Schedule 14A Information
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. _________)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commissions Only (as permitted by Rule
14a-6(e)(2) )
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
INTELECT COMMUNICATIONS SYSTEMS LIMITED
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
INTELECT COMMUNICATIONS SYSTEMS LIMITED
NOTICE OF THE
ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 26, 1996
TAKE NOTICE that the Annual General Meeting of INTELECT COMMUNICATIONS SYSTEMS
LIMITED (the "Company") will be held on Wednesday, June 26, 1996 at 9:00 a.m. at
The Glen Eagles Country Club, 5401 West Park Boulevard, Plano, Texas, 75220, for
the following purposes:
1. To receive the consolidated financial statements of the
Company for the fiscal year ended December 31, 1995 and the
report of the auditors thereon;
2. To elect three directors to fill the vacancies created by the
expiry at the Meeting of the terms of three of the directors;
3. To fix the maximum number of directors;
4. To appoint auditors; and
5. To transact such other business as may properly be brought
before the meeting or any adjournment thereof.
Shareholders of the Company who are unable to attend the meeting in person
are requested to date and sign the enclosed form of proxy and return it in the
enclosed envelope. In order to be valid and acted upon at the meeting, forms of
proxy must be returned to the Secretary of the Company at the address on the
enclosed envelope, c/o P.O. Box 2687, Houston, Texas, 77252-2687 or c/o The R-M
Trust Company, 393 University Avenue, 5th Floor, Toronto, Ontario, M5G 2M7,
Canada at any time up to the last business day before the time for holding the
meeting or any adjournment thereof or deposited with the Chairman of the meeting
on the day of the meeting and any adjournment thereof. A shareholder whose
shares are held by a broker must return his proxy to his broker in the envelope
provided.
DATED at Hamilton, Bermuda this 30 day of April, 1996.
BY ORDER OF THE BOARD OF DIRECTORS
RHIANON M. PEDRO
Secretary
INTELECT COMMUNICATIONS SYSTEMS LIMITED
REID HOUSE
31 CHURCH STREET, HAMILTON, HM 12, BERMUDA
P.O. BOX HM 1437, HAMILTON, HM FX, BERMUDA
ANNUAL GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON WEDNESDAY, JUNE 26, 1996
PROXY STATEMENT
SOLICITATION OF PROXIES
THIS PROXY STATEMENT ACCOMPANIES THE NOTICE (THE "NOTICE") OF THE ANNUAL
GENERAL MEETING OF SHAREHOLDERS OF INTELECT COMMUNICATIONS SYSTEMS LIMITED (THE
"COMPANY") AND IS FURNISHED IN CONNECTION WITH THE SOLICITATION BY THE
MANAGEMENT OF THE COMPANY OF PROXIES TO BE VOTED AT THE ANNUAL GENERAL MEETING
OF SHAREHOLDERS OF THE COMPANY (THE "MEETING") AND AT ANY AND ALL ADJOURNMENTS
OF SUCH MEETING. The Meeting is to be held at the time and place and for the
purposes set forth in the Notice. It is expected that solicitation of proxies
will be primarily by mail, however, the Company may retain agents to solicit
proxies. The costs of solicitation will be borne by the Company. Unless
otherwise stated, all amounts included in this Proxy Statement are stated in
U.S. dollars. The accompanying Notice of Meeting and this Proxy Statement are
being first mailed to shareholders on or about May 20, 1996.
APPOINTMENT AND REVOCATION OF PROXIES
The persons designated in the enclosed form of proxy are directors of the
Company. A shareholder desiring to appoint some other person to represent him at
the Meeting may do so either by inserting such person's name in the blank space
provided in the form of proxy or by completing another form of proxy.
A shareholder who has given a proxy may revoke it, as to any motion on
which a vote has not already been cast pursuant to the authority conferred by
it, by an instrument in writing executed by the shareholder or by his attorney
authorized in writing or, if the shareholder is a corporation, under its
corporate seal or by an officer or attorney thereof duly authorized.
A proxy or revocation of proxy, in order to be acted upon, must be
deposited with the Secretary of the Company c/o P.O. Box 2687, Houston, Texas,
77252-2687, U.S.A. or c/o The R-M Trust Company, 393 University Avenue, 5th
Floor, Toronto, Ontario, M5G 2M7, Canada at any time up to and including the
last business day preceding the day of the Meeting or any adjournment thereof,
or with the Chairman of the Meeting on the day of the Meeting or any adjournment
thereof.
EXERCISE OF DISCRETION BY PROXIES
All properly executed proxies, not heretofore revoked, WILL BE VOTED OR
WITHHELD FROM VOTING IN ACCORDANCE WITH THE INSTRUCTIONS OF THE SHAREHOLDER ON
ANY BALLOT THAT MAY BE CALLED FOR AND, IF THE SHAREHOLDER SPECIFIES A CHOICE
WITH RESPECT TO ANY MATTER TO BE ACTED UPON, THE SHARES WILL BE VOTED
ACCORDINGLY. IF NO DIRECTIONS ARE GIVEN, THE PROXY WILL BE VOTED FOR THE
ELECTION OF MANAGEMENT'S NOMINEES AS DIRECTORS AND FOR THE APPOINTMENT OF KPMG
PEAT MARWICK AS AUDITORS OF THE COMPANY.
The enclosed form of proxy confers discretionary authority upon the persons
named therein with respect to amendments or variations to matters identified in
the Notice and with respect to other matters which are appropriately brought
before the Meeting. Except as disclosed herein, at the date hereof, the
management of the Company knows of no such amendments, variation or other
matters.
VOTING SHARES AND PRINCIPAL SHAREHOLDERS
The voting shares of the Company are its Common Shares with a par value of
U.S. $0.01. At the date hereof, the Company had outstanding 11,880,117 Common
Shares. Shareholders of record at the close of business on May 8, 1996 (the
"Record Date"), are entitled to one vote for each Common Share held by them,
except to the extent that such shareholder transfers any such shares after that
date and the transferee produces properly endorsed share certificates or
otherwise establishes ownership of the shares and demands that the new name of
ownership, not later than ten days before the Meeting, be included in the
shareholders' list for the Meeting, in which case the transferee is entitled to
vote his shares at the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is information with respect to certain persons, including
those known to the Company, who own beneficially more than five percent of the
Company's outstanding Common Shares, and the number and percentage of
outstanding shares owned beneficially by directors and executive officers of the
Company individually, and directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP NOTE OF CLASS
------------------- --------- ---- --------
<S> <C> <C> <C>
Herman M. Frietsch
31 Church Street
Hamilton, Bermuda, HM12 513,333 (1) 4.24%
Peter G. Leighton
31 Church Street
Hamilton, Bermuda, HM12 753,433 (2) 6.26%
Jeremy T.G. Posner
31 Church Street
Hamilton, Bermuda, HM12 383,333 (3) 3.19%
Anton Liechtenstein
Administration & Trust
Company Registered
Merkurhaus
Josef Rheinbergerstrasse 6
Vaduz, Liechtenstein 257,500 2.17%
C. Simon Scupham
70 Harbour Road
Paget, Bermuda 1,877 (4) .02%
Rhianon M. Pedro
31 Church Street
Hamilton, Bermuda, HM12 3,333 (5) .03%
Meridian Fund, Ltd.
601 Jefferson, Suite 4000
Houston, Texas, 77002 651,000 5.48%
Cerrito Investments Limited
1900 W. Loop S.
Suite 1910
Houston, Texas, 77027-3208 1,311,883 (6) 10.72%
All Directors and
Executive Officers
as a group (6 persons) 1,885,243 (7) 15.43%
(1) Includes 213,333 options which are currently exercisable or become exercisable in the next six months.
(2) Includes 25,000 shares held by an unrelated investor over which Mr. Leighton has voting control and 163,333 options which
are currently exercisable or become exercisable in the next six months.
(3) Includes 118,333 options which are currently exercisable or become exercisable in the next six months.
(4) Includes 1,867 options which are currently exercisable or become exercisable in the next six months.
(5) Includes 3,333 options which are currently exercisable or become exercisable in the next six months.
(6) Includes 760,991 shares, 180,000 warrants @ $3.50 per share which expire on May 15, 1996 and 180,000 warrants @ $2.50 per
share which expire on May 15, 1996, held in the name of Cerrito
Investments Limited; 149,396 in the name of Cerrito Investors Ltd.,
41,496 in the name of Cerrito Partners.
(7) Includes 496,866 options which are currently exercisable or become exercisable in the next six months.
</TABLE>
ELECTION OF DIRECTORS
At the Annual and Special General Meeting of the Shareholders held April
14, 1993, the Shareholders adopted new Bye-Laws of the Company, of which one of
the provisions of such Bye-Laws (Bye-Law 4.03) provided that the directors of
the Company shall be elected and retire in a staggered term rotation. However,
the text of Bye-Law 4.03 failed to clarify that once directors have been elected
for staggered terms, their successors shall then be elected to hold office for a
term expiring at the annual meeting of the shareholders held in the third year
of their election. At the Special General Meeting of the Shareholders held
December 13, 1995, the Shareholders of the Company adopted the current Bye-Law
4.03 which accomplishes the appropriate clarification. Current Bye-Law 4.03
provides that the Directors shall be elected and shall retire in rotation such
that one-third (1/3rd) of the number of Directors fixed from time to time shall
be elected for a three (3) year term or until the third annual general meeting
following their election, one third (1/3rd) shall be elected for a two (2) year
term or until the second annual general meeting following their election and one
third (1/3rd) shall be elected for a one (1) year term or until the next annual
general meeting following their election. At each annual general meeting of
shareholders, the successors of such classes of directors whose term expires at
that meeting shall be elected to hold office for a term expiring at the annual
general meeting of the shareholders held in the third year of their election.
It is proposed that the shareholders elect four directors to fill the
vacancies created by (i) the expiry at the Meeting of the terms of three of the
directors as set forth in the table below and (ii) the vacancy created by the
resignation of a director in conjunction with the Company's sale of Savage
Corporation. Unless otherwise specified, the persons designated in the enclosed
form of proxy intend to vote in favor of re-electing the persons whose terms as
directors expire at the Meeting as directors for terms expiring as set forth in
the table below.
The following table states for each of the current directors all other
offices with the Company now held, his principal occupation, the year he became
a director of the Company, the expiry of his term as a director of the Company
or, in the case of the three directors whose terms expire at the Meeting, the
term for which he is proposed to be elected, and the number of Common Shares of
the Company that he has advised are beneficially owned, directly or indirectly,
or over which control or discretion is exercised, by him as of the date hereof:
<TABLE>
<CAPTION>
NAME AND OTHER OFFICES PRINCIPAL OFFICES WITH BECAME TERM NEW TERM COMMON
WITH THE COMPANY OCCUPATION COMPANY DIRECTOR EXPIRES EXPIRES SHARES HELD
---------------------------------------- --------------------- ------------------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
HERMAN M. FRIETSCH(3) Executive Executive 1988 1997 - 300,000
Chairman Chairman since
Executive Chairman October, 1995
(Chairman of the
Board since
April, 1989)
PETER G. LEIGHTON(3) President President since 1984 1997 - 590,100
President April, 1989
(Chief Financial
Officer from
April, 1989 to
October, 1995)
ANTON LIECHTENSTEIN(1)(3)(4) Consultant, None 1981 1996 1999 257,500
Chairman of Private Investor (Chairman of the
Stock Option Committee Board from
September, 1985
to March, 1989)
JEREMY T.G. POSNER(4) President, None 1987 1996 1998 265,000
Posner Management (Vice President
Limited from April, 1994
to October, 1995)
C. SIMON SCUPHAM(1)(2) President, None 1992 1996 - 10
Chairman of Audit Committee Abbeydale Limited (Vice President
from January,
1992 to April,
1994)
WENDELL M. HOLLIS(4) Partner None 1996 1996 1998 10
Mello, Hollis,
Jones & Martin
</TABLE>
(1) Member, Audit Committee.
(2) Member, Stock Option Committee.
(3) Term expires at the next annual general meeting following the Meeting.
(4) To be elected at the Annual General Meeting.
DIRECTORS AND OFFICERS OF THE REGISTRANT
Information regarding the directors is set forth below. Appointments were
made by the Shareholders in April 1995 or subsequently by the Board, as
authorized by the Shareholders, to fill vacancies created by resignations. Such
persons will serve until the next Annual General Meeting of Shareholders or
until their successors are elected.
HERMAN M. FRIETSCH, 56, EXECUTIVE CHAIRMAN AND DIRECTOR has been a director of
the Company since 1988 and Chairman of the Board since April, 1989 and Executive
Chairman since December, 1995. Mr. Frietsch has co-developed and directs with
Mr. Leighton the Company's corporate strategy, restructuring programs and
development of new business operations. Mr. Frietsch has over thirty years of
experience in corporate general management through executive positions with
large, diversified and international public companies as well as start up
private enterprises. Other recent positions include Executive Assistant to the
Chairman and Chief Executive Officer of The Coastal Corporation, Houston, Texas;
Director of Laker Airways, Inc., a privately-held U.S. certified commercial air
carrier initiating transcontinental passenger service between the U.S. and
Europe during 1996; President and co-founder with Michael E. DeBakey, M.D., of
the DeBakey Consulting Group, an advisory firm specializing in facilities,
clinical operations and training in the medical field; and a principal of MEDTEL
Systems, a joint venture among Raytheon Company, DeBakey Corporation and
International Telemedial Systems to design, market and operate Telemedicine
installations and networks internationally for interactive, real-time medical
diagnosis and consultation.
PETER G. LEIGHTON, 43, PRESIDENT AND DIRECTOR has been an officer of the Company
since its incorporation in 1980, a director since 1984 and President since 1988.
Along with Mr. Frietsch, Mr. Leighton has been a principal architect of the
Company's evolution since 1988 and has devised and implemented innovative
financing and disposition transactions that have been critical to the Company's
earlier survival and subsequent strategic development. Mr. Leighton has fifteen
years experience in corporate management and financial positions and has
successfully concluded public offerings and private placements in Canada, the
United Kingdom, Brazil and France, and has arranged bank financing and
acquisitions and dispositions for real estate, shipping and trading companies.
Mr. Leighton is also a director and shareholder of Brendan Wood International, a
pre-eminent financial research and consulting firm in Canada and the U.S.;
President of the International Airline Passenger Association, a private
membership organization advocating airline and travel safety; Director of Valmet
Group Limited, an investment and management group with operations in
Switzerland, Gibraltar, the United Kingdom, the Isle of Man, Ireland and
Bermuda.
JEREMY T.G. POSNER, 50, DIRECTOR has been a director since 1987. With degrees in
both law and business, Mr. Posner developed his career in various positions with
multi-national companies in the U.S., Canada and the United Kingdom. He
subsequently established a management consulting firm specializing in corporate
strategic planning. In the late 1970's he founded an industrial equipment
distribution company which was successfully built up over a ten year period and
then sold to a larger company in 1986. From 1987 to 1991 Mr. Posner managed the
corporate finance department of an investment brokerage firm. Since 1991 he has
concentrated on investment management in both Europe and North America, serving
as a director on the boards of several companies. Until its recent sale to a
major Canadian data communications company, Mr. Posner was a director and
principal shareholder of EDA Instruments, Inc. of Ontario, Canada which designs,
manufactures and markets electronic data communication equipment.
PRINZ ANTON VON AND ZU LIECHTENSTEIN, 50, DIRECTOR, CHAIRMAN OF THE STOCK OPTION
COMMITTEE AND MEMBER OF THE AUDIT COMMITTEE was a founding director and the
first Managing Director of the Company and is Chairman of the Stock Option
Committee. He has held senior management positions with Morgan Guaranty and is a
Director of The Liechtensteinishe Landesbank. Prinz Liechtenstein is a private
investor with current emphasis on enterprises in the former Soviet Union.
C. SIMON SCUPHAM, 42, DIRECTOR, CHAIRMAN OF THE AUDIT COMMITTEE AND MEMBER OF
THE STOCK OPTION COMMITTEE has been a director since 1992 and is Chairman of the
Audit Committee. Mr. Scupham is a Chartered Accountant and has held senior
management positions with Coopers & Lybrand in Bermuda and the United Kingdom;
he was President of Kemper Insurance Management from 1987 - 1991 and founded and
is President and owner of Abbeydale Investments Limited.
WENDELL M. HOLLIS, 43, DIRECTOR has been a Director since March, 1996. Mr.
Hollis was admitted to the Bermuda Bar Council in 1975 and is a senior partner
in Mello, Hollis, Jones & Martin. Mr. Hollis' practice areas are Managing
Partner and Private Client Representation. Mr. Hollis was a Bermuda Government
Senator and Parliamentary Secretary for Finance and the Environment from 1992 -
1993, Acting Magistrate since 1981, and has held several Bermuda Government
appointments which include the Board of Education 1978 - 1982; Medical Council
since 1981 and Defense Board since 1989. Mr. Hollis serves on the Boards of many
companies including Kloster Cruise Holdings Limited, Norwegian Cruise Line
Limited, Royal Cruise Line Limited and Teleport Bermuda Limited and was formerly
a director of the Bank of Butterfield Executor & Trustee Co. Ltd.
RHIANON M. PEDRO, 35, CHIEF FINANCIAL OFFICER AND MEMBER OF THE AUDIT COMMITTEE
has served as Treasurer of the Company since January 1993, as Chief Compliance
Officer since September 1995, Vice President since October 1995 and as Chief
Financial Officer since December 1995. She is also a member of the Board of
Valmet Group Limited and The CFM Group, a venture capital firm.
Messrs. Scupham and Liechtenstein are members of the Audit Committee and
the Stock Option Committee of the Board of Directors.
The executive officers of the Company were elected in April, 1995. The
executive officers are appointed by, and serve at the pleasure of, the Board of
Directors. All executive officers are also directors with exception of Rhianon
Pedro who was elected Chief Financial Officer of the Company in December 1995.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
Directors currently receive no cash compensation for their services as
Directors or meeting attendance fees. Members of the Audit Committee and the
Stock Option Committee each receive a cash fee of $10,000 per annum for each
committee.
COMPENSATION COMMITTEE
The Compensation Committee (the "Committee") designs and directs the
compensation policies of the Company. Members of the Committee as of December
31, 1995 were Herman M. Frietsch and Peter G. Leighton. Committee members do not
participate in Board actions on compensation relating to themselves. The
compensation for Mr. Frietsch and Mr. Leighton is determined by the Company's
Board of Directors based upon analyses and guidelines prepared for the Board by
the Performance and Compensation Management Group of KPMG Peat Marwick, New
York, N.Y., from an independent review and evaluation of executive compensation
in comparable circumstances and competitive conditions.
REPORT ON EXECUTIVE COMPENSATION
The Committee, in the determination of senior executive compensation,
follows the guidelines of pay-for-performance and the need to provide total
compensation packages that will attract and retain qualified and effective
executives. Individual performance standards and accomplishments are reviewed
regularly by the Committee in order to relate the compensation of executives to
the financial performance of the Company.
Various elements of compensation fulfill different roles in the attraction,
retention and motivation of qualified officers and employees. For named
executive officers, the least emphasis is currently given to benefits and
perquisites and the greatest emphasis to variable and contingent forms of
compensation. An annual incentive bonus program is provided. To further link the
interests of management with those of the Company's shareholders, stock options
are granted periodically to a significant number of officers, managers and
qualified employees. To encourage continued service, the options normally become
exercisable over three years in three equal annual installments from the date of
grant and expire after ten years. Stock options granted to executive officers
are considered to be appropriate in terms of the market value of the shares
covered by the options relative to performance, other forms of compensation and
taking into consideration the possible future value of the options.
Presented by the Committee:
Herman M. Frietsch
Peter G. Leighton
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation paid to Peter Leighton, the
President of the Company, and the other executive officers who have earned more
than $100,000 in salary and bonus during the last three completed fiscal years
ended December 31.
<TABLE>
<CAPTION>
RESTRICTED
SHARES OR
OTHER SECURITIES RESTRICTED ALL OTHER
NAME AND COMPEN- UNDER SHARES LTIP COMPEN-
PRINCIPAL FISCAL SALARY BONUS SATION OPTIONS (1) UNITS PAYOUTS (2) SATION
POSITION YEAR ($) ($) ($) (#) ($) ($) ($)
-------------------------------- --------- ----------- ----------- ----------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Herman M. Frietsch (3) 1993 $ -- $ -- $ -- 100,000 -- -- --
Executive Chairman of 1994 $ 20,000 $150,000 $ -- 40,000 -- -- --
Intelect Communications 1995 $120,000 $120,000 $ -- 150,000 -- -- --
Systems Limited
Peter G. Leighton (4) 1993 $100,000 $ -- $ 9,199 100,000 -- -- --
President of Intelect 1994 $125,000 $100,000 $ -- 40,000 -- -- --
Communications 1995 $150,000 $150,000 $ -- 150,000 -- -- --
Systems Limited
Pete Ianace (5) 1995 $160,000 $ -- $ -- 350,000 -- -- --
President of
Intelect, Inc.
Jeremy T.G. Posner 1993 $ -- $ -- $ -- 30,000 -- -- --
Vice President of Intelect 1994 $ -- $ -- $ -- 15,000 -- -- --
Communications 1995 $ -- $ -- 150,000 30,000 -- -- --
Systems Limited
until October 1995
Rhianon M. Pedro (6) 1995 $ 12,500 $ 20,000 $ -- 10,000 -- -- --
Vice President, Chief
Financial Officer of
Intelect Communications
Systems Limited
</TABLE>
(1) Common Shares of the Company.
(2) LTIP means Long Term Incentive Plan.
(3) Mr. Frietsch is party to a management contract with Intelect Systems
Corp. (a wholly-owned subsidiary of the Company),, the terms of which
provide effective January 1, 1996, for a minimum fee of $250,000 plus the
possibility of a discretionary bonus per annum and for a minimum term
ending December 31, 1997, thereafter the contract is automatically
renewed, but may be terminated on the next December 31 following three
(3) years notice of termination.
(4) Mr. Leighton is party to an employment contract with the Company, the
terms of which provides for a minimum salary of $250,000 plus the
possibility of a discretionary bonus per annum and for a minimum term
ending December 31, 1997, thereafter the contract is automatically
renewed, but may be terminated on the next December 31 following three
(3) years notice of termination.
(5) Mr. Ianace is party to an employment contract with Intelect, Inc., the
terms of which provide for a minimum salary of $240,000 for five years
ending April 24, 2000.
(6) Ms. Pedro was elected Chief Compliance Officer on September 14, 1995 and
Chief Financial Officer on December 13, 1995. Her annual salary is a
minimum of $75,000 per annum from November 1, 1995.
EMPLOYEE STOCK OPTION PLAN
(a)(i) General Information - The Company has in place one Stock Incentive
Plan (the "Plan"), which was adopted by the Board of Directors on October 18,
1995 and ratified by the Shareholders at the Special General Meeting held on
December 13, 1995. Under this Plan, the aggregate number of Common Shares which
may be issued is 3,000,000 shares, of which up to 1,000,000 shares are available
for the grant of restricted shares or restricted share units. The maximum number
of shares covered by all grants or awards in any fiscal year of the Company to
any one participant may not exceed 350,000, subject to adjustment in the event
of stock splits and similar events.
The Plan expires on December 13, 2005, after which no awards may be
granted. The Plan is administered by the Stock Option Committee (the "Option
Committee") which currently consists of two individuals who are directors of the
Company and who are appointed by the Board for an indefinite term. The Option
Committee's present members are C. Simon Scupham and Anton von Liechtenstein
(Chairman).
As stated in the Proxy Statement dated October 31, 1995, in anticipation of
the Plan being approved by the Company's shareholders and in accordance with the
terms of the Plan, the Stock Committee confirmed and approved commitments to
grant key employees 420,000 non-qualified stock options and 550,000 restricted
stock options. These options were granted on December 13, 1995 by the Stock
Option Committee following the Special General Meeting on December 13, 1995.
(a)(ii) Options Granted - Summary of Stock Incentive Plan activity (two
month period ended December 31)(unless otherwise stated all amounts are reported
in U.S.$):
1995
----
Number of Options Outstanding, beginning of period --
Granted 970,000
Exercised --
Canceled (40,000)
-----------
Outstanding end of period 930,000
Option Price per Share Granted $3.00 - $5.625
Exercised $ --
Canceled $ 3.00
Outstanding, end of period $3.00 - $5.625
As of December 31, 1995 the following options under the Plan were
outstanding:
VESTED
NUMBER PORTION
OF OF
SHARES SHARES EXERCISE OPTION
INCLUDED INCLUDED PRICE EXPIRATION
IN OPTION IN OPTION PER SHARE DATE
--------- --------- --------- ----
850,000 -- $ 3.00 2005
80,000 -- $ 5.625 2005
-------- ----------
930,000 --
------- ----------
(b)(i) At December 31, 1995, the Company has options outstanding under the
Employee Stock Option Plan ("ESOP"), which expired in January, 1996 and was
replaced by the Plan discussed above.
(b)(ii) Options Previously Granted - Summary of ESOP activity (years ended
October 31 - except 1995 which is for the fourteen months ended December 31):
<TABLE>
<CAPTION>
1995 1994 1993 1992
---- ---- ---- ----
<S> <C> <C> <C> <C>
Number of Options Outstanding, beginning
of period 1,044,018 881,818 180,000 155,000
Granted 172,000 177,200 750,000 25,000
Exercised (74,318) (10,000) (38,696) --
Canceled (153,900) (5,000) (9,486) --
--------------- --------------- ------------- --------------
Outstanding end of period 987,800 1,044,018 881,818 180,000
Option Price per Share Granted $3.32 - $5.40 $2.375 - $2.55 $1.00 - $3.08 $0.75
Exercised $1.50 - $2.55 $1.50 $1.50 --
Canceled $2.375 - $5.40 $2.55 $1.50 --
Outstanding, end of period $0.75 - $5.40 $0.75 - $3.60 $0.75 - $3.60 $0.75 - $3.60
</TABLE>
As of December 31, 1995 the following options under the ESOP were outstanding:
NUMBER VESTED
OF PORTION OF
SHARES SHARES EXERCISE OPTION
INCLUDED INCLUDED PRICE EXPIRATION
IN OPTION IN OPTION PER SHARE DATE
5,000 5,000 $ 3.60 1996
25,000 25,000 $ 0.75 2001
350,000 308,333 $ 1.00 1999-2002
120,000 120,000 $ 1.50 2003
300,000 233,334 $ 2.66 2003
25,000 16,667 $ 3.08 2003
27,800 22,600 $ 2.55 2003
95,000 31,666 $ 2.375 2004
23,200 -- $ 3.32 2005
16,800 -- $ 5.40 2005
---------- ----------
987,800 762,600
---------- ----------
OPTIONS GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
<TABLE>
<CAPTION>
MARKET VALUE
OF SECURITIES
% OF TOTAL UNDERLYING
SECURITIES OPTIONS EXERCISE OPTIONS ON
UNDER GRANTED TO OR THE DATE
OPTIONS EMPLOYEES BASE PRICE OF GRANT EXPIRATION
NAME GRANTED IN 1995 ($ / SHARE) ($ / SHARE) DATE
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
H. M. Frietsch 150,000 13.28% $ 3.00 (1) $ 4.3125 (2) 2005
P. G. Leighton 150,000 13.28% $ 3.00 (1 $ 4.3125 (2) 2005
P. Ianace 350,000 30.98% $ 3.00 (1) $ 4.3125 (2) 2005
J.T.G. Posner 30,000 2.66% $ 3.32 - $5.40 $ 3.90 - $5.40 2005
R. M. Pedro 10,000 0.09% $ 3.32 - $5.40 $ 3.90 - $5 40 2005
</TABLE>
(1) Market value of securities underlying options at agreement of grant
subject to the Stock Incentive Plan and Shareholder approval thereof,
at the Special General Meeting of Shareholders held December 13, 1995.
(2) Agreement of grant ratified on December 13, 1995, being the effective
date of the Stock Incentive Plan.
The following table sets forth each exercise of options during the fiscal
year ended December 31, 1995 by the named executive officers:
AGGREGATED OPTION EXERCISE DURING THE MOST RECENT
FINANCIAL YEAR TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED UNEXERCISED
SECURITIES AGGREGATE OPTIONS AT OPTIONS AT
ACQUIRED VALUE DECEMBER 31, 1995 DECEMBER 31,1995(1)
ON EXERCISE REALIZED # #
NAME # $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
H.M. Frietsch -- -- 180,000 210,000 $ 692,250 $ 566,125
P.G. Leighton -- -- 180,000 210,000 $ 692,250 $ 566,125
P. Ianace -- -- -- 350,000 -- $ 896,875
J.T.G. Posner -- -- 100,000 50,000 $ 409,541 $ 98,651
R.M. Pedro -- -- -- 10,000 -- $ 13,689
</TABLE>
(1) Value calculated as the difference between the exercise price of the
options and the closing NASDAQ price at December 29, 1995 of $5.5625.
PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the cumulative
total shareholder return over the last five years ended December 31, 1991
through 1995 on the Company's Common Shares (Nasdaq National Market ("NNM")
trading symbol ICOMF) with the cumulative total return of the Standard & Poor's
Small Cap and Nasdaq U.S. Stock Indexes.
[Line Chart Comparing Five Year Total Shareholder Return]
FIVE YEAR TOTAL RETURN ON $100 INVESTMENT
<TABLE>
<CAPTION>
COMP ANNUAL
1990 1991 1992 1993 1994 1995 GROWTH
---- ---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
ICOMF 100 300.00 437.50 1,300.00 843.76 2,225.20 85.98%
S&P SMALLCAP 100 145.87 174.23 204.88 192.93 248.10 19.93%
NASDAQ US 100 160.56 186.87 214.51 209.69 296.30 24.26%
</TABLE>
APPOINTMENT OF AUDITORS
KPMG Peat Marwick ("KPMG"), Chartered Accountants, Hamilton, Bermuda are
currently the auditors of the Company and were initially appointed in fiscal
1991. The Board of Directors recommends and, in the absence of contrary
instructions, the persons named in the enclosed form of proxy intend to vote for
the re-appointment of KPMG as auditors of the Company, to hold office until the
next annual general meeting.
CERTIFICATE AND APPROVAL
The contents and sending of this Proxy Statement have been approved by the
directors of the Company.
DATED as of April 30, 1996.
RHIANON M. PEDRO
Secretary
INTELECT COMMUNICATIONS SYSTEMS LIMITED
Cusip # G47962108
PROXY FOR ANNUAL GENERAL MEETING
to be held Wednesday, June 26, 1996 at
The Glen Eagles Country Club,
5401 West Park Boulevard, Plano, Texas, 75220
(Solicited by the Board of Directors of the Company)
The undersigned shareholder of INTELECT COMMUNICATIONS SYSTEMS LIMITED (the
"Company") hereby appoints PETER G. LEIGHTON, or failing him, HERMAN M.
FRIETSCH, or instead of either of the foregoing
................................................................................
as proxy of the undersigned, with power of substitution, to attend at and vote
and otherwise act for and on behalf of the undersigned in respect of all matters
that may come before the above meeting of shareholders, and any adjournment
thereof. The undersigned hereby undertakes to ratify and confirm all the said
proxyholder may do by virtue hereof, and hereby revokes any proxy previously
given. Without limiting the general authorisation and power hereby given, all
the shares registered in the name of the undersigned are to be voted as
indicated below and may be voted in the discretion of such proxyholder with
respect to amendments or variations to the matters identified in the notice of
meeting and with respect to other matters that may properly come before the
meeting. If no choice is specified this proxy will be voted "FOR" the matters
set out in paragraphs 1, 2 and 3 below.
1. FOR [ ] or WITHHOLD FROM VOTING FOR [ ] (or, if no specification is made,
FOR) the election of three directors to fill the vacancies created by the
expiry at the Meeting of the terms of three of the directors;
2. FOR [ ] or AGAINST [ ] (or, if no specification is made, FOR) to fix the
maximum number of directors;
3. FOR [ ] or AGAINST [ ] (or, if no specification is made, FOR) the
resolution to appoint KPMG Peat Marwick as auditors.
DATED this day of 1996.
-------------------------------------
Signature of Shareholder
NOTES:
1. This proxy must be signed by the appointor or his attorney in writing.
Please sign exactly as your name or names appear printed overleaf and date
the proxy.
2. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON, OTHER THAN THE PERSONS
DESIGNATED IN THE ABOVE FORM OF PROXY TO ATTEND, ACT AND VOTE FOR HIM AND
ON HIS BEHALF AT THE MEETING. To exercise such right the shareholder may
insert the name of the shareholder's desired nominee in the blank space
provided or may complete another appropriate proxy and, in either case,
should deliver the completed proxy to the Company indicated below.
3. In order for this form of proxy to be effective, it must be signed and
deposited with the Secretary of the Company, at the address on the envelope
provided, being P.O. Box 2687, Houston, Texas, 77252-2687 or c/o The R-M
Trust Company, 393 University Avenue, 5th Floor, Toronto, Ontario M5G 2M7,
Canada, at any time up to and including the last business day preceding the
day of the meeting or any adjournment thereof or given to the Chairman on
the day of the meeting.
