SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
INTERNATIONAL FIBERCOM, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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2) Aggregate number of securities to which transaction applies:
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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
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[ ] 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
INTERNATIONAL FIBERCOM, INC.
3410 East University, Suite 180
Phoenix, Arizona 85034
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
July 2, 1999
The 1999 Annual Meeting of Shareholders of International FiberCom, Inc.
will be held at the Mesa Hilton Pavilion, 1011 West Holmes Avenue, Mesa, Arizona
85202, on July 2, 1999, at 7:30 a.m., Mountain Standard Time.
MATTERS TO BE VOTED ON:
1. Ratification of the selection of BDO Seidman, LLP as the independent
public accountants for the Company's fiscal year 1999;
2. Election of seven directors;
3. Any other matters that may properly come before the meeting or any
adjournment thereof.
The close of business on May 26, 1999 has been fixed as the record date
for the determination of the shareholders of record entitled to notice of, and
to vote at, this meeting or any adjournment thereof. The list of shareholders
entitled to vote at this meeting is available at the offices of International
FiberCom, Inc., 3410 East University, Suite 180, Phoenix, Arizona 85034, for
examination by any shareholder.
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THIS MEETING, PLEASE SIGN,
DATE AND RETURN THE ENCLOSED PROXY, WHICH IS SOLICITED BY AND ON BEHALF OF THE
BOARD OF DIRECTORS. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO
REVOKE SUCH PROXY OR TO VOTE IN PERSON SHOULD YOU LATER DECIDE TO ATTEND THIS
MEETING.
By Order of the Board of Directors
Joseph P. Kealy
Chairman of the Board
Phoenix, Arizona
June 8, 1999
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
GENERAL INFORMATION.........................................................1
Who Can Vote..............................................................1
Voting by Proxies.........................................................1
How You May Revoke Your Proxy Instructions................................1
How Votes are Counted.....................................................1
Cost of this Proxy Solicitation...........................................1
Attending the Annual Meeting..............................................1
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?.............................2
WHO SHOULD I CALL IF I HAVE QUESTIONS?......................................2
PROPOSALS...................................................................2
PROPOSAL NO. 1 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS...........2
PROPOSAL NO. 2 - ELECT SEVEN DIRECTORS....................................3
INFORMATION ABOUT THE NOMINEES..............................................4
ABOUT THE BOARD AND ITS COMMITTEES..........................................5
ABOUT THE EXECUTIVE OFFICERS................................................7
EXECUTIVE COMPENSATION......................................................8
OPTION GRANTS IN 1998.......................................................9
OPTION EXERCISES IN 1998...................................................10
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT...............10
OWNERSHIP OF OUR COMMON STOCK..............................................11
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............................12
OTHER MATTERS..............................................................13
SHAREHOLDER PROPOSALS......................................................13
ANNUAL REPORT..............................................................13
<PAGE>
PROXY STATEMENT
Your vote is very important. For this reason, the Board of Directors is
requesting that you allow your Common Stock to be represented at the Annual
Meeting by the persons who are named on the enclosed Proxy Card. This Proxy
Statement is being sent to you in connection with this request and has been
prepared for the Board by our management. "We," "our," "IFC" and the "Company"
refer to International FiberCom, Inc. The Proxy Statement is first being sent to
our shareholders on or about June 8, 1999.
GENERAL INFORMATION
WHO CAN VOTE
You are entitled to vote your common stock if our records showed that you held
your shares as of May 26, 1999. At the close of business on that date,
27,635,183 shares of common stock were outstanding and entitled to vote. Each
share of common stock has one vote. The enclosed Proxy Card shows the number of
shares that you are entitled to vote. Your individual vote is confidential and
will not be disclosed to third parties.
VOTING BY PROXIES
If your common stock is held by a broker, bank or other nominee (i.e., in
"street name"), you will receive instructions from it that you must follow in
order to have your shares voted. If you hold your shares in your own name as a
holder of record, you may instruct the Proxies how to vote your common stock by
signing, dating and mailing the Proxy Card in the envelope provided. Of course,
you can always come to the meeting and vote your shares in person. If you give
us a proxy without giving specific voting instructions, your shares will be
voted by the Proxies as recommended by the Board of Directors. We are not now
aware of any other matters to be presented at the Annual Meeting except for
those described in this Proxy Statement. However, if any other matters not
described in the Proxy Statement are properly presented at the meeting, the
Proxies will use their own judgment to determine how to vote your shares. If the
meeting is adjourned, your common stock may be voted by the Proxies on the new
meeting date as well, unless you have revoked your proxy instructions prior to
that time.
HOW YOU MAY REVOKE YOUR PROXY INSTRUCTIONS
To revoke your proxy instructions, you must advise the Secretary in writing
before your common stock has been voted by the Proxies at the meeting, deliver
later proxy instructions, or attend the meeting and vote your shares in person.
HOW VOTES ARE COUNTED
The Annual Meeting will be held if a majority of the outstanding shares of
common stock entitled to vote is represented at the meeting. If you have
returned valid proxy instructions or attend the meeting in person, your common
stock will be counted for the purpose of determining whether there is a quorum,
even if you wish to abstain from voting on some or all matters introduced at the
meeting.
COST OF THIS PROXY SOLICITATION
We will pay the cost of this proxy solicitation. We will, upon request,
reimburse brokers, banks and other nominees for their expenses in sending proxy
material to their principals and obtaining their proxies. We will solicit
proxies by mail, except for any incidental personal solicitation made by our
directors, officers and employees, for which they will not be paid.
ATTENDING THE ANNUAL MEETING
If you are a holder of record and you plan to attend the Annual Meeting, please
indicate this when you vote. If you are a beneficial owner of common stock held
by a broker or bank, you will need proof of ownership to be admitted to the
meeting. A recent brokerage statement or letter from a broker or bank showing
your current ownership and ownership of our shares on the record date are
examples of proof of ownership. If you want to vote in person your common stock
held in street name, you will have to get a proxy in your name from the
registered holder. 1
<PAGE>
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
PROPOSAL 1: RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
The affirmative vote of a majority of the votes cast at the Annual Meeting is
required to ratify the selection of independent auditors. Therefore, if you
"abstain" from voting, it has the same effect as if you voted "against" this
proposal.
PROPOSAL 2: ELECTION OF SEVEN DIRECTORS
The seven nominees for director who receive the most votes will be elected.
Therefore, if you do not vote for a nominee or you indicate "withhold authority
to vote" for any nominee on your proxy card, your vote will not count for or
against any nominee.
WHO SHOULD I CALL IF I HAVE QUESTIONS?
If you have questions about the Annual Meeting or voting, please call Terry W.
Beiriger, our Corporate Secretary, or Anthony T. Baumann, our Assistant
Corporate Secretary. Messrs. Beiriger and Baumann may be reached at (602)
941-1900.
PROPOSALS
PROPOSAL NO. 1 - RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
Our Board of Directors, acting upon the recommendation of the Audit
Committee, has selected the firm of BDO Seidman, LLP, 1900 Avenue of the Stars,
11th Floor, Los Angeles, CA, 90067, as independent accountants to examine our
financial statements for the fiscal year ending December 31, 1999, and to
perform other appropriate accounting services. A resolution will be presented to
the Annual Meeting to ratify this selection. The affirmative vote of a majority
of the number of votes entitled to be cast by the common stock represented at
the meeting is needed to ratify the selection. If the shareholders do not ratify
the appointment of BDO Seidman, LLP the selection of independent accountants
will be reconsidered by the Board of Directors.
For the year ended December 31, 1997, Semple & Cooper, LLP, provided
our audit services which included examination of our annual consolidated
financial statements, review of unaudited quarterly financial information,
assistance and consultation in connection with the filing of our Annual Report
on Form 10-KSB with the Securities and Exchange Commission and other filings
with the Commission, and consultation in connection with various audit-related
and accounting matters. Semple & Cooper, LLP referred us to BDO Seidman, LLP
upon the conclusion of their audit of the financial statements for the year
ended December 31, 1997, because of the increased size and complexity our
operations. Semple & Cooper, LLP is a member of the BDO Seidman Alliance. Semple
& Cooper, LLP had been our independent accountants since 1992. None of the
financial statements prepared by Semple & Cooper, LLP contained any adverse or
disclaimer of opinion, nor were they modified as to uncertainty, audit scope, or
accounting principles.
We do not expect that representatives of Semple & Cooper, LLP or BDO
Seidman, LLP will be present at the annual meeting.
The Proxies will vote in favor of ratifying the selection of BDO
Seidman, LLP unless instructions to the contrary are indicated on the
accompanying proxy form.
YOUR DIRECTORS RECOMMEND A VOTE FOR PROPOSAL NO. 1
2
<PAGE>
PROPOSAL NO. 2 - ELECT SEVEN DIRECTORS
NUMBER OF DIRECTORS TO BE ELECTED
An entire Board of Directors, consisting of seven directors, is to be elected at
the Annual Meeting. Each Director elected will hold office until the next annual
meeting and the election of their successors. If any director resigns or
otherwise is unable to complete his or her term of office, the Board will elect
another director for the remainder of the resigning director's term. Our
Articles of Incorporation call for a Board consisting of not fewer than three
nor more than nine members.
VOTE REQUIRED - CUMULATIVE VOTING
Under Arizona law, when directors are to be elected to office each shareholder
is entitled to cumulate votes. In order to cumulate your votes, you should
multiply the number of shares you own by seven and then cast the product for a
single candidate or distribute the product among two or more candidates. The
seven individuals with the highest number of votes are elected to office.
NOMINEES OF THE BOARD
The Board has nominated the following individuals to serve on our Board of
Directors until the next annual meeting and the election of their successors:
Joseph P. Kealy
V. Thompson Brown, Jr.
C. James Jensen
John F. Kealy
Jerry A. Kleven
Richard J. Seminoff
John P. Stephens
All of these nominees are currently serving on the Board. Each of the nominees
has agreed to be named in this proxy statement and to serve if elected. Each of
the incumbent nominees attended all of the meetings of the Board in the prior
year except for Mr. Jensen who was appointed by the Board in May 1999.
See "Information about the Nominees" on the following page for information
regarding each of the Nominees listed above.
We know of no reason why any of the listed nominees would not be able
to serve. However, if any nominee is unavailable for election, the Proxies would
vote your shares to approve the election of any substitute nominee proposed by
the Board. The Board may also choose to reduce the number of Directors to be
elected, as permitted by our Bylaws.
3
<PAGE>
INFORMATION ABOUT THE NOMINEES
JOSEPH P. KEALY (Age 49)
Mr. Kealy has been the Chairman of the Company since May 1994 and the President
and a director of the Company since September 1990. He was President of
International Environmental Corporation ("IEC"), a former wholly-owned
subsidiary of the Company, from its inception in 1987 until his resignation in
March 1995 in connection with the sale of IEC. He has been involved in the
construction business in both field and management capacities since 1972. He
spent the 15 years prior to joining the Company as the Arizona manager for a
construction company. He attended college in Hastings, Nebraska and at Northern
Arizona University.
V. THOMPSON BROWN, JR. (Age 36)
Mr. Brown joined Concepts In Communications, Incorporated, a principal
subsidiary of the Company, in 1986. He has been the president of the subsidiary
since February 1997. From November 1987 to February 1997 he was the Operations
Manager for Concepts. He is responsible for project administration, materials
management and bid and sales supervision. Mr. Brown graduated from Vanderbilt
University with a Bachelor of Engineering in 1984.
C. JAMES JENSEN (Age 58)
Mr. Jensen was appointed a Director of the Company in May 1999. Mr. Jensen is
the President of SWD Holdings, Inc., a company which specializes in the
development of master planned residential and recreational communities in the
western United States and Texas. Prior to the founding of SWD Holdings, Inc. Mr.
Jensen was president of J J Consulting Corporation, a full service marketing
company that specialized in the marketing and sales of high-end, master planned
residential communities. Mr. Jensen is an active member of the World Presidents'
Organization, the alumni group of the Young Presidents' Organization. He is also
a past director of the Boys and Girls Club and the Leukemia Society of America.
Mr. Jensen attended the University of Washington, Seattle from 1958-1962.
JOHN F. KEALY (Age 54)
Mr. Kealy has been a Director of the Company since September 1990. He was the
Executive Vice President and Secretary of the Company until March 1995 when he
resigned in connection with his acquisition of IEC from the Company in 1995. He
served as Chairman of the Company from September 1990 to May 1994. He formed IEC
with his brother Joseph P. Kealy in 1987 and served as its chairman from its
inception to May 1994. He has been the President and Chairman of IEC since
January 1995. Mr. Kealy has been involved in the construction business in both
field and management capacities since 1967. He ran construction company offices
in Hastings, Nebraska, Farmington, New Mexico and Phoenix, Arizona from 1974 to
1989. He attended Notre Dame University and graduated from Arizona State
University in 1967 with a Bachelor of Science in Construction Management.
JERRY A. KLEVEN (Age 45)
Mr. Kleven is the President of Kleven Communications, Inc., one of the Company's
principal subsidiaries. He has been involved in the construction industry since
1971 and is a member of various construction organizations. He has worked in all
phases of Kleven's operations, including systems analysis, construction
methodology and final estimate pricing.
4
<PAGE>
RICHARD J. SEMINOFF (Age 52)
Mr. Seminoff has been a Vice President at Semco Enterprises, Inc., which is in
the metal processing business, since May 1995. From April 1991 to April 1995, he
served as president of Amos, Lovitt, Touche & Seminoff, an insurance agency in
Phoenix, Arizona. From 1979 to March 1991, he was employed by the Lasher-Cowie
Insurance Agency, Inc., one of the largest regional insurance agencies
headquartered in Phoenix, Arizona. He was the president of that agency from 1984
to March 1991. Lasher-Cowie became a part of Hilb, Rogal and Hamilton Company, a
publicly owned company. He resigned as president of Lasher-Cowie in March 1991.
JOHN P. STEPHENS (Age 57)
Mr. Stephens has been Vice President and Regional Manager for J.A. Jones
Construction Co. for the past 13 years. J.A. Jones' Western Division does
approximately $250 million in revenue per year. Mr. Stephens is a professional
engineer registered in Florida, Oregon, California and Washington. Mr. Stephens
attended the University of Detroit where he received his BCE and Adelphia
University where he attained his MBA.
YOUR DIRECTORS RECOMMEND A VOTE FOR THE ELECTION OF
THE SEVEN NOMINEES UNDER PROPOSAL NO. 2
ABOUT THE BOARD AND ITS COMMITTEES
THE BOARD
We are governed by a Board of Directors and various committees of the Board
which meet throughout the year. The Board of Directors held two meetings and
acted by unanimous written consent ten times during 1998. Directors discharge
their responsibility throughout the year at Board and committee meetings and
also through informal telephonic conferences and other communications with the
Chairman and others regarding our business. All directors attended all Board
meetings during 1998, except for Mr. Jensen, who was appointed to the Board in
May 1999.
COMMITTEES OF THE BOARD
The Board has two principal committees, the Compensation Committee and the Audit
Committee. The function of each of these Committees is described below along
with the current membership and number of meetings held during 1998.
COMPENSATION COMMITTEE
The Compensation Committee has three primary functions. First, it reviews the
performance of the principal executive officers on an annual basis. The results
of this review are then reported to the Board with a recommendation from the
Committee regarding the compensation packages to be awarded to these officers.
Second, the Compensation Committee reviews the compensation paid to outside
directors for service on the Board and for service on committees of the Board.
Finally, the Committee reviews the level and extent of applicable benefits
provided by us with respect to automobiles, travel, insurance, health and
medical coverage, stock options and other stock plans and benefits.
The Compensation Committee held two meetings, at which both members were
present, and also acted by unanimous written consent on one occasion during
1998.
In 1998 the Board elected John F. Kealy and Richard J. Seminoff to the
Compensation Committee. See "Compensation Committee Interlocks and Insider
Participation" in the following section.
5
<PAGE>
AUDIT COMMITTEE
The Audit Committee has several functions. First, it receives reports with
respect to loss contingencies that may require public disclosure or financial
statement notation. Second, it performs an annual review and examination of
those matters that relate to a financial and performance audit of our employee
plans. Third, it recommends to the Board the selection, retention and
termination of independent accountants. Fourth, it reviews the professional
services, proposed fees and independence of the nominated accountants. And
finally, it provides for the periodic review and examination of management
performance in selected aspects of corporate responsibility.
In 1998 the Board elected John P. Stephens and Richard J. Seminoff to the Audit
Committee held two meetings during 1998, at which both members were present.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Kealy and Seminoff served as members of the Compensation Committees
during the last fiscal year. Each member of the Compensation Committee has been,
and will be, a non-employee director for purposes of administering our stock
option plans under Rule 16b-3.
DIRECTOR COMPENSATION
Directors currently receive no cash compensation for their services in that
capacity. Reasonable out-of-pocket expenses may be reimbursed to directors in
connection with attendance at meetings. We granted the following options to our
non-employee directors in 1998:
<TABLE>
<CAPTION>
No. of Shares Exercise
Underlying Price
Name Options Granted Date of Grant ($/share) Expiration Date
---- --------------- ------------- --------- ---------------
<S> <C> <C> <C> <C>
John F. Kealy 30,000 September 18, 1998 5.00 April 1, 2003
30,000 April 2, 1998 5.00 April 1, 2003
Richard J. Seminoff 30,000 September 18, 1998 5.00 April 1, 2003
30,000 April 2, 1998 5.00 April 1, 2003
John P. Stephens 100,000 September 18, 1998 5.00 April 1, 2003
</TABLE>
LIMITATION OF LIABILITY OF DIRECTORS
ARIZONA CORPORATE LAW
Arizona Law permits the inclusion of a provision in the articles of
incorporation of a corporation limiting or eliminating the potential monetary
liability of directors to a corporation or its shareholders by reason of their
conduct as directors. These sections do not permit any limitation on, or the
elimination of, liability of a director for disloyalty to his corporation or its
shareholders, failing to act in good faith, engaging in intentional misconduct
or a knowing violation of the law, obtaining an improper personal benefit or
paying a dividend or approving a stock repurchase that was illegal under Arizona
law. Accordingly, the provisions limiting or eliminating the potential monetary
liability of directors permitted by the Arizona law apply only to the "duty of
care" of directors, that is, to unintentional errors in their deliberations or
judgments and not to any form of "bad faith" conduct.
LIMITATION OF LIABILITY FOR COMPANY DIRECTORS
Our Articles of Incorporation eliminate the personal monetary liability of
directors to the extent allowed under Arizona law. A shareholder is able to
prosecute an action against a director for monetary damages only if he can show
a breach of the duty of loyalty, a failure to act in good faith, intentional
misconduct, a knowing violation of law, an improper personal benefit or an
illegal dividend or stock repurchase, and not "negligence" or "gross negligence"
in satisfying the director's duty of care. This provision in the Articles of
Incorporation applies only to claims against a director arising out of his role
as a director and not in any other capacity or to his responsibilities under any
other law, such as the federal securities laws.
6
<PAGE>
ABOUT THE EXECUTIVE OFFICERS
Joseph P. Kealy, Jerry A. Kleven, Terry W. Beiriger and Douglas N.
Kimball are our principal executive officers. For information regarding Messrs.
Kealy and Kleven please refer to "Information About the Nominees" beginning on
Page 5. All executive officers are appointed by and serve at the discretion of
the Board for continuous terms.
TERRY W. BEIRIGER (Age 47)
Mr. Beiriger is our Chief Financial Officer, Treasurer and Secretary. Mr.
Beiriger has served as our Chief Financial Officer since September 1990, as
Treasurer since July 1996, and as Secretary since March 1995. In 1979 he became
the controller of Kealy Construction Company, which was owned by Joseph P. Kealy
and John F. Kealy. From 1974 to 1979, he was employed as an agent of the U.S.
Internal Revenue Service specializing in the audits of medium-sized
corporations. Mr. Beiriger graduated from Hastings College in Nebraska in 1974
with a Bachelor of Science in Business Administration.
DOUGLAS N. KIMBALL (Age 44)
Mr. Kimball joined us in late 1997 and became our Chief Operating Officer in
early 1998. From 1995 until joining us he held various executive officer
positions, and most recently as Vice President, Operations, at American
Environmental Network, Inc., an environmental testing firm. Prior to that he was
a self-employed consultant in the Metro-NY area. From 1987-1989 he served as the
Treasurer, Vice President Finance and Chief Financial Officer of Mayor's
Jewelers, Inc. in Coral Gables, Florida. Mr. Kimball has also served as the
Executive Vice President and as a director of American Trade and Finance Corp.,
a Boston based venture firm; as Vice President, Finance, Secretary and Treasurer
of Enseco Incorporated, a public environmental company; and as an audit manager
for the Boston Office of Touche Ross & Co. Mr. Kimball graduated with a liberal
arts degree from Dartmouth College in 1976 and earned a masters of science in
accounting from Northeastern University in 1978.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid by us to the
chief executive officer and the most highly compensated executive officers and
key employees whose total remuneration exceeded $100,000 for services rendered
in all capacities to us during the last three completed fiscal years.
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Annual Securities
Compensation/ Underlying All Other
Name and Principal Positions Year Salary & Bonus Options (#)(3) Compensation (4)
- ---------------------------- ---- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Joseph P. Kealy (1) 1998 $200,000 400,000 $9,600
President and Chairman of 1997 146,680 740,000 9,600
the Board 1996 117,092 165,000 9,600
Terry W. Beiriger (1) 1998 150,000 55,000 9,600
Principal Financial Officer, 1997 76,997 170,000 9,600
Secretary and Treasurer 1996 75,154 65,000 9,600
Douglas N. Kimball 1998 104,000 30,000 7,200
Chief Operating Officer 1997 85,000 60,000 7,200
1996 -- -- --
Jerry A. Kleven (1) 1998 146,060 55,000 10,000
Executive Vice President and 1997 146,060 120,000 10,000
Director 1996 150,000 70,000 10,000
V. Thompson Brown, Jr. 1998 150,000 55,000 --
Director 1997 190,879 (2) 70,000 --
1996 78,843 -- --
</TABLE>
- ----------
(1) In August 1994 we entered into a five-year employment agreements with
Joseph P. Kealy, Jerry A. Kleven and Terry W. Beiriger providing for an
annual base salary of $146,060 for Mr. Kleven and, as subsequently amended,
$200,000 and $150,000 Messrs. Kealy and Beiriger, respectively. These
contracts were extended for an additional two years.
(2) Of the total compensation paid to Mr. Brown during 1997, $70,000 is
attributable to forgiveness of a loan made to him by Concepts prior to our
acquisition of Concepts.
(3) The exercise prices of all stock options granted were at least equal to the
fair market value of our common stock on the date of grant.
(4) The amounts set forth in this column are the automobile allowances received
by the persons in the table under their respective employment agreements.
8
<PAGE>
OPTION GRANTS IN 1998
The following executive officers were granted stock options under and
outside of our Option Plans in Fiscal 1998 in recognition of their past
contributions to us. In each case, the option price was in excess of the fair
market value of the Common Stock on the date of grant.
<TABLE>
<CAPTION>
Percentage of Total
No. of Shares Shares for which
Underlying Options Granted to Exercise
Name Options Granted Employees (1) Price Expiration Date
---- --------------- ------------- ----- ---------------
<S> <C> <C> <C> <C>
Joseph P. Kealy 250,000 (2) 17.6 $5.00 April 1, 2003
150,000 (3) 5.00 April 1, 2003
Jerry A. Kleven 30,000 (2) 2.4 5.00 April 1, 2003
25,000 (3) 5.00 April 1, 2003
Terry W. Beiriger 30,000 (2) 2.4 5.00 April 1, 2003
25,000 (3) 5.00 April 1, 2003
V. Thompson 30,000 (2) 2.4 5.00 April 1, 2003
Brown, Jr. 25,000 (3) 5.00 April 1, 2003
Douglas N. Kimball 30,000 (2) 4.0 5.00 April 1, 2003
60,000 (4) 5.00 April 1, 2003
</TABLE>
- ----------
* Less than 1%
(1) Percentages represent total percentages for fiscal 1998 including all
grants under and outside of our stock option plans listed for each person.
(2) Options became exercisable on September 18, 1998.
(3) Options became exercisable on April 2, 1998.
(4) Of such options, 20,000 became exercisable on April 2, 1998, 20,000 became
exercisable on April 2, 1999 and the remaining 20,000 will become
exercisable on April 2, 2000.
9
<PAGE>
OPTION EXERCISES IN 1998
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised In-
Unexercised the-Money
Options/SARs at Options/SARs at
FY-End (#) FY-End ($)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized ($) Unexercisable Unexercisable
---- ----------- ------------------ ------------- -------------
<S> <C> <C> <C> <C>
Joseph P. Kealy 164,785 $ 902,835 1,109,446 $4,587,147
President and Chairman of
the Board
Terry W. Beiriger 85,577 476,022 190,000 861,850
Principal Financial Officer,
Secretary and Treasurer
Douglas N. Kimball -- -- 90,000 208,125
Chief Operation Officer
Jerry A. Kleven 87,947 625,620 145,000 680,913
Executive Vice President
and Director
V. Thompson Brown, Jr 59,904 333,216 55,000 127,188
Director ------- ---------- --------- ----------
Totals 398,213 $2,337,693 1,589,446 $6,465,223
======= ========== ========= ==========
</TABLE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act") requires the Company's officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Such officers, directors and
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms that they file. During the last year Messrs.
Beiriger, Brown, John F. Kealy and Joseph P. Kealy each failed to file one
report on Form 4 in a timely fashion, each of which should have contained
disclosure regarding one transaction. All of such transactions have subsequently
been reported on Form 5.
10
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OWNERSHIP OF OUR COMMON STOCK
The following table sets forth information, as of May 26, 1999 with
respect to the number of shares of our common stock beneficially owned by
individual directors, by all directors and officers as a group, and by persons
who we know own more than 5% of our common stock. We have no other class of
voting stock outstanding.
Name of Beneficial Number Percent of
Owner and Address of Shares (1) Common Stock Owned
----------------- ------------- ------------------
Joseph P. Kealy 1,735,686 (2) 6.33
3410 East University, Suite 180
Phoenix, Arizona 85034
John F. Kealy 365,211 (3) 1.33
520 South 52nd Street
Tempe, Arizona 85281
Jerry A. Kleven 351,872 (4) 1.28
3410 East University, Suite 180
Phoenix, Arizona 85034
Terry W. Beiriger 455,347 (5) 1.66
3410 East University, Suite 180
Phoenix, Arizona 85034
C. James Jensen 272,800 (6) 1.00
101 Wild Oak Court
Danville, California 94506
Richard J. Seminoff 221,874 (7) *
5050 North 40th Street
Suite 220
Phoenix, Arizona 85018
V. Thompson Brown, Jr. 264,222 (8) *
5714 Charlotte Avenue
Nashville, Tennessee 37209
Douglas N. Kimball 130,000 (9) *
3410 East University, Suite 180
Phoenix, Arizona 85034
John P. Stephens 150,000 (10) *
5771 Rickenbacker Road
Los Angeles, California 90040
All directors and 3,867,012 14.10
officers as a group
(nine persons)
See notes on the following page
- ----------
* Less than 1%
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(1) The shareholder listed has sole voting and investment power with respect to
the shares listed.
(2) Includes options to purchase 1,530,000 shares of common stock that are
presently exercisable. Does not include options to purchase 125,000 shares
of common stock that are not exercisable within the next 60 days.
(3) Includes options to purchase 175,000 shares of common stock that are
presently exercisable. John F. Kealy disclaims beneficial ownership of an
additional 1,500 shares owned by his immediate family.
(4) Includes options to purchase 295,000 shares of common stock that are
presently exercisable.
(5) Includes options to purchase 390,000 shares of common stock that are
presently exercisable. Mr. Beiriger disclaims beneficial ownership of an
additional 9,450 shares owned by his immediate family.
(6) Includes options to purchase 150,000 shares of common stock that are
presently exercisable. Does not include options to purchase 150,000 shares
of common stock that are not exercisable within the next 60 days. Mr.
Jensen disclaims beneficial ownership of an additional 14,500 shares held
by members of his family.
(7) Includes options to purchase 165,000 shares of common stock that are
presently exercisable.
(8) Includes options to purchase 155,000 shares of common stock that are
presently exercisable.
(9) Includes options to purchase 130,000 shares of common stock that are
presently exercisable. Does not include options to purchase 20,000 shares
of common stock that become exercisable on April 2, 2000.
(10) Includes options to purchase 150,000 shares of common stock that are
presently exercisable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Commencing in 1989 we advanced funds to Wings Limited Partnership
("Wings"), the partners of which included Joseph P. Kealy, John F. Kealy and one
of our former principal shareholders. In 1993, these persons and their spouses
assumed the Wing's obligation by executing a promissory note in the principal
amount of $396,732, plus accrued interest. Such individuals secured the note by
pledging 267,000 shares of common stock to us. In June 1996, the former
principal shareholder paid $108,035 representing his pro-rata share of the
principal and accrued interest on the note. Upon such payment we released him
and his spouse from their obligations under the note and 107,000 shares of
common stock that they had pledged to secure the note. The total principal and
accrued interest due as of December 31, 1998 was $142,413, and the maturity date
of the note has been extended to December 31, 1999.
At December 31, 1994 Jerry A. Kleven, Brad J. Kleven and Ronald Abeyta
owed us $81,656, $108,400 and $68,634, respectively, as a result of advances
made to such individuals in fiscal 1994. The advances were represented by
secured promissory notes bearing interest at 7% per annum, which notes were due
and payable in full on or before December 31, 1995. Also, at December 31, 1994
International FiberCon, Inc., a California corporation ("FiberCon"), in which
Jerry A. Kleven, Brad J. Kleven and Ronald Abeyta owned a majority interest,
owed us $210,000 as the result of advances to FiberCon. These individuals
personally guaranteed FiberCon's payment of the promissory note. In 1995
FiberCon failed to make the required payments on the note. As a result, we
requested payment from the guarantors under their respective guarantees of the
note. Jerry A. Kleven paid the sum of $100,000 toward his note and his pro rata
portion of the guarantee of the FiberCon note in 1995. The remaining balance was
consolidated into a new note on December 31, 1995, which had a $77,787 balance
outstanding at December 31, 1998. We had received no payment from either Brad
Kleven or Ronald Abeyta, who resigned as officers in 1996, on their respective
notes or guarantees under the FiberCon note as of June 1996 and therefore filed
suit against such individuals to collect the notes. In January 1998 we entered
into a settlement agreement and mutual release with Brad Kleven and Ronald
Abeyta whereby all claims and counterclaims were dismissed by all parties. As a
part of such agreement both such individuals agreed to five-year non-compete
arrangements. As such, the receivables balance was converted to covenants not to
compete and amortized over a five-year period.
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OTHER MATTERS
Our Board is not aware of any matters to be presented at the meeting
other than those described above. However, if other matters properly come before
the meeting, it is the intention of the persons named in the accompanying proxy
to vote your proxy on such matters in accordance with their judgment.
SHAREHOLDER PROPOSALS
Any shareholder desiring to have a proposal included in our proxy
statement for our 2000 Annual Meeting must deliver such proposal (which must
comply with the requirements of Rule 14a-8 promulgated under the Securities
Exchange Act of 1934) to our principal executive offices not later than February
8, 2000.
ANNUAL REPORT
Our Annual Report on Form 10-KSB with certified financial statements
required to be filed for the fiscal year ended December 31, 1998, accompanies
this Notice and Proxy Statement and was mailed to all shareholders of record on
or about June 8, 1999. Any exhibit to the annual report on Form 10-KSB will be
furnished to any requesting person who sets forth a good faith representation
that he or she was a beneficial owner of our common stock on May 26, 1999. The
fee for furnishing a copy of any exhibit will be 25 cents per page plus $3.00
for postage and handling.
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