<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20509
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:
[_] CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy Statement 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
ELCOTEL, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ELCOTEL, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
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:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
(A) Set forth the amount on which the filing fee is calculated and state how
it was determined.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
ELCOTEL, INC.
6428 PARKLAND DRIVE, SARASOTA, FLORIDA 34243
----------------
NOTICE AND PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD 9:00 A.M., OCTOBER 20, 1998
----------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Elcotel,
Inc. (the "Company") will be held on Tuesday, October 20, 1998, at 9:00 a.m.,
local time, at The Resort at Longboat Key Club, 301 Gulf of Mexico Drive,
Longboat Key, Florida, for consideration of and action by the holders of the
Company's Common Stock upon the following matters:
1. The election of a Board of Directors consisting of eight directors,
with each director to serve until the next annual meeting of stockholders
or until the election and qualification of his respective successor;
2. The ratification of the appointment of Deloitte & Touche LLP as the
Company's independent public accountants for the fiscal year ending March
31, 1999; and
3. The transaction of such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof, and matters
incident to the conduct of the Annual Meeting.
The Board of Directors has fixed the close of business on September 1, 1998
as the record date for the determination of holders of Common Stock of the
Company entitled to receive notice of, and to vote at, the Annual Meeting or
any adjournment or postponement thereof. The Company's Annual Report to
Stockholders for the year ended March 31, 1998 accompanies this Notice and
Proxy Statement.
STOCKHOLDERS (WHETHER THEY OWN ONE OR MANY SHARES AND WHETHER THEY EXPECT TO
ATTEND THE ANNUAL MEETING OR NOT) ARE REQUESTED TO VOTE, SIGN, DATE AND RETURN
PROMPTLY THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors
/s/ William H. Thompson
William H. Thompson,
Secretary
Sarasota, Florida
September 15, 1998
<PAGE>
ELCOTEL, INC.
6428 PARKLAND DRIVE, SARASOTA, FLORIDA 34243
----------------
PROXY STATEMENT
----------------
This Proxy Statement is furnished and is being mailed with the accompanying
proxy on approximately September 15, 1998 to each Stockholder of record of the
common stock, par value $0.01 per share (the "Common Stock"), of Elcotel, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company, to be voted at the Annual Meeting of Stockholders of
the Company (the "Meeting") to be held on Tuesday, October 20, 1998, at 9:00
a.m., local time, at The Resort at Longboat Key Club, 301 Gulf of Mexico
Drive, Longboat Key, Florida, and at any adjournment or postponement thereof,
for the purposes stated below.
Any person giving a proxy has the power to revoke it at any time before its
exercise by a later dated proxy, by a written revocation sent to the Secretary
of the Company or by attendance at the Meeting and voting in person. In the
absence of contrary instructions, properly executed proxies, received and
unrevoked, will be voted by the persons named in the proxy: (i) for the
election of the directors nominated by the Board of Directors; (ii) for the
ratification of Deloitte & Touche LLP as the Company's independent public
accountants for the fiscal year ending March 31, 1999; and (iii) in their
discretion, on such other business as may properly come before the Meeting and
matters incident to the conduct of the Meeting.
VOTING SECURITIES OF THE COMPANY
Only holders of record of Common Stock of the Company at the close of
business on September 1, 1998, are entitled to receive notice of, and to vote
at, the Meeting. On that date, the outstanding voting securities of the
Company consisted of 13,466,215 shares of Common Stock. Each share of Common
Stock is entitled to one vote on all matters presented to the Meeting with no
right to vote cumulatively.
The Company's By-laws provide that the presence, in person or by proxy, of a
majority of the issued and outstanding shares of the Common Stock entitled to
vote at the Meeting will constitute a quorum. A quorum, once established, will
not be broken by the withdrawal from the Meeting of enough votes to leave less
than a quorum, and the votes present at the Meeting after the establishment of
a quorum will be sufficient to transact all business at the Meeting. Those
nominees for election as directors of the Company at the Meeting who receive
the greatest number of votes cast by shares of Common Stock present in person
or represented by properly executed proxy will be elected as directors of the
Company.
Ratification of the appointment of Deloitte & Touche LLP as the independent
public accountants of the Company for the fiscal year ending March 31, 1999
will require the affirmative vote of a majority of the shares of Common Stock
present in person or represented by properly executed proxy at the Meeting.
Shares represented by proxies that reflect abstentions or "broker non-votes"
(i.e., shares held by a broker or nominee which are represented at the
Meeting, but with respect to which such broker or nominee is not empowered to
vote on a particular proposal) will be counted as shares that are present and
entitled to vote for purposes of determining the presence of a quorum.
Abstentions are counted as negative votes in tabulations of the votes cast on
proposals presented to stockholders, whereas broker non-votes will not be
counted for purposes of determining the number of votes cast.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth, at September 1, 1998, the number and
percentage of shares of Common Stock which, according to information supplied
to the Company, are beneficially owned by: (i) each person who is the
beneficial owner of more than 5% of the Common Stock; (ii) each of the
directors and named executive officers of the Company individually; and (iii)
all current directors and executive officers of the Company as a group. Under
rules adopted by the Securities and Exchange Commission, a person is deemed to
be a beneficial owner of Common Stock with respect to which he has or shares
voting power (which includes the power to vote or to direct the voting of the
security) or investment power (which includes the power to dispose of, or to
direct the disposition of, the security). A person is also deemed to be the
beneficial owner of shares with respect to which he could obtain voting or
investment power within 60 days of September 1, 1998, such as upon the
exercise of options or warrants.
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS SHARES(1) PERCENTAGE
---------------- --------- ----------
<S> <C> <C>
Wexford Management LLC............................. 2,597,269 19.3%
411 West Putnam Avenue
Greenwich, Connecticut 06830
Joseph M. Jacobs................................... 2,597,269(2) 19.3%
6428 Parkland Drive
Sarasota, Florida 34243
C. Shelton James................................... 1,585,843(3) 11.7%
6428 Parkland Drive
Sarasota, Florida 34243
Fundamental Management Corporation................. 1,439,223 10.7%
4000 Hollywood Boulevard
Suite 610N
Hollywood, Florida 33021
Tracey L. Gray..................................... 176,784(4) 1.3%
6428 Parkland Drive
Sarasota, Florida 34243
David R. A. Steadman............................... 70,202(5) 0.5%
6428 Parkland Drive
Sarasota, Florida 34243
Thomas E. Patton................................... 13,000(6) 0.1%
6428 Parkland Drive
Sarasota, Florida 34243
Dwight Jasmann..................................... 11,890(7) 0.1%
6428 Parkland Drive
Sarasota, Florida 34243
Charles H. Moore................................... 17,100(8) 0.1%
6428 Parkland Drive
Sarasota, Florida 34243
Mark L. Plaumann................................... 3,150(9) *
6428 Parkland Drive
Sarasota, Florida 34243
Ronald M. Tobin.................................... 55,482(10) 0.4%
6428 Parkland Drive
Sarasota, Florida 34243
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
NAME AND ADDRESS SHARES(1) PERCENTAGE
---------------- --------- ----------
<S> <C> <C>
Eduardo Gandarilla.................................. 27,500(11) 0.2%
6428 Parkland Drive
Sarasota, Florida 34243
Hugh H. Durden...................................... 13,550(12) 0.1%
6428 Parkland Drive
Sarasota, Florida 34243
Henry W. Swanson.................................... 12,000(13) 0.1%
6428 Parkland Drive
Sarasota, Florida 34243
All directors and executive officers as a group
(16 persons)....................................... 4,639,448(14) 33.8%
</TABLE>
- --------
* Less than .1%
(1) Unless otherwise indicated, each stockholder has sole voting and
investment power with respect to all listed shares.
(2) Includes 2,597,269 shares held by Wexford Management LLC, as to which
shares Mr. Jacobs disclaims beneficial ownership.
(3) Includes 1,439,223 shares held by Fundamental Management Corporation, as
to which shares Mr. James disclaims beneficial ownership, and 31,000
shares which may be issued upon exercise of stock options within 60 days.
(4) Includes 42,750 shares which may be issued upon the exercise of stock
options within 60 days.
(5) Includes 68,250 shares which may be issued upon the exercise of stock
options within 60 days.
(6) Includes 500 shares held jointly with Mr. Patton's wife. Includes 12,000
shares which may be issued upon the exercise of stock options within 60
days.
(7) Includes 9,000 shares which may be issued upon the exercise of stock
options within 60 days.
(8) Includes 75 shares held by Mr. Moore's wife and 25 shares held by Mr.
Moore's daughter. Includes 16,000 shares which may be issued upon the
exercise of stock options within 60 days.
(9) Includes 3,150 shares which may be issued upon exercise of stock options
within 60 days.
(10) Includes 150 shares held by Mr. Tobin's son. Includes 10,000 shares which
may be issued upon the exercise of stock options within 60 days.
(11) Includes 27,500 shares which may be issued upon the exercise of stock
options within 60 days.
(12) Includes 12,550 shares which may be issued upon the exercise of stock
options within 60 days.
(13) Includes 12,000 shares which may be issued upon the exercise of stock
options within 60 days.
(14) Includes a total of 1,439,223 shares held by Fundamental Management
Corporation, 2,597,269 shares held by Wexford Management LLC and shares
held by family members as to which shares the respective officers and
directors disclaim beneficial ownership. Also includes 257,446 shares
which may be issued upon exercise of stock options within 60 days.
3
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 18, 1997, the Company acquired Technology Service Group, Inc.
("TSG") via the merger (the "Merger") of Elcotel Hospitality Services, Inc.
("EHS"), a wholly owned subsidiary of the Company, into TSG. For services
rendered in connection with the Merger, TSG was obligated to pay a $200,000
investment banking fee to Wexford Management LLC. Following consummation of
the Merger, the Company exercised its option to pay that fee to Wexford by the
issuance of 30,769 shares of Common Stock, which had a fair market value at
the date of issuance of $181,000. Wexford is the beneficial owner of
approximately 19.3% of the outstanding Common Stock.
In connection with the Merger, the Company entered into a stockholders'
agreement with Fundamental Management Corporation (the beneficial owner of
approximately 10.7% of the outstanding Common Stock) and Wexford Partners
Fund, L.P. ( the beneficial owner of approximately 19.3% of the outstanding
Common Stock and an affiliate of Wexford Management LLC). Pursuant to the
stockholders' agreement, the Company has agreed to file a registration
statement with respect to the Common Stock owned by Wexford or Fundamental
within 45 days after any request by both Fundamental and Wexford. The Company
would generally bear the expenses of such registration.
ELECTION OF DIRECTORS
In accordance with the Company's By-laws, a Board of eight directors will be
elected to serve until the next annual meeting of stockholders or until
successors to the directors have been elected and have qualified. All
directors are elected annually. It is the intention of the persons named in
the proxy, unless otherwise directed, to vote all proxies in favor of the
election to the Board of Directors for the nominees listed below, all of whom
are presently directors of the Company. The Board has no reason to believe
that any of the nominees will be unable or unwilling to be a candidate for
election at the time of the Meeting. If any nominee is unable or declines to
serve as a director, the proxies will be voted for any nominee designated by
the present Board of Directors to fill the vacancy.
The Board of Directors has unanimously recommended a slate of nominees for
election as directors at the Meeting. The names of the nominees for directors
of the Company, their ages and certain other information is set forth as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
C. Shelton James.................... 58 Chairman of the Board
Tracey L. Gray...................... 66 President, Chief Executive Officer
and Director
Joseph M. Jacobs.................... 45 Director
Dwight Jasmann...................... 62 Director
Charles H. Moore.................... 69 Director
Thomas E. Patton.................... 57 Director
Mark L. Plaumann.................... 43 Director
David R.A. Steadman................. 61 Director
</TABLE>
MR. JAMES, currently Chairman of the Board, served as Chief Executive
Officer of the Company from May 1991 until the Merger in December 1997 and has
been a director of the Company since December 1990. Mr. James is currently an
investor in and business advisor to a number of companies. While he has
devoted a substantial amount of time to the Company since May 1991, he has
also served as Executive Vice President of Fundamental Management Corporation,
an investment management company, since April 1990, and was appointed
President of that company in April 1993. He is a member of the boards of
Cyberguard Corporation, Concurrent Computer Corporation, NAI Technologies,
Fundamental Management Corporation, CSPI and SK
4
<PAGE>
Technologies, Inc. From 1980 to 1989, Mr. James was Executive Vice President
of Gould, Inc., a diversified electronics company, and President of Gould's
Computer Systems Division.
MR. GRAY has served as President of the Company since July 1991 and Chief
Operating Officer of the Company from July 1991 until the Merger in December
1997, at which time he became Chief Executive Officer, and has been a director
of the Company since August 1991. From June 1986 until joining the Company,
Mr. Gray had been a Vice President of the Government Systems Division, Network
Systems Division and Federal Systems Division, respectively, of Sprint in
Washington, DC. Prior to that, Mr. Gray served in numerous assignments with
AT&T in corporate staff functions and retired as Vice President, Government
Systems in 1985. He served as Chief Executive Officer and a member of the
board of Access Engineering Corporation from 1985 to 1986. Mr. Gray has served
in various positions with industry professional associations.
MR. JACOBS was appointed a director of the Company in February 1998. Mr.
Jacobs has been President of Wexford Management LLC, a manager of several
private investment partnerships, since its formation in January 1996. From May
1994 to January 1996, he was President and sole shareholder of Concurrency
Management Corporation, the predecessor to Wexford Management LLC. From 1982
to May 1994, Mr. Jacobs was employed by, and since 1988 was the President of,
Bear Stearns Real Estate Group, Inc. Mr. Jacobs is currently a director and
the Chief Executive Officer of Resurgence Properties, Inc., an owner-operator
of real estate, and is a director of BCAM International, Inc., an ergonomic
technology and medical footwear company.
MR. JASMANN has been a director of the Company since December 1993 and is
currently an international telecommunications advisor. From August 1996 to
February 1998, Mr. Jasmann was President and General Manager for COMSAT
International Ventures in Bethesda, Maryland, a business unit of COMSAT
Corporation that managed telecommunications companies in thirteen overseas
markets serving the needs of national and multinational operators for digital
network solutions. From January 1995 to July 1996, Mr. Jasmann was Vice
President of Human Resources for AirTouch Communications in San Francisco, a
domestic and international operator of wireless services. From August 1992 to
December 1994, he was an international telecommunications advisor for various
U.S. and foreign telecommunications operators. From February 1959 to May 1992,
Mr. Jasmann held various positions with AT&T, most recently as President and
Managing Director of AT&T Communications Pacific based in Hong Kong. He
previously served on the boards of the Pacific Telecommunications Council in
Hawaii, the Information Communication Institute of Singapore, Philcom, a
Philippines telephone company, COMSAT Max in India and COMSAT Brazil and also
was chairman of the board of COMSAT Argentina.
MR. MOORE has been a director of the Company since December 1993. Mr. Moore
has been Director of Athletics for Cornell University since November 1994.
From November 1992 to October 1994 Mr. Moore was Vice Chairman of Advisory
Capital Partners, Inc., an investment advisory firm. From July 1988 to October
1992, Mr. Moore served as President and Chief Executive Officer of Ransburg
Corporation, a producer of industrial coating systems and equipment, and from
August 1991 to October 1992 as Executive Vice President of Illinois Tool
Works, Inc., a multinational manufacturer of highly engineered components and
systems. Mr. Moore is currently a director of The Turner Corporation and is
Chairman of the Audit Committee of the United States Olympic Committee.
MR. PATTON has been a director of the Company since July 1989. Mr. Patton
has been a partner in the Washington, D.C. law firm of Tighe, Patton,
Tabackman & Babbin, engaged in civil and criminal business litigation,
securities law enforcement matters, corporate finance and corporate
compliance, since August 1994. From 1979 until July 1994, Mr. Patton was a
partner in the Washington, D.C. law office of Schnader, Harrison, Segal &
Lewis LLP, engaged in civil and criminal securities litigation and general
business litigation. Mr. Patton also serves on the board of directors of
Information Exchange, Inc., a financial services marketing database company.
MR. PLAUMANN became a director of the Company in December 1997 after the
Merger. Mr. Plaumann has been a consultant to Wexford Management LLC since
March 1998. From January 1996 to March 1998,
5
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Mr. Plaumann was Senior Vice President of Wexford Management LLC, a manager of
several private investment partnerships. From February 1995 to January 1996,
Mr. Plaumann was a Vice President or director of the predecessor entities of
Wexford Management LLC. From 1990 to January 1995, Mr. Plaumann was a managing
director of Alvarez & Marsal, Inc., a crisis management consulting firm. From
1985 to 1990 he served in several capacities with American Healthcare
Management, Inc., an owner and operator of hospitals, most recently as its
President. From 1974 to 1985, Mr. Plaumann was with Ernst & Young LLP in
several capacities in its auditing and consulting divisions. Mr. Plaumann is a
director of Wahlco Environmental Systems, Inc., a manufacturer of
environmental conditioning systems, BCAM International, Inc., an ergonomic
technology and medical footwear company, and Vivax Medical Corporation, a
manufacturer of specialty beds and wound care products. Mr. Plaumann was a
director of TSG prior to the Merger in December 1997.
MR. STEADMAN became a director of the Company in December 1997 after the
Merger. Mr. Steadman has been President of Atlantic Management Associates,
Inc., a management services firm, since 1988. Mr. Steadman was an employee of
the Company providing management and business advice from immediately after
the Merger in December 1997 until March 1998, after having previously served
in a similar position with TSG. From 1990 to 1994, Mr. Steadman served as
President and Chief Executive Officer of Integra, a hotel and restaurant
company, and from 1987 to 1988, as Chairman and Chief Executive Officer of GCA
Corporation, a manufacturer of automated semiconductor capital equipment. From
1980 to 1987, Mr. Steadman was a Vice President of Raytheon Company, a defense
electronics manufacturer, and served in various management positions, most
recently as President of its venture capital division. Mr. Steadman is
Chairman of the Board of Directors of Wahlco Environmental Systems, Inc., a
manufacturer of environmental conditioning systems. He is also a director of
Aavid Thermal Technologies, Inc., which manufactures thermal management
products and produces computational fluid dynamics software and Tech/Ops
Sevcon, Inc., a manufacturer of electronic control systems for vehicles. Mr.
Steadman was Chairman of the Board of Directors of TSG from 1994 until the
Merger in December 1997.
STOCKHOLDERS AGREEMENT. Pursuant to a stockholders' agreement among the
Company, Fundamental Management Corporation (the beneficial owner of
approximately 10.7% of the outstanding Common Stock) and Wexford Partners
Fund, L.P. (the beneficial owner of approximately 19.3% of the outstanding
Common Stock and an affiliate of Wexford Management LLC), during the period
ending after the second annual meeting of stockholders of the Company which
occurs after the 1997 annual meeting, each of Fundamental and Wexford has
agreed to vote its shares of Common Stock in favor of any nominees for
director nominated by the incumbent Board of Directors. As a result, 4,036,492
shares of Common Stock will be voted in favor of the nominees for directors
referred to above.
EXECUTIVE OFFICERS
In addition to those directors listed above who are executive officers of
the Company in the positions indicated, the following persons are also
executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Eduardo Gandarilla.................. 48 Executive Vice President, Sales and
Marketing
David F. Hemmings................... 51 Senior Vice President, Business
Development and Technology/System
Development
William H. Thompson................. 45 Senior Vice President,
Administration/Finance and
Secretary
Ronald M. Tobin..................... 55 Vice President, Finance, Chief
Financial Officer, Assistant
Secretary and Treasurer
Darold R. Bartusek.................. 51 Vice President and General Manager,
Telco Sales
Hugh H. Durden...................... 50 Vice President and General Manager,
IPP Sales
Kenneth W. Noack.................... 61 Vice President, Operations
Henry W. Swanson.................... 61 Vice President, Engineering and
Development
</TABLE>
6
<PAGE>
MR. GANDARILLA was appointed Executive Vice President of Sales and Marketing
in May 1998, having previously served as Vice President of International Sales
and Marketing since October 1996 after joining the Company in April 1996. From
June 1995 until April 1996, he was an international marketing consultant for
Compression Laboratories, Inc., a company which manufactures video
conferencing equipment. From July 1993 until June 1995, Mr. Gandarilla was
managing director of the business communication systems division of AT&T,
based in Mexico. From 1990 until July 1993, he was a managing director for
Gestetner, a distributor of office equipment, also located in Mexico. His
previous employment included managerial positions with various computer system
companies located in Latin America and Paris.
MR. HEMMINGS joined the Company in June 1998 as Senior Vice President,
Business Development and Technology/System Development. From June 1997 until
May 1998, he was President and Chief Executive Officer of Net Invest, LLC, a
company developing satellite and cellular network operations in developing
countries worldwide. From July 1993 until May 1997, Mr. Hemmings was Executive
Vice President of the worldwide network and business systems groups for Brite
Voice Systems, Inc., a publicly held voice processing supplier. From 1991 to
June 1993, he was Senior Vice President of Boston Technology, Inc., a publicly
held voice mail supplier. His previous employment included management
positions with such organizations as Sprint and Harris Corporation.
MR. THOMPSON joined the Company as Senior Vice President of
Administration/Finance in December 1997 after the Merger and was elected
Secretary in February 1998. From February 1994 to December 1997, Mr. Thompson
served as Vice President of Finance, Chief Financial Officer and Secretary of
TSG, and from 1990 to 1994, he served as Vice President of Finance of TSG.
Prior to joining TSG, Mr. Thompson held various financial executive positions
with Cardiac Control Systems, Inc., a publicly-held medical device
manufacturer, from 1983 to 1990. From 1974 to 1983, Mr. Thompson, who is a
certified public accountant, held various positions, most recently as Audit
Manager, with Price Waterhouse LLP, certified public accountants.
MR. TOBIN has served as Vice President of Finance, Chief Financial Officer
and Treasurer of the Company since July 1992 and was appointed Assistant
Secretary in February 1998, having previously served as Secretary since July
1992. Prior to joining the Company he held various financial positions with
SmithKline Beecham Corporation in Philadelphia since September 1970, and most
recently had been Corporate Controller of SmithKline Beecham Clinical
Laboratories in King of Prussia, Pennsylvania since February 1982.
MR. BARTUSEK joined the Company as Vice President and General Manager of
Telco Sales in December 1997 after the Merger. Mr. Bartusek served as Senior
Vice President of Sales and Marketing of TSG from May 1996 to December 1997.
From February 1994 to April 1996 he was Vice President of Sales and Marketing
of TSG. From January 1991 to February 1994, Mr. Bartusek served TSG in various
capacities including Vice President of Worldwide Sales and Vice President and
General Manager of TSG's Smart Product Business. From 1989 to 1991, Mr.
Bartusek served as Vice President of Marketing of the Public Communication
Systems Division of Executone Information Systems, Inc., a supplier of smart
payphone systems. From 1973 to 1988, he served GTE Communication Systems
Corporation in various capacities including Director of Public Communications
and Director of Advertising and Sales Promotion.
MR. DURDEN has served as Vice President and General Manager of IPP Sales
since May 1995. From June 1991, when he rejoined the Company, to May 1995 he
was Vice President of Domestic Sales after having previously served as
district sales manager for the Company from March 1987 until August 1989. From
August 1989 until rejoining the Company, Mr. Durden founded and served as
Chief Executive Officer and President of two privately-held telecommunications
companies. From November 1984 until February 1987, Mr. Durden was President of
Communications Central, Inc., a privately-held operator of payphones.
MR. NOACK has served as Vice President of Operations since January 1993,
having joined the Company in July 1992 as Director of Operations. Prior to
joining the Company he was with AT&T Paradyne Corporation in Largo, Florida
since 1973, and most recently was Vice President and Director of Operations
Planning and Materials.
7
<PAGE>
MR. SWANSON has served as Vice President of Engineering and Development
since December 1996. Prior to joining the Company, he was a consultant for
Texas Microsystems, Inc., a computer hardware manufacturer, since March 1996.
From April 1994 until November 1995, Mr. Swanson was Vice President of
Engineering for Arrowsmith Technologies, a computer systems developer. From
1989 until April 1994 he was Director of PC Systems Development for Dell
Computer Corporation, also in Austin. His previous employment included
engineering management positions with several computer hardware and software
companies.
BOARD OF DIRECTORS AND COMMITTEES
The Company's Board of Directors held eleven meetings during the fiscal year
ended March 31, 1998. Each of the then-serving directors attended or
participated in at least 75% of the aggregate of all meetings of the Board and
all committees of which he was a member during the fiscal year ended March 31,
1998.
The Company has a Compensation and Stock Option Committee (the "Compensation
Committee"), presently composed of Messrs. Steadman, Jasmann and Plaumann. The
Compensation Committee is authorized to administer and grant options pursuant
to the Company's 1991 Stock Option Plan. The Compensation Committee held two
meetings during the fiscal year ended March 31, 1998, which were attended by
all of the then-serving committee members.
The Company has an Audit Committee composed of Messrs. Moore, Patton and
Plaumann, which recommends the independent public accountants for appointment
by the Board of Directors and reviews reports submitted by the accountants.
The Audit Committee held one meeting during the fiscal year ended March 31,
1998, which was attended by all of the then-serving Audit Committee members.
The Company has a Nominating Committee composed of Messrs. Patton, Steadman
and Jasmann, which recommends a slate of directors for election at the annual
meeting of stockholders. The Nominating Committee held no meetings during the
fiscal year ended March 31, 1998.
The Company's By-laws provide that stockholders may make nominations for
election to the Company's Board of Directors if such nominations are in
writing and delivered to the Secretary of the Company not less than 135 days
before the day and month of the previous year's annual meeting. Thus,
nominations for election to the Board of Directors at the 1999 Annual Meeting
must be delivered to the Secretary by June 7, 1999. The Stockholder making the
nomination must provide information about the persons nominated that is
required to be disclosed in a proxy statement for solicitation of proxies with
respect to nominees for election as directors pursuant to the regulations
under the Securities Exchange Act of 1934. Only those persons nominated by the
Board of Directors and by stockholders as described above shall be voted upon
at the Meeting.
8
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information covering the compensation
paid or accrued by the Company during the fiscal years indicated to all
individuals serving as its Chief Executive Officer during the fiscal year
ended March 31, 1998, and to each of its four most highly compensated
executive officers, other than the Chief Executive Officers, whose salary and
bonus exceeded $100,000 during the fiscal year ended March 31, 1998 and who
were serving as executive officers as of March 31, 1998 ("named executive
officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- ------------
(G)
(B) NUMBER OF
FISCAL SECURITIES
(A) YEAR (E) UNDERLYING (I)
NAME AND PRINCIPAL ENDED (C) (D) OTHER ANNUAL STOCK ALL OTHER
POSITION MARCH 31, SALARY ($) BONUS ($) COMPENSATION ($) OPTIONS(1) COMPENSATION ($)
------------------ --------- ---------- --------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
C. Shelton James(3)..... 1998 $ 90,313 $35,295 34,000 $2,066(2)
Chairman of the Board
and 1997 83,338 33,930 0 2,030(2)
Chief Executive Officer 1996 78,654 0 25,000 1,838(2)
Tracey L. Gray(3)....... 1998 162,096 66,010 41,000 4,621(2)
President and 1997 148,928 60,450 0 3,656(2)
Chief Executive Officer 1996 138,039 0 25,000 3,463(2)
Eduardo Gandarilla(4)... 1998 184,453 17,965 10,000 4,338(2)
Executive Vice
President 1997 162,123 12,000 $44,617(5) 50,000 1,762(2)
1996 0 0 0 0(2)
Ronald M. Tobin......... 1998 107,838 17,594 10,000 2,497(2)
Vice President, 1997 100,063 17,640 0 2,182(2)
Chief Financial
Officer, 1996 92,846 0 9,000 2,146(2)
Ass't Secretary and
Treasurer
Hugh H. Durden.......... 1998 186,952 8,589 8,000 4,256(2)
Vice President 1997 148,452 9,525 0 2,869(2)
1996 184,876 0 7,500 3,173(2)
Henry W. Swanson(4)..... 1998 112,677 16,787 8,000 3,019(2)
Vice President 1997 56,538 0 35,000(6) 40,000 640(2)
1996 0 0 0 0(2)
</TABLE>
- --------
(1) Represents options granted under the Company's 1991 Stock Option Plan. No
options were granted during the fiscal year ended March 31, 1997, except
for Mr. Gandarilla and Mr. Swanson who received options upon joining the
Company.
(2) Includes taxable portion of Company paid Group Term Life Insurance and the
Company's matching contribution to the 401(k) savings plan (see Note O to
the Company's financial statements). Such Group Term Life Insurance for
Messrs. James, Gray, Gandarilla, Tobin, Durden and Swanson, respectively,
for Fiscal 1998 is $450, $1,260, $174, $288, $174 and $702, for Fiscal
1997 is $450, $702, $174, $288, $174 and $48 and for Fiscal 1996 is $450,
$702, $0, $288, $174 and $0. 401(k) savings plan matching contributions
for Messrs. James, Gray, Gandarilla, Tobin, Durden and Swanson,
respectively, for Fiscal 1998 are $1,616, $3,361, $4,164, $2,209, $4,082
and $2,317, Fiscal 1997 are $1,580, $2,954, $1,588, $1,894, $2,695 and
$592 and for Fiscal 1996 are $1,388, $2,761, $0, $1,858, $2,999 and $0.
(3) Mr. James was Chairman of the Board and Chief Executive Officer until
December 18, 1997, the date of the Merger, at which time he relinquished
the title of Chief Executive Officer. Mr. Gray was President and Chief
Operating Officer through December 18, 1997, at which time he became
President and Chief Executive Officer.
9
<PAGE>
(4) Mr. Gandarilla joined the Company on April 1, 1996 and was appointed Vice
President on October 15, 1996. Mr. Swanson joined the Company and was
appointed Vice President on December 2, 1996.
(5) $39,217 of this amount represents reimbursement of relocation expenses to
Mr. Gandarilla during the fiscal year ended March 31, 1997.
(6) Represents reimbursement of relocation expenses to Mr. Swanson during the
fiscal year ended March 31, 1997.
STOCK OPTION GRANTS
The following table sets forth certain information with respect to stock
option grants to named executive officers who received options during the
fiscal year ended March 31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
----------------------------------------- ----------------
(B) (C)
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO (D)
OPTIONS EMPLOYEES EXERCISE (E)
(A) GRANTED IN FISCAL PRICE EXPIRATION (F) (G)
NAME (#)(1) YEAR ($/SH) DATE 5% ($) 10% ($)
---- ---------- ---------- -------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
C. Shelton James.... 34,000 7.2% $6.0000 5/22/02 $56,361 $124,544
Tracey L. Gray...... 41,000 8.7% $6.0000 5/22/02 $67,965 $150,185
Eduardo Gandarilla.. 10,000 2.1% $6.0000 5/22/02 $16,577 $ 36,631
Ronald M. Tobin..... 10,000 2.1% $6.0000 5/22/02 $16,577 $ 36,631
Hugh H. Durden...... 8,000 1.7% $6.0000 5/22/02 $13,262 $ 29,304
Henry W. Swanson.... 8,000 1.7% $6.0000 5/22/02 $13,262 $ 29,304
</TABLE>
- --------
(1) Options become exercisable twenty-five percent each year beginning on May
22, 1998, and the options expire on May 22, 2002.
(2) The potential realizable value is calculated based upon the indicated
rates of appreciation, compounded annually, from the date of grant to the
end of the option term. Actual gains, if any, on stock option exercises
and Common Stock holdings are dependent on the actual performance of the
Common Stock. There can be no assurance that the amounts reflected in this
table will be achieved.
10
<PAGE>
STOCK OPTION EXERCISES AND YEAR-END HOLDINGS
The following table sets forth certain information with respect to stock
options exercised by the named executive officers during the fiscal year ended
March 31, 1998 and the number and value of exercisable and unexercisable
options held by the named executive officers as of March 31, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTIONS VALUE TABLE
<TABLE>
<CAPTION>
(D) (E)
(B) NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES (C) UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
(A) ACQUIRED ON VALUE OPTIONS AT FY-END (#) AT FY-END ($)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
C. Shelton James........ 15,000 $74,544 12,500/56,500 $ 0/$20,625
Tracey L. Gray.......... -- -- 27,500/63,500 $39,388/$20,625
Eduardo Gandarilla...... -- -- 12,500/47,500 $ 3,906/$11,719
Ronald M. Tobin......... 13,300 $65,870 4,500/17,500 $ 0/$ 6,188
Hugh H. Durden.......... 4,700 $25,239 6,875/13,125 $11,438/$ 5,156
Henry W. Swanson........ -- -- 0/50,000 $ 0/$0
</TABLE>
EMPLOYMENT CONTRACTS
Mr. C. Shelton James. The Company and Mr. James entered into an employment
agreement which became effective as of the closing of the Merger and expires
on December 31, 1998, subject to certain earlier termination and automatic
renewal provisions. Pursuant to the agreement, Mr. James serves as the
Chairman of the Board of Directors and an employee of the Company, and is paid
an annual salary of at least $94,000. His base salary is subject to annual
review for merit and other increases at the discretion of the Board. Mr. James
is reimbursed (in accordance with Company policy from time to time in effect)
for all reasonable business expenses incurred by him in the performance of his
duties.
Pursuant to the terms of the agreement, Mr. James is entitled to the same
benefits made available to the other senior executives of the Company and on
the same terms and conditions as such executives. Mr. James is also entitled
to receive an annual incentive bonus equal to 50% of base salary if the
Company achieves its after tax profit plan for the year. If the Company is
profitable and earns less than its plan, then such bonus will be equal to the
percentage achievement of the annual plan times 50% of base salary. If the
Company achieves profits in excess of its annual plan, then, at the discretion
of the Board, an additional bonus in excess of 50% of base salary may be paid.
Pursuant to the terms of the agreement, Mr. James will be granted such options
to purchase shares of the Company's Common Stock as approved by the
Compensation and Stock Option Committee.
If the agreement is terminated by the Company without cause, Mr. James is
entitled to receive the amount of compensation, bonus and benefits he would
otherwise have received for the remaining term of the agreement or for twelve
months from the date of notice of termination, whichever period is longer. The
agreement is automatically renewed for additional one-year periods unless the
Company provides Mr. James 180 days' notice of non-renewal prior to the end of
any such period (in which event Mr. James will be entitled to six months of
salary, bonus and benefits). Mr. James can terminate the agreement by giving
the Company 120 days' notice of termination effective on December 31, 1998, or
on any date thereafter.
Pursuant to the agreement, Mr. James is indemnified by the Company with
respect to claims made against him as a director, officer, and/or employee of
the Company or any subsidiary of the Company to the fullest extent permitted
by the Company's Certificate of Incorporation, its Bylaws and Delaware
corporation law.
11
<PAGE>
Mr. Tracey L. Gray. The Company and Mr. Gray entered into an agreement which
is identical to the employment agreement with Mr. James described above,
except that Mr. Gray serves as President and Chief Executive Officer of the
Company and is paid an annual salary of at least $170,000.
SEVERANCE ARRANGEMENTS
In connection with hiring Mr. Gandarilla, the Company agreed to provide Mr.
Gandarilla with one year of salary and benefits in the event of early
discharge due to performance reasons.
The Company has agreed with Mr. Tobin, its Chief Financial Officer, that if,
on or before December 18, 1998, Mr. Tobin's employment is terminated or he
resigns for any reason, he will receive severance pay consisting of one year
of salary continuation and benefits and his outstanding stock options will
vest and remain exercisable for one year after termination. In addition, Mr.
Tobin will receive severance pay consisting of one year of salary continuation
and benefits and his outstanding stock options will vest and remain
exercisable for one year after termination if Mr. Tobin's employment is
terminated for any reason other than cause after December 18, 1998.
DIRECTORS' COMPENSATION
Directors who are not employees of the Company receive an annual retainer
fee of $5,000 per year plus $1,500 for each Board meeting attended, and $500
for each committee meeting attended. Directors are also reimbursed for
expenses in attending Board and Board committee meetings.
During the fiscal year ended March 31, 1998, options to purchase 4,000
shares were granted to each of the new non-employee directors (Messrs.
Plaumann, Jacobs and Steadman), pursuant to the Company's Directors' Stock
Option Plan. In the case of Mr. Plaumann, his option was granted at $5.875 per
share and becomes fully exercisable on December 18, 1998 and will expire on
December 18, 2002. With respect to Messrs. Jacobs and Steadman, their options
were granted at $5.5625 per share and become fully exercisable on February 6,
1999 and expire on February 6, 2003. In addition, options were granted to the
Company's non-employee directors on March 31, 1998 (Messrs. Jacobs, Jasmann,
Moore, Patton, Plaumann and Steadman), pursuant to the Company's Directors'
Stock Option Plan, in the amount of 1,000 shares, 2,000 shares, 2,000 shares,
3,000 shares, 1,000 shares and 3,000 shares, respectively, at $5.5625 per
share. These options are fully exercisable on March 31, 1999 and expire on
March 31, 2003.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
From April 1, 1997 to December 18, 1997, Dwight Jasmann, Charles H. Moore,
Thomas R. Wiltse and T. Raymond Suplee were the members of the Compensation
and Stock Option Committee. Messrs. Wiltse and Suplee resigned as directors of
the Company on December 18, 1997 in connection with the Merger. In February
1998, the Compensation Committee was restructured and thereafter consisted of
Dwight Jasmann, Mark L. Plaumann and David R. A. Steadman. Mr. Steadman was an
employee of the Company from December 18, 1997 until March 31, 1998 and was
paid $16,000 in compensation and was reimbursed $2,000 for out-of-pocket
expenses incurred in rendering services to the Company pursuant to an
agreement entered into in connection with the Merger. Prior to the Merger, Mr.
Steadman was an employee and the Chairman of the Board of Directors of TSG.
12
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
This report, prepared by the Compensation Committee, reflects executive
compensation policy and philosophy applicable to fiscal year ended March 31,
1998 ("Fiscal 1998"). Except that Mr. Steadman was employed by the Company
until March 31, 1998, each member of the Compensation Committee is a non-
employee director. Mr. Steadman and Mr. Plaumann became members of the
Compensation Committee in February 1998.
Compensation Policy. The Company's executive compensation plans have been
structured to attract and retain its executives and to incentivize them to
execute the strategies and plans essential to a technology-based company in
the telecommunications market. The policies and plans are designed to ensure
individual executives receive compensation in direct relationship to their
contribution to key corporate financial and strategic goals that are focused
on short term and long term business success while increasing shareholder
values. The plans are designed to be equitable and to recognize the balance
between short term operating performance and stock performance. The principal
components of executive compensation are salary, bonus and stock options.
Bonus. For Fiscal 1998, the Compensation Committee adopted an incentive
compensation bonus plan for the senior executive officers related to overall
corporate financial performance. The plan for C. Shelton James, Chairman of
the Board and Chief Executive Officer until December 18, 1997, and Tracey L.
Gray, President and Chief Executive Officer effective December 18, 1997,
having previously served as Chief Operating Officer, provided for incentive
bonuses of up to 50% of base salary to be paid based on the Company's
performance as measured against key financial factors, revenues, operating
profits and increasing profitability. The Compensation Committee determined
the appropriate level of bonus based on overall consideration of the Company's
performance for the fiscal year. The Compensation Committee awarded a $35,295
bonus to Mr. James and a $66,010 bonus to Mr. Gray.
For Fiscal 1998, the Compensation Committee adopted a discretionary
incentive compensation bonus plan for corporate officers other than Mr. James
and Mr. Gray. Maximum bonus levels of 20% to 25% of base salary would be paid
based on the Company achieving operating performance goals established for
revenues, gross margins, operating profits and personal objectives related to
each officer's area of responsibility. Recommendations regarding the bonus
payment to each officer were presented by Mr. Gray once the Company's final
financial results were available. No bonus is payable under the plan unless
the Company reports profits. The corporate performance goals and the personal
objectives of each officer are approved at the beginning of each fiscal year
following approval of the fiscal year business plan.
Salary. In October 1997, the Compensation Committee authorized adjustments
in all corporate officers' base compensation. The adjustments represented a
combination of annual salary review adjustments as well as structural
adjustments to address industry and competitive issues faced by the Company as
it attempts to attract a more talented and experienced executive team. The
Compensation Committee was briefed on comparable officer compensation in the
industry from a variety of salary survey reports and competitors' officer
compensation structure and also considered data provided by Towers Perrin
which had been commissioned by the Compensation Committee to advise on
compensation issues.
Mr. James and Mr. Gray's base compensation was adjusted from $87,000 to
$94,000 and from $155,000 to $170,000, respectively, at the recommendation of
the Compensation Committee effective October 1, 1997.
Stock Options. The Compensation Committee recognizes the merits and value of
stock ownership by the Company's executives as a basis for retention and
aligning the executive's interests with the stockholders of the Company. The
use of stock option grants has become a key element of the equity based
compensation plans designed to increase the equity interest of the Company's
executives and combined with performance based incentive compensation ensures
a balanced perspective focused on these two objectives. The stock option
grants made to the Company's executives in Fiscal 1998 were made based on the
subjective judgment of the Compensation Committee members of the appropriate
recognition for their services during the Fiscal 1998 and prior years.
13
<PAGE>
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code generally disallows a tax deduction to public companies
for compensation over $1 million paid to its chief executive officer and its
four other most highly compensated executives. The compensation payable by the
Company to any one executive officer (including potential income from
outstanding stock options) is currently and for the foreseeable future
unlikely to reach that threshold. Qualifying, performance-based compensation
will not be subject to the deduction limit if certain requirements are met.
The Compensation Committee currently intends to structure stock option grants
to executive officers in a manner that complies with the performance-based
requirements of the statute.
Respectfully submitted,
David R. A. Steadman, Chairman
Dwight Jasmann
Mark L. Plaumann
14
<PAGE>
STOCK PERFORMANCE CHART
The following chart compares the yearly percentage change in cumulative
total stockholder return on the Common Stock during the five years ended March
31, 1998, with the cumulative total return of (i) Standard & Poors 500
Composite Index, (ii) the Standard & Poors Telephone Index and (iii) the
Standard & Poors Technology Index. The comparison assumes $100 was invested on
March 31, 1993 in the Common Stock and in each of the other indices and
assumes reinvestment of dividends. The Company paid no dividends during the
five-year period.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
3/31/93 3/31/94 3/31/95 3/31/96 3/31/97 3/31/98
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Elcotel, Inc. ............. $100 $276 $299 $380 $453 $421
S&P 500 Index.............. 100 101 117 155 186 275
S&P Telephone Index........ 100 98 108 136 147 240
S&P Technology Index....... 100 129 166 228 336 508
</TABLE>
LOGO
15
<PAGE>
RATIFICATION OF APPOINTMENT
OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the Company's present independent
public accountants, Deloitte & Touche LLP, for the fiscal year ending March
31, 1999. This appointment will be submitted to the stockholders of the
Company for ratification at the Meeting.
The submission of the appointment of Deloitte & Touche LLP for ratification
by the stockholders of the Company is not required by law or by the By-laws of
the Company. The Board of Directors is nevertheless submitting it to the
stockholders to ascertain their views. If the Stockholders do not ratify the
appointment, the selection of other independent public accountants will be
considered by the Board of Directors.
Representatives of Deloitte & Touche LLP are expected to be present at the
Meeting to respond to appropriate questions and will have the opportunity to
make a statement if they so desire.
The Board of Directors unanimously recommends that the stockholders vote for
the ratification of the appointment of Deloitte & Touche LLP.
OTHER MATTERS
No other matters requiring a vote of the stockholders are expected to come
before the Meeting. However, if other matters should properly come before the
Meeting, it is the intention of the persons named in the enclosed proxy to
vote in accordance with their best judgment on such matters.
EXPENSES OF SOLICITATION
The solicitation of proxies being on behalf of the Board of Directors, all
expenses in connection therewith will be paid by the Company. Request will be
made of brokerage houses and other custodians, nominees and fiduciaries to
forward the solicitation material at the expense of the Company to the
beneficial owners of stock held of record by such persons.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended to be presented at the next annual
meeting of stockholders of the Company must be received by the Company at its
executive offices at 6428 Parkland Drive, Sarasota, Florida 34243, on or
before May 18, 1999, to be included in the Company's proxy statement and form
of proxy for the 1999 annual meeting.
THE COMPANY WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE EXCEPT FOR
EXHIBITS, UPON REQUEST IN WRITING, A COPY OF ITS ANNUAL REPORT ON FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED
MARCH 31, 1998. REQUESTS SHOULD BE DIRECTED TO MR. WILLIAM H. THOMPSON,
SECRETARY, ELCOTEL, INC. 6428 PARKLAND DRIVE, SARASOTA, FLORIDA 34243.
By Order of the Board of Directors
/s/ William H. Thompson
William H. Thompson,
Secretary
16
<PAGE>
ELCOTEL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Tracey L. Gray, Joseph M. Jacobs, C. Shelton
James, Dwight Jasmann, Charles H. Moore, Thomas E. Patton, Mark L. Plaumann
and David R.A. Steadman, or any of them with full power of substitution,
proxies to vote at the Annual Meeting of Stockholders of Elcotel, Inc. (the
"Company") to be held on Tuesday, October 20, 1998 at 9:00 A.M., local time,
and at any adjournment or postponement thereof, hereby revoking any proxies
heretofore given, to vote all shares of common stock of the Company held or
owned by the undersigned as directed on the reverse, and in their discretion
upon such other matters as may come before the meeting.
(TO BE CONTINUED AND SIGNED ON THE REVERSE SIDE)
SEE
REVERSE
SIDE
<PAGE>
[X] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
NOMINEES FOR DIRECTORS AND FOR PROPOSAL 2. THIS PROXY WILL ALSO BE VOTED ON
SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
FOR WITHHELD
1. ELECTION OF
NOMINEES: [ ] [ ]
2. Ratification of the appointment of Deloitte & Touche LLP as the Company's
independent accountants for the fiscal year ending March 31, 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
Tracey L. Gray, Joseph M. Jacobs, C. Shelton James, Dwight Jasmann, Charles H.
Moore, Thomas E. Patton, Mark L. Plaumann, David R.A. Steadman
For except vote withheld from the following nominee(s):
- ---------------------------------------------------------
NOTE: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN.
WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN,
PLEASE GIVE FULL TITLE AS SUCH.
SIGNATURE DATE
------------------------- -----------
SIGNATURE DATE
------------------------- -----------
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
