdings.
17
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides summary information concerning compensation
paid or accrued by us to, or on behalf of, our "Named Executive Officers,"
which are (1) our Chief Executive Officer, (2) our four most highly compensated
executive officers serving as executive officers at December 31, 1999 and (3)
one additional individual who was an executive officer during 1999 but was not
serving in that capacity on December 31, 1999. The aggregate amount of
perquisites and other personal benefits, securities or property received by
each of the Named Executive Officers was less than either $50,000 or 10% of the
total annual salary and bonus reported for that Named Executive Officer:
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- -----------------------------
SHARES ALL OTHER
SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION ($) ($) OPTIONS ($)
- ------------------------------------------------------ --------- ------- ------------ --------------
<S> <C> <C> <C> <C>
D. Gregory Smith 162,000 -- 1,100 --
President, Chief Executive Officer and Chairman
Russell T. Alba (1) 131,625 -- -- 40,500
Senior Vice President -- Business Development and
Chief Legal Officer
James A. Kitchen 162,000 -- 27,500 --
Senior Vice President -- Chief Architect
J. Bryan Bunting 162,000 -- 27,500 --
Senior Vice President -- Engineering and Technical
Services
Charles W. McDonough 162,000 -- 27,500 --
Senior Vice President -- Chief Technology Officer
David J. Malfara, Sr. 137,500 -- 357,500 12,000 (2)
President -- Z-Tel Network Services, Inc.
</TABLE>
- --------
(1) Effective September 1999, Mr. Alba was no longer employed by us. "All Other
Compensation" for Mr. Alba reflects amounts paid to him pursuant to a
severance agreement.
(2) Represents compensation for consulting services provided by Malfara
Associates, an assumed name of Mr. Malfara.
OPTION GRANTS DURING LAST FISCAL YEAR
The following table contains information concerning the stock option
grants made to each of the Named Executive Officers during the fiscal year
ended December 31, 1999, subject to the following:
Under our 1998 Equity Participation Plan, stock options are generally
granted as of the employee's start date. The options generally vest over a
three year period commencing on the start date and expire ten years thereafter
(unless the employee at the time of grant owned more than 10% of the total
combined voting power of all classes of stock, in which case they expire over
five years).
The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by the rules of the Securities and Exchange Commission. We cannot
be certain that the actual stock price appreciation over the ten-year option
term will be at the assumed 5% and 10% levels or at any other defined level.
Unless the market price of the common stock appreciates over the option term,
no value will be realized from the option grants. The potential realizable
value is calculated by assuming that the fair market value of the common stock
as determined by the Board of Directors on the date of grant of the options
appreciates at the indicated rate of the entire term of the option and that the
option is exercised at the exercise price and sold on the last day at the
appreciated price.
18
<PAGE>
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF POTENTIAL REALIZABLE
SHARES % OF TOTAL WEIGHTED VALUE AT ASSUMED
OF COMMON OPTIONS AVERAGE ANNUAL RATES OF STOCK
STOCK GRANTED TO EXERCISE PRICE
UNDERLYING EMPLOYEES IN PRICE EXPIRATION APPRECIATION FOR OPTION
NAME OPTIONS GRANTED 1999 ($/SH) DATE TERM
- ------------------------------- ----------------- -------------- ---------- ------------ -------------------------
(5%) ($) 10% ($)
---------- ------------
<S> <C> <C> <C> <C> <C> <C>
D. Gregory Smith .............. 1,100 <1% 3.64 08/01/04 1,106 2,444
*Russell T. Alba .............. -- -- -- -- -- --
James A. Kitchen .............. 27,500 <1% 5.45 10/09/09 94,256 238,862
J. Bryan Bunting .............. 27,500 <1% 5.45 10/09/09 94,256 238,862
Charles W. McDonough .......... 27,500 <1% 5.45 10/09/09 94,256 238,862
David J. Malfara, Sr. ......... 40,700 <1% 3.64 01/26/09 93,169 236,110
103,400 3% 3.64 02/01/09 236,701 599,846
185,900 5% 3.64 07/26/09 425,558 1,078,447
27,500 <1% 5.45 10/09/09 94,256 238,862
</TABLE>
- --------
* Effective September 1999, Mr. Alba was no longer employed by us.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUE TABLE
The following table shows information concerning stock option exercises
during 1999 and stock option values as of the year ending December 31, 1999 by
each of the Named Executive Officers. The value of unexercised in-the-money
options is determined by subtracting the exercise price from the fair market
value of the common stock based on $40.375, the closing price of Z-Tel common
stock as of December 31, 1999, multiplied by the number of shares underlying
the options.
<TABLE>
<CAPTION>
SHARES
ACQUIRED
ON VALUE NUMBER OF SECURITIES VALUE OF UNEXERCISED
EXERCISE REALIZED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
NAME (#) ($) OPTIONS AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
- ------------------------------- ---------- ------------ ------------------------------- ------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
D. Gregory Smith .............. -- -- 336,111 214,989 12,347,042 $ 7,897,617
*Russell T. Alba .............. -- -- 129,800 -- 4,768,203 0
James A. Kitchen .............. -- -- 351,389 226,111 12,908,271 8,256,416
J. Bryan Bunting .............. 10,000 133,600 119,861 172,639 4,403,098 6,292,115
Charles W. McDonough .......... 197,490 3,008,951 0 270,010 0 10,323,557
David J. Malfara, Sr. ......... -- -- 0 357,500 0 13,082,988
</TABLE>
- --------
* Effective September 1999, Mr. Alba was no longer employed by us.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consisted of Messrs.
Ortale and Williamson during the year ended December 31, 1999, both of whom are
non-employee directors. The Compensation Committee is responsible for all
decisions concerning executive officer compensation, including decisions
regarding grants of incentive stock options.
DIRECTOR COMPENSATION
Directors do not currently receive any cash compensation for services
rendered to us in their capacities as directors. Pursuant to the terms of the
1998 Plan (and its intended successor, the 2000 Plan), each outside director
who served as such as of the date of Z-Tel's initial public offering received
options to purchase 1,100 shares of Z-Tel's common stock, and will receive
options to purchase an additional 1,100 shares of Z-Tel's common stock on the
date of each annual meeting of shareholders following such initial public
offering.
19
<PAGE>
EMPLOYMENT AGREEMENTS
We have entered into the following employment agreements:
<TABLE>
<CAPTION>
ANNUAL
OFFICER TERM SALARY POSITION
- ------------------------------- ---------------------------- ----------- ---------------------------
<S> <C> <C> <C>
D. Gregory Smith ............. July 1998 - July 2001 $162,000 President, Chief Executive
Officer and Chairman
Charles W. McDonough ......... August 1998 - August 2001 $162,000 Senior Vice President --
Chief Technology Officer
J. Bryan Bunting ............. August 1998 - August 2001 $162,000 Senior Vice President --
Engineering and Technical
Services
James A. Kitchen ............. July 1998 - July 2001 $162,000 Senior Vice President --
Chief Architect
</TABLE>
The employment agreements with Messrs. Smith, McDonough, Bunting and
Kitchen also provide for:
o automatic renewal for subsequent one year terms unless either party
elects not to renew prior to 90 days from the end of the then current
term of the agreement;
o a bonus or other incentive compensation in an amount to be determined
by our compensation committee;
o the payment of his base salary and any other benefits to which he would
have been entitled for the term of the agreement if he is terminated
without cause (as defined in the agreements);
o generally, if a change of control occurs, the payment of two and
nine-tenths (2.9) times his base salary and any incentive or bonus paid
in the prior year if, within three years of the occurrence of a change
of control, specified events occur;
o his obligation to keep our nonpublic information confidential; and
o his obligation not to compete with us in the United States and not to
solicit our employees.
SEVERANCE AGREEMENT
We and Mr. Russell T. Alba are parties to an agreement, dated September 3,
1999, where we, among other things, agreed to pay a total severance amount of
$324,000, which amount is payable monthly for a period of two years, provide
health benefits and provide for the extension of the exercise period of stock
options for Mr. Alba. Mr. Alba and we also provided each other with a mutual
release of any prior legal claims.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PURCHASES OF COMMON STOCK
On January 15, 1998, Robert Curtis purchased 110,000 shares of our common
stock for a purchase price of $125,000. Mr. Curtis' note to us in the principal
amount of $93,750, bears interest at a rate of 8% per annum, matures on
December 31, 2001 and is secured by a pledge of his common stock. The largest
amount of indebtedness under the note during 1999 was $93,750, and the
outstanding balance as of April 13, 2000 was $0.
In agreements dated September 1, 1998, each of D. Gregory Smith, James A.
Kitchen, Charles W. McDonough and J. Bryan Bunting, together referred to as the
officer investors, purchased, in the aggregate, 9,570,000 shares of our common
stock for an aggregate purchase price of $10.88 million. In connection with the
purchase of these shares, we loaned: (1) $750,000 to Mr. Smith for the purchase
price of 660,000 of his shares, (2) $750,000 to Mr. Kitchen for the purchase
price of 660,000 of his shares; (3) $468,750 to Mr. McDonough for the purchase
price of 550,000 of his shares and (4) $187,500 to Mr. Bunting for the purchase
price of 220,000 of his shares. These loans, which bear interest at an 8%
annual rate and mature on December 31, 2001, are secured by a pledge to us of
the common stock. The largest amount of indebtedness under the notes during
1999 was $750,000; $750,000; $468,750; and $187,500, respectively and the
outstanding note balances as of April 13, 2000 were $0; $500,000; $468,750 and
$187,500, respectively.
20
<PAGE>
These agreements permit Messrs. Smith and Kitchen, first, and us, second,
to purchase from the officer investors a portion of their shares in the event
of a termination (as defined in the agreements) of the officer's employment
with us. This purchase option must be exercised within 30 days after the
termination of the respective officer's employment with us. In addition, the
purchase option lapses automatically if we are involved in a corporate
transaction (as defined in the agreements).
After March 1, 2000, the officer investors have a right, subject to
quantity limitations we determine, or determined by underwriters, if
applicable, to request that we register their common stock that is no longer
subject to the purchase option.
On September 1, 1999, Mr. Smith purchased an additional 85,800 shares of
our common stock for $97,500 as a result of his exercise of his purchase option
to buy shares from an individual who left the company. Mr. Smith paid for this
purchase with a note under which the largest amount of indebtedness during 1999
was $97,500. The principal balance of the note on April 13, 2000 was $0, and
was on substantially the same terms as Mr. Smith's other note to the company.
PURCHASE OF SERIES B PREFERRED STOCK
On September 22, 1999, we sold an additional 2,964,500 shares of Series B
Preferred Stock for an aggregate consideration of approximately $10 million.
Included in that offering were 148,519 shares purchased for $3.37 per share by
Fulmead Ventures Limited, which is beneficially owned by a trust of which
Eduard J. Mayer is a beneficiary, and 148,267 shares purchased for $3.37 per
share by Buford H. Ortale.
PURCHASE OF SERIES C PREFERRED STOCK
On October 8, 1999, Gramercy Z-Tel L.P. purchased 3,074,280 shares of
Series C Preferred Stock for a purchase price of $15 million.
STOCK PURCHASE AGREEMENT AND STOCKHOLDERS' AGREEMENT
REGISTRATION RIGHTS. The terms of the Series A Preferred Stock and Series
C Preferred Stock provide that the holders of common stock issued upon
conversion of, or as a dividend on, Series A Preferred Stock or Series C
Preferred Stock, as the case may be, may require us to register that common
stock under the Securities Act beginning no earlier than 180 days after the
effective date of a registration statement for an initial public offering of
our common stock. Holders of common stock issued upon conversion of, or as a
dividend on, Series A Preferred Stock and Series C Preferred Stock also have
the right to cause us to register that common stock on Form S-3 when it becomes
available to us if they propose to register securities having a value of at
least $10 million. We will bear all registration expenses incurred in
connection with the first three of these demands for registration. In addition,
if we propose to register securities under the Securities Act, other than
registrations on Form S-4 or Form S-8, then, the holders of common stock issued
upon conversion of, or as a dividend on, Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock have a right, subject to quantity
limitations determined by underwriters if the offering involves an
underwriting, to request that we register such holders' common stock. If
holders of common stock issued upon conversion of, or as a dividend on, Series
A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
participate in that registration, holders of common stock issued upon
conversion of, or as a dividend on, Series A Preferred Stock and Series C
Preferred Stock will have priority over all other holders of common stock
(other than Z-Tel).
TRANSACTIONS WITH OLYMPUS MANAGEMENT GROUP, INC.
Since January 1, 2000, Z-Tel Communications, Inc., one of our wholly owned
subsidiaries, has sub-sub leased, on a month-to-month basis, two pieces of real
property from Olympus Management Group, Inc., an entity of which Mr. Smith is a
100% shareholder. The rental obligation under these sub-sub leases is $6,800
per month. The sub-sub leases are terminable by either party at any time.
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<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of April 11, 2000 (unless otherwise
stated), the number of shares of our common stock beneficially owned by:
o each person who we know to be a beneficial owner of 5% or more of our
outstanding common stock;
o each of our directors;
o each of our Named Executive Officers; and
o all executive officers and directors as a group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF CLASS
BENEFICIAL OWNER OWNERSHIP (1)
- ------------------------------------------------------------ ------------ -----------------
<S> <C> <C>
D. Gregory Smith (2)(3) .................................... 7,758,300 23.98
Carol Jane Smith (2)(3) .................................... 7,758,300 23.98
G/CJ Investments, L.P. (3) ................................. 5,500,000 17.22
Russell T. Alba (2)(4) ..................................... 425,425 1.33
David J. Malfara, Sr. (2)(5) ............................... 64,044 *
James A. Kitchen (2)(6) .................................... 1,818,556 5.62
Charles W. McDonough (2)(7) ................................ 815,833 2.56
J. Bryan Bunting (2)(8) .................................... 388,056 1.21
Eduard J. Mayer (2)(9) ..................................... 0 *
Buford H. Ortale (2)(10) ................................... 1,829,061 5.73
Douglas C. Williamson (2)(11) .............................. 0 *
Jeffrey Bowden (2)(12) ..................................... 348,333 1.08
Laurence S. Grafstein (13) ................................. 0 *
Fulmead Ventures Limited (14) .............................. 2,348,520 7.35
BA Capital Company, L.P. (15) .............................. 1,780,325 5.57
Gramercy Z-Tel, L.P. (16) .................................. 3,074,280 9.63
All directors and officers as a group (19 persons) ......... 14,424,683 43.04
</TABLE>
- --------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the aggregate number of
shares beneficially owned by the individual stockholders and groups of
stockholders described above and the percentage ownership of such
individuals and groups, shares of common stock subject to options or
warrants that are currently exercisable or exercisable within 60 days of
the date of this report are deemed outstanding. Such shares, however, are
not deemed outstanding for the purposes of computing the percentage
ownership of the other stockholders or groups of stockholders.
(2) The address for each of Messrs. Smith, Alba, Malfara, Kitchen, McDonough,
Bunting, Mayer, Ortale, Williamson and Bowden and Mrs. Smith is c/o Z-Tel
Technologies, Inc., 601 South Harbour Island Boulevard, Suite 220, Tampa,
Florida 33602.
(3) D. Gregory Smith and Carol Jane Smith are husband and wife. The number of
shares shown for D. Gregory Smith and for Carol Jane Smith each includes
all of the shares held by G/CJ Investments, L.P., a Delaware limited
partnership. G/CJ Investments, Inc., a Delaware corporation established
and controlled by Mr. and Mrs. Smith, is the sole general partner of G/CJ
Investments, L.P. The share amount also includes 412,500 shares for Mr.
Smith and Mrs. Smith which are deemed to be beneficially owned by them by
virtue of certain stock options that are currently exercisable or become
exercisable within 60 days. The address of G/CJ Investments, L.P. is 300
Delaware Avenue, Suite 900, Wilmington, DE 19801.
(4) Includes 129,800 shares deemed to be beneficially owned by Mr. Alba by
virtue of certain stock options that are currently exercisable or which
become exercisable within 60 days. Effective September 1999, Mr. Alba was
no longer employed by us.
22
<PAGE>
(5) Includes 64,044 shares deemed to be beneficially owned by Mr. Malfara by
virtue of certain stock options that are currently exercisable or which
become exercisable within 60 days.
(6) Includes 443,056 shares deemed to be beneficially owned by Mr. Kitchen by
virtue of certain stock options that are currently exercisable or which
become exercisable within 60 days.
(7) Includes 68,343 shares deemed to be beneficially owned by Mr. McDonough by
virtue of certain stock options that are currently exercisable or which
become exercisable within 60 days.
(8) Includes 158,056 shares deemed to be beneficially owned by Mr. Bunting by
virtue of certain stock options that are currently exercisable or which
become exercisable within 60 days.
(9) Does not include 2,348,520 shares owned directly by Fulmead Ventures
Limited, which is beneficially owned by The Mayer Trust. Mr. Mayer is a
principal beneficiary of The Mayer Trust. Mr. Mayer disclaims beneficial
ownership of these shares as he does not have voting or dispositive power
with respect to these shares.
(10) Includes 158,036 shares held by a general partnership with which Mr.
Ortale is affiliated and 68,622 shares held by a trust of which Mr. Ortale
is a trustee.
(11) Excludes 1,780,325 shares owned by BA Capital Company, L.P., of which Mr.
Williamson is a senior officer. Mr. Williamson disclaims beneficial
ownership of the shares owned by BA Capital Company, L.P.
(12) Includes 238,333 shares deemed to be beneficially owned by Mr. Bowden by
virtue of certain stock options that are currently exercisable or which
become exercisable within 60 days.
(13) Excludes 3,074,280 shares owned by Gramercy Z-Tel L.P., of which Mr.
Grafstein is a senior officer. Mr. Grafstein disclaims beneficial
ownership of the shares owned by Gramercy Z-Tel L.P.
(14) This information is derived from a Schedule 13G dated February 4, 2000
filed jointly by The Mayer Trust, Eduard J. Mayer, Mutual Risk Management
Ltd., Mutual Risk Management (Holdings) Limited, Hemisphere Trust (Jersey)
Limited, Hemisphere Trustees Limited, Hemisphere Nominees Limited,
Hemisphere Investments Limited, and Fulmead Ventures Limited. Each of
these parties is shown to have shared voting and dispositive power with
respect to all of the shares shown. Eduard J. Mayer disclaims beneficial
ownership of the shares shown. The address of Fulmead Ventures Limited is
Akara Bldg., 24 Castro Street, Wickhams Cay I, Road Town, Tortola, British
Virgin Islands.
(15) This information is derived from a Schedule 13G dated February 14, 2000
filed jointly by BA Capital Company, L.P., BA SBIC Management, LLC, BA
Equity Management, L.P., BA Equity Management GP, LLC, Walter W. Walker,
Jr., and Bank of America Corporation. Each of these parties is shown to
have sole voting and dispositive power with respect to all of the shares
shown. The address of BA Capital Company, L.P., is 901 Main Street, 22nd
Floor, Dallas, TX 75202-3714.
(16) This information is derived from a Schedule 13G filed February 14, 2000
and dated February 2000 filed jointly by Gramercy Z-Tel L.P., Gramercy
Z-Tel LLC and Communicapital Partners (Cayman), L.P. Each of these parties
is shown to have shared voting and dispositive power with respect to all
of the shares shown. The address of Gramercy Z-Tel L.P. is 712 Fifth
Avenue, New York, NY 10019.
OTHER BUSINESS
It is not expected that any other matters are likely to be brought before
the meeting. However, if any other matters are presented, it is the intention
of the persons named in the proxy to vote the proxy in accordance with their
best judgment.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The firm of PricewaterhouseCoopers LLP has been our independent certified
public accountants since 1998. PricewaterhouseCoopers LLP has been recommended
by the Audit Committee and approved by the Board of Directors as our
independent certified public accountants for the year ending December 31, 2000.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting of Stockholders. They will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond
to appropriate questions by stockholders.
23
<PAGE>
STOCKHOLDER PROPOSALS FOR PRESENTATION AT THE 2001 ANNUAL MEETING
Stockholder proposals intended to be considered for inclusion in next
year's Proxy Statement and form of proxy for presentation at the 2001 Annual
Meeting of Stockholders must be submitted in writing and received by us on or
before December 26, 2000. Address proposals to Z-Tel Technologies, Inc.,
Attention: Secretary, 601 South Harbour Island Boulevard, Suite 220, Tampa,
Florida 33602. In addition, our bylaws provide that stockholder proposals
intended to be presented at an Annual Meeting of Stockholders must be received
by us not less than 60 nor more than 90 days before the date of the meeting
(unless less than 70 days notice or disclosure of the date of the meeting is
given to stockholders, in which case the proposal must be received by us no
later than the close of business on the tenth day following the date on which
notice was given or public disclosure was made). The specific requirements for
submitting such proposals are set forth in our bylaws.
By Order of the Board of Directors,
/s/JOHN M. HUTCHENS
----------------------
JOHN M. HUTCHENS,
CHIEF FINANCIAL OFFICER
Dated: May 4, 2000
24
<PAGE>
APPENDIX A
FORM OF PROXY
Z-TEL TECHNOLOGIES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 30, 2000
The undersigned, a stockholder of Z-Tel Technologies, Inc. ("Z-Tel"),
hereby appoints D. Gregory Smith, John M. Hutchens, Mark H. Johnson, and
Jeffrey H. Kupor, and each of them, attorney and proxy of the undersigned, each
with full powers of substitution, for and on behalf of the undersigned, to
represent the undersigned at the Annual Meeting of Stockholders of Z-Tel to be
held at the Wyndham Harbour Island Hotel, Tampa, Florida at 1:00 P.M., local
time, on May 30, 2000, and any adjournments or postponements thereof (the
"Annual Meeting"), and to vote at the Annual Meeting all the shares of Common
Stock of Z-Tel that the undersigned is entitled to vote at the Annual Meeting,
with the same effect as if the undersigned were personally present at the
Annual Meeting, all as described in the Company's Proxy Statement dated May
4, 2000 relating to the Annual Meeting, and the undersigned hereby authorizes
and instructs the above named proxies to vote as specified on the reverse side:
The shares represented by this Proxy will be voted in the manner directed
herein only if this Proxy is properly executed and timely returned. If the
undersigned does not specify a choice, the shares will be voted FOR the
nominees for director listed on the reverse side, FOR the proposal to approve
the Second Amendment to Z-Tel's Amended and Restated Certificate of
Incorporation, FOR the proposal to approve the 2000 Equity Participation Plan,
and in the discretion of the proxies for other matters which may properly come
before the Annual Meeting.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
<PAGE>
The Board of Directors recommends voting FOR the following proposals:
1. ELECTION OF DIRECTORS
Nominees: D. Gregory Smith, Eduard J. Mayer,
Jeffrey A. Bowden, Buford H. Ortale, Laurence S. Grafstein
WITHHOLD
FOR THE NOMINEES AUTHORITY
LISTED AT RIGHT (EXCEPT AS TO VOTE FOR ALL THE
MARKED TO THE CONTRARY) NOMINEES LISTED AT RIGHT
[ ] [ ]
(INSTRUCTION: To withhold authority to vote for any individual nominee(s),
print the name of such nominee(s) below.)
-------------------------------
2. PROPOSAL TO APPROVE THE SECOND AMENDMENT TO Z-TEL'S AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. PROPOSAL TO APPROVE THE 2000 EQUITY PARTICIPATION PLAN
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. OTHER MATTERS: Unless a line is stricken through this sentence, the proxies
herein named may in their discretion vote the shares represented by this Proxy
upon such other matters as may properly come before the Annual Meeting.
The undersigned acknowledges receipt of (1) the Company's 2000 Annual
Report to Stockholders and (2) the Company's Notice of Annual Meeting and
Proxy Statement dated May 4, 2000 relating to the Annual Meeting. The
undersigned does hereby revoke any proxy previously given with respect to
the shares represented by this Proxy.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT USING THE
ENCLOSED ENVELOPE.
Signature___________ Signature, if held jointly_______________ Date____, 2000
NOTE: Your signature should appear as your name appears hereon. As to shares
held in joint names, each joint owner should sign. If the signer is a
corporation, please sign full corporate name by a duly authorized officer.
If a partnership, please sign in partnership name by an authorized person.
If signing as attorney, executor, administrator, trustee, guardian, or in
other representative capacity, please give full title as such.
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