SALIENT 3 COMMUNICATIONS INC, DEF 14A, 1997-06-30

SALIENT 3 COMMUNICATIONS INC
DEF 14A, 1997-06-30
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:
[_]Preliminary Proxy Statement [_]Confidential, for Use of the

Commission Only (as permitted by
[X]Definitive Proxy Statement Rule 14a-6(e)(2))

[_]Definitive Additional Materials

[_]Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

SALIENT 3 COMMUNICATIONS, INC.
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)

Payment of Filing Fee (Check the appropriate box):
[X]No fee required.

[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_]Fee paid previously with preliminary materials.

[_Check]box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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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

Reading, Pennsylvania

Dated: July 1, 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 1, 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.

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 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 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.
Abstentions and broker non-votes will have the effect of votes against
Proposals 2 and 3 because an affirmative vote of a majority of the outstanding
voting shares is required for their approval, but will have no effect on the
outcome of Proposals 1 and 4.
<PAGE>

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.

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>

2
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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 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

3
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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 and
directors as a group(9
persons)................. 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 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

5
<PAGE>

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 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.

6
<PAGE>

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 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.

7
<PAGE>

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

<TABLE>
<S> <C>
John W. Boyer, Jr., Chairman Donald E. Lyons
James A. Sutton Donald K. Wilson, Jr.
</TABLE>

COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN

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.

[LINE CHART APPEARS HERE]
<TABLE>
<CAPTION>
Sallent 3 NASDAQ STOCK
Year Communications, Inc. PEER GROUP MARKET-US
- ---- -------------------- ---------- ------------
<S> <C> <C> <C>
12/91 $100 $100 $100
12/92 102 84 116
12/93 82 68 134
12/94 80 49 131
12/95 74 67 185
12/96 86 76 227
</TABLE>

8
<PAGE>

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($) OPTIONS(#)(1) COMPENSATION ($)
------------------ ---- ---------- --------- ---------- ------------- ----------------
<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.
(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.

9
<PAGE>

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:

OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SHARES TOTAL OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION ---------------------
NAME GRANTED (#)(1) LAST FISCAL YEAR 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.

AGGREGATED OPTION EXERCISES AND YEAR-END OPTION 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.

AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR,
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NO. OF SHARES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#)(2) AT FISCAL YEAR-END($)
-------------------------- --------------------------
SHARES
ACQUIRED VALUE NOT NOT
NAME ON EXERCISE(#) REALIZED($) 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.

10
<PAGE>

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.

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 certain miscellaneous amendments to the Certificate
of Incorporation as described below. The actual text of the proposed amendments
is set forth in full in Exhibit "A" to this Proxy Statement, which is
incorporated by reference herein. A summary of the proposed amendments and the
reasons for the Board's recommendation that this Proposal be approved by the
stockholders is set forth below. The proposed amendments would:

(1) Amend 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, redesignate Article TENTH as Article NINTH and amend
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
substantive 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) Restate 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").

11
<PAGE>

(3) Amend 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.

(4) Amend 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) Amend 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) Amend 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) Amend 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) Amend 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) Amend 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 extent that future statutory
amendments authorize such further limitation or elimination of liability.
The Board believes that such amendment would enhance the Company's ability
to attract qualified persons to serve on the Board.

(10) Amend 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.

12
<PAGE>

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 unless the Board is classified, the Rights Plan
could be circumvented by the replacement of the Board by certain stockholders
and the redemption of the Rights Plan. 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. The actual text of the proposed amendments is set forth in
full on Exhibit "A" to this Proxy Statement, which is incorporated by reference
herein.

At present, all the Company's directors are elected at each annual meeting of
stockholders for a one year term. If this Proposal No. 3 is approved at the
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.

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

13
<PAGE>

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 would significantly hinder 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 Proposal No. 3 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.

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. 3.

14
<PAGE>

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.

The affirmative vote of a majority of the shares of Class B Common Stock
present in person or by proxy is required to approve this Proposal No. 4.

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 3, 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 1, 1997

15
<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 provisions of the Certificate of
Incorporation would be revised as follows:

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.# Reserved
--------

SEVENTH: #The private property of stockholders shall not be subject to
the payment of corporate debts to any extent whatever.# Reserved
--------

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#:#

#(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#.]

A-1
<PAGE>

[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, 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".

[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.]
------------
A-2
<PAGE>

(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):

(8) Amend subsection (d) of Article EIGHTH by deleting the current text of
this subsection in its entirety.

[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.

A-3
<PAGE>

[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 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.

(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

A-4
<PAGE>

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:

#The directors shall be elected at the annual meeting of stockholders and
each director shall be elected to serve until the annual meeting of
stockholders next succeeding his election and until his successor shall be
elected and shall qualify, or for such shorter term as may be specified at
the time of his election.]#

A-5
<PAGE>

[Alternate notice to be provided to Class A Stockholders]

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

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.

By order of the Board of Directors

Thomas F. Hafer
Secretary

Reading, Pennsylvania

Dated: July 1, 1997

SPECIAL NOTICE TO CLASS A COMMON STOCKHOLDERS

THIS PROXY STATEMENT IS BEING PROVIDED TO CLASS A COMMON STOCKHOLDERS
FOR INFORMATIONAL PURPOSES ONLY. NO PROXY CARD IS ENCLOSED
FOR CLASS A COMMON STOCKHOLDERS.
<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 ANNUAL
MEETING AND PROXY STATEMENT.

-------------------------------------------
Signature of Stockholder

Date: ,1997
----------------------