SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for the Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 240.14a-11(c) or Rule 14a-12
V Band Corporation
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(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 offseting 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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<PAGE>
[GRAPHIC-V BAND LOGO] V Band Corporation
565 Taxter Road
Elmsford, NY 10523
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS--MAY 11, 1998
To the Shareholders of V Band Corporation:
The Annual Meeting of Shareholders of V Band Corporation (the
"Company"), a New York corporation, will be held at the principal office of the
Company, 565 Taxter Road, Elmsford, New York 10523, on May 11, 1998, at 10:00
a.m., for the following purposes:
(1) To elect a Board of Directors to hold office for a term expiring upon
the 1999 Annual Meeting of Shareholders or until their successors shall have
been duly elected and qualified.
(2) To approve an amendment to the Company's Restated Corporation to effect
a reverse stock split according to a formula described in the accompanying Proxy
Statement (if approved, the outstanding shares of Common Stock will be converted
into a smaller number of shares based upon the formula described in the
accompanying Proxy Statement).
(3) To approve the retention of Deloitte & Touche LLP as independent
auditors for the 1998 fiscal year.
(4) To transact such other business as may legally come before the meeting
or any adjournment or adjournments thereof, although management of the Company
was not aware on April 16, 1998 of any other business to be considered.
Reference is made to the accompanying Proxy Statement for more complete
information concerning the foregoing matters.
Only shareholders of record at the close of business on April 9, 1998
are entitled to vote at the Annual Meeting.
We look forward to seeing as many shareholders as possible at the
meeting. Whether or not you expect to be present, please mark, sign and date the
enclosed form of proxy and return it in the envelope provided. No postage need
be added if you deposit the envelope in a mail depository in the United States.
By Order of the Board of Directors
/s/Thomas E. Feil
-----------------
Thomas E. Feil
Elmsford, New York
April 16, 1998
SHAREHOLDERS CAN HELP THE COMPANY AVOID UNNECESSARY EXPENSE AND DELAY BY
PROMPTLY COMPLETING AND RETURNING THE ENCLOSED PROXY CARD. THE BUSINESS OF THE
MEEETING IS IMPORTANT TO THE COMPANY AND CANNOT BE TRANSACTED UNLESS A MAJORITY
OF THE MOST OUTSTANDING SHARES ARE REPRESENTED.
<PAGE>
[GRAPHIC-V BAND LOGO]
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of V Band Corporation (the "Company"), 565 Taxter
Road, Elmsford, New York 10523, of proxies for use at the Annual Meeting of
Shareholders to be held on May 11, 1998 and any adjournments thereof. A proxy
may be revoked by a shareholder at any time prior to its use by filing with the
Company a duly executed proxy bearing a later date or by giving written notice
of such revocation to the Secretary of the Company prior to the meeting. A proxy
is also subject to revocation if the person executing the proxy is present at
the meeting and chooses to vote in person.
The expenses of proxy solicitation will be paid by the Company. The
principal solicitation of proxies is being made by mail; however, officers and
other employees of the Company may solicit proxies by telephone, telegraph or
personal interview, without additional compensation therefor. Forms of proxies
and proxy material will also be distributed through brokers, custodians and
other like persons to the beneficial owners of Common Stock of the Company, and
the Company will reimburse such persons for their reasonable out-of-pocket
expenses incurred in connection therewith.
The Annual Report of the Company to Shareholders for the fiscal year
ended October 31, 1997, including financial statements, accompanies this Proxy
Statement. The proxy and this Proxy Statement, together with the Annual Report
to Shareholders, are being mailed to shareholders on or about April 16, 1998.
DESCRIPTION OF CAPITAL STOCK AND VOTING RIGHTS
The record date for the determination of shareholders entitled to vote
at the meeting is the close of business on April 9, 1998. On that date, the
Company had 5,426,591 shares of Common Stock, par value $.01 per share (the
"Common Stock"), issued and outstanding. Each holder of Common Stock is entitled
to one vote per share on all matters to come before the meeting.
All of the shares of Common Stock of the Company represented by valid
proxies, unless otherwise specified therein or unless revoked, will be voted FOR
the election of the persons nominated as directors, FOR the Amendment to the
Company's Restated Certificate of Incorporation to effect a reverse stock split,
FOR the approval of the retention of Deloitte & Touche LLP as the Company's
independent public auditors for the 1998 fiscal year, and at the discretion of
the proxy holders on any other matters that may properly come before the Annual
Meeting, although as of the date of this Proxy Statement, the Company was not
aware of any other business to be considered. Where a shareholder has
appropriately specified how a proxy is to be voted, it will be voted
accordingly. However, if a broker or shareholder nominee limits on the proxy
card the number of shares voted on a proposal or indicates that the shares
represented by a proxy card are not voted on a proposal, such "non-votes" will
not be voted on the proposal and will not be counted in determining the number
of affirmative votes required for approval.
<PAGE>
PRINCIPAL SHAREHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by (i) each person who owns
beneficially more than 5% of the Company's Common Stock, (ii) each director of
the Company, (iii) each executive officer named in the Summary Compensation
Table below, and (iv) all directors and executive officers of the Company as a
group, as of March 31, 1998.
<TABLE>
<CAPTION>
Number of Shares Percentage
Name and Address Beneficially Owned of Class
- ---------------- ------------------ --------
<S> <C> <C>
Thomas E. Feil 1,436,472 (1)(2) 26.5%
565 Taxter Road, Elmsford, NY 10523
Thomas Hughes 128,733 (1) 2.4%
565 Taxter Road, Elmsford, NY 10523
Mark R. Hahn 95,216 (1) 1.8%
565 Taxter Road, Elmsford, NY 10523
Luke P. La Valle, Jr. 22,000 (1) *
50 Broad Street, Suite 1609, New York, NY 10004
Thomas H. Lenagh 10,000 (1) *
6 Greenwich Office Park, Greenwich, CT 06831
Brian S. North 105,000 (1)(3) 1.9%
1800 One Liberty Place, Philadelphia, PA 19103
Joseph M. O'Donnell 22,000 (1) *
7900 Glades Road, Suite 500, Boca Raton, FL 33434
A. Eugene Sapp, Jr. 8,000 (1) *
2101 West Clinton Ave., Huntsville, AL 35807
J. Stephen Vanderwoude 10,000 (1) *
2316 Young Road, Southern Pines, NC 28388
Gerald C. Walsh 30,000 (1) *
565 Taxter Road, Elmsford, NY 10523
All directors and executive officers as a group (10 persons) 1,867,421 (1) 34.4%
</TABLE>
- ---------------------
* less than 1%
<PAGE>
(1) Includes shares that may be acquired upon exercise of options, which are
currently exercisable or are exercisable within 60 days, as follows: Mr. Hughes,
127,233 shares; Mr. Hahn, 85,334 shares; Mr. La Valle, 12,000 shares; Mr.
Lenagh, 10,000 shares; Mr. North, 25,000 shares; Mr. O'Donnell, 22,000 shares;
Mr. Sapp, 8,000 shares; Mr. Vanderwoude, 10,000 shares; Mr.Walsh, 30,000 shares;
and all directors and executive officers as a group, 329,567shares.
(2) Excludes 80,000 shares held in an irrevocable trust for Mr. Feil's daughter,
over which Mr. Feil holds no voting or investment power.
(3) Includes 80,000 shares held in an irrevocable trust for which Mr. North is a
trustee. Mr. North has no economic interest in the trust. However, he holds
investment and voting authority over such shares.
<TABLE>
<CAPTION>
DIRECTORS AND EXECUTIVE OFFICERS
Name Age Office Held
- ---- --- -----------
<S> <C> <C>
Thomas E. Feil (1) 56 Chairman, Chief Executive Officer, Director
Thomas Hughes 38 President, Chief Operating Officer
Mark R. Hahn (4) 40 Vice President - Chief Financial Officer, Treasurer and Secretary
Gerald C. Walsh 52 Senior Vice President - Sales and Operations
Luke P. La Valle, Jr. (2)(3) 56 Director
Thomas H. Lenagh (2) 73 Director
Brian S. North (1) 46 Director
Joseph M. O'Donnell (3) 52 Director
A. Eugene Sapp, Jr. (1) 61 Director
J. Stephen Vanderwoude (2)(3) 54 Director
</TABLE>
- -------------
(1) Member of Stock Option Committee.
(2) Member of Audit Committee.
(3) Member of Executive Compensation Committee.
(4) Resigned effective April 10, 1998.
<PAGE>
Thomas E. Feil has served as Chairman of the Company from April 1985 to
present, as a Director since its inception and as Chief Executive Officer from
April 1985 to August 1988 and from August 1993 to present. From the Company's
inception until April 1985, Mr. Feil was President of the Company.
Thomas Hughes was appointed President and Chief Operating Officer of the
Company in May 1997. He has been the Chief Operating Officer of the company
since 1995 and was its Vice President of Marketing and Product Planning from
1993 to 1995. Mr. Hughes began his career with the Company in 1988 as a Staff
Engineer and held various engineering management positions of increasing
responsibility until his appointment as Vice President. Prior to joining the
Company, he worked as a researcher at CBS Laboratories' Technology Center and a
Systems Engineer at United Technologies.
Gerald C. Walsh was appointed Senior Vice President, Sales and Operations
of the Company in May 1996. Prior to joining the Company, he was Eastern
Regional Manager, National Accounts at Executone Information Systems, Inc. From
1993 to 1995, Mr. Walsh served as Chief Operating Officer for Glasgal
Communications, Inc., in Northvale, New Jersey. From 1987 to 1992, he was Senior
Vice President and General Manager for Contel IPC.
Luke P. La Valle, Jr. has served as a Director of the Company since June
1992. Since 1980, Mr. La Valle has been President and Chief Investment Officer
of American Capital Management, Inc., a New York City based investment
management firm for individuals, trusts, pension and profit sharing accounts.
Prior to forming American Capital Management, Inc., Mr. La Valle worked for
United States Trust Company of New York for 13 years specializing in small
company investing in the Pension and Institutional Investment Division.
Thomas H. Lenagh has served as a Director of the Company since June 1993.
Mr. Lenagh has served as an independent financial consultant for the last six
years. He was formerly Chairman and Chief Executive Officer of Greiner
Engineering from 1984 to 1986. Prior to that he was Financial Vice President of
Aspen Institute until 1984. Previously, he was Treasurer and Portfolio Manager
of the Ford Foundation. Mr. Lenagh is a retired Captain of the United States
Naval Reserve. Mr. Lenagh is also a Director of CML, Inc., Gintel Funds, Adams
Express, Clemente Growth Fund, ICN Pharmaceuticals, Inc., ASD Group, Inc. and
Franklin Covey.
Brian S. North has served as a Director of the Company since September
1988. Mr. North has been an attorney with the law firm of Buchanan Ingersoll
Professional Corporation in Philadelphia. From 1995 to 1997 he practiced law
with White and Williams. From 1987 to 1994, he was a member of the law firm of
Elliott, Reihner, Siedzikowski, North & Egan, P.C. and predecessor law firms.
From 1980 to 1987, he was Senior Corporate Counsel of Sun Company, Inc.
<PAGE>
Joseph M. O'Donnell has served as a Director of the Company since June
1991. Since July 1994, Mr. O'Donnell has been the Chief Executive Officer and a
Director of Artesyn Technologies (formerly Computer Products, Inc.), a publicly
held multinational manufacturer in Boca Raton, Florida. From 1993 to 1994, he
was Chief Executive Officer for Savin Corporation, after one year of being an
independent business consultant. From 1990 to 1992 he served as President and
Chief Executive Officer of GO/DAN Industries Inc., a Connecticut-based
manufacturer of automobile parts sold primarily in the aftermarket. He is also a
Director of Cincinnati Microwave, Inc., a publicly held company, and Boca
Research.
A. Eugene Sapp, Jr. has served as a Director of the Company since August
1994. Mr. Sapp, employed by SCI Systems since 1962, has been its President,
Chief Operating Officer and Director since 1981. Mr. Sapp also serves as a
Director of Artesyn Technologies (formerly Computer Productis, Inc.) of Boca
Raton, Florida.
J. Stephen Vanderwoude has served as Director of the Company since May
1994. Mr. Vanderwoude is currently Chairman and Chief Executive Officer of
Madison River Telephone Company LLC. He was President, Chief Executive Officer
and Director for Video Lottery Technologies in Atlanta, Georgia from 1994 to
1995. Prior to that, he was the President and Chief Operating Officer of Sprint
Corporation's Local Telecommunication Division until September 1993. Prior to
the merger of Sprint and Centel corporations in March 1993, Mr. Vanderwoude was
President and a Director of Centel Corporation from 1988 and held various
executive and management positions with Centel since joining that company in
1971. Mr. Vanderwoude is also a Director of First Midwest, a bank holding
company.
The Board of Directors of the Company has an Executive Compensation
Committee, a Stock Option Committee and an Audit Committee. The Executive
Compensation Committee's principal functions are to recommend to the Board of
Directors the compensation arrangements for the executive officers of the
Company. The Stock Option Committee exercises the responsibilities of the Board
in granting options under and administering the Company's 1982 Incentive Stock
Option Plan and its 1984 Stock Option Plan. The Audit Committee's principal
functions are to review with internal financial staff and the Company's
independent auditors the Company's reporting process and internal controls and
to recommend the selection, retention or termination of the independent
auditors. During the 1997 fiscal year, the Audit Committee held 2 formal
meetings with the independent auditors present and an additional 5 informal
meetings preceding the regular board meetings, and the Executive Compensation
Committee and the Stock Option Committee did not hold formal meetings separate
from Board meetings. The Stock Option Committee acted by unanimous written
consent on 2 occasions. The Board of Directors has no other standing committees.
The Board of Directors of the Company held 6 meetings during the fiscal
year ended October 31, 1997. Four of the incumbent directors attended 100
percent of the meetings of the board; two of the incumbent directors attended
over 83 percent of the meetings of the board.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information for each of the fiscal years
ended October 31, 1997, 1996 and 1995 concerning the compensation of the
Company's chief executive officer and each of its other executive officers whose
salary and bonus for fiscal 1997 exceeded $100,000:
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation (1)
------------------- ----------------
Securities
Name/ Other Annual Underlying Options All Other
Principal Position Year Salary Bonus Compensation (#) Compensation (2)
- ------------------ ---- ------ ----- ------------ -- --------------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. Feil, 1997 $200,000 $ $ - $ 1,627
Chairman, Chief Executive 1996 200,000 - - - 2,000
Officer and Director 1995 199,000 - - - 1,528
Thomas Hughes, (3) 1997 154,000 - - 30,000 1,570
Chief Operating Officer 1996 150,000 2,000 - 90,000 1,500
1995 103,616 - 16,000 1,036
-
Mark R. Hahn, 1997 109,000 - - 20,000 1,100
Vice President - 1996 105,000 2,000 - 60,000 1,050
Chief Financial Officer 1995 85,077 - - 17,000 285
Gerald C. Walsh 1997 l26,000 - - 50,000 -
Senior Vice President 1996 63,000 - - 10,000 -
Sales and Operations 1995 - - - - -
</TABLE>
- -------------------
(1) Other than the Company's 401(k) Plan and its stock option and stock
purchase plans, the Company does not have any long-term incentive
plans and does not grant restricted stock awards.
(2) Includes amounts contributed by the Company under the Company's
401(k) Plan during the fiscal year and any additional discretionary
annual contributions related to the prior fiscal year.
(3) Mr. Hughes entered into an agreement with the Company in January
1998 whereby he is entitled to receive approximately one year's
compensation should there be a change of control of the Company
within one year from the date of the agreement.
<PAGE>
Stock Options
The following tables summarize options grants during the fiscal year ended
October 31, 1997 to each of the Executive Officers named in the Summary
Compensation Table and the value of the options held by such persons at the end
of such fiscal year. None of those Executive Officers exercised any stock
options during the fiscal year ended October 31, 1997. The Company does not
maintain any pension plans or any supplementary pension award plans.
Option Grants in Fiscal 1997
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term
-------------------------------------------------------------------------------------
Number of Percentage of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted Fiscal Year (per share) Date 5% 10%
---- ------- ----------- ----------- ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Thomas Hughes 30,000 17% $1.44 2007 $42,317 $92,971
Mark R. Hahn 20,000 11% 1.44 2007 28,211 61,981
Gerald C. Walsh 10,000 6% 1.44 2007 14,106 30,990
</TABLE>
Aggregate Option Exercises in Fiscal 1997 and Fiscal Year-end Option Value
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised In-the-
Underlying Unexercised Options Money Options at
at FY-End FY-End
-------------------------------- ---------------------------------
Shares
Acquired on Value
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas Hughes - - 72,233 73,334 9,375 -
Mark R. Hahn - - 44,334 52,666 6,250 -
Gerald C. Walsh - - 25,000 35,000 3,125 -
</TABLE>
On March 23, 1998 the Company offered to active employees, including the named
Executive Officers, the right to surrender existing options in exchange for new
options, exercisable at an exercise price of $.50 per share. Subsequent to the
grant of the initial options, the price of the Company's common stock remained
substantially lower than the exercise price. As a result, these options were not
serving the primary purpose of motivating and rewarding the employees of the
company.
<PAGE>
Compensation of Directors
Each outside director is entitled to receive an annual director's fee
of $7,500 plus $500 for each board meeting attended (up to a limit of six
meetings per year), plus deferred cash compensation payable upon termination of
service as a director in an amount equal to $2,000 for each year of service as a
director. Pursuant to the Company's Stock Compensation Plan for Non-Employee
Directors, each outside director may elect to have all or a portion of his
compensation paid by the Company by means of the issuance of the Company's
Common Stock in lieu of cash. Additionally, each director is entitled to
reimbursement for out-of-pocket travel expenses incurred to attend a board
meeting and may receive reasonable compensation for chairing any committee of
the board. Outside directors also receive, upon election or re-election as a
director, a grant of stock options under the Company's 1984 Stock Option Plan
covering 2,000 shares of the Company's Common Stock, at an exercise price equal
to the fair market value on the date of grant.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
AND THE STOCK OPTION COMMITTEE
Executive Compensation Policies
Executive compensation is set by the Executive Compensation Committee,
which approves cash compensation, and the Stock Option Committee, which
determines stock option grants. The Company's executive compensation program is
designed to provide compensation that is competitive with that offered by other
companies against which the Company competes for executive resources. The
objectives of the program are (1) to attract and retain superior talent and (2)
to reward executives for successful strategic management and for increases in
shareholder value.
Cash compensation is targeted relative to companies of similar size and
in similar businesses. In setting compensation levels, the Executive
Compensation Committee reviews competitive data compiled by an independent
compensation consulting firm. In addition to competitive factors, cash
compensation is based on the Executive Compensation Committee's evaluation of
each executive's performance as measured against individual, business group and
company-wide goals. Target annual incentive bonuses are set at the beginning of
the year and are conditioned on the achievement of a threshold level of
operating profit. If the threshold is reached, the amount of each bonus relative
to the target may vary based on individual performance.
Long-term compensation consists of stock options. Options are granted
in order to align more closely the interests of executives and shareholders by
creating the opportunity for executives to develop a significant equity interest
in the Company and because the potential value of the option is tied directly to
increases in the fair market value of the Company's common stock during the term
of the option. Mr. Feil, the Company's Chairman and largest stockholder, is a
member of the Stock Option Committee and is not eligible to receive stock
options.
<PAGE>
1997 Compensation
The Company's operating results, including operating results for prior
periods, influenced decisions regarding executive compensation during fiscal
year 1997. Increased levels of competition and a maturing market for the
Company's principal products have exerted substantial pressure on the Company's
operating results. Decisions regarding executive compensation during fiscal year
1997 were based upon individual and Company performance and the need to provide
incentives to improve the Company's financial performance and increase
shareholder value. These factors were equally applicable to CEO compensation
during fiscal year 1997.
The Executive Compensation Committee:
Luke P. La Valle, Jr.
Joseph M. O'Donnell
J. Stephen Vanderwoude
The Stock Option Committee:
Thomas E. Feil
Brian S. North
A. Eugene Sapp, Jr.
Compensation Committee Interlocks and Insider Participation
Messrs. La Valle, O'Donnell and Vanderwoude comprise the Executive Compensation
Committee. Messrs. Feil, North and Sapp comprise the Stock Option Committee.
Messrs. La Valle, Lenagh and Vanderwoude comprise the Audit Committee. Mr. Feil
is an officer and employee of the Company, but is not eligible to receive stock
options while serving on the Stock Option Committee.
PERFORMANCE GRAPH
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
I need data points for graph to insert in this spot
<PAGE>
The following graph sets forth total shareowner return (stock price
plus dividends, assuming dividend reinvestment) on a $100 investment in each of
the following: (i) the Company's Common Stock, (ii) U.S. NASDAQ Stock Market
Index and (iii) the NASDAQ Telecommunications Index, for the five-year period
commencing on November 1, 1992 and ended October 31, 1997.
1. ELECTION OF A BOARD OF DIRECTORS
Six directors are to be elected at the meeting for a term of office
which will expire upon the 1999 Annual Meeting of Shareholders, or at such later
date as each director's successor is elected and shall qualify. All current
members of the Board, with the exception of Joseph M. O'Donnell, are nominees
for election. Information regarding the nominees is set forth under "Directors
and Executive Officers" above. The term of office of all present directors will
expire on May 11, 1998, or at such later date as each director's successor is
elected and shall qualify.
The Board of Directors will consider shareholders' recommendations for
Board of Directors nominations for the 1999 Annual Meeting of Shareholders if
made in writing. The proposed nominee's written consent and sufficient
background information on the candidate must be included to enable the Board of
Directors to make proper judgments as to his or her qualifications.
Recommendations should be addressed to the Chief Executive Officer at the
Company's headquarters and received no later than January 15, 1999.
It is the intention of the persons named as proxies to vote the shares
to which the proxy relates FOR the election of the persons nominated as
directors unless instructed to the contrary. The affirmative vote of those
shareholders of record holding a plurality of the issued and outstanding shares
of Common Stock present in person or represented by proxy and voting at the
meeting (excluding abstentions and broker non-votes, which are not deemed
present and voting for this purpose) is required to elect the persons nominated.
The Board of Directors recommends that shareholders vote FOR the
nominees for director.
2. AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION TO EFFECT THE REVERSE
STOCK SPLIT
The Company's Board of Directors has unanimously approved and
determined to submit to the shareholders of the Company an amendment (the
"Amendment") to the Company's Restated Certificate of Incorporation to effect a
reverse stock split (the "Reverse Stock Split"). A copy of the proposed
Amendment is attached hereto as Exhibit A. A copy of the resolutions adopted by
the Board of Directors are attached hereto as Exhibit B. The statements made in
this Proxy Statement regarding the Amendment and the Reverse Stock Split should
be read in conjunction with and are qualified in their entirety by reference to
Exhibits A and B.
The Reverse Stock Split will be effective in accordance with a
formula based upon the trading price of the Company's Common Stock during the
ten (10) days prior to the filing of the Amendment. Under this formula, the
Reverse Stock Split will be effected pursuant to a ratio calculated by dividing
$1.50 by the average of the low bid prices of the Company's Common Stock as
reported on the Nasdaq National Market System during the ten (10) trading days
prior to the filing of the Amendment. See Exhibit B. In the event that the ratio
results in a fractional number, it will be rounded to the next closest whole
<PAGE>
number; provided, however, if the fraction is .5 it shall be rounded up to the
closest whole number. For example, if the average of the low bid prices of the
Company's Common Stock during the ten (10) trading days prior to the filing of
the Amendment was $.75 per share, the Reverse Stock Split would result in each
two (2) shares of the Company's presently outstanding Common Stock being
converted into one (1) new share of the Company's Common Stock (the "New Common
Stock"). By way of further example, if the average of the low bid prices of the
Company's Common Stock during the ten (10) trading days prior to the filing of
the Amendment was $.60 per share, the Reverse Stock Split would result in each
three (3) shares of the Company's presently outstanding Common Stock being
converted into one (1) share of New Common Stock.
The Company is currently authorized to issue 20,000,000 shares
of Common Stock, of which 5,426,591 were outstanding on the Record Date. If the
Reverse Stock Split is effected, the number of authorized shares shall remain
the same, but the number of outstanding shares shall be proportionately
decreased based on the average of the low bid prices of the Company's Common
Stock as reported on the Nasdaq National Market System during the ten (10)
trading days prior to the filing of the Amendment. For example, if the Reverse
Stock Split results in each two (2) shares of the Company's presently
outstanding shares of Common Stock being converted into one (1) share of New
Common Stock, the number of outstanding shares would be decreased to
approximately 2,713,295. The rights and preferences of the Common Stock would
not be affected by the Reverse Stock Split.
Each stockholder's percentage ownership of the Company and the
number of Company stockholders should not materially change as a result of the
Reverse Stock Split. The par value per share of Common Stock will remain at
$0.01 following the Reverse Stock Split; as a consequence, the aggregate capital
in excess of par value attributable to the outstanding Common Stock for
statutory and accounting purposes will be increased.
Nasdaq $1.00 Minimum Bid Requirement
The Company has received notice from The Nasdaq Stock Market,
Inc. ("Nasdaq") that its Common Stock is not in compliance with the minimum bid
and value of public float requirements for continued listing on the Nasdaq
National Market System. The Company does not believe that it will be able to
satisfy the requirements for continued listing on Nasdaq's National Market
System. However, the Board of Directors is recommending the Reverse Stock Split
to allow the Company's Common Stock to comply with the maintenance requirements
for listing on Nasdaq's SmallCap Market, as well as to improve the liquidity of
the Company's Common Stock. One of the maintenance standards of the SmallCap
Market is the requirement that the Company's Common Stock have a minimum bid
price of $1.00 per share (the "$1.00 Minimum Bid").
In the event that the Company's Common Stock does not satisfy
the $1.00 Minimum Bid, it will be subject to delisting from Nasdaq's National
Market System on May 28, 1998 and will not be eligible for listing on the
Nasdaq's SmallCap Market.
The Board of Directors believes that a delisting from Nasdaq
could, among other things, decrease the liquidity of the outstanding shares of
Common Stock and consequently, reduce the trading price and increase the
transaction costs of trading such shares. The Board of Directors believes that
if the Reverse Stock Split is approved, the bid price will likely increase over
the $1.00 Minimum Bid which should permit the Company to have its Common Stock
listed on the SmallCap Market.
<PAGE>
Potential Effects Of The Reverse Stock Split
If this proposal is approved by the Company's stockholders,
one new share of New Common Stock will be issued for a multiple number of
presently outstanding shares of Common Stock based upon a formula calculated by
dividing $1.50 by the average of the low bid prices of the Company's Common
Stock as reported on the National Market System during the ten (10) trading days
prior to the filing of the Amendment.
Although the Reverse Stock Split will not, by itself, impact
the Company's assets or prospects, the Reverse Stock Split could result in a
decrease in the aggregate market value of the Company's equity capital. The
Board of Directors believes that this risk is outweighed by the benefit of
compliance with the SmallCap Market maintenance requirements. There can,
however, be no assurance that approval of the Reverse Stock Split will succeed
in raising the bid price of the Company's Common Stock above $1.00, that such
price, if achieved, would be maintained, or if maintained that the Company's
Common Stock would not be delisted by Nasdaq for other reasons.
Increase Of Shares Available For Future Issuance
The increase in the number of authorized shares which would be
unissued and available for future issuance after the Reverse Stock Split (the
"Increased Available Shares") could be used for any proper corporate purpose
approved by the Board of Directors of the Company. The Increased Available
Shares will provide the Board with additional flexibility to issue shares in
connection with future financing transactions.
Since the Reverse Stock Split will result in the Increased
Available Shares, it may be construed as having an anti-takeover effect.
Although neither the Board of Directors nor the management of the Company views
this proposal as an anti-takeover measure, the Company could use the Increased
Available Shares to frustrate persons seeking to effect a takeover or otherwise
gain control of the Company. For example, the Company could privately place
shares with purchasers who might side with the Board of Directors in opposing a
hostile takeover bid or issue shares to a holder which would, thereafter, have
sufficient voting power to assure that any proposal to amend or repeal the
Bylaws or certain provisions of the Restated Certificate of Incorporation would
not receive the requisite vote.
Outstanding Shares Of Common Stock
As of April 9, 1998, there were outstanding 5,426,591 shares
of Common Stock. As of April 6, 1998, pursuant to the terms of outstanding
convertible instruments, options, warrants and other obligations, the Company
may be required to issue up to approximately additional shares of Common Stock.
As the conversion rates and anti-dilution adjustments of some of these
convertible instruments are influenced by the market price of the Company's
Common Stock at any given time, the number of shares of Common Stock issuable
upon conversion of such instruments will be affected by fluctuations in the
market price of the Company's Common Stock.
<PAGE>
Amendment To The Restated Certificate Of Incorporation And Notification Of
Stockholders
The Amendment, in substantially the form of Exhibit A to this
Proxy Statement, has been adopted by unanimous resolution of the Board of
Directors, subject to approval by the Company's shareholders. Upon filing of
appropriate documents to effect the Reverse Stock Split, including the amendment
to the Company's Restated Certificate of Incorporation, the Board will notify
the shareholders that the Reverse Stock Split has been effected.
Exchange Of Stock Certificates
If the Amendment is approved by the Company's shareholders,
the Board of Directors in consultation with the Company's Chief Financial
Officer and independent auditors will determine the Reverse Stock Split ratio
and the Company will file the Amendment to its Restated Certificate of
Incorporation with the Department of State of New York. The Reverse Stock Split
will become effective on the date of such filing of the Amendment (the
"Effective Date") and the stockholders will be notified on or after the
Effective Date that the Reverse Stock Split has been effected. The Company's
transfer agent will act as the Company's exchange agent (the "Exchange Agent")
for holders of Common Stock to exchange their certificates representing shares
of the Company's Common Stock.
As soon as practicable after the Effective Date, shareholders
will be notified and requested to surrender their certificates. Beginning on the
Effective Date, each certificate representing shares of the Company's Common
Stock will be deemed for all corporate purposes to evidence ownership of shares
of New Common Stock. To the extent a shareholder holds a number of shares not
evenly divisible by the ratio used with respect to the Reverse Stock Split, the
Company shall pay such shareholder in cash the fair market value of such
fractional share interest based upon the average of the low bid prices of the
Company's Common Stock during the ten (10) days prior to the Effective Date of
the Amendment.
Fractional Shares
No fractional shares will be issued. Any fractional shares
remaining after aggregating all fractional shares held by a shareholder will be
paid out in cash at the fair market value of such fractional share interest. For
example, if a stockholder held 21 shares of Common Stock prior to the Reverse
Stock Split and each two (2) shares of presently outstanding Common Stock is
converted into one (1) share of New Common Stock, after the Effective Date such
stockholder will hold 10 shares of New Common Stock and, assuming the average of
the low bid prices of the Company's Common Stock during the ten (10) days
trading prior to the date of the Meeting is $.75, be paid $0.38.
<PAGE>
Federal Income Tax Consequences
The following description of federal income tax consequences
is based on the Internal Revenue Code of 1986, as amended (the "Code"), the
applicable Treasury Regulations promulgated thereunder, judicial authority and
current administrative rulings and practices in effect on the date of this Proxy
Statement. This discussion is for general information only and does not discuss
the federal income tax consequences which may apply to non-resident aliens,
broker-dealers, stockholders who receive Common Stock in compensatory
transactions or insurance companies. This discussion does not address any
foreign, state or local tax consequences that may be relevant to the Company's
stockholders. Accordingly, stockholders are urged to consult their own tax
advisors to determine the particular consequences to them of the Reverse Stock
Split.
The exchange of shares of Common Stock for shares of New
Common Stock will not result in recognition of gain or loss, except to the
extent cash is paid with respect to fractional shares. The holding period of the
shares of New Common Stock will include the stockholder's holding period for the
shares of Common Stock exchanged therefor, provided that the shares of Common
Stock were held as a capital asset. The adjusted basis of the shares of New
Common Stock will be the same as the adjusted basis of the Common Stock
exchanged therefor.
No Dissenter's Rights
Under New York law, stockholders are not entitled to
dissenter's rights of appraisal with respect to the proposed Amendment to the
Company's Restated Certificate of Incorporation to effect the Reverse Stock
Split.
VOTE REQUIRED FOR APPROVAL
Under New York law and the Restated Certificate of Incorporation,
approval of the Reverse Stock Split requires the affirmative vote of at least a
majority of the outstanding shares of Common Stock. An abstention or failure to
vote on this proposal is not an affirmative vote and, therefore, will have the
same effect as a negative vote on this proposal at the Meeting.
The Board of Directors recommends a vote FOR the Amendment to the
Restated Certificate of Incorporation to effect the Reverse Stock Split
3. APPROVAL OF THE RETENTION OF INDEPENDENT AUDITORS
The Board of Directors has approved the retention of Deloitte & Touche
LLP as the Company's independent auditors for the 1998 fiscal year. Although
shareholder ratification is not required, the Board of Directors has directed
that such appointment be submitted to the shareholders of the Company for
ratification at the Annual Meeting. In addition, the Board of Directors in its
discretion may direct the appointment of a new independent accounting firm at
any time during the year if the Board believes that such change is in the best
interests of the Company and its shareholders. Deloitte & Touche LLP served as
the Company's independent public auditors for the 1997 fiscal year.
It is anticipated that representatives of Deloitte & Touche LLP will be
present at the Annual Meeting and will have an opportunity to make a statement
if they desire to do so, and to respond to any appropriate inquiries from
shareholders.
<PAGE>
The affirmative vote of the holders of a majority of the issued and
outstanding shares of Common Stock present and voting at the meeting (excluding
abstentions and broker non-votes, which are not deemed present and voting for
this purpose) is necessary for the adoption of the proposal. If the shareholders
do not ratify the appointment of Deloitte & Touche LLP, the Board of Directors
may reconsider the appointment.
The Board of Directors recommends that shareholders vote FOR approval
of the retention of Deloitte & Touche LLP.
4. OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at
the meeting. However, if any other business properly comes before the meeting,
it is the intention of the persons named in the enclosed proxy to vote on such
matters in accordance with their judgment.
DATE OF RECEIPT OF SHAREHOLDER PROPOSALS
FOR PRESENTATION AT THE 1999 ANNUAL MEETING
Any proposal that a shareholder wishes to present for consideration at
the 1999 Annual Meeting must be received by the Company at its principal
executive offices no later than December 18, 1998, for evaluation as to
inclusion in the Proxy Statement in connection with such meeting.
You are urged to promptly vote, sign, date and return the enclosed
proxy in the postage-paid envelope provided whether or not you currently plan to
attend the meeting in person.
By Order of the Board of Directors
/s/Thomas E. Feil
-----------------
Thomas E. Feil
Dated: April 16, 1998
<PAGE>
EXHIBIT A TO PROXY STATEMENT
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
V BAND CORPORATION
Under Section 805 of the
Business Corporation Law
The undersigned, being the Chairman of the Board of Directors
and Secretary of V BAND CORPORATION, a New York corporation (the "Corporation")
hereby certify
1. The name of the Corporation is V BAND CORPORATION.
2. The Corporation's Certificate of Incorporation was filed by
the Department of State on November 16, 1977.
3. The Certificate of Incorporation, as previously amended and
restated, is further amended to add add the following paragraph to paragraph
"FOURTH":
"All of the shares of Common Stock of the Corporation issued
and outstanding, or held as treasury shares, immediately prior
to the time this Amendment becomes effective shall be and are
by this means automatically reclassified and changed (without
further act) into fully paid and nonassessable shares of
Common Stock, the number of the which shall equal the number
of shares obtained by dividing (1) the total number of shares
of Common Stock issued and outstanding, or held as treasury
shares, immediately prior to the time this Amendment becomes
effective by (2) _________1. The shares of Common Stock
returned to the Corporation as a result of the
reclassification and change shall become effective without
increasing or decreasing the amount of stated capital or
paid-in-surplus of the Corporation, and shall constitute a
____________i for one reverse stock split, provided no
fractional shares of less than one share shall be issued. The
holders of fractional share interests of less than one share
shall be paid in cash by the Corporation the value of their
fractional share based upon the average of the low bid price
of the Corporation's Common Stock during the ten (10) trading
days prior to the effective date of this Amendment."
4. The foregoing amendments to the Certificate of
Incorporation were authorized by vote of the Board of Directors and by vote of
the holders of a majority of all outstanding shares entitled to vote thereon in
accordance with Section 803 of the Business Corporation Law.
- ------------------
1 The number shall be calculated in accordance with the resolutions adopted by
the Board of Directors of the Company on March 17, 1998 which are included
herein as Exhibit B and explained in the accompanying Proxy Statement. See "2.
AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION TO EFFECT THE REVERSE STOCK
SPLIT"
<PAGE>
IN WITNESS WHEREOF, the undersigned have subscribed to and
affirm as true the statements made herein under penalties of perjury this ___
day of May, 1998.
--------------------------------
Chairman of the Board of Directors
--------------------------------
Secretary
<PAGE>
EXHIBIT B TO PROXY STATEMENT
RESOLUTIONS ADOPTED BY BOARD OF DIRECTORS
AT A MEETING HELD ON MARCH 17, 1998
RESOLVED, that the officers of the Corporation are, and each
of them is, hereby authorized to take such action as any of them determines
necessary or desirable to effectuate the listing of the Corporation's Common
Stock on Nasdaq's SmallCap Market and to provide such certifications evidencing
this Board's authorization of such action as may be required by Nasdaq and the
text of any resolutions required by Nasdaq are hereby adopted in haec verba; and
it is further
RESOLVED, that paragraph "FOURTH" of the Corporation's
Restated Certificate of Incorporation be amended to add the following Section:
"All of the shares of Common Stock of the Corporation issued
and outstanding, or held as treasury shares, immediately prior
to the time this Amendment becomes effective shall be and are
by this means automatically reclassified and changed (without
further act) into fully paid and nonassessable shares of
Common Stock, the number of the which shall equal the number
of shares obtained by dividing (1) the total number of shares
of Common Stock issued and outstanding, or held as treasury
shares, immediately prior to the time this Amendment becomes
effective by (2) [the Reverse Stock Split Factor]. The shares
of Common Stock returned to the Corporation as a result of the
reclassification and change shall become effective without
increasing or decreasing the amount of stated capital or
paid-in-surplus of the Corporation, and shall constitute a
[the Reverse Stock Split Factor] for one reverse stock split,
provided no fractional shares of less than one share shall be
issued. The holders of fractional share interests of less than
one share shall be paid in cash by the Corporation the value
of their fractional share based upon the average of the low
bid price of the Corporation's Common Stock during the ten
(10) trading days prior to the effective date of this
Amendment."
; and it is further
RESOLVED, that the Chief Financial Officer of the Corporation
shall calculate the Reverse Stock Split Factor to be inserted in the foregoing
amendment to the Corporation's Certificate of Incorporation and shall insert
such number in the amendment in lieu of the words "Reverse Stock Split Factor"
The Reverse Stock Split Factor shall be the number obtained by dividing (1)$1.50
by (2) the average of the low bid prices of the Common Stock as reporting on the
Nasdaq National Market System during the ten (10) trading days prior to the
filing of the amendment to the Corporation's Certificate of Incorporation giving
effect to this paragraph;provided, that if such calculation results in a
fractional number as the Reverse Stock Split Factor, the Reverse Stock Split
Factor shall be rounded to the next closest whole number; and it is further
<PAGE>
RESOLVED, that the foregoing amendment to the Corporation's
Certificate of Amendment be submitted for approval by the Corporation's
shareholders at the 1998 Annual Meeting of Shareholders; and it is further
RESOLVED, that the officers of the Corporation are, and each
of them is, hereby authorized to take such action as may be necessary or
desirable to give effect to the actions authorized by the foregoing resolutions,
including the execution and delivery of agreements and instruments on behalf of
the Corporation.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES FOR DIRECTOR, FOR THE AMENDMENT TO THE RESTATED CERTIFICATE OF
INCORPORATION TO EFFECT THE REVERSE STOCK SPLIT, AND FOR THE RETENTION OF
DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE 1998 FISCAL YEAR.
1. Election of Directors:
Thomas E. Feil, Luke P. La Valle, Jr., Thomas H. Lenagh, Brian S. North,
A. Eugene Sapp, Jr., J. Stephen Vanderwoude
[ ] FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT
INSTRUCTION: To withhold your vote for any nominee(s), mark "For All Except" and
write that nominee's name on the line below
- --------------------------------------------------------------------------------
2. Approval of Amendment to the Restated Certificate of Incorporation to Effect
the Reverse Stock Split.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of Retention of DELOITTE & TOUCHE LLP as Independent Auditors for
Fiscal Year 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. NO
POSTAGE REQUIRED IF MAILED IN THE UNITED STATES.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Note: Please sign name(s) exactly as printed hereon. Joint owners shoud each
sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.
