<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
View Tech, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Not Applicable
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / 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:
---------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
3) Per unit price or other underlying or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and state how it
was determined):
---------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
5) Total fee paid:
---------------------------------------------------------------------
/ / Fee paid by written preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------
(3) Filing Party:
-------------------------------------------------------------
(4) Date Filed:
---------------------------------------------------------------
<PAGE>
VIEW TECH, INC.
3760 CALLE TECATE, SUITE A
CAMARILLO, CALIFORNIA 93012
April 30, 1998
To Our Stockholders:
You are cordially invited to attend the Annual Meeting (the "Annual
Meeting") of Stockholders of View Tech, Inc., a Delaware corporation (the
"Company"), which will be held at 10:00 a.m. on June 3, 1998, at the
Company's corporate office at 3760 Calle Tecate, Suite A, Camarillo
California 93012. All holders of the Company's outstanding Common Stock as
of April 7, 1998 are entitled to vote at the Annual Meeting.
Enclosed is a copy of the Notice of Annual Meeting of Stockholders,
proxy statement and proxy. A current report on the business operations of
the Company will be presented at the meeting, and stockholders will have an
opportunity to ask questions.
We hope you will be able to attend the Annual Meeting. Whether or not
you expect to attend, it is important you complete, date, sign, and return
the proxy in the enclosed envelope in order to make certain that your shares
will be represented at the Annual Meeting.
Sincerely,
William J. Shea
Chief Executive Officer
<PAGE>
------------------------------
VIEW TECH, INC.
3760 CALLE TECATE, SUITE A
CAMARILLO, CALIFORNIA 93012
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 3, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting (the "Annual Meeting") of
Stockholders of View Tech, Inc., a Delaware corporation (the "Company"), will
be held at 10:00 a.m. local time, on June 3, 1998, at the Company's corporate
office, located at 3760 Calle Tecate, Suite A, Camarillo, California 93012
for the following purposes:
1. To elect two Class II Directors to the Board of Directors;
2. To approve an amendment to the 1997 Non-Employee Director Stock Option
Plan to increase the shares of Common Stock of the Company reserved
for issuance under the Plan by 100,000 to a total of 150,000 shares;
3. To ratify the selection of Arthur Andersen LLP as the Company's
independent accountants for the year ended December 31, 1998; and
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on April 7, 1998,
as the record date for the determination of stockholders entitled to notice
of and to vote at the Annual Meeting and all adjourned meetings thereof.
By Order of the Board of Directors
William J. Shea
Chief Executive Officer
Dated: April 30, 1998
PLEASE COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED PROXY IN THE RETURN
ENVELOPE FURNISHED FOR THAT PURPOSE AS PROMPTLY AS POSSIBLE, WHETHER OR NOT
YOU PLAN TO ATTEND THE ANNUAL MEETING. IF YOU LATER DESIRE TO REVOKE YOUR
PROXY FOR ANY REASON, YOU MAY DO SO IN THE MANNER DESCRIBED IN THE ATTACHED
PROXY STATEMENT.
<PAGE>
-----------------------------
VIEW TECH, INC.
3760 CALLE TECATE, SUITE A
CAMARILLO, CALIFORNIA 93012
-----------------------------
PROXY STATEMENT
-----------------------------
GENERAL INFORMATION
This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of View Tech, Inc. (the
"Company") for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at 10:00 a.m., local time, on June 3, 1998, at the
Company's corporate office, located at 3760 Calle Tecate, Suite A, Camarillo,
California 93012, and at any adjournment thereof. When the enclosed proxy is
properly executed and returned, the shares it represents will be voted in
accordance with any directions noted thereon. If no specification is
indicated, the shares will be voted "FOR" (i) the election as Class II
Directors of the two nominees listed thereon, (ii) the approval of an
amendment to the Company's 1997 Non-Employee Director Stock Option Plan to
increase the shares of Common Stock of the Company reserved for issuance
under the Plan by 100,000 to a total of 150,000 shares, and (iii) the
approval of Arthur Andersen LLP as the Company's independent accountants for
the year ending December 31, 1998. Any stockholder giving a proxy has the
power to revoke it at any time before it is voted by written notice to the
Secretary of the Company, by issuance of a subsequent proxy, or by voting at
the Annual Meeting in person.
At the close of business on April 7, 1998, the record date for
determining stockholders entitled to notice of and to vote at the Annual
Meeting, the Company had issued and outstanding 6,701,310 shares of Common
Stock, $0.0001 par value per share ("Common Stock"). Each share of Common
Stock entitles the holder of record thereof to one vote on any matter coming
before the Annual Meeting. Only stockholders of record at the close of
business on April 7, 1998 are entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof.
The enclosed proxy, when properly signed, also confers discretionary
authority with respect to amendments or variations to the matters identified
in the Notice of Annual Meeting and with respect to other matters which may
be properly brought before the Annual Meeting. At the time of printing this
proxy statement, management of the Company is not aware of any other matters
to be presented for action at the Annual Meeting. If, however, other matters
which are not now known to management should properly come before the Annual
Meeting, the proxies hereby solicited will be exercised on such matters in
accordance with the best judgment of the proxyholders.
The Company will pay the expenses of soliciting proxies for the Annual
Meeting, including the cost of preparing, assembling, and mailing the proxy
solicitation materials. Proxies may be solicited personally, by mail, or by
telephone, by directors, officers, and regular employees of the Company who
will not be additionally compensated therefor. It is anticipated that this
proxy statement and accompanying proxy will be mailed on or about May 11,
1998 to all stockholders entitled to vote at the Annual Meeting.
The matters to be considered and acted upon at the Annual Meeting are
referred to in the preceding notice and are more fully discussed below.
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS AND OFFICERS
The following table sets forth certain information with respect to (i)
each director and nominee for director of the Company, (ii) the named
executive officers in the Summary Compensation Table on page 8, (iii) all
directors and executive officers of the Company as a group at April 17, 1998,
including the number of shares of Common Stock beneficially owned by each of
them, and (iv) each person known by the Company to own beneficially more than
5% of the outstanding shares of Common Stock. Unless otherwise indicated
below, the business address of each individual is the same as the address of
the Company's principal executive offices.
<TABLE>
<CAPTION>
Amount and Nature Percent of
of Beneficial Class of
Ownership of Common
Named Executives Common Stock(1) Stock
- ---------------- ----------------- ----------
<S> <C> <C>
William Shea(2) 50,000 *
Franklin A. Reece, III(3) 562,663 8.4%
David A. Kaplan(4) - *
Calvin M. Carrera(5) 26,000 *
Angelo P. Gentile(6) 11,631 *
<CAPTION>
Directors
- ---------
Robert F. Leduc(7) 11,000 *
David F. Millet(8) 251,158 3.8%
Paul C. O'Brien(9) 1,164,250 17.4%
All Directors and Executive 2,076,702 31.0%
Officers as a Group
(8 People)
<CAPTION>
5% Stockholders
- ---------------
Robert G. Hatfield(10) 517,500 7.7%
John W. Hammon(11) 503,500 7.5%
Mark P. Kiley(12) 1,089,250 16.3%
Telcom Holding, LLC(13) 1,008,000 15.0%
</TABLE>
- ---------------------------
* Less than 1%
2
<PAGE>
(1) Includes shares issuable upon the exercise of options or warrants that are
exercisable within 60 days of the date of this proxy statement. The shares
underlying such options or warrants are deemed to be outstanding for the
purpose of computing the percentage of outstanding stock owned by such
person individually and by each group of which such person is a member, but
are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person.
(2) Chief Executive Officer and director of the Company effective April 17,
1998. Includes 50,000 shares issuable upon exercise of options. Mr.
Shea's address is 745 Atlantic Avenue, Boston, Massachusetts 02111-2747.
(3) President and a director of the Company and Chief Executive Officer of
USTeleCenters, Inc., a wholly-owned subsidiary of the Company ("UST").
Includes 73,602 shares issuable upon exercise of options. Mr. Reece's
address is 745 Atlantic Avenue, Boston, Massachusetts 02111-2747.
(4) Chief Financial Officer of the Company and USTeleCenters. Mr. Kaplan's
address is 745 Atlantic Avenue, Boston, Massachusetts 02111-2747.
(5) General Manager of the Company. Includes 16,000 shares issuable upon
exercise of options.
(6) Vice President of Finance of the Company and USTeleCenters. Mr. Gentile's
address is 745 Atlantic Avenue, Boston, Massachusetts 02111-2747.
(7) Consists of 6,000 shares issuable upon exercise of options. Mr. Leduc's
address is 26 Thorn Oak, Trabuco Canyon, California 92679.
(8) Includes 12,000 shares issuable upon exercise of options. Mr. Millet's
address is 623 Chestnut Street, Needham, Massachusetts 02192.
(9) Chairman of the Company. Includes 650,000 shares of Common Stock and
325,000 Common Stock purchase warrants currently owned by Telcom Holding,
LLC ("Telcom"), of which Mr. O'Brien is a managing member, and 81,250
Common Stock purchase warrants owned by Mr. O'Brien individually and 12,000
shares issuable upon exercise of options. See "Certain Relationships and
Related Transactions--Transactions with Telcom Holding, LLC." Mr.
O'Brien's address is 205 Mattison Drive, Concord, Massachusetts 01742.
(10) Prior Chief Executive Officer and a director of the Company. Mr. Hatfield
resigned effective April 17, 1998. See "Certain Relationships and Related
Transactions." Includes 150,000 shares issuable upon exercise of options.
(11) Mr. Hammon resigned as President and Chief Operating Officer of the Company
effective April 17, 1997, and resigned as a director of the Company
effective May 20, 1997. See "Employment and Other Compensatory
Agreements." Includes 150,000 shares issuable upon exercise of options.
Mr. Hammon's address is 35065 Beach Road, San Juan Capistrano, California
92675.
(12) Consists of 650,000 shares of Common Stock and 325,000 Common Stock
purchase warrants currently owned by Telcom, of which Mr. Kiley is a
managing member, and 81,250 Common Stock purchase warrants owned by Mr.
Kiley individually. See "Certain Relationships and Related
Transactions--Transactions with Telcom Holding, LLC." Mr. Kiley's address
is 278 River Road, Andover, Massachusetts 01810.
(13) Consists of 650,000 shares of Common Stock and 325,000 Common Stock
purchase warrants currently owned by Telcom. See "Certain Relationships
and Related Transactions--Transactions with Telcom Holding, LLC." Telcom's
address is c/o The O'Brien Group, Inc., Two International Place, Boston,
Massachusetts 02110.
-----------------------
ELECTION OF DIRECTORS
(ITEM 1 OF THE PROXY CARD)
The Company has a classified Board of Directors consisting of two Class
I Directors Franklin A. Reece, III and one (1) vacancy, two Class II
Directors (William Shea and David F. Millet), and three Class III Directors
(Calvin M. Carrera, Robert F. Leduc and Paul C. O'Brien), who will serve
until the annual meetings of stockholders to be held in 1999, 1998, and 2000,
respectively, or until their respective successors are elected and qualified.
At each annual meeting of stockholders, directors are elected for a full
term of three years to succeed those directors whose terms expire on the
annual meeting dates.
Management's nominees for election at the Annual Meeting as Class II
directors are William J. Shea and David F. Millet. If elected, the nominees
will serve as directors until the Company's annual meeting of stockholders in
the year 2001, or until their successors are elected and qualified. If any
nominee declines to serve or becomes unavailable for any reason, or if a
vacancy occurs before the election (although management knows of no reason to
anticipate that this will occur), the proxies may be voted for such
substitute nominees as management may designate.
If a quorum is present and voting, the two nominees for Class II
directors receiving the highest number of votes will be elected as Class II
directors. Abstentions and shares held by brokers that are present, but not
voted because the brokers were prohibited from exercising discretionary
authority, i.e., "broker non-votes," will be counted as present for purposes
of determining if a quorum is present.
3
<PAGE>
The table below sets forth for the current directors and director
nominees, including the Class II nominees to be elected at the Annual
Meeting, certain information with respect to age and background.
<TABLE>
<CAPTION>
NAME POSITION WITH COMPANY AGE DIRECTOR SINCE
- ---- --------------------- --- --------------
<S> <C> <C> <C>
CLASS I DIRECTOR WHOSE TERM EXPIRES AT THE 1999
ANNUAL MEETING OF STOCKHOLDERS (TO BE HELD IN
1999):
Franklin A. Reece, III President, Chief Operating 51 1996
Officer and Director
CLASS II DIRECTORS AND DIRECTOR NOMINEES WHO ARE
CURRENTLY UP FOR ELECTION:
David F. Millet Director 53 1996
William J. Shea(1) Chief Executive Officer 49 1998
and Director
CLASS III DIRECTORS WHOSE TERM EXPIRES AT THE 2000
ANNUAL MEETING OF STOCKHOLDERS (TO BE HELD IN 2000):
Calvin M. Carrera Director 52 1994
Robert F. Leduc Director 52 1994
Paul C. O'Brien Chairman of the Board of 58 1997
Directors
</TABLE>
(1) Appointed Chief Executive Officer on April 17, 1998.
BUSINESS EXPERIENCE
DIRECTORS AND NOMINEES FOR DIRECTOR
Class I Director
- ----------------
FRANKLIN A. REECE, III has been a director of the Company since November
29, 1996 and President and Chief Operating Officer of the Company since April
21, 1997. Mr. Reece is also President and Chief Executive Officer of
USTeleCenters, Inc., a wholly-owned Subsidiary of the Company ("UST"). From
November 29, 1996 until April 21, 1997, Mr. Reece was a Vice President of the
Company. In 1986, Mr. Reece founded USTeleCenters, Inc., a Massachusetts
corporation ("USTeleCenters"), which merged with the Company in 1996 (the
"Merger"). Mr. Reece's positions with USTeleCenters have been Chairman,
President and Chief Executive Officer. Prior to establishing USTeleCenters,
he was Director of Manufacturing for Zymark Corporation, a manufacturer of
robotic systems for laboratory automation from 1983 until 1986. From 1968
until 1983, he was General Manager of Sales for The Reece Corporation, a
manufacturer of specialized automatic equipment for the apparel industry. A
graduate of Harvard College, Mr. Reece has extensive international and
domestic sales, distribution and management experience. Mr. Reece serves on
the boards of several Boston-based non-profit organizations. Mr. Reece
originally was nominated as a director pursuant to an agreement between the
Company and USTeleCenters in connection with the Merger. In the event Mr.
Reece does not complete his term as a director, the individuals that
comprised the board of directors of USTeleCenters may designate a replacement.
4
<PAGE>
Class II Directors and Director Nominees
- ----------------------------------------
DAVID F. MILLET has been a director of the Company since the Merger.
Mr. Millet was one of the original founders of USTeleCenters and was a
director of USTeleCenters from its inception in 1986 through the date of the
Merger. Since 1988, he has served as President of Chatham Venture
Corporation, a private investment firm. Since 1994, he has served as a
director and President of Thomas Emery Son's, L.L.C., an investment company.
Since 1996, he has served as President and Chief Executive Officer of
Holographix, Inc., a manufacturer of holographic optical components and
systems. Mr. Millet, a graduate of Harvard College, is also a director of
Wall Data, Inc. and Natural MicroSystems Inc. Mr. Millet originally was
nominated as a director pursuant to an agreement between the Company and
USTeleCenters in connection with the Merger.
WILLIAM J. SHEA has been a director of the Company since February, 1998
and was appointed Chief Executive Officer on April 17, 1998. Mr. Shea is the
former BankBoston Corp. vice chairman and retired in July 1997. Mr. Shea had
a long career with Coopers & Lybrand before joining the BankBoston and was
responsible for engineering the bank's recovery from the real estate collapse
of the early 1990s. In December 1997, Mr. Shea became chairman of the board
of Centennial Technologies, Inc. in Wilmington. In addition to his role at
Centennial, Mr. Shea also serves on the board of Starmet Corp., Micros Inc.,
the finance committee of Children's Hospital, the board of trustees of
Northeastern University, and the executive committee of the Boston Stock
Exchange.
Class III Directors
- -------------------
CALVIN M. CARRERA has been General Manager of the Company since August
1997 and a director of the Company since September 1994. From April 1995
through August 1997, Mr. Carrera was Director of Advanced Programs for
Engineering Management Concepts ("EMC"), a firm which specializes in
professional engineering and management services for government and industry
clients. He was responsible for advanced program development and execution.
From July 1994 to April 1995, he was Director of Western Operations for APEX
Technologies, Inc. ("APEX"), a privately held company which provides
engineering and training services for the federal and state governments.
Prior to joining APEX, Mr. Carrera served for 15 years as General Manager of
Veda Incorporated, a privately held firm which provides professional
engineering services for a diverse client base. Since 1991, he has served
as President of the Defense Services Industry Executive Association, a
non-profit corporation with 43 member companies dedicated to improving
communications within the defense services industry and between the defense
services industry and government. Mr. Carrera holds a B.S. in Electrical
Engineering from the University of Utah and a M.S. in Electrical Engineering
from the University of Southern California, where he has also completed
classroom work toward a doctoral degree.
ROBERT F. LEDUC has been a director of the Company since September 1994.
From January 1992 to the present, he has been President and Chief Executive
Officer of EconomicsAmerica of California, a California-based non-profit
funding organization that promotes education in economics. From January 1990
to January 1992, he was President of Foundation Group, another non-profit
organization. Mr. Leduc also has been a Visiting Professor at the L.B.J.
School of Public Affairs at the University of Texas at Austin since 1990 and
was previously a visiting professor or lecturer at the Kennedy School of
Public Administration at Harvard University, the University of Alberta, and
Rutgers University. Mr. Leduc has specialized in providing consulting
services to not-for-profit organizations since 1972, and served as Executive
Director of a charitable foundation from 1982 to 1985 and a trade association
from 1985 to 1988. Mr. Leduc has a M.B.A. from Wayne State University and is
currently completing the requirements for a Ph.D. in Public Administration
from the University of Colorado.
PAUL C. O'BRIEN has been Chairman of the Company since January 1997. He
is the founder and managing member of Telcom Holding, LLC, a Massachusetts
limited liability company and an affiliate of the Company ("Telcom"), that
was formed in December 1996. From 1987 until 1994, Mr. O'Brien was with New
England Telephone and Telegraph Company ("New England Telephone"), the unit
of NYNEX covering the New England region. He joined New England Telephone in
1987 as Executive Vice President and Chief Operating Officer; in 1988 he was
appointed President and Chief Executive Officer; and in 1993 he was elected
Chairman. Mr. O'Brien serves on the boards of several companies, including
Bank of Boston Corp., Shiva Corporation,
5
<PAGE>
First Pacific Networks, Inc. and Cambridge NeuroScience, Inc. Mr. O'Brien is
currently President of The O'Brien Group, Inc. and of Pan-Asia Development
Corporation, an investment firm concentrating on Asian ventures. He received
a degree in electrical engineering from Manhattan College and an M.B.A. from
New York University. Mr. O'Brien was elected to the Board of Directors and
nominated Chairman pursuant to the terms of the agreement between the Company
and Telcom. See "Certain Relationships and Related Transactions."
Executive Officers
- ------------------
ANGELO P. GENTILE, has been Vice President of Finance of the Company and
of UST since the Merger. Mr. Gentile was Chief Financial Officer of UST from
the Merger until February 1998. He was formerly with USTeleCenters from
August 1991, serving as its Chief Financial Officer since May 1995. Prior to
joining USTeleCenters, Mr. Gentile served as a Senior Auditor and Consultant
with Arthur Andersen LLP's entrepreneurial and emerging business group. He
is a certified public accountant in Massachusetts and a member of both the
American Institute of Certified Public Accountants and the Massachusetts
Society of Certified Public Accountants. Mr. Gentile received a B.S. in
business administration from Northeastern University.
DAVID A. KAPLAN, has been the Chief Financial Officer of the Company and
of UST since February 1998. For the past ten years, he served as the Chief
Financial Officer and Legal Officer, Regional Operating Officer and Secretary
of Monitor Company Inc., of Cambridge, Massachusetts, a world leader in
strategic management consulting whose clients are primarily international and
Fortune 500 companies. Previously, Mr. Kaplan was Chief Financial Officer at
Lifeline Systems, Inc. a public, nationwide producer of emergency response
systems. He has also been associated with Simplex Time Recorder Company and
Peat Marwick, Mitchell & Company. Mr. Kaplan graduated summa cum laude from
Fairleigh Dickinson University and holds a J.D. from Boston College Law
School.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
There were eleven (11) meetings (including telephonic meetings) of the
Board of Directors during the year ended December 31, 1997. All of the
directors attended each of these meetings. The Board of Directors has
authorized an Audit Committee and a Stock Option and Compensation Committee,
and the members of each committee are nominated by the majority vote of the
Board of Directors. The Board of Directors does not have a nominating
committee.
AUDIT COMMITTEE
The Board of Directors maintains an Audit Committee, which is currently
comprised of Messrs. O'Brien, Leduc and Millet. Mr. Carrera was a member of
the Audit Committe through September 1997. The Audit Committee met 4 times
(including telephonic meetings) during the year ended December 31, 1997, and
all members attended each meeting. The Audit Committee was formed to, among
other things, consult and meet with the Company's auditors and its Chief
Financial Officer and accounting personnel, review potential conflict of
interest situations, where appropriate, and report and make recommendations
to the full Board of Directors regarding such matters.
STOCK OPTION AND COMPENSATION COMMITTEE
The Board of Directors also has a Stock Option and Compensation
Committee, which is comprised of Messrs. Millet, Leduc and O'Brien. Mr.
Carrera was a member of the Stock Option and Compensation Committee through
September 1997. The Stock Option and Compensation Committee is responsible
for supervising the Company's executive compensation policies, administering
employee incentive plans, reviewing officers' salaries, approving significant
changes in employee benefits, and recommending to the Board of Directors such
other forms of remuneration as it deems appropriate. The Stock Option and
Compensation Committee met one (1) time during the year ended December 31,
1997, and all members attended the meeting.
6
<PAGE>
DIRECTOR COMPENSATION
All directors are reimbursed for out-of-pocket expenses in connection
with attendance at Board of Directors' meetings and all directors who are not
executive officers or employees of the Company currently receive a director's
fee of $1,000 per meeting attended (including telephonic meetings) and $1,000
per month for service as a director. Additionally, outside directors also
receive $500 per month for membership on committees of the Board of Directors
and an additional $250 per month is paid to the chairman of each committee.
Pursuant to the 1997 Non-Employee Director Stock Option Plan, outside
directors also receive 10,000 non-qualified stock options upon election as a
director and, after ninety (90) days of continuous service as an outside
director, 2,000 non-qualified stock options on the date of each annual
meeting. The 10,000 non-qualified stock options are automatically
exercisable but vest six (6) months following their issuance and have an
exercise price equal to the fair market value of the Common Stock on the
option grant date. The 2,000 non-qualified stock options are fully vested
and exercisable as of the grant date and have an exercise price equal to the
fair market value of the Common Stock on the option grant date.
COMPLIANCE WITH BENEFICIAL OWNERSHIP REPORTING RULES
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who beneficially own more than 10% of a registered class of the
Company's outstanding Common Stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
("Commission"). Such officers, directors, and stockholders are required by
Commission regulations to furnish the Company with copies of all such reports
that they file.
Based solely upon a review of copies of such reports furnished to the
Company during the year ended December 31, 1997 and thereafter, and written
representations received by the Company from directors, officers, and
beneficial owners of more than 10% of the Company's outstanding Common Stock
("reporting persons"), except as disclosed herein, the Company believes that,
during the twelve months ended December 31, 1997, all filing requirements
under Section 16(a) of Exchange Act applicable to the Company's reporting
persons were complied with. Mr. O'Brien filed a late Form 3 that was due in
January 1997, a Form 4 relating to a transaction in October 1997 and a Form 5
that related to a transaction in March 1997. Mr. Millet filed a late Form 4
relating to a transaction in June 1997.
STOCK OPTION AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Stock Option and Compensation Committee of the Board of
Directors of the Company was, during the twelve months ended December 31,
1997, an officer or employee of the Company or any of its subsidiaries, or
was formerly an officer of the Company or any of its subsidiaries or had any
relationship requiring disclosure by the Company under Item 404 of Regulation
S-K promulgated by the Commission.
During the twelve months ended December 31, 1997, no executive officer
of the Company served as (i) a member of the compensation committee (or other
board committee performing equivalent functions) of another entity, one of
whose executive officers served on the Compensation Committee of the Board of
Directors, (ii) a director of another entity, one of whose executive officers
served on the Compensation Committee of the Board of Directors, or (iii) a
member of the compensation committee (or other board committee performing
equivalent functions) of another entity, one of whose executive officers
served as a director of the Company.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the compensation for the Chief Executive
Officer and each of the most highly compensated executive officers whose
individual remuneration exceeded $100,000 for the year ended December 31,
1997 (the "Named Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
------------------------------------------ ------------
Name and Principal Position Year Salary Bonus Options(1)
- --------------------------- ---- ------ ----- ----------
<S> <C> <C> <C> <C>
Robert G. Hatfield 1997 $220,000 -- 50,000
Former Director and Chief Executive 1996(3) $114,603 -- --
Officer(2) 1996 $168,000 -- 100,000
1995 $126,000 -- 50,000
William M. McKay 1997 $136,000 25,000 15,000
Former Secretary and Chief 1996(3) $68,000 -- --
Financial Officer(4) 1996 $118,216 -- 25,000
1995 $17,914 -- 72,800
Franklin A. Reece, III 1997 $198,000 $54,131 50,000
President and Director(5) 1996(3) $64,492 $43,111 --
1996 $120,000 $27,693 73,602
1995 $137,500 $20,300 --
Angelo P. Gentile 1997 $125,000 $15,000 15,000
Vice President of Finance(5) 1996(3) $50,497 $28,578 --
1996 $100,994 $36,145 49,068
1995 $75,000 $5,757 --
</TABLE>
(1) All options granted to Messrs. Hatfield, McKay, Reece and Gentile in 1997
were granted under the Company's 1997 Section 16 Insiders Stock Option
Plan. All previous stock options granted to Messrs. Hatfield and McKay
were granted under the Company's 1995 Stock Option Plan. Messrs. Reece's
and Gentile's stock options were originally options to acquire
USTeleCenters' Common Stock that were converted into options to acquire the
Company's Common Stock upon consummation of the Merger.
(2) Mr. Hatfield resigned as a director and Chief Executive Officer effective
April 17, 1998.
(3) During calendar year 1996, the Company changed its year end from June 30 to
December 31; therefore, the information presented represents the period
from July 1, 1996 to December 31, 1996.
(4) Mr. McKay resigned as Chief Financial Officer effective January 31, 1998.
(5) Messrs. Reece and Gentile became employees of the Company on November 29,
1996 in connection with the Merger, which was treated as a pooling of
interests for financial reporting purposes. The amounts shown through such
date were paid by USTeleCenters. Mr. Reece was appointed President and
Chief Operating Officer of the Company on April 21, 1997. From November 29,
1996 until April 21, 1997, Mr. Reece was Vice President of the Company.
Mr. Gentile was appointed Vice President of Finance of the Company on
November 29, 1996.
8
<PAGE>
YEAR END OPTIONS
The following table sets forth information regarding unexercised options held by
the Named Executives.
AGGREGATED OPTION EXERCISES IN LAST YEAR
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Unexercised Options Valued of In-the Money
at Year End Options at Year End
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
<S> <C> <C>
Robert G. Hatfield 150,000/50,000 $247,500/$0
William M. McKay 72,800/15,000 $123,425/$74,055
Franklin A. Reece, III 73,602/50,000 $363,373/$246,850
Angelo P. Gentile 0/15,000 0/$74,055
</TABLE>
EMPLOYMENT AND OTHER COMPENSATORY AGREEMENTS
The Company entered into an employment agreement with Mr. Reece on
November 29, 1996, which expires on December 31, 1998. Under the terms of
this agreement, Mr. Reece's annual base salary is $150,000 and he is entitled
to receive from the Company a minimum annual cash bonus of $25,000 for each
of 1997 and 1998. Any bonuses in excess of such minimum amounts are subject
to determination by the Company. The Board of Directors of the Company
increased Mr. Reece's base salary to $198,000 on December 9, 1996. The
agreement provides that upon termination of Mr. Reece's employment with the
Company, either by Mr. Reece for "Good Reason" or by the Company without
"Cause" (as those terms are defined in the employment agreement) he is
entitled to receive base salary payments through the first anniversary of the
date on which his employment was terminated (the "Termination Date"), or
December 31, 1998, whichever date is later, in addition to a cash lump-sum
payment of any accrued bonus and the continuation of fringe benefits until
the first anniversary of the Termination Date. Upon the voluntary
termination of his employment with the Company, Mr. Reece is entitled to
receive all accrued base salary, bonus and other benefits. In the event that
his employment is terminated by the Company in connection with a change in
control of the Company, he will receive, for a period of time which is to be
not less than one year, his base salary, all fringe benefits to which he is
entitled and a cash lump-sum payment of any accrued bonus.
On April 17, 1998, William J. Shea was appointed Chief Executive Officer
of the Company. In connection with his appointment the Compensation
Committee of the Board of Directors granted Mr. Shea an option to purchase
200,000 shares of Common Stock at an exercise price of $4.38 per share which
was the closing price of the Company's Common Stock on the NASDAQ National
Market System on the date of his appointment. The Company and Mr. Shea also
agreed to a base annual salary of $225,000. It is anticipated that the
Company and Mr. Shea will enter into an employment agreement which will
provide the customary benefits for a Chief Executive Officer of a public
company.
AMENDMENT TO THE 1997 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
(ITEM 2 OF THE PROXY CARD)
INTRODUCTION
The stockholders are being asked to approve an amendment to the
Company's 1997 Non-Employee Director Stock Option Plan (the "Director Plan")
which will increase the maximum number of shares of Common Stock reserved for
issuance over the term of the Plan from 50,000 to 150,000 shares.
9
<PAGE>
The Board of Directors adopted the amendment on February 18, 1998,
subject to stockholder approval at the Annual Meeting. The Board believes
the amendment is necessary in order to assure that the Company will have a
sufficient reserve of Common Stock over the term of the Director Plan, to
provide option grants as an equity incentive to attract and retain the
services of key individuals essential to the Company's long-term success.
The following is a summary of the principal features of the amended
Director Plan. The summary, however, does not purport to be a complete
description of all the provisions of the Director Plan. Any stockholder of
the Company who wishes to obtain a copy of the actual plan document may do so
upon written request to the Corporate Secretary at the Company's principal
executive offices in Camarillo, California.
SHARE RESERVE
A reserve of 150,000 shares of Common Stock has been set aside for
issuance over the ten (10)-year term of the Director Plan. Should any
options granted under the Director Plan terminate prior to exercise in full,
the shares subject to the unexercised portion of those options will be
available for subsequent option grants. In addition, any unvested shares
issued under the Director Plan and subsequently repurchased by the Company at
the option exercise price paid per share pursuant to the Company's repurchase
rights will be added back to the number of shares of Common Stock reserved
for issuance under the Director Plan and will accordingly be available for
reissuance through one or more subsequent option grants made under the
Director Plan.
CHANGES IN CAPITALIZATION
In the event any change is made to the outstanding shares of Common
Stock by reason of any merger, consolidation or reorganization of the Company
or any recapitalization, stock dividend, stock split, combination of shares,
exchange of shares or other change in corporate structure effected without
the Company's receipt of consideration, appropriate adjustments will be made
to the maximum number and/or class of securities available for issuance under
the Director Plan and the number and/or class of securities and exercise
price per share in effect under each outstanding option under the Director
Plan. All such adjustments will be designed to preclude the enlargement or
dilution of participant rights and benefits under the Director Plan.
ELIGIBILITY
Only the non-employee members of the Board will be eligible to
participate in the Director Plan. As of April 17, 1998, three non-employee
Board members were eligible to participate in the Director Plan.
VALUATION
The fair market value per share of Common Stock on any relevant date
under the Director Plan will be the closing selling price per share on that
date on the NASDAQ National Market. On April 17, 1998, the closing selling
price per share was $4.38.
AUTOMATIC OPTION GRANTS
All automatic option grants under the Director Plan will be made in
strict compliance with the express provisions of such Plan. Accordingly,
stockholder approval of this Proposal will also constitute pre-approval of
each option granted pursuant to the provisions of the Director Plan
summarized below and the subsequent exercise of that option in accordance
with such provisions.
1. Each individual who first becomes a non-employee Board member will, upon
election, automatically be granted at that time an option grant for 10,000
shares of Common Stock, provided such individual has not previously been in
the Company's employ.
10
<PAGE>
2. On the date of each Annual Meeting of Stockholders, beginning with this
Annual Meeting, each individual who is to continue to serve as a
non-employee Board member will automatically be granted an option to
purchase 2,000 shares of Common Stock, provided that individual has
continuously served as a non-employee Board member for at least ninety (90)
days. There will be no limit on the number of such 2,000-share option
grants which any one non-employee Board member may receive over his or her
period of Board service, and non-employee Board members who have previously
served in the Company's employ will be eligible for one or more 2,000-share
option grants.
3. Each automatic option grant will have an exercise price per share equal to
100% of the fair market value per share of Common Stock on the option grant
date. Each option will have a maximum term of ten (10) years measured from
the option grant date, subject to earlier termination following the
optionee's cessation of Board service.
4. Each automatic option will remain exercisable for a twelve (12)-month
period following the optionee's cessation of service as a Board member. In
no event, however, may the option be exercised after the expiration date of
the option term. During the applicable post-service exercise period, the
option may not be exercised for more than the number of option shares (if
any) in which the Board member is vested at the time of his or her
cessation of Board service.
5. Each initial 10,000-share option grant will be immediately exercisable for
all the option shares, but any unvested shares purchased by the optionee
under that grant will be subject to repurchase by the Company, at the
exercise price paid per share, upon the optionee's cessation of Board
service prior to vesting in those shares. The shares subject to the
initial 10,000-share option grant will vest (and the Company's repurchase
rights will lapse) upon the optionee's completion of six (6) months of
Board service measured from the grant date. Each annual 2,000-share option
grant will be immediately exercisable for all the option shares as
fully-vested shares.
LIMITED TRANSFERABILITY
Options granted under the Director Plan may be transferred or assigned
during the optionee's lifetime to one or more members of the optionee's
immediate family or to a trust established exclusively for one or more such
family members, to the extent such transfer or assignment is in furtherance
of the optionee's estate plan.
ACCELERATION
The shares subject to each initial 10,000-share option grant immediately
vests upon (i) the optionee's death or permanent disability while serving as
a Board member, (ii) an acquisition of the Company by a merger in which there
is a change in ownership of seventy-five percent (75%) or more of the
Company's outstanding voting securities or through a sale of all or
substantially all of the Company's assets or (iii) a change in control of the
Company effected by a successful tender offer for more than seventy-five
percent (75%) of the Company's outstanding voting securities or by a change
in the majority of the Board as a result of one or more contested elections
for Board membership.
The acceleration of vesting in the event of a change in the ownership or
control of the Company may be seen as an anti-takeover provision and may have
the effect of discouraging a merger proposal, a takeover attempt or other
efforts to gain control of the Company.
AMENDMENT AND TERMINATION
The Board may amend or modify the Director Plan in any or all respects
whatsoever, subject to any stockholder approval required under applicable
laws or regulations. The Board may terminate the Director Plan at any time,
and the Director Plan will in all events terminate on March 10, 2007.
11
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
Options granted under the Director Plan are non-statutory options which
are not intended to satisfy the requirements of Section 422 of the Internal
Revenue Code (the "Code"). The Federal income tax treatment for such options
is as follows:
No taxable income is recognized by an optionee upon the grant of a
non-statutory option. The optionee will in general recognize ordinary
income, in the year in which the option is exercised, equal to the excess of
the fair market value of the purchased shares on the exercise date over the
exercise price paid for the shares, and the optionee will be required to
satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the
optionee's termination of service prior to vesting in those shares, then the
optionee will not recognize any taxable income at the time of exercise but
will have to report as ordinary income, as and when the Company's repurchase
right lapses, an amount equal to the excess of (i) the fair market value of
the shares on the date the repurchase right lapses over (ii) the exercise
price paid for the shares. The optionee may, however, elect under Section
83(b) of the Code to include as ordinary income in the year of exercise of
the option an amount equal to the excess of (i) the fair market value of the
purchased shares on the exercise date over (ii) the exercise price paid for
such shares. If the Section 83(b) election is made, the optionee will not
recognize any additional income as and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for
the taxable year of the Company in which such ordinary income is recognized
by the optionee.
ACCOUNTING TREATMENT
Option grants with an exercise price equal to the fair market value of
the shares on the grant date will not result in any direct compensation
expense to the Company's earnings, but such options may be a factor in
determining the Company's earnings per share on a diluted basis. In
addition, the Company must disclose, in pro-forma statements to the Company's
financial statements, the impact those options would have upon the Company's
reported earnings were the value of those options at the time of grant
treated as compensation expense.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the issued and outstanding shares
present or represented and entitled to vote at the Annual Meeting is sought
for the 100,000-share increase to the Director Plan. The Board of Directors
believes that option grants under the Director Plan play an important role in
the Company's efforts to attract, employ, and retain individuals essential to
the Company's long-term success. If the stockholders do not approve the
proposal, then the Director Plan will continue to remain in effect, and
option grants may continue to be made pursuant to the provisions of the
Director Plan until the available reserve of Common Stock as last approved by
the stockholders has been issued pursuant to option grants made under the
Director Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THIS PROPOSAL.
NEW PLAN BENEFITS
As of April 17, 1998, no options had been granted on the basis of the
100,000 share increase which is the subject of this proposal.
-----------------------
12
<PAGE>
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
(ITEM 3 OF THE PROXY CARD)
The Board of Directors has selected Arthur Andersen LLP as the Company's
independent accountants for the year ending December 31, 1998, and has
further directed that management submit the selection of independent
accountants for ratification by the stockholders at the Annual Meeting.
Arthur Andersen LLP has no financial interest in the Company and neither it
nor any member or employee of the firm has had any connection with the
Company in the capacity of promoter, underwriter, voting trustee, director,
officer or employee. The Delaware General Corporation Law does not require
the ratification of the selection of independent accountants by the Company's
stockholders, but in view of the importance of the financial statements to
the stockholders, the Board of Directors deems it advisable that they pass
upon such selection.
Arthur Andersen LLP acted as the Company's independent accountants for
the year ended December 31, 1997. Representatives of Arthur Andersen LLP are
expected to be present at the Annual Meeting. They have been offered the
opportunity to make a statement if they desire to do so and are expected to
be available to respond to appropriate questions.
In the event the stockholders fail to ratify the selection of Arthur
Andersen LLP , the Audit Committee of the Board of Directors will reconsider
whether or not to retain the firm. Even if the selection is ratified, the
Audit Committee and the Board of Directors in their discretion may direct the
appointment of a different independent accounting firm at any time during the
year if they determine that such a change would be in the best interests of
the Company and its stockholders.
BOARD COMPENSATION COMMITTEE REPORT
STOCK OPTION AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Company's executive compensation plan is administered by the Stock
Option and Compensation Committee, which was comprised of three non-employee
directors during the period from January 1, 1997 through December 31, 1997.
The Stock Option and Compensation Committee works with management to develop
compensation plans for the Company and is responsible for determining the
compensation of each executive officer and recommending such compensation to
the Board of Directors.
The Company's executive compensation program is designed to align
executive compensation with the Company's business objectives and the
executive's individual performance, and to enable the Company to attract,
retain and reward executive officers who contribute, and are expected to
contribute, to the Company's long-term success. In establishing executive
compensation, the Stock Option and Compensation Committee is guided by the
following principles: (i) the total compensation for executive officers
should be sufficiently competitive with the compensation paid by other
high-growth companies in the telecommunications industry for officers in
comparable positions so that the Company can attract and retain qualified
executives and (ii) individual compensation should include components that
reflect the financial performance of the Company and the performance of the
individual.
The compensation of the Company's executive officers consists of a
combination of base salary, bonuses and equity-based compensation. The Stock
Option and Compensation Committee believes that executive compensation should
be designed to motivate executives to increase stockholder values, and
further believes that executive officers can best increase stockholder value
through the Company's operating results by supplying high quality products
and services to the Company's customers.
BASE SALARY. The Stock Option and Compensation Committee sets the base
salary for executive officers by reviewing the salaries for comparable
positions in high-growth companies in the Company's industry, the historical
compensation levels of the Company's executives and the executive's
individual performance in the preceding year. The Compensation Committee
utilizes salary surveys for reference purposes, but its salary determinations
are not subject to specific criteria.
13
<PAGE>
CHIEF EXECUTIVE OFFICER COMPENSATION. The compensation for the
Company's Chief Executive Officer, Mr. Robert G. Hatfield, was determined
based on the same policies and criteria as the compensation for other
executive officers.
The Stock Option and Compensation Committee
Paul C. O'Brien, Chairman
David F. Millet
Robert F. Leduc
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TERMINATION AGREEMENTS. John W. Hammon resigned as President and Chief
Operating Officer of the Company effective April 17, 1997, and resigned as a
director of the Company effective May 20, 1997. Mr. Hammon is the brother of
Robert G. Hatfield, the former Chief Executive Officer and a former director
of the Company. In April 1997, the Company entered into a Severance and
Consulting Agreement (the "Severance Agreement") with Mr. Hammon pursuant to
which the Company agreed to pay Mr. Hammon $19,335 per month through December
31, 1998 (the "Consulting Period") and to reimburse him for his health
insurance costs and pre-approved normal and reasonable business expenses.
The Company also agreed to cancel $26,300 on Mr. Hammon's advance account for
expenses that he had incurred in connection with his employment with the
Company, and to pay $2,500 of attorneys' fees incurred by Mr. Hammon in
connection with the negotiation and drafting of the Severance Agreement. In
consideration of these payments, Mr. Hammon agreed (i) to provide consulting
services to the Company during the Consulting Period, (ii) not to compete
with the Company during the Consulting Period, and (iv) to not sell any of
the Common Stock of the Company during certain periods specified in the
Severance Agreement. The Severance Agreement was the result of arms' length
negotiations between the Company and Mr. Hammon.
William M. McKay resigned as Chief Financial Officer of the Company
effective January 31, 1998. Under the terms of Mr. McKay's employment
agreement with the Company, as amended, Mr. McKay received an aggregate
severance payment of $142,000. The Company also extended the exercise date
for Mr. McKay's outstanding stock options from May 2, 1998 until May 1, 1999.
Robert G. Hatfield resigned as Chief Executive Officer and a director of
the Company effective April 17, 1998. Mr. Hatfield and the Company are
currently negotiating the terms of a severance agreement. Pursuant to a
Memorandum of Understanding between the Company and Mr. Hatfield, Mr.
Hatfield will receive two (2) years compensation over the next eighteen
months. The first year's compensation will be paid during the first six (6)
months of the agreement. Mr. Hatfield will forfeit his severance benefits in
the event he competes with the Company or makes any disparaging remarks about
the Company.
TRANSACTIONS WITH ROBERT G. HATFIELD. In October 1997, the Company
purchased five (5) manufacturing systems (the "Systems") from Robert G.
Hatfield, the then Chief Executive Officer and a director of the Company, for
an aggregate purchase price of $162,500. The Systems were acquired by Mr.
Hatfield from an officer and director of Power-Data Services, Inc. ("PDS") in
settlement of certain claims in connection with a loan of $200,000 by Mr.
Hatfield to such officer and director incident to the proposed acquisition of
PDS by the Company. The Company ultimately determined not to proceed with
such acquisition. The purchase price paid for the Systems by the Company to
Mr. Hatfield was less than the wholesale price that the Company otherwise
would pay therefor, and the Systems subsequently were sold by the Company at
a profit. The Company loaned PDS a total of $265,000 in connection with the
same proposed acquisition. Such amount has not been repaid and the Company
is taking legal action to effect collection. However, there can be no
assurance that any amount ultimately will be collected from PDS.
TRANSACTIONS WITH TELCOM HOLDING, LLC. On December 31, 1996, the
Company entered into an agreement (the "Purchase Agreement") with Telcom
Holdings LLC ("Telcom"), a Massachusetts limited liability company, pursuant
to which Telcom agreed to use its reasonable best efforts to purchase (i) up
to 650,000 shares of Common Stock (the "Purchase Shares") and (ii) Common
Stock Purchase Warrants of the Company (the "Telcom Purchase
14
<PAGE>
Warrants," and together with the Purchased Shares the "Purchased Securities")
to purchase up to 325,000 shares of Common Stock, at a price of $4.40 per
unit ("Unit"). Each Unit consists of one (1) share of Common Stock and one
(1) Telcom Purchase Warrant for the purchase of one-half (1/2) share of
Common Stock at a purchase price per share of $6.50. The Purchase Agreement
provided that if the aggregate purchase price for the Purchased Securities
issued and sold to Telcom was at least $2,500,000, the Company would issue to
Paul C. O'Brien and Mark P. Kiley, managing members of Telcom, additional
Common Stock Purchase Warrants of the Company (the "O'Brien Purchase
Warrants") for the purchase of one-half (1/2) the aggregate number of shares
of Common Stock that are purchasable under the Telcom Purchase Warrants
issued and sold to Telcom, at a purchase price per share of $6.50. The
Purchase Agreement further provided that the aggregate number of Purchased
Securities may be increased by mutual agreement of the Company and Telcom,
but not to a number that would require the Company to obtain stockholder
approval under applicable rules promulgated by the NASDAQ National Market.
The Purchase Agreement further provided that upon the first issuance and
sale of any Purchased Securities to Telcom under the Agreement, which
occurred on January 15, 1997 (the "Initial Closing"), the Company was
required to take such actions as may be reasonably practicable to cause Paul
C. O'Brien, the president of The O'Brien Group, to be nominated and elected
to serve as Chairman and as a member of the Board of Directors. The Purchase
Agreement also provides that if Mr. O'Brien does not serve in such capacity
for any reason, the Company is required to take such actions as may be
reasonably practicable to cause another person designated by Telcom and
reasonably acceptable to a majority of the Board of Directors to be nominated
and elected to serve as a member of the Board of Directors. The foregoing
requirements expire at the end of the initial three-year director term to
which Mr. O'Brien is elected.
As long as Telcom Purchase Warrants to purchase at least fifty percent
(50%) of the aggregate number of shares of Common Stock purchasable under all
Telcom Purchase Warrants issued under the Purchase Agreement are outstanding,
but not longer than six (6) months after the Initial Closing, i.e., July 15,
1997, subject to certain exceptions, (i) if the Company intends to issue any
equity securities to a third party, it must offer to each holder of Purchased
Shares and to each holder of shares of Common Stock issued upon exercise of
the Telcom Purchase Warrants or the O'Brien Purchase Warrants (the "Warrant
Shares") the right, for a period of twenty (20) days, to purchase for cash,
at a purchase price equal to the price or other consideration for which such
securities are to be issued, a number of such securities (up to but not
exceeding that number of such equity securities that the Company intends to
issue or has received an offer to purchase) that would enable, after giving
effect to such issuance, such holder to maintain its same proportionate
diluted equity ownership in the Company as it held on the date of such
notice, and (ii) the Company will not, except with the affirmative vote or
consent of at least five (5) members of the Board of Directors, (A) merge or
consolidate with, or sell, assign, lease or otherwise dispose of or
voluntarily part with the control of (whether in one transaction or in a
series of transactions) all or substantially all of its assets to any third
party, or (B) permit any of its subsidiaries to do any of the foregoing,
other than sales or other dispositions of assets in the ordinary course of
business. In addition, holders of Purchased Shares and Warrant Shares are
granted certain "piggyback" registration rights and certain registration
rights on Form S-3 (or Form S-1 if the Company is not eligible for any reason
to use Form S-3) under the Purchase Agreement.
The Telcom Purchase Warrants and the O'Brien Purchase Warrants are
redeemable at the Company's option on 30 days' notice to the holders thereof
at a price of $0.50 per share of underlying Common Stock if (i) the average
closing bid price of the Common Stock has been at least $10.00 per share for
a period of 60 consecutive trading days ending within ten days prior to the
Company's written notice of redemption, or (ii) the Company effects a best
efforts or firm commitment underwritten public offering of Common Stock
resulting in aggregate gross proceeds to the Company of not less than
$7,500,000, provided that in such case the exercise price for the Telcom
Purchase Warrants and the O'Brien Purchase Warrants will be reduced in
proportion to any amount by which the public offering price is less than
$10.00 per share.
Telcom purchased all the Purchased Securities by March 10, 1997. The
Purchase Agreement provides that all net proceeds from the sale of the
Purchased Securities are required to be used by the Company for working
capital purposes, including payment of up to $500,000 toward professional
fees, costs and expenses associated with the Merger.
15
<PAGE>
Mr. O'Brien, the Chairman of the Company's Board of Directors, is a
managing member of Telcom and President of the O'Brien Group. Prior to the
execution of the Purchase Agreement, there were no other relationships
between the Company, and any of its officers and employees, and Telcom, and
any of its members. The purchase price for the Purchased Securities, and the
other terms of the Purchase Agreement were negotiated at arm's length by
management of the Company and the managing members of Telcom.
STOCK PRICE PERFORMANCE
The following graph compares the total cumulative stockholder return on
the Common Stock from June 15, 1995 (the date of the Company's initial public
offering) to December 31, 1997 to that of the (a) NASDAQ 100 Index, the index
is derived from performance data from 100 companies, and (b) the NASDAQ
Telecommunications Index, over the same period which is derived from the
performance data from the peer group companies. The graph assumes that the
value of an investment in Common Stock and in each such index was $100 on
June 15, 1995, and that all dividends have been reinvested.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
<TABLE>
<CAPTION>
- --------------------FISCAL YEAR ENDING-----------------------
<S> <C> <C> <C> <C>
COMPANY 6/16/95 12/31/95 12/31/96 12/31/97
VIEW TECH INC 100.00 118.52 79.63 73.15
PEER GROUP 100.00 114.44 116.99 172.85
BROAD MARKET 100.00 113.41 139.67 171.27
THE PEER GROUP CHOSEN WAS:
NASDAQ TELECOMMUNICATIONS INDEX
THE BROAD MARKET INDEX CHOSEN WAS:
NASDAQ MARKET INDEX-U.S. COMPANIES
</TABLE>
16
<PAGE>
FORM 10-K REPORT
A copy of the Company's annual report to the Securities and Exchange
Commission on Form 10-K is available without charge to stockholders and may
be obtained by writing to Teri Brath, Investor Relations Manager, View Tech,
Inc., 3760 Calle Tecate, Suite A, Camarillo, California 93012.
STOCKHOLDER PROPOSALS
Any proposals of security holders which are intended to be presented at
next year's Annual Meeting must be received by the Company at its principal
executive offices on or before December 31, 1998, in order to be considered
for inclusion in the Company's proxy materials relating to that meeting.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before
the Annual Meeting. However, if other matters should come before the Annual
Meeting, it is the intention of the person named in the proxy to vote such
proxy in accordance with his judgment on such matters.
By Order of the Board of Directors
David A. Kaplan
Secretary
Camarillo, California
April 30, 1998
Please complete, date, and sign the enclosed proxy and return it promptly in
the enclosed reply envelope. No postage is required if mailed in the United
States.
17
<PAGE>
VIEW TECH, INC.
INDEX TO APPENDICES
-------------------------
Appendix A 1997 Non-Employee Directors Stock Option Plan;
Amended and Restated Effective February 18, 1998
18
<PAGE>
VIEW TECH, INC.
1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
(AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 18, 1998)
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1997 Non-Employee Directors Stock Option Plan is intended to
promote the interests of View Tech, Inc., a Delaware corporation, by
providing the non-employee members of the Board with the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the
service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.
II. ADMINISTRATION OF THE PLAN
The terms of each option grant (including the timing and pricing of
the option grant) shall be determined by the express terms of the Plan, and
neither the Board nor any committee of the Board shall exercise any
discretionary functions with respect to option grants made pursuant to the
Plan.
III. ELIGIBILITY
A. The individuals eligible to receive option grants under the
Plan shall be limited to (i) those individuals who are first elected or
appointed as non-employee Board members on or after the Plan Effective Date,
whether through appointment by the Board or election by the Corporation's
stockholders, and (ii) those individuals who continue to serve as
non-employee Board members at one or more Annual Stockholders Meetings
beginning with the 1997 Annual Meeting. A non-employee Board member who has
previously been in the employ of the Corporation (or any of its parent or
subsidiary corporations) shall not be eligible to receive an option grant
under the Plan at the time he or she first becomes a non-employee Board
member, but shall be eligible to receive periodic option grants over his or
her continued service as a non-employee Board member.
<PAGE>
IV. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares
repurchased by the Corporation on the open market. The maximum number of
shares of Common Stock which may be issued over the term of the Plan shall
not exceed 150,000 shares.
B. Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent the options
expire or terminate for any reason prior to exercise in full. Unvested
shares issued under the Plan and subsequently repurchased by the Corporation
at the original exercise price paid per share pursuant to the Corporation's
repurchase rights under the Plan shall be added back to the number of shares
of Common Stock reserved for issuance under the Plan and shall accordingly be
available for reissuance through one or more subsequent option grants under
the Plan. However, should the exercise price of an option under the Plan be
paid with shares of Common Stock, then the number of shares of Common Stock
available for issuance under the Plan shall be reduced by the gross number of
shares for which the option is exercised, and not by the net number of shares
of Common Stock issued to the holder of such option.
C. Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as
a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of
securities for which option grants are to be subsequently made to
newly-elected or continuing non-employee Board members and (iii) the number
and/or class of securities and the exercise price per share in effect under
each outstanding option in order to prevent the dilution or enlargement of
benefits thereunder.
2.
<PAGE>
ARTICLE TWO
OPTION GRANT PROGRAM
I. OPTION TERMS
A. GRANT DATES. Option grants shall be made on the dates
specified below:
1. Each Eligible Director who is first elected or appointed
as a non-employee Board member on or after the Plan Effective Date shall
automatically be granted, on the Plan Effective Date or on the date of such
initial election or appointment (as the case may be), a Non-Statutory Option
to purchase 10,000 shares of Common Stock.
2. On the date of each Annual Stockholders Meeting,
beginning with the 1997 Annual Meeting, each individual who is to continue to
serve as an Eligible Director after such meeting shall automatically be
granted, whether or not such individual is standing for re-election as a
Board member at that Annual Meeting, a Non-Statutory Option to purchase 2,000
shares of Common Stock, provided such individual has served as a non-employee
Board member for at least ninety (90) days. There shall be no limit on the
number of such 2,000-share option grants any one Eligible Director may
receive over his or her period of Board service.
Stockholder approval of the Plan shall constitute pre-approval
of each option granted pursuant to the express terms of the Plan and the
subsequent exercise of that option in accordance with such terms.
B. EXERCISE PRICE.
1. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on
the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the forms
specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date, or
(iii) to the extent the option is exercised for vested
shares,
3.
<PAGE>
through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions to (a) a
Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment taxes required
to be withheld by the Corporation by reason of such exercise and (b) the
Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made
on the Exercise Date.
C. OPTION TERM. Each option shall have a term of ten (10) years
measured from the option grant date.
D. EXERCISE AND VESTING. Each initial 10,000-share option grant
shall be immediately exercisable for any or all of those option shares.
However, any shares purchased under such option shall be subject to
repurchase by the Corporation, at the exercise price paid per share, upon the
Optionee's cessation of Board service prior to vesting in those shares. The
shares subject to each initial 10,000-share grant shall vest, and the
Corporation's repurchase right shall lapse, upon the Optionee's completion of
six (6) months of Board service measured from the option grant date. Each
annual 2,000-share grant shall be immediately exercisable for fully-vested
shares upon grant.
E. EFFECT OF TERMINATION OF BOARD SERVICE. The following
provisions shall govern the exercise of any options held by the Optionee at
the time the Optionee ceases to serve as a Board member:
(i) The Optionee (or, in the event of Optionee's
death, the personal representative of the Optionee's estate or the
person or persons to whom the option is transferred pursuant to the
Optionee's will or in accordance with the laws of descent and
distribution) shall have a twelve (12)-month period following the date
of such cessation of Board service in which to exercise each such
option.
(ii) During the twelve (12)-month exercise period, the
option may not be exercised in the aggregate for more than the number
of vested shares for which the option is exercisable at the time of
the Optionee's cessation of Board service.
(iii) Should the Optionee cease to serve as a Board
4.
<PAGE>
member by reason of death or Permanent Disability, then all shares at
the time subject to the option shall immediately vest so that such
option may, during the twelve (12)-month exercise period following
such cessation of Board service, be exercised for all or any portion
of such shares as fully-vested shares.
(iv) In no event shall the option remain exercisable
after the expiration of the option term. Upon the expiration of the
twelve (12)-month exercise period or (if earlier) upon the expiration
of the option term, the option shall terminate and cease to be
outstanding for any vested shares for which the option has not been
exercised. However, the option shall, immediately upon the Optionee's
cessation of Board service, terminate and cease to be outstanding, to
the extent it is not exercisable for vested shares on the date of such
cessation of Board service.
F. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until
such person shall have exercised the option, paid the exercise price and
become a holder of record of the purchased shares.
G. LIMITED TRANSFERABILITY OF OPTIONS. The option may be
transferred or assigned by the Optionee, in connection with the Optionee's
estate plan, to one or more members of the Optionee's immediate family or to
a trust established exclusively for one or more such family members. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for
the option immediately prior to such assignment. Should the Optionee die
while holding the option, then the option shall be transferred in accordance
with the Optionee's will or the laws of decent and distribution.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the specified effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock
at the time subject to such option and may be exercised for all or any
portion of such shares as fully-vested shares of Common Stock. Immediately
following the consummation of the Corporate Transaction, each option shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).
B. In connection with any Change in Control, the shares of Common
Stock at the time subject to each outstanding option but not otherwise vested
shall automatically vest in full so that each such option shall, immediately
prior to the effective date of the Change in Control, become fully
exercisable for all of the shares of Common Stock at the time subject to such
option and may be exercised for all or any portion of such shares as
fully-vested shares of Common Stock.
5.
<PAGE>
Each such option shall remain exercisable for such fully-vested option shares
until the expiration or sooner termination of the option term.
C. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the exercise price
payable per share under each outstanding option, PROVIDED the aggregate
exercise price payable for such securities shall remain the same.
D. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
6.
<PAGE>
ARTICLE THREE
MISCELLANEOUS
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective immediately on the Plan
Effective Date, and options may be granted under the Plan from and after such
date.
B. On February 18, 1998, the Board approved an amendment to
increase the maximum number of shares of Common Stock reserved for issuance
under the Plan by 100,000 shares to 150,000 shares, subject to stockholder
approval at the 1998 Annual Meeting.
C. The Plan shall terminate upon the EARLIEST of (i) March 31,
2007, (ii) the date on which all shares available for issuance under the Plan
shall have been issued as vested shares or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. Upon such
Plan termination, all option grants and unvested stock issuances outstanding
on such date shall thereafter continue to have force and effect in accordance
with the provisions of the documents evidencing such grants or issuances.
IV. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment
or modification shall adversely affect the rights and obligations with
respect to any option at the time outstanding under the Plan unless the
Optionee consents to such amendment or modification. In addition, certain
amendments may require stockholder approval pursuant to applicable laws or
regulations.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option
under the Plan and the issuance of any shares of Common Stock upon the
exercise of any option shall be subject to the Corporation's procurement of
all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it and the shares of
Common Stock issued pursuant to it.
7.
<PAGE>
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance
with all applicable requirements of Federal and state securities laws,
including the filing and effectiveness of the Form S-8 registration statement
for the shares of Common Stock issuable under the Plan, and all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then listed for trading.
VII. NO IMPAIRMENT OF RIGHTS
Nothing in the Plan shall interfere with or otherwise restrict in
any way the rights of the Corporation and the Corporation's stockholders to
remove the Optionee from the Board at any time in accordance with the
provisions of applicable law.
8.
<PAGE>
APPENDIX
The following definitions shall be in effect under the Plan:
A. BOARD shall mean the Corporation's Board of Directors.
B. CHANGE IN CONTROL shall mean a change in ownership or control of
the Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly by any person
or related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation), of beneficial ownership (within
the meaning of Rule 13d-3 of the 1934 Act) of securities possessing
seventy-five percent (75%) or more of the total combined voting power
of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders, or
(ii) a change in the composition of the Board over a period
of thirty-six (36) consecutive months or less such that a majority of
the Board members ceases, by reason of one or more contested elections
for Board membership, to be comprised of individuals who either (A)
have been Board members continuously since the beginning of such
period or (B) have been elected or nominated for election as Board
members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such
election or nomination was approved by the Board.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing seventy-five percent (75%) or more of the total combined
voting power of the Corporation's outstanding securities are
transferred to a person or persons different from the persons holding
those securities immediately prior to such transaction; or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation
or dissolution of the Corporation.
A-1.
<PAGE>
F. CORPORATION shall mean View Tech, Inc., a Delaware corporation.
G. ELIGIBLE DIRECTOR shall mean a non-employee Board member eligible
to participate in the Plan.
H. EXERCISE DATE shall mean the date on which the Corporation shall
have received written notice of the option exercise.
I. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If
there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange which serves as the primary market for the Common Stock, as
such price is officially quoted in the composite tape of transactions
on such exchange. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such
quotation exists.
J. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
K. NON-STATUTORY OPTION shall mean an option not intended to satisfy
the requirements of Code Section 422.
L. OPTIONEE shall mean any person to whom an option is granted under
the Plan.
M. PERMANENT DISABILITY shall mean the inability of the Optionee to
perform his or her usual duties as a Board member by reason of any medically
determinable physical or mental impairment expected to result in death or to
be of continuous duration of twelve (12) months or more.
N. PLAN shall mean the Corporation's 1997 Non-Employee Directors Stock
Option Plan, as set forth in this document.
A-2.
<PAGE>
O. PLAN EFFECTIVE DATE shall mean the date of the 1997 Annual
Stockholders Meeting, provided the stockholders approve the Plan at such
Annual Meeting.
P. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.
A-3.
<PAGE>
VIEW TECH, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 3, 1998
The undersigned shareholder of View Tech, Inc., a Delaware corporation
("VIEW TECH"), hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and the Proxy Statement, each dated April 30, 1998, the undersigned
revokes all other proxies and appoints Paul C. O'Brien, William J. Shea and
David Kaplan, and each of them, the attorney's and proxies for the undersigned,
each with the power of substitution, to attend and act for the undersigned at
View Tech's Annual Meeting of Shareholders to be held at the Company's corporate
office at 3760 Calle Tecate, Suite A, Camarillo, California 93012, on June 3,
1998, at 10:00 a.m., and at any and all adjournments thereof in connection
therewith to vote and represent all of the shares of View Tech Common Stock
which the undersigned would be entitled to vote, as follows:
<TABLE>
<S> <C>
1. Proposal to elect two (2) Class II Directors to the Board of Directors.
Management's nominees for election at the Annual Meeting as Class II
directors are David F. Millet and William J. Shea. If elected, the
nominees will serve as directors until the Company's annual meeting of
stockholders in the year 2001, and until their successors are elected and
qualified:
</TABLE>
<TABLE>
<S> <C> <C> <C>
FOR all nominees listed below WITHHOLD AUTHORITY
(WITH VOTES CAST EQUALLY AMONG TO VOTE FOR ALL
NOMINEES EXCEPT AS MARKED TO NOMINEES LISTED
THE CONTRARY BELOW) / / BELOW / /
TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A LINE THROUGH
THE NOMINEE'S NAME BELOW:
David F. Millet and William J. Shea.
2. Proposal to approve amendments to the 1997 Non-Employee Directors Stock
Option Plan to (i) increase the shares of Common Stock of the Company
reserved for issuance over the term of the plan from 50,000 to 150,000
shares:
/ / FOR / / AGAINST / / ABSTAIN
3. To ratify the selection of Arthur Andersen LLP as the Company's
independent accountants for the year ending December 31, 1998:
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
</TABLE>
(CONTINUED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM REVERSE SIDE)
Each of the above-named proxies present at said meeting, either in person or
by substitute, shall have and exercise all the powers of said proxies hereunder.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE CHOICES HEREON, THIS PROXY WILL
BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR THE ELECTION OF THREE CLASS THREE
DIRECTORS TO THE BOARD OF DIRECTORS, FOR THE APPROVAL OF THE AMENDMENTS TO THE
1997 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN AND FOR THE RATIFICATION OF THE
ELECTION OF ARTHUR ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS.
Dated this ____ day of _______ , 1998
______________________________________
Signature of Shareholder
______________________________________
Signature of Shareholder
Please sign exactly as your name or
names appear hereon. When signing as
attorney, executor, administrator,
trustee or guardian, holder should
sign.
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE POSTAGE PREPAID ENVELOPE
PROVIDED.
