3Si HOLDINGS, INC.
Notice of Annual Meeting of Shareholders
To Be Held on April 30, 1999
Notice is hereby given that the annual meeting of shareholders of 3Si HOLDINGS,
INC., a Wyoming corporation ("3Si" or "the Company"), will be convened at 2:00
p.m. MDT on Friday, April 30, 1999, at the offices of the Company, 6886 S.
Yosemite Street, Englewood, Colorado, 80112, for the following purposes:
1. To ratify and approve the separation of the software division from 3Si
Holdings, Inc. into a newly formed Colorado subsidiary, KEWi.net, INC.
("KEWi.net"), in exchange for the stock of KEWi.net; the initial issuance of all
of the outstanding shares of KEWi.net to 3Si; and the offering and issuance of
up to 750,000 additional shares of stock in KEWi.net pursuant to a private
offering qualifying under Regulation D; and
2. To approve the possible sale of substantially all of the assets of 3Si
Holdings, Inc. (excluding its accounts receivables, and its subsidiary,
KEWi.net) to P.C. Specialists, Inc., a California corporation, pursuant to an
existing letter of intent; and
3. To elect a Board of Directors consisting of five members to hold office until
the next annual meeting of shareholders and until their successors shall be
elected and shall qualify; and
4. To ratify the appointment of Balogh & Tjornehoj, as independent auditors of
the Company for the fiscal year ending June 30, 1999; and
5. To transact such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
Shareholders of record at the close of business on April 8, 1999, will be
entitled to vote at the meeting.
A proxy statement explaining the matters to be acted upon at the annual meeting
is enclosed.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. IF YOU
CANNOT ATTEND, PLEASE COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE
ENCLOSED ENVELOPE SO THAT YOUR SHARES MAY BE VOTED AT THE MEETING. YOU MAY
REVOKE YOUR PROXY AT ANY TIME BEFORE THE MEETING. YOUR VOTE IS IMPORTANT.
By the Board of Directors,
/s/ F. Larry Valdez
--------------------------
F. Larry Valdez, Chairman
Englewood, Colorado
April 9, 1999
<PAGE>
3Si HOLDINGS, INC.
6886 S. Yosemite Street
Englewood, Colorado 80112
Proxy Statement
Annual Meeting of Shareholders
To Be Held April 30, 1999
GENERAL
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of 3Si HOLDINGS, INC. ("3Si" or the
"Company"), to be used at the Annual Meeting of Shareholders (the "Meeting") to
be held at the offices of the Company, 6886 S. Yosemite Street, Englewood,
Colorado, on April 30, 1999, at 2:00 p.m. MDT for the purposes set forth in the
accompanying Notice of Annual Meeting. This statement was sent to shareholders
of the Company on or about April 9, 1999.
SOLICITATION OF PROXIES
The shares covered by the enclosed proxy, if such is properly executed
and received by the Board of Directors prior to the Meeting, will be voted in
favor of the proposals to be considered, and in favor of the election of five
nominees to the Board of Directors as listed in "Election of Directors" below,
unless such proxy specified otherwise or the authority to vote in the election
of directors has been withheld. A proxy may be revoked at any time before it is
exercised by giving written notice to the Secretary of the Company at its above
address. Shareholders may vote their shares in person if they attend the
Meeting, even if they have executed and returned a proxy.
PURPOSE OF THE MEETING
The matters to be brought before the Meeting are the ratification and
approval of the newly-formed, wholly-owned subsidiary corporation, KEWi.net,
Inc. ("KEWi.net") in exchange for the stock of KEWi.net and the initial issuance
of all of the outstanding KEWi.net stock to 3Si; to be followed by the offering
and issuance of up to 750,000 additional shares of stock in KEWi.net pursuant to
a private offering qualifying under Regulation D; to approve the possible sale
of substantially all of the assets of the Company (excluding its newly-created
subsidiary, KEWi.net) to P.C. Specialists, Inc., a California corporation; and
to ratify the selection of Balogh & Tjornehoj as the Company's auditors for the
fiscal year ending June 30, 1999.
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VOTING SECURITIES
Only shareholders of record at the close of business on April 8, 1999,
will be entitled to vote at the Meeting. On that date, there were issued and
outstanding 33,756,798 shares of Company's $0.01 par value common stock ("Common
Stock"), entitled to one vote per share. Cumulative voting is not permitted.
A majority of the outstanding Common Stock (the presence in person or
by proxy of at least 16,878,400 shares) will constitute a quorum for the
transaction of business at the meeting. The vote of a majority of such quorum is
needed to approve the spin-off, to ratify the private offering, to approve the
possible sale of substantially all of the assets of the Company, to elect
directors, and to ratify the selection of Company's auditors.
Three 3Si shareholders, Frank W. Backes, Frederick J. Slack and F.
Larry Valdez (the "Principal Shareholders"), hold and vote 83.4% of the Common
Shares of the Company. The Principal Shareholders intend to vote in favor of all
the matters (1 through 4 in the Notice of Annual Meeting) to be brought before
the Meeting.
1. RATIFICATION AND APPROVAL OF SEPARATION OF
SOFTWARE DIVISION AS A NEW SUBSIDIARY OF 3Si
(KEWi.net) AND RATIFICATION AND APPROVAL
OF PRIVATE OFFERING OF KEWi.net SHARES
The Company has developed a software product (KEWi) which the Company
believes may help to revolutionize help desk products and services throughout
the world. This proprietary software works via the Internet. It maximizes the
efficiency of help desk support by responding to over 50% of first-tier calls
automatically through KEWi's knowledge-based access technology. Large customers
as well as individual PC consumers may be served by this technology. An overview
of the KEWi product is attached to this Proxy Statement as Exhibit A.
The Board of Directors feels that it is in the best interest of 3Si and
its shareholders to separate the 3Si software division (including the KEWi.net
product) as a separate, new subsidiary of 3Si, INC. (KEWi.net), which will allow
KEWi.net and its management to be focused on the software business, which is
very different from, and should be managed apart from, the other business of
3Si.
To successfully market the self-help desk, and other KEWi.net products
as they are developed, will require an infusion of new capital. Therefore, the
Board of Directors of 3Si has adopted the following plan, which will be
submitted to 3Si shareholders for ratification and approval:
2
<PAGE>
1) The software division of 3Si (including the KEWi product) will be
separated into a newly-formed subsidiary of 3Si (KEWi.net) in exchange for all
of the outstanding stock of KEWi.net.
2) All of the initially outstanding KEWi.net stock will be issued to
3Si (so that the pro-rata ownership in KEWi.net of existing 3Si shareholders
will be equivalent to the percentage of ownership which each shareholder
currently own in 3Si). Current 3Si shareholders will continue to own their
shares in 3Si with no change except that they will now own a percentage of
KEWi.net equal to their percentage ownership of 3Si.
3) 3Si will retain all other 3Si assets (other than the software
division transferred to KEWi.net) and proposes to sell substantially all of its
retained, fixed assets and contracts (while retaining its accounts receivable)
to P.C. Specialists, Inc., a California corporation, pursuant to an existing
letter of intent between 3Si and P.C. Specialists, Inc. (see proposal No. 2
below).
4) A private offering (pursuant to Regulation D under the Securities
Act of 1933) will be made to both new investors and to current KEWi shareholders
("the Offering") to raise the additional capital required to market the KEWi
product. The Offering, as described in the Private Offering Memorandum, will be
for a minimum of $500,000 and a maximum of $750,000.
To the extent additional financing may in the future be required,
existing KEWi shareholders (constituting the existing 3Si shareholders and new
investors pursuant to the Offering) may not have preemptive rights (to acquire
additional shares to prevent their percentage of ownership from being diluted).
The structure and tax-free nature of the creation of KEWi.net as a
subsidiary of 3Si has been approved by Draney, Lomas & Associates, P.C.,
C.P.A.s. The details of this transaction, and the tax consequences, are set
forth in Exhibit B hereto.
Any existing shareholder of 3Si who desires to acquire additional stock
in KEWi.net (in addition to their percentage ownership of those shares which
will be automatically issued to 3Si pursuant to the separation of KEWi.net as a
subsidiary of 3Si, will have the opportunity to subscribe to additional shares
in the Private Offering. If any shareholder is interested in receiving further
information, including a Private Offering Memorandum, please contact Frank
Backes, KEWi.net, at 6886 S. Yosemite Street, Englewood, Colorado, 80112.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS THE RATIFICATION AND APPROVAL OF 3Si'S CREATION OF A NEW SUBSIDIARY,
KEWi.net, INC., IN EXCHANGE FOR THE STOCK OF KEWI.NET, AND FURTHER RECOMMENDS
THE RATIFICATION AND APPROVAL OF THE KEWI.NET PRIVATE OFFERING.
3
<PAGE>
2. RATIFICATION OF SALE OF SUBSTANTIALLY
ALL OF 3Si'S REMAINING ASSETS
(EXCEPT ACCOUNTS RECEIVABLE)
On March 17, 1999, the Company received a proposal from P.C.
Specialists, Inc., a California corporation, to purchase substantially all of
the assets of 3Si Holdings, Inc. (excluding the software division transferred to
3Si's subsidiary, KEWi.net) and a signed letter of intent ("Letter of Intent"),
giving P.C. Specialists a 60-day due diligence period, in which it will
investigate the feasibility of the transaction, and decide whether to enter into
a definitive agreement ("Definitive Agreement") for purchase of these assets.
A copy of the Letter of Intent is attached to this Proxy Statement as
Exhibit C.
Pursuant to the Letter of Intent, and if the transaction contemplated
by the Letter of Intent is consummated, 3Si will, after sale of its assets on
the terms to be agreed in the Definitive Agreement, continue to exist as a going
business concern. The 3Si management anticipates that 3Si will become a master
reseller of the KEWi self-help desk and other products to be developed by
KEWi.net, and thus will profit from KEWi.net's products, if successful.
If the acquisition of substantially all of 3Si's assets by P.C.
Specialists goes forward under the conditions set forth in the Letter of Intent,
3Si will be paid $500,000 in cash at closing. 3Si will also be able to "earn" up
to an additional $2,500,000 (in no event will the purchase price of the assets
sold to P.C. Specialists, Inc. exceed $3,000,000) based upon the contingencies
set forth in the Letter of Intent.
Larry Valdez, presently CEO of 3Si, will be replaced by Frank Backes in
that position. Frank Backes and Fred Slack, presently executives, directors and
principal shareholders of 3Si, will remain as directors of 3Si, but will,
effective retroactively to March 1, 1999, be full-time employees of KEWi.net.
Frank Backes will be the President of KEWi.net and Fred Slack will be KEWi.net's
Vice President/Marketing.
FOR THE REASONS STATED ABOVE, THE BOARD OF DIRECTORS OF THE COMPANY
RECOMMENDS APPROVAL OF THE SALE OF SUBSTANTIALLY ALL OF THE ASSETS OF 3Si
(EXCLUDING THE SOFTWARE DIVISION TRANSFERRED TO 3Si'S SUBSIDIARY, KEWi.net) TO
P.C. SPECIALISTS, INC. ON THE TERMS AND CONDITIONS SET FORTH IN THE LETTER OF
INTENT; PROVIDED, HOWEVER, THAT THE CONTINGENCIES SET FORTH IN THE LETTER OF
INTENT, INCLUDING THE EXECUTION OF A DEFINITIVE PURCHASE AGREEMENT BETWEEN 3Si
AND P.C. SPECIALISTS, ARE SATISFIED.
4
<PAGE>
3. ELECTION OF DIRECTORS
The Company has no nominating or similar committee of its Board of
Directors. It is the recommendation of the Board of Directors that the Board for
the coming year, and until their successors have been duly elected and
qualified, shall consist of the five members of the current Board of Directors.
Unless the authority is withheld, it is intended that the shares
represented by your proxy will be voted for the election of the five nominees
named below, all of whom are presently members of the Board of Directors. If any
nominees should not serve for any reason, or if a vacancy should occur before
the election (which is not anticipated), your proxy will be voted for any person
who is designated by the Board of Directors to replace such nominee. The Board
of Directors has no reason to expect that any nominee will be unable to serve.
There is no arrangement between any of the nominees and any other person
pursuant to which he was or is to be elected as a director or nominee, nor is
there any family relationship between or among any nominees or the executive
officers of the Company.
The following sets forth information as of the record date for the
Meeting concerning (a) all persons known by the Company to be the beneficial
owner of more than five percent (5%) of the Company's Common Stock, and (b) each
nominee, including such person's ownership of Common Stock (the Company's only
class of voting securities), on an individual basis and ownership by all
nominees of the Company as a group:
(a) Beneficial owners of more than five percent (5%) of the Company's
Common Stock (other than those set forth in (b) below):
Name and Address Shares of Stock Percent
Title of of Beneficial Beneficially of
Class Owner Owned Class
----- ----- ----- -----
Common Stock - NONE -
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<PAGE>
(b) Nominees for election as director, and all officers and directors:
<TABLE>
<CAPTION>
Period of Service Shares
Position with as Director beneficially
Name and Age The Company or Officer owned (1) Percent
<S> <C> <C> <C> <C>
Frederick J. Slack Vice President 5/28/97 9,387,777 27.8%
Age: 44 and a Director to present (3Si)
Frank W. Backes Vice President 5/28/97 9,387,777 27.8%
Age: 38 and a Director to present (3Si)
Felipe L. Valdez President, CEO 5/28/97 9,387,778 27.8%
Age: 46 and a Director to present (3Si)
Tom N. Richardson a Director 7/10/86 188,724 *
Age: 49 to present (Tyrex)
Doris K. Backus Secretary and 12/5/91 53,567 *
Age: 45 a Director to present (Tyrex)
All Directors as a Group 28,405,622 84.147%
__________________
* Less than 1%
<FN>
(1) Beneficial ownership results in each case from the possession of sole
ownership of the shares voting and investment power with respect to the shares.
</FN>
</TABLE>
Frederick J. Slack has served as a Director of 3Si since August 1993. Mr.
Slack received his B.A. degree in Education in 1977 from the University of
Northern Colorado. Mr. Slack began his business career as a Methods and
Procedures Analyst for National Farmers Union Insurance in Denver, where he was
first introduced to mainframe computer environments. Mr. Slack then went to work
as the Western Territory Sales Manager for Travenol Labs selling
hospital/medical information systems involving IBM equipment. In 1986, Mr. Slack
became a sales/project manager for Digital Equipment Corporation. Initially, Mr.
Slack served as one of the project managers within the LSST (Large Systems
Selling Team) which focused on large, complex, million dollar solutions to
larger customers. LSST selling required multi-computer system disciplines
including hardware, software, consulting, training and implementation. Mr. Slack
then moved his sales expertise and success, into the Government Sales Division
for Digital. Over the next five years, Mr. Slack served as project manager for
similarly large, sophisticated government customers with mission-critical,
classified systems needs. Mr. Slack's responsibilities included writing "white
papers", preparing and presenting bids and proposals, negotiating contracts, and
implementation of contracts once awarded. Mr. Slack, throughout his career, has
been involved in preparing personal, division and corporate budgets and
implementation of those budgets at all levels.
6
<PAGE>
Frank W. Backes has served as Director of Technology and a Director of
3Si since August 1993. Mr. Backes received his B.S.E.E. degree in Semiconductor
Physics in 1984. Mr. Backes started his career working for Science Applications
International Corporation designing Command and Control systems for the
Department of Defense. Mr. Backes' accomplishments in the field of Command and
Control systems include: research and successful development of client-server
based systems in 1987; dynamic user interface designs in 1988 using Ada and
PHIGS; implementing 3-D graphics for display of command center information in
1989; training and working in combat position as an orbital analyst in the Space
Surveillance Center at NORAD; and, designing and implementing several command
centers pushing the development of state of the art high availability
techniques. In 1989, Mr. Backes went to work for Digital Equipment Corporation
as a computer industry analyst. In addition to his work in the computer
industry, Mr. Backes has utilized his skills in working with and teaching
students from elementary schools to high schools. One project was teaching
students to interact, over the Internet, with the Mars Land Rover developed by
Jet Propulsion Lab for NASA. Other projects include coaching Odyssey of the Mind
teams and working as a tutor for students in math and science.
Felipe Larry Valdez has served as a Director of 3Si since August of
1993. Mr. Valdez began his career working in telecommunications electronic
manufacturing operations in Logistics, Production and Inventory planning in
1971. Mr. Valdez moved from telecommunications manufacturing to computer
manufacturing when he joined Digital Equipment Corporation in 1977 in its
Albuquerque operations as an Inventory Control Planner. Shortly after that, Mr.
Valdez relocated to Digital's Colorado Springs operations where he was
responsible for New Product introduction on a variety of leading technology
storage products. Mr. Valdez was promoted into Digital's Customer Support Center
where he led technical support teams in providing remote support to a variety of
customers on a national level. Mr. Valdez joined Digital's Software Support
organization where he led technical and business consultants in providing pre-
and post-sales support to Digital's sales representatives in major federal
government and commercial accounts. Mr. Valdez' teams were successful at winning
and deploying numerous programs for Digital Equipment where both he,
individually, and his teams, collectively, were recognized numerous times for
their accomplishments. Mr. Valdez obtained bachelor and masters degrees in
Business Administration while employed full-time. In 1997, Mr. Valdez was
selected by the University of Phoenix as a faculty member in its Organization
Behavior studies program where he teaches Organization Communications courses.
Tom N. Richardson graduated from the University of Wyoming in 1972 with
a B.S. degree in Business Administration. From 1976 to 1980, he worked as a
Landman and Contracts Supervisor for Gulf Oil Corporation in Casper, Wyoming. In
1980, he joined the Company as Manage of Land. He was elected President and
Chief Financial Officer of the Company in March 1994. He is a Certified
Professional Landman, a member of the Wyoming Association of Petroleum Landmen
and a member of the American Association of Petroleum Landmen. Mr. Richardson
has been a member of the Board of Directors of Tyrex since July 10, 1986. On
December 31, 1997, subsequent to the completion of the Company's self-tender
offer, Mr. Richardson tendered his resignation as an officer
7
<PAGE>
of the Company, but remains as a member of the Board of Directors. He is
currently an independent oil producer.
Doris K. Backus graduated from the National College of Business in 1974
with an Associate's degree as a legal secretary. She has over 20 years
experience in various areas of the oil and gas business and has been employed by
the Company since 1983. Ms. Backus has been a member of the Board of Directors
of Tyrex since December 5, 1991. Ms. Backus is currently the secretary of the
Company and remains as a member of the Board of Directors. She currently owns
and operates her own candy distribution company, Sweets & Treats.
No family relationship exists between or among any of the nominees and
executive officers of the Company. Except as disclosed above, none of the
nominees are directors of any other company having a class of equity securities
registered under or required to file periodic reports pursuant to the Securities
Exchange Act of 1934, as amended, or any company registered as an investment
company under the Investment Company Act of 1940, as amended.
MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors has held five (5) meetings during the fiscal year
which ended June 30, 1998, and during the period July 1, 1998, to the date of
this Notice of Annual Meeting and Proxy Statement. All directors were present
for all of the meetings. In addition, the Board acted by unanimous written
consent on all occasions. The Company's officers have made a practice of keeping
its directors informed of corporate activities by personal meetings and
telephone discussions.
At the present time, the Company has no nominating, executive or similar
committees. The Company has an audit committee consisting of Messrs. Slack and
Valdez and Ms. Backus, and a compensation committee consisting of Messrs.
Richardson, Slack and Backes.
Based solely upon a review of Forms 3, 4 and 5, and amendment thereto,
furnished to the Company during the fiscal year ended June 30, 1998, and for the
subsequent quarters ended September 30, 1998, December 31, 1998, and March 31,
1999, the Company is unaware of any officer, director or beneficial owner of
more than 10% of the Company's Common Stock who failed to file reports required
by Section 16 of the Securities Exchange Act of 1934.
EXECUTIVE OFFICERS
The executive officers of the Company are listed below. Messrs. Backes,
Slack and Valdez are also members of the Board of Directors and their
biographical information is presented above under "3. Election of Directors"
above.
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Name Position
---- --------
Felipe Larry Valdez President and
Chief Executive Officer
Frank W. Backes Vice President and
Director of Technology
Frederick J. Slack Vice President, Marketing
Doris K. Backus Secretary
There are presently employment contracts with Frank Backes, Fred Slack
and Larry Valdez. A copy of these employment contracts is available from the
Company.
EXECUTIVE COMPENSATION
Compensation
The following table presents the aggregate compensation which was
earned by the Executive Officers for the fiscal years ended June 30, 1998, 1997
and 1996 for the Company and its predecessor, Tyrex Oil Company, and for the
period from July 1, 1998 to March 1, 1999.
<TABLE>
<CAPTION>
Long-term compensation
Annual compensation Awards Payouts
-------------------------------- ----------------- -------
Other All
annual Restricted other
Name and compen- Stock Options/ LTIP compen-
principal position Year Salary ($) Bonus sation (1) Awards SARs payouts sation
- ------------------ ---- ---------- ----- ------------ ---------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Tyrex Oil Company:
Tom N. Richardson 1998 $ 0.00
President, CFO 1997 52,500 --- --- --- --- --- ---
1996 52,500 --- --- --- --- --- ---
1995 52,500 --- --- $ 7,813 --- --- ---
3Si & 3Si Holdings:
Frederick J. Slack 1998 $110,000 --- --- --- --- --- ---
Chief Executive 1997 37,500 --- --- --- --- --- $ 13,279
Officer 1996 68,000 --- --- --- --- --- 31,871
1995 68,000 --- --- --- --- --- 71,518
1994 68,000 --- --- --- --- --- 45,775
Frank W. Backes 1998 $110,000 --- --- --- --- --- ---
Vice President 1997 37,500 --- --- --- --- --- $ 13,279
1996 68,000 --- --- --- --- --- 31,871
1995 68,000 --- --- --- --- --- 71,518
1994 68,000 --- --- --- --- --- 45,775
Felipe L. Valdez 1998 $110,000 --- --- --- --- --- ---
Chief Operating 1997 37,500 --- --- --- --- --- $ 13,279
Officer 1996 68,000 --- --- --- --- --- 31,871
1995 68,000 --- --- --- --- --- 71,518
1994 68,000 --- --- --- --- --- 45,775
9
<PAGE>
<FN>
(1) Perquisites and other personal benefits or property did not, in aggregate, exceed $50,000 or 10% of the
total compensation.
(2) 3Si was a subchapter S corporation prior to its acquisition by Tyrex. Amounts indicated are distributions
to the three officers of 3Si named above, made to them in their capacities as shareholders.
(3) There were no stock options granted to executive officers during 1998 or
from January 1, 1998 through April 1, 1999.
</FN>
</TABLE>
STOCK OPTIONS
The following table shows all individual grants of stock options
during the fiscal year ended June 30, 1998, and from December 31, 1998 to
March 31, 1999. The Company has not granted any stock appreciation rights
("SARs").
Number of Percent of
Securities Total Options
Underlying Granted to Exercise or
Options Employees in Base Price Expiration
Granted (#)(1) Fiscal Year (#/Sh) (2) Date
- --------------------------------------------------------------------------------
- NONE -
There were no aggregate stock options exercised during the fiscal
year ended June 30, 1998, and the period from July 1, 1998 to March 1, 1999,
and no unexercised options as of April 1, 1999 for the group of officers and
directors identified above.
Certain Transactions
Other than as set forth in this Proxy Statement, no officer, director
or principal shareholder of the Company has or proposes to have any direct or
indirect material interest by security holdings, contracts or otherwise in the
Company or in any assets proposed to be acquired by the Company, or by KEWi.net,
or in any purchase, the value of which will be affected by the operations of the
Company.
As of April 9, 1999, Messrs. Backes, Slack and Valdez, the three
principal shareholders of 3Si, are involved in negotiating the final terms of an
Agreement to sell in a private, Regulation D Offering, 166,000 shares of the
Company's Common Stock at $0.15 per share to six investors, all of whom are
shareholders of Space Mark, Inc., a Colorado company which has committed to
invest $500,000 in the Offering to be made by KEWi.net. There are no voting
agreements or similar arrangements with respect to this stock. A copy of the
Common Stock Purchase Agreement between the parties will be available from the
Company as soon as it has been completed and signed.
10
<PAGE>
As of April 9, 1999, Frank Backes also intends to sell to his father
(who is an "Accredited Investor" pursuant to Regulation D, and who is not an
officer, director or affiliate of the Company), $5,000 of 3Si stock currently
owned by Frank W. Backes. There are no voting arrangments with respect to this
stock.
On April 2, 1999, the Company signed an Agreement with Corp.Net, Inc.,
a Colorado corporation, for Corp.Net to provide to 3Si consulting services in
connection with the private offering, and the financing and management of
KEWi.net, in exchange for shares in KEWi.net to be issued to Corp.Net, on a
contingent basis, over a one year period. If all contingencies are met, Corp.Net
could receive up to 10% of the total KEWi.net stock (after completion of the
private offering). A copy of the Agreement between KEWi.net and Corp.Net is
available from the Company.
4. PROPOSAL TO APPROVE THE SELECTION OF AUDITORS
Although ratification of the appointment of Balogh & Tjornehoj as the
Company's independent auditors for the fiscal year ended June 30, 1999 is not
required by Wyoming corporate law or by the Company's Articles of Incorporation
or Bylaws, the Board of Directors, the Audit Committee recommends this selection
be ratified and approved by the shareholders. If shareholder approval is not
received, the Board of Directors will reconsider the appointment of its
auditors. It is expected that a representative of Balogh & Tjorneho will be
present at the Meeting and will be given an opportunity to make a statement if
he/she desires to do so. It is also expected that the representatives will be
available to respond to appropriate questions from shareholders.
5. OTHER MATTERS
The Board of Directors is aware of no other matters to be brought
before the Meeting which require a shareholder vote; if other matters properly
came before the Meeting, it is the intention of the persons named in the
solicited proxy to vote such proxy in accordance with their judgment.
No compensation will be paid to any person in connection with
solicitation of proxies. Brokers, banks and other entities will be reimbursed
out-of-pocket and reasonable clerical expenses incurred in obtaining
instructions from beneficial owners of the Common Stock. Special solicitation of
proxies may in certain instances be made personally or by telephone by officers
and employees of the Company and by employees of certain banking and brokerage
houses. All expenses, estimated to be normal in connection with this
solicitation, will be borne by the Company.
11
<PAGE>
ANNUAL REPORT AND FINANCIAL STATEMENTS
You are referred to the Company's Form 10-K filed with the Securities
and Exchange Commission on June 30, 1998, including financial statements filed
therein for the fiscal year ended June 30, 1998, and to the Form 10-Qs filed
with the Securities and Exchange Commission by the Company for each quarter
ended September 30, 1998 and December 31, 1998. The Form 10-K and other
financial information is not incorporated in this proxy statement and is not to
be considered part of the soliciting material. Copies of the Company's Annual
Report for the fiscal year ended June 30, 1998, as filed with the Securities and
Exchange Commission on Form 10-K, and the 10Q reports filed for subsequent
quarters, including financial statements and schedules thereto may be obtained
by written request from F. Larry Valdez, Chairman, 3Si Holdings, Inc., 6886 S.
Yosemite Street, Englewood, Colorado, 80112.
COMPLIANCE WITH SECTION 16(a) OF THE
1934 SECURITIES EXCHANGE ACT
The Company is not aware of any instances of late filing of reports
required by Section 16(a) of the 1934 Securities Exchange Act for the fiscal
year ended June 30, 1998, and for the period from July 1, 1998 through March 31,
1999.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR ANNUAL MEETING SCHEDULED TO BE HELD
Any proposal by a shareholder to be presented at the Company's next
Annual Meeting of Shareholders scheduled to be held on or about January 15,
2000, must be received at the Company's offices, 6886 S. Yosemite Street,
Englewood, Colorado, 80112, no later than October 15, 1999. Such proposals may
be included in next year's Proxy Statement if they comply with certain rules and
regulations promulgated by the SEC.
By Order of the Board of Directors
/s/ F. Larry Valdez
-------------------
F. Larry Valdez, Chairman
12
<PAGE>
EXHIBIT A
OVERVIEW OF KEWi
The KEWi product and technologies efficiently automate functions for
providing internal and external "technical support" to an organization's
computer users. Strategically, KEWi software is designed to be a "learning
system" to (a) optimize performance and (b) accumulate "knowledge". 3Si's
proprietary technology allows users to access virtually any database over the
Internet in a quick and responsive manner. Users (via Internet
certificates/subscriptions) access the database via a "friendly web-browser"
which assists the user with key-word searches of the database. The user will
generally locate the information in the database on their own 50% of the time
(based on industry standards and 3Si's previous experience). Depending on the
database being searched, the "call avoidance" success rate only increases. When
the User does NOT solve their own question, the software allows "call logging".
The User, again through "most-friendly" screen prompting, is able to log a
call-ticket for response by a live help-desk technician. Most of the time the
help-desk technician is able to respond via the Internet simply by accessing the
database with better key-word searches.
When the help-desk tech cannot easily respond from the current database of
information attached to the software, the tech simply performs the logical
research, responds to the User over the Internet AND updates the database with
the new information (i.e. knowledge). This knowledge is then available for Users
and technicians in the enhanced database: now, an ever expanding knowledge-base.
Depending on the database and the agreement with the User's sponsor, the
knowledge can become the property of the Company.
KEWi is designed to be the place where computer users will go for answers. With
the ability to combine private and general knowledge into the same tool while
delivering that knowledge to anyone anywhere, KEWi will become the Internet site
users go to for answers. KEWi can deliver this for the first time because of
unique integration of the three steps required for the successful delivery of
valuable support.
1. Low impact mining of organizational knowledge.
2. Tools for harnessing the knowledge and support.
3. Delivery of knowledge and support to anyone, anywhere, anytime.
Initial KEWi development is completed and the product is being delivered to
customers today. Anticipated to be the first of a family of Internet-based
products to be developed by KEWi.net, KEWi is an Internet-based customer support
system providing knowledge management, trouble ticket management, and call
avoidance capabilities. KEWi provides immediate access to current company
information, product knowledge and general knowledge with the ability to
communicate with support personnel via the Internet.
<PAGE>
EXHIBIT B
THE CREATION OF KEWI.NET AS A 3Si SUBSIDIARY
BACKGROUND OF AND REASONS FOR THE SUBSIDIARY
KEWi.net will be a wholly-owned subsidiary of 3Si, engaged in the
business of providing software information technology to assist users of
personal computers. The creation of KEWi.net as a subsidiary, and the initial
issuance of all of the outstanding stock of KEWi.net to 3Si will complete the
restructuring of 3Si to respond to fast-paced changes in customer needs and
demands, and new technology in the industry in which 3Si has operated in the
past. In 3Si's view, these changes are creating a new industry structure which
has heightened the need for focused management time and attention in each of the
businesses (hardware, reselling and software) previously conducted by 3Si. For
these reasons, the Board of Directors of 3Si has determined to separate its
businesses by means of its restructuring, including the sale of a substantial
part of 3Si's assets to P.C. Specialists and the creation of KEWi.net as 3Si's
wholly-owned subsidiary (and the transfer of the assets of 3Si's software
division to KEWi.net).
INITIAL ISSUANCE OF STOCK IN KEWI.NET TO 3SI
KEWi.net is authorized to issue 5,000,000 shares of Common Stock.
Initially, 1,565,218 shares of KEWi.net's Common Stock will be issued to 3Si.
All such shares of Common Stock will be fully paid, non-assessable and free of
preemptive rights.
NO HOLDER OF 3SI COMMON STOCK WILL BE REQUIRED TO MAKE ANY PAYMENT FOR
THE SHARES OF KEWI.NET COMMON STOCK TO BE RECEIVED BY 3SI, OR TO SURRENDER OR
EXCHANGE SHARES OF 3SI COMMON STOCK OR TO TAKE ANY OTHER ACTION.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE SEPARATION
The creation of KEWi.net as a wholly-owned subsidiary of 3Si, and the
transfer of the assets currently in 3Si's software division to KEWi.net is
intended to qualify as tax-free under Section 351 of the Internal Revenue Code
(the "Code"). Accordingly, so long as the separation of KEWi.net as a subsidiary
qualifies under Section 351 of the Internal Revenue Code, neither 3Si nor
KEWi.net will recognize any income, gain or loss with respect to the issuance of
KEWi.net shares to 3Si.
Should the separation ultimately be determined not to qualify under
Section 351 of the Code, there should be no adverse tax consequences to 3Si
shareholders, but the transaction might result in a tax to KEWi.net (3Si has a
net operating loss carry forward, against which any tax could be offset).
<PAGE>
THE FOREGOING SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES OF THE
DISTRIBUTION IS FOR GENERAL INFORMATION ONLY AND MAY NOT APPLY TO 3Si
SHAREOWNERS WHO ACQUIRED THEIR SHARES IN CONNECTION WITH THE GRANT OF A SHARE OF
RESTRICTED STOCK OR OTHERWISE AS COMPENSATION, WHO ARE NOT CITIZENS OR RESIDENTS
OF THE UNITED STATES, OR WHO ARE OTHERWISE SUBJECT TO SPECIAL TREATMENT UNDER
THE CODE. ALL 3Si SHAREOWNERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE
POSSIBLE TAX CONSEQUENCES, IF ANY, OF THE TRANSACTION TO THEM, INCLUDING THE
APPLICATION OF STATE, LOCAL AND FOREIGN TAX LAWS.
KEWi.net STOCK; SHAREHOLDERS; AFFILIATES
KEWi.net initially will have only one shareholder (3Si). However, after
the Private Offering, the number of record holders of KEWi.net will increase
based upon the number of investors who purchase the additional 500,000 (minimum)
to 750,000 (maximum) shares in the Offering.
The Transfer Agent and Registrar for the KEWi.net Common Stock will be
American Securities Transfer ("AST") of Denver, Colorado. For certain
information regarding options and other equity-based employee benefit awards
involving KEWi.net Common Stock that may become outstanding after the
Distribution, see "Management" and "Certain Transactions".
Under The Securities Act of 1933, as amended (the "Securities Act"),
"affiliates" of KEWi.net will generally include individuals or entities that
control, are controlled by, or are under common control with KEWi.net and may
include certain officers and directors of KEWi.net as well as principal
stockholders of KEWi.net, including 3Si. Persons who are affiliates of KEWi.net
will be permitted to sell their shares of KEWi.net Common Stock only pursuant to
an effective registration statement under the Securities Act or an exemption
from the registration requirements of the Securities Act, such as the exemption
afforded by Section 4(2) of the Securities Act (relating to private sales) or by
Rule 144 under the Securities Act.
CONDITIONS; TERMINATION
The completion of the proposed separation of KEWi.net as a subsidiary
of 3Si is conditioned upon, among other things: (a) the receipt by 3Si of
assurances from Draney, Lomas & Associates, P.C. the effect that the transaction
qualifies as tax-free under Section 351 of the Code; (b) the receipt of any
material governmental approvals and third party consents, if any, necessary to
consummate the transaction; and (e) the formal ratification and approval by the
shareholders of 3Si of the transactions. The 3Si Board may, but has no
obligation to, waive any of these conditions. In addition, regardless of whether
these conditions are satisfied, the 3Si Board has reserved the right to abandon,
defer or modify the transactions.
B-2
<PAGE>
EXHIBIT C
March 17, 1999
Larry Valdez, President
3SI Holdings, Inc.
6886 South Yosemite Street
Englewood, CO 80112
Re: Proposal to Purchase 3SI Holdings, Inc.
Dear Mr. Valdez:
This letter is intended to summarize the principal terms of a proposal
being considered by PC Specialists, Inc., a California corporation (the "Buyer")
regarding the possible acquisition of substantially all of the assets (except
those certain assets associated with the development and delivery of KEWi
products and services) and the assumption of certain liabilities (the
"Transaction") of 3SI, Inc., a Colorado corporation (the "Company"). In this
letter, (i) the Buyer and the Company are sometimes called a "Party" or the
"Parties," and (ii) the Buyer's possible acquisition of substantially all of the
assets and the assumption of certain liabilities of the Company is sometimes
called the "Possible Acquisition."
Part One
Subject to the conduct of due diligence and the provisions contained
herein, the Parties wish to commence negotiating a definitive written
acquisition agreement providing for the Possible Acquisition (a "Definitive
Agreement"). To facilitate the negotiation of the Definitive Agreement, at the
appropriate time, the Parties will request that the Buyer's counsel prepare an
initial draft. The execution of any such Definitive Agreement would be subject
to the satisfactory completion of the Buyer's ongoing investigation of the
Company's business. The parties agree that the Definitive Agreement will
contain: (i) the basic purchase and payment terms: (ii) the assets to be
acquired and the liabilities, if any, to be assumed, (iii) customary and
mutually agreeable representations and warranties, (iii) customary and mutually
agreeable covenants, and (iv) customary and mutually agreeable provisions for
indemnification.
Based on the information currently known to the Buyer, it is proposed
that the Definitive Agreement include the following terms:
1. Basic Transaction
Buyer will purchase substantially all of the assets of the Company
("Assets") and assume certain liabilities ("Assumed Liabilities") at the price
(the "Purchase Price") set forth in Paragraph 2 below. The closing of this
transaction (the "Closing") would occur concurrent with the execution of the
Definitive Agreement or as soon thereafter as possible. Assets will be
transferred to the Buyer free and clear of any and all liens, liabilities or
encumbrances.
3SI, Inc. will continue operations as a Master Reseller for KEWi.net
delivering sales, support, outsourcing and integration services for the Customer
Relationship Management (CRM) Business Segment.
<PAGE>
Larry Valdez, President
3SI Holdings, Inc.
March 17, 1999
The CRM business segment is defined by the following software segments:
o Customer Service Software (KEWi)
o Sales Automation/contact management applications (Being developed by
KEWi.net)
o Marketing applications (Integration of the customer support and sales
automation systems)
2. Purchase Price
The Purchase Price shall be no more than $3,000,000 and will be
determined and payable as follows:
(i) $500,000 payable at the Closing of the Transaction.
(ii) For the period between the Closing and the date one year
after the Closing ("Year 1 Period"): (a) $250,000 upon
renewal of the U.S. Postal Service Contract; (b) $75,000
upon renewal of the State of New Mexico Contract; and (c) an
amount equal to 75% of the Company Profits for the Year 1
Period. A method for determining and reporting Company
"Profits" of the New Division of Buyer and the method for
determining and reporting Company "Profits" of the New
Division will be set forth in the Definitive Agreement.
(iii) For the period between the end of the Year 1 Period and the
date one year thereafter ("Year 2 Period"): $250,000 upon
renewal of the U.S. Postal Service Contract: (b) $75,000
upon renewal of the State of New Mexico Contract; and (c) an
amount equal to 50% of the "Company Profits" for the Year 2
Period.
(iv) For the period between the end of the Year 2 Period and the
date one year thereafter ("Year 3 Period"); an amount equal
to 50% of the Company Profits for the Year 3 Period.
In no event shall the total Purchase Price exceed $3,000,000. If the Purchase
Price payments made according to the terms set forth above do not equal the
$3,000,000 threshold by the date that is three years after the Closing, then no
further Purchase Price consideration shall be paid.
3. Confidentiality Agreements
At the Closing, certain key employees and/or shareholders of the Company will
execute and deliver standard confidentiality and non-disclosure agreements with
respect to all trade secrets and other confidential proprietary information of
the Company. Such agreements shall supersede and replace any previous
confidentiality and non-disclosure agreements entered into by such parties with
the Company.
4. Employment Agreements; Non-Competition Agreements
At the Closing, certain key employees and/or shareholders of the Company will
execute and deliver employment agreements and non-competition agreements
mutually agreeable to the parties thereto. Such agreements shall supersede and
replace any previous employment agreements and non-competition agreements
entered into by such parties with the Company.
<PAGE>
Larry Valdez, President
3SI Holdings, Inc.
March 17, 1999
Part Two
The following paragraphs of this letter (the "Binding Provisions") are
the legally binding and enforceable agreements of the Buyer and the Company.
1. Access to Personnel, Books, Records and Properties; Prior Consent
Before Contacting Vendors
At all times prior to the consummation of the Transaction, the Company
shall afford and shall use its reasonable best efforts to cause to be afforded
to Buyer and its representatives, agents, and employees, full access to the
personnel, properties, contracts, books and records, tangible assets, agreements
and other documents and data of the Company as may be reasonably requested by
Buyer or its representatives, agents or employees.
2. Exclusive Dealing
The Company understands and acknowledges that following the mutual
execution of this Letter of Intent, Buyer will incur significant expenses in
connection with its review and investigation of the Company. Accordingly, the
Company agrees that beginning on the date of this Letter of Intent is executed
by it and through and including May 12, 1999, the Company will not, nor will
they permit any affiliate, officer, director, shareholder, employee, attorney,
accountant, financial adviser or other representative of the Company to
negotiate with, solicit, or participate in negotiations with any third party
with respect to the sale of the Company, the sale of any assets of the Company
(other than in the ordinary course), the sale of any ownership interests in the
Company, or any similar transaction. The Company will immediately notify the
Buyer regarding any contact between the Company or their respective
representatives and any other person regarding any such offer or proposal or any
related inquiry.
3. Confidentiality
Except as and to the extent required by law, the Parties will not disclose
or use, and will direct its representatives not to disclose or use to the
detriment of the other Party, any Confidential Information (as defined below)
furnished, or to be furnished, by such Party, or their respective
representatives, at any time or in any manner other than in connection with its
evaluation of the transaction proposed in this letter. For purposes of this
paragraph. "Confidential Information" means any information about a Party
identified in writing as "Confidential" promptly following its disclosure to
such other Party, unless (i) such information is already known to the other
Party or its representatives on a nonconfidential basis or to others not bound
by a duty of confidentiality or such information becomes publicly available
through no fault of such other Party or its representatives, (b) the use of such
information is required in making any filing or obtaining any consent or
approval required for the consummation of the Possible Acquisition, or (c) the
furnishing or use of such information is compelled by judicial or administrative
process or by other requirements of law. Upon the written request of a Party,
the other Party will promptly return to the Company or destroy any confidential
information in its possession and certify in writing to the other Party that it
has done so. The Parties acknowledge that the Company is a publicly held
"reporting" company which is required to file regular reports with the SEC
pursuant to the Securities Exchange Act of 1934 (the "Act")
<PAGE>
Larry Valdez, President
3SI Holdings, Inc.
March 17, 1999
4. Conduct of Business
Until the Definitive Agreement has been duly executed and delivered by all
parties or this Letter of Intent has been terminated pursuant to Section 12 of
Part Two below, the Company shall conduct its business only in the ordinary
course of business, except with respect to the KEWi products, services, and
assets which business the Company shall conduct in its sole discretion.
5. Disclosure
Except as and to the extent required by law, without the prior written
consent of the other Party, neither the Buyer nor the Company will, and each
will direct its representatives not to make, directly or indirectly, any public
comment, statement or communication with respect to, or otherwise to disclose or
to permit the disclosure of the existence of discussions regarding, a possible
transaction between the Parties, conditions, or other aspects of the transaction
proposed in this letter. If a Party is required by law to make any such
disclosure, it must first provide to the other Party the content of the proposed
disclosure, the reasons that such disclosure is required by law, and the time
and place that the disclosure will be made and it shall make its reasonable best
efforts to accommodate changes to the required disclosure suggested by the other
Party. The parties acknowledge that the Company is a publicly held "reporting"
company which is required to file regular reports with the SEC pursuant to the
Securities Exchange Act of 1934 (the "Act").
6. Costs
The Buyer and the Company will each be responsible for and bear all of its
own costs and expensed incurred at any time in connection with pursuing or
consummating the Possible Acquisition.
7. Brokerage Fees
No broker has been retained in connection with this Transaction. Each Party
will indemnify and hold harmless the other, and its successors and assigns, from
and against any and all actions, suits proceedings, damages, liabilities,
losses, costs, and expenses (including experts' and attorneys' fees) arising out
of or in connection with any claim by a Party for brokerage of finders' fees or
commissions, or similar payment or remuneration in respect of the Transaction.
8. Entire Agreement
The Binding Provisions constitute the entire agreement between the Parties,
and supersede all prior oral or written agreements, understandings,
representations and warranties, and courses of conduct and dealing between the
parties on the subject matter hereof. Except as otherwise provided herein, the
Binding Provisions may be amended or modified only by a writing executed by all
of the parties.
9. Disputes and Governing Law
This Agreement and the rights of the parties hereunder shall be governed by
and interpreted in accordance with the laws of the State of California. Any
dispute arising hereunder related to this Agreement shall be decided by a panel
of three arbitrators convened in Colorado Springs. Colorado or San Diego,
California, pursuant to the Rules of the American Arbitration Consortium.
Notwithstanding the foregoing, either party may obtain injunctive or other
equitable relief from a federal court in the District of California or a state
court in San Diego Co9unty pending the decision of the arbitration panel.
<PAGE>
Larry Valdez, President
3SI Holdings, Inc.
March 17, 1999
10. Jurisdiction; Services of Process
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of this Letter of Intent may be brought against any of the
parties in the courts of the State of California, county of San Diego, or, if it
has or can acquire jurisdiction, in the United States District Court of the
Southern District of California, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
11. Counterparts
This Agreement may be executed in one or more counterparts, all of which
when fully executed and delivered by all parties hereto and taken together shall
constitute a single agreement, binding against each of the parties. To the
maximum extent permitted by law or by any applicable governmental authority, an
document may be signed and transmitted by facsimile with the same validity as if
it were an ink-signed document.
12. Termination; No Liability
This Letter of Intent may be terminated for any reason by either party at
any time and without further obligation to the other party, if the Definitive
Agreement has not been entered into by May 12, 1999. Notwithstanding anything
contained herein to the contrary, however, the mutual covenants and agreements
of the Parties expressed in the Binding Provisions shall be binding whether or
not the Definitive Agreement is executed and whether or not the Transaction is
consummated. The paragraphs and provisions of Part One of this letter do not
constitute and will not give rise to any legally binding obligation on the part
of any of the Parties. Moreover, except as expressly provided in the Binding
Provisions (or as expressly provided in any binding written agreement that the
Parties may enter into in the future), no past or future action, course of
conduct, or failure to act relating to the Possible Acquisition, or relating to
the negotiation of the terms of the Possible Acquisition or any Definitive
Agreement, will give rise to or serve as a basis for any obligation or other
liability on the part of any of the Parties or the Company. The obligations of
the Parties under Sections 3-11 of Part Two shall survive any termination or
abandonment of this Letter of Intent.
<PAGE>
Larry Valdez, President
3SI Holdings, Inc.
March 17, 1999
If you are in agreement with the foregoing, please sign and return one copy
of this letter agreement, which thereupon will constitute our agreement with
respect to its subject matter.
Sincerely,
PC SPECIALISTS, INC., a California corporation
By: /S/ Tom Janecek
-------------------------------------
Tom Janecek, Executive Vice President
The undersigned hereby acknowledges and agrees to the terms and conditions
set forth above, as of March 17, 1999.
3SI HOLDINGS, INC., a Colorado corporation
/S/ Larry Valdez
-------------------------------------
By: Larry Valdez, President
[SIGNATURE PAGE TO LETTER OF INTENT]
<PAGE>
PROXY 3Si HOLDINGS, INC. PROXY
6886 S. Yosemite Street
Englewood, Colorado 80112
This Proxy Is Solicited On Behalf of the Board of Directors
The undersigned hereby appoints Laddie Blaskowski as proxy to vote all
shares of the undersigned at the Annual Meeting of Shareholders to be held April
30, 1999. The named proxy shall have the power to appoint a substitute proxy for
himself. The proxy shall have the power to vote: (i) only those shares of the
Common Stock of 3Si held of record by the undersigned as of the close of
business on March 31, 1999; (ii) at any adjournment or postponement of the
meeting; and (iii) upon any subject which may properly be brought before the
meeting. The proxy may vote upon all the matters described in the proxy
statement furnished with this proxy, subject to any directions indicated below.
1. Election of five (5) Directors:
FOR all nominees listed below |_| WITHHOLD AUTHORITY to vote for all
(except as written below) nominees listed below |_|
Frank W. Backes Doris K. Backus Tom N. Richardson
Frederick J. Slack Felipe L. Valdez
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space below.)
----------------------------------------------------------------------
2. To ratify and approve the separation of 3Si's software division as a new
subsidiary (KEWI.net) and the Private Offering of KEWi.net shares.
|_| FOR this proposal |_| AGAINST this proposal |_| ABSTAIN from voting
(Continued on reverse side.)
<PAGE>
3. To ratify and approve the sale of substantially all of 3Si's remaining
assets (except accounts receivable).
|_| FOR |_| AGAINST |_| ABSTAIN
4. To approve the selection of auditors.
|_| FOR |_| AGAINST |_| ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such other
business as may properly be brought before the meeting, or any adjournment
or postponement thereof.
Number of Shares held on record date:_________________
PLEASE MARK, DATE, SIGN AND RETURN PROMPTLY
___________________________________________
Shareholder
Dated: __________________________ , 1999
Your signature(s) should agree with the
name(s) in which you hold your 3Si stock.
Custodians, Executors, Administrators,
Trustees, Guardians and Attorneys should so
indicate when signing.
