<PAGE> 1
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
/X/ Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------
<PAGE> 2
VOICE POWERED TECHNOLOGY
INTERNATIONAL, INC.
15260 Ventura Blvd., Suite 2200
Sherman Oaks, CA 91403
_______________
NOTICE OF 1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 19, 1996
_______________
To All Shareholders:
The Annual Meeting of Shareholders of Voice Powered Technology
International, Inc., a California corporation (the "Company"), will be held on
Wednesday, June 19, 1996, at 9:00 a.m., local time, at the Warner Center
Hilton, 6360 Canoga Avenue, Woodland Hills, California 91367, for the following
purposes:
1. To elect six directors of the Company to hold office
until the next annual meeting of shareholders and until their
respective successors are duly elected and qualified.
2. To ratify the appointment of BDO Seidman as the
Company's independent auditors for the 1996 fiscal year.
3 To act upon such other matters as may properly come
before the meeting or any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on April 25,
1996 as the record date for determination of shareholders entitled to notice
of, and to vote at, the meeting or any adjournments or postponements thereof,
either in person or by proxy.
YOU ARE URGED TO DATE, MARK, AND SIGN THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU PLAN TO ATTEND THE
MEETING. You are cordially invited to attend the meeting and, if you do so,
you may personally vote your shares regardless of whether you have signed and
returned a completed proxy.
By Order of the Board of Directors,
Mitchell B. Rubin
Secretary
Sherman Oaks, California
May 6, 1996
<PAGE> 3
VOICE POWERED TECHNOLOGY
INTERNATIONAL, INC.
15260 Ventura Blvd., Suite 2200
Sherman Oaks, CA 91403
_______________
PROXY STATEMENT
FOR
1996 ANNUAL MEETING OF SHAREHOLDERS
_______________
GENERAL INFORMATION
This Proxy Statement and the enclosed Proxy are furnished in
connection with the solicitation of proxies on behalf of the Board of Directors
of Voice Powered Technology International, Inc., a California corporation (the
"Company"), for use at the Company's 1996 Annual Meeting of Shareholders
(together with any and all adjournments and postponements, the "Annual
Meeting"), which is scheduled to be held on the date, at the time and place,
and for the purposes set forth in the foregoing notice.
RECORD DATE, QUORUM, MAILING
All holders of record of the Company's common stock, $.001 par value
per share ("Common Stock"), at the close of business on April 25, 1996, are
entitled to notice of, and to vote at, the Annual Meeting. At the close of
business on such date, the Company had 13,909,072 shares of Common Stock
outstanding. A majority of the outstanding shares of Common Stock represented
in person or by proxy will constitute a quorum for the transaction of business
at the Annual Meeting.
The Company anticipates that these proxy solicitation materials and
the Annual Report to Shareholders for the year ended December 31, 1995,
including financial statements, will first be mailed or given to shareholders
entitled to vote at the Annual Meeting on or about May 10, 1996.
VOTE BY AND REVOCATION OF PROXIES
At the Annual Meeting, the designated proxy holders will vote the
shares of Common Stock represented by Proxies which have been received and not
revoked. Where the Shareholder specifies a choice on the Proxy Card with
respect to any matter to be acted upon, the shares of Common Stock will be
voted in accordance with the choice specified. Where no choice is specified,
the shares represented by a signed Proxy Card will be voted in favor of the
proposal set forth in the Notice attached hereto. Any Proxy may be revoked at
any time prior to its exercise by notifying the secretary of the Company in
writing, by delivering a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person. Attendance in person at the
Annual Meeting does not itself revoke an otherwise valid proxy; however, any
shareholder who attends such Meeting may orally revoke his or her proxy at the
Annual Meeting and vote in person. If your shares are held of record by a
broker, bank, or other nominee and you wish to attend and vote your shares at
the Annual Meeting, you must obtain a letter from the broker, bank, or nominee
confirming your beneficial ownership of the shares and a written proxy from the
holder issued in your name, and bring it to the Annual Meeting.
VOTING RIGHTS AND SOLICITATION
Each holder of Common Stock is entitled to one vote for each share
held. Every shareholder voting for the election of directors (Proposal No. 1)
may cumulate his or her votes and give one nominee a number of votes
1
<PAGE> 4
equal to the number of directors to be elected multiplied by the number of
shares that such shareholder is entitled to vote, or distribute such
shareholder's votes on the same principle among as many nominees as he or she
thinks fit. However, no shareholder shall be entitled to cumulate votes unless
the nominee's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the Annual Meeting,
prior to the voting, of the intention to cumulate the shareholder's votes. On
all other matters, shareholders may not cumulate votes.
Abstentions and broker non-votes are counted as shares of Common Stock
represented at the Annual Meeting for purposes of determining a quorum. An
abstention has the effect of a vote "withheld" with respect to the election of
directors under Proposal 1. Broker non-votes are not entitled to vote because
they indicate the withholding of power to vote on a specific matter, and
therefore have no effect on the outcome of a proposal.
The six nominees for directors receiving the highest number of votes
of shares of Common Stock present in person or represented by proxy at the
Annual Meeting and entitled to vote on the election of directors will be
elected to the Board of Directors. Proposal No. 2 requires for approval the
affirmative vote of a majority of the shares of Common Stock present in person
or represented by proxy at the Annual Meeting and entitled to vote on the
proposal. For purposes of the foregoing, (i) the aggregate number of votes
entitled to be cast by all shareholders present in person or represented by
proxy, whether such shareholders vote FOR, AGAINST, or ABSTAIN, or give no
instructions, will be counted for purposes of determining the minimum number of
affirmative votes required to approve the proposal, (ii) the total number of
shares cast for a proposal or giving no instructions will be considered to have
been voted in favor of the proposal, and (iii) an abstention from voting on a
matter by a shareholder present in person or represented by proxy will have no
effect with regard to the election of any nominee to the Board of Directors if
that nominee otherwise receives a sufficient number of affirmative votes to be
elected, and will have the same effect as a vote against with regard to the
other proposals.
The expenses of this solicitation of proxies for the Annual Meeting
will be paid by the Company. In addition to the mailing of the proxy
materials, such solicitation may be made in person or by telephone or other
means of communication by directors, officers or regular employees of the
Company, but such persons will not be specifically compensated for such
services. The Company may also reimburse brokers, banks, custodians, nominees
and other fiduciaries for their reasonable charges and expenses in forwarding
the proxy materials to beneficial owners.
PROPOSAL NO. 1 - ELECTION OF DIRECTORS
The bylaws of the Company provide that the Board of Directors shall be
comprised of a minimum of four and a maximum of seven directors, with the exact
number to be fixed, within the limits specified, by approval of the Board of
Directors or the shareholders in the manner provided in the bylaws. The Board
of Directors has fixed seven as the number of directors of the Company.
At the Annual Meeting, the shareholders will elect six directors to
hold office until the 1997 Annual Meeting of Shareholders, and until their
respective successors have been duly elected and qualified. The nominees for
election as directors are named below. All nominees are presently directors of
the Company were elected by the shareholders at the last annual meeting of
shareholders of the Company. It is currently contemplated that the seventh
seat on the Board will remain vacant until filled by the remaining directors or
the shareholders.
Each of the nominees has consented to be named and to serve if
elected. Should any of the nominees become unable to accept election as a
director, the persons named in the enclosed Proxy will vote the shares which
they represent for the election of such other persons as the Board of Directors
may recommend. In the event that additional persons are nominated for election
as directors, the proxy holders intend to vote all Proxies received by them in
such manner (in accordance with cumulative voting requirements, if applicable)
as will assure the election of as many of the named nominees as possible.
2
<PAGE> 5
DIRECTORS, NOMINEES, EXECUTIVE OFFICERS, AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
directors and executive officers of the Company, those persons nominated by the
Board of Directors for election as directors, as well as all directors and
executive officers of the Company as a group. To the Company's knowledge, all
of the shares shown in the following table are owned both of record and
beneficially, and the persons named possess sole voting and investment power,
except as otherwise indicated in the notes to the table. No person is known to
the Company to beneficially own 5% or more of the Company's outstanding Common
Stock as of March 31, 1996.
<TABLE>
<CAPTION>
Shares Beneficially Owned
As of March 31, 1996
--------------------
Positions and Offices Director Percent of
Name (1) (2) Age Held with Company Since Amount (3) Class
- ---- --- ----------------- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Edward M. Krakauer 63 President, CEO, Director,
Chairman of the Board, 1992 611,325 (4) 4%
Director Nominee
Mitchell B. Rubin 41 Vice President, CFO,
Director, 1994 137,500 1%
Director Nominee
Mark L. Frankel 48 Vice President, Director, 1995 95,834 *
Director Nominee
Myron H. Hitchcock 55 Director,
Director Nominee 1990 12,325 (5) *
Dr. Jack D. Steele 72 Director, 1994 17,325 (5) *
Director Nominee
Ernest W. Townsend 48 Director, 1994 12,325 (5) *
Director Nominee
George H. Fischer 50 Vice President n/a 121,046 1%
Kenneth I. DeWitt 60 Vice President n/a 30,000 *
All directors, nominees, and
executive officers of the
Company, as a group 1,037,680 7%
- -----------------------
</TABLE>
* Less than 1%.
(1) The address of each individual, unless otherwise indicated, is c/o
Voice Powered Technology International, Inc., 15260 Ventura Blvd.,
Suite 2200, Sherman Oaks, California 91403.
(2) In February 1996, Mr. H. Ben Taub, a director since 1994, resigned in
order to dedicate greater time to his personal business affairs.
(3) The amounts shown include shares subject to stock options currently
exercisable or exercisable within 60 days of the date of the table.
The amounts shown do not include options held by Mr. Krakauer,
3
<PAGE> 6
Mr. Rubin, Mr. Frankel, Mr. Fischer, and Mr. DeWitt to purchase,
respectively, 37,500 shares, 12,500 shares, 54,116 shares, 20,000
shares, and 30,000 shares, which options are not currently exercisable
or exercisable within 60 days of the date of the table.
(4) The amount shown does not include 6,000 shares of Common Stock owned
by relatives of Mr. Krakauer. Mr. Krakauer disclaims beneficial
ownership of such shares.
(5) The amounts shown include stock options granted to these directors in
1994 and 1995 for serving as directors of the Company, except for
options for 1,685 shares as to each of Messrs. Hitchcock, Steele, and
Townsend, as such options are not currently exercisable or exercisable
within 60 days of the date of this table. The amounts shown do not
include stock options which will be granted to these directors if they
are re-elected to the Board in 1996 (see "Board of Directors
Compensation"). The amounts shown also do not include options for
10,640 shares previously granted to H. Ben Taub, formerly a director
of the Company.
The following information with respect to the principal occupation and
employment of each director, executive officer and nominee as director or
executive officer, the principal business of the corporation or other
organization in which such occupation and employment is carried on, and in
regard to other affiliations and business experience during the past five
years, has been furnished to the Company by the respective directors, nominees
for directors and executive officers.
Edward M. Krakauer, a nominee, became a director of the Company upon
joining it in November 1991, was appointed chairman of the board in July 1994,
and has been the Company's president and chief executive officer since August
1993. From November 1991 to August 1993, Mr. Krakauer served as the Company's
chief operating officer. From 1985 to November 1991, Mr. Krakauer was a
managing director of The Oxford Group, a management consulting firm. Mr.
Krakauer's areas of concentration with The Oxford Group were management,
marketing, and new product development. From 1985 to 1991, Mr. Krakauer was
actively involved with, and was founder, chairman of the board, and chief
executive officer, of Rabbit Systems, Inc., a developer, marketer, and
manufacturer of innovative consumer electronic products. From 1980 to 1985,
Mr. Krakauer founded and served as president and chief executive officer of
General Consumer Electronics ("GCE"), a marketer of video games, which was
acquired by the Milton Bradley Company in 1982. Before starting GCE, from 1975
to 1980, Mr. Krakauer served as president and chief executive officer of Mattel
Electronics, where he was responsible for founding, developing, and managing
Mattel's consumer electronics business. Earlier, he was group vice president
of Hunt Wesson Foods with responsibility for all marketing, sales, and new
product development. Mr. Krakauer holds a Bachelors Degree in marketing and
economics from New York University, 1953. In addition, he has been a lecturer
in marketing at Johns Hopkins University.
Mitchell B. Rubin, a nominee, joined the Company as vice president and
general manager in January 1994, and was elected a director in July 1994. In
December 1994, Mr. Rubin assumed the newly created position of vice president,
finance and operations, which includes the responsibilities of chief financial
officer; and in January 1995 Mr. Rubin was also appointed secretary of the
Company. Previously, from July 1991 through 1993, Mr. Rubin held various
positions (including executive vice president and chief operating officer from
April 1992 through 1993) with Regal Group, Inc., a television direct-response
company with which the Company did business. In late 1994, when Mr. Rubin was
no longer associated with Regal, Regal filed a petition for protection under
Chapter 11 of the U.S. Bankruptcy Code. From 1990 to 1991, Mr. Rubin was
senior vice president and chief financial officer of Quantum Marketing
International, where he was responsible for operations, systems, and finance.
From 1984 to 1990, Mr. Rubin was treasurer and chief financial officer at Chase
Financial Management Corporation, a holding company, where he had
responsibility for negotiation of all business and real estate acquisitions and
sales, finance and operations. Prior to 1984, Mr. Rubin was a partner in
Margolis & Company, Certified Public Accountants, in Pennsylvania. Mr. Rubin
holds a B.S. degree in Business Administration/Accounting from Drexel
University, 1977, and became licensed as a certified public accountant in the
State of Pennsylvania in 1978.
Mark L. Frankel, a nominee, joined the Company as vice president,
sales and marketing in July 1994. In January 1995, Mr. Frankel became a
director. Mr. Frankel was previously with DSP Telecom, Inc., a supplier of
4
<PAGE> 7
voice recognition and wireless communication technologies, where he was vice
president, U.S. Operations. From September 1987 to March 1993, he held various
positions with Sony Corporation of America, including vice president,
Telecommunication Products Division; vice president, Mobile Satellite System
Division; and director of marketing of the Advanced Technology Group. From
1974 to 1987, he held numerous positions with the RCA Corporation with
responsibility in the areas of business development, marketing and finance.
Mr. Frankel holds a Masters of Business Administration and B.A. degree from
Temple University in Philadelphia, PA.
Myron H. Hitchcock, a nominee, became a director of the Company in
December 1990. He has been associated with the Company since July of 1990. He
is vice president engineering, chief financial officer, treasurer, and a
principal shareholder of Voice Control Products Inc., which develops and
licenses speech recognition technology principally to toy manufacturers and
previously to the Company. During the previous six years, he was also
president and the owner of ESSO Development Inc., which had developed speech
recognition related microprocessor-based products from design to
implementation. In the past, Mr. Hitchcock has licensed, and more recently he
sold, to the Company certain of the VoiceLogic technology utilized by the
Company. Prior to ESSO, he was employed by various divisions of Figgie
International in the area of voice and speech product research and development.
Mr. Hitchcock holds a B.S. degree in Mathematics with a minor in Electrical
Engineering from the University of Massachusetts, and has engaged in graduate
studies in computer science, engineering management and linguistics.
Dr. Jack D. Steele, a nominee, became a director of the Company in
July 1994. He serves as a member of the board of directors of, among others,
Rohr, Inc., Storage Properties, Inc., and Public Storage Properties. He is
also a director of several privately held companies. Dr. Steele is a
consultant to numerous companies, including, among others, AT&T, Bendix
Corporation, Fluor Corporation, Kansas Power and Light Company, and United
Airlines. Dr. Steele served as a dean and professor at the University of
Southern California from 1975 to 1986, and Texas Tech University from 1970 to
1975. He also served as a professor at, among others, Stanford University and
the University of Kansas. Dr. Steele has published numerous articles and
books on business management, marketing, and other subjects. He holds a
Doctorate of Business Administration from Harvard University, a Masters of
Business Administration from the University of Kansas, and a B.S. degree from
Missouri Valley College.
Ernest W. Townsend, a nominee, became a director of the Company in
July 1994. From 1993 to 1995 he served aspresident of Dole Food Company, North
America. He was also an executive vice president and member of the Office of
the Chairman of Dole Food Company, Inc. He was responsible for all Dole Food
Company operations and sales and marketing activities in North America. Mr.
Townsend is a twenty year veteran in the food industry. From 1992 to 1993, he
served as president of Dole Fresh Fruit and Vegetable Company. During 1989 to
1992, he was president and CEO of All American Gourmet, a subsidiary of
Kraft/General Foods, a subsidiary of Philip Morris Companies. During 1987 to
1989, Mr. Townsend was president of Kraft/General Foods Frozen Food Group.
Mr. Townsend holds a B.A. degree in Economics from California State University,
Sacramento. He has attended Harvard Business School's Program for Management
Development.
George H. Fischer became vice president, engineering of the Company in
November 1993. He originally joined the Company in 1991 as director of
engineering and manufacturing. From 1987 to 1991 he was vice president of
operations for Speech Systems, Inc., a developer of large-vocabulary
speaker-independent speech recognition equipment. From 1984 to 1987 he was
director of systems engineering for Perceptronics, Inc., a manufacturer of
simulators and other products. Mr. Fischer holds a B.S. degree in Electrical
Engineering from California State Polytechnic University, Pomona, 1974.
Kenneth I. DeWitt joined the Company as vice president of
manufacturing in July 1995. In this capacity he assumed responsibility for all
of the manufacturing activities and quality assurance of the Company's
products. Prior to joining the Company, Mr. DeWitt was Vice President of
Engineering for Universal Security Instruments, a consumer electronics company
which designs and manufactures telephones, answering machines and other related
technical consumer products. In 1989 and 1990, Mr. DeWitt was Senior Vice
President of Rabbit Systems, Inc., directing the development and manufacture of
innovative consumer electronics products. From 1978 to 1989, and again from
1991 to 1995, Mr. DeWitt was Director of Research and Development and Vice
President of
5
<PAGE> 8
Engineering at Universal Security Instruments. Mr. DeWitt has over twenty-five
years of experience developing and manufacturing high volume consumer
electronics products both domestically and off-shore. He holds a B.S. degree
in Electrical Engineering from the University of Pennsylvania, Moore School,
has taught Engineering courses at Penn State University, and holds various
patents in electronics products.
No director, nominee for director, or executive officer of the Company
has any family relationship with any other director, nominee for director, or
executive officer of the Company.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
The Board of Directors of the Company held five meetings during 1995,
exclusive of actions taken by unanimous written consent. One director, H. Ben
Taub who resigned as a director in 1996, attended fewer than 75% of such
meetings which were held while he was a director. The Company had an audit
committee (comprised of Messers. Steele, Taub, and Hitchcock), which held its
first meeting in 1995, and a stock option committee (comprised of Messers.
Townsend and Steele), which did not meet during 1995, exclusive of actions
taken by unanimous written consent. The Company had no nominating or
compensation committee during 1995
BOARD OF DIRECTORS COMPENSATION
Directors who are employees of the Company do not receive any
compensation for serving as directors. Each of Messrs. Hitchcock, Steele, H.
Ben Taub (formerly a director), and Townsend received cash in the amount of
$1,000 for each of the regularly scheduled Board of Directors' meetings held
during 1995 following the May 17, 1995 Annual Shareholders' Meeting which they
attended. In consideration for agreeing to serve as directors, upon the
election at the 1995 Annual Meeting, these same individuals were granted
options by the Company to purchase shares of the Company's Common Stock at a
price equal to 20% of the closing market price of such Stock on May 17, 1995,
the date such individuals were elected to the Board. These options, together
with registration rights relating to the underlying shares of Common Stock,
were for a number of shares which entitled each of the named individuals to
purchase, upon exercise, that many shares of Common Stock as would yield a
$16,000 gain if the options were exercised on May 17, 1995. The options became
exercisable in equal quarterly amounts at the end of each of the four quarters
following the election of these individuals to the Board of Directors; as to
Mr. Taub, who resigned in February 1996, the portion of these options
applicable to the time period subsequent thereto did not become exercisable.
It is anticipated that each of Messrs. Hitchcock, Steele, and Townsend, if
elected at the Annual Meeting, will receive a further grant of options and
registration rights immediately following their election to purchase shares of
the Company's Common Stock at a price equal to 20% of the closing market price
of such Stock on the date of their election and in an amount that would entitle
each of them to purchase that many shares of Common Stock as would yield a gain
of up to approximately $20,000 if the options were exercised on the date of
grant. It is anticipated that such options will become exercisable in equal
quarterly amounts at the end of each of the four quarters following the
election of the named persons. The Directors have waived the $1,000 cash
payments for the attendance of the 1996 meetings; they have the right to
reinstate same prospectively when they believe such to be appropriate.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of a registered class of the Company's equities securities
("10% Holders"), to file reports of ownership and changes in ownership of
equity securities of the Company with the Securities and Exchange Commission
(the "SEC"). Officers, directors, and 10% Holders are required by regulation
to furnish the Company with copies of all Section 16(a) forms that they file
with the SEC.
To the Company's knowledge, based solely on the Company's review of
the copies of such forms received by the Company, the Company believes that all
reports required to be filed under Section 16(a) of the Exchange Act and the
related rules were timely filed by all officers, directors, and 10% Holders,
except the initial
6
<PAGE> 9
Form 3 relating to the stock options granted to Mr. Kenneth DeWitt upon his
entry into an employment contract with the Company in June 1995 -- such Form 3
was filed by Mr. DeWitt on October 18, 1995.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES
NAMED ABOVE.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by the
Company for services rendered during the year ended December 31, 1995 to each
executive officer whose aggregate cash compensation exceeded $100,000, and to
all executive officers of the Company as a group:
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
-------------------- ------
(A) (B) (C) (G) (L)
NAME SECURITIES
AND UNDERLYING ALL OTHER
PRINCIPAL OPTIONS COMPENSATION
POSITION YEAR SALARY ($) (#) (1) ($)
--------- ---- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Edward M. Krakauer (2) 1995 248,468 0 0
Chief Executive Officer and President 1994 210,330 75,000 0
1993 150,238 0 0 (3)
Mitchell B. Rubin 1995 157,750 0 0
Vice President, Finance and Operations 1994 127,954 150,000 30,000 (4)
Mark L. Frankel 1995 157,325 0 0
Vice President, Sales and Marketing 1994 66,825 150,000 17,000 (4)
George H. Fischer 1995 136,875 0 0
Vice President, Engineering 1994 118,783 40,000 0
1993 96,000 50,000 0
Kenneth I. DeWitt 1995 57,308 (5) 60,000 0
Vice President, Manufacturing
</TABLE>
(1) The amounts in this column represent shares which are subject to stock
options granted by the Company to the named persons under the Company's
1992 and 1994 Stock Option Plans.
(2) Served as chief operating officer until August 1993, and since that time
as president and chief executive officer.
(3) In August 1993, Michael Bissonnette, the Company's former chairman of the
board, granted to Edward M. Krakauer, the Company's chief executive
officer, an option to purchase up to 250,000 shares of Mr. Bissonnette's
Common Stock in the Company at an exercise price of $0.20 per share. As
this option was granted by Mr. Bissonnette, not the Company, its value is
not included in the foregoing table.
(4) The amounts shown represent moving expenses paid to the named individuals
for costs and expenses associated with relocating to southern California
from out of state upon accepting employment with the Company.
(5) Mr. DeWitt's annualized base salary upon joining the Company in July 1995
was $120,000.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION VALUES:
<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY OPTIONS
UNEXERCISED OPTIONS/ AT FY-END ($) (1) (2)
SHARES SARS, FY-END (#) (1)
ACQUIRED ON VALUE EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE UNEXERCISABLE
---- ------------ ------------ ------------------------- -------------
<S> <C> <C> <C> <C>
Edward M. Krakauer 0 0 611,325/37,500 0/0
Mitchell B. Rubin 0 0 137,500/12,500 0/0
Mark L. Frankel 0 0 95,834/54,116 0/0
George H. Fischer 0 0 118,046/20,000 0/0
Kenneth I. DeWitt 0 0 30,000/30,000 0/0
</TABLE>
(1) The Company has not granted any stock appreciation rights to any persons.
(2) Potential unrealized value means the fair market value on December 31,
1995 ($1.63 per share), less the option exercise price (for options with
respect to which the exercise price is less than $1.63 per share), times
the number of shares.
EMPLOYMENT AGREEMENTS
Mr. Krakauer. In August 1993, the Company entered into a new
employment agreement with Edward M. Krakauer under which he serves as the
Company's president and chief executive officer. The term of Mr. Krakauer's
employment under the agreement expires in June 1998, subject to the right of
the parties to terminate earlier under certain conditions, including the right
of either party to terminate the agreement on ninety days' notice. If such
termination is by the Company without cause, Mr. Krakauer is entitled to
receive one year's salary as severance plus one year's participation in the
bonus pool described in the employment agreement. If termination results from
death or disability, he is entitled to one year's salary. The agreement
provides for a base salary of $175,000 through December 31, 1993, with
increases of at least 15% annually to the base salary, commencing January 1,
1994. In addition, Mr. Krakauer is eligible to receive incentive bonuses equal
to 33-1/3% of a bonus pool for executive employees, which pool, in the
aggregate, is 10% of the Company's annual pre-tax profits, as defined in the
employment agreement. Total 1995 compensation paid was $248,468. The
employment agreement contains certain restrictions on Mr. Krakauer's right to
compete. Effective January 1, 1996, this agreement was amended to reduce Mr.
Krakauer's 1996 base salary to $150,000, subject to prospective reinstatement
of the base salary upon, among other things, a change in ownership or control
of the Company.
Mr. Rubin. In January 1994, the Company entered into an employment
agreement with Mitchell B. Rubin under which he served as the Company's vice
president and general manager until December 1994, when he became vice
president of finance and operations and CFO. The term of Mr. Rubin's
employment agreement expires in February 1997, subject to the right of the
parties to terminate the agreement earlier under certain conditions, including
the right of the Company to terminate the agreement on ninety days' notice, and
Mr. Rubin to terminate the agreement on six months' notice. If such
termination is by the Company without cause, Mr. Rubin is entitled to receive
one year's salary as severance plus one year's participation in the bonus pool
described in the agreement. If termination results from death or disability,
he is entitled to one year's salary. The agreement provides for a base salary
of $150,000 through December 31, 1994, with increases at the discretion of the
Board of Directors thereafter. In addition, Mr. Rubin is eligible to receive
incentive bonuses equal to not less than 10% of a
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<PAGE> 12
bonus pool for executive employees, which pool, in the aggregate, is 10% of the
Company's annual pre-tax profits, as defined in the employment agreement.
Total 1995 compensation paid was $157,750. The employment agreement contains
certain restrictions on Mr. Rubin's right to compete. Effective January 1,
1996, this agreement was amended to reduce Mr. Rubin's 1996 base salary to
$135,000, subject to prospective reinstatement of the base salary upon, among
other things, a change in ownership or control of the Company
In connection with Mr. Rubin entering into his employment agreement in
January 1994, the Company granted him stock options for a term of ten years
under its 1992 Stock Option Plan to purchase up to 100,000 shares of the
Company's Common Stock at an exercise price of $4.0625 per share, the then
market price of such Stock. The Company also granted Mr. Rubin certain
registration rights with regard to the shares which were the subject of these
options. In December 1994, these options were terminated. Also in December
1994, the Company granted Mr. Rubin options to purchase an aggregate of 150,000
shares of the Company's Common Stock pursuant to its 1994 Stock Option Plan at
an exercise price of $1.69 per share, the then market price of such Stock, in
connection with his assuming significant additional responsibility for the
Company. The registration rights granted to Mr. Rubin in January 1994 were
amended to apply to 125,000 of the shares subject to the options granted in
December. The Company also entered into an agreement with Mr. Rubin in January
1994 providing him with indemnification on various matters that may result from
his service to the Company.
Mr. Frankel. In July 1994, the Company entered into an employment
agreement with Mark L. Frankel under which he serves as the Company's vice
president of sales and marketing. Pursuant to this agreement, as amended in
December 1994, the term of employment expires December 1996, subject to the
right of the parties to terminate earlier under certain conditions, including
the right of either party to terminate the agreement on ninety days' notice.
If such termination is by the Company without cause, Mr. Frankel is entitled to
receive one year's salary as severance, plus one year's participation in the
bonus pool described in the agreement. The agreement, as amended, provides for
a base salary of $150,000 per annum with increases at the discretion of the
Board of Directors. In addition, Mr. Frankel is eligible to receive incentive
bonuses equal to not less than 10% of a bonus pool for executive employees,
which pool, in the aggregate, is 10% of the Company's annual pre-tax profits,
as defined in the employment agreement. Total 1995 compensation paid was
$157,375. The employment agreement contains certain restrictions on Mr.
Frankel's right to compete. Effective January 1, 1996, this agreement was
amended to reduce Mr. Frankel's 1996 base salary to $115,000, subject to
prospective reinstatement of the base salary upon, among other things, a change
in ownership or control of the Company
In connection with Mr. Frankel's entering into his employment
agreement, the Company granted him stock options for a term of 10 years under
its 1994 Stock Option Plan to purchase up to 125,000 shares of the Company's
common stock at an exercise price of $2.44 per share, the then market price of
such Stock. In December 1994, the Company granted Mr. Frankel an additional
option to purchase 25,000 shares of the Company's Common Stock at an exercise
price of $1.69 per share, the then market price of such Stock.
Mr. Fischer. In July 1994, the Company entered into an employment
agreement with George H. Fischer, an employee of the Company since May 1992,
under which he serves as the Company's vice president of engineering. Pursuant
to this agreement, as amended in December 1994, the term of employment expires
December 1996, subject to the right of the parties to terminate earlier under
certain conditions, including the right of either party to terminate the
agreement on ninety days' notice. If such termination is by the Company
without cause, Mr. Fischer is entitled to receive one year's salary as
severance, plus one year's participation in the bonus pool described in the
agreement. The agreement, as amended, provides for a base salary of $130,000
per annum, with increases at the discretion of the Board of Directors. In
addition, Mr. Fischer is eligible to receive incentive bonuses equal to not
less than 10% of a bonus pool for executive employees, which pool, in the
aggregate, is 10% of the Company's annual pre-tax profits, as defined in the
employment agreement. Total 1995 compensation paid was $136,875. The
employment agreement contains certain restrictions on Mr. Fischer's right to
compete. Effective January 1, 1996, this agreement was amended, relating only
to 1996 base salary. Effective January 1, 1996, this agreement was amended to
reduce Mr. Fischer's 1996 base salary to $100,000, subject to prospective
reinstatement of the base salary upon, among other things, a change in
ownership or control of the Company
10
<PAGE> 13
During his term of employment with the Company, Mr. Fischer had been
granted options to purchase the Company's Common Stock under its 1992 and 1994
Stock Option Plans. These grants occurred in October 1992, November 1993 and
December 1994 for 48,046 shares, 50,000 shares and 40,000 shares, respectively,
at exercise prices of $3.00 per share, $4.06 per share, and $1.69 per share,
respectively, in each case the then market price of such Stock.
Mr. DeWitt. In June 1995, the Company entered into an employment
agreement with Kenneth I. DeWitt under which he serves as the Company's vice
president of manufacturing. Pursuant to this agreement, the term of employment
expires June 1997, subject to the right of the parties to terminate earlier
under certain conditions, including the right of the Company to terminate the
agreement on ninety days' notice, and Mr. DeWitt to terminate the agreement on
six months notice. If such termination is by the Company without cause, Mr.
DeWitt is entitled to receive one year's salary as severance plus one year's
participation in the bonus pool as described in the agreement. The agreement
provides for a base salary of $120,000 per annum. In addition, Mr. DeWitt is
eligible to receive incentive bonuses equal to not less than 5% of a bonus pool
for executive employees, which pool, in the aggregate, is 10% of the Company's
annual pre-tax profits, as defined in the employment agreement. Total 1995
compensation paid was $57,308. The employment agreement contains certain
restrictions on Mr. DeWitt's right to compete. Effective January 1, 1996, this
agreement was amended to reduce Mr. DeWitt's 1996 base salary to $100,000,
subject to prospective reinstatement of the base salary upon, among other
things, a change in ownership or control of the Company
In connection with Mr. DeWitt's entering into his employment
agreement, the Company granted him stock options for a term of 10 years under
its 1994 Stock Option Plan to purchase up to 60,000 shares of the Company's
common stock at an exercise price of $2.97 per share, the then market price of
such Stock.
1992 AND 1994 STOCK OPTION PLANS.
In July 1992 and January 1994, the Company adopted, respectively, the
1992 Stock Option Plan (the "1992 Plan") and the 1994 Stock Option Plan (the
"1994 Plan"). Subject to adjustment by reason of stock splits or similar
capital adjustments, each of the 1992 Plan and the 1994 Plan provides for the
granting of non-statutory stock options or incentive stock options to employees
or consultants to purchase up to an aggregate of 700,000 shares of Common
Stock.
As of December 31, 1995, options for 576,334 shares of Common Stock
had been granted and remained outstanding and unexercised under the 1992 Plan;
of these, options for 524,613 shares were exercisable as of December 31, 1995
at prices ranging from $1.69 to $6.75 per share. These options provide for
maturing of exercise rights over periods ranging from one year to three years
from the dates of grant. As of December 31, 1995, options for 520,000 shares
of Common Stock had been granted and remained outstanding and unexercised under
the 1994 Plan; of these, options for 366,041 shares were exercisable as of
December 31, 1995 at a prices ranging from $1.69 to $3.56 per share. These
options provide for maturing of exercise rights over periods ranging from one
year to three years from the dates of grant.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MICHAEL BISSONNETTE
Through August 1994, Michael Bissonnette, former chairman and CEO, was
the named lessee on a lease for certain of the office space occupied by the
Company. The Company paid the expenses for such space with no gain or loss to
Mr. Bissonnette. In August 1994, the Company ceased its occupancy of this
space, and the lease terminated. Further, during 1994, the Company paid
consulting fees of $50,000 to Mr. Bissonnette.
11
<PAGE> 14
An option was granted in August 1993 by Mr. Bissonnette to Mr.
Krakauer in connection with the change of management of the Company. Mr.
Bissonnette personally granted to Mr. Krakauer a ten-year option for 250,000
shares of the Company's Common Stock owned by Mr. Bissonnette at an exercise
price of $0.20 per share, payable in full in cash upon exercise. In addition,
the Company granted to Mr. Krakauer certain piggyback and demand registration
rights with regard to the shares subject to the option, and subsequently
registered such shares. In March 1994, Mr. Krakauer exercised the option and
sold the shares. The Company also entered into an agreement with Mr. Krakauer
providing him with indemnification on various matters that may result from his
service to the Company.
MISCELLANEOUS
For the year ended December 31, 1993, the Company paid Mr. Hitchcock,
a director of the Company, $59,000 in royalty payments under a license
agreement for technology. In 1994 and 1995, the Company paid Mr. Hitchcock
$92,000 and $131,000 respectively in royalties under such agreement. In
addition, during 1993, Voice Control Products, Inc. ("VCPI"), of which Mr.
Hitchcock is vice president-engineering and a director, and in which he owns
31% of the outstanding stock, entered into two license agreements with the
Company relating to the VoiceLogic technology utilized by the Company. In
consideration of one of the license agreements, in 1993 the Company issued
100,000 shares of its Common Stock and paid $30,000 for research and
development. In 1996, the Company entered into new agreements concerning the
VoiceLogic technology, replacing the prior agreements, which resulted in the
Company acquiring unrestricted exclusive ownership to the technology. As a
result of the new agreement, the Company agreed to pay Mr. Hitchcock $100,000
in two installments during 1996, $50,000 of which has already been paid.
Further, as a part of the new agreement, in 1996 the Company granted Mr.
Hitchcock options to purchase 33,333 shares at an exercise price of $0.375 per
share. The exercise price was a fraction of the then market price of the
shares, it being the intent of the Company that had the options been exercised
at issuance, a $50,000 gain would have been realized. The Company believes that
terms of the foregoing transactions were as favorable to the Company as would
be available from unrelated third parties.
PROPOSAL NO. 2 - RATIFICATION OF INDEPENDENT AUDITORS
The Company's Board of Directors recommends that the shareholders
ratify the selection of the firm of BDO Seidman, which has served as the
Company's independent auditors since inception, to serve as the Company's
independent auditors for the current fiscal year. A representative of BDO
Seidman is expected to be present at the Annual Meeting. He will have the
opportunity to make a statement if he desires to do so, and will be available
to respond to appropriate questions of shareholders. The Annual Report
contains consolidated financial statements of the Company, and the report
thereon of BDO Seidman, the Company's independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF BDO
SEIDMAN AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE CURRENT FISCAL YEAR.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal
year ended December 31, 1995 accompanies this Proxy Statement.
STOCKHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-KSB, INCLUDING FINANCIAL STATEMENTS REQUIRED TO BE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE SECURITIES AND EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995, BY WRITING TO THE
COMPANY AT 15260 VENTURA BLVD., SUITE 2200, SHERMAN OAKS, CALIFORNIA 91403
(ATTENTION: SECRETARY), OR ITS REGISTRAR AND TRANSFER AGENT,
12
<PAGE> 15
U.S. STOCK TRANSFER CORPORATION, 1745 GARDENA AVENUE, GLENDALE, CALIFORNIA
91204.
SHAREHOLDER PROPOSALS
In order for shareholders' proposals to be considered for inclusion in
the Company's proxy materials for the 1997 Annual Meeting of Shareholders, such
proposals must be received by the Company no later than December 15, 1996 in a
form that complies with applicable regulations.
OTHER MATTERS
The Board of Directors is not aware of any other matters that may come
before the Annual Meeting. However, if any such matters are properly presented,
it is the intention of the persons named in the accompanying form of proxy to
vote the proxy in accordance with their judgment on such matters.
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
Sherman Oaks, California
May 6, 1996
PLEASE PROMPTLY VOTE, DATE, SIGN AND RETURN THE ENCLOSED PROXY,
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING. A RETURN ENVELOPE IS ENCLOSED
FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE UNITED
STATES. PROMPT RESPONSE IS HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.
AT ANY TIME BEFORE A VOTE YOU MAY REVOKE YOUR PROXY BY (1) A LATER PROXY OR A
WRITTEN NOTICE OF REVOCATION DELIVERED TO THE INSPECTOR OF ELECTIONS, OR (2)
ADVISING THE INSPECTOR OF ELECTIONS AT THE MEETING THAT YOU ELECT TO VOTE IN
PERSON. ATTENDANCE AT THE MEETING WILL NOT IN AND OF ITSELF REVOKE A PROXY.
13
<PAGE> 16
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
VOICE POWERED TECHNOLOGY INTERNATIONAL, INC.
------------------------
1996 ANNUAL MEETING OF SHAREHOLDERS
JUNE 19, 1996
------------------------
The undersigned shareholder of Voice Powered Technology International, Inc.,
a California corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Shareholders and Proxy Statement, each dated May 6, 1996, and hereby
appoints Edward M. Krakauer and Mitchell B. Rubin, and each of them, proxies and
attorneys-in-fact, with full power to each of substitution, on behalf and in the
name of the undersigned, to represent the undersigned at the 1996 Annual Meeting
of Shareholders of Voice Powered Technology International, Inc., to be held on
June 19, 1996, at 9:00 a.m., local time, at the Warner Center Hilton, 6360
Canoga Avenue, Woodland Hills, California 91367, and at any postponements or
adjournments thereof, and to vote all shares of Common Stock which the
undersigned would be entitled to vote if then and there personally present, on
the matters set forth below:
1. ELECTION OF DIRECTORS: / / WITHHOLD AUTHORITY
/ / FOR all nominees listed below to vote for all nominees
(except as indicated) listed below
Nominees: Edward M. Krakauer, Mitchell B. Rubin, Mark L. Frankel, Myron H.
Hitchcock, Dr. Jack D. Steele, Ernest W. Townsend
(Instructions: to withhold authority to vote for any one or more nominee(s),
write the name(s) of such nominee(s) in the space provided below)
- --------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF BDO SEIDMAN AS THE INDEPENDENT
AUDITORS OF THE COMPANY FOR FISCAL 1996:
/ / FOR / / AGAINST / / ABSTAIN
and, in their discretion, upon such other matter or matters which may properly
come before the meeting or any postponements or adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE PROPOSALS.
<PAGE> 17
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY
DIRECTION IS INDICATED, WILL BE VOTED FOR PROPOSALS 1 AND 2, AND AS SAID PROXIES
DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. IF
ANY NOMINEE BECOMES UNAVAILABLE FOR ANY REASON, THE PERSONS NAMED AS PROXIES
SHALL VOTE FOR THE ELECTION OF SUCH OTHER PERSON AS THE BOARD OF DIRECTORS MAY
PROPOSE TO REPLACE SUCH NOMINEE.
Dated:____________, 1996
------------------------
(Signature)
------------------------
(Signature)
(This Proxy must be
signed exactly as your
name appears hereon.
Executors,
administrators,
trustees, etc., should
give full title as such.
If the shareholder is a
corporation, a duly
authorized officer
should sign on behalf of
the corporation and
should indicate his or
her title.)
PLEASE MARK, SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
