<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934 (AMENDMENT NO. 1)
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 Rule 14a-11(c) or Rule 14a-12
INTEGRATED SECURITY SYSTEMS, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------
(5) Total fee paid:
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<PAGE> 2
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 3
INTEGRATED SECURITY SYSTEMS, INC.
8200 SPRINGWOOD DRIVE, SUITE 230
IRVING, TEXAS 75063
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 17, 1999
To the Holders of Common Stock of
INTEGRATED SECURITY SYSTEMS, INC.:
Notice is hereby given that the 1999 Annual Meeting of Stockholders of
Integrated Security Systems, Inc., a Delaware corporation (the "Company"), will
be held at the Company's executive offices, 8200 Springwood Drive, Suite 230,
Irving, Texas 75063, on Friday, December 17, 1999 at 10:00 A.M., Dallas, Texas
time, for the following purposes:
(1) To elect six persons to serve as directors until the Company's 2000
Annual Meeting of Stockholders or until their successors are duly
elected and qualified;
(2) To consider an act upon a proposal to amend the Company's Amended
and Restated Certificate of Incorporation to increase the number of
authorized shares of Common Stock from 30,000,000 to 35,000,000;
(3) To consider and act upon a proposal to amend the Company's 1997
Omnibus Long-Term Incentive Plan to increase the number of shares which
may be issued pursuant to the provisions of the Plan from 1,500,000 to
2,000,000;
(4) To transact any other business properly brought before the meeting
or any adjournments or postponements thereof.
The Board of Directors has fixed Monday, October 18, 1999, at the close
of business, as the record date for the determination of stockholders entitled
to notice of, and to vote at, the meeting and any adjournments or postponements
thereof. Only holders of record of the Company's Common Stock on that date are
entitled to vote on matters coming before the meeting and any adjournments or
postponements thereof. A complete list of stockholders entitled to vote at the
meeting will be maintained in the Company's offices at 8200 Springwood Drive,
Suite 230, Irving, Texas 75063, for the ten days prior to the meeting.
Please advise the Company's transfer agent, American Stock Transfer,
6201 15th Avenue, Third Floor, Brooklyn, NY 11218, of any change in your
address.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL
MEETING, PLEASE MARK, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT IN THE
ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED WITHIN THE UNITED STATES.
IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES ARE REGISTERED IN
DIFFERENT NAMES OR AT DIFFERENT ADDRESSES, EACH SUCH PROXY CARD SHOULD BE SIGNED
AND RETURNED TO ENSURE THAT ALL OF YOUR SHARES WILL BE VOTED. THE PROXY CARD
SHOULD BE SIGNED BY ALL REGISTERED HOLDERS IN THE EXACT NAMES AS THE SHARES ARE
SO REGISTERED. ANY PERSON GIVING A PROXY HAS THE POWER TO REVOKE IT AT ANY TIME
PRIOR TO ITS EXERCISE AND, IF PRESENT AT THE ANNUAL MEETING, MAY WITHDRAW IT AND
VOTE IN PERSON.
By Order of the Board of Directors,
Gerald K. Beckmann
President and Chief Executive Officer
Irving, Texas
October 28, 1999
<PAGE> 4
INTEGRATED SECURITY SYSTEMS, INC.
8200 Springwood Drive, Suite 230
Irving, Texas 75063
------------------------------------
PROXY STATEMENT
------------------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 17, 1999
The accompanying proxy, mailed with this Proxy Statement to
stockholders on or about October 28, 1999, is solicited by Integrated Security
Systems, Inc. (the "Company"), in connection with the Annual Meeting of
Stockholders to be held on December 17, 1999 (the "Annual Meeting").
As stated in the Notice to which this Proxy Statement is attached, matters to be
acted upon at the Annual Meeting include (i) election to the Board of Directors
of six directors to serve as directors until the Company's 2000 Annual Meeting
of Stockholders or until their successors are duly elected and qualified; (ii)
consideration of a proposal to amend the Company's Amended and Restated
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 30,000,000 to 35,000,000; (iii) consideration of a proposal to
amend the Company's 1997 Omnibus Long-Term Incentive Plan (the "Incentive Plan")
to increase the number of shares which may be issued pursuant to the provisions
of the Plan from 1,500,000 to 2,000,000; and (iv) to transact any other proper
business brought before the Annual Meeting or any adjournments or postponements
thereof.
All holders of record of shares of Common Stock at the close of
business on October 18, 1999 (the "Record Date") are entitled to notice of and
to vote at the Annual Meeting. On the Record Date, the Company had outstanding
10,564,145 shares of Common Stock. Each share of Common Stock is entitled to one
vote. The presence, in person or by proxy, of holders of a majority of the
outstanding shares of Common Stock entitled to vote as of the Record Date is
necessary to constitute a quorum at the Annual Meeting.
With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all other proposals and
will be counted as present for purposes of the item on which the abstention is
noted. Abstentions on the proposals to amend the Incentive Plan and to amend the
Certificate of Incorporation, if any, will have the effect of a negative vote
because the plan amendment proposal requires the affirmative vote of holders of
a majority of shares present in person or by proxy and entitled to vote and the
amendment to the Certificate of Incorporation requires the affirmative vote of
holders of a majority of outstanding shares. Brokers who hold shares in street
name for customers and do not receive voting instructions from such customers
are entitled to vote on the election of directors. Under applicable Delaware
law, a broker non-vote resulting from the failure to deliver voting instructions
to a broker will have no effect on the outcome of the election of directors.
Each stockholder has the unconditional right to revoke his or her proxy
at any time before it is voted. Any proxy given may be revoked either by a
written notice duly signed and delivered to the Secretary of the Company prior
to the exercise of the proxy, by execution of a subsequent proxy or by voting in
person at the Annual Meeting (although attending the Annual Meeting without
executing a ballot or executing a subsequent proxy will not constitute
revocation of a proxy). All properly executed, unrevoked proxies received before
the Annual Meeting will be voted in accordance with the directions contained
therein. When no direction has been given by a stockholder returning a proxy,
the proxy will be voted (i) FOR the election as directors of the nominees named
in this Proxy Statement, (ii) FOR the proposal to amend the Certificate of
Incorporation, and (iii) FOR the proposal to amend the Incentive Plan.
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage of outstanding
shares of Common Stock beneficially owned as of September 30, 1999, by (i) each
director and named executive officer of the Company, (ii) all officers and
directors of the Company as a group, and (iii) all persons who are known by the
Company to be beneficial owners of 5% or more of the Company's outstanding
Common Stock. Unless otherwise noted, each of the persons listed below has sole
voting and investment power with respect to the shares indicated as beneficially
owned by such person.
<TABLE>
<CAPTION>
Number of Shares
Beneficially
Name and Address of Beneficial Owner Owned (1) Percent (1)
- --------------------------------------------------------------------------- ----------------------- ---------------
<S> <C> <C>
Renaissance Capital Growth & Income Fund III, Inc.(5) 5,561,795 35.4%
Renaissance US Growth & Income Trust PLC(6) 5,282,890 34.3%
I.S.T. Partners, Ltd.(18) 1,768,680 16.0%
Philip R. Thomas(4) 1,451,126 13.7%
Gerald K. Beckmann(2)(3)(7) 976,177 8.9%
C.A. Rundell, Jr. (2)(3)(14) 868,418 7.8%
ProFutures Bridge Capital Fund LP(8) 585,000 5.6%
Lehman Brothers Holdings, Inc.(9) 579,000 5.5%
Frank R. Marlow(2)(3)(10) 118,608 1.1%
Donald A. Riemer(2)(3)(15) 107,259 1.0%
Holly J. Burlage(2)(3)(11) 71,119 0.7%
Jack G. Caldwell(2)(3)(16) 55,895 0.5%
James E. Jack(2)(3)(12) 27,004 0.3%
Robert C. Pearson(2)(3)(17) 19,200 0.2%
Robert M. Galecke(2)(3)(13) 7,005 0.1%
All current directors and executive officers as a group (9 persons) 2,250,776 20.5%
- -----------------------
</TABLE>
(1) Pursuant to the rules of the Securities and Exchange Commission, shares
of Common Stock which an individual or group has a right to acquire
within 60 days pursuant to the exercise of options or warrants are
deemed to be outstanding for the purpose of computing the percentage
ownership of such individual or group, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of
any other person shown in the table.
(2) The address for this person is 8200 Springwood Drive, Suite 230,
Irving, TX 75063.
(3) Mr. Beckmann is a Director, the President and the Chief Executive
Officer of the Company. Mr. Rundell is a Director and Chairman of the
Board of the Company. Mr. Marlow, Mr. Galecke, Mr. Pearson and Mr. Jack
are Directors of the Company. Mr. Caldwell and Mr. Riemer are
Presidents of the subsidiaries of the Company. Ms. Burlage is Vice
President, Chief Financial Officer and Secretary of the Company.
(4) Includes 54,850 shares of Common Stock owned by Thomas Group Holding
Company, a company owned by Mr. Thomas, and 61,801 shares of Common
Stock issuable upon the exercise of warrants within 60 days. The
address for Mr. Thomas is 3510 Turtle Creek Boulevard, Ph-A, Dallas, TX
75219-5542.
(5) Based on a 13(g) filing dated September 14, 1999, Renaissance Capital
Growth & Income Fund III, Inc. is deemed the beneficial owner of
5,561,795 shares of Common Stock. The address for this company is 8080
N. Central Expressway, Suite 210, Dallas, TX 75206.
2
<PAGE> 6
(6) Based on a 13(g) filing dated September 14, 1999, Renaissance US Growth
& Income Trust PLC is deemed the beneficial owner of 5,282,890 shares
of Common Stock. The address for this company is 8080 N. Central
Expressway, Suite 210, Dallas, TX 75206.
(7) Includes 284,473 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days; and 146,021 shares of
Common Stock issuable upon the exercise of warrants within 60 days.
(8) Based on a 13(d) filing dated July 17, 1997, ProFutures Bridge Capital
Fund, LP is deemed the beneficial owner of 585,000 shares of Common
Stock. The address for this company is 1720 South Bellaire Street,
Suite 500, Denver, CO 80222.
(9) Based on a 13(g) filing dated May 7, 1998, Lehman Brothers Holdings,
Inc. is deemed the beneficial owner of 579,000 shares of Common Stock.
The address for this company is 3 World Financial Center, New York, NY
10285.
(10) Includes 61,649 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days and 14,344 shares of
Common Stock issuable upon the exercise of warrants within 60 days.
(11) Includes 60,625 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days and 1,240 shares of
Common Stock issuable upon the exercise of warrants within 60 days.
(12) Includes 7,005 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days.
(13) Includes 7,005 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days.
(14) Includes 100,000 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days and 485,133 shares of
Common Stock issuable upon the exercise of warrants within 60 days. Mr.
Rundell is Director of both Renaissance Capital Growth & Income Fund
III, Inc. and Renaissance US Growth & Income Trust PLC. As a result,
Mr. Rundell could be deemed to be a beneficial owner of the common
shares beneficially owned by these funds.
(15) Includes 107,259 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days.
(16) Includes 55,895 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days.
(17) Includes 19,200 shares of Common Stock issuable upon the exercise of
outstanding options exercisable within 60 days. Mr. Pearson is Senior
Vice President of Renaissance Capital Group, Inc., the managing general
partner of both Renaissance Capital Growth & Income Fund III, Inc. and
Renaissance US Growth & Income Trust PLC. As a result, Mr. Pearson
could be deemed to be a beneficial owner of the common shares
beneficially owned by these funds.
(18) Includes 518,680 shares of Common Stock issuable upon the exercise of
warrants exercisable within 60 days. The address for I.S.T. Partners is
2602 McKinney Avenue, Suite 220, Dallas, TX 75201.
3
<PAGE> 7
ELECTION OF DIRECTORS
The nominees for director listed below will stand for election at this
Annual Meeting for a one-year term of office expiring at the 2000 Annual Meeting
of Stockholders or until their successors are duly elected and qualified.
The following table sets forth certain information as to the nominees
for director of the Company:
<TABLE>
<CAPTION>
Name and Age Positions and Offices With the Company Director Since
------------ -------------------------------------- --------------
<S> <C> <C>
C. A. Rundell, Jr., 67 Director, Chairman of the Board 1999
Gerald K. Beckmann, 56 Director, President and Chief Executive Officer 1991
Robert M. Galecke, 57 Director 1996
James E. Jack, 58 Director 1998
Frank R. Marlow, 61 Director 1995
Robert C. Pearson, 63 Director 1999
</TABLE>
While it is not anticipated that any of the nominees will be unable to
serve, if any nominee should decline or become unable to serve as a director for
any reason, votes will be cast instead for a substitute nominee designated by
the Board of Directors or, if none is so designated, will be cast according to
the judgment of the person or persons voting the proxy.
DIRECTORS AND EXECUTIVE OFFICERS
C. A. RUNDELL, 67, Director and Chairman of the Board, has been a
director of the Company since March 1999. Mr. Rundell is also a director and
Chairman of the Board of NCI Building Systems, since 1988. Also since 1989, Mr.
Rundell has owned and operated Rundell Enterprises, a sole proprietorship
engaged in providing acquisitions and financial consulting services to various
business enterprises. Mr. Rundell is a director and member of the executive
committee of Tyler Technologies, Inc., a provider of information management
systems and services for county governments and other enterprises. Mr. Rundell
was the President and Chief Executive Officer of Tyler from 1997 to 1998,
Chairman of the Board from 1996 to 1997, and temporary Chief Executive Officer
from 1996 to 1997. Mr. Rundell is also a director of Dain Rauscher Corporation,
a holding company for a full-service regional brokerage and investment banking
company; Tandy Brands Accessories, Inc., a manufacturer of accessories for men,
women and boys; and Renaissance Capital Growth and Income Fund III, Inc. and
Renaissance U.S. Growth and Income Trust PLC. Mr. Rundell earned an M.B.A. with
Distinction from Harvard University and a B.S. in Chemical Engineering from The
University of Texas at Austin.
GERALD K. BECKMANN, 56, Director, President and Chief Executive
Officer, has served as a director of the Company since its inception in 1991.
Mr. Beckmann was Chief Technical Officer of the Company from 1991 to May 1995
and Chairman of the Board of Directors from February 1993 to March 1999. On May
1, 1995, Mr. Beckmann became President and Chief Executive Officer of the
Company. From 1991 to 1994 Mr. Beckmann was President and Chief Operating
Officer of Thomas Group Holding Company, a private investment company. In 1985,
Mr. Beckmann joined Thomas Group, Inc., a publicly-held management consulting
firm. Mr. Beckmann also serves as a director on the board of CTC Holdings, an
electronic funds transfer systems supplier. Mr. Beckmann is also a manager in
Celerity Partners, L.L.C., the general partner of two acquisition limited
partnerships, Celerity Partners I and II, L.P. Mr. Beckmann holds a B.S.E.E.
from Virginia Polytechnic Institute and University.
HOLLY J. BURLAGE, 36, Vice President, Chief Financial Officer,
Secretary and Treasurer, joined the Company in February 1994 as Accounting
Manager, became Controller in 1995, became Vice President, Secretary and
Treasurer in May 1997, and became Chief Financial Officer in July 1999. Prior
4
<PAGE> 8
to joining the Company, Ms. Burlage was Controller of Signature Home Care Group,
Inc., a home health care company, from 1993 to 1994, and Controller and Chief
Accounting Officer of National Heritage, Inc., a publicly-traded long-term care
company, from 1989 to 1993. Ms. Burlage holds a B.B.A. from Baylor University.
JACK G. CALDWELL, 62, President, B&B Electromatic, Inc., joined the
Company in January 1998. He has an extensive background in the manufacture and
design of industrial equipment. Prior to joining the Company, Mr. Caldwell was a
Results Manager for Thomas Group, Inc. from 1992 to 1998. From 1986 to 1992, Mr.
Caldwell served as the European Operations Manager for E-Systems and was
Director of Sales and Marketing from 1978 to 1986 for Cooper Industries. Mr.
Caldwell earned an M.B.A. and B.S. degrees from East Texas State University.
ROBERT M. GALECKE, 56, Director, has been a director of the Company
since May 1996. Mr. Galecke is currently Vice President of Finance and
Administration for the University of Dallas. Prior to that he was a principal in
the corporate consulting firm of Pate, Winters & Stone, Inc. from 1993 to May
1996. He also served as Executive Vice President, Chief Operating Officer and
Chief Financial Officer of Southmark Corporation, a financial services insurance
and real estate holding company, from 1986 to 1992. From 1989 to 1995, Mr.
Galecke served as Chairman of the Board, President and Chief Executive Officer
of National Heritage, Inc. Mr. Galecke received a graduate degree from the
School of Banking at the University of Wisconsin, Madison, and a BS in Economics
from the University of Wisconsin Stevens Point.
JAMES E. JACK, 57, Director, has been director of the Company since
1997. Mr. Jack is currently Executive Vice President and Chief Financial Officer
of Coachmen Industries, Inc. From 1996 to 1999, Mr. Jack was Director, Global
Financial Services Product for TowersPerrin. From 1991 to 1996 Mr. Jack was
Senior Executive Vice President and Chief Financial Officer of Associates First
Capital Corporation, a publicly traded consumer and commercial finance
organization. Prior to that, Mr. Jack was Director, Executive Vice President and
Chief Financial Officer from 1981 to 1993 of the same company. Mr. Jack received
a graduate degree from the Southern Methodist University School of Business and
a B.B.A. from the University of Notre Dame.
FRANK R. MARLOW, 60, Director, has been a director of the Company since
May 1995. Mr. Marlow served as Vice President, Sales and Marketing for the
Company from October 1993 to February 1995. Mr. Marlow is currently Vice
President of Sales for Money Star, a technology company based in Austin, Texas.
From 1995 until 1998, Mr. Marlow was vice president of Hogan Systems, a
publicly-traded company subsequently purchased by Computer Sciences Corp.
Previously, Mr. Marlow was with IBM, Docutel Corporation, UCCEL Corporation and
Syntelligence Corporation in executive sales and training positions.
ROBERT C. PEARSON, 63, Director, has been affiliated with the Company
in a non-voting capacity since January 1997 and became a director in April 1999.
Mr. Pearson is currently Senior Vice President of Renaissance Capital Group,
Inc. From 1994 to 1997, Mr. Pearson was an independent financial management
consultant. From 1990 to 1994, Mr. Pearson served as Chief Financial Officer and
Executive Vice President of Thomas Group, Inc., a management consulting firm,
where he was instrumental in moving the company from a small privately held
company to a public company with over $40 million in revenue. Prior to 1990, Mr.
Pearson was responsible for all administrative activities for the
Superconducting Super Collider Laboratory. In addition, from 1960 to 1985, Mr.
Pearson served in a variety of positions at Texas Instruments in financial
planning and analysis. Mr. Pearson earned an M.B.A. from the University of
Michigan and a B.S. in Business from the University of Maryland, where he was a
W. A. Paton Scholar.
DONALD A. RIEMER, 52, President, Intelli-Site, Inc., initially joined
the Company under a consulting contract in June 1998 and became President of
Intelli-Site, Inc. in August 1999. Prior to joining the Company, Mr. Riemer was
Vice President of North American Operations for Teklogix Corporation. During his
tenure, Teklogix grew into a leading provider of wireless data communications
network solutions by implementing multi-channel sales and marketing programs
that increased revenue to over $100 million in eight years. Prior to Teklogix,
Mr. Riemer was with MSI Data Corporation and National Semiconductor Corporation
in sales and marketing capacities. Mr. Riemer holds a B.A. degree from Baldwin
Wallace College.
5
<PAGE> 9
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors has established two committees: a Compensation
and Stock Option Committee, and an Audit Committee. The Company's Board of
Directors acts as the nominating committee to nominate persons for election to
the Board of Directors.
The Compensation and Stock Option Committee is currently composed of
Messrs. Rundell, Jack and Marlow. The Compensation and Stock Option Committee
did not meet during the fiscal year ended June 30, 1999. The Compensation and
Stock Option Committee determines the amount and form of compensation and
benefits payable to all officers and employees, and advises and consults with
management regarding the benefit plans and compensation policies of the Company.
The Compensation and Stock Option Committee also reviews and approves stock
option grants to directors, executive officers and employees of the Company.
The Audit Committee is currently composed of Messrs. Rundell, Galecke,
and Marlow. The Audit Committee met two times during the fiscal year ended June
30, 1999. This committee recommends to the Board of Directors the appointment of
independent auditors, reviews the plan and scope of audits, reviews the
Company's significant accounting policies and internal controls, and has general
responsibility for related matters. Prior to the mailing of this Proxy Statement
to the stockholders of the Company, this committee met with the Company's
independent auditors to review the fiscal 1999 audit and the significant
accounting policies and internal controls.
The Board of Directors held eight meetings during the fiscal year ended
June 30, 1999. None of the directors attended fewer than 75% of the meetings of
the Board of Directors and its committees on which they served.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1) LONG-TERM COMPENSATION AWARDS
------------------------- ----------------------------------
Restricted
Name and Principal Other Annual Stock Option/
Position Year Salary Bonus Compensation Awards SARS
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gerald K. Beckmann 1999 $296,393 -- -- -- --
President and CEO 1998 $289,425 -- -- -- 200,000
1997 $143,169 $125,000 -- -- --
Holly J. Burlage 1999 $105,011 -- -- -- 60,000
Vice President and CFO 1998 $ 90,368 $ 15,000 -- -- 17,500
1997 $ 41,348 -- -- -- 22,500
Jack G. Caldwell 1999 $140,510 -- -- -- 100,000
President 1998 $ 58,333 -- -- -- 61,790
B&B Electromatic, Inc. 1997 -- -- -- --
Donald A. Riemer 1999 $152,116 -- 120,000 -- 229,307
President 1998 -- -- -- -- --
Intelli-Site, Inc. 1997 -- -- -- -- --
- --------
</TABLE>
6
<PAGE> 10
(1) Fiscal years 1999 and 1998 pertains to the twelve months ended June 30,
1999 and June 30, 1998, fiscal year 1997 pertains to the six months
ended June 30, 1997.
(2) Relocation expenses.
No other executive officer's salary and bonus exceed $100,000 annually
and no executive had any form of long-term incentive plan compensation
arrangement with the company during any of the indicated periods.
STOCK OPTION GRANTS
The following table provides information concerning the grant of stock
options during the twelve months ended June 30, 1999 to the named executive
officers:
<TABLE>
<CAPTION>
Number of % of Total
Securities Options Granted
Underlying Options to Employees Exercise Expiration
Granted(1) in Fiscal Year Price Date
-------------------- -------------------- -------- ----------
For the twelve months ended 6/30/99
- -----------------------------------
<S> <C> <C> <C> <C>
Holly J. Burlage 60,000 5.8% $0.719 01/20/09
Jack G. Caldwell 100,000 9.7% $0.719 01/20/09
Donald A. Riemer 200,000 19.4% $1.094 08/01/08
Donald A. Riemer 29,307 2.9% $0.563 01/01/09
- ---------------
</TABLE>
(1) The options for all listed vest with respect to 25% of the shares
issuable thereunder six months after the date of grant and with respect
to cumulative increments of 25% of the shares issuable thereunder on
each anniversary of the date of grant.
OPTION EXERCISES AND HOLDINGS
The following table provides information related to the number of
shares received upon exercise of options, the aggregate dollar value realized
upon exercise, and the number and value of options held by the named executive
officers of the Company at June 30, 1999.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options/ SARS at In-The-Money Options/SARS
Fiscal Year End at Fiscal Year End
----------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
For the twelve months ended 6/30/99
- -----------------------------------
<S> <C> <C> <C> <C>
Gerald K. Beckmann 284,473 100,000 $ -- $ --
Holly J. Burlage 60,625 59,375 -- --
Jack G. Caldwell 55,895 105,895 -- --
Donald A. Riemer 100,000 129,307 -- --
</TABLE>
7
<PAGE> 11
DIRECTOR COMPENSATION
Currently, directors are compensated annually $7,500 for serving on the
Board in addition to $1,250 for each committee on which they serve. All
directors are reimbursed for their out-of-pocket expenses incurred in connection
with their attendance at Board meetings.
CERTAIN TRANSACTIONS
During 1999, Mr. Rundell loaned the Company approximately $200,000 at
9% interest and received 364,299 warrants exercisable at $0.549 for five years.
This loan was repaid in May 1999.
The Company believes that the terms of the foregoing transactions were
on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
BACKGROUND
Currently, the Company's Certificate of Incorporation authorizes the
issuance of up to 30,000,000 shares of Common Stock. On the Record Date,
10,564,145 shares of Common Stock were outstanding and 18,070,208 shares were
subject to future issuance pursuant to outstanding convertible debentures,
Convertible Preferred Stock, warrants and options. Therefore, as of the Record
Date, only 1,415,640 shares of Common Stock were available for future issuance.
The Board has unanimously adopted resolutions approving and
recommending that the stockholders adopt an amendment to the Company's
Certificate of Incorporation to increase the number of authorized shares of
Common Stock from 30,000,000 to 35,000,000.
REASONS FOR AND EFFECT OF THE AMENDMENT
The Company is currently attempting to raise up to $3 million through
the private placement of preferred stock that is convertible into Common Stock.
If such preferred stock is converted into Common Stock (and assuming full
conversion of all the Company's outstanding convertible securities and full
exercise of all options and warrants to purchase the Company's Common Stock),
the Company would not have sufficient authorized Common Stock for issuance.
Therefore, additional shares of authorized Common Stock are necessary in order
to assure the proper conversion and exercise of such convertible securities,
options and warrants. Holders of the Company's Common Stock have no preemptive
rights to purchase additional shares of Common Stock (or securities convertible
into Common Stock) issued by the Company.
The increase in the number of shares of Common Stock has been
recommended by the Board to assure that an adequate supply of shares is
available for issuance in connection with private equity financing,
acquisitions, and for other general corporate purposes. The Common Stock will be
available for issuance without further action of the stockholders, unless
required by the Company's Certificate of Incorporation or Bylaws, applicable
laws, or the policy of any stock exchange or registered securities association
on which the shares of stock of the Company are listed, if any.
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PROPOSED AMENDMENTS TO INCENTIVE PLAN
SUMMARY OF STOCK OPTION PLAN
The purpose of the Company's Incentive Plan is to provide a means
whereby the Company and its subsidiaries may attract able persons to enter the
employ of the Company and to provide a means whereby those key employees upon
whom the responsibilities of the successful administration and management of the
Company rest, and whose present and potential contributions to the welfare of
the Company are of importance, can acquire and maintain stock ownership, thereby
strengthening their concern for the long-term welfare of the Company and their
desire to remain in its employ. A further purpose of the Incentive Plan is to
provide such key employees with additional incentive and reward opportunities
designed to enhance the profitable growth of the Company over the long term.
Accordingly, the Incentive Plan provides for granting Incentive Stock Options,
options which do not constitute Incentive Stock Options, Stock Appreciation
Rights, Restricted Stock Awards, Performance Share Awards, Stock Value
Equivalent Awards, or any combination of the foregoing.
PARTICIPANTS
At September 30, 1999, the Company had 64 employees and non-employee
directors eligible to participate in the Incentive Plan.
PLAN BENEFITS OUTSTANDING
Of the total 1,500,000 shares for which options may be granted under
the Plan, options to purchase 1,442,285 shares of Common Stock were outstanding
as of September 30, 1999. As of September 30, 1999, the market value of all
shares of Common Stock subject to outstanding options was $1,427,042 (based upon
the closing sale price of the Common Stock as reported on the Nasdaq
Over-the-Counter Bulletin Board on such date).
AMENDMENTS TO INCREASE OPTIONS UNDER INCENTIVE PLAN
The Board of Directors is seeking stockholder approval of an amendment
to the Incentive Plan that would increase the number of shares which may be
issued pursuant to the Incentive Plan. Pursuant to the amendment, the number of
shares of Common Stock authorized to be issued under the Incentive Plan will be
increased from 1,500,000 shares to 2,000,000 subject to adjustments to reflect
possible future stock splits, stock dividends, combinations or exchange of
shares, or similar transactions.
The Board of Directors is seeking stockholder approval of the amendment
to the Incentive Plan because it believes that the Company will require
additional options to attract and retain persons of ability as officers,
directors and employees. The Board of directors believes that it is prudent to
seek stockholder approval of the increase at the present time in order to assure
that in the future the Company has sufficient options available for issuance
under the Incentive Plan to avoid granting options that are subject to
subsequent stockholder approval.
It is proposed that Article V of the Incentive Plan be amended to read
as follows:
"V. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS,
RESTRICTED STOCK AWARDS, PERFORMANCE SHARE AWARDS AND
STOCK VALUE EQUIVALENT AWARDS, SHARES SUBJECT TO THE PLAN
(a) Award Limits. The Committee may from time to time grant
Awards to one or more employees determined by it to be eligible for
participation in the Plan in accordance with the provisions of Article
VI. The aggregate number of shares of Common Stock that may be issued
under the Plan shall not exceed 2,000,000 shares. Any of such shares
which remain unissued and which are not subject to outstanding Options
or Awards at the termination of the Plan shall cease to be subject to
the Plan but, until termination of the Plan, the Company shall at all
times reserve a sufficient
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number of shares to meet the requirements of the Plan. Shares shall be
deemed to have been issued under the Plan only to the extent actually
issued and delivered pursuant to an Award. To the extent that an Award
lapses or the rights of its Holder terminate or the Award is paid in
cash, any shares of Common Stock subject to such Award shall again be
available for the grant of an Award. The aggregate number of shares
which may be issued under the Plan shall be subject to adjustment in
the same manner as provided in Article XII with respect to shares of
Common Stock subject to Options then outstanding. Separate stock
certificates shall be issued by the Company for those shares acquired
pursuant to the exercise of an Incentive Stock Option and for those
shares acquired pursuant to the exercise of any Option which does not
constitute an Incentive Stock Option.
(b) Stock Offered. The stock to be offered pursuant to the
grant of an Award may be authorized but unissued Common Stock or Common
Stock previously issued and outstanding and reacquired by the Company."
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors, executive officers and persons who own more
than ten percent of the Company's Common Stock, to file with the Securities and
Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Such persons are required by SEC regulations to furnish the Company with copies
of all Section 16(a) reports they file. Based solely upon a review of Forms 3, 4
and 5 and amendments thereto provided to the Company pursuant to Rule 16a-3(e),
Mr. Galecke, Mr. Jack and Mr. Marlow each had one late filing during the fiscal
year ending June 30, 1999.
INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed Grant Thornton LLP as the independent accountants of the Company for
the fiscal year ending June 30, 2000.
Representatives of Grant Thornton are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so
and to be available to respond to appropriate questions.
BOARD OF DIRECTORS' RECOMMENDATIONS; VOTE REQUIRED
The Board of Directors unanimously recommends a vote FOR the election
as directors of the nominees named in this Proxy Statement, FOR the amendment to
the Company's Certificate of Incorporation, and FOR the amendment to the
Company's Incentive Plan. Nominees for director receiving a plurality of votes
cast will be elected as directors. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock is required to approve the
amendment to the Certificate of Incorporation and the amendment of the Incentive
Plan.
STOCKHOLDER PROPOSALS
In order for stockholder proposals to receive consideration for
inclusion in the Proxy Statement for the Company's 2000 Annual Meeting of the
Stockholders, such proposals must be received by October 1, 2000, at the
Company's offices at 8200 Springwood Drive, Suite 230, Irving, Texas 75063,
Attention: Secretary.
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The Company's by-laws contain a provision which requires that a
stockholder may nominate a person for election as a director only if written
notice of such stockholder's intention to make such nomination has been given to
the Secretary of the Company not earlier than 60 days nor later than 30 days
prior to a meeting of stockholders. However, in the event that notice or public
disclosure of a meeting of stockholders is first given or made to the
stockholders less than 40 days prior to such meeting, then notice of a
stockholder's intention to nominate a person for election as a director will be
timely if given in writing to the Secretary before the close of business on the
tenth day following the date on which the notice of the meeting was mailed or
the public disclosure of the meeting was made. The by-laws also require that the
notice set forth, among other things, a description of all arrangements or
understandings between the nominating stockholder and the nominee pursuant to
which the nomination is to be made or the nominee is to be elected and such
other information regarding the nominee as would be required to be included in a
proxy statement filed pursuant to the proxy rules of the Securities and Exchange
Commission had the nominee been nominated by the Company's Board. This provision
is intended to give the Company the opportunity to obtain all relevant
information regarding persons nominated for director. The Board may disqualify
any nominee who fails to provide the Company with complete and accurate
information as required by this provision.
SOLICITATION OF PROXIES
The Company will pay the expenses of this proxy solicitation. In
addition to solicitation by mail, some of the officers and regular employees of
the Company may solicit proxies personally or by telephone, if deemed necessary.
The Company will request brokers and other fiduciaries to forward proxy
soliciting material to the beneficial owners of shares which are held of record
by the brokers and fiduciaries, and the Company may reimburse them for
reasonable out-of-pocket expenses incurred by them in connection therewith.
OTHER MATTERS
The Board is not aware of any matter, other than the matters described
above, to be presented for action at the Annual Meeting. However, if any other
proper items of business should come before the Annual Meeting, it is the
intention of the person or persons acting under the enclosed form of proxy to
vote in accordance with their best judgment on such matters.
The Annual Report on Form 10-KSB for the year ended June 30, 1999 is
enclosed herewith.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED POSTAGE PAID RETURN ENVELOPE. A PROMPT RETURN OF
YOUR PROXY CARD WILL BE APPRECIATED, AS IT WILL SAVE THE EXPENSE OF FURTHER
MAILINGS.
By Order of the Board of Directors,
Gerald K. Beckmann
President and Chief Executive Officer
Irving, Texas
October 28, 1999
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