<PAGE>
<PAGE>
Section 240.14a-101 Schedule 14A.
Information required in proxy statement.
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
EXECUTONE INFORMATION SYSTEMS, 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)(1)
and 0-11
(1) Title of each class of securities to which transaction
applies:
............................................................
(2) Aggregate number of securities to which transaction
applies:
.......................................................
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount
on which the filing fee is calculated and state how it was
determined):
.......................................................
(4) Proposed maximum aggregate value of transaction:
.......................................................
(5) Total fee paid:
.......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
.......................................................
(2) Form, Schedule or Registration Statement No.:
.......................................................
(3) Filing Party:
.......................................................
(4) Date Filed:
.......................................................
<PAGE>
<PAGE>
[Logo]
EXECUTONE INFORMATION SYSTEMS, INC.
478 WHEELERS FARMS ROAD
MILFORD, CONNECTICUT 06460
---------------------------
PROXY STATEMENT
---------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 18, 1998
To the Shareholders of
EXECUTONE INFORMATION SYSTEMS, INC.:
Notice is hereby given that the Annual Meeting of Shareholders of EXECUTONE
Information Systems, Inc. (the 'Company'), will be held at the Holiday Inn
Select, 700 Main Street, Stamford, Connecticut, 06901 on November 18, 1998, at
9:00 a.m., for the following purposes:
(1) To elect five directors of the Company to serve for the coming
year; and
(2) To transact such other business as may properly come before the
Meeting and any continuation or adjournment thereof.
Only shareholders of record at the close of business on September 30, 1998,
are entitled to notice of and to vote at the Meeting or any continuation or
adjournment thereof.
BARBARA C. ANDERSON
Vice President, Law and Administration
and Secretary
Milford, Connecticut
October 16, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS OF THE
COMPANY, AND RETURN IT IN THE SELF-ADDRESSED ENVELOPE PROVIDED FOR THIS PURPOSE.
THE PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED, BY WRITTEN NOTICE
TO SUCH EFFECT RECEIVED BY THE COMPANY, BY SUBMITTING A SUBSEQUENTLY DATED PROXY
OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
<PAGE>
<PAGE>
[Logo]
EXECUTONE INFORMATION SYSTEMS, INC.
478 WHEELERS FARMS ROAD
MILFORD, CONNECTICUT 06460
---------------------------
PROXY STATEMENT
---------------------------
ANNUAL MEETING OF SHAREHOLDERS
The Board of Directors of EXECUTONE Information Systems, Inc., a Virginia
corporation (the 'Company' or 'EXECUTONE'), is furnishing this Proxy Statement
to all shareholders of record and solicits their proxies for the Annual Meeting
of Shareholders (the 'Meeting') to be held on November 18, 1998, at the Holiday
Inn Select, 700 Main Street, Stamford, Connecticut, 06901 at 9:00 a.m. This
Proxy Statement and the enclosed form of proxy are being mailed to shareholders
commencing on or about October 16, 1998.
At the Meeting, shareholders will be asked:
1. To elect five directors of the Company to serve for the coming
year; and
2. To transact such other business as may properly come before the
Meeting and any continuation or adjournment thereof.
All proxies duly executed and received will be voted on all matters
presented at the Meeting in accordance with the instructions contained in such
proxies. In the absence of specific instructions, proxies received will be voted
in favor of the election of the named nominees to the Company's Board of
Directors. Management does not know of any other matters that will be brought
before the Meeting. In the event that any other matter should come before the
Meeting or any nominee is not available for election, the persons designated in
the enclosed proxy will have discretionary authority to vote all proxies not
marked to the contrary with respect to such matters in accordance with their
best judgment. Proxies may be revoked at any time prior to the exercise thereof
by written notice to such effect addressed to and received by the Company at its
corporate offices at the address given above, Attention: Corporate Secretary, by
delivery of a subsequently dated proxy or by a vote cast in person at the
Meeting.
As of September 30, 1998, the record date for the Meeting (the 'Record
Date'), there were outstanding a total of 49,960,179 shares of Common Stock,
250,000 shares of Cumulative Convertible Preferred Stock, Series A (the 'Series
A Stock'), and 100,000 shares of Cumulative Contingently Convertible Preferred
Stock, Series B (the 'Series B Stock' and, collectively with the Series A Stock,
the 'Preferred Stock'). The Common Stock, the Series A Stock and the Series B
Stock are the only classes of securities of the Company entitled to vote at the
Meeting and each outstanding share of each class has one vote. A majority of the
total number of shares of Common Stock and Preferred Stock outstanding and
entitled to vote as of September 30, 1998, or 25,155,089 shares, must be present
at the Meeting in person or by proxy in order to constitute a quorum for the
transaction of business. Only holders of record of Common Stock and Preferred
Stock as of the close of business on the Record Date will be entitled to vote at
the Meeting.
A list of shareholders entitled to vote at the Meeting will be available
for examination by any shareholder at the Company's offices, 478 Wheelers Farms
Road, Milford, Connecticut 06460, for a period of ten days prior to the Meeting
and also will be available at the Meeting.
<PAGE>
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Each director to be elected at the Meeting will serve for a term of one
year or until his successor shall be elected and qualified. The Bylaws give the
Board of Directors the flexibility to designate the size of the Board within a
range of five to nine members and appoint new directors should suitable
candidates come to its attention before the next annual meeting of shareholders.
Consequently, the Board of Directors has the ability to respond to changing
requirements and to take timely advantage of the availability of especially
well-qualified candidates. Any such appointees to the Board of Directors cannot
serve past the next annual meeting without shareholder approval.
The following persons have been nominated by the Board of Directors as
candidates for election as directors, and proxies not marked to the contrary
will be voted in favor of their election. Current directors Thurston R. Moore
and Richard S. Rosenbloom have decided not to stand for re-election. The Board
of Directors has reduced the size of the Board to five members effective as of
the Annual Meeting in accordance with the Bylaws of the Company. Each of the
nominees is currently serving as a director of the Company except Mr. John P.
Hectus. The election of each nominee for director requires the affirmative vote
of the holders of a plurality of the shares of Common Stock and Preferred Stock,
voting as a single group, cast in the election of directors. Votes that are
withheld and shares held in street name ('Broker Shares') that are not voted in
the election of directors will not be included in determining the number of
votes cast. Certain information regarding each nominee and each director
continuing in office is set forth below, including each individual's principal
occupation and business experience during at least the last five years, and the
year in which the individual was elected a director of the Company or one of its
predecessor companies.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- -------------------------------- --- --------------------------------------------------------------- --------
<S> <C> <C> <C>
Stanley J. Kabala............... 55 President, Chief Executive Officer, and Chairman of the Company 1998
since June 1998. Prior thereto, President and Chief Executive
Officer of Rogers Cantel Mobile Communications, the largest
wireless telephone company in Canada, and Chief Operating
Officer of its parent Rogers Communications, Inc., from 1996
to 1997. During 1995, President and Chief Executive Officer
of Unitel Communications, Inc., Canada's largest alternative
long distance provider. From 1968 through 1994, various
positions at AT&T Corporation, most recently Vice
President -- Customer Service for the Business Communications
Services Division and Vice President -- AT&T 800 and Business
Applications Services.
Louis K. Adler.................. 63 Private Investor; President and Director, Bancshares, Inc., 1997
Houston, Texas, since 1973; former director of Unistar Gaming
Corporation, prior to its acquisition by the Company. Mr.
Adler is also a director of Hospitality Worldwide Services,
Inc.
Stanley M. Blau................. 60 President, The Blau Group Ltd., an investment firm; formerly 1983
Vice Chairman of the Company from 1988 until 1996; President
and Chief Executive Officer of Vodavi Technology Corporation,
one of the Company's predecessor corporations, from 1987
until July 1988.
</TABLE>
(table continued on next page)
2
<PAGE>
<PAGE>
(table continued from previous page)
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION SINCE
- -------------------------------- --- --------------------------------------------------------------- --------
<S> <C> <C> <C>
John P. Hectus.................. 54 Vice President and Chief Financial Officer, AT&T Canada --
Enterprises, from June 1998 to the present; from 1996 through
June 1998 Senior Vice President and Chief Financial Officer,
AT&T Canada Long Distance Services; from 1994 through 1995,
regional Vice President and Chief Financial Officer, AT&T
Caribbean & Latin America; from 1990 to 1994, Executive Vice
President & Chief Financial Officer, AT&T Paradyne; prior
thereto, various executive positions within AT&T Corporation.
Jerry M. Seslowe................ 52 Managing Director of Resource Holdings Ltd., an investment and 1996
financial consulting firm, since 1983.
</TABLE>
DIRECTOR COMPENSATION
Each director who does not receive other direct compensation from the
Company receives an annual retainer of $10,000, payable in equal quarterly
installments, plus a fee of $1,250 for each Board meeting attended, $1,250 for
each three telephone conference call meetings, and $1,250 for each Committee
meeting held separately from a Board meeting. In addition, each such director is
granted annually an option to purchase shares of the Company's Common Stock
under the terms of the Company's 1990 Directors' Stock Option Plan (the 'Plan')
approved by the shareholders on June 20, 1990 and amended, with the approval of
the shareholders, on July 30, 1996.
As of September 30, 1998, 36,000 shares had been issued upon exercise of
options granted under the original terms of the Plan, options to purchase 18,000
shares of Common Stock were outstanding under the original terms of the Plan,
and options to purchase an additional 132,400 shares were outstanding under the
1996 amendment to the Plan. The number of shares for which options may be
granted each year are determined by reference to the Black-Scholes option
pricing model to provide an option equal in value to $10,000 based upon the
market price of the Common Stock at the date of grant. An aggregate of up to
250,000 shares are issuable under the Plan. Each of Messrs. Adler, Moore,
Rosenbloom and Seslowe received options to purchase 13,700 shares under this
Plan in 1997.
On February 1, 1996 and July 29, 1997, Jerry M. Seslowe and Louis K. Adler,
respectively, were each granted warrants to purchase 25,000 shares of the
Company' Common Stock at $2.63 and $2.00 per share, respectively, the closing
market prices on those dates. The warrants vest ratably over a three-year period
and expire on February 1, 2001 and July 29, 2002, respectively. Messrs. Seslowe
and Adler received these warrants upon being elected to serve on the Company's
Board of Directors.
The Company also reimburses directors for the travel and accommodation
expenses incurred in attending Board meetings.
BOARD AND COMMITTEE ACTIVITIES
During 1997, the Board of Directors met on nine occasions. All directors
attended more than 75% of the total number of meetings of the Board and of all
committees of which they were members during 1997. The Board has two standing
committees, an Audit Committee and a Compensation Committee.
The function of the Audit Committee is to recommend the selection of
auditors and to review the audit report and the adequacy of internal controls.
The Audit Committee met on two occasions during 1997. The members of the Audit
Committee are Messrs. Blau and Moore.
The Compensation Committee recommends to the full Board the compensation
arrangements, stock option grants and other benefits for executive management of
the Company as well as the incentive plans to be adopted by the Company. The
Compensation Committee met once during 1997. The members of the Compensation
Committee are Messrs. Rosenbloom and Seslowe.
3
<PAGE>
<PAGE>
OWNERSHIP OF EQUITY SECURITIES
The following table lists any person (including any 'group' as that term is
used in Section 13(d)(3) of the Exchange Act) who, to the knowledge of the
Company, was the beneficial owner as of September 30, 1998, of more than 5% of
the outstanding voting shares of the Company. Unless otherwise noted, the owner
has sole voting and dispositive power with respect to the securities.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS(1)
- ----------------------- --------------------------------------------- -------------------- -------------------
<S> <C> <C> <C>
Common Stock Heartland Advisors, Inc. 9,064,855(2) 18.14%
790 North Milwaukee Street
Milwaukee, WI 53202
Lawndale Capital Management LLC 3,425,604 6.86
One Sansome Street, Suite 3900
San Francisco, CA 94104
Entities Associated with 3,245,078(3) 6.52
Edmund H., Shea, Jr.
655 Brea Canyon Road
Walnut Creek, CA 91789
Series A Stock Watertone Holdings, L.P. 154,160 61.81
/Watertone Investments L.L.C.
730 Fifth Avenue
New York, NY 10038
Cooper Life Sciences 78,819 31.53
160 Broadway
New York, NY 10038
Series B Stock Watertone Holdings, L.P. 61,807 61.81
and Watertone Investments L.L.C.
730 Fifth Avenue
New York, NY 10038
Cooper Life Sciences 31,528 31.53
160 Broadway
New York, NY 10038
</TABLE>
- ------------
(1) With respect to the Common Stock, percentages shown are based upon
49,960,179 shares of Common Stock actually outstanding as of September 30,
1998. In cases where the beneficial ownership of the individual or group
includes options, warrants or convertible securities, the percentage is
based on 49,960,179 shares actually outstanding, plus the number of shares
issuable upon exercise or conversion of any such options, warrants or
convertible securities held by the individual or group. The percentage does
not reflect or assume the exercise or conversion of any options, warrants or
convertible securities not owned by the individual or group in question. In
the case of the Series A and Series B Preferred Stock, percentages shown are
based on 250,000 and 100,000 shares, respectively, actually outstanding as
of September 30, 1998.
(2) Heartland Advisors shares power to vote 625,000 of such shares.
(3) Includes 11,935 shares of Common Stock issuable upon conversion of the
Company's Debentures, of which entities associated with Mr. Shea own
$148,800 in principal amount, representing less than 1% of the outstanding
principal amount. The Shea entities share the power to vote and dispose of
all such shares.
4
<PAGE>
<PAGE>
The following table sets forth the beneficial ownership of the Company's
voting shares by all current directors and nominees of the Company, the Chief
Executive Officer, the former Chief Executive Officer and the four next most
highly compensated executive officers in 1997, and all current directors and
executive officers of the Company as a group. Unless otherwise indicated, each
person listed below has sole voting and investment power over all shares
beneficially owned by him or her.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS(1)
- --------------------- ---------------------------------------------- ----------------------- -------------------
<S> <C> <C> <C>
Common Stock Louis K. Adler................................ 138,123(2) *
Stanley M. Blau............................... 538,193 1.05
Stanley J. Kabala............................. 400,000 *
Alan Kessman.................................. 1,737,337 3.35
Andrew Kontomerkos............................ 407,083 *
John P. Hectus................................ -0- *
Thurston R. Moore............................. 132,235(3) *
Vic Northrup.................................. 127,537(4) *
Richard S. Rosenbloom......................... 73,900(5) *
Jerry M. Seslowe.............................. 209,615(6) *
Shlomo Shur................................... 626,456 1.43
Michael W. Yacenda............................ 856,860(7) 1.72
All Current Directors and Officers as a Group 3,562,480(8) 6.99
(13 Persons)................................
Series A Stock Louis K. Adler................................ 1,436 *
Stanley M. Blau............................... -0- *
Stanley J. Kabala............................. -0- *
Alan Kessman.................................. -0- *
Andrew Kontomerkos............................ -0- *
John P. Hectus................................ -0- *
Thurston R. Moore............................. -0- *
Vic Northrup.................................. -0- *
Richard S. Rosenbloom......................... -0- *
Jerry M. Seslowe.............................. 4,692(9) 1.87
Shlomo Shur................................... -0- *
Michael W. Yacenda............................ -0- *
All Current Directors and Officers as a Group 6,128 2.45
(13 Persons)
Series B Stock Louis K. Adler................................ 575 *
Stanley M. Blau............................... -0-
Stanley J. Kabala............................. -0-
Alan Kessman.................................. -0-
Andrew Kontomerkos............................ -0-
Thurston R. Moore............................. -0-
Vic Northrup.................................. -0-
Richard S. Rosenbloom......................... -0-
Jerry M. Seslowe.............................. 1,877(10) 1.87
Shlomo Shur................................... -0-
Michael W. Yacenda............................ -0-
All Current Directors and Officers as a Group 2,452 2.45
(13 Persons)
</TABLE>
(footnotes on next page)
5
<PAGE>
<PAGE>
(footnotes from previous page)
* Less than 1%.
(1) Information is provided as reported to the Company as of September 30, 1998
for all owners except Andrew Kontomerkos and Shlomo Shur, as to whom the
information is provided as of May 15, 1998 when their employment by the
Company terminated. With respect to the Common Stock, percentages shown are
based upon 49,960,179 shares of Common Stock actually outstanding as of
September 30, 1998. In cases where the beneficial ownership of the
individual or group includes options, warrants or convertible securities,
the percentage is based on 49,960,179 shares actually outstanding, plus the
number of shares issuable upon exercise or conversion of any such options,
warrants or convertible securities held by the individual or group. The
percentage does not reflect or assume the exercise or conversion of any
options, warrants or convertible securities not owned by the individual or
group in question. In the case of the Series A and Series B Preferred
Stock, percentages shown are based on 250,000 and 100,000 shares,
respectively, actually outstanding as of September 30, 1998.
(2) Includes 83,615 shares issuable upon exercise of options and 25,000 shares
issuable upon exercise of warrants, 91,918 of which are exercisable within
60 days of September 30, 1998. Does not include 76,445 shares of Common
Stock contingently issuable upon conversion of the Preferred Stock owned by
Mr. Adler.
(3) Includes 45,900 shares subject to options exercisable within 60 days of
September 30, 1998.
(4) Includes 56,494 shares subject to options, of which 34,108 are exercisable
within 60 days of September 30, 1998.
(5) Includes 45,900 shares subject to options, all of which are exercisable
within 60 days of September 30, 1998.
(6) Includes 51,612 shares subject to options, all of which are exercisable,
and 25,000 shares subject to warrants, 16,666 of which are exercisable
within 60 days of September 30, 1998. Also includes 12,755 shares of Common
Stock owned and 63,559 shares of Common Stock subject to exercisable
options held by Resource Holdings Associates, of which Mr. Seslowe is a
managing director and in which he holds a greater than 10% ownership
interest. Does not include 203,756 shares of Common Stock contingently
issuable upon conversion of the Preferred Stock owned by Mr. Seslowe or the
45,875 shares of Common Stock contingently issuable upon conversion of the
Preferred Stock owned by Resource Holdings Associates.
(7) Includes 3,576 shares issuable upon conversion of the Company's Debentures,
of which Mr. Yacenda beneficially owns $38,000 in principal amount or less
than 1% of the outstanding principal amount.
(8) Includes 773,921 shares subject to options, and 50,000 shares subject to
warrants, of which 351,593 and 16,666, respectively, are exercisable within
60 days of September 30, 1998, and 35,765 shares issuable upon conversion
of the Company's Debentures.
(9) Includes 862 shares held by Resource Holdings.
(10) Includes 345 shares held by Resource Holdings.
6
<PAGE>
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers of the Company as of October 1, 1998 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
- ------------------------------ --- ---------------------------------------------------------------------------
<S> <C> <C>
Stan Kabala................... 55 Chairman of the Board, President and Chief Executive Officer
Michael W. Yacenda............ 46 Executive Vice President and President, UniStar Entertainment
Barbara C. Anderson........... 46 Vice President, Law and Administration and Secretary
James E. Cooke III............ 49 Vice President, National Accounts
Israel J. Hersh............... 44 Vice President, Software Engineering
Robert W. Hopwood............. 54 Vice President -- Operations, Unistar Entertainment
Frank J. Rotatori............. 55 Vice President, and President, Healthcare Communications Division
</TABLE>
Stanley J. Kabala was elected Chairman of the Board, President and Chief
Executive Officer of the Company in June 1998. Prior to that, he was President
and Chief Executive Officer of Rogers Cantel Mobile Communications, the largest
wireless telephone company in Canada, and Chief Operating Officer of its parent
Rogers Communications, Inc., from 1996 to 1997. During 1995, Mr. Kabala was
President and Chief Executive Officer of Unitel Communications, Inc., Canada's
largest alternative long distance provider. From 1968 through 1994, Mr. Kabala
held various positions at AT&T Corporation, most recently Vice
President -- Customer Service for the Business Communications Services Division
and Vice President -- AT&T 800 and Business Applications Services.
Michael W. Yacenda has served as Executive Vice President of Executone
since January 1990, and as President of UniStar since 1996. Prior to that time,
he was Vice President, Finance and Chief Financial Officer of the Company from
July 1988 to January 1990. He served as a Vice President of ISOETEC from 1983 to
1988. From 1974 to 1983, Mr. Yacenda was employed by Arthur Andersen & Co., a
public accounting firm. Mr. Yacenda is a certified public accountant.
Barbara C. Anderson has been Vice President, Law and Administration since
October 1, 1998 and was Vice President, General Counsel and Secretary of the
Company since 1990. From 1985 to 1989, she was Corporate Counsel of United
States Surgical Corporation, a manufacturer of medical devices. Prior thereto,
she was an associate attorney at Arnold & Porter in Washington, D.C.
James E. Cooke III has served as Vice President, National Accounts since
February 1996. Prior to that time, from 1992 until 1996, Mr. Cooke served as
Division Manager of Operations for the Company, and from 1988 through 1991, Mr.
Cooke was a District Manager for the Company. From 1985 until 1988, Mr. Cooke
was the President of an interconnect company, and from 1981 to 1985, he was a
General Manager and a Regional Manager of the Jarvis Corporation. For eight
years prior to that time, he worked at Xerox Corporation in various sales and
management positions.
Israel J. Hersh has been Vice President, Software Engineering since
February 1996. Mr. Hersh joined the Company as Director of Software Development
in 1984, and was promoted to Senior Director of Software Engineering in January
1994. Prior to his employment with the Company, Mr. Hersh was a manager of the
software development department for T-Bar, Inc. Mr. Hersh has a B.S. in
Electrical Engineering from Tel Aviv University and a MS in Electrical
Engineering from Bridgeport University.
Robert W. Hopwood has been Vice President of the Company and Vice
President-Operations of its UniStar subsidiary since May 1996, and prior thereto
served as Vice President, Customer Care of the Company from January 1990. From
1983 until 1990, Mr. Hopwood was the Director of Technical Operations of the
Company and ISOETEC.
Frank J. Rotatori has been Vice President, Healthcare Communications since
February 1996. Prior thereto he was Vice President, European Operations since
February 1994, and prior thereto was Director of Call Center Management Products
during 1992 and 1993, Vice President -- Direct Sales from 1990 through 1991 and
Vice President -- Customer Service of the Company from 1988 to 1990. Mr.
Rotatori joined ISOETEC in 1986 as a regional manager. From 1982 to 1986, he
served as General Manager and Eastern Regional Manager for Rolm Corporation. For
13 years prior to that time, he worked at Xerox Corporation in various
manufacturing, accounting, sales and service management positions.
7
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation by the Company of the
former Chief Executive Officer and the four most highly compensated other
executive officers of the Company in 1997, for services in all capacities to the
Company and its subsidiaries during the past three fiscal years.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION($)(1)
ANNUAL COMPENSATION ------------------
----------------------------------------- AWARDS OF
OTHER ANNUAL OPTIONS/ ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) COMPENSATION($) SARS(#) COMPENSATION($)
- --------------------------------- ----- --------- ----------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Alan Kessman .................... 1997 400,000 -0- -0- -0- 9,849(2)
Chairman of the Board President 1996 400,000 63,000 -0- -0- 9,536
and Chief Executive Officer 1995 400,000 -0- -0- -0- 10,328
Michael W. Yacenda .............. 1997 256,000 -0- -0- -0- 5,997
Executive Vice President 1996 256,000 49,900 -0- -0- 5,935
1995 256,000 -0- -0- -0- 6,353
Shlomo Shur ..................... 1997 215,700 -0- -0- -0- 5,233
Senior Vice President, 1996 215,700 12,393 -0- -0- 5,192
Advanced Technology 1995 215,700 -0- -0- -0- 5,514
Andrew Kontomerkos .............. 1997 214,000 -0- -0- -0- 5,896
Senior Vice President, Hardware 1996 214,000 12,350 -0- -0- 5,703
Engineering and Production 1995 214,000 -0- -0- -0- 5,535
Vic Northrup .................... 1997 162,885 31,750 -0- -0- 660
Vice President and President, 1996 137,837 64,375 -0- 25,000 660
Computer 1995 126,223 83,353 -0- -0- 660
Telephony Division
</TABLE>
- ------------
(1) This category includes for each individual a matching contribution by the
Company under the Company's 401(k) plan in the amount of $660 each for each
year. This column also includes premiums paid by the Company for long-term
disability and life insurance for the following individuals in the following
amounts in 1997: Mr. Kessman, $9,189; Mr. Yacenda, $5,337; Mr. Shur, $4,573;
and Mr. Kontomerkos, $5,236; in the following amounts in 1996: Mr. Kessman,
$8,876; Mr. Yacenda, $5,275; Mr. Shur, $4,532; and Mr. Kontomerkos, $5,043;
and in the following amounts in 1995: Mr. Kessman, $9,668; Mr. Yacenda,
$5,693; Mr. Shur, $4,854; and Mr. Kontomerkos, $4,875.
(2) Does not include the payment of approximately $1,300,000 accrued under Mr.
Kessman's employment continuity agreement described immediately below.
EMPLOYMENT AGREEMENTS
The Company and Alan Kessman, former Chairman of the Board, President and
Chief Executive Officer of the Company, entered into an employment continuity
agreement in January 1995 that provided certain benefits to Mr. Kessman in the
event of the termination of Mr. Kessman's employment without cause or a
diminishment of his responsibilities, or following a change in control in the
Company, including a lump sum payment equal to 2.99 times his then current base
salary plus the average of any bonuses awarded to Mr. Kessman during the two
fiscal years preceding the termination of his employment and continuation of
benefits.
In January 1998, Mr. Kessman announced his intention to retire from the
management of the day-to-day operations of the Company. Mr. Kessman remained as
acting Chairman and Chief Executive Officer until his successor, Mr. Kabala, was
elected in June 1998. In accordance with the diminishment of responsibility
provisions of Mr. Kessman's employment continuity agreement, the Company paid
Mr. Kessman approximately $1.3 million, which includes severance of
approximately $1.1 million and continuation of certain benefits for four years.
The Company incurred this cost during the first quarter of 1998. As of September
30, 1998, Mr. Kessman had indebtedness to the Company of $2.4 million
8
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<PAGE>
relating to the Executive Stock Incentive Plan. These obligations will remain
outstanding until December 2001 notwithstanding Mr. Kessman's retirement;
however, during 1998 Mr. Kessman will pledge an additional 500,000 shares of
Common Stock to the Company as security for the loan and guarantee, and after
1998 he will pay 100% of the interest accrued on the loan as it becomes due. See
'CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.'
In June 1998, the Company entered into an employment agreement with Stanley
J. Kabala, its Chairman of the Board, President and Chief Executive Officer, for
an initial term of one year. The employment agreement provides for a minimum
base salary of $300,000 per year, eligibility for a incentive bonus of 150,000
shares of Common Stock upon achievement of objective performance goals set by
the Board of Directors, a signing bonus of 200,000 restricted shares of Common
Stock vesting ratably over 12 months and an initial stock option covering
200,000 shares of Common Stock vesting ratably over 12 months. The agreement
further provides that in the event of the termination of Mr. Kabala's employment
by the Company without cause or his voluntary termination of employment upon
certain events, including diminution of his responsibilities or a change of
control, the Company will pay Mr. Kabala his base salary for the remainder of
the initial term, a prorated bonus and continuation of medical insurance
coverage, and his restricted stock and stock options will vest immediately.
OPTION GRANTS IN LAST FISCAL YEAR
There were no grants of options made to any officers during 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth each exercise of stock options made during
the year ended December 31, 1997 by the Chief Executive Officer and the four
most highly compensated other executive officers during 1997 and the fiscal
year-end value of unexercised options held by those individuals as of December
31, 1997. There were no exercises or holdings of stock appreciation rights by
any officers during 1997, and there are no outstanding stock appreciation
rights.
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
IN-THE-MONEY
NUMBER OF OPTIONS
UNEXERCISED OPTIONS AT FISCAL YEAR-
AT FISCAL YEAR-END(#) END($)(1)
--------------------- ---------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) VALUE REALIZED($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------- --------------- ----------------- --------------------- ---------------
<S> <C> <C> <C> <C>
Alan Kessman........................... 10,000 $ 7,500 25,000/-0- 4,700/-0-
Michael W. Yacenda..................... 26,000 23,556 32,000/-0- 6,016/-0-
Shlomo Shur............................ 20,000 18,120 25,000/-0- 4,700/-0-
Andrew Kontomerkos..................... 15,000 13,590 20,000/-0- 3,670/-0-
Vic Northrup........................... -0- -0- 34,108/28,036 -0-/-0-
</TABLE>
- ------------
(1) Based upon the last sale price on December 31, 1997 of $2.188 per share of
Common Stock.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
It is the responsibility of the Compensation Committee of the Board of
Directors to administer the Company's incentive plans, review the performance of
management and approve the compensation of the Chief Executive Officer and other
executive officers of the Company.
The Compensation Committee believes that the Company's success depends on
the coordinated efforts of individual employees working as a team toward defined
common goals. The objectives of the Company's compensation program are to align
executive compensation with business objectives, to reward individual and team
performance furthering the business objectives, and to attract, retain and
reward employees who will contribute to the long-term success of the Company
with competitive salary and incentive plans.
Specifically, executive compensation decisions are based on the following
factors:
9
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<PAGE>
1. The total direct compensation package for the Company's executives
is made up of three elements: base salary, a short-term incentive program
in the form of a performance-based bonus, and a long-term incentive program
in the form of stock options and other inducements to own the Company's
stock.
2. The Committee believes that the total compensation of all
executives should have a large incentive element that is dependent upon
overall Company performance measured against objectives established at the
beginning of the fiscal year. Bonus and stock opportunities represent a
significant portion of the total compensation package, in an attempt to
further the Company's goal of linking compensation more closely to the
Company's performance. The percentage of direct compensation that is
dependent upon the Company's attainment of its objectives also generally
increases as the responsibility of the officer in question for the overall
corporate performance increases.
3. Total compensation levels, i.e., base salary, bonus potential, and
number of stock options, are established by individual levels of
responsibility and regular reference to competitive compensation levels for
executives performing similar functions and having equivalent levels of
responsibility. However, whether actual bonuses are paid to each executive
depends upon the achievement of Company profitability goals. In the case of
certain executives who have direct responsibility for individual business
units, a portion of the incentive compensation for such executives may
consist of bonuses tied to the performance against predetermined targets of
the individual business units for which they are responsible.
4. In 1997, the Compensation Committee reviewed executive compensation
data reported in a nationally recognized independent compensation survey
(the 'Survey') for a group of companies in the Company's industry or
similar industries and of comparable size and complexity. The Committee
compared the base salary and bonus levels of the Survey group to the
existing salary and bonus compensation of the Company's management.
5. The Committee views the 50th percentile of the Survey data as
average compensation for comparable positions and believes it is the
minimum level necessary for the Company to be competitive in attracting and
retaining qualified executives in its industry and geographic locations.
Therefore, since 1994 the base salaries for the Chief Executive Officer and
the four other highest paid executive officers have been established at
approximately the 50th percentile for comparable positions in the Survey
companies. In 1997, the Committee approved setting each executive's total
cash compensation at approximately the median for the comparable position
in the benchmark population of companies included in the Survey. As a
result, the Committee approved no increase in salary for Mr. Kessman or any
of the four other highest paid executive officers except one officer who
was initially elected as an executive officer in 1997.
6. Merit increases in base salary for executives other than Mr.
Kessman have been reviewed on an individual basis by Mr. Kessman and
increases are dependent upon a favorable evaluation by Mr. Kessman of
individual executive performance relative to individual goals, the
functioning of the executive's team within the corporate structure, success
in furthering the corporate strategy and goals, and individual management
skills. Based upon his evaluation, Mr. Kessman recommends base salary
increases to the Committee for its approval.
7. In addition to base salary and merit increases, the Compensation
Committee considers incentive bonuses for its executive officers, including
the Chief Executive Officer, both prospectively based upon the attainment
of specific performance goals, and retrospectively based upon the
Committee's discretionary judgment as to the performance during the year of
the Company and its executive officers or other considerations deemed
appropriate at the time. To establish 1997 bonus potential for executive
officers, including the Chief Executive Officer, the Compensation Committee
reviewed recommendations by the Chief Executive Officer based on data
provided by the Survey. The Committee provided that each officer would be
eligible for a bonus equal to a percentage of his or her salary consistent
with the Survey data if certain pre-established 1997 pretax income targets
or goals were achieved by the Company. Partial achievement of the pretax
income goals (above 74% attainment) would result in partial bonus payments.
The Committee also approved bonus eligibility for division presidents that
would be
10
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<PAGE>
based on division performance without regard to overall corporate
performance. In 1997, the pretax income from operations for the year was
below the applicable threshold. Therefore, the Committee approved no bonus
payments to Mr. Kessman or any of the four other highest paid executive
officers for 1997 except bonuses paid to one of the four other highest paid
executive officers based on his division's performance.
The Committee reserves the right to make discretionary bonus awards in
appropriate circumstances where an executive might merit a bonus based on
other considerations.
8. All executives, including the Chief Executive Officer, are eligible
for annual stock option grants under the employee stock option plans
applicable to employees generally, as approved by the Compensation
Committee. The number of options granted to any individual depends on
individual performance, salary level and competitive data. In addition, in
determining the number of stock options granted to each senior executive,
the Compensation Committee reviews the unvested options of each executive
to determine the future benefits potentially available to the executive.
The number of options granted will depend in part on the total number of
unvested options deemed necessary to create a long-term incentive on the
part of the executive to remain with the Company in order to realize future
benefits.
No options were granted in 1997 to Mr. Kessman or the four highest
paid other executive officers.
9. In December 1997, the Board of Directors on the recommendation of
the Committee approved certain modifications and waivers under the 1994
Executive Stock Incentive Plan. The Board of Directors approved the
extension of the participant loans and the Company's guarantee of those
loans from August 1999 until December 2001, subject to the approval of the
lending bank, and deferred the interest payment (15% of the bank interest
accrued in 1997) that would have otherwise been due from each participant
to the Company in January 1998. The Board of Directors also decided to
waive restrictions in the Plan to allow participants to sell a portion or
all of their Plan stock in 1998, subject to applicable legal requirements
and to repayment of the loan with the proceeds of the shares sold.
In conclusion, the Compensation Committee believes that the base
salary, bonus and stock options of the Company's Chief Executive Officer
and other executives are appropriate in light of competitive pay practices
and the Company's performance against short and long-term performance
goals.
LOUIS K. ADLER
RICHARD ROSENBLOOM
JERRY SESLOWE
11
<PAGE>
<PAGE>
PERFORMANCE GRAPH
The graph below compares, for the last five fiscal years, the yearly
percentage change in cumulative total returns (assuming reinvestment of
dividends and interest) of (i) the Company's Common Stock, (ii) the Company's
Debentures, (iii) the NASDAQ Stock Market and (iv) a peer group index
constructed by the Company (the 'Peer Group').
The Peer Group consists of the following companies:
<TABLE>
<S> <C>
Aspect Telecommunications Corp. Inter-Tel, Inc.
Boston Technology, Inc. InterVoice, Inc.
Brite Voice Systems, Inc. Microlog Corporation
Centigram Communications Corp. Mitel Corporation
Comdial Corporation Mosaix
Davox Corporation Norstan, Inc.
Digital Sound Corporation Syntellect, Inc.
Electronic Information Systems, Inc. Teknekron Communications Systems, Inc.(TCSI)
</TABLE>
The Peer Group includes companies who compete with the Company in the
general voice communications equipment area as well as those active in several
more specialized areas, such as ACD (automatic call distribution), voice mail,
interactive voice response systems, and predictive dialing systems, as well as
additional general voice communications companies. The Company believes that the
mix of the companies in the Peer Group accurately reflects the mix of businesses
in which the Company is currently engaged and will be engaged in the foreseeable
future.
The Peer Group is not identical to the Survey group used to evaluate
compensation of executives described in the Compensation Committee Report. The
Peer Group above does not provide sufficient compensation data for the
Committee's purposes, and the Survey group includes non-public entities for whom
stock price data for the performance graph is unavailable.
Although Lucent Technologies, Inc. and Nortel are the Company's principal
competitors in supplying voice communications equipment, software and services
to the under-300-desktop market, the business in which the Company is primarily
engaged, both of those companies are much larger than the Company and derive
most of their revenues from other lines of business and so have not been
included in the Peer Group. The returns of each Peer Group issuer have been
weighted in the graph below to reflect that issuer's stock market capitalization
at the beginning of each calendar year.
12
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<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN AMONG
EXECUTONE, INCLUDING THE COMMON STOCK ('XTON')
AND THE DEBENTURES ('XTONG'), THE NASDAQ (US) INDEX
AND THE COMPANY'S PEER GROUP
<TABLE>
<CAPTION>
WEIGHTED AVERAGE CUMULATIVE TOTAL RETURNS 1992 1993 1994 1995 1996 1997
- ------------------------------------------------------------------ ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
XTON.............................................................. $100 $159 $179 $128 $131 $121
NASDAQ............................................................ $100 $115 $112 $159 $195 $240
PEER GROUP........................................................ $100 $190 $179 $252 $327 $306
XTONG............................................................. $100 $138 $137 $160 $178 $198
</TABLE>
[PERFORMANCE GRAPH]
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Louis K. Adler, Richard
Rosenbloom and Jerry Seslowe.
No member of the Committee is a former or current officer or employee of
the Company or any subsidiary.
No executive officer of the Company served as a director or a member of the
Compensation Committee or of the equivalent body of any entity, any one of whose
executive officers serve on the Compensation Committee or the Board of Directors
of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors and executive officers, and persons who own more than 10% of
a registered class of the Company's equity securities, file with the Securities
and Exchange Commission initial reports of ownership and reports of change in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than 10% shareholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms that they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than 10% beneficial owners were complied with.
13
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The 1994 Executive Stock Incentive Plan (the 'Executive Plan'), approved by
shareholders at the 1994 Annual Meeting, was implemented in October 1994 with 30
employees participating. Under the terms of the Executive Plan, eligible key
employees were granted the right to purchase shares of the Company's Common
Stock at the market price, which was $3.1875 per share at the time of purchase.
Participating employees financed the purchases of these shares through loans by
the Company's bank lender at the prime rate less 1/4%, payable over five years.
The loans are fully-recourse to the participating employees but are guaranteed
by letters of credit from the Company to the lending bank. The Company lends the
employee 85% of the interest due to the bank. The Company holds the Common Stock
purchased under the Executive Plan (the 'Purchased Shares') as security for its
guarantees of the repayment of the loans. Sales of the Purchased Shares are
subject to certain restrictions, including repayment of the associated loan
amounts.
In December 1997, the Compensation Committee of the Board of Directors of
the Company agreed, subject to the Company obtaining the agreement of the
lending bank, that it would allow the participant loans to remain outstanding
until December 2001 instead of requiring repayment in August 1999, and that it
would defer collection from each participant of the 15% of the 1997 interest on
the loans that would otherwise have been currently payable to the Company. The
Committee also decided to waive certain restrictions in the Plan to allow
participants to sell a portion or all of their Purchased Shares in 1998 and
thereafter, subject to applicable legal requirements and to repayment of the
loan with the sale proceeds.
In June 1998, the Board of Directors approved a Transition and Retention
Plan (the 'Transition Plan') and offered it to certain participants in the
Executive Plan including certain executive officers as noted in the table below.
The Transition Plan provides, in exchange for a release of all prior claims by
the participant, defined retention and severance payments, option grants at
current market value and deferral of all loan interest to the participant. A
participant in the Transition Plan will earn, through continued employment, a
retention payment of up to 110% of any shortfall of the market value of the
Common Stock purchased with the loan below the loan's outstanding principal and
interest. The amount of this retention payment is determined, and the payment
becomes payable, only if and when the participant's employment with the Company
ends. A Transition Plan participant becomes vested in one-third of the retention
payment by continuation of employment through March 31, 1999, and becomes vested
in an additional 8.33% of the payment for each calendar quarter of continued
employment thereafter. In the event the Company terminates the participant's
employment without cause, or a change of control of the Company occurs, the
retention payment becomes fully vested and payable immediately. The Company has
the option at any time to repurchase the Purchased Shares from a Transition Plan
participant at the fair market value, in which case the participant remains
liable for any loan balance not repaid from the repurchase proceeds subject the
other terms of the Transition Plan. Under certain circumstances, such as
termination by the Company of the participant's employment following a change of
control or otherwise without cause as defined in the Transition Plan, the
participant is also entitled to continuation of salary and benefits for nine
months.
The following table contains information about borrowings in excess of
$60,000 by executive officers that were outstanding during 1997 pursuant to the
Executive Plan and that are guaranteed by the Company. The amounts listed below
also include the interest paid by the Company to the bank, reimbursement of
which is owed by the individual to the Company. No director, nominee, or
beneficial owner of more than 5% of any class of voting securities is eligible
for participation in the Executive Plan.
In September 1998, in connection with the termination of his employment and
in accordance with the Transition Plan, Mr. Guarascio surrendered to the Company
the shares purchased by him under the Executive Plan and the Company released
Mr. Guarascio from any further obligations under the Executive Plan loan.
14
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<PAGE>
<TABLE>
<CAPTION>
UNPAID
HIGHEST AMOUNT OF INDEBTEDNESS AT
INDEBTEDNESS BETWEEN 9/30/98
1/1/97 AND 9/30/98, INCLUDING
INCLUDING ACCRUED ACCRUED
NAME INTEREST INTEREST
- --------------------------------------------------------------------------- ---------------------- ---------------
<S> <C> <C>
Barbara C. Anderson(2)..................................................... $ 251,007 $ 251,007
James E. Cooke III(2)...................................................... 410,003 410,003
Anthony R. Guarascio(2).................................................... 574,004 -0-
Israel J. Hersh(2)......................................................... 123,000 123,000
Robert W. Hopwood(2)....................................................... 409,382 409,382
Alan Kessman(1)............................................................ 2,430,619 2,430,619
Andrew Kontomerkos......................................................... 717,505 717,505
Vic Northrup............................................................... 289,283 289,283
Frank J. Rotatori(2)....................................................... 246,002 246,002
Shlomo Shur................................................................ 717,505 717,505
Michael W. Yacenda(2)...................................................... 1,435,010 1,435,010
</TABLE>
- ------------
(1) See discussion under: Executive Compensation -- Employment Agreements'
above.
(2) Participant in Transition Plan.
SHAREHOLDER PROPOSALS -- 1999 ANNUAL MEETING
Shareholders are entitled to present proposals for action at the 1999
Annual Meeting of Shareholders if they comply with the applicable requirements
of the Company's Bylaws then in effect and with the requirements of the proxy
rules as promulgated by the Securities and Exchange Commission. Any proposals
intended to be presented at the 1999 Annual Meeting of Shareholders must be
received at the Company's offices on or before March 31, 1999 in order to be
considered for inclusion in the Company's Proxy Statement and form of proxy
relating to such Meeting.
OTHER MATTERS
The Board of Directors has designated Arthur Andersen LLP, independent
accountants, as auditors for the Company for the fiscal year ending December 31,
1997 subject to shareholder approval. Arthur Andersen LLP will be present at the
Annual Meeting with an opportunity to make a statement and will be available to
respond to appropriate questions relating to the audit of the Company's 1997
financial statements.
Management knows of no other business which will be presented to the
Meeting. If other matters properly come before the Meeting, the persons named as
proxies will vote on them in accordance with their best judgment.
The cost of this solicitation of proxies will be borne by the Company. In
addition to the use of the mail, some of the officers and regular employees of
the Company may solicit proxies by telephone and telegraph, and may also verify
the accuracy of marked proxies by contacting record and beneficial owners of
Common Stock and Preferred Stock, and the Company will request brokerage houses,
banks and other custodians, nominees and fiduciaries to forward soliciting
material to the beneficial owners of Common Stock and Preferred Stock held of
record by such persons. The Company will reimburse such persons for expenses
incurred in forwarding such soliciting material. It is contemplated that
additional solicitation of proxies will be made in the same manner under the
engagement and direction of Morrow & Company, at an anticipated cost to the
Company of $5,000, plus reimbursement of out-of-pocket expenses.
By Order of the Board of Directors
Barbara C. Anderson
Vice President, Law and Administration
and Secretary
October 16, 1998
15
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<PAGE>
APPENDIX 1
EXECUTONE INFORMATION SYSTEMS, INC.
PROXY
478 WHEELERS FARMS ROAD, MILFORD, CONNECTICUT 06460
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Stanley J. Kabala, Michael W. Yacenda and
Barbara C. Anderson, or any of them, with full power of substitution in each,
Proxies, to vote all the shares of Common Stock and Preferred Stock of EXECUTONE
Information Systems, Inc. held of record by the undersigned at the close of
business on September 30, 1998, at the Annual Meeting of Shareholders (the
"Meeting") to be held on November 18, 1998, at 3:00 p.m., or any continuation or
adjournment thereof.
1. Election of Directors
FOR WITHHOLD
[ ] [ ]
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEES:
STANLEY J. KABALA LOUIS K. ADLER STANLEY M. BLAU
JOHN P. HECTUS JERRY M. SESLOWE
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
THE PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
Signature:
----------------------------------------
Date:
----------------------
Signature if held jointly:
--------------------------------------
Date:
----------------------
Note: Please sign exactly as the name appears hereon. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by the President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
<PAGE>
