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
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant /_/
Check the appropriate box:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
NUMEREX CORP.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_____________________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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 No. ______________________________________
3) Filing party: ___________________________________________________________
4) Date filed: _____________________________________________________________
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NUMEREX CORP.
1600 PARKWOOD CIRCLE SE
SUITE 200
ATLANTA, GA 30339
Dear Shareholders:
We are pleased to enclose your Notice of Annual Meeting of Shareholders and
Proxy Statement for the Annual Meeting of Shareholders of NumereX Corp. (the
'Company') to be held at 10:00 a.m. on June 11, 1999 at the Hyatt Regency
Suites-Perimeter NW, 2999 Windy Hill Road, Atlanta, Georgia 30067.
At the Annual Meeting, you will be asked to elect six nominees to serve as
directors of the Company and to ratify the selection of Grant Thornton LLP as
the independent accountants of the Company.
The Board of Directors hopes that you will be able to attend the
shareholders' meeting. We look forward to meeting each of you and discussing
with you the significant events that have occurred during the Company's past
year and its current prospects. If you are unable to attend in person or to be
otherwise represented, we urge you to vote by signing the enclosed proxy and
mailing it to us in the accompanying stamped enveloped at your earliest
convenience. Please be sure to sign it exactly as the name or names appear on
the proxy. We urge you to read the enclosed proxy statement, which contains
information relevant to the actions to be taken at the meeting.
Sincerely yours,
/s/ Gordon T. Ray
Gordon T. Ray
Chairman
May 11, 1999
Enclosures
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NUMEREX CORP.
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 11, 1999
------------------------
TO OUR SHAREHOLDERS:
Notice is hereby given that the annual meeting of shareholders of NUMEREX
CORP. (the 'Company') will be held on June 11, 1999, at 10:00 a.m. (local time),
at the Hyatt Regency Suites-Perimeter NW, 2999 Windy Hill Road, Atlanta, Georgia
30067, for the following purposes:
1. To elect a Board of Directors consisting of six persons to serve
until the next annual meeting of shareholders and until their
respective successors shall have been duly elected and qualified;
2. To consider and vote upon the ratification of the selection by the
Board of Directors of Grant Thornton LLP as independent accountants
of the Company for the current fiscal year ending October 31, 1999;
and
3. To transact such other business as may properly come before this
meeting or any postponement or adjournment thereof.
The Board of Directors has fixed May 10, 1999 as the record date for the
determination of shareholders entitled to vote at the annual meeting. Only
shareholders of record at the close of business on that date will be entitled to
notice of, and to vote at, the annual meeting.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER
OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE URGED TO SIGN,
DATE AND PROMPTLY RETURN THE ENCLOSED PROXY. A SELF-ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
May 11, 1999 By Order of the Board of Directors
/s/ Gordon T. Ray
Gordon T. Ray, Chairman
<PAGE>
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NUMEREX CORP.
1600 PARKWOOD CIRCLE SE
SUITE 200
ATLANTA, GEORGIA 30339
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PROXY STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
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INTRODUCTION
The Board of Directors of NumereX Corp. (the 'Company'), the executive
offices of which are located at 1600 Parkwood Circle SE, Suite 200, Atlanta,
Georgia 30339, hereby solicits your proxy in the form enclosed for use at the
Annual Meeting of Shareholders to be held on June 11, 1999, at 10:00 a.m. (local
time), or at any postponement or adjournment thereof (the 'Annual Meeting'). The
expense of soliciting your proxy will be borne by the Company. The approximate
date on which this Proxy Statement and the accompanying form of proxy will first
be sent or given to shareholders is May 11, 1999.
At the Annual Meeting, shareholders will be asked to elect six directors of
the Company, each to serve until the next annual meeting, and to ratify the
selection of Grant Thornton LLP as independent accountants of the Company for
the current fiscal year ending October 31, 1999.
We urge you to date, sign and return your proxy in the enclosed envelope
promptly to make certain that your shares will be voted at the Annual Meeting.
DATE, TIME, AND PLACE
The Annual Meeting will be held on Friday, June 11, 1999, at 10:00 a.m.
local time, at the Hyatt Regency Suites-Perimeter NW, 2999 Windy Hill Road,
Atlanta, Georgia 30067.
RECORD DATE; VOTING RIGHTS
The Company had 10,343,092 shares of Common Stock outstanding at the close
of business on May 10, 1999, the record date (the 'Record Date'). Only
shareholders of record at the close of business on the Record Date will be
entitled to vote at the Annual Meeting. The presence, in person or by proxy, of
holders of a majority of all of the shares of stock entitled to vote constitutes
a quorum. Each share of Common Stock outstanding is entitled to one vote on each
matter which may be brought before the Annual Meeting. Directors will be elected
by a plurality of the votes cast in person or represented by proxy at the
meeting and entitled to vote on the election of directors. In all matters other
than the election of directors, the affirmative vote of the majority of the
votes cast in person or represented by proxy at the Annual Meeting and entitled
to vote on the matter will be the act of the shareholders. Under the
Pennsylvania Business Corporation Law, an abstention, notwithstanding the
authority to vote, or a broker non-vote, will not have the same legal affect as
an 'against' vote and will not be counted in determining whether the proposal
has received the required shareholder vote.
The Company is not currently aware of any matters that will be brought
before the Annual Meeting (other than procedural matters) that are not referred
to in the enclosed Notice of Annual Meeting.
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VOTING AND REVOCATION OF PROXIES
A form of proxy is enclosed. If properly executed and received in time for
voting, and not revoked, the enclosed proxy will be voted as indicated in
accordance with the directions thereon. If no directions to the contrary are
indicated, the persons named in the enclosed proxy will vote all shares of the
Company's Common Stock for election of all nominees for directors and for the
ratification of the selection of Grant Thornton LLP as the Company's independent
accountants.
Sending in a signed proxy will not affect a shareholder's right to attend
the Annual Meeting nor will it preclude a shareholder from voting in person
because the proxy is revocable at any time prior to the voting of such proxy.
Any shareholder giving a proxy has the power to revoke it by giving written
notice to the Secretary of the Company at any time before the proxy is
exercised, including by filing a later-dated proxy with the Secretary or by
appearing in person at the Annual Meeting and making a written demand to vote.
SOLICITATION OF PROXIES
The expense of the proxy solicitation will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited in person or by
telephone, telegraph or teletype, or by directors, officers or employees of the
Company without additional compensation. Upon request by record holders of the
Company's Class A Common Stock, no par value (the 'Common Stock'), who are
brokers, dealers, banks or voting trustees, or their nominees, the Company is
required to pay the reasonable expenses incurred by such record holders for
mailing proxy material and annual shareholder reports to any beneficial owners
of Common Stock.
FISCAL YEARS
As used in this Proxy Statement, 'fiscal 1996' means the Company's fiscal
year ended October 31, 1996, 'fiscal 1997' means the Company's fiscal year ended
October 31, 1997, 'fiscal 1998' means the Company's fiscal year ended October
31, 1998, and 'fiscal 1999' means the Company's fiscal year ending October 31,
1999.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of May 10, 1999, by (i) each person
known by the Company to be the beneficial owner of five percent or more of the
Common Stock, (ii) each director of the Company, (iii) each executive officer of
the Company named in the Summary Compensation Table which follows, and (iv) all
directors and executive officers of the Company as a group. Except as otherwise
indicated below, the beneficial owners of the Common Stock listed below have
sole investment and voting power with respect to such shares.
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<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED(1)
NAME OF BENEFICIAL OWNER ----------------------------------------
OR IDENTITY OF GROUP NUMBER OF SHARES
AND ADDRESS BENEFICIALLY OWNED PERCENT OF CLASS
- --------------------------------------------------------------------------- ------------------ ----------------
<S> <C> <C>
Gwynedd Resources, Ltd.
900 Market Street
Suite 200
Wilmington, DE 19801 3,207,280(2) 31.0%
Elizabeth Baxavanis, Trustee
Dominion Holdings #5
Revocable Trust for the Benefit of
Maria E. Nicolaides
900 Market Street
Suite 200
Wilmington, DE 19801 3,207,280(3) 31.0%
Maria E. Nicolaides
4193 Las Palmas Way
Sarasota, FL 34238 3,207,280(4) 31.0%
Douglas Holsclaw, MD
42 Llanberries Road
Bala Cynwyd, PA 19004 752,382(5) 7.3%
Kenneth F. Manser
Versus Technology Limited
Unit B7, Armstrong Mall
Southwood Summit Centre
Farnborough, Hampshire GU14 0NR 1,334,658 12.9%
George Benson(6) 11,000(7) *
Matthew J. Flanigan(6) 13,700(7) *
Frederick C. Shay(6) 30,000(8) *
Gordon T. Ray(6) 126,397(7) *
John J. Reis(6) 10,000(9) *
Andrew J. Ryan(10) 15,000 *
Charles L. McNew(6) 16,000(11) *
All Directors and Executive Officers as a group (7 Persons) 1,556,755(12) 14.8%
</TABLE>
- ------------------
*Less than 1%.
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(1) The shares 'beneficially owned' by an individual are determined in
accordance with the definition of 'beneficial ownership' set forth in the
regulations of the Securities and Exchange Commission. Accordingly, they
may include shares owned by or for, among other things, the wife, minor
children or certain other relatives of such individual, as well as other
shares as to which the individual has or shares voting or investment power
or has the right to acquire within 60 days after May 10, 1999.
(2) The shareholders of Gwynedd Resources, Ltd. ('Gwynedd') include various
trusts for the benefit of Maria E. Nicolaides and her children (for which
Mrs. Baxavanis is trustee) and Dr. Holsclaw. Gwynedd has the same
shareholders as Dominion Group Limited, a Member Company of Dominion
Holdings. See 'Certain Relationships and Related Transactions.' See
footnotes (3), (4), (5) and (10).
(3) Represents the shares of Common Stock owned by Gwynedd. Trusts for the
benefit of Maria E. Nicolaides and her children, of which Mrs. Baxavanis,
Maria E. Nicolaides' mother-in-law, is own approximately 89.8% and 0.9%,
respectively, of the outstanding stock of Gwynedd. Mrs. Baxavanis disclaims
beneficial ownership of all shares of Common Stock owned by Gwynedd. See
footnote (4) below.
(4) Represents the shares of Common Stock owned by Gwynedd. Trusts for the
benefit of Maria E. Nicolaides and her children, of which Mrs. Baxavanis,
Maria E. Nicolaides' mother-in-law, is trustee, own approximately 89.8% and
0.9%, respectively, of the outstanding stock of Gwynedd. Maria E.
Nicolaides disclaims beneficial ownership of 325,651 shares of Common Stock
owned by Gwynedd which may be deemed to be beneficially owned by the other
shareholders of Gwynedd, including for the benefit of her children. See
footnote (3) above.
(5) Does not include any shares of Common Stock owned by Gwynedd. Dr. Holsclaw
is the owner of approximately 9.3% of the outstanding stock of Gwynedd.
(6) The address of such person is c/o NumereX Corp., 1600 Parkwood Circle SE,
Suite 200, Atlanta, GA 30339-2119.
(7) Represents or includes options to purchase Common Stock under the
Non-Employee Director Stock Option Plan (the 'Director Plan'), as follows:
George Benson-9,000; Matthew J. Flanigan-10,700; and Gordon T. Ray-9,000
and 100,000 under the Company's Employee Stock Option Plan (the 'Employee
Plan'), but does not include 100,000 under the Employee Plan, which are not
exercisable as of the date of this table.
(8) Includes options to purchase 24,000 shares of Common Stock under the
Employee Plan. Mr. Shay, a Director of the Company will not be standing for
re-election.
(9) Does not include options to purchase 275,000 shares of Common Stock under
the Employee Plan which are not currently exercisable.
(10) Mr. Ryan disclaims beneficial ownership of the 3,207,280 shares of Common
Stock owned by Gwynedd. Mr. Ryan's address is: Salisbury & Ryan, 1325
Avenue of the Americas, Seventh Floor, New York, NY 10019-6026.
(11) Includes options to purchase 15,000 shares of Common Stock under the
Employee Plan.
(12) Does not include ownership of Mr. Reis who is not presently an executive
officer or director of the Company. Includes options to purchase 167,000
shares of Common Stock under the Employee Plan and the Director Plan.
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PROPOSAL ONE
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall consist
of not less than three nor more than ten directors and that the number of
directors to be elected, subject to the foregoing limits, shall be determined
from time to time by the Board of Directors. The Board has set the number of
directors at six. At the Annual Meeting six directors, who will constitute the
Company's entire Board of Directors, are to be elected to hold office until the
next annual meeting and until their respective successors have been duly elected
and qualified. The Board has designated the persons listed below to be nominees
for election as directors. The Company has no reason to believe that any of the
nominees will be unavailable for election; however, should any nominee become
unavailable for any reason, the Board of Directors may designate a substitute
nominee. The proxy agents intend (unless authority has been withheld) to vote
for the election of the Company's nominees.
All of the nominees currently serve as directors of the Company and have
consented to being named in this Proxy Statement and to serve if elected.
The Bylaws of the Company require that nominations by shareholders for
directors to be elected, or proposals by shareholders to be considered, at an
annual meeting of shareholders and which have not been previously approved by
the Board of Directors must be submitted to the Secretary of the Company in
writing, either by personal delivery, nationally recognized express mail or
United States mail, postage prepaid, not later than the latest date upon which
shareholder proposals must be submitted to the Company for inclusion in the
Company's proxy statement relating to such meeting pursuant to Rule 14a-8 under
the Securities Exchange Act of 1934, as amended, or other applicable rules or
regulations under the federal securities laws or, if no such rules apply, at
least ninety (90) days prior to the date one year from the date of the
immediately preceding annual meeting of shareholders. Each such nomination or
proposal shall set forth: (i) the name and address of the shareholder making the
nomination or proposal and the person or persons nominated, or the subject
matter of the proposal submitted; (ii) a representation that the shareholder is
a holder of record of capital stock of the Company entitled to vote at such
meeting and intends to appear in person or by proxy at the meeting to vote for
the person or persons nominated, or the proposal submitted; (iii) a description
of all arrangements and understandings between the shareholder and each nominee
and any other person or persons (naming such person or persons) pursuant to
which the nomination was made, or the proposal was submitted, by the
shareholder; (iv) such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission had the
nominee been nominated by the Board of Directors; and (v) the consent of each
nominee to serve as a director of the Company if so elected. All late
nominations and proposals will be rejected.
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INFORMATION AS TO DIRECTORS AND NOMINEES
The following table contains information with respect to the nominees for
Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
George Benson(l)(2)(3) 64 Director 1995
Matthew J. Flanigan(l)(2)(3) 53 Director 1994
Kenneth F. Manser 65 Director; Managing 1994
Director of the
Company's
subsidiary, Versus
Technology Limited
Stratton J. Nicolaides 45 Director; Chief 1999
Operating Officer
Gordon T. Ray 70 Chairman of the 1995
Board of Directors
Andrew J. Ryan(l)(2)(3) 40 Director; General 1996
Counsel; Secretary
</TABLE>
- ---------------------------
(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Member of Employee Stock Option Plan Committee
GEORGE BENSON has served as a Director of the Company since June 1995. Mr.
Benson has served as Chairman and Chief Executive Officer of Wisconsin Wireless
Communications Corporation and its subsidiary Airadigm Communications, two
wireless telecommunications service providers since September 1992, and Senior
Vice President of Mitel, Inc., a public telecommunications company, from
September 1990 until September 1992. From 1979 until 1990 Mr. Benson served as
Founder, President and Chief Executive Officer of Telecom North, Inc.
MATTHEW J. FLANIGAN has served as a Director of the Company since July
1994. Mr. Flanigan has been the President of the Telecommunication Industry
Association, a trade association for telecommunication companies, since April
1994. From March 1987 to January 1994, he served as President of Cognitronics
Corporation, a telecommunications manufacturer.
KENNETH F. MANSER has been the Managing Director of the Company's
subsidiary, Versus Technology Limited, since December 1990 and Chairman of the
Board of the Company from February 1994 to July 1998, at which time he
relinquished the position of Chairman of the Board. Mr. Manser continues to
serve as a Director. Prior thereto, since 1987, he was sales manager of the
Telecommunications Group of Base Ten Systems, Inc., a defense electronic systems
manufacturer.
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STRATTON J. NICOLAIDES has served as a Director of the Company since April
1999. Mr. Nicolaides was an original founder of the Company along with Mr.
Manser and previously served on the Company's Board of Directors from its
founding until October 1994. Since that time, he has managed a closely held
investment partnership and provided consulting services to Dominion Group
Limited.
GORDON T. RAY served as Chairman of the Board of Directors, President and
Chief Executive Officer of the Company from July 1998 until April 1999. He has
served as a Director of the Company since October 1995 and continues to serve as
Chairman of the Board of Directors. Mr. Ray served as Chairman and President of
Cellemetry LLC, a majority owned subsidiary of the Company, from October 1998
until April 1999. Mr. Ray has served as President of Global Information, Ltd., a
technology marketing consulting company, from September 1993 to present and for
more than five years prior thereto he served as Executive Vice President of NEC
America, an equipment manufacturing company. Mr. Ray is also a director of the
Telecommunication Industry Association and a member of the board of governors of
the Electronic Industries Association, trade associations for telecommunications
and electronics companies.
ANDREW J. RYAN has served as a Director of the Company since May 1996. Mr.
Ryan has practiced law with the law firm of Salisbury & Ryan from August 1994 to
present and, from March 1993 to August 1994, with the law firm of Pepper
Hamilton & Scheetz. Mr. Ryan serves as Gwynedd's designee on the Board. See
'Arrangements with Respect to the Board of Directors' and 'Certain Relationships
and Related Transactions.'
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
In March 1993, the Resolution Trust Corporation ('RTC'), as receiver for
Nassau Savings and Loan Association ('Nassau'), filed a complaint for damages
against Mr. Nicolaides arising out of five loans ('Loans') made by Nassau
between 1982 and 1985 to five partnerships of which Mr. Nicolaides was one of
the general partners. Mr. Nicolaides also was a guarantor of such Loans. On
November 22, 1995, without admitting liability for the claims asserted, Mr.
Nicolaides settled the RTC action for $2,125,000. On March 10, 1997, in a
separate criminal action arising out of the Loans, which was filed in the United
States District Court for the District of New Jersey, Mr. Nicolaides agreed to
plead guilty to one count of bank fraud. The court sentenced Mr. Nicolaides to
three-years probation and required payment of a $250,000 fine. Mr. Nicolaides is
in compliance with the terms of his probation.
Neither the RTC action nor the criminal action included any ban on Mr.
Nicolaides engaging in any type of business activity.
Mr. Nicolaides is the spouse of Maria E. Nicolaides, who may be deemed the
indirect beneficial owner of approximately 31.0% of the Company's outstanding
Common Stock. See 'Security Ownership of Management and Certain Beneficial
Owners' and 'Certain Relationships and Related Transactions.'
BOARD OF DIRECTORS, COMMITTEES AND ATTENDANCE AT MEETINGS
During fiscal 1998, the Board of Directors of the Company held 11 meetings.
Each director attended 75% or more of the meetings of the Board and committees
of which they were members during fiscal 1998.
During fiscal 1998, the Audit Committee held four meetings. The purpose of
the Audit Committee is to review all recommendations made by the Company's
independent public accountants with respect to the accounting methods used and
the system of internal control followed by the Company and to advise
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<PAGE>
the Board of Directors with respect thereto. The members of the Audit Committee
are George Benson, Matthew J. Flanigan and Andrew J. Ryan.
During fiscal 1998, the Compensation Committee held one meeting. The
Compensation Committee makes recommendations to the Board with respect to the
compensation of the officers and key employees. The members of the Compensation
Committee are George Benson, Matthew J. Flanigan and Andrew J. Ryan. See
'Executive Compensation-Report of the Compensation Committee.'
During fiscal 1998, the Employee Stock Option Plan Committee held two
meetings. The Employee Stock Option Committee authorizes stock option grants, if
any, to the employees of the Company pursuant to the Employee Stock Option Plan.
The members of the Employee Stock Option Plan Committee are George Benson,
Matthew J. Flanigan and Andrew J. Ryan.
ARRANGEMENTS WITH RESPECT TO THE BOARD OF DIRECTORS
The Company has entered into an agreement providing Gwynedd with the right
to designate one director to the Board. Additionally, in the event the Board
consists of more than seven directors, Gwynedd, at its option, may designate one
additional director. Any designee's appointment will be subject to the exercise
by the Board of Directors of its fiduciary duties and the approval of the
Company's shareholders upon the expiration of any appointed term at the next
annual meeting of shareholders. Gwynedd's right to designate directors will
cease at such time as Gwynedd's equity interest in the Company drops below ten
percent of the outstanding shares of the Company's Common Stock. Mr. Ryan
currently serves as Gwynedd's designee.
DIRECTOR COMPENSATION
During fiscal 1998, each director of the Company who was not also an
employee of the Company or a Gwynedd designated director received an annual fee
of $12,000 and a fee of $250 for each meeting (except telephonic meetings, in
which case the fee was $125) of the Board or a committee thereof attended plus
reimbursement of expenses incurred in attending meetings. No additional fee was
paid for committee meetings held the same day as Board meetings. Effective as of
February 12, 1999, each director of the Company who is not also an employee of
the Company or a Gwynedd designated director will receive an annual fee of
$12,000 and a fee of $500 for each meeting (except telephonic meetings, in which
case the fee will be $250) of the Board or a committee thereof attended plus
reimbursement of expenses incurred in attending meetings. No additional fee will
be paid for committee meetings held the same day as Board meetings.
Directors who are not employees or a Gwynedd designated director are
entitled to receive options under the Company's Non-Employee Director Stock
Option Plan.
PROPOSAL TWO
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP acted as the Company's independent public accountants
for the fiscal year ended October 31, 1998. Effective March 31, 1999, the
Company dismissed Deloitte & Touche LLP as the Company's independent
accountants. The decision to dismiss Deloitte & Touche LLP was recommended by
the Audit Committee and approved by the Board of Directors. No report on the
financial statements of the Company by Deloitte & Touche LLP contained an
adverse opinion or disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope, or accounting principles during either of the past two
fiscal years or any subsequent period through March 31, 1999.
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In connection with its audits for the two most recent fiscal years and
through March 31, 1999, there have been no disagreements between the Company and
Deloitte & Touche LLP on any matter or accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Deloitte & Touche LLP would
have caused them to make reference thereto in their report on the financial
statements for those years.
On March 31, 1999, the Board of Directors, upon the recommendation of the
Audit Committee, selected the firm of Grant Thornton LLP as independent
accountants of the Company for the fiscal year ending October 31, 1999. This
nationally known firm has no direct or indirect financial interest in the
Company.
Although not legally required to do so, the Board is submitting the
selection of Grant Thornton LLP as the Company's independent accountants for
fiscal 1999 for ratification by the shareholders at the Annual Meeting. If a
majority of the votes cast in person or by proxy at the Annual Meeting is not
voted for ratification, the Board will reconsider its appointment of Grant
Thornton LLP as independent accountants for the current fiscal year.
A representative of Grant Thornton LLP will be present at the Annual
Meeting and will have the opportunity to make a statement if he or she desires
to do so. It is anticipated that such representative will be available to
respond to appropriate questions from shareholders. The Company does not expect
that a representative of Deloitte & Touche LLP will be present at the Annual
Meeting.
OTHER BUSINESS
The Company does not presently know of any matters that will be presented
for action at the meeting other than those set forth herein. If other matters
properly come before the meeting, proxies submitted on the enclosed form will be
voted by the persons named in the enclosed proxy with respect to such other
matters in accordance with their best judgment.
EXECUTIVE COMPENSATION
Under rules established by the Securities and Exchange Commission (the
'SEC'), the Company is required to provide certain data and information with
respect to the compensation and benefits provided to the Company's Chief
Executive Officer and other executive officers of the Company. The disclosure
requirements for the Chief Executive Officer and other executive officers
include the use of tables and a report explaining the rationale and
considerations that led to fundamental compensation decisions affecting those
individuals. In fulfillment of this requirement, the Compensation Committee of
the Company (the 'Committee'), at the direction of the Board of Directors, has
prepared the following report for inclusion in this proxy statement.
REPORT OF THE COMPENSATION COMMITTEE
OVERVIEW AND PHILOSOPHY
The Committee is currently comprised of Matthew J. Flanigan, as Chairman,
and George Benson and Andrew J. Ryan. The Committee's responsibilities include
reviewing and making recommendations to the Board of Directors regarding the
compensation of the Chief Executive Officer and approving the compensation paid
to the Company's other executives. Starting with the 1998 fiscal year, the
Company instituted an incentive compensation program for senior employees. The
Committee also considers and
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recommends to the Employee Stock Option Plan Committee awards of options to
purchase shares of Common Stock pursuant to the Company's Employee Stock Option
Plan.
The compensation structure is aimed at establishing levels of compensation
sufficient to attract and retain qualified executive talent. To do so, the
Company seeks to provide total compensation packages that are comparable to
those offered by other companies of similar size, complexity and financial
performance. The compensation program also seeks to align the interests of
management with those of the Company's shareholders through the use of
stock-based forms of compensation, including compensation through stock option
grants.
COMPENSATION PROGRAM ELEMENTS
The senior employees compensation program consists of a base salary,
incentive compensation in the form of cash bonuses and long-term incentive
compensation in the form of options to purchase Common Stock under the Employee
Stock Option Plan, bonus and miscellaneous fringe benefits, including group
benefits generally available to employees of the Company. Overall, the Company's
process of setting the levels and mix of each component of compensation is
subjective, with no precise, mathematical weight given to any of the factors
discussed below.
BASE SALARY. The Company's salary levels are intended to be consistent
with the competitive practices of comparable companies and each executive
officer's level of responsibility. Salary increases are intended to reflect the
overall financial performance of the Company as well as the specific
contributions of the individual executive officer.
STOCK OPTIONS. Grants of options under the Company's Employee Stock Option
Plan are made at the Employee Plan Committee's discretion based on the level and
importance of the management position to the overall long term success of the
Company and the contribution of the executive officer. Grants are intended to
motivate the executive officers to build shareholder value and to relate a
significant portion of the executive's compensation directly to the financial
performance of the Company.
INCENTIVE COMPENSATION. The Company instituted an incentive compensation
program starting in fiscal 1998 for executive level employees whereby they can
receive cash bonuses ranging between 20-24% of base salary, based upon the
achievement of revenue and operating income objectives pursuant to the Company's
business plan. Additional incentive compensation may be paid for
over-achievement of objectives. The Company did not pay any bonuses to executive
level employees in fiscal 1998.
OTHER BENEFITS. In addition to the items of compensation described above,
the Company provides medical and life insurance and a 401(k) plan to its
executive officers, which are generally available to Company employees. The
Company also provides certain executive officers with a company car. The amount
of these benefits, as determined in accordance with the rules of the Securities
and Exchange Commission relating to executive compensation, did not exceed the
lesser of $50,000 or 10% of any such executive officer's salary for fiscal 1998.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Ray served as Chairman, President and Chief Executive Officer from July
1998 until April 1999. Mr. Ray received an annual base salary of $240,000. In
addition, in September 1998, Mr. Ray was granted performance-based stock options
to purchase 100,000 shares of Company Common Stock with an exercise price equal
to $3.06 per share, of which 50,000 are exercisable at the earlier of such time
as the closing price of NumereX Common Stock equals or exceeds $7.50, or five
years from the date of grant, and 50,000 are exercisable, at the earlier of such
time as the closing price of NumereX Common
10
<PAGE>
Stock equals or exceeds $10.00, or five years from the date of grant. Also, in
November 1998, Mr. Ray received an option to purchase 100,000 shares of NumereX
Common Stock, with an exercise price equal to $2.63 per share, all of which are
immediately exercisable. In February 1998, prior to Mr. Ray assuming the
positions referenced herein, he received options to purchase an additional 4,000
shares of NumereX Common Stock under the Company's Non-Employee Director Stock
Option Plan.
Effective June 3, 1996, the Company entered into an employment agreement
with John J. Reis, whereby Mr. Reis served as President, Chief Executive Officer
and a Director of the Company. Pursuant to the agreement, Mr. Reis received an
annual salary of $225,000, increased to $250,000 effective January 1, 1997, plus
a cash bonus equal to $50,000, $25,000 of which was pro-rated on a monthly basis
over the first six months of his employment, while the remaining $25,000 was
awarded at the discretion of the Board of Directors. Mr. Reis' base salary was
increased to $275,000, effective June 1, 1997. As part of a agreement (as
amended), Mr. Reis was granted stock options to purchase, in the aggregate,
125,000 shares of Company Common Stock, exercisable as follows: (i) 50,000, at
the earlier of such time as the closing price of NumereX Common Stock equals or
exceeds $10.00 per share for a period of sixty (60) consecutive days, or
February 27, 2002; (ii) 25,000, at the earlier of such time as the closing price
of NumereX Common Stock equals or exceeds $12.50 per share for a period of sixty
(60) consecutive days, or February 27, 2002; and (iii) 50,000, at the earlier of
such time as the closing price of NumereX Common Stock equals or exceeds $15.00
per share for a period of sixty (60) consecutive days, or February 27, 2002.
Also, during fiscal 1998, Mr. Reis was granted additional options to purchase
75,000 shares of Common Stock. Mr. Reis' employment with the Company terminated
in July 1998. See 'Employment and Related Agreements' for a description of the
arrangements with Mr. Reis under his employment and agreements.
The above compensation was based upon the Company's belief that the
background and skills brought to the Company by the chief executive officer, as
well as such person's contribution since commencing employment, were important
to the Company's achievement of its long range strategic goals.
POLICY WITH RESPECT TO SECTION 162(M) OF THE INTERNAL REVENUE CODE
Generally, Section 162(m) of the Internal Revenue Code, and the regulations
promulgated thereunder (collectively, 'Section 162(m)'), denies a deduction to
any publicly held corporation, such as the Company, for certain compensation
exceeding $1,000,000 paid to the chief executive officer and the four other
highest paid executive officers during any taxable year, excluding, among other
things, certain performance-based compensation. The Compensation Committee
intends to evaluate the level of compensation and the importance to the Company
of qualifying for the performance-based exclusion with respect to options having
an exercise price of not less than the fair market value of the Common Stock on
the date of grant. The Compensation Committee will also continually evaluate to
what extent Section 162(m) will apply to its other compensation programs.
11
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth all cash compensation paid to the Chief
Executive Officer of the Company, and the four most highly compensated executive
officers of the Company and its subsidiaries whose salary and bonus exceeded
$100,000 for services rendered in all capacities to the Company and its
subsidiaries, during the Company's fiscal years ended October 31, 1998, 1997 and
1996, except for the Chief Executive Officer.
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------- ------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION UNDERLYING OPTIONS COMPENSATION
- -------------------------------- ----------- -------- ------- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Gordon T. Ray, Chairman, 1998(1) $ 76,364 -- -- 104,000 $ 10,250
President and Chief 1997 -- -- -- 2,500 9,500
Executive Officer 1996 -- -- -- 2,500 7,125
John J. Reis, 1998(2) $206,250 -- $102,141 75,000 $ 11,706
President and Chief 1997 256,250 $66,983 -- 100,000 6,431
Executive Officer 1996 93,750 20,833 -- 100,000 --
Kenneth F. Manser, 1998(3) $157,786 -- -- -- $ 19,979(4)
Chairman of the Board of the 1997 156,218 $23,487 -- -- 27,988(4)
Company and Managing 1996 147,307 -- -- -- 22,693(4)
Director of Versus Technology
Limited
Charles L. McNew, Vice 1998(5) $160,208 -- -- 50,000 $ 5,000
President, Chief Operating 1997 133,500 $32,827 25,000 4,713
Officer and Chief 1996 123,500 25,000 3,708
Financial Officer
Frederick C. Shay, 1998(6) $150,000 -- -- -- $ 4,500
Chief Technology Officer 1997 145,000 -- -- 10,000 4,200
1996 161,667 -- -- 40,000 4,445
</TABLE>
12
<PAGE>
- ---------------------------
(1) Mr. Ray served as Chairman of the Board of Directors, President and Chief
Executive Officer of the Company from July 1998 until April 1999. Mr. Ray
continues to serve as Chairman of the Board of Directors. Amounts under
caption 'All Other Compensation' represent fees as an outside director prior
to July 1998.
(2) Mr. Reis became President and Chief Executive Officer of the Company in June
1996 at a base salary of $225,000, which was increased to $250,000 on
January 1, 1997. His base salary was increased to $275,000, effective June
1, 1997. Mr. Reis' employment with the Company terminated in July 1998, at
which time he ceased to serve as President, Chief Executive Officer and as a
Director of the Company. See 'Employment and Related Agreements.'
(3) Mr. Manser's salary, bonus and other compensation for fiscal 1996, 1997 and
1998 were pounds 95,000, pounds -0-, and pounds 14,635; pounds 95,000,
pounds 14,283 and pounds 17,202; and pounds 95,000, pounds -0- and pounds
18,050, respectively, which have been converted into dollars at the exchange
rate of $1.5506 for fiscal 1996, $1.6444 for fiscal 1997 and $1.6609 for
1998, respectively, per pounds 100 based on the average of the noon buying
rates in New York City on the last day of each month during fiscal 1996,
1997 and 1998, respectively, for cable transfers as certified for customs
purposes by the Federal Reserve Bank of New York.
(4) Represents private health insurance premium payments and amounts contributed
to Mr. Manser's account under a Limited Pension and Death Benefits Plan. See
'Limited Pension and Death Benefits Plan.'
(5) Mr. McNew became Vice President and Chief Financial Officer in July 1994 and
served as Chief Operating Officer of the Company from July 1998 until April
1999.
(6) Mr. Shay has served as a Director of the Company since February 1994, but
will not be standing for reelection. Mr. Shay served as President of
Cellemetry LLC, a majority owned subsidiary of the Company from May 1998 to
October 1998. Prior to that Mr. Shay served as the Company's Chief
Technology Officer, from October 1997 to May 1998. From June 1996 until
October 1997 Mr. Shay served as President of the Company's subsidiary, DCX
Systems, Inc. Mr. Shay served as acting President and acting Chief Executive
Officer of the Company from June 1995 to June 1996. From November 1994
through June 1995, Mr. Shay served as Vice President of the Company.
Accordingly, Mr. Shay's annual compensation includes amounts paid under
various capacities.
EMPLOYMENT AND RELATED AGREEMENTS
In June 1996, the Company entered into a one-year employment agreement with
Mr. Reis, which was extended by mutual agreement, pursuant to which he served as
President, Chief Executive Officer and a Director of the Company. For all
services rendered, Mr. Reis received an annual salary of $225,000 (increased to
$250,000 effective January 1, 1997 and $275,000 effective June 1, 1997), plus an
initial bonus equal to $50,000, $25,000 of which was pro-rated over the first
six months of his employment, while the remaining $25,000 was awarded by the
Board of Directors. Mr. Reis also was reimbursed for business travel and other
business expenses. Additionally, Mr. Reis received options to purchase, in the
aggregate, 125,000 shares of NumereX Common Stock, at exercise prices equal to
the fair market value of the Company Common Stock on the dates of grant. The
options are exercisable as follows: (i) 50,000, at such time as the closing
price of the Company's Common Stock equals or exceeds $10.00 per share for a
period of 60 consecutive days; (ii) 25,000, at such time as the closing price of
the Company's Common Stock equals or exceeds $12.50 per share for a period of 60
consecutive days; and (iii) 50,000, at such
13
<PAGE>
time as the closing price of the Company's Common Stock equals or exceeds $15.00
per share for a period of 60 consecutive days. The exercisability of the options
was modified to provide that they may be exercised at the earlier of (i) the
closing price of the Company's Common Stock equaling or exceeding the price
levels for the trading periods set forth above, or (ii) five years from the date
of grant. Mr. Reis also was entitled to benefits under Company employee benefit
plans and programs in which other executives of the Company are eligible to
participate. Mr. Reis was entitled to four weeks of annual vacation. The Company
was permitted to terminate this agreement 'for cause' (as defined therein) in
which case Mr. Reis would have had no right to receive compensation or other
benefits for any period after such termination. In the event of termination for
'good reason' (as defined therein), which includes a merger, consolidation or
reorganization, sale of all or substantially all of the assets or any similar
event, a 'change in control' (as defined therein), or for termination without
cause, Mr. Reis would receive his base salary plus bonus for the most recently
completed year of employment, payment of which would be made at the time
provided for in the agreement as though employment had not been terminated. This
payment would be in lieu of the base annual salary and bonus compensation he
would otherwise receive. The agreement also required certain payments by the
Company in the event of disability or partial disability. The agreement also
contained non-competition, non-disclosure and confidentiality provisions,
certain of which extend beyond the term of the agreement. In July 1998, the
Company entered into a consulting agreement (the 'Consulting Agreement') with
Mr. Reis. Pursuant to the Consulting Agreement, for a period of 60 days, Mr.
Reis agreed to provide certain services to the Company, and in return therefor,
Mr. Reis received compensation, based upon his then current annual compensation.
In addition, Mr. Reis received certain other benefits, including medical
benefits for fourteen months, reimbursement for automobile expenses and
reimbursement for outplacement expenses, not to exceed $25,000. In addition, the
Company agreed to use its best efforts to protect the value of stock options
granted to Mr. Reis, provided that such protections did not have an adverse
effect on the Company or Mr. Reis, and in this regard the Company and Mr. Reis
agreed to convert his incentive stock options into non-qualified stock options
and to provide that the options would not terminate 90 days after termination of
Mr. Reis' employment. All other terms of the options remain unchanged. In
addition, the Company acknowledged its obligations under Mr. Reis' employment
agreement referred to above. Accordingly, Mr. Reis is also entitled to receive
payment of his base salary plus bonus for the most recently completed year of
employment, payment of which will be made over a twelve month period.
In November 1993, the Company entered into an employment agreement with
Kenneth F. Manser, pursuant to which Mr. Manser has served as Managing Director
of Versus Technology Limited for two years, which ended in November 1995,
subject to automatic one year extensions unless notice of termination is given
by either party at least 90 days prior to the end of the then current term. The
employment agreement has not been extended. Mr. Manser's salary is pounds 95,000
per year, or such higher rate as may from time to time be agreed. In the event
of Mr. Manser's death during the term of the agreement, his wife will be
entitled to receive a lump-sum payment equal to six months salary at his then
current rate. Versus Technology Limited provides Mr. Manser with an automobile,
which may be used for business and private use, private health insurance
coverage for Mr. Manser and his wife, and pension and life insurance
arrangements as shall from time to time be agreed upon. The agreement may be
terminated due to Mr. Manser's long-term disability, serious breach of the
agreement, grossly negligent conduct or personal bankruptcy. Mr. Manser is
prohibited from disclosing or using confidential information during and after
the term of his agreement and from soliciting business from the Company's
customers for a period of one year after the termination of his employment.
In May 1996, NumereX entered into severance agreements with Messrs. Shay
and McNew, which terminate at the earlier of (i) death or permanent disability,
(ii) termination by the Company for cause,
14
<PAGE>
(iii) mutual agreement, (iv) termination by resignation or otherwise; or (v) one
year from the date of the agreement, and year to year thereafter unless
appropriate notice is given. The agreements generally provide that if employment
is terminated during the term by reason of a merger or similar transaction, a
'change in control' (as defined therein), a change to a less responsible
position, or termination of the employee (except for cause), the employee shall
receive, for a period of six months following termination 50% of his annual base
salary. In addition, the employee shall be entitled to receive, for a period of
six months following the termination date, reimbursement of all reasonable
expenses incurred in connection with his search for new employment, not to
exceed 20% of base annual salary, or, at the employee's option, a lump sum
payment of $10,000. For a period of one year following the termination date, the
employee shall be entitled to all customary Company benefits, such as medical
care and life insurance benefits. The agreements also contain certain provisions
preventing the employee from disclosing confidential information and not
competing with the Company. The severance agreement with Mr. McNew terminated by
the terms of the employment agreement entered into between Mr. McNew and the
Company referred to hereunder. Payment of severance benefits to Mr. Shay
commenced in January 1999.
In July 1998, the Company and Mr. McNew entered into a one-year employment
agreement, which shall continue for additional one-year terms, unless prior
notice of non-extension is given by either party. Mr. McNew agreed to serve as
Vice President, Chief Operating Officer and Chief Financial Officer of the
Company. This Agreement supersedes and cancels the severance agreement between
the Company and Mr. McNew referred to above. Mr. McNew receives an annual salary
of $185,000, or such higher salaries as may be negotiated from time to time by
NumereX and Mr. McNew. Mr. McNew is also entitled to be reimbursed for business
travel and other expenses and is entitled to four weeks of annual vacation. The
Company is permitted to terminate this agreement 'for cause' (as defined
therein) in which case Mr. McNew would have no right to receive compensation or
other benefits for any period after such termination. In the event of
termination for 'good reason' (as defined therein), which includes a merger,
consolidation or reorganization, sale of all or substantially all the assets or
any similar event, a 'change of control' (as defined therein), inability to
promote the best interests of the Company following a change in the President of
the Company, or for termination without cause, Mr. McNew is entitled to receive
his base salary plus bonus for the most recently completed year of employment,
payment of which will be made at the time provided for in the agreement as
though employment had not been terminated. This payment would be in lieu of the
base annual salary and bonus compensation he would otherwise receive. In
addition, Mr. McNew is entitled to receive reimbursement for out-placement
related expenses incurred by him, not to exceed $25,000. Additionally, all
options heretofore granted to Mr. McNew under any of the Company's stock option
plans would be amended to become non-qualified stock options and such options
would be further amended so that they do not expire 90 days after Mr. McNew's
termination of employment. The agreement also requires certain payments by the
Company in the event of disability or partial disability. The agreement also
contains non-competition, non-disclosure and confidentiality provisions, certain
of which extend beyond the term of the agreement. In April 1999, in accordance
with the terms of his employment agreement, the Company and Mr. McNew mutually
agreed that Mr. McNew's employment with the Company will not be extended and
that he will be entitled to the benefits provided thereunder.
15
<PAGE>
The following table sets forth certain information concerning stock options
granted under the Employee Plan during the fiscal year ended October 31, 1998 to
the executive officers of the Company named in the Summary Compensation Table:
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZED
INDIVIDUAL GRANTS(1) VALUE
---------------------------------------------------------- AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK PRICE
SECURITIES TOTAL APPRECIATION FOR
UNDERLYING OPTIONS GRANTED OPTION TERM(2)
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
- --------------------------- ---------- --------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Charles L. McNew 50,000 15.6% $ 4.44 6/26/08 $139,615 $353,811
Kenneth F. Manser -- -- -- -- -- --
Gordon T. Ray 100,000(3) 31.1% $ 3.06 9/14/08 $192,630 $488,163
John J. Reis 75,000 23.3% $ 4.44 6/26/08 $209,422 $530,716
Frederick C. Shay -- -- -- -- -- --
</TABLE>
- ---------------------------
(1) Generally, options become exercisable at a cumulative annual rate of
33 1/3%, commencing one year from the date of grant, and expire ten years
from the date of grant. Notwithstanding the foregoing, options are fully
exercisable in the event of a change of control of the Company. Options
generally will terminate three months after the date employment with the
Company or a subsidiary terminates. During such three-month period, options
may be exercised only for the number of shares eligible to be exercised on
the date employment terminates.
(2) Shows the difference between the market value of the Common Stock for which
the option may be exercised, assuming that the market value of the Common
Stock appreciates in value from the date of grant to the end of the ten-year
option term at annualized rates of 5% and 10%, respectively, less the
exercise price of the option.
(3) Does not include options to purchase 4,000 shares of Common Stock under the
Directors Plan which were granted when Mr. Ray was eligible to participate
therein. See 'Compensation of the Chief Executive Officer.'
16
<PAGE>
The following table sets forth certain information concerning the number of
unexercised options and the value of unexercised options at the end of the
fiscal year ended October 31, 1998 held by the executive officers of the Company
named in the Summary Compensation Table. No options were exercised by such
executive officers in fiscal 1998.
AGGREGATED OPTION EXERCISES IN FISCAL 1998 AND OCTOBER 31, 1998 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT OCTOBER 31, 1998 OCTOBER 31, 1998(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles L. McNew 15,000 135,000 -- --
Kenneth F. Manser -- -- -- --
Gordon T. Ray -- 100,000 -- --
John J. Reis -- 275,000 -- --
Frederick C. Shay 24,000 76,000 -- --
</TABLE>
- ---------------------------
(1) Although the last sale price per share exceeded the option exercise price of
the Common Stock on October 31, 1998 on the Nasdaq National Market, pursuant
to the terms of 521,000 of the 586,000 options included hereunder, they may
not be exercised until the earlier of (i) the closing price of NumereX
Common Stock exceeds certain per share thresholds ranging between
$7.50-$15.00 for 60 consecutive days, or (ii) five years from February 27,
1997 or such later date of grant.
LIMITED PENSION AND DEATH BENEFITS PLAN
Mr. Manser, as a full-time employee of Versus Technology Limited,
participates in the Limited Pension and Death Benefits Plan (the 'Versus
Technology Plan') maintained for employees of Versus Technology Limited. Under
the Versus Technology Plan, a participant who retires at the normal retirement
age of 65 will be entitled to receive an annual pension equal to 1/60th of such
participants 'final pensionable earnings' for each complete year of pensionable
service (subject to a maximum of 40 years). Final pensionable earnings are the
average of a participants highest three consecutive annual earnings from Versus
Technology Limited in the last ten years before the normal retirement date,
except that if a participant retires or leaves the Versus Technology Limited
Plan more than ten years before the normal retirement date, a participant's
final pensionable earnings will be equal to such participants last annual
earnings from Versus Technology Limited. Participants are required to contribute
five percent of annual earnings toward the cost of their pension benefits.
Assuming that Mr. Manser retired at age 65 and that his final pensionable
earnings were equal to pounds 95,000 (his current base annual salary), Mr.
Manser would be entitled to receive an annual pension of approximately pounds
17,500.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company had in the past entered into various transactions and
arrangements with Dominion Group Limited, a Member Company of Dominion Holdings
or a corporation which previously carried on certain activities of such entity
(collectively, 'Dominion'). Dominion is an investment and merchant banking firm
which has in prior years provided financial advisory and investment banking
services to the Company. Dominion received fees of $234,000 for investment
banking related services for the fiscal year ended October 31, 1997, and no fees
for fiscal 1998. Gwynedd owns approximately 31.0% of the outstanding Common
Stock of the Company. The shareholders of Dominion are also shareholders of
Gwynedd. See 'Security Ownership of Management and Certain Beneficial Owners.'
Gwynedd has the
17
<PAGE>
right to designate one member of the Company's Board of Directors (two members
if the Board consists of more than seven directors) as long as Gwynedd owns at
least ten percent of the outstanding Common Stock. Mr. Ryan serves as Gwynedd's
designee. See 'Proposal One--Election of Directors-- Arrangements with Respect
to the Board of Directors.'
During fiscal 1995 the Company's subsidiary, DA Systems, manufactured
certain products for CellTel Data Services, Inc. ('CellTel'), a company in which
Dominion owns a controlling interest. Sales to CellTel approximated $368,500
during fiscal 1995. In October 1996, NumereX invested $375,000 in CellTel in
return for an initial 10% equity interest in CellTel. These funds were used by
CellTel to repay the account receivable relating to the 1995 product sales. In
1999, NumereX has the right to put its initial equity interest to Dominion and
Dominion can call this interest for $500,000. In addition, in 1999, if the
above-referenced call is not exercised by NumereX, it may acquire an additional
10% interest in CellTel for $1.00. The Company believes that the terms related
to the manufacture and sale of products to CellTel and its investment in CellTel
are no less favorable to the Company than those generally available from an
unaffiliated party.
18
<PAGE>
STOCK PERFORMANCE GRAPH
The following graph shows a comparison of the cumulative total return for
the Company's Common Stock, the Nasdaq Composite Index and the Nasdaq Industrial
Index, assuming an investment of $100 in each on March 3, 1994, the date that
the Company's Common Stock was first traded on the Nasdaq SmallCap Market, and,
in the case of the Indexes, the reinvestment of all dividends.
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
Date NumereX NASDAQ Composite Index NASDAQ Industrial Index
- ---- ------- ---------------------- -----------------------
3/4/94 100 100 100
4/30/94 242 93 92
7/31/94 223 91 88
10/31/94 274 98 95
1/31/95 332 96 90
4/30/95 293 107 98
7/31/95 159 127 115
10/31/95 111 131 113
1/31/96 99 133 117
4/30/96 113 140 135
7/31/96 77 151 119
10/31/96 77 156 130
1/31/97 84 162 140
4/30/97 82 152 120
7/31/97 131 183 152
10/31/97 133 213 153
1/31/98 115 205 146
4/30/98 106 236 168
7/31/98 91 237 152
10/31/98 58 224 134
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the Securities and Exchange
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 SEC regulation to furnish the
Company with copies of all Section 16(a) reports they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended October 31, 1998, all Section
16(a) filing requirements applicable to its executive officers, directors and
greater than 10% beneficial owners were met.
SHAREHOLDER PROPOSALS
Pursuant to the proxy rules under the Exchange Act, the Company's
shareholders are notified that the deadline for providing the Company with
timely notice of any shareholder proposal to be submitted outside of the Rule
14a-8 process for consideration at the Company's 1999 Annual Meeting of
19
<PAGE>
Stockholders (the '1999 Meeting') will be December 11, 1999. As to all such
matters which the Company does not have notice on or prior to December 11, 1999,
discretionary authority to vote on such proposal shall be granted to the persons
designated in the Company's proxy related to the 1999 Meeting. A shareholder
proposal regarding the 1999 Meeting must be submitted to the Company at its
principal executive offices which are located at 1600 Parkwood Circle SE, Suite
200, Atlanta, Georgia 30339, Attention: Investor Relations, by September 28,
1999 to receive consideration for inclusion in the Company's 1999 proxy
materials. Any such proposal must also comply with the proxy rules under the
Exchange Act, including Rule 14a-8.
ANNUAL REPORT
The Annual Report to Shareholders of the Company (the 'Annual Report') for
the fiscal year ended October 31, 1998 previously has been mailed to all
shareholders of record as of January 22, 1999. An Annual Report will be mailed
in conjunction with the mailing of this Proxy Statement to only those
shareholders of record on May 10, 1999 who were not shareholders of record as of
January 22, 1999. Copies of the Annual Report are available upon written request
to the Company at its principal executive offices which are located at 1600
Parkwood Circle SE, Suite 200, Atlanta, Georgia 30339, Attention: Investor
Relations.
EACH PERSON SOLICITED HEREUNDER CAN OBTAIN WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER 31, 1998
REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, EXCEPT FOR
EXHIBITS TO THE REPORT, BY SENDING A REQUEST THEREFOR TO: 1600 PARKWOOD CIRCLE
SE, SUITE 200, ATLANTA, GEORGIA 30339.
By Order of the Board of Directors
/s/ Andrew J. Ray
Andrew J. Ryan, Secretary
20
<PAGE>
NUMEREX CORP.
Proxy for Annual Meeting of Shareholders
June 11, 1999
Solicited on behalf of the Board of Directors
The undersigned hereby constitutes and appoints Matthew J. Flanigan and
Andrew J. Ryan, and each of them with full power to act alone, as
attorneys-in-fact and proxies of the undersigned, with full power of
substitution for and in the name, place and stead of the undersigned to appear
at the Annual Meeting of Shareholders of NumereX Corp. ("NumereX"), to be held
on the 11th day of June, 1999, and at any postponement or adjournment thereof,
and to vote all of the shares of Common Stock of NumereX which the undersigned
is entitled to vote, with all the powers and authority the undersigned would
possess if personally present. The undersigned directs that this proxy be voted
as indicated on the reverse side of this proxy. The proxy agents present and
acting in person or by their substitute (or, if only one is present and acting,
then that one) may exercise all the powers conferred by this proxy
(To be Completed and Signed on Reverse Side)
<PAGE>
Please mark your votes A as in this example.
Please mark your votes
A |X| as in this example.
FOR all nominees
listed (except WITHHOLD AUTHORITY
as marked to the to vote for all directors,
contrary below). check this box.
___ ____
1. The election of | | | | Nominees: George Benson
the nominees |___| |___| Matthew J. Flanigan
listed at right Kenneth F. Manser
as Directors Stratton J. Nicolaides
of the Company, as more fully described in the Gordon T. Ray
accompanying Proxy Statement. Andrew J. Ryan
To withhold authority to vote for any individual nominee or nominees, write the
name of the nominee or nominees on the space provided below.
______________________________
2. Proposal to ratify Grant Thornton LLP as the Company's independent
accountants for the fiscal year ending October 31, 1999
___ ___ ___
| | | | | |
|___| |___| |___|
For Against Abstain
3. In their discretion, to transact such other business as may properly come
before this meeting or any postponement or adjournment thereof.
This proxy, when properly executed, will be voted as directed. The Board of
Directors recommends a vote FOR all nominees listed in Item 1 and FOR the
proposal listed in Item 2. If no directions to the contrary are indicated, the
persons named herein intend to vote FOR the election of the named nominees for
director and FOR the ratification of Grant Thornton LLP as the Company's
independent accountants for the current fiscal year.
PLEASE DATE AND SIGN THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
The undersigned hereby acknowledges receipt of the Company's 1998 Annual report
to Shareholders (mailed under separate cover in January 1999), Notice of the
Company's 1999 Annual Meeting of Shareholders and the Proxy Statement relating
thereto.
NAME ____________________________ DATE ______________________________________
NAME ____________________________ DATE ______________________________________
Please sign here personally. Signature of the shareholder(s) should correspond
exactly with the name(s) in which the shares are registered. If the shares are
registered in more than one name, each joint owner or fiduciary should sign
personally. Only authorized officers should sign for a corporation.
