<PAGE> 1
SCHEDULE 14A INFORMATION
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
The Cerplex Group, Inc.
----------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Not applicable
----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
Not applicable.
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
Not applicable.
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
Not applicable.
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
Not applicable.
- --------------------------------------------------------------------------------
(5) Total fee paid:
Not applicable.
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary material:
Not applicable.
- --------------------------------------------------------------------------------
[ ] 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:
Not applicable.
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
Not applicable.
- --------------------------------------------------------------------------------
(3) Filing Party:
Not applicable.
- --------------------------------------------------------------------------------
(4) Date Filed:
Not applicable.
- --------------------------------------------------------------------------------
<PAGE> 2
THE CERPLEX GROUP, INC.
1382 BELL AVENUE
TUSTIN, CALIFORNIA 92780
Dear Stockholder:
On behalf of the Board of Directors, you are cordially invited to attend
the Annual Meeting of Stockholders of The Cerplex Group, Inc., a Delaware
corporation (the "Company"), to be held on Tuesday, March 23, 1999, at 2:00 p.m.
Pacific Time (the "Annual Meeting") at the offices of Brobeck, Phleger &
Harrison LLP, located at 38 Technology Drive, Irvine, California 92618, for the
following purposes, as more fully described in the Proxy Statement:
1. To elect three directors of the Company to serve for one-year terms
expiring at the next annual meeting of stockholders or until their
successors are duly elected and qualified;
2. To ratify the appointment of KPMG LLP as the Company's public
accountants and independent auditors for the fiscal year ending
September 30, 1999; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
You are urged to carefully consider all the material in the Proxy Statement
and mark, sign, date and return the enclosed proxy as soon as possible,
regardless of whether you expect to attend the Annual Meeting. Giving a proxy
will not prevent you from voting in person at the Annual Meeting.
Very truly yours,
/s/ GEORGE L. MCTAVISH
--------------------------------------
George L. McTavish
Chief Executive Officer and
Chairman of the Board of Directors
Tustin, California
January 28, 1999
<PAGE> 3
THE CERPLEX GROUP, INC.
1382 BELL AVENUE
TUSTIN, CALIFORNIA 92780
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 23, 1999
------------------------
Dear Stockholder:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of The
Cerplex Group, Inc., a Delaware corporation (the "Company"), will be held on
Tuesday, March 23, 1999, at 2:00 p.m. Pacific Time (the "Annual Meeting") at the
offices of Brobeck, Phleger & Harrison LLP, located at 38 Technology Drive,
Irvine, California 92618, for the following purposes, as more fully described in
the Proxy Statement accompanying this Notice:
1. To elect three directors of the Company to serve for one-year terms
expiring at the next annual meeting of stockholders or until their
successors are duly elected and qualified;
2. To ratify the appointment of KPMG LLP as the Company's public
accountants and independent auditors for the fiscal year ending
September 30, 1999; and
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on January 28, 1999
(the "Record Date"), are entitled to notice of and to vote at the Annual
Meeting. The stock transfer books of the Company will remain open between the
Record Date and the date of the Annual Meeting. A list of stockholders entitled
to vote at the Annual Meeting will be available for inspection at the executive
offices of the Company.
All stockholders are cordially invited to attend the Annual Meeting in
person. Whether or not you plan to attend, please sign and return the enclosed
proxy as promptly as possible in the envelope enclosed for your convenience.
Should you receive more than one proxy because your shares are registered in
different names and addresses, each proxy should be signed and returned to
assure that all your shares will be voted. You may revoke your proxy at any time
prior to the Annual Meeting. If you attend the Annual Meeting and vote by
ballot, your proxy will be revoked automatically and only your vote at the
Annual Meeting will be counted.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ PHILIP E. PIETROWSKI
--------------------------------------
Philip E. Pietrowski
Secretary
Tustin, California
January 28, 1999
<PAGE> 4
THE CERPLEX GROUP, INC.
1382 BELL AVENUE
TUSTIN, CALIFORNIA 92780
------------------------
PROXY STATEMENT
------------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 23, 1999
------------------------
GENERAL
The enclosed proxy (the "Proxy") is solicited on behalf of the Board of
Directors of The Cerplex Group, Inc., a Delaware corporation (the "Company"),
for use at the Annual Meeting of Stockholders to be held on Tuesday, March 23,
1999 (the "Annual Meeting"). The Annual Meeting will be held at 2:00 p.m.
Pacific Time at the offices of Brobeck, Phleger & Harrison LLP, located at 38
Technology Drive, Irvine, California 92618. These proxy solicitation materials
will be mailed on or about March 8, 1999, to all stockholders entitled to vote
at the Annual Meeting.
VOTING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice and are described in more
detail in this Proxy Statement. On January 28, 1999, the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting (the "Record Date"), 7,367,518 shares of the Company's common stock, par
value $0.03 per share (the "Common Stock"), were issued and outstanding and
215,500 shares of the Company's 7% Senior Cumulative Convertible Preferred
Stock, par value $0.01 per share (the "Preferred Stock"), were issued and
outstanding. Each holder of Common Stock is entitled to one vote for each share
of Common Stock held by such stockholder on the Record Date. Each holder of
Preferred Stock is entitled to one vote, together with the Common Stock as a
single class on each matter duly presented for a vote at the Annual Meeting, for
each share of Common Stock into which the shares of Preferred Stock of such
holder are convertible as of the Record Date. As of the Record Date, the 215,500
shares of Preferred Stock issued and outstanding were convertible into 8,620,000
shares of Common Stock.
All votes will be tabulated by the inspector of elections appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. The presence at the Annual Meeting, in person
or by proxy, of the holders of a majority of the votes entitled to be cast by
the Common Stock and the Preferred Stock will constitute a quorum for the
transaction of business at the Annual Meeting. If a quorum is not present, in
person or by proxy, the Annual Meeting may be adjourned from time to time until
a quorum is obtained. The presence at the Annual Meeting, in person or by proxy,
of investment funds managed by Welsh, Carson, Anderson & Stowe, is sufficient to
constitute a quorum. Abstentions and broker non-votes are counted as present for
purposes of determining the presence or absence of a quorum for the transaction
of business.
The election of directors will be decided by a plurality of the votes
present or represented by proxy and entitled to be cast at the Annual Meeting by
the holders of the Common Stock and the Preferred Stock. Stockholders may not
cumulate votes in the election of directors. In all matter other than the
election of directors, the affirmative vote of a majority of the votes present
or represented by proxy and entitled to be cast at the Annual Meeting by the
holders of the Common Stock and Preferred Stock is required to take stockholder
action. With regard to the election of directors, votes may be cast in favor of
or withheld from each nominee; votes that are withheld will be excluded entirely
from the vote and will have no effect. Abstentions may be specified on all
proposals except the election of directors and will be counted as present for
purposes of determining the existence of a quorum regarding the item on which
the abstention is noted and
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<PAGE> 5
will also be counted for purposes of determining whether stockholder approval of
that item has been obtained. If shares are not voted by the broker who is the
record holder of the shares, or if shares are not voted in other circumstances
in which proxy authority is defective or has been withheld with respect to any
matter, these non-voted shares are not deemed to be present or represented for
purposes of determining whether stockholder approval of that matter has been
obtained.
PROXIES
If the enclosed form of Proxy is properly signed and returned, the shares
represented thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If the Proxy does not specify how the shares
represented thereby are to be voted, the Proxy will be voted FOR the election of
the directors proposed by the Board of Directors unless the authority to vote
for the election of such directors is withheld. If no contrary instructions are
given, the Proxy will be voted FOR the approval of Proposal 2 described in the
accompanying Notice and this Proxy Statement. You may revoke or change your
Proxy at any time before the Annual Meeting by filing with the Chief Executive
Officer of the Company at the Company's principal executive offices at 1382 Bell
Avenue, Tustin, California 92780, a notice of revocation or another signed Proxy
with a later date. You may also revoke your Proxy by attending the Annual
Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional solicitation materials furnished to the stockholders. Copies
of solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by a solicitation by
telephone, telegram or other means by directors, officers or employees of the
Company. No additional compensation will be paid to these individuals for any
such services. Except as described above, the Company does not presently intend
to solicit proxies other than by mail.
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<PAGE> 6
MATTERS TO BE CONSIDERED AT ANNUAL MEETING
PROPOSAL NO. 1
ELECTION OF DIRECTORS
GENERAL
The Board of Directors of the Company, currently consists of five members,
three of which are proposed to be re-elected at the Annual Meeting. The
directors elected will serve for one-year terms, expiring at the next annual
meeting of stockholders or until their successors have been duly elected and
qualified.
The nominees for election have agreed to serve if elected, and management
has no reason to believe that such nominees will be unavailable to serve. In the
event the nominees are unable or decline to serve as directors at the time of
the Annual Meeting, their proxies will be voted for any nominee who may be
designated by the present Board of Directors to fill the vacancy. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
FOR the nominees named below.
Nominations for election to the Board of Directors may be made by the Board
of Directors, a nominating committee appointed by the Board of Directors or by
any stockholder entitled to vote for the election of directors. Nominations made
by stockholders must be made by written notice, certified mail, return-receipt
requested and received by the Secretary of the Company by December 1 of any
calendar year. If, however, less than thirty days' notice of a stockholders'
meeting called for the election of directors is given to stockholders,
nominations by stockholders must be so made and received by the Secretary of the
Company not later than the close of business on the tenth day following the day
on which the notice was mailed. Such notice shall set forth as to each proposed
nominee who is not an incumbent director: (a) the name, age, business address
and, if known, residence address of each nominee proposed in such notice; (b)
the principal occupation or employment of each such nominee; (c) the number of
shares of Common Stock of the Company that are beneficially owned by each such
nominee and the nominating stockholder; and (d) any other information concerning
the nominee that must be disclosed of nominees in proxy solicitations pursuant
to Rule 14(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
DIRECTOR NOMINEES
George L. McTavish. Mr. McTavish, 57, has been the Chief Executive Officer
of the Company since January 1998 and the Chairman of the Board of Directors
since April 1998. From November 1987 through December 1995, Mr. McTavish was the
Chief Executive Officer and Chairman of the Board of Directors of Comdata
Holdings Corporation ("Comdata"). In March 1992, Comdata merged with Ceridian
Corporation, and Mr. McTavish was appointed Executive Vice President of Ceridian
Corporation in December 1995, in which capacity he served until November 1997.
Mr. McTavish serves as a director of Seer Technologies, Inc. and Broadway &
Seymour, Inc. Mr. McTavish also serves as a director of a private company.
Thomas E. McInerney. Mr. McInerney, 57, has served as a director of the
Company since March 1996. Mr. McInerney has been a general partner of Welsh,
Carson, Anderson & Stowe and has been a general partner of the sole general
partners of its associated limited partnerships since 1987. Since 1988, Mr.
McInerney has served as a director of DecisionOne Holdings Corp., and from 1994
to 1995, served as its Chairman. Mr. McInerney is also a director of Bisys
Group, Inc.
Richard H. Stowe. Mr. Stowe, 55, has served as a director of the Company
since March 1996. Mr. Stowe has been a general partner of Welsh, Carson,
Anderson & Stowe and has been a general partner of the sole general partners of
its associated limited partnerships since 1979. Mr. Stowe is a director of New
American Healthcare Corporation, MedQuist Inc. and Health Management Systems,
Inc. and several private companies.
DIRECTORS NOT STANDING FOR NOMINATION
William A. Klein. Mr. Klein, 57, has served as a director of the Company
since April 1998. Mr. Klein was the Chairman of the Board of Directors of The
Cerplex Group, Inc. ("Old Cerplex"), since its inception
3
<PAGE> 7
in May 1990 until April 1998, when Old Cerplex was acquired by the Company
(after which the Company changed its name to The Cerplex Group, Inc. and Old
Complex changed its name to Cerplex, Inc.). Mr. Klein also served as Old
Cerplex's President and Chief Executive Officer from May 1990 until August 1991
and from October 1996 until July 1997 and served as Chief Executive Officer from
August 1993 until October 1995. Mr. Klein serves as director of Smartflex
Systems Inc. and is a director of two private companies.
Robert A. Finzi. Mr. Finzi, 45, has served as a director of the Company
since April 1998. Mr. Finzi served as a member of the Board of Directors of Old
Cerplex from December 1993 until April 1998. Mr. Finzi has been a Vice President
of the Sprout Group, a division of DLJ Capital Corporation, which is the
managing general partner of Sprout Growth II, L.P. and an affiliate of
Donaldson, Lufkin & Jenrette Securities Corporation since May 1991. Mr. Finzi is
also a general partner of the general partner of a series of investment funds
managed by the Sprout Group and a limited partner of the general partner of ML
Ventures II, L.P. Mr. Finzi also serves as a director of Gentle Dental Service
Corporation and a number of private companies.
BOARD COMMITTEES AND MEETINGS
The business of the Company is managed under the direction of the Board of
Directors. The Board of Directors met or acted by unanimous written consent
approximately six times during the fiscal year ended September 30, 1998 (the
"1998 Fiscal Year"). The Board of Directors has an Audit Committee and a
Compensation and Stock Option Committee. Each director attended or participated
in 75% or more of the aggregate of (i) the total number of meetings of the Board
of Directors and (ii) the total number of meetings held by all committees of the
Board of Directors on which such director served during the 1998 Fiscal Year.
Audit Committee. The Audit Committee currently consists of two directors,
Mr. Finzi and Mr. Stowe, and is empowered to recommend to the Board of
Directors, a firm of certified public accountants to conduct audits of the
accountants and affairs of the Company, review accounting objectives and
procedures of the Company and the findings and reports of the independent
certified public accountants, and make such reports and recommendations to the
Board of Directors as it deems appropriate. The Audit Committee met or acted by
unanimous written consent approximately one time during the 1998 Fiscal Year.
Compensation and Stock Option Committee. The Compensation and Stock Option
Committee currently consists of two directors, Mr. Klein and Mr. McInerney. The
committee is empowered to establish and revise the compensation paid to all
executive officers of the Company and has complete authority to (a) construe,
interpret, and administer the provisions of the Company's 1998 Stock Option and
Restricted Stock Purchase Plan (the "Plan") and the provisions of the option
agreements granted thereunder; (b) select the key employees, consultants, and
directors to whom awards are granted, the number of options, the number of
shares of Common Stock with respect to each option, the exercise price or prices
of each option, the vesting and exercise period of each option, whether an
option may be exercised as to less than all of the Company's Common Stock
subject to the option, and such other terms and conditions of each option, if
any, that are not inconsistent with the provisions of the Plan; (c) prescribe,
amend, and rescind rules and regulations pertaining to the Plan; and (d) make
all other determinations necessary or advisable for their implementation and
administration. The Compensation and Stock Option Committee met or acted by
unanimous written consent approximately three times during the 1998 Fiscal Year.
The Company's Board of Directors does not have a standing nominating
committee or any other committee performing a similar function. The function
customarily attributable to a nominating committee is performed by the Company's
Board of Directors as a whole.
DIRECTOR COMPENSATION
During the 1998 Fiscal Year, the Company did not pay any fees or grant any
stock options to any directors for serving on the Board of Directors. All
directors are entitled to reimbursement for expenses incurred for attendance at
each meeting.
For years prior to the 1998 Fiscal Year, each non-employee director
received $2,500 for each quarter that such person served as a director of the
Company, and was automatically granted nonqualified stock options to
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<PAGE> 8
purchase 25,000 shares of the Company's Common Stock upon election to the Board
of Directors and options to purchase 5,000 shares of the Company's Common Stock
on the date of each annual meeting of the Company's stockholders when such
non-employee director had served on the Board of Directors for the immediately
preceding 181 consecutive days, had agreed to serve as a director upon such
re-election and was re-elected to the Board of Directors. This compensation of
non-employee directors was suspended for the 1998 Fiscal Year, but the Board of
Directors may re-examine the issue and may reinstate a program for automatic
option grants and/or cash fees to non-employee directors in order to attract and
retain qualified directors.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR the
election of the nominees listed above.
5
<PAGE> 9
PROPOSAL NO. 2
RATIFICATION OF INDEPENDENT AUDITORS
The Board of Directors of the Company has appointed the firm of KPMG LLP,
independent public auditors for the Company for the fiscal year ending September
30, 1999, and is asking the stockholders to ratify this appointment. The
affirmative vote of a majority of the shares represented and voting at the
Annual Meeting is required to ratify the selection of KPMG LLP.
In the event the stockholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified, the
Board of Directors in its discretion may direct the appointment of a different
independent auditing firm at any time during the year if the Board of Directors
believes that such a change would be in the best interests of the Company and
its stockholders.
A representative of KPMG LLP is expected to be present at the Annual
Meeting, will have the opportunity to make a statement if he or she desires to
do so, and will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of KPMG LLP to serve as the Company's independent
public auditors for the fiscal year ending September 30, 1999.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is granted
by the execution of the enclosed Proxy.
6
<PAGE> 10
OWNERSHIP OF SECURITIES
The following table sets forth, as of December 15, 1998, certain
information known to the Company with respect to the beneficial ownership of the
Company's Common Stock by (i) all persons who to the knowledge of the Company
are beneficial owners of five percent (5%) or more of the Company's Common
Stock, (ii) each director and nominee for director, (iii) the Named Executive
Officers in the Summary Compensation Table of the Executive Compensation and
Other Information section of this Proxy Statement and (iv) all current directors
and executive officers as a group. Unless otherwise indicated, each of the
stockholders has sole voting and investment power with respect to the shares
beneficially owned, subject to community property laws, where applicable. The
number of shares in the table gives effect to the one-for-ten reverse stock
split, approved at the Special Meeting of Stockholders on October 5, 1998, in
which each ten shares of the Company's Common Stock were converted into one
share of the Company's Common Stock.
<TABLE>
<CAPTION>
PERCENTAGE
SHARES OF SHARES
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER OWNED(1) OWNED(1)
---------------- ------------- ------------
<S> <C> <C>
WCAS Capital Partners II, L.P.
320 Park Avenue, Suite 2500
New York, NY 10022-6815................................. 1,389,746(2) 15.98%
Welsh, Carson, Anderson & Stowe VII, L.P.
320 Park Avenue, Suite 2500
New York, NY 10022-6815................................. 9,618,703(3) 67.32
WCAS Information Partners, L.P.
320 Park Avenue, Suite 2500
New York, NY 10022-6815................................. 125,264(4) 1.68
DLJ Capital Corporation
277 Park Avenue
New York, NY 10172...................................... 1,004,530(5) 13.62
Sprout Growth II, L.P.
277 Park Avenue
New York, NY 10172...................................... 900,053 12.22
George L. McTavish+*...................................... 100,000(6) 1.34
Thomas E. McInerney+...................................... 12,570,262(7) 79.84
Richard H. Stowe+......................................... 1,430,087(8) 16.39
Robert A. Finzi+.......................................... 6,796(9) **
William A. Klein+......................................... 920,802(10) 12.50
Steven L. Korby*.......................................... -- --
Philip E. Pietrowski*..................................... 20,333(11) **
Richard C. Gallagher*..................................... -- --
James C. Cowart (former officer)*......................... 90,154(12) 1.21
Richard C. Davis (former officer)*........................ 90,522 1.22
All directors and executive officers as a group (10
persons)................................................ 15,228,956(13) 88.01
</TABLE>
- ---------------
+ Director
* Named Executive Officer
** Less than one percent
(1) Percentage ownership is based on 7,367,518 shares of Common Stock
outstanding on December 15, 1998. Shares of Common Stock that were not
outstanding but that could be acquired through the exercise of stock
options or warrants, or the conversion of shares of Preferred Stock that
are now or will become exercisable or convertible within 60 days of
December 15, 1998 are deemed outstanding for the purpose of computing the
percentage of outstanding shares of Common Stock beneficially owned by the
person or group holding such options, warrants or shares of Preferred
Stock, but are not deemed outstanding for the purpose of computing the
percentage of outstanding shares of Common Stock beneficially owned by any
other person.
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<PAGE> 11
(2) Includes (i) 1,320,000 shares of Common Stock issuable upon conversion of
33,000 shares of the Company's convertible Preferred Stock and (ii) 9,025
shares of Common Stock issuable upon the exercise of immediately
exercisable warrants.
(3) Includes (i) 6,664,680 shares of Common Stock issuable upon conversion of
166,617 shares of the Company's convertible Preferred Stock and (ii)
256,544 shares of Common Stock issuable upon the exercise of immediately
exercisable warrants.
(4) Includes 90,960 shares of Common Stock issuable upon conversion of 2,274
shares of the Company's convertible Preferred Stock.
(5) Includes 900,053 shares beneficially owned by Sprout Growth II, L.P. DLJ
Capital Corporation, as the managing general partner of Sprout Growth II,
L.P., may be deemed to share voting and dispositive power with respect to
these shares. DLJ Capital Corporation disclaims beneficial ownership of
these shares except to the extent of its direct and indirect partnership
interests in Sprout Growth II, L.P. Also includes 6,421 options held by Mr.
Finzi for the beneficial ownership of DLJ Capital Corporation. See footnote
(9) below.
(6) Includes 100,000 shares of Common Stock issuable upon conversion of 2,900
shares of Preferred Stock.
(7) Includes (i) 3,000 shares of Common Stock issuable upon exercise of options
that are currently exercisable or will become exercisable within 60 days of
December 15, 1998, (ii) 31,800 shares of Common Stock issuable upon
conversion of 795 shares of the Company's convertible Preferred Stock,
(iii) 1,389,746 shares of Common Stock beneficially owned by WCAS Capital
Partners II, L.P. (see footnote (2) above), (iv) 9,618,703 shares of Common
Stock beneficially owned by Welsh, Carson, Anderson & Stowe VII, L.P. (see
footnote (3) above), and (v) 125,264 shares of Common Stock beneficially
owned by WCAS Information Partners, L.P. (see footnote (4) above). Mr.
McInerney is a general partner of the respective sole general partners of
each of WCAS Capital Partners II, L.P., Welsh, Carson, Anderson & Stowe
VII, L.P. and WCAS Information Partners, L.P. and may be deemed to
beneficially own the shares of Common Stock, convertible Preferred Stock
and warrants owned by such partnerships.
(8) Includes (i) 3,000 shares of Common Stock issuable upon exercise of options
that are currently exercisable or will become exercisable within 60 days of
December 15, 1998, (ii) 27,320 shares of Common Stock issuable upon
conversion of 683 shares of the Company's convertible Preferred Stock, and
(iii) 1,389,746 shares of Common Stock beneficially owned by WCAS Capital
Partners II, L.P. (see footnote (2) above). Mr. Stowe is a general partner
of the sole general partner of WCAS Capital Partners II, L.P., and may be
deemed to beneficially own the shares of Common Stock, convertible
Preferred Stock and warrants owned by such partnership. As of January 1,
1999, Mr. Stowe was no longer a general partner of the sole general partner
of Welsh, Carson, Anderson & Stowe VII, L.P. and the number of shares shown
as beneficially owned by him does not include shares owned by such
partnership.
(9) Includes 6,421 shares of the Company's Common Stock issuable upon exercise
of options that are currently exercisable or will become exercisable within
60 days of December 15, 1998 held by Mr. Finzi for the beneficial ownership
of DLJ Capital Corporation. Mr. Finzi disclaims beneficial ownership of
these shares. Mr. Finzi serves as a Vice President of Sprout Group, a
division of DLJ Capital Corporation, and is a general partner of one of the
general partners of Sprout Growth II, L.P. As such, Mr. Finzi may be deemed
as the beneficial owner of the shares of Common Stock held by Sprout Growth
II, L.P. Mr. Finzi disclaims such beneficial ownership except to the extent
of his indirect partnership interest in Sprout Growth II, L.P.
(10) Includes 261,399 shares of Common Stock held by the Klein Investments
Family Limited Partnership, 136,050 shares of Common Stock held by the
Klein 1994 Charitable Remainder Unitrust, and 19,263 shares of Common Stock
held by the Klein Family Foundation. Mr. Klein disclaims beneficial
ownership of these shares except to the extent of his indirect interest in
the shares held by the Klein Investments Family Limited Partnership and the
Klein 1994 Charitable Remainder Unitrust.
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<PAGE> 12
(11) Includes 20,333 shares of the Company's Common Stock issuable upon exercise
of options that are currently exercisable or will become exercisable within
60 days of December 15, 1998.
(12) Includes 73,717 shares of the Company's Common Stock issuable upon exercise
of options that are currently exercisable or will become exercisable within
60 days of December 15, 1998. Mr. Cowart is no longer employed by the
Company.
(13) This number reflects the stock ownership of the Named Executive Officers
and directors, and incorporates the shares and options referenced in
footnotes (6) through (12) above.
9
<PAGE> 13
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation earned, by the Company's Chief Executive Officer and each of the
other most highly compensated executive officers of the Company whose salary and
bonus for the 1998 Fiscal Year was in excess of $100,000 for services rendered
in all capacities to the Company and its subsidiaries. The listed individuals
shall be hereinafter referred to as the "Named Executive Officers."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------- ------------------
NAME AND FISCAL SALARY BONUS SECURITIES UNDER- ALL OTHER
PRINCIPAL POSITION YEAR ($) ($) LYING OPTIONS (#)* COMPENSATION ($)
------------------ ------ ------- -------- ------------------ ----------------
<S> <C> <C> <C> <C> <C>
George L. McTavish............ 1998 220,234(1) -- -- 72(2)
Chairman of the Board and
Chief Executive Officer
Steven L. Korby............... 1998 218,631(3) -- -- 72(2)
Executive Vice
President and Chief
Financial Officer
Philip E. Pietrowski.......... 1998 236,754(4) 84,000 -- 223(2)
Senior Vice President - 1997 212,941(4) -- 20,333(5) 466(2)
North American 1996 170,155(4) -- 7,491(6) 602(2)
Operations
Richard C. Gallagher, Jr...... 1998 112,450(7) 50,000(7) -- 72(2)
Senior Vice President
of Marketing and
Corporate Development
James C. Cowart............... 1998 28,879(8) -- -- 198,341(9)
Former Vice Chairman, 1997 208,449 -- -- --
Chairman of the 1996 190,631 10,534 142,862(10) 1,968(11)
Board and Chief Executive
Officer
Richard C. Davis.............. 1998 353,173(12) -- -- 250,206(13)
Former Senior Vice 1997 255,984 -- -- 561(2)
President - Inter- 1996 217,624 -- -- 602(2)
national Operations
</TABLE>
- ---------------
* Option figures other than for Mr. Cowart reflect options granted by Old
Cerplex, which have been adjusted to account for the conversion of Old
Cerplex stock into stock of the Company in connection with the Company's
acquisition of Old Cerplex.
(1) Mr. McTavish has been the Chief Executive Officer of the Company since
January 1998 and served as a consultant to the Company prior to that. The
figures for his compensation include $194,234 in salary and $26,000 in
consulting fees.
(2) Reflects payments of term life insurance premiums.
(3) Mr. Korby has been the Executive Vice President and the Chief Financial
Officer of the Company since May 1998 and served as a consultant to the
Company from January 1998 through May 1998. The figures for his
compensation include $114,231 in salary and $104,400 in consulting fees.
(4) Mr. Pietrowski has been the Senior Vice President-North American Operations
of the Company since May 1998, when the Company acquired Old Cerplex.
Before May 1998, he was employed by Old Cerplex. Figures prior to May 1998
reflect Mr. Pietrowski's compensation at Old Cerplex.
10
<PAGE> 14
(5) These option shares were granted on March 21, 1997 in connection with Old
Cerplex's option cancellation/regrant program.
(6) These option shares were cancelled on March 21, 1997 in connection with Old
Cerplex's option cancellation/regrant program.
(7) Mr. Gallagher has been the Senior Vice President of Marketing and Corporate
Development of the Company since February 1998. The figures provided for
Mr. Gallagher reflect his employment from February 1998 until the end of
the 1998 Fiscal Year.
(8) Mr. Cowart served as the Chief Executive Officer of the Company until his
employment ended in November 1997. The figure for his salary reflects his
base compensation through that time.
(9) Mr. Cowart received severance pay of $198,269 and the Company paid out $72
in life insurance premiums on his behalf for the 1998 Fiscal Year.
(10) During May 1996, Mr. Cowart surrendered for cancellation all of his
outstanding options to purchase shares of the Company's Common Stock, and
he was issued replacement options to purchase an aggregate of 142,862
shares of the Company's Common Stock.
(11) Reflects Company's contribution under its 401(K) plan.
(12) Mr. Davis was the Senior Vice President-International Operations of the
Company from April 1998 until his employment ended in September 1998.
Before April 1998, he was employed by Old Cerplex. Figures prior to May
1998 reflect his compensation at Old Cerplex.
(13) Mr. Davis received severance pay of $250,000 and the Company paid $206 in
life insurance premiums on his behalf for the 1998 Fiscal Year.
INFORMATION REGARDING NAMED EXECUTIVE OFFICERS
George L. McTavish. Information regarding Mr. McTavish appears previously
in this Proxy Statement under the section regarding nominees for election to the
Board of Directors.
Steven L. Korby. Mr. Korby, 53, has been the Executive Vice President and
Chief Financial Officer of the Company since May 1998. From October 1997 through
April 1998, Mr. Korby was engaged in various consulting assignments, including
with the Company. From March 1995 through September 1997, Mr. Korby served as
Executive Vice President and Chief Financial Officer of Greyhound Lines, Inc.,
the only nationwide inter-city bus company. From September 1994 through February
1995, Mr. Korby was engaged in various consulting assignments.
Philip E. Pietrowski. Mr. Pietrowski, 53, has been the Senior Vice
President-North American Operations of the Company since April 1998. Mr.
Pietrowski was the President of Old Cerplex's North American Operations from
February 1997 until April 1998. Mr. Pietrowski joined Old Cerplex in October
1995 as Vice President of Logistics and was Senior Vice President - North
American Operations from February 1996 until February 1997. Mr. Pietrowski spent
24 years at Digital Equipment Corporation in Massachusetts, holding various
senior level positions. The last position he held with Digital Equipment was
Corporate Multivendor Services Business Manager, where Mr. Pietrowski was
responsible for worldwide service logistics, repair, information systems and
administration.
Richard C. Gallagher, Jr. Mr. Gallagher, 36, has been the Senior Vice
President of Marketing and Corporate Development of the Company since February
1998. Since May 1997, Mr. Gallagher has been Chief Executive Officer and
President of Strategic Holdings USA, Inc. (which was formerly known as Strategic
Mortgage Services, Inc.). From October 1993 until May 1997 Mr. Gallagher was
Vice President of Mergers and Acquisitions of Strategic Mortgage Services, Inc.,
a provider of information services to the mortgage finance industry.
James C. Cowart. Mr. Cowart, 47, served as Vice Chairman of the Company
from January 1998 until April 1998, when his employment with the Company ended.
From December 1992 until January 1998, Mr. Cowart served as the Chairman of the
Board and until November 1997 as Chief Executive Officer, and formerly served as
Vice President of Strategic Development of the Company. Since February 1992,
11
<PAGE> 15
Mr. Cowart has served as Chairman of EOS Capital, Inc., a private capital firm
which has been, from time to time, retained by the Company. Mr. Cowart is also a
director of B/E Aerospace, Inc.
Richard C. Davis. Mr. Davis, 49, was the Senior Vice
President-International Operations of the Company from April 1998 until
September 1998, when his employment with the Company ended. Mr. Davis was the
President of International Operations of Old Cerplex from October 1995 until
April 1998. Prior to October 1995, Mr. Davis served as the President of Old
Cerplex and in various other executive positions since May 1990.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
The Company did not grant any stock options to the Named Executive Officers
during the 1998 Fiscal Year.
AGGREGATED OPTION/SAR EXERCISES AND FISCAL YEAR-END VALUES
The following table provides information with respect to the Named
Executive Officers concerning options held as of September 30, 1998. No options
were exercised during the 1998 Fiscal Year by any of the Named Executive
Officers. None of the options have an exercise price below the fair market value
of the Common Stock as of the end of the 1998 Fiscal Year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED
OPTIONS/SARS AT FY-END(#)
------------------------------
NAME EXERCISABLE UNEXERCISABLE
---- ----------- -------------
<S> <C> <C>
George L. McTavish........................................ -- --
Steven L. Korby........................................... -- --
Philip E. Pietrowski...................................... 20,333 --
Richard C. Gallagher...................................... -- --
James C. Cowart........................................... 73,716 --
Richard C. Davis.......................................... -- --
</TABLE>
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
The following information summarizes any employment agreements and
termination agreements entered into between the Company and any of the Named
Executive Officers of the Company.
James C. Cowart. Mr. Cowart and the Company entered into an employment
letter effective as of May 18, 1995, pursuant to which he served as Chairman of
the Board and Chief Executive Officer of the Company. Under the employment
letter, Mr. Cowart received an annual base salary and an incentive bonus based
upon certain financial performance targets of the Company. On November 4, 1997,
Mr. Cowart resigned as Chief Executive Officer and agreed to continue as
Chairman of the Board, pursuant to the terms of the employment letter until
October 21, 1998. On January 30, 1998, Mr. Cowart resigned as Chairman of the
Board and agreed to continue as Vice Chairman of the Board until April 1998.
Under the terms of his employment letter, Mr. Cowart received his compensation
until November 4, 1998, as severance, which totaled $198,269.
Richard C. Davis. Pursuant a termination arrangement with Mr. Davis, the
Company paid Mr. Davis a lump-sum severance payment of $250,000 following the
termination of his employment in August 1998.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee of the Company's Board of
Directors currently consists of Mr. Klein and Mr. McInerney. None of these
individuals was an officer or employee of the Company at any time during the
1998 Fiscal Year or at any other time.
12
<PAGE> 16
No current executive officer of the Company has ever served as a member of
the board of directors or compensation committee of any other entity that has or
has had one or more executive officers serving as a member of the Company's
Board of Directors or Compensation and Stock Option Committee.
BOARD COMPENSATION AND COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee has responsibility for
determining compensation for the Company's executive officers, setting overall
compensation policy for the Company, and administering the Company's Plan,
including authority regarding the selection of award recipients and the size and
terms of all option grants under the Plan. The Chief Executive Officer of the
Company makes annual compensation recommendations for the Company's executive
officers to the Compensation and Stock Option Committee.
The Compensation and Stock Option Committee believes that the Company must
attract and retain superior executives. During the 1998 Fiscal Year, the Company
focused on assembling and retaining a qualified senior management team. The
compensation levels for the Company's executive officers were determined by the
Compensation and Stock Option Committee based on a variety of subjective
elements, including each executive officer's compensation history, experience in
rendering services to the Company and individual talents. With respect to Mr.
McTavish, the Company's Chief Executive Officer and the Chairman of the Board of
Directors, the Compensation and Stock Option Committee established an annual
base salary of $300,000 for him. In determining the appropriate compensation
figure for Mr. McTavish, the Compensation and Stock Option Committee considered
a variety of factors, including a comparison of Mr. McTavish's compensation at
his level of experience with the executive compensation paid in similar industry
groups to executives with comparable levels of experience.
Submitted by the Compensation and Stock Option Committee of the Company's
Board of Directors.
COMPENSATION AND STOCK OPTION
COMMITTEE
William A. Klein
Thomas E. McInerney
13
<PAGE> 17
STOCK PERFORMANCE GRAPH
The graph shows a comparison of the five-year cumulative total stockholder
returns for the Company, the S&P 500 Composite Index and an index of peer
companies selected by the Company for the period since September 30, 1993.
Companies in the peer group are as follows: Bell Microproducts, Benchmark
Electronics, Inc., Genicom Corp., IEC Electronics Corp., Intelogic Trace, Jabil
Circuits, Inc., Jaco Electronics, Inc., Milgray Electronics, Inc., Nu Horizons
Electronics Corp., PC Service Source, Inc., Plexus Corp., Richardson
Electronics, Ltd., Marshall Industries and Savior Technology Group. The
comparison assumes $100 was invested on September 30, 1993 in the Company's
Common Stock and in each of the two indices and assumes reinvestment of
dividends.
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings made under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings made by the Company under those statutes, neither the preceding Stock
Performance Graph nor the Compensation and Stock Option Committee Report is to
be incorporated by reference into any such prior filings, nor shall such graph
or report be incorporated by reference into any future filings made by the
Company under those statutes.
<TABLE>
<CAPTION>
CERPLEX PEER GROUP S & P 500
------- ---------- ---------
<S> <C> <C> <C>
9/30/93 100.00 100.00 100.00
9/30/94 75.41 103.72 87.29
9/30/95 41.81 131.00 109.79
9/30/96 26.23 120.62 129.12
9/30/97 13.54 213.94 177.96
9/30/98 1.35 105.99 191.08
</TABLE>
The following summarizes the information in the graph above:
<TABLE>
<CAPTION>
THE COMPANY PEER GROUP S&P 500
----------- ---------- ---------
<S> <C> <C> <C>
9/30/93.......................... $100 $100 $100
9/30/94.......................... $75.41 $103.72 $ 87.29
9/30/95.......................... $41.81 $131.00 $109.79
9/30/96.......................... $26.23 $120.62 $129.12
9/30/97.......................... $13.54 $213.94 $177.96
9/30/98.......................... $ 1.35 $105.99 $191.08
</TABLE>
14
<PAGE> 18
CERTAIN TRANSACTIONS
Mr. McInerney, who is a director of the Company, is also a general partner
of the sole general partners of WCAS Capital Partners II, L.P., Welsh, Carson,
Anderson & Stowe VII, L.P., and WCAS Information Partners, L.P. (collectively,
the "WCAS Entities"). Mr. Stowe, who is a director of the Company, is also a
general partner of the sole general partner of WCAS Capital Partners II, L.P.,
one of the WCAS Entities. The WCAS Entities own approximately 70% of the capital
stock of the Company on a fully diluted basis. Certain of the WCAS Entities
recently made loans to the Company in the aggregate of $9.5 million (the "Short
Term Loans"). The Short Term Loans consist of three loans due within one year of
the time they were made: a loan for $5.0 million made on September 30, 1998, a
loan for $2.5 million made on December 9, 1998 and a loan for $2.0 million made
on January 26, 1999. In addition, in connection with the acquisition of Old
Cerplex, the Company sold an aggregate of approximately $14.6 million of newly
issued 10% Senior Subordinated Notes ("Senior Notes") and $20.8 million of newly
issued Preferred Stock to the WCAS Entities, in exchange for approximately $12.0
million in cash, the cancellation of $21.0 million of combined indebtedness of
Old Cerplex and the Company to certain of the WCAS Entities, and the surrender
of warrants held by certain of the WCAS Entities to purchase capital stock of
Old Cerplex. Furthermore, certain of the WCAS Entities have guaranteed the
repayment of $25.0 million of the principal amount owing by the Company at any
time under a $36.0 million term loan and a revolving line of credit with
available borrowings of up to $10.0 million, from Greyrock Business Credit, a
division of NationsCredit Commercial Corporation. Also, the Company sold
$250,000 of the Preferred Stock to Mr. McTavish. The terms of the Senior Notes,
the Preferred Stock and the Short Term Loans are described in greater detail in
the Company's Annual Report on Form 10-K for the 1998 Fiscal Year, mailed
together with this Proxy Statement. The terms of the Preferred Stock, the Senior
Notes and the Short Term Loans require substantial payments by the Company to
the WCAS Entities, which the Company may not be able to pay based on anticipated
income and other obligations of the Company senior to the obligations to the
WCAS Entities. In the event the Company cannot repay the obligations to the WCAS
Entities, the obligations may be exchanged for equity and/or debt securities of
the Company on mutually agreeable terms. If these obligations, and any future
financing the Company may obtain from the WCAS Entities, are later exchanged for
equity or debt securities, such an exchange would increase the percentage
ownership of the WCAS Entities in the Company and would result in substantial
dilution to the ownership interests of stockholders of the Company other than
the WCAS Entities.
Mr. Klein, who was a director and significant stockholder of Old Cerplex,
became a director and significant stockholder of the Company in connection with
the acquisition of Old Cerplex, as a result of the conversion of his Common
Stock in Old Cerplex into Common Stock of the Company in April 1998, and
received severance payments totaling $400,917 in connection with the
acquisition. In addition, Mr. Finzi, who was a director of Old Cerplex, became a
director of the Company in connection with the acquisition of Old Cerplex, as a
result of the conversion of his Common Stock in Old Cerplex into Common Stock of
the Company in April 1998. Mr. Finzi is a Vice President of Sprout Group, a
division of DLJ Capital Corporation, and is a general partner of one of the
general partners of Sprout Growth II, L.P. Both DLJ Capital Corporation and
Sprout Growth II, L.P. were significant stockholders of Old Cerplex and became
significant stockholders of the Company in connection with the acquisition of
Old Cerplex, as a result of the conversion of their Common Stock in Old Cerplex
into Common Stock of the Company in April 1998. DLJ Capital Corporation and
Sprout Growth II, L.P.'s beneficial ownership of Common Stock of the Company is
reported in this Proxy Statement in the section entitled "Ownership of
Securities."
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The members of the Board of Directors, the executive officers of the
Company and persons who hold more than 10% of the Company's outstanding Common
Stock are subject to the reporting requirements of Section 16(a) of the
Securities Exchange Act of 1934, as amended, which require them to file reports
with respect to their ownership of the Common Stock and their transactions in
such Common Stock. Based upon (i) the copies of Section 16(a) reports which the
Company received from such persons for their 1998 Fiscal Year transactions in
the Common Stock and their Common Stock holdings, and (ii) the written
representa-
15
<PAGE> 19
tions received from one or more of such persons that no annual Form 5 reports
were required to be filed by them for the 1998 Fiscal Year, the Company believes
that all reporting requirements under Section 16(a) for such fiscal year were
met in a timely manner by its directors, executive officers and greater than ten
percent beneficial owners except as set forth below.
The Company believes that Mr. Klein sold approximately 5,500 shares of
Common Stock of the Company during the 1998 Fiscal Year, but did not timely file
a Form 4 to report such sale.
ANNUAL REPORT ON FORM 10-K
The Company filed an Annual Report on Form 10-K with the Securities and
Exchange Commission on January 12, 1999 (the "Annual Report"), mailed together
with this Proxy Statement. Stockholders may obtain a copy of exhibits filed with
the Annual Report, without charge, by writing or calling Ms. Terrie Boulanger,
at the Company's principal executive offices located at 1382 Bell Avenue,
Tustin, California 92780, (714) 258-5300, or by accessing the Annual Report on
the Securities and Exchange Commission's web site at:
http://www.sec.gov/edgarhp.htm.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
All proposals of stockholders intended to be presented at the Company's
annual meeting of stockholders to be held in 2000 must be delivered to the
attention of the Secretary of the Company, at the address of the Company set
forth on the first page of this Proxy Statement, prior to November 8, 1999, if
they are to be considered for possible inclusion in the Proxy Statement and form
of proxy used in connection with such meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ PHILIP E. PIETROWSKI
--------------------------------------
Philip E. Pietrowski
Secretary
Tustin, California
January 28, 1999
16
<PAGE> 20
THE CERPLEX GROUP, INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS, MARCH 23, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
THE CERPLEX GROUP, INC.
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the Annual Meeting of Stockholders to be held March 23, 1999 and the
Proxy Statement and appoints George L. McTavish and Steven L. Korby and each of
them, the Proxy of the undersigned, with full power of substitution, to vote all
shares of Common Stock or Preferred Stock of The Cerplex Group, Inc. (the
"Company") which the undersigned is entitled to vote, either on his or her own
behalf or on behalf of any entity or entities, at the Annual Meeting of
Stockholders of the Company to be held at the offices of Brobeck, Phleger &
Harrison LLP, 38 Technology Drive, Irvine, CA, 92618 on March 23, 1999 at 2:00
p.m. Pacific Time (the "Annual Meeting"), and at any adjournment or postponement
thereof, with the same force and effect as the undersigned might or could do if
personally present thereat. The shares represented by this Proxy shall be voted
in the manner set forth in this proxy card.
1. To elect the following directors to serve for one-year terms ending in
the year 2000 or until their successors are duly elected and qualified;
<TABLE>
<CAPTION>
WITHHOLD
AUTHORITY
FOR TO VOTE
<S> <C> <C>
George L. McTavish [ ] [ ]
Thomas E. McInerney [ ] [ ]
Richard H. Stowe [ ] [ ]
</TABLE>
(Continued on reverse side)
<PAGE> 21
2. FOR [ ] AGAINST [ ] ABSTAIN [ ]
To ratify the appointment of KPMG LLP as independent auditors of the Company
for the fiscal year ending September 30, 1999.
3. In accordance with the discretion of the proxy holders, to act upon all
matters incident to the conduct of the meeting and upon other matters as may
properly come before the meeting.
The Board of Directors of the Company recommends a vote IN FAVOR OF the
directors listed above and a vote IN FAVOR OF the listed proposal. This Proxy,
when properly executed, will be voted as specified above. IF NO SPECIFICATION IS
MADE, THIS PROXY WILL BE VOTED IN FAVOR OF THE ELECTION OF THE DIRECTORS LISTED
ABOVE AND IN FAVOR OF THE OTHER PROPOSAL.
Please print the name(s)
appearing on each share
certificate(s) over
which you have voting
authority:
------------------------
(Print name(s) on
certificate)
Please sign your name:
------------------------
(Authorized
Signature(s))
------------------------
Date:
