<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
/ / Soliciting Material Pursuant to !240.14a-11(c) or !240.14a-12
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 the 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]
May 26, 1999
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,
June 29, 1999, 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, 1998 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,
/s/ TIMOTHY A. TIMMINS
--------------------------------------
Timothy A. Timmins
President
Chief Executive Officer
<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
----------------
NOTICE OF ANNUAL MEETING
TO BE HELD ON JUNE 29, 1999
---------------------
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 June 29, 1999 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 four Directors, each for a one-year term;
2. To approve the Company's 1999 Employee Stock Purchase Plan;
3. To approve an amendment to the Company's 1994 Stock Incentive Plan;
4. To approve the selection of Deloitte & Touche LLP as independent
auditors for the Company for the year ending December 31, 1999; and
5. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed May 14, 1999 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
May 26, 1999
<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
8405 S.W. NIMBUS AVENUE
BEAVERTON, OREGON 97008
------------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON JUNE 29, 1999
---------------------
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 June 29,
1999 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 four members
of the Board of Directors, (ii) adopt the Company's 1999 Employee Stock Purchase
Plan; (iii) approve an amendment to the Company's 1994 Stock Incentive Plan;
(iv) approve the selection of Deloitte & Touche LLP as independent auditors for
the Company for the year ending December 31, 1999; and (v) 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 May 26, 1999.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has fixed May 14, 1999 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 4,950 beneficial holders of the 11,392,249 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 NOMINATED IN THE PROXY, (II)
FOR APPROVAL OF THE COMPANY'S 1999 EMPLOYEE STOCK PURCHASE PLAN, (III) FOR
APPROVAL OF THE AMENDMENT TO THE COMPANY'S 1994 STOCK INCENTIVE PLAN AND (IV)
FOR APPROVAL OF THE SELECTION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS
FOR THE YEAR ENDING DECEMBER 31, 1999. 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
1
<PAGE>
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.
ELECTION OF DIRECTORS
(PROPOSAL I)
BACKGROUND
At the Annual Meeting, four directors are to be elected to serve until the
date of the Company's Annual Meeting to be held in 2000 and until their
successors are elected and qualified. Unless otherwise specified in 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 May 14, 1999, 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............ 77 1995 1999 Chairman of the Board of Directors
William D. Rutherford.......... 60 1995 1999 Director
Timothy A. Timmins............. 42 1994 1999 President, Chief Executive Officer and Director
James M. Usdan................. 49 1997 1999 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.
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,
2
<PAGE>
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. He is
the Chief Executive Officer of NextCARE Hospitals, Inc., a provider of long-term
acute care hospital services. From 1990 to 1998, Mr. Usdan was the President,
Chief Executive Officer and a director of RehabCare Group Inc. (NYSE: RHB), a
provider of physical therapy, rehabilitation staffing and outsourcing services.
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
Services, Inc. (Nasdaq: DKWD) a pharmaceutical distribution company, and is an
Advisory Board member of Mercantile Bank, the MedStat Group and Maryville
College. 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 until the next annual meeting of
shareholders. Executive officers are appointed by and serve at the discretion of
the Board of Directors.
BOARD MEETINGS AND COMMITTEES
During 1998 the Company's Board of Directors held nine meetings. Each
incumbent director attended more than 75% of the aggregate of the total number
of meetings held 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 maintains a standing Compensation Committee that has
consisted of Messrs. de Grandpre, Rutherford, Usdan and Mr. G. Raymond Doucet.
The Compensation Committee, which met two times in 1998, 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 consisting of Messrs. de Grandpre,
Rutherford and Usdan. The Audit Committee, which met three times in 1998,
reviews the scope of the independent annual audit, the independent public
accountants' letter 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 any such 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. Beginning in July 1999, each non-employee director will also be
compensated by an annual fee of $7,500. Additionally, after such date,
non-employee directors will
3
<PAGE>
be compensated at the rate of $250 for each committee meeting attended. 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 are 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.
In December 1994, the Company entered into a two-year consulting agreement
with G. Raymond Doucet, who is a director of the Company. As part of the
Agreement, which provides for a consulting fee of $5,000 per month, the Company
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 May
14, 1999, the option had vested to the extent of 10,000 shares. The consulting
agreement was renewed for an additional one-year term in November 1998.
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 at May 14, 1999 with
respect to the executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ---------------------------------------------------------------
<S> <C> <C>
Timothy A. Timmins........................ 42 President, Chief Executive Officer and Director
Stebbins B. Chandor, Jr................... 39 Senior Vice President, Chief Financial Officer and Secretary
Gary E. Henry............................. 42 Senior Vice President - Operations
Karen L. Johnson.......................... 49 Senior Vice President - Corporate Development
Hugh Knox................................. 59 Vice President - Sales and Marketing
R. Tod Hutchinson......................... 36 Vice President - Controller
</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 1992 and serves as Senior Vice
President -- Operations. From 1992 to 1999, he served the Company in a variety
of positions, most recently as Senior Vice President -- Call Center Operations.
Prior to 1992, 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.
KAREN L. JOHNSON joined the Company in 1993 and since 1998 has served as
Senior 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 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.
HUGH KNOX joined the Company in 1998 and serves as Vice President -- Sales
and Marketing. From 1989 to 1998, Mr. Knox worked as Vice President -- Sales and
Marketing with ACS Wireless, a developer, manufacturer and distributor of
telephone headset equipment to various telecommunications concerns, including
the Regional Bell Operating Companies and major long distance telephone
companies. Prior to joining ACS Wireless, Mr. Knox served in senior sales and
marketing positions with Pacific Bell, Centex Telemanagement and PacTel
Connection. Mr. Knox attended San Diego State University.
R. TOD HUTCHINSON joined the Company in January 1998 and serves as Vice
President -- Controller. From 1995 to 1998, he was the Chief Financial Officer
for various start-up and early stage companies. From 1990 to 1995, he was the
Controller and Chief Financial Officer for InterVen Partners, Inc., a regional
venture capital firm. From 1987 to 1990, he was an associate with Price
Waterhouse, LLP. Mr. Hutchinson is a certified public accountant and holds a
Bachelors degree in Finance from the University of Texas at Austin and a Masters
degree in Business Administration from the University of Oregon.
5
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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 1998
its officers, directors and greater than 10% shareholders complied with all
applicable Section 16(a) filing requirements.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth, for the fiscal year ended December 31, 1998,
certain summary information concerning compensation of the person serving as the
Company's Chief Executive Officer and the four other most highly paid executive
officers of the Company whose total annual salary and bonus exceeded $100,000
(the "Named Executive Officers").
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 ................................ 1998 $ 150,026 $ 150,000 -- --
President, Chief Executive 1997 150,026 3,000 -- --
Officer and Director 1996 127,385 -- -- --
Patrick M. Cox(1) ................................. 1998 $ 70,451 $ 62,877 -- $ 72,123(2)
Vice President, Technology 1997 135,017 2,700 -- --
1996 116,154 -- -- --
Gary E. Henry ..................................... 1998 $ 138,220 -- 30,000 --
Senior Vice President, 1997 98,752 -- 28,570 --
Operations 1996 68,997 -- 22,856 --
Stebbins B. Chandor, Jr. .......................... 1998 $ 119,954 -- 20,000 --
Senior Vice President, Chief 1997 110,417 -- -- --
Financial Officer and Secretary 1996 96,000 -- -- --
Karen L. Johnson .................................. 1998 $ 100,154 -- 20,000 --
Senior Vice President, Corporate 1997 88,044 -- 45,712 --
Development 1996 69,923 -- 14,285 --
</TABLE>
- ------------------------
(1) Mr. Cox resigned from the Company effective June 19, 1998.
(2) These amounts were paid to Mr. Cox in connection with an agreement that
provides for payment of compensation through June 19, 1999.
OPTION GRANTS
During the year ended December 31, 1998, the following Named Executive
Officers were granted options to purchase Common Stock pursuant to the Company's
1994 Stock Incentive Plan (the "Plan").
6
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZED
-------------------------------------------------- VALUE AT
% OF TOTAL ASSUMED ANNUAL RATES
NUMBER OF OPTIONS/ OF
SECURITIES SARS STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION
OPTIONS/ EMPLOYEES EXERCISE OR FOR OPTION TERM
SARS IN FISCAL BASE PRICE EXPIRATION ----------------------
NAME GRANTED YEAR ($/SH) DATE 5% 10%
- ---------------------------------------- ----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Gary E. Henry........................... 30,000 7.38% $ 11.44 12/9/08 $ 215,837 $ 546,972
Stebbins B. Chandor, Jr................. 20,000 4.92% $ 11.44 12/9/08 $ 143,891 $ 364,648
Karen L. Johnson........................ 20,000 4.92% $ 11.44 12/9/08 $ 143,891 $ 364,648
</TABLE>
YEAR-END OPTION TABLE
The following table provides information regarding exercises of options
during 1998 and unexercised options held, as of December 31, 1998, by the Named
Executive Officers.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES IN-
SHARES UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
ACQUIRED ON VALUE OPTIONS AT YEAR-END YEAR-END
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------------------------- ----------- ---------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Timothy A. Timmins................... -- -- 399,981/0 $2,079,901/$0
Patrick M. Cox(1).................... 25,000 $ 120,625 174,991/0 $909,953/$0
Gary E. Henry........................ -- -- 41,427/62,855 $ 152,780/$156,078
Stebbins B. Chandor, Jr.............. -- -- 58,033/33,393 $ 301,772/$105,844
Karen L. Johnson..................... -- -- 31,631/62,651 $ 122,751/$204,863
</TABLE>
- ------------------------
(1) Mr. Cox resigned from the Company effective June 19, 1998.
COMPENSATION COMMITTEE REPORT
Under rules established by the Securities and Exchange Commission (the
"SEC"), the Company is required to provide certain data and information in
regard to the compensation and benefits provided to the Company's Chief
Executive Officer and the four other most highly compensated executive officers.
In fulfillment of this requirement, the Compensation Committee has prepared the
following report for inclusion in this Proxy Statement.
COMPENSATION PHILOSOPHY. The Compensation Committee of the Board of
Directors, which is responsible for reviewing and evaluating the compensation of
the Company's executive officers, approves and recommends to the Board of
Directors compensation and award levels for executive officers of the Company.
With regard to compensation actions affecting Mr. Timmins, all of the members of
the Board of Directors except for Mr. Timmins act as the approving body.
7
<PAGE>
The executive compensation program of the Company has been designed to:
- Support a pay for performance policy that is tied to corporate and
individual performance;
- Motivate executive officers to achieve strategic business initiatives and
reward them for their achievement;
- Provide compensation opportunities which are comparable to those offered
by similarly-sized telecommunications and technology-based companies; and
- Align the interest of executives with the long-term interest of
shareholders through award opportunities that can result in ownership of
Common Stock.
Currently, the executive compensation program is comprised of a base salary and
long-term incentive opportunities in the form of stock options, along with
benefits offered to all employees of the Company.
BASE SALARIES. The base salaries of the Company's executive officers for
1998 were established effective December 1998. In approving those salaries, the
Compensation Committee considered information about salaries paid by companies
of comparable size in the telecommunications outsourcing industry, individual
performance, position, and internal comparability considerations. While all of
these factors were considered, the Compensation Committee did not assign
specific weights to any of these factors.
STOCK PLANS. The long-term, performance-based compensation of executive
officers takes the form of option awards under the Company's 1994 Stock
Incentive Plan (the "1994 Plan"), which is designed to align a significant
portion of the executive compensation program with long-term shareholder
interests. The 1994 Plan permits the granting of several different types of
stock-based awards. The Compensation Committee believes that equity-based
compensation ensures that the Company's executive officers have a continuing
stake in the long-term success of the Company. All options granted by the
Company have been granted with an exercise price equal to the market price of
the Company's Common Stock on the date of grant and, accordingly, will only have
value if the Company's stock price increases. In granting options under the 1994
Plan, the Compensation Committee generally takes into account each executive's
responsibilities, relative position in the Company and past grants.
CHIEF EXECUTIVE OFFICER COMPENSATION. In 1995, the Company entered into an
employment contract with Mr. Timmins that allows 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 for a
five-year period ending in 2000. The agreement provides for an adjusted base
salary for Mr. Timmins of $150,000. The employment agreement provides for annual
bonuses up to 100 percent of adjusted base salary for annual earnings per share
growth from 8 percent to 30 percent. In developing its recommendations regarding
Mr. Timmins' compensation, the Committee considered a number of factors,
including analyses of compensation in similarly-sized companies in the
telecommunications outsourcing industry, analyses of compensation levels in
similar companies in the Company's local geographic area and the Company's
improved performance in revenue and net income as compared to the prior year.
Mr. Timmins earned bonus payments for 1998 of $150,000.
The employment agreement also provides for payment to Mr. Timmins of one
additional year of adjusted base salary and a pro rata portion of annual bonuses
in the event of termination of 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 agreement, Mr. Timmins has
been granted certain indemnification rights. In addition, the employment
agreement prevents Mr. Timmins from competing with the Company or soliciting the
employment of other individuals employed by the Company during Mr. Timmins'
employment and for a period of one year thereafter. Under the employment
agreement, Mr. Timmins may
8
<PAGE>
not disclose the Company's confidential information to outsiders during
employment and for a period of two years thereafter.
COMPENSATION COMMITTEE
A. Jean de Grandpre
G. Raymond Doucet
William D Rutherford
James M. Usdan
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During the fiscal year ended December 31, 1998, the members of the
Compensation Committee were Messrs. de Grandpre, Doucet, Rutherford, and Usdan.
There were no employee directors on the Compensation Committee and no
Interlocks.
PERFORMANCE GRAPH
The following graph compares the cumulative total shareowner return on the
Company's Common Stock for the period beginning August 23, 1996, the date the
Company's Common Stock began trading on the Nasdaq National Market, and ending
December 31, 1998, as compared with the cumulative total return of the Russell
2000 Index and a Peer Group Index. The Peer Group consists of: Billing Concepts
Corp., Boston Communications Group, International Telecommunication Data
Systems, Inc., Lightbridge, Inc., Premiere Technologies, Inc., Saville Systems
PLC, SCC Communications Corp. and West Teleservices Corp. The total shareowner
return for each company in the Peer Group has been weighted according to the
company's stock market capitalization. This graph assumes an investment of $100
on August 23, 1996 in each of the company's common stock, the Russell 2000 Index
and the Peer Group Index, and assumes reinvestment of dividends, if any. The
stock price performance shown on the graph below is not necessarily indicative
of future stock price performance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MTON RUSSELL PEER GROUP
<S> <C> <C> <C>
23-Aug-96 100 100 100
31-Dec-96 76.8 109.3 110.6
31-Dec-97 81.7 131.7 138.2
31-Dec-98 129.3 127.2 102.9
</TABLE>
9
<PAGE>
CERTAIN TRANSACTIONS
During 1994, A. Jean de Grandpre, the Chairman of the Board of Directors,
and G. Raymond Doucet, a director, purchased 8% Convertible Secured Notes ("8%
Notes") of the Company in the principal amounts of $150,000 and $275,000,
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. de Grandpre and Doucet
were converted into 64,932 and 119,042 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. de
Grandpre and Mr. Doucet (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."
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.
10
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of May 14, 1999 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...................................................................... 194,928 1.7
G. Raymond Doucet........................................................................ 290,496 2.5
William D. Rutherford.................................................................... 118,759 1.0
Timothy A. Timmins....................................................................... 408,910 3.5
James M. Usdan........................................................................... 30,300 *
Gary E. Henry............................................................................ 52,605 *
Stebbins B. Chandor, Jr.................................................................. 73,861 *
Karen L. Johnson......................................................................... 41,418 *
All directors and officers as a group (10 persons)....................................... 1,223,776 10.6
</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 May 14, 1999 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 May 14, 1999 is as follows: A. Jean de Grandpre--129,996 shares;
G. Raymond Doucet--97,140 shares; William D. Rutherford-- 87,140 shares;
Timothy A. Timmins--399,981 shares; James M. Usdan--30,000 shares; Gary E.
Henry--51,605 shares; Stebbins B. Chandor, Jr.--69,461 shares; Karen L.
Johnson--41,018 shares; and all directors and officers as a group--918,840
shares.
11
<PAGE>
ADOPTION OF 1999 EMPLOYEE STOCK PURCHASE PLAN
(PROPOSAL II)
GENERAL
On December 9, 1998, the Board of Directors adopted, subject to stockholder
approval, the Metro One Telecommunications, Inc. 1999 Employee Stock Purchase
Plan (the "ESPP") and has reserved 150,000 shares of the Company's Common Stock
for issuance under the ESSP. The purpose of the ESPP is to attract and retain
qualified employees essential to the success of the Company, and to provide such
persons with an incentive to perform in the best interests of the Company. The
following is a summary of the basic terms and provisions of the ESPP, a complete
copy of which is attached to this Proxy Statement as Appendix A.
SUMMARY OF THE 1999 EMPLOYEE STOCK PURCHASE PLAN
The ESPP is administered by the Compensation Committee of the Board of
Directors. The Compensation Committee has the power to make and interpret all
rules and regulations it deems necessary to administer the ESPP and has broad
authority to amend the ESPP, subject to certain amendments requiring stockholder
approval.
All regular employees of the Company and its subsidiaries, including the
Company's officers, are eligible to participate in the ESPP if they: (i) are
employed in a position with regular hours of 20 or more hours a week and (ii)
are employed more than five months in any calendar year. Eligible employees may
elect to contribute from 1% to 10% of their cash compensation during each pay
period. The ESPP provides for two annual six-month offering periods, beginning
on May 1 and November 1 each year (the "Enrollment Dates"). During the offering
periods, participants accumulate funds in an account via payroll deduction. At
the end of each six-month offering period, the purchase price is determined and
the accumulated funds are used to automatically purchase shares of Common Stock.
The purchase price per share is equal to 85% of the lower of the fair market
value of the Common Stock (i) on the beginning date of the offering period or
(ii) the end of the Offering Period. Unless a participant files a withdrawal
notice before the beginning of the next offering period, such participant will
automatically be re-enrolled for the next offering period.
Neither payroll deductions credited to a participant's account nor any
rights with regard to the purchase of shares under the ESPP may be assigned,
transferred, pledged or otherwise disposed of in any way by the participant.
Upon termination of a participant's employment for any reason the payroll
deductions credited to the participant's account will be returned to the
participant. Any remaining balances will be returned to the participant, or his
or her beneficiary. As of May 14, 1999, approximately 1,733 employees of the
Company were eligible to participate in the ESPP.
The ESPP is intended to qualify as an "employee stock purchase plan" within
the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). Under the Code, no taxable income is recognized by the participant with
respect to shares purchased under the ESPP either at the time of enrollment or
at any purchase date within an offering period.
If the participant disposes of shares purchased pursuant to the ESPP more
than two years from the Enrollment Date and more than one year from the date on
which the shares were purchased, the participant will recognize ordinary income
equal to the lesser of (i) the excess of the fair market value of the shares at
the time of disposition over the purchase price, or (ii) 15% of the fair market
value of the shares on the Enrollment Date. Any gain on the disposition in
excess of the amount treated as ordinary income will be capital gain. The
Company is not entitled to take a deduction for the amount of the discount in
circumstances indicated above.
If the participant disposes of shares purchased pursuant to the ESPP within
two years after the Enrollment Date or within one year after the purchase date,
the employee will recognize ordinary income
12
<PAGE>
on the excess of the fair market value of the stock on the purchase date over
the purchase price. Any difference between the sale price of the shares and the
fair market value on the purchase date will be capital gain or loss. The Company
is entitled to a deduction from income equal to the amount the employee is
required to report as ordinary compensation income.
The federal income tax rules relating to employee stock purchase plans
qualifying under Section 423 of the Code are complex. Therefore, the foregoing
outline is intended to summarize only certain major federal income tax rules
concerning qualified employee stock purchase plans.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THIS PROPOSAL. The proposal
must be approved by the holders of at least a majority of the shares of Common
Stock present or represented by proxy at the Annual Meeting. Abstentions and
broker non-votes are treated as "no" votes in determining whether the proposal
is approved. The proxies will be voted for or against the proposal, or as an
abstention, in accordance with the instructions specified on the proxy form. If
no instructions are given, proxies will be voted for approval of the ESPP.
13
<PAGE>
AMENDMENT OF 1994 STOCK INCENTIVE PLAN
(PROPOSAL III)
GENERAL
The shareholders are being asked to approve an amendment to the Company's
1994 Stock Incentive Plan ("Plan") that will increase the number of shares of
Common Stock available for issuance under the Plan by 400,000 shares to
2,300,000 shares of Common Stock. The Plan was approved by the Board of
Directors on November 30, 1994 and by the Shareholders at a Special Meeting of
the Shareholders on November 29, 1995. On February 25, 1999, the Board
unanimously adopted an amendment, subject to shareholder approval, increasing
the number of shares of Common Stock available for issuance under the Plan.
As of May 14, 1999, there were 5,688 shares available for future issuance
under the Plan (exclusive of the increase in shares subject to shareholder
approval at this Annual Meeting). The Board of Directors believes that
increasing the number of shares available for issuance under the Plan will
provide the Company with equity award opportunities to attract, retain and
motivate the best available personnel for the successful conduct of its
business. The Company believes that the number of remaining shares available for
issuance under the Plan will be insufficient to accomplish these purposes. The
Company anticipates that this increase in shares reserved under the Plan should
meet the Company's retention and motivation goals through and beyond the coming
year.
The principal terms and provisions of the Plan are summarized below. The
summary, however, is not intended to be a complete description of all the terms
of the Plan. A copy of the Plan, as amended, will be furnished by the Company to
any shareholder upon written request to the Corporate Secretary at the Company's
corporate offices.
SUMMARY OF THE 1994 STOCK INCENTIVE PLAN
The purposes of the Plan are to attract and retain the best available
personnel for positions of substantial responsibility at the Company, to provide
additional incentive to the Company's employees and consultants and to promote
the success of the Company's business. The Plan may be administered by the
Company's Board, or by a Committee (the "Committee") the members of which are
appointed by the Board. The Plan is currently administered by the Compensation
Committee of the Board. In accordance with the terms of the Plan, the Board, or
the Committee, may grant options: (i) intended to qualify as Incentive Stock
Options ("ISOs") under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), to employees; or (ii) not intended to qualify as ISOs
under Section 422 of the Code ("NSOs") to employees or consultants. Direct stock
grants or sales may also be made under the Plan.
SECURITIES OFFERED. The stock options that may be granted under the Plan
may be exercised to purchase shares of the Company's common stock, no par value
(the "Common Stock"), 1,900,000 shares of which have been reserved for issuance
upon the exercise of options granted, or sales made, pursuant to the provisions
of the Plan.
ELIGIBILITY. Employees, defined as any person, including officers and
directors, employed by the Company or any parent or subsidiary of the Company,
are eligible to be granted options under the Plan. Consultants, defined as any
person who is engaged by the Company or any subsidiary to render consulting
services, and who is compensated for such services, are also eligible to be
granted options under the Plan. If an employee is granted an ISO which, when
aggregated with all other ISOs granted to such employee by the Company, or by
any parent or subsidiary of the Company, would result in shares of the Common
Stock having an aggregate fair market value in excess of One Hundred Thousand
and No/100 Dollars ($100,000.00) becoming available for purchase upon the
exercise of one (1) or more ISOs during any calendar year, then such excess ISOs
shall be treated as NSOs.
14
<PAGE>
OPTION TERMS. The term of each ISO shall be ten (10) years from the date of
grant or such shorter term as may be stated in the agreement granting such ISO;
provided, however, that the term of an ISO granted to an employee who, at the
time of such grant, owns shares representing more than ten percent (10%) of the
voting power of all classes of the Company's, any parent's or subsidiary's
stock, shall be five (5) years from the data of grant or such shorter term as
may be stated in the agreement granting such ISO. The term of each NSO shall be
ten (10) years and one (1) day from the date of grant or such other term as may
be stated in the agreement granting such NSO; provided, however, that the term
of a NSO granted to an employee who, at the time of such grant, owns shares
representing more than ten percent (10%) of the voting power of all classes of
the Company's, any parent's or subsidiary's stock, shall be five (5) years and
one (1) day or such shorter term as may be stated in the agreement granting such
NSO.
An option granted pursuant to the provisions of the Plan may be exercised at
such times and under such conditions as the Board determines. If an employee to
whom an ISO or NSO has been granted ceases to be an employee of the Company
other than by reason of his death or disability, such person may exercise his
ISO or NSO only during such period as the Board specified at the time the ISO or
NSO was granted, which period of time may in no event exceed 90 days from the
date of termination, and only to the extent that he could have exercised it on
the date of his termination. An option may not be sold, transferred or otherwise
disposed of in any manner other than by the laws of descent and distribution.
During the lifetime of the person to whom an option was granted (the
"Optionee"), such option generally may be exercised only by the Optionee. If an
Optionee ceases to be an employee or a consultant to the Company by reason of
his disability, then the Optionee may exercise his option at any time during the
2 month period following the date of his termination (to the extent that he
could have exercised it on the date of his termination). In the event of the
death of an Optionee, such option generally may be exercised (to the extent such
option was exercisable on the date of death) during the 12-month period
following the date of death by a the Optionee's estate or by a person who
acquired such option by bequest or inheritance.
The Board shall determine the exercise price of ISOs granted under the Plan,
but such price may not in any case be less than one hundred percent (100%) of
the fair market value per share of the Common Stock on the date the option is
granted. The Board shall determine the exercise price of NSOs granted under the
Plan, but such price may not in any case be less than eighty-five percent (85%)
of the fair market value per share of the Common Stock on the date the option is
granted. The Board shall determine, in its discretion, the fair market value per
share of the Common Stock; provided, however, that if there is a public market
for the Common Stock, such fair market value shall be the closing price of a
share of the Common Stock on the last market trading day prior to the date of
grant of an option or the date of authorization of a sale. The Board shall
determine the consideration to be paid upon the exercise of an option or
pursuant to a sale, including the method of payment, which may consist of cash,
check, transfer to the Company of previously owned shares of the Common Stock
having a fair market value equal to the option exercise price, delivery of
instructions to the Company to withhold shares of the Common Stock that would
otherwise be issued upon the exercise of the option having a fair market value
equal to the option exercise price, or any combination of the foregoing methods
of payment.
AMENDMENT OF THE PLAN. The Board may amend or terminate the Plan at any
time; provided, however, that no amendment regarding amount, price or timing of
the option grants may be made more frequently than once every six (6) months
other than to comply with changes in the requirements of the Code or the
Securities Exchange Act of 1934. No amendment or termination shall affect any
options outstanding at that time. Any amendment that would increase the number
of shares that may be issued under the Plan (other than with respect to changes
in the capitalization of the Company), modify the requirements as to eligibility
for participation in the Plan, or materially increase the benefits accruing to
participants in the Plan, must be approved by the Company's shareholders.
RESALE RESTRICTIONS. Shares of Common Stock purchased under the Plan
(whether by the exercise of an option or by direct sale) by the Company's
officers and directors, or a beneficial owner of ten percent
15
<PAGE>
(10%) or more of any class of the Company's equity securities (collectively,
"Affiliates") will be eligible for resale in accordance with Rule 144 under the
Securities Act of 1933. In addition, the Company's Affiliates must hold any
shares issuable upon the exercise of an option, or a direct grant or sale, for
at least six (6) months from the date the option is granted, or from the date
the shares are granted or sold, respectively.
FEDERAL INCOME TAX CONSEQUENCES. Under federal income tax law currently in
effect, the Optionee of an ISO will recognize no income upon the grant or
exercise of the ISO. However, the Optionee will have a preference item for
alternative minimum tax purposes upon exercise of the ISO in the amount by which
the fair market value of the shares subject to the ISO at the time of exercise
exceeds the exercise price. If an Optionee exercises an ISO and does not dispose
of any of the shares acquired thereby within two (2) years following the date of
the ISOs grant and within one (1) year following the date of exercise, then any
gain realized upon subsequent disposition of such shares will be taxable as
capital gain. If an Optionee disposes of shares acquired upon exercise of an ISO
before the expiration of either the one (1) year holding period or the two (2)
year waiting period, any amount realized will be taxable as ordinary income in
the year of such disqualifying disposition to the extent that the lesser of the
fair market value of the shares on the exercise date, or the fair market value
of the shares on the date of disposition, exceeds the exercise price.
There are no federal income tax consequences to the Company by reason of the
grant or exercise of an ISO. In the event of a disqualifying disposition by an
Optionee, the Company will be entitled to a business expense deduction in the
tax year in which the disposition occurred to the extent the Optionee recognized
ordinary income.
Under federal income tax law currently in effect, the Optionee of a NSO will
recognize no income upon the grant of the NSO. At the time the NSO is exercised,
the Optionee will recognize ordinary income in the amount by which the fair
market value of the shares subject to the NSO at the time of exercise exceeds
the exercise price, and the Company will be entitled to a business expense
deduction for the same amount (conditioned upon proper withholding). Upon the
Optionee's disposition of shares acquired pursuant to exercise of an NSO, the
excess of the amount realized from such disposition over the fair market value
of the shares on the exercise date will be taxable as short- or long-term
capital gain depending on how long the shares have been held.
PROPOSED AMENDMENT. If the proposal is adopted, the first paragraph of
Section 3 of the 1994 Stock Incentive Plan will be amended and read as follows:
3. Stock Subject to the Plan. Subject to the provisions of Section 11 of the
Plan, the maximum aggregate number of Shares which may be optioned and/or
Sold under the Plan is 2,300,000 shares of Common Stock. The Shares may
be authorized, but unissued, or reacquired Common Stock.
BOARD RECOMMENDATION
The purpose of the Plan is to provide a means whereby key employees,
officers, non-employee directors, consultants, and advisors of the Company may
be given the opportunity to purchase shares of the Company's Common Stock
pursuant to options granted under the Plan. The Board of Directors believes that
option grants play an important role in the Company's efforts to attract,
employ, and retain employees, directors and consultants of outstanding ability,
and accordingly THE BOARD RECOMMENDS THE SHAREHOLDERS VOTE FOR THE AMENDMENT. If
a quorum is present, this proposal will be approved if a majority of the votes
cast on the proposal are voted for approval of the proposal. Abstentions and
broker non-votes are counted for purposes of determining whether a quorum
exists, but are not counted as votes cast and have no effect on the results of
the vote on this proposal.
16
<PAGE>
SELECTION OF INDEPENDENT AUDITORS
(PROPOSAL IV)
The Board of Directors has selected Deloitte & Touche LLP as independent
auditors for the current year ending December 31, 1999. For the years ended
December 31, 1998, 1997 and 1996, 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 2000 annual meeting of shareholders must
be received by the Company not later than December 15, 1999, 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 that 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, 1998 accompanies this Proxy Statement. The Company is
required to file an Annual Report on Form 10-K for its fiscal year ended
December 31, 1998 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-K, 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.
17
<PAGE>
APPENDIX A
METRO ONE TELECOMMUNICATIONS
1999 EMPLOYEE STOCK PURCHASE PLAN
The following provisions constitute the Metro One Telecommunications 1999
Employee Stock Purchase Plan.
1. PURPOSE.
The purpose of the Plan is to provide employees of the Company and its
Designated Subsidiaries with an opportunity to purchase Common Stock of the
Company through accumulated payroll deductions. It is the intention of the
Company to have the Plan qualify as an "Employee Stock Purchase Plan" under
Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of
the Plan, accordingly, shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
2. DEFINITIONS.
2.1 "ACCOUNT" shall mean each separate account maintained for a Participant
under the Plan, collectively or singly as the context requires. Each Account
shall be credited with a Participant's contributions, and shall be charged for
the purchase of Common Stock. A Participant shall be fully vested in the cash
contributions to his or her account at all times. The Plan Administrator may
create special types of accounts for administrative reasons, even though the
Accounts are not expressly authorized by the Plan.
2.2 "BOARD" shall mean the Board of Directors of the Company.
2.3 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
2.4 "COMMITTEE" shall mean the Compensation Committee of the Board.
2.5 "COMMON STOCK" shall mean the Common Stock of the Company.
2.6 "COMPANY" shall mean Metro One Telecommunications, an Oregon
corporation.
2.7 "COMPENSATION" shall mean all base straight time gross earnings plus
payments for overtime, shift premiums and sales commissions, but excluding
incentive compensation, incentive payments, bonuses, awards, and other
compensation.
2.8 "DESIGNATED SUBSIDIARY" shall mean each Subsidiary which has been
designated by the Board from time to time in its sole discretion as eligible to
participate in the Plan.
2.9 "EMPLOYEE" shall mean an individual who renders services to the Company
or to a Designated Subsidiary pursuant to a regular-status employment
relationship with such employer. A person rendering services to the Company or
to a Designated Subsidiary purportedly as an independent consultant or
contractor shall not be an Employee for purposes of the Plan.
2.10 "ENROLLMENT DATE" shall mean the first day of each Offering Period.
2.11 "FAIR MARKET VALUE"
2.11.1 If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sale
price for the Common Stock (or the mean of the closing bid and asked prices, if
no sales were reported), as quoted on such exchange (or the exchange with the
greatest volume of trading in Common Stock) or system on the last Trading Day
prior to the day of such determination, as reported in THE WALL STREET JOURNAL
or such other source as the Board deems reliable, or;
2.11.2 If the Common Stock is quoted on the NASDAQ system (but not on
the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported,
<PAGE>
its Fair Market Value shall be the mean of the closing bid and asked prices for
the Common Stock on the last Trading Day prior to the day of such determination,
as reported in THE WALL STREET JOURNAL or such other source as the Board deems
reliable, or;
2.11.3 In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the Board.
2.12 "NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System or such other quotation system that supersedes it.
2.13 "OFFERING PERIOD" shall mean the period of approximately six (6)
months, commencing on the first Trading Day on or after a date designated in
advance by the Board and terminating on the last Trading Day in the period
ending six months later, during which an option granted pursuant to the Plan may
be exercised. The duration of Offering Periods may be changed pursuant to
Section 4 of this Plan.
2.14 "PARTICIPANT" shall mean any Employee who is participating in this
Plan by meeting the eligibility requirements of Section 3 and has completed a
Payroll Deduction Authorization Form.
2.15 "PAYROLL PARTICIPATION FORM" shall mean the form attached hereto as
Exhibit A (or such other form as may be provided by the Company) on which a
Participant shall elect to participate in the Plan and designate the percentage
of his or her Compensation to be contributed to his or her Account through
payroll deductions.
2.16 "PLAN" shall mean this Employee Stock Purchase Plan.
2.17 "PURCHASE DATE" shall mean the last day of each Offering Period.
2.18 "PURCHASE PRICE" shall mean an amount equal to 85 % of the Fair Market
Value of a share of Common Stock (i) on the Enrollment Date or (ii) on the
Purchase Date, whichever is lower.
2.19 "RESERVES" shall mean the number of shares of Common Stock covered by
each option under the Plan which have not yet been exercised and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but not yet placed under option.
2.20 "SUBSIDIARY" shall mean a corporation, domestic or foreign, of which
not less than 50% of the voting shares are held by the Company or a Subsidiary,
whether or not such corporation now exists or is hereafter organized or acquired
by the Company of a Subsidiary.
2.21 "TRADING DAY" shall mean a day on which national stock exchanges and
NASDAQ are open for trading.
3. ELIGIBILITY.
3.1 A person shall become eligible to participate in the Plan on the first
Enrollment Date on or after which he or she first meets all of the following
requirements; provided, however, that no one shall become eligible to
participate in the Plan prior to the Enrollment Date of the first Offering
Period provided for in Section 2.13:
3.1.1 The person's customary period of employment is for more than
twenty (20) hours per week;
3.1.2 The person's customary period of employment is for more than five
(5) months in any calendar year.
3.2 Any provisions of the Plan to the contrary notwithstanding, no Employee
shall be granted an option under the Plan (i) if, immediately after the grant,
such Employee (or any other person whose stock would be attributed to such
Employee pursuant to Section 424(d) of the Code) would own stock and/or hold
outstanding options to purchase stock possessing five percent (5 %) or more of
the total combined voting power or value of all classes of stock of the Company
or of any Subsidiary, or (ii) which permits his
2
<PAGE>
or her rights to purchase stock under all employee stock purchase plans (under
Section 423 of the Code) of the Company and Subsidiaries to accrue at a rate
which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined
at the fair market value of the shares at the time such option is granted) for
each calendar year in which such option is outstanding at any time.
3.3 For purposes of the Plan, eligibility shall be treated as continuing
intact while the individual is on sick leave or other leave of absence approved
by the Company. Where the period of leave exceeds 90 days and the individual's
right to reemployment is not guaranteed either by statute or by contract,
eligibility to participate in the Plan will be deemed to have terminated on the
91st day of such leave.
4. OFFERING PERIODS.
The Plan shall be implemented by consecutive Offering Periods with the first
Offering Period commencing on a date designated in advance by the Board, and
continuing for six month periods thereafter until terminated in accordance with
Section 19 hereof. The Board shall have the power to change the duration of
Offering Periods (including the commencement dates thereof) with respect to
future offerings without shareholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period to be affected thereafter.
5. PARTICIPATION.
5.1 An eligible Employee may become a Participant in the Plan by completing
a Payroll Participation Form and filing it with the Company's Administration
Department (as set forth in Section 20 below) at least fifteen (15) days prior
to the applicable Enrollment Date, unless a later time for filing the Payroll
Participation Form is set by the Board for all eligible Employees with respect
to a given Offering Period.
5.2 Payroll deductions for a Participant shall commence on the first
payroll period following the Enrollment Date and shall end on the last payroll
period in the Offering Period, unless sooner terminated by the Participant as
provided in Section 10 hereof.
6. PAYROLL DEDUCTIONS.
6.1 At the time a Participant files his or her Payroll Participation Form,
he or she shall elect to have payroll deductions made on each payday during the
Offering Period in an amount not exceeding ten percent (10%) of the Compensation
which he or she receives on each payday during the Offering Period, and the
aggregate of such payroll deductions during the Offering Period shall not exceed
ten percent (10%) of the Participant's Compensation during said Offering Period.
6.2 A Participant shall specify that he or she desires to make
contributions to the Plan in whole percentages not less than one percent (1%)
and not more than ten percent (10%) of the Participant's Compensation during
each pay period in the Offering Period, or such other minimum or maximum
percentage as the Board shall establish from time to time.
6.3 All payroll deductions made for a Participant shall be credited to his
or her Account under the Plan and will be withheld in whole percentages only. A
Participant may not make any additional payments into such Account.
6.4 A Participant may discontinue his or her participation in the Plan as
provided in Section 10 hereof, or may increase or decrease the rate of his or
her payroll deductions during the Offering Period by filing with the Company (as
set forth in Section 20 below) a new Payroll Participation Form authorizing a
change in payroll deduction rate. A Participant is limited to making one change
during an Offering Period. The change in rate shall be effective with the first
full payroll period following fifteen (15) days after the Company's receipt of a
new Payroll Participation Form unless the Company elects to process a given
change in participation more quickly. A Participant's Payroll Participation Form
shall remain in effect for successive Offering Periods unless terminated as
provided in Section 10.
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<PAGE>
6.5 Notwithstanding the foregoing, to the extent necessary to comply with
Section 423(b)(8) of the Code and Section 3.2 hereof, a Participant's payroll
deductions shall be decreased to 0% at such time during any Offering Period
which is scheduled to end during the current calendar year (the "Current
Offering Period") that the aggregate of all payroll deductions which were
previously used to purchase stock under the Plan in a prior Offering Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Offering Period equal $21,250 (85 % of $25,000).
Payroll deductions shall recommence at the rate provided in such Participant's
Payroll Participation Form at the beginning of the first Offering Period which
is scheduled to end in the following calendar year, unless terminated by the
Participant as provided in Section 10.
6.6 At the time the option is exercised, or at the time some or all of the
Common Stock issued under the Plan is disposed of, the Participant must make
adequate provision for the Company's federal, state, or other tax withholding
obligations, if any, which arise upon the exercise of the option or the
disposition of the Common Stock. At any time, the Company may, but will not be
obligated to, withhold from the Participant's compensation the amount necessary
for the Company to meet applicable withholding obligations, including any
withholding required to make available to the Company any tax deductions or
benefit attributable to sale or early disposition of Common Stock by the
Employee.
7. OPTION TO PURCHASE COMMON STOCK.
On the Enrollment Date of each Offering Period, each eligible Employee
participating in such Offering Period shall be granted an option to purchase on
the Purchase Date of such Offering Period (at the applicable Purchase Price) up
to a number of shares of the Common Stock determined by dividing such Employee's
payroll deductions accumulated prior to such Purchase Date and retained in the
Participant's account as of the Purchase Date by the applicable Purchase Price;
provided that in no event shall an Employee be permitted to purchase during each
Offering Period more than a number of shares determined by dividing $12,500 by
the Fair Market Value of a share of the Common Stock on the Enrollment Date, and
provided further that such purchase shall be subject to the limitations set
forth in Sections 3.2 and 12 hereof. Purchase of the Common Stock shall occur as
provided in Section 8, unless the Participant has withdrawn pursuant to Section
10, and the option shall expire on the last day of the Offering Period.
8. PURCHASE OF COMMON STOCK.
Unless a Participant withdraws from the Plan as provided in Section 10.1
below, his or her option for the purchase of Common Stock will be exercised
automatically on the Purchase Date, and the maximum number of full shares
subject to option shall be purchased for such Participant at the applicable
Purchase Price with the accumulated payroll deductions in his or her account. No
fractional shares of Common Stock will be purchased; any payroll deductions
accumulated in a Participant's account which are not sufficient to purchase a
full share shall be retained in the Participant's account for the subsequent
Offering Period, subject to earlier withdrawal by the Participant as provided in
Section 10 hereof. During a Participant's lifetime, a Participant's option to
purchase shares of Common Stock hereunder is exercisable only by him or her.
9. DELIVERY.
As promptly as practicable after each Purchase Date, the Company shall
arrange the delivery to each Participant of a certificate for the shares of
Common Stock purchased with his or her payroll deductions.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
10.1 A Participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to purchase shares of
Common Stock under the Plan by giving written notice in the form of Exhibit B to
this Plan (or such other form as may be provided by the Company) to the Company
(as set forth in Section 20 below) no less than 15 days immediately preceding a
Purchase Date.
4
<PAGE>
All of the Participant's payroll deductions credited to his or her Account will
be paid to such Participant as soon as practicable after receipt of notice of
withdrawal and such Participant's option for the Offering Period will be
automatically terminated, and no further payroll deductions for the purchase of
shares will be made during the Offering Period. If a Participant withdraws from
an Offering Period, payroll deductions will not resume at the beginning of the
succeeding Offering Period unless the Participant delivers to the Company a new
Payroll Participation Form.
10.2 Upon termination of a Participant's employment for any reason,
including death, disability or retirement, or a Participant failing to remain an
Employee of the Company for at least twenty (20) hours per week during an
Offering Period in which the Employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the payroll deductions credited to
such Participant's Account shall be returned to the Participant; or, in the case
of death, to the persons entitled thereto under Section 14, and such
Participant's option shall be automatically terminated.
11. INTEREST.
No interest shall accrue on the payroll deductions of a Participant in the
Plan.
12. STOCK.
12.1 The maximum number of shares of the Company's Common Stock which shall
be made available for sale under the Plan shall be 150,000 shares, subject to
adjustment upon changes in capitalization of the Company as provided in Section
18. If on a given Purchase Date the number of shares of Common Stock eligible to
be purchased exceeds the number of shares then available under the Plan, the
Company shall make a pro rata allocation of the shares remaining available for
purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
12.2 The Participant will have no interest or voting right in shares
covered by his or her option until such shares of Common Stock have been
purchased.
12.3 Common Stock to be delivered to a Participant under the Plan will be
registered in the name of the Participant or in the name of the Participant and
his or her spouse.
13. ADMINISTRATION.
13.1 ADMINISTRATIVE BODY. The Plan shall be administered by the Committee.
Subject to the terms of the Plan, the Committee shall have the power to construe
the provisions of the Plan, to determine all questions arising thereunder, and
to adopt and amend such rules and regulations for administering the Plan as the
Committee deems desirable.
13.2 RULE 16B-3 LIMITATIONS. Notwithstanding the provisions of Subsection
13.1, in the event that Rule 16b-3 promulgated under the Securities Exchange Act
of 1934, as amended, or any successor provision ("Rule 16b-3") provides specific
requirements for the administrators of plans of this type, the Plan shall be
only administered by such a body and in such a manner as shall comply with the
applicable requirements of Rule 16b-3.
14. DESIGNATION OF BENEFICIARY.
14.1 A Participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the Participant's account under the
Plan in the event of such Participant's death subsequent to a Purchase Date on
which the option is exercised but prior to delivery to such Participant of such
shares and cash. In addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the Participant's account under the
Plan in the event of such Participant's death prior to a Purchase Date.
14.2 Such designation of beneficiary may be changed by the Participant at
any time by written notice as provided in Section 20 below. In the event of the
death of a Participant and in the absence of a
5
<PAGE>
beneficiary validly designated under the Plan who is living at the time of such
Participant's death, the Company shall deliver such shares and/or cash to the
executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents or relatives of the Participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
15. TRANSFERABILITY.
Neither payroll deductions credited to a Participant's account nor any
rights with regard to the exercise of an option or to receive shares under the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution or as provided in
Section 14 hereof) by the Participant. Any such attempt at assignment, transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds from an Offering Period in
accordance with Section 10.
16. USE OF FUNDS.
All payroll deductions received or held by the Company under the Plan may be
used by the Company for any corporate purpose, and the Company shall not be
obligated to segregate such payroll deductions.
17. REPORTS.
Individual accounts will be maintained for each Participant in the Plan.
Statements of account will be given to participating Employees at least
annually, which statements will set forth the amounts of payroll deductions, the
Purchase Price, the number of shares purchased and the remaining cash balance,
if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER OR ASSET
SALE.
18.1 CHANGES IN CAPITALIZATION. Subject to any required action by the
shareholders of the Company, the Reserves, as well as the price per share of
Common Stock covered by each option under the Plan which has not yet been
exercised, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option. The Board may, if it so determines in the exercise of its sole
discretion, make provision for adjusting the Reserves, as well as the price per
share of Common Stock covered by each outstanding option, in the event the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock.
18.2 DISSOLUTION OR LIQUIDATION. In the event of the proposed dissolution
or liquidation of the Company, the Offering Period will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Board.
18.3 MERGER OR ASSET SALE. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, each option under the Plan shall be assumed or
any equivalent option shall be substituted by such successor corporation or a
parent or subsidiary of such successor corporation, unless the Board determines,
in the exercise of its sole discretion and in lieu of such assumption or
substitution, to shorten the Offering Period then in progress by setting a new
Purchase Date (the "New Purchase Date") or to cancel each outstanding right to
purchase and refund
6
<PAGE>
all sums collected from Participants during the Offering Period then in
progress. If the Board shortens the Offering Period then in progress in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify each Participant in writing, at least ten (10) business days prior
to the New Purchase Date, that the Purchase Date for his option has been changed
to the New Purchase Date and that his option will be exercised automatically on
the New Purchase Date, unless prior to such date he has withdrawn from the
Offering Period as provided in Section 10 hereof. For purposes of this
paragraph, an option granted under the Plan shall be deemed to be assumed if,
following the sale of assets or merger, the option confers the right to
purchase, for each share of option stock subject to the option immediately prior
to the sale of assets or merger, the consideration (whether stock, cash or other
securities or property) received in the sale of assets or merger by holders of
Common Stock for each share of Common Stock held on the effective date of the
transaction (and if such holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
shares of Common Stock); provided, however, that if such consideration received
in the sale of assets or merger was not solely common stock of the successor
corporation or its parent (as defined in Section 424(e) of the Code), the Board
may, with the consent of the successor corporation and the Participant, provide
for the consideration to be received upon exercise of the option to be solely
common stock of the successor corporation or its parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
sale of assets or merger.
19. AMENDMENT OR TERMINATION.
19.1 The Board may at any time and for any reason terminate or amend the
Plan. Except as provided in Section 18, no such termination can affect options
previously granted, provided that an Offering Period may be terminated by the
Board on any Purchase Date if the Board determines that the termination of the
Plan is in the best interests of the Company and its shareholders. Except as
provided in Section 18, no amendment may make any change in any option
theretofore granted which adversely affects the rights of any Participant.
19.2 Without shareholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected," the
Committee shall be entitled to change the Offering Periods, limit the frequency
and/or number of changes in the amount withheld during an Offering Period,
establish the exchange ratio applicable to amounts withheld in a currency other
than U.S. dollars, permit payroll withholding in excess of the amount designated
by a Participant in order to adjust for delays or mistakes in the Company's
processing of properly completed withholding elections, establish reasonable
waiting and adjustment periods and/or accounting and crediting procedures to
ensure that amounts applied toward the purchase of Common Stock for each
Participant properly correspond with amounts withheld from the Participant's
Compensation, and establish such other limitations or procedures as the Board
(or its committee) determines in its sole discretion advisable which are
consistent with the Plan.
19.3 The Company shall obtain shareholder approval of any Plan amendment to
the extent necessary and desirable to comply with Rule 16b-3 or with Section 423
of the Code (or any successor rule or statute or other applicable law, rule or
regulation, including the requirements of any exchange or quotation system on
which the Common Stock is listed or quoted). Such shareholder approval, if
required, shall be obtained in such a manner and to such a degree as is required
by the applicable law, rule or regulation.
20. NOTICES.
All notices or other communications by a Participant to the Company under or
in connection with the Plan shall be deemed to have been duly given when
received in the form specified by the Company by the Company's Chief Financial
Officer at the Company's corporate headquarters.
21. CONDITIONS UPON ISSUANCE OF SHARES OF COMMON STOCK.
Common Stock shall not be issued with respect to an option unless the
exercise of such option and the issuance and delivery of such shares pursuant
thereto shall comply with all applicable provisions of law,
7
<PAGE>
domestic or foreign, including, without limitation, the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which the shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the purchase of Common Stock, the Company may require the
person purchasing such Common Stock to represent and warrant at the time of any
such purchase that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. TERM OF PLAN.
22.1 The Plan shall become effective upon the earlier to occur of its
adoption by the Board of Directors or its approval by the shareholders of the
Company. It shall continue in effect for a term of ten (10) years unless sooner
terminated pursuant to Section 19.
22.2 Notwithstanding the above, the Plan is expressly made subject (i) to
the approval of the shareholders of the Company within 12 months after the date
the Plan is adopted and (ii) at its election, to the receipt by the Company from
the Internal Revenue Service of a ruling in scope and content satisfactory to
counsel to the Company, affirming the qualification of the Plan within the
meaning of Section 423 of the Code. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.
If the Plan is not so approved by the shareholders within 12 months after the
date the Plan is adopted, and if, at the election of the Company a ruling from
the Internal Revenue Service is sought but is not received on or before one year
after the Plan's adoption by the Board, this Plan shall not come into effect. In
that case, the Account of each Participant shall forthwith be paid to him or
her.
23. ADDITIONAL RESTRICTIONS OF RULE 16B-3.
The terms and conditions of options granted hereunder to, and the purchase
of shares by, persons subject to Section 16 of the Exchange Act shall comply
with the applicable provisions of Rule 16b-3. This Plan shall be deemed to
contain, and such options shall contain, and the shares issued upon exercise
thereof shall be subject to, such additional conditions and restrictions as may
be required by Rule 16b-3 to qualify for the maximum exemption from Section 16
of the Exchange Act with respect to Plan transactions.
8
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EXHIBIT A
METRO ONE TELECOMMUNICATIONS
1999 EMPLOYEE STOCK PURCHASE PLAN
PAYROLL PARTICIPATION FORM
<TABLE>
<S> <C>
Original Application Enrollment Date:
Change in Payroll Deduction Rate
Change of Beneficiary(ies)
</TABLE>
1. _______________________________ hereby elects to participate in the
Metro One Telecommunications 1999 Employee Stock Purchase Plan (the "Employee
Stock Purchase Plan") and subscribes to purchase shares of the Company's Common
Stock in accordance with this Payroll Participation Form and the Employee Stock
Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount
of ____% of my compensation on each payday (not to exceed 10%) during the
Offering Period in accordance with the Employee Stock Purchase Plan. (Please
note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares of Common Stock at the applicable Purchase Price determined
in accordance with the Employee Stock Purchase Plan. I understand that if I do
not withdraw from an Offering Period, any accumulated payroll deductions will be
used to automatically exercise my option.
4. I have received a copy of the complete "Metro One Telecommunications
1999 Employee Stock Purchase Plan." I understand that my participation in the
Employee Stock Purchase Plan is in all respects subject to the terms of the
Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be
issued in the name(s) of (employee and/or spouse only):
- --------------------------------------------------
6. I understand that if I dispose of any shares received by me pursuant to
the Plan within 2 years after the Enrollment Date (the first day of the Offering
Period during which I purchased such shares) or within 1 year after the Purchase
Date (the date I purchased such shares), I will be treated for federal income
tax purposes as having received ordinary income at the time of such disposition
in an amount equal to the excess of the fair market value of the shares at the
time such shares were delivered to me over the price which I paid for the
shares. I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE
DATE OF ANY DISPOSITION OF MY SHARES AND I WILL MAKE ADEQUATE PROVISION FOR
FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON
THE DISPOSITION OF THE COMMON STOCK. The Company may, but will not be obligated
to, withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to sale or early
disposition of Common Stock by me. If I dispose of such shares at any time after
the expiration of the 1-year and 2-year holding periods described above, I
understand that I will be treated for federal income tax purposes as having
received income only at the time of such disposition, and that such income will
be taxed as ordinary income only to the extent of an amount equal to the lesser
of (1) the excess of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares, or (2) 15% of
the fair market value of the shares on the first day of the Offering Period. The
remainder of the gain, if any, recognized on such disposition will be taxed as
capital gain.
<PAGE>
7. I hereby agree to be bound by the terms of the Employee Stock Purchase
Plan. The effectiveness of this Payroll Participation Form is dependent upon my
eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due me under the Employee
Stock Purchase Plan:
Name: (Please print)
- ----------------------------------------------------------
(First) (Middle) (Last)
Relationship
- -----------------------------------------------------------------
Address
- ---------------------------------------------------------------------
Name: (Please print)
- ----------------------------------------------------------
(First) (Middle) (Last)
Relationship
- -----------------------------------------------------------------
Address
- ---------------------------------------------------------------------
Employee's Social Security Number:
- ---------------------------------------------
Employee's Address:
- ----------------------------------------------------------
I UNDERSTAND THAT THIS PAYROLL PARTICIPATION FORM SHALL REMAIN IN EFFECT
THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
<TABLE>
<S> <C>
Dated:
------------------------------------
Signature of Employee
------------------------------------
Spouse's Signature (If beneficiary other than
spouse)
</TABLE>
<PAGE>
EXHIBIT B
METRO ONE TELECOMMUNICATIONS
1999 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned Participant in the Offering Period of the Metro One
Telecommunications 1999 Employee Stock Purchase Plan which began on ___________,
19__ (the "Enrollment Date") hereby notifies the Company that he or she hereby
withdraws from the Offering Period. He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his or her account with respect to such Offering Period. The
undersigned understands and agrees that his or her option for such Offering
Period will be automatically terminated. The undersigned understands further
that no further payroll deductions will be made for the purchase of shares in
the current Offering Period and the undersigned shall be eligible to participate
in succeeding Offering Periods only by delivering to the Company a new Payroll
Participation Form.
Name and Address of Participant
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Signature
------------------------------------------------------------------------------
Date
<PAGE>
METRO ONE TELECOMMUNICATIONS, INC.
PROXY FORM
ANNUAL MEETING OF SHAREHOLDERS
JUNE 29, 1999
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 3:00 p.m. on June
29, 1999, 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.
- FOLD AND DETACH HERE -
<PAGE>
Please mark your votes as indicated in this example /X/
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"
THE ADOPTION OF THE COMPANY'S 1999 EMPLOYEE STOCK PURCHASE PLAN DESCRIBED IN
PROPOSAL 2, "FOR" AN AMENDMENT TO THE COMPANY'S 1994 STOCK INCENTIVE PLAN
DESCRIBED IN PROPOSAL 3, "FOR" PROPOSAL 4, 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 four members to the Company's Board of Directors. Directors
nominated are A. Jean de Grandpre, William D. Rutherford, Timothy A. Timmins
and James M. Usdan.
FOR / / Withheld For All / / For All Except* / /
Except*: _______________________________
2. To approve the adoption of the Company's 1999 Employee Stock Purchase
Plan and reserve 150,000 shares of Common Stock for issuance under the Plan.
FOR / / AGAINST / / ABSTAIN / /
3. To approve an amendment to the Company's 1994 Stock Incentive Plan.
FOR / / AGAINST / / ABSTAIN / /
4. To approve the selection of Deloitte & Touche LLP as the Company's
independent auditors.
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I PLAN TO ATTEND THE ANNUAL MEETING. / /
I DO NOT PLAN TO ATTEND THE ANNUAL MEETING. / /
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