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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
MOSAIX, INC.
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(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):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Investment Company Act Rule 20a-1(c)
/ / $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
CALCULATION OF FILING FEE
<TABLE>
<S> <C> <C> <C> <C>
- ------------------------------ ------------------------- --------------------------- -------------------- -----------------
PER UNIT PRICE OR OTHER
UNDERLYING VALUE OF PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE NUMBER OF TRANSACTION COMPUTED AGGREGATE VALUE OF
SECURITIES TO WHICH SECURITIES TO WHICH PURSUANT TO EXCHANGE TRANSACTION:
TRANSACTION APPLIES: TRANSACTION APPLIES: ACT RULE 0-11: TOTAL FEE PAID
- ------------------------------ ------------------------- --------------------------- -------------------- -----------------
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</TABLE>
/ / 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.
Amount Previously Paid: Filing Party:
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Form, Schedule or
Registration Statement No.: Date Filed:
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[MOSAIX Logo]
March 19, 1997
Dear Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Mosaix, Inc., to be held in the Regency Ballroom at the Hyatt Regency Hotel,
located at 900 Bellevue Way NE, Bellevue, Washington, on Tuesday, April 22,
1997, at 10:00 a.m. Details of the business to be conducted at the annual
meeting are included in the enclosed Notice of Annual Meeting of Shareholders
and Proxy Statement.
Your vote is very important. Whether or not you expect to attend the annual
meeting, your shares should be represented and voted at the meeting. Therefore,
I urge you to complete, sign, date and promptly return the enclosed proxy. If
you decide to attend the meeting and wish to vote in person, you will still have
the opportunity to do so, even if you have already returned your proxy.
On behalf of the Board of Directors, I would like to express our appreciation
for your continued interest in Mosaix.
Sincerely,
Patrick S. Howard
Chief Executive Officer
<PAGE> 3
[MOSAIX LOGO]
MOSAIX, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, APRIL 22, 1997
To the Shareholders of Mosaix, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
MOSAIX, INC., a Washington corporation (the "Company"), will be held in the
Regency Ballroom at the Hyatt Regency Hotel, located at 900 Bellevue Way NE,
Bellevue, Washington, on Tuesday, April 22, 1997, at 10:00 a.m. (the "Annual
Meeting"), for the following purposes, as described in the attached Proxy
Statement:
1. To elect three directors to hold office for terms as described in the
attached Proxy Statement;
2. To approve an amendment to the Company's 1991 Employee Stock Purchase
Plan to enable participation in such plan by employees of the Company's
non-domestic subsidiaries;
3. To ratify the selection of KPMG Peat Marwick LLP as independent
auditors for the Company; and
4. To consider and transact such other business as may properly come
before the Annual Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 3, 1997
as the record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
John J. Flavio
Secretary
Redmond, Washington
March 19, 1997
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IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY TODAY. By promptly completing, signing, dating and returning the
proxy, you will save the Company the expenses of additional solicitation. If you
send your proxy and wish to attend the Annual Meeting and vote in person, you
may do so. Your proxy is revocable at your request.
- --------------------------------------------------------------------------------
<PAGE> 4
MOSAIX, INC.
PROXY STATEMENT
GENERAL
The enclosed proxy is solicited by the Board of Directors of Mosaix,
Inc. ("Mosaix" or the "Company") for use at the Annual Meeting of Shareholders
to be held Tuesday, April 22, 1997, at 10:00 a.m., and at any adjournment or
postponement thereof (the "Annual Meeting") for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Shareholders. The Annual
Meeting will be held in the Regency Ballroom at the Hyatt Regency Hotel, located
at 900 Bellevue Way NE, Bellevue, Washington.
The Company first mailed this Proxy Statement to shareholders on or
about March 19, 1997.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of shares of the Company's common stock (the
"Common Stock") at the close of business on March 3, 1997 will be entitled to
notice of, and to vote at, the Annual Meeting. On that date, 13,266,502 shares
of Common Stock were issued and outstanding.
REVOCABILITY OF PROXIES
Any shareholder granting a proxy has the power to revoke it at any time
before it is exercised. A proxy may be revoked either by (i) filing with the
Company's Secretary prior to the Annual Meeting, at the Company's executive
offices, either a written revocation or a duly executed proxy bearing a later
date or (ii) attending the Annual Meeting and voting in person, regardless of
whether a proxy has previously been given. Attendance at the Annual Meeting will
not revoke a shareholder's proxy unless such shareholder votes in person.
QUORUM
A quorum for the Annual Meeting will consist of the holders, present in
person or represented by proxy, of a majority of the outstanding shares of
Common Stock entitled to vote at the Annual Meeting.
VOTING
All shares represented by proxies will be voted in accordance with
shareholder directions. If the proxy is signed and returned without any
direction given, shares will be voted in accordance with the Board of Directors'
recommendations. The Company is not aware, as of the date hereof, of any matters
to be voted on at the Annual Meeting other than as stated in this Proxy
Statement and the accompanying Notice of Annual Meeting of Shareholders. If any
other matters are properly brought before the Annual Meeting, the enclosed proxy
gives discretionary authority to the persons named therein to vote the shares in
their best judgment.
Each share of Common Stock outstanding on March 3, 1997 will be
entitled to one vote at the Annual Meeting. Under applicable law and the
Company's Restated Articles of Incorporation and Restated Bylaws, if a quorum
exists at the Annual Meeting: (i) the three nominees for election of directors
who receive the greatest number of votes cast for the election of directors by
the shares present
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in person or represented by proxy and entitled to vote shall be elected
directors; (ii) the proposed amendment to the Company's 1991 Employee Stock
Purchase Plan will be approved if the number of votes cast in favor of such
proposed amendment exceeds the number of votes cast against it; and (iii) the
proposal to ratify the selection of KPMG Peat Marwick, LLP, as independent
auditors of the Company will be approved if the number of votes cast in favor of
such proposal exceeds the number of votes cast against it. An abstention with
respect to the election of directors will not be counted either in favor of or
against the election of the nominees. In addition, abstentions will have no
effect on the other proposals presented for shareholder approval as they will
neither count as votes for or as votes against such proposals.
Brokers who hold shares for the accounts of their clients may vote such
shares either as directed by their clients or in their own discretion if
permitted by the stock exchange or other organization of which they are members.
Members of the New York Stock Exchange are permitted to vote their clients'
proxies in their own discretion as to the election of directors if their clients
have not furnished voting instructions within ten days of the meeting. Certain
proposals other than the election of directors are "non-discretionary" and
brokers who have received no instructions from their clients do not have
discretion to vote on those items. When brokers vote proxies on some but not all
of the proposals at a meeting, the missing votes are referred to as "broker
non-votes." Broker non-votes are included in determining the presence of a
quorum at the meeting, but they are not considered "shares present" for voting
purposes and have no impact on the outcome of such proposals, other than to
reduce the number of favorable votes necessary to approve the proposal. Brokers
do have discretion to vote on Proposals 2 and 3; accordingly, there will be no
broker non-votes on these proposals.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of February 28, 1997, of (i) each
person known by the Company to own beneficially 5% or more of the Common Stock,
(ii) each director or director nominee of the Company, (iii) each executive
officer of the Company for whom information is given in the Summary Compensation
Table in this Proxy Statement, and (iv) all directors and executive officers as
a group. Each of the named persons has sole voting and investment power with
respect to the shares shown, except as stated below.
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------
AMOUNT AND NATURE OF
BENEFICIAL PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------------ -------------------- --------
<S> <C> <C>
First Bank System Inc. (1) ...................... 917,192 6.9%
601 2nd Avenue South
Minneapolis, MN 55402-4302
Tom A. Alberg (2) ............................... 20,100 *
Harvey N. Gillis (3) ............................ 39,000 *
Robert Gill ..................................... 0 *
David J. Ladd (4) ............................... 6,000 *
Robert S. Leventhal (5) ......................... 3,750 *
Cynthia Stroum (6) .............................. 106,774 *
Umang Gupta (7) ................................. 6,435 *
Patrick S. Howard (8) ........................... 93,500 *
Kamran Kheirolomoom (9) ......................... 235,521 1.7%
Thomas R. Clark (10) ............................ 57,843 *
Gayle A. Crowell (11) ........................... 80,881 *
John J. Flavio (12) ............................. 56,983 *
All directors and executive officers
as a group (19 persons) (13) ................. 891,840 6.7%
</TABLE>
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* Less than 1% of the outstanding shares of Common Stock.
(1) Based on publicly available information reported to the Company as of
February 25, 1997.
(2) Includes options exercisable within 60 days for the purchase of 9,000
shares. Also includes 100 shares held by Mr. Alberg's spouse.
(3) Includes options exercisable within 60 days for the purchase of 9,000
shares.
(4) Owned by the Ladd Family Trust. Includes options exercisable within 60
days for the purchase of 4,000 shares.
(5) Includes options exercisable within 60 days for the purchase of 3,000
shares.
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(6) Includes 5,903 shares held by Ms. Stroum as custodian for her children
under the Washington Uniform Gifts to Minors Act; Ms. Stroum disclaims
beneficial ownership of such shares. Also includes options exercisable
within 60 days for the purchase of 9,000 shares.
(7) Includes options exercisable within 60 days for the purchase of 6,435
shares.
(8) Includes options exercisable within 60 days for the purchase of 87,500
shares.
(9) Includes 103,959 restricted shares acquired prior to the Company's
merger with ViewStar Corporation on December 24, 1996. Also includes
options exercisable within 60 days for the purchase of 42,966 shares.
(10) Includes options exercisable within 60 days for the purchase of 53,750
shares.
(11) Includes 59,399 restricted shares acquired prior to the Company's
merger with ViewStar. Also includes options exercisable within 60 days
for the purchase of 21,482 shares.
(12) Includes options exercisable within 60 days for the purchase of 53,000
shares. Also includes 150 shares held by the Flavio Family Trust of
which Mr. Flavio's wife is trustee.
(13) Includes options exercisable within 60 days for the purchase of 427,611
shares.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of securities, to file with
the Securities and Exchange Commission (the "Commission") initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater-than-10% shareholders
are required by Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the year ended December 31, 1996, all Section
16(a) filing requirements applicable to its officers, directors and
greater-than-10% shareholders were satisfied.
ELECTION OF DIRECTORS
The Board of Directors currently consists of nine directors, who are
generally elected for three-year terms on a staggered basis. For purposes of
identifying and referring to those directors who are nominated for reelection in
any given year and those who continue to serve existing terms, the directors are
divided into three classes: Class I, Class II and Class III. Each director
serves for a term ending on the date of the third annual meeting of shareholders
following the annual meeting at which he or she was elected, except that any
director appointed by the Board of Directors serves, subject to election by the
shareholders at the next annual meeting, for a term ending on the date of the
annual meeting of shareholders for which directors in the class to which such
director was appointed are to be elected. Each director serves until his or her
successor is elected and qualified or until his or her earlier death,
resignation or removal.
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Information as to the three nominees and as to each other director
whose term will continue after the Annual Meeting is provided below. Unless
otherwise instructed, it is the intention of the persons named in the
accompanying proxy to vote shares represented by properly executed proxies for
the three nominees named below. Although the Board of Directors anticipates that
all the nominees will be available to serve as directors of the Company, should
any one or more of them be unable or unwilling to serve, it is intended that the
proxies will be voted for the election of a substitute nominee or nominees
designated by the Board of Directors.
Andrew Greenshields, who served as a director of the Company since
October 1989 and as Chairman of the Compensation Committee since April 1990,
resigned from the Board of Directors on October 1, 1990. Michael Darland, who
served as a director of the Company since its incorporation, and as President
and Chief Executive Officer from the date of incorporation until November 1994,
resigned from the Board of Directors on March 31, 1996.
Cynthia Stroum, who has served as a director of the Company since
November 1984, and a member of the Compensation Committee since May 1991, and is
currently serving a term as a Class II director, to expire in 1997, has asked
that she not be nominated for re-election at the April 22, 1997 annual meeting
of shareholders of the Company. Ms. Stroum is a Class II director. Mr.
Kheirolomoom's nomination as a Class II director, as described below, is
intended to fill this Class II vacancy.
After the April 22, 1997 Annual Meeting, it is intended that the Board
of Directors will consist of eight persons.
NOMINEES FOR ELECTION - AS CLASS II DIRECTORS (TERMS TO EXPIRE IN 2000)
H. Robert Gill, age 60, has been a director of the Company since July
1996 and currently serves as Chairman of the Compensation Committee. Mr. Gill
has served as President of The Topaz Group, a provider of board consulting
services, since April 1996. Before joining The Topaz Group, Mr. Gill served as
Senior Vice President and President, Enhanced Products Group for Frontier
Corporation, a supplier of telecommunications services and equipment, following
its merger with ALC Communications Corporation ("ALC") in December 1995. From
January 1989 until the time of such merger, Mr. Gill served as President and
Chief Executive Officer of ConferTech International, Inc. Mr. Gill is also a
director of Topro, Inc., a provider of systems integration services for
manufacturing industries, and Online System Services, Inc., a provider of
services and consulting relating to Internet web site content and commerce, and
is Chairman of the Board of Directors of Qualmark, Inc., a provider of equipment
and systems for environmental testing. He is also a director of Spatial
Technology, a three-dimensional modeling software.
Kamran Kheirolomoom, age 41, became a director of the Company, as well
as President, on December 24, 1996, the effective date of the merger with
ViewStar, whereby ViewStar became a wholly owned subsidiary of the Company. He
joined ViewStar as President and Chief Executive Officer in February 1986,
serving until January 1992. He served as Chief Executive Officer of ViewStar
from January 1992 to July 1993 and as President and Chief Executive Officer of
ViewStar from July 1993 to May 1994. He served as Chairman of the Board of
Directors of ViewStar from May 1994 to July 1995, and as President and Chief
Executive Officer from July 1995 to December 1996. He served as a director of
ViewStar since February 1986. Mr. Kheirolomoom holds a B.S. in Mechanical
Engineering and a M.A. in Business Administration, both from the University of
Washington.
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Umang Gupta, age 47, became a director of the Company on December 24,
1996, the effective date of the merger with ViewStar. Mr. Gupta is the founder
of Gupta Corporation, a publicly held client/server software company that is now
known as Centura Software Corporation. He served as its Chairman, President and
Chief Executive Officer from 1984 to 1995. Mr. Gupta also is a director of
Centura Software Corporation and Webflow Corporation, a privately held Internet
software company. Prior to founding Gupta Corporation, he served in various
sales, marketing and management positions at Oracle and IBM.
CONTINUING DIRECTORS
CLASS I DIRECTORS (TERM TO EXPIRE IN 1999)
Harvey N. Gillis, age 51, has been a director of the Company since
March 1987 and is currently Chairman of the Audit Committee. Since September
1992, Mr. Gillis has been Senior Vice President, Finance and Administration and
Chief Financial Officer of Advanced Technology Laboratories, Inc., a
manufacturer of medical diagnostic equipment. From December 1991 to September
1992, Mr. Gillis was Senior Vice President, Finance and Administration of
NeoPath, Inc., a biomedical equipment manufacturer of image diagnostic analysis
systems. From December 1985 to December 1991, Mr. Gillis was Chief Operating
Manager of Samuel Stroum Enterprises, an investment company.
David J. Ladd, age 50, has been a director of the Company since
February 1995 and a member of the Compensation Committee since December 1995.
Since March 1994, Mr. Ladd has been the Executive Vice President and Chief
Technology Officer of Octel Communications Corporation, a voice message system
manufacturer ("Octel"). Mr. Ladd was Executive Vice President, Chief Technology
Officer and a director of VMX, Inc., a call processing and unified messaging
company ("VMX"), from June 1986 to March 1994, when VMX merged with Octel.
Robert S. Leventhal, age 70, has been a director of the Company since
October 1995 and a member of the Audit Committee since April 1996. From December
1995 to April 1996, he served on the Compensation Committee. From September 1989
to June 1994, Mr. Leventhal was Dean of the University of Washington's School of
Business Administration. From 1980 to 1988, he served first as a director and
then as Chairman of the Board, Chief Executive Officer and Chief Operating
Officer of Western Union Corporation, which provides money transfer and
transaction processing services. Mr. Leventhal is a Trustee of the Seattle
Repertory Theatre and Chairman of the Board of both C3 Wireless Communications
Corporation and Global Datacom Inc.
CLASS III DIRECTORS (TERMS TO EXPIRE IN 1998)
Tom A. Alberg, age 57, has been a director of the Company since April
1992 and a member of the Audit Committee since October 1992. Mr. Alberg has been
a principal in the firm of Madrona Investment Group, L.L.C., a merchant banking
firm, since January 1996. From April 1991 to October 1995, he was the President
and a director of LIN Broadcasting Corporation and from July 1990 to October
1995, he was Executive Vice President of McCaw Cellular Communications, Inc.;
both companies were providers of cellular telephone services and are now part of
AT&T. Prior to 1990, Mr. Alberg was a partner of the law firm Perkins Coie,
where he also served as Chairman of the firm's Executive Committee. Mr. Alberg
is also a director of Active Voice Corporation, a manufacturer of voice message
systems, Visio Corp., a software firm, Teledesic Corporation, a satellite
telecommunication services provider, Amazon.com, Inc., an Internet based retail
book store, ConnexT, Inc., a
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software and systems firm for the electric utility industry, and Emeritus
Corp., a developer of assisted living facilities.
Patrick S. Howard, age 54, has served as Chairman of the Board of
Directors and Chief Executive Officer of the Company since January 1, 1997. Mr.
Howard was originally appointed as a director, as well as President and Chief
Executive Officer of the Company, in November 1994. From July 1994 to November
1994, Mr. Howard served as a consultant and acting Chief Executive Officer for
the PC Products Division of Octel. From March 1994 to June 1994, Mr. Howard
served as Vice President of Octel. Mr. Howard served as President and Chief
Executive Officer, and as a director, of VMX from June 1984 until the merger of
VMX with Octel in March 1994. He is a member of the advisory board of directors
of Symetrix, a private company. Mr. Howard holds a B.S. in Accounting from San
Diego State University.
INFORMATION ON MEETINGS AND COMMITTEES
The Board of Directors held eight meetings in 1996. Each of the
directors attended at least 75% of the total number of meetings of the Board of
Directors and the total number of meetings held by all committees on which he or
she served. The standing committees of the Board of Directors include an Audit
Committee and a Compensation Committee, but do not include a Nominating
Committee. The full Board of Directors selects nominees for election as
directors and will consider shareholder recommendations for nominees which are
submitted in accordance with the Company's Restated Bylaws.
The Audit Committee is composed of Harvey N. Gillis (Chairman), Tom A.
Alberg and Robert S. Leventhal. The Audit Committee reviews the scope and
results of the annual independent audit of the Company's books and records,
reviews compliance with all corporate policies that have been approved by the
Board of Directors and discharges such other duties as may from time to time be
assigned to it by the Board of Directors. The Audit Committee held six meetings
in 1996.
The Compensation Committee is composed of Robert Gill (Chairman),
Cynthia Stroum and David J. Ladd. The Compensation Committee approves the
compensation of the Company's officers, administers the Restated 1987 Stock
Option Plan, the 1996 Stock Incentive Compensation Plan, the ViewStar Amended
1986 Incentive Stock Plan, the ViewStar 1994 Senior Executive Stock Plan and the
ViewStar 1996 Incentive Stock Option Plan (collectively the "Option Plans"),
administers the 1991 Employee Stock Purchase Plan (the "Purchase Plan"), and has
overall responsibility for the Company's compensation policies for senior
management. The Compensation Committee held six meetings in 1996. Upon
termination of Ms. Stroum's term as a Class II director, and election of Mr.
Gupta, Mr. Gupta will be appointed to the Compensation Committee.
COMPENSATION OF THE BOARD OF DIRECTORS
Each non-employee director receives $1,000 in cash compensation for
attendance at each meeting of Board of Directors, and is reimbursed for expenses
incurred in connection with such attendance. In addition, such directors may
from time to time be asked to provide special services as a director of the
Company at a compensation rate of $1,000 per day (or $125 per hour for partial
days). It is intended by the Company that cash compensation for non-employee
directors shall not be less than $7,000 per year, as combined compensation for
board meeting attendance and consulting services rendered.
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Non-employee directors also receive stock option grants to purchase
shares of Common Stock under the Restated 1992 Stock Option Plan for
Non-Employee Directors upon their initial appointment or election as a director
(5,000 shares, vesting over a five year period from the date of grant) and
annually thereafter (2,000 shares granted on the date of the Annual Meeting,
vesting completely on the date of grant).
EXECUTIVE OFFICERS OF THE COMPANY
The following individuals are executive officers of the Company who
will serve in the capacities noted until their successors are appointed.
<TABLE>
<CAPTION>
POSITIONS AND
NAME AGE OFFICES WITH THE COMPANY
---- --- ------------------------
<S> <C> <C>
Patrick S. Howard................ 54 Chairman of the Board of Directors and
Chief Executive Officer
Kamran Kheirolomoom.............. 41 President
Thomas R. Clark.................. 46 Executive Vice President & President,
Mosaix Professional Services
Steve L. Adams................... 41 Senior Vice President, Marketing
Gayle A. Crowell................. 46 Senior Vice President, General Manager
ViewStar Enterprise Applications Group
John J. Flavio................... 49 Chief Financial Officer, Senior Vice
President, Administration and Finance,
Secretary and Treasurer
Steven R. Russell................ 39 Senior Vice President, Product Development
Nicholas A. Tiliacos............. 42 Senior Vice President, General Manager
Call Center Applications Group
Edmund D. Wilsbach............... 53 Senior Vice President, Sales, Call Center
Applications Group
Robert I. Pender, Jr............. 39 Vice President, Finance
</TABLE>
Each officer named above is expected to be reappointed at the Board of
Directors meeting to be held on April 22, 1997, following the Annual Meeting.
For the biographical summary of Patrick S. Howard and Kamran
Kheirolomoom, see "Election of Directors."
Thomas R. Clark has served as the Company's Executive Vice President
and as President, Mosaix Professional Services, a division of the Company, since
February 1996, and as Senior Vice President, Products and Operations from
September 1994 to February 1996. From April 1991 to October 1993, he was
President and Chief Executive Officer of Data I/O Corp., which produces
engineering software and manufacturing systems to work with semiconductors. He
holds a B.S. in Electronic Engineering from Ohio State University.
Steve L. Adams has served as the Company's Senior Vice President,
Marketing since January 1, 1997. From February 1996 to December 1996, he served
as Senior Vice President, Marketing and
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Business Development. From October 1994 to February 1996, he served as Vice
President of Marketing of Novell, Inc.'s GroupWare Division. From April 1993 to
October 1994, Mr. Adams was Vice President, Product Operations, of Big Sky
Technologies, a leading supplier of software products. From December 1988 to
April 1993, Mr. Adams served in various capacities, including Vice President of
Corporate Marketing and Planning and Manager of Marketing Communications, with
Simpact Associates, Inc., a provider of voice and data communications. He holds
a Ph.D. and an M.A. in English from Florida State University.
Gayle A. Crowell has served as the Company's Senior Vice President,
General Manager ViewStar Enterprise Applications Group, since December 24, 1996,
the effective date of the merger with ViewStar. She joined ViewStar as Senior
Vice President and General Manager, Worldwide Operations in July 1994. Prior to
joining ViewStar, she was Vice President of Worldwide Sale of Recognition
International, a document management company, from November 1991 to June 1994.
She holds a B.S. in Education from the University of Nevada.
John J. Flavio has served as the Company's Chief Financial Officer,
Senior Vice President, Administration and Finance, Secretary and Treasurer since
July 1993. From October 1992 to June 1993, he was Vice President, Finance and
Chief Financial Officer of MiniStor Peripherals Corporation, a manufacturer of
subminiature disk drives for portable computers and software. From 1985 to 1992,
Mr. Flavio was Executive Vice President, Finance and Chief Financial Officer at
Tenera, L.P., a provider of computer services to the public utilities industry.
He holds a B.S. in Finance from the University of Santa Clara and is a certified
public accountant.
Steven R. Russell has served as the Company's Senior Vice President,
Product Development since December 24, 1996, the effective date of the merger
with ViewStar. Mr. Russell originally joined ViewStar in October 1988 as Project
Manager. Since then, he has managed ViewStar's Professional Services,
Engineering and Marketing organizations. He was most recently ViewStar's Vice
President of Product Planning, serving in that capacity until the merger. He
holds a B.S. in Economics from Indiana University.
Nicholas A. Tiliacos has served as the Company's Senior Vice President,
General Manager Call Center Applications Group since January 1, 1997. From
February 1996 to December 1996, he served as Vice President, International
Business Operations for the Company. From 1988 to 1996, he was the Founding
Partner and Managing Director of Ventech International, an international
consulting and business development company. Mr. Tiliacos holds a B.S. in
Business Administration from Florida State University and an M.S. in
International Management from the American Graduate School of International
Management.
Edmund D. Wilsbach has served as the Company's Senior Vice President,
Sales Call Center Applications Group since January 1, 1997. From February 1996
to December 1996, he was Senior Vice President, Sales. He served as the
Company's Senior Vice President, Sales and Professional Services from June 1995
to February 1996, as its Senior Vice President, Professional Services from
February 1995 to June 1995, and as its Vice President, New Business Development
from November 1993 to February 1995. From January 1992 to November 1993, he was
Director of the Company's Revenue Management Services Group, a business unit
created to provide sales and services to state and local governments.
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Robert I. Pender, Jr. has served as the Company's Vice President,
Finance since December 24, 1996, the effective date of the merger with ViewStar.
He joined ViewStar as Controller in April 1993. In August 1995, he became
ViewStar's Vice President of Finance and Chief Financial Officer. From January
1992 to April 1993, he served as Controller of Versant Object Technology
Corporation, an object-oriented database software development company. He holds
an M.S. in Financial Planning/Tax Concentration from Golden Gate University and
a B.B.A. in Accounting from Baylor University.
10
<PAGE> 14
EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth certain information concerning the
annual and long-term compensation for services in all capacities to the Company
for the years ended December 31, 1996, 1995 and 1994 received by the Company's
Chief Executive Officer and the other four most highly compensated executive
officers of the Company during the last completed fiscal year (the "Named
Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------- Awards
-----------
Securities All Other
Salary Underlying Compensation
Name and Principal Position Year ($) Bonus ($) Options (#) ($)
- --------------------------- ---- ------- --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Patrick S. Howard 1996 251,500 79,950 -0- 4,750(2)
Chairman of the Board and 1995 251,573 100,000 -0- 4,148(2)
Chief Executive Officer (1) 1994 37,296 15,000 175,000 -0-
Kamran Kheirolomoom 1996 177,750 95,378 -0- 59,000(4)
President(3) 1995 171,000 37,022 -0- 51,000(4)
1994 156,000 10,000 -0- -0-
Thomas R. Clark 1996 189,625 45,255 15,000 2,245(2)
Executive Vice President & 1995 176,680 60,375 -0- 1,758(2)
President, Mosaix 1994 58,427 12,259 100,000 775(2)
Professional Services (5)
Gayle A. Crowell 1996 170,000 112,126(6) -0- -0-
Senior Vice President, 1995 170,000 147,525 4,950 -0-
General Manager ViewStar 1994 81,600 52,375 24,749 -0-
Enterprise Applications
Group(3)
John J. Flavio 1996 146,500 45,776 -0- 3,376
Chief Financial Officer, 1995 146,500 43,355 15,000 3,307
Senior Vice President, 1994 146,730 30,595 -0- 1,258
Administration &
Operations, Secretary and
Treasurer
</TABLE>
(1) Mr. Howard's employment with the Company commenced November 8, 1994.
(2) Consists of matching contributions awarded pursuant to the Company's
Profit Sharing and Salary Deferral Plan and Trust.
11
<PAGE> 15
(3) Amounts listed include compensation for services to ViewStar prior to
December 24, 1996.
(4) Consists of payments made under an employment agreement dated July 26,
1995 and amended on July 2, 1996.
(5) Mr. Clark's employment with the Company commenced September 2, 1994.
(6) Includes a one time bonus of $29,750 made under an employment agreement
dated October 14, 1996, effective December 24, 1996, which bonus must
be repaid if Ms. Crowell voluntarily gives notice of termination prior
to December 31, 1997.
OPTION GRANTS IN 1996
The following table provides information on grants of options to
purchase common stock in 1996 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- -----------------------------------------------------------------------------------------
Potential Realizable
Number of Percent of Total Value at Assumed
Securities Options Annual Rates of
Underlying Granted to Exercise Stock Price
Options Employees in Price Expiration Appreciation for
Granted (#) Fiscal Year (1) ($/Sh) Date Option Term (2)
-----------------------
Name 5% 10%
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Patrick S. Howard -0- -- -- -- -- --
Kamran Kheirolomoom -0- -- -- -- -- --
Thomas R. Clark 15,000(3) 2% 12.625 2/14/06 119,096 301,815
Gayle A. Crowell -0- -- -- -- -- --
John J. Flavio -0- -- -- -- -- --
</TABLE>
- ------------
(1) The Company granted 438,875 (DSI) and 213,607 (ViewStar stock options
converted into options to buy common stock in the Company) stock
options (652,482 stock options in total) to employees in 1996.
(2) Assumes all options are exercised at the end of their respective
10-year terms. The dollar amounts under these columns are the result of
calculations at the 5% and 10% rates required by applicable regulations
of the Securities and Exchange Commission and, therefore, are not
intended to forecast possible future appreciation, if any, of the
Common Stock price. Actual gains, if any, on stock option exercises
depend on the future performance of the Common Stock and overall stock
market conditions, as well as the option holders' continued employment
through the vesting period. The amount reflected in this table may not
necessarily be achieved.
12
<PAGE> 16
(3) The options have terms of 10 years from the date of grant and become
exercisable in equal annual installments over a period of four years,
commencing one year after the date of grant. Upon the occurrence of
certain business combination transactions, the exercisability of the
options are accelerated. The exercise price equals the fair market
value on the date of grant based on the closing price of the Common
Stock as quoted on the Nasdaq National Market.
OPTION YEAR-END VALUES TABLE
The following table provides information on option exercises in 1996 by
the Named Executive Officers and options outstanding at December 31, 1996.
AGGREGATED OPTION EXERCISES IN 1996
AND FISCAL YEAR-END OPTION VALUES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised
Shares Unexercised Options at In-the-Money Options
Acquired Fiscal Year-End (#) at Fiscal Year-End ($)
on Value --------------------- ------------------------
Exercise Realized Exercis- Unexercis- Exercisable Unexercis-
Name (#) ($)(1) able able (2) able (2)
- --------------------- -------- -------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Patrick S. Howard -0- -0- 87,500 87,500 437,500 437,500
Kamran Kheirolomoom -0- -0 40,588 8,910 628,938 138,060
Thomas R. Clark -0- -0- 50,000 65,000 493,500 544,125
Gayle A. Crowell -0- -0- 18,265 11,434 283,014 177,169
John J. Flavio 7,000 77,000 53,000 30,000 607,281 306,094
</TABLE>
- ---------------
(1) These amounts represent the aggregate number of options exercised,
multiplied by the market price of the Common Stock at the time of
exercise minus the exercise price for each option.
(2) These amounts represent the aggregate number of in-the-money options,
multiplied by the difference between the $16.00 closing price of the
Common Stock on the Nasdaq National Market on December 31, 1996 and the
exercise price for each option.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT AND
CHANGE OF CONTROL AGREEMENTS
As of November 8, 1994, the Company entered into an employment
agreement with Patrick S. Howard, stating the terms and conditions of his
employment by the Company as Chief Executive Officer and President, including
appointment of Mr. Howard as a director, an agreement to nominate Mr. Howard for
election as a director at the next annual meeting, and an agreement to permit
Mr. Howard to nominate an additional director to serve on the Board of
Directors. The agreement establishes Mr. Howard's minimum annual base salary at
$250,000 and provides for the continuation of
13
<PAGE> 17
base salary for one year in the event of a termination of employment for any
reason other than cause or in the event of a change of control of the Company.
On October 14, 1996, the Company entered into an agreement, effective
December 24, 1996, with Kamran Kheirolomoom, then the President of ViewStar,
providing for his employment as President of the Company at a minimum annual
base salary of $180,000, and for continuation of base salary, bonuses and option
vesting for a period of six months (or through December 31, 1997, if longer) in
the event of termination of employment for any reason other than for cause or in
the event of a change of control of the Company. In addition, if prior to
December 31, 1997, Mr. Kheirolomoom's employment is terminated by the Company,
or by Mr. Kheirolomoom for good reason, he will be entitled to the continuation
of certain benefits under a prior agreement with ViewStar.
As of March 1, 1995, the Company entered into an agreement with Thomas
R. Clark, then the Company's Senior Vice President, Product Development and
Operations, providing for employment at a minimum annual base salary of
$175,000, and for continuation of base salary for a period of six months in the
event of termination of employment for any reason other than for cause or in the
event of a change of control of the Company.
On October 14, 1996, the Company entered into an agreement, effective
December 24, 1996, with Gayle A. Crowell, then the Senior Vice President and
General Manager, Worldwide Operations of ViewStar, providing for her employment
as the Company's Senior Vice President, General Manager ViewStar Enterprise
Applications Group at a minimum annual base salary of $170,000, and for
continuation of base salary (at the rate of $250,000 per year) and benefits for
a period of twelve months in the event of termination of employment for any
reason other than for cause or in the event of a change of control of the
Company. In addition, if prior to December 31, 1997, Ms. Crowell's employment is
terminated by the Company, or by Ms. Crowell for good reason, her options will
continue to vest through December 31, 1997. Ms. Crowell received a one-time
bonus of $29,750 upon closing of the merger with ViewStar, which bonus must be
repaid if Ms. Crowell voluntarily gives notice of termination prior to December
31, 1997.
As of March 1, 1995, the Company entered into an agreement with John J.
Flavio, then the Company's Senior Vice President, Finance and Administration,
Secretary and Treasurer, providing for employment at a minimum annual base
salary of $145,000 through November 8, 1996, and for continuation of base salary
for a period of six months in the event of termination of employment for any
reason other than for cause or in the event of a change of control of the
Company.
Pursuant to the Option Plans and employment agreements described above,
all outstanding options become vested and exercisable should certain events
occur, including certain mergers and business combinations, that result in a
change of control of the Company. In the alternative, for options granted under
the Company's 1987 Stock Option Plan, unless the plan administrator of such plan
determines otherwise, such optionees may elect to receive a cash amount equal to
the difference between the option exercise price and the fair market value of
the stock on the date of the election.
COMPENSATION COMMITTEE REPORT
During 1996, the Compensation Committee of the Board of Directors (the
"Committee") included Andrew J. Greenshields, David J. Ladd, Robert Gill, Robert
Leventhal and Cynthia Stroum. Mr. Greenshields resigned from the Board of
Directors and the Committee on October 1, 1996. Mr.
14
<PAGE> 18
Leventhal was removed from the Committee in April 1996, concurrent with his
appointment to the Audit Committee. All committee members are non-employee
directors of the Company. The Committee is responsible for administering the
Company's compensation and employee benefit plans, which include primarily the
Option Plans, the 1991 Employee Stock Purchase Plan and the Management and
Company Profitability Bonus Plan. The Committee also administers the Company's
Profitability Bonus Plan, which provides a quarterly cash bonus to all
non-managers if the Company's quarterly operating income as a percentage of net
sales, exceeds a target percentage. In addition to setting policies regarding
compensation of all employees, the Committee reviews and approves base salaries
for all executive officers, annual payouts and levels of participation in the
Management Bonus Plan and changes to the design of these plans. Decisions made
by the Committee relating to compensation of executive officers are reviewed by
the full Board of Directors.
EXECUTIVE COMPENSATION POLICIES AND PERFORMANCE MEASURES
The Company's executive compensation policies have been developed to
meet the following objectives:
- Attract and retain key executives critical to the Company's
long-term success;
- Reward key executives for their contributions to the development
and successful execution of strategies relevant to their functional
responsibilities; and
- Motivate key executives to make decisions and take actions that
achieve the Company's strategic performance goals and increase the
long-term value of the Common Stock.
The Committee uses a combination of cash- and equity-based programs to
compensate key executives.
Compensation payments in excess of $1 million to each of the Chief
Executive Officer or four other most highly compensated executive officers are
subject to a limitation on deductibility for the Company under Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). Certain
performance-based compensation is not subject to the limitation on
deductibility. The Committee does not expect cash compensation in 1997 to the
Chief Executive Officer or any other executive officer to be in excess of $1
million. The Option Plans are designed to qualify stock option awards for the
performance-based exception to the $1 million limitation on deductibility of
compensation payments.
Cash-based Compensation
Base salaries for all executive officers are reviewed annually. In
evaluating executive salaries, the Committee uses industry surveys of
compensation paid at companies of similar size and/or in its industry, as well
as the Company's own recent recruiting experience, if applicable. The companies
surveyed include some, but not all, of the companies in the CRSP Index of Nasdaq
Business Services Stocks used in the Stock Price Performance graph. The
Committee also considers the officer's individual performance during the prior
year. Factors that affect an individual officer's performance rating focus on
the executive's success in contributing to the Company's short- and long-term
objectives. Short-term objectives include sales growth from new and existing
products and levels of gross profit and gross margin, operating income and
operating income margin, and net earnings and net earnings margin. Long-term
objectives include the timely development of new products, enhancements and
improvements
15
<PAGE> 19
to existing products, identification of new markets for the Company's products,
development and execution of plans to address identified market opportunities,
adequate control over and efficient use of the Company's assets, and share price
appreciation. The Company does not assign relative weights to the factors it
considers in establishing base salaries. In general, unless special
circumstances apply, the Committee sets executive salaries at or near the
midpoint of the range indicated by its surveys (depending on the applicable
experience level of the executive and subject to minimum salaries established in
the employment agreements of the executives). See "Employment Agreements,
Termination of Employment and Change of Control Agreements."
In addition to base salary, the Company provides executive officers and
other key managers incentive compensation in the form of its Management and
Company Performance Bonus Plan ("MCPBP"). The MCPBP is designed to ensure that a
significant percentage of each executive officer's total potential cash
compensation is based on a quantitative evaluation of the Company's financial
performance, as well as a qualitative evaluation of operating performance. The
MCPBP's payout formula is based on the Company's attainment of its planned
revenues and operating income and the individual officer's performance rating.
Bonuses paid for 1996 were based on the Company's attaining approximately 94.1%
of planned revenues and 81.5% of planned net operating income in 1996.
Equity-based Compensation
The Company provides its executive officers with long-term incentives
through the Option Plans. The Option Plans' primary objective is to provide an
incentive for the executive officers to make decisions and take actions that
maximize long-term shareholder value. The plan design promotes this long-term
focus using vesting periods. Options currently vest in four equal annual
installments beginning one year from the date of grant. The Committee reviews
and approves all grants made under the Option Plan and in connection with
initial hiring, promotions, extraordinary achievements or compensation
adjustments. In addition to these factors, the size and timing of grants are
generally subject to policies established by the Committee regarding the
employee grade level of the optionee, the overall number of options actually
granted to such optionee in the past, and the extent of vesting of such grants.
CHIEF EXECUTIVE OFFICER COMPENSATION
In establishing the Chief Executive Officer's compensation package, the
Committee pursues the same objectives and policies that apply for the Company's
other executive officers.
As with other executive officers, a significant percentage of the Chief
Executive Officer's total potential cash compensation exists in the form of a
bonus payable under the terms of the Company's MCPBP. The Committee determined
the Chief Executive Officer's bonus for fiscal year 1996 under the 1996 MCPBP to
be $79,950 after considering the following factors: the Company's 1996 financial
performance versus planned performance; the Chief Executive Officer's individual
performance; comparison to CEO bonuses granted by similar companies in similar
industries; and bonus payments made to the Company's Chief Executive Officer in
prior years.
As of November 8, 1994, the Company entered into an employment
agreement with Patrick S. Howard, stating the terms and conditions of his
employment by the Company, as Chief Executive Officer and President. The
agreement establishes Mr. Howard's minimum annual base salary at
16
<PAGE> 20
$250,000. See "Employment Agreements, Termination of Employment and Change of
Control Agreements."
COMPENSATION COMMITTEE
AFTER OCTOBER 1, 1996: PRIOR TO OCTOBER 1, 1996:
Robert Gill (Chairman) Andrew J. Greenshields (Chairman)
Cynthia Stroum Cynthia Stroum
David J. Ladd David J. Ladd
Robert Gill
17
<PAGE> 21
STOCK PRICE PERFORMANCE
The following graph compares the cumulative total return to
shareholders of the Common Stock with the cumulative total return of the Nasdaq
Composite Index and the Center for Research in Security Prices ("CRSP") Index of
Nasdaq Business Services Stocks for the period beginning on December 31, 1991.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG
MOSAIX, INC., NASDAQ COMPOSITE INDEX AND
CRSP INDEX OF NASDAQ BUSINESS SERVICES STOCKS
(FISCAL YEAR ENDED DECEMBER 31, 1996)
<TABLE>
<CAPTION>
12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
<S> <C> <C> <C> <C> <C> <C>
MOSAIX, INC 100 88 28 93 102 126
Nasdaq Composite Index 100 116 134 131 185 227
CRSP Index of Nasdaq Bus. Serv. Stocks 100 107 114 138 209 262
</TABLE>
Assumes $100 invested on December 31, 1991 in the Common Stock, the Nasdaq
Composite Index and the CRSP Index of Nasdaq Business Services Stocks, with all
dividends reinvested. Stock price performance shown above for the Common Stock
is historical and not necessarily indicative of future price performance.
18
<PAGE> 22
PROPOSAL TO AMEND THE 1991 EMPLOYEE STOCK PURCHASE PLAN
PROPOSAL 2
1991 EMPLOYEE STOCK PURCHASE PLAN
General. On March 4, 1991, the Board of Directors adopted the 1991
Employee Stock Purchase Plan (the "Purchase Plan"), which was approved at the
1992 Annual Meeting of Shareholders, for the purposes of attracting and
retaining the services of certain employees, as described below, and to provide
added incentive to them by encouraging stock ownership in the Company.
Proposed Amendment. On March 7, 1997, The Board of Directors adopted,
subject to shareholder approval, an amendment to the Purchase Plan to enable
participation in the Purchase Plan by employees of non-domestic subsidiaries.
The Purchase Plan, as amended subject to shareholder approval, is attached
hereto as Exhibit A and is incorporated herein by reference. The Company's
shareholders will be asked at the Annual Meeting to consider and approve this
amendment to the Purchase Plan, which is described below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE AMENDMENT
TO THE PURCHASE PLAN.
Description of the Purchase Plan. The Purchase Plan is an employee
benefit program that enables qualified employees to purchase shares of Common
Stock through payroll deductions at a 15% discount from market price and without
incurring broker commissions. To participate, an individual employee must: (i)
have worked for the Company or any subsidiary of the Company for at least three
months, (ii) be employed in a position with regular hours of 20 hours or more
per week, and (iii) be employed for at least five months in any calendar year. A
participant is not eligible to continue his or her participation in the Purchase
Plan in the event such participant's employment is voluntarily or involuntarily
terminated, or if such participant owns or will own, as a result of such
participation, 5% or more of the combined voting power or value of all classes
of stock of the Company or any related corporation. Non-employee directors of
the Company are not eligible to participate in the Purchase Plan.
The Purchase Plan is divided into two six-month offering periods,
beginning on January 1 and July 1 of each year. During these periods,
participating employees accumulate funds in an account used to buy Common Stock
through payroll deductions at a rate of not less than 2% nor more than 10% of
such participant's base pay during each payroll period in the purchase period.
At the end of each six-month offering period, the market price is determined and
the participating employees' accumulated funds are used to purchase the
appropriate number of whole shares of Common Stock. Up to 200,000 shares of
Common Stock may be issued under the Purchase Plan. No participant may purchase
more than 1,000 shares of Common Stock during any single offering, nor may any
participant purchase more than $25,000 fair market value of Common Stock for any
calendar year under the Purchase Plan. The purchase price per share of Common
Stock under the Purchase Plan is the lesser of 85% of the per share fair market
value of the Common Stock on either the first or the last day of the offering
period.
Participants have no right to acquire shares of the Company under the
Purchase Plan upon termination of their employment. Upon termination of a
participant's employment for any reason on or prior to the last business day of
an offering period, the balance in such participant's account will be paid to
the participant or to his or her estate. Neither payroll deductions credited to
a participant's account nor any rights with regard to the purchase of shares
under the Purchase Plan may be assigned, transferred,
19
<PAGE> 23
pledged or otherwise disposed of in any way by the participant, other than by
will or the laws of descent and distribution. The Company may treat any such act
as an election to withdraw from the Purchase Plan.
The Common Stock issued under the Purchase Plan may be either
authorized but unissued Common Stock or Common Stock now held or subsequently
acquired by the Company. As of February 28, 1997, 162,970 shares have been
issued by the Company under the Purchase Plan since its inception. During 1996,
the Named Executives acquired 941 shares under the Purchase Plan (599 shares by
Mr. Clark and 342 shares by Mr. Flavio), the executive officers of the Company
as a group acquired 3,272 shares, and all other employees acquired 29,915
shares. No shares were acquired under the Purchase Plan by directors or nominees
for director who are not also executive officers of the Company.
Administration. The Purchase Plan is currently administered by the
Compensation Committee of the Board of Directors. The Committee is authorized to
administer and interpret the Purchase Plan and to make such rules and
regulations as it deems necessary to administer the Purchase Plan, so long as
such interpretation, administration or application with respect to purchases
under the Purchase Plan corresponds to the requirements of Section 423 of the
Code.
Federal Income Tax Consequences. The Company intends that the Purchase
Plan qualify as an "employee stock purchase plan" under Section 423 of the Code.
The following discussion summarizes the material federal income tax consequences
to the Company and the participants in connection with the Purchase Plan under
existing applicable provisions of the Code and the regulations thereunder. The
discussion is general in nature and does not address issues relating to the
income tax circumstances of any individual employee. The discussion is based on
federal income tax laws in effect on the date hereof and is, therefore, subject
to possible future changes in the law. The discussion does not address the
consequences of state, local or foreign tax laws.
Under the Code, the Company is deemed to grant participants an "option"
on the first day of each six-month offering period to purchase as many shares of
Common Stock as the participant will be able to purchase with the payroll
deductions credited to his or her account during the offering period. On the
last day of each six-month offering period, the market price is determined and
the participant is deemed to have exercised the "option" and purchased the
number of shares of Common Stock his or her accumulated payroll deductions will
purchase at the market price.
The required holding period for favorable tax treatment upon
disposition of Common Stock acquired under the Purchase Plan is the later of (i)
two years after the deemed "option" is granted (the first day of an offering
period) and (ii) one year after the deemed "option" is exercised and the Common
Stock is purchased (the last day of an offering period). Thus, the Common Stock
must be held for at least one and one-half years after it is purchased to gain
favorable tax treatment. When the Common Stock is disposed of after this period,
the participant realizes ordinary income to the extent of the lesser of (a) the
amount by which the fair market value of the Common Stock at the time the deemed
"option" was granted exceeded the "option price" and (b) the amount by which the
fair market value of the Common Stock at the time of the disposition exceeded
the "option price." "Option price" is determined as of the date of grant and,
therefore, is equal to 85% of the fair market value of the Common Stock as of
the first day of an offering period. Thus, the maximum amount of gain taxable as
ordinary income is the amount of the 15% discount measured as of the first day
of an offering period. Any further gain is taxed at capital gain rates. If the
sale price is less than the option price, there is no ordinary income and the
participant recognizes long-term capital loss.
20
<PAGE> 24
When a participant sells the Common Stock before the expiration of the
required holding period, the participant recognizes ordinary income to the
extent of the difference between the price actually paid for the Common Stock
and the fair market value of the Common Stock at the date the option was
exercised (the last day of an offering period), regardless of the price at which
the Common Stock is sold. If the sale price is less than the fair market value
of the Common Stock at the date of exercise, then the participant will also have
a capital loss equal to such difference.
Even though a participant who, after waiting the requisite holding
period, must treat part of his or her gain on a disposition of the Common Stock
as ordinary income, the Company may not take a business deduction for such
amount. However, if a participant disposes of Common Stock before the end of the
requisite holding period, the amount of income that the participant must report
as ordinary income qualifies as a Company business deduction for the year of
such disposition.
Amendment of the Purchase Plan. The Board of Directors has the power to
amend, suspend or terminate the Purchase Plan, except that the Board may not
amend the Purchase Plan without shareholder approval if such approval is
required by Section 423 of the Code. The Compensation Committee of the Board of
Directors may also amend the Purchase Plan so long as such amendment does not
require shareholder approval.
PROPOSAL FOR RATIFICATION OF APPOINTMENT OF AUDITORS
(PROPOSAL 3)
Unless instructed to the contrary, shares represented by a duly
executed proxy in the form accompanying this Proxy Statement will be voted for
the ratification of the appointment of KPMG Peat Marwick LLP ("KPMG") as
auditors of the Company for 1997. KPMG has audited the accounts of the Company
and its subsidiaries since 1987. Representatives of KPMG are expected to attend
the Annual Meeting and will have the opportunity to make a statement and to
respond to appropriate questions from shareholders. In the event this
ratification of the appointment of KPMG is not approved by a majority of the
votes cast, the selection of other auditors will be considered and determined by
the Board of Directors. The Board of Directors has unanimously approved the
appointment of KPMG as auditors for the Company and its subsidiaries.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THIS PROPOSAL.
PROPOSALS OF SHAREHOLDERS
The Company's next annual meeting of shareholders is currently
scheduled for April 28, 1998. An eligible shareholder who desires to have a
qualified proposal considered for presentation at that annual meeting of
shareholders and for inclusion in the Company's Proxy Statement for that annual
meeting must submit the proposal in writing to the Company at its principal
executive offices no later than November 26, 1997.
SOLICITATION OF PROXIES
The proxy accompanying this Proxy Statement is solicited by the Board
of Directors. Proxies may be solicited by directors, executive officers and
regular supervisory and executive employees of the
21
<PAGE> 25
Company, none of whom will receive any additional compensation for their
services. Such solicitations may be made personally or by mail, telephone,
telegraph, facsimile transmission or messenger. The Company will reimburse
persons holding shares of Common Stock in their names or in the names of
nominees, but not owning such shares beneficially, such as brokerage houses,
banks and other fiduciaries, for their reasonable expenses in forwarding
soliciting materials to their principals. All costs of solicitation of proxies
will be paid by the Company.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matters for action at the Annual Meeting other than those
specifically referred to in this Proxy Statement. If other matters properly come
before the Annual Meeting, the holders of the proxies will act in respect
thereto in accordance with their best judgment.
Copies of the Company's Annual Report to Shareholders for the fiscal
year ended December 31, 1996 are being mailed to shareholders, together with
this Proxy Statement, the Proxy and the Notice of Annual Meeting of
Shareholders. Additional copies may be obtained from the Secretary of the
Company, 6464 185th Avenue NE, Redmond, Washington 98052.
BY ORDER OF THE BOARD OF DIRECTORS
John J. Flavio
Secretary
Redmond, Washington
March 19, 1997
22
<PAGE> 26
EXHIBIT A
MOSAIX, INC.
1991 EMPLOYEE STOCK PURCHASE PLAN
A-1
<PAGE> 27
MOSAIX, INC.
1991 EMPLOYEE STOCK PURCHASE PLAN
SECTION 1. PURPOSE
The purpose of this Mosaix, Inc.1991 Employee Stock Purchase Plan (the
"Plan") is to provide a means whereby certain employees of Mosaix, Inc. (the
"Company"), or of any Related Corporation designated by the Company, may be
granted stock options to purchase the common stock of the Company, in order to
attract and retain the services or advice of such employees and to provide added
incentive to them by encouraging stock ownership in the Company. It is the
intention of the Company to have the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended. The
provisions of the Plan shall, accordingly, be construed in a manner consistent
with the requirements of that Section of the Code.
SECTION 2. DEFINITIONS
2.1 ACCOUNT
"Account" shall mean the funds accumulated with respect to a
Participant as a result of deductions from his or her paycheck for the purpose
of purchasing stock under this Plan. The funds allocated to a Participant's
Account shall remain the property of the respective Participant at all times but
may be commingled with the general funds of the Company.
2.2 BASE PAY
"Base Pay" means the total cash compensation (including bonuses,
overtime, and commissions) as reflected on a Participant's W-2 income tax
statement (excluding moving expenses, reimbursed employee business expenses, and
taxable fringe benefits), except that a Participant may elect on the
Participation Agreement to exclude all bonuses from Base Pay.
2.3 CODE
"Code" shall mean the Internal Revenue Code of 1986, as it may be
amended from time to time.
2.4 ELIGIBLE EMPLOYEE
"Eligible Employee" shall mean any employee who is eligible to
participate in the Plan pursuant to the provisions of Section 5.
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2.5 OFFERING DATE
"Offering Date" shall mean the commencement date of an offering, if
such date is a regular business day; otherwise, it shall mean the first regular
business day following such commencement date. A different date may be set by
resolution of the Board.
2.6 PARTICIPANT
"Participant" shall mean an Eligible Employee who has completed and
filed a Participation Agreement pursuant to Section 7.1.
2.7 RELATED CORPORATION
"Related Corporation," when referring to a subsidiary corporation,
shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock of each of
the corporations other than the Company is owned by one of the other
corporations in such chain. When referring to a parent corporation, the term
"Related Corporation" shall mean any corporation in an unbroken chain of
corporations ending with the Company if, at the time of the granting of the
option, each of the corporations other than the Company owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
SECTION 3. ADMINISTRATION
This Plan shall be administered by the Compensation Committee of the
Board of Directors (the "Board"). The Compensation Committee shall hereinafter
be referred to as the Plan Administrator. The Plan Administrator shall be vested
with full authority to make, administer, and interpret such rules and
regulations as it deems necessary to administer the Plan, and any determination,
decision, or action of the Plan Administrator in connection with the
construction, interpretation, administration, or application of the Plan shall
be final, conclusive, and binding upon all Participants and any and all persons
claiming under or through any Participant, so long as such construction,
interpretation, administration, or application with respect to the stock options
correspond to the requirements of Section 423 of the Code, the regulations and
rulings thereunder, and any amendments thereto.
SECTION 4. STOCK SUBJECT TO THIS PLAN
4.1 TYPE AND NUMBER OF SHARES
The stock subject to this Plan shall be the Company's Common Stock (the
"Common Stock"), presently authorized but unissued or subsequently acquired by
the Company. Subject to adjustment as provided in Section 22, the aggregate
amount of Common Stock to be delivered upon the exercise of all options granted
under this Plan shall not exceed two hundred thousand (200,000) shares as such
Common Stock was constituted on the effective date of this Plan. If any option
granted under this Plan shall expire or terminate for any reason without having
been
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exercised in full, the unpurchased shares subject thereto shall thereupon again
be available for delivery under this Plan.
4.2 LIMITATION ON EXERCISE
If the total number of shares for which options are to be exercised on
any date in accordance with Section 10 exceeds the number of shares then
available under the Plan (after deduction of all shares for which options have
been exercised or are then outstanding), the Plan Administrator shall make a pro
rata allocation of the shares remaining available in as nearly a uniform manner
as shall be practicable and as it shall determine to be equitable. The Company
shall give written notice of such reduction to each Participant affected thereby
and shall return any unused portion of each Participant's Account to such
Participant.
SECTION 5. ELIGIBILITY
Any regular employee of the Company (or any Related Corporation
designated by the Company) who is in the employ of the Company (or any such
designated Related Corporation) on one or more Offering Dates is eligible to
participate in the Plan, except for (i) employees who have been employed less
than three months, (ii) employees whose customary employment is less than twenty
(20) hours per week, and (iii) employees whose customary employment is for not
more than five (5) months in any calendar year. If the Company permits any
employees of a Related Corporation to participate in this Plan, then all
employees of that Related Corporation who meet the requirements of this Section
5 shall also be considered Eligible Employees.
SECTION 6. OFFERINGS
There will be consecutive six-month offerings pursuant to the Plan,
until the earlier of the termination of the Plan or the date when all (except de
minimis amounts) the shares of Common Stock authorized under Section 4.1 to be
delivered upon exercise of options granted under the Plan have been so
delivered. The first offering shall commence on July 1, 1991 (or a later date
designated by the Board) and terminate on December 31, 1991. Thereafter,
offerings shall commence on each subsequent January 1 and July 1.
SECTION 7. PARTICIPATION BY PAYROLL DEDUCTION
7.1 An Eligible Employee may participate by completing a
Participation Agreement provided by the Company authorizing payroll deductions,
and completing any other papers deemed necessary by the Company or Plan
Administrator and filing the Agreement and any other such papers with the
Company no later than ten (10) business days prior to the commencement date
(January 1 or July 1) of the offering in which the Eligible Employee wishes to
participate. Participation, in one offering under the Plan shall neither limit,
nor require, participation in any other offering.
7.2 Payroll deductions for a Participant shall commence on the
Offering Date, and shall end on the termination date of such offering unless
earlier terminated by the Participant as provided in Section 13.
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7.3 At the time a Participant files his Participation Agreement,
the Participant shall elect to have payroll deductions made from the
Participant's Base Pay, measured by whole number percentages from two (2) up to
a maximum of ten percent (10%) of Base Pay, on each pay day during the time he
or she is a Participant in an offering.
7.4 All payroll deductions made for a Participant shall be
credited to the Participant's Account under the Plan. A Participant may not make
any separate cash payment into such Account, nor may the Participant make
payment for shares other than by payroll deduction.
7.5 A Participant may discontinue his or her participation in the
Plan as provided in Section 13, but no other change can be made during an
offering.
SECTION 8. OPTION PRICE
The purchase price per share of Common Stock during any offering shall
be the lesser of (1) 85% of the fair market value of the Common Stock on the
Offering Date or (2) 85% of the fair market value of the stock on the last
business day of the offering. Fair market value shall mean the closing price as
reported on the National Association of Securities Dealers Automated Quotation
System, or if the stock is traded on a stock exchange the closing price for the
stock on the principal such exchange.
SECTION 9. GRANTING OF OPTION
On each Offering Date, this Plan shall be deemed to have granted to the
Participant an option for as many full shares as he or she will be able to
purchase with the payroll deductions credited to his or her Account during
participation in that offering. Notwithstanding the foregoing, commencing as of
January 1, 1995, no Participant may purchase more than 1,000 shares of Common
Stock during any single offering.
SECTION 10. EXERCISE OF OPTION
Each Eligible Employee who continues to be a Participant in an offering
on the last business day of that offering shall be deemed to have exercised his
or her option on such date and shall be deemed to have purchased from the
Company such number of full shares of Common Stock reserved for the purpose of
the Plan as the accumulated payroll deductions on such date will pay for at the
option price, subject to the limitations of Section 4.2.
SECTION 11. PARTICIPANT'S RIGHTS AS A SHAREHOLDER
11.1 No Participant shall have any right as a shareholder with
respect to any shares of Common Stock until the shares have been purchased in
accordance with Section 10 above.
11.2 Shares to be delivered to a Participant under the Plan will be
registered in the name of the Participant, or, if the Participant so directs, by
written notice to the Company prior to the termination date of the pertinent
offering, in the names of the Participant and one such other person as may be
designated by the Participant, as joint tenants with right of survivorship,
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tenants in common or as community property, to the extent and in the manner
permitted by applicable law.
SECTION 12. DELIVERY OF STOCK CERTIFICATES
Certificates for stock issued to Participants will be delivered as soon
as practicable after the end of each offering.
SECTION 13. WITHDRAWAL AND SUSPENSION
13.1 A Participant may withdraw from the Plan at any time prior to
the last business day of each offering by delivering a Withdrawal Notice to the
Company, in which event the Company will refund the entire balance of his or her
Account as soon as practicable thereafter.
13.2 To re-enter the Plan, an Eligible Employee who has previously
withdrawn must file a new Participation Agreement in accordance with Section
7.1. Re-entry into the Plan cannot, however, become effective before the
beginning of the next offering following withdrawal.
13.3 The Plan Administrator, in its sole discretion, may authorize
and permit a Participant to suspend his or her payroll deductions at any time
prior to the last business day of each offering by delivering a Suspension
Notice to the Company; provided, however, that such a suspension shall not be
allowable for those persons who are subject to Section 16 of the Securities and
Exchange Act of 1934, as amended. In the event of such a suspension, the balance
of the Participant's Account will be used at the termination of the offering to
purchase shares of Common Stock in accordance with Section 10.
13.4 A Participant's payroll deductions will automatically be
suspended when the "maximum permissible amount" has been deducted from his or
her payroll check. "Maximum permissible amount," for this purpose, means the
lesser of (i) 1,000 (after January 1, 1995, the maximum number of shares
purchasable during an offering) multiplied by 85% of the fair market value of a
share of Common Stock on the Offering Date (the maximum purchase price), and
(ii) the amount necessary to purchase, at a price equal to 85% of the fair
market value of a share of Common Stock on the Offering Date, the greatest full
number of shares of Common Stock that does not exceed the limitation imposed
under Section 18.1.
13.5 To resume payroll deductions, an Eligible Employee who has
previously had his or her payroll deductions suspended under either Section 13.3
or 13.4 must file a new Participation Agreement in accordance with Section 7.1.
Resumption of payroll deductions cannot, however, become effective before the
beginning of the next offering following suspension of such deductions.
SECTION 14. CARRYOVER OF ACCOUNT
At the termination of each offering, the Company shall automatically
re-enroll each Participant in the next offering. Upon re-enrollment, the
balance, if any, in the Participant's Account shall be used for option exercises
in the new offering. The Participant may elect not to
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re-enroll in the Plan by filing notice of such election with the Company no
later than ten (10) business days prior to the commencement date (January 1 or
July 1) of the next offering. If the Participant does not re-enroll in the Plan
or the Plan terminates, the balance, if any, of each Participant's Account shall
be refunded to him or her.
SECTION 15. INTEREST
No interest will be paid or allowed on any money in the Accounts of
Participants.
SECTION 16. RIGHTS NOT TRANSFERABLE
No Participant shall be permitted to sell, assign, transfer, pledge, or
otherwise dispose of or encumber either the payroll deductions credited to his
or her Account or any rights with regard to the exercise of an option or to
receive shares under the Plan other than by will or the laws of descent and
distribution, and such right and interest shall not be liable for, or subject
to, the debts, contracts, or liabilities of the Participant. If any such action
is taken by the Participant, or any claim is asserted by any other party in
respect of such right and interest whether by garnishment, levy, attachment or
otherwise, such action or claim will be treated as an election by the
Participant to withdraw funds in accordance with Section 13.1.
SECTION 17. TERMINATION OF EMPLOYMENT
Upon termination of employment for any reason, on or prior to the last
business day of the offering, the balance in the Account of a Participant shall
be paid to the Participant or his or her estate.
SECTION 18. DOLLAR AMOUNT LIMITATION
18.1 No Eligible Employee may be granted an option under this Plan
which would permit the Eligible Employee's rights to purchase Common Stock under
all "employee stock purchase plans" of the Company, including any parent
corporation or subsidiary corporation (as the terms "parent corporation" and
"subsidiary corporation" are defined in Sections 425(e) and (f) of the Code), to
accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair
market value of such Common Stock (determined at the Offering Date) for each
calendar year in which such option is outstanding at any time.
18.2 For purposes of this Section 18.1, (i) the right to purchase
stock under an option accrues when the option (or any portion thereof) first
becomes exercisable during the calendar year, and (ii) a right to purchase stock
which has accrued under one option granted pursuant to this Plan may not be
carried over to any other option.
SECTION 19. CONTINUATION OF EMPLOYMENT
Nothing in this Plan or in any option granted pursuant to this Plan
shall confer upon any Participant any right to continue in the employ of the
Company or of a Related Corporation, or to interfere in any way with the right
of the Company or of any Related Corporation to terminate
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his or her employment or other relationship with the Company or Related
Corporation at any time.
SECTION 20. WITHHOLDING TAXES
Each Participant will agree by entering the Plan, promptly to give the
Company notice of any such stock disposed of within two years after the date of
grant of the applicable option, showing the number of such shares disposed of.
As a condition to the exercise of a stock option, the Participant shall make
such arrangements as the Plan Administrator may require for the satisfaction of
any federal, state or local withholding tax obligations that may arise in
connection with the exercise of the stock option and the subsequent sale of the
stock acquired upon the exercise of the option within two years after the date
of grant of the option.
SECTION 21. GREATER THAN FIVE PERCENT SHAREHOLDERS
No Eligible Employee may be granted an option under this Plan if such
employee, immediately after the option is granted, owns stock of the Company
possessing five percent (5%) or more of the total combined voting power of all
classes of stock of the Company or of any Related Corporations. For purposes of
this Section 21, the rules of Section 425(d) of the Code shall apply in
determining the stock ownership of an employee, and stock which an employee may
purchase under corresponding options (under this Plan or any other plan or
contract) shall be treated as stock owned by such employee.
SECTION 22. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
22.1 The aggregate number and class of shares for which options may
be granted under this Plan, the number and class of shares covered by each
outstanding option and the exercise price per share thereof (but not the total
price), and each such option, may all be proportionately adjusted by the Plan
Administrator as it deems appropriate, for any change in the structure of the
Common Stock of the Company resulting from a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger, consolidation, or
any other capital adjustment.
22.2 All adjustments under this Section 22 shall be made by the
Plan Administrator, and its determination as to what adjustments shall be made,
and the extent thereof, shall be final, binding and conclusive. Unless a
Participant agrees otherwise, any change or adjustment to an option shall be
made in such a manner so as not to constitute a "modification," as defined in
Section 425(h) of the Code, and so as not to cause the Participant's stock
option issued hereunder to fail to continue to qualify as a stock option granted
pursuant to an employee stock purchase plan, as defined in Section 423(b) of the
Code.
SECTION 23. SECURITIES REGULATION
23.1 Shares shall not be issued with respect to an option granted
under this Plan unless the exercise of such option and the issuance and delivery
of such shares pursuant thereto shall comply with all relevant provisions of
law, including, without limitation, any applicable state securities laws, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
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amended, the rules and regulations promulgated thereunder, the requirements of
any automated quotation system through which shares may then be traded, and the
requirements of any stock exchange upon which the shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance, including the availability of an exemption from registration
for the issuance and sale of any shares hereunder. Inability of the Company to
obtain, from any regulatory body having jurisdiction, the authority deemed by
the Company's counsel to be necessary for the lawful issuance and sale of any
shares hereunder or the unavailability of an exemption from registration for the
issuance and sale of any shares hereunder shall relieve the Company of any
liability in respect of the nonissuance or sale of such shares as to which such
requisite authority shall not have been obtained.
23.2 As a condition to the exercise of an option, the Company may
require the Participant to represent and warrant at the time of any such
exercise that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required by any relevant
provision of the aforementioned laws. At the option of the Company, a
stop-transfer order against any shares of stock may be placed on the official
stock books and records of the Company, and a legend indicating that the stock
may not be pledged, sold or otherwise transferred unless an opinion of counsel
is provided (concurred in by counsel for the Company) stating that such transfer
is not in violation of any applicable law or regulation, may be stamped on stock
certificates in order to ensure exemption from registration. The Plan
Administrator may also require such other action or agreement by the
Participants as may from time to time be necessary to comply with the federal
and state securities laws. THIS PROVISION SHALL NOT OBLIGATE THE COMPANY TO
UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK HEREUNDER.
SECTION 24. AMENDMENT AND TERMINATION
The Board may at any time suspend, amend or terminate this Plan;
provided, however, the Board may not amend this Plan without appropriate
shareholder approval if such approval is required by Section 423 of the Code or
the Securities and Exchange Commission Rule 16b-3 under the 1934 Act or any
successor rule or other regulatory requirement. The Plan Administrator may also
amend the Plan; provided, however, that the Plan Administrator may not amend the
Plan in any way which would require shareholder approval.
SECTION 25. INDEMNIFICATION OF BOARD AND PLAN ADMINISTRATOR
In addition to all other rights of indemnification they may have as
Directors of the Company or as members of the body serving as the Plan
Administrator, members of the Board and Plan Administrator shall be indemnified
by the Company to the fullest extent provided by law for all reasonable expenses
and liabilities of any type and nature, including attorneys' fees, incurred in
connection with any action, suit or proceeding to which they or any of them are
a party by reason of, or in connection with, any stock option granted hereunder,
and against all
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amounts paid by them in settlement thereof (if such settlement is approved by
independent legal counsel selected by the Company).
SECTION 26. EFFECTIVENESS
This Plan shall become effective upon adoption by the Board so long as
it receives any required approval by the holders of a majority of the Company's
outstanding shares of voting capital stock at any time within twelve (12) months
before or after the adoption of this Plan.
* * * * *
Adopted by the Board of Directors on March 4, 1991 and approved by the
shareholders on May 3, 1991.
Amendment No. 1 (Sections 7.5 and 13) adopted by the Compensation
Committee of the Board of Directors and incorporated herein on October 9, 1991.
Amendment No. 2 (Section 5) adopted by the Compensation Committee of
the Board of Directors and incorporated herein on March 18, 1992.
Amendment No. 3 (Sections 4.1, 8 and 9) adopted by the Board of
Directors and incorporated herein on February 15, 1995.
Amendment No. 4 (Section 5) adopted by the Board of Directors and
incorporated herein on March 7, 1997.
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<PAGE> 36
PROXY
MOSAIX, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 22, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Patrick S. Howard and John J. Flavio,
and each of them as, Proxies, with full power of substitution, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of Common Stock of Mosaix, Inc. held of record by the undersigned on March 3,
1997, at the Annual Meeting of Shareholders to be held on April 22, 1997,
or at any adjournment or postponement thereof.
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
ANNUAL MEETING OF SHAREHOLDERS
MOSAIX, INC.
APRIL 22, 1997
10:00 a.m.
HYATT REGENCY HOTEL
REGENCY BALLROOM
900 BELLEVUE WAY NE
BELLEVUE, WASHINGTON
<PAGE> 37
V16396 Mosaix Inc. proxy 3/11/97 7:53 Page 2
PLEASE MARK
YOUR VOTES AS / X /
INDICATED IN
THIS EXAMPLE
FOR WITHHOLD
ALL NOMINEES LISTED AUTHORITY
TO THE RIGHT (EXCEPT AS TO VOTE FOR ALL NOMINEES
MARKED TO THE CONTRARY) LISTED TO THE RIGHT
1. ELECTION OF DIRECTORS
NOMINEES: H. Robert Gill, / / / /
Umang Gupta and
Kamran Kheirolomoom
(INSTRUCTION: To withhold authority to vote for any individual nominee,
write that nominee's name the space provided below.)
- --------------------------------------------------------------------------------
2. EMPLOYEE STOCK PURCHASE PLAN FOR AGAINST ABSTAIN
Approve amendment to the 1991 / / / / / /
Employee Stock Purchase Plan.
3. RATIFICATION OF KPMG PEAT FOR AGAINST ABSTAIN
MARWICK LLP AS INDEPENDENT / / / / / /
AUDITORS FOR THE COMPANY.
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly 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 ALL NOMINEES" IN ITEM 1 AND "FOR" IN ITEMS 2 AND 3.
Signature(s) Dated: ,1997
----------------------------------------- -----------
Please sign below exactly as your name appears on your stock certificate. When
shares are held jointly, each person should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such. An
authorized person should sign on behalf of corporations, partnerships and
associations and give his or her title.
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
ANNUAL MEETING
OF
MOSAIX, INC.
TUESDAY, APRIL 22, 1997
10:00 A.M.
HYATT REGENCY HOTEL
REGENCY BALLROOM
900 BELLEVUE WAY NE
BELLEVUE, WA
