<PAGE>
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:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
NETWORK LONK DISTANCE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
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<PAGE>
PRELIMINARY COPY
NETWORK LONG DISTANCE, INC.
525 FLORIDA STREET
BATON ROUGE, LOUISIANA 70801
(504) 343-3125
_________________________
PROXY STATEMENT
_________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 24, 1996
TO THE SHAREHOLDERS OF NETWORK LONG DISTANCE, INC.
NOTICE HEREBY IS GIVEN that the Annual Meeting of Shareholders of Network
Long Distance, Inc., a Delaware corporation (the "Company") will be held at
the Company's offices at 525 Florida Street, Baton Rouge, Louisiana, on May
24, 1996, at 10:00 a.m., Central Standard Time, and at any and all
adjournments thereof, for the purpose of considering and acting upon the
following matters:
1. To consider and act upon a proposal to amend the Articles of
Incorporation to increase the Company's authorized Common Stock from
10,000,000 shares, $.0001 par value to 20,000,000 shares, $.0001 par
value.
2. To elect four (4) Directors of the Company;
3. To consider and act upon a proposal to ratify the re-election of
Arthur Andersen LLP as independent auditors of the Company for the
fiscal year ended March 31, 1997.
4. To transact such other business as properly may come before the
meeting or any adjournment thereof.
Only holders of the voting $.0001 par value common stock of the Company of
record at the close of business on April 24, 1996 will be entitled to notice
of and to vote at the Meeting or at any adjournment or adjournments thereof.
All shareholders, whether or not they expect to attend the Annual Meeting of
Shareholders in person, are urged to sign and date the enclosed Proxy and
return it promptly in the enclosed postage-paid envelope which requires no
additional postage if mailed in the United States. The giving of a proxy
will not affect your right to vote in person if you attend the Meeting.
A copy of the Company's Annual Report on Form 10-K for the year ended March
31, 1995 accompanies this Notice of Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS.
MARC I. BECKER
SECRETARY
Baton Rouge, Louisiana
April 24, 1996
<PAGE>
PRELIMINARY COPY
Network Long Distance, Inc.
525 Florida Street
Baton Rouge, Louisiana 70801
(504) 343-3125
_________________________
PROXY STATEMENT
_________________________
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 1996
GENERAL INFORMATION
The enclosed Proxy is solicited by and on behalf of the Board of Directors of
Network Long Distance, Inc., a Delaware corporation (the "Company"), for use
at the Company's Annual Meeting of Shareholders to be held at the Company's
offices, 525 Florida Street, Baton Rouge, Louisiana, on the 24th day of May,
1996, at 10:00 a.m., Central Standard Time, and at any adjournment thereof.
It is anticipated that this Proxy Statement and the accompanying Proxy will
be mailed to the Company's shareholders on or about April 24, 1996.
Any person signing and returning the enclosed Proxy may revoke it at any time
before it is voted by giving written notice of such revocation to the
Company, or by voting in person at the Meeting. The expense of soliciting
proxies, including the cost of preparing, assembling and mailing this proxy
material to shareholders, will be borne by the Company. It is anticipated
that solicitations of proxies for the Meeting will be made only by use of the
mail; however, the Company may use the services of its Directors, Officers
and employees to solicit proxies personally or by telephone without
additional salary or compensation to them. Brokerage houses, custodians,
nominees and fiduciaries will be requested to forward the proxy soliciting
materials to the beneficial owners of the Company's shares held of record by
such persons, and the Company will reimburse such persons for their
reasonable out-of-pocket expenses incurred by them in that connection.
All shares represented by valid proxies will be voted in accordance therewith
at the Meeting. Shares not voting as a result of a proxy marked abstain will
be counted as part of total shares voting in order to determine whether or
not a quorum has been achieved at the Meeting.
Shares will not be counted as part of the vote on any business at the Meeting
on which the shareholder has abstained.
The Company's Annual Report to Shareholders for the fiscal year ended March
31, 1995 is being mailed simultaneously to the Company's shareholders, but
does not constitute part of these proxy soliciting materials.
SHARES OUTSTANDING AND VOTING RIGHTS
All voting rights are vested exclusively in the holders of the Company's
$.0001 par value voting common stock, with each share entitled to one vote.
Only shareholders of record at the close of business on April 24, 1996 are
entitled to notice of and to vote at the Meeting
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or any adjournment thereof. On April 24, 1996 the Company had 3,935,183
shares of its $.0001 par value voting common stock outstanding, each of which
is entitled to one vote on all matters to be voted upon at the Meeting,
including the election of Directors. No fractional shares are presently
outstanding.
A majority of the Company's outstanding voting common stock represented in
person or by proxy shall constitute a quorum at the Meeting. The affirmative
vote of a majority of the votes cast, providing a quorum is present, is
necessary to elect the Directors. Cumulative voting in the election of
Directors is not permitted. The affirmative vote of a majority of the
Company's outstanding voting common stock is necessary to amend the Articles
of Incorporation.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND OF MANAGEMENT
The following table presents information with respect to shares of the
Company's Common Stock beneficially owned by the Company's Directors and
Officers and by all Directors and Officers of the Company as a group, and by
all other persons known by management to own beneficially five percent (5%)
or more of the Company's Common Stock as of April 24, 1996. As defined in
Rule 13d(d)(1) under the Securities Exchange Act of 1934, beneficial
ownership includes shares issued and outstanding, convertible preferred stock
and all options and warrants to acquire common stock.
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<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NAME AND ADDRESS NATURE OF BENEFICIAL CLASS OWNED
OF BENEFICIAL OWNER OWNERSHIP* BENEFICIALLY (1)
- ------------------- -------------------- ----------------
<S> <C> <C>
Michael M. Ross 600,691 (2) 12.94%
13929 Woodland Ridge
Baton Rouge, LA 70816
Marc I. Becker 611,691 (3) 13.17%
3847 Broussard
Baton Rouge, LA 70808
Joseph M. Edelman, M.D. 111,000 (4) 2.39%
525 Florida Street
Baton Rouge, LA 70801
Leon L. Nowalsky 265,000 (5) 5.71%
390097 Causeway Boulevard, Suite 1275
Metairie, LA 70002
Russell J. Page 100,000 (6) 2.15%
822 Queens Road
Charlotte, NC 28207
Timothy J. Sledz 879,055 (7) 18.93%
1841 Centre Point Drive, Suite 135
Naperville, IL 60563
S. David Rosenfeld 109,133 (8) 2.35%
8972 Tallyho Avenue
Baton Rouge, LA 70806
Louis J. Resweber 183,834 (9) 3.96%
828 High Lake Drive
Baton Rouge, LA 70810
Value Tel, Inc. 879,055 18.93%
1841 Centre Point Drive, Suite 135
Naperville, IL 60563
All Directors and 2,859,404 (10) 61.58%
Officers as a Group
(8 Persons)
</TABLE>
______________________
* Less than 1%
(1) The percentages indicated are based on outstanding options for
each individual, exercisable within 60 days, and 3,935,183 shares
of Common Stock issued and outstanding on April 24, 1996.
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(2) Mr. Ross is the record and beneficial owner of 600,691 shares of
the Company's Common Stock and 0 options to purchase 0 shares of
the Company's Common Stock, exercisable within the next 60 days.
(3) Mr. Becker is the record and beneficial owner of 611,691 shares
of the Company's Common Stock including 10,000 owned by his wife
and 1,000 shares owned by the Becker/Edelman Investment
Partnership and record and beneficial owner of 0 options to
purchase 0 shares of the Company's Common Stock, exercisable
within the next 60 days.
(4) Dr. Edelman is the record and beneficial owner of 11,000 shares
of the Company's Common Stock which includes 1,000 shares held in
the Becker/Edelman Investment Partnership and 100,000 options to
purchase 100,000 shares of the Company's Common Stock,
exercisable within the next 60 days.
(5) Mr. Nowalsky is the record and beneficial owner of 40,000 shares
of the Company's Common Stock and 225,000 options to purchase
225,000 shares of the Company's Common Stock, exercisable within
the next 60 days.
(6) Mr. Page is the record and beneficial owner of 0 shares of the
Company's Common Stock and 100,000 options to purchase 100,000
shares of the Company's Common Stock, exercisable within the next
60 days.
(7) Mr. Sledz is an indirect beneficial owner of 879,055 shares of
Common Stock owned by Value Tel by virtue of Mr. Sledz being an
Officer and Director of Value Tel, Inc.
(8) Mr. Rosenfeld is the record and beneficial owner of 9,133 shares
of the Company's Common Stock and 100,000 options to purchase
100,0000 shares of the Company's Common Stock, exercisable within
the next 60 days.
(9) Mr. Resweber is the record and beneficial owner of 500 shares of
the Company's Common Stock and 250,002 options to purchase
250,002 shares of the Company's Common Stock, exercisable within
the next 60 days.
(10) Includes 879,055 shares of Common Stock owned indirectly by Mr.
Sledz, a Director of Value Tel, Inc.
AMENDMENT TO CERTIFICATE OF INCORPORATION
CONCERNING INCREASING THE NUMBER OF
THE COMPANY'S COMMON STOCK
The Board has adopted resolutions proposing an Amendment to the Company's
current Certificate of Incorporation. The Amendment would increase the
Authorized Capital Common Stock of the Company from 10,000,000 to 20,000,000
shares. Under the current Certificate of Incorporation, the Board of
Directors possesses the maximum authority permitted under Delaware law to
determine the relative rights and preferences of the common stock. The
proposed Amendment in no way alters or reclassifies the issued and
outstanding shares of Common Stock of the Company.
Although the Company has no present intention of issuing any of the
additional shares as of the date of this Proxy Statement, the Board believes
that it is desirable to have the additional shares available for possible
future financing or acquisition transactions and/or future timely private or
public equity or convertible debt offering and other general corporate
purposes. The Board of Directors believes that the availability of such
shares of issuance in the future, will give the Company greater flexibility
and permit such shares to be issued without the expense of holding a
shareholder meeting.
The issuance of additional shares of Common Stock by the Company could
potentially have an anti-takeover effect by making it more difficult to
obtain shareholder approval of various actions, such as a merger or the
removal of management. The increase in authorized shares of Common Stock has
not been proposed for an anti-takeover-related purpose and the Board
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of Directors and management have no knowledge of any current efforts to
obtain control of the Company to effect large accumulations of its Common
Stock.
On March 12, 1996, the Board of Directors approved the amendment and
recommended that the shareholders approve the proposal. If the proposal is
accepted, it is anticipated that the amendment will be filed with the
Secretary for the State of Delaware and become effective immediately
following the Annual Meeting.
The Board of Directors of the Company unanimously recommends a vote FOR the
proposal to increase the Authorized Capital Common Stock of the Company.
Approval of the amendment requires the affirmative vote of the holders of a
majority of the shares of Common Stock outstanding.
It is therefore proposed that the Company's Certificate of Incorporation be
amended to add Article IV to read as follows:
ARTICLE IV
That Article IV of the Certificate of Incorporation of the Corporation be
amended as follows:
The number of shares of Common Stock, $.0001 par value, which the
Corporation shall have authority to issue shall be increased from
Ten Million (10,000,000) shares to Twenty Million (20,000,000)
shares. The number of shares of Preferred Stock, $.01 par value,
shall not change and shall remain Twenty-Five Million
(25,000,000) shares. All other provisions of Article IV of the
Certificate of Incorporation of the Corporation shall also remain
unchanged.
The affirmative vote of a majority of the outstanding shares of common stock
entitled to vote is required to authorize the proposed amendment.
The Board of Directors recommends approval of this proposed amendment.
ELECTION OF DIRECTORS
The Bylaws presently provide for a Board of Directors of not less than three
(3) members. The current number of Directors of the Company has been fixed
at six (6) by the Company's Board of Directors. The Company has one(1)
non-voting advisor to the Board of Directors who attends all meetings.
The Company's Board of Directors is divided into three classes which hold
office for three year terms. At the last Annual Meeting, Messrs Ross and
Becker were nominated and elected for a term expiring in 1997. Each
individual will be nominated for a new three year term at the next Annual
Meeting.
The Company's Board of Directors recommends the election of Directors of the
four (4) nominees listed below, in the Classes and for the terms indicated,
to hold office until the Annual Meeting of terms indicated, to hold office
until the Annual Meeting of Shareholders in the year indicated and until
their successors are elected and qualified or until their earlier death,
resignation or removal.
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The persons named as "proxies" in the enclosed form of Proxy, who have been
designated by Management, intend to vote for the four (4) nominees for election
as Directors unless otherwise instructed in such proxy. If at the time of the
Meeting, any of the nominees named below should be unable to serve, which event
is not expected to occur, the discretionary authority provided in the Proxy will
be exercised to vote for such substitute nominee and nominees, if any, as shall
be designated by the Board of Directors.
NOMINEES
The following table sets forth the name and age of each nominee for Director,
indicating all positions and offices with the Company presently held by him, the
period during which he has served as such, and the class and term for which he
has been nominated:
YEAR
NAME AGE POSITION FIRST DIRECTOR
- ---- --- -------- --------------
CLASS A NOMINEES - TERMS EXPIRING AT THE
ANNUAL SHAREHOLDERS MEETING IN 1999
Leon L. Nowalsky 34 Director 1995
Russell J. Page 53 Director 1995
CLASS B NOMINEES - TERMS EXPIRING AT THE
ANNUAL SHAREHOLDERS MEETING IN 1998
Dr. Joseph M. Edelman 75 Director 1990
Timothy J. Sledz 27 Director 1995
BUSINESS EXPERIENCE OF DIRECTORS
MICHAEL M. ROSS
FOUNDER, DIRECTOR
PRESIDENT & CHIEF EXECUTIVE OFFICER
Mr. Ross founded the Company along with Mr. Becker in 1979, and has served as
a Director and Officer of Network and its predecessor company, M.M. Ross,
Inc., since its inception. Mr. Ross has been active in every facet of the
telecommunications industry on an industry-wide level. He previously managed
responsibilities for a wide range of functions including design and
implementation of call route optimization, traffic engineering and switching
programs. Mr. Ross is a former Director of Telecom Management, Inc. (1984 to
1985) and Direct Communications, Inc., (1985 to 1990) both of which were
merged into Network. He is a charter member in the Telecommunications
Resellers Association ("TRA"). Currently, he is responsible for all global
strategic activities, corporate affairs, long range planning and administrative
functions, and he has direct oversight over all national sales and marketing
activities, business development, customer service and support functions, and
tariff and regulatory matters. He is a graduate of Louisiana State University
in Baton Rouge.
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MARC I. BECKER
CO-FOUNDER, DIRECTOR
EXECUTIVE VICE PRESIDENT, CHIEF OPERATING OFFICER & CORPORATE SECRETARY
Mr. Becker was a co-founder of Network's predecessor company, and has served as
a Director and Corporate Secretary of the Company since its formation. He has
previously served as Chief Financial Officer and Controller, managing all
financial, accounting and SEC reporting activities. Mr. Becker has experience
in every aspect of the Company -- including technical, administrative,
facilities management systems networking, human resources, information services,
customer service and customer support. He is a former Director of Telecom
Management, Inc. (1984 to 1985) and Direct Communications, Inc. (1985 to 1990).
Mr. Becker currently has responsibility for all nationwide operational and
management functions, including accounting systems design and implementation of
related software. He is also engaged in all networking, traffic engineering,
analysis and routing, and is active in developing specialized micro-processor
automated dialing system applications. Mr. Becker is a graduate of Louisiana
State University in Baton Rouge.
JOSEPH M. EDELMAN M.D.
DIRECTOR AND CONTROLLER
VICE PRESIDENT, TREASURER, TECHNICAL/SYSTEMS APPLICATIONS/RESEARCH &
DEVELOPMENT
Dr. Edelman has been a Director and Officer of Network and its predecessor
company, since 1981, and had previously served as an independent consultant to
the Company since 1980. Prior to joining the Company, Dr. Edelman was active in
the area of computer automation and systems applications since the early 1960s,
and developed one of the nation's first word processing systems for mini-
computers. After a career specializing in neurosurgery, Dr. Edelman founded and
served as Chairman, President and Chief Executive Officer of Edelman Systems,
Inc., a developer of computer hardware and software for the medical field and
industry which grew to become one of the nation's leading provider of systems
for standardization of record documentation, billing, scheduling, form
preparation, and related administrative processing for more than 100 medical
clinics across the country. In the late 1970's, Dr. Edelman wrote Network's
proprietary customized billing system, and developed other in-house management
and control systems still in use today. Currently, he is active in all aspects
of Network's operations, including switching systems, nationwide electronic
networking, data processing, management information services, call processing,
customized billing and invoicing, customer data base management, facilities
management and traffic engineering. He also directs the Company's research and
development efforts, and serves as the Company's Controller. He holds a
bachelors degree from Louisiana State University, and earned his doctorate in
Medicine from the Louisiana State University School of Medicine in New Orleans.
LEON L. NOWALSKY
DIRECTOR
Mr. Nowalsky has served as independent legal counsel to the Company since 1992,
and has been a Director since 1995. Since 1990, he has been a senior partner in
the law firm of Nowalsky & Bronston, LLP, a New Orleans-based law practice
specializing in telecommunications regulatory matters and mergers and
acquisitions and serves as counsel to over 40 independent telecom firms
nationwide. From 1985 to 1986, he served as in-house counsel for a Louisiana-
based long distance company which was acquired by Advanced Telecommunications
Corp. ("ATC"). Mr. Nowalsky served ATC as chief regulatory counsel with
responsibility for all compliance issues in a 15-state region, and in 1987, he
was promoted to interim general counsel of ATC, where he managed the legal
aspects of the
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company's telecommunications operations. Mr. Nowalsky holds a bachelors
degree from Tulane University in New Orleans and earned his Juris doctorate
from Loyola University School of Law in New Orleans. He serves on the Boards
of Receivables Funding Corp., an Ohio-based financial concern, and J.C.
Dupont, Inc., a Louisiana-based energy company.
RUSSELL J. (RUSTY) PAGE
DIRECTOR
Mr. Page has served as a Director of the Company since 1995. Since April of
1996, Mr. Page has served as a principal of Capital Markets Access Corp. For
the prior 15 years he served as Senior Vice President of NationsBank
Corporation, the fourth largest U.S. bank holding concern, and a primary lending
institution to a number of telecommunications corporations. Mr. Page joined
NationsBank in 1981, where he assisted the bank in fulfilling its growth
strategy, primarily through acquisitions, which resulted in the bank growing
from a regional retail banking business to one of the nation's largest
diversified financial institutions. As Equity Marketing Executive, he has had
direct responsibility for all investor relations for NationsBank. In addition
to his role at NationsBank, Mr. Page has served as an independent equity
markets/investor relations consultant to a number of public companies including
United Companies Financial Corporation. Mr. Page serves on the national
Marketing Committee of The NASDAQ Stock Market, and is a member of the Board of
Directors and the Executive Committee of the National Investor Relations
Institute, and he is Chairman of NIRI's International Committee. He is also a
member of the National Security Traders Association. He is an alumnus of the
University of North Carolina at Charlotte, and has served on the 1994 Charlotte
Organizing Committee Executive Board for the National Collegiate Athletic
Association ("NCAA").
TIMOTHY J. SLEDZ
DIRECTOR
Mr. Sledz has served as a Director of the Company since 1995. He is the
President and Chief Operating Officer of Value Tel, Inc., ("Value Tel") a
nationwide diversified telecommunications corporation based in Chicago,
Illinois. Mr. Sledz joined Value Tel's predecessor company, Discount Network
Services, Inc. ("DNS") in 1992 to assist in DNS's aggressive growth and
expansion plan. He served as a Director, Chief Financial Officer and Corporate
Secretary of DNS until its May, 1995 merger into Value Tel, at which time Mr.
Sledz became President of the combined companies. In November, 1995, Value Tel
sold a significant base of its nationwide telecommunications business and long
distance customer base to Network Long Distance, and since that time, Mr. Sledz
has overseen the transition of its previous customer base to Network. In
addition, Mr. Sledz currently oversees all of Value Tel's independent
operational and administrative functions. He is experienced in all areas of
computer and management information systems, including programming, networking,
and telecommunications provisioning and billing. Mr. Sledz is the former
President and Chief Executive Officer of Computer Document Imaging, Inc., a
Chicago-based computer consulting firm.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has two standing committees. The Audit Committee is
responsible for reviewing audit procedures and supervising the relationship
between the Company and its independent auditors. The Remuneration and Stock
Option/Warrant Committee is responsible for approving compensation arrangements
for senior management of the Company and administering the Company's stock
option plans.
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During fiscal year ending 1996, there were three regular and ten special
meetings of the Board of Directors of the Company. Each member of the Board of
Directors attended all the meetings of the Board of Directors and of each
Committee of which he was a member during the year.
COMPLIANCE WITH SECTION 16(A) OF SECURITIES EXCHANGE ACT OF 1934
To the Company's knowledge, during the fiscal year ended March 31, 1996, the
Company's Officers and Directors complied with all applicable Section 16(a)
filing requirements except Mr. Sledz inadvertently failed to file a Form 3
Statement of Beneficial Ownership of Securities. This statement is based solely
on a review of the copies of such reports furnished to the Company by its
Officers and Directors and their written representations that such reports
accurately reflect all reportable transactions.
FAMILY RELATIONSHIPS
There is no family relationship between any director, executive or person
nominated or chosen by the Company to become a director or executive officer.
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EXECUTIVE COMPENSATION
The following table sets forth all compensation paid or accrued by the Company
rendered during the fiscal years 1994, 1995 and 1996 by those of its executive
officers whose salaries and other compensation during 1996 exceeded $100,000 for
services.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------
LONG TERM COMPENSATION
----------------------------
ANNUAL COMPENSATION AWARDS PAY-
OUTS
- -------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
ALL
NAME ANNUAL RESTRICTED LTIP OTHER
AND COMPEN- STOCK OPTIONS/ PAY- COMPEN-
PRINCIPAL SALARY BONUS SATION AWARDS SARS OUTS SATION
POSITION YEAR(1) ($) ($) ($)(2) ($) (#) ($) ($)(3)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Michael M. Ross 1996 $ 99,386 $0 $ 221 N/A 0 N/A $9,155
President and 1995 $ 94,846 $0 $ 2,316 N/A 0 N/A $8,822
Chief Executive 1994 $ 81,213 $0 $ 2,422 N/A 0 N/A $5,362
Officer
Marc I. Becker 1996 $103,073 $0 $ 221 N/A 0 N/A $5,455
Executive Vice 1995 $ 99,022 $0 $ 884 N/A 0 N/A $5,449
President and Chief 1994 $ 82,900 $0 $ 884 N/A 0 N/A $5,362
Operating Officer
S. David Rosenfeld 1996 $ 60,234 $0 $63,666 N/A 0 N/A $3,739
Executive Vice 1995 $ 45,061 $0 $75,907 $2,800 0 N/A $3,383
President 1994 $ 44,500 $0 $34,081 N/A 0 N/A $3,192
</TABLE>
(1) Periods presented are for the years ended March 31.
(2) Represents a $500 monthly allowance less health insurance, and for
Mr. Rosenfeld, sales commissions. For fiscal year 1996, the $500 monthly
allowance was terminated July 1, 1995.
(3) Represents employer contributions for insurance, disability and a car
allowance.
(4) The following officers' salaries are anticipated in excess of $100,000
for the fiscal year 1997:
Michael M. Ross, President and Chief Executive Officer
Marc I. Becker, Executive Vice President and Chief Operating Officer.
S. David Rosenfeld, Executive Vice President
Louis J. Resweber, Executive Vice President
COMPENSATION OF DIRECTORS
Two (2) non-employee Directors of the Company, Mr. Russell J. Page and Mr. Leon
L. Nowalsky have been authorized Warrants under Directorship Agreements. In
addition, Mr. Nowalsky also currently receives $1,333.00 per month for serving
as a Director. All Directors receive expenses to attend board meetings and
expenses related to board duties assigned.
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OPTIONS AND WARRANTS
The Company issued to its principal underwriting firm, Barron Chase
Securities, Inc. on February 24, 1994, warrants to purchase 120,000 shares of
the Company's Common Stock for a five (5) year period for $7.50 per share.
On April 29, 1995, Mr. Leon L. Nowalsky, in consideration for accepting a
directorship, was authorized to receive warrants to purchase 225,000 shares
of the Company's Common Stock for a ten (10) year period for $7.75 per share.
Also on this date, Mr. David Rosenfeld, an Officer, and Dr. Joseph M. Edelman,
an Officer and Director, were authorized to receive warrants to purchase 100,000
share each of the Company's Common Stock for a ten (10) year period for $7.78
per share. On May 23, 1995, Mr. Louis J. Resweber, an Officer of the Company,
was authorized to receive warrants to purchase 250,002 shares of the Company's
Common Stock for a ten (10) year period for $7.75 per share. On October 26,
1995, Mr. Russell J. Page, in consideration of accepting a directorship, was
authorized to receive warrants to purchase 225,000 shares of the Company's
Common Stock for a ten (10) year period for $9.13 per share.
EMPLOYMENT AGREEMENTS
On January 1, 1994 the Company entered into employment agreements with Mr.
Michael M. Ross and Mr. Marc I. Becker, Officers and Directors of the Company.
The employment agreements extend to December 31, 1997 and provide for a minimum
salary of $96,000 to each individual. On May 23, 1995, the Company entered into
a employment agreement with Mr. Louis J. Resweber, an Officer of the Company,
for a three (3) year period beginning on June 2, 1995 and extending through May
31, 1998. The contract calls for a minimum of annual salary of $144,000. On
March 12, 1996, the board authorized employment agreements with Mr. S. David
Rosenfeld, an Officer of the Company and Dr. J. M. Edelman, an Officer and
Director of the Company, for a period of two (2) years from January 1, 1996 with
minimum annual salaries of $120,000 and $80,000, respectively. A discretionary
bonus may be paid to any of the above individuals based on factors deemed
relevant by the Board of Directors, such as the Company's performance and/or
other objective criteria.
OPTION/WARRANTS GRANTS IN 1996
The following table sets forth certain information regarding options to purchase
shares of Common Stock granted to the Executive Officers of the Company listed
in the Executive Compensation Table during the Company's 1996 fiscal year:
OPTION GRANTS IN 1996
- -----------------------------------------------------------------------------
(a) (b) (c) (d) (e)
% OF TOTAL
OPTIONS
GRANTED TO
OPTIONS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED IN 1996 PRICE DATE
- ------------------ ------- ------------ -------- ----------
Michael M. Ross None N/A N/A N/A
Marc I. Becker None N/A N/A N/A
S. David Rosenfeld 100,000 11.73% 7.88 4/29/2005
11
<PAGE>
AGGREGATE OPTIONS EXERCISED IN 1996 AND OPTION VALUES AT MARCH 31, 1996
The following table sets forth certain information regarding options to
purchase shares of Common Stock exercised during the Company's 1996 fiscal
year and the number and value of exercisable and unexercisable options to
purchase shares of Common Stock held as of the end of the Company's 1996
fiscal year by the Executive Officers of the Company named in the Summary
Compensation Table:
<TABLE>
<CAPTION>
AGGREGATE OPTIONS EXERCISED IN 1996
AND OPTION VALUES AT MARCH 31, 1996
- -----------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
03/31/96 03/31/96
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/ EXERCISABLE
NAME ON EXERCISE VALUE REALIZED(1) UNEXERCISABLE UNEXERCISABLE(2)
- ---- --------------- ----------------- -------------- ---------------
<S> <C> <C> <C> <C>
Michael M. Ross 0 0 0/0 $0/$0
Marc I. Becker 0 0 0/0 $0/$0
S. David Rosenfeld 0 0 100,000/0 $0/$137,000
</TABLE>
(1) Value realized is equal to the difference between the fair market value
per share of Common Stock on the date of exercise and the option exercise
price per share multiplied by the number of shares acquired upon exercise
of an option.
(2) Value of exercisable/unexercisable in-the-money options is equal to the
difference between the fair market value per share of Common Stock at
March 31, 1996 and the option exercise price per share multiplied by the
number of shares subject to options.
12
<PAGE>
COMPENSATION OF DIRECTORS
STANDARD ARRANGEMENTS
One (1) non-employee Director of the Company receives fees of $1,333 per
month. All Directors are reimbursed for reasonable out-of-pocket expenses
incurred related to Board duties assigned and in connection with attending
Board and Shareholder's meetings.
OTHER ARRANGEMENTS
There are no other arrangements pursuant to which the Company's Directors
receive compensation from the Company for services as Directors.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENT
There is no compensatory plan or arrangement with respect to any individual
named above which results or will result from the resignation, retirement or any
other termination of employment with the Company, or from a change in the
control of the Company.
TRANSACTIONS WITH MANAGEMENT
Mr. Michael M. Ross and Mr. Marc I. Becker, Officers and Directors of the
Company, owe to the Company $199,471 and $146,500 as of March 31, 1996 and 1995
respectively. The amounts represent advances to these individuals from the
Company, which are unsecured, and bear interest at 8% Interest income with
respect to these notes for 1996, 1995 and 1994 was $11,720, $11,240 and $9,800,
respectively.
Mr. Louis J. Resweber, an Officer of the Company, owes the Company $55,259 at
March 31, 1996. The amount represents an advance from the Company, which is
unsecured and is imputed an interest of 10%. Interest income for the period was
$1,257.
Mr. Michael M. Ross and Mr. Marc I. Becker have entered into an agreement with
the Company and its escrow agent whereby approximately 50% of their shares are
to be released over a period of time based upon certain objective performance
levels. In order for the shares to be released, the Company's net income per
share on a fully diluted basis, as defined in the agreement, must be as follows:
FISCAL NET INCOME PER SHARE AMOUNT OF SHARES TO
YEAR-END (FULLY-DILUTED) BE RELEASED
- -------- -------------------- --------------------
March 31, 1995 $.375 per share 208,897 shares
March 31, 1996 $0.60 per share 208,897 shares
March 31, 1997 $1.00 per share 208,897 shares
If in any of those years the Company achieves the following years' earnings
levels, all prior years shares and the additional shares for such earnings level
will be released. The escrow agreement terminates on January 27, 2000.
In the event the Company is acquired or merged into another entity prior to
March 31, 1997, at a price equivalent to at least $10 per share, all of the
escrowed shares shall be released from escrow. Alternatively, in the event the
Company is acquired or merged into another
13
<PAGE>
entity prior to March 31, 1997, at a price equivalent of less than $10 per
share, all of the escrowed shares still remaining in the escrow account at
the time of any such acquisition or merger shall be forfeited and all such
shares shall be placed in the Company's treasury for cancellation thereof as
a contribution to capital.
The staff of the Securities Exchange Commission may view the placement of shares
in escrow similar to a recapitalization by management. The agreement to release
shares upon the achievement of certain objective criteria is presumed to be a
separate compensatory arrangement between the Company and management. The
effect is that the fair value of the shares released from escrow is charged to
income in that period. Accordingly the Company's profitability could be
significantly effected in any period the shares held in escrow are released.
The Company entered into a lease agreement for a vehicle on behalf of Mr.
Michael M. Ross, the Company's President and a Director in 1993. The Company
pays the monthly lease, totalling $307, and is reimbursed for this amount by
Mr. Ross.
Mr. Leon L. Nowalsky, a Director of the Company, is a partner of Nowalsky &
Bronston, LLP. The law firm performed legal services for the Company during the
last fiscal year and was paid approximately $120,000.
RATIFICATION AND SELECTION OF INDEPENDENT AUDITORS
Arthur Andersen LLP served as the Company's auditors for the fiscal year
ended March 31, 1996. Representatives of Arthur Andersen are expected to be
present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and be available at that time to respond to appropriate
questions. Shareholders will request at the Annual Meeting to ratify the
selection of Arthur Andersen LLP to serve as independent auditors for the
fiscal year ended March 31, 1997. The Board of Directors recommends a vote
in favor of the proposal.
OTHER BUSINESS
As of the date of this Proxy Statement, management of the Company was not aware
of any other matter to be presented at the Meeting other than as set forth
herein. However, if any other matters are properly brought before the Meeting,
the shares represented by valid proxies will be voted with respect to such
matters in accordance with the judgement of the persons voting them.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Any proposal by a shareholder to be presented at the Company's 1996 annual
meeting must be received at the offices of the Company, 525 Florida Street,
Baton Rouge, Louisiana 70801, no later than September 15, 1996.
MARC I. BECKER
SECRETARY
Baton Rouge, Louisiana
April 24, 1996
14
<PAGE>
PROXY PROXY
NETWORK LONG DISTANCE, INC.
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF THE SHAREHOLDERS TO BE HELD MAY 24, 1996
The undersigned hereby constitutes and appoints Mr. Michael M. Ross and Mr. Marc
I. Becker, and each of them, the true and lawful attorneys and proxies of the
undersigned, with full power of substitution and appointment, for and in the
name, place and stead of the undersigned, to act for and vote all of the
undersigned's shares of the $.0001 par value common stock of Network Long
Distance, Inc., a Delaware corporation at the Annual Meeting of Shareholders to
be held at 525 Florida Street, Baton Rouge, Louisiana, at 10:00 a.m. Central
Standard Time, on May 24, 1996, and any and all adjournments thereof, for the
following purposes:
1. To amend the Articles of Incorporation to increase the Company's authorized
Common Stock from 10,000,000 shares, $.0001 par value to 20,000,000 shares,
$.0001 par value.
/ / FOR / / AGAINST / / ABSTAIN
2. The election of four (4) Directors of the Company:
/ / FOR all nominees listed below (except as marked to the contrary):
/ / WITHHOLD AUTHORITY to vote for all the nominees listed below:
Class A Nominees Class B Nominees
Three Year Term Two Year Term
----------------- ----------------------
Leon L. Nowalsky Dr. Joseph M. Edelman
Russell J. Page Timothy J. Sledz
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
CROSS OUT THAT NOMINEE'S NAME ABOVE.)
3. To ratify the re-election of Arthur Andersen LLP as independent auditors of
the Company for the fiscal year ended March 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
4. To transact such other business as properly may come before the meeting.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ABOVE.
15
<PAGE>
The undersigned hereby revokes any proxies as to said shares and heretofore
given by the undersigned, and ratifies and confirms all that said attorneys
and proxies may lawfully do by virtue hereof.
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH
THE SHAREHOLDER'S SPECIFICATION ABOVE. THIS PROXY CONFERS DISCRETIONARY
AUTHORITY IN RESPECT TO MATTERS NOT KNOWN OR DETERMINED AT THE TIME OF THE
MAILING OF THE NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS TO THE UNDERSIGNED.
The undersigned hereby acknowledges receipt of the
Notice of Annual Meeting of Shareholders, Proxy
Statement and Annual Report to Shareholders
furnished therewith.
Dated:_____________________________, 1996
-------------------------------------------------
-------------------------------------------------
Signature(s) of Shareholder(s)
Signature(s) should agree with the name(s) hereon.
Executors, administrators, trustees, guardians and
attorneys should indicate when signing. Attorneys
should submit powers of attorney.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF NETWORK LONG
DISTANCE, INC. PLEASE SIGN AND RETURN THIS PROXY TO NETWORK LONG DISTANCE,
INC., 525 FLORIDA STREET, BATON ROUGE, LOUISIANA 70801. THE GIVING OF A PROXY
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.
16
