<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
SALIENT 3 COMMUNICATIONS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PRELIMINARY COPY
DATED JUNE 17, 1997
SALIENT 3 COMMUNICATIONS, INC.
(formerly Gilbert Associates, Inc.)
P.O. Box 1498 Reading, Pa. 19603
Notice of Annual Meeting of Holders of Class B Common Stock
To Be Held July 30, 1997
Notice is hereby given that the Annual Meeting of holders of Class B
Common Stock of SALIENT 3 COMMUNICATIONS, INC. (the "Company") will be held at
The Sheraton Berkshire Hotel, Woodland & Paper Mill Road, Wyomissing,
Pennsylvania, on Wednesday, July 30, 1997 at 11:00 o'clock in the morning (local
time):
1. For the election of eight (8) directors of the Company;
2. To consider a proposal to approve certain miscellaneous amendments to the
Certificate of Incorporation;
3. To consider a proposal to approve an amendment to the Certificate of
Incorporation and Bylaws to provide for a classified Board of Directors;
4. To consider a proposal to ratify the Board of Directors' selection of Arthur
Andersen LLP as independent auditors for the year 1997; and
for the transaction of such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
Only holders of record of issued and outstanding shares of Class B Common
Stock of the Company at the close of business on June 13, 1997 are entitled to
notice of, and to vote at, the meeting. Such stockholders may vote in person or
by proxy. The stock transfer books of the Company will not be closed.
By order of the Board of Directors
Thomas F. Hafer
Secretary
Dated: Reading, Pennsylvania
July 3, 1997
Stockholders are urged to sign, date and mail the enclosed proxy
promptly in the accompanying envelope. The proxy is revocable at any time by a
written instrument signed in the same manner as the proxy and received by the
Secretary of the Company at or before the Annual Meeting. If you attend the
meeting, you may, if you wish, revoke your proxy by voting in person.
<PAGE>
SALIENT 3 COMMUNICATIONS, INC.
(formerly Gilbert Associates, Inc.)
P.O. Box 1498 Reading, Pa. 19603
(610) 856-5500
Proxy Statement on Behalf of the Board of Directors
for Annual Meeting - July 30, 1997
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the "Board") of Salient 3 Communications,
Inc. (the "Company") for use at the Annual Meeting of holders of Class B Common
Stock of the Company (the "Meeting") to be held at The Sheraton Berkshire Hotel,
Woodland & Paper Mill Roads, Wyomissing, Pennsylvania, at 11:00 A.M. on
Wednesday, July 30, 1997, and at any adjournment thereof. The Proxy Statement
and form of proxy are first being sent or given to stockholders on or about July
3, 1997.
Only holders of record at the close of business on June 13, 1997 of the
outstanding shares of the Company's Class B Common Stock are entitled to vote at
the meeting. The holders of a majority of the Class B Common Stock issued and
outstanding and present in person or represented by proxy at the Meeting, shall
be requisite for and shall constitute a quorum. Only directors of the Company,
"active employees" of the Company and its subsidiaries in which the Company
owns, directly or indirectly, 100% of the voting shares, and certain trusts for
the benefit of such employees, are entitled to hold Class B Common Stock. On
June 13, 1997, there were outstanding of record 567,007 shares of the Company's
Class B Common Stock. Such eligible stockholders are entitled on all matters to
cast one vote for each share held of record. In addition, there were
outstanding of record on such date 5,826,879 shares of the Company's Class A
Common Stock, excluding treasury shares. Holders of Class A Common Stock are
not eligible to vote at the Meeting.
If the enclosed proxy is appropriately marked, signed and returned in time to
be voted at the Meeting, the shares represented by the proxy will be voted in
accordance with the instructions marked thereon. Signed Proxies not marked to
the contrary will be voted (i) for the election of directors, (ii) for the
approval of certain miscellaneous amendments to the Certificate of Incorporation
as described in this Proxy Statement under Proposal No. 2, (iii) for the
approval of an amendment to the Certificate of Incorporation and Bylaws to
provide for a classified Board as described in this Proxy Statement under
Proposal No. 3, (iv) for the Proposal to ratify the Board's selection of Arthur
Andersen LLP as independent auditors for the year 1997 and (v) as the proxy
holders may in their discretion determine, on any other matter which may
properly come before the meeting or any adjournment or adjournments thereof.
<PAGE>
Directors are elected by the affirmative vote of a plurality of the votes of
the shares entitled to vote, present in person or represented by proxy. With
respect to the election of directors, votes may be cast in favor of or withheld
from the nominee. Votes that are withheld will be excluded entirely from the
vote and will have no effect thereon. There is no cumulative voting in the
election of directors. An affirmative vote of a majority of the outstanding
shares of Class B Common Stock is required for approval of Proposals 2 and
3. An affirmative vote of a majority of the shares of Class B Common Stock
present in person or by proxy is required for approval of Proposal 4.
Abstentions with respect to any Proposal other than the election of directors
will therefore have the same effect as votes against the Proposal. Abstentions
and broker non-votes (described below) are counted in determining the total
number of shares entitled to vote and present in person or represented by proxy.
Broker non-votes, which occur when a broker or other nominee holding shares for
a beneficial owner does not vote on a Proposal because the beneficial owner has
not checked one of the boxes on the proxy card, will have no effect on the
outcome of any of the matters to be voted upon at the meeting.
STOCKHOLDERS MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K AS AMENDED BY FORM 10-K/A FOR THE FISCAL YEAR ENDED JANUARY
3, 1997, FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FROM THOMAS F. HAFER,
SECRETARY OF THE COMPANY, AT SALIENT 3 COMMUNICATIONS, INC., P.O. BOX 1498,
READING, PA 19603, (610) 856-5500.
PROPOSAL NO. 1.
ELECTION OF DIRECTORS
A. Nominees for Director
At the meeting, eight directors are to be elected to hold office until the
next Annual Meeting of Stockholders and until their successors are elected and
have qualified. The Board, however, has proposed an amendment to the Company's
Certificate of Incorporation (and a corresponding amendment to the Company's
Bylaws) which, if approved, will provide for a classification of the Board into
three (3) classes of directors with staggered terms of office. If this proposed
change is approved at the Meeting, then the directors of the Company will be
divided into three classes of directors. The Class I directors will serve as
directors for the term expiring at the Annual Meeting in 1998; Class II
directors will serve as directors for the term expiring at the Annual Meeting in
1999; and Class III directors will serve as directors for the term expiring at
the Annual Meeting in 2000; and in each case until their successors are duly
elected and qualified or until their earlier resignation, removal from office,
death or incapacity. The class of which each nominee will become a member if
each such nominee is elected to the Board and the proposed change to the
Certificate of Incorporation and the Bylaws to classify the Board is approved,
is indicated below. See "Proposal No. 3 - Amendment to Certificate of
Incorporation and Bylaws to Provide for a Classified Board" below. It is the
intention of the persons in the accompanying proxy to vote all shares
represented thereby for the election of the eight nominees listed below. Any
stockholder who wishes to withhold from the proxy holder's authority to vote for
the election of one or more directors may do so by marking his proxy to that
effect. Should any nominee become unable to accept nomination or election, the
proxy holders may exercise their voting power in favor of such other person or
persons as the Board of the Company may recommend. The Board, however, has no
reason to believe that any of the nominees listed below will be unable to serve
as a director. Elections of directors are to be determined by a plurality vote.
2
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Each of the nominees is now a director of the Company. His present position
with the Company as well as certain other information are set forth below:
<TABLE>
<CAPTION>
Year In Which
First Became
Name Age Position With Company Director
---- --- --------------------- --------
<S> <C> <C> <C>
John W. Boyer, Jr.......... 68 Director 1984
Timothy S. Cobb............ 55 Chairman of the Board, 1993
President, Chief Executive
Officer and Director
Robert E. LaBlanc.......... 63 Director 1997
Donald E. Lyons............ 67 Director 1989
Alexander F. Smith......... 68 Director 1970
Paul H. Snyder............. 50 Senior Vice President, 1995
Chief Financial Officer
and Director
James A. Sutton............ 62 Director 1986
Donald K. Wilson, Jr....... 61 Director 1990
</TABLE>
Mr. Boyer retired in May 1993 as Chairman of Philadelphia Suburban
Corporation whose principal subsidiary, Philadelphia Suburban Water Company, is
a regulated water utility. Mr. Boyer served in various senior executive
positions with that company since 1981. He is a director of Philadelphia
Suburban Corporation, Betz Laboratories, Inc. and Rittenhouse Trust Company.
Since 1993, Mr. Boyer has been Distinguished Visiting Professor of Finance,
Eastern College, St. Davids, Pennsylvania. If the Proposal to classify the
Board is approved, Mr. Boyer will be classified as a Class I director with a
term expiring at the Annual Meeting in 1998.
Mr. Cobb has been Chairman of the Board since July 1995, Chief
Executive Officer of the Company since March 1994, and President and Chief
Operating Officer of the Company since October 1993. He served as President of
Gilbert/Commonwealth, Inc., then a subsidiary of the Company, from January 1991
to September 1993 and as President of GAI-Tronics, a subsidiary of the Company,
from June 1988 to December 1991. If the Proposal to classify the Board is
approved, Mr. Cobb will be classified as a Class III director with a term
expiring at the Annual Meeting in 2000.
Mr. LaBlanc has served as President of Robert E. LaBlanc Associates,
an information technologies consulting and investment banking firm, since 1981.
Prior to that, he was Vice Chairman of Continental Telecom, Inc., a major
telecommunications services company now merged with GTE. Mr. LaBlanc began his
career in the former Bell System and served as telecommunications analyst and
general partner with Salomon Brothers, Inc. before joining Continental. If the
Proposal to classify the Board is approved, Mr. LeBlanc will be classified as a
Class III director with a term expiring at the Annual Meeting in 2000.
For five years prior to his retirement in 1987, Mr. Lyons served as
Chief Executive Officer and President of the Power Systems Group of Combustion
Engineering, Inc., a supplier of technology, equipment and services to the power
and process industries. Mr. Lyons is also Chairman of the Board of CANISCO
Resources, Inc. If the Proposal to classify the Board is approved, Mr. Lyons
will be classified as a Class I director with a term expiring at the Annual
Meeting in 1998.
For more than five years prior to his retirement as President in
October 1993 and as Chief Executive Officer of the Company in March of 1994, Mr.
Smith served as President and Chief Executive Officer of the Company. Mr. Smith
also serves as a director of Stratton Monthly Dividend Shares, Inc., Stratton
Growth Fund, Inc. and Stratton Small Cap Yield Fund. If the Proposal to
classify
3
<PAGE>
the Board is approved, Mr. Smith will be classified as a Class I director with a
term expiring at the Annual Meeting in 1998.
Mr. Snyder was appointed Vice President of the Company in September
1995 and Senior Vice President in February 1997. He has been Chief Financial
Officer of the Company since August 1995. He served as Vice President and Chief
Financial Officer of The Dreyfus Corporation from August 1994 until joining the
Company. For more than five years prior to joining Dreyfus, Mr. Snyder served
as Senior Vice President and Chief Financial Officer of Mellon PSFS. If the
Proposal to classify the Board is approved, Mr. Snyder will be classified as a
Class II director with a term expiring at the Annual Meeting in 1999.
Mr. Sutton is the retired Chairman and CEO of UGI Corporation, a
diversified Pennsylvania-based natural gas and electric utility with non-utility
operations in energy and propane. He has served in various executive positions
with UGI since 1982. Mr. Sutton is also a retired Chairman of Amerigas Propane
Inc. If the Proposal to classify the Board is approved, Mr. Sutton will be
classified as a Class II director with a term expiring at the Annual Meeting in
1999.
Mr. Wilson retired in 1994 as Executive Vice President of The Hartford
Steam Boiler Inspection and Insurance Company, which is engaged in insurance
underwriting, investments and engineering. Mr. Wilson had served in various
executive positions with that company since 1970. He is also a director of
Mechanics Savings Bank in Hartford, Connecticut, and Spencer Turbine Company in
Windsor, Connecticut. He is presently serving as a consultant with American
Phoenix Corporation of Connecticut. If the Proposal to classify the Board is
approved, Mr. Wilson will be classified as a Class II director with a term
expiring at the Annual Meeting in 1999.
B. Meetings and Committees of Directors
The Board held a total of 11 regular and special meetings during 1996.
Each incumbent director attended at least 75% of the total number of meetings of
the Board and committees of the Board held while he was a member thereof.
The Board has established the following committees:
An Audit Committee presently consisting of J. A. Sutton, Chairman, J.
W. Boyer, Jr., R. E. LaBlanc, D. E. Lyons and D. K. Wilson, Jr., which held 3
meetings in 1996. This committee is primarily concerned with the effectiveness
of the Company's internal financial control systems and of the audits of the
Company's financial statements by the Company's independent accountants. Its
duties include recommending the selection of independent accountants; reviewing
the scope of audits to be conducted by independent accountants and internal
auditors and the results of such audits; and appraising the Company's financial
reporting activities and accounting policies.
An Executive Development Committee presently consisting of J. W.
Boyer, Jr., Chairman, R. E. LaBlanc, D. E. Lyons, J. A. Sutton, and D. K.
Wilson, Jr., which held 4 meetings in 1996. The committee assists the Board in
structuring compensation and incentive plans for management, and assists
management in the review of candidates, succession and development of directors,
officers and management. Its duties include reviewing and recommending to the
Board compensation and other benefits for directors, officers and management;
serving as any committee required by incentive compensation plans for such
Company personnel; and reviewing with the Chief Executive Officer the internal
organization and key manpower planning and development of the Company.
The Board has not formed a separate standing nominating committee.
4
<PAGE>
C. Beneficial Ownership of Equity Securities by Certain Persons
As of May 31, 1997, the number and percentage of equity securities of the
Company beneficially owned by (i) each of the directors, (ii) each Executive
Officer named in the Summary Compensation Table, (iii) all Executive Officers
and directors of the Company as a group and (iv) all holders of more than five
percent (5%) of the Class B Common Stock are set forth in the following table:
<TABLE>
<CAPTION>
Class B Percentage Class A Percentage
Individuals Common Stock of Class (1) Common Stock Of Class(1)
------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
J. W. Boyer, Jr.................... --- ---% 1,500 *
T. S. Cobb......................... 85,503(2)(3)(4) 15.7 --- ---
T. F. Hafer........................ 36,085(2)(3)(4) 6.7 ---
D. E. Lyons........................ 2,960 * --- ---
A. F. Smith........................ 53,077 10 12,051(5) *
P. H. Snyder....................... 32,542(3)(4) 6.1 --- ---
J. A. Sutton....................... 2,166 * 266 *
D. K. Wilson, Jr................... 1,895 * --- ---
All Executive Officers, directors
as a group........................ 214,228 38.6 13,817 *
Merrill Lynch & Company (6) 245,799 46.2 125,788 2.1
R.S. Newlan 36,584 (7) 6.8 --- ---
G.E. Troendle 45,280 (7) 8.4 --- ---
- -------------
</TABLE>
(1) Asterisks indicate beneficial ownership of less than 1% of the outstanding
shares of the class.
(2) Includes options held by Mr. Cobb and Mr. Hafer to purchase 14,367 shares
and 9,250 shares, respectively, of Class B Common Stock exercisable within
60 days.
(3) Includes shares purchased through May 31, 1997 on behalf of Mr. Cobb, Mr.
Snyder and Mr. Hafer under the Company's Stock Purchase Program and shares
for Mr. Hafer from contributions to the Payroll Stock Ownership portion of
the Retirement Savings Plan.
(4) Includes awards through May 31, 1997 of 38,500 shares of restricted stock
for Mr. Cobb and 13,500 shares of restricted stock each for Mr. Snyder and
Mr. Hafer.
(5) Includes 468 shares owned of record and beneficially by Mr. Smith's wife, as
to which shares he disclaims beneficial ownership.
(6) Merrill Lynch & Company, 265 Davidson Avenue, Somerset, NJ 08873 holds
through controlled nominees shares of the Company's Class B and Class A
Common Stock as trustee on behalf of present and past employees pursuant to
various employee benefit plans of the Company.
(7) The shares owned by R.S. Newlan and G.E. Troendle, respectively, President
and Executive Vice President of Resource Consultants, Inc., 1960 Gallows
Road, Vienna, Virginia 22182, a subsidiary of the Company, include (i)
options held by Messrs. Newlan and Troendle to
5
<PAGE>
purchase 9,500 shares and 6,500 shares, respectively, of Class B Common
Stock exercisable within 60 days and (ii) shares purchased through May 31,
1997 on each of their behalves under the Company's Stock Purchase Program
and the Resource Consultants, Inc. 401K Profit Sharing Plan.
D. Executive Compensation and Other Information
Board Committee Report on Executive Compensation
The Executive Development Committee of the Board assists the Board in
structuring compensation arrangements and incentive plans for the officers and
senior management of the Company. Decisions on compensation and the grant of
incentives are generally made by the members of the Committee, each of whom is a
non-employee director. All decisions by the Committee relating to the
compensation and incentives for the Company's officers are submitted to the full
Board for ratification or revision. Set forth below is the Committee's report
on the 1996 compensation of the Executive Officers of the Company.
Compensation Policies Toward Executive Officers
Section 162(m) of the Internal Revenue Code imposes a $1 million limit on the
allowable tax deduction of compensation paid by a publicly-held corporation to
its chief executive officer and its other four most highly compensated executive
officers employed at year-end, subject to certain pre-established objective
performance-based exceptions. The Committee intends to take Section 162(m) into
account when formulating its compensation policies for the Company's Chief
Executive Officer and its two other Executive Officers and to comply with
Section 162(m), if and where the Committee determines compliance to be
practicable and in the best interests of the Company and its stockholders.
In 1989 and during 1994/1995 the Committee undertook in-depth reviews of the
Company's compensation policies for the officers and senior management of the
Company and its subsidiaries. Sibson & Company, Inc., independent compensation
consultants, were retained to study and report on compensation practices.
Based upon study results and their broad based business backgrounds, the
Committee determined for 1990 and expanded for 1996 that the compensation policy
of the Company would be as follows:
- - Salary will be the basic compensation mechanism.
- - The Annual Incentive Program, discussed below, will be used to provide
specific growth oriented incentives and reward for above expected
performance.
- - Grants of stock options and/or restricted stock, coupled with a loan program
approved by stockholders in 1996, will be used to align management's
interests with stockholders' interests and encourage long-term investment and
interest in overall Company performance.
- - Other benefit programs will be used to encourage ownership and retention of
Company stock by management personnel and employees generally.
The Committee applies these policies directly to the Executive Officers,
presidents of the Company's subsidiaries and certain other management personnel.
The Committee also reviews the compensation policies and practices of the
subsidiaries for general alignment and appropriateness across and between
subsidiary units. The Committee continued to engage
6
<PAGE>
Sibson & Company and the compensation consultants recommended continuation of
the program outlined above through 1996, including grants of stock options,
restricted stock and the implementation of the Stock Purchase Assistance Plan,
described below.
Relationship of Performance Under Compensation Plans
Salaries
Each year the Committee evaluates the salaries of the officers of the
Company. These are compared with information available about salaries in the
Company's industry, trends in executive salaries, and the performance of the
individuals. Depending upon the officer involved, the Committee may utilize
salary information relating to comparable companies or companies in other
businesses in which subsidiaries of the Company are engaged. The companies used
for these purposes include some, but not all, of the companies in the Peer Group
shown in the tabular representation of the performance graph below. As
necessary, a number of other companies not included in such index are also used.
The various factors considered in the salary increase decision are not formally
weighted and the Committee uses subjective judgment in making its decisions.
If a salary increase is deemed justified, it is recommended to the Board.
Mr. Cobb's percentage increase for 1996 was 4.0%. Mr. Snyder's 5.3% increase
was agreed upon when he joined the Company in August 1995. Mr. Hafer's
percentage increase was 5.4%. The salary levels for Mr. Cobb and the other
Executive Officers were slightly above the median for companies within the same
industry and of comparable size to the Company.
Annual Incentive Program
In addition to the Executive Officers, the officers and key management of
the Company and its subsidiaries participate in an annual incentive program.
Under the program, incentive awards are made annually based on performance
measured against predetermined targets. For 1996, the targets for Executive
Officers were based on achieving financial performance levels related to the
operating earnings of the Company. In 1996, Mr. Cobb had a maximum incentive
opportunity equal to 100% of his salary and Messrs. Snyder and Hafer had maximum
incentive opportunities equal to 50% of their salaries. Based upon 1996
operating earnings, incentive awards were earned at 100% of the maximum
opportunity amounts.
Stock Incentive Plans
Stock Options
-------------
In 1996, 167,500 stock options were granted to 69 employees, managers and
officers of the Company and its subsidiaries. The Executive Officers and others
each received options potentially exercisable for shares of the Company's Common
Stock. The options granted to Messrs. Cobb, Snyder and Hafer represented 22.1%,
7.2%, and 7.2%, respectively, of the total options granted. The grants to
Messrs. Cobb, Snyder and Hafer and the other recipients were
7
<PAGE>
based primarily on each individual's position and performance although factors
are not formally weighted and the Committee uses subjective judgment in making
award grants. Options become exercisable based upon criteria established by the
Committee. The options granted in 1996 cannot be exercised for at least two
years following grant and are exercisable over a ten year period following date
of grant. The exercise price for each option was equal to the market price of
the stock at the time the option was granted.
Restricted Stock
----------------
In 1996, 34,500 shares of restricted stock were awarded to 7 officers and
managers of the Company. The Executive Officers and others each received shares
of the Company's Common Stock. The shares and dividends thereon are not
available to the recipients until the end of fiscal 2005; grant restrictions on
all or a portion of the shares could lapse at the end of 1998 if predetermined,
specific cumulative earnings per share financial targets are achieved.
The shares issued to Messrs. Cobb, Snyder and Hafer represented 53.6%, and
17.4%, and 17.4%, respectively of the total restricted shares awarded.
Stock Purchase Assistance Plan
------------------------------
After stockholder approval of the Plan in 1996, selected key executives of
the Company and certain subsidiaries were extended Company loans for the purpose
of acquiring Company stock as well as to refinance loans previously incurred in
the purchase of Company stock. All loans are full recourse loans, evidenced by
promissory notes, and secured by the shares purchased or refinanced with loan
proceeds. Loan interest, at the Company's approximate cost of borrowing, is
payable quarterly with principal payments due in 10 equal annual installments.
Under the provision of the Plan, $818,000 was advanced to 8 individuals
during 1996. Advances to Messrs. Cobb, Snyder and Hafer represented 22.0%,
21.8%, and 12.2%, respectively, of the total advanced.
It is the intent of the Company that stock purchased as a result of the
exercise of options, receipt of restricted stock and stock acquired with
proceeds of Company loans will be held by the executive as long-term personal
assets. The Company believes that this will align management's interest with
stockholders' interests in the future performance of the Company; however,
(except for restricted stock) there are no contractual or other restrictions
limiting the disposition of such stock.
EXECUTIVE DEVELOPMENT COMMITTEE
John W. Boyer, Jr., Chairman Donald E. Lyons James A. Sutton
Donald K. Wilson, Jr.
8
<PAGE>
Performance Graph
The following graph shows the cumulative total stockholder return on the
Company's Common Stock over the last five fiscal years as compared to the
returns of the Nasdaq Market Index and those companies contained within the
Standard Industry Code 8711 which must file an Annual Report with the Securities
and Exchange Commission and are publicly traded. The graph assumes $100 was
invested on December 31, 1991 in each company involved and all dividends are
reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------
12/91 12/92 12/93 12/94 12/95 12/96
<S> <C> <C> <C> <C> <C> <C>
Salient 3 Communications, Inc. 100 102 82 80 74 86
PEER GROUP 100 84 68 49 67 76
NASDAQ STOCK MARKET - US 100 116 134 131 185 227
</TABLE>
(PERFORMANCE GRAPH TO BE INSERTED)
Summary of Cash and Certain Other Compensation
The following table shows, for fiscal 1996, 1995 and 1994, the cash compensation
paid by the Company, as well as other compensation paid or accrued for those
years, to the Company's Chief Executive Officer and to each of the remaining
most highly compensated executive officers whose total annual salary and bonus
exceeded $100,000 in fiscal 1996 (collectively, the "Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
------------------------------
Awards
Annual ------------------------------
Compensation Restricted Securities
Name and -------------------- Stock Underlying All Other
Principal Position Year ($)Salary ($)Bonus Awards($) Options/SAR's(1) ($)Compensation
------------------ ------ --------- -------- --------- ---------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
T. S. Cobb.................... 1996 $389,423 $390,000 $231,250 (4) 37,000 $28,846 (2)
President & Chief 1995 374,998 95,700 60,000 28,904
Executive Officer 1994 358,762 77,000 10,000 13,904
P. H. Snyder.................. 1996 $199,615 100,000 75,000 (4) 12,000 32,800 (2)(3)
Sr. Vice President & 1995 89,423 60,000 10,000 10,357
Chief Financial Officer 1994 --- --- --- ---
T. F. Hafer................... 1996 $194,615 97,500 75,000 (4) 12,000 23,846 (2)
Sr. Vice President, General 1995 169,808 50,200 14,000 23,904
Counsel & Secretary 1994 147,389 27,000 1,500 12,173
</TABLE>
- ------------
(1) See Note 1 to 1996 Stock Option Grants table below.
9
<PAGE>
(2) Includes: (a) for Mr. Cobb, Mr. Snyder, and Mr. Hafer, Company contributions
of $10,500, to each of their accounts under the Company's Retirement Savings
Plan and $3,346, $2,976 and $3,346, respectively, to their accounts in the
Company's Stock Purchase Program; (b) for Mr. Cobb, Mr. Snyder and Mr.
Hafer, taxable expense reimbursements of $15,000, $10,000 and $10,000,
respectively.
(3) Includes $9,324, representing the value of bonus shares acquired in
connection with Mr. Snyder's participation in the Company's Stock Bonus
Purchase Program.
(4) The restricted shares were the first issued by the Company. Mr. Cobb
received 18,500 shares, Mr. Snyder 6,000 shares and Mr. Hafer 6,000 shares.
The stock will vest and be distributed at the end of ten years or, if
certain earnings per share goals are met for 1996-1998, at the end of 1998.
Regular dividends on the stock will be held by the Company and distributed
when the stock vests. The aggregate value of the shares at the end of
fiscal 1996 was $263,625 for Mr. Cobb and $85,500 each for Mr. Snyder and
Mr. Hafer.
Stock Options
The following table contains information concerning the stock options
granted to Executive Officers during 1996 under the Company's 1996 Long Term
Incentive Plan:
1996 Options/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
----------------------------------------------------------------------- Value at Assumed
Percent of Annual Rates of
Number of Total Stock Price
Securities Options/SAR's Appreciation for
Underlying Granted to Option Term ($)
Options/SAR's Employees in Exercise Price Expiration ---------------------
Name Granted(1) 1996 Per Share ($) Date 5% 10%
---- ------------ ------------ -------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
T. S. Cobb 37,000 22.1% 12.50 3/15/06 290,864 737,106
T. F. Hafer 12,000 7.2 12.50 3/15/06 94,334 239,061
P. H. Snyder 12,000 7.2 12.50 3/15/06 94,334 239,061
</TABLE>
- -------------
(1) All options have been granted under the 1996 Long Term Incentive Plan. The
exercise price is the fair market value of the stock on the date of grant.
Aggregate Option Exercises and Year-End Values
The following table shows stock options exercised by Executive Officers
during 1996, including the aggregate value of any gains on the date of exercise.
In addition, this table includes the number of shares covered by both
exercisable and non-exercisable stock options as of January 3, 1997. Also
reported are the values for "in-the-money" options which represent the positive
spread between the exercise price of outstanding stock options and the year-end
price of Company Common Stock.
Aggregate Stock Option/SAR Exercises in 1996,
10
<PAGE>
and Option/SAR Values as of January 3, 1997
<TABLE>
<CAPTION>
Value (in $) of Unexercised
No. of Shares Covered by In-The-Money Stock
Unexercised Options Options/SAR's
at 1/3/97 at 1/3/97 (2)
--------------------------- ---------------------------
Shares
Acquired Value Not Not
Name on Exercise Realized Exercisable Exercisable(1) Exercisable Exercisable(1)
---- ----------- -------- ----------- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
T. S. Cobb ---- ---- 10,700 101,300 ---- 147,250
T. F. Hafer ---- ---- 2,750 26,000 ---- 40,250
P. H. Snyder ---- ---- ---- 22,000 ---- 43,500
</TABLE>
- ------------
(1) Future exercise is subject to continued employment by the Company for at
least two years from the date the options were granted, subject to
acceleration for retirement, death or total disability.
(2) Amounts reflect the January 3, 1997 market price of the Company's Common
Stock ($14.25) less the exercise price.
Compensation Committee Interlocks
There were no Executive Development Committee interlocks during 1996.
Employment Contracts and Termination of Employment Arrangements
The Company has no formal contracts of employment or termination of
employment arrangements with its Executive Officers.
Director Compensation
Each Board member, other than officers of the Company, receives an annual
retainer of $18,000; committee chairmen receive an additional $5,000. Each such
director also receives $1,000 for each committee or Board meeting attended.
Directors may, at their election, defer receipt of payment of directors' fees.
Deferred directors' fees accrue interest at the prime rate of interest charged
by a major New York money center bank.
In 1996, the Board adopted and the stockholders approved the Directors'
Stock Option Plan. Under the terms of that plan, each non-employee Board member
may elect to receive stock options in lieu of all or a specified portion of his
annual retainer to be earned during that year.
11
<PAGE>
PROPOSAL NO. 2
MISCELLANEOUS AMENDMENTS TO CERTIFICATE OF INCORPORATION
The Board unanimously recommends that stockholders vote "For" this Proposal
No. 2 in order to approve the following miscellaneous amendments to the
Certificate of Incorporation:
(1) Amending Articles FIFTH, SIXTH, SEVENTH and NINTH of the Certificate of
Incorporation by deleting the text of these Articles as it currently exists
in its entirety, redesignating Article TENTH as Article NINTH and amending
Article EIGHTH by deleting certain subsections thereof in their entirety.
Article FIFTH provides that the Company will commence its business with a
minimum capital of $1,000; Article SIXTH provides that the Company shall
have perpetual existence; Article SEVENTH provides that the private
property of the stockholders shall not be subject to the payment of
corporate debts to any extent whatever; and Article NINTH deals with the
location of the annual meetings of the stockholders and the location of the
books of the Company. The subsections of Article EIGHTH proposed to be
deleted deal with the powers of the Board to declare dividends, to
designate committees and to elect officers, and provide that stockholders
do not have preemptive rights to acquire shares of Common Stock. The Board
has determined that a deletion of these provisions would not have any
practical effect as the foregoing provisions are merely a recital of
current statutory provisions and the capital requirement set forth in
Article FIFTH is no longer relevant.
(2) Restating Article SECOND of the Certificate of Incorporation setting forth
the registered office and registered agent of the Company in the State of
Delaware, to provide for the complete mailing address of the Company's
registered office. Currently, Article Second does not set forth the street
address of the Company's registered office in Delaware, as required by the
Delaware General Corporation Law ("DGCL").
(3) Amending Article FOURTH to authorize the Board to permit shares of Class B
Common Stock to be converted into shares of Class A Common Stock. The
current language authorizes the Board to permit shares of Class A Common
Stock (held by eligible stockholders) to be converted into shares of Class
B Common Stock. By this amendment, the Board would also be authorized to
permit a conversion of shares of Class B Common Stock into shares of Class
A Common Stock.
12
<PAGE>
(4) Amending Article FOURTH to clarify that any share of Common Stock
converted from one class to the other shall be restored to the status of an
authorized and unissued share of Common Stock. The current language implies
that the converted stock is restored to the status of an unissued share of
its own class. This amendment is therefore advisable to clarify that the
converted stock would be available for re-issuance either as Class A Common
Stock or as Class B Common Stock.
(5) Amending Article FOURTH to remove the requirement that the entire text of
the restrictions on transfer of shares of Class B Common Stock be set forth
on each certificate of the Class B Common Stock. This amendment would
allow the Company to note the transfer restrictions in the form of a
conspicuous notice on the stock certificates, as authorized by the DGCL,
rather than setting forth the entire provisions in detail.
(6) Amending Article FOURTH to remove the reference to the issued and
outstanding capital stock in connection with the right of holders of Class
B Common Stock to vote for an increase or decrease in the capital stock of
the Company. This amendment would limit the right to approve an increase
or decrease in the capital stock of the Company to the Board.
(7) Amending Article EIGHTH to allow the Company to benefit from the broader
authority granted to committees of the Board by the DGCL. Article EIGHTH
currently provides that the Board may designate an Executive Committee
consisting of three or more directors, whereas the DGCL authorizes Board
committees to consist of one or more directors. This amendment would also
allow the appointment of Board committees by a majority of the directors
present at a Board meeting, rather than by a majority of the whole Board.
(8) Amending Article EIGHTH by deleting subsection (d) thereof dealing with the
validity of transactions between the Company and its directors and
officers. This subsection generally tracks the statutory provisions of the
DGCL as they existed prior to a 1994 amendment of the DGCL. A deletion of
this subsection would allow the Company and its directors and officers to
benefit from the amended statutory provisions relaxing the manner by which
such transactions may be approved.
(9) Amending Article EIGHTH dealing with the limitation on the liability of
directors for monetary damages, to provide that such liability shall be
further limited or eliminated to the extend that future statutory
amendments authorize such further limitation or elimination of liability.
The Board believes that such amendment would enhanced the Company's ability
to attract qualified persons to serve on the Board.
13
<PAGE>
(10) Amending Article EIGHTH to the effect that the election of the directors of
the Company need not be by written ballot. The DGCL provides that
election of directors shall be by written ballot, unless otherwise provided
in the Certificate of Incorporation. This amendment would therefore
authorize the election of directors by a voice vote.
The affirmative vote of the holders of a majority of the outstanding shares
of Class B Common Stock is required to approve this Proposal No. 2.
In the absence of instructions to the contrary, the shares of Class B
Common Stock represented by a proxy delivered to the Board will be voted FOR the
approval of Proposal No. 2.
PROPOSAL NO. 3
AMENDMENT TO CERTIFICATE OF INCORPORATION AND BYLAWS
TO PROVIDE FOR A CLASSIFIED BOARD
The Board believes that the best interests of the stockholders would be
served if appropriate defenses to coercive tender offers or other coercive
efforts to gain control of the Company were put in place. The failure to
implement such protective devices would leave the Board with little or no
ability to protect the Company's stockholders in a coercive takeover situation
or against a merger, consolidation or sale of assets of the Company which are
not the result of negotiation and which may be opposed by a substantial minority
of the outstanding shares of the Common Stock. The Board had begun addressing
this concern when it adopted a stockholder rights plan (the "Rights Plan") in
October 1996. Under the Rights Plan, the stockholders of the Company own one
right (each, a "Right") for each share of the Company's Common Stock owned.
Each Right grants its holder a right to purchase one unit of junior preferred
stock at 50% discount from the then market value. Each unit of junior preferred
stock will have voting and distribution rights identical to the Class A Common
Stock or Class B Common Stock, as the case may be, with respect to which such
Right was granted. The Rights are exercisable upon an acquisition (the "Control
Acquisition") by an acquiror of either 20% of any class of the Company's Common
Stock, or 15% of all the Company's outstanding Common Stock. The Board may
redeem the Rights within ten (10) days (or such longer period as the Board may
determine) following a public announcement of a Control Acquisition.
The effect of the Rights Plan (so long as the Rights Plan remains in place)
is to encourage potential acquirors to negotiate with the Board prior to
acquiring a large block of the Common Stock and permit the Board to ensure fair
treatment for the Company's stockholders in the event of a coercive offer for
the Common Stock. The Board did not adopt the Rights Plan in reaction to any
known effort to acquire the Company's Common Stock.
The Board recognizes that the Company's current Certificate of
Incorporation and Bylaws, unless amended, could permit the Rights Plan to be
circumvented by the replacement of the Board by certain stockholders and the
redemption of the Rights Plan, without prior notice to all stockholders or the
opportunity to participate in the consideration thereof. Accordingly, the Board
unanimously recommends that stockholders vote "For" this Proposal No. 3 in order
to approve (i) the amendment of the Certificate of Incorporation, and (ii) the
amendment of Section 12 of the Bylaws, in each case to provide for the
classification of the Board into three classes, each comprising as nearly as
possible one-third of the directors.
At present, all the Company's directors are elected at each annual meeting
of stockholders for a one year term. If this Proposed Amendment is approved at
the 1997 Annual Meeting, the Class I directors would be elected for one year,
the Class II directors for two years and the Class III directors for three
years. At each annual meeting thereafter, the class of directors up for election
would be elected for three years and the directors in the other two classes
would continue in office. The votes required for election would remain
unchanged. (See Exhibit "A" for the entire text of the Proposal No. 3.)
14
<PAGE>
This Proposal No. 3 is intended to moderate the pace of any change in the
Board by extending the time required to replace a majority of the incumbent
directors. The Board believes that a classified Board would tend to assure
desirable continuity in leadership and policy since, when the classified Board
becomes fully operative, approximately two-thirds of the directors at any time
will have had prior experience on the Board. If this Proposal No. 3 is approved,
because only one of the three classes of a classified Board will be elected
annually, at least two annual stockholders' meetings, instead of one, will be
required to effect a change in the control of the Board through the normal
election processes. Pursuant to the DGCL, members of a classified board may be
removed only for cause. The classified Board amendment would require a person
seeking to acquire control of the Company to wait up to two years to obtain
control of the Board even though that person may have acquired ownership of a
controlling interest in the Company. This Proposal would thus make it more
difficult and time-consuming for any individual or entity who accumulates a
substantial stock or voting position in the Company to obtain control of the
Board or to effect change in the Company's day-to-day operations. It would
therefore reduce the vulnerability of the Company to takeover proposals that are
not in the best interests of the Company or its stockholders.
The principal purpose of this Proposal is to enhance the effectiveness of
the Rights Plan such that its provisions cannot be easily circumvented in a
coercive takeover situation and to enhance the likelihood of continuity and
stability in the composition of the Board and in the policies formulated by the
Board. The Board is not recommending this Proposal in reaction to any known
effort to acquire the Company's stock; rather, the function of the Rights Plan
and the classification of the Board, as a whole, is to give the Board an
opportunity and sufficient time to evaluate an acquisition offer and determine
if it reflects the full value of the Company and is fair to all stockholders,
and if not, to reject the offer or to seek an alternative that meets such
criteria. The proposed classification of the Board would also enable the Board
to conduct such evaluation without the imminent threat of removal. Even in the
case of an all-cash offer to all stockholders, the Rights Plan and the proposed
classification of the Board collectively serve the further function of providing
leverage for the Board to facilitate a bidding process and to negotiate for a
better price for the stockholders.
While the Board believes that this Proposal No. 3 should be adopted for the
reasons set forth in this Proxy Statement, the Board is aware that this Proposal
may have anti-takeover effects. Although the Rights Plan and the classification
of the Board are designed as protective measures for the Company's stockholders,
the Board would continue to have the power to reject any offer, including those
that may be at a premium above prevailing market prices. Therefore, the
classification of the Board might have the effect of preventing stockholders
from realizing an opportunity to sell their shares of Common Stock at higher
than market prices by deterring unfriendly tender offers or other efforts to
gain control of the Company. In addition, the classification of the Board may
have significant effects on the ability of stockholders of the Company to change
the composition of the incumbent Board and to benefit from certain transactions
which are opposed by the incumbent Board. Accordingly, stockholders are urged to
consider carefully the consequences of the proposed classification of the Board
and to review the Exhibit "A" hereto, which sets forth the full text of the
proposed amendments, before voting on this Proposal No. 3.
Because amendments to the Certificate of Incorporation would not become
effective until they are filed with the Delaware Secretary of State, the Board
recommends the adoption of corresponding provisions for a classified Board also
in the Bylaws, which would become effective immediately upon stockholder
approval, to enable the election of directors to the classified Board at the
Meeting in the event this Proposed Amendment is approved.
The Board has carefully considered the potential adverse effects of this
Proposal and has concluded that such adverse effects are substantially
outweighed by the benefits which the classification of the Board, would afford
the Company and its stockholders.
15
<PAGE>
The affirmative vote of the holders of a majority of the outstanding shares
of Class B Common Stock is required to approve Proposal No. 3.
In the absence of instructions to the contrary, the shares of Class B
Common Stock represented by a proxy delivered to the Board will be voted FOR the
approval of this Proposal No. 3.
PROPOSAL NO. 4
RATIFICATION OF THE BOARD'S SELECTION OF
ARTHUR ANDERSEN LLP AS INDEPENDENT AUDITORS FOR THE YEAR 1997
The Board has selected the firm of Arthur Andersen LLP independent
accountants, to audit the accounts of the Company for the year 1997 and requests
that such selection be ratified by majority vote of those Class B stockholders
voting upon ratification. Although submission to stockholders of the
appointment of the independent auditors is not required by law, the Board, in
accordance with its long-standing policy of seeking annual stockholder
ratification of the selection of auditors, believes it appropriate that such
selection be ratified by the stockholders. The Company has been advised that
neither that firm nor any of its partners has any material direct or indirect
relationship with the Company or its subsidiaries.
A representative from Arthur Andersen will attend the meeting, will have an
opportunity to make a statement if so desired, and will be available to respond
to appropriate questions at the meeting.
16
<PAGE>
STOCKHOLDER PROPOSALS
If a holder of Class B Common Stock has a Proposal which he or she intends
to present at the 1998 Annual Meeting, it must be received by the Company on or
before March 5, 1998 in order to be considered for inclusion in the Company's
Proxy Statement and proxy for such meeting. Stockholder Proposals should be
submitted to Thomas F. Hafer, Secretary of the Company, at the address indicated
on the first page of this Proxy Statement.
OTHER MATTERS
The Board does not intend to bring any other matter before the Meeting and
has not been informed of any other business which others may bring before the
Meeting. However, if any other matters should properly come before the Meeting,
or any adjournment thereof, it is the intention of the persons named in the
accompanying proxy to vote on such matters as they, in their discretion, may
deem advisable.
The Company will pay all costs of soliciting Proxies in the accompanying
form. Solicitation will be made by mail, and officers and other employees of
the Company may also solicit Proxies by telephone, telecopy or personal
interview.
By order of the Board of Directors,
Thomas F. Hafer,
Secretary
July 3, 1997
17
<PAGE>
EXHIBIT "A"
NOTE: THE BRACKETED TEXT SET FORTH BELOW IS NOT PART OF THE PROPOSED AMENDMENTS
AND IS PROVIDED HEREIN FOR CLARIFICATION PURPOSES ONLY. TEXT INDICATED AS
UNDERLINED WOULD BE ADDED, AND TEXT INDICATED AS STRICKEN WOULD BE DELETED, IF
THE PROPOSALS DESCRIBED BELOW ARE APPROVED. IN THE EDGAR VERSION OF THIS EXHIBIT
A FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, TEXT SURROUNDED BY POUND
SIGNS (#) WOULD BE DELETED.
PROPOSAL NO. 2
MISCELLANEOUS AMENDMENTS TO CERTIFICATE OF INCORPORATION
(1) Amend the Certificate of Incorporation as follows:
(a) Delete the entire text of Articles FIFTH, SIXTH, SEVENTH and NINTH
thereof, and by redesignating the current Article TENTH as Article NINTH.
[By this amendment, the following text will be deleted from the
Certificate of Incorporation:
FIFTH: #The minimum amount of capital with which the Corporation will
------
commence business is ONE THOUSAND DOLLARS ($1,000).#
SIXTH: #The Corporation is to have perpetual existence.#
------
SEVENTH: #The private property of stockholders shall not be
--------
subject to the payment of corporate debts to any extent whatever.#
NINTH: #Meetings of stockholders may be held without the State of
-----
Delaware, if the Bylaws so provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside
the State of Delaware at such place or places as from time to time may
be designated by the Board of Directors.#]
(b) Amend subsection (b) of Article EIGHTH by (i) deleting subsections (1)
and (3) thereof in their entirety, (ii) deleting the ":" in the first
sentence thereof, (iii) deleting the paragraph number designation of
subsection (2), and (iv) substituting the word "to" for the word "To"
in the current subsection (2).
[By this amendment, subsection (b) of Article EIGHTH will read as
follows:
(b) The Board of Directors shall have power:
A-1
<PAGE>
(1) #To fix and determine, and from time to time to vary, the amount
to be reserved as working capital; to determine whether any and
if any, what part of any surplus shall be declared and paid as
dividends; to determine the date or dates for the declaration and
payment of dividends, and to direct and determine the use and
disposition of any surplus;#
# (2) To# to make, alter, amend, suspend and repeal the Bylaws of the
--
Corporation;
# (3) To designate three or more of their number to constitute an
Executive Committee, which Committee, to such extent as may be
provided by resolution of the directors or by the Bylaws of the
Corporation, shall have, and may exercise any or all of the
powers of the Board of Directors in the management of the
business and affairs of the Corporation, including the power to
authorize its seal to be affixed to all papers which may require
it.#]
(c) Amend subsection (c) of Article EIGHTH by deleting the current text of
this subsection in its entirety.
[By this amendment, the following text of subsection (c) of Article
EIGHTH will be deleted:
(c) #Any officer elected or appointed by the stockholders or by the
Board of Directors or by any Committee may be removed (except from the
office of director) at any time, with or without cause, in such manner
as may be provided in the Bylaws. Any other officer or employee of the
Corporation other than a director may be removed at any time with or
without cause by the Board of Directors in such manner as may be
provided in the Bylaws or by any Committee or superior officer upon
whom such power of removal may be conferred by the Bylaws or by
authority of the Board of Directors.#]
(d) Amend subsection (e) of Article EIGHTH by deleting the current text of
this subsection in its entirety.
[By this amendment, the following text of subsection (e) of Article
EIGHTH will be deleted:
(e) #No holder of stock of this Corporation of any class shall be
entitled as of right to purchase or subscribe for any part of the
unissued stock of the Corporation, or any stock of the Corporation of
any class to be issued by reason of any increase of the authorized
capital stock of the Corporation,
A-2
<PAGE>
or of any bonds, debentures, certificates of indebtedness, or other
securities convertible into stock of the Corporation, or any stock of
the Corporation purchased by the Corporation or by its nominee or
nominees.#]
(2) Amend Article SECOND of the Certificate of Incorporation to read in its
entirety as follows:
Its registered office in the State of Delaware and New Castle County
--------------------------------------------------------------------
shall be 1013 Centre Road, Wilmington, DE 19801. The registered agent
---------------------------------------------------------------------
at such address shall be United States Corporation Company.
-----------------------------------------------------------
[By this amendment, the following text of Article Second will be
replaced in its entirety:
#Its registered office in the State of Delaware is located in the City
of Wilmington in the County of New Castle, in the State of Delaware.
The name of its registered agent is the United States Corporation
Company, 1013 Centre Road, in the City of Wilmington.#]
(3) Amend subsection (c) of Article FOURTH of the Certificate of Incorporation
by designating the text starting with the words "Class A Common Stock" and
ending with the words "Class B Common Stock of the Corporation" as clause
(i), and by adding the following text immediately before the words "share
for share":
share for share, or (ii) Class B Common Stock of the Corporation to be
converted into Class A Common Stock of the Corporation,
[By this amendment, subsection (c) of Article FOURTH will read in its
entirety as follows:
(c) The Board of Directors of the Corporation may, if the Board deems
it advisable and in the interest of the Corporation, permit any share
or shares of (i) Class A Common Stock of the Corporation held by any
Active Employee, Director or Eligible Trust to be converted into Class
B Common Stock of the Corporation share for share, or (ii) Class B
--------------------------------
Common Stock of the Corporation to be converted into Class A Common
-------------------------------------------------------------------
Stock of the Corporation, share for share.]
-------------------------
(4) Amend subsection (e) of Article FOURTH of the Certificate of Incorporation
by deleting the words "its class" at the end of such subsection, and by
substituting in lieu thereof the words "Common Stock".
A-3
<PAGE>
[By this amendment, subsection (e) of Article FOURTH will read in its
entirety as follows:
(e) Upon conversion of any share of stock of one class into a share
of stock of the other class, the share of stock of the class so
converted into the other shall be restored to the status of an
authorized and unissued share of #its class# Common Stock.]
------------
(5) Amend subsection (f) of Article FOURTH of the Certificate of Incorporation
by deleting the last sentence thereof in its entirety.
[By this amendment, the following text will be deleted from subsection
(f) of Article FOURTH:
#The provisions contained herein shall be embodied in, written,
printed or stamped on each certificate of the Class B Common Stock of
the Corporation, and thereupon shall be part thereof, binding upon
each and every present or future holder or owner thereof.#]
(6) Amend the last sentence of subsection (g) of Article FOURTH of the
Certificate of Incorporation by (i) deleting the words ", and the amount of
the capital stock which may be issued and outstanding at any time," and
(ii) by replacing the words "outstanding Class B Common Stock" with the
words "shares of Common Stock then entitled to vote at an election of
directors".
[By this amendment, the last sentence of subsection (g) of Article
FOURTH will read in its entirety as follows:
The amount of the authorized stock of any class or classes of stock#,
and the amount of the capital stock which may be issued and outstanding at
any time,# may be increased or decreased by the affirmative vote of the
holders of a majority of the outstanding #Class B Common Stock# shares of
---------
Common Stock then entitled to vote at an election of directors.]
---------------------------------------------------------------
(7) Amend Article EIGHTH by adding a new subsection to be designated as
subsection (c):
(c) The Corporation shall be governed by subsection (c)(2) of Section
141 of the Delaware General Corporation Law.
(8) Amend subsection (d) of Article EIGHTH by deleting the current text of
this subsection in its entirety.
A-4
<PAGE>
[By this amendment, the following text of subsection (d) of Article
EIGHTH will be deleted:
(d) #A director or officer of this Corporation shall not be
disqualified by his office from dealing or contracting with the
Corporation, either as a vendor, purchaser or otherwise, nor shall any
transaction or contract of this Corporation be void or voidable by
reason of the fact that any director or officer of the Corporation,
any firm of which any director or officer is a member or employee, or
any Corporation of which any director or officer is a shareholder,
director, officer or employee, is in any way interested in such
transaction or contract, provided that such transaction or contract is
or shall be authorized, ratified, or approved either (1) by vote of a
majority or a quorum of the Board of Directors or of the Executive
Committee without counting in such majority or quorum any director so
interested or member or employee of a firm so interested or a
shareholder, director, officer or employee of a Corporation so
interested, or (2) by vote at a stockholders' meeting of the holders
of record of a majority of all the outstanding shares of capital stock
of the Corporation having full voting power or by writing or writings
signed by a majority of such holders; nor shall any director or
officer be liable to account to the Corporation for any profits
realized by and from or through any such transaction, or contract of
this Corporation authorized, ratified or approved as aforesaid by
reason of the fact that he or any firm of which he is a member or
employee, or any Corporation of which he is a shareholder, director,
officer, or employee was interested in such transaction or contract.#]
(9) Amend subsection (g) of Article EIGHTH by (i) redesignating the entire text
of this subsection as subsection (e), and (ii) adding the following text at
the end of such subsection:
If the Delaware General Corporation Law is amended after the filing of
the Certificate of Incorporation of which this article is a part to
authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of
the Corporation shall be eliminated or limited to the fullest extent
permitted by the Delaware General Corporation Law, as so amended.
[By this amendment, subsection (e) of Article EIGHTH will read as
follows:
(e) No director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by
such director as a director. Notwithstanding the foregoing, a director
shall be liable to the extent provided by applicable law (i) for
breach of the
A-5
<PAGE>
director's duty of loyalty to the Corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of the law, (iii) any
willful or negligent payment of dividends or purchase or redemption of
stock in violation of the limitation imposed on such actions by the
General Corporation Law of Delaware or the Certificate of
Incorporation, or (iv) for any transaction from which the director
derived an improper personal benefit. No amendment to or repeal of
these provisions shall apply to or have any effect on the liability or
alleged liability of any director of the Corporation for or with
respect to any acts or omissions of such director occurring prior to
such amendment. If the Delaware General Corporation Law is amended
--------------------------------------------------
after the filing of the Certificate of Incorporation of which this
------------------------------------------------------------------
article is a part to authorize corporate action further eliminating or
----------------------------------------------------------------------
limiting the personal liability of directors, then the liability of a
---------------------------------------------------------------------
director of the Corporation shall be eliminated or limited to the
-----------------------------------------------------------------
fullest extent permitted by the Delaware General Corporation Law, as
--------------------------------------------------------------------
so amended.]
----------
(10) Amend Article EIGHTH by adding a new subsection to be designated as
subsection (d):
(d) The election of the directors of the Corporation need not be by
written ballot unless the Bylaws of the Corporation shall so
provide. .
PROPOSAL NO. 3
AMENDMENT TO CERTIFICATE OF INCORPORATION AND BYLAWS
TO PROVIDE FOR A CLASSIFIED BOARD
(1) Amend the Certificate of Incorporation by adding a new Article designated
as Article FIFTH to read in its entirety as follows:
FIFTH: The Board of Directors shall be divided into three classes, as
------
nearly equal in number as the then total number of directors constituting
the entire Board of Directors permits. At the 1997 annual meeting of the
stockholders of the Corporation (the "First Meeting"), directors of the
first class shall be elected to hold office for a term expiring at the next
succeeding annual meeting, directors of the second class shall be elected
to hold office for a term expiring at the second succeeding annual meeting
and directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. At each annual meeting of
the stockholders of the Corporation following the First Meeting, the
successors to the class of directors whose term shall then expire shall be
elected to hold office for a term expiring at the third succeeding annual
meeting.
A-6
<PAGE>
(2) Amend Section 12 of the Bylaws by deleting the third sentence thereof, and
by substituting in lieu thereof the following:
The Board of Directors shall be divided into three classes, as nearly equal
in numbers as the then total number of directors constituting the entire
Board of Directors permits. At the 1997 annual meeting of the stockholders
of the Corporation (the "First Meeting"), directors of the first class
shall be elected to hold office for a term expiring at the next succeeding
annual meeting, directors of the second class shall be elected to hold
office for a term expiring at the second succeeding annual meeting and
directors of the third class shall be elected to hold office for a term
expiring at the third succeeding annual meeting. At each annual meeting of
the stockholders of the Corporation following the First Meeting, the
successors to the class of directors whose term shall then expire shall be
elected to hold office for a term expiring at the third succeeding annual
meeting.
[By this amendment, the following text will be deleted from Section 12
of the Bylaws:
A-7
<PAGE>
SALIENT 3 COMMUNICATIONS, INC.
Proxy Solicited On Behalf Of The Board of Directors
The undersigned, revoking all previous proxies, hereby appoints Timothy S.
Cobb and Paul H. Snyder, and each of them acting individually, as the attorney
and proxy of the undersigned, with full power of substitution, to vote, as
indicated below and in their discretion upon such other matters as may properly
come before the meeting, all shares which the undersigned would be entitled to
vote at the Annual Meeting of Stockholders of the Company to be held on July 30,
1997, and at any adjournment or postponement thereof.
1. Election of Directors:
[_] For the listed nominees [_] Withhold Authority to Vote the Listed
Nominees
Nominees: John W. Boyer, Jr.; Timothy S. Cobb; Robert E. LaBlanc;
Donald E. Lyons; Alexander F. Smith; Paul H. Snyder;
James A. Sutton; Donald K. Wilson, Jr.
(Instruction: To withhold authority to vote for any nominee(s), write the
name(s) of such nominee(s) on the line below.)
---------------------------------
2. To Approve Certain Miscellaneous Amendments to the Certificate of
Incorporation as described in the Proxy Statement under Proposal No. 2:
[_] For [_] Against [_] Abstain
3. To Approve an Amendment to the Certificate of Incorporation and Bylaws to
Provide for a Classified Board as described in the Proxy Statement under
Proposal No. 3:
[_] For [_] Against [_] Abstain
4. To Ratify the Appointment of Arthur Andersen LLP as Independent Accountants
to Examine the Financial Statements of the Company for the Year 1997:
[_] For [_] Against [_] Abstain
Please date and sign your Proxy on the reverse side and return it promptly.
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS
OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE NOMINEES
FOR DIRECTOR LISTED ON THE REVERSE SIDE HEREOF, "FOR" THE APPROVAL OF CERTAIN
MISCELLANEOUS AMENDMENTS TO THE CERTIFICATE OF INCORPORATION AS DESCRIBED IN THE
PROXY STATEMENT UNDER PROPOSAL NO. 2, "FOR" THE APPROVAL OF AN AMENDMENT TO THE
CERTIFICATE OF INCORPORATION AND BYLAWS TO PROVIDE FOR A CLASSIFIED BOARD AS
DESCRIBED IN THE PROXY STATEMENT UNDER PROPOSAL NO. 3, AND "FOR" RATIFICATION OF
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS TO
EXAMINE THE FINANCIAL STATEMENTS OF THE COMPANY FOR THE YEAR 1997. THIS PROXY
ALSO DELEGATES DISCRETIONARY AUTHORITY WITH RESPECT TO ANY OTHER BUSINESS WHICH
MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF SPECIAL
MEETING AND PROXY STATEMENT.
-------------------------------------------
Signature of Stockholder
Date: ,1997
----------------------
