<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
QMS, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
To the Stockholders of QMS, Inc.:
You are cordially invited to attend the annual meeting of stockholders to be
held at the Adam's Mark Hotel, 64 Water Street, Mobile, Alabama, 36602, on
Wednesday, January 27, 1999, at 2:00 p.m. local time.
The principal business of the meeting will be (i) to elect one class of
directors to serve a three-year term beginning January 27, 1999, and (ii) to
present for stockholder approval an amendment to the Company's Certificate of
Incorporation to decrease the authorized shares of Common Stock. During the
meeting, we will also review the results of the past year and report on
significant aspects of our operations during the quarter ending January 1,
1999.
Whether or not you plan to attend the annual meeting, please complete, sign,
date, and return to the Company the enclosed proxy card in the enclosed,
postage-prepaid envelope at your earliest convenience so that your shares will
be represented at the meeting. If you choose to attend the meeting, you may,
of course, revoke your proxy and personally cast your votes.
Sincerely yours,
/s/ Edward E. Lucente
Edward E. Lucente
Chairman of the Board, President,
and Chief Executive Officer
Mobile, Alabama
December 15, 1998
<PAGE>
QMS, INC.
ONE MAGNUM PASS
MOBILE, ALABAMA 36618
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JANUARY 27, 1999
The annual meeting of stockholders of QMS, Inc. will be held on Wednesday,
January 27, 1999, at 2:00 p.m. local time, at the Adam's Mark Hotel, 64 Water
Street, Mobile, Alabama, 36602.
The meeting is called for the following purposes:
1. To elect three persons to serve as Class III directors for a three-year
term beginning in 1999;
2. To present for stockholder approval an amendment to the Company's
Certificate of Incorporation to decrease the number of authorized shares
of Common Stock, $0.01 par value, to 25,000,000 shares; and
3. To consider and act upon such other business as may properly come before
the meeting or any adjournment(s).
The Board of Directors has fixed November 30, 1998, as the record date for
the determination of stockholders entitled to notice of and to vote at the
meeting.
PLEASE COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES
WILL BE REPRESENTED AT THE MEETING. IF YOU CHOOSE TO ATTEND THE MEETING, YOU
MAY, OF COURSE, REVOKE YOUR PROXY AND PERSONALLY CAST YOUR VOTES.
By Order of the Board of Directors,
/s/ James A. Wallace
James A. Wallace
Secretary
Mobile, Alabama
December 15, 1998
<PAGE>
QMS, INC.
ONE MAGNUM PASS
MOBILE, ALABAMA 36618
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of QMS, Inc. (the "Company") of proxies to be voted at the
annual meeting of stockholders of the Company to be held Wednesday, January
27, 1999, and at any and all adjournments thereof (the "Meeting"). Any proxy
given pursuant to such solicitation and received in time for the Meeting will
be voted with respect to all shares represented by it and will be voted in
accordance with the directions, if any, given in such proxy. If directions are
not given, the proxy will be voted (i) for the election of the persons named
herein to serve as Class III directors, and (ii) FOR approval of an amendment
to the Company's Certificate of Incorporation to decrease the number of
authorized shares of Common Stock. All expenses incurred by this solicitation
will be borne by the Company.
Stockholders who execute proxies may revoke them at any time before they are
voted by filing with the Secretary of the Company either an instrument
revoking the proxy or a duly executed proxy bearing a later date. Proxies also
may be revoked by any stockholder present at the Meeting who expresses a
desire to vote his or her shares in person. A majority of the stockholders
entitled to vote must be present in person, or represented by proxy, to
constitute a quorum and to act upon the proposed business. Failure of a quorum
to be represented at the Meeting will necessitate adjournment and will subject
the Company to additional expense.
The Company's Board of Directors changed the Company's fiscal year to a year
ending on the Friday closest to December 31, effective at the end of a
transitional period ending January 1, 1999. The terms "fiscal 1996," "fiscal
1997," "fiscal 1998," "transitional period" and "fiscal 1999" as used herein
refer to the Company's fiscal years ended September 27, 1996, October 3, 1997,
and October 2, 1998, the quarter ending January 1, 1999, and the fiscal year
ending December 31, 1999, respectively.
SHARES ENTITLED TO VOTE
The Notice of the Meeting, this Proxy Statement, and the form of proxy are
first being mailed to stockholders on or about December 15, 1998. At the close
of business on November 30, 1998, the record date for determining the
stockholders entitled to notice of and to vote at the Meeting, there were
10,697,120 shares of common stock, $0.01 par value ("Common Stock"), of the
Company outstanding and entitled to vote at the Meeting. Each share is
entitled to one vote.
The election of directors requires the affirmative vote of a plurality of
shares of Common Stock voting in person or by proxy at the Meeting, and the
approval of the proposal regarding the Company's Certificate of Incorporation
requires the affirmative vote of a majority of the shares of Common Stock
outstanding at the time of the Meeting. Therefore, abstentions and votes
withheld from director nominees will not be included in vote totals and will
not be considered in determining the outcome of the election of directors.
Abstentions and broker non-votes will have the same effect as votes against
the proposal regarding the Company's Certificate of Incorporation.
YOUR BOARD OF DIRECTORS URGES YOU TO SIGN, DATE,
AND RETURN THE ENCLOSED PROXY CARD IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE
1
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
DIRECTORS AND DIRECTOR NOMINEES
The Company's Certificate of Incorporation provides for three classes of
directors serving staggered terms of office. Upon the expiration of the term
of office for a class of directors, the nominees for that class will be
elected for a term of three years to serve until the election and
qualification of their successors. At the Meeting, three nominees for the
Class III positions will be considered. The Class I and Class II directors
have two years and one year, respectively, remaining in their terms of office.
The Company's Certificate of Incorporation and Bylaws provide that the
Company shall have at least five and no more than ten directors, the exact
number to be determined by resolution of the Board of Directors from time to
time. The Board has, by resolution, set the number of directors at nine. The
Bylaws further permit the Board of Directors, between annual meetings of
stockholders, to fill any vacancy occurring in the Board, whether created by
the death, resignation, retirement, or removal from office of a director or by
an increase in the number of directors.
It is the intention of the persons named as proxies to vote the proxies for
the election as Class III directors of the Company of the persons named below,
each of whom is currently a director, unless the stockholders direct otherwise
in their proxies. In the event any of the nominees named below refuses or is
unable to serve as a director (which is not now anticipated), the persons
named as proxies reserve full discretion to vote for such other person or
persons as may be nominated. The election of the nominees to the Board of
Directors requires the presence, by proxy or in person, of the holders of a
majority of all shares of the Company's Common Stock entitled to notice of and
to vote at the Meeting and the affirmative vote of the holders of a plurality
of the shares voted at the Meeting.
Set forth below is certain information furnished to the Company by each of
the Company's directors, including each of the nominees.
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE FOR THE ELECTION
OF THE NOMINEES FOR DIRECTORS
NOMINEES FOR DIRECTORS
CLASS III DIRECTORS--CURRENT TERM EXPIRING 1999
MICHAEL C. DOW/1/ (age 51) has been a director of the Company since 1977 and
was an executive officer from 1977 until January 1989. He served the Company
in a consulting capacity from February 1989 to January 1992. From 1977 to
January 1989, he served the Company in various capacities, including Senior
Vice President, Marketing and Service; Senior Vice President, Marketing;
Senior Vice President, Sales and Customer Technical Service; Senior Vice
President, Sales and Customer Support; and Senior Vice President, Sales and
Services. Since October 1989, he has served as Mayor of the City of Mobile,
Alabama.
S. FELTON MITCHELL, JR. (age 53) has been a director of the Company since
1987. He has been President, S. Felton Mitchell, Jr., P.C. (attorney) since
1987; and sole proprietor, S. Felton Mitchell, Jr., CPA (accounting) since
1986. He is also a director of Energy South, Inc. (formerly Mobile Gas Service
Corporation) and President of The Vibroplex Company, Inc. (a communications
equipment manufacturer).
- --------
/1/ Mr. Dow and Mr. Busby are brothers-in-law.
2
<PAGE>
CHARLES D. DALEY (age 64) has been a director of the Company since 1990. Mr.
Daley retired from the Company in July 1995 but continues to serve on the
Company's Board of Directors and returned to serve as Executive Vice President
and Chief Operating Officer of the Company from July 1997 to January 1998.
From 1988 until his retirement in 1995, he served as the Company's Executive
Vice President, Finance and Administration (formerly Senior Vice President,
Finance and Administration), Treasurer, and Chief Financial Officer. He
previously served as Vice President, Finance and Administration, at Megatek
Corp., a subsidiary of United Telecommunications, Inc. (a CAD/CAM terminal
manufacturer).
DIRECTORS CONTINUING IN OFFICE
CLASS I DIRECTORS--CURRENT TERM EXPIRING 2001
JAMES L. BUSBY/1/ (age 52) has been a director of the Company since 1977. He
was President and Chief Executive Officer of the Company from 1977 to January
1998 and Chairman of the Board from 1977 to October 1998. He has been
President of Third Millennium Technology, Inc. (a central home lighting
systems manufacturer) since September 1997.
LUCIUS E. BURCH, III (age 57) has been a director of the Company since 1983.
He has been President of Massey Burch Investment Group, Inc. (an investment
management and venture capital firm) since 1981 and Chairman of Massey Burch
Investment Group, Inc. since 1990. He is also a director of Corrections
Corporation of America (a judicial systems management company), Norrell
Corporation (a provider of temporary personnel to businesses), and Physicians
Resource Group (a provider of physicians practice management services).
JACK EDWARDS (age 70) has been a director of the Company since July 1996. He
has been a senior member of the law firm of Hand Arendall, L.L.C. since 1985
and was a member of the U.S. House of Representatives for twenty years. He is
also a director of The Southern Company (an electric utility holding company)
and Northrop Grumman Corporation (a manufacturer of defense and electronics
systems), and has served on the Board of Trustees of the University of Alabama
System since 1988.
CLASS II DIRECTORS--TERM EXPIRING 2000
EDWARD E. LUCENTE (age 59) has been a director, President, and Chief
Executive Officer of the Company since January 1998 and Chairman of the Board
since October 1998. Previously, Mr. Lucente was President of Lucente
Associates, Inc. (a management consulting firm) from June 1994 to December
1997, Senior Vice President of Digital Equipment Corporation (an implementer
and supporter of networked business solutions) from April 1993 to June 1994
and Senior Vice President, World Wide Sales and Marketing, for Northern
Telecom (a provider of network solutions) from January 1991 to April 1993.
Prior to that, he was with International Business Machines (a computer
hardware and software company) for thirty years, retiring in 1991 as President
and Chairman of IBM World Trade Asia Pacific Corporation in Tokyo, Japan.
JAMES A. WALLACE (age 52) has been a director, Vice President and Chief
Financial Officer of the Company since July 1998. Previously, Mr. Wallace was
Vice President and Chief Financial Officer of Power Computing Corporation (a
direct marketer of personal computers) from December 1997 to June 1998. Prior
to that, he was with Digital Equipment Corporation (an implementer and
supporter of networked business solutions) for 16 years in a number of senior
management positions.
F. RIGDON CURRIE (age 68) has been a director of the Company since October
1996. He was a general partner of Pacific Venture Partners from 1983 to 1994,
and has been a special limited partner of MK Global Ventures since 1988. He is
also a director of DISC, Inc. (a manufacturer of robotic digital storage
libraries) and four private companies. He is Chairman of the Board of
Opportunity Capital Corporation (a minority venture capital firm).
- --------
/1/ Mr. Dow and Mr. Busby are brothers-in-law.
3
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal 1998, the Board of Directors met four times. All incumbent
members of the Board attended at least 75% of the total number of Board
meetings and meetings of committees of which they were members.
During fiscal 1998, the Executive Committee met four times. The Executive
Committee is authorized to exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the corporation.
The current members of the Executive Committee are Messrs. Edwards (Chairman),
Daley, and Lucente.
During fiscal 1998, the Audit Committee met four times. The Audit Committee
is responsible for reviewing and making recommendations regarding the
Company's employment of independent auditors, the annual audit of the
Company's financial statements and the Company's internal accounting practices
and policies. The current members of the Audit Committee are Messrs. Mitchell
(Chairman), Edwards, and Burch.
During fiscal 1998, the Compensation Committee met four times. The
Compensation Committee is responsible for recommending and reviewing the
compensation, including fringe benefits, of the executive officers and
directors of the Company and for administering the Company's stock option
plans. The current members of the Compensation Committee are Messrs. Burch
(Chairman), Currie, and Daley.
The Company has no nominating committee.
DIRECTOR COMPENSATION
No remuneration is paid to executive officers of the Company for services
rendered in their capacities as directors. The Company pays fees to non-
employee directors of $2,000 per month, plus $750 for each day, or part
thereof, spent in meetings of the Board of Directors or committees thereof.
Non-employee directors who are members of a committee are paid an additional
$2,000 a year for each committee on which the non-employee director serves.
Non-employee directors may elect, on an annual basis, to receive stock options
pursuant to the QMS, Inc. Stock Option Plan for Directors in lieu of the
monthly fee.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and persons who own more than 10% of the
Company's Common Stock to file reports of ownership and changes in ownership
of such securities with the Securities and Exchange Commission (the "SEC") and
the New York Stock Exchange, Inc. Such persons are also required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of the copies of such forms furnished to the
Company or representations that no Forms 5 were required, the Company believes
that during fiscal 1998 all of the Company's directors and executive officers
complied with all Section 16(a) filing requirements, except that Mr. Currie
filed one late report covering three transactions.
EXECUTIVE OFFICERS
The executive officers of the Company serve at the discretion of the Board
of Directors and as of November 30, 1998, included Edward E. Lucente, James A.
Wallace, Albert A. Butler, C. Richard Bowles, Robert R. Schulz, Marino J.
Niccolai, Charles A. Gammill, Thomas L. McGoogan, and Lloyd E. Adams.
MR. BUTLER (age 56) has been Vice President, Operations, of the Company
since April 1992. Prior to that time, Mr. Butler served as Vice President,
Corporate Materials and Logistics from January 1991 to April 1992. Previously,
he was with the General Electric Co. (a manufacturer of electronics) in a
number of manufacturing management positions for various GE businesses at the
corporate headquarters where he oversaw the internal product management
consulting organization.
4
<PAGE>
MR. BOWLES (age 37) has been Vice President, Marketing, of the Company since
February 1997. Prior to that time, Mr. Bowles served as Executive Director,
National Sales, from September 1996 to February 1997; Executive Director,
Marketing, from September 1995 to September 1996; Executive Director, Reseller
Sales, from February 1995 to September 1995; and Executive Director, Product
Marketing, from January 1993 to February 1995. From October 1983 to January
1993, Mr. Bowles served in a number of positions in the marketing, sales, and
engineering organizations of the Company.
MR. SCHULZ (age 53) has been Vice President, National Field Service, of the
Company since March 1998. Prior to that time, Mr. Schulz served as Area
Director of Field Service from March 1992 to March 1998.
DR. NICCOLAI (age 55) has been Vice President, Engineering, of the Company
since June 1998. Dr. Niccolai acted as a consultant to the Company from 1981
to June 1998. He was with the University of South Alabama as Professor of
Computer Science from 1982 to June 1998.
MR. GAMMILL (age 51) has been Vice President, Sales, of the Company since
August 1998. Prior to that time, Mr. Gammill served as Executive Assistant to
the President from March 1998 to September 1998; Executive Director,
Telesales/Telemarketing, from August 1996 to February 1998; and Executive
Director, North American Sales, from October 1995 to July 1996. From January
1986 to September 1995, Mr. Gammill served in a number of positions in the
sales organization of the Company.
MR. MCGOOGAN (age 45) has been Vice President, Human Resources, of the
Company since May 1998. Prior to that time, Mr. McGoogan served as Executive
Director of Human Resources from July 1996 to May 1998; Director of Personnel
from July 1990 to July 1996; and Employment Manager from July 1985 to July
1990.
MR. ADAMS (age 44) has been Corporate Controller of the Company since July
1998. Prior to that time, Mr. Adams served as Executive Director of Corporate
Accounting from May 1997 to July 1998. He was the Chief Financial Officer of
The Christian Broadcasting Network from May 1995 to November 1996 and was Vice
President of Finance and Controller of Search Capital (a financial services
company) from April 1993 to May 1995.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of November 30, 1998,
regarding the amount of Common Stock beneficially owned by each of the
executive officers whose names appear in the "Summary Compensation Table"
included herein ("named executive officers"), each director and director
nominee of the Company, all directors and officers of the Company as a group,
and each person known to the Company to own beneficially more than five
percent of the outstanding shares of Common Stock. All shares shown reflect
sole voting and investment power except as otherwise noted.
According to rules adopted by the SEC, a person is a "beneficial owner" of
securities if that person has or shares the power to vote them or to direct
their investment or has the right to acquire beneficial ownership of such
securities within 60 days through the exercise of an option, warrant or right
of conversion of a security, or otherwise. As of the date of this Proxy
Statement, the Company only has shares of Common Stock outstanding.
5
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES AND NATURE
OF
BENEFICIAL OWNERSHIP AT
NOVEMBER 30, 1998
--------------------------------------
VOTING OR OPTIONS
INVESTMENT POWER EXERCISABLE
--------------------- WITHIN PERCENT OF
NAME OR GROUP SOLE(/1/) SHARED 60 DAYS CLASS(/2/)
- ------------- --------- ------- ----------- ----------
<S> <C> <C> <C> <C>
Dimensional Fund Advisors,
Inc.(/3/)................... 410,450 203,200(/4/) 0 5.7%
Edward E. Lucente............ 103,642(/5/) 0 100,001 1.9%
James L. Busby(/6/).......... 559,418(/7/) 0 65,000 5.8%
Albert A. Butler............. 10,080 3,000(/8/) 26,800 *
C. Richard Bowles............ 3,088 0 16,900 *
Charles A. Gammill........... 9,436 0 9,400 *
Lloyd E. Adams............... 3,228 0 5,425 *
James A. Wallace............. 6,775 0 0 *
Charles D. Daley............. 0 3,000(/8/) 15,677 *
Lucius E. Burch, III......... 14,740 23,525(/9/) 66,966 1.0%
Michael C. Dow............... 19,000 40,467(/8/) 47,432 1.0%
S. Felton Mitchell, Jr....... 0 0 62,255 *
Jack Edwards................. 0 1,440(/8/) 6,250 *
F. Rigdon Currie............. 6,000 0 6,250 *
Joseph H. Niknejadi(/10/).... 3,245 0 0 *
Richard A. Wiggins(/11/)..... 4,075 0 21,500 *
All current directors and
executive officers as a
group (18 persons).......... 757,025 71,432 468,656 11.6%
</TABLE>
- --------
* Indicates beneficial ownership of less than 1.0%.
(/1/) Includes shares held in the Company's 401(k) plan as follows: Mr.
Butler, 10,080; Mr. Bowles, 3,088; Mr. Gammill, 9,436; Mr. Adams, 1,289;
Mr. Wallace, 722; Mr. Wiggins, 2,075; and all directors and executive
officers as a group, 36,783. It also includes shares held in the
Company's Employee Stock Purchase Plan as follows: Mr. Lucente, 3,642;
Mr. Adams, 1,939; Mr. Wallace, 1,053; Mr. Niknejadi, 2,245; and all
current directors and executive officers as a group, 9,085.
(/2/) For each person named and the group identified in the table, "Percent of
Class" has been calculated assuming the exercise of all options
exercisable by that person or group within 60 days after November 30,
1998.
(/3/) Dimensional Fund's address is 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401.
(/4/) Includes 74,400 shares held by the DFA Investment Dimensions Group Inc.,
(the "Fund") and 128,800 shares held by the DFA Investment Trust Company
(the "Trust").
(/5/) Includes 8,000 shares held by Mr. Lucente's spouse, as to which he has
no voting or investment power and disclaims beneficial ownership.
(/6/) Mr. Busby's address is 6106 Cottage Hill Road, Mobile, Alabama 36609.
(/7/) Includes 17,000 shares held by Mr. Busby's spouse, as to which he has no
voting or investment power and disclaims beneficial ownership.
(/8/) Voting and investment power is shared with spouse with respect to the
indicated shares.
(/9/) Of the indicated shares, 5,000 are held of record by Mr. Burch's spouse;
18,425 are held of record by a trust of which Mr. Burch is a beneficiary
and a co-trustee; and 100 are held by dependents of Mr. Burch.
(/10/) Mr. Niknejadi resigned his position as an executive officer of the
Company as of April 30, 1998.
(/11/) Mr. Wiggins ceased to be an executive officer of the Company as of June
22, 1998.
EXECUTIVE COMPENSATION TABLES
The following tables present certain information concerning the cash
compensation and stock options provided to the named executive officers. The
notes to these tables provide more specific information regarding
compensation. The executive officer compensation policies of the Board of
Directors are discussed in more detail in the Compensation Committee Report.
6
<PAGE>
TABLE I
SUMMARY COMPENSATION TABLE
This table presents the total compensation earned during or with respect to
fiscal 1998, fiscal 1997, and fiscal 1996 by the Company's Chief Executive
Officer and its four most highly compensated executive officers, other than
the Chief Executive Officer, during fiscal 1998. The table also includes one
additional individual who was Chief Executive Officer of the Company from
October 1997 to January 1998 and two additional individuals who were two of
the Company's most highly compensated executive officers during fiscal 1998,
but whose employment by the Company ceased prior to October 2, 1998. The
Company has outstanding no stock appreciation rights ("SARs") and no shares of
restricted stock.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ($) AWARDS
---------------------------- ------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION YEAR ($) ($) ($)(/1/) (*) ($)(/2/)
- ------------------ ------ ------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Edward E. Lucente....... 1998 263,270 325,002 0 500,000 0
President and CEO 1997 0 0 0 0 0
1996 0 0 0 0 0
James L. Busby.......... 1998 544,236 0 0 0 13,233
Former President and CEO 1997 546,886 0 0 20,000 1,103,426
1996 480,922 0 0 10,000 110,888
Albert A. Butler........ 1998 197,065 63,335 0 10,000 4,000
Vice President,
Operations 1997 187,976 15,500 0 5,000 0
1996 156,763 0 0 6,000 5,250
C. Richard Bowles....... 1998 160,010 54,835 0 10,000 4,000
Vice President,
Marketing 1997 137,296 33,400 0 2,500 0
1996 118,846 60,500 0 5,000 4,418
Charles A. Gammill...... 1998 137,410 64,462 0 5,900 4,000
Vice President, Sales 1997 120,000 46,998 0 2,500 0
1996 118,854 68,000 0 5,000 4,950
Lloyd E. Adams.......... 1998 106,478 19,300 26,663 23,700 0
Corporate Controller 1997 34,711 15,000 0 2,500 0
1996 0 0 0 0 0
Joseph H. Niknejadi..... 1998 350,240 90,125 0 10,000 4,000
Former Vice President, 1997 186,794 165,000 0 10,000 0
Sales and Service 1996 120,000 60,000 0 5,000 5,250
Richard A. Wiggins...... 1998 197,308 50,000 0 10,000 4,000
Former Vice President
and CFO 1997 182,116 800 2,730 10,000 0
1996 32,788 10,000 59,938 25,000 0
</TABLE>
- --------
* Number of shares.
(/1/) Amounts reported in the "Other Annual Compensation" for Mr. Wiggins and
Mr. Adams represent reimbursed relocation expense.
(/2/) Includes for Mr. Busby $4,000 contributed on his behalf to the Company's
401(k) Plan and $9,233 for life insurance premiums paid on his behalf.
Includes $4,000 contributed on the behalf of each of the following to
the Company's 401(k) Plan: Messrs Butler, Bowles, Gammill, Niknejadi and
Wiggins.
7
<PAGE>
TABLE II
FISCAL 1998 STOCK OPTION GRANTS
The following table presents information regarding options to purchase
shares of Common Stock that were issued by the Company to its named executive
officers in fiscal 1998 that may be exercised to purchase shares of Common
Stock. The Company granted no SARs during fiscal 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO EXERCISE GRANT
UNDERLYING EMPLOYEES OR BASE DATE
OPTIONS IN FISCAL PRICE EXPIRATION VALUE
NAME GRANTED(/1/) YEAR ($/SHARE) DATE ($)(/2/)
- ---- ------------ ---------- --------- ---------- --------
<S> <C> <C> <C> <C> <C>
Edward E. Lucente(/3/)... 400,000 33.5% $2.4375 1/05/08 $678,500
100,000 8.4% $2.6875 1/05/08 $124,230
James L. Busby........... 0 n/a n/a n/a n/a
Albert A. Butler......... 10,000 0.8% $2.8125 11/11/07 $ 14,838
C. Richard Bowles........ 10,000 0.8% $2.8125 11/11/07 $ 14,838
Charles A. Gammill(/4/).. 4,900 0.4% $2.8125 11/11/07 $ 4,607
1,000 0.1% $3.0625 1/22/08 $ 1,616
Lloyd E. Adams(/5/)...... 1,200 0.1% $3.0625 1/22/08 $ 1,939
22,500 1.9% $3.6875 7/29/08 $ 43,772
Joseph H. Niknejadi(/6/). 10,000 0.8% $2.8125 11/11/07 $ 14,838
Richard A. Wiggins....... 10,000 0.8% $2.8125 11/11/07 $ 14,838
</TABLE>
- --------
(/1/) All options granted to the named executive officers were granted on
November 11, 1997, except as noted for Messrs. Lucente, Gammill, and
Adams. These options become exercisable in 20% increments annually
beginning on the date of grant. All options are subject to accelerated
vesting in whole or in part upon a "change of control" as defined in the
Company's 1997 Stock Incentive Plan.
(/2/) This column represents the present value of the options on the date of
grant using the Black-Scholes option pricing model adapted for the
Company's Common Stock, utilizing the following assumptions: five-year
stock price volatility of 0.6384; no dividend yield; expected term to
exercise of 1.54 years; interest rates equal to the U.S. Treasury Note
rates in effect at the date of the grant (approximately 5%) for the
expected term of the option, and no adjustment for non-transferability
or forfeiture. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the
date the option is exercised, so there is no assurance that the value to
be realized by an executive will be at or near the value estimated by
the Black-Scholes model.
(/3/) On January 5, 1998, Mr. Lucente was granted options to purchase 500,000
shares. Options to purchase 300,000 shares become exercisable in 33.3%
increments annually beginning on the first anniversary of the date of
grant and options to purchase 200,000 shares become fully exercisable
upon the Company's common stock price reaching and maintaining a certain
level for a specified period of time.
(/4/) On November 11, 1997, and January 22, 1998, Mr. Gammill was granted
options to purchase 4,900 and 1,000 shares, respectively. The option to
purchase 4,900 shares becomes fully exercisable on the first anniversary
of the date of grant and the option to purchase 1,000 shares becomes
exercisable in 20% increments annually beginning on the date of grant.
(/5/) On January 22, 1998, and July 29, 1998, Mr. Adams was granted options to
purchase 1,200 and 22,500 shares, respectively. The option to purchase
1,200 shares becomes exercisable in 25% increments annually beginning on
the first anniversary of the date of grant and the option to purchase
22,500 shares becomes exercisable in 20% increments annually beginning
on the date of grant.
(/6/) All of Mr. Niknejadi's outstanding options were forfeited on April 30,
1998, when he ceased to be an executive officer of the Company.
8
<PAGE>
TABLE III
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND
FISCAL YEAR-END OPTION VALUES
The following table presents information regarding options exercised for
shares of the Company's Common Stock during fiscal 1998 and the value of
unexercised options held at October 2, 1998. The Company has no outstanding
SARs.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES VALUE OPTIONS AT 10/2/98 OPTIONS AT 10/2/98 ($)(/1/)
ACQUIRED ON REALIZED ------------------------- ------------------------------
NAME EXERCISE ($) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- EXERCISABLE ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Edward E. Lucente....... 0 $ 0 0 500,000 $ 0 $ 600,000
James L. Busby.......... 0 0 107,000 18,000 0 0
Albert A. Butler........ 0 0 21,600 14,400 1,750 7,000
C. Richard Bowles....... 0 0 13,140 12,060 1,750 7,000
Charles A. Gammill...... 0 0 600 5,900 125 4,788
Lloyd E. Adams.......... 0 0 5,125 21,075 352 1,805
Joseph H.
Niknejadi(/2/)......... 0 0 0 0 0 0
Richard A. Wiggins...... 0 0 17,000 28,000 1,750 7,000
</TABLE>
- --------
(/1/) Based on the closing price on the New York Stock Exchange--Composite
Transactions of the Company's Common Stock on that date ($3.6875).
(/2/) Mr. Niknejadi's options were forfeited on April 30, 1998, when he ceased
to be an executive officer of the Company.
9
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph compares the Company's five-year cumulative total return
to the S&P 500 and the S&P Computer Systems Composite Index over the five-year
period beginning on October 2, 1993, and ending October 2, 1998. The total
stockholder return assumes $100 invested at the beginning of the period in the
Company's Common Stock, the S&P 500, and the S&P Computer Systems Composite
Index. It also assumes reinvestment of all dividends. Past financial
performance should not be considered to be a reliable indicator of future
performance, and investors should not use historical trends to anticipate
results or trends in future periods.
[PERFORMANCE GRAPH APPEARS HERE]
1993 1994 1995 1996 1997 1998
----- -------- -------- -------- -------- --------
S&P 500 $100 $103.72 $134.47 $161.72 $227.05 $247.52
S&P Computer
Systems $100 $146.09 $209.89 $254.10 $469.26 $561.87
QMS, Inc. $100 $104.11 $ 49.32 $ 64.38 $ 31.51 $ 41.10
10
<PAGE>
EXECUTIVE AGREEMENTS
The Company has entered into Executive Services Agreements (the
"Agreements") with Mr. Lucente and Mr. Wallace. Mr. Lucente's Agreement has no
specified term. It provides that Mr. Lucente will be paid the following
compensation: (i) a base salary of $350,000 per year, subject to annual review
by the Compensation Committee; (ii) a guaranteed bonus of $29,167 per month,
which expired in June of 1998, together with the opportunity to earn
additional bonuses which total, together with the guaranteed bonus, up to
$350,000 for fiscal 1998; (iii) options to purchase up to 500,000 shares of
the Company's Common Stock; (iv) a monthly automobile allowance of $750; and
(v) reimbursement of expenses incurred in connection with joining a social
club. Mr. Lucente's Agreement also contains a $150,000 relocation bonus in
addition to reimbursement of moving expenses.
Mr. Lucente's Agreement gives the Board of Directors express authority to
terminate it if Mr. Lucente fails to perform his material obligations
thereunder. It also gives QMS the right to terminate Mr. Lucente's employment
due to any physical or mental infirmity which continues for three (3)
consecutive months, or for six (6) months during any consecutive twelve (12)
month period, on ninety (90) days written notice, during which ninety (90) day
period Mr. Lucente would continue to receive his full compensation. Mr.
Lucente's Agreement also contains restrictions on solicitation of Company
employees and competition with the Company for two years after termination of
employment and on use of confidential information.
Mr. Wallace's Agreement has no specified term. It may be terminated by the
Company for cause (as defined therein), in which case the Company would have
no further obligations to Mr. Wallace, or it may be terminated by the Company
without cause, in which case the Company would be obligated to pay Mr. Wallace
$250,000. Mr. Wallace's Agreement provides that Mr. Wallace will be paid the
following compensation: (i) an initial bonus of $25,000 after execution of the
Agreement; (ii) a base salary of $250,000 per year, subject to annual review
by the Compensation Committee; (iii) the option to purchase 200,000 shares of
the Company's common stock, with one-third of such amount vesting on the first
anniversary of the option, one-third vesting in the second anniversary of the
option and the final third vesting on the third anniversary of the option;
(iv) travel reimbursement for the initial ninety (90) days of his employment
for up to six (6) trips between Mobile, Alabama and Georgetown, Texas; (v) an
automobile allowance of $750 per month; (vi) a term life insurance policy with
a death benefit of $300,000; and (vii) the right to participate in and enjoy
the Company's vacation, insurance, retirement, bonus, and other employee
benefit plans generally applicable to senior executives. Mr. Wallace's
Agreement also contains restrictions on solicitation of Company employees and
competition with the Company for two years after termination of employment and
on use of confidential information.
The Company has entered into an Executive Agreement with Mr. Lucente which
provides Mr. Lucente with certain benefits upon a "change of control" of the
Company, as defined in the Executive Agreement. The Executive Agreement has no
specified term. It provides that if Mr. Lucente is terminated within eighteen
(18) months after the date of a change of control of the Company, he has the
right to receive the following: (i) immediate vesting of all options; and (ii)
a single cash payment equal to 200% of Mr. Lucente's base salary plus the
amount which, if paid to Mr. Lucente in thirty-six (36) consecutive equal
monthly installments, would have a present value equal to the amount by which
299% of Mr. Lucente's "base amount" (as defined by Section 280G of the
Internal Revenue Code) exceeds the aggregate present value of all other
parachute payments (as defined by Section 280G) received by Mr. Lucente.
"Present value" is determined in accordance with Section 280G. The amount to
be paid under the Executive Agreement would be paid to a trust for the benefit
of Mr. Lucente, and all expenses arising therefrom or from implementation or
enforcement of the agreement would be paid by the Company. The Executive
Agreement also provides that the Company will increase the amounts paid
thereunder to account for any excise tax due on such amounts.
Mr. Busby entered into a separation agreement with the Company on June 30,
1997, which provided for his resignation as an executive officer of the
Company as of the appointment of his successor, with his salary of $510,000
per year continuing through December 31, 1998. Thereafter, Mr. Busby will be
paid $287,500 per year for ten years, pursuant to his supplemental executive
retirement plan. This agreement terminates Mr. Busby's rights under change of
control agreements previously executed. The agreement also terminates his
employment
11
<PAGE>
rights, in the event he violates certain non-compete and trade secret
provisions, voluntarily resigns, attempts to influence QMS employees to resign
from QMS, or commits QMS monetarily without the consent of specifically
designated QMS officers.
REPORT OF THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS OF QMS, INC.
The Compensation Committee of the Board of Directors is currently composed
of three non-management directors, Messrs. Burch (Chairman), Currie and Daley.
The Committee is responsible for setting overall policies that govern the
Company's compensation programs, administering certain of the Company's equity
compensation plans, and establishing the cash compensation of executive
officers.
The Company's executive compensation programs are designed to attract,
reward, and retain key executives who will continue to lead the Company in
achieving its objectives in a highly competitive and fast-changing industry.
The cash compensation for each of the Company's executives consists of a
base salary and an annual incentive program. Long-term incentives consist of
stock options granted under the QMS, Inc. 1997 Stock Incentive Plan.
CASH COMPENSATION--BASE SALARIES
Base salary targets are established by reviewing published survey data and
compensation information contained in proxy statements regarding similar
positions held by executives of other high technology/electronics firms of
approximately the same size as the Company. The Compensation Committee then
chooses to pay the executive at, above, or below his base salary target
according to a subjective determination by the Compensation Committee based
upon the following two factors:
1. The executive's job performance in the Company's last fiscal year; and
2. The executive's perceived potential to contribute to the Company's
performance in the upcoming fiscal year.
Final decisions regarding the establishment of base salary targets and
levels of base salaries are made independently by the Compensation Committee.
The Committee does, however, solicit input from the Company's Chief Executive
Officer on the level of performance of executives reporting to him. Base
salary adjustments may be made within a fiscal year based on the executive's
performance and contribution to the Company's results of operations during
that period.
The results of such actions are reflected in the Summary Compensation Table
set forth above.
CASH COMPENSATION--ANNUAL INCENTIVE PROGRAMS
The Compensation Committee believes that an annual cash compensation program
tied to the Company's performance provides appropriate short-term incentives
to the Company's key executive officers. Accordingly, all executive officers
of the Company participate in an annual cash incentive program that requires
the Company to achieve a certain earnings level before any payments may be
made. The earnings levels are established by the Compensation Committee upon
recommendation by the Chief Financial Officer of the Company each year and are
generally set at levels providing for an increase in earnings over the prior
year before any incentive compensation is earned. The threshold earnings per
share target level for fiscal 1998 was $0.16 per share. As quarterly targeted
earnings are achieved, each executive is eligible to receive a bonus payment
of up to $15,000, contingent upon accomplishment of specific performance
goals. The Committee's philosophy is that executive base salaries should be
competitive within the industry and should be paid regardless of the Company's
performance so long as the officer retains his position, but that the annual
incentive portion of executive compensation should not be paid unless
stockholders benefit from improved earnings per share. Because target earnings
per share levels were attained in fiscal 1998, bonus payments were made in
accordance with the executives' individual compensation plans. Because target
earnings per share levels were not attained in fiscal years 1996 or 1997, no
payments were made under this program for those years.
12
<PAGE>
STOCK OPTION PROGRAMS
The Compensation Committee believes that management ownership of a
significant equity interest in the Company is a major incentive in building
stockholder value and aligning the long-term interests of management and
stockholders. To that end, the Compensation Committee has historically granted
stock options at option prices not less than the fair market value of the
Common Stock on the grant date. Any gain from the exercise of the stock
options will occur only when the price of the Company's Common Stock increases
above the option grant price. This situation, in turn, means that stockholder
value is being enhanced. In fiscal 1998, the Compensation Committee granted
stock options to the named executive officers as outlined in Table II--Fiscal
1998 Stock Option Grants set forth above.
COMPENSATION--CHIEF EXECUTIVE OFFICER
The Compensation Committee considers the information set forth above
concerning compensation paid to executives by other companies in setting the
compensation of Mr. Lucente as the Chief Executive Officer of the Company. The
Committee's objective in setting Mr. Lucente's compensation has been that his
salary be within a range of salaries paid to chief executive officers of
companies in the high technology/electronics industry of approximately the
same size as the Company. In addition, the Committee approves the performance
objectives set forth in an annual incentive plan described above, which is
designed to permit Mr. Lucente (as well as the other officer-participants in
the annual incentive plan) to earn additional compensation if certain earnings
levels are achieved. See the discussions under "Cash Compensation--Annual
Incentive Programs" above. The Committee also granted stock options to Mr.
Lucente in fiscal 1998 based on the philosophy described under "Stock Option
Programs" above. See "Table II--Fiscal 1998 Stock Option Grants" for the terms
of such options.
LIMITATIONS ON THE DEDUCTIBILITY OF COMPENSATION
Pursuant to the 1993 Omnibus Budget Reconciliation Act, a portion of annual
compensation payable after 1993 to any of the Company's five highest paid
executive officers would not be deductible by the Company for federal income
tax purposes to the extent such officer's overall compensation exceeds
$1,000,000. Qualifying performance-based incentive compensation, however,
would be both deductible and excluded for purposes of calculating the
$1,000,000 base. It has been determined that no portion of anticipated
compensation payable to any executive officer in fiscal 1998 would be non-
deductible. Although the Compensation Committee does not presently intend to
award compensation in excess of the $1,000,000 cap, it will continue to
address this issue when formulating compensation arrangements for executive
officers.
Submitted By the Compensation Committee
of the Board of Directors
<TABLE>
<S> <C> <C>
Lucius E. Burch, III F. Rigdon Currie Charles D. Daley
</TABLE>
The foregoing Report of the Compensation Committee shall not be deemed to
constitute soliciting material and shall not be deemed to be incorporated by
reference as a result of any general incorporation by reference of this Proxy
Statement or any part hereof in the Company's Annual Report to Stockholders on
form 10-K.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Burch, Daley, and Currie served on the Compensation Committee during
fiscal 1998. Mr. Daley ceased to serve on the Committee in July 1997 when he
was named Executive Vice President and Chief Operating Officer of the Company
but returned to serve on the Committee upon his retirement from the Company in
January 1998.
PROPOSAL 2--AMENDMENT OF THE
CERTIFICATE OF INCORPORATION
INTRODUCTION
The Board of Directors has adopted a resolution to amend the Company's
Restated Certificate of Incorporation, as amended to date, to decrease the
number of authorized shares of Common Stock, $0.01 par
13
<PAGE>
value, from 50,000,000 shares to 25,000,000 shares. The Board has declared the
change advisable and recommends the stockholders vote "FOR" the proposed
amendment which is attached hereto as Appendix A.
The Company's Restated Certificate of Incorporation currently authorizes the
issuance of 50,000,000 shares of Common Stock, $0.01 par value. At November
30, 1998, 10,697,120 shares of Common Stock were outstanding and an additional
2,000,000 shares were allocated for issuance under the Company's 1997 Stock
Incentive Plan and its Stock Option Plan for Directors and 500,000 shares were
allocated for purchase under the Company's Employee Stock Purchase Plan. In
addition, 100,000 shares are reserved for issuance pursuant to a warrant
issued to Foothill Capital Corporation and 100,000 shares are reserved for
issuance pursuant to a warrant issued to Ink (AL) QRS 12-21, Inc. The Board of
Directors is empowered, without further action by the stockholders, to issue
the remaining authorized but unissued shares of Common Stock. If the proposed
amendment is approved by the stockholders, the number of such shares of Common
Stock subject to issuance without further action by the stockholders will be
reduced accordingly. The holders of the Common Stock have no preemptive rights
to subscribe to any future issues of such stock.
Corporate franchise taxes paid by the Company are based, in part, upon the
number of shares outstanding and the aggregate par value of such shares.
Management of the Company estimates that such franchise taxes will be reduced
by approximately $28,000 annually as a result of the reduction in authorized
shares.
The Company presently has no plans to issue additional shares of Common
Stock otherwise than in accordance with its existing stock purchase and option
plans and pursuant to warrants issued to Foothill Capital Corporation and to
Ink (AL) QRS 12-21, Inc. Accordingly, it does not believe the reduction in the
number of authorized shares will affect the Company's ability to conduct its
business.
The approval of the amendment requires the affirmative vote of the holders
of the majority of the outstanding shares of Common Stock.
YOUR BOARD OF DIRECTORS RECOMMENDS
THAT STOCKHOLDERS VOTE FOR THE AMENDMENT TO
THE COMPANY'S CERTIFICATE OF INCORPORATION
AUDITORS
The firm of Deloitte & Touche LLP has served as the Company's independent
certified public accountants since 1980. The appointment of auditors is a
matter for determination by the Audit Committee of the Board of Directors and
is not being submitted to the stockholders for approval or ratification. A
representative of the firm is expected to attend the Meeting, to respond to
questions from stockholders, and to make a statement if he so desires.
CERTAIN TRANSACTIONS AND MATTERS
Jack Edwards, a director and nominee, is a member of the law firm of Hand
Arendall, L.L.C., which serves as counsel for the Company.
STOCKHOLDER PROPOSALS FOR ANNUAL MEETING
Any stockholder of the Company wishing to submit a proposal for action at
the Company's annual meeting of stockholders to be held in 2000 and desiring
the proposal to be considered for inclusion in the Company's proxy material
relating thereto must provide a written copy of the proposal to the management
of the Company at its principal executive office not later than August 17,
1999, and must otherwise comply with the rules of the SEC relating to
stockholder proposals. The named proxies for the 2000 annual meeting will have
discretionary voting authority with respect to any stockholder proposal not
received in writing by the Company by December 13, 1999, and they will
exercise their authority in accordance with the recommendations of the Board
of Directors.
14
<PAGE>
ANNUAL REPORT
The Company's 1998 Annual Report to Stockholders is being mailed to the
Company's stockholders with this Proxy Statement. The Annual Report is not
part of the proxy solicitation material.
GENERAL
Management does not know of any other matters to be presented at the Meeting
for action by stockholders. However, if any other matter requiring a vote of
the stockholders is properly presented at the Meeting or any adjournment
thereof, it is intended that votes will be cast pursuant to the proxies with
respect to such matters in accordance with the best judgment of the persons
acting under the proxies.
The Company will pay the cost of soliciting proxies in the accompanying
form. In addition to solicitation by use of the mail, certain officers and
regular employees of the Company may solicit the return of proxies by
telephone, telegram, or personal interview. The Company has engaged Corporate
Investor Communications, Inc. to distribute and solicit proxies for the
Meeting at an estimated cost of $4,500 plus reasonable expenses. The Company
has requested that brokerage houses and custodians, nominees and fiduciaries
forward soliciting materials to their principals and beneficial owners of
Common Stock of the Company, and will reimburse them for their reasonable out-
of-pocket expenses.
A list of stockholders entitled to be present and vote at the Meeting will
be available at the offices of the Company, One Magnum Pass, Mobile, Alabama,
for inspection by the stockholders during regular business hours from January
10, 1999, to the date of the Meeting. The list also will be available during
the Meeting for inspection by stockholders who are present.
If you cannot be present in person, you are requested to complete, sign,
date, and return the enclosed proxy promptly. An envelope has been provided
for that purpose. No postage is required if mailed in the United States.
/s/ James A. Wallace
James A. Wallace
Secretary
December 15, 1998
15
<PAGE>
APPENDIX A
SECOND AMENDMENT TO THE RESTATED
CERTIFICATE OF INCORPORATION
Article 4 of the Company's Restated Certificate of Incorporation is hereby
deleted in its entirety and replaced with the following:
"4. The aggregate number of shares which the corporation shall have
authority to issue is 25,000,000 shares of common stock having a par value
of $.01 per share ("Common Stock") and 500,000 shares of preferred stock,
without par value ("Preferred Stock"). The preferences, limitations and
relative rights of the Common Stock and the Preferred Stock are as follows:
(a) The holders of Common Stock shall be entitled to one vote for each
share on all matters required or permitted to be voted on by stockholders
of the corporation.
After payment or provision for the payment of dividends on any series
of Preferred Stock then outstanding to the extent provided by the board of
directors of the corporation in resolutions providing for the issuance
thereof, the board of directors of the corporation may declare and pay
dividends on the Common Stock to the extent permitted by law.
(b) The Preferred Stock entitles the holders thereof to the rights and
preferences set out below.
Any unissued shares of Preferred Stock may be issued from time to time
in one or more series. All shares of Preferred Stock shall be identical and
of equal rank, except with respect to particular variations in the relative
rights and preferences as between different series which may be fixed and
determined by the board of directors of the corporation as hereinafter
provided, and each share of any series of Preferred Stock shall be
identical in all respects with the other shares of such series except that,
if dividends thereon are cumulative, as to the date from which dividends
thereon shall accumulate.
Different series of Preferred Stock shall not be construed to
constitute different classes of stock for the purpose of voting by classes,
except to the extent such voting by classes is expressly required by law.
Before any shares of Preferred Stock of any particular series shall be
issued, the board of directors of the corporation shall, by resolution
adopt, fix and determine, in the manner provided by law, the following
provisions, rights and preferences of shares of any such series:
(i) the distinctive designation of such series and the number of shares
which shall constitute such series, which number may be increased (except
where otherwise provided by the board of directors of the corporation in
creating such a series) or decreased (but not below the number of shares
thereof then issued) from time to time by action of the board of directors
of the corporation;
(ii) the amount of stated capital of such series;
(iii) the annual rate of any dividends which may be payable on shares
of such series, whether dividends shall be cumulative, and the conditions
upon which and the date when such dividends shall begin to accumulate on
all shares of such series issued prior to the record date for the first
dividend of such series;
(iv) whether the shares of any such series shall be redeemable, and if
so, the time or times when, the conditions under which and the price or
prices at which shares of such series shall be redeemable and the purchase,
retirement or sinking fund provisions, if any, for the purchase or
redemption of such shares;
(v) the amount payable on shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the corporation;
(vi) the rights, if any, of the holders of shares of such series to
convert such shares into, or exchange such shares for, shares of Common
Stock or shares of any other series of Preferred Stock and the terms and
conditions of such conversion or exchange; and
<PAGE>
(vii) whether or not the holders of shares of such series have voting
rights, and the extent of such voting rights, if any.
The holders of Preferred Stock are entitled to receive, when and as
declared by the board of directors of the corporation, but only from funds
legally available for the payment of dividends, cash dividends at the
annual rate for each particular series as fixed and determined by the board
of directors of the corporation as herein authorized, and no more; such
dividends shall be payable before any dividend on Common Stock shall be
paid or set apart for payment. Any arrearages in the payment of dividends
shall not bear interest.
In the event of any dissolution, liquidation or winding up of the affairs
of the corporation, whether voluntary or involuntary, after payment or
provision for payment of the debts and other liabilities of the
corporation, the holders of shares of each series of Preferred Stock shall
be entitled to receive in cash, out of the net assets of the corporation,
an amount equal to the amount fixed and determined by the board of
directors of the corporation in any resolution providing for the issuance
of any particular series of Preferred Stock, plus an amount equal to any
dividends payable to such holder which are then unpaid, either under the
provisions of the resolution of the board of directors of the corporation
providing for the issuance of such series of Preferred Stock or by
declaration of the board of directors of the corporation, on each such
share up to the date fixed for distribution, and no more, before any
distribution shall be made to the holders of Common Stock. Neither the
merger or consolidation of the corporation, nor the sale, lease or
conveyance of all or a part of its assets, shall be deemed to be a
liquidation, dissolution or winding up of the affairs of the corporation."
A-2
<PAGE>
QMS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON JANUARY 27, 1999
The undersigned hereby appoints James A. Wallace and Lloyd E. Adams, or
either of them, proxies, with power of substitution, to vote the shares of
common stock of QMS, Inc. which the undersigned is entitled to vote at the
annual meeting of stockholders on January 27, 1999, and any adjournment thereof,
as follows:
(Continued and to be signed and dated on the other side.)
<PAGE>
This proxy, properly executed, will be voted as directed hereon. If no direction
is made, this proxy will be voted FOR all nominees in Proposal 1 and FOR
Proposal 2. The proxies may vote in their discretion as to other matters which
may properly come before the meeting.
[ ] Please mark your votes as indicated in this example.
NOMINEES: Michael C. Dow, S. Felton Mitchell, Jr., and Charles D. Daley
(Instructions: To withhold authority to vote for any particular nominee, draw a
line through the name above.)
1. Election of Directors:
[ ] FOR all nominees listed to the right (except as marked to the contrary)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed to the right
2. Approval of an amendment to the Company's Certificate of Incorporation.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. With discretionary power in the transaction of such other business as may
properly come before the meeting.
Dated: , 199
---------------------- -
- ----------------------------------
Signature
- ----------------------------------
Signature (if held jointly)
Title or authority (if applicable)
NOTE: Please sign exactly as name appears hereon. If shares are registered in
more than one name, the signatures of all persons are required. A corporation
should sign in its full corporate name by a duly authorized officer, stating his
or her title. Trustees, guardians, executors and administrators should sign in
their official capacity, giving their full titles as such. If a partnership,
please sign in the partnership name by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE. NO POSTAGE REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
