<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
TEXAS MICRO INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
TEXAS MICRO INC.
- --------------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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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>
[LOGO OF TEXAS MICRO INC. APPEARS HERE]
Texas Micro Inc.
5959 Corporate Drive, Houston, Texas 77036
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
to be held TUESDAY, NOVEMBER 11, 1997
The Annual Meeting of Stockholders of Texas Micro Inc. (the "Company") will
be held at the Company's headquarters, 5959 Corporate Drive, Houston, Texas on
Tuesday, November 11, 1997 at 10:00 a.m., local time, to consider and act upon
the following matters:
1. To elect two Class I Directors to serve until the Company's 2000 Annual
Meeting of Stockholders or until their respective successors have been duly
elected and qualified.
2. To amend the Company's Long Term Incentive Plan by increasing the number of
shares of the Company's common stock with respect to which options may be
granted from 950,000 to 1,550,000 shares.
3. To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the 1998 fiscal year.
4. To transact such other business as may properly come before the meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on September 15,
1997 as the record date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting and any adjournment or postponement
thereof.
You are cordially invited to attend the Annual Meeting in person. However,
to ensure your representation at the Annual Meeting, you are urged to review the
enclosed Proxy Statement and to sign and return the enclosed proxy card in the
enclosed prepaid envelope as promptly as possible. If you attend the meeting
and desire to revoke your proxy and vote in person, you may, of course, do so.
In all cases, a proxy may be revoked at any time before its exercise in the
manner specified herein.
Sincerely,
Kermit R. Sumrall
Secretary
Houston, Texas
September 29, 1997
<PAGE>
TEXAS MICRO INC.
5959 CORPORATE DRIVE, HOUSTON, TEXAS 77036
PROXY STATEMENT FOR THE 1997 ANNUAL MEETING OF STOCKHOLDERS
to be held NOVEMBER 11, 1997
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Texas Micro Inc. (the
"Company" or "Texas Micro") for use at the Annual Meeting to be held on Tuesday,
November 11, 1997 at the principal executive offices of the Company, 5959
Corporate Drive, Houston, Texas, commencing at 10:00 a.m., local time, and at
any adjournment or postponement thereof (the "Annual Meeting"). All proxies
will be voted in accordance with the instructions therein, and, if no choice is
specified, the proxies will be voted in favor of the matters set forth in the
accompanying Notice of Meeting. If any other matters are properly presented at
the Annual Meeting for consideration the persons named in the enclosed form of
proxy and acting thereunder will have discretion to vote on such matters in
accordance with their best judgment. The Board is currently unaware of any such
matters. Any proxy may be revoked by a stockholder at any time before it is
exercised by delivery of written revocation to the Secretary of the Company. No
such written revocation will be effective unless it has been received by the
Secretary of the Company prior to the day of the Annual Meeting or by the
inspectors of election at the Annual Meeting.
On September 15, 1997, the record date for the determination of stockholders
entitled to vote at the Annual Meeting, there were outstanding and entitled to
vote 13,508,476 shares of common stock, par value $.40 per share, of the Company
("Common Stock"), each share of which is entitled to one vote on each of the
matters to be voted upon at the meeting. Shares of Common Stock may not be
voted cumulatively.
This Proxy Statement and Notice of Annual Meeting and the accompanying form
of proxy are first being mailed to stockholders on or about September 29, 1997.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of August 15, 1997 with
respect to the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock; (ii) each director; (iii) each executive officer named
in the Summary Compensation Table under the heading "Executive Compensation" and
(iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Name of Number of Shares Percentage of Common
Beneficial Owner Beneficially Owned (1)(2) Stock Outstanding (2)
---------------- ------------------------- ---------------------
<S> <C> <C>
Dean C. Campbell 55,504 (3) *
A. Theodore Engkvist 32,000 (4) *
Francis J. Hughes, Jr. 159,053 (5) 1.1%
Dennis M. Malloy 34,500 (6) *
Frank B. Ryan 17,500 (7) *
John F. Smith 22,000 (8) *
J. Michael Stewart 1,981,117 (9) 14.2%
John C. Leonardo, Jr. 172,644 (10) 1.2%
Kermit R. Sumrall 37,031 (11) *
Ronald Groen 38,628 (12) *
Charles Mason 13,334 (13) *
All Directors and Executive Officers
as a group (12 persons) 2,568,499 (14) 18.4%
</TABLE>
2
<PAGE>
_______
* Less than 1%
(1) The inclusion herein of any shares of Common Stock deemed beneficially
owned does not constitute an admission of beneficial ownership of those
shares by the respective stockholders. Unless otherwise indicated, each
stockholder referred to above has sole voting and investment power with
respect to the shares listed.
(2) For purposes of this table, the number of shares of Common Stock of the
Company owned by each director or executive officer is determined under
the rules of the Commission and the information is not necessarily
indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares of Common Stock as to
which each director or executive officer has sole or shared voting or
investment power and also any shares of Common Stock with respect to which
any options held by such director or executive officer are exercisable
within 60 days after August 15, 1997.
(3) Comprised of 25,504 shares owned by Mr. Campbell and 30,000 shares issuable
pursuant to stock options which are exercisable by Mr. Campbell within 60
days after August 15, 1997.
(4) Comprised of 10,000 shares owned by Mr. Engkvist and 22,000 shares issuable
pursuant to stock options which are exercisable by Mr. Engkvist within 60
days after August 15, 1997.
(5) Includes 37,500 shares issuable pursuant to stock options which are
exercisable by American Research and Development II, L.P. ("ARD") of which
Mr. Hughes is a general partner (or a general partner of a general
partner), within 60 days after August 15, 1997, as to which Mr. Hughes
disclaims beneficial ownership. Also includes 26,053 shares held by Mr.
Hughes and 95,500 shares issuable pursuant to stock options which are
exercisable by Mr. Hughes within 60 days after August 15, 1997.
(6) Comprised of 15,000 shares owned by Mr. Malloy and 19,500 shares issuable
pursuant to stock options which are exercisable by Mr. Malloy within 60
days after August 15, 1997.
(7) Comprised of shares issuable pursuant to stock options which are
exercisable by Dr. Ryan within 60 days after August 15, 1997.
(8) Comprised of shares issuable pursuant to stock options which are
exercisable by Mr. Smith within 60 days after August 15, 1997.
(9) Includes 954,043 shares owned by Mr. Stewart's wife and 63,574 shares owned
by his children under the Texas Uniform Gift to Minors Act (as to all of
which he disclaims beneficial ownership) and 81,457 shares issuable
pursuant to stock options which are exercisable by Mr. Stewart within 60
days after August 15, 1997.
(10) Comprised of 40,000 shares owned by Mr. Leonardo's wife, 81,500 shares
owned by Mr. Leonardo and 51,144 shares issuable pursuant to stock options
which are exercisable by Mr. Leonardo within 60 days after August 15, 1997.
(11) Comprised of 21,562 shares owned by Mr. Sumrall and 15,469 shares issuable
pursuant to stock options which are exercisable by Mr. Sumrall within 60
days after August 15, 1997.
(12) Comprised of 17,000 shares owned by Mr. Groen and 21,628 shares issuable
pursuant to stock options which are exercisable by Mr. Groen within 60 days
after August 15, 1997.
(13) Comprised of 2,000 shares owned by Mr. Mason and 11,334 shares issuable
pursuant to stock options which are exercisable by Mr. Mason within 60 days
after August 15, 1997.
(14) Includes an aggregate of 429,720 shares which all executive officers and
directors have the right to acquire under outstanding stock options
exercisable within 60 days after August 15, 1997. Also includes those
shares listed above the beneficial ownership of which is disclaimed.
3
<PAGE>
QUORUM AND VOTES REQUIRED
The presence, either in person or by proxy, of holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting. Abstentions and broker non-votes are counted for purposes of
determining whether a quorum is present. A plurality vote is required for the
election of directors. Accordingly, if a quorum is present at the Annual
Meeting, the two persons receiving the greatest number of votes will be elected
to serve as directors. Withholding authority to vote for a director nominee and
broker non-votes in the election of directors will not affect the outcome of the
election of directors. All other matters to be voted on will be decided by the
vote of the holders of a majority of the shares present or represented at the
Annual Meeting and entitled to vote on such matter. On any such matter, an
abstention will have the same effect as a negative vote but, because shares held
by brokers will not be considered entitled to vote on matters as to which the
brokers withhold authority, a broker non-vote will have no effect on such vote.
All Proxies that are properly completed, signed and returned prior to the
Annual Meeting will be voted. Any Proxy given by a stockholder may be revoked
at any time before it is exercised by the stockholder (i) filing with the
Secretary of the Company an instrument revoking it, (ii) executing and returning
a Proxy bearing a later date or (iii) attending the Annual Meeting and
expressing a desire to vote his shares of Common Stock in person. Votes will be
counted by Boston EquiServe, the Company's transfer agent and registrar.
ITEM 1 - ELECTION OF DIRECTORS
Texas Micro has a classified Board consisting of two Class I Directors, three
Class II Directors and two Class III Directors. Pursuant to Texas Micro's
bylaws, directors are elected for terms ending on the date of the third annual
meeting following the annual meeting at which any given director is elected or
until their successors are duly elected and qualified.
The persons named in the enclosed proxy will vote to elect as Class I
Directors Dean C. Campbell and John F. Smith (the "Nominees"), unless the proxy
is marked otherwise. Each Nominee is currently a director of the Company.
Texas Micro has no nominating committee and all nominations are made by the
Texas Micro Board. The Nominees have indicated their willingness to serve, if
elected; however, if any Nominee should be unable to serve, the proxies may be
voted for a substitute nominee designated by the Board. The Board has no reason
to believe that any substitute nominee or nominees will be required.
There are no family relationships between or among any officers or directors
of Texas Micro.
The following sets forth the name, age, length of service as a director of
each member of the Board, including the Nominees, information given by each
concerning all positions he has held with the Company, his principal occupation
and business experience for the past five years and the names of other publicly
held companies of which he serves as a director:
NOMINEES FOR TERM EXPIRING IN 2000 (CLASS I DIRECTORS)
DEAN C. CAMPBELL
Mr. Campbell, age 47, has been a director of the Company since 1989. He has
been General Partner of Campbell Venture Management, L.P. and has been
associated with that firm and its predecessors since 1982. Mr. Campbell is also
a director of Telco Systems Corp. and R. F. Monolithics, Inc.
JOHN F. SMITH
Mr. Smith, age 62, has been a director of the Company since 1993. He has been
President and a director of PerSeptive Biosystems, Inc. since July 1996 and was
President of Mycos International, Inc. from July 1991 to July 1996. Mr. Smith
retired from Digital Equipment Corporation in 1993 as Senior Vice President and
Chief Operating Officer, after many years in various senior management
positions. Mr. Smith is also a director of Instron Corporation, Hadco
Corporation and Ansys, Inc.
4
<PAGE>
BOARD RECOMMENDATION
The Board recommends that stockholders vote FOR the election of each of the
above named nominees. Proxies solicited hereby will be voted for both nominees
unless stockholders specify otherwise in their Proxies.
DIRECTORS WHOSE TERMS EXPIRE IN 1998 (CLASS II DIRECTORS)
FRANCIS J. HUGHES, JR.
Mr. Hughes, age 46, has been a director of the Company since 1987. He
is President of American Research & Development Corporation, a venture capital
firm, and has been associated with that firm and its predecessors since 1982.
Since February 1997, Mr. Hughes has been a partner with Egan-Managed Capital, a
venture capital firm. Mr. Hughes is Chairman of the Board, President and Chief
Executive Officer of Remanco International, Inc. Mr. Hughes is also a director
of Ceramics Process Systems Corporation, Fusion Lighting, Inc., UltraFine Powder
Technology Inc. and R. F. Monolithics, Inc.
A. THEODORE ENGKVIST
Mr. Engkvist, age 62, has been a director of the Company since 1994.
He has been President of ENJO Consulting, a management consulting company, since
1992. He is a retired officer of NYNEX Corporation where he held a number of
executive positions during a lengthy career.
DENNIS M. MALLOY
Mr. Malloy, age 50, has been a director of the Company since 1995. He
has been President of Malloy's Cash Register Company since 1984 and is also a
director of Horizon Capital Bank.
DIRECTORS WHOSE TERMS EXPIRE IN 1999 (CLASS III DIRECTORS)
J. MICHAEL STEWART
Mr. Stewart, age 50, became a director of the Company on March 31, 1995.
He has been President and Chief Executive Officer of the Company since January
30, 1996. From March 31, 1995 until he was elected to his present position, he
was Executive Vice President of Texas Micro Inc. and President and Chief
Operating Officer of its subsidiary, Texas Microsystems, Inc. Prior to March
31, 1995, Mr. Stewart was President and Chief Operating Officer of Texas
Microsystems, Inc. since co-founding it in 1975.
FRANK B. RYAN
Dr. Ryan, age 61, was elected a director of the Company on March 12, 1996.
He has been a Professor of Mathematics at Rice University since 1990 and is a
director of America West Airlines, Danielson Holding Corporation and Siena
Holdings, Inc.
BOARD AND COMMITTEE MEETINGS
The Company has standing Audit and Compensation Committees. The Audit
Committee provides the opportunity for direct contact between the Company's
independent accountants and the Board. The Audit Committee has responsibility
for recommending the appointment of Texas Micro's independent accountants,
reviewing the scope and results of audits and reviewing the Company's internal
accounting control policies and procedures. Since April 16, 1997, the Audit
Committee has consisted of Mr. Smith, Chairman, and Messrs. Engkvist, Hughes and
Malloy. Prior to April 16, 1997, the Audit Committee also included Mr.
Campbell. The Audit Committee held four meetings during fiscal 1997.
5
<PAGE>
The Compensation Committee is responsible for recommending to the
Board the policies that govern executive officer compensation and for overseeing
the implementation of those policies. Since April 16, 1997, the Compensation
Committee has consisted of Mr. Ryan, Chairman, and Messrs. Campbell, Hughes and
Smith. Prior to April 16, 1997, the Compensation Committee consisted of Mr.
Hughes, Chairman, and Messrs. Campbell and Smith. The Compensation Committee
held four meetings during fiscal 1997.
The Board held eleven meetings during the fiscal year ended June 30,
1997. During fiscal 1997, each director attended at least 75% of the meetings
of the Texas Micro Board and any committee of the Texas Micro Board on which he
served, except Mr. Smith who attended less than 75% of the meetings of the Board
and the committees of the Board on which he served.
EXECUTIVE OFFICERS
Executive officers are elected by the Board annually at its meeting
immediately following the Annual Meeting of Stockholders and hold office until
the next such Annual Meeting unless they sooner resign or are removed from
office.
The following table lists the name, age and position of the current executive
officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
J. Michael Stewart 50 President and Chief Executive Officer
John C. Leonardo, Jr. 58 Executive Vice President; Chief
Operating Officer
Kermit R. Sumrall 46 Secretary and Acting Chief Financial Officer
Ronald Groen 35 Vice President, Sales & Marketing
Charles Mason 37 Vice President, Operations
Christopher M. Melson 41 Vice President, Product Development
</TABLE>
Information regarding the experience of Mr. Stewart is set forth above
under the heading "Directors".
Mr. Leonardo assumed his current position effective May 1, 1996. He
previously served as Senior Vice President, Marketing and Sales of Texas
Microsystems, Inc. since 1990. He is party to an agreement with the Company
dated May 1, 1996 that provides for a specified salary and bonus formula and
certain benefits in the case of involuntary termination of employment or change
of control.
Mr. Sumrall was appointed to his current position on April 16, 1997. Prior
to that time he was Controller of Texas Microsystems, Inc. since 1986.
Mr. Groen was appointed to his current position on April 16, 1997. From
July 1, 1996 until April 16, 1997 he was Vice President, PC Products, Worldwide
of Texas Microsystems, Inc. Prior to that time, he was Managing Director of
Texas Microsystems' international sales operations since 1992, before which he
held several financial management positions with other companies in the computer
industry.
Mr. Mason assumed his current position on April 16, 1997. He was Vice
President of Customer Quality of Texas Microsystems, Inc. from September 1996
until he assumed his current position. Prior to September 1996, he held several
customer quality positions with increasing responsibility at Texas Microsystems,
Inc. since 1992.
Mr. Melson assumed his current position on April 16, 1997. He joined the
Company on December 16, 1996, as Vice President, Engineering of Texas
Microsystems, Inc. Previously, Mr. Melson held a number of increasingly
responsible engineering management positions at Tandem Computers Incorporated
since 1990.
6
<PAGE>
DIRECTORS' COMPENSATION
The Company's non-employee directors are paid a fee of $1,750 for each meeting
attended (up to a maximum of six meetings per year) and are reimbursed for out-
of-pocket expenses incurred in attending Board and Committee meetings. Each
non-employee director then serving as a director also received an option to
purchase 2,500 shares of Texas Micro Inc. Common Stock on July 1, 1996 at an
exercise price of $3.00 per share under the Company's 1995 Outside Directors'
Stock Option Plan (the "1995 Directors' Plan").
Under a consulting agreement with the Company, Francis J. Hughes, Jr.,
Chairman of the Board, is eligible to receive $1,000 per day for consulting
services (up to a maximum of $7,500 per month). Mr. Hughes did not provide any
consulting services or receive any payments under this agreement during fiscal
1997. Under a consulting agreement with the Company, John F. Smith, a director
of the Company, is eligible to receive $2,500 per day for consulting services.
Mr. Smith did not provide any consulting services or receive any payments under
this agreement during fiscal 1997.
Directors who are officers or employees of Texas Micro Inc. do not receive any
additional compensation for their services as directors.
EXECUTIVE COMPENSATION
The following table sets forth all cash and non-cash compensation for each of
the last three fiscal years awarded to or earned by J. Michael Stewart,
President and Chief Executive Officer and the four other most highly compensated
executive officers of Texas Micro Inc. whose cash compensation exceeded $100,000
during the fiscal year ended June 30, 1997 (such executive officers are
collectively referred to herein as the "named executive officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------- -----------------------------------------------
Restricted
Name and Stock All Other
Principal Position Year Salary Bonus Awards Options Compensation(1)
- --------------------------- -------- --------------- ----------- ------------ ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
J. Michael Stewart (2) 1997 $326,937 0 N/A 75,000 $ 650 (4)
President and Chief 1996 $211,300 0 N/A 46,000 0
Executive Officer 1995 $ 43,269 (3) $ 22,156 N/A 50,000 0
John C. Leonardo, Jr. (5) 1997 $203,616 $ 10,000 N/A 100,000 $ 1,263 (4)
Executive Vice President; 1996 $186,656 $ 59,278 N/A 84,000 0
Chief Operating Officer 1995 $177,192 $181,685 N/A 25,000 $109,767 (6)
Kermit R. Sumrall (7) 1997 $103,077 $ 13,281 N/A 10,900 $ 604 (4)
Secretary and Acting 1996 $ 98,566 0 N/A 14,500 0
Chief Financial Officer 1995 $ 78,073 $ 36,625 N/A 12,500 0
Ronald Groen (7) 1997 $139,904 $ 15,000 N/A 31,850 $ 221 (4)
Vice President, Sales & 1996 $100,000 $ 75,818 N/A 22,500 0
Marketing 1995 $ 59,592 $ 37,552 N/A 12,500 0
Charles Mason (7) 1997 $112,499 $ 12,500 N/A 31,850 0
Vice President, 1996 $ 90,440 $ 5,786 N/A 22,500 0
Operations 1995 $ 84,739 $ 35,966 N/A 12,500 0
</TABLE>
7
<PAGE>
- --------------
(1) Amounts exclude perquisites and other personal benefits because such
compensation did not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported for each executive officer.
(2) Mr. Stewart was elected President and Chief Executive Officer on January 30,
1996 and his base annual salary was increased to $300,000 effective January
30, 1996. Compensation reported in fiscal 1997 includes $26,927 paid in
fiscal 1997 related to his January 30, 1996 increase which was unpaid as of
June 30, 1996.
(3) Represents salary paid to Mr. Stewart by the Company subsequent to the
Company's merger with Texas Microsystems, Inc. during the period March 31,
1995 through June 30, 1995, based on an annual salary of $187,500. Prior to
such merger, Mr. Stewart was compensated in the form of a fee paid pursuant
to an Operating and Management Agreement with Texas Microsystems, Inc. which
terminated on the effective date of the merger.
(4) Represents the value of group term life insurance paid by the Company.
(5) Mr. Leonardo became an executive officer of the Company effective May 1,
1996.
(6) Represents gains on exercise of stock options.
(7) Messrs. Sumrall, Groen and Mason became executive officers of the Company
effective April 16, 1997.
OPTION GRANTS AND EXERCISES
The following tables summarize (i) option grants and exercises during
fiscal 1997 to or by the named executive officers and (ii) the value of the
options held by such persons at the end of fiscal 1997. No stock appreciation
rights were granted during fiscal 1997.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rate of
Number of Percent of Stock Price
Securities Total Options Appreciation for
Underlying Granted to Exercise or Option Term (3)
Options Employees Base Price Expiration -------------------------
Name Granted (1) in Fiscal Year Per Share (2) Date 5% 10%
- --------------------- ----------- -------------- ------------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
J. Michael Stewart 75,000 11.0% $2.344 4/16/07 $110,560 $280,180
John C. Leonardo, Jr. 50,000 7.3% $2.531 10/29/06 $ 79,596 $201,712
50,000 7.3% $2.344 4/16/07 $ 73,706 $186,787
Kermit R. Sumrall 5,000 .7% $2.000 9/10/06 $ 6,289 $ 15,937
5,900 .9% $2.438 2/11/07 $ 9,046 $ 22,925
Ronald Groen 10,000 1.5% $2.000 6/11/06 $ 12,184 $ 30,657
5,000 .7% $2.000 9/10/06 $ 6,289 $ 15,937
16,850 2.5% $2.438 2/11/07 $ 25,835 $ 65,471
Charles Mason 10,000 1.5% $2.000 9/10/06 $ 12,578 $ 31,875
6,300 .9% $2.438 2/11/07 $ 9,659 $ 24,479
</TABLE>
8
<PAGE>
_______
(1) Options generally become exercisable at the monthly rate of 1/48th of the
shares subject to the option commencing one month after the date of grant.
(2) The exercise price of each option grant was equal to the fair market value
of the Common Stock on the date of grant.
(3) Amounts represent hypothetical gains that could be achieved for the options
if exercised at the end of the option terms. These gains are based on
assumed rates of stock appreciation of 5% and 10% compounded annually from
the date the respective options were granted and are not intended to
forecast future appreciation of the price of the Company's Common Stock. The
actual value, if any, an executive officer may realize will depend upon the
excess of the stock price over the exercise price on the date the option is
exercised.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Unexercised Options In-The-Money Options
Acquired Value at Fiscal Year End at Fiscal Year End (1)
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
J. Michael Stewart - - 74,498 / 96,502 $30,930 / $46,395
John C. Leonardo, Jr. - - 42,582 /166,418 $ 0 / $93,735
Kermit R. Sumrall - - 13,062 / 24,838 $ 1,290 / $11,114
Ronald Groen - - 17,685 / 49,165 $ 3,981 / $32,433
Charles Mason - - 9,042 / 25,758 $ 2,578 / $17,075
</TABLE>
(1) Computed based on the difference between the last reported sales price of
the Common Stock on the Nasdaq National Market on June 30, 1997 of $3.375
and the exercise price of the options, multiplied by the applicable number
of options. On September 15, 1997, the last reported sales price of the
Common Stock on the Nasdaq National Market was $3.00 per share.
9
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board (the "Compensation Committee")
currently consists of Frank B. Ryan, Francis J. Hughes, Jr., Dean C. Campbell
and John F. Smith, none of whom are officers or employees of the Company. The
Compensation Committee is responsible for recommending to the Board the policies
that govern executive officer compensation and for overseeing the implementation
of those policies. The Compensation Committee has furnished the following report
on executive compensation for the fiscal year ended June 30, 1997.
Executive Compensation Philosophy
The Compensation Committee strives to ensure that executive compensation is
competitive among companies in the computer manufacturing industry that are of
comparable size and complexity. Further, the Committee believes that the
Company's incentive compensation programs should contain the following elements:
. Base compensation levels that attract and retain superior talent;
. Bonus compensation awards that incentivize management's efforts to
achieve Company profitability goals; and
. Long-term equity incentives that align management's interests with those
of the Company's stockholders.
The Compensation Committee believes that the bonus compensation and long-
term equity incentives should be at risk relative to accomplishment of the
Company's profitability goals. Further, the Company should maintain
compensation programs that are competitive within the computer manufacturing
industry and that are constructive towards attainment of the Company's
operational and profitability goals.
Procedure for Establishing Compensation
Each fiscal year the Compensation Committee reviews and approves an annual
compensation plan for the Company's executive officers. The plan is based on
recommendations of the Company's Chief Executive Officer and the Company's Vice
President of Human Resources. In addition, the Compensation Committee proposes
an annual compensation plan for the Chief Executive Officer for Board approval.
The Compensation Committee believes, on the basis of its review of computer
industry data, that the base salaries of the Company's executive officers are
comparable to those of executive officers of similar companies in the computer
manufacturing industry.
In determining appropriate compensation and incentive awards for the
Company's executive officers and for the Chief Executive Officer, the
Compensation Committee relied on reports surveying the industry that were
prepared by an outside consulting firm specializing in compensation programs.
Executive Officer Compensation
Compensation of the Company's executive officers consists of a combination
of base salary, annual bonus incentives keyed to accomplishment of specific
goals and profitability, and long-term incentives in the form of stock options.
In addition, executive officers participate in the Company's employee benefits
program. Bonus and long-term incentive compensation are designed to represent a
substantial portion of the total compensation available to executive officers.
Base Salary. Base salaries are set within the range of salaries of
executive officers with comparable qualifications, experience and
responsibilities at other companies in the same or similar businesses and of
comparable size and complexity.
Annual Bonus Compensation. Bonus compensation available to executive
officers was generally keyed to
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<PAGE>
achievement of (1) critical financial goals related to profitability and (2)
specific goals related to job performance.
Long-term Incentive Compensation. The Compensation Committee believes that
stock option grants provide the most significant compensation opportunity for
executive officers and thereby serve the dual objectives of promoting retention
of executives and of ensuring that the interests of those executives are aligned
with those of the Company's stockholders. Stock options are granted at an
option price equal to the fair market value of the Company's Common Stock on the
date of the grant and are generally vested over a four year period.
Benefits. The Company's executive officers receive medical and term life
insurance benefits and participate in the Company's 401(k) savings plan on the
same basis as other full-time employees, with the exception that they are
provided at no cost with additional life insurance in an amount equal to twice
their base salary. The Company's 1993 Employee Stock Purchase Plan, which is
generally available to all employees, including executive officers, allows
participants to purchase up to a maximum of 500 shares of Common Stock per
offering period at a discount of 15% from the fair market value.
The total for benefits provided to executive officers, as determined by the
rules of the Commission Relating to Executive Compensation, did not exceed 10%
of salary of any executive officer for the fiscal year ended June 30, 1997.
Chief Executive Officer Compensation
During the fiscal year ended June 30, 1997, the Company's President and
Chief Executive Officer, J. Michael Stewart, participated in the programs
described above. The performance criteria for Mr. Stewart's annual incentive
program stressed the return to profitability while posturing the Company for
significant future growth. Mr. Stewart received aggregate salary of $300,000
during fiscal 1997. No bonus compensation was awarded. In conformance with the
long-term incentive program described above, the Compensation Committee
recommended, and the Board ratified, a stock option grant to Mr. Stewart of
75,000 shares of Common Stock having an exercise price of $2.34, that being the
fair market value of the Company's Common Stock on the date of the grant, to be
vested when certain performance goals are achieved. As of June 30, 1997, the
stock option granted in fiscal 1997 was vested and exercisable with respect to
30,000 shares of Common Stock.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), generally disallows a tax deduction to public companies for
compensation over $1 million paid to a corporation's chief executive officer and
four other most highly compensated executive officers. Qualifying
"performance-based" compensation will not be subject to the deduction limit if
certain requirements are met. Generally stock options will qualify as
"performance-based" compensation. The Compensation Committee has discussed and
considered and will continue to evaluate the potential impact of Section 162(m)
on the Company in making compensation determinations, but has not established a
set policy with respect to future compensation determinations.
The Compensation Committee
Frank B. Ryan, Chairman
Francis J. Hughes, Jr.
Dean C. Campbell
John F. Smith
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933, as amended, or under
the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
11
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COMPARATIVE STOCK PERFORMANCE
The cumulative stock performance graph below compares the cumulative
shareholder return on Common Stock for the last five fiscal years with the
cumulative return on (i) the Nasdaq National Market (U.S. Companies) (the
"Nasdaq Composite Index"), (ii) a peer group index based on the common stock of
Tandem Computers Incorporated, Stratus Computer, Inc. and Sequent Computer
Systems, Inc. (the "Old Peer Group") and (iii) the Nasdaq Computer Manufacturer
Index (the "New Peer Group"). In light of the sale of the Company's Sequoia
Enterprise business unit in October 1996, the Company has determined to use an
index based on the New Peer Group for future shareholder return comparisons. The
cumulative total shareholder return computations set forth in the Performance
Graph assume the investment of $100 in the Company's Common Stock, the Nasdaq
Composite Index and the Old and New Peer Groups on June 30, 1992, and
reinvestment of all dividends. Measurement points are June 30, 1992 and the last
trading days of Texas Micro's fiscal years ended June 30, 1993, 1994, 1995, 1996
and 1997.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG TEXAS MICRO INC., THE NASDAQ STOCK MARKET-US, THE NEW PEER GROUP AND THE
OLD PEER GROUP
<TABLE>
6/30/92 6/30/93 6/30/94 6/30/95 6/30/96 6/30/97
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Texas Micro Inc. $100 $ 21 $ 40 $ 44 $ 31 $ 35
Nasdaq Stock Market - US $100 $126 $127 $169 $218 $265
New Peer Group $100 $123 $101 $181 $258 $325
Old Peer Group $100 $ 95 $ 83 $109 $ 88 $144
</TABLE>
* $100 INVESTED ON 6/30/92 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JUNE 30.
The foregoing stock price performance comparisons shall not be deemed
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act of 1933, as
amended, or under the Exchange Act, except to the extent that the Company
specifically incorporates this graph by reference, and shall not otherwise be
deemed filed under such acts.
There can be no assurance that the Company's stock performance will
continue into the future with the same or similar trends depicted in the graph
above. The Company will not make or endorse any predictions as to future stock
performance.
12
<PAGE>
ITEM 2 - AMENDMENT TO THE LONG-TERM INCENTIVE PLAN
At the time of the Company's 1995 Annual Meeting of Stockholders, the
Board recommended and the stockholders approved the adoption of the 1996 Long
Term Incentive Plan (the "Plan" or the "1996 Plan") in order to encourage equity
ownership among its employees and to permit the Company to attract, motivate and
retain both executive and non-executive employees. The Board believes that the
Plan promotes the interests of the Company and its stockholders by, among other
things, providing incentives and rewards to those employees of the Company and
its subsidiaries who contribute to the Company's growth in earnings.
Under the terms of the Plan, as amended on April 16, 1997 by the
approval of the stockholders, the Company is authorized, among other things, to
grant options to purchase up to 950,000 shares of Texas Micro Common Stock
("Shares") to employees, including officers, of the Company. As of September
15, 1997, options to purchase an aggregate of 706,975 Shares had been granted
under the Plan. Due to the significant number of expired options which are no
longer available for grant under the Company's previous long-term incentive plan
(the 1986 Incentive Stock Option Plan) and in order to continue the Company's
ability to utilize the Plan for the purposes described above, the Board on
August 12, 1997 voted to amend the Plan by increasing the maximum number of
Shares with respect to which options may be granted under the terms of the Plan
from 950,000 to 1,550,000 shares, subject to stockholder approval. The
following table summarizes the option activity under the Company's 1996 Plan and
1986 Plan for the respective periods (shares in 000's):
<TABLE>
<CAPTION>
Fiscal Year 1997 Fiscal Year 1996
--------------------------- -----------------------------
1986 1996 1986 1996
Plan Plan Total Plan Plan Total
---- ----- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding at July 1 1,522 12 1,534 1,495 0 1,495
Options granted 0 684 684 2,416 12 2,428
Options exercised (58) (1) (59) (341) 0 (341)
Options forfeited/expired (757) (64) (821) (2,048) 0 (2,048)
----- --- ----- ------ --- ------
Outstanding at June 30 707 631 1,338 1,522 12 1,534
Available for grant at June 30 0 318 318 0 588 588
</TABLE>
Following is a summary of the material provisions of the Plan.
The Plan is administered in all respects by the Compensation Committee
of the Board (the "Committee"). The Committee has plenary authority to
interpret the Plan and may adopt rules and regulations relating to the Plan.
The Committee selects the employees, including executive officers and employees
who are also directors, to whom grants will be made; determines the number,
frequency and timing of awards as well as the type of award and its exercise or
purchase price, if any; prescribes any performance criteria to be met and any
restrictions on exercise of awards or receipt of Shares or cash, and determines
any other terms or conditions applicable to any awards, including exercise or
vesting schedules and the conditions under which exercisability or vesting may
be accelerated, such as in the event of death or disability. A participant may
receive more than one grant of awards under the Plan, and awards may be
exercisable independently of, jointly with, or in the alternative with respect
to other awards, all as the Committee may determine.
A total of 950,000 Shares (1,550,000 Shares if the proposed amendment
is approved) may be issued under the Plan, subject to adjustments for stock
splits, stock dividends, or other changes in capital stock of the Company. To
the extent that awards under the Plan do not vest or otherwise revert to the
Company, the Shares represented by such awards may be the subject of future
awards. The Plan provides that a maximum of 120,000 stock options or Stock
Appreciation Rights ("SARs") may be granted to any one participant in any one
calendar year. On September 15, 1997, Texas Micro's Common Stock closed at $3.00
on the Nasdaq National Market.
The Committee may grant awards in the form of non-qualified stock
options or incentive stock options (as defined in Section 422(b) of the Code).
The exercise price of a non-qualified stock option may not be less than 65% of
the fair market value of such Shares on the date of grant, and the exercise
price of an incentive stock option may not be less than the fair market value of
such Shares on the date of grant. Each grant of an incentive stock option
13
<PAGE>
will not be exercisable more than ten years after grant, and will include any
other provisions necessary to comply with Section 422 of the Code. Awards of
SARs may also be granted either in tandem with grants of stock options (and
exercisable as an alternative to the exercise of the stock options) or
separately. SARs allow the grantee to receive without payment and upon surrender
of the SARs and tandem options, or of the separate SARs an amount payable in
cash, Shares or a combination thereof, as determined by the Committee, not
exceeding the value on the exercise date of the number of Shares for which the
SARs are exercised over the exercise price of the SARs. The exercise price of an
SAR may not be less than the fair market value of a Share on the date of grant,
or in the case of an SAR granted in relation to an option, not less than the
option exercise price.
In addition, the Committee may in its discretion grant other awards
that consist of or are denominated in or payable in Shares, or that are valued
by reference to or are otherwise based on or related to Shares. Such awards may
include, for example, restricted Shares (limited in amount, as described below)
that are forfeitable upon termination of employment or failure to achieve
specified performance goals or that require no consideration other than services
rendered, phantom shares, performance bonus awards or other awards payable in
cash, Shares or a combination thereof. All awards are nontransferable (other
than by will or by the laws of descent and distribution) and may be exercised
during the grantee's lifetime only by the grantee. The Committee may subject the
awards to vesting or earnout provisions, restrictions on transfer or in
incidence of ownership, and other conditions. A maximum of 100,000 restricted
Shares may be granted in the aggregate under the Plan, no more than 25,000 of
which may be granted to any one Plan participant in any calendar year.
In the event of a merger, reorganization, recapitalization, stock
dividend, stock split or other change in capitalization, the Committee has the
discretion to prevent dilution or enlargement of grantees' rights and benefits
such as by adjusting the aggregate number and type of Shares available for
awards, the number and type of Shares subject to outstanding awards, the time of
vesting of outstanding awards, or the purchase or exercise price of outstanding
awards. The Committee may permit the exercise or purchase price (if any) of
awards, including options, granted under the Plan to be paid in cash or through
delivery of Shares having a fair market value equal to all or a portion of such
price; by authorizing the Company to withhold Shares comprising part of an award
and having a fair market value equal to all or a portion of such price; by
payment from the grantee's broker as instructed by the grantee; or by other
means at the discretion of the Committee. In addition, in the event of a
consolidation, merger or sale of all or substantially all the assets of the
Company, the Board may, in its discretion, provide, among other things, that
stock options and SARs shall be assumed by the acquiring or succeeding
corporation, or replaced by equivalent stock options or SARs of such
corporation, or that outstanding stock options shall become exercisable in full
immediately prior to any such consolidation, merger or sale.
The Board may at any time terminate, suspend or amend the Plan in any
way, without stockholder approval, subject to the following exceptions. The
Board may not without stockholder approval, materially increase the benefits
accruing to participants under the Plan or change (except as appropriate to
reflect a change in the capitalization of the Company) the aggregate number of
Shares available for grant or the class of persons eligible for awards under the
Plan. Further, the Board may not take any action with respect to the Plan that
would adversely affect the rights previously acquired by any grantee without
such grantee's consent.
FEDERAL INCOME TAX CONSEQUENCES
The principal federal income tax consequences to the Company and to
the grantee of the grant and exercise of awards under the Plan under existing
applicable provisions of the Code and regulations thereunder are substantially
as outlined in summary form below.
The grant of an option will not have any tax consequences to the
grantee or the Company. If Shares purchased pursuant to the exercise of an
incentive stock option are not disposed of by the grantee for two years after
the grant of the incentive stock option and for one year after exercise, then
(i) the grantee will not recognize income upon the exercise of the incentive
stock option; (ii) any gain or loss will be recognized only upon ultimate
disposition of the Shares; (iii) assuming the Shares constitute capital assets
in the grantee's hands, the gain or loss will be treated as long-term capital
gain or loss; and (iv) the Company will not be entitled to a tax deduction. The
difference between the option price and the fair market value of the Shares
acquired upon exercise of an incentive
14
<PAGE>
stock option is considered an item of adjustment included in the grantee's
income for purposes of the alternative minimum tax under the Code.
If the grantee disposes of the Shares acquired by the exercise of an
incentive stock option before the expiration of the required one and two year
holding periods described above, the grantee must treat as ordinary income in
the year of such disposition an amount equal to the difference between the
option price and the lesser of the fair market value of the Shares on the date
of exercise or the selling price. The balance of any gain or loss on such
disposition will be treated as a capital gain or loss (long-term or short-term,
depending on whether the Shares have been held for more than one year). The
Company will be entitled to a tax deduction in the year of disposition equal to
the amount of ordinary income recognized by the grantee.
In general, upon exercise of a non-qualified stock option, the grantee
will recognize ordinary income equal to the difference between the option
exercise price and the fair market value (on the date of exercise) of the Shares
purchased, and the Company will be entitled to a tax deduction in that amount.
When the grantee disposes of Shares acquired by the exercise of a non-qualified
stock option, any gain or loss on such disposition (generally, the difference
between the amount realized on disposition and the fair market value of the
Shares on the date of exercise) will be treated as capital gain or loss (long-
term or short-term, depending on whether the Shares have been held for more than
one year).
Generally, no gain or loss will be recognized by a grantee upon
transfer to the Company of previously acquired Shares of Common Stock in payment
of all or a portion of the incentive stock option or non-qualified stock option
exercise price.
No taxable income is recognized by a grantee of an SAR under the Plan.
The grantee must recognize as ordinary income any cash delivered and the fair
market value of any Shares delivered in payment of an amount due under an SAR.
The Company will be entitled to a business expense deduction equal to the amount
of ordinary income recognized by the grantee, subject to the limitations of
Section 162(m) of the Code. On the disposition by the grantee of any Shares
received in payment of an SAR, any additional gain or loss recognized will be a
capital gain or loss and will be a long-term gain or loss if the Shares are held
for more than one year.
The Company has the right under the Plan to collect from the grantee
an amount sufficient to satisfy any withholding tax obligation that arises in
connection with any award or to deduct a sufficient amount of cash or Shares
from other payments or transfers otherwise due to the grantee. The Committee
also may permit a grantee to satisfy the obligation by any of the methods
described above for payment of the exercise or purchase price of awards.
Substantially all employees are eligible to participate in the Plan.
The number of Shares that may be granted to executive officers and non-executive
officers is indeterminable at this time, as such grants are subject to the
discretion of the Committee.
BOARD RECOMMENDATION
The Board believes that the adoption of the amendment to the 1996 Long
Term Incentive Plan, as described above, is in the best interests of Texas Micro
and its stockholders and therefore recommends a vote FOR this proposal.
ITEM 3 - RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the stockholders, the Board, on the
recommendation of its Audit Committee, has selected the firm of Coopers &
Lybrand L.L.P. as Texas Micro's independent accountants for the fiscal year
ending June 30, 1998. Representatives of Coopers & Lybrand L.L.P. are expected
to be present at the Annual Meeting. They will have the opportunity to make a
statement if they desire to do so and will also be available to respond to
appropriate questions from stockholders. If the stockholders of Texas Micro do
not ratify the selection of Coopers & Lybrand L.L.P. as Texas Micro's
independent accountants, the selection of such accountants will be reconsidered
by the Board.
15
<PAGE>
BOARD RECOMMENDATION
The Texas Micro Board believes that the ratification of the selection
of Coopers & Lybrand L.L.P. as the Company's independent accountants for the
fiscal year ending June 30, 1998 is in the best interests of the Company and its
stockholders and therefore recommends a vote FOR this proposal.
OTHER MATTERS
The Board does not know of any other matters that may come before the
Annual Meeting. However, if any other matters are properly presented to the
Annual Meeting, it is the intention of persons named in the accompanying proxy
to vote, or otherwise act, in accordance with their judgment on such matters.
All expenses of the Company's solicitation of proxies, including the
cost of preparing and mailing this Proxy Statement, will be borne by the
Company. In addition to solicitation by use of the mails, proxies may be
solicited by directors, officers and employees of the Company in person or by
telephone, telegram or other means of communication. Such directors, officers
and employees soliciting proxies will not be additionally compensated, but may
be reimbursed for reasonable out-of-pocket expenses in connection with such
solicitation. Arrangements will be made with custodians, nominees and
fiduciaries for forwarding of proxy solicitation materials to beneficial owners
of shares held of record by such custodians, nominees and fiduciaries, and the
Company will reimburse such persons for reasonable expenses incurred in
connection therewith.
COMPLIANCE WITH SECTION 16(a)
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and officers, and persons who own more than 10%
of the Common Stock, to file initial reports of ownership and reports of changes
in ownership (Form 3, 4, and 5) of Common Stock with the Securities and Exchange
Commission (the "SEC") and the Nasdaq Stock Market. Officers, directors and
greater than 10% stockholders are required by SEC regulations to furnish the
Company with copies of all such forms that they file. To the Company's
knowledge, based solely on the Company's review of the copies of such reports
received by the Company and on written representations by certain reporting
persons that no reports on Form 5 were required, the Company believes that
during the fiscal year ended June 30, 1997, all Section 16(a) filing
requirements applicable to its officers, directors and 10% stockholders were
complied with in a timely manner.
FINANCIAL INFORMATION
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1997, as filed with the Securities and Exchange Commission,
except for exhibits, will be furnished without charge to any stockholder upon
written request of the Chief Financial Officer of the Company at 5959 Corporate
Drive, Suite 1600, Houston, Texas 77036.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, Company stockholders
may present proper proposals for inclusion in the Company's proxy statement for
consideration at the next annual meeting of stockholders by submitting their
proposals to the Company in a timely manner. In order to be considered for
inclusion in the proxy statement for the annual meeting of stockholders to be
held after the fiscal year ending June 30, 1998, stockholder proposals must be
received by the Secretary of the Company by August 1, 1998.
By Order of the Board of Directors,
Kermit R. Sumrall
Secretary
16
<PAGE>
TEXAS MICRO INC.
Proxy for the Annual Meeting of Stockholders
To Be Held on November 11, 1997
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE COMPANY
The undersigned, revoking all prior proxies, hereby appoint(s) J. Michael
Stewart and K.R. Sumrall, and each of them, with full power of substitution, as
proxies to represent and to vote as designated herein, all shares of stock of
Texas Micro Inc. (the "Company") which the undersigned would be entitled to vote
if personally present at the Annual Meeting of Stockholders of the Company to be
held at 5959 Corporate Drive, Houston, Texas, on Tuesday, November 11, 1997 at
10:00 a.m., local time, and at any adjournment or adjournments thereof.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3. ATTENDANCE OF THE UNDERSIGNED AT THE
MEETING OR AT ANY ADJOURNMENT THEREOF WILL NOT BE DEEMED TO REVOKE THIS PROXY
UNLESS THE UNDERSIGNED SHALL REVOKE THIS PROXY IN WRITING BEFORE IT IS
EXERCISED.
1. To elect Dean C. Campbell and John F. Smith as Class I Directors of the
Company as described in the Proxy Statement.
[ ] FOR [ ] WITHHELD
- --------------------------------------------
For both nominees except as noted above
2. To amend the Company's Long Term Incentive Plan by increasing the number of
shares of the Company's common stock with respect to which options may be
granted from 950,000 to 1,550,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the appointment of Coopers & Lybrand L.L.P. as the Company's
Independent Accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To transact such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
Please sign exactly as name appears hereon. When shares are held by joint
owners, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give the full title as such. If a corporation,
please sign in full corporate name by President or other authorized officer. If
a partnership, please sign in partnership name by authorized person.
Signature:______________ Date:________ Signature:______________ Date:________
