ENCORE COMPUTER CORPORATION
6901 West Sunrise Boulevard
Fort Lauderdale, Florida 33313-4499
Notice of Annual Meeting of Stockholders
To Be Held on June 26, 1997
The Annual Meeting of Stockholders of Encore Computer Corporation (the
"Company") will be held at Encore Computer Corporation, Building No. 7
Auditorium, 1800 NW. 69th Avenue, Fort Lauderdale, Florida on
Thursday, June 26, 1997, at 1:00 p.m. (local time) to consider and act
on the following matters.
1.To fix the number of directors at four (4) and to elect four (4)
directors to hold office for the ensuing year. See pages 4 through
7 of the Proxy Statement.
2.To amend the Company's Certificate of Incorporation to increase the
number of shares of authorized Common Stock to 300,000,000 shares
from the current authorization of 200,000,000 shares. See pages 17
through 18 of the Proxy Statement.
3.To approve the selection by the Board of Directors of Coopers &
Lybrand L.L.P. as the Company's independent auditors for the fiscal
year ending December 31, 1997. See page 19 of the Proxy Statement.
4.To transact such other business as may properly come before the
meeting or any adjournment or postponements of the meeting.
Stockholders of record at the close of business on May 2, 1997 will be
entitled to notice of, and to vote at, the meeting. The stock transfer
books of the Company will remain open. All shareholders are cordially
invited to attend the meeting.
By order of the Board of Directors
Edward J. Baker, Secretary
May 15, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE IN ORDER TO ASSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE
NEED BE AFFIXED IF MAILED IN THE UNITED STATES.
ENCORE COMPUTER CORPORATION
6901 West Sunrise Boulevard
Fort Lauderdale, Florida 33313-4499
Proxy Statement for Annual Meeting of Stockholders
June 26, 1997
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of Encore Computer Corporation
(the "Company") for use at the Annual Meeting of Stockholders to be
held on June 26, 1997, at 1:00 p.m. (local time) and at any
adjournment or postponement of that meeting. All proxies will be voted
in accordance with the instructions contained in the proxy, and if no
choice is specified, the proxies will be voted in favor of the
proposals set forth in the Notice of Meeting. Any proxy may be revoked
by a shareholder at any time before it is exercised by filing a later
dated proxy or a written notice of revocation with Edward J. Baker,
Secretary of the Company, or by voting in person at the meeting.
The Board of Directors has fixed May 2, 1997 as the record date for
determination of shareholders entitled to vote at the Annual Meeting.
At the close of business on May 2, 1997, there were outstanding and
entitled to vote 37,308,306 shares, $0.01 par value, of the Company's
Common Stock. Each share of Common Stock is entitled to one vote.
The election of two of the four directors at the meeting shall be
determined by a plurality of the votes cast in person or by proxy at
the meeting by the holders of the Common Stock. With respect to the
election of those two directors, the 3,935,900 outstanding shares of
Common Stock held by Gould Electronics Inc. ("Gould") will be voted
pro rata in accordance with the votes of the other holders of Common
Stock, as provided by a shareholders agreement among Gould, the
Company and Kenneth G. Fisher, the Company's Chairman. The holders of
the Company's Series A Convertible Participating Preferred Stock (the
"Series A Stock"), voting as a separate class, are entitled to elect
the other two directors. Gould holds all the outstanding shares of
Series A Stock and has indicated it will elect Mr. Ferguson and Dr.
Fedor (see "Election of Directors"). With respect to each other
matter to be submitted to the shareholders at the Annual Meeting, the
affirmative vote of the holders of a majority of the Common Stock
present or represented at the meeting and voting on such matter is
required for approval. Broker non-votes (a broker holding shares in
"street name" which has no authority to vote on a particular matter)
and abstentions on any matter are not included in the number of shares
voted on that matter. An automated system administered by the
Company's transfer agent tabulates the votes.
The Company's Annual Report for the year ended December 31, 1996 is
being mailed to shareholders at the same time as this Proxy Statement.
The date of mailing of this Proxy Statement and related proxy is
expected to be on or about May 15, 1997.
PRINCIPAL STOCKHOLDERS
The following table sets forth, to the knowledge of the Company, the
beneficial owners of 5% or more of the Company's outstanding Common
Stock and equivalents as of March 31, 1997:
Percentage of
Shares Common Stock Percentage of
Name and Address Beneficially and Equivalents Common Stock
of Beneficial Owner Owned Outstanding(1) Outstanding
Gould Electronics Inc.(2)(5) 135,189,230 64.5% 8.8%
35129 Curtis Boulevard
Eastlake, OH 44095
EFI International Inc.(3) 32,369,353 15.5% 0.0%
12 East 49th Street, Suite 1710
N.Y., N.Y 10017
Japan Energy Corporation (2)(3) 167,558,583 80.0% 8.8%
10-1, Toranomon 2-chome, (5)(6)
Minato-ko, Tokyo, Japan
Kenneth G. Fisher(4) 7,306,652 3.5% 13.8%
6901 West Sunrise Blvd.
Fort Lauderdale, FL 33313-4499
(1)For purposes of computing the percentage of Common Stock and
equivalents outstanding, the 7,364,100 shares of Common Stock
issuable upon conversion of the outstanding shares of Series A
Stock, the 23,798,000 shares of Common Stock issuable upon
conversion of the outstanding shares of Series B Convertible
Preferred Stock ("Series B Stock"), the 36,415,230 shares of
Common Stock issuable upon conversion of the outstanding shares
of Series D Convertible Preferred Stock ("Series D Stock"), the
37,222,184 shares of Common Stock issuable upon conversion of the
outstanding shares of Series E Convertible Preferred Stock
("Series E Stock"), the 17,417,138 shares of Common Stock
issuable upon conversion of the outstanding shares of Series F
Convertible Preferred Stock ("Series F Stock"), the 18,689,385
shares of Common Stock issuable upon conversion of the
outstanding shares of Series G Convertible Preferred Stock
("Series G Stock"), the 11,430,000 shares of Common Stock
issuable upon conversion of the outstanding shares of Series H
Convertible Preferred Stock ("Series H Stock") and the 12,400,000
shares of Common Stock issuable upon conversion of the
outstanding shares of Series I Convertible Preferred Stock
("Series I Stock") have been included as well as the 7,430,980
shares issuable upon exercise of options exercisable within 60
days after March 31, 1997.
(2)Includes 131,253,330 shares of Common Stock issuable upon
conversion of the shares of Series A Stock, Series B Stock,
Series D Stock, Series E Stock, Series F Stock, Series G Stock,
Series H Stock and Series I Stock held by Gould. The Series D,
Series E, Series F, Series G, Series H and Series I Stock is
convertible only by a United States citizen or a corporation or
other entity owned in the majority by a United States shareholder
or in connection with an underwritten public offering. Gould is
a wholly owned subsidiary of Japan Energy Corporation ("Japan
Energy") which is a Japanese corporation.
(3)Consists of Common Stock issuable upon conversion of Series D Stock
held by EFI International Inc. ("EFI"). Conversion of the Series
D Stock is restricted as described in (2) above. EFI is a wholly
owned subsidiary of Japan Energy.
(4)Includes: (i) 53,764 shares owned by Mr. Fisher's wife, (ii)
2,238,400 shares which may be acquired by Mr. Fisher within 60
days after March 31, 1997 by exercise of stock options and (iii)
3,901,134 shares of Common Stock and 1,113,354 shares of Common
Stock issuable upon conversion of the shares of Series B Stock
each held by Indian Creek Capital, Ltd., a limited partnership of
which Mr. Fisher is the managing general partner.
(5)Gould as the sole holder of the Series A Stock is entitled to elect
two directors to the Board of Directors. The remaining three
directors are elected by the holders of Common Stock. With
respect to the election of those three directors, the 3,935,900
outstanding shares of Common Stock held by Gould will be voted
pro rata in accordance with the votes of the other holders of
Common Stock as provided by a shareholders agreement among Gould,
the Company and Mr. Fisher.
(6) Japan Energy may be deemed to be the beneficial owner of the
shares owned by Gould and EFI.
ELECTION OF DIRECTORS
The persons named in the proxy will vote, as permitted by the By-Laws
of the Company, to fix the number of directors at four and to elect as
directors Messrs. Fisher and Thomas unless authority to vote for the
election of directors is withheld by marking the proxy to that effect
or unless the proxy is marked with the names of directors as to whom
authority to vote is withheld. The proxy may not be voted for more
than two directors. Mr. Ferguson and Dr. Fedor, the other two
nominees named below, are expected to be elected by Gould as the
holder of all the outstanding Series A Stock pursuant to the terms of
the Series A Stock.
Each director will be elected to hold office until the next annual
meeting of shareholders and until his successor is elected and
qualified. If one of the two nominees to be elected by the holders of
Common Stock becomes unavailable, the person acting under the proxy
may vote the proxy for the election of a substitute. It is not
presently contemplated that any of the nominees will be unavailable.
Mr. Daniel O. Anderson had been a member of the Board of Directors
since May 1987. During the fiscal year ended December 31, 1996, Mr.
Anderson was a member of the Audit Committee and Chairman of the
Compensation Committee. Effective April 25, 1997, Mr. Anderson
resigned as a member of the Board of Directors.
The following table sets forth the name of each nominee and the
positions and offices held by him, his age, the year in which he
became a director of the Company, his principal occupation and
business experience for at least the last five years, the names of
other publicly-held companies in which he serves as a director, the
number of shares of Common Stock and equivalents of the Company,
including shares which may be acquired within sixty days after March
31, 1997 by exercise of outstanding stock options, which he reported
were beneficially owned by him as of March 31, 1997, and the
percentage of all outstanding shares of Common Stock and equivalents
owned by him on such date.
Common Stock Percentage of
Name, Age, Principal and Equivalents Common Stock
Occupation, Business Beneficially and Equivalents
Experience and Directorships Owned Outstanding(1)
Kenneth G. Fisher, age 66 7,306,652(2) 3.5%(2)
Mr. Fisher is a founder of the Company and has served as a Director,
Chairman and Chief Executive Officer of the Company since the
Company's inception in May 1983. He was the Company's President from
its inception until December 1985 and also served in that capacity
from December 1987 to January 1991. From January 1982 until May 1983,
Mr. Fisher was engaged in private venture transactions. From 1975 to
1981, Mr. Fisher was President and Chief Executive Officer of
Computervision (formerly Prime Computer, Inc.). Before joining
Computervision, Mr. Fisher was Vice President of Central Operations
for Honeywell Information Systems, Inc.
Rowland H. Thomas, Jr., age 61 1,714,600(3) .8%(3)
Mr. Thomas has been a member of the Board of Directors since December
1987 and Chief Operating Officer since June 1989. He presently also
serves as President of the Company, a position to which he was
appointed in January 1991. From June 1989 to January 1991, Mr. Thomas
served as Executive Vice President of the Company. In February 1988,
he was named President and Chief Executive Officer of Netlink Inc.
Prior to joining Netlink, Mr. Thomas was Senior Executive Vice
President of National Data Corporation ("NDC"), a transaction
processing company, a position he held from June 1985 to February
1988. From May 1983 through June 1985, Mr. Thomas was Executive Vice
President and Senior Vice President at NDC.
Robert J. Fedor, age 56 0(4) *(4)
Dr. Fedor has been a member of the Board of Directors since July 1992.
He is presently Senior Vice President Corporate Development at Gould,
a position he has held since July 1992. From December 1989 to July
1992 he was Vice President, Corporate Business Development at Gould.
Prior to assuming that position, Dr. Fedor was General Manager of
Gould's U.S. and Far East Foil Business since 1985. Since joining
Gould in 1964, he has served in various senior marketing and research
positions. Dr. Fedor holds a Ph.D. in Metallurgical Engineering from
Case Western Reserve University.
C. David Ferguson, age 55 12,304(4) *(4)
Mr. Ferguson has been a member of the Board of Directors since April
1989. He is presently the President and Chief Executive Officer and a
director of Gould, a position he has held since October 1988. Prior to
such time, he served as Executive Vice President, Materials and
Components, at Gould's Foil Division from 1986 until October 1988. He
transferred to the Foil Division in 1967 from the Gould Engine Parts
Division where he began his career in 1963.
______________
*Less than 0.1%.
(1)For purposes of computing the percentage of Common Stock and
equivalents outstanding, the 7,364,100 shares of Common Stock
issuable upon conversion of the outstanding shares of Series A
Stock, the 23,798,000 shares of Common Stock issuable upon
conversion of the outstanding shares of Series B Convertible
Preferred Stock ("Series B Stock"), the 36,415,230 shares of
Common Stock issuable upon conversion of the outstanding shares
of Series D Convertible Preferred Stock ("Series D Stock"), the
37,222,184 shares of Common Stock issuable upon conversion of the
outstanding shares of Series E Convertible Preferred Stock
("Series E Stock"), the 17,417,138 shares of Common Stock
issuable upon conversion of the outstanding shares of Series F
Convertible Preferred Stock ("Series F Stock"), the 18,689,385
shares of Common Stock issuable upon conversion of the
outstanding shares of Series G Convertible Preferred Stock
("Series G Stock"), the 11,430,000 shares of Common Stock
issuable upon conversion of the outstanding shares of Series H
Convertible Preferred Stock ("Series H Stock") and the 12,400,000
shares of Common Stock issuable upon conversion of the
outstanding shares of Series I Convertible Preferred Stock
("Series I Stock") have been included as well as the 7,430,980
shares issuable upon exercise of options exercisable within 60
days after March 31, 1997.
(2) Includes: (i) 53,764 shares owned by Mr. Fisher's wife, (ii)
2,238,400 shares which may be acquired by Mr. Fisher within 60
days after March 31, 1997 by exercise of stock options and (iii)
3,901,134 shares of Common Stock and 1,113,354 shares of Common
Stock issuable upon conversion of the shares of Series B Stock
each held by Indian Creek Capital, Ltd., a limited partnership of
which Mr. Fisher is the managing general partner.
(3) Includes 500 shares owned by Mr. Thomas' wife and 1,619,850
shares which may be acquired by Mr. Thomas within 60 days after
March 31, 1997, by exercise of stock options.
(4) Mr. Ferguson is an officer and a director, and Dr. Fedor is an
officer, of Gould which beneficially owns 135,189,230 shares or
64.5% of the Company's outstanding Common Stock and equivalents.
During the fiscal year ended December 31, 1996, the Board of Directors
held four meetings. All Directors attended 100% of the meetings of the
Board of Directors and the committees of which they were members.
The Board of Directors has a standing Audit Committee, the membership
of which in 1996 consisted of Mr. Anderson and Dr. Fedor. The
principal functions of the Audit Committee are to make recommendations
to the Board of Directors as to the selection of the Company's
independent auditors, to act as liaison between the Board of Directors
and the firm so selected and, on advice of such firm or otherwise, to
recommend institution or modification of accounting procedures
employed by the Company. The members of the Audit Committee are not
employees of the Company and are, in the opinion of the Board of
Directors, free from any relationship that would interfere with their
exercise of independent judgment as Audit Committee members. The Audit
Committee met on January 15, 1997 in connection with the Company's
audit for the fiscal year ended December 31, 1996. During the fiscal
year ended December 31, 1996, the Audit Committee held four meetings.
The Board of Directors also has a Compensation Committee, which in
1996 consisted of Messrs. Fisher, Anderson and Ferguson. The principal
responsibilities of the Compensation Committee are to (i) function as
a stock option committee with respect to the Company's stock option
and stock purchase plans, except for the granting of options to
officers who are also Directors, which is administered by the
Directors Options Committee (consisting of Messrs. Anderson and
Ferguson), and (ii) make recommendations with respect to
implementation of present compensation programs and adoption of future
compensation programs.
The Board of Directors does not have a Nominating Committee.
Compensation Committee Interlocks and Insider Participation
As discussed above, Mr. Fisher, Mr. Anderson and Mr. Ferguson served
as members of the Compensation Committee during 1996. Mr. Fisher, in
addition to his position as Chairman of the Board, is the Company's
Chief Executive Officer. Mr. Ferguson, in addition to being a
director of the Company, is a director and President and Chief
Executive Officer of Gould, the beneficial owner of 64.5% of the
Company's Common Stock and equivalents. As described in more detail
under the caption of "Certain Relationships and Related Transactions",
since 1989 Gould has provided the Company with its line of credit and
at times has entered into exchanges of indebtedness owed to it by the
Company for various series of the Company's Preferred Stock.
EXECUTIVE COMPENSATION
Total compensation paid or accrued for services rendered during the
three most recent fiscal years for the Chief Executive Officer and the
four other most highly compensated executive officers of the Company
for the year ended December 31, 1996 was as follows:
Summary Compensation Table
Annual Compensation Long
Term
Compensation
Awards
Other Number of All
Annual Shares Other
Name and Compen- Underlying Compen-
Principal Position Year Salary Bonus sation(1) Options(3) sation(2)
Kenneth G. Fisher 1996 $340,000 $ 0 $ 0 952,200 $ 0
Chairman of the 1995 340,000 0 0 196,900 0
Board and Chief 1994 340,001 0 0 103,300 1,234
Executive Officer
Rowland H. Thomas 1996 $265,000 $ 26,095 $ 0 302,800 $ 0
President and 1995 265,000 26,850 0 113,600 0
Chief Operating 1994 264,617 36,833 0 59,600 728
Officer
Robert A. DiNanno 1996 $187,500 $25,835 $ 0 75,800 $ 0
Vice President and 1995 175,000 25,075 0 46,300 0
General Manager, 1994 175,000 39,644 0 20,000 676
Global Customer
Operations
Charles S. Namias 1996 $151,107 $19,830 $2,000 39,800 $ 0
Vice President, 1995 150,000 19,825 4,800 46,300 0
Corporate Alliances1994 136,154 70,844 4,800 105,000 608
Ziya Aral 1996 $150,000 $19,830 $ 0 35,800 $80,000
Vice President, 1995 150,000 19,700 0 46,300 0
Chief 1994 149,229 35,145 0 290,000 0
Technical Officer
(1) Amounts paid to Mr. Namias consist entirely of an allowance for
business-related automobile expenses.
(2) All Other Compensation for 1994 consists of earnings associated
with the individual's participation in a company-paid sales award
trip. Mr. Aral received an $80,000 loan from the Company on September
23, 1996. The note carries an annual interest rate of 6% and is due
and payable on September 22, 1999.
(3) Includes 800,000 shares for Mr. Fisher, 215,000 shares for Mr.
Thomas, 40,000 shares for Mr. DiNanno and 4,000 shares for Mr. Namias
which were originally granted in 1991 and were scheduled to expire in
1996 if not exercised. However, at the time the options were
scheduled to expire the Company's policy on insider trading
effectively prevented each from exercising their options.
Accordingly, the Board of Directors approved an extension of the
expiration date to year 2000. The extensions has been treated as a
cancellation of the old options and a grant of new options in the same
amount at the same exercise price.
The following table sets forth the number of shares of Common Stock
and equivalents of the Company, including shares which may be acquired
within sixty days after March 31, 1997 by exercise of outstanding
stock options, which are beneficially owned by executive officers of
the Company named in the Summary Compensation Table and all directors
and executive officers of the Company as a group as of March 31, 1997
along with the percentage of all outstanding shares of Common Stock
and equivalents owned by each executive officer and director on such
date.
Common Stock Percentage of
and Equivalents Common Stock
Beneficially and Equivalents
Name Owned Outstanding(1)
Kenneth G. Fisher 7,306,652(2) 3.5%
Chairman of the Board and
Chief Executive Officer
Rowland H. Thomas 1,714,600(3) .8%
President and
Chief Operating Officer
Robert A. DiNanno 390,652(4) .2%
Vice President and General Manager
Global Customer Operations
Charles S. Namias 328,733(5) .2%
Vice President
Corporate Alliances
Ziya Aral 475,606(6) .2%
Vice President and
Chief Technical Officer
Total directors and executive officers as
a group (9 people) 11,318,623(7) 5.4%
(1)For purposes of computing the percentage of Common Stock and
equivalents outstanding, the 7,364,100 shares of Common Stock
issuable upon conversion of the outstanding shares of Series A
Stock, the 23,798,000 shares of Common Stock issuable upon
conversion of the outstanding shares of Series B Convertible
Preferred Stock ("Series B Stock"), the 36,415,230 shares of
Common Stock issuable upon conversion of the outstanding shares of
Series D Convertible Preferred Stock ("Series D Stock"), the
37,222,184 shares of Common Stock issuable upon conversion of the
outstanding shares of Series E Convertible Preferred Stock
("Series E Stock"), the 17,417,138 shares of Common Stock issuable
upon conversion of the outstanding shares of Series F Convertible
Preferred Stock ("Series F Stock"), the 18,689,385 shares of
Common Stock issuable upon conversion of the outstanding shares of
Series G Convertible Preferred Stock ("Series G Stock"), the
11,430,000 shares of Common Stock issuable upon conversion of the
outstanding shares of Series H Convertible Preferred Stock
("Series H Stock") and the 12,400,000 shares of Common Stock
issuable upon conversion of the outstanding shares of Series I
Convertible Preferred Stock ("Series I Stock") have been included
as well as the 7,430,980 shares issuable upon exercise of options
exercisable within 60 days after March 31, 1997.
(2)Includes: (i) 53,764 shares owned by Mr. Fisher's wife, (ii)
2,238,400 shares which may be acquired by Mr. Fisher within 60
days after March 31, 1997 by exercise of stock options and (iii)
3,901,134 shares of Common Stock and 1,113,354 shares of Common
Stock issuable upon conversion of the shares of Series B Stock
each held by Indian Creek Capital, Ltd., a limited partnership of
which Mr. Fisher is the managing general partner.
(3)Includes 500 shares owned by Mr. Thomas' wife and 1,619,850 shares
which may be acquired by Mr. Thomas within 60 days after March 31,
1997, by exercise of stock options.
(4)Includes 388,062 shares which may be acquired within 60 days after
March 31, 1997, by exercise of stock options.
(5)Includes 251,987 shares which may be acquired within 60 days after
March 31, 1997, by exercise of stock options.
(6)Includes 437,362 shares which may be acquired within 60 days after
March 31, 1997, by exercise of stock options.
(7)Includes 5,994,034 shares which may be acquired within 60 days
after March 31, 1997, by exercise of stock options and 1,113,354
shares of Common Stock issuable upon conversion of the shares of
Series B Stock held beneficially by Mr. Fisher.
The following table shows, as to those executive officers named in the
Summary Compensation Table above, the number, exercise price and
expiration date of options to acquire Common Stock granted under the
Company's Long-Term Performance Plan during fiscal 1996, and the
potential realizable value of those shares assuming certain annual
rates of appreciation in the price of the Company's stock.
Option Grants for the year ended December 31, 1996
Potential realizable
Individual Grants values at assumed annual
Number % of Total rates of stock price
of Shares Options appreciation for the
Underlying Granted option term
Options in fiscal Exercise Expiration
Name Granted Year price/share Date 5% 10%
Kenneth G. Fisher 152,200 8.5% $2.8750 6/24/2006 $275,191 $697,363
800,000 44.8% 2.0000 1/21/2000 344,800 742,560
Rowland H. Thomas 87,800 4.9% 2.8750 6/24/2006 158,750 402,290
215,000 12.0% .8125 1/21/2000 37,645 81,072
Robert A. DiNanno 35,800 2.0% 2.8750 6/24/2006 64,730 164,032
40,000 2.2% .8125 1/21/2000 7,004 15,083
Charles S. Namias 35,800 2.0% 2.8750 6/24/2006 64,730 164,032
4,000 .2% .8125 1/21/2000 700 1,508
Ziya Aral 35,800 2.0% 2.8750 6/24/2006 64,730 164,032
As required by the rules of the Securities and Exchange Commission,
potential values are stated based on the prescribed assumption that
the Common Stock of the Company will appreciate in value from the date
of grant to the end of the option term at rates (compounded annually)
of 5% and 10%, respectively, and therefore do not reflect past results
and are not intended to forecast possible future appreciation, if any,
in the price of the Common Stock.
<PAGE>
The following table provides information on option exercises in 1996
by the named executive officers and the value of such officers'
unexercised options as of December 31, 1996.
Aggregated Option Exercises in the year ended December 31, 1996
and Option Values as of December 31, 1996
Number of Value of
Shares Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Number of 12/31/96 12/31/96
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable
Kenneth G. Fisher 0 $ 0 2,213,788/ $325,000/
338,612 0
Rowland H. Thomas 0 0 1,619,850/ 405,625/
181,150 0
Robert A. DiNanno 229,790 466,611 388,062/ 113,300/
72,238 0
Charles S. Namias 12,000 21,000 235,737/ 32,750/
120,363 0
Ziya Aral 0 0 423,612/ 56,250/
193,488 0
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
ENCORE COMPUTER CORPORATION
Executive Compensation Philosophy
It is the goal of the Compensation Committee of the Board of Directors
to provide compensation to executives of the Company in accordance
with the following considerations:
To provide compensation that is competitive with other high
technology companies that are of similar size to Encore with
similar products and markets;
To provide compensation that will attract, retain and reward
superior, industry-knowledgeable executives who can manage the
shareholders' short and long-term interest; and
To provide total compensation wherein the majority of value to be
delivered is based on the financial performance of the Company and
the appreciation of the Company's stock.
To meet these goals, the Committee establishes, administers and
reviews several programs for the Company. These programs are designed
to address the above considerations and consist of three major
components.
Base Salary
For executives of the Company, base salary is determined by the level
of job responsibility and overall competitive practices in the labor
market for the Company's executive talent. The Committee recognizes
that there is a scarcity of executive talent with the technical
capabilities that are critical to the Company's long-term success.
The Committee also considers the Company's location outside of
traditional labor markets for technical talent to be a considerable
factor for base salary positioning. As such, the Committee positions
the Company's executives' base salaries at the 75th percentile of the
competitive market and generally believes that this base salary
posture is an essential factor in maintaining a highly skilled
executive team. The Committee derives competitive data representing
the high technology and computer products sectors from an independent
compensation consultant, Towers Perrin. The Committee believes that
most of the companies in the S & P Computer Systems Index, which is
used as the Company's industry comparison line in the performance
graph appearing below, are represented in the various surveys used by
the compensation consultant.
1996 executive base salaries were below the above policy. None of the
named executives' base salaries or incentive bonus targets were
increased in 1996, with the exception of R. DiNanno. Mr. DiNanno's
base salary and bonus were increased in conjunction with a significant
increase in his responsibilities.
Annual Incentives
All executive officers are eligible to receive incentives which are
based on the short-term performance of the Company. The program is
intended to highlight critical business goals and reward the
achievement of these goals through individual and team contributions.
Target incentive opportunities typically range from 15% to 45% of
executives' base salaries and are based on median bonus levels
observed in other high technology and computer-related companies.
Target award levels are structured so that at those levels,
executives' total cash compensation (base salary plus annual
incentive) would be comparable to the 75th percentile total cash
compensation of the competitive market as discussed earlier.
The specific performance criteria used for incentive compensation
goals include the attainment of profit before tax objectives,
achievement of quarterly financial plans and subjective functional and
teamwork goals as determined by management. Functional goals include
activities aimed at achieving revenue, bookings, expenses, schedule
targets, etc. Teamwork goals include joint, cross-functional
activities and projects. The relative weighting of each factor
depends on the executive's position within the Company's
organizational structure. Typically, profit before tax objectives and
quarterly financial plan targets account for 60% to 100% of the named
executives' incentives; functional and teamwork goals account for 25%
to 40% of the total incentive. In 1996 the Company did not achieve
its profit before tax objective and therefore no incentive payments
were made that were based on the Company's profit performance.
Incentive payments that were made to certain named executives in 1996
reflect the attainment of individual functional and teamwork goals.
Long-Term Incentives
The Committee believes that stock-based incentives provide the
strongest link between the rewards earned by executives and the
returns generated for shareholders. The Committee also believes that
providing the potential for significant share ownership helps focus
executive behavior on the long-term growth and strength of the
organization. As such, the Committee has made significant stock
option grants throughout the Company to focus all recipients on long-
term growth and the enhancement of shareholder value. The Committee
has generally observed that stock option grants comprise a significant
portion of executive compensation in the high technology and computer-
related industries. Stock options represent the right to purchase the
Company's stock at the fair market value of the Company's stock on the
date of grant. Since the value ultimately realized from the option
depends entirely on the future success of the Company and the growth
of the stock price, an option serves to provide an incentive to the
executive for years after it has been awarded.
The Committee has adopted formal stock option grant guidelines which
will base annual option grants on the executive's base salary grade
and individual performance factors. This practice will ensure that
executives at similar organizational levels will have equal long-term
incentive opportunities while allowing the Committee some discretion
to augment awards as it feels appropriate to recognize significant
individual accomplishments. In 1996, the Board granted 347,400
options to the named executives in accord with the pre-established
guidelines.
The Committee feels that it is quite important that executives have a
significant personal investment in the Company. As such, the
Committee has also adopted formal stock ownership guidelines for the
CEO and other executive officers who report directly to the CEO. The
Committee believes that requiring executives to maintain a certain
ownership interest in the Company complements the existing long-term
incentive program in that once stock options are exercised, there is
an added emphasis on retaining exercised shares and further enhancing
shareholder value. The specific guidelines require that, by April,
1997, the CEO acquire and maintain ownership of Company stock with a
value equal to two times his current base salary; direct reports to
the CEO are required to acquire and maintain ownership of Company
stock with a value equal to at least one-half their current base
salaries. The Committee is pleased to report that at the end of 1996
the CEO had far exceeded his ownership requirement, and three of the
other named executives have met the requirement.
Compensation for Mr. Fisher
Mr. Fisher's base salary was not increased in 1996. Mr. Fisher's base
salary is positioned below the market average of other high technology
and computer-related companies of similar size to the Company. The
Committee intends to deliver most of Mr. Fisher's compensation in the
form of annual cash-based incentives and long-term stock-based
incentives that will deliver significant value to Mr. Fisher if, and
only if, the Company achieves positive returns and the stock price
appreciates over time.
To focus Mr. Fisher on the attainment of short-term financial results,
the Committee awards a bonus equal to 5% of the Company's profit
before taxes to Mr. Fisher as an incentive award on a quarterly basis.
This formula approach ensures shareholders that an incentive payment
will be made to Mr. Fisher only if the Company is profitable. In
addition, this approach provides a consistent incentive to maximize
profit each quarter. No incentive payments were made to Mr. Fisher in
1996.
The Committee granted 152,200 stock options to Mr. Fisher in 1996 in
accord with the Board's established annual guidelines. Mr. Fisher
continues to have a significant personal investment in the Company
and he is well motivated to increase the overall value of the Company
and to generate returns on behalf of all shareholders.
Other Compensation Matters
The Committee continues to evaluate the potential impact of the $1
million dollar deduction limitation on executive pay for the top five
executives which was implemented as part of the Omnibus Budget
Reconciliation Act of 1993. The 1995 Stock Option Plan, approved by
the shareholders at the 1995 annual meeting, is a performance-based
plan, and therefore, any gains on stock options will not be subject to
the $1 million dollar limit. The Committee believes this action
adequately protects the deduction for executive compensation at the
current time. The Committee will continue to evaluate the Company's
potential exposure to the deduction limitation on an annual basis.
In conclusion, the Committee feels that all pay programs are
reasonable and appropriate given the Company's industry, size and
organizational structure. Base salary and incentive programs provide
attractive features to attract, retain and motivate executives to
enhance the performance of the Company from year to year. The stock
option grants provide a significant incentive to executives to
undertake policies and actions to enhance the overall value of the
organization well into the future.
The Compensation Committee
of the Board of Directors
D.O. Anderson, Chairman
C.D. Ferguson
K.G. Fisher
Comparison of Five Year Cumulative Total Shareholder Return Among
Encore Computer Corporation, the NASDAQ Market Index and the
NASDAQ Computer Index
The following chart depicts the Company's performance for the five
year period ending December 31, 1996, as measured by total shareholder
return on the Company's Common Stock compared with the total return
of the NASDAQ Market Stock Index and the NASDAQ Computer Stock Index.
* This chart assumes an investment on December 31, 1991 of $100 in
the Company's Common Stock, the NASDAQ Market Stock Index and the
NASDAQ Computer Stock Index. See table below:
Year 1991 1992 1993 1994 1995 1996
Encore $100 $162 $446 $385 $238 $146
NASDAQ Market $100 $116 $134 $131 $185 $227
Index
NASDAQ Computer $100 $108 $114 $138 $211 $260
Index
The Report of the Compensation Committee on Executive Compensation and
Comparison of Five Year Cumulative Total Shareholder Return above
shall not be deemed to be "soliciting material" or be incorporated by
reference into any of the Company's filings with the Securities and
Exchange Commission.
Directors' Compensation
The Board of Directors has fixed the compensation of non-officer
directors at $2,500 per regular board meeting attended. No
compensation is paid for special meetings held by telephone
conference. A total of $10,000 was paid to Mr. Anderson for meetings
attended during fiscal 1996. Mr. Ferguson and Dr. Fedor have waived
payment to them of fees for attendance at board meetings. Directors
who are also officers of the Company receive no compensation for
serving as directors. During the past fiscal year, the Company has
also reimbursed certain of its directors for reasonable out-of-pocket
expenses relating to attendance at Board and Committee meetings.
Certain Relationships and Related Transactions
Financing by Gould
During 1996, the Company recorded significant quarterly operating
losses. Additionally, due to the operating losses incurred, the
Company was unable to generate sufficient levels of cash through
operating activities to fund the business. Cash requirements were
provided by additional borrowings made under a credit facility with
Gould. Gould has provided the Company with its loan facility since
1989.
On April 16, 1996, Gould canceled $35,000,000 of indebtedness owed to
it by the Company under the Credit Agreement in exchange for 350,000
shares of the Company's Series H Convertible Preferred Stock with a
liquidation preference of $35,000,000. The Series H carries a 6%
cumulative annual dividend requirement payable quarterly which the
Company can accumulate or pay in additional shares of preferred stock
(valued at its liquidation preference) until the Company's
shareholders' equity exceeds $50,000,000. The Series H is
convertible, at the holder's option, into the Company's common stock
at $3.25 per share only; (a) if the shareholder is a United States
citizen or a corporation or other entity owned in the majority by
United States citizens, or (b) in connection with an underwritten
public offering. The Series H is convertible, at the Company's
option, if the price of the common stock exceeds $3.90 per share for
twenty consecutive days and; (a) a buyer is contractually committed to
purchase for at least $3.90 per share at least 50% of the shares into
which all outstanding Preferred Stock would be converted, or (b) a
buyer is contractually committed to purchase for at least $3.50 per
share at least 75% of the shares into which all outstanding Preferred
Stock would be converted. The Series H is senior in liquidation
priority to all other classes of the Company's preferred and common
stock and is redeemable by the Company at any time for cash equal to
the liquidation preference plus accumulated dividends.
In conjunction with the above described exchange, the Company and
Gould also entered into an Amended and Restated Credit Agreement (the
"Amended Agreement"). The Amended Agreement provided the Company with
a committed borrowing facility of $65,000,000. On October 31, 1996,
the Company's borrowings under the Amended Agreement exceeded the
maximum allowed by the terms of the Amended Agreement. Subsequent to
October 31, 1996, Gould allowed the Company to borrow funds in excess
of the Amended Agreement's maximum limit to fund its daily operations
and during the fiscal fourth quarter the Company began negotiations
with Gould to significantly recapitalize the Company. As of December
31, 1996 the Company had incurred borrowings under the Amended
Agreement of $72,659,000.
On January 9, 1997, the Company and Gould agreed to further amend the
credit agreement to increase the maximum amount of the borrowing
facility to $80,000,000. On March 19, 1997, Gould exchanged
$40,000,000 of indebtedness owed to it by the Company (the "Canceled
Debt") for 400,000 newly-issued shares of the Company's Series I
Convertible Preferred Stock (the "Series I Stock"). The Canceled Debt
had, prior to the closing date, represented a portion of the
indebtedness owed by the Company to Gould under the Amended Agreement.
The principal terms of the Series I Stock are as follows:
(a)holders of such shares are entitled to receive, when, as and if
declared by the Company's board of directors, an annual dividend
per share equal to $6.00; provided, however, that if the number of
authorized shares of Common Stock of Company is not increased to
at least 300,000,000 on or prior to July 15, 1997, then such
dividend per share is increased to $10.00; and, further provided,
that if the number of shares of authorized Common Stock of the
Company is increased to at least 300,000,000 at any time after
July 15, 1997, then such dividend per share is decreased from
$10.00 to $6.00;
(b)dividends on such shares are payable in cash; provided, however,
that under certain specified circumstances such dividends may be
paid in additional shares of Series I Stock;
(c)such shares are entitled to a liquidation preference of $100 per
share plus an amount equal to accrued and unpaid dividends on such
share, which liquidation preference is senior in priority to the
Company's Common Stock and to all other shares of Preferred Stock
currently outstanding;
(d)subject to certain specified restrictions, such shares are
convertible, at the holder's option, at any time, into that number
of shares of the Company's Common Stock equal to (i) the
liquidation preference divided by $3.25, which amount is subject
to adjustment under certain specified circumstances;
(e)such shares are convertible, at the Company's option, in accordance
with the conversion methodology summarized in paragraph (d) above,
if (i) the last sale price of the Company's Common Stock exceeded
$3.90 for twenty consecutive trading days and (ii) a buyer is
contractually committed to purchase (x) for at least $3.90 per
share, at least 50% of the shares of Common Stock into which the
outstanding Series I Stock are then convertible, or (y) for at
least $3.50 per share, at least 75% of the shares of Common Stock
into which the outstanding shares of Series I Stock are then
convertible;
(f)such shares are non-voting shares except as to matters that would
adversely affect the Series I Stock and except as to any other
matters which, pursuant to applicable law, holders of such shares
may be entitled to vote; and
(g)to the extent that there are not a sufficient number of authorized
shares of the Company's Common Stock to allow for a conversion of
Series I Stock into shares of Common Stock as described above
(after taking into account, among other things, (i) the number of
options, warrants and other similar rights outstanding and (ii)
135% of the maximum number of shares of Common Stock the Company
may be required to issue on conversion of all the shares of each
series of preferred stock then outstanding), then, to that extent,
the Series I Stock is convertible into shares of Series J
Convertible Participating Preferred Stock of the Company (the
"Series J Stock") at the rate of one share of Series J Stock for
each 100 shares of Common Stock.
The principal terms of the Series J Stock are as follows:
(a)holders of such shares are entitled to receive a dividend per share
equal to 100 times the dividend that is paid by the Company with
regard to a share of Common Stock of the Company;
(b)such shares are entitled to a liquidation preference of $1 per
share plus an amount equal to accrued and unpaid dividends on such
share, which liquidation preference is senior in priority to the
Company's Common Stock, and, after the holders of Common Stock
have received $0.01 per share, such shares of Series I Stock are
further entitled to receive an amount equal to 100 times the
amount per shares in excess of that $0.01 received by the holders
of the Common Stock;
(c)subject to certain specified restrictions, such shares are
convertible, at the holder's option, at any time, in that number
of shares of the Company's Common Stock equal to (i) 100 shares of
Common Stock, which amount is subject to adjustment under certain
specified circumstances;
(d) such shares are voting shares and holders thereof shall be
entitled to vote together with the holders of Common Stock, voting
as a single class, on all matters presented for a vote of the
holders of Common Stock, which each share of Series J Stock being
entitled to 100 times the number of votes to which a share of
Common Stock is entitled; and
(e)the Series J Stock (i) ranks prior to the shares of Common Stock to
the extent specifically provided in the Certificate of
Designations, Powers, Rights and Preferences of the Series J
Stock, and in all other respects, ranks on parity with the Common
Stock, (ii) is on parity with the shares of Series A Convertible
Participating Preferred Stock of the Company and (iii) is, and
will be, junior to the shares of all other series of Preferred
Stock of the Company, other than series which are expressly
designated as ranking on a parity with, or being junior to, the
Series J Stock.
In conjunction with the exchange of the Canceled Debt for Series I
Stock, the Second Amendment to the Credit Agreement was executed
between the Company and Gould which (i) reduced the maximum amount
which can be borrowed by the Company from $80,000,000 to $50,000,000
and (ii) provided that any borrowings in excess of $41,915,869 (the
principal amount outstanding on March 19, 1997 after giving effect to
the exchange of indebtedness for shares of Series I Stock) may be made
only at the discretion of Gould.
The Credit Agreement matures on May 31, 1997. Borrowings under the
Credit Agreement are collateralized by substantially all of the
Company's tangible and intangible assets and the agreement contains
various covenants including maintenance of cash flow, leverage and
tangible net worth ratios and limitations on capital expenditures,
dividend payments and additional indebtedness. Interest on the loans
equals the prime rate plus 2%.
The following tables display the beneficial ownership of Japan Energy
Corporation through its wholly owned subsidiaries Gould and EFI in the
Company before the March 19, 1997 transaction as of December 31, 1996
and on a pro forma basis after the transaction as of December 31,
1996:
Before the Exchange of Indebtedness for Series I Stock
as of December 31, 1996
Debt (1) Beneficial Ownership (2)
($000's) % of total Shares % of total
Gould $ 72,659 99.1% 121,141,690 62.2%
EFI - - 31,891,015 16.4
Other 658 0.9 41,862,460 21.4
Total $ 73,317 100.0% 194,895,165 100.0%
After the Exchange of Indebtedness for Series I Stock
Pro Forma as of December 31, 1996
Debt (1) Beneficial Ownership (3)
($000's) % of total Shares % of total
Gould $ 32,659 98.0% 133,141,690 64.4%
EFI - - 31,891,015 15.4
Other 658 2.0 41,862,460 20.2
Total $ 33,317 100.0% 206,895,165 100.0%
(1)Includes both current and long-term portion of debt.
(2)Includes 150,193,728 shares of Common Stock issuable upon full
conversion of all outstanding Series A Stock, Series B Stock,
Series D Stock, Series E Stock , Series F Stock, Series G Stock
and Series H Stock after payment of all dividends payable through
January 15, 1997 as well as shares which may be acquired within
sixty days after December 31, 1996 by exercise of outstanding
stock options.
(3)Includes 162,193,728 shares of Common Stock issuable upon full
conversion of all outstanding Series A Stock, Series B Stock,
Series D Stock, Series E Stock, Series F Stock, Series G Stock,
Series H Stock and Series I Stock as well as shares which may be
acquired within sixty days after December 31, 1996 by exercise of
outstanding stock options. The Series D Stock, Series E Stock,
Series F Stock, Series G Stock, Series H and Series I Stock is
convertible by a United States citizen or a corporation or other
entity owned in the majority by a United States shareholder or in
connection with an underwritten public offering.
In connection with the various exchanges of indebtedness for preferred
stock discussed herein, the United States Defense Investigative
Service ("DIS") has reviewed the relationship between the Company and
the Japan Energy Group under revised government requirements relating
to foreign ownership, control and influence. Given the current
requirements in the National Industrial Security Program Operating
Manual ("NISPOM"), DIS has decided to replace the previous method of
negation of Foreign Ownership Control and Influence, accomplished by
Board Resolution, with a more detailed Security Control Agreement as
prescribed by DIS in the NISPOM, which is currently being drafted by
Encore's counsel.
Since 1989, Japan Energy Group and its wholly owned subsidiaries,
Gould and EFI, have been the principal source of the Company's
financing by either directly providing or guaranteeing the Company's
loans. Each of the Company's debt agreements with Japan Energy Group
and its wholly owned subsidiaries have contained various covenants
including maintenance of cash flow, leverage, and tangible net worth
ratios and limitations on capital expenditures, dividend payments and
additional indebtedness. Currently and at various times in the past,
the Company has been in default of certain covenants contained in the
debt agreements but waivers of compliance with those covenants have
been obtained and, generally, the Company has been able to
successfully renegotiate favorable terms with its creditor. To
continue operating in the normal course of business, the Company is
and will remain dependent on the continued financial support of Japan
Energy Group and its subsidiaries. Until such time as the Company
returns to a state of sustained profitability, Encore will be unable
to secure funding from other parties and/or generate sufficient levels
of cash through operations to meet the needs of the business.
APPROVAL OF AMENDMENT TO ARTICLE FOURTH
OF THE COMPANY'S CERTIFICATE OF INCORPORATION
On April 17, 1997, the Board of Directors voted to propose and declare
advisable an amendment to Article Fourth of the Company's Certificate
of Incorporation to increase the number of authorized shares of the
Company's Common Stock from 200,000,000 shares to 300,000,000 shares.
As of December 31, 1996, there were (i) 37,270,457 shares of Common
Stock issued and outstanding, (ii) 3,728,331 shares of Common Stock
reserved for issuance under the Company's stock purchase plan, (iii)
9,582,190 shares reserved for issuance on the exercise of outstanding
stock options as well as 14,417,810 shares reserved for issuance on
the exercise of stock options to be granted in future periods, (iv)
7,364,100 shares reserved for issuance upon conversion of the
outstanding shares of Series A Stock, (v) 22,019,138 shares reserved
for issuance upon conversion of the outstanding shares of Series B
Stock, (vi) 35,346,923 shares reserved for issuance upon conversion of
the outstanding shares of Series D Stock, (vii) 36,130,185 shares
reserved for issuance upon conversion of the outstanding shares of
Series E Stock, (viii) 16,906,185 shares reserved for issuance upon
conversion of the outstanding shares of Series F Stock, (ix)
18,141,108 shares reserved for issuance upon conversion of the
outstanding shares of Series G Stock, (x) 11,094,708 shares reserved
for issuance upon conversion of the outstanding shares of Series H
Stock, and (xi) 39,801,545 shares allocated for issuance upon
conversion of additional outstanding shares of Preferred Stock which
may be issued as dividends through 2000. Additionally, as of March
19, 1997 the Company and Gould agreed among other things to exchange
$40,000,000 of indebtedness owed to Gould by the Company for 400,000
shares of the Company's Series I Stock with a liquidation preference
of $40,000,000. The terms of the Series I Stock require the Company
to reserve sufficient shares of Common Stock to allow for the
potential conversion of the Series I Stock at a price of $3.25 per
share of Common Stock. In this connection, the Company has reserved
12,000,000 shares for issuance upon conversion of the Series I Stock.
See "Certain Relationships and Related Transactions" for further
details of this transaction. These reservations of shares, together
with the shares of Common Stock already outstanding, would exceed the
currently authorized shares of Common Stock by 63,802,680.
The Board of Directors has determined that an increase in authorized
shares of Common Stock is necessary in order to meet the commitments
and plans described above and to enhance the Company's flexibility in
connection with possible future actions, such as stock dividends,
financings, corporate mergers, acquisitions of property and services,
use in employee benefit plans, or other corporate purposes. The
shares would be available for issuance without further action by the
holders of Common Stock. The Company has no present intention,
however, of issuing the increased number of authorized shares of
Common Stock other than in connection with the commitments and plans
described above. The amendment would increase the number of shares of
Common Stock available for issuance by the Company but would have no
effect on the terms of the Common Stock or the rights of the holders
of the Common Stock. Shareholders do not have and will continue not
to have pre-emptive rights. The amendment would not affect the number
of authorized shares of the Company's Preferred Stock.
Although management is not currently aware of any effort by any person
to gain control of the Company, in the event of such an effort, the
authorized but unissued shares of Common Stock could be used to make a
change in control of the Company more difficult. Under certain
circumstances such shares could be used to create voting impediments
to deter persons seeking to effect a takeover or otherwise gain
control of the Company. Such shares could be sold in public or
private transactions to purchasers who might side with the Board of
Directors in opposing a takeover bid with the Board of Directors
determines not to be in the best interests of the Company and its
shareholders. The amendment might have the effect of discouraging an
attempt by another person, through the acquisition of a substantial
number of shares of the Company's Common Stock, to acquire control of
the Company with a view to imposing a merger, sale of all or any part
of the Company's assets or a similar transaction, since the issuance
of new shares could be used to dilute the stock ownership of such
person or entity.
The Board of Directors recommends a vote "FOR" this proposal. It is
intended that the enclosed proxy will be voted "FOR" this proposal
(unless the proxy indicates to the contrary) and in favor of
adjournment of the Annual Meeting in order to permit further
solicitation of proxies with respect to the proposed amendment if
sufficient votes in favor of the amendment have not been received.
The affirmative vote of the holders of a majority of the outstanding
shares of the Company's Common Stock is required for approval of the
amendment to Article Fourth of the Company's Certificate of
Incorporation.
APPROVAL OF AUDITORS
The Board of Directors has selected the firm of Coopers & Lybrand
L.L.P., independent public accountants, as auditors of the Company for
the year ending December 31, 1997, and is submitting the selection to
the shareholders for approval. The Board of Directors recommends a
vote "FOR" this proposal. It is intended that the shares represented
by the enclosed proxy will be voted (unless the proxy indicates to the
contrary) to approve such selection.
Representatives of Coopers & Lybrand L.L.P. are expected to be present
at the Annual Meeting of Stockholders. They will have an opportunity
to make a statement if they desire to do so and will also be available
to respond to appropriate questions from shareholders.
OTHER MATTERS
The Board of Directors does not know of any other matters that may
come before the meeting. However, if any other matters are properly
presented at the meeting, it is the intention of the persons named in
the accompanying proxy to vote, or otherwise to act, in accordance
with their judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers
and regular employees, without additional remuneration, may solicit
proxies by telephone and personal interviews. Brokers, custodians and
fiduciaries will be required to forward proxy soliciting material to
the owners of stock held in their names, and the Company will
reimburse them for their out-of-pocket expenses in this regard.
PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1998 Annual
Meeting of Stockholders must be received by the Company at its
principal office in Fort Lauderdale, Florida, Attention: Edward J.
Baker, Secretary, not later than February 25, 1998, for inclusion in
the proxy statement for that meeting.
By order of the Board of Directors
EDWARD J. BAKER
_______________
Edward J. Baker, Secretary
May 15, 1997
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE
MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING,
AND YOUR COOPERATION WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THE
MEETING MAY VOTE THEIR STOCK PERSONALLY EVEN THOUGH THEY HAVE RETURNED
THEIR PROXIES.
