<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
ITC LEARNING CORPORATION
------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------
5) Total fee paid:
-------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
ITC LEARNING CORPORATION
---------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1999
---------------------------------------------
The Annual Meeting of Stockholders of ITC Learning Corporation, a Maryland
corporation (the "Company"), will be held Wednesday, May 5, 1999 at 3:00 p.m.
Eastern Daylight Time, at the Company's corporate headquarters, 13515 Dulles
Technology Drive, Herndon, Virginia 20171 for the following purposes:
1. To elect two (2) Class II Directors to serve until the 2002 Annual
Meeting of Stockholders;
2. To transact such other business as may properly come before the
meeting or any adjournments thereof.
By resolution of the Board of Directors, only stockholders of record at
the close of business on March 2, 1999 are entitled to notice of and to vote at
the meeting.
It is important that your shares be represented at this meeting. Whether
or not you expect to be present, please fill in, date, sign and return the
enclosed proxy form in the accompanying addressed, postage-prepaid envelope. If
you attend the meeting, you may revoke your proxy and vote in person.
March 26, 1999 By Order of the Board of Directors
Herndon, Virginia ITC Learning Corporation
/s/Anne J. Fletcher
----------------------------------
Anne J. Fletcher
Corporate Secretary
WHETHER OR NOT YOU EXPECT TO BE PRESENT IN PERSON AT THE MEETING, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY FORM AND RETURN IT AS PROMPTLY AS
POSSIBLE IN THE POSTPAID ENVELOPE ENCLOSED. THE PROXY IS SOLICITED BY THE BOARD
OF DIRECTORS OF THE COMPANY. STOCKHOLDERS WHO ATTEND THE MEETING MAY REVOKE
THEIR PROXIES AT THE MEETING AND VOTE IN PERSON.
<PAGE> 3
ITC LEARNING CORPORATION
13515 DULLES TECHNOLOGY DRIVE
HERNDON, VIRGINIA 20171
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors and management of ITC Learning Corporation, a Maryland
corporation (the "Company"), of proxies for use at the Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at the Company's
headquarters at 13515 Dulles Technology Drive, Herndon, Virginia 20171, on
Wednesday, May 5, 1999 at 3:00 p.m., EDT, and at any and all postponements or
adjournments thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting.
Copies of the Annual Report and Form 10-KSB of the Company for its fiscal
year ended December 31, 1998 as filed with the Securities and Exchange
Commission, without exhibits, are included. This Proxy Statement, Notice of
Annual Meeting, accompanying proxy card and the annual report and Form 10-KSB
are first expected to be mailed to stockholders on or about March 26, 1999.
GENERAL
Only stockholders of record at the close of business on March 2, 1999 are
entitled to notice of and to vote the shares of common stock, par value $0.10
per share, of the Company (the "Common Stock") held by them on that date at the
Annual Meeting or any postponements or adjournments thereof.
If the accompanying proxy card is properly signed and returned to the
Company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders in the proxy card will vote for the slate of
nominees proposed by the Board of Directors and as recommended by the Board of
Directors with regard to all other matters or, if no such recommendation is
given, in their own discretion. Each stockholder may revoke a previously granted
proxy at any time before it is exercised by filing with the Secretary of the
Company a revoking instrument or a duly executed proxy bearing a later date. The
powers of the proxy holders will be suspended if the person executing the proxy
attends the Annual Meeting in person and so requests. Attendance at the Annual
Meeting will not, in itself, constitute revocation of a previously granted
proxy.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of Common Stock outstanding on March 2, 1999 will
constitute a quorum. Each outstanding share entitles its holder to cast one vote
on each matter to be voted upon at the Annual Meeting. As of February 25, 1999,
3,958,245 shares of Common Stock were outstanding.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and the broker does not have discretionary voting
authority. Brokers will have discretionary voting authority for Item 1.
Abstentions and broker non-votes will be counted as shares present for purposes
of determining whether a quorum is present but abstentions will not be voted for
or against any adjournment or proposal. Accordingly, abstentions and broker
non-votes effectively will be a vote against adjournment or against a proposal
where the required vote is a percentage of the shares present or outstanding.
The Company knows of no business which will be presented for action at
the meeting other than those matters referred to herein. If other matters do
come before the meeting, the persons named as proxies will act and vote
according to their best judgment on behalf of the stockholders they represent.
The cost of soliciting proxies in the enclosed form will be borne by the
Company. Officers and regular employees of the Company may, but without
compensation other than their regular compensation, solicit proxies by further
mailing or personal conversations, or by telephone or facsimile. The Company
will, upon request, reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to the beneficial owners of stock.
<PAGE> 4
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors has the ultimate authority for the management of
the Company's business, objectives, and operations. It selects the Company's
executive officers, delegates responsibilities for the conduct of the Company's
day-to-day operations to those officers, and monitors their performance.
The Board of Directors held thirteen (13) meetings during 1998. The Board
of Directors has a three-member Compensation Committee, the members of which are
Messrs. Thomas, Sanders and Bannister, each of which is an outside director. The
Committee recommends salaries and other compensation of the elected officers of
the Company for action by the whole Board. The Compensation Committee met two
(2) times during 1998.
The Board of Directors has also established a four-member Audit Committee
which is comprised of the same outside directors as the Compensation Committee,
with one vacancy. The Audit Committee acts in an oversight capacity, consistent
with standard industry practice, to review quarterly and year end financial
processes, and meets with the Company's auditors to review their reports and
recommendations. The Audit Committee met one time during 1998.
The Company does not have a nominating committee.
Each director attended 75 percent or more of the aggregate number of Board
and Committee meetings on which he served during 1998.
Directors who are also employees of the Company received no extra
compensation for serving as Directors for the year ended December 31, 1998. For
the year ended December 31, 1998, Directors who were not also employees were
paid $2,500 per calendar quarter and $500 per meeting for their service as
Directors. Dr. Sanders receives a monthly fee of $2,000 for his service as
Chairman of the Board.
The Board of Directors of the Company is divided into three classes, as
nearly equal in number as possible. Each class serves three years, with the
terms of office of the respective classes expiring in successive years. The term
of office of Directors in Class II expires at the 1999 Annual Meeting. The Board
of Directors has no reason to believe that the nominees will not serve if
elected, but if unavailable to serve as Directors, and if the Board designates
substitute nominees, the persons named as proxies will vote for the substitute
nominees designated by the Board.
Directors will be elected by a plurality of the votes cast at the Annual
Meeting. If elected, all nominees are expected to serve until the 2002 Annual
Meeting and until their successors are duly elected and qualified.
The Board of Directors recommends that the nominees described below be
elected for a term of three years and until they are re-elected or their
successors are duly elected and qualified.
Mr. Bannister is currently serving as a Class II Director. Dr. Spillane
has been nominated by the Board of Directors to serve as a Class II Director in
the vacancy existing in that class.
NOMINEES/DIRECTORS STANDING FOR ELECTION - CLASS II
<TABLE>
<CAPTION>
Year First
Elected or
Appointed
Name (Age) Director
Position with Company Business Experience (Term Expires)
- --------------------- ------------------- --------------
<S> <C> <C>
Daniel R. Bannister (68) Daniel R. Bannister, a Director since 1988, is Chairman of the Board of 1988
Director DynCorp, a leading technology services firm. Previously, he served as (1999)
President and Chief Executive Officer of DynCorp, from 1985 until 1997.
Mr. Bannister serves on the boards of several technology service companies.
He is also Chairman of the Board of the American Management Association,
and a director of the American Arbitration Association and the George
Mason University Foundation.
</TABLE>
2
<PAGE> 5
NOMINEES/DIRECTORS STANDING FOR ELECTION - CLASS II (CONTINUED)
<TABLE>
<CAPTION>
Year First
Elected or
Appointed
Name (Age) Director
Position with Company Business Experience (Term Expires)
- --------------------- ------------------- --------------
<S> <C> <C>
Robert R. Spillane (63) Robert R. Spillane, Ph.D., has served as Regional Education Officer for -
Nominee Europe, U.S. Department of State Office of Overseas Schools since 1997. (2002)
From 1985 to 1997 he was Superintendent of Schools for Fairfax County
Virginia Public Schools, the twelfth largest school system in the United
States with 150,000 students. He has also served as Superintendent of
Schools of Boston, Massachusetts, New Rochelle, New York, Roosevelt,
New York, and Glassboro, New Jersey, and as New York State Deputy
Commissioner of Education for Elementary, Secondary and Continuing
Education. Dr. Spillane was both a teacher and a principal in elementary
and secondary schools in Connecticut after receiving a B.S. from Eastern
Connecticut State College and M.A. and Ph.D. from the University of
Connecticut. He attended the Advanced Administrative Institute at
Harvard University, and has served as advisor to numerous regional and
national education organizations.
DIRECTORS CONTINUING IN OFFICE - CLASSES I AND III
John D. Sanders (60) John D. Sanders, Ph.D., a Director since 1977, is Chairman of the Board of 1977
Director and Directors and serves as a business consultant to emerging technology (2001)
Chairman companies. He was Chairman and Chief Executive Officer of TechNews, Inc.,
of the Board publishers of Washington Technology, from 1988 to 1996, prior to its sale to
The Washington Post Company. Since 1968, he has been a Registered
Representative of Wachtel & Co., Inc, a Washington, D.C. based investment
banking firm. He received a B.E.E. from University of Louisville in 1961 and
M.S.and Ph.D. degrees in electrical engineering from Carnegie-Mellon University
in 1962 and 1965, respectively. Dr. Sanders also serves as a Director of Comtex
Scientific Corporation, Hadron, Inc., and Sensys Technologies Inc.
Richard E. Thomas (72) Richard E. Thomas, a Director since 1982, is semi-retired, having served 1982
Director as President of COMSAT RSI from 1994 until 1997. Prior to that, he was (2001)
Chairman of the Board, President and Chief Executive Officer of Radiation
Systems, Inc. (RSI), a communications systems manufacturer, from 1978 until
1994, at which time RSI was merged into COMSAT Corporation. Mr. Thomas was
originally employed by RSI as Vice President of Manufacturing Operations.
From 1954 until 1965, Mr. Thomas was employed by Washington Aluminum of
Baltimore, Maryland, leaving as Vice President and General Manager of the
Technical Products Division.
</TABLE>
3
<PAGE> 6
DIRECTORS CONTINUING IN OFFICE - CLASSES I AND III (CONTINUED)
<TABLE>
<CAPTION>
Year First
Elected or
Appointed
Name (Age) Director
Position with Company Business Experience (Term Expires)
- ---------------------- ------------------- --------------
<S> <C> <C>
Carl D. Stevens (52) Carl D. Stevens, a Director since June 1997, joined ITC in 1997
President, Chief February 1997 as Senior Vice President of Marketing and (2000)
Executive Officer and Strategic Business Development. He was later appointed
Director President and Chief Operating Officer in June 1997, and
was appointed Chief Executive Officer effective December
1998. Prior to joining ITC, Mr. Stevens was Program
Director for Public Sector for IBM responsible for the
sale of personal computers into higher education, K-12,
federal, state and local governments. During his 26 year
career with IBM, he held numerous field and headquarters
marketing and management positions. He was Branch Manager
for the Southeastern U.S., managed IBM's New Manager School
for experienced managers, held various management positions
involving IBM's Personal Computer Remarketer Channels, and
was the Business Alliance Executive for IBM's Education and
Training Division. Mr. Stevens received his education from
Indiana University, where he majored in Marketing and
Business Education.
Peter J. Li (60) Peter J. Li, a Director since July 1998, is the Publisher 1998
Director and Chief Executive Officer of the Peter Li Education (2000)
Group, a leading education publisher. Mr. Li currently serves
on the Boards of Directors and committees of several companies
and associations in the education industry, including The
Education Press of America, Global Village Schools, National
Catholic Educational Exhibitors, The National School Supply,
The Equipment Association, Software Publishers Association and
The School of Education at The University of Dayton (OH). Mr.
Li received a degree in Journalism from Duquesne University.
</TABLE>
4
<PAGE> 7
STOCK OWNERSHIP
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as to the beneficial ownership
of each person known to the Company to own more than 5% of the outstanding
Common Stock as of February 25, 1999.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Owner of Beneficial Owner Percent of Class
- ------------------------------------ ------------------- ----------------
<S> <C> <C>
ROI Capital Management, Inc.(1) 488,900 12.4%
17 E. Sir Francis Drake Blvd.
Suite 225
Larkspur, CA 94939
Gruber & McBaine Capital Management, LLC(2) 372,250 9.4%
50 Osgood Place
San Francisco, CA 94133
J. Carlo Cannell(3) 300,000 7.6%
d/b/a Cannell Capital Management
600 California Street, 14th Floor
San Francisco, CA 94108
Dimensional Fund Advisors, Inc.(4) 219,900 5.6%
1299 Ocean Ave.
11th Floor
Santa Monica, CA 90401
James H. Walton(5) 198,667 5.0%
5213 N. 23rd Road
Arlington, VA 22207
</TABLE>
- -------------------------------
(1) Shares are owned by various investment advisory clients of ROI Capital
Management, Inc. ("ROI"), including 231,300 shares held by ROI Partners,
L.P. for which ROI acts as general manager. Each person for whom ROI acts
as investment adviser has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the Common
Stock purchased or held pursuant to such arrangement. Mitchell J.
Soboleski and Mark T. Boyer are deemed to be the beneficial owners of
these securities pursuant to their ownership interest in ROI.
(2) Includes 13,600 shares held by Jon D. Gruber and 32,900 shares held by J.
Patterson McBaine, the managers of Gruber & McBaine Capital Management,
LLC. Also includes 69,000 shares held by Lagunitas Partners, L.P., a
California limited partnership in which the LLC is the general partner.
(3) Shares are held by J. Carlo Cannell d/b/a Cannell Capital Management, for
the benefit of its investment advisory clients, which have sole voting and
dispositive power over their respective shares. Of the shares disclosed,
Tonga Partners, L.P. has sole voting and dispositive power over 89,268
shares; Pleiades Investment Partners, L.P. has sole voting and dispositive
power over 21,300 shares, The Cuttyhunk Fund Limited has sole voting and
dispositive power over 168,632 shares; and Canal, Ltd. has sole voting and
dispositive power over 20,800 shares.
(4) Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered under
the Investment Company Act of 1940, and serves as an investment manager to
certain other investment vehicles, including commingled group trusts
(These investment companies and investment vehicles are the "Portfolios").
In its role as investment advisor and investment manager, Dimensional
possesses both voting and investment power over the securities of the
Issuer described in this schedule that are owned by the Portfolios. All
securities reported herein are owned by the Portfolios, and Dimensional
disclaims beneficial ownership of such securities.
(5) James H. Walton was Chief Executive Officer of the Company until January
9, 1998 and a Director of the Company until February 17, 1998.
5
<PAGE> 8
OWNERSHIP OF EQUITY AND VOTING SECURITIES BY DIRECTORS AND OFFICERS(1)
The following table reflects shares of Common Stock beneficially owned (or
deemed to be beneficially owned pursuant to the rules of the Securities and
Exchange Commission) as of February 25, 1999 by each Director of the Company,
each of the executive officers named in the Summary Compensation Table included
elsewhere herein and the current Directors and executive officers of the Company
as a group.
<TABLE>
<CAPTION>
Amount and Nature
Name and Address of Beneficial Owner of Beneficial Owner Percent of Class
- ------------------------------------ ------------------- ----------------
<S> <C> <C>
Carl D. Stevens(2) 76,584 1.9%
12120 Brookfield Club Drive, Roswell, GA 30075
John D. Sanders(3) 72,133 1.8%
2500 Virginia Avenue, NW, Washington, DC 20037
Richard E. Thomas(4) 40,203 1.0%
8207 Light Horse Court, Annandale, VA 22003
Daniel R. Bannister(5) 20,333 0.5%
1403 Mayhurst Boulevard, McLean, VA 22102
Christopher E. Mack(6) 34,761 0.8%
21859 Hyde Park Drive, Ashburn, VA 20147
Harvey L. Shuster(7) 27,527 0.7%
700 Marshview Close, Roswell, GA 30076
Robert F. VanStry(8) 7,186 0.2%
3157 Kirkwell Place, Herndon, VA 22071
James H. Walton (9) 198,667 5.0%
5213 N. 23rd Road, Arlington, VA 22207
Directors and Executive Officers 279,130 6.8%
as a group (8 persons)(10)
</TABLE>
- --------------------------------
(1) Unless otherwise indicated, each person has sole voting and investment
rights with respect to the shares specified opposite his name.
(2) Includes 4,334 shares held by the Company's Employee Stock Ownership Plan.
Also includes 65,250 shares which Mr. Stevens is entitled to acquire
pursuant to stock options.
(3) Includes 1,800 shares owned by spouse.
(4) Includes 31,000 shares owned by Mr. Thomas and his spouse as tenants by
the entirety.
(5) Includes 2,000 shares owned by Mr. Bannister and his spouse as tenants by
the entirety.
(6) Includes 7,095 shares held by Employee Stock Ownership Plan. Also includes
26,666 shares which Mr. Mack is entitled to acquire pursuant to stock
options.
(7) Includes 7,140 shares held by Employee Stock Ownership Plan. Also includes
1,600 shares which Mr. Shuster is entitled to acquire pursuant to stock
options.
(8) Includes 6,666 shares which Mr. VanStry is entitled to acquire pursuant to
stock options. Mr. VanStry resigned his position with the Company on
November 17, 1998.
(9) James H. Walton was Chief Executive Officer of the Company until
January 9, 1998 and a Director of the Company until February 17, 1998.
(10) Excludes James H. Walton, who resigned from the Board of Directors in
February 17, 1998 and served as the Company's Chief Executive Officer
through January 9, 1998.
6
<PAGE> 9
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Executive Officers and Directors to file initial reports of ownership
and reports of changes of ownership of the Company's Common Stock with the
Securities and Exchange Commission. Executive Officers and Directors are
required to furnish the Company with copies of all Section 16(a) forms that they
file. Based solely upon a review of these filings and written representations
from certain of the Company's Directors and Executive Officers that no other
reports were required for fiscal year 1998, the Company notes that all reports
were timely filed, with the exception of Mr. Shuster, who inadvertently failed
to timely file his initial ownership report on Form 3, and Mr. Mack, who
inadvertently failed to timely file a Form 5 reporting a grant of options to him
under the Company's 1998 incentive stock plan. Both forms have subsequently been
filed.
EXECUTIVE COMPENSATION
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Stevens
and Mack. The agreements are generally subject to termination upon (i) death
(with each individuals' beneficiaries receiving up to $5,000 in death benefits);
(ii) disability; (iii) cause or (iv) without cause upon 60 days notice by the
Company. The agreements provide for twelve months of severance pay to Messrs.
Stevens and Mack. The foregoing severance pay is payable only upon termination
by the Company without cause. In addition, the agreements with Messrs. Stevens
and Mack specify that, upon certain changes of control, each would receive
twelve months' salary as severance pay if he is terminated or voluntarily leaves
within one year of the effective date of such an occurrence.
In addition to base salary, each officer is eligible to receive salary
increases, bonuses, stock option grants, pension and profit sharing arrangements
and other employee benefits that may from time to time be awarded or made
available. Each of Messrs. Stevens and Mack must provide 120 days notice of
resignation from the Company. During the notice period, all officers receive
salary. The agreements also provide for certain paid sick or disability leave
and reimbursement of certain medical expenses not covered by the Company's group
insurance.
EXECUTIVE COMPENSATION SUMMARY TABLE
The following table sets forth the aggregate compensation paid for
services rendered to the Company during the last three fiscal years by the
Company's Chief Executive Officer ("CEO") and its most highly compensated
executive officers, other than the CEO, who served as such at the end of the
last fiscal year and whose total compensation exceeds $100,000, plus two
additional former officers whose compensation exceeded $100,000, but who were
not serving as an executive officer of the Company at the end of the last
fiscal year.
7
<PAGE> 10
EXECUTIVE SUMMARY COMPENSATION TABLE (CONTINUED)
<TABLE>
<CAPTION>
-------------------------------------------- -----------------
Long-term
Annual Compensation
Compensation Awards
- ---------------------------------------------------------------------------------------------------------------------------------
Securities
Other Annual Underlying All Other
Name and Principal Position Compensation Options Granted Compensation
at Fiscal Year End Year Salary ($) Bonus ($) ($) (a) (#) ($)(c)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Carl D. Stevens (b) 1998 187,100 -- 22,235 122,000 --
President, Chief Executive Officer 1997 99,958 -- 13,243 78,000 --
and Director 1996 -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Christopher E. Mack 1998 129,583 -- 29,185 40,000 --
Vice President, Treasurer and Chief 1997 111,167 -- 11,992 20,000 --
Financial Officer 1996 83,625 -- 7,256 10,000 --
- ---------------------------------------------------------------------------------------------------------------------------------
1998 115,470 -- 29,256 20,000 --
Harvey L. Shuster 1997 99,425 -- -- -- --
Vice President 1996 94,320 -- -- 2,500 --
- ---------------------------------------------------------------------------------------------------------------------------------
1998 102,385 -- 2,511 -- --
Robert F. VanStry 1997 110,000 -- 10,941 20,000 --
Formerly Vice President 1996 110,276 -- 8,293 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
1998 41,654 -- 1,644 -- 607,217
James H. Walton (c) 1997 180,000 -- 22,203 30,000 --
Formerly Chief Executive Officer 1996 181,767 -- 15,266 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Represents the fair market value of shares allocated pursuant to the
Company's Employee Stock Ownership Plan, medical expense reimbursement,
automobile allowances, and Company match of 401K plan contributions.
(b) Mr. Stevens joined the Company in March 1997. His annualized base salary
for 1997 was $125,000.
(c) Mr. Walton served as the Company's Chief Executive Officer through January
9, 1998. He received severance compensation of $510,000 and consulting
fees of $97,217 during 1998.
OPTION GRANTS FOR FISCAL 1998 AND POTENTIAL REALIZABLE VALUES
The following table sets forth as to each of the named executive officers
information with respect to option grants during the last fiscal year.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
Number of
Securities Underlying % of Total Options/
Options/ SARs Granted SARs Granted to Exercise or Base Price
Name (#) Employees in Fiscal Year ($/Sh) Expiration Date
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Carl D. Stevens 57,000 12.8% $4.00/Sh 3/9/2003
65,000 14.6% $4.00/Sh 3/9/2005
- --------------------------------------------------------------------------------------------------------------------------------
Christopher E. Mack 20,000 4.5% $4.00/Sh 1/7/2003
20,000 4.5% $4.00/Sh 12/14/2003
- --------------------------------------------------------------------------------------------------------------------------------
Harvey L. Shuster 20,000 4.5% $4.00/Sh 1/7/2003
- --------------------------------------------------------------------------------------------------------------------------------
Robert F. VanStry -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
James H. Walton -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE> 11
OPTION EXERCISES AND VALUES FOR FISCAL 1998
The following table sets forth as to each of the named Executive Officers
information with respect to option exercises during Fiscal 1998 and the status
of their options on December 31, 1998.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Value of Unexercised
Number of Unexercised In-the-Money Options at
Options at Fiscal Year Fiscal Year End ($)
Shares Acquired on End (#) Exercisable (E)/ Exercisable (E)/
Name Exercise (#) Value Realized ($) Unexercisable (U) Unexercisable (U)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Carl D. Stevens 26,000(E)/ 0(E)/
-- -- 174,000(U) 0(U)
- ---------------------------------------------------------------------------------------------------------------------------------
Christopher E. Mack 21,666(E)/ 0(E)/
-- -- 53,334(U) 0(U)
- ---------------------------------------------------------------------------------------------------------------------------------
Harvey L. Shuster 1,600(E)/ 0(E)/
-- -- 20,900(U) 0(U)
- ---------------------------------------------------------------------------------------------------------------------------------
Robert F. VanStry 6,666(E)/ 0(E)/
-- -- 0(U) 0(U)
- ---------------------------------------------------------------------------------------------------------------------------------
James H. Walton 0(E)/ 0(E)/
-- -- 0(U) 0(U)
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS
The following sets forth the business experience of Executive Officers who
are not also Directors of the Company.
Anne J. Fletcher, age 36, is Secretary of ITC. Ms. Fletcher is an attorney
with the law firm of Michaels, Wishner & Bonner, P.C. in Washington, D.C. Ms.
Fletcher served as in-house general counsel to ITC from 1994-1996. Prior to
joining ITC, she was engaged in the private practice of law for six years in
Fairfax, Virginia. Ms. Fletcher received her J.D. from George Mason University
School of Law and a B.A. from the State University of New York, College at
Oswego.
Christopher E. Mack, age 33, prior to being named Chief Financial Officer
in January 1998, served as the Company's Vice President of Finance and
Administration and Treasurer since April 1997. Mr. Mack served as the Company's
Chief Operating Officer from November 1996 to April 1997. Prior to being named
COO, Mr. Mack served as the Company's Controller from December 1993 to November
1996. Prior to joining ITC in December 1993, Mr. Mack served as Assistant
Controller of Bardon, Inc., an international construction materials firm. Mr.
Mack holds a B.S. in Accounting from Shepherd College and is a C.P.A.
Harvey L. Shuster, age 54, is Vice President of ITC. Mr. Shuster joined
ITC in 1993 as part of ITC's acquisition of Comsell Training, Inc., where he was
Chief Operating Officer. Since joining ITC, Mr. Shuster has served in various
capacities from operations to sales. Mr. Shuster has previous experience as
director of the MicroComputer Consulting Group for Coopers and Lybrand in the
Southeast United States. Additionally, he was a founding member of Peachtree
Software, the microcomputing accounting software package that is now owned by
ADP. He holds a B.S. in Accounting from Temple University, an MBA in Finance
from Drexel University, and is a C.P.A.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Commencing in January 1998, Dr. Sanders agreed to devote 40% of his
business time to providing consulting services to the Company, in exchange for
an annual fee of $36,000 (not including fees payable for services as a director
of the Company and Chairman of the Board), payable in equal monthly
installments. This arrangement is terminable by the Company or Dr. Sanders at
any time.
Other than the foregoing, the Company was not a party to any transactions
with any Director, executive officer, nominee for election as a Director, any
security holder that is a beneficial owner of greater than five percent (5%) of
the Company's Common Stock, or any member of the immediate family of the
foregoing.
9
<PAGE> 12
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Proposals by stockholders which are intended to be presented at the
Company's 2000 Annual Meeting of Stockholders must be received by the Company no
later than November 29, 1999.
Dated: March 26, 1999
By Order of the Board of Directors
ITC Learning Corporation
/s/ Anne J. Fletcher
----------------------------------
Anne J. Fletcher
Corporate Secretary
10
<PAGE> 13
ITC LEARNING CORPORATION
-----------------------------------
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 1999
-----------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
AND MAY BE REVOKED PRIOR TO ITS EXERCISE.
The undersigned stockholder of ITC LEARNING CORPORATION hereby appoints
Christopher E. Mack and Matthew C. Sysak, and each and any one of them, with the
power to appoint his substitute, the true and lawful attorneys, agents and
proxies of the undersigned, to vote all shares of common stock which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders, to be
held at the Company's headquarters, 13515 Dulles Technology Drive, Herndon,
Virginia 20171, on May 5, 1999, at 3:00 p.m. Eastern Daylight Time, and at any
adjournment or adjournments of such meeting, with all powers which the
undersigned would possess if personally present, as follows:
The Board of Directors recommends a vote FOR the proposals listed below.
IF NO DIRECTONS ARE GIVEN, THE PROXIES WILL BE VOTED FOR THE MATTERS LISTED
BELOW. Please indicate your vote by marking an "X" in the space provided below.
1. Election of Directors (to serve terms as noted in the Proxy
Statement):
Nominee FOR WITHHOLD AUTHORITY
------- --- ------------------
Daniel R. Bannister ( ) ( )
Robert R. Spillane ( ) ( )
(For each nominee, check either FOR or WITHHOLD AUTHORITY.)
2. At their discretion, the Proxies are authorized to vote on any
other business properly brought before the meeting or any
adjournment thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED "FOR" THE MATTERS LISTED.
Dated________________________, 1999
- -------------------------------- ---------------------------------
Signature Signature
- -------------------------------- ---------------------------------
Print Name Print Name
(Please sign exactly as your name or names appear on the Company's stock
records. When shares are held by joint tenants, both should sign. If signing as
an attorney, executor, administrator, trustee or guardian, give your full title
as such. If signing on behalf of a corporation, the full name of the corporation
should be set forth accompanied by the signature on its behalf of a duly
authorized officer.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
