<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Preliminary Proxy Statement
- --------------------------------------------------------------------------------
METRO ONE TELECOMMUNICATIONS, 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/ 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:
(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>
[LOGO]
April 14, 1998
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Record of Metro One Telecommunications, Inc., which will be held on Tuesday
May 19, 1998, at 3:30 pm, local time, at the Portland Conference Center, 300
N.E. Multnomah Street, Portland, Oregon 97232. The Directors of Metro One and I
look forward to greeting as many of our shareholders as possible.
Details of the business to be conducted at the Annual Meeting are given in
the attached Proxy Statement. The Company's Annual Report for the year ended
December 31, 1997 is also enclosed.
Whether or not you plan to attend the meeting, it is important that your
shares be represented and voted at the meeting. Therefore, I urge you to sign,
date, and promptly return the enclosed proxy in the enclosed postage-paid
envelope. If you decide to attend the Annual Meeting and vote in person, you
will, of course, have that opportunity.
On behalf of the Board of Directors, I would like to express our continued
appreciation for your interest in the affairs of the Company.
Sincerely,
[LOGO]
Timothy A. Timmins
PRESIDENT
CHIEF EXECUTIVE OFFICER
<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
----------------
NOTICE OF ANNUAL MEETING
TO BE HELD ON MAY 19, 1998
---------------------
To the Shareholders of Metro One Telecommunications, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the shareholders of METRO
ONE TELECOMMUNICATIONS, INC. (the "Company") will be held on May 19, 1998 at
3:30 p.m. local time, at the Portland Conference Center, 300 N.E. Multnomah
Street, Portland, Oregon for the following purposes:
1. To elect five Directors, each for a one-year term;
2. To approve the selection of Deloitte & Touche LLP as independent
auditors for the Company for the year ending December 31, 1998; and
3. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed March 26, 1998 as the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. Only shareholders of record at the close of business on that date will
be entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors
STEBBINS B. CHANDOR, JR.
SECRETARY
Beaverton, Oregon
April 14, 1998
<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
8405 S.W. NIMBUS AVENUE
BEAVERTON, OREGON 97008
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 19, 1998
---------------------
GENERAL
This Proxy Statement is furnished to shareholders of METRO ONE
TELECOMMUNICATIONS, INC. (the "Company") in connection with the solicitation by
the Board of Directors of proxies from the shareholders of record of the
Company's outstanding shares of Common Stock, no par value (the "Common Stock"),
for use at the Company's Annual Meeting of Shareholders to be held on May 19,
1998 at 3:30 p.m. local time, and at any adjournments or postponements thereof
(the "Annual Meeting").
At the Annual Meeting, shareholders will be asked to (i) elect five members
of the Board of Directors, (ii) approve the selection of Deloitte & Touche LLP
as independent auditors for the Company for the year ending December 31, 1998
and (iii) transact such other business as may properly come before the meeting.
This Proxy Statement, together with the enclosed proxy card, is first being
mailed to the Company's shareholders on or about April 14, 1998.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has fixed March 26, 1998 as the record date for the
determination of the shareholders entitled to notice of and to vote at the
Annual Meeting. Accordingly, only holders of record of shares of Common Stock at
the close of business on such date will be entitled to notice of and to vote at
the Annual Meeting, with each such share entitling its owner to one vote on all
matters properly presented at the Annual Meeting. On the record date, there were
approximately 3,789 beneficial holders of the 11,039,947 shares of Common Stock
then outstanding. The presence, in person or by proxy, of 51% of the total
number of outstanding shares of Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum at the Annual Meeting.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Annual Meeting, the shares represented thereby will be voted in
accordance with the instructions marked thereon. EXECUTED BUT UNMARKED PROXIES
WILL BE VOTED (I) FOR THE ELECTION OF THE DIRECTORS NAMED IN THE PROXY, AND (II)
FOR APPROVAL OF THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS
FOR THE YEAR ENDING DECEMBER 31, 1998. The Board of Directors does not know of
any matters other than those described in the Notice of Annual Meeting that are
to come before the Annual Meeting. If any other matters are properly brought
before the Annual Meeting, the persons named in the proxy will vote the shares
represented by such proxy upon such matters as determined by a majority of the
Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. A shareholder may, however, revoke a proxy at
any time prior to its exercise by filing a written notice of revocation with, or
by delivering a duly executed proxy bearing a later date to, Secretary, Metro
One Telecommunications, Inc., 8405 S.W. Nimbus Avenue, Beaverton, Oregon 97008,
or by attending the Annual Meeting and voting in person. All valid, unrevoked
proxies will be voted at the Annual Meeting.
1
<PAGE>
ELECTION OF DIRECTORS
(PROPOSAL 1)
BACKGROUND
At the Annual Meeting, five directors are to be elected to serve until the
date of the Company's Annual Meeting to be held in 1999 and until their
successors are elected and qualified. Unless otherwise specified on the proxy,
it is the intention of the persons named in the proxy to vote the shares
represented by each properly executed proxy for the election as directors of the
persons named below as nominees. The Board of Directors believes that the
nominees will stand for election and will serve if elected as directors.
However, if any of the persons nominated by the Board of Directors fails to
stand for election or is unable to accept election, the proxies will be voted
for the election of such other persons as the Board of Directors may recommend.
INFORMATION AS TO THE BOARD'S NOMINEES
The following table sets forth the names of the Board of Directors' nominees
for election as directors. Also set forth is certain other information with
respect to each such person's age at March 26, 1998, the periods during which he
has served as a director of the Company, the expiration of his term as a
director, positions currently held with the Company and his principal occupation
or employment during the last five years.
<TABLE>
<CAPTION>
DIRECTOR EXPIRATION
NAME AGE SINCE OF TERM POSITION WITH THE COMPANY
- ------------------------------------------- --- ----------- ------------- ----------------------------------------
<S> <C> <C> <C> <C>
A. Jean de Grandpre........................ 76 1995 1998 Chairman of the Board of Directors
G. Raymond Doucet.......................... 55 1995 1998 Director
William D. Rutherford...................... 59 1995 1998 Director
Timothy A. Timmins......................... 41 1994 1998 President, Chief Executive Officer and
Director
James M. Usdan............................. 48 1997 1998 Director
</TABLE>
A. JEAN DE GRANDPRE is Chairman of the Board of Directors of the Company and
has served as a director since 1995. Mr. de Grandpre is the founding Director
and Chairman Emeritus of Bell Canada Enterprises from which he retired in 1989.
He has served on the Canadian Advisory Board of BJB International Management
since 1993 and the Board of Thera Technologies since 1993. He is a former
Director of Bell Canada, Northern Telecom Limited, Chrysler Corporation,
Chrysler Canada Ltd., and the International Advisory Board of The Chemical Bank,
New York. Mr. de Grandpre is a Life Member of the Canadian Bar Association,
Emeritus Member of the Canadian Association of Canadian General Counsel, Member
of the Bar of the Province of Quebec and former Chancellor of McGill University.
Mr. de Grandpre is a lawyer, appointed Queen's Counsel and a Companion of the
Order of Canada, the highest honour granted a private citizen. Mr. de Grandpre
is the recipient of the Honourary Associate Award of the Conference Board of
Canada and is an inductee into the Canadian Business Hall of Fame.
G. RAYMOND DOUCET has served as a director of the Company since 1995 and has
served as a consultant to the Company since 1994. Mr. Doucet is the President
and Chief Executive Officer of TeleZone Corporation, a Toronto-based
telecommunications company. He is past President and Chief Executive Officer of
Douserv Management Inc., a Montreal-based holding Company. From 1984 to 1991, he
was the Chairman and Chief Executive Officer of Radcel Communications Inc. which
was purchased by Rogers Communications, Inc. Prior to that, he was President of
Douserv Group Inc., a company offering consulting, marketing and operational
services to the telecommunications industry. From 1965 to 1974, Mr. Doucet was
the Director of Technical Services with Bell Canada where he was responsible for
the planning and development of transmission and distribution networks. Mr.
Doucet serves on the Boards of Directors of Doucet & Associates Consultants
Inc., Servco Quebec Inc. and TeleZone Inc.
2
<PAGE>
WILLIAM D. RUTHERFORD has served as a director of the Company since 1995. He
is the Principal of Rutherford Investment Management, an investment advisory
service. During 1997, Mr. Rutherford was Chief Executive Officer of Fiberboard
Asbestos Compensation Trust. From 1995 to 1996, Mr. Rutherford was a principal
with Macadam Partners, a Portland-based investment firm. He was formerly the
Treasurer of the State of Oregon, where he was responsible for the State's then
$14 billion investment program and the state's then $7.5 billion in indebtedness
and during which service he was elected Chairman of the Oregon Investment
Council. He also served for seven years as a Member of the Oregon House of
Representatives. From 1994 to 1995, Mr. Rutherford served as Director of Special
Projects for Metallgesellschaft Corp., a multi-billion dollar international
trading company. From 1990 through 1993, Mr. Rutherford was President and a
director of Societe Generale Touche Remnant Corporation (U.S.), an international
asset management company. From 1987 to 1990, Mr. Rutherford was President and
Chief Executive Officer of ABD International Management Corporation, an
international asset management company. Mr. Rutherford formerly practiced law
and served as the Chief Executive Officer of a regional investment firm. A U.S.
Army veteran, Mr. Rutherford received a Bachelor of Science in History from the
University of Oregon and an LL.B. from Harvard University Law School.
TIMOTHY A. TIMMINS has served as President and Chief Executive Officer of
the Company since 1995 and a director of the Company since 1994. He served as
the Company's Executive Vice President and Chief Financial Officer from 1993 to
1995. From 1985 to 1993, Mr. Timmins served in various capacities with the
Investment Banking Division of Kemper Securities, Inc. and predecessor firms,
ultimately as Senior Vice President. Mr. Timmins is a certified public
accountant and holds a Bachelor of Science degree in Business Administration
from Portland State University and a Masters degree in Business Administration
from the University of Southern California.
JAMES M. USDAN has served as a director of the Company since 1997. Mr. Usdan
is President, Chief Executive Officer and a director of RehabCare Group Inc.
(Nasdaq: RHBC), a St. Louis-based developer and manager of inpatient, subacute
and outpatient rehabilitation staffing programs under long-term contracts with
hospitals and nursing homes. Mr. Usdan joined RehabCare in 1990 as President and
Chief Operating Officer, becoming Chief Executive Officer of the Company in
1991. Prior to joining RehabCare, Mr. Usdan founded and was President and Chief
Executive Officer of American Transitional Care, Inc. from 1987 to 1990, and,
from 1986 to 1987, he was Executive Vice President and Chief Operating Officer
of Rehab Hospital Services Corporation, the rehabilitation subsidiary of
National Medical Enterprises. Mr. Usdan serves on the Board of D & K Healthcare
Resources, Inc. (Nasdaq: DKWD) a pharmaceutical distribution company. He is a
Board member of Maryville University and of the Metropolitan Employment and
Rehabilitation Services. Mr. Usdan holds a Bachelor of Arts degree from Harvard
College.
Pursuant to the Company's Third Restated Articles of Incorporation, at any
time when the Board of Directors consists of six or more members, the Board of
Directors is divided into three classes serving staggered three-year terms.
Directors are otherwise elected to serve one-year terms. Executive officers are
appointed by and serve at the discretion of the Board of Directors.
BOARD MEETINGS AND COMMITTEES
During 1997 the Company's Board of Directors held five meetings. Each
incumbent director attended more than 75% of the aggregate of the total number
of meetings held by the Board of Directors and the total number of meetings held
by all committees of the Board on which he served during the period that he
served.
The Board of Directors has a standing Compensation Committee currently
consisting of Messrs. de Grandpre, Doucet, Rutherford and Usdan. The
Compensation Committee, which met two times in 1997, reviews executive
compensation and makes recommendations to the full Board regarding changes in
compensation, and also administers the Company's stock option plans. The Board
of Directors has a standing Audit Committee currently consisting of Messrs. de
Grandpre, Rutherford and Usdan. The Audit
3
<PAGE>
Committee, which met one time in 1997, reviews the scope of the independent
annual audit, the independent public accountants' letter, if any, to the Board
of Directors concerning the effectiveness of the Company's internal financial
and accounting controls and facilitates the preparation of the Board of
Directors' response to that letter, if deemed necessary. The Board of Directors
acts as a nominating committee for selecting nominees for election as directors.
DIRECTORS' COMPENSATION AND OTHER ARRANGEMENTS
Generally, directors who are not employees of the Company receive $500 plus
expenses for each Board meeting attended locally or via telephone and $2,500
plus expenses for each meeting attended in person for which substantial travel
is required. Messrs. de Grandpre and Doucet, in 1995, and Mr. Rutherford, in
1996, were granted non-qualified options to purchase 57,140 shares of Common
Stock of the Company at a price of $8.05 per share. Such options vest over a
four-year period, which vesting has accelerated due to the occurrence of certain
events as outlined in the option agreements. Beginning in 1996, Directors who
are not employees of the Company will be granted non-qualified options to
purchase 10,000 shares of Common Stock at the time of recruitment ("Recruitment
Grant') and 10,000 shares of Common Stock in October of each year ("Annual
Grant"). The non-employee Chairman of the Board on July 31 of each year will
also be granted a non-qualified option to purchase 14,285 shares of Common Stock
(also, an "Annual Grant"). Annual Grants and Recruitment Grants are vested and
exercisable at the time of the grant and have exercise prices equal to the
market price on the date of grant. Mr. de Grandpre also receives $2,000 a month
for his service as Chairman of the Board.
The Company entered into a two-year consulting agreement with G. Raymond
Doucet, a director, in December 1994, pursuant to which Mr. Doucet advised the
Company on (i) enhancing the profitability of its Enhanced Directory Assistance
("EDA"), (ii) technical and personnel matters, and (iii) financial and budgetary
matters. In addition to receiving a consulting fee of $5,000 per month, the
Company in 1994 granted Mr. Doucet an option to purchase up to 85,710 shares of
its Common Stock at an exercise price of $2.31 per share. The Company entered
into a new, two-year consulting agreement with Mr. Doucet in December 1996. In
connection with the new agreement, in addition to receiving a consulting fee of
$5,000 per month, Mr. Doucet was granted a non-qualified option to purchase
30,000 shares of Common Stock of the Company at a price of $13.38 per share. The
option vests upon the occurrence of certain performance milestones relating to
the Company entering into long-term EDA Service contracts with certain entities.
As of March 26, 1998, the option had vested to the extent of 10,000 shares.
BOARD RECOMMENDATION
The Board of Directors recommends a vote FOR the election of its nominees as
Directors. If a quorum is present, a plurality of the votes cast by the shares
entitled to vote is required for the election of a director. Abstentions and
broker non-votes are counted for purposes of determining whether a quorum exists
but are not counted and have no effect in determining whether the nominee has
received the required shareholder vote.
4
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Timothy A. Timmins................................... 41 President, Chief Executive Officer and Director
Stebbins B. Chandor, Jr.............................. 38 Senior Vice President, Chief Financial Officer and
Secretary
Gary E. Henry........................................ 41 Senior Vice President--Call Center Operations
Kevin S. Anderson.................................... 34 Vice President--Customer Care and Project
Administration
Patrick M. Cox....................................... 36 Vice President--Technology
Karen L. Johnson..................................... 48 Vice President--Corporate Development
Michael A. Kepler.................................... 35 Vice President--Information Systems
Michael A. McCourt................................... 46 Vice President--Database Software
</TABLE>
Information concerning the principal occupation of Mr. Timmins is set forth
under "Information as to the Board's Nominees." Information concerning the
principal occupation during the last five years of the executive officers of the
Company who are not also directors of the Company is set forth below.
STEBBINS B. CHANDOR, JR. joined the Company in 1995 and serves as Senior
Vice President and Chief Financial Officer. He has served as Secretary of the
Company since 1996. From 1985 to 1995, Mr. Chandor served in various corporate
finance capacities with BA Securities, Inc., a wholly-owned subsidiary of
BankAmerica Corporation, and affiliated or predecessor firms including Bank of
America and Continental Bank N.A. Mr. Chandor holds a Bachelor of Science degree
in Chemical Engineering from Tufts University and a Masters degree in Business
Administration from the University of Southern California.
GARY E. HENRY joined the Company in 1993 and serves as Senior Vice
President--Call Center Operations. Prior to 1993, he was Senior Vice President,
Corporate Services Director for Imperial Corporation of America, Inc., a
financial institution, with whom he was employed since 1985. Mr. Henry holds a
Bachelor of Arts degree in Public Administration from San Diego State
University.
KEVIN S. ANDERSON has served as Vice President--Customer Care and Project
Administration of the Company since 1996. Since its inception in 1989, Mr.
Anderson has served in various capacities including President, Executive Vice
President and Senior Vice President. Mr. Anderson holds a Bachelor of Science
degree in Business Administration from Oregon State University.
PATRICK M. COX has served as Vice President--Technology of the Company since
1996 and served as Executive Vice President and Chief Operating Officer from
1993 to 1996, Secretary of the Company from 1995 to 1996 and a director of the
Company from 1989 to 1996. Since the Company's inception in 1989 through October
1993, Mr. Cox served as Chairman of the Board of Directors, President and Chief
Executive Officer or similar positions. Mr. Cox is a member of the National
Association of Radio and Telecommunications Engineers and is a Certified
Engineer Class One.
KAREN L. JOHNSON joined the Company in 1993 and since 1998 has served as
Vice President--Corporate Development. From 1993 to 1998, she served as Vice
President--Controller. From 1989 to 1993, she was Financial Operations Manager
for Care Medical Equipment, Inc. and Care Ambulance, Inc. Ms. Johnson
5
<PAGE>
is a certified public accountant with a Bachelor of Arts degree from St. Olaf
College and she performed post-graduate work in accounting and business
administration at Portland State University.
MICHAEL A. KEPLER has served as Vice President--Information Systems for the
Company since 1993. From 1989 to 1993 he held a similar position as Director of
Information Systems. From 1989 until joining the Company, Mr. Kepler was a
programmer with ComLink West, a computer services concern that performed
contract programming for the Company. During 1988 and 1989, he was an
Engineering Technician with Single Board Systems and an Assembly and Testing
Technician with Hewlett Packard.
MICHAEL A. MCCOURT has served as Vice President--Database Software for the
Company since 1997. From 1990 to 1997, he was Vice President and General Manager
for Microlytics, Inc., a developer of linguistic and data retrieval
technologies. Mr. McCourt holds an MBA from the University of Rochester Simon
Graduate School of Business Administration and a MSEE from Washington
University.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission reports of ownership and changes in ownership of Common
Stock and other equity securities of the Company. Officers, directors and
greater than 10% shareholders are required by Securities and Exchange Commission
regulations to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company, the Company believes that during fiscal 1997
its officers, directors and greater than 10% shareholders complied with all
applicable Section 16(a) filing requirements, except for the late filing of a
Form 3 to reflect an option to purchase 10,000 shares of Common Stock granted to
James M. Usdan upon his election to the Company's Board of Directors in 1997,
and the late filing of a Form 3 to reflect an option to purchase 23,000 shares
of Common Stock granted to Michael A. McCourt upon his joining the Company in
1997.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the fiscal year ended December 31, 1997,
certain summary information concerning compensation of the person serving as the
Company's Chief Executive Officer and the two other most highly paid executive
officers of the Company whose total annual salary and bonus exceeded $100,000
(the "Named Executive Officers"). No other executive officer received
compensation exceeding $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
-------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS COMPENSATION
- ----------------------------------------------------- --------- ---------- --------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Timothy A. Timmins .................................. 1997 $ 150,026 $ 3,000 -- --
President, Chief Executive Officer and Director 1996 127,385 -- -- --
1995 96,961 -- 399,981 --
Patrick M. Cox ...................................... 1997 $ 135,017 $ 2,700 -- --
Vice President--Technology 1996 116,154 -- 199,991 --
1995 98,850 -- --
Stebbins B. Chandor, Jr. ............................ 1997 $ 110,417 -- -- --
Senior Vice President, Chief Financial Officer and 1996 96,000 -- -- --
Secretary 1995 26,457 -- 71,426 --
</TABLE>
OPTION GRANTS
During the year ended December 31, 1997, no Named Executive Officer was
granted an option to purchase Common Stock pursuant to the Company's 1994 Stock
Incentive Plan (the "Plan").
YEAR-END OPTION TABLE
The following table provides information regarding exercises of options
during 1997 and unexercised options held, as of December 31, 1997, by the Named
Executive Officers.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ON VALUE OPTIONS AT YEAR-END AT YEAR-END
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------------------ ------------- ------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Timothy A. Timmins........................ -- -- 399,981/ 0 $131,994/ 0
Patrick M. Cox............................ -- -- 199,991/ 0 65,997/ 0
40,176/
Stebbins B. Chandor, Jr................... -- -- 31,250 13,258/ 10,313
</TABLE>
In 1995, the Company entered into employment contracts with Messrs. Timmins
and Cox that allow for a base annual compensation and increases based upon
achievement of certain corporate goals and upon a formula tied to the
profitability of the Company and for employment of them for five-year periods
ending in 2000. The agreements provide for adjusted base salaries for Messrs.
Timmins and Cox of $150,000 and $135,000, respectively. The employment
agreements provide for annual bonuses up to 100 percent of adjusted base salary
for annual earnings per share growth from 8 percent to 30 percent. The
7
<PAGE>
employment agreements also provide for payment to Messrs. Timmins and Cox of one
additional year of adjusted base salary and a pro rata portion of annual bonuses
in the event of termination of their respective employment upon death or for
reasons other than cause, six months additional adjusted base salary and a pro
rata portion of annual bonuses due to disability, or six months additional
adjusted base salary and no bonuses if for cause. Under the employment
agreements, Messrs. Timmins and Cox have been granted certain indemnification
rights. In addition, the employment agreements prevent Messrs. Timmins and Cox
from competing with the Company or soliciting the employment of other
individuals employed by the Company during Messrs. Timmins' and Cox's respective
employment and for a period of one year thereafter. Under the employment
agreements, Messrs. Timmins or Cox may not disclose the Company's confidential
information to outsiders during their respective employment and for a period of
two years thereafter.
CERTAIN TRANSACTIONS
During 1994, G. Raymond Doucet and A. Jean de Grandpre, both of whom are now
directors of the Company, purchased 8% Convertible Secured Notes ("8% Notes") of
the Company in the principal amounts of $275,000 and $150,000, respectively,
through investment companies controlled by them, as part of a convertible
secured note financing of the Company (the "Secured Note Financing"). The 8%
Notes beneficially held by Messrs. Doucet and de Grandpre were converted into
119,042 and 64,932 shares of the Common Stock of the Company, respectively,
during the fourth quarter of 1995.
In 1996, the lenders in the Secured Note Financing, including Mr. Doucet and
Mr. de Grandpre (the "Lenders"), and the Company entered into a Shareholder
Rights Agreement (the "Agreement"), pursuant to which the Company granted to the
Lenders certain registration rights with respect to shares of Common Stock of
the Company held by the Lenders and a right of first refusal with respect to
future sales of Common Stock, preferred stock or other securities issued by the
Company. Mr. Doucet exercised this right of first refusal and purchased 16,712
shares in the August 1996 initial public offering of the Company's Common Stock
at the initial public offering price of $8.50. The Agreement provides for the
termination of this right of first refusal upon the consummation of an
underwritten public offering of the Common Stock of the Company in which the
Company receives cash proceeds of not less than $10 million based on a per share
price of at least $10.50.
The Company entered into a two-year consulting agreement with Mr. Doucet in
1994 and granted him a five-year option to purchase up to 85,710 shares of its
Common Stock at an exercise price of $2.31 per share. The Company entered into a
new, two-year consulting agreement with Mr. Doucet in 1996 and in connection
with that agreement, the Company granted Mr. Doucet an additional option to
purchase up to 30,000 shares of its Common Stock at an exercise price of $13.38.
See "Directors' Compensation and Other Arrangements."
From time to time the Company has made cash advances to its officers,
employees and consultants. At December 31, 1997, the Company carried several
unsecured notes receivable bearing various interest rates from certain of its
officers, employees, consultants and a former employee. The following table
lists individuals for whom the Company carried aggregate outstanding balances
greater than $60,000 at any time during 1996 or 1997.
<TABLE>
<CAPTION>
BALANCE AT DECEMBER 31,
NAME 1997
- ----------------------------------------------------------------- ---------------------------
<S> <C>
Kevin S. Anderson................................................ $ 61,446
Patrick M. Cox................................................... $ 58,643
</TABLE>
The loans to Mr. Anderson are evidenced by 44 promissory notes at various
interest rates with maturities from 1992 to 1994. The loans to Mr. Cox are
evidenced by 38 promissory notes at various interest rates with maturities from
1992 to 1994. These loans were extended by the Company to Messrs. Anderson and
Cox for personal purposes during periods when the Company's financial position
8
<PAGE>
did not permit significant compensation increases to officers and when the
Company's future capital needs were uncertain. The Company believed that making
these cash advances allowed it to retain key personnel while maintaining the
ability to secure repayment at later dates if required by the Company's capital
needs. Although these notes have matured and are due, some of these notes may be
forgiven at future dates, resulting in additional payroll tax liability for the
Company and additional income tax liability for the makers of the notes.
The Company believes that the foregoing transactions were fair to the
Company and in its best interests. As a matter of policy, all future
transactions between the Company and any of its officers, directors or principal
stockholders or their affiliates will continue to be approved by a majority of
the Board of Directors and will continue to be on terms no less favorable to the
Company than could be obtained from unaffiliated third parties, and will
continue to be for bona fide business purposes of the Company.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 26, 1998 with respect to: (i) each
person known by the Company to beneficially own more than 5% of the outstanding
shares of Common Stock, (ii) each director of the Company, (iii) each Named
Executive Officer and (iv) all directors and executive officers as a group.
Except as otherwise indicated, the Company believes the that persons listed
below have sole investment and voting power with respect to the shares of Common
Stock owned by them.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------
NAMED EXECUTIVE OFFICERS, DIRECTORS AND 5% SHAREHOLDERS(1) NUMBER(2) PERCENT(2)
- ----------------------------------------------------------------------------------------- ---------- -------------
<S> <C> <C>
A. Jean de Grandpre...................................................................... 105,711 *
G. Raymond Doucet........................................................................ 280,496 2.5
William D. Rutherford.................................................................... 108,759 *
Timothy A. Timmins....................................................................... 403,910 3.5
James M. Usdan........................................................................... 20,000 *
Stebbins B. Chandor, Jr.................................................................. 47,041 *
Patrick M. Cox........................................................................... 426,644 3.8
All directors and officers as a group (12 persons)....................................... 1,838,740 16.4
</TABLE>
- ------------------------
* Less than one percent
(1) The address of each beneficial owner identified is 8405 SW Nimbus Avenue,
Beaverton, Oregon 97008.
(2) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes voting power and investment
power with respect to shares. Shares issuable upon the exercise of
outstanding stock options that are currently exercisable or become
exercisable within 60 days from March 26, 1998 are considered outstanding
for the purpose of calculating the percentage of Common Stock owned by such
person, but not for the purpose of calculating the percentage of Common
Stock owned by any other person. The number of shares that are issuable upon
the exercise of options that are currently exercisable or exercisable within
60 days of March 26, 1998 is as follows: A. Jean de Grandpre--105,711
shares; G. Raymond Doucet--172,850 shares; William D. Rutherford--77,140
shares; Timothy A. Timmins--399,981 shares; James M. Usdan--20,000 shares;
Stebbins B. Chandor, Jr.--44,641 shares; Patrick M. Cox--199,991 shares; and
all directors and officers as a group--1,227,830 shares.
9
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL 2)
The Board of Directors has selected Deloitte & Touche LLP as independent
auditors for the current year ending December 31, 1998. For the years ended
December 31, 1997, 1996 and 1995, Deloitte & Touche served as the Company's
independent auditors. It is expected that representatives of Deloitte & Touche
LLP will be present at the Annual Meeting, will have the opportunity to make a
statement if they so desire, and will be available to respond to appropriate
questions.
BOARD RECOMMENDATION
Although the selection of auditors is not required to be submitted to a vote
of the shareholders, the Board has decided to ask the shareholders to approve
the selection and recommends that the shareholders vote FOR approval. If a
majority of the shares of Common Stock represented at the Annual Meeting does
not vote to approve the selection, the Board will reconsider the selection.
OTHER BUSINESS
As of the date of this Proxy Statement, the Company knows of no other
business that will be presented for action at the meeting. If any other business
requiring a vote of the shareholders should properly come before the meeting,
the persons named in the enclosed proxy form will vote in their discretion upon
such other matters.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the proxy statement and
form of proxy relating to the Company's 1999 annual meeting of shareholders must
be received by the Company not later than December 15, 1998, pursuant to the
proxy soliciting regulations of the Securities and Exchange Commission (the
"SEC"). Nothing in this paragraph shall be deemed to require the Company to
include in its proxy statement or form of proxy for such meeting any shareholder
proposal which does not meet the requirements of the SEC in effect at the time.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
use of the mails, proxies may be solicited personally or by telephone by
directors, officers and employees of the Company, who will not be additionally
compensated for such activities. Such solicitations may be made personally, or
by mail, facsimile, telephone, telegraph or messenger. The Company will also
request persons, firms and companies holding shares in their names or in the
name of their nominees, which are beneficially owned by others, to send proxy
materials to and obtain proxies from such beneficial owners. The Company will
reimburse such persons for their reasonable expenses incurred in that
connection.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1997 accompanies this Proxy Statement. The Company is
required to file an Annual Report on Form 10-KSB for its fiscal year ended
December 31, 1997 with the Securities and Exchange Commission (the "SEC"). The
SEC maintains a web site, WWW.SEC.GOV, that contains reports, proxy statements,
and certain other information filed electronically by the Company with the SEC.
Shareholders may obtain, free of charge, a copy of the Form 10-KSB, without
exhibits, by writing to Investor Relations, Metro One Telecommunications, Inc.,
8405 S.W. Nimbus Avenue, Beaverton, Oregon 97008 or visiting the Company's web
site at WWW.METRO1.COM.
10
<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
PROXY FORM
ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF METRO ONE
TELECOMMUNICATIONS, INC.
The undersigned shareholder of record of Metro One Telecommunications,
Inc., an Oregon corporation (the "Company"), hereby appoints Timothy A.
Timmins and A. Jean de Grandpre, or either of them, with full power of
substitution, as proxies to cast all votes which the undersigned shareholder
is entitled to cast at the Annual Meeting of Shareholders to be held at
3:30 p.m. on May 19, 1998, at the Portland Conference Center, 300 N.E.
Multnomah Street, Portland, Oregon, or any adjournments or postponements
thereof upon the matters listed herein AND IN THEIR DISCRETION UPON SUCH
OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. UNLESS DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL 1, "FOR" PROPOSAL 2,
AND IN ACCORDANCE WITH THE RECOMMENDATIONS OF A MAJORITY OF THE BOARD OF
DIRECTORS AS TO OTHER MATTERS. The undersigned hereby acknowledges receipt of
the Company's Proxy Statement and hereby revokes any proxy or proxies previously
given.
1. To elect five members to the Company's Board of Directors. Directors
nominated are A. Jean de Grandpre, G. Raymond Doucet, William D. Rutherford,
Timothy A. Timmins and James M. Usdan.
FOR WITHHELD FOR ALL
FOR ALL EXCEPT*
-----------------------------------------------
| | | |
-----------------------------------------------
*Except:
---------------------------------------------
2. To approve the selection of Deloitte & Touche LLP as the Company's
independent auditors.
FOR AGAINST ABSTAIN
-----------------------------------------------
| | | |
-----------------------------------------------
<PAGE>
PLEASE SIGN, DATE, AND RETURN THIS PROXY CARD TODAY IN THE ENCLOSED,
PRE-ADDRESSED ENVELOPE.
Please sign below exactly as your name appears on this Proxy Card. If shares
are registered in more than one name, all such persons should sign. A
corporation should sign in its full corporate name by a duly authorized
officer, stating his/her title. Trustees, guardians, executors and
administrators should sign in their official capacity, giving their full
title as such. If a partnership, please sign in the partnership name by
authorized person(s).
If you receive more than one Proxy Card, please sign and return all such
cards in the accompanying envelope.
- ------------------------------------------------
Typed or Printed Name(s)
- ------------------------------------------------
Authorized Signature
- ------------------------------------------------
Title or authority, if applicable
- ------------------------------------------------
Date
PLEASE RETURN PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE U.S.A.
I PLAN TO ATTEND THE ANNUAL MEETING.
I DO NOT PLAN TO ATTEND THE ANNUAL MEETING.
