<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
PRO TECH COMMUNICATIONS INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
PRO TECH COMMUNICATIONS, INC.
3311 INDUSTRIAL 25TH STREET
FORT PIERCE, FLORIDA 34946
June 21, 2000
Dear Fellow Shareholder:
You are cordially invited to attend the annual meeting of shareholders of
Pro Tech Communications, Inc. to be held at 10:00 a.m., local time, on July 20,
2000 at the Radisson Resort, North Hutchinson Island, 2600 North A1A, Fort
Pierce, Florida 34949. All shareholders of record as of June 20, 2000 are
entitled to vote at the meeting. I urge you to be present in person or
represented by proxy at the meeting.
The enclosed notice of the annual meeting, proxy statement and proxy card
fully describe the business to be conducted at the meeting. At the meeting, you
will be asked to consider and vote upon: (a) an amendment to Pro Tech's Articles
of Incorporation to increase the number of authorized shares of common stock
from 10,000,000 shares to 40,000,000 shares and to create a new class of
2,000,000 shares of blank check preferred stock; (b) an amendment to the
Company's 1998 Stock Option Plan increasing the number of shares under the 1998
Plan from 500,000 to 2,000,000 shares of common stock; (c) the election of two
persons to the board of directors of Pro Tech, and (d) the appointment of Pro
Tech's independent auditors.
The board of directors believes that a favorable vote on these matters is
in the best interest of Pro Tech and its shareholders and unanimously recommends
a vote "FOR" such matters. Accordingly, we urge you to review the enclosed
material carefully and to return the enclosed proxy promptly.
Even if you expect to attend the meeting, please complete, sign, date and
return your proxy in the enclosed envelope without delay. If you attend the
meeting, you may vote in person even if you have previously mailed your proxy.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Keith Larkin
Keith Larkin
Chairman of the Board of Directors
<PAGE> 3
PRO TECH COMMUNICATIONS, INC.
3311 INDUSTRIAL 25TH STREET
FORT PIERCE, FLORIDA 34946
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 20, 2000
To All Shareholders:
The Annual Meeting (the "Meeting") of Shareholders of Pro Tech
Communications, Inc., a Florida corporation (the "Company"), will be held at
10:00 a.m., local time, on July 20, 2000 at the Radisson Resort, North
Hutchinson Island, 2600 North A1A, Fort Pierce, Florida 34949 for the following
purposes:
1. To consider and vote upon a proposal to amend the Company's Articles of
Incorporation:
(a) to increase the number of authorized shares of common stock, par
value $.001 per share (the "Common Stock"), of the Company from
10,000,000 shares to 40,000,000 shares; and
(b) to authorize the issuance of 1,000,000 shares of blank check
preferred stock;
2. To elect two persons to the board of directors of the Company to serve
until their successors are elected;
3. To consider and vote upon a proposal to amend the Company's 1998 Stock
Option Plan to increase the shares available for issuance under the Plan
from 500,000 to 2,000,000;
4. To ratify the appointment of Morgan Jacoby Thurn Boyle & Associates,
P.A. as the Company's independent auditors for the fiscal year ending
October 31, 2000; and
5. To transact such other business as may properly come before the Meeting.
These items are more fully described in the accompanying proxy statement.
The record date for the Meeting is the close of business on June 20, 2000. All
holders of Common Stock at that time are entitled to notice of, and to vote at,
the Meeting and at any adjournments or postponements thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" PROPOSAL NOS. 1, 2, 3, and 4.
Your vote is extremely important. To ensure that your shares are
represented, you should complete, sign, date and return the enclosed proxy card
in the prepaid envelope enclosed. This action will not limit your right to vote
in person if you wish to attend the Meeting and vote personally.
By Order of the Board of Directors,
/s/ Richard Hennessey
Richard Hennessey
President and Secretary
Fort Pierce, Florida
June 21, 2000
<PAGE> 4
PRO TECH COMMUNICATIONS, INC.
3311 INDUSTRIAL 25TH STREET
FORT PIERCE, FLORIDA 34946
-------------------------
PROXY STATEMENT
-------------------------
SOLICITATION OF PROXY, REVOCABILITY AND VOTING
SOLICITATION
This proxy statement and the accompanying proxy card are being mailed on or
about June 21, 2000, to all shareholders of record at the close of business on
June 20, 2000, in connection with the solicitation by the board of directors of
proxies for the Annual Meeting of Shareholders (the "Meeting") of Pro Tech
Communications, Inc. (the "Company") to be held at 10:00 a.m., local time, on
July 20, 2000 at the Radisson Hotel, North Hutchinson Island, 2600 North A1A,
Fort Pierce, Florida 34949. Proxies will be solicited by mail, and all expenses
of preparing and soliciting such proxies will be paid by the Company. All
proxies duly executed and received by the persons designated as proxy thereon
will be voted on matters presented at the Meeting in accordance with the
instructions given thereon by the person executing such proxy. Management does
not know of any other matter that may be brought before the Meeting, but, in the
event that any other matter should properly come before the Meeting, the persons
named as proxy will have authority to vote all proxies not marked to the
contrary in their discretion as they deem advisable.
A list of shareholders entitled to notice of the Meeting will be available
for examination by any shareholder at the Company's offices, 3311 Industrial
25th Street, Fort Pierce Florida 34946, for a period of 10 days prior to the
Meeting. The list will also be available for inspection at the Meeting.
REVOCABILITY
Any shareholder may revoke his or her proxy at any time before the Meeting
by written notice to such effect received by the Company at the address shown
above, attention: Corporate Secretary. A shareholder also may revoke his or her
proxy at any time before the Meeting by delivery of a subsequently dated proxy
or by attending the Meeting and voting in person.
NO APPRAISAL RIGHTS
The Company's shareholders are not entitled to appraisal rights under
Florida law with respect to any of the proposals to be considered and voted upon
at the Meeting.
QUORUM AND VOTING
The total number of issued and outstanding shares of common stock of the
Company as of May 31, 2000, was 4,266,000. The common stock is the only class of
securities of the Company entitled to vote, each share being entitled to one
noncumulative vote. Only shareholders of record as of the close of business on
June 20, 2000 will be entitled to vote. All properly executed proxy cards
delivered pursuant to this solicitation and not revoked will be voted at the
Meeting in accordance with the directions given. In voting by proxy with regard
to the election of directors, the Company's shareholders may vote in favor of
all nominees, withhold their votes as to all nominees or withhold their votes as
to a specific nominee. With regard to the other proposals, the Company's
shareholders may vote in favor of each proposal or against each proposal, or in
favor of some proposals and against
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others, or may abstain from voting on any or all proposals. Shareholders should
specify their respective choices on the accompanying proxy card. If no specific
instructions are given with regard to the matters to be voted upon, the shares
of common stock represented by a signed proxy card will be voted "FOR" Proposal
Nos. 1, 2, 3 and 4, listed on the proxy card. If any other matters properly come
before the Meeting, the persons named as proxies will vote upon such matters
according to their judgment.
A majority of the shares outstanding and entitled to vote, or 2,133,001
shares as of April 20, 2000, must be present at the Meeting, in person or by
proxy, in order to constitute a quorum for the transaction of business. The
affirmative vote of a majority of all of the outstanding shares of common stock
of the Company is required to approve the proposed amendments to the Company's
Articles of Incorporation. Thus, a majority of outstanding shares of common
stock (or 2,133,001 shares) must vote in favor of Proposal No. 1 or it will be
defeated. The affirmative vote of the holders of a plurality of shares of common
stock present in person or represented by proxy at the Meeting is required to
approve and adopt the other proposals being voted on at the Meeting and is
required to transact such other business as may properly come before the
Meeting. With respect to a proxy marked "ABSTAIN," shares are considered present
at the Annual Meeting for the purpose of determining the presence of a quorum,
but as they are not affirmative votes for the proposal, they will have the same
effect as a vote against the proposal. With respect to broker non-votes, shares
are not considered present at the Meeting for the proposal for which the
shareholder withheld authority for the broker to vote upon the proposal and will
not be counted in favor of or against the proposal, but will be counted toward a
quorum. Because the affirmative vote of a majority of all of the outstanding
shares of common stock of the Company is required to approve the proposed
amendments to the Company's Articles of Incorporation, a broker non-vote with
respect to this proposal will have the effect of a vote against the proposal.
For these reasons, it is important that all shares are represented at the
Meeting, either in person or by proxy.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 31, 2000, information concerning
the shares of common stock beneficially owned by each person who, to the
knowledge of the Company, is (i) the beneficial owner of more than five percent
of the common stock of the Company, (ii) each director of the Company, (iii) the
five most highly compensated executive officers of the Company, if such
compensation was at least $100,000, (including the Company's Chief Executive
Officer) in the last fiscal year, and (iv) all executive officers and directors
of the Company as a group. Except as otherwise noted, each beneficial owner has
sole investment and voting power with respect to the listed shares.
<TABLE>
<CAPTION>
AMOUNT AND NATURE APPROXIMATE
OF BENEFICIAL PERCENTAGE
NAME OF BENEFICIAL OWNER OWNERSHIP OF CLASS
------------------------ ----------------- -----------
<S> <C> <C>
Keith Larkin......................................... 1,380,000(1) 28.7%
Richard Hennessey.................................... 350,000(2) 7.6%
All Executive Officers and Directors as a Group
(2 persons)........................................ 1,730,000(1)(2) 33.5%
</TABLE>
-------------------------
(1) Includes 540,000 shares of common stock underlying a stock option, which is
presently exercisable at $.50 per share and expires on April 15, 2001, and
40,000 shares of common stock owned by The Seek Foundation, an organization
described in Section 501(c)(3) of the Internal Revenue Code of 1954, as
amended. The directors of such organization are Keith Larkin and his wife,
Cynthia Larkin.
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(2) Represents 350,000 shares of common stock underlying two stock options,
which are presently exercisable at $.375 per share. Of such options, 200,000
expire on April 13, 2001, 100,000 expire on August 3, 2001 and 50,000 expire
on August 3, 2002.
The Company has been advised by Mr. Larkin, who holds or otherwise has
voting power with respect to 840,000 shares of common stock (representing
approximately 19.7% of the votes possible), that he intends to vote such shares
in favor of the proposals to be presented for consideration and approval at the
Meeting.
SECTION 16(A) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than 10% shareholders are
required by regulations of the Securities and Exchange Commission to furnish the
Company with copies of all such reports. Based solely on its review of the
copies of such reports received by it, or written representations from certain
reporting persons that no reports were required for those persons, the Company
believes that, during the period from November 1, 1998, to October 31, 1999, its
officers, directors, and greater than 10% shareholders complied with the filing
requirements of Section 16(a) of the Exchange Act.
PROPOSAL 1. AMENDMENT TO THE ARTICLES OF INCORPORATION
The Company's board of directors has unanimously approved and declared
advisable an amendment to the Company's Articles of Incorporation to increase
the number of authorized shares of common stock, par value $0.001 per share,
from 10,000,000 to 40,000,000 and to authorize the creation of 1,000,000 shares
of blank check preferred stock. The board of directors is submitting this matter
for adoption by the holders of the common stock entitled to vote at the Annual
Meeting.
INCREASE IN AUTHORIZED COMMON STOCK
The terms of the additional shares of common stock will be identical to
those of the currently outstanding shares of common stock. However, because
holders of common stock have no preemptive rights to purchase or subscribe for
any unissued stock of the Company, the issuance of additional shares of common
stock will reduce the current shareholders' percentage ownership interest in the
total outstanding shares of common stock. Approval of this proposal will not
alter the current number of issued shares, unless the Company completes the
transaction described in "Proposed Transaction." The relative rights and
limitations of the shares of common stock would remain unchanged under this
proposal.
As of May 31, 2000, a total of 4,266,000 shares of the Company's currently
authorized shares of common stock were issued and are outstanding, leaving
5,734,000 shares of common stock available for all other purposes. Presently,
1,029,500 of the currently authorized but unissued shares of common stock are
required to be held in reserve for possible future issuance upon exercise of
outstanding stock options. The proposed increase in the number of authorized but
unissued shares of common stock would enable the Company, without further
shareholder approval, to issue shares from time to time as may be required for
proper business purposes, such as raising additional capital for ongoing
operations, business and asset acquisitions, stock splits and dividends, present
and future employee benefit programs and other corporate purposes. Except for
the purposes described in the "Proposed
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Transaction" section, the Company currently has no specific plans to issue any
additional unissued and unreserved shares of common stock.
PROPOSED TRANSACTION
On June 2, 1999, the Company entered into a preliminary agreement with NCT
Hearing Products, Inc. ("NCT Hearing"), a wholly-owned subsidiary of NCT Group,
Inc. ("NCT"), pursuant to which the Company had preliminarily agreed to issue a
majority of the common stock of the Company to NCT Hearing in exchange for
obtaining a license agreement to use NCT Hearing's Active Noise Reduction
("ANR") technology and Clear-Speech(R) algorithm technology. The Company
understands that ANR technology is particularly effective at reducing low
frequency noise and that Clear-Speech(R) technology removes noise from voice
transmissions. The Clear-Speech(R) technology can be adjusted to optimize
performance for a particular noise, or can be set to provide noise reduction
across a wide range of noises. The Company believes that it can incorporate NCT
Hearing's ANR and Clear-Speech(R) technologies into the Company's lightweight
telephone headsets.
The Company entered into the preliminary agreement with NCT Hearing because
NCT Hearing had agreed to introduce the Company to persons who would make an
equity investment in the Company of up to $3 million. Although the preliminary
agreement expired in August 1999, the parties presently are continuing their
discussions whereby the Company would issue to NCT Hearing a majority of the
outstanding common stock of the Company in exchange for a license to use NCT
Hearing's ANR and Clear-Speech(R) technologies. The Company and NCT Hearing have
not yet begun to negotiate the terms of the license agreement relating to NCT
Hearing's technology.
On March 8, 2000, the Company signed a non-binding term sheet with NCT, NCT
Hearing and Selinus Limited who was introduced to the Company by NCT Hearing.
Under the term sheet, the Company has preliminarily agreed to issue to Selinus
Limited warrants to purchase 4.5 million shares of the Company's common stock
for $1.5 million in cash. The exercise price of the warrants being negotiated
among the parties is $.50 per share. On March 8, 2000, the closing sale price of
the Company's common stock on the OTC Bulletin Board was $1.21. The Company has
also agreed to register all of the shares of its common stock underlying the
warrants in a registration statement to be filed with the Securities and
Exchange Commission after the transaction is completed. Under the terms of the
warrants being discussed among the parties, the warrants would be callable by
the Company in three 1.5 million share blocks, after the Company's common stock
trades at a minimum of 150,000 shares per day. Thereafter, the first block of
1.5 million shares may be called by the Company when the Company's common stock
price reaches and maintains for a minimum of 15 consecutive trading days a price
of 36% above the exercise price per share of the warrants. The second block of
1.5 million shares may be called by the Company when the Company's common stock
reaches and maintains for a minimum of 15 consecutive trading days a price 88%
above the exercise price per share of the warrants. The last block of 1.5
million shares may be called by the Company when the Company's common stock
reaches and maintains for a minimum of 15 consecutive trading days a price of
127% above the exercise price per share of the warrants.
If the Company does not register the shares of its common stock underlying
the warrants within one year after the closing of the transaction, Selinus
Limited would have the right to have a cashless exercise of the warrants, the
terms of which have not yet been negotiated among the parties.
As part of the term sheet, the Company has also preliminarily agreed to
issue 1,500 shares of convertible preferred stock of the Company to Selinus
Limited for $1.5 million in cash. The convertible preferred stock would not have
any voting rights, except as may be required by applicable law, and would
provide for a 4% accretion payment by the Company, at the Company's option, in
the Company's common stock or cash at the time of the conversion of the
preferred stock.
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All shares of the preferred stock would be required to be converted 36
months after the closing date of the transaction. In addition, the investor
would have the right to convert its shares of preferred stock into shares of the
Company's common stock at any time. The amount of shares of the Company's common
stock to be issued for each share of convertible preferred stock would be
determined by dividing the $1,000 stated value of each share of convertible
preferred stock by the conversion price. The conversion price would be equal to
the lesser of (a) $.50 or (b) a 20% discount from the lowest average closing bid
price of the Company's common stock for any consecutive five-day period out of
the 15-day period preceding the conversion.
Selinus Limited would also have the option, at its discretion, to convert
the preferred stock into NCT common stock at a 20% discount below the lowest
average closing bid price of NCT's common stock for any consecutive five-day
period out of the 15-day period preceding conversion. Six months from the
closing of the transaction, up to one-half of the shares of preferred stock
would be subject to this option, and the balance of the preferred stock would be
subject to this option 12 months after the closing.
The Company has preliminarily agreed to file a registration statement with
the Securities and Exchange Commission covering all of the shares of the
Company's common stock underlying the preferred stock within 60 days after the
closing of the transaction and to maintain the effectiveness of the registration
for three years.
Because the proposed arrangements described above among the Company, NCT
Hearing and Selinus Limited are non-binding, subject to change due to further
negotiation among the parties and do not require shareholder approval for the
Company to complete the transactions, the board of directors is only seeking
approval of amendments to the Company's Articles of Incorporation to increase
the number of shares of common stock authorized thereunder and to create a new
class of blank check preferred stock, which could be issued by the Company to
NCT Hearing and Selinus Limited, respectively. If the amendments to the Articles
of Incorporation are approved by the shareholders and the Company thereafter
enters into agreements with NCT Hearing and Selinus Limited respecting the
issuance of common stock and a form of preferred stock, shareholders of the
Company will not be asked to vote to approve the agreements or the issuance of
the Company's common stock or preferred stock pursuant to such agreements.
STOCK OPTIONS
The Company has a 1996 Stock Option Plan and a 1998 Stock Option Plan. The
Company is required to reserve 1,029,500 shares of its common stock for issuance
pursuant to outstanding options under the Plans. For a description of the 1996
and 1998 Stock Option Plans, see "Proposal Number 3. Election of
Directors -- Stock Option Plans." If the Company completes the transaction
described in the preceding section, a portion of the additional authorized
shares of common stock will be reserved for issuance under the 1998 Stock Option
Plan.
CONSULTING AGREEMENT
Pursuant to a consulting agreement dated as of March 15, 1999, as amended
as of June 1, 1999, and as modified as of July 29, 1999, between the Company and
Union Atlantic L.C. ("Union Atlantic"), the Company is obligated to issue two
percent (2%) of its outstanding common stock to Union Atlantic if the
transactions with NCT Hearing and Selinus Limited are completed. In order to
comply with the consulting agreement, certain members of its management team may
assign stock options to Union Atlantic, and the Company will provide Union
Atlantic with the funds to exercise such options. Union Atlantic has certain
piggy-back registration rights for all of the shares of common stock it may
receive under its agreement with the Company.
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ADDITIONAL CONSIDERATIONS
The proposed increase in the number of authorized shares of common stock
would enable the Company, without further shareholder approval, to issue such
shares from time to time as may be required for proper business purposes, such
as raising additional capital for ongoing operations, business and asset
acquisitions, stock splits, stock dividends and present and future employee
benefit plans, which would dilute the equity interest in the Company of the
then-present shareholders.
Except for the purposes outlined in the preceding sections, the Company
currently has no specific plans, agreements or understandings to issue any
additional shares of common stock.
The additional shares of common stock to be authorized by the amendment
would have rights identical to those currently outstanding shares of common
stock. One of the effects of the proposed amendment, if adopted, might be to
enable the board of directors to render it more difficult to, or discourage an
attempt to, obtain control of the Company by means of a merger, tender offer,
proxy contest or otherwise, and thereby protect the continuity of present
management. The board of directors would, unless prohibited by applicable law,
have additional shares of common stock available to effect transactions (such as
private placements) in which the number of the Company's outstanding shares
would be increased and would thereby dilute the interest of any party attempting
to gain control of the Company. Such action could discourage an acquisition of
the Company, which shareholders might view as desirable.
CREATION OF BLANK CHECK PREFERRED STOCK
The proposed amendment to the Articles of Incorporation will create
1,000,000 authorized shares of "blank check" preferred stock. Article IV of the
proposed Amended and Restated Articles of Incorporation attached as Exhibit "A"
to this proxy statement contains provisions related to the "blank check"
preferred stock. The following summary does not purport to be complete and is
qualified in its entirety by reference to the proposed Amended and Restated
Articles of Incorporation as set forth in Exhibit "A."
The term "blank check" refers to preferred stock, the creation and issuance
of which is authorized in advance by the shareholders and the terms, rights and
features of which are determined by the board of directors of the Company upon
issuance. The authorization of such blank check preferred stock would permit the
board of directors to authorize and issue preferred stock from time to time in
one or more series.
Subject to the provisions of the Company's Amended and Restated Articles of
Incorporation and the limitations prescribed by law, the board of directors
would be expressly authorized, at its discretion, to adopt resolutions to issue
shares, to fix the number of shares and to change the number of shares
constituting any series and to provide for or change the voting powers,
designations, preferences and relative, participating, optional or other special
rights, qualifications, limitations or restrictions thereof, including dividend
rights (including whether the dividends are cumulative), dividend rates, terms
of redemption (including sinking fund provisions), redemption prices, conversion
rights and liquidation preferences of the shares constituting any series of the
preferred stock, in each case without any further action or vote by the
shareholders. The board of directors would be required to make any determination
to issue shares of preferred stock based on its judgment as to the best
interests of the Company and its shareholders. As noted in the "Proposed
Transaction" section, the Company is presently negotiating with NCT Hearing and
Selinus Limited to sell a non-voting preferred stock to Selinus Limited.
However, the Company may not be able to negotiate terms and conditions with such
parties that are acceptable to the board of directors. Accordingly, the board of
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directors is seeking shareholder approval of an amendment to the Articles of
Incorporation which would give the board of directors flexibility, without
further shareholder action, to issue preferred stock on such terms and
conditions as the board of directors deems to be in the best interests of the
Company and its shareholders. Except for the possible issuance of the preferred
stock to the investor described hereinabove, the Company has no immediate
definitive plans to issue any shares of preferred stock. Therefore, the terms,
rights and features of a preferred stock subject to this proposal cannot be
stated or predicted with certainty.
It is not possible to state the effects of the proposed amendment upon the
rights of holders of common stock until the board of directors determines the
respective rights of the holders of one or more series of preferred stock.
However, the issuance of shares of preferred stock pursuant to the board of
directors' authority described above may adversely affect the rights of the
holders of common stock. Specifically, the effects of such issuances of
preferred stock could include (i) reduction of the amount otherwise available
for payment of dividends on common stock, if any, (ii) restrictions on dividends
on common stock, (iii) dilution of the voting power of common stock, and (iv)
restrictions on the rights of holders of common stock to share in the Company's
assets on liquidation until satisfaction of any liquidation preference granted
to the holders of such subsequently designated series of preferred stock. For
example, preferred stock issued by the Company may rank prior to the common
stock as to dividend rights, liquidation preferences or both, may have full or
limited voting rights, and may be convertible into shares of common stock.
Accordingly, the issuance of shares of preferred stock could decrease the amount
of earnings and assets allocable to or available for distribution to holders of
common stock and adversely affect the rights and powers, including voting rights
of the common stock, and may discourage bids for the common stock or may
otherwise adversely affect the market price of the common stock.
The proposed amendment will provide the Company with increased financial
flexibility in meeting future capital requirements by providing another type of
security in addition to its common stock, as it will allow preferred stock to be
available for issuance from time to time and with such features as determined by
the board of directors for any proper corporate purpose. Such purposes could
include, without limitation, issuance for cash as a means of obtaining capital
for use by the Company, or issuance as part or all of the consideration required
to be paid by the Company for acquisitions of other businesses or properties.
Any issuance of preferred stock with voting rights could, under certain
circumstances, have the effect of delaying or preventing a change in control of
the Company by increasing the number of outstanding shares entitled to vote and
by increasing the number of votes required to approve a change in control of the
Company. Shares of voting or convertible preferred stock could be issued, or
rights to purchase such shares could be issued, to render more difficult or
discourage an attempt to obtain control of the Company by means of a tender
offer, proxy contest, merger or otherwise. The ability of the board of directors
to issue such additional shares of preferred stock, with the rights and
preferences it deems advisable, could discourage an attempt by a party to
acquire control of the Company by tender offer or other means. Such issuances
could therefore deprive shareholders of benefits that could result from such an
attempt, such as the realization of a premium over the market price that such an
attempt could cause. Moreover, the issuance of such additional shares of
preferred stock to persons friendly to the board of directors could make it more
difficult to remove incumbent managers and directors from office even if such
change were to be favorable to shareholders generally.
While the amendment may have anti-takeover ramifications, the board of
directors believes that the financial flexibility offered by the amendment
outweighs any disadvantages. To the extent that the amendment may have
anti-takeover effects, the amendment may encourage persons seeking to
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acquire the Company to negotiate directly with the board of directors enabling
the board of directors to consider the proposed transaction in a manner that
best serves the shareholders' interests.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the issued and
outstanding shares of common stock as of June 20, 2000 is required to approve
the proposed Amended and Restated Articles of Incorporation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF THE
COMMON STOCK VOTE "FOR" THE PROPOSAL TO THE AMENDMENT TO THE COMPANY'S ARTICLES
OF INCORPORATION.
PROPOSAL 2. ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The business of the Company is managed under the direction of the board of
directors. It has responsibility for establishing broad corporate policies and
for the overall performance of the Company. Two directors are to be elected at
the Meeting to serve until their successors are elected and qualified. Proxies
not marked to the contrary will be voted in favor of the election of each named
nominee.
INFORMATION CONCERNING NOMINEES
The following table sets forth the positions and offices presently held
with the Company by each nominee, his age, and the year from which such
nominee's service on the Company's board of directors dates:
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE POSITIONS AND OFFICES
---- --- -------------- ---------------------
<S> <C> <C> <C>
Keith Larkin...................... 76 1994 Chairman of the Board of Directors,
Chief Executive Officer and
Treasurer
Richard Hennessey................. 41 1998 President, Director, and Secretary
</TABLE>
KEITH LARKIN is the founder, Chairman of the Board of Directors and
Treasurer of the Company. Mr. Larkin's 30-year professional career has been
devoted to designing, manufacturing and marketing his new designs in lightweight
telephone headsets. In 1961, Mr. Larkin founded Plantronics, the current
industry leader in lightweight telephone headsets with annual sales of all its
products (including the electronic amplifier) in 1999 of approximately $286
million. From 1961 until he sold his interest in 1967, Mr. Larkin served as the
President and Chairman of Plantronics, during which Plantronics established
itself as the main source of lightweight telephone headsets to the telephone
industry and provided the headsets for NASA Mercury, Gemini and Apollo moon
flights. In the late 1970's, Mr. Larkin conceived, developed and patented a new
design in headsets to compete against Plantronics' headsets. With Mr. Larkin as
its President, ACS Wireless attained $1 million monthly sales figures to the
telephone market within three years of operation and replaced Plantronics'
headsets on the NASA Space Shuttle. In 1986, he left ACS Wireless to become
involved in Christian children's relief programs in Haiti and Honduras for a
period of three years. From January 1989 to August 1991, Mr. Larkin served as
the President of Advanced Recreational Technology, Inc., an engineering research
and development company owned by Mr. Larkin. In August 1991,
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<PAGE> 12
Mr. Larkin founded Pro Tech Systems, a California limited partnership that he
managed as general partner. Pro Tech Systems was formed to design, manufacture,
and market lightweight telephone headsets. Upon the transfer of all of the
assets of Pro Tech Systems to the Company in November 1994, Mr. Larkin became
the Chairman of the Board of Directors, Chief Executive Officer, President and
Treasurer of the Company, positions which he has held until February 2, 1998,
when he resigned as President of the Company but retained his position as
Chairman of the Board of Directors, Chief Executive Officer and Treasurer.
RICHARD HENNESSEY joined the Company as Director of Marketing in August
1995 and was appointed Vice President Marketing on June 10, 1996. On August 4,
1998, Mr. Hennessey was appointed to Secretary and Director of the Company. On
February 2, 1999 Mr. Hennessey was appointed President and Chief Operating
Officer of the Company. From 1982 through 1984, Mr. Hennessey was a salesman
with the computer sales division of Lanier Business Products located in Boston,
Massachusetts. From 1984 through April 1994, Mr. Hennessey held various new
venture sales and sales management positions with Digital Equipment Corporation.
From January 1995 until Mr. Hennessey joined the Company, he was engaged in
voluntary missionary work.
BOARD MEETINGS AND COMMITTEES
The board of directors held no formal board meetings during the fiscal year
ended October 31, 1999. On five occasions throughout the year, the board of
directors took action by unanimous consent in lieu of holding a meeting. The
Company does not have audit, nominating and compensation committees of the board
of directors.
COMPENSATION OF DIRECTORS
No directors of the Company have received any fees for serving as a
director during 1999.
CERTAIN TRANSACTIONS
During fiscal year 1996, the Company loaned $28,882 to Keith Larkin. The
outstanding principal and interest, at the rate of 5% per annum, are due August
2, 2003. During fiscal year 1998, the Company loaned an additional $3,650 to Mr.
Larkin, which is due October 31, 2002, with interest at the rate of 5% per
annum. As of October 31, 1999, Mr. Larkin owed the Company outstanding principal
and interest totaling $43,743.
EXECUTIVE COMPENSATION
Set forth below is certain information for the three fiscal years ended
October 31, 1999, 1998 and 1997 relating to the cash and other compensation paid
or accrued by the Company to its Chief Executive Officer, Keith Larkin. No other
executive officer of the Company received compensation in excess of $100,000 for
services rendered in all capacities to the Company.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG TERM COMPENSATION
------------------------------------------------------------------ -----------------------------------------------------------
SECURITIES
RESTRICTED UNDERLYING
ANNUAL STOCK STOCK LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
--------------------------- ---- ------- ----- ------------ ---------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Keith Larkin.............. 1999 $25,000 0 $25,000 0 540,000(1) 0 0
1998 $45,000 0 $45,000 0 0 0 0
1997 $42,500 0 $42,500 0 0 0 0
</TABLE>
-------------------------
(1) For a description of such stock options, see "Stock Option Plans."
11
<PAGE> 13
EXECUTIVE COMPENSATION AGREEMENTS
The Company had an employment agreement with Keith Larkin, which was
terminated on February 2, 1999. The agreement provided for a maximum annual
salary of $90,000 with additional amounts added using the consumer price index
as a minimum. Mr. Larkin was eligible for the maximum annual salary during a
given year only if the Company generated annual sales of at least $2,000,000 and
pre-tax income equal to at least 20% of the Company's annual sales. Since the
Company did not meet the minimum requirements during fiscal years 1997, 1998 or
1999, the board of directors paid Mr. Larkin the compensation set forth in the
preceding table.
The Company has no set salary obligations to Mr. Larkin for his services
for the current or future fiscal years. Mr. Larkin, however, has agreed to
assign to the Company all of his rights, title and interest in and to any and
all inventions, discoveries, developments, improvements, processes, trade
secrets, trademark, copyright and patent rights of which he conceives during his
tenure as Chairman of the Board of Directors, Chief Executive Officer and
Treasurer of the Company.
The Company does not have a written employment agreement with Richard
Hennessey. During each of the fiscal years ended October 31, 1999, 1998 and
1997, Mr. Hennessey received a salary of $51,000, $51,000 and $45,000
respectively.
STOCK OPTION PLANS
On April 15, 1996, the board of directors of the Company adopted the
Company's 1996 Stock Option Plan (the "1996 Plan"). The 1996 Plan provides for
the grant by the Company of options to purchase up to an aggregate of 590,000 of
the Company's authorized but unissued shares of common stock (subject to
adjustment in certain cases including stock splits, recapitalizations and
reorganizations) to officers, directors, consultants, and other persons
rendering services to the Company.
The purposes of the 1996 Plan are to provide incentive to employees,
including officers, directors and consultants of the Company, to encourage such
persons to remain in the employ of the Company and to attract to the Company
persons of experience and ability. The 1996 Plan terminates on April 15, 2002.
Options granted under the 1996 Plan may be either incentive stock options
within the meaning of the Internal Revenue Code of 1986, as amended ("incentive
options"), or options that do not qualify as incentive options ("nonqualified
options"). The exercise price of incentive options must be at least equal to the
fair market value of the shares of common stock on the date of grant; provided,
however, that the exercise price of any incentive option granted to any person
who, at the time of the grant of the option, owns stock aggregating 10% or more
of the total combined voting power of the Company or any parent or subsidiary of
the Company ("Ten Percent Shareholder"), must not be less 110% of the fair
market value.
On April 15, 1996, options to purchase 540,000 shares were granted to Keith
Larkin and 25,000 shares to each of Richard Hennessey and Kenneth Campbell, who
was the Vice President of Operations at the time of the grant. The exercise
price of all of the stock options was $.50 per share. The stock option exercise
price was the fair value at the date of the grant, which was determined from the
price paid per share during the Company's stock offering in 1996. The stock
options were exercisable upon the grant date, extending over a period of three
years. In August 1999, Mr. Campbell resigned from his employment with the
Company, and the exercise period of his options was extended to April 14, 2006.
The options granted to Mr. Hennessey expired.
Prior to fiscal year 1998, the Company received $25,000 upon issuance of
50,000 shares of common stock upon the exercise of 50,000 options by the
Company's officers. On April 13, 1999, the
12
<PAGE> 14
exercise period of the remaining 540,000 options issued to Keith Larkin were
extended by vote of the board of directors for two years to April 13, 2001.
On March 5, 1998, the board of directors adopted the 1998 Stock Option Plan
for the benefit of directors, officers, employees and consultants to the
Company. This plan authorized the issuance of up to 500,000 shares of common
stock. On August 4, 1998, options to purchase 200,000 shares were granted to
Richard Hennessey and options to purchase 100,000 shares were granted to 15
employees, all at an option price of $.375 per share. The exercise price was the
fair market value of a share of common stock at the date of the grant. Of the
options granted to Mr. Hennessey, 100,000 vested immediately, 50,000 vested on
August 4, 1999 and 50,000 options vest on August 4, 2000. All of the options
granted to the employees vested immediately. All options are exercisable over a
three-year period from the date of vesting.
On April 13, 1999, the remaining 1998 Plan options to purchase 200,000
shares were granted to Richard Hennessey at an exercise price of $.375 per
share. The exercise price was greater than the fair market value of a share of
common stock at the date of the grant. The options are fully vested and are
exercisable through April 13, 2001.
REPORT ON EXECUTIVE COMPENSATION BY THE COMPENSATION AND STOCK OPTION COMMITTEES
The primary objective of the compensation policy of the Company is to align
executive compensation in a way that will encourage enhanced shareholder value,
while concurrently allowing the Company to attract, retain and satisfactorily
reward all employees who contributed to the Company's long-term growth and
economic success. The main principles of the compensation program are (1) the
development of incentive plans, (2) the attainment of both the Company's
short-term and long-term growth operational goals and strategic initiatives, (3)
the development of competitive compensation packages that will enable the
Company to attract, retain and motivate high caliber employees without depleting
the Company's resources, and (4) to provide incentives to the Company's
executives and other employees to share in appreciation of the price of the
Company's common stock, thereby aligning their interests with those of the
Company's shareholders. The compensation program for the Company's executives
includes an annual salary and stock options.
THE COMPENSATION COMMITTEE
By: /s/ Keith Larkin
Keith Larkin
Chairman of the Board of Directors
/s/ Richard Hennessey
Richard Hennessey
President and a Director
13
<PAGE> 15
STOCK OPTIONS
The following table summarizes the stock option activity of the Company's
executive officers during fiscal 1999:
OPTIONS GRANTED IN FISCAL 1999
<TABLE>
<CAPTION>
PERCENT OF
TOTAL OPTIONS
GRANTED
SHARES TO EXERCISE
UNDERLYING EMPLOYEES FISCAL PRICE EXPIRATION
NAME OPTIONS GRANTED YEAR 1999 PER SHARE DATE
---- --------------- ---------------- --------- ----------
<S> <C> <C> <C> <C>
Keith Larkin....................... 540,000(1) 12.7% $ 0.50 4/13/01(2)
Richard Hennessey.................. 200,000(2) 8.2% $0.375 8/3/03(2)
</TABLE>
-------------------------
(1) Options to purchase these shares were granted on April 15, 1996 pursuant to
the 1996 Stock Option Plan, and the options were to expire on April 14,
1999. On April 13, 1999, the board of directors extended the expiration date
for these options until April 13, 2001.
(2) Options to purchase these shares were granted on April 13, 1999 pursuant to
the 1998 Plan and are fully vested and exercisable until April 13, 2001.
During fiscal year 1999, neither Mr. Larkin nor Mr. Hennessey exercised any
stock options. The fair market value of the Company's common stock as of October
31, 1999 exceeded the exercise price for both Mr. Larkin's and Mr. Hennessey's
stock options. Accordingly, as of October 31, 1999, Mr. Larkin's and Mr.
Hennessey's unexercised stock options had no value.
VOTE REQUIRED
The affirmative vote of a plurality of the shares of common stock that are
voted is required to elect each nominee for director.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" EACH PERSON
NOMINATED AS A DIRECTOR OF THE COMPANY.
PROPOSAL 3. ADOPTION OF AN AMENDMENT TO THE
1998 STOCK OPTION PLAN
GENERAL
On March 5, 1998, the board of directors adopted the 1998 Plan for the
benefit of the directors, officers, employees and consultants of the Company.
The 1998 Plan is intended to attract and retain the services of qualified
officers, employees and directors while providing an incentive for such persons
to make a maximum contribution to the Company's success.
A total of 500,000 shares of common stock are reserved for issuance under
the 1998 Plan and stock options have been granted for all 500,000 shares. In
order to provide the Company with the ability to issue additional options under
the 1998 Plan, the board of directors of the Company has proposed for
shareholder approval an amendment to the 1998 Plan to increase the number of
shares
14
<PAGE> 16
of the Company's common stock reserved for issuance upon exercise of stock
options granted under the 1998 Plan from 500,000 shares to 2,000,000 shares.
The purpose of the amendment to the 1998 Plan is to enable the board of
directors to issue additional options to qualified officers, employees and
directors. If the plan, as amended, is approved by the shareholders of the
Company, the amendment to the plan will become effective as of the date of the
Meeting. If the amended plan is not approved by the Company's shareholders, the
plan and options previously granted or granted in the future under the plan will
not be affected. The board of directors believes that it is in the best interest
of the Company and its shareholders to approve the proposed amendment to the
1998 Plan.
SUMMARY OF THE 1998 PLAN
The major provisions of the 1998 Plan are summarized below. The following
summary does not purport to be complete and is qualified in its entirety by
reference to the 1998 Stock Option Plan as set forth in Exhibit "B" to this
proxy statement.
ADMINISTRATION
The board of directors or a committee appointed by the board administers
the 1998 Plan. The board of directors reserves the power to remove members and
add members to the committee. The board of directors or an appointed committee
determines, among other prescribed duties, the amount of any option grants, the
beneficiary of any options grants and the classification of the option grants as
either incentive stock options or non-incentive stock options. In addition, the
board's or appointed committee's interpretation of the provisions and
construction of the 1998 Plan is binding and conclusive on all optionees and
their legal representatives and beneficiaries.
ELIGIBILITY
Any employee may be granted incentive stock options under the 1998 Plan.
Any employee, officer, director or consultant of or other person rendering
services to the Company may be granted non-incentive stock options under the
1998 Plan, if in each instance, the board or appointed committee determines that
such person performs services of special importance to the management, operation
and development of the business of the Company.
TERMS AND CONDITIONS OF STOCK OPTIONS
All options granted under the 1998 Plan are evidenced by written agreements
the form of which will be determined by the board or appointed committee. Each
stock option agreement contains a grant date, the number of shares subject to
the option, the exercise price, and the vesting schedule and the expiration date
of the options. The exercise price for incentive options granted to an employee,
who is not a 10% shareholder, cannot be less than the par value nor less than
the fair market value of the shares on the grant date; additionally, the
exercise price for an incentive option granted to an employee who is a 10%
shareholder cannot be less than the par value nor less than 110% of the fair
market value of the shares on the grant date. The exercise price for
non-incentive stock options granted to any employee, officer or director of the
Company cannot be less than the par value of the shares. Options may be
exercised by submitting written notice to the Company disclosing the number of
shares to be exercised along with the full purchase price for such shares. The
Company will accept cash or a certified check as payment for exercised options.
In addition, the board or appointed committee may modify, extend or renew
outstanding options granted under the
15
<PAGE> 17
1998 Plan; however, the board or appointed committee may not, without prior
consent from the optionee, alter or impair any rights or obligations under any
option granted under the 1998 Plan.
TRANSFERABILITY
During the lifetime of the optionee, an incentive stock option must be
exercisable by the optionee only and cannot be assignable or transferable. In
the event of the optionee's death, the incentive stock options will only be
transferable by will or the laws of descent and distribution. The board or
appointed committee determines the restrictions on transferability, if any,
relating to non-incentive stock options, and any such restriction will be
disclosed in the non-incentive stock option agreement.
ACCELERATION OF AWARDS UPON CHANGE IN CONTROL
If the Company is to be dissolved or liquidated or if the Company will not
be the surviving corporation in a merger or consolidation; then each outstanding
option will be terminated, provided that each optionee receives the opportunity,
immediately prior to such dissolution or liquidation, or merger or
consolidation, to exercise the option in whole or in part.
AMENDMENT AND TERMINATION
The board or appointed committee may from time to time suspend,
discontinue, revise or amend the 1998 Plan; however, the shareholders of the
Company must approve any revision or amendment to the 1998 Plan that would
increase the number of shares subject to the 1998 Plan or change the class of
employees eligible to receive options.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
For federal income tax purposes, non-incentive stock options without
ascertainable fair market value at grant are not taxed to the participant until
exercised or otherwise disposed of. If the option is exercised, the participant
realizes compensation income equal to the fair market value of the stock at the
time it is transferred to him or her less the amount paid for it (the option or
exercise price). If the Company satisfies its tax withholding obligations
arising from the exercise of the options, it would receive a business expense
deduction for the amount that the participant must include in gross income as
compensation because of the exercise of a non-incentive stock option. This
deduction is taken for the same year in which or within which that income is
taxable to the participant. If the participant later sells the stock, any
subsequent gain or loss would be capital in nature.
In general, with respect to incentive stock options no income to a
participant will result for federal tax purposes upon either the granting or the
exercise of an option under the 1998 Plan. If the participant later sells the
acquired stock at least two years after the date the option is granted and at
least one year after the transfer of the acquired stock to the participant, the
participant would realize capital gain or loss equal to the difference between
the option price and the proceeds of the sale. If the participant's gain is
taxed as capital gain, the Company would not be allowed a business expense
deduction. If the participant disposes of the acquired stock before the end of
the required holding periods, then the participant would realize ordinary income
in the year of disposition equal to the lesser of: (i) the difference between
the option price and the fair market value of the stock on the exercise date, or
(ii) if the disposition is a taxable sale or exchange, the amount of gain
realized, and the Company would receive an equivalent deduction.
16
<PAGE> 18
With respect to non-vested stock options, the participant would generally
realize ordinary income in the year the shares of common stock covered by the
award become vested, non-forfeitable or fully transferable, in an amount equal
to the fair market value of the shares less the exercise price on the date they
become non-forfeitable or fully transferable. In such year, the Company would be
entitled to an equivalent deduction. If the participant later sells the stock,
any subsequent gain or loss would be capital in nature. Further, the participant
may elect within thirty (30) days of the date of grant to treat the award as
ordinary income in the year of grant. If the participant makes such an election,
then the Company would be entitled to an equivalent deduction. However, if the
participant makes such an election within thirty days of the grant and the
covered options never vest, then the participant will not receive a subsequent
deduction to income equal to the amount included as income in the year of the
grant.
VOTE REQUIRED
The affirmative vote of a plurality of the shares of common stock that are
voted is required to approve the proposal to amend the Company's stock option
plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL OF THE
ADOPTION OF THE AMENDMENT OF THE 1998 PLAN DESCRIBED ABOVE.
PROPOSAL 4. INDEPENDENT AUDITORS
Morgan Jacoby Thurn Boyle & Associates, P.A. ("Morgan Jacoby"), independent
public accountants, currently serves as the Company's independent auditors.
Morgan Jacoby acted as auditors of the Company for the fiscal year ended October
31, 1999. The board of directors has selected Morgan Jacoby to audit the
accounts of the Company for the fiscal year ending October 31, 2000. A
representative of Morgan Jacoby will be present at the meeting, be available to
respond to appropriate questions, and have the opportunity to make statements
should he desire to do so.
The affirmative vote of a plurality of the shares of common stock that are
voted is required to ratify the appointment of Morgan Jacoby.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF MORGAN JACOBY THURN BOYLE & ASSOCIATES, P.A. AS INDEPENDENT
AUDITORS.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the Company's fiscal 2000
Annual Meeting of Shareholders must be received by the Company by October 1,
2000, for inclusion in the Company's Proxy Statement and form of proxy relating
to that meeting. Any proposals by shareholders intended to be presented at the
fiscal 2000 Annual Meeting outside of the Company's proxy solicitation process
will be considered untimely if notice of such proposal is not given to the
Secretary of the Company by December 15, 2000. In the case of untimely notice,
persons named in the proxies solicited by the Company for that meeting (or their
substitutes) will be allowed to use their discretionary voting authority when
the proposal is raised at the meeting without any discussion of the proposal in
the Company's proxy statement for that meeting.
17
<PAGE> 19
OTHER MATTERS
As of the date of this proxy statement, we know of no other business to be
presented for action at the Meeting and do not intend to present any other
matters. However, if any other shareholder proposals or other business should
come before the Meeting, the persons named in the enclosed proxy (or their
substitutes) will have discretionary authority to take such action as shall be
in accordance with their best judgment.
PROXY SOLICITATION COSTS
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitation by mail, the Company's officers, employees or agents
may solicit proxies by telephone or personally, without additional compensation.
The Company may also make arrangements with brokerage houses and other
custodians, nominees and fiduciaries for the forwarding of solicitation
materials to the beneficial owners of shares of common stock held of record by
such persons, and the Company may reimburse them for any out-of-pocket expenses
incurred in connection therewith.
Fort Pierce, Florida
June 21, 2000
18
<PAGE> 20
EXHIBIT "A"
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
PRO TECH COMMUNICATIONS, INC.
Pursuant to Sections 607.1003 and 607.1007 of the Florida Business
Corporation Act, Pro Tech Communications, Inc., a Florida corporation (the
"Corporation"), certifies that:
These Amended and Restated Articles of Incorporation contain amendments
requiring the approval of the holders of shares of the common stock of the
Corporation, and the shareholders of the Corporation approved such amendments at
an annual shareholders' meeting duly held on , 2000. The number of
votes cast in favor of the amendments was sufficient for approval by the holders
of the common stock of the Corporation. These Amended and Restated Articles of
Incorporation were duly adopted, and proposed and recommended for action by the
shareholders, by the Board of Directors at a meeting of the Board of Directors
held on April 27, 2000.
The text of the Articles of Incorporation, as amended, of the Corporation
is hereby amended and restated in its entirety, effective as of the date of
filing of these Amended and Restated Articles of Incorporation with the
Secretary of State of Florida, to read as follows:
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
PRO TECH COMMUNICATIONS, INC.
ARTICLE I
NAME
The name of the Corporation is Pro Tech Communications, Inc.
ARTICLE II
PRINCIPAL OFFICE
The mailing address of the principal office of this Corporation is:
3311 Industrial 25th Street
Fort Pierce, Florida 34946
ARTICLE III
PURPOSE
This Corporation is organized for the purpose of transacting any and all
lawful business.
A-1
<PAGE> 21
ARTICLE IV
CAPITAL STOCK
A. The aggregate number of shares which the corporation is authorized to
issue is Forty-One Million (41,000,000) shares, consisting of:
(1) Forty Million (40,000,000) shares of common stock with a par value
of $.001 per share (the "Common Stock"); and
(2) One Million (1,000,000) shares of preferred stock with a par value
of $.01 per share (the "Preferred Stock").
B. The preferences and relative, participating or other rights of the
preferred stock, and the qualifications, limitations or restrictions thereof are
as follows:
(1) The Preferred Stock may be issued from time to time in one or more
classes or series, the shares of each class or series to have such
designations and powers, preferences and rights, qualifications,
limitations and restrictions thereof as are stated and expressed herein and
in the resolution or resolutions providing for the issue of such class or
series adopted by the Board of Directors as hereinafter prescribed.
(2) Authority is hereby expressly granted to and vested in the Board
of Directors to authorize the issuance of the Preferred Stock from time to
time in one or more classes or series, to determine and take necessary
proceedings fully to effect the issuance and redemption of any such
Preferred Stock, and, with respect to each class or series of the Preferred
Stock, to fix and state by the resolution or resolutions from time to time
adopted providing for the issuance thereof the following:
(a) whether or not the class or series is to have voting rights,
full or limited, or is to be without voting rights;
(b) the preferences and relative, participating, optional or other
special rights, if any, with respect to any class or series;
(c) whether or not the shares of any class or series shall be
redeemable and if redeemable the redemption price or prices, and the
time or times at which and the terms and conditions upon which, such
shares shall be redeemable and the manner of redemption;
(d) whether or not the shares of a class or series shall be subject
to the operation of retirement or sinking funds to be applied to the
purchase or redemption of such shares for retirement, and if such
retirement or sinking fund or funds be established, the annual amount
thereof and the terms and provisions relative to the operation thereof;
(e) the dividend rate, whether dividends are payable in cash, stock
of the Corporation, or other property, the conditions upon which and the
times when such dividends are payable, the preference to or the relation
to the payment of the dividends payable on any other class or classes or
series of stock, whether or not such dividend shall be cumulative or
noncumulative, and if cumulative, the date or dates from which such
dividends shall accumulate;
(f) whether or not the shares of any class or series shall be
convertible into, or exchangeable for, the shares of any other class of
classes or of any other series of the same of any other class or classes
of stock of the Corporation and the conversion price or prices or ratio
or ratios or the rate or rates at which such conversion or exchange may
be made,
A-2
<PAGE> 22
with such adjustments, if any, as shall be stated and expresses or
provided for in such resolution or resolutions; and
(g) such other special rights and protective provisions with
respect to any class or series as the Board of Directors may deem
advisable.
The shares of each class or series of the Preferred Stock may vary from the
shares of any other series thereof in any or all of the foregoing respects. The
Board of Directors may increase the number of shares of the Preferred Stock
designated for any existing class or series by a resolution adding to such class
or series authorized and unissued shares of the Preferred Stock not designated
for any other class or series. The Board of Directors may decrease the number of
shares of the Preferred Stock not designated for any other class or series. The
Board of Directors may decrease the number of shares of the Preferred Stock
designated for any existing class or series by a resolution, subtracting from
such series unissued shares of Preferred Stock designated for such class or
series, and the shares so subtracted shall become authorized, unissued and
undesignated shares of Preferred Stock.
ARTICLE V
REGISTERED OFFICE AND AGENT
The street address of the registered office of this Corporation is 3732
N.W. 16th Street, Fort Lauderdale, Florida 33311 and the name of the registered
agent of this Corporation at that address is Filings, Inc., a Florida
corporation.
ARTICLE VI
BOARD OF DIRECTORS
The Corporation shall initially have one (1) director to hold office until
the first annual meeting of shareholders and his successor shall have been duly
elected and qualified, or until his earlier resignation, removal from office or
death. The number of directors may be either increased or decreased from time to
time in accordance with the Bylaws of the Corporation.
ARTICLE VII
INDEMNIFICATION
The Corporation shall indemnify any officer or director, or any former
officer or director, to the full extent permitted by law.
ARTICLE VIII
AMENDMENT
This Corporation reserves the right to amend or repeal any provision
contained in these Amended and Restated Articles of Incorporation, or any
amendment hereto, and any right conferred upon the shareholders is subject to
this reservation.
A-3
<PAGE> 23
IN WITNESS WHEREOF, the undersigned has executed these Amended and Restated
Articles of Incorporation as of the day of , 2000.
--------------------------------------
Richard Hennessey, President
Pro Tech Communications, Inc.
STATE OF FLORIDA
COUNTY OF
The foregoing instrument was acknowledged before me this day
of , 2000, by Richard Hennessey, President of Pro Tech Communications,
Inc., a Florida corporation, on behalf of the corporation. He is personally
known to me or has produced as identification.
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NOTARY PUBLIC
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Type or Print Name
A-4
<PAGE> 24
EXHIBIT "B"
PRO TECH COMMUNICATIONS, INC.
AMENDED AND RESTATED 1998 STOCK OPTION PLAN
1. Purpose. The purpose of the 1998 Stock Option Plan of PRO TECH
COMMUNICATIONS, INC. is to provide incentive to employees, including officers,
directors and consultants of the Corporation, as defined below, to encourage
such individuals proprietary interest in the Corporation, to encourage such
individuals to remain in the employ of the Corporation, and to attract to the
Corporation individuals of experience and ability.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Committee appointed by the Board in
accordance with Section 4 of the Plan.
(d) "Common Stock" shall mean Company's common stock, par value $.001
per share.
(e) "Company" shall mean Pro Tech Communications, Inc., a Florida
corporation.
(f) "Corporation" shall mean and include the Company and any parent or
subsidiary corporation thereof, within the meaning of Section 425 of the
Code.
(g) "Disability" shall mean the condition of an Employee who is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result
in death or which has lasted or can be expected to last for a continuous
period of not less than twelve (12) months, all within the meaning of
Section 22(e)(3) of the Code.
(h) "Employee" shall mean any individual (including an officer or a
director) who is an employee of the Corporation (within the meaning of
section 422A(a)(2) of the Code and the regulations thereunder).
(i) "Exercise Price" shall mean the price per Share of Common Stock,
determined by the Board or Committee, at which an Option may be exercised.
(j) "Fair Market Value" of a Share of Common Stock as of a specified
date shall mean the closing price of a Share on the principal securities
exchange on which such Shares are traded on the day immediately preceding
the date as of which Fair Market Value is being determined, or on the next
preceding date on which such Shares are traded if no Shares were traded on
such immediately preceding day, or if the Shares are not traded on a
securities exchange, Fair Market Value shall be deemed to be the average of
the high bid and low asked prices of the Shares in the over-the-counter
market on the day immediately preceding the date as of which Fair Market
Value is being determined or on the next preceding date on which such high
bid and low asked prices were recorded. If the Shares are not publicly
traded, Fair Market Value shall be determined by the Board or Committee. In
no case shall Fair Market Value be less than the par value of a Share of
the Common Stock, and in no event shall Fair Market Value be determined
with regard to restrictions other than restrictions which, by their terms,
will never lapse.
(k) "Incentive Stock Option" shall mean an Option described in Code
section 422A(b).
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<PAGE> 25
(l) "Nonstatutory Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(m) "Option" shall mean a stock option granted pursuant to the Plan.
(n) "Optionee" shall mean a person to whom an Option has been granted.
(o) "Plan" shall mean this Pro Tech Communications, Inc. 1998 Stock
Option Plan.
(p) "Purchase Price" shall mean the Exercise Price times the number of
whole Shares with respect to which an Option is exercised.
(q) "Share" shall mean one share of Common Stock.
(r) "Ten Percent Shareholder" shall mean any Employee who, at the time
of the grant of an Option, owns (or is deemed to own, under Sections
422A(b)(6) and 425(d) of the Code) more than ten percent of the total
combined voting power of all classes of outstanding stock of the
Corporation.
3. Effective Date. This Plan was adopted by the Board as of March 5, 1998,
and this Plan was amended and restated with shareholder approval as of
, 2000. In order for an Option under the Plan to be accorded Incentive
Stock Option treatment under the Code, this Plan must be approved by the
Company's stockholders at a duly-held meeting of the Company's stockholders
within 12 months after the date the Plan was adopted by the Board. All Incentive
Stock Options granted under the Plan are made contingent upon such stockholder
approval of the Plan. If stockholder approval is not obtained within such
period, all Incentive Stock Options previously granted under the Plan shall be
deemed to be, and treated under the Code as, a Nonstatutory Stock Option.
4. Administration. The Plan shall be administered by the Board or a
Committee appointed by the Board consisting of not less than two members. The
Board may from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, however caused, shall be filled by the
Board. The Board or Committee shall from time to time at its discretion shall
determine who shall be granted Options, the number of Shares to be optioned to
each and the designation of such Options as Incentive Stock Options or
Nonstatutory Stock Options. The interpretation and construction by the Board or
the Committee of any provisions of the Plan or of any Option granted thereunder
shall be binding and conclusive on all Optionees and their legal representatives
and beneficiaries.
5. Eligibility. Any Employee may be granted Incentive Stock Options under
the Plan and any Employee or officer, director, consultant of or other person
rendering services to, the Corporation may be granted Nonstatutory Stock Options
under the Plan if, in each instance, the Board or Committee determines that such
person performs services of special importance to the management, operation and
development of the business of the Corporation.
6. Stock. The stock subject to Options granted under the Plan shall be
Shares of authorized but unissued or reacquired Common Stock. The aggregate
number of Shares which may be issued under Options exercised under this Plan
shall not exceed 1,500,000. The number of Shares subject to Options outstanding
under the Plan at any time may not exceed the number of Shares remaining
available for issuance under the Plan. In the event that an Option outstanding
under the Plan expires for a reason or is terminated, the Shares allocable to
the unexercised portion of such Option shall again be available for grant of
Options under the Plan.
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<PAGE> 26
The limitations established by this Section 6 shall be subject to
adjustment upon the occurrence of the events specified and in the manner
provided in Section 9 hereof.
7. Terms and Conditions of Options. Options granted pursuant to the Plan
shall be evidenced by written agreements in such form as the Board or the
Committee shall from time to time determine, which agreements shall comply with
and be subject to the following terms and conditions:
(a) Date of Grant. Each Option shall specify its effective date (the
"date of grant"), which shall be the date specified by the Board or
Committee in its action relating to the grant of the Option, but which date
shall not be earlier than the date of the determination by the Board or
Committee to grant such Option nor more than thirty days after such date.
(b) Number of Shares. Each Option shall state the number of Shares to
which it pertains and shall provide for the adjustment thereof in
accordance with the provisions of Section 9 hereof.
(c) Exercise Price. Each Option shall state the Exercise Price, which
price shall be determined by the Board or Committee, provided however, that
the Exercise Price (i) in the case of an Incentive Stock Option granted to
an Employee who is not a Ten Percent Shareholder, shall not be less than
the par value nor less than the Fair Market Value of the Shares to which
the Option relates on the date of grant, (ii) in the case of an Incentive
Stock Option granted to an Employee who is a Ten Percent Shareholder, shall
not be less than the par value nor less than 110% of the Fair Market Value
of the Shares to which the Option relates on the date of grant, and (iii)
in the case of a Nonstatutory Stock Option granted to any Employee or
officer or director of the Corporation, shall not be less than the par
value of the Shares to which the Option relates. The Exercise Price of an
Option shall be subject to adjustment in accordance with Section 9 hereof.
The Company may, at its discretion, permit the cashless exercise of Options
in accordance with the procedures and restrictions established by the Board
or the Committee.
(d) Exercise of Options and Medium and Time of Payment. To exercise
an Option, the Optionee shall give written notice to the Company specifying
the number of Shares to be purchased and accompanied by payment in cash or
by certified check of the full Purchase Price therefor and the amount of
any withholding tax obligation of the Corporation as described in Section
14 (a) hereof. No Share shall be issued until full payment therefor has
been made.
(e) Term and Exercise of Options; Non-Transferability of Incentive
Stock Options. Subject to Section 10 hereof, Options may be exercised as
determined by the Board or Committee and as stated in the written agreement
evidencing the Option, provided, however, that no Incentive Stock Option
granted to an Employee who is not a Ten Percent Shareholder shall be
exercisable after the expiration of ten (10) years from the date it is
granted, and no Incentive Stock Option granted to an Employee who is a Ten
Percent Shareholder shall be exercisable after the expiration of five (5)
years from the date it is granted. In addition, the aggregate fair market
value (determined at the time an Incentive Stock Option is granted) of
Shares with respect to which Incentive Stock Options are exercisable for
the first time by an Optionee during any calendar year (under this Plan and
all other plans maintained by the Corporation) shall not exceed $100,000.
During the lifetime of the Optionee, an Incentive Stock Option shall be
exercisable only by the Optionee and shall not be assignable or
transferable. In the event of the Optionee's death, no Incentive Stock
Option shall be transferable by the Optionee otherwise than by will or by
the laws of descent and distribution. Restrictions on the transfer of
Nonstatutory Stock Options, if any, shall be determined by the Board and
set forth in each Nonstatutory Stock Option Agreement.
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<PAGE> 27
(f) Termination of Employment. In the event that an Optionee shall
cease to be employed by the Corporation for any reason, such Optionee (or
the heirs or legatees of such Optionee, if applicable) shall have the
right, subject to the restrictions of Subsection (e) hereof, to exercise
the Option at any time within three (3) months after such termination of
employment (twelve (12) months if the termination was due to the death or
Disability of the Optionee or, in the case of a Nonstatutory Stock Option,
retirement) to the extent that, on the day preceding the date of
termination of employment, the Optionee's right to exercise such Option had
accrued pursuant to the terms of the option agreement pursuant to which
such Option was granted, and had not previously been exercised.
For this purpose, the employment relationship will be treated as
continuing intact while the Optionee is on military leave, sick leave or
other bona fide leave of absence (to be determined in the sole discretion
of the Board and, in the case of an Optionee who has received an Incentive
Stock Option, only to the extent permitted under Section 422A of the Code
and the regulations promulgated thereunder). Moreover, in the case of an
Optionee who has been granted an Incentive Stock Option, employment shall,
in no event, be deemed to continue beyond the ninetieth (90th) day after
the Optionee ceased active employment, unless the Optionee's reemployment
rights are guaranteed by statute or by contract.
(g) Rights as a Shareholder. An Optionee or, in the case of an
Incentive Stock Option, a transferee of a deceased Optionee or, in the case
of a Nonstatutory Stock Option, a permitted transferee shall have no rights
as a shareholder with respect to any Shares covered by his or her Option
until the date of the issuance of a stock certificate for such Shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions or other rights for
which the record date is prior to the date such stock certificate is
issued, except as provided in Section 9.
(h) Modification, Extension and Renewal of Options. Subject to the
terms and conditions and within the limitations of the Plan, the Board or
Committee may modify, extend or renew outstanding Options granted under the
Plan, or accept the exchange of outstanding Options (to the extent not
theretofore exercised) for the granting of new options in substitution
therefor. Notwithstanding the foregoing, however, no modification of an
Option shall, without the consent of the Optionee, alter or impair any
rights or obligations under any option theretofore granted under the Plan.
Moreover, in the case of any modification, extension or renewal of an
Incentive Stock Option, all of the requirements set forth herein shall
apply in the same manner as though a new Incentive Stock Option had been
granted to the Optionee on the date of such modification, extension or
renewal, but only if such modification, extension or renewal is treated,
under Section 425(h) of the Code, as the granting of a new option.
(i) Identification of Option. Each Option granted under the Plan
shall clearly identify its status as an Incentive Stock Option or
Nonstatutory Stock Option.
(j) Other Provisions. The option agreements authorized under the Plan
shall contain, in addition to those provisions provided in Section 7(e)
hereof, such other provisions not inconsistent with the terms of the Plan,
including, without limitation, restrictions upon the exercise of any
Option, and restrictions upon the transfer of Shares received upon exercise
of Options, as the Board or Committee shall deem advisable.
8. Term of Plan. Options may be granted pursuant to the Plan ten years
from March 5, 1998.
9. Recapitalization. Subject to any required action by the shareholders
and the last sentence of subsection 7(h) hereof, the number of Shares covered by
this Plan as provided in Section 6, the number of Shares covered by each
outstanding Option, and the Exercise Price thereof shall be
B-4
<PAGE> 28
proportionately adjusted for any increase or decrease in a number of issued
Shares resulting from a subdivision or consolidation of Shares, stock split, or
the payment of a stock dividend.
Subject to any required action by the shareholders of the Company and the
last sentence of Subsection 7(h) hereof, if the Company shall be the surviving
corporation in any merger or consolidation, each outstanding Option shall
pertain and apply to the securities to which a holder of the number of Shares
subject to the Option would have been entitled. A dissolution or liquidation of
the Company or a merger or consolidation in which the Company is not the
surviving corporation shall cause each outstanding Option to terminate, unless
the agreement of merger or consolidation shall otherwise provide, provided that
each Optionee shall, in such event, have the right immediately prior to such
dissolution or liquidation, or merger or consolidation in which the Company is
not the surviving corporation to exercise the Option in whole or in part,
subject to limitations on exercisability of Options under Sections 7(e) and (f)
hereof.
In the event of a change in the Common Stock as presently constituted,
which is limited to a change of all of its authorized shares with par value into
the same number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be Shares of Common
Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Board or Committee, whose
determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this Section 9, the Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class, stock split, or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, merger, or consolidation or spin-off of
assets or stock of another corporation, and any issue by the Company of shares
of stock of any class or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to the Option.
The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
10. Securities Law Requirements. No Shares shall be issued upon the
exercise of any Option unless and until the Company has determined that: (i) it
and the Optionee have taken all actions required to register the Shares under
the Securities Act of 1933 or perfect an exemption from the registration
requirements thereof (including the furnishing by the Optionee of an appropriate
investment letter); (ii) any applicable listing requirement of any stock
exchange on which the Common Stock is listed has been satisfied; and (iii) any
other applicable provision of state or Federal law has been satisfied.
11. Amendment of the Plan. The Board or Committee may, insofar as
permitted by law, from time to time, with respect to any Shares at the time not
subject to Options, suspend or discontinue the Plan or revise or amend it in any
respect whatsoever except that, without approval of the shareholders of the
Company, no such revision or amendment shall:
(a) Increase the number of Shares subject to the Plan; or
(b) Change the designation in Section 5 of the Plan of the class of
Employees eligible to receive options.
(c) Amend this Section 11 to defeat its purpose.
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<PAGE> 29
12. Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to the exercise of an Option will be used for
general corporate purposes or as otherwise determined by the Board.
13. No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.
14. Withholding.
(a) Nonstatutory Options. Whenever Shares are to be delivered upon
exercise of a Nonstatutory Option, the Corporation shall be entitled to
require as a condition of delivery that the Optionee remit to the
Corporation an amount sufficient to satisfy the Corporation's federal,
state and local withholding tax obligations with respect to the exercise of
the Option.
(b) Incentive Stock Options. The acceptance of Shares upon exercise of
an Incentive Stock Option shall constitute an agreement by the Optionee
(unless and until the Corporation shall notify the Optionee that it is
relieved, in whole or in part, of its obligations under this Section 14(b))
(i) to notify the Corporation if any or all of such Shares are disposed of
by the Optionee within two years from the date the Option was granted or
within one year from the date the Shares were transferred to the Optionee
pursuant to this exercise of the Option, and (ii) to remit to the
Corporation, at the time of and in the case of any such disposition, an
amount sufficient to satisfy the Corporation's federal, state and local
withholding tax obligations with respect to such disposition, whether or
not, as to both (i) and (ii), the Optionee is in the employ of the
Corporation at the time of such disposition.
15. Governing Law. The Plan shall be governed by the laws of the State of
Florida.
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PRO TECH COMMUNICATIONS, INC.
3311 INDUSTRIAL 25TH STREET
FORT PIERCE, FLORIDA 34946
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Keith Larkin and Richard Hennessey and each of
them individually, as proxies, each with full powers the undersigned would
possess if personally present, and each with full power of substitution, to
represent and vote all of the shares of common stock of Pro Tech Communications,
Inc. (the "Company") which the undersigned is entitled to vote at the Annual
Meeting of Shareholders to be held on July 20, 2000 or any adjournments or
postponements thereof, on the following proposals:
With respect to such other matters that may properly come before the Annual
Meeting or any adjournments or postponements of the Annual Meeting the proxies
named above are authorized to vote upon those matters in their discretion.
This proxy, when properly executed, will be voted in the manner directed by the
undersigned shareholder(s). If no direction is indicated, this proxy will be
voted as recommended by the board of directors for all proposals.
Your shares cannot be voted unless you sign, date and return this card.
[X] Please mark your votes as in this example.
1. Amendment to the Articles of Incorporation of the Company to:
(a) increase the authorized number of shares of the Company's common stock
from 10,000,000 to 40,000,000 shares; and
(b) create 1,000,000 shares of the Company's blank check preferred stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Election of Directors
FOR [ ] WITHHOLD [ ]
Nominees: Keith Larkin and Richard Hennessey
(to withhold authority to vote for any individual nominee, write that nominee's
name on the space provided below.)
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3. To approve the amendment of the Company's 1998 Stock Option Plan to
increase the number of shares of common stock available for issuance
under the Plan from 500,000 shares to 2,000,000 shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. To ratify the appointment of Morgan Jacoby Thurn Boyle & Associates,
P.A. as independent auditors for the fiscal year ending October 31,
2000.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Date: , 2000
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Signature(s)
Please sign exactly as name(s) appear(s) hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give title. If a corporation, please sign in full
corporate name by the president or other authorized officer. If a partnership
please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
