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-12
SI Diamond Technology, Inc.
------------------------------------------------
(Name of Registrant as Specified in its Charter)
N/A
------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the 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)(1) and
0-11.
(1) Title of each class of securities to which transaction
applies:
N/A
(2) Aggregate number of class of securities to which transaction
applies:
N/A
(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
fees 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: N/A
------------------------------
(2) Form, Schedule or Registration Statement No.: N/A
-----------
(3) Filing Party: N/A
-------------------------------------------
(4) Date Filed: N/A
--------------------------------------------
<PAGE>
SI DIAMOND TECHNOLOGY, INC.
3006 LONGHORN BOULEVARD
SUITE 107
AUSTIN, TEXAS 78758
June 12, 2000
To Our Shareholders:
On behalf of the Board of Directors and management of SI Diamond
Technology, Inc., I cordially invite you to attend the 2000 Annual Meeting of
Shareholders to be held at the Austin Marriott at the Capitol, 701 East 11th
Street, Austin, Texas 78701, on Monday, July 24, 2000, at 10:00 a.m., Central
Daylight Time. The attached Notice of Annual Meeting of Shareholders and Proxy
Statement describe the formal business to be transacted at the Annual Meeting.
In addition to the specific matters to be acted upon, there also will
be a report on the operations of SI Diamond. Directors and officers of SI
Diamond will be present to respond to any questions of general interest that
shareholders may have.
It is important that your shares be represented at the Annual Meeting.
Regardless of whether you plan to attend, you are requested to mark, sign, date
and promptly return the enclosed proxy in the envelope provided. If you attend
the Annual Meeting, which we hope you will do, you may vote in person even if
you have previously mailed a proxy card.
Sincerely,
Marc W. Eller
Chairman of the Board and
Chief Executive Officer
<PAGE>
SI Diamond Technology, Inc.
3006 Longhorn Boulevard
Suite 107
Austin, Texas 78758
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 24, 2000
To the Shareholders of
SI Diamond Technology, Inc.:
You are hereby notified that the 2000 Annual Meeting of Shareholders
(the "Annual Meeting") of SI Diamond Technology, Inc., a Texas corporation, will
be held at the Austin Marriott at the Capitol, 701 East 11th Street, Austin,
Texas 78701, on Monday, July 24, 2000, at 10:00 a.m., Central Daylight Time, for
the following purposes:
(1) To elect three Class I Directors to hold office in
accordance with the Amended and Restated Bylaws of SI Diamond;
(2) To ratify the appointment of WallaceSanders & Company as
independent auditors and accountants of SI Diamond for the fiscal year
ending December 31, 2000; and
(3) To transact such other business as properly may come
before the Annual Meeting or any adjournment thereof.
All shareholders are cordially invited to attend the Annual Meeting;
however, only shareholders of record at the close of business on June 5, 2000,
are entitled to notice of and to vote at the Annual Meeting. In accordance with
Texas law, a list of shareholders entitled to vote at the Annual Meeting shall
be open to the examination of any shareholder, for any purpose relating to the
Annual Meeting, during ordinary business hours at SI Diamond's principal
executive offices at 3006 Longhorn Boulevard, Suite 107, Austin, Texas, from
July 14, 2000, to July 23, 2000, and the list shall be available for inspection
at the Annual Meeting by any shareholder who is present.
By Order of the Board of Directors,
Douglas P. Baker
Vice President
DATED: June 12, 2000
IMPORTANT
Regardless of whether you expect to attend the meeting, please mark,
sign, date and return the enclosed proxy in the enclosed self-addressed envelope
as promptly as possible.
NO POSTAGE IS REQUIRED IF THE ENCLOSED ENVELOPE IS MAILED IN THE UNITED
STATES.
<PAGE>
PROXY STATEMENT
SI Diamond Technology, Inc.
3006 Longhorn Boulevard
Suite 107
Austin, Texas 78758
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies to be used at the 2000 Annual Meeting of Shareholders (the "Annual
Meeting") of SI Diamond Technology, Inc., a Texas corporation ("SI Diamond"), to
be held on Monday, July 24, 2000, at 10:00 a.m. Central Daylight Time, at the
Austin Marriott at the Capitol, 701 East 11th Street, Austin, Texas 78701, and
at any adjournments thereof. THE ACCOMPANYING PROXY IS SOLICITED BY THE BOARD OF
DIRECTORS OF SI DIAMOND. The principal executive offices of SI Diamond are
located at 3006 Longhorn Boulevard, Suite 107, Austin, Texas 78758. This Proxy
Statement and the accompanying proxy card are first being mailed to shareholders
on or about June 12, 2000.
SI DIAMOND WILL VOTE PROPERLY EXECUTED PROXIES ACCORDING TO THE
INSTRUCTIONS YOU PROVIDE ON THE PROXY CARD. IF YOU DO NOT SPECIFY A CHOICE AS TO
ANY OF THE MATTERS TO BE VOTED BY THE SHAREHOLDERS, THEN YOUR PROXY WILL BE
VOTED FOR ANY MATTER NOT CHOSEN OR SPECIFIED BY YOU AND, IN THE DISCRETION OF
THE PERSONS NAMED IN THE PROXY, ON ANY OTHER BUSINESS THAT MAY PROPERLY COME
BEFORE THE ANNUAL MEETING.
SOLICITATION
SI Diamond will bear all the costs of preparing, assembling and mailing
the proxy materials and of reimbursing brokers, nominees, and fiduciaries for
the out-of-pocket and clerical expenses of transmitting copies of the proxy
materials to the beneficial owners of shares held of record. Certain officers
and regular employees of SI Diamond or its subsidiaries, without additional
compensation, may use their personal efforts, by telephone or otherwise, to
obtain proxies in addition to this solicitation by mail. SI Diamond expects to
reimburse brokers, banks, custodians and other nominees for their reasonable
out-of-pocket expenses in handling proxy materials for beneficial owners of the
Common Stock. SI Diamond has engaged Morrow & Co., Inc., professional proxy
solicitors, to assist in the routine solicitation of proxies at a fee of
approximately $5,000 plus expenses.
VOTING AND REVOCABILITY OF PROXY APPOINTMENTS
Only shareholders of record at the close of business on June 5, 2000,
(the "Record Date") are entitled to receive notice of and to vote at the Annual
Meeting. As of the close of business on June 5, 2000, there were outstanding and
entitled to vote 56,611,840 shares of Common Stock and 1,160,820 shares of
Series G Preferred Stock (the "Series G Preferred"). The Common Stock holders of
record on the Record Date will be entitled to one vote per share. The Series G
Preferred is convertible into 1,160,820 shares of Common Stock at the option of
the holders thereof. Each share of Series G Preferred is convertible into the
number of shares of Common Stock determined by dividing the original price of
the Series G Preferred (the "Issue Price"), plus an amount equal to 10% per
annum of the Issue Price, by $1.00. The Series G Preferred shareholders of
record on the Record Date will be entitled to one vote per share for every share
of Common Stock into which the Series G Preferred is convertible on the Record
Date.
Under the current Amended and Restated By-Laws of SI Diamond, the
presence, in person or by proxy, of a majority of all outstanding Common Stock
and Series G Preferred, on an as-converted basis, at the Record Date will
constitute a quorum. For purposes of determining the presence of a quorum,
shareholders on the Record Date who are present at the meeting in person or by
proxy and who abstain, including brokers holding customers' shares of record who
cause abstentions to be recorded at the meeting, are considered shareholders who
are present and entitled to vote and they count toward the quorum. If there are
not sufficient shares represented in person or by proxy at the Annual Meeting to
constitute a quorum, the meeting may be postponed or adjourned in order to
1
<PAGE>
permit further solicitation of proxies by SI Diamond. Proxies given pursuant to
this solicitation and not revoked will be voted at any postponement of the
Annual Meeting.
Brokers holding shares of record for customers generally are not
entitled to vote on certain matters unless they receive voting instructions from
their customers. As used herein, "uninstructed shares" means shares held by a
broker who has not received instructions from its customers on such matters and
the broker has so notified SI Diamond on a proxy form in accordance with
industry practice or has otherwise advised SI Diamond that it lacks voting
authority. As used herein, "broker non-votes" means the votes that could have
been cast on the matter in questions by brokers with respect to uninstructed
shares if the brokers had received their customers' instructions.
Under Texas law, the vote of a plurality of the Common Stock and Series
G Preferred, present at the Annual Meeting in person or by proxy, and voting
together as one class, is necessary to elect Directors (Item 1). Abstentions and
broker non-votes will not be taken into account in determining the outcome of
the election of Directors. The ratification of the selection of SI Diamond's
independent accountants and auditors (Item 2) requires the affirmative vote of a
majority of the shares of the Common Stock and Series G Preferred, entitled to
vote and represented at the Annual Meeting in person or by proxy. Therefore,
abstentions and broker non-votes have the affect of negative votes for Item 2.
As of the date of this Proxy Statement, SI Diamond's Board of Directors
has not been informed of any matters, other than those set forth in the
foregoing Notice of Annual Meeting of Shareholders, that may be brought before
the Annual Meeting. If other matters requiring a vote of the shareholders arise,
the persons designated as proxies will vote the shares of Common Stock and
Series G Preferred, represented by the proxies in accordance with their judgment
on such matters.
Shareholders can ensure that their shares are voted at the Annual
Meeting by signing and returning the enclosed proxy card in the envelope
provided. Shares of Common Stock and Series G Preferred, represented by the
accompanying proxy card will be voted if the proxy card is properly executed and
is received by SI Diamond prior to the time of voting. Sending in a signed proxy
card will not affect a shareholder's right to attend the Annual Meeting and vote
in person.
Presence at the Annual Meeting by a shareholder who has signed a proxy
card does not by itself revoke the proxy. Each proxy granted may be revoked (1)
by giving written notice of such revocation to the Corporate Secretary of SI
Diamond, (2) by execution and delivery of a subsequent proxy, or (3) by
attending the Annual Meeting, giving notice of such revocation and voting in
person at the Annual Meeting, except that any such revocation shall not be
effective as to any matter upon which, prior to such revocation, a vote shall
have already been cast pursuant to the authority conferred by such proxy.
2
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to the
beneficial ownership of shares of each class of the SI Diamond's voting stock as
of June 5, 2000, by each person known to be the beneficial owner of 5% or more
of the outstanding voting stock of each such class of SI Diamond. For the
purposes of this Proxy Statement, beneficial ownership of securities is defined
in accordance with the rules of the SEC to mean generally the power to vote or
dispose of securities, regardless of any economic interest therein.
<TABLE>
<CAPTION>
Shares Owned Percent
Title of Class Name and Address Beneficially of Class
-------------------------------- ----------------------------------------------- ---------------------- --------------
<S> <C> <C> <C>
Common Stock None -- --
-------------------------------- ----------------------------------------------- ---------------------- --------------
Series G Preferred Stock William W. Gow 100 11.11%
4747 Sunset Blvd.
Los Angeles, CA 90027
----------------------------------------------- ---------------------- --------------
Klaich Animal Hospital, Ltd. 100<F1> 11.11%
Amended Profit Sharing
Retirement Plan & Trust
1990 South Virginia Street
Reno, NV 89502
----------------------------------------------- ---------------------- --------------
Nicholas Martin Living Trust 200 22.22%
3113 South University Drive, Suite 600
Ft. Worth, TX 76109
----------------------------------------------- ---------------------- --------------
Michael Scott Blechman Family Trust 200 22.22%
295 Shadowood Lane
Northfield, IL 60093
----------------------------------------------- ---------------------- --------------
SCG Cellular, Inc. 50 5.5%
8584 Katy Freeway, Suite 300
Houston, Texas 77024
----------------------------------------------- ---------------------- --------------
Chris S. Lawson 50 5.5%
3006 Longhorn Boulevard, Suite 107
Austin, Texas 78758
----------------------------------------------- ---------------------- --------------
Steve Aiello 50 5.5%
30094 Santa Barbara
Clinton, Township, MI 48036
----------------------------------------------- ---------------------- --------------
J. Brad Carter, M.D. 50 5.5%
9330 Park Crest Blvd. #300
Knoxville, TN 37923
----------------------------------------------- ---------------------- --------------
Peerless Distributing Company 50 5.5%
21700 Northwestern Highway, Suite 1160
Southfield, MI 48331
----------------------------------------------- ---------------------- --------------
ARA 50 5.5%
29844 High Valley Court
Farmington Hills, Michigan 48331
----------------------------------------------- ---------------------- --------------
<FN>
<F1> Shares are for a segregated account in the name of Nicholas L. Klaich.
</FN>
</TABLE>
3
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
Set forth below is certain information with respect to financial
ownership of SI Diamond's Common Stock as of June 5, 2000, by each Director,
each nominee for Director, each Named Executive Officer and by the Directors and
executive officers as a group. Unless otherwise indicated, each person or member
of the group listed has sole voting and investment power with respect to the
shares of Common Stock listed.
<TABLE>
<CAPTION>
Common Stock
Beneficial Percent
Name Ownership <F1> of Class
---- ------------- --------
<S> <C> <C>
Philip C. Shaffer 592,702 1.04%
David R. Sincox 391,213 *
Charles C. Bailey 30,000 *
Marc W. Eller 369,296 *
Ronald J. Berman 1,240,222 2.18%
Dr. Zvi Yaniv 1,386,000 2.39%
Douglas P. Baker <F2> 539,500 *
Nicholas Martin, Jr. 937,601 1.65%
All Executive Officers and 5,486,534 9.15%
Directors as a group (9 persons)
* Less than 1%.
<FN>
<F1> Included in the amounts indicated are shares that are subject to
options exercisable within 60 days of June 5, 2000 pursuant to Rule
13d-3(d)(1) of the Exchange Act. The number of such shares are 480,000
for Mr. Shaffer; 270,000 for Mr. Sincox; 394,383 for Mr. Berman;
1,350,000 for Mr. Yaniv; 530,000 for Mr. Baker; 30,000 for Mr. Martin;
30,000 for Mr. Bailey and 3,084,383 for the Directors and executive
officers as a group. The amount for Mr. Martin includes 258,685 shares
obtainable by Mr. Martin upon conversion of his Series G preferred
stock.
<F2> Mr. Baker ceased being an executive officer as of December 31, 1999,
but is included here because he was named executive officer in 1999.
</FN>
</TABLE>
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
SI Diamond's Amended and Restated Bylaws (the "Bylaws") provide for a
Board of Directors divided into three classes having staggered terms with each
class as nearly equal in size as possible. Pursuant to SI Diamond's Bylaws, the
Board of Directors can set the number of Directors at no less than three and no
more than nine members. The Board of Directors has set its size at seven members
as of the date of the Annual Meeting. The current term of office of the Class I
Directors expires at the Annual Meeting. The terms of office of Directors in
Class I, Class II and Class III will expire at the annual meetings of
shareholders to be held in 2003, 2001 and 2002, respectively. At each annual
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<PAGE>
meeting of shareholders, Directors will be elected to succeed those whose terms
then expire, with each newly elected Director to serve for the term specified
according to their class.
Mr. Sincox, Dr. Yaniv and Mr. Bailey have been nominated as Class I
Directors to serve a three-year term ending at the SI Diamond annual meeting in
2003. It is intended that the persons named in the accompanying proxy will vote
shares represented by properly executed proxies for the election of the three
listed nominees as Directors unless authority to vote is withheld. If any
nominee should become unavailable to serve on the Board of Directors, the
persons named in the proxy may act with discretionary authority to vote the
proxy for such other person, if any, as may be designed by the Board of
Directors. However, the Board of Directors is not aware of any circumstances
likely to render any of the nominees unavailable for election. The vote of a
plurality of the shares of Common Stock and Series G Preferred, present at the
Annual Meeting in person or by proxy and entitled to vote therein, voting
together as a single class, will be necessary to elect the nominees. A
"plurality" means that the individuals who receive the largest number of votes
cast are elected as Directors up to the maximum number of Directors to be chosen
at the meeting. Consequently, any shares not voted (whether by abstention,
broker non-vote, or otherwise) have no impact on the election of Directors. For
information about restrictions on Director nominations, see "SI Diamond Board of
Directors and Committees."
For each nominee's beneficial ownership of Common Stock, see "Security
Ownership of Management."
The following sets forth certain additional information regarding each
nominee for Director as of June 5, 2000. Unless otherwise indicated, each person
has had the same principal occupation for at least five years.
CLASS I DIRECTORS -- TERM EXPIRING 2003
DAVID R. SINCOX, age 59, has been a Director of the SI Diamond since
October 1994. Since 1987, Mr. Sincox has served as the Vice President of
Administration of Ref-Chem Construction Corporation, an engineering and
construction firm.
DR. ZVI YANIV, age 53, has served as SI Diamond's President and Chief
Operating Officer and as a Director since May 1996. Dr. Yaniv has degrees in
physics, mathematics, and electro-optics as well as a Ph.D. in Physics. Prior to
joining SI Diamond in May 1996, Dr. Yaniv operated a consulting practice and
previously was President and CEO of OIS Optical Imaging Systems, Inc., a
supplier of flat panel color liquid crystal displays to the avionics and defense
industries.
CHARLES C. BAILEY, age 51, has been a director of SI Diamond since
November 1999. He has been an attorney in private practice since 1995. Prior to
that Mr. Bailey had a 20 year career in government. Positions held include
Assistant Criminal District Attorney and Chief Prosecutor in Lubbock County,
Texas; General Counsel for Governor Bill Clements; and Director of Legal
Services and Franchise Taxes for the Texas State Comptroller's office; His last
position with the state of Texas, from 1993 to 1995, was Executive Assistant and
General Counsel to Lt. Governor Bob Bullock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES FOR
DIRECTOR.
CONTINUING DIRECTORS
Messrs. Shaffer and Martin are the current Class II Directors serving a
two year term ending at the SI Diamond annual meeting in 2001. Messrs. Eller and
Berman are the current Class III Directors serving a three-year term ending at
the SI Diamond annual meeting in 2002.
CLASS II DIRECTORS -- TERM EXPIRING 2001
PHILIP C. SHAFFER, age 62, has been a Director of SI Diamond since
March 1992. Since 1977, Mr. Shaffer has worked as a self-employed consultant in
the field of aerospace technology and management, with an emphasis in business
acquisitions. Mr. Shaffer also serves as the General Partner of an oil and gas
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<PAGE>
development partnership with a total capitalization of approximately $1.2
million. Prior to 1977, Mr. Shaffer worked for 12 years in the National
Aeronautics and Space Administration in a series of positions including Flight
Dynamics Officer, Apollo and Skylab Flight Director, Special Assistant to the
Director of the Johnson Space Center, and Manager of Space Shuttle Operations.
NICHOLAS MARTIN, JR., age 75, was President and owner of a North
American lumber wholesale and manufacturing company for approximately twenty
years. Mr. Martin has also owned companies manufacturing PVC pipe and vinyl
siding during the past thirty years. Mr. Martin currently is active in real
estate development in Kansas City, Detroit and Dallas/Ft. Worth.
CLASS III DIRECTORS -- TERM EXPIRING 2002
MARC W. ELLER, age 43, has served as SI Diamond's Chief Executive
Officer since July 1996. Mr. Eller is chairman of the Board of Directors and has
been a Director since November 1995. Mr. Eller co-founded BEG Enterprises, Inc.
in 1989 and has been its Vice President since that date. For the past five
years, Mr. Eller has also been involved in commercial real estate investment and
in investment banking activities for publicly traded companies. Mr. Eller has a
B.A. degree in Economics.
RONALD J. BERMAN, age 42, has been a Director since May 1996. Mr.
Berman co-founded BEG Enterprises, Inc. with Marc W. Eller and has been its
President since 1989. Mr. Berman also is President of R.J. Berman Enterprises,
Ltd., a real estate development company. Mr. Berman earned a Juris Doctor degree
in 1980 from the University of Detroit. Prior to 1989, Mr. Berman was an
attorney in private practice.
SI DIAMOND BOARD OF DIRECTORS AND COMMITTEES
The total number of meetings the Board held during 1999 was 14. No
incumbent Director who was a Director during 1999 attended fewer than 75 percent
of the aggregate of (i) the total number of meetings of the Board of Directors
and (ii) the total number of meetings held by all committees of the Board on
which he served, with the exception of Mr. Bailey who attended 3 meetings, which
constituted all meetings after his appointment to the Board of Directors. The
Board of Directors has established the following standing committees: Executive
Committee, Compensation Committee and Audit Committee.
EXECUTIVE COMMITTEE
The Executive Committee of the Board has and may exercise, during the
intervals between meetings of the Board, all the powers of the Board in the
management of SI Diamond's business and affairs, subject to certain statutory
restrictions. The current members of the Executive Committee are Messrs. Eller,
Yaniv and Shaffer. The members of the Executive Committee consulted with one
another frequently between Board meetings but took no formal action during 1999.
COMPENSATION COMMITTEE
The Compensation Committee is responsible for recommending to the Board
the compensation arrangements for SI Diamond's senior management and
administering SI Diamond's stock option plans. The Members of the Compensation
Committee during 1999 were Messrs. Berman and Mr. Shaffer. They conferred with
one another on a regular basis and consulted with the full Board from time to
time on matters within the Compensation Committee's purview. The members of the
Compensation Committee met three times during 1999.
AUDIT COMMITTEE
The Audit Committee consists of two members, Mr. Sincox and Mr. Martin
both of whom are "independent" under the NASDAQ listing standards as currently
in effect. The Committee members do not have any relationship to the Company
that may interfere with the exercise of independent judgment in carrying out the
responsibilities of a director. None of the Committee members are current
officers or employees of the Company or its affiliates. The committee met one
time in 1999.
6
<PAGE>
Audit Committee Charter
-----------------------
The Audit Committee operates pursuant to a Charter approved by the
Company's Board of Directors. The Audit Committee reports to the Board of
Directors and is responsible for overseeing and monitoring financial accounting
and reporting, the system of internal controls established by management and the
audit process of the Company. The Audit Committee Charter sets out the
responsibilities, authority and specific duties of the Audit Committee. The
Charter specifies, among other things, the structure and membership requirements
of the Committee, as well as the relationship of the Audit Committee to the
independent accountants, the internal audit department, and management of the
Company. A copy of the Audit Committee Charter is attached to this Proxy
Statement as Appendix A.
NOMINATING COMMITTEE
The Board of Directors as a whole acts in place of nominating
committee. SI Diamond's Amended and Restated Articles of Incorporation provide
that nominations for Directors may be made by shareholders only if written
notice of such proposed nominations are delivered to or mailed and received at
the principal executive offices of SI Diamond not less than 60 days nor more
than 90 days prior to the meeting; provided, however, that in the event that
less than 70 days' notice or prior public disclosure of the date of the meeting
is given or made to shareholders, then, notice by the shareholders, to be
timely, must be so delivered or mailed and received not later than the close of
business on the 10th day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such shareholder's
notice shall set forth (a) as to each person the shareholder proposes to
nominate for election or re-election as Director (i) the person's name, age,
business address, and residence address, (ii) the person's principal occupation
or employment, (iii) the class and number of shares of SI Diamond that the
person beneficially owns and (iv) any other information relating to the person
that is required to be disclosed in solicitation for proxies for election of
Directors pursuant to Section 14 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder; and (b) as to the shareholder giving notice, (i) the name and
address of the shareholder and (ii) the class or series and number of shares of
capital stock of SI Diamond that are owned beneficially or of record by the
shareholder. SI Diamond may require a proposed nominee to furnish such other
information as may be reasonably required by SI Diamond to determine the
eligibility of each proposed nominee to serve as one of the Directors. No person
shall be eligible for election as a Director unless nominated in accordance with
the procedures set forth above. The Chairman of the annual meeting shall, if the
facts warrant, determine and declare to the annual meeting that the nomination
was not made in accordance with the above procedures, and if the Chairman so
determines, he shall declare such to the meeting and the defective nomination
shall be disregarded.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires SI
Diamond's Officers, and Directors, and persons who beneficially own more than
10% of a registered class of SI Diamond's common stock, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
and NASDAQ. Officers, Directors, and beneficial owners of more than 10% of SI
Diamond's common stock are required by the Securities and Exchange Commission
regulations to furnish SI Diamond with copies of all Section 16(a) forms that
they file.
Based solely on review of the copies of such reports furnished to us, or written
representations that no reports were required, we believe that for the period
from January 1, 1999 through December 31, 1999, all its Officers, Directors and
greater than 10% beneficial owners complied with all Section 16(a) filing
requirements applicable to them, with the exception of one Director, Charles C.
Bailey. Mr. Bailey filed his initial Form 3, which reported ownership as of the
date Mr. Bailey became a director one day after the due date of the form.
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth the total cash compensation paid or to
be paid, as well as certain other compensation paid or accrued, for services
rendered during the fiscal years ended December 31, 1999, 1998 and 1997 by the
Chief Executive Officer and all executives whose total annual salary and bonus
exceeded $100,000 for the fiscal year ended December 31, 1999 (the " Named
Executive Officers"):
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
----------------------------------------------- ------------
Other Securities
Annual Underlying
Name and Position Year Salary($) Bonus($) Compensation($)<F1> Options(#)<F2>
----------------- ---- --------- -------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Marc W. Eller ................ 1999 $168,750 $ 111,250 $ -0- 250,000
Chief Executive Officer ...... 1998 150,000 -0- -0- 780,000
1997 150,000 -0- -0- 47,500
Zvi Yaniv, President and ..... 1999 $175,000 $ 125,000 $ 3,205 150,000
Chief Operating Officer ...... 1998 150,000 -0- 6,839 1,170,000
1997 150,000 -0- 24,170 270,000
Doug Baker, Vice President ... 1999 $130,000 $ 50,000 $ -0- $150,000
and Chief Financial Officer<F3> 1998 115,000 -0- -0- 520,000
1997 115,000 -0- -0- 45,000
<FN>
<F1> The following Named Executive Officers received perquisites that
exceeded in value the lesser of $50,000 or 10% of such officers' salary
and bonus. Dr. Yaniv received reimbursement of living expenses totaling
$20,070 in 1997. He was also provided use of a company owned automobile
valued at $3,205 in 1999, $1,882 in 1998, and $4,100 in 1997. In 1998,
Dr. Yaniv was reimbursed $4,957 in connection with the transportation
of his household belongings in connection with the relocation of his
primary residence to Austin, Texas.
<F2> 1997 options include options issued in 1996 but repriced in 1997 in the
following amounts: Mr. Eller - 27,500, Dr. Yaniv - 250,000, and Mr.
Baker - 25,000. 1998 options include options issued in 1996 and 1997,
but repriced in 1998 in the following amounts: Mr. Eller - 130,000, Dr.
Yaniv - 1,020,000, and Mr. Baker - 120,000. More information on this
repricing is identified in the "Options Repricing Table" below.
<F3> Mr. Baker ceased being an executive officer as of December 31, 1999,
but is included here because he was an executive officer at December
31, 1999.
</FN>
</TABLE>
STOCK OPTION GRANTS IN 1999
SI Diamond has an Amended and Restated 1992 Employee Stock Option Plan,
which may be used to grant employees, including officers of SI Diamond,
incentive stock options designed to qualify under Section 422 of the Internal
Revenue Code of 1986, or non-qualified stock options. SI Diamond also
established the 1998 Directors and Officers Stock Option Plan, which may be used
8
<PAGE>
to grant non-qualified stock options to officers and Directors of SI Diamond.
The following table sets forth information concerning stock option grants to the
Named Executive Officers in 1999.
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Underlying Options Granted to
Options Employees in Exercise or Expiration
Name Granted (#)<F1><F2> Fiscal Year 1999 Base Price ($/Sh) Date
---- ----------------- ---------------- ----------------- ----
<S> <C> <C> <C> <C> <C>
Marc W. Eller 250,000 <F3> 20.29% $0.50 01/11/2009
Dr. Zvi Yaniv 150,000 <F3> 12.17% $0.50 01/11/2009
Douglas P. Baker 150,000 <F3> 12.17% $0.50 01/11/2009
<FN>
<F1> Under the terms of SI Diamond's Amended and Restated 1992 Stock Option
Plan and the 1998 Directors and Officers Stock Option Plan, the
Compensation Committee of the SI Diamond Board of Directors retains
discretion, subject to plan limits, to modify the terms of outstanding
options and to reprice the options.
<F2> The options were granted for a term of ten (10) years, subject to
earlier termination in certain events related to termination of
employment.
<F3> These options became exercisable in full on the date of the grant in
1999.
</FN>
</TABLE>
AGGREGATE OPTION EXERCISES IN 1999
AND OPTION VALUES AT DECEMBER 31, 1999
The following table sets forth certain information concerning the
number and intrinsic value of the options held by the named executives at
December 31, 1999. Year-end values are based on the closing price of $1.66 per
share of the common stock on December 31, 1999, on the NASDAQ OTC Bulletin
Board. They do not reflect the actual amounts, if any, which may be realized
upon the future exercise of remaining stock options and should not be considered
indicative of future stock performance.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options at Options at
December 31, 1999 December 31, 1999
----------------- -----------------
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise Realized Unexercisable Unexercisable
---- ------------ -------- ------------- -------------
<S> <C> <C> <C> <C>
Marc W. Eller 0 0 753,500 / 26,500 $936,998 / $34,053
Dr. Zvi Yaniv 0 0 1,120,000 / 200,000 1,420,450 / 257,000
Douglas P. Baker 70,000 $64,050 600,000 / 0 752,250 / 0
</TABLE>
9
<PAGE>
DIRECTOR COMPENSATION FOR 1999
<TABLE>
<CAPTION>
Security Grants in 1999
Director Compensation Number of Securities
Name <F1> Meeting Fees ($) <F2> Underlying Options (#) <F3>
-------- -------------------- --------------------------
<S> <C> <C>
Lee B. Arberg <F1> 550 150,000
David R. Sincox 950 170,000
Philip C. Shaffer 900 170,000
Igor Leontiev <F1> 250 150,000
Ronald J. Berman 950 170,000
Nicholas Martin, Jr. 400 0
Charles C. Bailey 250 0
<FN>
<F1> Directors who are also executives of SI Diamond are not listed in the
above table. They do not receive compensation as Directors. Refer to
the "Summary Compensation Table" for information concerning their
compensation. Mr. Arberg resigned as a director on May 3, 1999. Mr.
Leontiev's term expired on July 26, 1999 and he was not reelected as a
Director.
<F2> All Directors receive $150 per board meeting or committee meeting
attended in person and $50 per telephonic meeting. Reasonable expenses
incurred by each Director in connection with his duties as a Director
are also reimbursed by SI Diamond. This amount is not reflected in the
above table.
<F3> All SI Diamond's outside Directors participate in the Amended and
Restated 1992 Outside Directors Stock Option Plan, under which SI
Diamond may grant stock options to any Director who is not a full time
salaried employed of the Company. On July 26, 1999, each Director at
that time was granted 20,000 options under this plan a price of $2.27
per share. These option grants became exercisable in full on that date.
The Board of Directors also established the 1998 Directors and Officers
Stock Option Plan in 1998. Each outside Director who was a Director on
January 11, 1999 was granted 150,000 fully vested options under this
plan on that date. These options are exercisable at a price of $0.50
per share.
</FN>
</TABLE>
All of Directors have retained the right to pursue additional business
activities that are not competitive with the business of SI Diamond, and do not
adversely affect their performance as Director. If, as and when conflicts of
interest arise, the nature of the conflict must be fully disclosed to the Board
of Directors, and the person who is subject to the conflict must abstain from
participating in any decision that may impact on his conflict of interest.
Except for this disclosure and abstention policy, the Directors will not be in
breach of any fiduciary duties owed to SI Diamond or the shareholders by virtue
of their participation in such additional business activities.
EMPLOYMENT AGREEMENTS
SI Diamond has an employment agreement with Dr. Zvi Yaniv, its
President and Chief Operating Officer, which was entered into on June 1, 1996.
Under the terms of this agreement, Dr. Yaniv was to be paid a base salary of
$125,000 per year. The contract was amended to adjust Dr. Yaniv's salary to
$175,000 per year effective January 1, 1999. All contingent compensation related
to bonuses or performance goals were eliminated. SI Diamond also provides Dr.
Yaniv with the use of an automobile. The employment agreement may be terminated
by either party, with or without cause, by giving 30 days notice of termination
to the other party.
10
<PAGE>
CERTAIN TRANSACTIONS
As of December 31, 1998, SI Diamond had notes payable to its chief
executive officer. These notes resulted from the CEO's personal guarantee of a
loan made by an investor. The loan was made to the CEO, who in turn loaned the
money to SI Diamond under the same terms. In April 1999, these notes payable
were assigned by the CEO to the holder of the underlying note payable. The
holder of the underlying note payable converted this loan into shares of the
Company's common stock.
In October 1998, Electronic Billboard Technology, Inc., a subsidiary of
SI Diamond entered into a Patent Assignment and Royalty Agreement with Advanced
Technology Incubator, Inc., ("ATI") a corporation based in Austin, Texas and
owned by Dr. Zvi Yaniv, SI Diamond's President and Chief Operating Officer.
Under the terms of the agreement, ATI agreed to assign U.S. Patent No. 5,469,187
related to certain LCD technology to EBT in exchange for an initial payment of
$200,000. In addition, ATI is entitled to receive a royalty of 5% of gross
revenue related to products using this patent. EBT intends to use this
technology in the development of its next generation electronic billboard
product. EBT may terminate this assignment at any time upon 30 days written
notice to ATI. The assignment may be terminated by ATI if, within two years of
the first sale or lease of a billboard using this technology, cumulative royalty
payments under the agreement have not totaled $500,000, or if payments do not
equal $500,000 in any one year period following this initial two year period. If
the assignment is terminated by ATI, EBT will be granted a non-exclusive
worldwide license to use the technology under terms similar to those contained
in this agreement.
ATI had the right to terminate this agreement if the initial payment
was not received by February 15, 1999. This date was extended until April 15,
1999. In April 1999, the agreement was amended to allow additional extensions,
in three month increments, for a period of up to one year from April 15, 1999.
In exchange for each three month extension, EBT was obligated to pay ATI
$12,500. The $200,000 initial payment required for the actual assignment of the
Patent under the agreement will be reduced for any amounts paid for the
extension periods. EBT elected to exercise each of its extension options and
paid ATI a total of $50,000 through January 2000. In April 2000, the contract
was renegotiated to extend the option period to July 15, 2000 in exchange for a
payment of $12,500. In July, 2000, EBT will either pay $137,500 to complete the
assignment of the patent, or allow its option to acquire the patent to lapse.
PROPOSAL NUMBER TWO
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
Subject to ratification by the shareholders, SI Diamond's Board of
Directors has appointed WallaceSanders & Company as independent auditors to
audit the financial statements of SI Diamond for the current fiscal year.
Representatives of the firm of WallaceSanders & Company are expected to
be present at the Annual Meeting and will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions.
THE AUDIT COMMITTEE AND THE BOARD OF DIRECTORS RECOMMEND THAT THE
SHAREHOLDERS VOTE "FOR" SUCH RATIFICATION.
CHANGES IN SI DIAMOND'S CERTIFYING ACCOUNTANTS
On June 18, 1998, Coopers & Lybrand L.L.P. ("Coopers & Lybrand")
informed SI Diamond of its resignation as SI Diamond's independent accountants.
The reports of Coopers & Lybrand on SI Diamond's financial statements
for the years ended December 31, 1997 and 1996 did not contain an adverse
opinion or disclaimer of opinion, but the reports did contain explanatory
paragraphs in each of the two years concerning the ability of SI Diamond to
continue as a going concern since SI Diamond has not yet achieved profitability,
has a working capital deficit and must obtain additional capital to fund its
11
<PAGE>
ongoing operations. There were no disagreements with Coopers & Lybrand on any
matters of accounting principles or practices, financial statement disclosures,
or auditing scope and procedures which, if not resolved to the satisfaction of
Coopers & Lybrand, would have caused Coopers & Lybrand to make reference to the
matter in their report.
On December 28, 1998, the Board of Directors of SI Diamond Technology,
Inc. appointed WallaceSanders & Company as independent auditors of SI Diamond
for the fiscal year ending December 31, 1998. SI Diamond did not consult
WallaceSanders & Company regarding the application of accounting principles to a
specific completed or contemplated transaction or the type of audit opinion that
might be rendered on SI Diamond's financial statements.
OTHER BUSINESS
The Board of Directors does not intend to present any other matter(s)
at the Annual Meeting and, at this date, has not been informed that any other
matters will be presented at the Annual Meeting by others. If, however, any
other matter does properly come before the Annual Meeting, the persons named in
the accompanying proxy will vote in accordance with their best judgment.
SHAREHOLDER PROPOSALS
In the event that a shareholder desires to have a proposal formally
considered at the 2001 annual meeting of shareholders and included in the proxy
statement for that meeting, the proposal must be received in writing by SI
Diamond, Technology, Inc., at its executive offices on or before February 12,
2001.
SI DIAMOND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS ANNUAL REPORT ON
FORM 10-KSB, AS FILED WITH THE SECURITIES EXCHANGE COMMISSION, FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1999, TO ANY SHAREHOLDER OF SI DIAMOND UPON WRITTEN
REQUEST. REQUESTS SHOULD BE SENT TO: SI DIAMOND TECHNOLOGY, INC., 3006 LONGHORN
BOULEVARD, SUITE 107, AUSTIN, TEXAS 78758, ATTENTION: CORPORATE SECRETARY.
By Order of the Board of Directors,
Marc W. Eller
Chairman of the Board and
Chief Executive Officer
Austin, Texas
June 12, 2000
<PAGE>
APPENDIX A
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its financial and other oversight responsibilities by:
o Serving as an independent and objective party to monitor the
Company's financial statements, financial reporting process
and internal control system.
o Reviewing and appraising the Company's outside auditors and
internal financial management.
o Providing an open avenue of communication among the Company's
outside auditors, management, including internal financial
management, and the Board.
The Audit Committee will further carry out its purpose by engaging in
the activities enumerated in Section IV of this Charter.
II. MEMBERSHIP REQUIREMENTS
Members of the Audit Committee shall meet the following qualifications,
or such other qualifications as may be imposed from time to time by the Board,
by law or by the listing requirements of any stock exchange or automated
quotation system upon which a security of the Company may be traded or quoted.
(A) Independence
The Audit Committee shall be comprised of three or more directors as
determined by the Board. Except as provided below, the members of the Audit
Committee shall be independent directors. "Independent director" shall mean a
person other than an officer or employee of the Company or its subsidiaries or
any other individual having a relationship which, in the opinion of the Board,
would interfere with the exercise of independent judgment in carrying out the
responsibilities of a director.
The following persons shall NOT be considered independent:
(1) A director who is employed by the Company or any of its
affiliates for the current year or any of the past three years.
(2) A director who accepts any compensation from the Company or
any of its affiliates in excess of $60,000 during the previous fiscal
year, other than compensation for Board service, benefits under a
tax-qualified retirement plan or non-discretionary compensation.
(3) A director who is a spouse, parent, child, sibling,
mother-in-law, father-in-law, brother-in-law, sister-in-law,
son-in-law, daughter-in-law, or resides in the home of an individual
who is, or has been in any of the past three years, employed by the
Company or any of its affiliates as an executive officer.
(4) A director who is a partner in, or controlling shareholder or
an executive officer of, any for-profit business organization to which
the Company made, or from which the Company received, payments (other
than those arising solely from investments in the Company's securities)
that exceed 5% of the Company's or the other business organization's
consolidated gross revenues for that year, or $200,000, whichever is
more, in any of the past three years.
(5) A director who is employed as an executive of another entity
where any of the Company's executives serve on that entity's
compensation committee.
A-1
<PAGE>
Notwithstanding the preceding limitations, one director who is not
otherwise independent and is not a current employee, or an immediate family
member (as defined above) of a current employee, may be appointed to the Audit
Committee if the Board, under exceptional and limited circumstances, determines
that membership on the Audit Committee by the individual is required by the best
interests of the Company and its shareholders.
(B) Financial Literacy
All members of the Audit Committee shall be able to read and understand
fundamental financial statements, including the Company's balance sheet, income
statement, and cash flow statement or will become able to do so within a
reasonable period of time after his or her appointment to the Audit Committee.
At least one member shall have past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background which results in the individual's financial
sophistication.
(C) Election, Removal and Replacement
The members of the Audit Committee shall be elected by the Board.
Unless a Chair is elected by the full Board, the members of the Audit Committee
may designate a Chair.
In the event a director becomes disqualified from membership on the
Audit Committee, such director shall be removed as soon as practicable from
service on the Audit Committee by the Board. In the event the removal,
resignation, retirement, death or other termination of a director from service
on the Audit Committee results in the Audit Committee comprising less than three
members, the Board shall elect a new qualified director to the Audit Committee
as soon as practicable. If such election to the Audit Committee requires the
election by the shareholders of the Company or the directors or new director to
the Board, the Company and the Board may consult with any stock exchange or
automated quotation system upon which a security of the Company may be traded or
quoted.
III. MEETINGS AND GOVERNANCE
The Audit Committee shall meet at least annually in connection with the
Company's annual audit, or more frequently as circumstances dictate. In
addition, the Audit Committee or its Chair shall meet to review the Company's
quarterly or other interim financial statements, as appropriate. Such meetings
may be held in or out of the presence of the Company's management, outside
auditors or both, as appropriate. Other governance matters not addressed herein
shall be governed by the Company's articles of incorporation or bylaws.
IV. DUTIES, RESPONSIBILITIES AND ACTIVITIES
To fulfill its purpose, the Audit Committee has the following duties
and responsibilities and shall engage in the following activities:
(A) Review of Charter and Financial Statements and Reports
The Audit Committee shall review the Company's financial statements,
reports and other financial information, in conjunction with the Company's
internal financial management and outside auditors, as appropriate. Such review
shall include candid discussions of the quality--not merely the
acceptability--of the Company's accounting principles as applied in its
financial reporting. Reviews shall occur prior to dissemination of the
statement, report or other document to a third party or the public. Without
limitation, the Audit Committee shall review:
o The annual financial statements and any reports or other
financial information, including any certification, report,
opinion, or review rendered by the outside auditors.
o Any quarterly or other interim financial statements and any
reports or other financial information, including any
certification, report, opinion, or review rendered by the
outside auditors. The Chair of the Audit Committee may
represent the entire Audit Committee for purposes of this
review.
o This Charter on an annual basis, or more frequently as
circumstances dictate.
o As circumstances dictate and as deemed necessary or advisable
from time to time, any material internal financial reports to
management prepared by internal financial management.
A-2
<PAGE>
(B) Relationship With Outside Auditors
The Audit Committee's and the Board's relationship with the Company's
outside auditors shall governed by the following principles:
o The Company's outside auditors are ultimately accountable to
the Audit Committee and the Board.
o The Audit Committee and the Board are ultimately responsible
for selecting, evaluating and, where appropriate, replacing
the Company's outside auditors.
o The Audit Committee is responsible for ensuring receipt from
the outside auditors of a formal written statement delineating
all relationships between the outside auditors and the
Company. The Audit Committee is responsible for actively
engaging in a dialogue with the outside auditors with respect
to any disclosed relationships or services that may impact the
objectivity and independence of the outside auditors. The
Audit Committee is further responsible for taking, or
recommending that the Board take, appropriate action to
oversee the independence of the outside auditors.
(C) Relationship With Company and Internal Financial Management
The Audit Committee's and the Board's relationship with the Company's
management, including its internal financial management, shall governed by the
following principles:
o The Audit Committee is responsible for reviewing the integrity
of the Company's financial reporting process, both internal
and external.
o The Audit Committee is responsible for reviewing the quality
and appropriateness of the Company's accounting principles as
applied in its financial reporting.
o The Audit Committee is responsible for considering and
approving, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested
by the outside auditors or management, including internal
financial management.
(D) Audit Committee Report
The Audit Committee shall prepare an Audit Committee Report annually in
connection with the Company's annual audit. The Report shall address such
matters as deemed appropriate by the Audit Committee, but shall state whether
the Audit Committee:
o Reviewed and discussed the Company's audited financial
statements with management.
o Discussed with the outside auditors such qualitative matters
concerning the Company's accounting principles as applied in
its financial reporting as are appropriate.
o Received from the outside auditors a formal written statement
delineating all relationships between the outside auditors and
the Company.
o Recommends to the Board that the Company's audited financial
statements be included in the Company's public filings or
other publicly available reports.
The names of the members of the Audit Committee shall appear at the end
of the Report.
A-3
<PAGE>
(E) OTHER ACTIVITIES
The Audit Committee may perform such activities from time to time, as
the Board deems appropriate. Without limitation, such activities may be assigned
to the Audit Committee because of the independence of its members.
A-4
<PAGE>
PROXY SI DIAMOND TECHNOLOGY, INC. PROXY
2000 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Marc W. Eller and Douglas P. Baker, either one
of whom may act without joinder of the other, with full power of substitution
and ratification, attorneys-in-fact and Proxies of the undersigned to vote as
designated on the reverse side all shares of Common Stock and Series G Preferred
Stock of SI Diamond Technology, Inc. ("SI Diamond"), held by the undersigned, at
the 2000 Annual Meeting of Shareholders of SI Diamond to be held at 10:00 a.m.
on Monday, July 24, 2000 (CDT) at the Austin Marriott at the Capitol, 701 East
11th Street, Austin, Texas 78701, and at any and all adjournments thereof, and
with discretionary authority to vote on all other matters that may properly come
before the meeting: IF YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS
OF THE BOARD OF DIRECTORS, YOU MAY JUST SIGN AND DATE BELOW AND MAIL IN THE
POSTAGE PAID ENVELOPE PROVIDED. SPECIFIC CHOICES MAY BE MADE BELOW. IN THE
ABSENCE OF INSTRUCTIONS TO THE CONTRARY, THE SHARES REPRESENTED WILL BE VOTED IN
ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS.
DATED: ____________________________________
SIGNATURE: ________________________________
SIGNATURE: ________________________________
(NOTE: PLEASE SIGN EXACTLY AS NAME(S) APPEARS HEREON. JOINT
OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR,
ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE.)
DO YOU PLAN TO ATTEND THE ANNUAL MEETING?______
(See Reverse Side)
<PAGE>
This proxy will be voted as directed, or if no direction is indicated, will be
voted FOR Item 1 all nominees listed below for election as Directors; FOR Item 2
ratification of Wallace Sanders & Company, as independent accountants and
auditors; and in the discretion of the persons named as Proxies with respect to
any other business that may properly come before the meeting. The Board of
Directors recommends a vote FOR Items 1 and 2.
<TABLE>
<CAPTION>
<S> <C> <C>
(1) Election of Directors. FOR ALL |_| WITHHOLDING AUTHORITY TO VOTE FOR |_|
(EXCEPT AS SPECIFIED BELOW)
</TABLE>
TERM ENDING 2000:
David R. Sincox
Dr. Zvi Yaniv
Charles C. Bailey
Instructions: To withhold vote for any individual(s) above write name(s) below:
-------------------------------------------------------------------------------
(2) Ratify the appointment of Wallace Sanders & FOR AGAINST ABSTAIN
Company as ndependent auditors for fiscal year |_| |_| |_|
2000.
(Sign and date on reverse side)
