SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14(a)-12
DATATEC SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) filing Proxy Statement, if other than 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):
- --------------------------------------------------------------------------------
<PAGE>
(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.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
-2-
<PAGE>
DATATEC SYSTEMS, INC.
March 17, 2000
Dear Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of Datatec Systems, Inc., which will be held at 23 Madison Road, Fairfield, New
Jersey 07004, on Tuesday, April 18, 2000 at 11:00 A.M., local time.
Information about the Annual Meeting, including a listing and
discussion of the matters on which the Stockholders will act, may be found in
the enclosed Notice of Annual Meeting and Proxy Statement.
We hope that you will be able to attend the Annual Meeting. However,
whether or not you anticipate attending in person, I urge you to complete, sign
and return the enclosed proxy card promptly to ensure that your shares will be
represented at the Annual Meeting. If you do attend, you will, of course, be
entitled to vote in person, and if you vote in person such vote will nullify
your proxy.
Sincerely,
ISAAC GAON
Chairman of the Board and Chief
Executive Officer
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, AND COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
<PAGE>
DATATEC SYSTEMS, INC.
23 Madison Rd.
Fairfield, New Jersey 07004
-------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-------------
To our Stockholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Datatec Systems, Inc., a Delaware corporation (the "Company") will be held at 23
Madison Road, Fairfield, New Jersey 07004, on Tuesday, April 18, 2000 at 11:00
A.M., local time for the following purposes:
1. To elect six (6) members to the Board of Directors of the
Company to serve until the next annual meeting of stockholders
and until their successors have been duly elected and shall
have qualified;
2. To approve the adoption of the Company's 2000 Stock Option
Plan (the "2000 Plan");
3. To ratify the appointment of Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year
ending April 30, 2000; and
4. To consider and act upon such other business as may properly
come before the Annual Meeting or any adjournments thereof.
Only stockholders of record at the close of business on March 6, 2000
will be entitled to notice of, and to vote at, the Annual Meeting.
Please sign and promptly mail the enclosed proxy, whether or not you
plan to attend the Annual Meeting, in order that your shares may be voted for
you. A return envelope is provided for your convenience.
By Order of the Board of Directors,
JAMES M. CACI
Vice President-Finance, Chief Financial
Officer, Secretary and Treasurer
Dated: Fairfield, New Jersey
March 17, 2000
<PAGE>
DATATEC SYSTEMS, INC.
23 Madison Rd.
Fairfield, New Jersey 07004
--------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
April 18, 2000
--------------------------
This Proxy Statement is being furnished to the stockholders of Datatec
Systems, Inc., a Delaware corporation (the "Company"), in connection with the
solicitation by the Board of Directors of the Company of proxies ("Proxies") for
the Annual Meeting of Stockholders (the "Annual Meeting") to be held at 23
Madison Road, Fairfield, New Jersey 07004, on Tuesday, April 18, 2000, at 11:00
A.M., local time. At the Annual Meeting, the stockholders will be asked to (i)
elect six (6) directors; (ii) approve the adoption of the Company's 2000 Stock
Option Plan (the "2000 Plan"); (iii) ratify the appointment of Arthur Andersen
LLP as the Company's independent public accountants for the fiscal year ending
April 30, 2000; and (iv) consider and act upon such other business as may
properly come before the Annual Meeting. It is expected that the Notice of
Annual Meeting, Proxy Statement and form of Proxy will first be mailed to
stockholders on or about March 17, 2000.
RECORD DATE AND VOTING SECURITIES
Only stockholders of record at the close of business on March 6, 2000
(the "Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting and any adjournments thereof. As of the close of business on the Record
Date, there were 32,517,053 outstanding shares of the Company's Common Stock.
Each outstanding share of Common Stock is entitled to one vote. There was no
other class of voting securities of the Company outstanding on the Record Date.
A majority of the outstanding shares of Common Stock present in person or by
proxy is required for a quorum.
PROXIES AND VOTING RIGHTS
Shares of Common Stock represented by Proxies, which are properly
executed, duly returned and not revoked, will be voted in accordance with the
instructions contained therein. If no specification is indicated on the Proxy,
the shares of Common Stock represented thereby will be voted (i) for the
election as Directors of the persons who have been nominated by the Board of
Directors, (ii) for the approval of the adoption of the 2000 Plan, (iii) for the
ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal
<PAGE>
year ending April 30, 2000, and (iv) for any other matter that may properly be
brought before the Annual Meeting in accordance with the judgment of the person
or persons voting the Proxy.
The execution of a Proxy will in no way affect a stockholder's right to
attend the Annual Meeting and vote in person. Any Proxy executed and returned by
a stockholder may be revoked at any time thereafter if written notice of
revocation is given to the Secretary of the Company prior to the vote to be
taken at the Annual Meeting, or by execution of a subsequent Proxy which is
presented at the Annual Meeting, or if the stockholder attends the Annual
Meeting and votes by ballot, except as to any matter or matters upon which a
vote shall have been cast pursuant to the authority conferred by such Proxy
prior to such revocation. Broker "non-votes" and the shares of Common Stock as
to which a stockholder abstains are included for purposes of determining the
presence or absence of a quorum for the transaction of business at the Annual
Meeting. A broker "non-vote" occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee does
not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner.
The management of the Company knows of no matters which are to be
presented for consideration at the Annual Meeting other than those specifically
described in the Notice of Annual Meeting of Stockholders, but, if other matters
are properly presented, it is the intention of the persons designated as proxies
to vote on them in accordance with their judgment.
All expenses in connection with this solicitation will be borne by the
Company. In addition to the use of the mails, proxy solicitation may be made by
telephone, telegraph and personal interview by officers, directors and employees
of the Company. The Company will, upon request, reimburse brokerage houses and
persons holding shares in the names of their nominees for their reasonable
expenses in sending soliciting material to their principals.
-2-
<PAGE>
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the
Common Stock outstanding as of March 6, 2000, by (i) each person known by the
Company to be the beneficial owner of more than five percent (5%) of the
Company's Common Stock, (ii) each director, (iii) each of the executive officers
named in the summary compensation table, and (iv) by all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
Amount of Shares
Beneficially
Name and Address of Beneficial Owner(1) Owned(2) Percentage of Class
--------------------------------------- -------- -------------------
<S> <C> <C>
Isaac J. Gaon (3) 1,282,258 3.8%
James M. Caci (4) 301,431 *
Robert F. Gadd(5) 470,766 1.4%
William J. Adams, Jr.(6) 0 *
Thomas J. Berry (7) 72,000 *
Frank P. Brosens(8) 534,873 1.6%
Robert H. Friedman (9) 92,146 *
David M. Milch (10) 517,505 1.6%
All directors and officers as a group (8
persons)(11) 3,270,979 9.4%
Christopher J. Carey (12) 3,443,389 10.5%
Daruma Asset Management, Inc.(13) 2,462,400 7.6%
Ralph Glasgal (14) 2,193,251 6.7%
</TABLE>
- --------------
* Less than 1%
(1) Unless otherwise indicated, all addresses are c/o Datatec Systems,
Inc., 23 Madison Road, Fairfield, New Jersey 07004.
(2) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act ("Rule 13d-3") and unless otherwise indicated,
represents shares for which the beneficial owner has sole voting and
investment power. The percentage of class is calculated in accordance
with Rule 13d-3 and includes options or other rights to subscribe which
are exercisable within sixty (60) days of March 6, 2000.
-3-
<PAGE>
(3) Mr. Gaon's beneficial ownership includes options exercisable within
sixty (60) days from March 6, 2000 to purchase an aggregate of
1,273,880 shares of Common Stock.
(4) Mr. Caci's beneficial ownership includes options exercisable within
sixty (60) days from March 6, 2000 to purchase 298,707 shares of Common
Stock.
(5) Mr. Gadd's beneficial ownership includes options exercisable within
sixty (60) days from March 6, 2000 to purchase 275,766 shares of Common
Stock.
(6) Mr. Adams' address is 555 East Main Street, Chester, New Jersey 07930.
(7) Mr. Berry's beneficial ownership includes options exercisable within
sixty (60) days of March 6, 2000 to purchase 72,000 shares of Common
Stock. Mr. Berry's address is P.O.
Box 447, Lindsley Road, New Vernon, New Jersey 07976.
(8) Mr. Brosens' beneficial ownership includes warrants exercisable within
sixty (60) days from March 6, 2000 to purchase 350,000 shares of Common
Stock and options exercisable within sixty (60) days of March 6, 2000
to purchase 8,000 shares of Common Stock. Mr. Brosens' address is 63
East Field Drive, Bedford, New York 10506.
(9) Mr. Friedman's beneficial ownership includes options exercisable within
sixty (60) days from March 6, 2000 to purchase 72,000 shares of Common
Stock. Mr. Friedman's address is 505 Park Avenue, New York, New York
10022-1170.
(10) Dr. Milch's beneficial ownership includes options exercisable within
sixty (60) days from March 6, 2000 to purchase 48,000 shares of Common
Stock. Dr. Milch's address is 114 East 13th Street, New York, New York
10003.
(11) Includes options and warrants exercisable within sixty (60) days of
March 6, 2000 to purchase an aggregate of 2,398,353 shares of Common
Stock held by the directors and executive officers of the Company.
(12) Mr. Carey's beneficial ownership includes (i) options exercisable
within sixty (60) days from March 6, 2000 to purchase 270,353 shares of
Common Stock, (ii) 118,518 shares of Common Stock owned by Mary Carey,
Mr. Carey's wife, (iii) 96,296 shares held by the Amy Carey GRAT, a
trust formed for the benefit of Mr. Carey's daughter, (iv) 96,296
shares held by the Christopher Carey GRAT, a trust formed for the
benefit of Mr. Carey's son, and (v) 45,000 shares beneficially owned by
Plan C LLC, a limited liability company of which Mr. Carey is a member.
Mr. Carey disclaims beneficial ownership of the shares owned by his
family members and except to the extent of his pecuniary interest
therein, those shares owned by Plan C LLC.
-4-
<PAGE>
(13) Based on information obtained from the Statement on Schedule 13G, dated
February 8, 2000, filed by Daruma Asset Management, Inc. The address
for Daruma Asset Management, Inc. is 60 East 42nd Street, Suite 1111,
New York, New York 10165.
(14) Based on information supplied to the Company by a representative of Mr.
Glasgal as of February 29, 2000. Includes 82,152 shares of Common Stock
owned by Mr. Glasgal's wife. Mr. Glasgal's address is 4 Piermont Road,
Rockleigh, New Jersey 07512.
PROPOSAL 1
ELECTION OF DIRECTORS
Unless otherwise specified, all Proxies received will be voted in favor
of the election of the persons named below as directors of the Company, to serve
until the next Annual Meeting of Stockholders of the Company and until their
successors shall be duly elected and qualified. Directors shall be elected by a
plurality of the votes cast, in person or by proxy, at the Annual Meeting.
The terms of the current directors expire at the Annual Meeting and
when their successors are duly elected and qualified. All nominees are currently
directors of the Company. Management has no reason to believe that any of the
nominees will be unable or unwilling to serve as a director. Should any of the
nominees not remain a candidate for election at the date of the Annual Meeting,
the Proxies will be voted in favor of those nominees who remain candidates and
may be voted for substitute nominees selected by the Board of Directors.
Information Concerning Nominees
The names of the nominees and certain biographical information
concerning each of them are set forth below:
Name Age Position with the Company
---- --- -------------------------
Isaac J. Gaon 50 Chairman of the Board and Chief Executive
Officer
William J. Adams, Jr. 51 Director Nominee
Thomas J. Berry 75 Director
Frank P. Brosens 42 Director
Robert H. Friedman 47 Director
David M. Milch 45 Director
-5-
<PAGE>
Isaac J. Gaon, Chairman of the Board since December 1997 and Director
since 1992, he has served as the Chief Executive Officer since October 1994. He
served as Chief Financial Officer from April 1992 until October 1994. From
September 1987 to December 1991, Mr. Gaon, a chartered accountant, served as
President and Chief Executive Officer of Toronto-based NRG, Inc., (a subsidiary
of Gestetner International) an office equipment supplier, and in several senior
management roles within Gestetner Canada and Gestetner USA.
William J. Adams, Jr., Director Nominee. He has served as the President
of WhiteSpace, Inc., a consulting firm specializing in marketing techniques for
technology-based firms, since he founded such firm in February 1998. Prior to
that time and since January 1994, Mr. Adams served as the President of
Infosource, Inc., an information technology consulting firm that he also
founded.
Thomas J. Berry, Director since July 1995, is currently retired. Mr.
Berry was an executive with the U.S. Postal Service from November 1986 to
December 1992, serving as executive assistant to the Postmaster General. Prior
to that time and until November 1986, Mr. Berry held various executive positions
at AT&T. Mr. Berry is a director of Computer Horizons Corp., a company which
provides a range of information technology services, including professional
staffing, and other technology-based solutions to informational problems.
Frank P. Brosens, Director since November 1998, is one of the founding
partners of Taconic Capital Partners, an investment firm. Mr. Brosens was a
general partner of Goldman Sachs & Co. from November 1988 to November 1994,
where he served as head of the equity derivative and risk arbitrage businesses,
as well as a member of several of the firm's principal investment committees.
Robert H. Friedman, Director since August 1994, has been a partner with
Olshan Grundman Frome Rosenzweig & Wolosky LLP, a New York City law firm, since
August 1992. Prior to that time and since September 1983 he was with Cahill
Gordon & Reindel, also a New York City law firm. Mr. Friedman specializes in
corporate and securities law matters.
Dr. David M. Milch, Director since October 1996, has been a director
and principal since 1983 of Bermil Industries Corporation, a closely held
diversified company owned by the Milch family involved in the manufacture, sale,
financing, and distribution of capital equipment, and in real estate
development. Dr. Milch is also the sole stockholder of Davco Consultants, Inc.,
a corporation that he founded in 1979 for the purpose of identifying, advising,
and investing in emerging growth technologies.
REQUIRED VOTE
Directors are elected by a plurality of the votes cast, in person or by
proxy, at the Annual Meeting. Votes withheld and broker non-votes are not
counted toward a nominee's total.
-6-
<PAGE>
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors of the Company recommends a vote "FOR" the
election of each of the nominees.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended April 30, 1999 ("Fiscal 1999"), the
Company's Board of Directors formally met on seven occasions. Each of the
directors attended (or participated by telephone) more than 75% of such meetings
of the Board of Directors and Committees on which he served during Fiscal 1999.
During Fiscal 1999, the Board of Directors also acted by unanimous written
consent in lieu of a meeting on three occasions. The Board of Directors has no
committees other than the Compensation Committee, the Nominating Committee and
the Audit Committee.
The Company's Compensation Committee, which is comprised of Thomas J.
Berry and Robert H. Friedman reviews and approves the compensation of the
Company's executive officers and administers and interprets the Company's stock
option plans. The Compensation Committee did not take any formal action during
Fiscal 1999.
The Nominating Committee of the Company's Board of Directors is
comprised of Isaac Gaon and David M. Milch. Christopher Carey, who served on the
Nominating Committee during Fiscal 1999, no longer serves on such Committee. The
purpose of this Committee is to select and nominate Directors for elections at
the Company's annual meetings of stockholders. The Nominating Committee met once
during Fiscal 1999. Stockholders wishing to recommend candidates for
consideration by the Nominating Committee may do so by writing to the Secretary
of the Company and providing the candidate's name, biographical data and
qualifications.
The Audit Committee of the Company's Board of Directors is comprised of
David Milch and Frank Brosens. Christopher Carey, who served on the Audit
Committee during Fiscal 1999, no longer serves on such Committee. The Audit
Committee recommends the Company's independent auditors, reviews the scope of
their engagement, consults with the auditors, reviews the results of their
examination, acts as liaison between the Board of Directors and the auditors and
reviews various Company policies, including those relating to accounting and
internal controls. The Audit Committee did not take any formal action during
Fiscal 1999.
-7-
<PAGE>
EXECUTIVE OFFICERS
The Company's executive officers, who are not also directors of the
Company, as well as additional information with respect to such persons is set
forth below. Information with respect to executive officers of the Company who
are also directors is set forth in "Information Concerning Nominees" above.
Name Age Position with the Company
- ---- --- -------------------------
Robert F. Gadd 38 Senior Vice President and Chief Technology
Officer
James M. Caci 35 Chief Financial Officer, Vice President,
Secretary and Treasurer
Robert F. Gadd, Senior Vice President and Chief Technology Officer,
joined the Company in April 1992. Mr. Gadd has been the Company's Chief
Technology Officer since November 1996. From August 1992 until November 1996 Mr.
Gadd was the Vice President of the Company's Federal and Enterprise Systems
group. Mr. Gadd served as Director of Technical Operations of the Company from
April 1992 until August 1992. Prior to joining the Company, Mr. Gadd was
co-founder of Automation Partners International, Inc. ("API"), a San
Francisco-based systems integration firm which has provided open architecture
solutions to the legal industry since 1986.
James M. Caci, Chief Financial Officer, Vice President of Finance,
Secretary and Treasurer, joined the Company in October 1994. Mr. Caci has been
the Company's Chief Financial Officer since October 1994, Vice President of
Finance since January 1997, and the Company's Secretary and Treasurer since June
1995. From April 1994 to October 1994 Mr. Caci was a manager in the finance
department of Merck & Co., and from July 1986 to April 1994, Mr. Caci was with
the accounting firm of Arthur Andersen LLP, most recently as Manager.
The officers of the Company are elected annually by the Board of
Directors at its meeting following the Annual Meeting of Stockholders and hold
office at the discretion of the Board of Directors. There are no family
relationships between any directors and executive officers of the Company.
-8-
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers and directors, and person who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Officers, directors and greater than ten percent
stockholders are required by the Commission's regulations to furnish the Company
with copies of all Section 16(a) forms they file.
Each of the following persons failed to file on a timely basis one
report for a single transaction required by Section 16(a) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder (the "Exchange Act"), during Fiscal 1999: Thomas Berry and David
Milch. Christopher Carey failed to file on a timely basis two reports covering
transactions required by Section 16(a) of the Exchange Act during Fiscal 1999.
Each of the transactions were subsequently reported to the Commission on a Form
4.
-9-
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information for the fiscal years ended
April 30, 1997, 1998 and 1999 with respect to annual and long-term compensation
for services in all capacities to the Company of (i) the chief executive
officer, and (ii) the other four most highly compensated executive officers of
the Company at April 30, 1999 who received compensation of at least $100,000
during Fiscal 1999 (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation(1)
Long-Term
Compensation
Awards
Securities
Underlying All Other
Name and Position Year Salary Bonus Options(#) Compensation
- -------------------------- -------- ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Isaac J. Gaon 1999 $262,000 - - -
Chairman of the Board 1998 257,000 - 150,000 -
and Chief Executive 1997 250,000 - 350,000 -
Officer
Christopher J. Carey (3) 1999 $262,000 $171,000 - -
Former President 1998 257,000 164,000 150,000 -
1997 345,000 95,000 120,353 $24,000
Robert F. Gadd 1999 $197,000 - - -
Senior Vice President and 1998 162,000 - 30,000 -
Chief Technology Officer 1997 155,000 - - -
James M. Caci 1999 $154,000 - - -
Vice President of Finance, 1998 152,000 - 20,000 -
Chief Financial Officer, 1997 128,100 - 175,000 -
Treasurer, and Secretary
Raymond Koch (4) 1999 $250,000 $75,000 50,000 -
Former Chief Operating 1998 250,000 75,000 30,000 -
Officer 1997 273,000 38,000 - $23,000
</TABLE>
- ---------------------
-10-
<PAGE>
(1) The value of personal benefits for executive officers of the Company
that might be attributable to management as executive fringe benefits
such as automobiles and club dues cannot be specifically or precisely
determined; however, it would not exceed the lesser of $50,000 or 10%
of the total annual salary and bonus reported for any individual named
above.
(2) The amounts shown in this column reflect the dollar value of life
insurance premiums paid by the Company.
(3) Mr. Carey has resigned as an executive officer and as a Director of the
Company in March 2000.
(4) Mr. Koch is no longer an executive officer of the Company.
Option Grants Table
The following table sets forth certain information regarding stock
option grants made to each of the Named Officers during Fiscal 1999.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Rates of Annual
Rates of Stock Price
Appreciation for
Individual Grants Option(1)
Percent of Total
Shares-of-Common Options Granted to Exercise or
Stock Underlying Employees in Fiscal Base Price
Name Options Granted Year(%) ($/Sh)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Isaac J. Gaon -- -- -- - - --
Christopher J. Carey -- -- - -- - -
Robert F. Gadd -- -- - - - -
James M. Caci -- -- - -- -- -
Raymond Koch 50,000 10.1% $2.307 04/30/00 6,000 12,000
</TABLE>
(1) The potential realizable portion of the foregoing table illustrates
value that might be realized upon exercise of options immediately prior
to the expiration of their term, assuming (for illustrative purposes
only) the specified compounded rates of appreciation on the Company's
Common Stock over the term of the option. These numbers do not take
into account provisions providing for termination of the option
following termination of employment, non-transferability or difference
in vesting periods.
-11-
<PAGE>
Aggregated Option Exercises and Year-End Option Values Table
The following table sets forth certain information concerning stock
options exercised during Fiscal 1999 and stock options which were unexercised at
the end of Fiscal 1999 with respect to the Named Executive Officers.
AGGREGATED OPTION EXERCISES
DURING THE MOST RECENTLY COMPLETED
FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Shares
Acquired Number of Securities
on Value Underlying Unexercised Value of Unexercised
Exercise Realized Options Held at Fiscal Year- in-the-Money Options at Fiscal
(#) ($) End(#) Year-End($)(1)
Name Exercisable Unexercisable Exercisable Unexercisable
- --------------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Isaac J. Gaon - -- 1,273,880 0 $633,699 --
Christopher J. Carey - -- 270,353 0 0 --
Robert Gadd - -- 275,766 0 0 -
James M. Caci - - 255,983 0 0 -
Raymond Koch - - 101,835 25,000 0 8,600
</TABLE>
(1) Represents the total gain that would be realized if all in-the-money
options held at April 30, 1999 were exercised, determined by
multiplying the number of shares underlying the options by the
difference between the per share option exercise price and $2.594 per
share, which was the closing bid price per share of the Company's
Common Stock on April 30, 1999. An option is in-the-money if the fair
market value of the underlying shares exceeds the exercise price of the
option.
-12-
<PAGE>
Options Repricing Table
In May 1997, certain employees and director stock options, including
options held by executive officers, were repriced to $4.00 per share, with all
other terms and conditions remaining unchanged. The following table sets forth
certain information regarding the repricing of stock options for executive
officers of the Company in May 1997 and within the ten previous years.
TEN-YEAR OPTION REPRICING
<TABLE>
<CAPTION>
Number of Length of
Securities Original Term
Underlying Market Price of Exercise Price Remaining at
Repricing Options Stock at Time at Time of New Exercise Date of
Name Date Repriced(#) of Repricing($) Repricing($) Price($) Repricing
- ------------------ --------- ------------ --------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Isaac J. Gaon, 5/30/97 350,000 $3.81 $5.25 $4.00 9 yrs. 5 mos.
Chairman of the
Board and Chief
Executive Officer
James M. Caci, 5/30/97 175,000 $3.81 $5.25 $4.00 9 yrs. 5 mos.
Vice President,
CFO, Treasurer and
Secretary
</TABLE>
Directors Compensation
Each director who is not an employee of the Company receives a fee of
$1,000 per meeting attended. The members of the Board are also eligible for
reimbursement of their reasonable expenses incurred in connection with
attendance of Board meetings.
Employment Agreements
Isaac Gaon is employed as the Company's Chairman of the Board and Chief
Executive Officer of the Company pursuant to an employment agreement dated as of
October 31, 1996, for a term ending on October 31, 1999, which has been extended
to April 30, 2000. The agreement provides for an initial base salary of $250,000
which is reviewed annually by the Compensation Committee and incentive
compensation based on the Company's Projected EBIT (as defined in the
agreement). In the event of his disability, Mr. Gaon is to receive the full
amount of his base salary for six months. Upon a Change of Control of the
Company (as defined in the agreement) that results in Mr. Gaon's removal from
the Company's Board of Directors, a significant change in the conditions of his
employment or other breach of the agreement, he is to receive liquidated damages
equal to 2.99 times the "base amount," as defined in the United States Internal
Revenue Code of 1986, as amended (the "Code"), of his compensation. Upon early
termination by the Company without Cause (as defined in the agreement), or by
Mr. Gaon with "Good Reason" (as defined in the agreement), the Company is
required to pay Mr. Gaon the
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<PAGE>
remainder of the salary owed him through April 30, 2000, but in no event shall
such payment be less than $500,000. Additionally, Mr. Gaon will be entitled to
undistributed bonus payments, as well as pro-rata unused vacation time payments.
In addition, following a Change of Control, termination by the Company without
Cause, or termination by Mr. Gaon for Good Reason, the Company is obligated to
purchase all Mr. Gaon's stock options, whether exercisable or not, for a price
equal to the difference between the fair market value of the Common Stock on the
date of termination and the exercise price of such options.
The Company entered into an employment agreement dated as of December
31, 1996, with Robert Gadd on terms substantially similar to those of Isaac
Gaon's employment agreement for a term ending on December 31, 1999, which has
been extended to April 30, 2000. Mr. Gadd's agreement provides for his
employment by the Company as its Senior Vice President at an initial base salary
of $155,000 which is reviewed annually by the Compensation Committee, and in the
case of early termination, his accelerated payment is in no case to be below
$200,000.
Effective as of October 31, 1996, the Company entered into an
employment agreement with James Caci on terms substantially similar to those of
Isaac Gaon's employment agreement for a term ending on October 31, 1999, which
has been extended to April 30, 2000. Mr. Caci's agreement provides for his
employment by the Company as its Chief Financial Officer and Vice President of
Finance and Secretary at an initial base salary of $150,000 which is reviewed
annually by the Compensation Committee, and in case of early termination, his
accelerated salary payment is in no case to be below $300,000.
DATATEC SYSTEMS, INC.
REPORT OF THE COMPENSATION COMMITTEE
General
The Board of Directors created the Compensation Committee in 1994.
Since Fiscal 1999, the Compensation Committee has consisted of Robert H.
Friedman and Thomas J. Berry.
The Compensation Committee's duties include: making recommendations on
compensation actions involving the Company's President and Chief Executive
Officer, including but not limited to salary actions, incentive bonus
determinations and terms of employment; approving incentive bonus determinations
and terms of employment for executive officers other than the President and
Chief Executive Officer and for other key employees and agents; reviewing salary
actions (approved by the Chief Executive Officer) regarding executive officers
other than the President and Chief Executive Officer and regarding other key
employees and agents; making recommendations on compensation and benefit plans
requiring Board and/or stockholder approval; and such other duties as the Board
of Directors may assign to it from time to time. The Compensation Committee also
currently administers the Company's stock option plans.
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<PAGE>
Philosophy of Executive Compensation
In reaching its decisions regarding executive compensation, the
Compensation Committee was guided by the following philosophy.
Total cash compensation levels (salary plus annual bonus)
should be set at levels consistent with competitive practice
at other open systems computer integration companies of
similar size.
Performance objectives, used to determine incentive bonuses,
should be explained and confirmed in advance.
Stock based incentives should be sufficient to promote
alignment of interests between executives and stockholders,
while ensuring that stockholders must benefit before
executives do.
Employment security arrangements should provide competitive
benefits while encouraging executives to make decisions that
will maximize long-term stockholder value.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), places a limit of $1,000,000 on the amount of compensation that may be
deducted by the Company in any year with respect to certain of the Company's
highest paid executives. Certain performance-based compensation that has been
approved by stockholders is not subject to the deduction limit. The Company
intends to qualify certain compensation paid to executive officers for
deductibility under the Code, including Section 162(m). However, the Company may
from time to time pay compensation to its executive officers that may not be
deductible.
Compensation Programs for Executive Officers
This section describes the compensation programs for executive officers
that were in effect in Fiscal 1999 and the programs approved by the Compensation
Committee for the 2000 fiscal year.
Base Salary
Base salary levels are primarily a function of competitive practice at
other companies for positions of similar scope and responsibility. Other factors
that influence base salary levels include the incumbent's tenure with the
Company, individual performance, potential earnings from comparable outside
positions and the performance of the Company.
Mr. Gaon's salary for Fiscal 1999 was $262,000, which reflects a
competitive salary for his position for similarly sized companies.
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<PAGE>
Incentive Bonus Program
The Compensation Committee considers cash performance bonuses to its
executives in accordance with the following terms: competitive practice at other
companies for positions of similar scope and responsibility; overall performance
of the Company; individual performance of the executive; and transactions
effected for the benefit of the Company which are outside the ordinary business
and directly accomplished through the efforts of the executive
Stock Option Program
During Fiscal 1999, options to purchase an aggregate of 50,000 shares
were granted to Named Executives under the Company's 1996 Senior Executive
Officer Stock Option Plan (the "Executive Option Plan"), none of which were
granted to Mr. Gaon. Grants under the Company's stock option plans are made to
provide incentives to executive officers to contribute to corporate growth and
profitability and are based on the Compensation Committee and the Board's
judgment of an employee's contribution to the success of the Company's
operations.
Employment Agreements
The Company has entered into employment agreements with Isaac Gaon,
James Caci, and Robert Gadd. See "Executive Compensation - Employment
Agreements." The objective of these agreements are two-fold:
To ensure the Company of consistency of leadership and the
retention of a qualified Chief Executive Officer, Chief
Financial Officer and Chief Technology Officer, respectively;
and
To foster a spirit of employment security to Mr. Gaon, Mr.
Caci and Mr. Gadd, thereby encouraging decisions that will
benefit long-term stockholders.
Compensation Committee: Robert H. Friedman; Thomas J. Berry.
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<PAGE>
Performance Graph
The "peer group" selected by the Company in the immediately preceding
fiscal year was comprised of data communications equipment distributors. The
Company knows of no other company whose entire focus is information technology
deployment services and has chosen peer group participants with primary lines of
business that most closely approximate the business of the Company. The Company
has selected the following companies in its peer group, (i) Hewlett-Packard
Corp., (ii) NCR Corp., (iii) Whitman-Hart, Inc., and (iv) Cambridge Technology
Partners, Inc. Whitman-Hart, Inc. and Cambridge Technology Partners, Inc. were
added to the "peer group" index that the Company used in the immediately
preceding fiscal year in order to replace Vanstar Corp. and Wang Laboratories,
Inc., which were involved in recent business combinations.
The graph below compares the cumulative total stockholder return on the
Common Stock of the Company with the cumulative total return on the Nasdaq
Market Index and an index of peer companies in the rapid deployment business
selected by the Company over the same period (assuming the investment of $100 in
the Company's Common Stock, the Nasdaq Market Index and the peer group on May 4,
1994, and reinvestment of all dividends).
Compare 5-Year Cumulative Total Return
Among Datatec Systems, Inc.
Nasdaq Market Index and
Peer Group Index
<TABLE>
<CAPTION>
------------------------- FISCAL YEAR ENDING ---------------------------------
COMPANY/INDEX/MARKET 5/04/1994 4/28/1995 4/30/1996 4/30/1997 4/30/1998 4/30/1999
<S> <C> <C> <C> <C> <C> <C>
Datatec Systems 100.00 50.00 176.47 76.47 129.41 61.03
Customer Selected Stock List 100.00 165.56 268.35 269.40 391.11 408.12
NASDAQ Market Index 100.00 109.19 152.42 162.47 241.31 318.66
</TABLE>
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October and November 1997, the Company loaned an aggregate of
$200,000 to Isaac Gaon. The loan matures on April 30, 2000 and bears interest at
a rate of 8.0% per annum.
In 1999, the Company forgave Ralph Glasgal's repayment of a loan of
$125,000 in consideration for signing a lock-up agreement as part of a private
placement equity offering. Mr. Glasgal is the former Chairman of the Company and
a 5% stockholder.
Mr. William J. Adams, Jr., a nominee for Director of the Company, is
the President of WhiteSpace, Inc., which company has been retained by the
Company to provide consulting services to the Company. No fees were received
from the Company by such firm during the last fiscal year.
Mr. Robert H. Friedman, a Director of the Company, is a member of the
law firm of Olshan Grundman Frome Rosenzweig & Wolosky LLP, which law firm has
been retained by the Company during the last fiscal year. Fees received from the
Company by such firm during the last fiscal year did not exceed 5% of such
firm's or the Company's revenues.
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PROPOSAL 2
APPROVAL OF ADOPTION OF 2000 STOCK OPTION PLAN
The Board of Directors of the Company has unanimously approved for
submission to a vote of the stockholders a proposal to adopt the 2000 Stock
Option Plan (the "2000 Plan"). The purpose of the 2000 Plan is to retain in the
employ of and as directors, consultants and advisors to the Company persons of
training, experience and ability, to attract new employees, directors, advisors
and consultants whose services are considered valuable, to encourage the sense
of proprietorship and to stimulate the active interest of such persons in the
development and financial success of the Company and its subsidiaries. As the
Company continues to develop, it believes that the grants of options and other
forms of equity participation will become a more important means to retain and
compensate employees, directors, advisors and consultants.
The 2000 Plan is intended to replace all of the Company's existing
stock option plans (collectively, the "Existing Plans"), which include (i) the
1990 Employee Stock Option Plan, (ii) the 1995 Directors Option Plan, (iii) the
1996 Employee and Consultant Stock Option Plan, and (iv) the 1996 Senior
Executive Plan. If the 2000 Plan is approved by the stockholders, the Company
intends that no further options will be granted under the Existing Plans, but
options heretofore granted thereunder will remain unaffected. The Company
believes that having a single stock option plan will be easier to administer.
Each option granted pursuant to the 2000 Plan shall be designated at
the time of grant as either an "incentive stock option" or as a "non-statutory
stock option." In addition, any director of the Company who is neither a present
nor past employee of the Company, will receive automatic option grants under
Section 6 of the 2000 Plan. A summary of the significant provisions of the 2000
Plan is set forth below. The full text of the 2000 Plan is set forth as Appendix
A to this Proxy Statement. This discussion of the 2000 Plan is qualified in its
entirety by reference to Appendix A.
Administration of the Plan
The 2000 Plan will be administered by the Board of Directors of the
Company or a committee consisting of two or more directors who are "Non-Employee
Directors" (as such term is defined in Rule 16b-3) and "Outside Directors" (as
such term is defined in Section 162(m) of the Code) (the "Committee"). All
references to the term "Committee" herein, shall be deemed references to the
Board of Directors. The Committee determines, with the exception of options
automatically granted to non-employee directors pursuant to Section 6 of the
Plan, to whom among those eligible, and the time or times at which options will
be granted, the number of shares to be subject to options, the duration of
options, any conditions to the exercise of options, and the manner in and price
at which options may be exercised. In making such determinations, the Committee
may take into account the nature and period of service of eligible persons,
their level of compensation, their past, present and potential contributions to
the Company and such other factors as the Committee in its discretion deems
relevant.
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<PAGE>
The Committee is authorized to amend, suspend or terminate the 2000
Plan, except that it is not authorized without stockholder approval (except with
regard to adjustments resulting from changes in capitalization) to (i)
materially increase the number of shares that may be issued under the 2000 Plan,
except as is provided in Section 8 of the 2000 Plan; (ii) materially increase
the benefits accruing to the option holders under the 2000 Plan; (iii)
materially modify the requirements as to eligibility for participation in the
2000 Plan; (iv) decrease the exercise price of an Incentive Option to less than
100% of the Fair Market Value per share of Stock on the date of grant thereof,
decrease the exercise price of a Nonqualified Option to less than 80% of the
Fair Market Value per share of Stock on the date of grant thereof; or decrease
the exercise price of an option granted to a Non-Employee director under Section
6 of the 2000 Plan, or (v) extend the term of any option beyond that provided
for in Section 5 of the 2000 Plan.
Unless the 2000 Plan is terminated earlier by the Committee, it will
terminate on March 8, 2010.
Common Stock Subject to the 2000 Plan
The 2000 Plan provides that options may be granted with respect to a
total of 3,000,000 shares of Common Stock. The maximum number of shares of stock
that can be subject to options granted under the 2000 Plan to any individual in
any calendar year shall not exceed 750,000. Under certain circumstances
involving a change in the number of shares of Common Stock, such as a stock
split, stock consolidation or payment of a stock dividend, the class and
aggregate number of shares of Common Stock in respect of which options may be
granted under the 2000 Plan, the class and number of shares subject to each
outstanding option and the option price per share will be proportionately
adjusted. In addition, if the Company is involved in a merger, consolidation,
dissolution, liquidation or upon a transfer of substantially all of the assets
or more than 80% of the outstanding Common Stock, the options granted under the
2000 Plan will be adjusted or, under certain conditions, will terminate, subject
to the right of the option holder to exercise his option or a comparable option
substituted at the discretion of the Company prior to such event. If any option
expires or terminates for any reason, without having been exercised in full, the
unpurchased shares subject to such option will be available again for the
purposes of the 2000 Plan.
Participation
Any employee, officer, director of, and any consultant and advisor to
the Company or any of its subsidiaries shall be eligible to receive stock
options under the 2000 Plan. Only employees of the Company or its subsidiaries
shall be eligible to receive incentive stock options. Only directors that are
not employees of the Company (each a "Non-Employee Director") shall be eligible
to receive automatic option grants under Section 6 of the 2000 Plan.
Option Price
With the exception of options granted to Non-Employee Directors under
Section 6 of the 2000 Plan, the exercise price of each option is determined by
the Committee, but may not be less than 100%
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<PAGE>
of the Fair Market Value (as defined in the 2000 Plan) of the shares of Common
Stock covered by the option on the date the option is granted in the case of an
incentive stock option, nor less than 80% of the Fair Market Value of the shares
of Common Stock covered by the option on the date the option is granted in the
case of a non-statutory stock option. If an incentive stock option is to be
granted to an employee who owns over 10% of the total combined voting power of
all classes of the Company's capital stock, then the exercise price may not be
less than 110% of the Fair Market Value of the Common Stock covered by the
option on the date the option is granted.
Terms of Options
With the exception of options granted to Non-Employee Directors under
Section 6 of the 2000 Plan, the Committee shall, in its discretion, fix the term
of each option, provided that the maximum term of each option shall be 10 years.
Incentive stock options granted to an employee who owns over 10% of the total
combined voting power of all classes of stock of the Company shall expire not
more than five years after the date of grant. The 2000 Plan provides for the
earlier expiration of options of a participant in the event of certain
terminations of employment or engagement. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend, or other change
in corporate structure affecting the common stock of the Company, the
Compensation Committee shall make an appropriate and equitable adjustment in the
number and kind of shares reserved for issuance under the 2000 Plan and in the
number and option price of shares subject to outstanding options granted under
the 2000 Plan, to the end that after such event each option holder's
proportionate interest shall be maintained as immediately before the occurrence
of such event.
Automatic Option Grants to Non-Employee Directors
Pursuant to Section 6 of the 2000 Plan, subject to stockholder
approval, each Non-Employee Director shall automatically receive a grant of an
option to purchase 24,000 shares of Common Stock on the date that such director
first becomes a director of the Company. To the extent that shares of Common
Stock remain available for the grant of options under the 2000 Plan, each year
on the day which is the yearly anniversary date after they began serving on the
Board, each Non-Employee Director shall be granted an option to purchase 24,000
shares of Common Stock.
Options automatically granted under Section 6 of the 2000 Plan shall be
exercisable in three equal installments commencing on the date of such grant and
on the two one year anniversaries thereafter; provided that in the case of a
Non-Employee Director's death or permanent disability, such options held thereby
will become immediately exercisable for a one-year period (but in no case after
the stated term of such option has expired).
The term of each of the options granted under Section 6 of the 2000
Plan shall be ten years from the date of grant, subject to early termination by
the Committee. The 2000 Plan also provides for the termination of such options
after one year in the event a Non-Employee Director's membership on the Board of
Directors terminates.
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<PAGE>
Restrictions on Grant and Exercise
Generally, an option may not be transferred or assigned other than by
will or the laws of descent and distribution or pursuant to a qualified domestic
relations order and, during the lifetime of the option holder, may be exercised
solely by him. The aggregate Fair Market Value (determined at the time the
incentive stock option is granted) of the shares as to which an employee may
first exercise incentive stock options in any one calendar year under all
incentive stock option plans of the Company and its subsidiaries may not exceed
$100,000. The Committee may impose any other conditions to exercise as it deems
appropriate.
Registration of Shares
The Company may file a registration statement under the Securities Act
of 1933, as amended, with respect to the Common Stock issuable pursuant to the
2000 Plan subsequent to the approval of the 2000 Plan by the Company's
stockholders.
Rule 16b-3 Compliance
In all cases, the terms, provisions, conditions and limitations of the
2000 Plan shall be construed and interpreted consistent with the provisions of
Rule 16b-3 of the Securities Exchange Act of 1934, as amended.
Tax Treatment of Incentive Options
No taxable income will be recognized by an option holder upon receipt
of an incentive stock option, and the Company will not be entitled to a tax
deduction in respect of such grant.
In general, no taxable income for Federal income tax purposes will be
recognized by an option holder upon receipt or exercise of an incentive stock
option and the Company will not then be entitled to any tax deduction. Assuming
that the option holder does not dispose of the option shares before the
expiration of the longer of (i) two years after the date of grant, or (ii) one
year after the transfer of the option shares, upon disposition, the option
holder will recognize capital gain equal to the difference between the sale
price on disposition and the exercise price.
If, however, the option holder disposes of his option shares prior to
the expiration of the required holding periods, he will recognize ordinary
income for Federal income tax purposes in the year of disposition equal to the
lesser of (i) the difference between the fair market value of the shares at date
of exercise and the exercise price, or (ii) the difference between the sale
price upon disposition and the exercise price. Any additional gain on such
disqualifying disposition will be treated as capital gain. In addition, if such
a disqualifying disposition is made by the option holder, the Company will be
entitled to a deduction equal to the amount of ordinary income recognized by the
option holder provided such amount constitutes an ordinary and reasonable
expense of the Company.
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<PAGE>
Tax Treatment of Non-Statutory Options
No taxable income will be recognized by an option holder upon receipt
of a non-statutory stock option, and the Company will not be entitled to a tax
deduction for such grant.
Upon the exercise of a non-statutory stock option, the option holder
will include in taxable income for Federal income tax purposes the excess in
value on the date of exercise of the shares acquired upon exercise of the
non-qualified stock option over the exercise price. Upon a subsequent sale of
the shares, the option holder will derive short-term or long-term gain or loss,
depending upon the option holder's holding period for the shares, commencing
upon the exercise of the option, and upon the subsequent appreciation or
depreciation in the value of the shares.
The Company generally will be entitled to a corresponding deduction at
the time that the participant is required to include the value of the shares in
his income.
Withholding of Tax
The Company is permitted to deduct and withhold amounts required to
satisfy its withholding tax liabilities with respect to its employees.
Option Grants
No options have heretofore been granted under the 2000 Plan.
Required Vote
The affirmative vote of the holders of a majority of the Common Stock
present, in person or by proxy, is required for approval of the adoption of the
2000 Plan. An abstention, withholding of authority to vote or broker non-vote,
therefore, will not have the same legal effect as an "against" vote and will not
be counted in determining whether the proposal has received the requisite
stockholder vote.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote "FOR" the
approval of the adoption of the 2000 Plan.
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<PAGE>
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Arthur Andersen LLP as the
Company's independent public accountants for the fiscal year ending April 30,
2000. Although the selection of auditors does not require ratification, the
Board of Directors has directed that the appointment of Arthur Andersen LLP be
submitted to stockholders for ratification due to the significance of their
appointment to the Company. A representative of Arthur Andersen LLP is expected
to be present at the Annual Meeting. Such representative will have an
opportunity to make a statement if he desires to do so and will be available to
respond to appropriate questions from stockholders.
Required Vote
The affirmative vote of the holders of a majority of the Common Stock
present, in person or by proxy, is required for ratification of the appointment
of Arthur Andersen LLP as independent auditors of the Company. An abstention,
withholding of authority to vote or broker non-vote, therefore, will not have
the same legal effect as an "against" vote and will not be counted in
determining whether the proposal has received the requisite stockholder vote.
Recommendation of the Board of Directors
The Board of Directors of the Company recommends a vote "FOR" the
ratification of the appointment of Arthur Andersen LLP as the Company's
independent public accountants for the fiscal year ending April 30, 2000.
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<PAGE>
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Annual Meeting
for the fiscal year ending April 30, 2000 must be received by the Company for
inclusion in the 2000 Proxy Statement no later than November 18, 2000. Such
proposals should be addressed to the Company's Secretary.
With respect to any stockholder proposals to be presented at the Annual
Meeting for the fiscal year ending April 30, 2000 which are not included in the
2000 proxy materials, management proxies for the 2000 meeting will be entitled
to exercise their discretionary authority to vote on such proposals
notwithstanding that they are not discussed in the proxy materials unless the
proponent notifies the Company of such proposal by not later than February 1,
2001.
ANNUAL REPORT
All stockholders of record as of Monday, March 6, 2000 have been sent,
or are concurrently herewith being sent, a copy of the Company's Annual Report
on Form 10-K, for the fiscal year ended April 30, 1999. Such report contains
certified consolidated statements of the Company and its subsidiaries for Fiscal
1999.
OTHER MATTERS
As of the date of this Proxy Statement, management knows of no matters
other than those set forth herein which will be presented for consideration at
the Annual Meeting. If any other matter or matters are properly brought before
the Annual Meeting or any adjournment thereof, the persons named in the
accompanying Proxy will have discretionary authority to vote, or otherwise act,
with respect to such matters in accordance with their judgment.
By Order of the Board of Directors,
JAMES M. CACI
Chief Financial Officer,
Secretary and Treasurer
March 17, 2000
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<PAGE>
APPENDIX A
DATATEC SYSTEMS, INC.
2000 STOCK OPTION PLAN
1. Purpose of the Plan.
This 2000 Stock Option Plan (the "Plan") is intended as an
incentive, to retain in the employ of and as directors, consultants and advisors
to Datatec Systems, Inc., a Delaware corporation (the "Company") and any
Subsidiary of the Company, within the meaning of Section 424(f) of the United
States Internal Revenue Code of 1986, as amended (the "Code"), persons of
training, experience and ability, to attract new employees, directors,
consultants and advisors whose services are considered valuable, to encourage
the sense of proprietorship and to stimulate the active interest of such persons
in the development and financial success of the Company and its Subsidiaries.
It is further intended that certain options granted pursuant
to the Plan shall constitute incentive stock options within the meaning of
Section 422 of the Code (the "Incentive Options") while certain other options
granted pursuant to the Plan shall be nonqualified stock options (the
"Nonqualified Options"). Incentive Options and Nonqualified Options are
hereinafter referred to collectively as "Options."
The Company intends that the Plan meet the requirements of
Rule 16b-3 ("Rule 16b-3") promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan will be exempt from the operation of Section
16(b) of the Exchange Act. Further, the Plan is generally intended to satisfy
the performance-based compensation exception to the limitation on the Company's
tax deductions imposed by Section 162(m) of the Code. In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company's intent as stated in this Section 1.
2. Administration of the Plan.
The Board of Directors of the Company (the "Board") shall
appoint and maintain as administrator of the Plan a Committee (the "Committee")
consisting of two or more directors who are "Non-Employee Directors" (as such
term is defined in Rule 16b-3) and "Outside Directors" (as such term is defined
in Section 162(m) of the Code), which shall serve at the pleasure of the Board.
The Committee, subject to Sections 3 and 5 hereof, shall have full power and
authority to designate recipients of Options, to determine the terms and
conditions of respective Option agreements (which need not be identical) and to
interpret the provisions and supervise the administration of the Plan. The
Committee shall have the authority, without limitation, to designate which
Options granted under the Plan shall be Incentive Options and which shall be
Nonqualified Options. To the extent any Option does not qualify as an Incentive
Option, it shall constitute a separate Nonqualified Option.
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<PAGE>
Subject to the provisions of the Plan, the Committee shall
interpret the Plan and all Options granted under the Plan, shall make such rules
as it deems necessary for the proper administration of the Plan, shall make all
other determinations necessary or advisable for the administration of the Plan
and shall correct any defects or supply any omission or reconcile any
inconsistency in the Plan or in any Options granted under the Plan in the manner
and to the extent that the Committee deems desirable to carry into effect the
Plan or any Options. The act or determination of a majority of the Committee
shall be the act or determination of the Committee and any decision reduced to
writing and signed by all of the members of the Committee shall be fully
effective as if it had been made by a majority at a meeting duly held. Subject
to the provisions of the Plan, any action taken or determination made by the
Committee pursuant to this and the other Sections of the Plan shall be
conclusive on all parties.
In the event that for any reason the Committee is unable to
act or if the Committee at the time of any grant, award or other acquisition
under the Plan of Options or Stock as hereinafter defined does not consist of
two or more directors who are "Non-Employee" and "Outside," or if there shall be
no such Committee, then the Plan shall be administered by the Board, and
references herein to the Committee (except in the proviso to this sentence)
shall be deemed to be references to the Board, and any such grant, award or
other acquisition may be approved or ratified in any other manner contemplated
by subparagraph (d) of Rule 16b-3; provided, however, that options granted to
the Company's Chief Executive Officer or to any of the Company's other four most
highly compensated officers that are intended to qualify as performance-based
compensation under Section 162(m) of the Code may only be granted by the
Committee.
3. Designation of Optionees.
The persons eligible for participation in the Plan as
recipients of Options (the "Optionees") shall include employees, officers and
directors of (in addition to what such director has received or may receive
under Section 6 of the Plan), and consultants and advisors to, the Company or
any Subsidiary; provided that Incentive Options may only be granted to employees
of the Company or any Subsidiary. In selecting Optionees, and in determining the
number of shares to be covered by each Option granted to Optionees, the
Committee may consider the office or position held by the Optionee or the
Optionee's relationship to the Company, the Optionee's degree of responsibility
for and contribution to the growth and success of the Company or any Subsidiary,
the Optionee's length of service, age, promotions, potential and any other
factors that the Committee may consider relevant. An Optionee who has been
granted an Option hereunder may be granted an additional Option or Options, if
the Committee shall so determine.
4. Stock Reserved for the Plan.
Subject to adjustment as provided in Section 8 hereof, a total
of 3,000,000 shares of the Company's Common Stock, $0.001 par value per share
(the "Stock"), shall be subject to the Plan. The maximum number of shares of
Stock that may be subject to options granted under the Plan to any individual in
any calendar year shall not exceed 750,000, and the method of counting such
shares shall conform to any requirements applicable to performance-based
compensation under Section 162(m) of
A-2
<PAGE>
the Code. The shares of Stock subject to the Plan shall consist of unissued
shares or previously issued shares held by any Subsidiary of the Company, and
such amount of shares of Stock shall be and is hereby reserved for such purpose.
Any of such shares of Stock that may remain unsold and that are not subject to
outstanding Options at the termination of the Plan shall cease to be reserved
for the purposes of the Plan, but until termination of the Plan the Company
shall at all times reserve a sufficient number of shares of Stock to meet the
requirements of the Plan. Should any Option expire or be canceled prior to its
exercise in full or should the number of shares of Stock to be delivered upon
the exercise in full of an Option be reduced for any reason, the shares of Stock
theretofore subject to such Option may be subject to future Options under the
Plan, except where such reissuance is inconsistent with the provisions of
Section 162(m) of the Code.
5. Terms and Conditions of Options.
Options granted under the Plan shall be subject to the
following conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:
(a) Option Price. The purchase price of each share of Stock
purchasable pursuant to an Incentive Option shall be determined by the Committee
at the time of grant, but shall not be less than 100% of the Fair Market Value
(as defined below) of such share of Stock on the date the Option is granted;
provided, however, that with respect to an Optionee who, at the time an
Incentive Option is granted, owns (within the meaning of Section 424(d) of the
Code) more than 10% of the total combined voting power of all classes of stock
of the Company or of any Subsidiary, the purchase price per share of Stock shall
be at least 110% of the Fair Market Value per share of Stock on the date of
grant. The purchase price of each share of Stock purchasable under a
Nonqualified Option shall not be less than 80% of the Fair Market Value of such
share of Stock on the date the Option is granted; provided, however, that if an
Option granted to the Company's Chief Executive Officer or to any of the
Company's other four most highly compensated officers is intended to qualify as
performance-based compensation under Section 162(m) of the Code, the exercise
price of such Option shall not be less than 100% of the Fair Market Value (as
such term is defined below) of such share of Stock on the date the Option is
granted. The exercise price for each Option shall be subject to adjustment as
provided in Section 8 below. "Fair Market Value" means the closing price of
publicly traded shares of Stock on the principal securities exchange on which
shares of Stock are listed (if the shares of Stock are so listed), or on the
NASDAQ Stock Market (if the shares of Stock are regularly quoted on the NASDAQ
Stock Market), or, if not so listed or regularly quoted, the mean between the
closing bid and asked prices of publicly traded shares of Stock in the
over-the-counter market, or, if such bid and asked prices shall not be
available, as reported by any nationally recognized quotation service selected
by the Company, or as determined by the Committee in a manner consistent with
the provisions of the Code. In no event shall the purchase price of a share of
Stock be less than the minimum price permitted under the rules and policies of
any national securities exchange on which the shares of Stock are listed.
Notwithstanding anything to the contrary in this Section 5(a), the purchase
price of each share of Stock purchasable pursuant to an Option granted to a
director under Section 6 of the Plan shall be the Fair Market Value of such
share of Stock on the date such Option is granted.
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(b) Option Term. The term of each Option shall be fixed by the
Committee, however, no Option shall be exercisable more than ten years after the
date such Option is granted. Notwithstanding anything to the contrary in this
Section 5(b), in the case of an Incentive Option granted to an Optionee who, at
the time such Incentive Option is granted, owns (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or of any Subsidiary, no such Option shall be
exercisable more than five years after the date such Option is granted.
(c) Exercisability. Subject to Section 5(j) hereof, Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at the time of grant. Options
granted to directors under Section 6 of the Plan shall be exercisable in three
equal annual installments commencing on the date of the grant of such Option.
The Board of Directors may waive any such installment exercise provision at any
time in whole or in part based on performance and or such other factors as the
Board shall determine in its sole discretion. Upon a Change of Control, the
Committee may declare all options granted under the Plan and then outstanding to
be exercisable in full at such time or times, and under such conditions, as the
Committee shall determine. A "Change of Control" shall mean: (i) the sale of all
or substantially all of the assets of the Company in one or a series of related
transactions to any person or entity or group of persons or entities acting in
concert or (ii) the merger or consolidation of the Company with or into another
corporation with the effect that the then existing stockholders of the company
hold less than 50% of the combined voting power of the then outstanding
securities of the surviving corporation of such merger or the corporation
resulting from such consolidation or (iii) the acquisition by any person or
entity or group of persons or entities acting in concert of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act
of 1934, as amended) of 50% or more of the outstanding shares of the voting
stock of the Company or (iv) the adoption of a plan relating to the liquidation
or dissolution of the Company.
(d) Method of Exercise. Options may be exercised, to the
extent then exercisable, in whole or in part at any time during the term of the
Option, by giving written notice to the Company specifying the number of shares
of Stock to be purchased, accompanied by payment in full of the purchase price,
in cash, or by check or such other instrument as may be acceptable to the
Committee. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may be made at the election of the Optionee
(i) in the form of Stock owned by the Optionee (based on the Fair Market Value
of the Stock on the trading day before the Option is exercised) which is not the
subject of any pledge or security interest, (ii) in the form of shares of Stock
withheld by the Company from the shares of Stock otherwise to be received with
such withheld shares of Stock having a Fair Market Value on the date of exercise
equal to the exercise price of the Option, or (iii) by a combination of the
foregoing, provided that the combined value of all cash and cash equivalents and
the Fair Market Value of any shares surrendered to the Company is at least equal
to such exercise price and except with respect to (ii) above, such method of
payment will not cause a disqualifying disposition of all or a portion of the
Stock received upon exercise of an Incentive Option. An Optionee shall have the
right to dividends and other rights of a stockholder with respect to shares of
Stock purchased upon exercise of an Option at such time as the Optionee has
given written notice of exercise and has paid in full for
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such shares and (ii) has satisfied such conditions that may be imposed by the
Company with respect to the withholding of taxes.
(e) Non-transferability of Options. Options are not
transferable and may be exercised solely by the Optionee during his lifetime or
after his death by the person or persons entitled thereto under his will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order. The Committee, in its sole discretion, may permit a transfer of a
Nonqualified Option to (i) a trust for the benefit of the Optionee, or (ii) a
member of the Optionee's immediate family (or a trust for his or her benefit).
Any attempt to transfer, assign, pledge or otherwise dispose of, or to subject
to execution, attachment or similar process, any Option contrary to the
provisions hereof shall be void and ineffective and shall give no right to the
purported transferee.
(f) Death. Unless otherwise determined by the Committee at the
time of grant, if any Optionee's employment with, retention by or service to the
Company or any Subsidiary (including that as a director of the Company)
terminates by reason of death, the Option may thereafter be exercised, to the
extent then exercisable (or on such accelerated basis as the Committee shall
determine at or after grant), by the legal representative of the estate or by
the legatee of the Optionee under the will of the Optionee, for a period of one
year after the date of such death or until the expiration of the stated term of
such Option as provided under the Plan, whichever period is shorter.
Notwithstanding anything to the contrary in this Section 5(f), in the case of
the death of a director holding Options granted under Section 6 of the Plan,
such Options shall become immediately exercisable.
(g) Disability. Unless otherwise determined by the Committee
at the time of grant, if any Optionee's employment with, retention by or service
to the Company or any Subsidiary (including that as a director of the Company)
terminates by reason of total and permanent disability, any Option held by such
Optionee may thereafter be exercised, to the extent such Option was exercisable
at the time of termination due to such disability (or on such accelerated basis
as the Committee shall determine at or after grant), but may not be exercised
after 90 days of the date of such termination of employment or service or the
expiration of the stated term of such Option, whichever period is shorter;
provided, however, that, if the Optionee dies within such 90-day period, any
unexercised Option held by such Optionee shall thereafter be exercisable to the
extent to which it was exercisable at the time of death for a period of one year
after the date of such death or for the stated term of such Option, whichever
period is shorter. Notwithstanding anything to the contrary in this Section
5(g), in the case of termination by reason of disability of a director holding
Options granted under Section 6 of the Plan, such Options may not be exercised
after one year of the date of such termination or the expiration of the stated
term of the Option, whichever period is shorter, provided, however, that if such
a director dies within such one-year period, any unexercised Option held by such
director shall thereafter be exercisable to the extent to which it is
exercisable at the time of the death of such director for a period of one year
after the date of such death or for the stated term of such Option, whichever
period is shorter.
(h) Retirement. Unless otherwise determined by the Committee
at the time of grant, if any Optionee's employment with, retention by or service
to the Company or any Subsidiary terminates by reason of Normal or Early
Retirement (as such terms are defined below), any Option held by such
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Optionee may thereafter be exercised to the extent it was exercisable at the
time of such Retirement (or on such accelerated basis as the Committee shall
determine at or after grant), but may not be exercised after 90 days after the
date of such termination of employment or service or the expiration of the
stated term of such Option, whichever period is shorter; provided, however,
that, if the Optionee dies within such 90-day period, any unexercised Option
held by such Optionee shall thereafter be exercisable, to the extent to which it
was exercisable at the time of death, for a period of one year after the date of
such death or for the stated term of such Option, whichever period is shorter.
For purposes of this Section 5(h) "Normal Retirement" shall
mean retirement from active employment with the Company or any Subsidiary on or
after the normal retirement date specified in the applicable Company or
Subsidiary pension plan or if no such pension plan, age 65, and "Early
Retirement" shall mean retirement from active employment with the Company or any
Subsidiary pursuant to the early retirement provisions of the applicable Company
or Subsidiary pension plan or if no such pension plan, age 55.
(i) Other Termination. Unless otherwise determined by the
Committee at the time of grant, if any Optionee's employment with, retention by
or service to the Company or any Subsidiary (including that as a director of the
Company) terminates for any reason other than death, disability, Normal
Retirement or Early Retirement, the Option shall thereupon terminate, except
that the portion of any Option that was exercisable on the date of such
termination of employment or service may be exercised for the lesser of 90 days
after the date of termination or the balance of such Option's term if the
Optionee's employment or service with the Company or any Subsidiary is
terminated by the Company or such Subsidiary without cause (the determination as
to whether termination was for cause to be made by the Committee). The transfer
of an Optionee from the employ of or service to the Company to the employ of or
service to a Subsidiary, or vice versa, or from one Subsidiary to another, shall
not be deemed to constitute a termination of employment or service for purposes
of the Plan. Notwithstanding anything to the contrary in this Section 5(i), in
the case of termination of membership on the Board of a director holding Options
granted under Section 6 of the Plan, such Options that are vested on the date of
termination may be exercised in whole or in part at any time within one year of
the date of such termination or the expiration of the stated term of the Option,
whichever period is shorter and shall thereafter terminate.
(j) Limit on Value of Incentive Option. The aggregate Fair
Market Value, determined as of the date the Incentive Option is granted, of
Stock for which Incentive Options are exercisable for the first time by any
Optionee during any calendar year under the Plan (and/or any other stock option
plans of the Company or any Subsidiary) shall not exceed $100,000.
(k) Transfer of Incentive Option Shares. The stock option
agreement evidencing an Incentive Option granted under this Plan shall provide
that if the Optionee makes a disposition, within the meaning of Section 424(c)
of the Code and regulations promulgated thereunder, of any share or shares of
Stock issued to him upon exercise of an Incentive Option granted under the Plan
within the two-year period commencing on the day after the date of the grant of
such Incentive Option or within a one-year period commencing on the day after
the date of transfer of the share or shares to him pursuant
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to the exercise of such Incentive Option, he shall, within 10 days after such
disposition, notify the Company thereof and immediately deliver to the Company
any amount of United States federal, state and local income tax withholding
required by law.
6. Grants to Non-Employee Directors.
Each director of the Company who is not an employee of the
Company or any Subsidiary who becomes a director of the Company shall
automatically receive a grant of an Option to purchase 24,000 shares of Stock on
the date that such director is first elected or appointed to the Board.
Thereafter, to the extent that shares of Stock remain available for the grant of
Options under the Plan, each year on the day which is the yearly anniversary
date after they began serving on the Board or the nearest preceding business day
if such yearly anniversary date falls on a weekend or holiday, each director of
the Company who is not an employee of the Company or any Subsidiary shall be
granted an Option to purchase 24,000 shares of Stock.
7. Term of Plan.
No Option shall be granted pursuant to the Plan on or after
March 8, 2010, but Options theretofore granted may extend beyond that date.
8. Capital Change of the Company.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock-split or other change in corporate
structure affecting the Stock, the Committee shall make an appropriate and
equitable adjustment in the number and kind of shares reserved for issuance
under the Plan and in the number and option price of shares subject to
outstanding Options granted under the Plan, to the end that after such event
each Optionee's proportionate interest shall be maintained as immediately before
the occurrence of such event.
9. Purchase for Investment.
Unless the Options and shares covered by the Plan have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or the Company has determined that such registration is unnecessary, each person
exercising an Option under the Plan may be required by the Company to give a
representation in writing that he or she is acquiring the shares for his or her
own account for investment and not with a view to, or for sale in connection
with, the distribution of any part thereof.
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10. Taxes.
The Company may make such provisions as it may deem
appropriate, consistent with applicable law, in connection with any Options
granted under the Plan with respect to the withholding of any taxes or any other
tax matters.
11. Effective Date of Plan.
The Plan shall be effective on March 8, 2000, provided however
that the Plan shall subsequently be approved by majority vote of the Company's
stockholders not later than March 8, 2001.
12. Amendment and Termination.
The Board may amend, suspend or terminate the Plan, except
that no amendment shall be made that would impair the rights of any Optionee
under any Option theretofore granted without the Optionee's consent, and except
that no amendment shall be made which, without the approval of the stockholders
of the Company would:
(a) materially increase the number of shares that may be
issued under the Plan, except as is provided in Section 8;
(b) materially increase the benefits accruing to the
Optionees under the Plan;
(c) materially modify the requirements as to eligibility
for participation in the Plan;
(d) decrease the exercise price of an Incentive Option to
less than 100% of the Fair Market Value per share of Stock on the date of grant
thereof, decrease the exercise price of a Nonqualified Option to less than 80%
of the Fair Market Value per share of Stock on the date of grant thereof; or
decrease the exercise price of an Option granted to a director under Section 6
of the Plan; or
(e) extend the term of any Option beyond that provided
for in Section 5(b).
The Committee may amend the terms of any Option theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Optionee without the Optionee's consent. The Committee may also
substitute new Options for previously granted Options, including options granted
under other plans applicable to the participant and previously granted Options
having higher option prices, upon such terms as the Committee may deem
appropriate.
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<PAGE>
13. Government Regulations.
The Plan, and the grant and exercise of Options hereunder, and
the obligation of the Company to sell and deliver shares under such Options,
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies, national securities exchanges and
interdealer quotation systems as may be required.
14. General Provisions.
(a) Certificates. All certificates for shares of Stock
delivered under the Plan shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, or other
securities commission having jurisdiction, any applicable Federal or state
securities law, any stock exchange or interdealer quotation system upon which
the Stock is then listed or traded and the Committee may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions.
(b) Employment Matters. The adoption of the Plan shall not
confer upon any Optionee of the Company or any Subsidiary any right to continued
employment or, in the case of an Optionee who is a director, continued service
as a director, with the Company or a Subsidiary, as the case may be, nor shall
it interfere in any way with the right of the Company or any Subsidiary to
terminate the employment of any of its employees, the service of any of its
directors or the retention of any of its consultants or advisors at any time.
(c) Limitation of Liability. No member of the Board or the
Committee, or any officer or employee of the Company acting on behalf of the
Board or the Committee, shall be personally liable for any action, determination
or interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.
(d) Registration of Stock. Notwithstanding any other provision
in the Plan, no Option may be exercised unless and until the Stock to be issued
upon the exercise thereof has been registered under the Securities Act and
applicable state securities laws, or are, in the opinion of counsel to the
Company, exempt from such registration in the United States. The Company shall
not be under any obligation to register under applicable federal or state
securities laws any Stock to be issued upon the exercise of an Option granted
hereunder in order to permit the exercise of an Option and the issuance and sale
of the Stock subject to such Option, although the Company may in its sole
discretion register such Stock at such time as the Company shall determine. If
the Company chooses to comply with such an exemption from registration, the
Stock issued under the Plan may, at the direction of the Committee, bear an
appropriate restrictive legend restricting the transfer or pledge of the Stock
represented thereby, and the Committee may also give appropriate stop transfer
instructions with respect to such Stock to the Company's transfer agent.
DATATEC SYSTEMS, INC.
March 8, 2000
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DATATEC SYSTEMS, INC.
Proxy -- Annual Meeting of Stockholders
April 18, 2000
The undersigned, a stockholder of Datatec Systems, Inc., a Delaware
corporation (the "Company"), does hereby constitute and appoint Isaac Gaon and
James Caci and each of them, the true and lawful attorney and proxy with full
power of substitution, for and in the name, place and stead of the undersigned,
to vote all of the shares of Common Stock of the Company which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Stockholders of the Company to be held at 23 Madison Road, Fairfield, New Jersey
07004, on Tuesday, April 18, 2000, at 11:00 a.m., local time, or at any
adjournment or adjournments thereof.
The undersigned hereby instructs said proxies or their substitutes:
1. ELECTION OF DIRECTORS:
The election of the following directors: Isaac J. Gaon,
William J. Adams, Jr., Thomas J. Berry, Frank P. Brosens,
Robert H. Friedman, and David M. Milch to serve until the next
annual meeting of stockholders and until their successors have
been duly elected and qualified.
TO WITHHOLD AUTHORITY
TO VOTE FOR ANY NOMINEE(S),
PRINT NAME(S) BELOW
FOR ____ WITHHELD ____
_________________________
_________________________
2. APPROVAL OF ADOPTION OF 2000 OPTION PLAN:
FOR _____ AGAINST _____ ABSTAIN _____
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS:
FOR _____ AGAINST _____ ABSTAIN _____
<PAGE>
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH ANY DIRECTIONS HEREINBEFORE
GIVEN. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED TO ELECT THE
DIRECTORS, TO APPROVE THE ADOPTION OF THE 2000 OPTION PLAN, TO RATIFY THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT PUBLIC
ACCOUNTANTS AND IN ACCORDANCE WITH THE DISCRETION OF THE PROXIES OR PROXY WITH
RESPECT TO ANY OTHER BUSINESS TRANSACTED AT THE ANNUAL MEETING.
Dated ______________, 2000
_____________________ (L.S.)
_____________________ (L.S.)
Signature(s)
NOTE: Your signature should appear the same as
your name appears hereon. In signing as attorney,
executor, administrator, trustee or guardian,
please indicate the capacity in which signing.
When signing as joint tenants, all parties in the
joint tenancy must sign. When a proxy is given by
a corporation, it should be signed by an
authorized officer and the corporate seal affixed.
No postage is required if mailed in the United
States.
