<PAGE> 1
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
VTEL CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
* Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
VTEL CORPORATION
108 WILD BASIN ROAD
AUSTIN, TX 78746
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 16, 1999
TO THE STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders of
VTEL Corporation (the "Company") to be held at the Company's offices in Austin,
Texas, at 2:00 p.m., on Thursday, December 16, 1999, for the following purposes:
1. To elect seven directors of the Company to hold office until the
next annual meeting of stockholders or until their respective successors
are duly elected and qualified.
2. To consider and act upon a proposal to approve an amendment to the
Company's Employee Stock Purchase Plan ("ESPP") to increase the number of
shares of the Company's Common Stock issuable under the ESPP upon the
exercise of stock options granted pursuant to the ESPP from 950,000 shares
to 1,450,000 shares.
3. To consider and act upon a proposal to approve an amendment of the
Company's 1992 Director Stock Option Plan (the "Director Plan") to increase
the number of shares of the Company's Common Stock issuable under the
Director Plan upon the exercise of stock options granted pursuant to the
Director Plan from 150,000 to 250,000 shares and to modify the formula
pursuant to which options are granted thereunder.
4. To ratify the Board of Directors' appointment of
PricewaterhouseCoopers LLP, independent accountants, as the Company's
independent auditors for the year ending July 31, 2000.
5. To transact such other business as may properly be brought before
the meeting or any adjournment(s) thereof.
Holders of record of the Company's Common Stock at the close of business on
November 5, 1999 will be entitled to notice of, and to vote at, the meeting or
any adjournment(s) thereof.
Stockholders who do not expect to attend the meeting are requested to sign
and return the enclosed proxy, for which a postage-paid, return envelope is
enclosed. The proxy must be signed and returned in order to be counted.
By Order of the Board of Directors,
RODNEY S. BOND
Secretary
Austin, Texas
November 12, 1999
<PAGE> 3
VTEL CORPORATION
108 WILD BASIN ROAD
AUSTIN, TEXAS 78746
PROXY STATEMENT
FOR
1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 16, 1999
SOLICITATION AND REVOCABILITY OF PROXIES
The enclosed form of proxy is solicited by the Board of Directors of VTEL
Corporation (the "Company") to be used at the 1999 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") to be held at the Company's
offices in Austin, Texas, at 2:00 p.m., on Thursday, December 16, 1999. This
Proxy Statement and the related proxy are to be first sent or given to the
stockholders of the Company on approximately November 12, 1999. Any stockholder
giving a proxy may revoke it at any time, provided written notice of such
revocation is received by the Secretary of the Company before such proxy is
voted; otherwise, if received in time, properly completed proxies will be voted
at the meeting in accordance with the instructions specified thereon.
Stockholders attending the meeting may revoke their proxies and vote in person.
Mere attendance at the Annual Meeting will not of itself revoke the proxy.
The Company's annual report for the year ended July 31, 1999, is being
mailed herewith to all stockholders entitled to vote at the Annual Meeting. The
annual report does not constitute a part of the proxy soliciting material.
VOTING SECURITIES OUTSTANDING; QUORUM
The record date for the determination of stockholders entitled to notice of
and vote at the Annual Meeting was the close of business November 5, 1999 (the
"Record Date"). At the close of business on November 5, 1999, there were
24,534,755 shares of Common Stock, $.01 par value (the "Common Stock"), issued
and outstanding, each entitled to one vote on all matters properly brought
before the Annual Meeting. There are no cumulative voting rights.
The presence in person or by proxy of the holders of a majority of the
issued and outstanding shares of Common Stock entitled to vote as of the Record
Date is necessary to constitute a quorum at the Annual Meeting. Abstentions and
broker non-votes are treated as present at the meeting and are therefore counted
to determine a quorum. If a quorum is not present, the stockholders entitled to
vote who are present in person or represented by proxy at the Annual Meeting
have the power to adjourn the meeting from time to time, without notice other
than an adjournment at the meeting, until a quorum is present or represented. At
any adjourned meeting at which a quorum is present, any business may be
transacted that might have been transacted at the Annual Meeting as originally
notified.
Directors are elected by a plurality of the votes of the shares present in
person or represented by proxy at the Annual Meeting and entitled to vote on the
election of directors. The affirmative vote of the holders of a majority of the
shares present in person or represented by proxy at the Annual Meeting and
entitled to vote thereon is required to approve the amendment to the Employee
Stock Purchase Plan ("ESPP"), the amendment to the 1992 Director Stock Option
Plan (the "Director Plan") and to ratify the appointment of independent
auditors.
Abstentions may be specified on all proposals except the election of
directors. Abstentions, with respect to any proposal other than the election of
directors, will have the same effect as a vote against such proposal. Broker
non-votes will have no effect on the outcome of the election of directors or the
other proposals. With regard to the election of directors, votes may be cast in
favor of or withheld from each nominee; votes that are withheld will be excluded
entirely from the vote and will have no effect.
<PAGE> 4
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Company has only one outstanding class of equity securities, its Common
Stock, par value $.01 per share.
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of October 13, 1999 by (i)
each person who is known by the Company to beneficially own more than 5% of the
Company's Common Stock, (ii) each of the Company's directors and nominees and
Named Executive Officers (as defined in "Executive Compensation" below) and
(iii) all directors and officers as a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)(2)
--------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- - ------------------------------------ --------- -------
<S> <C> <C>
Dimensional Fund Advisors
1299 Ocean Avenue
Santa Monica, CA 90401.................................... 1,711,040 7.0%
Intel Corporation
2200 Mission College Blvd
Santa Clara, CA 95052..................................... 1,672,846 6.8%
F.H. (Dick) Moeller......................................... 394,482(3) 1.6%
Stephen L. Von Rump......................................... 267,100(4) 1.1%
Eric L. Jones............................................... 68,687(5) *
Gordon H. Matthews.......................................... 24,427(6) *
Max D. Hopper............................................... 10,000(7) *
Richard N. Snyder........................................... 24,666(8) *
T. Gary Trimm............................................... 228,136(9) *
Kathleen A. Cote............................................ -- *
James H. Wells.............................................. 2,000(10) *
Jerry S. Benson, Jr. ....................................... 434,921(11) 1.8%
Ly-Huong T. Pham............................................ 131,385(12) *
Steven F. Keilen............................................ 81,384(13) *
Rodney S. Bond.............................................. 173,405(14) *
Michael J. Steigerwald...................................... 66,769(15) *
All directors and officers as a group (16 persons) (3), (4),
(5), (6), (7), (8), (9), (10), (11), (12), (13), (14),
(15), (16)................................................ 2,196,523 8.4%
</TABLE>
- - ---------------
* Indicates ownership of less than 1% of the Company's Common Stock
(1) Beneficial ownership as reported in the above table has been determined in
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The persons and entities named in the table
have sole voting and investment power with respect to all shares shown as
beneficially owned by them, except as noted below. Amounts shown include
shares of Common Stock issuable upon exercise of certain outstanding
options within 60 days after October 13, 1999.
(2) Except for the percentages of certain parties that are based on presently
exercisable options which are indicated in the following footnotes to the
table, the percentages indicated are based on 24,457,573 shares of Common
Stock issued and outstanding on October 13, 1999. In the case of parties
holding presently exercisable options, the percentage ownership is
calculated on the assumption that the shares presently held or purchasable
within the next 60 days underlying such options are outstanding.
(3) Consists of 89,109 shares held by Mr. Moeller directly (100 of which are
subject to restriction) and 305,373 shares (61,628 of which are subject to
repurchase at December 12, 1999 by VTEL at the
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<PAGE> 5
optionee's exercise prices pursuant to the option agreements) which Mr.
Moeller may acquire upon the exercise of options within 60 days after
October 13, 1999.
(4) Consists of 17,100 shares held by Mr. Von Rump directly (100 of which are
subject to restriction) and 250,000 shares (202,501 of which are subject to
repurchase at December 12, 1999 by VTEL at the optionee's exercise prices
pursuant to the option agreements) which Mr. Von Rump may acquire upon the
exercise of options within 60 days after October 13, 1999.
(5) Consists of 55,687 shares held by Mr. Jones directly and 13,000 shares
which Mr. Jones may acquire upon the exercise of options within 60 days
after October 13, 1999.
(6) Consists of 11,594 shares held by Mr. Matthews directly and 12,833 shares
which Mr. Matthews may acquire upon the exercise of options within 60 days
after October 13, 1999.
(7) Consists of 10,000 shares which Mr. Hopper may acquire upon the exercise of
options within 60 days after October 13, 1999.
(8) Consists of 17,000 shares held by Mr. Snyder directly and 7,666 shares
which Mr. Snyder may acquire upon the exercise of options within 60 days
after October 13, 1999.
(9) Consists of 12,307 shares held by Mr. Trimm directly and 215,829 shares
which Mr. Trimm may acquire upon the exercise of options within 60 days
after October 13, 1999.
(10) Consists of 2,000 shares held by Mr. Wells directly.
(11) Consists of 84,921 shares held by Mr. Benson directly (100 of which are
subject to restriction) and 350,000 shares (184,022 of which are subject to
repurchase at December 12, 1999 by VTEL at the optionee's exercise prices
pursuant to the option agreements) which Mr. Benson may acquire upon the
exercise of options within 60 days after October 13, 1999. Effective July
1999, Mr. Benson resigned from the position of President and Chief
Executive Officer of the Company (see Summary Compensation Table).
(12) Consists of 21,385 shares held by Ms. Pham directly (10,100 of which are
subject to restriction) and 110,000 shares (58,194 of which are subject to
repurchase at December 12, 1999 by VTEL at the optionee's exercise prices
pursuant to the option agreements) which Ms. Pham may acquire upon the
exercise of options within 60 days after October 13, 1999.
(13) Consists of 11,384 shares held by Mr. Keilen directly (100 of which are
subject to restriction ) and 70,000 shares (46,667 of which are subject to
repurchase at December 12, 1999 by VTEL at the optionee's exercise prices
pursuant to the option agreements) which Mr. Keilen may acquire upon the
exercise of options within 60 days after October 13, 1999.
(14) Consists of 35,072 shares held by Mr. Bond directly (100 of which are
subject to restriction) and 138,333 shares (50,013 of which are subject to
repurchase at December 12, 1999 by VTEL at the optionee's exercise prices
pursuant to the option agreements) which Mr. Bond may acquire upon the
exercise of options within 60 days after October 13, 1999.
(15) Consists of 13,928 shares held by Mr. Steigerwald directly (100 of which
are subject to restriction) and 52,841 shares (33,712 of which are subject
to repurchase at December 12, 1999 by VTEL at the optionee's exercise
prices pursuant to the option agreements) which Mr. Steigerwald may acquire
upon the exercise of options within 60 days after October 13, 1999.
(16) Includes an aggregate of 38,788 shares held directly (400 of which are
subject to restriction) by Dennis Egan, Vinay Goel, Dianne Johnson and Bob
Swem, collectively, and 250,373 shares (100,260 of which are subject to
repurchase at December 12, 1999 by VTEL at the optionees' exercise prices
pursuant to the option agreements) which such persons, collectively, may
acquire upon the exercise of options within 60 days after October 13, 1999.
All options held by the Chief Executive Officer and the Named Executive
Officers were granted under the VTEL Corporation 1989 Stock Option Plan
(the "1989 Plan") or the VTEL Corporation 1996 Stock Option Plan (the "1996
Plan") (collectively, the "Company's Stock Option Plans"). Pursuant to the
Company's Stock Option Plans, all options granted thereunder are
immediately exercisable, however, shares issued upon exercise are subject
to repurchase by VTEL, at the exercise price, to the extent of the number
of shares that have not vested in the event
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<PAGE> 6
that the optionees' employment terminates prior to all such optionees'
options becoming vested. All restricted shares held by the Chief Executive
Officer and the Named Executive Officers were issued pursuant to the VTEL
Corporation 1998 Restricted Stock Plan (the "1998 Plan").
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who beneficially own more than 10% of the Company's
Common Stock ("10% Stockholders"), to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Based solely
upon information provided to the Company by individual officers, directors and
10% Stockholders, the Company believes that all of these filing requirements
were satisfied by the Company's officers, directors and 10% Stockholders.
ELECTION OF DIRECTORS
(ITEM 1)
The Board of Directors has nominated for directors the seven individuals
named below to be elected at the Annual Meeting to hold office until the next
annual meeting of stockholders, or until their respective successors shall have
been duly elected and shall have qualified. All of the nominees are currently
directors of the Company, with the exception of Kathleen A. Cote and James H.
Wells. Proxies cannot be voted for a greater number of persons than the number
of nominees named on the enclosed form of proxy. A plurality of the votes cast
in person or by proxy by the holders of Common Stock is required to elect a
director.
<TABLE>
<CAPTION>
PRESENT
OFFICE(S) HELD DIRECTOR
NOMINEE AGE IN THE COMPANY SINCE
- - ------- --- -------------- --------
<S> <C> <C> <C>
F. H. (Dick) Moeller.................................... 54 Chairman of the Board 1989
Stephen L. Von Rump..................................... 41 President 1999
Gordon H. Matthews...................................... 63 None 1994
T. Gary Trimm........................................... 52 None 1997
Richard N. Snyder....................................... 55 None 1997
Kathleen A. Cote........................................ 50 None N/A
James H. Wells.......................................... 52 None N/A
</TABLE>
The following information regarding the principal occupations and other
employment of the nominees during the past five years and their directorships in
certain companies is as reported by the respective nominees:
F.H. (DICK) MOELLER, age 54, joined the Company as Chief Executive Officer,
President and director in October 1989 and became the Chairman of the Board in
March 1992. In September 1998, Mr. Moeller resigned from the position of
President and Chief Executive Officer, but continues to serve as Chairman of the
Board. In October 1998, Mr. Moeller was named General Partner of SSM Venture
Partners, a venture capital investment firm. From May 1982 to October 1989, Mr.
Moeller served as the founder and President of ProfitMaster Computer Systems,
Inc., a computer software firm specializing in real-time financial management
systems for retail point-of-sale applications. Prior to founding such firm, Mr.
Moeller spent 12 years with Texas Instruments Incorporated during which he held
a variety of management positions, most recently serving as Advanced Systems
Manager of its Computer Systems Division.
STEPHEN L. VON RUMP, age 41, joined the Company as Chief Marketing Officer
in October 1998 and became President and director in July 1999. From January
1985 until October 1998, Mr. Von Rump held various management positions at MCI
Corporation. Most recently, from May 1995 until October 1998, Mr. Von Rump
served as Vice President of Enterprise Services, responsible for MCI's highly
successful data and Internet services. From December 1981 until January 1985,
Mr. Von Rump was a member of the Technical Staff at AT&T Bell Laboratories. He
also serves as a director of Digital Link Corporation, based in Sunnyvale,
California.
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<PAGE> 7
GORDON H. MATTHEWS, age 63, has served as a director of the Company since
October 1994. Since May of 1996, Mr. Matthews has been the Chairman of Matthews
Communications Management, Inc., a provider of telephone control systems for
residences and small businesses. From May of 1996 to June of 1998 he was also
its Chief Executive Officer. Since May of 1992, Mr. Matthews has served as
Chairman and President of Matthews Communication Systems, Inc., a consulting
firm providing assistance to corporations on intellectual property processes.
Mr. Matthews' pre-1992 experience includes founding and managing a number of
companies in the electronics industry. Mr. Matthews is a named inventor in over
40 patents, including the U.S. Patent #4,371,752 for voice mail. Mr. Matthews is
the acknowledged inventor of voicemail.
T. GARY TRIMM, age 52, has served as a director of the Company since May
1997. Previously he was President, Chief Executive Officer and a member of the
Board of Directors of Compression Labs, Incorporated ("CLI") from February 1996
to May 1997 and CLI's Principal Financial Officer from April 1996 to May 1997.
From February 1994 to February 1995, he was President of the North American
Division of Scientific-Atlanta, Inc. ("S-A"), which supplies advanced analog and
digital video systems to the cable and telephone industry. From January 1990 to
March 1994, he held the position of President of the Subscriber Systems Division
at S-A, where he had general management responsibility for S-A's analog and
digital settop.
RICHARD N. SNYDER, age 55, has served as a director of the Company since
December 1997. Since September 1997, Mr. Snyder has served as founder and Chief
Executive Officer of Corum Cove Consulting, LLC, a consulting firm specializing
in providing strategic guidance to high technology businesses. From 1996 until
1997, Mr. Snyder was the Senior Vice President of World Wide Sales, Marketing,
Service and Support of Compaq Computer Corp., a worldwide computer company. From
1995 until 1996, Mr. Snyder was the Senior Vice President and General Manager of
Dell Americas, a computer manufacturer and marketer, and from 1993 until 1995,
Mr. Snyder was the Group General Manager, DeskJet Printer Group for Hewlett
Packard Company ("Hewlett"), a designer, manufacturer and servicer of electronic
products and systems. Prior to 1993, Mr. Snyder served as General Manager of the
Vancouver Division of Hewlett.
KATHLEEN A. COTE, age 50, is standing for election as a director of the
Company for the first time. In January of 1998, Ms. Cote founded Seagrass
Partners, a consulting firm specializing in providing business, operational and
technical support for internet start-up companies. She currently serves as its
President. From November 1996 to January 1998, Ms. Cote served as Chief
Executive Officer of ComputerVision Corporation, a hardware, software and
consulting business. From November 1986 to November 1996, she held various
senior management positions with ComputerVision Corporation. In January 1998,
ComputerVision Corporation was acquired by Parametric Technology Corporation.
Ms. Cote is also a director of MediaOne Group, Inc.
JAMES H. WELLS, age 52, is standing for election as a director of the
Company for the first time. Since January 1999, Mr. Wells has been the Senior
Vice President of Marketing and Business Development of Dazel, a recently
acquired Hewlett Packard enterprise software company. From April 1995 to March
1998, Mr. Wells served as Vice President of Sales and was a founding officer in
the internet streaming company, RealNetworks, Inc. He was the group manager of
Apple Computer's enterprise marketing from January 1990 to January 1994. Prior
to 1994, Mr. Wells held senior management positions in several high technology
companies and start-ups.
None of the nominees is related to any other nominee or to any executive
officer or director of the Company by blood, marriage or adoption (except
relationships, if any, more remote than first cousin).
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" EACH OF THE SEVEN NOMINEES.
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<PAGE> 8
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held four regularly scheduled meetings and one
special meeting during the fiscal year ended July 31, 1999. In addition, the
Board of Directors acted six times by unanimous consent during the fiscal year
ended July 31, 1999.
The Board of Directors uses working committees with functional
responsibility in the more complex recurring areas where disinterested oversight
is required. Working committees of the Board of Directors include the Audit
Committee, the Compensation Committee, the Nominating Committee and the
Executive Committee.
The Audit Committee is the communication link between the Board of
Directors and the Company's independent auditors. In addition to recommending
the appointment of the independent auditors to the Board of Directors, the Audit
Committee reviews the scope of the audit, the accounting policies and reporting
practices, internal auditing and internal control, compliance with the Company's
policies regarding business conduct and other matters as deemed appropriate. The
Audit Committee held three meetings in fiscal 1999 with the independent auditors
and management. The Audit Committee currently is composed of Messrs. Hopper
(Chairman) and Snyder.
The Compensation Committee is responsible for approving the compensation
arrangements of senior management and recommending approval by the Board of
Directors of amendments to the Company's benefit plans. At three regularly
scheduled meetings during the fiscal year ended July 31, 1999, the Compensation
Committee approved stock option awards pursuant to the Company's Plans. In
addition, the Compensation Committee acted ten times by unanimous consent during
the fiscal year ended July 31, 1999. The Compensation Committee currently is
composed of Messrs. Jones (Chairman), Matthews and Trimm.
The Nominating Committee is responsible for continuing studies of the size
and composition of the Board of Directors and for proposing nominees to the
Board. At one meeting during the fiscal year ended July 31, 1999, the Nominating
Committee reviewed information regarding proposed nominees to the Board of
Directors. The Nominating Committee will consider nominees properly recommended
by security holders. In order to make a nomination, the Company's Bylaws
generally require that advance notice of such nomination be provided to the
Company at least 60 days and not more than 90 days prior to the first
anniversary of the preceding year's annual stockholders' meeting, together with
additional information regarding the nominee and the stockholder making such
nominations as called for by the Company's Bylaws. The Nominating Committee
currently is composed of Messrs. Moeller (Chairman), Hopper, Jones and Von Rump.
During the fiscal year ended July 31, 1999, with the exception of two
directors who missed one regular meeting each, all directors attended 100% of
the total number of meetings of the Board and the committees on which that
director served.
DIRECTOR COMPENSATION
During fiscal 1999, each nonemployee director was paid a retainer of $1,500
for the first quarter and $3,000 for each of the second, third and fourth
quarters. Additionally, each nonemployee director was paid $1,000 for the
regularly scheduled and special meetings of the Board of Directors of the
Company attended by such director and $250 for participation in each telephonic
meeting not considered an official Board of Directors meeting. Accordingly,
total director fees earned in fiscal 1999 were $88,000.
All nonemployee directors participate in the Company's 1992 Director Plan.
Nonemployee directors elected prior to October 14, 1994 received stock options
to purchase 6,000 shares of the Company's Common Stock, having an exercise price
equal to the market price of the Company's Common Stock on the date of such
grant. Nonemployee directors elected on or after October 14, 1994 receive stock
options to purchase 12,000 shares of the Company's Common Stock on the same
terms. In addition, nonemployee directors will receive options to purchase 6,000
shares of the Company's Common Stock, such options vesting over a three-year
period, at the time that such eligible director's prior options granted under
the 1992 Director Plan become fully exercisable and vested. All such options
shall vest in equal amounts monthly over a three-year period but shall cease
vesting at the time such director ceases to be a director of the Company. An
amendment to the
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<PAGE> 9
1992 Director Plan will be voted upon at the Annual Meeting which will, among
other things, increase the number of options granted pursuant to the formula
specified in the Director Plan. See "Proposal to Amend the VTEL Corporation 1992
Director Stock Option Plan."
The compensation of employee directors of the Company is discussed at
"Executive Compensation" below.
REPORT FROM THE COMPENSATION COMMITTEE REGARDING EXECUTIVE COMPENSATION
As members of the Compensation Committee, it is our duty to administer the
executive compensation program for the Company. The Compensation Committee is
responsible for establishing appropriate compensation goals for the executive
officers of the Company and evaluating the performance of such executive
officers in meeting such goals. The elements of the executive compensation
program described below are implemented and periodically reviewed and adjusted
by the Compensation Committee.
The goals of the Compensation Committee in establishing the Company's
executive compensation program are as follows:
(1) To fairly compensate the executive officers of the Company for
their contributions to the Company's short-term and long-term performance.
The elements of the Company's executive compensation program are (a) annual
base salaries, (b) quarterly performance bonuses, (c) long-term incentives
and (d) equity incentives.
(2) To allow the Company to attract, motivate and retain the
management personnel necessary to the Company's success by providing an
executive compensation program comparable to that offered by companies with
which the Company competes for such management personnel.
(3) To provide an executive compensation program with incentives
linked to the financial performance of the Company, and thereby enhance
stockholder value. Under such a program, incentive compensation for
executive officers is linked to the financial performance of the Company as
measured by earnings per share and revenue.
Base Salaries. The annual base salaries of the Chief Executive Officer and
the other executive officers of the Company are determined based on individual
performance, experience and a comparison with salary ranges and midpoints
reflecting similar positions, duties and levels of responsibility at the
Company's Peer Group and other companies in similar industries and with
comparable revenues. The Company's Peer Group is identified under the heading
"Comparative Total Returns" below and the comparisons to companies in similar
industries with comparable revenues are based on reports published by Radford
Associates, a provider of national compensation surveys.
Quarterly Bonus. The quarterly bonuses available to the executive officers
of the Company are based upon the achievement of certain earnings per share and
revenue goals for the Company set by the Compensation Committee prior to the
beginning of such measurement period.
The Company did not achieve its first, second and third quarterly targets
during fiscal 1999. Thus, no bonuses related to those quarters were paid to the
executive officers. The Company did achieve 85% of its fourth quarter targets
during fiscal 1999. Thus, the fourth quarter bonuses were paid to the executive
officers. An additional bonus was paid to each executive officer at the end of
fiscal 1999 in recognition of certain individual achievements during fiscal
1999. In addition, one officer was paid a bonus during fiscal 1999 for
performance related to the Company's product development program.
Long-Term Value Creation Incentives. Upon completion of the merger between
the Company and CLI in 1997 (the "Merger"), the Board of Directors established a
Long-Term Value Creation Incentive Plan ("VCIP") to focus on the synergies and
opportunities created by the Merger. The VCIP allows selected individual
employees to share directly in any incremental earnings resulting from the
Merger. Accordingly, VCIP performance minimum thresholds were established based
on the performance that the two companies could have achieved independently. The
VCIP bonus pool is based on earnings performance above the
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<PAGE> 10
minimum earnings per share threshold. Any incremental performance above the
threshold results in the allocation of a portion of the earnings to the VCIP
pool. Awards to the individuals are based on the performance achieved during the
two-year period occurring following the completion of the Merger. Each employee
participating in the VCIP program is granted shares of the VCIP pool based upon
the pre-determined percentage of the VCIP pool allocated to each individual. The
individual percentage of the total pool remains constant as incrementally higher
performances are obtained. The number of shares granted to each participant is
based on management's and the Board's judgment of the individual's potential
ability to influence the success of the Merger and the profitability of the
combined Company.
The Company did not meet the VCIP performance minimum threshold during
fiscal 1998 or 1999. Thus there was no funding of the VCIP pool for the fiscal
years 1998 or 1999.
Equity Incentives. Equity incentives other than those described above,
including grants of stock options and restricted stock, are determined based on
the Compensation Committee's assessment of the ability of such officers to
positively impact the Company's future performance and enhance stockholder value
as determined by their individual performances. Stock option grants and other
equity incentives are not awarded annually, but rather as warranted by
individual performance and experience. Option awards generally vest over a 48-
month period. The amount and vesting of stock options generally are not
contingent on achievement of any performance targets.
In fiscal 1999, options covering a total of 622,993 shares of Common Stock
at a weighted average exercise price of $3.152 were granted to executives. Of
these options, 147,935 were granted based upon the objectives and goals achieved
by the Company and/or Optionee in fiscal 1998, with 160,000 being granted to one
new executive upon joining the Company. See "Executive Compensation -- Stock
Option Grants During Fiscal 1999."
In addition to the above grants, the Compensation Committee granted 11,300
shares of restricted stock to executives during fiscal 1999. 1,300 of these
shares were granted under a program pursuant to which all employees of the
Company received 100 shares of restricted stock. The additional 10,000 shares of
restricted stock was granted to an executive in recognition of individual
achievement.
Equity and cash incentives are not limited to executive officers. Grants of
stock options are made to all employees upon joining the Company in amounts
determined by the Compensation Committee and are also made to selected employees
as performance related awards and as awards for certain job promotions. The
amounts of such grants are determined based on the individual employee's
position with the Company and his or her potential ability to beneficially
impact the performance of the Company. By giving all employees a stake in the
financial performance of the Company, the Compensation Committee's goal is to
provide incentives to all employees of the Company to enhance the financial
performance of the Company and, thus, stockholder value.
Omnibus Budget Reconciliation Act of 1993. The Omnibus Budget
Reconciliation Act of 1993 added Section 162(m) to the Internal Revenue Code
("Section 162(m)"). With certain exceptions, beginning with the taxable year
commencing January 1, 1994, Section 162(m) will prevent publicly held
corporations, including the Company, from taking a tax deduction for
compensation in excess of $1 million paid to the Chief Executive Officer and the
four other persons named in the Summary Compensation Table in the Proxy
Statement. Section 162(m) will not apply to limit the deductibility of
performance-based compensation exceeding $1 million if paid (i) solely upon
attainment of one or more performance goals, (ii) pursuant to a
performance-based compensation plan adopted by the Compensation Committee, and
(iii) the terms of the plan are approved by the stockholders before payment of
the compensation.
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<PAGE> 11
The Compensation Committee has reviewed the Company's compensation plans
with regard to the deduction limitation contained in Section 162(m). The
Compensation Committee believes that option grants under the Company's stock
option plans meet the requirements for deductible compensation. The Compensation
Committee has decided for the present not to alter the Company's other
compensation plans to meet the deductibility requirements of the regulations
promulgated under the Internal Revenue Code. The Compensation Committee will
continue to review the issue and its determination under the regulations under
Section 162(m) and monitor whether the Company's compensation plans should be
amended in the future to meet the deductibility requirements. The Compensation
Committee does not anticipate that Section 162(m) will limit the deductibility
of any compensation paid in fiscal year 2000. No executive officers of the
Company were affected by such provision in fiscal year 1999.
COMPENSATION COMMITTEE
Eric L. Jones
Gordon H. Matthews
T. Gary Trimm
9
<PAGE> 12
EXECUTIVE COMPENSATION
The following table summarizes certain information regarding compensation
paid or accrued during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and each of the Company's four other most
highly compensated executive officers (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS(1)
----------------------- -------------------------
OTHER RESTRICTED SECURITIES
PERIOD BONUS AND ANNUAL STOCK UNDERLYING ALL OTHER
ENDED COMMISSIONS COMPENSATION AWARDS OPTIONS/SARS COMPENSATION
NAME AND PRINCIPAL POSITION JULY 31 SALARY($) ($) ($)(2) ($) (#) ($)(3)
- - --------------------------- ------- --------- ----------- ------------ ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
F.H. (Dick) Moeller........ 1999 $189,075 $20,343 $ -0- $ 287(5) 29,504 $3,843
Chairman and Former Chief 1998 $260,833 $ -0- $ -0- N/A -0- $3,531
Executive Officer(4) 1997 $216,666 $77,250 $ -0- N/A 130,302(1) $3,881
Stephen L. Von Rump(4)..... 1999 $175,360 $82,562(6) $ 53,800(7) $ 287(5) 250,000 $1,032
President 1998 N/A N/A N/A N/A N/A N/A
1997 N/A N/A N/A N/A N/A N/A
Jerry S. Benson, Jr. ...... 1999 $295,000 $ -0- $ -0- $ 287(5) 130,540 $1,390
Former Chief Executive 1998 $270,000 $ -0- $ 35,628(8) N/A -0- $1,007
Officer(4) 1997 $ 51,136 $28,125 $100,283(8) N/A 250,000 $ 72
Ly-Huong T. Pham........... 1999 $192,500 $83,779 $ -0- $30,287(5)(9) 35,000 $1,156
Chief Technology Officer 1998 $141,250 $83,388 $ -0- N/A 75,000 $ 706
and Vice President, 1997 N/A N/A N/A N/A N/A N/A
Engineering
Steven F. Keilen........... 1999 $183,125 $25,125 $106,300(8) $ 287(5) -0- $1,025
Chief Marketing Officer 1998 N/A $50,000(6) N/A N/A 70,000 N/A
and Vice President, Sales 1997 N/A N/A N/A N/A N/A N/A
and Marketing
Rodney S. Bond............. 1999 $180,833 $25,656 $ -0- $ 287(5) 30,967 $2,749
Chief Financial Officer, 1998 $157,833 -0- $ -0- N/A 50,000 $1,315
Secretary and Vice 1997 $150,000 $69,500 $ -0- N/A 28,699(1) $ 357
President, Finance
Michael J. Steigerwald..... 1999 $169,999 $24,062 $ -0- $ 287(5) 2,841 $ 960
Vice President, Global 1998 $ 25,113 $ -0- $ -0- N/A 50,000 $ 107
Services 1997 N/A N/A $ -0- N/A N/A N/A
</TABLE>
- - ---------------
(1) Effective as of May 27, 1997, the Compensation Committee approved an
exchange program pursuant to which all current employees holding options
under a VTEL or CLI employee stock option plan and current directors holding
options under the Company's 1992 Director Plan were permitted an opportunity
to exchange their options outstanding under the Company's stock option plans
for new options having an exercise price of $6.125, the fair market value of
the Common Stock on May 27, 1997. The new options issued to employees
pursuant to this program vest ratably over a 48-month period commencing on
May 27, 1997. The new options issued to directors pursuant to this program
vest ratably over a 36-month period commencing on May 27, 1997.
Subsequently, 40% of the eligible options, representing options covering
1,257,338 shares of Common Stock were reissued pursuant to this exchange
program. Of the option awards shown in the above table, 125,000 options
granted to Mr. Moeller and 25,000 options granted to Mr. Bond in 1997 were
the result of a repricing of options previously granted.
(2) Includes perquisites and other personal benefits if value is greater than
the lesser of $50,000 or 10% of reported salary and bonus.
(3) Represents the dollar value of any insurance premiums paid by the Company
during the covered fiscal year with respect to term life insurance and long
term disability insurance for the benefit of the Chief Executive Officer or
Named Executive Officer.
(4) In September 1998, Mr. Moeller resigned from the position of Chief Executive
Officer but continues to serve as Chairman of the Board of Directors. Mr.
Benson was named Chief Executive Officer in
10
<PAGE> 13
September 1998. In July 1999, Mr. Benson resigned from the position of
President and Chief Executive Officer. Under his separation agreement (the
"Separation Agreement") he will remain employed with the Company in a
non-executive capacity until January 31, 2001. Pursuant to the separation
agreement the Company will pay Mr. Benson a one-time payment of $21,000. The
Company also has agreed to accelerate the vesting of some of Mr. Benson's
options and has agreed to allow him to exercise his options until June 30,
2001, subject to the terms of the Option Agreements and the Separation
Agreement. Effective July 1999, Mr. Von Rump was named President of the
Company.
(5) Consists of 100 shares of restricted stock issued to the executive. The
restriction on the shares will lapse upon completion of one year of
employment with the Company from the date of grant.
(6) Consists of $50,000 paid to Mr. Keilen and Mr. Von Rump upon their initial
acceptance of employment with the Company and $25,125 and $32,562
respectively for the fourth quarter executive bonuses.
(7) Consists of temporary living expenses allowance paid to Mr. Von Rump.
(8) Consists of relocation expenses paid by the Company.
(9) Consists of 10,000 shares of restricted stock issued to Ms. Pham. The
restriction on the shares will lapse upon four years of employment with the
Company from the date of grant.
STOCK OPTION GRANTS DURING FISCAL 1999
The following table sets forth information with respect to grants of stock
options to purchase Common Stock pursuant to the Company's Plans to the Chief
Executive Officer and the Named Executive Officers reflected in the Summary
Compensation Table above. No stock appreciation rights (SARs) were granted
during fiscal 1999 and none were outstanding as of July 31, 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE OF ASSUMED ANNUAL
SECURITIES OPTIONS/SARS EXERCISE RATES OF STOCK PRICE
UNDERLYING GRANTED TO OR BASE APPRECIATION FOR OPTION TERM(1)
OPTIONS/SARS EMPLOYEES PRICE EXPIRATION ----------------------------------
NAME GRANTED (#) IN FISCAL YEAR ($/SH) DATE 0% ($) 5% ($) 10% ($)
- - ---- ------------ -------------- -------- ---------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
F.H. (Dick) Moeller......... 29,504 1.62 2.063 09/09/08 60,837 137,376 254,802
Steven L. Von Rump.......... 160,000 8.80 2.938 11/20/08 -0- 295,630 749,186
90,000 4.95 5.188 07/12/09 -0- 293,570 744,034
Jerry S. Benson, Jr. ....... 30,540 1.68 2.063 09/09/08 62,973 142,200 263,749
100,000 5.50 3.000 11/19/08 -0- 188,668 478,123
Ly-Huong T. Pham............ 15,977 0.88 2.063 09/09/08 32,945 74,392 137,980
19,023 1.05 3.000 11/19/08 -0- 35,890 90,953
Steven F. Keilen............ -0- N/A N/A N/A N/A N/A N/A
Rodney S. Bond.............. 17,853 0.98 2.063 09/09/08 36,813 83,127 154,182
13,114 0.72 3.000 11/19/08 -0- 24,742 62,701
Michael J. Steigerwald...... 2,841 0.16 2.063 09/09/08 5,858 13,228 24,535
All employee options........ 1,817,690 100.00 3.40(2) N/A 383,020 3,886,661 9,849,561
All stockholders(3)......... N/A N/A N/A N/A N/A 52,221,857 132,340,438
Optionee gains as % of all
stockholder gains......... N/A N/A N/A N/A N/A 7.44% 7.44%
</TABLE>
- - ---------------
(1) The dollar amounts under these columns represent the potential realizable
value of each grant of options assuming that the market price of the
Company's Common Stock appreciates in value from the date of grant at the 5%
and 10% annual rates compounded over the ten year term of the option as
prescribed by the SEC and therefore are not intended to forecast possible
future appreciation, if any, of the price of the Company's Common Stock.
(2) Weighted average grant price of all stock options granted to employees in
fiscal 1999.
(3) Appreciation for all stockholders is calculated using the average exercise
price for all employee optionees ($3.40) granted during fiscal 1999 and
using the number of shares of the Company's Common Stock outstanding on July
31, 1999 (24,422,803).
11
<PAGE> 14
AGGREGATED STOCK OPTION/SAR EXERCISES DURING FISCAL 1999 AND STOCK OPTION/SAR
VALUES AS OF JULY 31, 1999
The following table sets forth information with respect to the Chief
Executive Officer and the Named Executive Officers concerning the exercise of
options during fiscal 1999 and unexercised options held as of July 31, 1999:
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR END (#) FISCAL YEAR END ($)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
F.H. (Dick) Moeller........ -0- -0- 218,576 86,797 327,651 68,685
Stephen L. Von Rump........ -0- -0- 26,666 223,334 38,746 193,734
Jerry S. Benson, Jr. ...... 30,540 29,593 152,082 197,918 23,182 115,918
Ly-Huong T. Pham........... -0- -0- 34,420 75,580 4,409 59,246
Steven F. Keilen........... -0- -0- 17,500 52,500 -0- -0-
Rodney S. Bond............. -0- -0- 71,008 67,325 6,350 56,764
Michael J. Steigerwald..... -0- -0- 13,541 39,300 -0- 6,614
</TABLE>
- - ---------------
(1) All options held by the Chief Executive Officer and the Named Executive
Officers were granted under the 1989 Plan or the 1996 Plan. Pursuant to each
of the 1989 Plan and the 1996 Plan, all options granted thereunder are
immediately exercisable, however shares issued upon exercise are subject to
repurchase by the Company, at the exercise price, to the extent of the
number of shares that have not vested in the event that the optionee's
employment terminates prior to all such optionee's option shares becoming
vested. The amounts under the headings entitled "Exercisable" reflect vested
options as of July 31, 1999 and the amounts under the headings entitled
"Unexercisable" reflect option shares that have not vested as of July 31,
1999.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation Committee is or has been an officer or
employee of the Company or any of its subsidiaries or had any relationship
requiring disclosure pursuant to Item 404 of SEC Regulation S-K. No member of
the Compensation Committee served on the compensation committee, or as a
director, of another corporation, one of whose directors or executive officers
served on the Compensation Committee of or whose executive officers served on
the Company's Board of Directors.
CERTAIN TRANSACTIONS
As of July 31, 1999, under the Company's Officer and Director Stock Loan
Program, the aggregate principal amount of stock loans outstanding was $902,387.
Of this balance, the Named Executive Officers had stock loans outstanding in the
aggregate principal amount of $556,160. Two participants, Messrs. Moeller and
Benson, had stock loans outstanding under this program in the aggregate
principal amounts of $174,033 and $172,192, respectively.
See footnote 4 to the Executive Compensation table for a description of the
Separation Agreement entered into between Mr. Benson and the Company.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS
The Company has not entered into any employment agreements with members of
its senior management. However, the Company has entered into change-in-control
agreements (the "Parachute Agreements") with members of its senior management,
which provide that if the officer is terminated (i) by the Company other than
for cause, the officer's death, retirement or disability or (ii) by the officer
for "good reason," within a
12
<PAGE> 15
specified amount of time after a "change in control" of the Company (as those
terms are defined in the Parachute Agreements), the Company will pay to the
officer an amount (depending on the position of the officer) ranging from 1.5 to
2.99 times his or her current year's salary and will accelerate the vesting
schedule of a portion of his or her unvested stock options, based on how long
the officer has been employed with the Company. The Parachute Agreements also
provide that the Company will pay the officer all legal fees and expenses
incurred as a result of the termination and make available certain insurance
benefits at the officer's expense for the one year period following the
officer's termination.
13
<PAGE> 16
COMPARATIVE TOTAL RETURNS
PERFORMANCE GRAPH
The following Performance Graph shows the changes over the past five year
period in the value of $100 invested in: (1) the Company's Common Stock, (2) the
CRSP Total Return Index for NASDAQ Stock Market (U.S. Companies) (the "NASDAQ
Composite Index"), and (3) the Common Stock of the Peer Group (as defined below)
of companies whose returns are weighted according to their respective market
capitalization. The values with each investment as of the beginning of each year
are based on share price appreciation and the reinvestment with dividends on the
respective ex-dividend dates. The Peer Group for periods preceding the Company's
fiscal year ended July 31, 1997 consists of the following companies whose
business, taken as a whole, resembles the Company's activities: PictureTel
Corporation and CLI. Effective May 23, 1997, CLI merged with a wholly-owned
subsidiary of the Company. The Peer Group for the periods ended July 31, 1997,
1998 and 1999 consists solely of the following company whose business, taken as
a whole, resembles the Company's activities: PictureTel Corporation.
[PERFORMANCE GRAPH]
This graph above assumes $100 invested on December 31, 1993 in the Common
Stock of the Company, the NASDAQ Composite Index and the Peer Group, and was
plotted using the following data:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, JULY 31, JULY 31, JULY 31, JULY 31,
1993 1994 1995 1996 1997 1998 1999
------------ ------------ ------------ -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NASDAQ.................. $100.00 $ 98.00 $138.00 $142.00 $210.00 $248.00 $354.00
VTEL.................... $100.00 $128.00 $284.00 $106.00 $ 87.00 $ 87.00 $ 66.00
Peer Group.............. $100.00 $107.00 $369.00 $363.00 $ 97.00 $ 91.00 $ 66.00
</TABLE>
14
<PAGE> 17
PROPOSAL TO INCREASE THE NUMBER OF AUTHORIZED SHARES UNDER THE VTEL CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
(ITEM 2)
The Board of Directors has amended the VTEL Corporation Employee Stock
Purchase Plan (the "ESPP") in order to increase the number of shares of Common
Stock available for issuance thereunder from 950,000 to 1,450,000. The Board of
Directors increased the number of available shares under the ESPP because as of
October 1, 1999, only 215,909 shares of Common Stock remained available for
purchase by the Company's employees. By increasing the number of shares
available under the ESPP, the Board of Directors believes that the ESPP will
continue to be a useful stock-related benefit program for attracting and
retaining employees and providing additional incentive for all employees to
promote the success of the Company. The Company intends to register the 500,000
additional shares of Common Stock issuable under the ESPP under the Securities
Act, assuming the shareholders approve the proposal to increase the number of
available shares. Shares purchased pursuant to the ESPP after the effective date
of such registration could immediately be sold in the open market subject, in
the case of affiliates (as defined in Rule 144 under the 1933 Act), to
compliance with the provisions of Rule 144 other than the holding period
requirement. The proposed amendment requires the approval of the shareholders of
the Company pursuant to the terms of the ESPP. Assuming the presence of a
quorum, the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock present and voting at the Annual Meeting in person or by
proxy is necessary to approve the above described amendment to the ESPP. Proxies
will be voted for or against such approval in accordance with the specifications
marked thereon and, if no specifications are made, will be voted in favor of
such approval.
DESCRIPTION OF VTEL CORPORATION EMPLOYEE STOCK PURCHASE PLAN
General
The VTEL Corporation Employee Stock Purchase Plan was adopted, subject to
stockholder approval, by the Company's Board of Directors on April 29, 1993. The
ESPP authorizes as of October 1, 1999 the issuance of up to 950,000 shares of
Common Stock. The purpose of the ESPP is to assist eligible employees of the
Company and its subsidiaries in acquiring a stock ownership interest in the
Company through regular payroll deductions and cash contributions and thereby
encourage them to remain in the employ of the Company or its subsidiaries. The
ESPP allows participants to purchase shares of Common Stock at a price equal to
the lesser of: (a) 85% of the fair market value of the Common Stock on the date
of grant of the option or (b) 85% of the fair market value of the Common Stock
at the time of exercise. See "-- Exercise Price" below. The ESPP is not subject
to the qualification requirements of Section 401 of the Internal Revenue Code of
1986, as amended (the "Code"), nor is the ESPP subject to any provisions of
ERISA. No maximum period of duration has been established for the ESPP. The
Board of Directors of the Company, however, has the power to suspend or
terminate the ESPP at any time, provided such suspension or termination does not
affect outstanding options granted under the ESPP.
Eligibility and Participation
Any individual who is customarily employed by the Company or its
subsidiaries for more than 20 hours per week and more than five months in a
12-month period is eligible to participate in the ESPP for one or more offering
periods, provided that such individual is an employee on the first day of such
offering period or periods. In no event may options be granted under the ESPP to
an employee who immediately after the granting of the option would own capital
stock of the Company (including capital stock of the Company which the
individual may purchase under outstanding options) possessing more than 5% of
the total combined voting power or value of all classes of stock of the Company
or any of its affiliates. In addition, no option may be granted which would
permit an employee's rights to purchase stock under the ESPP and all other
employee stock purchase plans of the Company and its affiliates to accrue at a
rate which exceeds $25,000 of the fair market value of such stock (determined at
the time such option is granted) for each calendar year or portion thereof in
which such stock option is outstanding. An eligible employee may become a
participant by completing and returning to the Company a written stock purchase
agreement indicating the employee's desire to participate in the ESPP and the
amount in payroll deductions, cash or stock which the employee
15
<PAGE> 18
wishes to contribute under the ESPP in each offering period. Such agreement
shall become effective on the first day of such offering period and shall remain
effective for subsequent offering periods unless the employee's participation in
the ESPP has terminated. A participant may increase or decrease the rate of
contribution to the ESPP by amending his or her authorization for payroll
deductions or cash or stock contributions. An amended authorization must be
filed at least two weeks prior to the commencement date of the offering period
for which it is to become effective.
Administration
The ESPP is administered by the Compensation Committee of the Board of
Directors of the Company. The Compensation Committee has full authority to
administer the ESPP, including authority to interpret and construe any provision
of the ESPP and to adopt such rules and regulations for administering the ESPP
as it may deem advisable. Decisions of the Compensation Committee are binding on
all participants. All expenses of establishing and administering the ESPP are
paid by the Company without charge to participants.
Shares and Amounts Subject to Plan
As of October 1, 1999, the maximum number of shares of Common Stock of the
Company which may be issued under the ESPP cannot exceed 950,000 shares, subject
to adjustment in certain circumstances. To prevent dilution or enlargement of
the rights of participants under the ESPP, adjustments in the number of shares
subject to the ESPP, the number of shares subject to outstanding options, the
maximum number of shares for which options may be granted to any one employee,
and option exercise prices are to be made in the event of merger, consolidation,
reorganization, recapitalization, stock split, stock dividend in excess of 2% or
other change in the corporate structure of the Company. Upon dissolution or
liquidation of the Company, other than in connection with a reorganization,
merger or consolidation in which the surviving corporation prior to or
concurrent with its succession to the business of the Company assumes and
continues the restated ESPP by substituting its common stock for the Company's
Common Stock underlying the options granted thereunder, all options granted
under the ESPP shall terminate; provided, however, that each optionee shall have
the right to exercise his or her outstanding options at any time prior to or
concurrently with the consummation of such merger, consolidation or
reorganization to the full extent not theretofore exercised. If the number of
shares for which options are to be exercised on any date exceeds the number of
shares then remaining available under the ESPP, the Compensation Committee will
make a pro rata allocation of the remaining available shares in a manner as
nearly uniform as shall be practicable. Participant contributions not applied to
the purchase of Common Stock will be returned without interest. No person shall
have any rights as a stockholder with respect to any shares of Common Stock
covered by an option prior to the date of issuance of a stock certificate for
such shares. No adjustments will be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
Terms of Options -- Method of Payment
The maximum number of shares for which options may be granted to any
participant during any single offering period shall not exceed 1,200 shares. The
Compensation Committee has the power, exercisable at any time prior to the
commencement of an offering period, to increase or decrease the maximum number
of shares for which an option may be granted to each participant for that
offering period. There is no minimum number of shares for which options may be
granted to an employee. Each participant may contribute up to 15% of base pay,
at the rate of contribution elected prior to the commencement date of an
offering, through (i) regular payroll deductions in multiples of $5, (ii) lump
sum cash payments made not later than two weeks before the last day of an
offering period, or (iii) stock. The amount of each participant's contribution
is held by the Company in a special account, but the Company has no obligation
to pay interest on account balances. Base pay is defined in the ESPP as regular
straight-time earnings for an offering period plus sales commissions, bonuses
and other incentive payments for the three-month period immediately preceding
such offering period.
16
<PAGE> 19
Offering Periods
The initial offering period under the ESPP had a duration of three months
and commenced on July 1, 1993 and ended on September 30, 1993. Subsequent
offering periods are for successive three-month periods commencing on October 1,
January 1, April 1, and July 1 and ending on the December 31, March 31, June 30
and September 30, respectively. Except as hereafter provided, a participant's
option is automatically exercised on the last day of the offering period by
applying the funds then in the participant's account to the purchase of the
Company's Common Stock. If any money remains in the participant's account which
is less than the price of one share of the Company's Common Stock, then the
money is held for purchase of shares in the next offering period. Money
remaining in the participant's account by reason of the limitation on the
maximum number of shares purchasable in a single offering period is refunded
without interest promptly after the close of the offering period. If a
participant does not desire to have an option exercised, the participant must so
notify the Company in writing at least two weeks prior to the last day of the
offering period. As soon as reasonably practicable after receipt of such notice,
the Company may deliver to such participant a cash payment equal to the total of
the contributions credited to his or her account during such offering period. No
interest shall be paid on such contributions. The non-exercise of an option
shall not affect the participant's ability to participate in the ESPP for
subsequent offering periods, and the participant's stock purchase agreement
shall remain in force.
Exercise Price
The purchase price of the Common Stock covered by each option is equal to
the lesser of: (a) 85% of the fair market value of the Common Stock on the date
of grant of the option (the first day of the offering period) or (b) 85% of the
fair market value of the Common Stock at the time of exercise (the last day of
the offering period). The fair market value is deemed to be equal to the mean of
the high and low reported sales prices of the Common Stock on the NASDAQ
National Market System (or such other quotation system or stock exchange) on
which the Company's Common Stock is traded on the date such value is to be
determined.
Withdrawal -- Termination of Employment -- Death
An employee's participation in the ESPP will be terminated when the
participant voluntarily withdraws from the ESPP upon written notification to the
Compensation Committee, when the participant's employment terminates, or upon
the death of the participant. Within 30 days after an employee's participation
in the ESPP is terminated, all funds in the employee's account will be returned
without interest. A voluntary withdrawal from the ESPP will not affect a
participant's ability to participate in the ESPP for any subsequent offering
period provided the participant files a new stock purchase agreement and payroll
deduction authorization with the Compensation Committee at least two weeks prior
to the commencement of such offering period. Each participant may designate a
beneficiary or beneficiaries of the participant's interest in the ESPP. Upon the
participant's death, any balance in the participant's account will be
distributed to such beneficiary or beneficiaries, or in the absence of such
designation, to the executor or administrator of the participant's estate.
Transferability -- Delivery
Options granted pursuant to the ESPP may not be transferred by a
participant and are exercisable only during the participant's lifetime. After
the exercise of options at the end of each offering period, the Company will, as
expeditiously as possible, deliver to each participant certificates evidencing
the shares of stock purchased through such exercise. The Company may, however,
postpone delivery of shares for such period as may be required for it to comply
with applicable requirements of law or quotation system or stock exchange on
which the Company's Common Stock is traded.
Termination or Amendment
The Company's Board of Directors may at any time, with respect to any
shares not at the time subject to outstanding options, suspend or terminate the
ESPP. The Board may also amend the ESPP from time to time as it deems advisable,
but no amendment shall, without prior stockholder approval, (i) increase the
maximum
17
<PAGE> 20
number of shares subject to the ESPP or the maximum number of shares for which
options may be granted to any one employee (other than adjustments to prevent
dilution or enlargement of participant rights in the event of fundamental
changes to the Company), (ii) materially increase the benefits accruing to
participants, (iii) materially modify the eligibility requirements for ESPP
participation, or (iv) modify the terms of any option granted under the ESPP so
as to render such options unqualified for special tax treatment under Section
423 of the Code.
Certain Federal Tax Income Consequences
The following discussion of the federal income tax consequences of
participation in the ESPP for typical optionee is only a summary, does not
purport to be complete and does not cover, among other things, state and local
tax treatment of participation in the ESPP. Furthermore, differences in
individual optionees' financial situations may cause federal, state and local
income tax consequences of participation in the ESPP to vary. The ESPP is
intended to be an "employee stock purchase plan" within the meaning of Section
423 of the Code. Under a plan that so qualifies, no taxable income will be
reportable by a participant by reason of the grant of the option or its
exercise. A participant will recognize taxable income in the year of disposition
of the stock acquired under the ESPP or in the year of death if the participant
dies while still owning the stock. Generally, a disposition for this purpose
includes any transfer of legal title, including a transfer by sale, exchange or
gift, but does not include a transfer into joint ownership if the participant
remains one of the joint owners, a pledge or a transfer by bequest or
inheritance. If the participant disposes of stock within two years from the date
the underlying option was granted, the participant will realize ordinary income
in the year of disposition equal to the amount by which the fair market value of
the stock on the date the option was exercised exceeded the exercise price. In
such instances, the amount of the ordinary income will be added to the
participant's basis in the stock, and any additional gain or any loss recognized
on the disposition will be a capital gain or loss. The gain or loss will be
long-term if the stock has been held for more than eighteen months. If the
participant disposes of stock more than two years after the date the underlying
option was granted, the participant will realize ordinary income in the year of
disposition equal to the lesser of (i) the excess of the fair market value of
the stock at the time of disposition over the exercise price for such stock, or
(ii) the excess of the fair market value of the stock at the time the option was
granted over the exercise price for such stock. The amount of any ordinary
income will be added to the participant's basis in the stock, and any gain
recognized upon the disposition will be a long-term capital gain. If the fair
market value of the stock on the date of disposition is less than the exercise
price, there will be no ordinary income and any loss recognized will be a
long-term capital loss. If the participant still owns the stock at the time of
death, the lesser of (i) the excess of the fair market value of the stock at the
time of death over the exercise price for such stock, or (ii) the excess of the
fair market value of the stock at the time the option was granted over the
exercise price for such stock will constitute ordinary income in the year of
death. If a share is disposed of within two years after the date the underlying
option was granted, then the employer corporation will be entitled to a
deduction in the year of disposition equal to the amount of ordinary income
realized by the participant as a result of the disposition. In all other cases,
no deduction is allowed.
Required Vote and Recommendation
The affirmative vote of the holders of a majority of the shares of Common
Stock present or represented at the Annual Meeting is needed to approve this
proposal. Under Delaware law, an abstention would have the same legal effect as
a vote against this proposal, but a broker non-vote would not be counted for
purposes of determining whether a majority had been achieved. The shares
represented by proxies solicited by the Board of Directors will be voted as
directed on the form of proxy or, if no direction is indicated, will be voted
"FOR" the approval of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
18
<PAGE> 21
PROPOSAL TO AMEND THE
VTEL CORPORATION 1992 DIRECTOR STOCK OPTION PLAN
(ITEM 3)
GENERAL
In order to attract and retain nonemployee directors for the Company, the
Board of Directors has adopted, and the Company's stockholders have previously
approved, the Company's 1992 Director Stock Option Plan (the "Director Plan"),
pursuant to which an aggregate of 150,000 shares of Common Stock may be issued
upon the exercise of options granted under the Director Plan.
In general, the Director Plan provides for the automatic grant of an option
to purchase 12,000 shares of Common Stock, having an exercise price of the fair
market value of the Common Stock at the date of grant, to each nonemployee
director upon initial election or appointment, such options vesting over a
three-year period, and further provides that each nonemployee director shall
receive additional options to purchase 6,000 shares of the Company's Common
Stock, such options vesting over a three-year period, at the time that such
eligible director's prior options granted under the Director Plan become fully
exercisable and vested.
The Board of Directors has authorized an amendment to the Director Plan,
subject to stockholder approval, to increase the number of shares of the
Company's Common Stock available for issuance under the Director Plan from
150,000 to 250,000 shares, and to modify the formula pursuant to which options
may be granted thereunder. As modified, the formula for granting options under
the Director Plan will provide for the automatic grant of an option to purchase
25,000 shares of Common Stock, having an exercise price equal to the fair market
value of the Common Stock on the date of grant, to each of the nonemployee
directors upon their initial election or appointment, such options vesting over
a three-year period, and will further provide that each nonemployee director
shall receive additional options to purchase 12,500 shares of Common Stock,
having an exercise price equal to the fair market value of the Common Stock on
the date of grant and having a three-year vesting schedule, at such time as such
nonemployee director's prior options granted under the Director Plan become
fully vested and exercisable. This amendment increases the formula option
grants, as specified above, and is believed by the Board of Directors to be
necessary in order to enhance the usefulness of the Director Plan in attracting
and retaining nonemployee directors and to cover future grants of options under
the Director Plan. As of the date hereof, 48,335 shares remain available for
grant under the Director Plan. The amendment, if approved, will enable the
Company to continue the purposes of the Director Plan, by providing additional
incentives to attract and retain qualified nonemployee directors.
If approved by the stockholders of the Company at the Annual Meeting, the
following amendment shall be made to the Director Plan:
Section 4(a) will be amended in its entirety to provide as follows:
The maximum number of shares which may be issued under the Director Plan
shall be 250,000 shares of Common Stock, subject to adjustment as provided in
Section 9 of the Director Plan.
Corresponding amendments will be made to the Director Plan in order to
modify the formula for option grants, as described above, if the amendment is
approved at the Annual Meeting.
19
<PAGE> 22
The following table sets forth information with respect to options received
by or allocated to each indicated individual or group listed therein pursuant to
the Director Plan in fiscal 1999.
<TABLE>
<CAPTION>
NUMBER
NAME AND POSITION OF OPTIONS
- - ----------------- ----------
<S> <C>
F. H. (Dick) Moeller........................................ -0-
Chairman and Former Chief Executive Officer
Stephen L. Von Rump......................................... -0-
President
Jerry S. Benson, Jr. ....................................... -0-
Former Chief Executive Officer
Ly-Huong T. Pham............................................ -0-
Chief Technology Officer and Vice President, Engineering
Steven F. Keilen............................................ -0-
Chief Marketing Officer and Vice President, Sales and
Marketing
Rodney S. Bond.............................................. -0-
Chief Financial Officer, Secretary and Vice President,
Finance
Michael J. Steigerwald...................................... -0-
Vice President, Global Services
All current executive officers as a group................... -0-
All nonemployee directors as a group........................ -0-
All employees including all current officers, who are not
executive officers, as a group............................ -0-
</TABLE>
DESCRIPTION OF THE COMPANY'S 1992 DIRECTOR STOCK OPTION PLAN
Under the provisions of the Director Plan, Non-Qualified Stock Options may
be granted to the nonemployee directors of the Company. Pursuant to the Director
Plan, upon the initial election or appointment of a person who is not an
employee of the Company as director of the Company, such person will be granted
an option to purchase 12,000 shares of Common Stock (or, if the amendment is
approved, an option for 25,000 shares) at the fair market value of Common Stock
on the date of grant. At the time the initial grant and each subsequent grant
are fully vested (i.e., after 36 months), each nonemployee director is entitled
to an additional grant of options covering 6,000 shares (or, if the amendment is
approved, an option for 12,500 shares), such options to become exercisable over
a 36-month period and having an exercise price equal to the fair market value on
the date of grant.
Pursuant to the terms of the Director Plan, each option becomes exercisable
on a cumulative basis as to one-thirty-sixth of the shares subject to such
option on each monthly anniversary of the date of grant of such option. In the
event an optionee ceases to serve as a director, options granted under the
Director Plan may be exercised by the optionee (or, in the event of his death,
by his administrator, executor or heirs) at any time within 12 months after the
optionee ceases to serve as a director, to the extent such option was
exercisable at the time of such cessation of service. Each option shall expire
after the expiration of 10 years from the date of the grant. An option granted
under the current Director Plan is not transferable by the optionee except by
will or by the laws of descent and distribution.
The Director Plan is administered by the Board of Directors, which under
the provisions of the Director Plan has the authority to (i) issue options
granted in accordance with the formula set forth in the Director Plan to
eligible directors and (ii) prescribe the form or forms of instruments
evidencing awards.
The Director Plan is not required to be qualified under Section 401(a)of
the Code, nor is it subject to the provisions of ERISA.
As of November 8, 1999, options to purchase a total of 68,667 shares of
Common Stock were outstanding under the Director Plan. A total of 16,832 shares
have been issued under the Director Plan.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THIS PROPOSAL.
20
<PAGE> 23
RATIFICATION OF APPOINTMENT OF AUDITORS
(ITEM 4)
Pursuant to the recommendation of the Audit Committee, the Board of
Directors has appointed PricewaterhouseCoopers LLP, independent accountants, to
audit the consolidated financial statements of the Company for the year ending
July 31, 2000. The Company is advised that no member of PricewaterhouseCoopers
LLP has any direct financial interest or material indirect financial interest in
the Company or any of its subsidiaries or, during the past three years, has had
any connection with the Company or any of its subsidiaries in the capacity of
promoter, underwriter, voting trustee, director, officer or employee.
Ratification of this appointment shall be effective upon receiving the
affirmative vote of the holders of a majority of the Common Stock present or
represented by proxy and entitled to vote at the Annual Meeting.
A representative of PricewaterhouseCoopers LLP is expected to be present at
the Annual Meeting of Stockholders, will have the opportunity to make a
statement if such representative desires to do so and will be available to
respond to appropriate questions.
While stockholder ratification is not required for the selection of
PricewaterhouseCoopers LLP since the Board of Directors has the responsibility
for the selection of the Company's independent auditors, the selection is being
submitted for ratification at the Annual Meeting solely with a view toward
soliciting the stockholder's opinion thereon, which opinion will be taken into
consideration in future deliberations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION BY THE
STOCKHOLDERS OF THIS APPOINTMENT.
STOCKHOLDER PROPOSALS
Pursuant to various rules promulgated by the SEC, a stockholder that seeks
to include a proposal in the Company's proxy statement and form of proxy card
for the Annual Meeting of the Stockholders of the Company to be held in 2000
must timely submit such proposal in accordance with SEC Rule 14a-8 to the
Company, addressed to Rodney S. Bond, Secretary, 108 Wild Basin Road, Austin,
Texas 78746 no later than July 15, 2000. Further, a stockholder may not present
a proposal for inclusion in the Company's proxy statement and form of proxy card
related to the 2000 annual meeting and may not submit a matter for consideration
at the 2000 annual meeting, regardless of whether presented for inclusion in the
Company's proxy statement and form of proxy card, unless the stockholder shall
have timely complied with the Company's bylaw requirements which set a notice
deadline after which a stockholder will not be permitted to present a proposal
at the Company's stockholder meetings. The bylaws state that in order for
business to be properly brought before an annual meeting by a stockholder, the
stockholder must have given timely notice thereof in writing to the Secretary of
the Company. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the Company not less than 60
days nor more than 90 days prior to the first anniversary of the preceding
year's annual meeting. A stockholder's notice to the Secretary must set forth as
to each matter the stockholder proposes to bring before the meeting a brief
description of the business desired to be brought before the meeting and the
reasons for conducting such business at the meeting; the name and address, as
they appear on the Company's books, of the stockholder proposing such business
and the name and address of the beneficial owner, if any, on whose behalf the
proposal is made; the class and number of shares of the Company which are owned
beneficially and of record by such stockholder of record and by the beneficial
owner, if any of whose behalf the proposal is being made; and any material
interest of such stockholder of record and beneficial owner, if any, on whose
behalf the proposal is made in such business. A notice given pursuant to this
advance notice bylaw will not be timely with respect to the Company's 2000
meeting unless duly given by no later than October 17, 2000 and no earlier than
September 17, 2000.
With respect to business to be brought before the Annual Meeting, the
Company has not received any notices from stockholders that the Company is
required to include in this Proxy Statement.
21
<PAGE> 24
GENERAL
As of the date of this Proxy Statement, the management of the Company has
no knowledge of any business to be presented for consideration at the meeting
other than that described above. If any other business should properly come
before the meeting, it is intended that the shares represented by proxies will
be voted with respect thereto in accordance with the judgment of the persons
named in such proxies.
The cost of any solicitation of proxies by mail will be borne by the
Company. Arrangements may be made with brokerage firms and other custodians,
nominees and fiduciaries for the forwarding of material to and solicitation of
proxies from the beneficial owners of Common Stock held of record by such
persons, and the Company will reimburse such brokerage firms, custodians,
nominees and fiduciaries for reasonable out of pocket expenses incurred by them
in connection therewith. In addition to the proxy solicitation material mailed
to stockholders, the Company has also retained the services of Shareholder
Communications Corporation, New York, New York, to assist in the solicitation of
proxies for a fee estimated at $3,500 plus out-of-pocket expenses. Brokerage
houses and other custodians, nominees and fiduciaries will, in connection with
shares of Common Stock registered in their names, be requested to forward
solicitation material to the beneficial owners of such shares and to secure
their voting instructions. The cost of such solicitation will be borne by the
Company.
The information contained in this Proxy Statement in the sections entitled
"Election of Directors -- Report From the Compensation Committee Regarding
Executive Compensation" and "Comparative Total Returns" shall not be deemed
incorporated by reference by any general statement incorporating by reference
any information contained in this Proxy Statement into any filing under the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
except to the extent that the Company specifically incorporates by reference the
information contained in such sections, and shall not otherwise be deemed filed
under the Securities Act or the Exchange Act.
By Order of the Board of Directors,
RODNEY S. BOND
Secretary
Austin, Texas
22
<PAGE> 25
VTEL CORPORATION ANNUAL MEETING PROXY NO. SHARES
DECEMBER 16, 1999 IN YOUR NAME
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Rodney S. Bond as Proxy, with the power to
appoint his substitute, and hereby authorizes him to represent and vote, as
designated on the reverse side hereof, all of the shares of the Common Stock of
VTEL CORPORATION (the "Company") held of record by the undersigned at the close
of business on November 5, 1999, at the Annual Meeting of Shareholders to be
held on December 16, 1999, and any adjournment(s) thereof.
Dated , 1999
-----------------------------------
----------------------------------------------
Signature
----------------------------------------------
Signature, if Held Jointly
Please execute this Proxy as your name appears
hereon. When shares are held by joint tenants,
both should sign. When signing as attorney,
executor, administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full corporate
name by the president or other authorized
officer. If a partnership, please sign in
partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE> 26
VTEL CORPORATION ANNUAL MEETING CONTINUED FROM OTHER SIDE
DECEMBER 16, 1999
THIS PROXY, WHEN PROPERLY EXECUTED AND DATED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES UNDER PROPOSAL 1 AND FOR
PROPOSALS 2, 3 AND 4 AND AT THE DISCRETION OF THE PROXIES WITH RESPECT TO ANY
MATTERS REFERRED TO IN PROPOSAL 5.
<TABLE>
<S> <C> <C> <C>
1. Proposal to elect as directors of the Company the following persons to hold
office for the terms specified in the Company's 1999 Annual Proxy or until
their successors have been duly elected and have qualified.
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary nominees listed below
below)
F.H. (Dick) Moeller Gordon H. Matthews Richard N. Snyder James H. Wells
Stephen L. Von Rump T. Gary Trimm Kathleen A. Cole
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name
on the space provided below.)
- - -------------------------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
--- ------- -------
2. Proposal to approve an amendment to the Company's Employee Stock [ ] [ ] [ ]
Purchase Plan ("ESPP") to increase the number of shares of the
Company's Common Stock issuable under the ESPP upon the exercise
of stock options granted pursuant to the ESPP from 950,000 shares
to 1,450,000 shares.
3. Proposal to approve an amendment of the Company's 1992 Director [ ] [ ] [ ]
Stock Option Plan (the "Director Plan") to increase the number of
shares of the Company's Common Stock issuable under the Director
Plan upon the exercise of stock options granted pursuant to the
Director Plan from 150,000 to 250,000 shares and to modify the
formula pursuant to which options are granted thereunder.
4. The ratification of the Board of Directors' appointment of
PricewaterhouseCoopers LLP, independent accountants, as the
Company's independent auditors for the year ending July 31, 2000. [ ] [ ] [ ]
5. In their discretion, the proxies are authorized to vote upon such [ ] [ ] [ ]
other business as may properly come before the meeting or any
adjournment(s) thereof.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
- - -------------------------------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
- - -------------------------------------------------------------------------------------------------
</TABLE>
